Edgar Filing: NOBLE CORP

FORM 10-Q

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: June 30, 2012

¨	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: 000-53604

NOBLE CORPORATION

(Exact name of registrant as specified in its charter)


Switzerland		98-0619597
(State or other jurisdiction of incorporation or organization)		(I.R.S. employer identification number)

Dorfstrasse 19A, Baar, Switzerland		6340
(Address of principal executive offices)		(Zip Code)

Registrant’s Telephone Number, Including Area Code: 41 (41) 761-65-55

Commission file number: 001-31306

NOBLE CORPORATION

(Exact name of registrant as specified in its charter)

Cayman Islands

98-0366361

(State or other jurisdiction of

incorporation or organization)

(I.R.S. employer

identification number)

Suite 3D, Landmark Square, 64 Earth Close, P.O. Box 31327 George Town, Grand Cayman, Cayman Islands, KY1-1206

(Address of principal executive offices) (Zip Code)

Registrant’s Telephone Number, Including Area Code: (345) 938-0293

Indicate by check mark whether each registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No ¨

Indicate by check mark whether each registrant has submitted electronically and posted on its corporate website, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes x No ¨

Indicate by check mark whether each registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):


Noble-Swiss:	Large accelerated filer x	Accelerated filer ¨	Non-accelerated filer ¨	Smaller reporting company ¨
Noble-Cayman:	Large accelerated filer ¨	Accelerated filer ¨	Non-accelerated filer x	Smaller reporting company ¨

Indicate by check mark whether each registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes ¨ No x

Number of shares outstanding and trading at July 31, 2012: Noble Corporation (Switzerland) — 252,604,007

Number of shares outstanding at July 31, 2012: Noble Corporation (Cayman Islands) — 261,245,693

Noble Corporation, a Cayman Islands company and a wholly owned subsidiary of Noble Corporation, a Swiss corporation, meets the conditions set forth in General Instructions H(1) (a) and (b) to Form 10-Q and is therefore filing this Form 10-Q with the reduced disclosure format contemplated by paragraphs (b) and (c) of General Instruction H(2) of Form 10-Q.

TABLE OF CONTENTS


	Page
PART I FINANCIAL INFORMATION
Item 1 Financial Statements

Noble Corporation (Noble-Swiss) Financial Statements:
Consolidated Balance Sheet as of June 30, 2012 and December 31, 2011		3
Consolidated Statement of Income for the three and six months ended June 30, 2012 and 2011		4
Consolidated Statement of Comprehensive Income for the three and six months ended June 30, 2012 and 2011		5
Consolidated Statement of Cash Flows for the six months ended June 30, 2012 and 2011		6
Consolidated Statement of Equity for the six months ended June 30, 2012 and 2011		7

Noble Corporation (Noble-Cayman) Financial Statements:
Consolidated Balance Sheet as of June 30, 2012 and December 31, 2011		8
Consolidated Statement of Income for the three and six months ended June 30, 2012 and 2011		9
Consolidated Statement of Comprehensive Income for the three and six months ended June 30, 2012 and 2011		10
Consolidated Statement of Cash Flows for the six months ended June 30, 2012 and 2011		11
Consolidated Statement of Equity for the six months ended June 30, 2012 and 2011		12

Notes to Combined Consolidated Financial Statements		13

Item 2 Management’s Discussion and Analysis of Financial Condition and Results of Operations		36
Item 3 Quantitative and Qualitative Disclosures About Market Risk		50
Item 4 Controls and Procedures		51
PART II OTHER INFORMATION
Item 1 Legal Proceedings		52
Item 2 Unregistered Sales of Equity Securities and Use of Proceeds		52
Item 6 Exhibits		52
SIGNATURES		53
Index to Exhibits		54

This combined Quarterly Report on Form 10-Q is separately filed by Noble Corporation, a Swiss corporation (“Noble-Swiss”), and Noble Corporation, a Cayman Islands company (“Noble-Cayman”). Information in this filing relating to Noble-Cayman is filed by Noble-Swiss and separately by Noble-Cayman on its own behalf. Noble-Cayman makes no representation as to information relating to Noble-Swiss (except as it may relate to Noble-Cayman) or any other affiliate or subsidiary of Noble-Swiss. Since Noble-Cayman meets the conditions specified in General Instructions H(1)(a) and (b) to Form 10-Q, it is permitted to use the reduced disclosure format for wholly owned subsidiaries of reporting companies. Accordingly, Noble-Cayman has omitted from this report the information called for by Item 3 (Quantitative and Qualitative Disclosures about Market Risk) of Part I of Form 10-Q and the following items of Part II of Form 10-Q: Item 2 (Unregistered Sales of Equity Securities and Use of Proceeds) and Item 3 (Defaults upon Senior Securities).

This report should be read in its entirety as it pertains to each Registrant. Except where indicated, the Consolidated Financial Statements and related Notes are combined. References in this Quarterly Report on Form 10-Q to “Noble,” the “Company,” “we,” “us,” “our” and words of similar meaning refer collectively to Noble-Swiss and its consolidated subsidiaries, including Noble-Cayman.

PART I. FINANCIAL INFORMATION

Item 1.

Financial Statements

NOBLE CORPORATION (NOBLE-SWISS) AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEET

(In thousands)

(Unaudited)


	June 30,			December 31,
	2012			2011
ASSETS
Current assets
Cash and cash equivalents	$	275,293		$	239,196
Accounts receivable		693,533			587,163
Taxes receivable		97,900			75,284
Prepaid expenses		78,463			35,796
Other current assets		142,541			122,173

Total current assets		1,287,730			1,059,612

Property and equipment, at cost		16,055,168			15,540,178
Accumulated depreciation		(3,632,532	)		(3,409,833	)

Property and equipment, net		12,422,636			12,130,345

Other assets		325,650			305,202

Total assets	$	14,036,016		$	13,495,159

LIABILITIES AND EQUITY
Current liabilities
Accounts payable	$	277,647		$	436,006
Accrued payroll and related costs		125,603			117,907
Interest payable		73,208			54,419
Taxes payable		89,262			94,920
Dividends payable		132,679			—
Other current liabilities		108,714			123,928

Total current liabilities		807,113			827,180

Long-term debt		4,444,294			4,071,964
Deferred income taxes		238,045			242,791
Other liabilities		306,397			255,372

Total liabilities		5,795,849			5,397,307

Commitments and contingencies

Shareholders’ equity
Shares; 253,076 and 252,639 shares outstanding		709,368			766,595
Treasury shares, at cost; 569 and 287 shares		(20,318	)		(10,553	)
Additional paid-in capital		60,991			48,356
Retained earnings		6,823,758			6,676,444
Accumulated other comprehensive loss		(75,461	)		(74,321	)

Total shareholders’ equity		7,498,338			7,406,521
Noncontrolling interests		741,829			691,331

Total equity		8,240,167			8,097,852

Total liabilities and equity	$	14,036,016		$	13,495,159

See accompanying notes to the unaudited consolidated financial statements.

NOBLE CORPORATION (NOBLE-SWISS) AND SUBSIDIARIES

CONSOLIDATED STATEMENT OF INCOME

(In thousands, except per share amounts)

(Unaudited)


	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2012			2011			2012			2011
Operating revenues
Contract drilling services	$	848,237		$	589,550		$	1,594,547		$	1,132,155
Reimbursables		30,812			24,122			65,953			46,413
Labor contract drilling services		19,863			14,012			35,871			27,559
Other		11			313			242			758

		898,923			627,997			1,696,613			1,206,885

Operating costs and expenses
Contract drilling services		423,502			336,728			843,513			643,091
Reimbursables		24,970			18,723			55,571			35,826
Labor contract drilling services		11,847			8,750			21,079			17,273
Depreciation and amortization		183,615			163,119			354,692			321,241
Selling, general and administrative		25,404			21,632			48,530			45,347
Loss on impairment		18,345			—			18,345			—
Gain on contract settlements/extinguishments, net		(33,255	)		—			(33,255	)		(21,202	)

		654,428			548,952			1,308,475			1,041,576

Operating income		244,495			79,045			388,138			165,309

Other income (expense)
Interest expense, net of amount capitalized		(20,652	)		(14,829	)		(31,148	)		(33,870	)
Interest income and other, net		1,188			(534	)		2,973			2,058

Income before income taxes		225,031			63,682			359,963			133,497
Income tax provision		(46,356	)		(9,508	)		(67,945	)		(24,867	)

Net income		178,675			54,174			292,018			108,630
Net income attributable to noncontrolling interests		(18,857	)		(91	)		(12,025	)		(52	)

Net income attributable to Noble Corporation	$	159,818		$	54,083		$	279,993		$	108,578

Net income per share
Basic	$	0.63		$	0.21		$	1.10		$	0.43
Diluted	$	0.63		$	0.21		$	1.10		$	0.43

See accompanying notes to the unaudited consolidated financial statements.

NOBLE CORPORATION (NOBLE-SWISS) AND SUBSIDIARIES

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

(In thousands)

(Unaudited)


	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2012			2011			2012			2011
Net income	$	178,675		$	54,174		$	292,018		$	108,630

Other comprehensive income (loss), net of tax
Foreign currency translation adjustments		(6,949	)		1,375			(7,027	)		4,382
Gain on foreign currency forward contracts		644			2,351			3,061			2,513
Loss on interest rate swaps		—			—			—			(366	)
Amortization of deferred pension plan amounts (net of tax provision of $647 and $353 for the three months ended June 30, 2012 and 2011, respectively, and $1,367 and $705 for the six months ended June 30, 2012 and 2011, respectively)		1,404			689			2,826			1,375

Other comprehensive income/(loss), net		(4,901	)		4,415			(1,140	)		7,904

Net comprehensive income attributable to noncontrolling interests		(18,857	)		(91	)		(12,025	)		(52	)

Comprehensive income attributable to Noble Corporation	$	154,917		$	58,498		$	278,853		$	116,482

See accompanying notes to the unaudited consolidated financial statements.

