Independent energy company Noble Energy, Inc. (NBL) on Thursday reported a profit for the fourth quarter that plunged from last year, reflecting hedging losses and asset impairments. The year-ago quarter's results include hedging gains.
Excluding items, adjusted earnings per share increased, but missed analysts' consensus estimate. The company also forecast fiscal year 2010 sales volume, with the midpoint of the range being a 3.5% increase from 2009 levels.
The Houston, Texas-based oil and natural gas company reported net income for the quarter of $8 million or $0.05 per share, down from $305 million or $1.72 per share in the year-ago quarter.
Net income for the latest quarter was lowered by items totaling $170 million after-tax, including unrealized commodity derivative losses and identified asset impairments, offset by the recording of recoverable deepwater Gulf of Mexico royalties.
On an adjusted basis, net income for the fourth quarter increased to $178 million or $1.01 per share from $163 million or $0.91 per share in the year-ago quarter. On average, twenty one analysts polled by Thomson Reuters expected the company to report earnings of $1.03 per share. Analysts' estimates typically exclude special items.
Total revenues for the fourth quarter surged 33% to $760 million from $573 million in the year-ago quarter. Analysts had a consensus revenue estimate for the quarter of $766 million.
Charles Davidson, Noble Energy's Chairman and CEO, said, "Our results for the fourth quarter wrap up a strong year for Noble Energy. Despite reduced investment in U.S. onshore natural gas development, we were still able to grow our annual onshore volumes. We again generated free cash flow in 2009, largely attributable to our disciplined capital allocation process and diverse asset portfolio. It was perhaps the most successful exploration year in our Company's history, and we continued to build upon our large inventory of opportunities."
Revenues from crude oil and condensate for the fourth quarter surged 42% from the prior-year period to $385 million, while natural gas revenues declined 16% from a year earlier to $203 million Revenues from natural gas liquid or NGLs surged 45% to $32 million and income from equity method investees doubled to $32 million. Other revenues rose more than five-fold from the year-ago period to $108 million.
Total operating expenses for the quarter declined 9% to $646 million from $710 million, reflecting a 11% decline in lease operating expense and lower asset impairments. The company recorded asset impairments of $167 million in the quarter, down from $256 million in the same period last year.
Operating income for the quarter was $114 million compared to operating loss of $137 million a year ago.
The company recorded a loss on commodity derivative instruments of $16 million compared to gain on commodity derivative instruments of $630 million in the previous-year quarter.
Total sales volumes for the quarter averaged 206 thousand barrels of oil equivalent per day, or MBoepd, down from 208 MBoepd a year ago. Crude oil and condensate sales volumes during the quarter declined to 63 MBpd from 69 MBpd in the previous-year quarter. Natural gas sales volumes increased to 770 MMcfpd from 750 MMcfpd last year.
Crude oil price realizations for the fourth quarter averaged $68.43 per barrel, up 56% from the year-ago period In the U.S. and West Africa, crude realizations in the quarter were reduced by $1.71 and $4.79 per barrel, respectively, as a result of previously deferred hedge losses. Average natural gas price realizations in the quarter were $2.99 per Mcf, down 17% from $3.62 per Mcf a year ago.
For fiscal year 2009, Noble Energy reported a net loss of $131 million or $0.75 per share, compared to net income of $1.35 billion or $7.58 per share in the prior year.
Adjusted net income for the year was $590 million or $3.37 per share, down from $1.26 billion or $7.05 per share in the previous year. Analysts expected the company to report earnings of $3.39 per share for the year.
Revenues for the year declined 41% to $2.31 billion from $3.90 billion last year. Wall Street analysts had a consensus revenue estimate for the year of $2.41 billion.
The company's total sales volumes for the year averaged 210 thousand barrels of oil equivalent per day, or MBoepd, down from 215 MBoepd a year ago.
The company's estimated reserves as of December 31, 2009 were 820 million barrels of oil equivalent, or MMBoe. Noble Energy added total proved reserves of 79 MMBoe, representing 103% of 2009 production, from discoveries, extensions, performance revisions and acquisitions. The U.S. made up 55% and International the remaining 45% of total reserve additions.
Noble's capital expenditures for the year totaled $1.32 billion.
Separately, Noble Energy announced its 2010 capital budget and guidance. The company's total capital investment program for the year is estimated at $2.5 billion, with 40% going toward major project developments, 20% for exploration and appraisal activities, and the remaining 40% for ongoing maintenance and near-term growth opportunities. The company noted that approximately 55% of the total is to be spent in the U.S., with the other 45% allocated to international activities.
Sales volumes for the year are projected to range from 211 thousand to 224 thousand barrels of oil equivalent per day or MBoepd, with the midpoint of the range being up 3.5% compared to 2009 production. The company also said that about 80% of its expected full-year natural gas production is hedged or marketed under long-term pricing arrangements.
In early January, Noble Energy said it will buy substantially all of the Rocky Mountains oil and gas assets of Petro-Canada Resources Inc. and Suncor Energy America Inc., a unit of Suncor Energy Inc. (SU, SU.TO) for $494 million. The acquisition is expected to close late in the first quarter of 2010. Noble Energy estimates total proved reserves to be 53 million barrels of oil equivalent or MMBoe, 45% of which are liquids and 80% within the liquid-rich Wattenberg field, the company's largest onshore U.S. asset.
In Thursday's regular trading session, NBL is trading at $74.91, down $1.53 or 2.00% on a volume of 0.73 million shares. In the past 52 weeks, the stock has been trading in a range of $40.33-$79.19.
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