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**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.**

| **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) |

| Large                accelerated filer                x | Accelerated                filer                o | Non-accelerated                filer                o |
|---------------------------------------------------------|---------------------------------------------------|-------------------------------------------------------|

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| **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*                                                                         |   |   |   |   |   |   |   |   |

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| **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* |   |   |   |   |   |   |   |   |   |   |   |   |   |

----

| **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*                |   |   |   |   |   |   |   |   |

----

| **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* |   |   |   |   |   |   |   |   |   |   |   |   |   |

----

| **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*              |   |   |   |   |   |   |   |   |   |

----

**NOTES      TO CONSOLIDATED FINANCIAL STATEMENTS**

**Note      1 - Organization and Nature of Operations**

**Note      2 - Basis of Presentation**

*Presentation      *

*Estimates      *

----

*Balance      Sheet and Statement of Operations Information –*

|                                                       |   | 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 –*

----

|                                                                                                                       |   | 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 |   |

|                                                      |   | 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 | ) |

|                                             |   | 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 |   |

----

|                                                                                      |   | 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 |
|-----|----------------------------------------------|

|                                                   |   | 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) |   |                                                             | -      |   |                                                           |   | - |   |   |   | - |   |   |   | 5,565 |   |   |   | 45.00 |   |   |   | 70.29 |   |
|                                                   |   |                                                             |   |   |                                                           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| 2008                  (NYMEX)                          |   |                                                             | -      |   |                                                           |   | - |   |   |   | - |   |   |   | 3,100 |   |   |   | 60.00 |   |   |   | 72.40 |   |
| 2008                  (CIG)                            |   |                                                             | 14,000 |   |                                                           |   | 6.75 |   |   |   | 8.70 |   |   |   | - |   |   |   | - |   |   |   | - |   |
| 2008                  (Dated Brent)                    |   |                                                             | -      |   |                                                           |   | - |   |   |   | - |   |   |   | 4,074 |   |   |   | 45.00 |   |   |   | 66.52 |   |
|                                                   |   |                                                             |   |   |                                                           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| 2009                  (NYMEX)                          |   |                                                             | -      |   |                                                           |   | - |   |   |   | - |   |   |   | 3,700 |   |   |   | 60.00 |   |   |   | 70.00 |   |
| 2009                  (CIG)                            |   |                                                             | 15,000 |   |                                                           |   | 6.00 |   |   |   | 9.90 |   |   |   | - |   |   |   | - |   |   |   | - |   |
| 2009                  (Dated Brent)                    |   |                                                             | -      |   |                                                           |   | - |   |   |   | - |   |   |   | 3,074 |   |   |   | 45.00 |   |   |   | 63.04 |   |
|                                                   |   |                                                             |   |   |                                                           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| 2010                  (NYMEX)                          |   |                                                             | -      |   |                                                           |   | - |   |   |   | - |   |   |   | 3,500 |   |   |   | 55.00 |   |   |   | 73.80 |   |
| 2010                  (CIG)                            |   |                                                             | 15,000 |   |                                                           |   | 6.25 |   |   |   | 8.10 |   |   |   | - |   |   |   | - |   |   |   | - |   |

----

**Note      4 – Defined Benefit Pension, Restoration and Medical and Life      Plans**

|                                                  |   | Retirement                  & Restoration    |   |   | Medical                  & Life              |   |
|-------------------------------------------------------|--------|--------------------------------------------------|--------|--------|--------------------------------------------------|--------|
|                                                  |   | Plan                  Benefits    |   |   | Plan                  Benefits    |   |
|                                                  |   | 2007                                             |   |   | 2006                                             |   |   | 2007 |   |   | 2006 |   |
|                                                  |   | (in                  thousands)                  |   |
| **Three                  Months Ended September 30,** |   |                                             |   |   |                                             |   |   |   |   |   |   |   |
| Service                  cost                         |   | $                                                | 2,579  |   |                                             | $      | 2,400 |   |   | $ | 468 |   |   | $ | 420 |   |
| Interest                  cost                        |   |                                             | 2,536  |   |                                             |   | 2,224 |   |   |   | 307 |   |   |   | 296 |   |
| Expected                  return on plan assets       |   |                                             | (2,898 | )      |                                             |   | (2,046 | ) |   |   | - |   |   |   | - |   |
| Transition                  obligation recognition    |   |                                             | 60     |   |                                             |   | 60 |   |   |   | - |   |   |   | - |   |
| Amortization                  of prior service cost   |   |                                             | (129   | )      |                                             |   | (114 | ) |   |   | (231 | ) |   |   | (246 | ) |
| Recognized                  net actuarial loss        |   |                                             | 560    |   |                                             |   | 420 |   |   |   | 204 |   |   |   | 320 |   |
| Net                  periodic benefit cost            |   | $                                                | 2,708  |   |                                             | $      | 2,944 |   |   | $ | 748 |   |   | $ | 790 |   |
|                                                  |   |                                             |   |   |                                             |   |   |   |   |   |   |   |   |   |   |   |
| **Nine                  Months Ended September 30,**  |   |                                             |   |   |                                             |   |   |   |   |   |   |   |   |   |   |   |
| Service                  cost                         |   | $                                                | 8,753  |   |                                             | $      | 8,406 |   |   | $ | 1,472 |   |   | $ | 1,692 |   |
| Interest                  cost                        |   |                                             | 7,484  |   |                                             |   | 6,736 |   |   |   | 893 |   |   |   | 986 |   |
| Expected                  return on plan assets       |   |                                             | (8,284 | )      |                                             |   | (6,027 | ) |   |   | - |   |   |   | - |   |
| Transition                  obligation recognition    |   |                                             | 180    |   |                                             |   | 180 |   |   |   | - |   |   |   | - |   |
| Amortization                  of prior service cost   |   |                                             | (387   | )      |                                             |   | (66 | ) |   |   | (695 | ) |   |   | (489 | ) |
| Recognized                  net actuarial loss        |   |                                             | 2,516  |   |                                             |   | 1,660 |   |   |   | 790 |   |   |   | 868 |   |
| Net                  periodic benefit cost            |   | $                                                | 10,262 |   |                                             | $      | 10,889 |   |   | $ | 2,460 |   |   | $ | 3,057 |   |

**Note      5 - Stock-Based Compensation**

|                                                 |   | Three                  Months Ended                                             |   |   | Nine                  Months Ended               |   |
|------------------------------------------------------|--------|---------------------------------------------------------------------------------|--------|--------|--------------------------------------------------|--------|
|                                                 |   | September                  30,                                   |   |   | September                  30,    |   |
|                                                 |   | 2007                                                                            |   |   | 2006                                             |   |   | 2007 |   |   | 2006 |   |
|                                                 |   | (in                  thousands)         |   |
| Stock-based                  compensation expense    |   | $                                                                               | 7,962  |   |                                             | $      | 2,997 |   |   | $ | 20,040 |   |   | $ | 9,320 |   |
| Tax                  benefit from expense recognized |   |                                                                            | 2,994  |   |                                             |   | 1,129 |   |   |   | 7,535 |   |   |   | 3,510 |   |

----

**Note      6 - Effect of Gulf Coast Hurricanes**

**Note      7 - Asset Retirement Obligations**

|                                                                |   | Nine                  Months Ended  |     |
|---------------------------------------------------------------------|--------|-------------------------------------|----------|
|                                                                |   | September                  30, 2007 |     |
|                                                                |   | (in                  thousands)     |     |
| Asset                  retirement obligations at December 31, 2006  |   | $                                   | 196,189  |   |
| Liabilities                  incurred in current period             |   |                                | 5,926    |   |
| Liabilities                  settled in current period              |   |                                | (163,226 | ) |
| Revisions                                                           |   |                                | 78,444   |   |
| Accretion                  expense                                  |   |                                | 6,337    |   |
| Asset                  retirement obligations at September 30, 2007 |   | $                                   | 123,670  |   |

