Noble Energy Earnings: What You Need to Know

A look at Noble Energy’s first-quarter financial results and what to expect from the company in the years ahead.

Apr 25, 2014 at 2:00PM

Noble Energy (NYSE:NBL), the Houston-based independent oil and gas producer, reported first-quarter financial results on Thursday. Though the company's profit fell 23% compared to the year-earlier quarter, it continues to make solid progress in growing production from its core assets in the U.S. and Israel. Let's take a closer look at Noble's first-quarter performance and what to expect from the company going forward.


Photo Credit: Wikimedia Commons.

First-quarter highlights
Noble reported first-quarter earnings of $200 million, or $0.55 a share, down from $261 million, or $0.72 a share, a year earlier. Revenue jumped 21% to $1.38 billion. Excluding one-time items, the company reported earnings of $298 million, or $0.82 a share, handily surpassing analyst expectations of $0.75 per share on revenue of $1.32 billion.

Despite the year-over-year decline in profit, which was due largely to a 36% year-over-year increase in operating expenses, the company delivered strong growth in production. Total sales volumes jumped 20% compared to the first quarter of last year, to 286,000 barrels of oil equivalent per day, or MBoe/d, adjusted for asset sales.

This growth was led mainly by continued strong performance from the company's onshore U.S. operations, as well as higher volumes from Israel and West Africa. Production from Noble's DJ Basin and Marcellus shale plays surged by 60% year over year to a record average of 100 MBoe/d, while international sales volume jumped 23% thanks to major project start-ups at Tamar in Israel and the Alen condensate field in Equatorial Guinea.

In addition to strong production growth, the company also made major progress in securing export deals to supply gas from its offshore Tamar and Leviathan gas fields, two of the largest offshore gas discoveries of the past decade. In March, it signed a production agreement with the Israeli Anti-Trust Authority and received a 30-year development and production lease for the Leviathan field -- crucial advances for the project to move forward into the development phase.

Last but not least, Noble looks stronger than ever from a financial perspective. First-quarter capital expenditures of $950 million were only slightly higher than its discretionary cash flow of $870 million and operating cash flow of $929 million. The company closed out the quarter with $1.4 billion in cash and liquidity of $4.9 billion, while maintaining a healthy net debt-to-book cap ratio of 29%.

What to expect from Noble going forward
Going forward, Noble will continue to focus the bulk of its capital on onshore U.S. operations and Tamar, which will be its primary drivers of growth over the next few years. The company continues to see strong improvements in costs and recovery rates from employing tighter spacing between wells and from greater use of extended-reach lateral wells in both the DJ Basin and the Marcellus.

As the company conducts additional downspacing tests and drills more wells using extended-reach laterals, investors can expects costs and recovery rates to improve further, boosting returns. In Israel, Noble expects to significantly boost the deliverability of gas volumes from Tamar once it brings online its onshore compression project at Ashdod by mid-2015. 

Meanwhile, deepwater projects such as Big Bend, Dantzler, and Gunflint will double Noble's production in the Gulf of Mexico after they come online in 2015 and 2016 . Reflecting the company's confidence in continued double-digit production growth and strong cash flow growth, Noble's board recently authorized a 29% increase in its quarterly dividend. This was the eighth year out of the past 10 that the company has increased its payout to shareholders. 

At the same time, Noble continues to whittle down its portfolio by divesting noncore assets. So far this year, the company has announced asset sales in East Texas, North Louisiana, Wyoming's Powder River Basin, and the Tri-State field located at the borders of Colorado, Kansas, and Nebraska. Noble is also working on an agreement to divest offshore assets in China's Bohai Bay by midyear.

The takeaway
Noble maintains a large, diverse, and growing portfolio of both oil-rich and gassy assets that should provide several years of highly profitable, double-digit production growth. Though the company's exceptional growth prospects are largely reflected in its stock price -- shares trade at nearly 19 times forward earnings -- Noble's various exploratory prospects in the Gulf of Mexico and West Africa could offer considerable upside in terms of production and cash flow growth.

Will this stock be your next ten bagger?
While Noble Energy is poised to deliver ever stronger production and cash flow growth in the years ahead, there's a huge difference between a good stock and a stock that can make you rich. The Motley Fool's chief investment officer has selected his No. 1 stock for 2014, and it's one of those stocks that could make you rich. You can find out which stock it is in the special free report "The Motley Fool's Top Stock for 2014." Just click here to access the report and find out the name of this under-the-radar company.


Arjun Sreekumar has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

4 in 5 Americans Are Ignoring Buffett's Warning

Don't be one of them.

Jun 12, 2015 at 5:01PM

Admitting fear is difficult.

So you can imagine how shocked I was to find out Warren Buffett recently told a select number of investors about the cutting-edge technology that's keeping him awake at night.

This past May, The Motley Fool sent 8 of its best stock analysts to Omaha, Nebraska to attend the Berkshire Hathaway annual shareholder meeting. CEO Warren Buffett and Vice Chairman Charlie Munger fielded questions for nearly 6 hours.
The catch was: Attendees weren't allowed to record any of it. No audio. No video. 

Our team of analysts wrote down every single word Buffett and Munger uttered. Over 16,000 words. But only two words stood out to me as I read the detailed transcript of the event: "Real threat."

That's how Buffett responded when asked about this emerging market that is already expected to be worth more than $2 trillion in the U.S. alone. Google has already put some of its best engineers behind the technology powering this trend. 

The amazing thing is, while Buffett may be nervous, the rest of us can invest in this new industry BEFORE the old money realizes what hit them.

KPMG advises we're "on the cusp of revolutionary change" coming much "sooner than you think."

Even one legendary MIT professor had to recant his position that the technology was "beyond the capability of computer science." (He recently confessed to The Wall Street Journal that he's now a believer and amazed "how quickly this technology caught on.")

Yet according to one J.D. Power and Associates survey, only 1 in 5 Americans are even interested in this technology, much less ready to invest in it. Needless to say, you haven't missed your window of opportunity. 

Think about how many amazing technologies you've watched soar to new heights while you kick yourself thinking, "I knew about that technology before everyone was talking about it, but I just sat on my hands." 

Don't let that happen again. This time, it should be your family telling you, "I can't believe you knew about and invested in that technology so early on."

That's why I hope you take just a few minutes to access the exclusive research our team of analysts has put together on this industry and the one stock positioned to capitalize on this major shift.

Click here to learn about this incredible technology before Buffett stops being scared and starts buying!

David Hanson owns shares of Berkshire Hathaway and American Express. The Motley Fool recommends and owns shares of Berkshire Hathaway, Google, and Coca-Cola.We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

©1995-2014 The Motley Fool. All rights reserved. | Privacy/Legal Information