NOBLE CORPORATION (NOBLE-SWISS) AND SUBSIDIARIES

CONSOLIDATED STATEMENT OF CASH FLOWS

(In thousands)

(Unaudited)


	Six Months Ended
	June 30,
	2012			2011
Cash flows from operating activities
Net income	$	292,018		$	108,630
Adjustments to reconcile net income to net cash from operating activities:
Depreciation and amortization		354,692			321,241
Loss on impairment		18,345			—
Gain on contract extinguishments, net		—			(21,202	)
Deferred income taxes		(7,765	)		(1,753	)
Amortization of share-based compensation		17,840			16,388
Net change in other assets and liabilities		(139,184	)		(190,536	)

Net cash from operating activities		535,946			232,768

Cash flows from investing activities
Capital expenditures		(665,140	)		(1,416,215	)
Change in accrued capital expenditures		(159,134	)		(51,500	)
Refund from contract extinguishments		—			18,642

Net cash from investing activities		(824,274	)		(1,449,073	)

Cash flows from financing activities
Borrowings on bank credit facilities		325,000			625,000
Repayments on bank credit facilities		(1,150,000	)		(240,000	)
Proceeds from issuance of senior notes, net of debt issuance costs		1,186,636			1,087,833
Contributions from joint venture partners		40,000			436,000
Payments of joint venture debt		—			(693,494	)
Settlement of interest rate swaps		—			(29,032	)
Par value reduction payments		(71,897	)		(72,141	)
Financing costs on credit facilities		(5,014	)		(2,835	)
Proceeds from employee stock transactions		9,465			7,357
Repurchases of employee shares surrendered for taxes		(9,765	)		(9,377	)

Net cash from financing activities		324,425			1,109,311

Net change in cash and cash equivalents		36,097			(106,994	)
Cash and cash equivalents, beginning of period		239,196			337,871

Cash and cash equivalents, end of period	$	275,293		$	230,877

See accompanying notes to the unaudited consolidated financial statements.

NOBLE CORPORATION (NOBLE-SWISS) AND SUBSIDIARIES

CONSOLIDATED STATEMENT OF EQUITY

(In thousands)

(Unaudited)


																Accumulated
							Additional									Other
	Shares						Paid-in			Retained			Treasury			Comprehensive			Noncontrolling			Total
	Balance			Par Value			Capital			Earnings			Shares			Loss			Interests			Equity
Balance at December 31, 2010		262,415		$	917,684		$	39,006		$	6,630,500		$	(373,967	)	$	(50,220	)	$	124,631		$	7,287,634

Employee related equity activity
Amortization of share-based compensation		—			—			16,388			—			—			—			—			16,388
Issuance of share-based compensation shares		176			606			(599	)		—			—			—			—			7
Exercise of stock options		389			1,294			5,782			—			—			—			—			7,076
Tax benefit of stock options exercised		—			—			274			—			—			—			—			274
Restricted shares forfeited or repurchased for taxes		(312	)		(1,084	)		1,084			—			(9,377	)		—			—			(9,377	)
Net income		—			—			—			108,578			—			—			52			108,630
Par value reduction payments		—			(60,705	)		(11,436	)		—			—			—			—			(72,141	)
Equity contribution by joint venture partner		—			—			—			—			—			—			473,973			473,973
Other comprehensive income, net		—			—			—			—			—			7,904			—			7,904

Balance at June 30, 2011		262,668		$	857,795		$	50,499		$	6,739,078		$	(383,344	)	$	(42,316	)	$	598,656		$	7,820,368

Balance at December 31, 2011		252,639		$	766,595		$	48,356		$	6,676,444		$	(10,553	)	$	(74,321	)	$	691,331		$	8,097,852

Employee related equity activity
Amortization of share-based compensation		—			—			17,840			—			—			—			—			17,840
Issuance of share-based compensation shares		364			1,104			(1,099	)		—			—			—			—			5
Exercise of stock options		447			1,277			8,735			—			—			—			—			10,012
Tax benefit of stock options exercised		—			—			(552	)		—			—			—			—			(552	)
Restricted shares forfeited or repurchased for taxes		(374	)		(1,138	)		1,138			—			(9,765	)		—			—			(9,765	)
Net income		—			—			—			279,993			—			—			12,025			292,018
Equity contribution by joint venture partner		—			—			—			—			—			—			40,000			40,000
Other		—			—			—			—			—			—			(1,527	)		(1,527	)
Par value reduction payments		—			(58,470	)		(13,427	)		—			—			—			—			(71,897	)
Dividends payable		—			—			—			(132,679	)		—			—			—			(132,679	)
Other comprehensive loss, net		—			—			—			—			—			(1,140	)		—			(1,140	)

Balance at June 30, 2012		253,076		$	709,368		$	60,991		$	6,823,758		$	(20,318	)	$	(75,461	)	$	741,829		$	8,240,167

See accompanying notes to the unaudited consolidated financial statements.

NOBLE CORPORATION (NOBLE-CAYMAN) AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEET

(In thousands)

(Unaudited)


	June 30,			December 31,
	2012			2011
ASSETS
Current assets
Cash and cash equivalents	$	267,870		$	235,056
Accounts receivable		693,533			587,163
Taxes receivable		97,745			75,284
Prepaid expenses		76,630			33,105
Other current assets		142,541			120,109

Total current assets		1,278,319			1,050,717

Property and equipment, at cost		16,019,544			15,505,994
Accumulated depreciation		(3,626,272	)		(3,404,589	)

Property and equipment, net		12,393,272			12,101,405

Other assets		325,733			305,283

Total assets	$	13,997,324		$	13,457,405

LIABILITIES AND EQUITY
Current liabilities
Accounts payable	$	276,398		$	435,729
Accrued payroll and related costs		117,037			108,908
Interest payable		73,208			54,419
Taxes payable		84,893			91,190
Other current liabilities		108,676			123,399

Total current liabilities		660,212			813,645

Long-term debt		4,444,294			4,071,964
Deferred income taxes		238,045			242,791
Other liabilities		306,397			255,372

Total liabilities		5,648,948			5,383,772

Commitments and contingencies

Shareholder equity
Ordinary shares; 261,246 shares outstanding		26,125			26,125
Capital in excess of par value		461,054			450,616
Retained earnings		7,194,829			6,979,882
Accumulated other comprehensive loss		(75,461	)		(74,321	)

Total shareholder equity		7,606,547			7,382,302

Noncontrolling interests		741,829			691,331

Total equity		8,348,376			8,073,633

Total liabilities and equity	$	13,997,324		$	13,457,405

See accompanying notes to the unaudited consolidated financial statements.

NOBLE CORPORATION (NOBLE-CAYMAN) AND SUBSIDIARIES

CONSOLIDATED STATEMENT OF INCOME

(In thousands)

(Unaudited)


	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2012			2011			2012			2011
Operating revenues
Contract drilling services	$	848,237		$	589,550		$	1,594,547		$	1,132,155
Reimbursables		30,812			24,122			65,953			46,413
Labor contract drilling services		19,863			14,012			35,871			27,559
Other		11			313			242			758

		898,923			627,997			1,696,613			1,206,885

Operating costs and expenses
Contract drilling services		421,598			330,204			836,744			631,036
Reimbursables		24,970			18,723			55,571			35,826
Labor contract drilling services		11,847			8,750			21,079			17,273
Depreciation and amortization		183,103			162,636			353,676			320,291
Selling, general and administrative		15,467			14,642			29,477			31,173
Loss on impairment		18,345			—			18,345			—
Gain on contract settlements/extinguishments, net		(33,255	)		—			(33,255	)		(21,202	)

		642,075			534,955			1,281,637			1,014,397

Operating income		256,848			93,042			414,976			192,488

Other income (expense)
Interest expense, net of amount capitalized		(20,652	)		(14,829	)		(31,148	)		(33,870	)
Interest income and other, net		1,608			(147	)		3,007			2,094

Income before income taxes		237,804			78,066			386,835			160,712
Income tax provision		(45,977	)		(9,157	)		(67,188	)		(24,182	)

Net income		191,827			68,909			319,647			136,530
Net income attributable to noncontrolling interests		(18,857	)		(91	)		(12,025	)		(52	)

Net income attributable to Noble Corporation	$	172,970		$	68,818		$	307,622		$	136,478

See accompanying notes to the unaudited consolidated financial statements.

NOBLE CORPORATION (NOBLE-CAYMAN) AND SUBSIDIARIES

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

(In thousands)

(Unaudited)


	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2012			2011			2012			2011
Net income	$	191,827		$	68,909		$	319,647		$	136,530

Other comprehensive income (loss), net of tax
Foreign currency translation adjustments		(6,949	)		1,375			(7,027	)		4,382
Gain on foreign currency forward contracts		644			2,351			3,061			2,513
Loss on interest rate swaps		—			—			—			(366	)
Amortization of deferred pension plan amounts (net of tax provision of $647 and $353 for the three months ended June 30, 2012 and 2011, respectively, and $1,367 and $705 for the six months ended June 30, 2012 and 2011, respectively)		1,404			689			2,826			1,375

Other comprehensive income/(loss), net		(4,901	)		4,415			(1,140	)		7,904

Net comprehensive income attributable to noncontrolling interests		(18,857	)		(91	)		(12,025	)		(52	)

Comprehensive income attributable to Noble Corporation	$	168,069		$	73,233		$	306,482		$	144,382

See accompanying notes to the unaudited consolidated financial statements.

