NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unless otherwise indicated, dollar amounts in tables are in thousands, except per share data)
Note 1— Organization and Basis of Presentation
Noble Corporation plc, a public limited company incorporated under the laws of England and Wales (“Noble-UK”), is a leading offshore drilling contractor for the oil and gas industry. We perform contract drilling services with our global fleet of mobile offshore drilling units. As of
June 30, 2017
, our fleet consisted of
14
jackups,
eight
drillships and
six
semisubmersibles.
We report our contract drilling operations as a single reportable segment, Contract Drilling Services, which reflects how we manage our business, and the fact that all of our drilling fleet is dependent upon the worldwide oil and gas industry. The mobile offshore drilling units comprising our offshore rig fleet operate in a global market for contract drilling services and are often redeployed to different regions due to changing demands of our customers, which consist largely of major independent and government-owned or controlled oil and gas companies throughout the world. As of
June 30, 2017
, our contract drilling services segment conducted operations in the United States, the North Sea, the Middle East and Asia. 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 an indirect, wholly-owned subsidiary of Noble-UK, our publicly-traded parent company. Noble-UK’s principal asset is all of the shares of Noble-Cayman. Noble-Cayman has no public equity outstanding. The condensed consolidated financial statements of Noble-UK include the accounts of Noble-Cayman, and Noble-UK conducts substantially all of its business through Noble-Cayman and its subsidiaries.
The accompanying unaudited condensed consolidated financial statements of Noble-UK 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 Quarterly Reports on 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 condensed consolidated financial statements. All such adjustments are of a recurring nature. The
December 31, 2016
Condensed Consolidated Balance Sheets presented herein are derived from the
December 31, 2016
audited consolidated financial statements, but does not include all disclosures required by GAAP. 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, 2016
, filed by both Noble-UK 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. In accordance with our adoption of Accounting Standards Update (“ASU”) No. 2016-9, prior period excess tax benefits of approximately
$5.5 million
, previously classified as a financing activity in “Employee stock transactions” on the
June 30, 2016
Condensed Consolidated Statement of Cash Flows, are now classified as an operating activity in “Net change in other assets and liabilities” on the accompanying Condensed Consolidated Statement of Cash Flows for the comparative period. Prior period shares withheld for taxes on employee stock transactions of approximately
$3.2 million
, previously classified as an operating activity in “Net change in other assets and liabilities" on the
June 30, 2016
Condensed Consolidated Statement of Cash Flows, are now classified as a financing activity in “Employee stock transactions” on the accompanying Condensed Consolidated Statement of Cash Flows for the comparative period.
Note 2— Spin-off of Paragon Offshore plc ("Paragon Offshore")
On August 1, 2014, Noble-UK completed the separation and spin-off of a majority of its standard specification offshore drilling business (the “Spin-off”) through a pro rata distribution of all of the ordinary shares of its wholly-owned subsidiary, Paragon Offshore, to the holders of Noble’s ordinary shares.
In February 2016, Paragon Offshore sought approval of a pre-negotiated plan of reorganization (the "Prior Plan") by filing for voluntary relief under Chapter 11 of the United States Bankruptcy Code. As part of the Prior Plan, we entered into a settlement agreement with Paragon Offshore (the “Settlement Agreement”) under which, in exchange for a full and unconditional release of any claims by Paragon Offshore in connection with the Spin-off (including fraudulent conveyance claims that could be brought on behalf of Paragon Offshore’s creditors), we agreed to provide certain tax bonding in Mexico as well as assume certain tax liabilities and the administration of Mexican tax claims for a specified number of years.
The bonding to be provided by Noble-UK was a key benefit to Paragon Offshore of the Settlement Agreement, which was subject to bankruptcy court confirmation as part of a bankruptcy plan. The Prior Plan was rejected by the bankruptcy court in October 2016.
In April 2017, Paragon Offshore filed an updated disclosure statement and a revised plan of reorganization (the “New Plan”) in its bankruptcy proceeding. Under the New Plan, including Paragon Offshore
’s
revised business plan, Paragon Offshore no longer needed the Mexican tax bonding that Noble-UK was to provide under the
Settlement Agreement
. As a result, the Settlement Agreement was no longer applicable to the ongoing business of Paragon Offshore. Consequently, Paragon Offshore abandoned the Settlement Agreement as part of the New Plan, and the Settlement Agreement was terminated at the time of the filing of the New Plan. On May 2, 2017, Paragon Offshore announced that it had reached an agreement in principle with both its secured and unsecured creditors to revise the New Plan to, among other things, create and fund a
$10.0 million
litigation
NOBLE CORPORATION PLC AND SUBSIDIARIES
NOBLE CORPORATION AND SUBSIDIARIES
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unless otherwise indicated, dollar amounts in tables are in thousands, except per share data)
trust to pursue litigation against us. On June 7, 2017, the revised New Plan was approved by the bankruptcy court and Paragon Offshore emerged from bankruptcy on
July 18, 2017
.
We expect Paragon Offshore or its creditors will use the litigation trust to pursue claims against us relating to the Spin-off, including alleged fraudulent conveyance claims. We
continue to believe that Paragon Offshore, at the time of the Spin-off, was properly funded, solvent and had appropriate liquidity and that any fraudulent conveyance claim or other claim related to the Spin-off that may be brought by Paragon Offshore or its creditors, would be without merit and would be contested vigorously by us.
Prior to the completion of the Spin-off, Noble-UK and Paragon Offshore entered into a series of agreements to effect the separation and Spin-off and govern the relationship between the parties after the Spin-off (the "Separation Agreements"), including the Master Separation Agreement (the "MSA") and the Tax Sharing Agreement (the "TSA").
As part of its final bankruptcy plan, Paragon Offshore rejected the Separation Agreements. Accordingly, the indemnity obligations that Paragon Offshore potentially would have owed us under the Separation Agreements have now terminated, including indemnities arising under the MSA and the TSA in respect of obligations related to Paragon Offshore’s business that were incurred through Noble-retained entities prior to the Spin-off. Likewise, any potential indemnity obligations that we would have owed Paragon Offshore under the Separation Agreements, including those under the MSA and the TSA in respect of Noble-UK’s business that was conducted prior to the Spin-off through Paragon Offshore-retained entities, are now also extinguished. In the absence of the Separation Agreements, liabilities relating to the respective parties will be borne by the owner of the legal entity or asset at issue and neither party will look to an allocation based on the historic relationship of an entity or asset to one of the party’s business, as had been the case under the Separation Agreements.
The rejection and ultimate termination of the indemnity and related obligations under the Separation Agreements has resulted in a number of accounting charges and benefits in this period and such termination may continue to affect us in the future as liabilities arise for which we would have been indemnified by Paragon Offshore or would have had to indemnify Paragon Offshore. We do not expect that, overall, the rejection of the Separation Agreements by Paragon Offshore will have a material adverse effect on our financial condition or liquidity. However, any loss we experience with respect to which we would have been able to secure indemnification from Paragon Offshore under one or more of the Separation Agreements could have an adverse impact on our results of operations in any period, which impact may be material depending on our results of operations during this down-cycle.
For the
three and six
months ended
June 30, 2017
, we recognized net charges of
$15.9 million
, with a non-cash loss of
$1.5 million
recorded in "Net loss from discontinued operations, net of tax" on our Condensed Consolidated Statement of Operations relating to the emergence from bankruptcy of Paragon Offshore.
For more information on the Separation Agreements, see our Annual Report on Form 10-K for the year ended December 31, 2016.
Note 3— Consolidated Joint Ventures
We maintain a
50 percent
interest in
two
joint ventures, each with a subsidiary of Royal Dutch Shell plc (“Shell”), that own and operate the
two
Bully
-class drillships. We have determined that we are the primary beneficiary of the joint ventures. Accordingly, we consolidate the entities in our condensed consolidated financial statements after eliminating intercompany transactions. Shell’s equity interests are presented as noncontrolling interests on our Condensed Consolidated Balance Sheets.
During the
six
months ended
June 30, 2017
, the
Bully
joint ventures approved dividends totaling
$52.6 million
and paid dividends totaling
$10.8 million
. During the
six
months ended
June 30, 2016
, the
Bully
joint ventures approved and paid dividends totaling
$82.2 million
. Of these amounts,
50 percent
was paid to our joint venture partner.
The combined carrying amount of the
Bully
-class drillships at both
June 30, 2017
and
December 31, 2016
totaled
$1.4 billion
. These assets were primarily funded through partner equity contributions. Cash held by the
Bully
joint ventures totaled approximately
$83.3 million
at
June 30, 2017
as compared to approximately
$34.7 million
at
December 31, 2016
.
NOBLE CORPORATION PLC AND SUBSIDIARIES
NOBLE CORPORATION AND SUBSIDIARIES
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unless otherwise indicated, dollar amounts in tables are in thousands, except per share data)
Note 4— Share Data
Earnings per share
The following table presents the computation of basic and diluted earnings per share for Noble-UK:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
Numerator:
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
|
|
|
|
|
|
|
Net income (loss) attributable to Noble-UK
|
|
$
|
(93,350
|
)
|
|
$
|
322,866
|
|
|
$
|
(395,044
|
)
|
|
$
|
428,351
|
|
Net loss from discontinued operations, net of tax
|
|
1,486
|
|
|
—
|
|
|
1,486
|
|
|
—
|
|
Earnings allocated to unvested share-based payment awards
|
|
—
|
|
|
(11,577
|
)
|
|
—
|
|
|
(15,371
|
)
|
Net income (loss) from continuing operations to common shareholders - basic
|
|
$
|
(91,864
|
)
|
|
$
|
311,289
|
|
|
$
|
(393,558
|
)
|
|
$
|
412,980
|
|
Diluted
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss) attributable to Noble-UK
|
|
$
|
(93,350
|
)
|
|
$
|
322,866
|
|
|
$
|
(395,044
|
)
|
|
$
|
428,351
|
|
Net loss from discontinued operations, net of tax
|
|
1,486
|
|
|
—
|
|
|
1,486
|
|
|
—
|
|
Net income (loss) from continuing operations to common shareholders - diluted
|
|
$
|
(91,864
|
)
|
|
$
|
322,866
|
|
|
$
|
(393,558
|
)
|
|
$
|
428,351
|
|
Denominator:
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average shares outstanding - basic
|
|
244,828
|
|
|
243,217
|
|
|
244,527
|
|
|
243,021
|
|
Incremental shares issuable from assumed exercise of stock options and outstanding unvested share-based payment awards
|
|
—
|
|
|
9,045
|
|
|
—
|
|
|
9,045
|
|
Weighted average shares outstanding - diluted
|
|
244,828
|
|
|
252,262
|
|
|
244,527
|
|
|
252,066
|
|
Earnings per share
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic:
|
|
|
|
|
|
|
|
|
Income (loss) from continuing operations
|
|
$
|
(0.37
|
)
|
|
$
|
1.28
|
|
|
$
|
(1.61
|
)
|
|
$
|
1.70
|
|
Loss from discontinued operations
|
|
(0.01
|
)
|
|
—
|
|
|
(0.01
|
)
|
|
—
|
|
Net income (loss) attributable to Noble-UK
|
|
$
|
(0.38
|
)
|
|
$
|
1.28
|
|
|
$
|
(1.62
|
)
|
|
$
|
1.70
|
|
Diluted:
|
|
|
|
|
|
|
|
|
|
Income (loss) from continuing operations
|
|
$
|
(0.37
|
)
|
|
$
|
1.28
|
|
|
$
|
(1.61
|
)
|
|
$
|
1.70
|
|
Loss from discontinued operations
|
|
(0.01
|
)
|
|
—
|
|
|
(0.01
|
)
|
|
—
|
|
Net income (loss) attributable to Noble-UK
|
|
$
|
(0.38
|
)
|
|
$
|
1.28
|
|
|
$
|
(1.62
|
)
|
|
$
|
1.70
|
|
Dividends per share
|
|
$
|
—
|
|
|
$
|
0.02
|
|
|
$
|
—
|
|
|
$
|
0.17
|
|
Only those items having a dilutive impact on our basic earnings per share are included in diluted earnings per share. For the three months ended
June 30, 2017
and
2016
, approximately
1.3 million
and
1.6 million
shares underlying stock options, respectively, were excluded from the diluted earnings per share as such stock options were anti-dilutive. For both the
three and six
months ended
June 30, 2017
, we experienced net losses from continuing operations and as a result approximately
11.3 million
outstanding unvested share-based payment awards were excluded from the earnings per share calculation, as such awards were anti-dilutive.
Share capital
As of
June 30, 2017
, Noble-UK had approximately
244.9 million
shares outstanding and trading as compared to approximately
243.2 million
shares outstanding and trading at
December 31, 2016
. Our Board of Directors may increase our share capital through the issuance of up to
53.0 million
authorized shares (at current nominal value of
$0.01
per share) without obtaining shareholder approval.
The declaration and payment of dividends require authorization of the Board of Directors of Noble-UK, provided that such dividends on issued share capital may be paid only out of Noble-UK’s “distributable reserves” on its statutory balance sheet. Noble-UK is not permitted to pay dividends out of share capital, which includes share premiums. The resumption of the payment of future dividends 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.
