UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
| x | ||
| QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended: September 30, 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 October 28, 2011:31, 2012: Noble Corporation (Switzerland) — 252,437,480
Number of shares outstanding at October 28, 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) to Form 10-Q and is therefore filing this Form 10-Q with the reduced disclosure format contemplated by paragraphs (b) and (c) of General Instruction H(2) of Form 10-Q.
| Page | ||||||||
| PART I | ||||||||
Item 1 | Financial Statements | |||||||
Noble Corporation (Noble-Swiss) Financial Statements: | ||||||||
| 3 | ||||||||
| 4 | ||||||||
| 5 | ||||||||
Consolidated Statement of Cash Flows for the nine months ended September 30, 2012 and 2011 | 6 | |||||||
Consolidated Statement of Equity for the nine months ended September 30, 2012 and 2011 | 7 | |||||||
Noble Corporation (Noble-Cayman) Financial Statements: | ||||||||
| 8 | ||||||||
| 9 | ||||||||
| 10 | ||||||||
Consolidated Statement of Cash Flows for the nine months ended September 30, 2012 and 2011 | 11 | |||||||
Consolidated Statement of Equity for the nine months ended September 30, 2012 and 2011 | 12 | |||||||
| 13 | ||||||||
Item 2 | ||||||||
Item 3 | ||||||||
Item 4 | 51 | |||||||
PART II | ||||||||
Item | ||||||||
Item 2 | ||||||||
Item 6 | 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)
| September 30, | December 31, | |||||||
| 2011 | 2010 | |||||||
ASSETS | ||||||||
| Current assets | ||||||||
| Cash and cash equivalents | $ | 197,015 | $ | 337,871 | ||||
| Accounts receivable | 601,161 | 387,414 | ||||||
| Taxes receivable | 57,335 | 81,066 | ||||||
| Prepaid expenses | 61,166 | 35,502 | ||||||
| Other current assets | 84,767 | 69,941 | ||||||
| Total current assets | 1,001,444 | 911,794 | ||||||
| Property and equipment, at cost | 14,420,267 | 12,643,866 | ||||||
| Accumulated depreciation | (2,999,235 | ) | (2,595,779 | ) | ||||
| Property and equipment, net | 11,421,032 | 10,048,087 | ||||||
| Other assets | 529,057 | 342,506 | ||||||
Total assets | $ | 12,951,533 | $ | 11,302,387 | ||||
LIABILITIES AND EQUITY | ||||||||
| Current liabilities | ||||||||
| Current maturities of long-term debt | $ | — | $ | 80,213 | ||||
| Accounts payable | 320,053 | 374,814 | ||||||
| Accrued payroll and related costs | 124,317 | 125,663 | ||||||
| Interest payable | 22,129 | 40,260 | ||||||
| Taxes payable | 89,700 | 96,448 | ||||||
| Other current liabilities | 93,651 | 84,049 | ||||||
| Total current liabilities | 649,850 | 801,447 | ||||||
| Long-term debt | 3,811,866 | 2,686,484 | ||||||
| Deferred income taxes | 299,625 | 258,822 | ||||||
| Other liabilities | 218,523 | 268,000 | ||||||
Total liabilities | 4,979,864 | 4,014,753 | ||||||
| Commitments and contingencies | ||||||||
| Shareholders’ equity | ||||||||
| Shares; 252,718 and 262,415 shares outstanding | 796,067 | 917,684 | ||||||
| Treasury shares, at cost; 285 and 10,140 shares | (10,531 | ) | (373,967 | ) | ||||
| Additional paid-in capital | 49,010 | 39,006 | ||||||
| Retained earnings | 6,549,441 | 6,630,500 | ||||||
| Accumulated other comprehensive loss | (56,212 | ) | (50,220 | ) | ||||
Total shareholders’ equity | 7,327,775 | 7,163,003 | ||||||
| Noncontrolling interests | 643,894 | 124,631 | ||||||
Total equity | 7,971,669 | 7,287,634 | ||||||
Total liabilities and equity | $ | 12,951,533 | $ | 11,302,387 | ||||
| �� | ||||||||
| September 30, 2012 | December 31, 2011 | |||||||
ASSETS | ||||||||
Current assets | ||||||||
Cash and cash equivalents | $ | 218,467 | $ | 239,196 | ||||
Accounts receivable | 791,408 | 587,163 | ||||||
Taxes receivable | 118,540 | 75,284 | ||||||
Prepaid expenses | 64,644 | 35,796 | ||||||
Other current assets | 111,433 | 122,173 | ||||||
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Total current assets | 1,304,492 | 1,059,612 | ||||||
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Property and equipment, at cost | 16,637,626 | 15,540,178 | ||||||
Accumulated depreciation | (3,825,482 | ) | (3,409,833 | ) | ||||
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Property and equipment, net | 12,812,144 | 12,130,345 | ||||||
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Other assets | 343,770 | 305,202 | ||||||
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Total assets | $ | 14,460,406 | $ | 13,495,159 | ||||
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LIABILITIES AND EQUITY | ||||||||
Current liabilities | ||||||||
Accounts payable | $ | 298,363 | $ | 436,006 | ||||
Accrued payroll and related costs | 145,595 | 117,907 | ||||||
Interest payable | 23,851 | 54,419 | ||||||
Taxes payable | 130,551 | 94,920 | ||||||
Dividends payable | 99,582 | — | ||||||
Other current liabilities | 144,267 | 123,928 | ||||||
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Total current liabilities | 842,209 | 827,180 | ||||||
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Long-term debt | 4,639,429 | 4,071,964 | ||||||
Deferred income taxes | 235,851 | 242,791 | ||||||
Other liabilities | 353,595 | 255,372 | ||||||
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Total liabilities | 6,071,084 | 5,397,307 | ||||||
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Commitments and contingencies | ||||||||
Shareholders’ equity | ||||||||
Shares; 253,299 and 252,639 shares outstanding | 709,993 | 766,595 | ||||||
Treasury shares, at cost; 586 and 287 shares | (20,986 | ) | (10,553 | ) | ||||
Additional paid-in capital | 75,696 | 48,356 | ||||||
Retained earnings | 6,938,434 | 6,676,444 | ||||||
Accumulated other comprehensive loss | (72,077 | ) | (74,321 | ) | ||||
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Total shareholders’ equity | 7,631,060 | 7,406,521 | ||||||
Noncontrolling interests | 758,262 | 691,331 | ||||||
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Total equity | 8,389,322 | 8,097,852 | ||||||
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Total liabilities and equity | $ | 14,460,406 | $ | 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 | Nine Months Ended | |||||||||||||||
| September 30, | September 30, | |||||||||||||||
| 2011 | 2010 | 2011 | 2010 | |||||||||||||
Operating revenues | ||||||||||||||||
| Contract drilling services | $ | 704,892 | $ | 584,919 | $ | 1,837,047 | $ | 2,081,075 | ||||||||
| Reimbursables | 17,438 | 19,177 | 63,851 | 57,163 | ||||||||||||
| Labor contract drilling services | 15,564 | 7,887 | 43,123 | 23,704 | ||||||||||||
| Other | 8 | 635 | 766 | 1,449 | ||||||||||||
| 737,902 | 612,618 | 1,944,787 | 2,163,391 | |||||||||||||
Operating costs and expenses | ||||||||||||||||
| Contract drilling services | 358,547 | 315,844 | 1,001,638 | 845,870 | ||||||||||||
| Reimbursables | 13,971 | 14,351 | 49,797 | 44,459 | ||||||||||||
| Labor contract drilling services | 8,053 | 5,302 | 25,326 | 16,570 | ||||||||||||
| Depreciation and amortization | 166,213 | 143,282 | 487,454 | 385,366 | ||||||||||||
| Selling, general and administrative | 27,536 | 25,482 | 72,883 | 71,261 | ||||||||||||
| Gain on contract extinguishments, net | — | — | (21,202 | ) | — | |||||||||||
| 574,320 | 504,261 | 1,615,896 | 1,363,526 | |||||||||||||
Operating income | 163,582 | 108,357 | 328,891 | 799,865 | ||||||||||||
Other income (expense) | ||||||||||||||||
| Interest expense, net of amount capitalized | (11,530 | ) | (4,144 | ) | (45,400 | ) | (5,119 | ) | ||||||||
| Interest income and other, net | 1,117 | 2,561 | 3,175 | 7,193 | ||||||||||||
Income before income taxes | 153,169 | 106,774 | 286,666 | 801,939 | ||||||||||||
| Income tax provision | (17,614 | ) | (20,287 | ) | (42,481 | ) | (126,801 | ) | ||||||||
Net income | 135,555 | 86,487 | 244,185 | 675,138 | ||||||||||||
| Net income attributable to noncontrolling interests | (238 | ) | (467 | ) | (290 | ) | (467 | ) | ||||||||
Net income attributable to Noble Corporation | $ | 135,317 | $ | 86,020 | $ | 243,895 | $ | 674,671 | ||||||||
Net income per share | ||||||||||||||||
| Basic | $ | 0.53 | $ | 0.34 | $ | 0.96 | $ | 2.63 | ||||||||
| Diluted | $ | 0.53 | $ | 0.34 | $ | 0.96 | $ | 2.62 | ||||||||
| Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
| 2012 | 2011 | 2012 | 2011 | |||||||||||||
Operating revenues | ||||||||||||||||
Contract drilling services | $ | 833,212 | $ | 704,892 | $ | 2,427,759 | $ | 1,837,047 | ||||||||
Reimbursables | 28,137 | 17,438 | 94,090 | 63,851 | ||||||||||||
Labor contract drilling services | 22,667 | 15,564 | 58,538 | 43,123 | ||||||||||||
Other | 16 | 8 | 258 | 766 | ||||||||||||
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| 884,032 | 737,902 | 2,580,645 | 1,944,787 | |||||||||||||
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Operating costs and expenses | ||||||||||||||||
Contract drilling services | 449,125 | 358,547 | 1,292,638 | 1,001,638 | ||||||||||||
Reimbursables | 21,047 | 13,971 | 76,618 | 49,797 | ||||||||||||
Labor contract drilling services | 12,991 | 8,053 | 34,070 | 25,326 | ||||||||||||
Depreciation and amortization | 195,087 | 166,213 | 549,779 | 487,454 | ||||||||||||
Selling, general and administrative | 26,858 | 27,536 | 75,388 | 72,883 | ||||||||||||
Loss on impairment | — | — | 18,345 | — | ||||||||||||
Gain on contract settlements/extinguishments, net | — | — | (33,255 | ) | (21,202 | ) | ||||||||||
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| 705,108 | 574,320 | 2,013,583 | 1,615,896 | |||||||||||||
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Operating income | 178,924 | 163,582 | 567,062 | 328,891 | ||||||||||||
Other income (expense) | ||||||||||||||||
Interest expense, net of amount capitalized | (25,635 | ) | (11,530 | ) | (56,783 | ) | (45,400 | ) | ||||||||
Interest income and other, net | 1,553 | 1,117 | 4,526 | 3,175 | ||||||||||||
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Income before income taxes | 154,842 | 153,169 | 514,805 | 286,666 | ||||||||||||
Income tax provision | (25,162 | ) | (17,614 | ) | (93,107 | ) | (42,481 | ) | ||||||||
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Net income | 129,680 | 135,555 | 421,698 | 244,185 | ||||||||||||
Net income attributable to noncontrolling interests | (14,906 | ) | (238 | ) | (26,931 | ) | (290 | ) | ||||||||
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Net income attributable to Noble Corporation | $ | 114,774 | $ | 135,317 | $ | 394,767 | $ | 243,895 | ||||||||
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Net income per share | ||||||||||||||||
Basic | $ | 0.45 | $ | 0.53 | $ | 1.55 | $ | 0.96 | ||||||||
Diluted | $ | 0.45 | $ | 0.53 | $ | 1.55 | $ | 0.96 | ||||||||
See accompanying notes to the unaudited consolidated financial statements.
4
(In thousands)
(Unaudited)
| Nine Months Ended | ||||||||
| September 30, | ||||||||
| 2011 | 2010 | |||||||
Cash flows from operating activities | ||||||||
| Net income | $ | 244,185 | $ | 675,138 | ||||
| Adjustments to reconcile net income to net cash from operating activities: | ||||||||
| Depreciation and amortization | 487,454 | 385,366 | ||||||
| Gain on contract extinguishments, net | (21,202 | ) | — | |||||
| Deferred income taxes | (34,549 | ) | (29,586 | ) | ||||
| Share-based compensation expense | 26,857 | 26,906 | ||||||
| Net change in other assets and liabilities | (228,299 | ) | 227,873 | |||||
| Net cash from operating activities | 474,446 | 1,285,697 | ||||||
Cash flows from investing activities | ||||||||
| Capital expenditures | (1,987,988 | ) | (886,093 | ) | ||||
| Change in accrued capital expenditures | (48,782 | ) | 4,213 | |||||
| Refund from contract extinguishments | 18,642 | — | ||||||
| Acquisition of FDR Holdings, Ltd., net of cash acquired | — | (1,629,644 | ) | |||||
| Net cash from investing activities | (2,018,128 | ) | (2,511,524 | ) | ||||
Cash flows from financing activities | ||||||||
| Increase in bank credit facilities, net | 675,000 | — | ||||||
| Proceeds from issuance of senior notes, net of debt issuance costs | 1,087,833 | 1,238,074 | ||||||
| Contributions from joint venture partners | 481,000 | 35,000 | ||||||
| Payments of joint venture debt | (693,494 | ) | — | |||||
| Settlement of interest rate swaps | (29,032 | ) | (2,041 | ) | ||||
| Par value reduction payments | (114,453 | ) | (193,869 | ) | ||||
| Financing costs on credit facilities | (2,835 | ) | — | |||||
| Proceeds from employee stock transactions | 9,018 | 9,703 | ||||||
| Repurchases of employee shares surrendered for taxes | (10,211 | ) | (9,961 | ) | ||||
| Repurchases of shares | — | (219,330 | ) | |||||
| Net cash from financing activities | 1,402,826 | 857,576 | ||||||
| Net change in cash and cash equivalents | (140,856 | ) | (368,251 | ) | ||||
Cash and cash equivalents, beginning of period | 337,871 | 735,493 | ||||||
Cash and cash equivalents, end of period | $ | 197,015 | $ | 367,242 | ||||
| Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
| 2012 | 2011 | 2012 | 2011 | |||||||||||||
Net income | $ | 129,680 | $ | 135,555 | $ | 421,698 | $ | 244,185 | ||||||||
Other comprehensive income (loss), net of tax | ||||||||||||||||
Foreign currency translation adjustments | 2,033 | (4,929 | ) | (4,994 | ) | (547 | ) | |||||||||
Gain (loss) on foreign currency forward contracts | — | (9,654 | ) | 3,061 | (7,141 | ) | ||||||||||
Loss on interest rate swaps | — | — | — | (366 | ) | |||||||||||
Amortization of deferred pension plan amounts (net of tax provision of $790 and $356 for the three months ended September 30, 2012 and 2011, respectively, and $2,157 and $1,061 for the nine months ended September 30, 2012 and 2011, respectively) | 1,351 | 687 | 4,177 | 2,062 | ||||||||||||
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Other comprehensive income/(loss), net | 3,384 | (13,896 | ) | 2,244 | (5,992 | ) | ||||||||||
Net comprehensive income attributable to noncontrolling interests | (14,906 | ) | (238 | ) | (26,931 | ) | (290 | ) | ||||||||
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Comprehensive income attributable to Noble Corporation | $ | 118,158 | $ | 121,421 | $ | 397,011 | $ | 237,903 | ||||||||
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See accompanying notes to the unaudited consolidated financial statements.
5
(In thousands)
(Unaudited)
| Accumulated | ||||||||||||||||||||||||||||||||
| Additional | Other | |||||||||||||||||||||||||||||||
| Shares | Paid-in | Retained | Treasury | Comprehensive | Noncontrolling | Total | ||||||||||||||||||||||||||
| Balance | Par Value | Capital | Earnings | Shares | Loss | Interests | Equity | |||||||||||||||||||||||||
Balance at December 31, 2009 | 261,975 | $ | 1,130,607 | $ | — | $ | 5,855,737 | $ | (143,031 | ) | $ | (54,881 | ) | $ | — | $ | 6,788,432 | |||||||||||||||
| Employee related equity activity | ||||||||||||||||||||||||||||||||
| Share-based compensation expense | — | — | 26,906 | — | — | — | — | 26,906 | ||||||||||||||||||||||||
| Issuance of share-based compensation shares | 77 | 335 | (335 | ) | — | — | — | — | — | |||||||||||||||||||||||
| Contribution to employee benefit plans | 8 | 30 | 194 | — | — | — | — | 224 | ||||||||||||||||||||||||
| Exercise of stock options | 447 | 1,762 | 7,717 | — | — | — | — | 9,479 | ||||||||||||||||||||||||
| Tax benefit of stock options exercised | — | — | 5,556 | — | — | — | — | 5,556 | ||||||||||||||||||||||||
| Restricted shares forfeited or repurchased for taxes | (183 | ) | (804 | ) | 960 | 1,335 | (11,452 | ) | — | — | (9,961 | ) | ||||||||||||||||||||
| Repurchases of shares | — | — | — | — | (219,330 | ) | — | — | (219,330 | ) | ||||||||||||||||||||||
| Net income | — | — | — | 674,671 | — | — | 467 | 675,138 | ||||||||||||||||||||||||
| Par value reduction payments | — | (184,220 | ) | (9,648 | ) | (1 | ) | — | — | — | (193,869 | ) | ||||||||||||||||||||
| Noncontrolling interests from FDR Holdings, Ltd. acquisition | — | — | — | — | — | — | 124,628 | 124,628 | ||||||||||||||||||||||||
| Other comprehensive income, net | — | — | — | — | — | (6,113 | ) | — | (6,113 | ) | ||||||||||||||||||||||
Balance at September 30, 2010 | 262,324 | $ | 947,710 | $ | 31,350 | $ | 6,531,742 | $ | (373,813 | ) | $ | (60,994 | ) | $ | 125,095 | $ | 7,201,090 | |||||||||||||||
Balance at December 31, 2010 | 262,415 | $ | 917,684 | $ | 39,006 | $ | 6,630,500 | $ | (373,967 | ) | $ | (50,220 | ) | $ | 124,631 | $ | 7,287,634 | |||||||||||||||
| Employee related equity activity | ||||||||||||||||||||||||||||||||
| Share-based compensation expense | — | — | 26,857 | — | — | — | — | 26,857 | ||||||||||||||||||||||||
| Issuance of share-based compensation shares | 248 | 844 | (837 | ) | — | — | — | — | 7 | |||||||||||||||||||||||
| Exercise of stock options | 490 | 1,629 | 7,104 | — | — | — | — | 8,733 | ||||||||||||||||||||||||
| Tax benefit of stock options exercised | — | — | 278 | — | — | — | — | 278 | ||||||||||||||||||||||||
| Restricted shares forfeited or repurchased for taxes | (319 | ) | (1,107 | ) | 1,107 | — | (10,211 | ) | — | — | (10,211 | ) | ||||||||||||||||||||
| Retirement of treasury shares | (10,116 | ) | (33,035 | ) | — | (340,612 | ) | 373,647 | — | — | — | |||||||||||||||||||||
| Settlement of FIN 48 provision | — | — | — | 15,658 | — | — | — | 15,658 | ||||||||||||||||||||||||
| Net income | — | — | — | 243,895 | — | — | 290 | 244,185 | ||||||||||||||||||||||||
| Equity contribution by joint venture partner | — | — | — | — | — | — | 518,973 | 518,973 | ||||||||||||||||||||||||
| Par value reduction payments | — | (89,948 | ) | (24,505 | ) | — | — | — | — | (114,453 | ) | |||||||||||||||||||||
| Other comprehensive income, net | — | — | — | — | — | (5,992 | ) | — | (5,992 | ) | ||||||||||||||||||||||
Balance at September 30, 2011 | 252,718 | $ | 796,067 | $ | 49,010 | $ | 6,549,441 | $ | (10,531 | ) | $ | (56,212 | ) | $ | 643,894 | $ | 7,971,669 | |||||||||||||||
| Nine Months Ended September 30, | ||||||||
| 2012 | 2011 | |||||||
Cash flows from operating activities | ||||||||
Net income | $ | 421,698 | $ | 244,185 | ||||
Adjustments to reconcile net income to net cash from operating activities: | ||||||||
Depreciation and amortization | 549,779 | 487,454 | ||||||
Loss on impairment | 18,345 | — | ||||||
Gain on contract extinguishments, net | — | (21,202 | ) | |||||
Deferred income taxes | (16,090 | ) | (34,549 | ) | ||||
Amortization of share-based compensation | 28,782 | 26,857 | ||||||
Net change in other assets and liabilities | (71,010 | ) | (243,715 | ) | ||||
|
|
|
| |||||
Net cash from operating activities | 931,504 | 459,030 | ||||||
|
|
|
| |||||
Cash flows from investing activities | ||||||||
Capital expenditures | (1,247,139 | ) | (1,972,572 | ) | ||||
Change in accrued capital expenditures | (195,044 | ) | (48,782 | ) | ||||
Refund from contract extinguishments | — | 18,642 | ||||||
|
|
|
| |||||
Net cash from investing activities | (1,442,183 | ) | (2,002,712 | ) | ||||
|
|
|
| |||||
Cash flows from financing activities | ||||||||
Change in bank credit facilities, net | (630,000 | ) | 675,000 | |||||
Proceeds from issuance of senior notes, net of debt issuance costs | 1,186,636 | 1,087,833 | ||||||
Contributions from joint venture partners | 40,000 | 481,000 | ||||||
Payments of joint venture debt | — | (693,494 | ) | |||||
Settlement of interest rate swaps | — | (29,032 | ) | |||||
Par value reduction/dividend payments | (105,092 | ) | (114,453 | ) | ||||
Financing costs on credit facilities | (5,014 | ) | (2,835 | ) | ||||
Proceeds from employee stock transactions | 13,853 | 9,018 | ||||||
Repurchases of employee shares surrendered for taxes | (10,433 | ) | (10,211 | ) | ||||
|
|
|
| |||||
Net cash from financing activities | 489,950 | 1,402,826 | ||||||
|
|
|
| |||||
Net change in cash and cash equivalents | (20,729 | ) | (140,856 | ) | ||||
Cash and cash equivalents, beginning of period | 239,196 | 337,871 | ||||||
|
|
|
| |||||
Cash and cash equivalents, end of period | $ | 218,467 | $ | 197,015 | ||||
|
|
|
| |||||
See accompanying notes to the unaudited consolidated financial statements.
6
(In thousands)
(Unaudited)
| Three Months Ended | Nine Months Ended | |||||||||||||||
| September 30, | September 30, | |||||||||||||||
| 2011 | 2010 | 2011 | 2010 | |||||||||||||
Net income | $ | 135,555 | $ | 86,487 | $ | 244,185 | $ | 675,138 | ||||||||
Other comprehensive income (loss), net of tax | ||||||||||||||||
| Foreign currency translation adjustments | (4,929 | ) | 4,198 | (547 | ) | (2,263 | ) | |||||||||
| Gain (loss) on foreign currency forward contracts | (9,654 | ) | 4,762 | (7,141 | ) | 1,828 | ||||||||||
| Loss on interest rate swaps | — | (7,586 | ) | (366 | ) | (7,586 | ) | |||||||||
| Amortization of deferred pension plan amounts | 687 | 634 | 2,062 | 1,908 | ||||||||||||
| Other comprehensive income (loss), net | (13,896 | ) | 2,008 | (5,992 | ) | (6,113 | ) | |||||||||
| Net comprehensive income attributable to noncontrolling interests | (238 | ) | (467 | ) | (290 | ) | (467 | ) | ||||||||
Comprehensive income attributable to Noble Corporation | $ | 121,421 | $ | 88,028 | $ | 237,903 | $ | 668,558 | ||||||||
| Shares | Additional Paid-in | Retained | Treasury | Accumulated Other Comprehensive | Noncontrolling | Total | ||||||||||||||||||||||||||
| Balance | Par Value | Capital | Earnings | Shares | Loss | Interests | Equity | |||||||||||||||||||||||||
Balance at December 31, 2010 | 262,415 | $ | 917,684 | $ | 39,006 | $ | 6,630,500 | $ | (373,967 | ) | $ | (50,220 | ) | $ | 124,631 | $ | 7,287,634 | |||||||||||||||
Employee related equity activity | ||||||||||||||||||||||||||||||||
Amortization of share-based compensation | — | — | 26,857 | — | — | — | — | 26,857 | ||||||||||||||||||||||||
Issuance of share-based compensation shares | 248 | 844 | (837 | ) | — | — | — | — | 7 | |||||||||||||||||||||||
Exercise of stock options | 490 | 1,629 | 7,104 | — | — | — | — | 8,733 | ||||||||||||||||||||||||
Tax benefit of stock options exercised | — | — | 278 | — | — | — | — | 278 | ||||||||||||||||||||||||
Restricted shares forfeited or repurchased for taxes | (319 | ) | (1,107 | ) | 1,107 | — | (10,211 | ) | — | — | (10,211 | ) | ||||||||||||||||||||
Retirement of treasury shares | (10,116 | ) | (33,035 | ) | (340,612 | ) | 373,647 | — | — | — | ||||||||||||||||||||||
Settlement of FIN48 provision | — | — | 15,658 | — | — | — | 15,658 | |||||||||||||||||||||||||
Net income | — | — | — | 243,895 | — | — | 290 | 244,185 | ||||||||||||||||||||||||
Par value reduction payments | — | (89,948 | ) | (24,505 | ) | — | — | — | — | (114,453 | ) | |||||||||||||||||||||
Equity contribution by joint venture partner | — | — | — | — | — | — | 518,973 | 518,973 | ||||||||||||||||||||||||
Other comprehensive loss, net | — | — | — | — | — | (5,992 | ) | — | (5,992 | ) | ||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||
Balance at September 30, 2011 | 252,718 | $ | 796,067 | $ | 49,010 | $ | 6,549,441 | $ | (10,531 | ) | $ | (56,212 | ) | $ | 643,894 | $ | 7,971,669 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||
Balance at December 31, 2011 | 252,639 | $ | 766,595 | $ | 48,356 | $ | 6,676,444 | $ | (10,553 | ) | $ | (74,321 | ) | $ | 691,331 | $ | 8,097,852 | |||||||||||||||
Employee related equity activity | ||||||||||||||||||||||||||||||||
Amortization of share-based compensation | — | — | 28,782 | — | — | — | — | 28,782 | ||||||||||||||||||||||||
Issuance of share-based compensation shares | 428 | 1,284 | (1,276 | ) | — | — | — | — | 8 | |||||||||||||||||||||||
Exercise of stock options | 606 | 1,722 | 10,949 | — | — | — | — | 12,671 | ||||||||||||||||||||||||
Tax benefit of stock options exercised | — | — | 1,174 | — | — | — | — | 1,174 | ||||||||||||||||||||||||
Restricted shares forfeited or repurchased for taxes | (374 | ) | (1,138 | ) | 1,138 | — | (10,433 | ) | — | — | (10,433 | ) | ||||||||||||||||||||
Net income | — | — | — | 394,767 | — | — | 26,931 | 421,698 | ||||||||||||||||||||||||
Equity contribution by joint venture partner | — | — | — | — | — | — | 40,000 | 40,000 | ||||||||||||||||||||||||
Par value reduction/dividend payments | — | (58,470 | ) | (13,427 | ) | (33,195 | ) | — | — | — | (105,092 | ) | ||||||||||||||||||||
Dividends payable | — | — | — | (99,582 | ) | — | — | — | (99,582 | ) | ||||||||||||||||||||||
Other comprehensive income, net | — | — | — | — | — | 2,244 | — | 2,244 | ||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||
Balance at September 30, 2012 | 253,299 | $ | 709,993 | $ | 75,696 | $ | 6,938,434 | $ | (20,986 | ) | $ | (72,077 | ) | $ | 758,262 | $ | 8,389,322 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||
See accompanying notes to the unaudited consolidated financial statements.
