Noble Energy Announces Fourth Quarter and Full Year 2009 Results
HOUSTON, Feb. 18 /PRNewswire-FirstCall/ -- Noble Energy, Inc. (NYSE: NBL) reported today fourth quarter 2009 net income of $8 million, or $0.05 per share diluted, on revenues of $760 million. Net income for the quarter was lowered by items totaling $170 million after-tax, including unrealized commodity derivative losses and identified asset impairments, offset by the recording of recoverable deepwater Gulf of Mexico royalties. Excluding these items, which are typically not considered by analysts in published estimates, fourth quarter 2009 adjusted net income(1) was $178 million, or $1.01 per share diluted. For the fourth quarter of 2008, net income was $305 million, or $1.72 per share diluted, on revenues of $573 million. Adjusted net income(1) for the fourth quarter of 2008 was $163 million, or $0.91 per share diluted.
Discretionary cash flow(1) for the fourth quarter 2009 was $477 million, compared to $439 million for the similar quarter in 2008. Net cash provided by operating activities was $522 million and capital expenditures were $384 million(2).
Key highlights for the fourth quarter 2009 include:
- Successful new completion at the Swordfish field in the deepwater Gulf of Mexico
- Spud Deep Blue and Double Mountain exploration tests in the deepwater Gulf of Mexico
- Announced DJ Basin asset acquisition which will expand the Company's largest onshore U.S. property at Wattenberg
- Executed two Letters of Intent to sell natural gas from Tamar offshore Israel with expected gross revenues over $10 billion
- Completed field optimization efforts at Dumbarton and brought online the first well at Lochranza in the North Sea
For the full year 2009, Noble Energy reported a net loss of ($131) million, or ($0.75) per share diluted. Adjusted net income(1) for 2009 was $590 million, or $3.37 per share diluted. Discretionary cash flow(1) for the year was $1.69 billion and net cash provided by operating activities was $1.51 billion. Capital expenditures for the year totaled $1.32 billion(2).
Charles D. Davidson, Noble Energy's Chairman and CEO, said, "Our results for the fourth quarter wrap up a strong year for Noble Energy. Despite reduced investment in U.S. onshore natural gas development, we were still able to grow our annual onshore volumes. We again generated free cash flow in 2009, largely attributable to our disciplined capital allocation process and diverse asset portfolio. It was perhaps the most successful exploration year in our Company's history, and we continued to build upon our large inventory of opportunities. Substantial progress was made for long-term growth, as we sanctioned the Galapagos and Aseng oil projects and signed LOIs for first sales from Tamar. As we look forward into a new decade, we are focused on maintaining our strong production base, executing on our major projects, and continuing an impactful exploration program."
Total sales volumes for the fourth quarter 2009 averaged 206 thousand barrels of oil equivalent per day. In the United States, natural gas volumes were lower than the fourth quarter of 2008 due primarily to declines in the Mid-Continent region. Crude oil and condensate volumes were higher mostly due to the impact of Ticonderoga in the deepwater Gulf of Mexico returning to full production earlier in 2009. Lower oil volumes in the North Sea resulted from the FPSO repairs and facilities enhancements at Dumbarton, which have been completed. Greater natural gas volumes in West Africa were largely related to pipeline maintenance impacting the 2008 period. Natural gas volumes in Israel were reduced significantly during the fourth quarter 2009 due to warmer than normal weather and increased natural gas imports.
Crude oil price realizations for the quarter were $68.43 per barrel, up 56 percent from the fourth quarter 2008. In the U.S. and West Africa, fourth quarter 2009 crude realizations were reduced $1.71 and $4.79 per barrel, respectively, as a result of previously deferred hedge losses. U.S. natural gas prices were down from the same period in 2008, averaging $4.37 per thousand cubic feet (Mcf). In Israel, natural gas prices averaged a record $4.13 per Mcf for the fourth quarter 2009. Natural gas liquid pricing in the U.S. strengthened to $38.98 per barrel for the quarter.
