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8-K - FORM 8-K - NOBLE ENERGY INC | h81695e8vk.htm |
Exhibit 99.1
NEWS RELEASE |
NOBLE ENERGY ANNOUNCES FIRST QUARTER 2011 RESULTS
HOUSTON (April 28, 2011) Noble Energy, Inc. (NYSE: NBL) reported today first quarter 2011 net
income of $14 million, or $0.08 per share diluted, on revenues of $899 million. The Companys first
quarter 2010 net income was $237 million, or $1.34 per share diluted, on revenues of $733 million.
First quarter 2011 net income includes items that are not typically considered by analysts in
published estimates. Excluding the impact of these items, which were primarily unrealized commodity
derivative losses and a rig standby charge in the deepwater Gulf of Mexico, first quarter 2011
adjusted net income(1) was $240 million, or $1.35 per share diluted. Adjusted net
income(1) for the first quarter of 2010 was $138 million, or $0.78 per share diluted.
Discretionary cash flow(1) for the first quarter 2011 was $576 million, compared to $447
million for the similar quarter in 2010. Net cash provided by operating activities was $484
million, and capital expenditures(2) were $545 million.
Key highlights for the first quarter 2011 include:
| Increased sales volumes 9 percent versus the first quarter 2010 to 215 thousand barrels of oil equivalent per day (MBoe/d) | ||
| Drilled 12 additional horizontal Niobrara wells in the DJ basin, 9 of which were located in the Wattenberg field | ||
| Received industrys first drilling permit post-moratorium to resume deepwater Gulf of Mexico drilling at the Santiago prospect | ||
| Finalized field development drilling and well completions at the Aseng oil project offshore Equatorial Guinea | ||
| Completed seismic acquisition of 3D data offshore Nicaragua and 2D data offshore France | ||
| Issued $850 million of 30-year unsecured notes and enhanced liquidity position to over $3.5 billion between cash and available credit |
Charles D. Davidson, Noble Energys Chairman and CEO, commented, Noble Energys first quarter has
delivered a great start to 2011. With high liquid volumes and pricing, combined with good cost
control, the business generated very strong cash flow. Our balance sheet was further fortified with
a successful debt offering, and as a result, the Company is in a very strong position.
Operationally, we remain focused on delivering production and cash flow growth from our base of
discovered resources and major project developments. We are excited to have active investment
programs ongoing in all four of our core areas, including development of our major projects, as
well as exploration, appraisal, and development drilling underway throughout our global portfolio.
Total sales volumes for the first quarter 2011 averaged 215 MBoe/d. Approximately 40 percent of the
Companys sales volumes were liquids, with 31 percent international natural gas, and the remainder
U.S. natural gas. Production volumes were 216 MBoe/d.
The Companys international sales volumes were 101 MBoe/d, a 25 percent increase versus the first
quarter 2010. Lower facility maintenance downtime and higher liquid liftings in Equatorial Guinea
resulted in a 15 MBoe/d increase. Natural gas sales in Israel were up 61 percent to 140 million
cubic feet per day (MMcf/d), with the higher volumes attributable to increased overall demand for
natural gas in power generation, as well as the impact of lower competing imports. In the North
Sea, strong performance and additional deliverability at Dumbarton and Lochranza accounted for
increased oil volumes. The Companys 2010 volumes included 30 MMcf/d of natural gas in Ecuador,
where the Companys production sharing contract was terminated in late 2010.
Noble Energys U.S. volumes were 114 MBoe/d for the first quarter of 2011. Winter storms reduced
the Companys onshore U.S. volumes in the first quarter 2011 by nearly 2 MBoe/d on average. In
addition, U.S. volumes do not include the approximately 6 MBoe/d of Mid-continent and Illinois
basin oil assets which were sold in the third quarter 2010. In the DJ basin, first quarter 2011
volumes averaged over 56 MBoe/d, up 12 percent from the first quarter 2010. The increase is
primarily attributed to ongoing vertical and horizontal drilling at Wattenberg, as well as the
impact of the asset acquisition that closed in the first quarter last year. The Company experienced
natural declines in various onshore natural gas plays and the deepwater Gulf of Mexico versus the
first quarter last year.
Global crude oil pricing averaged $97.15 per barrel for the first quarter 2011, up 31 percent from
the same period last year. Natural gas realizations in the U.S. averaged $4.07 per thousand cubic
feet (Mcf), down from $5.46 per Mcf in the first quarter 2010. In Israel, natural gas realizations
continue to benefit from strong global liquid markets, with pricing averaging $4.19 per Mcf.
