NOBLE ENERGY, INC. Management's Discussion and Analysis of Financial Condition and Results of Operations (MD&A) is intended to provide a narrative about our business from the perspective of management. We use common industry terms, such as thousand barrels of oil equivalent per day (MBoe/d) and million cubic feet equivalent per day (MMcfe/d), to discuss production and sales volumes. Our MD&A is presented in the following sections: • Executive Overview & Operating Outlook ; • Results of Operations - Exploration and Production ; • Results of Operations - Midstream ; • Results of Operations - Corporate ; and • Liquidity and Capital Resources . The preceding consolidated financial statements, including the notes thereto, contain detailed information that should be read in conjunction with our MD&A. See also Item 1A. Risk Factors . EXECUTIVE OVERVIEW AND OPERATING OUTLOOK The following discussion highlights the current operating environment as well as significant operating and financial results for first quarter 2020. This discussion should be read in conjunction with our Annual Report on Form 10-K for the year endedDecember 31, 2019 , which includes disclosures regarding our critical accounting policies as part of "Management's Discussion and Analysis of Financial Condition and Results of Operations." The impacts on our business of both the significant decline in commodity prices and the novel coronavirus (COVID-19) pandemic are unprecedented. During this time,Noble Energy is committed first and foremost to the safety of our global workforce and the communities in which we operate, and ensuring that we continue to fulfill our purpose: Energizing the World, Bettering People's Lives®. Commodity Prices Market Conditions In first quarter 2020, the COVID-19 pandemic spread quickly across the globe and countries mobilized to implement containment mechanisms and minimize impacts to their populations and economies. Various containment measures, which have included business closures, work stoppages, shuttering of public spaces and events and/or severe restrictions of global and regional travel, among others, have caused unprecedented declines in the global demand for crude oil and natural gas commodities. This decline in global demand driven by reduced consumption has contributed to commodity prices declining precipitously beginning inmid-March 2020 . The longevity and severity of the impacts of COVID-19 to the oil and gas industry, including the reduced demand for crude oil and natural gas commodities and its resulting impact on commodity prices, may continue until a vaccine or alternative treatment is made widely available across the globe. Contemporaneously with the COVID-19 pandemic, theOrganization of Petroleum Exporting Countries (OPEC) and certain non-OPEC producers failed to agree inMarch 2020 to production cuts which were intended to stabilize and support global crude oil prices. With no agreement in place, certain large international crude oil producers, includingSaudi Arabia andRussia , 20
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began to deeply discount prices of their crude oil and committed to ramping up production in an attempt to protect, or increase, their global market share. This increased production further contributed to global production levels far exceeding current demand, a trend that exacerbated already depressed commodity prices. These extreme supply and demand dynamics have caused a significant decline in crude oil prices negatively impacting all crude oil producers. InApril 2020 , members ofOPEC and certain non-OPEC producers agreed to production cuts through first quarter 2022. While these production cuts are expected to reduce excess global crude oil inventories in 2021, they are unlikely to be sufficient to offset the sharp demand decreases caused by COVID-19 in the near-term. With commodity demand and consumption significantly depressed, and production adding to inventory levels, crude oil storage began to reach capacity placing further commodity pricing pressure on all elements of the crude oil and natural gas commodity value chain. For example, inApril 2020 , pricing for the NYMEX West Texas Intermediate (WTI) crude oil futures contract was negative for one day, resulting from a combination of theMay 2020 futures contract trading deadline with a physical settlement and a limited number of buyers with available crude oil storage capacity. This unprecedented negative price was driven by excessive oversupply of crude oil in the US market and concerns that supply would exceed available crude oil storage capacities. As a result, sales volumes indexed to WTI for that time resulted in certain buyers receiving payments to take crude oil production as storage capacities became scarce and filled. Additionally, the US domestic natural gas market and US natural gas liquid (NGL) market are oversupplied, with the NGL market also being impacted by export capacity constraints. These factors have contributed to depressed pricing for both US domestic natural gas and US NGLs. We expect that as development activity begins to decline in the US leading to reduced crude oil and associated natural gas production, US domestic natural gas prices will adjust as supply and demand levels equalize. Reduced demand and resulting commodity price volatility driven by factors discussed above have also contributed to increased short-term competition amongst fuel alternatives to crude oil and natural gas. For example, in the Eastern Mediterranean, spot coal and spot liquefied natural gas (LNG) prices could temporarily be below prices in our long-term natural gas sales and purchase agreements (GSPAs). Also, certain of our Tamar and Leviathan GSPAs have fixed minimum sales volumes and fixed base pricing with annual index escalations. Certain of our Egyptian export contracts include provisions which trigger adjustments to either decrease, or increase, fixed minimum sales volumes in the event the arithmetic average of daily Brent crude oil prices fall below, or above,$50 per barrel for certain periods of time. Our GSPAs do not preclude us from selling natural gas to domestic, or other regional customers, at amounts which exceed fixed minimum sales volumes. The commodity price environment may continue to remain depressed for an extended period of time based on oversupply, decreasing demand and a potential global economic recession caused by COVID-19, discussed further below. Our average realized sales prices, which exclude the impacts of hedges settled in the respective periods, are as follows: Three Months Ended Average Realized Sales Prices March 31, 2020 March 31, 2019 % Change Crude Oil & Condensate (Per Bbl)$ 46.21 $ 54.19 (15 )% NGLs (Per Bbl) 10.30 17.86 (42 )% Natural Gas (Per Mcf) 2.58 2.88 (10 )% Current and Future Expected Impact to Noble Energy The recent decline in commodity prices adversely affected our realized prices in first quarter 2020 and we expect this trend will continue in the second quarter and, perhaps, beyond. First quarter 2020 realized prices included January andFebruary 2020 prices that were much stronger than those realized inMarch 2020 . Therefore, we expect our realized prices may decline further in second quarter reflecting a full quarter of lower pricing. In addition, our stock price has been negatively impacted by the current environment, significantly reducing our market capitalization. Prolonged lower commodity prices would impact the amount of cash generated from our operating activities, results of operations and our financial position. In response to the current environment, we executed the following actions: • Reduced our initial 2020 organic capital investment program - Our initial
2020 organic capital investment program, which excludes Noble Midstream
Partners and acquisition capital, was in the range of
billion. As a result of the current macroeconomic and commodity
environment, we have revised our planned 2020 organic capital investment
program to a range of
which was spent in first quarter 2020. The majority of these reductions
are attributed to our US onshore business, resulting in a higher
concentration of production from our international assets. Additionally,
we have deferred spending on the exploration well offshore
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costs - We reduced our quarterly cash dividend to
common share. The reduction to our dividend, which begins in second
quarter 2020, is expected to preserve approximately $195 million in
annualized cash flow. Our Board of Directors will continue reviewing the
dividend quarterly in context of market conditions. See Liquidity andCapital Resources , below. Additionally, we identified cash cost savings
related to production expenses, general and administrative (G&A) expenses
and asset retirements. Certain of these cost savings initiatives included
strategic ramp down of activity in our US onshore business and successful
negotiation of reduced rates for certain contracts.
