Noble Provides Favorable Guidance - Analyst BlogFriday, December 07, 2012
Texas-based, Noble Energy Inc. (NBL) revised its outlook for the fourth quarter 2012 and provided guidance for capital outlay for 2013. Exploration activities are expected to be the highlight of the company’s 2013 capital program which includes seeking material options for business growth.
The company estimates fourth quarter sales volume from continuing operations to be above the high end of the previously estimate range of 248–252 thousand barrels of oil equivalent per day (MBoe/d). Currently, Noble Energy expects average sales in the range of 252–256 MBoe/d, reflecting a 4 MBoe/d upside from the earlier estimate. Continued ramp-up in production at the Denver/Julesburg (DJ) basin in Colorado led the company to push up its sales outlook.
For the fourth quarter 2012, exploration expenses witnessed a dip in its guidance level to the range of $110–$130 million from the prior $160–$200 million on the back of favorable drilling results in the Carla appraisal well in Equatorial Guinea and the Big Bend discovery in the deepwater Gulf of Mexico. The drilling costs for offshore Falkland based Scotia prospect were not provided by the company as the well is presently under evaluation.
Fiscal Year 2013 Guidance
Excluding the final installment pay of $328 million related to the Marcellus purchase, Noble Energy’s targeted capital investment is set at $3.9 billion for the year 2013. Overseas exploration and appraisal activity will get 15% of the entire capital. The company’s onshore U.S. plays will receive 60% of the total capital while 6%, 15% and 10% will go to deepwater Gulf of Mexico, West Africa and Eastern Mediterranean prospects, respectively. The company’s Falkland, Nevada and Nicaragua operations have also secured a place in the capital program.
The company’s West African and Eastern Mediterranean prospects represent $500 million and $400 million in investment, respectively. At the Alen liquid play, the company estimates first production to come sooner than scheduled. Presently, Noble Energy anticipates the West African project to come online in the third quarter 2013. In addition, the company plans to appraise its liquids-rich Carla and Diega assets in West Africa. In eastern Mediterranean, the Tamar natural gas prospect is expected to come online by April 2013. Additionally, the company plans to go ahead with a Mesozoic oil test and appraisal work as well as conduct flow tests at Leviathan along with evaluation of other natural gas prospects.
In domestic operations, DJ Basin holds the maximum share in the company’s capital outlay. The basin will see investments worth $1.7 billion to expedite the pace of Noble’s horizontal Niobrara drilling program in 2013. Noble Energy intends to add 60 extended-reach lateral wells in the Wattenberg play. A planned expenditure of $750 million in the Marcellus shale will help in drilling 140 joint venture wells along with a targeted 85 wells in the liquids concentrated area. The deepwater Gulf of Mexico will get $250 million for the execution of its exploration programs and appraisal drilling of Gunflint through a one-rig project.
With these broad investment initiatives, Noble Energy expects sales volumes for 2013 to average in the band of 270–282 MBoe/d indicating a 20% year-over-year increase at the midpoint of the range excluding gains from domestic property sales in 2012. Overall crude oil and natural gas sales volume will witness 23% and 16% growth, respectively. Liquids volume will contribute 46% of the total volume in 2013 whereas international operations are expected to grow 20%.
We believe the company will accrue a substantial return from these assets in the future. The ongoing developments at the various prospects bear evidence to Noble Energy’s effective project execution capabilities.
Noble Energy currently retains a short-term Zacks #3 Rank (Hold rating). The Zacks Consensus Estimates for the fourth quarter and full year 2012 are presently pegged at $1.01 per share and $4.52 per share, respectively.
Another exploration and production operator with a Zacks #3 Rank is Anadarko Petroleum Corporation (APC). Recently, the company provided an operational update on its core assets – Wattenberg in Colorado, Eagleford Shale in Texas, Greater Natural Buttes in Utah and Marcellus Shale in Pennsylvania – with output from each surpassing the gross production mark of 100,000 barrels of oil equivalent per day (BOE/d) during November 2012.
Noble Energy is an independent exploration and production company, having high-grade hydrocarbon assets across the U.S. and several international locations.
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