NOBLE CORPORATION PLC AND SUBSIDIARIES
NOBLE CORPORATION AND SUBSIDIARIES
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unless otherwise indicated, dollar amounts in tables are in thousands, except per share data)
Share repurchases
Under UK law, the Company is only permitted to purchase its own shares by way of an “off-market purchase” in a plan approved by shareholders. We do not currently have shareholder authority to repurchase shares, as our approval to repurchase up to
37.0 million
ordinary shares expired on
April 22, 2016
. During the
three and six
months ended
June 30, 2017
, we did not repurchase any of our shares.
Note 5— Contract Settlement and Termination Agreement with Freeport-McMoRan Inc.
On May 10, 2016, Freeport-McMoRan Inc. (“Freeport”), Freeport-McMoRan Oil & Gas LLC and one of our subsidiaries entered into an agreement terminating the contracts on the
Noble Sam Croft
and
Noble Tom Madden
(“FCX Settlement”), which were scheduled to end in July 2017 and November 2017, respectively.
Pursuant to the FCX Settlement, Noble could have received contingent payments based upon the average price of oil over a 12-month period from June 30, 2016 through June 30, 2017. These contingent payments were not designated for hedge accounting treatment under FASB standards, and therefore, the change in fair value was recognized as a loss in the accompanying Condensed Consolidated Statements of Operations. For the
three and six
months ended
June 30, 2017
, we recognized losses of approximately
$6.5 million
and
$14.4 million
, respectively, in “Contract drilling services revenue,” related to the valuation of these contingent payments. As of
June 30, 2017
, the average price of oil did not meet the FCX Settlement's threshold during the 12-month period. Accordingly, as of
June 30, 2017
, the fair value of these contingent payments was reduced to
zero
, as the period for earning the contingent payments had ended. (See
Note 11— Derivative Instruments and Hedging Activities
and
Note 12— Fair Value of Financial Instruments
for additional information).
Note 6— Receivables from Customers
In prior periods, we had receivables of approximately
$14.4 million
related to the
Noble Max Smith
, which had been disputed by our former customer, Petróleos Mexicanos (“Pemex”) and were classified as long-term and included in "Other assets" on our Condensed Consolidated Balance Sheet. The receivables were related to lost revenues for downtime that occurred after our rig was damaged when one of Pemex's supply boats collided with our rig in 2010.
Paragon Offshore has announced that, as part of its bankruptcy plan, it will liquidate the Mexican entity currently prosecuting the
Noble Max Smith
claim against Pemex. While Noble owns all rights to amounts from that claim and will take available actions to recover such amounts, we believe the announced actions by Paragon Offshore creates uncertainty relating to the prosecution of the claim and associated recovery, and accordingly, the disputed amounts of approximately
$14.4 million
were written off through "Contract drilling services costs" on the accompanying Condensed Consolidated Statements of Operations as of
June 30, 2017
.
Note 7— Property and Equipment
Property and equipment, at cost, as of
June 30, 2017
and December 31,
2016
for Noble-UK consisted of the following:
|
|
|
|
|
|
|
|
|
|
|
|
June 30, 2017
|
|
December 31, 2016
|
Drilling equipment and facilities
|
|
$
|
12,128,734
|
|
|
$
|
12,048,571
|
|
Construction in progress
|
|
78,345
|
|
|
112,103
|
|
Other
|
|
203,778
|
|
|
204,214
|
|
Property and equipment, at cost
|
|
$
|
12,410,857
|
|
|
$
|
12,364,888
|
|
Capital expenditures, including capitalized interest, totaled
$49.0 million
and
$120.5 million
for the
six
months ended
June 30, 2017
and
2016
, respectively. There was no capitalized interest for the
six
months ended
June 30, 2017
, due to the completion of our newbuild program. Capitalized interest was
$3.6 million
and
$7.4 million
for the
three and six
months ended
June 30, 2016
, respectively.
NOBLE CORPORATION PLC AND SUBSIDIARIES
NOBLE CORPORATION AND SUBSIDIARIES
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unless otherwise indicated, dollar amounts in tables are in thousands, except per share data)
Note 8— Debt
Our total debt consisted of the following at
June 30, 2017
and
December 31, 2016
:
|
|
|
|
|
|
|
|
|
|
|
|
June 30, 2017
|
|
December 31, 2016
|
Senior unsecured notes
|
|
|
|
|
2.50% Senior Notes due March 2017
|
|
$
|
—
|
|
|
$
|
299,992
|
|
5.75% Senior Notes due March 2018
|
|
249,864
|
|
|
249,771
|
|
7.50% Senior Notes due March 2019
|
|
201,695
|
|
|
201,695
|
|
4.90% Senior Notes due August 2020
|
|
167,600
|
|
|
167,576
|
|
4.625% Senior Notes due March 2021
|
|
208,552
|
|
|
208,538
|
|
3.95% Senior Notes due March 2022
|
|
125,503
|
|
|
125,488
|
|
7.75% Senior Notes due January 2024
|
|
981,187
|
|
|
980,117
|
|
7.70% Senior Notes due April 2025
|
|
448,958
|
|
|
448,909
|
|
6.20% Senior Notes due August 2040
|
|
399,899
|
|
|
399,898
|
|
6.05% Senior Notes due March 2041
|
|
397,779
|
|
|
397,758
|
|
5.25% Senior Notes due March 2042
|
|
498,384
|
|
|
498,369
|
|
8.70% Senior Notes due April 2045
|
|
394,636
|
|
|
394,613
|
|
Total debt
|
|
4,074,057
|
|
|
4,372,724
|
|
Less: Unamortized debt issuance costs
|
|
(30,688
|
)
|
|
(32,613
|
)
|
Less: Current maturities of long-term debt
(1)
|
|
(249,475
|
)
|
|
(299,882
|
)
|
Long-term debt, net of debt issuance costs
|
|
$
|
3,793,894
|
|
|
$
|
4,040,229
|
|
|
|
(1)
|
Presented net of current portion of unamortized debt issuance costs of
$0.4 million
and
$0.1 million
at
June 30, 2017
and
December 31, 2016
, respectively.
|
Credit Facility and Commercial Paper Program
We currently have a
five
-year
$2.4 billion
senior unsecured credit facility that matures in January 2020 and is guaranteed by our indirect, wholly owned subsidiaries, Noble Holding (U.S.) LLC ("NHUS") and Noble Holding International Limited ("NHIL"). The credit facility provides us with the ability to issue up to
$500.0 million
in letters of credit. The issuance of letters of credit under the facility reduces the amount available for borrowing.
Throughout the term of the credit facility, we pay a facility fee on the daily unused amount of the underlying commitment which ranges from
0.1
percent to
0.35
percent depending on our debt ratings. At
June 30, 2017
, based on our debt ratings on that date, the facility fee was
0.35
percent. At
June 30, 2017
, we had no borrowings outstanding or letters of credit issued. In addition, our credit facility has provisions which vary the applicable interest rates based upon our debt ratings. At
June 30, 2017
, the interest rate in effect is the highest permitted interest rate under the credit facility.
Debt Issuances
In December 2016, we issued
$1.0 billion
aggregate principal amount of
7.75%
Senior Notes, which we issued through our indirect wholly-owned subsidiary, NHIL. The net proceeds of approximately
$967.6 million
, after estimated expenses, were primarily used to retire debt related to our tender offer and the remaining portion will be used for general corporate purposes.
Senior Notes Interest Rate Adjustments
During 2016 and to date in 2017, we experienced debt rating downgrades by Moody’s Investors Service and S&P Global Ratings, which reduced our debt ratings below investment grade. As a result of these downgrades, we experienced interest rate increases during 2016 and 2017 on our Senior Notes due
2018
,
2025
and
2045
, all of which are subject to provisions that vary the applicable interest rates if our debt rating falls below investment grade, with continued adjustments up to a contractually-defined maximum interest rate increase set for each rating agency. On April 28, 2017, Moody’s Investors Service reduced our debt rating. However, there was no further increase in the interest rates on these Senior Notes because we have reached the contractually-defined maximum interest rate increase in respect of Moody’s Investors Service downgrades. The interest rates on these Senior Notes may be further increased if our debt ratings were to be downgraded further by S&P Global Ratings (up to a maximum of an additional 25 basis points) or decreased if our debt ratings were to be raised by either rating agency above specified levels.
NOBLE CORPORATION PLC AND SUBSIDIARIES
NOBLE CORPORATION AND SUBSIDIARIES
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unless otherwise indicated, dollar amounts in tables are in thousands, except per share data)
Our other outstanding senior notes, including the Senior Notes due 2024 issued in December 2016, do not contain provisions varying applicable interest rates based upon our credit rating.
Debt Tender Offers and Repayments
In December 2016, we commenced cash tender offers for our
4.90%
Senior Notes due
2020
, of which
$467.8 million
principal amount was outstanding, our
4.625%
Senior Notes due
2021
, of which
$396.6 million
principal amount was outstanding and our
3.95%
Senior Notes due
2022
, of which
$400.0 million
principal amount was outstanding. On December 28, 2016, we purchased
$762.3 million
of these Senior Notes for
$750.0 million
, plus accrued interest, using a portion of the net proceeds of the
$1.0 billion
Senior Notes due
2024
issuance in December 2016. In December 2016, as a result of this transaction, we recognized a net gain of approximately
$6.7 million
.
In March 2016, we commenced cash tender offers for our
4.90%
Senior Notes due
2020
, of which
$500.0 million
principal amount was outstanding, and our
4.625%
Senior Notes due
2021
, of which
$400.0 million
principal amount was outstanding. On April 1, 2016, we purchased
$36.0 million
of these Senior Notes for
$24.0 million
, plus accrued interest, using cash on hand. In April 2016, as a result of this transaction, we recognized a net gain of approximately
$11.1 million
.
In March 2017, we repaid our maturing
$300.0 million
2.50%
Senior Notes using cash on hand.
We currently anticipate using cash on hand to repay the outstanding principal balance of our
$250.0 million
5.75%
Senior Notes, maturing in March
2018
.
Covenants
The credit facility is guaranteed by NHUS and NHIL. The credit facility contains a covenant that limits our ratio of debt to total tangible capitalization, as defined in the credit facility, to
0.60
. At
June 30, 2017
, our ratio of debt to total tangible capitalization was approximately
0.40
. We were in compliance with all covenants under the credit facility as of
June 30, 2017
.
In addition to the covenants from the credit facility noted above, the indentures governing our outstanding senior unsecured notes contain covenants that place restrictions on certain merger and consolidation transactions, unless we are the surviving entity or the other party assumes the obligations under the indenture, and on the ability to sell or transfer all or substantially all of our assets. In addition, there are restrictions on incurring or assuming certain liens and on entering into sale and lease-back transactions. At
June 30, 2017
, we were in compliance with all of our debt covenants. We continually monitor compliance with the covenants under our notes and expect to remain in compliance during the remainder of
2017
.
Fair Value of Debt
Fair value represents the amount at which an instrument could be exchanged in a current transaction between willing parties. The estimated fair value of our senior notes was based on the quoted market prices for similar issues or on the current rates offered to us for debt of similar remaining maturities (Level 2 measurement). All remaining fair value disclosures are presented in
Note 12— Fair Value of Financial Instruments
.
NOBLE CORPORATION PLC AND SUBSIDIARIES
NOBLE CORPORATION AND SUBSIDIARIES
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unless otherwise indicated, dollar amounts in tables are in thousands, except per share data)
The following table presents the estimated fair value of our total debt, not including the effect of unamortized debt issuance costs, as of
June 30, 2017
and
December 31, 2016
, respectively:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
June 30, 2017
|
|
December 31, 2016
|
|
|
Carrying Value
|
|
Estimated Fair Value
|
|
Carrying Value
|
|
Estimated Fair Value
|
Senior unsecured notes:
|
|
|
|
|
|
|
|
|
2.50% Senior Notes due March 2017
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
299,992
|
|
|
$
|
299,128
|
|
5.75% Senior Notes due March 2018
|
|
249,864
|
|
|
250,682
|
|
|
249,771
|
|
|
249,808
|
|
7.50% Senior Notes due March 2019
|
|
201,695
|
|
|
204,378
|
|
|
201,695
|
|
|
209,524
|
|
4.90% Senior Notes due August 2020
|
|
167,600
|
|
|
153,912
|
|
|
167,576
|
|
|
167,329
|
|
4.625% Senior Notes due March 2021
|
|
208,552
|
|
|
171,182
|
|
|
208,538
|
|
|
196,416
|
|
3.95% Senior Notes due March 2022
|
|
125,503
|
|
|
99,223
|
|
|
125,488
|
|
|
112,791
|
|
7.75% Senior Notes due January 2024
|
|
981,187
|
|
|
793,560
|
|
|
980,117
|
|
|
945,317
|
|
7.70% Senior Notes due April 2025
|
|
448,958
|
|
|
348,899
|
|
|
448,909
|
|
|
423,267
|
|
6.20% Senior Notes due August 2040
|
|
399,899
|
|
|
244,636
|
|
|
399,898
|
|
|
280,221
|
|
6.05% Senior Notes due March 2041
|
|
397,779
|
|
|
236,908
|
|
|
397,758
|
|
|
273,854
|
|
5.25% Senior Notes due March 2042
|
|
498,384
|
|
|
281,715
|
|
|
498,369
|
|
|
325,814
|
|
8.70% Senior Notes due April 2045
|
|
394,636
|
|
|
292,756
|
|
|
394,613
|
|
|
328,608
|
|
Total debt
|
|
$
|
4,074,057
|
|
|
$
|
3,077,851
|
|
|
$
|
4,372,724
|
|
|
$
|
3,812,077
|
|
Note 9— Income Taxes
At
June 30, 2017
, the reserves for uncertain tax positions totaled
$190.3 million
(net of related tax benefits of
$1.0 million
). If the
June 30, 2017
reserves are not realized, the provision for income taxes would be reduced by
$184.1 million
. At
December 31, 2016
, the reserves for uncertain tax positions totaled
$172.5 million
(net of related tax benefits of
$1.0 million
).