Natural gas liquid pricing in the U.S. averaged $47.80 per barrel, or 52 percent of the Companys
average U.S. crude oil realization.
2
Total production costs per barrel of oil equivalent (Boe), including lease operating expenses,
production and ad valorem taxes, and transportation were down 6 percent from the first quarter of
2010 to $7.34 per Boe. Lease operating expense was $4.75 per Boe and depreciation, depletion, and
amortization was $11.42 per Boe. The Companys mix of production, with higher volumes in low-cost
areas such as Equatorial Guinea and Israel, contributed to lower per unit rates versus the first
quarter last year.
Exploration expense for the first quarter 2011 included $26 million of seismic expenditures,
including data acquisitions in the DJ basin, offshore Nicaragua and offshore France. General and
administrative expenses were up primarily related to increased staffing for the development of the
Companys major development projects. The Companys adjusted effective tax rate and deferred
portion were both 34 percent for the first quarter 2011.
Other operating income/expense includes an $18 million rig standby charge incurred as a result of
the time required to obtain deepwater Gulf of Mexico drilling permits post the moratorium. Included
in other income/expense for the first quarter 2011 is a $10 million deferred compensation charge
relating to the quarterly value change of Noble Energy stock held in a benefit program.
UPDATED GUIDANCE
The Companys original volume guidance for full year 2011 remains unchanged. Noble Energy expects
second quarter 2011 volumes to average 208 to 218 MBoe/d. Utilizing the midpoint of the range,
United States volumes should be fairly flat versus the first quarter, with growth from the DJ basin
development programs offsetting natural declines in the onshore natural gas and offshore areas.
International volumes are anticipated to be slightly lower as a result of planned downtime in the
North Sea and Equatorial Guinea.
Noble Energy has modified its full year interest expense guidance to range from $50 to $60 million
as a result of the recent debt offering. In addition, the Companys adjusted effective tax rate for
the year is now estimated to be 34 to 38 percent, driven by tax changes in the UK and Israel. All other annual guidance metrics remain within the original ranges.
(1) | A Non-GAAP measure, see attached Reconciliation Schedules |
3
(2) | Capital expenditures exclude a non-cash accrual related to construction progress to-date on the Aseng FPSO |
WEBCAST AND CONFERENCE CALL INFORMATION
Noble Energy, Inc. will host a webcast and conference call at 9:00 a.m. Central time today. The
webcast is accessible on the Investors page at www.nobleenergyinc.com. Conference call numbers
for participation are 800-479-9001 and 719-457-2601, passcode 9871975. A replay will be available
on the website.
Noble Energy is a leading independent energy company engaged in worldwide oil and gas exploration
and production. The Company has core operations onshore in the U.S., primarily in the DJ basin, in
the deepwater Gulf of Mexico, offshore Eastern Mediterranean, and offshore West Africa. Noble
Energy is listed on the New York Stock Exchange and is traded under the ticker symbol NBL. Further
information is available at www.nobleenergyinc.com.
Contacts:
David Larson
David Larson
(281) 872-3125 dlarson@nobleenergyinc.com
Brad Whitmarsh
(281) 872-3187 bwhitmarsh@nobleenergyinc.com
(281) 872-3187 bwhitmarsh@nobleenergyinc.com
This news release includes projections and other forward-looking statements within the meaning of
the federal securities laws. Such projections and statements reflect Noble Energys current views
about future events and financial performance. No assurances can be given that such events or
performance will occur as projected, and actual results may differ materially from those projected.
Risks, uncertainties and assumptions that could cause actual results to differ materially from
those projected include, without limitation, the volatility in commodity prices for crude oil and
natural gas, the presence or recoverability of estimated reserves, the ability to replace reserves,
environmental risks, drilling and operating risks, exploration and development risks, competition,
government regulation or other action, the ability of management to execute its plans to meet its
goals and other risks inherent in Noble Energys business that are detailed in its Securities and
Exchange Commission filings. Words such as anticipates, believes, expects, intends, will,
should, may, and similar expressions may be used to identify forward-looking statements. Noble
Energy assumes no obligation and expressly disclaims any duty to update the information contained
herein except as required by law. Investors are urged to consider closely the disclosures and risk
factors in our Forms 10-K and 10-Q, File No. 1-07964, available from Noble Energys offices or
website, http://www.nobleenergyinc.com. These forms can also be obtained from the SEC by calling
1-800-SEC-0330.
