Noble Energy Inc. reported adjusted earnings per share of 69 cents for the second quarter 2013, lagging the Zacks Consensus Estimate by 5.5%. The quarterly results, however, increased by a whopping 91.7% from year-ago earnings of 36 cents per share.
Earnings outperformed on the back of higher sales from the U.S. onshore plays as well as a rise in natural gas sales from the company’s Tamar field.
GAAP earnings during the quarter were $1.04 compared with 79 cents in the year-ago period. The difference between GAAP and operating figures during the quarter was due to a 44 cent gain from unrealized commodity derivative instruments, 5 cents gain from discontinued operations and a 3 cent loss from other adjustments. Income tax adjustment accounted for 11 cents.
Noble Energy's total revenue increased 19.1% year over year to $1,149.0 million in the second quarter of 2013. Quarterly revenue nevertheless fell short of the Zacks Consensus Estimate by 3.4%.
The year-over-year rise in revenue stemmed from upswing in crude oil and condensates as well as natural gas sales volume compared to the year-ago quarter.
Noble Energy's sales volume in the quarter surged 24% year over year to 260 thousand barrels of oil equivalent per day (MBoe/d). Domestic sales volumes expanded and outstripped domestic production due to the timing of liftings. The sales volume mix comprised 44% natural gas liquids, 30% international gas and 26% U.S. gas.
In the U.S., Marcellus and Denver/Julesburg ("DJ") once again were the key growth drivers. Total domestic volumes in the second quarter 2013 upped 14% year over year to 140 MBoe/d. Production was partially tempered by third-party facility downtime in the deepwater Gulf of Mexico and late winter storms in Colorado.
International volumes followed suit increasing sharply by 33% year over year to 120 MBoe/d owing to sales initiation from the Tamar prospect, offshore Israel.
Production costs including lease operating expenses, production and ad valorem taxes, and transportation were up 8% to $8.88 per barrel of oil equivalent (Boe) from the second quarter of 2012.
Total operating expenses for Noble Energy shrank 4.7% year over year to $788.0 million due to a 46.1% fall in exploration expense.
Noble Energy's operating income in the quarter shot up 161.6% to $361.0 million from the year-ago period. The combination of revenue upturn and plummeting cost led Noble Energy to book inspiring profits.
Realized oil prices for Noble Energy in the quarter declined 2.9% year over year to $96.84 per barrel owing to continued weakness in crude oil prices in the U.S. and China.
Natural gas realizations for the company jumped 74.7% year over year to $3.18 per thousand cubic feet due to the almost doubling of U.S. natural gas prices.
Realized prices for natural gas liquids suffered a setback, slipping 9.1% to $30.05 per barrel from $33.06 per barrel in the year-ago quarter.
Noble Energy's cash and cash equivalents as of Jun 30, 2013 were $706.0 million versus $1,387.0 million as of Dec 31, 2012.
Long-term debts as of Jun 30, 2013 were $3,547.0 million versus $3,736.0 million as of Dec 31, 2012.
Discretionary cash flow for the second quarter was $765.0 million versus $640.0 million in the prior-year quarter.
Noble Energy retained its 2013 sales volume forecast in the range of 270 MBoe/d to 282 MBoe/d. The company projects third quarter volume to average 285 MBoe/d to 295 MBoe/d. Noble Energy is expected to benefit from sales from the Tamar prospect, operational start-up at Alen and acceleration in horizontal programs in the DJ and Marcellus basins.
Other Oil & Gas Company Releases
Anadarko Petroleum Corporation is expected to release second quarter results on Jul 30, 2013. The Zacks Consensus Estimate for the quarter is 91 cents.
Quicksilver Resources Inc. earnings are set to release on Aug 5, 2013. The Zacks Consensus Estimate for the quarter is at a loss of 3 cents per share.
EPL Oil & Gas Inc. is expected to bring out second quarter results on Jul 29, 2013. The Zacks Consensus Estimate for the quarter is 96 cents per share.
Although Noble Energy's second quarter results trailed our estimates, the superior operational performance from the domestic and overseas exploration plays is definitely encouraging. We believe the production start-up at the Alen natural gas field in Equatorial New Guinea will boost Noble Energy's returns in the subsequent quarters.
Moreover, Israel’s growing appetite for natural gas will offer a ready market for the production from the Tamar play. This will be further supported by the successful discovery of the Karish prospect which has brought the total discovered estimated gross mean resource to 38 trillion cubic feet in the Levant basin. Noble Energy currently retains a Zacks Rank #3 (Hold).