Noble Energy Announces Third Quarter 2009 Results
- Press Release
- Source: Noble Energy, Inc.
- On 7:30 am EDT, Thursday October 29, 2009
HOUSTON, Oct. 29 /PRNewswire-FirstCall/ -- Noble Energy, Inc. (NYSE: NBL) reported today third quarter 2009 net income of $107 million, or $0.61 per share diluted, on revenues of $621 million. The results were reduced by certain items totaling $86 million after-tax, the largest of which was a previously disclosed unrealized commodity derivative loss. Excluding these items, which are typically not considered by analysts in published estimates, third quarter 2009 adjusted net income(1) was $193 million, or $1.10 per share diluted. For the third quarter of 2008, net income was $974 million, or $5.37 per share diluted, on revenues of $1.1 billion. Adjusted net income(1) for the same period was $395 million, or $2.08 per share diluted.
Related Quotes
| Symbol | Price | Change |
|---|---|---|
| NBL | 65.20 | +0.43 |
Discretionary cash flow(1) for the third quarter 2009 was $499 million, compared to $657 million for the similar quarter in 2008. Net cash provided by operating activities was $488 million and capital expenditures were $224 million.
Key highlights for the third quarter 2009 include:
- Ticonderoga in the deepwater Gulf of Mexico returned to full production
- Approved Isabela/Santa Cruz oil development project in the deepwater Gulf of Mexico
- Record Wattenberg production of 283 million cubic feet equivalent per day, including liquid volumes of 22 thousand barrels per day
- Completed first horizontal East Texas Haynesville shale well with initial 30-day average production rate of over 11 million cubic feet per day, gross
- Sanctioned Aseng oil development project in Block 'I' offshore Equatorial Guinea
- Executed an additional gas sales agreement in Israel which raised average natural gas prices by over 40 percent from the previous quarter
"Noble Energy reported very strong results for the quarter with sales volumes up and costs down versus the second quarter this year and the third quarter of 2008. Our diverse product mix, combined with strengthening global liquid prices and record realizations in Israel, were certainly key contributors," said Charles D. Davidson, Noble Energy's Chairman and CEO.
Mr. Davidson went on to say, "Initial results from our Texas Haynesville drilling program are very positive, and we anticipate more results in the near future. In addition, we look forward to resuming our deepwater Gulf of Mexico exploration program with drilling to start on two significant tests at Deep Blue and Double Mountain in the fourth quarter. We also made important progress on our long-term growth projects, sanctioning oil projects at Aseng and Isabela/Santa Cruz and moving forward the development plans at Tamar offshore Israel. Our financial and operating results for the quarter provide us with a lot of momentum as we approach the end of the year."
Total sales volumes averaged 217 thousand barrels of oil equivalent per day for the quarter, up three percent from the third quarter of 2008 primarily as a result of increased volumes in the United States and West Africa. Domestically, higher volumes were supported by ongoing development activity at Wattenberg, the return to full production of Ticonderoga, and the impact of the Raton gas project in the deepwater Gulf of Mexico. Greater natural gas volumes in West Africa were largely related to a lesser amount of facility maintenance downtime. North Sea volumes were down from the third quarter 2008 mainly due to Dumbarton performance.
Commodity price realizations for the quarter were down from the similar period last year. The Company's global crude oil and natural gas prices averaged $63.36 per barrel and $2.41 per thousand cubic feet during the third quarter 2009. Third quarter 2009 crude oil realizations were reduced $1.89 and $5.32 per barrel in the United States and West Africa, respectively, as a result of previously deferred hedge losses.
Cash costs, including lease operating, production and ad valorem taxes, transportation, and G&A were $9.22 per barrel of oil equivalent (Boe) for the quarter versus $11.44 per Boe for the same period in 2008. Lease operating expenses (LOE) averaged $4.41 per Boe, down 13 percent from the third quarter of 2008. The majority of the variance in LOE related to continued cost cutting measures, fewer workover activities onshore in the U.S., and reduced process handling fees in the deepwater Gulf of Mexico. Production taxes significantly declined as a result of lower realized commodity prices. G&A expenses also decreased from the prior period related mostly to incentive compensation. In addition, exploration expense was down from the third quarter of 2008 due to continued drilling success and lower seismic expenditures.