7
(In thousands)
(Unaudited)
| September 30, | December 31, | |||||||
| 2011 | 2010 | |||||||
ASSETS | ||||||||
| Current assets | ||||||||
| Cash and cash equivalents | $ | 192,005 | $ | 333,399 | ||||
| Accounts receivable | 601,161 | 387,414 | ||||||
| Taxes receivable | 57,335 | 81,066 | ||||||
| Prepaid expenses | 57,531 | 33,232 | ||||||
| Other current assets | 82,690 | 69,821 | ||||||
| Total current assets | 990,722 | 904,932 | ||||||
| Property and equipment, at cost | 14,386,421 | 12,614,974 | ||||||
| Accumulated depreciation | (2,994,486 | ) | (2,594,954 | ) | ||||
| Property and equipment, net | 11,391,935 | 10,020,020 | ||||||
| Other assets | 529,141 | 342,592 | ||||||
Total assets | $ | 12,911,798 | $ | 11,267,544 | ||||
LIABILITIES AND EQUITY | ||||||||
| Current liabilities | ||||||||
| Current maturities of long-term debt | $ | — | $ | 80,213 | ||||
| Accounts payable | 319,888 | 374,559 | ||||||
| Accrued payroll and related costs | 112,902 | 120,634 | ||||||
| Interest payable | 22,129 | 40,260 | ||||||
| Taxes payable | 86,321 | 94,132 | ||||||
| Other current liabilities | 93,184 | 83,759 | ||||||
| Total current liabilities | 634,424 | 793,557 | ||||||
| Long-term debt | 3,811,866 | 2,686,484 | ||||||
| Deferred income taxes | 299,625 | 258,822 | ||||||
| Other liabilities | 218,523 | 268,026 | ||||||
Total liabilities | 4,964,438 | 4,006,889 | ||||||
| Commitments and contingencies | ||||||||
| Shareholders’ equity | ||||||||
| Ordinary shares; 261,246 shares outstanding | 26,125 | 26,125 | ||||||
| Capital in excess of par value | 447,040 | 416,232 | ||||||
| Retained earnings | 6,886,513 | 6,743,887 | ||||||
| Accumulated other comprehensive loss | (56,212 | ) | (50,220 | ) | ||||
Total shareholders’ equity | 7,303,466 | 7,136,024 | ||||||
| Noncontrolling interests | 643,894 | 124,631 | ||||||
Total equity | 7,947,360 | 7,260,655 | ||||||
Total liabilities and equity | $ | 12,911,798 | $ | 11,267,544 | ||||
| September 30, 2012 | December 31, 2011 | |||||||
ASSETS | ||||||||
Current assets | ||||||||
Cash and cash equivalents | $ | 213,681 | $ | 235,056 | ||||
Accounts receivable | 791,408 | 587,163 | ||||||
Taxes receivable | 118,354 | 75,284 | ||||||
Prepaid expenses | 61,536 | 33,105 | ||||||
Other current assets | 111,433 | 120,109 | ||||||
|
|
|
| |||||
Total current assets | 1,296,412 | 1,050,717 | ||||||
|
|
|
| |||||
Property and equipment, at cost | 16,601,975 | 15,505,994 | ||||||
Accumulated depreciation | (3,818,729 | ) | (3,404,589 | ) | ||||
|
|
|
| |||||
Property and equipment, net | 12,783,246 | 12,101,405 | ||||||
|
|
|
| |||||
Other assets | 343,852 | 305,283 | ||||||
|
|
|
| |||||
Total assets | $ | 14,423,510 | $ | 13,457,405 | ||||
|
|
|
| |||||
LIABILITIES AND EQUITY | ||||||||
Current liabilities | ||||||||
Accounts payable | $ | 297,969 | $ | 435,729 | ||||
Accrued payroll and related costs | 134,010 | 108,908 | ||||||
Interest payable | 23,851 | 54,419 | ||||||
Taxes payable | 126,112 | 91,190 | ||||||
Other current liabilities | 144,267 | 123,399 | ||||||
|
|
|
| |||||
Total current liabilities | 726,209 | 813,645 | ||||||
|
|
|
| |||||
Long-term debt | 4,639,429 | 4,071,964 | ||||||
Deferred income taxes | 235,851 | 242,791 | ||||||
Other liabilities | 353,595 | 255,372 | ||||||
|
|
|
| |||||
Total liabilities | 5,955,084 | 5,383,772 | ||||||
|
|
|
| |||||
Commitments and contingencies | ||||||||
Shareholder equity | ||||||||
Ordinary shares; 261,246 shares outstanding | 26,125 | 26,125 | ||||||
Capital in excess of par value | 466,028 | 450,616 | ||||||
Retained earnings | 7,290,088 | 6,979,882 | ||||||
Accumulated other comprehensive loss | (72,077 | ) | (74,321 | ) | ||||
|
|
|
| |||||
Total shareholder equity | 7,710,164 | 7,382,302 | ||||||
Noncontrolling interests | 758,262 | 691,331 | ||||||
|
|
|
| |||||
Total equity | 8,468,426 | 8,073,633 | ||||||
|
|
|
| |||||
Total liabilities and equity | $ | 14,423,510 | $ | 13,457,405 | ||||
|
|
|
| |||||
See accompanying notes to the unaudited consolidated financial statements.
8
(In thousands)
(Unaudited)
| Three Months Ended | Nine Months Ended | |||||||||||||||
| September 30, | September 30, | |||||||||||||||
| 2011 | 2010 | 2011 | 2010 | |||||||||||||
Operating revenues | ||||||||||||||||
| Contract drilling services | $ | 704,892 | $ | 584,919 | $ | 1,837,047 | $ | 2,081,075 | ||||||||
| Reimbursables | 17,438 | 19,177 | 63,851 | 57,163 | ||||||||||||
| Labor contract drilling services | 15,564 | 7,887 | 43,123 | 23,704 | ||||||||||||
| Other | 8 | 635 | 766 | 1,449 | ||||||||||||
| 737,902 | 612,618 | 1,944,787 | 2,163,391 | |||||||||||||
Operating costs and expenses | ||||||||||||||||
| Contract drilling services | 349,626 | 315,787 | 980,662 | 839,652 | ||||||||||||
| Reimbursables | 13,971 | 14,351 | 49,797 | 44,459 | ||||||||||||
| Labor contract drilling services | 8,053 | 5,302 | 25,326 | 16,570 | ||||||||||||
| Depreciation and amortization | 165,719 | 143,059 | 486,010 | 384,775 | ||||||||||||
| Selling, general and administrative | 17,637 | 16,715 | 48,810 | 48,137 | ||||||||||||
| Gain on contract extinguishments, net | — | — | (21,202 | ) | — | |||||||||||
| 555,006 | 495,214 | 1,569,403 | 1,333,593 | |||||||||||||
Operating income | 182,896 | 117,404 | 375,384 | 829,798 | ||||||||||||
Other income (expense) | ||||||||||||||||
| Interest expense, net of amount capitalized | (11,530 | ) | (4,147 | ) | (45,400 | ) | (5,122 | ) | ||||||||
| Interest income and other, net | 1,884 | 1,210 | 3,978 | 6,320 | ||||||||||||
Income before income taxes | 173,250 | 114,467 | 333,962 | 830,996 | ||||||||||||
| Income tax provision | (17,298 | ) | (19,401 | ) | (41,480 | ) | (124,340 | ) | ||||||||
Net income | 155,952 | 95,066 | 292,482 | 706,656 | ||||||||||||
| Net income attributable to noncontrolling interests | (238 | ) | (467 | ) | (290 | ) | (467 | ) | ||||||||
Net income attributable to Noble Corporation | $ | 155,714 | $ | 94,599 | $ | 292,192 | $ | 706,189 | ||||||||
| Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
| 2012 | 2011 | 2012 | 2011 | |||||||||||||
Operating revenues | ||||||||||||||||
Contract drilling services | $ | 833,212 | $ | 704,892 | $ | 2,427,759 | $ | 1,837,047 | ||||||||
Reimbursables | 28,137 | 17,438 | 94,090 | 63,851 | ||||||||||||
Labor contract drilling services | 22,667 | 15,564 | 58,538 | 43,123 | ||||||||||||
Other | 16 | 8 | 258 | 766 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
| 884,032 | 737,902 | 2,580,645 | 1,944,787 | |||||||||||||
|
|
|
|
|
|
|
| |||||||||
Operating costs and expenses | ||||||||||||||||
Contract drilling services | 444,225 | 349,626 | 1,280,969 | 980,662 | ||||||||||||
Reimbursables | 21,047 | 13,971 | 76,618 | 49,797 | ||||||||||||
Labor contract drilling services | 12,991 | 8,053 | 34,070 | 25,326 | ||||||||||||
Depreciation and amortization | 194,595 | 165,719 | 548,271 | 486,010 | ||||||||||||
Selling, general and administrative | 15,487 | 17,637 | 44,964 | 48,810 | ||||||||||||
Loss on impairment | — | — | 18,345 | — | ||||||||||||
Gain on contract settlements/extinguishments, net | — | — | (33,255 | ) | (21,202 | ) | ||||||||||
|
|
|
|
|
|
|
| |||||||||
| 688,345 | 555,006 | 1,969,982 | 1,569,403 | |||||||||||||
|
|
|
|
|
|
|
| |||||||||
Operating income | 195,687 | 182,896 | 610,663 | 375,384 | ||||||||||||
Other income (expense) | ||||||||||||||||
Interest expense, net of amount capitalized | (25,635 | ) | (11,530 | ) | (56,783 | ) | (45,400 | ) | ||||||||
Interest income and other, net | 1,361 | 1,884 | 4,368 | 3,978 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Income before income taxes | 171,413 | 173,250 | 558,248 | 333,962 | ||||||||||||
Income tax provision | (24,784 | ) | (17,298 | ) | (91,972 | ) | (41,480 | ) | ||||||||
|
|
|
|
|
|
|
| |||||||||
Net income | 146,629 | 155,952 | 466,276 | 292,482 | ||||||||||||
Net income attributable to noncontrolling interests | (14,906 | ) | (238 | ) | (26,931 | ) | (290 | ) | ||||||||
|
|
|
|
|
|
|
| |||||||||
Net income attributable to Noble Corporation | $ | 131,723 | $ | 155,714 | $ | 439,345 | $ | 292,192 | ||||||||
|
|
|
|
|
|
|
| |||||||||
See accompanying notes to the unaudited consolidated financial statements.
9
(In thousands)
(Unaudited)
| Nine Months Ended | ||||||||
| September 30, | ||||||||
| 2011 | 2010 | |||||||
Cash flows from operating activities | ||||||||
| Net income | $ | 292,482 | $ | 706,656 | ||||
| Adjustments to reconcile net income to net cash from operating activities: | ||||||||
| Depreciation and amortization | 486,010 | 384,775 | ||||||
| Gain on contract extinguishments, net | (21,202 | ) | — | |||||
| Deferred income taxes | (34,549 | ) | (29,586 | ) | ||||
| Capital contribution by parent — share-based compensation | 15,150 | 15,519 | ||||||
| Net change in other assets and liabilities | (235,017 | ) | 203,384 | |||||
| Net cash from operating activities | 502,874 | 1,280,748 | ||||||
Cash flows from investing activities | ||||||||
| Capital expenditures | (1,983,034 | ) | (885,623 | ) | ||||
| Change in accrued capital expenditures | (48,782 | ) | 4,213 | |||||
| Refund from contract extinguishments | 18,642 | — | ||||||
| Acquisition of FDR Holdings, Ltd., net of cash acquired | — | (1,629,644 | ) | |||||
| Net cash from investing activities | (2,013,174 | ) | (2,511,054 | ) | ||||
Cash flows from financing activities | ||||||||
| Increase in bank credit facilities, net | 675,000 | — | ||||||
| Proceeds from issuance of senior notes, net of debt issuance costs | 1,087,833 | 1,238,074 | ||||||
| Contributions from joint venture partners | 481,000 | 35,000 | ||||||
| Payments of joint venture debt | (693,494 | ) | — | |||||
| Settlement of interest rate swaps | (29,032 | ) | (2,041 | ) | ||||
| Financing costs on credit facilities | (2,835 | ) | — | |||||
| Distributions to parent company, net | (149,566 | ) | (422,537 | ) | ||||
| Net cash from financing activities | 1,368,906 | 848,496 | ||||||
| Net change in cash and cash equivalents | (141,394 | ) | (381,810 | ) | ||||
Cash and cash equivalents, beginning of period | 333,399 | 726,225 | ||||||
Cash and cash equivalents, end of period | $ | 192,005 | $ | 344,415 | ||||
| Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
| 2012 | 2011 | 2012 | 2011 | |||||||||||||
Net income | $ | 146,629 | $ | 155,952 | $ | 466,276 | $ | 292,482 | ||||||||
Other comprehensive income (loss), net of tax | ||||||||||||||||
Foreign currency translation adjustments | 2,033 | (4,929 | ) | (4,994 | ) | (547 | ) | |||||||||
Gain (loss) on foreign currency forward contracts | — | (9,654 | ) | 3,061 | (7,141 | ) | ||||||||||
Loss on interest rate swaps | — | — | — | (366 | ) | |||||||||||
Amortization of deferred pension plan amounts (net of tax provision of $790 and $356 for the three months ended September 30, 2012 and 2011, respectively, and $2,157 and $1,061 for the nine months ended September 30, 2012 and 2011, respectively) | 1,351 | 687 | 4,177 | 2,062 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Other comprehensive income/(loss), net | 3,384 | (13,896 | ) | 2,244 | (5,992 | ) | ||||||||||
Net comprehensive income attributable to noncontrolling interests | (14,906 | ) | (238 | ) | (26,931 | ) | (290 | ) | ||||||||
|
|
|
|
|
|
|
| |||||||||
Comprehensive income attributable to Noble Corporation | $ | 135,107 | $ | 141,818 | $ | 441,589 | $ | 286,200 | ||||||||
|
|
|
|
|
|
|
| |||||||||
See accompanying notes to the unaudited consolidated financial statements.
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, 2009 | 261,246 | $ | 26,125 | $ | 368,374 | $ | 6,609,578 | $ | (54,881 | ) | $ | — | $ | 6,949,196 | ||||||||||||||
| Net income | — | — | — | 706,189 | — | 467 | 706,656 | |||||||||||||||||||||
| Capital contributions by parent — share-based compensation | — | — | 15,519 | — | — | — | 15,519 | |||||||||||||||||||||
| Distributions to parent | — | — | — | (422,537 | ) | — | — | (422,537 | ) | |||||||||||||||||||
| Noncontrolling interests from FDR Holdings, Ltd. acquisition | — | — | — | — | — | 124,628 | 124,628 | |||||||||||||||||||||
| Other comprehensive income (loss), net | — | — | — | — | (6,113 | ) | — | (6,113 | ) | |||||||||||||||||||
Balance at September 30, 2010 | 261,246 | $ | 26,125 | $ | 383,893 | $ | 6,893,230 | $ | (60,994 | ) | $ | 125,095 | $ | 7,367,349 | ||||||||||||||
Balance at December 31, 2010 | 261,246 | $ | 26,125 | $ | 416,232 | $ | 6,743,887 | $ | (50,220 | ) | $ | 124,631 | $ | 7,260,655 | ||||||||||||||
| Net income | — | — | — | 292,192 | — | 290 | 292,482 | |||||||||||||||||||||
| Capital contributions by parent — share-based compensation | — | — | 15,150 | — | — | — | 15,150 | |||||||||||||||||||||
| Distributions to parent | — | — | — | (149,566 | ) | — | — | (149,566 | ) | |||||||||||||||||||
| Settlement of FIN 48 provision | — | — | 15,658 | — | — | — | 15,658 | |||||||||||||||||||||
| Noncontrolling interest contributions | — | — | — | — | — | 518,973 | 518,973 | |||||||||||||||||||||
| Other comprehensive income (loss), net | — | — | — | — | (5,992 | ) | — | (5,992 | ) | |||||||||||||||||||
Balance at September 30, 2011 | 261,246 | $ | 26,125 | $ | 447,040 | $ | 6,886,513 | $ | (56,212 | ) | $ | 643,894 | $ | 7,947,360 | ||||||||||||||
| Nine Months Ended September 30, | ||||||||
| 2012 | 2011 | |||||||
Cash flows from operating activities | ||||||||
Net income | $ | 466,276 | $ | 292,482 | ||||
Adjustments to reconcile net income to net cash from operating activities: | ||||||||
Depreciation and amortization | 548,271 | 486,010 | ||||||
Loss on impairment | 18,345 | — | ||||||
Gain on contract extinguishments, net | — | (21,202 | ) | |||||
Deferred income taxes | (16,090 | ) | (34,549 | ) | ||||
Capital contribution by parent- shared-based compensation | 15,412 | 15,150 | ||||||
Net change in other assets and liabilities | (75,357 | ) | (250,433 | ) | ||||
|
|
|
| |||||
Net cash from operating activities | 956,857 | 487,458 | ||||||
|
|
|
| |||||
Cash flows from investing activities | ||||||||
Capital expenditures | (1,245,671 | ) | (1,967,618 | ) | ||||
Change in accrued capital expenditures | (195,044 | ) | (48,782 | ) | ||||
Refund from contract extinguishments | — | 18,642 | ||||||
|
|
|
| |||||
Net cash from investing activities | (1,440,715 | ) | (1,997,758 | ) | ||||
|
|
|
| |||||
Cash flows from financing activities | ||||||||
Change in bank credit facilities, net | (630,000 | ) | 675,000 | |||||
Proceeds from issuance of senior notes, net of debt issuance costs | 1,186,636 | 1,087,833 | ||||||
Contributions from joint venture partners | 40,000 | 481,000 | ||||||
Payments of joint venture debt | — | (693,494 | ) | |||||
Settlement of interest rate swaps | — | (29,032 | ) | |||||
Financing costs on credit facilities | (5,014 | ) | (2,835 | ) | ||||
Distributions to parent company, net | (129,139 | ) | (149,566 | ) | ||||
|
|
|
| |||||
Net cash from financing activities | 462,483 | 1,368,906 | ||||||
|
|
|
| |||||
Net change in cash and cash equivalents | (21,375 | ) | (141,394 | ) | ||||
Cash and cash equivalents, beginning of period | 235,056 | 333,399 | ||||||
|
|
|
| |||||
Cash and cash equivalents, end of period | $ | 213,681 | $ | 192,005 | ||||
|
|
|
| |||||
See accompanying notes to the unaudited consolidated financial statements.
11
(In thousands)
(Unaudited)
| Three Months Ended | Nine Months Ended | |||||||||||||||
| September 30, | September 30, | |||||||||||||||
| 2011 | 2010 | 2011 | 2010 | |||||||||||||
Net income | $ | 155,952 | $ | 95,066 | $ | 292,482 | $ | 706,656 | ||||||||
Other comprehensive income (loss), net of tax | ||||||||||||||||
| Foreign currency translation adjustments | (4,929 | ) | 4,198 | (547 | ) | (2,263 | ) | |||||||||
| Gain (loss) on foreign currency forward contracts | (9,654 | ) | 4,762 | (7,141 | ) | 1,828 | ||||||||||
| Loss on interest rate swaps | — | (7,586 | ) | (366 | ) | (7,586 | ) | |||||||||
| Amortization of deferred pension plan amounts | 687 | 634 | 2,062 | 1,908 | ||||||||||||
| Other comprehensive income (loss), net | (13,896 | ) | 2,008 | (5,992 | ) | (6,113 | ) | |||||||||
| Net comprehensive income attributable to noncontrolling interests | (238 | ) | (467 | ) | (290 | ) | (467 | ) | ||||||||
Comprehensive income attributable to Noble Corporation | $ | 141,818 | $ | 96,607 | $ | 286,200 | $ | 700,076 | ||||||||
| Accumulated | ||||||||||||||||||||||||||||
| Capital in | Other | |||||||||||||||||||||||||||
| Shares | Excess of | Retained | Comprehensive | Noncontrolling | Total | |||||||||||||||||||||||
| Balance | Par Value | Par Value | Earnings | Loss | Interests | Equity | ||||||||||||||||||||||
Balance at December 31, 2010 | 261,246 | $ | 26,125 | $ | 416,232 | $ | 6,743,887 | $ | (50,220 | ) | $ | 124,631 | $ | 7,260,655 | ||||||||||||||
Net income | — | — | — | 292,192 | — | 290 | 292,482 | |||||||||||||||||||||
Capital contributions by parent— share-based compensation | — | — | 15,150 | — | — | — | 15,150 | |||||||||||||||||||||
Distributions to parent | — | — | — | (149,566 | ) | — | — | (149,566 | ) | |||||||||||||||||||
Settlement of FIN48 provision | — | — | 15,658 | — | — | — | 15,658 | |||||||||||||||||||||
Noncontrolling interest contributions | — | — | — | — | — | 518,973 | 518,973 | |||||||||||||||||||||
Other comprehensive income, net | — | — | — | — | (5,992 | ) | — | (5,992 | ) | |||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||
Balance at September 30, 2011 | 261,246 | $ | 26,125 | $ | 447,040 | $ | 6,886,513 | $ | (56,212 | ) | $ | 643,894 | $ | 7,947,360 | ||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||
Balance at December 31, 2011 | 261,246 | $ | 26,125 | $ | 450,616 | $ | 6,979,882 | $ | (74,321 | ) | $ | 691,331 | $ | 8,073,633 | ||||||||||||||
Net income | — | — | — | 439,345 | — | 26,931 | 466,276 | |||||||||||||||||||||
Capital contributions by parent— share-based compensation | — | — | 15,412 | — | — | — | 15,412 | |||||||||||||||||||||
Distributions to parent | — | — | — | (129,139 | ) | — | — | (129,139 | ) | |||||||||||||||||||
Noncontrolling interest contributions | — | — | — | — | — | 40,000 | 40,000 | |||||||||||||||||||||
Other comprehensive loss, net | — | — | — | — | 2,244 | — | 2,244 | |||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||
Balance at September 30, 2012 | 261,246 | $ | 26,125 | $ | 466,028 | $ | 7,290,088 | $ | (72,077 | ) | $ | 758,262 | $ | 8,468,426 | ||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||
See accompanying notes to the unaudited consolidated financial statements.
12
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 September 30, 2011, ourOur fleet consisted of 79 mobile offshore drilling units located worldwide as follows:consists of 14 semisubmersibles, 14 drillships, 49 jackups and two submersibles. Additionally, we have one floating production storage and offloading unit (“FPSO”). At September 30, 2011, we had 13unit. Our fleet includes 11 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 and Alaska, Mexico, the Mediterranean,Brazil, the North Sea, Brazil,the Mediterranean, West Africa, the Middle East, India, Australia and the Asian Pacific. Noble and its predecessors have been engaged in the contract drilling of oil and gas wells since 1921.
Noble Corporation, a Cayman Islands company (“Noble-Cayman”) is a direct, wholly-owned subsidiary of Noble-Swiss, our publicly-traded parent company. Noble-Swiss’ principal asset is all of the shares of Noble-Cayman. Noble-Cayman has no public equity outstanding. The consolidated financial statements of Noble-Swiss include the accounts of Noble-Cayman, and Noble-Swiss conducts substantially all of its business through Noble-Cayman and its subsidiaries.
The accompanying unaudited consolidated financial statements of Noble-Swiss and Noble-Cayman have been prepared pursuant to the rules and regulations of the U.S. Securities and Exchange Commission (“SEC”) as they pertain to Form 10-Q. Accordingly, certain information and disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) have been condensed or omitted pursuant to such rules and regulations. The unaudited financial statements reflect all adjustments which are, in the opinion of management, necessary for a fair statement of the financial position and results of operations for the interim periods, on a basis consistent with the annual audited consolidated financial statements. All such adjustments are of a 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 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 reclassified to conform to the current year presentation. Taxes payable in the December 31, 2010 Consolidated Balance Sheets was reported net of approximately $81 million in taxes receivable. During the second quarter of 2011, we determined that a right of offset in certain taxable jurisdictions did not exist for these receivables, and they are now being disclosed separately as a current asset. For the December 31, 2010 Consolidated Balance Sheets presented herein, these amounts have been reclassified to conform to the current year presentation. We believe that this reclassification is immaterial, as it did not have a material impact on our financial position, working capital, results of operations or cash flows from operations.
Note 2 — Acquisition of FDR Holdings Limited
13
| Three months | Nine months | |||||||
| ended | ended | |||||||
| September 30, 2010 | September 30, 2010 | |||||||
| Total operating revenues | $ | 647,700 | $ | 2,339,889 | ||||
| Net income | 85,282 | 616,358 | ||||||
| Net income per share | $ | 0.33 | $ | 2.40 | ||||
We own 50 percent interestinterests 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 interests 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 September 30, 2011,2012, the combined carrying amount of the drillships was $1.3$1.5 billion, which was primarily funded through partnerpartners’ 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 September 30, 20112012 and December 31, 2010:
| September 30, | December 31, | |||||||
| 2011 | 2010 | |||||||
Shares outstanding and trading | 252,433 | 252,275 | ||||||
| Treasury shares | 285 | 10,140 | ||||||
Total shares outstanding | 252,718 | 262,415 | ||||||
| Treasury shares held for share-based compensation plans | 13,432 | 13,851 | ||||||
Total shares authorized for issuance | 266,150 | 276,266 | ||||||
| Par value per share (in Swiss Francs) | 3.54 | 3.93 | ||||||
| September 30, 2012 | December 31, 2011 | |||||||
Shares outstanding and trading | 252,713 | 252,352 | ||||||
Treasury shares | 586 | 287 | ||||||
|
|
|
| |||||
Total shares outstanding | 253,299 | 252,639 | ||||||
Treasury shares held for share-based compensation plans | 12,851 | 13,511 | ||||||
|
|
|
| |||||
Total shares authorized for issuance | 266,150 | 266,150 | ||||||
|
|
|
| |||||
Par value per share (in Swiss Francs) | 3.15 | 3.41 | ||||||
Repurchased treasury shares are recorded at cost, and include both shares repurchased pursuant to our Board of Directors approved share repurchase program 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.
