Noble Energy Inc. (NBL) reported adjusted earnings per share of $1.07 for the second quarter of 2010, which surpassed the Zacks Consensus Estimate of 74 cents as well as year-ago earnings of 66 cents. The outperformance was mainly driven by robust volume growth across the company’s businesses.

Net revenue of $751 million in the quarter was above the Zacks Consensus Estimate of $732 million and grew 53% from the second quarter of 2009. This was mainly due to higher hydrocarbon production along with improved price realizations. Revenues from oil, natural gas and natural gas liquids (NGL) were $460 million (up 55%), $202 million (up 41%) and $48 million (up 129%), respectively.

Operational Results

Consolidated sales volumes rose 5.2% to 20 million barrels of oil equivalent (BOE), or 219,000 BOE per day, primarily due to higher volumes in the U.S., Israel and the North Sea, partially offset by volume declines in Equatorial Guinea. Volume increases primarily stemmed from volume growth in the U.S. Onshore region (ongoing development work at Wattenberg and the acquisition of Central DJ Basin asset) coupled with higher natural gas sales in Israel.

Realized prices for oil, natural gas and NGL averaged $75.36 per barrel (up 45%), $2.91 per thousand cubic feet (up 37%) and $39.37 per barrel (up 64%), respectively.

Noble’s operating expenses increased 25.5% year over year to $521 million, primarily due to higher lease operating, production, transportation and exploration expenses coupled with a modest rise in general & administrative expenses. Despite this, the company reported an operating income of $230 million, substantially above $76 million in the year-ago quarter.

Balance Sheet and Cash Flows

Noble ended the quarter with cash and cash equivalents of $1.0 billion and long-term debt of $2.6 billion. During the quarter, the company generated $256 million of cash from operations and deployed $519 million towards capital expenditure. Discretionary cash flow for the second quarter 2010 was $480 million.

Guidance

Moving forward, Noble expects third quarter 2010 volumes to average 212,000−220,000 BOE per day. For all of 2010, volumes are likely to range between 211,000−217,000 BOE per day. Moreover, the company lowered its 2010 lease operating expense guidance to between $4.80 and $5.10 per BOE. Also, it slashed its exploration expense guidance for 2010 to a range of $265 – $325 million.

Noble cut its 2010 capital expenditure guidance to $2.2 billion from the previous guidance of $2.5 billion.

 
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