Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations.
The following discussion is intended to assist you in understanding our financial position at December 31, 2019 and 2018, and our results of operations for each of the years in the three-year period ended December 31, 2019. The following discussion should be read in conjunction with the consolidated financial statements and related notes contained in this Annual Report on Form 10-K for the year ended December 31, 2019 filed by Noble-UK and Noble-Cayman.
Executive Overview
We provide contract drilling services to the international oil and gas industry with our global fleet of mobile offshore drilling units. Our business strategy focuses on a balanced, high-specification fleet of both floating and jackup rigs and the deployment of our drilling rigs in established and emerging offshore oil and gas basins around the world. We emphasize safe operations through the employment of qualified, well-trained crews and strive to manage rig operating costs through the implementation and continuous improvement of innovative systems and processes, including the use of data analytics and predictive maintenance technology.
As of the filing date of this Annual Report on Form 10-K, our fleet of 25 drilling rigs consisted of 12 floaters and 13 jackups strategically deployed worldwide in both ultra-deepwater and shallow water locations. We typically employ each drilling unit under an individual contract, and many contracts are awarded based upon a competitive bidding process.
Our 2019 financial and operating results from continuing operations include:
|
|
•
|
operating revenues totaling $1.3 billion;
|
|
|
•
|
net loss attributable to Noble Corporation plc of $700.6 million, or 2.81 per diluted share, which includes a $615.3 million before-tax impairment charge recognized on two of our rigs and certain capital spare equipment; and
|
|
|
•
|
net cash provided by operating activities totaling $186.8 million.
|
Our floating and jackup drilling fleet is among the youngest, most modern and versatile in the industry. Our fleet consists predominately of technologically advanced units, equipped with sophisticated systems and components capable of executing our customers’ increasingly complicated offshore drilling programs safely and with greater efficiency. A total of 17 of our drilling rigs have been delivered since 2011 following their construction primarily in quality shipyards located in Korea and Singapore. The last of our new rig additions was delivered in July 2016, and no further newbuild rig construction is in process. We retired or sold 12 drilling rigs since late 2014, due in part to advanced service lives, high cost of operation and limited customer appeal. Current market conditions could lead to us stacking or retiring additional rigs.
Although we plan to prioritize capital preservation and liquidity based on the challenging market conditions, from time to time we will also continue to evaluate opportunities to enhance our fleet of floating and jackup rigs, particularly focusing on higher specification rigs, to execute the increasingly complex drilling programs required by our customers.
In September 2018, we purchased the Noble Johnny Whitstine, a new GustoMSC CJ46 design jackup rig, from the PaxOcean Group (“PaxOcean”) in connection with a concurrently awarded drilling contract in the Middle East region. We paid $93.8 million for the rig, with $33.8 million paid in cash and the remaining $60.0 million of the purchase price financed with a loan by the seller. On February 28, 2019, we purchased another GustoMSC CJ46 rig, the Noble Joe Knight, from PaxOcean. The rig has an awarded drilling contract in the Middle East region. We paid $83.8 million for the rig, with $30.2 million paid in cash and the remaining $53.6 million of the purchase price financed with a loan by the seller. See Part II, Item 8, “Financial Statements and Supplementary Data, Note 7— Debt” for additional information.
Market Outlook
The offshore drilling industry experienced a significant expansion from the early 2000s to the mid-2010s. Since that time, a significant reduction in oil prices from the levels experienced earlier in the 2010s, partly driven by the high level of growth in US onshore production, coupled with meaningful increases in offshore rig supply, have led to an industry-wide supply and demand imbalance and an extremely challenging environment. This period of oil price weakness and volatility compelled many exploration and production companies to deemphasize offshore programs while focusing instead on less capital intensive onshore-based opportunities. Levels of offshore rig utilization have been adversely impacted and contract awards have generally been subject to an extremely competitive bidding process. As a result, the contracts have included dayrates that are substantially lower than dayrates for the same class of rigs before this period of supply and demand imbalance.
However, while the environment remains extremely challenging, we believe that the industry is experiencing a gradual improvement driven by several factors. Over the last few years, customers have reduced the costs associated with many offshore projects through revised engineering solutions, advances in rig technologies and drilling efficiencies, and project simplification, resulting in more robust offshore project economics. Also, access has improved to some of the world’s most promising offshore basins, leading to the acquisition by exploration and production companies of large offshore positions and the commencement of exploration and development drilling campaigns. In addition, the oversupply of offshore rigs has improved as a result of a higher level of fleet attrition, due to the challenging environment, advanced service life of rigs, high maintenance and reactivation costs and limited customer appeal. Furthermore, during 2019, higher average crude oil prices and customer spending offshore led to an improvement in activity. The jackup market improved steadily throughout the year, driven primarily by activity in the Middle East, Asia and Mexico, and the floating fleet recognized pricing improvement during the fourth quarter of 2019 for the first time in several years.
With regard to industry prospects in 2020, customer surveys showing expected higher levels of offshore capital spending in 2020 have provided optimism that the favorable trends experienced during 2019 will continue. This optimism is somewhat tempered by the recent decline in oil prices experienced to-date in 2020 driven by the potential economic impact of the coronavirus, uncertainty regarding the viability and length
of reductions in production agreed to by the Organization of Petroleum Exporting Countries (“OPEC”) plus other non-OPEC producers including Russia and continued limits on certain of our customers’ access to capital.
Over the longer term, we believe that any number of other factors could contribute to an improvement in the market for our services. These factors include:
|
|
•
|
our customers’ access to capital
|
|
|
•
|
sustained higher crude oil prices;
|
|
|
•
|
renewed focus by operators on offshore exploration and development and accompanying increase in spending offshore;
|
|
|
•
|
improved geologic success with regard to our customers’ exploration efforts;
|
|
|
•
|
greater customer access to areas with promising offshore resource potential;
|
|
|
•
|
advances in offshore technological applications which reduce offshore costs and improve project economics;
|
|
|
•
|
high rate of natural depletion relating to land-based sources of crude oil production;
|
|
|
•
|
deteriorating annual production and poor reserve replacement metrics caused, in part, by a period of sustained under-investment by our customers; and
|
|
|
•
|
declining supply of rigs due to continued attrition.
|
We cannot give any assurances as to whether the favorable trends experienced in 2019 will continue or when the oversupply of available drilling rigs and the reduced demand from customers will come back into balance. Due to numerous factors that influence our customers’ annual global offshore spending patterns, including access to capital, cheaper onshore production opportunities and geopolitical events, we cannot predict the future level of demand or dayrates for our services, or future conditions in the offshore contract drilling industry.
Recent Events
Management Changes
On February 19, 2020, we announced that our Board of Directors approved the upcoming appointment of Julie J. Robertson, who currently serves as Chairman of the Board, President and Chief Executive Officer of the Company, to the newly created position of Chairman of the Board in the capacity of an executive of the Company (“Executive Chairman”). At the time Ms. Robertson transitions to the position of Executive Chairman, Ms. Robertson will step down from her positions of President and Chief Executive Officer of the Company. On February 19, 2020, our Board of Directors also approved the upcoming appointment of Mr. Robert W. Eifler, who currently serves as Senior Vice President, Commercial of the Company, to succeed Ms. Robertson as President and Chief Executive Officer. Such transitions will be effective as of the close of the Company’s 2020 annual general meeting of shareholders.
Spin-off of Paragon Offshore plc
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 plc (“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”). The Prior Plan was rejected by the bankruptcy court in October 2016.
In April 2017, Paragon Offshore filed a revised plan of reorganization (the “New Plan”) in its bankruptcy proceeding. Under the New Plan, Paragon Offshore no longer needed the Mexican tax bonding that Noble-UK was required to provide under the Settlement Agreement. 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 create and fund a 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.
On December 15, 2017, the litigation trust filed claims relating to the Spin-off against us and certain of our current and former officers and directors in the Delaware bankruptcy court that heard Paragon Offshore’s bankruptcy, and the litigation trust filed an amended complaint in October 2019. The amended complaint alleges claims of actual and constructive fraudulent conveyance, unjust enrichment and recharacterization of
intercompany notes as equity claims against Noble and claims of breach of fiduciary duty and aiding and abetting breach of fiduciary duty against the officer and director defendants. The litigation trust is seeking damages of (i) approximately $1.7 billion from the Company, an amount equal to the amount borrowed by Paragon Offshore immediately prior to the Spin-off, (ii) an additional approximately $935 million relating to the transfer of intercompany receivables and notes from a Paragon subsidiary to a Noble subsidiary prior to the Spin-off (bringing the total claimed damages to approximately $2.6 billion), and (iii) unspecified amounts in respect of the claims against the officer and director defendants, all of whom have indemnification agreements with us. A trial date has been set for September 2020.
We believe that Paragon Offshore, at the time of the Spin-off, was properly funded, solvent and had appropriate liquidity and that the claims brought by the litigation trust are without merit. However, the Company continually assesses potential outcomes, including the probability of the parties ultimately resolving the matter through settlement in light of various factors, including given the complex factual issues involved, the uncertainty and risk inherent in this type of litigation, the time commitment and distraction of our organization, the potential effect of the ongoing litigation and uncertainty on our business, and the substantial expense incurred in litigating the claims. As such, the Company’s current estimated loss related to final disposition of this matter is $100.0 million, which the Company recorded as a general and administrative expense for the year ended December 31, 2019 and is reflected as a current liability as of December 31, 2019. As pre-trial matters progress, the Company’s estimated loss could change from time to time, and any such change individually or in the aggregate could be material.
There is inherent risk and substantial expense in litigation, and the amount of damages that the plaintiff is seeking is substantial. If any of the litigation trust’s claims are successful, or if we elect to settle any claims (in part to reduce or eliminate the ongoing cost of defending the litigation and eliminate any risk of a larger judgment against us), any damages or other amounts we would be required to or agree to pay in excess of the amount we recognized at December 31, 2019, could have a material adverse effect on our business, financial condition and results of operations, including impeding our ability to meet ongoing financial obligations or to continue as a going concern. Given the risks and considerations discussed above, we cannot predict with any degree of certainty what the outcome of the litigation may be. Furthermore, as discussed below, we cannot predict the amount of insurance coverage, if any, that we may have if we were to settle or be found liable in the litigation.
We have directors’ and officers’ indemnification coverage for the officers and directors who have been sued by the litigation trust. The insurers have accepted coverage for the director and officer claims and we are continuing to discuss with them the scope of their reimbursement of litigation expenses. In addition, at the time of the Spin-off, we had entity coverage, or “Side C” coverage, which was meant to cover certain litigation claims up to the coverage limit of $150.0 million, including litigation expenses. We have made a claim for coverage of the litigation trust’s claims against Noble under such entity insurance. The insurers have rejected coverage for these claims. However, we intend to pursue coverage should the litigation be concluded adversely to us or should we settle the litigation. We cannot predict the amount of claims and expenses we may incur, pay or settle in the Paragon Offshore litigation that such insurance will cover, if any.
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 a Master Separation Agreement (the “MSA”) and a 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 resulted in a number of accounting charges and benefits during the year ended December 31, 2017, 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.
During the year ended December 31, 2019, we recognized charges of $3.8 million recorded in “Net loss from discontinued operations, net of tax” on our Consolidated Statement of Operations relating to settlement of Mexico customs audits from rigs included in the Spin-off.
Impairment
As more thoroughly described in Part II, Item 8, “Financial Statements and Supplementary Data, Note 6— Loss on Impairment” we evaluate our property and equipment for impairment whenever there are changes in facts that suggest that the value of the asset is not recoverable. An impairment loss is recognized when and to the extent that an asset's carrying value exceeds its estimated fair value. As part of this analysis, we make assumptions and estimates regarding future market conditions. To the extent actual results do not meet our estimated assumptions for a given rig or piece of equipment, we may take an impairment loss in the future.
During the years ended December 31, 2019, 2018 and 2017, we recognized non-cash, before-tax impairment charges of $615.3 million, $802.1 million and $121.6 million, respectively, related to certain rigs and related capital spares. These impairments were driven by factors such as customer suspensions of drilling programs, contract cancellations, a further reduction in the number of new contract opportunities, capital spare equipment obsolescence, and our belief that a drilling unit is no longer marketable and is unlikely to return to service.
There can be no assurance that we will not have to take additional impairment charges in the future if current depressed market conditions persist, or that we will be able to return cold stacked rigs to service in the time frame and at the reactivation costs or at the dayrates that we projected. It is reasonably possible that the estimate of undiscounted cash flows may change in the near term, resulting in the need to write down the affected assets to their corresponding estimated fair values.
Contract Drilling Services Backlog
We maintain a backlog of commitments for contract drilling services. Our contract drilling services backlog reflects estimated future revenues attributable to signed drilling contracts. While backlog did not include any letters of intent as of December 31, 2019, in the past we have included in backlog certain letters of intent that we expect to result in binding drilling contracts.
We calculate backlog for any given unit and period by multiplying the full contractual operating dayrate for such unit by the number of days remaining in the period, and for the two rigs contracted with Royal Dutch Shell plc (“Shell”) mentioned below, we utilize the idle period and floor rates as described in footnote (2) to the backlog table below. The reported contract drilling services backlog does not include amounts representing revenues for mobilization, demobilization and contract preparation, which are not expected to be significant to our contract drilling services revenues, amounts constituting reimbursables from customers or amounts attributable to uncommitted option periods under drilling contracts or letters of intent.
The table below presents the amount of our contract drilling services backlog and the percent of available operating days committed for the periods indicated:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ending December 31, (1)
|
|
|
Total
|
|
2020
|
|
2021
|
|
2022
|
|
2023
|
|
2024
|
|
|
(In thousands)
|
Contract Drilling Services Backlog
|
|
|
|
|
|
|
|
|
|
|
|
|
Floaters (2) (3)
|
|
$
|
833,599
|
|
|
$
|
395,824
|
|
|
$
|
213,925
|
|
|
$
|
154,275
|
|
|
$
|
69,575
|
|
|
$
|
—
|
|
Jackups
|
|
621,791
|
|
|
380,341
|
|
|
171,365
|
|
|
70,085
|
|
|
—
|
|
|
—
|
|
Total (4)
|
|
$
|
1,455,390
|
|
|
$
|
776,165
|
|
|
$
|
385,290
|
|
|
$
|
224,360
|
|
|
$
|
69,575
|
|
|
$
|
—
|
|
Percent of Available Days Committed (5)
|
|
|
|
|
|
|
|
|
|
|
|
|
Floaters (3)
|
|
|
|
45
|
%
|
|
19
|
%
|
|
13
|
%
|
|
6
|
%
|
|
—
|
%
|
Jackups
|
|
|
|
58
|
%
|
|
32
|
%
|
|
14
|
%
|
|
—
|
%
|
|
—
|
%
|
Total
|
|
|
|
52
|
%
|
|
25
|
%
|
|
13
|
%
|
|
3
|
%
|
|
—
|
%
|
|
|
(1)
|
Represents a twelve-month period beginning January 1.
|
|
|
(2)
|
As previously reported, two of our long-term drilling contracts with Shell, the Noble Globetrotter I and Noble Globetrotter II, contain a dayrate adjustment mechanism that utilizes an average of market rates that match a set of distinct technical attributes and is subject to a modest discount, beginning on the fifth-year anniversary of the contract and continuing every six months thereafter. On December 12, 2016, we amended those drilling contracts with Shell. As a result of the amendments, each of the contracts now has a contractual dayrate floor. The contract amendments for the Noble Globetrotter I and Noble Globetrotter II provide a dayrate floor of $275,000 per day. Once the dayrate adjustment mechanism becomes effective and following any idle periods, the dayrate for these rigs will not be lower than the higher of (i) the contractual dayrate floor or (ii) the market rate as calculated under the adjustment mechanism. The impact to contract backlog from these amendments has been reflected in the table above and the backlog calculation assumes that, after any idle period at the contractual stacking rate, each rig will work at its respective dayrate floor for the remaining contract term.
|
|
|
(3)
|
The backlog figures and days committed to contracts excludes the multi-year Commercial Enabling Agreement (the “CEA”) with Exxon Mobil Corporation (“ExxonMobil”) executed in February 2020. Concurrent with signing the CEA, ExxonMobil, has awarded three and half years of term to be added at the conclusion of the Noble Tom Madden’s (three years) and the Noble Bob Douglas’ (six months) current contract commitments, or approximately $242.3 million in backlog based on the initial agreed-upon rates that will be applicable once the first rig is operating under the CEA. Subsequent to the execution of the CEA, ExxonMobil awarded a one-year primary term contract for approximately $69.4 million in backlog on the Noble Sam Croft in February 2020, which has also been excluded from the backlog table above and will be added to the CEA. The aforementioned additional backlog was estimated using an illustrative dayrate of $200,000 and discount, net of performance bonus, of 5%.
|
|
|
(4)
|
Some of our drilling contracts provide customers with certain early termination rights and, in limited cases, those termination rights require minimal or no notice and minimal financial penalties.
|
|
|
(5)
|
Percent of available days committed is calculated by dividing the total number of days our rigs are operating under contract for such period by the product of the number of our rigs and the number of calendar days in such period.
|
The amount of actual revenues earned and the actual periods during which revenues are earned may be materially different than the backlog amounts and backlog periods presented in the table above due to various factors, including, but not limited to, shipyard and maintenance projects, unplanned downtime, the operation of market benchmarks for dayrate resets, achievement of bonuses, weather conditions, reduced standby or mobilization rates and other factors that result in applicable dayrates lower than the full contractual operating dayrate. In addition, amounts included in the backlog may change because drilling contracts may be varied or modified by mutual consent or customers may exercise early termination rights contained in some of our drilling contracts or decline to enter into a drilling contract after executing a letter of intent. As a result, our backlog as of any particular date may not be indicative of our actual operating results for the periods for which the backlog is calculated. See Part I, Item 1A, “Risk Factors— Our current backlog of contract drilling revenue may not be ultimately realized.”
For the year ended December 31, 2019, Shell, Saudi Arabian Oil Company (“Saudi Aramco”), ExxonMobil and Equinor ASA represented approximately 51.1 percent, 23.0 percent, 12.4 percent and 6.6 percent of our backlog, respectively.
Results of Operations
2019 Compared to 2018
Net loss from continuing operations attributable to Noble-UK for the year ended December 31, 2019 was $696.8 million, or $2.79 per diluted share, on operating revenues of $1.3 billion, compared to a net loss from continuing operations for the year ended December 31, 2018 of $885.1 million, or $3.59 per diluted share, on operating revenues of $1.1 billion.
As a result of Noble-UK conducting all of its business through Noble-Cayman and its subsidiaries, the financial position and results of operations for Noble-Cayman, and the reasons for material changes in the amount of revenue and expense items between December 31, 2019 and December 31, 2018, would be the same as the information presented below regarding Noble-UK in all material respects, with the exception of operating income (loss). During the years ended December 31, 2019 and 2018, Noble-Cayman's operating loss was $138.8 million and $40.7 million lower, respectively, than that of Noble-UK. The operating loss difference is primarily a result of expenses related to ongoing litigation, administration and other costs directly attributable to Noble-UK for operations support and stewardship-related services. In the year ended December 31, 2019, Noble-UK recorded a $100.0 million expense related to ongoing litigation, which was not recognized by Noble-Cayman.
Key Operating Metrics
Operating results for our contract drilling services segment are dependent on three primary metrics: operating days, dayrates and operating costs. We also track rig utilization, which is a function of operating days and the number of rigs in our fleet. For more information on operating costs, see “—Contract Drilling Services” below. The following table presents the average rig utilization, operating days and average dayrates for our rig fleet for the years ended December 31, 2019 and 2018:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average Rig Utilization (1)
|
|
Operating Days (2)
|
|
Average Dayrates
|
|
|
December 31,
|
|
December 31,
|
|
|
|
December 31,
|
|
|
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
|
% Change
|
|
2019
|
|
2018
|
|
% Change
|
Jackups
|
|
93
|
%
|
|
77
|
%
|
|
4,054
|
|
|
3,642
|
|
|
11
|
%
|
|
$
|
128,002
|
|
|
$
|
130,217
|
|
|
(2
|
)%
|
Floaters
|
|
62
|
%
|
|
44
|
%
|
|
2,729
|
|
|
2,085
|
|
|
31
|
%
|
|
266,442
|
|
(3)
|
269,452
|
|
|
(1
|
)%
|
Total
|
|
78
|
%
|
|
61
|
%
|
|
6,783
|
|
|
5,727
|
|
|
18
|
%
|
|
$
|
183,706
|
|
(3)
|
$
|
180,909
|
|
|
2
|
%
|
|
|
(1)
|
We define utilization for a specific period as the total number of days our rigs are operating under contract, divided by the product of the total number of our rigs, including cold stacked rigs, and the number of calendar days in such period. Information reflects our policy of reporting on the basis of the number of available rigs in our fleet, excluding newbuild rigs under construction.
|
|
|
(2)
|
Information reflects the number of days that our rigs were operating under contract.
|
|
|
(3)
|
Includes the impact of the Noble Bully II contract buyout during the year ended December 31, 2019. Exclusive of this item, the average dayrate for the year ended December 31, 2019 would have been $205,304 for floaters and $159,106 for total rigs.
|
Contract Drilling Services
The following table presents the operating results for our contract drilling services segment for the years ended December 31, 2019 and 2018 (dollars in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended December 31,
|
|
Change
|
|
|
2019
|
|
2018
|
|
$
|
|
%
|
Operating revenues:
|
|
|
|
|
|
|
|
|
Contract drilling services
|
|
$
|
1,246,058
|
|
|
$
|
1,036,082
|
|
|
$
|
209,976
|
|
|
20
|
%
|
Reimbursables and other (1)
|
|
59,380
|
|
|
46,744
|
|
|
12,636
|
|
|
27
|
%
|
|
|
$
|
1,305,438
|
|
|
$
|
1,082,826
|
|
|
$
|
222,612
|
|
|
21
|
%
|
Operating costs and expenses:
|
|
|
|
|
|
|
|
|
Contract drilling services
|
|
$
|
698,343
|
|
|
$
|
629,937
|
|
|
$
|
68,406
|
|
|
11
|
%
|
Reimbursables (1)
|
|
49,061
|
|
|
37,084
|
|
|
11,977
|
|
|
32
|
%
|
Depreciation and amortization
|
|
440,221
|
|
|
467,302
|
|
|
(27,081
|
)
|
|
(6
|
)%
|
General and administrative
|
|
168,792
|
|
|
73,216
|
|
|
95,576
|
|
|
131
|
%
|
Loss on impairment
|
|
615,294
|
|
|
802,133
|
|
|
$
|
(186,839
|
)
|
|
(23
|
)%
|
|
|
1,971,711
|
|
|
2,009,672
|
|
|
(37,961
|
)
|
|
(2
|
)%
|
Operating loss
|
|
$
|
(666,273
|
)
|
|
$
|
(926,846
|
)
|
|
$
|
260,573
|
|
|
(28
|
)%
|
|
|
(1)
|
Changes in the amount of these reimbursables generally do not have a material effect on our financial position, results of operations or cash flows. For additional information, see Part II, Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations— Critical Accounting Policies.”
|
Operating Revenues. Contract drilling services revenues increased $210.0 million for the year ended December 31, 2019 as compared to the same period of 2018. During 2019, we recognized $166.9 million related to a one-time contract buyout on the Noble Bully II. In addition to the one-time contract buyout, revenue increased $43.1 million with our jackup fleet contributing $44.6 million of the increase offset by a reduction in revenues for our floating fleet of $1.5 million.
The $1.5 million decrease in our floater fleet is attributable to a $47.4 million decrease due to reductions in dayrates offset by a $45.9 million increase attributable to additional operating days in the current period. The net reduction in dayrates was primarily comprised of approximately $90.5 million resulting from the expiration of legacy contracts that were replaced with lower rate contracts, partially offset by approximately $43.1 million attributable to new higher rate contracts, including utilization of the Company-owned managed pressure drilling system. Additional operating days in the current period were primarily attributable to the reactivations of the Noble Sam Croft and the Noble Tom Madden in early 2019 and late 2018, respectively, and the Noble Bob Douglas and the Noble Clyde Boudreaux operating during the majority of 2019. These operating day increases were partially offset by lower operating days on the Noble Don Taylor, which prepared for a new contract that commenced in late 2019, as well as fewer operating days as the Noble Paul Romano and the Noble Bully II completed contracts in late 2018 and late 2019, respectively.
The $44.6 million increase in our jackup fleet revenue is attributable to a $40.3 million increase for additional operating days and a $4.3 million increase from higher dayrates. The jackup fleet had a $53.1 million increase from additional operating days on various rigs, including the Noble Sam Hartley, the Noble Mick O’Brien and the Noble Hans Deul, as well as a $20.6 million increase from the Noble Johnny Whitstine and the Noble Joe Knight being placed into service for the first time. These increases were partially offset by a $33.4 million decrease in revenues attributable to fewer operating days primarily due to the Noble Gene House being retired in the first quarter of 2019 and the Noble Houston Colbert preparing for its contract that commenced in late 2019. There was also a $19.1 million increase due to higher dayrates on various rigs, primarily the Noble Hans Deul, the Noble Lloyd Noble and the Noble Regina Allen, offset by a $14.8 million decrease due to lower dayrates on various rigs, primarily the Noble Sam Hartley and the Noble Sam Turner.
