UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C.  20549

 

 

FORM 10-K

 

 

 

SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT: None

 

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

 

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of the registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.  ý

 

Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Act). Yes  ý   No  o

 

Aggregate market value of Common Stock held by nonaffiliates as of June 30, 2003:  $2,085,000,000.
Number of shares of Common Stock outstanding as of March 1, 2004:  57,710,547.

 

DOCUMENT INCORPORATED BY REFERENCE

 

Portions of the Registrant’s definitive proxy statement for the 2004 Annual Meeting of Stockholders to be held on April 27, 2004, which will be filed with the Securities and Exchange Commission within 120 days after December 31, 2003, are incorporated by reference into Part III.

 

 

TABLE OF CONTENTS

 

PART I.

 

Item 1.		Business
		General
		Crude Oil and Natural Gas
		Exploration, Exploitation and Development Activities
		Production Activities
		Acquisitions of Oil and Gas Properties, Leases and Concessions
		Dispositions of Oil and Gas Properties
		Marketing
		Regulations and Risks
		Competition
		Unconsolidated Subsidiaries
		Geographical Data
		Employees
		Available Information
Item 2.		Properties
		Offices
		Crude Oil and Natural Gas
Item 3.		Legal Proceedings
Item 4.		Submission of Matters to a Vote of Security Holders
		Executive Officers of the Registrant

 

PART II.

 

Item 5.		Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities
Item 6.		Selected Financial Data
Item 7.		Management’s Discussion and Analysis of Financial Condition and Results of Operations
Item 7a.		Quantitative and Qualitative Disclosures About Market Risk
Item 8.		Financial Statements and Supplementary Data
Item 9.		Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
Item 9a.		Controls and Procedures

 

PART III.

 

Item 10.		Directors and Executive Officers of the Registrant
Item 11.		Executive Compensation
Item 12.		Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
Item 13.		Certain Relationships and Related Transactions
Item 14.		Principal Accountant Fees and Services

 

PART IV.

 

Item 15.

Exhibits, Financial Statement Schedules and Reports on Form 8-K

 

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PART I

 

Item 1.            Business.

 

This Annual Report on Form 10-K and the documents incorporated herein by reference contain forward-looking statements based on expectations, estimates and projections as of the date of this filing. These statements by their nature are subject to risks, uncertainties and assumptions and are influenced by various factors. As a consequence, actual results may differ materially from those expressed in the forward-looking statements. For more information, see “Item 7a. Quantitative and Qualitative Disclosures About Market Risk—Cautionary Statement for Purposes of the Private Securities Litigation Reform Act of 1995 and Other Federal Securities Laws” of this Form 10-K.

 

General

 

Noble Energy, Inc. (the “Company” or “Noble Energy”), formerly known as Noble Affiliates, Inc., is a Delaware corporation that has been publicly traded on the New York Stock Exchange since 1980. Noble Energy has been engaged, directly or through its subsidiaries, in the exploration, production and marketing of crude oil and natural gas since 1932, when Noble Energy’s predecessor, Samedan Oil Corporation (“Samedan”), was organized. Noble Energy was organized in 1969 under the name “Noble Affiliates, Inc.” and was Samedan’s parent entity until Samedan was merged into Noble Energy at year-end 2002. The Company is noted for its innovative methods of marketing its international gas reserves through projects such as its methanol plant in Equatorial Guinea and its gas-to-power project in Ecuador.

 

In this report, unless otherwise indicated or the context otherwise requires, the “Company” or the “Registrant” refers to Noble Energy, Inc. and its subsidiaries. Effective December 31, 2001, Energy Development Corporation (“EDC”) was merged into Samedan. Effective December 31, 2002, Noble Trading, Inc. (“NTI”) was merged into Noble Gas Marketing, Inc. (“NGM”) under the name of Noble Energy Marketing, Inc. (“NEMI”).

 

As of January 1, 2003, the Company’s wholly-owned subsidiary, NEMI, markets the majority of the Company’s domestic natural gas as well as third-party natural gas. NEMI also markets a portion of the Company’s domestic crude oil as well as third-party crude oil. For more information regarding NEMI’s operations, see “Item 1. Business—Crude Oil and Natural Gas—Marketing” of this Form 10-K.

 

In this report, the following abbreviations are used:

 

Bbl	Barrel
Bbls	Barrels
MBbls	Thousand barrels
Bpd	Barrels per day
Bopd	Barrels oil per day
MMBbl	Million barrels
MBpd	Thousand barrels per day
MMBpd	Million barrels per day
MBopd	Thousand barrels oil per day
MMBopd	Million barrels oil per day
BOE	Barrels oil equivalent
MMBoe	Million barrels oil equivalent
MMBoepd	Million barrels oil equivalent per day
$MM	Millions of dollars
Kwh	Kilowatt hour
MW	Megawatt
MWH	Megawatt hours
Mcf	Thousand cubic feet
Mcfpd	Thousand cubic feet per day
Mcfe	Thousand cubic feet equivalent
MMcf	Million cubic feet
MMcfepd	Million cubic feet equivalent per day
MMcfpd	Million cubic feet per day
Bcf	Billion cubic feet
Bcfe	Billion cubic feet equivalent
Bcfepd	Billion cubic feet equivalent per day
Bcfpd	Billion cubic feet per day
BTU	British thermal unit
BTUpcf	British thermal unit per cubic foot
MMBTU	Million British thermal unit
MMBTUpd	Million British thermal unit per day
MTpd	Metric tons per day
LPG	Liquefied petroleum gas

 

For reporting BOE or Mcfe, one Bbl of oil, condensate or LPG is equal to six Mcf of natural gas.

 

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Crude Oil and Natural Gas

 

Noble Energy, directly or through its subsidiaries or various arrangements with other companies, explores for, develops and produces crude oil and natural gas. Exploration activities include geophysical and geological evaluation and exploratory drilling on properties for which the Company has exploration rights. The Company has exploration, exploitation and production operations domestically and internationally. The domestic areas consist of: offshore in the Gulf of Mexico and California; the Gulf Coast Region (Louisiana and Texas); the Mid-Continent Region (Oklahoma and Kansas); and the Rocky Mountain Region (Colorado, Montana, Nevada, Wyoming and California). The international areas of operations include Argentina, China, Ecuador, Equatorial Guinea, the Mediterranean Sea (Israel), the North Sea (Denmark, the Netherlands and the United Kingdom) and Vietnam. For more information regarding Noble Energy’s crude oil and natural gas properties, see “Item 2. Properties—Crude Oil and Natural Gas” of this Form 10-K.

 

Exploration, Exploitation and Development Activities

 

Domestic Offshore. Noble Energy has been actively engaged in exploration, exploitation and development of crude oil and natural gas properties in the Gulf of Mexico (Texas, Louisiana, Mississippi and Alabama) and California since 1968. The Company has shifted its domestic offshore exploration focus to the Gulf of Mexico deep shelf and deepwater areas, and away from the Gulf of Mexico’s conventional shallow shelf, in order to take advantage of larger prospect sizes and potential higher rates of return. The Company’s current offshore production is derived from 186 gross wells operated by Noble Energy and 299 gross wells operated by others. At December 31, 2003, the Company held offshore federal leases covering 932,820 gross developed acres and 755,658 gross undeveloped acres on which the Company currently intends to conduct future exploration activities. For more information, see “Item 2.  Properties—Crude Oil and Natural Gas” of this Form 10-K.