NOBLE CORPORATION (NOBLE-CAYMAN) AND SUBSIDIARIES

CONSOLIDATED STATEMENT OF CASH FLOWS

(In thousands)

(Unaudited)


	Six Months Ended
	June 30,
	2012			2011
Cash flows from operating activities
Net income	$	319,647		$	136,530
Adjustments to reconcile net income to net cash from operating activities:
Depreciation and amortization		353,676			320,291
Loss on impairment		18,345			—
Gain on contract extinguishments, net		—			(21,202	)
Deferred income taxes		(7,765	)		(1,753	)
Capital contribution by parent — share-based compensation		10,438			10,228
Net change in other assets and liabilities		(142,640	)		(197,617	)

Net cash from operating activities		551,701			246,477

Cash flows from investing activities
Capital expenditures		(663,700	)		(1,411,282	)
Change in accrued capital expenditures		(159,134	)		(51,500	)
Refund from contract extinguishments		—			18,642

Net cash from investing activities		(822,834	)		(1,444,140	)

Cash flows from financing activities
Borrowings on bank credit facilities		325,000			625,000
Repayments on bank credit facilities		(1,150,000	)		(240,000	)
Proceeds from issuance of senior notes, net of debt issuance costs		1,186,636			1,087,833
Contributions from joint venture partners		40,000			436,000
Payments of joint venture debt		—			(693,494	)
Settlement of interest rate swaps		—			(29,032	)
Financing costs on credit facilities		(5,014	)		(2,835	)
Distributions to parent company, net		(92,675	)		(94,291	)

Net cash from financing activities		303,947			1,089,181

Net change in cash and cash equivalents		32,814			(108,482	)
Cash and cash equivalents, beginning of period		235,056			333,399

Cash and cash equivalents, end of period	$	267,870		$	224,917

See accompanying notes to the unaudited consolidated financial statements.

NOBLE CORPORATION (NOBLE-CAYMAN) AND SUBSIDIARIES

CONSOLIDATED STATEMENT OF EQUITY

(In thousands)

(Unaudited)


										Accumulated
					Capital in					Other
	Shares				Excess of		Retained			Comprehensive			Noncontrolling			Total
	Balance		Par Value		Par Value		Earnings			Loss			Interests			Equity
Balance at December 31, 2010		261,246	$	26,125	$	416,232	$	6,743,887		$	(50,220	)	$	124,631		$	7,260,655
Net income		—		—		—		136,478			—			52			136,530
Capital contributions by parent — share-based compensation		—		—		10,228		—			—			—			10,228
Distributions to parent		—		—		—		(94,291	)		—			—			(94,291	)
Noncontrolling interest contributions		—		—		—		—			—			473,973			473,973
Other comprehensive income, net		—		—		—		—			7,904			—			7,904

Balance at June 30, 2011		261,246	$	26,125	$	426,460	$	6,786,074		$	(42,316	)	$	598,656		$	7,794,999

Balance at December 31, 2011		261,246	$	26,125	$	450,616	$	6,979,882		$	(74,321	)	$	691,331		$	8,073,633
Net income		—		—		—		307,622			—			12,025			319,647
Capital contributions by parent — share-based compensation		—		—		10,438		—			—			—			10,438
Distributions to parent		—		—		—		(92,675	)		—			—			(92,675	)
Other		—		—		—		—			—			(1,527	)		(1,527	)
Noncontrolling interest contributions		—		—		—		—			—			40,000			40,000
Other comprehensive loss, net		—		—		—		—			(1,140	)		—			(1,140	)

Balance at June 30, 2012		261,246	$	26,125	$	461,054	$	7,194,829		$	(75,461	)	$	741,829		$	8,348,376

See accompanying notes to the unaudited consolidated financial statements.

NOBLE CORPORATION (NOBLE-SWISS) AND SUBSIDIARIES

NOBLE CORPORATION (NOBLE-CAYMAN) AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unless otherwise indicated, dollar amounts in tables are in thousands, except per share data)

Note 1 — Organization and Basis of Presentation

Noble Corporation, a Swiss corporation (“Noble-Swiss”), is a leading provider of offshore contract drilling services for the oil and gas industry. Our fleet of 79 mobile offshore drilling units consists of 14 semisubmersibles, 14 drillships, 49 jackups and two submersibles. Additionally, we have one floating production storage and offloading unit. Our fleet includes 11 units under construction as follows:

•

five dynamically positioned, ultra-deepwater, harsh environment drillships and

•

six high-specification heavy-duty, harsh environment jackup rigs.

Our global fleet is currently located in the following areas: the U.S. Gulf of Mexico, Mexico, Brazil, the North Sea, the Mediterranean, West Africa, the Middle East, India and the Asian Pacific. Noble and its predecessors have been engaged in the contract drilling of oil and gas wells since 1921.

Noble Corporation, a Cayman Islands company (“Noble-Cayman”) is a direct, wholly-owned subsidiary of Noble-Swiss, our publicly-traded parent company. Noble-Swiss’ principal asset is all of the shares of Noble-Cayman. Noble-Cayman has no public equity outstanding. The consolidated financial statements of Noble-Swiss include the accounts of Noble-Cayman, and Noble-Swiss conducts substantially all of its business through Noble-Cayman and its subsidiaries.

The accompanying unaudited consolidated financial statements of Noble-Swiss and Noble-Cayman have been prepared pursuant to the rules and regulations of the U.S. Securities and Exchange Commission (“SEC”) as they pertain to Form 10-Q. Accordingly, certain information and disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) have been condensed or omitted pursuant to such rules and regulations. The unaudited financial statements reflect all adjustments which are, in the opinion of management, necessary for a fair statement of the financial position and results of operations for the interim periods, on a basis consistent with the annual audited consolidated financial statements. All such adjustments are of a recurring nature. The December 31, 2011 Consolidated Balance Sheets presented herein are derived from the December 31, 2011 audited consolidated financial statements. These interim financial statements should be read in conjunction with the consolidated financial statements and notes included in our Annual Report on Form 10-K for the year ended December 31, 2011, filed by both Noble-Swiss and Noble-Cayman. The results of operations for interim periods are not necessarily indicative of the results to be expected for the full year.

Certain amounts in prior periods have been reclassified to conform to the current year presentation. In connection with a review of the “Other Assets” caption in our financial statements, we determined that drilling equipment replacements and upgrades should be included in “Property and equipment”. As a result, we reclassified these amounts in our consolidated balance sheet for the year ended December 31, 2011. This reclassification is immaterial to the prior period financial statements.

Note 2 — Consolidated Joint Ventures

We own a 50 percent interest in two joint ventures, each with a subsidiary of Royal Dutch Shell, PLC (“Shell”), for the construction and operation of our two Bully-class drillships. Since these entities’ equity at risk is insufficient to permit them to carry on their activities without additional financial support, they each meet the criteria for a variable interest entity. We have determined that we are the primary beneficiary for accounting purposes. Accordingly, we consolidate the entities in our consolidated financial statements after eliminating intercompany transactions. Shell’s equity interests are presented as noncontrolling interests on our Consolidated Balance Sheets.

In April 2011, the Bully joint venture partners entered into capital contribution agreements whereby capital calls up to a total of $360 million can be made for funds needed to complete the construction of the drillships. All contributions under these agreements were made during 2011 and the first quarter of 2012. No amounts remain available under these agreements.

At June 30, 2012, the combined carrying amount of the drillships was $1.4 billion, which was primarily funded through partners’ equity contributions.

NOBLE CORPORATION (NOBLE-SWISS) AND SUBSIDIARIES

NOBLE CORPORATION (NOBLE-CAYMAN) AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unless otherwise indicated, dollar amounts in tables are in thousands, except per share data)

Note 3 — Share Data

Share capital

The following is a detail of Noble-Swiss’ authorized share capital as of June 30, 2012 and December 31, 2011:


	June 30,		December 31,
	2012		2011
Shares outstanding and trading		252,507		252,352
Treasury shares		569		287

Total shares outstanding		253,076		252,639

Treasury shares held for share-based compensation plans		13,074		13,511

Total shares authorized for issuance		266,150		266,150

Par value per share (in Swiss Francs)		3.15		3.41

Repurchased treasury shares are recorded at cost, and include both shares repurchased pursuant to our Board of Directors approved share repurchase program and shares surrendered by employees for taxes payable upon the vesting of restricted stock. The number of shares that we may hold in treasury is limited under Swiss law. At June 30, 2012, 6.8 million shares remained available for repurchase under the authorization by the Board of Directors noted above. No shares were repurchased under this authorization during the six months ended June 30, 2012.

Our Board of Directors may further increase Noble-Swiss’ share capital through the issuance of up to 133.1 million authorized registered shares without obtaining shareholder approval. The issuance of these authorized registered shares is subject to certain conditions regarding their use.

In April 2012, our shareholders approved the payment of a dividend funded from our capital contribution reserve aggregating $0.52 per share to be paid in four equal installments scheduled for August 2012, November 2012, February 2013 and May 2013. These dividends will require us to make cash payments of approximately $66 million in 2012, based on the number of shares currently outstanding. In connection with this approval and the resulting obligation to shareholders, we recorded dividends payable of approximately $133 million during the second quarter of 2012. Any additional issuances of shares would further increase our obligation.