This news release also contains certain non-GAAP measures of financial performance that management
believes are good tools for internal use and the investment community in evaluating the Companys
overall financial performance. These non-GAAP measures are broadly used to value and compare
companies in the crude oil and natural gas industry.
-xxx-
4
Schedule 1
Noble Energy, Inc.
Reconciliation of Net Income to Adjusted Earnings
(in millions, except per share amounts, unaudited)
Noble Energy, Inc.
Reconciliation of Net Income to Adjusted Earnings
(in millions, except per share amounts, unaudited)
Three Months Ended | ||||||||
March 31, | ||||||||
2011 | 2010 | |||||||
Net Income |
$ | 14 | $ | 237 | ||||
Unrealized
(gains) losses on commodity derivative instruments |
303 | (147 | ) | |||||
Standby Rig expense [1] |
18 | | ||||||
Other adjustments |
8 | | ||||||
Total Adjustments before tax |
329 | (147 | ) | |||||
Income Tax Effect of Adjustments [2] |
(103 | ) | 48 | |||||
Adjusted Earnings [3] |
$ | 240 | $ | 138 | ||||
Adjusted Earnings Per Share |
||||||||
Basic |
$ | 1.37 | $ | 0.79 | ||||
Diluted |
1.35 | 0.78 | ||||||
Weighted average number of shares outstanding |
||||||||
Basic |
176 | 174 | ||||||
Diluted |
178 | 177 |
[1] | Amount represents stand-by rig expense incurred prior to receiving permit to resume drilling activities in the deepwater Gulf of Mexico. | |
[2] | The net tax effects are determined by calculating the tax provision for GAAP Net Income (Loss), which includes the adjusting items, and comparing the results to the tax provision for Adjusted Earnings, which excludes the adjusting items. The difference in the tax provision calculations represents the tax impact of the adjusting items listed here. The calculation is performed at the end of each quarter and, as a result, the tax rates for each discrete period may be different. | |
[3] | Adjusted earnings should not be considered a substitute for net income (loss) as reported in accordance with GAAP. Adjusted earnings is provided for comparison to earnings forecasts prepared by analysts and other third parties. Our management believes, and certain investors may find, that adjusted earnings is beneficial in evaluating our financial performance as it excludes the impact of significant non-cash items. We believe such measures can facilitate comparisons of operating performance between periods and with our peers. |
Schedule 2
Noble Energy, Inc.
Summary Statement of Operations
(in millions, except per share amounts, unaudited)
Noble Energy, Inc.
Summary Statement of Operations
(in millions, except per share amounts, unaudited)
Three Months Ended | ||||||||
March 31, | ||||||||
2011 | 2010 | |||||||
Revenues |
||||||||
Crude oil and condensate |
$ | 569 | $ | 407 | ||||
Natural gas |
203 | 229 | ||||||
NGLs |
58 | 52 | ||||||
Income from equity method investees |
48 | 26 | ||||||
Other revenues |
21 | 19 | ||||||
Total revenues |
899 | 733 | ||||||
Operating Expenses |
||||||||
Lease operating expense |
92 | 88 | ||||||
Production and ad valorem taxes |
32 | 34 | ||||||
Transportation expense |
18 | 17 | ||||||
Exploration expense |
70 | 80 | ||||||
Depreciation, depletion and amortization |
221 | 216 | ||||||
General and administrative |
83 | 66 | ||||||
Other operating (income) expense, net |
36 | 14 | ||||||
Total operating expenses |
552 | 515 | ||||||
Operating Income |
347 | 218 | ||||||
Other (Income) Expense |
||||||||
(Gain) loss on commodity derivative instruments |
286 | (145 | ) | |||||
Interest, net of amount capitalized |
16 | 20 | ||||||
Other (income) expense, net |
8 | | ||||||
Total other (income) expense |
310 | (125 | ) | |||||
Income Before Taxes |
37 | 343 | ||||||
Income Tax Provision (Benefit) |
23 | 106 | ||||||
Net Income |
$ | 14 | $ | 237 | ||||
Earnings Per Share |
||||||||
Basic |
$ | 0.08 | $ | 1.36 | ||||
Diluted |
0.08 | 1.34 | ||||||
Weighted average number of shares outstanding |
||||||||
Basic |
176 | 174 | ||||||
Diluted |
178 | 177 |
Schedule 3
Noble Energy, Inc.
