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Other

Noble Energy 10-Q 2007

Documents found in this filing:

  1. 10-Q
  2. Ex-31.1
  3. Ex-31.2
  4. Ex-32.1
  5. Ex-32.2
  6. Ex-32.2
form10-q.htm

 



 
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C.  20549


FORM 10-Q
x   QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2007

OR

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

For the transition period from________ to _________

Commission file number: 001-07964

NOBLE ENERGY, INC.

(Exact name of registrant as specified in its charter)
Delaware
73-0785597
(State of incorporation)
(I.R.S. employer identification number)
   
100 Glenborough Drive, Suite 100
 
Houston, Texas
77067
(Address of principal executive offices)
(Zip Code)
(281) 872-3100
 
(Registrant’s telephone number, including area code)

 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 x    No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See definition of “accelerated filer and large accelerated filer” in Rule 12b-2 of the Exchange Act. (Check one):
Large accelerated filer x
Accelerated filer o
Non-accelerated filer o



Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes o    No x

Number of shares of common stock outstanding as of October 24, 2007: 171,449,686
 
 



 



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

2

Noble Energy, Inc. and Subsidiaries
 
Consolidated Statements of Operations
 
(in thousands, except per share amounts)
 
(Unaudited)
 
                         
   
Three Months Ended
   
Nine Months Ended
 
   
September 30,   
   
September 30,   
 
   
2007
   
2006
   
2007
   
2006
 
Revenues
                       
     Oil and gas sales
  $
746,258
    $
683,544
    $
2,140,218
    $
2,044,656
 
     Income from equity method investees
   
45,371
     
33,810
     
139,904
     
108,901
 
     Other revenues
   
22,182
     
23,965
     
70,447
     
72,339
 
     Total Revenues
   
813,811
     
741,319
     
2,350,569
     
2,225,896
 
                                 
Costs and Expenses
                               
     Lease operating costs
   
81,767
     
76,928
     
243,205
     
238,307
 
     Production and ad valorem taxes
   
26,752
     
30,697
     
80,667
     
83,663
 
     Transportation costs
   
13,260
     
4,531
     
40,346
     
18,463
 
     Exploration costs
   
45,794
     
30,904
     
144,796
     
92,327
 
     Depreciation, depletion and amortization
   
195,266
     
165,765
     
540,453
     
458,878
 
     General and administrative
   
49,518
     
40,657
     
142,368
     
113,716
 
     Accretion of discount on asset retirement obligations
   
1,909
     
2,426
     
6,337
     
8,405
 
     Interest, net of amount capitalized
   
29,247
     
28,556
     
87,105
     
95,642
 
     Loss (gain) on derivative instruments
   
1,514
      (6,315 )     (557 )    
389,723
 
     Loss (gain) on sale of assets
   
1,684
      (200,676 )     (4,381 )     (211,691 )
     Loss on involuntary conversion
   
-
     
-
     
51,406
     
-
 
     Other expense, net
   
23,823
     
22,880
     
78,594
     
89,008
 
     Total Costs and Expenses
   
470,534
     
196,353
     
1,410,339
     
1,376,441
 
                                 
Income Before Taxes
   
343,277
     
544,966
     
940,230
     
849,455
 
Income Tax Provision
   
120,602
     
226,902
     
296,638
     
336,009
 
Net Income
  $
222,675
    $
318,064
    $
643,592
    $
513,446
 
                                 
Earnings Per Share
                               
     Basic
  $
1.30
    $
1.80
    $
3.76
    $
2.91
 
     Diluted
  $
1.28
    $
1.75
    $
3.72
    $
2.85
 
                                 
Weighted average number of shares outstanding
                               
    Basic
   
171,123
     
176,218
     
170,953
     
176,505
 
    Diluted
   
173,350
     
181,077
     
173,156
     
180,158
 
                                 
The accompanying notes are an integral part of these financial statements
                         

3

Noble Energy, Inc. and Subsidiaries
 
Consolidated Statements of Cash Flows
 
(in thousands)
 
(Unaudited)
 
   
Nine Months Ended
 
   
September 30,   
 
   
2007
   
2006
 
Cash Flows From Operating Activities
           
Net income
  $
643,592
    $
513,446
 
Adjustments to reconcile net income to net cash provided by operating activities:
               