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 | Nine months ended | |||||||||||||||
| September 30, | September 30, | |||||||||||||||
| 2011 | 2010 | 2011 | 2010 | |||||||||||||
Allocation of net income | ||||||||||||||||
Basic | ||||||||||||||||
| Net income attributable to Noble Corporation | $ | 135,317 | $ | 86,020 | $ | 243,895 | $ | 674,671 | ||||||||
| Earnings allocated to unvested share-based payment awards | (1,415 | ) | (828 | ) | (2,487 | ) | (6,416 | ) | ||||||||
Net income to common shareholders — basic | $ | 133,902 | $ | 85,192 | $ | 241,408 | $ | 668,255 | ||||||||
Diluted | ||||||||||||||||
| Net income attributable to Noble Corporation | $ | 135,317 | $ | 86,020 | $ | 243,895 | $ | 674,671 | ||||||||
| Earnings allocated to unvested share-based payment awards | (1,412 | ) | (825 | ) | (2,481 | ) | (6,394 | ) | ||||||||
Net income to common shareholders — diluted | $ | 133,905 | $ | 85,195 | $ | 241,414 | $ | 668,277 | ||||||||
Weighted average shares outstanding — basic | 251,580 | 252,513 | 251,327 | 253,944 | ||||||||||||
| Incremental shares issuable from assumed exercise of stock options | 449 | 671 | 640 | 855 | ||||||||||||
Weighted average shares outstanding — diluted | 252,029 | 253,184 | 251,967 | 254,799 | ||||||||||||
Weighted average unvested share-based payment awards | 2,658 | 2,453 | 2,589 | 2,438 | ||||||||||||
Earnings per share | ||||||||||||||||
| Basic | $ | 0.53 | $ | 0.34 | $ | 0.96 | $ | 2.63 | ||||||||
| Diluted | $ | 0.53 | $ | 0.34 | $ | 0.96 | $ | 2.62 | ||||||||
| Three months ended | Nine months ended | |||||||||||||||
| September 30, | September 30, | |||||||||||||||
| 2012 | 2011 | 2012 | 2011 | |||||||||||||
Allocation of net income | ||||||||||||||||
Basic | ||||||||||||||||
Net income attributable to Noble Corporation | $ | 114,774 | $ | 135,317 | $ | 394,767 | $ | 243,895 | ||||||||
Earnings allocated to unvested share-based payment awards | (1,192 | ) | (1,415 | ) | (4,008 | ) | (2,487 | ) | ||||||||
|
|
|
|
|
|
|
| |||||||||
Net income to common shareholders—basic | $ | 113,582 | $ | 133,902 | $ | 390,759 | $ | 241,408 | ||||||||
|
|
|
|
|
|
|
| |||||||||
Diluted | ||||||||||||||||
Net income attributable to Noble Corporation | $ | 114,774 | $ | 135,317 | $ | 394,767 | $ | 243,895 | ||||||||
Earnings allocated to unvested share-based payment awards | (1,190 | ) | (1,412 | ) | (4,002 | ) | (2,481 | ) | ||||||||
|
|
|
|
|
|
|
| |||||||||
Net income to common shareholders—diluted | $ | 113,584 | $ | 133,905 | $ | 390,765 | $ | 241,414 | ||||||||
|
|
|
|
|
|
|
| |||||||||
Weighted average shares outstanding—basic | 252,657 | 251,580 | 252,339 | 251,327 | ||||||||||||
Incremental shares issuable from assumed exercise of stock options | 317 | 449 | 385 | 640 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Weighted average shares outstanding—diluted | 252,974 | 252,029 | 252,724 | 251,967 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Weighted average unvested share-based payment awards | 2,651 | 2,658 | 2,588 | 2,589 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Earnings per share | ||||||||||||||||
Basic | $ | 0.45 | $ | 0.53 | $ | 1.55 | $ | 0.96 | ||||||||
Diluted | $ | 0.45 | $ | 0.53 | $ | 1.55 | $ | 0.96 | ||||||||
Only those items having a dilutive impact on our basic earnings per share are included in diluted earnings per share. At both September 30, 2012 and 2011, stock options totaling approximately 1.1 million were excluded from the diluted earnings per share as they were not dilutive as compared to 0.8 million at September 30, 2010.
Note 54 — Property and Equipment
Property and equipment, at cost, as of September 30, 20112012 and December 31, 20102011 consisted of the following:
| 2011 | 2010 | |||||||
| Drilling equipment and facilities | $ | 9,908,049 | $ | 8,900,266 | ||||
| Construction in progress | 4,318,705 | 3,571,017 | ||||||
| Other | 193,513 | 172,583 | ||||||
| $ | 14,420,267 | $ | 12,643,866 | |||||
| September 30, | December 31, | |||||||
| 2012 | 2011 | |||||||
Drilling equipment and facilities | $ | 13,449,855 | $ | 10,974,943 | ||||
Construction in progress | 2,991,487 | 4,367,750 | ||||||
Other | 196,284 | 197,485 | ||||||
|
|
|
| |||||
| $ | 16,637,626 | $ | 15,540,178 | |||||
|
|
|
| |||||
Capital expenditures, including capitalized interest, totaled $2.0$1.2 billion and $886 million$2.0 billion for the nine months ended September 30, 20112012 and 2010,2011, respectively. Capital expenditures for 2010 do not include the fair valuefirst nine months of assets acquired as part of the Frontier acquisition. Capital expenditures for 20112012 consisted of the following:
$1.3 billion441 million for newbuild construction;
$463548 million for major projects, including $130$50 million in subsea related expenditures and $29 million to upgrade two drillships currently operating in Brazil;
16$150 million for other capitalized expenditures, including upgrades and replacements to drilling equipment, that generally have a useful life ranging from 3 to 5 years; and
NOBLE CORPORATION (NOBLE-CAYMAN) AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unless otherwise indicated, dollar amounts in tables are in thousands, except per share data)
Interest is capitalized on construction-in-progress at the weighted average cost of debt outstanding during the period of construction. Capitalized interest was $31 million and $108 million for the three and nine months ended September 30, 2012, respectively, as compared to $32 million and $88 million for the three and nine months ended September 30, 2011, 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 $25 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 $51a 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 nine months ended September 30, 2010, respectively.
Also, during the second quarter of 2012, we determined that certain corporate assets were partially impaired due to a declining market for, and the potential disposal of, the assets. We estimated the fair value of the asset based on recent transactions involving similar units in the market (Level 2 fair value measurement). Based on these estimates, we recognized a charge of approximately $5 million for the nine months ended September 30, 2012.
Note 6 — Gain on contract extinguishments,Contract Settlements/Extinguishments, net
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.
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. During the second quarter of 2011, Petrobras formally approved the rig substitution. We expect that acceptance of theNoble Phoenixwill take place in the first quarter of 2012. 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 was voidvoid ab initio, or never existed, due to a fundamental breach and has made other claims and is demandingdemanded 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 containscontained 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 September 30, 2011.2012. We believe that ifrecently received a favorable summary judgment ruling upholding the charter agreement and requiring BP wereto pay us the outstanding amounts, however, this matter has not been finally resolved because the ruling allows BP the opportunity to make a damages claim under the charter agreement. These receivables continue to be successfulclassified as long-term and are included in claiming the contractvoid ab initio,we would have an indemnity claim against the former shareholders of Frontier. We have put the former owners of Frontier“Other assets” on notice of this potential claim.our Consolidated Balance Sheet. We can make no assurances as to the outcome of this dispute.
17
NOBLE CORPORATION (NOBLE-CAYMAN) AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unless otherwise indicated, dollar amounts in tables are in thousands, except per share data)
At September 30, 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. 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. WhileIn January 2012, we believe we are entitled to the disputed amounts,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.
Note 8 — Debt
Total debt consisted of the following at September 30, 20112012 and December 31, 2010:
| September 30, | December 31, | |||||||
| 2011 | 2010 | |||||||
Wholly-owned debt instruments: | ||||||||
| 5.875% Senior Notes due 2013 | $ | 299,939 | $ | 299,911 | ||||
| 7.375% Senior Notes due 2014 | 249,610 | 249,506 | ||||||
| 3.45% Senior Notes due 2015 | 350,000 | 350,000 | ||||||
| 3.05% Senior Notes due 2016 | 299,934 | — | ||||||
| 7.50% Senior Notes due 2019 | 201,695 | 201,695 | ||||||
| 4.90% Senior Notes due 2020 | 498,754 | 498,672 | ||||||
| 4.625% Senior Notes due 2021 | 399,469 | — | ||||||
| 6.20% Senior Notes due 2040 | 399,890 | 399,889 | ||||||
| 6.05% Senior Notes due 2041 | 397,575 | — | ||||||
| Credit facilities | 715,000 | 40,000 | ||||||
Consolidated joint venture debt instruments: | ||||||||
| Joint venture credit facilities | $ | — | $ | 691,052 | ||||
| Joint venture partner notes | — | 35,972 | ||||||
| Total Debt | 3,811,866 | 2,766,697 | ||||||
| Less: Current Maturities | — | (80,213 | ) | |||||
| Long-term Debt | $ | 3,811,866 | $ | 2,686,484 | ||||
| September 30, 2012 | December 31, 2011 | |||||||
Wholly-owned debt instruments: | ||||||||
5.875% Senior Notes due 2013 | $ | 299,975 | $ | 299,949 | ||||
7.375% Senior Notes due 2014 | 249,760 | 249,647 | ||||||
3.45% Senior Notes due 2015 | 350,000 | 350,000 | ||||||
3.05% Senior Notes due 2016 | 299,948 | 299,938 | ||||||
2.50% Senior Notes due 2017 | 299,844 | — | ||||||
7.50% Senior Notes due 2019 | 201,695 | 201,695 | ||||||
4.90% Senior Notes due 2020 | 498,870 | 498,783 | ||||||
4.625% Senior Notes due 2021 | 399,515 | 399,480 | ||||||
3.95% Senior Notes due 2022 | 399,075 | — | ||||||
6.20% Senior Notes due 2040 | 399,891 | 399,890 | ||||||
6.05% Senior Notes due 2041 | 397,605 | 397,582 | ||||||
5.25% Senior Notes due 2042 | 498,251 | — | ||||||
Credit facilities | 345,000 | 975,000 | ||||||
|
|
|
| |||||
Total long-term debt | $ | 4,639,429 | $ | 4,071,964 | ||||
|
|
|
| |||||
During June 2012, we replaced our $575 million credit facilitiesfacility scheduled to mature in place which provide us2013, with a total borrowing capacity ofnew $1.2 billion. One credit facility, which has a capacity of $600 million, matures in 2013, and during the first quarter of 2011, we entered into an additional $600 million revolvingbillion credit facility, which matures in 2017. The new facility, combined with our existing $600 million credit facility that matures in 2015, gives us a total borrowing capacity under the two facilities (together referred to as the “Credit Facilities”). of $1.8 billion. The covenants and events of default under the Credit Facilities are substantially similar, and each facility contains a covenant that limits our ratio of debt to total tangible capitalization, as defined in the Credit Facilities, to 0.60. At September 30, 2012, our ratio of debt to total tangible capitalization was less than 0.36. We were in compliance with all covenants under the Credit Facilities as of September 30, 2011.
The Credit Facilities provide us with the ability to issue up to $300$375 million in letters of credit in the aggregate. While theThe issuance of letters of credit does not increase our borrowings outstanding under the Credit Facilities, but it does reduce the amount available. At September 30, 2011,2012, we had borrowings of $715 million outstanding and no letters of credit outstanding under the Credit Facilities.
During September 2012, we established a commercial paper program, which will allow us to issue up to $1.8 billion in unsecured commercial paper notes. Amounts issued under the commercial paper program are supported by the unused committed capacity under our Credit Facilities and, as such, are classified as long-term on our balance sheet. Subsequent to September 30, 2012, we began issuing notes under the program and had outstanding notes totaling $328 million as of October 31, 2012.
NOBLE CORPORATION (NOBLE-SWISS) AND SUBSIDIARIES
NOBLE CORPORATION (NOBLE-CAYMAN) AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unless otherwise indicated, dollar amounts in tables are in thousands, except per share data)
In February 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 andCredit Facilities.
Our 5.875% Senior Notes mature during the second quarter of 2013. We anticipate using availability under our Credit Facilities to repay the outstanding balance; therefore, we continue to report the balance as long-term at September 30, 2012.
The indentures governing our portion of outstanding debtsenior 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 joint venture credit facilities discussed below.
18
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 September 30, 20112012 and December 31, 2010.
| September 30, 2011 | December 31, 2010 | |||||||||||||||
| Carrying | Estimated | Carrying | Estimated | |||||||||||||
| Value | Fair Value | Value | Fair Value | |||||||||||||
Wholly-owned debt instruments | ||||||||||||||||
| 5.875% Senior Notes due 2013 | $ | 299,939 | $ | 323,731 | $ | 299,911 | $ | 324,281 | ||||||||
| 7.375% Senior Notes due 2014 | 249,610 | 283,353 | 249,506 | 282,078 | ||||||||||||
| 3.45% Senior Notes due 2015 | 350,000 | 365,503 | 350,000 | 357,292 | ||||||||||||
| 3.05% Senior Notes due 2016 | 299,934 | 305,919 | — | — | ||||||||||||
| 7.50% Senior Notes due 2019 | 201,695 | 250,238 | 201,695 | 242,464 | ||||||||||||
| 4.90% Senior Notes due 2020 | 498,754 | 537,513 | 498,672 | 516,192 | ||||||||||||
| 4.625% Senior Notes due 2021 | 399,469 | 420,987 | — | — | ||||||||||||
| 6.20% Senior Notes due 2040 | 399,890 | 456,403 | 399,889 | 423,345 | ||||||||||||
| 6.05% Senior Notes due 2041 | 397,575 | 447,951 | — | — | ||||||||||||
| Credit facilities | 715,000 | 715,000 | 40,000 | 40,000 | ||||||||||||
Consolidated joint venture debt instruments | ||||||||||||||||
| Joint venture credit facilities | — | — | 691,052 | 691,052 | ||||||||||||
| Joint venture partner notes | — | — | 35,972 | 35,972 | ||||||||||||
| September 30, 2012 | December 31, 2011 | |||||||||||||||
| Carrying | Estimated | Carrying | Estimated | |||||||||||||
| Value | Fair Value | Value | Fair Value | |||||||||||||
Wholly-owned debt instruments | ||||||||||||||||
5.875% Senior Notes due 2013 | $ | 299,975 | $ | 308,949 | $ | 299,949 | $ | 317,586 | ||||||||
7.375% Senior Notes due 2014 | 249,760 | 272,063 | 249,647 | 278,966 | ||||||||||||
3.45% Senior Notes due 2015 | 350,000 | 369,921 | 350,000 | 363,571 | ||||||||||||
3.05% Senior Notes due 2016 | 299,948 | 314,142 | 299,938 | 306,057 | ||||||||||||
2.50% Senior Notes due 2017 | 299,844 | 309,118 | — | — | ||||||||||||
7.50% Senior Notes due 2019 | 201,695 | 249,768 | 201,695 | 248,623 | ||||||||||||
4.90% Senior Notes due 2020 | 498,870 | 559,783 | 498,783 | 531,437 | ||||||||||||
4.625% Senior Notes due 2021 | 399,515 | 440,799 | 399,480 | 416,847 | ||||||||||||
3.95% Senior Notes due 2022 | 399,075 | 420,137 | — | — | ||||||||||||
6.20% Senior Notes due 2040 | 399,891 | 466,331 | 399,890 | 450,017 | ||||||||||||
6.05% Senior Notes due 2041 | 397,605 | 461,733 | 397,582 | 443,308 | ||||||||||||
5.25% Senior Notes due 2042 | 498,251 | 533,637 | — | — | ||||||||||||
Credit Facilities | 345,000 | 345,000 | 975,000 | 975,000 | ||||||||||||
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Total long-term debt | $ | 4,639,429 | $ | 5,051,381 | $ | 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 September 30, 2011,2012, the reserves for uncertain tax positions totaled $122$124 million (net of related tax benefits of $8$10 million). If the September 30, 20112012 reserves are not realized, the provision for income taxes would be reduced by $122 million.
NOBLE CORPORATION (NOBLE-SWISS) AND SUBSIDIARIES
NOBLE CORPORATION (NOBLE-CAYMAN) AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unless otherwise indicated, dollar amounts in tables are in thousands, except per share data)
It is possible that our existing liabilities related to our reserve for uncertain tax 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
Pension costs include the following components:
| Three Months Ended September 30, | ||||||||||||||||
| 2011 | 2010 | |||||||||||||||
| Non-U.S. | U.S. | Non-U.S. | U.S. | |||||||||||||
| Service cost | $ | 1,141 | $ | 2,152 | $ | 1,045 | $ | 1,912 | ||||||||
| Interest cost | 1,433 | 2,143 | 1,224 | 1,957 | ||||||||||||
| Return on plan assets | (1,449 | ) | (2,768 | ) | (1,331 | ) | (2,392 | ) | ||||||||
| Amortization of prior service cost | — | 57 | — | 57 | ||||||||||||
| Amortization of transition obligation | 19 | — | 17 | — | ||||||||||||
| Recognized net actuarial loss | 123 | 844 | 181 | 705 | ||||||||||||
| Net pension expense | $ | 1,267 | $ | 2,428 | $ | 1,136 | $ | 2,239 | ||||||||
| Nine Months Ended September 30, | ||||||||||||||||
| 2011 | 2010 | |||||||||||||||
| Non-U.S. | U.S. | Non-U.S. | U.S. | |||||||||||||
| Service cost | $ | 3,387 | $ | 6,456 | $ | 3,211 | $ | 5,736 | ||||||||
| Interest cost | 4,256 | 6,428 | 3,694 | 5,871 | ||||||||||||
| Return on plan assets | (4,306 | ) | (8,304 | ) | (3,999 | ) | (7,176 | ) | ||||||||
| Amortization of prior service cost | — | 170 | — | 171 | ||||||||||||
| Amortization of transition obligation | 56 | — | 53 | — | ||||||||||||
| Recognized net actuarial loss | 366 | 2,531 | 537 | 2,115 | ||||||||||||
| Net pension expense | $ | 3,759 | $ | 7,281 | $ | 3,496 | $ | 6,717 | ||||||||
| Three Months Ended September 30, | ||||||||||||||||
| 2012 | 2011 | |||||||||||||||
| Non-U.S. | U.S. | Non-U.S. | U.S. | |||||||||||||
Service cost | $ | 1,072 | $ | 2,431 | $ | 1,141 | $ | 2,152 | ||||||||
Interest cost | 1,317 | 2,196 | 1,433 | 2,143 | ||||||||||||
Return on plan assets | (1,313 | ) | (2,793 | ) | (1,449 | ) | (2,768 | ) | ||||||||
Amortization of prior service cost | — | 57 | — | 57 | ||||||||||||
Amortization of transition obligation | — | — | 19 | — | ||||||||||||
Recognized net actuarial loss | 199 | 1,885 | 123 | 844 | ||||||||||||
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Net pension expense | $ | 1,275 | $ | 3,776 | $ | 1,267 | $ | 2,428 | ||||||||
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| Nine Months Ended September 30, | ||||||||||||||||
| 2012 | 2011 | |||||||||||||||
| Non-U.S. | U.S. | Non-U.S. | U.S. | |||||||||||||
Service cost | $ | 3,306 | $ | 7,237 | $ | 3,387 | $ | 6,456 | ||||||||
Interest cost | 4,025 | 6,556 | 4,256 | 6,428 | ||||||||||||
Return on plan assets | (4,001 | ) | (8,379 | ) | (4,306 | ) | (8,304 | ) | ||||||||
Amortization of prior service cost | — | 171 | — | 170 | ||||||||||||
Amortization of transition obligation | — | — | 56 | — | ||||||||||||
Recognized net actuarial loss | 600 | 5,563 | 366 | 2,531 | ||||||||||||
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Net pension expense | $ | 3,930 | $ | 11,148 | $ | 3,759 | $ | 7,281 | ||||||||
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During the three and nine months ended September 30, 2011 and 2010,2012, we made contributions to our pension plans totaling $7$3 million and $15$13 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 $11$17 million.
Note 11 — Derivative Instruments and Hedging Activities
We periodically enter into derivative instruments to manage our exposure to fluctuations in interest rates and foreign currency exchange rates. We have documented policies and procedures to monitor and control the use of derivative instruments. We do not engage in derivative transactions for speculative or trading purposes, nor are we a party to leveraged derivatives. During the period,nine months ended September 30, 2011, we maintained certain foreign currency forward contracts that did not qualify under the Financial Accounting Standards Board (“FASB”) standards for hedge accounting treatment and therefore, changes in fair values were recognized as either income or loss in our consolidated income statement.
20
NOBLE CORPORATION (NOBLE-SWISS) AND SUBSIDIARIES
NOBLE CORPORATION (NOBLE-CAYMAN) AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unless otherwise indicated, dollar amounts in tables are in thousands, except per share data)
Cash Flow Hedges
Our North Sea and Brazil operations have a significant amount of their cash operating expenses payable in local currencies. To limit the potential risk of currency fluctuations, we 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 43 percent of these forecasted local currency requirements. The notional amount of the forward contracts outstanding, expressed in U.S. Dollars, was approximately $71 million atAt September 30, 2011. Total unrealized losses related to these forward contracts were $6 million as of September 30, 2011 and were recorded as part of “Accumulated other comprehensive loss” (“AOCL”).
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 | Nine Months Ended | |||||||||||||||
| September 30, | September 30, | |||||||||||||||
| 2011 | 2010 | 2011 | 2010 | |||||||||||||
| Net unrealized gain/(loss) at beginning of period | $ | 4,117 | $ | (2,517 | ) | $ | 1,970 | $ | 417 | |||||||
| Activity during period: | ||||||||||||||||
| Settlement of foreign currency forward contracts during the period | (2,054 | ) | 1,395 | (1,604 | ) | (417 | ) | |||||||||
| Settlement of interest rate swaps during the period | — | — | (366 | ) | — | |||||||||||
| Net unrealized gain/(loss) on outstanding foreign currency forward contracts | (7,600 | ) | 3,367 | (5,537 | ) | 2,245 | ||||||||||
| Net unrealized gain/(loss) on outstanding interest rate swaps | — | (7,586 | ) | — | (7,586 | ) | ||||||||||
| Net unrealized gain/(loss) at end of period | $ | (5,537 | ) | $ | (5,341 | ) | $ | (5,537 | ) | $ | (5,341 | ) | ||||
| Three Months Ended | Nine Months Ended | |||||||||||||||
| September 30, | September 30, | |||||||||||||||
| 2012 | 2011 | 2012 | 2011 | |||||||||||||
Net unrealized gain/(loss) at beginning of period | $ | — | $ | 4,117 | $ | (3,061 | ) | $ | 1,970 | |||||||
Activity during period: | ||||||||||||||||
Settlement of foreign currency forward contracts during the period | — | (2,054 | ) | 3,061 | (1,604 | ) | ||||||||||
Settlement of interest rate swaps during the period | — | — | — | (366 | ) | |||||||||||
Net unrealized loss on outstanding foreign currency forward contracts | — | (7,600 | ) | — | (5,537 | ) | ||||||||||
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Net unrealized gain/(loss) at end of period | $ | — | $ | (5,537 | ) | $ | — | $ | (5,537 | ) | ||||||
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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 September 30, 20112012 and December 31, 2010:
| Estimated fair value | ||||||||||||
| Balance sheet | September 30, | December 31, | ||||||||||
| classification | 2011 | 2010 | ||||||||||
Asset derivatives | ||||||||||||
| Cash flow hedges | ||||||||||||
| Short-term foreign currency forward contracts | Other current assets | $ | — | $ | 2,015 | |||||||
| Fair value hedges | ||||||||||||
| Short-term foreign currency forward contracts | Other current liabilities | — | — | |||||||||
| Non-designated derivatives | ||||||||||||
| Short-term foreign currency forward contracts | Other current assets | — | 2,603 | |||||||||
Liability derivatives | ||||||||||||
| Cash flow hedges | ||||||||||||
| Short-term foreign currency forward contracts | Other current liabilities | $ | (5,537 | ) | $ | 412 | ||||||
| Short-term interest rate swaps | Other current liabilities | — | 15,697 | |||||||||
| Long-term interest rate swaps | Other liabilities | — | 10,893 | |||||||||
| Fair value hedges | ||||||||||||
| Short-term foreign currency forward contracts | Other current liabilities | — | 3,306 | |||||||||
| Estimated fair value | ||||||||||
| Balance sheet classification | September 30, 2012 | December 31, 2011 | ||||||||
Liability derivatives | ||||||||||
Cash flow hedges | ||||||||||
Short-term foreign currency forward contracts | Other current liabilities | $ | — | $ | 3,061 | |||||
To supplement the fair value disclosures in Note 12, the following summarizes the recognized gains and losses of cash flow hedges and non-designated derivatives through AOCL or through “other income” for the three months ended September 30, 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 | $ | (7,600 | ) | $ | 4,762 | $ | 2,054 | $ | — | $ | — | $ | — | |||||||||||
| Interest rate swaps | — | (7,586 | ) | — | — | — | (261 | ) | ||||||||||||||||
Non-designated derivatives | ||||||||||||||||||||||||
| Foreign currency forward contracts | $ | — | $ | — | $ | — | $ | — | $ | — | $ | 1,234 | ||||||||||||
| Gain/(loss) recognized through AOCL | Gain/(loss) reclassified from AOCL to “other income” | Gain/(loss) recognized through “other income” | ||||||||||||||||||||||
| 2012 | 2011 | 2012 | 2011 | 2012 | 2011 | |||||||||||||||||||
Cash flow hedges | ||||||||||||||||||||||||
Foreign currency forward contracts | $ | — | $ | (7,600 | ) | $ | — | $ | (2,054 | ) | $ | — | $ | — | ||||||||||
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 nine months ended September 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 | $ | (5,537 | ) | $ | 1,828 | $ | 1,604 | $ | — | $ | — | $ | — | |||||||||||
| Interest rate swaps | — | (7,586 | ) | 366 | — | — | (261 | ) | ||||||||||||||||
Non-designated derivatives | ||||||||||||||||||||||||
| Foreign currency forward contracts | $ | — | $ | — | $ | — | $ | — | $ | (546 | ) | $ | 1,234 | |||||||||||
| Gain/(loss) recognized through AOCL | Gain/(loss) reclassified from AOCL to “other income” | Gain/(loss) recognized through “other income” | ||||||||||||||||||||||
| 2012 | 2011 | 2012 | 2011 | 2012 | 2011 | |||||||||||||||||||
Cash flow hedges | ||||||||||||||||||||||||
Foreign currency forward contracts | $ | — | $ | (5,537 | ) | $ | 3,061 | $ | (1,604 | ) | $ | — | $ | — | ||||||||||
Interest rate swaps | — | — | — | (366 | ) | — | — | |||||||||||||||||
Non-designated derivatives | ||||||||||||||||||||||||
Foreign currency forward contracts | $ | — | $ | — | $ | — | $ | — | $ | — | $ | (546 | ) | |||||||||||
Note 12 — Fair Value of Financial Instruments
The following table presents the carrying amount and estimated fair value of our financial instruments recognized at fair value on a recurring basis:
| September 30, 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 | $ | 4,294 | $ | 4,294 | $ | — | $ | — | $ | 6,854 | $ | 6,854 | ||||||||||||
| Foreign currency forward contracts | — | — | — | — | 4,618 | 4,618 | ||||||||||||||||||
| Firm commitment | — | — | — | — | 3,306 | 3,306 | ||||||||||||||||||
Liabilities — | ||||||||||||||||||||||||
| Interest rate swaps | $ | — | $ | — | $ | — | $ | — | $ | 26,590 | $ | 26,590 | ||||||||||||
| Foreign currency forward contracts | (5,537 | ) | — | (5,537 | ) | — | 3,718 | 3,718 | ||||||||||||||||
| September 30, 2012 | December 31, 2011 | |||||||||||||||||||||||
| Estimated Fair Value Measurements | ||||||||||||||||||||||||
| Quoted | Significant | |||||||||||||||||||||||
| Prices in | Other | Significant | ||||||||||||||||||||||
| Active | Observable | Unobservable | ||||||||||||||||||||||
| Carrying | Markets | Inputs | Inputs | Carrying | Estimated | |||||||||||||||||||
| Amount | (Level 1) | (Level 2) | (Level 3) | Amount | Fair Value | |||||||||||||||||||
Assets— | ||||||||||||||||||||||||
Marketable securities | $ | 5,745 | $ | 5,745 | $ | — | $ | — | $ | 4,701 | $ | 4,701 | ||||||||||||
Liabilities— | ||||||||||||||||||||||||
Foreign currency forward contracts | $ | — | $ | — | $ | — | $ | — | $ | 3,061 | $ | 3,061 | ||||||||||||
At the time of valuation, the derivative instruments 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-outtwo-well farmout of the rig in Libya after successfully drilling two wells with the rig for ExxonMobil. In August 2010, BP attempted to terminate the assignment agreement claiming that the rig was not in the required condition.condition, and 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 be fullywas 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 should the arbitration panel ultimately rule in our favor.
