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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

FORM 10-Q


ý
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2002

OR

o
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from                              to                             

Commission file number: 0-7062

NOBLE ENERGY, INC.
(Exact name of registrant as specified in its charter)

Delaware
 (State of incorporation)		   73-0785597
 (I.R.S. employer identification number)

350 Glenborough Drive, Suite 100
Houston, Texas
 (Address of principal executive offices)
 
77067
(Zip Code)

(281) 872-3100
(Registrant's telephone number, including area code)

NOBLE AFFILIATES, INC.
(Registrant's former name)

        Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes ý    No o

        Number of shares of common stock outstanding as of November 4, 2002: 57,290,842


PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS


NOBLE ENERGY, INC. AND SUBSIDIARIES

CONSOLIDATED CONDENSED BALANCE SHEET

(Dollars in thousands)

 
   September 30,
2002
   December 31,
2001
  
 
   (Unaudited)

    
  
ASSETS              
Current Assets:              
  Cash and short-term investments   $ 6,407   $ 73,237  
  Accounts receivable-trade     192,831     182,979  
  Oil and gas price risk management receivable     10,135     33,424  
  Materials and supplies inventories     10,202     10,828  
  Other current assets     30,784     51,103  
   
 
 
    Total Current Assets     250,359     351,571  
   
 
 
Property, Plant and Equipment, at cost     4,209,229     3,974,754  
  Less: accumulated depreciation, depletion and amortization     (2,145,666 )   (2,021,543 )
   
 
 
    Total property, plant and equipment, net     2,063,563     1,953,211  
   
 
 
Investment in Unconsolidated Subsidiary     238,643     117,735  
   
 
 
Other Assets     52,315     57,331  
   
 
 
   
Total Assets
 
$
2,604,880
 
$
2,479,848
 
   
 
 

LIABILITIES AND SHAREHOLDERS' EQUITY
 
 
 
 
 
 
 
Current Liabilities:              
  Accounts payable-trade   $ 250,214   $ 270,091  
  Short-term note payable     10,000     25,000  
  Current installments of long-term debt     43,629     19,507  
  Oil and gas price risk management payable     19,240     25,363  
  Other current liabilities     44,620     40,624  
   
 
 
    Total Current Liabilities     367,703     380,585  
   
 
 
Deferred Income Taxes     179,043     176,259  
   
 
 
Other Deferred Credits and Noncurrent Liabilities     70,658     75,629  
   
 
 
Long-Term Debt     987,105     837,177  
   
 
 

Shareholders' Equity:
 
 
 
 
 
 
 
  Common stock     199,308     198,369  
  Capital in excess of par value     403,346     396,104  
  Retained earnings     443,961     449,985  
  Accumulated other comprehensive income (loss)     (6,914 )   5,070  
   
 
 
      1,039,701     1,049,528  

Less Common Stock in Treasury (at cost, 2,505,522 shares)
 
 
(39,330
)
 
(39,330
)
   
 
 
   
Total Shareholders' Equity
 
 
1,000,371
 
 
1,010,198
 
   
 
 
     
Total Liabilities and Shareholders' Equity
 
$
2,604,880
 
$
2,479,848
 
   
 
 

See notes to consolidated condensed financial statements.

2


NOBLE ENERGY, INC. AND SUBSIDIARIES

CONSOLIDATED CONDENSED STATEMENT OF OPERATIONS

(Dollars in Thousands, Except Per Share Amounts)

(Unaudited)

 
   Three Months Ended September 30,
  
 
   2002
   2001
  
REVENUES:              
  Oil and gas sales and royalties   $ 177,991   $ 168,547  
  Gathering, marketing and processing     154,461     134,417  
  Electricity sales     3,931        
  Income from unconsolidated subsidiary     5,184     1,229  
  Other income (loss)     (1,901 )   643  
   
 
 
      339,666     304,836  
   
 
 

COSTS AND EXPENSES:
 
 
 
 
 
 
 
  Oil and gas operations     42,314     32,005  
  Oil and gas exploration     50,628     48,862  
  Gathering, marketing and processing     150,737     130,782  
  Electricity generation     3,117        
  Depreciation, depletion and amortization     70,637     68,536  
  Selling, general and administrative     14,835     9,726  
  Interest     14,979     10,974  
  Interest capitalized     (4,649 )   (3,575 )
   
 
 
      342,598     297,310  
   
 
 

INCOME (LOSS) BEFORE TAXES
 
 
(2,932
)
 
7,526
 

INCOME TAX PROVISION (BENEFIT)
 
 
(1,742
)
 
3,718
 
   
 
 

NET INCOME (LOSS)
 
$
(1,190
)
$
3,808
 
   
 
 

BASIC EARNINGS (LOSS) PER SHARE
 
$
(0.02
)
$
0.07
 
   
 
 

DILUTED EARNINGS (LOSS) PER SHARE
 
$
(0.02
)
$
0.07
 
   
 
 

See notes to consolidated condensed financial statements.

