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What Is Noble Energy’s Outlook for 2017 and Beyond?

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Dec. 2 2016, Published 5:58 p.m. ET

Noble Energy’s long-term outlook

On November 16, 2016, Noble Energy (NBL) provided its long-term outlook from 2016–2020. It also provided an update on its US onshore operations.

The company’s November 16 press release noted that the outlook “includes a forward base plan utilizing $50 per barrel WTI and Brent and $3 per thousand cubic feet Henry Hub natural gas for 2017, with modest oil price acceleration through 2020. An upside plan is also provided which adds $10 per barrel in commodity price to all periods.”

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Key 2016–2020 forecasts

Noble Energy (NBL) expects its US onshore oil (USO) volumes to increase at a CAGR[1. compound annual growth rate] of 23% in its “base plan” and 29% in the “upside plan” between 2016–2020. Onshore oil volumes in 2017 are expected to grow 15% compared to 2016.

Total US onshore production is expected to grow at a CAGR of 13% in the base plan and 16% CAGR in the upside plan through 2020. The combined Delaware and Eagle Ford production volumes are expected to increase 160% to 200% by 2020, compared to their 2016 volumes.

Noble Energy’s total production is expected to grow at a CAGR of 8% and 12% until 2020 in the base and upside plans, respectively, adjusted for divestitures. The 2020 production volumes include a “full year of volumes” from the Leviathan Gas Field. We’ll explore that in greater detail later in this series.

Management comments

David L. Stover, Noble Energy’s CEO, noted in the press release, “The high-margin growth we are outlining, led by our DJ Basin, Delaware and Eastern Mediterranean assets, is driving cash flows to increase at a rate of three to four times our volume growth. “

Top players in the DJ Basin include Anadarko Petroleum (APC) and PDC Energy (PDCE). The Delaware Basin’s top players include Cimarex Energy (XEC) and EP Energy (EPE).

Noble Energy’s return on average capital employed is expected to range between 8%–14% in 2020. Total operating cash flow is seen growing at a CAGR of 23% in the base plan and 35% in the upside plan between 2016–2020.

Next, we’ll discuss the Leviathan gas field, a crucial long-term growth driver for Noble Energy.

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