NOBLE CORPORATION (NOBLE-SWISS) AND SUBSIDIARIES
NOBLE CORPORATION (NOBLE-CAYMAN) AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unless otherwise indicated, dollar amounts in tables are in thousands, except per share data)
In August 2007, we entered into a drilling contract with Marathon Oil Company (“Marathon”) for 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 Court against Marathon seeking damages for its actions, and theactions. The suit is proceeding.proceeding and is currently in the discovery phase. We cannot provide assurance as to the outcome of this lawsuit.
We are from time to time a party to various lawsuits that are incidental to our operations in which the claimants seek an unspecified amount of monetary damages for personal injury, including injuries purportedly resulting from exposure to asbestos on drilling rigs and associated facilities. At September 30, 2012, there were 29 asbestos related lawsuits in which we are one of many defendants. These lawsuits have been filed in the United States in the states of Louisiana, Mississippi and Texas. We intend to vigorously defend against the litigation. We do not believe the ultimate resolution of these matters will have a material adverse effect on our financial position, results of operations or cash flows.
We are a defendant in certain claims and litigation arising out of operations in the ordinary course of business, including certain disputes with customers over receivables discussed in Note 7, the resolution of which, in the opinion of management, will not be material to our financial position, results of operations or cash flows. There is inherent risk in any litigation or dispute and no assurance can be given as to the outcome of these claims.
We operate in a number of countries throughout the world and our income tax returns filed in those jurisdictions are subject to review and examination by tax authorities within those jurisdictions. The U.S. Internal Revenue Service (“IRS”) has completed its audit examination of our 2008 U.S. tax return and proposed adjustments and deficiencies with respect to certain items that were reported by us for the 2008 tax year. We believe that we have accurately reported all amounts in our 2008 tax return, and have filed protests with the IRS Office of Appeals contesting the examination team’s proposed adjustments. A conference has been scheduled in December 2012 to discuss these items. We intend to vigorously defend our reported positions. Our 2009 tax return is under audit, and we expect to receive additional Information Document Requests in the coming months. During the third quarter, a U.S. subsidiary of Frontier concluded its audit with the IRS for its 2007 and 2008 tax returns, resulting in no change to income tax expense. Furthermore, we are currently contesting several non-U.S. tax assessments and may contest future assessments when we disagree with those assessments based on the technical merits of the positions established at the time of the filing of the tax return. We believe the ultimate resolution of the outstanding assessments, for which we have not made any accrual, will not have a material adverse effect on our consolidated financial statements. We recognize uncertain tax positions that we believe have a greater than 50 percent likelihood of being sustained. We cannot predict or provide assurance as to the ultimate outcome of the existing or future assessments.
Our Mexican income tax returns have been examined for the 2002 through 2007 periods and audit claims have been assessed for approximately $326 million (including interest and penalties). During 2011, we received from the Regional Chamber of the Federal Tax Court adverse decisions with respect to approximately $6 million in assessments related to depreciation deductions, which we are appealing. We are also contesting all other assessments in Mexico. Tax authorities in Mexico and other jurisdictions may issue additional assessments or pursue legal actions as a result of tax audits and we cannot predict or provide assurance as to the ultimate outcome of such assessments and legal actions.
Additional audit claims of approximately $91 million attributable to income, customs and other business taxes have been assessed against us in other jurisdictions. We have contested, or intend to contest, these assessments, including through litigation if necessary, and we believe the ultimate resolution, for which we have not made any accrual, will not have a material adverse effect on our consolidated financial statements.
NOBLE CORPORATION (NOBLE-SWISS) AND SUBSIDIARIES
NOBLE CORPORATION (NOBLE-CAYMAN) AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unless otherwise indicated, dollar amounts in tables are in thousands, except per share data)
We maintain certain insurance coverage against specified marine perils which includes physical damage and loss of hire. Damage caused by hurricanes has negatively impacted the energy insurance market, resulting in more restrictive and expensive coverage for U.S. named windstorm perils. Accordingly, we have elected to significantly reduce the named windstorm insurance on our rigs operating in the U.S. Gulf of Mexico. Presently we insure 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 $887,000) in connection with the inadvertent discharge of drilling fluid from one of our rigs offshore Brazil in September 2011. We have accepted the assessment.
In October 2011, we were assessed a fine by the Brazilian government in the amount of R$238,000 (approximately $117,000) in connection with the inadvertent discharge of drilling fluid from one of our rigs offshore Brazil in November 2010. We have accepted the assessment.
We carry protection and indemnity insurance covering marine third party liability exposures, which also includes coverage for employer’s liability resulting from personal injury to our offshore drilling crews. Our protection and indemnity policy currently has a standard deductible of $10 million per occurrence, with maximum liability coverage of $750 million.
In connection with our capital expenditure program, we had outstanding commitments, including shipyard and purchase commitments of approximately $3.0 billion at September 30, 2012.
We have entered into agreements with certain of our executive officers, as well as certain other employees. These agreements become effective upon a change of control of Noble-Swiss (within the meaning set forth in the agreements) or a termination of employment in connection with or in anticipation of a change of control, and remain effective for three years thereafter. These agreements provide for compensation and certain other benefits under such circumstances.
NOBLE CORPORATION (NOBLE-SWISS) AND SUBSIDIARIES
NOBLE CORPORATION (NOBLE-CAYMAN) AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unless otherwise indicated, dollar amounts in tables are in thousands, except per share data)
Nigerian Operations
During the fourth quarter of 2007, our Nigerian subsidiary received letters from the Nigerian Maritime Administration and Safety Agency (“NIMASA”) seeking to collect a two2 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
Under the Nigerian Industrial Training Fund Act of September 30, 2011, all2004, as amended, (the “Act”), Nigerian companies with five or more employees must contribute annually one percent of their payroll to the Industrial Training Fund (“ITF”) established under the Act to be used for the training of Nigerian nationals with a view towards generating a pool of indigenously trained manpower. We have not paid this amount on our rigs operatingexpatriate workers employed by our non-Nigerian employment entity in Nigeria were operating under temporary import permits. To date,the past as we have been successfuldid not believe the contribution obligation was applicable to them. In October 2012, we received a demand from the ITF for payments going back to 2004 and associated penalties in obtaining new, or extending existing, temporary import permits. However, there can be no assurancerespect of these expatriate employees. We do not believe that we will be able to obtain new permits or further extensions of permits necessary to continueowe 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 rigamount claimed 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 Nigeriathat, in the future, or howevent we were to have any such changes may impact our business there.
Note 14 — Segment and Related Information
We report our contract drilling operations as a single reportable segment:segment, Contract Drilling Services. The consolidation of our contract drilling operations into one reportable segment is attributable toServices, which reflects how we manage our business, and the fact that all of our drilling fleet is dependent upon the worldwide oil and gas industry. The mobile offshore drilling units comprising our offshore rig fleet operate in a single, global market for contract drilling services and are often redeployed globally in response to changing demands of our customers, which consist largely of major non-U.S. and government owned/controlled oil and gas companies throughout the world. Our Contract Drilling Services segment currently conducts contract drilling operations principally in the 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, Australia and the Asian Pacific.
NOBLE CORPORATION (NOBLE-SWISS) AND SUBSIDIARIES
NOBLE CORPORATION (NOBLE-CAYMAN) AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unless otherwise indicated, dollar amounts in tables are in thousands, except per share data)
We evaluate the performance of our operating segment primarily based on operating revenues and net income. Summarized financial information of our reportable segments for the three and nine months ended September 30, 2012 and 2011 for Noble-Swiss and 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 September 30, | ||||||||||||||||||||||||
| 2011 | 2010 | |||||||||||||||||||||||
| Contract | Contract | |||||||||||||||||||||||
| Drilling | Drilling | |||||||||||||||||||||||
| Services | Other | Total | Services | Other | Total | |||||||||||||||||||
| Revenues from external customers | $ | 719,546 | $ | 18,356 | $ | 737,902 | $ | 604,042 | $ | 8,576 | $ | 612,618 | ||||||||||||
| Depreciation and amortization | 162,837 | 3,376 | 166,213 | 140,199 | 3,083 | 143,282 | ||||||||||||||||||
| Segment operating income/ (loss) | 159,588 | 3,994 | 163,582 | 109,083 | (726 | ) | 108,357 | |||||||||||||||||
| Interest expense, net of amount capitalized | (122 | ) | (11,408 | ) | (11,530 | ) | (125 | ) | (4,019 | ) | (4,144 | ) | ||||||||||||
| Income tax (provision)/ benefit | (18,380 | ) | 766 | (17,614 | ) | (20,876 | ) | 589 | (20,287 | ) | ||||||||||||||
| Segment profit/ (loss) | 141,199 | (5,882 | ) | 135,317 | 89,001 | (2,981 | ) | 86,020 | ||||||||||||||||
| Total assets (at end of period) | 12,472,018 | 479,515 | 12,951,533 | 9,625,999 | 1,380,425 | 11,006,424 | ||||||||||||||||||
| Capital expenditures | 555,434 | 3,771 | 559,205 | 352,347 | 2,345 | 354,692 | ||||||||||||||||||
| Noble-Swiss | ||||||||||||||||||||||||
| Three Months Ended September 30, | ||||||||||||||||||||||||
| 2012 | 2011 | |||||||||||||||||||||||
| Contract | Contract | |||||||||||||||||||||||
| Drilling | Drilling | |||||||||||||||||||||||
| Services | Other | Total | Services | Other | Total | |||||||||||||||||||
Revenues from external customers | $ | 860,315 | $ | 23,717 | $ | 884,032 | $ | 719,546 | $ | 18,356 | $ | 737,902 | ||||||||||||
Depreciation and amortization | 191,638 | 3,449 | 195,087 | 162,837 | 3,376 | 166,213 | ||||||||||||||||||
Segment operating income | 173,285 | 5,639 | 178,924 | 159,588 | 3,994 | 163,582 | ||||||||||||||||||
Interest expense, net of amount capitalized | (121 | ) | (25,514 | ) | (25,635 | ) | (122 | ) | (11,408 | ) | (11,530 | ) | ||||||||||||
Income tax (provision) / benefit | (28,307 | ) | 3,145 | (25,162 | ) | (18,380 | ) | 766 | (17,614 | ) | ||||||||||||||
Segment profit / (loss) | 130,983 | (16,209 | ) | 114,774 | 141,199 | (5,882 | ) | 135,317 | ||||||||||||||||
Total assets (at end of period) | 13,983,223 | 477,183 | 14,460,406 | 12,472,018 | 479,515 | 12,951,533 | ||||||||||||||||||
27
| Noble-Cayman | ||||||||||||||||||||||||
| Three Months Ended September 30, | ||||||||||||||||||||||||
| 2012 | 2011 | |||||||||||||||||||||||
| Contract | Contract | |||||||||||||||||||||||
| Drilling | Drilling | |||||||||||||||||||||||
| Services | Other | Total | Services | Other | Total | |||||||||||||||||||
Revenues from external customers | $ | 860,315 | $ | 23,717 | $ | 884,032 | $ | 719,546 | $ | 18,356 | $ | 737,902 | ||||||||||||
Depreciation and amortization | 191,638 | 2,957 | 194,595 | 162,837 | 2,882 | 165,719 | ||||||||||||||||||
Segment operating income | 178,185 | 17,502 | 195,687 | 168,509 | 14,387 | 182,896 | ||||||||||||||||||
Interest expense, net of amount capitalized | (121 | ) | (25,514 | ) | (25,635 | ) | (122 | ) | (11,408 | ) | (11,530 | ) | ||||||||||||
Income tax (provision) / benefit | (28,307 | ) | 3,523 | (24,784 | ) | (18,380 | ) | 1,082 | (17,298 | ) | ||||||||||||||
Segment profit / (loss) | 135,883 | (4,160 | ) | 131,723 | 150,120 | 5,594 | 155,714 | |||||||||||||||||
Total assets (at end of period) | 13,983,223 | 440,287 | 14,423,510 | 12,472,018 | 439,780 | 12,911,798 | ||||||||||||||||||
NOBLE CORPORATION (NOBLE-CAYMAN) AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unless otherwise indicated, dollar amounts in tables are in thousands, except per share data)
| Nine Months Ended September 30, | ||||||||||||||||||||||||
| 2011 | 2010 | |||||||||||||||||||||||
| Contract | Contract | |||||||||||||||||||||||
| Drilling | Drilling | |||||||||||||||||||||||
| Services | Other | Total | Services | Other | Total | |||||||||||||||||||
| Revenues from external customers | $ | 1,897,045 | $ | 47,742 | $ | 1,944,787 | $ | 2,137,304 | $ | 26,087 | $ | 2,163,391 | ||||||||||||
| Depreciation and amortization | 477,568 | 9,886 | 487,454 | 376,754 | 8,612 | 385,366 | ||||||||||||||||||
| Segment operating income/ (loss) | 321,613 | 7,278 | 328,891 | 801,966 | (2,101 | ) | 799,865 | |||||||||||||||||
| Interest expense, net of amount capitalized | (1,890 | ) | (43,510 | ) | (45,400 | ) | (418 | ) | (4,701 | ) | (5,119 | ) | ||||||||||||
| Income tax (provision)/ benefit | (48,661 | ) | 6,180 | (42,481 | ) | (128,012 | ) | 1,211 | (126,801 | ) | ||||||||||||||
| Segment profit/ (loss) | 273,018 | (29,123 | ) | 243,895 | 680,302 | (5,631 | ) | 674,671 | ||||||||||||||||
| Total assets (at end of period) | 12,472,018 | 479,515 | 12,951,533 | 9,625,999 | 1,380,425 | 11,006,424 | ||||||||||||||||||
| Capital expenditures | 1,979,145 | 8,843 | 1,987,988 | 869,435 | 16,658 | 886,093 | ||||||||||||||||||
| Noble-Swiss | ||||||||||||||||||||||||
| Nine Months Ended September 30, | ||||||||||||||||||||||||
| 2012 | 2011 | |||||||||||||||||||||||
| Contract | Contract | |||||||||||||||||||||||
| Drilling | Drilling | |||||||||||||||||||||||
| Services | Other | Total | Services | Other | Total | |||||||||||||||||||
Revenues from external customers | $ | 2,519,930 | $ | 60,715 | $ | 2,580,645 | $ | 1,897,045 | $ | 47,742 | $ | 1,944,787 | ||||||||||||
Depreciation and amortization | 539,698 | 10,081 | 549,779 | 477,568 | 9,886 | 487,454 | ||||||||||||||||||
Segment operating income | 559,713 | 7,349 | 567,062 | 321,613 | 7,278 | 328,891 | ||||||||||||||||||
Interest expense, net of amount capitalized | (315 | ) | (56,468 | ) | (56,783 | ) | (1,890 | ) | (43,510 | ) | (45,400 | ) | ||||||||||||
Income tax (provision) / benefit | (102,005 | ) | 8,898 | (93,107 | ) | (48,661 | ) | 6,180 | (42,481 | ) | ||||||||||||||
Segment profit / (loss) | 434,561 | (39,794 | ) | 394,767 | 272,488 | (28,593 | ) | 243,895 | ||||||||||||||||
Total assets (at end of period) | 13,983,223 | 477,183 | 14,460,406 | 12,472,018 | 479,515 | 12,951,533 | ||||||||||||||||||
| Noble-Cayman | ||||||||||||||||||||||||
| Nine Months Ended September 30, | ||||||||||||||||||||||||
| 2012 | 2011 | |||||||||||||||||||||||
| Contract | Contract | |||||||||||||||||||||||
| Drilling | Drilling | |||||||||||||||||||||||
| Services | Other | Total | Services | Other | Total | |||||||||||||||||||
Revenues from external customers | $ | 2,519,930 | $ | 60,715 | $ | 2,580,645 | $ | 1,897,045 | $ | 47,742 | $ | 1,944,787 | ||||||||||||
Depreciation and amortization | 539,698 | 8,573 | 548,271 | 477,568 | 8,442 | 486,010 | ||||||||||||||||||
Segment operating income | 571,382 | 39,281 | 610,663 | 342,589 | 32,795 | 375,384 | ||||||||||||||||||
Interest expense, net of amount capitalized | (315 | ) | (56,468 | ) | (56,783 | ) | (1,890 | ) | (43,510 | ) | (45,400 | ) | ||||||||||||
Income tax (provision) / benefit | (102,005 | ) | 10,033 | (91,972 | ) | (48,661 | ) | 7,181 | (41,480 | ) | ||||||||||||||
Segment profit / (loss) | 446,230 | (6,885 | ) | 439,345 | 293,464 | (1,272 | ) | 292,192 | ||||||||||||||||
Total assets (at end of period) | 13,983,223 | 440,287 | 14,423,510 | 12,472,018 | 439,780 | 12,911,798 | ||||||||||||||||||
Note 15 — Accounting Pronouncements
In May 2011, the FASB issued Accounting Standards Update (“ASU”) No. 2011-04, which amends FASB Accounting Standards Codification (“ASC”) Topic 820, “Fair Value Measurements and Disclosures.” This amended guidance 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.
28
NOBLE CORPORATION (NOBLE-SWISS) AND SUBSIDIARIES
NOBLE CORPORATION (NOBLE-CAYMAN) AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unless otherwise indicated, dollar amounts in tables are in thousands, except per share data)
Note 16 — Net Change in Other Assets and Liabilities
The net effect of changes in other assets and liabilities on cash flows from operating activities is as follows:
| Noble-Swiss | Noble-Cayman | |||||||||||||||
| Nine months ended | Nine months ended | |||||||||||||||
| September 30, | September 30, | |||||||||||||||
| 2011 | 2010 | 2011 | 2010 | |||||||||||||
| Accounts receivable | $ | (213,747 | ) | $ | 250,917 | $ | (213,747 | ) | $ | 250,924 | ||||||
| Other current assets | (23,900 | ) | (22,962 | ) | (20,578 | ) | (21,001 | ) | ||||||||
| Other assets | (21,755 | ) | (6,600 | ) | (24,233 | ) | (6,705 | ) | ||||||||
| Accounts payable | (23,744 | ) | (12,635 | ) | (23,654 | ) | (20,773 | ) | ||||||||
| Other current liabilities | 21,281 | (9,105 | ) | 13,655 | (27,543 | ) | ||||||||||
| Other liabilities | 33,566 | 28,258 | 33,540 | 28,482 | ||||||||||||
| $ | (228,299 | ) | $ | 227,873 | $ | (235,017 | ) | $ | 203,384 | |||||||
| Noble-Swiss | Noble-Cayman | |||||||||||||||
| Nine months ended | Nine months ended | |||||||||||||||
| September 30, | September 30, | |||||||||||||||
| 2012 | 2011 | 2012 | 2011 | |||||||||||||
Accounts receivable | $ | (163,051 | ) | $ | (213,747 | ) | $ | (163,051 | ) | $ | (213,747 | ) | ||||
Other current assets | (58,303 | ) | (23,900 | ) | (59,764 | ) | (20,578 | ) | ||||||||
Other assets | (25,543 | ) | (37,171 | ) | (25,546 | ) | (39,649 | ) | ||||||||
Accounts payable | 29,470 | (23,744 | ) | 29,353 | (23,654 | ) | ||||||||||
Other current liabilities | 76,035 | 21,281 | 79,436 | 13,655 | ||||||||||||
Other liabilities | 70,382 | 33,566 | 64,215 | 33,540 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
| $ | (71,010 | ) | $ | (243,715 | ) | $ | (75,357 | ) | $ | (250,433 | ) | |||||
|
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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 September 30, 2011 of $202 million. NDC is a direct, wholly-owned subsidiary of NHC. Noble Drilling Holding LLC (“NDH”), a wholly-owned subsidiary of Noble-Cayman, is also a co-obligor on (and effectively a guarantor of) the 7.50% Senior Notes. Noble Drilling Services 6 LLC (“NDS6”), also a wholly-owned subsidiary of Noble-Cayman, is a co-issuer of the 7.50% Senior Notes.
| Issuer | ||||
Notes | (Co-Issuer(s)) | Guarantor(s) | ||
| $300 million 5.875% Senior Notes due 2013 | Noble-Cayman | Noble Drilling Corporation (“NDC”); | ||
| NHIL | ||||
| $250 million 7.375% Senior Notes due 2014 | NHIL | Noble-Cayman | ||
| $350 million 3.45% Senior Notes due 2015 | NHIL | Noble-Cayman | ||
| $300 million 3.05% Senior Notes due 2016 | NHIL | Noble-Cayman | ||
| $300 million 2.50% Senior Notes due 2017 | NHIL | Noble-Cayman | ||
| $202 million 7.50% Senior Notes due 2019 | NDC; | Noble-Cayman; | ||
| Noble Drilling Services 6 LLC (“NDS6”) | Noble Holding (U.S.) Corporation (“NHC”); | |||
| Noble Drilling Holding LLC (“NDH”) | ||||
| $500 million 4.90% Senior Notes due 2020 | NHIL | Noble-Cayman | ||
| $400 million 4.625% Senior Notes due 2021 | NHIL | Noble-Cayman | ||
| $400 million 3.95% Senior Notes due 2022 | NHIL | Noble-Cayman | ||
| $400 million 6.20% Senior Notes due 2040 | NHIL | Noble-Cayman | ||
| $400 million 6.05% Senior Notes due 2041 | NHIL | Noble-Cayman | ||
| $500 million 5.25% Senior Notes due 2042 | NHIL | Noble-Cayman |
The following consolidating financial statements of Noble-Cayman, NHC and NDH combined, NDC, NHIL, NDS6 and all other subsidiaries present investments in both consolidated and unconsolidated affiliates using the equity method of accounting.
