Noble’s profits drop amid shale boost

HOUSTON – Noble Energy’s profits fell 49 percent in the second quarter on a $187 million loss on commodity derivatives, even as higher production in its U.S. shale plays bolstered sales.

The Houston oil producer said Thursday it made $192 million in profit, or 53 cents a share, in the April-June period, compared to $377 million, or $1.05 a share, in the same period last year.

Revenue climbed 20 percent to $1.4 billion largely on increased crude sales.

Its daily output from horizontal wells in the DJ Basin in Colorado and the Marcellus Shale in Pennsylvania rose to 112,000 barrels of oil equivalent, up 56 over the second quarter 2013.

Noble Energy Chief Executive Charles Davidson told investors the company has been testing better well completion technologies, including a more efficient method of fracturing shale rock, called plug-and-perf.

“I’m confident we’re going to end the year stronger than we thought,” Davidson said.

The company said production from horizontal wells in which it used the plug-and-perf method was 50 percent higher than its older technique.

“The biggest thing I’m seeing here is the potential in completions in the DJ Basin: There’s more opportunity to fine-tune and enhance completions than I would have understood,” Davidson added. “We’re putting a lot of science into it. We’re learning a tremendous amount this year that I think is going to pay tremendous dividends ahead.”

Overall, its daily production in the DJ Basin hit a quarterly record of 70,000 barrels of oil equivalent, 33 percent higher than the second quarter last year.

Still, its production in the DJ Basin missed Wall Street expectations, largely because Noble upgraded 60 well facilities in the three-month period, David Tameron, an analyst with Wells Fargo, wrote in a note to investors.

Noble shares fell $2.58 to $71.63  in trading Thursday  on the New York Stock Exchange.