Operating Costs and Expenses. Contract drilling services costs increased $68.4 million for the year ended December 31, 2019 as compared to the same period of 2018. The primary cost increases were due to: (i) a $31.2 million increase from the Noble Sam Croft, Noble Tom Madden and Noble Clyde Boudreaux experiencing a full operating year in 2019 after reactivation activities began in 2018, (ii) the Noble Johnny Whitstine and Noble Joe Knight commencing operations during 2019, resulting in an increase of $30.4 million, (iii) a $19.8 million increase on various rigs that had additional operating days during 2019 compared to 2018, (iv) a $13.7 million increase attributable to locations with higher operating costs, and (v) an acceleration of deferred costs of $6.8 million as a result of the Noble Bully II contract early termination. These increases were offset by a $28.3 million decrease for various rigs with fewer operating days during 2019 compared to 2018, as well as other cost reductions.
Depreciation and amortization decreased $27.1 million for the year ended December 31, 2019 as compared to the same period of 2018. The decline was due to the effect of rig impairments recorded during both the second and fourth quarters of 2018 and the third quarter of 2019.
Loss on Impairments. We recorded a loss on impairment of $615.3 million for the year ended December 31, 2019 as compared to a loss on impairment of $802.1 million for the same period of 2018. We evaluate our property and equipment for impairment whenever there are changes in facts that suggest that the value of the asset is not recoverable. In connection with the preparation of our financial statements for the year ended December 31, 2019 and 2018, we conducted a review of our fleet. The review included an assessment of certain assumptions, including future marketability of each unit in light of its current technical specifications. Based upon our impairment analysis, we impaired the carrying values to estimated fair values for the Noble Bully II, Noble Paul Romano, and certain capital spare equipment during 2019 and the Noble Bully I, Noble Dave Beard, Noble Gene House, Noble Joe Beall, Noble Paul Romano, and certain capital spare equipment during 2018. For additional information, see Part II, Item 8, “Financial Statements and Supplementary Data, Note 6— Loss on Impairment.”
Other Income and Expenses
General and Administrative Expenses. General and administrative expenses increased $95.6 million during the year ended December 31, 2019 as compared to the same period of 2018, primarily as a result of Noble-UK recognizing a $100.0 million expense in connection with ongoing litigation during the year ended December 31, 2019 coupled with higher legal fees, partially offset by a decrease in employee-related costs.
Interest Expense. Interest expense decreased $18.2 million during the year ended December 31, 2019 as compared to the same period of 2018. This decrease was primarily due to the retirement of a portion of various tranches of our senior notes as a result of tender offers and open market repurchases throughout 2018 and early 2019. This decrease was partially offset by additional interest expense from the issuance of our Senior Notes due 2026 (the “2026 Notes”) in January 2018, the issuance of our two Seller Loans in late 2018 and early 2019 and the borrowing on our Credit Facilities (as defined herein) throughout 2019. For additional information, see Part II, Item 8, “Financial Statements and Supplementary Data, Note 7— Debt”.
Income Tax Benefit. Our income tax benefit decreased by $68.1 million for the year ended December 31, 2019 as compared to the same period of 2018. Excluding the tax impact of extraordinary items consisting of a gain on debt extinguishment of $6.6 million, the release of uncertain tax positions related to the settlement of our 2010-2011 US tax audit of $33.7 million, internal restructuring of $36.8 million in the current period, asset impairments of $35.6 million in the prior period, and our 2017 US return-to-provision adjustment of $24.9 million in the prior period, our tax benefit increased by $38.6 million. This increase is due to an increase in our worldwide tax rate applied to a lower pre-tax loss for the current period as compared to the prior period, which included a negative worldwide tax rate applied to a higher pre-tax loss. The increase in the worldwide effective tax rate is primarily a result of the geographic mix of income and sources of revenue during the current period.
2018 Compared to 2017
Liquidity and Capital Resources
Overview
Net cash provided by operating activities was $186.8 million for the year ended December 31, 2019 as compared to $171.9 million for the year ended December 31, 2018. The increase in net cash provided by operating activities for the year ended December 31, 2019 was primarily attributable to the contract buyout for the Noble Bully II in 2019 and a $24.7 million decline in cash outflow from changes in other working capital accounts year-over-year. These increases are partially offset by a net reduction in tax refunds of $95.5 million year-over-year (including a one-time VAT payment for the temporary import of the Noble Houston Colbert into the UK, of which we received a full refund in January 2020), and a decrease in contract drilling services margin (excluding the Noble Bully II contract buyout) year-over-year. We had negative working capital of $94.8 million and working capital of $293.6 million at December 31, 2019 and December 31, 2018, respectively.
Net cash used in investing activities for the year ended December 31, 2019 was $256.0 million as compared to $189.4 million for the year ended December 31, 2018. The variance primarily relates to the purchase of the Noble Joe Knight, and shipyard projects undertaken to ready the Noble Johnny Whitstine and the Noble Joe Knight for their respective contracts with Saudi Aramco, and various major projects in the current period.
Net cash used in financing activities for the year ended December 31, 2019 was $200.7 million as compared to $269.4 million for the year ended December 31, 2018. Our primary use of cash in both periods was the retirement of a portion of various tranches of our senior notes as a result of tender offers. This use of cash was offset in the current period by net borrowings under our Credit Facilities.
In March 2019, we completed cash tender offers for our Senior Notes due 2020 (the “2020 Notes”), Senior Notes due 2021 (the “2021 Notes”), Senior Notes due 2022 (the “2022 Notes”) and Senior Notes due 2024 (the “2024 Notes”). Pursuant to such tender offers, we purchased $440.9 million aggregate principal amount of these senior notes for $400.0 million, plus accrued interest, using borrowings under the 2015 Credit Facility (as defined herein) and cash on hand.
Our principal sources of capital in the current period were cash generated from operating activities and funding from our Credit Facilities. Cash on hand during the current period was primarily used for the following:
|
|
•
|
normal recurring operating expenses;
|
|
|
•
|
retirement of a portion of various tranches of our senior notes in tender offers; and
|
Our currently anticipated cash flow needs, both in the short-term and long-term, may include the following:
|
|
•
|
normal recurring operating expenses;
|
|
|
•
|
planned and discretionary capital expenditures; and
|
|
|
•
|
repayments of debt and interest.
|
We currently expect to fund these cash flow needs with cash generated by our operations, cash on hand, borrowings under our 2017 Credit Facility (as defined herein) and potential issuances of equity or long-term debt. However, to adequately cover our expected cash flow needs, we may require capital in excess of the amount available from these sources, and we may seek additional sources of liquidity and/or delay or cancel certain discretionary capital expenditures or other payments as necessary. If additional financing sources are unavailable, or not available on reasonable terms, our financial condition, results of operations, growth and future prospects could be materially adversely affected, and we may be unable to continue as a going concern.
At December 31, 2019, we had a total contract drilling services backlog of approximately $1.5 billion, which includes a commitment of 52.0 percent of available days for 2020. For additional information regarding our backlog, see “—Contract Drilling Services Backlog.”
Capital Expenditures
Capital expenditures totaled $306.4 million, $281.3 million and $111.1 million for the years ended December 31, 2019, 2018 and 2017, respectively. Capital expenditures during 2019 consisted of the following:
|
|
•
|
$74.6 million for sustaining capital;
|
|
|
•
|
$120.3 million in major projects, including upgrades to the Noble Johnny Whitstine and Noble Joe Knight, reactivations and subsea and other related projects;
|
|
|
•
|
$83.8 million to purchase the Noble Joe Knight (inclusive of cash paid and seller financing);
|
|
|
•
|
$18.1 million for rebillable capital modifications; and
|
|
|
•
|
$9.6 million in capitalized interest.
|
Our total capital expenditure estimate for 2020 is is expected to range between $190.0 million and $200.0 million, of which approximately $115.0 million is currently anticipated to be spent for sustaining capital.
From time to time we consider possible projects that would require expenditures that are not included in our capital budget, and such unbudgeted expenditures could be significant. In addition, we will continue to evaluate acquisitions of drilling units from time to time. Other factors that could cause actual capital expenditures to materially exceed plan include delays and cost overruns in shipyards (including costs attributable to labor shortages), shortages of equipment, latent damage or deterioration to hull, equipment and machinery in excess of engineering estimates and assumptions, changes in governmental regulations and requirements, possible refurbishment and reactivation of rigs and changes in design criteria or specifications during repair or construction.
Share Capital
The declaration and payment of dividends require the 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 in accordance with UK law. Therefore, Noble-UK is not permitted to pay dividends out of share capital, which includes share premium. Noble has not paid dividends since the third quarter of 2016. The payment of future dividends will depend on our results of operations, financial condition, cash requirements, future business prospects, contractual and indenture restrictions and other factors deemed relevant by our Board of Directors.
At our 2019 Annual General Meeting, shareholders authorized our Board of Directors to increase share capital through the issuance of up to approximately 83.1 million ordinary shares (at current nominal value of $0.01 per share). The authority to allot shares will expire at the end of our 2020 Annual General Meeting unless we seek an extension from shareholders at that time. Other than shares issued to our directors under our Noble Corporation plc 2017 Director Omnibus Plan, the authority was not used to allot shares during the year ended December 31, 2019.
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 currently do not have shareholder authority to repurchase shares. During the years ended December 31, 2019, 2018 and 2017, we did not repurchase any of our shares.
Credit Facilities
2015 Credit Facility
Effective January 2018, in connection with entering into the 2017 Credit Facility, we amended our $300.0 million senior unsecured credit facility that would have matured in January 2020 and was guaranteed by our indirect, wholly-owned subsidiaries, Noble Holding (U.S.) LLC (“NHUS”) and Noble Holding International Limited (“NHIL”) (as amended, the “2015 Credit Facility”), which resulted in, among other things, a reduction in the aggregate principal amount of commitments thereunder. As a result of the 2015 Credit Facility's reduction in the aggregate principal amount of commitments, we recognized a net loss of approximately $2.3 million in the year ended December 31, 2018. On December 20, 2019, we repaid $300.0 million of outstanding borrowings and terminated the 2015 Credit Facility.
2017 Credit Facility
On December 21, 2017, Noble Cayman Limited, a Cayman Islands company and a wholly-owned indirect subsidiary of Noble-Cayman; Noble International Finance Company, a Cayman Islands company and a wholly-owned indirect subsidiary of Noble-Cayman; and Noble Holding UK Limited, a company incorporated under the laws of England and Wales and a wholly-owned direct subsidiary of Noble-UK (“NHUK”), as parent guarantor, entered into a new senior unsecured credit agreement (as amended, the “2017 Credit Facility” and, together with the 2015 Credit Facility, the “Credit Facilities”). In July 2019, we executed an amendment to our 2017 Credit Facility (the “First Amendment to the 2017 Credit Facility”), which, among other things, reduced the maximum aggregate amount of commitments thereunder from $1.5 billion to $1.3 billion. As a result of such reduction in the maximum aggregate amount of commitments, we recognized a net loss of approximately $0.7 million in the year ended December 31, 2019. Borrowings under the 2017 Credit Facility are subject to certain conditions precedent to advance loans. The First Amendment to the 2017 Credit Facility added a requirement that any amounts drawn under the 2017 Credit Facility plus any undrawn amounts needed to cause us to be in compliance with the $300.0 million Liquidity (as defined in the First Amendment to the 2017 Credit Facility) covenant not exceed the amount of the Indenture Secured Debt Basket (as defined in the First Amendment to the 2017 Credit Facility) at the time of each borrowing. The maximum aggregate amount of commitments under the 2017 Credit Facility on December 31, 2019 was $1.3 billion with approximately $660 million available to borrow. The First Amendment to the 2017 Credit Facility also replaced the debt to capitalization ratio financial covenant with a Senior Guaranteed Indebtedness to Adjusted EBITDA (each as defined in the First Amendment to the 2017 Credit Facility) ratio financial covenant, as described below.
The 2017 Credit Facility will mature in January 2023. Borrowings may be used for working capital and other general corporate purposes. The 2017 Credit Facility provides for a letter of credit sub-facility currently in the amount of $15.0 million, with the ability to increase such amount up to $500.0 million with the approval of the lenders. Borrowings under the 2017 Credit Facility bear interest at LIBOR plus an applicable margin, which is currently the maximum contractual rate of 4.25%. At December 31, 2019, we had $335.0 million of borrowings outstanding under the 2017 Credit Facility.
At December 31, 2019, we had $9.0 million of letters of credit issued under the 2017 Credit Facility and an additional $12.3 million in letters of credit and surety bonds issued under unsecured bilateral arrangements.
Both of our Credit Facilities had or have provisions which vary the applicable interest rates for borrowings based upon our debt ratings. We also paid a facility fee under the 2015 Credit Facility on the full commitments thereunder (used or unused) and pay a commitment fee under the 2017 Credit Facility on the daily unused amount of the underlying commitments, in each case which varies depending on our credit ratings. At December 31, 2019, the interest rates in effect under our 2017 Credit Facility were the highest permitted interest rates under that agreement.
Debt Issuance
In January 2018, we issued $750.0 million aggregate principal amount of the 2026 Notes through our indirect wholly-owned subsidiary, NHIL. The net proceeds of the offering of approximately $737.4 million, after expenses, were used to retire a portion of our near-term senior notes in a related tender offer.
The indenture for the 2026 Notes contains certain covenants and restrictions, including, among others, restrictions on our subsidiaries’ ability to incur certain additional indebtedness. Additionally, the subsidiary guarantors must own, directly or indirectly, (i) assets comprising at least 85% of the revenue of Noble-Cayman and its subsidiaries on a consolidated basis and (ii) jackups, semisubmersibles, drillships, submersibles or other mobile offshore drilling units of material importance, the combined book value of which comprises at least 85% of the combined book value of all such assets of Noble-Cayman and its subsidiaries on a consolidated basis, in each case, with respect to the most recently completed fiscal year.
Seller Loans
2019 Seller Loan
In February 2019, we purchased the Noble Joe Knight for $83.8 million with a $53.6 million seller-financed secured loan (the “2019 Seller Loan”). The 2019 Seller Loan has a term of four years and requires a 5% principal payment at the end of the third year with the remaining 95% of the principal due at the end of the term. The 2019 Seller Loan bears a cash interest rate of 4.25% and the equivalent of a 1.25% interest rate paid-in-kind over the four-year term of the 2019 Seller Loan. Based on the terms of the 2019 Seller Loan, the 1.25% paid-in-kind interest rate is accelerated into the first year, resulting in an overall first year interest rate of 8.91%, of which only 4.25% is payable in cash. Thereafter, the paid-in-kind interest ends and the cash interest rate of 4.25% is payable for the remainder of the term.
2018 Seller Loan
In September 2018, we purchased the Noble Johnny Whitstine for $93.8 million with a $60.0 million seller-financed secured loan (the “2018 Seller Loan” and, together with the 2019 Seller Loan, the “Seller Loans”). The 2018 Seller Loan has a term of four years and requires a 5% principal payment at the end of the third year with the remaining 95% of the principal due at the end of the term. The 2018 Seller Loan bears a cash interest rate of 4.25% and the equivalent of a 1.25% interest rate paid-in-kind over the four-year term of the 2018 Seller Loan. Based on the terms of the 2018 Seller Loan, the 1.25% paid-in-kind interest rate is accelerated into the first year, resulting in an overall first year interest rate of 8.91%, of which only 4.25% is payable in cash. Thereafter, the paid-in-kind interest ends and the cash interest rate of 4.25% is payable for the remainder of the term.
Both of the Seller Loans are guaranteed by Noble-Cayman and each is secured by a mortgage on the applicable rig and by the pledge of the shares of the applicable single-purpose entity that owns the relevant rig. Each Seller Loan contains a debt to total capitalization ratio requirement that such ratio not exceed 0.55 at the end of each fiscal quarter, a $300.0 million minimum liquidity financial covenant and an asset and revenue covenant substantially similar to the 2026 Notes, as well as other covenants and provisions customarily found in secured transactions, including a cross default provision. Each Seller Loan requires immediate repayment on the occurrence of certain events, including the termination of the drilling contract associated with the relevant rig or circumstances in connection with a material adverse effect.
Senior Notes Interest Rate Adjustments
Our Senior Notes due 2025 and our Senior Notes due 2045 are subject to provisions that vary the applicable interest rates based on our debt rating. Effective April 2018, these senior notes have reached the contractually defined maximum interest rate set for each rating agency and no further interest rate increases are possible. The interest rates on these senior notes may be decreased if our debt ratings were to be raised by either rating agency above specified levels. Our other outstanding senior notes do not contain provisions varying applicable interest rates based upon our credit ratings.
Debt Tender Offers, Repayments and Open Market Repurchases
In March 2019, we completed cash tender offers for the 2020 Notes, the 2021 Notes, the 2022 Notes, and the 2024 Notes. Pursuant to such tender offers, we purchased $440.9 million aggregate principal amount of these senior notes for $400.0 million, plus accrued interest, using cash on hand and borrowings under the 2015 Credit Facility. As a result of this transaction, we recognized a net gain of approximately $31.3 million.
In October 2018, we purchased $27.4 million aggregate principal amount of various tranches of our senior notes for approximately $20.2 million, plus accrued interest, as open market repurchases and recognized a net gain of approximately $6.9 million.
In August 2018, we purchased $0.4 million aggregate principal amount of our Senior Notes due 2042 for approximately $0.3 million, plus accrued interest, as open market repurchases and recognized a net gain of approximately $0.1 million.
In March 2018, we repaid the remaining aggregate principal amount of $126.6 million of our Senior Notes due 2018 (the “2018 Notes”) at maturity using cash on hand.
In March 2018, we purchased $9.5 million aggregate principal amount of various tranches of our senior notes for approximately $8.7 million, plus accrued interest, as open market repurchases and recognized a net gain of approximately $0.5 million.
In February 2018, we redeemed the remaining principal amount of $61.9 million of our Senior Notes due 2019 (the “2019 Notes”) for approximately $65.3 million, plus accrued interest. As a result of this transaction, we recognized a net loss of approximately $3.5 million.
In February 2018, we completed cash tender offers for the 2018 Notes, the 2019 Notes, the 2020 Notes, the 2021 Notes, the 2022 Notes and the 2024 Notes. Pursuant to such tender offers, we purchased $754.2 million aggregate principal amount of these senior notes for $750.0 million, plus accrued interest, using the net proceeds of the 2026 Notes issuance and cash on hand. As a result of this transaction, we recognized a net loss of approximately $3.5 million.
Covenants
At December 31, 2019, the 2017 Credit Facility contained certain financial covenants applicable to NHUK and its subsidiaries, including (i) a covenant that limits our ratio of Senior Guaranteed Indebtedness to Adjusted EBITDA as of the last day of each fiscal quarter, with such ratio not being permitted to exceed 4.0 to 1.0 for the fiscal quarters ending September 30, 2019 through December 31, 2020, 3.5 to 1.0 for the fiscal quarters ending March 31, 2021 through December 31, 2021 and 3.0 to 1.0 for the fiscal quarters ending March 31, 2022 and thereafter, (ii) a minimum Liquidity requirement of $300.0 million, (iii) a covenant that the ratio of the Rig Value (as defined in the 2017 Credit Facility) of Marketed Rigs (as defined in the 2017 Credit Facility) to the sum of commitments under the 2017 Credit Facility plus indebtedness for borrowed money of the borrowers and guarantors, in each case, that directly own Marketed Rigs, is not less than 3:00 to 1:00 at the end of each fiscal quarter and (iv) a covenant that the ratio of (A) the Rig Value of the Closing Date Rigs (as defined in the 2017 Credit Facility) that are directly wholly owned by the borrowers and guarantors to (B) the Rig Value of the Closing Date Rigs owned by NHUK, subsidiaries of NHUK and certain local content affiliates, is not less than 80% at the end of each fiscal quarter (such covenants described in (iii) and (iv) of this paragraph, the “Guarantor Ratio Covenants”). The 2017 Credit Facility also includes restrictions on borrowings if, after giving effect to any such borrowings and the application of the proceeds thereof, the aggregate amount of Available Cash (as defined in the 2017 Credit Facility) would exceed $200.0 million and a requirement that any amounts drawn under the 2017 Credit Facility plus any undrawn amounts needed to cause us to be in compliance with the $300.0 million Liquidity covenant not exceed the amount of the Indenture Secured Debt Basket at the time of each borrowing. As of February 18, 2020, we had $335 million of borrowings outstanding under the 2017 Credit Facility, and we would have been able to borrow a maximum of an additional approximately $660 million thereunder.
NHUK has guaranteed the obligations of the borrowers under the 2017 Credit Facility. In addition, certain indirect subsidiaries of Noble-UK that own rigs are guarantors under the 2017 Credit Facility. Certain other subsidiaries of Noble-UK may be required from time to time to guarantee the obligations of the borrowers under the 2017 Credit Facility in order maintain compliance with the Guarantor Ratio Covenants.
The 2017 Credit Facility contains additional restrictive covenants generally applicable to NHUK and its subsidiaries, including restrictions on the incurrence of liens and indebtedness, mergers and other fundamental changes, restricted payments, repurchases and redemptions of indebtedness with maturities outside of the maturity of the 2017 Credit Facility, sale and leaseback transactions and transactions with affiliates.
In addition to the covenants from the 2017 Credit Facility noted above, the covenants from the 2026 Notes described under “—Debt Issuance” above and the covenants from the Seller Loans described under “—Seller Loans” 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. There are also restrictions on incurring or assuming certain liens and on entering into sale and lease-back transactions.
At December 31, 2019, our debt to total tangible capitalization ratio under our Seller Loans was approximately 0.50 and we were in compliance with all applicable debt covenants. We continually monitor compliance with the covenants under our 2017 Credit Facility, senior notes and Seller Loans, and expect to remain in compliance throughout 2020.
Summary of Contractual Cash Obligations and Commitments
The following table summarizes our contractual cash obligations and commitments (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Payments Due by Period
|
|
|
|
|
|
|
For the Years Ending December 31,
|
|
|
|
|
Total
|
|
2020
|
|
2021
|
|
2022
|
|
2023
|
|
2024
|
|
Thereafter
|
|
Other
|
Contractual Cash Obligations
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Debt obligations
|
|
$
|
3,886,905
|
|
|
$
|
62,535
|
|
|
$
|
82,937
|
|
|
$
|
83,730
|
|
|
$
|
388,462
|
|
|
$
|
397,025
|
|
|
$
|
2,872,216
|
|
|
$
|
—
|
|
Interest payments
|
|
3,341,726
|
|
|
276,580
|
|
|
271,623
|
|
|
268,527
|
|
|
235,818
|
|
|
219,714
|
|
|
2,069,464
|
|
|
—
|
|
Operating leases
|
|
50,203
|
|
|
9,463
|
|
|
7,734
|
|
|
5,345
|
|
|
3,527
|
|
|
3,604
|
|
|
20,530
|
|
|
—
|
|
Pension plan contributions
|
|
152,175
|
|
|
16,981
|
|
|
17,547
|
|
|
13,336
|
|
|
13,952
|
|
|
14,245
|
|
|
76,114
|
|
|
—
|
|
Tax reserves (1)
|
|
159,669
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
159,669
|
|
Total contractual cash obligations
|
|
$
|
7,590,678
|
|
|
$
|
365,559
|
|
|
$
|
379,841
|
|
|
$
|
370,938
|
|
|
$
|
641,759
|
|
|
$
|
634,588
|
|
|
$
|
5,038,324
|
|
|
$
|
159,669
|
|
|
|
(1)
|
Tax reserves are included in “Other” due to the difficulty in making reasonably reliable estimates of the timing of cash settlements to taxing authorities. See Part II, Item 8, “Financial Statements and Supplementary Data, Note 12— Income Taxes.”
|
At December 31, 2019, we had other commitments that we are contractually obligated to fulfill with cash if the obligations are called. These obligations include letters of credit that guarantee our performance as it relates to our drilling contracts, tax and other obligations in various jurisdictions. These letters of credit obligations are not normally called, as we typically comply with the underlying performance requirement.
The following table summarizes our other commercial commitments at December 31, 2019 (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amount of Commitment Expiration Per Period
|
|
|
Total
|
|
2020
|
|
2021
|
|
2022
|
|
2023
|
|
2024
|
|
Thereafter
|
Total letters of credit and commercial commitments
|
|
$
|
21,237
|
|
|
$
|
12,844
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
8
|
|
|
$
|
—
|
|
|
$
|
8,385
|
|
Critical Accounting Policies
We consider the following to be our critical accounting policies and estimates since they are very important to the understanding of our financial condition and results and require our most subjective and complex judgments. We have discussed the development, selection and disclosure of such policies and estimates with the Audit Committee of our Board of Directors. For a discussion of our significant accounting policies, refer to Part II, Item 8, “Financial Statements and Supplementary Data, Note 1— Organization and Significant Accounting Policies.”
We prepare our consolidated financial statements in accordance with accounting principles generally accepted in the United States (“GAAP”), which require us to make estimates that affect the reported amounts of assets, liabilities, revenues, expenses and related disclosures of contingent assets and liabilities. These estimates require significant judgments and assumptions. We base our estimates on historical experience and on various other assumptions that we believe are reasonable under the circumstances, the results of which form the basis for making judgments about the carrying amounts of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates.
Principles of Consolidation
The consolidated financial statements include our accounts and those of our wholly-owned subsidiaries and entities in which we hold a controlling financial interest. Until December 3, 2019, our consolidated financial statements included the accounts of two joint ventures, in each of which we owned a 50 percent interest. On December 3, 2019, we acquired the remaining 50 percent interest not owned by us and as a result the two joint ventures became our wholly-owned subsidiaries. Our historical ownership interest in the joint ventures met the definition of variable interest under Financial Accounting Standards Board (“FASB”) codification and we determined that we were the primary beneficiary. Intercompany balances and transactions have been eliminated in consolidation.