• Borrowed on our Revolving Credit Facility - During first quarter 2020, we
borrowed
to increase our cash balance on hand in an abundance of caution to
mitigate potential future issues in the global financial system. As of
Credit Facility and approximately
• Cash settled hedges - We enhanced our liquidity by cash settling certain
2020 crude oil hedges prior to their original settlement dates and entered
into new instruments for the remainder of the year. Net cash received in
first quarter 2020 for these transactions was approximately
See Item 1. Financial Statements - Note 11. Derivative Instruments and
Hedging Activities.
• Assessed production levels - As a result of the COVID-19 pandemic andresulting decline in demand for our products, we expect production levels
to be lower than our originally expected 2020 production levels, which
ranged from 385 MBoe/d to 405 MBoe/d. We expect some of these decreases
will result from voluntary curtailments of certain US onshore production
beginning in
duration of these curtailments could be shortened or extended depending on
commodity markets. We do not expect reduced production levels will impact
our ability to deliver on our firm sales or processing commitments.
• Assessed proved reserves - We assessed our proved reserves during thequarter and recorded a downward reserves revision of 14 MMBoe primarily
attributable to removal of proved undeveloped reserves in the
Basin due to changes in our development plans.
• Assessed long-lived assets for impairment - We performed impairment
assessments on proved and unproved oil and gas properties, equity method
investments, customer-related intangible assets, goodwill and lease
right-of-use assets. Based on these assessments, we recorded impairments
related to certain of our
and
right-of-use asset.
expense related to a previous acquisition. See Item 1. Financial
Statements - Note 4. Impairments.
• Reviewed deferred tax asset valuation allowances - The impairment of our
Delaware Basin proved and unproved properties andEagle Ford Shale unproved properties caused us to establish a valuation allowance for our forecasted domestic net deferred tax asset, which resulted in a corresponding reduction in the deferred tax benefit. See Item 1. Financial Statements - Note 10. Income Taxes. • Adjusted our employee workforce capacity - We implemented furlough and
part-time working programs for certain employees in response to reductions
in planned activity levels, representing approximately 30% of our US
workforce. Employees will continue receiving enrolled benefits under these
programs; however, furloughed employees will not receive salaries and
employees under the part-time program will receive 50% of their base
salaries. Furthermore, the decreases in planned activity levels caused us
to significantly reduce our contractor workforce. We expect these actions
will reduce G&A spending beginning in second quarter 2020.
• Lowered executive leadership salaries and director cash retainers -
Salaries for the Chief Executive Officer, Senior Officers and VicePresidents were lowered by 20%, 15% and 10%, respectively. In addition,
cash retainers for members of the Board of Directors were lowered by 25%.
These reductions are expected to extend through the end of 2020.
COVID-19
Market Conditions Containment measures and responsive actions to the COVID-19
pandemic, while aiding in the prevention of further outbreak, have resulted in
severe declines in general economic activity and energy demand. As a result, the
global economy has experienced a slowing of economic growth, disruption of
global manufacturing supply chains, stagnation of oil and gas consumption and
interference with workforce continuity.
Current and Future Expected Impact to Noble Energy The COVID-19 pandemic,
specifically measures to restrict individuals
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within their homes, has impacted the global demand for commodities, a trend we expect to continue into the second quarter, and, perhaps, beyond. Additionally, the risks associated with the virus have impacted our workforce and the way we meet our business objectives. In response to this, we executed the following actions: • Remote workforce and personnel management - Due to concerns over health
and safety, we have asked the vast majority of our global workforce to
work remotely until further notice. As of
has not significantly impacted our ability to maintain operations,
including use of financial reporting systems, nor has it significantly
impacted our internal control environment. In addition, certain of our
employees and contractors work in remote field locations or on offshore
platforms. We have implemented various safety protocols including, among
others, reduction of certain operational workloads to critical maintenance
and personnel, mandating use of certain secure travel options, review of
critical medical supplies and procedures and implementation of other
safeguards to protect operational personnel. We have not incurred, and in
the future do not expect to incur, significant expenses related to
business continuity as employees work from home.
• Mobilized our Crisis Management Team (CMT) - Our corporate CMT is
responsible for ensuring the organization implements our corporate
Employee Health and Wellness plan elements pertaining to pandemic
response. This plan follows
state and local guidance in preparing and responding to COVID-19. The CMT
implemented communication protocols should an employee become sick, and we
will continue to follow CDC guidance, which is subject to change in the
future. To date, we have not experienced significant business or
operational interruption due to workforce health or safety concerns
pertaining to COVID-19.
Regarding our supply chain, the structure of the global oilfield material and
services supply chain provides us flexibility in sourcing equipment and services
for our development projects. However, the global nature of our supply chains,
particularly in relation to our major international construction projects,
exposes us to the risk of dispersed supply chain disruptions. We have
experienced some delays in deliveries and are monitoring the situation to
mitigate impacts on development projects.
The COVID-19 pandemic and impact of lower commodity prices have also caused
disruptions in our distribution networks, including, among other things, storage
and pipeline constraints and decreased demand from downstream consumers. These
have the potential to result in claims of force majeure from transportation,
processing, or other downstream service providers, as well as customers and
other entities with which we conduct business. Prolonged constraints to the
distribution chain could lead to additional shut-ins and/or increased production
curtailment from certain of our US onshore wells in the future, further
preventing us from producing our proved reserves. Additionally, we will continue
to evaluate the amount and duration of our voluntary production curtailments,
which could be shortened or extended depending on commodity markets.
Should our US production be shut-in or curtailed for an extended period of time,
we could experience further declines in cash flows attributable to both our US
onshore and Midstream segments. Our capital spending and development plans are
flexible and we have already curtailed the majority of near-term US onshore
development. As our pace of development slows, our inventory of drilled but
uncompleted wells is expected to increase in the DJ Basin .