It is reasonably possible that our existing liabilities related to our reserve for uncertain tax positions may fluctuate in the next
12 months
primarily due to the completion of open audits or the expiration of statutes of limitation. However, we cannot reasonably estimate a range of changes in our existing liabilities due to various uncertainties, such as the unresolved nature of various audits.
At
June 30, 2017
, our income tax provision included a non-cash, discrete item of
$260.7 million
as the result of an internal tax restructuring, which was implemented to reduce costs associated with the ownership of multiple legal entities, simplify the overall legal entity structure, ease deployment of cash throughout the business and consolidate operations into one centralized group of entities. The effect of this tax restructuring will be to lower current tax expense.
As of
June 30, 2017
, we recorded deferred charges of
$147.5 million
related to the deferral of income tax expense on intercompany asset transfers as a result of our internal tax restructuring. The deferred charges are included in “Other assets” on the accompanying Condensed Consolidated Balance Sheet and are amortized as a component of income tax expense over the remaining life of the underlying assets.
Note 10— Employee Benefit Plans
Pension costs include the following components for the three months ended
June 30, 2017
and
2016
:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended June 30,
|
|
|
2017
|
|
2016
|
|
|
Non-U.S.
|
|
U.S.
|
|
Non-U.S.
|
|
U.S.
|
Service cost
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
799
|
|
|
$
|
1,662
|
|
Interest cost
|
|
492
|
|
|
2,149
|
|
|
641
|
|
|
2,389
|
|
Return on plan assets
|
|
(721
|
)
|
|
(2,941
|
)
|
|
(904
|
)
|
|
(3,097
|
)
|
Amortization of prior service cost
|
|
—
|
|
|
—
|
|
|
27
|
|
|
29
|
|
Recognized net actuarial loss
|
|
245
|
|
|
366
|
|
|
38
|
|
|
1,100
|
|
Net pension benefit cost (gain)
|
|
$
|
16
|
|
|
$
|
(426
|
)
|
|
$
|
601
|
|
|
$
|
2,083
|
|
NOBLE CORPORATION PLC AND SUBSIDIARIES
NOBLE CORPORATION AND SUBSIDIARIES
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unless otherwise indicated, dollar amounts in tables are in thousands, except per share data)
Pension costs include the following components for the
six
months ended
June 30, 2017
and
2016
:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Six Months Ended June 30,
|
|
|
2017
|
|
2016
|
|
|
Non-U.S.
|
|
U.S.
|
|
Non-U.S.
|
|
U.S.
|
Service cost
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
1,574
|
|
|
$
|
3,324
|
|
Interest cost
|
|
970
|
|
|
4,297
|
|
|
1,275
|
|
|
4,778
|
|
Return on plan assets
|
|
(1,422
|
)
|
|
(5,882
|
)
|
|
(1,799
|
)
|
|
(6,194
|
)
|
Amortization of prior service cost
|
|
—
|
|
|
—
|
|
|
53
|
|
|
58
|
|
Recognized net actuarial loss
|
|
511
|
|
|
732
|
|
|
75
|
|
|
2,200
|
|
Net pension benefit cost (gain)
|
|
$
|
59
|
|
|
$
|
(853
|
)
|
|
$
|
1,178
|
|
|
$
|
4,166
|
|
During the second quarter of 2017, we made contributions to our pension plans totaling approximately
$0.2 million
.
During the fourth quarter of 2016, we approved amendments, effective as of
December 31, 2016
, to our non-U.S. and U.S. defined benefit plans. With these amendments, employees and alternate payees will accrue no future benefits under the plans after December 31, 2016. However, these amendments will not affect any benefits earned through that date.
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.
The FCX Settlement included
two
contingent payments, which are further discussed below. We accounted for these contingent payments as derivative instruments 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 a loss in the accompanying Condensed Consolidated Statements of Operations.
For foreign currency forward contracts, hedge effectiveness is evaluated at inception based on the matching of critical terms between derivative contracts and the hedged item. Any change in fair value resulting from ineffectiveness is recognized immediately in earnings.
Cash Flow Hedges
Several of our regional shorebases, including our North Sea operations, have a significant amount of their cash operating expenses payable in local currencies. To limit the potential risk of currency fluctuations, we periodically enter into forward contracts, which settle monthly in the operations’ respective local currencies. All of these contracts have a maturity of less than 12 months. The forward contract settlements in the remainder of
2017
represent approximately
70 percent
of these forecasted local currency requirements. The notional amount of the forward contracts outstanding, expressed in U.S. Dollars, was approximately
$20.6 million
at
June 30, 2017
. Total unrealized gains related to these forward contracts were approximately
$0.7 million
as of
June 30, 2017
and were recorded as part of “Accumulated other comprehensive income (loss)” (“AOCL”).
FCX Settlement
As discussed in
Note 5— Contract Settlement and Termination Agreement with Freeport-McMoRan Inc.
, pursuant to the FCX Settlement, Noble could have received contingent payments from the FCX Settlement on September 30, 2017, depending on the average price of oil over a
12
- month period from June 30, 2016 through June 30, 2017. The average price of oil was calculated using the daily closing price of West Texas Intermediate crude oil (“WTI”) (CL1) on the New York Mercantile Exchange for the period of June 30, 2016 through June 30, 2017. If the price of WTI averaged more than
$50
per barrel during such period, Freeport would have paid
$25.0 million
to Noble. In addition to the
$25.0 million
contingent payment, if the price of WTI averaged more than
$65
per barrel during such period, Freeport would have paid an additional
$50.0 million
to Noble. These contingent payments did not qualify for hedge accounting treatment under FASB standards, and therefore, the change in fair value was recognized as a loss in the accompanying Condensed Consolidated Statements of Operations. These contingent payments are referred to as non-designated derivatives in the following tables.
The price of WTI did not average more than
$50
per barrel during the 12-month period. For the three and
six
months ended
June 30, 2017
, we recognized losses of approximately
$6.5 million
and
$14.4 million
, respectively, in “Contract drilling services revenue,” related to the valuation of these contingent payments. As of
June 30, 2017
, the fair value of these contingent payments was reduced to
zero
, as the period for earning the contingent payments had ended.
NOBLE CORPORATION PLC AND SUBSIDIARIES
NOBLE CORPORATION AND SUBSIDIARIES
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unless otherwise indicated, dollar amounts in tables are in thousands, except per share data)
Financial Statement Presentation
The following table, together with
Note 12— Fair Value of Financial Instruments
, summarizes the financial statement presentation and fair value of our derivative positions as of
June 30, 2017
and
December 31, 2016
:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Estimated fair value
|
|
|
Balance sheet
classification
|
|
June 30,
2017
|
|
December 31,
2016
|
Asset derivatives
|
|
|
|
|
|
|
Cash flow hedges
|
|
|
|
|
|
|
Foreign currency forward contracts
|
|
Prepaid expenses and other current assets
|
|
$
|
739
|
|
|
$
|
—
|
|
Non-designated derivatives
|
|
|
|
|
|
|
FCX Settlement
|
|
Prepaid expenses and other current assets
|
|
$
|
—
|
|
|
$
|
14,400
|
|
To supplement the fair value disclosures in
Note 12— Fair Value of Financial Instruments
, the following table summarizes the recognized gains and losses of cash flow hedges and non-designated derivatives through AOCL or as “contract drilling services” revenue or expense for the three months ended
June 30, 2017
and
2016
:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unrealized gain/(loss) recognized through AOCL
|
|
Gain/(loss) reclassified from AOCL to "contract drilling services" expense
|
|
Gain/(loss) recognized through "contract drilling services" revenue
|
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
Cash flow hedges
|
|
|
|
|
|
|
|
|
|
|
|
|
Foreign currency forward contracts
|
|
$
|
849
|
|
|
$
|
(2,054
|
)
|
|
$
|
210
|
|
|
$
|
290
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Non-designated derivatives
|
|
|
|
|
|
|
|
|
|
|
|
|
FCX Settlement
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
(6,500
|
)
|
|
$
|
17,600
|
|
To supplement the fair value disclosures in
Note 12— Fair Value of Financial Instruments
, the following table summarizes the recognized gains and losses of cash flow hedges and non-designated derivatives through AOCL or as “contract drilling services” revenue or expense for the
six
months ended
June 30, 2017
and
2016
:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unrealized gain/(loss) recognized through AOCL
|
|
Gain/(loss) reclassified from AOCL to "contract drilling services" expense
|
|
Gain/(loss) recognized through "contract drilling services" revenue
|
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
Cash flow hedges
|
|
|
|
|
|
|
|
|
|
|
|
|
Foreign currency forward contracts
|
|
$
|
739
|
|
|
$
|
(1,068
|
)
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
137
|
|
|
$
|
382
|
|
Non-designated derivatives
|
|
|
|
|
|
|
|
|
|
|
|
|
FCX Settlement
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
(14,400
|
)
|
|
$
|
17,600
|
|
Note 12— Fair Value of Financial Instruments
The FASB guidance establishes a fair value hierarchy that distinguishes between assumptions based on market data from independent sources (“observable inputs”) and a reporting entity’s internal assumptions based upon the best information available when external market data is limited or unavailable (“unobservable inputs”). The fair value hierarchy under FASB guidance prioritizes inputs within three levels:
Level 1: Valuations based on quoted prices in active markets for identical assets;
Level 2: Valuations based on observable inputs that do not meet the criteria for Level 1, including quoted prices in inactive markets and quoted prices in active markets for similar but not identical instruments; and
Level 3: Valuations based on unobservable inputs.
NOBLE CORPORATION PLC AND SUBSIDIARIES
NOBLE CORPORATION AND SUBSIDIARIES
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unless otherwise indicated, dollar amounts in tables are in thousands, except per share data)
The following tables present the carrying amount and estimated fair value of our financial instruments recognized at fair value on a recurring basis:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
June 30, 2017
|
|
|
Estimated Fair Value Measurements
|
|
|
Carrying Amount
|
|
Quoted Prices in Active Markets (Level 1)
|
|
Significant Other Observable Inputs(Level 2)
|
|
Significant Unobservable Inputs (Level 3)
|
Assets
-
|
|
|
|
|
|
|
|
|
Marketable securities
|
|
$
|
7,077
|
|
|
$
|
7,077
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Foreign currency forward contracts
|
|
$
|
739
|
|
|
$
|
—
|
|
|
$
|
739
|
|
|
$
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2016
|
|
|
Estimated Fair Value Measurements
|
|
|
Carrying Amount
|
|
Quoted Prices in Active Markets(Level 1)
|
|
Significant Other Observable Inputs(Level 2)
|
|
Significant Unobservable Inputs (Level 3)
|
Assets
-
|
|
|
|
|
|
|
|
|
Marketable securities
|
|
$
|
6,246
|
|
|
$
|
6,246
|
|
|
$
|
—
|
|
|
$
|
—
|
|
FCX Settlement
|
|
$
|
14,400
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
14,400
|
|
Our cash and cash equivalents, accounts receivable, marketable securities and accounts payable are by their nature short-term. As a result, the carrying values included in the accompanying Condensed Consolidated Balance Sheets approximate fair value. The foreign currency forward contracts have been valued using actively quoted prices and quotes obtained from the counterparties to the contracts.
