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Form 8-K NOBLE ENERGY INC For: Feb 19

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February 19, 2015 8:27 AM EST


UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 
FORM 8-K
 
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): February 19, 2015

 

NOBLE ENERGY, INC.
(Exact name of Registrant as specified in its charter)
 
 
 
 
 
 
Delaware
 
001-07964
 
73-0785597
(State or other jurisdiction of
incorporation or organization)
 
Commission
File Number
 
(I.R.S. Employer
Identification 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 following provisions:
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 19, 2015, Noble Energy, Inc. (the “Company”) issued a press release announcing results for the fiscal year and fiscal quarter ended December 31, 2014. A copy of the press release issued by the Company is attached hereto as Exhibit 99.1.
The Company’s press release announcing its financial results for its fiscal year and fiscal quarter ended December 31, 2014 contains non-GAAP financial measures. Generally, a non-GAAP financial measure is a numerical measure of a company’s performance, financial position, or cash flows that either excludes or includes amounts that are not normally excluded or included in the most directly comparable measure calculated and presented in accordance with United States generally accepted accounting principles, or GAAP. Pursuant to the requirements of Regulation G, the Company has provided quantitative reconciliations within the press release of the non-GAAP financial measures to the most directly comparable GAAP financial measures.
The information in this Form 8-K and Exhibit 99.1 shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to liabilities of that Section.
Item 7.01. Regulation FD Disclosure.
On February 19, 2015, the Company issued a press release with respect to its 2015 capital budget and operational and financial guidance. A copy of the Company’s press 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 19, 2015 announcing results for the fiscal year and fiscal quarter ended December 31, 2014.
 
99.2
Press Release dated February 19, 2015 announcing the 2015 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 undersigned thereunto duly authorized.
 
 
 
 
 
 
 
 
 
 
 
 
NOBLE ENERGY, INC.
 
 
 
 
Date:
February 19, 2015
 
 
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 19, 2015 announcing results for the fiscal year and fiscal quarter ended December 31, 2014.
99.2
 
Press Release dated February 19, 2015 announcing the 2015 capital budget and operational and financial guidance.






Exhibit 99.1

  
 
NEWS RELEASE
 
 
 
 
 
 
 

NOBLE ENERGY ANNOUNCES FOURTH QUARTER AND YEAR-END 2014 RESULTS


HOUSTON (February 19, 2015) -- Noble Energy, Inc. (NYSE: NBL) announced today fourth quarter 2014 net income of $402 million, or $1.05 per diluted share. Excluding the impact of certain items, which would typically not be considered by analysts in published earnings estimates, fourth quarter 2014 adjusted income(1) was $156 million, or $0.38 per diluted share. Discretionary cash flow(1) was $754 million and net cash provided by operating activities was $803 million. Capital expenditures for the final quarter of 2014 totaled $1.35 billion.

Total sales volumes for the quarter averaged a record 315 thousand barrels of oil equivalent per day (MBoe/d). This represents an increase of eight percent compared to the fourth quarter of 2013, or 14 percent after adjusting for divested assets. Versus the final quarter of last year, total sales volumes were up primarily as a result of the Company’s continued horizontal development of the DJ Basin and Marcellus Shale resource plays. Noble Energy’s onshore horizontal production was 50 percent higher in the fourth quarter of 2014 versus the same period in 2013.

Liquids comprised 44 percent (35 percent crude oil and condensate and 9 percent natural gas liquids) of total Company fourth quarter 2014 volumes, with natural gas the remaining 56 percent. U.S. volumes for the quarter totaled 192 MBoe/d, while International sales volumes were 123 MBoe/d. Total sales volumes were higher than produced volumes by more than three thousand barrels per day (MBbl/d) due to the timing of liftings in Equatorial Guinea, primarily at the Alba field.

Noble Energy reported full year 2014 net income of $1.21 billion, or $3.27 per diluted share, and adjusted income(1) was $881 million, or $2.36 per diluted share. Discretionary cash flow(1) for 2014 was $3.32 billion and net cash provided by operating activities was $3.51 billion. Total capital expenditures for the year were $4.88 billion. The Company sold average volumes for the year of 298 MBoe/d, an increase of 16 percent over 2013 volumes after adjusting for divested assets.

David L. Stover, Noble Energy’s President and CEO, commented, “Despite the dramatic commodity price volatility over the last several months, Noble Energy exited 2014 with a substantially increased operational capacity and a solid liquidity position. Our operational momentum was highlighted by the DJ Basin and Marcellus Shale programs, where each asset ended the year at record production levels and above our fourth quarter averages. As we move into 2015, we are responding swiftly and materially to the current environment, focused on maintaining our financial and operational flexibility, while also preserving the long-term value of our business.”