----

**Note      8 – Equity Method Investments**

|                                                                                |   | September                  30,  |    |   | December                  31, |   |
|-------------------------------------------------------------------------------------|--------|---------------------------------|---------|--------|-------------------------------|--------|
|                                                                                |   | 2007                            |    |   | 2006                          |   |
|                                                                                |   | (in                  thousands) |    |
| **Equity                  method investments:**                                     |   |                            |    |   |                          |   |
| Atlantic                  Methanol Production Company, LLC ("AMPCO") (45% interest) |   | $                               | 204,091 |   |                          | $      | 211,325 |   |
| Alba                  Plant LLC ("Alba Plant") (27.8% interest)                     |   |                            | 140,501 |   |                          |   | 146,051 |   |
| Other                                                                               |   |                            | 14,348  |   |                          |   | 15,996 |   |
| Total                  equity method investments                                    |   | $                               | 358,940 |   |                          | $      | 373,372 |   |

|                                                       |   |                                |    |   |                               |   |    | September                  30,  |    |   | December                  31, |   |
|------------------------------------------------------------|--------|-------------------------------------|---------|--------|------------------------------------|--------|---------|---------------------------------|---------|--------|-------------------------------|--------|
|                                                       |   |                                |    |   |                               |   |    | 2007                            |    |   | 2006                          |   |
|                                                       |   |                                |    |   |                               |   |    | (in                  thousands) |    |
| **Balance                  sheet information:**            |   |                                |    |   |                               |   |    |                            |    |   |                          |   |
| Current                  assets                            |   |                                |    |   |                               |   |    | $                               | 262,330 |   |                          | $      | 252,201 |   |
| Noncurrent                  assets                         |   |                                |    |   |                               |   |    |                            | 839,524 |   |                          |   | 857,465 |   |
| Current                  liabilities                       |   |                                |    |   |                               |   |    |                            | 165,987 |   |                          |   | 171,028 |   |
| Noncurrent                  liabilities                    |   |                                |    |   |                               |   |    |                            | 2,181   |   |                          |   | 2,385 |   |
|                                                       |   |                                |    |   |                               |   |    |                            |    |   |                          |   |   |   |
|                                                       |   | Three                  Months Ended |    |   | Nine                  Months Ended |   |
|                                                       |   | September                  30,      |    |   | September                  30,     |   |
|                                                       |   | 2007                                |    |   | 2006                               |   |    | 2007                            |    |   | 2006                          |   |
|                                                       |   | (in                  thousands)     |    |
| **Statements                  of operations information:** |   |                                |    |   |                               |   |    |                            |    |   |                          |   |   |   |
| Operating                  revenues                        |   | $                                   | 218,584 |   |                               | $      | 179,087 |                            |    | $      | 641,897                       |   |   | $ | 533,949 |   |
| Less                  cost of goods sold                   |   |                                | 57,309  |   |                               |   | 55,157  |                            |    |   | 161,606                       |   |   |   | 145,900 |   |
| Gross                  margin                              |   |                                | 161,275 |   |                               |   | 123,930 |                            |    |   | 480,291                       |   |   |   | 388,049 |   |
| Less                  other expense, net                   |   |                                | 8,488   |   |                               |   | 9,993   |                            |    |   | 28,977                        |   |   |   | 36,654 |   |
| Less                  income tax expense                   |   |                                | 8,966   |   |                               |   | 1,956   |                            |    |   | 27,598                        |   |   |   | 18,795 |   |
| Net                  income                                |   | $                                   | 143,821 |   |                               | $      | 111,981 |                            |    | $      | 423,716                       |   |   | $ | 332,600 |   |

----

**Note      9 - Basic and Diluted Earnings Per Share**

|                                                                                                                       |   | 2007                                       |    |   | 2006    |   |
|----------------------------------------------------------------------------------------------------------------------------|--------|-----------------------------------------------------------|---------|--------|------------------------|--------|
|                                                                                                                       |   |                                                      |    |   | Weighted               |   |   |   |   |   | Weighted |   |
|                                                                                                                       |   | Net                                                       |    |   | Average                |   |   | Net |   |   | Average |   |
|                                                                                                                       |   | Income                                                    |    |   | Shares                 |   |   | Income |   |   | Shares |   |
|                                                                                                                       |   | (in                  thousands, except per share amounts) |    |
| **Three                  Months Ended September 30,**                                                                      |   |                                                      |    |   |                   |   |   |   |   |   |   |   |
| Net                  income available to common shareholders and weighted average                  shares outstanding |   | $                                                         | 222,675 |   |                   |   | 171,123 |   |   | $ | 318,064 |   |   |   | 176,218 |   |
| **Basic                  EPS**                                                                                             |   | $                                                         | 1.30    |   |                   |   |   |   |   | $ | 1.80 |   |   |   |   |   |
|                                                                                                                       |   |                                                      |    |   |                   |   |   |   |   |   |   |   |   |   |   |   |
| Net                  income available to common shareholders and weighted average                  shares outstanding |   | $                                                         | 222,675 |   |                   |   | 171,123 |   |   | $ | 318,064 |   |   |   | 176,218 |   |
| Plus                  incremental shares from assumed conversions:                                                         |   |                                                      |    |   |                   |   |   |   |   |   |   |   |   |
|   Dilutive                  stock options                                                                        |   |                                                      | -       |   |                   |   | 1,983 |   |   |   | - |   |   |   | 3,198 |   |
|   Dilutive                  restricted stock                                                                     |   |                                                      | -       |   |                   |   | 244 |   |   |   | - |   |   |   | 141 |   |
|   Dilutive                  rabbi trust shares                                                                   |   |                                                      | -       |   |                   |   | - |   |   | $ | (708 | ) |   |   | 1,520 |   |
| Adjusted                  net income and shares                                                                            |   | $                                                         | 222,675 |   |                   |   | 173,350 |   |   | $ | 317,356 |   |   |   | 181,077 |   |
| **Diluted                  EPS**                                                                                           |   | $                                                         | 1.28    |   |                   |   |   |   |   | $ | 1.75 |   |   |   |   |   |
|                                                                                                                       |   |                                                      |    |   |                   |   |   |   |   |   |   |   |   |   |   |   |
| **Nine                  Months Ended September 30,**                                                                       |   |                                                      |    |   |                   |   |   |   |   |   |   |   |   |   |   |   |
| Net                  income available to common shareholders and weighted average shares                  outstanding      |   | $                                                         | 643,592 |   |                   |   | 170,953 |   |   | $ | 513,446 |   |   |   | 176,505 |   |
| **Basic                  EPS**                                                                                             |   | $                                                         | 3.76    |   |                   |   |   |   |   | $ | 2.91 |   |   |   |   |   |
|                                                                                                                       |   |                                                      |    |   |                   |   |   |   |   |   |   |   |   |   |   |   |
| Net                  income available to common shareholders and weighted average shares                  outstanding |   | $                                                         | 643,592 |   |                   |   | 170,953 |   |   | $ | 513,446 |   |   |   | 176,505 |   |
| Plus                  incremental shares from assumed conversions:                                                         |   |                                                      |    |   |                   |   |   |   |   |   |   |   |   |
|   Dilutive                  stock options                                                                        |   |                                                      | -       |   |                   |   | 2,008 |   |   |   | - |   |   |   | 3,508 |   |
|   Dilutive                  restricted stock                                                                     |   |                                                      | -       |   |                   |   | 195 |   |   |   | - |   |   |   | 145 |   |
| Adjusted                  net income and shares                                                                            |   | $                                                         | 643,592 |   |                   |   | 173,156 |   |   | $ | 513,446 |   |   |   | 180,158 |   |
| **Diluted                  EPS**                                                                                           |   | $                                                         | 3.72    |   |                   |   |   |   |   | $ | 2.85 |   |   |   |   |   |

**Note      10 - Income Taxes**

|                                        |   | Three                  Months Ended                                                   |    |   | Nine                  Months Ended |   |
|---------------------------------------------|--------|---------------------------------------------------------------------------------------|---------|--------|------------------------------------|--------|
|                                        |   | September                  30,                                         |    |   | September                  30,     |   |
|                                        |   | 2007                                                                                  |    |   | 2006                               |   |   | 2007 |   |   | 2006 |   |
|                                        |   | (in                  thousands)          |    |
| Current                                     |   | $                                                                                     | 31,981  |   |                               | $      | 127,252 |   |   | $ | 104,501 |   |   | $ | 189,300 |   |
| Deferred                                    |   |                                                                                  | 88,621  |   |                               |   | 99,650 |   |   |   | 192,137 |   |   |   | 146,709 |   |
| Total                  income tax provision |   | $                                                                                     | 120,602 |   |                               | $      | 226,902 |   |   | $ | 296,638 |   |   | $ | 336,009 |   |

----

Our      effective tax      rate decreased from 39.6% for the first nine months of 2006 to 31.5% for the      first nine months of 2007.  Tax expense was higher in 2006 because      $100 million of goodwill associated with the sale of our Gulf of Mexico shelf      assets was not deductible, there was an increase in the valuation allowance      on a      deferred tax asset for future foreign tax credits and there was an increase      in      deferred tax liabilities due to a rate change in the UK.  In addition,      income from equity method investments was higher in 2007, which is a favorable      permanent difference in calculating income tax expense.