The following table details the activity related to the FCX Settlement asset classified within Level 3 of the valuation hierarchy for the periods indicated:
|
|
|
|
|
|
Balance as of December 31, 2016
|
|
$
|
14,400
|
|
Fair value recognized in earnings
|
|
(7,900
|
)
|
Balance as of March 31, 2017
|
|
$
|
6,500
|
|
Fair value recognized in earnings
|
|
(6,500
|
)
|
Balance as of June 30, 2017
|
|
$
|
—
|
|
NOBLE CORPORATION PLC AND SUBSIDIARIES
NOBLE CORPORATION AND SUBSIDIARIES
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unless otherwise indicated, dollar amounts in tables are in thousands, except per share data)
Note 13— Accumulated Other Comprehensive Income (Loss)
The following table presents the changes in the accumulated balances for each component of AOCL for the
six
months ended
June 30, 2017
and
2016
. All amounts within the tables are shown net of tax.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unrealized Gains /(Losses) on Cash Flow Hedges
(1)
|
|
Defined Benefit Pension Items
(2)
|
|
Foreign Currency Items
|
|
Total
|
Balance at December 31, 2015
|
|
$
|
—
|
|
|
$
|
(46,919
|
)
|
|
$
|
(16,256
|
)
|
|
$
|
(63,175
|
)
|
Activity during period:
|
|
|
|
|
|
|
|
|
Other comprehensive income (loss) before reclassifications
|
|
(1,068
|
)
|
|
—
|
|
|
806
|
|
|
(262
|
)
|
Amounts reclassified from AOCL
|
|
—
|
|
|
1,567
|
|
|
—
|
|
|
1,567
|
|
Net other comprehensive income (loss)
|
|
(1,068
|
)
|
|
1,567
|
|
|
806
|
|
|
1,305
|
|
Balance at June 30, 2016
|
|
$
|
(1,068
|
)
|
|
$
|
(45,352
|
)
|
|
$
|
(15,450
|
)
|
|
$
|
(61,870
|
)
|
Balance at December 31, 2016
|
|
$
|
—
|
|
|
$
|
(35,865
|
)
|
|
$
|
(16,275
|
)
|
|
$
|
(52,140
|
)
|
Activity during period:
|
|
|
|
|
|
|
|
|
Other comprehensive income (loss) before reclassifications
|
|
739
|
|
|
—
|
|
|
280
|
|
|
1,019
|
|
Amounts reclassified from AOCL
|
|
—
|
|
|
767
|
|
|
—
|
|
|
767
|
|
Net other comprehensive income (loss)
|
|
739
|
|
|
767
|
|
|
280
|
|
|
1,786
|
|
Balance at June 30, 2017
|
|
$
|
739
|
|
|
$
|
(35,098
|
)
|
|
$
|
(15,995
|
)
|
|
$
|
(50,354
|
)
|
|
|
(1)
|
Gains/(losses) on cash flow hedges are related to foreign currency forward contracts. Reclassifications from AOCL are recognized through “contract drilling services” expense on our Condensed Consolidated Statements of Operations. See
Note 11— Derivative Instruments and Hedging Activities
for additional information.
|
|
|
(2)
|
Defined benefit pension items relate to actuarial changes and the amortization of prior service costs. Reclassifications from AOCL are recognized as expense on our Condensed Consolidated Statements of Operations through either “Contract drilling services” or “General and administrative.” See
Note 10— Employee Benefit Plans
for additional information.
|
Note 14— Commitments and Contingencies
In January 2017, a subsidiary of Transocean Ltd. ("Transocean") filed suit against us and certain of our subsidiaries for patent infringement in a Texas federal court. The suit claims that
five
of our newbuild rigs that operated in the U.S. Gulf of Mexico violated Transocean patents relating to what is generally referred to as dual-activity drilling. We were aware of the patents when we constructed the rigs, and we do not believe that our rigs infringe the Transocean patents, which are now expired. We intend to defend ourselves vigorously against this claim.
In December 2014, one of our subsidiaries reached a settlement with the U.S. Department of Justice (“DOJ”) regarding our former drillship, the
Noble Discoverer,
and the
Kulluk,
a rig we were providing contract labor services for, in respect of violations of applicable law discovered in connection with a 2012 Coast Guard inspection in Alaska and our own subsequent internal investigation. Under the terms of the agreement, the subsidiary pled guilty to oil record book, ballast record and required hazardous condition reporting violations with respect to the
Noble Discoverer
and an oil record book violation with respect to the
Kulluk
. The subsidiary paid
$8.2 million
in fines and
$4.0 million
in community service payments and was placed on probation for
four years
, provided that we may petition the court for early dismissal of probation after
three years
. If, during the term of probation, the subsidiary fails to adhere to the terms of the plea agreement, the DOJ may withdraw from the plea agreement and would be free to prosecute the subsidiary on all charges arising out of its investigation, including any charges dismissed pursuant to the terms of the plea agreement, as well as potentially other charges. We also implemented a comprehensive environmental compliance plan in connection with the settlement.
We have used a commercial agent in Brazil in connection with our Petróleo Brasileiro S.A. (“Petrobras”) drilling contracts. We understand that this agent has represented a number of different companies in Brazil over many years, including several offshore drilling contractors. In November 2015, this agent pled guilty in Brazil in connection with the award of a drilling contract to a competitor and implicated a Petrobras official as part of a wider investigation of Petrobras’ business practices. Following news reports relating to the agent’s involvement in the Brazil investigation in connection with his activities with other companies, we conducted a review, which is now substantially complete, of our relationship with the agent and with Petrobras. We are in contact with the SEC, the Brazilian federal prosecutor’s office and the DOJ about this matter. We are cooperating with these agencies and they are aware of our internal review. To our knowledge, neither the agent, nor the government authorities investigating the matter, has alleged that the agent or Noble acted improperly in connection with our contracts with Petrobras.
NOBLE CORPORATION PLC AND SUBSIDIARIES
NOBLE CORPORATION AND SUBSIDIARIES
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unless otherwise indicated, dollar amounts in tables are in thousands, except per share data)
In previous periods, we reported the existence of a number of asbestos related lawsuits in which we were one of many defendants. As a result of the termination of the Separation Agreements, we no longer have any indemnity obligations in respect of these lawsuits, and responsibility for the claims has reverted back to Paragon Offshore, the entity that was originally named as a party in the lawsuits.
We are a defendant in certain claims and litigation arising out of operations in the ordinary course of business, including personal injury claims, 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 tax returns filed in those jurisdictions are subject to review and examination by tax authorities within those jurisdictions. We recognize uncertain tax positions that we believe have a greater than
50 percent
likelihood of being sustained. We cannot predict or provide assurance as to the ultimate outcome of any existing or future assessments.
During 2014, the IRS began its examination of our tax reporting in the U.S. for the taxable years ended December 31, 2010 and 2011. The IRS examination team has completed its examination of our 2010 and 2011 U.S. tax returns and proposed adjustments and deficiencies with respect to certain items that were reported by us for the 2010 and 2011 tax year. On December 19, 2016, we received the Revenue Agent Report ("RAR") from the IRS. We believe that we have accurately reported all amounts in our tax returns, and have submitted administrative protests with the IRS Office of Appeals contesting the examination team’s proposed adjustments. We intend to vigorously defend our reported positions, and believe the ultimate resolution of the adjustments proposed by the IRS examination team will not have a material adverse effect on our condensed consolidated financial statements. We have also been informed by the IRS that our 2012 and 2013 tax returns will be examined, and we anticipate that examination will begin during 2017. The IRS examination team also completed its examination of two U.S. subsidiaries of Frontier Drilling for 2011, and proposed no changes to those returns.
On August 1, 2014, Noble-UK completed the Spin-off through a pro rata distribution of all of the ordinary shares of its wholly-owned subsidiary, Paragon Offshore, to the holders of Noble’s ordinary shares.
In February 2016, Paragon Offshore sought approval of the Prior Plan by filing for voluntary relief under Chapter 11 of the United States Bankruptcy Code. As part of the Prior Plan,
we entered into the Settlement Agreement with Paragon Offshore under which, in exchange for a full and unconditional release of any claims by Paragon Offshore in connection with the Spin-off (including fraudulent conveyance claims that could be brought on behalf of Paragon Offshore’s creditors), we agreed to provide certain tax bonding in Mexico as well as assume certain tax liabilities and the administration of Mexican tax claims for specified years.
The bonding to be provided by Noble-UK was a key benefit to Paragon Offshore of the Settlement Agreement, which was subject to bankruptcy court confirmation as part of a bankruptcy plan. The Prior Plan was rejected by the bankruptcy court in October 2016.
In April 2017, Paragon Offshore filed an updated disclosure statement and the revised New Plan in its bankruptcy proceeding. Under the New Plan, including Paragon Offshore
’s
revised business plan, Paragon Offshore no longer needed the Mexican tax bonding that Noble-UK was to provide under the
Settlement Agreement
. As a result, the Settlement Agreement was no longer applicable to the ongoing business of Paragon Offshore. Consequently, Paragon Offshore abandoned the Settlement Agreement as part of the New Plan, and the Settlement Agreement was terminated at the time of the filing of the New Plan. On May 2, 2017, Paragon Offshore announced that it had reached an agreement in principle with both its secured and unsecured creditors to revise the New Plan to, among other things, create and fund a
$10.0 million
litigation trust to pursue litigation against us. On June 7, 2017, the revised New Plan was approved by the bankruptcy court and Paragon Offshore emerged from bankruptcy on
July 18, 2017
.
We expect Paragon Offshore or its creditors will use the litigation trust to pursue claims against us relating to the Spin-off, including alleged fraudulent conveyance claims. We
continue to believe that Paragon Offshore, at the time of the Spin-off, was properly funded, solvent and had appropriate liquidity and that any fraudulent conveyance claim or other claim related to the Spin-off that may be brought by Paragon Offshore or its creditors, would be without merit and would be contested vigorously by us. If litigation is instituted against Noble and we are unsuccessful in defending such claims, it could have a material adverse effect on our financial position, results of operations and/or cash flows.
Prior to the completion of the Spin-off, Noble-UK and Paragon Offshore entered into the Separation Agreements to effect the separation and Spin-off and govern the relationship between the parties after the Spin-off, including the MSA and TSA.
As part of its final bankruptcy plan, Paragon Offshore rejected the Separation Agreements. Accordingly, the indemnity obligations that Paragon Offshore potentially would have owed us under the Separation Agreements have now terminated, including indemnities arising under the MSA and the TSA in respect of obligations related to Paragon Offshore’s business that were incurred through Noble-retained entities prior to the Spin-off. Likewise, any potential indemnity obligations that we would have owed Paragon Offshore under the Separation Agreements, including those under the MSA and the TSA in respect of Noble-UK’s business that was conducted prior to the Spin-off through Paragon Offshore-retained entities, are now also extinguished. In the absence of the Separation Agreements, liabilities relating to the respective parties will be borne by the owner of the legal entity or asset at issue and neither party will look to an allocation based on the historic relationship of an entity or asset to one of the party’s business, as had been the case under the Separation Agreements.
NOBLE CORPORATION PLC AND SUBSIDIARIES
NOBLE CORPORATION AND SUBSIDIARIES
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unless otherwise indicated, dollar amounts in tables are in thousands, except per share data)
The rejection and ultimate termination of the indemnity and related obligations under the Separation Agreements has resulted in a number of accounting charges and benefits in this period and such termination may continue to affect us in the future as liabilities arise for which we would have been indemnified by Paragon Offshore or would have had to indemnify Paragon Offshore. We do not expect that, overall, the rejection of the Separation Agreements by Paragon Offshore will have a material adverse effect on our financial condition or liquidity. However, any loss we experience with respect to which we would have been able to secure indemnification from Paragon Offshore under one or more of the Separation Agreements could have an adverse impact on our results of operations in any period, which impact may be material depending on our results of operations during this down-cycle.
For the
three and six
months ended
June 30, 2017
, we recognized net charges of
$15.9 million
, with a non-cash loss of
$1.5 million
recorded in "Net loss from discontinued operations, net of tax" on our Condensed Consolidated Statement of Operations relating to the emergence from bankruptcy of Paragon Offshore.
In January 2015, Noble received an official notification of a ruling from the Second Chamber of the Supreme Court in Mexico. The ruling settled an ongoing dispute in Mexico relating to the classification of a Noble subsidiary’s business activity and the applicable rate of depreciation under the Mexican law applicable to the activities of that subsidiary. The ruling did not result in any additional tax liability to Noble. Additionally, the ruling is only applicable to the Noble subsidiary named in the ruling and, therefore, does not establish the depreciation rate applicable to the assets of other Noble subsidiaries. We will continue to contest future assessments received, and can make no assurances regarding the ultimate outcome of these tax claims or our obligations to pay additional taxes in respect of these tax claims.
In previous periods, we reported that Mexican and Brazilian authorities had made significant tax assessments against Paragon Offshore entities, of which approximately
$45.5 million
and
$46.5 million
, respectively, related to Noble’s business that operated through Paragon Offshore-retained entities in Mexico and Brazil prior to the spin-off. As a result of the termination of the Separation Agreements, we no longer have any indemnity obligations in respect of these tax claims made against Paragon Offshore entities, and responsibility for these claims has reverted back to the applicable Paragon Offshore entity. Audit claims of approximately
$51.3 million
attributable to income and other business taxes have been assessed against Noble entities in Mexico.
In previous periods, we also reported that Petrobras had notified us that it was challenging assessments by Brazilian tax authorities of withholding taxes associated with the provision of drilling rigs for its operations in Brazil during 2008 and 2009. Petrobras had also notified us that if Petrobras was ultimately forced to pay such withholding taxes, it would seek reimbursement from Paragon Offshore who would then seek reimbursement from us for the portion of the
$23.9 million
in withholding that was allocable to our drilling rigs. As a result of the termination of the Separation Agreements, we no longer have any indemnity obligation in respect of these withholding claims made against a Paragon Offshore entity, and responsibility for these claims has reverted back to the applicable Paragon Offshore entity.
