Noble Energy Sees Production Up – Analyst Blog

U.S. oil and natural gas company Noble Energy Inc. (NBL) Wednesday releases its future strategy including production, reserves and capital spending plans. The company expects a five-year annual compounded production growth rate of 10%, bringing the production of 350 thousand barrels of oil equivalent per day (MBOE/d) in 2015.

Noble also anticipates a five-year annual compounded growth of 14% for proved reserves from the year end 2009. The company intends to spend an average of $2.6 billion per year for the next five years as capital expenditure and has agreed to sell certain non-core high cost mid-continent and Illinois basin assets for about $550 million.

In addition to the deepwater Gulf of Mexico projects, the company is gaining momentum with an increasing U.S. onshore resource base, extending its footprint to over 2.5 million net acres. It expects major ongoing projects to deliver approximately $1 billion in free cash flow in 2015. The company’s next five years’ production growth target is supported by its key major projects in the Gulf of Mexico, West Africa and Israel.

We believe that Noble’s potential exploration program, disciplined capital allocation and major asset restructuring have already been reflected into its present premium valuation. We are currently Neutral on Noble shares as we think that the upside potential has been neutralized by the tentative commodity price environment.