Edgar Filing: Noble Corp / Switzerland

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, 2013

¨	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 Georgetown, Grand Cayman, Cayman Islands, BWI, KY-1 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, 2013: Noble Corporation (Switzerland) — 253,407,310

Number of shares outstanding at October 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.

TABLE OF CONTENTS


		Page
PART I	FINANCIAL INFORMATION
Item 1	Financial Statements
	Noble Corporation (Noble-Swiss) Financial Statements:
	Consolidated Balance Sheets as of September 30, 2013 and December 31, 2012		3
	Consolidated Statements of Income for the three and nine months ended September 30, 2013 and 2012		4
	Consolidated Statements of Comprehensive Income for the three and nine months ended September 30, 2013 and 2012		5
	Consolidated Statements of Cash Flows for the nine months ended September 30, 2013 and 2012		6
	Consolidated Statements of Equity for the nine months ended September 30, 2013 and 2012		7

	Noble Corporation (Noble-Cayman) Financial Statements:
	Consolidated Balance Sheets as of September 30, 2013 and December 31, 2012		8
	Consolidated Statements of Income for the three and nine months ended September 30, 2013 and 2012		9
	Consolidated Statements of Comprehensive Income for the three and nine months ended September 30, 2013 and 2012		10
	Consolidated Statements of Cash Flows for the nine months ended September 30, 2013 and 2012		11
	Consolidated Statements of Equity for the nine months ended September 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		40
Item 3	Quantitative and Qualitative Disclosures About Market Risk		55
Item 4	Controls and Procedures		56
PART II	OTHER INFORMATION
Item 1	Legal Proceedings		57
Item 1A	Risk Factors		57
Item 2	Unregistered Sales of Equity Securities and Use of Proceeds		58
Item 6	Exhibits		58
	SIGNATURES		59
	Index to Exhibits		60

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 SHEETS

(In thousands)

(Unaudited)


	September 30,			December 31,
	2013			2012
ASSETS
Current assets
Cash and cash equivalents	$	178,370		$	282,092
Accounts receivable		865,746			743,673
Taxes receivable		143,635			112,423
Prepaid expenses		52,752			43,962
Other current assets		134,500			123,175

Total current assets		1,375,003			1,305,325

Property and equipment, at cost		18,606,931			16,971,666
Accumulated depreciation		(4,534,474	)		(3,945,694	)

Property and equipment, net		14,072,457			13,025,972

Other assets		281,871			276,477

Total assets	$	15,729,331		$	14,607,774

LIABILITIES AND EQUITY
Current liabilities
Accounts payable	$	318,013		$	350,147
Accrued payroll and related costs		137,481			132,728
Taxes payable		134,318			135,257
Dividends payable		192,352			66,369
Other current liabilities		202,422			226,948

Total current liabilities		984,586			911,449

Long-term debt		5,307,838			4,634,375
Deferred income taxes		187,648			226,045
Other liabilities		392,443			347,615

Total liabilities		6,872,515			6,119,484

Commitments and contingencies
Shareholders’ equity
Shares; 254,165 and 253,348 shares outstanding		712,421			710,130
Treasury shares, at cost; 777 and 589 shares		(28,627	)		(21,069	)
Additional paid-in capital		117,458			83,531
Retained earnings		7,417,890			7,066,023
Accumulated other comprehensive loss		(110,583	)		(115,449	)

Total shareholders’ equity		8,108,559			7,723,166
Noncontrolling interests		748,257			765,124

Total equity		8,856,816			8,488,290

Total liabilities and equity	$	15,729,331		$	14,607,774

See accompanying notes to the unaudited consolidated financial statements.

NOBLE CORPORATION (NOBLE-SWISS) AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME

(In thousands, except per share amounts)

(Unaudited)


	Three Months Ended						Nine Months Ended
	September 30,						September 30,
	2013			2012			2013			2012
Operating revenues
Contract drilling services	$	1,041,118		$	833,212		$	2,945,310		$	2,427,759
Reimbursables		29,242			28,137			78,676			94,090
Labor contract drilling services		8,493			22,667			43,150			58,538
Other		28			16			105			258

		1,078,881			884,032			3,067,241			2,580,645

Operating costs and expenses
Contract drilling services		488,250			449,125			1,464,320			1,292,638
Reimbursables		23,671			21,047			61,294			76,618
Labor contract drilling services		8,153			12,991			29,804			34,070
Depreciation and amortization		223,711			195,087			642,456			549,779
General and administrative		33,776			26,858			86,196			75,388
Loss on impairment		3,585			—			3,585			18,345
Gain on disposal of assets, net		(35,646	)		—			(35,646	)		—
Gain on contract settlements/extinguishments, net		(45,000	)		—			(46,800	)		(33,255	)

		700,500			705,108			2,205,209			2,013,583

Operating income		378,381			178,924			862,032			567,062
Other income (expense)
Interest expense, net of amount capitalized		(23,149	)		(25,635	)		(75,115	)		(56,783	)
Interest income and other, net		1,057			1,553			1,587			4,526

Income before income taxes		356,289			154,842			788,504			514,805
Income tax provision		(55,830	)		(25,162	)		(127,006	)		(93,107	)

Net income		300,459			129,680			661,498			421,698
Net income attributable to noncontrolling interests		(18,502	)		(14,906	)		(52,861	)		(26,931	)

Net income attributable to Noble Corporation	$	281,957		$	114,774		$	608,637		$	394,767

Net income per share
Basic	$	1.10		$	0.45		$	2.37		$	1.55
Diluted	$	1.10		$	0.45		$	2.37		$	1.55

See accompanying notes to the unaudited consolidated financial statements.

NOBLE CORPORATION (NOBLE-SWISS) AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(In thousands)

(Unaudited)


	Three Months Ended						Nine Months Ended
	September 30,						September 30,
	2013			2012			2013			2012
Net income	$	300,459		$	129,680		$	661,498		$	421,698
Other comprehensive income/(loss), net of tax
Foreign currency translation adjustments		(1,135	)		2,033			(658	)		(4,994	)
Foreign currency forward contracts		5,320			—			589			3,061
Amortization of deferred pension plan amounts (net of tax provision of $732 and $790 for the three months ended September 30, 2013 and 2012, respectively, and $2,192 and $2,157 for the nine months ended September 30, 2013 and 2012, respectively)		1,661			1,351			4,935			4,177

Other comprehensive income, net		5,846			3,384			4,866			2,244
Net comprehensive income attributable to noncontrolling interests		(18,502	)		(14,906	)		(52,861	)		(26,931	)

Comprehensive income attributable to Noble Corporation	$	287,803		$	118,158		$	613,503		$	397,011

See accompanying notes to the unaudited consolidated financial statements.

