NOBLE ENERGY, INC.

HOLD
Ticker: NBL
Price: 91.17(As of 11/28/2011) Price Target: 106.9
We believe Noble will continue to grow because:
There is a growing demand for natural gas and oil.
Continue finding fuel where competitors haven`t.
Diversified portfolio of assets that is balanced
between US and international projects.

O Do more expansion
NBL is on its way to do continued expansion.
And in the history, NBL made a 100 success
on its oil field exploitation.

O Strong EBITDA Margin:
I project EBITDA margin to reach 81 by
FY14 from 68.6 in FY10. The key drivers for
higher EBITDA are NBL has multiple fuel
sources, diversified asset holdings and
technology for drilling and exploitation.

O Growing demand for natural energy:
The key driver in growing demand remains
growth in global population and prosperity as
emerging nations enter their most energy-intensive
phase of economic development. Millions are
escaping poverty. They are gaining access to
commercial energy in the home.


ey Ratios and Projections
Price Target 106.9
Current Price 91.17
52-wk Price Range 65.912 -101.27
Base case value 106.9
Bull case value 133.4
Bear case value 96.2

FY
Revenue
Growth ()
EBITDA
Margin
OCF
Margin
Ending
FY10 F 33.83 68.60 35.42
FY11 E 28.80 62.48 33.56
FY12 E 20.16 77.98 34.98
FY13 E 21.05 80.98 34.98
FY14 E 5.28 80.98 34.98
FY15 E 5.31 81.98 35.98
FY16 E 5.99 85.98 35.98
FY17E 6.02 87.98 37.98
FY18 E 6.59 87.98 37.98
FY19 E 6.62 87.98 37.98
Market Profile
Average Daily Volume 2.17M
Beta 0.93
Dividend Yield 0.94
Shrs. Outstanding 176.65M
Mkt Cap 15.23B
Institutional Holdings 95
Net income per Share 4.4
WACC 10
Return on Equity 11


Business Description:
Noble Energy, Inc. (Noble Energy, we or us) is a leading independent energy company engaged
in worldwide oil and gas exploration and production. Noble Energy is a Delaware corporation,
Iormed in 1969, that has been publicly traded on the New York Stock Exchange (NYSE) since
1980.
Noble energy has operations in four key areas:

These areas provide:

Most oI its crude oil and natural gas production;
Visible growth Irom major development projects;
Numerous exploration opportunities.

Industry Analysis
World energy markets are continually expending, and companies spend billions oI dollars
annually to maintain and increase their oil and gas production. Current perIormance oI the
natural gas and crude oil industry is mainly driven by oil prices, volume oI production, and
demand oI gas and oil. Price oI gas and oil is based on the supply and demand Ior oil worldwide.
There is a growing demand for natural energy:
Natural gas demand will grow strongly, driven by economic growth and the thrust towards
lower carbon Iuels. In the electricity sector, lower-cost gas Iired generation will replace coal-
Iired generation. What is more, growth in renewable energy also means more gas-Iired power
plants are required. The success in unconventional gas production in the US, which may be
replicated elsewhere in the world, will underpin this demand growth. Natural gas gives Ilexibility
and lower greenhouse emissions. Noble Energy will grow their natural gas exploration as the


industry demand is increasing. Since their exploration oI natural gas gives them high success rate
and high volumes, sales volume will
increase rapidly. Natural gas production in
the US is mainly onshore, but production is
increasing to oIIshore GulI oI Mexico. The
two main areas oI production in the
industry is deepwater GulI oI Mexico and
Texas, both oI which Noble Energy has
their operations. Local crude oil is expected
to grow moderately. Crude oil has 2/3 oI
the industry revenue.
Oil demand is swinging Irom west to east.
The recession-driven drop in oil demand
occurred mainly in the OECD countries
while developing economies continued
their strong growth. Rising prosperity is
key to strong demand growth. Demand will
also remain strong in the Middle East and
in other developing countries. The net
eIIect is that global oil demand will
increase.

