Noble Energy Beats on Q2 Earnings, Revenues Fall Short - Analyst Blog

Noble Energy, Inc. NBL reported adjusted earnings of 26 cents per share in the second quarter of 2015, surpassing the Zacks Consensus Estimate by 333.3%. However, quarterly earnings slumped 70.5% from the prior-year figure due to a significant decline in commodity prices.

 

Noble Energy Inc. - Earnings Surprise | FindTheBest

On a GAAP basis, the company incurred a loss of 28 cents per share as against earnings of 52 cents a year ago. The variance between adjusted and GAAP figures was due to the combined impact of gains on commodity derivative instruments, deferred compensation, asset impairments and other adjustments.

Total Revenue

Noble Energy's total revenues of $730 million missed the Zacks Consensus Estimate by 14.7% in the second quarter. Revenues also decreased around 47.2% year over year.

Operational Results

In the quarter under review, sales volume averaged 299 thousand barrels of oil equivalent per day (MBoe/d), an increase of 3% year over year, or 7% after adjusting for divestitures. U.S. sales volume constituted 67% of total sales, while international volume accounted for the balance. In the U.S., the Denver/Julesburg (DJ) Basin and the Marcellus Shale were once again the prime volume drivers.

Noble Energy's total operating expenses during the quarter increased 4.3% year over year to around $891 million mainly due to higher transportation and gathering expenses and depreciation, depletion and amortization expenses.

Interest expenses in the reported quarter were $54 million, up 3.8% year over year.

Realized Prices

Realized crude oil and condensate prices in the quarter sunk 46.4% to $54.91 per barrel from $102.33 per barrel in the year-ago period owing to lower prices in both domestic and international markets.

Natural gas realizations also decreased 34.3% year over year to $2.30 per thousand cubic feet (Mcf) due to a drop in prices in the U.S. and Israel.

Realized prices for natural gas liquids plunged 72.2% year over year to $9.64 per barrel.

Financial Highlights

Noble Energy's cash and cash equivalents as of Jun 30, 2015 were $1.27 billion compared with $1.18 billion as of Dec 31, 2014.

Long-term debts as of Jun 30, 2015 were $6.11 billion, nearly flat with $6.10 billion as of Dec 31, 2014.

Operating cash flow from operating activities in the quarter was $424 million compared with $827 million in the second quarter of 2014.

The company’s capital expenditure in the second quarter was $807 million compared with $1,288 million a year ago.

Guidance

Noble Energy raised the total sales volume guidance for 2015, prior to the inclusion of Rosetta assets, to the range of 305–320 MBoe/d from an earlier projection of 300–315 MBoe/d.

Noble Energy anticipates sales volume to be 345 to 365 MBoe/d during third quarter, while fourth quarter sales volume is expected to increase to a range of 375 to 400 MBoe/d.

For 2015, the company plans to invest $2.9 billion in capital expenditure.

Other Releases

Murphy Oil Corporation MUR reported a second-quarter 2015 loss of 48 cents per share, narrower than the Zacks Consensus Estimate of a loss of 54 cents. This amounted to a positive surprise of 11.1%.

TOTAL S.A. TOT reported second-quarter 2015 operating earnings of $1.34 per share (€1.21 per share), surpassing the Zacks Consensus Estimate by 20.7%.

Anadarko Petroleum Corporation APC reported second-quarter 2015 adjusted earnings of 1 cent per share. The Zacks Consensus Estimate was at a loss of 54 cents.

To Conclude

Noble Energy’s core U.S. onshore operations in the DJ and Marcellus basins are contributing meaningfully to its overall performance. Despite registering strong sales volume in the second quarter, Noble Energy was affected by weak oil and natural gas prices.

This did not impede the company from continuing with its upstream operations in the core U.S. onshore assets. Noble Energy commenced production at a few wells this quarter. In addition, the cost-saving initiatives are helping to lower lease operating expenses, which declined nearly 19% year over year to $4.74 Boe in the reported quarter.

The Rosetta acquisition will help Noble Energy to further strengthen and diversify its position in the liquid and gas rich regions.

Noble Energy carries a Zacks Rank #3 (Hold).

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