Table of Contents

 

 

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, 2013

OR

 

¨	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) 949-8066

 

 

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, 2013: Noble Corporation (Switzerland) — 253,368,874

Number of shares outstanding at July 31, 2013: 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.

 

 

 

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Table of Contents

TABLE OF CONTENTS

 

		Page
PART I FINANCIAL INFORMATION
Item 1 Financial Statements
Noble Corporation (Noble-Swiss) Financial Statements:
Consolidated Balance Sheets as of June 30, 2013 and December 31, 2012			3
Consolidated Statements of Income for the three and six months ended June 30, 2013 and 2012			4
Consolidated Statements of Comprehensive Income for the three and six months ended June  30, 2013 and 2012			5
Consolidated Statements of Cash Flows for the six months ended June 30, 2013 and 2012			6
Consolidated Statements of Equity for the six months ended June 30, 2013 and 2012			7
Noble Corporation (Noble-Cayman) Financial Statements:
Consolidated Balance Sheets as of June 30, 2013 and December 31, 2012			8
Consolidated Statements of Income for the three and six months ended June 30, 2013 and 2012			9
Consolidated Statements of Comprehensive Income for the three and six months ended June  30, 2013 and 2012			10
Consolidated Statements of Cash Flows for the six months ended June 30, 2013 and 2012			11
Consolidated Statements of Equity for the six months ended June 30, 2013 and 2012			12
Notes to Combined Consolidated Financial Statements			13
Item 2 Management’s Discussion and Analysis of Financial Condition and Results of Operations			39
Item 3 Quantitative and Qualitative Disclosures About Market Risk			53
Item 4 Controls and Procedures			55
PART II OTHER INFORMATION
Item 1 Legal Proceedings			55
Item 1A Risk Factors			55
Item 2 Unregistered Sales of Equity Securities and Use of Proceeds			56
Item 6 Exhibits			56
SIGNATURES			57
Index to Exhibits			58

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.

 

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PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

NOBLE CORPORATION (NOBLE-SWISS) AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(In thousands)

(Unaudited)

 

		June 30,				December 31,
		2013				2012
ASSETS
Current assets
Cash and cash equivalents		$	166,207			$	282,092
Accounts receivable			834,576				743,673
Taxes receivable			148,281				112,423
Prepaid expenses			71,824				43,962
Other current assets			123,338				123,175
Total current assets			1,344,226				1,305,325
Property and equipment, at cost			18,198,504				16,971,666
Accumulated depreciation			(4,354,168	)			(3,945,694	)
Property and equipment, net			13,844,336				13,025,972
Other assets			277,524				276,477
Total assets		$	15,466,086			$	14,607,774
LIABILITIES AND EQUITY
Current liabilities
Accounts payable		$	344,468			$	350,147
Accrued payroll and related costs			126,267				132,728
Interest payable			67,255				68,436
Taxes payable			123,234				135,257
Dividends payable			256,420				66,369
Other current liabilities			168,946				158,512
Total current liabilities			1,086,590				911,449
Long-term debt			5,276,304				4,634,375
Deferred income taxes			218,513				226,045
Other liabilities			324,379				347,615
Total liabilities			6,905,786				6,119,484
Commitments and contingencies
Shareholders’ equity
Shares; 254,080 and 253,348 shares outstanding			712,183				710,130
Treasury shares, at cost; 764 and 589 shares			(28,146	)			(21,069	)
Additional paid-in capital			103,878				83,531
Retained earnings			7,135,980				7,066,023
Accumulated other comprehensive loss			(116,429	)			(115,449	)
Total shareholders’ equity			7,807,466				7,723,166
Noncontrolling interests			752,834				765,124
Total equity			8,560,300				8,488,290
Total liabilities and equity		$	15,466,086			$	14,607,774

See accompanying notes to the unaudited consolidated financial statements.

 

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NOBLE CORPORATION (NOBLE-SWISS) AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME

(In thousands, except per share amounts)

(Unaudited)

 

		Three Months Ended								Six Months Ended
		June 30,								June 30,
		2013				2012				2013				2012
Operating revenues
Contract drilling services		$	975,455			$	848,237			$	1,904,192			$	1,594,547
Reimbursables			28,260				30,812				49,434				65,953
Labor contract drilling services			13,603				19,863				34,657				35,871
Other			67				11				77				242
			1,017,385				898,923				1,988,360				1,696,613
Operating costs and expenses
Contract drilling services			491,983				423,502				976,070				843,513
Reimbursables			22,701				24,970				37,623				55,571
Labor contract drilling services			9,402				11,847				21,651				21,079
Depreciation and amortization			212,589				183,615				418,745				354,692
General and administrative			26,850				25,404				52,420				48,530
Loss on impairment			—				18,345				—				18,345
Gain on contract settlements/extinguishments, net			—				(33,255	)			(1,800	)			(33,255	)
			763,525				654,428				1,504,709				1,308,475
Operating income			253,860				244,495				483,651				388,138
Other income (expense)
Interest expense, net of amount capitalized			(24,665	)			(20,652	)			(51,966	)			(31,148	)
Interest income and other, net			955				1,188				530				2,973
Income before income taxes			230,150				225,031				432,215				359,963
Income tax provision			(36,824	)			(46,356	)			(71,176	)			(67,945	)
Net income			193,326				178,675				361,039				292,018
Net income attributable to noncontrolling interests			(16,706	)			(18,857	)			(34,359	)			(12,025	)
Net income attributable to Noble Corporation		$	176,620			$	159,818			$	326,680			$	279,993
Net income per share
Basic		$	0.69			$	0.63			$	1.28			$	1.10
Diluted		$	0.69			$	0.63			$	1.27			$	1.10

See accompanying notes to the unaudited consolidated financial statements.

 

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NOBLE CORPORATION (NOBLE-SWISS) AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(In thousands)

(Unaudited)

 

		Three Months Ended								Six Months Ended
		June 30,								June 30,
		2013				2012				2013				2012
Net income		$	193,326			$	178,675			$	361,039			$	292,018
Other comprehensive income/(loss), net of tax
Foreign currency translation adjustments			(2,180	)			(6,949	)			477				(7,027	)
Foreign currency forward contracts			(3,529	)			644				(4,731	)			3,061
Amortization of deferred pension plan amounts (net of tax provision of $730 and $647 for the three months ended June 30, 2013 and 2012, respectively, and $1,460 and $1,367 for the six months ended June 30, 2013 and 2012, respectively)			1,632				1,404				3,274				2,826
Other comprehensive loss, net			(4,077	)			(4,901	)			(980	)			(1,140	)
Net comprehensive income attributable to noncontrolling interests			(16,706	)			(18,857	)			(34,359	)			(12,025	)
Comprehensive income attributable to Noble Corporation		$	172,543			$	154,917			$	325,700			$	278,853

See accompanying notes to the unaudited consolidated financial statements.