Valuation & Financial Analysis
The valuation methodology is based on Discounted Cash Flow Analysis and comparable
multiples valuation as Iollows:

Bear Base Bull Weight
TV Growth Rate 2 3 5
TP through DCF 102.4 113.7 151.5 60
TP through Multiple 86.9 96.6 106.2 40
Target Price 96.2 106.9 133.4
Upside 6 17 46

I believe that a 60 weight Ior the Dynamic DCF realistically reIlects the intrinsic value oI the
company Irom a long term because I use the last 4Q value to estimate the target price oI Noble
which means that Multiple reIlects the current intrinsic value oI the company.


Price Target
The target price Ior Noble is $106.9 per share, a 28 upside potential over the current share price.
Discounted Cash Flow Analysis
For the DCF Model, I use the percent oI revenue method. And I analyze Cash Flow condition
Irom 2007 to 2010 and project its cash Ilow Irom 2011 to 2019 in which year I suppose the
growth rate will be stable.
-Revenues
NBL records its revenues in two ways. The Iirst
one is recording revenue oI diIIerent countries
and areas they operate in. Another way is by the
diIIerent market segments: natural gas, crude oil
and NGLs. My revenue model is projected using
the market segments.
According the industry growth in revenues,
which are projected around 6, NBL
management is conIident they would achieve
signiIicant growth in earnings and cash Ilow
through exploration success and the development
oI a high quality, diversiIied portIolio oI assets. I
project NBL`s growth rate oI the coming two
years would be a little big higher because the
trend oI average sales price oI natural gas and
crude oil will continue to rise aIter the big
downturn oI 2009(economic crisis). What is
more, NBL will gain Irom capital expenditures
which reIer mainly to the acquisition oI other
Iields Ior exploration and major projects in the
past two years. And then I project the growth
rate a little bit less than 6 then more than 6 in
the terminal years. Noble Energy`s high-quality
portIolio is distinguished by its diversity, exploration component and sizeable international
holdings. Each asset Iills an important role in a portIolio that balances lower-risk development
projects with high-potential exploration activities.

With an asset mix that includes both United States and international opportunities in oil and
natural gas, Noble Energy would create value Ior many years to come.
For the natural gas part, IBIS World project it to increase 5-8.2 Ior the next 5 years, but I
project NBL higher than that since NBL is being successIul in its exploration and the demand Ior
natural gas is increasing. NBL also has other revenues, but they do not provide much inIormation
on that in 10-k, so I project Iuture growth based on their historic growth.
-Cost of Goods Sold
Oil & Gas industry is diIIerent Irom other retail industry which the main cost is cost oI goods
sold. For NBL, the main expenditure is capital expenditures. So I project the cost oI goods sold
based on the historic data. I also projected NBL`s Cost oI Goods Sold would decrease because
their advanced exploitation technology.
-Capital expenditures
NBL`s capital expenditures reIer mainly to be acquisition oI other Iields Ior exploration and
major projects. I project the capital expenditures to be around 50 oI revenue in the long term
based on historical data and NBL`s style which is more aggressive than competitors.
-Tax rate
Taxes in UK and Israel are increasing because oI changing laws oI natural gas. As well as in
China, they are increasing tax on crude oil which also increase taxed Ior NBL. I project tax to
increase steadily as taxes in Ioreign countries increase and volume increases.
Comparable Multiples Valuation
When picking comparable companies, I looked Ior companies that were in similar industry as
Noble Energy. Most oI the comparables I chose share similar geographical operations and
similar business strategy. For my valuation method, I use P/E, EV/EBITDA and EV/EBIT. I
weight each oI the margins equally because I Ieel they represent important aspects oI the
valuation.
Strategy
NBL`s aim is to achieve growth in earnings and cash Ilow through exploration success and the
development oI a high quality, diversiIied portIolio oI assets that is balanced between US and
international projects.


