EX-99.2 3 nbl20180630supex992.htm EXHIBIT 99.2 nbl20180630supex992
Second Quarter Supplement August 2018


 
2Q Key Highlights www.nblenergy.com NYSE: NBL Solid operational performance and continued focus on shareholder returns Strong natural gas demand drove Record USO oil sales volumes Completed record sales volumes 105 MBbl/d 2 Delaware CGFs and increased firm takeaway for > 1 Bcf/d led by Delaware and DJ Basins Permian oil gross, from Israel Exploration > $440 MM Progressed Alen Captured directed to NBL stock repurchase Gas Monetization new opportunities international and debt reduction in West Africa through Heads of offshore and U.S. onshore Agreement 2


 
2Q18 Actuals vs. Guidance www.nblenergy.com NYSE: NBL Volumes and total operating expenses in-line Financial & Operating Metrics 2Q Guidance 2Q Actuals Adjusted Earnings 2Q ($MM) Total Sales Volumes (MBoe/d) 340 – 350 346 Net (Loss) Income Attributable to NBL (GAAP) (23) Oil (MBbl/d) 124 – 132 127 Adjustments to Net (Loss) Income, Before Tax 121 Natural Gas Liquids (MBbl/d) 65 – 70 67 Adjusted Net Income attributable to NBL, Before Tax 98 Natural Gas (MMcf/d) 885 – 910 917 Current Income Tax Effect of Adjustments (3) Capital(1) ($MM) 750 – 850 866 Deferred Income Tax Effect of Adjustments (14) Lease Operating ($/BOE) 3.70 – 4.00 4.19 Adjusted Net Income Attributable to NBL(2) (Non-GAAP) 81 Gathering, Transportation & Processing ($/BOE) 3.30 – 3.60 3.17 Adjusted EBITDAX 2Q ($MM) Production Taxes (% Oil, NGL, Gas Revenues) 4.5 – 4.9 4.5 Net (Loss) Income Including Noncontrolling Interest(GAAP) (6) DD&A ($/BOE) 14.00 – 14.75 14.75 Adjustments to Net (Loss) Income, After Tax 104 Marketing ($MM) 8 – 12 7 DD&A 465 Exploration ($MM) 30 – 50 29 G&A ($MM) 100 – 110 105 Exploration 29 Interest, net ($MM) 70 – 80 73 Interest, net 73 Equity Investment Income ($MM) 35 – 50 49 Current Income Tax Expense, Adjusted 26 Midstream Services Revenue – Third Party ($MM) 10 – 20 15 Deferred Income Tax Expense, Adjusted 7 Noncontrolling Interest – NBLX Public Unitholders ($MM) 10 – 20 17 Adjusted EBITDAX(2) (Non-GAAP) 698 (1) Includes only NBL-funded portion of midstream capital expenditures. (2) Non-GAAP reconciliation to GAAP measure available in 2Q18 earnings release. 3


 
DJ Basin www.nblenergy.com NYSE: NBL Delivering above expectations CO Solid Operational Execution in 2Q18 DJ Basin Activity 2Q18 Weld • Added 2nd rig and 3rd frac crew Oil (MBbl/d) 60 NGL(1) (MBbl/d) 24 • Sales volumes of 121 MBoe/d reflect strong well East performance Gas(1) (MMcf/d) 219 Pony (1) • Oil mix of 50% (or 55% prior to impact of ASC 606 Total Sales (MBoe/d) 121 Operated Rigs 2 Wells implementation) Ranch (2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Wells Drilled 23 Wells Completed(2) 31 Mustang Anticipate Volume Growth in 2H18 Wells Brought Online(2) 16 NBL Acreage Municipalities • 25-30 wells planned to come online in both 3Q and 4Q Avg. Lateral Length (ft) 10,000 GOR: Low Mid High • Expect 2H18 DJ Basin gas processing expansions to support volume uplift MBoe/d Wells Ranch and East Pony Sales Volumes(1) • Timing Mustang wells online in coordination with 100 infrastructure expansion within basin 75 50 25 2Q16 2Q17 2Q18 (1) Reflects the current presentation of sales volumes, post-implementation of ASC 606 accounting standard. (2) Represents NBL operated activity. 4


