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Why Noble Energy's Stock Fell despite Its Earnings Beat

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Why Noble Energy's Stock Fell despite Its Earnings Beat PART 1 OF 5

Noble Energy Reported an Earnings Beat, Revenues in Line

Noble Energy’s 2Q17 revenue

Noble Energy (NBL) reported its 2Q17 earnings on August 3, 2017. The company reported revenue of ~$1.1 billion, in line with analysts’ expectations. In 2Q16, NBL reported revenue of $847 million. In 1Q17, NBL reported revenue of $1.04 billion.

Noble Energy Reported an Earnings Beat, Revenues in Line

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Noble’s 2Q17 earnings

Noble Energy reported adjusted net income of ~$24 million in 2Q17. In 1Q16, NBL reported an adjusted net loss of $103 million.

Noble’s adjusted EPS (earnings per share) in 2Q17 were $0.05, versus Wall Street analysts’ consensus EPS estimate of about -$0.10. As you can see above, in the graph on the right, NBL’s 2Q17 earnings were better than expected and higher on both year-over-year and sequential bases.

Peer comparison

NBL’s peers Cabot Oil & Gas (COG) and EQT (EQT) reported 2Q17 earnings per share of $0.14 and $0.06, respectively. To learn more about their 2Q17 earnings performance, see What to Make of Cabot Oil & Gas’s 2Q17 Earnings and EQT’s Stock Rises after 2Q17 Earnings: Key Takeaways.

2Q17 highlights and management commentary

Noble Energy closed its acquisition of Clayton Williams in April, expanding its position in the Delaware Basin. Back in January, Noble announced that it would be acquiring Clayton Williams for $2.7 billion.

In line with NBL’s 2017 goal of focusing more on liquid-rich areas, Noble Energy exited the natural gas–rich Marcellus Shale in May 2017. The proceeds of this sale, which totaled $2 billion, were used for the acquisition of Clayton Williams.

Finally, NBL completed its first drop-down to Noble Midstream Partners (NBLX) in June 2017 for a total consideration of $270 million.

NBL’s management noted in the 2Q17 earnings release, “The completion of several transformative portfolio actions during the quarter reflect our continued focus on enhancing margins and corporate returns.  The quality of our asset base, our superior execution capabilities, and our robust financial strength position us to create differential long-term value.”

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