 

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NOBLE CORPORATION (NOBLE-SWISS) AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

(Unaudited)

 

		Six Months Ended
		June 30,
		2013				2012
Cash flows from operating activities
Net income		$	361,039			$	292,018
Adjustments to reconcile net income to net cash from operating activities:
Depreciation and amortization			418,745				354,692
Loss on impairment			—				18,345
Deferred income taxes			(7,505	)			(7,765	)
Amortization of share-based compensation			20,335				17,840
Net change in other assets and liabilities			(146,549	)			(139,184	)
Net cash from operating activities			646,065				535,946
Cash flows from investing activities
Capital expenditures			(1,244,311	)			(665,140	)
Change in accrued capital expenditures			(39,047	)			(159,134	)
Net cash from investing activities			(1,283,358	)			(824,274	)
Cash flows from financing activities
Net change in borrowings outstanding on bank credit facilities			941,653				(825,000	)
Repayment of long-term debt			(300,000	)			—
Proceeds from issuance of senior notes, net of debt issuance costs			—				1,186,636
Dividends paid to joint venture partner			(46,649	)			—
Contributions from joint venture partner			—				40,000
Financing costs on credit facilities			(1,912	)			(5,014	)
Par value reduction/dividend payments			(66,672	)			(71,897	)
Proceeds from employee stock transactions			2,065				9,465
Repurchases of employee shares surrendered for taxes			(7,077	)			(9,765	)
Net cash from financing activities			521,408				324,425
Net change in cash and cash equivalents			(115,885	)			36,097
Cash and cash equivalents, beginning of period			282,092				239,196
Cash and cash equivalents, end of period		$	166,207			$	275,293

See accompanying notes to the unaudited consolidated financial statements.

 

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NOBLE CORPORATION (NOBLE-SWISS) AND SUBSIDIARIES

CONSOLIDATED STATEMENTS 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, 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 employee stock transactions			—				—				(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
Balance at December 31, 2012			253,348			$	710,130			$	83,531			$	7,066,023			$	(21,069	)		$	(115,449	)		$	765,124			$	8,488,290
Employee related equity activity
Amortization of share-based compensation			—				—				20,335				—				—				—				—				20,335
Issuance of share-based compensation shares			601				1,688				(1,671	)			—				—				—				—				17
Exercise of stock options			131				365				3,161				—				—				—				—				3,526
Tax benefit of employee stock transactions			—				—				(1,478	)			—				—				—				—				(1,478	)
Restricted shares forfeited or repurchased for taxes			—				—				—				—				(7,077	)			—				—				(7,077	)
Net income			—				—				—				326,680				—				—				34,359				361,039
Net change in dividends payable			—				—				—				(256,723	)			—				—				—				(256,723	)
Dividends paid to joint venture partner			—				—				—				—				—				—				(46,649	)			(46,649	)
Other comprehensive loss, net			—				—				—				—				—				(980	)			—				(980	)
Balance at June 30, 2013			254,080			$	712,183			$	103,878			$	7,135,980			$	(28,146	)		$	(116,429	)		$	752,834			$	8,560,300

See accompanying notes to the unaudited consolidated financial statements.

 

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NOBLE CORPORATION (NOBLE-CAYMAN) AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(In thousands)

(Unaudited)

 

		June 30, 2013				December 31, 2012
ASSETS
Current assets
Cash and cash equivalents		$	162,029			$	277,375
Accounts receivable			834,576				743,673
Taxes receivable			148,158				112,310
Prepaid expenses			70,180				41,232
Other current assets			123,336				122,649
Total current assets			1,338,279				1,297,239
Property and equipment, at cost			18,161,913				16,935,147
Accumulated depreciation			(4,346,230	)			(3,938,518	)
Property and equipment, net			13,815,683				12,996,629
Other assets			277,609				276,558
Total assets		$	15,431,571			$	14,570,426
LIABILITIES AND EQUITY
Current liabilities
Accounts payable		$	344,012			$	349,594
Accrued payroll and related costs			117,340				123,936
Interest payable			67,255				68,436
Taxes payable			120,622				130,844
Other current liabilities			168,946				158,499
Total current liabilities			818,175				831,309
Long-term debt			5,276,304				4,634,375
Deferred income taxes			218,513				226,045
Other liabilities			324,379				347,615
Total liabilities			6,637,371				6,039,344
Commitments and contingencies
Shareholders’ equity
Ordinary shares; 261,246 shares outstanding			26,125				26,125
Capital in excess of par value			482,637				470,454
Retained earnings			7,649,033				7,384,828
Accumulated other comprehensive loss			(116,429	)			(115,449	)
Total shareholders’ equity			8,041,366				7,765,958
Noncontrolling interests			752,834				765,124
Total equity			8,794,200				8,531,082
Total liabilities and equity		$	15,431,571			$	14,570,426

See accompanying notes to the unaudited consolidated financial statements.

 

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NOBLE CORPORATION (NOBLE-CAYMAN) AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME

(In thousands)

(Unaudited)

 

		Three Months Ended June 30,								Six Months Ended June 30,
		2013				2012				2013				2012
Operating revenues
Contract drilling services		$	975,455			$	848,237			$	1,904,192			$	1,594,547
Reimbursables			28,260				30,812				49,434				65,953
Labor contract drilling services			13,603				19,863				34,657				35,871
Other			67				11				77				242
			1,017,385				898,923				1,988,360				1,696,613
Operating costs and expenses
Contract drilling services			485,445				421,598				962,006				836,744
Reimbursables			22,701				24,970				37,623				55,571
Labor contract drilling services			9,402				11,847				21,651				21,079
Depreciation and amortization			212,232				183,103				417,983				353,676
General and administrative			15,588				15,467				30,431				29,477
Loss on impairment			—				18,345				—				18,345
Gain on contract settlements/extinguishments, net			—				(33,255	)			(1,800	)			(33,255	)
			745,368				642,075				1,467,894				1,281,637
Operating income			272,017				256,848				520,466				414,976
Other income (expense)
Interest expense, net of amount capitalized			(24,665	)			(20,652	)			(51,966	)			(31,148	)
Interest income and other, net			705				1,608				768				3,007
Income before income taxes			248,057				237,804				469,268				386,835
Income tax provision			(35,730	)			(45,977	)			(69,744	)			(67,188	)
Net income			212,327				191,827				399,524				319,647
Net income attributable to noncontrolling interests			(16,706	)			(18,857	)			(34,359	)			(12,025	)
Net income attributable to Noble Corporation		$	195,621			$	172,970			$	365,165			$	307,622

See accompanying notes to the unaudited consolidated financial statements.