The combined carrying amount of the Bully-class drillships at December 31, 2018 totaled $0.7 billion. These assets were primarily funded through partner equity contributions. Cash held by the Bully joint ventures totaled approximately $45.2 million at December 31, 2018.
Basis of Presentation-UK Companies Act 2006 Section 435 Statement
The accompanying consolidated financial statements have been prepared in accordance with GAAP, which the Board of Directors considers to be the most meaningful presentation of our results of operations and financial position. The accompanying consolidated financial statements do not constitute statutory accounts required by the UK Companies Act 2006 (“Companies Act”), which will be prepared in accordance with International Financial Reporting Standards, as adopted by the European Union and delivered to the Registrar of Companies in the UK following the annual general meeting of shareholders.
Property and Equipment
Property and equipment is stated at cost, reduced by provisions to recognize economic impairment in value whenever events or changes in circumstances indicate an asset’s carrying value may not be recoverable. At December 31, 2019 and 2018, we had $88.9 million and $209.1 million of construction-in-progress, respectively. Such amounts are included in “Property and equipment, at cost” in the accompanying Consolidated Balance Sheets. Major replacements and improvements are capitalized. When assets are sold, retired or otherwise disposed of, the cost and related accumulated depreciation are eliminated from the accounts and the gain or loss is recognized. Drilling equipment and facilities are depreciated using the straight-line method over their estimated useful lives as of the date placed in service or date of major refurbishment. Estimated useful lives of our drilling equipment range from three to thirty years. Other property and equipment is depreciated using the straight-line method over useful lives ranging from two to forty years.
Interest is capitalized on construction-in-progress using the weighted average cost of debt outstanding during the period of construction. During the years ended December 31, 2019, 2018 and 2017, there was $9.6 million, $2.9 million and zero capitalized interest, respectively.
Scheduled maintenance of equipment is performed based on the number of hours operated in accordance with our preventative maintenance program. Routine repair and maintenance costs are charged to expense as incurred; however, the costs of the overhauls and asset replacement projects that benefit future periods and which typically occur every three to five years are capitalized when incurred and depreciated over an equivalent period. These overhauls and asset replacement projects are included in “Property and equipment, at cost” in the Consolidated Balance Sheets. Such amounts, net of accumulated depreciation, totaled $143.4 million and $146.3 million at December 31, 2019 and 2018, respectively. Depreciation expense from continuing operations related to overhauls and asset replacement totaled $61.3 million, $66.9 million and $79.2 million for the years ended December 31, 2019, 2018 and 2017, respectively.
We evaluate the impairment of property and equipment whenever events or changes in circumstances (including the decision to cold stack, retire or sell a rig) indicate that the carrying amount of an asset may not be recoverable. An impairment loss on our property and equipment may exist when the estimated undiscounted cash flows expected to result from the use of the asset and its eventual disposition are less than its carrying amount. Any impairment loss recognized represents the excess of the asset's carrying value over the estimated fair value. As part of this analysis, we make assumptions and estimates regarding future market conditions. To the extent actual results do not meet our estimated assumptions, for a given rig or piece of equipment, we may take an impairment loss in the future.
During the years ended December 31, 2019, 2018 and 2017, we recognized a non-cash loss on impairment of $615.3 million, $802.1 million and $121.6 million, respectively, related to our long-lived assets. See Part II, Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations— Executive Overview,” and Part II, Item 8, “Financial Statements and Supplementary Data, Note 6— Loss on Impairment” for additional information.
Revenue Recognition
The activities that primarily drive the revenue earned in our drilling contracts include (i) providing a drilling rig and the crew and supplies necessary to operate the rig, (ii) mobilizing and demobilizing the rig to and from the drill site, and (iii) performing rig preparation activities and/or modifications required for the contract. Consideration received for performing these activities may consist of dayrate drilling revenue, mobilization and demobilization revenue, contract preparation revenue and reimbursement revenue. We account for these integrated services provided within our drilling contracts as a single performance obligation satisfied over time and comprised of a series of distinct time increments in which we provide drilling services.
Our standard drilling contracts require that we operate the rig at the direction of the customer throughout the contract term (which is the period we estimate to benefit from the corresponding activities and generally ranges from two to 60 months). The activities performed and the level of service provided can vary hour to hour. Our obligation under a standard contract is to provide whatever level of service is required by the operator, or customer, over the term of the contract. We are, therefore, under a stand-ready obligation throughout the entire contract duration. Consideration for our stand-ready obligation corresponds to distinct time increments, though the rate may be variable depending on various factors, and is recognized in the period in which the services are performed. The total transaction price is determined for each individual contract by estimating both fixed and variable consideration expected to be earned over the term of the contract. We have elected to exclude from the transaction
price measurement all taxes assessed by a governmental authority. See further discussion regarding the allocation of the transaction price to the remaining performance obligations below.
The amount estimated for variable consideration may be subject to interrupted or restricted rates and is only included in the transaction price to the extent that it is probable that a significant reversal of previously recognized revenue will not occur throughout the term of the contract (“constrained revenue”). When determining if variable consideration should be constrained, management considers whether there are factors outside the Company’s control that could result in a significant reversal of revenue as well as the likelihood and magnitude of a potential reversal of revenue. These estimates are re-assessed each reporting period as required.
Dayrate Drilling Revenue. Our drilling contracts generally provide for payment on a dayrate basis, with higher rates for periods when the drilling unit is operating and lower rates or zero rates for periods when drilling operations are interrupted or restricted. The dayrate invoices billed to the customer are typically determined based on the varying rates applicable to the specific activities performed on an hourly basis. Such dayrate consideration is allocated to the distinct hourly increment it relates to within the contract term, and therefore, recognized in line with the contractual rate billed for the services provided for any given hour.
Mobilization/Demobilization Revenue. We may receive fees (on either a fixed lump-sum or variable dayrate basis) for the mobilization and demobilization of our rigs. These activities are not considered to be distinct within the context of the contract and, therefore, the associated revenue is allocated to the overall performance obligation and the associated pre-operating costs are deferred. We record a contract liability for mobilization fees received and a deferred asset for costs. Both revenue and pre-operating costs are recognized ratably over the initial term of the related drilling contract.
In most contracts, there is uncertainty as to the amount of expected demobilization revenue due to contractual provisions that stipulate that certain conditions must be present at contract completion for such revenue to be received and as to the amount thereof, if any. For example, contractual provisions may require that a rig demobilize a certain distance before the demobilization revenue is payable or the amount may vary dependent upon whether or not the rig has additional contracted work within a certain distance from the wellsite. Therefore, the estimate for such revenue may be constrained, as described earlier, depending on the facts and circumstances pertaining to the specific contract. We assess the likelihood of receiving such revenue based on past experience and knowledge of the market conditions. In cases where demobilization revenue is expected to be received upon contract completion, it is estimated as part of the overall transaction price at contract inception and recognized in earnings ratably over the initial term of the contract with an offset to an accretive contract asset.
Contract Preparation Revenue. Some of our drilling contracts require downtime before the start of the contract to prepare the rig to meet customer requirements. At times, we may be compensated by the customer for such work (on either a fixed lump-sum or variable dayrate basis). These activities are not considered to be distinct within the context of the contract and, therefore, the related revenue is allocated to the overall performance obligation and recognized ratably over the initial term of the related drilling contract. We record a contract liability for contract preparation fees received, which is amortized ratably to contract drilling revenue over the initial term of the related drilling contract.
Bonuses, Penalties and Other Variable Consideration. We may receive bonus increases to revenue or penalty decreases to revenue. Based on historical data and ongoing communication with the operator/customer, we are able to reasonably estimate this variable consideration. We will record such estimated variable consideration and re-measure our estimates at each reporting date. For revenue estimated, but not received, we will record to “Prepaid expenses and other current assets” on our Consolidated Balance Sheets.
Capital Modification Revenue. From time to time, we may receive fees from our customers for capital improvements to our rigs to meet contractual requirements (on either a fixed lump-sum or variable dayrate basis). Such revenue is allocated to the overall performance obligation and recognized ratably over the initial term of the related drilling contract as these activities are integral to our drilling activities and are not considered to be a stand-alone service provided to the customer within the context of our contracts. We record a contract liability for such fees and recognize them ratably as contract drilling revenue over the initial term of the related drilling contract.
Revenues Related to Reimbursable Expenses. We generally receive reimbursements from our customers for the purchase of supplies, equipment, personnel services and other services provided at their request in accordance with a drilling contract or other agreement. Such reimbursable revenue is variable and subject to uncertainty, as the amounts received and timing thereof is highly dependent on factors outside of our influence. Accordingly, reimbursable revenue is constrained revenue and not included in the total transaction price until the uncertainty is resolved, which typically occurs when the related costs are incurred on behalf of a customer. We are generally considered a principal in such transactions and record the associated revenue at the gross amount billed to the customer as “Reimbursables and other” in our Consolidated Statements of Operations. Such amounts are recognized ratably over the period within the contract term during which the corresponding goods and services are to be consumed.
Deferred revenues from drilling contracts totaled $65.1 million and $80.8 million at December 31, 2019 and 2018, respectively. Such amounts are included in either “Other current liabilities” or “Other liabilities” in the accompanying Consolidated Balance Sheets, based upon our expected time of recognition. Related expenses deferred under drilling contracts totaled $30.8 million at December 31, 2019 as compared to $47.7
million at December 31, 2018 and are included in either “Prepaid expenses and other current assets,” “Other assets,” or “Property and equipment, net” in the accompanying Consolidated Balance Sheets, based upon our expected time of recognition.
We record reimbursements from customers for “out-of-pocket” expenses as revenues and the related direct cost as operating expenses.
Income Taxes
We currently operate, and have in the past operated, 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 upon challenge by a tax authority. We cannot predict or provide assurance as to the ultimate outcome of any existing or future assessments. Our net deferred tax asset balance at year-end reflects the application of our income tax accounting policies and is based on management’s estimates, judgments and assumptions regarding realizability. If it is more likely than not that a portion of the deferred tax assets will not be realized in a future period, the deferred tax assets will be reduced by a valuation allowance based on management’s estimates. The Company has adopted an accounting policy to look through the outside basis of partnerships and all other flow-through entities and exclude these from the computation of deferred taxes.
The Internal Revenue Service (“IRS”) has completed its examination procedures including all appeals and administrative reviews for the taxable years ended December 31, 2010 and 2011. In June 2019, the IRS examination team notified us that it was no longer proposing any adjustments with respect to our tax reporting for the taxable years ended December 31, 2010 and December 31, 2011. During the third quarter of 2017, the IRS initiated its examination of our 2012, 2013, 2014 and 2015 tax returns. In October 2019, we received a notice that the IRS added our 2016 and 2017 tax returns to its examination. We believe that we have accurately reported all amounts in our 2012, 2013, 2014, 2015, 2016 and 2017 tax returns.
Audit claims of approximately $74.0 million attributable to income and other business taxes were assessed against Noble entities in Mexico related to tax years 2005 and 2007 and in Australia related to tax years 2013 to 2016. We intend to vigorously defend our reported positions, and believe the ultimate resolution of the audit claims will not have a material adverse effect on our consolidated financial statements.
Insurance Reserves
We maintain various levels of self-insured retention for certain losses including property damage, loss of hire, employment practices liability, employers’ liability and general liability, among others. We accrue for property damage and loss of hire charges on a per event basis.
Employment practices liability claims are accrued based on actual claims during the year. Maritime employer’s liability claims are generally estimated using actuarial determinations. General liability claims are estimated by our internal claims department by evaluating the facts and circumstances of each claim (including incurred but not reported claims) and making estimates based upon historical experience with similar claims. At December 31, 2019 and 2018, loss reserves for personal injury and protection claims totaled $27.9 million and $22.4 million, respectively, and such amounts are included in “Other current liabilities” in the accompanying Consolidated Balance Sheets.
Certain Significant Estimates and Contingent Liabilities
The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amount of revenues and expenses during the reporting period. Certain accounting policies involve judgments and uncertainties to such an extent that there is reasonable likelihood that materially different amounts could have been reported under different conditions, or if different assumptions had been used. We evaluate our estimates and assumptions on a regular basis. We base our estimates on historical experience and various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates and assumptions used in preparation of our consolidated financial statements. We follow FASB standards regarding contingent liabilities, which are discussed in Part II, Item 8, “Financial Statements and Supplementary Data, Note 16— Commitments and Contingencies.”
Off-Balance Sheet Arrangements
We have no off-balance sheet arrangements as that term is defined in Item 303(a)(4)(ii) of Regulation S-K.
New Accounting Pronouncements
See Part II, Item 8, “Financial Statements and Supplementary Data, Note 1— Organization and Significant Accounting Policies” for a description of the recent accounting pronouncements.
Item 7A. Quantitative and Qualitative Disclosures about Market Risk.
Market risk is the potential for loss due to a change in the value of a financial instrument as a result of fluctuations in interest rates, currency exchange rates or equity prices, as further described below.
Interest Rate Risk
We are subject to market risk exposure related to changes in interest rates on borrowings under the 2017 Credit Facility. Interest on borrowings under our 2017 Credit Facility is at an agreed upon percentage point spread over LIBOR, or a base rate stated in the agreements. Borrowings under the 2017 Credit Facility bear interest at LIBOR plus an applicable margin, which is currently the maximum contractual rate of 4.25%. At December 31, 2019, we had $335.0 million of borrowings outstanding under the 2017 Credit Facility, plus $9.0 million of performance letters of credit.
Our Senior Notes due 2025 and our Senior Notes due 2045 are subject to provisions that vary the applicable interest rates based on our debt rating. Effective April 2018, these senior notes have reached the contractually defined maximum interest rate set for each rating agency and no further interest rate increases are possible. The interest rates on these senior notes may be decreased if our debt ratings were to be raised by either rating agency above specified levels. Our other outstanding senior notes do not contain provisions varying applicable interest rates based upon our credit ratings.
We maintain certain debt instruments at a fixed rate whose fair value will fluctuate based on changes in market expectations for interest rates and perceptions of our credit risk. The fair value of our total debt was $2.2 billion and $2.9 billion at December 31, 2019 and December 31, 2018, respectively. The decrease in the fair value of debt relates to changes in market expectations for interest rates and perceptions of our credit risk and a reduction in total principal amount outstanding due to our debt repayments during 2019, partially offset by the issuance of the 2019 Seller Loan and draws on our Credit Facilities during 2019.
Foreign Currency Risk
Although we are a UK company, we define foreign currency as any non-US denominated currency. Our functional currency is the US Dollar. However, outside the United States, a portion of our expenses are incurred in local currencies. Therefore, when the US Dollar weakens (strengthens) in relation to the currencies of the countries in which we operate, our expenses reported in US Dollars will increase (decrease).
We are exposed to risks on future cash flows to the extent that local currency expenses exceed revenues denominated in local currency that are other than the functional currency. To help manage this potential risk, we periodically enter into derivative instruments to manage our exposure to fluctuations in currency exchange rates, and we may conduct hedging activities in future periods to mitigate such exposure. These contracts are primarily accounted for as cash flow hedges, with the effective portion of changes in the fair value of the hedge recorded on the Consolidated Balance Sheets and in “Accumulated other comprehensive income (loss)” (“AOCI”). Amounts recorded in AOCI are reclassified into earnings in the same period or periods that the hedged item is recognized in earnings. The ineffective portion of changes in the fair value of the hedged item is recorded directly to earnings. We have documented policies and procedures to monitor and control the use of derivative instruments. We do not engage in derivative transactions for speculative or trading purposes, nor are we a party to leveraged derivatives.
Several of our regional shorebases 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 have historically settled monthly in the operations’ respective local currencies. All of these contracts had a maturity of less than 12 months. During 2019 and 2018, we entered into forward contracts of approximately $15.8 million and zero, respectively, all of which settled during their respective years. At both December 31, 2019 and 2018, we had no outstanding derivative contracts.
Market Risk
We have a US noncontributory defined benefit pension plan that covers certain salaried employees and a US noncontributory defined benefit pension plan that covers certain hourly employees, whose initial date of employment is prior to August 1, 2004 (collectively referred to as our “qualified US plans”). These plans are governed by the Noble Drilling Employees’ Retirement Trust. The benefits from these plans are based primarily on years of service and, for the salaried plan, employees’ compensation near retirement. These plans are designed to qualify under the Employee Retirement Income Security Act of 1974 (“ERISA”), and our funding policy is consistent with funding requirements of ERISA and other applicable laws and regulations. We make cash contributions, or utilize credits available to us, for the qualified US plans when required. The benefit amount that can be covered by the qualified US plans is limited under ERISA and the Internal Revenue Code of 1986. Therefore, we maintain an unfunded, nonqualified excess benefit plan designed to maintain benefits for specified employees at the formula level in the qualified salary US plan. We refer to the qualified US plans and the excess benefit plan collectively as the “US plans.”
In addition to the US plans, Noble Drilling (Land Support) Limited, an indirect, wholly-owned subsidiary of Noble-UK, maintains a pension plan that covers all of its salaried, non-union employees, whose most recent date of employment is prior to April 1, 2014 (referred to as our “non-US plan”). Benefits are based on credited service and employees’ compensation, as defined by the non-US plan.
Changes in market asset values related to the pension plans noted above could have a material impact upon our Consolidated Statements of Comprehensive Income (Loss) and could result in material cash expenditures in future periods.
Item 8. Financial Statements and Supplementary Data.
The following financial statements are filed in this Item 8:
Report of Independent Registered Public Accounting Firm
To the Board of Directors and
Shareholders of Noble Corporation plc:
Opinions on the Financial Statements and Internal Control over Financial Reporting
We have audited the accompanying consolidated balance sheets of Noble Corporation plc and its subsidiaries (the “Company”) as of December 31, 2019 and 2018, and the related consolidated statements of operations, comprehensive income (loss), cash flows and equity for each of the three years in the period ended December 31, 2019, including the related notes (collectively referred to as the “consolidated financial statements”). We also have audited the Company's internal control over financial reporting as of December 31, 2019, based on criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”).
In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of the Company as of December 31, 2019 and 2018, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2019 in conformity with accounting principles generally accepted in the United States of America. Also in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2019, based on criteria established in Internal Control - Integrated Framework (2013) issued by the COSO.
Basis for Opinions
The Company's management is responsible for these consolidated financial statements, for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting, included in Management’s Annual Report on Internal Control Over Financial Reporting appearing under Item 9A. Our responsibility is to express opinions on the Company’s consolidated financial statements and on the Company’s internal control over financial reporting based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud, and whether effective internal control over financial reporting was maintained in all material respects.
Our audits of the consolidated financial statements included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audits also included performing such other procedures as we considered necessary in the circumstances. We believe that our audits provide a reasonable basis for our opinions.
Definition and Limitations of Internal Control over Financial Reporting
A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
|
|
|
/s/ PricewaterhouseCoopers LLP
|
|
Houston, Texas
|
February 20, 2020
|
We have served as the Company’s auditor since 1994.
NOBLE CORPORATION PLC AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Unless otherwise indicated, dollar amounts in tables are in thousands, except per share data)
|
|
|
|
|
|
|
|
|
|
|
|
December 31,
2019
|
|
December 31,
2018
|
ASSETS
|
Current assets
|
|
|
|
|
Cash and cash equivalents
|
|
$
|
104,621
|
|
|
$
|
375,232
|
|
Accounts receivable, net
|
|
198,665
|
|
|
200,722
|
|
Taxes receivable
|
|
59,771
|
|
|
20,498
|
|
Prepaid expenses and other current assets
|
|
59,050
|
|
|
62,604
|
|
Total current assets
|
|
422,107
|
|
|
659,056
|
|
Property and equipment, at cost
|
|
10,306,625
|
|
|
10,956,412
|
|
Accumulated depreciation
|
|
(2,572,701
|
)
|
|
(2,475,694
|
)
|
Property and equipment, net
|
|
7,733,924
|
|
|
8,480,718
|
|
Other assets
|
|
128,467
|
|
|
125,149
|
|
Total assets
|
|
$
|
8,284,498
|
|
|
$
|
9,264,923
|
|
LIABILITIES AND EQUITY
|
Current liabilities
|
|
|
|
|
Current maturities of long-term debt
|
|
$
|
62,505
|
|
|
$
|
—
|
|
Accounts payable
|
|
108,208
|
|
|
125,557
|
|
Accrued payroll and related costs
|
|
56,056
|
|
|
50,284
|
|
Taxes payable
|
|
30,715
|
|
|
29,386
|
|
Interest payable
|
|
88,047
|
|
|
100,100
|
|
Other current liabilities
|
|
171,397
|
|
|
60,130
|
|
Total current liabilities
|
|
516,928
|
|
|
365,457
|
|
Long-term debt
|
|
3,779,499
|
|
|
3,877,402
|
|
Deferred income taxes
|
|
68,201
|
|
|
91,695
|
|
Other liabilities
|
|
260,898
|
|
|
275,795
|
|
Total liabilities
|
|
4,625,526
|
|
|
4,610,349
|
|
Commitments and contingencies (Note 16)
|
|
|
|
|
|
|
Shareholders' equity
|
|
|
|
|
Common stock, $0.01 par value, ordinary shares; 249,200 and 246,794 shares outstanding as of December 31, 2019 and December 31, 2018, respectively.
|
|
2,492
|
|
|
2,468
|
|
Additional paid-in capital
|
|
807,093
|
|
|
699,409
|
|
Retained earnings
|
|
2,907,776
|
|
|
3,608,366
|
|
Accumulated other comprehensive loss
|
|
(58,389
|
)
|
|
(57,072
|
)
|
Total shareholders' equity
|
|
3,658,972
|
|
|
4,253,171
|
|
Noncontrolling interests
|
|
—
|
|
|
401,403
|
|
Total equity
|
|
3,658,972
|
|
|
4,654,574
|
|
Total liabilities and equity
|
|
$
|
8,284,498
|
|
|
$
|
9,264,923
|
|
See accompanying notes to the consolidated financial statements.
NOBLE CORPORATION PLC AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unless otherwise indicated, dollar amounts in tables are in thousands, except per share data)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended December 31,
|
|
|
2019
|
|
2018
|
|
2017
|
Operating revenues
|
|
|
|
|
|
|
Contract drilling services
|
|
$
|
1,246,058
|
|
|
$
|
1,036,082
|
|
|
$
|
1,207,026
|
|
Reimbursables and other
|
|
59,380
|
|
|
46,744
|
|
|
29,889
|
|
|
|
1,305,438
|
|
|
1,082,826
|
|
|
1,236,915
|
|
Operating costs and expenses
|
|
|
|
|
|
|
Contract drilling services
|
|
698,343
|
|
|
629,937
|
|
|
642,937
|
|
Reimbursables
|
|
49,061
|
|
|
37,084
|
|
|
18,435
|
|
Depreciation and amortization
|
|
440,221
|
|
|
486,530
|
|
|
547,990
|
|
General and administrative
|
|
168,792
|
|
|
73,216
|
|
|
71,634
|
|
Loss on impairment
|
|
615,294
|
|
|
802,133
|
|
|
121,639
|
|
|
|
1,971,711
|
|
|
2,028,900
|
|
|
1,402,635
|
|
Operating loss
|
|
(666,273
|
)
|
|
(946,074
|
)
|
|
(165,720
|
)
|
Other income (expense)
|
|
|
|
|
|
|
Interest expense, net of amount capitalized
|
|
(279,435
|
)
|
|
(297,611
|
)
|
|
(291,989
|
)
|
Gain (loss) on extinguishment of debt, net
|
|
30,616
|
|
|
(1,793
|
)
|
|
—
|
|
Interest income and other, net
|
|
6,007
|
|
|
8,302
|
|
|
7,897
|
|
Loss from continuing operations before income taxes
|
|
(909,085
|
)
|
|
(1,237,176
|
)
|
|
(449,812
|
)
|
Income tax benefit (provision)
|
|
38,540
|
|
|
106,641
|
|
|
(42,629
|
)
|
Net loss from continuing operations
|
|
(870,545
|
)
|
|
(1,130,535
|
)
|
|
(492,441
|
)
|
Net loss from discontinued operations, net of tax
|
|
(3,821
|
)
|
|
—
|
|
|
(1,486
|
)
|
Net loss
|
|
(874,366
|
)
|
|
(1,130,535
|
)
|
|
(493,927
|
)
|
Net (income) loss attributable to noncontrolling interests
|
|
173,776
|
|
|
245,485
|
|
|
(22,584
|
)
|
Net loss attributable to Noble Corporation plc
|
|
$
|
(700,590
|
)
|
|
$
|
(885,050
|
)
|
|
$
|
(516,511
|
)
|
Net loss attributable to Noble Corporation plc
|
|
|
|
|
|
|
Loss from continuing operations
|
|
$
|
(696,769
|
)
|
|
$
|
(885,050
|
)
|
|
$
|
(515,025
|
)
|
Net loss from discontinued operations, net of tax
|
|
(3,821
|
)
|
|
—
|
|
|
(1,486
|
)
|
Net loss attributable to Noble Corporation plc
|
|
$
|
(700,590
|
)
|
|
$
|
(885,050
|
)
|
|
$
|
(516,511
|
)
|
Per share data
|
|
|
|
|
|
|
Basic:
|
|
|
|
|
|
|
Loss from continuing operations
|
|
$
|
(2.79
|
)
|
|
$
|
(3.59
|
)
|
|
$
|
(2.10
|
)
|
Loss from discontinued operations
|
|
(0.02
|
)
|
|
—
|
|
|
(0.01
|
)
|
Net loss attributable to Noble Corporation plc
|
|
$
|
(2.81
|
)
|
|
$
|
(3.59
|
)
|
|
$
|
(2.11
|
)
|
Diluted:
|
|
|
|
|
|
|
Loss from continuing operations
|
|
$
|
(2.79
|
)
|
|
$
|
(3.59
|
)
|
|
$
|
(2.10
|
)
|
Loss from discontinued operations
|
|
(0.02
|
)
|
|
—
|
|
|
(0.01
|
)
|
Net loss attributable to Noble Corporation plc
|
|
$
|
(2.81
|
)
|
|
$
|
(3.59
|
)
|
|
$
|
(2.11
|
)
|
Weighted- Average Shares Outstanding
|
|
|
|
|
|
|
Basic
|
|
248,949
|
|
|
246,614
|
|
|
244,743
|
|
Diluted
|
|
248,949
|
|
|
246,614
|
|
|
244,743
|
|
See accompanying notes to the consolidated financial statements.