Fourth quarter 2014 total production costs, including lease operating expense, production and ad valorem taxes, and transportation and gathering averaged $9.01 per barrel of oil equivalent (Boe), and depreciation, depletion, and amortization totaled $15.94 per Boe. Exploration expense was $147 million, including $63 million related to unsuccessful exploration drilling and $28 million for the write-off of certain non-core U.S. undeveloped leasehold costs. General and administrative costs were lower than anticipated due primarily to reduced personnel costs. Included in other non-operating income for the fourth quarter 2014 was a $26 million gain related to the value change of Noble Energy stock held in a deferred compensation program.

Adjustments to net income for the final quarter of 2014 included non-cash commodity derivative gains of approximately $778 million, as a result of the value change of the Company’s existing crude oil and natural gas hedge positions as of the end of the year. In addition, the Company adjusted from net income certain proved property asset impairment charges of $336 million, which primarily related to properties in the Gulf of Mexico. The effective tax rate on adjusted income for the quarter was 15 percent, with 57 percent of the adjusted tax provision being deferred.

OPERATIONS UPDATE

DJ BASIN
In the DJ Basin, sales volumes averaged a record 108 MBoe/d in the fourth quarter of 2014, up five percent from the third quarter of 2014. Versus the same quarter of last year, after excluding the impact of volumes associated with an acreage exchange executed late in 2013, volumes were up 10 percent. Fourth quarter 2014 volumes were reduced approximately 5 MBoe/d due to winter weather and third-party facility downtime. Liquids made up 65 percent of DJ Basin volumes (50 percent crude oil and condensate and 15 percent natural gas liquids) and 35 percent was natural gas. Highlights for the quarter included:
•
Record quarterly horizontal volumes, which totaled 82 MBoe/d, up 11 percent from the third quarter of 2014 and more than 30 percent from the same quarter of last year, after excluding the impact of volumes associated with the exchange executed in late 2013.
•
Drilled 80 wells in the quarter, including 28 extended reach laterals, with an average lateral length of more than 6,000 feet. The average lateral length per operated well in 2014 of 5,555 feet is more than 1,000 feet longer than the previous year average.
•
Included in the wells drilled for the quarter was a record spud to rig release time of under five days for a 4,520 foot horizontal well drilled in the East Pony area.
•
Commenced production on 90 operated wells, including 36 extended reach lateral wells (total of 119 standard length equivalent wells).
•
Included in the wells brought online in the quarter were the Company’s initial downspacing results in the Greeley-Crescent area, with 29 wells testing 24 and 32-well per section spacing. After more than 90 days of production, 20 of the wells are performing at or above expectations for the area. The downspaced wells include wells in each of the Niobrara zones, as well as the Codell. In East Pony, five downspacing wells have been on production for more than 50 days, testing up to 32 wells per section spacing. All five wells are performing consistent with expectations.
•
20 additional Plug-n-Perf completions commenced production in the fourth quarter of 2014. The wells, which have been on production between 40 and 100 days, are located primarily in the Wells Ranch and East Pony areas. Performance on average is consistent to slightly above the comparable sliding sleeve completion wells.
•
Third-party compression capacity is being expanded with the 70 Ranch Compressor Station commencing operation in early February 2015, adding 45 million cubic feet of natural gas per day (MMcf/d) of compression in the Wells Ranch area. An additional 100 MMcf/d of compression in Wells Ranch is anticipated to be operational with the Rocky Compressor Station in the second quarter of 2015. Gas processing is also expanding within Greater Wattenberg with the Lucerne-2 gas processing plant, designed to add 200 MMcf/d of natural gas processing capacity, progressing for start-up in the second quarter of 2015.
•
Oil pipeline capacity out of the DJ Basin is being expanded with the first quarter 2015 connection of the Northern Colorado Pipeline to the Wattenberg Oil Trunkline, which delivers oil volume to both the White Cliffs pipeline and the Tampa rail system. In addition, the Tallgrass lateral, connecting East Pony production to the Pony Express pipeline, is planned to commence operation in the second quarter of 2015 with a capacity of 90 MBbl/d.

MARCELLUS SHALE
Production volumes in the Marcellus Shale averaged a record 378 million cubic feet of natural gas equivalent per day (MMcfe/d), a 16 percent increase versus the third quarter of 2014 and 93 percent versus the same quarter of last year. Natural gas represented 86 percent of fourth quarter 2014 volumes, with the remaining 14 percent primarily composed of natural gas liquids (NGLs). Highlights for the quarter included:
•
Operated wet gas production increased to approximately 47 percent of total Joint Venture volume, versus 28 percent in the fourth quarter of 2013. Total wet gas production is up approximately 220 percent from the fourth quarter of last year.
•
Drilled 24 operated wells at an average lateral length of more than 9,000 feet. The average lateral length per operated well in 2014 of 8,000 feet is more than 1,000 feet longer than the previous year average and 3,000 feet longer than the 2012 average.
•
Noble Energy commenced drilling on the Joint Venture’s first Utica well, the Moundsville-6H, located in Marshall County, West Virginia. The well was drilled to a total depth of 20,309 feet, with a lateral length of 9,483 feet. First production from the well is anticipated in the second half of 2015.
•
Commenced production on 32 operated wells, including 8 wells completed with Reduced Stage and Cluster Spacing (RSCS). Results from all operated RSCS wells in 2014 continue to support a 20 to 40 percent improvement in production rate versus wells with standard completion designs.
•
Included in the wells brought online during the quarter were the Company’s first pads in the Pennsboro and Moundsville areas of West Virginia (Ritchie and Marshall counties, respectively). Initial production from these areas is performing in line with expectations.
•
The WFN-4 pad in Majorsville, the Company’s most recent operated pad on production, consisting of 6 wells at an average lateral length of nearly 7,000 feet, came online during the fourth quarter and was producing more than 55 MMcfe/d, gross, after 30 days online. Performance is tracking consistent with the Company’s best pads in the Majorsville area and above expectations.
•
Joint Venture partner CONSOL Energy drilled 21 wells during the quarter (7,500 foot average lateral length), including four Upper Devonian wells. 14 dry gas wells, all of which were completed with RSCS, commenced production in the fourth quarter.

