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Noble Energy Focuses on US Onshore Volumes

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Production guidance

Noble Energy’s (NBL) 4Q17 volumes are expected to range between 380 Mboe/d and 390 Mboe/d (thousand barrels of oil equivalent per day). Noble Energy’s 4Q16 production was 410 Mboe/d.

The decline in production was likely due to Noble Energy’s asset divestments this year. In a bid to focus more on liquids-rich areas, the company exited the Marcellus Shale in May 2017. The proceeds from these divestments, which totaled $2 billion, were used for the Clayton Williams acquisition.

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However, Noble Energy’s 4Q17 production is expected to rise sequentially. Noble Energy’s production in 3Q17 was 355 MBoe/d. In Noble Energy’s 3Q17 earnings release, management noted that its strong production results were mostly due to its US onshore business. Likely in reference to the Clayton Williams acquisition and the Marcellus exit, Noble Energy’s management said, “The significant value of our recent strategic portfolio repositioning is being realized as onshore cash flows and volumes grow at a rapid pace as we move towards the end of 2017.”

As you can see in the above graphs, Noble Energy’s US onshore (labeled as USO in the image) production has been rising consistently since 3Q16. In 3Q17, Noble Energy’s US onshore oil volumes were 93 Mbpd (thousand barrels per day)—a quarterly record. US onshore volumes are expected to rise 15% in 4Q17—compared to 3Q17. US onshore oil volumes are expected to range between 102 Mbpd and 108 Mbpd in 4Q17.

Focus on US onshore volumes

Noble Energy has been focusing on developing its US onshore resources where it operates in three key areas—the Delaware Basin, the DJ Basin, and the Eagle Ford region. Noble Energy expects a 40% increase in its US onshore oil growth volumes between 1Q17 and 4Q17.

In the 3Q17 earnings conference, management said, “With our focus on significantly improving per unit cash margins and enhancing our overall corporate returns, nearly 100 percent of our forward capital is being allocated to our three U.S. onshore plays and the Eastern Mediterranean.”

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