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NOBLE ENERGY INC
FORM 8-K(Current report filing)
Filed 02/17/16 for the Period Ending 02/17/16
Address 1001 NOBLE ENERGY WAY
HOUSTON, TX 77070Telephone 2818723100
CIK 0000072207Symbol NBL
SIC Code 1311 - Crude Petroleum and Natural GasIndustry Oil & Gas Operations
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): February 17, 2016
NOBLE ENERGY, INC.(Exact name of Registrant as specified in its charter)
Delaware 001-07964 73-0785597(State or other jurisdiction ofincorporation or organization)
CommissionFile Number
(I.R.S. EmployerIdentification No.)
1001 Noble Energy Way,Houston, Texas 77070
(Address of principal executive offices) (Zip Code)
Registrant’s telephone number, including area code: (281) 872-3100
(Former name, former address and former fiscal year, if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the followingprovisions:
o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Item 2.02. Results of Operations and Financial Condition.On February 17, 2016, Noble Energy, Inc. (the “Company”) issued a press release announcing results for the fiscal year and fiscal quarter ended December 31,2015. A copy of the press release issued by the Company is furnished as Exhibit 99.1 to this Current Report and will be published on the Company's website atwww.nobleenergyinc.com.
The Company’s press release announcing its financial results for its fiscal year and fiscal quarter ended December 31, 2015 contains non-GAAP financialmeasures. Generally, a non-GAAP financial measure is a numerical measure of a company’s performance, financial position, or cash flows that either excludes orincludes amounts that are not normally excluded or included in the most directly comparable measure calculated and presented in accordance with United Statesgenerally accepted accounting principles, or GAAP. Pursuant to the requirements of Regulation G, the Company has provided quantitative reconciliations withinthe press release of the non-GAAP financial measures to the most directly comparable GAAP financial measures.
In accordance with General Instruction B.2. of Form 8-K, the information set forth herein and in the press release is deemed to be "furnished" and shall not be"filed" for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the "Exchange Act").
Item 7.01. Regulation FD Disclosure.
On February 17, 2016, the Company issued a press release with respect to its 2016 capital budget and operational and financial guidance. A copy of the Company’spress release is furnished as Exhibit 99.2 to this current report on Form 8-K and incorporated herein by reference.
Item 9.01. Financial Statements and Exhibits.(d) Exhibits. The following exhibits are furnished as part of this Current Report on Form 8-K:
99.1 Press Release dated February 17, 2016 announcing results for the fiscal year and fiscal quarter ended December 31, 2015. 99.2 Press Release dated February 17, 2016 announcing the 2016 capital budget and operational and financial guidance.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the Company has duly caused this report to be signed on its behalf by the undersignedthereunto duly authorized.
NOBLE ENERGY, INC.
Date: February 17, 2016 By: /s/ Kenneth M. Fisher Kenneth M. Fisher Executive Vice President, Chief Financial Officer
INDEX TO EXHIBITS
Exhibit No. Description
99.1
Press Release dated February 17, 2016 announcing results for the fiscal year and fiscal quarter ended December 31, 2015.
99.2
Press Release dated February 17, 2016 announcing the 2016 capital budget and operational and financial guidance.
This news release contains certain “forward-looking statements” within the meaning of federal securities law. Words such as
“anticipates”, “believes”, “expects”, “intends”, “will”, “should”, “may”, “estimates”, and similar expressions may be used to identify
forward-looking statements. Forward-looking statements are not statements of historical fact and reflect Noble Energy’s current
views about future events. They include estimates of oil and natural gas reserves, estimates of future production, assumptions
regarding future oil and natural gas pricing, planned drilling activity, future results of operations, projected cash flow and liquidity,
business strategy and other plans and objectives for future operations. No assurances can be given that the forward-looking
statements contained in this news release will occur as projected and actual results may differ materially from those projected.
Forward-looking statements are based on current expectations, estimates and assumptions that involve a number of risks and
uncertainties that could cause actual results to differ materially from those projected. These risks 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 actions, the ability of management to execute its plans to meet its goals and other risks inherent in Noble
Energy’s business that are discussed in its most recent annual report on Form 10-K and in other reports on file with the
Securities and Exchange Commission (“SEC”). These reports are also available from Noble Energy’s offices or website,
http://www.nobleenergyinc.com . Forward-looking statements are based on the estimates and opinions of management at the
time the statements are made. Noble Energy does not assume any obligation to update forward-looking statements should
circumstances, management’s estimates, or opinions change.
