Noble Energy Announces 2011 Capital Program and Guidance
HOUSTON, Feb. 10, 2011 /PRNewswire/ — Noble Energy, Inc. (NYSE: NBL) announced today its 2011 capital program and guidance. The Company’s total capital program is estimated at $2.7 billion, with investment split relatively evenly between the United States and international operations. Approximately 42 percent of the program is going toward major project investments, 18 percent for exploration and appraisal activities, and the remaining 40 percent for ongoing maintenance and near-term growth opportunities. Major project investments include the Company’s development activities in the horizontal Niobrara, deepwater Gulf of Mexico, West Africa, and Eastern Mediterranean.
“Our plans for 2011 place Noble Energy on the threshold of accelerating growth in production and cash flow. Driven by multiple years of record exploration success, the impacts from our inventory of major development projects are rapidly approaching. Our 2011 drilling program in the horizontal Niobrara play is expected to more than double over 2010 as we expand development in the Wattenberg area, while appraising the northern portions of the play. First production at Galapagos in the deepwater Gulf and Aseng in Equatorial Guinea is in the near future, and the sanctioning of Tamar and Alen in 2010 has added two more major projects to the development queue. Our strong balance sheet and cash flows from existing assets will allow us to execute this full array of programs, including a continuation of a very material exploration effort,” said Charles D. Davidson, Noble Energy’s Chairman and CEO.
The Company anticipates investing $875 million in the Central DJ basin. In addition to the existing vertical well program in Wattenberg, Noble Energy intends to expand horizontal Niobrara drilling activity, targeting around 70 horizontal wells in 2011. In the deepwater Gulf of Mexico, the Company’s $275 million program is focused on progressing near-term oil developments at Galapagos and Raton South. It also includes three exploration wells with expectations to resume drilling at the moratorium-suspended Santiago and Deep Blue wells, along with a first appraisal well at the Gunflint discovery.
Noble Energy’s core international programs in West Africa and the Eastern Mediterranean represent approximately $575 million and $650 million, respectively. In West Africa, the Company plans to advance liquid developments at Aseng and Alen, and to resume oil exploration with two to three tests in the region. The first test will be an appraisal well in the Carmen-Diega area in Equatorial Guinea. A large portion of the Eastern Mediterranean expenditures will be the development of the Tamar natural gas field, offshore Israel. Exploration plans in the Eastern Mediterranean include three to four wells, which will include at least one appraisal well at the Leviathan discovery.
The remainder of the capital program is set aside for other opportunities onshore in the United States, as well as in the North Sea and China. Excluded from the capital program is $70 million of non-cash capital to be accrued for the Aseng FPSO capital lease.
Sales volumes for 2011 are projected to range from 208 to 218 thousand barrels of oil equivalent per day (MBoe/d). The midpoint of the range is up about three percent compared to 2010, after excluding 2010 volumes associated with the United States onshore property sales (5 MBoe/d) and the termination of a production sharing contract in Ecuador (4 MBoe/d). Product split is estimated to be 40 percent crude oil, condensate and natural gas liquids, 30 percent international natural gas, and 30 percent domestic natural gas.
United States volumes are anticipated to be up about two percent versus adjusted 2010. The Company’s ongoing development program in the Central DJ basin is projected to more than offset the natural declines expected from other non-core onshore gas properties and deepwater Gulf of Mexico. The international portfolio is expected to grow approximately four percent from adjusted 2010, largely due to higher liquids and natural gas volumes in Equatorial Guinea. Increased natural gas volumes in Israel, driven by further power generation needs, are also anticipated to contribute to the Company’s growth.
Additional detailed operational and financial information representing the 2011 Guidance is included on the following pages.
WEBCAST AND CONFERENCE CALL INFORMATION
Noble Energy, Inc. will host a webcast and conference call at 9:00 a.m. Central time today. The webcast is accessible on the ‘Investors’ page at www.nobleenergyinc.com. Conference call numbers for participation are 888-471-3840 and 719-325-2392. A replay will be available on the website.
Noble Energy is a leading independent energy company engaged in worldwide oil and gas exploration and production. The Company has core operations onshore in the U.S., primarily in the DJ basin, in the deepwater Gulf of Mexico, offshore Eastern Mediterranean, and offshore West Africa. Noble Energy is listed on the New York Stock Exchange and is traded under the ticker symbol NBL. Further information is available at www.nobleenergyinc.com.