NOBLE CORPORATION (NOBLE-SWISS) AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

(Unaudited)


	Nine Months Ended
	September 30,
	2013			2012
Cash flows from operating activities
Net income	$	661,498		$	421,698
Adjustments to reconcile net income to net cash from operating activities:
Depreciation and amortization		642,456			549,779
Loss on impairment		3,585			18,345
Gain on disposal of assets, net		(35,646	)		—
Deferred income taxes		(41,400	)		(16,090	)
Amortization of share-based compensation		33,471			28,782
Net change in other assets and liabilities		(102,310	)		(71,010	)

Net cash from operating activities		1,161,654			931,504

Cash flows from investing activities
Capital expenditures		(1,724,727	)		(1,247,139	)
Change in accrued capital expenditures		(66,946	)		(195,044	)
Proceeds from disposal of assets		61,000			—

Net cash from investing activities		(1,730,673	)		(1,442,183	)

Cash flows from financing activities
Net change in borrowings outstanding on bank credit facilities		973,055			(630,000	)
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		(69,728	)		—
Contributions from joint venture partner		—			40,000
Financing costs on credit facilities		(2,432	)		(5,014	)
Par value reduction/dividend payments		(130,787	)		(105,092	)
Proceeds from employee stock transactions		2,747			13,853
Repurchases of employee shares surrendered for taxes		(7,558	)		(10,433	)

Net cash from financing activities		465,297			489,950

Net change in cash and cash equivalents		(103,722	)		(20,729	)
Cash and cash equivalents, beginning of period		282,092			239,196

Cash and cash equivalents, end of period	$	178,370		$	218,467

See accompanying notes to the unaudited consolidated financial statements.

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		—			—			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 employee stock transactions		—			—			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 payments		—			(58,470	)		(13,427	)		—			—			—			—			(71,897	)
Dividends declared		—			—			—			(132,777	)		—			—			—			(132,777	)
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

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		—			—			33,471			—			—			—			—			33,471
Issuance of share-based compensation shares		659			1,851			(1,834	)		—			—			—			—			17
Exercise of stock options		158			440			3,760			—			—			—			—			4,200
Tax benefit of employee stock transactions		—			—			(1,470	)		—			—			—			—			(1,470	)
Restricted shares forfeited or repurchased for taxes		—			—			—			—			(7,558	)		—			—			(7,558	)
Net income		—			—			—			608,637			—			—			52,861			661,498
Dividends declared		—			—			—			(256,770	)		—			—			—			(256,770	)
Dividends paid to joint venture partner		—			—			—			—			—			—			(69,728	)		(69,728	)
Other comprehensive income, net		—			—			—			—			—			4,866			—			4,866

Balance at September 30, 2013		254,165		$	712,421		$	117,458		$	7,417,890		$	(28,627	)	$	(110,583	)	$	748,257		$	8,856,816

See accompanying notes to the unaudited consolidated financial statements.

NOBLE CORPORATION (NOBLE-CAYMAN) AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(In thousands)

(Unaudited)


	September 30,			December 31,
	2013			2012
ASSETS
Current assets
Cash and cash equivalents	$	173,717		$	277,375
Accounts receivable		865,746			743,673
Taxes receivable		143,238			112,310
Prepaid expenses		49,329			41,232
Other current assets		134,004			122,649

Total current assets		1,366,034			1,297,239

Property and equipment, at cost		18,569,631			16,935,147
Accumulated depreciation		(4,526,002	)		(3,938,518	)

Property and equipment, net		14,043,629			12,996,629

Other assets		281,956			276,558

Total assets	$	15,691,619		$	14,570,426

LIABILITIES AND EQUITY
Current liabilities
Accounts payable	$	315,933		$	349,594
Accrued payroll and related costs		129,170			123,936
Taxes payable		130,071			130,844
Other current liabilities		202,422			226,935

Total current liabilities		777,596			831,309

Long-term debt		5,307,838			4,634,375
Deferred income taxes		187,648			226,045
Other liabilities		392,443			347,615

Total liabilities		6,665,525			6,039,344

Commitments and contingencies
Shareholders’ equity
Ordinary shares; 261,246 shares outstanding		26,125			26,125
Capital in excess of par value		489,058			470,454
Retained earnings		7,873,237			7,384,828
Accumulated other comprehensive loss		(110,583	)		(115,449	)

Total shareholders’ equity		8,277,837			7,765,958
Noncontrolling interests		748,257			765,124

Total equity		9,026,094			8,531,082

Total liabilities and equity	$	15,691,619		$	14,570,426

See accompanying notes to the unaudited consolidated financial statements.

NOBLE CORPORATION (NOBLE-CAYMAN) AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME

(In thousands)

(Unaudited)


	Three Months Ended						Nine Months Ended
	September 30,						September 30,
	2013			2012			2013			2012
Operating revenues
Contract drilling services	$	1,041,118		$	833,212		$	2,945,310		$	2,427,759
Reimbursables		29,242			28,137			78,676			94,090
Labor contract drilling services		8,493			22,667			43,150			58,538
Other		28			16			105			258

		1,078,881			884,032			3,067,241			2,580,645

Operating costs and expenses
Contract drilling services		486,113			444,225			1,448,119			1,280,969
Reimbursables		23,671			21,047			61,294			76,618
Labor contract drilling services		8,153			12,991			29,804			34,070
Depreciation and amortization		223,176			194,595			641,159			548,271
General and administrative		7,251			15,487			37,682			44,964
Loss on impairment		3,585			—			3,585			18,345
Gain on disposal of assets, net		(35,646	)		—			(35,646	)		—
Gain on contract settlements/extinguishments, net		(45,000	)		—			(46,800	)		(33,255	)

		671,303			688,345			2,139,197			1,969,982

Operating income		407,578			195,687			928,044			610,663
Other income (expense)
Interest expense, net of amount capitalized		(23,149	)		(25,635	)		(75,115	)		(56,783	)
Interest income and other, net		415			1,361			1,183			4,368

Income before income taxes		384,844			171,413			854,112			558,248
Income tax provision		(55,488	)		(24,784	)		(125,232	)		(91,972	)

Net income		329,356			146,629			728,880			466,276
Net income attributable to noncontrolling interests		(18,502	)		(14,906	)		(52,861	)		(26,931	)

Net income attributable to Noble Corporation	$	310,854		$	131,723		$	676,019		$	439,345

See accompanying notes to the unaudited consolidated financial statements.