Potential Global Recession
Market Conditions COVID-19, coupled with the drop in commodity prices, have
contributed to equity market volatility and, potentially, the risk of a global
recession. We expect this global equity market volatility experienced in first
quarter 2020 to continue until the COVID-19 pandemic stabilizes.
In March and April 2020 , the US government passed a series of stimulus packages
which, collectively, provide the largest relief packages in US history. These
packages include various provisions intended to provide relief to individuals
and businesses in the form of tax changes, loans and grants, among others. At
this time, we do not believe these stimulus measures will have a material impact
on Noble Energy ; however, we do believe it could aid the economy by providing
relief to certain individuals and smaller businesses.
Current and Future Expected Impact to Noble Energy We have experienced a sharp
decline in our stock price over the first quarter 2020, a condition that is
consistent across our sector. We do not have any debt covenants or other lending
arrangements that depend upon our stock price. As of March 31, 2020 , we are in
compliance with the financial covenant contained in our Revolving Credit
Facility which provides that our total debt to capitalization ratio, as defined
in the Revolving Credit Facility agreement, may not exceed 65% at any time. As
of March 31, 2020 , this total debt to capitalization ratio was below 40%. Our
consolidated financial statements include the accounts of Noble Midstream
Partners . Noble Midstream Partners is subject to financial covenants under the
Noble Midstream Services Revolving Credit Facility and term loans, for which the
outstanding debt is non-recourse to Noble Energy . As of March 31, 2020 , Noble
Midstream Partners is in compliance with these financial covenants. We receive
limited partnership cash distributions from Noble Midstream Partners . Changes in
Noble Midstream Partners' covenant compliance or changes in distributions to us
would not have a material impact to Noble Energy .
During the quarter, we borrowed $1.0 billion , net, on our Revolving Credit
Facility to ensure ample cash on hand, leaving over
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$3.0 billion in remaining liquidity as ofMarch 31, 2020 , as well as approximately$1.4 billion of cash on hand. See Item 1. Financial Statements - Note 8. Debt and Liquidity and Capital Resources . As cities, states and countries implement plans to loosen confinement restrictions and stimulate markets and economies, there is a risk for the resurgence and recurrence of COVID-19. Such an event is likely to impact global populations and could result in the reinstatement of containment measures, potentially leading to an extended period of reduced demand for crude oil and natural gas commodities. First Quarter 2020 Operating Highlights Regional Gas Sales From Leviathan Field ByJanuary 15th , we were selling natural gas from the Leviathan field to customers inIsrael ,Egypt andJordan . First quarter 2020 sales volumes from Tamar and Leviathan increased 80% compared to fourth quarter 2019. Progressing Natural Gas Monetization Offshore WestAfrica During first quarter 2020, we progressed construction of the offshore pipeline which will transport natural gas from the Alen platform for processing at Punta Europa. Additionally, we finalized commercial LNG sales agreements for our Alen natural gas monetization project, securing sales to a large multi-national LNG trader. The Alen natural gas monetization project provides capital-efficient access to additional reserves and our entry into the global LNG markets. First production is anticipated in early 2021. Exploration Program Update Due to the current commodity price environment, we are delaying the majority of expenditures under our exploration program. In offshoreColombia , we have postponed drilling of an exploration well until at least 2021. In 2020, we do not expect to incur significant costs advancing US onshore exploration opportunities. Potential for Future Impairments We performed impairment assessments as ofMarch 31, 2020 , including assessments of proved and unproved properties, other long-lived assets, including property, plant and equipment and equity method investments, right-of-use assets and intangible assets, including customer relationships and goodwill. These assessments indicated that certain of our assets were impaired as of March 31, 2020. See Item 1. Financial Statements - Note 4. Impairments. Impairment testing involves uncertainties related to key assumptions such as expectations for future commodity prices, development and capital spending plans, reservoir performance and production, among others. These assumptions are relevant to all of the Company's operating segments and a significant number of interdependent variables are derived from these key assumptions. There is a high degree of complexity in their application in determining use and value in asset recovery tests and fair value determinations. Given the inherent volatility of the current market conditions driven by the COVID-19 pandemic and crude oil and natural gas supply dynamics, there exists the potential for future conditions to deviate from our current assumptions. For example, properties that have been previously reduced to fair value, such as ourEagle Ford Shale proved properties in 2019, could become further impaired, or certain other assets, including capitalized exploratory well costs and undeveloped leasehold costs, could become impaired in a future environment. Further, it is likely additional impairments could be triggered if the COVID-19 pandemic leads to a continued and sustained reduction in global economic activity and demand for crude oil and natural gas. Recently Issued Accounting Standards See Item 1. Financial Statements - Note 2. Basis of Presentation. 24
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RESULTS OF OPERATIONS - EXPLORATION AND PRODUCTION (E&P) US Onshore See Management's Discussion and Analysis - Executive Overview and Operating Outlook for updates to our US onshore capital program. In light of the current commodity price environment, we plan to run one drilling rig in theDJ Basin for the remainder of 2020. We plan to temporarily defer completion activities, which we expect to resume based upon economic and commodity conditions. The results of operations outlined below are significantly impacted by commodity prices. During the quarter, realized prices inJanuary 2020 andFebruary 2020 were higher than realized prices inMarch 2020 . Since the impacts of the current economic environment are not reflected within the results for the entire quarter, results in first quarter 2020 may not be indicative of future results in the near-term. During first quarter 2020, our US onshore E&P activities consisted of the following: Average Average Wells Sales Rigs Wells Brought Volumes Location Operated Drilled (1) Online (MBoe/d) DJ Basin 2.5 36 29 156 Delaware Basin 2 23 22 67 Eagle Ford Shale - - - 46 Total 4.5 59 51 269 (1) The number of wells drilled refers to the number of wells completed, regardless of when drilling was initiated.DJ Basin During first quarter 2020, our activities were primarily focused in the Mustang andWells Ranch areas. We currently have approximately 355 approved and remaining drilling permits, primarily in our Mustang Comprehensive Drilling Plan (CDP). The vast majority of these permits have six-year terms. In addition, inMarch 2020 our Wells Ranch CDP application, which covers approximately 41,000 net acres and allows for up to 250 additional drilling permits, was unanimously approved by theColorado Oil and Gas Conservation Commission , with terms subject to the adoption of new rules which currently propose five-year terms. We can apply for an additional five-year term on any permits left undrilled at the end of the original five-year term.Delaware Basin (Permian Basin ) During first quarter 2020, our activities were primarily focused in the northern and central areas of our acreage position where we continued to assess completion designs to further drive operational and economic efficiencies, including testing of water intensity and number of stages per completion.Eagle Ford Shale During first quarter 2020, we focused on maximizing cash flows from existing production and continued to evaluate and assess our development plan for the area. International ByJanuary 15, 2020 , we were selling natural gas from the Leviathan field, offshoreIsrael , to customers inIsrael ,Egypt andJordan . Our Tamar asset continues to reliably supply natural gas to customers inIsrael andJordan . Most of our Eastern Mediterranean natural gas sales and purchase agreements include fixed minimum volumes and fixed base prices. As a result, natural gas revenues in the region have historically been less susceptible to commodity price volatility. OurWest Africa segment continues to benefit from reliable operations at Aseng, Alen and Alba fields. We remain committed to the Alen gas monetization project, which we expect will create a regional natural gas hub able to supply a number of markets with LNG. During the quarter, we progressed marketing activities for the sale of future LNG cargoes with first production anticipated in early 2021. Results of Operations First Quarter 2020 Significant E&P Highlights: • byJanuary 15th , we were selling natural gas from the Leviathan field to
customers in
• organic capital expenditures of
first quarter 2019;
• total production expense per BOE of
first quarter 2019;
• increased total consolidated average daily sales volumes by 17% to 385
MBoe/d, net;
• increased average daily sales volumes for crude oil by 11%;
• finalized commercial LNG sales agreements for Alen natural gas
monetization, securing sales to a large multi-national LNG trader; and
• recorded certain asset impairments of $2.7 billion and undeveloped
leasehold exploration expense of $1.5 billion .