NOBLE CORPORATION PLC AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
(Unless otherwise indicated, dollar amounts in tables are in thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended December 31,
|
|
|
2019
|
|
2018
|
|
2017
|
Net loss
|
|
$
|
(874,366
|
)
|
|
$
|
(1,130,535
|
)
|
|
$
|
(493,927
|
)
|
Other comprehensive income (loss)
|
|
|
|
|
|
|
|
|
Foreign currency translation adjustments
|
|
260
|
|
|
(2,729
|
)
|
|
990
|
|
Net pension plan gain (loss) (net of tax provision (benefit) of ($924), ($1,828) and $523 for the year ended December 31, 2019, 2018 and 2017, respectively)
|
|
(3,744
|
)
|
|
(7,099
|
)
|
|
6,774
|
|
Amortization of deferred pension plan amounts (net of tax provision of $584, $345 and $623 for the year ended December 31, 2019, 2018 and 2017, respectively)
|
|
2,197
|
|
|
1,298
|
|
|
1,393
|
|
Net pension plan curtailment and settlement expense (net of tax provision (benefit) of ($8), $28 and zero for the year ended December 31, 2019, 2018 and 2017, respectively)
|
|
(30
|
)
|
|
107
|
|
|
95
|
|
Prior service cost arising during the period (net of tax provision (benefit) of zero, ($55) and zero for the year ended December 31, 2019, 2018 and 2017, respectively)
|
|
—
|
|
|
(221
|
)
|
|
—
|
|
Other comprehensive income (loss), net
|
|
(1,317
|
)
|
|
(8,644
|
)
|
|
9,252
|
|
Net comprehensive (income) loss attributable to noncontrolling interests
|
|
173,776
|
|
|
245,485
|
|
|
(22,584
|
)
|
Comprehensive loss attributable to Noble Corporation plc
|
|
$
|
(701,907
|
)
|
|
$
|
(893,694
|
)
|
|
$
|
(507,259
|
)
|
See accompanying notes to the consolidated financial statements.
NOBLE CORPORATION PLC AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unless otherwise indicated, dollar amounts in tables are in thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended December 31,
|
|
|
2019
|
|
2018
|
|
2017
|
Cash flows from operating activities
|
|
|
|
|
|
|
Net loss
|
|
$
|
(874,366
|
)
|
|
$
|
(1,130,535
|
)
|
|
$
|
(493,927
|
)
|
Adjustments to reconcile net loss to net cash flow from operating activities:
|
|
|
|
|
|
|
Depreciation and amortization
|
|
440,221
|
|
|
486,530
|
|
|
547,990
|
|
Loss on impairment
|
|
615,294
|
|
|
802,133
|
|
|
121,639
|
|
(Gain) loss on extinguishment of debt, net
|
|
(30,616
|
)
|
|
1,793
|
|
|
—
|
|
Deferred income taxes
|
|
(17,825
|
)
|
|
(68,416
|
)
|
|
241,326
|
|
Amortization of share-based compensation
|
|
14,737
|
|
|
23,993
|
|
|
29,115
|
|
Other long-term asset write-off
|
|
—
|
|
|
—
|
|
|
29,032
|
|
Other costs, net
|
|
60,259
|
|
|
6,446
|
|
|
12,590
|
|
Changes in components of working capital
|
|
|
|
|
|
|
Change in taxes receivable
|
|
(11,225
|
)
|
|
84,847
|
|
|
(49,865
|
)
|
Net changes in other operating assets and liabilities
|
|
(9,708
|
)
|
|
(34,940
|
)
|
|
(21,225
|
)
|
Net cash provided by operating activities
|
|
186,771
|
|
|
171,851
|
|
|
416,675
|
|
Cash flows from investing activities
|
|
|
|
|
|
|
Capital expenditures
|
|
(268,783
|
)
|
|
(194,779
|
)
|
|
(120,707
|
)
|
Proceeds from disposal of assets, net
|
|
12,753
|
|
|
5,402
|
|
|
2,382
|
|
Net cash used in investing activities
|
|
(256,030
|
)
|
|
(189,377
|
)
|
|
(118,325
|
)
|
Cash flows from financing activities
|
|
|
|
|
|
|
Issuance of senior notes
|
|
—
|
|
|
750,000
|
|
|
—
|
|
Borrowings on credit facilities
|
|
755,000
|
|
|
—
|
|
|
—
|
|
Repayments of credit facilities
|
|
(420,000
|
)
|
|
—
|
|
|
—
|
|
Repayments of senior notes
|
|
(400,000
|
)
|
|
(972,708
|
)
|
|
(300,000
|
)
|
Debt issuance costs
|
|
(1,092
|
)
|
|
(15,639
|
)
|
|
(42
|
)
|
Purchase of noncontrolling interests
|
|
(106,744
|
)
|
|
—
|
|
|
—
|
|
Dividends paid to noncontrolling interests
|
|
(25,109
|
)
|
|
(27,579
|
)
|
|
(56,881
|
)
|
Taxes withheld on employee stock transactions
|
|
(2,779
|
)
|
|
(3,470
|
)
|
|
(4,320
|
)
|
Net cash used in financing activities
|
|
(200,724
|
)
|
|
(269,396
|
)
|
|
(361,243
|
)
|
Net decrease in cash, cash equivalents and restricted cash
|
|
(269,983
|
)
|
|
(286,922
|
)
|
|
(62,893
|
)
|
Cash, cash equivalents and restricted cash, beginning of period
|
|
375,907
|
|
|
662,829
|
|
|
725,722
|
|
Cash, cash equivalents and restricted cash, end of period
|
|
$
|
105,924
|
|
|
$
|
375,907
|
|
|
$
|
662,829
|
|
See accompanying notes to the consolidated financial statements.
NOBLE CORPORATION PLC AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF EQUITY
(Unless otherwise indicated, dollar amounts in tables are in thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares
|
|
Additional Paid-in Capital
|
|
Retained Earnings
|
|
Accumulated Other Comprehensive Loss
|
|
Noncontrolling Interests
|
|
Total Equity
|
|
|
Balance
|
|
Par Value
|
|
|
|
|
|
Balance at December 31, 2016
|
|
243,239
|
|
|
$
|
2,432
|
|
|
$
|
654,168
|
|
|
$
|
5,154,221
|
|
|
$
|
(52,140
|
)
|
|
$
|
708,764
|
|
|
$
|
6,467,445
|
|
Employee related equity activity
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amortization of share-based compensation
|
|
—
|
|
|
—
|
|
|
29,115
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
29,115
|
|
Issuance of share-based compensation shares
|
|
1,732
|
|
|
18
|
|
|
(23
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(5
|
)
|
Tax benefit of equity transactions
|
|
—
|
|
|
—
|
|
|
(4,338
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(4,338
|
)
|
Net income (loss)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(516,511
|
)
|
|
—
|
|
|
22,584
|
|
|
(493,927
|
)
|
Dividends paid to noncontrolling interests
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(56,881
|
)
|
|
(56,881
|
)
|
Dividends
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(33
|
)
|
|
—
|
|
|
—
|
|
|
(33
|
)
|
Other comprehensive income, net
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
9,252
|
|
|
—
|
|
|
9,252
|
|
Balance at December 31, 2017
|
|
244,971
|
|
|
$
|
2,450
|
|
|
$
|
678,922
|
|
|
$
|
4,637,677
|
|
|
$
|
(42,888
|
)
|
|
$
|
674,467
|
|
|
$
|
5,950,628
|
|
Tax effects of intra-entity asset transfers
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(148,393
|
)
|
|
—
|
|
|
—
|
|
|
(148,393
|
)
|
Stranded tax effect resulting from the Tax Cuts and Jobs Act
|
|
—
|
|
|
—
|
|
|
—
|
|
|
5,540
|
|
|
(5,540
|
)
|
|
—
|
|
|
—
|
|
Adjustment for adopting the revenue recognition standard
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(1,488
|
)
|
|
—
|
|
|
—
|
|
|
(1,488
|
)
|
Balance at January 1, 2018
|
|
244,971
|
|
|
2,450
|
|
|
678,922
|
|
|
4,493,336
|
|
|
(48,428
|
)
|
|
674,467
|
|
|
5,800,747
|
|
Employee related equity activity
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amortization of share-based compensation
|
|
—
|
|
|
—
|
|
|
23,993
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
23,993
|
|
Issuance of share-based compensation shares
|
|
1,823
|
|
|
18
|
|
|
(18
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
Tax benefit of equity transactions
|
|
—
|
|
|
—
|
|
|
(3,488
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(3,488
|
)
|
Net loss
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(885,050
|
)
|
|
—
|
|
|
(245,485
|
)
|
|
(1,130,535
|
)
|
Dividends paid to noncontrolling interests
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(27,579
|
)
|
|
(27,579
|
)
|
Dividend equivalents (1)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
80
|
|
|
—
|
|
|
—
|
|
|
80
|
|
Other comprehensive loss, net
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(8,644
|
)
|
|
—
|
|
|
(8,644
|
)
|
Balance at December 31, 2018
|
|
246,794
|
|
|
$
|
2,468
|
|
|
$
|
699,409
|
|
|
$
|
3,608,366
|
|
|
$
|
(57,072
|
)
|
|
$
|
401,403
|
|
|
$
|
4,654,574
|
|
Employee related equity activity
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amortization of share-based compensation
|
|
—
|
|
|
—
|
|
|
14,737
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
14,737
|
|
Issuance of share-based compensation shares
|
|
2,406
|
|
|
24
|
|
|
(24
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
Tax benefit of equity transactions
|
|
—
|
|
|
—
|
|
|
(2,803
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(2,803
|
)
|
Purchase of noncontrolling interests
|
|
—
|
|
|
—
|
|
|
95,774
|
|
|
—
|
|
|
—
|
|
|
(202,518
|
)
|
|
(106,744
|
)
|
Net loss
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(700,590
|
)
|
|
—
|
|
|
(173,776
|
)
|
|
(874,366
|
)
|
Dividends paid to noncontrolling interests
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(25,109
|
)
|
|
(25,109
|
)
|
Other comprehensive loss, net
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(1,317
|
)
|
|
—
|
|
|
(1,317
|
)
|
Balance at December 31, 2019
|
|
249,200
|
|
|
$
|
2,492
|
|
|
$
|
807,093
|
|
|
$
|
2,907,776
|
|
|
$
|
(58,389
|
)
|
|
$
|
—
|
|
|
$
|
3,658,972
|
|
|
|
(1)
|
Activity associated with dividend equivalents, which are related to 2016 performance awards to be paid upon vesting.
|
See accompanying notes to the consolidated financial statements.
Report of Independent Registered Public Accounting Firm
To the Board of Directors and
Shareholder of Noble Corporation:
Opinions on the Financial Statements and Internal Control over Financial Reporting
We have audited the accompanying consolidated balance sheets of Noble Corporation and its subsidiaries (the “Company”) as of December 31, 2019 and 2018, and the related consolidated statements of operations, comprehensive income (loss), cash flows and equity for each of the three years in the period ended December 31, 2019, including the related notes (collectively referred to as the “consolidated financial statements”). We also have audited the Company's internal control over financial reporting as of December 31, 2019, based on criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”).
In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of the Company as of December 31, 2019 and 2018, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2019 in conformity with accounting principles generally accepted in the United States of America. Also in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2019, based on criteria established in Internal Control - Integrated Framework (2013) issued by the COSO.
Basis for Opinions
The Company's management is responsible for these consolidated financial statements, for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting, included in Management’s Annual Report on Internal Control Over Financial Reporting appearing under Item 9A. Our responsibility is to express opinions on the Company’s consolidated financial statements and on the Company’s internal control over financial reporting based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud, and whether effective internal control over financial reporting was maintained in all material respects.
Our audits of the consolidated financial statements included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audits also included performing such other procedures as we considered necessary in the circumstances. We believe that our audits provide a reasonable basis for our opinions.
Definition and Limitations of Internal Control over Financial Reporting
A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
|
|
|
/s/ PricewaterhouseCoopers LLP
|
|
Houston, Texas
|
February 20, 2020
|
We have served as the Company’s auditor since 1994.
NOBLE CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Unless otherwise indicated, dollar amounts in tables are in thousands, except per share data)
|
|
|
|
|
|
|
|
|
|
|
|
December 31,
2019
|
|
December 31,
2018
|
ASSETS
|
Current assets
|
|
|
|
|
Cash and cash equivalents
|
|
$
|
104,575
|
|
|
$
|
374,375
|
|
Accounts receivable, net
|
|
198,665
|
|
|
200,722
|
|
Taxes receivable
|
|
59,771
|
|
|
20,498
|
|
Prepaid expenses and other current assets
|
|
57,890
|
|
|
61,917
|
|
Total current assets
|
|
420,901
|
|
|
657,512
|
|
Property and equipment, at cost
|
|
10,306,625
|
|
|
10,956,412
|
|
Accumulated depreciation
|
|
(2,572,701
|
)
|
|
(2,475,694
|
)
|
Property and equipment, net
|
|
7,733,924
|
|
|
8,480,718
|
|
Other assets
|
|
128,467
|
|
|
125,149
|
|
Total assets
|
|
$
|
8,283,292
|
|
|
$
|
9,263,379
|
|
LIABILITIES AND EQUITY
|
Current liabilities
|
|
|
|
|
Current maturities of long-term debt
|
|
$
|
62,505
|
|
|
$
|
—
|
|
Accounts payable
|
|
107,985
|
|
|
125,237
|
|
Accrued payroll and related costs
|
|
56,065
|
|
|
50,284
|
|
Taxes payable
|
|
30,715
|
|
|
29,386
|
|
Interest payable
|
|
88,047
|
|
|
100,100
|
|
Other current liabilities
|
|
71,397
|
|
|
60,012
|
|
Total current liabilities
|
|
416,714
|
|
|
365,019
|
|
Long-term debt
|
|
3,779,499
|
|
|
3,877,402
|
|
Deferred income taxes
|
|
68,201
|
|
|
91,695
|
|
Other liabilities
|
|
260,898
|
|
|
275,795
|
|
Total liabilities
|
|
4,525,312
|
|
|
4,609,911
|
|
Commitments and contingencies (Note 16)
|
|
|
|
|
|
|
Shareholder equity
|
|
|
|
|
Common stock, $0.10 par value, ordinary shares; 261,246 shares outstanding as of December 31, 2019 and December 31, 2018
|
|
26,125
|
|
|
26,125
|
|
Capital in excess of par value
|
|
757,545
|
|
|
647,082
|
|
Retained earnings
|
|
3,032,699
|
|
|
3,635,930
|
|
Accumulated other comprehensive loss
|
|
(58,389
|
)
|
|
(57,072
|
)
|
Total shareholder equity
|
|
3,757,980
|
|
|
4,252,065
|
|
Noncontrolling interests
|
|
—
|
|
|
401,403
|
|
Total equity
|
|
3,757,980
|
|
|
4,653,468
|
|
Total liabilities and equity
|
|
$
|
8,283,292
|
|
|
$
|
9,263,379
|
|
See accompanying notes to the consolidated financial statements.
NOBLE CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unless otherwise indicated, dollar amounts in tables are in thousands, except per share data)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended December 31,
|
|
|
2019
|
|
2018
|
|
2017
|
Operating revenues
|
|
|
|
|
|
|
Contract drilling services
|
|
$
|
1,246,058
|
|
|
$
|
1,036,082
|
|
|
$
|
1,207,026
|
|
Reimbursables and other
|
|
59,380
|
|
|
46,744
|
|
|
29,889
|
|
|
|
1,305,438
|
|
|
1,082,826
|
|
|
1,236,915
|
|
Operating costs and expenses
|
|
|
|
|
|
|
Contract drilling services
|
|
696,265
|
|
|
628,128
|
|
|
640,483
|
|
Reimbursables
|
|
49,061
|
|
|
37,084
|
|
|
18,435
|
|
Depreciation and amortization
|
|
437,690
|
|
|
482,660
|
|
|
543,119
|
|
General and administrative
|
|
34,602
|
|
|
38,203
|
|
|
41,087
|
|
Loss on impairment
|
|
615,294
|
|
|
802,133
|
|
|
121,639
|
|
|
|
1,832,912
|
|
|
1,988,208
|
|
|
1,364,763
|
|
Operating loss
|
|
(527,474
|
)
|
|
(905,382
|
)
|
|
(127,848
|
)
|
Other income (expense)
|
|
|
|
|
|
|
Interest expense, net of amount capitalized
|
|
(279,435
|
)
|
|
(297,611
|
)
|
|
(291,989
|
)
|
Gain (loss) on extinguishment of debt, net
|
|
30,616
|
|
|
(1,793
|
)
|
|
—
|
|
Interest income and other, net
|
|
6,670
|
|
|
8,282
|
|
|
7,733
|
|
Loss from continuing operations before income taxes
|
|
(769,623
|
)
|
|
(1,196,504
|
)
|
|
(412,104
|
)
|
Income tax benefit (provision)
|
|
38,540
|
|
|
106,534
|
|
|
(42,595
|
)
|
Net loss from continuing operations
|
|
(731,083
|
)
|
|
(1,089,970
|
)
|
|
(454,699
|
)
|
Net income from discontinued operations, net of tax
|
|
(3,821
|
)
|
|
—
|
|
|
2,967
|
|
Net loss
|
|
(734,904
|
)
|
|
(1,089,970
|
)
|
|
(451,732
|
)
|
Net (income) loss attributable to noncontrolling interests
|
|
173,776
|
|
|
245,485
|
|
|
(22,584
|
)
|
Net loss attributable to Noble Corporation
|
|
$
|
(561,128
|
)
|
|
$
|
(844,485
|
)
|
|
$
|
(474,316
|
)
|
See accompanying notes to the consolidated financial statements.
NOBLE CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
(Unless otherwise indicated, dollar amounts in tables are in thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended December 31,
|
|
|
2019
|
|
2018
|
|
2017
|
Net loss
|
|
$
|
(734,904
|
)
|
|
$
|
(1,089,970
|
)
|
|
$
|
(451,732
|
)
|
Other comprehensive income (loss)
|
|
|
|
|
|
|
|
|
Foreign currency translation adjustments
|
|
260
|
|
|
(2,729
|
)
|
|
990
|
|
Net pension plan gain (loss) (net of tax provision (benefit) of ($924), ($1,828) and $523 for the year ended December 31, 2019, 2018 and 2017, respectively)
|
|
(3,744
|
)
|
|
(7,099
|
)
|
|
6,774
|
|
Amortization of deferred pension plan amounts (net of tax provision of $584, $345 and $623 for the year ended December 31, 2019, 2018 and 2017, respectively)
|
|
2,197
|
|
|
1,298
|
|
|
1,393
|
|
Net pension plan curtailment and settlement expense (net of tax provision (benefit) of ($8), $28 and zero for the year ended December 31, 2019, 2018 and 2017, respectively)
|
|
(30
|
)
|
|
107
|
|
|
95
|
|
Prior service cost arising during the period (net of tax provision (benefit) of zero, ($55) and zero for the year ended December 31, 2019, 2018 and 2017, respectively)
|
|
—
|
|
|
(221
|
)
|
|
—
|
|
Other comprehensive income (loss), net
|
|
(1,317
|
)
|
|
(8,644
|
)
|
|
9,252
|
|
Net comprehensive (income) loss attributable to noncontrolling interests
|
|
173,776
|
|
|
245,485
|
|
|
(22,584
|
)
|
Comprehensive loss attributable to Noble Corporation
|
|
$
|
(562,445
|
)
|
|
$
|
(853,129
|
)
|
|
$
|
(465,064
|
)
|
See accompanying notes to the consolidated financial statements.
NOBLE CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unless otherwise indicated, dollar amounts in tables are in thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended December 31,
|
|
|
2019
|
|
2018
|
|
2017
|
Cash flows from operating activities
|
|
|
|
|
|
|
Net loss
|
|
$
|
(734,904
|
)
|
|
$
|
(1,089,970
|
)
|
|
$
|
(451,732
|
)
|
Adjustments to reconcile net loss to net cash flow from operating activities:
|
|
|
|
|
|
|
Depreciation and amortization
|
|
437,690
|
|
|
482,660
|
|
|
543,119
|
|
Loss on impairment
|
|
615,294
|
|
|
802,133
|
|
|
121,639
|
|
(Gain) loss on extinguishment of debt, net
|
|
(30,616
|
)
|
|
1,793
|
|
|
—
|
|
Deferred income taxes
|
|
(17,825
|
)
|
|
(68,416
|
)
|
|
241,326
|
|
Amortization of share-based compensation
|
|
14,689
|
|
|
23,945
|
|
|
29,046
|
|
Other long-term asset write-off
|
|
—
|
|
|
—
|
|
|
29,030
|
|
Other costs, net
|
|
(39,741
|
)
|
|
6,446
|
|
|
12,591
|
|
Change in components of working capital
|
|
|
|
|
|
|
Change in taxes receivable
|
|
(11,225
|
)
|
|
84,847
|
|
|
(49,865
|
)
|
Net changes in other operating assets and liabilities
|
|
(6,456
|
)
|
|
(30,679
|
)
|
|
(20,080
|
)
|
Net cash provided by operating activities
|
|
226,906
|
|
|
212,759
|
|
|
455,074
|
|
Cash flows from investing activities
|
|
|
|
|
|
|
Capital expenditures
|
|
(268,783
|
)
|
|
(194,779
|
)
|
|
(120,707
|
)
|
Proceeds from disposal of assets
|
|
12,753
|
|
|
5,402
|
|
|
2,382
|
|
Net cash used in investing activities
|
|
(256,030
|
)
|
|
(189,377
|
)
|
|
(118,325
|
)
|
Cash flows from financing activities
|
|
|
|
|
|
|
Borrowings on credit facilities
|
|
755,000
|
|
|
—
|
|
|
—
|
|
Issuance of senior notes
|
|
—
|
|
|
750,000
|
|
|
—
|
|
Repayment of credit facilities
|
|
(420,000
|
)
|
|
—
|
|
|
—
|
|
Repayments of senior notes
|
|
(400,000
|
)
|
|
(972,708
|
)
|
|
(300,000
|
)
|
Debt issuance costs
|
|
(1,092
|
)
|
|
(15,639
|
)
|
|
(42
|
)
|
Purchase of noncontrolling interests
|
|
(106,744
|
)
|
|
—
|
|
|
—
|
|
Dividends paid to noncontrolling interests
|
|
(25,109
|
)
|
|
(27,579
|
)
|
|
(56,881
|
)
|
Contributions (distributions) from (to) parent company, net
|
|
(42,103
|
)
|
|
(44,417
|
)
|
|
28,352
|
|
Net cash used in financing activities
|
|
(240,048
|
)
|
|
(310,343
|
)
|
|
(328,571
|
)
|
Net increase (decrease) in cash, cash equivalents and restricted cash
|
|
(269,172
|
)
|
|
(286,961
|
)
|
|
8,178
|
|
Cash, cash equivalents and restricted cash, beginning of period
|
|
375,050
|
|
|
662,011
|
|
|
653,833
|
|
Cash, cash equivalents and restricted cash, end of period
|
|
$
|
105,878
|
|
|
$
|
375,050
|
|
|
$
|
662,011
|
|
See accompanying notes to the consolidated financial statements.
