Most of Noble Energy Inc.’s Lower 48 oil and gas volumes that were curtailed as the coronavirus sapped demand are back online as operating costs and netback pricing have improved.
The Houston-based super independent, which issued its results Monday, curtailed 30,000 boe/d net during 2Q2020. Most of the reduced volumes, estimated at 80%, were curtailed in the Denver-Julesburg (DJ) Basin, with the remainder in the Permian Basin’s Delaware sub-basin. There were “minimal” curtailments in its third Lower 48 asset, the Eagle Ford Shale.
“With significant improvements to operating costs and netback pricing, the majority of curtailed volumes were brought back on production by the end of July,” management said in its 2Q2020 report.
“Noble Energy’s second quarter results reflect strong operational execution against the backdrop of the challenging global economic environment that impacted financial outcomes across our industry,” CEO David Stover said.
The company did not hold a conference call because of the pending merger with Chevron Corp., which is scheduled to be completed by the end of the year.
More quarterly earnings coverage by NGI can be found here.
Noble’s total sales volumes in 2Q2020 averaged 350,000 boe/d, with the Lower 48 providing the bulk at 248,000 boe/d. West Africa volumes were 50,000 boe/d, while Israel’s natural gas-weighted volumes on average totaled 311 MMcfe/d. Oil volumes overall totaled 130,000 b/d.
Between April and June, the DJ contributed 144,000 boe/d, while the Permian Delaware averaged 63,000, and the Eagle Ford Shale contributed 41,000.
The company operated 1.5 rigs in the quarter, with 1.0 in the DJ and 0.5 in the Delaware. Noble also drilled 16 DJ wells and three in the Delaware. Early in the quarter, 16 DJ wells came online, along with six in the Delaware.
‘Top Tier’ Leviathan
In the Eastern Mediterranan (Med), combined volumes from the Tamar and Leviathan gas projects totaled 1.09 Bcfe/d gross. Volumes fell 23% sequentially, “driven by the demand impacts from the Covid-19 pandemic as well as the normal seasonal weather-based decline experienced in the second quarter,” management noted.
Net sales volumes from the two big projects totaled 311 MMcfe/d.
Following its start up at the end of 2019, “the Leviathan field has performed in the top tier of all offshore major projects,” management noted. During 2Q2020, “field and facility uptime averaged in excess of 99%.”
Noble in July also completed commissioning additional compression onshore at the Ashkelon metering station in Israel, designed to increase the capacity throughput into Egypt via the EMG Pipeline.
Within its West Africa portfolio, Noble’s Equatorial Guinea production averaged 50,000 boe/d. Management pointed to solid field performance from its operated Aseng and Alen fields, as well as the nonoperated Alba field and onshore facilities.
Progressing Alen Gas
Despite impacts from the pandemic, the Alen Gas Monetization project “continues to progress toward an early 2021 start-up,” management noted. “During July, the shore crossing site preparation for connecting the Alen natural gas pipeline to the onshore facilities continued,” with offshore pipe installation on schedule by the end of September.
During the second quarter, Noble also initiated hedge positions for the Alen project to secure global liquefied natural gas revenue for a portion of expected revenue in 2021 and 2022.
U.S. onshore oil price realizations in 2Q2020 before hedges averaged $22.30/bbl, with natural gas liquids pricing of $7.51/bbl. For the U.S. onshore portfolio, Noble fetched a domestic natural gas price of $1.16/Mcf.
In Equatorial Guinea, about 75% of the quarterly oil sales were in May, driving the average realization to $23.87/bbl. Natural gas realizations in Israel averaged $5.00/Mcf.
Net losses in 2Q2020 totaled $408 million (minus 85 cents/share), versus a year-ago loss of $10 million (minus 2 cents). Revenue fell to $571 million from $1.09 billion. Total operating expenses were down year/year at $799 million from $1.06 billion.
Capital expenditures (capex) in 2Q2020 totaled $102 million, including $62 million for U.S. onshore activities and $32 million for the offshore businesses in Israel and West Africa. Capex for the master limited partnership Noble Midstream Partners LP totaled $8 million.
Financial liquidity at the end of the second quarter totaled $4 billion, comprising $324 million of cash on hand and revolver borrowing capacity of $3.7 billion.
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