NBL’s net debt to EBITDA
Noble Energy’s (NBL) net debt to EBITDA (earnings before interest, tax, depreciation, and amortization) has mostly been rising since 1Q15 as a result of its declining EBITDA. The company’s net debt to adjusted EBITDA was mostly under 2x until 2Q15, but it’s currently trading at ~3.4x.
NBL’s net debt has been on the rise since 1Q15 while its EBITDA has been declining, which explains the jump in its EV/EBITDA multiple. Since 3Q15, however, its net debt has stabilized at ~$7 billion while its EBITDA continued to decline. This explains why the EV/EBITDA multiple has stayed high.
NBL’s 1Q16 net debt was ~$7.1 billion compared to $4.5 billion in 1Q15. Its trailing-12-month adjusted EBITDA as of 1Q16 was $2.1 billion compared to its 1Q15 trailing-12-month EBITDA of ~$2.7 billion.
Peer group comparison
In comparison, upstream companies such as Cabot Oil and Gas (COG) and EQT (EQT) saw lower EBITDA levels due to lower crude oil prices (USO). Their respective 1Q16 EBITDAs for the trailing 12 months fell by 53.3% and ~54.3%, respectively. On the other hand, Antero Resources (AR) saw its trailing-12-month EBITDA for 1Q16 rise by ~1%. Together, these companies make up 8.6% of the iShares U.S. Oil & Gas Exploration & Production ETF (IEO).
Liquidity and financial position
Noble Energy noted that it had $953 billion in cash and cash equivalents as of March 31, 2015. It also has $4 billion from an unused credit facility.
Continue to the next part to read about NBL’s free cash flow trends.