NOBLE CORPORATION (NOBLE-SWISS) AND SUBSIDIARIES

NOBLE CORPORATION (NOBLE-CAYMAN) AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unless otherwise indicated, dollar amounts in tables are in thousands, except per share data)

Earnings per share

The following table sets forth the computation of basic and diluted earnings per share for Noble-Swiss:


	Three months ended						Six months ended
	June 30,						June 30,
	2012			2011			2012			2011
Allocation of net income
Basic
Net income attributable to Noble Corporation	$	159,818		$	54,083		$	279,993		$	108,578
Earnings allocated to unvested share-based payment awards		(1,694	)		(572	)		(2,797	)		(1,083	)

Net income to common shareholders — basic	$	158,124		$	53,511		$	277,196		$	107,495

Diluted
Net income attributable to Noble Corporation	$	159,818		$	54,083		$	279,993		$	108,578
Earnings allocated to unvested share-based payment awards		(1,692	)		(572	)		(2,793	)		(1,082	)

Net income to common shareholders — diluted	$	158,126		$	53,511		$	277,200		$	107,496

Weighted average shares outstanding — basic		252,387			251,368			252,179			251,198
Incremental shares issuable from assumed exercise of stock options		358			700			425			737

Weighted average shares outstanding — diluted		252,745			252,068			252,604			251,935

Weighted average unvested share-based payment awards		2,704			2,688			2,555			2,554

Earnings per share
Basic	$	0.63		$	0.21		$	1.10		$	0.43
Diluted	$	0.63		$	0.21		$	1.10		$	0.43

Only those items having a dilutive impact on our basic earnings per share are included in diluted earnings per share. At June 30, 2012, stock options totaling approximately 1.2 million were excluded from the diluted earnings per share as they were not dilutive as compared to 0.7 million at June 30, 2011.

Note 4 — Property and Equipment

Property and equipment, at cost, as of June 30, 2012 and December 31, 2011 consisted of the following:


	June 30,		December 31,
	2012		2011
Drilling equipment and facilities	$	12,572,630	$	10,974,943
Construction in progress		3,289,005		4,367,750
Other		193,533		197,485

	$	16,055,168	$	15,540,178

Capital expenditures, including capitalized interest, totaled $665 million and $1.4 billion for the six months ended June 30, 2012 and 2011, respectively. Capital expenditures for 2012 consisted of the following:

•

$162 million for newbuild construction;

•

$327 million for major projects, including $34 million in subsea related expenditures and $24 million to upgrade two drillships currently operating in Brazil;

•

$99 million for other capitalized expenditures, including drilling equipment replacements and upgrades which generally have useful lives ranging from 3 to 5 years; and

•

$77 million in capitalized interest.

NOBLE CORPORATION (NOBLE-SWISS) AND SUBSIDIARIES

NOBLE CORPORATION (NOBLE-CAYMAN) AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unless otherwise indicated, dollar amounts in tables are in thousands, except per share data)

Interest is capitalized on construction-in-progress at the weighted average cost of debt outstanding during the period of construction. Capitalized interest was $36 million and $77 million for the three and six months ended June 30, 2012, respectively, as compared to $29 million and $56 million for the three and six months ended June 30, 2011.

Note 5 — Loss on Impairment

During the second quarter of 2012, we determined that our submersible rig fleet, consisting of two cold stacked rigs, was partially impaired due to the declining market outlook for drilling services for this rig type. We estimated the fair value of the rigs based on the salvage value of the rigs and a recent transaction involving a similar unit owned by a peer company (Level 2 fair value measurement). Based on these estimates, we recognized a charge of approximately $13 million for the three months ended June 30, 2012.

Also, during the second quarter of 2012, we determined that certain corporate assets were partially impaired due to a declining market for, and the potential disposal of, the assets. We estimated the fair value of the asset based on recent transactions involving similar units in the market (Level 2 fair value measurement). Based on these estimates, we recognized a charge of approximately $5 million for the three months ended June 30, 2012.

Note 6 — Gain on Contract Settlements/Extinguishments, net

During the second quarter of 2012, we received approximately $5 million from the settlement of a claim relating to the Noble David Tinsley, which had experienced a “punch-through” while being positioned on location in 2009. We had originally recorded a $17 million charge during 2009 related to this incident. Additionally, during the second quarter of 2012, we settled an action against certain vendors for damages sustained during Hurricane Ike. We recognized a net gain of approximately $28 million related to this settlement. We also resolved all outstanding matters with Anadarko Petroleum Company (“Anadarko”) related to the previously disclosed force majeure action, Hurricane Ike matters and receivables relating to the Noble Amos Runner during the quarter.

In January 2011, we announced the signing of a Memorandum of Understanding (“MOU”) with Petroleo Brasileiro S.A. (“Petrobras”) regarding operations in Brazil. Under the terms of the MOU, we agreed to substitute the Noble Phoenix, then under contract with Shell in Southeast Asia, for the Noble Muravlenko. In connection with the cancellation of the contract on the Noble Phoenix, we recognized a non-cash gain of approximately $52.5 million during the first quarter of 2011, which represented the unamortized fair value of the in-place contract at acquisition. As a result of the substitution, we reached a decision not to proceed with the previously announced reliability upgrade to the Noble Muravlenko that was scheduled to take place in 2013. As a result, we incurred a non-cash charge of approximately $32.6 million related to the termination of outstanding shipyard contracts. We expect the actual substitution to take place in the third quarter of 2012 after the Noble Phoenix completes its shipyard work.

In February 2011, the outstanding balances of the Bully joint venture credit facilities, which totaled $693 million, were repaid in full and the credit facilities terminated using a portion of the proceeds from our February 2011 debt offering and equity contributions from our joint venture partner. In addition, the related interest rate swaps were settled and terminated concurrent with the repayment and termination of the credit facilities. As a result of these transactions, we recognized a gain of approximately $1.3 million during the first quarter of 2011.

Note 7 — Receivables from Customers

In June 2010, a subsidiary of Frontier, which we acquired in July 2010, entered into a charter contract with a subsidiary of BP PLC (“BP”) for the Seillean with a term of a minimum of 100 days. The unit went on hire on July 23, 2010. In October 2010, BP initiated an arbitration proceeding against us claiming the contract was void ab initio, or never existed, due to a fundamental breach and has made other claims and is demanding that we reimburse the amounts already paid to us under the charter. We believe BP owes us the amounts due under the charter. The charter contains a “hell or high water” provision requiring payment, and we believe we have satisfied our obligations under the charter. Outstanding receivables related to this charter totaled $35 million as of June 30, 2012. While we recently received a favorable arbitration ruling, this matter has not been finally resolved and these receivables continue to be classified as long-term and are included in “Other assets” on our Consolidated Balance Sheet at June 30, 2012. We believe that if BP were to be successful in claiming the contract void ab initio, we may have an indemnity claim against the former shareholders of Frontier. We have put the former shareholders of Frontier on notice of this potential claim. We can make no assurances as to the outcome of this dispute.

NOBLE CORPORATION (NOBLE-SWISS) AND SUBSIDIARIES

NOBLE CORPORATION (NOBLE-CAYMAN) AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unless otherwise indicated, dollar amounts in tables are in thousands, except per share data)

At June 30, 2012, we had receivables of approximately $14 million related to the Noble Max Smith, which are being disputed by our customer, Pemex Exploracion y Produccion (“Pemex”). These receivables have been classified as long-term and are included in “Other assets” on our Consolidated Balance Sheet at June 30, 2012. The disputed amount relates to lost revenues due from Pemex for downtime that occurred after our rig was damaged when one of Pemex’s supply boats collided with our rig. In January 2012, we filed a lawsuit against Pemex in Mexican court seeking recovery of these amounts. While we can make no assurances as to the outcome of this dispute, we believe we are entitled to the disputed amounts.

Note 8 — Debt

Total debt consisted of the following at June 30, 2012 and December 31, 2011:


	June 30,		December 31,
	2012		2011
Wholly-owned debt instruments:
5.875% Senior Notes due 2013	$	299,966	$	299,949
7.375% Senior Notes due 2014		249,722		249,647
3.45% Senior Notes due 2015		350,000		350,000
3.05% Senior Notes due 2016		299,945		299,938
2.50% Senior Notes due 2017		299,836		—
7.50% Senior Notes due 2019		201,695		201,695
4.90% Senior Notes due 2020		498,840		498,783
4.625% Senior Notes due 2021		399,503		399,480
3.95% Senior Notes due 2022		399,054		—
6.20% Senior Notes due 2040		399,891		399,890
6.05% Senior Notes due 2041		397,598		397,582
5.25% Senior Notes due 2042		498,244		—
Credit facilities		150,000		975,000

Total long-term debt	$	4,444,294	$	4,071,964

During June 2012, we replaced our $575 million credit facility, which was scheduled to mature in 2013, with a new $1.2 billion credit facility which matures in 2017. We continue to maintain our $600 million credit facility, which matures in 2015, which combined with our new facility, gives us a total borrowing capacity under the two facilities (together referred to as the “Credit Facilities”) of $1.8 billion. The covenants and events of default under the Credit Facilities are substantially similar, and each facility contains a covenant that limits our ratio of debt to total tangible capitalization, as defined in the Credit Facilities, to 0.60. At June 30, 2012, our ratio of debt to total tangible capitalization was 0.35. We were in compliance with all covenants under the Credit Facilities as of June 30, 2012.

