My updated forecast model for Noble Energy has been posted to the EPG website.
My valuation today is $18.50, with a lot more upside if oil prices move higher.
Start your due diligence by listening to their June 17th webcast and then reading their July 9th press release.
Here is what I like:
> In addition to Stifel's price target of $24.00 on June 29, UBS rated it a BUY with a price target of $18.00 on June 29 and on July 12 RBC Cap updated their price target to $13.00
> Stifel's "4P Net Asset Valuation" is $30.60. This is Stifel's value assuming all of their probable reserves eventually move to proven.
> If WTI oil averages $35 in Q3 2020 and $40 in Q4 2020 the Company should generate ~$1.6 Billion in cash flow from operations this year.
> Cash flow compares to their revised capex budget of $750 to $850 million, so they are generating a lot of free cash flow from operations TODAY.
> Noble has a strong balance sheet; $10.40 book value per share as of March 31, 2020
> The #1 reason for putting it in our Sweet 16 > Noble has a lot of running room
>> Offshore Israel where their gas sold for $5.36/mcf in Q1 2020
>> Offshore West Africa
>> Onshore U.S. in the DJ Basin in Colorado and the Delaware Basin in West Texas.
Noble Energy (NBL) will be added to the Sweet 16
Noble Energy (NBL) will be added to the Sweet 16
Dan Steffens
Energy Prospectus Group
Energy Prospectus Group
Re: Noble Energy (NBL) will be added to the Sweet 16
Noble's production mix in the first quarter was 35.7% crude oil & condensate, 46.4% natural gas and 17.9% NGLs.
Because their Q1 oil price included over $200 million of cash settlements on oil hedges, oil made up over 77% of their Q1 revenues. Including the cash settlements on their hedges, Noble's "realized oil price" was $61.58/bbl in Q1.
Adding upside to my valuation is the fact that over a 3rd of their natural gas production in the first quarter sold into the Israel market at $5.36/mcf and their gas sales volumes in the Eastern Mediterranean will be going up in 2H 2020. See: https://www.nblenergy.com/operations/ea ... iterranean
2nd quarter sales volumes have been announced:
SALES VOLUMES - delivered 350 MBoe/d, including 248 MBoe/d from U.S. onshore, 50 MBoe/d from Equatorial Guinea and 311 MMcfe/d from Israel
Plus: NGL prices were only $10.30/bbl in Q1 2020, compared to $15.40 in 2019. I believe the NGL prices I'm using in my forecasts models will end up being way too low. In 2018, Noble's NGLs sold for $27.18/bbl.
Because their Q1 oil price included over $200 million of cash settlements on oil hedges, oil made up over 77% of their Q1 revenues. Including the cash settlements on their hedges, Noble's "realized oil price" was $61.58/bbl in Q1.
Adding upside to my valuation is the fact that over a 3rd of their natural gas production in the first quarter sold into the Israel market at $5.36/mcf and their gas sales volumes in the Eastern Mediterranean will be going up in 2H 2020. See: https://www.nblenergy.com/operations/ea ... iterranean
2nd quarter sales volumes have been announced:
SALES VOLUMES - delivered 350 MBoe/d, including 248 MBoe/d from U.S. onshore, 50 MBoe/d from Equatorial Guinea and 311 MMcfe/d from Israel
Plus: NGL prices were only $10.30/bbl in Q1 2020, compared to $15.40 in 2019. I believe the NGL prices I'm using in my forecasts models will end up being way too low. In 2018, Noble's NGLs sold for $27.18/bbl.
Dan Steffens
Energy Prospectus Group
Energy Prospectus Group