Company focused on delivering sustainable organic free cash flow
in 2020 and beyond
Noble Energy, Inc. (NYSE: NBL) (“Noble Energy” or the "Company”)
today announced guidance for 2019, including planned capital
expenditures and anticipated sales volumes.
David L. Stover, the Company's Chairman and CEO commented, “Recent
market dynamics, including increased commodity price volatility, further
highlight the need for our industry to prioritize capital discipline and
corporate returns over top-line production growth. Our 2019 capital
program and early 2020 outlook aligns capital investment with the
environment and sets the stage for Noble Energy to generate sustainable
organic free cash flow in 2020 and beyond.”
Stover added, “By the end of 2019, our high-return U.S. onshore business
is anticipated to be self-funding, and it will underpin the Company’s
production growth of five to ten percent per year, before the additional
impact of major projects. We will be completing spend for Leviathan,
offshore Israel, this year and commencing production and cash flow from
the project by the end of the year. Our differentiated portfolio,
combining high-quality U.S. onshore assets with long-life offshore
production, provides competitive advantage through low base production
declines and low maintenance capital needs. Our early 2020 outlook
provides over $500 million in free cash flow(1) at strip
pricing, which we plan to return to shareholders through the dividend
and share repurchase program.”
Highlights from the Company’s 2019 plan include:
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Organic capital expenditures funded by Noble Energy are planned at
a range of $2.4 to $2.6 billion, 17 percent lower at the midpoint
compared to 2018.
-
Total company volumes are anticipated in the range of 345-365
MBoe/d, an increase of 5 percent(3) at the
midpoint as compared to 2018.
-
The Company’s U.S. onshore business is anticipated to deliver
asset-level free cash flow(2) by the end of
2019, while delivering total volume growth of approximately 10 percent(3)
and oil production growth of 13 percent(3) from
2018 levels.
-
First gas sales from Leviathan are expected by the end of 2019,
delivering substantial production and cash flow growth in 2020.
Organic capital expenditures by area (in $MM) are estimated to be:
United States Onshore
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1,600 – 1,700
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NBL-funded Midstream
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100 – 125
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Eastern Mediterranean
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550 – 600
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West Africa
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100 – 125
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Other
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50
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Total
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2,400 – 2,600
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Sixty percent of the Company’s total organic capital for 2019 is
expected to be spent in the first half of the year due to the timing of
Leviathan spend and U.S. onshore activity. Excluded from the amounts
above is an estimated $195 million of Noble Midstream Partners’ (NYSE:
NBLX) capital, which will be consolidated into Noble Energy. Third-party
customer activity represents 65 percent of the NBLX capital.
U.S. Onshore
Approximately 90 percent of Noble Energy’s U.S. onshore capital will be
focused in the DJ and Delaware Basins. Activity in the DJ Basin includes
progressing the second row of development in Mustang, which benefits
from the Company’s approved Comprehensive Drilling Plan and access to
multiple gas processing providers. In addition, Noble Energy expects to
bring online a number of pads within Wells Ranch and East Pony. In the
Delaware, operated activity is focused on row development primarily in
the Wolfcamp A and Third Bone Spring zones. The Company will continue to
optimize base production and cash flows from the Eagle Ford.
Noble Energy expects to commence production in 2019 on between 165-175
wells across the U.S. onshore, including 95-100 in the DJ Basin, 50-55
in the Delaware Basin and approximately 20 in the Eagle Ford. The second
and third quarter are planned to have a higher count of wells commencing
production as compared to the first and fourth quarters of the year.
The Company anticipates full-year 2019 average U.S. onshore sales
volumes of between 262 and 278 thousand barrels of oil equivalent per
day (MBoe/d). Combined, production from the DJ and Delaware Basins is
expected to increase throughout 2019, up 15 to 20 percent(3)
on a full year basis. Sales volumes in the Eagle Ford are anticipated to
be lower on a full year basis, with volumes growing from the first half
to the second half of the year.
Compared to the second half of 2018, Noble Energy expects capital costs
per well in 2019 to be lower by 10 to 15 percent. The majority of these
costs savings have been realized through operational efficiencies and
lower service costs.
International Offshore
Offshore, the Company is focused on maintaining its strong base
production and cash flow in Israel and Equatorial Guinea (E.G.), while
progressing the Leviathan project offshore Israel for first gas sales by
the end of the year. In addition, Noble Energy expects to sanction the
Alen gas monetization project in E.G. in the first half of 2019, with
first gas sales estimated for the first half of 2021.
In Israel, gross natural gas sales volumes are anticipated to be flat to
up slightly from 2018, reflecting the nearly fully utilized capacity of
the Tamar field on an annual basis. Organic capital expenditures in the
Eastern Mediterranean primarily comprise spending to complete the
Leviathan project. Excluded from the Company’s organic capital
expenditures guidance are costs related to an acquisition of interest in
the EMG pipeline, which provides a connection point for the export of
natural gas from Israel to Egypt.