GULF OF MEXICO
In the Gulf of Mexico, sales volumes averaged 17 MBoe/d, which were comprised of 80 percent crude oil and condensate, seven percent NGLs, and 13 percent natural gas. Highlights for the quarter included:
•
Successfully executed the completion work on the Dantzler-2 production well. The drilling rig is currently performing completion operations at Dantzler-1, to be followed by development work at the Gunflint field.
•
Progress on the Company’s sanctioned major projects remains on schedule. Facility modifications at third-party production host facilities are underway and offshore pipeline installations are scheduled to begin in the second quarter of 2015. Production at the Big Bend field is estimated to begin in the fourth quarter of 2015, Dantzler around the end of 2015, and Gunflint by mid-2016.

WEST AFRICA
Hydrocarbon sales in West Africa averaged 85 MBoe/d, which was comprised of 46 percent crude oil and condensate, five percent NGLs, and 49 percent natural gas. Sales volumes for the quarter were in excess of production volumes by more than 3 MBbl/d as a result of the timing of liquid liftings. Nearly 50 percent of the Company’s fourth quarter 2014 crude oil liftings occurred in the month of December. Highlights for the quarter included:
•
Successful workover activities at the Alen field, including a sidetrack at the 1P well and increased injection well capacity, resulted in average gross production of more than 28 MBbl/d of condensate for the quarter. The field exited the year with production in excess of 30 MBbl/d.
•
Active production management and strong reservoir performance continued at the Aseng oil field, which averaged 37 MBbl/d, gross, during the quarter.

EASTERN MEDITERRANEAN
In the Eastern Mediterranean, Israel natural gas sales volumes averaged 228 MMcfe/d. Highlights for the quarter included:
•
Tamar continued to exhibit exceptional reservoir and facility reliability. Record daily sales volumes of over 1 billion cubic feet of natural gas equivalent per day (Bcfe/d), gross, was reached on multiple days in late 2014 and early 2015, driven by increased electricity demand due to cold weather and coal plant maintenance.
•
Additional progress was made at the Ashdod Onshore Terminal compression project, which is more than 90 percent complete. The expansion is targeted to increase deliverability at Tamar to 1.2 Bcfe/d, gross, beginning in mid-2015.
•
Executed a non-binding Letter of Intent (LOI) for interruptible sales of up to 250 MMcf/d of natural gas for 7 years from the Tamar field to Dolphinus Holdings Ltd., for supply to Egypt’s domestic market. Initial sales of natural gas under the LOI could commence in 2015 utilizing existing Tamar production capacity and currently available pipeline infrastructure. Negotiation of a final purchase and sale contract is underway, after which start of sales will be dependent upon regulatory approvals for regional export.

OTHER
Key highlights for the quarter included:
•
Drilled two additional vertical wells in the Company’s NE Nevada Wilson play, with one well each in the northern and southern acreage areas. The two wells encountered hydrocarbon shows in the targeted reservoir. Completion operations were recently performed on the first of the two wells, with oil recovered. The well is currently shut-in awaiting facilities for a sustained production test.
•
Successfully issued $1.5 billion in long-term notes, with $650 million issued at an interest rate of 3.9 percent due in 2024, and $850 million issued at an interest rate of 5.1 percent due in 2044. Funds raised from the issuance of the bonds were used to pay off the balance on the Company’s credit facility. Total liquidity at the end of 2014 was $5.2 billion, including $1.2 billion in cash and $4 billion per the Company’s undrawn credit facility.

PROVED RESERVES
Estimated reserves at year-end 2014 were 1.4 billion barrels of oil equivalent as 2014 total additions and revisions offset the Company’s production and non-core asset sales during the year. Reserves in the U.S. were 58 percent of the Company’s total, with assets in Equatorial Guinea and Israel combining for the remaining 42 percent. The composition of reserves at the end of 2014 is 31 percent global liquids, 36 percent international natural gas and 33 percent U.S. natural gas.

