UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
| x | ||
| QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended: June 30, 2011
OR
| ¨ | ||
| TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the transition period fromto
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 | (I.R.S. employer identification number) | |
| Dorfstrasse 19A, Baar, Switzerland | 6340 | |
| (Address of principal executive offices) | (Zip Code) | |
Registrant’s Telephone Number, Including Area Code:41 (41) 761-65-55
Commission file number: 001-31306
NOBLE CORPORATION
(Exact name of registrant as specified in its charter)
| Cayman Islands | 98-0366361 | |
(State or other jurisdiction of incorporation or | (I.R.S. employer identification number) |
Suite 3D, Landmark Square, 64 Earth Close, P.O. Box 31327 George Town, Grand Cayman, Cayman Islands, KY1-1206
(Address of principal executive offices) (Zip Code)
Registrant’s Telephone Number, Including Area Code:(345) 938-0293
Indicate by check mark whether each registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yesþx Noo¨
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). Yesþx 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 filer | Accelerated filer | Non-accelerated filer | Smaller reporting company | ||||
| Noble-Cayman: | Large accelerated filer | Accelerated filer | Non-accelerated filer | Smaller reporting company |
Indicate by check mark whether each registrant is a shell company (as defined in Rule 12b-2 of the Act). Yeso¨ Noþx
Number of shares outstanding and trading at July 29, 2011:31, 2012: Noble Corporation (Switzerland) — 252,390,953
Number of shares outstanding at July 29, 2011:31, 2012: Noble Corporation (Cayman Islands) — 261,245,693
Noble Corporation, a Cayman Islands company and a wholly owned subsidiary of Noble Corporation, a Swiss corporation, meets the conditions set forth in General Instructions H(1) (a) and (b) toForm 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.
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Noble Corporation (Noble-Swiss) Financial Statements: | ||||||||
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Consolidated Statement of Cash Flows for the six months ended June 30, 2012 and 2011 | 6 | |||||||
Consolidated Statement of Equity for the six months ended June 30, 2012 and 2011 | 7 | |||||||
Noble Corporation (Noble-Cayman) Financial Statements: | ||||||||
| 8 | ||||||||
| 9 | ||||||||
| 10 | ||||||||
Consolidated Statement of Cash Flows for the six months ended June 30, 2012 and 2011 | 11 | |||||||
Consolidated Statement of Equity for the six months ended June 30, 2012 and 2011 | 12 | |||||||
| 13 | ||||||||
| 52 | ||||||||
| 52 | ||||||||
| 54 | ||||||||
This combined Quarterly Report on Form 10-Q is separately filed by Noble Corporation, a Swiss corporation (“Noble-Swiss”), and Noble Corporation, a Cayman Islands company (“Noble-Cayman”). Information in this filing relating to Noble-Cayman is filed by Noble-Swiss and separately by Noble-Cayman on its own behalf. Noble-Cayman makes no representation as to information relating to Noble-Swiss (except as it may relate to Noble-Cayman) or any other affiliate or subsidiary of Noble-Swiss. Since Noble-Cayman meets the conditions specified in General Instructions H(1)(a) and (b) to Form 10-Q, it is permitted to use the reduced disclosure format for wholly owned subsidiaries of reporting companies. Accordingly, Noble-Cayman has omitted from this report the information called for by Item 3 (Quantitative and Qualitative Disclosures about Market Risk) of Part I of Form 10-Q and the following items of Part II of Form 10-Q: Item 2 (Unregistered Sales of Equity Securities and Use of Proceeds) and Item 3 (Defaults upon Senior Securities).
This report should be read in its entirety as it pertains to each Registrant. Except where indicated, the Consolidated Financial Statements and related Notes are combined. References in this Quarterly Report on Form 10-Q to “Noble,” the “Company,” “we,” “us,” “our” and words of similar meaning refer collectively to Noble-Swiss and its consolidated subsidiaries, including Noble-Cayman.
2
NOBLE CORPORATION (NOBLE-SWISS) AND SUBSIDIARIES
(In thousands)
(Unaudited)
| June 30, | December 31, | |||||||
| 2011 | 2010 | |||||||
ASSETS | ||||||||
| Current assets | ||||||||
| Cash and cash equivalents | $ | 230,877 | $ | 337,871 | ||||
| Accounts receivable | 510,019 | 387,414 | ||||||
| Taxes receivable | 80,815 | 81,066 | ||||||
| Prepaid expenses | 67,311 | 35,502 | ||||||
| Other current assets | 88,474 | 69,941 | ||||||
| Total current assets | 977,496 | 911,794 | ||||||
| Property and equipment, at cost | 13,926,052 | 12,643,866 | ||||||
| Accumulated depreciation | (2,863,482 | ) | (2,595,779 | ) | ||||
| Property and equipment, net | 11,062,570 | 10,048,087 | ||||||
| Other assets | 398,172 | 342,506 | ||||||
Total assets | $ | 12,438,238 | $ | 11,302,387 | ||||
LIABILITIES AND EQUITY | ||||||||
| Current liabilities | ||||||||
| Current maturities of long-term debt | $ | — | $ | 80,213 | ||||
| Accounts payable | 303,902 | 374,814 | ||||||
| Accrued payroll and related costs | 114,736 | 125,663 | ||||||
| Interest payable | 58,328 | 40,260 | ||||||
| Taxes payable | 69,764 | 96,448 | ||||||
| Other current liabilities | 79,826 | 84,049 | ||||||
| Total current liabilities | 626,556 | 801,447 | ||||||
| Long-term debt | 3,521,770 | 2,686,484 | ||||||
| Deferred income taxes | 257,069 | 258,822 | ||||||
| Other liabilities | 212,475 | 268,000 | ||||||
Total liabilities | 4,617,870 | 4,014,753 | ||||||
| Commitments and contingencies | ||||||||
| Shareholders’ equity | ||||||||
| Shares; 262,668 and 262,415 shares outstanding | 857,795 | 917,684 | ||||||
| Treasury shares, at cost; 10,378 and 10,140 shares | (383,344 | ) | (373,967 | ) | ||||
| Additional paid-in capital | 50,499 | 39,006 | ||||||
| Retained earnings | 6,739,078 | 6,630,500 | ||||||
| Accumulated other comprehensive loss | (42,316 | ) | (50,220 | ) | ||||
Total shareholders’ equity | 7,221,712 | 7,163,003 | ||||||
| Noncontrolling interests | 598,656 | 124,631 | ||||||
Total equity | 7,820,368 | 7,287,634 | ||||||
Total liabilities and equity | $ | 12,438,238 | $ | 11,302,387 | ||||
| June 30, | December 31, | |||||||
| 2012 | 2011 | |||||||
ASSETS | ||||||||
Current assets | ||||||||
Cash and cash equivalents | $ | 275,293 | $ | 239,196 | ||||
Accounts receivable | 693,533 | 587,163 | ||||||
Taxes receivable | 97,900 | 75,284 | ||||||
Prepaid expenses | 78,463 | 35,796 | ||||||
Other current assets | 142,541 | 122,173 | ||||||
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Total current assets | 1,287,730 | 1,059,612 | ||||||
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Property and equipment, at cost | 16,055,168 | 15,540,178 | ||||||
Accumulated depreciation | (3,632,532 | ) | (3,409,833 | ) | ||||
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Property and equipment, net | 12,422,636 | 12,130,345 | ||||||
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Other assets | 325,650 | 305,202 | ||||||
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Total assets | $ | 14,036,016 | $ | 13,495,159 | ||||
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LIABILITIES AND EQUITY | ||||||||
Current liabilities | ||||||||
Accounts payable | $ | 277,647 | $ | 436,006 | ||||
Accrued payroll and related costs | 125,603 | 117,907 | ||||||
Interest payable | 73,208 | 54,419 | ||||||
Taxes payable | 89,262 | 94,920 | ||||||
Dividends payable | 132,679 | — | ||||||
Other current liabilities | 108,714 | 123,928 | ||||||
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Total current liabilities | 807,113 | 827,180 | ||||||
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Long-term debt | 4,444,294 | 4,071,964 | ||||||
Deferred income taxes | 238,045 | 242,791 | ||||||
Other liabilities | 306,397 | 255,372 | ||||||
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Total liabilities | 5,795,849 | 5,397,307 | ||||||
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Commitments and contingencies | ||||||||
Shareholders’ equity | ||||||||
Shares; 253,076 and 252,639 shares outstanding | 709,368 | 766,595 | ||||||
Treasury shares, at cost; 569 and 287 shares | (20,318 | ) | (10,553 | ) | ||||
Additional paid-in capital | 60,991 | 48,356 | ||||||
Retained earnings | 6,823,758 | 6,676,444 | ||||||
Accumulated other comprehensive loss | (75,461 | ) | (74,321 | ) | ||||
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Total shareholders’ equity | 7,498,338 | 7,406,521 | ||||||
Noncontrolling interests | 741,829 | 691,331 | ||||||
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Total equity | 8,240,167 | 8,097,852 | ||||||
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Total liabilities and equity | $ | 14,036,016 | $ | 13,495,159 | ||||
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See accompanying notes to the unaudited consolidated financial statements.
3
(In thousands, except per share amounts)
(Unaudited)
| Three Months Ended | Six Months Ended | |||||||||||||||
| June 30, | June 30, | |||||||||||||||
| 2011 | 2010 | 2011 | 2010 | |||||||||||||
Operating revenues | ||||||||||||||||
| Contract drilling services | $ | 589,550 | $ | 687,510 | $ | 1,132,155 | $ | 1,496,156 | ||||||||
| Reimbursables | 24,122 | 13,753 | 46,413 | 37,986 | ||||||||||||
| Labor contract drilling services | 14,012 | 8,056 | 27,559 | 15,817 | ||||||||||||
| Other | 313 | 603 | 758 | 814 | ||||||||||||
| 627,997 | 709,922 | 1,206,885 | 1,550,773 | |||||||||||||
Operating costs and expenses | ||||||||||||||||
| Contract drilling services | 336,728 | 275,595 | 643,091 | 530,026 | ||||||||||||
| Reimbursables | 18,723 | 10,365 | 35,826 | 30,108 | ||||||||||||
| Labor contract drilling services | 8,750 | 5,380 | 17,273 | 11,268 | ||||||||||||
| Depreciation and amortization | 163,119 | 126,227 | 321,241 | 242,084 | ||||||||||||
| Selling, general and administrative | 21,632 | 23,808 | 45,347 | 45,779 | ||||||||||||
| Gain on contract extinguishments, net | — | — | (21,202 | ) | — | |||||||||||
| 548,952 | 441,375 | 1,041,576 | 859,265 | |||||||||||||
Operating income | 79,045 | 268,547 | 165,309 | 691,508 | ||||||||||||
Other income (expense) | ||||||||||||||||
| Interest expense, net of amount capitalized | (14,829 | ) | (510 | ) | (33,870 | ) | (975 | ) | ||||||||
| Interest income and other, net | (534 | ) | 1,006 | 2,058 | 4,632 | |||||||||||
Income before income taxes | 63,682 | 269,043 | 133,497 | 695,165 | ||||||||||||
| Income tax provision | (9,508 | ) | (51,118 | ) | (24,867 | ) | (106,514 | ) | ||||||||
Net income | 54,174 | 217,925 | 108,630 | 588,651 | ||||||||||||
| Net income attributable to noncontrolling interests | (91 | ) | — | (52 | ) | — | ||||||||||
Net income attributable to Noble Corporation | $ | 54,083 | $ | 217,925 | $ | 108,578 | $ | 588,651 | ||||||||
Net income per share | ||||||||||||||||
| Basic | $ | 0.21 | $ | 0.85 | $ | 0.43 | $ | 2.29 | ||||||||
| Diluted | $ | 0.21 | $ | 0.85 | $ | 0.43 | $ | 2.28 | ||||||||
| Three Months Ended | Six Months Ended | |||||||||||||||
| June 30, | June 30, | |||||||||||||||
| 2012 | 2011 | 2012 | 2011 | |||||||||||||
Operating revenues | ||||||||||||||||
Contract drilling services | $ | 848,237 | $ | 589,550 | $ | 1,594,547 | $ | 1,132,155 | ||||||||
Reimbursables | 30,812 | 24,122 | 65,953 | 46,413 | ||||||||||||
Labor contract drilling services | 19,863 | 14,012 | 35,871 | 27,559 | ||||||||||||
Other | 11 | 313 | 242 | 758 | ||||||||||||
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| 898,923 | 627,997 | 1,696,613 | 1,206,885 | |||||||||||||
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Operating costs and expenses | ||||||||||||||||
Contract drilling services | 423,502 | 336,728 | 843,513 | 643,091 | ||||||||||||
Reimbursables | 24,970 | 18,723 | 55,571 | 35,826 | ||||||||||||
Labor contract drilling services | 11,847 | 8,750 | 21,079 | 17,273 | ||||||||||||
Depreciation and amortization | 183,615 | 163,119 | 354,692 | 321,241 | ||||||||||||
Selling, general and administrative | 25,404 | 21,632 | 48,530 | 45,347 | ||||||||||||
Loss on impairment | 18,345 | — | 18,345 | — | ||||||||||||
Gain on contract settlements/extinguishments, net | (33,255 | ) | — | (33,255 | ) | (21,202 | ) | |||||||||
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| 654,428 | 548,952 | 1,308,475 | 1,041,576 | |||||||||||||
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Operating income | 244,495 | 79,045 | 388,138 | 165,309 | ||||||||||||
Other income (expense) | ||||||||||||||||
Interest expense, net of amount capitalized | (20,652 | ) | (14,829 | ) | (31,148 | ) | (33,870 | ) | ||||||||
Interest income and other, net | 1,188 | (534 | ) | 2,973 | 2,058 | |||||||||||
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Income before income taxes | 225,031 | 63,682 | 359,963 | 133,497 | ||||||||||||
Income tax provision | (46,356 | ) | (9,508 | ) | (67,945 | ) | (24,867 | ) | ||||||||
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Net income | 178,675 | 54,174 | 292,018 | 108,630 | ||||||||||||
Net income attributable to noncontrolling interests | (18,857 | ) | (91 | ) | (12,025 | ) | (52 | ) | ||||||||
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Net income attributable to Noble Corporation | $ | 159,818 | $ | 54,083 | $ | 279,993 | $ | 108,578 | ||||||||
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Net income per share | ||||||||||||||||
Basic | $ | 0.63 | $ | 0.21 | $ | 1.10 | $ | 0.43 | ||||||||
Diluted | $ | 0.63 | $ | 0.21 | $ | 1.10 | $ | 0.43 | ||||||||
4
| Six Months Ended | ||||||||
| June 30, | ||||||||
| 2011 | 2010 | |||||||
Cash flows from operating activities | ||||||||
| Net income | $ | 108,630 | $ | 588,651 | ||||
| Adjustments to reconcile net income to net cash from operating activities: | ||||||||
| Depreciation and amortization | 321,241 | 242,084 | ||||||
| Gain on contract extinguishments, net | (21,202 | ) | — | |||||
| Deferred income taxes | (1,753 | ) | (11,842 | ) | ||||
| Share-based compensation expense | 16,388 | 16,285 | ||||||
| Net change in other assets and liabilities | (177,968 | ) | 179,246 | |||||
| Net cash from operating activities | 245,336 | 1,014,424 | ||||||
Cash flows from investing activities | ||||||||
| Capital expenditures | (1,428,783 | ) | (531,401 | ) | ||||
| Change in accrued capital expenditures | (51,500 | ) | (17,848 | ) | ||||
| Refund from contract extinguishments | 18,642 | — | ||||||
| Net cash from investing activities | (1,461,641 | ) | (549,249 | ) | ||||
Cash flows from financing activities | ||||||||
| Borrowings on bank credit facilities | 625,000 | — | ||||||
| Payments of bank credit facilities | (240,000 | ) | — | |||||
| Proceeds from issuance of senior notes, net of debt issuance costs | 1,087,833 | — | ||||||
| Contributions from joint venture partners | 436,000 | — | ||||||
| Payments of joint venture debt | (693,494 | ) | — | |||||
| Settlement of interest rate swaps | (29,032 | ) | — | |||||
| Par value reduction payments | (72,141 | ) | (23,306 | ) | ||||
| Financing costs on credit facilities | (2,835 | ) | — | |||||
| Proceeds from employee stock transactions | 7,357 | 3,711 | ||||||
| Repurchases of employee shares surrendered for taxes | (9,377 | ) | (9,309 | ) | ||||
| Repurchases of shares | — | (88,652 | ) | |||||
| Net cash from financing activities | 1,109,311 | (117,556 | ) | |||||
| Net change in cash and cash equivalents | (106,994 | ) | 347,619 | |||||
Cash and cash equivalents, beginning of period | 337,871 | 735,493 | ||||||
Cash and cash equivalents, end of period | $ | 230,877 | $ | 1,083,112 | ||||
5
(In thousands)
(Unaudited)
| Additional | Other | |||||||||||||||||||||||||||||||
| Shares | Paid-in | Retained | Treasury | Comprehensive | Noncontrolling | Total | ||||||||||||||||||||||||||
| Balance | Par Value | Capital | Earnings | Shares | Loss | Interests | Equity | |||||||||||||||||||||||||
Balance at December 31, 2010 | 262,415 | $ | 917,684 | $ | 39,006 | $ | 6,630,500 | $ | (373,967 | ) | $ | (50,220 | ) | $ | 124,631 | $ | 7,287,634 | |||||||||||||||
| Employee related equity activity | ||||||||||||||||||||||||||||||||
| Share-based compensation expense | — | — | 16,388 | — | — | — | — | 16,388 | ||||||||||||||||||||||||
| Issuance of share-based compensation shares | 176 | 606 | (599 | ) | — | — | — | — | 7 | |||||||||||||||||||||||
| Exercise of stock options | 389 | 1,294 | 5,782 | — | — | — | — | 7,076 | ||||||||||||||||||||||||
| Tax benefit of stock options exercised | — | — | 274 | — | — | — | — | 274 | ||||||||||||||||||||||||
| Restricted shares forfeited or repurchased for taxes | (312 | ) | (1,084 | ) | 1,084 | — | (9,377 | ) | — | — | (9,377 | ) | ||||||||||||||||||||
| Net income | — | — | — | 108,578 | — | — | 52 | 108,630 | ||||||||||||||||||||||||
| Equity contribution by joint venture partner | — | — | — | — | — | — | 473,973 | 473,973 | ||||||||||||||||||||||||
| Par value reduction payments ($0.29 per Share) | — | (60,705 | ) | (11,436 | ) | — | — | — | — | (72,141 | ) | |||||||||||||||||||||
| Other comprehensive income, net | — | — | — | — | — | 7,904 | — | 7,904 | ||||||||||||||||||||||||
Balance at June 30, 2011 | 262,668 | $ | 857,795 | $ | 50,499 | $ | 6,739,078 | $ | (383,344 | ) | $ | (42,316 | ) | $ | 598,656 | $ | 7,820,368 | |||||||||||||||
| Three Months Ended | Six Months Ended | |||||||||||||||
| June 30, | June 30, | |||||||||||||||
| 2012 | 2011 | 2012 | 2011 | |||||||||||||
Net income | $ | 178,675 | $ | 54,174 | $ | 292,018 | $ | 108,630 | ||||||||
Other comprehensive income (loss), net of tax | ||||||||||||||||
Foreign currency translation adjustments | (6,949 | ) | 1,375 | (7,027 | ) | 4,382 | ||||||||||
Gain on foreign currency forward contracts | 644 | 2,351 | 3,061 | 2,513 | ||||||||||||
Loss on interest rate swaps | — | — | — | (366 | ) | |||||||||||
Amortization of deferred pension plan amounts (net of tax provision of $647 and $353 for the three months ended June 30, 2012 and 2011, respectively, and $1,367 and $705 for the six months ended June 30, 2012 and 2011, respectively) | 1,404 | 689 | 2,826 | 1,375 | ||||||||||||
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Other comprehensive income/(loss), net | (4,901 | ) | 4,415 | (1,140 | ) | 7,904 | ||||||||||
Net comprehensive income attributable to noncontrolling interests | (18,857 | ) | (91 | ) | (12,025 | ) | (52 | ) | ||||||||
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Comprehensive income attributable to Noble Corporation | $ | 154,917 | $ | 58,498 | $ | 278,853 | $ | 116,482 | ||||||||
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See accompanying notes to the unaudited consolidated financial statements.
6
(In thousands)
(Unaudited)
| Three Months Ended | Six Months Ended | |||||||||||||||
| June 30, | June 30, | |||||||||||||||
| 2011 | 2010 | 2011 | 2010 | |||||||||||||
Net income | $ | 54,174 | $ | 217,925 | $ | 108,630 | $ | 588,651 | ||||||||
Other comprehensive income (loss), net of tax | ||||||||||||||||
| Foreign currency translation adjustments | 1,375 | (1,980 | ) | 4,382 | (6,461 | ) | ||||||||||
| Gain (loss) on foreign currency forward contracts | 2,351 | (1,009 | ) | 2,513 | (2,934 | ) | ||||||||||
| Loss on interest rate swaps | — | — | (366 | ) | — | |||||||||||
| Amortization of deferred pension plan amounts | 689 | 634 | 1,375 | 1,273 | ||||||||||||
| Other comprehensive income (loss), net | 4,415 | (2,355 | ) | 7,904 | (8,122 | ) | ||||||||||
| Net comprehensive income attributable to noncontrolling interests | (91 | ) | — | (52 | ) | — | ||||||||||
Comprehensive income attributable to Noble Corporation | $ | 58,498 | $ | 215,570 | $ | 116,482 | $ | 580,529 | ||||||||
| Six Months Ended | ||||||||
| June 30, | ||||||||
| 2012 | 2011 | |||||||
Cash flows from operating activities | ||||||||
Net income | $ | 292,018 | $ | 108,630 | ||||
Adjustments to reconcile net income to net cash from operating activities: | ||||||||
Depreciation and amortization | 354,692 | 321,241 | ||||||
Loss on impairment | 18,345 | — | ||||||
Gain on contract extinguishments, net | — | (21,202 | ) | |||||
Deferred income taxes | (7,765 | ) | (1,753 | ) | ||||
Amortization of share-based compensation | 17,840 | 16,388 | ||||||
Net change in other assets and liabilities | (139,184 | ) | (190,536 | ) | ||||
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Net cash from operating activities | 535,946 | 232,768 | ||||||
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Cash flows from investing activities | ||||||||
Capital expenditures | (665,140 | ) | (1,416,215 | ) | ||||
Change in accrued capital expenditures | (159,134 | ) | (51,500 | ) | ||||
Refund from contract extinguishments | — | 18,642 | ||||||
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Net cash from investing activities | (824,274 | ) | (1,449,073 | ) | ||||
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Cash flows from financing activities | ||||||||
Borrowings on bank credit facilities | 325,000 | 625,000 | ||||||
Repayments on bank credit facilities | (1,150,000 | ) | (240,000 | ) | ||||
Proceeds from issuance of senior notes, net of debt issuance costs | 1,186,636 | 1,087,833 | ||||||
Contributions from joint venture partners | 40,000 | 436,000 | ||||||
Payments of joint venture debt | — | (693,494 | ) | |||||
Settlement of interest rate swaps | — | (29,032 | ) | |||||
Par value reduction payments | (71,897 | ) | (72,141 | ) | ||||
Financing costs on credit facilities | (5,014 | ) | (2,835 | ) | ||||
Proceeds from employee stock transactions | 9,465 | 7,357 | ||||||
Repurchases of employee shares surrendered for taxes | (9,765 | ) | (9,377 | ) | ||||
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|
| |||||
Net cash from financing activities | 324,425 | 1,109,311 | ||||||
|
|
|
| |||||
Net change in cash and cash equivalents | 36,097 | (106,994 | ) | |||||
Cash and cash equivalents, beginning of period | 239,196 | 337,871 | ||||||
|
|
|
| |||||
Cash and cash equivalents, end of period | $ | 275,293 | $ | 230,877 | ||||
|
|
|
| |||||
7
| June 30, | December 31, | |||||||
| 2011 | 2010 | |||||||
ASSETS | ||||||||
| Current assets | ||||||||
| Cash and cash equivalents | $ | 224,917 | $ | 333,399 | ||||
| Accounts receivable | 509,986 | 387,414 | ||||||
| Taxes receivable | 80,815 | 81,066 | ||||||
| Prepaid expenses | 64,677 | 33,232 | ||||||
| Other current assets | 88,035 | 69,821 | ||||||
| Total current assets | 968,430 | 904,932 | ||||||
| Property and equipment, at cost | 13,892,227 | 12,614,974 | ||||||
| Accumulated depreciation | (2,859,227 | ) | (2,594,954 | ) | ||||
| Property and equipment, net | 11,033,000 | 10,020,020 | ||||||
| Other assets | 398,255 | 342,592 | ||||||
Total assets | $ | 12,399,685 | $ | 11,267,544 | ||||
LIABILITIES AND EQUITY | ||||||||
| Current liabilities | ||||||||
| Current maturities of long-term debt | $ | — | $ | 80,213 | ||||
| Accounts payable | 303,617 | 374,559 | ||||||
| Accrued payroll and related costs | 105,386 | 120,634 | ||||||
| Interest payable | 58,328 | 40,260 | ||||||
| Taxes payable | 66,764 | 94,132 | ||||||
| Other current liabilities | 79,277 | 83,759 | ||||||
| Total current liabilities | 613,372 | 793,557 | ||||||
| Long-term debt | 3,521,770 | 2,686,484 | ||||||
| Deferred income taxes | 257,069 | 258,822 | ||||||
| Other liabilities | 212,475 | 268,026 | ||||||
Total liabilities | 4,604,686 | 4,006,889 | ||||||
| Commitments and contingencies | ||||||||
| Shareholder equity | ||||||||
| Ordinary shares; 261,246 shares outstanding | 26,125 | 26,125 | ||||||
| Capital in excess of par value | 426,460 | 416,232 | ||||||
| Retained earnings | 6,786,074 | 6,743,887 | ||||||
| Accumulated other comprehensive loss | (42,316 | ) | (50,220 | ) | ||||
Total shareholder equity | 7,196,343 | 7,136,024 | ||||||
| Noncontrolling interests | 598,656 | 124,631 | ||||||
Total equity | 7,794,999 | 7,260,655 | ||||||
Total liabilities and equity | $ | 12,399,685 | $ | 11,267,544 | ||||
8
(In thousands)
(Unaudited)
| Three Months Ended | Six Months Ended | |||||||||||||||
| June 30, | June 30, | |||||||||||||||
| 2011 | 2010 | 2011 | 2010 | |||||||||||||
Operating revenues | ||||||||||||||||
| Contract drilling services | $ | 589,550 | $ | 687,510 | $ | 1,132,155 | $ | 1,496,156 | ||||||||
| Reimbursables | 24,122 | 13,753 | 46,413 | 37,986 | ||||||||||||
| Labor contract drilling services | 14,012 | 8,056 | 27,559 | 15,817 | ||||||||||||
| Other | 313 | 603 | 758 | 814 | ||||||||||||
| 627,997 | 709,922 | 1,206,885 | 1,550,773 | |||||||||||||
Operating costs and expenses | ||||||||||||||||
| Contract drilling services | 330,204 | 271,084 | 631,036 | 523,865 | ||||||||||||
| Reimbursables | 18,723 | 10,365 | 35,826 | 30,108 | ||||||||||||
| Labor contract drilling services | 8,750 | 5,380 | 17,273 | 11,268 | ||||||||||||
| Depreciation and amortization | 162,636 | 126,052 | 320,291 | 241,716 | ||||||||||||
| Selling, general and administrative | 14,642 | 15,534 | 31,173 | 31,422 | ||||||||||||
| Gain on contract extinguishments, net | — | — | (21,202 | ) | — | |||||||||||
| 534,955 | 428,415 | 1,014,397 | 838,379 | |||||||||||||
Operating income | 93,042 | 281,507 | 192,488 | 712,394 | ||||||||||||
Other income (expense) | ||||||||||||||||
| Interest expense, net of amount capitalized | (14,829 | ) | (510 | ) | (33,870 | ) | (975 | ) | ||||||||
| Interest income and other, net | (147 | ) | 1,503 | 2,094 | 5,110 | |||||||||||
Income before income taxes | 78,066 | 282,500 | 160,712 | 716,529 | ||||||||||||
| Income tax provision | (9,157 | ) | (49,543 | ) | (24,182 | ) | (104,939 | ) | ||||||||
Net income | 68,909 | 232,957 | 136,530 | 611,590 | ||||||||||||
| Net income attributable to noncontrolling interests | (91 | ) | — | (52 | ) | — | ||||||||||
Net income attributable to Noble Corporation | $ | 68,818 | $ | 232,957 | $ | 136,478 | $ | 611,590 | ||||||||
| Accumulated | ||||||||||||||||||||||||||||||||
| Additional | Other | |||||||||||||||||||||||||||||||
| Shares | Paid-in | Retained | Treasury | Comprehensive | Noncontrolling | Total | ||||||||||||||||||||||||||
| Balance | Par Value | Capital | Earnings | Shares | Loss | Interests | Equity | |||||||||||||||||||||||||
Balance at December 31, 2010 | 262,415 | $ | 917,684 | $ | 39,006 | $ | 6,630,500 | $ | (373,967 | ) | $ | (50,220 | ) | $ | 124,631 | $ | 7,287,634 | |||||||||||||||
Employee related equity activity | ||||||||||||||||||||||||||||||||
Amortization of share-based compensation | — | — | 16,388 | — | — | — | — | 16,388 | ||||||||||||||||||||||||
Issuance of share-based compensation shares | 176 | 606 | (599 | ) | — | — | — | — | 7 | |||||||||||||||||||||||
Exercise of stock options | 389 | 1,294 | 5,782 | — | — | — | — | 7,076 | ||||||||||||||||||||||||
Tax benefit of stock options exercised | — | — | 274 | — | — | — | — | 274 | ||||||||||||||||||||||||
Restricted shares forfeited or repurchased for taxes | (312 | ) | (1,084 | ) | 1,084 | — | (9,377 | ) | — | — | (9,377 | ) | ||||||||||||||||||||
Net income | — | — | — | 108,578 | — | — | 52 | 108,630 | ||||||||||||||||||||||||
Par value reduction payments | — | (60,705 | ) | (11,436 | ) | — | — | — | — | (72,141 | ) | |||||||||||||||||||||
Equity contribution by joint venture partner | — | — | — | — | — | — | 473,973 | 473,973 | ||||||||||||||||||||||||
Other comprehensive income, net | — | — | — | — | — | 7,904 | — | 7,904 | ||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||
Balance at June 30, 2011 | 262,668 | $ | 857,795 | $ | 50,499 | $ | 6,739,078 | $ | (383,344 | ) | $ | (42,316 | ) | $ | 598,656 | $ | 7,820,368 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||
Balance at December 31, 2011 | 252,639 | $ | 766,595 | $ | 48,356 | $ | 6,676,444 | $ | (10,553 | ) | $ | (74,321 | ) | $ | 691,331 | $ | 8,097,852 | |||||||||||||||
Employee related equity activity | ||||||||||||||||||||||||||||||||
Amortization of share-based compensation | — | — | 17,840 | — | — | — | — | 17,840 | ||||||||||||||||||||||||
Issuance of share-based compensation shares | 364 | 1,104 | (1,099 | ) | — | — | — | — | 5 | |||||||||||||||||||||||
Exercise of stock options | 447 | 1,277 | 8,735 | — | — | — | — | 10,012 | ||||||||||||||||||||||||
Tax benefit of stock options exercised | — | — | (552 | ) | — | — | — | — | (552 | ) | ||||||||||||||||||||||
Restricted shares forfeited or repurchased for taxes | (374 | ) | (1,138 | ) | 1,138 | — | (9,765 | ) | — | — | (9,765 | ) | ||||||||||||||||||||
Net income | — | — | — | 279,993 | — | — | 12,025 | 292,018 | ||||||||||||||||||||||||
Equity contribution by joint venture partner | — | — | — | — | — | — | 40,000 | 40,000 | ||||||||||||||||||||||||
Other | — | — | — | — | — | — | (1,527 | ) | (1,527 | ) | ||||||||||||||||||||||
Par value reduction payments | — | (58,470 | ) | (13,427 | ) | — | — | — | — | (71,897 | ) | |||||||||||||||||||||
Dividends payable | — | — | — | (132,679 | ) | — | — | — | (132,679 | ) | ||||||||||||||||||||||
Other comprehensive loss, net | — | — | — | — | — | (1,140 | ) | — | (1,140 | ) | ||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||
Balance at June 30, 2012 | 253,076 | $ | 709,368 | $ | 60,991 | $ | 6,823,758 | $ | (20,318 | ) | $ | (75,461 | ) | $ | 741,829 | $ | 8,240,167 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||
See accompanying notes to the unaudited consolidated financial statements.
