Barclays CEO Conference - Noble Energy, Inc.

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Barclays CEO Conference. September 2017 ..... Pipeline Manufacturing. Equipment Manufacturing. Commissioning and First G
Barclays CEO Conference September 2017

NOBLE ENERGY INVESTMENT THESIS Best assets, best execution, best results

High-Graded Portfolio Focused on High-Margin U.S. Onshore Oil and EMED Industry-leading Drilling and Completion Performance Disciplined Capital Allocation Delivering Enhanced Corporate Returns

Robust Financial Capacity Through Cycles NBL


PORTFOLIO TRANSFORMATION High-graded portfolio focused on growing margins and cash flow STRATEGIC ACTIONS

Entered liquids-rich Eagle Ford Shale and Delaware Basin through ROSE Merger Expanded Delaware Position to 2 BBoe Net Unrisked Resources with CWEI Acquisition Exited Marcellus Upstream and Midstream, Accelerating Value of Assets Not Attracting Capital Established Noble Midstream Business, NBLX IPO and First Drop Down Optimized DJ Basin Position through Acreage Exchanges Sanctioned Initial Phase of Leviathan Development, First Gas by YE 2019 * Pro-forma for Marcellus divestiture.


Focused on Highest-margin Assets: U.S. Onshore Liquids Plays and EMED 

95% of 2017 capital allocation

Offshore Assets Generating Substantial Cash Flow $MM 2,500

Business Unit Operating Cash Flow* Led By 70% Higher U.S. Onshore

2,000 1,500 1,000 500 0

2015 U.S. Onshore

2016 2017E EMED Other Offshore



SUPERIOR U.S. UNCONVENTIONAL APPROACH Built to leverage shared learnings and drive efficiencies

Resource Play Assessment and Exploitation  

Big data approach to opportunity recognition Subsurface modeling to optimize reservoir stimulation

Proprietary Dataset of Over 2,000 Horizontal Wells in Multiple Basins

Operational Excellence  

Basin scale, long laterals and pads drive efficiencies Peer-leading safety performance

Maximizing Value per Section  

Complex fractures from higher proppant loadings and stages Leveraging advanced analytics to assess and enhanced completion design performance

Integrated Development Planning   

Applying major project practices and maximizing efficiencies Integrated midstream with centralized facilities, water management and recycling Minimizing footprint, reducing trucks on road NBL


SIGNIFICANT POSITIONS IN PREMIER, LOW-COST BASINS 4.5 BBoe net unrisked resource potential, 7,500 liquids-rich locations MBbl/d 105

2017 USO Oil* Trajectory Up 40% 1Q to 4Q

85 352,000 net acres 3,220 gross locations 8,400’ average lateral length 2 BBoe net unrisked resources

65 45 25 1Q

DJ Basin



Catalyst Rich 2H17

118,000 net acres 4,225 gross locations 7,800’ average lateral length 2 BBoe net unrisked resources


33,000 net acres 360 gross locations 7,600’ average lateral length 460 MMBoe net unrisked resources

Eagle Ford

* Pro-forma for divestitures


Delaware Basin – Doubling Wells Online Each Quarter  

10-15 in 3Q and 20-25 in 4Q Multi-zone development and central gathering facility start-up

Eagle Ford – South Gates Ranch Activity Delivering Rapid Growth DJ Basin – Continued High Intensity Completions Online in Wells Ranch NBL


INTEGRATED MIDSTREAM DEVELOPMENT NBLX provides both operating and financial advantages

Major Project Mindset for Integrated Development and Infrastructure Planning in Delaware and DJ Basins 

Four central gathering facilities online in Delaware Basin by mid-year 2018, expanding oil capacity to 90 MBbl/d Access to multiple markets through Advantage Pipeline Coordinated planning underway for Mustang development in DJ Basin

> $1.5 B $838 MM combined retained EBITDA(1) and GP value(2)

NBL ownership of LP units(3)

Billy Miner – First Delaware CGF

Reduces Overall Operating Expense NBL Funded Midstream Capital Returned through Future Drop Down Potential  