NOBLE CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF EQUITY
(Unless otherwise indicated, dollar amounts in tables are in thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares
|
|
Additional Paid-in Capital
|
|
Retained Earnings
|
|
Accumulated Other Comprehensive Loss
|
|
Noncontrolling Interests
|
|
Total Equity
|
|
|
Balance
|
|
Par Value
|
|
|
|
|
|
Balance at December 31, 2016
|
|
261,246
|
|
|
$
|
26,125
|
|
|
$
|
594,091
|
|
|
$
|
5,115,137
|
|
|
$
|
(52,140
|
)
|
|
$
|
708,764
|
|
|
$
|
6,391,977
|
|
Contributions from parent company, net
|
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
28,352
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
28,352
|
|
Capital contribution by parent - share-based compensation
|
|
—
|
|
|
—
|
|
|
29,046
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
29,046
|
|
Net income (loss)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(474,316
|
)
|
|
—
|
|
|
22,584
|
|
|
(451,732
|
)
|
Dividends paid to noncontrolling interests
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(56,881
|
)
|
|
(56,881
|
)
|
Other comprehensive income, net
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
9,252
|
|
|
—
|
|
|
9,252
|
|
Balance at December 31, 2017
|
|
261,246
|
|
|
26,125
|
|
|
623,137
|
|
|
4,669,173
|
|
|
(42,888
|
)
|
|
674,467
|
|
|
5,950,014
|
|
Tax effects of intra-entity asset transfers
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(148,393
|
)
|
|
—
|
|
|
—
|
|
|
(148,393
|
)
|
Stranded tax effect resulting from the Tax Cuts and Jobs Act
|
|
—
|
|
|
—
|
|
|
—
|
|
|
5,540
|
|
|
(5,540
|
)
|
|
—
|
|
|
—
|
|
Adjustment for adopting the revenue recognition standard
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(1,488
|
)
|
|
—
|
|
|
—
|
|
|
(1,488
|
)
|
Balance at January 1, 2018
|
|
261,246
|
|
|
26,125
|
|
|
623,137
|
|
|
4,524,832
|
|
|
(48,428
|
)
|
|
674,467
|
|
|
5,800,133
|
|
Distributions to parent company, net
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(44,417
|
)
|
|
—
|
|
|
—
|
|
|
(44,417
|
)
|
Capital contribution by parent - share-based compensation
|
|
—
|
|
|
—
|
|
|
23,945
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
23,945
|
|
Net loss
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(844,485
|
)
|
|
—
|
|
|
(245,485
|
)
|
|
(1,089,970
|
)
|
Dividends paid to noncontrolling interests
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(27,579
|
)
|
|
(27,579
|
)
|
Other comprehensive loss, net
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(8,644
|
)
|
|
—
|
|
|
(8,644
|
)
|
Balance at December 31, 2018
|
|
261,246
|
|
|
26,125
|
|
|
647,082
|
|
|
3,635,930
|
|
|
(57,072
|
)
|
|
401,403
|
|
|
4,653,468
|
|
Distributions to parent company, net
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(42,103
|
)
|
|
—
|
|
|
—
|
|
|
(42,103
|
)
|
Capital contribution by parent - share-based compensation
|
|
—
|
|
|
—
|
|
|
14,689
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
14,689
|
|
Purchase of noncontrolling interests
|
|
—
|
|
|
—
|
|
|
95,774
|
|
|
—
|
|
|
—
|
|
|
(202,518
|
)
|
|
(106,744
|
)
|
Net loss
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(561,128
|
)
|
|
—
|
|
|
(173,776
|
)
|
|
(734,904
|
)
|
Dividends paid to noncontrolling interests
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(25,109
|
)
|
|
(25,109
|
)
|
Other comprehensive loss, net
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(1,317
|
)
|
|
—
|
|
|
(1,317
|
)
|
Balance at December 31, 2019
|
|
261,246
|
|
|
26,125
|
|
|
757,545
|
|
|
3,032,699
|
|
|
(58,389
|
)
|
|
—
|
|
|
3,757,980
|
|
See accompanying notes to the consolidated financial statements.
NOBLE CORPORATION PLC AND SUBSIDIARIES
NOBLE CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unless otherwise indicated, dollar amounts in tables are in thousands)
Note 1— Organization and Significant Accounting Policies
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 provide contract drilling services to the international oil and gas industry with our global fleet of mobile offshore drilling units. As of December 31, 2019, our fleet of 25 drilling rigs consisted of 12 floaters and 13 jackups.
We report our contract drilling operations as a single reportable segment, Contract Drilling Services, which reflects how we manage our business. 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 primarily of large, integrated, independent and government-owned or controlled oil and gas companies throughout the world.
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 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.
Beginning in 2019, we combined the semisubmersibles and drillships in our contract drilling services fleet into a single category, floaters, for reporting purposes. We have made certain reclassifications to prior year so as to conform to such current period presentation. The reclassification did not have a material effect on our Condensed Consolidated Statements of Operations or related disclosures.
Principles of Consolidation
The consolidated financial statements include our accounts and those of our wholly-owned subsidiaries and entities in which we hold a controlling financial interest. Until December 3, 2019 our consolidated financial statements included the accounts of two joint ventures, in each of which we owned a 50 percent interest. On December 3, 2019, we acquired the remaining 50 percent interest not owned by us and as a result the two joint ventures became our wholly-owned subsidiaries. Our historical ownership interest in the joint ventures met the definition of variable interest under Financial Accounting Standards Board (“FASB”) codification and we determined that we were the primary beneficiary. Intercompany balances and transactions have been eliminated in consolidation.
The combined carrying amount of the Bully-class drillships at December 31, 2018 totaled $0.7 billion. These assets were primarily funded through partner equity contributions. Cash held by the Bully joint ventures totaled approximately $45.2 million at December 31, 2018.
Foreign Currency Translation
Although we are a UK company, our functional currency is the US dollar, and we define any non-US dollar denominated currency as “foreign currencies.” In non-US locations where the US Dollar has been designated as the functional currency (based on an evaluation of factors including the markets in which the subsidiary operates, inflation, generation of cash flow, financing activities and intercompany arrangements), local currency transaction gains and losses are included in net income or loss. In non-US locations where the local currency is the functional currency, assets and liabilities are translated at the rates of exchange on the balance sheet date, while statement of operations items are translated at average rates of exchange during the year. The resulting gains or losses arising from the translation of accounts from the functional currency to the US Dollar are included in “Accumulated other comprehensive loss” in the Consolidated Balance Sheets. We did not recognize any material gains or losses on foreign currency transactions or translations during the three years ended December 31, 2019.
Cash and Cash Equivalents
Cash and cash equivalents include cash on hand, demand deposits with banks and all highly liquid investments with original maturities of three months or less. Our cash, cash equivalents and short-term investments are subject to potential credit risk, and certain of our cash accounts carry balances greater than the federally insured limits. Cash and cash equivalents are primarily held by major banks or investment firms. Our cash management and investment policies restrict investments to lower risk, highly liquid securities and we perform periodic evaluations of the relative credit standing of the financial institutions with which we conduct business.
NOBLE CORPORATION PLC AND SUBSIDIARIES
NOBLE CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unless otherwise indicated, dollar amounts in tables are in thousands)
Restricted Cash
We classify restricted cash balances in current assets if the restriction is expected to expire or otherwise be resolved within one year and in other assets if the restriction is expected to expire or otherwise be resolved in more than one year. As of December 31, 2019 and 2018, our restricted cash balance consisted of $1.3 million and $0.7 million, respectively, associated with our financing of the Noble Johnny Whitstine and Noble Joe Knight, recorded in Prepaid expenses and other current assets.
Accounts Receivable
We record accounts receivable at the amount we invoice our clients, net of allowance for doubtful accounts. We provide an allowance for uncollectible accounts, as necessary. Our allowance for doubtful accounts as of December 31, 2019 and 2018 was $1.9 million and $2.2 million, respectively.
Property and Equipment
Property and equipment is stated at cost, reduced by provisions to recognize economic impairment. Major replacements and improvements are capitalized. When assets are sold, retired or otherwise disposed of, the cost and related accumulated depreciation are eliminated from the accounts and the gain or loss is recognized. Drilling equipment and facilities are depreciated using the straight-line method over their estimated useful lives as of the date placed in service or date of major refurbishment. Estimated useful lives of our drilling equipment range from three to thirty years. Other property and equipment is depreciated using the straight-line method over useful lives ranging from two to forty years. Included in accounts payable were $36.0 million and $52.1 million of capital accruals as of December 31, 2019 and 2018, respectively.
Interest is capitalized on long-term construction project using the weighted average cost of debt outstanding during the period of construction.
Scheduled maintenance of equipment is performed based on the number of hours operated in accordance with our preventative maintenance program. Routine repair and maintenance costs are charged to expense as incurred; however, the costs of the overhauls and asset replacement projects that benefit future periods and which typically occur every three to five years are capitalized when incurred and depreciated over an equivalent period. These overhauls and asset replacement projects are included in “Drilling equipment and facilities” in “Note 5— Property and Equipment.”
We evaluate our property and equipment for impairment whenever there are changes in facts that suggest that the value of the asset is not recoverable. For more detailed information, see “Note 6— Loss on Impairment.”
Fair Value Measurements
We measure certain of our assets and liabilities based on a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. The three-level hierarchy, from highest to lowest level of observable inputs, are as follows:
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.
Revenue Recognition
The activities that primarily drive the revenue earned in our drilling contracts include (i) providing a drilling rig and the crew and supplies necessary to operate the rig, (ii) mobilizing and demobilizing the rig to and from the drill site, and (iii) performing rig preparation activities and/or modifications required for the contract. Consideration received for performing these activities may consist of dayrate drilling revenue, mobilization and demobilization revenue, contract preparation revenue and reimbursement revenue. We account for these integrated services provided within our drilling contracts as a single performance obligation satisfied over time and comprised of a series of distinct time increments in which we provide drilling services.
Our standard drilling contracts require that we operate the rig at the direction of the customer throughout the contract term (which is the period we estimate to benefit from the corresponding activities and generally ranges from two to 60 months). The activities performed and the level of service provided can vary hour to hour. Our obligation under a standard contract is to provide whatever level of service is required by the operator, or customer, over the term of the contract. We are, therefore, under a stand-ready obligation throughout the entire contract duration. Consideration for our stand-ready obligation corresponds to distinct time increments, though the rate may be variable depending on various factors,
NOBLE CORPORATION PLC AND SUBSIDIARIES
NOBLE CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unless otherwise indicated, dollar amounts in tables are in thousands)
and is recognized in the period in which the services are performed. The total transaction price is determined for each individual contract by estimating both fixed and variable consideration expected to be earned over the term of the contract. We have elected to exclude from the transaction price measurement all taxes assessed by a governmental authority. See further discussion regarding the allocation of the transaction price to the remaining performance obligations below.
The amount estimated for variable consideration may be subject to interrupted or restricted rates and is only included in the transaction price to the extent that it is probable that a significant reversal of previously recognized revenue will not occur throughout the term of the contract (“constrained revenue”). When determining if variable consideration should be constrained, management considers whether there are factors outside the Company’s control that could result in a significant reversal of revenue as well as the likelihood and magnitude of a potential reversal of revenue. These estimates are re-assessed each reporting period as required.
Dayrate Drilling Revenue. Our drilling contracts generally provide for payment on a dayrate basis, with higher rates for periods when the drilling unit is operating and lower rates or zero rates for periods when drilling operations are interrupted or restricted. The dayrate invoices billed to the customer are typically determined based on the varying rates applicable to the specific activities performed on an hourly basis. Such dayrate consideration is allocated to the distinct hourly increment it relates to within the contract term, and therefore, recognized in line with the contractual rate billed for the services provided for any given hour.
Mobilization/Demobilization Revenue. We may receive fees (on either a fixed lump-sum or variable dayrate basis) for the mobilization and demobilization of our rigs. These activities are not considered to be distinct within the context of the contract and, therefore, the associated revenue is allocated to the overall performance obligation and the associated pre-operating costs are deferred. We record a contract liability for mobilization fees received and a deferred asset for costs. Both revenue and pre-operating costs are recognized ratably over the initial term of the related drilling contract.
In most contracts, there is uncertainty as to the amount of expected demobilization revenue due to contractual provisions that stipulate that certain conditions must be present at contract completion for such revenue to be received and as to the amount thereof, if any. For example, contractual provisions may require that a rig demobilize a certain distance before the demobilization revenue is payable or the amount may vary dependent upon whether or not the rig has additional contracted work within a certain distance from the wellsite. Therefore, the estimate for such revenue may be constrained, as described earlier, depending on the facts and circumstances pertaining to the specific contract. We assess the likelihood of receiving such revenue based on past experience and knowledge of the market conditions. In cases where demobilization revenue is expected to be received upon contract completion, it is estimated as part of the overall transaction price at contract inception and recognized in earnings ratably over the initial term of the contract with an offset to an accretive contract asset.
Contract Preparation Revenue. Some of our drilling contracts require downtime before the start of the contract to prepare the rig to meet customer requirements. At times, we may be compensated by the customer for such work (on either a fixed lump-sum or variable dayrate basis). These activities are not considered to be distinct within the context of the contract and, therefore, the related revenue is allocated to the overall performance obligation and recognized ratably over the initial term of the related drilling contract. We record a contract liability for contract preparation fees received, which is amortized ratably to contract drilling revenue over the initial term of the related drilling contract.
Bonuses, Penalties and Other Variable Consideration. We may receive bonus increases to revenue or penalty decreases to revenue. Based on historical data and ongoing communication with the operator/customer, we are able to reasonably estimate this variable consideration. We will record such estimated variable consideration and re-measure our estimates at each reporting date. For revenue estimated, but not received, we will record to “Prepaid expenses and other current assets” on our Consolidated Balance Sheets.
Capital Modification Revenue. From time to time, we may receive fees from our customers for capital improvements to our rigs to meet contractual requirements (on either a fixed lump-sum or variable dayrate basis). Such revenue is allocated to the overall performance obligation and recognized ratably over the initial term of the related drilling contract as these activities are integral to our drilling activities and are not considered to be a stand-alone service provided to the customer within the context of our contracts. We record a contract liability for such fees and recognize them ratably as contract drilling revenue over the initial term of the related drilling contract.
Revenues Related to Reimbursable Expenses. We generally receive reimbursements from our customers for the purchase of supplies, equipment, personnel services and other services provided at their request in accordance with a drilling contract or other agreement. Such reimbursable revenue is variable and subject to uncertainty, as the amounts received and timing thereof is highly dependent on factors outside of our influence. Accordingly, reimbursable revenue is constrained revenue and not included in the total transaction price until the uncertainty is resolved, which typically occurs when the related costs are incurred on behalf of a customer. We are generally considered a principal in such transactions and record the associated revenue at the gross amount billed to the customer as “Reimbursables and other” in our Consolidated Statements of Operations. Such amounts are recognized ratably over the period within the contract term during which the corresponding goods and services are to be consumed.
NOBLE CORPORATION PLC AND SUBSIDIARIES
NOBLE CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unless otherwise indicated, dollar amounts in tables are in thousands)
Deferred revenues from drilling contracts totaled $65.1 million and $80.8 million at December 31, 2019 and 2018, respectively. Such amounts are included in either “Other current liabilities” or “Other liabilities” in the accompanying Consolidated Balance Sheets, based upon our expected time of recognition. Related expenses deferred under drilling contracts totaled $30.8 million at December 31, 2019 as compared to $47.7 million at December 31, 2018 and are included in either “Prepaid expenses and other current assets,” “Other assets” or “Property and equipment, net” in the accompanying Consolidated Balance Sheets, based upon our expected time of recognition.
We record reimbursements from customers for “out-of-pocket” expenses as revenues and the related direct cost as operating expenses.
Income Taxes
Income taxes are based on the laws and rates in effect in the countries in which operations are conducted or in which we or our subsidiaries are considered resident for income tax purposes. In certain circumstances, we expect that, due to changing demands of the offshore drilling markets and the ability to redeploy our offshore drilling units, certain of such units will not reside in a location long enough to give rise to future tax consequences. As a result, no deferred tax asset or liability has been recognized in these circumstances. Should our expectations change regarding the length of time an offshore drilling unit will be used in a given location, we will adjust deferred taxes accordingly.
Deferred tax assets and liabilities are recognized for the anticipated future tax effects of temporary differences between the financial statement basis and the tax basis of our assets and liabilities using the applicable jurisdictional tax rates at year-end. A valuation allowance for deferred tax assets is recorded when it is more likely than not that the deferred tax asset will not be realized in a future period.
We operate through various subsidiaries in numerous countries throughout the world, including the United States. Consequently, we are subject to changes in tax laws, treaties or regulations or the interpretation or enforcement thereof in the United States, UK and any other jurisdictions in which we or any of our subsidiaries operate or are resident. Our income tax expense is based upon our interpretation of the tax laws in effect in various countries at the time that the expense was incurred. If the IRS or other taxing authorities do not agree with our assessment of the effects of such laws, treaties and regulations, this could have a material adverse effect on us including the imposition of a higher effective tax rate on our worldwide earnings or a reclassification of the tax impact of our significant corporate restructuring transactions. The Company has adopted an accounting policy to look through the outside basis of partnerships and all other flow-through entities and exclude these from the computation of deferred taxes.
Insurance Reserves
We maintain various levels of self-insured retention for certain losses including property damage, loss of hire, employment practices liability, employers’ liability and general liability, among others. We accrue for property damage and loss of hire charges on a per event basis.
Employment practices liability claims are accrued based on actual claims during the year. Maritime employer’s liability claims are generally estimated using actuarial determinations. General liability claims are estimated by our internal claims department by evaluating the facts and circumstances of each claim (including incurred but not reported claims) and making estimates based upon historical experience with similar claims. At December 31, 2019 and 2018, loss reserves for personal injury and protection claims totaled $27.9 million and $22.4 million, respectively, and such amounts are included in “Other current liabilities” in the accompanying Consolidated Balance Sheets.
Earnings per Share
Our unvested share-based payment awards, which contain non-forfeitable rights to dividends, are participating securities and are included in the computation of earnings per share pursuant to the two-class method. The two-class method allocates undistributed earnings between common shares and participating securities. The diluted earnings per share calculation under the two-class method also includes the dilutive effect of potential shares issued in connection with stock options. The dilutive effect of stock options is determined using the treasury stock method.
Share-Based Compensation Plans
We record the grant date fair value of share-based compensation arrangements as compensation cost using a straight-line method over the service period. Share-based compensation is expensed or capitalized based on the nature of the employee’s activities.
Litigation Contingencies
We are involved in legal proceedings, claims, and regulatory, tax or government inquiries and investigations that arise in the ordinary course of business. Certain of these matters include speculative claims for substantial or indeterminate amounts of damages. We record a liability when we believe that it is both probable that a loss has been incurred and the amount can be reasonably estimated. If we determine that a loss is reasonably possible and the loss or range of loss can be estimated, we disclose the possible loss in the notes to the consolidated financial statements.
NOBLE CORPORATION PLC AND SUBSIDIARIES
NOBLE CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unless otherwise indicated, dollar amounts in tables are in thousands)
We review the developments in our contingencies that could affect the amount of the provisions that has been previously recorded, and the matters and related possible losses disclosed. We make adjustments to our provisions and changes to our disclosures accordingly to reflect the impact of negotiations, settlements, rulings, advice of legal counsel, and updated information. Significant judgement is required to determine both the probability and the estimated amount.
Discontinued Operations
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 plc (“Paragon Offshore”), to the holders of Noble’s ordinary shares. Paragon Offshore, which had been reflected as continuing operations in our consolidated financial statements prior to the Spin-off, meets the criteria for being reported as discontinued operations and has been reclassified as such in our results of operations.
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”). During the year ended December 31, 2017, we recorded a non-cash loss of $1.5 million in “Net loss from discontinued operations, net of tax” on our Consolidated Statement of Operations from the effects of Paragon Offshore's rejection of the Separation Agreements. During the year ended December 31, 2019, we recognized charges of $3.8 million recorded in “Net loss from discontinued operations, net of tax” on our Consolidated Statement of Operations relating to settlement of Mexico customs audits from rigs included in the Spin-off. For additional information related to the Spin-off, refer to “Note 16— Commitments and Contingencies.”
Certain Significant Estimates
The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amount of revenues and expenses during the reporting period. Certain accounting policies involve judgments and uncertainties to such an extent that there is reasonable likelihood that materially different amounts could have been reported under different conditions, or if different assumptions had been used. We evaluate our estimates and assumptions on a regular basis. We base our estimates on historical experience and various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates and assumptions used in preparation of our consolidated financial statements.
Accounting Pronouncements
Accounting Standards Adopted
In February 2016, the FASB issued Accounting Standards Update (“ASU”) No. 2016-02 (Topic 842, “Leases”), as amended, which generally requires lessees to recognize operating and financing lease liabilities and corresponding right-of-use assets on the balance sheet and to provide enhanced disclosures surrounding the amount, time and uncertainty of cash flows arising from lease agreements. We adopted this standard, on a modified retrospective basis, effective January 1, 2019 and did not restate comparative periods. Our adoption did not have a material effect on our consolidated financial statements.
With respect to leases in which we are the lessee, we recognized a lease liability and a corresponding right-of-use asset of approximately $28.0 million on our Consolidated Balance Sheet as of January 1, 2019. We have elected the package of practical expedients that permits us to not reassess (1) whether previously expired or existing contracts are or contain leases, (2) the lease classification for any expired or existing leases, and (3) any initial direct costs for any existing leases as of the effective date. In addition, we have elected the hindsight practical expedient in connection with our adoption of the new lease standard. As lessee, we have made the accounting policy election to not recognize a right-of-use asset lease and lease liability for leases with a term of 12 months or less. We will recognize lease payments in the Consolidated Statements of Operations on a straight-line basis over the lease term. We have also elected the practical expedient to not separate lease and non-lease components.
Our drilling contracts contain a lease component related to the underlying drilling equipment, in addition to the service component provided by our crews and our expertise to operate such drilling equipment. We have concluded the non-lease service of operating our equipment and providing expertise in the drilling of the client’s well is predominant in our drilling contracts. We have applied the practical expedient to account for the lease and associated nonlease components as a single component. With the election of the practical expedient, we will continue to present a single performance obligation under the new revenue guidance in Accounting Standards Codification (“ASC”) Topic 606, “Revenue from Contracts with Customers.”
NOBLE CORPORATION PLC AND SUBSIDIARIES
NOBLE CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unless otherwise indicated, dollar amounts in tables are in thousands)
Recently Issued Accounting Standards
In December 2019, the FASB issued ASU No. 2019-12, which amends ASC Subtopic 740, “Income Taxes” This update simplifies the accounting for income taxes by removing certain exceptions to general principles. The amendment is effective for fiscal years beginning after December 15, 2020 and is required to be adopted on a retrospective basis for all periods presented. We are evaluating what impact, if any, the adoption of this guidance will have on our consolidated financial statements.
In August 2018, the FASB issued ASU No. 2018-14, which amends ASC Subtopic 715-20, “Compensation — Retirement Benefits — Defined Benefit Plans — General.” This update applies to all employers that sponsor defined benefit pension or other postretirement plans and is part of the disclosure framework project to improve the effectiveness of disclosures in notes to the financial statements. The amendment is effective for fiscal years ending after December 15, 2020 and is required to be adopted on a retrospective basis for all periods presented. We do not expect the adoption of this guidance to materially affect our consolidated financial statements.
In June 2016, the FASB issued ASU No. 2016-13 (Topic 326, “Measurement of Credit Losses on Financial Instruments”), which requires changes to the recognition of credit losses on financial instruments not accounted for at fair value through net income, including loans, debt securities, trade receivables, net investments in leases and available-for-sale debt securities. This guidance will be effective for annual and interim periods beginning after December 15, 2019. Entities are required to apply the standard’s provisions as a cumulative-effect adjustment to retained earnings as of the beginning of the first reporting period in which the guidance is adopted. We do not expect the adoption of this guidance to materially affect our consolidated financial statements.
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 consolidated financial statements.
Note 2— Consolidated Joint Ventures
On December 3, 2019, we completed a transaction with a subsidiary of Royal Dutch Shell plc (“Shell”), in which Shell bought out the remaining term of its drilling contract for the drillship Noble Bully II for $166.9 million, and we acquired Shell’s 50 percent interests in the Bully I and Bully II joint ventures for $106.7 million. As a result of this transaction, the former joint venture entities became our wholly-owned subsidiaries.
Prior to this transaction, we maintained a 50 percent interest in the two joint ventures, each with Shell, that owned and operated the two Bully-class drillships. We had determined that we were the primary beneficiary of the joint ventures. Accordingly, we consolidated the entities in our consolidated financial statements after eliminating intercompany transactions. Shell’s equity interests were presented as noncontrolling interests on our Consolidated Balance Sheets.
During the years ended December 31, 2019, 2018 and 2017, the Bully joint ventures approved and paid dividends totaling $50.2 million, $55.2 million and $113.8 million, respectively. Of these amounts, 50 percent was paid to our former joint venture partner, Shell.
The combined carrying amount of the Bully-class drillships at December 31, 2018 totaled $0.7 billion. These assets were primarily funded through partner equity contributions. During the year ended December 31, 2019, we recognized a $595.5 million impairment charge on the Noble Bully II, of which $265.0 million is attributable to Shell, our former joint venture partner. During the year ended December 31, 2018, we recognized a $550.3 million impairment on the Noble Bully I, of which $250.3 million is attributable to our former joint venture partner. See “Note 6— Loss on Impairment” for additional information. Cash held by our wholly-owned subsidiaries that were formerly the Bully joint ventures totaled approximately $45.2 million at December 31, 2018.
