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.
BP’s shift to becoming a net-zero company uncovers an eventual transformation of its upstream oil and gas business.
Offshore operations in the Gulf of Mexico will thrive with improving economics, while in the shale fields ... not so much; a new generation of leaders takes over following the retirement of a slew of industry icons, and just in time to tackle investor pressure on ESG issues, continuing consolidation and the pursuit of capital; and then there's the 2020 U.S. presidential election, in which the subject of energy is likely to play a prominent role.
The Permian Basin remains one of the best opportunities for nonoperating investors in the world, particularly for those who go in with eyes wide open to these risks and a clear plan for mitigating them.