 

Domestic Onshore. Noble Energy has been actively engaged in exploration, exploitation and development of crude oil and natural gas properties in three regions since the 1930s. The Gulf Coast Region covers onshore Louisiana and Texas. The Mid-Continent Region covers Oklahoma and Kansas. Properties in the Rocky Mountain Region are located in Colorado, Montana, Nevada, Wyoming and California.

 

Noble Energy’s current onshore production is derived from 1,330 gross wells operated by the Company and 511 gross wells operated by others. At December 31, 2003, the Company held 667,708 gross developed acres and 351,201 gross undeveloped acres onshore on which the Company may conduct future exploration activities. For more information, see “Item 2. Properties—Crude Oil and Natural Gas” of this Form 10-K.

 

Argentina. Noble Energy has been actively engaged in exploration, exploitation and development of crude oil and natural gas properties in Argentina since 1996. The Company’s producing properties are located in southern Argentina in the El Tordillo field, which is characterized by secondary recovery crude oil production from a 10,000 acre reservoir. At December 31, 2003, the Company held 28,988 gross developed acres and 2,426,221 gross undeveloped acres in Argentina on which the Company may conduct future exploration activities. For more information, see “Item 2.  Properties—Crude Oil and Natural Gas” of this Form 10-K.

 

China. Noble Energy has been actively engaged in exploration, exploitation and development of crude oil and natural gas properties in China since 1996. The Company has a concession offshore China in the southern portion of Bohai Bay. At December 31, 2003, the Company held 7,413 gross developed acres and 1,617,549 gross undeveloped acres in China on which the Company may conduct future exploration activities. For more information, see “Item 2.  Properties—Crude Oil and Natural Gas” of this Form 10-K.

 

Ecuador. Noble Energy has been actively engaged in exploration, exploitation and development of crude oil and natural gas properties in Ecuador since 1996. The Company is currently utilizing the gas in the Amistad gas field

 

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(offshore Ecuador), which was discovered in the 1970s, to generate electricity through its 100 percent-owned natural gas-fired power plant, located near the city of Machala. With a current generating capacity of 130 MW of electricity, additional capital investment for combined cycle to the power plant could ultimately increase capacity to generate 220 MW of electricity into the Ecuadorian power grid. The concession covers 12,355 gross developed acres and 851,771 gross undeveloped acres encompassing the Amistad field. For more information, see “Item 2.  Properties—Crude Oil and Natural Gas” of this Form 10-K.

 

Equatorial Guinea. Noble Energy has been actively engaged in exploration, exploitation and development of crude oil and natural gas properties offshore Equatorial Guinea (West Africa) since 1990. Production is from the Alba field, which produces natural gas and condensate. The majority of the natural gas production is sold to a methanol plant, which began production in the second quarter of 2001. The methanol plant has a contract through 2026 to purchase natural gas from the Alba field. The plant is owned by Atlantic Methanol Production Company LLC (“AMPCO”), in which the Company owns a 45 percent interest through its ownership of Atlantic Methanol Capital Company (“AMCCO”). For more information on the methanol plant, see “Item 1. Business—Unconsolidated Subsidiaries” of this Form 10-K.

 

At December 31, 2003, the Company held 45,203 gross developed acres and 266,754 gross undeveloped acres offshore Equatorial Guinea on which the Company may conduct future exploration activities. For more information, see “Item 2.  Properties—Crude Oil and Natural Gas” of this Form 10-K.

 

Israel. Noble Energy has been actively engaged in exploration, exploitation and development of crude oil and natural gas properties in the Mediterranean Sea, offshore Israel, since 1998. The Company owns a 47 percent interest in three licenses and two leases. At December 31, 2003, the Company held 123,552 gross developed acres and 292,572 gross undeveloped acres located about 20 miles offshore Israel in water depths ranging from 700 feet to 5,000 feet. Noble Energy and its partners announced, on December 24, 2003, the commencement of production of natural gas from its Mari-B field. Sales of natural gas to Israel Electric Corporation (“IEC”) began in February 2004 under a definitive agreement executed in June 2002. For more information, see “Item 2. Properties—Crude Oil and Natural Gas” of this Form 10-K.

 

North Sea. Noble Energy has been actively engaged in exploration, exploitation and development of crude oil and natural gas properties in the North Sea (Denmark, the Netherlands and the United Kingdom) since 1996. At December 31, 2003, the Company held 66,354 gross developed acres and 573,838 gross undeveloped acres on which the Company may conduct future exploration activities. For more information, see “Item 2.  Properties—Crude Oil and Natural Gas” of this Form 10-K.

 

Vietnam. In December 2003, Noble Energy elected not to pursue any additional exploration efforts in the Nam Con Son Basin of Vietnam. As a result, the Company wrote off its investment in Vietnam and is in the process of assigning its ownership in the two blocks. During 2003, the Company expensed one exploratory well and associated exploration costs.

 

Production Activities

 

Revenues from sales of crude oil, natural gas and gathering, marketing and processing (“GMP”) have accounted for approximately 90 percent or more of consolidated revenues for each of the last three fiscal years.

 

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Operated Property Statistics. The percentage of properties operated by the Company indicates the amount of control over timing of operations. The percentage of operated crude oil and natural gas wells on both the well count and percentage of sales volume basis are shown in the following table as of December 31:

 

		2003				2002				2001
(in percentages)		Oil		Gas		Oil		Gas		Oil		Gas
Operated well count basis		19.6		60.1		23.3		62.8		24.8		60.6
Operated sales volume basis		33.3		48.8		29.3		45.1		37.2		52.3

 

Non-operated Property Statistics. The percentage of non-operated crude oil and natural gas wells on both the well count and the percentage of sales volume basis are shown in the following table as of December 31:

 

		2003				2002				2001
(in percentages)		Oil		Gas		Oil		Gas		Oil		Gas
Non-operated well count basis		80.4		39.9		76.7		37.2		75.2		39.4
Non-operated sales volume basis		66.7		51.2		70.7		54.9		62.8		47.7

 

Net Production. The following table sets forth Noble Energy’s net crude oil and natural gas production, including royalty, from continuing operations, for the three years ended December 31:

 

		2003		2002		2001
Crude oil production (MMBbl)		13.1		10.6		9.1
Natural gas production (Bcf)		122.9		124.5		129.8

 

Crude Oil and Natural Gas Equivalents. The following table sets forth Noble Energy’s net production stated in crude oil and natural gas equivalent volumes, including royalty, from continuing operations, for the three years ended December 31:

 

		2003		2002		2001
Total crude oil equivalents (MMBoe)		33.6		31.4		30.8
Total natural gas equivalents (Bcfe)		201.7		188.2		184.5

 

Acquisitions of Oil and Gas Properties, Leases and Concessions

 

During 2003, Noble Energy spent approximately $1.2 million on the purchase of proved crude oil and natural gas properties. The Company spent approximately $8.0 million in 2002 and  $97.6 million in 2001 on the acquisition of proved properties. For more information, see “Item 2.  Properties—Crude Oil and Natural Gas” of this Form 10-K.

