Noble Energy Inc. (NBL)

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Noble Energy, Inc. (NBL)

Q4 2010 Earnings Conference Call

February 10, 2011 10:00 AM ET


David Larson – VP, IR

Charles Davidson – Chairman and CEO

Dave Stover – President and COO

Ken Fisher – SVP and CFO


Brian Singer – Goldman Sachs

Dave Kistler – Simmons & Company

Leo Mariani – RBC

Irene Haas – Wunderlich

Dan McSpirit – BMO Capital Markets

David Heikkinen – Tudor Pickering Holt

Rehan Rashid – FBR Capital Markets

John Herrlin – Societe Generale



Good morning, and welcome to today’s Noble Energy Fourth Quarter and Year End 2010 Earnings Call. At this time, I would now like to turn the call over to Mr. David Larson. Please go ahead, sir.

David Larson

Thanks, John. Good morning everyone. Welcome to Noble Energy’s Fourth Quarter and Year End 2010 Earnings Call and Webcast. On the call today, we have Chuck Davidson, Chairman, CEO; Dave Stover, President, COO; and Ken Fisher, CFO.

This morning, we issued two news releases. One, covering the fourth quarter and full year which goes through some details on our year end reserves as well, and the second one, with our 2011 guidance. Later today, we expect filing our 10-K with the SEC and it will also be available on our Web site.

The agenda for today will begin with Chuck discussing final quarter of 2010 and then we’ll highlight our capital and guidance expectations for 2011. Dave, then will give some detail overview of our operational programs including a summary of our 2010 reserves and a breakdown of our expected activity levels for the current year. We’ll leave time for Q&A at the end and plan to wrap up the call in less than an hour.

We would ask everyone to limit themselves to one primary question and one follow-up today. Should you have any questions that we don’t get to this morning, please give Brad or I a call and we’ll do our best to answer you.

I want to remind everyone that this Webcast and conference call contains projections, forward-looking statements based on our current views and most reasonable expectations. We provide no assurances on these statements as a number of factors and uncertainties could cause actual results in the future periods to differ materially from what we discuss here today. You should read our full disclosures on forward-looking statements in our latest news releases and SEC filings for a discussion of the risk factors that influence our business.

We’ll reference certain non-GAAP financial measures today, such as adjusted net income and discretionary cash flow. When we refer to these items, it’s because we believe these are good metrics to be used in evaluating our performance. Be sure to see the reconciliations in our earnings release tables. With that, let me turn the call over to Chuck.

Charles Davidson

Thanks, David, and good morning, everyone. I’m going to go ahead and start this morning with – by covering Noble Energy’s fourth quarter results as well as full year 2010 where certainly we finished up the year with a real strong performance.

Next I’ll go over our 2011 capital and production guidance after which Dave will follow with a deeper dive into some of our recent results and also specific plans for the year.

Overall 2010 was a year of big things for us. We started out the year by adding to our core onshore U.S. position at Wattenberg and building a leading acreage position in the Central Diega basin. The horizontal Niobrara program in the Central Diega basin is still in the early phases of testing a number of the areas of the play going from the core of Wattenberg up into south eastern Wyoming. But our initial results have certainly been strong especially in the core of Wattenberg and the Wattenberg edges, which comprises the majority of our drilling so far. We are just now getting results on the areas outside of the field, but overall the program is clearly having an impact as we see our liquid volumes grow in the U.S.

Offshore we’ve added a number of new opportunities to our portfolio in the March 2010 lease sale. And our current fields there continue to have strong production. Our plans for the Gulf were severely impacted by the Macondo incident and the resulting drilling moratorium, which suspended our Deep Blue and Santiago wells. Despite the moratorium, we’ll – we were able to get permits for completion work at Santa Cruz and Isabella, which enabled us to keep our near development at Galapagos moving forward, which was certainly a big accomplishment for Noble Energy. Significant progress has made by us in the industry as a whole regarding well control, spill containment and clean up. And I feel good about the readiness of the industry to return to drilling in the Gulf.

Internationally we moved forward with the large liquid developments in Equatorial Guinea at Aseng where we completed field drilling and also at Alen where we – which we sanctioned at the end of the year. Our exploration plans offshore West Africa were furthered with new seismic acquisition, which really teased up some drilling this year that Dave will cover.

Finally in Israel, the highlight of the year was certainly the success at Leviathan, our largest exploration find ever and the biggest global deepwater gas discovery in the last decade. Interestingly, number two on that list of deepwater gas discoveries is Tamar, which is in of course the same basin as Leviathan. We operate both and sanction Tamar for development in 2010.

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