NOBLE CORPORATION (NOBLE-CAYMAN) AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(In thousands)

(Unaudited)


	Three Months Ended						Nine Months Ended
	September 30,						September 30,
	2013			2012			2013			2012
Net income	$	329,356		$	146,629		$	728,880		$	466,276
Other comprehensive income/(loss), net of tax
Foreign currency translation adjustments		(1,135	)		2,033			(658	)		(4,994	)
Foreign currency forward contracts		5,320			—			589			3,061
Amortization of deferred pension plan amounts (net of tax provision of $732 and $790 for the three months ended September 30, 2013 and 2012, respectively, and $2,192 and $2,157 for the nine months ended September 30, 2013 and 2012, respectively)		1,661			1,351			4,935			4,177

Other comprehensive income, net		5,846			3,384			4,866			2,244
Net comprehensive income attributable to noncontrolling interests		(18,502	)		(14,906	)		(52,861	)		(26,931	)

Comprehensive income attributable to Noble Corporation	$	316,700		$	135,107		$	680,885		$	441,589

See accompanying notes to the unaudited consolidated financial statements.

NOBLE CORPORATION (NOBLE-CAYMAN) AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

(Unaudited)


	Nine Months Ended
	September 30,
	2013			2012
Cash flows from operating activities
Net income	$	728,880		$	466,276
Adjustments to reconcile net income to net cash from operating activities:
Depreciation and amortization		641,159			548,271
Loss on impairment		3,585			18,345
Gain on disposal of assets, net		(35,646	)		—
Deferred income taxes		(41,400	)		(16,090	)
Capital contribution by parent—share-based compensation		18,604			15,412
Net change in other assets and liabilities		(102,238	)		(75,357	)

Net cash from operating activities		1,212,944			956,857

Cash flows from investing activities
Capital expenditures		(1,723,941	)		(1,245,671	)
Change in accrued capital expenditures		(66,946	)		(195,044	)
Proceeds from disposal of assets		61,000			—

Net cash from investing activities		(1,729,887	)		(1,440,715	)

Cash flows from financing activities
Net change in borrowings outstanding on bank credit facilities		973,055			(630,000	)
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		(69,728	)		—
Contributions from joint venture partner		—			40,000
Financing costs on credit facilities		(2,432	)		(5,014	)
Distributions to parent company, net		(187,610	)		(129,139	)

Net cash from financing activities		413,285			462,483

Net change in cash and cash equivalents		(103,658	)		(21,375	)
Cash and cash equivalents, beginning of period		277,375			235,056

Cash and cash equivalents, end of period	$	173,717		$	213,681

See accompanying notes to the unaudited consolidated financial statements.

NOBLE CORPORATION (NOBLE-CAYMAN) AND SUBSIDIARIES

CONSOLIDATED STATEMENTS 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, 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	)
Equity contribution by joint venture partner		—		—		—		—			—			40,000			40,000
Other comprehensive income, 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

Balance at December 31, 2012		261,246	$	26,125	$	470,454	$	7,384,828		$	(115,449	)	$	765,124		$	8,531,082
Net income		—		—		—		676,019			—			52,861			728,880
Capital contributions by parent—share-based compensation		—		—		18,604		—			—			—			18,604
Distributions to parent		—		—		—		(187,610	)		—			—			(187,610	)
Dividends paid to joint venture partner		—		—		—		—			—			(69,728	)		(69,728	)
Other comprehensive income, net		—		—		—		—			4,866			—			4,866

Balance at September 30, 2013		261,246	$	26,125	$	489,058	$	7,873,237		$	(110,583	)	$	748,257		$	9,026,094

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

(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 (“FPSO”). Currently, our fleet consists of 14 semisubmersibles, 14 drillships, 49 jackups and two submersibles. At September 30, 2013, we had nine units under construction as follows:

•

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

•

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

Subsequent to September 30, 2013, one newbuild drillship, the Noble Bob Douglas, and one newbuild jackup, the Noble Regina Allen, were delivered from the shipyard. These units are currently mobilizing, undergoing final commissioning and customer acceptance testing before commencing their respective contracts.

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.

Migration to the United Kingdom

In October 2013, our shareholders approved the previously announced proposed corporate reorganization transaction (the “Transaction”) of Noble-Swiss and the group of companies it controls. The Transaction will merge Noble-Swiss into a newly formed subsidiary incorporated under English law, Noble Corporation plc (“Noble-UK”), which will become our new holding company. The Transaction will effectively change the place of incorporation of our publicly traded parent company from Switzerland to the United Kingdom. Subject to the completion of certain closing requirements, 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 ordinary share of Noble-UK in exchange for each ordinary 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 become subject to SEC reporting requirements and its ordinary shares have been approved for listing on the New York Stock Exchange under the symbol “NE”, subject to notice of issuance.

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)

Proposed Spin-off Transaction

In September 2013, we announced that our Board of Directors approved a plan to reorganize our business by means of a separation and spin-off of a newly formed subsidiary whose assets and liabilities would consist of most of our standard specification drilling units and related assets, liabilities and business (the “Separation”), resulting in the creation of two separate offshore drilling companies. The drilling units to be owned and operated by the new company include five drillships, three semisubmersibles, 34 jackups, two submersibles and one FPSO, as well as the Hibernia platform operations offshore Canada. We will continue to own and operate our high-specification assets with particular operating focus in deepwater and ultra-deepwater markets for drillships and semisubmersibles and harsh environment and high-specification markets for jackups. The Separation is subject to several conditions, including final board approval and shareholder approval.

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.

During the nine months ended September 30, 2013, the Bully joint venture partners approved and paid dividends totaling $139 million.

The combined carrying amount of the Bully-class drillships at both September 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 nine months ended September 30, 2013 and 2012 are as follows:


	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2013		2012		2013		2012
Operating revenues	$	94,847	$	78,447	$	272,620	$	162,892
Net income	$	36,488	$	28,679	$	103,123	$	52,152

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 table details Noble-Swiss’ share capital as of September 30, 2013 and December 31, 2012:


	September 30,		December 31,
	2013		2012
Shares outstanding and trading		253,388		252,759
Treasury shares		777		589

Total shares outstanding		254,165		253,348
Treasury shares held for share-based compensation plans		11,985		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 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, with the final payment having been made in May 2013.

In April 2013, our shareholders approved the payment of a dividend aggregating $1.00 per share to be paid in four equal installments, the first of which was paid in August 2013, with the remaining three installments currently scheduled for November 2013, February 2014 and May 2014, respectively. As of September 30, 2013, we had $192 million of dividends payable outstanding. 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.