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The following is a summarized statement of operations for our E&P business:
Three Months Ended March 31,
(millions) 2020 2019
Oil, NGL and Gas Sales to Third Parties $ 894 $ 937
Sales of Purchased Oil and Gas 25 14
(Loss) Income from Equity Method Investments and Other (19 ) 15
Total Revenues 900 966
Production Expense 341 351
Exploration Expense 1,504 24
Depreciation, Depletion and Amortization 462 475
Cost of Purchased Oil and Gas 28 14
Asset Impairments 2,703 -
(Gain) Loss on Commodity Derivative Instruments (389 ) 212
Loss Before Income Taxes (3,768 ) (168 )
Average Oil, NGL and Gas Sales Volumes and Prices Average daily sales volumes from our share of production and average realized sales prices were as follows:
Average Sales Volumes (1) Average Realized Sales Prices (1)
Crude Oil & Crude Oil &
Condensate NGLs Natural Gas Total Condensate NGLs Natural Gas
(MBbl/d) (MBbl/d) (MMcf/d) (MBoe/d) (Per Bbl) (Per Bbl) (Per Mcf)
Three Months Ended March 31, 2020
United States 117 66 516 269 $ 46.10 $ 10.30 $ 1.27
Eastern
Mediterranean 1 - 390 66 25.20 - 5.36
West Africa (2) 20 - 178 50 47.35 - 0.27
Total
Consolidated
Operations 138 66 1,084 385 46.21 10.30 2.58
Equity
Investments (3) 1 4 - 5 53.65 28.69 -
Total 139 70 1,084 390 $ 46.27 $ 11.43 $ 2.58
Three Months Ended March 31, 2019
United States 113 59 483 253 $ 53.46 $ 17.86 $ 2.49
Eastern
Mediterranean - - 233 39 - - 5.57
West Africa (2) 12 - 168 40 61.01 - 0.27
Total
Consolidated
Operations (4) 126 59 884 332 54.19 17.86 2.88
Equity
Investments (3) 1 4 - 5 53.01 36.81 -
Total (4) 127 63 884 337 $ 54.18 $ 19.09 $ 2.88 (1) Natural gas is converted on the basis of six Mcf of gas per one barrel of
crude oil equivalent (BOE). This ratio reflects an energy content
equivalency and not a price or revenue equivalency. Given commodity price
disparities, the prices for a barrel of crude oil equivalent for US natural
gas and NGLs are significantly less than the price for a barrel of crude
oil. In
the price is fixed, resulting in less commodity price disparity between
reporting periods.
(2) Natural gas from the Alba field is sold under contract for
to a methanol plant, an LPG plant, an LNG plant and a power generation
plant. The methanol and LPG plants are owned by affiliated entities
accounted for under the equity method.
(3) Volumes represent sales of condensate and LPG from the LPG plant in(4) Includes an immaterial amount of condensate sales from offshoreIsrael assets. 26
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An analysis of revenues from sales of crude oil, NGLs and natural gas is as follows:
Crude Oil &
(millions) Condensate NGLs Natural Gas Total
Three Months Ended March 31, 2019 $ 612 $ 96 $ 229 $ 937
Changes due to
Increase in Sales Volumes 69 11 87 167
Decrease in Sales Prices (1) (103 ) (45 )
(62 ) (210 )
Three Months Ended
(1) Changes exclude gains and losses related to commodity derivative
instruments. See Item 1. Financial Statements - Note 11. Derivative
Instruments and Hedging Activities.
Crude Oil and Condensate Sales Revenues Revenues from crude oil and condensate
sales decreased in first quarter 2020 as compared with 2019 primarily due to the
following:
• decreases in average realized prices for first quarter 2020 (see
Executive Overview & Operating Outlook - Commodity Prices );
partially offset by:
• higher
compared to first quarter 2019 due to Aseng 6P coming online in fourth
quarter 2019 and timing of liftings; and
• higher US onshore sales volumes of 4 MBbl/d for first quarter 2020compared to first quarter 2019 primarily due to an increase in development
activity in the DJ and Delaware Basins.
NGL Sales Revenues Revenues from NGL sales decreased in first quarter 2020 as compared with 2019 primarily due to the following: • decreases in average realized prices for first quarter 2020 (see
Executive Overview & Operating Outlook - Commodity Prices );
partially offset by: • higher US onshore sales volumes of 7 MBbl/d for first quarter 2020
compared to first quarter 2019 primarily due to an increase in development
activity in the DJ and Delaware Basins.
Natural Gas Sales Revenues Revenues from natural gas sales increased in first
quarter 2020 as compared with 2019 primarily due to the following:
• higher
to first quarter 2019 primarily due to Leviathan commencing production
late
• higher sales volumes in the DJ and Delaware Basins of 50 MMcf/d for first
quarter 2020 compared to first quarter 2019 due to an increase in
development activities;
partially offset by:
• decreases in average realized prices for first quarter 2020 (see
Executive Overview & Operating Outlook - Commodity Prices ); and
• lower
compared to first quarter 2019 due to reduced activity and natural field
decline.