*Adoption      of FIN 48 and FSP FIN 48-1*

----

**Note      11 - Segment Information**

|                                                           |   |                            |    |   |    |   |    |   |   |   |                       |   |   |   |    |   | Other                  Int'l     |   |
|----------------------------------------------------------------|--------|---------------------------------|---------|--------|---------|--------|---------|--------|--------|--------|----------------------------|--------|--------|--------|---------|--------|----------------------------------|--------|
|                                                           |   |                            |    |   | North   |   |    | West   |   |   |                       |   |   |   |    |   | Corporate                  & |   |
|                                                           |   | Consolidated                    |    |   | America |   |    | Africa |   |   | North                  Sea |   |   | Israel |    |   | Marketing                        |   |
|                                                           |   | (in                  thousands) |    |
| **Three                  Months Ended September 30, 2007**     |   |                            |    |   |    |   |    |   |   |   |                       |   |   |   |    |   |
| Revenues                  from third parties                   |   | $                               | 768,440 |   |    | $      | 397,148 |   |   | $      | 97,893                     |   |   | $      | 121,774 |   |                             | $      | 35,626 |   |   | $ | 115,999 |   |
| Intersegment                  revenue                          |   |                            | -       |   |    |   | 60,201  |   |   |   | -                          |   |   |   | -       |   |                             |   | - |   |   |   | (60,201 | ) |
| Income                  from equity method investees           |   |                            | 45,371  |   |    |   | -       |   |   |   | 45,371                     |   |   |   | -       |   |                             |   | - |   |   |   | - |   |
| Total                  Revenues                                |   |                            | 813,811 |   |    |   | 457,349 |   |   |   | 143,264                    |   |   |   | 121,774 |   |                             |   | 35,626 |   |   |   | 55,798 |   |
|                                                           |   |                            |    |   |    |   |    |   |   |   |                       |   |   |   |    |   |                             |   |   |   |   |   |   |   |
| Depreciation,                  depletion and amortization |   |                            | 195,266 |   |    |   | 143,574 |   |   |   | 8,716                      |   |   |   | 29,741  |   |                             |   | 5,178 |   |   |   | 8,057 |   |
| Loss                  on derivative instruments                |   |                            | 1,514   |   |    |   | 1,514   |   |   |   | -                          |   |   |   | -       |   |                             |   | - |   |   |   | - |   |
| Income                  (loss) before taxes                    |   |                            | 343,277 |   |    |   | 181,291 |   |   |   | 112,273                    |   |   |   | 77,536  |   |                             |   | 27,957 |   |   |   | (55,780 | ) |
|                                                           |   |                            |    |   |    |   |    |   |   |   |                       |   |   |   |    |   |                             |   |   |   |   |   |   |   |
| **Three                  Months Ended September 30, 2006**     |   |                            |    |   |    |   |    |   |   |   |                       |   |   |   |    |   |                             |   |   |   |   |
| Revenues                  from third parties                   |   | $                               | 707,509 |   |    | $      | 406,173 |   |   | $      | 85,498                     |   |   | $      | 26,082  |   |                             | $      | 30,451 |   |   | $ | 159,305 |   |
| Intersegment                  revenue                          |   |                            | -       |   |    |   | 99,549  |   |   |   | -                          |   |   |   | -       |   |                             |   | - |   |   |   | (99,549 | ) |
| Income                  from equity method investees           |   |                            | 33,810  |   |    |   | -       |   |   |   | 33,810                     |   |   |   | -       |   |                             |   | - |   |   |   | - |   |
| Total                  Revenues                                |   |                            | 741,319 |   |    |   | 505,722 |   |   |   | 119,308                    |   |   |   | 26,082  |   |                             |   | 30,451 |   |   |   | 59,756 |   |
|                                                           |   |                            |    |   |    |   |    |   |   |   |                       |   |   |   |    |   |                             |   |   |   |   |   |   |   |
| Depreciation,                  depletion and amortization |   |                            | 165,765 |   |    |   | 146,010 |   |   |   | 5,353                      |   |   |   | 2,603   |   |                             |   | 4,115 |   |   |   | 7,684 |   |
| Gain                  on derivative instruments                |   |                            | (6,315  | )      |    |   | (6,315  | )      |   |   | -                          |   |   |   | -       |   |                             |   | - |   |   |   | - |   |
| Income                  (loss) before taxes                    |   |                            | 544,966 |   |    |   | 435,432 |   |   |   | 107,206                    |   |   |   | 15,707  |   |                             |   | 24,785 |   |   |   | (38,164 | ) |
|                                                           |   |                            |    |   |    |   |    |   |   |   |                       |   |   |   |    |   |                             |   |   |   |   |   |   |   |

----

|                                                                         |   |                            |       |   |    |   |      |   |   |   |                       |   |   |   |    |   | Other                  Int'l     |   |
|------------------------------------------------------------------------------|--------|---------------------------------|------------|--------|---------|--------|-----------|--------|--------|--------|----------------------------|--------|--------|--------|---------|--------|----------------------------------|--------|
|                                                                         |   |                            |       |   | North   |   |      | West   |   |   |                       |   |   |   |    |   | Corporate                  & |   |
|                                                                         |   | Consolidated                    |       |   | America |   |      | Africa |   |   | North                  Sea |   |   | Israel |    |   | Marketing                        |   |
|                                                                         |   | (in                  thousands) |       |
| **Nine                  Months Ended September 30, 2007**                    |   |                            |       |   |    |   |      |   |   |   |                       |   |   |   |    |   |
| Revenues                  from third parties                                 |   | $                               | 2,210,665  |   |    | $      | 1,209,760 |   |   | $      | 283,168                    |   |   | $      | 239,104 |   |                             | $      | 84,937 |   |   | $ | 393,696 |   |
| Intersegment                  revenue                                        |   |                            | -          |   |    |   | 227,141   |   |   |   | -                          |   |   |   | -       |   |                             |   | - |   |   |   | (227,141 | ) |
| Income                  from equity method investees                         |   |                            | 139,904    |   |    |   | -         |   |   |   | 139,904                    |   |   |   | -       |   |                             |   | - |   |   |   | - |   |
| Total                  Revenues                                              |   |                            | 2,350,569  |   |    |   | 1,436,901 |   |   |   | 423,072                    |   |   |   | 239,104 |   |                             |   | 84,937 |   |   |   | 166,555 |   |
|                                                                         |   |                            |       |   |    |   |      |   |   |   |                       |   |   |   |    |   |                             |   |   |   |   |   |   |   |
| Depreciation,                  depletion and amortization               |   |                            | 540,453    |   |    |   | 427,861   |   |   |   | 18,731                     |   |   |   | 56,849  |   |                             |   | 13,011 |   |   |   | 24,001 |   |
| Gain                  on derivative instruments                              |   |                            | (557       | )      |    |   | (557      | )      |   |   | -                          |   |   |   | -       |   |                             |   | - |   |   |   | - |   |
| Loss                  on involuntary conversion                              |   |                            | 51,406     |   |    |   | 51,406    |   |   |   | -                          |   |   |   | -       |   |                             |   | - |   |   |   | - |   |
| Income                  (loss) before taxes                                  |   |                            | 940,230    |   |    |   | 558,784   |   |   |   | 338,082                    |   |   |   | 137,057 |   |                             |   | 65,132 |   |   |   | (158,825 | ) |
|                                                                         |   |                            |       |   |    |   |      |   |   |   |                       |   |   |   |    |   |                             |   |   |   |   |   |   |   |
| **Nine                  Months Ended September 30, 2006**                    |   |                            |       |   |    |   |      |   |   |   |                       |   |   |   |    |   |                             |   |   |   |   |
| Revenues                  from third parties                                 |   | $                               | 2,116,995  |   |    | $      | 1,097,212 |   |   | $      | 306,870                    |   |   | $      | 88,723  |   |                             | $      | 68,441 |   |   | $ | 555,749 |   |
| Intersegment                  revenue                                        |   |                            | -          |   |    |   | 372,656   |   |   |   | -                          |   |   |   | -       |   |                             |   | - |   |   |   | (372,656 | ) |
| Income                  from equity method investees                         |   |                            | 108,901    |   |    |   | -         |   |   |   | 108,901                    |   |   |   | -       |   |                             |   | - |   |   |   | - |   |
| Total                  Revenues                                              |   |                            | 2,225,896  |   |    |   | 1,469,868 |   |   |   | 415,771                    |   |   |   | 88,723  |   |                             |   | 68,441 |   |   |   | 183,093 |   |
|                                                                         |   |                            |       |   |    |   |      |   |   |   |                       |   |   |   |    |   |                             |   |   |   |   |   |   |   |
| Depreciation,                  depletion and amortization               |   |                            | 458,878    |   |    |   | 402,033   |   |   |   | 15,674                     |   |   |   | 5,933   |   |                             |   | 10,367 |   |   |   | 24,871 |   |
| Loss                  on derivative instruments                              |   |                            | 389,723    |   |    |   | 389,723   |   |   |   | -                          |   |   |   | -       |   |                             |   | - |   |   |   | - |   |
| Income                  (loss) before taxes                                  |   |                            | 849,455    |   |    |   | 484,655   |   |   |   | 373,490                    |   |   |   | 59,250  |   |                             |   | 52,851 |   |   |   | (120,791 | ) |
|                                                                         |   |                            |       |   |    |   |      |   |   |   |                       |   |   |   |    |   |                             |   |   |   |   |   |   |   |
| Total                    assets at September 30, 2007 (1)               |   | $                               | 10,251,428 |   |    | $      | 7,515,385 |   |   | $      | 1,222,046                  |   |   | $      | 476,729 |   |                             | $      | 265,026 |   |   | $ | 772,242 |   |
| Total                  assets at December 31, 2006                  (1) |   |                            | 9,588,625  |   |    |   | 7,224,920 |   |   |   | 960,357                    |   |   |   | 343,236 |   |                             |   | 256,913 |   |   |   | 803,199 |   |