NOBLE CORPORATION PLC AND SUBSIDIARIES
NOBLE CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unless otherwise indicated, dollar amounts in tables are in thousands)
Note 3— Loss Per Share
The following table presents the computation of basic and diluted loss per share for Noble-UK:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended December 31,
|
|
|
2019
|
|
2018
|
|
2017
|
Numerator:
|
|
|
|
|
|
|
|
|
|
Basic
|
|
|
|
|
|
|
Net loss from continuing operations
|
|
$
|
(696,769
|
)
|
|
$
|
(885,050
|
)
|
|
$
|
(515,025
|
)
|
Net loss from discontinued operations, net of tax
|
|
(3,821
|
)
|
|
—
|
|
|
(1,486
|
)
|
Net loss attributable to Noble Corporation plc
|
|
$
|
(700,590
|
)
|
|
$
|
(885,050
|
)
|
|
$
|
(516,511
|
)
|
Diluted
|
|
|
|
|
|
|
|
|
|
Net loss from continuing operations
|
|
$
|
(696,769
|
)
|
|
$
|
(885,050
|
)
|
|
$
|
(515,025
|
)
|
Net loss from discontinued operations, net of tax
|
|
(3,821
|
)
|
|
—
|
|
|
(1,486
|
)
|
Net loss attributable to Noble Corporation plc
|
|
$
|
(700,590
|
)
|
|
$
|
(885,050
|
)
|
|
$
|
(516,511
|
)
|
Denominator:
|
|
|
|
|
|
|
|
|
|
Weighted average shares outstanding - basic
|
|
248,949
|
|
|
246,614
|
|
|
244,743
|
|
Weighted average shares outstanding - diluted
|
|
248,949
|
|
|
246,614
|
|
|
244,743
|
|
Loss per share
|
|
|
|
|
|
|
|
|
|
Basic:
|
|
|
|
|
|
|
Loss from continuing operations
|
|
$
|
(2.79
|
)
|
|
$
|
(3.59
|
)
|
|
$
|
(2.10
|
)
|
Loss from discontinued operations
|
|
(0.02
|
)
|
|
—
|
|
|
(0.01
|
)
|
Net loss attributable to Noble Corporation plc
|
|
$
|
(2.81
|
)
|
|
$
|
(3.59
|
)
|
|
$
|
(2.11
|
)
|
Diluted:
|
|
|
|
|
|
|
|
Loss from continuing operations
|
|
$
|
(2.79
|
)
|
|
$
|
(3.59
|
)
|
|
$
|
(2.10
|
)
|
Loss from discontinued operations
|
|
(0.02
|
)
|
|
—
|
|
|
(0.01
|
)
|
Net loss attributable to Noble Corporation plc
|
|
$
|
(2.81
|
)
|
|
$
|
(3.59
|
)
|
|
$
|
(2.11
|
)
|
Dividends per share
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Only those items having a dilutive impact on our basic loss per share are included in diluted loss per share. For the years ended December 31, 2019, 2018 and 2017, 11.9 million, 12.5 million and 12.0 million share-based awards, respectively, were excluded from the diluted loss per share since the effect would have been anti-dilutive.
Note 4— Receivables from Customers
At December 31, 2016, 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 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. A Mexican subsidiary of Paragon Offshore, which had operated the Noble Max Smith, had been prosecuting the claim against Pemex. As of December 31, 2017, Paragon Offshore announced that, as part of its bankruptcy plan, it will liquidate the Mexican entity involved.
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 create 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 our Consolidated Statements of Operations during the year ended December 31, 2017.
NOBLE CORPORATION PLC AND SUBSIDIARIES
NOBLE CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unless otherwise indicated, dollar amounts in tables are in thousands)
Note 5— Property and Equipment
Property and equipment, at cost, for Noble-UK consisted of the following:
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended December 31,
|
|
|
2019
|
|
2018
|
Drilling equipment and facilities
|
|
$
|
10,014,314
|
|
|
$
|
10,546,376
|
|
Construction in progress
|
|
88,904
|
|
|
209,091
|
|
Other
|
|
203,407
|
|
|
200,945
|
|
Property and equipment, at cost
|
|
$
|
10,306,625
|
|
|
$
|
10,956,412
|
|
Capital expenditures, including capitalized interest, totaled $306.4 million, $281.3 million and $111.1 million for the years ended December 31, 2019, 2018 and 2017, respectively. During the years ended December 31, 2019, 2018 and 2017, capitalized interest was $9.6 million, $2.9 million and zero, respectively.
During the year ended December 31, 2017, we recognized a $14.3 million charge in “Contract drilling services” costs related to damages sustained on the Noble Danny Adkins and Noble Jim Day during Hurricane Harvey in the US Gulf of Mexico region.
On February 28, 2019, we purchased a new GustoMSC CJ46 rig, the Noble Joe Knight, from the PaxOcean Group (“PaxOcean”) in connection with a concurrently awarded drilling contract in the Middle East region. We paid $83.8 million for the rig, with $30.2 million paid in cash and the remaining $53.6 million of the purchase price financed with a loan by the seller. See “Note 7— Debt” for additional information.
On September 21, 2018, we purchased the Noble Johnny Whitstine, a new GustoMSC CJ46 design jackup rig, from PaxOcean in connection with a concurrently awarded drilling contract in the Middle East region. We paid $93.8 million for the rig, with $33.8 million paid in cash and the remaining $60.0 million of the purchase price financed with a loan by the seller. See “Note 7— Debt” for additional information.
During the years ended December 31, 2019, 2018 and 2017, we recognized a non-cash loss on impairment of $615.3 million, $802.1 million and $121.6 million, respectively, related to our long-lived assets. See “Note 6— Loss on Impairment” for additional information.
Note 6— Loss on Impairment
Asset Impairments
In connection with the preparation of the consolidated financial statements included in this Annual Report, consistent with our accounting policies discussed in “Note 1— Organization and Significant Accounting Policies,” we evaluate our property and equipment for impairment whenever there are changes in facts that suggest that the value of the asset is not recoverable. In connection with the preparation of our financial statements for the year ended December 31, 2019, we conducted a review of our fleet. The review included an assessment of certain assumptions, including future marketability of each unit in light of its current technical specifications. Assumptions used in our assessment included, but were not limited to, timing of future contract awards and expected operating dayrates, operating costs, utilization rates, discount rates, capital expenditures, reactivation costs, estimated economic useful lives and, in certain cases, our belief that a drilling unit is no longer marketable and is unlikely to return to service.
During the years ended December 31, 2019, 2018, and 2017, we recognized non-cash losses on impairment of $615.3 million, $802.1 million and $121.6 million, respectively, related to certain rigs and related capital spares.
Based upon our impairment analyses, we impaired the carrying value to their corresponding estimated fair values for the Noble Bully II, Noble Paul Romano, and certain capital spare equipment, which resulted in an impairment charge of approximately $615.3 million for the year ended December 31, 2019. During the year ended December 31, 2019, we recognized a $595.5 million impairment on the Noble Bully II, of which $265.0 million was attributable to our joint venture partner at the time of impairment. See “Note 2— Consolidated Joint Ventures” for additional information. For our impaired units, we estimated the fair value of these units by applying the income valuation approach utilizing significant unobservable inputs, representative of a Level 3 fair value measurement. If we experience unfavorable changes to current market conditions, reactivation costs or dayrates, or we are unable to return cold stacked rigs to service in the anticipated time frame or if we are unable to secure new or extended contracts for our active rigs, it is reasonably possible that the estimate of undiscounted cash flows may change in the near term, resulting in the need to write down the affected assets to their corresponding estimated fair values.
NOBLE CORPORATION PLC AND SUBSIDIARIES
NOBLE CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unless otherwise indicated, dollar amounts in tables are in thousands)
Based upon our impairment analysis, we impaired the carrying values to their corresponding estimated fair values for the Noble Bully I, Noble Dave Beard, Noble Gene House, Noble Joe Beall, Noble Paul Romano, and certain capital spare equipment. During the year ended December 31, 2018, impairment charges related to these units and certain capital spare equipment were approximately $802.1 million. For our impaired units, we estimated the fair values of these units by applying the income valuation approach utilizing significant unobservable inputs, representative of a Level 3 fair value measurement. During the year ended December 31, 2018, we recognized a $550.3 million impairment on the Noble Bully I, of which $250.3 million was attributable to our joint venture partner at the time of impairment. See “Note 2— Consolidated Joint Ventures” for additional information.
During the year ended December 31, 2017, we identified indicators that certain assets in our fleet might not be recoverable. Such indicators included additional customer suspensions of drilling programs, contract cancellations, a further reduction in the number of new contract opportunities, resulting in reduced drilling contracts, and our belief that a drilling unit is no longer marketable and is unlikely to return to service. As a result, we determined that the carrying amounts of the Noble Amos Runner, Noble Alan Hay, Noble David Tinsley and certain capital spares were impaired and recorded an impairment charge of approximately $121.6 million.
Note 7— Debt
Credit Facilities
2015 Credit Facility
Effective January 2018, in connection with entering into the 2017 Credit Facility (as defined herein), we amended our $300.0 million senior unsecured credit facility that would have matured in January 2020 and was guaranteed by our indirect, wholly-owned subsidiaries, Noble Holding (U.S.) LLC (“NHUS”) and Noble Holding International Limited (“NHIL”) (as amended, the “2015 Credit Facility”), which resulted in, among other things, a reduction in the aggregate principal amount of commitments thereunder. As a result of the 2015 Credit Facility's reduction in the aggregate principal amount of commitments, we recognized a net loss of approximately $2.3 million in the year ended December 31, 2018. On December 20, 2019, we repaid $300.0 million of outstanding borrowings and terminated the 2015 Credit Facility.
2017 Credit Facility
On December 21, 2017, Noble Cayman Limited, a Cayman Islands company and a wholly-owned indirect subsidiary of Noble-Cayman; Noble International Finance Company, a Cayman Islands company and a wholly-owned indirect subsidiary of Noble-Cayman; and Noble Holding UK Limited, a company incorporated under the laws of England and Wales and a wholly-owned direct subsidiary of Noble-UK (“NHUK”), as parent guarantor, entered into a new senior unsecured credit agreement (as amended, the “2017 Credit Facility” and, together with the 2015 Credit Facility, the “Credit Facilities”). In July 2019, we executed an amendment to our 2017 Credit Facility (the “First Amendment to the 2017 Credit Facility”), which, among other things, reduced the maximum aggregate amount of commitments thereunder from $1.5 billion to $1.3 billion. As a result of such reduction in the maximum aggregate amount of commitments, we recognized a net loss of approximately $0.7 million in the year ended December 31, 2019. Borrowings under the 2017 Credit Facility are subject to certain conditions precedent to advance loans. The First Amendment to the 2017 Credit Facility added a requirement that any amounts drawn under the 2017 Credit Facility plus any undrawn amounts needed to cause us to be in compliance with the $300.0 million Liquidity (as defined in the First Amendment to the 2017 Credit Facility) covenant not exceed the amount of the Indenture Secured Debt Basket (as defined in the First Amendment to the 2017 Credit Facility) at the time of each borrowing. The maximum aggregate amount of commitments under the 2017 Credit Facility on December 31, 2019 was $1.3 billion with approximately $660 million available to borrow. The First Amendment to the 2017 Credit Facility also replaced the debt to capitalization ratio financial covenant with a Senior Guaranteed Indebtedness to Adjusted EBITDA (each as defined in the First Amendment to the 2017 Credit Facility) ratio financial covenant, as described below.
The 2017 Credit Facility will mature in January 2023. Borrowings may be used for working capital and other general corporate purposes. The 2017 Credit Facility provides for a letter of credit sub-facility currently in the amount of $15.0 million, with the ability to increase such amount up to $500.0 million with the approval of the lenders. Borrowings under the 2017 Credit Facility bear interest at LIBOR plus an applicable margin, which is currently the maximum contractual rate of 4.25%. At December 31, 2019, we had $335.0 million of borrowings outstanding under the 2017 Credit Facility.
At December 31, 2019, we had $9.0 million of letters of credit issued under the 2017 Credit Facility and an additional $12.2 million in letters of credit and surety bonds issued under unsecured bilateral arrangements.
Both of our Credit Facilities had or have provisions which vary the applicable interest rates for borrowings based upon our debt ratings. We also paid a facility fee under the 2015 Credit Facility on the full commitments thereunder (used or unused) and pay a commitment fee under the 2017 Credit Facility on the daily unused amount of the underlying commitments, in each case which varies depending on our credit ratings. At December 31, 2019, the interest rates in effect under our 2017 Credit Facility were the highest permitted interest rates under that agreement.
NOBLE CORPORATION PLC AND SUBSIDIARIES
NOBLE CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unless otherwise indicated, dollar amounts in tables are in thousands)
Debt Issuance
In January 2018, we issued $750.0 million aggregate principal amount of our Senior Notes due 2026 (the “2026 Notes”) through our indirect wholly-owned subsidiary, NHIL. The net proceeds of the offering of approximately $737.4 million, after expenses, were used to retire a portion of our near-term senior notes in a related tender offer.
The indenture for the 2026 Notes contains certain covenants and restrictions, including, among others, restrictions on our subsidiaries’ ability to incur certain additional indebtedness. Additionally, the subsidiary guarantors must own, directly or indirectly, (i) assets comprising at least 85% of the revenue of Noble-Cayman and its subsidiaries on a consolidated basis and (ii) jackups, semisubmersibles, drillships, submersibles or other mobile offshore drilling units of material importance, the combined book value of which comprises at least 85% of the combined book value of all such assets of Noble-Cayman and its subsidiaries on a consolidated basis, in each case, with respect to the most recently completed fiscal year.
Seller Loans
2019 Seller Loan
In February 2019, we purchased the Noble Joe Knight for $83.8 million with a $53.6 million seller-financed secured loan (the “2019 Seller Loan”). The 2019 Seller Loan has a term of four years and requires a 5% principal payment at the end of the third year with the remaining 95% of the principal due at the end of the term. The 2019 Seller Loan bears a cash interest rate of 4.25% and the equivalent of a 1.25% interest rate paid-in-kind over the four-year term of the 2019 Seller Loan. Based on the terms of the 2019 Seller Loan, the 1.25% paid-in-kind interest rate is accelerated into the first year, resulting in an overall first year interest rate of 8.91%, of which only 4.25% is payable in cash. Thereafter, the paid-in-kind interest ends and the cash interest rate of 4.25% is payable for the remainder of the term.
2018 Seller Loan
In September 2018, we purchased the Noble Johnny Whitstine for $93.8 million with a $60.0 million seller-financed secured loan (the “2018 Seller Loan” and, together with the 2019 Seller Loan, the “Seller Loans”). The 2018 Seller Loan has a term of four years and requires a 5% principal payment at the end of the third year with the remaining 95% of the principal due at the end of the term. The 2018 Seller Loan bears a cash interest rate of 4.25% and the equivalent of a 1.25% interest rate paid-in-kind over the four-year term of the 2018 Seller Loan. Based on the terms of the 2018 Seller Loan, the 1.25% paid-in-kind interest rate is accelerated into the first year, resulting in an overall first year interest rate of 8.91%, of which only 4.25% is payable in cash. Thereafter, the paid-in-kind interest ends and the cash interest rate of 4.25% is payable for the remainder of the term.
Both of the Seller Loans are guaranteed by Noble-Cayman and each is secured by a mortgage on the applicable rig and by the pledge of the shares of the applicable single-purpose entity that owns the relevant rig. Each Seller Loan contains a debt to total capitalization ratio requirement that such ratio not exceed 0.55 at the end of each fiscal quarter, a $300.0 million minimum liquidity financial covenant and an asset and revenue covenant substantially similar to the 2026 Notes, as well as other covenants and provisions customarily found in secured transactions, including a cross-default provision. Each Seller Loan requires immediate repayment on the occurrence of certain events, including the termination of the drilling contract associated with the relevant rig or circumstances in connection with a material adverse effect.
Senior Notes Interest Rate Adjustments
Our Senior Notes due 2025 and our Senior Notes due 2045 are subject to provisions that vary the applicable interest rates based on our debt rating. Effective April 2018, these senior notes have reached the contractually defined maximum interest rate set for each rating agency and no further interest rate increases are possible. The interest rates on these senior notes may be decreased if our debt ratings were to be raised by either rating agency above specified levels. Our other outstanding senior notes do not contain provisions varying applicable interest rates based upon our credit ratings.
Debt Tender Offers, Repayments and Open Market Repurchases
In March 2019, we completed cash tender offers for our Senior Notes due 2020 (the “2020 Notes”), Senior Notes due 2021 (the “2021 Notes”), Senior Notes due 2022 (the “2022 Notes”) and Senior Notes due 2024 (the “2024 Notes”). Pursuant to such tender offers, we purchased $440.9 million aggregate principal amount of these senior notes for $400.0 million, plus accrued interest, using cash on hand and borrowings under the 2015 Credit Facility. As a result of this transaction, we recognized a net gain of approximately $31.3 million.
In October 2018, we purchased $27.4 million aggregate principal amount of various tranches of our senior notes for approximately $20.2 million, plus accrued interest, as open market repurchases and recognized a net gain of approximately $6.9 million.
NOBLE CORPORATION PLC AND SUBSIDIARIES
NOBLE CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unless otherwise indicated, dollar amounts in tables are in thousands)
In August 2018, we purchased $0.4 million aggregate principal amount of our Senior Notes due 2042 for approximately $0.3 million, plus accrued interest, as open market repurchases and recognized a net gain of approximately $0.1 million.
In March 2018, we repaid the remaining aggregate principal amount of $126.6 million of our Senior Notes due 2018 (the “2018 Notes”) at maturity using cash on hand.
In March 2018, we purchased $9.5 million aggregate principal amount of various tranches of our senior notes for approximately $8.7 million, plus accrued interest, as open market repurchases and recognized a net gain of approximately $0.5 million.
In February 2018, we redeemed the remaining principal amount of $61.9 million of our Senior Notes due 2019 (the “2019 Notes”) for approximately $65.3 million, plus accrued interest. As a result of this transaction, we recognized a net loss of approximately $3.5 million.
In February 2018, we completed cash tender offers for the 2018 Notes, the 2019 Notes, the 2020 Notes, the 2021 Notes, the 2022 Notes, and the 2024 Notes. Pursuant to such tender offers, we purchased $754.2 million aggregate principal amount of these senior notes for $750.0 million, plus accrued interest, using the net proceeds of the 2026 Notes issuance and cash on hand. As a result of this transaction, we recognized a net loss of approximately $3.5 million.
Covenants
At December 31, 2019, the 2017 Credit Facility contained certain financial covenants applicable to NHUK and its subsidiaries, including (i) a covenant that limits our ratio of Senior Guaranteed Indebtedness to Adjusted EBITDA as of the last day of each fiscal quarter, with such ratio not being permitted to exceed 4.0 to 1.0 for the fiscal quarters ending September 30, 2019 through December 31, 2020, 3.5 to 1.0 for the fiscal quarters ending March 31, 2021 through December 31, 2021 and 3.0 to 1.0 for the fiscal quarters ending March 31, 2022 and thereafter, (ii) a minimum Liquidity requirement of $300.0 million, (iii) a covenant that the ratio of the Rig Value (as defined in the 2017 Credit Facility) of Marketed Rigs (as defined in the 2017 Credit Facility) to the sum of commitments under the 2017 Credit Facility plus indebtedness for borrowed money of the borrowers and guarantors, in each case, that directly own Marketed Rigs, is not less than 3:00 to 1:00 at the end of each fiscal quarter and (iv) a covenant that, the ratio of (A) the Rig Value of the Closing Date Rigs (as defined in the 2017 Credit Facility) that are directly wholly owned by the borrowers and guarantors to (B) the Rig Value of the Closing Date Rigs owned by NHUK, subsidiaries of NHUK and certain local content affiliates, is not less than 80% at the end of each fiscal quarter (such covenants described in (iii) and (iv) of this paragraph, the “Guarantor Ratio Covenants”). The 2017 Credit Facility also includes restrictions on borrowings if, after giving effect to any such borrowings and the application of the proceeds thereof, the aggregate amount of Available Cash (as defined in the 2017 Credit Facility) would exceed $200.0 million and a requirement that any amounts drawn under the 2017 Credit Facility plus any undrawn amounts needed to cause us to be in compliance with the $300.0 million Liquidity covenant not exceed the amount of the Indenture Secured Debt Basket at the time of each borrowing. As of February 18, 2020, we had $335 million of borrowings outstanding under the 2017 Credit Facility, and we would have been able to borrow a maximum of an additional approximately $660 million thereunder.
NHUK has guaranteed the obligations of the borrowers under the 2017 Credit Facility. In addition, certain indirect subsidiaries of Noble-UK that own rigs are guarantors under the 2017 Credit Facility. Certain other subsidiaries of Noble-UK may be required from time to time to guarantee the obligations of the borrowers under the 2017 Credit Facility in order maintain compliance with the Guarantor Ratio Covenants.
The 2017 Credit Facility contains additional restrictive covenants generally applicable to NHUK and its subsidiaries, including restrictions on the incurrence of liens and indebtedness, mergers and other fundamental changes, restricted payments, repurchases and redemptions of indebtedness with maturities outside of the maturity of the 2017 Credit Facility, sale and leaseback transactions and transactions with affiliates.
In addition to the covenants from the 2017 Credit Facility noted above, the covenants from the 2026 Notes described under “—Debt Issuance” above, and the covenants from the Seller Loans described under “—Seller Loans” 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. There are also restrictions on incurring or assuming certain liens and on entering into sale and lease-back transactions.
At December 31, 2019, our debt to total tangible capitalization ratio under our Seller Loans was approximately 0.50 and we were in compliance with all applicable debt covenants. We continually monitor compliance with the covenants under our 2017 Credit Facility, senior notes and Seller Loans and expect to remain in compliance throughout 2020. However, our failure to comply with those covenants could result in an event of default which, if not cured or waived, could result in the acceleration of all our debt, which could result in our inability to continue as a going concern.
NOBLE CORPORATION PLC AND SUBSIDIARIES
NOBLE CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unless otherwise indicated, dollar amounts in tables are in thousands)
Five-year debt obligations
At December 31, 2019, aggregate principal repayments of total debt for the next five years and thereafter are as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2020
|
|
2021
|
|
2022
|
|
2023
|
|
2024
|
|
Thereafter
|
|
Total
|
$
|
62,535
|
|
|
$
|
82,937
|
|
|
$
|
83,730
|
|
|
$
|
388,462
|
|
|
$
|
397,025
|
|
|
$
|
2,872,216
|
|
|
$
|
3,886,905
|
|
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 debt instruments 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). The carrying amount of the 2017 Credit Facility approximates fair value as the interest rate is variable and reflective of market rates. All remaining fair value disclosures are presented in “Note 15— Fair Value of Financial Instruments.”
The following table presents the carrying value, net of unamortized debt issuance costs and discounts, and the estimated fair value of our total debt, not including the effect of unamortized debt issuance costs, respectively:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2019
|
|
December 31, 2018
|
|
|
Carrying Value
|
|
Estimated Fair Value
|
|
Carrying Value
|
|
Estimated Fair Value
|
Senior unsecured notes
|
|
|
|
|
|
|
|
|
4.90% Senior Notes due August 2020
|
|
$
|
62,505
|
|
|
$
|
60,660
|
|
|
$
|
65,810
|
|
|
$
|
60,177
|
|
4.625% Senior Notes due March 2021
|
|
79,854
|
|
|
64,262
|
|
|
92,967
|
|
|
84,931
|
|
3.95% Senior Notes due March 2022
|
|
21,181
|
|
|
12,170
|
|
|
41,617
|
|
|
37,096
|
|
7.75% Senior Notes due January 2024
|
|
389,800
|
|
|
211,035
|
|
|
783,350
|
|
|
613,719
|
|
7.95% Senior Notes due April 2025
|
|
446,962
|
|
|
228,515
|
|
|
446,517
|
|
|
339,035
|
|
7.875% Senior Notes due February 2026
|
|
739,371
|
|
|
546,353
|
|
|
738,075
|
|
|
647,085
|
|
6.20% Senior Notes due August 2040
|
|
390,526
|
|
|
149,134
|
|
|
390,454
|
|
|
245,242
|
|
6.05% Senior Notes due March 2041
|
|
389,809
|
|
|
142,646
|
|
|
389,693
|
|
|
247,171
|
|
5.25% Senior Notes due March 2042
|
|
478,122
|
|
|
176,265
|
|
|
477,996
|
|
|
277,056
|
|
8.95% Senior Notes due April 2045
|
|
390,763
|
|
|
164,664
|
|
|
390,672
|
|
|
311,392
|
|
Seller loans:
|
|
|
|
|
|
|
|
|
Seller-financed secured loan due September 2022
|
|
62,453
|
|
|
36,968
|
|
|
60,251
|
|
|
57,902
|
|
Seller-financed secured loan due February 2023
|
|
55,658
|
|
|
31,175
|
|
|
—
|
|
|
—
|
|
Credit facility:
|
|
|
|
|
|
|
|
|
2017 Credit Facility matures January 2023
|
|
335,000
|
|
|
335,000
|
|
|
—
|
|
|
—
|
|
Total debt
|
|
3,842,004
|
|
|
2,158,847
|
|
|
3,877,402
|
|
|
2,920,806
|
|
Less: Current maturities of long-term debt
|
|
62,505
|
|
|
60,660
|
|
|
—
|
|
|
—
|
|
Long-term debt
|
|
$
|
3,779,499
|
|
|
$
|
2,098,187
|
|
|
$
|
3,877,402
|
|
|
$
|
2,920,806
|
|
Note 8— Equity
Share Capital
As of December 31, 2019, Noble-UK had approximately 249.2 million shares outstanding and trading as compared to approximately 246.8 million shares outstanding and trading at December 31, 2018. At our 2019 Annual General Meeting, shareholders authorized our Board of Directors to increase share capital through the issuance of up to approximately 83.1 million ordinary shares (at current nominal value of $0.01 per share). That authority to allot shares will expire at the end of our 2020 Annual General Meeting unless we seek an extension from shareholders at that time. Other than shares issued to our directors under our Noble Corporation plc 2017 Director Omnibus Plan, the authority was not used to allot shares during the year ended December 31, 2019.
NOBLE CORPORATION PLC AND SUBSIDIARIES
NOBLE CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unless otherwise indicated, dollar amounts in tables are in thousands)
The declaration and payment of dividends require the 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 in accordance with UK law. Therefore, Noble-UK is not permitted to pay dividends out of share capital, which includes share premium. Noble has not paid dividends since the third quarter of 2016. The payment of future dividends will depend on our results of operations, financial condition, cash requirements, future business prospects, contractual and indenture restrictions and other factors deemed relevant by our Board of Directors.