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,
	2013			2012			2013			2012
Allocation of net income
Basic
Net income attributable to Noble Corporation	$	281,957		$	114,774		$	608,637		$	394,767
Earnings allocated to unvested share-based payment awards		(3,393	)		(1,192	)		(7,191	)		(4,008	)

Net income to common shareholders—basic	$	278,564		$	113,582		$	601,446		$	390,759

Diluted
Net income attributable to Noble Corporation	$	281,957		$	114,774		$	608,637		$	394,767
Earnings allocated to unvested share-based payment awards		(3,390	)		(1,190	)		(7,184	)		(4,002	)

Net income to common shareholders—diluted	$	278,567		$	113,584		$	601,453		$	390,765

Weighted average shares outstanding—basic		253,357			252,657			253,242			252,339
Incremental shares issuable from assumed exercise of stock options		261			317			265			385

Weighted average shares outstanding—diluted		253,618			252,974			253,507			252,724

Weighted average unvested share-based payment awards		3,086			2,651			3,028			2,588

Earnings per share
Basic	$	1.10		$	0.45		$	2.37		$	1.55
Diluted	$	1.10		$	0.45		$	2.37		$	1.55

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 September 30, 2013 and 2012, stock options representing approximately 0.9 million and 1.1 million shares, respectively, were excluded from the diluted earnings per share as they were not dilutive.

Note 4 — Receivables from Customers

At September 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.

Note 5 — Property and Equipment

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


	September 30,		December 31,
	2013		2012
Drilling equipment and facilities	$	15,835,848	$	14,099,628
Construction in progress		2,569,052		2,677,385
Other		202,031		194,653

Property and equipment, at cost	$	18,606,931	$	16,971,666

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)

Capital expenditures, including capitalized interest, totaled $1.7 billion and $1.2 billion for the nine months ended September 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 $31 million and $92 million for the three and nine months ended September 30, 2013, respectively, as compared to $31 million and $108 million for the three and nine months ended September 30, 2012.

Note 6 — 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 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 a signed letter of intent to sell the assets (Level 2 fair value measurement). Based on these estimates, we recognized a charge of approximately $5 million in 2012.

During the third quarter of 2013, we recorded an additional impairment charge of approximately $4 million on our two cold stacked submersible rigs arising from the potential disposition of these assets to an unrelated third party.

Note 7 — Gain on Disposal of Assets, net

During the third quarter of 2013, we completed the sale of the Noble Lewis Dugger for $61 million to an unrelated third party in Mexico. In connection with the sale, we recorded a pre-tax gain of approximately $36 million.

Note 8 – Gain on Contract Settlements/Extinguishments, net

During the third quarter of 2013, we received $45 million related to the settlement of all claims against the former shareholders of FDR Holdings, Ltd., which we acquired in July 2010, relating to alleged breaches of various representations and warranties contained in the purchase agreement.

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 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.

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 9 — Debt

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


	September 30,		December 31,
	2013		2012
Senior unsecured notes:
5.875% Senior Notes due 2013	$	—	$	299,985
7.375% Senior Notes due 2014		249,922		249,799
3.45% Senior Notes due 2015		350,000		350,000
3.05% Senior Notes due 2016		299,963		299,952
2.50% Senior Notes due 2017		299,877		299,852
7.50% Senior Notes due 2019		201,695		201,695
4.90% Senior Notes due 2020		498,991		498,900
4.625% Senior Notes due 2021		399,563		399,527
3.95% Senior Notes due 2022		399,157		399,095
6.20% Senior Notes due 2040		399,892		399,891
6.05% Senior Notes due 2041		397,638		397,613
5.25% Senior Notes due 2042		498,276		498,257

Total senior unsecured notes		3,994,974		4,294,566
Commercial paper program		1,312,864		339,809

Total long-term debt	$	5,307,838	$	4,634,375

Credit Facilities and Commercial Paper Program

We currently have three separate credit facilities with an aggregate maximum available capacity of $2.9 billion (together, the “Credit Facilities”), which includes a $600 million 364-day unsecured revolving credit agreement we entered into in August 2013. In addition, we have an $800 million credit facility maturing in 2015 and a $1.5 billion credit facility maturing in 2017. We also established a commercial paper program in September 2012, 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. Our total debt related to the Credit Facilities and commercial paper program was $1.3 billion at September 30, 2013 as compared to $340 million at December 31, 2012. At September 30, 2013, we had approximately $1.6 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 September 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.

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)

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 September 30, 2013, our ratio of debt to total tangible capitalization was approximately 0.37. We were in compliance with all covenants under the Credit Facilities as of September 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 September 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 September 30, 2013 and December 31, 2012, respectively:


	September 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		249,922		257,442		249,799		269,008
3.45% Senior Notes due 2015		350,000		363,551		350,000		368,824
3.05% Senior Notes due 2016		299,963		309,374		299,952		316,268
2.50% Senior Notes due 2017		299,877		301,995		299,852		309,846
7.50% Senior Notes due 2019		201,695		235,014		201,695		249,358
4.90% Senior Notes due 2020		498,991		523,400		498,900		562,530
4.625% Senior Notes due 2021		399,563		407,416		399,527		442,776
3.95% Senior Notes due 2022		399,157		385,207		399,095		422,227
6.20% Senior Notes due 2040		399,892		407,789		399,891		477,327
6.05% Senior Notes due 2041		397,638		400,740		397,613		468,256
5.25% Senior Notes due 2042		498,276		451,050		498,257		533,422

Total senior unsecured notes		3,994,974		4,042,978		4,294,566		4,725,436
Commercial paper program		1,312,864		1,312,864		339,809		339,809

Total long-term debt	$	5,307,838	$	5,355,842	$	4,634,375	$	5,065,245

Note 10 — Income Taxes

At December 31, 2012, the reserves for uncertain tax positions totaled $125 million (net of related tax benefits of $10 million). At September 30, 2013, the reserves for uncertain tax positions totaled $138 million (net of related tax benefits of $2 million), and if not utilized, would reduce the provision for income taxes by $138 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.