| (1) | North                America includes goodwill of $766 million and $781 million at September                30, 2007 and December 31, 2006,                respectively. |
|-----|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

**Note      12 - Commitments and Contingencies**

*Legal      Proceedings*

----

**Note      13 - Capitalized Exploratory Well Costs**

|                                                                                                                               |   | Nine                  Months Ended  |    |
|------------------------------------------------------------------------------------------------------------------------------------|--------|-------------------------------------|---------|
|                                                                                                                               |   | September                  30, 2007 |    |
|                                                                                                                               |   | (in                  thousands)     |    |
|                                                                                                                               |   |                                |    |
| Capitalized                  exploratory well costs at beginning of period                                                         |   | $                                   | 80,359  |   |
| Additions                  to capitalized exploratory well costs pending determination of                  proved reserves    |   |                                | 145,575 |   |
| Reclassified                    to proved oil and gas properties based on determination of proved                    reserves |   |                                | (4,595  | ) |
| Capitalized                  exploratory well costs charged to expense                                                             |   |                                | (6,454  | ) |
| Capitalized                  exploratory well costs at end of period                                                               |   | $                                   | 214,885 |   |

|                                                                                                                                                                |   | September                  30,                    |    |   | December                  31, |   |
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|---------------------------------------------------|---------|--------|-------------------------------|--------|
|                                                                                                                                                                |   | 2007                                              |    |   | 2006                          |   |
|                                                                                                                                                                |   | (in                  thousands)    |    |
| Capitalized                    exploratory well costs that have been capitalized for a period of one                    year or less                           |   | $                                                 | 174,602 |   |                          | $      | 58,493 |   |
| Capitalized                    exploratory well costs that have been capitalized for a period                    greater than one year after completion of drilling |   |                                              | 40,283  |   |                          |   | 21,866 |   |
| Balance                  at end of period                                                                                                                           |   | $                                                 | 214,885 |   |                          | $      | 80,359 |   |
|                                                                                                                                                                |   |                                              |    |   |                          |   |   |   |
| Number                  of projects that have exploratory well costs that have been capitalized                  for a period greater than one                      |   |                                              |    |   |                          |   |   |   |
|    year                  after completion of drilling                                                                                                |   |                                              | 2       |   |                          |   | 4 |   |

----

**Note      14 - Recently Issued Pronouncements**

*SFAS      157 *
* *

*SFAS      159 *

*FSP      FIN 39-1*

----

**ITEM      2.  MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL      CONDITION**

**AND      RESULTS OF OPERATIONS**

**EXECUTIVE      OVERVIEW**

|   | · | net                  income of $223 million and diluted earnings per share of $1.28,                  as                  compared with net income of $318 million and diluted earnings per                  share of                  $1.75 for third quarter 2006 (which included the sale of our Gulf                  of                  Mexico shelf assets); and |
|--------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | cash                  flow from operating activities of $548 million, as compared with                  $407                  million for third quarter                  2006. |
|--------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | oil                discovery on Benita appraisal well on Block I, offshore Equatorial                Guinea; |
|--------|--------|--------------------------------------------------------------------------------------------------------------|

|   | · | successful                appraisal well (Belinda) on Block O, offshore Equatorial                Guinea; |
|--------|--------|-----------------------------------------------------------------------------------------------------------|

|   | · | exploration                success at the YoYo prospect on PH-77 license, offshore                Cameroon; |
|--------|--------|-------------------------------------------------------------------------------------------------------------|

|   | · | continued                ramp-up of Dumbarton oil production in the North                Sea; |
|--------|--------|-----------------------------------------------------------------------------------------------|

|   | · | record                quarterly natural gas production in Israel;                and |
|--------|--------|--------------------------------------------------------------------------------------|

|   | · | increasing                natural gas sales to a liquefied natural gas (“LNG”) plant in Equatorial                Guinea. |
|--------|--------|---------------------------------------------------------------------------------------------------------------------------------------|

**OUTLOOK**

|   | · | production                contributions from the sale of natural gas from the Alba field in                Equatorial Guinea to an LNG                facility; |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | the                contribution of production from the Dumbarton North Sea                development; |
|--------|--------|--------------------------------------------------------------------------------------------------------|

|   | · | growing                natural gas sales in Israel due to the planned conversion of additional                power plants to use natural gas as                fuel; |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | growing                production from the Piceance Basin and the Niobrara Trend areas in                the Northern region of our North America operations, where we are                continuing active drilling                programs; |
|--------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | a                full year of production from our acquisition of U.S.                Exploration; |
|--------|--------|---------------------------------------------------------------------------------------------------|

|   | · | partially                offset by loss of production from Gulf of Mexico shelf assets sold                in                July 2006, natural field decline in the Gulf Coast area and                specific well performance in the deepwater Gulf of                Mexico. |
|--------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | infrastructure                  development in Israel; |
|--------|--------|--------------------------------------------------------|

|   | · | potential                  hurricane-related volume curtailments in the Gulf of Mexico and                  Gulf Coast                  areas; |
|--------|--------|------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | potential                  winter storm-related volume curtailments in the Northern region                  of our                  North America operations; |
|--------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | potential                  pipeline and processing facility capacity constraints in the Rocky                  Mountain area of our Northern                  region; |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | seasonal                  rainfall variations in Ecuador that affect our natural gas-to-power                  project; |
|--------|--------|-------------------------------------------------------------------------------------------------------------------------|

|   | · | natural                  gas volume curtailments in Equatorial Guinea due to LNG plant repairs;                  and |
|--------|--------|----------------------------------------------------------------------------------------------------------------------|

|   | · | timing                  of capital expenditures, as discussed below, which are expected                  to result                  in near-term production. |
|--------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

*2007      Capital Expenditures – *

*Recent      Developments in Equatorial Guinea *
* *

*Recently      Issued Pronouncements*
*** ***

**LIQUIDITY      AND CAPITAL RESOURCES**

***Overview***

***Cash      Flows***

|                                                                                       |   | Nine                  Months Ended                |       |
|--------------------------------------------------------------------------------------------|--------|---------------------------------------------------|------------|
|                                                                                       |   | September                  30,     |       |
|                                                                                       |   | 2007                                              |       |   | 2006 |   |
|                                                                                       |   | (in                  thousands)    |       |
| Total                  cash provided by (used in):                                         |   |                                              |       |   |   |   |
|                       Operating activities                             |   | $                                                 | 1,320,611  |   |   | $ | 1,340,813 |   |
|                       Investing activities                             |   |                                              | (1,015,602 | ) |   |   | (827,033 | ) |
|                       Financing activities                             |   |                                              | (7,644     | ) |   |   | (534,298 | ) |
|                       Increase (decrease) in cash and cash equivalents |   | $                                                 | 297,365    |   |   | $ | (20,518 | ) |

----

*Operating      Activities*

|   | · | cash                  flows from higher liquid commodity prices;                  and |
|--------|--------|---------------------------------------------------------------------------------------|

|   | · | dividends                  from equity method investees, which had been classified as investing                  cash                  flows in 2006 (See Item 2. Results of Operations – Equity Method                  Investees); |
|--------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | a                  decrease in non-cash working capital resulting from decreases in                  the                  current portions of asset retirement obligations and other accrued                  liabilities; and |
|--------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | an                  increase in exploration costs, general and administrative expense                  and                  transportation costs. |
|--------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------|