 

During 2003, Noble Energy spent approximately $10.2 million on acquisitions of unproved properties. The Company spent approximately $30.6 million in 2002 and $81.3 million in 2001 on acquisitions of unproved properties. These properties were acquired primarily through various offshore lease sales, domestic onshore lease acquisitions and international concession negotiations. For more information, see “Item 2.  Properties—Crude Oil and Natural Gas” of this Form 10-K.

 

Dispositions of Oil and Gas Properties

 

During 2003, the Company identified five packages of non-core domestic properties to be sold. The properties held for disposition were reported as discontinued operations. Overall, these properties represented approximately six percent of year-end reserves and nine percent of 2003 production. Four of the five packages closed in 2003; the fifth

 

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is scheduled to close in the first half of 2004. The Company received $79.9 million from the sale of the four packages. The estimated reserves associated with these four packages were 17.2 MMBoe.

 

During 2002, the Company sold approximately 4.1 MMBoe of reserves and received approximately $20.4 million from the sale of properties.

 

Marketing

 

NEMI seeks opportunities to enhance the value of the Company’s domestic natural gas production by marketing directly to end-users and aggregating natural gas to be sold to natural gas marketers and pipelines. During 2003, approximately 86 percent of NEMI’s total sales were to end-users. NEMI is also actively involved in the purchase and sale of natural gas from other producers. Such third-party natural gas production may be purchased from non-operators who own working interests in the Company’s wells or from other producers’ properties in which the Company may not own an interest. NEMI, through its wholly-owned subsidiary, Noble Gas Pipeline, Inc., engages in the installation, purchase and operation of natural gas gathering systems.

 

Noble Energy has a short-term natural gas sales contract with NEMI, whereby the Company is paid an index price for all natural gas sold to NEMI. The contract does not specify scheduled quantities or delivery points and expires on May 31, 2004. The Company sold approximately 64 percent of its natural gas production to NEMI in 2003. NEMI’s revenues from sales of natural gas, including related derivative financial transactions, less cost of goods sold are reported in GMP. All intercompany sales and expenses are eliminated in the Company’s consolidated financial statements. The Company has a small number of long-term natural gas contracts representing approximately four percent of its 2003 natural gas sales.

 

Substantial competition in the natural gas marketplace continued in 2003. The Company’s average natural gas price increased $1.24 from $2.89 per Mcf in 2002 to $4.13 per Mcf in 2003. Due to the volatility of natural gas prices, the Company, from time to time, has used derivative instruments and may do so in the future as a means of controlling its exposure to commodity price changes. For additional information, see “Item 7a. Quantitative and Qualitative Disclosures About Market Risk” and “Item 8. Financial Statements and Supplementary Data” of this Form 10-K.

 

Crude oil produced by the Company is sold to purchasers in the United States and foreign locations at various prices depending on the location and quality of the crude oil.  The Company has no long-term contracts with purchasers of its crude oil production. Crude oil and condensate are distributed through pipelines and by trucks to gatherers, transportation companies and end-users. NEMI markets approximately 34 percent of the Company’s crude oil production as well as certain third-party crude oil. The Company records all of NEMI’s revenues from sales of crude oil, less cost of goods sold, as GMP. All intercompany sales and expenses are eliminated in the Company’s consolidated financial statements.

 

Crude oil prices are affected by a variety of factors that are beyond the control of the Company. The Company’s average crude oil price from continuing operations increased $3.50 from $24.22 per Bbl in 2002 to $27.72 per Bbl in 2003. Due to the volatility of crude oil prices, the Company, from time to time, has used derivative instruments and may do so in the future as a means of controlling its exposure to price changes. For additional information, see “Item 7a. Quantitative and Qualitative Disclosures About Market Risk” and “Item 8. Financial Statements and Supplementary Data” of this Form 10-K.

 

The largest single non-affiliated purchaser of the Company’s crude oil production in 2003 accounted for approximately 16 percent of the Company’s crude oil sales, representing approximately six percent of total revenues. The five largest purchasers accounted for approximately 57 percent of total crude oil sales. The largest single non-affiliated purchaser of the Company’s natural gas production in 2003 accounted for approximately five percent of its natural gas sales, representing approximately three percent of total revenues. The five largest purchasers accounted

 

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for approximately 18 percent of total natural gas sales. The Company does not believe that its loss of a major crude oil or natural gas purchaser would have a material effect on the Company.

 

Regulations and Risks

 

General. Exploration for and production and sale of crude oil and natural gas are extensively regulated at the international, national, state and local levels. Crude oil and natural gas development and production activities are subject to various laws and regulations (and orders of regulatory bodies pursuant thereto) governing a wide variety of matters, including allowable rates of production, prevention of waste and pollution and protection of the environment. Laws affecting the crude oil and natural gas industry are under constant review for amendment or expansion and frequently increase the regulatory burden on companies. Noble Energy’s ability to economically produce and sell crude oil and natural gas is affected by a number of legal and regulatory factors, including federal, state and local laws and regulations in the United States and laws and regulations of foreign nations. Many of these governmental bodies have issued rules and regulations that are often difficult and costly to comply with, and that carry substantial penalties for failure to comply. These laws, regulations and orders may restrict the rate of crude oil and natural gas production below the rate that would otherwise exist in the absence of such laws, regulations and orders. The regulatory burden on the crude oil and natural gas industry increases its costs of doing business and consequently affects the Company’s profitability.

 

Certain Risks. In the Company’s exploration operations, losses may occur before any accumulation of crude oil or natural gas is found. If crude oil or natural gas is discovered, no assurance can be given that sufficient reserves will be developed to enable the Company to recover the costs incurred in obtaining the reserves or that reserves will be developed at a sufficient rate to replace reserves currently being produced and sold. The Company’s international operations are also subject to certain political, economic and other uncertainties including, among others, risk of war, expropriation, renegotiation or modification of existing contracts, taxation policies, foreign exchange restrictions, international monetary fluctuations and other hazards arising out of foreign governmental sovereignty over areas in which the Company conducts operations.

 

Environmental Matters. As a developer, owner and operator of crude oil and natural gas properties, the Company is subject to various federal, state, local and foreign country laws and regulations relating to the discharge of materials into, and the protection of, the environment. The unauthorized release or discharge of crude oil or certain other regulated substances from the Company’s domestic onshore or offshore facilities could subject the Company to liability under federal laws and regulations, including the Oil Pollution Act of 1990, the Outer Continental Shelf Lands Act and the Federal Water Pollution Control Act, as amended. These laws, among others, impose liability for such a release or discharge for pollution cleanup costs, damage to natural resources and the environment, various forms of direct and indirect economic losses, civil or criminal penalties, and orders or injunctions, including those that can require the suspension or cessation of operations causing or impacting or potentially impacting such release or discharge. The liability under these laws for such a release or discharge, subject to certain specified limitations on liability, may be large. If any pollution was caused by willful misconduct, willful negligence or gross negligence within the privity and knowledge of the Company, or was caused primarily by a violation of federal regulations, the Federal Water Pollution Control Act provides that such limitations on liability do not apply. Certain of the Company’s facilities are subject to regulations that require the preparation and implementation of spill prevention control and countermeasure plans relating to the prevention of, and preparation for, the possible discharge of crude oil into navigable waters.

