Noble Energy Announces Second Quarter 2009 Results

Press Release

Jul 30, 2009
Noble Energy Announces Second Quarter 2009 Results

HOUSTON, July 30, 2009 /PRNewswire-FirstCall via COMTEX News Network/ -- Noble Energy, Inc. (NYSE: NBL) reported today a second quarter 2009 net loss of $57 million, or $0.33 per share diluted, on revenues of $491 million. The results included an unrealized mark-to-market financial hedging loss, a gain on the completed 2008 Argentina asset sale, and various other items which reduced earnings in total $173 million after-tax. Excluding these items, which are typically not considered by analysts in published estimates, second quarter 2009 adjusted net income(1) was $116 million, or $0.66 per share diluted. For the same period in 2008, the Company reported a net loss of $144 million, or $0.84 per share diluted, on revenues of $1.2 billion. Adjusted net income(1) for the second quarter 2008 was $337 million, or $1.93 per share diluted.

Discretionary cash flow(1) for the second quarter 2009 was $374 million, compared to $685 million for the same period in 2008. Net cash provided by operating activities was $313 million and capital expenditures were $323 million.

Key highlights for the second quarter 2009 include:

    --  Record Wattenberg production of 282 million cubic feet equivalent per
        day, including liquid production of over 21 thousand barrels per day
    --  Awarded 22 of the 24 high bid lease blocks in Central Gulf of Mexico
        Lease Sale 208
    --  Successful Tamar appraisal well offshore Israel increasing the gross
        mean resource estimate to 6.3 trillion cubic feet of natural gas

    --  Flow test at Dalit natural gas discovery offshore Israel confirmed
        deliverability up to 200 million cubic feet per day and gross mean
        resources of 500 billion cubic feet

"Second quarter 2009 results were very encouraging for Noble Energy, as we benefited from our leverage to strengthening liquid markets, while continuing to move forward our long-term developments. Critical progress was made in each of our three major project areas, which we expect will deliver significant growth for our Company beginning in 2011. We recently sanctioned the Aseng oil development in Equatorial Guinea and announced a very successful appraisal well at Tamar offshore Israel. In the near-term, we continue to see a challenged natural gas market in the U.S.; however, the benefits of our diversified portfolio should show up in the second half of the year with nice volume growth expected from our international assets," said Noble Energy's Chairman and CEO, Charles D. Davidson.

Total sales volumes averaged 206 thousand barrels of oil equivalent per day (MBoe/d) for the quarter, down five percent from the same period in 2008. Production was 207 MBoe/d in the current period. United States volumes were down, primarily in the deepwater Gulf of Mexico, due to the impact of ongoing hurricane shut-ins and natural decline in field production.

International volumes declined versus the second quarter 2008, with the timing of liftings in the North Sea contributing to the decrease. In addition, power plant downtime, overall economic factors, and increased imports resulted in lower volumes in Israel. West Africa volumes were higher due to greater natural gas sales to the third-party liquefied natural gas facility.

Second quarter 2009 commodity price realizations were down significantly from the same quarter last year. Crude oil and condensate averaged $52.05 per barrel and natural gas averaged $2.13 per thousand cubic feet.

Cash costs, including lease operating, production and ad valorem taxes, transportation, and SG&A were $10.08 per barrel of oil equivalent (Boe) for the quarter, down seven percent versus the second quarter of 2008. Lower production taxes more than offset higher lease operating expenses (LOE). Depreciation, depletion, and amortization (DD&A) was up six percent to $10.46 per Boe. DD&A unit costs were impacted by higher rates, primarily onshore in the United States, as well as changes in the Company's volume mix.

(1) A Non-GAAP measure, see attached Reconciliation Schedules

CONFERENCE CALL

Noble Energy's second quarter 2009 conference call will be available today via live audio webcast at 9:00 a.m. Central Time. To listen, log on to www.nobleenergyinc.com and click on the Investors tab and go to the Investors Events link. Dial in numbers are (877) 856-1965 or (719) 325-4810. The conference call replay will be available until August 31, 2009. To access the replay, go to www.nobleenergyinc.com and click on the Investors tab and go to the Investors Events link. You can also access the replay by dialing (888) 203-1112 or (719) 457-0820. The pin code is 2546931.

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 significant 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 at www.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.