(1) A Non-GAAP measure, see attached Reconciliation Schedules
CONFERENCE CALL
Noble Energy's third quarter 2009 conference call will be available today via live audio webcast at 9:00 a.m. Central Time. To listen, log on to www.nobleenergyinc.com and click on the Investors tab and go to the Investors Events link. Dial in numbers are (888) 437-9276 or (719) 325-2361. The conference call replay will be available on the website until November 30, 2009.
Noble Energy is a leading independent energy company engaged in worldwide oil and gas exploration and production. The Company operates primarily in the Rocky Mountains, Mid-Continent, and deepwater Gulf of Mexico areas in the United States, with significant international operations offshore Israel and West Africa. Noble Energy is listed on the New York Stock Exchange and is traded under the ticker symbol NBL. Visit Noble Energy online at www.nobleenergyinc.com.
This news release may include projections and other "forward-looking statements" within the meaning of the federal securities laws. Any such projections or statements reflect Noble Energy's current views about future events and financial performance. No assurances can be given that such events or performance will occur as projected, and actual results may differ materially from those projected. Risks, uncertainties and assumptions that could cause actual results to differ materially from those projected 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 action, the ability of management to execute its plans to meet its goals and other risks inherent in Noble Energy's business that are detailed in its Securities and Exchange Commission filings. Words such as "anticipates," "believes," "expects," "intends," "will," "should," "may," and similar expressions may be used to identify forward-looking statements. Noble Energy assumes no obligation and expressly disclaims any duty to update the information contained herein except as required by law.
This news release may also contain certain forward-looking non-GAAP measures of financial performance that management believes are good tools for internal use and the investment community in evaluating the company's overall financial performance. These non-GAAP measures are broadly used to value and compare companies in the crude oil and natural gas industry.
Schedule 1
Noble Energy, Inc.
Reconciliation of Net Income (Loss) to Adjusted Net Income
(in millions, except per share amounts, unaudited)
Three Months Nine Months
Ended Ended
September 30, September 30,
------------ -------------
2009 2008 2009 2008
---- ---- ---- ----
Net Income (Loss) $107 $974 $(139) $1,045
Adjustments, net of tax (1)
Unrealized (gains) losses on
commodity derivative
instruments 81 (637) 302 (7)
Gain on sale of Argentina
assets - - (14) -
Asset impairments (2) - 26 259 25
Allowance for SemCrude
receivable 5 26 5 25
Other adjustments, net - 6 (1) 6
--- --- -- ---
Adjusted Net Income (3) $193 $395 $412 $1,094
---- ---- ---- ------
Adjusted Earnings Per Share
Basic $1.11 $2.29 $2.38 $6.35
Diluted 1.10 2.08 2.35 6.14
Weighted average number of
shares outstanding
Basic 173 173 173 172
Diluted (4) 175 176 175 176
(1) The net tax effects are determined by calculating the tax provision
for GAAP Net Income (Loss), which includes the adjusting items, and
comparing the results to the tax provision for Adjusted Net Income, which
excludes the adjusting items. The difference in the tax provision
calculations represents the tax impact of the adjusting items listed here.
The calculation is performed at the end of each quarter and, as a result,
the tax rates for each discrete period are different.
(2) The 2009 impairments were recorded in the first quarter and were
predominantly related to Granite Wash.
(3) Adjusted net income should not be considered a substitute for net
income as reported in accordance with GAAP. Adjusted net income is
provided for comparison to earnings forecasts prepared by analysts and
other third parties. Our management believes, and certain investors may
find, that adjusted net income is beneficial in evaluating our financial
performance.
(4) The adjusted diluted earnings per share calculation for the nine
months ended September 30, 2009 includes an increase to diluted shares of
approximately 2 million shares representing the incremental dilutive
shares that were anti-dilutive, for GAAP purposes, and therefore excluded
from the calculation of GAAP net loss per share for the nine months ended
September 30, 2009.
Schedule 2
Noble Energy, Inc.
