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: September 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 October 31, 2012: Noble Corporation (Switzerland) — 252,720,353

Number of shares outstanding at October 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 September 30, 2012 and December 31, 2011		3
	Consolidated Statement of Income for the three and nine months ended September 30, 2012 and 2011		4
	Consolidated Statement of Comprehensive Income for the three and nine months ended September 30, 2012 and 2011		5
	Consolidated Statement of Cash Flows for the nine months ended September 30, 2012 and 2011		6
	Consolidated Statement of Equity for the nine months ended September 30, 2012 and 2011		7
	Noble Corporation (Noble-Cayman) Financial Statements:
	Consolidated Balance Sheet as of September 30, 2012 and December 31, 2011		8
	Consolidated Statement of Income for the three and nine months ended September 30, 2012 and 2011		9
	Consolidated Statement of Comprehensive Income for the three and nine months ended September 30, 2012 and 2011		10
	Consolidated Statement of Cash Flows for the nine months ended September 30, 2012 and 2011		11
	Consolidated Statement of Equity for the nine months ended September 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)


	September 30, 2012			December 31, 2011
ASSETS
Current assets
Cash and cash equivalents	$	218,467		$	239,196
Accounts receivable		791,408			587,163
Taxes receivable		118,540			75,284
Prepaid expenses		64,644			35,796
Other current assets		111,433			122,173

Total current assets		1,304,492			1,059,612

Property and equipment, at cost		16,637,626			15,540,178
Accumulated depreciation		(3,825,482	)		(3,409,833	)

Property and equipment, net		12,812,144			12,130,345

Other assets		343,770			305,202

Total assets	$	14,460,406		$	13,495,159

LIABILITIES AND EQUITY
Current liabilities
Accounts payable	$	298,363		$	436,006
Accrued payroll and related costs		145,595			117,907
Interest payable		23,851			54,419
Taxes payable		130,551			94,920
Dividends payable		99,582			—
Other current liabilities		144,267			123,928

Total current liabilities		842,209			827,180

Long-term debt		4,639,429			4,071,964
Deferred income taxes		235,851			242,791
Other liabilities		353,595			255,372

Total liabilities		6,071,084			5,397,307

Commitments and contingencies
Shareholders’ equity
Shares; 253,299 and 252,639 shares outstanding		709,993			766,595
Treasury shares, at cost; 586 and 287 shares		(20,986	)		(10,553	)
Additional paid-in capital		75,696			48,356
Retained earnings		6,938,434			6,676,444
Accumulated other comprehensive loss		(72,077	)		(74,321	)

Total shareholders’ equity		7,631,060			7,406,521
Noncontrolling interests		758,262			691,331

Total equity		8,389,322			8,097,852

Total liabilities and equity	$	14,460,406		$	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 September 30,						Nine Months Ended September 30,
	2012			2011			2012			2011
Operating revenues
Contract drilling services	$	833,212		$	704,892		$	2,427,759		$	1,837,047
Reimbursables		28,137			17,438			94,090			63,851
Labor contract drilling services		22,667			15,564			58,538			43,123
Other		16			8			258			766

		884,032			737,902			2,580,645			1,944,787

Operating costs and expenses
Contract drilling services		449,125			358,547			1,292,638			1,001,638
Reimbursables		21,047			13,971			76,618			49,797
Labor contract drilling services		12,991			8,053			34,070			25,326
Depreciation and amortization		195,087			166,213			549,779			487,454
Selling, general and administrative		26,858			27,536			75,388			72,883
Loss on impairment		—			—			18,345			—
Gain on contract settlements/extinguishments, net		—			—			(33,255	)		(21,202	)

		705,108			574,320			2,013,583			1,615,896

Operating income		178,924			163,582			567,062			328,891

Other income (expense)
Interest expense, net of amount capitalized		(25,635	)		(11,530	)		(56,783	)		(45,400	)
Interest income and other, net		1,553			1,117			4,526			3,175

Income before income taxes		154,842			153,169			514,805			286,666
Income tax provision		(25,162	)		(17,614	)		(93,107	)		(42,481	)

Net income		129,680			135,555			421,698			244,185
Net income attributable to noncontrolling interests		(14,906	)		(238	)		(26,931	)		(290	)

Net income attributable to Noble Corporation	$	114,774		$	135,317		$	394,767		$	243,895

Net income per share
Basic	$	0.45		$	0.53		$	1.55		$	0.96
Diluted	$	0.45		$	0.53		$	1.55		$	0.96

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 September 30,						Nine Months Ended September 30,
	2012			2011			2012			2011
Net income	$	129,680		$	135,555		$	421,698		$	244,185