 

The Comprehensive Environmental Response, Compensation and Liability Act, as amended (“CERCLA”), also known as “Superfund,” imposes liability on certain classes of persons that generated hazardous substances that have been released into the environment or that own or operate facilities or vessels onto or into which hazardous substances are disposed. The Resource Conservation and Recovery Act, as amended, (“RCRA”) and regulations promulgated thereunder, regulate hazardous waste, including its generation, treatment, storage and disposal. CERCLA currently exempts crude oil, and RCRA currently exempts certain crude oil and natural gas exploration and

 

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production drilling materials, such as drilling fluids and produced waters, from the definitions of hazardous substance and hazardous waste, respectively. The Company’s operations, however, may involve the use or handling of other materials that may be classified as hazardous substances and hazardous wastes, and therefore, these statutes and regulations promulgated under them would apply to the Company’s generation, handling and disposal of these materials. In addition, there can be no assurance that such exemptions will be preserved in future amendments of such acts, if any, or that more stringent laws and regulations protecting the environment will not be adopted.

 

Certain of the Company’s facilities may also be subject to other federal environmental laws and regulations, including the Clean Air Act with respect to emissions of air pollutants.

 

Certain state or local laws or regulations and common law may impose liabilities in addition to, or restrictions more stringent than, those described herein.

 

The environmental laws, rules and regulations of foreign countries are generally less stringent than those of the United States, and therefore, the requirements of such jurisdictions do not generally impose an additional compliance burden on the Company or on its subsidiaries.

 

The Company has made and will continue to make expenditures in its efforts to comply with environmental requirements. The Company does not believe that it has to date expended material amounts in connection with such activities or that compliance with such requirements will have a material adverse effect upon the capital expenditures, earnings or competitive position of the Company. Although such requirements do have a substantial impact upon the energy industry, they do not appear to affect the Company any differently or to any greater or lesser extent than other companies in the industry.

 

Insurance. The Company has various types of insurance coverages as are customary in the industry that include, in various degrees, directors and officers liability, general liability, well control, pollution, terrorism acts and physical damage insurance. The Company believes the coverages and types of insurance are adequate.

 

Competition

 

The oil and gas industry is highly competitive. Many companies and individuals are engaged in exploring for crude oil and natural gas and acquiring crude oil and natural gas properties, resulting in a high degree of competition for desirable exploratory and producing properties. A number of the companies with which the Company competes are larger and have greater financial resources than the Company.

 

The availability of a ready market for the Company’s crude oil and natural gas production depends on numerous factors beyond its control, including the level of consumer demand, the extent of worldwide crude oil and natural gas production, the costs and availability of alternative fuels, the costs and proximity of pipelines and other transportation facilities, regulation by state and federal authorities and the costs of complying with applicable environmental regulations.

 

Unconsolidated Subsidiaries

 

Through its ownership in AMCCO, the Company owns a 45 percent interest in AMPCO, which completed construction of a methanol plant in Equatorial Guinea in the second quarter of 2001. During 1999, AMCCO issued $125 million Series A-2 senior secured notes due December 15, 2004 to fund construction payments owed in connection with the construction of the methanol plant. The Company’s investment in the methanol plant is included in investment in unconsolidated subsidiaries. The $125 million Series A-2 notes are in current installments of long-term debt on the Company’s balance sheet.

 

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The plant construction started during 1998, and initial production of commercial grade methanol commenced May 2, 2001. The plant is designed to produce 2,500 MTpd of methanol, which equates to approximately 20,000 Bpd. At this level of production, the plant would purchase approximately 125 MMcfpd of natural gas from the 34 percent-owned Alba field. The methanol plant has a contract through 2026 to purchase natural gas from the Alba field. For more information, see “Item 8. Financial Statements and Supplementary Data—Note 9 - Unconsolidated Subsidiaries” of this Form 10-K.

 

Geographical Data

 

The Company has operations throughout the world and manages its operations by country. Information is grouped into five components that are all primarily in the business of crude oil and natural gas exploration, exploitation and production: United States, North Sea, Israel, Equatorial Guinea, and Other International, Corporate and Marketing. For more information, see “Item 8. Financial Statements and Supplementary Data—Note 11 - Geographical Data” of this Form 10-K.

 

Employees

 

The total number of employees of the Company decreased during the year from 624 at December 31, 2002, to 583 at December 31, 2003. In addition, one hundred sixty-seven foreign nationals worked in Noble Energy offices in China, Ecuador, Israel, the United Kingdom and Vietnam as of December 31, 2003.

 

Available Information

 

The Company’s website address is www.nobleenergyinc.com. Available on this website under “Investor Relations -Investor Relations Menu - SEC Filings,” free of charge, are Noble Energy’s annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, Forms 3, 4 and 5 filed on behalf of directors and officers and amendments to those reports as soon as reasonably practicable after such materials are electronically filed with or furnished to the United States Securities and Exchange Commission (“SEC”).

 

Also posted on the Company’s website, and available in print upon request of any stockholder to the Investor Relations Department, are charters for the Company’s Audit Committee, Compensation, Benefits and Stock Option Committee, Corporate Governance and Nominating Committee and the Environmental, Health and Safety Committee. Copies of the Code of Business Conduct and Ethics and the Code of Ethics for Chief Executive and Senior Financial Officers governing our directors, officers and employees (the “Codes”) are also posted on the Company’s website under the “Corporate Governance” section. Within the time period required by the SEC and the New York Stock Exchange, Inc., the Company will post on its website any modifications to the Codes and any waivers applicable to senior officers as defined in the applicable Code, as required by the Sarbanes-Oxley Act of 2002.

 

Item 2.            Properties.

 

Offices

 

The principal corporate office of the Registrant is located in Houston, Texas. The Company maintains offices for international, domestic onshore and domestic offshore operations in Houston, Texas. The Company also maintains offices in China, Ecuador, Israel, the United Kingdom and Vietnam. NEMI’s office is located in Houston, Texas.  The Company also maintains offices in Ardmore, Oklahoma for centralized accounting, division orders, employee benefits, information systems and related administrative functions.

 

Crude Oil and Natural Gas

 

The Company searches for potential crude oil and natural gas properties, seeks to acquire exploration rights in areas of interest and conducts exploratory activities. These activities include geophysical and geological evaluation and

 

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exploratory drilling, where appropriate, on properties for which it acquired exploration rights. During 2003, Noble Energy drilled or participated in the drilling of 164 gross (66.6 net) wells, comprised of 64 gross (10.1 net) international wells and 100 gross (56.5 net) domestic wells. For more information regarding Noble Energy’s oil and gas properties, see “Item 1. Business—Crude Oil and Natural Gas” of this Form 10-K.

 

Domestic Offshore. During 2003, Noble Energy’s offshore drilling program included 20 gross (6.1 net) exploration and development wells. Of the wells drilled in 2003, 14 wells, or 70 percent, were commercial discoveries and six wells were dry holes.

 

Green Canyon 136 A-8 (Shasta) commenced production in January 2003 at 30 MMcfpd gross.  Noble Energy has a 25 percent working interest in Shasta. The reserves on this previously existing field were recorded in prior years.

