Noble Touts 1Q Results on Record Volumes
Noble Energy, Inc. reported first quarter 2012 net income of $263 million, or $1.47 per share diluted, on revenues of $1.17 billion. Excluding the impact of unrealized commodity derivative losses, first quarter 2012 adjusted net income was $314 million, or $1.75 per share diluted. Net income for the first quarter 2011 was $14 million, or $0.08 per share diluted, on revenues of $899 million. Adjusted net income for the first quarter of 2011 was $240 million, or $1.35 per share diluted.
Discretionary cash flow for the first quarter 2012 was a record $716 million, compared to $576 million for the same quarter in 2011. Net cash provided by operating activities was $741 million, and capital expenditures were $963 million.
Key highlights for the first quarter 2012 include:
- Record sales volume of 243 thousand barrels of oil equivalent per day (MMboepd), up 10 MMboepd over the previous record reported in the fourth quarter of 2011
- Liquids represent 47 percent of sales volumes, up from 40 percent last quarter
- Horizontal production from the DJ Basin averaged 18 MMboepd net, which was 25 percent of the total DJ Basin volumes
- Expanded the Northern Colorado acreage position by 48,000 net acres to 230,000 net acres, where recent Company horizontal Niobrara results indicate recoveries comparable to Wattenberg
- Assumed operatorship in the liquids-rich gas portion of the Marcellus joint venture acreage
- Gross daily crude oil production from the Aseng field, offshore Equatorial Guinea, achieved 60 thousand barrels per day (MBbl/d)
- Signed a natural gas sales contract with Israel Electric Corporation for 2.7 trillion cubic feet (Tcf) with expected gross revenues of $18 billion
- Announced the Tanin discovery offshore Israel with estimated gross mean resources of 1.2 Tcf
Charles D. Davidson, Noble Energy's Chairman and CEO, commented, "The first quarter confirmed the strong growth we have been projecting for this year. The real value driver for the outstanding results this quarter was the impressive increase in crude oil volumes and related revenues which reflect the exceptional operational performance at the Aseng field and drilling results in the DJ Basin. The impact of our crude oil and liquids sales is evident as it accounted for over 80 percent of our revenue for the quarter. We are looking forward to the additional oil and liquids production that will be coming online in the second quarter with the startup of Galapagos in the Gulf of Mexico and the expansion of horizontal activity into Northern Colorado where we are realizing the highest crude oil content in the Niobrara play."
First quarter 2012 total sales volumes averaged 243 MMboepd, up 13 percent from the first quarter 2011. Essentially all of the 28 MMboepd increase was from crude oil and other liquids products, raising the Company's liquid volume composition to 47 percent. International and U.S. natural gas comprised the remaining 23 and 30 percent, respectively. Production volumes for the quarter were 238 MMboepd, with the difference attributable to timing of crude oil and condensate liftings in Equatorial Guinea.
U.S. sales volumes were up 15 percent from the first quarter last year to a total of 131 MMboepd. In the DJ Basin, first quarter 2012 volumes averaged a record 73 MBoed/d with liquids increasing to 56 percent of total volumes. The 30 percent increase was largely attributable to the acceleration of the Company's horizontal drilling program within Wattenberg. The addition of the Marcellus Shale and subsequent development activities provided an average of 68 million cubic feet per day to the quarter. Natural production declines were experienced in both non-core onshore properties and the deepwater Gulf of Mexico.
International sales volumes totaled 112 MMboepd for the quarter, up 11 percent from the same period last year. Strong operational performance resulted in Aseng crude oil sales volumes of 18 MBbl/d for the first quarter 2012. Israel natural gas sales were lower reflecting the planned ramp down of production rates at Mari-B to manage the reservoir. In the North Sea, maintenance at Dumbarton and normal declines reduced volumes.
The average realized price for crude oil and condensate was $110.80 per barrel for the first quarter, up 14 percent from the prior year period. Natural gas realizations in the U.S. averaged $2.62 per thousand cubic feet (Mcf) and $4.51 per Mcf in Israel. Natural gas liquids pricing in the U.S. averaged $41.62 per barrel, which equates to 41 percent of the Company's average realized price for U.S. crude oil.
Total production costs per barrel of oil equivalent (Boe), including lease operating expense (LOE), production and ad valorem taxes, and transportation and gathering expenses were $8.09 per Boe, up 10 percent from the first quarter of 2011. LOE was $5.34 per Boe and depreciation, depletion, and amortization (DD&A) was $14.11 per Boe. The unit rates were impacted by the increased cost of high value crude oil production from Aseng, the deepwater Gulf of Mexico and the DJ Basin. General and administrative expenses were up due to staffing increases supporting major development projects and increased exploration activities. The Company's adjusted effective tax rate for the first quarter 2012 was 30 percent, with 29 percent deferred.
Noble Energy's original full year volume guidance range for 2012 remains unchanged at 244 to 256 MMboepd, while second quarter sales volumes are expected to average 224 to 232 MMboepd. The volume forecast for the second quarter includes planned maintenance at the non-operated Alba facilities in Equatorial Guinea, which was mostly deferred from the first quarter. This maintenance will affect both natural gas and liquids production, as well as equity investment income. Natural gas sales in Israel are expected to be lower as production rates at Mari-B are reduced to manage the reservoir. The Galapagos project is anticipated to come online and the horizontal drilling programs in DJ Basin and Marcellus Shale continue to build momentum during the second quarter. As a result of these volume adjustments, the Company expects second quarter unit rates for LOE and DD&A to be at the high end of the annual ranges. For the full year, both these cost items are forecast to remain within the original guidance ranges.
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