We maintain certain insurance coverage against specified marine perils, which includes physical damage and loss of hire to our drilling rigs along with other associated coverage common in our industry. We maintain a physical damage deductible on our rigs of
$25.0 million
per occurrence. With respect to the U.S. Gulf of Mexico, hurricane risk has generally resulted in more restrictive and expensive coverage for U.S. named windstorm perils, and we have opted in certain years to maintain limited or no windstorm coverage. Our current program provides for
$500.0 million
in named windstorm coverage in the U.S. Gulf of Mexico. 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, strikes or cyber risks. If a significant accident or other event occurs and is not fully covered by insurance or contractual indemnity, it could materially adversely affect our financial position, results of operations or cash flows. Additionally, there can be no assurance that those parties with contractual obligations to indemnify us will necessarily be financially able to indemnify us against all these risks.
We carry protection and indemnity insurance covering marine third party liability exposures, which also includes coverage for employer’s liability resulting from personal injury to our offshore drilling crews. Our protection and indemnity policy currently has a standard deductible of
$10.0 million
per occurrence, with maximum liability coverage of
$750.0 million
.
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-UK (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 PLC AND SUBSIDIARIES
NOBLE CORPORATION AND SUBSIDIARIES
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unless otherwise indicated, dollar amounts in tables are in thousands, except per share data)
Note 15— Accounting Pronouncements
In May 2014, the FASB issued ASU No. 2014-9, which creates Accounting Standards Codification (“ASC”) Topic 606, “Revenue from Contracts with Customers,” and supersedes the revenue recognition requirements in Topic 605, “Revenue Recognition,” including most industry-specific revenue recognition guidance throughout the Industry Topics of the Codification. In addition, ASU No. 2014-9 supersedes the cost guidance in Subtopic 605-35, “Revenue Recognition—Construction-Type and Production-Type Contracts,” and creates new Subtopic 340-40, “Other Assets and Deferred Costs—Contracts with Customers.” In summary, the core principle of Topic 606 is to recognize revenue when promised goods or services are transferred to customers in an amount that reflects the consideration that is expected to be received for those goods or services. The amendments in ASU No. 2014-9 are effective for annual reporting periods beginning after December 15, 2017, including interim periods within that reporting period, and early application is permitted for periods beginning after December 15, 2016. We have formed an implementation work team, completed training on ASC Topic 606 and have begun a project to review relevant contracts.
We plan on adopting the new standard effective January 1, 2018 concurrently with ASU No. 2016-2, Leases (ASC Topic 842) as discussed below and applying it retrospectively to all comparative periods presented. Upon adoption of these two new standards, we expect to have a lease component and a service component of revenue related to our drilling contracts.
In February 2016, the FASB issued ASU No. 2016-2, which creates ASC Topic 842, “Leases.” This update increases transparency and comparability among organizations by recognizing lease assets and lease liabilities on the balance sheet and disclosing key information about leasing arrangements. This guidance is effective for interim and annual reporting periods beginning after December 15, 2018. Under the updated accounting standards, we have preliminarily determined that our drilling contracts contain a lease component, and our adoption, therefore, will require that we separately recognize revenues associated with the lease and services components. Our adoption, and the ultimate effect on our condensed consolidated financial statements, will be based on an evaluation of the contract-specific facts and circumstances. Due to the interaction with the issued accounting standard on revenue recognition, we expect to adopt ASC 842 effective January 1, 2018, concurrently with ASC 606. We expect to apply the modified retrospective approach to our adoption. Our adoption will have an impact on how our condensed consolidated financial statements and related disclosures will be presented. We are currently evaluating the impact ASC 842 will have on our condensed consolidated financial statements, and to complete that evaluation we have completed training on the ASU, formed an implementation team and started the review and documentation of contracts.
In March 2016, the FASB issued ASU No. 2016-9, which amends ASC Topic 718, “Compensation – Stock Compensation.” This amendment simplifies several aspects of the accounting for share-based payment transactions, including the income tax consequences, classification of awards as either equity or liabilities and classification on the statement of cash flows. This guidance is effective for interim and annual reporting periods beginning after December 15, 2016. Under the new provision, current period excess tax benefits related to stock compensation are now recognized in our Condensed Consolidated Statement of Operations in “Provision for income taxes,” rather than on our Condensed Consolidated Balance Sheet and Condensed Consolidated Statement of Cash Flows. This update has been applied on a prospective basis. Changes to our Condensed Consolidated Statement of Cash Flows related to the reclassification of prior period excess tax benefits and employee taxes paid for share-based payment arrangements have been implemented on a retrospective basis. In accordance with our adoption of this update, prior period excess tax benefits of approximately
$5.5 million
, previously classified as a financing activity in “Employee stock transactions” on the
June 30, 2016
Condensed Consolidated Statement of Cash Flows, are now classified as an operating activity in “Net change in other assets and liabilities” on the accompanying Condensed Consolidated Statement of Cash Flows for the comparative period. Additionally, prior period employee taxes paid for share-based payment arrangements of approximately
$3.2 million
, previously classified as an operating activity in “Net change in other assets and liabilities” on the
June 30, 2016
Condensed Consolidated Statement of Cash Flows, are now classified as a financing activity in “Employee stock transactions” on the accompanying Condensed Consolidated Statement of Cash Flows for the comparative period.
In October 2016, the FASB issued ASU No. 2016-16 which amends ASC Topic 740, “Income Taxes.” The amendments in this update improve the accounting for the income tax consequences of intra-entity transfers of assets other than inventory. This guidance is effective for interim and annual reporting periods beginning after December 15, 2017. We are evaluating what impact, if any, the adoption of this guidance will have on our financial condition, results of operations, cash flows or financial disclosures.
With the exception of the updated standards discussed above, there have been no new accounting pronouncements not yet effective that have significance, or potential significance, to our condensed consolidated financial statements.
Note 16— Supplemental Financial Information
Condensed Consolidated Balance Sheets Information
Deferred revenues from drilling contracts totaled
$122.8 million
and
$134.4 million
at
June 30, 2017
and
December 31, 2016
, respectively. Such amounts are included in either “Other current liabilities” or “Other liabilities” in the accompanying Condensed Consolidated Balance Sheets, based upon our expected time of recognition. Related expenses deferred under drilling contracts totaled
$47.3 million
at
June 30, 2017
as compared
NOBLE CORPORATION PLC AND SUBSIDIARIES
NOBLE CORPORATION AND SUBSIDIARIES
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unless otherwise indicated, dollar amounts in tables are in thousands, except per share data)
to
$53.8 million
at
December 31, 2016
, and are included in either “Prepaid expenses and other current assets” or “Other assets” in the accompanying Condensed Consolidated Balance Sheets, based upon our expected time of recognition.
In April 2015, we agreed to contract dayrate reductions for
five
rigs working for Saudi Arabian Oil Company (“Saudi Aramco”), which were effective from January 1, 2015 through December 31, 2015. During the first quarter of 2016, we agreed to further contract dayrate reductions for the remaining
four
contracted rigs through the end of 2016. Given current market conditions and based on discussions with the customer, we do not expect the rates to return to the original contract rates. In accordance with accounting guidance, we are recognizing the reductions on a straight-line basis over the remaining life of the existing Saudi Aramco contracts. At
June 30, 2017
and
December 31, 2016
, revenues recorded in excess of billings as a result of this recognition totaled
$15.1 million
and
$17.9 million
, respectively, and are included in either “Prepaid expenses and other current assets” or “Other assets” in the accompanying Condensed Consolidated Balance Sheets, based upon our expected time of recognition.
Condensed Consolidated Statements of Cash Flows Information
The net effect of changes in other assets and liabilities on cash flows from operating activities is as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Noble-UK
|
|
Noble-Cayman
|
|
|
Six Months Ended June 30,
|
|
Six Months Ended June 30,
|
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
Accounts receivable
|
|
$
|
76,495
|
|
|
$
|
147,454
|
|
|
$
|
76,495
|
|
|
$
|
147,454
|
|
Other current assets
|
|
15,896
|
|
|
75,949
|
|
|
12,475
|
|
|
73,543
|
|
Other assets
|
|
(40,078
|
)
|
|
104,416
|
|
|
(47,166
|
)
|
|
102,335
|
|
Accounts payable
|
|
(8,881
|
)
|
|
(50,663
|
)
|
|
(8,754
|
)
|
|
(48,719
|
)
|
Other current liabilities
|
|
(19,385
|
)
|
|
(74,247
|
)
|
|
(18,293
|
)
|
|
(67,843
|
)
|
Other liabilities
|
|
6,703
|
|
|
(38,590
|
)
|
|
13,547
|
|
|
(39,933
|
)
|
|
|
$
|
30,750
|
|
|
$
|
164,319
|
|
|
$
|
28,304
|
|
|
$
|
166,837
|
|
In accordance with our adoption of ASU No. 2016-9, prior period excess tax benefits, which were previously classified as a financing activity in “Employee stock transactions,” are now classified as an operating activity in “Net change in other assets and liabilities” on our Condensed Consolidated Statement of Cash Flows and current period excess tax benefits are now recognized in our Condensed Consolidated Statement of Operations through income taxes. Additionally, shares withheld for taxes on employee stock transactions, which were previously classified as an operating activity in “Net change in other assets and liabilities,” are now classified as a financing activity in “Employee stock transactions” on our Condensed Consolidated Statement of Cash Flows.
NOBLE CORPORATION PLC AND SUBSIDIARIES
NOBLE CORPORATION AND SUBSIDIARIES
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unless otherwise indicated, dollar amounts in tables are in thousands, except per share data)
Note 17— Condensed Consolidating Financial Information
Guarantees of Registered Securities
Noble-Cayman, or one or more 100 percent owned subsidiaries of Noble-Cayman, is a co-issuer or full and unconditional guarantor or otherwise obligated as of
June 30, 2017
as follows:
|
|
|
|
|
|
|
|
Issuer
|
|
|
Notes
|
|
(Co-Issuer(s))
|
|
Guarantor
|
$250 million 5.75% Senior Notes due 2018
|
|
NHIL
|
|
Noble-Cayman
|
$202 million 7.50% Senior Notes due 2019
|
|
NHUS
|
|
Noble-Cayman
|
|
|
Noble Drilling Holding, LLC ("NDH")
|
|
|
|
|
Noble Drilling Services 6 LLC ("NDS6")
|
|
|
$168 million 4.90% Senior Notes due 2020
|
|
NHIL
|
|
Noble-Cayman
|
$209 million 4.625% Senior Notes due 2021
|
|
NHIL
|
|
Noble-Cayman
|
$126 million 3.95% Senior Notes due 2022
|
|
NHIL
|
|
Noble-Cayman
|
$1 billion 7.75% Senior Notes due 2024
|
|
NHIL
|
|
Noble-Cayman
|
$450 million 7.70% Senior Notes due 2025
|
|
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
|
$400 million 8.70% Senior Notes due 2045
|
|
NHIL
|
|
Noble-Cayman
|
The following condensed consolidating financial statements of Noble-Cayman, NHUS, NDH, NHIL, NDS6 and all other subsidiaries present investments in both consolidated and unconsolidated affiliates using the equity method of accounting.
