EX-99.1 2 h50950exv99w1.htm PRESS RELEASE exv99w1
 

Exhibit 99.1
     
(LOGO)
  NEWS RELEASE
100 Glenborough Drive
  Contact: Chris Tong: 281-872-3122
Suite 100
  Investor_Relations@nobleenergyinc.com
Houston, TX 77067
    
NOBLE ENERGY ANNOUNCES THIRD QUARTER 2007 RESULTS
HOUSTON (October 31, 2007) — Noble Energy, Inc. (NYSE: NBL) today reported third quarter 2007 net income of $222.7 million, or $1.30 per basic share ($1.28 per share diluted). This compares to adjusted third quarter 2006 net income (non-GAAP measure, see Note 1 below) of $230.0 million or $1.31 per basic share ($1.27 per share diluted) after adjusting for the gain on our Gulf of Mexico Shelf Asset Sale. Reported third quarter 2006 net income was $318.1 million or $1.80 per basic share ($1.75 per share diluted). Discretionary cash flow (non-GAAP measure, see Schedule 3 - Discretionary Cash Flow and Reconciliation to Operating Cash Flow) for the third quarter 2007 was $556.1 million, as compared to $533.5 million for the third quarter 2006. Net cash provided by operating activities during the third quarter 2007 was $547.7 million.
Key accomplishments for the third quarter include:
  •   Daily equivalent production volume increase of 14 percent versus third quarter 2006
 
  •   Successful appraisal well of the Belinda prospect in Block O, offshore Equatorial Guinea
 
  •   Oil discovery in the Benita appraisal well in Block I, offshore Equatorial Guinea
 
  •   Exploration success at the YoYo prospect in the PH-77 license, offshore Cameroon
 
  •   Net sales of 155 million cubic feet per day (MMcfpd) of natural gas to the liquefied natural gas (LNG) plant in Equatorial Guinea
 
  •   Continued ramp-up of the Dumbarton field in the North Sea with net production for the quarter averaging approximately 13,400 barrels of oil per day (Bopd)
 
  •   Record quarterly net natural gas production in Israel of 131 MMcfpd
Third quarter 2007 results included deferred compensation expense of $8.4 million pretax ($5.3 million after tax). Excluding the effects of deferred compensation, third quarter adjusted net income (a non-GAAP measure, see Note 1 below) would have been $228.0 million, or $1.33 per basic share.
Third quarter 2007 production was 214,486 barrels of oil equivalent per day (Boepd) compared to 187,664 Boepd for the same period last year. Sales volumes during the third quarter 2007 were 213,309 Boepd. Capital expenditures for the quarter totaled $449.1 million.
Charles D. Davidson, the company’s Chairman, President and CEO, said, “Noble Energy has continued to execute its development and exploration programs resulting in another strong quarter both financially and operationally. Our exploration program experienced significant success during the quarter with announcements on the positive appraisal at Belinda and the exciting discovery of an oil column at Benita, both of which are in Equatorial Guinea. In addition, we announced a new gas condensate discovery in Cameroon. We are continuing with our West Africa exploration program now knowing that the three discoveries to-date provide a sound foundation for future growth in the region. In the U.S., we were pleased to be the apparent high bidder on several deepwater blocks at the latest Gulf of Mexico lease sale. Also in the Gulf of Mexico, our deepwater development projects made good progress and remain on schedule for delivering important new production in 2008.”
NORTH AMERICA
North America operations reported pre-tax operating income for the third quarter 2007 of $181.3 million compared to $435.4 million for the third quarter 2006, which included a pretax gain on sale of the Gulf of Mexico Shelf assets of approximately $203.5 million.

 

 

North American production volumes were 107,365 Boepd in the third quarter 2007 compared to 119,872 Boepd for the same quarter last year. Liquids and natural gas production volumes were 39,992 Bopd and 404.2 MMcfpd, respectively, for the current quarter compared to 48,193 Bopd and 430.1 MMcfpd for the third quarter of 2006. As compared to the third quarter 2006, a decrease of approximately 4,000 Boepd was due to the sale of our Gulf of Mexico Shelf properties in the third quarter 2006, and a decrease of approximately 8,600 Boepd in the deepwater Gulf of Mexico resulted from a combination of well performance, workovers, storm impacts, and third-party facility restrictions. Decreases of approximately 2,500 Boepd related to natural decline in onshore Gulf Coast properties and 1,350 Boepd from our Main Pass properties were fully offset by an increase of approximately 4,050 Boepd in our remaining North America properties. Third quarter 2007 production was impacted 1,000 Boepd due to third-party processing downtime in the Rocky Mountains.
North America operations benefited from higher realized natural gas prices during the quarter. The average realized natural gas price was $6.77 per thousand cubic feet (Mcf) for the third quarter 2007 compared to $6.41 per Mcf last year. Realized liquids prices decreased slightly to $55.85 per barrel (Bbl) compared to $56.84 per Bbl during the third quarter of 2006. The following table provides a detailed breakdown of the major components impacting our realized natural gas and crude oil prices for the quarter.
                     
    $Per Mcf       $Per Bbl
Natural Gas Market Price
    3.93     Crude Oil Market Price     71.49  
Cash Flow Hedges Settled
    0.15     Cash Flow Hedges Settled     (15.64 )
Gulf of Mexico OCL Addback*
    1.14         —
NGL Processing Uplift
    1.55         —
 
                   
Realized Natural Gas Price
  $ 6.77     Realized Crude Oil Price   $ 55.85  
 
*   Natural gas prices included a third quarter benefit that was attributable to previously recognized losses for hedge contracts that were re-designated concurrent with the 2006 Gulf of Mexico Shelf Asset Sale (see Schedule 8 — Impact of Loss Associated with Gulf of Mexico Shelf Asset Sale).
INTERNATIONAL OPERATIONS
International operations reported operating income for the third quarter 2007 of $231.3 million compared to $158.9 million in the third quarter last year. Total third quarter 2007 production volumes were 107,121 Boepd compared to 67,792 Boepd for the same quarter last year, an increase of 58 percent. Liquids production volumes were 45,628 barrels per day (Bpd) compared to 36,776 Bpd for the third quarter of 2006. Natural gas production was 369.0 MMcfpd compared to 186.1 MMcfpd in the same quarter last year. Third quarter 2007 international sales were 105,944 Boepd, compared to 63,714 Boepd for the third quarter of 2006.
West Africa
Operating income for the third quarter increased to $112.3 million this year compared to $107.2 million last year. Total sales volumes in Equatorial Guinea (exclusive of methanol operations) were 55,813 Boepd, an increase of 90 percent compared to 29,331 Boepd during the third quarter of 2006. Higher sales volumes resulted primarily from increased natural gas sales to the LNG plant of approximately 155 MMcfpd in the quarter.
Alba field condensate and natural gas sales (exclusive of Alba Plant and methanol operations) accounted for $66.9 million, or 60 percent, of the operating income from West Africa. Third quarter 2007 condensate and natural gas sales volumes averaged 48,341 Boepd compared to 20,399 Boepd last year. The average realized price for condensate during the third quarter was $73.25 per Bbl compared to $66.93 per Bbl for the same period last year.

