UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q


þ		QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended: September 30, ~~2010~~2011


o		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 ~~6430~~6340
(Address of principal executive offices) (Zip Code)

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

Securities registered pursuant to Section 12(b) of the Act:


Title of each class		Name of each exchange on which registered

Shares, Par Value ~~4.06~~3.54 CHF ~~Per~~per Share		New York Stock Exchange

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)		98-0366361 (I.R.S. employer identification number)

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

(Address of principal executive offices) (Zip Code)

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

Securities registered pursuant to Section 12(b) of the Act:


~~Title of each class~~		~~Name of each exchange on which registered~~

~~N/A~~		~~N/A~~

None

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. YesþNoo

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). Yesþ Noo

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 filerþ	Accelerated filero	Non-accelerated filero	Smaller reporting companyo
Noble-Cayman:	Large accelerated filero	Accelerated filero	Non-accelerated filerþ	Smaller reporting companyo

Indicate by check mark whether each registrant is a shell company (as defined in Rule 12b-2 of the Act). Yeso Noþ

Number of shares outstanding and trading at October ~~31, 2010:~~28, 2011: Noble Corporation (Switzerland) — ~~252,280,175~~252,437,480

Number of shares outstanding at October 28, 2011: 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 thisForm 10-Q with the reduced disclosure format contemplated by paragraphs (b) and (c) of General Instruction H(2) ofForm ~~10-Q~~.10-Q.

TABLE OF CONTENTS


	Page
PART I FINANCIAL INFORMATION

Item 1 Financial Statements

Noble Corporation (Noble-Swiss) Financial Statements:

Consolidated Balance Sheet as of September 30, ~~2010~~2011 and December 31, ~~2009~~2010		3

Consolidated Statement of Income for the three and nine months ended September 30, ~~2010~~2011 and ~~2009~~2010		4

Consolidated Statement of Cash Flows for the nine months ended September 30, ~~2010~~2011 and ~~2009~~2010		5

Consolidated Statement of Equity for the nine months ended September 30, 2011 and 2010		6

Consolidated Statement of Comprehensive Income for the three and nine months ended September 30, ~~2010~~2011 and ~~2009~~2010		7

Noble Corporation (Noble-Cayman) Financial Statements:

Consolidated Balance Sheet as of September 30, ~~2010~~2011 and December 31, ~~2009~~2010		8

Consolidated Statement of Income for the three and nine months ended September 30, ~~2010~~2011 and ~~2009~~2010		9

Consolidated Statement of Cash Flows for the nine months ended September 30, ~~2010~~2011 and ~~2009~~2010		10

Consolidated Statement of Equity for the nine months ended September 30, 2011 and 2010		11

Consolidated Statement of Comprehensive Income for the three and nine months ended September 30, ~~2010~~2011 and ~~2009~~2010		12

Notes to Combined Consolidated Financial Statements		13

Item 2 Management’s Discussion and Analysis of Financial Condition and Results of Operations		4338

Item 3 Quantitative and Qualitative Disclosures About Market Risk		6157

Item 4 Controls and Procedures		6358

PART II OTHER INFORMATION

Item 1 Legal Proceedings		6459

Item 1A Risk Factors		6459

Item 2 Unregistered Sales of Equity Securities and Use of Proceeds		6660

Item 6 Exhibits		6660

SIGNATURES		6761

Index to Exhibits		6862

Exhibit 3.1
Exhibit 31.1
Exhibit 31.2
Exhibit ~~31.3~~
~~Exhibit~~ 32.1
Exhibit 32.2
~~Exhibit 32.3~~
EX-101 INSTANCE DOCUMENT
EX-101 SCHEMA DOCUMENT
EX-101 CALCULATION LINKBASE DOCUMENT
EX-101 LABELS LINKBASE DOCUMENT
EX-101 PRESENTATION LINKBASE DOCUMENT
EX-101 DEFINITION LINKBASE DOCUMENT

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 ~~the~~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, after March 26, 2009 and to Noble-Cayman and its consolidated subsidiaries for periods through March 26, 2009. Noble-Swiss became a successor registrant to Noble-Cayman pursuant to Rule 12g-3 of the Securities Exchange Act of 1934, as amended, as a result of a series of transactions described in Note 1 to Item 1, Part I of this Quarterly Report on Form 10-Q.Noble-Cayman.

PART I. FINANCIAL INFORMATION

~~Item 1. Financial Statements~~


Item 1.		Financial Statements

NOBLE CORPORATION (NOBLE-SWISS) AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEET

(In thousands)

(Unaudited)


	September 30,			December 31,			September 30,			December 31,
	2010			2009			2011			2010
ASSETS
Current assets
Cash and cash equivalents	$	367,242		$	735,493		$	197,015		$	337,871
Accounts receivable		487,029			647,454			601,161			387,414
Prepaid expenses and other current assets		133,786			100,243
Taxes receivable								57,335			81,066
Prepaid expenses								61,166			35,502
Other current assets								84,767			69,941

Total current assets		988,057			1,483,190			1,001,444			911,794


Property and equipment
Drilling equipment and facilities		11,981,111			8,666,750
Other		167,290			143,477

		12,148,401			8,810,227
Property and equipment, at cost								14,420,267			12,643,866
Accumulated depreciation		(2,468,867	)		(2,175,775	)		(2,999,235	)		(2,595,779	)

		9,679,534			6,634,452

Property and equipment, net								11,421,032			10,048,087

Other assets		338,833			279,254			529,057			342,506

Total assets	$	11,006,424		$	8,396,896		$	12,951,533		$	11,302,387


LIABILITIES AND EQUITY
Current liabilities
Current maturities of long-term debt	$	52,650		$	—		$	—		$	80,213
Accounts payable		277,944			197,800			320,053			374,814
Accrued payroll and related costs		127,046			100,167			124,317			125,663
Interest payable								22,129			40,260
Taxes payable		35,751			68,760			89,700			96,448
Other current liabilities		96,051			67,220			93,651			84,049

Total current liabilities		589,442			433,947			649,850			801,447


Long-term debt		2,670,701			750,946			3,811,866			2,686,484
Deferred income taxes		270,645			300,231			299,625			258,822
Other liabilities		274,546			123,340			218,523			268,000

Total liabilities		3,805,334			1,608,464			4,979,864			4,014,753


Commitments and contingencies

Shareholders’ equity
Shares; 262,324 shares and 261,975 shares outstanding		947,710			1,130,607
Treasury shares, at cost; 10,136 shares and 3,750 shares		(373,813	)		(143,031	)
Shares; 252,718 and 262,415 shares outstanding								796,067			917,684
Treasury shares, at cost; 285 and 10,140 shares								(10,531	)		(373,967	)
Additional paid-in capital		31,350			—			49,010			39,006
Retained earnings		6,531,742			5,855,737			6,549,441			6,630,500
Accumulated other comprehensive loss		(60,994	)		(54,881	)		(56,212	)		(50,220	)

Total shareholders’ equity		7,075,995			6,788,432			7,327,775			7,163,003


Noncontrolling interests		125,095			—			643,894			124,631


Total equity		7,201,090			6,788,432			7,971,669			7,287,634


Total liabilities and equity	$	11,006,424		$	8,396,896		$	12,951,533		$	11,302,387
												��

NOBLE CORPORATION (NOBLE-SWISS) AND SUBSIDIARIES

CONSOLIDATED STATEMENT OF INCOME

(In thousands, except per share amounts)

(Unaudited)


	Three Months Ended						Nine Months Ended						Three Months Ended						Nine Months Ended
	September 30,						September 30,						September 30,						September 30,
	2010			2009			2010			2009			2011			2010			2011			2010
Operating revenues
Contract drilling services	$	584,919		$	874,969		$	2,081,075		$	2,615,571		$	704,892		$	584,919		$	1,837,047		$	2,081,075
Reimbursables		19,177			22,455			57,163			61,967			17,438			19,177			63,851			57,163
Labor contract drilling services		7,887			7,490			23,704			21,843			15,564			7,887			43,123			23,704
Other		635			721			1,449			1,277			8			635			766			1,449

		612,618			905,635			2,163,391			2,700,658			737,902			612,618			1,944,787			2,163,391

Operating costs and expenses
Contract drilling services		315,844			250,842			845,870			742,752			358,547			315,844			1,001,638			845,870
Reimbursables		14,351			18,717			44,459			52,081			13,971			14,351			49,797			44,459
Labor contract drilling services		5,302			4,642			16,570			13,899			8,053			5,302			25,326			16,570
Depreciation and amortization		143,282			103,245			385,366			295,646			166,213			143,282			487,454			385,366
Selling, general and administrative		25,482			21,700			71,261			60,901			27,536			25,482			72,883			71,261
Loss on asset disposal/involuntary conversion, net		—			2,076			—			31,053
Gain on contract extinguishments, net														—			—			(21,202	)		—

														574,320			504,261			1,615,896			1,363,526
		504,261			401,222			1,363,526			1,196,332

Operating income		108,357			504,413			799,865			1,504,326			163,582			108,357			328,891			799,865

Other income (expense)
Interest expense, net of amount capitalized		(4,144	)		(379	)		(5,119	)		(1,261	)		(11,530	)		(4,144	)		(45,400	)		(5,119	)
Interest income and other, net		2,561			2,605			7,193			4,995			1,117			2,561			3,175			7,193

Income before income taxes		106,774			506,639			801,939			1,508,060			153,169			106,774			286,666			801,939
Income tax provision		(20,287	)		(80,556	)		(126,801	)		(275,833	)		(17,614	)		(20,287	)		(42,481	)		(126,801	)

Net income		86,487			426,083			675,138			1,232,227			135,555			86,487			244,185			675,138


Net (income)/loss attributable to noncontrolling interests		(467	)		—			(467	)		—

Net income attributable to noncontrolling interests														(238	)		(467	)		(290	)		(467	)

Net income attributable to Noble Corporation	$	86,020		$	426,083		$	674,671		$	1,232,227		$	135,317		$	86,020		$	243,895		$	674,671


Net income per share
Basic	$	0.34		$	1.63		$	2.63		$	4.72		$	0.53		$	0.34		$	0.96		$	2.63
Diluted	$	0.34		$	1.63		$	2.62		$	4.70		$	0.53		$	0.34		$	0.96		$	2.62

Par value reduction/dividend per share	$	0.66		$	0.04		$	0.75		$	0.08

NOBLE CORPORATION (NOBLE-SWISS) AND SUBSIDIARIES

CONSOLIDATED STATEMENT OF CASH FLOWS

(In thousands)

(Unaudited)


	Nine Months Ended						Nine Months Ended
	September 30,						September 30,
	2010			2009			2011			2010
Cash flows from operating activities
Net income	$	675,138		$	1,232,227		$	244,185		$	675,138
Adjustments to reconcile net income to net cash from operating activities:
Depreciation and amortization		385,366			295,646			487,454			385,366
Loss on asset disposal/involuntary conversion, net		—			31,053
Deferred income tax provision/(benefit)		(29,586	)		29,916
Gain on contract extinguishments, net								(21,202	)		—
Deferred income taxes								(34,549	)		(29,586	)
Share-based compensation expense		26,906			28,543			26,857			26,906
Pension contributions		(14,823	)		(13,022	)
Other changes in assets and liabilities, net of effect from acquisition:
Accounts receivable		250,917			(88,773	)
Other current assets		(22,962	)		(45,607	)
Other assets		8,223			2,609
Accounts payable		(12,635	)		27,491
Other current liabilities		(9,105	)		21,881
Other liabilities		28,258			(6,751	)
Net change in other assets and liabilities								(228,299	)		227,873

Net cash from operating activities		1,285,697			1,515,213			474,446			1,285,697


Cash flows from investing activities
New construction		(381,928	)		(457,233	)
Other capital expenditures		(439,921	)		(342,399	)
Major maintenance expenditures		(64,244	)		(93,112	)
Capital expenditures								(1,987,988	)		(886,093	)
Change in accrued capital expenditures		4,213			(44,493	)		(48,782	)		4,213
Acquisition of FDR Holdings Ltd., net of cash acquired		(1,629,644	)		—
Refund from contract extinguishments								18,642			—
Acquisition of FDR Holdings, Ltd., net of cash acquired								—			(1,629,644	)

Net cash from investing activities		(2,511,524	)		(937,237	)		(2,018,128	)		(2,511,524	)


Cash flows from financing activities
Payments of other long-term debt		—			(172,700	)
Proceeds from issuance of notes to joint venture partner		35,000			—
Increase in bank credit facilities, net								675,000			—
Proceeds from issuance of senior notes, net of debt issuance costs		1,238,074			—			1,087,833			1,238,074
Contributions from joint venture partners								481,000			35,000
Payments of joint venture debt								(693,494	)		—
Settlement of interest rate swaps		(2,041	)		—			(29,032	)		(2,041	)
Par value reduction payments								(114,453	)		(193,869	)
Financing costs on credit facilities								(2,835	)		—
Proceeds from employee stock transactions		9,703			3,871			9,018			9,703
Dividends/par value reduction payments paid		(193,869	)		(35,093	)
Repurchases of employee shares surrendered for taxes		(9,961	)		(975	)		(10,211	)		(9,961	)
Repurchases of shares		(219,330	)		(130,297	)		—			(219,330	)

Net cash from financing activities		857,576			(335,194	)		1,402,826			857,576

Net (decrease) increase in cash and cash equivalents		(368,251	)		242,782
Net change in cash and cash equivalents								(140,856	)		(368,251	)
Cash and cash equivalents, beginning of period		735,493			513,311			337,871			735,493

Cash and cash equivalents, end of period	$	367,242		$	756,093		$	197,015		$	367,242

NOBLE CORPORATION (NOBLE-SWISS) AND SUBSIDIARIES

CONSOLIDATED STATEMENT OF EQUITY

(In thousands)

(Unaudited)


																Accumulated																							Accumulated
							Additional									Other												Additional									Other
	Shares						Paid-in			Retained			Treasury			Comprehensive			Noncontrolling		Total			Shares						Paid-in			Retained			Treasury			Comprehensive			Noncontrolling		Total
	Balance			Par Value			Capital			Earnings			Shares			Loss			Interests		Equity			Balance			Par Value			Capital			Earnings			Shares			Loss			Interests		Equity

Balance at December 31, 2009		261,975		$	1,130,607		$	—		$	5,855,737		$	(143,031	)	$	(54,881	)	$	—	$	6,788,432			261,975		$	1,130,607		$	—		$	5,855,737		$	(143,031	)	$	(54,881	)	$	—	$	6,788,432

Employee related equity activity
Share-based compensation expense		—			—			26,906			—			—			—			—		26,906			—			—			26,906			—			—			—			—		26,906
Issuance of share-based compensation shares		77			335			(335	)		—			—			—			—		—			77			335			(335	)		—			—			—			—		—
Contribution to employee benefit plans		8			30			194			—			—			—			—		224			8			30			194			—			—			—			—		224
Exercise of stock options		447			1,762			7,717			—			—			—			—		9,479			447			1,762			7,717			—			—			—			—		9,479
Tax benefit of stock options exercised		—			—			5,556			—			—			—			—		5,556			—			—			5,556			—			—			—			—		5,556
Restricted shares forfeited or repurchased for taxes		(183	)		(804	)		960			1,335			(11,452	)		—			—		(9,961	)		(183	)		(804	)		960			1,335			(11,452	)		—			—		(9,961	)
Repurchases of shares		—			—			—			—			(219,330	)		—			—		(219,330	)		—			—			—			—			(219,330	)		—			—		(219,330	)
Net income		—			—			—			674,671			—			—			467		675,138			—			—			—			674,671			—			—			467		675,138
Dividends/par value reduction payments paid		—			(184,220	)		(9,648	)		(1	)		—			—			—		(193,869	)
Par value reduction payments																									—			(184,220	)		(9,648	)		(1	)		—			—			—		(193,869	)
Noncontrolling interests from FDR Holdings, Ltd. acquisition		—			—			—			—			—			—			124,628		124,628			—			—			—			—			—			—			124,628		124,628
Other comprehensive income (loss), net		—			—			—			—			—			(6,113	)		—		(6,113	)
Other comprehensive income, net																									—			—			—			—			—			(6,113	)		—		(6,113	)

Balance at September 30, 2010		262,324		$	947,710		$	31,350		$	6,531,742		$	(373,813	)	$	(60,994	)	$	125,095	$	7,201,090			262,324		$	947,710		$	31,350		$	6,531,742		$	(373,813	)	$	(60,994	)	$	125,095	$	7,201,090


Balance at December 31, 2010																									262,415		$	917,684		$	39,006		$	6,630,500		$	(373,967	)	$	(50,220	)	$	124,631	$	7,287,634

Employee related equity activity
Share-based compensation expense																									—			—			26,857			—			—			—			—		26,857
Issuance of share-based compensation shares																									248			844			(837	)		—			—			—			—		7
Exercise of stock options																									490			1,629			7,104			—			—			—			—		8,733
Tax benefit of stock options exercised																									—			—			278			—			—			—			—		278
Restricted shares forfeited or repurchased for taxes																									(319	)		(1,107	)		1,107			—			(10,211	)		—			—		(10,211	)
Retirement of treasury shares																									(10,116	)		(33,035	)		—			(340,612	)		373,647			—			—		—
Settlement of FIN 48 provision																									—			—			—			15,658			—			—			—		15,658
Net income																									—			—			—			243,895			—			—			290		244,185
Equity contribution by joint venture partner																									—			—			—			—			—			—			518,973		518,973
Par value reduction payments																									—			(89,948	)		(24,505	)		—			—			—			—		(114,453	)
Other comprehensive income, net																									—			—			—			—			—			(5,992	)		—		(5,992	)

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

NOBLE CORPORATION (NOBLE-CAYMAN) AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEET

(In thousands)

(Unaudited)


								September 30,			December 31,
		September 30,			December 31,			2011			2010
		2010			2009
ASSETS
Current assets
Cash and cash equivalents		$	344,415		$	726,225		$	192,005		$	333,399
Accounts receivable			487,022			647,454			601,161			387,414
Due from affiliate			598,022			191,004
Taxes receivable									57,335			81,066
Prepaid expenses									57,531			33,232
Other current assets			130,788			99,206			82,690			69,821

Total current assets			1,560,247			1,663,889			990,722			904,932
	��

Property and equipment
Drilling equipment and facilities			11,981,111			8,666,750
Other			138,757			115,414

			12,119,868			8,782,164
Property and equipment, at cost									14,386,421			12,614,974
Accumulated depreciation			(2,468,275	)		(2,175,775	)		(2,994,486	)		(2,594,954	)

			9,651,593			6,606,389

Property and equipment, net									11,391,935			10,020,020

Other assets			338,822			279,139			529,141			342,592

Total assets		$	11,550,662		$	8,549,417		$	12,911,798		$	11,267,544


LIABILITIES AND EQUITY
Current liabilities
Current maturities of long-term debt		$	52,650		$	—		$	—		$	80,213
Accounts payable			269,718			197,712			319,888			374,559
Accrued payroll and related costs			120,299			99,372			112,902			120,634
Interest payable									22,129			40,260
Taxes payable			21,752			61,577			86,321			94,132
Other current liabilities			95,963			67,246			93,184			83,759

Total current liabilities			560,382			425,907			634,424			793,557


Long-term debt			2,670,701			750,946			3,811,866			2,686,484
Deferred income taxes			270,645			300,231			299,625			258,822
Other liabilities			274,567			123,137			218,523			268,026

Total liabilities			3,776,295			1,600,221			4,964,438			4,006,889


Commitments and contingencies

Shareholder equity
Shareholders’ equity
Ordinary shares; 261,246 shares outstanding			26,125			26,125			26,125			26,125
Capital in excess of par value			368,374			368,374			447,040			416,232
Retained earnings			7,315,767			6,609,578			6,886,513			6,743,887
Accumulated other comprehensive loss			(60,994	)		(54,881	)		(56,212	)		(50,220	)

Total shareholder equity			7,649,272			6,949,196

Total shareholders’ equity									7,303,466			7,136,024

Noncontrolling interests			125,095			—			643,894			124,631


Total equity			7,774,367			6,949,196			7,947,360			7,260,655


Total liabilities and equity		$	11,550,662		$	8,549,417		$	12,911,798		$	11,267,544

NOBLE CORPORATION (NOBLE-CAYMAN) AND SUBSIDIARIES

CONSOLIDATED STATEMENT OF INCOME

(In thousands)

(Unaudited)


	Three Months Ended						Nine Months Ended						Three Months Ended						Nine Months Ended
	September 30,						September 30,						September 30,						September 30,
	2010			2009			2010			2009			2011			2010			2011			2010
Operating revenues
Contract drilling services	$	584,919		$	874,969		$	2,081,075		$	2,615,571		$	704,892		$	584,919		$	1,837,047		$	2,081,075
Reimbursables		19,177			22,455			57,163			61,967			17,438			19,177			63,851			57,163
Labor contract drilling services		7,887			7,490			23,704			21,843			15,564			7,887			43,123			23,704
Other		635			721			1,449			1,277			8			635			766			1,449

		612,618			905,635			2,163,391			2,700,658			737,902			612,618			1,944,787			2,163,391

Operating costs and expenses
Contract drilling services		315,787			250,842			839,652			742,752			349,626			315,787			980,662			839,652
Reimbursables		14,351			18,717			44,459			52,081			13,971			14,351			49,797			44,459
Labor contract drilling services		5,302			4,642			16,570			13,899			8,053			5,302			25,326			16,570
Depreciation and amortization		143,059			103,245			384,775			295,646			165,719			143,059			486,010			384,775
Selling, general and administrative		16,715			22,623			48,137			60,901			17,637			16,715			48,810			48,137
Loss on asset disposal/involuntary conversion, net		—			2,076			—			31,053

Gain on contract extinguishments, net														—			—			(21,202	)		—
		495,214			402,145			1,333,593			1,196,332
														555,006			495,214			1,569,403			1,333,593

Operating income		117,404			503,490			829,798			1,504,326			182,896			117,404			375,384			829,798

Other income (expense)
Interest expense, net of amount capitalized		(4,147	)		(379	)		(5,122	)		(1,261	)		(11,530	)		(4,147	)		(45,400	)		(5,122	)
Interest income and other, net		1,210			2,574			6,320			4,964			1,884			1,210			3,978			6,320

Income before income taxes		114,467			505,685			830,996			1,508,029			173,250			114,467			333,962			830,996
Income tax provision		(19,401	)		(80,556	)		(124,340	)		(275,833	)		(17,298	)		(19,401	)		(41,480	)		(124,340	)

Net income		95,066			425,129			706,656			1,232,196			155,952			95,066			292,482			706,656


Net (income)/loss attributable to noncontrolling interests		(467	)		—			(467	)		—

Net income attributable to noncontrolling interests														(238	)		(467	)		(290	)		(467	)

Net income attributable to Noble Corporation	$	94,599		$	425,129		$	706,189		$	1,232,196		$	155,714		$	94,599		$	292,192		$	706,189

NOBLE CORPORATION (NOBLE-CAYMAN) AND SUBSIDIARIES

CONSOLIDATED STATEMENT OF CASH FLOWS

(In thousands)

(Unaudited)

Nine Months Ended
September 30,
2010 2009
Cash flows from operating activities

Net income $ 706,656 $ 1,232,196
Adjustments to reconcile net income to net cash from operating activities:
Depreciation and amortization 384,775 295,646
Loss on asset disposal/involuntary conversion, net — 31,053
Deferred income tax provision/(benefit) (29,586 ) 29,916
Share-based compensation expense — 8,399
Pension contributions (14,823 ) (13,022 )
Other changes in assets and liabilities, net of effect from acquisition:
Accounts receivable 250,924 (88,773 )
Due from affiliates, net (407,018 ) (73,729 )
Other current assets (21,001 ) (45,017 )
Other assets 8,118 2,702
Accounts payable (20,773 ) 27,491
Other current liabilities (27,543 ) 15,797
Other liabilities 28,482 (6,917 )

Net cash from operating activities 858,211 1,415,742

Cash flows from investing activities

New construction (381,928 ) (457,233 )
Other capital expenditures (439,451 ) (342,281 )
Major maintenance expenditures (64,244 ) (93,112 )
Change in accrued capital expenditures 4,213 (44,493 )
Acquisition of FDR Holdings, Ltd., net of cash acquired (1,629,644 ) —

Net cash from investing activities (2,511,054 ) (937,119 )

Cash flows from financing activities

Payments of other long-term debt — (172,700 )
Proceeds from issuance of notes to joint venture partner 35,000 —
Proceeds from issuance of senior notes, net of debt issuance costs 1,238,074 —
Settlement of interest rate swap (2,041 ) —
Employee stock transactions — (5,416 )
Dividends/par value reduction payments paid — (10,470 )
Repurchases of ordinary shares — (60,867 )

Net cash from financing activities 1,271,033 (249,453 )

Net (decrease) increase in cash and cash equivalents (381,810 ) 229,170
Cash and cash equivalents, beginning of period
726,225 513,311

Cash and cash equivalents, end of period
$ 344,415 $ 742,481


	Nine Months Ended
	September 30,
	2011			2010
Cash flows from operating activities
Net income	$	292,482		$	706,656
Adjustments to reconcile net income to net cash from operating activities:
Depreciation and amortization		486,010			384,775
Gain on contract extinguishments, net		(21,202	)		—
Deferred income taxes		(34,549	)		(29,586	)
Capital contribution by parent — share-based compensation		15,150			15,519
Net change in other assets and liabilities		(235,017	)		203,384

Net cash from operating activities		502,874			1,280,748


Cash flows from investing activities
Capital expenditures		(1,983,034	)		(885,623	)
Change in accrued capital expenditures		(48,782	)		4,213
Refund from contract extinguishments		18,642			—
Acquisition of FDR Holdings, Ltd., net of cash acquired		—			(1,629,644	)

Net cash from investing activities		(2,013,174	)		(2,511,054	)


Cash flows from financing activities
Increase in bank credit facilities, net		675,000			—
Proceeds from issuance of senior notes, net of debt issuance costs		1,087,833			1,238,074
Contributions from joint venture partners		481,000			35,000
Payments of joint venture debt		(693,494	)		—
Settlement of interest rate swaps		(29,032	)		(2,041	)
Financing costs on credit facilities		(2,835	)		—
Distributions to parent company, net		(149,566	)		(422,537	)

Net cash from financing activities		1,368,906			848,496

Net change in cash and cash equivalents		(141,394	)		(381,810	)
Cash and cash equivalents, beginning of period		333,399			726,225

Cash and cash equivalents, end of period	$	192,005		$	344,415

See accompanying notes to the unaudited consolidated financial statements.

NOBLE CORPORATION (NOBLE-SWISS) AND SUBSIDIARIES
NOBLE CORPORATION (NOBLE-CAYMAN) AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

Note 1 — Organization and Basis of Presentation

~~On March 26, 2009,~~Noble Corporation, a Swiss corporation, is a leading offshore drilling contractor for the oil and gas industry. At September 30, 2011, our fleet consisted of 79 mobile offshore drilling units located worldwide as follows: 14 semisubmersibles, 14 drillships, 49 jackups and two submersibles. Additionally, we ~~completed a series~~have one floating production storage and offloading unit (“FPSO”). At September 30, 2011, we had 13 units under construction as follows:

•

seven dynamically positioned, ultra-deepwater, harsh environment drillships, including twoGlobetrotter-class drillships and oneBully-class drillship, and

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

Our global fleet is currently located in the following areas: the Middle East, India, the U.S. Gulf of ~~transactions that effectively changed~~Mexico, Mexico, the ~~place~~Mediterranean, the North Sea, Brazil, West Africa and the Asian Pacific. Noble and its predecessors have been engaged in the contract drilling of ~~incorporation of our parent holding company from the Cayman Islands to Switzerland. As a result of these transactions,~~ oil and gas wells since 1921.

Noble-Cayman ~~our former publicly-traded parent holding company, became~~is a direct, wholly-owned subsidiary of Noble-Swiss, our ~~current~~ publicly-traded parent company. Noble-Swiss’ principal asset is ~~100%~~all of the shares of Noble-Cayman. Noble-Cayman has no public equity ~~outstanding after March 26, 2009.~~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. ~~In connection with these transactions, we relocated our principal executive offices, executive officers and selected personnel to Geneva, Switzerland.~~

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 normal recurring nature. The December 31, 2010 Consolidated Balance Sheets ~~at December 31, 2009~~ presented herein are derived from the December 31, ~~2009,~~2010 audited consolidated financial statements. These interim financial statements should be read in conjunction with the consolidated financial statements and notes ~~thereto~~ included in our Annual Report on Form 10-K for the year ended December 31, ~~2009,~~2010, 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. Taxes payable in the December 31, 2010 Consolidated Balance Sheets was reported net of approximately $81 million in taxes receivable. During the second quarter of 2011, we determined that a right of offset in certain taxable jurisdictions did not exist for these receivables, and they are now being disclosed separately as a current asset. For the December 31, 2010 Consolidated Balance Sheets presented herein, these amounts have been reclassified to conform to the current year presentation. We believe that this reclassification is immaterial, as it did not have a material impact on our financial position, working capital, results of operations or cash flows from operations.