 

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NOBLE CORPORATION (NOBLE-CAYMAN) AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(In thousands)

(Unaudited)

 

		Three Months Ended June 30,								Six Months Ended June 30,
		2013				2012				2013				2012
Net income		$	212,327			$	191,827			$	399,524			$	319,647
Other comprehensive income/(loss), net of tax
Foreign currency translation adjustments			(2,180	)			(6,949	)			477				(7,027	)
Foreign currency forward contracts			(3,529	)			644				(4,731	)			3,061
Amortization of deferred pension plan amounts (net of tax provision of $730 and $647 for the three months ended June 30, 2013 and 2012, respectively, and $1,460 and $1,367 for the six months ended June 30, 2013 and 2012, respectively)			1,632				1,404				3,274				2,826
Other comprehensive loss, net			(4,077	)			(4,901	)			(980	)			(1,140	)
Net comprehensive income attributable to noncontrolling interests			(16,706	)			(18,857	)			(34,359	)			(12,025	)
Comprehensive income attributable to Noble Corporation		$	191,544			$	168,069			$	364,185			$	306,482

See accompanying notes to the unaudited consolidated financial statements.

 

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NOBLE CORPORATION (NOBLE-CAYMAN) AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

(Unaudited)

 

		Six Months Ended June 30,
		2013				2012
Cash flows from operating activities
Net income		$	399,524			$	319,647
Adjustments to reconcile net income to net cash from operating activities:
Depreciation and amortization			417,983				353,676
Loss on impairment			—				18,345
Deferred income taxes			(7,505	)			(7,765	)
Capital contribution by parent—share-based compensation			12,183				10,438
Net change in other assets and liabilities			(146,377	)			(142,640	)
Net cash from operating activities			675,808				551,701
Cash flows from investing activities
Capital expenditures			(1,244,239	)			(663,700	)
Change in accrued capital expenditures			(39,047	)			(159,134	)
Net cash from investing activities			(1,283,286	)			(822,834	)
Cash flows from financing activities
Net change in borrowings outstanding on bank credit facilities			941,653				(825,000	)
Repayment of long-term debt			(300,000	)			—
Proceeds from issuance of senior notes, net of debt issuance costs			—				1,186,636
Dividends paid to joint venture partner			(46,649	)			—
Contributions from joint venture partner			—				40,000
Financing costs on credit facilities			(1,912	)			(5,014	)
Distributions to parent company, net			(100,960	)			(92,675	)
Net cash from financing activities			492,132				303,947
Net change in cash and cash equivalents			(115,346	)			32,814
Cash and cash equivalents, beginning of period			277,375				235,056
Cash and cash equivalents, end of period		$	162,029			$	267,870

See accompanying notes to the unaudited consolidated financial statements.

 

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CONSOLIDATED STATEMENTS OF EQUITY

(In thousands)

(Unaudited)

 

										Capital in								Accumulated Other
		Shares								Excess of				Retained				Comprehensive				Noncontrolling				Total
		Balance				Par Value				Par Value				Earnings				Loss				Interests				Equity
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	)
Equity contribution by joint venture partner			—				—				—				—				—				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
Balance at December 31, 2012			261,246			$	26,125			$	470,454			$	7,384,828			$	(115,449	)		$	765,124			$	8,531,082
Net income			—				—				—				365,165				—				34,359				399,524
Capital contributions by parent—share-based compensation			—				—				12,183				—				—				—				12,183
Distributions to parent			—				—				—				(100,960	)			—				—				(100,960	)
Dividends paid to joint venture partner			—				—				—				—				—				(46,649	)			(46,649	)
Other comprehensive loss, net			—				—				—				—				(980	)			—				(980	)
Balance at June 30, 2013			261,246			$	26,125			$	482,637			$	7,649,033			$	(116,429	)		$	752,834			$	8,794,200

See accompanying notes to the unaudited consolidated financial statements.

 

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

(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 offshore drilling contractor for the oil and gas industry. We perform contract drilling services with our fleet of 79 mobile offshore drilling units located worldwide. We also own one floating production storage and offloading unit. Currently, our fleet consists of 14 semisubmersibles, 14 drillships, 49 jackups and two submersibles, including 10 units under construction as follows:

 

•

three dynamically positioned, ultra-deepwater, harsh environment drillships; and

 

•

seven high-specification heavy-duty, harsh environment jackups.

Our fleet is deployed globally in oil and gas producing regions. 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, 2012 Consolidated Balance Sheets presented herein are derived from the December 31, 2012 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, 2012, 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.

Proposed Transaction

In July 2013, we announced a proposed corporate reorganization transaction (the “Transaction”) of Noble-Swiss and the group of companies it controls. The Transaction would merge Noble-Swiss into a newly formed subsidiary incorporated under English law, Noble Corporation plc (“Noble-UK”), which would become our new holding company. The Transaction would effectively change the place of incorporation of the publicly traded parent company from Switzerland to the United Kingdom. We expect an extraordinary general meeting of Noble-Swiss shareholders to take place in October 2013 to consider the Transaction. If shareholders approve the Transaction at that meeting, and the other conditions to completing the Transaction are satisfied, the Transaction is expected to be completed in November 2013.

In the Transaction, all of the outstanding ordinary shares of Noble-Swiss will be cancelled, and Noble-UK will issue, through an exchange agent, one share of Noble-UK in exchange for each share of Noble-Swiss. Upon completion of the Transaction, Noble-UK will own and continue to conduct the same businesses through the Noble group as Noble-Swiss conducted prior to the Transaction, except that Noble-UK will be the parent company of the Noble group of companies. Noble-UK is expected to remain subject to SEC reporting requirements and will file an application with the New York Stock Exchange to have its ordinary shares listed.

 

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

 

Note 2 — Consolidated Joint Ventures

We maintain a 50 percent interest in two joint ventures, each with a subsidiary of Royal Dutch Shell plc (“Shell”), that own and operate the two Bully-class drillships. 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 could be made for funds needed to complete the construction of the drillships. All contributions under these agreements have been made, with the final contribution made in the first quarter of 2012.

In June 2013, the Bully joint venture partners approved and paid a dividend totaling $93 million.

