Noble Energy (NBL) Q3 Results

[dan_s]

Noble Energy Announces Strong Outperformance With Third Quarter Results. Production compares to my forecast of 411 MBoe/d.

Company also adds two rigs to its U.S. onshore program in fourth quarter



•Achieved third quarter sales volumes of 425 MBoe/d, an increase of 12 percent over the third quarter of 2015, or an 8 percent increase pro-forma. U.S. oil volumes were up 14 percent pro-forma and Israel volumes set a new quarterly record.
•Reported third quarter capital expenditures of $297 million, substantially below expectation and reflecting continued operational efficiencies across the business.

•Reduced LOE on a BOE basis to $3.37, a decrease of 14 percent from the third quarter of last year pro-forma.
•Commenced production on 43 wells in the DJ Basin during the third quarter, with average proppant per lateral foot increasing to approximately 1,600 pounds. Wells Ranch and East Pony combined production was up 11 percent from the third quarter of 2015.
•Initiated production on the Company's fourth operated well within the Delaware Basin, achieving an IP-30 rate of 1,560 Boe/d (333 Boe/d per thousand lateral feet) with 70 percent oil. On a normalized basis, the well is outperforming the historical type curve.
•Realized significant progress towards sanctioning Leviathan, including the execution of a gas sales agreement for gross volumes of up to 350 MMcf/d (total volume of 1.6 Tcf) to the National Electric Power Company of Jordan. The gross contract revenues are estimated to be approximately $10 billion.
•Commenced the startup of two major offshore projects, the Gunflint oil development in the Gulf of Mexico and the non-operated B3 compression platform at the Alba field in West Africa. Production for both projects has exceeded expectations.
•Increased liquidity at the end of the quarter to $5.8 billion, comprised of $1.8 billion of cash and a $4.0 billion undrawn credit facility. Included in the cash balance was nearly $300 million resulting from a distribution from Noble Midstream Partners LP following its successful initial public offering.

[dan_s]

I have updated my forecast/valuation model for NBL and it will be posted to the EPG website later today.

My valuation has increased by $2.00/share to $50.00. This compares to First Call's price target of $43.58.

NBL was added to the Sweet 16 in April, 2016. I have gained more confidence in my forecast model and I've raised the multiple of operating cash flow that I use to value it. Noble has a strong balance sheet and lots of running room in its core areas. In addition to significant operations in the DJ Basin, Eagle Ford, Permian Basin, Marcellus/Utica and Gulf of Mexico, Noble has some big international projects that have a lot of upside.

Their controlling interest in Noble Midstream Partners (NBLX) adds another layer of value. < Check it out if you are seeking high yield.