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Alba Plant reported $30.7 million of income, net to Noble Energy’s interest, compared to $30.5 million during the third quarter 2006. Net Alba Plant LPG and condensate sales volumes totaled 7,472 Bpd compared to 8,932 Bpd for the same period last year. The average Alba Plant realized price during the third quarter was $57.24 per Bbl compared to $48.88 per Bbl for the same period last year.
Income from methanol operations increased to $14.6 million, net to Noble Energy’s interest, compared to $3.3 million during the third quarter 2006. The Company’s share of methanol sales volumes was 43.5 million gallons (Gal) compared to last year’s 18.8 million Gal, which was impacted by compressor repairs following a turnaround and expansion project. Third quarter realized methanol prices were 80 cents per Gal compared to 83 cents per Gal for the third quarter 2006.
North Sea
In the North Sea, operating income for the third quarter 2007 was $77.5 million compared to $15.7 million for the same period last year. The increase was primarily due to increased crude sales from the Dumbarton field in the UK, which commenced production in late January 2007. In the third quarter 2007, Dumbarton production averaged approximately 13,400 Bopd.
Israel
Third quarter 2007 operating income was $28.0 million compared to $24.8 million for the same period in 2006. Natural gas production averaged a record 131.1 MMcfpd for the third quarter 2007 compared to 116.7 MMcfpd the previous year. Increased seasonal demand for natural gas contributed to the production growth. Sales prices averaged $2.95 per Mcf for the third quarter 2007 as compared to $2.84 per Mcf for the prior year period.
Other International
Argentina, China, Ecuador and Suriname combined recorded third quarter 2007 operating income of $13.6 million compared to $11.2 million for third quarter last year. In China, third quarter operating income was $12.1 million. Net oil production in China averaged 3,780 Bopd for the third quarter. In Argentina, operating income was $2.9 million, and net production averaged 2,850 Bopd. The Machala power plant reported operating income of $2.9 million. For the quarter, 223,663 megawatt-hours were sold at an average price of 7.4 cents per kilowatt-hour.
Note 1 — Adjusted net income should not be considered a substitute for net income as reported in accordance with GAAP and is provided for comparison purposes to prior periods and to earnings forecasts prepared by analysts and other third parties. Management believes and certain investors may find that adjusted net income is beneficial in evaluating the Company’s financial performance.
OUTLOOK
Fourth quarter production is expected to range from 193,000 to 197,000 Boepd, which represents an increase of six to eight percent above fourth quarter 2006. The above guidance assumes net natural gas sales to the LNG plant of 50 MMcfpd in the fourth quarter 2007 versus actual sales of 155 MMcfpd in the third quarter, with the decrease a result of fourth quarter downtime for third-party plant repairs. Compared to the third quarter 2007, other international production is expected to be down 2,000 to 5,000 Boepd mostly due to the seasonal decline in natural gas demand in Israel. Production in North America is expected to increase 1,000 to 2,000 Boepd from the third quarter.
For the fourth quarter 2007, costs and expenses are expected to range as follows:
  •   Exploration expense is expected to range from $45 million to $60 million,
 
  •   General and administrative expenses is expected to range from $52 million to $56 million,
 
  •   Oil and gas operations expense is expected to range from $78 million to $82 million,
 
  •   Depreciation, depletion and amortization is expected to range from $185 million to $190 million.

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For the year 2007, an effective tax rate is expected on the low end of the original estimated range of 30 to 36 percent. Of the total book taxes planned for 2007, deferred taxes are expected to be between 60 and 65 percent as compared to the previous estimate of 55 to 60 percent.
Capital expenditures for the year are expected to total approximately $1.7 billion.
Noble Energy is one of the nation’s leading independent energy companies and operates throughout major basins in the United States including Colorado’s Wattenberg Field, the Mid-continent region of western Oklahoma and the Texas Panhandle, the San Juan Basin in New Mexico, the Gulf Coast and the deepwater Gulf of Mexico. In addition, Noble Energy operates internationally in Argentina, China, Ecuador, the Mediterranean Sea (Israel), the North Sea (UK, the Netherlands, and Norway), West Africa (Equatorial Guinea and Cameroon) and Suriname. Noble Energy markets natural gas and crude oil through its subsidiary, Noble Energy Marketing, Inc. Visit Noble Energy online at www.nobleenergyinc.com.
This news release may include projections and other “forward-looking statements” within the meaning of the federal securities laws. Any such projections or statements reflect Noble Energy’s current views about future events and financial performance. 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 oil and gas, the presence or recoverability of estimated reserves, the ability to replace reserves, environmental risks, drilling and operating risks, exploration and development risks, competition, government regulation or other action, the ability of management to execute its plans to meet its goals and other risks inherent in Noble Energy’s business that are detailed in its Securities and Exchange Commission filings. The United States Securities and Exchange Commission permits oil and gas companies, in their filings with the SEC, to disclose only proved reserves. We may use certain terms in this press release, such as “resources,” “estimated resource range,” “resource potential” and “potential resources,” that the SEC’s guidelines strictly prohibit us from including in filings with the SEC. Investors are urged to consider closely the disclosures and risk factors in our Forms 10-K and 10-Q, File No. 1-07964, available from Noble Energy’s offices or website, www.nobleenergyinc.com. These forms can also be obtained from the SEC by calling 1-800-SEC-0330.
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Schedule 1
Noble Energy, Inc. and Subsidiaries
Consolidated Statements of Operations
(in thousands, except per share amounts)
(Unaudited)
                                 