Anticipate significant growth in Delaware and DJ Basin system throughput Target one drop down transaction per year (1) Estimates average 2018-2020 EBITDA of retained assets and development company interest. Applies potential future drop down multiple of 7.5x and 10x to EBITDA. EBITDA is a Non-GAAP metric that cannot be easily reconciled to GAAP metric at this asset level. See appendix for definition of this non-GAAP measure. (2) Estimates 100% NBL ownership of NBLX GP IDR average cash flows 2018-2020 at 25x to 35x multiple. NBL owns 100% of the GP Holdings of NBLX. Assumes 20% NBLX distribution growth and units outstanding remain flat. (3) Represents NBL’s 50.1% ownership of NBLX LP unit at market value as of 8/31/17 closing price.



EXCEPTIONAL DRILLING PERFORMANCE Competitively advantaged drilling capabilities

Real Time Drilling Data Integration Enabling Rapid Design Optimization  

Leveraging predictive analytics to improve drilling efficiency and reduce down time Physics-based approach supplements empirical data

Strong Drilling Precision through Geosteering in Delaware Basin 

Over 90% within 10 ft target zone across 10,000 ft lateral

Realizing Significant Drilling Efficiencies 

Reduced Delaware Basin drill time for 10,000 ft lateral wells by 8 days versus beginning of 2017

$/ft 900 750 600 450 300 150 0

Reducing Average Drilling Cost per Lateral Foot

2015 DJ Basin

2016 Delaware

1H17 Eagle Ford



days record drill time in Delaware for 15,725 ft total depth (5,700 ft lateral)

days record drill time in DJ Basin for 15,982 ft total depth (9,616 ft lateral)



LEADING-EDGE COMPLETIONS Driven by continuous improvement culture

Evaluating Best Value Proposition  

Improving well productivity through higher proppant concentrations Evaluating cluster and stage spacing modifications for cost efficiencies

Systematic Approach to Completion Optimization by Area and by Zone   

Assessing various cluster designs and proppant concentrations on adjacent pads Optimizing flow back techniques Using fiber optic distributed temperature sensors to evaluate cluster effectiveness

Leveraging Machine Learning to Accelerate Learning Curve 

Enhanced predictive capabilities from combined reservoir, completion and production data Predicting optimal completions to maximize value

Early Application of Enhanced Completions lbs/ft 2,000

2017 Average Proppant in DJ Basin

1,500 1,000 500










lbs/ft 4,000

2017 Average Proppant in Delaware Basin Reeves County

3,000 2,000 1,000 0









Peers: APC, BHP, CXO, EOG, FANG, PE, XEC Source: NBL analysis of public data where available for public operators



INDUSTRY-LEADING WELL PRODUCTIVITY Top-tier acreage plus industry-leading execution Boe/d per 1,000 ft

Delaware Basin – Reeves County Wolfcamp A 3-Month Total Production*

DJ Basin – Weld County 3-Month Total Production*

Boe/d per 1,000 ft





120 30











Delaware Basin – Reeves County Wolfcamp A 3-Month Oil Production

Bbl/d per 1,000 ft













DJ Basin – Weld County 3-Month Oil Production

Bbl/d per 1,000 ft





80 25 40 0








Delaware Peers: BHP, CDEV, CXO, EOG, OXY, PDCE, PE, REN











Source: RS Energy Group, Inc. analysis of public operators 2016 and 2017 wells. Includes top 9 operators. * Reflects gross 2-stream production data.



DELAWARE BASIN: MONROE WELLS Encouraging early results for multi-zone development

First Multi-Well Pad with 10,000 ft Laterals  



Avg. Wolfcamp A IP-30 Boe/d per 1,000 Lateral Ft.