9
(In thousands)
(Unaudited)
| Six Months Ended | ||||||||
| June 30, | ||||||||
| 2011 | 2010 | |||||||
Cash flows from operating activities | ||||||||
| Net income | $ | 136,530 | $ | 611,590 | ||||
| Adjustments to reconcile net income to net cash from operating activities: | ||||||||
| Depreciation and amortization | 320,291 | 241,716 | ||||||
| Gain on contract extinguishments, net | (21,202 | ) | — | |||||
| Deferred income taxes | (1,753 | ) | (11,843 | ) | ||||
| Capital contribution by parent — share-based compensation | 10,228 | 10,301 | ||||||
| Net change in other assets and liabilities | (185,049 | ) | 174,670 | |||||
| Net cash from operating activities | 259,045 | 1,026,434 | ||||||
Cash flows from investing activities | ||||||||
| Capital expenditures | (1,423,850 | ) | (531,033 | ) | ||||
| Change in accrued capital expenditures | (51,500 | ) | (17,848 | ) | ||||
| Refund from contract extinguishments | 18,642 | — | ||||||
| Net cash from investing activities | (1,456,708 | ) | (548,881 | ) | ||||
Cash flows from financing activities | ||||||||
| Borrowings on bank credit facilities | 625,000 | — | ||||||
| Payments of bank credit facilities | (240,000 | ) | — | |||||
| Proceeds from issuance of senior notes, net of debt issuance costs | 1,087,833 | — | ||||||
| Contributions from joint venture partners | 436,000 | — | ||||||
| Payments of joint venture debt | (693,494 | ) | — | |||||
| Settlement of interest rate swaps | (29,032 | ) | — | |||||
| Financing costs on credit facilities | (2,835 | ) | — | |||||
| Distributions to parent company, net | (94,291 | ) | (128,315 | ) | ||||
| Net cash from financing activities | 1,089,181 | (128,315 | ) | |||||
| Net change in cash and cash equivalents | (108,482 | ) | 349,238 | |||||
Cash and cash equivalents, beginning of period | 333,399 | 726,225 | ||||||
Cash and cash equivalents, end of period | $ | 224,917 | $ | 1,075,463 | ||||
| June 30, | December 31, | |||||||
| 2012 | 2011 | |||||||
ASSETS | ||||||||
Current assets | ||||||||
Cash and cash equivalents | $ | 267,870 | $ | 235,056 | ||||
Accounts receivable | 693,533 | 587,163 | ||||||
Taxes receivable | 97,745 | 75,284 | ||||||
Prepaid expenses | 76,630 | 33,105 | ||||||
Other current assets | 142,541 | 120,109 | ||||||
|
|
|
| |||||
Total current assets | 1,278,319 | 1,050,717 | ||||||
|
|
|
| |||||
Property and equipment, at cost | 16,019,544 | 15,505,994 | ||||||
Accumulated depreciation | (3,626,272 | ) | (3,404,589 | ) | ||||
|
|
|
| |||||
Property and equipment, net | 12,393,272 | 12,101,405 | ||||||
|
|
|
| |||||
Other assets | 325,733 | 305,283 | ||||||
|
|
|
| |||||
Total assets | $ | 13,997,324 | $ | 13,457,405 | ||||
|
|
|
| |||||
LIABILITIES AND EQUITY | ||||||||
Current liabilities | ||||||||
Accounts payable | $ | 276,398 | $ | 435,729 | ||||
Accrued payroll and related costs | 117,037 | 108,908 | ||||||
Interest payable | 73,208 | 54,419 | ||||||
Taxes payable | 84,893 | 91,190 | ||||||
Other current liabilities | 108,676 | 123,399 | ||||||
|
|
|
| |||||
Total current liabilities | 660,212 | 813,645 | ||||||
|
|
|
| |||||
Long-term debt | 4,444,294 | 4,071,964 | ||||||
Deferred income taxes | 238,045 | 242,791 | ||||||
Other liabilities | 306,397 | 255,372 | ||||||
|
|
|
| |||||
Total liabilities | 5,648,948 | 5,383,772 | ||||||
|
|
|
| |||||
Commitments and contingencies | ||||||||
Shareholder equity | ||||||||
Ordinary shares; 261,246 shares outstanding | 26,125 | 26,125 | ||||||
Capital in excess of par value | 461,054 | 450,616 | ||||||
Retained earnings | 7,194,829 | 6,979,882 | ||||||
Accumulated other comprehensive loss | (75,461 | ) | (74,321 | ) | ||||
|
|
|
| |||||
Total shareholder equity | 7,606,547 | 7,382,302 | ||||||
Noncontrolling interests | 741,829 | 691,331 | ||||||
|
|
|
| |||||
Total equity | 8,348,376 | 8,073,633 | ||||||
|
|
|
| |||||
Total liabilities and equity | $ | 13,997,324 | $ | 13,457,405 | ||||
|
|
|
| |||||
See accompanying notes to the unaudited consolidated financial statements.
10
(In thousands)
(Unaudited)
| Accumulated | ||||||||||||||||||||||||||||
| Capital in | Other | |||||||||||||||||||||||||||
| Shares | Excess of | Retained | Comprehensive | Noncontrolling | Total | |||||||||||||||||||||||
| Balance | Par Value | Par Value | Earnings | Loss | Interests | Equity | ||||||||||||||||||||||
Balance at December 31, 2010 | 261,246 | $ | 26,125 | $ | 416,232 | $ | 6,743,887 | $ | (50,220 | ) | $ | 124,631 | $ | 7,260,655 | ||||||||||||||
| Net income | — | — | — | 136,478 | — | 52 | 136,530 | |||||||||||||||||||||
| Capital contributions by parent — share-based compensation | — | — | 10,228 | — | — | — | 10,228 | |||||||||||||||||||||
| Distributions to parent | — | — | — | (94,291 | ) | — | — | (94,291 | ) | |||||||||||||||||||
| Noncontrolling interest contributions | — | — | — | — | — | 473,973 | 473,973 | |||||||||||||||||||||
| Other comprehensive income, net | — | — | — | — | 7,904 | — | 7,904 | |||||||||||||||||||||
Balance at June 30, 2011 | 261,246 | $ | 26,125 | $ | 426,460 | $ | 6,786,074 | $ | (42,316 | ) | $ | 598,656 | $ | 7,794,999 | ||||||||||||||
| Three Months Ended | Six Months Ended | |||||||||||||||
| June 30, | June 30, | |||||||||||||||
| 2012 | 2011 | 2012 | 2011 | |||||||||||||
Operating revenues | ||||||||||||||||
Contract drilling services | $ | 848,237 | $ | 589,550 | $ | 1,594,547 | $ | 1,132,155 | ||||||||
Reimbursables | 30,812 | 24,122 | 65,953 | 46,413 | ||||||||||||
Labor contract drilling services | 19,863 | 14,012 | 35,871 | 27,559 | ||||||||||||
Other | 11 | 313 | 242 | 758 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
| 898,923 | 627,997 | 1,696,613 | 1,206,885 | |||||||||||||
|
|
|
|
|
|
|
| |||||||||
Operating costs and expenses | ||||||||||||||||
Contract drilling services | 421,598 | 330,204 | 836,744 | 631,036 | ||||||||||||
Reimbursables | 24,970 | 18,723 | 55,571 | 35,826 | ||||||||||||
Labor contract drilling services | 11,847 | 8,750 | 21,079 | 17,273 | ||||||||||||
Depreciation and amortization | 183,103 | 162,636 | 353,676 | 320,291 | ||||||||||||
Selling, general and administrative | 15,467 | 14,642 | 29,477 | 31,173 | ||||||||||||
Loss on impairment | 18,345 | — | 18,345 | — | ||||||||||||
Gain on contract settlements/extinguishments, net | (33,255 | ) | — | (33,255 | ) | (21,202 | ) | |||||||||
|
|
|
|
|
|
|
| |||||||||
| 642,075 | 534,955 | 1,281,637 | 1,014,397 | |||||||||||||
|
|
|
|
|
|
|
| |||||||||
Operating income | 256,848 | 93,042 | 414,976 | 192,488 | ||||||||||||
Other income (expense) | ||||||||||||||||
Interest expense, net of amount capitalized | (20,652 | ) | (14,829 | ) | (31,148 | ) | (33,870 | ) | ||||||||
Interest income and other, net | 1,608 | (147 | ) | 3,007 | 2,094 | |||||||||||
|
|
|
|
|
|
|
| |||||||||
Income before income taxes | 237,804 | 78,066 | 386,835 | 160,712 | ||||||||||||
Income tax provision | (45,977 | ) | (9,157 | ) | (67,188 | ) | (24,182 | ) | ||||||||
|
|
|
|
|
|
|
| |||||||||
Net income | 191,827 | 68,909 | 319,647 | 136,530 | ||||||||||||
Net income attributable to noncontrolling interests | (18,857 | ) | (91 | ) | (12,025 | ) | (52 | ) | ||||||||
|
|
|
|
|
|
|
| |||||||||
Net income attributable to Noble Corporation | $ | 172,970 | $ | 68,818 | $ | 307,622 | $ | 136,478 | ||||||||
|
|
|
|
|
|
|
| |||||||||
See accompanying notes to the unaudited consolidated financial statements.
statements.
11
(In thousands)
(Unaudited)
| Three Months Ended | Six Months Ended | |||||||||||||||
| June 30, | June 30, | |||||||||||||||
| 2011 | 2010 | 2011 | 2010 | |||||||||||||
Net income | $ | 68,909 | $ | 232,957 | $ | 136,530 | $ | 611,590 | ||||||||
Other comprehensive income (loss), net of tax | ||||||||||||||||
| Foreign currency translation adjustments | 1,375 | (1,980 | ) | 4,382 | (6,461 | ) | ||||||||||
| Gain (loss) on foreign currency forward contracts | 2,351 | (1,009 | ) | 2,513 | (2,934 | ) | ||||||||||
| Loss on interest rate swaps | — | — | (366 | ) | — | |||||||||||
| Amortization of deferred pension plan amounts | 689 | 634 | 1,375 | 1,273 | ||||||||||||
| Other comprehensive income (loss), net | 4,415 | (2,355 | ) | 7,904 | (8,122 | ) | ||||||||||
| Net comprehensive income attributable to noncontrolling interests | (91 | ) | — | (52 | ) | — | ||||||||||
Comprehensive income attributable to Noble Corporation | $ | 73,233 | $ | 230,602 | $ | 144,382 | $ | 603,468 | ||||||||
| Three Months Ended | Six Months Ended | |||||||||||||||
| June 30, | June 30, | |||||||||||||||
| 2012 | 2011 | 2012 | 2011 | |||||||||||||
Net income | $ | 191,827 | $ | 68,909 | $ | 319,647 | $ | 136,530 | ||||||||
Other comprehensive income (loss), net of tax | ||||||||||||||||
Foreign currency translation adjustments | (6,949 | ) | 1,375 | (7,027 | ) | 4,382 | ||||||||||
Gain on foreign currency forward contracts | 644 | 2,351 | 3,061 | 2,513 | ||||||||||||
Loss on interest rate swaps | — | — | — | (366 | ) | |||||||||||
Amortization of deferred pension plan amounts (net of tax provision of $647 and $353 for the three months ended June 30, 2012 and 2011, respectively, and $1,367 and $705 for the six months ended June 30, 2012 and 2011, respectively) | 1,404 | 689 | 2,826 | 1,375 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Other comprehensive income/(loss), net | (4,901 | ) | 4,415 | (1,140 | ) | 7,904 | ||||||||||
Net comprehensive income attributable to noncontrolling interests | (18,857 | ) | (91 | ) | (12,025 | ) | (52 | ) | ||||||||
|
|
|
|
|
|
|
| |||||||||
Comprehensive income attributable to Noble Corporation | $ | 168,069 | $ | 73,233 | $ | 306,482 | $ | 144,382 | ||||||||
|
|
|
|
|
|
|
| |||||||||
See accompanying notes to the unaudited consolidated financial statements.
NOBLE CORPORATION (NOBLE-CAYMAN) AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CASH FLOWS
(In thousands)
(Unaudited)
| Six Months Ended | ||||||||
| June 30, | ||||||||
| 2012 | 2011 | |||||||
Cash flows from operating activities | ||||||||
Net income | $ | 319,647 | $ | 136,530 | ||||
Adjustments to reconcile net income to net cash from operating activities: | ||||||||
Depreciation and amortization | 353,676 | 320,291 | ||||||
Loss on impairment | 18,345 | — | ||||||
Gain on contract extinguishments, net | — | (21,202 | ) | |||||
Deferred income taxes | (7,765 | ) | (1,753 | ) | ||||
Capital contribution by parent — share-based compensation | 10,438 | 10,228 | ||||||
Net change in other assets and liabilities | (142,640 | ) | (197,617 | ) | ||||
|
|
|
| |||||
Net cash from operating activities | 551,701 | 246,477 | ||||||
|
|
|
| |||||
Cash flows from investing activities | ||||||||
Capital expenditures | (663,700 | ) | (1,411,282 | ) | ||||
Change in accrued capital expenditures | (159,134 | ) | (51,500 | ) | ||||
Refund from contract extinguishments | — | 18,642 | ||||||
|
|
|
| |||||
Net cash from investing activities | (822,834 | ) | (1,444,140 | ) | ||||
|
|
|
| |||||
Cash flows from financing activities | ||||||||
Borrowings on bank credit facilities | 325,000 | 625,000 | ||||||
Repayments on bank credit facilities | (1,150,000 | ) | (240,000 | ) | ||||
Proceeds from issuance of senior notes, net of debt issuance costs | 1,186,636 | 1,087,833 | ||||||
Contributions from joint venture partners | 40,000 | 436,000 | ||||||
Payments of joint venture debt | — | (693,494 | ) | |||||
Settlement of interest rate swaps | — | (29,032 | ) | |||||
Financing costs on credit facilities | (5,014 | ) | (2,835 | ) | ||||
Distributions to parent company, net | (92,675 | ) | (94,291 | ) | ||||
|
|
|
| |||||
Net cash from financing activities | 303,947 | 1,089,181 | ||||||
|
|
|
| |||||
Net change in cash and cash equivalents | 32,814 | (108,482 | ) | |||||
Cash and cash equivalents, beginning of period | 235,056 | 333,399 | ||||||
|
|
|
| |||||
Cash and cash equivalents, end of period | $ | 267,870 | $ | 224,917 | ||||
|
|
|
| |||||
12See accompanying notes to the unaudited consolidated financial statements.
NOBLE CORPORATION (NOBLE-CAYMAN) AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF EQUITY
(Unaudited)
| Accumulated | ||||||||||||||||||||||||||||
| Capital in | Other | |||||||||||||||||||||||||||
| Shares | Excess of | Retained | Comprehensive | Noncontrolling | Total | |||||||||||||||||||||||
| Balance | Par Value | Par Value | Earnings | Loss | Interests | Equity | ||||||||||||||||||||||
Balance at December 31, 2010 | 261,246 | $ | 26,125 | $ | 416,232 | $ | 6,743,887 | $ | (50,220 | ) | $ | 124,631 | $ | 7,260,655 | ||||||||||||||
Net income | — | — | — | 136,478 | — | 52 | 136,530 | |||||||||||||||||||||
Capital contributions by parent — share-based compensation | — | — | 10,228 | — | — | — | 10,228 | |||||||||||||||||||||
Distributions to parent | — | — | — | (94,291 | ) | — | — | (94,291 | ) | |||||||||||||||||||
Noncontrolling interest contributions | — | — | — | — | — | 473,973 | 473,973 | |||||||||||||||||||||
Other comprehensive income, net | — | — | — | — | 7,904 | — | 7,904 | |||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||
Balance at June 30, 2011 | 261,246 | $ | 26,125 | $ | 426,460 | $ | 6,786,074 | $ | (42,316 | ) | $ | 598,656 | $ | 7,794,999 | ||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||
Balance at December 31, 2011 | 261,246 | $ | 26,125 | $ | 450,616 | $ | 6,979,882 | $ | (74,321 | ) | $ | 691,331 | $ | 8,073,633 | ||||||||||||||
Net income | — | — | — | 307,622 | — | 12,025 | 319,647 | |||||||||||||||||||||
Capital contributions by parent — share-based compensation | — | — | 10,438 | — | — | — | 10,438 | |||||||||||||||||||||
Distributions to parent | — | — | — | (92,675 | ) | — | — | (92,675 | ) | |||||||||||||||||||
Other | — | — | — | — | — | (1,527 | ) | (1,527 | ) | |||||||||||||||||||
Noncontrolling interest contributions | — | — | — | — | — | 40,000 | 40,000 | |||||||||||||||||||||
Other comprehensive loss, net | — | — | — | — | (1,140 | ) | — | (1,140 | ) | |||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||
Balance at June 30, 2012 | 261,246 | $ | 26,125 | $ | 461,054 | $ | 7,194,829 | $ | (75,461 | ) | $ | 741,829 | $ | 8,348,376 | ||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||
See accompanying notes to the unaudited consolidated financial statements.
NOBLE CORPORATION (NOBLE-SWISS) AND SUBSIDIARIES
NOBLE CORPORATION (NOBLE-CAYMAN) AND SUBSIDIARIES
(Unless otherwise indicated, dollar amounts in tables are in thousands, except per share data)
Note 1 — Organization and Basis of Presentation
Noble Corporation, a Swiss corporation (“Noble-Swiss”), is a leading provider of offshore contract drilling contractorservices for the oil and gas industry. At June 30, 2011, ourOur fleet consisted of 7679 mobile offshore drilling units located worldwide as follows:consists of 14 semisubmersibles, 1314 drillships, 4749 jackups and two submersibles. In addition,Additionally, we have one floating production storage and offloading unit (“FPSO”). At June 30, 2011, we hadunit. Our fleet includes 11 of our 76 units under construction as follows:
five dynamically positioned, ultra-deepwater, harsh environment drillships and
six high-specification heavy duty,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 Mexico, Mexico, the Mediterranean,Brazil, the North Sea, Brazil,the Mediterranean, West Africa, the Middle East, India and the Asian Pacific. Noble and its predecessors have been engaged in the contract drilling of oil and gas wells since 1921.
Noble Corporation, a Cayman Islands company (“Noble-Cayman”) is a direct, wholly-owned subsidiary of Noble-Swiss, our publicly-traded parent company. Noble-Swiss’ principal asset is all of the shares of Noble-Cayman. Noble-Cayman has no public equity outstanding. The consolidated financial statements of Noble-Swiss include the accounts of Noble-Cayman, and Noble-Swiss conducts substantially all of its business through Noble-Cayman and its subsidiaries.
The accompanying unaudited consolidated financial statements of Noble-Swiss and Noble-Cayman have been prepared pursuant to the rules and regulations of the U.S. Securities and Exchange Commission (“SEC”) as they pertain to Form 10-Q. Accordingly, certain information and disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) have been condensed or omitted pursuant to such rules and regulations. The unaudited financial statements reflect all adjustments which are, in the opinion of management, necessary for a fair statement of the financial position and results of operations for the interim periods, on a basis consistent with the annual audited consolidated financial statements. All such adjustments are of a normal recurring nature. The December 31, 20102011 Consolidated Balance Sheets presented herein are derived from the December 31, 20102011 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, 2010,2011, filed by both Noble-Swiss and Noble-Cayman. The results of operations for interim periods are not necessarily indicative of the results to be expected for the full year.
Certain amounts in prior periods have been revisedreclassified to conform to the current year presentation. Taxes payableIn connection with a review of the “Other Assets” caption in the December 31, 2010 Consolidated Balance Sheets was reported net of approximately $81 million in taxes receivable. During the quarter ended June 30, 2011,our financial statements, we determined that drilling equipment replacements and upgrades should be included in “Property and equipment”. As a right of offsetresult, we reclassified these amounts in certain taxable jurisdictions did not existour consolidated balance sheet for these receivables, and they are now being disclosed separately as a current asset. For the year ended December 31, 2010 Consolidated Balance Sheets presented herein, these amounts have been revised to conform2011. This reclassification is immaterial to the current year presentation. We believe that this revision is immaterial, as it did not have a material impact on ourprior period financial position, working capital, results of operations or cash flows from operations.
statements.
13
| Three months | Six months | |||||||
| ended | ended | |||||||
| June 30, 2010 | June 30, 2010 | |||||||
| Total operating revenues | $ | 784,424 | $ | 1,693,039 | ||||
| Net income | 191,377 | 552,601 | ||||||
| Net income per share | $ | 0.74 | $ | 2.14 | ||||
We own a 50 percent interest in two joint ventures, each with a subsidiary of Royal Dutch Shell, PLC (“Shell”), for the construction and operation of theour twoBully-class Bully-class drillships. Since these entities’ equity at risk is insufficient to permit them to carry on their activities without additional financial support, they each meet the criteria for a variable interest entity. We have determined that we are the primary beneficiary for accounting purposes. Accordingly, we consolidate the entities in our consolidated financial statements after eliminating intercompany transactions. Shell’s equity interest isinterests are presented as noncontrolling interests on our Consolidated Balance Sheets.
In April 2011, the Bully 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 converted 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 capital contribution, totaling $73 million, was eliminated in consolidation.
At June 30, 20112012, the combined carrying amount of the drillships was $280 million.
$1.4 billion, which was primarily funded through partners’ equity contributions.
14
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 43 — Share Data
Share capital
The following is a detail of Noble-Swiss’ authorized share capital as of June 30, 20112012 and December 31, 2010:
| June 30, | December 31, | |||||||
| 2011 | 2010 | |||||||
Shares outstanding and trading | 252,290 | 252,275 | ||||||
| Treasury shares | 10,378 | 10,140 | ||||||
Total shares outstanding | 262,668 | 262,415 | ||||||
| Treasury shares held for share-based compensation plans | 13,598 | 13,851 | ||||||
Total shares authorized for issuance | 276,266 | 276,266 | ||||||
| Par value per share (in Swiss Francs) | 3.67 | 3.93 | ||||||
| June 30, | December 31, | |||||||
| 2012 | 2011 | |||||||
Shares outstanding and trading | 252,507 | 252,352 | ||||||
Treasury shares | 569 | 287 | ||||||
|
|
|
| |||||
Total shares outstanding | 253,076 | 252,639 | ||||||
Treasury shares held for share-based compensation plans | 13,074 | 13,511 | ||||||
|
|
|
| |||||
Total shares authorized for issuance | 266,150 | 266,150 | ||||||
|
|
|
| |||||
Par value per share (in Swiss Francs) | 3.15 | 3.41 | ||||||
Repurchased treasury shares are recorded at cost, and include both shares repurchased pursuant to our Board of Directors approved share repurchase program discussed below and shares surrendered by employees for taxes payable upon the vesting of restricted stock.
Our Board of Directors may further increase Noble-Swiss’ share capital through the issuance of up to 138.1133.1 million conditionally authorized registered shares without obtaining shareholder approval. The issuance of these conditionally authorized registered shares is subject to certain conditions regarding their use.
In April 2011,2012, our shareholders approved the cancellationpayment of 10.1a dividend funded from our capital contribution reserve aggregating $0.52 per share to be paid in four equal installments scheduled for August 2012, November 2012, February 2013 and May 2013. These dividends will require us to make cash payments of approximately $66 million shares held in treasury. During July 2011, after making2012, based on the required filings with the Swiss Commercial Register, these 10.1 million treasury shares were cancelled and the total number of shares authorized for issuance was reducedcurrently outstanding. In connection with this approval and the resulting obligation to 266.2shareholders, we recorded dividends payable of approximately $133 million shares.
during the second quarter of 2012. Any additional issuances of shares would further increase our obligation.