    Three Months Ended     Nine Months Ended  
    September 30,     September 30,  
    2007     2006     2007     2006  
     
Revenues
                                
Oil and gas sales
   $ 746,258     $ 683,544     $ 2,140,218     $ 2,044,656  
Income from equity method investees
     45,371       33,810       139,904       108,901  
Other revenues
     22,182       23,965       70,447       72,339  
     
Total Revenues
     813,811       741,319       2,350,569       2,225,896  
     
 
                                
Costs and Expenses
                                
Lease operating costs
     81,767       76,928       243,205       238,307  
Production and ad valorem taxes
     26,752       30,697       80,667       83,663  
Transportation costs
     13,260       4,531       40,346       18,463  
Exploration costs
     45,794       30,904       144,796       92,327  
Depreciation, depletion and amortization
     195,266       165,765       540,453       458,878  
General and administrative
     49,518       40,657       142,368       113,716  
Accretion of discount on asset retirement obligations
     1,909       2,426       6,337       8,405  
Interest, net of amount capitalized
     29,247       28,556       87,105       95,642  
Loss (gain) on derivative instruments
     1,514       (6,315 )     (557 )     389,723  
Loss (gain) on sale of assets
     1,684       (200,676 )     (4,381 )     (211,691 )
Loss on involuntary conversion
     —       —       51,406       —  
Other expense, net
     23,823       22,880       78,594       89,008  
     
Total Costs and Expenses
     470,534       196,353       1,410,339       1,376,441  
     
 
                                
Income Before Taxes
     343,277       544,966       940,230       849,455  
Income Tax Provision
     120,602       226,902       296,638       336,009  
     
Net Income
   $ 222,675     $ 318,064     $ 643,592     $ 513,446  
     
 
                                
Earnings Per Share
                                
Basic
   $ 1.30     $ 1.80     $ 3.76     $ 2.91  
Diluted
   $ 1.28     $ 1.75     $ 3.72     $ 2.85  
 
                                
Weighted average number of shares outstanding
                                
Basic
     171,123       176,218       170,953       176,505  
Diluted
     173,350       181,077       173,156       180,158  

 

 

Schedule 2
Noble Energy, Inc. and Subsidiaries
Consolidated Balance Sheets
(in thousands, except share amounts)
                 
    (Unaudited)        
    September 30,     December 31,  
    2007     2006  
     
ASSETS
Current Assets
                
Cash and cash equivalents
   $ 450,773     $ 153,408  
Accounts receivable — trade, net
     555,850       586,882  
Deferred income taxes
     64,337       99,835  
Probable insurance claims
     12,193       101,233  
Other current assets
     114,857       127,188  
     
Total current assets
     1,198,010       1,068,546  
Property, plant and equipment
                
Oil and gas properties (successful efforts method of accounting)
     9,924,532       8,867,639  
Other property, plant and equipment
     93,475       79,646  
     
 
     10,018,007       8,947,285  
Accumulated depreciation, depletion and amortization
     (2,292,108 )     (1,776,528 )
     
Total property, plant and equipment, net
     7,725,899       7,170,757  
Other noncurrent assets
     561,270       568,032  
Goodwill
     766,249       781,290  
     
Total Assets
   $ 10,251,428     $ 9,588,625  
     
 
                
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current Liabilities
                
Accounts payable — trade
   $ 588,453     $ 518,609  
Derivative instruments
     372,027       254,625  
Income taxes
     54,055       107,136  
Short-term borrowings
     25,000       —  
Asset retirement obligations
     15,081       68,500  
Other current liabilities
     176,579       235,392  
     
Total current liabilities
     1,231,195       1,184,262  
Deferred income taxes
     1,882,518       1,758,452  
Asset retirement obligations
     108,589       127,689  
Derivative instruments
     127,944       328,875  
Other noncurrent liabilities
     341,873       274,720  
Long-term debt
     1,941,018       1,800,810  
     
Total Liabilities
     5,633,137       5,474,808  
     
Commitments and Contingencies
                
 
                
Shareholders’ Equity
                
Preferred stock — par value $1.00; 4,000,000 shares authorized, none issued
     —       —  
Common stock — par value $3.33 1/3; 250,000,000 shares authorized; 190,462,250 and 188,808,087 shares issued, respectively
     634,860       629,360  
Capital in excess of par value
     2,088,891       2,041,048  
Accumulated other comprehensive loss
     (177,023 )     (140,509 )
Treasury stock, at cost:18,580,865 and 16,574,384 shares, respectively
     (612,976 )     (511,443 )
Retained earnings
     2,684,539       2,095,361  
     
Total Shareholders’ Equity
     4,618,291       4,113,817  
     
Total Liabilities and Shareholders’ Equity
   $ 10,251,428     $ 9,588,625  
     

 

 

Schedule 3
Noble Energy, Inc. and Subsidiaries
Discretionary Cash Flow and Reconciliation to Operating Cash Flow
(In Thousands)
(Unaudited)
                                 
    Three Months Ended     Nine Months Ended  
    September 30,     September 30,  
    2007     2006     2007     2006  
     
Net income
   $ 222,675     $ 318,064     $ 643,592     $ 513,446  
Adjustments to reconcile net income to discretionary cash flow:
                                
Depreciation, depletion and amortization — oil and gas production
     195,266       165,765       540,453       458,878  
Depreciation, depletion and amortization — electricity generation
     3,645       3,775       10,558       11,842  
Impairment of operating assets
     3,661       —       3,661       6,359  
Exploration costs
     45,794       30,904       144,796       92,327  
Interest capitalized
     (3,918 )     (1,174 )     (10,219 )     (3,430 )
Income from equity method investments
     (45,371 )     (33,810 )     (139,904 )     (108,901 )
Distributions and dividends from equity method investees
     58,487       39,001       155,431       134,521  
Deferred compensation adjustment
     8,423       933       23,089       15,673  
Deferred income taxes
     88,621       99,650       192,137       146,709  
Accretion of discount on asset retirement obligations
     1,909       2,426       6,337       8,405  
Allowance for doubtful accounts
     3,297       6,949       10,780       10,564  
Stock-based compensation expense
     7,962       2,997       20,040       9,320  
(Gain) loss on derivative instruments [1]
     (40,890 )     (17,461 )     (133,580 )     430,328  
Gain on sale of Gulf of Mexico shelf assets
     —       (88,148 )     —       (88,148 )
Other, net
     6,546       3,600       10,465       5,079  
     