     Depreciation, depletion and amortization - oil and gas production
   
540,453
     
458,878
 
     Depreciation, depletion and amortization - electricity generation
   
10,558
     
11,842
 
     Dry hole expense
   
47,769
     
24,164
 
     Impairment of operating assets
   
3,661
     
6,359
 
     Amortization of unproved leasehold costs
   
12,700
     
15,180
 
     Stock-based compensation expense
   
20,040
     
9,320
 
     Gain on sale of assets
    (4,381 )     (211,691 )
     Deferred income taxes
   
192,137
     
146,709
 
     Accretion of discount on asset retirement obligations
   
6,337
     
8,405
 
     Increase in allowance for doubtful accounts
   
10,780
     
10,564
 
     Income from equity method investees
    (139,904 )     (108,901 )
     Dividends from equity method investees
   
153,331
     
18,000
 
     Deferred compensation expense
   
23,089
     
15,673
 
     (Gain) loss on derivative instruments
    (133,580 )    
430,328
 
     Loss on involuntary conversion
   
51,406
     
-
 
     Other
   
6,861
      (17,657 )
Changes in operating assets and liabilities, net of acquisition:
               
     Decrease (increase) in accounts receivable - trade
   
20,984
      (41,222 )
     (Increase) decrease in other current assets
    (2,733 )    
13,479
 
     Decrease in probable insurance claims
   
94,695
     
101,612
 
     Decrease in accounts payable
    (11,875 )     (29,246 )
     Decrease in other current liabilities
    (225,309 )     (34,429 )
Net Cash Provided by Operating Activities
   
1,320,611
     
1,340,813
 
                 
Cash Flows From Investing Activities
               
     Additions to property, plant and equipment
    (1,017,702 )     (1,030,430 )
     U.S. Exploration acquisition, net of cash acquired
   
-
      (412,257 )
     Proceeds from sales of assets
   
-
     
504,259
 
     Investments in equity method investees
   
-
      (5,126 )
     Distributions from equity method investees
   
2,100
     
116,521
 
Net Cash Used in Investing Activities
    (1,015,602 )     (827,033 )
                 
Cash Flows From Financing Activities
               
     Exercise of stock options
   
19,381
     
50,576
 
     Tax benefits from stock-based awards
   
13,922
     
18,534
 
     Cash dividends paid
    (54,414 )     (35,776 )
     Purchases of treasury stock
    (101,533 )     (192,632 )
     Proceeds from credit facility
   
280,000
     
300,000
 
     Repayment of credit facility
    (165,000 )     (605,000 )
     Repayment of term loans
   
-
      (105,000 )
     Net proceeds from short term borrowings
   
-
     
35,000
 
Net Cash Used in Financing Activities
    (7,644 )     (534,298 )
Increase (Decrease) in Cash and Cash Equivalents
   
297,365
      (20,518 )
Cash and Cash Equivalents at Beginning of Period
   
153,408
     
110,321
 
Cash and Cash Equivalents at End of Period
  $
450,773
    $
89,803
 
                 
The accompanying notes are an integral part of these financial statements
               

4

Noble Energy, Inc. and Subsidiaries
 
Consolidated Statements of Shareholders' Equity
 
(in thousands)
 
(Unaudited)
 
                                                 
                     
Deferred
   
Accumulated
                   
               
Capital in
   
Compensation -
   
Other
   
Treasury
         
Total
 
   
Common Stock
   
Excess of
   
Restricted
   
Comprehensive
   
Stock
   
Retained
   
Shareholders'
 
   
Shares
   
Amount
   
Par Value
   
Stock
   
Loss
   
at Cost
   
Earnings
   
Equity
 
                                                 
December 31, 2006
   
188,808
    $
629,360
    $
2,041,048
    $
-
    $ (140,509 )   $ (511,443 )   $
2,095,361
    $
4,113,817
 
Net income
   
-
     
-
     
-
     
-
     
-
     
-
     
643,592
     
643,592
 
Stock-based compensation expense  
-
     
-
     
20,040
     
-
     
-
     
-
     
-
     
20,040
 
Exercise of stock options
   
1,128
     
3,760
     
15,621
     
-
     
-
     
-
     
-
     
19,381
 
Tax benefits from stock-based awards  
-
     
-
     
13,922
     
-
     
-
     
-
     
-
     
13,922
 
Restricted stock grants, net
   
526
     
1,740
      (1,740 )    
-
     
-
     
-
     
-
     
-
 
Dividends ($0.315 per share)
   
-
     
-
     
-
     
-
     
-
     
-
      (54,414 )     (54,414 )
Purchases of treasury stock
   
-
     
-
     
-
     
-
     
-
      (101,533 )    
-
      (101,533 )
Oil and gas cash flow hedges:
                                                         
