Energy Prospectus

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'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.