Noble Energy, Inc. (NBL) reported adjusted earnings of 28 cents per share for the third quarter of 2014, missing the Zacks Consensus Estimate by 22.2%. Quarterly earnings decreased significantly from the prior-year figure, primarily due to a decrease in total revenues, and an increase in both total operating expenses and shares outstanding.
On a GAAP basis, the company’s earnings were $1.12 per share versus 56 cents per share a year ago. The variance between adjusted and GAAP earnings was due to the combined impact of gains on commodity derivative instruments, divestitures and other adjustments, and losses from income tax adjustments and asset impairments.
Total Revenue
Noble Energy's total revenues decreased around 9% to $1.27 billion in the third quarter. The reported top line missed the Zacks Consensus Estimate by 1.8%.
Lower crude oil and condensate revenues, resulting from lower total sales volumes and average realized prices, impacted the total revenues adversely.
Operational Results
In the quarter under review, sales volumes averaged 302 thousand barrels of oil equivalent per day (MBoe/d), an increase of 2.7% compared with the third quarter of 2013, after adjusting for divested assets. U.S. sales volume constituted 60.3% of the total, while international volumes accounted for the balance.
In the U.S., the Denver/Julesburg (DJ) Basin and the Marcellus Shale were yet again the prime volume drivers. Strong contribution from the Eastern Mediterranean operations boosted international sales volumes.
Noble Energy's total operating expenses during the quarter increased 19.3% year over year to around $1.04 billion mainly due to higher exploration as well as general and administrative expenses, and an increase in depreciation, depletion and amortization expenses.
The company’s operating income decreased roughly 56% in the third quarter due to higher total operating expenses and lower revenues.
Realized Prices
Realized crude oil and condensate prices in the quarter decreased to $95.55 per barrel from $104.95 per barrel in the year-ago period owing to lower prices in both domestic and international markets.
Natural gas realizations increased 4.8% year over year to $3.26 per thousand cubic feet (Mcf) due to strong gas prices in Israel.
Realized prices for natural gas liquids decreased 5.5% to $29.53 per barrel from the year-ago quarter.
Financial Highlights
Noble Energy's cash and cash equivalents as of Sep 30, 2014 were $1.17 billion versus $1.12 billion as of Dec 31, 2013.
Long-term debts as of Sep 30, 2014 were $5.5 billion versus $4.57 billion as of Dec 31, 2013.
Discretionary cash flow for the third quarter was $0.81 billion versus $0.99 billion in the prior-year quarter.
Operating cash flow during the quarter stood at $0.95 billion compared with $0.91 billion in the year-ago quarter.
The company’s capital expenditure was $1.4 billion in the quarter versus $1.17 billion a year ago.
Guidance
Noble Energy reported its guidance for the fourth quarter of 2014 volumes in the range of 307–327 MBoe/d. This is lower than the previous projection of 310–330 MBoe/d range, considering the sale of the Piceance Basin assets.
In the fourth quarter of 2014, the company plans to invest $1.2–$1.4 billion as capital expenditure.
Noble Energy expects strong performance from the onshore U.S. region as a result of the development programs at the DJ Basin and Marcellus Shale.
Upcoming Releases
Cobalt International Energy, Inc. (CIE) is slated to release its third-quarter 2014 earnings on Nov 4. The Zacks Consensus Estimate is pegged at a loss of 18 cents.
Halcon Resources Corp. (HK) is slated to release its third-quarter 2014 earnings on Nov 10. The Zacks Consensus Estimate is pegged at 6 cents.
Midstates Petroleum Company, Inc. (MPO) is slated to release its third-quarter 2014 earnings on Nov 4. The Zacks Consensus Estimate is pegged at 8 cents.
Zacks Rank
Noble Energy currently has a Zacks Rank #5 (Strong Sell).
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