Wunderlich Names 2017 Catalysts For Noble Energy

“Noble Energy, Inc. NBL expects to sanction the Leviathan project in 1Q17 and close the $3.4 billion Clayton Williams Energy, Inc. CWEI acquisition in 2Q17, with a first production date targeted for late 2019,” Wunderlich’s Irene O. Haas said in a note, while reiterating a Buy rating on Noble Energy, with a price target of $53.

Catalysts

The analyst expects these two events to be large milestones for Noble Energy, and mentioned that the company expects to receive proceeds of $1 billion in 2017 through the monetization of assets drop down, which would lead to a stronger balance sheet and a high grade portfolio.

Among the major catalysts for 2017, Haas listed the Leviathan project, first gas production at which is expected by year-end 2019.

“NBL is finalizing contracts, working with the Israeli government agencies, firming up engineering designs and beginning to procure long lead time items, setting the stage to book reserves at year-end 2017,” the analyst elaborated.

Haas believes that there could be more catalysts from Noble Energy’s onshore U.S. resource plays, while continued refinements to its completion techniques would drive “oilier” wells with “flatter declines,” better margins and a higher euro.

Related Link: Noble Energy Provides Detailed 2017 Outlook and Guidance

‘Exceptionally Strong Quarter’

Nobel Energy reported an “exceptionally strong” quarter, beating expectations across the board. The EPS came in at $0.26, well ahead of the consensus, while the CFPS of $1.35 and EBITDA of $687 million were also above consensus.

“One of the key drivers was production volume which was 3 percent higher than expected, driven by strong U.S. production and Israeli gas demand. In addition, oil price realization was better than expected as NBL optimized transportation, per unit costs were also lower across the board,” Haas noted.