Wall Street Reform and 

Consumer Act & 

Regulatory lmplementatio 

February 2011 
Key Regulatory Concerns 

NBL Supports Regulatory Objectives 

..,. Reduction of "Systemic" Risks 

..,. Reduction of Major Market Participant Risks 

..,. Protection Against Counterparty Credit Risks 

..,. Improved Market Visibility I Transparency and Full Disclosure 

..,. Protect U.S. Taxpayers 
Executive Summary 

~ Noble Energy ("NBL") is a Leading Investment Grade, Independent Energy Company Engaged in Worldwide Oil and Gas Exploration and Production 

("E&P") 

~ NBL Hedges (i.e. Sells Forward) up to 50% of its Oil & Gas Volumes to 

Reduce Cash Flow Volatility and to Protect Near-Term Capital Investment 

Programs 

~ NBL Does Not Conduct Proprietary Trading 

~ As an Investment Grade Company, NBL Does Not Have Any Collateral/ 

Margin Posting Requirements 

~ Collateral/ Margin Requirements Have the Potential to Substantially Reduce 

NBL's Cash and Available Borrowing Capacity Impacting Capital Spending I 

Future Investment Plans 

~ Independent Producers are Critical to U.S. Energy Security and Affordability 

;.. Reliable Energy Supply 

;.. Affordable Energy for Consumers 

~ An End User Exemption and Freedom From Collateral/ Margin Requirements are Imperative to Support Current Business Plans, Maintain a 

Conservative Financtal Position and Ensure Future Investment Capabilities 
Noble Energy, Inc. 

NYSE Ticker Symbol: NBL 

~ Global Independent Exploration and Production Company 

;.. $15 8 Market Capitalization 

;.. Investment Grade Credit Rating 

;.. 230,000 BOE Day of Production ..... 820 Million BOE Reserves at Year End 2009 

~ Discovered World's ToQ 2 Offshore Gas Discoveries of the Past Decade in 2009 and 

2010 - Israel Offshore - Tamar and Leviathan (25 Tcf) 

~ Extensive Worldwide Exploration Acreage and Project Inventory 

~ Conducts Commodity Hedging as Part of its Treasury I Risk Management Activities 

;.. Risk Management Only 

·/ ' 

;.. No Proprietary Trading 

- ,(;: ;;}~~' •\ . ~ 

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\\ 

Internationa I '· ''-':- - - "".' : ..•. 

• ,.,t"'l .• 

North Sea .1' ' ,'.) :· 

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...,J_i/ .,>-.J.. _ .. _, 

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1-:-... Isiciel ,_;~ · •. 

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' 

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1 ·· chi~ ./ I 

). 

J 

-J' 

United States 

Future Focus Areas .... ,..,, •-. ( 

Ecuador X:Jt; 

~ 1r West 

Africa • France 

• Cyprus I 

• Nicaragua l . 

,/ 
Conservative Financial Position 

Provides Short Term Safety, Supports Long-Term Growth Plans 

~ Over $1.1 Billion Cash 

On-hand 

~ $1.8 Billion Available Under 

Credit Facility 

A Investment grade rating with stable 

outlook 

o/o Debt to Cap <35% 

<30o/o ~ 

~ r--

2008 2009 2010 2011 2012 2013 

~ Debt to Book Cap Ratio of 

25o/o 

~ Debt to Book Cap Ratio, Net 

of Cash, of 13% 

~ Hedges in Place to Support 

Cash Flow 

A Only 1 0°/o of volumes tied to 

unhedged U.S. natural gas 

2010 Volumes 

1-D-.s-. Gas Unhedged I 

I U.S. Gas Hedged I 

International Gas 

Liquids Unhedged 

I Liquids Hedged ] 
NBL Commodity Hedging Program 

Strategy, Rationale, Governance and Controls 

..,. Reduce Commodity Price Volatility Exposure 

..,. Ensure Predictability of Cash Flow and Earnings 

..,. Secure Revenue to Support Acquisition and Major Project Economics 

..,. Protect Balance Sheet and Multi-Year Capital Investment Programs 

A NBL's Current Business Plan Includes - $2.6 Billion Exploration and Development Capital Per 

Year Through 2015 

..,. Transact Only with Investment Grade Counterparties with A Rating or 

Better 

..,. Board of Directors Governance 

A Strategy, Rules and Policies Ratified by Board of Directors 

A Management Committee Oversight (CEO I COO I CFO I Treasurer) 

A Strong Internal and External Controls in Place 

A Internal & External Audits (KPMG) Conducted to Ensure Compliance 

..,. Commodity Risk Management Team Incentives and Compensation Fully 

Consistent With All NBL Employees 
NBL Commodity Hedging Program 

Noble Energy Is Not A Significant Market Participant 

..,. The Over-The-Counter {"OTC") Market is a Very Large, Extremely 

Liquid and Competitive Market 

..,. The Confidential Nature of the OTC Market Ensures That Prices Are 

Competitive and That NBL's Price View is Not Signaled to the Rest of 

the Market 

..,. The OTC Market is Highly Customizable to a Producer's Specific 

Needs 

..,. Common Settlement Dates Enable Netting of "In-the-money" and 

"Out-of-the-money" Positions Which Creates Efficiencies in 

Administration 

..,. NBL Has No Influence Over Commodity Prices 

..,. Commodity Prices are Determined by Worldwide Supply and Demand 

Fundamentals 

..~.. 2009 Top 20 Independents Production: 1.2o/o of Global Oil and 26.3o/o of U.S Natural 