*Investing      Activities – *

|   | · | a                slight decrease in capital expenditures during 2007 as compared to                2006; |
|--------|--------|----------------------------------------------------------------------------------------------------------|

|   | · | a                decrease in acquisition and divestiture activity during 2007 as compared                to the acquisition of U.S. Exploration and sale of our Gulf of Mexico                shelf assets during 2006; and |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | a                decrease in distributions received from equity method investees for                2007                as compared to 2006 (See Item 2. Results of Operations – Equity Method                Investees). |
|--------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

*Financing      Activities – *

|   | · | a                net increase in cash from short-term and long-term borrowings in                2007 as                compared with a net decrease from short-term and long-term borrowing                repayments in 2006; and |
|--------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | a                reduction of cash used for repurchases of our common stock during                the                first nine months of 2007 as compared with the first nine months                of                2006. |
|--------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

***Acquisition,      Capital and Other Exploration Expenditures***

|                                                                         |   | Three                  Months Ended                                    |    |   | Nine                  Months Ended               |   |
|------------------------------------------------------------------------------|--------|---------------------------------------------------------------------------------------|---------|--------|--------------------------------------------------|--------|
|                                                                         |   | September                  30,                                         |    |   | September                  30,    |   |
|                                                                         |   | 2007                                                                                  |    |   | 2006                                             |   |   | 2007 |   |   | 2006 |   |
|                                                                         |   | (in                  thousands)          |    |
| **Acquisition,                  Capital and Other Exploration Expenditures** |   |                                                                                  |    |   |                                             |   |   |   |   |   |
| Lease                  acquisition of unproved property                      |   | $                                                                                     | 1,892   |   |                                             | $      | - |   |   | $ | 93,346 |   |   | $ | 130,819 |   |
| Lease                  acquisition of proved property                        |   |                                                                                  | 116     |   |                                             |   | - |   |   |   | 5,703 |   |   |   | 412,687 |   |
| Exploration                  expenditures                                    |   |                                                                                  | 97,407  |   |                                             |   | 51,819 |   |   |   | 249,973 |   |   |   | 192,896 |   |
| Development                  expenditures                                    |   |                                                                                  | 344,870 |   |                                             |   | 328,218 |   |   |   | 841,888 |   |   |   | 825,481 |   |
| Corporate                  and other expenditures                            |   |                                                                                  | 4,847   |   |                                             |   | 5,866 |   |   |   | 23,662 |   |   |   | 15,948 |   |
| Total                                                                        |   | $                                                                                     | 449,132 |   |                                             | $      | 385,903 |   |   | $ | 1,214,572 |   |   | $ | 1,577,831 |   |

***Insurance      Recoveries***

***Financing      Activities***

*Long-Term      Debt*

----

*Piceance      Installment Payments Due –*

*Other      Short-Term Borrowings –*

*Dividends      – *

*Exercise      of Stock Options – *

----

**RESULTS      OF OPERATIONS**

***Natural      Gas Information***

|                               |   | Three                  Months Ended                                 |   | Nine                  Months Ended                                   |
|------------------------------------|--------|---------------------------------------------------------------------|--------|----------------------------------------------------------------------|
|                               |   | September                  30,                            |   | September                  30,                                       |
|                               |   | 2007                                                                |   | 2006                                                                 |   | 2007 |   | 2006 |
|                               |   | (in                  thousands)       |
|                               |   |                                                                |   |                                                                 |   |   |   |   |
| Natural                  gas sales |   |  $        296,360      |   |  $         290,845 |   |  $      935,364 |   |  $      917,673 |

|                                                  |   | 2007    |    |   | 2006    |   |
|-------------------------------------------------------|--------|------------------------|---------|--------|------------------------|--------|
|                                                  |   | Mcfpd                  |    |   | $/Mcf                  |   |   | Mcfpd |   |   | $/Mcf |   |
| **Three                  Months Ended September 30,** |   |                   |    |   |                   |   |   |   |   |   |   |   |
| North                  America (1)                    |   |                   | 404,238 |   |                   | $      | 6.77 |   |   |   | 430,072 |   |   | $ | 6.41 |   |
| West                  Africa (2)                  (3) |   |                   | 207,501 |   |                   |   | 0.27 |   |   |   | 40,498 |   |   |   | 0.39 |   |
| North                  Sea                            |   |                   | 5,496   |   |                   |   | 7.26 |   |   |   | 8,553 |   |   |   | 6.62 |   |
| Israel                                                |   |                   | 131,115 |   |                   |   | 2.95 |   |   |   | 116,718 |   |   |   | 2.84 |   |
| Ecuador                  (4)                          |   |                   | 24,844  |   |                   |   | - |   |   |   | 20,131 |   |   |   | - |   |
| Other                  International                  |   |                   | -       |   |                   |   | - |   |   |   | 198 |   |   |   | 1.51 |   |
| Total                                                 |   |                   | 773,194 |   |                   | $      | 4.30 |   |   |   | 616,170 |   |   | $ | 5.30 |   |
|                                                  |   |                   |    |   |                   |   |   |   |   |   |   |   |   |   |   |   |
| **Nine                  Months Ended September 30,**  |   |                   |    |   |                   |   |   |   |   |   |   |   |   |   |   |   |
| North                  America (1)                    |   |                   | 410,083 |   |                   | $      | 7.42 |   |   |   | 461,843 |   |   | $ | 6.55 |   |
| West                  Africa (2)                  (3) |   |                   | 126,820 |   |                   |   | 0.29 |   |   |   | 44,232 |   |   |   | 0.38 |   |
| North                  Sea                            |   |                   | 5,967   |   |                   |   | 6.05 |   |   |   | 8,460 |   |   |   | 8.13 |   |
| Israel                                                |   |                   | 110,675 |   |                   |   | 2.81 |   |   |   | 91,656 |   |   |   | 2.74 |   |
| Ecuador                  (4)                          |   |                   | 25,571  |   |                   |   | - |   |   |   | 22,764 |   |   |   | - |   |
| Other                  International                  |   |                   | -       |   |                   |   | - |   |   |   | 324 |   |   |   | 1.20 |   |
| Total                                                 |   |                   | 679,116 |   |                   | $      | 5.24 |   |   |   | 629,279 |   |   | $ | 5.54 |   |

| (1) | Average                  realized sales prices include the effects of hedging activities.                  Hedging                  activities resulted in increases (reductions) per Mcf of $1.29                  and $0.07                  for third quarter 2007 and 2006, respectively, and $1.07 and $(0.47)                  for                  the first nine months of 2007 and 2006,                  respectively. |
|-----|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (2) | Natural                  gas from the Alba field in Equatorial Guinea is under contract                  for $0.25                  per MMBtu to a methanol plant, an LPG plant and an LNG plant. The                  price on                  an Mcf basis has been adjusted to reflect Btu content. The methanol                  and                  LPG plants are owned by affiliated entities accounted for under                  the equity                  method of accounting.  The volumes sold by the LPG plant are                  included in the table below under crude oil                  information. |
|-----|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (3) | Equatorial                  Guinea natural gas volumes include sales to an LNG plant of 154,637                  Mcfpd                  for third quarter 2007 and 72,010 Mcfpd for the first nine months                  of                  2007.  There were no natural gas sales to the LNG plant in                  2006. |
|-----|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (4) | The                  natural gas-to-power project in Ecuador is 100% owned by our subsidiaries                  and intercompany natural gas sales are eliminated for accounting                  purposes.                  Electricity sales of $54 million and $50 million are included in                  other                  revenues for the first nine months of 2007 and 2006,                  respectively. |
|-----|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

|   | · | sales                of natural gas to an LNG facility in Equatorial                Guinea; |
|--------|--------|---------------------------------------------------------------------------------------------|

|   | · | a                full nine months of production from U.S. Exploration properties and                successful development activity in the Northern region of our North                America operations; and |
|--------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | a                full nine months of sales to Israeli Electric Company’s Reading power                plant in Tel Aviv, as well as increased seasonal demand for                electricity; |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | reduction                due to sale of our Gulf of Mexico shelf assets in                2006; |
|--------|--------|-------------------------------------------------------------------------------------------------|

|   | · | a                temporary decline in production due to third party processing downtime                and                inclement weather in the Northern region of our North America                operations; |
|--------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | natural                field decline in the Gulf Coast area;                and |
|--------|--------|---------------------------------------------------------------------------------|

|   | · | declining                performance and storm shut-in in the deepwater Gulf of                Mexico. |
|--------|--------|--------------------------------------------------------------------------------------------------------|

