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Noble Energy’s Production Guidance for 2016

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NBL’s 1Q16 and 2016 production guidance

For 1Q16, Noble Energy (NBL) expects total production to be in the range of 395–405 Mboed (thousand barrels of oil equivalent per day). For 2016, NBL expects total production to be 390 Mboed. In 2015, NBL reported total production of ~355 Mboed, which was ~19% higher than production in 2014.

 

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NBL’s quarterly production trends

As you can see in the above graph, NBL’s production volumes have increased steadily since 2Q15. NBL’s production growth can be attributed to strong operational performance in the Eagle Ford Shale, the DJ Basin, the Marcellus Shale, and the company’s Israel assets.

NBL’s cost efficiencies and hedges

In addition to increasing its production, Noble Energy has been focusing on reducing its costs. Total operating costs, which include lease operating expenses, production taxes, and transportation, averaged $6.93 per boe in 4Q15, down 22% compared to 4Q14. Additionally, the company reduced its 2015 average drilling cost per lateral foot by 40% as compared to 2014.

In the 4Q15 earnings release, David Stover, NBL’s chairman, president, and CEO, commented, “Noble Energy ended 2015 by delivering another outstanding operational quarter. We have substantially improved capital efficiency across our business, evidenced by a continued reduction in well costs as well as completion enhancements in each of our core onshore assets.” He went on to add, “With a high-quality, low-cost, and diverse portfolio, bolstered by strong liquidity and a sound balance sheet, we enter 2016 well positioned to manage within cash flow and sustain our strong operating performance.”

Additionally, Noble has hedges in place for 2016. These measures could place the company in a better position to withstand volatile energy prices in 2016. Upstream companies Chesapeake Energy (CHK), Cabot Oil & Gas (COG), and EQT Corporation (EQT) are also hedged in 2016. Combined, these companies constitute ~8.2% of the SPDR S&P Oil & Gas Exploration & Production ETF (XOP).

In the next article in this series, we’ll look at how Noble Energy’s stock has performed over the last year.

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