Note 2 — Acquisition of FDR Holdings Limited

On July 28, 2010, Noble-Swiss and Noble AM Merger Co., a Cayman Islands company and indirect ~~wholly owned~~wholly-owned subsidiary of Noble-Swiss (“Merger Sub”), completed the acquisition of FDR Holdings Limited, a Cayman Islands company (“Frontier”). Under the terms of the Agreement and Plan of Merger with Frontier and certain of Frontier’s shareholders, Merger Sub merged with and into Frontier, with Frontier surviving as an indirect ~~wholly owned~~wholly-owned subsidiary of Noble-Swiss and a ~~wholly owned~~wholly-owned subsidiary of Noble-Cayman. The Frontier acquisition was ~~completed~~for a purchase price of approximately $1.7 billion in ~~order to~~cash plus liabilities assumed and strategically ~~expand~~expanded and ~~enhance~~enhanced our global fleet. The Frontier acquisition added three dynamically positioned drillships (including two Bully-class joint venture-owned drillships under construction), two conventionally moored drillships, including one which is Arctic-class, a conventionally moored deepwater semisubmersible drilling rig and one dynamically positioned floating production, storage and offloading vessel (“FPSO”) to our fleet. Frontier’s results of operations were included in our results beginning July 28, 2010. ~~The purchase price was $1.7 billion in cash plus liabilities assumed and we~~We funded the cash consideration paid at closing of approximately $1.7 billion using proceeds from our July 2010 offering of senior notes and existing cash on hand.

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 following table summarizes our preliminary allocation of the purchase price to the estimated fair values of the assets acquired and liabilities assumed on the acquisition date of July 28, 2010:~~

Fair value
ASSETS
Cash and cash equivalents $ 77,375
Accounts receivable, net of $2,111 reserve 58,229
Other current assets 11,296
Other assets 11,469
Drilling equipment 2,528,759
Value of in-place contracts 77,260

Total assets acquired $ 2,764,388

LIABILITIES
Accounts payable $ 88,566
Other current liabilities 34,360
Consolidated joint ventures notes payable 688,748
Other liabilities 36,824
Non-controlling interests 124,628
Value of in-place contracts 84,243

Total liabilities assumed 1,057,369

Cash consideration paid $ 1,707,019

The fair value of cash and cash equivalents, accounts receivable, other current assets, accounts payable and other current liabilities was generally determined using historical carrying values given the short term nature of these items. The fair values of drilling equipment, in-place contracts and noncontrolling interests were determined using management’s estimates of future net cash flows. Such estimated future cash flows were discounted at an appropriate risk-adjusted rate of return. The fair values of the consolidated joint venture notes payable and derivatives were determined based on a discounted cash flow model utilizing an appropriate market or risk-adjusted yield. The fair value of other assets and other liabilities, related to long-term tax items, was derived using estimates made by management. Intangible assets consisted of fair value estimates for in-place contracts and will be amortized over the life of the respective contract. The weighted average life of those contracts totaled approximately 3.0 years as of the date of the acquisition.

Any change in the estimated fair value of assets acquired and liabilities assumed, prior to the final determination of such values, will change the amount of the purchase price allocation. Any subsequent changes to the purchase price allocation that are material to our consolidated financial results will be adjusted retroactively. We are currently not aware of any significant potential changes to the preliminary purchase price allocation, although we are still reviewing open tax positions and accrued payables. No material contingencies existed at the date of acquisition. We anticipate completing the purchase price allocation by December 31, 2010.

As of September 30, 2010, we have incurred $19 million in acquisition costs related to the Frontier acquisition. These costs have been expensed and are included in contract drilling services expense.

~~Treasury shares/~~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 ~~repurchases~~

Share repurchases were made pursuant to the share repurchase program that our Board of Directors authorized and adopted. Subsequent to our 2009 Swiss migration, all shares repurchased under our share repurchase program are held in treasury. During the three and nine months ended September 30, 2010, we repurchased 4.0 million and 6.1 million shares under this plan, respectively. At September 30, 2010, 6.8 million shares remained available under this authorization. Treasury shares held at September 30, 2010 include 9.9 million shares repurchased under our share repurchase program and 0.2 million shares surrendered by employees for taxes payable upon the vesting of restricted stock.data)

Earnings per share

Our unvested share-based payment awards, which include restricted shares and restricted units, contain non-forfeitable rights to dividends and are considered participating securities and should be included inThe following table sets forth the computation of ~~earnings per share pursuant to the “two-class” method. The “two-class” method allocates undistributed earnings between common shares~~basic and ~~participating securities. The~~ diluted earnings per share ~~calculation under the “two-class” method also includes the~~for Noble-Swiss:


	Three months ended						Nine months ended
	September 30,						September 30,
	2011			2010			2011			2010
Allocation of net income
Basic
Net income attributable to Noble Corporation	$	135,317		$	86,020		$	243,895		$	674,671
Earnings allocated to unvested share-based payment awards		(1,415	)		(828	)		(2,487	)		(6,416	)

Net income to common shareholders — basic	$	133,902		$	85,192		$	241,408		$	668,255


Diluted
Net income attributable to Noble Corporation	$	135,317		$	86,020		$	243,895		$	674,671
Earnings allocated to unvested share-based payment awards		(1,412	)		(825	)		(2,481	)		(6,394	)

Net income to common shareholders — diluted	$	133,905		$	85,195		$	241,414		$	668,277


Weighted average shares outstanding — basic		251,580			252,513			251,327			253,944
Incremental shares issuable from assumed exercise of stock options		449			671			640			855

Weighted average shares outstanding — diluted		252,029			253,184			251,967			254,799


Weighted average unvested share-based payment awards		2,658			2,453			2,589			2,438


Earnings per share
Basic	$	0.53		$	0.34		$	0.96		$	2.63
Diluted	$	0.53		$	0.34		$	0.96		$	2.62

Only those items having a dilutive ~~effect of potential~~impact on our basic earnings per share ~~issuances~~are included in ~~connection with stock options. The dilutive effect of~~diluted earnings per share. At September 30, 2011, stock options ~~is determined using~~totaling approximately 1.1 million were excluded from the ~~treasury stock method.~~diluted earnings per share as they were not dilutive as compared to 0.8 million at September 30, 2010.

Note 5 — Property and Equipment

Property and equipment, at cost, as of September 30, 2011 and December 31, 2010 consisted of the following:


	2011		2010
Drilling equipment and facilities	$	9,908,049	$	8,900,266
Construction in progress		4,318,705		3,571,017
Other		193,513		172,583

	$	14,420,267	$	12,643,866

Capital expenditures, including capitalized interest, totaled $2.0 billion and $886 million for the nine months ended September 30, 2011 and 2010, respectively. Capital expenditures for 2010 do not include the fair value of assets acquired as part of the Frontier acquisition. Capital expenditures for 2011 consisted of the following:

$1.3 billion for newbuild construction;

$463 million for major projects, including $130 million to upgrade two drillships currently operating in Brazil;

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 following table sets forth the computation of basic~~

$156 million for other capitalized expenditures, including major maintenance and ~~diluted earnings per share for Noble-Swiss.~~regulatory expenditures which generally have useful lives ranging from 3 to 5 years; and

Three months ended Nine months ended
September 30, September 30,
2010 2009 2010 2009
Allocation of net income

Basic

Net income attributable to Noble Corporation $ 86,020 $ 426,083 $ 674,671 $ 1,232,227
Earnings allocated to unvested share-based payment awards (828 ) (4,520 ) (6,416 ) (12,176 )

Net income to common shareholders — basic
$ 85,192 $ 421,563 $ 668,255 $ 1,220,051

Diluted

Net income attributable to Noble Corporation $ 86,020 $ 426,083 $ 674,671 $ 1,232,227
Earnings allocated to unvested share-based payment awards (825 ) (4,505 ) (6,394 ) (12,141 )

Net income to common shareholders — diluted
$ 85,195 $ 421,578 $ 668,277 $ 1,220,086

Weighted average shares outstanding — basic
252,513 257,913 253,944 258,550
Incremental shares issuable from assumed exercise of stock options 671 925 855 778

Weighted average shares outstanding — diluted
253,184 258,838 254,799 259,328

Weighted average unvested share-based payment awards
2,453 2,765 2,438 2,581

Earnings per share

Basic $ 0.34 $ 1.63 $ 2.63 $ 4.72
Diluted $ 0.34 $ 1.63 $ 2.62 $ 4.70

~~Only those items having a dilutive impact on our basic net earnings per share are included~~$88 million in diluted earnings per share. At September 30, 2010, stock options totaling approximately 0.8 million were excluded from the diluted earnings per share as they were not dilutive as compared to 0.6 million at September 30, 2009.capitalized interest.

~~Note 4 — Property and Equipment~~

Interest is capitalized on construction-in-progress at the weighted average cost of debt outstanding during the period of construction. Capitalized interest was $32 million and $88 million for the three and nine months ended September 30, 2011, respectively, as compared to $25 million and $51 million for the three and nine months ended September 30, 2010, ~~respectively, as compared~~respectively.

Note 6 — Gain on contract extinguishments, net

In January 2011, we announced the signing of a Memorandum of Understanding (“MOU”) with Petroleo Brasileiro S.A. (“Petrobras”) regarding operations in Brazil. Under the terms of the MOU, we agreed to ~~$13 million and $42 million~~substitute theNoble Phoenix, then under contract with Shell in Southeast Asia, for the ~~three and nine months ended September 30, 2009, respectively.~~

Noble Muravlenko. In January 2011, Shell agreed to release theNoble Phoenixfrom its contract, which was effective in March 2011. During the second quarter of 2011, Petrobras formally approved the rig substitution. We expect that acceptance of theNoble Phoenixwill take place in the first quarter of ~~2009,~~2012. In connection with the cancelation of the contract with Shell on theNoble Phoenix, we recognized a ~~charge~~non-cash gain of ~~$12~~approximately $52.5 million ~~related to~~during the~~Noble Fri Rodli, a submersible that has been cold stacked since October 2007. We recorded~~ first quarter of 2011, which represented the ~~charge~~unamortized fair value of the in-place contract assumed in connection with the Frontier acquisition.

Also in January 2011, as a result of the substitution discussed above, we reached a decision not to ~~evaluate disposition alternatives for this rig.~~proceed with the previously announced reliability upgrade to theNoble Muravlenkothat was scheduled to take place in 2013. As a result, we incurred a non-cash charge of ~~September 30, 2010, we have not disposed~~approximately $32.6 million related to the termination of ~~this rig.~~outstanding shipyard contracts.

In February 2011, the ~~second~~outstanding balances of the Bully joint venture credit facilities, which totaled $693 million, were repaid in full and the credit facilities terminated using a portion of the proceeds from our February 2011 debt offering and equity contributions from our joint venture partner. In addition, the related interest rate swaps were settled and terminated concurrent with the repayment and termination of the credit facilities. As a result of these transactions, we recognized a gain of approximately $1.3 million during the first quarter of ~~2009, we recorded a $17 million charge related to our jackup, the~~~~Noble David Tinsley~~, which experienced a “punch-through” while the rig was being positioned on location offshore Qatar. The incident involved the sudden penetration through the sea bottom, which resulted in severe damage to the legs and the rig.

~~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)~~2011.

Note 57 — Receivables from ~~customers~~Customers

~~We have an agreement with one of our customers~~As noted in Note 13, in May 2010 Anadarko Petroleum Corporation (“Anadarko”) sent a letter asserting that the initial attempted deepwater drilling moratorium in the U.S. Gulf of Mexico ~~regarding outstanding receivables owed~~was an event of force majeure under the drilling contract for theNoble Amos Runner. In June 2010, Anadarko filed a declaratory judgment action in Federal District Court in Houston, Texas seeking to ~~us, which totaled approximately $22 million at~~have the court declare that a force majeure condition had occurred and that the drilling contract was terminated by virtue of the initial proclaimed moratorium. We disagree that a force majeure event occurred and that Anadarko had the right to terminate the contract. In August 2010, we filed a counterclaim seeking damages from Anadarko for breach of contract. Anadarko has also attempted to offset revenue that we had billed for services performed prior to their termination of the contract. At September 30, ~~2010. The customer~~2011, we had accounts receivable of approximately $13 million related to this attempted offset. We do not believe Anadarko has ~~conveyed~~a basis to ~~us an overriding royalty interest (“ORRI”)~~offset these invoiced amounts. While we will continue to litigate the matter to full resolution, we can make no assurances as ~~security for the outstanding receivables and has agreed to a payment plan to repay all past due amounts. Amounts received by us pursuant~~ to the ORRI have been and will be applied to the customer’s payment obligations under the payment plan. We have agreed that we will not sell, assign or otherwise dispose of the ORRI as long as the customer meets its payment obligations and complies with the terms of the agreement, which runs through June 2011. Due to the current termoutcome of this obligation we have reclassed these amounts from “other assets” to “accounts receivable” during the third quarter. As of September 30, 2010, the customer has continued to meet its payment obligations under the agreement. The customer has a right to reacquire the ORRI at the end of the term of the agreement, or earlier, subject to certain conditions, which include the customer being current on all payment obligations.dispute.

In June 2010, a subsidiary of Frontier entered into a charter contract with a subsidiary of BP PLC (“BP”) for the ~~FPSO,~~Seillean, with a term of a minimum of 100 ~~days in connection with BP’s oil spill relief efforts in the U.S. Gulf of Mexico.~~days. The unit went on hire on July 23, 2010. In October 2010, ~~after the Macondo well was sealed,~~ BP initiated an arbitration proceeding against us claiming the contract wasvoid ab initio, or never existed, due to a fundamental breach and ~~demanded~~has made other claims and is demanding that we reimburse the amounts already paid to us under the charter. We believe BP owes us the amounts due under the ~~charter and are not aware of a basis upon which we believe BP could successfully make such a claim.~~charter. The charter ~~has~~contains a “hell or high water” provision requiring payment, and we believe we have satisfied our obligations under the charter. ~~Based on the available information and the analysis we have performed~~Outstanding receivables related to ~~date, we have recorded the revenue under the~~this charter ~~which was $19~~totaled $35 million ~~through the end~~as of ~~the third quarter 2010. In the event BP is successful in its claim, we would take a charge for revenue recorded. However, we also~~September 30, 2011. We believe that if BP were to be successful in claiming the contractvoid ab initio,, we would have an indemnity claim against the former shareholders of ~~Frontier, and we~~Frontier. We have put ~~them~~the former owners of Frontier on notice of this potential claim. We can make no assurances as to the outcome of this dispute.

NOBLE CORPORATION (NOBLE-SWISS) AND SUBSIDIARIES
NOBLE CORPORATION (NOBLE-CAYMAN) AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

The Bully 1 secured non-recourse credit facility consists of a $375 million senior term loan facility, a $40 million senior revolving loan facility and a $50 million junior term loan facility. As of September 30, 2010, loans in an aggregate principal amount of $370 million were outstanding under the Bully 1 facility. The senior term loan facility requires 20 quarterly payments of $15.75 million each, beginning at the end ofIn the first ~~complete fiscal~~ quarter ~~after the earlier~~ of ~~(i) delivery and acceptance of the~~~~Noble Bully I~~drillship and (ii) December 30, 2010. A one-time balloon payment of up to $60 million is due on the date of the final quarterly payment under the senior term loan facility (the “Final Payment Date”). In addition, all outstanding advances under the senior revolving loan facility are due in full on the Final Payment Date. The junior term loan facility requires quarterly payments in amounts based on an excess cash flow calculation defined in the Bully 1 credit agreement, commencing in the third complete quarter following the earlier of (i) delivery and acceptance of the~~Noble Bully I~~drillship and (ii) December 30, 2010, with final payment to be made on the Final Payment Date. The senior term loan facility and the senior revolving loan facility provide for floating interest rates that are fixed for one-, three- or six-month periods at LIBOR plus 2.5% prior to delivery and acceptance of the~~Noble Bully Idrillship and LIBOR plus 1.5% thereafter (which may be reduced to LIBOR plus 1.25% if the~~~~Noble Bully I~~drillship has a utilization rate of at least 95% during the first year after its acceptance). The junior term loan facility provides for floating interest rates that are fixed for one-, three- or six-month periods at LIBOR plus 3.5% prior to delivery and acceptance of the~~Noble Bully Idrillship and LIBOR plus 2.5% thereafter (which may be reduced to LIBOR plus 2.25% if the~~~~Noble Bully I~~~~drillship has a utilization rate of at least 95% during the first year after its acceptance). As noted in Note 9- “~~~~Derivative Instruments and Hedging Activities~~~~” below,~~2011, the joint venture ~~maintains~~credit facilities, which had a combined outstanding balance of $693 million, were repaid in full through contributions to the joint ventures from Noble and Shell. Shell contributed $361 million in equity to fund their portion of the repayment of joint venture credit facilities and related interest rate swaps, which were settled concurrent with ~~a notional amount~~the repayment and termination of $280 million, to satisfy bank covenants and to hedge the impact of interest rate changes on interest paid. The Bully 1 credit facility is secured by assignments of the major contracts for the construction of the~~Noble Bully Idrillship and its equipment, the drilling contract for the drillship, and various other rights. In addition, following completion of construction of the~~~~Noble Bully I~~~~drillship, the credit facility is required to be secured by a first-preferred ship mortgage on the drillship.~~

The Bully 2 secured non-recourse credit facility consists of a $435 million senior term loan facility, a $10 million senior revolving loan facility and a $50 million cost overrun term loan facility. As of September 30, 2010, loans in an aggregate principal amount of $319 million were outstanding under the Bully 2 facility. The senior term loan facility requires 28 quarterly payments beginning on the earlier of (i) a specified date that is soon after the first full fiscal quarter to occur after commencement of operations by the~~Noble Bully II~~drillship and (ii) July 15, 2011. The final quarterly payment will be paid together with a one-time balloon payment of up to $90 million plus any amounts outstanding under the senior revolving loan facility on the final quarterly installment payment date. The senior term loan facility and the senior revolving loan facility provide for floating interest rates that are fixed for three months or such other period selected by the borrower and agreed by the agent (but not to exceed three months), at LIBOR plus 2.5% prior to the occurrence of the delivery date of the hull, thereafter at LIBOR plus 2.3% until contract commencement, thereafter at LIBOR plus 2.25% until the first day of the sixth anniversary of the contract commencement, and thereafter at LIBOR plus 2.4%. At September 30, 2010, the applicable interest rate was LIBOR plus 2.3%. The secured cost overrun term loan has floating interest rates of LIBOR plus 3.5% prior to the occurrence of the contract commencement and LIBOR plus 3.25% thereafter. As noted in Note 9- “~~Derivative Instruments and Hedging Activities~~~~” below,~~ the joint venture ~~maintains an interest rate swap, with a notional amount of $304 million, to satisfy bank covenants and to hedge the impact of interest rate changes on interest paid. The Bully 2~~ credit ~~facility is secured by assignments of the major contracts for the construction of the~~~~Noble Bully II~~~~drillship and its equipment, the drilling contract for the drillship, and various other rights. In addition, following the completion of construction of the~~~~Noble Bully II~~~~drillship, the credit facility is required to be secured by a first-preferred ship mortgage on the drillship.~~

Certain amendments to the underlying drilling contracts and the revised vessel delivery impact to loan amortization schedules require consent from lenders to both Bully joint ventures. Pending resolution of these issues, the Bully joint ventures are restricted from drawing down additional funds under these facilities. We believe that we have several potential alternatives for resolving these issues, as well as sources for additional funding of the Bully construction projects, such as the notes issued by the Bully joint ventures described below. Until we are able to implement one of these alternatives, we and our joint venture partner will have to fund the Bully joint ventures.

In ~~September 2010,~~January 2011, the Bully joint ventures issued notes to the joint venture partners totaling $70 million. The interest rate on these notes iswas 10%, payable semi-annually in arrears, and in kind, on June 30 and December 31 commencing in ~~December 2010.~~June 2011. The purpose of these notes iswas to provide additional liquidity to ~~these~~the joint ventures in connection with the shipyard construction of theBullyvessels.

In April 2011, the Bully ~~vessels.~~joint venture partners entered into a subscription agreement, pursuant to which each partner was issued equity in each of the Bully joint ventures in exchange for the cancellation of all outstanding joint venture partner notes. The subscription agreement has the effect of converting all joint venture partner notes into equity of the respective joint venture. The total capital contributed as a result of these agreements was $146 million, which included $142 million in outstanding notes, plus accrued interest. Our portion of the ~~joint venture partner notes, which totaled $35~~capital contribution, totaling $73 million, ~~has been~~was eliminated in our Consolidated Balance Sheets. The non-eliminated portions of these joint venture partner notes totaled $18 million for Bully 1 and $17 million for Bully 2 and are due in 2016 and 2018, respectively.

In addition, we have a $600 million unsecured bank credit facility (the “Credit Facility”), which contains various covenants; including a covenant that limits our ratio of debt to total tangible capitalization (as defined in the Credit Facility) to 0.60. As of September 30, 2010, our ratio of debt to total tangible capitalization was 0.21.

~~NOBLE CORPORATION (NOBLE-SWISS) AND SUBSIDIARIES~~
~~NOBLE CORPORATION (NOBLE-CAYMAN) AND SUBSIDIARIES~~consolidation.

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS~~

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

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. The following table presents the estimated fair value of our long-term debt as of September 30, ~~2010~~2011 and December 31, ~~2009.~~2010.

September 30, 2010 December 31, 2009
Carrying Estimated Carrying Estimated
Value Fair Value Value Fair Value
5.875% Senior Notes due 2013 $ 299,902 $ 329,424 $ 299,874 $ 325,398
7.375% Senior Notes due 2014 249,473 288,984 249,377 282,105
3.45% Senior Notes due 2015 350,000 363,903 — —
7.50% Senior Notes due 2019 201,695 251,003 201,695 231,015
4.90% Senior Notes due 2020 498,645 539,628 — —
6.20% Senior Notes due 2040 399,888 444,121 — —
Bully 1 joint venture debt 370,000 370,000 — —
Bully 2 joint venture debt 318,748 318,748 — —
Bully 1 joint venture partner debt 18,000 18,000 — —
Bully 2 joint venture partner debt 17,000 17,000 — —

As the Bully joint venture debt bears interest at a variable rate and, the carrying value approximated fair value at the acquisition date of Frontier, we have deemed the fair value to approximate the carrying value as of September 30, 2010. The Bully joint venture partner debt is subordinated debt with joint venture partners and was entered into in September 2010, therefore any difference between carrying value and estimated fair value is considered immaterial.


	September 30, 2011				December 31, 2010
	Carrying		Estimated		Carrying		Estimated
	Value		Fair Value		Value		Fair Value
Wholly-owned debt instruments
5.875% Senior Notes due 2013	$	299,939	$	323,731	$	299,911	$	324,281
7.375% Senior Notes due 2014		249,610		283,353		249,506		282,078
3.45% Senior Notes due 2015		350,000		365,503		350,000		357,292
3.05% Senior Notes due 2016		299,934		305,919		—		—
7.50% Senior Notes due 2019		201,695		250,238		201,695		242,464
4.90% Senior Notes due 2020		498,754		537,513		498,672		516,192
4.625% Senior Notes due 2021		399,469		420,987		—		—
6.20% Senior Notes due 2040		399,890		456,403		399,889		423,345
6.05% Senior Notes due 2041		397,575		447,951		—		—
Credit facilities		715,000		715,000		40,000		40,000
Consolidated joint venture debt instruments
Joint venture credit facilities		—		—		691,052		691,052
Joint venture partner notes		—		—		35,972		35,972

Note 79 — Income Taxes

At December 31, ~~2009, the reserves for uncertain tax positions totaled $98 million (net of related tax benefits of $7 million). At September 30,~~ 2010, the reserves for uncertain tax positions totaled ~~$138~~$145 million (net of related tax benefits of $8 million). At September 30, 2011, the reserves for uncertain tax positions totaled $122 million (net of related tax benefits of $8 million). If the September 30, ~~2010~~2011 reserves are not realized, the provision for income taxes would be reduced by $122 ~~million and equity would be directly increased by $16~~ million.

~~We do not anticipate~~It is possible that ~~any~~our existing liabilities related to our reserve for uncertain tax ~~contingencies resolved will have a material impact on our consolidated financial~~ position amounts may increase or ~~results of operations~~decrease in the next ~~12 months.~~twelve months primarily from 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 for various uncertainties, such as the unresolved nature of various audits.

2019

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 ~~discussed further below.~~in thousands, except per share data)

For foreign currency forward contracts, hedge effectiveness is evaluated at inception based on the matching of critical terms between derivative contracts and the hedged item. For interest rate swaps, we evaluate all material terms between the swap and the underlying debt obligation, known in FASB standards as the “long-haul ~~method”.~~method.” Any change in fair value resulting from ineffectiveness is recognized immediately in earnings. We recognized a loss of $0.3 million in other income due to interest rate swap hedge ineffectiveness during the three and nine months ended September 30, 2010. No income or loss was recognized during 2009 due to hedge ineffectiveness.

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 ~~fluctuation,~~fluctuations, we typically maintain short-term forward contracts settling monthly in their respective local ~~currencies to mitigate exchange exposure.~~currencies. The forward contract settlements in the remainder of ~~2010~~2011 represent approximately 4943 percent of these forecasted local currency requirements. The notional amount of the forward contracts outstanding, expressed in U.S. Dollars, was approximately ~~$82~~$71 million at September 30, ~~2010.~~2011. Total unrealized ~~gains~~losses related to these forward contracts were $2$6 million as of September 30, ~~2010~~2011 and were recorded as part of “Accumulated other comprehensive loss” (“AOCL”).

~~As part of the Frontier acquisition discussed in Note 2, we acquired an interest in~~Our two joint ventures ~~with an unaffiliated third party. These joint ventures maintain~~had maintained interest rate swaps which ~~are~~were classified as cash flow hedges. The interest rate swaps relate to debt for the construction of the two Bully-class rigs undertaken by the two joint ventures, and the hedges are designed to fix the cash paid for interest on these projects. The purpose of these hedges iswas to satisfy bank covenants of the then outstanding credit facilities and to limit exposure to changes in interest rates. ~~There are no~~In February 2011, the outstanding balances of the joint venture credit ~~risk~~facilities and the related ~~contingency features embedded in these swap agreements. The aggregate notional amounts of the~~ interest rate swaps ~~totaled $584 million as of September 30, 2010. The notional amounts~~were settled and settlement dates for the Bully 1 interest rate swaps include $37 million settling in December 2010 and $243 million settling quarterly, with the final amounts settling in December 2014. The notional amount and settlement dates for the Bully 2 interest rate swap is $304 million settling quarterly, with the final amount settling in January 2018. The carrying amountterminated. As a result of these ~~interest rate swaps was $39~~transactions we recognized a gain of $1 million ~~which includes $31 million included in liabilities as part of~~during the ~~purchase price allocation for the Frontier acquisition and $8 million of unrealized losses included in “Accumulated other comprehensive loss (“AOCL”)” at September 30, 2010. For the three and~~ nine months ended September 30, 2010, $0.3 million was recognized in the income statement for the ineffective portion of our interest rate swaps. As of September 30, 2010, we do not expect to reclassify material amounts from “Accumulated other comprehensive loss” to “other income” within the next twelve months.2011.

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


	Three Months Ended						Nine Months Ended					Three Months Ended						Nine Months Ended
	September 30,						September 30,					September 30,						September 30,
	2010			2009			2010			2009		2011			2010			2011			2010

Net unrealized gain at beginning of period	$	(2,517	)	$	2,852		$	417		$	—
Net unrealized gain/(loss) at beginning of period												$	4,117		$	(2,517	)	$	1,970		$	417
Activity during period:
Settlement of foreign currency forward contracts during the period		1,395			(1,301	)		(417	)		—		(2,054	)		1,395			(1,604	)		(417	)
Settlement of interest rate swaps during the period													—			—			(366	)		—
Net unrealized gain/(loss) on outstanding foreign currency forward contracts		3,367			(144	)		2,245			1,407		(7,600	)		3,367			(5,537	)		2,245
Net unrealized gain/(loss) on outstanding interest rate swaps		(7,586	)		—			(7,586	)		—		—			(7,586	)		—			(7,586	)

Net unrealized gain/(loss) at end of period	$	(5,341	)	$	1,407		$	(5,341	)	$	1,407	$	(5,537	)	$	(5,341	)	$	(5,537	)	$	(5,341	)

Foreign Currency Forward Contracts

One of our joint ventures maintained foreign currency forward contracts to help mitigate the risk of currency fluctuation of the Singapore Dollar for the construction of theNoble Bully II drillship.These contracts were not designated for hedge accounting treatment under FASB standards, and therefore, changes in fair values were recognized as either income or loss in our Consolidated Income Statement. These contracts are referred to as non-designated derivatives in the tables to follow, and all were settled during the first quarter of 2011. For the nine months ended September 30, 2011, we recognized a loss of $0.5 million related to these foreign currency forward contracts.