Other comprehensive income (loss), net of tax
Foreign currency translation adjustments		2,033			(4,929	)		(4,994	)		(547	)
Gain (loss) on foreign currency forward contracts		—			(9,654	)		3,061			(7,141	)
Loss on interest rate swaps		—			—			—			(366	)
Amortization of deferred pension plan amounts (net of tax provision of $790 and $356 for the three months ended September 30, 2012 and 2011, respectively, and $2,157 and $1,061 for the nine months ended September 30, 2012 and 2011, respectively)		1,351			687			4,177			2,062

Other comprehensive income/(loss), net		3,384			(13,896	)		2,244			(5,992	)

Net comprehensive income attributable to noncontrolling interests		(14,906	)		(238	)		(26,931	)		(290	)

Comprehensive income attributable to Noble Corporation	$	118,158		$	121,421		$	397,011		$	237,903

See accompanying notes to the unaudited consolidated financial statements.

NOBLE CORPORATION (NOBLE-SWISS) AND SUBSIDIARIES

CONSOLIDATED STATEMENT OF CASH FLOWS

(In thousands)

(Unaudited)


	Nine Months Ended September 30,
	2012			2011
Cash flows from operating activities
Net income	$	421,698		$	244,185
Adjustments to reconcile net income to net cash from operating activities:
Depreciation and amortization		549,779			487,454
Loss on impairment		18,345			—
Gain on contract extinguishments, net		—			(21,202	)
Deferred income taxes		(16,090	)		(34,549	)
Amortization of share-based compensation		28,782			26,857
Net change in other assets and liabilities		(71,010	)		(243,715	)

Net cash from operating activities		931,504			459,030

Cash flows from investing activities
Capital expenditures		(1,247,139	)		(1,972,572	)
Change in accrued capital expenditures		(195,044	)		(48,782	)
Refund from contract extinguishments		—			18,642

Net cash from investing activities		(1,442,183	)		(2,002,712	)

Cash flows from financing activities
Change in bank credit facilities, net		(630,000	)		675,000
Proceeds from issuance of senior notes, net of debt issuance costs		1,186,636			1,087,833
Contributions from joint venture partners		40,000			481,000
Payments of joint venture debt		—			(693,494	)
Settlement of interest rate swaps		—			(29,032	)
Par value reduction/dividend payments		(105,092	)		(114,453	)
Financing costs on credit facilities		(5,014	)		(2,835	)
Proceeds from employee stock transactions		13,853			9,018
Repurchases of employee shares surrendered for taxes		(10,433	)		(10,211	)

Net cash from financing activities		489,950			1,402,826

Net change in cash and cash equivalents		(20,729	)		(140,856	)
Cash and cash equivalents, beginning of period		239,196			337,871

Cash and cash equivalents, end of period	$	218,467		$	197,015

See accompanying notes to the unaudited consolidated financial statements.

NOBLE CORPORATION (NOBLE-SWISS) AND SUBSIDIARIES

CONSOLIDATED STATEMENT OF EQUITY

(In thousands)

(Unaudited)


	Shares						Additional Paid-in			Retained			Treasury			Accumulated Other 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		—			—			26,857			—			—			—			—		26,857
Issuance of share-based compensation shares		248			844			(837	)		—			—			—			—		7
Exercise of stock options		490			1,629			7,104			—			—			—			—		8,733
Tax benefit of stock options exercised		—			—			278			—			—			—			—		278
Restricted shares forfeited or repurchased for taxes		(319	)		(1,107	)		1,107			—			(10,211	)		—			—		(10,211	)
Retirement of treasury shares		(10,116	)		(33,035	)					(340,612	)		373,647			—			—		—
Settlement of FIN48 provision		—			—						15,658			—			—			—		15,658
Net income		—			—			—			243,895			—			—			290		244,185
Par value reduction payments		—			(89,948	)		(24,505	)		—			—			—			—		(114,453	)
Equity contribution by joint venture partner		—			—			—			—			—			—			518,973		518,973
Other comprehensive loss, net		—			—			—			—			—			(5,992	)		—		(5,992	)

Balance at September 30, 2011		252,718		$	796,067		$	49,010		$	6,549,441		$	(10,531	)	$	(56,212	)	$	643,894	$	7,971,669

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		—			—			28,782			—			—			—			—		28,782
Issuance of share-based compensation shares		428			1,284			(1,276	)		—			—			—			—		8
Exercise of stock options		606			1,722			10,949			—			—			—			—		12,671
Tax benefit of stock options exercised		—			—			1,174			—			—			—			—		1,174
Restricted shares forfeited or repurchased for taxes		(374	)		(1,138	)		1,138			—			(10,433	)		—			—		(10,433	)
Net income		—			—			—			394,767			—			—			26,931		421,698
Equity contribution by joint venture partner		—			—			—			—			—			—			40,000		40,000
Par value reduction/dividend payments		—			(58,470	)		(13,427	)		(33,195	)		—			—			—		(105,092	)
Dividends payable		—			—			—			(99,582	)		—			—			—		(99,582	)
Other comprehensive income, net		—			—			—			—			—			2,244			—		2,244

Balance at September 30, 2012		253,299		$	709,993		$	75,696		$	6,938,434		$	(20,986	)	$	(72,077	)	$	758,262	$	8,389,322

See accompanying notes to the unaudited consolidated financial statements.