 

Green Canyon 199 (Lorien), an apparent deepwater crude oil discovery in 2003, is located in 2,177 feet of water and was drilled to a total depth of 17,432 feet.  The well encountered over 120 feet of oil in a high-quality reservoir interval.  Further appraisal will be conducted in 2004. The Company did not record any discovery of reserves on this property in 2003. The Company has a 20 percent working interest in Lorien.

 

Green Canyon 282 (Boris), a deepwater crude oil discovery, commenced production from the second well in the third quarter of 2003 at an initial gross rate of 4,000 Bopd and 7 MMcfpd. Combined with the discovery well, the field’s gross production was 20,000 Bopd and 33 MMcfpd at January 1, 2004. The Company has a 25 percent working interest in Boris. The reserves on this property were recorded in 2001 and 2002 without a flow test but did utilize other testing procedures.

 

Mississippi Canyon 837 (Loon), a deepwater natural gas discovery in 2001, is scheduled to commence production in the second quarter of 2004. The estimated initial gross production rate is 12 MMcfpd. Noble Energy has a 40 percent working interest in Loon. The reserves on this property were recorded in 2001 after a flow test of the well.

 

Noble Energy had several significant deep shelf properties commence production in 2003. State Lease 340 A-1 (Mound Point), a natural gas discovery in which the Company has a 25 percent working interest, commenced production in the fourth quarter at a gross rate of 850 Bopd and 28 MMcfpd. Viosca Knoll 251 A-3 and A-4 commenced production in the second quarter at a combined gross rate of 26 MMcfpd. Noble Energy has a 40 percent working interest in these wells. South Timbalier 316 (Roaring Fork) commenced production in the third quarter from the discovery well at an initial gross rate of 6,000 Bopd and 13 MMcfpd. During February 2004, the field’s gross production was 19,600 Bopd and 40 MMcfpd. The Company has a 40 percent working interest in Roaring Fork.

 

During 2003, the Company expensed four exploratory wells related to its offshore activity.

 

Noble Energy was the successful bidder, alone or with partners, on five of seven blocks at the Central Gulf of Mexico Outer Continental Shelf Sale 185. Of the five approved bids, two were on blocks in deepwater, one on a block in the deep shelf and the remaining blocks were on the conventional shelf. Approved bids totaled approximately $2.9 million net to the Company’s interest. Noble Energy will be the designated operator on all five of the approved bids.

 

The Company also participated in the Western Gulf of Mexico Outer Continental Shelf Sale 187. Noble Energy was the successful bidder, alone or with partners, on five of seven blocks. Of the five approved bids, three were on blocks in deepwater and the remaining blocks were on the conventional shelf. Approved bids totaled approximately $2.3 million net to the Company’s interest. Noble Energy will be the designated operator on all five of the approved bids.

 

9

 

Domestic Onshore. During 2003, Noble Energy’s onshore drilling program included 80 gross (50.4 net) exploration and development wells. Of the wells drilled in 2003, 50 wells, or 63 percent, were commercial discoveries and 30 wells were dry holes.

 

The Gulf Coast remains one of Noble Energy’s most active areas. During 2003, the Company drilled 45 wells in the Gulf Coast with a 53 percent success rate. The Aspect Resources joint venture accounted for a substantial portion of Noble Energy’s drilling activity during 2003 with 26 wells drilled and 13 successes.

 

Noble Energy had a three well program on its Wildcat Ridge project, located in Jefferson County, Texas. Two of the three wells drilled were successful, and additional prospects will be drilled in 2004. The two successful wells were producing 771 BOE per day, gross, at year-end 2003. The Company has a 37.5 percent working interest in the Wildcat Ridge project.

 

In south Louisiana, Noble Energy drilled and completed a discovery well and successful offset on the Savanne D’Or prospect in Lafourche Parish. The wells were producing 2,400 BOE per day, gross, at year-end 2003. The Company owns a 40 percent working interest in the prospect.

 

In Duval County, Texas, Noble Energy drilled six wells, of which five were successful. The prospects were identified with proprietary 3D seismic acquired in late 2002. The five successful wells were producing 2,100 BOE per day, gross, at year-end 2003. Noble Energy’s working interests in the wells drilled in 2003 range from 85 percent to 100 percent.

 

During 2003, the Company expensed 22 exploratory wells related to its onshore activity.

 

Argentina. Noble Energy participated with a 13 percent working interest in 55 development wells in the El Tordillo field during 2003. The Company has been awarded and is awaiting final government approval on a crude oil and natural gas exploration permit of approximately 1.2 million acres. The permit is located adjacent to an existing permit in the Cuyo Basin of Mendoza Province in western Argentina.

 

China. Noble Energy has a 57 percent working interest in the Cheng Dao Xi (“CDX”) field, which is located on the south side of Bohai Bay off the coast of China. Initial production from CDX commenced on January 13, 2003. During 2003, CDX averaged 5,781 Bopd (3,295 Bopd net to Noble Energy).

 

During 2003, the Company expensed two exploratory wells related to its block 16/02 activity in China. The 16/02 block was subsequently relinquished during the year. Noble Energy also relinquished its acreage in the Cheng Zi Kou field during 2003.

 

Ecuador. In September 2002, Noble Energy commenced operations of its 100 percent-owned integrated gas-to-power project. The project includes the Amistad field, which is located in the shallow waters of the Gulf of Guayaquil near the coast of Ecuador. The power plant is located on the coast near Machala, Ecuador and connects to the Amistad field via a 40-mile pipeline. The Machala power plant is the only natural gas-fired commercial power generator in Ecuador and currently has a generating capacity of 130 MW of electricity from twin General Electric Frame 6Fa turbines. Additional development drilling is planned for 2004.

 

Equatorial Guinea. During 2002, Noble Energy and its partners obtained approval from the government of Equatorial Guinea for Phases 2A and 2B Alba field expansion projects. The Phase 2A project includes adding two platforms, 12 wells, three pipelines and two compressors. The processed dry gas is then re-injected into the reservoir.

Initial startup of Phase 2A began in November 2003. The Phase 2A expansion is expected to increase gross condensate production approximately 27,700 Bpd (8,400 Bpd net to Noble Energy).

 

10

 

Phase 2B, scheduled to be completed late in the fourth quarter of 2004, is expected to increase gross production of LPG by approximately 14,000 Bpd (3,900 Bpd net to Noble Energy) and gross condensate production by approximately 6,000 Bpd (1,800 Bpd net to Noble Energy). The project includes increasing processing capacity, storage and offloading facilities at the existing LPG plant. A fractionation unit will also be installed.

 

Following the ramp-up of Phase 2A in 2004 and the completion of Phase 2B, gross condensate and LPG capacity will be approximately 52,000 Bpd (15,800 Bpd net to Noble Energy) and 16,700 Bpd (4,700 Bpd net to Noble Energy), respectively.

 

Noble Energy, through its subsidiaries, holds a 34 percent working interest in the Alba field and related condensate production facilities, a 28 percent working interest in the Bioko Island LPG plant and a 45 percent working interest in the AMPCO plant. The AMPCO plant purchases and processes approximately 125 MMcfpd of natural gas into 2,500 MTpd of methanol.

 

Israel. The Company and its partners have an agreement to provide approximately 170 MMcfpd of natural gas for use in IEC’s power plants. Natural gas will be produced from the Mari-B field, offshore Israel, which was discovered in 2000. Sales commenced February 18, 2004. Noble Energy has a 47 percent working interest in the project.