29
CONDENSED CONSOLIDATING BALANCE SHEET
September 30, 2011
2012
(in thousands)
| Other | ||||||||||||||||||||||||||||||||
| Non-guarantor | ||||||||||||||||||||||||||||||||
| Noble- | NHC and NDH | Subsidiaries | Consolidating | |||||||||||||||||||||||||||||
| Cayman | Combined | NDC | NHIL | NDS6 | of Noble | Adjustments | Total | |||||||||||||||||||||||||
ASSETS | ||||||||||||||||||||||||||||||||
| Current assets | ||||||||||||||||||||||||||||||||
| Cash and cash equivalents | $ | — | $ | 292 | $ | — | $ | — | $ | — | $ | 191,713 | $ | — | $ | 192,005 | ||||||||||||||||
| Accounts receivable | — | 10,757 | 3,472 | — | — | 586,932 | — | 601,161 | ||||||||||||||||||||||||
| Prepaid expenses | — | 400 | 10 | — | — | 57,121 | — | 57,531 | ||||||||||||||||||||||||
| Short-term notes receivable from affiliates | — | 119,476 | — | — | — | 110,000 | (229,476 | ) | — | |||||||||||||||||||||||
| Accounts receivable from affiliates | 1,182,035 | 92,282 | 847,880 | 150,144 | 15,737 | 5,705,679 | (7,993,757 | ) | — | |||||||||||||||||||||||
| Other current assets | — | 6,247 | 240 | — | — | 133,538 | — | 140,025 | ||||||||||||||||||||||||
| Total current assets | 1,182,035 | 229,454 | 851,602 | 150,144 | 15,737 | 6,784,983 | (8,223,233 | ) | 990,722 | |||||||||||||||||||||||
| Property and equipment | ||||||||||||||||||||||||||||||||
| Drilling equipment, facilities and other | — | 2,374,299 | 71,567 | — | — | 11,940,555 | — | 14,386,421 | ||||||||||||||||||||||||
| Accumulated depreciation | — | (207,832 | ) | (52,334 | ) | — | — | (2,734,320 | ) | — | (2,994,486 | ) | ||||||||||||||||||||
| Total property and equipment, net | — | 2,166,467 | 19,233 | — | — | 9,206,235 | — | 11,391,935 | ||||||||||||||||||||||||
| Notes receivable from affiliates | 3,487,062 | 675,000 | — | 2,336,527 | 572,107 | 2,662,901 | (9,733,597 | ) | — | |||||||||||||||||||||||
| Investments in affiliates | 7,185,905 | 9,133,639 | 3,510,041 | 6,370,565 | 1,899,939 | — | (28,100,089 | ) | — | |||||||||||||||||||||||
| Other assets | 3,660 | 15,933 | 2,067 | 19,087 | 910 | 487,484 | — | 529,141 | ||||||||||||||||||||||||
Total assets | $ | 11,858,662 | $ | 12,220,493 | $ | 4,382,943 | $ | 8,876,323 | $ | 2,488,693 | $ | 19,141,603 | $ | (46,056,919 | ) | $ | 12,911,798 | |||||||||||||||
LIABILITIES AND EQUITY | ||||||||||||||||||||||||||||||||
| Current liabilities | ||||||||||||||||||||||||||||||||
| Short-term notes payables from affiliates | $ | 60,000 | $ | 50,000 | $ | — | $ | — | $ | — | $ | 119,476 | $ | (229,476 | ) | $ | — | |||||||||||||||
| Accounts payable and accrued liabilities | 6,298 | 24,036 | 8,116 | 15,201 | 630 | 580,143 | — | 634,424 | ||||||||||||||||||||||||
| Accounts payable to affiliates | 1,802,030 | 3,806,799 | 26,056 | 99,896 | 30,916 | 2,228,060 | (7,993,757 | ) | — | |||||||||||||||||||||||
| Total current liabilities | 1,868,328 | 3,880,835 | 34,172 | 115,097 | 31,546 | 2,927,679 | (8,223,233 | ) | 634,424 | |||||||||||||||||||||||
| Long-term debt | 1,014,939 | — | — | 2,595,232 | 201,695 | — | — | 3,811,866 | ||||||||||||||||||||||||
| Notes payable to affiliates | 1,652,000 | 1,147,500 | 85,000 | 975,000 | 811,000 | 5,063,097 | (9,733,597 | ) | — | |||||||||||||||||||||||
| Other liabilities | 19,929 | 24,291 | 30,177 | — | — | 443,751 | — | 518,148 | ||||||||||||||||||||||||
Total liabilities | 4,555,196 | 5,052,626 | 149,349 | 3,685,329 | 1,044,241 | 8,434,527 | (17,956,830 | ) | 4,964,438 | |||||||||||||||||||||||
| Commitments and contingencies | ||||||||||||||||||||||||||||||||
Equity | 7,303,466 | 7,167,867 | 4,233,594 | 5,190,994 | 1,444,452 | 10,707,076 | (28,100,089 | ) | 7,947,360 | |||||||||||||||||||||||
Total liabilities and equity | $ | 11,858,662 | $ | 12,220,493 | $ | 4,382,943 | $ | 8,876,323 | $ | 2,488,693 | $ | 19,141,603 | $ | (46,056,919 | ) | $ | 12,911,798 | |||||||||||||||
30
| Noble- Cayman | NHC and NDH Combined | NDC | NHIL | NDS6 | Other Non-guarantor Subsidiaries of Noble | Consolidating Adjustments | Total | |||||||||||||||||||||||||
ASSETS | ||||||||||||||||||||||||||||||||
Current assets | ||||||||||||||||||||||||||||||||
Cash and cash equivalents | $ | — | $ | 435 | $ | — | $ | 19 | $ | — | $ | 213,227 | $ | — | $ | 213,681 | ||||||||||||||||
Accounts receivable | — | 10,560 | 1,584 | — | — | 779,264 | — | 791,408 | ||||||||||||||||||||||||
Taxes receivable | — | 25,502 | — | — | — | 92,852 | — | 118,354 | ||||||||||||||||||||||||
Prepaid expenses | — | 444 | 20 | — | — | 61,072 | — | 61,536 | ||||||||||||||||||||||||
Short-term notes receivable from affiliates | — | 119,476 | — | — | — | 252,138 | (371,614 | ) | — | |||||||||||||||||||||||
Accounts receivable from affiliates | 852,466 | 153,146 | 970,918 | 502,287 | 42,675 | 5,570,469 | (8,091,961 | ) | — | |||||||||||||||||||||||
Other current assets | 375 | 640 | 196 | — | — | 110,222 | — | 111,433 | ||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||
Total current assets | 852,841 | 310,203 | 972,718 | 502,306 | 42,675 | 7,079,244 | (8,463,575 | ) | 1,296,412 | |||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||
Property and equipment, at cost | — | 2,616,145 | 75,591 | — | — | 13,910,239 | — | 16,601,975 | ||||||||||||||||||||||||
Accumulated depreciation | — | (300,637 | ) | (57,520 | ) | — | — | (3,460,572 | ) | — | (3,818,729 | ) | ||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||
Property and equipment, net | — | 2,315,508 | 18,071 | — | — | 10,449,667 | — | 12,783,246 | ||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||
Notes receivable from affiliates | 3,816,463 | 1,206,000 | — | 3,524,814 | 479,107 | 2,171,875 | (11,198,259 | ) | — | |||||||||||||||||||||||
Investments in affiliates | 7,484,253 | 9,078,691 | 3,412,070 | 7,188,893 | 2,348,479 | — | (29,512,386 | ) | — | |||||||||||||||||||||||
Other assets | 6,296 | 535 | 654 | 26,740 | 790 | 308,837 | — | 343,852 | ||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||
Total assets | $ | 12,159,853 | $ | 12,910,937 | $ | 4,403,513 | $ | 11,242,753 | $ | 2,871,051 | $ | 20,009,623 | $ | (49,174,220 | ) | $ | 14,423,510 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||
LIABILITIES AND EQUITY | ||||||||||||||||||||||||||||||||
Current liabilities | ||||||||||||||||||||||||||||||||
Short-term notes payables from affiliates | $ | 90,314 | $ | 51,054 | $ | 110,770 | $ | — | $ | — | $ | 119,476 | $ | (371,614 | ) | $ | — | |||||||||||||||
Accounts payable | — | 2,720 | 644 | — | — | 294,605 | — | 297,969 | ||||||||||||||||||||||||
Accrued payroll and related costs | — | 5,478 | 7,857 | — | — | 120,675 | — | 134,010 | ||||||||||||||||||||||||
Accounts payable to affiliates | 848,091 | 4,628,552 | 4,593 | 152,009 | 68,819 | 2,389,897 | (8,091,961 | ) | — | |||||||||||||||||||||||
Interest payable | 6,093 | — | — | 17,128 | 630 | — | — | 23,851 | ||||||||||||||||||||||||
Taxes payable | — | 9,007 | — | — | — | 117,105 | — | 126,112 | ||||||||||||||||||||||||
Other current liabilities | — | — | 240 | — | — | 144,027 | — | 144,267 | ||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||
Total current liabilities | 944,498 | 4,696,811 | 124,104 | 169,137 | 69,449 | 3,185,785 | (8,463,575 | ) | 726,209 | |||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||
Long-term debt | 644,975 | — | — | 3,792,759 | 201,695 | — | — | 4,639,429 | ||||||||||||||||||||||||
Notes payable to affiliates | 2,840,287 | 648,475 | — | 975,000 | 1,342,000 | 5,392,497 | (11,198,259 | ) | — | |||||||||||||||||||||||
Deferred income taxes | — | — | 15,731 | — | — | 220,120 | — | 235,851 | ||||||||||||||||||||||||
Other liabilities | 19,929 | 17,475 | — | — | — | 316,191 | — | 353,595 | ||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||
Total liabilities | 4,449,689 | 5,362,761 | 139,835 | 4,936,896 | 1,613,144 | 9,114,593 | (19,661,834 | ) | 5,955,084 | |||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||
Commitments and contingencies | ||||||||||||||||||||||||||||||||
Total shareholder equity | 7,710,164 | 7,548,176 | 4,263,678 | 6,305,857 | 1,257,907 | 10,136,768 | (29,512,386 | ) | 7,710,164 | |||||||||||||||||||||||
Noncontrolling interest | — | — | — | — | — | 758,262 | — | 758,262 | ||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||
Total equity | 7,710,164 | 7,548,176 | 4,263,678 | 6,305,857 | 1,257,907 | 10,895,030 | (29,512,386 | ) | 8,468,426 | |||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||
Total liabilities and equity | $ | 12,159,853 | $ | 12,910,937 | $ | 4,403,513 | $ | 11,242,753 | $ | 2,871,051 | $ | 20,009,623 | $ | (49,174,220 | ) | $ | 14,423,510 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||
CONDENSED CONSOLIDATING BALANCE SHEET
December 31, 2010
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 | $ | 42 | $ | 146 | $ | — | $ | — | $ | — | $ | 333,211 | $ | — | $ | 333,399 | ||||||||||||||||
| Accounts receivable | — | 6,984 | 1,795 | — | — | 378,635 | — | 387,414 | ||||||||||||||||||||||||
| Prepaid expenses | — | 310 | — | — | — | 32,922 | — | 33,232 | ||||||||||||||||||||||||
| Short-term notes receivable from affiliates | — | 119,476 | — | — | — | 75,000 | (194,476 | ) | — | |||||||||||||||||||||||
| Accounts receivable from affiliates | 614,264 | 73,001 | 751,623 | 219,215 | 11,374 | 3,801,852 | (5,471,329 | ) | — | |||||||||||||||||||||||
| Other current assets | — | 16,735 | 240 | — | — | 133,912 | — | 150,887 | ||||||||||||||||||||||||
| Total current assets | 614,306 | 216,652 | 753,658 | 219,215 | 11,374 | 4,755,532 | (5,665,805 | ) | 904,932 | |||||||||||||||||||||||
| Property and equipment | ||||||||||||||||||||||||||||||||
| Drilling equipment, facilities and other | — | 1,254,482 | 70,945 | — | — | 11,289,547 | — | 12,614,974 | ||||||||||||||||||||||||
| Accumulated depreciation | — | (153,638 | ) | (50,250 | ) | — | — | (2,391,066 | ) | — | (2,594,954 | ) | ||||||||||||||||||||
| Total property and equipment, net | — | 1,100,844 | 20,695 | — | — | 8,898,481 | — | 10,020,020 | ||||||||||||||||||||||||
| Notes receivable from affiliates | 3,507,062 | 675,000 | — | 1,239,600 | 479,107 | 2,492,900 | (8,393,669 | ) | — | |||||||||||||||||||||||
| Investments in affiliates | 6,835,466 | 9,150,129 | 3,561,451 | 5,618,248 | 1,879,831 | — | (27,045,125 | ) | — | |||||||||||||||||||||||
| Other assets | 1,872 | 7,700 | 2,451 | 11,336 | 1,001 | 318,232 | — | 342,592 | ||||||||||||||||||||||||
Total assets | $ | 10,958,706 | $ | 11,150,325 | $ | 4,338,255 | $ | 7,088,399 | $ | 2,371,313 | $ | 16,465,145 | $ | (41,104,599 | ) | $ | 11,267,544 | |||||||||||||||
LIABILITIES AND EQUITY | ||||||||||||||||||||||||||||||||
| Current liabilities | ||||||||||||||||||||||||||||||||
| Short-term notes payables from affiliates | $ | 25,000 | $ | 50,000 | $ | — | $ | — | $ | — | $ | 119,476 | $ | (194,476 | ) | $ | — | |||||||||||||||
| Current maturities of long-term debt | — | — | — | — | — | 80,213 | — | 80,213 | ||||||||||||||||||||||||
| Accounts payable and accrued liabilities | 1,473 | 19,218 | 8,779 | 31,973 | 4,413 | 647,488 | — | 713,344 | ||||||||||||||||||||||||
| Accounts payable to affiliates | 1,601,869 | 2,708,598 | 30,095 | 64,192 | 7,134 | 1,059,441 | (5,471,329 | ) | — | |||||||||||||||||||||||
| Total current liabilities | 1,628,342 | 2,777,816 | 38,874 | 96,165 | 11,547 | 1,906,618 | (5,665,805 | ) | 793,557 | |||||||||||||||||||||||
| Long-term debt | 339,911 | — | — | 1,498,066 | 201,695 | 646,812 | — | 2,686,484 | ||||||||||||||||||||||||
| Notes payable to affiliates | 1,834,500 | 1,092,000 | 120,000 | 550,000 | 811,000 | 3,986,169 | (8,393,669 | ) | — | |||||||||||||||||||||||
| Other liabilities | 19,929 | 48,595 | 25,485 | — | — | 432,839 | — | 526,848 | ||||||||||||||||||||||||
Total liabilities | 3,822,682 | 3,918,411 | 184,359 | 2,144,231 | 1,024,242 | 6,972,438 | (14,059,474 | ) | 4,006,889 | |||||||||||||||||||||||
| Commitments and contingencies | ||||||||||||||||||||||||||||||||
Equity | 7,136,024 | 7,231,914 | 4,153,896 | 4,944,168 | 1,347,071 | 9,492,707 | (27,045,125 | ) | 7,260,655 | |||||||||||||||||||||||
Total liabilities and equity | $ | 10,958,706 | $ | 11,150,325 | $ | 4,338,255 | $ | 7,088,399 | $ | 2,371,313 | $ | 16,465,145 | $ | (41,104,599 | ) | $ | 11,267,544 | |||||||||||||||
31
| Noble- Cayman | NHC and NDH Combined | NDC | NHIL | NDS6 | Other Non-guarantor Subsidiaries of Noble | Consolidating Adjustments | Total | |||||||||||||||||||||||||
ASSETS | ||||||||||||||||||||||||||||||||
Current assets | ||||||||||||||||||||||||||||||||
Cash and cash equivalents | $ | 146 | $ | 385 | $ | — | $ | — | $ | — | $ | 234,525 | $ | — | $ | 235,056 | ||||||||||||||||
Accounts receivable | — | 10,810 | 3,371 | — | — | 572,982 | — | 587,163 | ||||||||||||||||||||||||
Taxes receivable | — | 4,566 | — | — | — | 70,718 | — | 75,284 | ||||||||||||||||||||||||
Prepaid expenses | — | 453 | 19 | — | — | 32,633 | — | 33,105 | ||||||||||||||||||||||||
Short-term notes receivable from affiliates | — | 119,476 | — | — | — | 122,298 | (241,774 | ) | — | |||||||||||||||||||||||
Accounts receivable from affiliates | 1,683,740 | 99,202 | 879,581 | 159,132 | 33,905 | 6,372,657 | (9,228,217 | ) | — | |||||||||||||||||||||||
Other current assets | — | 643 | 196 | 93 | — | 119,177 | — | 120,109 | ||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||
Total current assets | 1,683,886 | 235,535 | 883,167 | 159,225 | 33,905 | 7,524,990 | (9,469,991 | ) | 1,050,717 | |||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||
Property and equipment, at cost | — | 2,737,764 | 75,001 | — | — | 12,693,229 | — | 15,505,994 | ||||||||||||||||||||||||
Accumulated depreciation | — | (232,621 | ) | (54,599 | ) | — | — | (3,117,369 | ) | — | (3,404,589 | ) | ||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||
Property and equipment, net | — | 2,505,143 | 20,402 | — | — | 9,575,860 | — | 12,101,405 | ||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||
Notes receivable from affiliates | 3,842,062 | 675,000 | — | 2,336,527 | 572,107 | 2,678,192 | (10,103,888 | ) | — | |||||||||||||||||||||||
Investments in affiliates | 6,969,201 | 9,101,938 | 3,450,212 | 6,605,771 | 2,141,450 | — | (28,268,572 | ) | — | |||||||||||||||||||||||
Other assets | 3,230 | 473 | 483 | 18,548 | 880 | 281,669 | — | 305,283 | ||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||
Total assets | $ | 12,498,379 | $ | 12,518,089 | $ | 4,354,264 | $ | 9,120,071 | $ | 2,748,342 | $ | 20,060,711 | $ | (47,842,451 | ) | $ | 13,457,405 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||
LIABILITIES AND EQUITY | ||||||||||||||||||||||||||||||||
Current liabilities | ||||||||||||||||||||||||||||||||
Short-term notes payables from affiliates | $ | 72,298 | $ | 50,000 | $ | — | $ | — | $ | — | $ | 119,476 | $ | (241,774 | ) | $ | — | |||||||||||||||
Accounts payable | — | 5,577 | 985 | — | — | 429,167 | — | 435,729 | ||||||||||||||||||||||||
Accrued payroll and related costs | — | 2,897 | 6,518 | — | — | 99,493 | — | 108,908 | ||||||||||||||||||||||||
Accounts payable to affiliates | 2,079,719 | 4,166,021 | 27,341 | 112,953 | 34,107 | 2,808,076 | (9,228,217 | ) | — | |||||||||||||||||||||||
Interest payable | 1,891 | — | — | 48,116 | 4,412 | — | — | 54,419 | ||||||||||||||||||||||||
Taxes payable | — | 10,032 | — | — | — | 81,158 | — | 91,190 | ||||||||||||||||||||||||
Other current liabilities | — | — | 240 | — | — | 123,159 | — | 123,399 | ||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||
Total current liabilities | 2,153,908 | 4,234,527 | 35,084 | 161,069 | 38,519 | 3,660,529 | (9,469,991 | ) | 813,645 | |||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||
Long-term debt | 1,274,949 | — | — | 2,595,320 | 201,695 | — | — | 4,071,964 | ||||||||||||||||||||||||
Notes payable to affiliates | 1,667,291 | 1,147,500 | 85,000 | 975,000 | 811,000 | 5,418,097 | (10,103,888 | ) | — | |||||||||||||||||||||||
Deferred income taxes | — | — | 15,731 | — | — | 227,060 | — | 242,791 | ||||||||||||||||||||||||
Other liabilities | 19,929 | 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 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||
CONDENSED CONSOLIDATING STATEMENT OF INCOME
Three Months Ended September 30, 2012
(in thousands)
| Noble- Cayman | NHC and NDH Combined | NDC | NHIL | NDS6 | Other Non-guarantor Subsidiaries of Noble | Consolidating Adjustments | Total | |||||||||||||||||||||||||
Operating revenues | ||||||||||||||||||||||||||||||||
Contract drilling services | $ | — | $ | 36,149 | $ | 5,061 | $ | — | $ | — | $ | 809,858 | $ | (17,856 | ) | $ | 833,212 | |||||||||||||||
Reimbursables | — | 389 | — | — | — | 27,748 | — | 28,137 | ||||||||||||||||||||||||
Labor contract drilling services | — | — | — | — | — | 22,667 | — | 22,667 | ||||||||||||||||||||||||
Other | — | — | — | — | — | 16 | — | 16 | ||||||||||||||||||||||||
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||
Total operating revenues | — | 36,538 | 5,061 | — | — | 860,289 | (17,856 | ) | 884,032 | |||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||
Operating costs and expenses | ||||||||||||||||||||||||||||||||
Contract drilling services | 1,355 | 13,948 | 1,919 | 19,636 | — | 425,223 | (17,856 | ) | 444,225 | |||||||||||||||||||||||
Reimbursables | — | 216 | — | — | — | 20,831 | — | 21,047 | ||||||||||||||||||||||||
Labor contract drilling services | — | — | — | — | — | 12,991 | — | 12,991 | ||||||||||||||||||||||||
Depreciation and amortization | — | 15,500 | 1,181 | — | — | 177,914 | — | 194,595 | ||||||||||||||||||||||||
Selling, general and administrative | 426 | 1,447 | — | 9,700 | 1 | 3,913 | — | 15,487 | ||||||||||||||||||||||||
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|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||
Total operating costs and expenses | 1,781 | 31,111 | 3,100 | 29,336 | 1 | 640,872 | (17,856 | ) | 688,345 | |||||||||||||||||||||||
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|
|
|
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|
|
|
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|
|
|
|
|
| |||||||||||||||||
Operating income (loss) | (1,781 | ) | 5,427 | 1,961 | (29,336 | ) | (1 | ) | 219,417 | — | 195,687 | |||||||||||||||||||||
Other income (expense) | ||||||||||||||||||||||||||||||||
Equity earnings in affiliates, net of tax | 162,311 | 69,069 | 36,463 | 172,364 | 129,161 | — | (569,368 | ) | — | |||||||||||||||||||||||
Interest expense, net of amounts capitalized | (30,496 | ) | (8,964 | ) | (852 | ) | (33,509 | ) | (11,832 | ) | (20,221 | ) | 80,239 | (25,635 | ) | |||||||||||||||||
Interest income and other, net | 1,689 | 11,080 | 9 | 37,430 | 2,846 | 28,546 | (80,239 | ) | 1,361 | |||||||||||||||||||||||
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|
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|
| |||||||||||||||||
Income before income taxes | 131,723 | 76,612 | 37,581 | 146,949 | 120,174 | 227,742 | (569,368 | ) | 171,413 | |||||||||||||||||||||||
Income tax provision | — | (8,639 | ) | — | — | — | (16,145 | ) | — | (24,784 | ) | |||||||||||||||||||||
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|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||
Net Income | 131,723 | 67,973 | 37,581 | 146,949 | 120,174 | 211,597 | (569,368 | ) | 146,629 | |||||||||||||||||||||||
Net income attributable to noncontrolling interests | — | — | — | — | — | (14,906 | ) | — | (14,906 | ) | ||||||||||||||||||||||
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||
Net income attributable to Noble Corporation | 131,723 | 67,973 | 37,581 | 146,949 | 120,174 | 196,691 | (569,368 | ) | 131,723 | |||||||||||||||||||||||
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|
|
|
|
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|
|
|
|
|
|
|
|
|
| |||||||||||||||||
Other comprehensive income, net | 3,384 | — | — | — | — | 3,384 | (3,384 | ) | 3,384 | |||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||
Comprehensive income attributable to Noble Corporation | $ | 135,107 | $ | 67,973 | $ | 37,581 | $ | 146,949 | $ | 120,174 | $ | 200,075 | $ | (572,752 | ) | $ | 135,107 | |||||||||||||||
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|
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|
|
|
| |||||||||||||||||
NOBLE CORPORATION (NOBLE-CAYMAN) AND SUBSIDIARIES
CONDENSED CONSOLIDATING STATEMENT OF INCOME
Nine Months Ended September 30, 2012
(in thousands)
| Noble- Cayman | NHC and NDH Combined | NDC | NHIL | NDS6 | Other Non-guarantor Subsidiaries of Noble | Consolidating Adjustments | Total | |||||||||||||||||||||||||
Operating revenues | ||||||||||||||||||||||||||||||||
Contract drilling services | $ | — | $ | 117,488 | $ | 14,941 | $ | — | $ | — | $ | 2,352,618 | $ | (57,288 | ) | $ | 2,427,759 | |||||||||||||||
Reimbursables | — | 6,199 | — | — | — | 87,891 | — | 94,090 | ||||||||||||||||||||||||
Labor contract drilling services | — | — | — | — | — | 58,538 | — | 58,538 | ||||||||||||||||||||||||
Other | — | — | — | — | — | 1,190 | (932 | ) | 258 | |||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||
Total operating revenues | — | 123,687 | 14,941 | — | — | 2,500,237 | (58,220 | ) | 2,580,645 | |||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||
Operating costs and expenses | ||||||||||||||||||||||||||||||||
Contract drilling services | 3,794 | 42,642 | 5,529 | 56,048 | — | 1,231,176 | (58,220 | ) | 1,280,969 | |||||||||||||||||||||||
Reimbursables | — | 5,641 | — | — | — | 70,977 | — | 76,618 | ||||||||||||||||||||||||
Labor contract drilling services | — | — | — | — | — | 34,070 | — | 34,070 | ||||||||||||||||||||||||
Depreciation and amortization | — | 45,577 | 3,278 | — | — | 499,416 | — | 548,271 | ||||||||||||||||||||||||
Selling, general and administrative | 1,237 | 4,258 | — | 28,137 | 1 | 11,331 | — | 44,964 | ||||||||||||||||||||||||
Loss on impairment | — | — | — | — | — | 18,345 | — | 18,345 | ||||||||||||||||||||||||
Gain on contract settlements/extinguishments, net | — | (4,869 | ) | — | — | — | (28,386 | ) | — | (33,255 | ) | |||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||
Total operating costs and expenses | 5,031 | 93,249 | 8,807 | 84,185 | 1 | 1,836,929 | (58,220 | ) | 1,969,982 | |||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||
Operating income (loss) | (5,031 | ) | 30,438 | 6,134 | (84,185 | ) | (1 | ) | 663,308 | — | 610,663 | |||||||||||||||||||||
Other income (expense) | ||||||||||||||||||||||||||||||||
Equity earnings in affiliates, net of tax | 515,132 | 358,234 | 92,343 | 583,122 | 274,564 | — | (1,823,395 | ) | — | |||||||||||||||||||||||
Interest expense, net of amounts capitalized | (76,396 | ) | (37,881 | ) | (3,040 | ) | (83,975 | ) | (31,020 | ) | (60,193 | ) | 235,722 | (56,783 | ) | |||||||||||||||||
Interest income and other, net | 5,640 | 29,771 | 4 | 99,609 | 8,771 | 96,295 | (235,722 | ) | 4,368 | |||||||||||||||||||||||
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||
Income before income taxes | 439,345 | 380,562 | 95,441 | 514,571 | 252,314 | 699,410 | (1,823,395 | ) | 558,248 | |||||||||||||||||||||||
Income tax provision | — | (30,902 | ) | — | — | — | (61,070 | ) | — | (91,972 | ) | |||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||
Net Income | 439,345 | 349,660 | 95,441 | 514,571 | 252,314 | 638,340 | (1,823,395 | ) | 466,276 | |||||||||||||||||||||||
Net income attributable to noncontrolling interests | — | — | — | — | — | (26,931 | ) | — | (26,931 | ) | ||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||
Net income attributable to Noble Corporation | 439,345 | 349,660 | 95,441 | 514,571 | 252,314 | 611,409 | (1,823,395 | ) | 439,345 | |||||||||||||||||||||||
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||
Other comprehensive income, net | 2,244 | — | — | — | — | 2,244 | (2,244 | ) | 2,244 | |||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||
Comprehensive income attributable to Noble Corporation | $ | 441,589 | $ | 349,660 | $ | 95,441 | $ | 514,571 | $ | 252,314 | $ | 613,653 | $ | (1,825,639 | ) | $ | 441,589 | |||||||||||||||
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|
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|
|
|
|
| |||||||||||||||||
NOBLE CORPORATION (NOBLE-CAYMAN) AND SUBSIDIARIES
CONDENSED CONSOLIDATING STATEMENT OF INCOME
Three Months Ended September 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 | $ | — | $ | 38,955 | $ | 5,105 | $ | — | $ | — | $ | 680,617 | $ | (19,785 | ) | $ | 704,892 | |||||||||||||||
| Reimbursables | — | 691 | — | — | — | 16,747 | — | 17,438 | ||||||||||||||||||||||||
| Labor contract drilling services | — | 4 | — | — | — | 15,560 | — | 15,564 | ||||||||||||||||||||||||
| Other | — | — | — | — | — | 8 | — | 8 | ||||||||||||||||||||||||
| Total operating revenues | — | 39,650 | 5,105 | — | — | 712,932 | (19,785 | ) | 737,902 | |||||||||||||||||||||||
Operating costs and expenses | ||||||||||||||||||||||||||||||||
| Contract drilling services | 1,759 | 10,485 | 1,883 | 9,819 | — | 345,465 | (19,785 | ) | 349,626 | |||||||||||||||||||||||
| Reimbursables | — | 420 | — | — | — | 13,551 | — | 13,971 | ||||||||||||||||||||||||
| Labor contract drilling services | — | — | — | — | — | 8,053 | — | 8,053 | ||||||||||||||||||||||||
| Depreciation and amortization | — | 13,138 | 937 | — | — | 151,644 | — | 165,719 | ||||||||||||||||||||||||
| Selling, general and administrative | 2,094 | 1,488 | — | 9,253 | — | 4,802 | — | 17,637 | ||||||||||||||||||||||||
| Gain on contract extinguishments, net | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||
| Total operating costs and expenses | 3,853 | 25,531 | 2,820 | 19,072 | — | 523,515 | (19,785 | ) | 555,006 | |||||||||||||||||||||||
Operating income (loss) | (3,853 | ) | 14,119 | 2,285 | (19,072 | ) | — | 189,417 | — | 182,896 | ||||||||||||||||||||||
Other income (expense) | ||||||||||||||||||||||||||||||||
| Equity earnings in affiliates, net of tax | 174,673 | 226,079 | 45,818 | 172,153 | (20,624 | ) | — | (598,099 | ) | — | ||||||||||||||||||||||
| Interest expense, net of amounts capitalized | (16,721 | ) | (15,612 | ) | (1,285 | ) | (21,641 | ) | (7,106 | ) | (267 | ) | 51,102 | (11,530 | ) | |||||||||||||||||
| Interest income and other, net | 1,615 | 6,906 | (40 | ) | 15,813 | 2,277 | 26,415 | (51,102 | ) | 1,884 | ||||||||||||||||||||||
Income before income taxes | 155,714 | 231,492 | 46,778 | 147,253 | (25,453 | ) | 215,565 | (598,099 | ) | 173,250 | ||||||||||||||||||||||
