Basis of Presentation

Presentation The accompanying unaudited consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the US (US GAAP) for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and notes required by US GAAP for complete financial statements. The accompanying consolidated financial statements at September 30, 2014 and December 31, 2013 and for the three and nine months ended September 30, 2014 and 2013 contain all normally recurring adjustments considered necessary for a fair presentation of our financial position, results of operations, cash flows and shareholders’ equity for such periods. Certain prior-period amounts have been reclassified to conform to the current-period presentation. Operating results for the three and nine months ended September 30, 2014 are not necessarily indicative of the results that may be expected for the year ending December 31, 2014.

These consolidated financial statements should be read in conjunction with the consolidated financial statements and accompanying notes included in our Annual Report on Form 10-K for the year ended December 31, 2013.

Consolidation Our consolidated accounts include our accounts and the accounts of our wholly-owned subsidiaries. In addition, we use the equity method of accounting for investments in entities that we do not control but over which we exert significant influence. All significant intercompany balances and transactions have been eliminated upon consolidation.

Equity Investees On September 24, 2014, our equity method investee, CONE Gathering LLC (CONE Gathering), contributed substantially all of its assets to a newly-formed master limited partnership, CONE Midstream Partners LP (CONE Midstream), concurrently with an initial public offering of limited partner units. CONE Gathering subsequently made a cash distribution of $204 million to us, which is reflected within cash flows from operating activities ($48 million) and cash flows from investing activities ($156 million) within our consolidated statement of cash flows. As a result of the transaction, we own a 32.1% interest in CONE Midstream, which we account for using the equity method of accounting.

Discontinued Operations In 2012, we initiated a strategy to exit the North Sea geographical area through sales of our non-operated working interests in the assets. The North Sea geographical segment was classified as held for sale and the operations were reflected as discontinued operations in 2012 and 2013.

The most significant North Sea assets were sold during 2012 and 2013. However, we have been unable to locate purchasers for the remaining assets, and a sale is no longer considered probable. Therefore, during first quarter 2014, we reclassified the remaining North Sea assets to held and used, and the North Sea geographical segment is included in continuing operations in the first, second, and third quarters 2014. In addition, we recorded impairments for the North Sea assets in both the first and second quarters of 2014. See Note 4. Asset Impairments.

North Sea revenues and operating expenses for the nine months ended September 30, 2014, except for the impairments recorded in the first and second quarters 2014, were de minimis. See Note 3. Divestitures, Note 4. Asset Impairments, and Note 7. Fair Value Measurements and Disclosures.

Common Stock Split On April 22, 2013, Noble Energy’s Board of Directors approved a 2-for-1 split of its common stock to be effected in the form of a stock dividend. The stock dividend was distributed on May 28, 2013 to shareholders of record as of May 14, 2013. Earnings per share and common shares outstanding are reported giving retrospective effect to the common stock split.

Recently Issued Accounting Standards In April 2014, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update No. 2014-08: Presentation of Financial Statements (Topic 205) and Property, Plant, and Equipment (Topic 360): Reporting Discontinued Operations and Disclosures of Disposals of Components of an Entity (ASU 2014-08). ASU 2014-08 changes the criteria for reporting discontinued operations while enhancing disclosures in this area and is effective for annual and interim periods beginning after December 15, 2014. Early adoption is permitted for disposals or for assets classified as held for sale that have not been reported in previously issued financial statements. We elected to early adopt ASU 2014-08 on a prospective basis, and the adoption did not have a material impact on our consolidated financial statements.

In May 2014, the FASB issued Accounting Standards Update No. 2014-09 (ASU 2014-09), which creates Topic 606, Revenue from Contracts with Customers, and supersedes the revenue recognition requirements in Topic 605, Revenue Recognition, including most industry-specific revenue recognition guidance throughout the Industry Topics of the Codification. In addition, ASU 2014-09 supersedes the cost guidance in Subtopic 605-35, Revenue Recognition - Construction-Type and Production-Type Contracts, and creates new Subtopic 340-40, Other Assets and Deferred Costs - Contracts with Customers. In summary, the core principle of Topic 606 is that an entity recognizes revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. Additionally, ASU 2014-09 requires enhanced financial statement disclosures over revenue recognition as part of the new accounting guidance. The amendments in ASU 2014-09 are effective for annual reporting periods beginning after December 15, 2016, including interim periods within that reporting period, and early application is not permitted. We are currently evaluating the provisions of ASU 2014-09 and assessing the impact, if any, it may have on our financial position and results of operations.

Estimates The preparation of consolidated financial statements in conformity with US GAAP requires us to make a number of estimates and assumptions relating to the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ significantly from those estimates. Management evaluates estimates and assumptions on an ongoing basis using historical experience and other factors, including the current economic and commodity price environment.

Statements of Operations Information Other statements of operations information is as follows:



	Three Months Ended September 30,						Nine Months Ended September 30,
(millions)	2014			2013			2014		2013
Production Expense
Lease Operating Expense	$	133		$	137		$	432	$	393
Production and Ad Valorem Taxes	44			51			146		137
Transportation and Gathering Expense	40			33			119		89
Total	$	217		$	221		$	697	$	619
Other Non-Operating (Income) Expense, Net
Deferred Compensation (Income) Expense ⁽¹⁾	$	(12	)	$	10		$	—	$	24
Other (Income) Expense, Net	(1		)	(1		)	1		(3		)
Total	$	(13	)	$	9		$	1	$	21


⁽¹⁾	Amounts represent increases (decreases) in the fair value of shares of our common stock held in a rabbi trust.

Balance Sheet Information Other balance sheet information is as follows:



(millions)	September 30, 2014			December 31, 2013
Accounts Receivable, Net
Commodity Sales	$	345		$	495
Joint Interest Billings	310			382
Other	101			81
Allowance for Doubtful Accounts	(16		)	(11		)
Total	$	740		$	947
Other Current Assets
Inventories, Materials and Supplies	$	95		$	96
Inventories, Crude Oil	28			25
Commodity Derivative Assets	79			1
Deferred Income Taxes, Net	5			62
Assets Held for Sale	98			292
Prepaid Expenses and Other Current Assets	56			71
Total	$	361		$	547
Other Noncurrent Assets
Equity Method Investments	$	290		$	437
Mutual Fund Investments	121			114
Commodity Derivative Assets	32			16
Other Assets	95			112
Total	$	538		$	679
Other Current Liabilities
Production and Ad Valorem Taxes	$	110		$	103
Commodity Derivative Liabilities	—			65
Income Taxes Payable	183			156
Asset Retirement Obligations	155			39
Interest Payable	56			63
Current Portion of Long Term Debt	—			200
Current Portion of Capital Lease	67			58
Liabilities Associated with Assets Held for Sale	12			111
Other	224			193
Total	$	807		$	988
Other Noncurrent Liabilities
Deferred Compensation Liabilities	$	264		$	253
Asset Retirement Obligations	543			547
Accrued Benefit Costs	108			155
Commodity Derivative Liabilities	—			10
Other	139			144
Total	$	1,054		$	1,109