 
DJ Basin Activity www.nblenergy.com NYSE: NBL Key well results Exceptional Productivity Continues from Wells Ranch Kona Wells – High Proppant Concentration Test Kona Wells MBoe/d gross rate total • Seven wells utilizing high sand concentrations of 2,800 – 10+ after 150 days online 3,600 lbs/ft proppant across 10,500+ ft. average lateral Wells Ranch • Continue to optimize well designs to maximize value and recovery per section oil cut, maintaining lower 60% GOR than offset wells • Higher proppant concentration at wider well spacing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Encouraging Early Results from Mustang Wells Mustang IDP • Wellhead pressures significantly higher than offset wells with similar GOR wells planned to be online by year-end 2018 across • First row development includes multiple proppant 30 lower GOR area concentration tests to optimize development Mustang • Initial six wells online late 2Q utilized 1,800 lbs/ft proppant standard design wells currently online and 10 ramping up • Utilizing new modular spec-oil facility design 5


 
DJ Basin Infrastructure www.nblenergy.com NYSE: NBL Line of sight to processing additions for growing DJ volumes DCP Plant 10 (Mewborne 3) DCP Plant 11 (O’Connor 2) NBL Well Positioned to Benefit from Near-term Processing - Adds 200 MMcf/d capacity - Adds 300 MMcf/d processing - Online August 2018 and bypass capacity Expansions - Expected online 2Q19 NBL Acreage New Processing Wells • Mustang activity planned in coordination with DCP Plant 10 Plant Ranch start-up in 3Q18 and Discovery addition in 4Q18 DCP Plant 12 • Additional near-term bypass and offload opportunities - Adds up to 1 Bcf/d • DCP Plant 11 and 12 support growth in 2019 and 2020 processing and Mustang bypass capacity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . beginning in 2020 Mustang Infrastructure Built To Maximize Gas Processing Flexibility Western Gas Latham Plant Discovery Plant • Diversified processing capacity across three providers with - Adds >200 MMcf/d capacity - Adds 200 MMcf/d capacity multiple offload points - Expected online in 2019 - Expected online in 4Q18 • Protected through compression Processing DCP and Discovery Gas Processing Capacity Capacity • NBLX completed gathering infrastructure (75% NBL owned, MMcf/d Supports Mustang Growth 25% NBLX) 1,600 1,100 600 2Q18 3Q18E 4Q18E 1Q19E 2Q19E 6


 
Delaware Basin www.nblenergy.com NYSE: NBL Doubled production year-over-year TX Solid Operations in 2Q with Sales Volumes of 47 MBoe/d Delaware Activity 2Q18 Reeves Ward • Majority of 2Q wells online late in quarter Oil (MBbl/d) 33 • 55 MBoe/d average July production NGL (MBbl/d) 7 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Gas (MMcf/d) 40 Progressed Midstream Infrastructure Build-out Total Sales (MBoe/d) 47 Operated Rigs 6 • 5 central gathering facilities (CGFs) now online, expanding oil (1) gathering capacity to 90 MBbl/d Wells Drilled 22 Wells Completed(1) 22 Pecos • All CGFs connected and flowing through the Advantage crude Wells Brought Online(1) 23 oil pipeline (operated by NBLX) Avg. Lateral Length (ft) 9,050 NBL Acreage . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Modifying Near-term Activity to Address Basin Constraints Delaware Basin Net Production(2) MBoe/d 100% Volume Growth 2Q17 to 2Q18 • Timing development to align with pipeline expansions 50 40 • Temporarily reducing completion activity late 3Q18; optimizing 30 drilling for row development around CGFs 20 • 15-20 wells planned to come online in both 3Q and 4Q 10 0 2Q16 2Q17 2Q18 Total Oil (MBbl/d) (1) Represents NBL operated activity. (2) Includes impact of CWEI acquisition which closed in 2Q17. 7


 
Delaware Basin Activity www.nblenergy.com NYSE: NBL Demonstrating strength of asset across acreage position 2Q18 Activity Focused on Wolfcamp A Upper and Lower Zones Recycled Water Test 100% Use 100 Mesh Test . Used 100% recycled . Primarily locally • 21 of 23 wells online were in Wolfcamp A, majority were multi-well pads water in completion sourced 100 mesh sand . 1 Wolfcamp A well . 2 Wolfcamp A wells avg. • 18 of the 23 wells were long laterals, over 9,000 ft lateral length IP-30 1,510 Boe/d IP-30 1,520 Boe/d . 4,370 ft lateral length, . 10,140 ft avg. lateral • Longer laterals experiencing shallower declines 74% oil length, 82% oil • IP-60 averaging 93% of IP-30 for 2Q wells that have reached 60 days Reeves . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Progressing Development of Legacy Clayton Williams Acreage Central Gathering • Strong well performance in 2Q18 Facilities . 4th and 5th CGFs • Nearly all wells brought online flowing through CGFs online in 2Q18 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Continue to Drive Operating Efficiencies NBL Acreage • Reduced drilling days by 10% in 1H18 vs. 2017 Southern Wolfcamp A Well Results • Lateral length for wells online increased by 30% in 1H18 vs. 2017 . 9 wells in Wolfcamp A Upper and Lower Zones . Avg. IP-30 1,600 Boe/d; Avg. IP-60 1,495 Boe/d • Increased use of recycled water for completions to 10% . 9,540 ft avg. lateral length, 82% oil 8