15
NOBLE CORPORATION (NOBLE-CAYMAN) AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unless otherwise indicated, dollar amounts in tables are in thousands, except per share data)
Earnings per share
The following table sets forth the computation of basic and diluted earnings per share for Noble-Swiss:
| Three months ended | Six months ended | |||||||||||||||
| June 30, | June 30, | |||||||||||||||
| 2011 | 2010 | 2011 | 2010 | |||||||||||||
Allocation of net income | ||||||||||||||||
Basic | ||||||||||||||||
| Net income attributable to Noble Corporation | $ | 54,083 | $ | 217,925 | $ | 108,578 | $ | 588,651 | ||||||||
| Earnings allocated to unvested share-based payment awards | (572 | ) | (2,143 | ) | (1,083 | ) | (5,652 | ) | ||||||||
Net income to common shareholders — basic | $ | 53,511 | $ | 215,782 | $ | 107,495 | $ | 582,999 | ||||||||
Diluted | ||||||||||||||||
| Net income attributable to Noble Corporation | $ | 54,083 | $ | 217,925 | $ | 108,578 | $ | 588,651 | ||||||||
| Earnings allocated to unvested share-based payment awards | (572 | ) | (2,137 | ) | (1,082 | ) | (5,632 | ) | ||||||||
Net income to common shareholders — diluted | $ | 53,511 | $ | 215,788 | $ | 107,496 | $ | 583,019 | ||||||||
Weighted average shares outstanding — basic | 251,368 | 254,224 | 251,198 | 254,671 | ||||||||||||
| Incremental shares issuable from assumed exercise of stock options | 700 | 800 | 737 | 949 | ||||||||||||
Weighted average shares outstanding — diluted | 252,068 | 255,024 | 251,935 | 255,620 | ||||||||||||
Weighted average unvested share-based payment awards | 2,688 | 2,480 | 2,554 | 2,431 | ||||||||||||
Earnings per share | ||||||||||||||||
| Basic | $ | 0.21 | $ | 0.85 | $ | 0.43 | $ | 2.29 | ||||||||
| Diluted | $ | 0.21 | $ | 0.85 | $ | 0.43 | $ | 2.28 | ||||||||
| Three months ended | Six months ended | |||||||||||||||
| June 30, | June 30, | |||||||||||||||
| 2012 | 2011 | 2012 | 2011 | |||||||||||||
Allocation of net income | ||||||||||||||||
Basic | ||||||||||||||||
Net income attributable to Noble Corporation | $ | 159,818 | $ | 54,083 | $ | 279,993 | $ | 108,578 | ||||||||
Earnings allocated to unvested share-based payment awards | (1,694 | ) | (572 | ) | (2,797 | ) | (1,083 | ) | ||||||||
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|
| |||||||||
Net income to common shareholders — basic | $ | 158,124 | $ | 53,511 | $ | 277,196 | $ | 107,495 | ||||||||
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| |||||||||
Diluted | ||||||||||||||||
Net income attributable to Noble Corporation | $ | 159,818 | $ | 54,083 | $ | 279,993 | $ | 108,578 | ||||||||
Earnings allocated to unvested share-based payment awards | (1,692 | ) | (572 | ) | (2,793 | ) | (1,082 | ) | ||||||||
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| |||||||||
Net income to common shareholders — diluted | $ | 158,126 | $ | 53,511 | $ | 277,200 | $ | 107,496 | ||||||||
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| |||||||||
Weighted average shares outstanding — basic | 252,387 | 251,368 | 252,179 | 251,198 | ||||||||||||
Incremental shares issuable from assumed exercise of stock options | 358 | 700 | 425 | 737 | ||||||||||||
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| |||||||||
Weighted average shares outstanding — diluted | 252,745 | 252,068 | 252,604 | 251,935 | ||||||||||||
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| |||||||||
Weighted average unvested share-based payment awards | 2,704 | 2,688 | 2,555 | 2,554 | ||||||||||||
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| |||||||||
Earnings per share | ||||||||||||||||
Basic | $ | 0.63 | $ | 0.21 | $ | 1.10 | $ | 0.43 | ||||||||
Diluted | $ | 0.63 | $ | 0.21 | $ | 1.10 | $ | 0.43 | ||||||||
Only those items having a dilutive impact on our basic earnings per share are included in diluted earnings per share. At June 30, 2011,2012, stock options totaling approximately 0.71.2 million were excluded from the diluted earnings per share as they were not dilutive as compared to 0.80.7 million at June 30, 2010.
Note 54 — Property and Equipment
Property and equipment, at cost, as of June 30, 20112012 and December 31, 20102011 consisted of the following:
| 2011 | 2010 | |||||||
| Drilling equipment and facilities | $ | 9,824,335 | $ | 8,900,266 | ||||
| Construction in progress | 3,918,618 | 3,571,017 | ||||||
| Other | 183,099 | 172,583 | ||||||
| $ | 13,926,052 | $ | 12,643,866 | |||||
| June 30, | December 31, | |||||||
| 2012 | 2011 | |||||||
Drilling equipment and facilities | $ | 12,572,630 | $ | 10,974,943 | ||||
Construction in progress | 3,289,005 | 4,367,750 | ||||||
Other | 193,533 | 197,485 | ||||||
|
|
|
| |||||
| $ | 16,055,168 | $ | 15,540,178 | |||||
|
|
|
| |||||
Capital expenditures, including capitalized interest, totaled $665 million and $1.4 billion and $531 million for the six months ended June 30, 20112012 and 2010,2011, respectively. Capital expenditures for 20112012 consisted of the following:
$972162 million for newbuild construction;
$293327 million for major projects, including $82$34 million in subsea related expenditures and $24 million to upgrade two drillships currently operating in Brazil;
$10899 million for other capitalized expenditures, including major maintenancedrilling equipment replacements and regulatory expendituresupgrades which generally have useful lives ranging from 3 to 5 years; and
$5677 million in capitalized interest.
NOBLE CORPORATION (NOBLE-SWISS) AND SUBSIDIARIES
NOBLE CORPORATION (NOBLE-CAYMAN) AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unless otherwise indicated, dollar amounts in tables are in thousands, except per share data)
Interest is capitalized on construction-in-progress at the weighted average cost of debt outstanding during the period of construction. Capitalized interest was $36 million and $77 million for the three and six months ended June 30, 2012, respectively, as compared to $29 million and $56 million for the three and six months ended June 30, 2011, respectively, as compared2011.
Note 5 — Loss on Impairment
During the second quarter of 2012, we determined that our submersible rig fleet, consisting of two cold stacked rigs, was partially impaired due to $13 millionthe declining market outlook for drilling services for this rig type. We estimated the fair value of the rigs based on the salvage value of the rigs and $26a recent transaction involving a similar unit owned by a peer company (Level 2 fair value measurement). Based on these estimates, we recognized a charge of approximately $13 million for the three and six months ended June 30, 2010, respectively.
2012.
16
During the second quarter of 2012, we received approximately $5 million from the settlement of a claim relating to theNoble David Tinsley, which had experienced a “punch-through” while being positioned on location in 2009. We had originally recorded a $17 million charge during 2009 related to this incident. Additionally, during the second quarter of 2012, we settled an action against certain vendors for damages sustained during Hurricane Ike. We recognized a net gain of approximately $28 million related to this settlement. We also resolved all outstanding matters with Anadarko Petroleum Company (“Anadarko”) related to the previously disclosed force majeure action, Hurricane Ike matters and receivables relating to theNoble Amos Runner during the quarter.
In January 2011, we announced the signing of a Memorandum of Understanding (“MOU”) with Petroleo Brasileiro S.A. (“Petrobras”) regarding operations in Brazil. Under the terms of the MOU, we agreed to substitute theNoble Phoenix, then under contract with Shell in Southeast Asia, for theNoble Muravlenko. In January 2011, Shell agreed to release theNoble Phoenixfrom its contract, which was effective in March 2011. TheNoble Phoenixis undergoing limited contract preparations, after which the unit will mobilize to Brazil. During the second quarter of 2011, Petrobras formally approved the rig substitution. We expect that acceptance of theNoble Phoenixwill take place in the fourth quarter of 2011. In connection with the cancelationcancellation of the contract with Shell on theNoble Phoenix, we recognized a non-cash gain of approximately $52.5 million during the first quarter of 2011, which represented the unamortized fair value of the in-place contract assumed in connection with the Frontierat acquisition.
In February 2011, the outstanding balances of the Bully joint venture credit facilities, which totaled $693 million, were repaid in full and the credit facilities terminated using a portion of the proceeds from our February 2011 debt offering and equity contributions from our joint venture partner. In addition, the related interest rate swaps were settled and terminated concurrent with the repayment and termination of the credit facilities. As a result of these transactions, we recognized a gain of approximately $1.3 million during the first quarter of 2011.
Note 7 — Receivables from Customers
In June 2010, a subsidiary of Frontier, which we acquired in July 2010, entered into a charter contract with a subsidiary of BP PLC (“BP”) for theSeilleanwith a term of a minimum of 100 days. The unit went on hire on July 23, 2010. In October 2010, BP initiated an arbitration proceeding against us claiming the contract wasvoid ab initio,, or never existed, due to a fundamental breach and has made other claims and is demanding that we reimburse the amounts already paid to us under the charter. We believe BP owes us the amounts due under the charter. The charter hascontains a “hell or high water” provision requiring payment, and we believe we have satisfied our obligations under the charter. Outstanding receivables related to this charter totaled $35 million as of June 30, 2011.2012. While we recently received a favorable arbitration ruling, this matter has not been finally resolved and these receivables continue to be classified as long-term and are included in “Other assets” on our Consolidated Balance Sheet at June 30, 2012. We believe that if BP were to be successful in claiming the contractvoid ab initio, we wouldmay have an indemnity claim against the former shareholders of Frontier, and weFrontier. We have put themthe former shareholders of Frontier on notice to that effect.of this potential claim. We can make no assurances as to the outcome of this dispute.
NOBLE CORPORATION (NOBLE-SWISS) AND SUBSIDIARIES
NOBLE CORPORATION (NOBLE-CAYMAN) AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unless otherwise indicated, dollar amounts in tables are in thousands, except per share data)
At June 30, 2011,2012, we had accounts receivablereceivables of approximately $14 million related to theNoble Max Smith, which are being disputed by our customer, Pemex Exploracion y Produccion (“Pemex”). These receivables have been classified as long-term and are included in “Other assets” on our Consolidated Balance Sheet at June 30, 2012. The disputed amount relates to lost revenues due from Pemex for downtime that occurred whenafter our rig was damaged afterwhen one of Pemex’s supply boats collided with our rig. WeIn January 2012, we filed a lawsuit against Pemex in Mexican court seeking recovery of these amounts. While we can make no assurances as to the outcome of this dispute, we believe that we are entitled to these revenues and continue to pursue resolution to this issue.
the disputed amounts.
17
Total debt consisted of the following at June 30, 20112012 and December 31, 2010:
| June 30, | December 31, | |||||||
| 2011 | 2010 | |||||||
Wholly-owned debt instruments: | ||||||||
| 5.875% Senior Notes due 2013 | $ | 299,929 | $ | 299,911 | ||||
| 7.375% Senior Notes due 2014 | 249,574 | 249,506 | ||||||
| 3.45% Senior Notes due 2015 | 350,000 | 350,000 | ||||||
| 3.05% Senior Notes due 2016 | 299,931 | — | ||||||
| 7.50% Senior Notes due 2019 | 201,695 | 201,695 | ||||||
| 4.90% Senior Notes due 2020 | 498,726 | 498,672 | ||||||
| 4.625% Senior Notes due 2021 | 399,458 | — | ||||||
| 6.20% Senior Notes due 2040 | 399,889 | 399,889 | ||||||
| 6.05% Senior Notes due 2041 | 397,568 | — | ||||||
| Credit facilities | 425,000 | 40,000 | ||||||
Consolidated joint venture debt instruments: | ||||||||
| Joint venture credit facilities | $ | — | $ | 691,052 | ||||
| Joint venture partner notes | — | 35,972 | ||||||
| Total Debt | 3,521,770 | 2,766,697 | ||||||
| Less: Current Maturities | — | (80,213 | ) | |||||
| Long-term Debt | $ | 3,521,770 | $ | 2,686,484 | ||||
| June 30, | December 31, | |||||||
| 2012 | 2011 | |||||||
Wholly-owned debt instruments: | ||||||||
5.875% Senior Notes due 2013 | $ | 299,966 | $ | 299,949 | ||||
7.375% Senior Notes due 2014 | 249,722 | 249,647 | ||||||
3.45% Senior Notes due 2015 | 350,000 | 350,000 | ||||||
3.05% Senior Notes due 2016 | 299,945 | 299,938 | ||||||
2.50% Senior Notes due 2017 | 299,836 | — | ||||||
7.50% Senior Notes due 2019 | 201,695 | 201,695 | ||||||
4.90% Senior Notes due 2020 | 498,840 | 498,783 | ||||||
4.625% Senior Notes due 2021 | 399,503 | 399,480 | ||||||
3.95% Senior Notes due 2022 | 399,054 | — | ||||||
6.20% Senior Notes due 2040 | 399,891 | 399,890 | ||||||
6.05% Senior Notes due 2041 | 397,598 | 397,582 | ||||||
5.25% Senior Notes due 2042 | 498,244 | — | ||||||
Credit facilities | 150,000 | 975,000 | ||||||
|
|
|
| |||||
Total long-term debt | $ | 4,444,294 | $ | 4,071,964 | ||||
|
|
|
| |||||
During June 2012, we replaced our $575 million credit facility, which has a capacity of $600 million, matureswas scheduled to mature in 2013, and during the first quarter of 2011, we entered into an additional $600 million revolvingwith a new $1.2 billion credit facility which matures in 2017. We continue to maintain our $600 million credit facility, which matures in 2015, which combined with our new facility, gives us a total borrowing capacity under the two facilities (together referred to as the “Credit Facilities”). of $1.8 billion. The covenants and events of default under the Credit Facilities are substantially similar, and each facility contains a covenant that limits our ratio of debt to total tangible capitalization, as defined in the Credit Facilities, to 0.60. At June 30, 2012, our ratio of debt to total tangible capitalization was 0.35. We were in compliance with all covenants under the Credit Facilities as of June 30, 2011.
The Credit Facilities provide us with the ability to issue up to $300$375 million in letters of credit in the aggregate. While the issuance of letters of credit does not increase our borrowings outstanding under the Credit Facilities, it does reduce the amount available. At June 30, 2011,2012, we had borrowings of $425 million outstanding and no letters of credit outstanding under the Credit Facilities.
In February 2011,2012, we issued, through our indirect wholly-owned subsidiary, Noble Holding International Limited (“NHIL”), $1.1$1.2 billion aggregate principal amount of senior notes in three separate tranches, comprisingwith $300 million of 3.05%2.50% Senior Notes due 2016,2017, $400 million of 4.625%3.95% Senior Notes due 2021,2022, and $400$500 million of 6.05%5.25% Senior Notes due 2041. A portion2042. The weighted average coupon of theall three tranches is 4.13%. The net proceeds of approximately $1.09$1.19 billion, after expenses, waswere primarily used to repay the then outstanding balance on our revolving credit facility and to repay our portion of outstanding debt under the joint venture credit facilities discussed below.
Credit Facilities.
18
NOBLE CORPORATION (NOBLE-CAYMAN) AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unless otherwise indicated, dollar amounts in tables are in thousands, except per share data)
Our 5.875% Senior Notes mature during the second quarter of 2013. We anticipate using availability under our Credit Facilities to repay the outstanding balance; therefore, we have continued to report the balance as long-term on our June 30, 2012 Consolidated Balance Sheet.
The indentures governing our outstanding senior unsecured notes contain covenants that place restrictions on certain merger and consolidation transactions, unless we are the surviving entity or the other party assumes the obligations under the indenture, and on the ability to sell or transfer all or substantially all of our assets. In April 2011,addition, there are restrictions on incurring or assuming certain liens and sale and lease-back transactions. At June 30, 2012, we were in compliance with all our debt covenants. We continually monitor compliance with the Bully joint venture partners entered into a subscription agreement, pursuantcovenants under our Credit Facilities and senior notes and, based on our expectations for 2012, expect to which each partner was issued equityremain in each ofcompliance during 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 capital contribution, totaling $73 million, was eliminated in consolidation.
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.maturities (Level 2 measurement). The following table presents the estimated fair value of our long-term debt as of June 30, 20112012 and December 31, 2010.
| June 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 | $ | 299,929 | $ | 324,745 | $ | 299,911 | $ | 324,281 | ||||||||
| 7.375% Senior Notes due 2014 | 249,574 | 285,298 | 249,506 | 282,078 | ||||||||||||
| 3.45% Senior Notes due 2015 | 350,000 | 362,312 | 350,000 | 357,292 | ||||||||||||
| 3.05% Senior Notes due 2016 | 299,931 | 302,553 | — | — | ||||||||||||
| 7.50% Senior Notes due 2019 | 201,695 | 245,187 | 201,695 | 242,464 | ||||||||||||
| 4.90% Senior Notes due 2020 | 498,726 | 517,933 | 498,672 | 516,192 | ||||||||||||
| 4.625% Senior Notes due 2021 | 399,458 | 405,760 | — | — | ||||||||||||
| 6.20% Senior Notes due 2040 | 399,889 | 421,767 | 399,889 | 423,345 | ||||||||||||
| 6.05% Senior Notes due 2041 | 397,568 | 411,041 | — | — | ||||||||||||
| Credit facilities | 425,000 | 425,000 | 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 | ||||||||||||
| June 30, 2012 | December 31, 2011 | |||||||||||||||
| Carrying | Estimated | Carrying | Estimated | |||||||||||||
| Value | Fair Value | Value | Fair Value | |||||||||||||
Wholly-owned debt instruments | ||||||||||||||||
5.875% Senior Notes due 2013 | $ | 299,966 | $ | 312,362 | $ | 299,949 | $ | 317,586 | ||||||||
7.375% Senior Notes due 2014 | 249,722 | 274,275 | 249,647 | 278,966 | ||||||||||||
3.45% Senior Notes due 2015 | 350,000 | 367,465 | 350,000 | 363,571 | ||||||||||||
3.05% Senior Notes due 2016 | 299,945 | 309,804 | 299,938 | 306,057 | ||||||||||||
2.50% Senior Notes due 2017 | 299,836 | 303,649 | — | — | ||||||||||||
7.50% Senior Notes due 2019 | 201,695 | 248,719 | 201,695 | 248,623 | ||||||||||||
4.90% Senior Notes due 2020 | 498,840 | 538,532 | 498,783 | 531,437 | ||||||||||||
4.625% Senior Notes due 2021 | 399,503 | 424,232 | 399,480 | 416,847 | ||||||||||||
3.95% Senior Notes due 2022 | 399,054 | 404,017 | — | — | ||||||||||||
6.20% Senior Notes due 2040 | 399,891 | 444,713 | 399,890 | 450,017 | ||||||||||||
6.05% Senior Notes due 2041 | 397,598 | 436,205 | 397,582 | 443,308 | ||||||||||||
5.25% Senior Notes due 2042 | 498,244 | 496,435 | — | — | ||||||||||||
Credit Facilities | 150,000 | 150,000 | 975,000 | 975,000 | ||||||||||||
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Total long-term debt | $ | 4,444,294 | $ | 4,710,408 | $ | 4,071,964 | $ | 4,331,412 | ||||||||
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Note 9 — Income Taxes
At December 31, 2010,2011, the reserves for uncertain tax positions totaled $145$118 million (net of related tax benefits of $8 million). At June 30, 2011,2012, the reserves for uncertain tax positions totaled $141$115 million (net of related tax benefits of $9$8 million). If the June 30, 20112012 reserves are not realized, the provision for income taxes would be reduced by $124$115 million and equity would be directly increased by $17 million.
It is possible that our existing liabilities related to our reserve for uncertain tax position amountspositions may increase or decrease in the next twelve months primarily fromdue to the completion of open audits or the expiration of statutes of limitation. However, we cannot reasonably estimate a range of changes in our existing liabilities fordue to various uncertainties, such as the unresolved nature of various audits.
19
NOBLE CORPORATION (NOBLE-CAYMAN) AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unless otherwise indicated, dollar amounts in tables are in thousands, except per share data)
Note 10 — Employee Benefit Plans
Pension costs include the following components:
| Three Months Ended June 30, | ||||||||||||||||
| 2011 | 2010 | |||||||||||||||
| Non-U.S. | U.S. | Non-U.S. | U.S. | |||||||||||||
| Service cost | $ | 1,153 | $ | 2,152 | $ | 1,050 | $ | 1,912 | ||||||||
| Interest cost | 1,440 | 2,143 | 1,204 | 1,957 | ||||||||||||
| Return on plan assets | (1,454 | ) | (2,768 | ) | (1,302 | ) | (2,392 | ) | ||||||||
| Amortization of prior service cost | — | 57 | — | 57 | ||||||||||||
| Amortization of transition obligation | 19 | — | 18 | — | ||||||||||||
| Recognized net actuarial loss | 123 | 843 | 175 | 705 | ||||||||||||
| Net pension expense | $ | 1,281 | $ | 2,427 | $ | 1,145 | $ | 2,239 | ||||||||
| Six Months Ended June 30, | ||||||||||||||||
| 2011 | 2010 | |||||||||||||||
| Non-U.S. | U.S. | Non-U.S. | U.S. | |||||||||||||
| Service cost | $ | 2,246 | $ | 4,304 | $ | 2,166 | $ | 3,824 | ||||||||
| Interest cost | 2,823 | 4,286 | 2,470 | 3,914 | ||||||||||||
| Return on plan assets | (2,857 | ) | (5,536 | ) | (2,668 | ) | (4,784 | ) | ||||||||
| Amortization of prior service cost | — | 113 | — | 114 | ||||||||||||
| Amortization of transition obligation | 37 | — | 36 | — | ||||||||||||
| Recognized net actuarial loss | 243 | 1,687 | 356 | 1,410 | ||||||||||||
| Net pension expense | $ | 2,492 | $ | 4,854 | $ | 2,360 | $ | 4,478 | ||||||||
| Three Months Ended June 30, | ||||||||||||||||
| 2012 | 2011 | |||||||||||||||
| Non-U.S. | U.S. | Non-U.S. | U.S. | |||||||||||||
Service cost | $ | 1,111 | $ | 2,375 | $ | 1,153 | $ | 2,152 | ||||||||
Interest cost | 1,350 | 2,164 | 1,440 | 2,143 | ||||||||||||
Return on plan assets | (1,342 | ) | (2,793 | ) | (1,454 | ) | (2,768 | ) | ||||||||
Amortization of prior service cost | — | 57 | — | 57 | ||||||||||||
Amortization of transition obligation | — | — | 19 | — | ||||||||||||
Recognized net actuarial loss | 201 | 1,793 | 123 | 843 | ||||||||||||
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Net pension expense | $ | 1,320 | $ | 3,596 | $ | 1,281 | $ | 2,427 | ||||||||
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| Six Months Ended June 30, | ||||||||||||||||
| 2012 | 2011 | |||||||||||||||
| Non-U.S. | U.S. | Non-U.S. | U.S. | |||||||||||||
Service cost | $ | 2,234 | $ | 4,806 | $ | 2,246 | $ | 4,304 | ||||||||
Interest cost | 2,708 | 4,360 | 2,823 | 4,286 | ||||||||||||
Return on plan assets | (2,688 | ) | (5,586 | ) | (2,857 | ) | (5,536 | ) | ||||||||
Amortization of prior service cost | — | 114 | — | 113 | ||||||||||||
Amortization of transition obligation | — | — | 37 | — | ||||||||||||
Recognized net actuarial loss | 401 | 3,678 | 243 | 1,687 | ||||||||||||
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Net pension expense | $ | 2,655 | $ | 7,372 | $ | 2,492 | $ | 4,854 | ||||||||
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During the three and six months ended June 30, 2011 and 2010,2012, we made contributions to our pension plans totaling $2$6 million and $3$10 million, respectively. We expect the funding to our non-U.S. and U.S. plans in 2011,2012, subject to applicable law, to be approximately $10$21 million.
Note 11 — Derivative Instruments and Hedging Activities
We periodically enter into derivative instruments to manage our exposure to fluctuations in interest rates and foreign currency exchange rates. We have documented policies and procedures to monitor and control the use of derivative instruments. We do not engage in derivative transactions for speculative or trading purposes, nor wereare we a party to leveraged derivatives. During the period,six months ended June 30, 2011, we maintained certain foreign exchangecurrency forward contracts that did not qualify under the Financial Accounting Standards Board (“FASB”) standards for hedge accounting treatment and therefore, changes in fair values were recognized as either income or loss in our consolidated income statement.
For foreign currency forward contracts, hedge effectiveness is evaluated at inception based on the matching of critical terms between derivative contracts and the hedged item. For interest rate swaps, we evaluate all material terms between the swap and the underlying debt obligation, known in FASB standards as the “long-haul method.” Any change in fair value resulting from ineffectiveness is recognized immediately in earnings.
20
Our North Sea and Brazil operations have a significant amount of their cash operating expenses payable in local currencies. To limit the potential risk of currency fluctuations, we typically maintainhave historically maintained short-term forward contracts settling monthly in their respective local currencies. The forward contract settlements in the remainder of 2011 represent approximately 52 percent of these forecasted local currency requirements. The notional amount of the forward contracts outstanding, expressed in U.S. Dollars, was approximately $113 million atAt June 30, 2011. Total unrealized gains related to these forward contracts were $4 million as of June 30, 2011 and were recorded as part of “Accumulated other comprehensive loss” (“AOCL”).
NOBLE CORPORATION (NOBLE-SWISS) AND SUBSIDIARIES
NOBLE CORPORATION (NOBLE-CAYMAN) AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unless otherwise indicated, dollar amounts in interest rates. In February 2011, the outstanding balances of the joint venture credit facilities and the related interest rate swaps were settled and terminated. As a result of these transactions we recognized a gain of $1 million during the six months ended June 30, 2011.