Volume and Price Statistics
(unaudited)
Noble Energy, Inc.
Volume and Price Statistics
(unaudited)
Three Months Ended | ||||||||
March 31, | ||||||||
2011 | 2010 | |||||||
Crude Oil and Condensate Sales Volumes
(MBbl/d) |
||||||||
United States |
37 | 40 | ||||||
Equatorial Guinea |
13 | 8 | ||||||
North Sea |
11 | 9 | ||||||
China |
4 | 4 | ||||||
Total consolidated operations |
65 | 61 | ||||||
Equity method investee |
2 | 2 | ||||||
Total sales volumes |
67 | 63 | ||||||
Crude Oil and Condensate Realized
Prices ($/Bbl) |
||||||||
United States |
$ | 92.25 | $ | 73.80 | ||||
Equatorial Guinea |
103.49 | 73.34 | ||||||
North Sea |
106.26 | 77.06 | ||||||
China |
95.28 | 72.34 | ||||||
Consolidated average realized prices |
$ | 97.15 | $ | 74.12 | ||||
Natural Gas Sales Volumes (MMcf/d) |
||||||||
United States |
382 | 384 | ||||||
Equatorial Guinea |
248 | 194 | ||||||
Israel |
140 | 87 | ||||||
North Sea |
8 | 7 | ||||||
Ecuador |
| 30 | ||||||
Total sales volumes |
778 | 702 | ||||||
Natural Gas Realized Prices ($/Mcf) |
||||||||
United States |
$ | 4.07 | $ | 5.46 | ||||
Equatorial Guinea |
0.27 | 0.27 | ||||||
Israel |
4.19 | 4.20 | ||||||
North Sea |
7.30 | 5.42 | ||||||
Consolidated average realized prices |
$ | 2.91 | $ | 3.79 | ||||
Natural Gas Liquids (NGL) Sales
Volumes (MBbl/d) |
||||||||
United States |
14 | 13 | ||||||
Equity method investee |
5 | 4 | ||||||
Total sales volumes |
19 | 17 | ||||||
Natural Gas Liquids Realized Prices ($/Bbl) |
||||||||
United States |
$ | 47.80 | $ | 44.98 | ||||
Barrels of Oil Equivalent Volumes (MBoe/d) |
||||||||
United States |
114 | 116 | ||||||
Equatorial Guinea |
55 | 41 | ||||||
Israel |
23 | 15 | ||||||
North Sea |
12 | 10 | ||||||
Other International |
4 | 9 | ||||||
Total consolidated operations |
208 | 191 | ||||||
Equity method investee |
7 | 6 | ||||||
Total barrels of oil equivalent (MBoe/d) |
215 | 197 | ||||||
Barrels of oil equivalent volumes (MMBoe) |
19 | 18 | ||||||
Schedule 4
Noble Energy, Inc.
Condensed Balance Sheets
(in millions)
Noble Energy, Inc.
Condensed Balance Sheets
(in millions)
(unaudited) | ||||||||
March 31, | December 31, | |||||||
2011 | 2010 | |||||||
Assets |
||||||||
Current Assets |
||||||||
Cash and cash equivalents |
$ | 1,419 | $ | 1,081 | ||||
Accounts receivable, net |
565 | 556 | ||||||
Other current assets |
207 | 201 | ||||||
Total current assets |
2,191 | 1,838 | ||||||
Net property, plant and equipment |
10,561 | 10,264 | ||||||
Goodwill |
696 | 696 | ||||||
Other noncurrent assets |
519 | 484 | ||||||
Total Assets |
$ | 13,967 | $ | 13,282 | ||||
Liabilities and Shareholders Equity |
||||||||
Current Liabilities |
||||||||
Accounts payable trade |
$ | 897 | $ | 927 | ||||
Other current liabilities |
403 | 495 | ||||||
Total current liabilities |
1,300 | 1,422 | ||||||
Long-term debt |
2,801 | 2,272 | ||||||
Deferred income taxes |
2,175 | 2,110 | ||||||
Other noncurrent liabilities |
815 | 630 | ||||||
Total Liabilities |
7,091 | 6,434 | ||||||
Total Shareholders Equity |
6,876 | 6,848 | ||||||
Total Liabilities and Shareholders Equity |
$ | 13,967 | $ | 13,282 | ||||
Schedule 5
Noble Energy, Inc.
