In an Aug. 2 research note, Raymond James analyst John Freeman reported that Noble Energy Inc. (NBL:NYSE) delivered a "strong Q2/19."
He provided the company's Q2/19's numbers and pointed out the highlights.
As for production, Noble produced 348,500 barrels of oil equivalent per day in Q2/19, up 4% quarter over quarter (QOQ), noted Freeman. This quantity exceeded consensus' expectation by 2% and was in line with Raymond James' forecast.
As for costs during Q2/19, capex was "a whopping 10% below our estimates due to reduced U.S. onshore well costs," Freeman highlighted. Capital expenditures amounted to $618 million versus Raymond James $705 million and the Street's $739 million projections. Q2/19 capex was down 10% from Q1/19.
Regarding well costs, they dropped 15% in the lower 48 states since Q4/18. Noble is beating its well cost estimates in both the Delaware and DJ basins, due to "a sharp increase in completion stages per day (up 50% compared to back half of 2018) and faster drilling times (down to five drilling days per well in the DJ)," Freeman explained.
In light of this cost landscape, he added, Noble decreased its 2019 capital spending guidance, specifically its projected lease operating expenses by 2% and its anticipated depreciation, depletion and amortization costs by 3%, both on a per barrel of oil equivalent basis.
As for finances, the energy company reported an adjusted EBITDA of $589 million, a 5% QOQ increase, Freeman relayed. It was in line with the Street's projection but below Raymond James' $600 forecast. Adjusted earnings per share was -$0.10, 11% higher than Q1/19. It exceeded both Raymond James and consensus' estimates of -$0.11 and -$0.12, respectively.
In his report, Freeman also provided an update on Noble's Leviathan project. About 88% complete, he wrote, the project is on time and on budget for starting production by year-end 2019. The company anticipates producing about 800 million cubic feet equivalent per day in gross volumes in 2020.
Raymond James has an Outperform rating but no target price on Noble Energy. The oil & gas company's stock is currently trading at around $21.40 per share.
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Disclosures from Raymond James, Noble Energy Inc., August 2, 2019
ANALYST INFORMATION
Analysts Holdings and Compensation: Equity analysts and their staffs at Raymond James are compensated based on a salary and bonus system. Several factors enter into the bonus determination, including quality and performance of research product, the analyst's success in rating stocks versus an industry index, and support effectiveness to trading and the retail and institutional sales forces. Other factors may include but are not limited to: overall ratings from internal (other than investment banking) or external parties and the general productivity and revenue generated in covered stocks.
The analyst John Freeman, primarily responsible for the preparation of this research report, attests to the following: (1) that the views and opinions rendered in this research report reflect his or her personal views about the subject companies or issuers and (2) that no part of the research analyst’s compensation was, is, or will be directly or indirectly related to the specific recommendations or views in this research report. In addition, said analyst(s) has not received compensation from any subject company in the last 12 months.
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Raymond James & Associates, Inc. makes a market in the shares of Noble Energy, Inc.
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