February 19, 2019 / 4:53 PM / 3 months ago

Noble Energy to reward investors with more than $500 million cash flow target

(Reuters) - Noble Energy Inc on Tuesday outlined a plan to return over $500 million to shareholders by 2020 and lowered its 2019 capital expense forecast in response to a drop in crude oil prices, sending its shares up 5 percent.

The U.S. oil and gas producer’s announcement comes when a near-40 percent fall in U.S. crude prices in the fourth-quarter has pressured margins at oil and gas producers with investors calling for lower expenses and higher returns.

Noble cut its 2019 spending target, joining a list of peers that includes Apache Corp and Pioneer Natural Resources. The Houston-based company forecast capital expenditure in the range of $2.4 billion to $2.6 billion this year, lower than its previous forecast of $2.8 billion.

The company also said it would generate over $500 million in free cash flow by 2020, which it plans to return to shareholders through dividend and buybacks.

“Recent market dynamics, including increased commodity price volatility..highlight the need to prioritize capital discipline and corporate returns over top-line production growth,” said Noble Chief Executive Officer David Stover in a statement.

However, the company’s production forecast for 2019 fell short of analysts’ estimates. Noble said it plans to complete more oil and gas wells in the second half of the year.

Noble expects overall sales volumes in the range of 345,000 barrels of oil equivalent per day to 365,000 boe/d, while analysts were expecting about 372,000 boe/d, according to IBES data from Refinitiv.

The company said it expects to begin producing natural gas from the Leviathan project offshore Israel by the end of this year. Noble has a 39.66 percent stake in the project.

While Noble’s results are being interpreted as “better than the bear’s feared”, the regulatory environment in Colorado is keeping investors on the sidelines, Coker Palmer Institutional analysts wrote in a note.

Noble has operations in Colorado, where newly elected officials are expected to enforce a tougher permitting process for oil and gas producers.

Net loss attributable to shareholders was $824 million, or $1.72 per share, in the three months ended Dec. 31, from a profit of $494 million, or $1.01 per share, a year earlier.

The company took a $1.3 billion charge related to its Texas assets in the fourth-quarter.

Excluding one-time items, the company earned 12 cents per share, missing analysts’ estimate of 13 cents per share, according to IBES data from Refinitiv.

Total sales volumes fell to 350,000 boe/d from 380,000 boe/d. Analysts, on average, had expected about 344,000 boe/d, according to IBES data from Refinitiv.

Noble’ shares rose 5 percent to $23.76 in afternoon trading.

Reporting by John Benny and Shradha Singh in Bengaluru; Editing by Shailesh Kuber

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