Noble Energy added total proved reserves of 141 million barrels of oil equivalent (MMBoe) in 2014, including extensions, discoveries, and revisions. These additions replaced approximately 1.3 times 2014 production. U.S. total additions, including revisions, of 135 MMBoe resulted in more than 200 percent replacement of U.S. production and were driven by the horizontal drilling programs in the DJ Basin and Marcellus Shale, as well as the Dantzler project sanction in the Gulf of Mexico. During 2014, the Company sold approximately 33 MMBoe of proved reserves from non-core assets in the U.S. and China.

Proved developed reserves represent approximately 63 percent of total proved reserves at the end of the year, up from 60 percent at year-end 2013. Proved undeveloped reserve bookings in the U.S. onshore programs reflect future drilling activity based on the current price environment.

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

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 888-554-1424 and 719-785-1768. The pass code number is 9275379. 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 and Marcellus Shale, in the 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.


Investor Contacts
David Larson
(281) 872-3125

Brad Whitmarsh
(281) 943-1670

John Nicholson
(281) 876-6186

Media Contact:
Reba Reid
(281) 943-1789

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”, 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. 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.











1


Schedule 1
Noble Energy, Inc.
Reconciliation of Net Income to Adjusted Income
(in millions, except per share amounts, unaudited)
 
 
 
Three Months Ended December 31,
 
Twelve Months Ended December 31,
 
 
2014
 
Per Diluted Share [5]
 
2013
 
Per Diluted Share
 
2014
 
Per Diluted Share [5]
 
2013
 
Per Diluted Share
Net Income
 
$
402

 
$
1.05

 
$
134

 
$
0.37

 
$
1,214

 
$
3.27

 
$
978

 
$
2.69

(Gain) loss on commodity derivative instruments, net of cash settlements [1]
 
(778
)
 
(2.12
)
 
65

 
0.18

 
(947
)
 
(2.58
)
 
131

 
0.36

Asset impairments [2]
 
336

 
0.91

 
23

 
0.06

 
500

 
1.36

 
86

 
0.24

(Gain) on divestitures [3]
 
(1
)
 
—

 
(27
)
 
(0.07
)
 
(73
)
 
(0.20
)
 
(94
)
 
(0.26
)
Other adjustments
 
3

 
0.01

 
1

 
—

 
—

 
—

 
7

 
0.02

Total adjustments before tax
 
(440
)
 
(1.20
)
 
62

 
0.17

 
(520
)
 
(1.42
)
 
130

 
0.36

Income tax effect of adjustments [4]
 
194

 
0.53

 
(4
)
 
(0.01
)
 
187

 
0.51

 
(44
)
 
(0.12
)
Adjusted Income
 
$
156

 
$
0.38

 
$
192

 
$
0.53

 
$
881

 
$
2.36

 
$
1,064

 
$
2.93

Weighted average number of shares outstanding
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Diluted
 
367

 
 
 
364

 
 
 
367

 
 
 
363

 
 

NOTE:
Adjusted income should not be considered a substitute for net income as reported in accordance with GAAP. Adjusted 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 income is beneficial in evaluating our financial performance. We believe such measures can facilitate comparisons of operating performance between periods and with our peers. See Schedule 2: Summary Statement of Operations.
 
All per share and shares outstanding amounts have been retroactively adjusted for the two-for-one stock split, which was distributed on May 28, 2013 to shareholders of record as of May 14, 2013.
[1]
Many factors impact our gain or loss on commodity derivatives, net of cash settlements, including: increases and decreases in the commodity forward price curves compared to our executed hedging arrangements; increases in hedged future volumes; 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]
Amounts for 2014 represent impairments related to U.S., offshore Israel and North Sea properties.
[3]
During 2014 and 2013, we sold certain non-core onshore U.S. properties and our China assets.
[4]
The income tax effect of adjustments is determined for each major tax jurisdiction for each adjusting item.
[5]
The diluted earnings per share calculations for the three and twelve months ended December 31, 2014 include deferred compensation (gains) losses from NBL shares held in a rabbi trust. Consistent with GAAP, when dilutive, the deferred compensation gain or loss, net of tax, is excluded from net income while the NBL shares held in the rabbi trust are included in the diluted sharecount.


2


Schedule 2
Noble Energy, Inc.
Summary Statement of Operations
(in millions, except per share amounts, unaudited) 
 
 
Three Months Ended
December 31,
 
Twelve Months Ended
December 31,
 
 
2014
 
2013
 
2014
 
2013
Revenues
 
 
 
 
 
 
 
 
Crude oil and condensate
 
$
690

 
$
935

 
$
3,438

 
$
3,618

Natural gas
 
291

 
258

 
1,223

 
976

Natural gas liquids
 
56

 
79

 
270

 
215

Income from equity method investees
 
33

 
56

 
170

 
206

Total revenues
 
1,070

 
1,328

 
5,101

 
5,015

Operating Expenses
 
 
 
 
 
 
 
