Exhibit 99.1
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NEWS RELEASE
NOBLE ENERGY ANNOUNCES FIRST QUARTER 2008 EARNINGS
AND RECORD VOLUMES
AND RECORD VOLUMES
HOUSTON(May 1, 2008) — Noble Energy, Inc. (NYSE:NBL) today reported its first quarter 2008 results. Net income for the quarter was $215 million, or $1.20 per share diluted, on revenues of $1.0 billion. The results included a previously disclosed $218 million ($149 million after-tax) unrealized commodity derivative loss. Excluding this item, first quarter 2008 adjusted net income (a non-GAAP measure, see Schedule 1) was $364 million, or $2.05 per share diluted. For the same period in 2007, the company reported net income of $212 million, or $1.22 per diluted share, on revenues of $743 million.
Discretionary cash flow (a non-GAAP measure, see Schedule 5) for the first quarter 2008 was a record $662 million, compared to $448 million for the same period in 2007. Net cash provided by operating activities was $506 million.
Key highlights for the first quarter 2008 include:
• | Record sales volumes of 222 thousand barrels of oil equivalent per day (MBoepd) |
• | Continued production growth in the Rocky Mountains |
• | Net natural gas sales in Israel were a record 145 million cubic feet per day (MMcfpd) |
• | New Ticonderoga development wells brought online in the deepwater Gulf of Mexico |
• | Successful high bidder on 15 deepwater blocks in Central Gulf of Mexico lease sale 206 |
“We are experiencing exceptional performance from multiple areas as we begin this new year. Our outstanding first quarter results were driven by strong worldwide growth in production coupled with increasing energy prices. As such, we find ourselves in an excellent position for delivering on our 2008 growth objectives. We are also looking forward to the results of important upcoming exploration programs which include significant wells in West Africa and Suriname, where rigs are already on location, as well as in Israel and the deepwater Gulf of Mexico,” said Noble Energy’s Chairman, President and CEO, Charles D. Davidson.
Noble Energy’s operating income for the quarter was $563 million, an increase of 64 percent over the similar quarter last year. Sales volumes for the quarter averaged 222 MBoepd, up 23 percent over first quarter 2007, with growth coming from both the United States and International assets.
During the quarter, Rocky Mountain volumes reached a record level of 57 MBoepd due to continued drilling success. Deepwater Gulf of Mexico volumes rebounded with strong performance from the development projects at Swordfish and Ticonderoga. Internationally, higher natural gas demand in Israel resulted in record sales in the quarter, and in West Africa, volumes benefited from natural gas sales to the liquefied natural gas facility and the timing of condensate and LPG cargo liftings.
Effective in 2008, Noble Energy began reporting natural gas liquid volumes separately where the company has the right to the liquids recovered from its natural gas processed at third-party processing plants. The effect is evidenced with lower natural gas volumes in the United States compared to 2007. Where the rights do not exist, the processing revenue will continue to be included in natural gas revenues and benefit realized prices.
Worldwide commodity markets were robust during the quarter. On average for the quarter, Noble Energy received $78.89 per barrel for crude oil and condensate, $5.34 per thousand cubic feet for natural gas, and domestic natural gas liquids prices averaged $55.15 per barrel. Crude oil and natural gas realizations for the quarter were impacted by the settlement of commodity derivative contracts.
Production costs, including lease operating, production and ad valorem taxes, and transportation expenses, were $6.83 per barrel of oil equivalent (Boe), a decrease of three percent from the first quarter 2007. Depreciation, depletion, and amortization was $10.05 per Boe, down over one percent. The lower per unit costs benefited from increased volumes in the Rocky Mountains, Israel, and West Africa.
The company also announced an increase to its 2008 capital program from $1.6 billion to $1.9 billion. The incremental $300 million will fund new opportunities that expand its positions in the deepwater Gulf of Mexico, East Texas, and the Rocky Mountains, as well as accelerate the phase two development of the Dumbarton project in the North Sea.
