Noble Notes $237MM Net Income in 1Q
Noble Energy reported first quarter 2010 net income of $237 million, or $1.34 per share diluted, on revenues of $733 million. Excluding a $99 million after-tax unrealized commodity derivative gain, which would typically not be considered by analysts in published estimates, first quarter 2010 adjusted net income(1) was $138 million, or $0.78 per share diluted. For the first quarter of 2009, the Company reported a net loss of ($188) million, or ($1.09) per share diluted, on revenues of $441 million. Adjusted net income(1) for the first quarter of 2009 was $103 million, or $0.59 per share diluted.
Discretionary cash flow(1) for the first quarter 2010 was $432 million, compared to $339 million for the similar quarter in 2009. Net cash provided by operating activities was $588 million. Organic capital expenditures for the first quarter 2010 were $409 million, which excluded capital associated with the DJ Basin asset acquisition and a non-cash accrual for construction progress on the Aseng FPSO.
Key highlights for the first quarter 2010 include:
- Record legacy Wattenberg and onshore U.S. volumes
- Closed DJ Basin asset acquisition which enhanced the Company's largest onshore U.S. property at Wattenberg
- Expanded Central DJ Basin position to over 730,000 net acres
- Successful high bidder on 16 deepwater lease blocks in Central Gulf of Mexico (GOM) lease sale 213
- Initiated field development drilling at the Aseng oil project in Equatorial Guinea
- Completed acquisition of 3D seismic in the Eastern Mediterranean
Charles D. Davidson, Noble Energy's Chairman and CEO, commented, "During the first quarter, Noble Energy made solid progress towards its 2010 goals of maintaining a strong base of operations, moving forward our major projects, continuing significant investments in exploration, and retaining our strong financial capacity despite significant impacts on our volumes from the scheduled maintenance in Equatorial Guinea. We continue to benefit from exposure to crude oil and natural gas liquids, and our portfolio diversity remains a source of strength in the current commodity environment. Looking forward to the remainder of 2010, we are focused on growing our Wattenberg production and continuing to evaluate the potential in our expanding position within the Central DJ Basin, while advancing new long-lived projects on budget and on schedule. On the exploration and appraisal front, our programs will remain active throughout the year as we appraise the large Gunflint discovery and continue testing the potential in all three of our key offshore basins: the deepwater Gulf of Mexico, West Africa, and the Eastern Mediterranean."
Total sales volumes for the first quarter 2010 averaged 197 thousand barrels of oil equivalent per day (MBoe/d). Production volumes for the quarter were 201 MBoe/d, higher than sales volumes due to the timing of crude oil liftings in Equatorial Guinea and the North Sea.
Internationally, total sales volumes were lower than the first quarter 2009, resulting primarily from facility maintenance downtime and the timing of liftings in Equatorial Guinea, as well as lower natural gas sales in Israel. The associated maintenance downtime in Equatorial Guinea reduced the Company's first quarter 2010 volumes by four thousand barrels per day (Bbl/d) of liquids and 49 million cubic feet per day (Mmcf/d) of natural gas. Natural gas volumes in Israel declined from the first quarter 2009 primarily as a result of increased natural gas imports. Unseasonal weather, which was slightly warmer than the first quarter 2009, also resulted in lower sales volumes. In the North Sea, the completion of facility enhancements at Dumbarton and the impact of the first well at Lochranza coming online led to increased oil volumes versus the first quarter 2009.
The Company's United States volumes were up three percent from the first quarter of 2009 to 116 MBoe/d, with liquids comprising 46 percent of total domestic volumes versus 39 percent in the 2009 period. The increase in oil and natural gas liquid volumes is primarily attributed to ongoing development drilling at Wattenberg, which produced approximately 50 MBoe/d for the quarter. In addition, oil volumes in the deepwater Gulf of Mexico were up versus the first quarter 2009 as a result of a new well completion at Swordfish that came online early in 2010, combined with hurricane shut-ins that impacted the 2009 period. Natural gas volumes in the U.S. were lower than the first quarter of 2009 due primarily to natural declines in the Mid-Continent and deepwater GOM regions, as well as the impact of a Swordfish gas well that watered out in the second half of 2009. The closing of the DJ Basin asset acquisition in March 2010 added over one thousand Bbl/d of crude oil and 12 Mmcf/d of natural gas on average for the quarter.
Crude oil price realizations were up significantly to $74.12 per barrel for the first quarter 2010. In the U.S., the Company's average crude oil price was $73.80, which included a reduction of $1.32 per barrel as a result of previously deferred hedge losses. Domestic natural gas price realizations were up from the same period in 2009, averaging $5.46 per thousand cubic feet (Mcf). In Israel, natural gas realizations continue to be benefitted by strong global liquid markets, with pricing averaging a record $4.20 per Mcf for the first quarter 2010. The Company's natural gas liquid pricing in the U.S. strengthened to $44.98 per barrel for the quarter.
Lease operating expenses for the quarter were down six percent from the first quarter of 2009 to $4.96 per barrel of oil equivalent (Boe). Lower lease operating costs, primarily due to the abandonment of the Company's remaining Gulf of Mexico Shelf properties during the first quarter of 2009, as well as lower onshore repairs and maintenance, offset higher production taxes resulting from stronger commodity prices. Depreciation, depletion, and amortization was $12.18 per Boe for the first quarter 2010. The Company's mix of production, impacted largely by the Alba field and plant downtime in Equatorial Guinea, primarily resulted in a higher DD&A rate versus the first quarter of 2009. Exploration expense for the first quarter 2010 includes dry hole costs associated with the Double Mountain well located in Green Canyon 555, which encountered noncommercial quantities of hydrocarbons. General and administrative expenses were up mostly related to increased staffing for the development of the Company's discovered major projects.
SECOND QUARTER VOLUME GUIDANCE
The Company expects second quarter 2010 volumes to average 208 to 214 MBoe/d. In the United States, onshore volumes should be up from the first quarter 2010 primarily as a result of the impact from the DJ Basin asset acquisition for a full quarter. Internationally, volumes in Equatorial Guinea will be up substantially as the maintenance projects at the Alba field and associated facilities were completed in mid April. Natural gas sales in Israel are expected to be up sequentially as well. Using the midpoint of the range, second quarter 2010 volumes should be up approximately seven percent from the first quarter 2010. Noble Energy's full year volume guidance remains 211 to 224 MBoe/d.
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