SWOT Analysis











Risk unulysis
Exploration Risk: Noble Energy takes a signiIicant amount oI exploration risk. A string oI dry
holes or mediocre appraisal wells in the deepwater GulI oI Mexico, oIIshore West AIrica, or
oIIshore Eastern Mediterranean could cause the stock to underperIorm the sector.
International Risk: II Noble Energy were to lose production, reserves, or prospect potential due
to political or social changes in its areas oI operations, the stock could underperIorm.
External Economic Risk: II the global economy experiences another downturn, the price oI
natural gas and oil would drop dramatically. The stock could underperIorm.





Strengths
DiversiIied Asset Holdings
Multiple Fuel Source
Technology Ior Drilling and Exploration
High Sales Volume
Weaknesses
Dependence on Government Regulations
Dependence on Global Commodity Price
Natural Disasters Impacting Production


Opportunities:
Continue Exploration in Areas US OIIshore
and Israel
New Technological Advances
Increasing Demand

Threats:
50 oI Sales comes Irom Natural Gas
Foreign Currency

Appendix 1
DCF
Millions
USD Actual Forecast
FY07 FY08 FY09 FY10 FY11Q123 FY11 FY12 FY13 FY14 FY15 FY16 FY17 FY18 FY19 TV
Total
Revenue 3,272 3,901 2,313 3,096 3,382 3,987 4,791 5,799 6,105 6,430 6,815 7,225 7,701 8,212
Growth 11.3 19.2
-
40.7 33.8 9.3 28.8 20.2 21.0 5.3 5.3 6.0 6.0 6.6 6.6 3
-COGS 488 594 525 570 589 694 767 928 977 964 1,022 939 1,001 1,068
oI
Revenue 15 15 23 18 17 17 16 16 16 15 15 13 13 13
Gross ProIit 2,784 3,307 1,788 2,526 2,793 3,293 4,024 4,871 5,129 5,465 5,792 6,286 6,700 7,144
oI
Revenue 85 85 77 82 83 83 84 84 84 85 85 87 87 87
-Operationg
Exp. 1,249 1,199 1,966 1,429 1,658 1,955 2,349 2,843 2,993 3,152 3,341 3,542 3,776 4,026
oI
Revenue 38 31 85 46 49 49 49 49 49 49 49 49 49 49
EBIT 1,535 2,108 -178 1,097 1,135 1,338 1,676 2,028 2,135 2,313 2,452 2,744 2,925 3,118
oI
Revenue 47 54 8 35 34 34 35 35 35 36 36 38 38 38
D&A 740 1,085 1,420 1,027 1,085 1,153 2,060 2,668 2,808 2,958 3,407 3,613 3,851 4,106
oI
Revenue 23 28 61 33 32 29 43 46 46 46 50 50 50 50
EBITDA 2,275 3,193 1,242 2,124 2,220 2,491 3,736 4,696 4,944 5,271 5,859 6,356 6,775 7,224
oI
Revenue 70 82 54 69 66 62 78 81 81 82 86 88 88 88
-CapEx. 1,414 1,971 1,268 1,885 2,427 2,450 2,060 2,494 2,625 2,765 3,407 3,613 3,851 4,106
oI
Revenue 43 51 55 61 72 61 43 43 43 43 50 50 50 50
-Taxes 424 711 -133 306 453 460 503 609 662 717 785 878 936 998
oI EBIT 28 34 -75 28 40 34 30 30 31 31 32 32 32 32
-Inc. NWC 49 1,051 -296 -272 -297 -100 -100 -100 -100 -100 -100 -100 -100 -100
FCF 388 340 403 203 363 319 1273 1694 1737 1889 1767 1966 2089 2221 35,133


Investment in working capital
FY06 FY07 FY08 FY09 FY10 FY11Q123
Current Assents 1,069 1,569 2,158 1,678 1,838 2077
Current Liabilities 1,184 1,636 1,174 990 1,422 1938
Working Capital -116 -67 984 688 416 119
Inc. NWC 49 1,051 -296 -272 -297


WACC 10
NPV 22,700
Enterprise Value 22,700
-Net Debt 2,610
Mrk. Cap 20,090
Shares outstanding 177
Target Price 113.7


