21 st Credit Suisse Energy Summit

Transcription

1 21 st Credit Suisse Energy Summit February 2016 Energizing the World, Bettering People s Lives

2 Noble Energy s Strategy and Purpose Energizing the World, Bettering People s Lives Diversified Portfolio of High Quality, Low-Cost Assets Premier Basins U.S. Unconventional and Global Offshore Deep Inventory of Proved Reserves and Resources Investment Flexibility and Low Capital Intensity Proficient Organization and Capabilities Strong Financial Liquidity and Flexibility Onshore U.S. Drilling and Completion Innovation Offshore Exploration and Major Project Execution Total Cash Outflow Aligned to Cash Inflow $5 Billion Liquidity Portfolio Management Supports Delevering Driven by Corporate Values Commitment to Stakeholder Engagement Creating Positive Impact 2

3 Premier Global Operations High-Quality, Diversified Asset Base Balanced Mix of Geography and Commodity Exposure Exceptional investment optionality All Core Areas with Visible Long- Term Growth Potential Portfolio Provides High Capital Efficiency Reserves and 2016 Production Statistics 2015 Reserves 1.4 BBoe Marcellus Shale DJ Basin Eagle Ford & Delaware Gulf of Mexico Suriname Israel / Cyprus Equatorial Guinea / Cameroon Gabon 2016E Production Location 390 MBoe/d ~ 72% U.S. ~ 28% Int l ~ 45% Liquids Falkland Islands Composition ~ 35% U.S. Gas ~ 20% Int l Gas Core operating areas New ventures 3

4 2015 Key Accomplishments Delivered outstanding operational success and strategic execution 2015 Objectives 2015 Outcomes Capital Aligned with Cash Flow Plug 3Q15 and 4Q15 Capital Less than Generated Cash Flow Protect Balance Sheet and Financial Liquidity Maintained $5 Billion in Liquidity; Significantly Lower Controllable Unit Costs Enhance Visibility of Long-Term Value Unlocked DJ Basin Production; Executed GOM Major Projects; Israel Natural Gas Framework Retain Capacity to Capitalize on Market Conditions Expanded U.S. Unconventional Portfolio with New Core Assets in Eagle Ford and Delaware Basin 4 Record safety and volume performance

5 Aligning Capital and Cost with Environment Enhancing competitiveness for the future $MM 1, $/BOE $6.00 $5.50 $5.00 $4.50 $4.00 $3.50 $3.00 Capital and Cash Flow 1Q15 2Q15 3Q15 4Q15 Capital Discretionary Cash Flow * Lease Operating Expense E Activity Levels Reduced and Focused on Highest Return Areas DJ Basin activity in Wells Ranch and East Pony IDPs with lowest costs and longer lateral lengths Suspended Marcellus drilling for the foreseeable future DCF Exceeded Capital for Second Quarter in a Row 4Q15 lowest quarterly capital of the year Unit Operating Costs Driven to Lowest Level in Last 8 Years LOE/BOE down more than 20% from * Non-GAAP reconciliation to GAAP measure available in respective earnings release Note: Texas assets included as of July 20, 2015.

6 Robust Financial Position 2016 plans focused on maintaining financial strength $5 Billion of Liquidity 1 Debt-to-Capital 40%; Well Below 65% Covenant Level Hedge Value Approximately $700 MM 3 38% of global oil and 26% of U.S. gas volumes $200 MM Proceeds in 1Q16 for Non- Producing Eastern Med. Assets Dividend Adjustment and Debt Refinancing Up to $200 MM annual cash benefit Term loan provides deleveraging flexibility $ MM 4,000 3,000 2,000 1,000 0 Well Managed Maturity Profile Bonds Term Loan 6 1 Liquidity defined as cash on hand plus unused credit capacity. 2 Adjusted for impairments to reflect debt facility calculation 3 Based on forward strip pricing as of January 25, 2016

7 Key 2016 Goals and Objectives Strengthen financial position and maintain capacity for long-term value Protect the Balance Sheet Disciplined and flexible investment plan Ensure Total Cash Inflows Match or Exceed Total Cash Outflows Capex program estimated at $1.5 billion, 50% lower than 2015 pro-forma Average sales expected at 390 MBoe/d, up 10% from 2015 reported and flat pro-forma Maintain Company Capabilities and Build Long-Term Optionality Leverage Benefits of a Well-positioned and Diversified Portfolio Optimize Returns With Enhanced Completions in Best Areas and Targeted Cost Reductions Portfolio Proceeds Become Opportunities for De-Levering 7

