A month has gone by since the last earnings report for Noble Energy (NBL). Shares have lost about 3.2% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Noble due for a breakout? Before we dive into how investors and analysts have reacted as of late, let’s take a quick look at its most recent earnings report in order to get a better handle on the important drivers.
Noble Q2 Loss Narrower Than Expected, Revenues Miss
Noble Energy, Inc. reported second-quarter adjusted loss of 24 cents per share, narrower than the Zacks Consensus Estimate of a loss of 39 cents. The company reported a loss of 10 cents per share in the year-ago quarter.
GAAP loss for the reported quarter was 85 cents compared with a loss of 2 cents per share in the year-ago period.
Total Revenues
Noble's total revenues were $571 million, lagging the Zacks Consensus Estimate of $642 million by 11%. Revenues also declined 47.8% from the year-ago quarter’s $1,093 million. This year-over-year decline was due to lower contribution from oil, NGL and gas sales, along with weak commodity prices.
Highlights of the Release
In the quarter under review, sales volume averaged 350 thousand barrels of oil equivalent per day (MBoe/d), in line with the year-ago level. U.S. onshore volumes averaged 248 MBoe/d in the second quarter, down 5.7% from the prior-year period. The startup of Leviathan boosted volumes from the Eastern Mediterranean region.
Operating expenses for the reported quarter were $799 million, down 24.7% from the year-ago period. The decline was due to lower lease operating expenses, depreciation, depletion and amortization costs, as well as general and administrative expenses.
Interest expenses for the reported quarter were $87 million, up 38.1% from the year-ago period.
The company entered into a definite agreement to be acquired by Chevron Corporation. Chevron is set to acquire all outstanding shares of Noble in an all-stock transaction valued at $10.38 per share or nearly $5 billion.
Realized Prices
U.S. onshore realized crude oil and condensate prices (including derivatives) for the reported quarter decreased 44.5% to $32.28 per barrel from the year-ago level of $58.13.
U.S. onshore natural gas prices were $1.16 per thousand cubic feet, down 34.5% year over year.
U.S. onshore realized prices for natural gas liquids also declined 44.5% from the year-ago quarter to $8.07 per barrel.
Financial Highlights
Noble's cash and cash equivalents as of Jun 30, 2020 were $324 million compared with $484 million on Dec 31, 2019.
Long-term debt was $7,936 million as of Jun 30, 2020 compared with $7,477 million on Dec 31, 2019.
Cash flow from operating activities for first-half 2020 was $400 million, down from $1,092 million in first-half 2019.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed an upward trend in estimates revision. The consensus estimate has shifted 10.71% due to these changes.
VGM Scores
At this time, Noble has a poor Growth Score of F, however its Momentum Score is doing a lot better with an A. However, the stock was allocated a grade of C on the value side, putting it in the middle 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of C. If you aren’t focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending upward for the stock, and the magnitude of these revisions looks promising. Notably, Noble has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
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