Delaware
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73-0785597
|
|
(State
or other jurisdiction of incorporation
or
organization)
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(I.R.S.
employer identification number)
|
|
100
Glenborough Drive, Suite 100
|
||
Houston,
Texas
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77067
|
|
(Address
of principal executive offices)
|
(Zip
Code)
|
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(281)
872-3100
(Registrant’s
telephone number, including area
code)
|
Large
accelerated filer [X]
|
Accelerated
filer [ ]
|
Non-accelerated
filer [ ]
|
Smaller
reporting company [ ]
|
(Do
not check if a smaller reporting
company)
|
|
||
Page
|
||
Item
1.
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Financial
Statements
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3
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4
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5
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6
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7
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Item
2.
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25
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Item
3.
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39
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Item
4.
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40
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Item
1.
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41
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Item
1A.
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41
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Item
2.
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41
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Item
3.
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41
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Item
4.
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41
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Item
5.
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42
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Item
6.
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42
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Three
Months Ended
June
30,
|
Six
Months Ended
June
30,
|
|||||||||||||||||||
2009
|
2008
|
2009
|
2008
|
|||||||||||||||||
Revenues
|
||||||||||||||||||||
Oil,
Gas and NGL Sales
|
$ | 460 | $ | 1,130 | $ | 866 | $ | 2,074 | ||||||||||||
Income
from Equity Method Investees
|
16 | 56 | 27 | 118 | ||||||||||||||||
Other
Revenues
|
15 | 19 | 39 | 38 | ||||||||||||||||
Total
Revenues
|
491 | 1,205 | 932 | 2,230 | ||||||||||||||||
Costs
and Expenses
|
||||||||||||||||||||
Lease
Operating Expense
|
93 | 88 | 193 | 170 | ||||||||||||||||
Production
and Ad Valorem Taxes
|
23 | 51 | 42 | 94 | ||||||||||||||||
Transportation
Expense
|
13 | 16 | 25 | 29 | ||||||||||||||||
Exploration
Expense
|
33 | 103 | 75 | 143 | ||||||||||||||||
Depreciation,
Depletion and Amortization
|
196 | 196 | 396 | 399 | ||||||||||||||||
General
and Administrative
|
60 | 61 | 119 | 121 | ||||||||||||||||
Asset
Impairments
|
- | - | 437 | - | ||||||||||||||||
Other
Operating (Income) Expense, Net
|
(3 | ) | 20 | (11 | ) | 46 | ||||||||||||||
Total
Operating Expenses
|
415 | 535 | 1,276 | 1,002 | ||||||||||||||||
Operating
Income (Loss)
|
76 | 670 | (344 | ) | 1,228 | |||||||||||||||
Other
(Income) Expense
|
||||||||||||||||||||
Loss
on Commodity Derivative Instruments
|
139 | 828 | 66 | 1,065 | ||||||||||||||||
Interest,
Net of Amount Capitalized
|
23 | 17 | 41 | 34 | ||||||||||||||||
Other
Non-Operating (Income) Expense, Net
|
4 | 23 | 12 | 10 | ||||||||||||||||
Total
Non-Operating (Income) Expense
|
166 | 868 | 119 | 1,109 | ||||||||||||||||
Income
(Loss) Before Income Taxes
|
(90 | ) | (198 | ) | (463 | ) | 119 | |||||||||||||
Income
Tax Provision (Benefit)
|
(33 | ) | (54 | ) | (218 | ) | 48 | |||||||||||||
Net
Income (Loss)
|
$ | (57 | ) | $ | (144 | ) | $ | (245 | ) | $ | 71 | |||||||||
Earnings
(Loss) Per Share, Basic
|
$ | (0.33 | ) | $ | (0.84 | ) | $ | (1.42 | ) | $ | 0.41 | |||||||||
Earnings
(Loss) Per Share, Diluted
|
(0.33 | ) | (0.84 | ) | (1.42 | ) | 0.41 | |||||||||||||
Weighted
Average Number of Shares Outstanding, Basic
|
173 | 172 | 173 | 172 | ||||||||||||||||
Weighted
Average Number of Shares Outstanding, Diluted
|
173 | 172 | 173 | 175 | ||||||||||||||||
The
accompanying notes are an integral part of these financial
statements.
|
(unaudited)
June
30,
|
December
31,
|
|||||||
2009
|
2008
|
|||||||
ASSETS
|
||||||||
Current
Assets
|
||||||||
Cash
and Cash Equivalents
|
$ | 956 | $ | 1,140 | ||||
Accounts
Receivable, Net
|
450 | 423 | ||||||
Commodity
Derivative Assets, Current
|
203 | 437 | ||||||
Other
Current Assets
|
128 | 158 | ||||||
Total
Assets, Current
|
1,737 | 2,158 | ||||||
Property,
Plant and Equipment
|
||||||||
Oil
and Gas Properties (Successful Efforts Method of
Accounting)
|
12,161 | 11,963 | ||||||
Property,
Plant and Equipment, Other
|
224 | 175 | ||||||
Total
Property, Plant and Equipment, Gross
|
12,385 | 12,138 | ||||||
Accumulated
Depreciation, Depletion and Amortization
|
(3,504 | ) | (3,134 | ) | ||||
Total
Property, Plant and Equipment, Net
|
8,881 | 9,004 | ||||||
Goodwill
|
758 | 759 | ||||||
Other
Noncurrent Assets
|
475 | 463 | ||||||
Total
Assets
|
$ | 11,851 | $ | 12,384 | ||||
LIABILITIES
AND SHAREHOLDERS’ EQUITY
|
||||||||
Current
Liabilities
|
||||||||
Accounts
Payable - Trade
|
$ | 493 | $ | 579 | ||||
Income
Taxes Payable
|
69 | 130 | ||||||
Deferred
Income Taxes, Net, Current
|
25 | 142 | ||||||
Other
Current Liabilities
|
303 | 323 | ||||||
Total
Liabilities, Current
|
890 | 1,174 | ||||||
Long-Term
Debt
|
2,416 | 2,241 | ||||||
Deferred
Income Taxes, Noncurrent
|
1,947 | 2,174 | ||||||
Other
Noncurrent Liabilities
|
539 | 486 | ||||||
Total
Liabilities
|
5,792 | 6,075 | ||||||
Commitments
and Contingencies
|
||||||||
Shareholders’
Equity
|
||||||||
Preferred
Stock - Par Value $1.00; 4 million Shares Authorized, None
Issued
|
- | - | ||||||
Common
Stock - Par Value $3.33 1/3; 250 Million Shares Authorized; 193
Million and 192 Million Shares Issued, Respectively
|
645 | 641 | ||||||
Additional
Paid in Capital
|
2,229 | 2,193 | ||||||
Accumulated
Other Comprehensive Loss
|
(91 | ) | (110 | ) | ||||
Treasury
Stock, at Cost; 19 Million Shares
|
(615 | ) | (614 | ) | ||||
Retained
Earnings
|
3,891 | 4,199 | ||||||
Total
Shareholders’ Equity
|
6,059 | 6,309 | ||||||
Total
Liabilities and Shareholders’ Equity
|
$ | 11,851 | $ | 12,384 | ||||
The
accompanying notes are an integral part of these financial
statements.
|
Six
Months Ended
June
30,
|
||||||||
2009
|
2008
|
|||||||
Cash
Flows From Operating Activities
|
||||||||
Net
Income (Loss)
|
$ | (245 | ) | $ | 71 | |||
Adjustments
to Reconcile Net Income (Loss) to Net Cash Provided by Operating
Activities:
|
||||||||
Depreciation,
Depletion and Amortization
|
396 | 399 | ||||||
Asset
Impairments
|
437 | - | ||||||
Deferred
Income Taxes
|
(359 | ) | 10 | |||||
Income
from Equity Method Investees
|
(27 | ) | (118 | ) | ||||
Dividends
from Equity Method Investees
|
5 | 121 | ||||||
Unrealized
Loss on Commodity Derivative Instruments
|
358 | 934 | ||||||
Settlement
of Previously Recognized Hedge Losses
|
- | (101 | ) | |||||
Allowance
for Doubtful Accounts
|
(38 | ) | 6 | |||||
Gain
on Asset Sale
|
(24 | ) | - | |||||
Other
Adjustments for Noncash Items Included in Income
|
46 | 122 | ||||||
Changes
in Operating Assets and Liabilities:
|
||||||||
(Increase)
Decrease in Accounts Receivable
|
7 | (276 | ) | |||||
(Increase)
Decrease in Other Current Assets
|
17 | (28 | ) | |||||
Increase
in Accounts Payable
|
10 | 64 | ||||||
(Decrease)
in Other Current Liabilities
|
(47 | ) | (41 | ) | ||||
Other
Assets and Liabilities, Net
|
(38 | ) | (9 | ) | ||||
Net
Cash Provided by Operating Activities
|
498 | 1,154 | ||||||
Cash
Flows From Investing Activities
|
||||||||
Additions
to Property, Plant and Equipment
|
(777 | ) | (932 | ) | ||||
Proceeds
from Sale of Property, Plant and Equipment
|
- | 109 | ||||||
Net
Cash Used in Investing Activities
|
(777 | ) | (823 | ) | ||||
Cash
Flows From Financing Activities
|
||||||||
Exercise
of Stock Options
|
13 | 24 | ||||||
Excess
Tax Benefits from Stock-Based Awards
|
3 | 23 | ||||||
Dividends
Paid, Common Stock
|
(63 | ) | (53 | ) | ||||
Purchase
of Treasury Stock
|
(1 | ) | (2 | ) | ||||
Proceeds
from Credit Facilities
|
340 | 450 | ||||||
Repayment
of Credit Facilities
|
(1,161 | ) | (425 | ) | ||||
Net
Proceeds from Issuance of 8 ¼% Senior Notes
|
989 | - | ||||||
Repayment
of Installment Note
|
(25 | ) | (25 | ) | ||||
Net
Cash Provided by (Used in) Financing Activities
|
95 | (8 | ) | |||||
Increase
(Decrease) in Cash and Cash Equivalents
|
(184 | ) | 323 | |||||
Cash
and Cash Equivalents at Beginning of Period
|
1,140 | 660 | ||||||
Cash
and Cash Equivalents at End of Period
|
$ | 956 | $ | 983 | ||||
The
accompanying notes are an integral part of these financial
statements.