Financial Statement Presentation

The following tables, together with Note 12, summarize the financial statement presentation and fair value of our derivative positions as of September 30, 2011 and December 31, 2010:


		Estimated fair value
	Balance sheet	September 30,			December 31,
	classification	2011			2010
Asset derivatives
Cash flow hedges
Short-term foreign currency forward contracts	Other current assets	$	—		$	2,015
Fair value hedges
Short-term foreign currency forward contracts	Other current liabilities		—			—
Non-designated derivatives
Short-term foreign currency forward contracts	Other current assets		—			2,603
Liability derivatives
Cash flow hedges
Short-term foreign currency forward contracts	Other current liabilities	$	(5,537	)	$	412
Short-term interest rate swaps	Other current liabilities		—			15,697
Long-term interest rate swaps	Other liabilities		—			10,893
Fair value hedges
Short-term foreign currency forward contracts	Other current liabilities		—			3,306

To supplement the fair value disclosures in Note 12, the following summarizes the recognized gains and losses of cash flow hedges and non-designated derivatives through AOCL or through “other income” for the three months ended September 30, 2011 and 2010:


							Gain/(loss) reclassified
	Gain/(loss) recognized						from AOCL to “other				Gain/(loss) recognized
	through AOCL						income”				through “other income”
	2011			2010			2011		2010		2011		2010
Cash flow hedges
Foreign currency forward contracts	$	(7,600	)	$	4,762		$	2,054	$	—	$	—	$	—
Interest rate swaps		—			(7,586	)		—		—		—		(261	)
Non-designated derivatives
Foreign currency forward contracts	$	—		$	—		$	—	$	—	$	—	$	1,234

~~Fair Value Hedges~~

~~During 2008, we entered into a firm commitment for the construction of the~~~~Noble Globetrotter I~~drillship. The drillship will be constructed in two phases, with the second phase being installation and commissioning of the topside equipment. The contract for this second phase of construction is denominated in Euros, and in order to mitigate the risk of fluctuations in foreign currency exchange rates, we entered into forward contracts to purchase Euros. As of September 30, 2010, the aggregate notional amount of the forward contracts was 30 million Euros. Each forward contract settles in connection with required payments under the construction contract. We are accounting for these forward contracts as fair value hedges. The fair market value of these derivative instruments is included in “Other current assets/liabilities” or “Other assets/liabilities,” depending on when the forward contract is expected to be settled. Gains and losses from these fair value hedges would be recognized in earnings currently along with the change in fair value of the hedged item attributable to the risk being hedged, if any portion was found to be ineffective. The fair market value of these outstanding forward contracts, which are included in “Other current assets/liabilities” and “Other assets/liabilities,” totaled approximately $3 million at September 30, 2010 and $0.8 million at December 31, 2009. No amounts related to fair value hedges were recognized in the income statement for the three or nine months ended September 30, 2010 and 2009.

~~Foreign Exchange Forward Contracts~~

As part of the Frontier acquisition, we acquired an interest in two joint ventures with an unaffiliated third party. These joint ventures maintain foreign exchange forward contracts to help mitigate the risk of currency fluctuation of the Singapore dollar for the construction of the Bully vessels taking place in a Singapore shipyard. The notional amount on these contracts totaled approximately $57 million as of September 30, 2010. These contracts were not designated for hedge accounting treatment under FASB standards and therefore changes in fair values are recognized as either income or loss in our consolidated income statement. These contracts are referred to as non-designated derivatives in the tables to follow. For the three and nine months ended September 30, 2010, we have recognized a gain of $1 million related to these foreign exchange forward contracts.

~~Financial Statement Presentation~~

~~The following tables, together with Note 10, summarize the financial statement presentation and fair value of our derivative positions as of September 30, 2010 and December 31, 2009:~~

Estimated fair value
Balance sheet September 30, December 31,
classification 2010 2009
Asset derivatives

Cash flow hedges
Short-term foreign currency forward contracts Other current assets $ 2,681 $ 654

Non-designated derivatives
Short-term foreign currency forward contracts Other current assets 2,905 —

Liability derivatives

Fair value hedges
Short-term foreign currency forward contracts Other current liabilities $ 2,543 $ 301
Long-term foreign currency forward contracts Other liabilities — 464

Cash flow hedges
Short-term foreign currency forward contracts Other current liabilities 436 237
Short-term interest rate swaps Other current liabilities 16,045 —
Long-term interest rate swaps Other liabilities 22,789 —

Noble Asset Company Limited (“NACL”), our wholly-owned, indirect subsidiary, was named one of 21 parties served a Show Cause Notice (“SCN”) issued by the Commissioner of Customs (Prev.), Mumbai, India (the “Commissioner”) in August 2003. The SCN concerned alleged violations of Indian customs laws and regulations regarding one of our jackups. The Commissioner alleged certain violations to have occurred before, at the time of, and after NACL acquired the rig from the rig’s previous owner. In the purchase agreement for the rig, NACL received contractual indemnification against liability for Indian customs duty from the rig’s previous owner. In connection with the export of the rig from India in 2001, NACL posted a bank guarantee in the amount of 150 million Indian Rupees (or $3 million at September 30, 2010) and a customs bond in the amount of 970 million Indian Rupees (or $22 million at September 30, 2010), both of which remain in place. In March 2005, the Commissioner passed an order against NACL and the other parties cited in the SCN seeking (i) to invoke the bank guarantee posted on behalf of NACL as a fine, (ii) to demand duty of (a) $19 million plus interest related to a 1997 alleged import and (b) $22 million plus interest related to a 1999 alleged import, provided that the duty and interest demanded in (b) would not be payable if the duty and interest demanded in (a) were paid by NACL, and (iii) to assess a penalty of $500,000 against NACL. NACL appealed the order of the Commissioner to the Customs, Excise & Service Tax Appellate Tribunal (“CESTAT”). In 2006, CESTAT upheld NACL’s appeal and overturned the Commissioner’s March 2005 order against NACL in its entirety. The Commissioner filed an appeal in the Bombay High Court, which dismissed the appeal. In 2008, the Commissioner appealed to the Supreme Court of India, appealing the order of the Bombay High Court. NACL is opposing admission of the Appeal in the Supreme Court of India, and is seeking the return or cancellation of its previously posted custom bond and bank guarantee. NACL continues to pursue contractual indemnification against liability for Indian customs duty and related costs and expenses against the rig’s previous owner in arbitration proceedings in London, which proceedings the parties have temporarily stayed pending further developments in the Indian proceeding. We do not believe the ultimate resolution of this matter will have a material adverse effect on our financial position, results of operations or cash flows.

InNote 13 — Commitments and Contingencies

As noted in Note 7, in May 2010 Anadarko ~~Petroleum Corporation (“Anadarko”)~~ sent a letter asserting that the initial attempted deepwater drilling moratorium in the U.S. Gulf of Mexico ~~issued on May 28, 2010 by U.S. Secretary of the Interior Ken Salazar,~~ was an event of force majeure under the drilling contract for theNoble Amos Runner. In June 2010, Anadarko filed a declaratory judgment action in Federal District Court in Houston, Texas seeking to have the court declare that a force majeure condition had occurred and that the drilling contract was terminated by virtue of the initial proclaimed moratorium. We disagree that a force majeure event occurred and that Anadarko had the right to terminate the contract. In August 2010, we filed a counterclaim seeking damages from Anadarko for breach of contract. Anadarko has also attempted to offset approximately $13 million that we had billed for services performed prior to their termination of the contract. We do not believe ~~the ultimate resolution~~Anadarko has a basis to offset these invoiced amounts. As a result of ~~this matter will have a material adverse effect on our financial position, results of operations or cash flows. Due to~~ the uncertainties noted above, we have not recognized any revenue under the ~~disputed~~ portion of this ~~contract.~~contract relating to the period after termination and the matter could have a material positive effect on our results of operations or cash flows for the period in which the matter is resolved should the court ultimately rule in our favor.

TheNoble Homer Ferringtonis under contract with a subsidiary of ExxonMobil Corporation (“ExxonMobil”), who entered into an assignment agreement with BP for a two well ~~farmout~~farm-out of the rig in Libya after successfully drilling two wells with the rig for ~~Exxon Mobil.~~ExxonMobil. In August 2010, BP attempted to terminate the assignment agreement claiming that the rig was not in the required condition. ExxonMobil has informed us that we must look to BP for payment of the dayrate during the assignment period. In August 2010, we initiated arbitration proceedings under the drilling contract against both BP and ExxonMobil. We do not believe BP had the right to terminate the assignment agreement and believe the rig ~~continues~~continued to be fully ready to operate under the drilling contract. The rig has been operating under farm-out arrangements since March 2011. 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. We are proceeding with the arbitration process and intend to vigorously pursue these claims. ~~Due to~~As a result of the uncertainties noted above, we have not recognized any revenue during the assignment ~~period. We do not believe~~period and the ~~ultimate resolution of these matters will have a material adverse effect on our financial position. The~~ matter could have a material positive effect on our results of operations or cash flows in the period ~~incurred given~~ the ~~amount~~matter is resolved should the arbitration panel ultimately rule in ~~dispute.~~our favor.

In August 2007, we entered into a drilling contract with Marathon Oil Company (“Marathon”) for theNoble Jim Dayto 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 ~~are from~~believe the rig was ready to commence operations and should have been accepted by Marathon. The contract term was for four years and represented approximately $752 million in contract backlog at the time ~~to time a party to various lawsuits that are incidental to our operations~~of termination. No revenue has been recognized under this contract. In March 2011, we filed suit in ~~which the claimants seek an unspecified amount of monetary~~Texas State District Court against Marathon seeking damages for ~~personal injury, including injuries purportedly resulting from exposure to asbestos on drilling rigs~~its actions, and ~~associated facilities. At September 30, 2010, there were approximately 38 of these 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.~~suit is proceeding. We intend to defend vigorously 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 5, 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 nocannot provide assurance ~~can be given~~ as to the outcome of ~~these claims.~~this lawsuit.

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

2624

NIMASA had also informed the Nigerian Content Division of its position that we are 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 originally 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. Further, we continue to evaluate the local content regulations in Nigeria, which could also affect our ability to operate there and our profitability earned from Nigeria.

In November 2010, we concluded our contract for the Noble Duchess in Nigeria. Following the contract, we commenced the exportation process for the rig. The Nigerian Customs Service delayed departure of the rig while we discussed certain spare items that they claimed were unaccounted for and for which duty would be due. We resolved this matter for an immaterial amount and exported the rig during the third quarter of 2011.

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, 2011, there were approximately 22 asbestos related lawsuits in which we are one of many defendants. These lawsuits have been filed in the United States in the states of Louisiana, Mississippi and Texas. We intend to vigorously defend against the litigation. We do not believe the ultimate resolution of these matters will have a material adverse effect on our financial position, results of operations or cash flows.

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

We operate in a number of countries throughout the world and our income tax returns filed in those jurisdictions are subject to review and examination by tax authorities within those jurisdictions. ~~We have been informed by the U.S. Internal Revenue Service that our~~Our 2008 tax return is currently under ~~audit.~~audit by the U.S. Internal Revenue Service. In addition, a U.S. subsidiary of Frontier is also under audit for its 2007 and 2008 tax returns. Furthermore, we are currently contesting several non-U.S. tax assessments and may contest future assessments when we believe the assessments are in error. We cannot predict or provide assurance as to the ultimate outcome of the existing or 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.

Certain of our non-U.S. income tax returns have been examined for the 2002 through 2008 periods and audit claims have been assessed for approximately ~~$299~~$286 million (including interest and penalties), primarily in Mexico. We do not believe we owe these amounts and are defending our position. However, we expect increased audit activity in Mexico and anticipate the tax authorities will issue additional assessments and continue to pursue legal actions for all audit claims. We believe additional audit claims in the range of ~~$21~~$9 to ~~$23~~$10 million attributable to other business tax returns may be assessed against us. We have contested, or intend to contest, the audit findings, including through litigation if necessary, and we do not believe that there is greater than 50 percent likelihood that additional taxes will be incurred. Accordingly, no accrual has been made for such amounts.

We maintain certain insurance coverage against specified marine perils, including liability for physical damage to our drilling rigs, and loss of hire on certain of our rigs. The damage caused in 2005 and 2008 by Hurricanes Katrina, Rita and Ike ~~to oil and gas assets situated in the U.S. Gulf of Mexico~~ negatively impacted the energy insurance market, resulting in more ~~restricted~~restrictive and ~~more~~ expensive coverage. We also cannot predict what the impact of the recent events in the U.S. Gulf of Mexico will have on the cost or availability of future insurance coverage. We evaluate and renew our operational insurance policies on a yearly basis during the month of March.

~~We have elected to self insure~~coverage for U.S. named windstorm ~~physical damage and loss of hire exposures due~~perils. Accordingly, effective March 2009, we elected to ~~the high cost of coverage for these perils. This self insurance applies only~~self-insure this exposure to our units in the U.S. portion of the Gulf of Mexico. Our rigs located in the Mexican portion of the Gulf of Mexico remain covered by commercial insurance for windstorm damage. In addition, we maintain physical damage deductibles of $25 million per occurrence for rigs located in the U.S., Mexico, Brazil, Southeast Asia, ~~and~~ the North Sea, New Zealand and Australia and $15 million per occurrence for rigs operating in West Africa, the Middle East, India, and the Mediterranean Sea. 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 ~~war risk,~~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. ~~There~~Additionally, there can be no assurance that those parties with contractual obligations to indemnify us will necessarily be financially able to indemnify us against all these risks.

In October 2011, we were assessed a fine by the Brazilian government in the amount of R$238,000 (approximately $135,000) in connection with the inadvertent discharge of approximately 200 barrels of drilling fluid from one of our vessels offshore Brazil in November 2010. We plan on appealing this judgment to the full extent permissible by law.

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 January 2011, the Nigerian Economic and Financial Crimes Commission and the Nigerian Attorney General Office initiated an investigation ~~we entered~~ into these same activities. A subsidiary of Noble-Swiss resolved this matter through the execution of a non-prosecution agreement ~~with~~dated January 28, 2011. Pursuant to this agreement, the ~~DOJ, which provides for the payment of a fine of $2.6~~subsidiary paid $2.5 million as well as certain undertakings, including continued cooperation with the DOJ, compliance with the FCPA, certain self-reporting and annual reporting obligations and certain restrictions on our public discussion regarding the agreement. The agreement does not require that we install a monitor to oversee our activities and compliance with laws. In order to resolve ~~the SEC investigation, we agreed to the entry of a civil judgment against us for violations~~all charges and claims of the ~~FCPA. Pursuant to the agreed judgment, we agreed to disgorge profits of $4.3 million, pay prejudgment interest of $1.3 million~~Nigerian government.

Any similar investigations or charges and refrain from denying the allegations contained in the SEC’s petition, except in other litigation to which the SEC is not a party. We also agreed to an injunction restraining us from violating the anti-bribery, books and records, and internal controls provisions of the FCPA, and we waived a variety of litigation rights with respect to the conduct at issue. The agreed judgment does not require a monitor.

In connection with the internal investigation, we had already enhanced our compliance program and efforts and we will continue to emphasize the importance of compliance and ethical business conduct. Though the settlements described above conclude the investigations of the SEC and the DOJ, we could be investigated by relevant foreign jurisdictions, and we could face fines or otherany additional sanctions ~~in those jurisdictions. Any sanctions and other costs~~ we may incur as a result of any such investigation ~~or any future alleged violations of the FCPA or similar laws could have a material adverse effect on our business or financial condition and~~ could damage our reputation and ~~ability to do~~result in substantial fines, sanctions, civil and/or criminal penalties and curtailment of operations in certain jurisdictions and might adversely affect our business, ~~to attract~~results of operations or financial condition. Further, resolving any such investigation could be expensive and ~~retain employees~~consume significant time and ~~to access capital markets.~~attention of our senior management.

~~We are currently~~As of September 30, 2011, all of our rigs operating ~~three jackup rigs offshore Nigeria. The~~in Nigeria were operating under temporary import ~~permits covering two of these rigs expired in November 2008 and~~permits. To date, we have ~~pending applications to renew these permits. We have received notice that we will be allowed to obtain a~~been successful in obtaining new, or extending existing, temporary import ~~permit for one of the two rigs and are in the process of clarifying this approval.~~permits. However, as of October 31, 2010, the Nigerian customs office had not acted on our application for the second unpermitted rig, but we are discussing undertaking the same process as for the first rig. We did obtain a new temporary import permit for the third rig in 2009 that had previously been operating with an expired temporary import permit, while the application was pending, by exporting and re-importing the rig. We continue to seek to avoid material disruption to our Nigerian operations; however, there can be no assurance that we will be able to obtain new permits or further extensions of permits necessary to continue the operation of our rigs in Nigeria. If we cannot obtain a new permit or an extension necessary to continue operations of any rig, we may need to cease operations under the drilling contract for such rig and relocate such rig from Nigerian waters. ~~In any case, we also could be subject to actions by Nigerian customs for import duties and fines for these two rigs, as well as other drilling rigs that operated in Nigeria in the past.~~ We cannot predict what impact these events may have on any such contract or our business in Nigeria, and we could face additional fines and sanctions in Nigeria. Furthermore, we cannot predict what changes, if any, relating to temporary import permit policies and procedures may be established or implemented in Nigeria in the future, or how any such changes may impact our business there.

~~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 1214 — Segment and Related Information

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

We evaluate the performance of our operating segment primarily based on operating revenues and net income. Summarized financial information of our reportable segments for the three and nine months ended September 30, ~~2010~~2011 and ~~2009~~2010 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.

Three Months Ended September 30,
2010 2009
Contract Contract
Drilling Drilling
Services Other Total Services Other Total

Revenues from external customers $ 604,042 $ 8,576 $ 612,618 $ 896,989 $ 8,646 $ 905,635
Depreciation and amortization 140,199 3,083 143,282 100,669 2,576 103,245
Segment operating income/ (loss) 109,083 (726 ) 108,357 503,962 451 504,413
Interest expense, net of amount capitalized 125 4,019 4,144 166 213 379
Income tax provision/ (benefit) 20,876 (589 ) 20,287 80,374 182 80,556
Segment profit/ (loss) 89,001 (2,981 ) 86,020 425,120 963 426,083
Total assets (at end of period) 9,625,999 1,380,425 11,006,424 7,307,345 782,030 8,089,375
Capital expenditures 352,347 2,345 354,692 356,447 10,737 367,184


	Nine Months Ended September 30,													Three Months Ended September 30,
	2010							2009						2011									2010
	Contract							Contract						Contract									Contract
	Drilling							Drilling						Drilling									Drilling
	Services		Other			Total		Services		Other		Total		Services			Other			Total			Services			Other			Total

Revenues from external customers	$	2,137,304	$	26,087		$	2,163,391	$	2,676,583	$	24,075	$	2,700,658	$	719,546		$	18,356		$	737,902		$	604,042		$	8,576		$	612,618
Depreciation and amortization		376,754		8,612			385,366		288,519		7,127		295,646		162,837			3,376			166,213			140,199			3,083			143,282
Segment operating income/ (loss)		801,966		(2,101	)		799,865		1,503,398		928		1,504,326		159,588			3,994			163,582			109,083			(726	)		108,357
Interest expense, net of amount capitalized		418		4,701			5,119		516		745		1,261		(122	)		(11,408	)		(11,530	)		(125	)		(4,019	)		(4,144	)
Income tax provision/ (benefit)		128,012		(1,211	)		126,801		275,418		415		275,833
Income tax (provision)/ benefit															(18,380	)		766			(17,614	)		(20,876	)		589			(20,287	)
Segment profit/ (loss)		680,302		(5,631	)		674,671		1,230,303		1,924		1,232,227		141,199			(5,882	)		135,317			89,001			(2,981	)		86,020
Total assets (at end of period)		9,625,999		1,380,425			11,006,424		7,307,345		782,030		8,089,375		12,472,018			479,515			12,951,533			9,625,999			1,380,425			11,006,424
Capital expenditures		869,435		16,658			886,093		850,575		42,169		892,744		555,434			3,771			559,205			352,347			2,345			354,692


	Nine Months Ended September 30,
	2011									2010
	Contract									Contract
	Drilling									Drilling
	Services			Other			Total			Services			Other			Total

Revenues from external customers	$	1,897,045		$	47,742		$	1,944,787		$	2,137,304		$	26,087		$	2,163,391
Depreciation and amortization		477,568			9,886			487,454			376,754			8,612			385,366
Segment operating income/ (loss)		321,613			7,278			328,891			801,966			(2,101	)		799,865
Interest expense, net of amount capitalized		(1,890	)		(43,510	)		(45,400	)		(418	)		(4,701	)		(5,119	)
Income tax (provision)/ benefit		(48,661	)		6,180			(42,481	)		(128,012	)		1,211			(126,801	)
Segment profit/ (loss)		273,018			(29,123	)		243,895			680,302			(5,631	)		674,671
Total assets (at end of period)		12,472,018			479,515			12,951,533			9,625,999			1,380,425			11,006,424
Capital expenditures		1,979,145			8,843			1,987,988			869,435			16,658			886,093

Note 1315 — Accounting Pronouncements

In June 2009, the FASB issued guidance which expanded disclosures that a reporting entity provides about transfers of financial assets and its effect on the financial statements. This guidance is effective for annual and interim reporting periods beginning after November 15, 2009. The adoption of this guidance did not have a material impact on our financial condition or results of operations or financial disclosures.

Also in June 2009, the FASB issued guidance that revises how an entity evaluates variable interest entities. This guidance is effective for annual and interim reporting periods beginning after November 15, 2009. The adoption of this guidance did not have a material impact on our financial condition or results of operations and cash flows.

In October 2009, the FASB issued guidance that impacts the recognition of revenue in multiple-deliverable arrangements. The guidance establishes a selling-price hierarchy for determining the selling price of a deliverable. The goal of this guidance is to clarify disclosures related to multiple-deliverable arrangements and to align the accounting with the underlying economics of the multiple-deliverable transaction. This guidance is effective for fiscal years beginning on or after June 15, 2010. ~~We are in the process~~The adoption of ~~evaluating~~ this guidance ~~but do~~did not ~~believe this guidance will~~ have a material impact on our financial condition, or results of operations, ~~and~~ cash ~~flows.~~flows or financial disclosures.

In January 2010, the FASB issued guidance relating to the disclosure of the fair value of assets. This guidance calls for additional information to be given regarding the transfer of items in and out of respective categories. In addition, it requires additional disclosures regarding the purchase, sales, issuances, and settlements of assets that are classified as level three within the FASB fair value hierarchy. This guidance is generally effective for annual and interim periods ending after December 15, 2009. However, the disclosures about purchases, sales, issuances and settlements in the roll-forward activity in Level 3 fair value measurements iswere deferred until fiscal years beginning after December 15, 2010. ~~These additional disclosures did not have and are not expected to have a significant impact on our financial disclosures or our financial condition.~~

In February 2010, the FASB issued guidance that clarifies the disclosure of subsequent events for SEC registrants. Under this guidance an SEC registrant can disclose the company has considered subsequent events through the date of filing with the SEC as opposed to specifically stating the date to which subsequent events were considered. This guidance is effective upon the issuance of the guidance. OurThe adoption of this guidance did not have a material impact on our financial ~~disclosures~~condition, results of operations, cash flows or financial ~~condition.~~disclosures.

In ~~April~~December 2010, the FASB issued guidance that ~~codifies~~requires a public entity to disclose pro forma information for business combinations that occurred in the ~~need for disclosure relating to the disallowance of various credits as a result~~current reporting period. The disclosures include pro forma revenue and earnings of the ~~passage~~combined entity for the current reporting period as though the acquisition date for all business combinations that occurred during the year had been as of ~~both~~ the ~~Health Care~~beginning of the annual reporting period. If comparative financial statements are presented, the pro forma revenue and ~~Education Reconciliation Act~~earnings of ~~2010 and~~ the ~~Patient Protection and Affordable Care Act, which were signed into law in March~~combined entity for the comparable prior reporting period should be reported as though the acquisition date for all business combinations that occurred during the current year had been as of the beginning of the comparable prior annual reporting period. The guidance is effective for annual reporting periods beginning on or after December 15, 2010. The ~~passage~~adoption of ~~these acts does~~this guidance did not have ana material impact on our ~~tax liability, our related~~ financial ~~disclosures,~~condition, results of operations, cash flows or financial disclosures.

In May 2011, the FASB issued guidance that modified the wording used to describe many of the requirements in accounting literature for measuring fair value and for disclosing information about fair value measurements. The goal of the amendment is to create consistency between the United States and international accounting standards. The guidance is effective for annual and interim reporting periods beginning on or after December 15, 2011. While we are still evaluating this guidance, the adoption of this guidance should not have a material impact on our financial ~~condition.~~

~~Note 14 — Guarantees~~condition, results of ~~Registered Securities~~

Noble-Cayman and Noble Holding (U.S.) Corporation (“NHC”), each a wholly-owned subsidiary of Noble-Swiss, are full and unconditional guarantors of Noble Drilling Corporation’s (“NDC”) 7.50% Senior Notes due 2019 which had an outstanding principal balance at September 30, 2010 of $202 million. NDC is an indirect, wholly-owned subsidiary of Noble-Swiss and a direct, wholly-owned subsidiary of NHC. In December 2005, Noble Drilling Holding LLC (“NDH”), an indirect wholly-owned subsidiary of Noble-Swiss, became a co-obligor on (and effectively a guarantor of) the 7.50% Senior Notes.

In connection with our worldwide internal restructuring completed during 2009, prior to September 30, 2009, Noble Drilling Services 1 LLC (“NDS1”), an indirect wholly-owned subsidiary of Noble-Swiss, became a co-issuer of the 7.50% Senior Notes. Subsequent to September 30, 2009, NDS1 merged with Noble Drilling Services 6 LLC (“NDS6”), also an indirect wholly-owned subsidiary of Noble-Swiss, as part of the internal restructuring. NDS6 was the surviving company in this merger and assumed NDS1’s obligations under, and became a co-issuer of, the 7.50% Senior Notes.

In connection with the issuance of Noble-Cayman’s 5.875% Senior Notes due 2013, NDC guaranteed the payment of the 5.875% Senior Notes. In connection with the worldwide internal restructuring, Noble Holding International Limited (“NHIL”), an indirect wholly-owned subsidiary of Noble-Cayman and Noble-Swiss, also guaranteed the payment of the 5.875% Senior Notes. NDC’s and NHIL’s guarantees of the 5.875% Senior Notes are full and unconditional. The outstanding principal balance of the 5.875% Senior Notes at September 30, 2010 was $300 million.operations, cash flows or financial disclosures.

3028

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 ~~November 2008,~~June 2011, the FASB issued guidance that allows an entity to present the total of comprehensive income, the components of net income, and the components of other comprehensive income either in a single continuous statement of comprehensive income or in two separate but consecutive statements. The amendment no longer allows an entity to show changes to other comprehensive income solely through the statement of equity. For publicly traded entities, the guidance is effective for annual and interim reporting periods beginning on or after December 15, 2011. While we are still evaluating this guidance, the adoption of this guidance will not have a material impact on our financial condition, results of operations, cash flows or financial disclosures.

Note 16 — Net Change in Other Assets and Liabilities

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


	Noble-Swiss						Noble-Cayman
	Nine months ended						Nine months ended
	September 30,						September 30,
	2011			2010			2011			2010

Accounts receivable	$	(213,747	)	$	250,917		$	(213,747	)	$	250,924
Other current assets		(23,900	)		(22,962	)		(20,578	)		(21,001	)
Other assets		(21,755	)		(6,600	)		(24,233	)		(6,705	)
Accounts payable		(23,744	)		(12,635	)		(23,654	)		(20,773	)
Other current liabilities		21,281			(9,105	)		13,655			(27,543	)
Other liabilities		33,566			28,258			33,540			28,482

	$	(228,299	)	$	227,873		$	(235,017	)	$	203,384

Note 17 — Guarantees of Registered Securities

Noble-Cayman and Noble Holding (U.S.) Corporation (“NHC”), a wholly-owned subsidiary of Noble-Cayman, are full and unconditional guarantors of NDC’s 7.50% Senior Notes due 2019 which had an outstanding principal balance at September 30, 2011 of $202 million. NDC is a direct, wholly-owned subsidiary of NHC. Noble Drilling Holding LLC (“NDH”), a wholly-owned subsidiary of Noble-Cayman, is also a co-obligor on (and effectively a guarantor of) the 7.50% Senior Notes. Noble Drilling Services 6 LLC (“NDS6”), also a wholly-owned subsidiary of Noble-Cayman, is a co-issuer of the 7.50% Senior Notes.

