Texas-based Noble Energy (NBL) is an independent oil and gas exploration and production (E&P) company with high-grade hydrocarbon assets across the U.S. and several international locations. Noble’s U.S. onshore assets provide stable performance, while the offshore assets in the deepwater Gulf of Mexico offer significant growth opportunities over the medium to long-terms. The international operations of the company – with core positions in Equatorial Guinea and Israel – are a source of a low-cost, long-term production base; they do not require huge maintenance capital and diversify the overall portfolio.
Noble has a strong balance sheet with sufficient liquidity and financial flexibility. Management maintains a disciplined investment approach. They have been sensibly allocating resources to long-term development projects, which are vital for its future growth and to living within generated cash flows.
Going forward, the ongoing major development projects in deepwater Gulf of Mexico, Equatorial Guinea and Israel will create substantial value for Noble shareholders. However, the present unfavorable macro backdrop remains a concern and might overshadow the positives, at least in the near term.
We expect Noble shares to perform in line with its large E&P peers in the absence of near-term catalysts. As such, we maintain our Neutral recommendation for the company.
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