Summary Statement of Operations
(in millions, except per share amounts, unaudited)
Three Months Nine Months
Ended Ended
September 30, September 30,
------------- -------------
2009 2008 2009 2008
---- ---- ---- ----
Revenues
Crude oil and condensate $377 $629 $876 $1,830
Natural gas 172 361 498 1,132
NGLs 24 50 66 153
Income from equity method investees 25 40 52 158
Other revenues 23 18 61 55
-- -- -- --
Total revenues 621 1,098 1,553 3,328
--- ----- ----- -----
Operating Expenses
Lease operating expense 88 98 281 268
Production and ad valorem taxes 25 47 66 141
Transportation expense 18 14 43 43
Exploration expense 27 39 102 181
Depreciation, depletion and amortization 205 194 601 593
General and administrative 53 63 173 184
Asset impairments - 38 437 38
Other operating expense, net 34 60 22 107
-- -- -- ---
Total operating expenses 450 553 1,725 1,555
--- --- ----- -----
Operating Income (Loss) 171 545 (172) 1,773
Other (Income) Expense
(Gain) Loss on commodity derivative
instruments 28 (875) 95 190
Interest, net of amount capitalized 23 18 64 52
Other expense (income), net 5 (52) 18 (42)
-- --- -- ---
Total other (income) expense 56 (909) 177 200
-- ---- --- ---
Income (Loss) Before Taxes 115 1,454 (349) 1,573
Income Tax Provision (Benefit) 8 480 (210) 528
--- --- ---- ---
Net Income (Loss) $107 $974 $(139) $1,045
---- ---- ----- ------
Earnings (Loss) Per Share
Basic $0.62 $5.64 $(0.80) $6.06
Diluted 0.61 5.37 (0.80) 5.86
Weighted average number of shares
outstanding
Basic 173 173 173 172
Diluted 175 176 173 176
Schedule 3
Noble Energy, Inc.
Volume and Price Statistics
(unaudited)
Three Months Nine Months
Ended Ended
September 30, September 30,
------------- -------------
2009 2008 2009 2008
---- ---- ---- ----
Crude Oil and Condensate Sales Volumes (MBpd)
United States 39 38 37 41
West Africa 14 14 14 15
North Sea 8 12 7 10
Other International 4 3 4 4
-- -- -- --
Total consolidated operations 65 67 62 70
Equity method investee 2 2 2 2
-- -- -- --
Total sales volumes 67 69 64 72
-- -- -- --
Crude Oil and Condensate Realized Prices
($/Bbl)
United States $62.30 $93.47 $50.45 $87.84
West Africa 63.10 109.90 51.94 103.31
North Sea 69.56 117.44 57.61 114.42
Other International 62.75 106.03 49.76 73.37
----- ------ ----- -----
Consolidated average realized prices $63.36 $101.82 $51.55 $78.89
------ ------- ------ ------
Natural Gas Sales Volumes (MMcfpd)
United States 397 384 401 393
West Africa 228 194 238 212
North Sea 5 6 5 6
Israel 144 155 117 140
Other International 28 21 24 22
-- -- -- --
Total sales volumes 802 760 785 773
--- --- --- ---
Natural Gas Realized Prices ($/Mcf)
United States $3.05 $8.48 $3.36 $9.10
West Africa 0.27 0.27 0.27 0.27
North Sea 4.63 11.54 5.94 10.62
Israel 3.95 3.57 3.27 3.15
Other International - - - -
--- --- --- ---
Average realized prices $2.41 $5.31 $2.40 $5.50
----- ----- ----- -----
Natural Gas Liquids (NGL) Sales Volumes
(MBpd)
United States 10 10 10 10
Equity method investee 6 5 6 6
-- -- -- --
Total sales volumes 16 15 16 16
-- -- -- --
Natural Gas Liquids Realized Prices
($/Bbl)
United States $25.39 $57.06 $24.70 $57.39
Barrels of Oil Equivalent Volumes (MBoepd)
United States 115 111 113 117
West Africa 52 47 54 50
North Sea 9 13 8 11
Israel 24 26 20 23
Other International 9 7 8 8
-- -- -- --
Total consolidated operations 209 204 203 209
Equity method investee 8 7 8 8
-- -- -- --
Total barrels of oil equivalent (MBoepd) 217 211 211 217
--- --- --- ---
Barrels of oil equivalent volumes (MMBoe) 20 19 58 59
-- -- -- --
Schedule 4
Noble Energy, Inc.
