Noble Energy, Inc. (NYSE:NBL) (“Noble Energy” or “the Company”)
today provided updated and detailed guidance for 2017, including
capital expenditure and sales volume expectations, along with
various cost items for the year.
David L. Stover, the Company's Chairman,
President and CEO, commented, “Building on our strong performance
over the last couple of years, Noble Energy is now rapidly
accelerating our pace of development in 2017. In the U.S.
onshore business, we are materially increasing the capital
allocation to each of our liquids-focused assets in 2017, including
the DJ Basin, the Delaware Basin, and the Eagle Ford. We will
continue to concentrate on long laterals and pad drilling, enhanced
completions with higher proppant loadings and tighter stage and
cluster spacing, as well as integrated facility design. We have
leading positions in two of the top U.S. oil basins, and we
materially enhanced our Delaware Basin position earlier this year
through the announced acquisition of Clayton Williams Energy. Our
onshore portfolio provides some of the highest return opportunities
in the U.S., and our 2017 capital plan positions us for significant
value-added growth, near term and for many years to
come.”
Stover continued, “In addition to our onshore
business, we have a tremendous opportunity with the Leviathan
project offshore Israel. In 2017, our teams will begin project
development, with first gas targeted for the end of 2019. I
have no doubt that our outstanding track record of major project
execution will again deliver substantial value to the
Company. At the same time as we progress Leviathan, we will
continue to maximize production and cash flow from our other
offshore assets. We are excited about 2017, which will certainly be
an impactful year for Noble Energy, and we are off to a great
start.”
Capital ProgramAt the midpoint of the annual
capital range of $2.3 to $2.6 billion for 2017, Noble Energy
expects to invest approximately $1.8 billion in the U.S. onshore
(75 percent of total) and $625 million (25 percent of total) in
offshore and other activities. Anticipated capital by
business unit is:
Initial 2017 Organic Capital Program ($
MM) |
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DJ Basin |
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$850 |
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Eastern Med. |
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$550 |
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Delaware Basin |
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$500 |
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Other |
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$75 |
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Eagle Ford |
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$325 |
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Marcellus |
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$150 |
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U.S
Onshore |
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$ |
1,825 |
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Offshore /
Other |
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$625 |
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Total
Company |
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$2,300 – 2,600 |
U.S. onshore organic investments are up
approximately 90 percent from 2016 levels and will be primarily
focused on drilling and completion activities within the DJ Basin,
Delaware Basin and Eagle Ford. Capital expenditures in the
Marcellus Shale will focus on the completion of previously-drilled
uncompleted wells. For the Clayton Williams Energy assets,
reported capital has been included from closing (expected in the
second quarter of 2017) through the end of the year.
Noble Energy’s total U.S. onshore rig count is
expected to average more than eight operated rigs for 2017, exiting
the year with nine. A third operated rig for the DJ Basin has
been accelerated and is now planned to be added in the second
quarter of 2017. In the Delaware Basin, Noble Energy increased its
operated rig count on its existing position to three rigs during
the fourth quarter of 2016 and anticipates running three rigs
during 2017. Following closing of the Clayton Williams Energy
acquisition, Noble Energy anticipates adding a second operated rig
to this position mid-year and a third rig by the end of 2017.
Combined, total rigs running at the exit of 2017 in the Delaware
Basin is anticipated to be six operated rigs. On average for
2017, a one rig program is anticipated in the Eagle Ford.
The Company anticipates to drill and commence
production on approximately 225 onshore wells in 2017. The
average drilling length across the U.S. onshore activity for 2017
is 8,200 lateral feet, with approximately two-thirds of the wells
to be drilled in the DJ Basin, nearly 25 percent in the Delaware
and the remainder in the Eagle Ford. In the DJ Basin, half of
the anticipated wells in the 2017 program are located in Wells
Ranch. The Company will also be drilling wells in the East
Pony and Mustang areas. In the Delaware Basin, the vast majority of
the wells are expected to be in the Wolfcamp A interval, with a few
wells in other zones. The majority of the Eagle Ford program
is focused on Lower Eagle Ford wells in Gates Ranch; however, the
Company plans to also include multiple Upper Eagle Ford wells in
its 2017 activity. Noble Energy will continue to utilize
enhanced completion designs throughout its U.S. onshore well
activity.
Included in the U.S. onshore capital expenditure
amount is approximately $120 million related to midstream facility
infrastructure buildout for central gathering facilities (CGF) and
associated gathering lines, split evenly between the DJ Basin and
Delaware Basin. These amounts include the buildout of the CGF
in the Mustang area of the DJ Basin as well as for the Company’s
first two CGFs in the Delaware Basin. The $120 million reflects
Noble Energy’s interest in the respective development companies
(NBL currently owns 75% of both systems). The remaining 25
percent is owned by Noble Midstream Partners LP (NYSE:NBLX) (“Noble
Midstream Partners” or “the Partnership”), which is designing and
operating the facilities in support of the Company’s long-term
upstream plans. Noble Midstream Partners’ organic capital program
for 2017 of $155 to $175 million, attributable to the Partnership,
is not included in the Company’s capital guidance amount, although
it will be consolidated when reported as a result of the Company’s
ownership of the general partner.