NDC and NHIL ~~issued $250~~are full and unconditional guarantors of Noble-Cayman’s 5.875% Senior Notes due 2013, which had an outstanding principal balance of $300 million ~~principal amount~~at September 30, 2011. The indenture governing the Senior Notes due 2013 provides that each guarantee may be released in connection with certain events, including upon a merger, consolidation or transfer of all of the assets of Noble Cayman or the guarantor with or to another person in compliance with the indenture (provided the acquiror assumes the guarantee), upon a liquidation of the guarantor in compliance with the indenture (provided any acquiror assumes the guarantee), or upon the guarantor’s ceasing to be a wholly-owned subsidiary of Noble-Cayman.

Noble-Cayman is a full and unconditional guarantor of NHIL’s 7.375% Senior Notes due 2014, which ~~are fully and unconditionally guaranteed by Noble-Cayman. The~~had an outstanding principal balance of ~~the 7.375% Senior Notes~~$250 million at September 30, ~~2010 was $249 million.~~2011.

~~In connection with the Frontier acquisition, in July 2010, NHIL issued~~Noble-Cayman is a ~~total~~full and unconditional guarantor of ~~$1.25 billion principal amount of senior notes in three separate tranches, comprising $350 million of~~NHIL’s 3.45% Senior Notes due 2015, ~~$500 million of~~ 4.90% Senior Notes due 2020 and ~~$400 million of~~ 6.20% Senior Notes due 2040. ~~Noble-Cayman fully and unconditionally guaranteed the notes on a senior unsecured basis.~~ The aggregate principal balance of these three tranches of senior notes at September 30, ~~2010~~2011 was $1.25 billion.

Noble-Cayman is a full and unconditional guarantor of NHIL’s 3.05% Senior Notes due 2016, 4.625% Senior Notes due 2021 and 6.05% Senior Notes due 2041. The aggregate principal balance of these three tranches of senior notes at September 30, 2011 was $1.1 billion.

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.

Consistent with our report on Form 10-Q for the quarter ended June 30, 2010, the condensed consolidating balance sheet as of December 31, 2009 has been revised to increase investment in affiliates and notes payable to affiliates of NHIL by approximately $550 million, resulting from non-cash intercompany transactions. Additionally, as part of these transactions, the investment in affiliates as presented in the NHC and NDH combined column has increased approximately $405 million as of December 31, 2009. The increase is offset by an increase in accounts payable to affiliates of approximately $1.2 billion and a reduction in shareholders’ equity of approximately $843 million. As a result, corresponding changes have been made to notes receivable from affiliates, accounts payable to affiliates and shareholders’ equity as of December 31, 2009 in the “Other Non-guarantor Subsidiaries of Noble” columns. Offsetting revisions were made to the eliminations column. These revisions had no impact on Noble-Cayman or the consolidated balances presented in the condensed consolidating balance sheet as of December 31, 2009. Additionally, there was no impact to the statements of operations or cash flows for any periods presented from these non-cash intercompany transactions.

As of January 1, 2010, certain notes issued by Noble-Cayman and NDC each had less than 300 record holders and the duties of NHC, NDH, NDC and NDS6 to file reports under the Securities Exchange Act of 1934 were suspended, and consolidating financial statements in the Form 10-Q for the period ended March 31, 2010 only included columns for Noble-Cayman, NHIL and all other subsidiaries of Noble. Although the reporting requirements for NHC, NDH, NDC and NDS6 were suspended, the staff of the Securities and Exchange Commission has stated that, as a condition to the use of the Rule 12h-5 exemption by subsidiary issuers and guarantors (which permits condensed consolidating financial information in lieu of full financials for such subsidiaries), they expect parent companies to continue to include condensed consolidating financial information relating to their issuer and guarantor subsidiaries as long as the subsidiaries’ debt is outstanding. Therefore, we are including consolidating financial statements as of March 31, 2010 in conformity with our current presentation.

3129

NOBLE CORPORATION (NOBLE-CAYMAN) AND SUBSIDIARIES

CONDENSED CONSOLIDATING BALANCE SHEET
September 30, ~~2010~~2011
(in thousands)


													Other																					Other
													Non-guarantor																					Non-guarantor
	Noble-		NHC and NDH										Subsidiaries			Consolidating						Noble-		NHC and NDH										Subsidiaries			Consolidating
	Cayman		Combined			NDC			NHIL		NDS6		of Noble			Adjustments			Total			Cayman		Combined			NDC			NHIL		NDS6		of Noble			Adjustments			Total
ASSETS
Current assets
Cash and cash equivalents	$	41	$	234		$	—		$	—	$	—	$	344,140		$	—		$	344,415		$	—	$	292		$	—		$	—	$	—	$	191,713		$	—		$	192,005
Accounts receivable		—		7,439			5,168			—		—		474,415			—			487,022			—		10,757			3,472			—		—		586,932			—			601,161
Prepaid expenses																							—		400			10			—		—		57,121			—			57,531
Short-term notes receivable from affiliates																							—		119,476			—			—		—		110,000			(229,476	)		—
Accounts receivable from affiliates		1,006,622		74,207			788,299			262,488		19,392		3,729,122			(5,282,108	)		598,022			1,182,035		92,282			847,880			150,144		15,737		5,705,679			(7,993,757	)		—
Short-term notes receivable from affiliates		—		119,476			—			—		—		75,000			(194,476	)		—
Prepaid expenses and other current assets		—		18,092			738			—		—		111,958			—			130,788
Other current assets																							—		6,247			240			—		—		133,538			—			140,025

Total current assets		1,006,663		219,448			794,205			262,488		19,392		4,734,635			(5,476,584	)		1,560,247			1,182,035		229,454			851,602			150,144		15,737		6,784,983			(8,223,233	)		990,722


Property and equipment
Drilling equipment, facilities and other		—		1,026,300			70,909			—		—		11,022,659			—			12,119,868			—		2,374,299			71,567			—		—		11,940,555			—			14,386,421
Accumulated depreciation		—		(144,849	)		(49,552	)		—		—		(2,273,874	)		—			(2,468,275	)		—		(207,832	)		(52,334	)		—		—		(2,734,320	)		—			(2,994,486	)

Total property and equipment, net		—		881,451			21,357			—		—		8,748,785			—			9,651,593			—		2,166,467			19,233			—		—		9,206,235			—			11,391,935


Notes receivable from affiliates		3,507,062		675,000			—			1,239,600		479,107		2,423,400			(8,324,169	)		—			3,487,062		675,000			—			2,336,527		572,107		2,662,901			(9,733,597	)		—
Investments in affiliates		6,698,100		9,123,159			3,627,816			5,346,268		1,765,160		—			(26,560,503	)		—			7,185,905		9,133,639			3,510,041			6,370,565		1,899,939		—			(28,100,089	)		—
Other assets		2,088		7,033			2,219			11,710		1,031		314,741			—			338,822			3,660		15,933			2,067			19,087		910		487,484			—			529,141

Total assets	$	11,213,913	$	10,906,091		$	4,445,597		$	6,860,066	$	2,264,690	$	16,221,561		$	(40,361,256	)	$	11,550,662		$	11,858,662	$	12,220,493		$	4,382,943		$	8,876,323	$	2,488,693	$	19,141,603		$	(46,056,919	)	$	12,911,798


LIABILITIES AND EQUITY
Current liabilities
Current maturities of long-term debt	$	—	$	—		$	—		$	—	$	—	$	52,650		$	—		$	52,650
Short-term notes payables from affiliates		25,000		50,000			—			—		—		119,476			(194,476	)		—		$	60,000	$	50,000		$	—		$	—	$	—	$	119,476		$	(229,476	)	$	—
Accounts payable and accrued liabilities		5,875		11,224			8,844			12,020		630		469,139			—			507,732			6,298		24,036			8,116			15,201		630		580,143			—			634,424
Accounts payable to affiliates		1,379,435		2,529,525			115,898			54,349		13,475		1,189,426			(5,282,108	)		—			1,802,030		3,806,799			26,056			99,896		30,916		2,228,060			(7,993,757	)		—

Total current liabilities		1,410,310		2,590,749			124,742			66,369		14,105		1,830,691			(5,476,584	)		560,382			1,868,328		3,880,835			34,172			115,097		31,546		2,927,679			(8,223,233	)		634,424


Long-term debt		299,902		—			—			1,498,006		201,695		671,098			—			2,670,701			1,014,939		—			—			2,595,232		201,695		—			—			3,811,866
Notes payable to affiliates		1,834,500		1,022,500			120,000			550,000		811,000		3,986,169			(8,324,169	)		—			1,652,000		1,147,500			85,000			975,000		811,000		5,063,097			(9,733,597	)		—
Other liabilities		19,929		47,849			25,329			—		—		452,105			—			545,212			19,929		24,291			30,177			—		—		443,751			—			518,148

Total liabilities		3,564,641		3,661,098			270,071			2,114,375		1,026,800		6,940,063			(13,800,753	)		3,776,295			4,555,196		5,052,626			149,349			3,685,329		1,044,241		8,434,527			(17,956,830	)		4,964,438


Commitments and contingencies

Total equity		7,649,272		7,244,993			4,175,526			4,745,691		1,237,890		9,281,498			(26,560,503	)		7,774,367
Equity																							7,303,466		7,167,867			4,233,594			5,190,994		1,444,452		10,707,076			(28,100,089	)		7,947,360

Total liabilities and equity	$	11,213,913	$	10,906,091		$	4,445,597		$	6,860,066	$	2,264,690	$	16,221,561		$	(40,361,256	)	$	11,550,662		$	11,858,662	$	12,220,493		$	4,382,943		$	8,876,323	$	2,488,693	$	19,141,603		$	(46,056,919	)	$	12,911,798

NOBLE CORPORATION (NOBLE-CAYMAN) AND SUBSIDIARIES
CONDENSED CONSOLIDATING BALANCE SHEET
December 31, ~~2009~~
~~(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 $ 3 $ 268 $ — $ — $ — $ 725,954 $ — $ 726,225
Accounts receivable — 7,509 — — — 639,945 — 647,454
Accounts receivable from affiliates 102,507 80,316 573,238 251,232 2,663 2,885,944 (3,704,896 ) 191,004
Short-term notes receivable from affiliates — 168,681 — — — — (168,681 ) —
Prepaid expenses and other current assets — 13,221 — — — 85,985 — 99,206

Total current assets 102,510 269,995 573,238 251,232 2,663 4,337,828 (3,873,577 ) 1,663,889

Property and equipment
Drilling equipment, facilities and other — 1,419,193 69,601 — — 7,293,370 — 8,782,164
Accumulated depreciation — (120,862 ) (47,585 ) — — (2,007,328 ) — (2,175,775 )

Total property and equipment, net — 1,298,331 22,016 — — 5,286,042 — 6,606,389

Notes receivable from affiliates 3,507,062 — — — 479,107 1,964,821 (5,950,990 ) —
Investments in affiliates 4,258,135 8,423,518 3,709,623 4,578,138 1,403,805 — (22,373,219 ) —
Other assets 2,735 8,227 772 1,744 1,122 264,539 — 279,139

Total assets $ 7,870,442 $ 10,000,071 $ 4,305,649 $ 4,831,114 $ 1,886,697 $ 11,853,230 $ (32,197,786 ) $ 8,549,417

LIABILITIES AND EQUITY

Current liabilities
Current maturities of long-term debt $ — $ — $ — $ — $ — $ — $ — $ —
Short-term notes payables from affiliates — — — — — 168,681 (168,681 ) —
Accounts payable and accrued liabilities 1,468 10,815 9,067 5,382 4,412 394,763 — 425,907
Accounts payable to affiliates 470,075 1,922,049 24,462 25,148 2 1,263,160 (3,704,896 ) —

Total current liabilities 471,543 1,932,864 33,529 30,530 4,414 1,826,604 (3,873,577 ) 425,907

Long-term debt 299,874 — — 249,377 201,695 — — 750,946
Notes payable to affiliates 129,900 1,164,921 120,000 550,000 — 3,986,169 (5,950,990 ) —
Other liabilities 19,929 41,501 23,883 — — 338,055 — 423,368

Total liabilities 921,246 3,139,286 177,412 829,907 206,109 6,150,828 (9,824,567 ) 1,600,221

Commitments and contingencies

Total equity 6,949,196 6,860,785 4,128,237 4,001,207 1,680,588 5,702,402 (22,373,219 ) 6,949,196

Total liabilities and equity $ 7,870,442 $ 10,000,071 $ 4,305,649 $ 4,831,114 $ 1,886,697 $ 11,853,230 $ (32,197,786 ) $ 8,549,417

~~NOBLE CORPORATION (NOBLE-CAYMAN) AND SUBSIDIARIES~~

~~CONDENSED CONSOLIDATING STATEMENT OF INCOME~~
~~Three Months Ended September 30,~~ 2010
(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 $ — $ 23,724 $ 5,363 $ — $ — $ 565,132 $ (9,300 ) $ 584,919
Reimbursables — 388 — — — 18,789 — 19,177
Labor contract drilling services — — — — — 7,887 — 7,887
Other — (107 ) — — — 742 — 635

Total operating revenues — 24,005 5,363 — — 592,550 (9,300 ) 612,618

Operating costs and expenses

Contract drilling services 18,924 8,475 1,657 — — 296,031 (9,300 ) 315,787
Reimbursables — 127 — — — 14,224 — 14,351
Labor contract drilling services — — — — — 5,302 — 5,302
Depreciation and amortization — 9,494 924 — — 132,641 — 143,059
Selling, general and administrative — 605 94 (63 ) — 16,079 — 16,715

Total operating costs and expenses 18,924 18,701 2,675 (63 ) — 464,277 (9,300 ) 495,214

Operating income (loss)
(18,924 ) 5,304 2,688 63 — 128,273 — 117,404

Other income (expense)

Equity earnings in affiliates (net of tax) 124,218 155,504 38,484 136,039 35,842 — (490,087 ) —
Interest expense, net of amounts capitalized (12,251 ) (14,845 ) (1,859 ) (12,645 ) (1,424 ) (2,668 ) 41,545 (4,147 )
Interest income and other, net 1,556 555 — 8,419 2,221 30,004 (41,545 ) 1,210

Income before income taxes
94,599 146,518 39,313 131,876 36,639 155,609 (490,087 ) 114,467
Income tax (provision) benefit
— (18,445 ) — — — (956 ) — (19,401 )

Net income
94,599 128,073 39,313 131,876 36,639 154,653 (490,087 ) 95,066

Net (income)/loss attributable to noncontrolling interests — — — — — (467 ) — (467 )

Net income attributable to Noble Corporation
$ 94,599 $ 128,073 $ 39,313 $ 131,876 $ 36,639 $ 154,186 $ (490,087 ) $ 94,599


													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	$	42	$	146		$	—		$	—	$	—	$	333,211		$	—		$	333,399
Accounts receivable		—		6,984			1,795			—		—		378,635			—			387,414
Prepaid expenses		—		310			—			—		—		32,922			—			33,232
Short-term notes receivable from affiliates		—		119,476			—			—		—		75,000			(194,476	)		—
Accounts receivable from affiliates		614,264		73,001			751,623			219,215		11,374		3,801,852			(5,471,329	)		—
Other current assets		—		16,735			240			—		—		133,912			—			150,887

Total current assets		614,306		216,652			753,658			219,215		11,374		4,755,532			(5,665,805	)		904,932


Property and equipment
Drilling equipment, facilities and other		—		1,254,482			70,945			—		—		11,289,547			—			12,614,974
Accumulated depreciation		—		(153,638	)		(50,250	)		—		—		(2,391,066	)		—			(2,594,954	)

Total property and equipment, net		—		1,100,844			20,695			—		—		8,898,481			—			10,020,020


Notes receivable from affiliates		3,507,062		675,000			—			1,239,600		479,107		2,492,900			(8,393,669	)		—
Investments in affiliates		6,835,466		9,150,129			3,561,451			5,618,248		1,879,831		—			(27,045,125	)		—
Other assets		1,872		7,700			2,451			11,336		1,001		318,232			—			342,592

Total assets	$	10,958,706	$	11,150,325		$	4,338,255		$	7,088,399	$	2,371,313	$	16,465,145		$	(41,104,599	)	$	11,267,544


LIABILITIES AND EQUITY
Current liabilities
Short-term notes payables from affiliates	$	25,000	$	50,000		$	—		$	—	$	—	$	119,476		$	(194,476	)	$	—
Current maturities of long-term debt		—		—			—			—		—		80,213			—			80,213
Accounts payable and accrued liabilities		1,473		19,218			8,779			31,973		4,413		647,488			—			713,344
Accounts payable to affiliates		1,601,869		2,708,598			30,095			64,192		7,134		1,059,441			(5,471,329	)		—

Total current liabilities		1,628,342		2,777,816			38,874			96,165		11,547		1,906,618			(5,665,805	)		793,557


Long-term debt		339,911		—			—			1,498,066		201,695		646,812			—			2,686,484
Notes payable to affiliates		1,834,500		1,092,000			120,000			550,000		811,000		3,986,169			(8,393,669	)		—
Other liabilities		19,929		48,595			25,485			—		—		432,839			—			526,848

Total liabilities		3,822,682		3,918,411			184,359			2,144,231		1,024,242		6,972,438			(14,059,474	)		4,006,889


Commitments and contingencies

Equity		7,136,024		7,231,914			4,153,896			4,944,168		1,347,071		9,492,707			(27,045,125	)		7,260,655

Total liabilities and equity	$	10,958,706	$	11,150,325		$	4,338,255		$	7,088,399	$	2,371,313	$	16,465,145		$	(41,104,599	)	$	11,267,544

NOBLE CORPORATION (NOBLE-CAYMAN) AND SUBSIDIARIES
CONDENSED CONSOLIDATING STATEMENT OF INCOME
Three Months Ended September 30, ~~2009~~2011
(in thousands)


															Other																								Other
															Non-guarantor																								Non-guarantor
	Noble-			NHC and NDH											Subsidiaries			Consolidating						Noble-			NHC and NDH												Subsidiaries			Consolidating
	Cayman			Combined			NDC			NHIL			NDS6		of Noble			Adjustments			Total			Cayman			Combined			NDC			NHIL			NDS6			of Noble			Adjustments			Total
Operating revenues
Contract drilling services	$	—		$	29,500		$	15,015		$	—		$	—	$	841,975		$	(11,521	)	$	874,969		$	—		$	38,955		$	5,105		$	—		$	—		$	680,617		$	(19,785	)	$	704,892
Reimbursables		—			443			—			—			—		22,012			—			22,455			—			691			—			—			—			16,747			—			17,438
Labor contract drilling services		—			—			—			—			—		7,490			—			7,490			—			4			—			—			—			15,560			—			15,564
Other		—			51			—			—			—		670			—			721			—			—			—			—			—			8			—			8

Total operating revenues		—			29,994			15,015			—			—		872,147			(11,521	)		905,635			—			39,650			5,105			—			—			712,932			(19,785	)		737,902


Operating costs and expenses
Contract drilling services		(10,518	)		(2,249	)		1,591			3			—		273,536			(11,521	)		250,842			1,759			10,485			1,883			9,819			—			345,465			(19,785	)		349,626
Reimbursables		—			89			—			—			—		18,628			—			18,717			—			420			—			—			—			13,551			—			13,971
Labor contract drilling services		—			—			—			—			—		4,642			—			4,642			—			—			—			—			—			8,053			—			8,053
Depreciation and amortization		—			7,718			3,026			—			—		92,501			—			103,245			—			13,138			937			—			—			151,644			—			165,719
Selling, general and administrative		(6,229	)		622			481			—			—		27,749			—			22,623			2,094			1,488			—			9,253			—			4,802			—			17,637
Impairment loss on planned disposal of assets		—			—			—			—			—		2,076			—			2,076
Gain on contract extinguishments, net																									—			—			—			—			—			—			—			—

Total operating costs and expenses		(16,747	)		6,180			5,098			3			—		419,132			(11,521	)		402,145			3,853			25,531			2,820			19,072			—			523,515			(19,785	)		555,006


Operating income (loss)		16,747			23,814			9,917			(3	)		—		453,015			—			503,490			(3,853	)		14,119			2,285			(19,072	)		—			189,417			—			182,896

Other income (expense)
Equity earnings in affiliates (net of tax)		408,645			328,417			176,278			305,632			8,555		—			(1,227,527	)		—
Equity earnings in affiliates, net of tax																									174,673			226,079			45,818			172,153			(20,624	)		—			(598,099	)		—
Interest expense, net of amounts capitalized		(265	)		(16,185	)		(3,782	)		(9,844	)		—		1,646			28,051			(379	)		(16,721	)		(15,612	)		(1,285	)		(21,641	)		(7,106	)		(267	)		51,102			(11,530	)
Interest income and other, net		2			—			2			—			—		30,621			(28,051	)		2,574			1,615			6,906			(40	)		15,813			2,277			26,415			(51,102	)		1,884


Income before income taxes		425,129			336,046			182,415			295,785			8,555		485,282			(1,227,527	)		505,685			155,714			231,492			46,778			147,253			(25,453	)		215,565			(598,099	)		173,250
Income tax (provision) benefit		—			(15,163	)		5,434			—			—		(70,827	)		—			(80,556	)
Income tax provision																									—			487			—			—			—			(17,785	)		—			(17,298	)

Net income	$	425,129		$	320,883		$	187,849		$	295,785		$	8,555	$	414,455		$	(1,227,527	)	$	425,129
Net Income																									155,714			231,979			46,778			147,253			(25,453	)		197,780			(598,099	)		155,952

Net loss attributable to noncontrolling interests																									—			—			—			—			—			(238	)		—			(238	)

Net income attributable to Noble Corporation																								$	155,714		$	231,979		$	46,778		$	147,253		$	(25,453	)	$	197,542		$	(598,099	)	$	155,714

~~NOBLE CORPORATION (NOBLE-CAYMAN) AND SUBSIDIARIES~~

CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS
Nine Months Ended September 30, 2010
(in thousands)


																Other																								Other
																Non-guarantor																								Non-guarantor
	Noble-			NHC and NDH												Subsidiaries			Consolidating						Noble-			NHC and NDH												Subsidiaries			Consolidating
	Cayman			Combined			NDC			NHIL			NDS6			of Noble			Adjustments			Total			Cayman			Combined			NDC			NHIL			NDS6			of Noble			Adjustments			Total
Cash flows from operating activities
Net cash from operating activities	$	(21,713	)	$	(57,507	)	$	(3,907	)	$	(26,975	)	$	3,258		$	965,055		$	—		$	858,211		$	(6,194	)	$	(57,507	)	$	(3,907	)	$	(26,975	)	$	3,258		$	1,372,073		$	—		$	1,280,748


Cash flows from investing activities
New construction and capital expenditures		—			(381,928	)		—			—			—			(499,482	)		—			(881,410	)		—			(381,928	)		—			—			—			(499,482	)		—			(881,410	)
Notes receivable from affiliates		—			—			—			(1,239,600	)		—			(490,000	)		1,729,600			—			—			—			—			(1,239,600	)		—			(490,000	)		1,729,600			—
Acquisition of FDR Holdings, Ltd., net of cash acquired		(1,629,644	)		—			—			—			—			—			—			(1,629,644	)		(1,629,644	)		—			—			—			—			—			—			(1,629,644	)

Net cash from investing activities		(1,629,644	)		(381,928	)		—			(1,239,600	)		—			(989,482	)		1,729,600			(2,511,054	)		(1,629,644	)		(381,928	)		—			(1,239,600	)		—			(989,482	)		1,729,600			(2,511,054	)


Cash flows from financing activities
Proceeds from issuance of senior notes, net of debt issuance costs		—			—			—			1,238,074			—			—			—			1,238,074
Proceeds from issuance of notes to joint venture partner		—			—			—			—			—			35,000			—			35,000
Proceeds from issuance of senior notes, net																										—			—			—			1,238,074			—			—			—			1,238,074
Contributions from joint venture partners																										—			—			—			—			—			35,000			—			35,000
Settlement of interest rate swaps		—			—			—			—			—			(2,041	)		—			(2,041	)		—			—			—			—			—			(2,041	)		—			(2,041	)
Distributions to parent																										(422,537	)																				(422,537	)
Advances (to) from affiliates		(78,205	)		439,401			3,907			28,501			(3,258	)		(390,346	)		—			—			328,813			439,401			3,907			28,501			(3,258	)		(797,364	)		—			—
Notes payable to affiliates		1,729,600			—			—			—			—			—			(1,729,600	)		—			1,729,600			—			—			—			—			—			(1,729,600	)		—

Net cash from financing activities		1,651,395			439,401			3,907			1,266,575			(3,258	)		(357,387	)		(1,729,600	)		1,271,033			1,635,876			439,401			3,907			1,266,575			(3,258	)		(764,405	)		(1,729,600	)		848,496

Net increase (decrease) in cash and cash equivalents		38			(34	)		—			—			—			(381,814	)		—			(381,810	)
Net change in cash and cash equivalents																										38			(34	)		—			—			—			(381,814	)		—			(381,810	)
Cash and cash equivalents, beginning of period		3			268			—			—			—			725,954			—			726,225			3			268			—			—			—			725,954						726,225

Cash and cash equivalents, end of period	$	41		$	234		$	—		$	—		$	—		$	344,140		$	—		$	344,415		$	41		$	234		$	—		$	—		$	—		$	344,140		$	—		$	344,415

~~NOBLE CORPORATION (NOBLE-CAYMAN) AND SUBSIDIARIES~~

~~CONDENSED CONSOLIDATING BALANCE SHEET~~
~~March 31, 2010~~
~~(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 $ 209 $ 106 $ — $ — $ — $ 836,866 $ — $ 837,181
Accounts receivable — 9,774 2,862 — — 609,577 — 622,213
Accounts receivable from affiliates 186,251 46,363 611,236 271,254 1,938 3,151,658 (3,972,504 ) 296,196
Short-term notes receivable from affiliates — 168,681 — — — — (168,681 ) —
Prepaid expenses and other current assets — 16,193 240 — — 103,915 — 120,348

Total current assets 186,460 241,117 614,338 271,254 1,938 4,702,016 (4,141,185 ) 1,875,938

Property and equipment
Drilling equipment, facilities and other — 1,513,412 70,343 — — 7,518,416 — 9,102,171
Accumulated depreciation — (128,609 ) (48,191 ) — — (2,088,504 ) — (2,265,304 )

Total property and equipment, net — 1,384,803 22,152 — — 5,429,912 — 6,836,867

Notes receivable from affiliates 3,507,062 — — — 479,107 1,904,821 (5,890,990 ) —
Investments in affiliates 4,635,473 8,598,543 3,666,407 4,968,019 1,581,196 — (23,449,638 ) —
Other assets 2,519 10,262 2,992 1,645 1,092 258,729 — 277,239

Total assets $ 8,331,514 $ 10,234,725 $ 4,305,889 $ 5,240,918 $ 2,063,333 $ 12,295,478 $ (33,481,813 ) $ 8,990,044

LIABILITIES AND EQUITY

Current liabilities
Current maturities of long-term debt $ — $ — $ — $ — $ — $ — $ — $ —
Short-term notes payables from affiliates — — — — — 168,681 (168,681 ) —
Accounts payable and accrued liabilities 5,875 11,138 10,962 769 630 441,269 — 470,643
Accounts payable to affiliates 553,864 2,033,821 24,538 59,324 1,091 1,299,866 (3,972,504 ) —

Total current liabilities 559,739 2,044,959 35,500 60,093 1,721 1,909,816 (4,141,185 ) 470,643

��
Long-term debt 299,883 — — 249,409 201,695 — — 750,987
Notes payable to affiliates 129,900 1,104,921 120,000 550,000 — 3,986,169 (5,890,990 ) —
Other liabilities 19,929 49,919 24,759 — — 351,744 — 446,351

Total liabilities 1,009,451 3,199,799 180,259 859,502 203,416 6,247,729 (10,032,175 ) 1,667,981

Commitments and contingencies

Total equity 7,322,063 7,034,926 4,125,630 4,381,416 1,859,917 6,047,749 (23,449,638 ) 7,322,063

Total liabilities and equity $ 8,331,514 $ 10,234,725 $ 4,305,889 $ 5,240,918 $ 2,063,333 $ 12,295,478 $ (33,481,813 ) $ 8,990,044


Item 2.		~~Item 2.~~ Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following discussion is intended to assist you in understanding our financial position at September 30, ~~2010,~~2011, and our results of operations for the three and nine months ended September 30, ~~2010~~2011 and ~~2009.~~2010. The following discussion should be read in conjunction with the consolidated financial statements and related notes contained in this Quarterly Report on Form 10-Q and the consolidated financial statements and notes thereto included in the Annual Report on Form 10-K for the year ended December 31, ~~2009~~2010 filed by Noble Corporation, a Swiss corporation (“Noble-Swiss”), and Noble Corporation, a Cayman Islands company (“Noble-Cayman”).