The balance of the net unrealized gain/(loss) related to our cash flow hedges included in AOCL“Accumulated other comprehensive loss” (“AOCL”) and related activity is as follows:
| Three Months Ended | Six Months Ended | |||||||||||||||
| June 30, | June 30, | |||||||||||||||
| 2011 | 2010 | 2011 | 2010 | |||||||||||||
| Net unrealized gain at beginning of period | $ | 1,766 | $ | (1,508 | ) | $ | 1,970 | $ | 417 | |||||||
| Activity during period: | ||||||||||||||||
| Settlement of foreign currency forward contracts during the period | (801 | ) | 617 | (1,382 | ) | (356 | ) | |||||||||
| Settlement of interest rate swaps during the period | — | — | (366 | ) | — | |||||||||||
| Net unrealized gain/(loss) on outstanding foreign currency forward contracts | 3,152 | (1,626 | ) | 3,895 | (2,578 | ) | ||||||||||
| Net unrealized gain/(loss) at end of period | $ | 4,117 | $ | (2,517 | ) | $ | 4,117 | $ | (2,517 | ) | ||||||
| Three Months Ended | Six Months Ended | |||||||||||||||
| June 30, | June 30, | |||||||||||||||
| 2012 | 2011 | 2012 | 2011 | |||||||||||||
Net unrealized gain/(loss) at beginning of period | $ | (644 | ) | $ | 1,766 | $ | (3,061 | ) | $ | 1,970 | ||||||
Activity during period: | ||||||||||||||||
Settlement of foreign currency forward contracts during the period | 644 | (801 | ) | 3,061 | (1,382 | ) | ||||||||||
Settlement of interest rate swaps during the period | — | — | — | (366 | ) | |||||||||||
Net unrealized gain on outstanding foreign currency forward contracts | — | 3,152 | — | 3,895 | ||||||||||||
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Net unrealized gain/(loss) at end of period | $ | — | $ | 4,117 | $ | — | $ | 4,117 | ||||||||
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21
The following tables, together with Note 12, summarize the financial statement presentation and fair value of our derivative positions as of June 30, 20112012 and December 31, 2010:
| Estimated fair value | ||||||||||||
| Balance sheet | June 30, | December 31, | ||||||||||
| classification | 2011 | 2010 | ||||||||||
Asset derivatives | ||||||||||||
| Cash flow hedges | ||||||||||||
| Short-term foreign currency forward contracts | Other current assets | $ | 4,260 | $ | 2,015 | |||||||
| Fair value hedges | ||||||||||||
| Short-term foreign currency forward contracts | Other current liabilities | 51 | — | |||||||||
| 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 | $ | 143 | $ | 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 | |||||||||
| Estimated fair value | ||||||||||||
| Balance sheet classification | June 30, 2012 | December 31, 2011 | ||||||||||
Liability derivatives | ||||||||||||
Cash flow hedges | ||||||||||||
Short-term foreign currency forward contracts | Other current liabilities | $ | — | $ | 3,061 | |||||||
To supplement the fair value disclosures in Note 12, the following summarizes the recognized gains and losses of cash flow hedges and non-designated derivatives through AOCL or through “other income” for the three months ended June 30, 20112012 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 | $ | 3,152 | $ | (1,626 | ) | $ | 801 | $ | (617 | ) | $ | — | $ | — | ||||||||||
| Gain/(loss) recognized through AOCL | Gain/(loss) reclassified from AOCL to “other income” | Gain/(loss) recognized through “other income” | ||||||||||||||||||||||
| 2012 | 2011 | 2012 | 2011 | 2012 | 2011 | |||||||||||||||||||
Cash flow hedges | ||||||||||||||||||||||||
Foreign currency forward contracts | $ | — | $ | 3,152 | $ | (644 | ) | $ | 801 | $ | — | $ | — | |||||||||||
22
NOBLE CORPORATION (NOBLE-CAYMAN) AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unless otherwise indicated, dollar amounts in tables are in thousands, except per share data)
To supplement the fair value disclosures in Note 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 six months ended June 30, 20112012 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 | $ | 3,895 | $ | (2,578 | ) | $ | 1,382 | $ | 356 | $ | — | $ | — | |||||||||||
Non-designated derivatives | ||||||||||||||||||||||||
| Foreign currency forward contracts | — | — | — | — | (546 | ) | — | |||||||||||||||||
| Gain/(loss) recognized through AOCL | Gain/(loss) reclassified from AOCL to “other income” | Gain/(loss) recognized through “other income” | ||||||||||||||||||||||
| 2012 | 2011 | 2012 | 2011 | 2012 | 2011 | |||||||||||||||||||
Cash flow hedges | ||||||||||||||||||||||||
Foreign currency forward contracts | $ | — | $ | 3,895 | $ | (3,061 | ) | $ | 1,382 | $ | — | $ | — | |||||||||||
Non-designated derivatives | ||||||||||||||||||||||||
Foreign currency forward contracts | $ | — | $ | — | $ | — | $ | — | $ | — | $ | (546 | ) | |||||||||||
Note 12 — Fair Value of Financial Instruments
The following table presents the carrying amount and estimated fair value of our financial instruments recognized at fair value on a recurring basis:
| June 30, 2011 | December 31, 2010 | |||||||||||||||||||||||
| Estimated Fair Value Measurements | ||||||||||||||||||||||||
| Quoted | Significant | |||||||||||||||||||||||
| Prices in | Other | Significant | ||||||||||||||||||||||
| Active | Observable | Unobservable | ||||||||||||||||||||||
| Carrying | Markets | Inputs | Inputs | Carrying | Estimated | |||||||||||||||||||
| Amount | (Level 1) | (Level 2) | (Level 3) | Amount | Fair Value | |||||||||||||||||||
Assets - | ||||||||||||||||||||||||
| Marketable securities | $ | 7,178 | $ | 7,178 | $ | — | $ | — | $ | 6,854 | $ | 6,854 | ||||||||||||
| Foreign currency forward contracts | 4,311 | — | 4,311 | — | 4,618 | 4,618 | ||||||||||||||||||
| Firm commitment | — | — | — | — | 3,306 | 3,306 | ||||||||||||||||||
Liabilities - | ||||||||||||||||||||||||
| Interest rate swaps | $ | — | $ | — | $ | — | $ | — | $ | 26,590 | $ | 26,590 | ||||||||||||
| Foreign currency forward contracts | 143 | — | 143 | — | 3,718 | 3,718 | ||||||||||||||||||
| Firm commitment | 51 | — | 51 | — | — | — | ||||||||||||||||||
| June 30, 2012 | December 31, 2011 | |||||||||||||||||||||||
| Estimated Fair Value Measurements | ||||||||||||||||||||||||
| Quoted | Significant | |||||||||||||||||||||||
| Prices in | Other | Significant | ||||||||||||||||||||||
| Active | Observable | Unobservable | ||||||||||||||||||||||
| Carrying | Markets | Inputs | Inputs | Carrying | Estimated | |||||||||||||||||||
| Amount | (Level 1) | (Level 2) | (Level 3) | Amount | Fair Value | |||||||||||||||||||
Assets - | ||||||||||||||||||||||||
Marketable securities | $ | 5,247 | $ | 5,247 | $ | — | $ | — | $ | 4,701 | $ | 4,701 | ||||||||||||
Liabilities - | ||||||||||||||||||||||||
Foreign currency forward contracts | $ | — | $ | — | $ | — | $ | — | $ | 3,061 | $ | 3,061 | ||||||||||||
At the time of valuation, the derivative instruments have beenwere valued using actively quoted prices and quotes obtained from the counterparties to the derivative instruments. Our cash and cash equivalents, accounts receivable and accounts payable are by their nature short-term. As a result, the carrying values included in the accompanying Consolidated Balance Sheets approximate fair value.
23
TheNoble Homer Ferringtonis was under contract with a subsidiary of ExxonMobil Corporation (“ExxonMobil”), whowhich entered into an assignment agreement with BP for a two well farm-outfarmout of the rig in Libya after successfully drilling two wells with the rig for ExxonMobil. In August 2010, BP attempted to terminate the assignment agreement claiming that the rig was not in the required condition. ExxonMobil has informed us that we must look to BP for payment of the dayrate during the assignment period. In August 2010, we initiated arbitration proceedings under the drilling contract against both BP and ExxonMobil. We do not believe BP had the right to terminate the assignment agreement and believe the rig continued to bewas fully ready to operate under the drilling contract. The rig has been operatingoperated under farm-outfarmout arrangements sincefrom March 2011.2011 to the conclusion of the contract in the second quarter of 2012. We believe we are owed dayrate by either or both of these clients. The operating dayrate was approximately $538,000 per day for the work in Libya. We are proceeding with theThe arbitration process is proceeding, and we intend to vigorously pursue these claims. As a result of the uncertainties noted above, we have not recognized any revenue during the assignment period and the matter could have a material positive effect on our results of operations or cash flows in the period the matter is resolved.
NOBLE CORPORATION (NOBLE-SWISS) AND SUBSIDIARIES
NOBLE CORPORATION (NOBLE-CAYMAN) AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unless otherwise indicated, dollar amounts in tables are in thousands, except per share data)
In August 2007, we entered into a drilling contract with Marathon Oil Company (“Marathon”) for 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 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 of termination.years. No revenue has been recognized under this contract. We have contracted the rig for much of the original term with other customers. In March 2011, we filed suit in Texas state district courtState District Court against Marathon seeking damages for its actions, and the suit is proceeding. We cannot provide assurance as to the outcome of this lawsuit.
We are from time to time a party to various lawsuits that are incidental to our operations in which the claimants seek an unspecified amount of monetary damages for personal injury, including injuries purportedly resulting from exposure to asbestos on drilling rigs and associated facilities. At June 30, 2012, there were 26 asbestos related lawsuits in which we are one of many defendants. These lawsuits have been filed in the United States in the states of Louisiana, Mississippi and Texas. We intend to vigorously defend against the litigation. We do not believe the ultimate resolution of these matters will have a material adverse effect on our financial position, results of operations or cash flows.
We are a defendant in certain claims and litigation arising out of operations in the ordinary course of business, including certain disputes with customers over receivables discussed in Note 7, the resolution of which, in the opinion of management, will not be material to our financial position, results of operations or cash flows. There is inherent risk in any litigation or dispute and no assurance can be given as to the outcome of these claims.
We operate in a number of countries throughout the world and our income tax returns filed in those jurisdictions are subject to review and examination by tax authorities within those jurisdictions. The U.S. Internal Revenue Service (“IRS”) has completed its audit examination of our 2008 U.S. tax return and proposed adjustments and deficiencies with respect to certain items that were reported by us for the 2008 tax year. We believe that we have accurately reported all amounts in our 2008 tax return, and have filed protests with the IRS Office of Appeals contesting the examination team’s proposed adjustments. We intend to vigorously defend our reported positions. Our 2009 tax return is under audit, and we expect to receive additional Information Document Requests in the coming months. In addition, a U.S. subsidiary of Frontier is also under audit by the IRS for its 2007 and 2008 tax returns. Furthermore, we are currently contesting several non-U.S. tax assessments and may contest future assessments when we disagree with those assessments based on the technical merits of the positions established at the time of the filing of the tax return. We believe the ultimate resolution of the outstanding assessments, for which we have not made any accrual, will not have a material adverse effect on our consolidated financial statements. We recognize uncertain tax positions that we believe have a greater than 50 percent likelihood of being sustained. We cannot predict or provide assurance as to the ultimate outcome of the existing or future assessments.
Our Mexican income tax returns have been examined for the 2002 through 2007 periods and audit claims have been assessed for approximately $297 million (including interest and penalties). During 2011, we received from the Regional Chamber of the Federal Tax Court adverse decisions with respect to approximately $5 million in assessments related to depreciation deductions, which we are appealing. We are also contesting all other assessments in Mexico. Tax authorities in Mexico and other jurisdictions may issue additional assessments or pursue legal actions as a result of tax audits and we cannot predict or provide assurance as to the ultimate outcome of such assessments and legal actions.
Additional audit claims of approximately $75 million attributable to customs and other business taxes have been assessed against us in other jurisdictions. We have contested, or intend to contest, these assessments, including through litigation if necessary, and we believe the ultimate resolution, for which we have not made any accrual, will not have a material adverse effect on our consolidated financial statements.
NOBLE CORPORATION (NOBLE-SWISS) AND SUBSIDIARIES
NOBLE CORPORATION (NOBLE-CAYMAN) AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unless otherwise indicated, dollar amounts in tables are in thousands, except per share data)
We maintain certain insurance coverage against specified marine perils which includes physical damage and loss of hire. Damage caused by hurricanes has negatively impacted the energy insurance market, resulting in more restrictive and expensive coverage for U.S. named windstorm perils. Accordingly, we have elected to significantly reduce the named windstorm insurance on our rigs operating in the U.S. Gulf of Mexico. Presently we insure theNoble Jim Thompson,Noble Amos Runner andNoble Driller for “total loss only” when caused by a named windstorm. Our customer assumes the risk of loss on theNoble Bully I due to a named windstorm event up to $450 million per occurrence pursuant to the terms of the drilling contract relating to such vessel, provided that we are responsible for the first $25 million per occurrence for such named windstorm events. The remaining rigs in the U.S. Gulf of Mexico are self-insured for named windstorm perils. Our rigs located in the Mexico portion of the Gulf of Mexico remain covered by commercial insurance for windstorm damage. In addition, we maintain physical damage deductibles on our rigs ranging from $15 million to $25 million per occurrence, depending on location. The loss of hire coverage applies only to our rigs operating under contract with a dayrate equal to or greater than $200,000 a day and is subject to a 45-day waiting period for each unit and each occurrence.
Although we maintain insurance in the geographic areas in which we operate, pollution, reservoir damage and environmental risks generally are not fully insurable. Our insurance policies and contractual rights to indemnity may not adequately cover our losses or may have exclusions of coverage for some losses. We do not have insurance coverage or rights to indemnity for all risks, including loss of hire insurance on most of the rigs in our fleet. Uninsured exposures may include expatriate activities prohibited by U.S. laws and regulations, radiation hazards, certain loss or damage to property on board our rigs and losses relating to shore-based terrorist acts or strikes. If a significant accident or other event occurs and is not fully covered by insurance or contractual indemnity, it could materially adversely affect our financial position, results of operations or cash flows. Additionally, there can be no assurance that those parties with contractual obligations to indemnify us will necessarily be financially able to indemnify us against all these risks.
In January 2012, we were assessed a fine by the Brazilian government in the amount of R$1.8 million (approximately $900,000) in connection with the inadvertent discharge of drilling fluid from one of our rigs offshore Brazil in September 2011. We have accepted the assessment.
In October 2011, we were assessed a fine by the Brazilian government in the amount of R$238,000 (approximately $120,000) in connection with the inadvertent discharge of drilling fluid from one of our rigs offshore Brazil in November 2010. We have accepted the assessment.
We carry protection and indemnity insurance covering marine third party liability exposures, which also includes coverage for employer’s liability resulting from personal injury to our offshore drilling crews. Our protection and indemnity policy currently has a standard deductible of $10 million per occurrence, with maximum liability coverage of $750 million.
In connection with our capital expenditure program, we had outstanding commitments, including shipyard and purchase commitments of approximately $3.1 billion at June 30, 2012.
We have entered into agreements with certain of our executive officers, as well as certain other employees. These agreements become effective upon a change of control of Noble-Swiss (within the meaning set forth in the agreements) or a termination of employment in connection with or in anticipation of a change of control, and remain effective for three years thereafter. These agreements provide for compensation and certain other benefits under such circumstances.
NOBLE CORPORATION (NOBLE-SWISS) AND SUBSIDIARIES
NOBLE CORPORATION (NOBLE-CAYMAN) AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unless otherwise indicated, dollar amounts in tables are in thousands, except per share data)
Nigerian Operations
During the fourth quarter of 2007, our Nigerian subsidiary received letters from the Nigerian Maritime Administration and Safety Agency (“NIMASA”) seeking to collect a two percent surcharge on contract amounts under contracts performed by “vessels,” within the meaning of Nigeria’s cabotage laws, engaged in the Nigerian coastal shipping trade. Although we do not believe that these laws apply to our ownership of drilling units, NIMASA is seeking to apply a provision of the Nigerian cabotage laws (which became effective on May 1, 2004) to our offshore drilling units by considering these units to be “vessels” within the meaning of those laws and therefore subject to the surcharge, which is imposed only upon “vessels.” Our offshore drilling units are not engaged in the Nigerian coastal shipping trade and are not in our view “vessels” within the meaning of Nigeria’s cabotage laws. In January 2008, we filed an originating summons against NIMASA and the Minister of Transportation in the Federal High Court of Lagos, Nigeria seeking, among other things, a declaration that our drilling operations do not constitute “coastal trade” or “cabotage” within the meaning of Nigeria’s cabotage laws and that our offshore drilling units are not “vessels” within the meaning of those laws. In February 2009, NIMASA filed suit against us in the Federal High Court of Nigeria seeking collection of the cabotage surcharge. In August 2009, the court issued a favorable ruling in response to our originating summons stating that drilling operations do not fall within the cabotage laws and that drilling rigs are not vessels for purposes of those laws. The court also issued an injunction against the defendants prohibiting their interference with our drilling rigs or drilling operations. NIMASA has appealed the court’s ruling, although the court dismissed NIMASA’s lawsuit filed against us in February 2009. We intend to take all further appropriate legal action to resist the application of Nigeria’s cabotage laws to our drilling units. The outcome of any such legal action and the extent to which we may ultimately be responsible for the surcharge is uncertain. If it is ultimately determined that offshore drilling units constitute vessels within the meaning of the Nigerian cabotage laws, we may be required to pay the surcharge and comply with other aspects of the Nigerian cabotage laws, which could adversely affect our operations in Nigerian waters and require us to incur additional costs of compliance.
24
As previously disclosed, in Nigeria, which could also affect our ability to operate there and our profitability earned from Nigeria.
25
26
27
We report our contract drilling operations as a single reportable segment: Contract Drilling Services. The consolidation of our contract drilling operations into one reportable segment is attributable to how we manage our business, and the fact that all of our drilling fleet is dependent upon the worldwide oil and gas industry. The mobile offshore drilling units comprising our offshore rig fleet operate in a single, global market for contract drilling services and are often redeployed globally in response to changing demands of our customers, which consist largely of major non-U.S. and government owned/controlled oil and gas companies throughout the world. Our contract drilling servicesContract Drilling Services segment currently conducts contract drilling operations principally in the Middle East, India, the U.S. Gulf of Mexico, Mexico, the Mediterranean,Brazil, the North Sea, Brazil,the Mediterranean, West Africa, the Middle East, India and the Asian Pacific.
NOBLE CORPORATION (NOBLE-SWISS) AND SUBSIDIARIES
NOBLE CORPORATION (NOBLE-CAYMAN) AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unless otherwise indicated, dollar amounts in tables are in thousands, except per share data)
We evaluate the performance of our operating segment primarily based on operating revenues and net income. Summarized financial information of our reportable segments for the three and six months ended June 30, 2012 and 2011 for Noble-Swiss and 2010 isNoble-Cayman are shown in the following table. The “Other” column includes results of labor contract drilling services in Canada and Alaska, as well as corporate related items.
| Three Months Ended June 30, | ||||||||||||||||||||||||
| 2011 | 2010 | |||||||||||||||||||||||
| Contract | Contract | |||||||||||||||||||||||
| Drilling | Drilling | |||||||||||||||||||||||
| Services | Other | Total | Services | Other | Total | |||||||||||||||||||
| Revenues from external customers | $ | 612,845 | $ | 15,152 | $ | 627,997 | $ | 701,102 | $ | 8,820 | $ | 709,922 | ||||||||||||
| Depreciation and amortization | 159,843 | 3,276 | 163,119 | 123,379 | 2,848 | 126,227 | ||||||||||||||||||
| Segment operating income/ (loss) | 77,309 | 1,736 | 79,045 | 268,941 | (394 | ) | 268,547 | |||||||||||||||||
| Interest expense, net of amount capitalized | (683 | ) | (14,146 | ) | (14,829 | ) | (235 | ) | (275 | ) | (510 | ) | ||||||||||||
| Income tax (provision)/ benefit | (11,418 | ) | 1,910 | (9,508 | ) | (51,544 | ) | 426 | (51,118 | ) | ||||||||||||||
| Segment profit/ (loss) | 64,939 | (10,856 | ) | 54,083 | 219,267 | (1,342 | ) | 217,925 | ||||||||||||||||
| Total assets (at end of period) | 12,046,536 | 391,702 | 12,438,238 | 7,761,724 | 1,141,778 | 8,903,502 | ||||||||||||||||||
| Capital expenditures | 810,723 | 3,736 | 814,459 | 181,505 | 11,132 | 192,637 | ||||||||||||||||||
| Six Months Ended June 30, | ||||||||||||||||||||||||
| 2011 | 2010 | |||||||||||||||||||||||
| Contract | Contract | |||||||||||||||||||||||
| Drilling | Drilling | |||||||||||||||||||||||
| Services | Other | Total | Services | Other | Total | |||||||||||||||||||
| Revenues from external customers | $ | 1,177,499 | $ | 29,386 | $ | 1,206,885 | $ | 1,533,262 | $ | 17,511 | $ | 1,550,773 | ||||||||||||
| Depreciation and amortization | 314,731 | 6,510 | 321,241 | 236,553 | 5,531 | 242,084 | ||||||||||||||||||
| Segment operating income/ (loss) | 162,025 | 3,284 | 165,309 | 692,885 | (1,377 | ) | 691,508 | |||||||||||||||||
| Interest expense, net of amount capitalized | (1,768 | ) | (32,102 | ) | (33,870 | ) | (293 | ) | (682 | ) | (975 | ) | ||||||||||||
| Income tax (provision)/ benefit | (30,281 | ) | 5,414 | (24,867 | ) | (107,136 | ) | 622 | (106,514 | ) | ||||||||||||||
| Segment profit/ (loss) | 131,819 | (23,241 | ) | 108,578 | 591,304 | (2,653 | ) | 588,651 | ||||||||||||||||
| Total assets (at end of period) | 12,046,536 | 391,702 | 12,438,238 | 7,761,724 | 1,141,778 | 8,903,502 | ||||||||||||||||||
| Capital expenditures | 1,423,711 | 5,072 | 1,428,783 | 517,088 | 14,313 | 531,401 | ||||||||||||||||||
| Noble-Swiss | ||||||||||||||||||||||||
| Three Months Ended June 30, | ||||||||||||||||||||||||
| 2012 | 2011 | |||||||||||||||||||||||
| Contract | Contract | |||||||||||||||||||||||
| Drilling | Drilling | |||||||||||||||||||||||
| Services | Other | Total | Services | Other | Total | |||||||||||||||||||
Revenues from external customers | $ | 878,372 | $ | 20,551 | $ | 898,923 | $ | 612,845 | $ | 15,152 | $ | 627,997 | ||||||||||||
Depreciation and amortization | 180,112 | 3,503 | 183,615 | 159,843 | 3,276 | 163,119 | ||||||||||||||||||
Segment operating income / (loss) | 246,161 | (1,666 | ) | 244,495 | 77,309 | 1,736 | 79,045 | |||||||||||||||||
Interest expense, net of amount capitalized | (105 | ) | (20,547 | ) | (20,652 | ) | (683 | ) | (14,146 | ) | (14,829 | ) | ||||||||||||
Income tax (provision) / benefit | (51,098 | ) | 4,742 | (46,356 | ) | (11,418 | ) | 1,910 | (9,508 | ) | ||||||||||||||
Segment profit / (loss) | 178,094 | (18,276 | ) | 159,818 | 64,939 | (10,856 | ) | 54,083 | ||||||||||||||||
Total assets (at end of period) | 13,483,083 | 552,933 | 14,036,016 | 12,046,536 | 391,702 | 12,438,238 | ||||||||||||||||||
28
| Noble-Cayman | ||||||||||||||||||||||||
| Three Months Ended June 30, | ||||||||||||||||||||||||
| 2012 | 2011 | |||||||||||||||||||||||
| Contract | Contract | |||||||||||||||||||||||
| Drilling | Drilling | |||||||||||||||||||||||
| Services | Other | Total | Services | Other | Total | |||||||||||||||||||
Revenues from external customers | $ | 878,372 | $ | 20,551 | $ | 898,923 | $ | 612,845 | $ | 15,152 | $ | 627,997 | ||||||||||||
Depreciation and amortization | 180,112 | 2,991 | 183,103 | 159,843 | 2,793 | 162,636 | ||||||||||||||||||
Segment operating income | 248,065 | 8,783 | 256,848 | 83,833 | 9,209 | 93,042 | ||||||||||||||||||
Interest expense, net of amount capitalized | (105 | ) | (20,547 | ) | (20,652 | ) | (683 | ) | (14,146 | ) | (14,829 | ) | ||||||||||||
Income tax (provision) / benefit | (51,098 | ) | 5,121 | (45,977 | ) | (11,418 | ) | 2,261 | (9,157 | ) | ||||||||||||||
Segment profit / (loss) | 179,998 | (7,028 | ) | 172,970 | 71,463 | (2,645 | ) | 68,818 | ||||||||||||||||
Total assets (at end of period) | 13,483,083 | 514,241 | 13,997,324 | 12,046,536 | 353,149 | 12,399,685 | ||||||||||||||||||
NOBLE CORPORATION (NOBLE-CAYMAN) AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unless otherwise indicated, dollar amounts in tables are in thousands, except per share data)
| Noble-Swiss | ||||||||||||||||||||||||
| Six Months Ended June 30, | ||||||||||||||||||||||||
| 2012 | 2011 | |||||||||||||||||||||||
| Contract | Contract | |||||||||||||||||||||||
| Drilling | Drilling | |||||||||||||||||||||||
| Services | Other | Total | Services | Other | Total | |||||||||||||||||||
Revenues from external customers | $ | 1,659,615 | $ | 36,998 | $ | 1,696,613 | $ | 1,177,499 | $ | 29,386 | $ | 1,206,885 | ||||||||||||
Depreciation and amortization | 348,060 | 6,632 | 354,692 | 314,731 | 6,510 | 321,241 | ||||||||||||||||||
Segment operating income | 386,428 | 1,710 | 388,138 | 162,025 | 3,284 | 165,309 | ||||||||||||||||||
Interest expense, net of amount capitalized | (194 | ) | (30,954 | ) | (31,148 | ) | (1,768 | ) | (32,102 | ) | (33,870 | ) | ||||||||||||
Income tax (provision) / benefit | (73,698 | ) | 5,753 | (67,945 | ) | (30,281 | ) | 5,414 | (24,867 | ) | ||||||||||||||
Segment profit / (loss) | 303,578 | (23,585 | ) | 279,993 | 131,819 | (23,241 | ) | 108,578 | ||||||||||||||||
Total assets (at end of period) | 13,483,083 | 552,933 | 14,036,016 | 12,046,536 | 391,702 | 12,438,238 | ||||||||||||||||||
| Noble-Cayman | ||||||||||||||||||||||||
| Six Months Ended June 30, | ||||||||||||||||||||||||
| 2012 | 2011 | |||||||||||||||||||||||
| Contract | Contract | |||||||||||||||||||||||
| Drilling | Drilling | |||||||||||||||||||||||
| Services | Other | Total | Services | Other | Total | |||||||||||||||||||
Revenues from external customers | $ | 1,659,615 | $ | 36,998 | $ | 1,696,613 | $ | 1,177,499 | $ | 29,386 | $ | 1,206,885 | ||||||||||||
Depreciation and amortization | 348,060 | 5,616 | 353,676 | 314,731 | 5,560 | 320,291 | ||||||||||||||||||
Segment operating income | 393,197 | 21,779 | 414,976 | 174,080 | 18,408 | 192,488 | ||||||||||||||||||
Interest expense, net of amount capitalized | (194 | ) | (30,954 | ) | (31,148 | ) | (1,768 | ) | (32,102 | ) | (33,870 | ) | ||||||||||||
Income tax (provision) / benefit | (73,698 | ) | 6,510 | (67,188 | ) | (30,281 | ) | 6,099 | (24,182 | ) | ||||||||||||||
Segment profit / (loss) | 310,347 | (2,725 | ) | 307,622 | 143,874 | (7,396 | ) | 136,478 | ||||||||||||||||
Total assets (at end of period) | 13,483,083 | 514,241 | 13,997,324 | 12,046,536 | 353,149 | 12,399,685 | ||||||||||||||||||
Note 15 — Accounting Pronouncements
In May 2011, the FASB issued Accounting Standards Update (“ASU”) No. 2011-04, which amends FASB Accounting Standards Codification (“ASC”) Topic 820, “Fair Value Measurements and Disclosures.” This amended guidance that modifiedclarifies 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, theOur adoption of this guidance shoulddid not have a material impact on our financial condition, results of operations, cash flows or financial disclosures.
In June 2011, the FASB issued guidance thatASU No. 2011-05, which amends ASC Topic 220, “Comprehensive Income.” This ASU allows an entity to present the total of comprehensive income, the components of net income, and the components of other comprehensive income either in a single continuous statement of comprehensive income or in two separate but consecutive statements. The amendment no longer allows an entity to show changes to other comprehensive income solely through the statement of equity. For publicly traded entities, the guidance is effective for annual and interim reporting periods beginning on or after December 15, 2011. While we are still evaluating this guidance, theOur adoption of this guidance willdid not have a material impact on our financial condition, results of operations, cash flows or financial disclosures.