|
Six
Months Ended
June
30,
|
||||||||
2009
|
2008
|
|||||||
Common
Stock
|
||||||||
Balance,
Beginning of Period
|
$ | 641 | $ | 636 | ||||
Exercise
of Stock Options
|
2 | 4 | ||||||
Restricted
Stock Awards, Net
|
2 | 1 | ||||||
Balance,
End of Period
|
645 | 641 | ||||||
Capital
in Excess of Par Value
|
||||||||
Balance,
Beginning of Period
|
2,193 | 2,106 | ||||||
Stock-Based
Compensation Expense
|
24 | 20 | ||||||
Exercise
of Stock Options
|
11 | 20 | ||||||
Tax
Benefits Related to Exercise of Stock Options
|
3 | 23 | ||||||
Restricted
Stock Awards, Net
|
(2 | ) | (1 | ) | ||||
Rabbi
Trust Shares Sold
|
- | 2 | ||||||
Balance,
End of Period
|
2,229 | 2,170 | ||||||
Accumulated
Other Comprehensive Loss
|
||||||||
Balance,
Beginning of Period
|
(110 | ) | (284 | ) | ||||
Oil
and Gas Cash Flow Hedges:
|
||||||||
Realized
Amounts Reclassified Into Earnings
|
20 | 97 | ||||||
Interest
Rate Cash Flow Hedges:
|
||||||||
Unrealized
Change in Fair Value
|
- | (7 | ) | |||||
Net
Change in Other
|
(1 | ) | (1 | ) | ||||
Balance,
End of Period
|
(91 | ) | (195 | ) | ||||
Treasury
Stock at Cost
|
||||||||
Balance,
Beginning of Period
|
(614 | ) | (613 | ) | ||||
Purchases
of Treasury Stock
|
(1 | ) | (2 | ) | ||||
Rabbi
Trust Shares Sold
|
- | 2 | ||||||
Balance,
End of Period
|
(615 | ) | (613 | ) | ||||
Retained
Earnings
|
||||||||
Balance,
Beginning of Period
|
4,199 | 2,964 | ||||||
Net
Income (Loss)
|
(245 | ) | 71 | |||||
Cash
Dividends ($0.36 Per Share and $0.30 Per Share,
Respectively)
|
(63 | ) | (53 | ) | ||||
Balance,
End of Period
|
3,891 | 2,982 | ||||||
Total
Shareholders' Equity
|
$ | 6,059 | $ | 4,985 | ||||
The
accompanying notes are an integral part of these financial
statements.
|
Three
Months Ended
June
30,
|
Six
Months Ended
June
30,
|
|||||||||||||||
2009
|
2008
|
2009
|
2008
|
|||||||||||||
(in
millions)
|
||||||||||||||||
Other
Revenues
|
||||||||||||||||
Electricity
Sales (1)
|
$ | 11 | $ | 14 | $ | 32 | $ | 29 | ||||||||
Gathering,
Marketing and Processing Revenues
|
4 | 5 | 7 | 9 | ||||||||||||
Total
|
$ | 15 | $ | 19 | $ | 39 | $ | 38 | ||||||||
Other
Operating (Income) Expense, Net
|
||||||||||||||||
Gain
on Asset Sale (2)
|
$ | (24 | ) | $ | - | $ | (24 | ) | $ | - | ||||||
Electricity
Generation Expense (1)
|
11 | 13 | (19 | ) | 28 | |||||||||||
Gathering,
Marketing and Processing Expense
|
5 | 4 | 10 | 8 | ||||||||||||
Settlement
of Legal Proceedings (3)
|
4 | - | 9 | - | ||||||||||||
Gain
on Involuntary Conversion (4)
|
(3 | ) | - | (3 | ) | - | ||||||||||
Other
Operating (Income) Expense, Net
|
4 | 3 | 16 | 10 | ||||||||||||
Total
|
$ | (3 | ) | $ | 20 | $ | (11 | ) | $ | 46 | ||||||
Other
Non-Operating (Income) Expense, Net
|
||||||||||||||||
Deferred
Compensation Expense
|
$ | 5 | $ | 29 | $ | 10 | $ | 22 | ||||||||
Interest
Income
|
(1 | ) | (6 | ) | (1 | ) | (12 | ) | ||||||||
Other
(Income) Expense, Net
|
- | - | 3 | - | ||||||||||||
Total
|
$ | 4 | $ | 23 | $ | 12 | $ | 10 |
(1)
|
Includes amounts
related to our 100%-owned Ecuador integrated power project. The project
includes the Amistad natural gas field, offshore Ecuador, which supplies
natural gas to fuel the Machala power plant located in Machala, Ecuador.
Electricity generation expense includes all operating and non-operating
expenses associated with the plant, including depreciation, depletion and
amortization expense (DD&A) and changes in the allowance for doubtful
accounts. We recognized
a net increase of $2 million in the allowance during second quarter 2009
and a net decrease of $40 million in the allowance during the first six
months of 2009. We recognized net increases of $3 million and $6 million
in the allowance during the second quarter and first six months of 2008,
respectively. See Allowance
for Doubtful Accounts
below.
|
(2)
|
In
February 2008, effective July 1, 2007, we sold our interest in Argentina
for a sales price of $117.5 million. The gain on sale was deferred until
second quarter 2009 when the Argentine government approved the
sale.
|
(3)
|
Second
quarter 2009 includes a $19 million charge on legal settlement (See Note
14 – Commitments
and Contingencies), offset by a $15 million gain on legal settlement
related to reimbursement of bonuses paid for federal leases offshore
California.
|
(4)
|
Amount
represents receipt of insurance claims related to Hurricane Katrina
damage.
|
Balance Sheet Information
– Other balance sheet information is as
follows:
|
June
30,
|
December
31,
|
||||||
2009 | 2008 | ||||||
(in
millions)
|
|||||||
Other
Current Assets
|
|||||||
Inventories,
Current
|
$ |
107
|
$ |
105
|
|||
Prepaid
Expenses and Other Assets, Current
|
21
|
27
|
|||||
Asset
Held for Sale (1)
|
-
|
26
|
|||||
Total
|
$ |
128
|
$ |
158
|
|||
Other
Noncurrent Assets
|
|||||||
Equity
Method Investments
|
$ |
335
|
$ |
311
|
|||
Mutual
Fund Investments
|
90
|
84
|
|||||
Commodity
Derivative Assets, Noncurrent
|
7
|
33
|
|||||
Other
Assets, Noncurrent
|
43
|
35
|
|||||
Total
|
$ |
475
|
$ |
463
|
|||
Other
Current Liabilities
|
|||||||
Accrued
and Other Liabilities, Current
|
$ |
182
|
$ |
215
|
|||
Commodity
Derivative Liabilities, Current
|
39
|
23
|
|||||
Asset
Retirement Obligations, Current
|
44
|
27
|
|||||
Interest
Payable
|
38
|
9
|
|||||
Short-Term
Borrowings
|
-
|
25
|
|||||
Deferred
Gain on Asset Sale, Current (2)
|
-
|
24
|
|||||
Total
|
$ |
303
|
$ |
323
|
|||
Other
Noncurrent Liabilities
|
|||||||
Deferred
Compensation Liabilities, Noncurrent
|
$ |
182
|
$ |
159
|
|||
Asset
Retirement Obligations, Noncurrent
|
187
|
184
|
|||||
Accrued
Benefit Costs, Noncurrent
|
83
|
81
|
|||||
Commodity
Derivative Liabilities, Noncurrent
|
53
|
2
|
|||||
Other
Liabilities, Noncurrent
|
34
|
60
|
|||||
Total
|
$ |
539
|
$ |
486
|
(1)
|
The
Main Pass asset was reclassified as held-and-used and impaired during
first quarter 2009. Estimated proved reserves attributed to this property
were less than 1% of our total estimated proved reserves. See Note 5 – Fair Value
Measurements
|
(2)
|
See
footnote (2) to Statements of Operations
Information above.
|
|
·
|
The
period after the balance sheet date during which management of a reporting
entity should evaluate events or transactions that may occur for potential
recognition or disclosure in the financial statements (through the date
that the financial statements are issued or are available to be
issued);
|
|
·
|
The
circumstances under which an entity should recognize events or
transactions occurring after the balance sheet date in its financial
statements; and
|
|
·
|
The
disclosures that an entity should make about events or transactions that
occurred after the balance sheet
date.