This news release also contains certain historical non-GAAP measures of financial performance that management believes are
good tools for internal use and the investment community in evaluating Noble Energy’s overall financial performance. These
non-GAAP measures are broadly used to value and compare companies in the crude oil and natural gas industry. Please see
the attached schedules for reconciliations of the differences between any historical non-GAAP measures used in this news
release and the most directly comparable GAAP financial measures.
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Schedule 1Noble Energy, Inc.
Summary Statement of Operations(in millions, except per share amounts, unaudited)
Three Months Ended
December 31, Twelve Months Ended
December 31,
2015 2014 2015 2014Revenues
Crude oil and condensate $ 488 $ 690 $ 1,840 $ 3,438Natural gas 272 291 1,056 1,223Natural gas liquids 56 56 147 270Income from equity method investees 30 33 90 170
Total revenues 846 1,070 3,133 5,101Operating Expenses
Lease operating expense 146 170 563 593Production and ad valorem taxes 38 38 127 184Transportation and gathering expense 85 50 272 170Exploration expense 180 147 488 498Depreciation, depletion and amortization 686 462 2,131 1,759General and administrative 89 104 396 503Asset impairments 490 336 533 500Goodwill Impairment 779 — 779 —Other operating (income) expense, net 65 8 316 (24)
Total operating expenses 2,558 1,315 5,605 4,183Operating Income (Loss) (1,712) (245) (2,472) 918Other (Income) Expense
(Gain) on commodity derivative instruments (170) (903) (501) (976)Interest, net of amount capitalized 80 59 263 210Other non-operating (income) expense, net 5 (25) (15) (26)
Total other (income) expense (85) (869) (253) (792)Income (Loss) Before Income Taxes (1,627) 624 (2,219) 1,710Income Tax (Benefit) Provision 401 222 222 496Net Income (Loss) $ (2,028) $ 402 $ (2,441) $ 1,214Earnings (Loss) Per Share Earnings (Loss) Per Share, Basic $ (4.73) $ 1.11 $ (6.07) $ 3.36Earnings (Loss) Per Share, Diluted $ (4.73) $ 1.05 $ (6.07) $ 3.27
Weighted average number of shares outstanding Basic 429 362 402 361Diluted 429 367 402 367
These financial statements should be read in conjunction with the financial statements and the accompanying notes and other information included in Noble Energy's AnnualReport on Form 10-K to be filed with the Securities and Exchange Commission on February 17, 2016.
On July 20, 2015, we completed the merger with Rosetta Resources Inc. (Rosetta or Rosetta Merger) and the results of operations attributable to Rosetta are included in ourconsolidated statement of operations beginning on July 21, 2015. The results of these operations attributable to Rosetta will affect the comparability of our financial results toprior periods.
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Schedule 2Noble Energy, Inc.
Condensed Balance Sheets(in millions, unaudited)
December 31, December 31,
2015 2014ASSETS
Current Assets Cash and cash equivalents $ 1,028 $ 1,183Accounts receivable, net 450 857Commodity derivative assets, current 582 710Other current assets 216 325
Total current assets 2,276 3,075Net property, plant and equipment 21,300 18,143Goodwill — 620Other noncurrent assets 620 680
Total Assets $ 24,196 $ 22,518LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities Accounts payable - trade $ 1,128 $ 1,578Other current liabilities 677 944
Total current liabilities 1,805 2,522Long-term debt 7,976 6,068Deferred income taxes, noncurrent 2,826 2,516Other noncurrent liabilities 1,219 1,087
Total Liabilities 13,826 12,193Total Shareholders’ Equity 10,370 10,325
Total Liabilities and Shareholders’ Equity $ 24,196 $ 22,518
These financial statements should be read in conjunction with the financial statements and the accompanying notes and other information included in Noble Energy's AnnualReport on Form 10-K to be filed with the Securities and Exchange Commission on February 17, 2016.
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Schedule 3Noble Energy, Inc.
Volume and Price Statistics(unaudited)
Three Months Ended
December 31, Twelve Months Ended
December 31,
2015 2014 2015 2014Crude Oil and Condensate Sales Volumes (MBbl/d)
United States 99 70 81 68Equatorial Guinea 37 37 31 33Other International — — — 2
Total sales volumes 422 315 355 298(1) Average realized prices do not include gains or losses on commodity derivative instruments.
