Noble Energy Corporation is poised to gain from its cost-containment efforts and decision to sell some of its non-core assets. Solid production from the company’s organic and inorganic assets will boost its performance. However, drilling regulations and lack of adequate infrastructure facilities near its drilling zones could affect performance.

Noble Energy is currently focusing on best-return assets and cost savings is helping to bolster results. The company’s lease operating expenses (LOE) per barrel of oil equivalent in the first quarter was down 5% year over year. In addition, Noble Energy’s U.S. onshore drilling costs per foot were more than 50% below the 2015 average costs.

The company projects 2017 organic capital expenditure in the range of $2.3–$2.6 billion, of which 75% will be directed to the development of U.S on shore assets. Thanks to the solid performance of its organic and inorganic assets, Noble Energy expects 2017 production volume in the range of 415–425 thousand barrels of oil equivalent per day (“Mboe/d”), up 5% year over year after adjusting for 2016 divested assets.

Noble Energy’s international assets are also contributing toward its solid performance. Apart from Israel, its operations in Big Bend, Dantzler and Gunflint fields in Gulf of Mexico, West Africa and Equatorial Guinea are going to help the company achieve its production target for 2017.

Noble Energy’s operations are subject to federal, state and local hydraulic fracturing regulations. It has offshore development plans in Israel that significantly expose the company to the uncertain regulatory environment there.

The company usually has to rely on third party systems and facilities for transportation of oil and natural gas production, which affects supply prices. Lack of adequate facilities might create problem for marketability of its products.

Noble Energy reported strong results in the first quarter, with total revenue beating the Zacks Consensus Estimate. Its loss per share was also narrower than expected.

Price Movement

Shares of Noble Energy lost 25.5% in the last six months compared with the Oil & Gas –Exploration & Production – U.S.  industry’s loss of 25.7%.

Even though shares are down at present,the company is poised to benefit from strong production volumes from its DJ Basin, Eagle Ford and the Delaware area assets.

Zacks Rank and Stocks to Consider

Noble Energy currently has a Zacks Rank #3 (Hold). Some better-ranked stocks in the same space are W&T Offshore Inc. (WTI Quick QuoteWTI - Free Report) , Bonanza Creek Energy, Inc. and Centennial Resource Development, Inc. . All these stocks carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

W&T Offshore reported a positive earnings surprise of 77.78% in the first quarter of 2017. Its 2017 earnings estimate moved to 64 cents from a loss of 39 cents in the last 90 days.

Bonanza Creek Energy reported a positive earnings surprise of 100.0% in the first quarter of 2017. Its 2017 earnings estimate moved to $1.70 from a loss of $91.01 in the last 90 days.

Centennial Resource Development reported a positive earnings surprise of 33.3% in the first quarter of 2017. Its 2017 earnings estimate moved up 35.7% to 19 cents.

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