|
·
|
FSP SFAS 157-4 –
FASB Staff Position No. 157-4, “Determining Fair Value When the
Volume and Level of Activity for the Asset or Liability has Significantly
Decreased and Identifying Transactions That Are Not Orderly” provides
guidance on how to determine the fair value of assets and liabilities
under SFAS 157 in the current economic environment and reemphasizes that
the objective of a fair value measurement remains the price that would be
received to sell an asset or paid to transfer a liability at the
measurement date.
|
|
|
·
|
FSP SFAS 115-2 and SFAS 124-2
– FASB Staff Position No. 115-2 and 124-2, “Recognition and
Presentation of Other-Than-Temporary Impairments” modifies the
requirements for recognizing other-than-temporarily impaired debt
securities and significantly changes the existing impairment model for
such securities. It also modifies the presentation of other-than-temporary
impairment losses and increases the frequency of and expands already
required disclosures about other-than-temporary impairment for debt and
equity securities.
|
·
|
FSP
SFAS 107-1 and APB 28-1 – FASB Staff Position No. 107-1 and APB
28-1, “Interim Disclosures about Fair Value of Financial Instruments”
requires disclosures of the fair value of financial instruments within the
scope of SFAS 107 in interim financial statements, adding to the current
requirement to make those disclosures in annual financial statements. The
staff position also requires that companies disclose the method or methods
and significant assumptions used to estimate the fair value of financial
instruments and a discussion of changes, if any, in the method or methods
and significant assumptions during the
period.
|
June
30,
|
December
31,
|
|||||||||||||||
2009
|
2008
|
|||||||||||||||
Debt
|
Interest
Rate
|
Debt
|
Interest
Rate
|
|||||||||||||
(in
millions, except percentages)
|
||||||||||||||||
Credit
Facility
|
$ | 785 | 0.62 | % | $ | 1,606 | 0.80 | % | ||||||||
5
¼% Senior Notes, due April 15, 2014
|
200 | 5.25 | % | 200 | 5.25 | % | ||||||||||
8
¼% Senior Notes, due March 1, 2019
|
1,000 | 8.25 | % | - | - | |||||||||||
7
¼% Notes, due October 15, 2023
|
100 | 7.25 | % | 100 | 7.25 | % | ||||||||||
8%
Senior Notes, due April 1, 2027
|
250 | 8.00 | % | 250 | 8.00 | % | ||||||||||
7
¼% Senior Debentures, due August 1, 2097
|
89 | 7.25 | % | 89 | 7.25 | % | ||||||||||
Long-term
Debt
|
2,424 | 2,245 | ||||||||||||||
Installment
Payment, due May 11, 2009
|
- | - | 25 | 4.18 | % | |||||||||||
Total
Debt
|
2,424 | 2,270 | ||||||||||||||
Unamortized
Discount
|
(8 | ) | (4 | ) | ||||||||||||
Total
Debt, Net of Discount
|
$ | 2,416 | $ | 2,266 |
Variable
to Fixed Price Swaps
|
Collars
|
|||||||||||||||||||
Weighted
|
Weighted
|
Weighted
|
||||||||||||||||||
Production
|
Bbls
|
Average
|
Bbls
|
Average
|
Average
|
|||||||||||||||
Period
|
Index
|
Per
Day
|
Fixed
Price
|
Index
|
Per
Day
|
Floor
Price
|
Ceiling
Price
|
|||||||||||||
2009
|
NYMEX
WTI
|
9,000 | $ | 88.43 |
NYMEX
WTI
|
6,700 | $ | 79.70 | $ | 90.60 | ||||||||||
2009
|
Dated
Brent
|
2,000 | 87.98 |
Dated
Brent
|
4,924 | 71.40 | 88.36 | |||||||||||||
2009
Average
|
11,000 | 88.35 | 11,624 | 76.19 | 89.65 | |||||||||||||||
2010
|
NYMEX
WTI
|
14,500 | 61.48 | 75.63 | ||||||||||||||||
2010
|
Dated
Brent
|
6,000 | 63.83 | 73.79 | ||||||||||||||||
2010
Average
|
20,500 | 62.17 | 75.10 |
Collars
|
|||||||||||||||
Weighted
|
Weighted
|
||||||||||||||
Production
|
MMBtu
|
Average
|
Average
|
||||||||||||
Period
|
Index
|
Per
Day
|
Floor
Price
|
Ceiling
Price
|
|||||||||||
2009
|
NYMEX
HH
|
170,000 | $ | 9.15 | $ | 10.81 | |||||||||
2009
|
IFERC
CIG (1)
|
15,000 | 6.00 | 9.90 | |||||||||||
2009
Average
|
185,000 | 8.90 | 10.73 | ||||||||||||
2010
|
NYMEX
HH
|
160,000 | 5.88 | 6.84 | |||||||||||
2010
|
IFERC
CIG
|
15,000 | 6.25 | 8.10 | |||||||||||
2010
Average
|
175,000 | 5.91 | 6.95 | ||||||||||||
2011
|
NYMEX
HH
|
90,000 | 5.92 | 7.04 |
Basis Swaps | ||||||||||||
Weighted
|
||||||||||||
Production
|
Index
Less
|
MMBtu
|
Average
|
|||||||||
Period
|
Index
|
Differential
|
Per
Day
|
Differential
|
||||||||
2009
|
IFERC
CIG
|
NYMEX
HH
|
140,000 | $ | (2.49 | ) | ||||||
2010
|
IFERC
CIG
|
NYMEX
HH
|
90,000 | (1.68 | ) |
Derivative
Instruments Not Designated as Hedging Instruments Under SFAS
133
|
||||||||||||||||||||||
Asset
Derivative Instruments
|
Liability
Derivative Instruments
|
|||||||||||||||||||||
June
30,
|
December
31,
|
June
30,
|
December
31,
|
|||||||||||||||||||
2009
|
2008
|
2009
|
2008
|
|||||||||||||||||||
(in
millions)
|
Balance
Sheet Location
|
Fair
Value
|
Balance
Sheet Location
|
Fair
Value
|
Balance
Sheet Location
|
Fair
Value
|
Balance
Sheet Location
|
Fair
Value
|
||||||||||||||
Commodity
Derivative Instruments
|
||||||||||||||||||||||
Current
Assets
|
$ | 203 |
Current
Assets
|
$ | 437 |
Current
Liabilities
|
$ | 39 |
Current
Liabilities
|
$ | 23 | |||||||||||
Noncurrent
Assets
|
7 |
Noncurrent
Assets
|
33 |
Noncurrent
Liabilities
|
53 |
Noncurrent
Liabilities
|
2 | |||||||||||||||
Total
|
$ | 210 | $ | 470 | $ | 92 | $ | 25 |
Derivative
Instruments Not Designated as Hedging Instruments Under SFAS
133
|
||||||||||||||||
Amount
of (Gain) Loss on Derivative
Instruments
Recognized in Income
|
||||||||||||||||
Three
Months Ended
June
30,
|
Six
Months Ended
June
30,
|
|||||||||||||||
2009
|
2008
|
2009
|
2008
|
|||||||||||||
(in
millions)
|
||||||||||||||||
Commodity Derivative
Instruments
|
||||||||||||||||
Realized
Mark-to-Market (Gain) Loss
(1)
|
$ | (138 | ) | $ | 112 | $ | (292 | ) | $ | 131 | ||||||
Unrealized
Mark-to-Market Loss (1)
|
277 | 716 | 358 | 934 | ||||||||||||
Total
(Gain) Loss on Commodity Derivative Instruments
|
$ | 139 | $ | 828 | $ | 66 | $ | 1,065 |
(1)
|
Amounts
are included in the line item “Loss on Commodity Derivative Instruments”
in our consolidated statements of
operations.
|
Derivative
Instruments in Previously Designated SFAS 133 Cash Flow Hedging
Relationships
|
||||||||||||||||
Amount
of (Gain) Loss on Derivative Instruments Recognized in OCI
|
Amount
of (Gain) Loss on Derivative Instruments Reclassified from
AOCL
|
|||||||||||||||
2009
|
2008
|
2009
|
2008
|
|||||||||||||
(in
millions)
|
(in
millions)
|
|||||||||||||||
Three
Months Ended June 30,
|
||||||||||||||||
Commodity
Derivative Instruments (1)
|
||||||||||||||||
Crude
Oil
(2)
|
$ | - | $ | - | $ | 15 | $ | 93 | ||||||||
Natural
Gas (2)
|
- | - | - | 2 | ||||||||||||
Treasury
Rate Locks
|
- | (32 | ) | - | - | |||||||||||
Total
|
$ | - | $ | (32 | ) | $ | 15 | $ | 95 | |||||||
Six
Months Ended June 30,
|
||||||||||||||||
Commodity
Derivative Instruments (1)
|
||||||||||||||||
Crude
Oil
(2)
|
$ | - | $ | - | $ | 32 | $ | 190 | ||||||||
Natural
Gas (2)
|
- | - | - | (35 | ) | |||||||||||
Treasury
Rate Locks
|
- | 11 | - | - | ||||||||||||
Total
|
$ | - | $ | 11 | $ | 32 | $ | 155 |
(1)
|
Includes
effect of commodity derivative instruments previously accounted for as
cash flow hedges. Net derivative gains and losses that were deferred in
AOCL as of January 1, 2008, as a result of previous cash flow hedge
accounting, are reclassified to earnings in future periods as the original
hedged transactions occur.
