Table of Contents
SECURITIES AND EXCHANGE COMMISSION
þ | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
o | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
Switzerland (State or other jurisdiction of incorporation or organization) | 98-0619597 (I.R.S. employer identification number) |
(Address of principal executive offices) (Zip Code)
Title of each class | Name of each exchange on which registered | |
Shares, Par Value 4.75 CHF Per Share | New York Stock Exchange |
Cayman Islands | 98-0366361 | |
(State or other jurisdiction of incorporation or organization) | (I.R.S. employer identification number) |
(Address of principal executive offices) (Zip Code)
Title of each class | Name of each exchange on which registered | |
N/A | N/A |
Large accelerated filerþ | Accelerated filero | Non-accelerated filero | Smaller reporting companyo |
Page | ||||||||
Noble Corporation (Noble-Swiss) Financial Statements: | ||||||||
3 | ||||||||
4 | ||||||||
5 | ||||||||
6 | ||||||||
7 | ||||||||
Noble Corporation (Noble-Cayman) Financial Statements: | ||||||||
8 | ||||||||
9 | ||||||||
10 | ||||||||
11 | ||||||||
12 | ||||||||
13 | ||||||||
34 | ||||||||
51 | ||||||||
52 | ||||||||
53 | ||||||||
53 | ||||||||
56 | ||||||||
56 | ||||||||
57 | ||||||||
58 | ||||||||
Exhibit 31.1 | ||||||||
Exhibit 31.2 | ||||||||
Exhibit 31.3 | ||||||||
Exhibit 32.1 | ||||||||
Exhibit 32.2 | ||||||||
Exhibit 32.3 | ||||||||
EX-101 INSTANCE DOCUMENT | ||||||||
EX-101 SCHEMA DOCUMENT | ||||||||
EX-101 CALCULATION LINKBASE DOCUMENT | ||||||||
EX-101 LABELS LINKBASE DOCUMENT | ||||||||
EX-101 PRESENTATION LINKBASE DOCUMENT | ||||||||
EX-101 DEFINITION LINKBASE DOCUMENT |
2
Table of Contents
Item 1. | Financial Statements |
June 30, | December 31, | |||||||
2010 | 2009 | |||||||
ASSETS | ||||||||
Current assets | ||||||||
Cash and cash equivalents | $ | 1,083,112 | $ | 735,493 | ||||
Accounts receivable | 471,348 | 647,454 | ||||||
Prepaid expenses and other current assets | 132,036 | 100,243 | ||||||
Total current assets | 1,686,496 | 1,483,190 | ||||||
Property and equipment | ||||||||
Drilling equipment and facilities | 9,130,967 | 8,666,750 | ||||||
Other | 161,046 | 143,477 | ||||||
9,292,013 | 8,810,227 | |||||||
Accumulated depreciation | (2,356,040 | ) | (2,175,775 | ) | ||||
6,935,973 | 6,634,452 | |||||||
Other assets | 281,033 | 279,254 | ||||||
Total assets | $ | 8,903,502 | $ | 8,396,896 | ||||
LIABILITIES AND SHAREHOLDERS’ EQUITY | ||||||||
Current liabilities | ||||||||
Accounts payable | $ | 199,850 | $ | 197,800 | ||||
Accrued payroll and related costs | 99,550 | 100,167 | ||||||
Taxes payable | 56,557 | 68,760 | ||||||
Other current liabilities | 80,870 | 67,220 | ||||||
Total current liabilities | 436,827 | 433,947 | ||||||
Long-term debt | 751,028 | 750,946 | ||||||
Deferred income taxes | 288,389 | 300,231 | ||||||
Other liabilities | 158,886 | 123,340 | ||||||
Total liabilities | 1,635,130 | 1,608,464 | ||||||
Commitments and contingencies | ||||||||
Shareholders’ equity | ||||||||
Shares; 261,971 shares and 261,975 shares outstanding | 1,107,281 | 1,130,607 | ||||||
Treasury shares, at cost; 6,116 shares and 3,750 shares | (242,484 | ) | (143,031 | ) | ||||
Additional paid-in capital | 20,856 | — | ||||||
Retained earnings | 6,445,722 | 5,855,737 | ||||||
Accumulated other comprehensive loss | (63,003 | ) | (54,881 | ) | ||||
Total shareholders’ equity | 7,268,372 | 6,788,432 | ||||||
Total liabilities and shareholders’ equity | $ | 8,903,502 | $ | 8,396,896 | ||||
3
Table of Contents
Three Months Ended | Six Months Ended | |||||||||||||||
June 30, | June 30, | |||||||||||||||
2010 | 2009 | 2010 | 2009 | |||||||||||||
Operating revenues | ||||||||||||||||
Contract drilling services | $ | 687,510 | $ | 868,205 | $ | 1,496,156 | $ | 1,740,602 | ||||||||
Reimbursables | 13,753 | 22,834 | 37,986 | 39,512 | ||||||||||||
Labor contract drilling services | 8,056 | 7,419 | 15,817 | 14,353 | ||||||||||||
Other | 603 | 414 | 814 | 556 | ||||||||||||
709,922 | 898,872 | 1,550,773 | 1,795,023 | |||||||||||||
Operating costs and expenses | ||||||||||||||||
Contract drilling services | 275,595 | 251,054 | 530,026 | 491,910 | ||||||||||||
Reimbursables | 10,365 | 19,281 | 30,108 | 33,364 | ||||||||||||
Labor contract drilling services | 5,380 | 4,881 | 11,268 | 9,257 | ||||||||||||
Depreciation and amortization | 126,227 | 99,417 | 242,084 | 192,401 | ||||||||||||
Selling, general and administrative | 23,808 | 21,484 | 45,779 | 39,201 | ||||||||||||
Loss on asset disposal/involuntary conversion, net | — | 16,943 | — | 28,977 | ||||||||||||
441,375 | 413,060 | 859,265 | 795,110 | |||||||||||||
Operating income | 268,547 | 485,812 | 691,508 | 999,913 | ||||||||||||
Other income (expense) | ||||||||||||||||
Interest expense, net of amount capitalized | (510 | ) | (361 | ) | (975 | ) | (882 | ) | ||||||||
Interest income and other, net | 1,006 | 1,318 | 4,632 | 2,390 | ||||||||||||
Income before income taxes | 269,043 | 486,769 | 695,165 | 1,001,421 | ||||||||||||
Income tax provision | (51,118 | ) | (94,920 | ) | (106,514 | ) | (195,277 | ) | ||||||||
Net income | $ | 217,925 | $ | 391,849 | $ | 588,651 | $ | 806,144 | ||||||||
Net income per share | ||||||||||||||||
Basic | $ | 0.85 | $ | 1.50 | $ | 2.29 | $ | 3.08 | ||||||||
Diluted | $ | 0.85 | $ | 1.49 | $ | 2.28 | $ | 3.08 | ||||||||
Dividend/Par value reduction per share | $ | 0.04 | $ | — | $ | 0.09 | $ | 0.04 |
4
Table of Contents
Six Months Ended | ||||||||
June 30, | ||||||||
2010 | 2009 | |||||||
Cash flows from operating activities | ||||||||
Net income | $ | 588,651 | $ | 806,144 | ||||
Adjustments to reconcile net income to net cash from operating activities: | ||||||||
Depreciation and amortization | 242,084 | 192,401 | ||||||
Loss on asset disposal/involuntary conversion, net | — | 28,977 | ||||||
Deferred income tax provision | (11,842 | ) | 6,431 | |||||
Share-based compensation expense | 16,285 | 17,294 | ||||||
Pension contributions | (4,947 | ) | (1,432 | ) | ||||
Other changes in assets and liabilities: | ||||||||
Accounts receivable | 176,106 | (25,691 | ) | |||||
Other current assets | (43,555 | ) | (42,037 | ) | ||||
Other assets | (10,804 | ) | (17,282 | ) | ||||
Accounts payable | 19,898 | 23,333 | ||||||
Other current liabilities | 10,340 | (29,083 | ) | |||||
Other liabilities | 32,208 | 39,384 | ||||||
Net cash from operating activities | 1,014,424 | 998,439 | ||||||
Cash flows from investing activities | ||||||||
New construction | (184,963 | ) | (275,153 | ) | ||||
Other capital expenditures | (305,751 | ) | (192,657 | ) | ||||
Major maintenance expenditures | (40,687 | ) | (57,750 | ) | ||||
Change in accrued capital expenditures | (17,848 | ) | (68,134 | ) | ||||
Net cash from investing activities | (549,249 | ) | (593,694 | ) | ||||
Cash flows from financing activities | ||||||||
Payments of other long-term debt | — | (172,700 | ) | |||||
Proceeds from employee stock transactions | 3,711 | 2,978 | ||||||
Dividends/par value reduction payments paid | (23,306 | ) | (10,470 | ) | ||||
Repurchases of employee shares surrendered for taxes | (9,309 | ) | (5,577 | ) | ||||
Repurchases of shares | (88,652 | ) | (60,867 | ) | ||||
Net cash from financing activities | (117,556 | ) | (246,636 | ) | ||||
Net increase in cash and cash equivalents | 347,619 | 158,109 | ||||||
Cash and cash equivalents, beginning of period | 735,493 | 513,311 | ||||||
Cash and cash equivalents, end of period | $ | 1,083,112 | $ | 671,420 | ||||
5
Table of Contents
Accumulated | ||||||||||||||||||||||||||||
Additional | Other | Total | ||||||||||||||||||||||||||
Shares | Paid-in | Retained | Treasury | Comprehensive | Shareholders’ | |||||||||||||||||||||||
Balance | Par Value | Capital | Earnings | Shares | Loss | 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 | — | — | 16,285 | — | — | — | 16,285 | |||||||||||||||||||||
Issuance of share-based compensation shares | 4 | 16 | (16 | ) | — | — | — | — | ||||||||||||||||||||
Contribution to employee benefit plans | 8 | 30 | 194 | — | — | — | 224 | |||||||||||||||||||||
Exercise of stock options | 166 | 719 | 2,768 | — | — | — | 3,487 | |||||||||||||||||||||
Tax benefit of stock options exercised | — | — | 682 | — | — | — | 682 | |||||||||||||||||||||
Restricted shares forfeited or repurchased for taxes | (182 | ) | (786 | ) | 944 | 1,334 | (10,801 | ) | (9,309 | ) | ||||||||||||||||||
Repurchases of shares | — | — | — | — | (88,652 | ) | — | (88,652 | ) | |||||||||||||||||||
Net income | — | — | — | 588,651 | — | — | 588,651 | |||||||||||||||||||||
Dividends/par value reduction payments paid | — | (23,305 | ) | (1 | ) | — | — | — | (23,306 | ) | ||||||||||||||||||
Other comprehensive income (loss), net | — | — | — | — | (8,122 | ) | (8,122 | ) | ||||||||||||||||||||
Balance at June 30, 2010 | 261,971 | $ | 1,107,281 | $ | 20,856 | $ | 6,445,722 | $ | (242,484 | ) | $ | (63,003 | ) | $ | 7,268,372 | |||||||||||||