Realized amounts reclassified into earnings  
-
     
-
     
-
     
-
     
5,180
     
-
     
-
     
5,180
 
Unrealized change in fair value
   
-
     
-
     
-
     
-
      (44,006 )    
-
     
-
      (44,006 )
Net change in other
   
-
     
-
     
-
     
-
     
2,312
     
-
     
-
     
2,312
 
September 30, 2007
   
190,462
    $
634,860
    $
2,088,891
    $
-
    $ (177,023 )   $ (612,976 )   $
2,684,539
    $
4,618,291
 
                                                                 
December 31, 2005
   
184,894
    $
616,311
    $
1,945,239
    $ (5,288 )   $ (783,499 )   $ (148,476 )   $
1,465,857
    $
3,090,144
 
Net income
   
-
     
-
     
-
     
-
     
-
     
-
     
513,446
     
513,446
 
Adoption of SFAS 123(R), net of tax  
-
     
-
      (5,288 )    
5,288
     
-
     
-
     
-
     
-
 
Stock-based compensation expense
   
-
     
-
     
9,320
     
-
     
-
     
-
     
-
     
9,320
 
Exercise of stock options
   
2,815
     
9,382
     
41,194
     
-
     
-
     
-
     
-
     
50,576
 
Tax benefits from stock-based awards  
-
     
-
     
18,534
     
-
     
-
     
-
     
-
     
18,534
 
Restricted stock grants, net
   
64
     
217
      (217 )    
-
     
-
     
-
     
-
     
-
 
Dividends ($0.20 per share)
   
-
     
-
     
-
     
-
     
-
     
-
      (35,776 )     (35,776 )
Rabbi trust shares sold
   
-
     
-
     
7,837
     
-
     
-
     
24,005
     
-
     
31,842
 
Purchases of treasury stock
   
-
     
-
     
-
     
-
     
-
      (192,632 )    
-
      (192,632 )
Oil and gas cash flow hedges:
                                                         
Realized amounts reclassifed into earnings
   
-
     
-
     
-
     
-
     
136,546
     
-
     
-
     
136,546
 
Unrealized change in fair value
   
-
     
-
     
-
     
-
     
197,239
     
-
     
-
     
197,239
 
Unrealized amounts reclassified into earnings
   
-
     
-
     
-
     
-
     
264,265
     
-
     
-
     
264,265
 
Net change in other
   
-
     
-
     
-
     
-
     
533
     
-
     
-
     
533
 
September 30, 2006
   
187,773
    $
625,910
    $
2,016,619
    $
-
    $ (184,916 )   $ (317,103 )   $
1,943,527
    $
4,084,037
 
                                                                 
The accompanying notes are an integral part of these financial statements
                         


5

Noble Energy, Inc. and Subsidiaries           
 
Consolidated Statements of Comprehensive Income
 
(in thousands)
 
(Unaudited)
 
                         
   
Three Months Ended
   
Nine Months Ended
 
   
September 30,   
   
September 30,   
 
   
2007
   
2006
   
2007
   
2006
 
                         
Net income
  $
222,675
    $
318,064
    $
643,592
    $
513,446
 
                                 
Other items of comprehensive income (loss)
                               
Oil and gas cash flow hedges:
                               
    Realized amounts reclassified into earnings
   
12,324
     
43,798
     
8,302
     
219,035
 
        Less tax provision
    (4,634 )     (16,494 )     (3,122 )     (82,489 )
    Unrealized change in fair value
   
11,804
     
274,361
      (70,523 )    
266,483
 
        Less tax provision
    (4,438 )     (87,952 )    
26,517
      (69,244 )
    Unrealized amounts reclassified into earnings
   
-
     
-
     
-
     
423,910
 
        Less tax provision
   
-
     
-
     
-
      (159,645 )
Net change in other:
   
186
     
354
     
3,705
     
855
 
        Less tax provision
    (70 )     (134 )     (1,393 )     (322 )
Other comprehensive income (loss)
   
15,172
     
213,933
      (36,514 )    
598,583
 
                                 
Comprehensive income
  $
237,847
    $
531,997
    $
607,078
    $
1,112,029
 
                                 
The accompanying notes are an integral part of these financial statements
                 

6

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 (Unaudited)

Note 1 - Organization and Nature of Operations
 
Noble Energy, Inc. (“Noble Energy”, “we”, “our” or “us”) is an independent energy company engaged in the exploration, development, production and marketing of crude oil and natural gas. We have exploration, exploitation and production operations domestically and internationally. We operate throughout major basins in the US including Colorado’s Wattenberg field, the Mid-continent area of western Oklahoma and the Texas Panhandle, the San Juan Basin in New Mexico, the Gulf Coast and the deepwater Gulf of Mexico. In addition, we conduct business internationally in West Africa (Equatorial Guinea and Cameroon), the Mediterranean Sea (Israel), Ecuador, the North Sea (UK, the Netherlands and Norway), China, Argentina and Suriname.