|
(2)
|
The
amount of (Gain) Loss reclassified from AOCL on Derivative Instrument is
recognized in Oil, Gas and NGL Sales within our consolidated statement of
operations.
|
Fair
Value Measurements Using
|
||||||||||||||||||||
Quoted
Prices in
Active
Markets (Level 1)
|
Significant
Other Observable Inputs (Level 2)
|
Significant
Unobservable Inputs (Level 3)
|
Adjustment
(1)
|
Fair
Value Measurement
|
||||||||||||||||
(in
millions)
|
||||||||||||||||||||
As
of June 30, 2009
|
||||||||||||||||||||
Financial
Assets:
|
||||||||||||||||||||
Mutual
Fund Investments
|
$ | 90 | $ | - | $ | - | $ | - | $ | 90 | ||||||||||
Commodity
Derivative Instruments
|
- | 245 | - | (35 | ) | 210 | ||||||||||||||
Financial
Liabilities:
|
||||||||||||||||||||
Commodity
Derivative Instruments
|
- | (127 | ) | - | 35 | (92 | ) | |||||||||||||
Patina
Deferred Compensation Liability
|
(139 | ) | - | - | - | (139 | ) | |||||||||||||
As
of December 31, 2008
|
||||||||||||||||||||
Financial
Assets:
|
||||||||||||||||||||
Mutual
Fund Investments
|
84 | - | - | - | 84 | |||||||||||||||
Commodity
Derivative Instruments
|
- | 492 | - | (22 | ) | 470 | ||||||||||||||
Financial
Liabilities:
|
||||||||||||||||||||
Commodity
Derivative Instruments
|
- | (47 | ) | - | 22 | (25 | ) | |||||||||||||
Patina
Deferred Compensation Liability
|
(123 | ) | - | - | - | (123 | ) |
(1)
Amount represents the impact of master netting agreements that allow us to
net cash settle asset and liability positions with the same
counterparty.
|
June
30,
|
December
31,
|
|||||||||||||||
2009
|
2008
|
|||||||||||||||
Carrying
Amount
|
Fair
Value
|
Carrying
Amount
|
Fair
Value
|
|||||||||||||
(in
millions)
|
||||||||||||||||
Total
Debt, Net of Unamortized Discount
|
$ | 2,416 | $ | 2,566 | $ | 2,266 | $ | 2,172 |
Six
Months Ended
June
30,
|
||||
(in
millions)
|
||||
Capitalized
Exploratory Well Costs, Beginning of Period
|
$ |
501
|
||
Additions
to Capitalized Exploratory Well Costs Pending Determination of Proved
Reserves
|
96
|
|||
Reclassified
to Property, Plant and Equipment Based on Determination of Proved
Reserves
|
(88
|
) | ||
Capitalized
Exploratory Well Costs Charged to Expense
|
(9
|
) | ||
Capitalized
Exploratory Well Costs, End of Period
|
$ |
500
|
June
30,
|
December
31,
|
|||||||
2009
|
2008
|
|||||||
(in
millions)
|
||||||||
Exploratory
Well Costs Capitalized for a Period of One Year or Less
|
$ | 225 | $ | 256 | ||||
Exploratory
Well Costs Capitalized for a Period Greater Than One Year After Completion
of Drilling
|
275 | 245 | ||||||
Balance
at End of Period
|
$ | 500 | $ | 501 | ||||
Number
of Projects with Exploratory Well Costs That Have Been Capitalized for a
Period Greater Than One Year After Completion of Drilling
|
4 | 6 |
Suspended
Since
|
||||||||||||||||
Total
|
2008
|
2007
|
2006
&
Prior
|
|||||||||||||
(in
millions)
|
||||||||||||||||
Project
|
||||||||||||||||
West
Africa
|
$ | 221 | $ | 61 | $ | 140 | $ | 20 | ||||||||
Redrock
(deepwater Gulf of Mexico)
|
17 | - | - | 17 | ||||||||||||
Flyndre
(North Sea)
|
15 | - | 12 | 3 | ||||||||||||
Selkirk
(North Sea)
|
22 | - | 22 | - | ||||||||||||
Total
Exploratory Well Costs Capitalized for a Period Greater Than One Year
After Completion of Drilling
|
$ | 275 | $ | 61 | $ | 174 | $ | 40 |
Six
Months Ended
June
30,
|
||||||||
2009
|
2008
|
|||||||
(in millions) | ||||||||
Asset
Retirement Obligations, Beginning of Period
|
$ | 211 | $ | 144 | ||||
Liabilities
Incurred in Current Period
|
4 | 14 | ||||||
Liabilities
Settled in Current Period
|
(8 | ) | (7 | ) | ||||
Revisions
|
17 | 6 | ||||||
Accretion
Expense
|
7 | 4 | ||||||
Asset
Retirement Obligations, End of Period
|
$ | 231 | $ | 161 |
Three
Months Ended
June
30,
|
Six
Months Ended
June
30,
|
|||||||||||||||
2009
|
2008
|
2009
|
2008
|
|||||||||||||
(in
millions)
|
||||||||||||||||
Service
Cost
|
$ | 3 | $ | 3 | $ | 6 | $ | 6 | ||||||||
Interest
Cost
|
3 | 3 | 6 | 6 | ||||||||||||
Expected
Return on Plan Assets
|
(3 | ) | (3 | ) | (7 | ) | (6 | ) | ||||||||
Other
|
- | 1 | 1 | 1 | ||||||||||||
Net
Periodic Benefit Cost
|
$ | 3 | $ | 4 | $ | 6 | $ | 7 |
Three
Months Ended
June
30,
|
Six
Months Ended
June
30,
|
|||||||||||||||
2009
|
2008
|
2009
|
2008
|
|||||||||||||
(in
millions)
|
||||||||||||||||
Stock-Based
Compensation Expense
|
$ | 12 | $ | 11 | $ | 24 | $ | 20 | ||||||||
Tax
Benefit Recognized
|
(4 | ) | (4 | ) | (8 | ) | (8 | ) |
Net
Income (Loss)
|
Weighted
Average Shares
|
Net
Income (Loss)
|
Weighted
Average Shares
|
|||||||||||||
2009
|
2008
|
|||||||||||||||
(in
millions, except per share amounts)
|
||||||||||||||||
Three
Months Ended June 30:
|
||||||||||||||||
Net
Income (Loss)
|
$ |
(57
|
) |
173
|
$ |
(144
|
) |
172
|
||||||||
Basic
Earnings (Loss) Per Share
|
$ |
(0.33
|
) | $ |
(0.84
|
) | ||||||||||
Net
Income (Loss)
|
$ |
(57
|
) |
173
|
$ |
(144
|
) |
172
|
||||||||
Plus
Incremental Shares from Assumed Conversions:
|
||||||||||||||||
Dilutive
Options, Restricted Stock and Shares of Common Stock in Rabbi
Trust
|
-
|
-
|
-
|
-
|
||||||||||||
Net
Income (Loss) Available to Common Shareholders
|
$ |
(57
|
) |
173
|
$ |
(144
|
) |
172
|
||||||||
Diluted
Earnings (Loss) Per Share
|
$ |
(0.33
|
) | $ |
(0.84
|
) | ||||||||||
Six
Months Ended June 30:
|
||||||||||||||||
Net
Income (Loss)
|
$ |
(245
|
) |
173
|
$ |
71
|
172
|
|||||||||
Basic
Earnings (Loss) Per Share
|
$ |
(1.42
|
) | $ |
0.41
|
|||||||||||
Net
Income (Loss)
|
$
|
(245
|
) |
173
|
$ |
71
|
172
|
|||||||||
Plus
Incremental Shares from Assumed Conversions:
|
||||||||||||||||
Dilutive
Options, Restricted Stock and Shares of Common Stock in Rabbi
Trust
|
-
|
-
|
-
|
3
|
||||||||||||
Net
Income (Loss) Available to Common Shareholders
|
$ |
(245
|
) |
173
|
$ |
71
|
175
|
|||||||||
Diluted
Earnings (Loss) Per Share
|
$ |
(1.42
|
) | $ |
0.41
|
Three
Months Ended
June
30,
|
Six
Months Ended
June
30,
|
|||||||||||||||
2009
|
2008
|
2009
|
2008
|
|||||||||||||
(in
millions)
|
||||||||||||||||
Current
|
$ | 25 | $ | (28 | ) | $ | 141 | $ | 38 | |||||||
Deferred
|
(58 | ) | (26 | ) | (359 | ) | 10 | |||||||||
Total
Income Tax Provision (Benefit)
|
$ | (33 | ) | $ | (54 | ) | $ | (218 | ) | $ | 48 |
Three
Months Ended
June
30,
|
Six
Months Ended
June
30,
|
|||||||||||||||
2009
|
2008
|
2009
|
2008
|
|||||||||||||
(in
millions)
|
||||||||||||||||
Net
Income (Loss)
|
$ | (57 | ) | $ | (144 | ) | $ | (245 | ) | $ | 71 | |||||
Other
Items of Comprehensive Income (Loss)
|
||||||||||||||||
Oil
and Gas Cash Flow Hedges
|
||||||||||||||||
Realized
Losses Reclassified Into Earnings
|
15 | 95 | 32 | 155 | ||||||||||||
Less
Tax Provision
|
(6 | ) | (36 | ) | (12 | ) | (58 | ) | ||||||||
Interest
Rate Cash Flow Hedges
|
||||||||||||||||
Unrealized
Change in Fair Value (Gain / (Loss))
|
- | 32 | - | (11 | ) | |||||||||||
Less
Tax Provision
|
- | (12 | ) | - | 4 | |||||||||||
Net
Change in Other
|
- | - | (1 | ) | (1 | ) | ||||||||||
Other
Comprehensive Income
|
9 | 79 | 19 | 89 | ||||||||||||
Comprehensive
Income (Loss)
|
$ | (48 | ) | $ | (65 | ) | $ | (226 | ) | $ | 160 |
Consolidated
|
United
States
|
West
Africa
|
North
Sea
|
Eastern
Mediter-ranean
|
Other
Int'l, Corporate, Marketing
|
|||||||||||||||||||
(in
millions)
|
||||||||||||||||||||||||
Three
Months Ended June 30, 2009
|
||||||||||||||||||||||||
Revenues
from Third Parties
|
$ | 490 | $ | 275 | $ | 85 | $ | 35 | $ | 24 | $ | 71 | ||||||||||||