                              Schedule 1
                          Noble Energy, Inc.
      Reconciliation of Net Income (Loss) to Adjusted Net Income
          (in millions, except per share amounts, unaudited)


                                                   Three Months   Six Months
                                                       Ended         Ended
                                                      June 30,      June 30,
                                                      --------      --------
                                                    2009   2008   2009   2008
                                                    ----   ----   ----   ----

    Net Income (Loss)                               $(57) $(144) $(245)   $71

      Adjustments, net of tax (1)
        Unrealized losses on commodity derivative
         instruments                                 190    481    216    630
        Gain on sale of Argentina assets             (16)     -    (14)     -
        Asset impairments (2)                          -      -    263      -
        Other adjustments, net                        (1)     -     (1)     -
                                                     ---    ---    ---    ---

    Adjusted Net Income (3)                         $116   $337   $219   $701
                                                    ----   ----   ----   ----

    Adjusted Earnings Per Share
      Basic                                        $0.67  $1.96  $1.27  $4.08
      Diluted                                       0.66   1.93   1.25   4.01

    Weighted average number of shares outstanding
      Basic                                          173    172    173    172
      Diluted (4)                                    175    175    175    175

    (1) The net of tax amounts are determined by calculating the tax provision
        for GAAP Net Income (Loss), which includes the adjusting items, and
        comparing the results to the tax provision for Adjusted Net Income,
        which excludes the adjusting items. The difference in the tax
        provision calculations represents the tax impact of the adjusting
        items listed here. The calculation is performed at the end of each
        quarter and, as a result, the tax rates for each discrete period are
        different.
    (2) Total pre-tax (non-cash) impairments, recorded in the first quarter
        of 2009, were predominantly related to Granite Wash, an onshore US
        area where we have significantly reduced investments beginning in
        2007.
    (3) 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.
    (4) The adjusted diluted earnings per share calculation for the second
        quarter of 2009 and the first six months of 2009 includes an increase
        to diluted shares of approximately 2 million shares representing the
        incremental dilutive shares that would be included if not for our
        second quarter 2009 and first six months 2009 net loss. The adjusted
        diluted earnings per share calculation for the second quarter of 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 second quarter 2008 net loss.



                                    Schedule 2
                                Noble Energy, Inc.
                          Summary Statement of Operations
                (in millions, except per share amounts, unaudited)

                                                  Three Months     Six Months
                                                     Ended           Ended
                                                    June 30,        June 30,
                                                    --------        --------
                                                  2009    2008    2009    2008
                                                  ----    ----    ----    ----
    Revenues
      Crude oil and condensate                    $296    $674    $497  $1,200
      Natural gas                                  143     399     326     771
      NGLs                                          21      57      43     103
      Income from equity method investees           16      56      27     118
      Other revenues                                15      19      39      38
                                                   ---     ---     ---     ---
        Total revenues                             491   1,205     932   2,230
                                                   ---   -----     ---   -----
    Operating Expenses
      Lease operating expense                       93      88     193     170
      Production and ad valorem taxes               23      51      42      94
      Transportation expense                        13      16      25      29
      Exploration expense                           33     103      75     143
      Depreciation, depletion and amortization     196     196     396     399
      General and administrative                    60      61     119     121
      Asset impairments                              -       -     437       -
      Other operating expense, net                  (3)     20     (11)     46
                                                   ---     ---     ---     ---
        Total operating expenses                   415     535   1,276   1,002
                                                   ---     ---   -----   -----
    Operating Income (Loss)                         76     670    (344)  1,228
    Other (Income) Expense
      Loss on commodity derivative instruments     139     828      66   1,065
      Interest, net of amount capitalized           23      17      41      34
      Other expense (income), net                    4      23      12      10
                                                   ---     ---     ---     ---
        Total other (income) expense               166     868     119   1,109
                                                   ---     ---     ---   -----
    Income (Loss) Before Taxes                     (90)   (198)   (463)    119
    Income Tax Provision (Benefit)                 (33)    (54)   (218)     48
                                                   ---     ---    ----     ---
    Net Income (Loss)                             $(57)  $(144)  $(245)    $71
                                                  ----   -----   -----     ---

    Earnings (Loss) Per Share
      Basic                                     $(0.33) $(0.84) $(1.42)  $0.41
      Diluted                                    (0.33)  (0.84)  (1.42)   0.41

    Weighted average number of shares
     outstanding
      Basic                                        173     172     173     172
      Diluted                                      173     172     173     175



