NOBLE NET INCOME $227 MLN
NOBLE ENERGY - Noble Energy Announces Third Quarter 2018 Results, Including Nearly 30 Percent Year on Year
Operating Cash Flow Growth
- Delivered sales volumes of 345 MBoe/d, with all business units at or above the midpoint of guidance.
- Increased U.S. onshore liquids production to 172 MBbl/d, up 18 percent(1) compared to third quarter 2017. Achieved records for both U.S. onshore oil volumes at 109 MBbl/d and NGL volumes at 63 MBbl/d, driven by Delaware and DJ Basin growth.
- Sold a record of nearly 1.1 Bcfe/d of natural gas equivalents, gross, from the Company's Israel assets, driven by high power demand and coal displacement.
- Disciplined spending drove organic capital expenditures to the low end of guidance at $716 million, with total operating expenses also below expectations.
- Announced pipeline agreements for multiple transportation routes to supply natural gas from Tamar and Leviathan, offshore Israel, into Egypt.
- Received $358 million in asset sale proceeds, including the divestment of the Company's remaining CNXM units and the second closure of the Greeley Crescent sale in the DJ Basin, contributing to total financial liquidity at the end of the third quarter of $4.7 billion.
- Accelerated share repurchase program, deploying $103 million to repurchase 3.4 million Noble Energy shares in the third quarter, bringing total year-to-date repurchased to $233 million.
- Noble Midstream Partners achieved record gathering throughput while expanding new gathering and pipeline opportunities in the Delaware Basin.
David L. Stover, Noble Energy's Chairman, President and CEO, commented, "We achieved a number of key operational and strategic objectives in the third quarter, reflecting our team's continued hard work and execution. Strong volumes across all business units, cost management, and improved price realizations delivered our highest quarterly operating cash flow in the last four years. During the quarter, we accelerated the return of capital to shareholders, allocating $157 million to share repurchases and dividends. With a deep inventory of high-return projects across our global portfolio and disciplined capital allocation, we are poised to deliver differentiated shareholder returns."
Third Quarter 2018 Results
The Company reported third quarter net income attributable to Noble Energy of $227 million, or $0.47 per diluted share. Net income including noncontrolling interest was $248 million. Excluding the impact of items not typically considered by analysts in formulating estimates, the Company generated adjusted net income(2) and adjusted net income per share(2) attributable to Noble Energy for the quarter of $129 million, or $0.27 per diluted share. Adjustments were primarily the Company's mark to market on unrealized commodity derivative positions and gains on divestitures.
Adjusted EBITDAX(2) was $766 million and operating cash flow was $697 million, representing increases of 23 percent and 29 percent, respectively, from the third quarter 2017.
Total company sales volumes for the third quarter 2018 were 345 thousand barrels of oil equivalent per day (MBoe/d), at the upper end of the Company's guidance range. Compared to the third quarter 2017, sales volumes increased by eight percent (1) due primarily to higher volumes from the Company's Delaware and DJ Basin assets. U.S. onshore production comprised 72 percent of total volumes in the third quarter 2018, with West Africa representing 16 percent and Israel representing 12 percent. Liquids were 55 percent of total sales volumes for the third quarter 2018.
Unit operating expenses for the third quarter 2018, including lease operating expenses (LOE), production and ad valorem taxes, gathering, transportation and processing expenses (GTP), other royalty expense and marketing costs totaled $8.96 per barrel of oil equivalent (BOE). Compared to the third quarter 2017, per unit combined LOE and GTP decreased by seven percent, benefitted by low-cost DJ and Delaware Basin volume growth as well as the divestment of higher cost Gulf of Mexico assets earlier in 2018.
Income from equity method investees for the quarter totaled $44 million, primarily from the Company's operations in West Africa, driven by strength in oil and global methanol pricing. Other income in the third quarter included $17 million in dividend income from the Company's ownership of Tamar Petroleum Ltd. ("TMRP").
Interest expense in the third quarter of $70 million decreased 20 percent from the third quarter 2017. This was driven by a $1.2 billion debt reduction for Noble Energy, including repaying the Noble Energy term loan, redeeming the legacy Rosetta Resources Inc. notes and refinancing higher coupon bonds.
Third quarter 2018 organic capital investments attributable to Noble Energy totaled $716 million. The Company spent $505 million related to U.S. onshore upstream activities and $29 million for Noble Energy's portion of Noble Midstream Partners LP ("NBLX") (NYSE: NBLX) capital. Consolidated capital expenditures included an additional $40 million in expenditures funded by NBLX. U.S. onshore capital was lower by more than $100 million from the second quarter 2018, primarily due to lower midstream spend from the infrastructure build-out completed in the first half of 2018 and lower completion activity in the Delaware. The Company's capital expenditures in Israel were $172 million, primarily for the development of the Leviathan project, and $10 million in West Africa and other corporate expenditures.
The results for NBLX are consolidated into Noble Energy's financial statements. Midstream Services Revenue of $21 million for the quarter was primarily composed of NBLX's gathering revenue from unaffiliated third parties. The public's 55 percent ownership of third quarter net income attributable to NBLX, $21 million, has been excluded from net income attributable to Noble Energy.
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