Reclassification
from AOCL (1)
|
(15 | ) | (8 | ) | (7 | ) | - | - | - | |||||||||||||||
Intersegment
Revenue
|
- | 36 | - | - | - | (36 | ) | |||||||||||||||||
Income
from Equity Method Investees
|
16 | - | 16 | - | - | - | ||||||||||||||||||
Total
Revenues
|
491 | 303 | 94 | 35 | 24 | 35 | ||||||||||||||||||
DD&A
|
196 | 164 | 9 | 9 | 5 | 9 | ||||||||||||||||||
Loss
on Commodity Derivative Instruments
|
139 | 109 | 30 | - | - | - | ||||||||||||||||||
Income
(Loss) Before Income Taxes
|
(90 | ) | (72 | ) | 40 | 13 | 14 | (85 | ) | |||||||||||||||
Three
Months Ended June 30, 2008
|
||||||||||||||||||||||||
Revenues
from Third Parties
|
$ | 1,244 | $ | 752 | $ | 163 | $ | 99 | $ | 30 | $ | 200 | ||||||||||||
Reclassification
from AOCL (1)
|
(95 | ) | (84 | ) | (11 | ) | - | - | - | |||||||||||||||
Intersegment
Revenue
|
- | 144 | - | - | - | (144 | ) | |||||||||||||||||
Income
from Equity Method Investees
|
56 | - | 56 | - | - | - | ||||||||||||||||||
Total
Revenues
|
1,205 | 812 | 208 | 99 | 30 | 56 | ||||||||||||||||||
DD&A
|
196 | 165 | 9 | 12 | 5 | 5 | ||||||||||||||||||
Loss
on Commodity Derivative Instruments
|
828 | 677 | 151 | - | - | - | ||||||||||||||||||
Income
(Loss) Before Income Taxes
|
(198 | ) | (214 | ) | 38 | 72 | 23 | (117 | ) |
Consolidated
|
United
States
|
West
Africa
|
North
Sea
|
Eastern
Mediter-ranean
|
Other
Int'l, Corporate, Marketing
|
|||||||||||||||||||
(in
millions)
|
||||||||||||||||||||||||
Six
Months Ended June 30, 2009
|
||||||||||||||||||||||||
Revenues
from Third Parties
|
$ | 937 | $ | 511 | $ | 144 | $ | 69 | $ | 52 | $ | 161 | ||||||||||||
Reclassification
from AOCL (1)
|
(32 | ) | (16 | ) | (16 | ) | - | - | - | |||||||||||||||
Intersegment
Revenue
|
- | 88 | - | - | - | (88 | ) | |||||||||||||||||
Income
from Equity Method Investees
|
27 | - | 27 | - | - | - | ||||||||||||||||||
Total
Revenues
|
932 | 583 | 155 | 69 | 52 | 73 | ||||||||||||||||||
DD&A
|
396 | 333 | 18 | 18 | 10 | 17 | ||||||||||||||||||
Asset
Impairments
|
437 | 437 | - | - | - | - | ||||||||||||||||||
Loss
on Commodity Derivative Instruments
|
66 | 42 | 24 | - | - | - | ||||||||||||||||||
Income
(Loss) Before Income Taxes
|
(463 | ) | (481 | ) | 82 | 24 | 35 | (123 | ) | |||||||||||||||
Six
Months Ended June 30, 2008
|
||||||||||||||||||||||||
Revenues
from Third Parties
|
$ | 2,267 | $ | 1,329 | $ | 304 | $ | 191 | $ | 70 | $ | 373 | ||||||||||||
Reclassification
from AOCL (1)
|
(155 | ) | (132 | ) | (23 | ) | - | - | - | |||||||||||||||
Intersegment
Revenue
|
- | 260 | - | - | - | (260 | ) | |||||||||||||||||
Income
from Equity Method Investees
|
118 | - | 118 | - | - | - | ||||||||||||||||||
Total
Revenues
|
2,230 | 1,457 | 399 | 191 | 70 | 113 | ||||||||||||||||||
DD&A
|
399 | 329 | 18 | 28 | 11 | 13 | ||||||||||||||||||
Loss
on Commodity Derivative Instruments
|
1,065 | 886 | 179 | - | - | - | ||||||||||||||||||
Income
(Loss) Before Income Taxes
|
119 | (68 | ) | 188 | 127 | 54 | (182 | ) | ||||||||||||||||
Total
Assets at June 30, 2009
(2)
|
11,851 | 8,849 | 1,590 | 593 | 427 | 392 | ||||||||||||||||||
Total
Assets at December 31, 2008 (2)
|
12,384 | 9,212 | 1,614 | 775 | 366 | 417 |
(1)
|
Revenues
include decreases resulting from hedging activities. The decreases
resulted from hedge gains and losses that were deferred in AOCL, as a
result of previous cash flow hedge accounting, and subsequently
reclassified to revenues.
|
(2)
|
The
US reporting unit includes goodwill of $758 million at June 30, 2009 and
$759 million at December 31, 2008.
|
Note 14 – Commitments
and Contingencies
|
|
·
|
Commodity
Prices – Economic producibility of reserves and discounted cash flows will
be based on a 12-month average commodity price unless contractual
arrangements designate the price to be
used.
|
|
·
|
Disclosure
of Unproved Reserves – Probable and possible reserves may be disclosed
separately on a voluntary basis.
|
|
·
|
Proved
Undeveloped Reserve Guidelines – Reserves may be classified as proved
undeveloped if there is a high degree of confidence that the quantities
will be recovered.
|
|
·
|
Reserve
Estimation Using New Technologies – Reserves may be estimated through the
use of reliable technology in addition to flow tests and production
history.
|
|
·
|
Reserve
Personnel and Estimation Process – Additional disclosure is required
regarding the qualifications of the chief technical person who oversees
our reserves estimation process. We will also be required to
provide a general discussion of our internal controls used to assure the
objectivity of the reserves
estimate.
|
|
·
|
Disclosure
by Geographic Area – Reserves in foreign countries or continents must be
presented separately if they represent more than 15% of our total oil and
gas proved reserves.
|
|
·
|
Non-Traditional
Resources – The
definition of oil and gas producing activities will expand and focus on
the marketable product rather than the method of
extraction.
|
|
·
|
net
loss of $57 million, as compared with a net loss of $144 million for
second quarter 2008;
|
|
·
|
loss
on commodity derivative instruments of $139 million as compared with a
loss of $828 million for second quarter
2008;
|
|
·
|
gain
of $24 million on the completed Argentina asset
sale;
|
|
·
|
diluted
loss per share of $0.33, as compared with diluted loss per share of $0.84
for second quarter 2008;
|
|
·
|
ending
cash and cash equivalents balance of $956 million;
and
|
|
·
|
cash
flow provided by operating activities of $313 million, as compared with
$648 million for second quarter
2008.
|
Significant
operational highlights for second quarter 2009
included:
|
|
successful
Tamar appraisal well offshore
Israel;
|
|
·
|
successful
flow test at the Dalit natural gas discovery offshore
Israel;
|
|
·
|
record
Wattenberg field production of 282 MMcfepd, including liquid production of
over 21 MBopd; and
|
|
·
|
award
of 22 of the 24 high bid lease blocks from the Central Gulf of Mexico
lease sale 208.
|
|
·
|
overall
level and timing of capital expenditures, as discussed below, which,
dependent upon our drilling
success, are expected to maintain our near-term production
volumes;
|
|
·
|
natural
field decline in the deepwater Gulf of Mexico, Gulf Coast and
Mid-continent areas of our US operations and the North
Sea;
|
|
·
|
variations
in sales volumes of natural gas from the Alba field in Equatorial
Guinea;
|
|
·
|
potential
hurricane-related volume curtailments in the Gulf of Mexico and Gulf Coast
areas of our US operations as occurred with Hurricanes Gustav and Ike in
2008;
|
|
·
|
timing
of the full restoration of pipeline and facilities necessary to increase
our Gulf of Mexico production;
|
|
·
|
potential
winter storm-related volume curtailments in the Northern region of our US
operations;
|
|
·
|
potential
pipeline and processing facility capacity constraints in the Rocky
Mountains area of our US
operations;
|
·
|
Israeli demand for electricity which affects demand for natural gas as fuel for power generation, market growth and competing deliveries of natural gas from Egypt; | |
|
·
|
potential
downtime at the methanol, LPG and/or LNG plants in Equatorial
Guinea;
|
|
·
|
seasonal
variations in rainfall in Ecuador that affect our natural gas-to-power
project; and
|
|
·
|
timing
of significant project completion and initial
production.
