Exhibit 99.1
NEWS RELEASE |
NOBLE ENERGY ANNOUNCES SECOND QUARTER RESULTS
HOUSTON(July 30, 2008) — Noble Energy, Inc. (NYSE:NBL) today reported a second quarter 2008 net loss of $144 million, or $0.84 per share on revenues of $1.2 billion. The result included a previously disclosed $716 million ($481 million after-tax) unrealized commodity derivative loss. Excluding this item, second quarter 2008 adjusted net income (a non-GAAP measure, see Schedule 1) was $337 million, or $1.93 per share diluted. For the same period in 2007, net income was $209 million, or $1.21 per share diluted, on revenues of $794 million.
Discretionary cash flow (a non-GAAP measure, see Schedule 5) for the second quarter 2008 was a record $685 million, compared to $473 million for the same period in 2007. Net cash provided by operating activities was $648 million.
Key highlights for the second quarter 2008 include:
• | Sales volumes rose nine percent versus second quarter 2007 with growth in both the United States and International operations | ||
• | Successful Benita oil test offshore Equatorial Guinea | ||
• | Exploration discoveries offshore Equatorial Guinea at Diega and Felicita | ||
• | Executed agreement to acquire certain producing properties in western Oklahoma |
“The second quarter 2008 was another excellent quarter for Noble Energy. Our ongoing development programs in the United States again contributed outstanding volume growth. We continued to supplement our organic programs with new acreage and selected producing properties that fit with our strategies for growth. Internationally, we experienced natural gas sales growth in Israel and West Africa compared to the second quarter last year and advanced our Dumbarton development in the North Sea. Our exploration programs continued their momentum with oil and gas-condensate discoveries offshore West Africa, as well as a natural gas discovery in the deepwater Gulf of Mexico. We remain excited about the progress we have made towards our 2008 goals and our ability to capitalize on the current environment in which we operate,” said Noble Energy’s Chairman, President and CEO, Charles D. Davidson.
Noble Energy’s operating income for the quarter was $672 million, up significantly from the same quarter last year. Sales volumes averaged 218 thousand barrels of oil equivalent per day (MBoepd), up nine percent over second quarter 2007 or 11 percent after adjusting for the Argentina asset sale. United States volumes were up five percent and International volumes were up 14 percent, respectively.
During the quarter, Rocky Mountain volumes reached a record level of 61 MBoepd resulting from ongoing development and drilling success. Deepwater Gulf of Mexico volumes continued their strong performance from recent development projects averaging approximately 29 MBoepd for the quarter. Due to robust market demand, natural gas sales in Israel were 121 million cubic feet per day.
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 plants. As a consequence, reported natural gas volumes in the United States are lower compared to 2007. Where the rights to the liquids do not exist, the processing revenue will continue to be included in natural gas revenues and benefit realized prices.
On average for the quarter, Noble Energy received $105.46 per barrel for crude oil and condensate and $5.86 per thousand cubic feet for natural gas. United States natural gas liquids prices averaged $59.65 per barrel. Crude oil and natural gas realizations for the quarter were impacted by the settlement of commodity derivative contracts.
Lease operating and transportation expenses totaled $5.24 per barrel of oil equivalent (Boe), down four percent from the second quarter 2007. Depreciation, depletion, and amortization was $9.88 per Boe, a two percent decrease. Unit costs benefited from increased volumes from lower cost operations in the Rocky Mountains, Israel, and West Africa. Production and ad valorem taxes were up due to higher oil, natural gas, and natural gas liquid revenues.
Exploration expense for the quarter included unsuccessful tests at Stones River in the deepwater Gulf of Mexico and West Tapir offshore Suriname. Included in other expenses for the quarter was deferred compensation expense of $29 million relating to the increased value of Noble Energy stock held in a benefit program.
Mid-continent Acquisition
Noble Energy also announced the acquisition of producing properties in western Oklahoma for $291 million in cash, subject to customary adjustments. Properties acquired cover approximately 15,500 net acres and have net production of 25 million cubic feet equivalent per day. Proved and probable
2
resources are estimated to be 132 billion cubic feet equivalent with approximately 75 percent natural gas and 25 percent liquids. Noble Energy will operate the assets with an average working interest of 83 percent, with plans to double net production over the next two years through the drilling of over 70 additional horizontal wells. The transaction closed in early July.
