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Takeaways from Noble Energy’s 4Q16 Earnings

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Feb. 14 2017, Updated 1:05 p.m. ET

Key operational highlights

Noble Energy’s (NBL) 4Q16 production volumes totaled 410 Mboepd (thousand barrels of oil equivalent per day)—down ~3% compared to its production volumes in 4Q15. Its 3Q16 production volumes were 425 Mboepd.

Liquids accounted for 46.0% of Noble Energy’s 4Q16 production volumes—32.0% was crude oil and condensates and 14.0% was natural gas liquids. Natural gas made up the remaining 54.0%.

The total production volumes for the year were 420 Mboepd—up 18% compared to production volumes in 2015. In 2016, US onshore volumes rose 22% YoY (year-over-year), while offshore volumes rose 12%.

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Noble Energy’s 4Q16 realized prices

Noble Energy’s average realized price of crude oil (OIL) (USO) and condensates rose from $38.75 per barrel in 4Q15 to $47.41 per barrel in 4Q16. The average realized price for natural gas (UNG) rose from $2.19 per thousand cubic feet in 4Q15 to $2.63 per thousand cubic feet in 4Q16. The average realized price for natural gas liquids rose from $11.55 per barrel in 4Q15 to $20.04 per barrel in 4Q16.

So, higher realized prices were one of the major drivers for Noble Energy’s increased revenues in 4Q16—to learn more, read Part 1.

Noble Energy’s 2017 operational guidance

The midpoint of Noble Energy’s 2016 production growth guidance is 420 Mboepd. It represents 5% production growth compared to its levels in 2016, adjusting for 2016 divestments.

Noble Energy expects its US onshore oil volumes to rise nearly 30% YoY, adjusting for 2016 divestments. Most of the US onshore growth this year will be driven by the oil-rich Delaware and Eagle Ford assets. According to Noble Energy, volumes from the natural gas-weighted Marcellus are expected to fall after the impact of its Marcellus joint venture separation along with “natural decline in existing production.”

Noble Energy also expects to see a reduction in its offshore natural gas volumes. In a press release, the company said, “Total reported net production in Israel is anticipated to be down slightly from 2016, with underlying natural gas demand growth partially offsetting the impact of the 3.5 percent Tamar interest sale in late 2016. In the Gulf of Mexico and West Africa, volume declines are expected from 2016.”

Read Why Did Noble Energy Sell Interest in the Tamar Field? to know why Noble Energy is divesting its Israel assets.

So, oil could see its share in Noble Energy’s 2017 production mix rise significantly.

The capex guidance for 2017 is $2.3 billion–$2.6 billion. Of the capex guidance, ~$1.8 billion is allocated to development in the US onshore.

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