With a solid contribution from the Patina Oil and Gas assets, Noble Energy Corp. reported its highest quarterly net income ever, with 3Q profit increasing 111% to $177 million (99 cents/share), compared with $83.7 million (70 cents) in 3Q2004. Daily production rose 61% worldwide, and domestic output also climbed, despite the impact of Hurricanes Katrina and Rita.
Noble operates throughout major basins in the United States, but until it acquired Patina for $3.4 billion in 2004, it was best known domestically for its successes in the deepwater Gulf of Mexico (see Daily GPI, Dec. 17, 2004). However, despite the hurricanes, which reduced domestic impact by about 7,600 boe/d, Noble's daily production increased 61%, to 168,666 boe/d in the quarter.
In North America, production increased to 99,440 boe/d from 59,884 boe/d in 3Q2004. Natural gas output, which was boosted with Patina, climbed to 4.14 MMcf/d from 2.32 MMcf/d in 3Q2004.
"Noble Energy continued its trend of stable and consistent growth during the third quarter, despite the impact of two large hurricanes," said CEO Charles D. Davidson. "This was our first full quarter with Patina Oil and Gas integrated into Noble Energy's operations, and our improved operating and financial performance reflects the potential of the combined businesses. Patina's long-lived assets not only added to Noble Energy's domestic production base, they also provided stability while our Gulf of Mexico and Gulf Coast production was impacted by hurricanes Katrina and Rita."
Davidson said "organic growth will continue to drive our performance," noting the deepwater Swordfish development in the Gulf has begun producing and is expected to reach 10,000 boe/d net in the fourth quarter. Two additional deepwater developments of similar size, Lorien and Ticonderoga, are scheduled to begin production by mid 2006.
In North America, Noble reported operating income of $150.9 million, an increase of 99% over $75.7 million in 3Q2004. Higher production and commodity prices were offset by increased exploration expenses, which climbed $51.7 million from 3Q2004. The increase resulted from higher dry hole expense in the Gulf Coast region and offshore.
Domestically in the quarter, the company had 24 drilling rigs running onshore (10 in the Rocky Mountains, 10 in the MidContinent and four in the Gulf Coast) and 47 workover rigs (26 in the Rocky Mountains and 21 in the MidContinent). Noble plans to drill nearly 643 onshore wells in 2005, of which 53 are to be drilled in the Gulf Coast, 415 are planned for the Rockies and 175 for the MidContinent.
Worldwide, Noble's average boe production in 2005 is expected to increase about 36% over 2004, with average production ranging between 145,000-146,000 boe/d. Fourth quarter output is expected to range between 165,000-170,000 boe/d. By the end of the year, Noble is forecasting it will spend $160-180 million in exploration expenses, with oil and gas operations expenses ranging between $4.00-4.20/boe. The costs were adjusted from prior guidance, said Noble, "to reflect increasing pressure on personnel, rig and service costs."
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