<a target=new href=http://www.nobleenergyinc.com/>Noble Energy Inc.</a> (NYSE: <a href=Javascript:viewInstrument('NBL',4,'EN')>NBL</a>) yesterday published its 2016 financial statements, which included two mentions of the company's business in Israel. The first was a positive statement by chairman and CEO David Stover about development of the Leviathan natural gas reservoir, and the second reported the natural gas prices charged by the company in the US, Israel, and Equatorial Guinea.
As reported last week by "Globes," the pressure on Noble Energy to make a decision about development of Leviathan is growing, in view of the fact that February 20 is the deadline for Delek Group Ltd. (TASE: DLEKG) to cancel its $1.5-1.75-billion financing agreement with HSBC and JP Morgan. The appendices to the financial reports quote Stover as saying, "…we have a tremendous opportunity with the Leviathan project offshore Israel. In 2017, our teams will begin project development, with first gas targeted for the end of 2019.
It was learned last week that the Leviathan partnership's agreement with the Jordan Electric Power Company (JEPCO) to supply 45 BCM over 15 years has not been finalized, and that Noble Energy is waiting for an agreement between the governments that will ensure the contract for its entire period. Without this $10-billion contract, development of Leviathan is not commercially viable at this stage.
Sources in the energy industry believe that Noble Energy is concerned about repeated sabotage of the gas pipeline by opponents of normalization between Israel and Jordan that could disrupt its stable operation. Despite the concerns and the fact that two months have passed since the first date on which the market expected an announcement by Noble Energy about financing for Leviathan, the company has budgeted $550 million for development of Leviathan in 2017.
A second prominent point in the financial statements is what it says about the gas prices that Noble Energy is obtaining. While the company received an average price of $5.27 per mmbtu in Israel in 2016, it received $2.47 per mmbtu in the US and only $0.27 per mmbtu in Equatorial Guinea. The phrase "tremendous opportunity" used by Stover to describe Leviathan is therefore extremely appropriate.
According to the report, Noble Energy's revenue rose from $3.18 billion in 2015 to $3.49 billion in 2016. Noble Energy posted a $998 million net loss in 2016, an improvement on its $2.44 billion net loss in 2015, and its loss per share dropped from $6.07 in 2015 to $2.32 in 2016. The company's stability rests on $21 billion in reported assets, with only $11.4 billion in liabilities.
Published by Globes [online], Israel Business News - www.globes-online.com - on February 14, 2017
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