CONFERENCE CALL
Noble Energy’s second quarter 2008 conference call will be available today via live audio webcast at 9:00 a.m. Central Time. To listen, log on towww.nobleenergyinc.com and click on the Investor Relations tab. Dial in numbers are (888) 661-5157 or (913) 312-0641. The pass code is ‘Noble Energy 2008 Second Quarter Results’. The conference call replay will be available until August 30, 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 4975764.
Noble Energy is a leading independent energy company engaged in worldwide oil and gas exploration and production. The Company operates primarily in the Rocky Mountains, Mid-Continent, and deepwater Gulf of Mexico areas in the United States, with key international operations offshore Israel, UK and West Africa. Noble Energy is listed on the New York Stock Exchange and is traded under the ticker symbol NBL. Visit Noble Energy online atwww.nobleenergyinc.com.
Contacts:
David Larson
(281) 872-3125 dlarson@nobleenergyinc.com
David Larson
(281) 872-3125 dlarson@nobleenergyinc.com
Brad Whitmarsh
(281) 872-3187 bwhitmarsh@nobleenergyinc.com
(281) 872-3187 bwhitmarsh@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. Risks, uncertainties and assumptions that could cause actual results to differ materially from those projected include, without limitation, the volatility in commodity prices for crude oil and natural 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. Words such as “anticipates,” “believes,” “expects,” “intends,” “will,” “should,” “may,” and similar expressions may be used to identify forward-looking statements. Noble Energy assumes no obligation and expressly disclaims any duty to update the information contained herein except as required by law.
This news release may also contain certain forward-looking non-GAAP measures of financial performance that management believes are good tools for internal use and the investment community in evaluating the company’s overall financial performance. These non-GAAP measures are broadly used to value and compare companies in the crude oil and natural gas industry.
The United States Securities and Exchange Commission permits oil and gas companies, in their filings with the SEC, to disclose only proved reserves that a company has demonstrated by actual production or conclusive formation tests to be economically and legally producible under existing economic and operating conditions. We use certain terms in this news release, such as “resources,”
3
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, http://www.nobleenergyinc.com. These forms can also be obtained from the SEC by calling 1-800-SEC-0330.
-xxx-
4
Schedule 1
Noble Energy, Inc.
Reconciliation of Net Income (Loss) to Adjusted Net Income
(in millions, except per share amounts, unaudited)
Noble Energy, Inc.
Reconciliation of Net Income (Loss) to Adjusted Net Income
(in millions, except per share amounts, unaudited)
Three Months Ended | Six Months Ended | |||||||||||||||
June 30, | June 30, | |||||||||||||||
2008 | 2007 | 2008 | 2007 | |||||||||||||
Net Income (Loss) | $ | (144 | ) | $ | 209 | $ | 71 | $ | 421 | |||||||
Adjustments, net of tax | ||||||||||||||||
Unrealized commodity derivative losses in net income | 481 | — | 630 | — | ||||||||||||
Adjusted Net Income [1] | $ | 337 | $ | 209 | $ | 701 | $ | 421 | ||||||||
Adjusted Earnings Per Share | ||||||||||||||||
Basic | $ | 1.96 | $ | 1.22 | $ | 4.08 | $ | 2.46 | ||||||||
Diluted | 1.93 | 1.21 | 4.01 | 2.43 | ||||||||||||
Weighted average number of shares outstanding | ||||||||||||||||
Basic | 172 | 171 | 172 | 171 | ||||||||||||
Diluted[2] | 175 | 173 | 175 | 173 |
[1] | Adjusted net income should not be considered a substitute for net income (loss) 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 affected on a standalone basis at the end of each period. For analysis purposes, adjusted net income for 2008 should be compared to 2007 reported net income since, effective January 1, 2008, we voluntarily changed our accounting method for commodity derivative instruments from the cash flow hedge method to the mark-to-market method. | |
[2] | The adjusted diluted earnings per share calculation for 2nd Quarter 2008 includes an increase to diluted shares of approximately 3 million shares representing the incremental dilutive shares that would be included if not for our 2nd quarter 2008 net loss. |
Schedule 2
Noble Energy, Inc.
Summary Statement of Operations
(in millions, except per share amounts, unaudited)
Noble Energy, Inc.