On July 20, 2015, we completed the merger with Rosetta and the associated volumes and price statistics are included in our operations beginning on July 21, 2015. The results ofthese volumes and prices attributable to Rosetta will affect the comparability of our results to prior periods.
4
Schedule 4Noble Energy, Inc.
Reconciliation of Net Income (Loss) to Adjusted Income(in millions, except per share amounts, unaudited)
Three Months Ended December 31, Twelve Months Ended December 31,
Total adjustments before tax 1,573 3.67 (466) (1.26) 2,176 5.41 (545) (1.49)Income tax effect of adjustments [6] 646 1.50 203 0.54 477 1.18 196 0.54
Adjusted Income $ 191 $ 0.44 $ 139 $ 0.38 $ 212 $ 0.52 $ 865 $ 2.36Weighted average number of shares outstanding
Diluted 431 367 405 367
NOTE: Adjusted income should not be considered an alternative to, or more meaningful than, net income (loss) as reported in accordance with GAAP. Adjusted income is provided forcomparison to earnings forecasts prepared by analysts and other third parties. Our management believes, and certain investors may find, that adjusted income is beneficial inevaluating our financial performance. We believe such measures can facilitate comparisons of operating performance between periods and with our peers. However, NobleEnergy's method of computing this measure may not be the same method used to compute similar measures reported by other entities. See Schedule 1: Summary Statement ofOperations.
On July 20, 2015, we completed the merger with Rosetta and the results of operations attributable to Rosetta are included in our consolidated statement of operations beginningon July 21, 2015. The results of these operations attributable to Rosetta will affect the comparability of our financial results to prior periods.
[1] Many factors impact our gain or loss on commodity derivative instruments, net of cash settlements, including: increases and decreases in the commodity forward price curves comparedto our executed hedging arrangements; increases in hedged future revenues; and the mix of hedge arrangements between NYMEX WTI, Dated Brent and NYMEX HH commodities.These gains or losses on commodity derivative instruments, net of cash settlements, recognized in the current period, will be realized in the future when cash settlement occurs.
[2] Amount for 2015 relates to Equatorial Guinea, Gulf of Mexico and Eastern Mediterranean properties. Amount for 2014 primarily relates to US Onshore, Gulf of Mexico and North Seaproperties.
[3] Due to continuing declines in commodity prices and the market value of our common stock, we determined that our goodwill, associated with the US reporting unit, was impaired.
[4] Amount represents (increases) decreases in the fair value of shares of our common stock held in a rabbi trust.
[5] Amount represents our Northeast Nevada exploration efforts which we elected to discontinue after assessing commercial viability in the current commodity price environment.
[6] Amount represents the income tax effect of adjustments, determined for each major tax jurisdiction for each adjusting item, as well as the change in the indefinite reinvestment assertionrelated to accumulated undistributed earnings of foreign subsidiaries.
5
Schedule 5Noble Energy, Inc.
Discretionary Cash Flow and Reconciliation to Net Cash Provided by Operating Activities(in millions, unaudited)
Three Months Ended
December 31, Twelve Months Ended
December 31,
2015 2014 2015 2014Adjusted Income [1] $ 191 $ 139 $ 212 $ 865Adjustments to reconcile adjusted income to discretionary cash flow
Depreciation, depletion and amortization 686 462 2,131 1,759Exploration expense 85 147 393 498(Income)/Dividends from equity method investments, net (10) (20) (14) 33Deferred income taxes (362) 4 (457) 72Stock-based compensation expense 17 21 71 87Other 2 1 (2) 10
Net changes in working capital (55) 127 (129) 412Cash exploration costs (33) (79) (106) (229)Current tax benefit of earnings adjustments 77 — 97 —Corporate restructuring (12) — (51) —Stacked drilling rig (11) — (30) —Rosetta merger expenses (8) — (66) —Other adjustments 9 1 13 (1)
Net Cash Provided by Operating Activities $ 576 $ 803 $ 2,062 $ 3,506
Capital expenditures (accrual based) $ 527 $ 1,353 $ 2,852 $ 4,883Rosetta merger capital expenditures — — 3,175 —Increase in capital lease obligations [2] (5) 29 55 110Total Capital Expenditures (Accrual Based) $ 522 $ 1,382 $ 6,082 $ 4,993
NOTE: Discretionary cash flow should not be considered an alternative to, or more meaningful than, net income (loss), net cash provided by operating activities, or anyother measure as reported in accordance with GAAP. The table above reconciles discretionary cash flow to net cash provided by operating activities. Ourmanagement believes, and certain investors may find that discretionary cash flow is useful as an indicator of the company's ability to fund exploration andproduction activities and meet financial obligations. Discretionary cash flow is also useful as a basis for valuing companies in the oil and gas industry. However,Noble Energy's method of computing this measure may not be the same method used to compute similar measures reported by other entities.