8 $1.5 Billion 2016 Capital Program Disciplined and prudent investment approach Represents a 50% Reduction to 2015 Program While Maintaining Agility and Flexibility Majority of asset positions held by production Limited committed capital U.S. Onshore: Focus On Best Return Areas and Maximize Use of Existing Infrastructure Progress Existing Major Projects Gunflint project complete mid-2016 Alba compression project completion Position for EMED FID Exploration Focused on U.S. GOM Drilling and Int l Seismic Silvergate prospect and Katmai appraisal GOM Program Focus on Gunflint development, Katmai appraisal, Silvergate prospect DJ Basin Texas Marcellus GOM EMed West Africa Other $1.5 Billion Capex 390 MBoe/d Volumes Marcellus Program Activity limited to working down a portion of DUC inventory in dry gas area DJ Basin Program Focus on Wells Ranch and East Pony IDPs Texas Program Eagle Ford development drilling in Gates Ranch and Delaware appraisal 8

9 9 Onshore U.S. Unconventional Operations Integrate learnings between basins to unlock resource value Significant Positions in Four Premier, Low-Cost U.S Basins Leveraging Core Competencies to Deliver Material Capital Efficiencies Drilling time reductions Completion enhancement techniques Infrastructure strategy Disciplined Capital Allocation Focus on best value opportunities Onshore Lease Operating Expense $/BOE $6.50 $5.50 $4.50 $3.50 $ E 2016 Activity Capital: ~ $1 Bn Spud ~115 Wells TIL ~ 210 Wells 2015 Production ~ 255 MBoe/d PF

10 DJ Basin Focus on Wells Ranch and East Pony Highest value areas and leveraging existing infrastructure Operating Two Drilling Rigs During lateral length average of 7,600 up materially from 2015 Realizing Normalized Costs for Long Laterals Under $3 MM in Wells Ranch Drilling costs per lateral foot down 40% from Capital Spend is ~$600 MM Drill 155, TIL 205 equivalent wells Approximately 35% Volume Growth in Wells Ranch and East Pony in 2015 Wells Ranch East Pony Noble Acreage 2016 Development 10

11 Enhancing DJ Completions in Wells Ranch and East Pony New completion designs focus on higher proppant and slickwater Advanced Completions with Higher Proppant Concentration Testing range of 1,100-1,800 pounds per foot Early Results Encouraging 20%+ initial production uplift versus standard slickwater with flattened decline observed Capitally efficient design as volume uplift exceeds incremental cost Cum. MBoe 2015 Actuals w/ Enhanced Proppant (~1,100 1,800 pounds per lateral ft.) 150-day avg Boe/d 2015 Actuals w/ Standard Proppant (~700 pounds per lateral ft.) 150-day avg. 375 Boe/d Enhanced Slickwater Design Standard for 2016 Program Majority of 2016 program focused on Wells Ranch long laterals Note: Normalized to 4,500 laterals and gross three-stream volumes. 11

12 Delaware Basin Operated Program NBL s Initial Completions Anticipated in Early 2016 Testing slickwater and hybrid gel completion designs 2016 activity 13 new drills and 10 TILs Focused on Wolfcamp A Delineated Core Position 45,000 contiguous acreage position Average WI 72% Production mix: 71% oil, 12% NGL and 17% gas Stacked pay potential Appraisal program underway 12 Previous Drilling and Nearby Competitor Well Results Validate Tier 1 Position Noble s First Completions Noble Acreage

13 Impressive Results In the Eagle Ford New completion designs ahead of expected performance NBL Drilling and Completing Some of the Most Productive Wells in the Eagle Ford Combination of tier-1 acreage with NBL enhanced completions Drilling times materially reduced Very Encouraging Well Results on Tighter Lateral Spacing 500 foot lateral spacing results outperforming wider spacing type curve 2016 Plan Focused on Gates Ranch and Testing Enhanced Completions in New Areas 2016 activity Drill 13 wells, TILs 24 Eagle Ford Production Mix: 22% Oil, 38% NGL and 40% Gas Cum. MBoe S. Gates Ranch Lower Eagle Ford Performance Days on Production Note: Normalized to 5,000 lateral and gross three-stream volumes. Avg. of 2 Wells at 500' Spacing Avg. of 3 Wells at 1,000' Spacing NBL 3MMBoe Type Curve 13