| Income tax provision | — | 487 | — | — | — | (17,785 | ) | — | (17,298 | ) | ||||||||||||||||||||||
Net Income | 155,714 | 231,979 | 46,778 | 147,253 | (25,453 | ) | 197,780 | (598,099 | ) | 155,952 | ||||||||||||||||||||||
| Net loss attributable to noncontrolling interests | — | — | — | — | — | (238 | ) | — | (238 | ) | ||||||||||||||||||||||
Net income attributable to Noble Corporation | $ | 155,714 | $ | 231,979 | $ | 46,778 | $ | 147,253 | $ | (25,453 | ) | $ | 197,542 | $ | (598,099 | ) | $ | 155,714 | ||||||||||||||
32
| Noble- Cayman | NHC and NDH Combined | NDC | NHIL | NDS6 | Other Non-guarantor Subsidiaries of Noble | Consolidating Adjustments | Total | |||||||||||||||||||||||||
Operating revenues | ||||||||||||||||||||||||||||||||
Contract drilling services | $ | — | $ | 38,955 | $ | 5,105 | $ | — | $ | — | $ | 680,617 | $ | (19,785 | ) | $ | 704,892 | |||||||||||||||
Reimbursables | — | 691 | — | — | — | 16,747 | — | 17,438 | ||||||||||||||||||||||||
Labor contract drilling services | — | 4 | — | — | — | 15,560 | — | 15,564 | ||||||||||||||||||||||||
Other | — | — | — | — | — | 8 | — | 8 | ||||||||||||||||||||||||
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||
Total operating revenues | — | 39,650 | 5,105 | — | — | 712,932 | (19,785 | ) | 737,902 | |||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||
Operating costs and expenses | ||||||||||||||||||||||||||||||||
Contract drilling services | 1,759 | 10,485 | 1,883 | 9,819 | — | 345,465 | (19,785 | ) | 349,626 | |||||||||||||||||||||||
Reimbursables | — | 420 | — | — | — | 13,551 | — | 13,971 | ||||||||||||||||||||||||
Labor contract drilling services | — | — | — | — | — | 8,053 | — | 8,053 | ||||||||||||||||||||||||
Depreciation and amortization | — | 13,138 | 937 | — | — | 151,644 | — | 165,719 | ||||||||||||||||||||||||
Selling, general and administrative | 2,094 | 1,488 | — | 9,253 | — | 4,802 | — | 17,637 | ||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||
Total operating costs and expenses | 3,853 | 25,531 | 2,820 | 19,072 | — | 523,515 | (19,785 | ) | 555,006 | |||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||
Operating income (loss) | (3,853 | ) | 14,119 | 2,285 | (19,072 | ) | — | 189,417 | — | 182,896 | ||||||||||||||||||||||
Other income (expense) | ||||||||||||||||||||||||||||||||
Equity earnings in affiliates, net of tax | 174,673 | 226,079 | 45,818 | 172,153 | (20,624 | ) | — | (598,099 | ) | — | ||||||||||||||||||||||
Interest expense, net of amounts capitalized | (16,721 | ) | (15,612 | ) | (1,285 | ) | (21,641 | ) | (7,106 | ) | (267 | ) | 51,102 | (11,530 | ) | |||||||||||||||||
Interest income and other, net | 1,615 | 6,906 | (40 | ) | 15,813 | 2,277 | 26,415 | (51,102 | ) | 1,884 | ||||||||||||||||||||||
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|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||
Income before income taxes | 155,714 | 231,492 | 46,778 | 147,253 | (25,453 | ) | 215,565 | (598,099 | ) | 173,250 | ||||||||||||||||||||||
Income tax (provision) / benefit | — | 487 | — | — | — | (17,785 | ) | — | (17,298 | ) | ||||||||||||||||||||||
|
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|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||
Net Income | 155,714 | 231,979 | 46,778 | 147,253 | (25,453 | ) | 197,780 | (598,099 | ) | 155,952 | ||||||||||||||||||||||
Net income attributable to noncontrolling interests | — | — | — | — | — | (238 | ) | — | (238 | ) | ||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||
Net income attributable to Noble Corporation | 155,714 | 231,979 | 46,778 | 147,253 | (25,453 | ) | 197,542 | (598,099 | ) | 155,714 | ||||||||||||||||||||||
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||
Other comprehensive loss, net | (13,896 | ) | — | — | — | — | (13,896 | ) | 13,896 | (13,896 | ) | |||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||
Comprehensive income attributable to Noble Corporation | $ | 141,818 | $ | 231,979 | $ | 46,778 | $ | 147,253 | $ | (25,453 | ) | $ | 183,646 | $ | (584,203 | ) | $ | 141,818 | ||||||||||||||
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|
|
|
|
|
| |||||||||||||||||
CONDENSED CONSOLIDATING STATEMENT OF INCOME
Nine Months Ended September 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 | $ | — | $ | 100,009 | $ | 14,800 | $ | — | $ | — | $ | 1,770,356 | $ | (48,118 | ) | $ | 1,837,047 | |||||||||||||||
| Reimbursables | — | 3,381 | 12 | — | — | 60,458 | — | 63,851 | ||||||||||||||||||||||||
| Labor contract drilling services | — | 4 | — | — | — | 43,119 | — | 43,123 | ||||||||||||||||||||||||
| Other | — | — | — | — | — | 766 | — | 766 | ||||||||||||||||||||||||
| Total operating revenues | — | 103,394 | 14,812 | — | — | 1,874,699 | (48,118 | ) | 1,944,787 | |||||||||||||||||||||||
Operating costs and expenses | ||||||||||||||||||||||||||||||||
| Contract drilling services | 4,818 | 31,554 | 5,681 | 26,625 | — | 960,102 | (48,118 | ) | 980,662 | |||||||||||||||||||||||
| Reimbursables | — | 3,331 | — | — | — | 46,466 | — | 49,797 | ||||||||||||||||||||||||
| Labor contract drilling services | — | — | — | — | — | 25,326 | — | 25,326 | ||||||||||||||||||||||||
| Depreciation and amortization | — | 36,330 | 2,781 | — | — | 446,899 | — | 486,010 | ||||||||||||||||||||||||
| Selling, general and administrative | 5,397 | 4,206 | — | 24,756 | 1 | 14,450 | — | 48,810 | ||||||||||||||||||||||||
| Gain on contract extinguishments, net | — | — | — | — | (21,202 | ) | — | (21,202 | ) | |||||||||||||||||||||||
| Total operating costs and expenses | 10,215 | 75,421 | 8,462 | 51,381 | 1 | 1,472,041 | (48,118 | ) | 1,569,403 | |||||||||||||||||||||||
Operating income (loss) | (10,215 | ) | 27,973 | 6,350 | (51,381 | ) | (1 | ) | 402,658 | — | 375,384 | |||||||||||||||||||||
Other income (expense) | ||||||||||||||||||||||||||||||||
| Equity earnings in affiliates, net of tax | 350,439 | 328,452 | 80,795 | 344,524 | 86,932 | — | (1,191,142 | ) | — | |||||||||||||||||||||||
| Interest expense, net of amounts capitalized | (52,985 | ) | (45,527 | ) | (4,824 | ) | (67,667 | ) | (22,048 | ) | (3,284 | ) | 150,935 | (45,400 | ) | |||||||||||||||||
| Interest income and other, net | 4,953 | 19,376 | 8 | 38,557 | 6,321 | 85,698 | (150,935 | ) | 3,978 | |||||||||||||||||||||||
Income before income taxes | 292,192 | 330,274 | 82,329 | 264,033 | 71,204 | 485,072 | (1,191,142 | ) | 333,962 | |||||||||||||||||||||||
| Income tax provision | — | 6,287 | — | — | — | (47,767 | ) | — | (41,480 | ) | ||||||||||||||||||||||
Net Income | 292,192 | 336,561 | 82,329 | 264,033 | 71,204 | 437,305 | (1,191,142 | ) | 292,482 | |||||||||||||||||||||||
| Net loss attributable to noncontrolling interests | — | — | — | — | — | (290 | ) | — | (290 | ) | ||||||||||||||||||||||
Net income attributable to Noble Corporation | $ | 292,192 | $ | 336,561 | $ | 82,329 | $ | 264,033 | $ | 71,204 | $ | 437,015 | $ | (1,191,142 | ) | $ | 292,192 | |||||||||||||||
33
| Noble- Cayman | NHC and NDH Combined | NDC | NHIL | NDS6 | Other Non-guarantor Subsidiaries of Noble | Consolidating Adjustments | Total | |||||||||||||||||||||||||
Operating revenues | ||||||||||||||||||||||||||||||||
Contract drilling services | $ | — | $ | 100,009 | $ | 14,800 | $ | — | $ | — | $ | 1,770,356 | $ | (48,118 | ) | $ | 1,837,047 | |||||||||||||||
Reimbursables | — | 3,381 | 12 | — | — | 60,458 | — | 63,851 | ||||||||||||||||||||||||
Labor contract drilling services | — | 4 | — | — | — | 43,119 | — | 43,123 | ||||||||||||||||||||||||
Other | — | — | — | — | — | 766 | — | 766 | ||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||
Total operating revenues | — | 103,394 | 14,812 | — | — | 1,874,699 | (48,118 | ) | 1,944,787 | |||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||
Operating costs and expenses | ||||||||||||||||||||||||||||||||
Contract drilling services | 4,818 | 31,554 | 5,681 | 26,625 | — | 960,102 | (48,118 | ) | 980,662 | |||||||||||||||||||||||
Reimbursables | — | 3,331 | — | — | — | 46,466 | — | 49,797 | ||||||||||||||||||||||||
Labor contract drilling services | — | — | — | — | — | 25,326 | — | 25,326 | ||||||||||||||||||||||||
Depreciation and amortization | — | 36,330 | 2,781 | — | — | 446,899 | — | 486,010 | ||||||||||||||||||||||||
Selling, general and administrative | 5,397 | 4,206 | — | 24,756 | 1 | 14,450 | — | 48,810 | ||||||||||||||||||||||||
Gain on contract extinguishments, net | — | — | — | — | — | (21,202 | ) | — | (21,202 | ) | ||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||
Total operating costs and expenses | 10,215 | 75,421 | 8,462 | 51,381 | 1 | 1,472,041 | (48,118 | ) | 1,569,403 | |||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||
Operating income (loss) | (10,215 | ) | 27,973 | 6,350 | (51,381 | ) | (1 | ) | 402,658 | — | 375,384 | |||||||||||||||||||||
Other income (expense) | ||||||||||||||||||||||||||||||||
Equity earnings in affiliates, net of tax | 350,439 | 328,452 | 80,795 | 344,524 | 86,932 | — | (1,191,142 | ) | — | |||||||||||||||||||||||
Interest expense, net of amounts capitalized | (52,985 | ) | (45,527 | ) | (4,824 | ) | (67,667 | ) | (22,048 | ) | (3,284 | ) | 150,935 | (45,400 | ) | |||||||||||||||||
Interest income and other, net | 4,953 | 19,376 | 8 | 38,557 | 6,321 | 85,698 | (150,935 | ) | 3,978 | |||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||
Income before income taxes | 292,192 | 330,274 | 82,329 | 264,033 | 71,204 | 485,072 | (1,191,142 | ) | 333,962 | |||||||||||||||||||||||
Income tax (provision) / benefit | — | 6,287 | — | — | — | (47,767 | ) | — | (41,480 | ) | ||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||
Net Income | 292,192 | 336,561 | 82,329 | 264,033 | 71,204 | 437,305 | (1,191,142 | ) | 292,482 | |||||||||||||||||||||||
Net income attributable to noncontrolling interests | — | — | — | — | — | (290 | ) | — | (290 | ) | ||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||
Net income attributable to Noble Corporation | 292,192 | 336,561 | 82,329 | 264,033 | 71,204 | 437,015 | (1,191,142 | ) | 292,192 | |||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||
Other comprehensive loss, net | (5,992 | ) | — | — | — | — | (5,992 | ) | 5,992 | (5,992 | ) | |||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||
Comprehensive income attributable to Noble Corporation | $ | 286,200 | $ | 336,561 | $ | 82,329 | $ | 264,033 | $ | 71,204 | $ | 431,023 | $ | (1,185,150 | ) | $ | 286,200 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||
| Other | ||||||||||||||||||||||||||||||||
| Non-guarantor | ||||||||||||||||||||||||||||||||
| Noble- | NHC and NDH | Subsidiaries | Consolidating | |||||||||||||||||||||||||||||
| Cayman | Combined | NDC | NHIL | NDS6 | of Noble | Adjustments | Total | |||||||||||||||||||||||||
Operating revenues | ||||||||||||||||||||||||||||||||
| Contract drilling services | $ | — | $ | 23,724 | $ | 5,363 | $ | — | $ | — | $ | 565,132 | $ | (9,300 | ) | $ | 584,919 | |||||||||||||||
| Reimbursables | — | 388 | — | — | — | 18,789 | — | 19,177 | ||||||||||||||||||||||||
| Labor contract drilling services | — | — | — | — | — | 7,887 | — | 7,887 | ||||||||||||||||||||||||
| Other | — | (107 | ) | — | — | — | 742 | — | 635 | |||||||||||||||||||||||
| Total operating revenues | — | 24,005 | 5,363 | — | — | 592,550 | (9,300 | ) | 612,618 | |||||||||||||||||||||||
Operating costs and expenses | ||||||||||||||||||||||||||||||||
| Contract drilling services | 18,924 | 8,475 | 1,657 | — | — | 296,031 | (9,300 | ) | 315,787 | |||||||||||||||||||||||
| Reimbursables | — | 127 | — | — | — | 14,224 | — | 14,351 | ||||||||||||||||||||||||
| Labor contract drilling services | — | — | — | — | — | 5,302 | — | 5,302 | ||||||||||||||||||||||||
| Depreciation and amortization | — | 9,494 | 924 | — | — | 132,641 | — | 143,059 | ||||||||||||||||||||||||
| Selling, general and administrative | — | 605 | 94 | (63 | ) | — | 16,079 | — | 16,715 | |||||||||||||||||||||||
| Total operating costs and expenses | 18,924 | 18,701 | 2,675 | (63 | ) | — | 464,277 | (9,300 | ) | 495,214 | ||||||||||||||||||||||
Operating income (loss) | (18,924 | ) | 5,304 | 2,688 | 63 | — | 128,273 | — | 117,404 | |||||||||||||||||||||||
Other income (expense) | ||||||||||||||||||||||||||||||||
| Equity earnings in affiliates, net of tax | 124,218 | 155,504 | 38,484 | 136,039 | 35,842 | — | (490,087 | ) | — | |||||||||||||||||||||||
| Interest expense, net of amounts capitalized | (12,251 | ) | (14,845 | ) | (1,859 | ) | (12,645 | ) | (1,424 | ) | (2,668 | ) | 41,545 | (4,147 | ) | |||||||||||||||||
| Interest income and other, net | 1,556 | 555 | — | 8,419 | 2,221 | 30,004 | (41,545 | ) | 1,210 | |||||||||||||||||||||||
Income before income taxes | 94,599 | 146,518 | 39,313 | 131,876 | 36,639 | 155,609 | (490,087 | ) | 114,467 | |||||||||||||||||||||||
| Income tax provision | — | (18,445 | ) | — | — | — | (956 | ) | (19,401 | ) | ||||||||||||||||||||||
Net Income | 94,599 | 128,073 | 39,313 | 131,876 | 36,639 | 154,653 | (490,087 | ) | 95,066 | |||||||||||||||||||||||
| Net loss attributable to noncontrolling interests | — | — | — | — | — | (467 | ) | — | (467 | ) | ||||||||||||||||||||||
Net income attributable to Noble Corporation | $ | 94,599 | $ | 128,073 | $ | 39,313 | $ | 131,876 | $ | 36,639 | $ | 154,186 | $ | (490,087 | ) | $ | 94,599 | |||||||||||||||
34
| Other | ||||||||||||||||||||||||||||||||
| Non-guarantor | ||||||||||||||||||||||||||||||||
| Noble- | NHC and NDH | Subsidiaries | Consolidating | |||||||||||||||||||||||||||||
| Cayman | Combined | NDC | NHIL | NDS6 | of Noble | Adjustments | Total | |||||||||||||||||||||||||
Operating revenues | ||||||||||||||||||||||||||||||||
| Contract drilling services | $ | — | $ | 72,313 | $ | 12,847 | $ | — | $ | — | $ | 2,026,515 | $ | (30,600 | ) | $ | 2,081,075 | |||||||||||||||
| Reimbursables | — | 978 | 61 | — | — | 56,124 | — | 57,163 | ||||||||||||||||||||||||
| Labor contract drilling services | — | — | — | — | — | 23,704 | — | 23,704 | ||||||||||||||||||||||||
| Other | — | 5 | — | — | — | 1,444 | — | 1,449 | ||||||||||||||||||||||||
| Total operating revenues | — | 73,296 | 12,908 | — | — | 2,107,787 | (30,600 | ) | 2,163,391 | |||||||||||||||||||||||
Operating costs and expenses | ||||||||||||||||||||||||||||||||
| Contract drilling services | 18,931 | 27,082 | 4,793 | — | — | 819,446 | (30,600 | ) | 839,652 | |||||||||||||||||||||||
| Reimbursables | — | 1,226 | 61 | — | — | 43,172 | — | 44,459 | ||||||||||||||||||||||||
| Labor contract drilling services | — | — | — | — | — | 16,570 | — | 16,570 | ||||||||||||||||||||||||
| Depreciation and amortization | — | 27,321 | 2,536 | — | — | 354,918 | — | 384,775 | ||||||||||||||||||||||||
| Selling, general and administrative | — | 51,241 | 315 | 56 | — | (3,475 | ) | — | 48,137 | |||||||||||||||||||||||
| Total operating costs and expenses | 18,931 | 106,870 | 7,705 | 56 | — | 1,230,631 | (30,600 | ) | 1,333,593 | |||||||||||||||||||||||
Operating income (loss) | (18,931 | ) | (33,574 | ) | 5,203 | (56 | ) | — | 877,156 | — | 829,798 | |||||||||||||||||||||
Other income (expense) | ||||||||||||||||||||||||||||||||
| Equity earnings in affiliates, net of tax | 732,956 | 497,191 | 47,602 | 768,130 | 336,350 | — | (2,382,229 | ) | — | |||||||||||||||||||||||
| Interest expense, net of amounts capitalized | (12,838 | ) | (50,179 | ) | (5,516 | ) | (32,010 | ) | (1,424 | ) | (8,852 | ) | 105,697 | (5,122 | ) | |||||||||||||||||
| Interest income and other, net | 5,002 | 23,312 | — | 8,419 | 8,373 | 66,911 | (105,697 | ) | 6,320 | |||||||||||||||||||||||
Income before income taxes | 706,189 | 436,750 | 47,289 | 744,483 | 343,299 | 935,215 | (2,382,229 | ) | 830,996 | |||||||||||||||||||||||
| Income tax provision | — | (27,537 | ) | — | — | — | (96,803 | ) | — | (124,340 | ) | |||||||||||||||||||||
Net Income | 706,189 | 409,213 | 47,289 | 744,483 | 343,299 | 838,412 | (2,382,229 | ) | 706,656 | |||||||||||||||||||||||
| Net loss attributable to noncontrolling interests | — | — | — | — | — | (467 | ) | — | (467 | ) | ||||||||||||||||||||||
Net income attributable to Noble Corporation | $ | 706,189 | $ | 409,213 | $ | 47,289 | $ | 744,483 | $ | 343,299 | $ | 837,945 | $ | (2,382,229 | ) | $ | 706,189 | |||||||||||||||
35
Nine Months Ended September 30, 2012
(in thousands)
| Noble- Cayman | NHC and NDH Combined | NDC | NHIL | NDS6 | Other Non-guarantor Subsidiaries of Noble | Consolidating Adjustments | Total | |||||||||||||||||||||||||
Cash flows from operating activities | ||||||||||||||||||||||||||||||||
Net cash from operating activities | $ | (59,614 | ) | $ | 7,563 | $ | 8,989 | $ | (107,638 | ) | $ | (25,942 | ) | $ | 1,133,499 | $ | — | $ | 956,857 | |||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||
Cash flows from investing activities | ||||||||||||||||||||||||||||||||
New construction and capital expenditures | — | (499,141 | ) | (1,040 | ) | — | — | (940,534 | ) | — | (1,440,715 | ) | ||||||||||||||||||||
Notes receivable from affiliates | — | — | — | (1,188,287 | ) | — | — | 1,188,287 | — | |||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||
Net cash from investing activities | — | (499,141 | ) | (1,040 | ) | (1,188,287 | ) | — | (940,534 | ) | 1,188,287 | (1,440,715 | ) | |||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||
Cash flows from financing activities | ||||||||||||||||||||||||||||||||
Change in bank credit facilities, net | (630,000 | ) | — | — | — | — | — | — | (630,000 | ) | ||||||||||||||||||||||
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 | (129,139 | ) | — | — | — | — | — | — | (129,139 | ) | ||||||||||||||||||||||
Advances (to) from affiliates | (364,666 | ) | 491,628 | (7,949 | ) | 109,308 | 25,942 | (254,263 | ) | — | — | |||||||||||||||||||||
Notes payable to affiliates | 1,188,287 | — | — | — | — | — | (1,188,287 | ) | — | |||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||
Net cash from financing activities | 59,468 | 491,628 | (7,949 | ) | 1,295,944 | 25,942 | (214,263 | ) | (1,188,287 | ) | 462,483 | |||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||
Net change in cash and cash equivalents | (146 | ) | 50 | — | 19 | — | (21,298 | ) | — | (21,375 | ) | |||||||||||||||||||||
Cash and cash equivalents, beginning of period | 146 | 385 | — | — | — | 234,525 | — | 235,056 | ||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||
Cash and cash equivalents, end of period | $ | — | $ | 435 | $ | — | $ | 19 | $ | — | $ | 213,227 | $ | — | $ | 213,681 | ||||||||||||||||
|
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|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||
NOBLE CORPORATION (NOBLE-CAYMAN) AND SUBSIDIARIES
CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS
Nine Months Ended September 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 | $ | (40,060 | ) | $ | 23,345 | $ | 7,041 | $ | (105,014 | ) | $ | (19,420 | ) | $ | 636,982 | $ | — | $ | 502,874 | |||||||||||||
Cash flows from investing activities | ||||||||||||||||||||||||||||||||
| New construction and capital expenditures | — | (1,124,826 | ) | — | — | — | (906,990 | ) | — | (2,031,816 | ) | |||||||||||||||||||||
| Notes receivable from affiliates | 20,000 | — | — | (1,096,927 | ) | — | 200,000 | 876,927 | — | |||||||||||||||||||||||
| Refund from contract extinguishments | — | — | — | — | — | 18,642 | — | 18,642 | ||||||||||||||||||||||||
| Net cash from investing activities | 20,000 | (1,124,826 | ) | — | (1,096,927 | ) | — | (688,348 | ) | 876,927 | (2,013,174 | ) | ||||||||||||||||||||
Cash flows from financing activities | ||||||||||||||||||||||||||||||||
| Increase in bank credit facilities, net | 675,000 | — | — | — | — | — | — | 675,000 | ||||||||||||||||||||||||
| Proceeds from issuance of senior notes, net | — | — | — | 1,087,833 | — | — | — | 1,087,833 | ||||||||||||||||||||||||
| Contributions from joint venture partners | — | — | — | — | — | 481,000 | — | 481,000 | ||||||||||||||||||||||||
| 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 | (149,566 | ) | — | — | — | — | — | — | (149,566 | ) | ||||||||||||||||||||||
| Advances (to) from affiliates | (355,081 | ) | 1,119,127 | 27,959 | 114,108 | 19,420 | (925,533 | ) | — | — | ||||||||||||||||||||||
| Notes payable to affiliates | (147,500 | ) | (17,500 | ) | (35,000 | ) | — | — | 1,076,927 | (876,927 | ) | — | ||||||||||||||||||||
| Net cash from financing activities | 20,018 | 1,101,627 | (7,041 | ) | 1,201,941 | 19,420 | (90,132 | ) | (876,927 | ) | 1,368,906 | |||||||||||||||||||||
| �� | ||||||||||||||||||||||||||||||||
| Net change in cash and cash equivalents | (42 | ) | 146 | — | — | — | (141,498 | ) | — | (141,394 | ) | |||||||||||||||||||||
| Cash and cash equivalents, beginning of period | 42 | 146 | — | — | — | 333,211 | — | 333,399 | ||||||||||||||||||||||||
| Cash and cash equivalents, end of period | $ | — | $ | 292 | $ | — | $ | — | $ | — | $ | 191,713 | $ | — | $ | 192,005 | ||||||||||||||||
36
| Noble- Cayman | NHC and NDH Combined | NDC | NHIL | NDS6 | Other Non-guarantor Subsidiaries of Noble | Consolidating Adjustments | Total | |||||||||||||||||||||||||
Cash flows from operating activities | ||||||||||||||||||||||||||||||||
Net cash from operating activities | $ | (40,060 | ) | $ | 30,944 | $ | 6,889 | $ | (105,014 | ) | $ | (19,420 | ) | $ | 614,119 | $ | — | $ | 487,458 | |||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||
Cash flows from investing activities | ||||||||||||||||||||||||||||||||
New construction and capital expenditures | — | (1,135,054 | ) | (475 | ) | — | — | (880,871 | ) | — | (2,016,400 | ) | ||||||||||||||||||||
Notes receivable from affiliates | 20,000 | — | — | (1,096,927 | ) | — | 200,000 | 876,927 | — | |||||||||||||||||||||||
Refund from contract extinguishments | — | — | — | — | — | 18,642 | — | 18,642 | ||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||
Net cash from investing activities | 20,000 | (1,135,054 | ) | (475 | ) | (1,096,927 | ) | — | (662,229 | ) | 876,927 | (1,997,758 | ) | |||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||
Cash flows from financing activities | ||||||||||||||||||||||||||||||||
Change in bank credit facilities, net | 675,000 | — | — | — | — | — | — | 675,000 | ||||||||||||||||||||||||
Proceeds from issuance of senior notes, net | — | — | — | 1,087,833 | — | — | — | 1,087,833 | ||||||||||||||||||||||||
Contributions from joint venture partners | — | — | — | — | — | 481,000 | — | 481,000 | ||||||||||||||||||||||||
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 | (149,566 | ) | — | — | — | — | — | — | (149,566 | ) | ||||||||||||||||||||||
Advances (to) from affiliates | (355,081 | ) | 1,121,756 | 28,586 | 114,108 | 19,420 | (928,789 | ) | — | — | ||||||||||||||||||||||
Notes payable to affiliates | (147,500 | ) | (17,500 | ) | (35,000 | ) | — | — | 1,076,927 | (876,927 | ) | — | ||||||||||||||||||||
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Net cash from financing activities | 20,018 | 1,104,256 | (6,414 | ) | 1,201,941 | 19,420 | (93,388 | ) | (876,927 | ) | 1,368,906 | |||||||||||||||||||||
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Net change in cash and cash equivalents | (42 | ) | 146 | — | — | — | (141,498 | ) | — | (141,394 | ) | |||||||||||||||||||||
Cash and cash equivalents, beginning of period | 42 | 146 | — | — | — | 333,211 | — | 333,399 | ||||||||||||||||||||||||
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Cash and cash equivalents, end of period | $ | — | $ | 292 | $ | — | $ | — | $ | — | $ | 191,713 | $ | — | $ | 192,005 | ||||||||||||||||
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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
| 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 | $ | (6,194 | ) | $ | (57,507 | ) | $ | (3,907 | ) | $ | (26,975 | ) | $ | 3,258 | $ | 1,372,073 | $ | — | $ | 1,280,748 | ||||||||||||
Cash flows from investing activities | ||||||||||||||||||||||||||||||||
| New construction and capital expenditures | — | (381,928 | ) | — | — | — | (499,482 | ) | — | (881,410 | ) | |||||||||||||||||||||
| Notes receivable from affiliates | — | — | — | (1,239,600 | ) | — | (490,000 | ) | 1,729,600 | — | ||||||||||||||||||||||
| Acquisition of FDR Holdings, Ltd., net of cash acquired | (1,629,644 | ) | — | — | — | — | — | — | (1,629,644 | ) | ||||||||||||||||||||||
| Net cash from investing activities | (1,629,644 | ) | (381,928 | ) | — | (1,239,600 | ) | — | (989,482 | ) | 1,729,600 | (2,511,054 | ) | |||||||||||||||||||
Cash flows from financing activities | ||||||||||||||||||||||||||||||||
| Proceeds from issuance of senior notes, net | — | — | — | 1,238,074 | — | — | — | 1,238,074 | ||||||||||||||||||||||||
| Contributions from joint venture partners | — | — | — | — | — | 35,000 | — | 35,000 | ||||||||||||||||||||||||
| Settlement of interest rate swaps | — | — | — | — | — | (2,041 | ) | — | (2,041 | ) | ||||||||||||||||||||||
| Distributions to parent | (422,537 | ) | (422,537 | ) | ||||||||||||||||||||||||||||
| Advances (to) from affiliates | 328,813 | 439,401 | 3,907 | 28,501 | (3,258 | ) | (797,364 | ) | — | — | ||||||||||||||||||||||
| Notes payable to affiliates | 1,729,600 | — | — | — | — | — | (1,729,600 | ) | — | |||||||||||||||||||||||
| Net cash from financing activities | 1,635,876 | 439,401 | 3,907 | 1,266,575 | (3,258 | ) | (764,405 | ) | (1,729,600 | ) | 848,496 | |||||||||||||||||||||
| Net change in cash and cash equivalents | 38 | (34 | ) | — | — | — | (381,814 | ) | — | (381,810 | ) | |||||||||||||||||||||
| Cash and cash equivalents, beginning of period | 3 | 268 | — | — | — | 725,954 | 726,225 | |||||||||||||||||||||||||
| Cash and cash equivalents, end of period | $ | 41 | $ | 234 | $ | — | $ | — | $ | — | $ | 344,140 | $ | — | $ | 344,415 | ||||||||||||||||
37
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), issuance of commercial paper notes, completion and acceptance of our newbuild rigs, future capital expenditures, 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 September 30, 2011, ourOur fleet consisted of 79 mobile offshore drilling units located worldwide as follows:consists of 14 semisubmersibles, 14 drillships, 49 jackups and two submersibles. Additionally, we have one floating production storage and offloading unit (“FPSO”). At September 30, 2011, we had 13unit. Our fleet includes 11 units under construction.construction as follows:
five dynamically positioned, ultra-deepwater, harsh environment drillships and
six high-specification heavy-duty, harsh environment jackup rigs.