29
NOBLE CORPORATION (NOBLE-CAYMAN) AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unless otherwise indicated, dollar amounts in tables are in thousands, except per share data)
Note 16 — Net Change in Other Assets and Liabilities
The net effect of changes in other assets and liabilities on cash flows from operating activities is as follows:
| Noble-Swiss | Noble-Cayman | |||||||||||||||
| Six months ended | Six months ended | |||||||||||||||
| June 30, | June 30, | |||||||||||||||
| 2011 | 2010 | 2011 | 2010 | |||||||||||||
| Accounts receivable | $ | (122,605 | ) | $ | 176,106 | $ | (122,572 | ) | $ | 176,106 | ||||||
| Other current assets | (55,141 | ) | (43,555 | ) | (46,895 | ) | (43,136 | ) | ||||||||
| Other assets | (776 | ) | (15,751 | ) | (3,253 | ) | (15,865 | ) | ||||||||
| Accounts payable | (17,020 | ) | 19,898 | (17,050 | ) | 15,470 | ||||||||||
| Other current liabilities | 1,544 | 10,340 | (11,283 | ) | 9,683 | |||||||||||
| Other liabilities | 16,030 | 32,208 | 16,004 | 32,412 | ||||||||||||
| $ | (177,968 | ) | $ | 179,246 | $ | (185,049 | ) | $ | 174,670 | |||||||
| Noble-Swiss | Noble-Cayman | |||||||||||||||
| Six months ended | Six months ended | |||||||||||||||
| June 30, | June 30, | |||||||||||||||
| 2012 | 2011 | 2012 | 2011 | |||||||||||||
Accounts receivable | $ | (87,244 | ) | $ | (122,605 | ) | $ | (87,244 | ) | $ | (122,572 | ) | ||||
Other current assets | (82,590 | ) | (55,141 | ) | (85,357 | ) | (46,895 | ) | ||||||||
Other assets | (10,452 | ) | (13,344 | ) | (10,454 | ) | (15,821 | ) | ||||||||
Accounts payable | 9,776 | (17,020 | ) | 8,804 | (17,050 | ) | ||||||||||
Other current liabilities | (2,282 | ) | 1,544 | (1,997 | ) | (11,283 | ) | |||||||||
Other liabilities | 33,608 | 16,030 | 33,608 | 16,004 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
| $ | (139,184 | ) | $ | (190,536 | ) | $ | (142,640 | ) | $ | (197,617 | ) | |||||
|
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| |||||||||
Note 17 — Guarantees of Registered Securities
Noble-Cayman, and Noble Holding (U.S.) Corporation (“NHC”), a wholly-owned subsidiaryor one or more subsidiaries of Noble-Cayman, are full and unconditional guarantorsa co-issuer or guarantor or otherwise obligated as of NDC’s 7.50% Senior Notes due 2019 which had an outstanding principal balance at June 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.
| Issuer | ||||
Notes | (Co-Issuer(s)) | Guarantor(s) | ||
$300 million 5.875% Senior Notes due 2013 | Noble-Cayman | Noble Drilling Corporation (“NDC”) | ||
| NHIL | ||||
$250 million 7.375% Senior Notes due 2014 | NHIL | Noble-Cayman | ||
$350 million 3.45% Senior Notes due 2015 | NHIL | Noble-Cayman | ||
$300 million 3.05% Senior Notes due 2016 | NHIL | Noble-Cayman | ||
$300 million 2.50% Senior Notes due 2017 | NHIL | Noble-Cayman | ||
$202 million 7.50% Senior Notes due 2019 | NDC | Noble-Cayman | ||
Noble Drilling Services 6 LLC (“NDS6”) | Noble Holding (U.S.) Corporation (“NHC”) | |||
| Noble Drilling Holding LLC (“NDH”) | ||||
$500 million 4.90% Senior Notes due 2020 | NHIL | Noble-Cayman | ||
$400 million 4.625% Senior Notes due 2021 | NHIL | Noble-Cayman | ||
$400 million 3.95% Senior Notes due 2022 | NHIL | Noble-Cayman | ||
$400 million 6.20% Senior Notes due 2040 | NHIL | Noble-Cayman | ||
$400 million 6.05% Senior Notes due 2041 | NHIL | Noble-Cayman | ||
$500 million 5.25% Senior Notes due 2042 | NHIL | Noble-Cayman |
30
| 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 | $ | 41 | $ | 291 | $ | — | $ | — | $ | — | $ | 224,585 | $ | — | $ | 224,917 | ||||||||||||||||
| Accounts receivable | — | 12,143 | 3,115 | — | — | 494,728 | — | 509,986 | ||||||||||||||||||||||||
| Prepaid expenses | — | 357 | 11 | — | — | 64,309 | — | 64,677 | ||||||||||||||||||||||||
| Short-term notes receivable from affiliates | — | 119,476 | — | — | — | 100,500 | (219,976 | ) | — | |||||||||||||||||||||||
| Accounts receivable from affiliates | 1,115,706 | — | 799,688 | 1,276,324 | — | 4,371,467 | (7,563,185 | ) | — | |||||||||||||||||||||||
| Other current assets | 10,396 | 99,322 | 240 | 18,849 | 13,459 | 308,015 | (281,431 | ) | 168,850 | |||||||||||||||||||||||
| Total current assets | 1,126,143 | 231,589 | 803,054 | 1,295,173 | 13,459 | 5,563,604 | (8,064,592 | ) | 968,430 | |||||||||||||||||||||||
| Property and equipment | ||||||||||||||||||||||||||||||||
| Drilling equipment, facilities and other | — | 2,144,664 | 71,297 | — | — | 11,676,266 | — | 13,892,227 | ||||||||||||||||||||||||
| Accumulated depreciation | — | (195,924 | ) | (51,632 | ) | — | — | (2,611,671 | ) | — | (2,859,227 | ) | ||||||||||||||||||||
| Total property and equipment, net | — | 1,948,740 | 19,665 | — | — | 9,064,595 | — | 11,033,000 | ||||||||||||||||||||||||
| Notes receivable from affiliates | 3,487,062 | 675,000 | — | 1,239,600 | 572,107 | 2,781,400 | (8,755,169 | ) | — | |||||||||||||||||||||||
| Investments in affiliates | 7,011,232 | 8,853,976 | 3,510,031 | 6,215,619 | 1,993,985 | — | (27,584,843 | ) | — | |||||||||||||||||||||||
| Other assets | 4,090 | 10,302 | 2,081 | 19,691 | 941 | 361,150 | — | 398,255 | ||||||||||||||||||||||||
Total assets | $ | 11,628,527 | $ | 11,719,607 | $ | 4,334,831 | $ | 8,770,083 | $ | 2,580,492 | $ | 17,770,749 | $ | (44,404,604 | ) | $ | 12,399,685 | |||||||||||||||
LIABILITIES AND EQUITY | ||||||||||||||||||||||||||||||||
| Current liabilities | ||||||||||||||||||||||||||||||||
| Short-term notes payables from affiliates | $ | 50,500 | $ | 50,000 | $ | — | $ | — | $ | — | $ | 119,476 | $ | (219,976 | ) | $ | — | |||||||||||||||
| Accounts payable and accrued liabilities | 1,767 | 21,747 | 9,818 | 52,149 | 4,412 | 523,479 | — | 613,372 | ||||||||||||||||||||||||
| Accounts payable to affiliates | 1,864,559 | 3,590,781 | 24,770 | 86,840 | 20,058 | 2,257,608 | (7,844,616 | ) | — | |||||||||||||||||||||||
| Total current liabilities | 1,916,826 | 3,662,528 | 34,588 | 138,989 | 24,470 | 2,900,563 | (8,064,592 | ) | 613,372 | |||||||||||||||||||||||
| Long-term debt | 724,929 | — | — | 2,595,146 | 201,695 | — | 3,521,770 | |||||||||||||||||||||||||
| Notes payable to affiliates | 1,770,500 | 1,147,500 | 85,000 | 975,000 | 811,000 | 3,966,169 | (8,755,169 | ) | — | |||||||||||||||||||||||
| Other liabilities | 19,929 | 46,253 | 25,796 | — | — | 377,566 | 469,544 | |||||||||||||||||||||||||
Total liabilities | 4,432,184 | 4,856,281 | 145,384 | 3,709,135 | 1,037,165 | 7,244,298 | (16,819,761 | ) | 4,604,686 | |||||||||||||||||||||||
| Commitments and contingencies | ||||||||||||||||||||||||||||||||
Equity | 7,196,343 | 6,863,326 | 4,189,447 | 5,060,948 | 1,543,327 | 10,526,451 | (27,584,843 | ) | 7,794,999 | |||||||||||||||||||||||
Total liabilities and equity | $ | 11,628,527 | $ | 11,719,607 | $ | 4,334,831 | $ | 8,770,083 | $ | 2,580,492 | $ | 17,770,749 | $ | (44,404,604 | ) | $ | 12,399,685 | |||||||||||||||
31
CONDENSED CONSOLIDATING BALANCE SHEETDecember 31, 2010
June 30, 2012
(in thousands)
| 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 | 607,207 | — | 751,623 | 199,235 | 1,958 | 3,659,570 | (5,219,593 | ) | — | |||||||||||||||||||||||
| Other current assets | 7,057 | 89,736 | 240 | 19,980 | 9,416 | 276,194 | (251,736 | ) | 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 | ||||||||||||||||||||||||||||||||
Total 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 | |||||||||||||||
32
| Other | ||||||||||||||||||||||||||||||||
| Non-guarantor | ||||||||||||||||||||||||||||||||
| Noble- | NHC and NDH | Subsidiaries | Consolidating | |||||||||||||||||||||||||||||
| Cayman | Combined | NDC | NHIL | NDS6 | of Noble | Adjustments | Total | |||||||||||||||||||||||||
ASSETS | ||||||||||||||||||||||||||||||||
Current assets | ||||||||||||||||||||||||||||||||
Cash and cash equivalents | $ | 95 | $ | 331 | $ | — | $ | 4 | $ | — | $ | 267,440 | $ | — | $ | 267,870 | ||||||||||||||||
Accounts receivable | — | 15,595 | 3,325 | — | — | 674,613 | — | 693,533 | ||||||||||||||||||||||||
Taxes receivable | — | 4,566 | — | — | — | 93,179 | — | 97,745 | ||||||||||||||||||||||||
Prepaid expenses | — | 502 | 9 | — | — | 76,119 | — | 76,630 | ||||||||||||||||||||||||
Short-term notes receivable from affiliates | — | 119,476 | — | — | — | 234,992 | (354,468 | ) | — | |||||||||||||||||||||||
Accounts receivable from affiliates | 761,630 | 130,097 | 973,381 | 563,640 | 39,829 | 5,340,324 | (7,808,901 | ) | — | |||||||||||||||||||||||
Other current assets | 516 | 641 | 196 | — | — | 141,188 | — | 142,541 | ||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||
Total current assets | 762,241 | 271,208 | 976,911 | 563,644 | 39,829 | 6,827,855 | (8,163,369 | ) | 1,278,319 | |||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||
Property and equipment, at cost | — | 2,326,256 | 74,856 | — | — | 13,618,432 | — | 16,019,544 | ||||||||||||||||||||||||
Accumulated depreciation | — | (285,259 | ) | (56,410 | ) | — | — | (3,284,603 | ) | — | (3,626,272 | ) | ||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||
Property and equipment, net | — | 2,040,997 | 18,446 | — | — | 10,333,829 | — | 12,393,272 | ||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||
Notes receivable from affiliates | 3,816,463 | 1,206,000 | — | 3,524,814 | 479,107 | 2,578,007 | (11,604,391 | ) | — | |||||||||||||||||||||||
Investments in affiliates | 7,322,022 | 9,407,807 | 3,418,778 | 7,016,530 | 2,219,318 | — | (29,384,455 | ) | — | |||||||||||||||||||||||
Other assets | 6,745 | 554 | 435 | 27,584 | 820 | 289,595 | — | 325,733 | ||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||
Total assets | $ | 11,907,471 | $ | 12,926,566 | $ | 4,414,570 | $ | 11,132,572 | $ | 2,739,074 | $ | 20,029,286 | $ | (49,152,215 | ) | $ | 13,997,324 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||
LIABILITIES AND EQUITY | ||||||||||||||||||||||||||||||||
Current liabilities | ||||||||||||||||||||||||||||||||
Short-term notes payables from affiliates | $ | 73,168 | $ | 51,054 | $ | 110,770 | $ | — | $ | — | $ | 119,476 | $ | (354,468 | ) | $ | — | |||||||||||||||
Accounts payable | — | 3,141 | 555 | — | — | 272,702 | — | 276,398 | ||||||||||||||||||||||||
Accrued payroll and related costs | — | 4,530 | 7,223 | — | — | 105,284 | — | 117,037 | ||||||||||||||||||||||||
Accounts payable to affiliates | 900,919 | 4,342,182 | 3,741 | 138,782 | 53,235 | 2,370,042 | (7,808,901 | ) | — | |||||||||||||||||||||||
Interest payable | 1,548 | — | — | 67,248 | 4,412 | — | — | 73,208 | ||||||||||||||||||||||||
Taxes payable | — | 9,595 | — | — | — | 75,298 | — | 84,893 | ||||||||||||||||||||||||
Other current liabilities | — | — | 241 | — | — | 108,435 | — | 108,676 | ||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||
Total current liabilities | 975,635 | 4,410,502 | 122,530 | 206,030 | 57,647 | 3,051,237 | (8,163,369 | ) | 660,212 | |||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||
Long-term debt | 449,966 | — | — | 3,792,633 | 201,695 | — | — | 4,444,294 | ||||||||||||||||||||||||
Notes payable to affiliates | 2,855,394 | 1,039,500 | — | 975,000 | 1,342,000 | 5,392,497 | (11,604,391 | ) | — | |||||||||||||||||||||||
Deferred income taxes | — | — | 15,731 | — | — | 222,314 | — | 238,045 | ||||||||||||||||||||||||
Other liabilities | 19,929 | 17,361 | — | — | — | 269,107 | — | 306,397 | ||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||
Total liabilities | 4,300,924 | 5,467,363 | 138,261 | 4,973,663 | 1,601,342 | 8,935,155 | (19,767,760 | ) | 5,648,948 | |||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||
Commitments and contingencies | ||||||||||||||||||||||||||||||||
Total shareholder equity | 7,606,547 | 7,459,203 | 4,276,309 | 6,158,909 | 1,137,732 | 10,352,302 | (29,384,455 | ) | 7,606,547 | |||||||||||||||||||||||
Noncontrolling interest | — | — | — | — | — | 741,829 | — | 741,829 | ||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||
Total equity | 7,606,547 | 7,459,203 | 4,276,309 | 6,158,909 | 1,137,732 | 11,094,131 | (29,384,455 | ) | 8,348,376 | |||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||
Total liabilities and equity | $ | 11,907,471 | $ | 12,926,566 | $ | 4,414,570 | $ | 11,132,572 | $ | 2,739,074 | $ | 20,029,286 | $ | (49,152,215 | ) | $ | 13,997,324 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||
CONDENSED CONSOLIDATING BALANCE SHEET
December 31, 2011
(in thousands)
| Other | ||||||||||||||||||||||||||||||||
| Non-guarantor | ||||||||||||||||||||||||||||||||
| Noble- | NHC and NDH | Subsidiaries | Consolidating | |||||||||||||||||||||||||||||
| Cayman | Combined | NDC | NHIL | NDS6 | of Noble | Adjustments | Total | |||||||||||||||||||||||||
ASSETS | ||||||||||||||||||||||||||||||||
Current assets | ||||||||||||||||||||||||||||||||
Cash and cash equivalents | $ | 146 | $ | 385 | $ | — | $ | — | $ | — | $ | 234,525 | $ | — | $ | 235,056 | ||||||||||||||||
Accounts receivable | — | 10,810 | 3,371 | — | — | 572,982 | — | 587,163 | ||||||||||||||||||||||||
Taxes receivable | — | 4,566 | — | — | — | 70,718 | — | 75,284 | ||||||||||||||||||||||||
Prepaid expenses | — | 453 | 19 | — | — | 32,633 | — | 33,105 | ||||||||||||||||||||||||
Short-term notes receivable from affiliates | — | 119,476 | — | — | — | 122,298 | (241,774 | ) | — | |||||||||||||||||||||||
Accounts receivable from affiliates | 1,683,740 | 99,202 | 879,581 | 159,132 | 33,905 | 6,372,657 | (9,228,217 | ) | — | |||||||||||||||||||||||
Other current assets | — | 643 | 196 | 93 | — | 119,177 | — | 120,109 | ||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||
Total current assets | 1,683,886 | 235,535 | 883,167 | 159,225 | 33,905 | 7,524,990 | (9,469,991 | ) | 1,050,717 | |||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||
Property and equipment, at cost | — | 2,737,764 | 75,001 | — | — | 12,693,229 | — | 15,505,994 | ||||||||||||||||||||||||
Accumulated depreciation | — | (232,621 | ) | (54,599 | ) | — | — | (3,117,369 | ) | — | (3,404,589 | ) | ||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||
Property and equipment, net | — | 2,505,143 | 20,402 | — | — | 9,575,860 | — | 12,101,405 | ||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||
Notes receivable from affiliates | 3,842,062 | 675,000 | — | 2,336,527 | 572,107 | 2,678,192 | (10,103,888 | ) | — | |||||||||||||||||||||||
Investments in affiliates | 6,969,201 | 9,101,938 | 3,450,212 | 6,605,771 | 2,141,450 | — | (28,268,572 | ) | — | |||||||||||||||||||||||
Other assets | 3,230 | 473 | 483 | 18,548 | 880 | 281,669 | — | 305,283 | ||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||
Total assets | $ | 12,498,379 | $ | 12,518,089 | $ | 4,354,264 | $ | 9,120,071 | $ | 2,748,342 | $ | 20,060,711 | $ | (47,842,451 | ) | $ | 13,457,405 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||
LIABILITIES AND EQUITY | ||||||||||||||||||||||||||||||||
Current liabilities | ||||||||||||||||||||||||||||||||
Short-term notes payables from affiliates | $ | 72,298 | $ | 50,000 | $ | — | $ | — | $ | — | $ | 119,476 | $ | (241,774 | ) | $ | — | |||||||||||||||
Accounts payable | — | 5,577 | 985 | — | — | 429,167 | — | 435,729 | ||||||||||||||||||||||||
Accrued payroll and related costs | — | 2,897 | 6,518 | — | — | 99,493 | — | 108,908 | ||||||||||||||||||||||||
Accounts payable to affiliates | 2,079,719 | 4,166,021 | 27,341 | 112,953 | 34,107 | 2,808,076 | (9,228,217 | ) | — | |||||||||||||||||||||||
Interest payable | 1,891 | — | — | 48,116 | 4,412 | — | — | 54,419 | ||||||||||||||||||||||||
Taxes payable | — | 10,032 | — | — | — | 81,158 | — | 91,190 | ||||||||||||||||||||||||
Other current liabilities | — | — | 240 | — | — | 123,159 | — | 123,399 | ||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||
Total current liabilities | 2,153,908 | 4,234,527 | 35,084 | 161,069 | 38,519 | 3,660,529 | (9,469,991 | ) | 813,645 | |||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||
Long-term debt | 1,274,949 | — | — | 2,595,320 | 201,695 | — | — | 4,071,964 | ||||||||||||||||||||||||
Notes payable to affiliates | 1,667,291 | 1,147,500 | 85,000 | 975,000 | 811,000 | 5,418,097 | (10,103,888 | ) | — | |||||||||||||||||||||||
Deferred income taxes | — | — | 15,731 | — | — | 227,060 | — | 242,791 | ||||||||||||||||||||||||
Other liabilities | 19,929 | 24,878 | — | — | — | 210,565 | — | 255,372 | ||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||
Total liabilities | 5,116,077 | 5,406,905 | 135,815 | 3,731,389 | 1,051,214 | 9,516,251 | (19,573,879 | ) | 5,383,772 | |||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||
Commitments and contingencies | ||||||||||||||||||||||||||||||||
Total shareholder equity | 7,382,302 | 7,111,184 | 4,218,449 | 5,388,682 | 1,697,128 | 9,853,129 | (28,268,572 | ) | 7,382,302 | |||||||||||||||||||||||
Noncontrolling interest | — | — | — | — | — | 691,331 | — | 691,331 | ||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||
Total equity | 7,382,302 | 7,111,184 | 4,218,449 | 5,388,682 | 1,697,128 | 10,544,460 | (28,268,572 | ) | 8,073,633 | |||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||
Total liabilities and equity | $ | 12,498,379 | $ | 12,518,089 | $ | 4,354,264 | $ | 9,120,071 | $ | 2,748,342 | $ | 20,060,711 | $ | (47,842,451 | ) | $ | 13,457,405 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||
NOBLE CORPORATION (NOBLE-CAYMAN) AND SUBSIDIARIES
CONDENSED CONSOLIDATING STATEMENT OF INCOME
Three Months Ended June 30, 2012
(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 | $ | — | $ | 38,348 | $ | 4,819 | $ | — | $ | — | $ | 824,684 | $ | (19,614 | ) | $ | 848,237 | |||||||||||||||
Reimbursables | — | 502 | — | — | — | 30,310 | — | 30,812 | ||||||||||||||||||||||||
Labor contract drilling services | — | — | — | — | — | 19,863 | — | 19,863 | ||||||||||||||||||||||||
Other | — | — | — | — | — | 943 | (932 | ) | 11 | |||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||
Total operating revenues | — | 38,850 | 4,819 | — | — | 875,800 | (20,546 | ) | 898,923 | |||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||
Operating costs and expenses | ||||||||||||||||||||||||||||||||
Contract drilling services | 1,256 | 14,375 | 1,839 | 18,779 | — | 405,895 | (20,546 | ) | 421,598 | |||||||||||||||||||||||
Reimbursables | — | 338 | — | — | — | 24,632 | — | 24,970 | ||||||||||||||||||||||||
Labor contract drilling services | — | — | — | — | — | 11,847 | — | 11,847 | ||||||||||||||||||||||||
Depreciation and amortization | — | 15,238 | 1,061 | — | — | 166,804 | — | 183,103 | ||||||||||||||||||||||||
Selling, general and administrative | 454 | 1,465 | — | 9,618 | — | 3,930 | — | 15,467 | ||||||||||||||||||||||||
Loss on impairment | — | — | — | — | — | 18,345 | — | 18,345 | ||||||||||||||||||||||||
Gain on contract settlements/extinguishments, net | — | (4,869 | ) | — | — | — | (28,386 | ) | — | (33,255 | ) | |||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||
Total operating costs and expenses | 1,710 | 26,547 | 2,900 | 28,397 | — | 603,067 | (20,546 | ) | 642,075 | |||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||
Operating income (loss) | (1,710 | ) | 12,303 | 1,919 | (28,397 | ) | — | 272,733 | — | 256,848 | ||||||||||||||||||||||
Other income (expense) | ||||||||||||||||||||||||||||||||
Equity earnings in affiliates, net of tax | 197,409 | 154,580 | 10,078 | 230,830 | 69,542 | — | (662,439 | ) | — | |||||||||||||||||||||||
Interest expense, net of amounts capitalized | (25,294 | ) | (14,003 | ) | (842 | ) | (29,494 | ) | (11,405 | ) | (20,076 | ) | 80,462 | (20,652 | ) | |||||||||||||||||
Interest income and other, net | 2,565 | 10,867 | (21 | ) | 32,925 | 2,815 | 32,919 | (80,462 | ) | 1,608 | ||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||
Income before income taxes | 172,970 | 163,747 | 11,134 | 205,864 | 60,952 | 285,576 | (662,439 | ) | 237,804 | |||||||||||||||||||||||
Income tax provision | — | (13,487 | ) | — | — | — | (32,490 | ) | — | (45,977 | ) | |||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||
Net Income | 172,970 | 150,260 | 11,134 | 205,864 | 60,952 | 253,086 | (662,439 | ) | 191,827 | |||||||||||||||||||||||
Net income attributable to noncontrolling interests | — | — | — | — | — | (18,857 | ) | — | (18,857 | ) | ||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||
Net income attributable to Noble Corporation | 172,970 | 150,260 | 11,134 | 205,864 | 60,952 | 234,229 | (662,439 | ) | 172,970 | |||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||
Other comprehensive loss, net | (4,901 | ) | — | — | — | — | (4,901 | ) | 4,901 | (4,901 | ) | |||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||
Comprehensive income attributable to Noble Corporation | $ | 168,069 | $ | 150,260 | $ | 11,134 | $ | 205,864 | $ | 60,952 | $ | 229,328 | $ | (657,538 | ) | $ | 168,069 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||
NOBLE CORPORATION (NOBLE-CAYMAN) AND SUBSIDIARIES
CONDENSED CONSOLIDATING STATEMENT OF INCOME
Six Months Ended June 30, 2012
(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 | $ | — | $ | 81,339 | $ | 9,880 | $ | — | $ | — | $ | 1,542,760 | $ | (39,432 | ) | $ | 1,594,547 | |||||||||||||||
Reimbursables | — | 5,810 | — | — | — | 60,143 | — | 65,953 | ||||||||||||||||||||||||
Labor contract drilling services | — | — | — | — | — | 35,871 | — | 35,871 | ||||||||||||||||||||||||
Other | — | — | — | — | — | 1,174 | (932 | ) | 242 | |||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||
Total operating revenues | — | 87,149 | 9,880 | — | — | 1,639,948 | (40,364 | ) | 1,696,613 | |||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||
Operating costs and expenses | ||||||||||||||||||||||||||||||||
Contract drilling services | 2,439 | 28,694 | 3,610 | 36,412 | — | 805,953 | (40,364 | ) | 836,744 | |||||||||||||||||||||||
Reimbursables | — | 5,425 | — | — | — | 50,146 | — | 55,571 | ||||||||||||||||||||||||
Labor contract drilling services | — | — | — | — | — | 21,079 | — | 21,079 | ||||||||||||||||||||||||
Depreciation and amortization | — | 30,077 | 2,097 | — | — | 321,502 | — | 353,676 | ||||||||||||||||||||||||
Selling, general and administrative | 811 | 2,811 | — | 18,437 | — | 7,418 | — | 29,477 | ||||||||||||||||||||||||
Loss on impairment | — | — | — | — | — | 18,345 | — | 18,345 | ||||||||||||||||||||||||
Gain on contract settlements/extinguishments, net | — | (4,869 | ) | — | — | — | (28,386 | ) | — | (33,255 | ) | |||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||
Total operating costs and expenses | 3,250 | 62,138 | 5,707 | 54,849 | — | 1,196,057 | (40,364 | ) | 1,281,637 | |||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||
Operating income (loss) | (3,250 | ) | 25,011 | 4,173 | (54,849 | ) | — | 443,891 | — | 414,976 | ||||||||||||||||||||||
Other income (expense) | ||||||||||||||||||||||||||||||||
Equity earnings in affiliates, net of tax | 352,821 | 289,165 | 55,880 | 410,758 | 145,403 | — | (1,254,027 | ) | — | |||||||||||||||||||||||
Interest expense, net of amounts capitalized | (45,900 | ) | (28,917 | ) | (2,188 | ) | (50,466 | ) | (19,188 | ) | (39,972 | ) | 155,483 | (31,148 | ) | |||||||||||||||||
Interest income and other, net | 3,951 | 18,691 | (5 | ) | 62,179 | 5,925 | 67,749 | (155,483 | ) | 3,007 | ||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||
Income before income taxes | 307,622 | 303,950 | 57,860 | 367,622 | 132,140 | 471,668 | (1,254,027 | ) | 386,835 | |||||||||||||||||||||||
Income tax provision | — | (22,263 | ) | — | — | — | (44,925 | ) | — | (67,188 | ) | |||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||
Net Income | 307,622 | 281,687 | 57,860 | 367,622 | 132,140 | 426,743 | (1,254,027 | ) | 319,647 | |||||||||||||||||||||||
Net income attributable to noncontrolling interests | — | — | — | — | — | (12,025 | ) | — | (12,025 | ) | ||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||
Net income attributable to Noble Corporation | 307,622 | 281,687 | 57,860 | 367,622 | 132,140 | 414,718 | (1,254,027 | ) | 307,622 | |||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||
Other comprehensive loss, net | (1,140 | ) | — | — | — | — | (1,140 | ) | 1,140 | (1,140 | ) | |||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||
Comprehensive income attributable to Noble Corporation | $ | 306,482 | $ | 281,687 | $ | 57,860 | $ | 367,622 | $ | 132,140 | $ | 413,578 | $ | (1,252,887 | ) | $ | 306,482 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||
NOBLE CORPORATION (NOBLE-CAYMAN) AND SUBSIDIARIES
CONDENSED CONSOLIDATING STATEMENT OF INCOME
Three Months Ended June 30, 2011
(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 | $ | — | $ | 35,090 | $ | 4,705 | $ | — | $ | — | $ | 566,145 | $ | (16,390 | ) | $ | 589,550 | |||||||||||||||
| Reimbursables | — | 1,778 | — | — | — | 22,344 | — | 24,122 | ||||||||||||||||||||||||
| Labor contract drilling services | — | — | — | — | — | 14,012 | — | 14,012 | ||||||||||||||||||||||||
| Other | — | — | — | — | — | 313 | — | 313 | ||||||||||||||||||||||||
| Total operating revenues | — | 36,868 | 4,705 | — | — | 602,814 | (16,390 | ) | 627,997 | |||||||||||||||||||||||
Operating costs and expenses | ||||||||||||||||||||||||||||||||
| Contract drilling services | 1,598 | 12,085 | 1,975 | 8,236 | — | 322,700 | (16,390 | ) | 330,204 | |||||||||||||||||||||||
| Reimbursables | — | 2,007 | — | — | — | 16,716 | — | 18,723 | ||||||||||||||||||||||||
| Labor contract drilling services | — | — | — | — | — | 8,750 | — | 8,750 | ||||||||||||||||||||||||
| Depreciation and amortization | — | 13,068 | 935 | — | — | 148,633 | — | 162,636 | ||||||||||||||||||||||||
| Selling, general and administrative | 1,792 | 1,209 | — | 7,626 | 1 | 4,014 | — | 14,642 | ||||||||||||||||||||||||
| Gain on contract extinguishments, net | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||
| Total operating costs and expenses | 3,390 | 28,369 | 2,910 | 15,862 | 1 | 500,813 | (16,390 | ) | 534,955 | |||||||||||||||||||||||
Operating income (loss) | (3,390 | ) | 8,499 | 1,795 | (15,862 | ) | (1 | ) | 102,001 | — | 93,042 | |||||||||||||||||||||
Other income (expense) | ||||||||||||||||||||||||||||||||
| Equity earnings in affiliates, net of tax | 88,486 | 64,434 | 19,176 | 122,310 | 71,736 | — | (366,142 | ) | — | |||||||||||||||||||||||
| Interest expense, net of amounts capitalized | (17,903 | ) | (15,323 | ) | (1,719 | ) | (23,530 | ) | (7,271 | ) | (886 | ) | 51,803 | (14,829 | ) | |||||||||||||||||
| Interest income and other, net | 1,625 | 6,932 | 37 | 11,435 | 2,252 | 29,375 | (51,803 | ) | (147 | ) | ||||||||||||||||||||||
Income before income taxes | 68,818 | 64,542 | 19,289 | 94,353 | 66,716 | 130,490 | (366,142 | ) | 78,066 | |||||||||||||||||||||||
| Income tax provision | — | 6,658 | (15,815 | ) | (9,157 | ) | ||||||||||||||||||||||||||
Net Income | 68,818 | 71,200 | 19,289 | 94,353 | 66,716 | 114,675 | (366,142 | ) | 68,909 | |||||||||||||||||||||||
| Net loss attributable to noncontrolling interests | — | — | — | — | — | (91 | ) | — | (91 | ) | ||||||||||||||||||||||
Net income attributable to Noble Corporation | $ | 68,818 | $ | 71,200 | $ | 19,289 | $ | 94,353 | $ | 66,716 | $ | 114,584 | $ | (366,142 | ) | $ | 68,818 | |||||||||||||||