6
Table of Contents
Three Months Ended | Six Months Ended | |||||||||||||||
June 30, | June 30, | |||||||||||||||
2010 | 2009 | 2010 | 2009 | |||||||||||||
Net income | $ | 217,925 | $ | 391,849 | $ | 588,651 | $ | 806,144 | ||||||||
Other comprehensive income (loss), net of tax | ||||||||||||||||
Foreign currency translation adjustments | (1,980 | ) | 2,349 | (6,461 | ) | 1,222 | ||||||||||
Gain (loss) on foreign currency forward contracts | (1,009 | ) | 2,658 | (2,934 | ) | 2,852 | ||||||||||
Amortization of deferred pension plan amounts | 634 | 889 | 1,273 | 1,741 | ||||||||||||
Other comprehensive income (loss), net | (2,355 | ) | 5,896 | (8,122 | ) | 5,815 | ||||||||||
Comprehensive income | $ | 215,570 | $ | 397,745 | $ | 580,529 | $ | 811,959 | ||||||||
7
Table of Contents
(In thousands)
June 30, | December 31, | |||||||
2010 | 2009 | |||||||
ASSETS | ||||||||
Current assets | ||||||||
Cash and cash equivalents | $ | 1,075,463 | $ | 726,225 | ||||
Accounts receivable | 471,348 | 647,454 | ||||||
Due from affiliate | 309,018 | 191,004 | ||||||
Other current assets | 130,580 | 99,206 | ||||||
Total current assets | 1,986,409 | 1,663,889 | ||||||
Property and equipment | ||||||||
Drilling equipment and facilities | 9,130,967 | 8,666,750 | ||||||
Other | 132,615 | 115,414 | ||||||
9,263,582 | 8,782,164 | |||||||
Accumulated depreciation | (2,355,672 | ) | (2,175,775 | ) | ||||
6,907,910 | 6,606,389 | |||||||
Other assets | 281,032 | 279,139 | ||||||
Total assets | $ | 9,175,351 | $ | 8,549,417 | ||||
LIABILITIES AND SHAREHOLDER EQUITY | ||||||||
Current liabilities | ||||||||
Accounts payable | $ | 195,334 | $ | 197,712 | ||||
Accrued payroll and related costs | 94,722 | 99,372 | ||||||
Taxes payable | 53,538 | 61,577 | ||||||
Other current liabilities | 80,790 | 67,246 | ||||||
Total current liabilities | 424,384 | 425,907 | ||||||
Long-term debt | 751,028 | 750,946 | ||||||
Deferred income taxes | 288,388 | 300,231 | ||||||
Other liabilities | 158,887 | 123,137 | ||||||
Total liabilities | 1,622,687 | 1,600,221 | ||||||
Commitments and contingencies | ||||||||
Shareholder equity | ||||||||
Ordinary shares; 261,246 shares outstanding | 26,125 | 26,125 | ||||||
Capital in excess of par value | 368,374 | 368,374 | ||||||
Retained earnings | 7,221,168 | 6,609,578 | ||||||
Accumulated other comprehensive loss | (63,003 | ) | (54,881 | ) | ||||
Total shareholder equity | 7,552,664 | 6,949,196 | ||||||
Total liabilities and shareholder equity | $ | 9,175,351 | $ | 8,549,417 | ||||
8
Table of Contents
Three Months Ended | Six Months Ended | |||||||||||||||
June 30, | June 30, | |||||||||||||||
2010 | 2009 | 2010 | 2009 | |||||||||||||
Operating revenues | ||||||||||||||||
Contract drilling services | $ | 687,510 | $ | 868,205 | $ | 1,496,156 | $ | 1,740,602 | ||||||||
Reimbursables | 13,753 | 22,834 | 37,986 | 39,512 | ||||||||||||
Labor contract drilling services | 8,056 | 7,419 | 15,817 | 14,353 | ||||||||||||
Other | 603 | 414 | 814 | 556 | ||||||||||||
709,922 | 898,872 | 1,550,773 | 1,795,023 | |||||||||||||
Operating costs and expenses | ||||||||||||||||
Contract drilling services | 271,084 | 251,054 | 523,865 | 491,910 | ||||||||||||
Reimbursables | 10,365 | 19,281 | 30,108 | 33,364 | ||||||||||||
Labor contract drilling services | 5,380 | 4,881 | 11,268 | 9,257 | ||||||||||||
Depreciation and amortization | 126,052 | 99,417 | 241,716 | 192,401 | ||||||||||||
Selling, general and administrative | 15,534 | 20,653 | 31,422 | 38,278 | ||||||||||||
Loss on asset disposal/involuntary conversion, net | — | 16,943 | — | 28,977 | ||||||||||||
428,415 | 412,229 | 838,379 | 794,187 | |||||||||||||
Operating income | 281,507 | 486,643 | 712,394 | 1,000,836 | ||||||||||||
Other income (expense) | ||||||||||||||||
Interest expense, net of amount capitalized | (510 | ) | (361 | ) | (975 | ) | (882 | ) | ||||||||
Interest income and other, net | 1,503 | 1,318 | 5,110 | 2,390 | ||||||||||||
Income before income taxes | 282,500 | 487,600 | 716,529 | 1,002,344 | ||||||||||||
Income tax provision | (49,543 | ) | (94,920 | ) | (104,939 | ) | (195,277 | ) | ||||||||
Net income | $ | 232,957 | $ | 392,680 | $ | 611,590 | $ | 807,067 | ||||||||
9
Table of Contents
Six Months Ended | ||||||||
June 30, | ||||||||
2010 | 2009 | |||||||
Cash flows from operating activities | ||||||||
Net income | $ | 611,590 | $ | 807,067 | ||||
Adjustments to reconcile net income to net cash from operating activities: | ||||||||
Depreciation and amortization | 241,716 | 192,401 | ||||||
Loss on asset disposal/involuntary conversion, net | — | 28,977 | ||||||
Deferred income tax provision | (11,843 | ) | 6,431 | |||||
Share-based compensation expense | — | 8,399 | ||||||
Pension contributions | (4,947 | ) | (1,432 | ) | ||||
Other changes in assets and liabilities: | ||||||||
Accounts receivable | 176,106 | (25,691 | ) | |||||
Due from affiliates, net | (118,014 | ) | — | |||||
Other current assets | (43,136 | ) | (42,037 | ) | ||||
Other assets | (10,918 | ) | (17,282 | ) | ||||
Accounts payable | 15,470 | 23,160 | ||||||
Other current liabilities | 9,683 | (29,398 | ) | |||||
Other liabilities | 32,412 | 50,642 | ||||||
Net cash from operating activities | 898,119 | 1,001,237 | ||||||
Cash flows from investing activities | ||||||||
New construction | (184,963 | ) | (275,153 | ) | ||||
Other capital expenditures | (305,383 | ) | (192,657 | ) | ||||
Major maintenance expenditures | (40,687 | ) | (57,750 | ) | ||||
Change in accrued capital expenditures | (17,848 | ) | (68,134 | ) | ||||
Net cash from investing activities | (548,881 | ) | (593,694 | ) | ||||
Cash flows from financing activities | ||||||||
Payments of other long-term debt | — | (172,700 | ) | |||||
Employee stock transactions | — | (5,416 | ) | |||||
Dividends/par value reduction payments paid | — | (10,470 | ) | |||||
Repurchases of ordinary shares | — | (60,867 | ) | |||||
Net cash from financing activities | — | (249,453 | ) | |||||
Net increase in cash and cash equivalents | 349,238 | 158,090 | ||||||
Cash and cash equivalents, beginning of period | 726,225 | 513,311 | ||||||
Cash and cash equivalents, end of period | $ | 1,075,463 | $ | 671,401 | ||||
10
Table of Contents
Accumulated | ||||||||||||||||||||||||
Capital in | Other | Total | ||||||||||||||||||||||
Shares | Excess of | Retained | Comprehensive | Shareholder | ||||||||||||||||||||
Balance | Par Value | Par Value | Earnings | Loss | Equity | |||||||||||||||||||
Balance at December 31, 2009 | 261,246 | $ | 26,125 | $ | 368,374 | $ | 6,609,578 | $ | (54,881 | ) | $ | 6,949,196 | ||||||||||||
Net income | — | — | — | 611,590 | — | 611,590 | ||||||||||||||||||
Other comprehensive loss, net | — | — | — | — | (8,122 | ) | (8,122 | ) | ||||||||||||||||
Balance at June 30, 2010 | 261,246 | $ | 26,125 | $ | 368,374 | $ | 7,221,168 | $ | (63,003 | ) | $ | 7,552,664 | ||||||||||||
11
Table of Contents
Three Months Ended | Six Months Ended | |||||||||||||||
June 30, | June 30, | |||||||||||||||
2010 | 2009 | 2010 | 2009 | |||||||||||||
Net income | $ | 232,957 | $ | 392,680 | $ | 611,590 | $ | 807,067 | ||||||||
Other comprehensive income (loss), net of tax | ||||||||||||||||
Foreign currency translation adjustments | (1,980 | ) | 2,349 | (6,461 | ) | 1,222 | ||||||||||
Gain (loss) on foreign currency forward contracts | (1,009 | ) | 2,658 | (2,934 | ) | 2,852 | ||||||||||
Amortization of deferred pension plan amounts | 634 | 889 | 1,273 | 1,741 | ||||||||||||
Other comprehensive income (loss), net | (2,355 | ) | 5,896 | (8,122 | ) | 5,815 | ||||||||||
Comprehensive income | $ | 230,602 | $ | 398,576 | $ | 603,468 | $ | 812,882 | ||||||||
12
Table of Contents
NOBLE CORPORATION (NOBLE-CAYMAN) AND SUBSIDIARIES
13
Table of Contents
NOBLE CORPORATION (NOBLE-CAYMAN) AND SUBSIDIARIES
June 30, | December 31, | |||||||
2010 | 2009 | |||||||
Shares outstanding and trading | 255,855 | 258,225 | ||||||
Treasury shares | 6,116 | 3,750 | ||||||
Total shares outstanding | 261,971 | 261,975 | ||||||
Treasury shares held for share-based compensation plans | 14,295 | 14,291 | ||||||
Total shares authorized for issuance | 276,266 | 276,266 | ||||||
Par value (in CHF) | 4.75 | 4.85 |
14
Table of Contents
NOBLE CORPORATION (NOBLE-CAYMAN) AND SUBSIDIARIES
Three months ended | Six months ended | |||||||||||||||
June 30, | June 30, | |||||||||||||||
2010 | 2009 | 2010 | 2009 | |||||||||||||
Allocation of net income | ||||||||||||||||
Basic | ||||||||||||||||
Net income | $ | 217,925 | $ | 391,849 | $ | 588,651 | $ | 806,144 | ||||||||
Earnings allocated to unvested share-based payment awards | (2,143 | ) | (4,174 | ) | (5,652 | ) | (7,671 | ) | ||||||||
Net income to common shareholders — basic | $ | 215,782 | $ | 387,675 | $ | 582,999 | $ | 798,473 | ||||||||
Diluted | ||||||||||||||||
Net income | $ | 217,925 | $ | 391,849 | $ | 588,651 | $ | 806,144 | ||||||||
Earnings allocated to unvested share-based payment awards | (2,137 | ) | (4,161 | ) | (5,632 | ) | (7,650 | ) | ||||||||