 
Lease operating expense
 
173

 
136

 
604

 
530

Production and ad valorem taxes
 
38

 
51

 
184

 
188

Transportation and gathering expense
 
50

 
44

 
170

 
132

Exploration expense
 
147

 
204

 
498

 
415

Depreciation, depletion and amortization
 
462

 
422

 
1,759

 
1,568

General and administrative
 
104

 
109

 
503

 
433

(Gain) on divestitures
 
(1
)
 
(24
)
 
(73
)
 
(36
)
Asset impairments
 
336

 
23

 
500

 
86

Other operating expense, net
 
6

 
15

 
38

 
43

Total operating expenses
 
1,315

 
980

 
4,183

 
3,359

Operating Income
 
(245
)
 
348

 
918

 
1,656

Other (Income) Expense
 
 

 
 

 
 
 
 
(Gain) loss on commodity derivative instruments
 
(903
)
 
65

 
(976
)
 
133

Interest, net of amount capitalized
 
59

 
54

 
210

 
158

Other non-operating (income) expense, net
 
(25
)
 
—

 
(26
)
 
21

Total other (income) expense
 
(869
)
 
119

 
(792
)
 
312

Income from Continuing Operations Before Income Taxes
 
624

 
229

 
1,710

 
1,344

Income Tax Provision
 
222

 
107

 
496

 
437

Income from Continuing Operations
 
402

 
122

 
1,214

 
907

Discontinued Operations, Net of Tax
 
—

 
12

 
—

 
71

Net Income
 
$
402

 
$
134

 
$
1,214

 
$
978

Earnings Per Share
 
 
 
 
 
 
 
 
Basic
 
 
 
 
 
 
 
 
Income from continuing operations
 
$
1.11

 
$
0.34

 
$
3.36

 
$
2.53

Discontinued operations, net of tax
 
—

 
0.04

 
—

 
0.19

Net Income
 
$
1.11

 
$
0.38

 
$
3.36

 
$
2.72

Diluted
 
 
 
 
 
 
 
 
Income from continuing operations
 
$
1.05

 
$
0.33

 
$
3.27

 
$
2.50

Discontinued operations, net of tax
 
—

 
0.04

 
—

 
0.19

Net Income
 
$
1.05

 
$
0.37

 
$
3.27

 
$
2.69

Weighted average number of shares outstanding
 
 
 
 
 
 
 
 
Basic
 
362

 
360

 
361

 
359

Diluted
 
367

 
364

 
367

 
363



3


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

 
 
Three Months Ended
December 31,
 
Twelve Months Ended
December 31,
 
 
2014
 
2013
 
2014
 
2013
Crude Oil and Condensate Sales Volumes (MBbl/d)
 
 
 
 
 
 
 
 
United States
 
70

 
68

 
68

 
63

Equatorial Guinea
 
37

 
31

 
33

 
32

Other International
 
—

 
5

 
2

 
4

Total consolidated operations
 
107

 
104

 
103

 
99

Equity method investee - Equatorial Guinea
 
2

 
2

 
2

 
2

Total sales volumes
 
109

 
106

 
105

 
101

Crude Oil and Condensate Realized Prices ($/Bbl)
 
 
 
 
 
 
 
 
United States
 
$
69.43

 
$
92.49

 
$
89.60

 
$
96.53

Equatorial Guinea
 
69.61

 
109.59

 
94.61

 
107.48

Consolidated average realized prices
 
$
69.54

 
$
98.09

 
$
91.58

 
$
100.29

Natural Gas Sales Volumes (MMcf/d)
 
 
 
 
 
 
 
 
United States
 
578

 
458

 
518

 
440

Equatorial Guinea
 
251

 
252

 
243

 
252

Israel
 
226

 
248

 
231

 
209

Total sales volumes
 
1,055

 
958

 
992

 
901

Natural Gas Realized Prices ($/Mcf)
 
 
 
 
 
 
 
 
United States
 
$
3.21

 
$
3.27

 
$
3.86

 
$
3.54

Equatorial Guinea
 
0.27

 
0.27

 
0.27

 
0.27

Israel
 
5.50

 
5.00

 
5.57

 
5.02

Consolidated average realized prices
 
$
3.00

 
$
2.93

 
$
3.38

 
$
2.97

Natural Gas Liquids Sales Volumes (MBbl/d)
 
 
 
 
 
 
 
 
United States
 
26

 
22

 
23

 
16

Equity method investee - Equatorial Guinea
 
4

 
5

 
5

 
6

Total sales volumes
 
30

 
27

 
28

 
22

Natural Gas Liquids Realized Prices ($/Bbl)
 
 
 
 
 
 
 
 
United States
 
$
23.56

 
$
39.38

 
$
32.04

 
$
35.53

Barrels of Oil Equivalent Volumes (MBoe/d)
 
 
 
 
 
 
 