33
| Other | ||||||||||||||||||||||||||||||||
| Non-guarantor | ||||||||||||||||||||||||||||||||
| Noble- | NHC and NDH | Subsidiaries | Consolidating | |||||||||||||||||||||||||||||
| Cayman | Combined | NDC | NHIL | NDS6 | of Noble | Adjustments | Total | |||||||||||||||||||||||||
Operating revenues | ||||||||||||||||||||||||||||||||
Contract drilling services | $ | — | $ | 35,090 | $ | 4,705 | $ | — | $ | — | $ | 566,145 | $ | (16,390 | ) | $ | 589,550 | |||||||||||||||
Reimbursables | — | 1,778 | — | — | — | 22,344 | — | 24,122 | ||||||||||||||||||||||||
Labor contract drilling services | — | — | — | — | — | 14,012 | — | 14,012 | ||||||||||||||||||||||||
Other | — | — | — | — | — | 313 | — | 313 | ||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||
Total operating revenues | — | 36,868 | 4,705 | — | — | 602,814 | (16,390 | ) | 627,997 | |||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||
Operating costs and expenses | ||||||||||||||||||||||||||||||||
Contract drilling services | 1,598 | 12,085 | 1,975 | 8,236 | — | 322,700 | (16,390 | ) | 330,204 | |||||||||||||||||||||||
Reimbursables | — | 2,007 | — | — | — | 16,716 | — | 18,723 | ||||||||||||||||||||||||
Labor contract drilling services | — | — | — | — | — | 8,750 | — | 8,750 | ||||||||||||||||||||||||
Depreciation and amortization | — | 13,068 | 935 | — | — | 148,633 | — | 162,636 | ||||||||||||||||||||||||
Selling, general and administrative | 1,792 | 1,209 | — | 7,626 | 1 | 4,014 | — | 14,642 | ||||||||||||||||||||||||
Gain on contract extinguishments, net | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||
Total operating costs and expenses | 3,390 | 28,369 | 2,910 | 15,862 | 1 | 500,813 | (16,390 | ) | 534,955 | |||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||
Operating income (loss) | (3,390 | ) | 8,499 | 1,795 | (15,862 | ) | (1 | ) | 102,001 | — | 93,042 | |||||||||||||||||||||
Other income (expense) | ||||||||||||||||||||||||||||||||
Equity earnings in affiliates, net of tax | 88,486 | 64,434 | 19,176 | 122,310 | 71,736 | — | (366,142 | ) | — | |||||||||||||||||||||||
Interest expense, net of amounts capitalized | (17,903 | ) | (15,323 | ) | (1,719 | ) | (23,530 | ) | (7,271 | ) | (886 | ) | 51,803 | (14,829 | ) | |||||||||||||||||
Interest income and other, net | 1,625 | 6,932 | 37 | 11,435 | 2,252 | 29,375 | (51,803 | ) | (147 | ) | ||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||
Income before income taxes | 68,818 | 64,542 | 19,289 | 94,353 | 66,716 | 130,490 | (366,142 | ) | 78,066 | |||||||||||||||||||||||
Income tax provision | — | 6,658 | — | — | — | (15,815 | ) | — | (9,157 | ) | ||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||
Net Income | 68,818 | 71,200 | 19,289 | 94,353 | 66,716 | 114,675 | (366,142 | ) | 68,909 | |||||||||||||||||||||||
Net income attributable to noncontrolling interests | — | — | — | — | — | (91 | ) | — | (91 | ) | ||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||
Net income attributable to Noble Corporation | 68,818 | 71,200 | 19,289 | 94,353 | 66,716 | 114,584 | (366,142 | ) | 68,818 | |||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||
Other comprehensive income, net | 4,415 | — | — | — | — | 4,415 | (4,415 | ) | 4,415 | |||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||
Comprehensive income attributable to Noble Corporation | $ | 73,233 | $ | 71,200 | $ | 19,289 | $ | 94,353 | $ | 66,716 | $ | 118,999 | $ | (370,557 | ) | $ | 73,233 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||
CONDENSED CONSOLIDATING STATEMENT OF INCOME
Six Months Ended June 30, 2011
(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 | $ | — | $ | 61,054 | $ | 9,695 | $ | — | $ | — | $ | 1,089,739 | $ | (28,333 | ) | $ | 1,132,155 | |||||||||||||||
| Reimbursables | — | 2,690 | 12 | — | — | 43,711 | — | 46,413 | ||||||||||||||||||||||||
| Labor contract drilling services | — | — | — | — | �� | 27,559 | — | 27,559 | ||||||||||||||||||||||||
| Other | — | — | — | — | — | 758 | — | 758 | ||||||||||||||||||||||||
| Total operating revenues | — | 63,744 | 9,707 | — | — | 1,161,767 | (28,333 | ) | 1,206,885 | |||||||||||||||||||||||
Operating costs and expenses | ||||||||||||||||||||||||||||||||
| Contract drilling services | 3,059 | 21,069 | 3,798 | 16,806 | — | 614,637 | (28,333 | ) | 631,036 | |||||||||||||||||||||||
| Reimbursables | — | 2,911 | — | — | — | 32,915 | — | 35,826 | ||||||||||||||||||||||||
| Labor contract drilling services | — | — | — | — | — | 17,273 | — | 17,273 | ||||||||||||||||||||||||
| Depreciation and amortization | — | 23,192 | 1,844 | — | — | 295,255 | — | 320,291 | ||||||||||||||||||||||||
| Selling, general and administrative | 3,303 | 2,718 | — | 15,503 | 1 | 9,648 | — | 31,173 | ||||||||||||||||||||||||
| Gain on contract extinguishments, net | — | — | — | — | — | (21,202 | ) | — | (21,202 | ) | ||||||||||||||||||||||
| Total operating costs and expenses | 6,362 | 49,890 | 5,642 | 32,309 | 1 | 948,526 | (28,333 | ) | 1,014,397 | |||||||||||||||||||||||
Operating income (loss) | (6,362 | ) | 13,854 | 4,065 | (32,309 | ) | (1 | ) | 213,241 | — | 192,488 | |||||||||||||||||||||
Other income (expense) | ||||||||||||||||||||||||||||||||
| Equity earnings in affiliates, net of tax | 175,766 | 102,373 | 34,977 | 172,371 | 107,556 | — | (593,043 | ) | — | |||||||||||||||||||||||
| Interest expense, net of amounts capitalized | (36,264 | ) | (29,915 | ) | (3,539 | ) | (46,026 | ) | (14,942 | ) | (3,017 | ) | 99,833 | (33,870 | ) | |||||||||||||||||
| Interest income and other, net | 3,338 | 12,470 | 48 | 22,744 | 4,044 | 59,283 | (99,833 | ) | 2,094 | |||||||||||||||||||||||
Income before income taxes | 136,478 | 98,782 | 35,551 | 116,780 | 96,657 | 269,507 | (593,043 | ) | 160,712 | |||||||||||||||||||||||
| Income tax provision | — | 5,800 | — | — | — | (29,982 | ) | — | (24,182 | ) | ||||||||||||||||||||||
Net Income | 136,478 | 104,582 | 35,551 | 116,780 | 96,657 | 239,525 | (593,043 | ) | 136,530 | |||||||||||||||||||||||
| Net loss attributable to noncontrolling interests | — | — | — | — | — | (52 | ) | — | (52 | ) | ||||||||||||||||||||||
Net income attributable to Noble Corporation | $ | 136,478 | $ | 104,582 | $ | 35,551 | $ | 116,780 | $ | 96,657 | $ | 239,473 | $ | (593,043 | ) | $ | 136,478 | |||||||||||||||
34
| Other | ||||||||||||||||||||||||||||||||
| Non-guarantor | ||||||||||||||||||||||||||||||||
| Noble- | NHC and NDH | Subsidiaries | Consolidating | |||||||||||||||||||||||||||||
| Cayman | Combined | NDC | NHIL | NDS6 | of Noble | Adjustments | Total | |||||||||||||||||||||||||
Operating revenues | ||||||||||||||||||||||||||||||||
Contract drilling services | $ | — | $ | 61,054 | $ | 9,695 | $ | — | $ | — | $ | 1,089,739 | $ | (28,333 | ) | $ | 1,132,155 | |||||||||||||||
Reimbursables | — | 2,690 | 12 | — | — | 43,711 | — | 46,413 | ||||||||||||||||||||||||
Labor contract drilling services | — | — | — | — | — | 27,559 | — | 27,559 | ||||||||||||||||||||||||
Other | — | — | — | — | — | 758 | — | 758 | ||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||
Total operating revenues | — | 63,744 | 9,707 | — | — | 1,161,767 | (28,333 | ) | 1,206,885 | |||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||
Operating costs and expenses | ||||||||||||||||||||||||||||||||
Contract drilling services | 3,059 | 21,069 | 3,798 | 16,806 | — | 614,637 | (28,333 | ) | 631,036 | |||||||||||||||||||||||
Reimbursables | — | 2,911 | — | — | — | 32,915 | — | 35,826 | ||||||||||||||||||||||||
Labor contract drilling services | — | — | — | — | — | 17,273 | — | 17,273 | ||||||||||||||||||||||||
Depreciation and amortization | — | 23,192 | 1,844 | — | — | 295,255 | — | 320,291 | ||||||||||||||||||||||||
Selling, general and administrative | 3,303 | 2,718 | — | 15,503 | 1 | 9,648 | — | 31,173 | ||||||||||||||||||||||||
Gain on contract extinguishments, net | — | — | — | — | — | (21,202 | ) | — | (21,202 | ) | ||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||
Total operating costs and expenses | 6,362 | 49,890 | 5,642 | 32,309 | 1 | 948,526 | (28,333 | ) | 1,014,397 | |||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||
Operating income (loss) | (6,362 | ) | 13,854 | 4,065 | (32,309 | ) | (1 | ) | 213,241 | — | 192,488 | |||||||||||||||||||||
Other income (expense) | ||||||||||||||||||||||||||||||||
Equity earnings in affiliates, net of tax | 175,766 | 102,373 | 34,977 | 172,371 | 107,556 | — | (593,043 | ) | — | |||||||||||||||||||||||
Interest expense, net of amounts capitalized | (36,264 | ) | (29,915 | ) | (3,539 | ) | (46,026 | ) | (14,942 | ) | (3,017 | ) | 99,833 | (33,870 | ) | |||||||||||||||||
Interest income and other, net | 3,338 | 12,470 | 48 | 22,744 | 4,044 | 59,283 | (99,833 | ) | 2,094 | |||||||||||||||||||||||
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|
| |||||||||||||||||
Income before income taxes | 136,478 | 98,782 | 35,551 | 116,780 | 96,657 | 269,507 | (593,043 | ) | 160,712 | |||||||||||||||||||||||
Income tax provision | — | 5,800 | — | — | — | (29,982 | ) | — | (24,182 | ) | ||||||||||||||||||||||
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|
|
| |||||||||||||||||
Net Income | 136,478 | 104,582 | 35,551 | 116,780 | 96,657 | 239,525 | (593,043 | ) | 136,530 | |||||||||||||||||||||||
Net income attributable to noncontrolling interests | — | — | — | — | — | (52 | ) | — | (52 | ) | ||||||||||||||||||||||
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| |||||||||||||||||
Net income attributable to Noble Corporation | 136,478 | 104,582 | 35,551 | 116,780 | 96,657 | 239,473 | (593,043 | ) | 136,478 | |||||||||||||||||||||||
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| |||||||||||||||||
Other comprehensive income, net | 7,904 | — | — | — | — | 7,904 | (7,904 | ) | 7,904 | |||||||||||||||||||||||
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| |||||||||||||||||
Comprehensive income attributable to Noble Corporation | $ | 144,382 | $ | 104,582 | $ | 35,551 | $ | 116,780 | $ | 96,657 | $ | 247,377 | $ | (600,947 | ) | $ | 144,382 | |||||||||||||||
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| |||||||||||||||||
| Other | ||||||||||||||||||||||||||||||||
| Non-guarantor | ||||||||||||||||||||||||||||||||
| Noble- | NHC and NDH | Subsidiaries | Consolidating | |||||||||||||||||||||||||||||
| Cayman | Combined | NDC | NHIL | NDS6 | of Noble | Adjustments | Total | |||||||||||||||||||||||||
Operating revenues | ||||||||||||||||||||||||||||||||
| Contract drilling services | $ | — | $ | 20,280 | $ | 5,016 | $ | — | $ | — | $ | 670,214 | $ | (8,000 | ) | $ | 687,510 | |||||||||||||||
| Reimbursables | — | 340 | 61 | — | — | 13,352 | 13,753 | |||||||||||||||||||||||||
| Labor contract drilling services | — | — | — | — | — | 8,056 | 8,056 | |||||||||||||||||||||||||
| Other | — | 112 | — | — | — | 491 | 603 | |||||||||||||||||||||||||
| Total operating revenues | — | 20,732 | 5,077 | — | — | 692,113 | (8,000 | ) | 709,922 | |||||||||||||||||||||||
Operating costs and expenses | ||||||||||||||||||||||||||||||||
| Contract drilling services | 2 | 10,726 | 1,188 | — | — | 267,168 | (8,000 | ) | 271,084 | |||||||||||||||||||||||
| Reimbursables | — | 988 | 61 | — | — | 9,316 | 10,365 | |||||||||||||||||||||||||
| Labor contract drilling services | — | — | — | — | — | 5,380 | 5,380 | |||||||||||||||||||||||||
| Depreciation and amortization | — | 9,044 | 874 | — | — | 116,134 | 126,052 | |||||||||||||||||||||||||
| Selling, general and administrative | — | 49,773 | 88 | 76 | — | (34,403 | ) | 15,534 | ||||||||||||||||||||||||
| Total operating costs and expenses | 2 | 70,531 | 2,211 | 76 | — | 363,595 | (8,000 | ) | 428,415 | |||||||||||||||||||||||
Operating income (loss) | (2 | ) | (49,799 | ) | 2,866 | (76 | ) | — | 328,518 | — | 281,507 | |||||||||||||||||||||
Other income (expense) | ||||||||||||||||||||||||||||||||
| Equity earnings in affiliates, net of tax | 231,400 | 166,662 | 9,556 | 242,210 | 123,117 | — | (772,945 | ) | — | |||||||||||||||||||||||
| Interest expense, net of amounts capitalized | (174 | ) | (20,453 | ) | (1,839 | ) | (9,736 | ) | — | (2,739 | ) | 34,431 | (510 | ) | ||||||||||||||||||
| Interest income and other, net | 1,733 | 20,941 | — | — | 4,214 | 9,046 | (34,431 | ) | 1,503 | |||||||||||||||||||||||
Income before income taxes | 232,957 | 117,351 | 10,583 | 232,398 | 127,331 | 334,825 | (772,945 | ) | 282,500 | |||||||||||||||||||||||
| Income tax provision | — | (10,351 | ) | — | — | — | (39,192 | ) | — | (49,543 | ) | |||||||||||||||||||||
Net Income | $ | 232,957 | $ | 107,000 | $ | 10,583 | $ | 232,398 | $ | 127,331 | $ | 295,633 | $ | (772,945 | ) | $ | 232,957 | |||||||||||||||
35
| Other | ||||||||||||||||||||||||||||||||
| Non-guarantor | ||||||||||||||||||||||||||||||||
| Noble- | NHC and NDH | Subsidiaries | Consolidating | |||||||||||||||||||||||||||||
| Cayman | Combined | NDC | NHIL | NDS6 | of Noble | Adjustments | Total | |||||||||||||||||||||||||
Operating revenues | ||||||||||||||||||||||||||||||||
| Contract drilling services | $ | — | $ | 48,589 | $ | 7,484 | $ | — | $ | — | $ | 1,461,383 | $ | (21,300 | ) | $ | 1,496,156 | |||||||||||||||
| Reimbursables | — | 590 | 61 | — | — | 37,335 | — | 37,986 | ||||||||||||||||||||||||
| Labor contract drilling services | — | — | — | — | — | 15,817 | — | 15,817 | ||||||||||||||||||||||||
| Other | — | 112 | — | — | — | 702 | — | 814 | ||||||||||||||||||||||||
| Total operating revenues | — | 49,291 | 7,545 | — | — | 1,515,237 | (21,300 | ) | 1,550,773 | |||||||||||||||||||||||
Operating costs and expenses | ||||||||||||||||||||||||||||||||
| Contract drilling services | 7 | 18,607 | 3,136 | — | — | 523,415 | (21,300 | ) | 523,865 | |||||||||||||||||||||||
| Reimbursables | — | 1,099 | 61 | — | — | 28,948 | — | 30,108 | ||||||||||||||||||||||||
| Labor contract drilling services | — | — | — | — | — | 11,268 | — | 11,268 | ||||||||||||||||||||||||
| Depreciation and amortization | — | 17,827 | 1,612 | — | — | 222,277 | — | 241,716 | ||||||||||||||||||||||||
| Selling, general and administrative | — | 50,636 | 221 | 119 | — | (19,554 | ) | — | 31,422 | |||||||||||||||||||||||
| Total operating costs and expenses | 7 | 88,169 | 5,030 | 119 | — | 766,354 | (21,300 | ) | 838,379 | |||||||||||||||||||||||
Operating income (loss) | (7 | ) | (38,878 | ) | 2,515 | (119 | ) | — | 748,883 | — | 712,394 | |||||||||||||||||||||
Other income (expense) | ||||||||||||||||||||||||||||||||
| Equity earnings in affiliates, net of tax | 608,738 | 341,687 | 9,118 | 632,091 | 300,508 | — | (1,892,142 | ) | — | |||||||||||||||||||||||
| Interest expense, net of amounts capitalized | (587 | ) | (35,334 | ) | (3,657 | ) | (19,365 | ) | — | (6,184 | ) | 64,152 | (975 | ) | ||||||||||||||||||
| Interest income and other, net | 3,446 | 22,757 | — | — | 6,152 | 36,907 | (64,152 | ) | 5,110 | |||||||||||||||||||||||
Income before income taxes | 611,590 | 290,232 | 7,976 | 612,607 | 306,660 | 779,606 | (1,892,142 | ) | 716,529 | |||||||||||||||||||||||
| Income tax provision | — | (9,092 | ) | — | — | — | (95,847 | ) | — | (104,939 | ) | |||||||||||||||||||||
Net Income | $ | 611,590 | $ | 281,140 | $ | 7,976 | $ | 612,607 | $ | 306,660 | $ | 683,759 | $ | (1,892,142 | ) | $ | 611,590 | |||||||||||||||
36
Six Months Ended June 30, 2012
(in thousands)
| Other | ||||||||||||||||||||||||||||||||
| Non-guarantor | ||||||||||||||||||||||||||||||||
| Noble- | NHC and NDH | Subsidiaries | Consolidating | |||||||||||||||||||||||||||||
| Cayman | Combined | NDC | NHIL | NDS6 | of Noble | Adjustments | Total | |||||||||||||||||||||||||
Cash flows from operating activities | ||||||||||||||||||||||||||||||||
Net cash from operating activities | $ | (39,135 | ) | $ | 8,929 | $ | 4,457 | $ | (32,947 | ) | $ | (13,203 | ) | $ | 623,600 | $ | — | $ | 551,701 | |||||||||||||
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| |||||||||||||||||
Cash flows from investing activities | ||||||||||||||||||||||||||||||||
Capital expenditures | — | (182,619 | ) | (306 | ) | — | — | (480,775 | ) | — | (663,700 | ) | ||||||||||||||||||||
Change in accrued capital expenditures | — | — | — | — | — | (159,134 | ) | — | (159,134 | ) | ||||||||||||||||||||||
Notes receivable from affiliates | — | — | — | (1,188,287 | ) | — | — | 1,188,287 | — | |||||||||||||||||||||||
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| |||||||||||||||||
Net cash from investing activities | — | (182,619 | ) | (306 | ) | (1,188,287 | ) | — | (639,909 | ) | 1,188,287 | (822,834 | ) | |||||||||||||||||||
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| |||||||||||||||||
Cash flows from financing activities | ||||||||||||||||||||||||||||||||
Borrowings on bank credit facilities | 325,000 | — | — | — | — | — | — | 325,000 | ||||||||||||||||||||||||
Repayments on bank credit facilities | (1,150,000 | ) | — | — | — | — | — | — | (1,150,000 | ) | ||||||||||||||||||||||
Proceeds from issuance of senior notes, net | — | — | — | 1,186,636 | — | — | — | 1,186,636 | ||||||||||||||||||||||||
Contributions from joint venture partners | — | — | — | — | — | 40,000 | — | 40,000 | ||||||||||||||||||||||||
Financing costs on credit facilities | (5,014 | ) | — | — | — | — | — | — | (5,014 | ) | ||||||||||||||||||||||
Distributions to parent | (92,675 | ) | — | — | — | — | — | — | (92,675 | ) | ||||||||||||||||||||||
Advances (to) from affiliates | (226,514 | ) | 173,636 | (4,151 | ) | 34,602 | 13,203 | 9,224 | — | — | ||||||||||||||||||||||
Notes payable to affiliates | 1,188,287 | — | — | — | — | — | (1,188,287 | ) | — | |||||||||||||||||||||||
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| |||||||||||||||||
Net cash from financing activities | 39,084 | 173,636 | (4,151 | ) | 1,221,238 | 13,203 | 49,224 | (1,188,287 | ) | 303,947 | ||||||||||||||||||||||
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| |||||||||||||||||
Net change in cash and cash equivalents | (51 | ) | (54 | ) | — | 4 | — | 32,915 | — | 32,814 | ||||||||||||||||||||||
Cash and cash equivalents, beginning of period | 146 | 385 | — | — | — | 234,525 | — | 235,056 | ||||||||||||||||||||||||
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Cash and cash equivalents, end of period | $ | 95 | $ | 331 | $ | — | $ | 4 | $ | — | $ | 267,440 | $ | — | $ | 267,870 | ||||||||||||||||
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| |||||||||||||||||
NOBLE CORPORATION (NOBLE-CAYMAN) AND SUBSIDIARIES
CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS
Six Months Ended June 30, 2011
(in thousands)
| Other | ||||||||||||||||||||||||||||||||
| Non-guarantor | ||||||||||||||||||||||||||||||||
| Noble- | NHC and NDH | Subsidiaries | Consolidating | |||||||||||||||||||||||||||||
| Cayman | Combined | NDC | NHIL | NDS6 | of Noble | Adjustments | Total | |||||||||||||||||||||||||
Cash flows from operating activities | ||||||||||||||||||||||||||||||||
| Net cash from operating activities | $ | (30,984 | ) | $ | 20,555 | $ | 2,807 | $ | (43,770 | ) | $ | (10,840 | ) | $ | 321,277 | $ | — | $ | 259,045 | |||||||||||||
Cash flows from investing activities | ||||||||||||||||||||||||||||||||
| New construction and capital expenditures | — | (842,012 | ) | — | — | — | (633,338 | ) | — | (1,475,350 | ) | |||||||||||||||||||||
| Notes receivable from affiliates | 20,000 | — | — | — | — | 91,000 | (111,000 | ) | — | |||||||||||||||||||||||
| Refund from contract extinguishments | — | — | — | — | — | 18,642 | — | 18,642 | ||||||||||||||||||||||||
| Net cash from investing activities | 20,000 | (842,012 | ) | — | — | — | (523,696 | ) | (111,000 | ) | (1,456,708 | ) | ||||||||||||||||||||
Cash flows from financing activities | ||||||||||||||||||||||||||||||||
| Borrowings on bank credit facilities | 625,000 | — | — | — | — | — | — | 625,000 | ||||||||||||||||||||||||
| Payments of bank credit facilities | (240,000 | ) | — | — | — | — | — | — | (240,000 | ) | ||||||||||||||||||||||
| Proceeds from issuance of senior notes, net | — | — | — | 1,087,833 | — | — | — | 1,087,833 | ||||||||||||||||||||||||
| Contributions from joint venture partners | — | — | — | — | — | 436,000 | — | 436,000 | ||||||||||||||||||||||||
| Payments of joint venture debt | — | — | — | — | — | (693,494 | ) | — | (693,494 | ) | ||||||||||||||||||||||
| Settlement of interest rate swaps | — | — | — | — | — | (29,032 | ) | — | (29,032 | ) | ||||||||||||||||||||||
| Financing cost on credit facilities | (2,835 | ) | — | — | — | — | — | — | (2,835 | ) | ||||||||||||||||||||||
| Distributions to parent | (94,291 | ) | — | — | — | — | — | — | (94,291 | ) | ||||||||||||||||||||||
| Advances (to) from affiliates | (238,391 | ) | 839,102 | 32,193 | (1,044,063 | ) | 10,840 | 400,319 | — | — | ||||||||||||||||||||||
| Notes payable to affiliates | (38,500 | ) | (17,500 | ) | (35,000 | ) | — | — | (20,000 | ) | 111,000 | — | ||||||||||||||||||||
| Net cash from financing activities | 10,983 | 821,602 | (2,807 | ) | 43,770 | 10,840 | 93,793 | 111,000 | 1,089,181 | |||||||||||||||||||||||
| Net change in cash and cash equivalents | (1 | ) | 145 | — | — | — | (108,626 | ) | — | (108,482 | ) | |||||||||||||||||||||
| Cash and cash equivalents, beginning of period | 42 | 146 | — | — | — | 333,211 | 333,399 | |||||||||||||||||||||||||
| Cash and cash equivalents, end of period | $ | 41 | $ | 291 | $ | — | $ | — | $ | — | $ | 224,585 | $ | — | $ | 224,917 | ||||||||||||||||
37
| 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 | $ | 10,138 | $ | (36,375 | ) | $ | 3,592 | $ | (4,400 | ) | $ | 60 | $ | 1,053,419 | $ | — | $ | 1,026,434 | $ | (30,984 | ) | $ | 23,361 | $ | 2,591 | $ | (43,770 | ) | $ | (10,840 | ) | $ | 306,119 | $ | — | $ | 246,477 | |||||||||||||||||||||||||||
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Cash flows from investing activities | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| New construction and capital expenditures | — | (184,963 | ) | — | — | — | (363,918 | ) | — | (548,881 | ) | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Capital expenditures | — | (846,292 | ) | (197 | ) | — | — | (564,793 | ) | — | (1,411,282 | ) | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Change in accrued capital expenditures | — | — | — | — | — | (51,500 | ) | — | (51,500 | ) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Notes receivable from affiliates | 20,000 | — | — | — | — | 91,000 | (111,000 | ) | — | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Refund from contract extinguishments | — | — | — | — | — | 18,642 | — | 18,642 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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| |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Net cash from investing activities | — | (184,963 | ) | — | — | — | (363,918 | ) | — | (548,881 | ) | 20,000 | (846,292 | ) | (197 | ) | — | — | (506,651 | ) | (111,000 | ) | (1,444,140 | ) | ||||||||||||||||||||||||||||||||||||||||
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| |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Cash flows from financing activities | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Borrowings on bank credit facilities | 625,000 | — | — | — | — | — | — | 625,000 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Repayments on bank credit facilities | (240,000 | ) | — | — | — | — | — | — | (240,000 | ) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Proceeds from issuance of senior notes, net | — | — | — | 1,087,833 | — | — | — | 1,087,833 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Contributions from joint venture partners | — | — | — | — | — | 436,000 | — | 436,000 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Payments of joint venture debt | — | — | — | — | — | (693,494 | ) | — | (693,494 | ) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Settlement of interest rate swaps | — | — | — | — | — | (29,032 | ) | — | (29,032 | ) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Financing costs on credit facilities | (2,835 | ) | — | — | — | — | — | — | (2,835 | ) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Distributions to parent | (128,315 | ) | — | — | — | — | — | — | (128,315 | ) | (94,291 | ) | — | — | — | — | — | — | (94,291 | ) | ||||||||||||||||||||||||||||||||||||||||||||
| Advances (to) from affiliates | 119,876 | 221,265 | (3,592 | ) | 4,400 | (60 | ) | (341,889 | ) | — | — | (238,391 | ) | 840,576 | 32,606 | (1,044,063 | ) | 10,840 | 398,432 | — | — | |||||||||||||||||||||||||||||||||||||||||||
Notes payable to affiliates | (38,500 | ) | (17,500 | ) | (35,000 | ) | — | — | (20,000 | ) | 111,000 | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||
|
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|
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|
| |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Net cash from financing activities | (8,439 | ) | 221,265 | (3,592 | ) | 4,400 | (60 | ) | (341,889 | ) | — | (128,315 | ) | 10,983 | 823,076 | (2,394 | ) | 43,770 | 10,840 | 91,906 | 111,000 | 1,089,181 | ||||||||||||||||||||||||||||||||||||||||||
|
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|
|
|
|
|
| |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Net change in cash and cash equivalents | 1,699 | (73 | ) | — | — | — | 347,612 | — | 349,238 | (1 | ) | 145 | — | — | — | (108,626 | ) | — | (108,482 | ) | ||||||||||||||||||||||||||||||||||||||||||||
| Cash and cash equivalents, beginning of period | 3 | 268 | — | — | — | 725,954 | — | 726,225 | 42 | 146 | — | — | — | 333,211 | — | 333,399 | ||||||||||||||||||||||||||||||||||||||||||||||||
|
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|
|
|
|
|
| |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Cash and cash equivalents, end of period | $ | 1,702 | $ | 195 | $ | — | $ | — | $ | — | $ | 1,073,566 | $ | — | $ | 1,075,463 | $ | 41 | $ | 291 | $ | — | $ | — | $ | — | $ | 224,585 | $ | — | $ | 224,917 | ||||||||||||||||||||||||||||||||
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38
| Item 2. | Management’s Discussion and Analysis of Financial Condition and Results of Operations |
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,status, our financial position, business strategy, backlog,timing or results of acquisitions or dispositions, repayment of debt, borrowings under our Credit Facilities (as defined below), 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, indemnity and other contract claims, construction and upgrade of rigs, industry conditions including the effect of disruptions of drilling in the U.S. Gulf of Mexico, access to financing, impact of competition, governmental regulations and permitting, availability of labor, worldwide economic conditions, taxes and tax rates, advantages of our worldwide internal restructuring, indebtedness covenant compliance, 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 Part I, Item 1A. “Risk Factors” of our Annual Report on Form 10-K for the year ended December 31, 2010,2011, 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.