Discretionary Cash Flow [2]
     556,107       533,471       1,477,636       1,642,972  
     
 
                                
Reconciliation to Operating Cash Flows:
                                
Net changes in working capital
     17,102       66,204       (65,661 )     10,194  
Cash exploration costs
     (28,888 )     (16,665 )     (97,027 )     (52,983 )
Capitalized interest
     3,918       1,174       10,219       3,430  
Distributions from equity method investees
     (2,100 )     (39,001 )     (2,100 )     (116,521 )
(Gain) Loss on disposal of assets
     1,684       (112,528 )     (4,381 )     (123,543 )
Other adjustments to reconcile discretionary cash flow to operating cash flows
     (83 )     (26,082 )     1,925       (22,736 )
     
Net Cash Provided by Operating Activities
   $ 547,740     $ 406,573     $ 1,320,611     $ 1,340,813  
     
 
[1]   Includes $42,404 and $133,022 related to hedge contracts that were re-designated at the time of the Gulf of Mexico Shelf Asset Sale and settled during the three and nine months ended September 30, 2007. $10,129 is included in the three and nine months ended September 30, 2006. See Schedule 8 — PreTax Cash Flow Hedges Earnings Impact.
 
[2]   The table above reconciles discretionary cash flow to net cash provided by operating activities. While discretionary cash flow is not a GAAP measure of financial performance, management believes it is a good tool for internal use and the investment community in evaluating the Company’s overall financial performance. Among management, professional research analysts, portfolio managers and investors following the oil and gas industry, discretionary cash flow is broadly used as an indicator of a company’s ability to fund exploration and production activities and meet financial obligations. Discretionary cash flow is also commonly used as a basis to value and compare companies in the oil and gas industry.

 

 

Schedule 4
Noble Energy, Inc.
Income Before Income Taxes
(Dollars in thousands, except realized prices)
(Unaudited)
Three Months Ended 9/30/07
                                                                                                 
                    North             West             North             Other             Corporate        
            Consolidated     America             Africa             Sea     Israel     Int'l     [1]     & Other     [2]  
                     
 
                                                                                                
Revenues
                                                                                                
Oil sales
           $ 449,898     $ 205,477             $ 92,704             $ 118,101     $ —     $ 33,616             $ —          
Gas sales
             296,360       251,872               5,189       [3]       3,673       35,626       —               —          
Equity investee liquids sales
             —       —               39,349               —       —       —               (39,349 )        
Equity investee methanol sales
             —       —               34,744               —       —       —               (34,744 )        
Gathering, marketing and processing
             5,566       —               —               —       —       —               5,566          
Electricity sales
             16,616       —               —               —       —       16,616               —          
Income from equity method investments
             45,371       —               —               —       —       —               45,371          
                     
Total Revenues
             813,811       457,349               171,986               121,774       35,626       50,232               (23,156 )        
 
                                                                                                
Costs and expenses
                                                                                                
Oil and gas operating costs
             77,283       50,007               7,483               10,697       2,615       6,300               181          
Workover and repair expense
             4,484       4,460       [8]       —               —       —       24               —          
Production and ad valorem taxes
             26,752       21,389               —               —       —       5,240               123          
Transportation
             13,260       10,111               —               2,859       —       290               —          
Oil and gas exploration
             45,794       21,274               17,903               2,087       689       1,256               2,585          
Gathering, marketing and processing
             4,100       —               —               —       —       —               4,100          
Equity investee liquids expense
             —       —               8,627               —       —       —               (8,627 )        
Equity investee methanol expense
             —       —               20,095               —       —       —               (20,095 )        
Electricity generation
             13,679       —               —               —       —       13,679               —          
DD&A
             195,266       143,574               8,716               29,741       5,178       5,845               2,212          
Impairment of operating assets
             3,661       3,661               —               —       —       —               —          
General and administrative
             49,518       17,138               906               1,125       6       2,481               27,862          
Accretion expense
             1,909       1,373               25               336       112       63               —          
Interest expense, net
             29,247       —               —               —       —       —               29,247          
Deferred compensation
             8,423       —               —               —       —       —               8,423          
Loss on derivative instruments
             1,514       1,514               —               —       —       —               —          
Loss on involuntary conversion
             —       —               —               —       —       —               —          
(Gain) loss on sale of assets
             1,684       1,945               —               (225 )     (39 )     —               3          
Other expense (income), net
             (6,040 )     (388 )             (4,042 )             (2,382 )     (892 )     1,497               167          
                     
Total Costs and Expenses
             470,534       276,058               59,713               44,238       7,669       36,675               46,181          
 
                                                                                                
                     
Operating Income (Loss)
           $ 343,277     $ 181,291             $ 112,273             $ 77,536     $ 27,957     $ 13,557             $ (69,337 )        
                     
 
                                                                                                
Key Statistics
                                                                                                
Sales Volumes
                                                                                                
                     
Liquids (Bopd)
             76,971       39,992               13,757               16,644       —       6,578               —          
Natural Gas (Mcfpd)
             773,194       404,238               207,501       [3][4]       5,496       131,115       24,844       [7]       —          
Equity Investee Liquids (Bpd)
             7,472       —               7,472       [5]       —       —       —               —          
Equity Investee Methanol (Kgal)
             43,541       —               43,541               —       —       —               —          
                     
 
                                                                                                
Production Volumes
                                                                                                
                     
Liquids (Bopd)
             77,671       39,992               15,327               15,722       —       6,630               —          
Natural Gas (Mcfpd)
             773,194       404,238               207,501               5,496       131,115       24,844               —          
Equity Investee Liquids (Bpd)
             7,949       —               7,949       [6]       —       —       —               —          
                     
Total Production Boepd
     [9]       214,486       107,365               57,860               16,638       21,853       10,771               —          
                     
 
                                                                                                
Average Realized Price
                                                                                                
                     
Liquids
           $ 63.53     $ 55.85             $ 73.25             $ 77.13     $ —     $ 55.55             $ —          
Natural Gas
             4.30       6.77               0.27               7.26       2.95                       —          
Equity Investee Liquids
             57.24       —               57.24               —       —       —               —          
Equity Investee Methanol
             0.80       —               0.80               —       —       —               —          
                     
 
[1]   Other international includes operations in Argentina, China, Ecuador and Suriname.
 