NOBLE CORPORATION (NOBLE-CAYMAN) AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEET

(In thousands)

(Unaudited)


	September 30, 2012			December 31, 2011
ASSETS
Current assets
Cash and cash equivalents	$	213,681		$	235,056
Accounts receivable		791,408			587,163
Taxes receivable		118,354			75,284
Prepaid expenses		61,536			33,105
Other current assets		111,433			120,109

Total current assets		1,296,412			1,050,717

Property and equipment, at cost		16,601,975			15,505,994
Accumulated depreciation		(3,818,729	)		(3,404,589	)

Property and equipment, net		12,783,246			12,101,405

Other assets		343,852			305,283

Total assets	$	14,423,510		$	13,457,405

LIABILITIES AND EQUITY
Current liabilities
Accounts payable	$	297,969		$	435,729
Accrued payroll and related costs		134,010			108,908
Interest payable		23,851			54,419
Taxes payable		126,112			91,190
Other current liabilities		144,267			123,399

Total current liabilities		726,209			813,645

Long-term debt		4,639,429			4,071,964
Deferred income taxes		235,851			242,791
Other liabilities		353,595			255,372

Total liabilities		5,955,084			5,383,772

Commitments and contingencies

Shareholder equity
Ordinary shares; 261,246 shares outstanding		26,125			26,125
Capital in excess of par value		466,028			450,616
Retained earnings		7,290,088			6,979,882
Accumulated other comprehensive loss		(72,077	)		(74,321	)

Total shareholder equity		7,710,164			7,382,302
Noncontrolling interests		758,262			691,331

Total equity		8,468,426			8,073,633

Total liabilities and equity	$	14,423,510		$	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 September 30,						Nine Months Ended September 30,
	2012			2011			2012			2011
Operating revenues
Contract drilling services	$	833,212		$	704,892		$	2,427,759		$	1,837,047
Reimbursables		28,137			17,438			94,090			63,851
Labor contract drilling services		22,667			15,564			58,538			43,123
Other		16			8			258			766

		884,032			737,902			2,580,645			1,944,787

Operating costs and expenses
Contract drilling services		444,225			349,626			1,280,969			980,662
Reimbursables		21,047			13,971			76,618			49,797
Labor contract drilling services		12,991			8,053			34,070			25,326
Depreciation and amortization		194,595			165,719			548,271			486,010
Selling, general and administrative		15,487			17,637			44,964			48,810
Loss on impairment		—			—			18,345			—
Gain on contract settlements/extinguishments, net		—			—			(33,255	)		(21,202	)

		688,345			555,006			1,969,982			1,569,403

Operating income		195,687			182,896			610,663			375,384

Other income (expense)
Interest expense, net of amount capitalized		(25,635	)		(11,530	)		(56,783	)		(45,400	)
Interest income and other, net		1,361			1,884			4,368			3,978

Income before income taxes		171,413			173,250			558,248			333,962
Income tax provision		(24,784	)		(17,298	)		(91,972	)		(41,480	)

Net income		146,629			155,952			466,276			292,482
Net income attributable to noncontrolling interests		(14,906	)		(238	)		(26,931	)		(290	)

Net income attributable to Noble Corporation	$	131,723		$	155,714		$	439,345		$	292,192

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 September 30,						Nine Months Ended September 30,
	2012			2011			2012			2011
Net income	$	146,629		$	155,952		$	466,276		$	292,482

Other comprehensive income (loss), net of tax
Foreign currency translation adjustments		2,033			(4,929	)		(4,994	)		(547	)
Gain (loss) on foreign currency forward contracts		—			(9,654	)		3,061			(7,141	)
Loss on interest rate swaps		—			—			—			(366	)
Amortization of deferred pension plan amounts (net of tax provision of $790 and $356 for the three months ended September 30, 2012 and 2011, respectively, and $2,157 and $1,061 for the nine months ended September 30, 2012 and 2011, respectively)		1,351			687			4,177			2,062

Other comprehensive income/(loss), net		3,384			(13,896	)		2,244			(5,992	)

Net comprehensive income attributable to noncontrolling interests		(14,906	)		(238	)		(26,931	)		(290	)

Comprehensive income attributable to Noble Corporation	$	135,107		$	141,818		$	441,589		$	286,200

See accompanying notes to the unaudited consolidated financial statements.