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 11 — Employee Benefit Plans

Pension costs include the following components:


	Three Months Ended September 30,
	2013						2012
	Non-U.S.			U.S.			Non-U.S.			U.S.
Service cost	$	1,361		$	2,681		$	1,072		$	2,431
Interest cost		1,259			2,263			1,317			2,196
Return on plan assets		(1,443	)		(3,275	)		(1,313	)		(2,793	)
Amortization of prior service cost		—			57			—			57
Recognized net actuarial loss		426			1,910			199			1,885

Net pension expense	$	1,603		$	3,636		$	1,275		$	3,776


	Nine Months Ended September 30,
	2013						2012
	Non-U.S.			U.S.			Non-U.S.			U.S.
Service cost	$	4,089		$	8,043		$	3,306		$	7,237
Interest cost		3,793			6,787			4,025			6,556
Return on plan assets		(4,351	)		(9,827	)		(4,001	)		(8,379	)
Amortization of prior service cost		—			171			—			171
Recognized net actuarial loss		1,226			5,730			600			5,563

Net pension expense	$	4,757		$	10,904		$	3,930		$	11,148

During the three and nine months ended September 30, 2013, we made contributions to our pension plans totaling $5 million and $13 million, respectively.

Note 12 — 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 $42 million at September 30, 2013. Total unrealized gain related to these forward contracts was approximately $0.6 million as of September 30, 2013 and was recorded as part of “Accumulated other comprehensive loss” (“AOCL”).

NOBLE CORPORATION (NOBLE-SWISS) AND SUBSIDIARIES

NOBLE CORPORATION (NOBLE-CAYMAN) AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

The balance of the net unrealized gain related to our cash flow hedges included in AOCL and related activity is as follows:


	Three Months Ended					Nine Months Ended
	September 30,					September 30,
	2013			2012		2013		2012
Net unrealized loss at beginning of period	$	(4,731	)	$	—	$	—	$	(3,061	)
Activity during period:
Settlement of foreign currency forward contracts during the period		2,849			—		—		3,061
Net unrealized gain on outstanding foreign currency forward contracts		2,471			—		589		—

Net unrealized gain at end of period	$	589		$	—	$	589	$	—

Financial Statement Presentation

The following tables, together with Note 13, summarize the financial statement presentation and fair value of our derivative positions as of September 30, 2013 and December 31, 2012:


		Estimated fair value
	Balance sheet classification	September 30, 2013		December 31, 2012
Asset derivatives
Cash flow hedges
Short-term foreign currency forward contracts	Other current assets	$	1,927	$	—
Liability derivatives
Cash flow hedges
Short-term foreign currency forward contracts	Other current liabilities	$	1,338	$	—

To supplement the fair value disclosures in Note 13, the following summarizes the recognized gains and losses of cash flow hedges through AOCL or through “other income” for the three months ended September 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	$	2,471	$	—	$	2,849	$	—	$	—	$	—

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)

To supplement the fair value disclosures in Note 13, the following summarizes the recognized gains and losses of cash flow hedges through AOCL or through “other income” for the nine months ended September 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	$	(2,525	)	$	—	$	3,114	$	3,061	$	—	$	—

Note 13 — 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, 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	$	7,072	$	7,072	$	—	$	—
Foreign currency forward contracts		1,927		—		1,927		—
Liabilities—
Foreign currency forward contracts	$	1,338	$	—	$	1,338	$	—

December 31, 2012

Estimated Fair Value Measurements

Quoted

Significant

Prices in

Other

Significant

Active

Observable

Unobservable

Carrying

Markets

Inputs

Amount

(Level 1)

(Level 2)

(Level 3)

Assets—

Marketable securities

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.

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 14 — Accumulated Other Comprehensive Loss

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


	Three months ended September 30, 2013
	Gain / (Loss)			Defined
	on			Benefit			Foreign
	Cash Flow			Pension			Currency
	Hedges⁽¹⁾			Items⁽²⁾			Items			Total
Balance at beginning of period	$	(4,731	)	$	(91,797	)	$	(19,901	)	$	(116,429	)

Activity during period:
Other comprehensive income/(loss) before reclassifications		2,471			—			(1,135	)		1,336
Amounts reclassified from AOCL		2,849			1,661			—			4,510

Net current period other comprehensive income/(loss)		5,320			1,661			(1,135	)		5,846

Balance at end of period	$	589		$	(90,136	)	$	(21,036	)	$	(110,583	)


	Nine months ended September 30, 2013
				Defined
	Gain 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		589			—			(658	)		(69	)
Amounts reclassified from AOCL		—			4,935			—			4,935

Net current period other comprehensive income/(loss)		589			4,935			(658	)		4,866

Balance at end of period	$	589		$	(90,136	)	$	(21,036	)	$	(110,583	)

(1)	Gain / (loss) 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 12 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 11 for additional information

Note 15 — 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.

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. We are in advanced settlement discussions with Marathon and have postponed the trial date. We cannot predict the outcome of this lawsuit, including any settlement discussions.

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 and operational sanctions, 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 September 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 September 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.

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 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.

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.

Audit claims of approximately $300 million attributable to income, customs and other business taxes have been assessed against us. 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. Tax authorities 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.

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 remaining rigs, including those in the Mexico portion of the Gulf of Mexico, continue to be 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 $2.6 billion at September 30, 2013.

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 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.

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 — 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 nine months ended September 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 September 30,
	2013									2012
	Contract									Contract
	Drilling									Drilling
	Services			Other			Total			Services			Other			Total
Revenues from external customers	$	1,069,986		$	8,895		$	1,078,881		$	860,315		$	23,717		$	884,032
Depreciation and amortization		219,695			4,016			223,711			191,638			3,449			195,087
Segment operating income/(loss)		382,475			(4,094	)		378,381			173,285			5,639			178,924
Interest expense, net of amount capitalized		(317	)		(22,832	)		(23,149	)		(121	)		(25,514	)		(25,635	)
Income tax (provision)/benefit		(59,854	)		4,024			(55,830	)		(28,307	)		3,145			(25,162	)
Segment profit/(loss)		303,617			(21,660	)		281,957			130,983			(16,209	)		114,774
Total assets (at end of period)		15,058,076			671,255			15,729,331			13,983,223			477,183			14,460,406


	Nine Months Ended September 30,
	2013									2012
	Contract									Contract
	Drilling									Drilling
	Services			Other			Total			Services			Other			Total
Revenues from external customers	$	3,022,966		$	44,275		$	3,067,241		$	2,519,930		$	60,715		$	2,580,645
Depreciation and amortization		631,396			11,060			642,456			539,698			10,081			549,779
Segment operating income		861,219			813			862,032			559,713			7,349			567,062
Interest expense, net of amount capitalized		(539	)		(74,576	)		(75,115	)		(315	)		(56,468	)		(56,783	)
Income tax (provision)/benefit		(138,695	)		11,689			(127,006	)		(102,005	)		8,898			(93,107	)
Segment profit/(loss)		669,107			(60,470	)		608,637			434,561			(39,794	)		394,767
Total assets (at end of period)		15,058,076			671,255			15,729,331			13,983,223			477,183			14,460,406

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 17 — 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 18 — 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,
	2013			2012			2013			2012
Accounts receivable	$	(92,073	)	$	(163,051	)	$	(92,073	)	$	(163,051	)
Other current assets		(50,738	)		(58,303	)		(49,791	)		(59,764	)
Other assets		(8,129	)		(25,543	)		(8,133	)		(25,546	)
Accounts payable		9,357			29,470			7,830			29,353
Other current liabilities		4,042			76,035			4,702			79,436
Other liabilities		35,231			70,382			35,227			64,215

	$	(102,310	)	$	(71,010	)	$	(102,238	)	$	(75,357	)

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 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 September 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.