|
Three
Months Ended
June
30,
|
Six
Months Ended
June
30,
|
|||||||||||||||
2009
|
2008
|
2009
|
2008
|
|||||||||||||
(in
millions)
|
||||||||||||||||
Crude
Oil and Condensate Sales
|
$ | 296 | $ | 674 | $ | 497 | $ | 1,200 | ||||||||
Natural
Gas Sales
|
143 | 399 | 326 | 771 | ||||||||||||
NGL
Sales
|
21 | 57 | 43 | 103 | ||||||||||||
Total
|
$ | 460 | $ | 1,130 | $ | 866 | $ | 2,074 |
Sales
Volumes
|
Average
Realized Sales Prices
|
||||||||||||||||||
Crude
Oil & Condensate (MBopd)
|
Natural
Gas (MMcfpd)
|
NGLs
(MBpd)
|
Crude
Oil & Condensate (Per Bbl)
|
Natural
Gas (Per Mcf)
|
NGLs
(Per Bbl)
|
||||||||||||||
Three
Months Ended June 30, 2009
|
|||||||||||||||||||
United
States (1)
(2)
|
37
|
394
|
10
|
$ |
51.85
|
$ |
3.09
|
$ |
23.94
|
||||||||||
West
Africa (3)
(4)
|
15
|
244
|
-
|
51.63
|
0.27
|
-
|
|||||||||||||
North
Sea
|
6
|
5
|
-
|
56.57
|
5.20
|
-
|
|||||||||||||
Israel
|
-
|
95
|
-
|
-
|
2.76
|
-
|
|||||||||||||
Ecuador
(5)
|
-
|
16
|
-
|
-
|
-
|
-
|
|||||||||||||
Other
International
|
5
|
-
|
-
|
48.87
|
-
|
-
|
|||||||||||||
Total
Consolidated Operations
|
63
|
754
|
10
|
52.05
|
2.13
|
23.94
|
|||||||||||||
Equity
Investees (6)
|
2
|
-
|
6
|
56.12
|
-
|
30.12
|
|||||||||||||
Total
|
65
|
754
|
16
|
$ |
52.19
|
$ |
2.13
|
$ |
26.24
|
||||||||||
Three
Months Ended June 30, 2008
|
|||||||||||||||||||
United
States (1)
(2)
|
44
|
402
|
10
|
$ |
99.05
|
$ |
9.82
|
$ |
59.65
|
||||||||||
West
Africa (3)
(4)
|
14
|
222
|
-
|
112.32
|
0.27
|
-
|
|||||||||||||
North
Sea
|
8
|
5
|
-
|
126.05
|
10.81
|
-
|
|||||||||||||
Israel
|
-
|
121
|
-
|
-
|
2.72
|
-
|
|||||||||||||
Ecuador
(5)
|
-
|
22
|
-
|
-
|
-
|
-
|
|||||||||||||
Other
International
|
4
|
-
|
-
|
109.17
|
-
|
-
|
|||||||||||||
Total
Consolidated Operations
|
70
|
772
|
10
|
105.46
|
5.86
|
59.65
|
|||||||||||||
Equity
Investees (6)
|
2
|
-
|
7
|
118.95
|
-
|
69.70
|
|||||||||||||
Total
|
72
|
772
|
17
|
$ |
105.74
|
$ |
5.86
|
$ |
63.75
|
||||||||||
Six
Months Ended June 30, 2009
|
|||||||||||||||||||
United
States (1)
(2)
|
36
|
403
|
10
|
$ |
43.92
|
$ |
3.52
|
$ |
24.33
|
||||||||||
West
Africa (3)
(4)
|
14
|
243
|
-
|
46.19
|
0.27
|
-
|
|||||||||||||
North
Sea
|
7
|
5
|
-
|
50.81
|
6.72
|
-
|
|||||||||||||
Israel
|
-
|
103
|
-
|
-
|
2.78
|
-
|
|||||||||||||
Ecuador
(5)
|
-
|
23
|
-
|
-
|
-
|
-
|
|||||||||||||
Other
International
|
4
|
-
|
-
|
43.28
|
-
|
-
|
|||||||||||||
Total
Consolidated Operations
|
61
|
777
|
10
|
45.17
|
2.39
|
24.33
|
|||||||||||||
Equity
Investees (6)
|
2
|
-
|
6
|
50.38
|
-
|
28.38
|
|||||||||||||
Total
|
63
|
777
|
16
|
$ |
45.32
|
$ |
2.39
|
$ |
25.92
|
||||||||||
Six
Months Ended June 30, 2008
|
|||||||||||||||||||
United
States (1)
(2)
|
43
|
397
|
10
|
$ |
85.36
|
$ |
9.40
|
$ |
57.55
|
||||||||||
West
Africa (3)
(4)
|
15
|
221
|
-
|
100.16
|
0.27
|
-
|
|||||||||||||
North
Sea
|
9
|
6
|
-
|
112.36
|
10.18
|
-
|
|||||||||||||
Israel
|
-
|
133
|
-
|
-
|
2.90
|
-
|
|||||||||||||
Ecuador
(5)
|
-
|
23
|
-
|
-
|
-
|
-
|
|||||||||||||
Other
International
|
5
|
-
|
-
|
87.47
|
-
|
-
|
|||||||||||||
Total
Consolidated Operations
|
72
|
780
|
10
|
91.88
|
5.60
|
57.55
|
|||||||||||||
Equity
Investees (6)
|
2
|
-
|
7
|
107.01
|
-
|
65.50
|
|||||||||||||
Total
|
74
|
780
|
17
|
$ |
92.24
|
$ |
5.60
|
$ |
60.80
|
(1)
|
Average
realized crude oil and condensate prices reflect reductions of $2.29 per
Bbl and $20.46 per Bbl for second quarter 2009 and 2008, respectively, and
reductions of $2.49 per Bbl and $21.13 per Bbl for the first six months of
2009 and 2008, respectively, from hedging activities. The price reductions
resulted from hedge gains and losses that were previously deferred in
AOCL.
|
(2)
|
Average
realized natural gas prices reflect an increase of $0.01 per Mcf and a
reduction of $0.06 per Mcf for second quarter 2009 and 2008, respectively,
and an increase of $0.49 per Mcf for the first six months of 2008 from
hedging activities. The price increases and reduction resulted
from hedge gains and losses that were previously deferred in AOCL. The
average realized natural gas price for the first six months of 2009 was
not impacted by hedging activities, as the net deferred gain reclassified
from AOCL was de minimis.
|
(3)
|
Average
realized crude oil and condensate prices reflect reductions of $5.33 per
Bbl and $8.20 per Bbl for second quarter 2009 and 2008, respectively, and
$6.11 per Bbl and $8.42 per Bbl for the first six months of 2009 and 2008,
respectively, from hedging activities. The price reductions
resulted from hedge losses that were previously deferred in
AOCL.
|
(4)
|
Natural
gas from the Alba field in Equatorial Guinea is under contract for $0.25
per MMBtu to a methanol plant, an LPG plant and an LNG plant. The methanol
and LPG plants are owned by affiliated entities accounted for under the
equity method of accounting. Natural gas volumes sold to the
LNG plant totaled 200 MMcfpd and 175 MMcfpd during second quarter 2009 and
2008, respectively, and 194 MMcfpd and 174 MMcfpd during the first six
months of 2009 and 2008,
respectively.
|
(5)
|
The
natural gas-to-power project in Ecuador is 100% owned by our subsidiaries
and intercompany natural gas sales are eliminated for accounting purposes.
Electricity sales are included in other revenues. See Item 1. Financial
Statements – Note 2 – Basis of
Presentation.
|
(6)
|
Volumes
represent sales of condensate and LPG from the Alba plant in Equatorial
Guinea. See Equity
Method Investees
below.