3


NOBLE ENERGY, INC. AND SUBSIDIARIES

CONSOLIDATED CONDENSED STATEMENT OF OPERATIONS

(Dollars in Thousands, Except Per Share Amounts)

(Unaudited)

 
   Nine Months Ended September 30,
  
 
   2002
   2001
  
REVENUES:              
  Oil and gas sales and royalties   $ 505,422   $ 714,537  
  Gathering, marketing and processing     476,005     562,387  
  Electricity sales     3,931        
  Income from unconsolidated subsidiary     1,278     482  
  Other income     972     1,912  
   
 
 
      987,608     1,279,318  
   
 
 

COSTS AND EXPENSES:
 
 
 
 
 
 
 
  Oil and gas operations     112,969     98,573  
  Oil and gas exploration     107,266     114,153  
  Gathering, marketing and processing     468,559     552,457  
  Electricity generation     3,117        
  Depreciation, depletion and amortization     219,188     209,647  
  Selling, general and administrative     38,241     32,207  
  Interest     47,092     30,704  
  Interest capitalized     (13,732 )   (10,372 )
   
 
 
      982,700     1,027,369  
   
 
 

INCOME BEFORE TAXES
 
 
4,908
 
 
251,949
 

INCOME TAX PROVISION
 
 
4,077
 
 
90,898
 
   
 
 

NET INCOME
 
$
831
 
$
161,051
 
   
 
 

BASIC EARNINGS PER SHARE
 
$
0.01
 
$
2.85
 
   
 
 

DILUTED EARNINGS PER SHARE
 
$
0.01
 
$
2.81
 
   
 
 

See notes to consolidated condensed financial statements.

4


NOBLE ENERGY, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

AND SHAREHOLDERS' EQUITY

(Dollars in Thousands)

(Unaudited)

 
   Comprehensive
Income (Loss)
   Common
Stock
   Capital in
Excess of
Par Value
   Retained
Earnings
   Accumulated
Other
Comprehensive
Income (Loss)
   Treasury
Stock
At Cost
   Total
Shareholders'
Equity
  
Balance at December 31, 2001         $ 198,369   $ 396,104   $ 449,985   $ 5,070   $ (39,330 ) $ 1,010,198  
  Net income   $ 831                 831                 831  
  Reclassification of unrealized gains on hedges to net income, net of $107 income tax     199                       199           199  
  Change in fair value of cash flow hedges, net of income tax     (12,183 )                     (12,183 )         (12,183 )
  Shares issued           939     7,242                       8,181  
  Dividends declared ($0.12 per share)                       (6,855 )               (6,855 )
   
 
 
 
 
 
 
 
  Total   $ (11,153 )                                    
   
                                     
Balance at September 30, 2002         $ 199,308   $ 403,346   $ 443,961   $ (6,914 ) $ (39,330 ) $ 1,000,371  
         
 
 
 
 
 
 

See notes to consolidated condensed financial statements.

5


NOBLE ENERGY, INC. AND SUBSIDIARIES

CONSOLIDATED CONDENSED STATEMENT OF CASH FLOWS

(Dollars in Thousands)

(Unaudited)

 
   Nine Months Ended September 30,
  
 
   2002
   2001
  
Cash Flows from Operating Activities:              
  Net income   $ 831   $ 161,051  
  Adjustments to reconcile net income to net cash provided by operating activities:              
    Depreciation, depletion and amortization     219,188     209,647  
    Dry hole     62,126     79,661  
    Amortization of undeveloped lease costs     15,510     12,297  
    (Gain) loss on disposal of assets     48     (1,919 )
    Deferred income taxes     2,783     40,981  
    Income from unconsolidated subsidiary     (1,278 )   (482 )
    Dividends received from unconsolidated subsidiary     5,363        
    Increase (decrease) in deferred credits     (4,971 )   3,033  
    (Increase) decrease in other     6,375     (9,188 )
  Changes in working capital, not including cash:              
    (Increase) decrease in accounts receivable     (9,852 )   64,715  
    (Increase) decrease in other current assets and inventories     24,900     (84,411 )
    Increase (decrease) in accounts payable     (19,877 )   (48,775 )
    Increase (decrease) in other current liabilities     3,997     35,352  
   