The combined carrying amount of the Bully-class drillships at both June 30, 2013 and December 31, 2012 totaled $1.4 billion. These assets were primarily funded through partner equity contributions. During 2012, these rigs commenced operations. Operational results for the three and six months ended June 30, 2013 and 2012 are as follows:

 

		Three Months Ended								Six Months Ended
		June 30,								June 30,
		2013				2012				2013				2012
Operating revenues		$	87,478			$	78,691			$	177,773			$	84,445
Net income		$	35,914			$	40,773			$	73,413			$	26,429

Note 3 — Share Data

Share capital

The following details Noble-Swiss’ share capital as of June 30, 2013 and December 31, 2012:

 

		June 30,				December 31,
		2013				2012
Shares outstanding and trading			253,316				252,759
Treasury shares			764				589
Total shares outstanding			254,080				253,348
Treasury shares held for share-based compensation plans			12,070				12,802
Total shares authorized for issuance			266,150				266,150
Par value per share (in Swiss Francs)			3.15				3.15

Repurchased treasury shares are recorded at cost, and relate to shares surrendered by employees for taxes payable upon the vesting of restricted stock.

Our Board of Directors may further increase Noble-Swiss’ share capital through the issuance of up to 133.1 million authorized shares without obtaining shareholder approval. The issuance of these authorized 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, which was paid in four equal installments. The final payment of this obligation was made in May 2013.

 

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

 

In April 2013, our shareholders approved the payment of a dividend aggregating $1.00 per share to be paid in four equal installments currently scheduled for August 2013, November 2013, February 2014 and May 2014. In connection with this approval, and the resulting obligation to shareholders, we recorded dividends payable of approximately $256 million during the second quarter of 2013. Our Board of Directors has the authority to accelerate the payment of any installment, or portions thereof, at its sole discretion at any time prior to payment of the final installment.

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,
		2013				2012				2013				2012
Allocation of net income
Basic
Net income attributable to Noble Corporation		$	176,620			$	159,818			$	326,680			$	279,993
Earnings allocated to unvested share-based payment awards			(2,169	)			(1,694	)			(3,822	)			(2,797	)
Net income to common shareholders—basic		$	174,451			$	158,124			$	322,858			$	277,196
Diluted
Net income attributable to Noble Corporation		$	176,620			$	159,818			$	326,680			$	279,993
Earnings allocated to unvested share-based payment awards			(2,167	)			(1,692	)			(3,819	)			(2,793	)
Net income to common shareholders—diluted		$	174,453			$	158,126			$	322,861			$	277,200
Weighted average shares outstanding—basic			253,295				252,387				253,184				252,179
Incremental shares issuable from assumed exercise of stock options			261				358				265				425
Weighted average shares outstanding—diluted			253,556				252,745				253,449				252,604
Weighted average unvested share-based payment awards			3,150				2,704				2,998				2,555
Earnings per share
Basic		$	0.69			$	0.63			$	1.28			$	1.10
Diluted		$	0.69			$	0.63			$	1.27			$	1.10

Only those items having a dilutive impact on our basic earnings per share are included in diluted earnings per share. For the three months ended June 30, 2013 and 2012, stock options representing approximately 0.9 million and 1.2 million shares, respectively, were excluded from the diluted earnings per share as they were not dilutive.

Note 4 — Receivables from Customers

At June 30, 2013, 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 amounts relate to lost revenues for downtime that occurred after our rig was damaged when one of Pemex’s supply boats collided with our rig in 2010. 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.

 

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

 

Note 5 — Property and Equipment

Property and equipment, at cost, as of June 30, 2013 and December 31, 2012 consisted of the following:

 

		June 30,				December 31,
		2013				2012
Drilling equipment and facilities		$	14,461,241			$	14,099,628
Construction in progress			3,548,650				2,677,385
Other			188,613				194,653
Property and equipment, at cost		$	18,198,504			$	16,971,666

Capital expenditures, including capitalized interest, totaled $1.24 billion and $665 million for the six months ended June 30, 2013 and 2012, respectively. Interest is capitalized on construction-in-progress at the weighted average cost of debt outstanding during the period of construction. Capitalized interest was $32 million and $62 million for the three and six months ended June 30, 2013, respectively, as compared to $36 million and $77 million for the three and six months ended June 30, 2012.

Note 6 — Loss on Impairment

During the second quarter of 2012, 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 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 in 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 assets based on transactions involving similar units in the market (Level 2 fair value measurement). Based on these estimates, we recognized a charge of approximately $5 million in 2012.

Note 7 — 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”) in the second quarter of 2012 related to the previously disclosed force majeure action, Hurricane Ike matters and receivables relating to the Noble Amos Runner.

 

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

 

Note 8 — Debt

Total debt consisted of the following at June 30, 2013 and December 31, 2012:

 

		June 30,				December 31,
		2013				2012
Senior unsecured notes:
5.875% Senior Notes due 2013		$	—			$	299,985
7.375% Senior Notes due 2014			249,880				249,799
3.45% Senior Notes due 2015			350,000				350,000
3.05% Senior Notes due 2016			299,959				299,952
2.50% Senior Notes due 2017			299,869				299,852
7.50% Senior Notes due 2019			201,695				201,695
4.90% Senior Notes due 2020			498,960				498,900
4.625% Senior Notes due 2021			399,551				399,527
3.95% Senior Notes due 2022			399,136				399,095
6.20% Senior Notes due 2040			399,892				399,891
6.05% Senior Notes due 2041			397,630				397,613
5.25% Senior Notes due 2042			498,270				498,257
Total senior unsecured notes			3,994,842				4,294,566
Commercial paper program			1,281,462				339,809
Total long-term debt		$	5,276,304			$	4,634,375

Credit Facilities and Commercial Paper Program

We currently have two separate credit facilities with an aggregate maximum available capacity of $2.3 billion. One credit facility matures in 2015 and the other matures in 2017 (together, the “Credit Facilities”). In January 2013, we increased the maximum amount available under our credit facility maturing in 2015 from $600 million to $800 million and the maximum amount available under our credit facility maturing in 2017 from $1.2 billion to $1.5 billion. We have also established a commercial paper program, which allows us to issue up to $1.8 billion in unsecured commercial paper notes. Amounts issued under the commercial paper program are supported by our Credit Facilities and, therefore, are classified as long-term on our Consolidated Balance Sheet. At June 30, 2013, we had approximately $1.02 billion of available capacity under the Credit Facilities.

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 June 30, 2013, we had no letters of credit issued under the Credit Facilities.

Senior Unsecured Notes

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, comprising $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 matured during the second quarter of 2013. We used proceeds from our commercial paper program to repay the $300 million outstanding balance.