Cash costs, including lease operating, production and ad valorem taxes, transportation, and general and administrative expenses were $10.50 per barrel of oil equivalent (Boe) for the quarter. Lease operating expenses were down 11 percent from the fourth quarter of 2008 to $4.80 per Boe, more than offsetting higher production taxes and transportation expenses. General and administrative expenses were up from the fourth quarter of 2008 primarily related to increased staffing for the development of major projects. Depreciation, depletion, and amortization was $11.34 per Boe for the fourth quarter 2009.
During the fourth quarter of 2009, the Company recorded a receivable of $97 million related to the favorable resolution of royalty litigation on identified leases under the Deep Water Royalty Relief Act of 1995. Also included in the fourth quarter of 2009 were before-tax asset impairments of $67 million related to certain natural gas assets onshore in the U.S. and in the deepwater Gulf of Mexico, as well as $100 million related to the Company's operations in Ecuador.
PROVED RESERVES
Year-end 2009 estimated reserves were 820 million barrels of oil equivalent (MMBoe). Noble Energy added total proved reserves of 79 MMBoe, representing 103 percent of 2009 production, from discoveries, extensions, performance revisions and acquisitions. These reserve additions exclude negative revisions caused by lower prices and new SEC rules requiring the development of proved undeveloped reserves (PUDs) within five years.
The U.S. made up 55 percent and International the remaining 45 percent of total reserve additions. Initial bookings at the Aseng oil project in West Africa accounted for the majority of the International additions. In the U.S., additions were primarily driven by the execution of low-risk development projects onshore in the Rockies, as well as from the sanctioning of the Galapagos development in the deepwater Gulf of Mexico.
David L. Stover, President and COO of Noble Energy, said, "Our teams did a good job of organically replacing production, despite a very constrained capital program. We began converting to proved reserves the major-project resources that our exploration programs have delivered over the past few years. However, the majority of these identified resources are yet to be booked, including our discoveries at Tamar, Belinda, Gunflint and others. We anticipate substantial multi-year growth in reserves beginning in 2010."
Price revisions lowered proven reserves by 27 MMBoe driven primarily by natural gas and the use of average pricing which was lower than 2008's year-end pricing. Had the previous price methodology still been in effect, reserves would have been 61 MMBoe higher than the 2009 total.
Proved reserves were also reduced by 18 MMBoe as a result of the new SEC rules requiring development of PUDs within five years. These reserves are expected to be re-booked to proved as drilling occurs in future years.
- A Non-GAAP measure, see attached Reconciliation Schedules
- Capital expenditures for the fourth quarter and full year 2009 exclude a non-cash accrual of $29 million related to construction progress to-date on the Aseng FPSO
CONFERENCE CALL
Noble Energy's fourth quarter 2009 conference call will be available today via live audio webcast at 9:00 a.m. Central Time. To listen, log on to www.nobleenergyinc.com and click on the Investors tab and go to the Investors Events link. Dial in numbers are (888) 572-7025 or (719) 457-2552. A replay of the conference call will be available on the website.
Noble Energy is a leading independent energy company engaged in worldwide oil and gas exploration and production. The Company operates primarily in the Rocky Mountains, Mid-Continent, and deepwater Gulf of Mexico areas in the United States, with significant international operations offshore Israel and West Africa. Noble Energy is listed on the New York Stock Exchange and is traded under the ticker symbol NBL. Visit Noble Energy online at www.nobleenergyinc.com.