Our global fleet is currently located in the following areas: the Middle East, India, the U.S. Gulf of Mexico and Alaska, Mexico, the Mediterranean,Brazil, the North Sea, Brazil,the Mediterranean, West Africa, the Middle East, India, Australia and the Asian Pacific. Noble and its predecessors have been engaged in the contract drilling of oil and gas wells since 1921.
38
Outlook
There continues to be uncertainty regarding the sustainability of the global economic recovery, which is proceeding unevenly in different geographic regions. In addition to the political instability in certain oil producing nations in the Middle East and North Africa, there is also uncertainty regarding recovery in the credit markets, particularly in Europe, and North America. Duringwhich some analysts predict could be the first nine months of 2011,catalyst for a worldwide recession. As a result, oil prices fluctuated as a result of supplyduring 2012 have been volatile for short-term pricing. Supply side concerns in response to continued political unrest in the Middle East and North Africa.Africa are weighed against global recession fears. Natural gas prices in the United States fluctuated during the first nine months of the year, but ended the period in-line with year-end 2010 pricing. We believe there continue to be at low levels based on current oversupply. We believe these competing factors which couldwill impact the volatility in the offshore drilling market and the prices of oil and gas commodities for the foreseeable future.
Despite the instability in the global economy and commodity prices noted above, we have seen an increase in demandthe market for offshore drilling services has continued the upward trend that began in the first nine months of 2011. While the risk of negative developments in the U.S. Gulf of Mexico could continue to have an impact on the deepwater market segment inWe believe both the short-term we believe thatand long-term outlook for the long-term outlookdeep and ultra-deepwater markets continues to strengthen. Market dayrates for new ultra-deepwater units remain generally above $450,000,$500,000, which is significantly lower than the peak rates achieved in 2007-2008, but higher than rates seen in 2010. Short-termrecent years. A number of fixtures for very high specification units have exceeded $500,000,$550,000, and we believe thisin certain cases even exceeded $600,000. Our market analysis indicates that there is an indicationlittle, if any, availability of where the market could be going should there continue to be a strong demandultra-deepwater units for ultra-deepwater drilling units. Although demand in the jackup segment decreased slightly during 2010, utilization2012, and 2013 availability is rapidly decreasing. Utilization rates for jackup units stabilized in 2011, and improved in most regions during the first nine months of 2011, especially2012. While we currently have three jackup rigs available, we have seen tangible market activity and anticipate a favorable environment for those units equipped with standard drilling features.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 those for units that entered service before 2000. Likewise, there has been a bifurcation of dayrates between older and newer unitsHowever, we continue to see improvement in the jackupolder jack-up market with newer units earning a premium as customers display a preference for technologically advancedincreased utilization and efficient drilling alternatives.
Demand for our drilling services generally depends on a variety of economic and political factors, including worldwide demand for oil and gas, the ability of the Organization of Petroleum Exporting Countries (“OPEC”) to set and maintain production levels and pricing, the level of production of non-OPEC countries and the policies of various governments 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,is underway. This increased supply and the majority of which currently have no contract. 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 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. Petrobras opened the tenders late October 2011, receiving offers for the 21 rigs from local Brazilian and Norwegian based drillers, which Petrobras is currently reviewing. Petrobras is also reviewing offers received for existing deepwater drilling units. The potential increase in supply from the Petrobras newbuilds could also adversely impact overall industry dayrates and economics.
39
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 returned to work in the fourth 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 270 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. For example, recently a number of labor issues within the operational and regulatory support infrastructure in Brazil caused two rigs to be delayed in returning to operations following the completion of shipyard projects. 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 the future levelactive expansion of demand or dayrates forour fleet through construction and acquisitions of drilling units, coupled with upgrades and modifications of existing units. We seek to deploy our drilling services or future conditionsassets in the offshore contract drilling industry, we continue to believe we are well positioned within the industryimportant oil and believe our acquisition of Frontier and recent newbuild announcements further strengthen our position, especially in deepwater drilling.
40
| Three Months Ended | ||||||||
| September 30, | June 30, | |||||||
| 2011 | 2011 | |||||||
| Average dayrate | $ | 151,782 | $ | 140,296 | ||||
| Average utilization | 76 | % | 70 | % | ||||
| Daily contract drilling services costs | $ | 77,205 | $ | 80,985 | ||||
| Contract drilling services margin | 49 | % | 43 | % | ||||
We believe modernizing our overall fleet is an important element of our worldwide offshore drilling and deepwater capabilities through upgrades and modifications, acquisitions, divestituresstrategy. We may dispose of some, or all, of our 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 to contribute positively to our overall results under current market conditions, we do continue to analyze strategic options for these lower specification units in important oil and gas producing areas. a manner that we believe will maximize shareholder value. We can provide no assurance as to whether, or when, any disposition transaction will occur or what form it may take.
At September 30, 2011,2012, we continued our newbuild strategy with the following 1311 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 under construction at Hyundai Heavy Industries Co. Ltd. (“HHI”), the first of which areis estimated to be delivered from the shipyard to begin acceptance testing as follows:in the second quarter of 2013, the fourth quarter of 2013, the second quarter of 2014,2013; and the second half of 2014, respectively; and
six high-specification heavy duty, harsh environment jackup rigs, the first of which areis estimated to be delivered from the shipyard to begin acceptance testing as follows:in the first quarter of 2013, third quarter of 2013, fourth quarter of 2013, first quarter of 2014, fourth quarter of 2014 and first quarter of 2015, respectively.2013.
Of our 1311 rigs under construction as of September 30, 2011, four drillships and all six jackups are being constructed at a shipyard with a strong history of successful execution. Also, four2012, two of the drillships are contractedcommitted for five years or more whileand one drillship is committed for three years. Additionally, two of the jackup rigs have received commitments for contracts. The remaining nine rigs are currently being constructed without contracts.
While we cannot predict the future level of demand or dayrates for our business strategy,drilling services or future conditions in the offshore contract drilling industry, we continue to review our fleet and the strategic benefit of our lower specification units. As part of this process, we may dispose of some of our lower specification units, andbelieve we are considering potential options.
In the third quarter of FDR Holdings Limited
| Three Months Ended | ||||||||
| September 30, | June 30, | |||||||
| 2012 | 2012 | |||||||
Average dayrate | $ | 168,608 | $ | 181,663 | ||||
Average utilization | 78 | % | 76 | % | ||||
Daily contract drilling services costs | $ | 90,885 | $ | 90,699 | ||||
Contract drilling services margin | 46 | % | 50 | % | ||||
41
We maintain a backlog (as defined below) of commitments for contract drilling services. The following table sets forth, as of September 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) | $ | 11,219 | $ | 519 | $ | 1,865 | $ | 1,665 | $ | 1,780 | $ | 5,390 | ||||||||||||
| Jackups/Submersibles (3) | 1,619 | 296 | 750 | 386 | 184 | 3 | ||||||||||||||||||
| Total (4) | $ | 12,838 | $ | 815 | $ | 2,615 | $ | 2,051 | $ | 1,964 | $ | 5,393 | ||||||||||||
| Percent of Available Operating Days | ||||||||||||||||||||||||
| Committed (5) | 81 | % | 53 | % | 33 | % | 24 | % | 5 | % | ||||||||||||||
| Year Ending December 31, | ||||||||||||||||||||||||
| Total | 2012 (1) | 2013 | 2014 | 2015 | 2016-2023 | |||||||||||||||||||
| (In millions) | ||||||||||||||||||||||||
Contract Drilling Services Backlog | ||||||||||||||||||||||||
Semisubmersibles/Drillships(2) (4) (6) | $ | 12,495 | $ | 651 | $ | 2,607 | $ | 2,614 | $ | 1,878 | $ | 4,745 | ||||||||||||
Jackups/Submersibles(3) | 2,302 | 344 | 1,229 | 631 | 98 | — | ||||||||||||||||||
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Total(4) | $ | 14,797 | $ | 995 | $ | 3,836 | $ | 3,245 | $ | 1,976 | $ | 4,745 | ||||||||||||
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Percent of Available Operating Days | ||||||||||||||||||||||||
Committed(5) | 83 | % | 69 | % | 45 | % | 19 | % | 5 | % | ||||||||||||||
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| (1) | Represents a three-month period beginning October 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, we (a) have not included in our backlog any performance bonuses for periods prior to the commencement of certain upgrade projects planned for | |
The drilling contracts with Shell for theNoble Globetrotter I,Noble Globetrotter II,Noble Jim Thompson, | ||
42
| (3) | ||
| (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 date nor do we anticipate receiving any such notifications. |
| (5) | Percentages take into account additional capacity from the estimated dates of deployment of our newbuild rigs that are scheduled to commence operations during | |
| (6) | ||
Noble and a subsidiary of Shell are involved in joint venture agreements to |
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 becauseas 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 September 30, 2011,2012, we estimate Shell and Petrobras represented approximately 63%61% and 22%15%, respectively, of our backlog.
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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 (“NCD 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 establishesestablished a Nigerian Content Development Fund to fund the implementation of the law. The implementationlaw, and requires that 1 percent of the law is ongoingvalue of every contract awarded in the Nigerian oil and bothgas industry be paid into the manner and timing of final implementation is uncertain. We have participated in a number of meetings with the NCD Board and are analyzing how we might reorganize our operations in Nigeria to meet these requirements, including creating third party noncontrolling interests in our operating assets.fund. We cannot predict thewhat impact the new law may have on our existing or future operations in Nigeria, but the effect on our operations there could be significantly and adversely affected.
Results of Operations
For the Three Months Ended September 30, 20112012 and 2010
Net income attributable to Noble Corporation (Noble-Swiss)(“Noble-Swiss”) for the three months ended September 30, 2012 (the “Current Quarter”) was $115 million, or $0.45 per diluted share, on operating revenues of $884 million, compared to net income for the three months ended September 30, 2011 (the “Current“Comparable Quarter”) wasof $135 million, or $0.53 per diluted share, on operating revenues of $738 million, compared to net income for the three months ended September 30, 2010 (the “Comparable Quarter”) of $86 million, or $0.34 per diluted share, on operating revenues of $613 million.
The consolidated financial statements of Noble-Swiss include the accounts of Noble-Cayman, andNoble-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 20112012 and 2010,2011, 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 September 30, 20112012 was $19$17 million higher than operating income for Noble-Swiss for the same period,period. The operating income difference is primarily as a result of depreciation related to Swiss-owned assets and operatingexecutive costs directly attributable to Noble-Swiss for operations support and stewardship related services.
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Operating revenues and operating costs and expenses for our contract drilling services segment are dependent on three primary metrics — rig utilization, operating days and dayrates. The following table sets forth the average rig utilization, operating days and average dayrates for our rig fleet for the three months ended September 30, 20112012 and 2010:
| Average Rig | Operating | Average | ||||||||||||||||||||||||||||||
| Utilization (1) | Days (2) | Dayrates | ||||||||||||||||||||||||||||||
| Three Months Ended | Three Months Ended | Three Months Ended | ||||||||||||||||||||||||||||||
| September 30, | September 30, | September 30, | ||||||||||||||||||||||||||||||
| 2011 | 2010 | 2011 | 2010 | %Change | 2011 | 2010 | %Change | |||||||||||||||||||||||||
| Jackups | 82 | % | 77 | % | 3,229 | 3,032 | 6 | % | $ | 89,352 | $ | 90,791 | -2 | % | ||||||||||||||||||
| Semisubmersibles | 84 | % | 90 | % | 1,086 | 1,057 | 3 | % | 315,034 | 172,727 | 82 | % | ||||||||||||||||||||
| Drillships | 60 | % | 100 | % | 329 | 468 | -30 | % | 225,669 | 229,963 | -2 | % | ||||||||||||||||||||
| FPSO/Submersibles | 0 | % | 26 | % | — | 64 | — | — | 304,000 | — | ||||||||||||||||||||||
Total | 76 | % | 79 | % | 4,644 | 4,621 | 0 | % | $ | 151,782 | $ | 126,581 | 20 | % | ||||||||||||||||||
| Average Rig Utilization (1) | Operating Days (2) | Average Dayrates | ||||||||||||||||||||||||||||||
| Three Months Ended September 30, | Three Months Ended September 30, | Three Months Ended September 30, | ||||||||||||||||||||||||||||||
| 2012 | 2011 | 2012 | 2011 | % Change | 2012 | 2011 | % Change | |||||||||||||||||||||||||
Jackups | 83 | % | 82 | % | 3,285 | 3,229 | 2 | % | $ | 97,857 | $ | 89,352 | 10 | % | ||||||||||||||||||
Semisubmersibles | 83 | % | 84 | % | 1,067 | 1,086 | -2 | % | 331,900 | 315,034 | 5 | % | ||||||||||||||||||||
Drillships | 73 | % | 60 | % | 590 | 329 | 79 | % | 267,166 | 225,669 | 18 | % | ||||||||||||||||||||
Other | 0 | % | 0 | % | — | — | — | — | — | — | ||||||||||||||||||||||
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| |||||||||||||||||||||||||||||
Total | 78 | % | 76 | % | 4,942 | 4,644 | 6 | % | $ | 168,608 | $ | 151,782 | 11 | % | ||||||||||||||||||
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| (1) | Information reflects our policy of reporting on the basis of the number of rigs in our fleet, excluding newbuild rigs under construction. | |
| (2) | Information reflects the number of days that our rigs were operating under contract. |
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 September 30, 20112012 and 20102011 (in thousands):
| Three Months Ended | ||||||||||||||||
| September 30, | Change | |||||||||||||||
| 2011 | 2010 | $ | % | |||||||||||||
Operating revenues: | ||||||||||||||||
| Contract drilling services | $ | 704,892 | $ | 584,919 | $ | 119,973 | 21 | % | ||||||||
| Reimbursables (1) | 14,646 | 18,488 | (3,842 | ) | -21 | % | ||||||||||
| Other | 8 | 635 | (627 | ) | -99 | % | ||||||||||
| $ | 719,546 | $ | 604,042 | $ | 115,504 | 19 | % | |||||||||
Operating costs and expenses: | ||||||||||||||||
| Contract drilling services | $ | 358,547 | $ | 315,844 | $ | 42,703 | 14 | % | ||||||||
| Reimbursables (1) | 11,362 | 13,696 | (2,334 | ) | -17 | % | ||||||||||
| Depreciation and amortization | 162,837 | 140,199 | 22,638 | 16 | % | |||||||||||
| Selling, general and administrative | 27,212 | 25,220 | 1,992 | 8 | % | |||||||||||
| 559,958 | 494,959 | 64,999 | 13 | % | ||||||||||||
Operating income | $ | 159,588 | $ | 109,083 | $ | 50,505 | 46 | % | ||||||||
| Three Months Ended September 30, | Change | |||||||||||||||
| 2012 | 2011 | $ | % | |||||||||||||
Operating revenues: | ||||||||||||||||
Contract drilling services | $ | 833,212 | $ | 704,892 | $ | 128,320 | 18 | % | ||||||||
Reimbursables (1) | 27,087 | 14,646 | 12,441 | 85 | % | |||||||||||
Other | 16 | 8 | 8 | 100 | % | |||||||||||
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| |||||||||
| $ | 860,315 | $ | 719,546 | $ | 140,769 | 20 | % | |||||||||
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| |||||||||
Operating costs and expenses: | ||||||||||||||||
Contract drilling services | $ | 449,125 | $ | 358,547 | $ | 90,578 | 25 | % | ||||||||
Reimbursables (1) | 20,039 | 11,362 | 8,677 | 76 | % | |||||||||||
Depreciation and amortization | 191,638 | 162,837 | 28,801 | 18 | % | |||||||||||
Selling, general and administrative | 26,228 | 27,212 | (984 | ) | -4 | % | ||||||||||
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| |||||||||
| 687,030 | 559,958 | 127,072 | 23 | % | ||||||||||||
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| |||||||||
Operating income | $ | 173,285 | $ | 159,588 | $ | 13,697 | 9 | % | ||||||||
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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 the amount of these reimbursables generally do not have a material effect on our financial position, results of operations or cash flows. |
Operating Revenues.RevenuesIncreases—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 2011 percent increase in average dayrates increased revenuesrevenue by approximately $117$83 million andwhile the slight6 percent increase in operating days increased revenues by an additional $3approximately $45 million.
45
The increase in semisubmersibledrillship revenues was driven by a 79 percent increase in operating days and an 18 percent increase in average dayrates, resulting in a $59 million and a $24 million increase in revenues, respectively, from the Comparable Quarter. The increase in both operating days and average dayrates was the result of theNoble Bully I,Noble Bully IIandNoble Globetrotter I, which commenced their contracts with Shell in March 2012, April 2012, and July 2012, respectively.
The 10 percent increase in jackup average dayrates resulted in a $155$28 million increase in revenues, from the Comparable Quarter while the increase in operating days of three percent resulted in an additional $5 million increase in revenues. The increase in semisubmersibles revenue iswhich was coupled with a result of drilling restrictions in the U.S. Gulf of Mexico in the Comparable Quarter, where lower standby rates replaced the standard operating dayrates for a majority of our contracts. The increase in operating days is primarily from theNoble Jim Dayand theNoble Homer Ferrington, which were added to the fleet subsequent to September 30, 2010.
The 5 percent increase in market conditionssemisubmersible average dayrates resulted in an $18 million increase in revenues from the global shallow water market.
Operating Costs and Expenses.Expenses—Contract drilling services operating costs and expenses increased $43$91 million for the Current Quarter as compared to the Comparable Quarter. In additionA portion of the increase is due to the crew-up and operating expenses for the recently completed rigs added to the fleet as part of the Frontier acquisition, theNoble Jim Daywas placed into service in January 2011. These additional unitsnoted above, which added approximately $15$40 million of operating costs in expense during the Current Quarter. Excluding the additional expenses related to these rigs, our contract drilling costs increased $28$51 million in the Current Quarter from the Comparable Quarter. This change was primarily driven by an $11a $20 million increase in repair and maintenance, a $12 million increase in labor, and a $10$9 million increase related to shorebase support, a $5 million increase in mobilization, transportation and fuelinsurance costs related to rigs returning, or preparing to return, to workincreased premiums on our new policy renewed in the Current Quarter, a $4 million increase in safety and training costs andMarch 2012, a $3 million increase in rotation costs.
The increase in depreciation and amortization in the Current Quarter from the Comparable Quarter was primarily attributable to depreciation onassets placed in service, including theNoble Jim Day,Bully Irigs added to the fleet as part of the Frontier acquisition ,Noble Bully IIand additional depreciation related to other capital expenditures on our fleet since the Comparable Quarter.
Noble Globetrotter I.
46
The following table sets forth the operating revenues and the operating costs and expenses for our other services for the three months ended September 30, 20112012 and 2010:
| Three Months Ended | ||||||||||||||||
| September 30, | Change | |||||||||||||||
| 2011 | 2010 | $ | % | |||||||||||||
Operating revenues: | ||||||||||||||||
| Labor contract drilling services | $ | 15,564 | $ | 7,887 | $ | 7,677 | 97 | % | ||||||||
| Reimbursables (1) | 2,792 | 689 | 2,103 | 305 | % | |||||||||||
| $ | 18,356 | $ | 8,576 | $ | 9,780 | 114 | % | |||||||||
Operating costs and expenses: | ||||||||||||||||
| Labor contract drilling services | $ | 8,053 | $ | 5,302 | $ | 2,751 | 52 | % | ||||||||
| Reimbursables (1) | 2,609 | 655 | 1,954 | 298 | % | |||||||||||
| Depreciation and amortization | 3,376 | 3,083 | 293 | 10 | % | |||||||||||
| Selling, general and administrative | 324 | 262 | 62 | 24 | % | |||||||||||
| 14,362 | 9,302 | 5,060 | 54 | % | ||||||||||||
Operating (loss) income | $ | 3,994 | $ | (726 | ) | $ | 4,720 | * | * | |||||||
| Three Months Ended September 30, | Change | |||||||||||||||
| 2012 | 2011 | $ | % | |||||||||||||
Operating revenues: | ||||||||||||||||
Labor contract drilling services | $ | 22,667 | $ | 15,564 | $ | 7,103 | 46 | % | ||||||||
Reimbursables (1) | 1,050 | 2,792 | (1,742 | ) | -62 | % | ||||||||||
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| |||||||||
| $ | 23,717 | $ | 18,356 | $ | 5,361 | 29 | % | |||||||||
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Operating costs and expenses: | ||||||||||||||||
Labor contract drilling services | $ | 12,991 | $ | 8,053 | $ | 4,938 | 61 | % | ||||||||
Reimbursables (1) | 1,008 | 2,609 | (1,601 | ) | -61 | % | ||||||||||
Depreciation and amortization | 3,449 | 3,376 | 73 | 2 | % | |||||||||||
Selling, general and administrative | 630 | 324 | 306 | 94 | % | |||||||||||
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| |||||||||
| 18,078 | 14,362 | 3,716 | 26 | % | ||||||||||||
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Operating income | $ | 5,639 | $ | 3,994 | $ | 1,645 | 41 | % | ||||||||
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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 the amount of these reimbursables generally do not have a material effect on our financial position, results of operations or cash flows. | |
Operating Revenues and Costs and Expenses.Expenses—The increasechange in both revenue and expense primarily relatesrelate 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.
Other Income and Expenses
Interest Expense, net of amount capitalized.capitalized—Interest expense, net of amount capitalized, increased $7$14 million in the Current Quarter as compared to the Comparable Quarter. The increase is a result of $1.25the $1.2 billion of debt issued in July 2010, which was used to partially fund the Frontier acquisition, $1.1 billion of debtsenior notes issued in February 2011, which was2012, coupled with lower capitalized interest due primarily used to repay the outstanding balancecompletion of construction on three of our revolving credit facility and to repay our portionnewbuild drillships. During the Current Quarter, we capitalized approximately 55 percent of outstanding debt undertotal interest charges versus approximately 74 percent during the joint venture credit facilities, and the $715 million currently drawn on our credit facilities.
Income Tax Provision.Provision—Our income tax provision decreased $3increased $8 million in the Current Quarter primarily as a result of a lowerhigher effective tax rate of 12 percentduring the Current Quarter. The increase in the Current Quarter as compared to 19 percent in the Comparable Quarter, which decreased income tax expense by approximately $12 million. The decrease in the effective tax rate was a result of certainprimarily due to fewer discrete tax items totaling approximately $11 million. Partially offsetting the decrease is an increase in pre-tax earnings of approximately 43 percent, which increased income tax expense by approximately $9 million inbenefits recognized during the Current Quarter.
47
Net income attributable to Noble Corporation (Noble-Swiss)(“Noble-Swiss”) for the nine months ended September 30, 2012 (the “Current Period”) was $395 million, or $1.55 per diluted share, on operating revenues of $2.6 billion, compared to net income for the nine months ended September 30, 2011 (the “Current“Comparable Period”) wasof $244 million, or $0.96 per diluted share, on operating revenues of $1.9 billion, compared to net income for the nine months ended September 30, 2010 (the “Comparable Period”) of $675 million, or $2.62 per diluted share, on operating revenues of $2.2 billion.