NOBLE CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATING BALANCE SHEET
June 30, 2017
(in thousands)
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Noble -
Cayman
|
|
NHUS
|
|
NDH
|
|
NHIL
|
|
NDS6
|
|
Other
Non-guarantor
Subsidiaries
of Noble
|
|
Consolidating
Adjustments
|
|
Total
|
ASSETS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current assets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
$
|
14
|
|
|
$
|
—
|
|
|
$
|
119
|
|
|
$
|
367
|
|
|
$
|
—
|
|
|
$
|
601,678
|
|
|
$
|
—
|
|
|
$
|
602,178
|
|
Accounts receivable
|
|
—
|
|
|
—
|
|
|
31,008
|
|
|
—
|
|
|
—
|
|
|
211,649
|
|
|
—
|
|
|
242,657
|
|
Taxes receivable
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
18,169
|
|
|
—
|
|
|
18,169
|
|
Short-term notes receivable from affiliates
|
|
—
|
|
|
—
|
|
|
119,476
|
|
|
—
|
|
|
2,373,452
|
|
|
—
|
|
|
(2,492,928
|
)
|
|
—
|
|
Accounts receivable from affiliates
|
|
619,661
|
|
|
92,349
|
|
|
149,005
|
|
|
60,944
|
|
|
357,957
|
|
|
5,824,879
|
|
|
(7,104,795
|
)
|
|
—
|
|
Prepaid expenses and other current assets
|
|
96
|
|
|
—
|
|
|
1,040
|
|
|
49
|
|
|
1
|
|
|
73,014
|
|
|
—
|
|
|
74,200
|
|
Total current assets
|
|
619,771
|
|
|
92,349
|
|
|
300,648
|
|
|
61,360
|
|
|
2,731,410
|
|
|
6,729,389
|
|
|
(9,597,723
|
)
|
|
937,204
|
|
Property and equipment, at cost
|
|
—
|
|
|
—
|
|
|
1,070,746
|
|
|
—
|
|
|
—
|
|
|
11,340,111
|
|
|
—
|
|
|
12,410,857
|
|
Accumulated depreciation
|
|
—
|
|
|
—
|
|
|
(246,631
|
)
|
|
—
|
|
|
—
|
|
|
(2,325,931
|
)
|
|
—
|
|
|
(2,572,562
|
)
|
Property and equipment, net
|
|
—
|
|
|
—
|
|
|
824,115
|
|
|
—
|
|
|
—
|
|
|
9,014,180
|
|
|
—
|
|
|
9,838,295
|
|
Notes receivable from affiliates
|
|
3,177,248
|
|
|
—
|
|
|
1,053,783
|
|
|
—
|
|
|
3,943,299
|
|
|
1,171,304
|
|
|
(9,345,634
|
)
|
|
—
|
|
Investments in affiliates
|
|
5,029,983
|
|
|
3,179,576
|
|
|
4,698,262
|
|
|
12,517,083
|
|
|
7,275,866
|
|
|
—
|
|
|
(32,700,770
|
)
|
|
—
|
|
Other assets
|
|
3,462
|
|
|
16,775
|
|
|
6,419
|
|
|
—
|
|
|
—
|
|
|
222,138
|
|
|
—
|
|
|
248,794
|
|
Total assets
|
|
$
|
8,830,464
|
|
|
$
|
3,288,700
|
|
|
$
|
6,883,227
|
|
|
$
|
12,578,443
|
|
|
$
|
13,950,575
|
|
|
$
|
17,137,011
|
|
|
$
|
(51,644,127
|
)
|
|
$
|
11,024,293
|
|
LIABILITIES AND EQUITY
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current liabilities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Short-term notes payables to affiliates
|
|
$
|
—
|
|
|
$
|
1,605,243
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
887,685
|
|
|
$
|
(2,492,928
|
)
|
|
$
|
—
|
|
Current maturities of long-term debt
|
|
—
|
|
|
—
|
|
|
—
|
|
|
249,475
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
249,475
|
|
Accounts payable
|
|
—
|
|
|
—
|
|
|
2,856
|
|
|
—
|
|
|
—
|
|
|
83,558
|
|
|
—
|
|
|
86,414
|
|
Accrued payroll and related costs
|
|
—
|
|
|
—
|
|
|
4,848
|
|
|
—
|
|
|
—
|
|
|
33,492
|
|
|
—
|
|
|
38,340
|
|
Accounts payable to affiliates
|
|
3,434,157
|
|
|
456,573
|
|
|
1,857,871
|
|
|
404,332
|
|
|
—
|
|
|
951,862
|
|
|
(7,104,795
|
)
|
|
—
|
|
Taxes payable
|
|
—
|
|
|
41,361
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
47,951
|
|
|
—
|
|
|
89,312
|
|
Interest payable
|
|
24
|
|
|
—
|
|
|
—
|
|
|
95,184
|
|
|
4,454
|
|
|
—
|
|
|
—
|
|
|
99,662
|
|
Other current liabilities
|
|
16
|
|
|
—
|
|
|
945
|
|
|
—
|
|
|
—
|
|
|
83,517
|
|
|
—
|
|
|
84,478
|
|
Total current liabilities
|
|
3,434,197
|
|
|
2,103,177
|
|
|
1,866,520
|
|
|
748,991
|
|
|
4,454
|
|
|
2,088,065
|
|
|
(9,597,723
|
)
|
|
647,681
|
|
Long-term debt
|
|
—
|
|
|
—
|
|
|
—
|
|
|
3,592,411
|
|
|
201,483
|
|
|
—
|
|
|
—
|
|
|
3,793,894
|
|
Notes payable to affiliates
|
|
—
|
|
|
700,000
|
|
|
470,643
|
|
|
3,175,662
|
|
|
—
|
|
|
4,999,329
|
|
|
(9,345,634
|
)
|
|
—
|
|
Deferred income taxes
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
212,526
|
|
|
—
|
|
|
212,526
|
|
Other liabilities
|
|
19,929
|
|
|
—
|
|
|
11,010
|
|
|
—
|
|
|
—
|
|
|
266,867
|
|
|
—
|
|
|
297,806
|
|
Total liabilities
|
|
3,454,126
|
|
|
2,803,177
|
|
|
2,348,173
|
|
|
7,517,064
|
|
|
205,937
|
|
|
7,566,787
|
|
|
(18,943,357
|
)
|
|
4,951,907
|
|
Commitments and contingencies
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total shareholder equity
|
|
5,376,338
|
|
|
485,523
|
|
|
4,535,054
|
|
|
5,061,379
|
|
|
13,744,638
|
|
|
8,471,145
|
|
|
(32,297,739
|
)
|
|
5,376,338
|
|
Noncontrolling interests
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1,099,079
|
|
|
(403,031
|
)
|
|
696,048
|
|
Total equity
|
|
5,376,338
|
|
|
485,523
|
|
|
4,535,054
|
|
|
5,061,379
|
|
|
13,744,638
|
|
|
9,570,224
|
|
|
(32,700,770
|
)
|
|
6,072,386
|
|
Total liabilities and equity
|
|
$
|
8,830,464
|
|
|
$
|
3,288,700
|
|
|
$
|
6,883,227
|
|
|
$
|
12,578,443
|
|
|
$
|
13,950,575
|
|
|
$
|
17,137,011
|
|
|
$
|
(51,644,127
|
)
|
|
$
|
11,024,293
|
|
NOBLE CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATING BALANCE SHEET
December 31, 2016
(in thousands)
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Noble-
Cayman
|
|
NHUS
|
|
NDH
|
|
NHIL
|
|
NDS6
|
|
Other
Non-guarantor
Subsidiaries
of Noble
|
|
Consolidating
Adjustments
|
|
Total
|
ASSETS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current assets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
$
|
2,537
|
|
|
$
|
—
|
|
|
$
|
10,855
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
640,441
|
|
|
$
|
—
|
|
|
$
|
653,833
|
|
Accounts receivable
|
|
—
|
|
|
—
|
|
|
33,162
|
|
|
—
|
|
|
—
|
|
|
285,990
|
|
|
—
|
|
|
319,152
|
|
Taxes receivable
|
|
—
|
|
|
21,428
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
34,052
|
|
|
—
|
|
|
55,480
|
|
Short-term notes receivable from affiliates
|
|
—
|
|
|
—
|
|
|
243,915
|
|
|
—
|
|
|
1,349,708
|
|
|
52,611
|
|
|
(1,646,234
|
)
|
|
—
|
|
Accounts receivable from affiliates
|
|
361,313
|
|
|
—
|
|
|
137,476
|
|
|
67,560
|
|
|
85,274
|
|
|
3,038,658
|
|
|
(3,690,281
|
)
|
|
—
|
|
Prepaid expenses and other current assets
|
|
270
|
|
|
—
|
|
|
1,611
|
|
|
—
|
|
|
—
|
|
|
86,868
|
|
|
—
|
|
|
88,749
|
|
Total current assets
|
|
364,120
|
|
|
21,428
|
|
|
427,019
|
|
|
67,560
|
|
|
1,434,982
|
|
|
4,138,620
|
|
|
(5,336,515
|
)
|
|
1,117,214
|
|
Property and equipment, at cost
|
|
—
|
|
|
—
|
|
|
2,376,862
|
|
|
—
|
|
|
—
|
|
|
9,988,026
|
|
|
—
|
|
|
12,364,888
|
|
Accumulated depreciation
|
|
—
|
|
|
—
|
|
|
(428,308
|
)
|
|
—
|
|
|
—
|
|
|
(1,874,632
|
)
|
|
—
|
|
|
(2,302,940
|
)
|
Property and equipment, net
|
|
—
|
|
|
—
|
|
|
1,948,554
|
|
|
—
|
|
|
—
|
|
|
8,113,394
|
|
|
—
|
|
|
10,061,948
|
|
Notes receivable from affiliates
|
|
3,304,672
|
|
|
—
|
|
|
112,706
|
|
|
69,564
|
|
|
5,000
|
|
|
1,798,614
|
|
|
(5,290,556
|
)
|
|
—
|
|
Investments in affiliates
|
|
2,848,855
|
|
|
2,007,016
|
|
|
1,411,874
|
|
|
8,369,728
|
|
|
6,129,082
|
|
|
—
|
|
|
(20,766,555
|
)
|
|
—
|
|
Other assets
|
|
4,292
|
|
|
—
|
|
|
5,687
|
|
|
—
|
|
|
—
|
|
|
168,573
|
|
|
—
|
|
|
178,552
|
|
Total assets
|
|
$
|
6,521,939
|
|
|
$
|
2,028,444
|
|
|
$
|
3,905,840
|
|
|
$
|
8,506,852
|
|
|
$
|
7,569,064
|
|
|
$
|
14,219,201
|
|
|
$
|
(31,393,626
|
)
|
|
$
|
11,357,714
|
|
LIABILITIES AND EQUITY
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current liabilities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Short-term notes payables to affiliates
|
|
$
|
—
|
|
|
$
|
171,925
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
1,474,309
|
|
|
$
|
(1,646,234
|
)
|
|
$
|
—
|
|
Current maturities of long-term debt
|
|
—
|
|
|
—
|
|
|
—
|
|
|
299,882
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
299,882
|
|
Accounts payable
|
|
—
|
|
|
—
|
|
|
4,228
|
|
|
—
|
|
|
—
|
|
|
103,640
|
|
|
—
|
|
|
107,868
|
|
Accrued payroll and related costs
|
|
—
|
|
|
—
|
|
|
4,882
|
|
|
—
|
|
|
—
|
|
|
43,437
|
|
|
—
|
|
|
48,319
|
|
Accounts payable to affiliates
|
|
818,737
|
|
|
111,801
|
|
|
1,995,788
|
|
|
123,642
|
|
|
—
|
|
|
640,313
|
|
|
(3,690,281
|
)
|
|
—
|
|
Taxes payable
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
46,561
|
|
|
—
|
|
|
46,561
|
|
Interest payable
|
|
48
|
|
|
—
|
|
|
—
|
|
|
56,839
|
|
|
4,412
|
|
|
—
|
|
|
—
|
|
|
61,299
|
|
Other current liabilities
|
|
12
|
|
|
—
|
|
|
4,296
|
|
|
—
|
|
|
—
|
|
|
63,004
|
|
|
—
|
|
|
67,312
|
|
Total current liabilities
|
|
818,797
|
|
|
283,726
|
|
|
2,009,194
|
|
|
480,363
|
|
|
4,412
|
|
|
2,371,264
|
|
|
(5,336,515
|
)
|
|
631,241
|
|
Long-term debt
|
|
—
|
|
|
—
|
|
|
—
|
|
|
3,838,807
|
|
|
201,422
|
|
|
—
|
|
|
—
|
|
|
4,040,229
|
|
Notes payable to affiliates
|
|
—
|
|
|
700,000
|
|
|
467,139
|
|
|
744,181
|
|
|
—
|
|
|
3,379,236
|
|
|
(5,290,556
|
)
|
|
—
|
|
Deferred income taxes
|
|
—
|
|
|
—
|
|
|
534
|
|
|
—
|
|
|
—
|
|
|
1,550
|
|
|
—
|
|
|
2,084
|
|
Other liabilities
|
|
19,929
|
|
|
—
|
|
|
24,035
|
|
|
—
|
|
|
—
|
|
|
248,219
|
|
|
—
|
|
|
292,183
|
|
Total liabilities
|
|
838,726
|
|
|
983,726
|
|
|
2,500,902
|
|
|
5,063,351
|
|
|
205,834
|
|
|
6,000,269
|
|
|
(10,627,071
|
)
|
|
4,965,737
|
|
Commitments and contingencies
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total shareholder equity
|
|
5,683,213
|
|
|
1,044,718
|
|
|
1,404,938
|
|
|
3,443,501
|
|
|
7,363,230
|
|
|
7,106,323
|
|
|
(20,362,710
|
)
|
|
5,683,213
|
|
Noncontrolling interests
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1,112,609
|
|
|
(403,845
|
)
|
|
708,764
|
|
Total equity
|
|
5,683,213
|
|
|
1,044,718
|
|
|
1,404,938
|
|
|
3,443,501
|
|
|
7,363,230
|
|
|
8,218,932
|
|
|
(20,766,555
|
)
|
|
6,391,977
|
|
Total liabilities and equity
|
|
$
|
6,521,939
|
|
|
$
|
2,028,444
|
|
|
$
|
3,905,840
|
|
|
$
|
8,506,852
|
|
|
$
|
7,569,064
|
|
|
$
|
14,219,201
|
|
|
$
|
(31,393,626
|
)
|
|
$
|
11,357,714
|
|
NOBLE CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS and COMPREHENSIVE INCOME (LOSS)
Three Months Ended
June 30, 2017
(in thousands)
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Noble-