[2]   Corporate and Other includes corporate overhead, intercompany eliminations and marketing.
 
[3]   Natural gas in Equatorial Guinea is under contract for $0.25 per MMBtu through 2026 to a methanol plant, an LPG plant and an LNG plant. The price on an Mcf basis has been adjusted to reflect Btu content. The methanol and LPG plants are owned by affiliated entities accounted for under the equity method of accounting.
 
[4]   Equatorial Guinea natural gas volumes include 154,637 Mcfpd sold to an LNG plant.
 
[5]   Equity Investee LPG volumes include condensate and natural gas liquids of 1,942 Bpd and 5,530 Bpd, respectively. These volumes are included in West Africa production and LPG sales revenue.
 
[6]   Equity Investee LPG volumes include condensate and natural gas liquids of 1,815 Bpd and 6,134 Bpd, respectively.
 
[7]   Ecuador natural gas volumes are included in Other International and Consolidated production, but are not included in natural gas sales revenue for either. Because the gas-to-power project in Ecuador is 100 percent owned by Noble Energy, intercompany natural gas sales are eliminated for accounting purposes.
 
[8]   There was no hurricane related repair expense recorded in the third quarter 2007.
 
[9]   Barrels of oil equivalent for natural gas is calculated at a 6 to 1 ratio.

 

 

 
Schedule 5
Noble Energy, Inc.
Income Before Income Taxes
(Dollars in thousands, except realized prices)
(Unaudited)
Three Months Ended 9/30/06
                                                                                                 
                    North             West             North             Other             Corporate        
            Consolidated     America             Africa             Sea     Israel     Int'l     [1]     & Other     [2]  
                     
 
                                                                                                
Revenues
                                                                                                
Oil sales
           $ 392,699     $ 252,019             $ 84,048             $ 20,869     $ —     $ 35,763             $ —          
Gas sales
             290,845       253,703               1,450       [3]       5,213       30,451       28               —          
Equity investee liquids sales
             —       —               40,164               —       —       —               (40,164 )        
Equity investee methanol sales
             —       —               15,654               —       —       —               (15,654 )        
Gathering, marketing and processing
             7,724       —               —               —       —       —               7,724          
Electricity sales
             16,241       —               —               —       —       16,241               —          
Income from equity method investments
             33,810       —               —               —       —       —               33,810          
                     
Total Revenues
             741,319       505,722               141,316               26,082       30,451       52,032               (14,284 )        
 
                                                                                                
Costs and expenses
                                                                                                
Oil and gas operating costs
             66,431       50,753               6,310               3,355       2,134       3,817               62          
Workover and repair expense
             10,497       10,453       [7]       —               —       —       44               —          
Production and ad valorem taxes
             30,697       22,636               —               —       —       7,942               119          
Transportation
             4,531       3,358               —               952       —       221               —          
Oil and gas exploration
             30,904       23,366               706               1,395       82       2,900               2,455          
Gathering, marketing and processing
             4,204       —               —               —       —       —               4,204          
Equity investee liquids expense
             —       —               9,655               —       —       —               (9,655 )        
Equity investee methanol expense
             —       —               12,352               —       —       —               (12,352 )        
Electricity generation
             17,876       —               —               —       —       17,876               —          
DD&A
             165,765       146,010               5,353               2,603       4,115       5,921               1,763          
Impairment of operating assets
             —       —               —               —       —       —               —          
General and administrative
             40,657       16,013               —               774       19       2,000               21,851          
Accretion expense
             2,426       1,937               26               290       119       54               —          
Interest expense, net
             28,556       —               —               —       —       —               28,556          
Deferred compensation
             933       —               —               —       —       —               933          
Gain on derivative instruments
             (6,315 )     (6,315 )             —               —       —       —               —          
Loss on involuntary conversion
             —       —               —               —       —       —               —          
Gain on sale of assets
             (200,676 )     (200,599 )             —               (74 )     —       —               (3 )        
Other expense (income), net
             (133 )     2,678               (292 )             1,081       (803 )     35               (2,832 )        
                     
Total Costs and Expenses
             196,353       70,290               34,110               10,376       5,666       40,810               35,101          
 
                                                                                                
                     
Operating Income (Loss)
           $ 544,966     $ 435,432             $ 107,206             $ 15,706     $ 24,785     $ 11,222             $ (49,385 )        
                     
 
                                                                                                
Key Statistics
                                                                                                
                     
Sales Volumes
                                                                                                
Liquids (Bopd)
             71,959       48,193               13,649               3,292       —       6,825               —          
Natural Gas (Mcfpd)
             616,170       430,072               40,498       [3]       8,553       116,718       20,329       [6]       —          
Equity Investee Liquids (Bpd)
             8,932       —               8,932       [4]       —       —       —               —          
Equity Investee Methanol (Kgal)
             18,769       —               18,769               —       —       —               —          
                     
 
                                                                                                
Production Volumes
                                                                                                
                     
Liquids (Bopd)
             76,975       48,193               17,324               3,675       —       7,783               —          
Natural Gas (Mcfpd)
             616,170       430,072               40,498               8,553       116,718       20,329               —          
Equity Investee Liquids (Bpd)
             7,994       —               7,994       [5]       —       —       —               —          
                     
Total Production Boepd
     [8]       187,664       119,872               32,068               5,101       19,453       11,171               —          
                     
 
                                                                                                
Average Realized Price
                                                                                                
                     
Liquids
           $ 59.32     $ 56.84             $ 66.93             $ 68.90     $ —     $ 56.96             $ —          
Natural Gas
             5.30       6.41               0.39               6.62       2.84       1.51               —          
Equity Investee Liquids
             48.88       —               48.88               —       —       —               —          
Equity Investee Methanol
             0.83       —               0.83               —       —       —               —          
                     
 
[1]   Other international includes operations in Argentina, China, Ecuador and Suriname.
 
[2]   Corporate and Other includes corporate overhead, intercompany eliminations and marketing.
 
[3]   Natural gas in Equatorial Guinea is under contract for $0.25 per MMBTU through 2026 to a methanol plant and an LPG plant. The price on an Mcf basis has been adjusted to reflect Btu content. The methanol and LPG plants are owned by affiliated entities accounted for under the equity method of accounting.
 
[4]   Equity Investee LPG volumes include condensate and natural gas liquids of 1,975 Bpd and 6,957 Bpd, respectively. These volumes are included in West Africa production and LPG sales revenue.
 
