Noble Energy (NBL) Gains; Co. Seen as a 'Survivor' in the Oil Patch
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Noble Energy (NYSE: NBL) is sharply higher Thursday (+8%) as Nomura Securities analyst Lloyd Byrne called the company a "survivor" in the oil wreckage and upgraded the stock to Buy.
Byrne cited the company's asset quality and financial positioning.
"NBL is well placed given its current leverage, its locked in Israel pricing, its fixed Alba (34% WI) contract, and its 2016 commodity hedge," the analyst said. "Using ~$40/WTI in 2016, we estimate ~$2bn in CFO, and ~16% production growth, resulting in positive Debt Adjusted Cash Flow (DCAF) growth; One of the select few in the E&P universe in 2016."
Further, the analyst notes NBL’s production growth is back-stopped by pre-funded growth from three properties in the Gulf of Mexico; 1) Big Bend (54% WI), which started up in October, 2) Dantzler (45% WI) which started up in December and 3) Gunflint (31% WI) with an anticipated mid-year 2016 start up.
The company has one of the stronger balance sheets and credit ratings among our companies under coverage, with S&P assigning a credit rating of BBB.
"At the close of 3Q15, the company had net debt of $7bn, with $1bn in cash and no maturities until 2019," he noted. "In 2016, NBL has 33% of its oil production hedged and 17% of its natural gas production."
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