 
Permian Oil Takeaway www.nblenergy.com NYSE: NBL Securing flow assurance and diversifying pricing Majority of New Production Transported via Pipe to Sales Point Diversified Permian Firm Oil Takeaway • Wells gathered from wellhead to CGFs NBL Acreage Existing Pipeline Midland • Oil volumes connected from CGFs to Advantage Pipeline system (operated by NBLX) transported to Crane with access to Midland Advantage Pipeline to Crane . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Cushing Crane Reducing Price Impact of Wide Midland Differentials • Diversified end markets for Delaware oil volumes Reeves Midland • Mid-Cush basis hedging provides further protection • ~5% of 2H18 Total Company sales volumes exposed to Midland Crane pricing(2) Permian Firm Oil Takeaway 2H18-2019 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Houston 25 MBbl/d Avg. 2H18-2019 Firm Sales(1) EPIC Firm Transport Agreement Will Provide Access to Majority to Gulf Coast 100 MBbl/d via EPIC pipeline to Gulf Firm Transport(1) Corpus Christi Premium Priced Markets from Gulf Coast Coast online in 4Q19 • Secured capacity for 100 MBbl/d gross on EPIC crude pipeline Basis Hedges 2H18-2019 20 MBbl/d in 2H18 at $2.30/Bbl avg. Mid-Cush • Anticipate start-up in 4Q19 27 MBbl/d in 2019 at $3.23/Bbl avg. (1) Represents gross sales volumes. (2) Includes impact of basis hedges. 9


 
Noble Midstream (NBLX) www.nblenergy.com NYSE: NBL Peer-leading distribution growth and growing third-party services 20% 192 4 1.8x targeted MBoe/d record quarterly major projects distribution coverage annual distribution oil and gas volumes completed in 2Q with a strong growth gathered in 2Q balance sheet Delaware Basin Highlights DJ Basin Highlights • Delivered CGF Construction in Support of NBL Delaware • Maintained Wells Ranch and East Pony Volumes Volume Growth Gathered from Fewer Wells Turned Online 2Q vs. 1Q . Completed Billy Miner II and Collier CGFs in 2Q18 . Total gathering capacity from 5 CGFs expanded to 90 • Mustang IDP Gathering Infrastructure Online at the End MBbl/d for oil, and 115 MBoe/d including natural gas of 2Q18 . Spec gathering system for oil, gas, and produced water • All CGFs Connecting through Advantage System by . Delivered fresh water to two frac crews in Mustang Mid-year for a full quarter • Grew Advantage Pipeline Oil Throughput to 105 MBbl/d; • Reported a Full Quarter of Contribution from Black 19% increase from 1Q18 Diamond Gathering . Increased dedicated system acres by 12% • Advantage Pipeline Capacity Expansion to 200 MBbl/d . 2Q18 throughput up 4% from time of acquisition Completed in July close 10


 
Eastern Mediterranean www.nblenergy.com NYSE: NBL Growing natural gas demand with stable long-term cash flows Aphrodite Tamar Record Gross Sales Volumes 1,019 MMcfe/d; Net Sales 35% WI 25% WI Volumes 227 MMcfe/d Leviathan • Driven by strong demand and weather 39.7% WI Dor Tamar SW • Price realizations of $5.46/Mcf 25% WI Tel Aviv . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . NBL Interests Producing Discovery Ashdod Over 900 MMcf/d Total Volume Under Contract for Leviathan Field Development • Over 200 MMcf/d contracted to meet Israel domestic consumption Existing Pipeline Planned Pipeline Israel • 700 MMcf/d contracted for exports Egypt • 350 MMcf/d to Egypt and 350 MMcf/d to Jordan Israel Gross Production MMcfe/d All-time Record in 2Q18, Over 1 Bcfe/d • Continue negotiations to fill up Leviathan phase 1 to 1 Bcf/d 1,200 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,000 Progressing Options for Multiple Pipelines Routes to Export 800 Gas to Regional Markets 600 • Prioritizing use of existing infrastructure to Jordan and Egypt 400 200 2Q15 2Q16 2Q17 2Q18 11