[5]   Equity Investee LPG volumes include condensate and natural gas liquids of 1,811 Bpd and 6,183 Bpd, respectively.
 
[6]   Ecuador natural gas volumes are included in Other International and Consolidated production, but are not included in natural gas sales revenue for either. Because the gas-to-power project in Ecuador is 100 percent owned by Noble Energy, intercompany natural gas sales are eliminated for accounting purposes.
 
[7]   Hurricane related repair expense was $4.2 million for third quarter 2006.
 
[8]   Barrels of oil equivalent for natural gas is calculated at a 6 to 1 ratio.

 

 

Schedule 6
Noble Energy, Inc.
Income Before Income Taxes
(Dollars in thousands, except realized prices)
(Unaudited)
Nine Months Ended 9/30/07
                                                                                                 
                    North             West             North             Other             Corporate        
            Consolidated     America             Africa             Sea     Israel     Int'l     [1]     & Other     [2]  
                     
 
                                                                                                
Revenues
                                                                                                
Oil sales
           $ 1,204,854     $ 606,421             $ 273,082             $ 229,243     $ —     $ 96,108             $ —          
Gas sales
             935,364       830,480               10,086       [3]       9,861       84,937                       —          
Equity investee liquids sales
             —       —               109,329               —       —       —               (109,329 )        
Equity investee methanol sales
             —       —               112,094               —       —       —               (112,094 )        
Gathering, marketing and processing
             16,702       —                       —       —       —       —               16,702          
Electricity sales
             53,745       —                       —       —       —       53,745               —          
Income from equity method investments
             139,904       —                       —       —       —       —               139,904          
                     
Total Revenues
             2,350,569       1,436,901               504,591               239,104       84,937       149,853               (64,817 )        
 
                                                                                                
Costs and expenses
                                                                                                
Oil and gas operating costs
             228,672       155,980               25,014               23,954       6,896       16,312               516          
Workover and repair expense
             14,533       14,327       [8]               —       —       —       206               —          
Production and ad valorem taxes
             80,667       65,933                       —       —       —       14,326               408          
Transportation
             40,346       31,887                       —       7,091       —       1,368               —          
Oil and gas exploration
             144,796       71,156               46,182               12,881       1,077       4,571               8,929          
Gathering, marketing and processing
             13,093       —                       —       —       —       —               13,093          
Equity investee liquids expense
             —       —               19,829               —       —       —               (19,829 )        
Equity investee methanol expense
             —       —               61,690               —       —       —               (61,690 )        
Electricity generation
             41,941       —                       —       —       —       41,941               —          
DD&A
             540,453       427,861               18,731               56,849       13,011       17,863               6,138          
Impairment of operating assets
             3,661       3,661                       —       —       —       —               —          
General and administrative
             142,368       50,761               2,452               2,835       55       3,123               83,142          
Accretion expense
             6,337       4,767               77               1,009       337       147               —          
Interest expense, net
             87,105       —                       —       —       —       —               87,105          
Deferred compensation
             23,089       —                       —       —       —       —               23,089          
Gain on derivative instruments
             (557 )     (557 )                     —       —       —       —               —          
Loss on involuntary conversion
             51,406       51,406                       —       —       —       —               —          
(Gain) loss on sale of assets
             (4,381 )     (4,196 )                     —       (225 )     34       (4 )             10          
Other expense (income), net
             (3,190 )     5,131               (7,466 )             (2,347 )     (1,605 )     2,373               724          
                     
Total Costs and Expenses
             1,410,339       878,117               166,509               102,047       19,805       102,226               141,635          
 
                                                                                                
                     
Operating Income (Loss)
           $ 940,230     $ 558,784             $ 338,082             $ 137,057     $ 65,132     $ 47,627             $ (206,452 )        
                     
 
                                                                                                
Key Statistics
                                                                                                
                     
Sales Volumes
                                                                                                
Liquids (Bopd)
             77,385       43,525               14,936               11,926       —       6,998               —          
Natural Gas (Mcfpd)
             679,116       410,083               126,820       [3][4]       5,967       110,675       25,571       [7]       —          
Equity Investee Liquids (Bpd)
             7,862       —               7,862       [5]       —       —       —               —          
Equity Investee Methanol (Kgal)
             116,792       —               116,792               —       —       —               —          
                     
 
                                                                                                
Production Volumes
                                                                                                
                     
Liquids (Bopd)
             78,396       43,525               15,874               11,954       —       7,043               —          
Natural Gas (Mcfpd)
             679,116       410,083               126,820               5,967       110,675       25,571               —          
Equity Investee Liquids (Bpd)
             8,220       —               8,220       [6]       —       —       —               —          
                     
Total Production Boepd
     [9]       199,802       111,872               45,231               12,949       18,446       11,305               —          
                     
 
                                                                                                
Average Realized Price
                                                                                                
                     
Liquids
           $ 57.03     $ 51.04             $ 66.97             $ 70.41     $ —     $ 50.30             $ —          
Natural Gas
             5.24       7.42               0.29               6.05       2.81                       —          
Equity Investee Liquids
             50.93       —               50.93               —       —       —               —          
Equity Investee Methanol
             0.96       —               0.96               —       —       —               —          
                     
 
[1]   Other international includes operations in Argentina, China, Ecuador and Suriname.
 
[2]   Corporate and Other includes corporate overhead, intercompany eliminations and marketing.
 
[3]   Natural gas in Equatorial Guinea is under contract for $0.25 per MMBTU through 2026 to a methanol plant, an LPG plant and an LNG plant. The price on an Mcf basis has been adjusted to reflect Btu content. The methanol and LPG plants are owned by affiliated entities accounted for under the equity method of accounting.
 
[4]   Equatorial Guinea natural gas volumes include 72,010 Mcfpd sold to an LNG plant.
 
[5]   Equity Investee LPG volumes include condensate and natural gas liquids of 1,955 Bpd and 5,907 Bpd, respectively. These volumes are included in West Africa production and LPG sales revenue.
 
[6]   Equity Investee LPG volumes include condensate and natural gas liquids of 1,896 Bpd and 6,324 Bpd, respectively.
 
[7]   Ecuador natural gas volumes are included in Other International and Consolidated production, but are not included in natural gas sales revenue for either. Because the gas-to-power project in Ecuador is 100 percent owned by Noble Energy, intercompany natural gas sales are eliminated for accounting purposes.
 