Executive Overview
Noble-Swiss is a leading provider of offshore contract drilling contractorservices for the oil and gas industry. At June 30, 2011, ourOur fleet consisted of 7679 mobile offshore drilling units located worldwide as follows:consists of 14 semisubmersibles, 1314 drillships, 4749 jackups and two submersibles. In addition,Additionally, we have one floating production storage and offloading unit (“FPSO”). At June 30, 2011, we hadunit. Our fleet includes 11 of our 76 units under construction. Subsequent to June 30, 2011, we exercised options for the construction of two additionalas follows:
five dynamically positioned, ultra-deepwater, harsh environment drillships and
six high-specification heavy duty,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 Mexico, Mexico, the Mediterranean,Brazil, the North Sea, Brazil,the Mediterranean, West Africa, the Middle East, India and the Asian Pacific. Noble and its predecessors have been engaged in the contract drilling of oil and gas wells since 1921.
Outlook
During the first six months of 2012, we continued to see stability in the offshore drilling market has been volatile since the events occurring in connection with theDeepwater Horizon, and the U.S. governmental response to the incident.even as underlying commodity markets were volatile. In the U.S. Gulf of Mexico, the liftinggranting of the moratoriumpermits and publication of new safety rules has led to progressmore stable activity levels within the industry, especially as it relates to the deepwater markets. The continued stable activity has led to greater investment and has contributed to an improvement in returning activity to more normal levels as indicated by the recent issuance of new drilling permits. However, while the issuance of a limited number of permits is a positive development,dayrates for deepwater and ultra-deepwater rigs worldwide. While there are a number of ongoingstill risks, which make it difficult to predict whether or when industry activity in the U.S. Gulf will return to levels seen prior to theDeepwater Horizon incident. These risks include a current and ongoing risk ofincluding potential third party environmental lawsuits targeting the permitting process, possible new drilling regulations, a failure of the Bureaufederal agencies of Ocean Energy Management, Regulation and Enforcement (“BOEMRE”)the U.S. government to issue permits in a timely manner and the adoption by individual operators of new drilling or equipment standards exceeding those required by regulatory bodies.
bodies, we believe the potential for these risks will be reduced as long as rigs continue to work without incident in the U.S. Gulf of Mexico.
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Despite the increaseinstability in the global economy and commodity prices we have only recently seen an increase in demandnoted above, the market for offshore drilling services. Developmentsservices has continued the upward trend that began in 2011. We believe both the U.S. Gulf of Mexico will continue to have an impact on the deepwater market segment in the short-term; however, we believe that theshort-term and long-term outlook is stronger.for the deep and ultra-deepwater markets continues to strengthen. Market dayrates for new ultra-deepwater units remain generally above $450,000,$500,000, which is significantly lowerhigher than the peak rates achievedseen in 2007-2008. However, short-termrecent years. A number of fixtures for very high specification units, like theNoble Jim Day, have exceeded $500,000. Although demand$550,000, and in thecertain cases even exceeded $600,000. Our market analysis indicates that there is little, if any, availability of ultra-deepwater units for 2012, and 2013 availability is rapidly decreasing. Utilization rates for jackup segment decreased slightly during 2010, utilization for units operating outside the U.S. Gulf of Mexico still averaged approximately 80 percentstabilized in 2011, and improved in most regions during the first half of 2011.2012. While we currently have certain jackup rigs idle, we have seen tangible market activity and anticipate a favorable environment for these rigs in the short-term. We continue to see differentiation in the jackup market segment with newer units having utilization rates and dayrates exceeding 90 percent, whilethose for units that entered service before 2000 have utilization rates closer2000. However, we continue to 70 percent. Likewise, there has been a bifurcation of dayrates between older and newer unitssee improvement in the jackupolder jack-up market with newerincreased utilization and competitive dayrates. While we have several of these units earning a premium as customers display a preference for technologically advanced and efficient drilling alternatives. Dayrates for both older and newer units were relatively stable throughout the second half of 2010 and whileidle, we have seen some indications that rates in certain regions started to increase during the first halftangible market activity and are actively pursuing a number of 2011, rates in general are significantly lower than the peak rates reached in 2007 and 2008.
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 addressingregarding access to their oil and gas reserves. Our results of operations depend on offshore drilling activity 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 analysts widely acknowledgereport that a significant expansion of industry supply of both jackups and ultra-deepwater units has commenced, the majority of which currently have no contract.is underway. The introduction of additional non-contracted rigs into the marketplace could have an adverse effect on demand for our services or the dayrates we are able to achieve.
We currently have twelve rigs contracted in Brazil and accepted bids in 2010 to construct these units from a number of shipyards and drilling contractors. A deepwater drilling rig construction industry possessing the scope and experience to efficiently address this volume of work does not currently exist in Brazil and Noble did not participate in these bids primarily because we viewed the capital risk associated with constructing a unit in Brazil as inappropriate. Petrobras awarded the first tranche of seven drillships to a Brazilian shipyard for delivery beginning in 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. Nevertheless, the future of Petrobras’ building program remains uncertain and the ultimate number of deepwater rigs to be built in Brazil is still unknown. While Petrobras is currently in the market tendering for existing deepwater drilling units, the potential increase in supply from the Petrobras newbuilds could also adversely impact overall industry dayrates and economics.
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In connection with our existing drilling contracts with Petrobras for two of our drillships operating in Brazil, we approved certain shipyard reliability upgrade projects for these drillships, theNoble Leo Segeriusand theNoble Roger Eason. These upgrade projects planned through 2012, are designed to enhance the reliability and operational performance of these drillships. During the first quarter of 2012, theNoble Leo Segeriusentered a completed the shipyard portion of its reliability upgrade and departed the shipyard in Brazil for seatrials, final commissioning and customer acceptance activities. TheNoble Leo Segerius is currently scheduled to return to work in the third quarter of 2012. TheNoble Roger Eason entered the shipyard for its reliability upgrade.upgrade in the second quarter of 2012, which is expected to take approximately 300 days to complete. There are a number of risks associated with shipyard projects of this nature, particularly in Brazil, including potential project delays and cost overruns 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 both of these 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
Our business strategy focuses on theNoble Discovererwas operating off active expansion of our fleet through construction, upgrades and modifications, and acquisitions of drilling units, as well as the coastdeployment of New Zealand when a severe weather event occurred. In anticipation of the severe weather, and in accordance with established procedures for severe weather events, theNoble Discoverersuspended drilling operations and secured and disconnected from the well. As a result of severe weather, the riser and the lower marine riser package were damaged and released from the vessel. While we are still evaluating the extent of the equipment damage, we currently believe the damage will not be material. We believe we are entitled to continue receiving dayrate from our customer until repairs are complete, and we are discussing the implications of this event with our customer. We can make no assurances as to the outcome of this event. TheNoble Discovereris currently anchored safely in a New Zealand harbor pending repairs.
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| Three Months Ended | ||||||||
| June 30, | March 31, | |||||||
| 2011 | 2011 | |||||||
| Average dayrate | $ | 140,296 | $ | 150,294 | ||||
| Average utilization | 70 | % | 61 | % | ||||
| Daily contract drilling services costs | $ | 80,985 | $ | 84,858 | ||||
| Contract drilling services margin | 43 | % | 44 | % | ||||
We may dispose of some, or all, of our worldwide offshore drilling and deepwater capabilities through upgrades and modifications, acquisitions, divestitures of lower specification units and related assets and operations in one or more transactions. These dispositions may include sales of assets to third parties, a spin-off or other distribution or separation of assets. In analyzing any disposition, we will consider the deploymentstrategic benefit of the potential transaction while seeking to secure what we consider appropriate value to our shareholders. To date, no potential disposition has provided the results we seek. The drilling market for lower specification units has recently improved. While we expect the increased utilization and dayrates experienced in most regions for these assets in important oil and gas producing areas. to contribute positively to our overall results under current market conditions, we do continue to analyze strategic options for these lower specification units. We can provide no assurance as to whether, or when, any disposition transaction will occur or what form it may take.
At June 30, 2011,2012, we continued our newbuild strategy with the following 11 projects:
one dynamically positioned, ultra-deepwater, harsh environment Globetrotter-class drillship, which is scheduled to be delivered to our customer in the fourth quarter of 2013;
four dynamically positioned, ultra-deepwater, harsh environment drillships at Hyundai Heavy Industries Co. Ltd. (“HHI”), the first of which is estimated to be delivered from the shipyard to begin acceptance testing in the second quarter of 2013; and
six high-specification heavy duty, harsh environment jackup rigs, the first of which is estimated to be delivered from the shipyard to begin acceptance testing in the first quarter of 2013.
Of our 11 rigs under construction as of June 30, 2011, five2012, two of the drillships are contractedcommitted for five years or more. We also recently received an 18-month contract on one jackup, theNoble Regina Allen,and a three-year contract on one drillship, the Noble Bob Douglas. The remaining six rigs are being constructed without contracts. Subsequent to June 30, 2011, we exercised options for the construction of two additional high-specification heavy duty, harsh environment jackup rigs which are expected to be delivered from the shipyard during the third and fourth quarters of 2014; both rigs are currently being constructed without contracts. We have a priced option
While we cannot predict the future level of demand or dayrates for an additional ultra-deepwater drillship.
In the second quarter of Mexico, U.S. governmental authorities implemented a moratorium2012, we recognized net income attributable to Noble-Swiss of $160 million, or $0.63 per diluted share, on and suspensiontotal revenues of specified types of drilling activities in the U.S. Gulf of Mexico.
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| Three Months Ended | ||||||||
| June 30, | March 31, | |||||||
| 2012 | 2012 | |||||||
Average dayrate | $ | 181,663 | $ | 167,124 | ||||
Average utilization | 76 | % | 74 | % | ||||
Daily contract drilling services costs | $ | 90,699 | $ | 94,055 | ||||
Contract drilling services margin | 50 | % | 44 | % | ||||
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We maintain a backlog (as defined below) of commitments for contract drilling services. The following table sets forth, as of June 30, 20112012, 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 | 2011 (1) | 2012 | 2013 | 2014 | 2015-2023 | |||||||||||||||||||
| (In millions) | ||||||||||||||||||||||||
Contract Drilling Services Backlog | ||||||||||||||||||||||||
| Semisubmersibles/Drillships (2) (6) (7) | $ | 11,388 | $ | 886 | $ | 1,683 | $ | 1,667 | $ | 1,780 | $ | 5,372 | ||||||||||||
| Jackups/Submersibles (3) | 1,559 | 556 | 579 | 287 | 134 | 3 | ||||||||||||||||||
| Other | — | — | — | — | — | — | ||||||||||||||||||
| Total (4) | $ | 12,947 | $ | 1,442 | $ | 2,262 | $ | 1,954 | $ | 1,914 | $ | 5,375 | ||||||||||||
| Percent of Available Operating Days Committed (5) | 73 | % | 43 | % | 28 | % | 22 | % | 5 | % | ||||||||||||||
| Year Ending December 31, | ||||||||||||||||||||||||
| Total | 2012(1) | 2013 | 2014 | 2015 | 2016-2023 | |||||||||||||||||||
| (In millions) | ||||||||||||||||||||||||
Contract Drilling Services Backlog | ||||||||||||||||||||||||
Semisubmersibles/Drillships(2) (4) (6) | $ | 12,255 | $ | 1,219 | $ | 2,591 | $ | 2,459 | $ | 1,613 | $ | 4,373 | ||||||||||||
Jackups/Submersibles(3) | 2,159 | 639 | 927 | 496 | 97 | — | ||||||||||||||||||
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Total(4) | $ | 14,414 | $ | 1,858 | $ | 3,518 | $ | 2,955 | $ | 1,710 | $ | 4,373 | ||||||||||||
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Percent of Available Operating Days Committed(5) | 79 | % | 61 | % | 40 | % | 17 | % | 4 | % | ||||||||||||||
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| (1) | Represents a six-month period beginning July 1, | |
| (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, | |
The drilling contracts with Shell for theNoble Globetrotter I,Noble Globetrotter II,Noble Jim Thompson,Noble Jim Day andNoble Clyde Boudreaux, as well as the letters of intent for theNoble Don Taylor andNoble Max Smith, 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 50 percent of the potential performance bonuses for these rigs, except for theNoble Clyde Boudreaux,while it is working in Brazil, where limited bonus is expected. Our backlog for these rigs includes approximately $418 million attributable to these performance bonuses.
| (3) | ||
| Pemex has the ability to cancel its drilling contracts on 30 days or less notice without |
| (4) | 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 | |
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| Average Rig | Operating | Average | ||||||||||||||||||||||||||||||
| Utilization (1) | Days (2) | Dayrates | ||||||||||||||||||||||||||||||
| Three Months Ended | Three Months Ended | Three Months Ended | ||||||||||||||||||||||||||||||
| June 30, | June 30, | June 30, | ||||||||||||||||||||||||||||||
| 2011 | 2010 | 2011 | 2010 | % Change | 2011 | 2010 | % Change | |||||||||||||||||||||||||
| Jackups | 71 | % | 81 | % | 2,797 | 3,183 | -12 | % | $ | 80,742 | $ | 96,677 | -16 | % | ||||||||||||||||||
| Semisubmersibles | 85 | % | 94 | % | 1,088 | 1,023 | 6 | % | 269,798 | 328,286 | -18 | % | ||||||||||||||||||||
| Drillships | 58 | % | 67 | % | 317 | 182 | 74 | % | 220,953 | 242,045 | -9 | % | ||||||||||||||||||||
| FPSO/Submersibles | 0 | % | 0 | % | — | — | — | — | — | — | ||||||||||||||||||||||
Total | 70 | % | 80 | % | 4,202 | 4,388 | -4 | % | $ | 140,296 | $ | 156,683 | -10 | % | ||||||||||||||||||
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| Three Months Ended | ||||||||||||||||
| June 30, | Change | |||||||||||||||
| 2011 | 2010 | $ | % | |||||||||||||
Operating revenues: | ||||||||||||||||
| Contract drilling services | $ | 589,550 | $ | 687,510 | $ | (97,960 | ) | -14 | % | |||||||
| Reimbursables (1) | 22,982 | 12,989 | 9,993 | 77 | % | |||||||||||
| Other | 313 | 603 | (290 | ) | -48 | % | ||||||||||
| $ | 612,845 | $ | 701,102 | $ | (88,257 | ) | -13 | % | ||||||||
Operating costs and expenses: | ||||||||||||||||
| Contract drilling services | $ | 336,728 | $ | 275,595 | $ | 61,133 | 22 | % | ||||||||
| Reimbursables (1) | 17,606 | 9,626 | 7,980 | 83 | % | |||||||||||
| Depreciation and amortization | 159,843 | 123,379 | 36,464 | 30 | % | |||||||||||
| Selling, general and administrative | 21,359 | 23,561 | (2,202 | ) | -9 | % | ||||||||||
| 535,536 | 432,161 | 103,375 | 24 | % | ||||||||||||
Operating income | $ | 77,309 | $ | 268,941 | $ | (191,632 | ) | -71 | % | |||||||
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| Three Months Ended | ||||||||||||||||
| June 30, | Change | |||||||||||||||
| 2011 | 2010 | $ | % | |||||||||||||
Operating revenues: | ||||||||||||||||
| Labor contract drilling services | $ | 14,012 | $ | 8,056 | $ | 5,956 | 74 | % | ||||||||
| Reimbursables (1) | 1,140 | 764 | 376 | 49 | % | |||||||||||
| $ | 15,152 | $ | 8,820 | $ | 6,332 | 72 | % | |||||||||
Operating costs and expenses: | ||||||||||||||||
| Labor contract drilling services | $ | 8,750 | $ | 5,380 | $ | 3,370 | 63 | % | ||||||||
| Reimbursables (1) | 1,117 | 739 | 378 | 51 | % | |||||||||||
| Depreciation and amortization | 3,276 | 2,848 | 428 | 15 | % | |||||||||||
| Selling, general and administrative | 273 | 247 | 26 | 11 | % | |||||||||||
| 13,416 | 9,214 | 4,202 | 46 | % | ||||||||||||
Operating (loss) income | $ | 1,736 | $ | (394 | ) | $ | 2,130 | ** | ||||||||
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| Average Rig | Operating | Average | ||||||||||||||||||||||||||||||
| Utilization (1) | Days (2) | Dayrates | ||||||||||||||||||||||||||||||
| Six Months Ended | Six Months Ended | Six Months Ended | ||||||||||||||||||||||||||||||
| June 30, | June 30, | June 30, | ||||||||||||||||||||||||||||||
| 2011 | 2010 | 2011 | 2010 | % Change | 2011 | 2010 | % Change | |||||||||||||||||||||||||
| Jackups | 67 | % | 81 | % | 5,178 | 6,324 | -18 | % | $ | 80,799 | $ | 106,522 | -24 | % | ||||||||||||||||||
| Semisubmersibles | 77 | % | 93 | % | 1,956 | 1,954 | 0 | % | 273,374 | 370,358 | -26 | % | ||||||||||||||||||||
| Drillships | 62 | % | 79 | % | 678 | 429 | 58 | % | 263,905 | 230,679 | 14 | % | ||||||||||||||||||||
| FPSO/Submersibles | 0 | % | 0 | % | — | — | — | — | — | — | ||||||||||||||||||||||
Total | 65 | % | 81 | % | 7,812 | 8,707 | -10 | % | $ | 144,916 | $ | 171,828 | -16 | % | ||||||||||||||||||
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| Six Months Ended | ||||||||||||||||
| June 30, | Change | |||||||||||||||
| 2011 | 2010 | $ | % | |||||||||||||
Operating revenues: | ||||||||||||||||
| Contract drilling services | $ | 1,132,155 | $ | 1,496,156 | $ | (364,001 | ) | -24 | % | |||||||
| Reimbursables (1) | 44,586 | 36,292 | 8,294 | 23 | % | |||||||||||
| Other | 758 | 814 | (56 | ) | -7 | % | ||||||||||
| $ | 1,177,499 | $ | 1,533,262 | $ | (355,763 | ) | -23 | % | ||||||||
Operating costs and expenses: | ||||||||||||||||
| Contract drilling services | $ | 643,091 | $ | 530,026 | $ | 113,065 | 21 | % | ||||||||
| Reimbursables (1) | 34,046 | 28,495 | 5,551 | 19 | % | |||||||||||
| Depreciation and amortization | 314,731 | 236,553 | 78,178 | 33 | % | |||||||||||
| Selling, general and administrative | 44,808 | 45,303 | (495 | ) | -1 | % | ||||||||||
| (Gain)/Loss on contract extinguishment | (21,202 | ) | — | (21,202 | ) | ** | ||||||||||
| 1,015,474 | 840,377 | 175,097 | 21 | % | ||||||||||||
Operating income | $ | 162,025 | $ | 692,885 | $ | (530,860 | ) | -77 | % | |||||||
| (5) | Percentages take into |
| (6) | Noble and a subsidiary of Shell are involved in |
Our contract drilling services backlog reported above reflects estimated future revenues attributable to both signed drilling contracts and letters of 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 for various factors, including, but not limited to, shipyard and maintenance projects, 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 as a result of government-imposed restrictions or delays in the issuance of drilling permits. Furthermore, 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 June 30, 2012, we estimate Shell and Petrobras represented approximately 64% and 16%, respectively, of our backlog.
Nigerian Operations
As previously disclosed, in November 2010 we finalized settlements with the SEC and the Department of Justice as the result of an internal investigation of the legality under the United States Foreign Corrupt Practices Act (“FCPA”) and local laws of certain reimbursement payments made by our Nigerian affiliate to our customs agents in Nigeria. In January 2011, a subsidiary of Noble-Swiss resolved an investigation by the Nigerian Economic and Financial Crimes Commission and the Nigerian Attorney General Office into these same activities. Any additional investigation by these or other agencies could damage our reputation and result in substantial fines, sanctions, civil and/or criminal penalties and curtailment of operations in certain jurisdictions and might adversely affect our business, results of operations or financial condition. Further, resolving any additional investigations could be expensive and consume significant time and attention of our senior management.
As of June 30, 2012, our three rigs operating in Nigeria were operating under temporary import permits. To date, we have been successful in obtaining new, or extending existing, temporary import permits. 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. 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.
In April 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 (“NCDMB”) to implement and monitor the law and develop regulations pursuant to the law. The NCDMB has indicated that it will require all non-Nigerian offshore drilling companies to reorganize their local operations to include Nigerian indigenous minority interests in the operating assets and to obtain the approval of the NCDMB for future work in Nigeria. The NCDMB actively monitors awards for future work and reviews plans for local content and development of Nigerian interests. The law also established a Nigerian Content Development Fund to fund the implementation of the law, and requires that one percent of the value of every contract awarded in the Nigerian oil and gas industry be paid into the fund. We cannot predict what impact the law may have on our existing or future operations in Nigeria, but the effect on our operations there could be significant.
Results of Operations
For the Three Months Ended June 30, 2012 and 2011
Net income attributable to Noble Corporation (“Noble-Swiss”) for the three months ended June 30, 2012 (the “Current Quarter”) was $160 million, or $0.63 per diluted share, on operating revenues of $899 million, compared to net income for the three months ended June 30, 2011 (the “Comparable Quarter”) of $54 million, or $0.21 per diluted share, on operating revenues of $628 million.
The consolidated financial statements of Noble-Swiss include the accounts of Noble-Cayman; 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 2012 and 2011, 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 June 30, 2012 was $12 million higher than operating income for Noble-Swiss for the same period. The operating income difference is primarily a result of executive costs directly attributable to Noble-Swiss for operations support and 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 June 30, 2012 and 2011:
| Average Rig | Operating | Average | ||||||||||||||||||||||||||||||
| Utilization (1) | Days (2) | Dayrates | ||||||||||||||||||||||||||||||
| Three Months Ended June 30, | Three Months Ended June 30, | Three Months Ended June 30, | ||||||||||||||||||||||||||||||
| 2012 | 2011 | 2012 | 2011 | % Change | 2012 | 2011 | % Change | |||||||||||||||||||||||||
Jackups | 79 | % | 71 | % | 3,073 | 2,797 | 10 | % | $ | 97,612 | $ | 80,742 | 21 | % | ||||||||||||||||||
Semisubmersibles | 88 | % | 85 | % | 1,127 | 1,088 | 4 | % | 349,163 | 269,798 | 29 | % | ||||||||||||||||||||
Drillships | 65 | % | 58 | % | 469 | 317 | 48 | % | 329,761 | 220,953 | 49 | % | ||||||||||||||||||||
Other | 0 | % | 0 | % | — | — | — | — | — | — | ||||||||||||||||||||||
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| |||||||||||||||||||||||||||||
Total | 76 | % | 70 | % | 4,669 | 4,202 | 11 | % | $ | 181,663 | $ | 140,296 | 29 | % | ||||||||||||||||||
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| (1) | Information reflects our |
| (2) | Information reflects the |
Contract Drilling Services
The following table sets forth the operating revenues and the operating costs and expenses for our contract drilling services segment for the three months ended June 30, 2012 and 2011 (in thousands):
| Three Months Ended | ||||||||||||||||
| June 30, | Change | |||||||||||||||
| 2012 | 2011 | $ | % | |||||||||||||
Operating revenues: | ||||||||||||||||
Contract drilling services | $ | 848,237 | $ | 589,550 | $ | 258,687 | 44 | % | ||||||||
Reimbursables (1) | 30,124 | 22,982 | 7,142 | 31 | % | |||||||||||
Other | 11 | 313 | (302 | ) | -96 | % | ||||||||||
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| $ | 878,372 | $ | 612,845 | $ | 265,527 | 43 | % | |||||||||
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Operating costs and expenses: | ||||||||||||||||
Contract drilling services | $ | 423,502 | $ | 336,728 | $ | 86,774 | 26 | % | ||||||||
Reimbursables (1) | 24,307 | 17,606 | 6,701 | 38 | % | |||||||||||
Depreciation and amortization | 180,112 | 159,843 | 20,269 | 13 | % | |||||||||||
Selling, general and administrative | 24,835 | 21,359 | 3,476 | 16 | % | |||||||||||
Loss on impairment | 12,710 | — | 12,710 | ** | ||||||||||||
Gain on contract settlements/extinguishments, net | (33,255 | ) | — | (33,255 | ) | ** | ||||||||||
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| 632,211 | 535,536 | 96,675 | 18 | % | ||||||||||||
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Operating income | $ | 246,161 | $ | 77,309 | $ | 168,852 | 218 | % | ||||||||
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50
| Six Months Ended | ||||||||||||||||
| June 30, | Change | |||||||||||||||
| 2011 | 2010 | $ | % | |||||||||||||
Operating revenues: | ||||||||||||||||
| Labor contract drilling services | $ | 27,559 | $ | 15,817 | $ | 11,742 | 74 | % | ||||||||
| Reimbursables (1) | 1,827 | 1,694 | 133 | 8 | % | |||||||||||
| $ | 29,386 | $ | 17,511 | $ | 11,875 | 68 | % | |||||||||
Operating costs and expenses: | ||||||||||||||||
| Labor contract drilling services | $ | 17,273 | $ | 11,268 | $ | 6,005 | 53 | % | ||||||||
| Reimbursables (1) | 1,780 | 1,613 | 167 | 10 | % | |||||||||||
| Depreciation and amortization | 6,510 | 5,531 | 979 | 18 | % | |||||||||||
| Selling, general and administrative | 539 | 476 | 63 | 13 | % | |||||||||||
| 26,102 | 18,888 | 7,214 | 38 | % | ||||||||||||
Operating (loss) income | $ | 3,284 | $ | (1,377 | ) | $ | 4,661 | ** | ||||||||
| (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. | |
Operating Revenues — Changes in contract drilling services revenues for the Current Quarter as compared to the Comparable Quarter were driven by increases in both average dayrates and operating days. The 29 percent increase in average dayrates increased revenue by $193 million while the 11 percent increase in operating days increased revenues by approximately $66 million.