Note 2 - Basis of Presentation
 
Presentation – The accompanying unaudited consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the US for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and notes required by US generally accepted accounting principles (“GAAP”) for complete financial statements. The accompanying unaudited consolidated financial statements at September 30, 2007 and December 31, 2006 and for the three and nine months ended September 30, 2007 and 2006 contain all normally recurring adjustments considered necessary for a fair presentation of our financial position, results of operations and cash flows for such periods. Operating results for the three and nine months ended September 30, 2007 are not necessarily indicative of the results that may be expected for the year ending December 31, 2007. Certain reclassifications of amounts previously reported have been made to conform to current year presentations. These consolidated financial statements should be read in conjunction with the consolidated financial statements and the notes included in our annual report on Form 10-K for the year ended December 31, 2006.

Estimates – The preparation of consolidated financial statements in conformity with GAAP requires us to make a number of estimates and assumptions relating to the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ significantly from those estimates.


7

Balance Sheet and Statement of Operations Information –
Other balance sheet and statement of operations information is as follows:
   
September 30,
   
December 31,
 
   
2007
   
2006
 
   
(in thousands)
 
Other Current Assets
           
Derivative instruments
  $
20,282
    $
35,242
 
Materials and supplies inventories
   
62,399
     
46,973
 
Prepaid expenses and other current assets
   
32,176
     
44,973
 
Total
  $
114,857
    $
127,188
 
Other Noncurrent Assets
               
Equity method investments
  $
358,940
    $
373,372
 
Mutual fund investments
   
125,860
     
116,314
 
Probable insurance claims
   
40,846
     
46,500
 
Derivative instruments
   
5,172
     
2,862
 
Other noncurrent assets
   
30,452
     
28,984
 
Total
  $
561,270
    $
568,032
 
Other Current Liabilities
               
Accrued and other current liabilities
  $
151,292
    $
219,885
 
Interest payable
   
25,287
     
15,507
 
Total
  $
176,579
    $
235,392
 
Other Noncurrent Liabilities
               
Deferred compensation liability
  $
207,825
    $
173,253
 
Accrued benefit costs
   
57,850
     
58,491
 
Other noncurrent liabilities
   
76,198
     
42,976
 
Total
  $
341,873
    $
274,720
 

   
Three Months Ended
   
Nine Months Ended
 
   
September 30,   
   
September 30,   
 
   
2007
   
2006
   
2007
   
2006
 
   
(in thousands)         
 
Other Revenues
                       
Electricity sales
  $
16,616
    $
16,241
    $
53,745
    $
49,672
 
Gathering, marketing and processing
   
5,566
     
7,724
     
16,702
     
22,667
 
Total
  $
22,182
    $
23,965
    $
70,447
    $
72,339
 
                                 
Other Expense, net
                               
Electricity generation
  $
13,679
    $
17,876
    $
41,941
    $
43,099
 
Gathering, marketing and processing
   
4,100
     
4,204
     
13,093
     
15,674
 
Deferred compensation expense
   
8,423
     
933
     
23,089
     
15,673
 
Impairment of operating assets
   
3,661
     
-
     
3,661
     
6,359
 
Other
    (6,040 )     (133 )     (3,190 )    
8,203
 
Total
  $
23,823
    $
22,880
    $
78,594
    $
89,008
 

Note 3 - Derivative Instruments and Hedging Activities
 
Cash Flow Hedges – We use various derivative instruments in connection with forecasted crude oil and natural gas sales to mitigate the variability of cash flows associated with commodity price fluctuations. Such instruments include variable to fixed price swaps, costless collars and basis swaps.  While these instruments mitigate the cash flow risk of future reductions in commodity prices they may also curtail benefits from future increases in commodity prices.

We account for derivative instruments and hedging activities in accordance with Statement of Financial Accounting Standards (“SFAS”) No. 133, “Accounting for Derivative Instruments and Hedging Activities,” as amended, and have elected to designate certain of our derivative instruments as cash flow hedges. Derivative instruments designated as cash flow hedges are reflected at fair value in the consolidated balance sheets. Changes in fair value, to the extent the hedge is effective, are reported in accumulated other comprehensive income or loss (“AOCL”) until the forecasted transaction occurs. Gains and losses from such derivative instruments related to our crude oil and natural gas sales, and which qualify for hedge accounting treatment, are recorded in oil and gas sales on our consolidated statements of operations upon sale of the associated commodity. We assess hedge effectiveness quarterly based on total changes in the derivative’s fair value. Any ineffective portion of the derivative instrument’s change in fair value is immediately recognized in earnings.

