Noble (NBL) Gives Q2 Updates, Sees Q/Q Drop in Sales Volume

Noble Energy NBL recently provided some second-quarter updates. The quarterly results are scheduled to be announced on Aug 7, 2020. In the quarter, sales volume averaged 350 thousand barrels of oil equivalent per day (MBoe/d). This includes 248 MBoe/d from U.S. onshore, 50 MBoe/d from Equatorial Guinea and 311 million cubic feet per day (MMcfe/d) from Israel. In the first quarter, sales volume was 390 Mboe/d.

Cost-Management Initiatives

Noble continues with cost-reduction initiatives, which yield positive results. Unit production costs (including lease operating, gathering and transportation, production taxes, as well as others) were $6.61 per BOE compared with $7.77 in the first quarter of 2020.

Courtesy of its proper management of expenses, general & administrative (G&A) expenses were down 40% year over year to $63 million. The company was able to lower G&A expenses through workforce initiatives, and reduce consultant as well as travel costs.

Other Developments in the Quarter

During the quarter, the company marked the entry into Egypt’s Upstream sector. During June 2020, Noble was awarded concessions on two exploration blocks offshore the Western Desert area of Egypt. Blocks 6 and 7 each encompass more than 800,000 square acres, gross, with final award of the blocks expected later this summer. This project will provide another opportunity to Noble to benefit from the rising demand for oil and natural gas in Egypt.

In addition, Noble and its partners are finalizing the commissioning of newly-installed compression onshore at the Ashkelon metering station in Israel to allow increasing sales volumes in Egypt via the EMG Pipeline.

Despite the impact of the novel coronavirus, the company continued to work on the Alen Gas Monetization Project, which is expected start from early 2021. In the second quarter, investments funded by the company were nearly $100 million, reflecting persistent improvement in capital efficiencies in the U.S. onshore business and reduced project spending on an international basis.

COVID-19 Impact on Oil

Year to date, prices of crude oil have dropped 35% to $39.65 per barrel, recovering marginally from the lows in April 2020. One of the primary reasons behind this significant drop in crude oil price and demand is the global outbreak of the novel coronavirus. The gradual recovery in prices was due to oil production cut by OPEC+ and the gradual reopening of economic activities that increased the demand for oil.

However, the situation still looks grim with reports of fresh coronavirus cases post the reopening of economic activities, which might again result in lockdown in the impacted areas to control the virus spread. To counter the unprecedented crisis, other oil and gas companies like Devon Energy Corporation DVN, Occidental Petroleum Corporation OXY and Murphy Oil Corporation MUR were forced to reduce expenditure for preserving liquidity, in addition to Noble.

Zacks Rank & Price Performance

Currently, Noble carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Its shares have outperformed the industry in the past three months.

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