***Crude      Oil Information***

|                             |   | Three                  Months Ended                                                   |    |   | Nine                  Months Ended |   |
|----------------------------------|--------|---------------------------------------------------------------------------------------|---------|--------|------------------------------------|--------|
|                             |   | September                  30,                                         |    |   | September                  30,     |   |
|                             |   | 2007                                                                                  |    |   | 2006                               |   |   | 2007 |   |   | 2006 |   |
|                             |   | (in                  thousands)          |    |
| Crude                  oil sales |   | $                                                                                     | 449,898 |   |                               | $      | 392,699 |   |   | $ | 1,204,854 |   |   | $ | 1,126,983 |   |

|                                                   |   | 2007       |   |   | 2006       |   |
|--------------------------------------------------------|--------|------------------------------------------|--------|--------|------------------------------------------|--------|
|                                                   |   | Production                  (1)          |   |   | Sales                     |   |   | Production                  (1) |   |   | Sales    |   |
|                                                   |   | Bopd                                     |   |   | Bopd                                     |   |   | $/Bbl |   |   | Bopd |   |   | Bopd |   |   | $/Bbl |   |
| **Three                  Months Ended September 30,**  |   |                                     |   |   |                                     |   |   |   |   |   |   |   |   |   |   |   |
| North                  America (2)                     |   |                                     | 39,992 |   |                                     |   | 39,992 |   |   | $ | 55.85 |   |   |   | 48,193 |   |   |   | 48,193 |   |   | $ | 56.84 |   |
| West                  Africa                  (3)      |   |                                     | 15,327 |   |                                     |   | 13,757 |   |   |   | 73.25 |   |   |   | 17,324 |   |   |   | 13,649 |   |   |   | 66.93 |   |
| North                  Sea                             |   |                                     | 15,722 |   |                                     |   | 16,644 |   |   |   | 77.13 |   |   |   | 3,675 |   |   |   | 3,292 |   |   |   | 68.90 |   |
| Other                  International                   |   |                                     | 6,630  |   |                                     |   | 6,578 |   |   |   | 55.55 |   |   |   | 7,783 |   |   |   | 6,825 |   |   |   | 56.96 |   |
| Total                  Consolidated Operations         |   |                                     | 77,671 |   |                                     |   | 76,971 |   |   |   | 63.53 |   |   |   | 76,975 |   |   |   | 71,959 |   |   |   | 59.32 |   |
| Equity                  Investees                  (4) |   |                                     | 7,949  |   |                                     |   | 7,472 |   |   |   | 57.24 |   |   |   | 7,994 |   |   |   | 8,932 |   |   |   | 48.88 |   |
| Total                                                  |   |                                     | 85,620 |   |                                     |   | 84,443 |   |   | $ | 62.98 |   |   |   | 84,969 |   |   |   | 80,891 |   |   | $ | 58.17 |   |
|                                                   |   |                                     |   |   |                                     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| **Nine                  Months Ended September 30,**   |   |                                     |   |   |                                     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| North                  America (2)                     |   |                                     | 43,525 |   |                                     |   | 43,525 |   |   | $ | 51.04 |   |   |   | 45,834 |   |   |   | 45,834 |   |   | $ | 51.48 |   |
| West                  Africa                  (3)      |   |                                     | 15,874 |   |                                     |   | 14,936 |   |   |   | 66.97 |   |   |   | 17,790 |   |   |   | 17,374 |   |   |   | 63.73 |   |
| North                  Sea                             |   |                                     | 11,954 |   |                                     |   | 11,926 |   |   |   | 70.41 |   |   |   | 3,867 |   |   |   | 3,619 |   |   |   | 70.79 |   |
| Other                  International                   |   |                                     | 7,043  |   |                                     |   | 6,998 |   |   |   | 50.30 |   |   |   | 7,338 |   |   |   | 7,463 |   |   |   | 54.31 |   |
| Total                  Consolidated Operations         |   |                                     | 78,396 |   |                                     |   | 77,385 |   |   |   | 57.03 |   |   |   | 74,829 |   |   |   | 74,290 |   |   |   | 55.57 |   |
| Equity                  Investees                  (4) |   |                                     | 8,220  |   |                                     |   | 7,862 |   |   |   | 50.93 |   |   |   | 7,503 |   |   |   | 8,168 |   |   |   | 46.96 |   |
| Total                                                  |   |                                     | 86,616 |   |                                     |   | 85,247 |   |   | $ | 56.47 |   |   |   | 82,332 |   |   |   | 82,458 |   |   | $ | 54.72 |   |

----

| (1) | The              variance between production and sales volumes is attributable to the              timing of liquid hydrocarbon tanker liftings. |
|-----|--------------------------------------------------------------------------------------------------------------------------------------------------|
| (2) | Average                realized sales prices include the effects of hedging activities.                Hedging                activities resulted in reductions per Bbl of $15.64 and $10.46 for                third                quarter 2007 and 2006, respectively, and $10.57 and $12.76 for the                first                nine months of 2007 and 2006,                respectively. |
|-----|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (3) | Average                realized sales prices include the effects of hedging activities.                Hedging                activities resulted in reductions per Bbl of $2.18 for third quarter                2007                and $0.68 for the first nine months of                2007. |
|-----|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (4) | Volumes                represent our share of sales of condensate and LPG from the Alba                plant in                Equatorial Guinea. LPG volumes were 5,530 Bpd and 6,957 Bpd for third                quarter 2007 and 2006, respectively, and 5,907 Bopd and 6,409 Bopd                for the                first nine months of 2007 and 2006,                respectively. |
|-----|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | contribution                of Dumbarton North Sea development; |
|--------|--------|-----------------------------------------------------------------|

|   | · | a                full nine months of production from U.S. Exploration properties;                and |
|--------|--------|------------------------------------------------------------------------------------------------------|

|   | · | successful                development activity in the Northern region of our North America                operations; |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------|

|   | · | reduction                due to sale our of Gulf of Mexico shelf assets in                2006; |
|--------|--------|-------------------------------------------------------------------------------------------------|

|   | · | timing                of liftings in Equatorial Guinea; |
|--------|--------|---------------------------------------------------------|

|   | · | temporary                decline in production due to inclement weather in the Northern                region; |
|--------|--------|----------------------------------------------------------------------------------------------------------------|

|   | · | natural                field decline in the Gulf Coast area;                and |
|--------|--------|---------------------------------------------------------------------------------|

|   | · | declining                performance and storm shut-in in the deepwater Gulf of                Mexico. |
|--------|--------|--------------------------------------------------------------------------------------------------------|

***Effect      of Hedging Activities***

***Equity      Method Investees***

|                                                     |   | Three                  Months Ended              |   |   | Nine                  Months Ended               |   |
|----------------------------------------------------------|--------|--------------------------------------------------|--------|--------|--------------------------------------------------|--------|
|                                                     |   | September                  30,    |   |   | September                  30,    |   |
|                                                     |   | 2007                                             |   |   | 2006                                             |   |   | 2007 |   |   | 2006 |   |
| Net                  income (in thousands):              |   |                                             |   |   |                                             |   |   |   |   |   |   |   |
|    AMPCO                  and affiliates  |   | $                                                | 14,649 |   |                                             | $      | 3,302 |   |   | $ | 50,404 |   |   | $ | 27,415 |   |
|    Alba                  Plant            |   | $                                                | 30,722 |   |                                             | $      | 30,508 |   |   | $ | 89,500 |   |   | $ | 81,486 |   |
| Distributions/Dividends                  (in thousands): |   |                                             |   |   |                                             |   |   |   |   |   |   |   |   |   |   |   |
|    AMPCO                  and affiliates  |   | $                                                | 17,513 |   |                                             | $      | - |   |   | $ | 59,920 |   |   | $ | 19,500 |   |
|    Alba                  Plant            |   | $                                                | 40,975 |   |                                             | $      | 39,001 |   |   | $ | 95,511 |   |   | $ | 115,021 |   |
| Sales                  volumes:                          |   |                                             |   |   |                                             |   |   |   |   |   |   |   |   |   |   |   |
|    Methanol                  (Kgal)       |   |                                             | 43,541 |   |                                             |   | 18,769 |   |   |   | 116,792 |   |   |   | 85,233 |   |
|    Condensate                  (Bopd)     |   |                                             | 1,942  |   |                                             |   | 1,975 |   |   |   | 1,955 |   |   |   | 1,759 |   |
|    LPG                  (Bpd)             |   |                                             | 5,530  |   |                                             |   | 6,957 |   |   |   | 5,907 |   |   |   | 6,409 |   |
| Production                  volumes:                     |   |                                             |   |   |                                             |   |   |   |   |   |   |   |   |   |   |   |
|    Condensate                  (Bopd)     |   |                                             | 1,815  |   |                                             |   | 1,811 |   |   |   | 1,896 |   |   |   | 1,726 |   |
|    LPG                  (Bpd)             |   |                                             | 6,134  |   |                                             |   | 6,183 |   |   |   | 6,324 |   |   |   | 5,777 |   |
| Average                  realized prices:                |   |                                             |   |   |                                             |   |   |   |   |   |   |   |   |   |   |   |
|    Methanol                  (per gallon) |   | $                                                | 0.80   |   |                                             | $      | 0.83 |   |   | $ | 0.96 |   |   | $ | 0.83 |   |
|    Condensate                  (per Bbl)  |   | $                                                | 77.91  |   |                                             | $      | 69.46 |   |   | $ | 69.63 |   |   | $ | 67.51 |   |
|    LPG                  (per Bbl)         |   | $                                                | 49.98  |   |                                             | $      | 43.03 |   |   | $ | 44.75 |   |   | $ | 41.32 |   |

