Exploration & Production | Quarterly / Earnings Reports | Second Quarter (2Q) Update
Noble Sees Record HZ Production in 2Q; Talks Ops
Email
Print 
Bookmark
Noble Energy, Inc. reported second quarter 2014 net income of $192 million, or $0.52 per diluted share on total revenues of $1.4 billion.
Excluding the impact of certain items, which would typically not be considered by analysts in published earnings estimates, second quarter 2014 adjusted income was $318 million, or $0.87 per diluted share. Discretionary cash flow was $887 million and net cash provided by operating activities was $827 million. Capital expenditures for the second quarter of 2014 totaled $1.3 billion.
Key highlights for the second quarter of 2014 include:
- Delivered record horizontal production of 112 thousand barrels of oil equivalent per day (MBoe/d) from the DJ Basin and Marcellus Shale plays, 56 percent higher than second quarter of last year
- Increased wet gas type curves 10 percent for wells in the Majorsville area of the Marcellus Shale play
- Announced plans to form Marcellus midstream MLP
- Exploration discovery made at the Katmai prospect located in the Gulf of Mexico
- Acquired interest in 17 exploration lease blocks in the Atwater Valley area of the Gulf of Mexico and spud initial prospect
- Leviathan resource estimate increased 16 percent to 22 trillion cubic feet equivalent (Tcfe) of natural gas
- Signed two regional export letters of intent for natural gas sales to LNG facilities in Egypt.
- Closed China asset sale, receiving $186 million in proceeds
Charles D. Davidson, Noble Energy's Chairman and CEO, commented, "We continued to make great progress on numerous fronts during the second quarter and find ourselves well-positioned to accelerate our growth profile in the second half of 2014 and into 2015. Our U.S. onshore horizontal programs have set yet another quarterly volume record and new completion techniques are enhancing well performance in both the DJ Basin and Marcellus programs. Our Gulf of Mexico program has built significant momentum with a commercial oil discovery at Katmai, as well as by adding a significant new lease position with attractive and sizeable prospects. In the meantime, development work is rapidly proceeding on prior Gulf discoveries, which will begin to deliver new production in 2015. In West Africa, both Aseng and Alen reached production milestones in the quarter. Finally in the Eastern Mediterranean, we have announced letters of intent with two new customers for over 1.1 Bcf/d that support the expansion at Tamar and first phase of Leviathan development. I am excited about the progress we are making and our outlook for the coming months and years."
Operations Update
Noble has updated its E&P operations for the second quarter, which can be accessed below:
Noble's DJ Basin Plug-N-Perf Wells Outperform
Noble's Marcellus Majoresville Wells Credited for Record Gas Output
Noble Sees Strong GoM Performance; Hits West Africa Milestone
Volumes & Prices
Second quarter 2014 sales volumes averaged 290 MBoe/d, an increase of 14 percent compared to the second quarter of 2013, after adjusting for divested assets. Total liquid sales were up 18 percent. U.S. sales volumes comprised 57 percent of the total and the remaining 43 percent came from International operations. U.S. volumes increased 25 percent, after adjusting for divested assets, driven by the continued horizontal development of the Marcellus Shale and DJ Basin plays. Internationally, volumes were up slightly as Alen volumes in Equatorial Guinea, which started up in the third quarter of last year, more than offset natural declines at Aseng.
Global crude oil and condensate prices averaged $102.53 per barrel for the second quarter of 2014. Natural gas realizations averaged $4.24 per thousand cubic feet (Mcf) in the U.S. and $5.57 per Mcf in Israel. Natural gas liquid pricing in the U.S. averaged 34 percent of the average West Texas Intermediate crude oil price for the quarter.
Expenses
Second quarter 2014 total production costs, including lease operating expense (LOE), production and ad valorem taxes, and transportation and gathering averaged $9.40 per barrel of oil equivalent (Boe). LOE and depreciation, depletion and amortization (DD&A) per Boe were $5.84 and $15.65, respectively. Exploration expense for the quarter was $59 million, which had no substantial dry hole costs or seismic expenditures. General and administrative expenses reflected an increase in staffing for major development and exploration activities.
Included in the adjustments to net income for the second quarter of 2014 were gains associated with non-core property sales, impairments to reflect the updated estimate of abandonment cost on non-producing properties and a non-cash commodity derivative loss. The effective tax rate on adjusted earnings for the quarter was 22 percent and the deferred portion of taxes on adjusted earnings was 63 percent.
UPDATED GUIDANCE
Volumes for third quarter 2014 are anticipated to be between 290 and 305 MBoe/d and the fourth quarter volumes to range from 310 to 330 MBoe/d. These second half estimates are lower than earlier expectations primarily due to more conservative assumptions in the DJ Basin for infrastructure capacity and timing of well tie-ins. Infrastructure capacity constraints are related to higher than expected third-party midstream downtime, high field line pressures and the carryover impacts from facility enhancements. Included in the third quarter estimate is a 12 MBbl/d oil reduction versus the second quarter attributable to a significant underlifting in Equatorial Guinea, as well as the China asset sale. The third quarter estimate also included a reduced assumption for natural gas sales in Israel as a result of the ongoing conflict.