CONFERENCE CALL
Noble Energy’s first quarter 2008 conference call will be available today via live audio webcast at 9 a.m. Central Time. To listen, log on towww.nobleenergyinc.com and click on the Investor Relations tab. Dial in numbers are (888) 632-5006 or (913) 312-1411. The pass code is ‘Noble Energy 2008
2
First Quarter Results’. The conference call replay will be available until June 1, 2008. To access the replay, go towww.nobleenergyinc.com and click on the Investor Relations tab. You can also access the replay by dialing (888) 203-1112 or (719) 457-0820. The pin code is 4465361.
Noble Energy is one of the nation’s leading independent energy companies and operates throughout major basins in the United States including Colorado’s Wattenberg field and Piceance basin, the Mid-continent region of western Oklahoma and the Texas Panhandle, the San Juan Basin in New Mexico, the Gulf Coast and the deepwater Gulf of Mexico. In addition, Noble Energy operates internationally in China, Ecuador, the Mediterranean Sea, the North Sea, and West Africa (Equatorial Guinea and Cameroon). Visit Noble Energy online atwww.nobleenergyinc.com.
Contacts:
David Larson
(281) 872-3125dlarson@nobleenergyinc.com
David Larson
(281) 872-3125dlarson@nobleenergyinc.com
Brad Whitmarsh
(281) 872-3187bwhitmarsh@nobleenergyinc.com
(281) 872-3187bwhitmarsh@nobleenergyinc.com
This news release may include projections and other “forward-looking statements” within the meaning of the federal securities laws. Any such projections or statements reflect Noble Energy’s current views about future events and financial performance. No assurances can be given that such events or performance will occur as projected, and actual results may differ materially from those projected. Important factors that could cause the actual results to differ materially from those projected include, without limitation, the volatility in commodity prices for oil and gas, the presence or recoverability of estimated reserves, the ability to replace reserves, environmental risks, drilling and operating risks, exploration and development risks, competition, government regulation or other action, the ability of management to execute its plans to meet its goals and other risks inherent in Noble Energy’s business that are detailed in its Securities and Exchange Commission filings. The United States Securities and Exchange Commission permits oil and gas companies, in their filings with the SEC, to disclose only proved reserves. We may use certain terms in this news release, such as “resources,” “estimated resource range,” “resource potential” and “potential resources,” that the SEC’s guidelines strictly prohibit us from including in filings with the SEC. Investors are urged to consider closely the disclosures and risk factors in our Forms 10-K and 10-Q, File No. 1-07964, available from Noble Energy’s offices or website,www.nobleenergyinc.com. These forms can also be obtained from the SEC by calling 1-800-SEC-0330.
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PR 412 | 05/01/08 |
3
Schedule 1
Noble Energy, Inc.
Reconciliation of Net Income to Adjusted Net Income
(in millions, except per share amounts, unaudited)
Noble Energy, Inc.
Reconciliation of Net Income to Adjusted Net Income
(in millions, except per share amounts, unaudited)
Three Months Ended | ||||||||
March 31, | ||||||||
2008 | 2007 | |||||||
Net Income | $ | 215 | $ | 212 | ||||
Adjustments, net of tax | ||||||||
Unrealized commodity derivative losses in net income | 149 | — | ||||||
Adjusted Net Income [1] | $ | 364 | $ | 212 | ||||
Adjusted Net Income Per Share | ||||||||
Basic | $ | 2.12 | $ | 1.24 | ||||
Diluted[2] | 2.05 | 1.22 | ||||||
Weighted average number of shares outstanding | ||||||||
Basic | 172 | 171 | ||||||
Diluted | 175 | 173 |
[1] | Adjusted net income should not be considered a substitute for net income as reported in accordance with GAAP. Adjusted net income is provided for comparison to earnings forecasts prepared by analysts and other third parties. Our Management believes and certain investors may find that adjusted net income is beneficial in evaluating our financial performance. Adjustments are tax effected at our effective tax rate for the period. For analysis purposes, adjusted net income for 2008 should be compared to 2007 reported net income due to the voluntary election of the mark-to-market method of accounting beginning in 2008. | |
[2] | The diluted earnings per share calculation includes a decrease to net income of $4 million, net of tax, related to a deferred compensation gain from NBL shares held in a Rabbi Trust. When dilutive, the deferred compensation gain or loss, net of tax, and the NBL shares held in the Rabbi Trust are reflected in the diluted earnings per share calculation. |
Schedule 2
Noble Energy, Inc.
