Noble Energy, Inc. (NASDAQ:NBL) (“Noble Energy” or the “Company”) today provided an operational update in response to the current global macroeconomic and commodity outlook.
David L. Stover, Noble Energy’s Chairman and CEO, commented, “In light of the recent commodity price downturn, we are sharply reducing capital expenditures. Deferring activity until commodity prices recover protects our investment returns, maintains free cash flow and strengthens the balance sheet. While this is a challenging environment, Noble Energy is well positioned to achieve attractive long-term returns for our shareholders. The impact of bringing a mega-project like Leviathan on production is evident today, as it provides greater certainty of cash flows, supports strong financial liquidity and improves our annual production decline profile.”
As compared to its earlier announced guidance, the Company is immediately acting to reduce its planned 2020 capital expenditures by approximately $500 million, or nearly 30%, to now range between $1.1 and $1.3 billion for the year. In addition, Noble Energy has also identified more than $50 million in reductions through operating and other cash costs. The Company is monitoring the macroeconomic and commodity environments and will continue to act prudently to address the evolving business conditions.
Approximately 80% of the capital reduction will occur in the U.S. onshore business where the Company has significant flexibility in drilling and completion activity, with the majority of contractual arrangements on a well to well basis. More than half of these reductions will occur in the Delaware Basin.
Internationally, the Company has identified approximately $100 million in capital reductions coming from major project execution, deferral of non-critical spend into future years and the exploration program. Noble Energy is continuing to move forward the Alen gas monetization project in Equatorial Guinea for first production in early 2021 and will complete pipeline expansion work in Israel.
Noble Energy will update detailed capital, cost and sales volume guidance for 2020 in association with its first quarter conference call.