On Nov 27, we issued an updated research report on Noble Energy, Inc. NBL. The company is currently benefiting from ongoing strategic acquisitions and non-core divestitures. Further, its well-placed global assets base is also aiding performance. However, stringent drilling regulations and lack of infrastructure facilities near the company’s drilling zones continues to hinder growth.

Noble Energy has been divesting non-core assets at regular intervals. Notably, the company has been making a series of divestments to sell off its non-core assets.

These divestments are aiding the company to shift focus on core assets and develop them. Notably, gains from developing the high-return assets are expected drive the performance over next few years and also improve its financial position.

Toward this, it entered into two major divestiture agreements with buyers in the month of November. In the beginning of the same month, it sold 30,200 net acres of company’s non-core DJ Basin portion to SRC Energy Inc, for a sum of $608 million. Recently, it divested a minerals and royalty package to Houston-based Black Stone Minerals LP BSM for $340 million. (Read more: Noble Energy Continues to Divest, Sells Assets for $340M)

Moreover, the company continues to gain from the onshore U.S. performance, more specifically, robust production from Delaware Basin. Thanks to the strength in production from the high-quality assets, it was able to raise fourth-quarter production guidance. Notably, Noble Energy anticipates fourth-quarter onshore U.S. oil sales to be up 15% sequentially, in the range of 102-108 thousand barrels per day.

However, it is to be noted that the company’s current debt to capital ratio is 42.96% higher than the industry average of 34.61%. As of Sep 30, 2017, the company’s long-term debt was pegged at $7,487 million.We expect the ongoing divestitures to aid the company in lowering debt levels.

Price Movement

Shares of Noble Energy have underperformed the industry in the last 12 months. The company’s shares lost 24.9%, wider than the industry’s loss of 18.6%.

Zacks Rank & Key Picks

Noble Energy currently carries a Zacks Rank #3 (Hold).

Investors can consider better-ranked stocks from the same industry like Northern Oil and Gas, Inc. NOG and Denbury Resources Inc. DNR, both sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Northern Oil’s third-quarter 2017 adjusted earnings of 4 cents per share beat the Zacks Consensus Estimate by 500%. Additionally, its current year estimates have increased to 4 cents from a loss of a cent in the last 30 days.

Denbury Resources’ third-quarter 2017 adjusted earnings of 4 cents per share beat the Zacks Consensus Estimate by 500%. Additionally, its current quarter estimates have increased to 3 cents from a cent in the last 30 days.

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Black Stone Minerals, L.P. (BSM): Free Stock Analysis Report
 
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