NOBLE CORPORATION (NOBLE-CAYMAN) AND SUBSIDIARIES

CONSOLIDATED STATEMENT OF CASH FLOWS

(In thousands)

(Unaudited)


	Nine Months Ended September 30,
	2012			2011
Cash flows from operating activities
Net income	$	466,276		$	292,482
Adjustments to reconcile net income to net cash from operating activities:
Depreciation and amortization		548,271			486,010
Loss on impairment		18,345			—
Gain on contract extinguishments, net		—			(21,202	)
Deferred income taxes		(16,090	)		(34,549	)
Capital contribution by parent- shared-based compensation		15,412			15,150
Net change in other assets and liabilities		(75,357	)		(250,433	)

Net cash from operating activities		956,857			487,458

Cash flows from investing activities
Capital expenditures		(1,245,671	)		(1,967,618	)
Change in accrued capital expenditures		(195,044	)		(48,782	)
Refund from contract extinguishments		—			18,642

Net cash from investing activities		(1,440,715	)		(1,997,758	)

Cash flows from financing activities
Change in bank credit facilities, net		(630,000	)		675,000
Proceeds from issuance of senior notes, net of debt issuance costs		1,186,636			1,087,833
Contributions from joint venture partners		40,000			481,000
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		(129,139	)		(149,566	)

Net cash from financing activities		462,483			1,368,906

Net change in cash and cash equivalents		(21,375	)		(141,394	)
Cash and cash equivalents, beginning of period		235,056			333,399

Cash and cash equivalents, end of period	$	213,681		$	192,005

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		—		—		—		292,192			—			290		292,482
Capital contributions by parent— share-based compensation		—		—		15,150		—			—			—		15,150
Distributions to parent		—		—		—		(149,566	)		—			—		(149,566	)
Settlement of FIN48 provision		—		—		15,658		—			—			—		15,658
Noncontrolling interest contributions		—		—		—		—			—			518,973		518,973
Other comprehensive income, net		—		—		—		—			(5,992	)		—		(5,992	)

Balance at September 30, 2011		261,246	$	26,125	$	447,040	$	6,886,513		$	(56,212	)	$	643,894	$	7,947,360

Balance at December 31, 2011		261,246	$	26,125	$	450,616	$	6,979,882		$	(74,321	)	$	691,331	$	8,073,633
Net income		—		—		—		439,345			—			26,931		466,276
Capital contributions by parent— share-based compensation		—		—		15,412		—			—			—		15,412
Distributions to parent		—		—		—		(129,139	)		—			—		(129,139	)
Noncontrolling interest contributions		—		—		—		—			—			40,000		40,000
Other comprehensive loss, net		—		—		—		—			2,244			—		2,244

Balance at September 30, 2012		261,246	$	26,125	$	466,028	$	7,290,088		$	(72,077	)	$	758,262	$	8,468,426

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 and Alaska, Mexico, Brazil, the North Sea, the Mediterranean, West Africa, the Middle East, India, Australia 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.

Note 2 — Consolidated Joint Ventures

We own 50 percent interests 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 September 30, 2012, the combined carrying amount of the drillships was $1.5 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 September 30, 2012 and December 31, 2011:


	September 30, 2012		December 31, 2011
Shares outstanding and trading		252,713		252,352
Treasury shares		586		287

Total shares outstanding		253,299		252,639
Treasury shares held for share-based compensation plans		12,851		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 September 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 nine months ended September 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 aggregating $0.52 per share to be paid in four equal installments the first of which was paid in August 2012, with the remaining three installments to be paid in November 2012, February 2013 and May 2013, respectively. These dividends will require us to make cash payments of approximately $33 million during the fourth quarter of 2012, based on the number of shares currently outstanding. As of September 30, 2012, we had $100 million of dividends payable outstanding on this obligation. 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						Nine months ended
	September 30,						September 30,
	2012			2011			2012			2011
Allocation of net income
Basic
Net income attributable to Noble Corporation	$	114,774		$	135,317		$	394,767		$	243,895
Earnings allocated to unvested share-based payment awards		(1,192	)		(1,415	)		(4,008	)		(2,487	)

Net income to common shareholders—basic	$	113,582		$	133,902		$	390,759		$	241,408

Diluted
Net income attributable to Noble Corporation	$	114,774		$	135,317		$	394,767		$	243,895
Earnings allocated to unvested share-based payment awards		(1,190	)		(1,412	)		(4,002	)		(2,481	)