                                  Schedule 3
                              Noble Energy, Inc.
                         Volume and Price Statistics
                                 (unaudited)

                                                    Three Months   Six Months
                                                       Ended          Ended
                                                      June 30,       June 30,
                                                      --------       --------
                                                    2009    2008   2009   2008
                                                    ----    ----   ----   ----
    Crude Oil and Condensate Sales Volumes (MBpd)
      United States                                  37      44     36     43
      West Africa                                    15      14     14     15
      North Sea                                       6       8      7      9
      Other International                             5       4      4      5
                                                    ---     ---    ---    ---
        Total consolidated operations                63      70     61     72
      Equity method investee                          2       2      2      2
                                                    ---     ---    ---    ---
        Total sales volumes                          65      72     63     74
                                                    ---     ---    ---    ---
    Crude Oil and Condensate Realized
     Prices ($/Bbl)
      United States                              $51.85  $99.05 $43.92 $85.36
      West Africa                                 51.63  112.32  46.19 100.16
      North Sea                                   56.57  126.05  50.81 112.36
      Other International                         48.87  109.17  43.28  87.47
                                                  -----  ------  -----  -----
        Consolidated average realized prices     $52.05 $105.46 $45.17 $91.88
                                                 ------ ------- ------ ------

    Natural Gas Sales Volumes (MMcfpd)
      United States                                 394     402    403    397
      West Africa                                   244     222    243    221
      North Sea                                       5       5      5      6
      Israel                                         95     121    103    133
      Other International                            16      22     23     23
                                                    ---     ---    ---    ---
        Total sales volumes                         754     772    777    780
                                                    ---     ---    ---    ---
    Natural Gas Realized Prices ($/Mcf)
      United States                               $3.09   $9.82  $3.52  $9.40
      West Africa                                  0.27    0.27   0.27   0.27
      North Sea                                    5.20   10.81   6.72  10.18
      Israel                                       2.76    2.72   2.78   2.90
      Other International                             -       -      -      -
                                                    ---     ---    ---    ---
        Average realized prices                   $2.13   $5.86  $2.39  $5.60
                                                  -----   -----  -----  -----

    Natural Gas Liquids (NGL) Sales
     Volumes (MBpd)
      United States                                  10      10     10     10
      Equity method investee                          6       7      6      7
                                                    ---     ---    ---    ---
        Total sales volumes                          16      17     16     17
                                                    ---     ---    ---    ---
    Natural Gas Liquids Realized
     Prices ($/Bbl)
      United States                              $23.94  $59.65 $24.33 $57.55

    Barrels of Oil Equivalent Volumes (MBoepd)
      United States                                 112     121    113    119
      West Africa                                    56      51     55     52
      North Sea                                       7       9      8     10
      Israel                                         16      20     17     22
      Other International                             8       8      8      9
                                                    ---     ---    ---    ---
        Total consolidated operations               199     209    201    212
      Equity method investee                          7       9      7      9
                                                    ---     ---    ---    ---
        Total barrels of oil equivalent (MBoepd)    206     218    208    221
                                                    ---     ---    ---    ---
        Barrels of oil equivalent volumes (MMBoe)    19      20     38     40
                                                    ---     ---    ---    ---



                                    Schedule 4
                                Noble Energy, Inc.
                             Condensed Balance Sheets
                                   (in millions)

                                                      (unaudited)
                                                        June 30,  December 31,
                                                        --------  ------------
                                                          2009        2008
                                                          ----        ----
    Assets
      Current Assets
        Cash and cash equivalents                         $956      $1,140
        Accounts receivable, net                           450         423
        Commodity derivative assets                        203         437
        Other current assets                               128         158
                                                           ---         ---
            Total current assets                         1,737       2,158
      Net property, plant and equipment                  8,881       9,004
      Goodwill                                             758         759
      Other noncurrent assets                              475         463
                                                           ---         ---
            Total Assets                               $11,851     $12,384
                                                       -------     -------

    Liabilities and Shareholders' Equity
      Current Liabilities
        Accounts payable - trade                          $493        $579
          Other current liabilities                        397         595
                                                           ---         ---
            Total current liabilities                      890       1,174
      Deferred income taxes                              1,947       2,174
      Long-term debt                                     2,416       2,241
      Other noncurrent liabilities                         539         486
                                                           ---         ---
            Total Liabilities                            5,792       6,075