Net income to common shareholders — diluted | $ | 215,788 | $ | 387,688 | $ | 583,019 | $ | 798,494 | ||||||||
Weighted average shares outstanding — basic | 254,224 | 258,487 | 254,671 | 258,874 | ||||||||||||
Incremental shares issuable from assumed exercise of stock options | 800 | 839 | 949 | 702 | ||||||||||||
Weighted average shares outstanding — diluted | 255,024 | 259,326 | 255,620 | 259,576 | ||||||||||||
Weighted average unvested share-based payment awards | 2,480 | 2,783 | 2,431 | 2,487 | ||||||||||||
Earnings per share | ||||||||||||||||
Basic | $ | 0.85 | $ | 1.50 | $ | 2.29 | $ | 3.08 | ||||||||
Diluted | $ | 0.85 | $ | 1.49 | $ | 2.28 | $ | 3.08 |
15
Table of Contents
NOBLE CORPORATION (NOBLE-CAYMAN) AND SUBSIDIARIES
June 30, | December 31, | |||||||
2010 | 2009 | |||||||
5.875% Senior Notes due 2013 | $ | 299,893 | $ | 299,874 | ||||
7.375% Senior Notes due 2014 | 249,440 | 249,377 | ||||||
7.50% Senior Notes due 2019 | 201,695 | 201,695 | ||||||
Credit Facility | — | — | ||||||
Long-term debt | $ | 751,028 | $ | 750,946 | ||||
June 30, 2010 | December 31, 2009 | |||||||||||||||
Carrying | Estimated | Carrying | Estimated | |||||||||||||
Value | Fair Value | Value | Fair Value | |||||||||||||
5.875% Senior Notes due 2013 | $ | 299,893 | $ | 323,633 | $ | 299,874 | $ | 325,398 | ||||||||
7.375% Senior Notes due 2014 | 249,440 | 283,074 | 249,377 | 282,105 | ||||||||||||
7.50% Senior Notes due 2019 | 201,695 | 229,155 | 201,695 | 231,015 |
16
Table of Contents
NOBLE CORPORATION (NOBLE-CAYMAN) AND SUBSIDIARIES
Three Months Ended June 30, | ||||||||||||||||
2010 | 2009 | |||||||||||||||
Non-U.S. | U.S. | Non-U.S. | U.S. | |||||||||||||
Service cost | $ | 1,050 | $ | 1,912 | $ | 757 | $ | 1,803 | ||||||||
Interest cost | 1,204 | 1,957 | 1,063 | 1,713 | ||||||||||||
Return on plan assets | (1,302 | ) | (2,392 | ) | (1,322 | ) | (1,786 | ) | ||||||||
Amortization of prior service cost | — | 57 | — | 73 | ||||||||||||
Amortization of transition obligation | 18 | — | 18 | — | ||||||||||||
Recognized net actuarial loss | 175 | 705 | 61 | 1,031 | ||||||||||||
Net pension expense | $ | 1,145 | $ | 2,239 | $ | 577 | $ | 2,834 | ||||||||
Six Months Ended June 30, | ||||||||||||||||
2010 | 2009 | |||||||||||||||
Non-U.S. | U.S. | Non-U.S. | U.S. | |||||||||||||
Service cost | $ | 2,166 | $ | 3,824 | $ | 1,505 | $ | 3,606 | ||||||||
Interest cost | 2,470 | 3,914 | 2,085 | 3,426 | ||||||||||||
Return on plan assets | (2,668 | ) | (4,784 | ) | (2,593 | ) | (3,572 | ) | ||||||||
Amortization of prior service cost | — | 114 | — | 146 | ||||||||||||
Amortization of transition obligation | 36 | — | 35 | — | ||||||||||||
Recognized net actuarial loss | 356 | 1,410 | 118 | 2,062 | ||||||||||||
Net pension expense | $ | 2,360 | $ | 4,478 | $ | 1,150 | $ | 5,668 | ||||||||
17
Table of Contents
NOBLE CORPORATION (NOBLE-CAYMAN) AND SUBSIDIARIES
Three Months Ended | Six Months Ended | |||||||||||||||
June 30, | June 30, | |||||||||||||||
2010 | 2009 | 2010 | 2009 | |||||||||||||
Net unrealized gain at beginning of period | $ | (1,508 | ) | $ | 194 | $ | 417 | $ | — | |||||||
Activity during period: | ||||||||||||||||
Settlement of forward contracts during period | 617 | (60 | ) | (356 | ) | — | ||||||||||
Net unrealized gain/(loss) on outstanding forward contracts | (1,626 | ) | 2,718 | (2,578 | ) | 2,852 | ||||||||||
Net unrealized gain/(loss) at end of period | $ | (2,517 | ) | $ | 2,852 | $ | (2,517 | ) | $ | 2,852 | ||||||
18
Table of Contents
NOBLE CORPORATION (NOBLE-CAYMAN) AND SUBSIDIARIES
June 30, 2010 | December 31, 2009 | |||||||||||||||||||||||
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 | $ | 6,794 | $ | 6,794 | $ | — | $ | — | $ | 8,483 | $ | 8,483 | ||||||||||||
Forward contracts-cash flow hedges | $ | 1,314 | $ | — | $ | 1,314 | $ | — | $ | 654 | $ | 654 | ||||||||||||
Liabilities — | ||||||||||||||||||||||||
Forward contracts-cash flow hedges | $ | 3,831 | $ | — | $ | 3,831 | $ | — | $ | 237 | $ | 237 | ||||||||||||
Forward contracts-fair value hedges | $ | 10,999 | $ | — | $ | 10,999 | $ | — | $ | 765 | $ | 765 |
19
Table of Contents
NOBLE CORPORATION (NOBLE-CAYMAN) AND SUBSIDIARIES
20
Table of Contents
NOBLE CORPORATION (NOBLE-CAYMAN) AND SUBSIDIARIES
21
Table of Contents
NOBLE CORPORATION (NOBLE-CAYMAN) AND SUBSIDIARIES
22
Table of Contents
NOBLE CORPORATION (NOBLE-CAYMAN) AND SUBSIDIARIES
Three Months Ended June 30, | ||||||||||||||||||||||||
2010 | 2009 | |||||||||||||||||||||||
Contract | Contract | |||||||||||||||||||||||
Drilling | Drilling | |||||||||||||||||||||||
Services | Other | Total | Services | Other | Total | |||||||||||||||||||
Revenues from external customers | $ | 701,102 | $ | 8,820 | $ | 709,922 | $ | 890,914 | $ | 7,958 | $ | 898,872 | ||||||||||||
Depreciation and amortization | 123,379 | 2,848 | 126,227 | 96,952 | 2,465 | 99,417 | ||||||||||||||||||
Segment operating income | 268,941 | (394 | ) | 268,547 | 485,800 | 12 | 485,812 | |||||||||||||||||
Interest expense, net of amount capitalized | 235 | 275 | 510 | 160 | 201 | 361 | ||||||||||||||||||
Income tax provision | 51,544 | (426 | ) | 51,118 | 94,899 | 21 | 94,920 | |||||||||||||||||
Segment profit | 219,267 | (1,342 | ) | 217,925 | 391,763 | 86 | 391,849 | |||||||||||||||||
Total assets (at end of period) | 7,761,724 | 1,141,778 | 8,903,502 | 7,001,497 | 680,625 | 7,682,122 | ||||||||||||||||||
Capital expenditures | 181,505 | 11,132 | 192,637 | 254,393 | 20,447 | 274,840 | ||||||||||||||||||
Six Months Ended June 30, | ||||||||||||||||||||||||
2010 | 2009 | |||||||||||||||||||||||
Contract | Contract | |||||||||||||||||||||||
Drilling | Drilling | |||||||||||||||||||||||
Services | Other | Total | Services | Other | Total | |||||||||||||||||||
Revenues from external customers | $ | 1,533,262 | $ | 17,511 | $ | 1,550,773 | $ | 1,779,594 | $ | 15,429 | $ | 1,795,023 | ||||||||||||
Depreciation and amortization | 236,553 | 5,531 | 242,084 | 187,850 | 4,551 | 192,401 | ||||||||||||||||||
Segment operating income | 692,885 | (1,377 | ) | 691,508 | 999,436 | 477 | 999,913 | |||||||||||||||||
Interest expense, net of amount capitalized | 293 | 682 | 975 | 350 | 532 | 882 | ||||||||||||||||||
Income tax provision | 107,136 | (622 | ) | 106,514 | 195,044 | 233 | 195,277 | |||||||||||||||||
Segment profit | 591,304 | (2,653 | ) | 588,651 | 805,183 | 961 | 806,144 | |||||||||||||||||
Total assets (at end of period) | 7,761,724 | 1,141,778 | 8,903,502 | 7,001,497 | 680,625 | 7,682,122 | ||||||||||||||||||
Capital expenditures | 517,088 | 14,313 | 531,401 | 494,128 | 31,432 | 525,560 |
23
Table of Contents
NOBLE CORPORATION (NOBLE-CAYMAN) AND SUBSIDIARIES
• | A 10-year contract on the dynamically positioned, ultra-deepwater drillship,Noble Globetrotter,currently under construction and scheduled to be delivered during the second half of 2011; |
• | A 10-year contract on a second ultra-deepwater drillship to be constructed with an anticipated delivery date in the second half of 2013; and |
• | A three-year extension on theNoble Jim Thompson, a moored 4th generation semisubmersible operating in the U.S. Gulf of Mexico. |
24
Table of Contents
NOBLE CORPORATION (NOBLE-CAYMAN) AND SUBSIDIARIES
Noble-Cayman and Noble Holding (U.S.) Corporation (“NHC”), each a wholly-owned subsidiary of Noble-Swiss, are full and unconditional guarantors of Noble Drilling Corporation’s (“NDC”) 7.50% Senior Notes due 2019 which had an outstanding principal balance at June 30, 2010 of $202 million. NDC is an indirect, wholly-owned subsidiary of Noble-Swiss and a direct, wholly-owned subsidiary of NHC. In December 2005, Noble Drilling Holding LLC (“NDH”), an indirect wholly-owned subsidiary of Noble-Swiss, became a co-obligor on (and effectively a guarantor of) the 7.50% Senior Notes.
In connection with our worldwide internal restructuring completed during 2009, prior to September 30, 2009, Noble Drilling Services 1 LLC (“NDS1”), an indirect wholly-owned subsidiary of Noble-Swiss, became a co-issuer of the 7.50% Senior Notes. Subsequent to September 30, 2009, NDS1 merged with Noble Drilling Services 6 LLC (“NDS6”), also an indirect wholly-owned subsidiary of Noble-Swiss, as part of the internal restructuring. NDS6 was the surviving company in this merger and assumed NDS1’s obligations under, and became a co-issuer of, the 7.50% Senior Notes.
In connection with the issuance of Noble-Cayman’s 5.875% Senior Notes due 2013, NDC guaranteed the payment of the 5.875% Senior Notes. In connection with the worldwide internal restructuring, Noble Holding International Limited (“NHIL”), an indirect wholly-owned subsidiary of Noble-Cayman and Noble-Swiss, also guaranteed the payment of the 5.875% Senior Notes. NDC’s and NHIL’s guarantees of the 5.875% Senior Notes are full and unconditional. The outstanding principal balance of the 5.875% Senior Notes at June 30, 2010 was $300 million.