 

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

 

Covenants

The Credit Facilities are guaranteed by our indirect wholly-owned subsidiaries, NHIL and Noble Drilling Corporation (“NDC”). 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, 2013, our ratio of debt to total tangible capitalization was approximately 0.38. We were in compliance with all covenants under the Credit Facilities as of June 30, 2013.

In addition to the covenants from the Credit Facilities noted above, 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, 2013, we were in compliance with all of our debt covenants. We continually monitor compliance with the covenants under our notes and, based on our expectations for 2013, 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, 2013 and December 31, 2012, respectively:

 

		June 30, 2013								December 31, 2012
		Carrying				Estimated				Carrying				Estimated
		Value				Fair Value				Value				Fair Value
Senior unsecured notes:
5.875% Senior Notes due 2013		$	—			$	—			$	299,985			$	305,594
7.375% Senior Notes due 2014			249,880				260,845				249,799				269,008
3.45% Senior Notes due 2015			350,000				363,129				350,000				368,824
3.05% Senior Notes due 2016			299,959				308,116				299,952				316,268
2.50% Senior Notes due 2017			299,869				298,148				299,852				309,846
7.50% Senior Notes due 2019			201,695				242,129				201,695				249,358
4.90% Senior Notes due 2020			498,960				526,123				498,900				562,530
4.625% Senior Notes due 2021			399,551				412,416				399,527				442,776
3.95% Senior Notes due 2022			399,136				391,005				399,095				422,227
6.20% Senior Notes due 2040			399,892				417,943				399,891				477,327
6.05% Senior Notes due 2041			397,630				405,013				397,613				468,256
5.25% Senior Notes due 2042			498,270				453,567				498,257				533,422
Total senior unsecured notes			3,994,842				4,078,434				4,294,566				4,725,436
Commercial paper program			1,281,462				1,281,462				339,809				339,809
Total long-term debt		$	5,276,304			$	5,359,896			$	4,634,375			$	5,065,245

Note 9 — Income Taxes

At December 31, 2012, the reserves for uncertain tax positions totaled $125 million (net of related tax benefits of $10 million). At June 30, 2013, the reserves for uncertain tax positions totaled $116 million (net of related tax benefits of $2 million), and if not utilized, would reduce the provision for income taxes by $116 million.

It is possible that our existing liabilities related to our reserves for uncertain tax positions may change in the next 12 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.

 

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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,
		2013								2012
		Non-U.S.				U.S.				Non-U.S.				U.S.
Service cost		$	1,349			$	2,681			$	1,111			$	2,375
Interest cost			1,252				2,262				1,350				2,164
Return on plan assets			(1,437	)			(3,276	)			(1,342	)			(2,793	)
Amortization of prior service cost			—				57				—				57
Recognized net actuarial loss			395				1,910				201				1,793
Net pension expense		$	1,559			$	3,634			$	1,320			$	3,596
		Six Months Ended June 30,
		2013								2012
		Non-U.S.				U.S.				Non-U.S.				U.S.
Service cost		$	2,728			$	5,362			$	2,234			$	4,806
Interest cost			2,534				4,524				2,708				4,360
Return on plan assets			(2,908	)			(6,552	)			(2,688	)			(5,586	)
Amortization of prior service cost			—				114				—				114
Recognized net actuarial loss			800				3,820				401				3,678
Net pension expense		$	3,154			$	7,268			$	2,655			$	7,372

During the three and six months ended June 30, 2013, we made contributions to our pension plans totaling $5 million and $8 million, respectively.

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.

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. 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 periodically enter into forward contracts, all of which have a maturity of less than 12 months. The forward contracts maturing during the remainder of 2013 represent approximately 59 percent of these forecasted local currency requirements. The notional amount of the forward contracts outstanding, expressed in U.S. Dollars, was approximately $84 million at June 30, 2013. Total unrealized loss related to these forward contracts was approximately $5 million as of June 30, 2013 and was recorded as part of “Accumulated other comprehensive loss” (“AOCL”).

 

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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 loss related to our cash flow hedges included in AOCL and related activity is as follows:

 

		Three Months Ended								Six Months Ended
		June 30,								June 30,
		2013				2012				2013				2012
Net unrealized loss at beginning of period		$	(1,202	)		$	(644	)		$	—			$	(3,061	)
Activity during period:
Settlement of foreign currency forward contracts during the period			265				644				—				3,061
Net unrealized loss on outstanding foreign currency forward contracts			(3,794	)			—				(4,731	)			—
Net unrealized loss at end of period		$	(4,731	)		$	—			$	(4,731	)		$	—

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, 2013 and December 31, 2012:

 

				Estimated fair value
		Balance sheet classification		June 30, 2013				December 31, 2012
Asset derivatives
Cash flow hedges
Short-term foreign currency forward contracts		Other current assets		$	700			$	—
Liability derivatives
Cash flow hedges
Short-term foreign currency forward contracts		Other current liabilities		$	5,431			$	—

To supplement the fair value disclosures in Note 12, the following summarizes the recognized gains and losses of cash flow hedges through AOCL or through “other income” for the three months ended June 30, 2013 and 2012:

 

		Gain/(loss) recognized through AOCL								Gain/(loss) reclassified from AOCL to “other income”								Gain/(loss) recognized through “other income”
		2013				2012				2013				2012				2013				2012
Cash flow hedges
Foreign currency forward contracts		$	(3,794	)		$	—			$	265			$	644			$	—			$	—

 

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

 

To supplement the fair value disclosures in Note 12, the following summarizes the recognized gains and losses of cash flow hedges through AOCL or through “other income” for the six months ended June 30, 2013 and 2012:

 

		Gain/(loss) recognized through AOCL								Gain/(loss) reclassified from AOCL to “other income”								Gain/(loss) recognized through “other income”
		2013				2012				2013				2012				2013				2012
Cash flow hedges
Foreign currency forward contracts		$	(4,996	)		$	—			$	265			$	3,061			$	—			$	—

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, 2013

Estimated Fair Value Measurements

Quoted

Significant

Prices in

Other

Significant

Active

Observable

Unobservable

Carrying

Markets

Inputs

Inputs

Amount

(Level 1)

(Level 2)

(Level 3)

Assets -

Marketable securities

$

6,178

$

6,178

$

—

$

—

Foreign currency forward contracts

700

—

700

—

Liabilities -

Foreign currency forward contracts

$

5,431

$

—

$

5,431

$

—

December 31, 2012

Estimated Fair Value Measurements

Quoted

Significant

Prices in

Other

Significant

Active

Observable

Unobservable

Carrying

Markets

Inputs

Inputs

Amount

(Level 1)

(Level 2)

(Level 3)

Assets -

Marketable securities

$

5,816

$

5,816

$

—

$

—

The foreign currency instruments have been 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.