Summary Statement of Operations
(in millions, except per share amounts, unaudited)
Three Months Ended | Six Months Ended | |||||||||||||||
June 30, | June 30, | |||||||||||||||
2008 | 2007 | 2008 | 2007 | |||||||||||||
Revenues | ||||||||||||||||
Crude oil and condensate | $ | 674 | $ | 422 | $ | 1,200 | $ | 755 | ||||||||
Natural gas | 399 | 305 | 771 | 639 | ||||||||||||
Natural gas liquids | 57 | — | 103 | — | ||||||||||||
Income from equity method investees | 56 | 49 | 118 | 95 | ||||||||||||
Other revenues | 19 | 18 | 38 | 48 | ||||||||||||
Total revenues | 1,205 | 794 | 2,230 | 1,537 | ||||||||||||
Operating Expenses | ||||||||||||||||
Lease operating expense | 88 | 83 | 170 | 161 | ||||||||||||
Production and ad valorem taxes | 51 | 28 | 94 | 54 | ||||||||||||
Transportation expense | 16 | 16 | 29 | 27 | ||||||||||||
Exploration expense | 103 | 54 | 143 | 99 | ||||||||||||
Depreciation, depletion and amortization | 196 | 183 | 399 | 349 | ||||||||||||
General and administrative | 61 | 48 | 121 | 93 | ||||||||||||
Other operating expense, net | 18 | 54 | 38 | 83 | ||||||||||||
Total operating expenses | 533 | 466 | 994 | 866 | ||||||||||||
Operating Income | 672 | 328 | 1,236 | 671 | ||||||||||||
Other (Income) Expense | ||||||||||||||||
Loss (gain) on commodity derivative instruments | 828 | (1 | ) | 1,065 | (2 | ) | ||||||||||
Interest, net of amount capitalized | 17 | 31 | 34 | 58 | ||||||||||||
Other expense, net | 25 | 5 | 18 | 18 | ||||||||||||
Total other expenses | 870 | 35 | 1,117 | 74 | ||||||||||||
Income (Loss) Before Taxes | (198 | ) | 293 | 119 | 597 | |||||||||||
Income Tax Provision (Benefit) | (54 | ) | 84 | 48 | 176 | |||||||||||
Net Income (Loss) | $ | (144 | ) | $ | 209 | $ | 71 | $ | 421 | |||||||
Earnings (Loss) Per Share | ||||||||||||||||
Basic | $ | (0.84 | ) | $ | 1.22 | $ | 0.41 | $ | 2.46 | |||||||
Diluted | $ | (0.84 | ) | $ | 1.21 | $ | 0.41 | $ | 2.43 | |||||||
Weighted average number of shares outstanding | ||||||||||||||||
Basic | 172 | 171 | 172 | 171 | ||||||||||||
Diluted | 172 | 173 | 175 | 173 |
Schedule 3
Noble Energy, Inc.
Volume and Price Statistics
(unaudited)
Noble Energy, Inc.
Volume and Price Statistics
(unaudited)
Three Months Ended | Six Months Ended | |||||||||||||||
June 30, | June 30, | |||||||||||||||
2008 | 2007 | 2008 | 2007 | |||||||||||||
Crude Oil and Condensate Sales Volumes (MBpd) | ||||||||||||||||
United States | 44 | 45 | 43 | 45 | ||||||||||||
West Africa | 14 | 19 | 15 | 16 | ||||||||||||
North Sea | 8 | 10 | 9 | 10 | ||||||||||||
Other International | 4 | 7 | 5 | 7 | ||||||||||||
Total consolidated operations | 70 | 81 | 72 | 78 | ||||||||||||
Equity method investee | 2 | 2 | 2 | 2 | ||||||||||||
Total sales volumes | 72 | 83 | 74 | 80 | ||||||||||||
Crude Oil and Condensate Realized Prices ($/Bbl) | ||||||||||||||||
United States | $ | 99.05 | $ | 51.34 | $ | 85.36 | $ | 48.88 | ||||||||
West Africa | 112.32 | 69.23 | 100.16 | 64.15 | ||||||||||||
North Sea | 126.05 | 67.88 | 112.36 | 64.45 | ||||||||||||
Other International | 109.17 | 50.51 | 87.47 | 47.87 | ||||||||||||
Average consolidated realized prices | $ | 105.46 | $ | 57.42 | $ | 91.88 | $ | 53.75 | ||||||||
Natural Gas Sales Volumes (MMcfpd) | ||||||||||||||||
United States | 402 | 418 | 397 | 413 | ||||||||||||
West Africa | 222 | 116 | 221 | 86 | ||||||||||||