 

North Sea. The Company continued to focus on production and exploration growth in 2003 and added reserves in producing fields. The Company participated in two non-operated discoveries in the North Sea. Both discoveries are expected to lead to development. The Company plans to drill one exploration well in 2004.

 

Vietnam. In December 2003, Noble Energy elected not to pursue any additional exploration efforts in the Nam Con Son Basin of Vietnam. As a result, the Company wrote off its investment in Vietnam and is in the process of assigning its ownership in the two blocks. During 2003, the Company expensed one exploratory well and associated exploration costs.

 

11

 

Net Exploratory and Development Wells. The following table sets forth, for each of the last three years, the number of net exploratory and development wells drilled by or on behalf of Noble Energy. An exploratory well is a well drilled to find and produce crude oil or natural gas in an unproved area, to find a new reservoir in a field previously found to be productive of crude oil or natural gas in another reservoir, or to extend a known reservoir. A development well, for purposes of the following table and as defined in the rules and regulations of the SEC, is a well drilled within the proved area of a crude oil or natural gas reservoir to the depth of a stratigraphic horizon known to be productive. The number of wells drilled refers to the number of wells completed at any time during the respective year, regardless of when drilling was initiated. Completion refers to the installation of permanent equipment for the production of crude oil or natural gas, or in the case of a dry hole, to the reporting of abandonment to the appropriate agency.

 

		Net Exploratory Wells								Net Development Wells
		Productive(1)				Dry(2)				Productive(1)				Dry(2)
Year Ended December 31,		U.S.		Int’l		U.S.		Int’l		U.S.		Int’l		U.S.		Int’l
2003		10.84		.07		12.40		2.67		25.10		7.32		8.16
2002		9.78				11.45		3.27		41.53		12.84		11.17
2001		4.87		.63		10.79		5.41		68.30		13.67		12.88		1.62

 

(1)          A productive well is an exploratory or a development well that is not a dry hole.

 

(2)          A dry hole is an exploratory or development well determined to be incapable of producing either crude oil or natural gas in sufficient quantities to justify completion as an oil or gas well.

 

At January 31, 2004, Noble Energy was drilling 9 gross (4.1 net) exploratory wells and 3 gross (.4 net) development wells. These wells are located onshore in California, Louisiana, Nevada, Texas and Argentina and offshore in the Gulf of Mexico. These wells have objectives ranging from approximately 4,500 feet to 21,500 feet. The drilling cost to Noble Energy of these wells will be approximately $20.5 million if all are dry and approximately $43.8 million if all are completed as producing wells.

 

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Crude Oil and Natural Gas Wells. Due to the various asset dispositions in 2003, there was a significant decrease from 2002 in the number of gross wells in which Noble Energy held an interest. The number of productive crude oil and natural gas wells in which Noble Energy held an interest as of December 31 follows:

 

		2003(1)(2)				2002(1)(2)				2001(1)(2)
		Gross		Net		Gross		Net		Gross		Net
Crude Oil Wells
United States – Onshore		196.0		118.2		1,131.0		458.7		1,364.5		573.6
United States – Offshore		186.0		114.2		232.5		95.7		212.5		120.0
International		716.0		88.8		687.0		81.3		670.0		75.7
Total		1,098.0		321.2		2,050.5		635.7		2,247.0		769.3
Natural Gas Wells
United States – Onshore		1,645.0		1,042.1		1,603.0		1,006.6		1,673.5		1,025.7
United States – Offshore		299.0		116.5		265.5		184.9		333.5		143.3
International		34.0		8.4		42.0		13.1		38.0		8.4
Total		1,978.0		1,167.0		1,910.5		1,204.6		2,045.0		1,177.4

 

(1)          Productive wells are producing wells and wells capable of production. A gross well is a well in which a working interest is owned. The number of gross wells is the total number of wells in which a working interest is owned. A net well is deemed to exist when the sum of fractional ownership working interests in gross wells equals one. The number of net wells is the sum of the fractional working interests owned in gross wells expressed as whole numbers and fractions thereof.

 

(2)          One or more completions in the same borehole are counted as one well in this table.

 

The following table summarizes multiple completions and non-producing wells as of December 31 for the years shown. Included in wells not producing are productive wells awaiting additional action, pipeline connections or shut-in for various reasons.

 

		2003				2002				2001
		Gross		Net		Gross		Net		Gross		Net
Multiple Completions
Crude Oil		9.0		5.8		12.0		6.0		13.5		6.9
Natural Gas		29.0		11.3		28.5		8.9		36.5		14.0
Not Producing (Shut-in)
Crude Oil		573.0		109.2		565.0		212.3		391.0		179.2
Natural Gas		337.0		142.5		121.0		73.0		100.0		36.3

 

At year-end 2003, Noble Energy had less than nine percent of its crude oil and natural gas sales volumes committed to long-term supply contracts and had no similar agreements with foreign governments or authorities.

 

Since January 1, 2003, no crude oil or natural gas reserve information has been filed with, or included in any report to any federal authority or agency other than the SEC and the Energy Information Administration (“EIA”). Noble Energy files Form 23, including reserve and other information, with the EIA.

 

The SEC requested clarification, which the Company provided, as to the Company’s Israel and Equatorial Guinea gas reserves recorded in excess of existing contract amounts. SEC guidelines do not limit reserve bookings only to contracted volumes if it can be demonstrated that there is reasonable certainty that a market exists, which the Company believes exists in both of these situations. The Israel gas contract is for a period of 11 years. The Israel gas market, as estimated by the Israeli Ministry of National Infrastructure, from 2005 to 2020, is twenty times greater than Noble Energy’s

 

13

 

uncontracted net estimated proved reserves. In Equatorial Guinea, the gas contract, which runs through 2026, is between the field owners and the methanol plant owners. Noble Energy, through its subsidiaries, holds a working interest in the field as well as an interest in the methanol plant. The Company has recorded reserves through the end of the concession’s term in 2040. Noble Energy has obtained independent third-party engineer reserve estimates for both of these projects.

 

Average Sales Price. The following table sets forth, for each of the last three years, the average sales price per unit of crude oil produced and per unit of natural gas produced, and the average production cost per unit from continuing operations.

 

		Year Ended December 31,
		2003			2002(6)			2001(6)
Average sales price per Bbl of crude oil (1):
United States		$	26.21		$	23.29		$	23.02
International		$	28.94		$	24.98		$	23.98
Combined (2)		$	27.72		$	24.22		$	23.49
Average sales price per Mcf of natural gas (1):
United States		$	4.75		$	3.24		$	4.21
International (3)		$	1.17		$	1.18		$	1.60
Combined (4)		$	4.13		$	2.89		$	3.86
Average production cost per Mcfe (5):
United States		$	.74		$	.63		$	.61
International		$	.78		$	.43		$	.39
Combined		$	.75		$	.57		$	.56

 

(1)          Net production amounts used in this calculation include royalties.

 

(2)   Reflects a reduction of  $1.01 per Bbl in 2003, $.02 per Bbl in 2002 and an increase of $.01 per Bbl in 2001 from hedging in the United States.

