Noble Remains Hopeful After Posting $144MM Loss in Q2
Noble Energy, Inc. reported a second quarter 2008 net loss of $144 million, or $0.84 per share on revenues of $1.2 billion. The result included a previously disclosed $716 million ($481 million after-tax) unrealized commodity derivative loss. Excluding this item, second quarter 2008 adjusted net income (a non-GAAP measure, see Schedule 1) was $337 million, or $1.93 per share diluted. For the same period in 2007, net income was $209 million, or $1.21 per share diluted, on revenues of $794 million.
Discretionary cash flow (a non-GAAP measure, see Schedule 5) for the second quarter 2008 was a record $685 million, compared to $473 million for the same period in 2007. Net cash provided by operating activities was $648 million.
Key highlights for the second quarter 2008 include:
- Sales volumes rose nine percent versus second quarter 2007 with growth in both the United States and International operations
- Successful Benita oil test offshore Equatorial Guinea
- Exploration discoveries offshore Equatorial Guinea at Diega and Felicita
- Executed agreement to acquire certain producing properties in western Oklahoma
"The second quarter 2008 was another excellent quarter for Noble Energy," said Noble Energy's Chairman, President and CEO, Charles D. Davidson. "Our ongoing development programs in the United States again contributed outstanding volume growth. We continued to supplement our organic programs with new acreage and selected producing properties that fit with our strategies for growth. Internationally, we experienced natural gas sales growth in Israel and West Africa compared to the second quarter last year and advanced our Dumbarton development in the North Sea. Our exploration programs continued their momentum with oil and gas-condensate discoveries offshore West Africa, as well as a natural gas discovery in the deepwater Gulf of Mexico. We remain excited about the progress we have made towards our 2008 goals and our ability to capitalize on the current environment in which we operate."
Noble Energy's operating income for the quarter was $672 million, up significantly from the same quarter last year. Sales volumes averaged 218 thousand barrels of oil equivalent per day (MBoepd), up nine percent over second quarter 2007 or 11 percent after adjusting for the Argentina asset sale. United States volumes were up five percent and International volumes were up 14 percent, respectively.
During the quarter, Rocky Mountain volumes reached a record level of 61 MBoepd resulting from ongoing development and drilling success. Deepwater Gulf of Mexico volumes continued their strong performance from recent development projects averaging approximately 29 MBoepd for the quarter. Due to robust market demand, natural gas sales in Israel were 121 million cubic feet per day.
Effective in 2008, Noble Energy began reporting natural gas liquid volumes separately where the company has the right to the liquids recovered from its natural gas processed at third-party plants. As a consequence, reported natural gas volumes in the United States are lower compared to 2007. Where the rights to the liquids do not exist, the processing revenue will continue to be included in natural gas revenues and benefit realized prices.
On average for the quarter, Noble Energy received $105.46 per barrel for crude oil and condensate and $5.86 per thousand cubic feet for natural gas. United States natural gas liquids prices averaged $59.65 per barrel. Crude oil and natural gas realizations for the quarter were impacted by the settlement of commodity derivative contracts.
Lease operating and transportation expenses totaled $5.24 per barrel of oil equivalent (Boe), down four percent from the second quarter 2007. Depreciation, depletion, and amortization was $9.88 per Boe, a two percent decrease. Unit costs benefited from increased volumes from lower cost operations in the Rocky Mountains, Israel, and West Africa. Production and ad valorem taxes were up due to higher oil, natural gas, and natural gas liquid revenues.
Exploration expense for the quarter included unsuccessful tests at Stones River in the deepwater Gulf of Mexico and West Tapir offshore Suriname. Included in other expenses for the quarter was deferred compensation expense of $29 million relating to the increased value of Noble Energy stock held in a benefit program.
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