The Credit Facilities provide us with the ability to issue up to $375 million in letters of credit in the aggregate. While the issuance of letters of credit does not increase our borrowings outstanding under the Credit Facilities, it does reduce the amount available. At June 30, 2012, we had no letters of credit outstanding under the Credit Facilities.

In February 2012, we issued, through our indirect wholly-owned subsidiary, Noble Holding International Limited (“NHIL”), $1.2 billion aggregate principal amount of senior notes in three separate tranches, with $300 million of 2.50% Senior Notes due 2017, $400 million of 3.95% Senior Notes due 2022, and $500 million of 5.25% Senior Notes due 2042. The weighted average coupon of all three tranches is 4.13%. The net proceeds of approximately $1.19 billion, after expenses, were primarily used to repay the then outstanding balance on our Credit Facilities.

NOBLE CORPORATION (NOBLE-SWISS) AND SUBSIDIARIES

NOBLE CORPORATION (NOBLE-CAYMAN) AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unless otherwise indicated, dollar amounts in tables are in thousands, except per share data)

Our 5.875% Senior Notes mature during the second quarter of 2013. We anticipate using availability under our Credit Facilities to repay the outstanding balance; therefore, we have continued to report the balance as long-term on our June 30, 2012 Consolidated Balance Sheet.

The indentures governing our outstanding senior unsecured notes contain covenants that place restrictions on certain merger and consolidation transactions, unless we are the surviving entity or the other party assumes the obligations under the indenture, and on the ability to sell or transfer all or substantially all of our assets. In addition, there are restrictions on incurring or assuming certain liens and sale and lease-back transactions. At June 30, 2012, we were in compliance with all our debt covenants. We continually monitor compliance with the covenants under our Credit Facilities and senior notes and, based on our expectations for 2012, expect to remain in compliance during the year.

Fair Value of Debt

Fair value represents the amount at which an instrument could be exchanged in a current transaction between willing parties. The estimated fair value of our senior notes was based on the quoted market prices for similar issues or on the current rates offered to us for debt of similar remaining maturities (Level 2 measurement). The following table presents the estimated fair value of our long-term debt as of June 30, 2012 and December 31, 2011.


	June 30, 2012				December 31, 2011
	Carrying		Estimated		Carrying		Estimated
	Value		Fair Value		Value		Fair Value
Wholly-owned debt instruments
5.875% Senior Notes due 2013	$	299,966	$	312,362	$	299,949	$	317,586
7.375% Senior Notes due 2014		249,722		274,275		249,647		278,966
3.45% Senior Notes due 2015		350,000		367,465		350,000		363,571
3.05% Senior Notes due 2016		299,945		309,804		299,938		306,057
2.50% Senior Notes due 2017		299,836		303,649		—		—
7.50% Senior Notes due 2019		201,695		248,719		201,695		248,623
4.90% Senior Notes due 2020		498,840		538,532		498,783		531,437
4.625% Senior Notes due 2021		399,503		424,232		399,480		416,847
3.95% Senior Notes due 2022		399,054		404,017		—		—
6.20% Senior Notes due 2040		399,891		444,713		399,890		450,017
6.05% Senior Notes due 2041		397,598		436,205		397,582		443,308
5.25% Senior Notes due 2042		498,244		496,435		—		—
Credit Facilities		150,000		150,000		975,000		975,000

Total long-term debt	$	4,444,294	$	4,710,408	$	4,071,964	$	4,331,412

Note 9 — Income Taxes

At December 31, 2011, the reserves for uncertain tax positions totaled $118 million (net of related tax benefits of $8 million). At June 30, 2012, the reserves for uncertain tax positions totaled $115 million (net of related tax benefits of $8 million). If the June 30, 2012 reserves are not realized, the provision for income taxes would be reduced by $115 million in future periods.

It is possible that our existing liabilities related to our reserve for uncertain tax positions may increase or decrease in the next twelve months primarily due to the completion of open audits or the expiration of statutes of limitation. However, we cannot reasonably estimate a range of changes in our existing liabilities due to various uncertainties, such as the unresolved nature of various audits.

NOBLE CORPORATION (NOBLE-SWISS) AND SUBSIDIARIES

NOBLE CORPORATION (NOBLE-CAYMAN) AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unless otherwise indicated, dollar amounts in tables are in thousands, except per share data)

Note 10 — Employee Benefit Plans

Pension costs include the following components:


	Three Months Ended June 30,
	2012						2011
	Non-U.S.			U.S.			Non-U.S.			U.S.
Service cost	$	1,111		$	2,375		$	1,153		$	2,152
Interest cost		1,350			2,164			1,440			2,143
Return on plan assets		(1,342	)		(2,793	)		(1,454	)		(2,768	)
Amortization of prior service cost		—			57			—			57
Amortization of transition obligation		—			—			19			—
Recognized net actuarial loss		201			1,793			123			843

Net pension expense	$	1,320		$	3,596		$	1,281		$	2,427


	Six Months Ended June 30,
	2012						2011
	Non-U.S.			U.S.			Non-U.S.			U.S.
Service cost	$	2,234		$	4,806		$	2,246		$	4,304
Interest cost		2,708			4,360			2,823			4,286
Return on plan assets		(2,688	)		(5,586	)		(2,857	)		(5,536	)
Amortization of prior service cost		—			114			—			113
Amortization of transition obligation		—			—			37			—
Recognized net actuarial loss		401			3,678			243			1,687

Net pension expense	$	2,655		$	7,372		$	2,492		$	4,854

During the three and six months ended June 30, 2012, we made contributions to our pension plans totaling $6 million and $10 million, respectively. We expect the funding to our non-U.S. and U.S. plans in 2012, subject to applicable law, to be approximately $21 million.

Note 11 — Derivative Instruments and Hedging Activities

We periodically enter into derivative instruments to manage our exposure to fluctuations in interest rates and foreign currency exchange rates. We have documented policies and procedures to monitor and control the use of derivative instruments. We do not engage in derivative transactions for speculative or trading purposes, nor are we a party to leveraged derivatives. During the six months ended June 30, 2011, we maintained certain foreign currency forward contracts that did not qualify under the Financial Accounting Standards Board (“FASB”) standards for hedge accounting treatment and therefore, changes in fair values were recognized as either income or loss in our consolidated income statement.

For foreign currency forward contracts, hedge effectiveness is evaluated at inception based on the matching of critical terms between derivative contracts and the hedged item. For interest rate swaps, we evaluate all material terms between the swap and the underlying debt obligation, known in FASB standards as the “long-haul method.” Any change in fair value resulting from ineffectiveness is recognized immediately in earnings.

Cash Flow Hedges

Our North Sea and Brazil operations have a significant amount of their cash operating expenses payable in local currencies. To limit the potential risk of currency fluctuations, we have historically maintained short-term forward contracts settling monthly in their respective local currencies. At June 30, 2012, we had no outstanding derivative contracts.

NOBLE CORPORATION (NOBLE-SWISS) AND SUBSIDIARIES

NOBLE CORPORATION (NOBLE-CAYMAN) AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unless otherwise indicated, dollar amounts in tables are in thousands, except per share data)

The balance of the net unrealized gain/(loss) related to our cash flow hedges included in “Accumulated other comprehensive loss” (“AOCL”) and related activity is as follows:


	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2012			2011			2012			2011
Net unrealized gain/(loss) at beginning of period	$	(644	)	$	1,766		$	(3,061	)	$	1,970
Activity during period:
Settlement of foreign currency forward contracts during the period		644			(801	)		3,061			(1,382	)
Settlement of interest rate swaps during the period		—			—			—			(366	)
Net unrealized gain on outstanding foreign currency forward contracts		—			3,152			—			3,895

Net unrealized gain/(loss) at end of period	$	—		$	4,117		$	—		$	4,117

Financial Statement Presentation

The following tables, together with Note 12, summarize the financial statement presentation and fair value of our derivative positions as of June 30, 2012 and December 31, 2011:

Estimated fair value

Balance sheet
classification

June 30, 2012

December 31,
2011

Liability derivatives

Cash flow hedges

Short-term foreign currency forward contracts

Other current liabilities

—

3,061

To supplement the fair value disclosures in Note 12, the following summarizes the recognized gains and losses of cash flow hedges and non-designated derivatives through AOCL or through “other income” for the three months ended June 30, 2012 and 2011:


	Gain/(loss) recognized through AOCL				Gain/(loss) reclassified from AOCL to “other income”					Gain/(loss) recognized through “other income”
	2012		2011		2012			2011		2012		2011
Cash flow hedges
Foreign currency forward contracts	$	—	$	3,152	$	(644	)	$	801	$	—	$	—

NOBLE CORPORATION (NOBLE-SWISS) AND SUBSIDIARIES

NOBLE CORPORATION (NOBLE-CAYMAN) AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unless otherwise indicated, dollar amounts in tables are in thousands, except per share data)


	Gain/(loss) recognized through AOCL				Gain/(loss) reclassified from AOCL to “other income”					Gain/(loss) recognized through “other income”
	2012		2011		2012			2011		2012		2011
Cash flow hedges
Foreign currency forward contracts	$	—	$	3,895	$	(3,061	)	$	1,382	$	—	$	—
Non-designated derivatives
Foreign currency forward contracts	$	—	$	—	$	—		$	—	$	—	$	(546	)

Note 12 — Fair Value of Financial Instruments

The following table presents the carrying amount and estimated fair value of our financial instruments recognized at fair value on a recurring basis:


	June 30, 2012								December 31, 2011
			Estimated Fair Value Measurements
			Quoted		Significant
			Prices in		Other		Significant
			Active		Observable		Unobservable
	Carrying		Markets		Inputs		Inputs		Carrying		Estimated
	Amount		(Level 1)		(Level 2)		(Level 3)		Amount		Fair Value
Assets -
Marketable securities	$	5,247	$	5,247	$	—	$	—	$	4,701	$	4,701
Liabilities -
Foreign currency forward contracts	$	—	$	—	$	—	$	—	$	3,061	$	3,061

At the time of valuation, the derivative instruments were valued using actively quoted prices and quotes obtained from the counterparties to the derivative instruments. Our cash and cash equivalents, accounts receivable and accounts payable are by their nature short-term. As a result, the carrying values included in the accompanying Consolidated Balance Sheets approximate fair value.