Capital expenditures in the Eastern
Mediterranean for the initial development of the Leviathan project
include drilling one production well, long-lead investment items,
and ramp up of construction activities. The Company will also
complete an additional production well at Tamar, which was drilled
in the fourth quarter of 2016.
The remainder of the capital program is planned
for offshore and corporate, including the Gulf of Mexico and West
Africa, as well as other exploration activities. Late in 2017,
Noble Energy anticipates participating in the drilling of the Araku
exploration prospect offshore Suriname. The Company holds a
20 percent non-operated working interest in the prospect, with
total gross unrisked resources in excess of 500 million barrels of
oil equivalent.
Sales VolumesFull year sales volumes are
anticipated to average approximately 415 - 425 MBoe/d for 2017,
including volumes from the Clayton Williams Energy properties
following closing of the transaction. In total, this
represents a 5 percent increase over last year, adjusted for 2016
divestments.
Total U.S. onshore volumes are expected to be up
10 percent versus 2016, after adjusting for the impact of 2016
divestments. U.S. onshore oil volumes are expected to be
higher by nearly 30 percent on a full year basis and 40 percent
when comparing the second half of 2017 to the second half of
2016. The majority of U.S. onshore growth in 2017 is driven
by development programs in the Delaware and Eagle Ford assets. Full
year 2017 DJ Basin volumes are anticipated to be equivalent to
2016, although higher on an exit rate basis. Sales volumes
from the Marcellus are expected to be down from 2016 as a result of
the impact of the divested volumes from the Marcellus JV
separation, as well as natural decline in existing production.
In offshore areas, total reported net production
in Israel is anticipated to be down slightly from 2016, with
underlying natural gas demand growth partially offsetting the
impact of the 3.5 percent Tamar interest sale in late 2016. In the
Gulf of Mexico and West Africa, volume declines are expected from
2016.
Sales volumes are expected to grow materially throughout the
year. The trajectory of volumes through the year is expected
to be:
First Quarter 2017 |
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370 – 380 MBoe/d |
Second Quarter
2017 |
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395 – 415 MBoe/d |
Second Half 2017 |
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440 – 460 MBoe/d |
First quarter 2017 sales volumes reflect lower liftings in West
Africa as compared to the fourth quarter of 2016 by over 10
MBbl/d. In addition, asset divestitures are resulting in a
decrease in sales volumes from the fourth quarter of 2016 to the
first quarter of 2017. This amount totals approximately 15
MBoe/d and is primarily comprised of the Marcellus JV dissolution
impact and the 3.5% working interest sale in Tamar.
Underlying production from the Marcellus is expected to be impacted
by natural decline and no new wells commencing production in the
quarter. In the DJ Basin, slight volume decline is expected,
with the first quarter reflecting the fewest new well startups
during 2017.
Second quarter volumes are expected to include a
partial quarter of the Clayton Williams Energy production and will
begin to reflect the production impact from the ramp in U.S.
onshore drilling and completions. Total Company sales volumes in
the second half of 2017 are expected to reflect continued growth
from the onshore development programs.
Full detailed first quarter 2017 guidance is
provided in the Company’s supplemental slides for today’s upcoming
conference call. The slides are available on the Company’s
website.
2017 Full-year Operational and Financial
Guidance
The breakdown of the Company's estimated annual
average daily volumes for 2017 by product and location is:
Crude Oil and
Condensate (MBbl/d) |
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United States
Onshore |
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90 -
95 |
United States Gulf of
Mexico |
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19 -
22 |
Equatorial Guinea |
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20 -
22 |
Equatorial Guinea –
equity method investment |
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1 -
2 |
Total |
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132 -
138 |
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Natural Gas Liquids
(MBbl/d) |
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United States
Onshore |
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60 -
64 |
United States Gulf of
Mexico |
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1 -
2 |
Equatorial Guinea –
equity method investment |
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5 -
6 |
Total |
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66 -
72 |
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Natural Gas
(MMcf/d) |
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United States
Onshore |
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750 -
785 |
United States Gulf of
Mexico |
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15 -
20 |
Equatorial Guinea |
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240 -
250 |
Israel |
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255 -
270 |
Total |
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1,275 -
1,305 |
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Total Equivalent Sales
Volumes (MBoe/d) |
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United States
Onshore |
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277 -
287 |
United States Gulf of
Mexico |
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23 -
27 |
Equatorial Guinea |
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60 -
64 |
Equatorial Guinea –
equity method investment |
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6 -
8 |
Israel |
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42 -
45 |
Total |
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415 -
425 |
At the midpoint of the Company’s volume guidance, existing hedge
positions cover over 35 percent of global crude oil and condensate
production and over 55 percent of U.S. natural gas production.