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 currently do not have shareholder authority to repurchase shares. During the years ended December 31, 2019, 2018 and 2017, we did not repurchase any of our shares.
Share-Based Compensation Plans
Stock Plans
During 2015, Noble Corporation plc shareholders approved a new equity plan, the Noble Corporation plc 2015 Omnibus Incentive Plan (the “Noble Incentive Plan”), which permits grants of options, stock appreciation rights (“SARs”), stock or stock unit awards or cash awards, any of which may be structured as a performance award, from time to time to employees who are to be granted awards under the Noble Incentive Plan. Neither consultants nor non-employee directors are eligible for awards under the Noble Incentive Plan. The Noble Incentive Plan replaced the Noble Corporation 1991 Stock Options and Restricted Stock Plan, as amended (the “1991 Plan”). The 1991 Plan was terminated, and equity awards have thereafter only been made under the Noble Incentive Plan. Stock option awards previously granted under the 1991 Plan remain outstanding in accordance with their terms.
During 2019, 2018 and 2017, the Noble Incentive Plan was restated and shareholders approved amendments, primarily to increase the number of ordinary shares available for issuance as long-term incentive compensation under the Noble Incentive Plan by 5.8 million, 5.0 million and 3.7 million shares, respectively. The maximum aggregate number of ordinary shares that may be granted for any and all awards under the Noble Incentive Plan will not exceed 31.3 million shares and at December 31, 2019, we had 13.2 million shares remaining available for grants to employees.
During 2017, upon shareholder approval, the Noble Corporation plc 2017 Director Omnibus Plan (the “Director Plan”) replaced the previous plans that were terminated. Equity awards to our non-employee directors have thereafter only been made under the Director Plan. No awards made under previous plans remain outstanding.
During 2019, shareholders approved amendments to increase the number of ordinary shares available for issuance under the Director Plan by 0.9 million shares, bringing the maximum aggregate number of ordinary shares that may be granted for any and all awards under the Director Plan to 1.8 million shares. At December 31, 2019, we had 1.0 million shares remaining for grants to non-employee directors.
Stock Options
Options have a term of 10 years, an exercise price equal to the fair market value of a share on the date of grant and generally vest over a three-year period. A summary of the status of stock options granted under the 1991 Plan as of December 31, 2019, 2018 and 2017 and the changes during the year ended on those dates is presented below:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2019
|
|
2018
|
|
2017
|
|
|
Number of
Shares
Underlying
Options
|
|
Weighted
Average
Exercise
Price
|
|
Number of
Shares
Underlying
Options
|
|
Weighted
Average
Exercise
Price
|
|
Number of
Shares
Underlying
Options
|
|
Weighted
Average
Exercise
Price
|
Outstanding at beginning of year
|
|
1,103,242
|
|
|
$
|
28.74
|
|
|
1,313,155
|
|
|
$
|
29.51
|
|
|
1,420,175
|
|
|
$
|
29.52
|
|
Expired
|
|
(394,842
|
)
|
|
24.85
|
|
|
(209,913
|
)
|
|
33.56
|
|
|
(107,020
|
)
|
|
29.74
|
|
Outstanding at end of year (1)
|
|
708,400
|
|
|
30.90
|
|
|
1,103,242
|
|
|
28.74
|
|
|
1,313,155
|
|
|
29.51
|
|
Exercisable at end of year (1)
|
|
708,400
|
|
|
$
|
30.90
|
|
|
1,103,242
|
|
|
$
|
28.74
|
|
|
1,313,155
|
|
|
$
|
29.51
|
|
|
|
(1)
|
Options outstanding and exercisable at December 31, 2019 had no intrinsic value.
|
NOBLE CORPORATION PLC AND SUBSIDIARIES
NOBLE CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unless otherwise indicated, dollar amounts in tables are in thousands)
The following table summarizes additional information about stock options outstanding at December 31, 2019:
|
|
|
|
|
|
|
|
|
|
|
|
|
Options Outstanding and Exercisable
|
|
|
Number of
Shares
Underlying
Options
|
|
Weighted
Average
Remaining
Life (Years)
|
|
Weighted
Average
Exercise
Price
|
$20.49 to $25.41
|
|
53,934
|
|
|
2.03
|
|
$
|
25.41
|
|
$25.42 to $30.59
|
|
277,177
|
|
|
2.10
|
|
30.59
|
|
$30.60 to $32.78
|
|
377,289
|
|
|
0.70
|
|
31.92
|
|
Total
|
|
708,400
|
|
|
1.33
|
|
$
|
30.90
|
|
The fair value of each option is estimated on the date of grant using a Black-Scholes pricing model. The expected term of options granted represents the period of time that the options are expected to be outstanding and is derived from historical exercise behavior, current trends and values derived from lattice-based models. Expected volatilities are based on implied volatilities of traded options on our shares, historical volatility of our shares, and other factors. The expected dividend yield is based on historical yields on the date of grant. The risk-free rate is based on the US Treasury yield curve in effect at the time of grant.
There were no non-vested stock option balances at December 31, 2019 or any changes during the year ended December 31, 2019. No new stock options were granted during the years ended December 31, 2019, 2018 and 2017. There was no compensation cost recognized during the years ended December 31, 2019, 2018 and 2017 related to stock options.
Restricted Stock Units (“RSUs”)
We have awarded both Time Vested (“TVRSUs”) and Performance Vested (“PVRSUs”) RSUs under the Noble Incentive Plan. The TVRSUs generally vest over a three-year period. The number of PVRSUs which vest will depend on the degree of achievement of specified corporate performance criteria over a three-year performance period. Depending on the date the PVRSU was awarded, these criteria consist of market based criteria or market and performance based criteria.
The TVRSUs are valued on the date of award at our underlying share price. The total compensation for units that ultimately vest is recognized over the service period. The shares and related nominal value are recorded when the restricted stock unit vests and additional paid-in capital is adjusted as the share-based compensation cost is recognized for financial reporting purposes.
The market-based PVRSUs are valued on the date of grant based on the estimated fair value. Estimated fair value is determined based on numerous assumptions, including an estimate of the likelihood that our stock price performance will achieve the targeted thresholds and the expected forfeiture rate. The fair value is calculated using a Monte Carlo Simulation Model. The assumptions used to value the PVRSUs include historical volatility and risk-free interest rates over a time period commensurate with the remaining term prior to vesting, as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
2019
|
|
2018
|
|
2017
|
Valuation assumptions:
|
|
|
|
|
|
|
|
|
|
Expected volatility
|
|
59.6
|
%
|
|
61.8
|
%
|
|
56.4
|
%
|
Risk-free interest rate
|
|
2.50
|
%
|
|
2.31
|
%
|
|
1.49
|
%
|
Additionally, similar assumptions were made for each of the companies included in the defined index and the peer group of companies in order to simulate the future outcome using the Monte Carlo Simulation Model.
NOBLE CORPORATION PLC AND SUBSIDIARIES
NOBLE CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unless otherwise indicated, dollar amounts in tables are in thousands)
A summary of the RSUs awarded for each of the years ended December 31, 2019, 2018 and 2017 is as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2019
|
|
2018
|
|
2017
|
TVRSU
|
|
|
|
|
|
|
|
|
|
Units awarded
|
|
4,639,119
|
|
|
3,578,212
|
|
|
3,231,225
|
|
Weighted-average share price at award date
|
|
$
|
3.02
|
|
|
$
|
4.71
|
|
|
$
|
6.96
|
|
Weighted-average vesting period (years)
|
|
3.0
|
|
|
3.0
|
|
|
3.0
|
|
PVRSU
|
|
|
|
|
|
|
|
|
|
Units awarded
|
|
1,623,399
|
|
|
2,733,906
|
|
|
2,474,978
|
|
Weighted-average share price at award date
|
|
$
|
3.13
|
|
|
$
|
4.55
|
|
|
$
|
7.28
|
|
Three-year performance period ended December 31
|
|
2021
|
|
|
2020
|
|
|
2019
|
|
Weighted-average award date fair value
|
|
$
|
3.61
|
|
|
$
|
2.96
|
|
|
$
|
4.37
|
|
During the years ended December 31, 2019, 2018 and 2017, we awarded 280,635, 267,204 and 197,316 shares, respectively, to our non-employee directors.
A summary of the status of non-vested RSUs at December 31, 2019 and changes during the year ended December 31, 2019 is presented below:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TVRSUs
Outstanding
|
|
Weighted
Average
Award-Date
Fair Value
|
|
PVRSUs
Outstanding (1)
|
|
Weighted
Average
Award-Date
Fair Value
|
Non-vested RSUs at January 1, 2019
|
|
5,224,403
|
|
|
$
|
5.71
|
|
|
6,191,067
|
|
|
$
|
4.38
|
|
Awarded
|
|
4,639,119
|
|
|
3.02
|
|
|
1,623,399
|
|
|
3.61
|
|
Vested
|
|
(2,597,672
|
)
|
|
6.08
|
|
|
(621,759
|
)
|
|
3.81
|
|
Forfeited
|
|
(936,821
|
)
|
|
4.44
|
|
|
(2,338,355
|
)
|
|
3.39
|
|
Non-vested RSUs at December 31, 2019
|
|
6,329,029
|
|
|
$
|
3.89
|
|
|
4,854,352
|
|
|
$
|
3.56
|
|
(1)For awards granted prior to 2019, the number of PVRSUs shown equals the units that would vest if the “maximum” level of performance is achieved. The minimum number of units is zero and the “target” level of performance is 50 percent of the amounts shown. For awards granted during 2019, the number of PVRSUs shown equals the units that would vest if the “target” level of performance is achieved. The minimum number of units is zero and the “maximum” level of performance is 200 percent of the amounts shown.
At December 31, 2019, there was $12.7 million of total unrecognized compensation cost related to the TVRSUs, which is expected to be recognized over a remaining weighted-average period of 1.6 years. The total award-date fair value of TVRSUs vested during the year ended December 31, 2019 was $15.8 million.
At December 31, 2019, there was $5.9 million of total unrecognized compensation cost related to the PVRSUs, which is expected to be recognized over a remaining weighted-average period of 1.1 years. The total potential compensation for PVRSUs is recognized over the service period regardless of whether the performance thresholds are ultimately achieved.
Share-based amortization recognized during the years ended December 31, 2019, 2018 and 2017 related to all restricted stock totaled $14.7 million ($14.1 million net of income tax), $24.0 million ($21.9 million net of income tax) and $29.1 million ($26.3 million net of income tax), respectively. During the years ended December 31, 2019, 2018 and 2017, capitalized share-based amortization was zero.
NOBLE CORPORATION PLC AND SUBSIDIARIES
NOBLE CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unless otherwise indicated, dollar amounts in tables are in thousands)
Note 9— Accumulated Other Comprehensive Income (Loss)
The following table presents the changes in the accumulated balances for each component of “Accumulated other comprehensive income (loss)” for the years ended December 31, 2019 and 2018. All amounts within the tables are shown net of tax.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Defined Benefit Pension Items (1)
|
|
Foreign Currency Items
|
|
Total
|
Balance at December 31, 2017
|
|
$
|
(27,603
|
)
|
|
$
|
(15,285
|
)
|
|
$
|
(42,888
|
)
|
Activity during period:
|
|
|
|
|
|
|
Stranded tax effect resulting from the Tax Cuts and Jobs Act
|
|
(5,540
|
)
|
|
—
|
|
|
(5,540
|
)
|
Balance at January 1, 2018
|
|
(33,143
|
)
|
|
(15,285
|
)
|
|
(48,428
|
)
|
Activity during period:
|
|
|
|
|
|
|
Other comprehensive loss before reclassifications
|
|
—
|
|
|
(2,729
|
)
|
|
(2,729
|
)
|
Amounts reclassified from AOCI
|
|
(5,915
|
)
|
|
—
|
|
|
(5,915
|
)
|
Net other comprehensive loss
|
|
(5,915
|
)
|
|
(2,729
|
)
|
|
(8,644
|
)
|
Balance at December 31, 2018
|
|
$
|
(39,058
|
)
|
|
$
|
(18,014
|
)
|
|
$
|
(57,072
|
)
|
Activity during period:
|
|
|
|
|
|
|
Other comprehensive income before reclassifications
|
|
—
|
|
|
260
|
|
|
260
|
|
Amounts reclassified from AOCI
|
|
(1,577
|
)
|
|
—
|
|
|
(1,577
|
)
|
Net other comprehensive income (loss)
|
|
(1,577
|
)
|
|
260
|
|
|
(1,317
|
)
|
Balance at December 31, 2019
|
|
$
|
(40,635
|
)
|
|
$
|
(17,754
|
)
|
|
$
|
(58,389
|
)
|
|
|
(1)
|
Defined benefit pension items relate to actuarial changes and the amortization of prior service costs. Reclassifications from AOCI are recognized as expense on our Consolidated Statements of Operations through “Other income (expense).” See “Note 13— Employee Benefit Plans” for additional information.
|
NOBLE CORPORATION PLC AND SUBSIDIARIES
NOBLE CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unless otherwise indicated, dollar amounts in tables are in thousands)
Note 10— Revenue and Customers
Contract Balances
Accounts receivable are recognized when the right to consideration becomes unconditional based upon contractual billing schedules. Payment terms on invoiced amounts are typically 30 days. Current contract asset and liability balances are included in “Prepaid expenses and other current assets” and “Other current liabilities,” respectively, and noncurrent contract assets and liabilities are included in “Other assets” and “Other liabilities,” respectively, on our Consolidated Balance Sheets.
The following table provides information about contract assets and contract liabilities from contracts with customers:
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2019
|
|
December 31, 2018
|
Current contract assets
|
|
$
|
21,292
|
|
|
$
|
25,298
|
|
Noncurrent contract assets
|
|
9,508
|
|
|
22,366
|
|
Total contract assets
|
|
30,800
|
|
|
47,664
|
|
|
|
|
|
|
Current contract liabilities (deferred revenue)
|
|
(34,196
|
)
|
|
(32,906
|
)
|
Noncurrent contract liabilities (deferred revenue)
|
|
(30,859
|
)
|
|
(47,847
|
)
|
Total contract liabilities
|
|
$
|
(65,055
|
)
|
|
$
|
(80,753
|
)
|
Significant changes in the remaining performance obligation contract assets and the contract liabilities balances for the years ended December 31, 2019 and 2018 are as follows:
|
|
|
|
|
|
|
|
|
|
|
|
Contract Assets
|
|
Contract Liabilities
|
Net balance at December 31, 2017
|
|
$
|
55,749
|
|
|
$
|
(108,861
|
)
|
|
|
|
|
|
Amortization of deferred costs
|
|
(32,420
|
)
|
|
—
|
|
Additions to deferred costs
|
|
24,335
|
|
|
—
|
|
Amortization of deferred revenue
|
|
—
|
|
|
47,798
|
|
Additions to deferred revenue
|
|
—
|
|
|
(19,690
|
)
|
Total
|
|
(8,085
|
)
|
|
28,108
|
|
|
|
|
|
|
Net balance at December 31, 2018
|
|
$
|
47,664
|
|
|
$
|
(80,753
|
)
|
|
|
|
|
|
Amortization of deferred costs
|
|
(39,936
|
)
|
|
—
|
|
Additions to deferred costs
|
|
23,072
|
|
|
—
|
|
Amortization of deferred revenue
|
|
—
|
|
|
65,312
|
|
Additions to deferred revenue
|
|
—
|
|
|
(49,614
|
)
|
Total
|
|
(16,864
|
)
|
|
15,698
|
|
|
|
|
|
|
Net balance at December 31, 2019
|
|
$
|
30,800
|
|
|
$
|
(65,055
|
)
|
Contract Costs
Certain direct and incremental costs incurred for upfront preparation, initial rig mobilization and modifications are costs of fulfilling a contract and are recoverable. These recoverable costs are deferred and amortized ratably to contract drilling expense as services are rendered over the initial term of the related drilling contract. Certain of our contracts include capital rig enhancements used to satisfy our performance obligations. These capital items are capitalized and depreciated in accordance with our existing property and equipment accounting policy.
NOBLE CORPORATION PLC AND SUBSIDIARIES
NOBLE CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unless otherwise indicated, dollar amounts in tables are in thousands)
Costs incurred for the demobilization of rigs at contract completion are recognized as incurred during the demobilization process. Costs incurred for rig modifications or upgrades required for a contract, which are considered to be capital improvements, are capitalized as drilling and other property and equipment and depreciated over the estimated useful life of the improvement.
Transaction Price Allocated to the Remaining Performance Obligations
The following table reflects revenue expected to be recognized in the future related to unsatisfied performance obligations, by rig type, at the end of the reporting period:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ending December 31,
|
|
|
2020
|
|
2021
|
|
2022
|
|
2023
|
|
2024 and beyond
|
|
Total
|
Floaters
|
|
$
|
17,252
|
|
|
$
|
10,584
|
|
|
$
|
7,798
|
|
|
$
|
3,548
|
|
|
$
|
—
|
|
|
$
|
39,182
|
|
Jackups
|
|
16,912
|
|
|
7,230
|
|
|
1,732
|
|
|
—
|
|
|
—
|
|
|
25,874
|
|
Total
|
|
$
|
34,164
|
|
|
$
|
17,814
|
|
|
$
|
9,530
|
|
|
$
|
3,548
|
|
|
$
|
—
|
|
|
$
|
65,056
|
|
The revenue included above consists of expected mobilization, demobilization, and upgrade revenue for unsatisfied performance obligations. The amounts are derived from the specific terms within drilling contracts that contain such provisions, and the expected timing for recognition of such revenue is based on the estimated start date and duration of each respective contract based on information known at December 31, 2019. The actual timing of recognition of such amounts may vary due to factors outside of our control. We have taken the optional exemption, permitted by accounting standards, to exclude disclosure of the estimated transaction price related to the variable portion of unsatisfied performance obligations at the end of the reporting period, as our transaction price is based on a single performance obligation consisting of a series of distinct hourly, or more frequent, periods, the variability of which will be resolved at the time of the future services.
Disaggregation of Revenue
The following table provides information about contract drilling revenue by rig types:
|
|
|
|
|
|
|
|
|
|
|
|
Twelve Months Ended December 31, 2019
|
|
Twelve Months Ended December 31, 2018
|
Floaters (1)
|
|
$
|
727,177
|
|
|
$
|
561,825
|
|
Jackups
|
|
518,881
|
|
|
474,257
|
|
Total (1)
|
|
$
|
1,246,058
|
|
|
$
|
1,036,082
|
|
(1) Includes the impact of the Noble Bully II contract buyout during the year ended December 31, 2019. Exclusive of this item, revenue for the year ended December 31, 2019 would have been $560,319 for floaters and $1,079,200 for total rigs.
Note 11— Leases
Leases
We determine if an arrangement is a lease at inception. Our operating lease agreements are primarily for real estate, equipment, storage, dock space and automobiles and are included within “Other current liabilities,” “Other assets” and “Other liabilities,” respectively, on our Consolidated Balance Sheets.
As most of our leases do not provide an implicit rate, we use our incremental borrowing rate based on the information available at commencement date in determining the present value of lease payments. Certain of our lease agreements include options to extend or terminate the lease, which we do not include in our minimum lease terms unless management is reasonably certain to exercise.
NOBLE CORPORATION PLC AND SUBSIDIARIES
NOBLE CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unless otherwise indicated, dollar amounts in tables are in thousands)
Supplemental balance sheet information related to leases was as follows:
|
|
|
|
|
|
|
|
December 31, 2019
|
Operating Leases
|
|
|
Operating lease right-of-use assets
|
|
$
|
33,480
|
|
Current operating lease liabilities
|
|
6,591
|
|
Long-term operating lease liabilities
|
|
26,778
|
|
|
|
|
|
|
Weighted average remaining lease term for operating leases (years)
|
|
7.7
|
|
Weighted average discounted rate for operating leases
|
|
9.7
|
%
|
The components of lease cost were as follows:
|
|
|
|
|
|
|
|
Twelve Months Ended December 31, 2019
|
Operating lease cost
|
|
$
|
8,878
|
|
Short-term lease cost
|
|
7,012
|
|
Variable lease cost
|
|
1,620
|
|
Total lease cost
|
|
$
|
17,510
|
|
Supplemental cash flow information related to leases was as follows:
|
|
|
|
|
|
|
|
Twelve Months Ended December 31, 2019
|
Cash paid for amounts included in the measurement of lease liabilities
|
|
|
Operating cash flows from operating leases
|
|
$
|
8,812
|
|
Maturities of lease liabilities as of December 31, 2019 were as follows:
|
|
|
|
|
|
|
|
Operating Leases
|
2020
|
|
$
|
9,463
|
|
2021
|
|
7,734
|
|
2022
|
|
5,345
|
|
2023
|
|
3,527
|
|
2024
|
|
3,604
|
|
Thereafter
|
|
20,530
|
|
Total lease payments
|
|
50,203
|
|
Less: Interest
|
|
(16,834
|
)
|
Present value of lease liability
|
|
$
|
33,369
|
|
Note 12— Income Taxes
Noble-UK is a company which is a tax resident in the UK and, as such, will be subject to UK corporation tax on its taxable profits and gains. A UK tax exemption is available in respect of qualifying dividends income and capital gains related to the sale of qualifying participations. We operate in various countries throughout the world, including the United States. The income or loss of the non-UK subsidiaries is not expected to be subject to UK corporation tax.
Consequently, we have taken account of the above exemption and provided for income taxes based on the laws and rates in effect in the countries in which operations are conducted, or in which we or our subsidiaries have a taxable presence for income tax purposes.
NOBLE CORPORATION PLC AND SUBSIDIARIES
NOBLE CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unless otherwise indicated, dollar amounts in tables are in thousands)
The components of the net deferred taxes are as follows:
|
|
|
|
|
|
|
|
|
|
|
|
2019
|
|
2018
|
Deferred tax assets
|
|
|
|
|
|
|
United States
|
|
|
|
|
|
|
Net operating loss carry forwards
|
|
$
|
129,695
|
|
|
$
|
95,577
|
|
Disallowed interest deduction carryforwards
|
|
92,030
|
|
|
51,423
|
|
Deferred pension plan amounts
|
|
10,447
|
|
|
11,887
|
|
Accrued expenses not currently deductible
|
|
8,434
|
|
|
9,688
|
|
Other
|
|
2,356
|
|
|
1,936
|
|
Non-United States
|
|
|
|
|
|
Net operating loss carry forwards
|
|
22,426
|
|
|
26,441
|
|
Disallowed interest deduction carryforwards
|
|
13,942
|
|
|
6,254
|
|
Deferred pension plan amounts
|
|
787
|
|
|
670
|
|
Deferred tax assets
|
|
280,117
|
|
|
203,876
|
|
Less: valuation allowance
|
|
(8,084
|
)
|
|
(12,306
|
)
|
Net deferred tax assets
|
|
$
|
272,033
|
|
|
$
|
191,570
|
|
Deferred tax liabilities
|
|
|
|
|
|
|
United States
|
|
|
|
|
|
|
Excess of net book basis over remaining tax basis
|
|
$
|
(299,136
|
)
|
|
$
|
(254,669
|
)
|
Other
|
|
(2,420
|
)
|
|
(6,482
|
)
|
Non-United States
|
|
|
|
|
|
|
Excess of net book basis over remaining tax basis
|
|
(4,780
|
)
|
|
(1,066
|
)
|
Other
|
|
(1,342
|
)
|
|
(1,596
|
)
|
Deferred tax liabilities
|
|
(307,678
|
)
|
|
(263,813
|
)
|
Net deferred tax liabilities
|
|
$
|
(35,645
|
)
|
|
$
|
(72,243
|
)
|
Loss from continuing operations before income taxes consists of the following:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended December 31,
|
|
|
2019
|
|
2018
|
|
2017
|
United States
|
|
$
|
(65,062
|
)
|
|
$
|
(136,083
|
)
|
|
$
|
(81,329
|
)
|
Non-United States
|
|
(844,022
|
)
|
|
(1,101,093
|
)
|
|
(368,485
|
)
|
Total
|
|
$
|
(909,084
|
)
|
|
$
|
(1,237,176
|
)
|
|
$
|
(449,814
|
)
|
NOBLE CORPORATION PLC AND SUBSIDIARIES
NOBLE CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unless otherwise indicated, dollar amounts in tables are in thousands)
The income tax provision (benefit) for continuing operations consists of the following:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended December 31,
|
|
|
2019
|
|
2018
|
|
2017
|
Current- United States
|
|
$
|
(34,726
|
)
|
|
$
|
(56,574
|
)
|
|
$
|
(227,707
|
)
|
Current- Non-United States
|
|
14,011
|
|
|
18,348
|
|
|
29,010
|
|
Deferred- United States
|
|
(5,307
|
)
|
|
(67,371
|
)
|
|
257,432
|
|
Deferred- Non-United States
|
|
(12,518
|
)
|
|
(1,044
|
)
|
|
(16,106
|
)
|
Total
|
|
$
|
(38,540
|
)
|
|
$
|
(106,641
|
)
|
|
$
|
42,629
|
|
The following is a reconciliation of our reserve for uncertain tax positions, excluding interest and penalties.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2019
|
|
2018
|
|
2017
|
Gross balance at January 1,
|
|
$
|
161,256
|
|
|
$
|
174,437
|
|
|
$
|
159,826
|
|
Additions based on tax positions related to current year
|
|
934
|
|
|
97
|
|
|
14,187
|
|
Additions for tax positions of prior years
|
|
224
|
|
|
25
|
|
|
1,284
|
|
Reductions for tax positions of prior years
|
|
(28,542
|
)
|
|
(12,806
|
)
|
|
(860
|
)
|
Expiration of statutes
|
|
(1,629
|
)
|
|
(497
|
)
|
|
—
|
|
Tax settlements
|
|
(1,406
|
)
|
|
—
|
|
|
—
|
|
Gross balance at December 31,
|
|
130,837
|
|
|
161,256
|
|
|
174,437
|
|
Related tax benefits
|
|
(400
|
)
|
|
(1,008
|
)
|
|
(1,008
|
)
|
Net reserve at December 31,
|
|
$
|
130,437
|
|
|
$
|
160,248
|
|
|
$
|
173,429
|
|
The liabilities related to our reserve for uncertain tax positions are comprised of the following:
|
|
|
|
|
|
|
|
|
|
|
|
2019
|
|
2018
|
Reserve for uncertain tax positions, excluding interest and penalties
|
|
$
|
130,437
|
|
|
$
|
160,248
|
|
Interest and penalties included in “Other liabilities”
|
|
29,232
|
|
|
23,538
|
|
Reserve for uncertain tax positions, including interest and penalties
|
|
$
|
159,669
|
|
|
$
|
183,786
|
|
At December 31, 2019, the reserves for uncertain tax positions totaled $159.7 million (net of related tax benefits of $0.4 million). If a portion or all of the December 31, 2019 reserves are not realized, the provision for income taxes could be reduced by up to $159.7 million. At December 31, 2018, the reserves for uncertain tax positions totaled $183.8 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. We estimate the potential changes could range from $80.0 million to $100.0 million.