 

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

 

Note 13 — Accumulated Other Comprehensive Loss

The following tables set forth the changes in AOCL by component for the three and six months ended June 30, 2013. All amounts within the tables are shown net of tax.

 

		Three months ended June 30, 2013
						Defined
		Losses on				Benefit				Foreign
		Cash Flow				Pension				Currency
		Hedges(1)				Items(2)				Items				Total
Balance at beginning of period		$	(1,202	)		$	(93,429	)		$	(17,721	)		$	(112,352	)
Activity during period:
Other comprehensive income/(loss) before reclassifications			(3,794	)			—				(2,180	)			(5,974	)
Amounts reclassified from AOCL			265				1,632				—				1,897
Net current period other comprehensive income/(loss)			(3,529	)			1,632				(2,180	)			(4,077	)
Balance at end of period		$	(4,731	)		$	(91,797	)		$	(19,901	)		$	(116,429	)
		Six months ended June 30, 2013
						Defined
		Losses on				Benefit				Foreign
		Cash Flow				Pension				Currency
		Hedges(1)				Items(2)				Items				Total
Balance at beginning of period		$	—			$	(95,071	)		$	(20,378	)		$	(115,449	)
Activity during period:
Other comprehensive income/(loss) before reclassifications			(4,731	)			—				477				(4,254	)
Amounts reclassified from AOCL			—				3,274				—				3,274
Net current period other comprehensive income/(loss)			(4,731	)			3,274				477				(980	)
Balance at end of period		$	(4,731	)		$	(91,797	)		$	(19,901	)		$	(116,429	)

 

(1)	Losses on cash flow hedges are related to our foreign currency forward contracts. Reclassifications from AOCL are recognized through “other income” on our Consolidated Statement of Income. See Note 11 for additional information.

(2)

Defined benefit pension items relate to actuarial losses and the amortization of prior service costs. Reclassifications from AOCL are recognized as expense on our Consolidated Statement of Income through either “contract drilling services” or “general and administrative”. See Note 10 for additional information

Note 14 — 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.

 

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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 we expect the trial to occur in the fourth quarter of 2013. We cannot predict the outcome of this lawsuit.

In November 2012, the U.S. Coast Guard in Alaska conducted an inspection of our drillship, the Noble Discoverer, and cited a number of deficiencies to be remediated, including issues relating to the main propulsion and safety management systems. We initiated a comprehensive effort to address the deficiencies identified by the Coast Guard and commenced an ongoing dialogue with the agency to keep it apprised of our progress. We began an internal investigation in conjunction with the Coast Guard inspection, and the Coast Guard then began its own investigation. We reported certain potential violations of applicable law to the Coast Guard identified as a result of our internal investigation. These related to what we believe were certain unauthorized disposals of collected deck and sea water from the Noble Discoverer, collected, treated deck water from the Kulluk and potential record-keeping issues with the oil record books for the Noble Discoverer, Kulluk and other rigs, and with the garbage log for the Kulluk. The Coast Guard referred the Noble Discoverer and Kulluk matters to the U.S. Department of Justice (“DOJ”) for further investigation. We are cooperating with the DOJ and Coast Guard in connection with their investigation, and are maintaining a dialogue with the DOJ. We cannot predict when the DOJ and Coast Guard will conclude the investigation and cannot provide any assurances with respect to the outcome. If the DOJ or Coast Guard determines that violations of applicable law have occurred, they could seek civil and criminal sanctions, including monetary penalties, against us and/or certain of our employees, as well as oversight of our operational compliance programs. Based on information obtained to date, we believe it is probable that we will have to pay some amount in fines and penalties to resolve this matter. However, at this time we cannot appropriately estimate the potential liability that may result and we have not made any accrual in our consolidated financial statements at June 30, 2013 related to the matter.

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, 2013, there were 33 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 4, 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 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 examination of our tax reporting for the taxable year ended December 31, 2008. In June 2013, the IRS examination team notified us that they were no longer proposing any adjustments with respect to our tax reporting for the taxable year ended December 31, 2008. We are due a refund for the 2008 tax year, and our refund claim is currently under review. The IRS began its examination of our tax reporting for the taxable year ended December 31, 2009. We believe that we have accurately reported all amounts in our 2009 tax returns. Furthermore, we are currently contesting several non-U.S. tax assessments and may contest future assessments. 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 any existing or future assessments.

 

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

 

During the second quarter of 2013, we reached an agreement with the Mexican tax authorities resolving certain previously disclosed tax assessments. This settlement removes potential contingent tax exposure of $502 million in Mexico for periods prior to 2007, which includes the assessments for years 2002 through 2005 of approximately $348 million, as well as settlement for 2006. The settlement of these assessments did not have a material impact on our consolidated financial statements. 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.

Audit claims of approximately $115 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.

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. For the Noble Bully I, our customer assumes the risk of loss due to a named windstorm event, pursuant to the terms of the drilling contract, through the purchase of insurance coverage (provided that we are responsible for any deductible under such policy) or, at its option, the assumption of the risk of loss up to the insured value in lieu of the purchase of such insurance. 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.

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 $2.7 billion at June 30, 2013.

 

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

 

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.

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.

Under the Nigerian Industrial Training Fund Act of 2004, as amended, (the “Act”), Nigerian companies with five or more employees must contribute annually 1 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. In February 2013, the ITF filed suit seeking payment of these amounts. We do not believe that we owe the amount claimed. We are in discussions with the ITF to resolve the issue and do not believe the resolution of this matter will have a material adverse effect on our financial position or cash flows.

 

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

 

Note 15 — 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 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 due 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 conducts contract drilling operations in the United States, Mexico, Brazil, the North Sea, the Mediterranean, West Africa, the Middle East, India, Asia and Australia.

We evaluate the performance of our operating segment based on revenues from external customers and segment profit. Summarized financial information of our reportable segment for the three and six months ended June 30, 2013 and 2012 is 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. 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. As a result, the summarized financial information for Noble-Cayman is substantially the same as Noble-Swiss.