North Sea | 5 | 5 | 6 | 6 | ||||||||||||
Israel | 121 | 97 | 133 | 100 | ||||||||||||
Other International | 22 | 22 | 23 | 26 | ||||||||||||
Total sales volumes | 772 | 658 | 780 | 631 | ||||||||||||
Natural Gas Realized Prices ($/Mcf) | ||||||||||||||||
United States | $ | 9.82 | $ | 7.25 | $ | 9.40 | $ | 7.74 | ||||||||
West Africa | 0.27 | 0.29 | 0.27 | 0.31 | ||||||||||||
North Sea | 10.81 | 4.81 | 10.18 | 5.51 | ||||||||||||
Israel | 2.72 | 2.70 | 2.90 | 2.72 | ||||||||||||
Other International | — | — | — | — | ||||||||||||
Average realized prices | $ | 5.86 | $ | 5.27 | $ | 5.60 | $ | 5.83 | ||||||||
Natural Gas Liquids (NGL) Sales Volumes (MBpd) [1] | ||||||||||||||||
United States | 10 | — | 10 | — | ||||||||||||
Equity method investee | 7 | 7 | 7 | 6 | ||||||||||||
Total sales volumes | 17 | 7 | 17 | 6 | ||||||||||||
Natural Gas Liquids Realized Prices ($/Bbl) | ||||||||||||||||
United States | $ | 59.65 | $ | — | $ | 57.55 | $ | — | ||||||||
Barrels of Oil Equivalent Volumes (MBoepd) | ||||||||||||||||
United States | 121 | 115 | 119 | 114 | ||||||||||||
West Africa | 51 | 38 | 52 | 30 | ||||||||||||
North Sea | 9 | 11 | 10 | 11 | ||||||||||||
Israel | 20 | 16 | 22 | 17 | ||||||||||||
Other International | 8 | 11 | 9 | 11 | ||||||||||||
Total consolidated operations | 209 | 191 | 212 | 183 | ||||||||||||
Equity method investee | 9 | 9 | 9 | 8 | ||||||||||||
Total barrels of oil equivalent (MBoepd) | 218 | 200 | 221 | 191 | ||||||||||||
Barrels of oil equivalent volumes (MMBoe) | 20 | 18 | 40 | 35 | ||||||||||||
[1] | For 2007, United States NGL sales volumes were included with natural gas volumes. Effective in 2008, we began reporting United States 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) | ||||||||
June 30, | December 31, | |||||||
2008 | 2007 | |||||||
Assets | ||||||||
Current Assets | ||||||||
Cash and cash equivalents | $ | 983 | $ | 660 | ||||
Accounts receivable — trade, net | 864 | 594 | ||||||
Other current assets | 301 | 315 | ||||||
Total current assets | 2,148 | 1,569 | ||||||
Net property, plant and equipment | 8,469 | 7,945 | ||||||
Goodwill | 759 | 761 | ||||||
Other noncurrent assets | 561 | 556 | ||||||
Total Assets | $ | 11,937 | $ | 10,831 | ||||
Liabilities and Shareholders’ Equity | ||||||||
Current Liabilities | ||||||||
Accounts payable — trade | $ | 921 | $ | 781 | ||||
Commodity Derivative instruments | 964 | 540 | ||||||
Short-term borrowings | 25 | 25 | ||||||
Other current liabilities | 295 | 290 | ||||||
Total current liabilities | 2,205 | 1,636 | ||||||
Deferred income taxes | 1,999 | 1,984 | ||||||
Commodity Derivative instruments | 390 | 83 | ||||||
Other noncurrent liabilities | 507 | 468 | ||||||
Long-term debt | 1,851 | 1,851 | ||||||
Total Liabilities | 6,952 | 6,022 | ||||||
Total Shareholders’ Equity | 4,985 | 4,809 | ||||||
Total Liabilities and Shareholders’ Equity | $ | 11,937 | $ | 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 | Six Months Ended | |||||||||||||||
June 30, | June 30, | |||||||||||||||
2008 | 2007 | 2008 | 2007 | |||||||||||||
Adjusted Net Income [1] | $ | 337 | $ | 209 | $ | 701 | $ | 421 | ||||||||
Adjustments to reconcile net income to discretionary cash flow: | ||||||||||||||||
Depreciation, depletion and amortization | 196 | 185 | 399 | 349 | ||||||||||||
Exploration costs | 103 | 54 | 143 | 99 | ||||||||||||