Forward-Looking Statements

This Quarterly Report on Form 10-Q includes “forward-looking statements” within the meaning of Section 27A of the U.S. Securities Act of 1933, as amended, and Section 21E of the U.S. Securities Exchange Act of 1934, as amended. All statements other than statements of historical facts included in this report regarding the Frontier transaction and integration, contract backlog, fleet and benefits, our financial position, business strategy, backlog, completion and acceptance of our newbuild rigs, contract commitments, dayrates, contract commencements, extension or renewals, contract tenders, the outcome of any dispute, litigation or investigation, plans and objectives of management for future operations, foreign currency requirements, results of joint ventures, or indemnity and other contract claims, construction of rigs, industry conditions including the effect of disruptions of drilling in the U.S. Gulf of Mexico, access to financing, impact of competition, taxes and tax rates, advantages of our worldwide internal restructuring, indebtedness covenant compliance, ~~possible amendments to credit facilities or resolution of issues under such facilities,~~ and timing for compliance with any new regulations are forward-looking statements. When used in this report, the words “anticipate,” “believe,” “estimate,” “expect,” “intend,” “may,” “plan,” “project,” “should” and similar expressions are intended to be among the statements that identify forward-looking statements. Although we believe that the expectations reflected in such forward-looking statements are reasonable, we cannot assure you that such expectations will prove to be correct. These forward-looking statements speak only as of the date of this report on Form 10-Q and we undertake no obligation to revise or update any forward-looking statement for any reason, except as required by law. We have identified factors including but not limited to operating hazards and delays, risks associated with operations outside the U.S., actions by regulatory authorities, customers, joint venture partners, contractors, lenders and other third parties, legislation and regulations affecting drilling operations, costs and difficulties relating to the integration of businesses, factors affecting the level of activity in the oil and gas industry, supply and demand of drilling rigs, factors affecting the duration of contracts, the actual amount of downtime, factors that reduce applicable dayrates, violations of anti-corruption laws, hurricanes and other weather conditions and the future price of oil and gas that could cause actual plans or results to differ materially from those included in any forward-looking statements. These factors include those referenced or described in ~~“Item~~Part I, Item 1A. ~~Risk~~“Risk Factors” of ~~Part II included herein,~~our Annual Report on Form 10-K for the year ended December 31, 2010, our Quarterly Reports on Form 10-Q and in our other filings with the U.S. Securities and Exchange Commission (“SEC”). We cannot control such risk factors and other uncertainties, and in many cases, we cannot predict the risks and uncertainties that could cause our actual results to differ materially from those indicated by the forward-looking statements. You should consider these risks and uncertainties when you are evaluating us.

~~Acquisition of FDR Holdings Limited~~

On July 28, 2010, Noble-Swiss and Noble AM Merger Co., a Cayman Islands company and indirect wholly owned subsidiary of Noble-Swiss (“Merger Sub”), completed the acquisition of FDR Holdings Limited, a Cayman Islands company (“Frontier”). Under the terms of the Agreement and Plan of Merger with Frontier and certain of Frontier’s shareholders, Merger Sub merged with and into Frontier, with Frontier surviving as an indirect wholly owned subsidiary of Noble-Swiss and a wholly owned subsidiary of Noble-Cayman. The Frontier acquisition was for a purchase price of approximately $2.76 billion and was completed in order to strategically expand and enhance our global fleet. The Frontier acquisition added three dynamically positioned drillships (including two Bully-class joint venture-owned drillships under construction), two conventionally moored drillships, including one which is Arctic-class, a conventionally moored deepwater semisubmersible drilling rig and one dynamically positioned floating production, storage and offloading vessel (“FPSO”) to our fleet. Frontier’s results of operations were included in our results beginning July 28, 2010. We funded the cash consideration paid at closing of approximately $1.7 billion using proceeds from our July 2010 offering of senior notes and existing cash on hand.

~~U.S. Gulf of Mexico Operations~~

~~Subsequent to the April 20, 2010 fire and explosion on the~~~~Deepwater Horizon~~, a competitor’s drilling rig in the U.S. Gulf of Mexico, U.S. governmental authorities implemented a moratorium on and suspension of specified types of drilling activities in the U.S. Gulf of Mexico

Judicial challenges were made to the initial actions of the U.S. government, and in July 2010 the government issued a revised moratorium on and suspension of drilling. On October 12, 2010, the U.S. government lifted the moratorium following adoption of new regulations including a drilling safety rule and a workplace safety rule, each of which imposed multiple obligations relating to offshore drilling operations. These obligations relate to, among other things, additional certifications and verifications relating to compliance with applicable regulations; compatibility of blowout preventers with drilling rigs and well design; third-party inspections and design review of blowout preventers; testing of casing installations; minimum requirements for personnel operating blowout preventers; and training in deepwater well control.

In addition, the U.S. government has indicated that before any new deepwater drilling resumes, (i) operators must demonstrate that containment resources are available promptly in the event of a deepwater blowout, (ii) the chief executive officer of each operator seeking to perform deepwater drilling must certify that the operator has complied with all applicable regulations and (iii) the Bureau of Ocean Energy Management, Regulation and Enforcement will conduct inspections of each deepwater drilling operation for compliance with the applicable regulations.

Our existing U.S. Gulf of Mexico operations have been and will continue to be negatively impacted by the events and governmental action described above. As of September 30, 2010, our U.S. Gulf of Mexico operations included eight deepwater drilling units: the~~Noble Amos Runner~~,~~Noble Clyde Boudreaux~~,~~Noble Danny Adkins~~,~~Noble Jim Thompson~~,~~Noble Driller~~,~~Noble Paul Romano~~,~~Noble Lorris Bouzigard~~~~and~~~~Noble Jim Day~~. We estimate the negative impact to our revenues for the three and nine months ended September 30, 2010 to be approximately $146 million and $164 million, respectively. We have worked and continue to work closely with our customers for drilling services in the U.S. Gulf of Mexico to address the hardships imposed by the governmental actions described above. The discussion below briefly describes the current status of each of these drilling units.

•

~~Noble Amos Runner~~. We have been advised by our customer, Anadarko Petroleum, that it believes that the government-imposed moratorium described above is a force majeure event permitting termination of the contract on the~~Noble Amos Runner~~. We do not agree with this position and plan to enforce our contractual rights under that contract and under our other U.S. Gulf of Mexico drilling contracts. We are currently in litigation with Anadarko over this dispute. Pending resolution of the legal dispute, which may take an extended period of time, no revenues are being recognized under this contract. The~~Noble Amos Runnerreceived its blow-out preventer (“BOP”) certification and is currently operating in place of the~~~~Noble Lorris Bouzigard~~~~for LLOG at the full dayrate under the~~~~Noble Lorris Bouzigard~~~~contract.~~

•

~~Noble Clyde Boudreaux~~~~. In late June 2010, we reached agreement with our customer, Noble Energy, relating to the~~~~Noble Clyde Boudreaux~~to place the drilling unit on standby for a daily rate of $145,000 per day from June 15 through December 12, 2010, which period may be extended by mutual agreement with Noble Energy. We also agreed to negotiate in good faith a new contract that would apply after the standby period at a dayrate of $397,500 per day, although neither party is not obligated to enter into a new contract. This unit is currently undergoing the certification process for its BOP and is being actively marketed to potential customers.

•

~~Noble Danny Adkins.~~~~This unit received its BOP certification. However, we cannot guarantee that our customer Royal Dutch Shell, PLC (“Shell”) will be able to continue to secure required permits.~~

•

~~Noble Jim Thompson~~ ~~and~~~~Noble Driller~~~~. These units are under contract with Shell and are undergoing shipyard projects. They are concurrently undergoing the certification process for their BOPs.~~

•

~~Noble Paul Romano~~~~. This unit is idle, having completed its drilling contract in June 2010. The unit is currently undergoing the certification process for its BOP and is being actively marketed to potential customers.~~

•

~~Noble Lorris Bouzigard~~~~. This drilling unit is currently idle and is being actively marketed to potential customers.~~

•

~~Noble Jim Day~~. We continue customer acceptance on the newbuild ultra-deepwater semisubmersible, the Noble Jim Day, which was received from the shipyard in the second quarter of 2010. After customer acceptance, the unit is expected to begin work in the U.S. Gulf of Mexico during the fourth quarter of 2010 although the events described above could have an effect on operations. As has been previously disclosed, the drilling contract grants the customer a termination right in the event the rig is not ready to commence operations by December 31, 2010.

~~It is still unclear when normal operations will resume, what the cost of additional safety measures will be and how additional regulations will impact our operations in the U.S. Gulf of Mexico.~~

~~Consummation of Migration~~

On March 26, 2009, we completed a series of transactions that effectively changed the place of incorporation of our parent holding company from the Cayman Islands to Switzerland. As a result of these transactions, Noble-Cayman, our former publicly-traded parent holding company, became a direct, wholly-owned subsidiary of Noble-Swiss, our current publicly-traded parent company. Noble-Swiss’ principal asset is 100% of the shares of Noble-Cayman. Noble-Cayman has no public equity outstanding after March 26, 2009. 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. In connection with these transactions, we relocated our principal executive offices, executive officers and selected personnel to Geneva, Switzerland.

Executive Overview

Noble is a leading offshore drilling contractor for the oil and gas industry. ~~Noble performs, through its subsidiaries, contract drilling services with a~~At September 30, 2011, our fleet consisted of 6979 mobile offshore drilling units ~~(including five drilling rigs currently under construction)~~ located worldwide ~~including~~as follows: 14 semisubmersibles, 14 drillships, 49 jackups and two submersibles. Additionally, we have one floating production storage and offloading unit (“FPSO”). At September 30, 2011, we had 13 units under construction.

Our global fleet is currently located in the following areas: the Middle East, India, the U.S. Gulf of Mexico, Mexico, the Mediterranean, the North Sea, Brazil, West Africa and the Asian Pacific. Noble ~~also owns~~ and ~~operates a dynamically positioned floating production, storage~~its predecessors have been engaged in the contract drilling of oil and ~~offloading vessel (“FPSO”).~~gas wells since 1921.

Outlook

~~The overall~~During the third quarter of 2011, we began to see some stability in the offshore drilling market ~~has been volatile since~~after a period of volatility, which occurred following the ~~events occurring in connection with the~~ Deepwater Horizonincident and the U.S. governmental response to the incident. ~~Despite~~In the ~~lifting~~U.S. Gulf of Mexico, the ~~moratorium~~granting of permits and publication of new safety rules ~~we believe~~has led to more stable activity levels within the industry itself, especially as it relates to the deepwater markets. This resumption of activity has led to greater investment within the Gulf of Mexico and is ~~unlikely that we will see significant progress~~contributing to an improvement in dayrates for ~~some time as indicated~~deepwater and ultra-deepwater rigs worldwide. While there are still risks, including potential third party environmental lawsuits targeting the permitting process, possible new drilling regulations, a failure of the Bureau of Ocean Energy Management Regulation and Enforcement (“BOEMRE”) to issue permits in a timely manner and the adoption by ~~the difficulties surrounding the issuance~~individual operators of new drilling ~~permits, and we are unable~~or equipment standards exceeding those required by regulatory bodies. We believe those risks may be reduced as long as rigs continue to ~~predict when normal drilling operations will resume~~work without incident in the ~~U.S.~~ Gulf of Mexico. ~~Outside~~

The offshore drilling market displayed notable indications of improvement in the ~~U.S. Gulf of Mexico, we believe the risk for early contract terminations or defaults under existing contracts has decreased over the prior year, but the risk has not been eliminated.~~

~~Furthermore,~~third quarter even though there iscontinues to be uncertainty regarding the sustainability of the global economic recovery, which is proceeding unevenly in different geographic regions. In addition to the political instability in certain oil producing nations in the Middle East and North Africa, there is also uncertainty regarding ~~the sustainability of the~~ recovery ~~of the global financial markets highlighted by issues~~ in the credit ~~markets.~~markets, particularly in Europe and North America. During the ~~third quarter~~first nine months of 2011, oil prices fluctuated as a result of supply side concerns in response to political unrest in the Middle East and North Africa. Natural gas prices in the United States fluctuated during the first nine months of the year, but ended the period in-line with year-end 2010 pricing. We believe there continue to be competing factors which could impact the volatility in the offshore drilling market and the prices of oil and gas prices responded differently to these recent developments. While gas prices decreased modestly during the quarter, the price of oil has generally risen since the beginning of the quarter to approximately $80 per barrel at the close of the quarter. We believe that prices for both commodities ~~will continue to be volatile~~ for the foreseeable future.

~~Despite~~Even with the ~~increase~~instability in ~~oil prices,~~the global economy noted above, we have ~~not~~ seen ~~a significant~~an increase in demand for offshore drilling ~~services. Developments~~services in the first nine months of 2011. While the risk of negative developments in the U.S. Gulf of Mexico ~~will~~could continue to have an impact on the deepwater market segment in the short-term, ~~however,~~ we believe that the long-term outlook ~~remains strong. Even so,~~continues to strengthen. Market dayrates for new ultra-deepwater units remain generally above $450,000, which is significantly lower than the peak rates achieved in 2007-2008, but higher than rates seen in 2010. Short-term fixtures for ~~ultradeepwater~~very high specification units ~~remain at dayrates generally greater than $400,000. Activity remains relatively stagnant in~~have exceeded $500,000, and we believe this is an indication of where the ~~deepwater and midwater segments and dayrates have declined significantly since their peaks in 2007-2008. Demand~~market could be going should there continue to be a strong demand for ultra-deepwater drilling units. Although demand in the jackup segment ~~has increased~~decreased slightly during 2010, ~~and~~utilization rates for units ~~operating outside~~stabilized in the ~~U.S. Gulf~~first nine months of ~~Mexico, total utilization continues~~2011, especially for those units equipped with standard drilling features. We continue to ~~hover around 80 percent. However, we are seeing some~~see differentiation in the jackup market segment with newer units having utilization rates exceeding ~~90 percent while~~those units that entered service before ~~2000 are operating with utilization rates closer to 70 percent.~~2000. Likewise, there has been a bifurcation of dayrates between older and newer units in the jackup market with ~~new~~newer units earning a ~~premium. Dayrates~~premium as customers display a preference for ~~both older~~technologically advanced and ~~newer units have been relatively stable over the last quarter.~~efficient drilling alternatives.

Demand for our drilling services generally depends on a variety of economic and political factors, including worldwide demand for oil and gas, the ability of the Organization of Petroleum Exporting Countries (“OPEC”) to set and maintain production levels and pricing, the level of production of non-OPEC countries and the policies of various governments ~~regarding exploration and development of~~addressing access to their oil and gas reserves. Our results of operations depend on offshore drilling activity ~~in the oil and gas production and development markets~~ worldwide. Historically, oil and gas prices and market expectations of potential changes in these prices have significantly affected that level of activity. Generally, higher oil and natural gas prices or our customers’ expectations of higher prices result in greater demand for our ~~services and lower oil and gas prices result in reduced demand for our~~ services. Demand for our services is also a function of the worldwide supply of mobile offshore drilling units. Industry ~~sources report~~analysts widely acknowledge that a ~~total~~significant expansion of ~~41 newbuild~~industry supply of both jackups and ~~61 deepwater newbuilds are planned or under construction with scheduled delivery dates from November 2010 and beyond. The jackup total includes approximately nine~~ultra-deepwater units ~~announced since~~has commenced, the ~~end of the third quarter, none~~majority of which currently have ~~future contracts. Industry analysts have predicted that a new wave of speculative building of both jackup and ultradeepwater units may be beginning.~~no contract. The introduction of additional non-contracted rigs into the marketplace could have an adverse ~~affect~~effect on ~~the level of~~ demand for our services or the dayrates we are able to achieve.

In addition, as a result of exploration discoveries offshore Brazil, Petroleo Brasileiro S.A. (“Petrobras”), the Brazilian national oil company, announced a plan to construct up to 28 deepwater rigs in Brazil and ~~recently~~ accepted bids in 2010 to construct these units from a number of shipyards and drilling contractors. Petrobras originally declared its intention to finance and own the first nine of these additional rigs. Petrobras also stated that they would seek long-term contracts for the remaining 19 rigs to support construction and to allow drilling contractors to bid for the opportunity to supply up to four rigs per contractor. However, these plans may change and Petrobras may decide to build and own more than nine rigs, leaving fewer opportunities for contractor participation. Currently aA deepwater drilling rig construction industry possessing the scope and experience to efficiently address this volume of work does not currently exist in ~~Brazil. As~~Brazil and Noble did not participate in these bids primarily because we viewed the capital risk associated with constructing a result, if new shipyards are built, construction prices for new rigs built in such shipyards could exceed the price of an equivalent rig built in an existing yard outside of Brazil. At current market dayrates, economic returns on these units may be challenged. We cannot predict how many deepwater units may ultimately be constructedunit in Brazil ~~or our participation~~as inappropriate. Petrobras awarded the first tranche of seven drillships to a Brazilian shipyard for delivery beginning in ~~this program. This~~2015. In March 2011, Petrobras cancelled the bids for the remaining 21 newbuild units. In June 2011, Petrobras issued a new tender to build 21 ultra deepwater rigs in Brazil to operate with Petrobras under 10 to 15 year contracts with drilling operations commencing within 48 months after the contract is awarded. Petrobras opened the tenders late October 2011, receiving offers for the 21 rigs from local Brazilian and Norwegian based drillers, which Petrobras is currently reviewing. Petrobras is also reviewing offers received for existing deepwater drilling units. The potential increase in supply from the Petrobras newbuilds could also adversely impact overall industry dayrates and economics.

As of ~~November 1, 2010,~~September 30, 2011, we ~~had nine jackup units operating for~~have 12 rigs, including the deepwater semisubmersible rigNoble Max Smithunder contract in Mexico with Pemex Exploracion y Produccion (“Pemex”) ~~in Mexico, six~~, and seven of ~~which~~these rigs have contracts scheduled to expire in ~~2010.~~2011. Pemex ~~has approved extensions~~continues to ~~contracts~~tender for ~~several of these~~additional jackup rigs as they attempt to increase the ~~contracts have reached expiration and have issued four ‘fast-track’ tenders aimed at keeping units~~number of working ~~through year end 2010, but have allowed some of our other rigs to become available.~~rigs. Some ~~recent~~previous tenders published by Pemex ~~contain~~contained a requirement that certain units must have entered service since the year 2000. WeWhile Pemex did not succeed in securing a significant number of newer rigs from those published tenders, we cannot predict whether this age requirement will be present in future Pemex tenders. If this requirement is present in future tenders, it could require us to seek work for our rigs in other locations, as the ~~age~~ages of our rigs currently operating in Mexico do not meet this requirement. If such work is not available, it could lead to additional idle time on some of our rigs. We cannot predict how many rigs might be affected or how long they could remain idle. We remain optimistic that many, if not all, of our rigs currently operating in Mexico will be able to continue to secure long-term work with Pemex.

In January 2011, we announced the signing of a Memorandum of Understanding (“MOU”) with Petrobras regarding operations in Brazil. Under the terms of the MOU, we would substitute the drillshipNoble Phoenix, then under contract with Royal Dutch Shell (“Shell”) in Southeast Asia, for ~~Pemex.~~the drillshipNoble Muravlenko. In January 2011, Shell agreed to release theNoble Phoenixfrom its contract, which was effective in March 2011. During the second quarter of 2011, Petrobras formally approved the rig substitution. We expect that acceptance of theNoble Phoenix will take place in the first quarter of 2012. In connection with the cancelation of the contract on theNoble Phoenix, we recognized a non-cash gain of approximately $52.5 million during the first quarter of 2011, which represents the unamortized fair value of the in-place contract assumed in connection with the Frontier acquisition.

Also in January 2011, as a result of the substitution discussed above, we reached a decision not to proceed with the previously announced reliability upgrade to theNoble Muravlenkothat was scheduled to take place in 2013. As a result, we incurred a non-cash charge of approximately $32.6 million related to the termination of outstanding shipyard contracts.

In connection with our existing drilling contracts with Petrobras for two of our ~~three~~ drillships operating in Brazil, we approved certain shipyard reliability upgrade projects for these drillships, theNoble Leo Segeriusand theNoble Roger Eason ~~and~~~~Noble Muravlenko.~~. These upgrade projects, planned ~~for 2010~~ through ~~2013,~~2012, are designed to enhance the reliability and operational performance of these drillships. During the first quarter, theNoble Leo Segeriusentered a shipyard in Brazil for its reliability upgrade. There are a number of risks associated with shipyard projects of this nature, particularly in Brazil, including potential project delays and cost overruns ~~due to~~because of labor, customs, local shipyard, local content and other issues. In addition, the drilling contracts for these vessels provide Petrobras with certain rights of termination in the event of excessive downtime, and it is possible that Petrobras could exercise this right in the future with respect to one or ~~more~~both of these ~~drillships prior to the completion of these upgrade projects if the units suffer excessive downtime or other delays.~~drillships. We intend to continue to closely monitor and discuss with Petrobras the status of these projects and plan to take appropriate steps to mitigate identified risks, which depending upon the circumstances, could involve a variety of options.

Results and Strategy

In the third quarter of ~~2010,~~2011, we recognized net income attributable to Noble-Swiss of ~~$86~~$135 million, or ~~$0.34~~$0.53 per diluted share, on total revenues of ~~$613~~$738 million. ~~The average dayrate across~~Sequential results of key metrics are as follows:


	Three Months Ended
	September 30,			June 30,
	2011			2011
Average dayrate	$	151,782		$	140,296
Average utilization		76	%		70	%
Daily contract drilling services costs	$	77,205		$	80,985
Contract drilling services margin		49	%		43	%

We have actively expanded our ~~worldwide~~offshore drilling and deepwater capabilities in recent years through the construction of new rigs, and as part of this technical and operational expansion we plan to continue pursuing opportunities to upgrade our fleet ~~decreased~~ to ~~$126,581 for the third quarter of 2010 from $156,683 for the second quarter of 2010. Fleetwide average utilization was 79 percent in the third quarter of 2010, as compared~~achieve greater technological capability, which would lead to ~~80 percent in the second quarter of 2010. Daily contract~~increased drilling services costs increased to $68,351 for the third quarter of 2010 from $62,808 for the second quarter of 2010. As a result, our contract drilling services margin decreased in the third quarter of 2010 to 46 percent as compared to 60 percent in the second quarter of 2010.

efficiencies. Our ~~long-standing~~ business strategy ~~continues to be~~also focuses on the active expansion of our worldwide offshore drilling and deepwater capabilities through upgrades and modifications, acquisitions, divestitures of lower specification units and the deployment of our drilling assets in important oil and gas producing areas. We have also actively expanded our offshore drilling and deepwater capabilities in recent years through the construction of new rigs, and as part of this technical and operational expansion we plan to continue to seek opportunities to high-grade our fleet. During the third quarter of 2010,At September 30, 2011, we continued our ~~expansion~~newbuild strategy ~~as indicated by~~with the following ~~activities:~~13 projects:

•

~~As discussed~~two dynamically positioned, ultra-deepwater, harsh environmentGlobetrotter-class drillships, which are scheduled to be delivered in “~~U.S. Gulf~~the fourth quarter of ~~Mexico Operations~~~~” above, we continue customer acceptance on the newbuild ultra-deepwater semisubmersible, the~~ ~~Noble Jim Day~~~~, which was received from the shipyard in~~2011 and the second quarter of ~~2010;~~

~~through our newly acquired joint ventures we continued construction on two Bully class drillships, which are scheduled to be delivered to our customer in August 2011 and December 2011,~~2013, respectively and complete acceptance testing in the first quarter of 2012 and the fourth quarter of 2013, respectively;

•

~~we continued construction on the dynamically positioned, ultra-deepwater drillship~~~~Noble Globetrotter I,~~~~currently under construction and due to be delivered to our customer in December 2011; and~~

•

~~we began construction on~~one dynamically positioned, ultra-deepwater, harsh environmentBully-class drillship owned through a ~~second ultra-deepwater drillship, the~~~~Noble Globetrotter II~~,joint venture with Shell which is scheduled to be ~~constructed with an anticipated delivery date~~delivered in the fourth quarter of ~~2013.~~2011 and complete acceptance testing in the first quarter of 2012;

four dynamically positioned, ultra-deepwater, harsh environment drillships under construction at Hyundai Heavy Industries Co. Ltd. which are estimated to be delivered from the shipyard to begin acceptance testing as follows: the second quarter of 2013, the fourth quarter of 2013, the second quarter of 2014, and the second half of 2014, respectively; and

six high-specification heavy duty, harsh environment jackup rigs which are estimated to be delivered from the shipyard to begin acceptance testing as follows: first quarter of 2013, third quarter of 2013, fourth quarter of 2013, first quarter of 2014, fourth quarter of 2014 and first quarter of 2015, respectively.

Of our 13 rigs under construction as of September 30, 2011, four drillships and all six jackups are being constructed at a shipyard with a strong history of successful execution. Also, four of the drillships are contracted for five years or more, while the remaining nine rigs are being constructed without contracts.

As part of our business strategy, we continue to review our fleet and the strategic benefit of our lower specification units. As part of this process, we may dispose of some of our lower specification units, and we are considering potential options.

Acquisition of FDR Holdings Limited

On July 28, 2010, Noble-Swiss and Noble AM Merger Co., a Cayman Islands company and indirect wholly-owned subsidiary of Noble-Swiss (“Merger Sub”), completed the acquisition of FDR Holdings Limited, a Cayman Islands company (“Frontier”). Under the terms of the Agreement and Plan of Merger with Frontier and certain of Frontier’s shareholders, Merger Sub merged with and into Frontier, with Frontier surviving as an indirect wholly-owned subsidiary of Noble-Swiss and a wholly-owned subsidiary of Noble-Cayman. The Frontier acquisition was for a purchase price of approximately $1.7 billion in cash plus liabilities assumed and strategically expanded and enhanced our global fleet. Frontier’s results of operations were included in our results beginning July 28, 2010. We funded the cash consideration paid at closing of approximately $1.7 billion using proceeds from our July 2010 offering of senior notes and existing cash on hand.

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Contract Drilling Services Backlog

We maintain a backlog (as defined below) of commitments for contract drilling services. The following table sets forth as of September 30, ~~2010~~2011 the amount of our contract drilling services backlog and the percent of available operating days committed for the periods indicated:

Year Ending December 31,
Total 2010 (1) 2011 2012 2013 2014-2023
(In millions)
Contract Drilling Services Backlog

Semisubmersibles/Drillships (2) (5) (7) (8) $ 12,666 $ 482 $ 1,940 $ 1,936 $ 1,803 $ 6,505
Jackups/Submersibles (3) 1,342 220 571 303 183 65
Other 9 9 — — — —

Total (4) $ 14,017 $ 711 $ 2,511 $ 2,239 $ 1,986 $ 6,570

Percent of Available Operating Days Committed (6) 71 % 49 % 31 % 25 % 6 %

Potential Suspension Adjustments (7) $ (62 ) $ (84 ) $ (29 ) $ — $ — $ 51


			Year Ending December 31,
	Total		2011 (1)			2012			2013			2014			2015-2023
						(In millions)
Contract Drilling Services Backlog
Semisubmersibles/Drillships (2) (6) (7)	$	11,219	$	519		$	1,865		$	1,665		$	1,780		$	5,390
Jackups/Submersibles (3)		1,619		296			750			386			184			3

Total (4)	$	12,838	$	815		$	2,615		$	2,051		$	1,964		$	5,393

Percent of Available Operating Days
Committed (5)				81	%		53	%		33	%		24	%		5	%


(1)		Represents a three-month period beginning October 1, ~~2010.~~2011.

(2)		Our drilling contracts with Petrobras provide an opportunity for us to earn performance bonuses based on downtime experienced for our rigs operating offshore Brazil. With respect to our semisubmersibles operating offshore Brazil for Petrobras, we have included in our backlog an amount equal to 75 percent of potential performance bonuses for such semisubmersibles, which amount is based on and generally consistent with our historical earnings of performance bonuses for these rigs. With respect to our drillships presently operating offshore Brazil for Petrobras, we (a) have not included in our backlog any performance bonuses for periods prior to the commencement of certain upgrade projects planned for ~~2010~~2011 through ~~2013,~~2012, which projects are designed to enhance the reliability and operational performance of ~~our~~these drillships, and (b) have included in our backlog an amount equal to 75 percent of potential performance bonuses for periods after the estimated completion of such upgrade projects. Our backlog for semisubmersibles/drillships includes approximately ~~$278~~$266 million attributable to these performance bonuses; however, the actual amounts of these bonuses could vary materially. Our drilling contracts with Petrobras provide Petrobras with the right to terminate the contract in the event of excessive downtime.bonuses.