14 Gulf of Mexico Program Sustained value creation with visibility for significant growth Leveraging Benefits of New Project Startups 2016 sales volumes nearly double % reduction in capital versus 2015 Louisiana Galapagos 26% Avg WI Swordfish 85% WI Gunflint Oil Development Planned for Mid-2016 Startup NBL Interests Producing Silvergate 50% WI Two-well subsea tieback Silvergate Drilling Ongoing Gross mean resource of between MMBoe Under development Discovery Exploration Katmai 50% WI Gunflint 31% WI Dantzler 45% WI Big Bend 54% WI Troubadour 60% WI Middle Miocene oil target Katmai Appraisal Ticonderoga 50% WI Discovered MMBoe, testing upside to 100 MMBoe total gross resources 14

15 Deepwater Major Projects Proven track record of exploration and development success Leading-edge Technology with Disciplined Processes Short Discovery to Production Cycle Times; Delivered Within Budget Integrated approach including exploration, appraisal, and development teams Leveraging existing third-party infrastructure; Big Bend and Dantzler online in 3 and 2 years from discovery Favorable Cash Operating Margins Primarily oil development Attractive cost structure High per-well deliverability Discovery Rio Grande Big Bend Dantzler 15 Gunflint Sanction First Oil

16 West Africa Operations Alba Compression Installation in First Half 2016 Increases flow of gas; primarily condensate to onshore facilities Extends the economic life of the field Substantial cash-flow with material upside 16 Maximizing and Sustaining Current Production Relatively low declines at Alba and Aseng Recent production enhancements at Alen 3D Seismic Processing of Blocks O and I Offshore Equatorial Guinea is Underway Beginning Gabon Seismic Acquisition Equatorial Guinea Methanol Plant 45% WI LPG Plant 28% WI Bioko Island NBL Interests Producing Discovery Exploration Alba Field 34% WI Aseng 40% WI Alen 45% WI Cameroon YoYo License 50% WI Tilapia PSC 47% WI

17 Eastern Mediterranean Strategic assets positioned to meet regional market demand Tamar Performance Continues to Exceed Expectations 2015 average daily production of ~800 MMcf/d Average uptime of 99% Government of Israel Implemented Natural Gas Framework Provides regulatory clarity and stability to progress with Leviathan/Tamar development 2016 efforts focused on securing gas sales contracts, development concept selection and contracting Monetization of Non-Producing Assets of ~$200 MM Cyprus farm out to BG Tanin and Karish sale Cyprus 35% WI Producing Discovery Leviathan 40% WI NBL Interests AOT 47% WI Tamar 36% WI Tamar SW 36% WI Tel Aviv Egypt Ashdod Israel 17

18 Eastern Mediterranean Gas Opportunities Current and expected demand far exceeds supply Significant Regional Export Potential 4 Bcf/d deficit growing to 9 Bcf/d led by Jordan, Egypt and Turkey demand Robust and Increasing Israel Demand Potential expansion of natural gas usage in power generation and industrial sectors Marketing Leviathan gas in Israel Progressing Projects to FID Late 2016 Securing gas contracts to anchor development Finalizing and costing technical designs Obtaining project financing Maturing Options for Leviathan Development Including FPSO and Fixed-Platform Concepts Match capital and first gas sales with timing of demand Potential to accelerate production Lower pre-production capital 18

19 Noble Energy Beyond 2016 Keys to Success: As the energy world continues to evolve Remain Flexible and Agile Continue Operational Execution and Financial Strength Maintain High Quality Diversified Portfolio that Provides Investment Choices Leverage Exploration and Major Project Capabilities 19

20 Forward-looking Statements and Other Matters This presentation contains certain forward-looking statements within the meaning of the federal securities law. Words such as anticipates, believes, expects, intends, will, should, may, estimate, 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. They include 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 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 business that are discussed in its most recent Form 10-K and in other reports on file with the Securities and Exchange Commission ( SEC ). These reports are also available from Noble Energy s offices or website, 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 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 MMBoe type curve. These estimates 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 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 historical 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 Noble Energy s respective earnings release for reconciliations of the differences between any historical non-gaap measures used in this presentation and the most directly comparable GAAP financial measures. 20

21 21 st Credit Suisse Energy Summit February 2016 Energizing the World, Bettering People s Lives