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Noble Energy expects to grow sales volumes by 12% in 2018 while halving spending

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Noble Energy expects to grow sales volumes by 12% in 2018 while halving spending

Noble Energy Inc. expects to spend between $2.7 billion and $2.9 billion in CapEx in 2018, compared to $5.59 billion spent in the previous year, while aiming to grow its full-year sales volumes by 12% over 2017 levels.

Of the CapEx budget, 70% would go to Noble's U.S. onshore program, in which the company expects to average nine operated onshore rigs through 2018. Of the nine rigs, six would be in the Delaware Basin in West Texas, with the rest in the Eagle Ford Shale in south Texas and Colorado's DJ Basin, according to a Feb. 20 news release. The Delaware Basin development program is expected to drive most of the U.S. onshore growth.

U.S. onshore upstream capital investments are forecast at about $1.8 billion at the midpoint of Noble Energy's expected range, compared to $2.56 billion spent in 2017. Noble plans to invest $750 million in eastern Mediterranean operations, particularly to bring its Leviathan development toward first production in late 2019.

Sales volumes for the full year 2018 were forecast in a range of 343,000 to 353,000 barrels of oil equivalent per day, pro forma for asset divestitures.

Noble Energy expects $1.5 billion in excess cash flows through 2020 based on a $50/barrel West Texas Intermediate oil price and $3/MMBtu Henry Hub natural gas price, and another $1.5 billion at strip pricing. The company's current dividend payout and the $750 million share repurchase program would yield direct shareholder returns of over $1.3 billion through 2020, according to the forecast. CapEx would also remain at $2.8 billion annually in the same period.

Estimated cash flow from operations is expected to grow at a 35% compound annual growth rate at the same price scenario. Estimated volumes are anticipated to increase to about 525 Mboe/d in 2020, representing a 20% compound annual growth rate from 2017.

Noble Midstream Partners LP also announced 2018 GAAP net income guidance of $220 million to $260 million and adjusted EBITDA estimates at $275 million to $315 million, or $215 million to $235 million attributable to the partnership. The guidance represents a 45% increase to the partnership compared to 2017 levels. Noble Midstream aims for distribution per unit growth of 20% in 2018, with distributable cash flow coverage of 1.9x to 2.1x.

Noble Midstream's capital budget is expected at $485 million to $535 million, or $255 million to $285 million attributable to the partnership.