On July 20, 2015, we completed the merger with Rosetta and the results of operations attributable to Rosetta are included in our consolidated statement ofoperations beginning on July 21, 2015. The results of these operations attributable to Rosetta will affect the comparability of our financial results to prior periods.
[1] See Schedule 4: Reconciliation of Net Income (Loss) to Adjusted Income.
[2] Represents estimated construction in progress to date on US operating assets and corporate buildings.
6
Schedule 6Noble Energy, Inc.Supplemental Data
(in millions, unaudited)
2015 Costs Incurred in Oil and Gas Activities United States Int’l [1] Total
Investment in equity method investee 104Other corporate capital and capital leases 152
Total capital spending (accrual basis) $ 6,082
Proved Reserves [3] United States Int’l [4] TotalTotal Barrel Oil Equivalents (MMBoe) Beginning reserves - December 31, 2014 816 588 1,404
Price-related revisions (293) (14) (307)Other non-price-related revisions 84 7 91Extensions, discoveries and other additions 100 — 100Purchase of minerals in place 269 — 269Sale of minerals in place (6) — (6)Production (86) (44) (130)
Ending reserves - December 31, 2015 884 537 1,421Proved Developed Reserves (MMBoe)
[1] International primarily includes Cameroon, Cyprus, Equatorial Guinea, Falkland Islands and Israel.
[2] Includes ARO costs of $194 million for United States and $39 million for International.
[3] Netherland, Sewell & Associates, Inc. performed a reserves audit for 2015 and concluded that the Company's estimates of proved reserves were, in theaggregate, reasonable and have been prepared in accordance with Standards Pertaining to the Estimating and Auditing of Oil and Gas Reserves Informationpromulgated by the Society of Petroleum Engineers.
[4] International primarily includes Equatorial Guinea and Israel.
7
Exhibit 99.2
NEWSRELEASE
NOBLEENERGYDETAILS2016OUTLOOKANDGUIDANCE
• Total 2016 capital estimated at $1.5 billion, approximately 50 percent lower than 2015
• Focus on managing within total cash flows and maintaining financial strength in the current commodity environment
• Targeting two-thirds of capital program to onshore U.S. unconventional assets and one-third to offshore development and
exploration
• Expect full-year sales volumes up 10 percent over 2015 reported totals (consistent with full-year 2015 pro-forma for the
Rosetta Resources Inc. merger)
• Anticipate liquids volumes will increase by approximately 20 MBbl/d over 2015 reported total
HOUSTON(February 17, 2016) - Noble Energy, Inc. (NYSE: NBL) (“Noble Energy” or “the Company”) today provided full 2016
annual guidance. As previously indicated, capital expenditures, including capitalized interest, for 2016 are expected to total $1.5
billion, and average sales volumes for the year are projected to be approximately 390 thousand barrels of oil equivalent per day
(MBoe/d).
David L. Stover, the Company's Chairman, President and CEO, commented, “Starting early last year, we successfully executed
on our strategy to align activity levels and underlying costs with the current market outlook, while maintaining strong operating
momentum. These actions enabled us to enter 2016 with line of sight on managing the business within total cash flow.
Protecting our balance sheet is fundamental in this environment. Our 2016 capital program ensures financial strength and high
operating capability, while building long-term value for the shareholders. Although we are not focused on accelerating near-term
production growth into a challenging commodity market, our ability to maintain, and even grow production, with a much reduced
capital program than last year, is a testament to both our asset quality and portfolio diversity. We have tremendous optionality in
how we allocate capital, and we will continue to optimize activity levels as we proceed throughout the year.”
Initial Capital Program
The Company’s 2016 capital program represents an approximate 50 percent reduction from 2015 levels (pro-forma for Rosetta).
Investments in onshore U.S. unconventional development comprise two-thirds of the total. Activity will be primarily focused on
drilling, completion and associated midstream investments in the Wells Ranch and East Pony IDPs in the DJ Basin, while also
furthering development of the Eagle Ford and delineation of the Delaware Basin assets. Capital expenditures in the Marcellus
Shale will be limited to the completion of certain previously-drilled wells, primarily located in non-operated dry gas areas.