 
United States
 
192

 
166

 
176

 
153

Equatorial Guinea
 
79

 
73

 
74

 
73

Israel
 
38

 
42

 
39

 
35

Other International
 
—

 
5

 
2

 
4

Total consolidated operations
 
309

 
286

 
291

 
265

Equity method investee - Equatorial Guinea
 
6

 
7

 
7

 
8

Total sales volumes from continuing operations
 
315

 
293

 
298

 
273

Total sales volumes from discontinued operations
 
—

 
—

 
—

 
1

Total sales volumes
 
315

 
293

 
298

 
274



4


Schedule 4
Noble Energy, Inc.
Condensed Balance Sheets
(in millions, unaudited)
 
 
 
December 31,
 
December 31,
 
 
2014
 
2013
ASSETS
 
 
 
 
Current Assets
 
 
 
 
Cash and cash equivalents
 
$
1,183

 
$
1,117

Accounts receivable, net
 
857

 
947

Commodity Derivative Assets, Current
 
710

 
1

Other current assets
 
325

 
546

Total current assets
 
3,075

 
2,611

Net property, plant and equipment
 
18,143

 
15,725

Goodwill
 
620

 
627

Other noncurrent assets
 
715

 
679

Total Assets
 
$
22,553

 
$
19,642

LIABILITIES AND SHAREHOLDERS' EQUITY
 
 
 
 
Current Liabilities
 
 
 
 
Accounts payable - trade
 
$
1,578

 
$
1,354

Other current liabilities
 
944

 
988

Total current liabilities
 
2,522

 
2,342

Long-term debt
 
6,103

 
4,566

Deferred income taxes
 
2,516

 
2,441

Other noncurrent liabilities
 
1,087

 
1,109

Total Liabilities
 
12,228

 
10,458

Total Shareholders’ Equity
 
10,325

 
9,184

Total Liabilities and Shareholders’ Equity
 
$
22,553

 
$
19,642





5


Schedule 5
Noble 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,
 
 
2014
 
2013
 
2014
 
2013
Adjusted Income [1]
 
$
156

 
$
192

 
$
881

 
$
1,064

Adjustments to reconcile adjusted income to discretionary cash flow:
 
 
 
 
 
 
 
 
Depreciation, depletion and amortization
 
462

 
422

 
1,759

 
1,568

Exploration expense
 
147

 
204

 
498

 
415

(Income)/Dividends from equity method investments, net
 
(20
)
 
(5
)
 
33

 
(17
)
Deferred compensation (income) expense
 
(26
)
 
2

 
(25
)
 
26

Deferred income taxes
 
13

 
105

 
81

 
319

Stock-based compensation expense
 
21

 
21

 
87

 
80

Other
 
1

 
(6
)
 
10

 
(5
)
Discretionary Cash Flow
 
$
754

 
$
935

 
$
3,324

 
$
3,450

Reconciliation to Operating Cash Flows
 
 
 
 
 
 
 
 
Net changes in working capital
 
127

 
(91
)
 
412

 
(291
)
Cash exploration costs
 
(79
)
 
(69
)
 
(229
)
 
(236
)
Current tax benefit of earnings adjustments
 
—

 
(1
)
 
—

 
(5
)
Other adjustments
 
1

 
8

 
(1
)
 
19

Net Cash Provided by Operating Activities
 
$
803

 
$
782

 
$
3,506

 
$
2,937

 
 
 
 
 
 
 
 
 
Capital expenditures (accrual based)
 
$
1,353

 
$
1,125

 
$
4,883

 
$
4,311

Increase in capital lease obligations [2]
 
29

 
22

 
110

 
76

Total Capital Expenditures (Accrual Based)
 
$
1,382

 
$
1,147

 
$
4,993

 
$
4,387

 
NOTE:
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.
[1]
See Schedule 1: Reconciliation of Net Income to Adjusted Income.
[2]
Increase in capital lease obligations represents estimated construction in progress to date on US operating assets and corporate buildings.




6


Schedule 6
Noble Energy, Inc.
Supplemental Data
(in millions, unaudited)
2014 Costs Incurred in Oil and Gas Activities
 
United States
 
Int’l [1]
 
Total
Unproved property acquisition costs
 
$
246

 
$
3

 
$
249

Exploration costs
 
485

 
185

 
670

Development costs [2]
 
3,685

 
433

 
4,118

Total costs incurred
 
$
4,416

 
$
621

 
$
5,037

 
 
 
 
 
 
 
Reconciliation to Capital Spending (accrual basis)
 
 
 
 
 
 
Total costs incurred
 
 
 
 
 
$
5,037

Exploration overhead
 
 
 
 
 
(153
)
Lease rentals
 
 
 
 
 
(11
)
Asset retirement obligations
 
 
 
 
 
(230
)
Total oil and gas spending
 
 
 
 
 
4,643

Investment in equity method investee
 
 
 
 
 
71

Other corporate capital
 
 
 
 
 
279

Total capital spending (accrual basis)
 
 
 
 
 
$
4,993

 
 
 
 
 
 
 
Proved Reserves [3]
 
United States
 
Int’l [4]
 