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. We concluded these errors were not material individually or in the aggregate to any of the previously issued financial statements taken as a whole. 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.

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, 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	)

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	)

NOBLE CORPORATION (NOBLE-CAYMAN) AND SUBSIDIARIES

CONDENSED CONSOLIDATING BALANCE SHEET

September 30, 2013

(in thousands)


	Noble-		NHC and NDH										Subsidiaries			Consolidating
	Cayman		Combined			NDC			NHIL		NDS6		of Noble			Adjustments			Total
ASSETS
Current assets
Cash and cash equivalents	$	5	$	123		$	—		$	8	$	—	$	173,581		$	—		$	173,717
Accounts receivable		—		59,250			3,388			—		—		803,108			—			865,746
Taxes receivable		—		41,407			—			—		—		101,831			—			143,238
Prepaid expenses		—		749			8			—		—		48,572			—			49,329
Short-term notes receivable from affiliates		—		869,476			—			—		606,269		319,201			(1,794,946	)		—
Accounts receivable from affiliates		978,461		157,252			1,154,776			172,379		65,991		6,311,688			(8,840,547	)		—
Other current assets		—		4,418			196			—		—		129,390			—			134,004

Total current assets		978,466		1,132,675			1,158,368			172,387		672,260		7,887,371			(10,635,493	)		1,366,034

Property and equipment, at cost		—		2,518,896			77,253			—		—		15,973,482			—			18,569,631
Accumulated depreciation		—		(328,045	)		(61,592	)		—		—		(4,136,365	)		—			(4,526,002	)

Property and equipment, net		—		2,190,851			15,661			—		—		11,837,117			—			14,043,629

Notes receivable from affiliates		3,816,463		675,000			—			3,524,814		5,000		1,827,879			(9,849,156	)		—
Investments in affiliates		8,507,009		12,100,603			3,310,205			8,521,927		2,332,612		—			(34,772,356	)		—
Other assets		6,144		5,266			266			23,395		668		246,217			—			281,956

Total assets	$	13,308,082	$	16,104,395		$	4,484,500		$	12,242,523	$	3,010,540	$	21,798,584		$	(55,257,005	)	$	15,691,619

LIABILITIES AND EQUITY
Current liabilities
Short-term notes payables from affiliates	$	78,016	$	127,036		$	114,149		$	—	$	750,000	$	725,745		$	(1,794,946	)	$	—
Accounts payable		—		4,338			537			—		—		311,058			—			315,933
Accrued payroll and related costs		—		8,085			8,865			—		—		112,220			—			129,170
Accounts payable to affiliates		1,061,152		4,998,213			3,908			236,008		77,296		2,463,970			(8,840,547	)		—
Taxes payable		—		13,434			9			—		—		116,628			—			130,071
Other current liabilities		496		5,270			240			17,128		630		178,658			—			202,422

Total current liabilities		1,139,664		5,156,376			127,708			253,136		827,926		3,908,279			(10,635,493	)		777,596

Long-term debt		1,312,864		—			—			3,793,279		201,695		—			—			5,307,838
Notes payable to affiliates		2,557,787		586,979			—			975,000		811,000		4,918,390			(9,849,156	)		—
Deferred income taxes		—		—			15,731			—		—		171,917			—			187,648
Other liabilities		19,930		23,106			—			—		—		349,407			—			392,443

Total liabilities		5,030,245		5,766,461			143,439			5,021,415		1,840,621		9,347,993			(20,484,649	)		6,665,525

Commitments and contingencies
Total shareholder equity		8,277,837		10,337,934			4,341,061			7,221,108		1,169,919		11,261,974			(34,331,996	)		8,277,837
Noncontrolling interest		—		—			—			—		—		1,188,617			(440,360	)		748,257

Total equity		8,277,837		10,337,934			4,341,061			7,221,108		1,169,919		12,450,591			(34,772,356	)		9,026,094

Total liabilities and equity	$	13,308,082	$	16,104,395		$	4,484,500		$	12,242,523	$	3,010,540	$	21,798,584		$	(55,257,005	)	$	15,691,619

NOBLE CORPORATION (NOBLE-CAYMAN) AND SUBSIDIARIES

CONDENSED CONSOLIDATING BALANCE SHEET

December 31, 2012

(in thousands)


													Other
													Non-guarantor
	Noble-		NHC and NDH										Subsidiaries			Consolidating
	Cayman		Combined			NDC			NHIL		NDS6		of Noble			Adjustments			Total
ASSETS
Current assets
Cash and cash equivalents	$	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

Property and equipment, at cost		—		2,735,223			76,428			—		—		14,123,496			—			16,935,147
Accumulated depreciation		—		(283,028	)		(58,411	)		—		—		(3,597,079	)		—			(3,938,518	)

Property and equipment, net		—		2,452,195			18,017			—		—		10,526,417			—			12,996,629

Notes receivable from affiliates		3,816,463		1,206,000			—			3,524,814		479,107		2,171,875			(11,198,259	)		—
Investments in affiliates		7,770,066		9,170,923			3,386,879			7,413,361		1,977,906		—			(29,719,135	)		—
Other assets		5,798		320			543			25,895		759		243,243			—			276,558

Total assets	$	12,257,940	$	13,114,093		$	4,424,183		$	11,490,555	$	3,083,436	$	20,316,033		$	(50,115,814	)	$	14,570,426

LIABILITIES AND EQUITY
Current liabilities
Short-term notes payables from affiliates	$	90,314	$	51,054		$	110,770		$	—	$	—	$	706,245		$	(958,383	)	$	—
Accounts payable		—		6,522			1,183			—		—		341,889			—			349,594
Accrued payroll and related costs		—		6,176			7,611			—		—		110,149			—			123,936
Accounts payable to affiliates		900,063		4,806,235			5,444			165,065		77,075		2,286,155			(8,240,037	)		—
Taxes payable		—		9,152			—			—		—		121,692			—			130,844
Other current liabilities		1,594		—			240			62,430		4,412		158,259			—			226,935

