Noble Energy, Inc. (NYSE: NBL) reported today fourth quarter 2012 net income of $251 million, or $1.39 per share diluted, and net income from continuing operations(1) of $277 million, or $1.54 per share diluted. Excluding the impact of an unrealized commodity derivatives gain and an asset impairment charge, fourth quarter 2012 adjusted net income from continuing operations(2) was $296 million, or $1.65 per share diluted. During the fourth quarter 2011, the Company had a net loss from continuing operations of $314 million, or $1.77 per share diluted, and adjusted net income from continuing operations(2) of $277 million, or $1.55 per share diluted.
Discretionary cash flow from continuing operations(2) for the fourth quarter 2012 was a record $824 million compared to $710 million for the same quarter in 2011. Net cash provided by operating activities was $762 million and capital expenditures(3) for the quarter were $1.1 billion.
Key highlights for the fourth quarter of 2012 include:
- Record quarterly cash flow of $824 million and record annual cash flow of $2.9 billion for 2012
- Record sales volume from continuing operations of 255 thousand barrels of oil equivalent per day (MBoe/d) and 239 MBoe/d for the year
- DJ Basin volumes increased to 86 MBoe/d with horizontal production contributing 39 MBoe/d, 45 percent of the total volumes
- Production in the Marcellus Shale averaged 121 million cubic feet equivalent per day (MMcfe/d) net, a 19 percent increase over third quarter 2012
- Discovery at Big Bend in the Gulf of Mexico
- New reservoir discovery at Carla offshore Equatorial Guinea
- Tamar platform installed and commissioning process initiated
- Announced a strategic partner in the Leviathan leases offshore Israel
Noble Energy reported full year 2012 net income of $1.0 billion, or $5.71 per share diluted, compared to net income of $453 million, or $2.54 per share diluted, in 2011. Adjusted net income from continuing operations(1) for 2012 was $889 million, or $4.95 per share diluted, compared to$904 million, or $5.06 per share diluted, in 2011. Discretionary cash flow from continuing operations(1) was $2.9 billion for the year, up 21 percent from 2011, and net cash provided by operating activities for the year was $2.9 billion, up 32 percent from 2011. Total year capital expenditures(2) were $3.6 billion.
Charles D. Davidson, Noble Energy's Chairman and CEO, commented, "Delivering record quarterly cash flow of more than $800 million in the fourth quarter was an excellent culmination to an exciting year of growth for Noble Energy and has set the stage for an even better year in 2013. Record sales, with liquids accounting for 47 percent of the volumes, were a strong contributor to the quarterly results. In particular, crude and condensate sales grew more than 17 percent from the previous quarter. In 2013, we anticipate another exciting year of growth as we deliver 20 percent production growth over 2012 after adjusting for our 2012 property sales. We plan to bring Tamar and Alen to first production while continuing to grow our U.S. production from the DJ Basin and Marcellus. To support future growth, we intend to sanction this year another wave of major projects that will likely include a Phase 2 of Tamar in Israel, a Phase 1 of Leviathan also in Israel, Carla offshore West Africa, and Gunflint and Big Bend in the Gulf of Mexico. While we move these projects into development, we will also be testing significant exploration prospects including theParaiso well offshore Nicaragua, Leviathan deep offshore Israel, and multiple prospects in the Gulf of Mexico."
Fourth quarter 2012 sales volumes from continuing operations averaged 255 MBoe/d, up 18 percent from the fourth quarter 2011, after adjusting for assets divested in 2012. Production volumes were 254 MBoe/d with the difference attributable to the timing of crude oil liftings in Equatorial Guinea. The sales volume split for the quarter was 47 percent liquids, 24 percent international natural gas, and 29 percent U.S. natural gas.
U.S. volumes totaled 149 MBoe/d for the fourth quarter 2012, up 31 percent from the same quarter last year excluding volumes from divested assets. The increase was attributed to growth from the horizontal plays in the DJ Basin and Marcellus, and from the Gulf of Mexico largely due to the addition of Galapagos. Natural production declines were experienced in the remaining non-core U.S. assets.
Sales volumes from international assets were 106 MBoe/d for the final quarter of 2012, an increase of 9 percent from the fourth quarter of 2011, excluding volumes from discontinued operations in the UK. The increase was due to production from the Aseng oil project offshore Equatorial Guinea offset slightly by lower natural gas sales in Israel.
Crude oil prices averaged $97.98 per barrel, down 2 percent versus the fourth quarter 2011. Natural gas realizations in the U.S. averaged $3.09 per thousand cubic feet (Mcf), down 10 percent from the fourth quarter of 2011, and averaged $5.29 per Mcf in Israel. Natural gas liquid pricing in the U.S. averaged $36.86 per barrel for the quarter, representing 40 percent of the Company's average U.S. crude oil realization.
Total production costs per barrel of oil equivalent (Boe), including lease operating expense (LOE), production and ad valorem taxes, and transportation were $7.97 per Boe, up 1 percent from the last quarter of 2011. LOE and depreciation, depletion, and amortization (DD&A) per Boe were$5.20 and $16.33, respectively. LOE rates were impacted primarily by an increase in facilities costs in the Gulf of Mexico. The increase in DD&A rates were due to increased liquids production from the DJ Basin and Gulf of Mexico, as well as the addition of natural gas production from the Noa and Pinnacles fields offshore Israel. Exploration expense for the fourth quarter 2012 was $86 million, which included costs associated with seismic acquisition in Nevada and offshore Falkland Islands. General and administrative expenses were up primarily due to increased staffing for major development and exploration activities. The Company recorded a $31 million asset impairment related to Mari-B offshore Israel. The adjusted effective tax rate for the fourth quarter 2012 was 19 percent with 45 percent deferred.
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