This news release may include projections and other "forward-looking statements" within the meaning of the federal securities laws. Any such projections or statements reflect Noble Energy's current views about future events and financial performance. No assurances can be given that such events or performance will occur as projected, and actual results may differ materially from those projected. Risks, uncertainties and assumptions that could cause actual results to differ materially from those projected include, without limitation, the volatility in commodity prices for crude oil and natural gas, the presence or recoverability of estimated reserves, the ability to replace reserves, environmental risks, drilling and operating risks, exploration and development risks, competition, government regulation or other action, the ability of management to execute its plans to meet its goals and other risks inherent in Noble Energy's business that are detailed in its Securities and Exchange Commission filings. Words such as "anticipates," "believes," "expects," "intends," "will," "should," "may," and similar expressions may be used to identify forward-looking statements. Noble Energy assumes no obligation and expressly disclaims any duty to update the information contained herein except as required by law.
This news release may also contain certain forward-looking non-GAAP measures of financial performance that management believes are good tools for internal use and the investment community in evaluating the Company's overall financial performance. These non-GAAP measures are broadly used to value and compare companies in the crude oil and natural gas industry.
The Securities and Exchange Commission permits oil and gas companies, in their filings with the SEC, to disclose proved reserves that a company has demonstrated by actual production or conclusive formation tests to be economically and legally producible under existing economic and operating conditions. Beginning with year-end reserves for 2009, the SEC permits the optional disclosure of probable and possible reserves. We have elected not to disclose the Company's probable and possible reserves in our filings with the SEC. We use certain terms in this news release, such as "resource potential," that the SEC's guidelines strictly prohibit us from including in filings with the SEC. Investors are urged to consider closely the disclosures and risk factors in our Forms 10-K and 10-Q, File No. 1-07964, available from Noble Energy's offices or website, http://www.nobleenergyinc.com. These forms can also be obtained from the SEC by calling 1-800-SEC-0330.
Schedule 1
Noble Energy, Inc.
Reconciliation of Net Income (Loss) to Adjusted Earnings
(in millions, except per share amounts, unaudited)
Three Months
Ended Year Ended
December 31, December 31,
------------ ------------
2009 2008 2009 2008
---- ---- ---- ----
Net Income (Loss) $8 $305 $(131) $1,350
Unrealized (gains) losses on
commodity derivative instruments 99 (513) 606 (522)
Asset impairments (1) 167 256 604 294
Gain on sale of Argentina assets - - (24) -
Allowance for SemCrude receivable - - 12 38
MMS Royalty Relief, Including
interest (97) - (97) -
Other adjustments, net (6) - (5) 9
--- --- --- ---
Total Adjustments before tax 163 (257) 1,096 (181)
Income Tax Effect of
Adjustments (2) 7 115 (375) 89
--- --- ---- ---
Adjusted Earnings (3) $178 $163 $590 $1,258
---- ---- ---- ------
Adjusted Earnings Per Share
Basic $1.03 $0.95 $3.41 $7.30
Diluted 1.01 0.91 3.37 7.05
Weighted average number of shares
outstanding
Basic 173 173 173 173
Diluted (4) 176 175 175 176
(1) The 2009 impairments were related to US properties sensitive to
natural gas prices and our investments in Ecuador.
(2) The net tax effects are determined by calculating the tax
provision for GAAP Net Income (Loss), which includes the adjusting
items, and comparing the results to the tax provision for Adjusted
Earnings, which excludes the adjusting items. The difference in the
tax provision calculations represents the tax impact of the
adjusting items listed here. The calculation is performed at the
end of each quarter and, as a result, the tax rates for each
discrete period are different.
(3) Adjusted earnings should not be considered a substitute for net
income as reported in accordance with GAAP. Adjusted earnings is
provided for comparison to earnings forecasts prepared by analysts
and other third parties. Our management believes, and certain
investors may find, that adjusted earnings is beneficial in
evaluating our financial performance.
(4) The adjusted diluted earnings per share calculation for the
year ended December 31, 2009 includes an increase to diluted shares
of approximately 2 million shares representing the incremental
dilutive shares that were anti-dilutive, for GAAP purposes, and
therefore excluded from the calculation of GAAP net loss per share
for the year ended December 31, 2009.
Schedule 2
Noble Energy, Inc.
