Noble Energy, Inc. (NYSE:NBL) reported impressive results for the fourth quarter, and this gives us an opportunity to examine whether an investment in the stock should be considered. In this article, I will focus on these results and see how they match up against analysts’ consensus estimates.
Noble reported net income for the fourth quarter of 2012 of $251 million and EPS of $1.39 per share diluted; net income from continuing operations was $277 million, EPS of $1.54 per share diluted. If you exclude the effects of an unrealized commodity derivatives gain and an asset impairment charge, fourth quarter adjusted net income from continuing operations was $296 million, an EPS of $1.65 per share diluted.
During the same quarter of the previous year, the company had reported a net loss from continuing operations of $314 million ($1.77 per share diluted) and adjusted net income from continuing operations of $277 million, or an EPS of $1.55 per share diluted. The discretionary cash flow generated by continuing operations for the quarter was a record $824 million compared to $710 million year on year. Net cash generated by operating activities was $762 million and capital expenditure was $1.1 billion.
For the full year 2012, Noble reported net income of $1 billion, or an EPS of $5.71 per share diluted, compared to net income of $453 million, or an EPS of $2.54 per share diluted in the previous year. Adjusted net income from continuing operations for 2012 was $889 million, EPS of $4.95 per share diluted, compared to $904 million, or $5.06 per share diluted for 2011. Discretionary cash flow generated by continuing operations was $2.9 billion for the year, a growth of 21% from the previous year, and net cash generated by operating activities for the year was $2.9 billion, a growth of 32% over the previous year. Total capital expenditure for the year was $3.6 billion.
Operations
In the DJ Basin, average production was 86 MBoe/d for the fourth quarter, representing a 15% increase over the preceding quarter. The horizontal program at 39 MBoe/d of production was 45% of the total. Crude oil and other liquid sales grew to 51,000 barrels of oil per day (MBbl/d) rise of 59%. During the quarter, 53 wells were drilled and 63 were completed, and the full year total was 200 wells drilled and 193 completed. All 15 wells in the 40-acre pilot program for spacing were completed and are in the initial stages of flowback operations. The company operated a total of 16 rigs with eight rigs in the DJ Basin, two in Northern Colorado and six in the Greater Wattenberg Area.
To support the operations in Northern Colorado, the company approved the development of the Keota Gas Plant with a processing capacity of 30 million cubic feet per day (MMcf/d). The plant is scheduled to go into operations in the second quarter of 2014. Marcellus Shale net production was an average of 121 MMcfe/d, up 19% from the preceding quarter.
Production of wet gas was 14 MMcfe/d net for the quarter while dry gas averaged 107 MMcf/d net; in the Eastern Mediterranean, the output from the Noa and Pinnacles fields resulted in production of 118 MMcf/d net, unchanged from the preceding quarter.
Estimated reserves at year-end 2012 were approximately 1.2 billion barrels of oil equivalent (BBoe) divided almost evenly between the United States and the international assets. Reserves are 30% global liquids, 42% international natural gas, and 28% U.S. natural gas. Noble Energy added proved reserves of 121 million barrels of oil equivalent (MMBoe) during the year, replacing 136% of 2012 production. The full year volume guidance range for 2013 remains at 270 to 282 MBoe/d, and volumes for the first quarter of 2013 are expected to average 238 to 242 MBoe/d.