Condensed Balance Sheets
(in millions)
(unaudited)
September 30, December 31,
-------------- ------------
2009 2008
---- ----
Assets
Current Assets
Cash and cash equivalents $926 $1,140
Accounts receivable, net 348 423
Commodity derivative assets 96 437
Other current assets 130 158
--- ---
Total current assets 1,500 2,158
Net property, plant and equipment 8,896 9,004
Goodwill 758 759
Other noncurrent assets 481 463
--- ---
Total Assets $11,635 $12,384
------- -------
Liabilities and Shareholders' Equity
Current Liabilities
Accounts payable - trade $397 $579
Other current liabilities 449 595
--- ---
Total current liabilities 846 1,174
Long-term debt 2,161 2,241
Deferred income taxes 1,905 2,174
Other noncurrent liabilities 565 486
--- ---
Total Liabilities 5,477 6,075
Total Shareholders' Equity 6,158 6,309
----- -----
Total Liabilities and Shareholders'
Equity $11,635 $12,384
------- -------
Schedule 5
Noble Energy, Inc.
Discretionary Cash Flow and Reconciliation to Operating Cash
Flow
(in millions, unaudited)
Three Months Nine Months
Ended Ended
September 30, September 30,
------------- -------------
2009 2008 2009 2008
---- ---- ---- ----
Adjusted Net Income (1) $193 $395 $412 $1,094
Adjustments to reconcile net
income to discretionary cash flow:
Depreciation, depletion and
amortization 205 194 601 593
Exploration expense 27 38 102 181
Interest capitalized (12) (7) (30) (23)
(Income) / distributions from
equity method investments, net 7 31 (15) 34
Deferred compensation adjustment 7 (47) 18 (25)
Deferred income taxes 51 81 96 199
Stock-based compensation expense 13 10 37 30
Settlement of previously
recognized hedge losses (2) - (43) - (144)
Other, net 8 5 (8) 20
-- -- -- --
Discretionary Cash Flow (3) $499 $657 $1,213 $1,959
---- ---- ------ ------
Reconciliation to Operating Cash
Flows
Net changes in working capital 62 281 11 (9)
Cash exploration costs (25) (29) (91) (103)
Capitalized interest 12 7 30 23
Current tax benefit (expense) of
net income adjustments (60) (196) (136) -
Gain on disposal of assets - - (24) -
Other adjustments - (7) (17) (3)
--- -- --- --
Net Cash Provided by Operating
Activities $488 $713 $986 $1,867
---- ---- ---- ------
Capital Expenditures, accrual
based $224 $786 $933 $1,832
(1) See Schedule 1, Reconciliation of Net Income (Loss) to Adjusted Net
Income.
(2) See Schedule 6, Effect of Derivative Instruments.
(3) The table above reconciles discretionary cash flow to net cash
provided by operating activities. While discretionary cash flow is not a
GAAP measure of financial performance, our management believes it is a
useful tool for evaluating our overall financial performance. Among our
management, research analysts, portfolio managers and investors,
discretionary cash flow is broadly used as an indicator of a company's
ability to fund exploration and production activities and meet financial
obligations. Discretionary cash flow is also commonly used as a basis to
value and compare companies in the oil and gas industry.
Schedule 6
Noble Energy, Inc.
Effect of Commodity Derivative Instruments
(in millions, unaudited)
Three Months Nine Months
Ended Ended
September 30, September 30,
------------- -------------
2009 2008 2009 2008
---- ---- ---- ----
Reclassification from Accumulated Other
Comprehensive Loss (AOCL) to Revenue (1)
Crude oil $(14) $(89) $(45) $(279)
Natural gas - (4) - 31
--- -- --- --
Total Revenue Decrease $(14) $(93) $(45) $(248)
---- ---- ---- -----
Gain (Loss) on Derivative Instruments
Crude oil
Realized $50 $(61) $212 $(140)
Unrealized (34) 559 (305) (121)
--- --- ---- ----
Total crude oil 16 498 (93) (261)
-- --- --- ----
Natural gas
Realized 71 (7) 201 (59)
Unrealized (115) 384 (203) 130
---- --- ---- ---
Total natural gas (44) 377 (2) 71
--- --- -- --
Total Gain (Loss) on Derivative Instruments $(28) $875 $(95) $(190)
---- ---- ---- -----
Summary of Cash Settlements
Cash settlements (received) paid $(107) $204 $(368) $591
Realized gain (loss) on derivative
instruments 121 (68) 413 (199)
Amounts reclassified from AOCL (14) (93) (45) (248)
--- --- --- ----
Settlement of previously recognized hedge
losses $- $43 $- $144
-- --- -- ----
(1) The amounts in AOCL represent deferred unrealized hedge gains and
losses. Upon settlement, these deferred gains and losses are
reclassified from AOCL to net income as increases or decreases to crude
oil and natural gas revenues, and impact reported realized commodity
prices.
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