|
Three
Months Ended
June
30,
|
Six
Months Ended
June
30,
|
|||||||||||||||
2009
|
2008
|
2009
|
2008
|
|||||||||||||
(MBopd)
|
||||||||||||||||
United
States
|
37 | 44 | 36 | 43 | ||||||||||||
West
Africa
|
14 | 15 | 14 | 15 | ||||||||||||
North
Sea
|
8 | 9 | 8 | 10 | ||||||||||||
Other
International
|
5 | 4 | 4 | 5 | ||||||||||||
Total
Consolidated Operations
|
64 | 72 | 62 | 73 | ||||||||||||
Equity
Investees
|
2 | 2 | 2 | 2 | ||||||||||||
Total
|
66 | 74 | 64 | 75 |
Crude
Oil & Condensate
|
Natural
Gas
|
Crude
Oil & Condensate
|
Natural
Gas
|
|||||||||||||
2009
|
2008
|
|||||||||||||||
(Per
Bbl)
|
(Per
Mcf)
|
(Per
Bbl)
|
(Per
Mcf)
|
|||||||||||||
Commodity
Price Increase (Decrease)
|
||||||||||||||||
Three
Months Ended June 30,
|
||||||||||||||||
United
States
|
$ | 13.39 | $ | 2.00 | $ | (13.84 | ) | $ | (1.09 | ) | ||||||
West
Africa
|
15.77 | - | (12.42 | ) | - | |||||||||||
Total
Consolidated Operations
|
11.68 | 1.07 | (11.19 | ) | (0.58 | ) | ||||||||||
Total
|
11.29 | 1.07 | (10.96 | ) | (0.58 | ) | ||||||||||
Six
Months Ended June 30,
|
||||||||||||||||
United
States
|
$ | 17.18 | $ | 1.79 | $ | (7.65 | ) | $ | (0.72 | ) | ||||||
West
Africa
|
19.79 | - | (6.72 | ) | - | |||||||||||
Total
Consolidated Operations
|
14.65 | 0.95 | (6.01 | ) | (0.38 | ) | ||||||||||
Total
|
14.23 | 0.95 | (5.87 | ) | (0.38 | ) |
Three
Months Ended
June
30,
|
Six
Months Ended
June
30,
|
|||||||||||||||
2009
|
2008
|
2009
|
2008
|
|||||||||||||
Net
Income (in millions):
|
||||||||||||||||
AMPCO
and Affiliates
|
$ | 2 | $ | 17 | $ | 2 | $ | 45 | ||||||||
Alba
Plant
|
14 | 39 | 25 | 73 | ||||||||||||
Distributions/Dividends
(in millions):
|
||||||||||||||||
AMPCO
and Affiliates
|
- | 5 | - | 39 | ||||||||||||
Alba
Plant
|
5 | 40 | 5 | 82 | ||||||||||||
Sales
Volumes:
|
||||||||||||||||
Methanol
(MMgal)
|
41 | 36 | 76 | 70 | ||||||||||||
Condensate
(MBopd)
|
2 | 2 | 2 | 2 | ||||||||||||
LPG
(MBpd)
|
6 | 7 | 6 | 7 | ||||||||||||
Production
Volumes:
|
||||||||||||||||
Methanol
(MMgal)
|
29 | 31 | 68 | 63 | ||||||||||||
Condensate
(MBopd)
|
2 | 2 | 2 | 2 | ||||||||||||
LPG
(MBpd)
|
6 | 6 | 6 | 6 | ||||||||||||
Average
Realized Prices:
|
||||||||||||||||
Methanol
(per gallon)
|
$ | 0.49 | $ | 1.15 | $ | 0.47 | $ | 1.38 | ||||||||
Condensate
(per Bbl)
|
56.12 | 118.95 | 50.38 | 107.01 | ||||||||||||
LPG
(per Bbl)
|
30.12 | 69.70 | 28.38 | 65.50 |
Total
|
United
States
|
West
Africa
|
North
Sea
|
Israel
|
Other
Int'l, Corporate(1)
|
|||||||||||||||||||
(in
millions)
|
||||||||||||||||||||||||
Three
Months Ended June 30, 2009
|
||||||||||||||||||||||||
Oil
and Gas Operating Costs (2)
|
$ | 88 | $ | 60 | $ | 11 | $ | 9 | $ | 3 | $ | 5 | ||||||||||||
Workover
and Repair Expense
|
5 | 5 | - | - | - | - | ||||||||||||||||||
Lease
Operating Expense
|
93 | 65 | 11 | 9 | 3 | 5 | ||||||||||||||||||
Production
and Ad Valorem Taxes
|
23 | 20 | - | - | - | 3 | ||||||||||||||||||
Transportation
Expense
|
13 | 11 | - | 1 | - | 1 | ||||||||||||||||||
Total
Production Costs
|
129 | 96 | 11 | 10 | 3 | 9 | ||||||||||||||||||
Three
Months Ended June 30, 2008
|
||||||||||||||||||||||||
Oil
and Gas Operating Costs (2)
|
80 | 56 | 10 | 9 | 2 | 3 | ||||||||||||||||||
Workover
and Repair Expense
|
8 | 8 | - | - | - | - | ||||||||||||||||||
Lease
Operating Expense
|
88 | 64 | 10 | 9 | 2 | 3 | ||||||||||||||||||
Production
and Ad Valorem Taxes
|
51 | 41 | - | - | - | 10 | ||||||||||||||||||
Transportation
Expense
|
16 | 14 | - | 2 | - | - | ||||||||||||||||||
Total
Production Costs
|
155 | 119 | 10 | 11 | 2 | 13 | ||||||||||||||||||
Six
Months Ended June 30, 2009
|
||||||||||||||||||||||||
Oil
and Gas Operating Costs (2)
|
180 | 131 | 20 | 17 | 4 | 8 | ||||||||||||||||||
Workover
and Repair Expense
|
13 | 11 | - | 2 | - | - | ||||||||||||||||||
Lease
Operating Expense
|
193 | 142 | 20 | 19 | 4 | 8 | ||||||||||||||||||
Production
and Ad Valorem Taxes
|
42 | 38 | - | - | - | 4 | ||||||||||||||||||
Transportation
Expense
|
25 | 21 | - | 2 | - | 2 | ||||||||||||||||||
Total
Production Costs
|
260 | 201 | 20 | 21 | 4 | 14 | ||||||||||||||||||
Six
Months Ended June 30, 2008
|
||||||||||||||||||||||||
Oil
and Gas Operating Costs (2)
|
156 | 105 | 19 | 20 | 4 | 8 | ||||||||||||||||||
Workover
and Repair Expense
|
14 | 14 | - | - | - | - | ||||||||||||||||||
Lease
Operating Expense
|
170 | 119 | 19 | 20 | 4 | 8 | ||||||||||||||||||
Production
and Ad Valorem Taxes
|
94 | 74 | - | - | - | 20 | ||||||||||||||||||
Transportation
Expense
|
29 | 25 | - | 4 | - | - | ||||||||||||||||||
Total
Production Costs
|
$ | 293 | $ | 218 | $ | 19 | $ | 24 | $ | 4 | $ | 28 |
(1)
|
Other
international includes Ecuador, China, and Argentina (through February
2008).
|
(2)
|
Oil
and gas operating costs include labor, fuel, repairs, replacements,
saltwater disposal and other related lifting
costs.
|
Three
Months Ended
June
30,
|
Six
Months Ended
June
30,
|
|||||||||||||||
2009
|
2008
|
2009
|
2008
|
|||||||||||||
Oil
and Gas Operating Costs
|
$ | 4.88 | $ | 4.23 | $ | 4.99 | $ | 4.05 | ||||||||
Workover
and Repair Expense
|
0.29 | 0.42 | 0.35 | 0.38 | ||||||||||||
Lease
Operating Expense
|
5.17 | 4.65 | 5.34 | 4.43 | ||||||||||||
Production
and Ad Valorem Taxes
|
1.29 | 2.67 | 1.14 | 2.45 | ||||||||||||
Transportation
Expense
|
0.73 | 0.81 | 0.68 | 0.74 | ||||||||||||
Total
Production Costs (1)
(2)
|
$ | 7.19 | $ | 8.13 | $ | 7.16 | $ | 7.62 |
(1)
|
Consolidated
unit rates exclude sales volumes and expenses attributable to equity
method investees. Sales volumes include natural gas sales to an LNG plant
in Equatorial Guinea. The inclusion of these volumes reduced the unit rate
by $1.45 per BOE and $1.32 per BOE for second quarter 2009 and 2008,
respectively, and $1.38 per BOE and $1.21 per BOE for the first six months
of 2009 and 2008, respectively.
|
(2)
|
Natural
gas is converted on the basis of six Mcf of gas per one barrel of oil
equivalent.
|
Total
|
United
States
|
West
Africa
|
North
Sea
|
Eastern
Mediter-ranean
|
Other
Int'l, Corporate (1)
|
|||||||||||||||||||
(in
millions)
|
||||||||||||||||||||||||
Three
Months Ended June 30, 2009
|
||||||||||||||||||||||||
Dry
Hole Expense
|
$ | 7 | $ | 7 | $ | - | $ | - | $ | - | $ | - | ||||||||||||
Seismic
|
7 | 5 | - | - | 2 | - | ||||||||||||||||||
Staff
Expense
|
17 | 3 | 3 | - | - | 11 | ||||||||||||||||||
Other
|
2 | 2 | - | - | - | - | ||||||||||||||||||
Total
Exploration Expense
|
33 | 17 | 3 | - | 2 | 11 | ||||||||||||||||||
Three
Months Ended June 30, 2008
|
||||||||||||||||||||||||
Dry
Hole Expense
|
$ | 61 | $ | 28 | $ | 1 | $ | - | $ | - | $ | 32 | ||||||||||||
Seismic
|
20 | 16 | - | 4 | - | - | ||||||||||||||||||
Staff
Expense
|
16 | 1 | 4 | 3 | - | 8 | ||||||||||||||||||
Other
|
6 | 6 | - | - | - | - | ||||||||||||||||||
Total
Exploration Expense
|
103 | 51 | 5 | 7 | - | 40 | ||||||||||||||||||
Six
Months Ended June 30, 2009
|
||||||||||||||||||||||||
Dry
Hole Expense
|
$ | 9 | $ | 6 | $ | 4 | $ | - | $ | - | $ | (1 | ) | |||||||||||
Seismic
|
30 | 28 | - | - | 2 | - | ||||||||||||||||||
Staff
Expense
|
32 | 6 | 6 | 1 | - | 19 | ||||||||||||||||||
Other
|
4 | 4 | - | - | - | - | ||||||||||||||||||
Total
Exploration Expense
|
75 | 44 | 10 | 1 | 2 | 18 | ||||||||||||||||||
Six
Months Ended June 30, 2008
|
||||||||||||||||||||||||
Dry
Hole Expense
|
$ | 68 | $ | 27 | $ | 1 | $ | 8 | $ | - | $ | 32 | ||||||||||||
Seismic
|
33 | 29 | - | 4 | - | - | ||||||||||||||||||
Staff
Expense
|
32 | 6 | 4 | 4 | - | 18 | ||||||||||||||||||
Other
|
10 | 10 | - | - | - | - | ||||||||||||||||||
Total
Exploration Expense
|
143 | 72 | 5 | 16 | - | 50 |
(1)
|
Other
international includes amounts spent in support of various international
new ventures.