 

(3)   Ecuador natural gas revenues and natural gas production volumes are excluded in the calculation of the International average sales price per Mcf of natural gas. The gas-to-power project in Ecuador is 100 percent owned by Noble Energy. Intercompany natural gas sales are eliminated for accounting purposes.

 

(4)   Reflects a reduction of $.44 per Mcf in 2003, an increase of $.05 per Mcf in 2002 and $.04 per Mcf in 2001 from hedging in the United States.

 

(5)   Production costs include lease operating expense, workover expense, production taxes and other related lifting costs. The natural gas production volumes associated with the Company’s gas-to-power project in Ecuador for 2003 and 2002 were 7,842 MMcf and 2,788 MMcf, respectively, and are excluded in the average production cost per Mcfe for both International and Combined.

 

(6)   Reclassified from prior years due to discontinued operations.

 

14

 

 

Significant Offshore Undeveloped Lease Holdings (interests rounded to nearest whole percent)

 

Block			Working Interest (%)
East Breaks
279	*		33
464	*		48
465	*		48
475	*		100
510	*		33
519	*		100
563	*		100
Green Canyon
23			100
85	*		50
142			100
185	*		100
186	*		100
187	*		100
199	*		20
228	*		100
303	*		40
507	*		50
723	*		100
724	*		100
768	*		100
955	*		7
958	*		25
West Cameron
136			40
311			10
392			100
393			100
400			100
419			100
422			50
423			100
438			100
443			100
446			100
Mustang Island
829			80
830			80
831			100
Vermilion
208			25
227			100
228			100
230			100
232			50
235			100
352			100
353			100
391			100
Garden Banks
25			50
416	*		100
460	*		100
461	*		100
751	*		100
795	*		100
841	*		39
Main Pass
107			25
109			25
110			25
192			100
East Cameron
342			67
348			30
355			100
South Timbalier
62			100
278			50
Ship Shoal
73			50
Galveston
249-L			50
South Marsh Island
38			100
64			67
70			50
145			100
195			50
Mississippi Canyon
26	*		75
70	*		75
71	*		75
115	*		75
116	*		100
123	*		75
159	*		75
204	*		100
524	*		50
595	*		24
602	*		75
639	*		24
665	*		50
769	*		100
811	*		30
849	*		34
855	*		30
856	*		30
857	*		30
892	*		35
896	*		67
900	*		30
901	*		30
911	*		40
999	*		30
1000	*		30
Brazos
308-L			50
543			100
Ewing Bank
834			14
949			52
993			98
Eugene Island
35			25
36			25
37			25
38			25
96			25
317			67
High Island
A-218			100
A-230			100
A-232			50
A-422			100
A-516			100
A-587			3
Viosca Knoll
23			100
157			100
697			50
908	*		100
917	*		10
961	*		10
962	*		10
Atwater Valley
10	*		100
11	*		100
23	*		100
66	*		100
67	*		100
327	*		79
533	*		40

 

*Located in water deeper than 1,000 feet.

 

15

 

The developed and undeveloped acreage (including both leases and concessions) that Noble Energy held as of December 31, 2003, is as follows:

 

		Developed Acreage (1)(2)				Undeveloped Acreage (2)(3)(4)
Location		Gross Acres		Net Acres		Gross Acres		Net Acres
United States Onshore
Alabama						2,926		505
California		2,368		1,191		5,914		2,610
Colorado		79,251		60,372		27,636		20,817
Kansas		93,278		52,833		18,724		12,828
Louisiana		33,712		11,398		36,920		11,465
Michigan						1,876		427
Mississippi		878		34		1,884		51
Montana		201,622		122,928		4,598		1,612
Nevada						50,996		49,727
New Mexico		2,117		826		2,480		1,833
North Dakota						685		314
Oklahoma		137,943		48,756		12,752		5,833
Texas		88,076		33,952		114,190		46,331
Utah		1,280		260		3,232		2,456
Wyoming		27,183		11,834		66,388		35,973
Total United States Onshore		667,708		344,384		351,201		192,782
United States Offshore (Federal Waters)
Alabama		97,920		37,670		24,381		14,467
California		38,833		12,039		52,364		9,422
Louisiana		543,986		239,863		443,042		285,774
Mississippi		37,756		19,260		120,960		58,070
Texas		214,325		97,702		114,911		76,625
Total United States Offshore (Federal Waters)		932,820		406,534		755,658		444,358
International
Argentina		28,988		3,977		2,426,221		2,353,455
China		7,413		4,225		1,617,549		808,775
Denmark						81,050		32,420
Ecuador		12,355		12,355		851,771		851,771
Equatorial Guinea		45,203		15,727		266,754		92,808
Israel		123,552		58,142		292,572		137,681
Netherlands		865		130		74,749		11,212
United Kingdom		65,489		4,441		418,039		110,641
Vietnam (5)						1,701,812		1,309,034
Total International		283,865		98,997		7,730,517		5,707,797
Total (6)		1,884,393		849,915		8,837,376		6,344,937

 

(1)          Developed acreage is acreage spaced or assignable to productive wells.

 

(2)          A gross acre is an acre in which a working interest is owned. A net acre is deemed to exist when the sum of fractional ownership working interests in gross acres equals one. The number of net acres is the sum of the fractional working interests owned in gross acres expressed as whole numbers and fractions thereof.

 

(3)          Undeveloped acreage is considered to be those leased acres on which wells have not been drilled or completed to a point that would permit the production of commercial quantities of crude oil and natural gas regardless of whether or not such acreage contains proved reserves. Included within undeveloped acreage are those leased acres (held by production under the terms of a lease) that are not within the spacing unit containing, or acreage assigned to, the productive well so holding such lease.

 

(4)          The Argentina acreage includes one concession totaling 1,163,865 acres subject to final regulatory approval.

 

(5)          The Company wrote off its investment in Vietnam and is in the process of assigning its ownership in the two blocks.

 

(6)          If production is not established, approximately 112,617 gross acres (65,080 net acres), 136,362 gross acres (85,015 net acres) and 128,939 gross acres (79,699 net acres) will expire during 2004, 2005 and 2006, respectively.

 

16

 

Item 3.    Legal Proceedings.

 

The Company and its subsidiaries are involved in various legal proceedings in the ordinary course of business. These proceedings are subject to the inherent uncertainties in any litigation. The Company is defending itself vigorously in all such matters and does not believe that the ultimate disposition of such proceedings will have a material adverse effect on the Company’s consolidated financial position, results of operations or liquidity.

 

On October 15, 2002, Noble Gas Marketing, Inc. and Samedan Oil Corporation, collectively referred to as the “Noble Defendants,” filed proofs of claim in the United States Bankruptcy Court for the Southern District of New York in response to bankruptcy filings by Enron Corporation and certain of its subsidiaries and affiliates, including Enron North America Corporation (“ENA”), under Chapter 11 of the U.S. Bankruptcy Code. The proofs of claim relate to certain natural gas sales agreements and aggregate approximately $12 million.

 

On December 13, 2002, ENA filed a complaint in which it objected to the Noble Defendants’ proofs of claim, sought recovery of approximately $60 million from the Noble Defendants under the natural gas sales agreements, sought declaratory relief in respect of the offset rights of the Noble Defendants and sought to invalidate the arbitration provisions contained in certain of the agreements in issue. The Noble Defendants intend to vigorously defend against ENA’s claims and do not believe that the ultimate disposition of the bankruptcy proceeding will have a material adverse effect on the Company’s consolidated financial position, results of operations or liquidity.