		The drilling contracts with Shell for theNoble Globetrotter I,Noble Globetrotter II,Noble Jim Thompson,Noble Jim Day and Noble ~~Phoenix~~Clyde Boudreaux, as well as the ~~three-year extension~~letter of intent for the unnamed~~Noble Jim Thompson~~HHI Drillship I, ~~with subsidiaries of Shell~~ provide opportunities for us to earn performance bonuses based on key performance indicators as defined by Shell. With respect to these contracts, we have included in our backlog an amount equal to 75 percent of the potential performance bonuses for these ~~rigs.~~rigs, except for theNoble Clyde Boudreauxwhere limited bonus is expected. Our backlog for these rigs includes approximately ~~$412~~$480 million attributable to these performance ~~bonuses; however, the actual amounts of these bonuses could vary materially.~~bonuses.

(3)		Our drilling contracts with Pemex for certain jackups operating offshore in Mexico are subject to price review and adjustment of the rig dayrate. ~~As of September 30, 2010, contracts~~Presently, the contract for ~~two jackups have dayrates~~one jackup has a dayrate indexed to the world average of the highest dayrates published by ODS-Petrodata. After an initial firm dayrate period, the ~~dayrates are~~dayrate is generally adjusted quarterly based on formulas calculated from the index. Our contract drilling services backlog has been calculated using the September 30, ~~2010,~~2011 index-based ~~dayrates~~dayrate for periods subsequent to the ~~initial~~ firm dayrate period.


~~(7)~~(6)		~~Each of our drilling contracts relating to the nine deepwater rigs (including the~~~~Noble Jim Day~~~~and~~~~Noble Bully I~~~~) contracted for the U.S. Gulf of Mexico contains a force majeure contract clause that, if validly exercised, may result in modification or cancellation of such contracts.~~ It is not possible to accurately determine the impact to our revenues or backlog resulting from ~~the U.S. government-imposed restrictions and regulations,~~ efforts by operators to cancel or modify drilling contracts ~~delays in issuing~~due to U.S. government imposed restrictions and the rigorous scrutiny for issuance of new drilling permits, and other consequences of ~~the~~ actions by the U.S. government. At September 30, ~~2010,~~2011, backlog related to ~~these~~our U.S. Gulf of Mexico deepwater rigs totaled ~~$6.5~~$5.5 billion, ~~$166~~$206 million of which represents backlog for the three-month period ending December 31, ~~2010.~~ 2011.

		The amounts of backlog shown in the table above reflect the backlog determined pursuant to contracts and rates in existence for the eight deepwater rigs operating or to operate in the U.S. Gulf of Mexico. The potential suspension adjustments reflect possible adjustments to the contract status at September 30, 2010 and assume a suspension period through December 31, 2010. These potential suspension adjustments are presented to assist in the understanding of potential effects on our backlog that could arise from the U.S. government-imposed restrictions described under “~~U.S. Gulf of Mexico Operations~~~~” above and are not indicative of the actual results that may occur. The potential suspension adjustments include or reflect the following:~~


a)		~~One customer, Anadarko Petroleum, has asserted termination of its contract based on a force majeure event in the U.S. Gulf of Mexico.~~ We do not believe the customer has the right to terminate the contract, and the future contracted revenues in the amount of $70 million ($40 million for the remaining three months of 2010) have been included in our backlog as of September 30, 2010. This matter is in litigation, and we will not realize these revenues if the customer is successful in the related litigation. Pending resolution of the legal dispute, no revenues are being recognized under this contract.

b)		~~We have~~ entered into an agreement with Shell, effective June 27, 2010, which provides that Shell may suspend the contracts on three ~~Noble~~of our units operating in the U.S. Gulf of Mexico during any period of regulatory restriction by paying reduced suspension dayrates in lieu of the normal ~~dayrates of $336,200, $383,500 and $447,000, respectively.~~operating dayrates. The term of the initial contract is also extended by the suspension period. The impact of this agreement is to shift backlog among periods with an immaterial increase to total backlog because of the reduced ~~standby~~suspension rates. ~~The potential backlog reduction for the remaining three months of 2010 totals approximately $44 million.~~

c)(7)		~~We have entered into~~ Noble and a subsidiary of Shell are involved in joint venture agreements to build, operate, and own both theNoble Bully Iand theNoble Bully II. Pursuant to these agreements, each party has an agreement with Noble Energy effective June 15, 2010 providing for, among other things, the cancellation of the initial drilling contract for a deepwater drilling unit and payment of a standby dayrate of $145,000 from June 15, 2010 through December 12, 2010, without right of cancellation. The parties also agreed to negotiateequal 50 percent share in good faith a new drilling contract following the standby period with a dayrate of $397,500 and having a term equal to the previous contract term (previously expected to end in November 2011) without regard to the standby period. Backlog asboth vessels. As of September 30, ~~2010 includes~~2011, the ~~non-cancellable standby rate through December 12, 2010. There~~combined amount of backlog for these rigs totaled $2.4 billion, all of which is ~~no guarantee that agreement on a new contract will be reached and, accordingly, no related amounts have been~~ included in our ~~backlog subsequent to December 12, 2010.~~


~~(8)~~		~~The~~~~Noble Homer Ferrington~~is under contract with a subsidiary of ExxonMobil Corporation (“ExxonMobil”), who 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 notbacklog. Noble’s net interest in the ~~required condition. ExxonMobil has informed us that we must look to BP~~backlog 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 continues to be fully ready to operate under the drilling contract. We believe we are owed dayrate by either or both of these ~~clients. The operating dayrate~~rigs was approximately $538,000 per day for the work in Libya. We are proceeding with the arbitration process and intend to vigorously pursue these claims. Due to the uncertainties noted above, we have not recognized any revenue during the assignment period. The future contracted revenues totaling $286 million ($47 million for the remaining three months of 2010) have been included in our backlog as of September 30, 2010.$1.2 billion.

Our contract drilling services backlog reported above reflects estimated future revenues attributable to both signed drilling contracts and letters of ~~intent.~~intent that we expect will become binding contracts. A letter of intent is generally subject to customary conditions, including the execution of a definitive drilling contract. For a number of reasons, it is possible that some customers that have entered into letters of intent will not enter into signed drilling contracts. We calculate backlog for any given unit and period by multiplying the full contractual operating dayrate for such unit by the number of days remaining in the period. The reported contract drilling services backlog does not include amounts representing revenues for mobilization, demobilization and contract preparation, which are not expected to be significant to our contract drilling services revenues, amounts constituting reimbursables from customers or amounts attributable to uncommitted option periods under drilling contracts or letters of intent.

The amount of actual revenues earned and the actual periods during which revenues are earned may be different than the backlog amounts and backlog periods set forth in the table above ~~due to~~for various factors, including, but not limited to, shipyard and maintenance projects, ~~unplanned~~operational downtime, weather conditions, bonuses and other factors that result in applicable dayrates lower than the full contractual operating dayrate. In addition, amounts included in the backlog may change because drilling contracts may be varied or modified by mutual consent or customers may exercise early termination rights contained in some of our drilling contracts or decline to enter into a drilling contract after executing a letter of intent. As a result, our backlog as of any particular date may not be indicative of our actual operating results for the subsequent periods for which the backlog is calculated.

As of September 30, ~~2010,~~2011, we estimate Shell and Petrobras ~~represent more than 50%~~represented approximately 63% and ~~20%~~22%, respectively, of our backlog.

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Internal Investigation

In 2007, we began, and voluntarily contacted the SEC and the U.S. Department of Justice (“DOJ”) to advise them of, an internal investigation of the legality under the United States Foreign Corrupt Practices Act (“FCPA”) and local laws of certain reimbursement payments made by our Nigerian affiliate to our customs agents in Nigeria. In ~~November~~ 2010, we finalized settlements of this matter with each of the SEC and the DOJ. ~~In order~~Pursuant to ~~resolve~~these settlements, we agreed to pay fines and penalties to the DOJ ~~investigation, we entered into a non-prosecution agreement with~~and the ~~DOJ, which provides for the payment of a fine of $2.6 million, as well as~~SEC and to certain undertakings, including continued cooperation with the DOJ, compliance with the FCPA, certain self-reporting and annual reporting obligations and certain restrictions on our public discussion regarding the agreement. The agreement does not require that we install a monitor to oversee our activities and compliance with laws. In order to resolve the SEC investigation, we agreed to the entry of a civil judgment against us for violations of the FCPA. Pursuant to the agreed judgment, we agreed to disgorge profits of $4.3 million, pay prejudgment interest of $1.3 million and refrain from denying the allegations contained in the SEC’s petition, except in other litigation to which the SEC is not a party. We also agreed to an injunction restraining usrefraining from violating the ~~anti-bribery, books and records, and internal controls provisions of the~~ FCPA and ~~we waived a variety of litigation rights with respect to the conduct at issue. The agreed judgment does not require a monitor.~~

In connection with the internal investigation, we had already enhanced our compliance program and efforts and we will continue to emphasize the importance of compliance and ethical business conduct. Though the settlements described above conclude the investigations of the SEC and the DOJ, we could be investigated by relevant foreign jurisdictions, and we could face fines or other ~~sanctions in those jurisdictions. Any sanctions and other costs we may incur as a result of~~anti-corruption laws, self-reporting any ~~such investigation, or any future alleged~~ violations of the FCPA or such laws to the DOJ and reporting to the DOJ on an annual basis our progress on anti-corruption compliance matters. Our ability to comply with the terms of the settlements is dependent on the success of our ongoing compliance program, including our ability to continue to manage our agents and supervise, train and retain competent employees, and the efforts of our employees to comply with applicable law and our code of business conduct and ethics.

In January 2011, the Nigerian Economic and Financial Crimes Commission and the Nigerian Attorney General Office initiated an investigation into these same activities. A subsidiary of Noble-Swiss resolved this matter through the execution of a non-prosecution agreement dated January 28, 2011. Pursuant to this agreement, the subsidiary paid $2.5 million to resolve all charges and claims of the Nigerian Government. Any similar ~~laws could have a material adverse effect on our business~~investigations or ~~financial condition~~charges and any additional sanctions we may incur could damage our reputation and ~~ability to do~~result in substantial fines, sanctions, civil and/or criminal penalties and curtailment of operations in certain jurisdictions and might adversely affect our business, ~~to attract~~results of operations or financial condition. Further, resolving any such investigation could be expensive and ~~retain employees~~consume significant time and ~~to access capital markets.~~attention of our senior management.

In 2010, the Nigerian Oil and Gas Industry Content Development Bill was signed into law. The law is designed to create Nigerian content in operations and transactions within the Nigerian oil and gas industry. The law sets forth certain requirements for the utilization of Nigerian human resources and goods and services in oil and gas projects and creates a Nigerian Content Development and Monitoring Board (“NCD Board”) to implement and monitor the law and develop regulations pursuant to the law. The law also establishes a Nigerian Content Development Fund to fund the implementation of the law. The implementation of the law is ongoing and both the manner and timing of final implementation is uncertain. We have participated in a number of meetings with the NCD Board and are analyzing how we might reorganize our operations in Nigeria to meet these requirements, including creating third party noncontrolling interests in our operating assets. We cannot predict the impact the new law may have on our existing or future operations in Nigeria, but our operations there could be significantly and adversely affected.

Results of Operations

For the Three Months Ended September 30, ~~2010~~2011 and ~~2009~~2010

General

Net income attributable to ~~Noble-Swiss~~Noble Corporation (Noble-Swiss) for the three months ended September 30, 2011 (the “Current Quarter”) was $135 million, or $0.53 per diluted share, on operating revenues of $738 million, compared to net income for the three months ended September 30, 2010 (the ~~“Current~~“Comparable Quarter”) ~~was~~of $86 million, or $0.34 per diluted share, on operating revenues of $613 ~~million, compared to net~~million.

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 financial position and results of operations for Noble-Cayman, and the reasons for material changes in the amount of revenue and expense items between 2011 and 2010, would be the same as the information presented below regarding Noble-Swiss in all material respects, except operating income for Noble-Cayman for the three months ended September 30, ~~2009 (the “Comparable Quarter”)~~2011 was $19 million higher than operating income for Noble-Swiss for the same period, primarily as a result of ~~$426 million, or $1.63 per diluted share, on~~depreciation related to Swiss-owned assets and operating ~~revenues of $906 million.~~costs directly attributable to Noble-Swiss for stewardship related services.

Rig Utilization, Operating Days and Average Dayrates

Operating revenues and operating costs and expenses for our contract drilling services segment are dependent on three primary metrics — rig utilization, operating days and dayrates. The following table sets forth the average rig utilization, operating days and average dayrates for our rig fleet for the three months ended September 30, ~~2010~~2011 and ~~2009:~~2010:


	Average Rig						Operating							Average
	Utilization (1)						Days (2)							Dayrates							Average Rig						Operating							Average
	Three Months Ended						Three Months Ended							Three Months Ended							Utilization (1)						Days (2)							Dayrates
	September 30,						September 30,							September 30,							Three Months Ended						Three Months Ended							Three Months Ended
	2010			2009			2010		2009		% Change			2010		2009		% Change			September 30,						September 30,							September 30,
																					2011			2010			2011		2010		%Change			2011		2010		%Change
Jackups		77	%		80	%		3,032		3,183		-5	%	$	90,791	$	143,388		-37	%		82	%		77	%		3,229		3,032		6	%	$	89,352	$	90,791		-2	%
Semisubmersibles > 6000’ (3)		89	%		98	%		736		631		17	%		203,316		434,435		-53	%
Semisubmersibles < 6000’ (4)		94	%		100	%		321		276		16	%		102,589		261,167		-61	%
Semisubmersibles																						84	%		90	%		1,086		1,057		3	%		315,034		172,727		82	%
Drillships		100	%		100	%		468		276		70	%		229,963		243,186		-5	%		60	%		100	%		329		468		-30	%		225,669		229,963		-2	%
FPSO/Submersibles		26	%		42	%		64		78		-18	%		304,000		65,944		361	%		0	%		26	%		—		64		—			—		304,000		—


Total		79	%		83	%		4,621		4,444		4	%	$	126,581	$	196,900		-36	%		76	%		79	%		4,644		4,621		0	%	$	151,782	$	126,581		20	%


(1)		Information reflects our policy of reporting on the basis of the number of rigs in our fleet excluding newbuild rigs under construction.

(2)		Information reflects the number of days that our rigs were operating under contract.

~~(3)~~		~~These units have water depth ratings of 6,000 feet or greater.~~

~~(4)~~		~~These units have water depth ratings of less than 6,000 feet.~~

The ~~decrease~~increase in contract drilling services ~~revenue resulted~~revenues primarily ~~from~~relates to our ~~jackup rigs~~semisubmersibles and ~~our semisubmersibles,~~jackups, which generated approximately ~~$181~~$160 million and ~~$164~~$13 million ~~less~~more revenue, ~~for~~respectively, in the Current ~~Quarter as compared to~~Quarter.

The increase in semisubmersible average dayrates resulted in a $155 million increase in revenues from the Comparable Quarter ~~respectively.~~while the increase in operating days of three percent resulted in an additional $5 million increase in revenues. The increase in semisubmersibles revenue is a result of drilling restrictions in the U.S. Gulf of Mexico in the Comparable Quarter, where lower standby rates replaced the standard operating dayrates for a majority of our contracts. The increase in operating days is primarily from theNoble Jim Dayand theNoble Homer Ferrington, which were added to the fleet subsequent to September 30, 2010.

The six percent increase in jackup operating days resulted in an $18 million increase in revenues, which was partially offset by a decrease in jackup ~~revenue was due~~average dayrates of two percent which resulted in a $5 million decrease in revenues from the Comparable Quarter. The increase in utilization primarily related to rigs in Mexico that commenced contracts in the second quarter of 2011 and operated for the entire Current Quarter. The reduction in average dayrates ~~decreasing 37%,~~resulted primarily from the contractual re-pricing of rigs in the Middle East, the North Sea, and Mexico ~~resulting from~~for changes in market conditions in the global shallow water market. The decrease in semisubmersibles revenue relates to an average dayrate decrease of 53%, which primarily is a result of drilling restrictions in the U.S. Gulf of Mexico where lower standby rates replaced the standard operating dayrates for a majority of our customers.

The ~~decreases~~increases in revenue for the above rig classes were partially offset by ~~higher~~lower revenues from our drillships and ~~other rigs, which increased $55~~FPSO/submersibles. Revenue from our drillships decreased $33 million in the Current Quarter as compared to the Comparable Quarter. The ~~increase~~decrease was primarily ~~due~~attributable to a number of rigs being in the ~~addition of~~shipyard or stacked during the ~~drillships~~~~Noble Discoverer~~,Current Quarter. Revenue from our FPSO, theNoble ~~Duchessand the FPSO vessel~~Seillean, ~~which were all added to~~decreased $20 million as it did not operate in the ~~fleet as part of the Frontier acquisition on July 28, 2010.~~Current Quarter.

Operating Costs and Expenses.Contract drilling services operating costs and expenses increased ~~$65~~$43 million for the Current Quarter as compared to the Comparable Quarter. In addition to the ~~acquisition of Frontier, our newbuild~~ rigs ~~the~~~~Noble Danny Adkins~~~~and~~~~Noble Dave Beard~~~~, which were~~ added to the fleet as part of the Frontier acquisition, theNoble Jim Daywas placed into service in ~~October 2009 and March 2010, respectively,~~January 2011. These additional units added approximately ~~$53~~$15 million of operating costs in the Current Quarter. Excluding the additional expenses related to these rigs, our contract drilling costs increased ~~$12~~$28 million in the Current Quarter from the Comparable Quarter. This change was primarily driven by ~~a $15~~an $11 million increase in ~~acquisition~~labor and a $10 million increase in mobilization, transportation and fuel costs related to rigs returning, or preparing to return, to work in the ~~quarter, due to the acquisition of Frontier, partially offset by~~Current Quarter, a $4 million increase in safety and training costs and a $3 million ~~decrease~~increase in ~~rig maintenance and other expenses during the Current Quarter.~~rotation costs.

The increase in depreciation and amortization in the Current Quarter ~~over~~from the Comparable Quarter was primarily ~~due~~attributable to depreciation on ~~newbuilds~~theNoble Jim Day,rigs added to the fleet ~~the addition~~as part of the Frontier ~~rigs~~acquisition and additional depreciation related to other capital expenditures on our fleet since the Comparable Quarter.

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For the Nine Months Ended September 30, ~~2010~~2011 and ~~2009~~2010

General

Net income attributable to ~~Noble-Swiss~~Noble Corporation (Noble-Swiss) for the nine months ended September 30, 2011 (the “Current Period”) was $244 million, or $0.96 per diluted share, on operating revenues of $1.9 billion, compared to net income for the nine months ended September 30, 2010 (the ~~“Current~~“Comparable Period”) ~~was~~of $675 million, or $2.62 per diluted share, on operating revenues of $2.2 ~~billion, compared to net~~billion.

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 financial position and results of operations for Noble-Cayman, and the reasons for material changes in the amount of revenue and expense items between 2011 and 2010, would be the same as the information presented below regarding Noble-Swiss in all material respects, except operating income for Noble-Cayman for the nine months ended September 30, ~~2009 (the “Comparable Period”)~~2011 was $46 million higher than operating income for Noble-Swiss for the same period, primarily as a result of ~~$1.2 billion, or $4.70 per diluted share, on~~depreciation related to Swiss owned assets and operating ~~revenues of $2.7 billion.~~costs directly attributable to Noble-Swiss for stewardship related services.

Rig Utilization, Operating Days and Average Dayrates

Operating revenues and operating costs and expenses for our contract drilling services segment are dependent on three primary metrics — rig utilization, operating days and dayrates. The following table sets forth the average rig utilization, operating days and average dayrates for our rig fleet for the nine months ended September 30, ~~2010~~2011 and ~~2009:~~2010:


	Average Rig						Operating							Average
	Utilization (1)						Days (2)							Dayrates							Average Rig						Operating							Average
	Nine Months Ended						Nine Months Ended							Nine Months Ended							Utilization (1)						Days (2)							Dayrates
	September 30,						September 30,							September 30,							Nine Months Ended						Nine Months Ended							Nine Months Ended
	2010			2009			2010		2009		% Change			2010		2009		% Change			September 30,						September 30,							September 30,
																					2011			2010			2011		2010		%Change			2011		2010		%Change
Jackups		80	%		82	%		9,357		9,502		-2	%	$	101,424	$	153,027		-34	%		72	%		80	%		8,407		9,357		-10	%	$	84,084	$	101,424		-17	%
Semisubmersibles > 6000’ (3)		90	%		97	%		2,146		1,857		16	%		343,029		404,254		-15	%
Semisubmersibles < 6000’ (4)		98	%		100	%		864		819		5	%		196,480		253,132		-22	%
Semisubmersibles																						80	%		92	%		3,042		3,010		1	%		288,246		300,971		-4	%
Drillships		89	%		87	%		897		716		25	%		229,963		248,102		-7	%		61	%		89	%		1,007		897		12	%		251,421		230,306		9	%
FPSO/Other (5)		10	%		66	%		64		418		-85	%	��	303,056		61,711		391	%

FPSO/Submersibles																						0	%		10	%		—		64		—			—		303,056		—

Total		80	%		85	%		13,328		13,312		0	%	$	156,142	$	196,476		-21	%		69	%		80	%		12,456		13,328		-7	%	$	147,476	$	156,142		-6	%

The decreases in revenue for the above rig classes were partially offset by an increase in revenue of $47 million from our drillships. The increase was primarily attributable to a nine percent increase in average dayrates and 12 percent increase in operating days, which contributed additional revenue in the Current Period ~~as compared~~of $21 million and $25 million, respectively. The increase is primarily attributable to operations from the drillships added to the ~~Comparable Period. These amounts were partially offset by higher revenues~~fleet as part of ~~$22 million from our drillships and other rigs principally due to additional operating days following~~ the Frontier acquisition.

Operating Costs and Expenses.Contract drilling services operating costs and expenses increased ~~$103~~$156 million for the Current Period as compared to the Comparable Period. ~~Our newbuild~~In addition to the rigs ~~the~~~~Noble Scott Marks~~,~~Noble Danny Adkins~~~~and~~~~Noble Dave Beard~~~~, which were~~ added to the fleet as part of the Frontier acquisition, theNoble Dave Beardand theNoble Jim Daywere placed into service in ~~June 2009, October 2009 and~~ March 2010 ~~respectively,~~and January 2011, respectively. These additions added approximately ~~$83~~$108 million of operating costs in the Current Period. ~~The acquisition of the Frontier rigs added an additional $24 million of operating costs.~~ Excluding the additional expenses related to these ~~newbuild and Frontier~~ rigs, our contract drilling costs ~~decreased $4~~increased $48 million in the Current Period from the Comparable Period. This change was ~~principally due to a decrease in maintenance expenses of $15 million, coupled with a decrease in transportation and other expenses of $8 million, partially offset~~primarily driven by a ~~$19~~$13 million increase in ~~acquisition~~maintenance and rig-related expense, $12 million increase in mobilization costs, ~~due~~$8 million increase in fuel and transportation costs and $3 million increase in labor costs related to ~~the acquisition of Frontier.~~our rigs returning, or preparing to return, to work in Brazil and Mexico, $6 million increase in rotation costs and $6 million increase in safety and training costs.

Other Income and Expenses

Selling, General and Administrative Expenses.Consolidated selling, general and administrative expenses increased ~~$10~~$2 million in the Current Period as compared to the Comparable Period. The increase relates to a $5 million increase in ongoing legal and tax expenses and a $3 million increase in employee-related and miscellaneous costs in the Current Period, partially offset by a $6 million decrease related to our FCPA investigation in the Comparable Period.

Interest Expense, net of amount capitalized.Interest expense, net of amount capitalized, increased $40 million in the Current Period as compared to the Comparable Period. The increase is a result of $1.25 billion of debt issued in July 2010, which was used to partially fund the Frontier acquisition, $1.1 billion of debt issued in February 2011, which was primarily ~~due~~used to ~~an accrual~~repay the outstanding balance on our revolving credit facility and to repay our portion of ~~$8 million related to our FCPA settlement, expatriate costs related to~~outstanding debt under the ~~relocation of our executive officers~~joint venture credit facilities, and ~~selected personnel to Switzerland of $4 million, partially offset by a $2 million decrease in transaction fees related to our migration to Switzerland and other expenses.~~Current Period drawdowns on the credit facilities.

Income Tax Provision.Our income tax provision decreased ~~$149~~$84 million in the Current Period primarily ~~due to~~from a decline in pre-tax earnings ~~combined with~~of approximately 64 percent, which reduced income tax expense by approximately $81 million in the Current Period. The remaining $3 million decrease is a result of a lower effective tax rate ~~in the Current Period compared to the Comparable Period. Pre-tax earnings decreased approximately 47~~of 15 percent ~~during~~in the Current Period as compared to ~~the Comparable Period resulting in a reduction of approximately $129 million in income tax expense. The lower effective tax rate, which was 15.8 percent in the Current Period compared to 18.3~~16 percent in the Comparable Period, reduced income tax expense by approximately $20 million. During the fourth quarter of 2009, we completed an internal restructuring of the ownership of substantially all of our drilling rigs under a single non-U.S. entity. In addition to certain business advantages, the restructuring had a beneficial impact onPeriod. The decrease in the effective tax rate was a result of certain discrete tax items totaling approximately $17 million, partially offset by a change in our geographic revenue mix primarily resulting from drilling restrictions in the ~~Current Period.~~U.S. Gulf of Mexico.

5651

Liquidity and Capital Resources

Overview

~~Our principal capital resource in~~Net cash from operating activities for the Current Period was ~~net cash from operating activities of $1.3 billion,~~$474 million, which compared to ~~$1.5~~$1.3 billion in the Comparable Period. The decrease in net cash from operating activities in the Current Period was primarily attributable to a ~~decrease~~significant decline in net income ~~partially offset by a decrease~~coupled with an increase in ~~outstanding~~ accounts receivable. AtThe increase in accounts receivable is primarily related to the increased fleet activity in 2011 and certain disputed amounts, which we believe will ultimately be collected. During the Current Period, we entered into an additional $600 million revolving credit facility, and at September 30, ~~2010,~~2011 we had ~~cash and cash equivalents of $367 million and $600~~$485 million available under our ~~bank~~ credit ~~facility described under “Credit Facility and Long-Term Debt” below.~~facilities. We had working capital of ~~$399~~$352 million and ~~$1.0 billion~~$110 million at September 30, ~~2010~~2011 and December 31, ~~2009,~~2010, respectively. Primarily as a result of our ~~$1.25~~$1.1 billion debt offering in ~~July 2010,~~February 2011 and an increase in net borrowings on our credit facilities during the Current Period of $675 million, total debt as a percentage of total debt plus equity increased to 2732 percent at September 30, ~~2010~~2011 from 1028 percent at December 31, ~~2009.~~2010. Additionally, at September 30, ~~2010,~~2011, we had a total contract drilling services backlog of approximately ~~$14~~$12.8 billion. Our backlog as of September 30, ~~2010~~2011 reflects a commitment of 7181 percent of operating days for the remainder of ~~2010~~2011 and 4953 percent for ~~2011.~~2012. See additional information regarding our backlog at “Contract Drilling Services Backlog.”

~~As a result~~Our principal capital resource in the Current Period was cash generated from our $1.1 billion senior notes offering, net borrowings under our bank credit facilities of $675 million and net cash from operating activities of $474 million.

Our currently anticipated cash flow needs include the following:

	•		normal recurring operating expenses;

	•		committed capital expenditures, including expenditures for newbuild projects currently underway;

	•		discretionary capital expenditures, including various capital upgrades; and

	•		payments of return of capital in the form of a reduction of par value of our shares (in lieu of dividends).