 
 
Net Cash Provided by Operating Activities     305,143     461,962  
   
 
 
Cash Flows From Investing Activities:              
  Capital expenditures     (427,587 )   (544,421 )
  Investment in unconsolidated subsidiary     (7,838 )   (43,736 )
  Proceeds from sale of property, plant and equipment     20,363     1,295  
  Distribution from unconsolidated subsidiary     5,500        
   
 
 
Net Cash Used in Investing Activities     (409,562 )   (586,862 )
   
 
 
Cash Flows From Financing Activities:              
  Exercise of stock options     8,181     16,533  
  Cash dividends     (6,855 )   (6,777 )
  Proceeds from bank debt     153,489     235,000  
  Repayment of bank debt     (100,000 )   (125,000 )
  Repayment of note payable obtained on Aspect acquisition     (17,226 )      
   
 
 
Net Cash Provided by Financing Activities     37,589     119,756  
   
 
 
Decrease in Cash and Short-term Investments     (66,830 )   (5,144 )
   
 
 
Cash and Short-term Investments at Beginning of Period     73,237     23,152  
   
 
 
Cash and Short-term Investments at End of Period   $ 6,407   $ 18,008  
   
 
 
Supplemental Disclosures of Cash Flow Information:              
  Cash paid (received) during the period for:              
  Interest (net of amount capitalized)   $ 13,914   $ 16,389  
  Income taxes paid (refunded)   $ (40,394 ) $ 66,131  
  Debt obtained from consolidation of AMCCO (net of discount)   $ 122,655   $    

See notes to consolidated condensed financial statements.

6



NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS

(Unaudited)

        In the opinion of Noble Energy, Inc. (the "Company"), the accompanying unaudited consolidated condensed financial statements contain all adjustments, consisting only of necessary and normal recurring adjustments, necessary to present fairly the Company's financial position as of September 30, 2002 and December 31, 2001; the results of operations for the three month and nine month periods ended September 30, 2002 and 2001, respectively; the statement of comprehensive income and equity for the nine month period ended September 30, 2002; and the cash flows for the nine month periods ended September 30, 2002 and 2001. These consolidated condensed financial statements should be read in conjunction with the consolidated financial statements and the notes thereto included in the Company's annual report on Form 10-K for the year ended December 31, 2001.

(1) INCOME TAX PROVISION (BENEFIT)

        For the three months ended September 30:

 
   (In thousands)

  
 
   2002
   2001
  
Current   $ (249 ) $ (12,788 )
Deferred     (1,493 )   16,506  
   
 
 
    $ (1,742 ) $ 3,718  
   
 
 

        For the nine months ended September 30:

 
   (In thousands)
 
   2002
   2001
Current   $ 1,294   $ 49,917
Deferred     2,783     40,981
   
 
    $ 4,077   $ 90,898
   
 

(2) BASIC EARNINGS PER SHARE AND DILUTED EARNINGS PER SHARE

        Basic earnings per share of common stock was computed using the weighted average number of shares of common stock outstanding during each period. The diluted net income per share of common stock includes the effect of outstanding stock options.

        The following table summarizes the calculation of basic earnings per share ("EPS") and diluted EPS.

7


        For the three months ended September 30:

 
   2002
   2001
(in thousands, except per share)
   Income
(Numerator)
   Shares
(Denominator)
   Income
(Numerator)
   Shares
(Denominator)
Net income (loss)/shares   $ (1,190 ) 57,287   $ 3,808   56,595
   
 
 
 
Basic EPS   $ (.02)   $ .07
   
 
 
 
Net income (loss)/shares   $ (1,190 ) 57,287   $ 3,808   56,595
Effect of Dilutive Securities                    
  Stock options(1)                   575
   
 
 
 
Adjusted net income (loss)/shares   $ (1,190 ) 57,287   $ 3,808   57,170
   
 
 
 
Diluted EPS   $ (.02)   $ .07
   
 
 
 
(1)
The effect of dilutive securities on third quarter 2002 diluted EPS is antidilutive as a result of the net operating loss; therefore, the basic EPS and diluted EPS are the same. The number of dilutive securities that would have been used to determine fully diluted EPS was 395 with adjusted shares of 57,682.

8

        For the nine months ended September 30:

 
   2002
   2001
(in thousands, except per share)
   Income
(Numerator)
   Shares
(Denominator)
   Income
(Numerator)
   Shares
(Denominator)
Net income/shares   $ 831   57,159   $ 161,051   56,502
   
 
 
 
Basic EPS   $ .01   $ 2.85
   
 
 
 
Net income/shares   $ 831   57,159   $