This news release includes projections and other “forward-looking statements” within the meaning of the federal securities laws. Such projections and 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.
2011 Operational and Financial Guidance
Volumes and Prices ------------------ Total volumes are estimated to average between 208 to 218 MBoe/d, which includes equity method investment volumes. The breakdown of our estimated annual average daily volumes by product and area is: Crude Oil and Condensate (MBbl/d) --------------------------------- United States 36 - 41 Equatorial Guinea 10 - 14 Equatorial Guinea - equity method investment 1 - 2 North Sea 8 - 10 China 4 - 5
The price differential for crude oil in the United States is expected to range from $3.50 to $5.00 per barrel below WTI. Crude oil differentials in Equatorial Guinea and North Sea are based off dated Brent and should range from $0.00 to $1.00 per barrel for Equatorial Guinea and a premium of $0.00 to $1.00 per barrel for the North Sea. In China, crude oil differentials should be $7.50 to $9.00 per barrel below WTI. All price differentials exclude the impact of hedge results. Natural Gas (MMcf/d) -------------------- United States 385 - 415 Equatorial Guinea 230 - 245 Israel 125 - 155 North Sea 5 - 8
The natural gas price differential for the United States is expected to range from $0.10 to $0.35 per thousand cubic feet (Mcf) below NYMEX Henry Hub and includes a processing uplift where applicable. Price realizations for West Africa are estimated to be $0.27 per Mcf. Israel natural gas prices are anticipated to range from $3.75 to $4.00 per Mcf. All price differentials exclude the impact of hedge results. Natural Gas Liquids (MBbl/d) ---------------------------- United States 10 - 12 Equatorial Guinea - equity method investment 5 - 7 The natural gas liquid (NGL) price realizations for the United States should average around 45 to 55 percent of WTI.
Equity method investments include income generated from the methanol operations, and the condensate and NGLs recovered at the LPG plant in Equatorial Guinea, both which vary with production levels and liquid prices. The margin for 2011 is estimated at $125 to $145 million. Costs and Expenses ------------------ Lease operating $4.95 - $5.35 per Boe Transportation $0.90 - $1.05 per Boe Depreciation, depletion and amortization $11.50 - $12.00 per Boe Production and ad valorem 4.5 -4.8% of oil, gas and ngl taxes revenues Exploration $340 - $400 million General and administrative $300 - $320 million Interest (net) $30 - $50 million
Included in costs and expenses is approximately $55 million of stock-based compensation. Capitalized interest is estimated to be about $120 to $140 million. Other Items ----------- Effective tax rate 28 - 32% Deferred tax ratio 30 - 40% Outstanding shares - diluted 177 - 179 million Tax guidance is applicable to earnings before unrealized mark-to-market gain /loss on commodity derivatives and other items typically not factored in by analysts.
Commodity Hedges - 2011 ----------------------- The Company has hedged approximately 55 percent of its United States natural gas volumes with an average floor price of about $5.75 per million british thermal unit (Mmbtu). Crude oil hedges totaling about 45 percent of the Company's oil production have an average floor price of approximately $80.25 per barrel. Noble Energy has entered into the following crude oil and natural gas derivative instruments for 2011.
Crude Oil Hedges Swaps Collars Average Average Average Average Put Floor Ceiling Volume Price Price Price Price Type of Contract Index (Bbl/d) ($/Bbl) ($/Bbl) ($/Bbl) ($/Bbl)
Fixed Price Swaps WTI 5,000 $ 85.52 Two-Way Collars WTI 13,000 $80.15 $94.63 Three-Way Collars WTI 12,000 $58.33 $78.33 $100.71
Natural Gas Hedges ------------------ Swaps Collars ----- ------- Average Average Average Average Put Floor Ceiling Volume Price Price Price Price (MMBtu/ Type of Contract Index d) ($/MMBtu) ($/MMBtu) ($/MMBtu) ($/MMBtu) ---------------- ----- -------- --------- --------- --------- --------- Fixed Price Swaps NYMEX 25,000 $6.41 Two-Way Collars NYMEX 140,000 $5.95 $6.82 Three-Way Collars NYMEX 50,000 $4.00 $5.00 $6.70
Natural Gas Differential Hedges ------------------------------- Average Volume Price (MMBtu/ Type of Contract Index d) ($/MMBtu) ---------------- ----- ------- --------- Fixed Price Swaps CIG 140,000 ($0.70)
SOURCE Noble Energy, Inc.