Summary Statement of Operations
(in millions, except per share amounts, unaudited)
Three Months
Ended Year Ended
December 31, December 31,
------------ ------------
2009 2008 2009 2008
---- ---- ---- ----
Revenues
Crude oil and condensate $385 $271 $1,261 $2,101
Natural gas 203 243 701 1,375
NGLs 32 22 98 175
Income from equity method investees 32 16 84 174
Other revenues 108 21 169 76
--- --- --- ---
Total revenues 760 573 2,313 3,901
--- --- ----- -----
Operating Expenses
Lease Operating Expense 91 103 372 371
Production and Ad Valorem Taxes 28 25 94 166
Transportation Expense 16 14 59 57
Exploration expense 42 36 144 217
Depreciation, depletion and
amortization 215 198 816 791
General and administrative 64 52 237 236
Asset impairments 167 256 604 294
Other operating expense, net 23 26 45 124
--- --- --- ---
Total operating expenses 646 710 2,371 2,256
--- --- ----- -----
Operating Income (Loss) 114 (137) (58) 1,645
Other (Income) Expense
(Gain) Loss on commodity derivative
instruments 16 (630) 110 (440)
Interest, net of amount capitalized 20 17 84 69
Other expense (income), net (7) (12) 12 (45)
--- --- --- ---
Total other (income) expense 29 (625) 206 (416)
--- ---- --- ----
Income (Loss) Before Taxes 85 488 (264) 2,061
Income Tax Provision (Benefit) 77 183 (133) 711
--- --- ---- ---
Net Income (Loss) $8 $305 $(131) $1,350
--- ---- ----- ------
Earnings (Loss) Per Share
Basic $0.05 $1.77 $(0.75) $7.83
Diluted 0.05 1.72 (0.75) 7.58
Weighted average number of shares
outstanding
Basic 173 173 173 173
Diluted 176 176 173 176
Schedule 3
Noble Energy, Inc.
Volume and Price Statistics
(unaudited)
Three Months
Ended Year Ended
December 31, December 31,
------------ ------------
2009 2008 2009 2008
---- ---- ---- ----
Crude Oil and Condensate Sales
Volumes (MBpd)
United States 38 36 37 40
Equatorial Guinea 14 15 14 15
North Sea 5 12 7 10
China 4 4 4 4
--- --- --- ---
Total consolidated operations 61 67 62 69
Equity method investee 2 2 2 2
--- --- --- ---
Total sales volumes 63 69 64 71
--- --- --- ---
Crude Oil and Condensate Realized
Prices ($/Bbl)
United States $68.74 $33.16 $55.19 $75.53
Equatorial Guinea 67.53 48.15 55.94 88.95
North Sea 67.79 67.89 59.51 100.56
China 69.44 47.77 54.40 82.66
----- ----- ----- -----
Consolidated average realized prices $68.43 $43.80 $55.76 $82.60
------ ------ ------ ------
Natural Gas Sales Volumes (MMcfpd)
United States 386 404 397 395
Equatorial Guinea 244 187 239 206
Israel 104 133 114 139
North Sea 6 5 5 5
Ecuador 30 21 26 22
--- --- --- ---
Total sales volumes 770 750 781 767
--- --- --- ---
Natural Gas Realized Prices ($/Mcf)
United States $4.37 $5.30 $3.61 $8.12
Equatorial Guinea 0.27 0.27 0.27 0.27
Israel 4.13 2.96 3.47 3.10
North Sea 5.23 10.28 5.75 10.54
---- ----- ---- -----
Average realized prices $2.99 $3.62 $2.54 $5.04
----- ----- ----- -----
Natural Gas Liquids (NGL) Sales
Volumes (MBpd)
United States 8 9 10 9
Equity method investee 7 5 6 6
--- --- --- ---
Total sales volumes 15 14 16 15
--- --- --- ---
Natural Gas Liquids Realized
Prices ($/Bbl)
United States $38.98 $26.64 $27.96 $50.15
Barrels of Oil Equivalent Volumes
(MBoepd)
United States 110 112 113 116
Equatorial Guinea 55 46 54 49
Israel 17 22 19 23
North Sea 6 13 8 11
Ecuador 5 4 4 4
China 4 4 4 4
--- --- --- ---
Total consolidated operations 197 201 202 207
Equity method investee 9 7 8 8
--- --- --- ---
Total barrels of oil equivalent
(MBoepd) 206 208 210 215
--- --- --- ---
Barrels of oil equivalent volumes
(MMBoe) 19 19 77 79
--- --- --- ---
Schedule 4
Noble Energy, Inc.