        Total Shareholders' Equity                       6,059       6,309
                                                         -----       -----
          Total Liabilities and Shareholders' Equity   $11,851     $12,384
                                                       -------     -------



                                   Schedule 5
                               Noble Energy, Inc.
       Discretionary Cash Flow and Reconciliation to Operating Cash Flow
                            (in millions, unaudited)

                                                 Three Months  Six Months
                                                    Ended        Ended
                                                   June 30,     June 30,
                                                   --------     --------
                                                  2009  2008  2009    2008
                                                  ----  ----  ----    ----

    Adjusted Net Income (1)                       $116  $337  $219    $701
    Adjustments to reconcile net income to
     discretionary cash flow:
      Depreciation, depletion and amortization     196   196   396     399
      Exploration expense                           33   103    75     143
      Interest capitalized                         (12)   (6)  (18)    (16)
      (Income) / distributions from equity
       method investments, net                     (11)  (11)  (22)      3
      Deferred compensation adjustment               5    29    10      22
      Deferred income taxes                         21    60    45     118
      Stock-based compensation expense              12    11    24      20
      Settlement of previously recognized hedge
       losses (2)                                    -   (39)    -    (101)
      Other, net                                    14     5   (16)     13
                                                   ---   ---   ---     ---
    Discretionary Cash Flow (3)                   $374  $685  $713  $1,302
                                                  ----  ----  ----  ------

    Reconciliation to Operating Cash Flows
      Net changes in working capital               (35) (153)  (51)   (290)
      Cash exploration costs                       (26)  (42)  (66)    (74)
      Capitalized interest                          12     6    18      16
      Current tax benefit (expense) of net
       income adjustments                           22   151   (76)    196
      Gain on disposal of assets                   (24)    -   (24)      -
      Other adjustments                            (10)    1   (16)      4
                                                   ---   ---   ---     ---
    Net Cash Provided by Operating Activities     $313  $648  $498  $1,154
                                                  ----  ----  ----  ------

    Capital Expenditures, accrual based           $323  $561  $709  $1,046

    (1) See Schedule 1, Reconciliation of Net Income (Loss) to Adjusted Net
        Income.
    (2) See Schedule 6, Effect of Commodity Derivative Instruments.
    (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)


                                                 Three Months    Six Months
                                                    Ended          Ended
                                                   June 30,       June 30,
                                                   --------       --------
                                                 2009   2008   2009     2008
                                                 ----   ----   ----     ----
    Reclassification from Accumulated Other
      Comprehensive Loss (AOCL) to Revenue (1)
      Crude oil                                  $(15)  $(93)  $(32)   $(190)
      Natural gas                                   -     (2)     -       35
                                                  ---    ---    ---      ---
    Total Revenue Decrease                       $(15)  $(95)  $(32)   $(155)
                                                 ----   ----   ----    -----

    Gain (Loss) on Derivative Instruments
      Crude oil
        Realized                                  $66   $(72)  $162     $(79)
        Unrealized                               (189)  (575)  (271)    (680)
                                                 ----   ----   ----     ----
          Total crude oil                       $(123) $(647) $(109)   $(759)
                                                -----  -----  -----    -----
      Natural gas
        Realized                                  $72   $(40)  $130     $(52)
        Unrealized                                (88)  (141)   (87)    (254)
                                                  ---   ----    ---     ----
          Total natural gas                       (16)  (181)    43     (306)
                                                  ---   ----    ---     ----
    Total Gain (Loss) on Derivative
     Instruments                                $(139) $(828)  $(66) $(1,065)
                                                -----  -----   ----  -------

    Summary of Cash Settlements
    Cash settlements (received) paid            $(123)  $246  $(260)    $387
    Realized gain (loss) on derivative
     instruments                                  138   (112)   292     (131)
    Amounts reclassified from AOCL                (15)   (95)   (32)    (155)
                                                  ---    ---    ---     ----
    Settlement of previously recognized hedge
     losses                                        $-    $39     $-     $101
                                                  ---    ---    ---     ----

    (1) The amounts in AOCL represent deferred unrealized hedge gains and
        losses.  Upon settlement, these deferred gains and losses are
        reclassified from AOCL to net income as increases or decreases to
        crude oil and natural gas revenues, and impact reported realized
        commodity prices.

SOURCE Noble Energy, Inc.

http://www.nobleenergyinc.com

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