Appendix 2
Revenue Model

2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019
Crude
Oil 1694 2101 1261 1795 2513 3217 4117 4303 4496 4730 4976 5270 5580
Growth 13.8 24.0 -40.0 42.3 40.0 28.0 28.0 4.5 4.5 5.2 5.2 5.9 5.9
Natural
Gas 1272 1375 701 834 992 1077 1168 1272 1386 1519 1664 1827 2007
Growth 5.0 8.1 -49.0 19.0 19.0 8.5 8.5 8.9 8.9 9.6 9.6 9.8 9.8
NGL's 0 175 98 203 207 211 215 220 224 229 233 238 243
Growth -44.0 107.1 2.0 2.0 2.0 2.0 2.0 2.0 2.0 2.0 2.0
from
investees 211 174 84 88 92 97 101 106 111 117 122 128 134
Growth 51.8
-
17.5 -51.7 4.8 4.8 4.8 4.8 4.8 4.8 4.8 4.8 4.8 4.8
Other
Revenues 95 76 169 176 182 190 197 205 213 221 230 238 248
Growth -5.0
-
20.0 122.4 3.9 3.9 3.9 3.9 3.9 3.9 3.9 3.9 3.9 3.9
Total
Revenue 3272 3901 2313 3096 3987 4791 5799 6105 6430 6815 7225 7701 8212

Growth 11.3 19.2 -40.7 33.8 28.8 20.2 21.0 5.3 5.3 6.0 6.0 6.6 6.6













Appendix 3
Multiples
Millions USD NOBLE ANADARO APACHE EOG TALISMAN PIONEER Average
Employees 1,722 4,400 4,449 2,290 2,921 2,248 3,005
Market Cap 15,646 38,919 36,005 24,225 14,249 9,553 23,100
Shares 177 498 384 269 1,025 116 412
Revenue 3,443 12,508 14,753 7,225 7,732 2,118 7,963
Revenue
Growth 18.8 38.1 46.7 67.3 39.6 40.3 42
YTD Return 1.5 1.4 -23 -3.8 -39 -7.7 -12
Return on
Assets 5.5 1.6 9.8 1.9 0.8 8.1 5
Return on
Equity 11.2 4 17.6 3.7 1.8 17.8 9
P/E 17.5x 34.7x 8.8x 38.2x N/A 23.1x 24.5x
EV/EBITDA 8.2x 7.4x 4.0x 8.3x 4.0x 9.8x 7.0x
EV/EBIT 13.9x 17.1x 6.0x 25.1x 7.6x 19.6x 14.9x
Dividend Yield 1 0.5 0.7 0.7 2 0.1 1





Q4
Dec-31-2010

Q1
Mar-31-2011

Q2
1un-30-2011

Q3
Sep-30-2011
Last
4Q
Diluted EPS 0.28 0.08 1.62 2.38 4.36

EBITDA 321.0 234.0 738.0 895.0 2,188.0 Millions
EBIT 56.0 13.0 364.0 670.0 1,103.0 Millions
Shares
outstanding 177.0 Millions







Bull(up 10) Base Bear(down 10)

P/E 27.0 24.5 22.1

Price 117.6 106.9 96.2


Bull(up 10) Base Bear(down 10)

EV/EBITDA 7.7 7.0 6.3

Price 95.2 86.5 77.9


Bull(up 10) Base Bear(down 10)

EV/EBIT 16.4 14.9 13.4

Price 102.1 92.9 83.6



Bull(up 10) Base Bear(down 10) Weight
Price (P/E) 117.6 106.9 96.2 40
Price (EV/EBITDA) 95.2 86.5 77.9 30
Price (EV/EBIT) 102.1 92.9 83.6 30
Weighted Price 106.2 96.6 86.9

Appendix 4
Target Price

Bear Base Bull Weight
TV Growth Rate 2 3 5
TP through DCF 102.4 113.7 151.5 60
TP through Multiple 86.9 96.6 106.2 40
Target Price 96.2 106.9 133.4
Upside 6 17 46