Sales and Cost ofPurchased Oil and Gas Sales and purchases of crude oil increased in first quarter 2020 as compared with 2019 primarily due to sales and purchases in theDelaware Basin to meet firm sales agreements, which did not occur in 2019. This increase was partially offset by decreases in sales and purchases of crude oil in theDJ Basin as compared to first quarter 2019. (Loss) Income from Equity Method Investments and Other Income from equity method investments and other decreased in first quarter 2020 as compared with 2019. The decrease includes a$31 million decrease fromAtlantic Methanol Production Company, LLC (AMPCO), our methanol investment, primarily due to planned turnaround activities and the impact of lower methanol prices, and a$1 million decrease fromAlba Plant , our LPG investment. 27
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Production Expense Components of production expense were as follows:
Total per BOE United States Eastern
(millions, except unit rate) (1)(2) Total (2) Mediterranean West Africa
Three Months Ended March 31,
2020
Lease Operating Expense (3) $ 4.32 $ 151 $ 108 $ 13 $ 30
Production and Ad Valorem Taxes 1.06 37 37 - -
Gathering, Transportation and
Processing 4.26 149 146 3 -
Other Royalty Expense 0.11 4 4 - -
Total Production Expense $ 9.75 $ 341 $ 295 $ 16 $ 30
Total Production Expense per
BOE $ 9.75 $ 12.03 $ 2.69 $ 6.68
Three Months Ended March 31,
2019
Lease Operating Expense (3) $ 5.32 $ 159 $ 125 $ 10 $ 24
Production and Ad Valorem Taxes 1.57 47 47 - -
Gathering, Transportation and
Processing 4.75 142 142 - -
Other Royalty Expense 0.10 3 3 - -
Total Production Expense $ 11.74 $ 351 $ 317 $ 10 $ 24
Total Production Expense per
BOE $ 11.74 $ 13.91 $ 2.84 $ 6.67 (1) Consolidated unit rates exclude sales volumes and expenses attributable to
equity method investments.
(2) US production expense includes charges from our midstream operations that
are eliminated on a consolidated basis.
(3) Lease operating expense includes oil and gas operating costs (labor, fuel,
repairs, replacements, saltwater disposal and other related lifting costs)
and workover expense.
Production expense for first quarter 2020 decreased as compared with 2019, primarily due to the following: • decrease in US lease operating expense (LOE) due to reductions in leased
assets and lower labor and workover costs; and
• decrease in US production and ad valorem taxes due to lower commodity
price realizations and assessed taxes in
partially offset by: • increase in West Africa LOE due to an increase in sales volumes; and
• increase in LOE and gathering, transportation and processing expenses in
Eastern Mediterranean due to Leviathan commencing production in late
December 2019 .
The unit rate per BOE decreased for first quarter 2020 as compared with 2019
primarily due to the decrease in production expenses and an increase in volumes
from US onshore, Eastern Mediterranean and West Africa .
Exploration Expense See Item 1. Financial Statements - Note 4. Impairments.
Depreciation, Depletion and Amortization (DD&A) Expense DD&A expense was as
follows:
Eastern
(millions, except unit rate) Total
$ 462 $ 419 $ 19 $ 24 $ - Unit Rate per BOE (1)$ 13.22 $ 17.09 $ 3.19$ 5.34 $ - Three Months EndedMarch 31, 2019 DD&A Expense$ 475 $ 439 $ 16 $ 20 $ - Unit Rate per BOE (1)$ 15.89 $ 19.27 $ 4.55$ 5.56 $ -
(1) Consolidated unit rates exclude sales volumes and expenses attributable to
equity method investments.
DD&A expense for first quarter 2020 decreased as compared with 2019, primarily due to the following: • decreases in theDJ Basin primarily due to year-end 2019 reserves additions and capital efficiencies; and
• decreases in
proved properties.
partially offset by: • increases in Eastern Mediterranean as the Leviathan field commenced
production in late
• increases in
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The unit rate per BOE for first quarter 2020 decreased as compared with 2019, primarily due to the decrease in total DD&A expense and an increase in volumes from US onshore, Eastern Mediterranean andWest Africa . Asset Impairments See Item 1. Financial Statements - Note 4. Impairments. (Gain)/Loss on Commodity Derivative Instruments We incurred a gain on commodity derivative instruments for first quarter 2020 as compared with a loss on commodity derivative instruments in 2019. For first quarter 2020, gain on commodity derivative instruments included: • net cash receipts of$208 million ; and • net non-cash increase of$181 million in the fair value of
our net
commodity derivative asset, primarily driven by changes in the forward
commodity price curves for crude oil.
For first quarter 2019, loss on commodity derivative instruments included:
• net cash settlement receipts of
• net non-cash decrease of
commodity derivative liability, primarily driven by changes in the forward
commodity price curves for both crude oil and natural gas.
See Item 1. Financial Statements - Note 11. Derivative Instruments and Hedging Activities.
RESULTS OF OPERATIONS - MIDSTREAM
The results of operations outlined below are significantly impacted by commodity
prices. Since the impacts of the current economic environment are not reflected
within the results for the entire quarter, results in first quarter 2020 may not
be indicative of future results in the near-term.