----

***Costs      and Expenses***

*Production      Costs – *

|                                                       |   |                                                                                                                      |    |   | North   |   |    | West   |   |   |                       |   |   |   |   |   | Other                  Int'l / |   |
|------------------------------------------------------------|--------|---------------------------------------------------------------------------------------------------------------------------|---------|--------|---------|--------|---------|--------|--------|--------|----------------------------|--------|--------|--------|--------|--------|--------------------------------|--------|
|                                                       |   | Consolidated                                                                                                              |    |   | America |   |    | Africa |   |   | North                  Sea |   |   | Israel |   |   | Corporate(2)                   |   |
|                                                       |   | (in                  thousands)                |    |
| **Three                  Months Ended September 30, 2007** |   |                                                                                                                      |    |   |    |   |    |   |   |   |                       |   |   |   |   |   |
| Oil                  and gas operating costs (1)           |   | $                                                                                                                         | 77,283  |   |    | $      | 50,007  |   |   | $      | 7,483                      |   |   | $      | 10,697 |   |                           | $      | 2,615 |   |   | $ | 6,481 |   |
| Workover                  and repair expense               |   |                                                                                                                      | 4,484   |   |    |   | 4,460   |   |   |   | -                          |   |   |   | -      |   |                           |   | - |   |   |   | 24 |   |
| Lease                  operating expense                   |   |                                                                                                                      | 81,767  |   |    |   | 54,467  |   |   |   | 7,483                      |   |   |   | 10,697 |   |                           |   | 2,615 |   |   |   | 6,505 |   |
| Production                  and ad valorem taxes           |   |                                                                                                                      | 26,752  |   |    |   | 21,389  |   |   |   | -                          |   |   |   | -      |   |                           |   | - |   |   |   | 5,363 |   |
| Transportation                  costs                      |   |                                                                                                                      | 13,260  |   |    |   | 10,111  |   |   |   | -                          |   |   |   | 2,859  |   |                           |   | - |   |   |   | 290 |   |
| Total                  production costs                    |   | $                                                                                                                         | 121,779 |   |    | $      | 85,967  |   |   | $      | 7,483                      |   |   | $      | 13,556 |   |                           | $      | 2,615 |   |   | $ | 12,158 |   |
|                                                       |   |                                                                                                                      |    |   |    |   |    |   |   |   |                       |   |   |   |   |   |                           |   |   |   |   |   |   |   |
| **Three                  Months Ended September 30, 2006** |   |                                                                                                                      |    |   |    |   |    |   |   |   |                       |   |   |   |   |   |                           |   |   |   |   |
| Oil                  and gas operating costs (1)           |   | $                                                                                                                         | 66,431  |   |    | $      | 50,753  |   |   | $      | 6,310                      |   |   | $      | 3,355  |   |                           | $      | 2,134 |   |   | $ | 3,879 |   |
| Workover                  and repair expense               |   |                                                                                                                      | 10,497  |   |    |   | 10,453  |   |   |   | -                          |   |   |   | -      |   |                           |   | - |   |   |   | 44 |   |
| Lease                  operating expense                   |   |                                                                                                                      | 76,928  |   |    |   | 61,206  |   |   |   | 6,310                      |   |   |   | 3,355  |   |                           |   | 2,134 |   |   |   | 3,923 |   |
| Production                  and ad valorem taxes           |   |                                                                                                                      | 30,697  |   |    |   | 22,636  |   |   |   | -                          |   |   |   | -      |   |                           |   | - |   |   |   | 8,061 |   |
| Transportation                  costs                      |   |                                                                                                                      | 4,531   |   |    |   | 3,358   |   |   |   | -                          |   |   |   | 952    |   |                           |   | - |   |   |   | 221 |   |
| Total                  production costs                    |   | $                                                                                                                         | 112,156 |   |    | $      | 87,200  |   |   | $      | 6,310                      |   |   | $      | 4,307  |   |                           | $      | 2,134 |   |   | $ | 12,205 |   |
|                                                       |   |                                                                                                                      |    |   |    |   |    |   |   |   |                       |   |   |   |   |   |                           |   |   |   |   |   |   |   |
| **Nine                  Months Ended September 30, 2007**  |   |                                                                                                                      |    |   |    |   |    |   |   |   |                       |   |   |   |   |   |                           |   |   |   |   |
| Oil                  and gas operating costs (1)           |   | $                                                                                                                         | 228,672 |   |    | $      | 155,980 |   |   | $      | 25,014                     |   |   | $      | 23,954 |   |                           | $      | 6,896 |   |   | $ | 16,828 |   |
| Workover                  and repair expense               |   |                                                                                                                      | 14,533  |   |    |   | 14,327  |   |   |   | -                          |   |   |   | -      |   |                           |   | - |   |   |   | 206 |   |
| Lease                  operating expense                   |   |                                                                                                                      | 243,205 |   |    |   | 170,307 |   |   |   | 25,014                     |   |   |   | 23,954 |   |                           |   | 6,896 |   |   |   | 17,034 |   |
| Production                  and ad valorem taxes           |   |                                                                                                                      | 80,667  |   |    |   | 65,933  |   |   |   | -                          |   |   |   | -      |   |                           |   | - |   |   |   | 14,734 |   |
| Transportation                  costs                      |   |                                                                                                                      | 40,346  |   |    |   | 31,887  |   |   |   | -                          |   |   |   | 7,091  |   |                           |   | - |   |   |   | 1,368 |   |
| Total                  production costs                    |   | $                                                                                                                         | 364,218 |   |    | $      | 268,127 |   |   | $      | 25,014                     |   |   | $      | 31,045 |   |                           | $      | 6,896 |   |   | $ | 33,136 |   |
|                                                       |   |                                                                                                                      |    |   |    |   |    |   |   |   |                       |   |   |   |   |   |                           |   |   |   |   |   |   |   |
| **Nine                  Months Ended September 30, 2006**  |   |                                                                                                                      |    |   |    |   |    |   |   |   |                       |   |   |   |   |   |                           |   |   |   |   |
| Oil                  and gas operating costs (1)           |   | $                                                                                                                         | 195,550 |   |    | $      | 147,357 |   |   | $      | 21,760                     |   |   | $      | 7,998  |   |                           | $      | 6,389 |   |   | $ | 12,046 |   |
| Workover                  and repair expense               |   |                                                                                                                      | 42,757  |   |    |   | 42,628  |   |   |   | -                          |   |   |   | -      |   |                           |   | - |   |   |   | 129 |   |
| Lease                  operating expense                   |   |                                                                                                                      | 238,307 |   |    |   | 189,985 |   |   |   | 21,760                     |   |   |   | 7,998  |   |                           |   | 6,389 |   |   |   | 12,175 |   |
| Production                  and ad valorem taxes           |   |                                                                                                                      | 83,663  |   |    |   | 66,373  |   |   |   | -                          |   |   |   | -      |   |                           |   | - |   |   |   | 17,290 |   |
| Transportation                  costs                      |   |                                                                                                                      | 18,463  |   |    |   | 14,022  |   |   |   | -                          |   |   |   | 3,843  |   |                           |   | - |   |   |   | 598 |   |
| Total                  production costs                    |   | $                                                                                                                         | 340,433 |   |    | $      | 270,380 |   |   | $      | 21,760                     |   |   | $      | 11,841 |   |                           | $      | 6,389 |   |   | $ | 30,063 |   |

| (1) | Oil                and gas operating costs include labor, fuel, repairs, replacements,                saltwater disposal and other related lifting                costs. |
|-----|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| (2) | Other                  international includes Ecuador, China, and                  Argentina. |
|-----|-----------------------------------------------------------------------------------------------|