Net income to common shareholders—diluted	$	113,584		$	133,905		$	390,765		$	241,414

Weighted average shares outstanding—basic		252,657			251,580			252,339			251,327
Incremental shares issuable from assumed exercise of stock options		317			449			385			640

Weighted average shares outstanding—diluted		252,974			252,029			252,724			251,967

Weighted average unvested share-based payment awards		2,651			2,658			2,588			2,589

Earnings per share
Basic	$	0.45		$	0.53		$	1.55		$	0.96
Diluted	$	0.45		$	0.53		$	1.55		$	0.96

Only those items having a dilutive impact on our basic earnings per share are included in diluted earnings per share. At both September 30, 2012 and 2011, stock options totaling approximately 1.1 million were excluded from the diluted earnings per share as they were not dilutive.

Note 4 — Property and Equipment

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


	September 30,		December 31,
	2012		2011
Drilling equipment and facilities	$	13,449,855	$	10,974,943
Construction in progress		2,991,487		4,367,750
Other		196,284		197,485

	$	16,637,626	$	15,540,178

Capital expenditures, including capitalized interest, totaled $1.2 billion and $2.0 billion for the nine months ended September 30, 2012 and 2011, respectively. Capital expenditures for the first nine months of 2012 consisted of the following:

•

$441 million for newbuild construction;

•

$548 million for major projects, including $50 million in subsea related expenditures and $29 million to upgrade two drillships currently operating in Brazil;

•

$150 million for other capitalized expenditures, including upgrades and replacements to drilling equipment, that generally have a useful life ranging from 3 to 5 years; and

•

$108 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 $31 million and $108 million for the three and nine months ended September 30, 2012, respectively, as compared to $32 million and $88 million for the three and nine months ended September 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 nine months ended September 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 nine months ended September 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.

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, and therefore, incurred a non-cash charge of approximately $32.6 million related to the termination of outstanding shipyard contracts. The substitution was completed during the fourth quarter of 2012.

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 demanded 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 contained a “hell or high water” provision requiring payment, and we believe we satisfied our obligations under the charter. Outstanding receivables related to this charter totaled $35 million as of September 30, 2012. We recently received a favorable summary judgment ruling upholding the charter agreement and requiring BP to pay us the outstanding amounts, however, this matter has not been finally resolved because the ruling allows BP the opportunity to make a damages claim under the charter agreement. These receivables continue to be classified as long-term and are included in “Other assets” on our Consolidated Balance Sheet. 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 September 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. The disputed amount relates to lost revenues 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 September 30, 2012 and December 31, 2011:


	September 30, 2012		December 31, 2011
Wholly-owned debt instruments:
5.875% Senior Notes due 2013	$	299,975	$	299,949
7.375% Senior Notes due 2014		249,760		249,647
3.45% Senior Notes due 2015		350,000		350,000
3.05% Senior Notes due 2016		299,948		299,938
2.50% Senior Notes due 2017		299,844		—
7.50% Senior Notes due 2019		201,695		201,695
4.90% Senior Notes due 2020		498,870		498,783
4.625% Senior Notes due 2021		399,515		399,480
3.95% Senior Notes due 2022		399,075		—
6.20% Senior Notes due 2040		399,891		399,890
6.05% Senior Notes due 2041		397,605		397,582
5.25% Senior Notes due 2042		498,251		—
Credit facilities		345,000		975,000

Total long-term debt	$	4,639,429	$	4,071,964

During June 2012, we replaced our $575 million credit facility scheduled to mature in 2013, with a new $1.2 billion credit facility, which matures in 2017. The new facility, combined with our existing $600 million credit facility that matures in 2015, 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 September 30, 2012, our ratio of debt to total tangible capitalization was less than 0.36. We were in compliance with all covenants under the Credit Facilities as of September 30, 2012.

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

During September 2012, we established a commercial paper program, which will allow us to issue up to $1.8 billion in unsecured commercial paper notes. Amounts issued under the commercial paper program are supported by the unused committed capacity under our Credit Facilities and, as such, are classified as long-term on our balance sheet. Subsequent to September 30, 2012, we began issuing notes under the program and had outstanding notes totaling $328 million as of October 31, 2012.

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 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.

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 continue to report the balance as long-term at September 30, 2012.

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 September 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 September 30, 2012 and December 31, 2011.