8

(Gain) loss on derivative instruments included the following:
   
Three Months Ended
   
Nine Months Ended
 
   
September 30,   
   
September 30,   
 
   
2007
   
2006
   
2007
   
2006
 
   
(in thousands)      
 
                         
Ineffectiveness (gains) losses
  $
1,514
    $ (2,957 )   $ (557 )   $
8,384
 
Reclassified from AOCL
   
-
     
-
     
-
     
423,910
 
Mark-to-market gain on derivative instruments not accounted for as cash flow hedges
   
-
      (3,358 )    
-
      (42,571 )
Loss (gain) on derivative instruments
  $
1,514
    $ (6,315 )   $ (557 )   $
389,723
 

During 2006, $424 million of losses deferred in AOCL were reclassified to our earnings when it became probable that forecasted sales would not occur. Of this amount, $399 million related to the sale of Gulf of Mexico shelf assets.

Effects of cash flow hedges on natural gas and crude oil sales were as follows:

   
Three Months Ended
   
Nine Months Ended
 
   
September 30,   
   
September 30,   
 
   
2007
   
2006
   
2007
   
2006
 
   
(in thousands)         
 
                         
Increase (decrease) in natural gas sales
  $
47,973
    $
2,588
    $
120,057
    $ (59,348 )
Decrease in crude oil sales
    (60,297 )     (46,386 )     (128,359 )     (159,687 )
Total decrease in oil and gas sales
  $ (12,324 )   $ (43,798 )   $ (8,302 )   $ (219,035 )

The increase in natural gas sales in 2007 includes non-cash increases related to hedge contracts that were re-designated at the time of our Gulf of Mexico shelf asset sale in 2006 and settled during the first nine months of 2007. These non-cash increases totaled $42 million for third quarter 2007 and $133 million for the first nine months of 2007.

At September 30, 2007, we had entered into, and designated as cash flow hedges, the following variable to fixed price swap derivative instruments related to natural gas and crude oil sales.
   
Natural Gas   
   
Crude Oil   
 
         
Average Price
         
Average price
 
Production Period
 
MMBtupd
   
per MMBtu
   
Bopd
   
per Bbl
 
October - December 2007 (NYMEX)
   
170,000
    $
5.97
     
17,100
    $
38.74
 
                                 
2008 (NYMEX)
   
170,000
     
5.66
     
16,500
     
38.23
 


9

At September 30, 2007, we had entered into basis swap derivative instruments related to natural gas sales. These basis swaps have been combined with NYMEX variable to fixed swaps and designated as cash flow hedges. The basis swaps are as follows:
   
Natural Gas   
 
         
Average
 
         
Differential
 
Production Period
 
MMBtupd
   
per MMBtu
 
October - December 2007 (CIG (1) vs. NYMEX)
   
100,000
    $
2.02
 
October - December 2007 (ANR (2) vs. NYMEX)
   
30,000
     
1.17
 
October - December 2007 (PEPL (3) vs. NYMEX)
   
10,000
     
1.11
 
                 
2008 (CIG vs. NYMEX)
   
100,000
     
1.66
 
2008 (ANR vs. NYMEX)
   
40,000
     
1.01
 
2008 (PEPL vs. NYMEX)
   
10,000
     
0.98
 
                 
(1)
Colorado Interstate Gas - Northern System
(2)
ANR Oklahoma Pipeline
(3)
Panhandle Eastern Pipe Line
 
At September 30, 2007, we had entered into, and designated as cash flow hedges, the following costless collar derivative instruments related to natural gas and crude oil sales.
   
Natural Gas      
   
Crude Oil      
 
         
Average price
         
Average price
 
         
per MMBtu
         
per Bbl   
 
Production Period
 
MMBtupd
   
Floor
   
Ceiling
   
Bopd
   
Floor
   
Ceiling
 
October - December 2007 (NYMEX)
   
-
    $
-
    $
-
     
2,700
    $
60.00
    $
74.30
 
October - December 2007 (CIG)
   
12,000
     
6.50
     
9.50
     
-
     
-
     
-
 
October - December 2007 (Dated Brent)
   
-
     
-
     
-