[8]   Includes $.6 million of hurricane related repair expense.
 
[9]   Barrels of oil equivalent for natural gas is calculated at a 6 to 1 ratio.

 

 

Schedule 7
Noble Energy, Inc.
Income Before Income Taxes
(Dollars in thousands, except realized prices)
(Unaudited)
Nine Months Ended 9/30/06
                                                                                                 
                    North             West             North             Other             Corporate        
            Consolidated     America             Africa             Sea     Israel     Int'l     [1]     & Other     [2]  
                     
 
                                                                                                
Revenues
                                                                                                
Oil sales
           $ 1,126,983     $ 644,103             $ 302,284             $ 69,948     $ —     $ 110,648             $ —          
Gas sales
             917,673       825,765               4,586       [3]       18,775       68,441       106               —          
Equity investee liquids sales
             —       —               104,720               —       —       —               (104,720 )        
Equity investee methanol sales
             —       —               70,967               —       —       —               (70,967 )        
Gathering, marketing and processing
             22,667       —                       —       —       —       —               22,667          
Electricity sales
             49,672       —                       —       —       —       49,672               —          
Income from equity method investments
             108,901       —                       —       —       —       —               108,901          
                     
Total Revenues
             2,225,896       1,469,868               482,557               88,723       68,441       160,426               (44,119 )        
 
                                                                                                
Costs and expenses
                                                                                                
Oil and gas operating costs
             195,550       147,357               21,760               7,998       6,389       11,623               423          
Workover and repair expense
             42,757       42,628       [7]               —       —       —       129               —          
Production and ad valorem taxes
             83,663       66,373                       —       —       —       16,910               380          
Transportation
             18,463       14,022                       —       3,843       —       598               —          
Oil and gas exploration
             92,327       62,481               5,339               9,279       143       7,684               7,401          
Gathering, marketing and processing
             15,674       —                       —       —       —       —               15,674          
Equity investee liquids expense
             —       —               23,233               —       —       —               (23,233 )        
Equity investee methanol expense
             —       —               43,552               —       —       —               (43,552 )        
Electricity generation
             43,099       —                       —       —       —       43,099               —          
DD&A
             458,878       402,033               15,674               5,933       10,367       19,445               5,426          
Impairment of operating assets
             6,359       6,359                       —       —       —       —               —          
General and administrative
             113,716       44,089               1               2,080       58       2,982               64,506          
Accretion expense
             8,405       6,960               78               868       332       167               —          
Interest expense, net
             95,642       —                       —       —       —       —               95,642          
Deferred compensation
             15,673       —                       —       —       —       —               15,673          
Loss on derivative instruments
             389,723       389,723                       —       —       —       —               —          
Loss on involuntary conversion
             —       —                       —       —       —       —               —          
(Gain) loss on sale of assets
             (211,691 )     (209,725 )                     —       (2,004 )     —       15               23          
Other expense (income), net
             8,203       12,912               (570 )             1,476       (1,699 )     1,162               (5,078 )        
                     
Total Costs and Expenses
             1,376,441       985,212               109,067               29,473       15,590       103,814               133,285          
 
                                                                                                
                     
Operating Income (Loss)
           $ 849,455     $ 484,656             $ 373,490             $ 59,250     $ 52,851     $ 56,612             $ (177,404 )        
                     
 
                                                                                                
Key Statistics
                                                                                                
                     
Sales Volumes
                                                                                                
Liquids (Bopd)
             74,290       45,834               17,374               3,619       —       7,463               —          
Natural Gas (Mcfpd)
             629,279       461,843               44,232       [3]       8,460       91,656       23,088       [6]       —          
Equity Investee Liquids (Bpd)
             8,168       —               8,168       [4]       —       —       —               —          
Equity Investee Methanol (Kgal)
             85,233       —               85,233               —       —       —               —          
                     
 
                                                                                                
Production Volumes
                                                                                                
                     
Liquids (Bopd)
             74,829       45,834               17,790               3,867       —       7,338               —          
Natural Gas (Mcfpd)
             629,279       461,843               44,232               8,460       91,656       23,088               —          
Equity Investee Liquids (Bpd)
             7,503       —               7,503       [5]       —       —       —               —          
                     
Total Production Boepd
     [8]       187,212       122,808               32,665               5,277       15,276       11,186               —          
                     
 
                                                                                                
Average Realized Price
                                                                                                
                     
Liquids
           $ 55.57     $ 51.48             $ 63.73             $ 70.79     $ —     $ 54.31             $ —          
Natural Gas
             5.54       6.55               0.38               8.13       2.74       1.20               —          
Equity Investee Liquids
             46.96       —               46.96               —       —       —               —          
Equity Investee Methanol
             0.83       —               0.83               —       —       —               —          
                     
 
[1]   Other international includes operations in Argentina, China, Ecuador and Suriname.
 
[2]   Corporate and Other includes corporate overhead, intercompany eliminations and marketing.
 
[3]   Natural gas in Equatorial Guinea is under contract for $0.25 per MMBTU through 2026 to a methanol plant and an LPG plant. The price on an Mcf basis has been adjusted to reflect Btu content. The methanol and LPG plants are owned by affiliated entities accounted for under the equity method of accounting.
 
[4]   Equity Investee LPG volumes include condensate and natural gas liquids of 1,759 Bpd and 6,409 Bpd, respectively. These volumes are included in West Africa production and LPG sales revenue.
 
[5]   Equity Investee LPG volumes include condensate and natural gas liquids of 1,726 Bpd and 5,777 Bpd, respectively.
 
[6]   Ecuador natural gas volumes are included in Other International and Consolidated production, but are not included in natural gas sales revenue for either. Because the gas-to-power project in Ecuador is 100 percent owned by Noble Energy, intercompany natural gas sales are eliminated for accounting purposes.
 
[7]   Includes approximately $25.6 million of hurricane related repair expense.
 
[8]   Barrels of oil equivalent for natural gas is calculated at a 6 to 1 ratio.