Cayman
|
|
NHUS
|
|
NDH
|
|
NHIL
|
|
NDS6
|
|
Other
Non-guarantor
Subsidiaries
of Noble
|
|
Consolidating
Adjustments
|
|
Total
|
Operating revenues
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Contract drilling services
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
39,988
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
241,488
|
|
|
$
|
(9,944
|
)
|
|
$
|
271,532
|
|
Reimbursables
|
|
—
|
|
|
—
|
|
|
892
|
|
|
—
|
|
|
—
|
|
|
5,707
|
|
|
—
|
|
|
6,599
|
|
Other
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
11
|
|
|
—
|
|
|
11
|
|
Total operating revenues
|
|
—
|
|
|
—
|
|
|
40,880
|
|
|
—
|
|
|
—
|
|
|
247,206
|
|
|
(9,944
|
)
|
|
278,142
|
|
Operating costs and expenses
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Contract drilling services
|
|
(866
|
)
|
|
3,362
|
|
|
12,687
|
|
|
(10,834
|
)
|
|
—
|
|
|
167,452
|
|
|
(9,944
|
)
|
|
161,857
|
|
Reimbursables
|
|
—
|
|
|
—
|
|
|
472
|
|
|
—
|
|
|
—
|
|
|
3,922
|
|
|
—
|
|
|
4,394
|
|
Depreciation and amortization
|
|
—
|
|
|
—
|
|
|
14,005
|
|
|
—
|
|
|
—
|
|
|
120,628
|
|
|
—
|
|
|
134,633
|
|
General and administrative
|
|
(442
|
)
|
|
1,538
|
|
|
—
|
|
|
(5,941
|
)
|
|
5
|
|
|
18,071
|
|
|
—
|
|
|
13,231
|
|
Total operating costs and expenses
|
|
(1,308
|
)
|
|
4,900
|
|
|
27,164
|
|
|
(16,775
|
)
|
|
5
|
|
|
310,073
|
|
|
(9,944
|
)
|
|
314,115
|
|
Operating income (loss)
|
|
1,308
|
|
|
(4,900
|
)
|
|
13,716
|
|
|
16,775
|
|
|
(5
|
)
|
|
(62,867
|
)
|
|
—
|
|
|
(35,973
|
)
|
Other income (expense)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) of unconsolidated affiliates
|
|
(85,274
|
)
|
|
(99,354
|
)
|
|
39,114
|
|
|
48,476
|
|
|
5,647
|
|
|
—
|
|
|
91,391
|
|
|
—
|
|
Income (loss) of unconsolidated affiliates - discontinued operations, net of tax
|
|
2,967
|
|
|
4,566
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(7,533
|
)
|
|
—
|
|
Interest income (expense), net of amounts capitalized
|
|
(2,578
|
)
|
|
(6,345
|
)
|
|
(3,291
|
)
|
|
(107,686
|
)
|
|
(3,854
|
)
|
|
(23,134
|
)
|
|
73,679
|
|
|
(73,209
|
)
|
Interest income and other, net
|
|
2,646
|
|
|
(26
|
)
|
|
14,309
|
|
|
720
|
|
|
53,560
|
|
|
5,198
|
|
|
(73,679
|
)
|
|
2,728
|
|
Income (loss) from continuing operations before income taxes
|
|
(80,931
|
)
|
|
(106,059
|
)
|
|
63,848
|
|
|
(41,715
|
)
|
|
55,348
|
|
|
(80,803
|
)
|
|
83,858
|
|
|
(106,454
|
)
|
Income tax benefit (provision)
|
|
—
|
|
|
66,127
|
|
|
(835
|
)
|
|
—
|
|
|
—
|
|
|
(47,079
|
)
|
|
—
|
|
|
18,213
|
|
Net income (loss) from continuing operations
|
|
(80,931
|
)
|
|
(39,932
|
)
|
|
63,013
|
|
|
(41,715
|
)
|
|
55,348
|
|
|
(127,882
|
)
|
|
83,858
|
|
|
(88,241
|
)
|
Net income (loss) from discontinuing operations, net of tax
|
|
—
|
|
|
(1,598
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
4,565
|
|
|
—
|
|
|
2,967
|
|
Net Income (loss)
|
|
(80,931
|
)
|
|
(41,530
|
)
|
|
63,013
|
|
|
(41,715
|
)
|
|
55,348
|
|
|
(123,317
|
)
|
|
83,858
|
|
|
(85,274
|
)
|
Net (income) loss attributable to noncontrolling interests
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
4,821
|
|
|
(478
|
)
|
|
4,343
|
|
Net income (loss) attributable to Noble Corporation
|
|
(80,931
|
)
|
|
(41,530
|
)
|
|
63,013
|
|
|
(41,715
|
)
|
|
55,348
|
|
|
(118,496
|
)
|
|
83,380
|
|
|
(80,931
|
)
|
Other comprehensive income (loss), net
|
|
1,318
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1,318
|
|
|
(1,318
|
)
|
|
1,318
|
|
Comprehensive income (loss) attributable to Noble Corporation
|
|
$
|
(79,613
|
)
|
|
$
|
(41,530
|
)
|
|
$
|
63,013
|
|
|
$
|
(41,715
|
)
|
|
$
|
55,348
|
|
|
$
|
(117,178
|
)
|
|
$
|
82,062
|
|
|
$
|
(79,613
|
)
|
NOBLE CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS and COMPREHENSIVE INCOME (LOSS)
Six Months Ended
June 30, 2017
(in thousands)
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Noble-
Cayman
|
|
NHUS
|
|
NDH
|
|
NHIL
|
|
NDS6
|
|
Other
Non-guarantor
Subsidiaries
of Noble
|
|
Consolidating
Adjustments
|
|
Total
|
Operating revenues
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Contract drilling services
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
87,092
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
566,212
|
|
|
$
|
(27,113
|
)
|
|
$
|
626,191
|
|
Reimbursables
|
|
—
|
|
|
—
|
|
|
2,028
|
|
|
—
|
|
|
—
|
|
|
12,875
|
|
|
—
|
|
|
14,903
|
|
Other
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
24
|
|
|
—
|
|
|
24
|
|
Total operating revenues
|
|
—
|
|
|
—
|
|
|
89,120
|
|
|
—
|
|
|
—
|
|
|
579,111
|
|
|
(27,113
|
)
|
|
641,118
|
|
Operating costs and expenses
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Contract drilling services
|
|
135
|
|
|
5,933
|
|
|
24,186
|
|
|
1,653
|
|
|
—
|
|
|
317,079
|
|
|
(27,113
|
)
|
|
321,873
|
|
Reimbursables
|
|
—
|
|
|
—
|
|
|
1,292
|
|
|
—
|
|
|
—
|
|
|
8,248
|
|
|
—
|
|
|
9,540
|
|
Depreciation and amortization
|
|
—
|
|
|
—
|
|
|
30,520
|
|
|
—
|
|
|
—
|
|
|
239,831
|
|
|
—
|
|
|
270,351
|
|
General and administrative
|
|
71
|
|
|
2,845
|
|
|
—
|
|
|
892
|
|
|
9
|
|
|
18,478
|
|
|
—
|
|
|
22,295
|
|
Total operating costs and expenses
|
|
206
|
|
|
8,778
|
|
|
55,998
|
|
|
2,545
|
|
|
9
|
|
|
583,636
|
|
|
(27,113
|
)
|
|
624,059
|
|
Operating income (loss)
|
|
(206
|
)
|
|
(8,778
|
)
|
|
33,122
|
|
|
(2,545
|
)
|
|
(9
|
)
|
|
(4,525
|
)
|
|
—
|
|
|
17,059
|
|
Other income (expense)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) of unconsolidated affiliates
|
|
(380,376
|
)
|
|
(412,919
|
)
|
|
41,483
|
|
|
145,293
|
|
|
56,266
|
|
|
—
|
|
|
550,253
|
|
|
—
|
|
Income (loss) of unconsolidated affiliates - discontinued operations, net of tax
|
|
2,967
|
|
|
4,566
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(7,533
|
)
|
|
—
|
|
Interest income (expense), net of amounts capitalized
|
|
(5,183
|
)
|
|
(23,856
|
)
|
|
(6,383
|
)
|
|
(213,688
|
)
|
|
(7,671
|
)
|
|
(80,447
|
)
|
|
190,572
|
|
|
(146,656
|
)
|
Interest income and other, net
|
|
7,278
|
|
|
(91
|
)
|
|
54,211
|
|
|
4,923
|
|
|
116,978
|
|
|
11,120
|
|
|
(190,572
|
)
|
|
3,847
|
|
Income (loss) from continuing operations before income taxes
|
|
(375,520
|
)
|
|
(441,078
|
)
|
|
122,433
|
|
|
(66,017
|
)
|
|
165,564
|
|
|
(73,852
|
)
|
|
542,720
|
|
|
(125,750
|
)
|
Income tax benefit (provision)
|
|
—
|
|
|
116,586
|
|
|
(326
|
)
|
|
—
|
|
|
—
|
|
|
(355,420
|
)
|
|
—
|
|
|
(239,160
|
)
|
Net income (loss) from continuing operations
|
|
(375,520
|
)
|
|
(324,492
|
)
|
|
122,107
|
|
|
(66,017
|
)
|
|
165,564
|
|
|
(429,272
|
)
|
|
542,720
|
|
|
(364,910
|
)
|
Net income (loss) from discontinuing operations, net of tax
|
|
—
|
|
|
(1,598
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
4,565
|
|
|
—
|
|
|
2,967
|
|
Net Income (loss)
|
|
(375,520
|
)
|
|
(326,090
|
)
|
|
122,107
|
|
|
(66,017
|
)
|
|
165,564
|
|
|
(424,707
|
)
|
|
542,720
|
|
|
(361,943
|
)
|
Net income attributable to noncontrolling interests
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(12,761
|
)
|
|
(816
|
)
|
|
(13,577
|
)
|
Net income (loss) attributable to Noble Corporation
|
|
(375,520
|
)
|
|
(326,090
|
)
|
|
122,107
|
|
|
(66,017
|
)
|
|
165,564
|
|
|
(437,468
|
)
|
|
541,904
|
|
|
(375,520
|
)
|
Other comprehensive income (loss), net
|
|
1,786
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1,786
|
|
|
(1,786
|
)
|
|
1,786
|
|
Comprehensive income (loss) attributable to Noble Corporation
|
|
$
|
(373,734
|
)
|
|
$
|
(326,090
|
)
|
|
$
|
122,107
|
|
|
$
|
(66,017
|
)
|
|
$
|
165,564
|
|
|
$
|
(435,682
|
)
|
|
$
|
540,118
|
|
|
$
|
(373,734
|
)
|
NOBLE CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATING STATEMENT OF INCOME and COMPREHENSIVE INCOME (LOSS)
Three Months Ended
June 30, 2016
(in thousands)
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Noble-
Cayman
|
|
NHUS
|
|
NDH
|
|
NHIL
|
|
NDS6
|
|
Other
Non-guarantor
Subsidiaries
of Noble
|
|
Consolidating
Adjustments
|
|
Total
|
Operating revenues
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Contract drilling services
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
64,839
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
838,984
|
|
|
$
|
(27,126
|
)
|
|
$
|
876,697
|
|
Reimbursables
|
|
—
|
|
|
—
|
|
|
2,622
|
|
|
—
|
|
|
—
|
|
|
15,311
|
|
|
—
|
|
|
17,933
|
|
Other
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
253
|
|
|
—
|
|
|
253
|
|
Total operating revenues
|
|
—
|
|
|
—
|
|
|
67,461
|
|
|
—
|
|
|
—
|
|
|
854,548
|
|
|
(27,126
|
)
|
|
894,883
|
|
Operating costs and expenses
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Contract drilling services
|
|
972
|
|
|
4,318
|
|
|
11,960
|
|
|
19,290
|
|
|
—
|
|
|
232,820
|
|
|
(27,126
|
)
|
|
242,234
|
|
Reimbursables
|
|
—
|
|
|
—
|
|
|
2,345
|
|
|
—
|
|
|
—
|
|
|
11,953
|
|
|
—
|
|
|
14,298
|
|
Depreciation and amortization
|
|
—
|
|
|
—
|
|
|
22,309
|
|
|
—
|
|
|
—
|
|
|
128,629
|
|
|
—
|
|
|
150,938
|
|
General and administrative
|
|
306
|
|
|
2,340
|
|
|
—
|
|
|
10,920
|
|
|
1
|
|
|
286
|
|
|
—
|
|
|
13,853
|
|
Loss on impairment
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
16,616
|
|
|
—
|
|
|
16,616
|
|
Total operating costs and expenses
|
|
1,278
|
|
|
6,658
|
|
|
36,614
|
|
|
30,210
|
|
—
|
|
1
|
|
|
390,304
|
|
|
(27,126
|
)
|
|
437,939
|
|
Operating income (loss)
|
|
(1,278
|
)
|
|
(6,658
|
)
|
|
30,847
|
|
|
(30,210
|
)
|
|
(1
|
)
|
|
464,244
|
|
|
—
|
|
|
456,944
|
|
Other income (expense)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) of unconsolidated affiliates
|
|
245,695
|
|
|
(13,250
|
)
|
|
(44,699
|
)
|
|
454,402
|
|
|
461,434
|
|
|
—
|
|
|
(1,103,582
|
)
|
|
—
|
|
Interest expense, net of amounts capitalized
|
|
(5,228
|
)
|
|
(21,339
|
)
|
|
(2,816
|
)
|
|
(59,812
|
)
|
|
(4,189
|
)
|
|
(95,104
|
)
|
|
131,182
|
|
|
(57,306
|
)
|
Gain on extinguishment of debt, net
|
|
—
|
|
|
—
|
|
|
—
|
|
|
11,066
