We retain our Neutral recommendation on Noble Energy Inc. (NBL). The oil and gas exploration as well as production operator currently carries a Zacks Rank #3 (Hold).
Why the Reiteration?
Noble Energy recorded yet another earnings surprise in the second quarter of 2013 backed by production ramp-up in the U.S. onshore assets as well as rising natural gas sales from the Tamar field, off the coast of Israel.
The reiteration, however, takes into account the increasing political disturbance in the Middle East and West Africa as well as the highly volatile oil and gas price conditions. The current conflict in Syria has lent a hand in the fluctuating oil price trend.
New emerging plays like the Troubadour discovery in the Gulf of Mexico and the Karish prospect in Israel will offer significant growth opportunities in the years ahead. Noble Energy’s agreement with the Cyprus government for the creation of a liquefied natural gas export terminal will also help strengthen the company’s operations in the Eastern Mediterranean.
Nonetheless, the threat of operational disruption from severe storms might put the company’s operations at risk. Notably, most of Noble’s assets are located offshore.
Finally, accelerated horizontal programs at the Niobrara basin and anticipated service start-ups of the Kyoto and Tioga gas plants in Colorado and North Dakota, respectively, will substantially benefit Noble.
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