Note 13 — Commitments and Contingencies

The Noble Homer Ferrington was under contract with a subsidiary of ExxonMobil Corporation (“ExxonMobil”), which entered into an assignment agreement with BP for a two well farmout of the rig in Libya after successfully drilling two wells with the rig for ExxonMobil. In August 2010, BP attempted to terminate the assignment agreement claiming that the rig was not in the required condition. ExxonMobil has informed us that we must look to BP for payment of the dayrate during the assignment period. In August 2010, we initiated arbitration proceedings under the drilling contract against both BP and ExxonMobil. We do not believe BP had the right to terminate the assignment agreement and believe the rig was fully ready to operate under the drilling contract. The rig operated under farmout arrangements from March 2011 to the conclusion of the contract in the second quarter of 2012. We believe we are owed dayrate by either or both of these clients. The operating dayrate was approximately $538,000 per day for the work in Libya. The arbitration process is proceeding, and we intend to vigorously pursue these claims. As a result of the uncertainties noted above, we have not recognized any revenue during the assignment period and the matter could have a material positive effect on our results of operations or cash flows in the period the matter is resolved should the arbitration panel ultimately rule in our favor.

NOBLE CORPORATION (NOBLE-SWISS) AND SUBSIDIARIES

NOBLE CORPORATION (NOBLE-CAYMAN) AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unless otherwise indicated, dollar amounts in tables are in thousands, except per share data)

In August 2007, we entered into a drilling contract with Marathon Oil Company (“Marathon”) for the Noble Jim Day to operate in the U.S. Gulf of Mexico. On January 1, 2011, Marathon provided notice that it was terminating the contract. Marathon’s stated reason for the termination was that the rig had not been accepted by Marathon by December 31, 2010, and Marathon also maintained that a force majeure condition existed under the contract. The contract contained a provision allowing Marathon to terminate if the rig had not commenced operations by December 31, 2010. We believe the rig was ready to commence operations and should have been accepted by Marathon. The contract term was for four years. No revenue has been recognized under this contract. We have contracted the rig for much of the original term with other customers. In March 2011, we filed suit in Texas State District Court against Marathon seeking damages for its actions, and the suit is proceeding. We cannot provide assurance as to the outcome of this lawsuit.

We are from time to time a party to various lawsuits that are incidental to our operations in which the claimants seek an unspecified amount of monetary damages for personal injury, including injuries purportedly resulting from exposure to asbestos on drilling rigs and associated facilities. At June 30, 2012, there were 26 asbestos related lawsuits in which we are one of many defendants. These lawsuits have been filed in the United States in the states of Louisiana, Mississippi and Texas. We intend to vigorously defend against the litigation. We do not believe the ultimate resolution of these matters will have a material adverse effect on our financial position, results of operations or cash flows.

We are a defendant in certain claims and litigation arising out of operations in the ordinary course of business, including certain disputes with customers over receivables discussed in Note 7, the resolution of which, in the opinion of management, will not be material to our financial position, results of operations or cash flows. There is inherent risk in any litigation or dispute and no assurance can be given as to the outcome of these claims.

We operate in a number of countries throughout the world and our income tax returns filed in those jurisdictions are subject to review and examination by tax authorities within those jurisdictions. The U.S. Internal Revenue Service (“IRS”) has completed its audit examination of our 2008 U.S. tax return and proposed adjustments and deficiencies with respect to certain items that were reported by us for the 2008 tax year. We believe that we have accurately reported all amounts in our 2008 tax return, and have filed protests with the IRS Office of Appeals contesting the examination team’s proposed adjustments. We intend to vigorously defend our reported positions. Our 2009 tax return is under audit, and we expect to receive additional Information Document Requests in the coming months. In addition, a U.S. subsidiary of Frontier is also under audit by the IRS for its 2007 and 2008 tax returns. Furthermore, we are currently contesting several non-U.S. tax assessments and may contest future assessments when we disagree with those assessments based on the technical merits of the positions established at the time of the filing of the tax return. We believe the ultimate resolution of the outstanding assessments, for which we have not made any accrual, will not have a material adverse effect on our consolidated financial statements. We recognize uncertain tax positions that we believe have a greater than 50 percent likelihood of being sustained. We cannot predict or provide assurance as to the ultimate outcome of the existing or future assessments.

Our Mexican income tax returns have been examined for the 2002 through 2007 periods and audit claims have been assessed for approximately $297 million (including interest and penalties). During 2011, we received from the Regional Chamber of the Federal Tax Court adverse decisions with respect to approximately $5 million in assessments related to depreciation deductions, which we are appealing. We are also contesting all other assessments in Mexico. Tax authorities in Mexico and other jurisdictions may issue additional assessments or pursue legal actions as a result of tax audits and we cannot predict or provide assurance as to the ultimate outcome of such assessments and legal actions.

Additional audit claims of approximately $75 million attributable to customs and other business taxes have been assessed against us in other jurisdictions. We have contested, or intend to contest, these assessments, including through litigation if necessary, and we believe the ultimate resolution, for which we have not made any accrual, will not have a material adverse effect on our consolidated financial statements.

NOBLE CORPORATION (NOBLE-SWISS) AND SUBSIDIARIES

NOBLE CORPORATION (NOBLE-CAYMAN) AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unless otherwise indicated, dollar amounts in tables are in thousands, except per share data)

We maintain certain insurance coverage against specified marine perils which includes physical damage and loss of hire. Damage caused by hurricanes has negatively impacted the energy insurance market, resulting in more restrictive and expensive coverage for U.S. named windstorm perils. Accordingly, we have elected to significantly reduce the named windstorm insurance on our rigs operating in the U.S. Gulf of Mexico. Presently we insure the Noble Jim Thompson, Noble Amos Runner and Noble Driller for “total loss only” when caused by a named windstorm. Our customer assumes the risk of loss on the Noble Bully I due to a named windstorm event up to $450 million per occurrence pursuant to the terms of the drilling contract relating to such vessel, provided that we are responsible for the first $25 million per occurrence for such named windstorm events. The remaining rigs in the U.S. Gulf of Mexico are self-insured for named windstorm perils. Our rigs located in the Mexico portion of the Gulf of Mexico remain covered by commercial insurance for windstorm damage. In addition, we maintain physical damage deductibles on our rigs ranging from $15 million to $25 million per occurrence, depending on location. The loss of hire coverage applies only to our rigs operating under contract with a dayrate equal to or greater than $200,000 a day and is subject to a 45-day waiting period for each unit and each occurrence.

Although we maintain insurance in the geographic areas in which we operate, pollution, reservoir damage and environmental risks generally are not fully insurable. Our insurance policies and contractual rights to indemnity may not adequately cover our losses or may have exclusions of coverage for some losses. We do not have insurance coverage or rights to indemnity for all risks, including loss of hire insurance on most of the rigs in our fleet. Uninsured exposures may include expatriate activities prohibited by U.S. laws and regulations, radiation hazards, certain loss or damage to property on board our rigs and losses relating to shore-based terrorist acts or strikes. If a significant accident or other event occurs and is not fully covered by insurance or contractual indemnity, it could materially adversely affect our financial position, results of operations or cash flows. Additionally, there can be no assurance that those parties with contractual obligations to indemnify us will necessarily be financially able to indemnify us against all these risks.

In January 2012, we were assessed a fine by the Brazilian government in the amount of R$1.8 million (approximately $900,000) in connection with the inadvertent discharge of drilling fluid from one of our rigs offshore Brazil in September 2011. We have accepted the assessment.

In October 2011, we were assessed a fine by the Brazilian government in the amount of R$238,000 (approximately $120,000) in connection with the inadvertent discharge of drilling fluid from one of our rigs offshore Brazil in November 2010. We have accepted the assessment.

We carry protection and indemnity insurance covering marine third party liability exposures, which also includes coverage for employer’s liability resulting from personal injury to our offshore drilling crews. Our protection and indemnity policy currently has a standard deductible of $10 million per occurrence, with maximum liability coverage of $750 million.

In connection with our capital expenditure program, we had outstanding commitments, including shipyard and purchase commitments of approximately $3.1 billion at June 30, 2012.

We have entered into agreements with certain of our executive officers, as well as certain other employees. These agreements become effective upon a change of control of Noble-Swiss (within the meaning set forth in the agreements) or a termination of employment in connection with or in anticipation of a change of control, and remain effective for three years thereafter. These agreements provide for compensation and certain other benefits under such circumstances.