Noble Energy’s total onshore U.S. rig count is expected to fluctuate between three and four horizontal rigs throughout the year.
Two rigs are planned on average for the DJ Basin, while the Eagle Ford and Delaware Basin assets will utilize between one and
two rigs combined. The Company anticipates drilling approximately 115 wells to total depth, 80 percent of which are planned in
the DJ Basin, where activity will be focused on maximizing lateral lengths and enhancing completion techniques. Remaining
drilling activity is split relatively evenly between the Eagle Ford and Delaware Basin. Approximately 215 wells are anticipated to
commence production in the U.S. unconventional business during the year.
The remaining one-third of the capital program is allocated to offshore development and exploration activities. This is mainly
driven by the deepwater Gulf of Mexico, including the completion of the Gunflint major project. Noble Energy anticipates drilling
two to three offshore exploration wells, including the Silvergate prospect and an appraisal at the Katmai oil discovery.
International capital expenditures include the Alba compression project in Equatorial Guinea and certain pre-FID expenditures
for the advancement of Eastern Mediterranean projects.
Anticipated capital expectations by business unit:
Initial2016CapitalProgram($MM)DJ Basin $600 Gulf of Mexico $250Eagle Ford $150 West Africa $75Delaware $100 Eastern Med. $100Marcellus Shale $150 Other $75U.SUnconventional $1,000 Offshore/Other $500
TotalCompany $1,500
Sales Volumes
Full year sales volumes are anticipated to average approximately 390 MBoe/d for 2016, which represents a 10 percent increase
over 2015 reported totals and essentially flat pro-forma for the Rosetta merger. Liquids are anticipated to comprise 45 percent of
total 2016 volumes (32 percent crude oil and condensate and 13 percent natural gas liquids) with the remaining 55 percent
natural gas.
For the full year, total liquids volumes are anticipated to be up approximately 20 MBbl/d over last year, with the increase split
relatively evenly between crude oil and natural gas liquids.
In the Gulf of Mexico, oil volumes are expected to be up substantially due to the impact of the Big Bend and Dantzler projects,
which commenced production in late 2015, and the Gunflint development on schedule for startup in mid-2016. The increase in
the Gulf of Mexico will more than offset anticipated downtime associated with the Alba compression project installation in
Equatorial Guinea. Project installation is underway and expected complete early in the second quarter of 2016. The Company is
anticipating natural gas sales volumes in Israel, which is driven by demand trends, to be consistent with 2015 levels. Natural gas
exports to neighboring countries could commence in 2016, offering additional upside to the Company’s guidance.
In the U.S. unconventional business and based on planned drilling and completion activity, volumes from the DJ Basin are
expected to be down some, while Marcellus and Texas (pro-forma) production are expected to show year on year increases.
First quarter 2016 sales volumes are expected to average between 395 and 405 MBoe/d, down from the fourth quarter of 2015
primarily as a result of downtime associated with the Alba compression project. Full detailed first quarter 2016 guidance is
provided in the Company’s supplemental slides for today’s upcoming conference call. The slides are available on the Company’s
website.
2016Full-yearOperationalandFinancialGuidanceThe breakdown of our estimated annual average daily volumes for 2016 by product and location is:
Equity method investments include income generated from the methanol facilities, the LPG plant in Equatorial Guinea, as well as
the CONE MLP. Equity method income for 2015 is estimated at $90 to $110 million.
Costs and Expenses
Lease operating ($ per BOE) $ 4.20 - $ 4.50
Transportation and gathering ($ per BOE) $ 2.90 - $ 3.10
Depreciation, depletion and amortization ($ per BOE) $16.00 - $16.50
Production and ad valorem taxes 4.7 - 5.2% of oil, gas and NGL revenues
Marketing and processing ($ per BOE) $0.55 - $0.70
Exploration ($ MM) $330 - $380
General and administrative ($ MM) $420 - $450
Interest, net* ($ MM) $310 - $330
*Capitalized interest is estimated to be $100 million.
Other Items
Effective tax rate 35 - 45%
Deferred tax ratio 80 - 100%
Outstanding shares - diluted 430 - 440 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.
NobleEnergy(NYSE:NBL)is an independent oil and natural gas exploration and production company with a diversified high-quality portfolio of both U.S. unconventional and global offshore conventional assets spanning three continents. Founded morethan 80 years ago, the company is committed to safely and responsibly delivering our purpose: Energizing the World, BetteringPeople’s Lives ®. For more information, visit www.nobleenergyinc.com