The change in contract drilling services revenues relates to our semisubmersibles, drillships and jackups, which generated approximately $100 million, $85 million and $74 million more revenue, respectively, in the Current Quarter.
The 29 percent increase in semisubmersible average dayrates resulted in an $89 million increase in revenues from the Comparable Quarter while the four percent increase in operating days resulted in an additional $11 million increase in revenues. The increase in semisubmersibles revenue is a result of our rigs returning to standard operating dayrates after experiencing lower standby rates due to drilling restrictions in the U.S. Gulf of Mexico in the Comparable Quarter, as well as theNoble Paul Romano returning to work after being stacked in the Comparable Quarter. The increase in operating days is primarily from theNoble Jim Day, theNoble Homer Ferrington,theNoble Paul Romanoand the Noble Clyde Boudreaux, which all operated at full capacity during the Current Quarter after being off contract for the majority of the Comparable Quarter.
The increase in drillship revenues was driven by a 49 percent increase in average dayrates and a 48 percent increase in operating days, resulting in a $51 million and a $34 million increase in revenues, respectively, from the Comparable Quarter. The increase in both average dayrates and operating days was the result of theNoble Bully I andNoble Bully II, which commenced their contracts with Shell in March 2012 and April 2012, respectively.
The 21 percent increase in jackup average dayrates resulted in a $52 million increase in revenues, which was coupled with a 10 percent increase in jackup operating days, resulting in a $22 million increase in revenues from the Comparable Quarter. The increase in average dayrates resulted from improved market conditions in the global shallow water market throughout the jackup fleet. The increase in utilization primarily related to rigs in Mexico and the Middle East, which experienced increased operating days during the Current Quarter.
Operating Costs and Expenses — Contract drilling services operating costs and expenses increased $87 million for the Current Quarter as compared to the Comparable Quarter. A portion of the increase is due to the crew-up and operating expenses for the recently completed rigs, which added approximately $25 million in expense during the Current Quarter. Excluding the additional expenses related to these rigs, our contract drilling costs increased $62 million in the Current Quarter from the Comparable Quarter. This change was primarily driven by a $16 million increase in labor, a $14 million increase related to shorebase support, a $7 million increase in insurance costs related to increased premiums on our new policy renewed in March 2012, a $7 million increase in mobilization due to the commencement of amortization of certain rig moves and the demobilization of rigs in Mexico, a $5 million increase in repair and maintenance, a $5 million increase in rig communications, transportation and rotation costs, a $5 million increase in rig catering and other miscellaneous expenses and a $3 million increase in safety, training and regulatory inspections.
The increase in depreciation and amortization in the Current Quarter from the Comparable Quarter was primarily attributable to assets placed in service, including theNoble Bully I andNoble Bully II.
Loss on impairment during the Current Quarter related to an impairment charge on our submersible fleet, primarily as a result of the declining market outlook for drilling services for this rig type.
Gain on contract settlements/extinguishments during the Current Quarter related to a $28 million gain on the settlement of an action with certain vendors for damages sustained during Hurricane Ike. Additionally, we received $5 million from a claims settlement on theNoble David Tinsley, which had experienced a “punch-through” while being positioned on location in 2009.
Other
The following table sets forth the operating revenues and the operating costs and expenses for our other services for the three months ended June 30, 2012 and 2011:
| Three Months Ended | ||||||||||||||||
| June 30, | Change | |||||||||||||||
| 2012 | 2011 | $ | % | |||||||||||||
Operating revenues: | ||||||||||||||||
Labor contract drilling services | $ | 19,863 | $ | 14,012 | $ | 5,851 | 42 | % | ||||||||
Reimbursables (1) | 688 | 1,140 | (452 | ) | -40 | % | ||||||||||
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| $ | 20,551 | $ | 15,152 | $ | 5,399 | 36 | % | |||||||||
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Operating costs and expenses: | ||||||||||||||||
Labor contract drilling services | $ | 11,847 | $ | 8,750 | $ | 3,097 | 35 | % | ||||||||
Reimbursables (1) | 663 | 1,117 | (454 | ) | -41 | % | ||||||||||
Depreciation and amortization | 3,503 | 3,276 | 227 | 7 | % | |||||||||||
Selling, general and administrative | 569 | 273 | 296 | 108 | % | |||||||||||
Loss on impairment | 5,635 | — | 5,635 | ** | ||||||||||||
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| 22,217 | 13,416 | 8,801 | 66 | % | ||||||||||||
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Operating (loss) income | $ | (1,666 | ) | $ | 1,736 | $ | (3,402 | ) | ** | |||||||
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| (1) | We record reimbursements from customers for out-of-pocket expenses as operating revenues and
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| ** | Not a meaningful percentage. |
Operating Revenues and Costs and Expenses — The change in both revenue and expense primarily relate to the commencement of a refurbishment project with our customer, Shell, for one of its rigs to be operated under a labor contract in Alaska, combined with operational increases and foreign currency fluctuations in our Canadian operations.
Loss on impairment during the Current Quarter related to an impairment charge on certain corporate assets, as a result of a declining market for, and the potential disposal of, the assets.
Other Income and Expenses
Interest Expense, net of amount capitalized — Interest expense, net of amount capitalized, increased $6 million in the Current Quarter as compared to the Comparable Quarter. The increase is a result of the $1.2 billion of senior notes issued in February 2012, partially offset by higher capitalized interest related to the continued construction under our newbuild program.
Income Tax Provision — Our income tax provision increased $37 million in the Current Quarter as a result of increased pre-tax income and a higher effective tax rate during the Current Quarter. The increase in pre-tax earnings generated a $24 million increase in tax expense while the increase in the income tax rate during the Current Quarter increased the income tax provision by $13 million. The increase in the income tax rate was primarily due to the net gain from the settlements and impairment charges, primarily subject to tax in the United States, coupled with other discrete tax items recognized during the Current Quarter.
For the Six Months Ended June 30, 2012 and 2011
Net income attributable to Noble Corporation (“Noble-Swiss”) for the six months ended June 30, 2012 (the “Current Period”) was $280 million, or $1.10 per diluted share, on operating revenues of $1.7 billion, compared to net income for the six months ended June 30, 2011 (the “Comparable Period”) of $109 million, or $0.43 per diluted share, on operating revenues of $1.2 billion.
The consolidated financial statements of Noble-Swiss include the accounts of Noble-Cayman; 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 2012 and 2011, would be the same as the information presented below regarding Noble-Swiss in all material respects, except operating income for Noble-Cayman for the six months ended June 30, 2012 was $27 million higher than operating income for Noble-Swiss for the same period. The operating income difference is primarily a result of executive costs directly attributable to Noble-Swiss for operations support and 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 six months ended June 30, 2012 and 2011:
| Average Rig | Operating | Average | ||||||||||||||||||||||||||||||
| Utilization (1) | Days (2) | Dayrates | ||||||||||||||||||||||||||||||
| Six Months Ended June 30, | Six Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||||||||||||||||||
| 2012 | 2011 | 2012 | 2011 | % Change | 2012 | 2011 | % Change | |||||||||||||||||||||||||
Jackups | 79 | % | 67 | % | 6,162 | 5,178 | 19 | % | $ | 93,988 | $ | 80,799 | 16 | % | ||||||||||||||||||
Semisubmersibles | 87 | % | 77 | % | 2,219 | 1,956 | 13 | % | 352,084 | 273,374 | 29 | % | ||||||||||||||||||||
Drillships | 59 | % | 62 | % | 754 | 678 | 11 | % | 310,463 | 263,905 | 18 | % | ||||||||||||||||||||
Other | 0 | % | 0 | % | — | — | — | — | — | — | ||||||||||||||||||||||
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Total | 75 | % | 65 | % | 9,135 | 7,812 | 17 | % | $ | 174,555 | $ | 144,916 | 20 | % | ||||||||||||||||||
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| (1) | Information reflects our |
| (2) | Information reflects the number of days that our rigs were operating under contract. |
Contract Drilling Services
The following table sets forth the operating revenues and the operating costs and expenses for our contract drilling services segment for the six months ended June 30, 2012 and 2011 (in thousands):
| Six Months Ended | ||||||||||||||||
| June 30, | Change | |||||||||||||||
| 2012 | 2011 | $ | % | |||||||||||||
Operating revenues: | ||||||||||||||||
Contract drilling services | $ | 1,594,547 | $ | 1,132,155 | $ | 462,392 | 41 | % | ||||||||
Reimbursables (1) | 64,826 | 44,586 | 20,240 | 45 | % | |||||||||||
Other | 242 | 758 | (516 | ) | -68 | % | ||||||||||
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| $ | 1,659,615 | $ | 1,177,499 | $ | 482,116 | 41 | % | |||||||||
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Operating costs and expenses: | ||||||||||||||||
Contract drilling services | $ | 843,513 | $ | 643,091 | $ | 200,422 | 31 | % | ||||||||
Reimbursables (1) | 54,480 | 34,046 | 20,434 | 60 | % | |||||||||||
Depreciation and amortization | 348,060 | 314,731 | 33,329 | 11 | % | |||||||||||
Selling, general and administrative | 47,679 | 44,808 | 2,871 | 6 | % | |||||||||||
Loss on impairment | 12,710 | — | 12,710 | ** | ||||||||||||
Gain on contract settlements/extinguishments, net | (33,255 | ) | (21,202 | ) | (12,053 | ) | 57 | % | ||||||||
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| 1,273,187 | 1,015,474 | 257,713 | 25 | % | ||||||||||||
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Operating income | $ | 386,428 | $ | 162,025 | $ | 224,403 | 138 | % | ||||||||
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| (1) | We record reimbursements from customers for out-of-pocket expenses as operating revenues and the related direct costs as operating expenses. Changes in |
| ** | Not a meaningful percentage. |
Operating Revenues — Changes in contract drilling services revenues for the Current Period as compared to the Comparable Period were driven by increases in both average dayrates and operating days. The 20 percent increase in average dayrates increased revenues by approximately $270 million while the 17 percent increase in operating days increased revenue by $192 million.
The change in contract drilling services revenues relates to our semisubmersibles, jackups and drillships, which generated approximately $247 million, $161 million and $55 million more revenue, respectively, in the Current Period.
The 29 percent increase in semisubmersible average dayrates resulted in a $175 million increase in revenues from the Comparable Period while the increase in operating days of 13 percent resulted in an additional $72 million increase in revenues. The increase in semisubmersibles revenue is a result of our rigs returning to standard operating dayrates after experiencing lower standby rates due to drilling restrictions in the U.S. Gulf of Mexico in the Comparable Period, as well as theNoble Paul Romano returning to work after being stacked in the Comparable Period. The increase in operating days is primarily from theNoble Jim Day, theNoble Homer Ferrington,theNoble Paul Romanoand the Noble Clyde Boudreaux, which all operated at full capacity during the Current Period after being off contract for the majority of the Comparable Period.
The 16 percent increase in jackup average dayrates resulted in an $81 million increase in revenues, which was coupled with a 19 percent increase in operating days, resulting in an $80 million increase in revenues from the Comparable Period. The increase in average dayrates resulted from improved market conditions in the global shallow water market throughout the jackup fleet. The increase in utilization primarily related to rigs in Mexico and the Middle East, which experienced increased operating days during the Current Period.
The increase in drillship revenues was driven by an 18 percent increase in average dayrates and an 11 percent increase in operating days, resulting in a $35 million and a $20 million increase in revenues, respectively, from the Comparable Period. The increase in both average dayrates and operating days was the result of theNoble Bully I andNoble Bully II, which commenced their contracts with Shell in March 2012 and April 2012, respectively, partially offset by theNoble Phoenix, which is completing its shipyard project in anticipation of substitution for theNoble Muravlenko in Brazil.
Operating Costs and Expenses — Contract drilling services operating costs and expenses increased $200 million for the Current Period as compared to the Comparable Period. A portion of the increase is due to the crew-up and operating expenses for the recently completed rigs, which have added approximately $53 million in expense during the Current Period. Excluding the additional expenses related to these rigs, our contract drilling costs increased $147 million in the Current Period from the Comparable Period. This change was primarily driven by a $46 million increase in labor, the majority of which is due to salary increases effective in the second quarter of the prior year, a $29 million increase in mobilization due to the amortization of certain rig moves and the demobilization of rigs in Mexico, a $25 million increase related to shorebase support, an $11 million increase in repair and maintenance, a $9 million increase in rig catering and other miscellaneous expenses, a $9 million increase in insurance costs related to increased premiums on our new policy renewed in March 2012, an $8 million increase in safety, training and regulatory inspections, a $5 million increase in rotation costs and a $5 million increase for rig communications and rental equipment.
The increase in depreciation and amortization in the Current Period from the Comparable Period was primarily attributable to assets placed in service during the Current Period, including theNoble Bully I andNoble Bully II.
Loss on impairment during the Current Period related to an impairment charge on our submersible fleet, primarily as a result of the declining market outlook for drilling services for this rig type.
Gain on contract settlements/extinguishments during the Current Period related to a $28 million gain on the settlement of an action with certain vendors for damages sustained during Hurricane Ike. Additionally, we received $5 million from a claims settlement on theNoble David Tinsley, which had experienced a “punch-through” while being positioned on location in 2009.
Other
The following table sets forth the operating revenues and the operating costs and expenses for our other services for the six months ended June 30, 2012 and 2011:
| Six Months Ended | ||||||||||||||||
| June 30, | Change | |||||||||||||||
| 2012 | 2011 | $ | % | |||||||||||||
Operating revenues: | ||||||||||||||||
Labor contract drilling services | $ | 35,871 | $ | 27,559 | $ | 8,312 | 30 | % | ||||||||
Reimbursables (1) | 1,127 | 1,827 | (700 | ) | -38 | % | ||||||||||
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| $ | 36,998 | $ | 29,386 | $ | 7,612 | 26 | % | |||||||||
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Operating costs and expenses: | ||||||||||||||||
Labor contract drilling services | $ | 21,079 | $ | 17,273 | $ | 3,806 | 22 | % | ||||||||
Reimbursables (1) | 1,091 | 1,780 | (689 | ) | -39 | % | ||||||||||
Depreciation and amortization | 6,632 | 6,510 | 122 | 2 | % | |||||||||||
Selling, general and administrative | 851 | 539 | 312 | 58 | % | |||||||||||
Loss on impairment | 5,635 | — | 5,635 | ** | ||||||||||||
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| 35,288 | 26,102 | 9,186 | 35 | % | ||||||||||||
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Operating (loss) income | $ | 1,710 | $ | 3,284 | $ | (1,574 | ) | ** | ||||||||
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| (1) | We record reimbursements from customers for out-of-pocket expenses as operating revenues and the flows. |
| ** | Not a meaningful percentage. |
Operating Revenues and Costs and Expenses — The change in both revenue and expense primarily relate to the commencement of a refurbishment project with our customer, Shell, for one of its rigs to be operated under a labor contract in Alaska, combined with operational increases and foreign currency fluctuations in our Canadian operations.
Loss on impairment during the Current Period related to an impairment charge on certain corporate assets, as a result of a declining market for, and the potential disposal of, the assets.
Other Income and Expenses
Interest Expense, net of amount capitalized — Interest expense, net of amount capitalized, decreased $3 million in the Current Period as compared to the Comparable Period. The decrease is a result of higher capitalized interest in the Current Period as compared to the Comparable Period due primarily to the continued construction under our newbuild program, which was partially offset by the issuance of $1.2 billion in senior notes in February 2012. During the Current Period, we capitalized approximately 71 percent of total interest charges versus approximately 62 percent during the Comparable Period.
Income Tax Provision — Our income tax provision increased $43 million in the Current Period primarily as a result of a higher pre-tax income and effective tax rate during the Current Period. The increase in pre-tax earnings generated a $42 million increase in tax expense while the increase in the income tax rate during the Current Period increased the income tax provision by $1 million. The increase in the income tax rate was primarily due to the net gain from the settlements and impairment charges, primarily subject to tax in the United States, coupled with other discrete tax items recognized in the Current Period.
Liquidity and Capital Resources
Overview
Net cash from operating activities for the Current Period increased to $536 million from $233 million in the Comparable Period. The increase in net cash from operating activities in the Current Period was primarily attributable to a significant increase in net income. We had working capital of $481 million and $232 million at June 30, 2012 and December 31, 2011, respectively. As a result of our $1.2 billion debt offering in February 2012 and outstanding borrowings of $150 million on our Credit Facilities at June 30, 2012, total debt as a percentage of total debt plus equity increased to 35 percent at June 30, 2012 from 34 percent at December 31, 2011.
At June 30, 2012, we had a total contract drilling services backlog of approximately $14.4 billion. Our backlog as of June 30, 2012 reflects a commitment of 79 percent of available operating days for the remainder of 2012 and 61 percent for 2013. See additional information regarding our backlog at “Contract Drilling Services Backlog.”
Our principal capital resource in the Current Period was cash generated from our $1.2 billion senior notes offering and net cash from operating activities of $536 million. Cash generated during the Current Period was primarily used to repay borrowings outstanding under our Credit Facilities and to fund our capital expenditure program.
Our currently anticipated future cash flow needs include the following:
committed capital expenditures, including expenditures for newbuild projects currently underway;
normal recurring operating expenses;
discretionary capital expenditures, including various capital upgrades;
potential newbuild projects and acquisitions;
payments of dividends; and
repayment of maturing debt.
We currently expect to fund these cash flow needs with cash generated by our operations, cash on hand and borrowings under our existing Credit Facilities.
Capital Expenditures
Our primary use of available liquidity during 2012 is for capital expenditures. Capital expenditures, including capitalized interest, totaled $665 million and $1.4 billion for the six months ended June 30, 2012 and 2011, respectively.
At June 30, 2012, we had 11 rigs under construction, and capital expenditures, excluding capitalized interest, for new construction during the first six months of 2012 totaled $162 million, as follows (in millions):
Rig type/name | ||||
Currently under construction | ||||
Drillships | ||||
Noble Don Taylor (formerly HHI Drillship I) | $ | 56.2 | ||
Noble Globetrotter II | 37.7 | |||
Noble Bob Douglas (formerly HHI Drillship II) | 4.2 | |||
Noble Sam Croft (formerly HHI Drillship III) | 1.8 | |||
HHI Drillship IV | 1.2 | |||
Jackups | ||||
Noble Regina Allen (formerly Noble Jackup I) | 3.4 | |||
Noble Mick O’Brien (formerly Noble Jackup II) | 2.7 | |||
Noble Houston Colbert (formerly Noble Jackup III) | 1.8 | |||
Noble Sam Turner (formerly Noble Jackup IV) | 1.5 | |||
Noble Tom Prosser (formerly Noble Jackup V) | 1.5 | |||
Noble Jackup VI | 1.5 | |||
Recently completed construction projects | ||||
Noble Bully II | 17.9 | |||
Noble Globetrotter I | 25.4 | |||
Noble Bully I | 4.7 | |||
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| |||
Total Newbuild Capital Expenditures | $ | 161.5 | ||
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| |||
In addition to the newbuild expenditures noted above, capital expenditures for the six months ended June 30, 2012 consisted of the following:
$327 million for major projects, including $34 million in subsea related expenditures and $24 million to upgrade two drillships currently operating in Brazil;
$99 million for other capitalized expenditures, including drilling equipment upgrades which generally have useful lives ranging from 3 to 5 years; and
$77 million in capitalized interest.
Our total capital expenditure estimate for 2012 is approximately $1.9 billion, including capitalized interest, which may fluctuate as a result of the timing of completion of ongoing projects.
In connection with our capital expenditure program, as of June 30, 2012, we had outstanding commitments, including shipyard and purchase commitments, for approximately $3.1 billion, of which we expect to spend approximately $1.6 billion within the next twelve months.
From time to time we consider possible projects that would require expenditures that are not included in our capital budget, and such unbudgeted 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 expected amounts 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.
Dividends
Our most recent quarterly payment to shareholders, totaling approximately $36 million (or 0.13 CHF per share), in the form of a par value reduction, was declared on April 27, 2012 and paid on May 16, 2012 to holders of record on May 7, 2012. This payment represented the final tranche of our previously approved payment to shareholders in the form of a par value reduction.
In April 2012, our shareholders approved the payment of a dividend funded from our capital contribution reserve aggregating $0.52 per share to be paid in four equal installments scheduled for August 2012, November 2012, February 2013 and May 2013. These dividends will require us to make cash payments of approximately $66 million in 2012, based on the number of shares currently outstanding. In connection with this approval and the resulting obligation to shareholders, we recorded dividends payable of approximately $133 million during the second quarter of 2012. Any additional issuances of shares would further increase our obligation.
The declaration and payment of dividends in the future by Noble-Swiss or the distributions of capital, including returns of capital in the form of par value 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 shareholders.
Credit Facilities and Long-Term Debt
During June 2012, we replaced our $575 million credit facility, which has a capacity of $600 million, matureswas scheduled to mature in 2013, and during the first quarter of 2011, we entered into an additional $600 million revolvingwith a new $1.2 billion credit facility which matures in 2017. We continue to maintain our $600 million credit facility, which matures in 2015, which combined with our new facility, gives us a total borrowing capacity under the two facilities (together referred to as the “Credit Facilities”). of $1.8 billion. The covenants and events of default under the Credit Facilities are substantially similar, and each facility contains a covenant that limits our ratio of debt to total tangible capitalization, as defined in the Credit Facilities, to 0.60. At June 30, 2012, our ratio of debt to total tangible capitalization was 0.35. We were in compliance with all covenants under the Credit Facilities as of June 30, 2011.
The Credit Facilities provide us with the ability to issue up to $300$375 million in letters of credit in the aggregate. While the issuance of letters of credit does not increase our borrowings outstanding under the Credit Facilities, it does reduce the amount available. At June 30, 2011,2012, we had borrowings of $425 million outstanding and no letters of credit outstanding under the Credit Facilities. We believe that we maintain good relationships with our lenders under the Credit 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 Facilities.
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At June 30, 2011,2012, we had letters of credit of $84$50 million and performance and tax assessment bonds totaling $347$306 million supported by surety bonds outstanding. Of the letters of credit outstanding, $19 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 $3.5$4.4 billion at June 30, 20112012 as compared to $2.8$4.1 billion at December 31, 2010.2011. The increase in debt is a result of the issuance of $1.1$1.2 billion aggregate principal amount of senior notes, and $385 million of additional net borrowings on our Credit Facilities, partially offset by the net repayment of $693$825 million in joint venture credit facilities.on the Credit Facilities. For additional information on our long-term debt, see Note 8 to our consolidated financial statements.
New Accounting Pronouncements
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In June 2011, the FASB issued guidance thatASU No. 2011-05, which amends ASC Topic 220, “Comprehensive Income.” This ASU allows an entity to present the total of comprehensive income, the components of net income, and the components of other comprehensive income either in a single continuous statement of comprehensive income or in two separate but consecutive statements. The amendment no longer allows an entity to show changes to other comprehensive income solely through the statement of equity. For publicly traded entities, the guidance is effective for annual and interim reporting periods beginning on or after December 15, 2011. While we are still evaluating this guidance, theOur adoption of this guidance willdid not have a material impact on our financial condition, results of operations, cash flows or financial disclosures.
| Item 3. | Quantitative and Qualitative Disclosures About Market Risk |
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Interest Rate Risk
We are subject to market risk exposure related to changes in interest rates on borrowings under the Credit Facilities. Interest on borrowings under the Credit Facilities is at an agreed upon percentage point spread over LIBOR, or a base rate stated in the agreements. At June 30, 2011,2012, we had $425$150 million outstanding under the Credit Facilities. Assuming our current level of debt, a change in LIBOR rates of 100 basis pointsone percent would increase our interest charges by approximately $4$2 million per year.
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 totallong-term debt was $3.7$4.7 billion and $2.9$4.3 billion at June 30, 20112012 and December 31, 2010,2011, respectively. The increase was primarily a result of our issuance of $1.1$1.2 billion in debt in February 2011 and $385 million of additional net borrowings on the Credit Facilities,2012, partially offset by the net repayment of $693$825 million in joint venture credit facilitieson our Credit Facilities, coupled with changes in fair value related to changes in interest rates and market perceptions of our credit risk.
Foreign Currency Risk
As a multinational company, we conduct business 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 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 “Accumulated other comprehensive loss” (“AOCL”). Amounts recorded in 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.
At June 30, 2012, we typically maintainhad no outstanding derivative contracts. Depending on market conditions, we may elect to utilize short-term forward currency contracts settling monthly in their respective local currencies. The forward contract settlements in the remainder of 2011 represent approximately 52 percent of these forecasted local currency requirements. The notional amount of the forward contracts outstanding, expressed in U.S. dollars, was approximately $113 million at June 30, 2011. Total unrealized gains related to these forward contracts were $4 million as of June 30, 2011 and were recorded as part of AOCL. A 10 percent change in the exchange rate for the local currencies would change the fair value of these forward contracts by approximately $12 million.
future.
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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 June 30, 2011, our liability under the Restoration Plan totaled $7 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 million at June 30, 2011. A 10 percent change in the fair value of the phantom investments would change our liability by approximately $0.7 million. Any change in the fair value of the phantom investments would be mitigated by a change in the investments held for our benefit.
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”).employees. 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. | Controls and Procedures |
David W. Williams, Chairman, President and Chief Executive Officer of Noble-Swiss, and Thomas L. Mitchell,James A. MacLennan, Senior Vice President and Chief Financial Officer Treasurer and Controller 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. MitchellMacLennan have concluded that Noble-Swiss’ disclosure controls and procedures were effective as of June 30, 2011.2012. 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 June 30, 2011.2012. 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.
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| Item 1. | Legal Proceedings |
Information regarding legal proceedings is set forth in NoteNotes 6, 7 and 13 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 2. | Unregistered Sales of Equity Securities and Use of Proceeds |
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| 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(1) | or Programs(1) | ||||||||||||
| April 2011 | 705 | $ | 43.33 | (2) | — | 6,769,891 | ||||||||||
| May 2011 | 60,000 | $ | 41.87 | (2) | — | 6,769,891 | ||||||||||
| June 2011 | 29,330 | $ | 37.45 | (2) | — | 6,769,891 | ||||||||||
| 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 | ||||||||||||
April 2012 | 1,532 | $ | 37.96 | (1) | — | 6,769,891 | ||||||||||
May 2012 | 156 | $ | 37.94 | (1) | — | 6,769,891 | ||||||||||
June 2012 | 103,693 | $ | 31.34 | (1) | — | 6,769,891 | ||||||||||
| (1) |
The information required by this Item 6 is set forth in the Index to Exhibits accompanying this Quarterly Report on Form 10-Q and is incorporated herein by reference.
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| Noble Corporation, a Swiss corporation | ||||||||
| /s/ David W. Williams | August 6, 2012 | |||||||
| David W. Williams | Date | |||||||
| Chairman, President and Chief Executive Officer | ||||||||
| (Principal Executive Officer) | ||||||||
| /s/ James A. MacLennan | ||||||||
| Senior Vice President and Chief Financial Officer | ||||||||
| (Principal Financial | ||||||||
Noble Corporation, a Cayman Islands company | ||||||||
/s/ David W. Williams | August 6, 2012 | |||||||
| 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 | ||||||||
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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). | ||||
| 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 | Revolving Credit Agreement dated as of | ||||
| 4.2 | |||||
| 4.3 | |||||
| 10.1* | |||||
| 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 | ||||
| 31.3 | Certification of Dennis J. Lubojacky pursuant to the U.S. Securities Exchange Act of 1934, as amended, Rule 13a- 14(a) or Rule 15d-14(a), for Noble-Cayman. | ||||
| 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. | |||||
| Certification of | |||||
| 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-Cayman. | |||||
| Interactive Data File | |||||
| * | Management contract or compensatory plan or arrangement |
| + | Furnished in accordance with Item 601(b)(32)(ii) of Regulation S-K. |
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