Can this company make money at $20-30 oil, let alone $40-50?
It's only a matter of time!
7 replies (most recent on top)
Noble has not been making money when oil was at $50-60. In fact, the only reason it is not insolvet is that it raised billions of dollars in equity in recent years (cash and shares issuances to acquire new onshore assets) and the low interest rate on the current debt. International is the only part of the business which is making money. The people who created the international portfolio (Israel and EG) like RC and CD are gone. Current leadership was pushing to acquire more US Onshore assets. At this stage, the Company is basically working for the creditors (and executive compensation). Shareholder equity will continue to shrink as losses will continue to accumulate. If the credit rating is lowered debt will also become more expensive. Ultimately share price will go to zero. The good people will find new positions outside of Noble. Better companies with stronger managments will also not survive at $20-30 oil.
The problem as I see it is where domestically can they make money. All they have is shale plays; Eagleford, Permian, DJ basin. They have no where to turn. So I wouldn’t be surprised if management gets into a position where it’s forced to sell/separate domestic businesses from the International ones and eventually become strictly international. Short sighted lack of diversity.
Yea, it’s coming. Don’t know how bad or what exactly but it’s definitely coming.
Everyone, put on your innovator hat.
Magical thinking is your best self-defense in a time of crisis.
Hedge activity for a company can be found on 10Qs and 10Ks on sec.gov. Go to the 10K and scroll through it.
Maybe Noble Energy hedged?
Many companies in the US won't survive long at $20. Typically, even for large conglomerate, ~$30 is the breakeven point