 

		Three Months Ended June 30,
		2013												2012
		Contract												Contract
		Drilling												Drilling
		Services				Other				Total				Services				Other				Total
Revenues from external customers		$	1,003,522			$	13,863			$	1,017,385			$	878,372			$	20,551			$	898,923
Depreciation and amortization			209,082				3,507				212,589				180,112				3,503				183,615
Segment operating income/(loss)			253,610				250				253,860				246,161				(1,666	)			244,495
Interest expense, net of amount capitalized			(102	)			(24,563	)			(24,665	)			(105	)			(20,547	)			(20,652	)
Income tax (provision)/benefit			(40,600	)			3,776				(36,824	)			(51,098	)			4,742				(46,356	)
Segment profit/(loss)			196,439				(19,819	)			176,620				178,094				(18,276	)			159,818
Total assets (at end of period)			14,777,991				688,095				15,466,086				13,483,083				552,933				14,036,016
		Six Months Ended June 30,
		2013												2012
		Contract												Contract
		Drilling												Drilling
		Services				Other				Total				Services				Other				Total
Revenues from external customers		$	1,952,980			$	35,380			$	1,988,360			$	1,659,615			$	36,998			$	1,696,613
Depreciation and amortization			411,701				7,044				418,745				348,060				6,632				354,692
Segment operating income/(loss			478,744				4,907				483,651				386,428				1,710				388,138
Interest expense, net of amount capitalized			(222	)			(51,744	)			(51,966	)			(194	)			(30,954	)			(31,148	)
Income tax (provision)/benefit			(78,841	)			7,665				(71,176	)			(73,698	)			5,753				(67,945	)
Segment profit/(loss)			365,490				(38,810	)			326,680				303,578				(23,585	)			279,993
Total assets (at end of period)			14,777,991				688,095				15,466,086				13,483,083				552,933				14,036,016

 

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

 

Note 16 — Accounting Pronouncements

In February 2013, the FASB issued Accounting Standards Update (“ASU”) No. 2013-02, which amends FASB Accounting Standards Codification (“ASC”) Topic 220, “Comprehensive Income.” This amended guidance requires additional information about reclassification adjustments out of comprehensive income, including changes in comprehensive income balances by component and significant items reclassified out of comprehensive income. This guidance is effective for reporting periods beginning after December 15, 2012. The adoption of this guidance did not have a material impact on our financial condition, results of operations, cash flows or financial disclosures.

In March 2013, the FASB issued ASU No. 2013-05, which amends ASC Topic 830, “Foreign Currency Matters.” This ASU provides guidance on foreign currency translation adjustments when a parent entity ceases to have a controlling interest on a previously consolidated subsidiary or group of assets. The guidance is effective for fiscal years beginning on or after December 15, 2013. We are still evaluating what impact, if any, the adoption of this guidance will have on our financial condition, results of operations, cash flows or financial disclosures.

In July 2013, the FASB issued ASU No. 2013-11, which amends ASC Topic 740, “Taxes.” This ASU provides guidance on the presentation of tax benefits when a net operating loss carryforward or other tax credit carryforward exists. The guidance is effective for fiscal years beginning on or after December 15, 2013. We are still evaluating what impact, if any, the adoption of this guidance will have on our financial condition, results of operations, cash flows or financial disclosures.

Note 17 — 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,
		2013				2012				2013				2012
Accounts receivable		$	(90,903	)		$	(87,244	)		$	(90,903	)		$	(87,244	)
Other current assets			(68,614	)			(82,590	)			(70,214	)			(85,357	)
Other assets			1,191				(10,452	)			1,145				(10,454	)
Accounts payable			32,125				9,776				32,222				8,804
Other current liabilities			(8,057	)			(2,282	)			(6,336	)			(1,997	)
Other liabilities			(12,291	)			33,608				(12,291	)			33,608
		$	(146,549	)		$	(139,184	)		$	(146,377	)		$	(142,640	)

Note 18 — Subsequent Event

In July 2013, we completed the sale of the Noble Lewis Dugger for $61 million to an unrelated third party in Mexico that owns and operates drilling units.

 

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

 

Note 19 — Guarantees of Registered Securities

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, 2013 as follows:

 

		Issuer
Notes		(Co-Issuer(s))		Guarantor(s)
$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.

Revision

As part of our worldwide asset consolidation completed in 2009, NDC received a limited partnership interest in one of our Other Non-Guarantor Subsidiaries of Noble. This limited partnership interest has historically been included as a component of Total Shareholder Equity and income attributable to this limited partnership interest has been included in Net Income Attributable to Noble Corporation in the Other Non-Guarantor Subsidiaries of Noble column in the condensed consolidating financial statements. We concluded these errors were not material individually or in the aggregate to any of the previously issued financial statements taken as a whole.

During the first quarter of 2013, we amended the presentation of this limited partnership interest in the Other Non-guarantor Subsidiaries of Noble column to correctly present it as a noncontrolling interest and to record the income attributable to NDC as Net Income Attributable to Noncontrolling Interests. We also made appropriate adjustments to the Consolidating Adjustments column. The following chart presents the impact of this change in presentation in the Other Non-Guarantor Subsidiaries of Noble and Consolidating Adjustments columns on the historical Condensed Consolidating Balance Sheet and Condensed Consolidating Statement of Income. The revisions below did not impact our Condensed Consolidating Statement of Cash Flows.

 

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

 

		Other Non-Guarantor Subsidiaries of Noble								Consolidating Adjustments
		As reported				As adjusted				As reported				As adjusted
December 31, 2010
Income statement- Twelve months ended
Net income		$	1,023,782			$	1,023,782			$	(2,963,512	)		$	(2,963,512	)
Net income attributable to noncontrolling interests			(3	)			(41,889	)			—				41,886
Net income attributable to Noble Corporation		$	1,023,779			$	981,893			$	(2,963,512	)		$	(2,921,626	)
December 31, 2011
Income statement- Twelve months ended
Net income		$	634,128			$	634,128			$	(1,758,285	)		$	(1,758,285	)
Net loss attributable to noncontrolling interests			7,273				(15,808	)			—				23,081
Net income attributable to Noble Corporation		$	641,401			$	618,320			$	(1,758,285	)		$	(1,735,204	)
Balance Sheet
Total shareholder equity		$	9,853,129			$	9,483,809			$	(28,268,572	)		$	(27,899,252	)
Noncontrolling interests			691,331				1,060,651				—				(369,320	)
Total equity		$	10,544,460			$	10,544,460			$	(28,268,572	)		$	(28,268,572	)
March 31, 2012
Income statement- Three months ended
Net income		$	173,657			$	173,657			$	(591,588	)		$	(591,588	)
Net income attributable to noncontrolling interests			6,832				(1,196	)			—				8,028
Net income attributable to Noble Corporation		$	180,489			$	172,461			$	(591,588	)		$	(583,560	)
June 30, 2012
Income statement- Three months ended
Net income		$	253,086			$	253,086			$	(662,439	)		$	(662,439	)
Net income attributable to noncontrolling interests			(18,857	)			(29,201	)			—				10,344
Net income attributable to Noble Corporation		$	234,229			$	223,885			$	(662,439	)		$	(652,095	)
Income statement- Six months ended
Net income		$	426,743			$	426,743			$	(1,254,027	)		$	(1,254,027	)
Net income attributable to noncontrolling interests			(12,025	)			(30,397	)			—				18,372
Net income attributable to Noble Corporation		$	414,718			$	396,346			$	(1,254,027	)		$	(1,235,655	)
September 30, 2012
Income statement- Three months ended
Net income		$	211,597			$	211,597			$	(569,368	)		$	(569,368	)
Net income attributable to noncontrolling interests			(14,906	)			(22,246	)			—				7,340
Net income attributable to Noble Corporation		$	196,691			$	189,351			$	(569,368	)		$	(562,028	)
Income statement- Nine months ended
Net income		$	638,340			$	638,340			$	(1,823,395	)		$	(1,823,395	)
Net income attributable to noncontrolling interests			(26,931	)			(52,643	)			—				25,712
Net income attributable to Noble Corporation		$	611,409			$	585,697			$	(1,823,395	)		$	(1,797,683	)

