What happened

Shares of Noble Energy, Inc. (NYSE:NBL) bounced higher on Tuesday and were up 11% at 2:30 p.m. EST. Fueling the oil stock's rise was its strong fourth-quarter results and a bullish outlook for the coming years.

So what

Noble Energy ended 2017 on a positive note, producing $156 million, or $0.32 per share, of adjusted net income. That was not only an improvement from the $0.26 per share it pulled in during the year-ago period, it also blew past the consensus estimate by an impressive $0.28 per share. A 40.5% increase in output from higher-margin U.S. resources plays, a $7.14-per-barrel improvement in pricing, and a 50% drop in operating expenses helped fuel the company's expectation-trouncing results.

A barrel standing on a grey floor with money bursting out of it with a happy businessman in a suit celebrating next to it.

Image source: Getty Images.

As good as Noble Energy's fourth-quarter results were, the company expects even better ones in the coming years. The company said that it would spend about $2.8 billion in capital to develop its oil and gas properties per year through 2020, which is about 6% more than last year. However, that capital should drive 20% compound annual production growth over that time frame. Further, cash flow should rise by an even higher 35% compound annual growth rate as long as oil averages $50 a barrel. That cash flow growth rate is well above most peers, with Pioneer Natural Resources (NYSE:PXD) and Encana (NYSE:ECA), for example, expecting cash flow to grow at compound annual rates of 20% and 25%, respectively. Though, in Pioneer Natural Resources' case, it hopes to maintain that 20% rate through 2026, while Encana's estimate runs through 2022.

Noble Energy's forecast suggests that it will generate a growing stream of free cash flow in the coming years. That positions the company to return even more money to investors above its recently announced $750 million share buyback program. It probably won't be alone, since larger buybacks are also likely for both Pioneer and Encana after the two oil stocks authorized $100 million and $400 million in share repurchases this year.

Now what

Noble Energy is one of a growing number of shale drillers that are transforming into cash flow machines. Further, like rivals, it only needs oil in the $50s to fuel its growth engine, which means it could produce even more excess cash if oil stays in the $60s or heads higher. The forecast suggests that this oil stock could have plenty of fuel to continue running higher.

Matthew DiLallo has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.