First Quarter 2020 Significant Midstream Highlights:
• exercise of Black Diamond's option to acquire a 20% ownership interest in
Saddlehorn, which owns a crude oil pipeline, for $87 million , net, to
Noble Midstream Partners ;
• commissioning of the EPIC crude oil pipeline;
• total revenues of$218 million , as compared with$165 million for first quarter 2019; and
• recorded goodwill impairment of
The following is a summarized statement of operations for our Midstream segment:
Three Months Ended March 31,
(millions) 2020 2019
Midstream Services Revenues - Third Party $ 25 $ 24
Sales ofPurchased Oil and Gas 83
33
(Loss) Income from Equity Method Investments (5 ) 2 Intersegment Revenues 115 106 Total Revenues 218 165 Operating Costs and Expenses 33 36 Depreciation, Depletion and Amortization 26 25 Cost of Purchased Oil and Gas 80 31 Goodwill Impairment 110 - Total Expense 249 92 (Loss) Income Before Income Taxes $ (31 ) $
73
Midstream Services Revenues - Third Party The amount of revenue generated by the Midstream segment depends primarily on the volumes of crude oil, natural gas and water for which services are provided to dedicated acreage for our E&P business and to third-party customers. These volumes are affected by the level of drilling and completion activity and by changes in the supply of, and demand for, crude oil, NGLs and natural gas in the markets served directly or indirectly by our midstream assets. We anticipate these volumes will decrease in the near-term due to impacts of COVID-19 and the current commodity price environment. Sales and Costs of Purchased Oil and Gas Sales and costs of purchased oil for first quarter 2020 increased as compared with 2019 due to an increase in throughput volumes driven by additional well connections. (Loss) Income from Equity Method Investments (Loss) Income from equity method investments decreased for first quarter 2020 as compared with 2019, primarily due to operating losses incurred byNoble Midstream Partners' equity method investments that have yet to fully commence commercial operations, partially offset by earnings for Saddlehorn Pipeline and Advantage Pipeline. 29
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Table of Contents Goodwill Impairment See Item 1. Financial Statements - Note 4. Impairments. RESULTS OF OPERATIONS - CORPORATE Expenses related to debt, such as interest and other debt-related costs, headquarters depreciation, corporate general and administrative (G&A) expenses, exit costs and certain costs associated with mitigating the effects of our retainedMarcellus Shale transportation agreements, are recorded at the Corporate level. The impacts of the current environment, including changes to our workforce and borrowings under our Revolving Credit Facility in lateMarch 2020 , were not yet fully reflected within G&A and interest expense, respectively, in first quarter 2020. As such, results in first quarter 2020 may not be indicative of future results. Transportation Exit Cost Revenues and expenses associated with retainedMarcellus Shale transportation contracts were as follows: Three Months Ended March 31, (millions) 2020 2019 Sales of Purchased Gas (1) $ 17$ 27 Cost of Purchased Gas (1) 31 42 Firm Transportation Exit Cost (2) -
92
(1) Relates to third party mitigation activities we engage in to utilize a
portion of our
gas includes utilized and unutilized transportation expense. Decreases in
sales and cost of purchased gas related to lower natural gas prices in first
quarter 2020 as compared to first quarter 2019.
(2) Represents exit costs related to future commitments to a third party
resulting from a permanent capacity assignment.
General and Administrative Expense G&A expense was as follows:
Three Months Ended March 31,
(millions, except unit rate) 2020 2019
G&A Expense $ 85 $ 102
Unit Rate per BOE (1) $ 2.43 $ 3.41 (1) Consolidated unit rates exclude sales volumes and expenses attributable to
equity method investments.
Due to our focus on overall G&A cost reductions, expense for first quarter 2020 decreased approximately 17% as compared with first quarter 2019. Decreases were primarily due to reduced employee, office and travel expenses. The unit rate per BOE for first quarter 2020 also decreased as compared with 2019 due to the reduction in G&A expense and the increase in the total sales volumes. Other Operating Expense, Net Other operating expense, net includes$40 million of impairment expense for a finance lease right-of-use asset relating to a corporate real estate lease. See Item 1. Financial Statements - Note 4. Impairments. Interest Expense and Capitalized Interest Interest expense and capitalized interest were as follows: Three Months Ended March 31, (millions, except unit rate) 2020 2019 Interest Expense, Gross $ 91 $ 87 Capitalized Interest (10 ) (21 ) Interest Expense, Net $ 81 $ 66 Unit Rate per BOE (1)$ 2.32 $ 2.21
(1) Consolidated unit rates exclude sales volumes and expenses attributable to
equity method investments.
Interest expense, gross, for first quarter 2020 remained relatively flat as compared with 2019. See Item 1. Financial Statements - Note 8. Debt. Capitalized interest for first quarter 2020 decreased as compared with 2019, primarily due to lower work in progress amounts with Leviathan commencing production lateDecember 2019 , partially offset by additions to equity method investments engaged in construction activities. The unit rate per BOE for first quarter 2020 increased as compared with 2019, primarily due to the increase in net interest expense partially offset by the increase in total sales volumes. 30
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LIQUIDITY AND CAPITAL RESOURCES Impact of Commodity Price Environment and COVID-19 Recent events, as further described in Management's Discussion & Analysis - Executive Overview and Operating Outlook, have significantly impacted our financing strategy. The magnitude of the recent drop in commodity prices, combined with the global uncertainty surrounding the COVID-19 pandemic, is unprecedented. Our capital structure and financing strategy are designed to provide sufficient liquidity to fund development of our discovered hydrocarbons through commodity price cycles. In the current commodity price environment, the duration of which could be prolonged, we have delayed certain development projects and exploration activities in order to preserve our financial liquidity. Additionally, we have adjusted our shareholder return initiatives, including our dividend, when determining how to best allocate our capital and cash resources to maintain maximum liquidity. The reduction of our quarterly dividend to$0.02 perNoble Energy common share is expected to preserve approximately$195 million in annualized cash flow. Our liquidity could also be impacted by counterparty credit risk. We closely monitor the credit worthiness of all counterparties with whom we do business. When considered necessary, we obtain letters of credit or other credit enhancements to mitigate risks associated with certain counterparties. Additionally, our liquidity is impacted by the amount of distributions we receive fromNoble Midstream Partners . InMarch 2020 ,Noble Midstream Partners announced a reduction in their quarterly distribution to$0.1875 per unit which will reduce cash received from distributions beginning in second quarter 2020. Our focus on liquidity is allowing us to address current volatility and risk. During first quarter 2020, our primary sources of liquidity were cash flows from operations, cash on hand and borrowings under our Revolving Credit Facility, which does not mature until 2023. Cash flows from operations include$208 million of cash received in the settlement of derivative instruments. We utilize derivative instruments to protect liquidity, provide risk mitigation and support cash flow predictability. DuringMarch 2020 , the instability in the global economy disrupted the commercial paper market. Therefore, instead of borrowing under our commercial paper program, inMarch 2020 , we borrowed$1.0 billion , net, on our$4.0 billion Revolving Credit Facility, leaving$3.0 billion of available borrowing capacity. The first quarter 2020 borrowing on our$4.0 billion Revolving Credit Facility was used to increase our cash on hand balance in an abundance of caution to mitigate potential future issues in the global financial system. As ofMarch 31, 2020 , we are in compliance with the financial covenant contained in our Revolving