Total
Total Barrel Oil Equivalents (MMBoe)
 
 
 
 
 
 
Beginning reserves - December 31, 2013
 
774

 
632

 
1,406

Revisions of previous estimates
 
15

 
6

 
21

Extensions, discoveries and other additions
 
120

 
—

 
120

Purchase of minerals in place
 
—

 
—

 
—

Sale of minerals in place
 
(28
)
 
(5
)
 
(33
)
Production
 
(65
)
 
(45
)
 
(110
)
Ending reserves - December 31, 2014
 
816

 
588

 
1,404

Proved Developed Reserves (MMBoe)
 
 
 
 
 
 
December 31, 2013
 
349

 
500

 
849

December 31, 2014
 
426

 
455

 
881


[1]
International includes Cameroon, China (through June 30, 2014), Cyprus, Equatorial Guinea, Falkland Islands, Israel, the North Sea, Nicaragua, Sierra Leone, Gabon, and other new ventures.
[2]
Includes ARO costs of $106 million for United States and $124 million for International.
[3]
Netherland, Sewell & Associates, Inc. performed a reserves audit for 2014 and concluded that the Company's estimates of proved reserves were, in the aggregate, reasonable and have been prepared in accordance with Standards Pertaining to the Estimating and Auditing of Oil and Gas Reserves Information promulgated by the Society of Petroleum Engineers.
[4]
International includes China (through June 30,2014), Equatorial Guinea, Israel, and the North Sea.


7


Exhibit 99.2

  
 
NEWS RELEASE
 
 
 
 
 
 
 
 

 
NOBLE ENERGY PROVIDES 2015 GUIDANCE

HOUSTON (February 19, 2015) -- Noble Energy, Inc. (NYSE: NBL) today announced its 2015 guidance, which includes anticipated capital investments of $2.9 billion and total sales volumes of between 295 and 315 thousand barrels of oil equivalent (MBoe/d). This represents an approximate 40 percent reduction in capital from 2014 and volume growth of 5 percent at the midpoint of the range, after adjusting for assets divested in 2014.

David L. Stover, Noble Energy’s President and CEO, stated, “The 2015 budget is designed to align the capital program with the investment environment and cash flow from operations, while maintaining our financial strength and providing for modest growth across the business. In a highly uncertain commodity environment, this program retains substantial operating and financial flexibility to adjust our plans while allowing us to take advantage of value-creating opportunities that may arise. We have already captured significant cost savings, which should enhance margins as we move through the year. Our high-quality and diverse portfolio positions us to extend growth into 2016 at even lower capital levels than this year.”

Capital Investments
The Company’s total capital program is estimated at $2.9 billion with 60 percent of total investment planned for core U.S. Onshore assets, 35 percent for Global Offshore development activities and approximately 5 percent for Global Offshore exploration. Highlights of the 2015 investment program include:
•
Investment in U.S. Onshore unconventionals is planned at approximately $1.8 billion, split relatively evenly between the DJ Basin and Marcellus Shale. Development in both areas will continue to focus on enhancing investment efficiency and increasing recovery through the application of long laterals and modified completion techniques.
•
The Company is currently running a four rig operated program in the DJ Basin. Activity is targeted primarily in the Wells Ranch and East Pony core areas, which provide the best return opportunities and optimize the use of existing infrastructure.




•
In the Marcellus Shale, two operated rigs are running, with activity planned for 2015 primarily focused in the Majorsville development area. In addition, four non-operated rigs are running in the dry gas areas. Noble Energy and its partner continue to work together to find an optimal investment plan for 2015. Approximately 15 percent of the Company’s Marcellus investment is allocated to midstream.
•
In the Gulf of Mexico, approximately $600 million will be invested in the continued development of the Company’s sanctioned Gulf of Mexico projects. Investment will be focused on subsea pipeline installation at Big Bend and Dantzler and drilling and completion operations at Gunflint.
•
Expenditures in West Africa are primarily associated with the non-operated Alba compression project, offshore Equatorial Guinea, which is targeted for startup in 2016. In addition, the Company will be drilling the Cheetah oil prospect, offshore Cameroon, in the middle part of 2015.
•
In Israel, the Ashdod onshore compression project is being completed in the first half of 2015, which will allow for an increase in peak deliverability into Israel. Further investments in the expansion of Tamar, as well as the initial development of Leviathan, have been suspended until regulatory issues are resolved.
•
Frontier exploration includes the Company’s initial operated prospects in the Falkland Islands, the first of which is expected to spud around mid-year.

