US Noble Cuts Spending After Price Collapse

Texas-based Noble Energy has slashed planned spending for this year by $550mn, it said on March 12, in order to protect its returns, cash flow and balance sheet following the steep fall in oil prices.

The company said it would immediately scale down its capital expenditure plan by $500mn to $1.1-1.3bn this year, noting it had identified over $50mn in operating and other cash costs that could also be cut. Some 80% of the capex reduction will be made at its US onshore business. Noble said its planned drilling and completion activity in the US was flexible, as most of its contractual arrangements are on a well-to-well basis.

Internationally, Noble will trim $100mn off its expenditure, in relation to major projects, deferral of non-critical spending and its exploration programme. The company noted it was moving ahead with its Alen gas monetisation project in Equatorial Guinea, on track for first production in early 2021, and would complete pipeline expansion work in Israel.

“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," Noble CEO David Stover said in a statement. "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."

The Noble-operated Leviathan field off Israel came on stream in January.

Noble had $4.4bn in financial liquidity at the end of February, and has no significant debt maturities before late 2024. Around 60% of its revenue base this year is also shielded from low prices by hedging contracts or long-term pricing agreements.

Fellow Texan producer Apache also reduced its capital investment plan on March 12, from $1.6-1.9bn to $1.0-1.2bn. So too did US firm Murphy Oil, by $500mn to around $950mn.