Noble Energy Inc. (NBL) reported adjusted earnings per share of $1.27 for the third quarter of 2010, which outdid the Zacks Consensus Estimate of 81 cents as well as the year-ago earnings of $1.10. The outperformance was mainly driven by robust volume growth across the company’s businesses.

Net revenue of $755 million in the third quarter was above the Zacks Consensus Estimate of $737 million and grew 21.6% from $621 million in the third quarter of 2009. This was mainly due to strong operating performance across all business segments.

Revenues from oil, natural gas and natural gas liquids (NGL) were $446 million (up 18%), $214 million (up 24%) and $44 million (up 83%), respectively.

Operational Results

Consolidated sales volumes rose 5% to 21 million barrels of oil equivalent (BOE), or 230,000 BOE per day, primarily due to a 4% rise in volumes sold in the U.S. and an 8% rise in sales volumes internationally. The company’s sales volumes mix for the third quarter was 38% global liquids, 33% international natural gas, and 29% U.S. natural gas.

Realized prices for oil, natural gas and NGL averaged $73.41 per barrel (up 16%), $3.87 per thousand cubic feet (up 27%) and $36.30 per barrel (up 51%), respectively.

During the quarter, Noble Energy made significant progress on its major projects in all four core areas. In the U.S., the company moved ahead with its horizontal Niobrara drilling program in the Central DJ Basin and also performed completion activities in the deepwater Gulf of Mexico at Galapagos, despite the offshore moratorium. Internationally, Noble Energy initiated the development work at Aseng and sanctioned the Tamar project.

Noble’s operating expenses increased 2.7% year over year to $462 million, primarily due to higher lease operating, production and exploration expenses coupled with a rise in general & administrative and depreciation expenses. Despite these higher expenses, the company reported an operating income of $293 million, substantially above $171 million in the year-ago quarter.

Balance Sheet and Cash Flows

Noble ended the third quarter with cash and cash equivalents of $1.1 billion and long-term debt of $2.2 billion. During the quarter, the company generated $608 million of cash from operations and deployed $688 million towards capital expenditure. Net proceeds from asset sales during the third quarter summed to $552 million. Discretionary cash flow for the quarter was $485 million.

Guidance

Moving forward, Noble expects fourth quarter 2010 volumes to average 212,000−222,000 BOE per day. Based on strong sales volumes year-to-date, the company increased its 2010 volume guidance to range between 214,000−217,000 BOE per day. The new guidance represents the upper-end of the company’s previous guidance range of 211,000-217,000 BOE per day.

Noble Energy maintained its 2010 expense guidance, with lease operating expense expected at $4.80-$5.10 per BOE and exploration expense at $265 – $325 million. Capital expenditure for 2010 is expected to be $2.2 billion.

 
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