Sales Volumes
Total sales volumes for 2015 are anticipated to average between 295 and 315 MBoe/d. Highlights for the 2015 volume outlook include:
•
Liquids volumes are expected to represent 43 percent of the total volume, with the remaining product split estimated to be 33 percent U.S. natural gas and 24 percent international gas.
•
Approximately 70 percent of global crude oil production and 48 percent of U.S. natural gas production is hedged.
•
Sales volumes are projected to be up more than five percent in the DJ Basin and 40 percent in the Marcellus Shale.
•
In the Gulf of Mexico, volumes are anticipated to be slightly down on average for the year. In the fourth quarter of 2015, the Big Bend field is anticipated to come on production, followed by Dantzler around the end of 2015 and Gunflint by mid-2016.
•
Sales volumes in Israel are projected to increase 10 percent, driven by an increase in demand.
•
West Africa volumes are expected to be down around 15 percent, with approximately half of the decrease due to natural declines at the Alba and Aseng fields. Planned facility downtime associated with the ongoing compression project at Alba and a plant turnaround at the methanol facilities account for the remainder of the decrease.





Additional detailed operational and financial information representing the 2015 Guidance is included on the following pages.

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 and Marcellus Shale, in the 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.


Investor Contacts:
David Larson
(281) 872-3125

Brad Whitmarsh
(281) 943-1670

John Nicholson
(281) 872-6186

Media Contact:
Reba Reid
(281) 943-1789



This news release contains certain “forward-looking statements” within the meaning of the federal securities law. Words such as “expects,” “predicts,” “estimates,” “anticipates,” “believes,” “intends,” “will,” “should,” “may,” 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 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. 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 or management's estimates or opinions change.

2015 Operational and Financial Guidance

Volumes and Prices
Total volumes are estimated to average between 295 and 315 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
66 - 76
Equatorial Guinea
28 - 32
Equatorial Guinea-equity method investment
1 - 2

The price of our crude oil in the U.S. is expected to be at a discount to WTI of $2.00 to $4.00 per barrel. Crude oil in Equatorial Guinea is based off dated Brent. Prices of Equatorial Guinea barrels are determined at the timing of liftings and are expected to be at a discount from $4.00 to $6.00 per barrel. All price estimates exclude the impact of hedge results.

Natural Gas
MMcf/d
United States
585 - 625
Equatorial Guinea
185 - 205
Israel
240 - 265

The natural gas price for the U.S. is expected to range from $0.45 to $0.65 per thousand cubic feet (Mcf) below NYMEX Henry Hub. Price realizations for West Africa are estimated to be $0.27 per Mcf. Israel natural gas prices are anticipated to range from $5.20 to $5.40 per Mcf. All price estimates exclude the impact of hedge results.




Natural Gas Liquids
MBbl/d
United States
20 - 26
Equatorial Guinea - equity method investment
4 - 5

The natural gas liquid (NGL) price realizations for the U.S. should average 25 to 30 percent of WTI.

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 $85 to $115 million.

Cost and Expenses
 
Lease Operating
$ 4.70 - $ 5.10 per Boe
Transportation and gathering
$ 1.90 - $ 2.30 per Boe
Depreciation, depletion and amortization
$15.65 - $16.15 per Boe
 
 
Production and ad valorem taxes
3.8 - 4.2% of oil, gas and NGL revenues
 
 
Exploration
$280 - $350 million
General and administrative
$450 - $490 million
Interest (net)
$245 - $265 million

Capitalized interest is estimated to be $120 to $140 million. Deferred compensation expense (income) is recognized as the market value of 1 million shares of Noble Energy stock held in a rabbi trust increases (decreases).

Other Items
 
Effective tax rate
45 - 55%
Deferred tax ratio
20 - 30%
Outstanding shares - diluted
366 - 368 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 - 2015
Noble Energy has entered into the following crude oil and natural gas derivative instruments for 2015.

 
 
 
Crude Oil Hedges
 
 
 
Swaps
Collars
 
 
 
Average
Average
Average
Average
 
 
Volume
Price
Short Put Price
Floor Price
Ceiling Price
Type of Contract
Index
(Bbl/d)
($/Bbl)
($/Bbl)
($/Bbl)
($/Bbl)
 
 
 
 
 
 
 
Fixed Price Swaps
NYMEX WTI
27,000
$88.97
 
 
 
Fixed Price Swaps
Dated Brent
8,000
$100.31
 
 
 
Two-Way Collars*

NYMEX WTI

5,000

 
 
$50.00

$64.94

Three - Way Collars
NYMEX WTI
20,000
 
$70.50
$87.55
$94.91
Three-Way Collars
Dated Brent
13,000
 
$76.92
$96.00
$108.49
 
 
 
 
 
 
 
*The two-way collars are active from March 1, 2015 to December 31, 2015.

 
 
 
 
 
 
 
 
 
 
Natural Gas Hedges
 
 
 
Swaps
Collars
 
 
 
Average
Average
Average
Average
 
 
Volume
Price
Short Put Price
Floor Price
Ceiling Price
Type of Contract
Index
(MMBtu/d)
($/MMBtu)
($/MMBtu)
($/MMBtu)
($/MMBtu)
 
 
 
 
 
 
 
Fixed Price Swaps
NYMEX HH
140,000
$4.30
 
 
 
Three-Way Collars
NYMEX HH
150,000
 
$3.58
$4.25
$5.04



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