May 4, 2016

Noble Energy raises production expectations on DJ Basin improvements

One day after announcing the company was selling $505 million worth of drilling assets in Weld County to Synergy Resources, Nobel Energy Inc. (NYSE: NBL) officials on Wednesday said increased production expectations in the United States for 2016 are largely due to improved productivity in the Denver-Julesburg Basin.

In their first-quarter earnings report Wednesday, Noble officials raised guidance on volume productions for the year by 4 percent while at the same time lowering guidance on expected capital spending thanks to various efficiencies.

Houston-based Noble, the second-largest producer of oil and natural gas in northern Colorado, on Tuesday announced a deal to sell about 33,000 net acres to Synergy. But that was a small fraction of the nearly 400,000 acres the company held in the DJ Basin, which lies mostly in northern Colorado but also stretches into southeast Wyoming and southwest Nebraska.

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Noble said sales volumes in the DJ Basin in the first quarter were up 2 percent from the same period a year ago to 118,000 barrels of oil equivalent per day, with crude oil representing about half of that. The company, which also has significant holdings in Texas, the Midwest, the Gulf of Mexico and Africa, drilled 24 new wells in the DJ Basin during the quarter.

After an early spike following the earnings report Wednesday morning Noble shares backtracked a bit to close up 1 percent at $35.59 apiece.

The company reported net income of $287 million, or 67 cents per diluted share, compared with a loss of $22 million, or 6 cents per share, last year. Revenue slid from $767 million last year to $724 million in this year’s first quarter. Company officials said Noble has about $5 billion in liquidity, including $953 million in cash on hand and $4 billion in undrawn credit.

“We have aligned our business within cash flows and are continuing to protect our investment-grade balance sheet,” Noble chairman and chief executive David Stover said in a press release. “Significant capital efficiency gains and outstanding operating performance, combined with robust liquidity, position us well in any price scenario.”

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