Gas Markets 

..~.. 2009 NBL Production: .076o/o of Global Oil and .69o/o of U.S. Natural Gas Markets 
Independents Role in the Energy System 

Independent Producers are Critical to U.S. Energy Security and Affordability 

~ U.S. Independent Producers Play a Key Role in U.S. Oil 

Production and a Leading Role in U.S. Natural Gas Production 

~ U.S. Independent Producers Account For: 

;. 80% of Natural Gas and 41 o/o of Oil Production in the U.S. 

;. 81% of Natural Gas and 60°/o of Oil Reserves in the U.S. 

;. 85% of Rig Count Usage in the U.S. 
US Independent Commodity Hedging 

Large Majority of US Independents Utilize Hedging to Manage Risk 

100% l 92% 86% 

n - 80% 

60% 

40% 

20% 

0% 

Percent of 2010 Oil Volume Hedged 

48% 46% 45% 43% 41% Av~r~n~ = 42°/o 

18% 

0% 0% 

PXD PXP COG DVN APC CHK NFX FST NBL TLM RRC APA EOG SWN MUR 

Percent of 2010 U.S. Gas Volume Hedged 

100% 

80% 

82% 76% 

60% 62% 55% 51% 

45% Av~r~n~ = 47o/o 

40% 30% 29% 27% 

20% 

2% 0% 

0% 

PXD RRC APC NBL NFX CHK FST DVN APA PXP SWN COG TLM EOG MUR 
Indicative Impact of Margin I Collateral Posting 

Would Create Capital "Squeeze" and Negatively Impact Investment Plans 

Maintenance Margin Requirements 2011-12 

$=Min GAS PRICE 

2.00 3.00 4.00 5.00 6.00 7.00 8.00 9.00 10.00 

I 40.00 0 0 0 0 0 0 0 0 0 'I II 45.00 0 0 0 0 0 0 0 0 0 ' 

50.00 0 0 0 0 0 0 0 0 0 

r 55.00 0 0 0 0 0 0 0 0 (12) I 60.00 0 0 0 0 0 0 0 0 (52) J II , I 65.00 0 0 0 0 0 0 0 (28) (106) I • ,, 70.00 0 0 0 0 0 0 (4) (83) (161) 

OIL 75.00 0 0 0 0 0 0 (59) (138) (246) 

80.00 0 0 0 0 (4) (28) (106) (235) (365) PRICE 85.00 0 0 0 0 (14) (41) (170) (300) (429) 

90.00 0 0 0 0 (30) (79) (208) (338) (468) I 95.00 0 0 0 (15) (70) (119) (249) (378 (508) I 

I 100.00 0 0 (8 (50) (129) (178) (307) (437) (566) 

' I 105.00 (37 (48) (59) (154 (232) (281) (410) (540) (670) 

I 110.00 (107) (118\ (167 (279) (357) (406) (535) (665 (794) I I 115.00 (179 (221) (292 (404) (483) (532) (661) (791) {_920) I 120.00 (276 (347 (418 (530 (609) (658) (787) (917) (1 ,046) 

..,. Indicative Hedge Book with ~proximately 64JOOO BOE I Day Hedged For Two Years and "Marked-To-Market" on 11112011 at Indicated 

Prices 

..,. Data Above Excludes Initial Margin Requirements of $116 Min 

..,. Best I Worst Case Total Margin Requirements of $116 Min - $1.16 Bin 

A Worst Case Margin Represents 40°/o of Financial Liquidity and 44°/o of Capital Program 

A As Commodity Prices Rise, Margin Requirements Increase, Reducing Financial Capacity 

For New Capital Investment Which is Required in Order to Provide Incremental Market 

Supply 1/r;;.=, =. ~ = •. ==::;.1 

• • -
To Ensure NBL's Investment Capacity in U.S. Energy Supply 

..,. Designation as "Exempt End-User" 

..,. Large and Healthy Market with Creditworthy Counterparties 

A Cost Effective Commodity Hedge Pricing 

..,. Freedom From Collateral or Margin Requirements 

A Avoid Tying Up Scarce Capital. ...... Directly or Indirectly Via Counterparties 
>< 

·-

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c:: 

CD 

c. 

c. 