The consolidated financial statements of Noble-Swiss include the accounts of Noble-Cayman, andNoble-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 20112012 and 2010,2011, would be the same as the information presented below regarding Noble-Swiss in all material respects, except operating income for Noble-Cayman for the nine months ended September 30, 20112012 was $46$44 million higher than operating income for Noble-Swiss for the same period,period. The operating income difference is primarily as a result of depreciation related to Swiss owned assets and operatingexecutive 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 nine months ended September 30, 20112012 and 2010:
| Average Rig | Operating | Average | ||||||||||||||||||||||||||||||
| Utilization (1) | Days (2) | Dayrates | ||||||||||||||||||||||||||||||
| Nine Months Ended | Nine Months Ended | Nine Months Ended | ||||||||||||||||||||||||||||||
| September 30, | September 30, | September 30, | ||||||||||||||||||||||||||||||
| 2011 | 2010 | 2011 | 2010 | %Change | 2011 | 2010 | %Change | |||||||||||||||||||||||||
| Jackups | 72 | % | 80 | % | 8,407 | 9,357 | -10 | % | $ | 84,084 | $ | 101,424 | -17 | % | ||||||||||||||||||
| Semisubmersibles | 80 | % | 92 | % | 3,042 | 3,010 | 1 | % | 288,246 | 300,971 | -4 | % | ||||||||||||||||||||
| Drillships | 61 | % | 89 | % | 1,007 | 897 | 12 | % | 251,421 | 230,306 | 9 | % | ||||||||||||||||||||
| FPSO/Submersibles | 0 | % | 10 | % | — | 64 | — | — | 303,056 | — | ||||||||||||||||||||||
Total | 69 | % | 80 | % | 12,456 | 13,328 | -7 | % | $ | 147,476 | $ | 156,142 | -6 | % | ||||||||||||||||||
| Average Rig Utilization (1) | Operating Days (2) | Average Dayrates | ||||||||||||||||||||||||||||||
| Nine Months Ended September 30, | Nine Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||||||||||
| 2012 | 2011 | 2012 | 2011 | % Change | 2012 | 2011 | % Change | |||||||||||||||||||||||||
Jackups | 80 | % | 72 | % | 9,447 | 8,407 | 12 | % | $ | 95,333 | $ | 84,084 | 13 | % | ||||||||||||||||||
Semisubmersibles | 86 | % | 80 | % | 3,286 | 3,042 | 8 | % | 345,530 | 288,246 | 20 | % | ||||||||||||||||||||
Drillships | 64 | % | 61 | % | 1,344 | 1,007 | 33 | % | 291,448 | 251,421 | 16 | % | ||||||||||||||||||||
Other | 0 | % | 0 | % | — | — | — | — | — | — | ||||||||||||||||||||||
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| |||||||||||||||||||||||||||||
Total | 76 | % | 69 | % | 14,077 | 12,456 | 13 | % | $ | 172,466 | $ | 147,476 | 17 | % | ||||||||||||||||||
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| (1) | Information reflects our policy of reporting on the basis of the number of rigs in our fleet, excluding newbuild rigs under construction. | |
| (2) | Information reflects the number of days that our rigs were operating under contract. |
48
The following table sets forth the operating revenues and the operating costs and expenses for our contract drilling services segment for the nine months ended September 30, 20112012 and 20102011 (in thousands):
| Nine Months Ended | ||||||||||||||||
| September 30, | Change | |||||||||||||||
| 2011 | 2010 | $ | % | |||||||||||||
Operating revenues: | ||||||||||||||||
| Contract drilling services | $ | 1,837,047 | $ | 2,081,075 | $ | (244,028 | ) | -12 | % | |||||||
| Reimbursables (1) | 59,232 | 54,780 | 4,452 | 8 | % | |||||||||||
| Other | 766 | 1,449 | (683 | ) | -47 | % | ||||||||||
| $ | 1,897,045 | $ | 2,137,304 | $ | (240,259 | ) | -11 | % | ||||||||
Operating costs and expenses: | ||||||||||||||||
| Contract drilling services | $ | 1,001,638 | $ | 845,870 | $ | 155,768 | 18 | % | ||||||||
| Reimbursables (1) | 45,408 | 42,191 | 3,217 | 8 | % | |||||||||||
| Depreciation and amortization | 477,568 | 376,754 | 100,814 | 27 | % | |||||||||||
| Selling, general and administrative | 72,020 | 70,523 | 1,497 | 2 | % | |||||||||||
| (Gain)/Loss on contract extinguishment | (21,202 | ) | — | (21,202 | ) | * | * | |||||||||
| 1,575,432 | 1,335,338 | 240,094 | 18 | % | ||||||||||||
Operating income | $ | 321,613 | $ | 801,966 | $ | (480,353 | ) | -60 | % | |||||||
| Nine Months Ended September 30, | Change | |||||||||||||||
| 2012 | 2011 | $ | % | |||||||||||||
Operating revenues: | ||||||||||||||||
Contract drilling services | $ | 2,427,759 | $ | 1,837,047 | $ | 590,712 | 32 | % | ||||||||
Reimbursables (1) | 91,913 | 59,232 | 32,681 | 55 | % | |||||||||||
Other | 258 | 766 | (508 | ) | -66 | % | ||||||||||
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| |||||||||
| $ | 2,519,930 | $ | 1,897,045 | $ | 622,885 | 33 | % | |||||||||
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|
| |||||||||
Operating costs and expenses: | ||||||||||||||||
Contract drilling services | $ | 1,292,638 | $ | 1,001,638 | $ | 291,000 | 29 | % | ||||||||
Reimbursables (1) | 74,519 | 45,408 | 29,111 | 64 | % | |||||||||||
Depreciation and amortization | 539,698 | 477,568 | 62,130 | 13 | % | |||||||||||
Selling, general and administrative | 73,907 | 72,020 | 1,887 | 3 | % | |||||||||||
Loss on impairment | 12,710 | — | 12,710 | ** | ||||||||||||
Gain on contract settlements/extinguishments, net | (33,255 | ) | (21,202 | ) | (12,053 | ) | 57 | % | ||||||||
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| |||||||||
| 1,960,217 | 1,575,432 | 384,785 | 24 | % | ||||||||||||
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| |||||||||
Operating income | $ | 559,713 | $ | 321,613 | $ | 238,100 | 74 | % | ||||||||
|
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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 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 |
Operating Revenues.RevenuesDecreases—Changes in contract drilling services revenues for the Current Period as compared to the Comparable Period were driven by reductionsincreases in both average dayrates and operating days. The six17 percent decreaseincrease in average dayrates reducedincreased revenues by approximately $108$352 million andwhile the seven13 percent decreaseincrease in operating days decreased revenuesincreased revenue by an additional $136$239 million.
The decreasechange in contract drilling services revenues primarily relates to our semisubmersibles, jackups semisubmersibles and FPSO/submersibles,drillships, which generated approximately $242$259 million, $29$194 million and $19$138 million lessmore revenue, respectively, in the Current Period.
The decrease20 percent increase in jackupsemisubmersible average dayrates of 17 percent resulted in a $146$188 million decreaseincrease in revenues from the Comparable Period. The reductionPeriod while the increase in average dayrates was primarily from the contractual re-pricing of rigs in the Middle East, the North Sea, and Mexico for changes in market conditions in the global shallow water market. The 10 percent decline in jackup operating days of 8 percent resulted in a $96an additional $71 million declineincrease in revenues. The decrease in utilization primarily related to rigs coming off of contract in Mexico during the first quarter of 2011, the majority of which did not return to work until the second quarter.
The 13 percent increase in jackup average dayrates resulted in a $9$106 million increase in revenues, which was coupled with a 12 percent increase in jackup operating days, resulting in an $88 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, West Africa and the Middle East, which experienced increased operating days during the Current PeriodPeriod.
The increase in drillship revenues was driven by 32 additional operating days.
49
Operating Costs and Expenses.Expenses—Contract drilling services operating costs and expenses increased $156$291 million for the Current Period as compared to the Comparable Period. In additionA portion of the increase is due to the crew-up and operating expenses for the recently completed rigs added to the fleet as part of the Frontier acquisition, theNoble Dave Beardand theNoble Jim Daywere placed into service in March 2010 and January 2011, respectively. These additionsnoted above, which have added approximately $108$90 million of operating costs in expense during the Current Period. Excluding the additional expenses related to these rigs, our contract drilling costs increased $48$201 million in the Current Period from the Comparable Period. This change was primarily driven by a $13 million increase in maintenance and rig-related expense, $12 million increase in mobilization costs, $8 million increase in fuel and transportation costs and $3$59 million increase in labor costs relateddue to our rigs returning, or preparing to return, to work and salary increases effective in Brazilthe second and third quarters of the prior year, a $37 million increase in shorebase support, a $30 million increase in maintenance and rig-related expense, a $23 million increase in mobilization due to the amortization of certain rig moves and the demobilization of rigs primarily in Mexico, $6a $14 million increase in rig catering, communications and other miscellaneous expenses, a $14 million increase in insurance costs related to increased premiums on our policy renewed in March 2012, an $11 million increase in safety, training and regulatory inspections, a $5 million increase in rig communications and rental equipment, a $4 million increase in rotation costs and $6a $4 million increase in safetyfuel and trainingtransportation costs.
The increase in depreciation and amortization in the Current Period from the Comparable Period was primarily attributable to depreciationassets placed in service during the Current Period, including theNoble Bully I, Noble Bully IIand the Noble Globetrotter I.
Loss on newbuilds addedimpairment during the Current Period related to thean impairment charge on our submersible fleet, the additionprimarily as a result of the Frontier rigs and additional depreciationdeclining market outlook for drilling services for this rig type.
Gain on contract settlements/extinguishments during the Current Period related to other capital expendituresa $28 million gain on our fleet since the Comparable Period.
Other
The following table sets forth the operating revenues and the operating costs and expenses for our other services for the nine months ended September 30, 20112012 and 2010:
| Nine Months Ended | ||||||||||||||||
| September 30, | Change | |||||||||||||||
| 2011 | 2010 | $ | % | |||||||||||||
Operating revenues: | ||||||||||||||||
| Labor contract drilling services | $ | 43,123 | $ | 23,704 | $ | 19,419 | 82 | % | ||||||||
| Reimbursables (1) | 4,619 | 2,383 | 2,236 | 94 | % | |||||||||||
| $ | 47,742 | $ | 26,087 | $ | 21,655 | 83 | % | |||||||||
Operating costs and expenses: | ||||||||||||||||
| Labor contract drilling services | $ | 25,326 | $ | 16,570 | $ | 8,756 | 53 | % | ||||||||
| Reimbursables (1) | 4,389 | 2,268 | 2,121 | 94 | % | |||||||||||
| Depreciation and amortization | 9,886 | 8,612 | 1,274 | 15 | % | |||||||||||
| Selling, general and administrative | 863 | 738 | 125 | 17 | % | |||||||||||
| 40,464 | 28,188 | 12,276 | 44 | % | ||||||||||||
Operating (loss) income | $ | 7,278 | $ | (2,101 | ) | $ | 9,379 | * | * | |||||||
| Nine Months Ended September 30, | Change | |||||||||||||||
| 2012 | 2011 | $ | % | |||||||||||||
Operating revenues: | ||||||||||||||||
Labor contract drilling services | $ | 58,538 | $ | 43,123 | $ | 15,415 | 36 | % | ||||||||
Reimbursables (1) | 2,177 | 4,619 | (2,442 | ) | -53 | % | ||||||||||
|
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| |||||||||
| $ | 60,715 | $ | 47,742 | $ | 12,973 | 27 | % | |||||||||
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|
| |||||||||
Operating costs and expenses: | ||||||||||||||||
Labor contract drilling services | $ | 34,070 | $ | 25,326 | $ | 8,744 | 35 | % | ||||||||
Reimbursables (1) | 2,099 | 4,389 | (2,290 | ) | -52 | % | ||||||||||
Depreciation and amortization | 10,081 | 9,886 | 195 | 2 | % | |||||||||||
Selling, general and administrative | 1,481 | 863 | 618 | 72 | % | |||||||||||
Loss on impairment | 5,635 | — | 5,635 | ** | ||||||||||||
|
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|
|
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|
|
| |||||||||
| 53,366 | 40,464 | 12,902 | 32 | % | ||||||||||||
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|
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| |||||||||
Operating income | $ | 7,349 | $ | 7,278 | $ | 71 | 1 | % | ||||||||
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|
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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 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 |
Operating Revenues and Costs and Expenses.Expenses—The increasechange in both revenue and expense primarily relatesrelate to the initial start-up costs and 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 increasesAlaska.
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 foreign currency fluctuations in our existing Canadian operations.
potential disposal of, the assets.
50
Interest Expense, net of amount capitalized.capitalized—Interest expense, net of amount capitalized, increased $40$11 million in the Current Period as compared to the Comparable Period. The increase is aprimarily the result of $1.25the issuance of $1.2 billion of debt issued in July 2010, which was used to partially fund the Frontier acquisition, $1.1 billion of debt issuedsenior notes in February 2011, which was primarily used to repay the outstanding balance on our revolving credit facility and to repay our portion of outstanding debt under the joint venture credit facilities, and Current Period drawdowns on the credit facilities.
Income Tax Provision.Provision—Our income tax provision decreased $84increased $51 million in the Current Period primarily fromas a decline inresult of a higher pre-tax earnings of approximately 64 percent, which reduced income and effective tax expense by approximately $81 million inrate during the Current Period. The remaining $3increase in pre-tax earnings generated a $34 million decrease is a result of a lower effectiveincrease in tax expense while the increase in the income tax rate of 15 percentduring the Current Period increased the income tax provision by $17 million. The increase in the income tax rate was primarily due to the net gain from U.S. settlement and impairment charges, coupled with various discrete tax items recognized in the Current Period as compared to 16 percent in the Comparable Period. The decrease in the effective tax rate was a result of certain discrete tax items totaling approximately $17 million, partially offset by a change in our geographic revenue mix primarily resulting from drilling restrictions in the U.S. Gulf of Mexico.
other taxing jurisdictions.
51
Overview
Net cash from operating activities for the Current Period was $474increased to $932 million which compared to $1.3 billionfrom $459 million in the Comparable Period. The decreaseincrease in net cash from operating activities in the Current Period was primarily attributable to a significant declineincrease in net income coupled with an increase in accounts receivable. The increase in accounts receivable is primarily related to the increased fleet activity in 2011 and certain disputed amounts, which we believe will ultimately be collected. During the Current Period, we entered into an additional $600 million revolving credit facility, and at September 30, 2011 we had $485 million available under our credit facilities.income. We had working capital of $352$462 million and $110$232 million at September 30, 20112012 and December 31, 2010,2011, respectively. Primarily asAs a result of our $1.1$1.2 billion debt offering in February 2011 and an increase2012 partially offset by a reduction in net borrowings outstanding on our credit facilities during the Current Period of $675 million,Credit Facilities, total debt as a percentage of total debt plus equity increased to 3236 percent at September 30, 20112012 from 2834 percent at December 31, 2010. Additionally, at September 30, 2011, we had a total contract drilling services backlog of approximately $12.8 billion. Our backlog as of September 30, 2011 reflects a commitment of 81 percent of operating days for the remainder of 2011 and 53 percent for 2012. See additional information regarding our backlog at “Contract Drilling Services Backlog.”
Our principal source of capital resource in the Current Period was cash generated from our $1.1$1.2 billion senior notes offering net borrowings under our bank credit facilities of $675 million and net cash from operating activities of $474$932 million.
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;
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 bank credit facilities. However, givenCredit Facilities and commercial paper program.
At September 30, 2012, we had a total contract drilling services backlog of approximately $14.8 billion. Our backlog as of September 30, 2012 reflects a commitment of 83 percent of available operating days for the level of expenditures we expect to incur through the endremainder of 2012 a significant portion of which relates toand 69 percent for 2013. See additional information regarding our newbuild program, we may require capital in excess of the amount provided through these sources. Subject to market and other conditions, we may raise such additional capital in a number of ways, including accessing capital markets, obtaining additional lines of credit or disposing of assets. We also retain the flexibility to delay or cancel certain discretionary capital expenditures as necessary.
Capital Expenditures
Our primary use of available liquidity requirement during 20112012 is for capital expenditures. Capital expenditures, including capitalized interest, totaled $2.0$1.2 billion and $886 million$2.0 billion for the nine months ended September 30, 2012 and 2011, and 2010, respectively. Capital expenditures for 2010 do not include the fair value of assets acquired as part of the Frontier acquisition.
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| Rig type/name | ||||
Wholly-owned drillships | ||||
| Globetrotter class | ||||
Noble Globetrotter I | $ | 176.2 | ||
Noble Globetrotter II | 78.3 | |||
| Gusto P10,000 | ||||
HHI Drillship I | 161.1 | |||
HHI Drillship II | 161.5 | |||
HHI Drillship III | 161.6 | |||
HHI Drillship IV | 50.0 | |||
Joint venture owned drillships | ||||
| GustoMSC Bully PRD 12,000 | ||||
Noble Bully I | 149.4 | |||
Noble Bully II | 114.1 | |||
Wholly-owned jackups | ||||
| F&G JU-3000N | ||||
Noble Jackup I | 43.5 | |||
Noble Jackup II | 2.4 | |||
Noble Jackup III | 45.1 | |||
Noble Jackup IV | 44.4 | |||
Noble Jackup V | 44.4 | |||
Noble Jackup VI | 44.4 | |||
| Other recently completed newbuilds | 4.2 | |||
Total Newbuild Capital Expenditures | $ | 1,280.6 | ||
Rig type/name | ||||
Currently under construction | ||||
Drillships | ||||
Noble Globetrotter II | $ | 187.3 | ||
Noble Don Taylor (formerly HHI Drillship I) | 63.0 | |||
Noble Bob Douglas (formerly HHI Drillship II) | 57.0 | |||
Noble Sam Croft (formerly HHI Drillship III) | 2.4 | |||
HHI Drillship IV | 2.4 | |||
Jackups | ||||
Noble Sam Turner (formerly Noble Jackup IV) | 47.2 | |||
Noble Regina Allen (formerly Noble Jackup I) | 6.0 | |||
Noble Mick O’Brien (formerly Noble Jackup II) | 4.0 | |||
Noble Houston Colbert (formerly Noble Jackup III) | 3.0 | |||
Noble Tom Prosser (formerly Noble Jackup V) | 1.7 | |||
Noble Jackup VI | 1.6 | |||
Recently completed construction projects | ||||
Noble Globetrotter I | 41.5 | |||
Noble Bully II | 18.7 | |||
Noble Bully I | 4.7 | |||
|
| |||
Total Newbuild Capital Expenditures | $ | 440.5 | ||
|
| |||
In addition to the newbuild expenditures noted above, capital expenditures during 2011for the nine months ended September 30, 2012 consisted of:
$463548 million for major projects, including $130$50 million in subsea related expenditures and $29 million to upgrade two drillships currently operating in Brazil;
$156150 million for other capitalized expenditures, including major maintenanceupgrades and regulatory expenditures whichreplacements to drilling equipment that generally have a useful liveslife ranging from 3 to 5 years; and
$88108 million in capitalized interest.
Our total capital expenditure estimate for 20112012 is approximately $2.7 billion. $1.8 billion, including capitalized interest, which may fluctuate as a result of the timing of completion of ongoing projects.
In connection with our 2011 and future capital expenditure programs,program, as of September 30, 2011,2012, we had outstanding commitments, including shipyard and purchase commitments, for approximately $3.4$3.0 billion, of which $1.1we expect to spend approximately $1.8 billion is anticipated to be spent within the next twelve months. Our remaining 2011 capital expenditure budget and our 2012 capital expenditures will generally be spent at our discretion. We may accelerate or delay capital projects as needed.
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 planexpected 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.
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Our most recent quarterly payment to shareholders, totaling approximately $33 million registered shares remained available under(or $0.13 per share) was declared on July 27, 2012 and paid on August 16, 2012 to holders of record on August 6, 2012. This payment represented the existing Board authorization forfirst tranche of our share repurchase program. No shares have been repurchased under this authorization during the nine months ended September 30, 2011. During the nine months ended September 30, 2011, we acquired approximately 0.3 million shares surrendered by employees for taxes payable upon the vesting of restricted stock and exercises of options for $10 million. Future repurchases by Noble-Swiss will be subjectpreviously approved payment to the requirements of Swiss law, including the requirement that Noble-Swiss and its subsidiaries may only repurchase shares if and to the extent that sufficient freely distributable reserves are available.
In April 2011,2012, our shareholders approved the payment of a return of capital through a reduction of the par value of our shares in a total amount equal to 0.52 CHFdividend aggregating $0.52 per share to be paid in four equal installments scheduled forthe first of which was paid in August 2011,2012, with the remaining three installments to be paid in November 2011,2012, February 20122013 and May 2012. The payments will be made in U.S. Dollars based on the CHF/USD exchange rate available approximately two business days prior to the payment date. Although the amount of the return of capital, expressed in Swiss francs, is fixed, the amount of the payment in U.S. Dollars will fluctuate based on the exchange rate. The exchange rate as published by the Swiss National Bank on October 28, 2011 was 0.8625 CHF/1.0 USD.2013, respectively. These returns of capitaldividends will require us to make total cash payments of approximately $38$33 million duringin the remainderfourth quarter of 2011 (based2012, based on the exchange ratenumber of shares currently outstanding. As of September 30, 2012, we had $100 million of dividends payable outstanding on October 28, 2011).
The declaration and payment of dividends in the future by Noble-Swiss andor the making of distributions of capital, including returns of capital in the form of par value or additional paid-in capital reductions, require authorization of the shareholders of Noble-Swiss. The amount of such dividends, distributions and returns of capital will depend on our results of operations, financial condition, cash requirements, future business prospects, contractual restrictions and other factors deemed relevant by our Board of Directors and shareholders.
Credit Facilities and Long-Term Debt
During June 2012, we replaced our $575 million credit facilitiesfacility scheduled to mature in place which provide us2013, with a total borrowing capacity ofnew $1.2 billion. One credit facility, which has a capacity of $600 million, matures in 2013, and during the first quarter of 2011, we entered into an additional $600 million revolvingbillion credit facility, which matures in 2017. The new facility, combined with our existing $600 million credit facility that matures in 2015, gives us a total borrowing capacity under the two facilities (together referred to as the “Credit Facilities”). of $1.8 billion. The covenants and events of default under the Credit Facilities are substantially similar, and each facility contains a covenant that limits our ratio of debt to total tangible capitalization, as defined in the Credit Facilities, to 0.60. At September 30, 2012, our ratio of debt to total tangible capitalization was less than 0.36. We were in compliance with all covenants under the Credit Facilities as of September 30, 2011.
The Credit Facilities provide us with the ability to issue up to $300$375 million in letters of credit in the aggregate. While theThe issuance of letters of credit does not increase our borrowings outstanding under the Credit Facilities, but it does reduce the amount available. At September 30, 2011,2012, we had borrowings of $715 million outstanding and no letters of credit outstanding under the Credit Facilities. We believe that
During September 2012, we maintain good relationships with our lendersestablished a commercial paper program, which will allow us to issue up to $1.8 billion in unsecured commercial paper notes. Amounts issued under the commercial paper program are supported by the unused committed capacity under our Credit Facilities and, as such, are classified as long-term on our balance sheet. Subsequent to September 30, 2012, we believe thatbegan issuing notes under the program and had outstanding notes totaling $328 million as of October 31, 2012.
In February 2012, we issued, through our lenders haveindirect wholly-owned subsidiary, Noble Holding International Limited (“NHIL”), $1.2 billion aggregate principal amount of senior notes in three separate tranches, with $300 million of 2.50% Senior Notes due 2017, $400 million of 3.95% Senior Notes due 2022, and $500 million of 5.25% Senior Notes due 2042. The weighted average coupon of all three tranches is 4.13%. The net proceeds of approximately $1.19 billion, after expenses, were primarily used to repay the liquidity and capability to perform should the need arise for us to drawthen outstanding balance on theour Credit Facilities.
Our 5.875% Senior Notes mature during the second quarter of 2013. We anticipate using availability under our Credit Facilities to repay the outstanding balance; therefore, we continue to report the balance as long-term at September 30, 2012.
The indentures governing our outstanding senior unsecured notes contain covenants that place restrictions on certain merger and consolidation transactions, unless we are the surviving entity or the other party assumes the obligations under the indenture, and on the ability to sell or transfer all or substantially all of our assets. In addition, there are restrictions on incurring or assuming certain liens and sale and lease-back transactions. At September 30, 2011,2012, we were in compliance with all our debt covenants. We continually monitor compliance with the covenants under our Credit Facilities and senior notes and, based on our expectations for 2011,2012, expect to remain in compliance during the year.
At September 30, 2011,2012, we had letters of credit of $74$36 million and performance and tax assessment bonds totaling $295$318 million supported by surety bonds outstanding. 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.
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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,In December 2011, the FASB issued ASU No. 2011-12, which defers only those changes in ASU 2011-05 that relate to the presentation of reclassification adjustments. Our adoption of this guidance isdid not expected to have a material impact on our financial condition, results of operations, cash flows or financial disclosures.
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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 September 30, 2011,2012, we had $715$345 million outstanding under the Credit Facilities. Assuming our current level of debt, a change in LIBOR rates of one1 percent would increase our interest charges by approximately $7$3 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 $3.4$5.1 billion and $2.9$4.3 billion at September 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 $675 million of additional net borrowings on the Credit Facilities,2012, partially offset by the net repayment of $693$630 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 September 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 43 percent of these forecasted local currency requirements. The notional amount of the forward contracts outstanding, expressed in U.S. dollars, was approximately $71 million at September 30, 2011. Total unrealized losses related to these forward contracts were $6 million as of September 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 $7 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 September 30, 2011, our liability under the Restoration Plan totaled $5 million. We previously purchased investments that closely correlate to the investment elections made by participants in the Restoration Plan in order to mitigate the impact of the phantom investment income and losses on our consolidated financial statements. The value of these investments held for our benefit totaled $4 million at September 30, 2011. A 10 percent change in the fair value of the phantom investments would change our liability by approximately $0.4 million. Any change in the fair value of the phantom investments would be mitigated by a change in the investments held for our benefit.
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.
David W. Williams, Chairman, President and Chief Executive Officer of Noble-Swiss, and Dennis J. Lubojacky, PrincipalJames A. MacLennan, Senior Vice President and Chief Financial Officer and Principal Accounting Officer of Noble-Swiss, have evaluated the disclosure controls and procedures of Noble-Swiss as of the end of the period covered by this report. On the basis of this evaluation, Mr. Williams and Mr. LubojackyMacLennan have concluded that Noble-Swiss’ disclosure controls and procedures were effective as of September 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 September 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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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.
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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) | ||||||||||||
| July 2011 | 17,429 | $ | 36.89 | (2) | — | 6,769,891 | ||||||||||
| August 2011 | 728 | $ | 31.23 | (2) | — | 6,769,891 | ||||||||||
| September 2011 | — | $ | 0 | — | 6,769,891 | |||||||||||
Period | Total Number of Shares Purchased | Average Price Paid per Share | Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs | Maximum Number of Shares that May Yet Be Purchased Under the Plans or Programs | ||||||||||||
July 2012 | 16,997 | $ | 37.46 | (1) | — | 6,769,891 | ||||||||||
August 2012 | 835 | $ | 38.25 | (1) | — | 6,769,891 | ||||||||||
September 2012 | — | n/a | — | 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 David W. Williams | |||||
Chairman, President and Chief Executive Officer | |||||
(Principal Executive Officer) | November 6, 2012 Date | ||||
/s/ James A. MacLennan James A. MacLennan Senior Vice President and Chief Financial Officer (Principal Financial Officer) | |||||
Noble Corporation, a Cayman Islands company | |||||
/s/ David W. Williams David W. Williams | |||||
President and Chief Executive Officer | |||||
(Principal Executive Officer) | November 6, 2012 Date | ||||
/s/ Dennis J. Lubojacky Dennis J. Lubojacky | |||||
Vice President and Chief Financial Officer (Principal Financial Officer) | |||||
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Exhibit | 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 | ||||
| 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). | ||||
| 10.1 | |||||
| 10.2 | |||||
| 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 James A. MacLennan pursuant to the U.S. Securities Exchange Act of 1934, as amended, Rule 13a- 14(a) or Rule 15d-14(a), for Noble-Swiss. | ||||
| 31.3 | Certification of Dennis J. Lubojacky pursuant to the U.S. Securities Exchange Act of 1934, as amended, Rule 13a- 14(a) or Rule 15d-14(a), for | ||||
| Certification of David W. Williams pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, for Noble-Swiss and for Noble-Cayman. | |||||
| 32.2+ | Certification of James A. MacLennan pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, for Noble-Swiss. | ||||
| 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 | |||||
| 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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