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|                                                         |   | Three                  Months Ended              |   |   | Nine                  Months Ended               |   |
|--------------------------------------------------------------|--------|--------------------------------------------------|--------|--------|--------------------------------------------------|--------|
|                                                         |   | September                  30,    |   |   | September                  30,    |   |
|                                                         |   | 2007                                             |   |   | 2006                                             |   |   | 2007 |   |   | 2006 |   |
|                                                         |   |                                             |   |   |                                             |   |   |   |   |   |   |   |
| Oil                  and gas operating costs                 |   | $                                                | 4.08   |   |                                             | $      | 4.14 |   |   | $ | 4.40 |   |   | $ | 4.00 |   |
| Workover                  and repair expense                 |   |                                             | 0.24   |   |                                             |   | 0.65 |   |   |   | 0.28 |   |   |   | 0.87 |   |
| Lease                  operating expense                     |   |                                             | 4.32   |   |                                             |   | 4.79 |   |   |   | 4.68 |   |   |   | 4.87 |   |
| Production                  and ad valorem taxes             |   |                                             | 1.41   |   |                                             |   | 1.91 |   |   |   | 1.55 |   |   |   | 1.71 |   |
| Transportation                  costs                        |   |                                             | 0.70   |   |                                             |   | 0.28 |   |   |   | 0.78 |   |   |   | 0.38 |   |
| Total                  production costs                  (1) |   | $                                                | 6.43   |   |                                             | $      | 6.98 |   |   | $ | 7.01 |   |   | $ | 6.96 |   |

| (1) | Consolidated                unit rates exclude sales volumes and costs attributable to equity                method                investees. The sales volumes include natural gas sales to the Equatorial                Guinea LNG plant that began late first quarter of 2007. The inclusion                of                these volumes reduced the unit rates by $0.92 per BOE and $0.47 per                BOE                for the three and nine months ending September 30, 2007,                respectively. |
|-----|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

*Oil      and Gas Exploration Expense – *

*Depreciation,      Depletion and Amortization – *

|                                                |   | Three                  Months Ended |    |   | Nine                  Months Ended               |   |
|-----------------------------------------------------|--------|-------------------------------------|---------|--------|--------------------------------------------------|--------|
|                                                |   | September                  30,      |    |   | September                  30,    |   |
|                                                |   | 2007                                |    |   | 2006                                             |   |   | 2007 |   |   | 2006 |   |
|                                                |   |                                |    |   |                                             |   |   |   |   |   |   |   |
| DD&A                  expense (in thousands)    |   | $                                   | 195,266 |   |                                             | $      | 165,765 |   |   | $ | 540,453 |   |   | $ | 458,878 |   |
| Unit                  rate per BOE sales volume (1) |   | $                                   | 10.31   |   |                                             | $      | 10.32 |   |   | $ | 10.39 |   |   | $ | 9.38 |   |

| (1) | Consolidated                unit rates exclude sales volumes and costs attributable to equity                method                investees. The sales volumes include natural gas sales to the Equatorial                Guinea LNG plant that began late first quarter of 2007. The inclusion                of                these volumes reduced the unit rates by $1.20 per BOE and $0.57 per                BOE                for the three and nine months ending September 30, 2007,                respectively. |
|-----|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

*General      and Administrative Expense*

|                                                |   | Three                  Months Ended              |   |   | Nine                  Months Ended               |   |
|-----------------------------------------------------|--------|--------------------------------------------------|--------|--------|--------------------------------------------------|--------|
|                                                |   | September                  30,    |   |   | September                  30,    |   |
|                                                |   | 2007                                             |   |   | 2006                                             |   |   | 2007 |   |   | 2006 |   |
|                                                |   |                                             |   |   |                                             |   |   |   |   |   |   |   |
| G&A                  expense (in thousands)     |   | $                                                | 49,518 |   |                                             | $      | 40,657 |   |   | $ | 142,368 |   |   | $ | 113,716 |   |
| Unit                  rate per BOE sales volume (1) |   | $                                                | 2.61   |   |                                             | $      | 2.53 |   |   | $ | 2.74 |   |   | $ | 2.32 |   |

| (1) | Consolidated                unit rates exclude sales volumes and costs attributable to equity                method                investees. The sales volumes include natural gas sales to the Equatorial                Guinea LNG plant that began late first quarter of 2007. The inclusion                of                these volumes reduced the unit rates by $0.38 per BOE and $0.18 per                BOE                for the three and nine months ending September 30, 2007,                respectively. |
|-----|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

*Interest      Expense and Capitalized Interest –*

*(Gain)      Loss on Derivative Instruments *

*Gain      on Sale of Assets*

*Other      Expense, Net – *

*Income      Tax Provision – *

|                                                 |   | Three                  Months Ended        |    |   | Nine                  Months Ended         |   |
|------------------------------------------------------|--------|--------------------------------------------|---------|--------|--------------------------------------------|--------|
|                                                 |   | September                  30,   |    |   | September                  30,   |   |
|                                                 |   | 2007                                       |    |   | 2006                                       |   |   | 2007 |   |   | 2006 |   |
|                                                 |   |                                       |    |   |                                       |   |   |   |   |   |   |   |
| Income                  tax provision (in thousands) |   | $                                          | 120,602 |   |                                       | $      | 226,902 |   |   | $ | 296,638 |   |   | $ | 336,009 |   |
| Effective                  rate                      |   |                                       | 35.1    | %      |                                       |   | 41.6 | % |   |   | 31.5 | % |   |   | 39.6 | % |

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**ITEM      3.  QUANTITATIVE AND QUALITATIVE DISCLOSURES**

**ABOUT      MARKET RISK**

***Commodity      Price Risk***

*Derivative      Instruments Held for Non-Trading Purposes*

***Interest      Rate Risk***

***Foreign      Currency Risk***

**DISCLOSURE      REGARDING FORWARD-LOOKING STATEMENTS**

|   | · | our                growth strategies; |
|--------|--------|---------------------------------------|

|   | · | our                ability to successfully and economically explore for and develop                crude oil                and natural gas resources; |
|--------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | anticipated                trends in our business; |
|--------|--------|----------------------------------------------------|

|   | · | our                future results of operations; |
|--------|--------|--------------------------------------------------|

|   | · | our                liquidity and ability to finance our exploration and development                activities; |
|--------|--------|----------------------------------------------------------------------------------------------------------------|

|   | · | market                conditions in the oil and gas                industry; |
|--------|--------|------------------------------------------------------------------------------|

|   | · | our                ability to make and integrate acquisitions;                and |
|--------|--------|-----------------------------------------------------------------------------------|

----

|   | · | the                impact of governmental regulation. |
|--------|--------|-------------------------------------------------------|

**ITEM      4.  CONTROLS AND PROCEDURES**

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**PART      II. OTHER INFORMATION**

**ITEM      1.  LEGAL PROCEEDINGS**

**ITEM      1A.  RISK FACTORS**

***Information      technology systems implementation issues could disrupt our internal operations      and adversely affect our financial results or our ability to report our      financial results.***

**ITEM      6.  EXHIBITS**

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|   |                            | NOBLE                ENERGY, INC.                                               |                          |
|--------|---------------------------------|---------------------------------------------------------------------------------|-------------------------------|
|   |                            |                                                                            | (Registrant)                  |   |
|   |                            |                                                                            |                          |
|   |                            |                                                                            |                          |
| Date   | October                31, 2007 |                                                                            | /s/                CHRIS TONG |   |
|   |                            | CHRIS                TONG                                                       |
|   |                            | Senior                Vice President and Chief Financial                Officer |

----

| **Exhibit** |   |                                                                                                                                                                                          |
|-------------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| **Number**  |   | **Exhibit**                                                                                                                                                                                   |
|        |   |                                                                                                                                                                                          |
| 31.1        |   | Certification                of the Company’s Chief Executive Officer Pursuant To Section 302 of the                Sarbanes-Oxley Act of 2002 (18 U.S.C. Section 7241).                |
|        |   |                                                                                                                                                                                          |
| 31.2        |   | Certification                of the Company’s Chief Financial Officer Pursuant To Section 302 of the                Sarbanes-Oxley Act of 2002 (18 U.S.C. Section 7241).                |
|        |   |                                                                                                                                                                                          |
| 32.1        |   | Certification                of the Company’s Chief Executive Officer Pursuant To Section 906 of the                Sarbanes-Oxley Act of 2002 (18 U.S.C. Section 1350).                |
|        |   |                                                                                                                                                                                          |
| 32.2        |   | Certification                of the Company’s Chief Financial Officer Pursuant To Section 906 of the                Sarbanes-Oxley Act of 2002 (18 U.S.C. Section                1350). |

----