We currently expect to fund these cash flow needs with cash generated by our operations, ~~our~~ cash on hand and ~~the availability~~borrowings under our existing bank credit ~~facility,~~facilities. However, given the level of expenditures we ~~believe~~expect to incur through the end of 2012, a significant portion of which relates to our ~~liquidity~~newbuild program, we may require capital in excess of the amount provided through these sources. Subject to market and ~~financial condition are sufficient~~other conditions, we may raise such additional capital in a number of ways, including accessing capital markets, obtaining additional lines of credit or disposing of assets. We also retain the flexibility to ~~meet all of our reasonably anticipated cash flow needs for the remainder of 2010 including:~~

~~normal recurring operating expenses;~~

delay or cancel certain discretionary capital expenditures ~~including expenditures for newbuilds and upgrades;~~

~~repurchase of shares;~~

~~payments of return of capital in the form of a reduction of par value of our shares (in-lieu of dividends); and~~

~~contributions to our pension plans.~~

Due to the uncertainties regarding the U.S. Gulf of Mexico and the current market conditions for our jackup rigs, our cash flows from operations could be negatively impacted in the near term, which would impact our liquidity. The availability of capital and credit to fund the continuation and expansion of our business operations worldwide could impact our liquidity and financial condition in the future. Our long-term liquidity requirements will primarily relate to expenditures for newbuild rigs, ongoing maintenance expenditures and repaying or refinancing debt. It may be difficult or more expensive for us to access the capital markets in the future, which could have an adverse impact on our ability to react to changing economic and business conditions, to fund our capital expenditures, to refinance debt and to make acquisitions.as necessary.

Capital Expenditures

Our primary ~~capital~~liquidity requirement ~~for the remainder of 2010 will be~~during 2011 is for capital expenditures. Capital expenditures, ~~excluding~~including capitalized interest, totaled $2.0 billion and $886 million for the nine months ended September 30, 2011 and 2010, respectively. Capital expenditures for 2010 do not include the fair value of assets acquired as part of the Frontier ~~acquisition, totaled $886 million and $893 million for the nine months ended September 30, 2010 and 2009, respectively.~~acquisition.

~~Other capital expenditures totaled $440 million in~~during the first nine months of ~~2010, which included approximately $311~~2011 totaled $1.3 billion, as follows (in millions):


Rig type/name
Wholly-owned drillships
Globetrotter class
Noble Globetrotter I	$	176.2
Noble Globetrotter II		78.3

Gusto P10,000
HHI Drillship I		161.1
HHI Drillship II		161.5
HHI Drillship III		161.6
HHI Drillship IV		50.0

Joint venture owned drillships
GustoMSC Bully PRD 12,000
Noble Bully I		149.4
Noble Bully II		114.1

Wholly-owned jackups
F&G JU-3000N
Noble Jackup I		43.5
Noble Jackup II		2.4
Noble Jackup III		45.1
Noble Jackup IV		44.4
Noble Jackup V		44.4
Noble Jackup VI		44.4

Other recently completed newbuilds		4.2

Total Newbuild Capital Expenditures	$	1,280.6

In addition to the newbuild expenditures noted above, capital expenditures during 2011 consisted of:

$463 million for major ~~upgrade~~ projects, including ~~$174~~$130 million to upgrade ~~our three~~two drillships currently operating ~~under contracts with Petrobras. In addition,~~in Brazil;

$156 million for other capitalized expenditures, including major maintenance and regulatory expenditures which generally have useful lives ranging from 3 to 5 ~~years, totaled $64~~years; and

$88 million ~~for the nine months ended September 30, 2010.~~in capitalized interest.

~~Excluding the fair value of assets acquired as part of the Frontier acquisition, our~~Our total capital expenditure estimate for ~~2010~~2011 is approximately ~~$1.4~~$2.7 billion. In connection with our ~~2010~~2011 and future capital expenditure programs, as of September 30, ~~2010,~~2011, we had outstanding commitments, including shipyard and purchase commitments, for approximately ~~$1.4~~$3.4 billion, of which $1.1 billion is anticipated to be spent within the next twelve months. Our remaining ~~2010~~2011 capital expenditure budget and our 2012 capital expenditures will generally be spent at our discretion. We may accelerate or delay capital projects as needed. We continue to monitor regulatory developments in the U.S. Gulf of Mexico and resulting potential capital expenditures that will be required to comply with such regulations. Based on our preliminary expectations relating to the regulations adopted to date, we believe the additional capital expenditures in the U.S. Gulf of Mexico necessary to comply with the governmental regulations will not exceed $10 million per rig. Actual amounts will depend on final regulations and will also vary per rig, depending on several factors including the date upon which the rig entered our fleet. We also anticipate incurring additional amounts on certain other rigs within our fleet that are located outside the U.S. Gulf of Mexico and are in the process of assessing what expenditures will be made and the amount of such expenditures.

From time to time we consider possible projects that would require ~~capital expenditures or other cash~~ expenditures that are not included in our capital budget, and such unbudgeted ~~capital or cash~~ expenditures could be significant. In addition, we will continue to evaluate acquisitions of drilling units from time to time. Other factors that could cause actual capital expenditures to materially exceed ~~planned capital expenditures~~plan include delays and cost overruns in shipyards (including costs attributable to labor shortages), shortages of equipment, latent damage or deterioration to hull, equipment and machinery in excess of engineering estimates and assumptions, changes in governmental regulations and requirements and changes in design criteria or specifications during repair or construction.

Share Repurchases and Dividends

At September 30, ~~2010,~~2011, 6.8 million registered shares remained available under the existing Board authorization for our share repurchase program. ~~Total share repurchases for~~No shares have been repurchased under this authorization during the nine months ended September 30, ~~2010 were 6.3 million, which included 6.1 million shares that were repurchased in open market transactions under our share repurchase program for approximately $219 million. In addition,~~2011. During the ~~Company~~nine months ended September 30, 2011, we acquired approximately ~~0.2~~0.3 million shares surrendered by employees for taxes payable upon the vesting of restricted stock and exercises of options for $10 million. Future repurchases by Noble-Swiss will be subject to the requirements of Swiss law, including the requirement that Noble-Swiss and its subsidiaries may only repurchase shares if and to the extent that sufficient freely distributable reserves are available.

In April 2011, our shareholders approved the payment of a return of capital through a reduction of the par value of our shares in a total amount equal to 0.52 CHF per share to be paid in four equal installments scheduled for August 2011, November 2011, February 2012 and May 2012. The payments will be made in U.S. Dollars based on the CHF/USD exchange rate available approximately two business days prior to the payment date. Although the amount of the return of capital, expressed in Swiss francs, is fixed, the amount of the payment in U.S. Dollars will fluctuate based on the exchange rate. The exchange rate as published by the Swiss National Bank on October 28, 2011 was 0.8625 CHF/1.0 USD. These returns of capital will require us to make total cash payments of approximately $38 million during the remainder of 2011 (based on the exchange rate on October 28, 2011).

Our most recent quarterly payment to shareholders in the form of a capital reduction, which was paid on August ~~19, 2010,~~18, 2011 to ~~shareholders~~holders of record on August ~~9, 2010, in the~~8, 2011, was 0.13 CHF per share, or an aggregate ~~amount~~ of approximately ~~$0.665 per share. The amounts were based on a regular par value reduction of Swiss Francs (“CHF”) 0.13 and a special par value reduction of CHF 0.56.~~$42 million. The declaration and payment of ~~returns of capital or~~ dividends in the future by Noble-Swiss and the making of distributions of capital, including returns of capital in the form of par value or additional paid-in capital reductions, require authorization of the shareholders of Noble-Swiss. The amount of such dividends, distributions and returns of capital will depend on our results of operations, financial condition, cash requirements, future business prospects, contractual restrictions and other factors deemed relevant by our Board of Directors and ~~must be approved in advance by our~~ shareholders.

Our Board of Directors and shareholders approved the payment of a regular return of capital through a reduction of the par value of our shares in a total amount equal to CHF 0.52 per share to be paid in four equal installments. The first installment was paid in August 2010 and the remaining three installments are scheduled for November 2010, February 2011 and May 2011. The payment of future returns of capital will be made in U.S. dollars based on the CHF/USD exchange rate available approximately two business days prior to the payment date.

~~Contributions to Pension Plans~~

Noble maintains certain pension plans for both Non-U.S. and U.S. employees. The Pension Protection Act of 2006 requires that pension plans fund towards a target of at least 100 percent with a transition through 2011 and increases the amount we are allowed to contribute to our U.S. pension plans in the near term. During the nine months ended September 30, 2010 and 2009, we made contributions to our pension plans totaling $15 million and $13 million, respectively. We expect the minimum funding to our non-U.S. and U.S. plans in 2010, subject to applicable law, to be approximately $17 million. We continue to monitor and evaluate funding options based upon market conditions and may increase contributions at our discretion.

Credit ~~Facility~~Facilities and Long-Term Debt

We have two separate revolving credit facilities in place which provide us with a total borrowing capacity of $1.2 billion. One credit facility, which has a capacity of $600 million, ~~unsecured bank~~matures in 2013, and during the first quarter of 2011, we entered into an additional $600 million revolving credit facility ~~(the~~which matures in 2015 (together referred to as the “Credit ~~Facility”~~Facilities”). The ~~Credit Facility contains various~~ covenants ~~including a debt to total tangible capitalization covenant (as defined in~~and events of default under the Credit ~~Facility)~~Facilities are substantially similar, and each facility contains a covenant that limits ~~this ratio to 0.60. As of September 30, 2010,~~ our ratio of debt to total tangible capitalization, ~~was 0.21.~~as defined in the Credit Facilities, to 0.60. We were in compliance with all covenants as of September 30, 2011.

The Credit ~~Facility provides~~Facilities provide us with the ability to issue up to ~~$150~~$300 million in letters of ~~credit.~~credit in the aggregate. While the issuance of letters of credit does not increase our borrowings outstanding under the Credit Facilities, it does reduce the amount available. At September 30, ~~2010,~~2011, we had borrowings of $715 million outstanding and no ~~borrowing or~~ letters of credit outstanding under the Credit ~~Facility.~~Facilities. We believe that we maintain good relationships with our lenders under the Credit ~~Facility,~~Facilities, and we believe that our lenders have the liquidity and capability to perform should the need arise for us to draw on the Credit ~~Facility.~~Facilities.

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, ~~2010,~~2011, we were in compliance with all our debt covenants. We continually monitor compliance with the covenants under our Credit Facilities and senior notes and, based on our expectations for ~~2010,~~2011, expect to remain in compliance during the year.

At September 30, ~~2010,~~2011, we had letters of credit of ~~$128~~$74 million and performance and tax assessment bonds totaling ~~$364~~$295 million supported by surety bonds outstanding. ~~Of the letters of credit outstanding, $74 million were issued to support bank bonds in connection with our drilling units in Nigeria.~~ Additionally, certain of our subsidiaries issue, from time to time, guarantees of the temporary import status of rigs or equipment imported into certain countries in which we operate. These guarantees are issued in lieu of payment of custom, value added or similar taxes in those countries.

Our long-term debt, including current maturities, was ~~$2.7~~$3.8 billion at September 30, ~~2010~~2011 as compared to ~~$751 million~~$2.8 billion at December 31, ~~2009.~~2010. The increase in debt is ~~due to~~a result of the ~~debt issuances~~issuance of ~~$1.25~~$1.1 billion aggregate principal amount of senior notes ~~discussed below, the assumption of $689~~and $675 million of ~~joint venture debt related to~~additional net borrowings on our Credit Facilities, partially offset by the ~~Frontier acquisition and $35~~repayment of $693 million in joint venture ~~partner debt.~~credit facilities. For additional information on our long-term debt, see Note 68 to our consolidated financial statements.

~~On July 26, 2010,~~In February 2011, we issued through our indirect wholly-owned subsidiary, Noble Holding International Limited ~~$1.25~~(“NHIL”), $1.1 billion aggregate principal amount of senior notes in three separate tranches, comprising ~~of $350~~$300 million of ~~3.45%~~3.05% Senior Notes due ~~2015, $500~~2016, $400 million of ~~4.90%~~4.625% Senior Notes due ~~2020,~~2021, and $400 million of ~~6.20%~~6.05% Senior Notes due ~~2040. Proceeds, net of discount and issuance costs, totaled $1.24 billion and were used to finance a~~2041. A portion of the ~~cash consideration for~~net proceeds of approximately $1.09 billion, after expenses, was used to repay the ~~Frontier acquisition. Noble-Cayman fully and unconditionally guaranteed the notes~~outstanding balance on ~~a senior unsecured basis. Interest on all three series of these senior notes are payable semi-annually, in arrears, on February 1 and August 1 of each year, beginning on February 1, 2011.~~

~~The Bully 1 secured non-recourse~~our revolving credit facility ~~consists~~and to repay our portion of a $375 million senior term loan facility, a $40 million senior revolving loan facility and a $50 million junior term loan facility. As of September 30, 2010, loans in an aggregate principal amount of $370 million were outstanding debt under the Bully 1 facility. The senior term loan facility requires 20 quarterly payments of $15.75 million each, beginning at the end of the first complete fiscal quarter after the earlier of (i) delivery and acceptance of the ~~Noble Bully I~~ drillship and (ii) December 30, 2010. A one-time balloon payment of up to $60 million is due on the date of the final quarterly payment under the senior term loan facility (the “Final Payment Date”). In addition, all outstanding advances under the senior revolving loan facility are due in full on the Final Payment Date. The junior term loan facility requires quarterly payments in amounts based on an excess cash flow calculation defined in the Bully 1 credit agreement, commencing in the third complete quarter following the earlier of (i) delivery and acceptance of the ~~Noble Bully I~~ drillship and (ii) December 30, 2010, with final payment to be made on the Final Payment Date. The senior term loan facility and the senior revolving loan facility provide for floating interest rates that are fixed for one-, three- or six-month periods at LIBOR plus 2.5% prior to delivery and acceptance of the ~~Noble Bully I~~ ~~drillship and LIBOR plus 1.5% thereafter (which may be reduced to LIBOR plus 1.25% if the~~ ~~Noble Bully I~~ drillship has a utilization rate of at least 95% during the first year after its acceptance). The junior term loan facility provides for floating interest rates that are fixed for one-, three- or six-month periods at LIBOR plus 3.5% prior to delivery and acceptance of the ~~Noble Bully I~~ ~~drillship and LIBOR plus 2.5% thereafter (which may be reduced to LIBOR plus 2.25% if the~~ ~~Noble Bully I~~ ~~drillship has a utilization rate of at least 95% during the first year after its acceptance). As noted in Note 9- “~~~~Derivative Instruments and Hedging Activities~~~~” below,~~ the joint venture ~~maintains~~credit facilities discussed below.

In the first quarter of 2011, the joint venture credit facilities, which had a combined outstanding balance of $693 million, were repaid in full through contributions to the joint ventures from Noble and Shell. Shell contributed $361 million in equity to fund their portion of the repayment of joint venture credit facilities and related interest rate swaps, which were settled concurrent with ~~a notional amount~~the repayment and termination of $280 million, to satisfy bank covenants and to hedge the impact of interest rate changes on interest paid. The Bully 1 credit facility is secured by assignments of the major contracts for the construction of the ~~Noble Bully I~~ ~~drillship and its equipment, the drilling contract for the drillship, and various other rights. In addition, following completion of construction of the~~ ~~Noble Bully I~~ ~~drillship, the credit facility is required to be secured by a first-preferred ship mortgage on the drillship.~~

The Bully 2 secured non-recourse credit facility consists of a $435 million senior term loan facility, a $10 million senior revolving loan facility and a $50 million cost overrun term loan facility. As of September 30, 2010, loans in an aggregate principal amount of $319 million were outstanding under the Bully 2 facility. The senior term loan facility requires 28 quarterly payments beginning on the earlier of (i) a specified date that is soon after the first full fiscal quarter to occur after commencement of operations by the ~~Noble Bully II~~ drillship and (ii) July 15, 2011. The final quarterly payment will be paid together with a one-time balloon payment of up to $90 million plus any amounts outstanding under the senior revolving loan facility on the final quarterly installment payment date. The senior term loan facility and the senior revolving loan facility provide for floating interest rates that are fixed for three months or such other period selected by the borrower and agreed by the agent (but not to exceed three months), at LIBOR plus 2.5% prior to the occurrence of the delivery date of the hull, thereafter at LIBOR plus 2.3%, until contract commencement, thereafter at LIBOR plus 2.25% until the first day of the sixth anniversary of the contract commencement, and thereafter at LIBOR plus 2.4%. At September 30, 2010, the applicable interest rate was LIBOR plus 2.3%. The secured cost overrun term loan has floating interest rates of LIBOR plus 3.5% prior to the occurrence of the contract commencement and LIBOR plus 3.25% thereafter. As noted in Note 9- “~~Derivative Instruments and Hedging Activities~~~~” below,~~ the joint venture ~~maintains an interest rate swap, with a notional amount of $304 million, to satisfy bank covenants and to hedge the impact of interest rate changes on interest paid. The Bully 2~~ credit ~~facility is secured by assignments of the major contracts for the construction of the~~ ~~Noble Bully II~~ ~~drillship and its equipment, the drilling contract for the drillship, and various other rights. In addition, following the completion of construction of the~~ ~~Noble Bully II~~ ~~drillship, the credit facility is required to be secured by a first-preferred ship mortgage on the drillship.~~

In ~~September 2010,~~January 2011, the Bully joint ventures issued notes to the joint venture partners totaling $70 million. The interest rate on these notes iswas 10%, payable semi-annually in arrears and in kind on June 30 and December 31 commencing in ~~December 2010.~~June 2011. The purpose of these notes iswas to provide additional liquidity to ~~these~~the joint ventures in connection with the shipyard construction of theBullyvessels.

In April 2011, the Bully ~~vessels.~~joint venture partners entered into a subscription agreement, pursuant to which each partner was issued equity in each of the Bully joint ventures in exchange for the cancellation of all outstanding joint venture partner notes. The subscription agreement has the effect of converting all joint venture partner notes, including the contribution noted above, into equity of the respective joint venture. The total capital contributed as a result of these agreements was $146 million, which included $142 million in outstanding notes, plus accrued interest. Our portion of the ~~joint venture partner notes, which totaled $35~~capital contribution, totaling $73 million, ~~has been~~was eliminated in our Consolidated Balance Sheets. The non-eliminated portions of these joint venture partner notes totaled $18 million for Bully 1 and $17 million for Bully 2 and are due in 2016 and 2018, respectively.consolidation.

New Accounting Pronouncements

In June 2009, the Financial Accounting Standards Board (the “FASB”), issued guidance which expanded disclosures that a reporting entity provides about transfers of financial assets and its effect on the financial statements. This guidance is effective for annual and interim reporting periods beginning after November 15, 2009. The adoption of this guidance did not have a material impact on our financial condition or results of operations or financial disclosures.


Item 3.		~~Item 3.~~ Quantitative and Qualitative Disclosures About Market Risk

Market risk is the potential for loss ~~due to~~from a change in the value of a financial instrument as a result of fluctuations in interest rates, currency exchange rates or equity prices, as further described below.

Interest Rate Risk

We are subject to market risk exposure related to changes in interest rates on borrowings under the Credit ~~Facility.~~Facilities. Interest on borrowings under the Credit ~~Facility~~Facilities is at an agreed upon percentage point spread over LIBOR, or a base rate stated in the ~~agreement.~~agreements. At September 30, ~~2010,~~2011, we had ~~no amounts~~$715 million outstanding under the Credit ~~Facility.~~Facilities. Assuming our current level of debt, a change in LIBOR rates of one percent would increase our interest charges by approximately $7 million per year.

~~As part~~We maintain certain debt instruments at a fixed rate whose fair value will fluctuate based on changes in interest rates and market perceptions of our credit risk. The fair value of our total debt was $3.4 billion and $2.9 billion at September 30, 2011 and December 31, 2010, respectively. The increase was primarily a result of our issuance of $1.1 billion in debt in February 2011 and $675 million of additional net borrowings on the Frontier acquisition, we acquired an interest in two joint ventures with an unaffiliated third party. These joint ventures maintain interest rate swaps which are classified as cash flow hedges. The interest rate swaps relate to debt for the construction of the two Bully-class rigs undertakenCredit Facilities, partially offset by the ~~two~~repayment of $693 million in joint ~~ventures, and the hedges are designed to fix the cash paid for interest on these projects. The purpose of these hedges is to satisfy bank covenants and to limit exposure~~venture credit facilities coupled with changes in fair value related to changes in interest ~~rates. There are no~~rates and market perceptions of our credit risk related contingency features embedded in these swap agreements. The aggregate notional amounts of the interest rate swaps totaled $584 million as of September 30, 2010. The notional amounts and settlement dates for the Bully 1 interest rate swaps include $37 million settling in December 2010 and $243 million settling quarterly, with the final amounts settling in December 2014. The notional amount and settlement dates for the Bully 2 interest rate swap is $304 million settling quarterly, with the final amount settling in January 2018. The carrying amount of these interest rate swaps was $39 million which includes $31 million included in liabilities as part of the purchase price allocation for the Frontier acquisition and $8 million of unrealized losses included in “Accumulated other comprehensive loss” at September 30, 2010. Under the current hedge structure a one percent change in the LIBOR rate would lead to an additional $1 million of interest charges per year.risk.

Foreign Currency Risk

As a multinational company, we conduct business ~~in approximately 16 countries.~~worldwide. Our functional currency is primarily the U.S. dollar, which is consistent with the oil and gas industry. However, outside the United States, a portion of our expenses are incurred in local currencies. Therefore, when the U.S. dollar weakens (strengthens) in relation to the currencies of the countries in which we operate, our expenses reported in U.S. dollars will increase (decrease).

We are exposed to risks on future cash flows to the extent that local currency expenses exceed revenues denominated in local currency that are ~~other~~different than the functional currency. To help manage this potential risk, we periodically enter into derivative instruments to manage our exposure to fluctuations in currency exchange rates, and we may conduct hedging activities in future periods to mitigate such exposure. These contracts are primarily accounted for as cash flow hedges, with the effective portion of changes in the fair value of the hedge recorded on the Consolidated Balance Sheet and in ~~Other Comprehensive Income (Loss)~~“Accumulated other comprehensive loss” (“AOCL”). Amounts recorded in ~~Other Comprehensive Income (Loss)~~AOCL are reclassified into earnings in the same period or periods that the hedged item is recognized in earnings. The ineffective portion of changes in the fair value of the hedged item is recorded directly to earnings. 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; however, we do maintain certain derivatives which were not designated for hedge accounting under FASB standards.~~derivatives.

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 ~~fluctuation,~~fluctuations, we typically maintain short-term forward contracts settling monthly in their respective local ~~currencies to mitigate exchange exposure.~~currencies. The forward contract settlements in the remainder of ~~2010~~2011 represent approximately 4943 percent of these forecasted local currency requirements. The notional amount of the forward contracts outstanding, expressed in U.S. dollars, was approximately ~~$82~~$71 million at September 30, ~~2010.~~2011. Total unrealized ~~gains~~losses related to these forward contracts were $2$6 million as of September 30, ~~2010~~2011 and were recorded as part of ~~“Accumulated other comprehensive loss”.~~AOCL. A ~~ten~~10 percent change in the exchange rate for the local currencies would change the fair value of these forward contracts by approximately $8$7 million.

We ~~have~~ entered into a firm commitment for the construction of ~~our~~theNoble Globetrotter Idrillship. The drillship ~~will be~~was constructed in two phases, with the second phase being installation and commissioning of the topside equipment. ~~Our payment obligation~~The contract for this second phase of construction iswas denominated in Euros, and in order to mitigate the risk of fluctuations in foreign currency exchange rates, we entered into forward contracts to purchase Euros. As of September 30, ~~2010,~~2011, all amounts related to the ~~aggregate notional amount of the remaining~~ forward contracts ~~was 30 million Euros. Each forward contract settles in connection with required payments under~~have settled. We accounted for the ~~contract. We are accounting for these~~ forward contracts as fair value ~~hedges. The~~hedges, and their fair market value ~~of these derivative instruments is~~was included in “Other current assets/liabilities” in the Consolidated Balance Sheets. No gain or ~~“Other assets/liabilities,” depending on when the forward contract is expected to be settled. Gains and losses from these fair value hedges are~~loss was recognized in ~~earnings currently along with~~ the change in fair value of the hedged item attributable to the risk being hedged. The fair market value of these outstanding forward contracts, which are included in “Other current assets/liabilities” and “Other assets/liabilities,” totaled approximately $3 million at September 30, 2010 and $0.8 million at December 31, 2009. A ten percent change in the exchange rateincome statement for ~~the Euro would change the fair value of these forward contracts by approximately $4 million.~~

As part of the Frontier acquisition we acquired an interest in two joint ventures with an unaffiliated third party. These joint ventures maintained foreign exchange forward contracts to help mitigate the risk of currency fluctuation the Singapore dollar for the construction of the Bully vessels taking place in a Singapore shipyard. The notional amount on these contracts totaled approximately $57 million as of September 30, 2010. These contracts do not qualify for hedge accounting treatment under FASB standards and therefore changes in fair values are recognized as either income or loss in our consolidated income statement. For the three and nine months ended September 30, 2010 we have recognized a gain of $1 million related to these foreign exchange forward contracts. A ten percent change in the exchange rate for the local currencies would change the fair value of these forward contracts and impact net income by approximately $6 million.2011 or 2010.

Market Risk

We sponsor the Noble Drilling Corporation 401(k) Savings Restoration Plan (“Restoration Plan”). The Restoration Plan is a nonqualified, unfunded employee benefit plan under which certain highly compensated employees may elect to defer compensation in excess of amounts deferrable under our 401(k) savings plan. The Restoration Plan has no assets, and amounts withheld for the Restoration Plan are kept by us for general corporate purposes. The investments selected by employees and the associated returns are tracked on a phantom basis. Accordingly, we have a liability to employees for amounts originally withheld plus phantom investment income or less phantom investment losses. We are at risk for phantom investment income and, conversely, benefit should phantom investment losses occur. At September 30, ~~2010,~~2011, our liability under the Restoration Plan totaled $6$5 million. We previously purchased investments that closely correlate to the investment elections made by participants in the Restoration Plan in order to mitigate the impact of the phantom investment income and losses on our consolidated financial statements. The value of these investments held for our benefit totaled $7$4 million at September 30, ~~2010.~~2011. A ~~ten~~10 percent change in the fair value of the phantom investments would change our liability by approximately ~~$0.7~~$0.4 million. Any change in the fair value of the phantom investments would be mitigated by a change in the investments held for our benefit.

We also have a U.S. noncontributory defined benefit pension plan that covers certain salaried employees and a U.S. noncontributory defined benefit pension plan that covers certain hourly employees, whose initial date of employment is prior to August 1, 2004 (collectively referred to as our “qualified U.S. plans”). These plans are governed by the Noble Drilling Corporation Retirement Trust. The benefits from these plans are based primarily on years of service and, for the salaried plan, employees’ compensation near retirement. These plans are designed to qualify under the Employee Retirement Income Security Act of 1974 (“ERISA”), and our funding policy is consistent with funding requirements of ERISA and other applicable laws and regulations. We make cash contributions, or utilize credits available to us, for the qualified U.S. plans when required. The benefit amount that can be covered by the qualified U.S. plans is limited under ERISA and the Internal Revenue Code (“IRC”) of 1986. Therefore, we maintain an unfunded, nonqualified excess benefit plan designed to maintain benefits for all employees at the formula level in the qualified U.S. plans.

In addition to the U.S. plans, each of Noble Drilling (Land Support) Limited, Noble Enterprises Limited and Noble Drilling (Nederland) B.V., all indirect, wholly-owned subsidiaries of Noble-Swiss, maintains a pension plan that covers all of its salaried, non-union employees (collectively referred to as our “non-U.S. plans”). Benefits are based on credited service and employees’ compensation near retirement, as defined by the plans.

Changes in market asset values related to the pension plans noted above could have a material impact upon our “Consolidated Statement of Comprehensive Income” and could result in material cash expenditures in future periods.


Item 4.		~~Item 4.~~ Controls and Procedures

David W. Williams, Chairman, President and Chief Executive Officer of Noble-Swiss, and ~~Thomas L. Mitchell, Senior Vice President, Chief~~Dennis J. Lubojacky, Principal Financial Officer ~~Treasurer~~ and ~~Controller~~Principal Accounting Officer of Noble-Swiss, have evaluated the disclosure controls and procedures of Noble-Swiss as of the end of the period covered by this report. On the basis of this evaluation, Mr. Williams and Mr. ~~Mitchell~~Lubojacky have concluded that Noble-Swiss’ disclosure controls and procedures were effective as of September 30, ~~2010.~~2011. Noble-Swiss’ disclosure controls and procedures are designed to ensure that information required to be disclosed by Noble-Swiss in the reports that it files with or submits to the SEC is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms and is accumulated and communicated to management as appropriate to allow timely decisions regarding required disclosure.

David W. Williams, President and Chief Executive Officer of Noble-Cayman, and Dennis J. Lubojacky, Vice President and Chief Financial Officer of Noble-Cayman, have evaluated the disclosure controls and procedures of Noble-Cayman as of the end of the period covered by this report. On the basis of this evaluation, Mr. Williams and Mr. Lubojacky have concluded that Noble-Cayman’s disclosure controls and procedures were effective as of September 30, ~~2010.~~2011. Noble-Cayman’s disclosure controls and procedures are designed to ensure that information required to be disclosed by Noble-Cayman in the reports that it files with or submits to the SEC is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms and is accumulated and communicated to management as appropriate to allow timely decisions regarding required disclosure.