|
Three
Months Ended
June
30,
|
Six
Months Ended
June
30,
|
|||||||||||||||
2009
|
2008
|
2009
|
2008
|
|||||||||||||
(in
millions, except unit rate)
|
||||||||||||||||
DD&A
Expense
|
$ | 192 | $ | 194 | $ | 389 | $ | 395 | ||||||||
Accretion
of Discount on Asset Retirement Obligations
|
4 | 2 | 7 | 4 | ||||||||||||
Total
DD&A Expense
|
$ | 196 | $ | 196 | $ | 396 | $ | 399 | ||||||||
Unit
Rate per BOE
(1)
|
$ | 10.88 | $ | 10.30 | $ | 10.95 | $ | 10.36 |
(1)
|
Consolidated
unit rates exclude sales volumes and expenses attributable to equity
method investees. Sales volumes include natural gas sales to an LNG plant
in Equatorial Guinea. The inclusion of these volumes reduced the unit rate
by $1.82 per BOE and $1.34 per BOE for second quarter 2009 and 2008,
respectively, and $1.75 and $1.32 per BOE for the first six months of 2009
and 2008, respectively.
|
Three
Months Ended
June
30,
|
Six
Months Ended
June
30,
|
|||||||||||||||
2009
|
2008
|
2009
|
2008
|
|||||||||||||
G&A
Expense (in millions)
|
$ | 60 | $ | 61 | $ | 119 | $ | 121 | ||||||||
Unit
Rate per BOE (1)
|
$ | 3.35 | $ | 3.21 | $ | 3.29 | $ | 3.15 |
(1)
|
Consolidated
unit rates exclude sales volumes and expenses attributable to equity
method investees. Sales volumes include natural gas sales to an LNG plant
in Equatorial Guinea. The inclusion of these volumes reduced the unit rate
by $0.68 per BOE and $0.52 per BOE for second quarter 2009 and 2008,
respectively and $0.63 per BOE and $0.50 per BOE for the first six months
of 2009 and 2008, respectively.
|
Three
Months Ended
June
30,
|
Six
Months Ended
June
30,
|
|||||||||||||||
2009
|
2008
|
2009
|
2008
|
|||||||||||||
(in
millions)
|
||||||||||||||||
Interest
Expense
|
$ | 35 | $ | 23 | $ | 59 | $ | 49 | ||||||||
Capitalized
Interest
|
(12 | ) | (6 | ) | (18 | ) | (15 | ) | ||||||||
Interest
Expense, net
|
$ | 23 | $ | 17 | $ | 41 | $ | 34 |
Three
Months Ended
June
30,
|
Six
Months Ended
June
30,
|
|||||||||||||||
2009
|
2008
|
2009
|
2008
|
|||||||||||||
Income
Tax Provision (Benefit) (in millions)
|
$ | (33 | ) | $ | (54 | ) | $ | (218 | ) | $ | 48 | |||||
Effective
Rate
|
37 | % | 27 | % | 47 | % | 40 | % |
Six
Months Ended
June
30,
|
||||||||
2009
|
2008
|
|||||||
(in
millions)
|
||||||||
Total
Cash Provided By (Used in):
|
||||||||
Operating
Activities
|
$ | 498 | $ | 1,154 | ||||
Investing
Activities
|
(777 | ) | (823 | ) | ||||
Financing
Activities
|
95 | (8 | ) | |||||
Increase
(Decrease) in Cash and Cash Equivalents
|
$ | (184 | ) | $ | 323 |
Three
Months Ended
June
30,
|
Six
Months Ended
June
30,
|
|||||||||||||||
2009
|
2008
|
2009
|
2008
|
|||||||||||||
(in
millions)
|
||||||||||||||||
Acquisition,
Capital and Exploration Expenditures
|
||||||||||||||||
Unproved
Property Acquisition
|
$ | 46 | $ | 87 | $ | 62 | $ | 263 | ||||||||
Exploration
|
50 | 198 | 145 | 243 | ||||||||||||
Development
|
198 | 261 | 429 | 506 | ||||||||||||
Corporate
and Other
|
29 | 15 | 73 | 34 | ||||||||||||
Total
|
$ | 323 | $ | 561 | $ | 709 | $ | 1,046 |
Interest
Rate Risk
|
Foreign
Currency Risk
|
|
·
|
the
extent and effect of any hedging activities engaged in by
us;
|
|
·
|
our
growth strategies;
|
|
·
|
our
ability to successfully and economically explore for and develop crude oil
and natural gas resources;
|
|
·
|
anticipated
trends in our business;
|
|
·
|
our
future results of operations;
|
|
·
|
effect
of current volatility in the credit
markets;
|
|
·
|
our
liquidity and ability to finance our exploration and development
activities;
|
|
·
|
market
conditions in the oil and gas
industry;
|
|
·
|
our
ability to make and integrate acquisitions;
and
|
|
·
|
the
impact of governmental regulation.
|
|
(a)
|
Our
annual stockholders meeting was held at 9:30 a.m., Central Time, on
Tuesday, April 28, 2009 in The Woodlands,
Texas.
|
|
(b)
|
Proxies
were solicited by our Board of Directors pursuant to Regulation 14A under
the Securities Exchange Act of 1934. There was no solicitation in
opposition to the Board of Directors’ nominees as listed in the proxy
statement and all such nominees were duly
elected.
|
|
(c)
|
Out
of a total of 173,328,806 shares of our common stock outstanding and
entitled to vote, 158,577,955 shares were present in person or by proxy,
representing 91.49% of the outstanding shares of common
stock.
|
The
stockholder voting results are as
follows:
|
Number
of
Shares
Voting
For
Election As
Director
|
Number
of
Shares
Withholding
Authority
To
Vote
for
Election As
Director
|
|||
Jeffrey
L. Berenson
|
155,834,018
|
2,743,937
|
||
Michael
A. Cawley
|
152,273,049
|
6,304,906
|
||
Edward
F. Cox
|
155,358,078
|
3,219,877
|
||
Charles
D. Davidson
|
155,278,394
|
3,299,561
|
||
Thomas
J. Edelman
|
157,425,631
|
1,152,324
|
||
Eric
P. Grubman
|
157,954,331
|
623,624
|
||
Kirby
L. Hedrick
|
155,909,611
|
2,668,344
|
||
Scott
D. Urban
|
157,595,343
|
982,612
|
||
William
T. Van Kleef
|
157,671,218
|
906,737
|
|
(For
157,421,503; Against 1,082,482; Abstaining
73,970)
|
|
Proposal
III. Ratification of amendment of 1992 Stock Option and
Restricted Stock Plan to increase the number of shares of common stock
authorized for issuance under the plan from 22,000,000 to
24,000,000.
|
|
(For
93,068,057; Against 54,295,631; Abstaining 97,536; Broker Non-Vote
11,116,731)
|
NOBLE
ENERGY, INC.
|
||
(Registrant)
|
Date
|
July
30, 2009
|
/s/
Frederick B. Bruning
|
|
Frederick
B. Bruning
Vice
President and Chief Accounting Officer
|
|||
Exhibit
Number
|
Exhibit
|
|
10.1
|
Noble
Energy, Inc. 1992 Stock Option and Restricted Stock Plan (as amended
through April 28, 2009) (incorporated by reference to Exhibit 10.1 to the
Company’s Current Report on Form 8-K filed April 29,
2009).
|
31.1
|
Certification
of the Company’s Chief Executive Officer Pursuant To Section 302 of the
Sarbanes-Oxley Act of 2002 (18 U.S.C. Section
7241).
|
31.2
|
Certification
of the Company’s Acting Principal Financial Officer Pursuant To Section
302 of the Sarbanes-Oxley Act of 2002 (18 U.S.C. Section
7241).
|
32.1
|
Certification
of the Company’s Chief Executive Officer Pursuant To Section 906 of the
Sarbanes-Oxley Act of 2002 (18 U.S.C. Section
1350).
|
32.2
|
Certification
of the Company’s Acting Principal Financial Officer Pursuant To Section
906 of the Sarbanes-Oxley Act of 2002 (18 U.S.C. Section
1350).
|
101
|
The
following materials from the Noble Energy, Inc. Quarterly Report on Form
10-Q for the quarter ended June 30, 2009, formatted in XBRL (eXtensible
Business Reporting Language): (i) the Consolidated Statements of
Operations, (ii) the Consolidated Balance Sheets, (iii) the
Consolidated Statements of Cash Flows, (iv) the Consolidated Statements of
Shareholders’ Equity, and (v) Notes to the Consolidated Financial
Statements, tagged as blocks of
text.
|