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
11,066
|
|
Interest income and other, net
|
|
91,659
|
|
|
54
|
|
|
3,427
|
|
|
4,039
|
|
|
693
|
|
|
30,107
|
|
|
(131,182
|
)
|
|
(1,203
|
)
|
Income (loss) from continuing operations before income taxes
|
|
330,848
|
|
|
(41,193
|
)
|
|
(13,241
|
)
|
|
379,485
|
|
|
457,937
|
|
|
399,247
|
|
|
(1,103,582
|
)
|
|
409,501
|
|
Income tax provision
|
|
—
|
|
|
(23,656
|
)
|
|
(173
|
)
|
|
—
|
|
|
—
|
|
|
(32,291
|
)
|
|
—
|
|
|
(56,120
|
)
|
Net income (loss)
|
|
330,848
|
|
|
(64,849
|
)
|
|
(13,414
|
)
|
|
379,485
|
|
|
457,937
|
|
|
366,956
|
|
|
(1,103,582
|
)
|
|
353,381
|
|
Net (income) loss attributable to noncontrolling interests
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(42,231
|
)
|
|
19,698
|
|
|
(22,533
|
)
|
Net income (loss) attributable to Noble Corporation
|
|
330,848
|
|
|
(64,849
|
)
|
|
(13,414
|
)
|
|
379,485
|
|
|
457,937
|
|
|
324,725
|
|
|
(1,083,884
|
)
|
|
330,848
|
|
Other comprehensive income (loss), net
|
|
(1,232
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(1,232
|
)
|
|
1,232
|
|
|
(1,232
|
)
|
Comprehensive income (loss) attributable to Noble Corporation
|
|
$
|
329,616
|
|
|
$
|
(64,849
|
)
|
|
$
|
(13,414
|
)
|
|
$
|
379,485
|
|
|
$
|
457,937
|
|
|
$
|
323,493
|
|
|
$
|
(1,082,652
|
)
|
|
$
|
329,616
|
|
NOBLE CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATING STATEMENT OF INCOME and COMPREHENSIVE INCOME (LOSS)
Six Months Ended
June 30, 2016
(in thousands)
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Noble-
Cayman
|
|
NHUS
|
|
NDH
|
|
NHIL
|
|
NDS6
|
|
Other
Non-guarantor
Subsidiaries
of Noble
|
|
Consolidating
Adjustments
|
|
Total
|
Operating revenues
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Contract drilling services
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
117,046
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
1,396,458
|
|
|
$
|
(45,440
|
)
|
|
$
|
1,468,064
|
|
Reimbursables
|
|
—
|
|
|
—
|
|
|
3,368
|
|
|
—
|
|
|
—
|
|
|
35,171
|
|
|
—
|
|
|
38,539
|
|
Other
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
853
|
|
|
—
|
|
|
853
|
|
Total operating revenues
|
|
—
|
|
|
—
|
|
|
120,414
|
|
|
—
|
|
|
—
|
|
|
1,432,482
|
|
|
(45,440
|
)
|
|
1,507,456
|
|
Operating costs and expenses
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Contract drilling services
|
|
2,717
|
|
|
11,713
|
|
|
26,518
|
|
|
51,604
|
|
|
—
|
|
|
444,412
|
|
|
(45,440
|
)
|
|
491,524
|
|
Reimbursables
|
|
—
|
|
|
—
|
|
|
2,887
|
|
|
—
|
|
|
—
|
|
|
27,417
|
|
|
—
|
|
|
30,304
|
|
Depreciation and amortization
|
|
—
|
|
|
—
|
|
|
43,770
|
|
|
—
|
|
|
—
|
|
|
256,841
|
|
|
—
|
|
|
300,611
|
|
General and administrative
|
|
725
|
|
|
5,655
|
|
|
—
|
|
|
25,465
|
|
|
1
|
|
|
(7,388
|
)
|
|
—
|
|
|
24,458
|
|
Loss on impairment
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
16,616
|
|
|
—
|
|
|
16,616
|
|
Total operating costs and expenses
|
|
3,442
|
|
|
17,368
|
|
|
73,175
|
|
|
77,069
|
|
|
1
|
|
|
737,898
|
|
|
(45,440
|
)
|
|
863,513
|
|
Operating income (loss)
|
|
(3,442
|
)
|
|
(17,368
|
)
|
|
47,239
|
|
|
(77,069
|
)
|
|
(1
|
)
|
|
694,584
|
|
|
—
|
|
|
643,943
|
|
Other income (expense)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) of unconsolidated affiliates
|
|
380,787
|
|
|
40,605
|
|
|
(58,282
|
)
|
|
630,756
|
|
|
598,805
|
|
|
—
|
|
|
(1,592,671
|
)
|
|
—
|
|
Interest income (expense), net of amounts capitalized
|
|
(22,784
|
)
|
|
(22,666
|
)
|
|
(5,564
|
)
|
|
(121,221
|
)
|
|
(8,464
|
)
|
|
(99,503
|
)
|
|
165,796
|
|
|
(114,406
|
)
|
Gain on extinguishment of debt, net
|
|
—
|
|
|
—
|
|
|
—
|
|
|
11,066
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
11,066
|
|
Interest income and other, net
|
|
93,308
|
|
|
50
|
|
|
6,903
|
|
|
19,360
|
|
|
762
|
|
|
43,477
|
|
|
(165,796
|
)
|
|
(1,936
|
)
|
Income (loss) from continuing operations before income taxes
|
|
447,869
|
|
|
621
|
|
|
(9,704
|
)
|
|
462,892
|
|
|
591,102
|
|
|
638,558
|
|
|
(1,592,671
|
)
|
|
538,667
|
|
Income tax (provision) benefit
|
|
—
|
|
|
(33,738
|
)
|
|
(378
|
)
|
|
—
|
|
|
—
|
|
|
(15,501
|
)
|
|
—
|
|
|
(49,617
|
)
|
Net income (loss)
|
|
447,869
|
|
|
(33,117
|
)
|
|
(10,082
|
)
|
|
462,892
|
|
|
591,102
|
|
|
623,057
|
|
|
(1,592,671
|
)
|
|
489,050
|
|
Net (income) loss attributable to noncontrolling interests
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(65,047
|
)
|
|
23,866
|
|
|
(41,181
|
)
|
Net income (loss) attributable to Noble Corporation
|
|
447,869
|
|
|
(33,117
|
)
|
|
(10,082
|
)
|
|
462,892
|
|
|
591,102
|
|
|
558,010
|
|
|
(1,568,805
|
)
|
|
447,869
|
|
Other comprehensive income (loss), net
|
|
1,305
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1,305
|
|
|
(1,305
|
)
|
|
1,305
|
|
Comprehensive income (loss) attributable to Noble Corporation
|
|
$
|
449,174
|
|
|
$
|
(33,117
|
)
|
|
$
|
(10,082
|
)
|
|
$
|
462,892
|
|
|
$
|
591,102
|
|
|
$
|
559,315
|
|
|
$
|
(1,570,110
|
)
|
|
$
|
449,174
|
|
NOBLE CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS
Six Months Ended
June 30, 2017
(in thousands)
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Noble-
Cayman
|
|
NHUS
|
|
NDH
|
|
NHIL
|
|
NDS6
|
|
Other
Non-guarantor
Subsidiaries
of Noble
|
|
Consolidating
Adjustments
|
|
Total
|
Cash flows from operating activities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash provided by (used in) operating activities
|
|
$
|
18,027
|
|
|
$
|
128,277
|
|
|
$
|
94,821
|
|
|
$
|
(173,014
|
)
|
|
$
|
109,339
|
|
|
$
|
91,919
|
|
|
$
|
—
|
|
|
$
|
269,369
|
|
Cash flows from investing activities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Capital expenditures
|
|
—
|
|
|
—
|
|
|
(1,309
|
)
|
|
—
|
|
|
—
|
|
|
(66,299
|
)
|
|
—
|
|
|
(67,608
|
)
|
Proceeds from disposal of assets
|
|
—
|
|
|
—
|
|
|
7
|
|
|
—
|
|
|
—
|
|
|
307
|
|
|
—
|
|
|
314
|
|
Net cash used in investing activities
|
|
—
|
|
|
—
|
|
|
(1,302
|
)
|
|
—
|
|
|
—
|
|
|
(65,992
|
)
|
|
—
|
|
|
(67,294
|
)
|
Cash flows from financing activities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Repayment of long-term debt
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(300,000
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(300,000
|
)
|
Debt issuance costs on senior notes and credit facility
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(42
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(42
|
)
|
Dividends paid to noncontrolling interests
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(5,393
|
)
|
|
—
|
|
|
(5,393
|
)
|
Distributions to parent company, net
|
|
51,705
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
51,705
|
|
Advances (to) from affiliates
|
|
(72,255
|
)
|
|
(128,277
|
)
|
|
(104,255
|
)
|
|
473,423
|
|
|
(109,339
|
)
|
|
(59,297
|
)
|
|
—
|
|
|
—
|
|
Net cash provided by (used in) financing activities
|
|
(20,550
|
)
|
|
(128,277
|
)
|
|
(104,255
|
)
|
|
173,381
|
|
|
(109,339
|
)
|
|
(64,690
|
)
|
|
—
|
|
|
(253,730
|
)
|
Net change in cash and cash equivalents
|
|
(2,523
|
)
|
|
—
|
|
|
(10,736
|
)
|
|
367
|
|
|
—
|
|
|
(38,763
|
)
|
|
—
|
|
|
(51,655
|
)
|
Cash and cash equivalents, beginning of period
|
|
2,537
|
|
|
—
|
|
|
10,855
|
|
|
—
|
|
|
—
|
|
|
640,441
|
|
|
—
|
|
|
653,833
|
|
Cash and cash equivalents, end of period
|
|
$
|
14
|
|
|
$
|
—
|
|
|
$
|
119
|
|
|
$
|
367
|
|
|
$
|
—
|
|
|
$
|
601,678
|
|
|
$
|
—
|
|
|
$
|
602,178
|
|
NOBLE CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS
Six Months Ended
June 30, 2016
(in thousands)
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Noble-
Cayman
|
|
NHUS
|
|
NDH
|
|
NHIL
|
|
NDS6
|
|
Other
Non-guarantor
Subsidiaries
of Noble
|
|
Consolidating
Adjustments
|
|
Total
|
Cash flows from operating activities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash provided by (used in) operating activities
|
|
$
|
87,431
|
|
|
$
|
(72,611
|
)
|
|
$
|
66,135
|
|
|
$
|
(179,793
|
)
|
|
$
|
(7,703
|
)
|
|
$
|
985,834
|
|
|
$
|
—
|
|
|
$
|
879,293
|
|
Cash flows from investing activities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Capital expenditures
|
|
—
|
|
|
—
|
|
|
(44,139
|
)
|
|
—
|
|
|
—
|
|
|
(114,770
|
)
|
|
—
|
|
|
(158,909
|
)
|
Proceeds from disposal of assets
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
21,190
|
|
|
—
|
|
|
21,190
|
|
Net cash used in investing activities
|
|
—
|
|
|
—
|
|
|
(44,139
|
)
|
|
—
|
|
|
—
|
|
|
(93,580
|
)
|
|
—
|
|
|
(137,719
|
)
|
Cash flows from financing activities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Repayment of long-term debt
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(322,207
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(322,207
|
)
|
Premiums paid on early repayment of long-term debt
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(1,781
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(1,781
|
)
|
Dividends paid to noncontrolling interests
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(41,088
|
)
|
|
—
|
|
|
(41,088
|
)
|
Distributions to parent company, net
|
|
(65,316
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(65,316
|
)
|
Advances (to) from affiliates
|
|
(23,514
|
)
|
|
72,611
|
|
|
(23,921
|
)
|
|
503,781
|
|
|
7,703
|
|
|
(536,660
|
)
|
|
—
|
|
|
—
|
|
Net cash provided by (used in) financing activities
|
|
(88,830
|
)
|
|
72,611
|
|
|
(23,921
|
)
|
|
179,793
|
|
|
7,703
|
|
|
(577,748
|
)
|
|
—
|
|
|
(430,392
|
)
|
Net change in cash and cash equivalents
|
|
(1,399
|
)
|
|
—
|
|
|
(1,925
|
)
|
|
—
|
|
|
—
|
|
|
314,506
|
|
|
—
|
|
|
311,182
|
|
Cash and cash equivalents, beginning of period
|
|
1,627
|
|
|
—
|
|
|
2,101
|
|
|
—
|
|
|
—
|
|
|
508,067
|
|
|
—
|
|
|
511,795
|
|
Cash and cash equivalents, end of period
|
|
$
|
228
|
|
|
$
|
—
|
|
|
$
|
176
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
822,573
|
|
|
$
|
—
|
|
|
$
|
822,977
|
|