Noble Energy (NBL)
Posted: Tue Feb 14, 2017 12:42 pm
I have updated my forecast model for NBL and it will be posted to the EPG website this afternoon.
Q4 results beat my forecast. Adjusted earnings per share ($0.36 for Q4) crushed First Call's estimate. Reported EPS included a big non-cash impairment charge, which was included in Exploration Expense on the Income Statement.
Increased proven reserves combined with big impairment charges will reduce DD&A expense going forward, so reported EPS should be much better than what First Call is currently estimating.
Cash flow from operations in 2017 s/b more than enough to cover NBL capex budget of $2.3 to $2.6 Billion. Plus, they should get a BIG increase in proven reserves this year when some of the significant offshore projects come on-line.
NBL is a more complex company than most of the Sweet 16 since it has significant offshore and international projects. So, I have lowered the multiple used to value it.
I am lowering my current valuation by $2.00 to $60.00 per share. This compares to First Call's price target of $46.88. During the second half of 2017, NBL should generate BIG increases in production for Q3 and Q4. Production exit rate s/b around 470,000 BOE per day, compared to 410,000 in Q4 2016.
You should all listen to their Q4 conference call and follow along with the slides. It is available on the company's website. I think you will agree that NBL has a lot of upside.
BTW the closing of the merger with CWEI in Q2 will give NBL a significant position in the Permian Basin. They are also getting impressive well results in the DJ Basin.
Q4 results beat my forecast. Adjusted earnings per share ($0.36 for Q4) crushed First Call's estimate. Reported EPS included a big non-cash impairment charge, which was included in Exploration Expense on the Income Statement.
Increased proven reserves combined with big impairment charges will reduce DD&A expense going forward, so reported EPS should be much better than what First Call is currently estimating.
Cash flow from operations in 2017 s/b more than enough to cover NBL capex budget of $2.3 to $2.6 Billion. Plus, they should get a BIG increase in proven reserves this year when some of the significant offshore projects come on-line.
NBL is a more complex company than most of the Sweet 16 since it has significant offshore and international projects. So, I have lowered the multiple used to value it.
I am lowering my current valuation by $2.00 to $60.00 per share. This compares to First Call's price target of $46.88. During the second half of 2017, NBL should generate BIG increases in production for Q3 and Q4. Production exit rate s/b around 470,000 BOE per day, compared to 410,000 in Q4 2016.
You should all listen to their Q4 conference call and follow along with the slides. It is available on the company's website. I think you will agree that NBL has a lot of upside.
BTW the closing of the merger with CWEI in Q2 will give NBL a significant position in the Permian Basin. They are also getting impressive well results in the DJ Basin.