NOBLE CORPORATION (NOBLE-SWISS) AND SUBSIDIARIES

NOBLE CORPORATION (NOBLE-CAYMAN) AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unless otherwise indicated, dollar amounts in tables are in thousands, except per share data)

Nigerian Operations

During the fourth quarter of 2007, our Nigerian subsidiary received letters from the Nigerian Maritime Administration and Safety Agency (“NIMASA”) seeking to collect a two percent surcharge on contract amounts under contracts performed by “vessels,” within the meaning of Nigeria’s cabotage laws, engaged in the Nigerian coastal shipping trade. Although we do not believe that these laws apply to our ownership of drilling units, NIMASA is seeking to apply a provision of the Nigerian cabotage laws (which became effective on May 1, 2004) to our offshore drilling units by considering these units to be “vessels” within the meaning of those laws and therefore subject to the surcharge, which is imposed only upon “vessels.” Our offshore drilling units are not engaged in the Nigerian coastal shipping trade and are not in our view “vessels” within the meaning of Nigeria’s cabotage laws. In January 2008, we filed an originating summons against NIMASA and the Minister of Transportation in the Federal High Court of Lagos, Nigeria seeking, among other things, a declaration that our drilling operations do not constitute “coastal trade” or “cabotage” within the meaning of Nigeria’s cabotage laws and that our offshore drilling units are not “vessels” within the meaning of those laws. In February 2009, NIMASA filed suit against us in the Federal High Court of Nigeria seeking collection of the cabotage surcharge. In August 2009, the court issued a favorable ruling in response to our originating summons stating that drilling operations do not fall within the cabotage laws and that drilling rigs are not vessels for purposes of those laws. The court also issued an injunction against the defendants prohibiting their interference with our drilling rigs or drilling operations. NIMASA has appealed the court’s ruling, although the court dismissed NIMASA’s lawsuit filed against us in February 2009. We intend to take all further appropriate legal action to resist the application of Nigeria’s cabotage laws to our drilling units. The outcome of any such legal action and the extent to which we may ultimately be responsible for the surcharge is uncertain. If it is ultimately determined that offshore drilling units constitute vessels within the meaning of the Nigerian cabotage laws, we may be required to pay the surcharge and comply with other aspects of the Nigerian cabotage laws, which could adversely affect our operations in Nigerian waters and require us to incur additional costs of compliance.

NIMASA had previously informed the Nigerian Content Division of its position that we were not in compliance with the cabotage laws. The Nigerian Content Division makes determinations of companies’ compliance with applicable local content regulations for purposes of government contracting, including contracting for services in connection with oil and gas concessions where the Nigerian national oil company is a partner. The Nigerian Content Division had previously barred us from participating in new tenders as a result of NIMASA’s allegations, although the Division reversed its actions based on the favorable Federal High Court ruling. However, no assurance can be given with respect to our ability to bid for future work in Nigeria until our dispute with NIMASA is resolved.

As previously disclosed, in November 2010 we finalized settlements with the SEC and the Department of Justice as the result of an internal investigation of the legality under the United States Foreign Corrupt Practices Act (“FCPA”) and local laws of certain reimbursement payments made by our Nigerian affiliate to our customs agents in Nigeria. In January 2011, a subsidiary of Noble-Swiss resolved an investigation by the Nigerian Economic and Financial Crimes Commission and the Nigerian Attorney General Office into these same activities. Any additional investigation by these or other agencies could damage our reputation and result in substantial fines, sanctions, civil and/or criminal penalties and curtailment of operations in certain jurisdictions and might adversely affect our business, results of operations or financial condition. Further, resolving any additional investigations could be expensive and consume significant time and attention of our senior management.

Note 14 — Segment and Related Information

We report our contract drilling operations as a single reportable segment: Contract Drilling Services. The consolidation of our contract drilling operations into one reportable segment is attributable to how we manage our business, and the fact that all of our drilling fleet is dependent upon the worldwide oil and gas industry. The mobile offshore drilling units comprising our offshore rig fleet operate in a single, global market for contract drilling services and are often redeployed globally in response to changing demands of our customers, which consist largely of major non-U.S. and government owned/controlled oil and gas companies throughout the world. Our Contract Drilling Services segment currently conducts contract drilling operations principally in the U.S. Gulf of Mexico, Mexico, Brazil, the North Sea, the Mediterranean, West Africa, the Middle East, India and the Asian Pacific.

NOBLE CORPORATION (NOBLE-SWISS) AND SUBSIDIARIES

NOBLE CORPORATION (NOBLE-CAYMAN) AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unless otherwise indicated, dollar amounts in tables are in thousands, except per share data)

We evaluate the performance of our operating segment primarily based on operating revenues and net income. Summarized financial information of our reportable segments for the three and six months ended June 30, 2012 and 2011 for Noble-Swiss and Noble-Cayman are shown in the following table. The “Other” column includes results of labor contract drilling services in Canada and Alaska, as well as corporate related items.


	Noble-Swiss
	Three Months Ended June 30,
	2012									2011
	Contract									Contract
	Drilling									Drilling
	Services			Other			Total			Services			Other			Total
Revenues from external customers	$	878,372		$	20,551		$	898,923		$	612,845		$	15,152		$	627,997
Depreciation and amortization		180,112			3,503			183,615			159,843			3,276			163,119
Segment operating income / (loss)		246,161			(1,666	)		244,495			77,309			1,736			79,045
Interest expense, net of amount capitalized		(105	)		(20,547	)		(20,652	)		(683	)		(14,146	)		(14,829	)
Income tax (provision) / benefit		(51,098	)		4,742			(46,356	)		(11,418	)		1,910			(9,508	)
Segment profit / (loss)		178,094			(18,276	)		159,818			64,939			(10,856	)		54,083
Total assets (at end of period)		13,483,083			552,933			14,036,016			12,046,536			391,702			12,438,238


	Noble-Cayman
	Three Months Ended June 30,
	2012									2011
	Contract									Contract
	Drilling									Drilling
	Services			Other			Total			Services			Other			Total
Revenues from external customers	$	878,372		$	20,551		$	898,923		$	612,845		$	15,152		$	627,997
Depreciation and amortization		180,112			2,991			183,103			159,843			2,793			162,636
Segment operating income		248,065			8,783			256,848			83,833			9,209			93,042
Interest expense, net of amount capitalized		(105	)		(20,547	)		(20,652	)		(683	)		(14,146	)		(14,829	)
Income tax (provision) / benefit		(51,098	)		5,121			(45,977	)		(11,418	)		2,261			(9,157	)
Segment profit / (loss)		179,998			(7,028	)		172,970			71,463			(2,645	)		68,818
Total assets (at end of period)		13,483,083			514,241			13,997,324			12,046,536			353,149			12,399,685

NOBLE CORPORATION (NOBLE-SWISS) AND SUBSIDIARIES

NOBLE CORPORATION (NOBLE-CAYMAN) AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unless otherwise indicated, dollar amounts in tables are in thousands, except per share data)


	Noble-Swiss
	Six Months Ended June 30,
	2012									2011
	Contract									Contract
	Drilling									Drilling
	Services			Other			Total			Services			Other			Total
Revenues from external customers	$	1,659,615		$	36,998		$	1,696,613		$	1,177,499		$	29,386		$	1,206,885
Depreciation and amortization		348,060			6,632			354,692			314,731			6,510			321,241
Segment operating income		386,428			1,710			388,138			162,025			3,284			165,309
Interest expense, net of amount capitalized		(194	)		(30,954	)		(31,148	)		(1,768	)		(32,102	)		(33,870	)
Income tax (provision) / benefit		(73,698	)		5,753			(67,945	)		(30,281	)		5,414			(24,867	)
Segment profit / (loss)		303,578			(23,585	)		279,993			131,819			(23,241	)		108,578
Total assets (at end of period)		13,483,083			552,933			14,036,016			12,046,536			391,702			12,438,238


	Noble-Cayman
	Six Months Ended June 30,
	2012									2011
	Contract									Contract
	Drilling									Drilling
	Services			Other			Total			Services			Other			Total
Revenues from external customers	$	1,659,615		$	36,998		$	1,696,613		$	1,177,499		$	29,386		$	1,206,885
Depreciation and amortization		348,060			5,616			353,676			314,731			5,560			320,291
Segment operating income		393,197			21,779			414,976			174,080			18,408			192,488
Interest expense, net of amount capitalized		(194	)		(30,954	)		(31,148	)		(1,768	)		(32,102	)		(33,870	)
Income tax (provision) / benefit		(73,698	)		6,510			(67,188	)		(30,281	)		6,099			(24,182	)
Segment profit / (loss)		310,347			(2,725	)		307,622			143,874			(7,396	)		136,478
Total assets (at end of period)		13,483,083			514,241			13,997,324			12,046,536			353,149			12,399,685

Note 15 — Accounting Pronouncements

In May 2011, the FASB issued Accounting Standards Update (“ASU”) No. 2011-04, which amends FASB Accounting Standards Codification (“ASC”) Topic 820, “Fair Value Measurements and Disclosures.” This amended guidance clarifies the wording used to describe many of the requirements in accounting literature for measuring fair value and for disclosing information about fair value measurements. The goal of the amendment is to create consistency between the United States and international accounting standards. The guidance is effective for annual and interim reporting periods beginning on or after December 15, 2011. Our adoption of this guidance did not have a material impact on our financial condition, results of operations, cash flows or financial disclosures.

In June 2011, the FASB issued ASU No. 2011-05, which amends ASC Topic 220, “Comprehensive Income.” This ASU allows an entity to present the total of comprehensive income, the components of net income, and the components of other comprehensive income either in a single continuous statement of comprehensive income or in two separate but consecutive statements. The amendment no longer allows an entity to show changes to other comprehensive income solely through the statement of equity. For publicly traded entities, the guidance is effective for annual and interim reporting periods beginning on or after December 15, 2011. Our adoption of this guidance did not have a material impact on our financial condition, results of operations, cash flows or financial disclosures.

