Leviathan Sanction. February 23, 2017

Transcription

1 Leviathan Sanction February 23, 2017

2 Leviathan Project Sanction Highlights First Gas Targeted for the End of 2019 Exceptional quality project with decades of potential Initial capacity of 1.2 Bcf/d, future phase expansion to 2.1 Bcf/d Initial 2017 Reserve Bookings Estimated at 9.4 Tcf Gross ~550 MMBoe net, over 35% increase in total company reserves Target Volume Case of 1 Bcf/d Gross Minimum volume case of 600 MMcf/d at startup Fully Funded Project Captures Procurement Savings in Offshore Industry Trough $3.75* B gross, $1.5 B net phase one capital Leviathan initial investment funded with Tamar operating cash and planned EMED portfolio management Sets up cost effective expansion Cyprus 35% WI Leviathan 39.7% WI Interests Producing Discovery Sanctioned Existing Pipeline Planned Pipeline AOT 47% WI Tamar 32.5% WI Tamar SW 32.5% WI Tel Aviv Egypt Ashdod Israel Dor * Includes ~$200 million in pre-investment for expansion and ~$100 million in 2016 capital 2

3 Superior Reservoir Quality and World Class Scale Geologic similarities to Tamar, and 2x size at 22 Tcf gross recoverable resource Discovered in 2010 Largest Discovery in Region at 34 Tcf Gas in Place Giant reservoir spans 24 deepwater GOM blocks Clean, High Quality Sand 500-1,000 md and 22% porosity Minimal gas processing required Initial Three Wells Averaged 360 ft Net Pay High Deliverability Wells Capable of 300+ MMcf/d sustained production rates Expected 25+ year well life Excellent Lateral and Vertical Connectivity Efficiently drained with minimal development wells NYC Metro Area Leviathan Reservoir Scale 3

4 Leviathan Field Development Plan Initial Phase $3.75 Billion Gross Cost-effective expansion capability Second Phase Additional Deck Capacity 3 rd Flowline Export Pipeline Capacity 1.2 Bcf/d 4 wells Process Trains 3x450 MMscf/d Subsea Tieback Flowlines Twin 18-inch diameter, 115 km tieback flowlines 600 MMcf/d each Domestic Supply Delivers resources to the Israel National Transmission System 0.9 Bcf/d additional capacity 4 additional wells Additional Two Process Trains 3 rd Subsea Tieback Flowline Compression Trains 4x300 MMcf/d Up to 1.2 Bcf/d potential via export pipeline Field development plan approved for both phases 4

5 Pathway to First Gas FEED Finalized Confidence in timing and cost estimates Firm Bids Received on Majority of Project Costs Selected Suppliers Experienced from Tamar Project Key Contractors Onboard to Provide Design Input Platform and subsea fabrication, transportation and installation Drilling 1 to 2 Leviathan Production Wells in 2017 First Gas Less Than 3 Years From Sanction $MM 1, Leviathan Net Capital Project Phase Sanction Order Critical Path Equipment Detail Design and Engineering Equipment Manufacturing Drilling and Completions Pipeline Manufacturing E 2018E 2019E 2020E Offshore Platform Installation Commissioning and First Gas 5

6 Diverse and Robust Marketing Position Over 1 Bcf/d Combined of GSPAs and LOIs Up to 525 MMcf/d and over $15 B in Current Executed GSPAs High-Quality Contracts High percentage take-or-pay Term of 15+ years Firm floor prices Brent linkage for export contracts Domestic and Export Blended Realized Price at Startup of $ $6.00/Mcf at Current Brent Pricing Domestic pricing responsive to Natural Gas Regulatory Framework Anticipate higher pricing for export sales Export prices very competitive with LNG imports Target sales volumes of 1 Bcf/d at startup Bcf/d Sizable Regional Gas Deficit Israel Deficit Jordan Deficit Egypt Domestic Deficit Egypt LNG Plant Deficit Turkey Contract Openers Cyprus Deficit Note: Data represents & BDO Israel estimates. Also reflects Egypt LNG imports of ~1.2 Bcf/d through 2020 Leviathan Phase One Sales Volume Assumptions (Gross) Target Case (Bcf/d) Minimum Case (Bcf/d)

7 Leviathan Phase One Economics Phase One Low-cost Development Capital $3.75 B gross, $1.5 B net LOE less than $0.40/Mcf 12.5% wellhead royalty Tax Structure Provides for Early Recovery of Capital Profit tax commences 6 to 7 years post production startup 23% corporate tax rate Project Delivers Initial Annual Net Operating Cash Flow of at Least $650 MM at Startup and Exceeds $5 B Over First 10 Years Minimum volume case delivers at least $400 MM net and adds one year to payout *Government take includes royalties, profit tax and corporate tax as percentage of project cash flows **Excludes financing; working interest 39.66% ***See appendix for definition of this Non-GAAP measure Steady cash flow stream, payout within 3-4 years $MM 1, (200) (400) (600) (800) Partnership ~40% Life of Project Cash Flows* Government of Israel ~60% Phase One Net Cash Flow Profile- Target Case** 1 Bcf/d at Startup Capex Corporate Tax Profit Tax Pre-Tax Operating Cash Flow*** Free Cash Flow*** 7

8 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 gross natural gas resource. 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 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 news release and the most directly comparable GAAP financial measures. 8

9 Non-GAAP Reconciliations 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 7 labeled Phase One Net Cash Flow Profile-Target Case. Cumulative E ($B) Operating cash flow (GAAP) 5.3 Profit tax 1.5 Corporate tax 1.0 Pre-tax operating cash flow (Non-GAAP) 7.8 Cumulative E ($B) Operating cash flow (GAAP) 5.3 Capital expenditures 1.5 Free cash flow (Non-GAAP) 3.8 9