Equity method investments include income generated from the
methanol facilities, the LPG plant in Equatorial Guinea, as well as
the CONE MLP. Equity method income for 2017 is estimated at
$110 to $140 million.
Costs and Expenses |
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Lease operating ($ per
BOE) |
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$ 3.60
- $ 3.90 |
Transportation and
gathering ($ per BOE) |
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$ 3.70
- $ 4.00 |
Depreciation, depletion
and amortization ($ per BOE) |
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$ 15.00
- $ 15.90 |
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Production and ad
valorem taxes |
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3.5 –
4.0% of oil, gas and NGL revenues |
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Marketing and
processing ($ MM) |
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$ 70 -
$ 90 |
Exploration ($ MM) |
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$ 140 -
$ 170 |
General and
administrative ($ MM) |
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$ 390 -
$ 430 |
Interest, net* ($
MM) |
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$ 340 -
$ 370 |
*Capitalized interest is estimated to be $65 million. |
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Other Items |
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Effective tax rate |
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30 -
40% |
Deferred tax ratio |
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80 -
100% |
Tax guidance is applicable to earnings before unrealized
mark-to-market gain / loss on commodity derivatives and other items
typically not factored in by analysts.
Diluted outstanding shares are expected to average 465 to 475
million for the full year, reflecting the issuance of 55 million
shares associated with the Clayton Williams Energy acquisition,
which is expected to close in the second quarter of 2017.
Noble Energy (NYSE:NBL) is an independent oil
and natural gas exploration and production company with a
diversified high-quality portfolio of both U.S. unconventional and
global offshore conventional assets spanning three
continents. Founded more than 80 years ago, the company is
committed to safely and responsibly delivering our purpose:
Energizing the World, Bettering People’s Lives®. For more
information, visit www.nobleenergyinc.com
Forward Looking StatementsThis news release
contains certain “forward-looking statements” within the meaning of
federal securities law. Words such as “anticipates”,
“believes,” “expects”, “intends”, “will”, “should”, “may”, and
similar expressions may be used to identify forward-looking
statements. Forward-looking statements are not statements of
historical fact and reflect Noble Energy’s current views about
future events. They include estimates of oil and natural gas
reserves, estimates of future production, assumptions regarding
future oil and natural gas pricing, planned drilling activity,
future results of operations, projected cash flow and liquidity,
business strategy and other plans and objectives for future
operations. No assurances can be given that the
forward-looking statements contained in this news release will
occur as projected and actual results may differ materially from
those projected. Forward-looking statements are based on
current expectations, estimates and assumptions that involve a
number of risks and uncertainties that could cause actual results
to differ materially from those projected. These risks
include, without limitation, the volatility in commodity prices for
crude oil and natural gas, the presence or recoverability of
estimated reserves, the ability to replace reserves, environmental
risks, drilling and operating risks, exploration and development
risks, competition, government regulation or other actions, the
ability of management to execute its plans to meet its goals and
other risks inherent in Noble Energy’s business that are discussed
in its most recent annual report on Form 10-K and in other reports
on file with the Securities and Exchange Commission. These reports
are also available from Noble Energy’s offices or website,
http://www.nobleenergyinc.com. Forward-looking statements are
based on the estimates and opinions of management at the time the
statements are made. Noble Energy does not assume any
obligation to update forward-looking statements should
circumstances, management’s estimates, or opinions change.
The Securities and Exchange Commission requires oil and gas
companies, in their filings with the SEC, to disclose proved
reserves that a company has demonstrated by actual production or
conclusive formation tests to be economically and legally
producible under existing economic and operating conditions. The
SEC permits the optional disclosure of probable and possible
reserves, however, we have not disclosed the Company's probable and
possible reserves in our filings with the SEC. We use certain terms
in this news release, such as “gross unrisked resources” and “EUR”
or “estimated ultimate recovery”, which are by their nature more
speculative than estimates of proved, probable and possible
reserves and accordingly are subject to substantially greater risk
of being actually realized. The SEC guidelines strictly prohibit us
from including these estimates in filings with the SEC. Investors
are urged to consider closely the disclosures and risk factors in
our most recent annual report on Form 10-K and in other reports on
file with the SEC, available from Noble Energy's offices or
website, http://www.nobleenergyinc.com.
Investor Contacts
Brad Whitmarsh
(281) 943-1670
brad.whitmarsh@nblenergy.com
Megan Repine
(832) 639-7380
megan.repine@nblenergy.com
Megan Dolezal
(281) 943-1861
megan.dolezal@nblenergy.com
Media Contacts
Reba Reid
(713) 412-8441
media@nblenergy.com
Paula Beasley
(281) 876-6133
media@nblenergy.com
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