Total current liabilities		991,971		4,879,139			125,248			227,495		81,487		3,724,389			(9,198,420	)		831,309

Long-term debt		639,794		—			—			3,792,886		201,695		—			—			4,634,375
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			—		—		210,314			—			226,045
Other liabilities		19,930		17,815			—			—		—		309,870			—			347,615

Total liabilities		4,491,982		5,545,429			140,979			4,995,381		1,625,182		9,637,070			(20,396,679	)		6,039,344

Commitments and contingencies
Total shareholder equity		7,765,958		7,568,664			4,283,204			6,495,174		1,458,254		9,509,343			(29,314,639	)		7,765,958
Noncontrolling interest		—		—			—			—		—		1,169,620			(404,496	)		765,124

Total equity		7,765,958		7,568,664			4,283,204			6,495,174		1,458,254		10,678,963			(29,719,135	)		8,531,082

Total liabilities and equity	$	12,257,940	$	13,114,093		$	4,424,183		$	11,490,555	$	3,083,436	$	20,316,033		$	(50,115,814	)	$	14,570,426

NOBLE CORPORATION (NOBLE-CAYMAN) AND SUBSIDIARIES

CONDENSED CONSOLIDATING STATEMENT OF INCOME

Three Months Ended September 30, 2013

(in thousands)


																Other
																Non-guarantor
	Noble-			NHC and NDH												Subsidiaries			Consolidating
	Cayman			Combined			NDC			NHIL			NDS6			of Noble			Adjustments			Total
Operating revenues
Contract drilling services	$	—		$	67,831		$	5,126		$	—		$	—		$	991,221		$	(23,060	)	$	1,041,118
Reimbursables		—			1,796			—			—			—			27,446			—			29,242
Labor contract drilling services		—			—			—			—			—			8,493			—			8,493
Other		—			—			—			—			—			28			—			28

Total operating revenues		—			69,627			5,126			—			—			1,027,188			(23,060	)		1,078,881

Operating costs and expenses
Contract drilling services		1,665			24,776			2,231			29,339			—			451,162			(23,060	)		486,113
Reimbursables		—			1,509			—			—			—			22,162			—			23,671
Labor contract drilling services		—			—			—			—			—			8,153			—			8,153
Depreciation and amortization		—			15,937			1,174			—			—			206,065			—			223,176
General and administrative		252			831			—			2,672			—			3,496			—			7,251
Loss on impairment		—			—			—			—			—			3,585			—			3,585
Gain on disposal of assets, net		—			—			—			—			—			(35,646	)		—			(35,646	)
Gain on contract settlements/extinguishments, net		(45,000	)		—			—			—			—			—			—			(45,000	)

Total operating costs and expenses		(43,083	)		43,053			3,405			32,011			—			658,977			(23,060	)		671,303

Operating income (loss)		43,083			26,574			1,721			(32,011	)		—			368,211			—			407,578
Other income (expense)
Equity earnings in affiliates, net of tax		301,048			189,686			40,619			330,102			(1,381,410	)		—			519,955			—
Interest expense, net of amounts capitalized		(34,941	)		(5,604	)		(503	)		(32,646	)		(14,998	)		(1,548,475	)		1,614,018			(23,149	)
Interest income and other, net		1,664			20,354			(7	)		44,809			1,524,744			22,869			(1,614,018	)		415

Income before income taxes		310,854			231,010			41,830			310,254			128,336			(1,157,395	)		519,955			384,844
Income tax provision		—			(51,021	)		—			—			—			(4,467	)		—			(55,488	)

Net Income		310,854			179,989			41,830			310,254			128,336			(1,161,862	)		519,955			329,356
Net income attributable to noncontrolling interests		—			—			—			—			—			(34,004	)		15,502			(18,502	)

Net income attributable to Noble Corporation		310,854			179,989			41,830			310,254			128,336			(1,195,866	)		535,457			310,854

Other comprehensive income, net		5,846			—			—			—			—			5,846			(5,846	)		5,846

Comprehensive income attributable to Noble Corporation	$	316,700		$	179,989		$	41,830		$	310,254		$	128,336		$	(1,190,020	)	$	529,611		$	316,700

NOBLE CORPORATION (NOBLE-CAYMAN) AND SUBSIDIARIES

CONDENSED CONSOLIDATING STATEMENT OF INCOME

Nine Months Ended September 30, 2013

(in thousands)


	Noble- Cayman			NHC and NDH Combined			NDC			NHIL			NDS6			Other Non-guarantor Subsidiaries of Noble			Consolidating Adjustments			Total
Operating revenues
Contract drilling services	$	—		$	201,101		$	15,135		$	—		$	—		$	2,795,505		$	(66,431	)	$	2,945,310
Reimbursables		—			5,117			—			—			—			73,559			—			78,676
Labor contract drilling services		—			—			—			—			—			43,150			—			43,150
Other		—			—			—			—			—			105			—			105

Total operating revenues		—			206,218			15,135			—			—			2,912,319			(66,431	)		3,067,241

Operating costs and expenses
Contract drilling services		3,600			61,079			5,842			79,188			—			1,364,841			(66,431	)		1,448,119
Reimbursables		—			4,332			—			—			—			56,962			—			61,294
Labor contract drilling services		—			—			—			—			—			29,804			—			29,804
Depreciation and amortization		—			46,120			3,377			—			—			591,662			—			641,159
General and administrative		1,544			4,845			1			20,788			1			10,503			—			37,682
Loss on impairment		—			—			—			—			—			3,585			—			3,585
Gain on disposal of assets, net		—			—			—			—			—			(35,646	)		—			(35,646	)
Gain on contract settlements/extinguishments, net		(45,000	)		—			—			—			—			(1,800	)		—			(46,800	)

Total operating costs and expenses		(39,856	)		116,376			9,220			99,976			1			2,019,911			(66,431	)		2,139,197

Operating income (loss)		39,856			89,842			5,915			(99,976	)		(1	)		892,408			—			928,044
Other income (expense)
Equity earnings in affiliates, net of tax		736,942			392,101			53,787			796,217			(1,177,957	)		—			(801,090	)		—
Interest expense, net of amounts capitalized		(105,720	)		(18,604	)		(1,842	)		(99,911	)		(38,388	)		(1,595,902	)		1,785,252			(75,115	)
Interest income and other, net		4,941			42,205			(7	)		129,601			1,537,410			72,285			(1,785,252	)		1,183