 
Eastern Mediterranean Leviathan Development www.nblenergy.com NYSE: NBL Project ~60% complete and progressing towards first gas sales by year-end 2019 Leviathan Major Project Development Remains On Schedule and On Budget, Several Milestones Achieved: • Finished drilling program and began completion activity • Completed first subsea tree installation • Completed floating of the production decks • Finished pipelay for gathering lines • Completed direct pipe shore crossing Construction of Leviathan Platform Project Phase 2017 2018 2019 Sanction Order Critical Path Equipment Detail Design and Engineering Equipment Manufacturing Drilling and Completions Pipeline Manufacturing Offshore Platform Installation Commissioning and First Gas Subsea Tree Installation Jacket Fabrication 12


 
Financial Position www.nblenergy.com NYSE: NBL Continued focus on financial strength and shareholder returns Progressing Direct Shareholder Return Initiatives Reduced NBL Debt by $2.6 B • Repurchased 1.8 MM shares outstanding in 2Q18 $B Since Beginning of 2016 10 • $750 MM share repurchase program, 17% complete in 1H18 • 10% dividend increase in 1H18 8 CWEI . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6 Assumed Debt Accomplished $600 MM NBL Debt Reduction 3-Year Target 4 Debt Retirement • $379 MM reduction in 2Q18 removed legacy ROSE debt 2 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . YE15 2Q18 Realized Proceeds of ~$520 MM in 2Q18 Investment Grade Credit Ratings • Gulf of Mexico divestiture and CNXM unit sale Current Rating Agency Summary • Funds allocated for share repurchases and debt reduction Moody’s Baa3 Stable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S&P BBB Neutral Robust Liquidity of $4.6 B at end of 2Q18 Fitch BBB- Positive 13


 
Updated 2018 Outlook www.nblenergy.com NYSE: NBL Delivering significant volume growth year-over-year FY18 U.S. Onshore Oil Expected to Grow >25% from FY17 Maintaining Total Company Sales MBoe/d Volumes(2) Growth Target • Anticipate nearly 10 MBbl/d oil growth from 2Q to 3Q and 400 Up 12% ~5 MBbl/d growth from 3Q to 4Q 350 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 300 Full Year Sales Volumes Towards Lower End of 250 350 – 360 MBoe/d Range 200 FY17 FY18E • EMed and West Africa volumes expected in upper half of Total original guided ranges Strong USO Sales Volumes(2) Growth • U.S. onshore volumes expected lower due to near-term MBoe/d MBbl/d Permian completion deferrals and Eagle Ford declines 300 Total: Up > 15% 150 Oil: Up > 25% . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 250 Reallocating Near-term U.S. Onshore Capital to Optimize 200 100 Returns and Cash Flow 150 (1) 100 50 • Full year capital budget increased to $3.0 B driven by FY17 FY18E higher facility spend and industry cost inflation Total Oil (1) Excludes NBLX funded capital expenditures. (2) Pro-forma for acquisitions and divestitures. Reflects volumes post-implementation of ASC 606. 14


 
www.nblenergy.com NYSE: NBL Third Quarter 2018 Guidance Crude Oil and Natural Gas Liquids Natural Gas Total Equivalent 3Q 2018 Sales Volume Condensate (MBbl/d) (MBbl/d) (MMcf/d) (MBoe/d) Low High Low High Low High Low High United States Onshore 110 118 54 59 445 465 241 251 Israel - - - - 220 240 37 40 Equatorial Guinea 11 15 - - 200 220 46 50 Equatorial Guinea - Equity method investment 1 2 5 5 - - 6 7 Total Company 125 132 59 64 880 910 335 345 Capital & Cost Metrics Capital Expenditures(1) ($MM) Total Company Organic Capital $700 - $775 Cost Metrics LOW HIGH Lease Operating Expense ($/BOE) 3.90 4.30 Gathering, Transportation & Processing ($/BOE) 3.10 3.40 Production Taxes (% Oil, Gas, NGL Revenues) 4.6 5.0 Marketing ($MM) 8 12 DD&A ($/BOE) 15.25 16.25 Exploration ($MM) 30 50 G&A ($MM) 100 110 Interest, net ($MM) 70 80 Other Guidance Items ($MM) Equity Investment Income 30 45 Midstream Services Revenue – Third Party 10 20 Non-Controlling Interest – NBLX Public Unitholders 15 25 (1) Includes only NBL-funded portion of midstream capital expenditures. 15