<( 
NBL Clearly Discloses All Commodity Hedging Today 

3Q 2010 10Q & 200910K Crude Oil Excerpts 

llOQ I 

Production Bbls 

Per Day 

Weighted Weighted Weighted Weighted 

Average Average 

~ 

Period 

03- 04 2010 

03- 04 2010 

03- 04 2010 

03-04 2010 

201 0 Average 

2011 

2011 

2011 

2011 

2011 

2011 Average 

2012 

2012 

2012 

2012 

2012 

2012 Average 

Index 

NYMEXWTI 

NYMEXWTI 

Dated Brent 

Dated Brent 

NYMEXWTI 

NYMEXWTI 

NYMEXWTI 

Dated Brent 

Dated Brent 

NYMEXWTI 

NYMEXWTI 

NYMEXWTI 

Dated Brent 

Dated Brent 

Type of Contract 

Variable to Fixed Price Swaps 

Two Way Collars 

Variable to Fixed Price Swaps 

Two Way Collars 

Variable to Fixed Price Swaps 

Two Way Collars 

Three Way Collars 

Variable to Fixed Price Swaps 

Two Way Collars 

Variable to Fixed Price Swaps 

Two Way Collars 

Three Way Collars 

Variable to Fixed Price Swaps 

Two Way Collars 

3,000 

14,500 

1,000 

7 ,000 

25,500 

5,000 

13,000 

5,000 

$ 

23,000 

5,000 $ 

12,000 

5,000 

22,000 

Average 

Fixed Price 

83.36 

80.05 

82.53 

91.84 

91.84 

Variable to Fixed Price SwaEs 

Weighted 

Production Bbls Average 

Period Index Per Day Fixed Price Index 

2010 NYMEXWTI 1,000 - NYMEXWTI 

2010 Dated Brent 1,000 80.05 Dated Brent 

2010 Average 2,000 40.03 

2011 NYMEXWTI - - NYMEXWTI 

2011 Dated Brent - - Dated Brent 

2011 Average 

Average 

Additional Put 

56.00 

56.00 

Floor Price 

61.48 

64.00 

62.30 

80.15 

76.00 

79.00 

Collars 

Weighted 

Bbls Average 

Per Day Floor Price 

14,500 61.48 

7,000 64.00 

21,500 62.30 

6,000 79.00 

6,000 79.00 

Ceiling Price 

75.63 

73.96 

75.09 

94.63 

101.46 

96.53 

Weighted 

Average 

Ceiling Price 

75.63 

73.96 

75.09 

87.42 

87.42 

Note: The above tables represent NBL's Crude Oil Swap and Collar Contracts, as disclosed in the 03 2010 Form 1 OQ and 2009 Form 1 OK, respectively . All other 

derivative instruments are presented to this detail in our SEC filed reports. 
llOQ I 

llOK I 

NBL Clearly Discloses All Commodity Hedging Today 

3Q 2010 10Q & 200910K Natural Gas Excerpts 

Production 

Period 

Q3- Q4 2010 

Q3- Q4 2010 

Q3- Q4 2010 

2010 Average 

2011 

2011 

2011 

~ 

2011 Average 

2012 

2012 

2012 

2012 

2012 Average 

Production 

Period 

Q3- Q4 2010 

2011 

2012 

Production 

Period 

2010 

2010 

2010 Average 

2011 

Production 

Period 

Index 

NYMEX HH 

NYMEX HH 

IFERCCIG 

NYMEX HH 

NYMEX HH 

NYMEX HH 

IFERCCIG 

NYMEX HH 

NYMEX HH 

NYMEX HH 

IFERC CIG 

Index 

IFERCCIG 

IFERCCIG 

IFERCCIG 

Weighted Weighted Weighted Weighted 

MMBtu Average Average Average Average 

Type of Contract Per Day Fixed Price Additional Put Floor Price Ceiling Price 

Variable to Fixed Price Swaps 40,000 $ 6.10 

Two Way Collars 210,000 5.90 6.73 

Two Way Collars 15,000 6.25 8.10 

Variable to Fixed Price Swaps 

Two Way Collars 

Three Way Collars 

Two Way Collars 

Variable to Fixed Price Swaps 

Two Way Collars 

Three Way Collars 

Two Way Collars 

Index Less 

Differential 

NYMEX HH 

NYMEX HH 

NYMEX HH 

265,000 6.10 5.93 6.82 

25,000 

140,000 

50,000 

215,000 

50,000 

50,000 

MMBtu 

Per Day 

110,000 

140,000 

150,000 

6.41 

6.41 

Weighted 

Average 

Differential 

$ (1.49) 

(0.70) 

(0.52) 

4.00 

4.75 

5.95 

5.00 

5.70 

5.50 

5.50 

6.82 

6.70 

6.79 

7.92 

7.92 

Variable to Fixed Price Swaps Collars 

Index 

NYMEXHH 

IFERC CIG 

NYMEXHH 

Weighted Weighted Weighted 

MMBtu Average MMBtu Average Average 

Per Day Fixed Price Index Per Day Floor Price Ceiling Price 

20,000 $ 6.10 NYMEX HH 210,000 $ 5.90 $ 6.73 

IFERC CIG 15,000 6.25 8.10 

20,000 6.10 225,000 5.93 6.82 

Basis Swaps 

Index Less 

Differential 

MMBtu 

Per Day 

NYMEXHH 

Weighted 

Average 

Differential 

140,000 5.95 6.82