3rd Bone Spring IP-30 Boe/d Total Rate ~75% Oil

Targeting Wolfcamp A Upper and Lower and 3rd Bone Spring zones Flowing into NBLX operated Billy Miner facility


Exceptional Initial NBL 3rd Bone Spring Completion   

Substantially above type curve, IP-30 over 2,300 Boe/d 750 lbs/ft proppant with hybrid gel design optimal for fracture width growth over height Further confirms potential across acreage position

Strong Wolfcamp A Upper and Lower Performance 

Standard 3,000 lbs/ft slickwater design for long laterals, 5,000 lbs/ft short lateral

Monroe Wells Billy Miner CGF NBL Acreage


Initial Multi-Zone Spacing Test 3rd Bone Spring Wolfcamp A Upper Wolfcamp A Lower 1 mile

Producing Wells

Future Wells




Cyprus 35% WI

World-class resources in a high-demand region

Tamar 10+ Tcf and Leviathan 22 Tcf Gross Recoverable Resources  

Leviathan 39.7% WI

Tamar current capacity >1.1 Bcf/d; assessing expansion opportunities Leviathan ultimate capacity of 2.1 Bcf/d through cost advantaged expansion

Tamar Generates ~$400 MM Operating Cash Flow to NBL Annually 

Margins competitive with U.S. oil plays

Dor Tamar SW 32.5% WI

Tamar currently supplying up to 60% of Israel power generation High natural gas demand leading to record Tamar sales volumes

Tel Aviv

NBL Interests Producing Discovery

Potential to Expand Ultimate Gross Capacity to Over 4 Bcf/d 

Tamar 32.5% WI



AOT 47% WI

Existing Pipeline Planned Pipeline

Israel Egypt

Tamar Gross Sales Volumes MMcfe/d 1,100 1,000 900 800 700 600 500 1Q 2014

2Q 2015

3Q 2016

Gross Peak Capacity

4Q 2017



LEVIATHAN: PHASE ONE 1.2 BCF/D FROM 4 WELLS Massive cash flow stream, payout within 3-4 years

Phase One – Low-cost Development  

Capital $3.75 B gross, $1.5 B net LOE less than $0.40/Mcf

Generating ~$800MM in Excess Cash Flow** While Funding Leviathan Development Project Delivers Initial Annual Net Operating

Cash Flow of ~$650 MM at Startup and Exceeds $5 B Over First 10 Years $MM 1,000 750 500 250 (250) (500) (750) 2017 Capex Profit Tax

Phase One Net Cash Flow Profile* 1 Bcf/d Targeted at Startup

Tamar Operating Cash Flow 2017-2019E

7.5% Tamar WI Sale***



2026 2029 Corporate Tax Pre-Tax Operating Cash Flow**

*Excludes financing; working interest 39.66% **See appendix for definition of this non-GAAP measure. *** Assumes same after tax valuation as 2016 3.5% working interest sale

2016 EMED Proceeds Sources

Net Project Capital



LEVIATHAN PROGRESS On target for first gas sales by end of 2019

Progressing Required 7.5% Tamar Working Interest Sell-Down  

Targeted by end of 2018 $12.3 B gross valuation for initial 3.5% WI sold

Securing High-quality Contracts    

Over $15 B in current executed GSPAs High percentage take-or-pay; 15+ years term Firm floor prices Brent linkage for export contracts

Domestic and Export Blended Realized Price at Startup of $5.50/Mcf to $6.00/Mcf at Current Brent Pricing  

Anticipate higher pricing for export sales Export prices very competitive with LNG imports

Line of Sight to Over 1 Bcf/d at Start-up Leviathan Natural Gas Sales Contracts Domestic Firm GSPAs Export Firm GSPAs Firm GSPAs Total Domestic LOIs Domestic Negotiations Export Negotiations Additional Opportunities Total Total Firm GSPAs and Additional Opportunities

MMcf/d 175 350 525 100 ~400 ~600 ~1,100


Phase I Development ~20% Complete Project Phase




Sanction Order Critical Path Equipment Detail Design and Engineering Equipment Manufacturing Drilling and Completions Pipeline Manufacturing Offshore Platform Installation Commissioning and First Gas



OTHER GLOBAL OFFSHORE Substantial cash flow generation

Over $550 MM Free Cash Flow* in 2017E Combined from West Africa and Gulf of Mexico Producing Assets 

Araku Prospect 500 MMBoe+ Gross

Minimal capital, reliable operations and steady production

Continued Exploration Efforts Focused on High-Quality, Low Cost Opportunities 

Differential offshore exploration capabilities in discovering and monetizing resources

Targeting new core area post Leviathan start up


Block 54

Testing High Potential Araku Prospect in Suriname in 4Q17 

500+ MMBoe gross potential; NBL 20% WI, non-op.