Credit Facility which provides that our total debt to capitalization ratio, as defined in the Revolving Credit Facility agreement, may not exceed 65% at any time. As ofMarch 31, 2020 , our total debt to capitalization ratio was below 40%. A few of our commercial agreements contain the obligation to provide assurances in the event certain financial triggers are met. Potential collateral requirements could be triggered by a downgrade of our credit rating to non-investment grade or other financial triggers. We anticipate meeting any collateral obligations through bi-lateral letters of credit facilities and/or our Revolving Credit Facility. We have sufficient capacity under such facilities to meet potential collateral obligations. Posting of collateral through the use of our bilateral facilities and other instruments would not impact our available borrowing capacity under our Revolving Credit Facility, while issuance of letters of credit under our Revolving Credit Facility would reduce available borrowing capacity by an equivalent amount. Our credit rating, as well as the credit ratings of our competitors in the oil and gas industry, are periodically reviewed by the various credit rating agencies. Credit rating downgrades, particularly below investment grade, or other negative rating actions could restrict our access to the commercial paper market, increase the interest rate and fees we pay on our$4.0 billion Revolving Credit Facility, and increase the costs of future borrowings. We will continue to consider strategic farm-out arrangements of our working interests for reimbursement of our capital spending. Additionally, we consider repatriations of foreign cash to increase our financial flexibility and fund our capital investment program. We believe these factors position us to have sufficient liquidity to address the current downturn in commodity prices. However, we are unable to predict how long commodity demand and prices will continue to be depressed, nor are we able to predict whether prices will continue to decline. Our financing strategy in future periods could include further reductions to capital spending, additional borrowings under our$4.0 billion Revolving Credit Facility, changes to our dividend, proceeds from asset divestitures, or issuance of new debt or equity securities and/or extension of debt maturities, among others. In addition, we may from time to time seek to retire or purchase our outstanding senior notes through cash purchases in the open market, privately negotiated transactions or otherwise. Such repurchases, if any, will depend on prevailing market conditions, our liquidity requirements, contractual requirements and other factors. 31
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Available Liquidity The following table summarizes our cash, debt balances and available liquidity:
March 31, 2020 December 31, 2019
Noble Energy Noble Energy
Excluding Excluding
(millions, except Noble Midstream Noble Midstream Noble Midstream Noble Midstream
percentages) Partners Partners Total Partners Partners Total
Cash and Cash
Equivalents $ 1,379 $ 18 $ 1,397 $ 471 $ 13 $ 484
Amounts Available for
Borrowing (1) 3,000 - 3,000 4,000 - 4,000
Total Liquidity (1) $ 4,379 $ 18 $ 4,397 $ 4,471 $ 13 $ 4,484
Total Debt (2) $ 7,087 $ 1,650 $ 8,737 $ 6,089 $ 1,495 $ 7,584
Noble Energy Share of
Equity $ 4,397 $ 8,410
Ratio of Debt-to-Book
Capital (3) 67 % 47 %
(1) Excludes
Services Revolving Credit Facility, which is not available to
for general corporate purposes.
(2) Excludes unamortized debt discount/premium and debt issuance costs. See
Item 1. Financial Statements - Note 8. Debt.
(3) We define our ratio of debt-to-book capital as total debt divided by the sum
of total debt plus
determining compliance with the financial covenant in our
Revolving Credit Facility. As of
the financial covenant contained in our Revolving Credit Facility which
provides that our total debt to capitalization ratio, as defined in the
Revolving Credit Facility agreement, may not exceed 65% at any time. As of
Revolving Credit Facility agreement, was below 40%. See Impact of Commodity
Price Environment and COVID-19, above.
Cash and Cash Equivalents We had approximately$1.4 billion in cash and cash equivalents atMarch 31, 2020 , primarily denominated in US dollars and invested in money market funds and short-term deposits with major financial institutions. Approximately$330 million of this cash is attributable to our foreign subsidiaries. We do not expect to incur significant US income tax expense with respect to future repatriation of foreign cash. Revolving Credit Facilities Noble Energy's$4.0 billion Revolving Credit Facility and the Noble Midstream Services Revolving Credit Facility of nearly$1.2 billion both mature in 2023. These committed facilities are used to fund capital investment programs, acquisitions and amounts for working capital purposes. AtMarch 31, 2020 ,$1.0 billion was outstanding under the Noble Energy Revolving Credit Facility, leaving$3.0 billion available for borrowing. AtMarch 31, 2020 ,$750 million was outstanding under the Noble Midstream Services Revolving Credit Facility, leaving$400 million available for borrowing. See Item 1. Financial Statements - Note 8. Debt. Cash Flows The following table summarizes our total cash provided by (used in) operating, investing and financing activities: Three Months Ended March 31, (millions) 2020 2019 Operating Activities$ 482 $ 528 Investing Activities (696 ) (911 ) Financing Activities 1,127 194 Increase (Decrease) in Cash, Cash Equivalents and Restricted Cash$ 913 $ (189 ) Operating Activities Cash provided by operating activities for first quarter 2020 decreased$46 million as compared with 2019. The decrease was primarily driven by a decrease in revenues driven by lower commodity prices, partially offset by cash received for settlements of commodity derivatives of$208 million , as compared with cash receipts of$14 million in the prior year. Working capital was impacted by a decrease in accounts receivables due to lower average realized prices. Investing Activities Cash used in investing activities decreased approximately$215 million for first quarter 2020 as compared with 2019, primarily due to decreases of$284 million in capital spending for property, plant and equipment due to reduced 32
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capital spend for Leviathan, which came online lateDecember 2019 , and reduced spending in our US onshore business. During the quarter, cash used for additions to equity method investments was$45 million lower than in first quarter 2020. These decreases were partially offset by reductions in proceeds from divestitures, as we had$17 million of proceeds in first quarter 2020 compared to$123 million in the prior year. Financing Activities Our financing activities during first quarter 2020 primarily included net borrowings of$1.0 billion under our$4.0 billion Revolving Credit Facility and net borrowings of$155 million on the Noble Midstream Services Revolving Credit Facility. Additionally, we received contributions from noncontrolling interest owners of$78 million , which primarily related to external funding received forNoble Midstream Partners' investment in Saddlehorn. During first quarter 2020, we paid$58 million of cash dividends toNoble Energy shareholders. Our financing activities during first quarter 2019 included net borrowings of$170 million on the Noble Midstream Services Revolving Credit Facility and the receipt of$99 million of preferred equity, net of offering costs. In addition, we paid$53 million of cash dividends toNoble Energy shareholders. See Item 1. Financial Statements - Consolidated Statements of Cash Flows . Capital Expenditure Activities Our capital expenditures (on an accrual basis) were as follows: Three Months EndedMarch 31 , (millions) 2020
2019
Unproved Property Acquisition (1) $ -$ 35 Proved Property Acquisition (1) 6 4 Exploration 12 14 Development 340 614 Midstream 43 66 Corporate 7 8 Other (2) 40 10 Total $ 448$ 751 Additions to Equity Method Investments Saddlehorn Pipeline (3) $ 87 $ - EPIC Y-Grade 14 123 EPIC Crude Holdings 33 104 Delaware Crossing 17 38 Other 2 6 Total Additions to Equity Method Investments (4) $
153
Increase in Finance Lease Obligations $ 8$ 2 (1) Costs relate to US onshore leasehold activity. (2) 2020 amount includes$34 million of linefill purchased for start-up of the
EPIC crude oil and
within our US onshore segment.