 
www.nblenergy.com NYSE: NBL Full-Year 2018 Guidance Crude Oil and Natural Gas Liquids Natural Gas Total Equivalent Full-Year 2018 Sales Volume Condensate (MBbl/d) (MBbl/d) (MMcf/d) (MBoe/d) Low High Low High Low High Low High United States Onshore 108 113 57 60 460 480 244 252 United States Gulf of Mexico(1) 5 5 - 1 6 6 7 7 Israel(1) - - - - 225 245 38 40 Equatorial Guinea 13 15 - - 200 220 47 51 Equatorial Guinea - Equity method investment 1 2 5 5 - - 7 7 Total Company 129 135 62 66 915 930 350 360 Capital & Cost Metrics Capital Expenditures(2) ($MM) Total Company Organic Capital ~ $3,000 Cost Metrics LOW HIGH Lease Operating Expense ($/BOE) 4.30 4.60 Gathering, Transportation & Processing ($/BOE) 2.95 3.15 Production Taxes (% Oil, Gas, NGL Revenues) 4.6 5.0 Marketing ($MM) 30 45 DD&A ($/BOE) 14.50 15.25 Exploration ($MM) 125 150 G&A ($MM) 400 430 Interest, net ($MM) 260 300 Other Guidance Items ($MM) Equity Investment Income 140 180 Midstream Services Revenue – Third Party 50 70 Non-Controlling Interest – NBLX Public Unitholders 80 105 (1) U.S. Gulf of Mexico volumes are included in sales guidance through closing April 12, 2018. Israel sales volumes reflect divestment of 7.5% interest in Tamar on March 11, 2018. (2) Includes only NBL-funded portion of midstream capital expenditures. 16


 
www.nblenergy.com NYSE: NBL Forward-Looking Statements and Other Matters This presentation contains certain "forward-looking statements" within the meaning of federal securities laws. Words such as "anticipates", "plans", "believes", "expects", "intends", "will", "should", "may", and similar expressions may be used to identify forward-looking statements. Forward-looking statements are not statements of historical fact and reflect Noble Energy's current views about future events. Such forward-looking statements may include, but are not limited to, future financial and operating results, and other statements that are not historical facts, including estimates of oil and natural gas reserves and resources, estimates of future production, assumptions regarding future oil and natural gas pricing, planned drilling activity, future results of operations, projected cash flow and liquidity, business strategy and other plans and objectives for future operations. No assurances can be given that the forward-looking statements contained in this presentation will occur as projected and actual results may differ materially from those projected. Forward-looking statements are based on current expectations, estimates and assumptions that involve a number of risks and uncertainties that could cause actual results to differ materially from those projected. These risks and uncertainties include, without limitation, the volatility in commodity prices for crude oil and natural gas, the presence or recoverability of estimated reserves, the ability to replace reserves, environmental risks, drilling and operating risks, exploration and development risks, competition, government regulation or other actions, the ability of management to execute its plans to meet its goals and other risks inherent in Noble Energy's businesses that are discussed in Noble Energy's most recent annual report on Form 10-K and in other Noble Energy reports on file with the Securities and Exchange Commission (the "SEC"). These reports are also available from the sources described above. Forward-looking statements are based on the estimates and opinions of management at the time the statements are made. Noble Energy does not assume any obligation to update any forward-looking statements should circumstances or management’s estimates or opinions change. This presentation also contains certain non-GAAP measures of financial performance that management believes are good tools for internal use and the investment community in evaluating Noble Energy’s overall financial performance. These non-GAAP measures are broadly used to value and compare companies in the crude oil and natural gas industry. Please see the attached schedules for reconciliations of the differences between any historical non-GAAP measures used in this presentation and the most directly comparable GAAP financial measures. 17


 
Investor Relations Contacts Brad Whitmarsh Megan Dolezal 281.943.1670 281.943.1861 brad.whitmarsh@nblenergy.com megan.dolezal@nblenergy.com Visit us on the Investor Relations Homepage at www.nblenergy.com