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Why Is Noble (NBL) Up 6.3% Since Last Earnings Report?

Zacks Equity Research

It has been about a month since the last earnings report for Noble Energy (NBL). Shares have added about 6.3% in that time frame, outperforming the S&P 500.

Will the recent positive trend continue leading up to its next earnings release, or is Noble due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.

Noble Energy Q3 Loss Narrower Than Expected, Sales Lag

Noble Energy, Inc.  incurred an adjusted loss of 10 cents per share in third-quarter 2019, narrower than the Zacks Consensus Estimate of a loss of 11 cents.

Total Revenues

Noble Energy's total revenues were $1,119 million, lagging the Zacks Consensus Estimate of $1,122 million by 0.3%. Revenues also declined 12.1% from the year-ago quarter’s $1,273 million.

Operational Results

In the quarter under review, sales volume averaged 385 thousand barrels of oil equivalent per day (MBoe/d), up 12% from the year-ago level. U.S. onshore volumes averaged 293 MBoe/d in the third quarter.

Operating expenses in the reported quarter were $1,128 million, up 45.5% from the year-ago period.
 
Interest expenses in the reported quarter were $67 million, up 4.3% from the year-ago period. During the quarter, the company refinanced debts, which will help it to lower interest expenses by $4 million annually.

Notably, the offshore Leviathan project is 96% complete. First production from Leviathan is now expected in December 2019. Total gross capital for the project has been reduced $150 million to $3.6 billion.

Realized Prices

U.S. onshore realized crude oil and condensate prices in the reported quarter dropped 15.9% to $55.13 per barrel from the year-ago level of $65.54.

U.S. onshore natural gas prices were $1.57 per thousand cubic feet, down 32% year over year.

U.S. onshore realized prices for natural gas liquids also declined 60.9% to $11.18 per barrel.

Financial Highlights

Noble Energy's cash and cash equivalents as of Sep 30, 2019 were $473 million compared with $716 million on Dec 31, 2018.

Long-term debt was $6,941 million as of Sep 30, 2019 compared with $6,574 million on Dec 31, 2018.

Cash flow from operating activities in the quarter under review was $437 million, down from $697 million in the prior-year quarter.

Guidance

Noble Energy lowered its 2019 capital expenditure view by $200 million to $2.3 billion.

For fourth-quarter 2019, Noble Energy expects U.S. onshore oil volumes in the range of 276-288 MBoe/d. The company anticipates total fourth-quarter volumes in the range of 364-376 MBoe/d.

Furthermore, the company intends to make organic capital expenditures worth $425-$475 million in the fourth quarter.

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed a downward trend in fresh estimates. The consensus estimate has shifted -23.86% due to these changes.

VGM Scores

At this time, Noble has a subpar Growth Score of D, though it is lagging a bit on the Momentum Score front with an F. However, the stock was allocated a grade of B on the value side, putting it in the second quintile for this investment strategy.

Overall, the stock has an aggregate VGM Score of D. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, Noble has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.



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