Noble Energy Inc. (NBL)

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Noble Energy (NBL)

Q4 2011 Earnings Call

February 09, 2012 10:00 am ET

Executives

David R. Larson - Vice President of Investor Relations

Charles D. Davidson - Chairman, Chief Executive Officer and Member of Environment, Health & Safety Committee

David L. Stover - President and Chief Operating Officer

Analysts

David W. Kistler - Simmons & Company International, Research Division

Brian Singer - Goldman Sachs Group Inc., Research Division

Amir Arif - Stifel, Nicolaus & Co., Inc., Research Division

Leo P. Mariani - RBC Capital Markets, LLC, Research Division

Robert S. Morris - Citigroup Inc, Research Division

John P. Herrlin - Societe Generale Cross Asset Research

Bob Brackett - Sanford C. Bernstein & Co., LLC., Research Division

Irene O. Haas - Wunderlich Securities Inc., Research Division

John Malone - Global Hunter Securities, LLC, Research Division

David Heikkinen - Tudor, Pickering, Holt & Co. Securities, Inc., Research Division

Michael A. Hall - Robert W. Baird & Co. Incorporated, Research Division

Paul Crovo

Presentation

Operator

Good morning, and welcome to the Noble Energy's Fourth Quarter and Year-End 2011 Earnings Call. I would now like to turn the call over to David Larson. Please go ahead, sir.

David R. Larson

Thanks, Celia. Good morning, everyone. Welcome to Noble Energy's Fourth Quarter and Year-End 2011 Earnings Call and Webcast. On the call today, we have Chuck Davidson, Chairman and CEO; Dave Stover, President and COO; and Ken Fisher, CFO.

This morning, we issued 2 news releases, one covering the fourth quarter and full-year earnings, and the second one was for our 2012 guidance. Later today, we expect to be filing our 10-K with the SEC, and it will be available on our website.

The agenda for today will include -- will begin with Chuck discussing final fourth quarter 2011 results and then will highlight our capital and guidance expectations for 2012. Dave will then give some detailed overview of our operational programs, including a summary of year-end reserves and a breakdown of our expected activity levels for the current year. We will leave time for Q&A at the end and plan to wrap up the call in less than an hour. [Operator Instructions] Should you have any questions that we don't get to this morning, please don't hesitate to give us a call, and we'll do the best we can answering you.

I want to remind everyone that this webcast and conference call contains projections and 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 today. You should read our full disclosures on forward-looking statements in our latest news release and SEC filings for a discussion of the risk factors that influence our business.

We'll reference certain non-GAAP financial measures here today such as adjusted net income or discretionary cash flow. When we refer to these items, it's because we believe they are good metrics to use in evaluating the company's performance. Be sure to see the reconciliation in our earnings release tables.

With that, let me turn the call over to Chuck.

Charles D. Davidson

Thanks, David, and good morning, everyone. I'm going to start out with a brief wrap-up on 2011 and then go into an overview of our plans for this year. As David said, Dave Stover will follow up with the operational highlights, as well as details on our planned work in each of our 5 core areas in 2012.

I have to say up front that 2012 is the year that certainly I've been waiting for, and I think I can speak for the rest of the Noble Energy team as well on that. You can see early indications why when you look at our fourth quarter results, results that included the start-up of Aseng, the first of many major projects that we're pursuing globally; it also included the first contributions from our newly added Marcellus Joint Venture; and another quarter, actually our third quarter in a row, of record DJ Basin production, driven by outstanding horizontal Niobrara results; and finally, the announcement just before the end of the year of yet another major gas discovery in the Eastern Mediterranean, in Cyprus.

All great results but not the only reasons I'm excited about 2012. This year marks the beginning of a multi-year period of growth for Noble Energy, driven by major projects and programs in each of our 5 core areas. As we announced at our Analyst Day back in November, we now expect the annual production growth over the next 5 years to average 17% per year. On a debt adjusted per share basis, we expect not only production but cash flow and reserves to grow at double-digit rates over the next 5 years.

Starting in 2012, we begin realizing the benefits from multiple years of exploration success and the strength, balance and diversity of our portfolio. The early start-up of Aseng offshore Equatorial Guinea clearly demonstrated our ability to deliver on projects of significant magnitude. Projects of this scale would not have been possible for us several years ago, but they're well within our capabilities today, both technically and financially. Our exceptional project execution, whether in the international deepwater such as Aseng or onshore U.S. such as the Wattenberg horizontal Niobrara, now parallels our best-in-class exploration program and gives us good reason to be confident about our future growth.

With Aseng now onstream and Galapagos ready to go shortly in 2012, Tamar in early 2013, Alen in late 2013, followed by many other developments, our major exploration discoveries are now turning into real production, cash flow and profitable growth with growing margins.

While our guidance for 2012 suggests strong overall growth this year of 13%, the real headline is that with Aseng, Galapagos and the Niobrara, we expect growth in oil production this year of 40% over 2011. At today's oil prices, that will drive real value growth, and that really gets us excited.

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