In E.G., sales volumes are expected to be lower than 2018 due to natural
field declines through the year and anticipated downtime for the
third-party LNG facility turnaround in the first quarter. The Company’s
2019 capital expenditure guidance includes initial costs for the Alen
gas monetization project as well an additional development well at the
Aseng oil field to help mitigate field decline. First production from
the Aseng development well is anticipated in the third quarter of 2019.
The Company’s new guidance for 2019 replaces its prior 2019 and
multi-year outlook.
First Quarter 2019 Guidance
The Company anticipates sales volumes in the first quarter in the range
of 321 to 336 MBoe/d. In E.G., sales volumes are anticipated to be lower
than the fourth quarter 2018 by approximately 15 MBoe/d as a result of
the timing of oil liftings (production is anticipated to be greater than
sales) and the turnaround maintenance at the third-party LNG facility.
The variance from the fourth quarter 2018 is estimated to be 40 percent
from oil volumes and 60 percent from natural gas volumes, which will
also result in equity method investment income being lower than prior
quarters.
U.S. onshore sales volumes in the first quarter 2019 are also
anticipated to be slightly lower than the fourth quarter 2018 as a
result of the timing of well activities in late 2018 and early 2019. The
first quarter is planned to be the low quarter for wells commencing
production in 2019. Natural decline in the Eagle Ford will also impact
the first quarter 2019. Second half U.S. onshore production is
anticipated to be approximately 15 percent higher than the first half of
the year.
The Company’s planned first quarter organic capital expenditures of
between $725 and $800 million are anticipated to be the highest quarter
of 2019, driven by the timing of drilling and completion activities in
the U.S. onshore business as well as Leviathan spend.
Additional full-year and first quarter 2019 guidance details are
available in the latest presentation deck provided on the ‘Investors’
page of the Company’s website, www.nblenergy.com.
(1) Free cash flow defined as GAAP cash flow from operations
less consolidated capital investments.
(2) Asset-level free cash flow defined as before tax operating
cash flow, less capital investments.
(3) Pro forma for asset divestments.
Noble Energy (NYSE: NBL) is an independent oil and natural gas
exploration and production company committed to meeting the world’s
growing energy needs and delivering leading returns to shareholders. The
Company operates a high-quality portfolio of assets onshore in the
United States and offshore in the Eastern Mediterranean and off the west
coast of Africa. Founded more than 85 years ago, Noble Energy is guided
by its values, its commitment to safety, and respect for stakeholders,
communities and the environment. For more information on how the Company
fulfills its purpose: Energizing the World, Bettering People’s Lives®,
visit https://www.nblenergy.com.
This news release contains certain "forward-looking statements"
within the meaning of federal securities laws. Words such as
"anticipates", “plans”, “estimates”, "believes", "expects", "intends",
"will", "should", "may", and similar expressions may be used to identify
forward-looking statements. Forward-looking statements are not
statements of historical fact and reflect Noble Energy's current views
about future events. Such forward-looking statements may include, but
are not limited to, future financial and operating results, and other
statements that are not historical facts, including estimates of oil and
natural gas reserves and resources, estimates of future production,
assumptions regarding future oil and natural gas pricing, planned
drilling activity, future results of operations, projected cash flow and
liquidity, business strategy and other plans and objectives for future
operations. No assurances can be given that the forward-looking
statements contained in this news release will occur as projected and
actual results may differ materially from those projected.
Forward-looking statements are based on current expectations, estimates
and assumptions that involve a number of risks and uncertainties that
could cause actual results to differ materially from those projected.
These risks and uncertainties include, without limitation, the
volatility in commodity prices for crude oil and natural gas, the
presence or recoverability of estimated reserves, the ability to replace
reserves, environmental risks, drilling and operating risks, exploration
and development risks, competition, government regulation or other
actions, the ability of management to execute its plans to meet its
goals and other risks inherent in Noble Energy's businesses that are
discussed in Noble Energy's most recent annual report on Form 10-K,
quarterly report on Form 10-Q, and in other Noble Energy reports on file
with the Securities and Exchange Commission (the "SEC"). These reports
are also available from the sources described above. Forward-looking
statements are based on the estimates and opinions of management at the
time the statements are made. Noble Energy does not assume any
obligation to update any forward-looking statements should circumstances
or management’s estimates or opinions change.
This news release also contains certain forward-looking non-GAAP
financial measures, including free cash flow, and asset-level free cash
flow. Due to the forward-looking nature of the aforementioned non-GAAP
financial measures, management cannot reliably or reasonably predict
certain of the necessary components of the most directly comparable
forward-looking GAAP measures, such as future impairments and future
changes in working capital. Accordingly, we are unable to present a
quantitative reconciliation of such forward-looking non-GAAP financial
measures to their most directly comparable forward-looking GAAP
financial measures. Amounts excluded from these non-GAAP measures in
future periods could be significant. Management believes the
aforementioned non-GAAP financial measures are good tools for internal
use and the investment community in evaluating Noble Energy’s overall
financial performance. These non-GAAP measures are broadly used to value
and compare companies in the crude oil and natural gas industry.
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