Income before income taxes		676,019			505,544			57,853			725,931			321,064			(631,209	)		(801,090	)		854,112
Income tax provision		—			(41,278	)		—			—			—			(83,954	)		—			(125,232	)

Net Income		676,019			464,266			57,853			725,931			321,064			(715,163	)		(801,090	)		728,880
Net income attributable to noncontrolling interests		—			—			—			—			—			(88,725	)		35,864			(52,861	)

Net income attributable to Noble Corporation		676,019			464,266			57,853			725,931			321,064			(803,888	)		(765,226	)		676,019

Other comprehensive income, net		4,866			—			—			—			—			4,866			(4,866	)		4,866

Comprehensive income attributable to Noble Corporation	$	680,885		$	464,266		$	57,853		$	725,931		$	321,064		$	(799,022	)	$	(770,092	)	$	680,885

NOBLE CORPORATION (NOBLE-CAYMAN) AND SUBSIDIARIES

CONDENSED CONSOLIDATING STATEMENT OF INCOME

Three Months Ended September 30, 2012

(in thousands)


	Noble- Cayman			NHC and NDH Combined			NDC			NHIL			NDS6			Other Non-guarantor Subsidiaries of Noble			Consolidating Adjustments			Total
Operating revenues
Contract drilling services	$	—		$	36,149		$	5,061		$	—		$	—		$	809,858		$	(17,856	)	$	833,212
Reimbursables		—			389			—			—			—			27,748			—			28,137
Labor contract drilling services		—			—			—			—			—			22,667			—			22,667
Other		—			—			—			—			—			16			—			16

Total operating revenues		—			36,538			5,061			—			—			860,289			(17,856	)		884,032

Operating costs and expenses
Contract drilling services		1,355			13,948			1,919			19,636			—			425,223			(17,856	)		444,225
Reimbursables		—			216			—			—			—			20,831			—			21,047
Labor contract drilling services		—			—			—			—			—			12,991			—			12,991
Depreciation and amortization		—			15,500			1,181			—			—			177,914			—			194,595
General and administrative		426			1,447			—			9,700			1			3,913			—			15,487

Total operating costs and expenses		1,781			31,111			3,100			29,336			1			640,872			(17,856	)		688,345

Operating income (loss)		(1,781	)		5,427			1,961			(29,336	)		(1	)		219,417			—			195,687
Other income (expense)
Equity earnings in affiliates, net of tax		162,311			69,069			36,463			172,364			129,161			—			(569,368	)		—
Interest expense, net of amounts capitalized		(30,496	)		(8,964	)		(852	)		(33,509	)		(11,832	)		(20,221	)		80,239			(25,635	)
Interest income and other, net		1,689			11,080			9			37,430			2,846			28,546			(80,239	)		1,361

Income before income taxes		131,723			76,612			37,581			146,949			120,174			227,742			(569,368	)		171,413
Income tax provision		—			(8,639	)		—			—			—			(16,145	)		—			(24,784	)

Net Income		131,723			67,973			37,581			146,949			120,174			211,597			(569,368	)		146,629
Net income attributable to noncontrolling interests		—			—			—			—			—			(22,246	)		7,340			(14,906	)

Net income attributable to Noble Corporation		131,723			67,973			37,581			146,949			120,174			189,351			(562,028	)		131,723

Other comprehensive income, net		3,384			—			—			—			—			3,384			(3,384	)		3,384

Comprehensive income attributable to Noble Corporation	$	135,107		$	67,973		$	37,581		$	146,949		$	120,174		$	192,735		$	(565,412	)	$	135,107

NOBLE CORPORATION (NOBLE-CAYMAN) AND SUBSIDIARIES

CONDENSED CONSOLIDATING STATEMENT OF INCOME

Nine Months Ended September 30, 2012

(in thousands)


	Noble- Cayman			NHC and NDH Combined			NDC			NHIL			NDS6			Other Non-guarantor Subsidiaries of Noble			Consolidating Adjustments			Total
Operating revenues
Contract drilling services	$	—		$	117,488		$	14,941		$	—		$	—		$	2,352,618		$	(57,288	)	$	2,427,759
Reimbursables		—			6,199			—			—			—			87,891			—			94,090
Labor contract drilling services		—			—			—			—			—			58,538			—			58,538
Other		—			—			—			—			—			1,190			(932	)		258

Total operating revenues		—			123,687			14,941			—			—			2,500,237			(58,220	)		2,580,645

Operating costs and expenses
Contract drilling services		3,794			42,642			5,529			56,048			—			1,231,176			(58,220	)		1,280,969
Reimbursables		—			5,641			—			—			—			70,977			—			76,618
Labor contract drilling services		—			—			—			—			—			34,070			—			34,070
Depreciation and amortization		—			45,577			3,278			—			—			499,416			—			548,271
General and administrative		1,237			4,258			—			28,137			1			11,331			—			44,964
Loss on impairment		—			—			—			—			—			18,345			—			18,345
Gain on contract settlements/extinguishments, net		—			(4,869	)		—			—			—			(28,386	)		—			(33,255	)

Total operating costs and expenses		5,031			93,249			8,807			84,185			1			1,836,929			(58,220	)		1,969,982

Operating income (loss)		(5,031	)		30,438			6,134			(84,185	)		(1	)		663,308			—			610,663
Other income (expense)
Equity earnings in affiliates, net of tax		515,132			358,234			92,343			583,122			274,564			—			(1,823,395	)		—
Interest expense, net of amounts capitalized		(76,396	)		(37,881	)		(3,040	)		(83,975	)		(31,020	)		(60,193	)		235,722			(56,783	)
Interest income and other, net		5,640			29,771			4			99,609			8,771			96,295			(235,722	)		4,368

Income before income taxes		439,345			380,562			95,441			514,571			252,314			699,410			(1,823,395	)		558,248
Income tax provision		—			(30,902	)		—			—			—			(61,070	)		—			(91,972	)

Net Income		439,345			349,660			95,441			514,571			252,314			638,340			(1,823,395	)		466,276
Net income attributable to noncontrolling interests		—			—			—			—			—			(52,643	)		25,712			(26,931	)

Net income attributable to Noble Corporation		439,345			349,660			95,441			514,571			252,314			585,697			(1,797,683	)		439,345

Other comprehensive income, net		2,244			—			—			—			—			2,244			(2,244	)		2,244

Comprehensive income attributable to Noble Corporation	$	441,589		$	349,660		$	95,441		$	514,571		$	252,314		$	587,941		$	(1,799,927	)	$	441,589

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