~$10 MM net well cost to NBL

Liza & Payara

Tambaredjo NBL Interests


Oil Prospect

Suriname * See appendix for definition of this non-GAAP measure..

Oil Discovery



NOBLE ENERGY Competitively advantaged to deliver differential performance

Superior Portfolio  Top-tier U.S. Onshore asset quality and inventory

depth  Integrated midstream business delivers financial and operational advantages  Capital flexibility through diversification

Operational Excellence  Leading unconventional performance: longer

laterals, IDPs, underground laboratories and enhanced completions  Industry-leading major project execution

Financial Strength  Disciplined capital allocation process  Prudent balance sheet and risk management 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", "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 reports 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. The SEC requires oil and gas companies, in their filings with the SEC, to disclose proved reserves that a company has demonstrated by actual production or conclusive formation tests to be economically and legally producible under existing economic and operating conditions. The SEC permits the optional disclosure of probable and possible reserves, however, we have not disclosed our probable and possible reserves in our filings with the SEC. We use certain terms in this presentation, such as “net unrisked resources” which are by their nature more speculative than estimates of proved, probable and possible reserves and accordingly are subject to substantially greater risk of being actually realized. The SEC guidelines strictly prohibit us from including these estimates in filings with the SEC. Investors are urged to consider closely the disclosures and risk factors in our and Clayton Williams’ most recent Form 10-K and in other reports on file with the SEC, available from Noble Energy’s offices or website, 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. This presentation also contains a forward-looking non-GAAP financial measure, EBITDA (earnings before interest, taxes, depreciation and amortization). Due to the forward-looking nature of the aforementioned non-GAAP financial measure, management cannot reliably or reasonably predict certain of the necessary components of the most directly comparable forwardlooking GAAP measures at this asset level. Accordingly, we are unable to present a quantitative reconciliation of such forward-looking non-GAAP financial measure to its most directly comparable forward-looking GAAP financial measure. Amounts excluded from this non-GAAP measure in future periods could be significant. Management believes the aforementioned nonGAAP financial measure is a good tools for internal use and the investment community in evaluating Noble Energy’s overall financial performance. This non-GAAP measure is broadly used to value and compare companies in the crude oil and natural gas industry.



Non-GAAP Reconciliations & Defined Terms Pre-tax operating cash flow (Non-GAAP) and free cash flow (Non-GAAP) should not be considered an alternative to, or more meaningful than, operating cash flow (GAAP). Our management believes and certain investors may find that pre-tax operating cash flow and free cash flow is beneficial in evaluating and comparing companies in the crude oil and natural gas industry when discussing financial results. The following presents a reconciliation of each of these non-GAAP financial measures to their nearest comparable GAAP measure. The GAAP measure most directly comparable to pre-tax operating cash flow and free cash flow is operating cash flow. Non-GAAP measures may not be directly comparable to similarly titled measures of other companies. Please see below reconciliation of each of these Non-GAAP measures on a cumulative basis from 2017 to 2029E. The annual data included in the reconciliations is included in the chart on slide 12 labeled “Phase One Net Cash Flow Profile.”

Cumulative 2017-2029E ($B) Operating cash flow (GAAP) Profit tax Corporate tax Pre-tax operating cash flow (Non-GAAP) Term

Cumulative 2017-2029E ($B) 5.3 1.5 1.0 7.8

Operating cash flow (GAAP) Capital expenditures Free cash flow (Non-GAAP)

5.3 1.5 3.8


Operating Cash Flow

GAAP Net cash provided by operating activities

Free Cash Flow

Operating cash flow less organic cash capital

Excess Cash Flow

Operating cash flow plus divestments less organic cash capital

Pre-Tax Operating Cash Flow

GAAP operating cash flow plus profit tax and corporate tax


Earnings before interest, taxes, depreciation and amortization



Investor Relations Contacts Brad Whitmarsh 281.943.1670 [email protected]

Megan Dolezal 281.943.1861 [email protected]

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