Discretionary Cash Flow and Reconciliation to Operating Cash Flow
(in millions, unaudited)
Noble Energy, Inc.
Discretionary Cash Flow and Reconciliation to Operating Cash Flow
(in millions, unaudited)
Three Months Ended | ||||||||
March 31, | ||||||||
2011 | 2010 | |||||||
Adjusted Earnings [1] |
$ | 240 | $ | 138 | ||||
Adjustments to reconcile adjusted earnings to discretionary cash flow: |
||||||||
Depreciation, depletion and amortization |
221 | 216 | ||||||
Exploration expense |
70 | 80 | ||||||
(Income)/distributions from equity method investments, net |
(23 | ) | (13 | ) | ||||
Deferred compensation expense |
10 | 2 | ||||||
Deferred income taxes |
43 | 8 | ||||||
Stock-based compensation expense |
14 | 14 | ||||||
Other |
1 | 2 | ||||||
Discretionary Cash Flow [2] |
$ | 576 | $ | 447 | ||||
Reconciliation to Operating Cash Flows |
||||||||
Net changes in working capital |
(100 | ) | 208 | |||||
Cash exploration costs |
(48 | ) | (41 | ) | ||||
Current tax expense of earnings adjustments |
70 | (28 | ) | |||||
Standy-by rig expense [3] |
(18 | ) | | |||||
Other adjustments |
4 | 2 | ||||||
Net Cash Provided by Operating Activities |
$ | 484 | $ | 588 | ||||
Capital expenditures (accrual based) |
$ | 545 | $ | 409 | ||||
DJ Basin asset acquisition |
| 509 | ||||||
Increase in FPSO lease obligation |
34 | 40 | ||||||
Total Capital Expenditures (Accrual Based) |
$ | 579 | $ | 958 | ||||
[1] | See Schedule 1, Reconciliation of Net Income to Adjusted Earnings. | |
[2] | The table above reconciles discretionary cash flow to net cash provided by operating activities. Adjustments for capitalized interest were retrospectively removed from our discretionary cash flow calculation as of March 31, 2011. While discretionary cash flow is not a GAAP measure of financial performance, our management believes it is a useful tool for evaluating our overall financial performance. Among our management, research analysts, portfolio managers and investors, discretionary cash flow is broadly used as an indicator of a companys ability to fund exploration and production activities and meet financial obligations. Discretionary cash flow is also commonly used as a basis to value and compare companies in the oil and gas industry. | |
[3] | Amount represents stand-by rig expense incurred prior to receiving permit to resume drilling activities in the deepwater Gulf of Mexico. |
Schedule 6
Noble Energy, Inc.
Effect of Commodity Derivative Instruments
(in millions, unaudited)
Noble Energy, Inc.
Effect of Commodity Derivative Instruments
(in millions, unaudited)
Three Months Ended | ||||||||
March 31, | ||||||||
2011 | 2010 | |||||||
Reclassification from Accumulated Other |
||||||||
Comprehensive Loss (AOCL) to Revenue [1] |
||||||||
Crude Oil |
$ | | $ | (5 | ) | |||
Natural Gas |
(1 | ) | ||||||
Total Revenue Decrease |
$ | | $ | (6 | ) | |||
Gain (Loss) on Commodity Derivative Instruments |
||||||||
Crude oil |
||||||||
Realized |
$ | (9 | ) | $ | (3 | ) | ||
Unrealized |
(273 | ) | 3 | |||||
Total crude oil |
$ | (282 | ) | $ | | |||
Natural gas |
||||||||
Realized |
26 | 1 | ||||||
Unrealized |
(30 | ) | 144 | |||||
Total natural gas |
(4 | ) | 145 | |||||
Total Gain (Loss) on Commodity Derivative Instruments |
$ | (286 | ) | $ | 145 | |||
Summary of Cash Settlements |
||||||||
Realized gain on commodity derivative instruments |
$ | 17 | $ | (2 | ) | |||
Amounts reclassified from AOCL |
| (6 | ) | |||||
Cash settlements received (paid) |
$ | 17 | $ | (8 | ) | |||
[1] | The amounts reclassified from AOCL represented deferred unrealized hedge gains and losses. All hedge gains or losses had been reclassified to revenues by December 31, 2010. |