In November 2008, NHIL issued $250 million principal amount of 7.375% Senior Notes due 2014, which are fully and unconditionally guaranteed by Noble-Cayman. The outstanding principal balance of the 7.375% Senior Notes at June 30, 2010 was $249 million.
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.
The condensed consolidating balance sheet as of December 31, 2009 has been revised to properly reflect the sale of assets between wholly-owned subsidiaries in exchange for a note. As a result, amounts have been transferred from the “Other Non-guarantor Subsidiaries of Noble” column to the NHIL and “NHC and NDH Combined” columns. NHIL has been revised to increase investment in affiliates and notes payable to affiliates by approximately $550 million, and the “NHC and NDH Combined” column has been revised to increase investment in affiliates by approximately $405 million, increase accounts payable to affiliates by approximately $1.2 billion and decrease shareholders’ equity by approximately $843 million. Corresponding changes have been made to increase notes receivable from affiliates, reduce accounts payable to affiliates and increase shareholders’ equity in the “Other Non-guarantor Subsidiaries of Noble” column. Offsetting revisions were made to the “Consolidating Adjustments” column. These revisions had no impact on Noble-Cayman or the consolidated balances presented in the condensed consolidating balance sheet as of December 31, 2009. Additionally, there was no impact to the statements of operations or cash flows for any periods presented.
In connection with the revisions discussed above, the condensed consolidating balance sheet as of March 31, 2010 required revisions to increase investment in affiliates and notes payable to affiliates of NHIL by approximately $550 million. Additionally, the condensed consolidating financial statements as of and for the three months ended March 31, 2010 required revisions to separately present “NHC and NDH combined,” NDC and NDS6. These entities were presented as “Other Subsidiaries of Noble” in our Form 10-Q for the period ended March 31, 2010. Such revisions will be reflected in future filings when the condensed consolidating financial statements as of and for the three months ended March 31, 2010 are presented.
25
Table of Contents
June 30, 2010
(in thousands)
Other | ||||||||||||||||||||||||||||||||
Non-guarantor | ||||||||||||||||||||||||||||||||
Noble- | NHC and NDH | Subsidiaries | Consolidating | |||||||||||||||||||||||||||||
Cayman | Combined | NDC | NHIL | NDS6 | of Noble | Adjustments | Total | |||||||||||||||||||||||||
ASSETS | ||||||||||||||||||||||||||||||||
Current assets | ||||||||||||||||||||||||||||||||
Cash and cash equivalents | $ | 1,702 | $ | 195 | $ | — | $ | — | $ | — | $ | 1,073,566 | $ | — | $ | 1,075,463 | ||||||||||||||||
Accounts receivable | — | 4,474 | — | — | — | 466,874 | — | 471,348 | ||||||||||||||||||||||||
Accounts receivable from affiliates | — | — | 653,601 | 246,889 | 2,721 | 1,674,339 | (2,268,532 | ) | 309,018 | |||||||||||||||||||||||
Prepaid expenses and other current assets | 3,555 | 22,838 | — | — | 6,153 | 208,269 | (110,235 | ) | 130,580 | |||||||||||||||||||||||
Total current assets | 5,257 | 27,507 | 653,601 | 246,889 | 8,874 | 3,423,048 | (2,378,767 | ) | 1,986,409 | |||||||||||||||||||||||
Property and equipment | ||||||||||||||||||||||||||||||||
Drilling equipment, facilities and other | — | 1,554,694 | 70,909 | — | — | 7,637,979 | — | 9,263,582 | ||||||||||||||||||||||||
Accumulated depreciation | — | (136,532 | ) | (48,855 | ) | — | — | (2,170,285 | ) | — | (2,355,672 | ) | ||||||||||||||||||||
Total property and equipment, net | — | 1,418,162 | 22,054 | — | — | 5,467,694 | — | 6,907,910 | ||||||||||||||||||||||||
Notes receivable from affiliates | 3,507,062 | — | — | — | 479,107 | 1,904,821 | (5,890,990 | ) | — | |||||||||||||||||||||||
Investments in affiliates | 4,866,873 | 8,765,205 | 3,632,735 | 5,210,229 | 1,724,229 | — | (24,199,271 | ) | — | |||||||||||||||||||||||
Other assets | 2,305 | 9,038 | 2,371 | 6,020 | 1,061 | 260,237 | — | 281,032 | ||||||||||||||||||||||||
Total assets | $ | 8,381,497 | $ | 10,219,912 | $ | 4,310,761 | $ | 5,463,138 | $ | 2,213,271 | $ | 11,055,800 | $ | (32,469,028 | ) | $ | 9,175,351 | |||||||||||||||
LIABILITIES AND SHAREHOLDERS’ EQUITY | ||||||||||||||||||||||||||||||||
Current liabilities | ||||||||||||||||||||||||||||||||
Current maturities of long-term debt | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | ||||||||||||||||
Accounts payable and accrued liabilities | 6,626 | 50,787 | 35,217 | 49,884 | 4,412 | 387,693 | (110,235 | ) | 424,384 | |||||||||||||||||||||||
Accounts payable to affiliates | 372,485 | 1,890,075 | — | — | — | 5,972 | (2,268,532 | ) | — | |||||||||||||||||||||||
Total current liabilities | 379,111 | 1,940,862 | 35,217 | 49,884 | 4,412 | 393,665 | (2,378,767 | ) | 424,384 | |||||||||||||||||||||||
Long-term debt | 299,893 | — | — | 249,440 | 201,695 | — | — | 751,028 | ||||||||||||||||||||||||
Notes payable to affiliates | 129,900 | 1,104,921 | 120,000 | 550,000 | — | 3,986,169 | (5,890,990 | ) | — | |||||||||||||||||||||||
Other liabilities | 19,929 | 52,083 | 25,174 | — | — | 350,089 | — | 447,275 | ||||||||||||||||||||||||
Total liabilities | 828,833 | 3,097,866 | 180,391 | 849,324 | 206,107 | 4,729,923 | (8,269,757 | ) | 1,622,687 | |||||||||||||||||||||||
Commitments and contingencies | ||||||||||||||||||||||||||||||||
Shareholders’ Equity | 7,552,664 | 7,122,046 | 4,130,370 | 4,613,814 | 2,007,164 | 6,325,877 | (24,199,271 | ) | 7,552,664 | |||||||||||||||||||||||
Total liabilities and shareholders’ equity | $ | 8,381,497 | $ | 10,219,912 | $ | 4,310,761 | $ | 5,463,138 | $ | 2,213,271 | $ | 11,055,800 | $ | (32,469,028 | ) | $ | 9,175,351 | |||||||||||||||
26
Table of Contents
CONDENSED CONSOLIDATING BALANCE SHEET
December 31, 2009
(in thousands)
Other | ||||||||||||||||||||||||||||||||
Non-guarantor | ||||||||||||||||||||||||||||||||
Noble- | NHC and NDH | Subsidiaries | Consolidating | |||||||||||||||||||||||||||||
Cayman | Combined | NDC | NHIL | NDS6 | of Noble | Adjustments | Total | |||||||||||||||||||||||||
ASSETS | ||||||||||||||||||||||||||||||||
Current assets | ||||||||||||||||||||||||||||||||
Cash and cash equivalents | $ | 3 | $ | 268 | $ | — | $ | — | $ | — | $ | 725,954 | $ | — | $ | 726,225 | ||||||||||||||||
Accounts receivable | — | 7,509 | — | — | — | 639,945 | — | 647,454 | ||||||||||||||||||||||||
Accounts receivable from affiliates | — | — | 573,339 | 251,677 | 202,447 | 1,364,377 | (2,200,836 | ) | 191,004 | |||||||||||||||||||||||
Prepaid expenses and other current assets | 109 | 13,221 | — | — | — | 175,711 | (89,835 | ) | 99,206 | |||||||||||||||||||||||
Total current assets | 112 | 20,998 | 573,339 | 251,677 | 202,447 | 2,905,987 | (2,290,671 | ) | 1,663,889 | |||||||||||||||||||||||
Property and equipment | ||||||||||||||||||||||||||||||||
Drilling equipment, facilities and other | — | 1,419,193 | 69,601 | — | — | 7,293,370 | — | 8,782,164 | ||||||||||||||||||||||||
Accumulated depreciation | — | (120,862 | ) | (47,585 | ) | — | — | (2,007,328 | ) | — | (2,175,775 | ) | ||||||||||||||||||||
Total property and equipment, net | — | 1,298,331 | 22,016 | — | — | 5,286,042 | — | 6,606,389 | ||||||||||||||||||||||||
Notes receivable from affiliates | 3,507,062 | — | — | — | 479,107 | 1,964,821 | (5,950,990 | ) | — | |||||||||||||||||||||||
Investments in affiliates | 4,258,135 | 8,423,518 | 3,709,623 | 4,578,138 | 1,403,805 | — | (22,373,219 | ) | — | |||||||||||||||||||||||
Other assets | 2,735 | 8,227 | 772 | 1,744 | 1,122 | 264,539 | — | 279,139 | ||||||||||||||||||||||||
Total assets | $ | 7,768,044 | $ | 9,751,074 | $ | 4,305,750 | $ | 4,831,559 | $ | 2,086,481 | $ | 10,421,389 | $ | (30,614,880 | ) | $ | 8,549,417 | |||||||||||||||
LIABILITIES AND SHAREHOLDERS’ EQUITY | ||||||||||||||||||||||||||||||||
Current liabilities | ||||||||||||||||||||||||||||||||
Current maturities of long-term debt | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | ||||||||||||||||
Accounts payable and accrued liabilities | 6,625 | 47,631 | 31,787 | 30,524 | 4,412 | 394,763 | (89,835 | ) | 425,907 | |||||||||||||||||||||||
Accounts payable to affiliates | 362,520 | 1,636,236 | 1,843 | 451 | 199,786 | — | (2,200,836 | ) | — | |||||||||||||||||||||||
Total current liabilities | 369,145 | 1,683,867 | 33,630 | 30,975 | 204,198 | 394,763 | (2,290,671 | ) | 425,907 | |||||||||||||||||||||||
Long-term debt | 299,874 | — | — | 249,377 | 201,695 | — | — | 750,946 | ||||||||||||||||||||||||
Notes payable to affiliates | 129,900 | 1,164,921 | 120,000 | 550,000 | — | 3,986,169 | (5,950,990 | ) | — | |||||||||||||||||||||||
Other liabilities | 19,929 | 41,501 | 23,883 | — | — | 338,055 | — | 423,368 | ||||||||||||||||||||||||
Total liabilities | 818,848 | 2,890,289 | 177,513 | 830,352 | 405,893 | 4,718,987 | (8,241,661 | ) | 1,600,221 | |||||||||||||||||||||||
Commitments and contingencies | ||||||||||||||||||||||||||||||||
Shareholders’ Equity | 6,949,196 | 6,860,785 | 4,128,237 | 4,001,207 | 1,680,588 | 5,702,402 | (22,373,219 | ) | 6,949,196 | |||||||||||||||||||||||
Total liabilities and shareholders’ equity | $ | 7,768,044 | $ | 9,751,074 | $ | 4,305,750 | $ | 4,831,559 | $ | 2,086,481 | $ | 10,421,389 | $ | (30,614,880 | ) | $ | 8,549,417 | |||||||||||||||
27
Table of Contents
CONDENSED CONSOLIDATING STATEMENT OF INCOME
Three Months Ended June 30, 2010
(in thousands)
Other | ||||||||||||||||||||||||||||||||
Non-guarantor | ||||||||||||||||||||||||||||||||
Noble- | NHC and NDH | Subsidiaries | Consolidating | |||||||||||||||||||||||||||||
Cayman | Combined | NDC | NHIL | NDS6 | of Noble | Adjustments | Total | |||||||||||||||||||||||||
Operating revenues | ||||||||||||||||||||||||||||||||
Contract drilling services | $ | — | $ | 20,280 | $ | 5,016 | $ | — | $ | — | $ | 670,214 | $ | (8,000 | ) | $ | 687,510 | |||||||||||||||
Reimbursables | — | 340 | 61 | — | — | 13,352 | — | 13,753 | ||||||||||||||||||||||||
Labor contract drilling services | — | — | — | — | — | 8,056 | — | 8,056 | ||||||||||||||||||||||||
