Upbeat Q3 Earnings at Noble
Noble Energy Inc. (NBL) reported adjusted earnings per share of 97 cents for the third quarter 2013, edging out the Zacks Consensus Estimate by 1.04%. The quarterly results, however, increased by a whopping 136.6% from year-ago earnings of 41 cents per share.
The earnings growth stemmed from increased production activities in the domestic plays as well as higher sales from Noble Energy’s Tamar natural gas field and Alen condensate field in offshore Israel and Equatorial New Guinea, respectively.
GAAP earnings during the quarter were 56 cents compared with 61 cents in the year-ago period. The difference between GAAP and operating figures during the quarter was due to a 41 cent loss from unrealized commodity derivative instruments, an 18 cent loss from asset impairments and a 2 cent loss from other adjustments offset by a 3 cent gain from discontinued operations and a 17 cent gain from income tax adjustments.
Total Revenue
Noble Energy's total revenue increased 38.7% year over year to $1,394.0 million in the third quarter. Quarterly revenue beat the Zacks Consensus Estimate of $1,387.0 million.
The year-over-year rise in revenue was due to a 35.4% and a 79.9% jump in crude oil and condensates as well as natural gas sales, respectively, as compared to the year-ago quarter.
Operational Results
Noble Energy's sales volume in the quarter surged 26% year over year to 293 thousand barrels of oil equivalent per day (MBoe/d). Domestic sales volumes outstripped domestic production due to the timing of liftings in Equatorial New Guinea. The sales volume mix comprised 43% natural gas liquids, 29% international gas and 28% U.S. gas.
In the U.S., Marcellus and Denver/Julesburg ("DJ") basins continued with its production streak. Total domestic volumes in the third quarter 2013 upped 22% year over year to 159 MBoe/d. Production was partially tempered by a storm flood in northern Colorado.
International volumes followed suit, increasing sharply by 33% year over year to 134 MBoe/d owing to the early start-up of the Alen prospect and rising sales from the Tamar play.
Production costs including lease operating expenses, production and ad valorem taxes, and transportation were up 15.5% to $8.20 per barrel of oil equivalent (Boe) from the third quarter of 2012.
Total operating expenses increased 56.9% year over year to $871.0 million due to a 64.52% rise in production expenses.
Operating income in the quarter climbed 16.2% to $523.0 million from the year-ago period. The magnitude increase in revenues was more than offset by the magnitude increase in operating expenses.
Realized Prices
Realized oil prices in the quarter rose 5.7% year over year to $104.95 per barrel owing to favorable crude oil prices in the U.S.
Natural gas realizations for the company escalated 45.3% year over year to $3.11 per thousand cubic feet due to strong gas prices in the U.S. and Israel.
Realized prices for natural gas liquids moved up 5.2% to $31.26 per barrel from $29.71 per barrel in the year-ago quarter.
Financial Highlights
Noble Energy's cash and cash equivalents as of Sep 30, 2013 were $938.0 million versus $1,387.0 million as of Dec 31, 2012.
Long-term debts as of Sep 30, 2013 were $4,352.0 million versus $3,736.0 million as of Dec 31, 2012.
Discretionary cash flow for the third quarter was $984.0 million versus $710.0 million in the prior-year quarter.
Guidance
Noble Energy estimates fourth quarter sales volume to average 280 MBoe/d to 285 MBoe/d. The company expects solid production growth from its U.S. onshore and Gulf of Mexico plays in the fourth quarter which will be tempered by the recent DJ Basin acreage exchange and sale of San Juan assets as well as the short-term impact from the Colorado flood.
International sales volumes will also be affected by an under-lift in Equatorial Guinea and seasonal demand in Israel.
Other Oil & Gas Company Releases
Anadarko Petroleum Corp. (APC) is expected to release third quarter results on Nov 4, 2013. The Zacks Consensus Estimate for the quarter is $1.19.
Quicksilver Resources Inc. (KWK) earnings are set to release on Nov 5, 2013. The Zacks Consensus Estimate for the quarter is at a loss of 5 cents per share.
Abraxas Petroleum Corp. (AXAS) is expected to bring out third quarter results on Nov 6, 2013. The Zacks Consensus Estimate for the quarter is 4 cents per share.
Our View
Noble Energy reported impressive financial results in the third quarter of 2013 with the top and bottom line beating our expectations. The DJ and Marcellus Basins will continue to act as key sales drivers for the company. Moreover, its exploration ventures in Eastern Mediterranean are expected to fetch lucrative returns. Noble Energy currently retains a Zacks Rank #3 (Hold).
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