 

 

Schedule 8
Noble Energy, Inc.
Pretax Cash Flow Hedges Earnings Impact
(Dollars in thousands)
(Unaudited)
                                 
    Three Months Ended     Nine Months Ended  
    September 30,     September 30,  
    2007     2006     2007     2006  
     
(Decrease) increase of oil and gas sales:
                                
Cash settlement crude oil contracts
   $ (60,297 )   $ (46,386 )   $ (128,359 )   $ (159,687 )
Cash settlement natural gas contracts
     5,569       (7,541 )     (12,965 )     (69,477 )
     
Total cash settlements
     (54,728 )     (53,927 )     (141,324 )     (229,164 )
Non-cash impact of loss associated with Gulf of Mexico shelf asset sale
     42,404       10,129       133,022       10,129  
     
Net decrease of oil and gas sales
     (12,324 )     (43,798 )     (8,302 )     (219,035 )
     
 
                                
Gain (loss) on derivative instruments:
                                
Loss associated with Gulf of Mexico shelf asset sale
     —       —       —       (398,517 )
(Loss) gain from ineffectiveness and other
     (1,514 )     6,315       557       8,794  
     
(Loss) gain on derivative instruments
     (1,514 )     6,315       557       (389,723 )
 
                                
     
Pretax earnings decrease
   $ (13,838 )   $ (37,483 )   $ (7,745 )   $ (608,758 )
     
Impact of Loss Associated with Gulf of Mexico Shelf Asset Sale
(Dollars in thousands)
(Unaudited)
         
Loss associated with Gulf of Mexico shelf asset sale (2Q 2006)
   $ (398,517 )
Redesignated and mark to market contracts settled in 2006
     30,651  
Redesignated contracts settled in 1st, 2nd & 3rd Qtr 2007
     133,022  
 
      
Unsettled loss associated with Gulf of Mexico shelf asset sale
   $ (234,844 )
                         
Settlement schedule   Crude Oil     Natural Gas     Total  
     
4Q 2007
     —       49,402       49,402  
1Q 2008
     5,979       54,529       60,508  
2Q 2008
     5,835       32,191       38,026  
3Q 2008
     5,763       34,055       39,818  
4Q 2008
     5,633       41,457       47,090  
     
Remaining settlements
   $ 23,210     $ 211,634     $ 234,844  
     

 

 

Schedule 9
Noble Energy, Inc.
Ecuador Power Operations
(Dollars in thousands, except realized prices)
(Unaudited)
                                         
            Three Months Ended     Nine Months Ended  
            September 30,     September 30,  
            2007     2006     2007     2006  
             
Revenues
                                        
Power Sales
           $ 14,539     $ 14,231     $ 47,309     $ 43,447  
Capacity Charge
             2,077       2,010       6,436       6,225  
             
Total Revenues
             16,616       16,241       53,745       49,672  
 
                                        
Costs and expenses
                                        
Field Lease Operating
             658       756       1,987       2,119  
DD&A
             2,582       2,593       7,812       8,337  
General and administrative
             604       595       2,053       1,857  
Plant Fuel & Other Operating Costs
     [1]       7,536       10,733       23,251       21,661  
DD&A
             1,069       1,182       2,755       3,505  
General and administrative
             1,230       2,017       4,083       5,620  
             
Total Costs and Expenses
             13,679       17,876       41,941       43,099  
 
                                        
             
Operating Income
           $ 2,937     $ (1,635 )   $ 11,804     $ 6,573  
 
                                        
             
Natural Gas Production (Mcfpd)
             24,844       20,131       25,571       22,764  
Average Natural Gas Price
           $ 3.74     $ 3.76     $ 3.75     $ 3.76  
 
                                        
             
Power Production — Total MW
             223,663       182,806       678,986       603,513  
Average Power Price ($/Kwh)
           $ 0.074     $ 0.089     $ 0.079     $ 0.082  
             
 
[1]   Includes increases in the allowance for doubtful accounts of $3 million and $3 million for third quarter 2007 and 2006, respectively, and $11 million and $4 million for the first nine months of 2007 and 2006, respectively. We increased the allowance to cover potentially uncollectible balances related to our Ecuador power operations. Certain entities purchasing electricity in Ecuador have been slow to pay amounts due us. We are pursuing various strategies to protect our interests including international arbitration and litigation.

 

 

Schedule 10
Income from Equity Method Investees
Methanol Operations
(Dollars in thousands, except realized prices)
(Unaudited)
                                 
    Three Months Ended     Nine Months Ended  
    September 30,     September 30,  
    2007     2006     2007     2006  
     
Revenues
                                
Methanol sales
   $ 34,744     $ 15,654     $ 112,094     $ 70,967  
Other
     2,083       2,682       4,874       7,959  
     
Total revenues
     36,827       18,336       116,968       78,926  
 
                                
Costs and expenses
                                
Cost of goods sold
     13,899       11,425       40,064       34,576  
DD&A
     2,739       2,348       8,260       7,075  
General and administrative
     648       381       1,806       1,403  
     
Total costs and expenses
     17,286       14,154       50,130       43,054  
 
                                
Income Tax Provision
     4,892       880       16,434       8,457  
 
                                
     
Income from Equity Method Investees
   $ 14,649     $ 3,302     $ 50,404     $ 27,415  
     
 
                                
Methanol Sales (KGal)
     43,541       18,769       116,792       85,233  
Average Realized Price ($/Gal)
   $ 0.80     $ 0.83     $ 0.96     $ 0.83  
Alba Plant
(Dollars in thousands, except realized prices)
(Unaudited)
                                 
    Three Months Ended     Nine Months Ended  
    September 30,     September 30,  
    2007     2006     2007     2006  
     
Revenues
                                
LPG Plant Sales
   $ 39,349     $ 40,164     $ 109,329     $ 104,720  
Other
     189       310       497       957  
     
Total Revenues
     39,538       40,474     $ 109,826     $ 105,677  
 
                                
Costs and expenses
                                
LPG Plant Expenses
     7,579       8,285       19,201       19,222  
DD&A
     1,767       1,645       5,249       4,933  
Other
     —       —       (2,765 )     —  
     
Total Costs and Expenses
     9,346       9,930       21,685       24,155  
 
                                
Income Tax Benefit
     (530 )     35       (1,359 )     35  
 
                                
     
Income from Equity Method Investees
   $ 30,722     $ 30,509     $ 89,500     $ 81,487  
     
 
                                
LPG Plant Sales (Bpd)
     7,472       8,932       7,862       8,168  
Average Realized Price ($/Bbl)
   $ 57.24     $ 48.88     $ 50.93     $ 46.96