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Noble slashes upstream budget by 25%, indicates Eagle Ford assets are available from SNL Energy Finance Daily Noble slashes upstream budget by 25%, indicates Eagle Ford assets are availableByline: Mark Passwaters Noble Energy Inc.'s oil and gas assets in the Eagle Ford Shale are available "if somebody came in with a big enough check," President and COO Brent Smolik said Feb. 12 during the company's fourth-quarter 2019 earnings call. During the question and answer session with analysts, Smolik was asked what the company planned to do with its Eagle Ford holdings, which have fallen behind other U.S. unconventional plays in terms of importance to the company. He said the company tested a pilot program in 2019 to refracture some older wells, but "right now, the heads-up drilling capital doesn't compete with the Delaware and the DJ. So it will stay in its free cash flow generation posture." Smolik was then asked if the Eagle Ford could be a "monetization candidate." "We've said often on that we're willing to think about divesting noncore assets, and we've done a fair amount of that over the last couple of years. So if somebody came in with a big enough check, we think about it," the executive said. Noble executives said the company's capital budget for upstream in 2020 would be between $1.6 billion and $1.8 billion, with the focus of its domestic operations on the Delaware and DJ basins. Both areas would see operations similar to 2019 but with approximately $200 million less capital applied. "The program is expected to generate DJ growth to offset Eagle Ford decline and maintain or modestly grow Delaware production," Smolik said. "We think that the focus on DJ makes sense based on the scale and the remaining inventory in the DJ Basin, our track record of successful execution and returns there and the ability to grow while generating significant cash flow." Chairman and CEO David Stover said Noble is responding to the low price environment with a significant budget reduction across the board. "Capital spend for 2020 is estimated down 25% from last year, while production volumes should grow 10%, and operating cash flow grows even higher," Stover said. Noble officials said the company's Leviathan natural gas project off the coast of Israel was put online on schedule and $200 million under budget. Leviathan, Stover said, would help increase the company's margins in 2020. "The greatest single achievement in 2019 was successfully bringing Leviathan offshore Israel on production," Stover said. " ... We are already delivering volumes into Israel, Jordan and Egypt, making it the first time in Israel's history to have significant exports to regional customers." For the fourth quarter of 2019, Noble reported an adjusted net loss of $26 million, or a loss of 5 cents per share, compared to an adjusted net income of $56 million, or 12 cents per share, in the prior-year period. The S&P Global Market Intelligence consensus normalized earnings estimate for the quarter was a loss of 8 cents per share. |
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