Summary Income Statement
(in millions, except per share amounts, unaudited)
Noble Energy, Inc.
Summary Income Statement
(in millions, except per share amounts, unaudited)
Three Months Ended | ||||||||
March 31, | ||||||||
2008 | 2007 | |||||||
Revenues | ||||||||
Crude oil and condensate | $ | 527 | $ | 333 | ||||
Natural gas | 371 | 334 | ||||||
Natural gas liquids | 46 | — | ||||||
Income from equity method investees | 62 | 46 | ||||||
Other revenues | 19 | 30 | ||||||
Total revenues | 1,025 | 743 | ||||||
Operating Expenses | ||||||||
Lease operating costs | 82 | 79 | ||||||
Production and ad valorem taxes | 43 | 25 | ||||||
Transportation costs | 13 | 11 | ||||||
Exploration costs | 40 | 45 | ||||||
Depreciation, depletion and amortization | 203 | 166 | ||||||
General and administrative | 60 | 45 | ||||||
Other expense, net | 21 | 29 | ||||||
Total operating expenses | 462 | 400 | ||||||
Operating Income | 563 | 343 | ||||||
Interest and Other | ||||||||
Loss (gain) on commodity derivative instruments | 237 | (1 | ) | |||||
Interest, net of capitalized interest | 17 | 27 | ||||||
Other expense (income), net | (7 | ) | 13 | |||||
Total interest and other expenses | 247 | 39 | ||||||
Income Before Taxes | 316 | 304 | ||||||
Income Tax Provision | 101 | 92 | ||||||
Net Income | $ | 215 | $ | 212 | ||||
Earnings Per Share | ||||||||
Basic | $ | 1.25 | $ | 1.24 | ||||
Diluted[1] | $ | 1.20 | $ | 1.22 | ||||
Weighted average number of shares outstanding | ||||||||
Basic | 172 | 171 | ||||||
Diluted | 175 | 173 |
[1] | The diluted earnings per share calculation includes a decrease to net income of $4 million, net of tax, related to a deferred compensation gain from NBL shares held in a Rabbi Trust. When dilutive, the deferred compensation gain or loss, net of tax, and the NBL shares held in the Rabbi Trust are reflected in the diluted earnings per share calculation. |
Schedule 3
Noble Energy, Inc.
Volume and Price Statistics
(unaudited)
Noble Energy, Inc.