Other | — | 112 | — | — | — | 491 | — | 603 | ||||||||||||||||||||||||
Total operating revenues | — | 20,732 | 5,077 | — | — | 692,113 | (8,000 | ) | 709,922 | |||||||||||||||||||||||
Operating costs and expenses | ||||||||||||||||||||||||||||||||
Contract drilling services | 2 | 10,726 | 1,188 | — | — | 267,168 | (8,000 | ) | 271,084 | |||||||||||||||||||||||
Reimbursables | — | 988 | 61 | — | — | 9,316 | — | 10,365 | ||||||||||||||||||||||||
Labor contract drilling services | — | — | — | — | — | 5,380 | — | 5,380 | ||||||||||||||||||||||||
Depreciation and amortization | — | 9,044 | 874 | — | — | 116,134 | — | 126,052 | ||||||||||||||||||||||||
Selling, general and administrative | — | 49,773 | 88 | 76 | — | (34,403 | ) | — | 15,534 | |||||||||||||||||||||||
Total operating costs and expenses | 2 | 70,531 | 2,211 | 76 | — | 363,595 | (8,000 | ) | 428,415 | |||||||||||||||||||||||
Operating income (loss) | (2 | ) | (49,799 | ) | 2,866 | (76 | ) | — | 328,518 | — | 281,507 | |||||||||||||||||||||
Other income (expense) | ||||||||||||||||||||||||||||||||
Equity earnings in affiliates (net of tax) | 231,400 | 166,662 | 9,556 | 242,210 | 123,117 | — | (772,945 | ) | — | |||||||||||||||||||||||
Interest expense, net of amounts capitalized | (174 | ) | (20,453 | ) | (1,839 | ) | (9,736 | ) | — | (2,739 | ) | 34,431 | (510 | ) | ||||||||||||||||||
Interest income and other, net | 1,733 | 20,941 | — | — | 4,214 | 9,046 | (34,431 | ) | 1,503 | |||||||||||||||||||||||
Income before income taxes | 232,957 | 117,351 | 10,583 | 232,398 | 127,331 | 334,825 | (772,945 | ) | 282,500 | |||||||||||||||||||||||
Income tax (provision) benefit | — | (10,351 | ) | — | — | — | (39,192 | ) | — | (49,543 | ) | |||||||||||||||||||||
Net income | $ | 232,957 | $ | 107,000 | $ | 10,583 | $ | 232,398 | $ | 127,331 | $ | 295,633 | $ | (772,945 | ) | $ | 232,957 | |||||||||||||||
28
Table of Contents
CONDENSED CONSOLIDATING STATEMENT OF INCOME
Six Months Ended June 30, 2010
(in thousands)
Other | ||||||||||||||||||||||||||||||||
Non-guarantor | ||||||||||||||||||||||||||||||||
Noble- | NHC and NDH | Subsidiaries | Consolidating | |||||||||||||||||||||||||||||
Cayman | Combined | NDC | NHIL | NDS6 | of Noble | Adjustments | Total | |||||||||||||||||||||||||
Operating revenues | ||||||||||||||||||||||||||||||||
Contract drilling services | $ | — | $ | 48,589 | $ | 7,484 | $ | — | $ | — | $ | 1,461,383 | $ | (21,300 | ) | $ | 1,496,156 | |||||||||||||||
Reimbursables | — | 590 | 61 | — | — | 37,335 | — | 37,986 | ||||||||||||||||||||||||
Labor contract drilling services | — | — | — | — | — | 15,817 | — | 15,817 | ||||||||||||||||||||||||
Other | — | 112 | — | — | — | 702 | — | 814 | ||||||||||||||||||||||||
Total operating revenues | — | 49,291 | 7,545 | — | — | 1,515,237 | (21,300 | ) | 1,550,773 | |||||||||||||||||||||||
Operating costs and expenses | ||||||||||||||||||||||||||||||||
Contract drilling services | 7 | 18,607 | 3,136 | — | — | 523,415 | (21,300 | ) | 523,865 | |||||||||||||||||||||||
Reimbursables | — | 1,099 | 61 | — | — | 28,948 | — | 30,108 | ||||||||||||||||||||||||
Labor contract drilling services | — | — | — | — | — | 11,268 | — | 11,268 | ||||||||||||||||||||||||
Depreciation and amortization | — | 17,827 | 1,612 | — | — | 222,277 | — | 241,716 | ||||||||||||||||||||||||
Selling, general and administrative | — | 50,636 | 221 | 119 | — | (19,554 | ) | — | 31,422 | |||||||||||||||||||||||
Total operating costs and expenses | 7 | 88,169 | 5,030 | 119 | — | 766,354 | (21,300 | ) | 838,379 | |||||||||||||||||||||||
Operating income (loss) | (7 | ) | (38,878 | ) | 2,515 | (119 | ) | — | 748,883 | — | 712,394 | |||||||||||||||||||||
Other income (expense) | ||||||||||||||||||||||||||||||||
Equity earnings in affiliates (net of tax) | 608,738 | 341,687 | 9,118 | 632,091 | 300,508 | — | (1,892,142 | ) | — | |||||||||||||||||||||||
Interest expense, net of amounts capitalized | (587 | ) | (35,334 | ) | (3,657 | ) | (19,365 | ) | — | (6,184 | ) | 64,152 | (975 | ) | ||||||||||||||||||
Interest income and other, net | 3,446 | 22,757 | — | — | 6,152 | 36,907 | (64,152 | ) | 5,110 | |||||||||||||||||||||||
Income before income taxes | 611,590 | 290,232 | 7,976 | 612,607 | 306,660 | 779,606 | (1,892,142 | ) | 716,529 | |||||||||||||||||||||||
Income tax (provision) benefit | — | (9,092 | ) | — | — | — | (95,847 | ) | — | (104,939 | ) | |||||||||||||||||||||
Net income | $ | 611,590 | $ | 281,140 | $ | 7,976 | $ | 612,607 | $ | 306,660 | $ | 683,759 | $ | (1,892,142 | ) | $ | 611,590 | |||||||||||||||
29
Table of Contents
CONDENSED CONSOLIDATING STATEMENT OF INCOME
Three Months Ended June 30, 2009
(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 | $ | — | $ | 34,947 | $ | 18,167 | $ | — | $ | — | $ | 835,052 | $ | (19,961 | ) | $ | 868,205 | |||||||||||||||
Reimbursables | — | 583 | — | — | — | 22,251 | — | 22,834 | ||||||||||||||||||||||||
Labor contract drilling services | — | — | — | — | — | 7,419 | — | 7,419 | ||||||||||||||||||||||||
Other | — | — | (1,862 | ) | — | — | 2,276 | — | 414 | |||||||||||||||||||||||
Total operating revenues | — | 35,530 | 16,305 | — | — | 866,998 | (19,961 | ) | 898,872 | |||||||||||||||||||||||
Operating costs and expenses | ||||||||||||||||||||||||||||||||
Contract drilling services | 5,517 | 17,336 | 1,860 | 17 | — | 246,285 | (19,961 | ) | 251,054 | |||||||||||||||||||||||
Reimbursables | — | 352 | — | — | — | 18,929 | — | 19,281 | ||||||||||||||||||||||||
Labor contract drilling services | — | — | — | — | — | 4,881 | — | 4,881 | ||||||||||||||||||||||||
Depreciation and amortization | — | 7,868 | 2,664 | — | — | 88,885 | — | 99,417 | ||||||||||||||||||||||||
Selling, general and administrative | 3,095 | 1,689 | 506 | — | — | 15,363 | — | 20,653 | ||||||||||||||||||||||||
Impairment loss on planned disposal of assets | — | — | — | — | — | 16,943 | — | 16,943 | ||||||||||||||||||||||||
Total operating costs and expenses | 8,612 | 27,245 | 5,030 | 17 | — | 391,286 | (19,961 | ) | 412,229 | |||||||||||||||||||||||
Operating income (loss) | (8,612 | ) | 8,285 | 11,275 | (17 | ) | — | 475,712 | — | 486,643 | ||||||||||||||||||||||
Other income (expense) | ||||||||||||||||||||||||||||||||
Equity earnings in affiliates (net of tax) | 401,945 | 419,978 | 177,806 | 232,545 | — | — | (1,232,274 | ) | — | |||||||||||||||||||||||
Interest expense, net of amounts capitalized | (653 | ) | (16,175 | ) | (3,781 | ) | (5,456 | ) | — | 1,683 | 24,021 | (361 | ) | |||||||||||||||||||
Interest income and other, net | — | — | — | — | — | 25,339 | (24,021 | ) | 1,318 | |||||||||||||||||||||||
Income before income taxes | 392,680 | 412,088 | 185,300 | 227,072 | — | 502,734 | (1,232,274 | ) | 487,600 | |||||||||||||||||||||||
Income tax (provision) benefit | — | (289 | ) | (4,150 | ) | — | — | (90,481 | ) | — | (94,920 | ) | ||||||||||||||||||||
Net income | $ | 392,680 | $ | 411,799 | $ | 181,150 | $ | 227,072 | $ | — | $ | 412,253 | $ | (1,232,274 | ) | $ | 392,680 | |||||||||||||||
30
Table of Contents
CONDENSED CONSOLIDATING STATEMENT OF INCOME
Six Months Ended June 30, 2009
(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 | $ | — | $ | 84,222 | $ | 25,867 | $ | — | $ | — | $ | 1,666,474 | $ | (35,961 | ) | $ | 1,740,602 | |||||||||||||||
Reimbursables | — | 1,050 | — | — | — | 38,462 | — | 39,512 | ||||||||||||||||||||||||
Labor contract drilling services | — | — | — | — | — | 14,353 | — | 14,353 | ||||||||||||||||||||||||
Other | — | — | — | — | — | 556 | — | 556 | ||||||||||||||||||||||||
Total operating revenues | — | 85,272 | 25,867 | — | — | 1,719,845 | (35,961 | ) | 1,795,023 | |||||||||||||||||||||||
Operating costs and expenses | ||||||||||||||||||||||||||||||||
Contract drilling services | 10,518 | 27,597 | 3,648 | 26 | — | 486,082 | (35,961 | ) | 491,910 | |||||||||||||||||||||||
Reimbursables | — | 731 | — | — | — | 32,633 | — | 33,364 | ||||||||||||||||||||||||
Labor contract drilling services | — | — | — | — | — | 9,257 | — | 9,257 | ||||||||||||||||||||||||
Depreciation and amortization | — | 16,488 | 4,712 | — | — | 171,201 | — | 192,401 | ||||||||||||||||||||||||
Selling, general and administrative | 6,229 | 3,021 | 861 | — | — | 28,167 | — | 38,278 | ||||||||||||||||||||||||
Impairment loss on planned disposal of assets | — | — | — | — | — | 28,977 | — | 28,977 | ||||||||||||||||||||||||
Total operating costs and expenses | 16,747 | 47,837 | 9,221 | 26 | — | 756,317 | (35,961 | ) | 794,187 | |||||||||||||||||||||||
Operating income (loss) | (16,747 | ) | 37,435 | 16,646 | (26 | ) | — | 963,528 | — | 1,000,836 | ||||||||||||||||||||||
Other income (expense) | ||||||||||||||||||||||||||||||||
Equity earnings in affiliates (net of tax) | 826,882 | 839,781 | 279,236 | 504,604 | — | — | (2,450,503 | ) | — | |||||||||||||||||||||||
Interest expense, net of amounts capitalized | (4,652 | ) | (32,301 | ) | (7,542 | ) | (5,456 | ) | — | 3,341 | 45,728 | (882 | ) | |||||||||||||||||||
Interest income and other, net | 1,201 | — | — | — | — | 46,917 | (45,728 | ) | 2,390 | |||||||||||||||||||||||
Income before income taxes | 806,684 | 844,915 | 288,340 | 499,122 | — | 1,013,786 | (2,450,503 | ) | 1,002,344 | |||||||||||||||||||||||
Income tax (provision) benefit | 383 | (1,807 | ) | (5,434 | ) | — | — | (188,419 | ) | — | (195,277 | ) | ||||||||||||||||||||
Net income | $ | 807,067 | $ | 843,108 | $ | 282,906 | $ | 499,122 | $ | — | $ | 825,367 | $ | (2,450,503 | ) | $ | 807,067 | |||||||||||||||
31
Table of Contents
CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS
Six Months Ended June 30, 2010
(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 | (163 | ) | (36,375 | ) | 3,592 | (4,400 | ) | 60 | 935,405 | — | 898,119 | |||||||||||||||||||||
Cash flows from investing activities | ||||||||||||||||||||||||||||||||
New construction and capital expenditures | — | (184,963 | ) | — | — | — | (363,918 | ) | — | (548,881 | ) | |||||||||||||||||||||
Net cash from investing activities | — | (184,963 | ) | — | — | — | (363,918 | ) | — | (548,881 | ) | |||||||||||||||||||||