Condensed Balance Sheets
(in millions)
December 31,
------------
2009 2008
---- ----
Assets
Current Assets
Cash and cash equivalents $1,014 $1,140
Accounts receivable, net 465 423
Commodity derivative assets 13 437
Other current assets 186 158
--- ---
Total current assets 1,678 2,158
Net property, plant and equipment 8,916 9,004
Goodwill 758 759
Other noncurrent assets 455 463
--- ---
Total Assets $11,807 $12,384
------- -------
Liabilities and Shareholders' Equity
Current Liabilities
Accounts payable - trade $548 $579
Other current liabilities 442 595
--- ---
Total current liabilities 990 1,174
Long-term debt 2,037 2,241
Deferred income taxes 2,076 2,174
Other noncurrent liabilities 547 486
--- ---
Total Liabilities 5,650 6,075
Total Shareholders’ Equity 6,157 6,309
----- -----
Total Liabilities and Shareholders’ Equity $11,807 $12,384
------- -------
Schedule 5
Noble Energy, Inc.
Discretionary Cash Flow and Reconciliation to Operating Cash Flow
(in millions, unaudited)
Three Months
Ended Year Ended
December 31, December 31,
------------ ------------
2009 2008 2009 2008
---- ---- ---- ----
Adjusted Earnings (1) $178 $163 $590 $1,258
Adjustments to reconcile adjusted
earnings to discretionary cash flow:
Depreciation, depletion and amortization 215 198 816 791
Exploration expense 42 36 144 217
Capitalized interest (15) (10) (45) (33)
(Income) / distributions from equity method
investments, net 23 13 8 47
Deferred compensation adjustment 5 (7) 23 (32)
Deferred income taxes 4 71 100 270
Stock-based compensation expense 12 9 49 39
Settlement of previously recognized hedge
losses (2) - (50) - (194)
Other, net 13 16 5 35
--- --- --- ---
Discretionary Cash Flow (3) 477 439 1,690 2,398
--- --- ----- -----
Reconciliation to Operating Cash Flows
Net changes in working capital (158) 8 (147) (1)
Cash exploration costs (42) (30) (133) (133)
Capitalized interest 15 10 45 33
Current tax benefit (expense) of net income
adjustments 232 - 96 -
Net (gain) loss on disposal of assets 2 - (22) (5)
Other adjustments (4) (9) (21) (7)
--- --- --- ---
Net Cash Provided by Operating Activities $522 $418 $1,508 $2,285
---- ---- ------ ------
Capital Expenditures, accrual based (4) $384 $432 $1,317 $2,264
Capital Lease Accrual $29 $- $29 $-
(1) See Schedule 1, Reconciliation of Net Income (Loss) to Adjusted
Earnings
(2) See Schedule 6, Effect of Derivative Instruments.
(3) The table above reconciles discretionary cash flow to net cash
provided by operating activities. While discretionary cash flow is
not a GAAP measure of financial performance, our management believes
it is a useful tool for evaluating our overall financial performance.
Among our management, research analysts, portfolio managers and
investors, discretionary cash flow is broadly used as an indicator of
a company’s ability to fund exploration and production activities and
meet financial obligations. Discretionary cash flow is also commonly
used as a basis to value and compare companies in the oil and gas
industry.