Volume and Price Statistics
(unaudited)
Three Months Ended | ||||||||
March 31, | ||||||||
2008 | 2007 | |||||||
Crude Oil and Condensate Sales Volumes (MBpd) | ||||||||
United States | 43 | 46 | ||||||
West Africa | 15 | 12 | ||||||
North Sea | 9 | 9 | ||||||
Other International | 6 | 7 | ||||||
Total consolidated operations | 73 | 74 | ||||||
Equity method investee | 2 | 2 | ||||||
Total sales volumes | 75 | 76 | ||||||
Crude Oil and Condensate Realized Prices ($/Bbl) | ||||||||
United States | $ | 71.33 | $ | 46.42 | ||||
West Africa | 88.79 | 56.25 | ||||||
North Sea | 100.46 | 60.85 | ||||||
Other International | 73.37 | 45.24 | ||||||
Average consolidated realized prices | $ | 78.89 | $ | 49.73 | ||||
Natural Gas Sales Volumes (MMcfpd) | ||||||||
United States | 393 | 408 | ||||||
West Africa | 220 | 55 | ||||||
North Sea | 6 | 7 | ||||||
Israel | 145 | 103 | ||||||
Other International | 23 | 31 | ||||||
Total sales volumes | 787 | 604 | ||||||
Natural Gas Realized Prices ($/Mcf) | ||||||||
United States | $ | 8.97 | $ | 8.24 | ||||
West Africa | 0.27 | 0.36 | ||||||
North Sea | 9.65 | 6.02 | ||||||
Israel | 3.04 | 2.73 | ||||||
Other International | — | — | ||||||
Average realized prices | $ | 5.34 | $ | 6.46 | ||||
Natural Gas Liquids (NGL) Sales Volumes (MBpd) [1] | ||||||||
United States | 9 | — | ||||||
Equity method investee | 6 | 5 | ||||||
Total sales volumes | 15 | 5 | ||||||
Natural Gas Liquids Realized Prices ($/Bbl) | ||||||||
United States | $ | 55.15 | $ | — | ||||
Barrels of Oil Equivalent Volumes (MBoepd) | ||||||||
United States | 118 | 114 | ||||||
West Africa | 52 | 21 | ||||||
North Sea | 10 | 10 | ||||||
Israel | 24 | 17 | ||||||
Other International | 10 | 12 | ||||||
Total consolidated operations | 214 | 174 | ||||||
Equity method investee | 8 | 7 | ||||||
Total barrels of oil equivalent (MBoepd) | 222 | 181 | ||||||
Barrels of oil equivalent volumes (MMBoe) | 20 | 16 | ||||||
[1] | For 2007, domestic NGL sales volumes were included with natural gas volumes. Effective in 2008, we began reporting domestic NGLs, which has lowered the comparative natural gas volumes from 2007 to 2008. |
Schedule 4
Noble Energy, Inc.
Condensed Balance Sheets
(in millions)
Noble Energy, Inc.
Condensed Balance Sheets
(in millions)
(unaudited) | ||||||||
March 31, | December 31, | |||||||
2008 | 2007 | |||||||
Assets | ||||||||
Current Assets | ||||||||
Cash and cash equivalents | $ | 807 | $ | 660 | ||||
Accounts receivable — trade, net | 727 | 594 | ||||||
Other current assets | 242 | 315 | ||||||
Total current assets | 1,776 | 1,569 | ||||||
Net property, plant and equipment | 8,207 | 7,945 | ||||||
Goodwill | 759 | 761 | ||||||
Other noncurrent assets | 540 | 556 | ||||||
Total Assets | $ | 11,282 | $ | 10,831 | ||||
Liabilities and Shareholders’ Equity | ||||||||
Current Liabilities | ||||||||
Accounts payable — trade | $ | 731 | $ | 781 | ||||
Commodity Derivative instruments | 623 | 540 | ||||||
Short-term borrowings | 25 | 25 | ||||||
Other current liabilities | 404 | 290 | ||||||
Total current liabilities | 1,783 | 1,636 | ||||||
Deferred income taxes | 2,019 | 1,984 | ||||||
Commodity Derivative instruments | 109 | 83 | ||||||
Other noncurrent liabilities | 477 | 468 | ||||||
Long-term debt | 1,851 | 1,851 | ||||||
Total Liabilities | 6,239 | 6,022 | ||||||
Total Shareholders’ Equity | 5,043 | 4,809 | ||||||
Total Liabilities and Shareholders’ Equity | $ | 11,282 | $ | 10,831 | ||||
Schedule 5
Noble Energy, Inc.
Discretionary Cash Flow and Reconciliation to Operating Cash Flow
(in millions, unaudited)
Noble Energy, Inc.