 

On January 13, 2003, the Noble Defendants filed an answer to ENA’s complaint. On January 29, 2003, the Noble Defendants filed the Motion of Noble Energy Marketing, Inc., as Successor to Noble Gas Marketing, Inc., and Noble Energy, Inc., as Successor to Samedan Oil Corporation, to Compel Arbitration. On March 4, 2003, the Court issued its Order Governing Mediation of Trading Cases and Appointing the Honorable Allan L. Gropper as Mediator (the “Mediation Order”) which, among other things, abated this case and referred it to mediation along with other pending adversary proceedings in the Enron bankruptcy cases which involve disputes arising from or in connection with commodity trading contracts. Pursuant to the Mediation Order, the Honorable Allan L. Gropper (United States Bankruptcy Judge for the Southern District of New York) is acting as mediator for this case and the other trading cases which have been referred to him. The mediation for this case was held on December 17, 2003 and no resolution was reached.

 

Item 4.            Submission of Matters to a Vote of Security Holders.

 

There were no matters submitted to a vote of security holders during the fourth quarter of 2003.

 

17

 

Executive Officers of the Registrant

 

The following table sets forth certain information, as of March 12, 2004, with respect to the executive officers of the Registrant.

 

Name		Age		Position
Charles D. Davidson (1)		54		Chairman of the Board, President, Chief Executive Officer and Director
Alan R. Bullington (2)		52		Vice President, International
Robert K. Burleson (3)		46		Vice President, Business Administration and President, Noble Energy      Marketing, Inc.
Susan M. Cunningham (4)		48		Senior Vice President, Exploration
Arnold J. Johnson (5)		48		Vice President, General Counsel and Secretary
James L. McElvany (6)		50		Senior Vice President, Chief Financial Officer and Treasurer
Richard A. Peneguy, Jr. (7)		53		Vice President, Offshore
William A. Poillion, Jr. (8)		54		Senior Vice President, Production and Drilling
Ted A. Price (9)		44		Vice President, Onshore
David L. Stover (10)		46		Vice President, Business Development
Kenneth P. Wiley (11)		51		Vice President, Information Systems

 

(1)          Charles D. Davidson was elected President and Chief Executive Officer of the Company in October 2000 and Chairman of the Board in April 2001. Prior to October 2000, he served as President and Chief Executive Officer of Vastar Resources, Inc. (“Vastar”) from March 1997 to September 2000 (Chairman from April 2000) and was a Vastar Director from March 1994 to September 2000. From September 1993 to March 1997, he served as a Senior Vice President of Vastar. From December 1992 to October 1993, he was Senior Vice President of the Eastern District for ARCO Oil and Gas Company. From 1988 to December 1992, he held various positions with ARCO Alaska, Inc. Mr. Davidson joined ARCO in 1972.

 

(2)          Alan R. Bullington was elected Vice President and General Manager, International Division of Samedan Oil Corporation on January 1, 1998 and on April 24, 2001 was elected a Vice President of the Company. Prior thereto, he served as Manager-International Operations and Exploration and as Manager-International Operations. Prior to his employment with Samedan in 1990, he held various management positions within the exploration and production division of Texas Eastern Transmission Company.

 

(3)          Robert K. Burleson was elected a Vice President of the Company on April 24, 2001 and has been in charge of the Company’s Business Administration Department since April 2002. He has also served as President of Noble Gas Marketing, Inc. (now Noble Energy Marketing, Inc.) since June 14, 1995. Prior thereto, he served as Vice President-Marketing for Noble Gas Marketing since its inception in 1994. Previous to his employment with the Company, he was employed by Reliant Energy as Director of Business Development for its interstate pipeline, Reliant Gas Transmission.

 

18

 

(4)          Susan M. Cunningham was elected Senior Vice President of Exploration of the Company in April 2001. Prior to joining the Company, Ms. Cunningham was Texaco’s Vice President of worldwide exploration from April 2000 to March 2001. From 1997 through 1999, she was employed by Statoil, beginning in 1997 as Exploration Manager for deepwater Gulf of Mexico, appointed a Vice President in 1998 and responsible, in 1999, for Statoil’s West Africa exploration efforts. She joined Amoco in 1980 as a geologist and served in exploration and development positions of increasing responsibility until 1997.

 

(5)          Arnold J. Johnson was elected Vice President, General Counsel and Secretary of the Company on February 1, 2004. Prior thereto, he served as Associate General Counsel and Assistant Secretary of the Company from January 2001 through January 2004. Prior thereto, he served as Senior Counsel for BP America, Inc. from October 2000 to January 2001. Mr. Johnson held several positions as an attorney for Vastar Resources, Inc. and ARCO from March 1989 through September 2000, most recently as Assistant General Counsel and Assistant Secretary of Vastar Resources from 1997 through 2000. He joined ARCO in 1980 as a landman and served in land management positions of increasing responsibility until 1989.

 

(6)          James L. McElvany was elected Senior Vice President, Chief Financial Officer and Treasurer of the Company in July 2002. Prior thereto, he served as Vice President-Finance, Treasurer and Assistant Secretary since July 1999. Prior to July 1999, he had served as Vice President-Controller of the Company since December 1997. Prior thereto, he served as Controller of the Company since December 1983.

 

(7)          Richard A. Peneguy, Jr. was elected a Vice President of the Company on April 24, 2001 and has served as Vice President and General Manager, Offshore Division of Samedan Oil Corporation since January 2002. Prior thereto, he served as Vice President and General Manager, Onshore Division of Samedan since January 2000. Prior thereto, he served as General Manager, Onshore Division of Samedan since January 1, 1991.

 

(8)          William A. Poillion, Jr. was elected a Senior Vice President of the Company on April 24, 2001 and has served as Senior Vice President-Production and Drilling of Samedan Oil Corporation since January 1998. Prior thereto, he served as Vice President-Production and Drilling of Samedan since November 1990. From March 1, 1985 to October 31, 1990, he served as Manager of Offshore Production and Drilling for Samedan.

 

(9)          Ted A. Price was elected Vice President of the Company and Division Manager for the Onshore Division on January 29, 2002. Previously, he served as Manager of Onshore Exploration since 1999. Mr. Price joined the Company in 1981 as a geologist.

 

(10)          David L. Stover was elected Vice President of Business Development of the Company on December 16, 2002. Previous to his employment with the Company, he was employed by BP as Vice President, Gulf of Mexico Shelf from September 2000 to August 2002. Prior to joining BP, Mr. Stover was employed by Vastar Resources, Inc. as Area Manager for Gulf of Mexico Shelf from April 1999 to September 2000, and prior thereto, as Area Manager for Oklahoma/Arklatex from January 1994 to April 1999.

 

(11)          Kenneth P. Wiley was elected Vice President-Information Systems of the Company in July 1998. Prior thereto, he served as Manager-Information Systems for Samedan Oil Corporation since November 1994.

 

Officers serve until the next annual organizational meeting of the Board of Directors or until their successors are chosen and qualified. No officer or executive officer of the Registrant currently has an employment agreement with the Registrant or any of its subsidiaries. There are no family relationships among any of the Registrant’s officers.

 

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