NOBLE CORPORATION (NOBLE-SWISS) AND SUBSIDIARIES

NOBLE CORPORATION (NOBLE-CAYMAN) AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unless otherwise indicated, dollar amounts in tables are in thousands, except per share data)

Note 16 — Net Change in Other Assets and Liabilities

The net effect of changes in other assets and liabilities on cash flows from operating activities is as follows:


	Noble-Swiss						Noble-Cayman
	Six months ended						Six months ended
	June 30,						June 30,
	2012			2011			2012			2011
Accounts receivable	$	(87,244	)	$	(122,605	)	$	(87,244	)	$	(122,572	)
Other current assets		(82,590	)		(55,141	)		(85,357	)		(46,895	)
Other assets		(10,452	)		(13,344	)		(10,454	)		(15,821	)
Accounts payable		9,776			(17,020	)		8,804			(17,050	)
Other current liabilities		(2,282	)		1,544			(1,997	)		(11,283	)
Other liabilities		33,608			16,030			33,608			16,004

	$	(139,184	)	$	(190,536	)	$	(142,640	)	$	(197,617	)

Note 17 — Guarantees of Registered Securities

Noble-Cayman, or one or more subsidiaries of Noble-Cayman, are a co-issuer or guarantor or otherwise obligated as of June 30, 2012 as follows:


	Issuer
Notes	(Co-Issuer(s))	Guarantor(s)
$300 million 5.875% Senior Notes due 2013	Noble-Cayman	Noble Drilling Corporation (“NDC”)
		NHIL
$250 million 7.375% Senior Notes due 2014	NHIL	Noble-Cayman
$350 million 3.45% Senior Notes due 2015	NHIL	Noble-Cayman
$300 million 3.05% Senior Notes due 2016	NHIL	Noble-Cayman
$300 million 2.50% Senior Notes due 2017	NHIL	Noble-Cayman
$202 million 7.50% Senior Notes due 2019	NDC	Noble-Cayman
	Noble Drilling Services 6 LLC (“NDS6”)	Noble Holding (U.S.) Corporation (“NHC”)
		Noble Drilling Holding LLC (“NDH”)
$500 million 4.90% Senior Notes due 2020	NHIL	Noble-Cayman
$400 million 4.625% Senior Notes due 2021	NHIL	Noble-Cayman
$400 million 3.95% Senior Notes due 2022	NHIL	Noble-Cayman
$400 million 6.20% Senior Notes due 2040	NHIL	Noble-Cayman
$400 million 6.05% Senior Notes due 2041	NHIL	Noble-Cayman
$500 million 5.25% Senior Notes due 2042	NHIL	Noble-Cayman

The following consolidating financial statements of Noble-Cayman, NHC and NDH combined, NDC, NHIL, NDS6 and all other subsidiaries present investments in both consolidated and unconsolidated affiliates using the equity method of accounting.

NOBLE CORPORATION (NOBLE-CAYMAN) AND SUBSIDIARIES

CONDENSED CONSOLIDATING BALANCE SHEET

June 30, 2012

(in thousands)


													Other
													Non-guarantor
	Noble-		NHC and NDH										Subsidiaries			Consolidating
	Cayman		Combined			NDC			NHIL		NDS6		of Noble			Adjustments			Total
ASSETS
Current assets
Cash and cash equivalents	$	95	$	331		$	—		$	4	$	—	$	267,440		$	—		$	267,870
Accounts receivable		—		15,595			3,325			—		—		674,613			—			693,533
Taxes receivable		—		4,566			—			—		—		93,179			—			97,745
Prepaid expenses		—		502			9			—		—		76,119			—			76,630
Short-term notes receivable from affiliates		—		119,476			—			—		—		234,992			(354,468	)		—
Accounts receivable from affiliates		761,630		130,097			973,381			563,640		39,829		5,340,324			(7,808,901	)		—
Other current assets		516		641			196			—		—		141,188			—			142,541

Total current assets		762,241		271,208			976,911			563,644		39,829		6,827,855			(8,163,369	)		1,278,319

Property and equipment, at cost		—		2,326,256			74,856			—		—		13,618,432			—			16,019,544
Accumulated depreciation		—		(285,259	)		(56,410	)		—		—		(3,284,603	)		—			(3,626,272	)

Property and equipment, net		—		2,040,997			18,446			—		—		10,333,829			—			12,393,272

Notes receivable from affiliates		3,816,463		1,206,000			—			3,524,814		479,107		2,578,007			(11,604,391	)		—
Investments in affiliates		7,322,022		9,407,807			3,418,778			7,016,530		2,219,318		—			(29,384,455	)		—
Other assets		6,745		554			435			27,584		820		289,595			—			325,733

Total assets	$	11,907,471	$	12,926,566		$	4,414,570		$	11,132,572	$	2,739,074	$	20,029,286		$	(49,152,215	)	$	13,997,324

LIABILITIES AND EQUITY
Current liabilities
Short-term notes payables from affiliates	$	73,168	$	51,054		$	110,770		$	—	$	—	$	119,476		$	(354,468	)	$	—
Accounts payable		—		3,141			555			—		—		272,702			—			276,398
Accrued payroll and related costs		—		4,530			7,223			—		—		105,284			—			117,037
Accounts payable to affiliates		900,919		4,342,182			3,741			138,782		53,235		2,370,042			(7,808,901	)		—
Interest payable		1,548		—			—			67,248		4,412		—			—			73,208
Taxes payable		—		9,595			—			—		—		75,298			—			84,893
Other current liabilities		—		—			241			—		—		108,435			—			108,676

Total current liabilities		975,635		4,410,502			122,530			206,030		57,647		3,051,237			(8,163,369	)		660,212

Long-term debt		449,966		—			—			3,792,633		201,695		—			—			4,444,294
Notes payable to affiliates		2,855,394		1,039,500			—			975,000		1,342,000		5,392,497			(11,604,391	)		—
Deferred income taxes		—		—			15,731			—		—		222,314			—			238,045
Other liabilities		19,929		17,361			—			—		—		269,107			—			306,397

Total liabilities		4,300,924		5,467,363			138,261			4,973,663		1,601,342		8,935,155			(19,767,760	)		5,648,948

Commitments and contingencies

Total shareholder equity		7,606,547		7,459,203			4,276,309			6,158,909		1,137,732		10,352,302			(29,384,455	)		7,606,547
Noncontrolling interest		—		—			—			—		—		741,829			—			741,829

Total equity		7,606,547		7,459,203			4,276,309			6,158,909		1,137,732		11,094,131			(29,384,455	)		8,348,376

Total liabilities and equity	$	11,907,471	$	12,926,566		$	4,414,570		$	11,132,572	$	2,739,074	$	20,029,286		$	(49,152,215	)	$	13,997,324

NOBLE CORPORATION (NOBLE-CAYMAN) AND SUBSIDIARIES

CONDENSED CONSOLIDATING BALANCE SHEET

December 31, 2011

(in thousands)


													Other
													Non-guarantor
	Noble-		NHC and NDH										Subsidiaries			Consolidating
	Cayman		Combined			NDC			NHIL		NDS6		of Noble			Adjustments			Total
ASSETS
Current assets
Cash and cash equivalents	$	146	$	385		$	—		$	—	$	—	$	234,525		$	—		$	235,056
Accounts receivable		—		10,810			3,371			—		—		572,982			—			587,163
Taxes receivable		—		4,566			—			—		—		70,718			—			75,284
Prepaid expenses		—		453			19			—		—		32,633			—			33,105
Short-term notes receivable from affiliates		—		119,476			—			—		—		122,298			(241,774	)		—
Accounts receivable from affiliates		1,683,740		99,202			879,581			159,132		33,905		6,372,657			(9,228,217	)		—
Other current assets		—		643			196			93		—		119,177			—			120,109

Total current assets		1,683,886		235,535			883,167			159,225		33,905		7,524,990			(9,469,991	)		1,050,717

Property and equipment, at cost		—		2,737,764			75,001			—		—		12,693,229			—			15,505,994
Accumulated depreciation		—		(232,621	)		(54,599	)		—		—		(3,117,369	)		—			(3,404,589	)

Property and equipment, net		—		2,505,143			20,402			—		—		9,575,860			—			12,101,405

Notes receivable from affiliates		3,842,062		675,000			—			2,336,527		572,107		2,678,192			(10,103,888	)		—
Investments in affiliates		6,969,201		9,101,938			3,450,212			6,605,771		2,141,450		—			(28,268,572	)		—
Other assets		3,230		473			483			18,548		880		281,669			—			305,283

Total assets	$	12,498,379	$	12,518,089		$	4,354,264		$	9,120,071	$	2,748,342	$	20,060,711		$	(47,842,451	)	$	13,457,405

LIABILITIES AND EQUITY
Current liabilities
Short-term notes payables from affiliates	$	72,298	$	50,000		$	—		$	—	$	—	$	119,476		$	(241,774	)	$	—
Accounts payable		—		5,577			985			—		—		429,167			—			435,729
Accrued payroll and related costs		—		2,897			6,518			—		—		99,493			—			108,908
Accounts payable to affiliates		2,079,719		4,166,021			27,341			112,953		34,107		2,808,076			(9,228,217	)		—
Interest payable		1,891		—			—			48,116		4,412		—			—			54,419
Taxes payable		—		10,032			—			—		—		81,158			—			91,190
Other current liabilities		—		—			240			—		—		123,159			—			123,399

Total current liabilities		2,153,908		4,234,527			35,084			161,069		38,519		3,660,529			(9,469,991	)		813,645

Long-term debt		1,274,949		—			—			2,595,320

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