Prominent oil & natural gas exploration company,
Noble Energy Inc
) dull top- and bottom-line outcomes in the second quarter 2012
resulted from a downward trend in crude oil and natural gas prices.
The company reported pro forma earnings per share of 77 cents for
the second quarter 2012, which considerably lagged the year-ago
earnings of $1.44 per share.
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We believe a gradual improvement in energy prices in the US market
will add to the company's top-line results in the near term. In
addition, the company's onshore assets, especially in the
Denver-Julesberg (DJ) and Marcellus play, are expected to provide
stable performance. In the offshore operations, assets in the
deepwater Gulf of Mexico are also expected to offer significant
However, Noble Energy's international business operations are
exposed to political and economic risks rife in West Africa and the
Middle East countries. Also, unexpected factors like accident or
natural disaster and government intervention could hurt the
company's margins and financials.
On a positive note, Noble Energy's planned divestiture programs
will enable the company to acquire lucrative assets which will
fetch high returns. Noble Energy continues to expand its
infrastructural facilities which will aid in augmenting growth.
Nevertheless, we believe reliance on third parties for
marketability of production and commodity price volatilities owing
to the effect of periodic economic cycles in the US market could
hurt the company's margins.
The company expects third quarter 2012 sales volumes to average
242-250 thousand barrels of oil equivalent per day (MBoe/d), which
does not include volumes from discontinued operations.
The Zacks Consensus Estimates for the third quarter and full year
2012 currently stand at $1.09 per share and $5.09 per share,
Noble Energy presently retains a Zacks #3 Rank implying a
short-term Hold rating. The company competes closely with
Anadarko Petroleum Corporation
Based in Houston, Texas, Noble Energy, Inc. engages in the
acquisition, exploration, development, production, and marketing of
crude oil, natural gas and natural gas liquids.