	September 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	$	299,975	$	308,949	$	299,949	$	317,586
7.375% Senior Notes due 2014		249,760		272,063		249,647		278,966
3.45% Senior Notes due 2015		350,000		369,921		350,000		363,571
3.05% Senior Notes due 2016		299,948		314,142		299,938		306,057
2.50% Senior Notes due 2017		299,844		309,118		—		—
7.50% Senior Notes due 2019		201,695		249,768		201,695		248,623
4.90% Senior Notes due 2020		498,870		559,783		498,783		531,437
4.625% Senior Notes due 2021		399,515		440,799		399,480		416,847
3.95% Senior Notes due 2022		399,075		420,137		—		—
6.20% Senior Notes due 2040		399,891		466,331		399,890		450,017
6.05% Senior Notes due 2041		397,605		461,733		397,582		443,308
5.25% Senior Notes due 2042		498,251		533,637		—		—
Credit Facilities		345,000		345,000		975,000		975,000

Total long-term debt	$	4,639,429	$	5,051,381	$	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 September 30, 2012, the reserves for uncertain tax positions totaled $124 million (net of related tax benefits of $10 million). If the September 30, 2012 reserves are not realized, the provision for income taxes would be reduced by $124 million in future periods.

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)

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.

Note 10 — Employee Benefit Plans

Pension costs include the following components:


	Three Months Ended September 30,
	2012						2011
	Non-U.S.			U.S.			Non-U.S.			U.S.
Service cost	$	1,072		$	2,431		$	1,141		$	2,152
Interest cost		1,317			2,196			1,433			2,143
Return on plan assets		(1,313	)		(2,793	)		(1,449	)		(2,768	)
Amortization of prior service cost		—			57			—			57
Amortization of transition obligation		—			—			19			—
Recognized net actuarial loss		199			1,885			123			844

Net pension expense	$	1,275		$	3,776		$	1,267		$	2,428


	Nine Months Ended September 30,
	2012						2011
	Non-U.S.			U.S.			Non-U.S.			U.S.
Service cost	$	3,306		$	7,237		$	3,387		$	6,456
Interest cost		4,025			6,556			4,256			6,428
Return on plan assets		(4,001	)		(8,379	)		(4,306	)		(8,304	)
Amortization of prior service cost		—			171			—			170
Amortization of transition obligation		—			—			56			—
Recognized net actuarial loss		600			5,563			366			2,531

Net pension expense	$	3,930		$	11,148		$	3,759		$	7,281

During the three and nine months ended September 30, 2012, we made contributions to our pension plans totaling $3 million and $13 million, respectively. We expect the funding to our non-U.S. and U.S. plans in 2012, subject to applicable law, to be approximately $17 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 nine months ended September 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.

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)

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 September 30, 2012, we had no outstanding derivative contracts.

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					Nine Months Ended
	September 30,					September 30,
	2012		2011			2012			2011
Net unrealized gain/(loss) at beginning of period	$	—	$	4,117		$	(3,061	)	$	1,970
Activity during period:
Settlement of foreign currency forward contracts during the period		—		(2,054	)		3,061			(1,604	)
Settlement of interest rate swaps during the period		—		—			—			(366	)
Net unrealized loss on outstanding foreign currency forward contracts		—		(7,600	)		—			(5,537	)

Net unrealized gain/(loss) at end of period	$	—	$	(5,537	)	$	—		$	(5,537	)

Financial Statement Presentation

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


		Estimated fair value
	Balance sheet classification	September 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 September 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	$	—	$	(7,600	)	$	—	$	(2,054	)	$	—	$	—

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	$	—	$	(5,537	)	$	3,061	$	(1,604	)	$	—	$	—
Interest rate swaps		—		—			—		(366	)		—		—
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:


	September 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	$	5,745	$	5,745	$	—	$	—	$	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, and ExxonMobil 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 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. The suit is proceeding and is currently in the discovery phase. 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 September 30, 2012, there were 29 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. A conference has been scheduled in December 2012 to discuss these items. 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. During the third quarter, a U.S. subsidiary of Frontier concluded its audit with the IRS for its 2007 and 2008 tax returns, resulting in no change to income tax expense. 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 $326 million (including interest and penalties). During 2011, we received from the Regional Chamber of the Federal Tax Court adverse decisions with respect to approximately $6 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 $91 million attributable to income, 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 $887,000) 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 $117,000) 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 $3.0 billion at September 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 2 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.

Under the Nigerian Industrial Training Fund Act of 2004, as amended, (the “Act”), Nigerian companies with five or more employees must contribute annually one percent of their payroll to the Industrial Training Fund (“ITF”) established under the Act to be used for the training of Nigerian nationals with a view towards generating a pool of indigenously trained manpower. We have not paid this amount on our expatriate workers employed by our non-Nigerian employment entity in the past as we did not believe the contribution obligation was applicable to them. In October 2012, we received a demand from the ITF for payments going back to 2004 and associated penalties in respect of these expatriate employees. We do not believe that we owe the amount claimed and that, in the event we were to have any liability, it would be for an immaterial amount. We continue to investigate the matter and are also engaged in discussions with the ITF to resolve the issue.

