Noble Energy Inc. said Feb. 12 it took a $1.16 billion charge related to its assets in the Eagle Ford Shale, becoming the latest producer to write down the value of its natural gas holdings as prices plunge amid record U.S. output and a global glut.
Several large gas producers such as EQT Corp. and CNX Resources Corp. have reduced the value of their production assets in the last few weeks, with analysts and investors forecasting further spending cuts and write-downs by shale producers.
Shares of Noble fell 4.5% to its lowest in more than one year after the company forecast full-year sales volumes below market estimates, as it plans no new drilling in Eagle Ford.
The impairment charge led Noble to post a bigger quarterly loss, though its adjusted loss of 5 cents per share was smaller than expected, thanks to higher sales volume. Analysts on average expected a loss of 8 cents, according to Refinitiv IBES data.
Noble also cut its spending plans for 2020 to between $1.6 billion and $1.8 billion, $400 million less than its earlier estimate, joining peers in curbing spending as investors demand higher returns.
President Brent Smolik, in a post-earnings conference call, said the company would consider monetizing the Eagle Ford asset "if somebody came with a big enough check."
Noble said it expects sales volumes of between 385,000 and 405,000 barrels of oil equivalent per day (boe/d) in 2020, below estimates of about 416,000 boe/d.
Still, the sales outlook was about 10% higher than 2019, boosted by Noble's partially owned Leviathan project in Israel, which went online at the end of 2019.
Leviathan, one of the world's biggest offshore gas discoveries of the last decade, began exporting in January and is already supplying Israel, Egypt and Jordan with natural gas.
Quarterly total sales volumes rose 6.6% to 373,000 boe/d. For the first quarter, Noble expects total sales between 378,000 to 398,000 boe/d.
Net loss attributable to the company widened to $1.21 billion or $2.52 per share for the fourth quarter ended Dec. 31, from $824 million or $1.72 per share last year.
In our final Permian perspectives segment, Tom Petrie analyzes where the basin fits in the ‘new world order.’
Speakers in the morning sessions of Midstream Texas certainly had Permian production on their minds. Why not? The prolific basin is soon to produce as much crude as the entire U.S did 15 years ago.
Whiting Petroleum, and Hess Corp. espoused optimism about the Bakken, while others talked about the reinvented San Juan. Meanwhile, Extraction Oil & Gas is ready to deal with SB-181.