(4) Capital expenditures for 2009 excludes a non-cash accrual of $29
million related to estimated construction progress to date on an FPSO
to be used in the development of the Aseng field in Equatorial
Guinea.
Schedule 6
Noble Energy, Inc.
Effect of Commodity Derivative Instruments
(in millions, unaudited)
Three Months
Ended Year Ended
December 31, December 31,
------------ ------------
2009 2008 2009 2008
---- ---- ---- ----
Reclassification from Accumulated Other
Comprehensive Loss (AOCL) to Revenue (1)
Crude oil $(12) $(86) $(58) $(365)
Natural gas - 3 - 34
--- --- --- ---
Total Revenue Decrease $(12) $(83) $(58) $(331)
---- ---- ---- -----
Gain (Loss) on Derivative Instruments
Crude oil
Realized $34 $68 $246 $(72)
Unrealized (96) 456 (401) 335
--- --- ---- ---
Total crude oil $(62) $524 $(155) $263
---- ---- ----- ----
Natural gas
Realized $49 $49 $250 $(10)
Unrealized (3) 57 (205) 187
--- --- ---- ---
Total natural gas 46 106 45 177
--- --- --- ---
Total Gain (Loss) on Derivative Instruments $(16) $630 $(110) $440
---- ---- ----- ----
Summary of Cash Settlements
Cash settlements (received) paid $(71) $16 $(438) $607
Realized gain (loss) on derivative
instruments 83 117 496 (82)
Amounts reclassified from AOCL (12) (83) (58) (331)
--- --- --- ----
Settlement of previously recognized hedge
losses $- $50 $- $194
--- --- --- ----
(1) The amounts in AOCL represent deferred unrealized hedge gains and
losses. Upon settlement, these deferred gains and losses are
reclassified from AOCL to net income as increases or decreases to
crude oil and natural gas revenues, and impact reported realized
commodity prices.
Schedule 7
Noble Energy, Inc.
Supplemental Data
(in millions)
(Unaudited)
2009 Costs Incurred in Oil and Gas Activities
---------------------------------------------
United States International (1) Total
--------------- ------------------- -------
Property acquisition
costs:
Proved $(5) $- $(5)
Unproved 89 3 92
--- --- ---
Total acquisition
costs 84 3 87
Exploration costs 189 124 313
Development costs 700 223 923
Capital lease
accrual - 29 29
Asset retirement
obligations 11 10 21
--- --- ---
Total costs
incurred $984 $389 $1,373
---- ---- ------
Reconciliation to Capital
Spending
Total costs incurred $1,373
Exploration overhead (30)
Lease rentals (6)
Asset retirement obligations (21)
---
Total oil and gas spending 1,316
Other capital 1
---
Total capital spending $1,317
------
Proved Reserves (2)
-------------------
Total Barrel
Oil Equivalents
(MMBoe) United States International (1) Total
--------------- ------------------- -------
Beginning
reserves -
December 31, 2008 508.3 355.3 863.6
Revisions of
previous estimates (71.6) 7.5 (64.1)
Extensions, discoveries
and other additions 67.4 28.2 95.6
Purchase of minerals
in place 1.6 - 1.6
Sale of minerals
in place - - -
Production (41.2) (35.4) (76.6)
----- ----- -----
Ending reserves
- December 31, 2009 464.5 355.6 820.1
----- ----- -----
Proved Developed
Reserves (MMBoe)
December 31, 2008 332.7 263.8 596.5
December 31, 2009 307.7 242.2 549.9
(1) International includes Equatorial Guinea, Israel, North
Sea, Ecuador and China.
(2) Netherland, Sewell & Associates, Inc. performed an audit
of over 86 percent of Noble Energy’s year-end 2009 total
proved reserves and concluded the Company’s estimates of
proved reserves, in the aggregate, are reasonable and have
been prepared in accordance with generally accepted petroleum
engineering and evaluation principles.
SOURCE Noble Energy, Inc.
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