Interest capitalized | (6 | ) | (3 | ) | (16 | ) | (6 | ) | ||||||||
Income / distributions from equity method investments, net | (11 | ) | (5 | ) | 3 | 2 | ||||||||||
Deferred compensation adjustment | 29 | 3 | 22 | 15 | ||||||||||||
Deferred income taxes | 60 | 56 | 118 | 104 | ||||||||||||
Stock-based compensation expense | 11 | 7 | 20 | 12 | ||||||||||||
Settlement of previously recognized hedge losses[2] | (39 | ) | (39 | ) | (101 | ) | (91 | ) | ||||||||
Other, net | 5 | 6 | 13 | 17 | ||||||||||||
Discretionary Cash Flow [3] | 685 | 473 | 1,302 | 922 | ||||||||||||
Reconciliation to Operating Cash Flows | ||||||||||||||||
Net changes in working capital | (153 | ) | (173 | ) | (290 | ) | (190 | ) | ||||||||
Cash exploration costs | (42 | ) | — | (74 | ) | (25 | ) | |||||||||
Capitalized interest | 6 | 3 | 16 | 6 | ||||||||||||
Loss (Gain) on disposal of assets | — | (1 | ) | — | (6 | ) | ||||||||||
Current tax benefit of unrealized commodity derivative losses | 151 | — | 196 | — | ||||||||||||
Other adjustments | 1 | 49 | 4 | 66 | ||||||||||||
Net Cash Provided by Operating Activities | $ | 648 | $ | 351 | $ | 1,154 | $ | 773 | ||||||||
Capital Expenditures, accrual based | $ | 561 | $ | 481 | $ | 1,046 | $ | 765 |
[1] | See Schedule 1, Reconciliation of Net Income (Loss) to Adjusted Net Income, for reconciliation. | |
[2] | See Schedule 6, Effect of Commodity Derivative Instruments, for reconciliation. | |
[3] | 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 Commodity Derivative Instruments
(in millions, unaudited)
Noble Energy, Inc.
Effect of Commodity Derivative Instruments
(in millions, unaudited)
Three Months Ended | Six Months Ended | |||||||||||||||
June 30, | June 30, | |||||||||||||||
2008 | 2007 | 2008 | 2007 | |||||||||||||
Reclassification from Accumulated Other Comprehensive Loss to Revenue [1] | ||||||||||||||||
Crude Oil | $ | (93 | ) | $ | (40 | ) | $ | (190 | ) | $ | (68 | ) | ||||
Natural Gas | (2 | ) | 29 | 35 | 72 | |||||||||||
Total Revenue Increase (Decrease) | $ | (95 | ) | $ | (11 | ) | $ | (155 | ) | $ | 4 | |||||
Gain (Loss) on Derivative Instruments [2] | ||||||||||||||||
Crude oil | ||||||||||||||||
Realized losses | $ | (72 | ) | $ | — | $ | (79 | ) | $ | — | ||||||
Unrealized losses | (575 | ) | — | (680 | ) | — | ||||||||||
Ineffectiveness and other | — | — | — | — | ||||||||||||
Total crude oil | (647 | ) | — | (759 | ) | — | ||||||||||
Natural gas | ||||||||||||||||
Realized losses | (40 | ) | — | (52 | ) | — | ||||||||||
Unrealized losses | (141 | ) | — | (254 | ) | — | ||||||||||
Ineffectiveness and other | — | 1 | — | 2 | ||||||||||||
Total natural gas | (181 | ) | 1 | (306 | ) | 2 | ||||||||||
Total Gain (Loss) on Derivative Instruments | $ | (828 | ) | $ | 1 | $ | (1,065 | ) | $ | 2 | ||||||
Summary of Cash Settlements | ||||||||||||||||
Cash settlements paid | $ | (246 | ) | $ | (50 | ) | $ | (387 | ) | $ | (87 | ) | ||||
Less realized loss on derivative instruments | (112 | ) | — | (131 | ) | — | ||||||||||
Less amounts reclassified from AOCL | (95 | ) | (11 | ) | (155 | ) | 4 | |||||||||
Settlement of previously recognized hedge losses | $ | (39 | ) | $ | (39 | ) | $ | (101 | ) | $ | (91 | ) | ||||
[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 changed our accounting method for commodity derivative instruments from the cash flow hedge method to the mark-to-market method. |