Note 14 — Segment and Related Information

We report our contract drilling operations as a single reportable segment, Contract Drilling Services, which reflects 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, Australia 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 nine months ended September 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 September 30,
	2012									2011
	Contract									Contract
	Drilling									Drilling
	Services			Other			Total			Services			Other			Total
Revenues from external customers	$	860,315		$	23,717		$	884,032		$	719,546		$	18,356		$	737,902
Depreciation and amortization		191,638			3,449			195,087			162,837			3,376			166,213
Segment operating income		173,285			5,639			178,924			159,588			3,994			163,582
Interest expense, net of amount capitalized		(121	)		(25,514	)		(25,635	)		(122	)		(11,408	)		(11,530	)
Income tax (provision) / benefit		(28,307	)		3,145			(25,162	)		(18,380	)		766			(17,614	)
Segment profit / (loss)		130,983			(16,209	)		114,774			141,199			(5,882	)		135,317
Total assets (at end of period)		13,983,223			477,183			14,460,406			12,472,018			479,515			12,951,533


	Noble-Cayman
	Three Months Ended September 30,
	2012									2011
	Contract									Contract
	Drilling									Drilling
	Services			Other			Total			Services			Other			Total
Revenues from external customers	$	860,315		$	23,717		$	884,032		$	719,546		$	18,356		$	737,902
Depreciation and amortization		191,638			2,957			194,595			162,837			2,882			165,719
Segment operating income		178,185			17,502			195,687			168,509			14,387			182,896
Interest expense, net of amount capitalized		(121	)		(25,514	)		(25,635	)		(122	)		(11,408	)		(11,530	)
Income tax (provision) / benefit		(28,307	)		3,523			(24,784	)		(18,380	)		1,082			(17,298	)
Segment profit / (loss)		135,883			(4,160	)		131,723			150,120			5,594			155,714
Total assets (at end of period)		13,983,223			440,287			14,423,510			12,472,018			439,780			12,911,798

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
	Nine Months Ended September 30,
	2012									2011
	Contract									Contract
	Drilling									Drilling
	Services			Other			Total			Services			Other			Total
Revenues from external customers	$	2,519,930		$	60,715		$	2,580,645		$	1,897,045		$	47,742		$	1,944,787
Depreciation and amortization		539,698			10,081			549,779			477,568			9,886			487,454
Segment operating income		559,713			7,349			567,062			321,613			7,278			328,891
Interest expense, net of amount capitalized		(315	)		(56,468	)		(56,783	)		(1,890	)		(43,510	)		(45,400	)
Income tax (provision) / benefit		(102,005	)		8,898			(93,107	)		(48,661	)		6,180			(42,481	)
Segment profit / (loss)		434,561			(39,794	)		394,767			272,488			(28,593	)		243,895
Total assets (at end of period)		13,983,223			477,183			14,460,406			12,472,018			479,515			12,951,533


	Noble-Cayman
	Nine Months Ended September 30,
	2012									2011
	Contract									Contract
	Drilling									Drilling
	Services			Other			Total			Services			Other			Total
Revenues from external customers	$	2,519,930		$	60,715		$	2,580,645		$	1,897,045		$	47,742		$	1,944,787
Depreciation and amortization		539,698			8,573			548,271			477,568			8,442			486,010
Segment operating income		571,382			39,281			610,663			342,589			32,795			375,384
Interest expense, net of amount capitalized		(315	)		(56,468	)		(56,783	)		(1,890	)		(43,510	)		(45,400	)
Income tax (provision) / benefit		(102,005	)		10,033			(91,972	)		(48,661	)		7,181			(41,480	)
Segment profit / (loss)		446,230			(6,885	)		439,345			293,464			(1,272	)		292,192
Total assets (at end of period)		13,983,223			440,287			14,423,510			12,472,018			439,780			12,911,798

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. In December 2011, the FASB issued ASU No. 2011-12, which defers only those changes in ASU 2011-05 that relate to the presentation of reclassification adjustments. 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
	Nine months ended						Nine months ended
	September 30,						September 30,
	2012			2011			2012			2011
Accounts receivable	$	(163,051	)	$	(213,747	)	$	(163,051	)	$	(213,747	)
Other current assets		(58,303	)		(23,900	)		(59,764	)		(20,578	)
Other assets		(25,543	)		(37,171	)		(25,546	)		(39,649	)
Accounts payable		29,470			(23,744	)		29,353			(23,654	)
Other current liabilities		76,035			21,281			79,436			13,655
Other liabilities		70,382			33,566			64,215			33,540