PART II. OTHER INFORMATION


Item 1.		~~Item 1.~~ Legal Proceedings

Information regarding legal proceedings is set forth in Note 1113 to our consolidated financial statements included in Item 1 of Part I of this Quarterly Report on Form 10-Q and is incorporated herein by reference.


Item 1A.		~~Item 1A.~~ Risk Factors

Risks Relating to Our Business

The risk ~~factors~~factor below ~~update~~updates and ~~supplement~~supplements the risks described under “Risk Factors Relating to Our Business” in Part I, Item 1A, “Risk Factors,” of our Annual Report on Form 10-K for the year ended December 31, ~~2009, and in Part II, Item 1A, “Risk Factors,” of our Quarterly Report on Form 10-Q for the quarter ended June 30,~~ 2010, and should be considered together with the risk factors described in that report.

~~The U.S. governmental, regulatory,~~We may have difficulty obtaining or maintaining insurance in the future and ~~industry response to~~our insurance coverage and contractual indemnity rights may not protect us against all of the ~~Deepwater Horizon drilling rig accident~~risks and ~~resulting oil spill could have a prolonged and material adverse impact on our U.S. Gulf of Mexico operations.~~hazards we face.

~~Subsequent~~We generally identify the operational hazards for which we will procure insurance coverage based on the likelihood of loss, the potential magnitude of loss, the cost of coverage, the requirements of our customer contracts and applicable legal requirements. We do not procure insurance coverage for all of the potential risks and hazards we may face. Furthermore, no assurance can be given that we will be able to obtain insurance against all of the ~~April 20, 2010 fire~~risks and ~~explosion on~~hazards we face or that we will be able to obtain or maintain adequate insurance at rates and with deductibles or retention amounts that we consider commercially reasonable.

Although we maintain what we believe to be an appropriate level of insurance covering hazards and risks we currently encounter during our operations, we do not insure against all possible hazards and risks. Furthermore, our insurance carriers may interpret our insurance policies such that they do not cover losses for which we make claims. Our insurance policies may also have exclusions of coverage for some losses. Uninsured exposures may include expatriate activities prohibited by U.S. laws, radiation hazards, certain loss or damage to property onboard our rigs and losses relating to shore-based terrorist acts or strikes.

In addition, the~~Deepwater Horizon~~, damage sustained to offshore oil and gas assets as a ~~competitor’s drilling rig~~result of hurricanes in recent years caused the insurance market for U.S. ~~Gulf of Mexico,~~named windstorm perils to deteriorate significantly. Consequently, we currently self-insure U.S. ~~governmental authorities implemented a moratorium on and suspension of specified types of drilling activities~~named windstorm coverage for our units deployed in the U.S. Gulf of Mexico. Judicial challenges were made to the initial actions of the U.S. government, and in July 2010 the government issued a revised moratorium on and suspension of drilling. On October 12, 2010, the U.S. government lifted the moratorium following adoption of new regulations including a drilling safety rule and a workplace safety rule, each of which imposed multiple obligations relating to offshore drilling operations. These obligations relate to, among other things, additional certifications and verifications relating to compliance with applicable regulations; compatibility of blowout preventers with drilling rigs and well design; third-party inspections and design review of blowout preventers; testing of casing installations; minimum requirements for personnel operating blowout preventers; and training in deepwater well control.

~~In addition, the U.S. government has indicated that before any new deepwater drilling resumes, (i) operators much demonstrate that containment resources are available promptly~~If one or more future significant weather-related events occur in the ~~event~~Gulf of ~~a deepwater blowout, (ii) the chief executive officer~~Mexico, or in any other geographic area in which we operate, we may experience increases in insurance costs, additional coverage restrictions or unavailability of ~~each operator seeking to perform deepwater~~certain insurance products.

Under our drilling must certify that the operator has complied with all applicable regulations and (iii) the Bureau of Ocean Energy Management, Regulation and Enforcement will conduct inspections of each deepwater drilling operation for compliance with the applicable regulations.

~~There have been and may continue to be judicial and other challenges made~~contracts, liability with respect to ~~some~~personnel and property is customarily assigned on a “knock-for-knock” basis, which means that we and our customers assume liability for our respective personnel and property, irrespective of the government imposed restrictions on U.S. Gulf of Mexico drilling operations. However, we cannot predict (1) how those challenges will be resolved, (2) how the resolution of those challenges may affect the scopefault or ~~duration~~negligence of the ~~government-imposed restrictions~~party indemnified. Although our drilling contracts generally provide for indemnification from our customers for certain liabilities, including liabilities resulting from pollution or ~~(3)~~contamination originating below the ~~actions~~surface of the ~~U.S. government~~water, enforcement of these contractual rights to indemnity may ~~take, whether~~be limited by public policy and other considerations and, in ~~response~~any event, may not adequately cover our losses from such incidents. There can also be no assurance that those parties with contractual obligations to ~~those challenges~~indemnify us will necessarily be in a financial position to do so.

If a significant accident or ~~otherwise.~~other event occurs and is not fully covered by our insurance or a contractual indemnity, it could materially adversely affect our financial position, results of operations or cash flows.

As a result of our significant cash flow needs, we may be required to incur additional indebtedness, or delay or cancel discretionary capital expenditures.

Our currently anticipated cash flow needs include the following:

normal recurring operating expenses;

committed capital expenditures, including expenditures for newbuild projects currently underway;

discretionary capital expenditures, including various capital upgrades; and

payments of return of capital in the form of a reduction of par value of our shares (in lieu of dividends).

In order to fund our capital expenditures, we may need funding beyond the amount available to us from cash generated by our operations, cash on hand and borrowings under our existing ~~U.S. Gulf of Mexico operations have been and will continue to be negatively impacted by the events and governmental actions described above. U.S. governmental restrictions and regulations~~bank credit facilities. We may ~~result~~raise such additional capital in a number of ways, including accessing capital markets, obtaining additional lines of credit or disposing of assets. However, we can provide no assurance that any of these options will be available to us on terms acceptable to us or at all.

Our ability to obtain financing or to access the capital markets may be limited by our ~~rigs~~financial condition at the time of any such financing and ~~those of others being moved,~~the covenants in our existing debt agreements, as well as by adverse market conditions resulting from, among other things, general economic conditions and uncertainties that are beyond our control. Even if we are successful in obtaining additional capital through debt financings, incurring additional indebtedness may significantly increase our interest expense and may reduce our flexibility to respond to changing business and economic conditions or ~~becoming available for moving,~~ to ~~locations outside of~~fund working capital needs, because we will require additional funds to service our outstanding indebtedness.

If we fail to obtain the ~~U.S. Gulf of Mexico,~~capital necessary to fund our capital expenditures, we may delay or cancel discretionary capital expenditures, which could ~~potentially reduce global dayrates~~have certain adverse consequences including delaying upgrades or equipment purchases that could make the affected rigs less competitive and negatively affect our ability to contract our floating rigs that are currently uncontracted or coming off contract. In addition, U.S. or other governmental authorities could implement additional regulations concerning licensing, taxation, equipment specifications and training requirements that could increase the costs of our operations. Additionally, increased costs for our customers’ operations, along with permitting delays, could negatively affect the economics of currently planned or future exploration and development activity and result in a reduction in demand for our services. Furthermore, due to the~~Deepwater Horizonaccident and resulting oil spill, insurance costs across the industry could increase, and certain insurance may be less available or not available at all, which could negatively affect us over time.~~

~~At this time, we cannot predict for how long or to what extent our operations will be adversely impacted by the governmental, regulatory and industry response to the~~~~Deepwater Horizon~~~~drilling rig accident and resulting oil spill. At this time, we cannot predict:~~

~~the extent of additional or substitute regulations and restrictions that may be imposed on drilling operations in the U.S. Gulf of Mexico,~~

~~the extent to which drilling operations subsequent to the moratorium period will be impacted or the delay in issuing permits for new or continued drilling,~~

~~the cost or availability of relevant insurance coverage,~~

~~the extent to which customers may seek to terminate existing contracts or the demand by customers for new or renewed drilling contracts,~~

~~the availability of, or delays in delivery of, equipment required to comply with any new regulations,~~

~~the effect of new regulations and restrictions on our costs and the costs for the operations of our customers, or~~

~~the effect of the developments described above on demand for our services in the U.S. Gulf of Mexico.~~

~~Depending on their duration and extent, these and related developments could have a material adverse affect on our results of operations, cash flows and liquidity relating to the U.S. Gulf of Mexico.~~

~~We could be adversely affected by violations of applicable anti-corruption laws and our failure to comply with the terms of our settlement agreements with the DOJ and SEC.~~

We operate in a number of countries throughout the world, including countries known to have a reputation for corruption. We are committed to doing business in accordance with applicable anti-corruption laws and our code of business conduct and ethics. We are subject, however, to the risk that we, our affiliated entities or their respective officers, directors, employees and agents may take action determined to be in violation of such anti-corruption laws, including the U.S. Foreign Corrupt Practices Act of 1977 (“FCPA”). Any violation of the FCPA or other applicable anti-corruption laws could result in substantial fines, sanctions, civil and/or criminal penalties and curtailment of operations in certain jurisdictions and might adversely affect our business, results of operations or financial condition. In addition, actual or alleged violations could damage our reputation and ability to do business. Further, detecting, investigating, and resolving actual or alleged violations is expensive and can consume significant time and attention of our senior management.rigs.

In 2007, we began an internal investigation of the legality under the FCPA of certain activities in Nigeria. In November 2010, we finalized settlements of this matter with each of the SEC and the DOJ. Under the settlements with the DOJ and SEC, we agreed to, among other things, pay certain fines and interest and disgorge certain profits, cooperate with the DOJ, comply with the FCPA, comply with certain self-reporting and annual reporting obligations and comply with an injunction restraining us from violating the anti-bribery, books and records and internal controls provisions of the FCPA. [The impact of the settlements on our ongoing operations could include limits on revenue growth and increases in operating costs.] Our ability to comply with the terms of the settlements is dependent on the success of our ongoing compliance program, including our ability to continue to manage our agents and supervise, train and retain competent employees, and the efforts of our employees to comply with applicable law and our code of business conduct and ethics. Though these settlements concluded the investigations of the SEC and the DOJ, we could be investigated by relevant foreign jurisdictions, and we could face fines or other sanctions in those jurisdictions. Any sanctions we may incur as a result of any such investigation could damage our reputation and result in substantial fines, sanctions, civil and/or criminal penalties and curtailment of operations in certain jurisdictions and might adversely affect our business, results of operations or financial condition. Further, resolving any such investigation could be expensive and consume significant time and attention of our senior management.

~~We are substantially dependent on our customers Shell and Petrobras, and the loss of either customer could have a material adverse effect on our financial condition and results of operations.~~

We estimate Shell and Petrobras represents more than 50% and 20%, respectively, of our backlog. This concentration of customers increases the risks associated with any possible termination or nonperformance of contracts by either customer and our exposure to credit risk of either customer. If either of these customers were to terminate or fail to perform their obligations under their contracts and we were not able to find other customers for the affected drilling units promptly, our financial condition and results of operations could be materially and adversely affected.

Index to Exhibits


Exhibit
Number		Exhibit

	2.1	Agreement and Plan of Merger, Reorganization and Consolidation, dated as of December 19, 2008, among Noble Corporation, a Swiss corporation (“Noble-Swiss”), Noble Corporation, a Cayman Islands company (“Noble-Cayman”), and Noble Cayman Acquisition Ltd. (filed as Exhibit 1.1 to Noble-Cayman’s Current Report on Form 8-K filed on December 22, 2008 and incorporated herein by reference).

	2.2	Amendment No. 1 to Agreement and Plan of Merger, Reorganization and Consolidation, dated as of February 4, 2009, among Noble-Swiss, Noble-Cayman and Noble Cayman Acquisition Ltd. (filed as Exhibit 2.2 to Noble-Cayman’s Current Report on Form 8-K filed on February 4, 2009 and incorporated herein by reference).

	~~2.3~~	Agreement and Plan of Merger, dated as of June 27, 2010, among Noble-Swiss, Noble AM Merger Co., a Cayman Islands company, Frontier Holdings Limited, a Cayman Islands company (“Frontier”), and certain of Frontier’s shareholders (filed as Exhibit 2.1 to Noble-Swiss’ and Noble-Cayman’s Current Report on Form 8-K filed on June 28, 2010 and incorporated herein by reference).

	3.1	Articles of Association of Noble-Swiss.

	3.2	By-laws of Noble-Swiss (filed as Exhibit 3.2 to Noble-Swiss’ Current Report on Form 8-K filed on March 27, 2009 and incorporated herein by reference).

	3.3	Memorandum and Articles of Association of Noble-Cayman (filed as Exhibit 3.1 to Noble-Cayman’s Current Report on Form 8-K filed on March 30, 2009 and incorporated herein by reference).

	4.1	~~Second Supplemental Indenture~~Revolving Credit Agreement dated as of ~~July 26, 2010~~February 11, 2011 among Noble Corporation, a Cayman Islands company; the Lenders from time to time parties thereto; Wells Fargo Bank, National Association, as Administrative Agent, Swingline Lender and an Issuing Bank; Barclays Capital, a division of Barclays Bank PLC, and HSBC Securities (USA) Inc., as Co-Syndication Agents; and Wells Fargo Securities, LLC, Barclays Capital, a division of Barclays Bank PLC, and HSBC Securities (USA) Inc., as Joint Lead Arrangers and Joint Lead Bookrunners (filed as Exhibit ~~4.2~~4.1 to ~~Noble-Swiss’ and~~ Noble-Cayman’s Current Report on Form 8-K filed on ~~July 26, 2010~~February 17, 2011 and incorporated herein by reference).

	4.2	~~Specimen Note for the 3.45% Senior Notes due 2015 of Noble Holding International Limited~~First Amendment to Revolving Credit Agreement dated as of ~~July 26, 2010~~March 11, 2011 among Noble Corporation, a Cayman Islands company; the Lenders from time to time parties thereto; Wells Fargo Bank, National Association, as Administrative Agent, Swingline Lender and an Issuing Bank; Barclays Capital, a division of Barclays Bank PLC, and HSBC Securities (USA) Inc., as Co-Syndication Agents; and Wells Fargo Securities, LLC, Barclays Capital, a division of Barclays Bank PLC, and HSBC Securities (USA) Inc., as Joint Lead Arrangers and Joint Lead Bookrunners (filed as Exhibit ~~4.3~~4.2 to ~~Noble Swiss’ and~~ Noble-Cayman’s ~~Current~~Quarterly Report on Form ~~8-K filed on July 26, 2010~~10-Q for the quarter ended March 31, 2011 and incorporated herein by reference).

	4.3	~~Specimen Note for the 4.90% Senior Notes due 2020~~Indenture, dated as of November 21, 2008, between Noble Holding International Limited, ~~dated~~ as Issuer, and The Bank of ~~July 26, 2010~~New York Mellon Trust Company, N.A., as Trustee (filed as Exhibit ~~4.4~~4.1 to ~~Noble Swiss’ and~~ Noble-Cayman’s Current Report on Form 8-K filed on ~~July 26, 2010~~November 21, 2008 and incorporated herein by reference).

	4.4	~~Specimen Note for the 6.20%~~Third Supplemental Indenture, dated as of February 3, 2011, among Noble Holding International Limited, as Issuer, Noble Corporation, as Guarantor, and The Bank of New York Mellon Trust Company, N.A., as Trustee, relating to 3.05% Senior Notes due ~~2040~~2016 of Noble Holding International Limited, ~~dated as~~4.625% Senior Notes due 2021 of ~~July 26, 2010~~Noble Holding International Limited, and 6.05% Senior Notes due 2041 of Noble Holding International Limited (filed as Exhibit ~~4.5~~4.2 to ~~Noble Swiss’ and~~ Noble-Cayman’s Current Report on Form 8-K filed on July 26, 2010 and incorporated herein by reference).

	~~4.5~~	Term Loan and Credit Facility Agreement, dated December 21, 2007, by and among Bully 1, Ltd., the Lenders as set forth therein, Standard Chartered Bank, Bank of Scotland PLC and NIBC Bank N.V. as arrangers, and NIBC Bank N.V. as agent and security trustee for the Lenders, as amended by Amendment No. 1 to Term Loan and Credit Facility Agreement, dated February 12, 2008 and Amendment No. 2 and Consent to Term Loan and Credit Facility Agreement, dated July 28, 2010 (filed as Exhibit 4.1 to Noble Swiss’ and Noble Cayman’s Current Report on Form 8-K on August 2, 2010 and incorporated herein by reference).

	~~4.6~~	Term Loan and Revolving Loan Credit Facility Agreement, dated as of October 21, 2008, and amended and restated as of October 9, 2009, among Bully 2 Ltd., Standard Chartered Bank (as administrative agent and collateral agent) and the Lenders party thereto, as amended by the Omnibus Amendment and Consent Agreement, dated as of July 28, 2010, between Bully 2, Ltd. and Standard Chartered Bank (as administrative agent acting on the behalf of the Majority Lenders and as collateral agent for the Secured Parties) (filed as Exhibit 4.2 to Noble Swiss’ and Noble Cayman’s Current Report on Form 8-K on August 2, 2010 and incorporated herein by reference).


	September 30,		December 31,		September 30,		December 31,
	2010		2009		2011		2010

Shares outstanding and trading		252,188		258,225		252,433		252,275
Treasury shares		10,136		3,750		285		10,140

Total shares outstanding		262,324		261,975		252,718		262,415

Treasury shares held for share-based compensation plans		13,942		14,291		13,432		13,851

Total shares authorized for issuance		276,266		276,266		266,150		276,266


Par value (in Swiss Francs)		4.06		4.85
Par value per share (in Swiss Francs)						3.54		3.93


	Nine Months Ended September 30,												Nine Months Ended September 30,
	2010						2009						2011						2010
	Non-U.S.			U.S.			Non-U.S.			U.S.			Non-U.S.			U.S.			Non-U.S.			U.S.
Service cost	$	3,211		$	5,736		$	2,275		$	5,409		$	3,387		$	6,456		$	3,211		$	5,736
Interest cost		3,694			5,871			3,202			5,139			4,256			6,428			3,694			5,871
Return on plan assets		(3,999	)		(7,176	)		(3,983	)		(5,358	)		(4,306	)		(8,304	)		(3,999	)		(7,176	)
Amortization of prior service cost		—			171			—			219			—			170			—			171
Amortization of transition obligation		53			—			54			—			56			—			53			—
Recognized net actuarial loss		537			2,115			184			3,093			366			2,531			537			2,115

Net pension expense	$	3,496		$	6,717		$	1,732		$	8,502		$	3,759		$	7,281		$	3,496		$	6,717


									Accumulated
					Capital in				Other					Total												Accumulated
	Shares				Excess of		Retained		Comprehensive			Noncontrolling		Shareholder							Capital in					Other
	Balance		Par Value		Par Value		Earnings		Loss			Interests		Equity			Shares				Excess of		Retained			Comprehensive			Noncontrolling		Total
																	Balance		Par Value		Par Value		Earnings			Loss			Interests		Equity
Balance at December 31, 2009		261,246	$	26,125	$	368,374	$	6,609,578	$	(54,881	)	$	—	$	6,949,196			261,246	$	26,125	$	368,374	$	6,609,578		$	(54,881	)	$	—	$	6,949,196

Net income		—		—		—		706,189		—			467		706,656			—		—		—		706,189			—			467		706,656
Capital contributions by parent — share-based compensation																		—		—		15,519		—			—			—		15,519
Distributions to parent																		—		—		—		(422,537	)		—			—		(422,537	)
Noncontrolling interests from FDR Holdings, Ltd. acquisition		—		—		—		—		—			124,628		124,628			—		—		—		—			—			124,628		124,628
Other comprehensive income (loss), net		—		—		—		—		(6,113	)		—		(6,113	)		—		—		—		—			(6,113	)		—		(6,113	)


Balance at September 30, 2010		261,246	$	26,125	$	368,374	$	7,315,767	$	(60,994	)	$	125,095	$	7,774,367			261,246	$	26,125	$	383,893	$	6,893,230		$	(60,994	)	$	125,095	$	7,367,349


Balance at December 31, 2010																		261,246	$	26,125	$	416,232	$	6,743,887		$	(50,220	)	$	124,631	$	7,260,655
Net income																		—		—		—		292,192			—			290		292,482
Capital contributions by parent — share-based compensation																		—		—		15,150		—			—			—		15,150
Distributions to parent																		—		—		—		(149,566	)		—			—		(149,566	)
Settlement of FIN 48 provision																		—		—		15,658		—			—			—		15,658
Noncontrolling interest contributions																		—		—		—		—			—			518,973		518,973
Other comprehensive income (loss), net																		—		—		—		—			(5,992	)		—		(5,992	)

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


	Fair value
ASSETS
Cash and cash equivalents	$	77,375
Accounts receivable, net of $2,111 reserve		58,229
Other current assets		11,296
Other assets		11,469
Drilling equipment		2,528,759
Value of in-place contracts		77,260

Total assets acquired	$	2,764,388


LIABILITIES
Accounts payable	$	88,566
Other current liabilities		34,360
Consolidated joint ventures notes payable		688,748
Other liabilities		36,824
Non-controlling interests		124,628
Value of in-place contracts		84,243

Total liabilities assumed		1,057,369

Cash consideration paid	$	1,707,019


	Three months ended				Nine months ended				Three months		Nine months
	September 30,				September 30,				ended		ended
	2010		2009		2010		2009		September 30, 2010		September 30, 2010
Total operating revenues	$	647,700	$	1,004,974	$	2,341,579	$	2,940,175	$	647,700	$	2,339,889
Net income		85,282		425,478	$	621,962		1,214,384		85,282		616,358
Net income per share	$	0.33	$	1.63	$	2.42	$	4.64	$	0.33	$	2.40


	September 30, 2010				December 31, 2009
	Carrying		Estimated		Carrying		Estimated
	Value		Fair Value		Value		Fair Value
5.875% Senior Notes due 2013	$	299,902	$	329,424	$	299,874	$	325,398
7.375% Senior Notes due 2014		249,473		288,984		249,377		282,105
3.45% Senior Notes due 2015		350,000		363,903		—		—
7.50% Senior Notes due 2019		201,695		251,003		201,695		231,015
4.90% Senior Notes due 2020		498,645		539,628		—		—
6.20% Senior Notes due 2040		399,888		444,121		—		—
Bully 1 joint venture debt		370,000		370,000		—		—
Bully 2 joint venture debt		318,748		318,748		—		—
Bully 1 joint venture partner debt		18,000		18,000		—		—
Bully 2 joint venture partner debt		17,000		17,000		—		—


				Year Ending December 31,
	Total			2010 (1)			2011			2012			2013			2014-2023
	(In millions)
Contract Drilling Services Backlog
Semisubmersibles/Drillships (2) (5) (7) (8)	$	12,666		$	482		$	1,940		$	1,936		$	1,803		$	6,505
Jackups/Submersibles (3)		1,342			220			571			303			183			65
Other		9			9			—			—			—			—

Total (4)	$	14,017		$	711		$	2,511		$	2,239		$	1,986		$	6,570


Percent of Available Operating Days Committed (6)					71	%		49	%		31	%		25	%		6	%

Potential Suspension Adjustments (7)	$	(62	)	$	(84	)	$	(29	)	$	—		$	—		$	51


(4)		a) Pemex has the ability to cancel its drilling contracts on 30 days or less notice without ~~any~~Pemex’s making an early termination payment. As of September 30, ~~2010,~~2011, we had ~~nine~~twelve rigs contracted to Pemex in Mexico, plus one additional rig scheduled to go to work for Pemex in late December 2011, and our backlog includes approximately ~~$226~~$387 million related to such ~~contracts. Also, our~~contracts at September 30, 2011.


b)		Our drilling contracts generally provide the customer an early termination right in the event we fail to meet certain performance standards, including downtime thresholds. For example, Petrobras has the right to terminate its contracts in the event of excessive downtime. While we do not currently anticipate any cancellations as a result of events that have occurred to date, clients may from time to time have the contractual right to do ~~so.~~so, which is the case with the drilling contracts for theNoble Dave Beardand theNoble Paul Wolff. However, we have not received any notification concerning contract cancellations to date.


(5)		~~The drilling contract for the~~~~Noble Jim Day~~~~contains a termination right in the event the rig is not ready to commence operations by December 31, 2010.~~

~~(6)~~		Percentages take into account additional capacity from the estimated dates of deployment of our newbuild rigs that are scheduled to commence operations during ~~the remainder of 2010~~2011 through ~~2013.~~2015.


(1)		We record reimbursements from customers for out-of-pocket expenses as operating revenues and the related direct costs as operating expenses. Changes in the amount of these reimbursables generally do not have a material effect on our financial position, results of operations or cash flows.

**		~~Not a meaningful percentage~~


(1)		We record reimbursements from customers for out-of-pocket expenses as operating revenues and the related direct costs as operating expenses. Changes in the amount of these reimbursables generally do not have a material effect on our financial position, results of operations or cash flows.

**		Not a meaningful percentage


	Expenditures in 2010
Project	(in millions)
Noble Jim Day	$	98.3
Noble Globetrotter II		94.7
Noble Globetrotter I		91.1
Noble Bully II		22.3
Noble Bully I		16.7
Other		58.8

Total	$	381.9


Item 2.		~~Item 2.~~ Unregistered Sales of Equity Securities and Use of Proceeds


						Total Number of		Maximum Number
						Shares Purchased		of Shares that May
	Total Number		Average			as Part of Publicly		Yet Be Purchased
	of Shares		Price Paid			Announced Plans		Under the Plans
Period	Purchased		per Share			or Programs		or Programs (1)
July 2010		19,639	$	31.95	(2)		—		10,769,891
August 2010		4,000,728	$	32.67	(3)		4,000,000		6,769,891
September 2010		—	$	—			—		6,769,891


(1)		All share purchases made in the open market and were pursuant to the share repurchase program which our Board of Directors authorized and adopted. Our repurchase program has no date of expiration.

(2)		~~Includes 19,639~~Amounts represent shares ~~at an average price of $31.95 per share~~ surrendered by employees for withholding taxes payable upon the vesting of restricted ~~stock.~~

~~(3)~~		~~Includes 728 shares at an average price~~stock or exercise of ~~$32.75 per share surrendered by employees for withholding taxes payable upon the vesting of restricted stock.~~stock options.


~~/s/ David W. Williams~~ Noble Corporation, a Swiss corporation		~~November 9, 2010~~

/s/ David W. Williams David W. Williams	November 2, 2011 Date		~~Date~~
Chairman, President and Chief Executive Officer
(Principal Executive Officer)

/s/ ~~Thomas L. Mitchell~~Dennis. J. Lubojacky Dennis J. Lubojacky
~~Thomas L. Mitchell~~
~~Senior Vice President, Chief Financial Officer, Treasurer and Controller~~
(Principal Financial Officer and Principal Accounting Officer)

Noble Corporation, a Cayman Islands company

/s/ David W. Williams	David W. Williams	November ~~9, 2010~~
2, 2011 Date
~~David W. Williams~~		~~Date~~
President and Chief Executive Officer
(Principal Executive Officer)

/s/ Dennis J. Lubojacky
Dennis J. Lubojacky
Vice President and Chief Financial Officer
(Principal Financial Officer and Principal Accounting Officer)


~~Exhibit~~
~~Number~~			~~Exhibit~~

	31.1		Certification of David W. Williams pursuant to the U.S. Securities Exchange Act of 1934, as amended, Rule 13a-14(a) or Rule 15d-14(a), for Noble-Swiss and for Noble-Cayman.

	31.2		Certification of ~~Thomas L. Mitchell pursuant to the U.S. Securities Exchange Act of 1934, as amended, Rule 13a-14(a) or Rule 15d-14(a), for Noble-Swiss.~~

	~~31.3~~		~~Certification of~~ Dennis J. Lubojacky pursuant to the U.S. Securities Exchange Act of 1934, as amended, Rule ~~13a-14(a)~~13a- 14(a) or Rule 15d-14(a), for Noble-Swiss and Noble-Cayman.

	32.1	+	Certification of David W. Williams pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, for Noble-Swiss and for Noble-Cayman.

	32.2	+	Certification of ~~Thomas L. Mitchell pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, for Noble-Swiss.~~

	~~32.3~~	+	~~Certification of~~ Dennis J. Lubojacky pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, for Noble-Swiss and Noble-Cayman.

	101	+	Interactive Data File


+		Furnished in accordance with Item 601(b)(32)(ii) of Regulation S-K.