(3) Represents amount contributed by Noble Midstream Partners and excludes $73
million of externally funded capital.
(4) Includes an immaterial amount of capitalized interest. See Item 1.
Financial Statements - Note 5. Acquisitions, Divestitures and Equity
Method Investments.
Development costs decreased compared to 2019 primarily due to decreased capital
spend for the Leviathan project, which commenced production in late December
2019 , as well as our continued focus on US onshore capital efficiencies.
Development costs included approximately $319 million for US onshore, prior to
intersegment eliminations, $29 million for Eastern Mediterranean and $16 million
for West Africa .
Capital spending by our Midstream segment in first quarter 2020 decreased as
compared with 2019, primarily due to reduced spend on gathering activities.
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Dividends
InApril 2020 , our Board of Directors declared a quarterly cash dividend of$0.02 perNoble Energy common share, which will be paid onMay 26, 2020 to shareholders of record onMay 11, 2020 . The amount of future dividends will be determined on a quarterly basis at the discretion of our Board of Directors and will depend on earnings, financial condition, capital requirements and other factors. Item 3. Quantitative and Qualitative Disclosures About Market Risk Commodity Price Risk We are exposed to market risk in the normal course of business operations and the volatility of commodity prices continues to impact the oil and gas industry. For discussion of current and anticipated impacts of the current commodity price environment and COVID-19, see Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations - Executive Overview & Operating Outlook . AtMarch 31, 2020 , our open commodity derivative instruments were in a net asset position with a fair value of$159 million . Based on theMarch 31, 2020 published commodity futures price curves for the underlying commodities, a hypothetical price increase of 10% per Bbl for both crude oil and NGLs and 10% per MMBtu for natural gas would decrease the fair value of our net commodity derivative asset by approximately$64 million . Even with certain hedging arrangements in place to mitigate the risk of commodity price volatility, our 2020 revenues and results of operations will be adversely affected if commodity prices continue to decline. See Item 1. Financial Statements - Note 11. Derivative Instruments and Hedging Activities. Interest Rate Risk Changes in interest rates affect the amount of interest we pay on certain of our borrowings. Outstanding borrowings under the Noble Revolving Credit Facility, Noble Midstream Services Revolving Credit Facility, andNoble Midstream Services Term Loan Credit Facilities, which as ofMarch 31, 2020 total nearly$2.7 billion and have a weighted average interest rate of 1.98%, are subject to variable interest rates which expose us to the risk of earnings or cash flow loss due to potential increases in market interest rates. While we currently have no interest rate derivative instruments as ofMarch 31, 2020 , we may invest in such instruments in the future in order to mitigate interest rate risk. Disclosure Regarding Forward-Looking Statements This quarterly report on Form 10-Q contains forward-looking statements within the meaning of the federal securities laws. Forward-looking statements give our current expectations or forecasts of future events. These forward-looking statements include, among others, the following: • our growth strategies;
• our future results of operations;
• our liquidity and ability to finance our exploration and development
activities;
• our ability to successfully and economically explore for and develop crude
oil, NGL and natural gas resources;
• anticipated trends in our business;
• market conditions in the oil and gas industry;
• the impact of governmental regulation, including US federal, state, local,
and foreign host government tax regulations, fiscal policies and terms, as
well as that involving the protection of the environment or marketing of
production and other regulations;
• our ability to make and integrate acquisitions or execute divestitures;
• access to resources; and
• the potential adverse impact of the COVID-19 pandemic on our business,
financial condition and results of operations, and the markets and
communities in which we operate.
Any such projections or statements reflectNoble Energy's views (as of the date such projections were published or such statements were made) about future events and financial performance, and we undertake no obligation to publicly update or revise any forward-looking statements to reflect events or circumstances that may arise after the date of this report. No assurances can be given that such events or performance will occur as projected, and actual results may differ materially from those projected. Important factors that could cause the actual results to differ materially from those projected include, without limitation, the volatility in commodity prices for crude oil and natural gas, the presence or recoverability of estimated reserves, the ability to replace reserves, environmental risks, drilling and operating risks, exploration and development risks, information technology and security risks, competition, government regulation or other action, the ability of management to execute its plans to meet its goals and other risks inherent inNoble Energy's business that are detailed in itsSecurities and Exchange Commission filings. Forward-looking statements are typically identified by use of terms such as "may," "will," "expect," "believe," "anticipate," "estimate," "intend," and similar words, although some forward-looking statements may be expressed differently. These 34
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forward-looking statements are made based upon our current plans, expectations, estimates, assumptions and beliefs concerning future events impacting us and therefore involve a number of risks and uncertainties. We caution that forward-looking statements are not guarantees and that actual results could differ materially from those expressed or implied in the forward-looking statements. You should consider carefully the statements under Item 1A. Risk Factors included in our Annual Report on Form 10-K for the year endedDecember 31, 2019 and in this quarterly report on Form 10-Q for the quarter endedMarch 31, 2020 , which describe factors that could cause our actual results to differ from those set forth in the forward-looking statements. Our Annual Report on Form 10-K for the year endedDecember 31, 2019 is available on our website at www.nblenergy.com. Item 4. Controls and Procedures Based on the evaluation of our disclosure controls and procedures by our principal executive officer and our principal financial officer, as of the end of the period covered by this quarterly report, each of them has concluded that our disclosure controls and procedures (as defined in Rule 13a-15(e) and Rule 15d-15(e) under the Securities Exchange Act of 1934, as amended (Exchange Act)), are effective. There were no changes in internal control over financial reporting (as defined in Exchange Act Rule 13a-15(f) and 15d-15(f)) that occurred during the quarter covered by this report that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting. These forms can also be obtained from theSEC by calling 1-800-SEC -0330. Alternatively, you may access these reports at theSEC's website at www.sec.gov.
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