Cash flows from financing activities | ||||||||||||||||||||||||||||||||
Advances (to) from affiliates | 1,862 | 221,265 | (3,592 | ) | 4,400 | (60 | ) | (223,875 | ) | — | — | |||||||||||||||||||||
Net cash from financing activities | 1,862 | 221,265 | (3,592 | ) | 4,400 | (60 | ) | (223,875 | ) | — | — | |||||||||||||||||||||
Net increase (decrease) in cash and cash equivalents | 1,699 | (73 | ) | — | — | — | 347,612 | — | 349,238 | |||||||||||||||||||||||
Cash and cash equivalents, beginning of period | 3 | 268 | — | — | — | 725,954 | — | 726,225 | ||||||||||||||||||||||||
Cash and cash equivalents, end of period | $ | 1,702 | $ | 195 | $ | — | $ | — | $ | — | $ | 1,073,566 | $ | — | $ | 1,075,463 | ||||||||||||||||
32
Table of Contents
Six Months Ended June 30, 2009
(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 | (9,440 | ) | 26,291 | 23,663 | 3,331 | — | 957,392 | — | 1,001,237 | |||||||||||||||||||||||
Cash flows from investing activities | ||||||||||||||||||||||||||||||||
New construction and capital expenditures | — | (275,153 | ) | (12,412 | ) | — | — | (306,129 | ) | — | (593,694 | ) | ||||||||||||||||||||
Repayments of notes from affiliates | — | — | 42,775 | — | — | 331,900 | (374,675 | ) | — | |||||||||||||||||||||||
Net cash from investing activities | — | (275,153 | ) | 30,363 | — | — | 25,771 | (374,675 | ) | (593,694 | ) | |||||||||||||||||||||
Cash flows from financing activities | ||||||||||||||||||||||||||||||||
Payments of bank credit facilities | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||
Payments of other long-term debt | — | — | (150,000 | ) | — | — | (22,700 | ) | — | (172,700 | ) | |||||||||||||||||||||
Advances (to) from affiliates | 389,604 | 280,575 | 100,158 | (3,331 | ) | — | (767,006 | ) | — | — | ||||||||||||||||||||||
Repayments of notes to affiliates | (300,000 | ) | (31,900 | ) | — | — | — | (42,775 | ) | 374,675 | — | |||||||||||||||||||||
Repurchases of ordinary shares | (60,867 | ) | — | — | — | — | — | — | (60,867 | ) | ||||||||||||||||||||||
Other | (15,886 | ) | — | — | — | — | — | — | (15,886 | ) | ||||||||||||||||||||||
Net cash from financing activities | 12,851 | 248,675 | (49,842 | ) | (3,331 | ) | — | (832,481 | ) | 374,675 | (249,453 | ) | ||||||||||||||||||||
Net increase (decrease) in cash and cash equivalents | 3,411 | (187 | ) | 4,184 | — | — | 150,682 | — | 158,090 | |||||||||||||||||||||||
Cash and cash equivalents, beginning of period | 661 | 445 | 26 | — | — | 512,179 | — | 513,311 | ||||||||||||||||||||||||
Cash and cash equivalents, end of period | $ | 4,072 | $ | 258 | $ | 4,210 | $ | — | $ | — | $ | 662,861 | $ | — | $ | 671,401 | ||||||||||||||||
33
Table of Contents
Item 2. | Management’s Discussion and Analysis of Financial Condition and Results of Operations |
34
Table of Contents
• | implemented a moratorium on and suspension of specified types of drilling activities in the U.S. Gulf of Mexico; |
• | indicated that drilling permits for specified types of wells and related activities would not be considered until expiration of the moratorium and suspension; |
• | ordered the operators of wells covered by the moratorium that were currently being drilled to halt drilling and take steps to secure the affected wells; and |
• | implemented stricter safety requirements. |
• | Noble Amos Runner. We have been advised by our customer, Anadarko Petroleum, that it believes that the government-imposed moratorium described above is a force majeure event permitting termination of the contract on theNoble Amos Runner. We do not agree with this position and plan to enforce our contractual rights under that contract and under our other U.S. Gulf of Mexico drilling contracts. We are currently in litigation with Anadarko over this dispute. If we do not prevail in the litigation, the contract may be terminated. Pending resolution of the legal dispute, no revenues are being recognized under this contract. |
• | Noble Clyde Boudreaux. In late June 2010, we reached agreement with our customer, Noble Energy, relating to theNoble Clyde Boudreauxto place the drilling unit on standby for a daily rate of $145,000 per day from June 15 through December 12, 2010, which period may be extended by mutual agreement with Noble Energy. We also agreed to negotiate in good faith a new contract that would apply after the standby period at a dayrate of $397,500 per day, although Noble Energy is not obligated to enter into the new contract. |
• | Noble Danny Adkins,Noble Jim Thompson, andFrontier Driller. In connection with the execution of the Frontier acquisition, we entered into an agreement with Shell that: |
• | allows Shell to suspend the contracts for these three rigs contracted to operate in the U.S. Gulf of Mexico during the imposed restricted period; and |
• | provides for payment by Shell of a reduced suspension rate designed to cover certain of our personnel and other operating costs. |
• | Noble Paul Romano. This drilling unit is currently idle, having recently completed a contract in June 2010. |
• | Noble Lorris Bouzigard. Our customer has a work program allowed under the U.S. government imposed moratorium, and we believe it will have available work after a brief recertification process. |
35
Table of Contents
36
Table of Contents
37
Table of Contents
• | we announced the acquisition of Frontier; |
• | we entered into a strategic relationship with Shell, including separate agreements for: |
• | a 10-year contract on the dynamically positioned, ultra-deepwater drillship,Noble Globetrotter,currently under construction and due to be delivered during the second half of 2011; |
• | a 10-year contract on a second ultra-deepwater drillship to be constructed with an anticipated delivery date in the second half of 2013; and |
• | a three-year extension on theNoble Jim Thompson, a moored 4th generation semisubmersible operating in the U.S. Gulf of Mexico. |
• | an additional newbuild ultra-deepwater semisubmersible, theNoble Jim Day, was delivered to us from the shipyard in the second quarter of 2010. After mobilization, installation of remaining equipment and customer acceptance, the unit is expected to begin work in the U.S. Gulf of Mexico in late 2010 (subject to the U.S. government imposed restrictions described in “Restrictions on U.S. Gulf of Mexico Operations.”) |
38
Table of Contents
Year Ending December 31, | ||||||||||||||||||||||||
Total | 2010 (1) | 2011 | 2012 | 2013 | 2014-2017 | |||||||||||||||||||
(In millions) | ||||||||||||||||||||||||
Contract Drilling Services Backlog (2) | ||||||||||||||||||||||||
Semisubmersibles/Drillships (3) (6) (8) | $ | 5,855 | $ | 940 | $ | 1,408 | $ | 1,062 | $ | 1,032 | $ | 1,413 | ||||||||||||
Jackups/Submersibles (4) | 863 | 384 | 348 | 78 | 29 | 24 | ||||||||||||||||||
Total (5) (6) | $ | 6,718 | $ | 1,324 | $ | 1,756 | $ | 1,140 | $ | 1,061 | $ | 1,437 | ||||||||||||
Percent of Available Operating Days | ||||||||||||||||||||||||
Committed (7) | 61 | % | 35 | % | 19 | % | 15 | % | 5 | % | ||||||||||||||
Potential Suspension Adjustments (8) | $ | (89 | ) | $ | (234 | ) | $ | 63 | $ | — | $ | — | $ | 82 |
(1) | Represents a six-month period beginning July 1, 2010. | |
(2) | Backlog is as of June 30, 2010 and excludes gross backlog of $3.2 billion related to rigs acquired from Frontier and $4.0 billion related to the recently signed agreements with Shell. | |
(3) | Our drilling contracts with Petroleo Brasileiro S.A. (“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, 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 operating offshore Brazil, we (a) have not included in our backlog any performance bonuses for periods prior to the commencement of certain upgrade projects planned for 2010 through 2013, which projects are designed to enhance the reliability and operational performance of our drillships, and (b) have included in our backlog an amount equal to 75 percent of potential performance bonuses for periods after the estimated completion of such upgrade projects. Our backlog for semisubmersibles/drillships includes approximately $286 million attributable to these performance bonuses. | |
(4) | Our drilling contracts with Pemex for certain jackups operating offshore in Mexico are subject to price review and adjustment of the rig dayrate. Presently, contracts for three jackups have dayrates indexed to the world average of the highest dayrates published by ODS-Petrodata. After an initial firm dayrate period, the dayrates are generally adjusted quarterly based on formulas calculated from the index. Our contract drilling services backlog has been calculated using the June 30, 2010 index-based dayrates for periods subsequent to the initial firm dayrate period. | |
(5) | Pemex has the ability to cancel its drilling contracts on 30 days or less notice without any early termination payment. We currently have 12 rigs contracted to Pemex in Mexico, and our backlog includes approximately $315 million related to such contracts at June 30, 2010. Also, our drilling contracts generally give the customer an early termination right in the event we fail to meet certain performance standards, including downtime thresholds. While we do not currently anticipate any cancellations as a result of events that have occurred to date, clients may from time to time have the contractual right to do so. | |
(6) | The drilling contract for theNoble Jim Daycontains a termination right in the event the rig is not ready to commence operations by December 31, 2010. | |
(7) | Percentages take into account additional capacity from the estimated dates of deployment of our newbuild rigs that are scheduled to commence operations during the remainder of 2010 through 2011. | |
(8) | Each of our drilling contracts relating to the seven deepwater rigs (including theNoble Jim Day) contracted for the U.S. Gulf of Mexico contains a force majeure contract clause that, if validly exercised, may result in modification or cancellation of such contracts. It is not possible to determine the impact to our revenues or backlog resulting from the U.S. government-imposed restrictions, efforts by operators to cancel or modify drilling contracts, and other consequences of the actions by the U.S. government. At June 30, 2010, backlog related to the seven U.S. Gulf of Mexico deepwater rigs totaled $1.7 billion, $390 million of which represents backlog for the six-month period ending December 31, 2010. |
