By Ernest Scheyder
Feb 6 Oil and natural gas producer Noble Energy
Inc surprised Wall Street on Thursday with a weak
production forecast and a lower-than-expected quarterly profit
as its costs spiked.
The report comes as Noble Energy, like many of its peers,
spends heavily to find more oil and natural gas to satisfy Wall
Street's demands for constant reserve growth. Energy resources
are becoming increasingly hard to find, a difficulty that is
prompting spending that would have been considered astronomical
a decade ago.
Noble Energy, for instance, spent $1.1 billion in the fourth
quarter on capital projects, ending the year with reserves 19
percent higher than 2012.
Despite the new reserves, Noble Energy expects to produce
280,000 to 288,000 barrels of oil equivalent per day (boe/d)
this quarter. That is less than it produced in the fourth
quarter and far below analysts' expectations of at least 300,000
boe/d in the first quarter.
The company said weather was why results were out of whack.
A rare December snowstorm in Israel, where the company has begun
supplying natural gas for heating and electricity generation,
sharply boosted demand. The first-quarter production forecast
reflects a leveling out of demand, Chief Executive Charles
Davidson said on a conference call with investors.
"The first quarter is really right on track with where we
expected and right on track to deliver the growth rate that
we've laid out this year," Davidson said.
For the fourth quarter, Noble Energy reported net income of
$134 million, or 37 cents per share, compared with $251 million,
or 70 cents per share, in the year-ago period.
Excluding hedging losses and other one-time items, the
company earned 50 cents per share, compared with the 60 cents
expected, on average, by analysts, according to Thomson Reuters
Sales rose 16 percent to 293,000 barrels of oil equivalent
per day (boe/d), exceeding the company's previously announced
forecast for the quarter.
Almost half of the sales were in crude oil, with the rest in
Operating expenses, including the cost of finding,
transporting and storing oil and natural gas, increased 22
percent from the same quarter in 2012.
The increase was starkest in exploration expenses, which
more than doubled. The company's production taxes rose 31
percent, also surprising Wall Street analysts.
Noble has identified giant natural gas fields off the coast
of Israel as one of its most promising developments, but the
cost to develop them and other areas will be high.
The company is also growing rapidly in the Marcellus and
Denver-Julesburg shale basins in the United States.
Noble Energy's shares were up 0.3 percent at $62.24 in
mid-day trading on Thursday. The stock has lost about 5 percent
of its value in the past six months.
BlackRock Inc said on Wednesday that it now owns 6.1
percent of Noble Energy's shares, making it the company's