	$	(71,010	)	$	(243,715	)	$	(75,357	)	$	(250,433	)

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 September 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

September 30, 2012

(in thousands)


	Noble- Cayman		NHC and NDH Combined			NDC			NHIL		NDS6		Other Non-guarantor Subsidiaries of Noble			Consolidating Adjustments			Total
ASSETS
Current assets
Cash and cash equivalents	$	—	$	435		$	—		$	19	$	—	$	213,227		$	—		$	213,681
Accounts receivable		—		10,560			1,584			—		—		779,264			—			791,408
Taxes receivable		—		25,502			—			—		—		92,852			—			118,354
Prepaid expenses		—		444			20			—		—		61,072			—			61,536
Short-term notes receivable from affiliates		—		119,476			—			—		—		252,138			(371,614	)		—
Accounts receivable from affiliates		852,466		153,146			970,918			502,287		42,675		5,570,469			(8,091,961	)		—
Other current assets		375		640			196			—		—		110,222			—			111,433

Total current assets		852,841		310,203			972,718			502,306		42,675		7,079,244			(8,463,575	)		1,296,412

Property and equipment, at cost		—		2,616,145			75,591			—		—		13,910,239			—			16,601,975
Accumulated depreciation		—		(300,637	)		(57,520	)		—		—		(3,460,572	)		—			(3,818,729	)

Property and equipment, net		—		2,315,508			18,071			—		—		10,449,667			—			12,783,246

Notes receivable from affiliates		3,816,463		1,206,000			—			3,524,814		479,107		2,171,875			(11,198,259	)		—
Investments in affiliates		7,484,253		9,078,691			3,412,070			7,188,893		2,348,479		—			(29,512,386	)		—
Other assets		6,296		535			654			26,740		790		308,837			—			343,852

Total assets	$	12,159,853	$	12,910,937		$	4,403,513		$	11,242,753	$	2,871,051	$	20,009,623		$	(49,174,220	)	$	14,423,510

LIABILITIES AND EQUITY
Current liabilities
Short-term notes payables from affiliates	$	90,314	$	51,054		$	110,770		$	—	$	—	$	119,476		$	(371,614	)	$	—
Accounts payable		—		2,720			644			—		—		294,605			—			297,969
Accrued payroll and related costs		—		5,478			7,857			—		—		120,675			—			134,010
Accounts payable to affiliates		848,091		4,628,552			4,593			152,009		68,819		2,389,897			(8,091,961	)		—
Interest payable		6,093		—			—			17,128		630		—			—			23,851
Taxes payable		—		9,007			—			—		—		117,105			—			126,112
Other current liabilities		—		—			240			—		—		144,027			—			144,267

Total current liabilities		944,498		4,696,811			124,104			169,137		69,449		3,185,785			(8,463,575	)		726,209

Long-term debt		644,975		—			—			3,792,759		201,695		—			—			4,639,429
Notes payable to affiliates		2,840,287		648,475			—			975,000		1,342,000		5,392,497			(11,198,259	)		—
Deferred income taxes		—		—			15,731			—		—		220,120			—			235,851
Other liabilities		19,929		17,475			—			—		—		316,191			—			353,595

Total liabilities		4,449,689		5,362,761			139,835			4,936,896		1,613,144		9,114,593			(19,661,834	)		5,955,084

Commitments and contingencies
Total shareholder equity		7,710,164		7,548,176			4,263,678			6,305,857		1,257,907		10,136,768			(29,512,386	)		7,710,164
Noncontrolling interest		—		—			—			—		—		758,262			—			758,262

Total equity		7,710,164		7,548,176			4,263,678			6,305,857		1,257,907		10,895,030			(29,512,386	)		8,468,426

Total liabilities and equity	$	12,159,853	$	12,910,937		$	4,403,513		$	11,242,753	$	2,871,051	$	20,009,623		$	(49,174,220	)	$	14,423,510

NOBLE CORPORATION (NOBLE-CAYMAN) AND SUBSIDIARIES

CONDENSED CONSOLIDATING BALANCE SHEET

December 31, 2011

(in thousands)


	Noble- Cayman		NHC and NDH Combined			NDC			NHIL		NDS6		Other Non-guarantor Subsidiaries of Noble			Consolidating 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		201,695		—			—			4,071,964
Notes payable to affiliates		1,667,291		1,147,500			85,000			975,000		811,000		5,418,097			(10,103,888	)		—
Deferred income taxes		—		—			15,731			—		—		227,060			—			242,791
Other liabilities		19,929

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