Discretionary Cash Flow and Reconciliation to Operating Cash Flow
(in millions, unaudited)
Three Months Ended | ||||||||
March 31, | ||||||||
2008 | 2007 | |||||||
Net income | $ | 215 | $ | 212 | ||||
Adjustments to reconcile net income to discretionary cash flow: | ||||||||
Depreciation, depletion and amortization | 203 | 166 | ||||||
Exploration costs | 40 | 45 | ||||||
Interest capitalized | (10 | ) | (4 | ) | ||||
Income / distributions from equity method investments, net | 14 | 7 | ||||||
Deferred compensation adjustment | (7 | ) | 12 | |||||
Deferred income taxes | 35 | 48 | ||||||
Stock-based compensation expense | 9 | 5 | ||||||
Unrealized loss (gain) on commodity derivative instruments | 218 | (1 | ) | |||||
Settlement of previously recognized hedge losses[1] | (62 | ) | (51 | ) | ||||
Other, net | 7 | 9 | ||||||
Discretionary Cash Flow [2] | 662 | 448 | ||||||
Reconciliation to Operating Cash Flows | ||||||||
Net changes in working capital | (137 | ) | (17 | ) | ||||
Cash exploration costs | (32 | ) | (25 | ) | ||||
Capitalized interest | 10 | 4 | ||||||
Loss (Gain) on disposal of assets | — | (5 | ) | |||||
Other adjustments | 3 | 17 | ||||||
Net Cash Provided by Operating Activities | $ | 506 | $ | 422 | ||||
Capital Expenditures, accrual based | $ | 486 | $ | 284 |
[1] | See Schedule 6, Effect of Derivative Instruments, for reconciliation. | |
[2] | The table above reconciles discretionary cash flow to net cash provided by operating activities. While discretionary cash flow is not a GAAP measure of financial performance, our management believes it is a useful tool for evaluating our overall financial performance. Among our Management, research analysts, portfolio managers and investors, discretionary cash flow is broadly used as an indicator of a company’s ability to fund exploration and production activities and meet financial obligations. Discretionary cash flow is also commonly used as a basis to value and compare companies in the oil and gas industry. |
Schedule 6
Noble Energy, Inc.
Effect of Derivative Instruments
(in millions, unaudited)
Noble Energy, Inc.
Effect of Derivative Instruments
(in millions, unaudited)
Three Months Ended | ||||||||
March 31, | ||||||||
2008 | 2007 | |||||||
Reclassification from Accumulated Other Comprehensive Loss to Revenue [1] | ||||||||
Crude Oil | $ | (97 | ) | $ | (28 | ) | ||
Natural Gas | 37 | 43 | ||||||
Total Revenue Increase (Decrease) | $ | (60 | ) | $ | 15 | |||
Gain (Loss) on Derivative Instruments [2] | ||||||||
Crude oil | ||||||||
Realized losses | $ | (7 | ) | $ | — | |||
Unrealized losses | (104 | ) | — | |||||
Ineffectiveness and other | — | — | ||||||
Total crude oil | (111 | ) | — | |||||
Natural gas | ||||||||
Realized losses | (12 | ) | — | |||||
Unrealized losses | (114 | ) | — | |||||
Ineffectiveness and other | — | 1 | ||||||
Total natural gas | (126 | ) | 1 | |||||
Total Gain (Loss) on Derivative Instruments | $ | (237 | ) | $ | 1 | |||
Summary of Cash Settlements | ||||||||
Cash settlements paid | $ | (141 | ) | $ | (36 | ) | ||
Less realized loss on derivative instruments | (19 | ) | — | |||||
Less amounts reclassified from AOCL | (60 | ) | 15 | |||||
Settlement of previously recognized hedge losses | $ | (62 | ) | $ | (51 | ) |
[1] | The amounts in accumulated other comprehensive loss represent deferred unrealized hedge gains and losses. These deferred gains and losses are recognized as an adjustment to revenue when the associated derivative instruments are cash settled. | |
[2] | Effective January 1, 2008 we voluntarily elected to change our accounting method for commodity derivative instruments from the cash flow hedge method to the mark-to-market method. |