39
Table of Contents
The amounts of backlog shown in the table above reflect the backlog determined pursuant to contracts in existence for the seven deepwater rigs operating or to operate in the U.S. Gulf of Mexico. The potential suspension adjustments reflect possible adjustments to the contract status at June 30, 2010 and assume a suspension period through December 31, 2010. These potential suspension adjustments are presented to assist in the understanding of potential effects on our backlog that could arise from the U.S. government-imposed restrictions described under “Restrictions on U.S. Gulf of Mexico Operations” above and are not indicative of the actual results that may occur. The potential suspension adjustments include or reflect the following: |
a) | One customer, Anadarko Petroleum, has asserted termination of its contract based on a force majeure event in the U.S. Gulf of Mexico. We do not believe the customer has the right to terminate the contract, and the future contracted revenues in the amount of $110 million ($81 million for the remaining six months of 2010) have been included in our backlog as of June 30, 2010. This matter is in litigation, and we will not realize these revenues if the customer is successful in the related litigation. Pending resolution of the legal dispute, no revenues are being recognized under this contract. |
b) | The Company has entered into an agreement with Shell, effective June 27, 2010, which provides that Shell may suspend the contracts on two existing Noble units operating in the U.S. Gulf of Mexico during any period of regulatory restriction by paying reduced suspension dayrates in lieu of the normal dayrates of $505,000 and $447,000, respectively. The term of the initial contract is also extended by the suspension period. The impact of this agreement is to shift backlog among periods with an immaterial increase to total backlog because of the reduced standby rates. The potential backlog reduction for the remaining six months of 2010 totals approximately $154 million. |
c) | Our other agreements with Shell contain other provisions that became effective upon the consummation of the Frontier acquisition. These provisions include (i) a three-year extension of the contract on one unit, effective on closing the Frontier acquisition, at a reduced dayrate, and (ii) contracts on two newbuild drillships for a ten-year period. These contracts or contract modifications have not been included in backlog or the potential suspension adjustments at June 30, 2010. |
d) | We and a customer, Noble Energy, have entered into an agreement effective June 15, 2010 providing for, among other things, the cancellation of the initial drilling contract and payment of a standby dayrate of $145,000 from June 15, 2010 through December 12, 2010, without right of cancellation. The parties also agreed to negotiate in good faith a new drilling contract following the standby period with a dayrate of $397,500 and having a term equal to the previous contract term (previously expected to end in November 2011) without regard to the standby period. Backlog as of June 30, 2010 includes the non-cancellable standby rate through December 12, 2010, and previous backlog of $304 million has been removed because of the contract cancellation. There is no guarantee that agreement on a new contract will be reached and, accordingly, no related amounts have been included in backlog or the potential suspension adjustments. |
40
Table of Contents
41
Table of Contents
Average Rig | Operating | Average | ||||||||||||||||||||||||||||||
Utilization (1) | Days (2) | Dayrates | ||||||||||||||||||||||||||||||
Three Months Ended | Three Months Ended | Three Months Ended | ||||||||||||||||||||||||||||||
June 30, | June 30, | June 30, | ||||||||||||||||||||||||||||||
2010 | 2009 | 2010 | 2009 | % Change | 2010 | 2009 | % Change | |||||||||||||||||||||||||
Jackups | 81 | % | 80 | % | 3,183 | 3,076 | 3 | % | $ | 96,677 | $ | 157,381 | -39 | % | ||||||||||||||||||
Semisubmersibles > 6000’ (3) | 92 | % | 94 | % | 750 | 596 | 26 | % | 355,450 | 408,510 | -13 | % | ||||||||||||||||||||
Semisubmersibles < 6000’ (4) | 100 | % | 100 | % | 273 | 273 | 0 | % | 253,697 | 251,945 | 1 | % | ||||||||||||||||||||
Drillships | 67 | % | 100 | % | 182 | 273 | -33 | % | 242,045 | 226,187 | 7 | % | ||||||||||||||||||||
Submersibles | 0 | % | 88 | % | — | 161 | -100 | % | — | 63,324 | -100 | % | ||||||||||||||||||||
Total | 80 | % | 84 | % | 4,388 | 4,379 | 0 | % | $ | 156,683 | $ | 198,270 | -21 | % | ||||||||||||||||||
(1) | Information reflects our policy of reporting on the basis of the number of rigs in our fleet excluding newbuild rigs under construction. | |
(2) | Information reflects the number of days that our rigs were operating under contract. | |
(3) | These units have water depth ratings of 6,000 feet or greater. | |
(4) | These units have water depth ratings of less than 6,000 feet. |
42
Table of Contents
Three Months Ended | ||||||||||||||||
June 30, | Change | |||||||||||||||
2010 | 2009 | $ | % | |||||||||||||
Operating revenues: | ||||||||||||||||
Contract drilling services | $ | 687,510 | $ | 868,205 | $ | (180,695 | ) | -21 | % | |||||||
Reimbursables (1) | 12,989 | 22,295 | (9,306 | ) | -42 | % | ||||||||||
Other | 603 | 414 | 189 | 46 | % | |||||||||||
$ | 701,102 | $ | 890,914 | $ | (189,812 | ) | -21 | % | ||||||||
Operating costs and expenses: | ||||||||||||||||
Contract drilling services | $ | 275,595 | $ | 251,054 | $ | 24,541 | 10 | % | ||||||||
Reimbursables (1) | 9,626 | 18,754 | (9,128 | ) | -49 | % | ||||||||||
Depreciation and amortization | 123,379 | 96,952 | 26,427 | 27 | % | |||||||||||
Selling, general and administrative | 23,561 | 21,411 | 2,150 | 10 | % | |||||||||||
Loss on involuntary conversion | — | 16,943 | (16,943 | ) | ** | |||||||||||
432,161 | 405,114 | 27,047 | 7 | % | ||||||||||||
Operating income | $ | 268,941 | $ | 485,800 | $ | (216,859 | ) | -45 | % | |||||||
(1) | We record reimbursements from customers for out-of-pocket expenses as revenues and the related direct costs as operating expenses. Changes in the amount of these reimbursables generally do not have a material effect on our financial position, results of operations or cash flows. | |
** | Not a meaningful percentage |
43
Table of Contents
Three Months Ended | ||||||||||||||||
June 30, | Change | |||||||||||||||
2010 | 2009 | $ | % | |||||||||||||
Operating revenues: | ||||||||||||||||
Labor contract drilling services | $ | 8,056 | $ | 7,419 | $ | 637 | 9 | % | ||||||||
Reimbursables (1) | 764 | 539 | 225 | 42 | % | |||||||||||
$ | 8,820 | $ | 7,958 | $ | 862 | 11 | % | |||||||||
Operating costs and expenses: | ||||||||||||||||
Labor contract drilling services | $ | 5,380 | $ | 4,881 | $ | 499 | 10 | % | ||||||||
Reimbursables (1) | 739 | 527 | 212 | 40 | % | |||||||||||
Depreciation and amortization | 2,848 | 2,465 | 383 | 16 | % | |||||||||||
Selling, general and administrative | 247 | 73 | 174 | 238 | % | |||||||||||
9,214 | 7,946 | 1,268 | 16 | % | ||||||||||||
Operating income | $ | (394 | ) | $ | 12 | $ | (406 | ) | ** | |||||||
(1) | We record reimbursements from customers for out-of-pocket expenses as revenues and the related direct costs as operating expenses. Changes in the amount of these reimbursables generally do not have a material effect on our financial position, results of operations or cash flows. | |
** | Not a meaningful percentage |
44
Table of Contents
Average Rig | Operating | Average | ||||||||||||||||||||||||||||||
Utilization (1) | Days (2) | Dayrates | ||||||||||||||||||||||||||||||
Six Months Ended | Six Months Ended | Six Months Ended | ||||||||||||||||||||||||||||||
June 30, | June 30, | June 30, | ||||||||||||||||||||||||||||||
2010 | 2009 | 2010 | 2009 | % Change | 2010 | 2009 | % Change | |||||||||||||||||||||||||
Jackups | 81 | % | 83 | % | 6,324 | 6,319 | 0 | % | $ | 106,522 | $ | 157,882 | -33 | % | ||||||||||||||||||
Semisubmersibles > 6000’ (3) | 91 | % | 97 | % | 1,411 | 1,226 | 15 | % | 415,925 | 388,709 | 7 | % | ||||||||||||||||||||
Semisubmersibles < 6000’ (4) | 100 | % | 100 | % | 543 | 543 | 0 | % | 251,985 | 249,048 | 1 | % | ||||||||||||||||||||
Drillships | 79 | % | 81 | % | 429 | 440 | -3 | % | 230,679 | 251,182 | -8 | % | ||||||||||||||||||||
Submersibles (5) | 0 | % | 75 | % | — | 341 | -100 | % | — | 60,749 | -100 | % | ||||||||||||||||||||
Total | 81 | % | 85 | % | 8,707 | 8,869 | -2 | % | $ | 171,828 | $ | 196,263 | -12 | % | ||||||||||||||||||
(1) | Information reflects our policy of reporting on the basis of the number of actively marketed rigs in our fleet excluding newbuild rigs under construction. | |
(2) | Information reflects the number of days that our rigs were operating under contract. | |
(3) | These units have water depth ratings of 6,000 feet or greater. | |
(4) | These units have water depth ratings of less than 6,000 feet. | |
(5) | Effective March 31, 2009, theNoble Fri Rodli,which had been cold stacked since October 2007, was removed from our rig fleet. |
45
Table of Contents
Six Months Ended | ||||||||||||||||
June 30, | Change | |||||||||||||||
2010 | 2009 | $ | % | |||||||||||||
Operating revenues: | ||||||||||||||||
Contract drilling services | $ | 1,496,156 | $ | 1,740,602 | $ | (244,446 | ) | -14 | % | |||||||
Reimbursables (1) | 36,292 | 38,451 | (2,159 | ) | -6 | % | ||||||||||
Other | 814 | 541 | 273 | 50 | % | |||||||||||
$ | 1,533,262 | $ | 1,779,594 | $ | (246,332 | ) | -14 | % | ||||||||
Operating costs and expenses: | ||||||||||||||||
Contract drilling services | $ | 530,026 | $ | 491,910 | 38,116 | 8 | % | |||||||||
Reimbursables (1) | 28,495 | 32,343 | (3,848 | ) | -12 | % | ||||||||||
Depreciation and amortization | 236,553 | 187,850 | 48,703 | 26 | % | |||||||||||