 

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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)

 

		Other Non-Guarantor Subsidiaries of Noble								Consolidating Adjustments
		As reported				As adjusted				As reported				As adjusted
December 31, 2012
Income statement- Twelve months ended
Net income		$	280,763			$	280,763			$	(1,891,202	)		$	(1,891,202	)
Net income attributable to noncontrolling interests			(33,793	)			(68,969	)			—				35,176
Net income attributable to Noble Corporation		$	246,970			$	211,794			$	(1,891,202	)		$	(1,856,026	)
Balance Sheet
Total shareholder equity		$	9,913,839			$	9,509,343			$	(29,719,135	)		$	(29,314,639	)
Noncontrolling interests			765,124				1,169,620				—				(404,496	)
Total equity		$	10,678,963			$	10,678,963			$	(29,719,135	)		$	(29,719,135	)

 

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NOBLE CORPORATION (NOBLE-CAYMAN) AND SUBSIDIARIES

CONDENSED CONSOLIDATING BALANCE SHEET

June 30, 2013

(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		$	5			$	244			$	—			$	2			$	—			$	161,778			$	—			$	162,029
Accounts receivable			—				57,034				3,303				—				—				774,239				—				834,576
Taxes receivable			—				46,297				—				—				—				101,861				—				148,158
Prepaid expenses			—				487				8				—				—				69,685				—				70,180
Short-term notes receivable from affiliates			—				119,476				—				—				586,770				331,498				(1,037,744	)			—
Accounts receivable from affiliates			1,268,524				161,799				1,108,461				503,656				51,560				6,714,765				(9,808,765	)			—
Other current assets			—				639				196				—				—				122,501				—				123,336
Total current assets			1,268,529				385,976				1,111,968				503,658				638,330				8,276,327				(10,846,509	)			1,338,279
Property and equipment, at cost			—				2,891,199				76,827				—				—				15,193,887				—				18,161,913
Accumulated depreciation			—				(313,094	)			(60,462	)			—				—				(3,972,674	)			—				(4,346,230	)
Property and equipment, net			—				2,578,105				16,365				—				—				11,221,213				—				13,815,683
Notes receivable from affiliates			3,816,463				1,206,000				—				3,524,814				479,107				2,110,379				(11,136,763	)			—
Investments in affiliates			8,205,962				10,353,399				3,313,219				7,879,478				1,952,694				—				(31,704,752	)			—
Other assets			6,390				443				360				24,231				696				245,489				—				277,609
Total assets		$	13,297,344			$	14,523,923			$	4,441,912			$	11,932,181			$	3,070,827			$	21,853,408			$	(53,688,024	)		$	15,431,571
LIABILITIES AND EQUITY
Current liabilities
Short-term notes payables from affiliates		$	90,314			$	127,036			$	114,149			$	—			$	—			$	706,245			$	(1,037,744	)		$	—
Accounts payable			—				4,393				521				—				—				339,098				—				344,012
Accrued payroll and related costs			—				7,327				8,628				—				—				101,385				—				117,340
Accounts payable to affiliates			1,023,571				5,573,240				3,404				190,753				100,405				2,917,392				(9,808,765	)			—
Interest payable			414				—				—				62,430				4,411				—				—				67,255
Taxes payable			—				11,476				9				—				—				109,137				—				120,622
Other current liabilities			—				—				241				—				—				168,705				—				168,946
Total current liabilities			1,114,299				5,723,472				126,952				253,183				104,816				4,341,962				(10,846,509	)			818,175
Long-term debt			1,281,462				—				—				3,793,147				201,695				—				—				5,276,304
Notes payable to affiliates			2,840,287				586,979				—				975,000				1,342,000				5,392,497				(11,136,763	)			—
Deferred income taxes			—				—				15,731				—				—				202,782				—				218,513
Other liabilities			19,930				8,864				—				—				—				295,585				—				324,379
Total liabilities			5,255,978				6,319,315				142,683				5,021,330				1,648,511				10,232,826				(21,983,272	)			6,637,371
Commitments and contingencies
Total shareholder equity			8,041,366				8,204,608				4,299,229				6,910,851				1,422,316				10,442,890				(31,279,894	)			8,041,366
Noncontrolling interest			—				—				—				—				—				1,177,692				(424,858	)			752,834
Total equity			8,041,366				8,204,608				4,299,229				6,910,851				1,422,316				11,620,582				(31,704,752	)			8,794,200
Total liabilities and equity		$	13,297,344			$	14,523,923			$	4,441,912			$	11,932,181			$	3,070,827			$	21,853,408			$	(53,688,024	)		$	15,431,571

 

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NOBLE CORPORATION (NOBLE-CAYMAN) AND SUBSIDIARIES

CONDENSED CONSOLIDATING BALANCE SHEET

December 31, 2012

(in thousands)

 

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		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		$	1,003			$	904			$	—			$	2			$	—			$	275,466			$	—			$	277,375
Accounts receivable			—				14,885				3,335				—				—				725,453				—				743,673
Taxes receivable			—				8,341				—				—				—				103,969				—				112,310
Prepaid expenses			—				396				9				—				—				40,827				—				41,232
Short-term notes receivable from affiliates			—				119,476				—				—				586,769				252,138				(958,383	)			—
Accounts receivable from affiliates			664,375				140,014				1,015,204				526,483				38,895				5,855,066				(8,240,037	)			—
Other current assets			235				639				196				—				—				121,579				—				122,649
Total current assets			665,613				284,655				1,018,744				526,485				625,664				7,374,498				(9,198,420	)			1,297,239