Noble Energy Inc.
), an independent oil and gas exploration and production company,
having high-grade hydrocarbon assets across the U.S. and several
international locations is scheduled to release its third-quarter
2012 financial results before the market bell on October 25,
Recap, Second-Quarter 2012
Noble Energy reported overall lackluster financial results in
the second quarter 2012 with earnings of 77 cents per share
missing the Zacks Consensus Estimate of 98 cents as well as the
year-ago earnings of $1.44 per share. Quarterly earnings
plummeted mainly due to a decline in the average realized price
of the products sold and a steep rise in total costs.
Revenue in the said quarter increased 14.7% to $966 million
from $842 million in the year-ago quarter. However, revenue fell
short of the Zacks Consensus Estimate by $1,018 million.
The top-line growth was largely attributed to strong
contribution from crude oil and condensate, while the results
were partly pulled down by lower natural gas and natural gas
liquids ("NGL") prices.
Noble Energy expects third quarter 2012 sales volumes to
average 242-250 thousand barrels of oil equivalent per day
(MBoe/d). The company expects its sales volumes to improve from
the second quarter due to greater contribution from Galapagos,
continuation of the drilling programs in DJ Basin and Marcellus
Shale, and encouraging sales in Israel. For 2012, the volume
range is projected to be between 236 Mboe/d to 244 Mboe/d.
The Zacks Consensus Estimate for the third quarter 2012 is
$1.02 per share, lower than the earnings of $1.24 per share
recorded in the comparable quarter, last year. At present, the
Zacks Consensus Estimate for earnings of the aforementioned
period range from 74 cents per share to $1.21 per share.
For full-year 2012, the Zacks Consensus Estimate is $4.89 per
share, down from $5.31 per share reported in the prior year. The
present Zacks Consensus Estimate ranges between $4.11 per share
and $5.39 per share.
Estimate Revisions Trend
We witness mixed estimate revisions at this point. Among a
total of 19 estimates, 6 estimates moved downwards while 7
estimates moved up in the past 30 days for the third quarter. In
the past 7 days, 3 estimates inched down and 2 jumped up.
For 2012, 7 out of 17 estimates moved downwards while 6
estimates moved north in the past 30 days. The last 7 days
observed 4 estimates climbing up and 2 moving downward out of an
aggregate of 17 estimates.
The Zacks Consensus Estimate for the third quarter fell by 3
cents in the last 30 days and simultaneously the last 7 days
witnessed estimate shrink by a penny.
For 2012, the consensus estimate decreased by 4 cents to $4.89
in the past month. However the fall was much more pronounced by 8
cents in the first three weeks of the past month. The trend was
buckled only in the past week which witnessed sharp recovery of 4
cents for the 2012 Zacks Consensus Estimate.
With respect to earnings surprise, the company surpassed our
expectation in the last three out of four quarters.
The earnings surprise in the last four quarters ranged from
(21.43%) to 23.24%. The average surprise over the last four
quarters was 6.89%.
Noble Energy's successful non-core asset divestitures in the
first half of 2012 have lent constancy to its stock profile. We
believe the company's new strategy of optimizing its global oil
and natural gas assets will generate favorable returns.
The projected increase in energy consumption in the US market
and a steady rise in crude oil and slowly recovering natural gas
prices in the international market are expected to act as growth
catalysts for the company in the near term.
However, regulatory risks could result in higher capital
expenditures and potential increase in exploratory costs could
hurt margins. Other negatives include commodity price
fluctuations, rise in the prices of key fuel inputs without an
offsetting rise in power prices and weather irregularities.
Noble Energy operates in a highly competitive energy market
and faces intense competition from companies like
Anadarko Petroleum Corporation
Currently, we are maintaining a long-term Neutral
recommendation on Noble Energy Inc. The company has a Zacks #3
Rank implying a short-term Hold rating on the stock.
APACHE CORP (APA): Free Stock Analysis Report
ANADARKO PETROL (APC): Free Stock Analysis
NOBLE ENERGY (NBL): Free Stock Analysis
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