Selling, general and administrative | 45,303 | 39,078 | 6,225 | 16 | % | |||||||||||
Loss on asset disposal/involuntary conversion | — | 28,977 | (28,977 | ) | ** | |||||||||||
840,377 | 780,158 | 60,219 | 8 | % | ||||||||||||
Operating income | $ | 692,885 | $ | 999,436 | $ | (306,551 | ) | -31 | % | |||||||
(1) | We record reimbursements from customers for out-of-pocket expenses as revenues and the related direct costs as operating expenses. Changes in the amount of these reimbursables generally do not have a material effect on our financial position, results of operations or cash flows. | |
** | Not a meaningful percentage |
46
Table of Contents
Six Months Ended | ||||||||||||||||
June 30, | Change | |||||||||||||||
2010 | 2009 | $ | % | |||||||||||||
Operating revenues: | ||||||||||||||||
Labor contract drilling services | $ | 15,817 | $ | 14,353 | $ | 1,464 | 10 | % | ||||||||
Reimbursables (1) | 1,694 | 1,061 | 633 | 60 | % | |||||||||||
Other | — | 15 | (15 | ) | ** | |||||||||||
$ | 17,511 | $ | 15,429 | $ | 2,082 | 13 | % | |||||||||
Operating costs and expenses: | ||||||||||||||||
Labor contract drilling services | $ | 11,268 | $ | 9,257 | 2,011 | 22 | % | |||||||||
Reimbursables (1) | 1,613 | 1,021 | 592 | 58 | % | |||||||||||
Depreciation and amortization | 5,531 | 4,551 | 980 | 22 | % | |||||||||||
Selling, general and administrative | 476 | 123 | 353 | 287 | % | |||||||||||
18,888 | 14,952 | 3,936 | 26 | % | ||||||||||||
Operating income | $ | (1,377 | ) | $ | 477 | $ | (1,854 | ) | -389 | % | ||||||
(1) | We record reimbursements from customers for out-of-pocket expenses as revenues and the related direct costs as operating expenses. Changes in the amount of these reimbursables generally do not have a material effect on our financial position, results of operations or cash flows. | |
** | Not a meaningful percentage |
47
Table of Contents
• | normal recurring operating expenses; |
• | capital expenditures, including expenditures for newbuilds and upgrades; |
• | repurchase of shares; |
• | payments of return of capital in the form of a reduction of par value of our shares (in-lieu of dividends) including a planned special dividend in August 2010; and |
• | contributions to our pension plans. |
48
Table of Contents
49
Table of Contents
50
Table of Contents
Item 3. | Quantitative and Qualitative Disclosures About Market Risk |
51
Table of Contents
Item 4. | Controls and Procedures |
52
Table of Contents
Item 1. | Legal Proceedings |
Item 1A. | Risk Factors |
• | incorrect assumptions regarding the future results of acquired operations or assets or expected cost reductions or other synergies expected to be realized as a result of acquiring operations or assets; |
• | failure to integrate the operations or management of acquired operations or assets successfully and timely and to retain key personnel; |
• | diversion of management’s attention from existing operations or other priorities; |
• | the assumption of or otherwise becoming subject to unknown liabilities, losses or costs for which we are not indemnified or for which our indemnity is inadequate; and |
• | an inability to secure, on acceptable terms, sufficient financing that may be required. |
53
Table of Contents
• | implemented a moratorium on and suspension of specified types of drilling activities in the U.S. Gulf of Mexico, |
• | indicated that drilling permits for specified types of wells and related activities would not be considered until expiration of the moratorium and suspension, |
• | ordered the operators of wells covered by the moratorium that were currently being drilled to halt drilling and take steps to secure the affected wells, and |
• | implemented certain safety requirements. |
• | whether the moratorium will be extended beyond November 30, 2010, |
• | the extent of additional or substitute regulations and restrictions that are expected to be imposed on drilling operations in the U.S. Gulf of Mexico, |
• | the extent to which drilling operations beyond the moratorium period will be impacted, |
• | the cost or availability of relevant insurance coverage, | ||
• | the termination by customers of existing contracts and the demand by customers for new or renewed drilling contracts, |
• | the effect of new regulations and restrictions on costs for the operations of our customers, |
• | the availability of, or delays in delivery of, equipment required to comply with any new regulations, |
• | the effect of permitting delays on our customers operations, or |
• | the effect of the developments described above on demand for our services in the U.S. Gulf of Mexico. |
54
Table of Contents
55
Table of Contents
Item 2. | Unregistered Sales of Equity Securities and Use of Proceeds |
Total Number of | Maximum Number | |||||||||||||||
Shares Purchased | of Shares that May | |||||||||||||||
Total Number | Average | as Part of Publicly | Yet Be Purchased | |||||||||||||
of Shares | Price Paid | Announced Plans | Under the Plans | |||||||||||||
Period | Purchased | per Share | or Programs | or Programs (1) | ||||||||||||
April 2010 | 622 | $ | 41.38 | (2) | — | 10,769,891 | ||||||||||
May 2010 | — | $ | 0.00 | — | 10,769,891 | |||||||||||
June 2010 | — | $ | 0.00 | — | 10,769,891 |
(1) | All share purchases made in the open market and were pursuant to the share repurchase program which our Board of Directors authorized and adopted. Our repurchase program has no date of expiration. | |
(2) | Includes 622 shares at an average price of $41.38 per share surrendered by employees for withholding taxes payable upon the vesting of restricted stock. |
Item 6. | Exhibits |
56
Table of Contents
/s/ David W. Williams | August 9, 2010 | |||
David W. Williams | Date | |||
Chairman, President and Chief Executive Officer | ||||
(Principal Executive Officer) | ||||
/s/ Thomas L. Mitchell Thomas L. Mitchell | ||||
Senior Vice President, Chief Financial Officer, Treasurer and Controller | ||||
(Principal Financial and Accounting Officer) |
/s/ David W. Williams | August 9, 2010 | |||
David W. Williams | Date | |||
President and Chief Executive Officer | ||||
(Principal Executive Officer) | ||||
/s/ Dennis J. Lubojacky Dennis J. Lubojacky | ||||
Vice President and Chief Financial Officer | ||||
(Principal Financial and Accounting Officer) |
57
Table of Contents
Exhibit Number | Exhibit | |||
2.1 | Agreement and Plan of Merger, Reorganization and Consolidation, dated as of December 19, 2008, among Noble Corporation, a Swiss corporation (“Noble-Swiss”), Noble Corporation, a Cayman Islands company (“Noble-Cayman”), and Noble Cayman Acquisition Ltd. (filed as Exhibit 1.1 to Noble-Cayman’s Current Report on Form 8-K filed on December 22, 2008 and incorporated herein by reference). | |||
2.2 | Amendment No. 1 to Agreement and Plan of Merger, Reorganization and Consolidation, dated as of February 4, 2009, among Noble-Swiss, Noble-Cayman and Noble Cayman Acquisition Ltd. (filed as Exhibit 2.2 to Noble-Cayman’s Current Report on Form 8-K filed on February 4, 2009 and incorporated herein by reference). | |||
2.3 | Agreement and Plan of Merger, dated as of June 27, 2010, among Noble-Swiss, Noble AM Merger Co., a Cayman Islands company, Frontier Holdings Limited, a Cayman Islands company (“Frontier”), and certain of Frontier’s shareholders (filed as Exhibit 2.1 to Noble-Swiss’ and Noble-Cayman’s Current Report on Form 8-K filed on June 28, 2010 and incorporated herein by reference). | |||
3.1 | Articles of Association of Noble-Swiss (filed as Exhibit 3.1 to Noble Swiss’ Quarterly Report on Form 10-Q filed on May 7, 2010 and incorporated herein by reference. | |||
3.2 | By-laws of Noble-Swiss (filed as Exhibit 3.2 to Noble-Swiss’ Current Report on Form 8-K filed on March 27, 2009 and incorporated herein by reference). | |||
3.3 | Memorandum and Articles of Association of Noble-Cayman (filed as Exhibit 3.1 to Noble-Cayman’s Current Report on Form 8-K filed on March 30, 2009 and incorporated herein by reference). | |||
4.1 | Second Supplemental Indenture dated as of July 26, 2010 (filed as Exhibit 4.2 to Noble-Swiss’ and Noble-Cayman’s Current Report on Form 8-K filed on July 26, 2010 and incorporated herein by reference). | |||
4.2 | Specimen Note for the 3.45% Senior Notes due 2015 of Noble Holding International Limited dated as of July 26, 2010 (filed as Exhibit 4.3 to Noble Swiss’s and Noble-Cayman’s Current Report on Form 8-K filed on July 26, 2010 and incorporated herein by reference). | |||
4.3 | Specimen Note for the 4.90% Senior Notes due 2020 of Noble Holding International Limited dated as of July 26, 2010 (filed as Exhibit 4.4 to Noble Swiss’s and Noble-Cayman’s Current Report on Form 8-K filed on July 26, 2010 and incorporated herein by reference). | |||
4.4 | Specimen Note for the 6.20% Senior Notes due 2040 of Noble Holding International Limited dated as of July 26, 2010 (filed as Exhibit 4.5 to Noble Swiss’s and Noble-Cayman’s Current Report on Form 8-K filed on July 26, 2010 and incorporated herein by reference). |
58
Table of Contents
Exhibit Number | Exhibit | |||
31.1 | Certification of David W. Williams pursuant to the U.S. Securities Exchange Act of 1934, as amended, Rule 13a-14(a) or Rule 15d-14(a), for Noble-Swiss and for Noble-Cayman. | |||
31.2 | Certification of Thomas L. Mitchell pursuant to the U.S. Securities Exchange Act of 1934, as amended, Rule 13a-14(a) or Rule 15d-14(a), for Noble-Swiss. | |||
31.3 | Certification of Dennis J. Lubojacky pursuant to the U.S. Securities Exchange Act of 1934, as amended, Rule 13a-14(a) or Rule 15d-14(a), for Noble-Cayman. | |||
32.1 | + | Certification of David W. Williams pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, for Noble-Swiss and for Noble-Cayman. | ||
32.2 | + | Certification of Thomas L. Mitchell pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, for Noble-Swiss. | ||
32.3 | + | Certification of Dennis J. Lubojacky pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, for Noble-Cayman. | ||
101 | + | Interactive Data File |
+ | Furnished in accordance with Item 601(b)(32)(ii) of Regulation S-K. |
59