We include, as a component of our “Income tax benefit (provision),” potential interest and penalties related to recognized tax contingencies within our global operations. Interest and penalties resulted in an income tax benefit of $3.0 million in 2019, an income tax expense of $5.1 million in 2018 and an income tax benefit of $4.7 million in 2017.
During the year ended December 31, 2019, our income tax provision included a discrete item of $36.8 million as a result of an internal restructuring.
During the year ended December 31, 2019, our income tax benefit included a net discrete tax benefit of $33.7 million following the settlement of the examination of our US tax returns for the taxable years ended December 31, 2010 and 2011 and a net tax benefit of $5.2 million following the settlement and expiration of taxable years ended December 31, 2005 and 2008 related to former Mexico tax operations.
During the year ended December 31, 2019, our income tax benefit included non-cash items of $2.6 million related to the impairment of two rigs and certain capital spares. During the year ended December 31, 2018, our income tax provision included non-cash items of $35.6 million related to the impairment of three rigs and certain capital spares. See “Note 6— Loss on Impairment” for additional information.
NOBLE CORPORATION PLC AND SUBSIDIARIES
NOBLE CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unless otherwise indicated, dollar amounts in tables are in thousands)
We conduct business globally and, as a result, we file numerous income tax returns in US and in non-US jurisdictions. In the normal course of business, we are subject to examination by taxing authorities throughout the world, including in jurisdictions such as Brazil, Brunei, Bulgaria, Canada, Cyprus, Egypt, Ghana, Guyana, Hungary, Malta, Mexico, Nigeria, Norway, Saudi Arabia, Argentina, Australia, Denmark, Gabon, Luxembourg, Malaysia, Morocco, Myanmar, the Netherlands, Oman, Qatar, Tanzania, Timor-Leste, Singapore, Suriname, Switzerland, the United Kingdom and the United States. We are no longer subject to US Federal income tax examinations for years before 2012 and non-US income tax examinations for years before 2007.
Noble-UK conducts substantially all of its business through Noble-Cayman and its subsidiaries. The income or loss of our non-UK subsidiaries is not subject to UK income tax. Earnings are taxable in the United Kingdom at the UK statutory rate of 19 percent. The ongoing consultative process in the United Kingdom and a possible change in law could materially impact our tax rate on operations in the United Kingdom continental shelf. A reconciliation of tax rates outside of the United Kingdom and the Cayman Islands to our Noble-UK effective rate for continuing operations is shown below:
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended December 31,
|
|
|
2019
|
|
2018
|
|
2017
|
Effect of:
|
|
|
|
|
|
|
|
|
|
Tax rates which are different than the UK and Cayman Island rates
|
|
4.3
|
%
|
|
5.0
|
%
|
|
23.4
|
%
|
Tax impact of asset impairment and disposition
|
|
0.3
|
%
|
|
2.9
|
%
|
|
11.7
|
%
|
Tax impact of restructuring
|
|
(4.1
|
)%
|
|
—
|
%
|
|
(76.1
|
)%
|
Tax impact of the Tax Cuts and Jobs Act
|
|
—
|
%
|
|
2.1
|
%
|
|
33.4
|
%
|
Tax impact of valuation allowance
|
|
0.5
|
%
|
|
(1.0
|
)%
|
|
—
|
%
|
Resolution of (reserve for) tax authority audits
|
|
3.2
|
%
|
|
(0.4
|
)%
|
|
(1.9
|
)%
|
Total
|
|
4.2
|
%
|
|
8.6
|
%
|
|
(9.5
|
)%
|
Due to US foreign tax credit limitation constraints, for the years ended December 31, 2019, 2018 and 2017, the Company has made the determination to take foreign tax expense as a deduction against US taxable income.
At December 31, 2019, the Company asserts that its investment in certain subsidiaries is permanent in nature.
Note 13— Employee Benefit Plans
Defined Benefit Plans
Noble Drilling (Land Support) Limited, an indirect, wholly-owned subsidiary of Noble-UK (“NDLS”), maintains a pension plan that covers all of its salaried, non-union employees, whose most recent date of employment is prior to April 1, 2014 (referred to as our “non-US plan”).
In addition to the non-US plan discussed above, we have a US noncontributory defined benefit pension plan that covers certain salaried employees and a US noncontributory defined benefit pension plan that covers certain hourly employees, whose initial date of employment is prior to August 1, 2004 (collectively referred to as our “qualified US plans”). These plans are governed by the Noble Drilling Employees’ Retirement Trust (the “Trust”). The benefits from these plans are based primarily on years of service and, for the salaried plan, employees' compensation near retirement. These plans are designed to qualify under the Employee Retirement Income Security Act of 1974 (“ERISA”), and our funding policy is consistent with funding requirements of ERISA and other applicable laws and regulations. We make cash contributions, or utilize credits available to us, for the qualified US plans when required. The benefit amount that can be covered by the qualified US plans is limited under ERISA and the Internal Revenue Code of 1986. Therefore, we maintain an unfunded, nonqualified excess benefit plan designed to maintain benefits for specified employees at the formula level in the qualified salaried US plan. We refer to the qualified US plans and the excess benefit plan collectively as the “US plans.”
During the fourth quarter of 2016, we approved amendments, effective as of December 31, 2016, to our non-US and US 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.
NOBLE CORPORATION PLC AND SUBSIDIARIES
NOBLE CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unless otherwise indicated, dollar amounts in tables are in thousands)
A reconciliation of the changes in projected benefit obligations (“PBO”) for our non-US and US plans is as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Years Ended December 31,
|
|
|
2019
|
|
2018
|
|
|
Non-US
|
|
US
|
|
Non-US
|
|
US
|
Benefit obligation at beginning of year
|
|
$
|
54,898
|
|
|
$
|
210,944
|
|
|
$
|
61,952
|
|
|
$
|
235,175
|
|
Service cost
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
Interest cost
|
|
1,814
|
|
|
8,711
|
|
|
1,747
|
|
|
8,179
|
|
Actuarial loss (gain)
|
|
6,649
|
|
|
29,078
|
|
|
(2,683
|
)
|
|
(20,673
|
)
|
Plan amendments
|
|
—
|
|
|
—
|
|
|
285
|
|
|
—
|
|
Benefits paid
|
|
(2,821
|
)
|
|
(7,201
|
)
|
|
(3,282
|
)
|
|
(7,218
|
)
|
Settlements and curtailments
|
|
—
|
|
|
(1,283
|
)
|
|
—
|
|
|
(4,519
|
)
|
Foreign exchange rate changes
|
|
1,945
|
|
|
—
|
|
|
(3,121
|
)
|
|
—
|
|
Benefit obligation at end of year
|
|
$
|
62,485
|
|
|
$
|
240,249
|
|
|
$
|
54,898
|
|
|
$
|
210,944
|
|
A reconciliation of the changes in fair value of plan assets is as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Years Ended December 31,
|
|
|
2019
|
|
2018
|
|
|
Non-US
|
|
US
|
|
Non-US
|
|
US
|
Fair value of plan assets at beginning of year
|
|
$
|
68,597
|
|
|
$
|
165,730
|
|
|
$
|
77,141
|
|
|
$
|
189,240
|
|
Actual return on plan assets
|
|
8,282
|
|
|
35,597
|
|
|
(1,366
|
)
|
|
(16,326
|
)
|
Employer contributions
|
|
—
|
|
|
1,317
|
|
|
—
|
|
|
4,553
|
|
Benefits paid
|
|
(2,821
|
)
|
|
(7,201
|
)
|
|
(3,282
|
)
|
|
(7,218
|
)
|
Settlement and curtailment
|
|
—
|
|
|
(1,283
|
)
|
|
—
|
|
|
(4,519
|
)
|
Foreign exchange rate changes
|
|
2,371
|
|
|
—
|
|
|
(3,896
|
)
|
|
—
|
|
Fair value of plan assets at end of year
|
|
$
|
76,429
|
|
|
$
|
194,160
|
|
|
$
|
68,597
|
|
|
$
|
165,730
|
|
The funded status of the plans is as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Years Ended December 31,
|
|
|
2019
|
|
2018
|
|
|
Non-US
|
|
US
|
|
Non-US
|
|
US
|
Funded status
|
|
$
|
13,944
|
|
|
$
|
(46,089
|
)
|
|
$
|
13,699
|
|
|
$
|
(45,214
|
)
|
NOBLE CORPORATION PLC AND SUBSIDIARIES
NOBLE CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unless otherwise indicated, dollar amounts in tables are in thousands)
Amounts recognized in the Consolidated Balance Sheets consist of:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Years Ended December 31,
|
|
|
2019
|
|
2018
|
|
|
Non-US
|
|
US
|
|
Non-US
|
|
US
|
Other assets (noncurrent)
|
|
$
|
13,944
|
|
|
$
|
—
|
|
|
$
|
13,699
|
|
|
$
|
—
|
|
Other liabilities (current)
|
|
—
|
|
|
(2,535
|
)
|
|
—
|
|
|
(1,062
|
)
|
Other liabilities (noncurrent)
|
|
—
|
|
|
(43,555
|
)
|
|
—
|
|
|
(44,152
|
)
|
Net amount recognized
|
|
$
|
13,944
|
|
|
$
|
(46,090
|
)
|
|
$
|
13,699
|
|
|
$
|
(45,214
|
)
|
Amounts recognized in AOCI consist of:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Years Ended December 31,
|
|
|
2019
|
|
2018
|
|
|
Non-US
|
|
US
|
|
Non-US
|
|
US
|
Net actuarial loss
|
|
$
|
4,758
|
|
|
$
|
46,420
|
|
|
$
|
3,622
|
|
|
$
|
45,358
|
|
Prior service cost
|
|
—
|
|
|
—
|
|
|
273
|
|
|
—
|
|
Deferred income tax asset
|
|
(787
|
)
|
|
(9,748
|
)
|
|
(670
|
)
|
|
(9,524
|
)
|
Accumulated other comprehensive loss
|
|
$
|
3,971
|
|
|
$
|
36,672
|
|
|
$
|
3,225
|
|
|
$
|
35,834
|
|
Pension costs include the following components:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Years Ended December 31,
|
|
|
2019
|
|
2018
|
|
2017
|
|
|
Non-US
|
|
US
|
|
Non-US
|
|
US
|
|
Non-US
|
|
US
|
Service cost
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Interest cost
|
|
1,814
|
|
|
8,711
|
|
|
1,747
|
|
|
8,179
|
|
|
2,151
|
|
|
8,593
|
|
Return on plan assets
|
|
(2,471
|
)
|
|
(10,313
|
)
|
|
(2,762
|
)
|
|
(11,914
|
)
|
|
(2,879
|
)
|
|
(11,764
|
)
|
Amortization of prior service cost
|
|
10
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
Recognized net actuarial loss
|
|
—
|
|
|
2,771
|
|
|
—
|
|
|
1,642
|
|
|
743
|
|
|
1,464
|
|
Settlement and curtailment gains
|
|
—
|
|
|
(37
|
)
|
|
—
|
|
|
135
|
|
|
(838
|
)
|
|
82
|
|
Net pension benefit cost (gain)
|
|
$
|
(647
|
)
|
|
$
|
1,132
|
|
|
$
|
(1,015
|
)
|
|
$
|
(1,958
|
)
|
|
$
|
(823
|
)
|
|
$
|
(1,625
|
)
|
There is less than $0.1 million and $2.9 million estimated net actuarial losses and prior service costs for the non-US plan and the US plans, respectively, that will be amortized from AOCI into net periodic pension cost in 2020.
During the years ended December 31, 2019, 2018 and 2017, we adopted the Retirement Plan (“RP”) mortality tables with the Mortality Projection (“MP”) scale as issued by the Society of Actuaries for each of the respective years. The RP 2019, 2018 and 2017 mortality tables represent the new standard for defined benefit mortality assumptions due to adjusted life expectancies. The adoption of the updated mortality tables and the mortality improvement scales decreased our pension liability on our US plans by approximately $2.1 million, $0.6 million and $1.6 million as of December 31, 2019, 2018 and 2017.
During the fourth quarter of 2018, the UK High Court made a judgement confirming that UK pension schemes are required to equalize male and female members’ benefits for the effect of guaranteed minimum pensions (GMP). We have accounted for the impact of the GMP equalization as a plan amendment to our non-US plan, and the impact is included as a prior service cost as of December 31, 2019, which will be amortized over the average life expectancy of the members at that date.
NOBLE CORPORATION PLC AND SUBSIDIARIES
NOBLE CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unless otherwise indicated, dollar amounts in tables are in thousands)
Defined Benefit Plans—Disaggregated Plan Information
Disaggregated information regarding our non-US and US plans is summarized below:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Years Ended December 31,
|
|
|
2019
|
|
2018
|
|
|
Non-US
|
|
US
|
|
Non-US
|
|
US
|
Projected benefit obligation
|
|
$
|
62,485
|
|
|
$
|
240,249
|
|
|
$
|
54,898
|
|
|
$
|
210,944
|
|
Accumulated benefit obligation
|
|
62,485
|
|
|
240,249
|
|
|
54,898
|
|
|
210,944
|
|
Fair value of plan assets
|
|
76,429
|
|
|
194,160
|
|
|
68,597
|
|
|
165,730
|
|
The following table provides information related to those plans in which the PBO exceeded the fair value of the plan assets at December 31, 2019 and 2018. The PBO is the actuarially computed present value of earned benefits based on service to date and includes the estimated effect of any future salary increases. Employees and alternate payees have no longer accrued future benefits under the plans since December 31, 2017.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Years Ended December 31,
|
|
|
2019
|
|
2018
|
|
|
Non-US
|
|
US
|
|
Non-US
|
|
US
|
Projected benefit obligation
|
|
$
|
—
|
|
|
$
|
240,249
|
|
|
$
|
—
|
|
|
$
|
210,944
|
|
Fair value of plan assets
|
|
—
|
|
|
194,160
|
|
|
—
|
|
|
165,730
|
|
The PBO for the unfunded excess benefit plan was $10.8 million at December 31, 2019 as compared to $10.5 million in 2018, and is included under “US” in the above tables.
The following table provides information related to those plans in which the accumulated benefit obligation (“ABO”) exceeded the fair value of plan assets at December 31, 2019 and 2018. The ABO is the actuarially computed present value of earned benefits based on service to date, but differs from the PBO in that it is based on current salary levels. Employees and alternate payees have no longer accrued future benefits under the plans since December 31, 2016.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Years Ended December 31,
|
|
|
2019
|
|
2018
|
|
|
Non-US
|
|
US
|
|
Non-US
|
|
US
|
Accumulated benefit obligation
|
|
$
|
—
|
|
|
$
|
240,249
|
|
|
$
|
—
|
|
|
$
|
210,944
|
|
Fair value of plan assets
|
|
—
|
|
|
194,160
|
|
|
—
|
|
|
165,730
|
|
The ABO for the unfunded excess benefit plan was $10.8 million at December 31, 2019 as compared to $10.5 million in 2018, and is included under “US” in the above tables.
NOBLE CORPORATION PLC AND SUBSIDIARIES
NOBLE CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unless otherwise indicated, dollar amounts in tables are in thousands)
Defined Benefit Plans—Key Assumptions
The key assumptions for the plans are summarized below:
|
|
|
|
|
|
|
|
|
|
|
|
Years Ended December 31,
|
|
|
2019
|
|
2018
|
|
|
Non-US
|
|
US
|
|
Non-US
|
|
US
|
Weighted-average assumptions used to determine benefit obligations:
|
|
|
|
|
|
|
|
|
Discount Rate
|
|
2.10%
|
|
2.56% - 3.32%
|
|
2.90%
|
|
3.65% - 4.29%
|
Rate of compensation increase
|
|
N/A
|
|
N/A
|
|
N/A
|
|
N/A
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Years Ended December 31,
|
|
|
2019
|
|
2018
|
|
2017
|
|
|
Non-US
|
|
US
|
|
Non-US
|
|
US
|
|
Non-US
|
|
US
|
Weighted-average assumptions used to determine periodic benefit cost:
|
|
|
|
|
|
|
|
|
|
|
|
|
Discount Rate
|
|
2.90%
|
|
3.65% - 4.29%
|
|
2.60%
|
|
2.84% - 3.66%
|
|
2.48% - 2.70%
|
|
3.00% - 4.24%
|
Expected long-term return on assets
|
|
3.70%
|
|
5.40% - 6.50%
|
|
3.70%
|
|
5.75% - 6.50%
|
|
4.10%
|
|
6.00% - 6.50%
|
Rate of compensation increase
|
|
N/A
|
|
N/A
|
|
N/A
|
|
N/A
|
|
N/A
|
|
N/A
|
The discount rates used to calculate the net present value of future benefit obligations for our US plans is based on the average of current rates earned on long-term bonds that receive a Moody’s rating of “Aa” or better. We have determined that the timing and amount of expected cash outflows on our plans reasonably match this index. For our non-US plan, the discount rate used to calculate the net present value of future benefit obligations is determined by using a yield curve of high quality bond portfolios with an average maturity approximating that of the liabilities.
In developing the expected long-term rate of return on assets, we considered the current level of expected returns on risk free investments (primarily government bonds), the historical level of risk premium associated with the other asset classes in which the portfolio is invested and the expectations for future returns of each asset class. The expected return for each asset class was then weighted based on the target asset allocation to develop the expected long-term rate of return on assets for the portfolio. To assist us with this analysis, we employ third-party consultants for our US and non-US plans that use a portfolio return model.
Defined Benefit Plans—Plan Assets
Non-US Plan
As of December 31, 2019, the NDLS pension Scheme targets an asset allocation of 48.0% return-seeking securities (Growth) and 52.0% debt securities (Matching). The Trustees have decided to implement a de-risking strategy whereby the level of investment risk reduces as the Scheme’s funding level improves. Consistent with this strategy, the Scheme's Trustees will target an asset allocation of 30.0% return-seeking securities (Growth) and 70.0% in debt securities (Matching) to be implemented in 2020. The overall investment objective of the Scheme, as adopted by the Scheme’s Trustees, is to reach a fully funded position on the agreed de-risking basis of Gilts - 0.20% per annum. The objectives within the Scheme’s overall investment strategy is to outperform the cash + 4% per annum long term objective for Growth assets and to sufficiently hedge interest rate and inflation risk within the Matching portfolio in relation to the Scheme’s liabilities. By achieving these objectives, the Trustees believe the Scheme will be able to avoid significant volatility in the contribution rate and provide sufficient assets to cover the Scheme’s benefit obligations. To achieve this the Trustees have given Mercer, the appointed investment manager, full discretion in the day-to-day management of the Scheme’s assets and implementation of the de-risking strategy, who in turn invests in multiple underlying investment managers where appropriate. The Trustees meet with Mercer periodically to review and discuss their investment performance.
NOBLE CORPORATION PLC AND SUBSIDIARIES
NOBLE CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unless otherwise indicated, dollar amounts in tables are in thousands)
The actual fair values of the non-US plan are as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended December 31, 2019
|
|
|
|
|
Estimated Fair Value Measurements
|
|
|
Carrying Amount
|
|
Quoted Prices in Active Markets (Level 1)
|
|
Significant Other Observable Inputs (Level 2)
|
|
Significant Unobservable Inputs (Level 3)
|
Cash and cash equivalents
|
|
$
|
903
|
|
|
$
|
903
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Equity securities:
|
|
|
|
|
|
|
|
|
International companies
|
|
26,131
|
|
|
26,131
|
|
|
—
|
|
|
—
|
|
Fixed income securities:
|
|
|
|
|
|
|
|
|
Corporate bonds
|
|
49,395
|
|
|
49,395
|
|
|
—
|
|
|
—
|
|
Total
|
|
$
|
76,429
|
|
|
$
|
76,429
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended December 31, 2018
|
|
|
|
|
Estimated Fair Value
Measurements
|
|
|
Carrying Amount
|
|
Quoted Prices in Active Markets (Level 1)
|
|
Significant Other Observable Inputs (Level 2)
|
|
Significant Unobservable Inputs (Level 3)
|
Cash and cash equivalents
|
|
$
|
151
|
|
|
$
|
151
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Equity securities:
|
|
|
|
|
|
|
|
|
International companies
|
|
25,585
|
|
|
25,585
|
|
|
—
|
|
|
—
|
|
Fixed income securities:
|
|
|
|
|
|
|
|
|
Corporate bonds
|
|
42,861
|
|
|
42,861
|
|
|
—
|
|
|
—
|
|
Other
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
Total
|
|
$
|
68,597
|
|
|
$
|
68,597
|
|
|
$
|
—
|
|
|
$
|
—
|
|
US Plans
The fundamental objective of the US plan (the “Plan”) is to provide the capital assets necessary to meet the financial obligations made to Plan participants. In order to meet this objective, the Investment Policy Statement depicts how the investment assets of the Plan are to be managed in accordance with the overall target asset allocation of approximately 41.0% equity securities, 57.7% fixed income securities, and 1.3% in cash and equivalents. The target asset allocation is intended to generate sufficient capital to meet Plan obligations and provide a portfolio rate of return equal to or greater than the return realized using appropriate blended, market benchmark over a full market cycle (usually a three to five year time period). Actual allocations may deviate from the target range, however any deviation from the target range of asset allocations must be approved by the Trust’s governing committee.
For investments in mutual funds, the assets of the Trust are subject to the guidelines and limits imposed by such mutual fund’s prospectus and the other governing documentation at the fund level.
No shares of Noble were included in equity securities at either December 31, 2019 or 2018.
NOBLE CORPORATION PLC AND SUBSIDIARIES
NOBLE CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unless otherwise indicated, dollar amounts in tables are in thousands)
The actual fair values of US plan assets are as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended December 31, 2019
|
|
|
|
|
Estimated Fair Value
Measurements
|
|
|
Carrying
Amount
|
|
Quoted
Prices in
Active
Markets
(Level 1)
|
|
Significant
Other
Observable
Inputs
(Level 2)
|
|
Significant
Unobservable
Inputs
(Level 3)
|
Cash and cash equivalents
|
|
$
|
2,254
|
|
|
$
|
2,254
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Equity securities:
|
|
|
|
|
|
|
|
|
United States
|
|
60,422
|
|
|
21,502
|
|
|
38,920
|
|
|
—
|
|
International
|
|
23,470
|
|
|
23,470
|
|
|
—
|
|
|
—
|
|
Fixed income securities:
|
|
|
|
|
|
|
|
|
Corporate bonds
|
|
75,131
|
|
|
74,253
|
|
|
878
|
|
|
—
|
|
Municipal bonds
|
|
1,064
|
|
|
—
|
|
|
1,064
|
|
|
|
Treasury bonds
|
|
31,819
|
|
|
31,819
|
|
|
—
|
|
|
—
|
|
Total
|
|
$
|
194,160
|
|
|
$
|
153,298
|
|
|
$
|
40,862
|
|
|
$
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended December 31, 2018
|
|
|
|
|
Estimated Fair Value
Measurements
|
|
|
Carrying
Amount
|
|
Quoted
Prices in
Active
Markets
(Level 1)
|
|
Significant
Other
Observable
Inputs
(Level 2)
|
|
Significant
Unobservable
Inputs
(Level 3)
|
Cash and cash equivalents
|
|
$
|
4,801
|
|
|
$
|
4,801
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Equity securities:
|
|
|
|
|
|
|
|
|
United States
|
|
47,950
|
|
|
16,775
|
|
|
31,175
|
|
|
—
|
|
International
|
|
17,838
|
|
|
17,838
|
|
|
—
|
|
|
—
|
|
Fixed income securities:
|
|
|
|
|
|
|
|
|
Corporate bonds
|
|
64,802
|
|
|
59,648
|
|
|
5,154
|
|
|
—
|
|
Treasury bonds
|
|
30,339
|
|
|
30,339
|
|
|
—
|
|
|
—
|
|
Total
|
|
$
|
165,730
|
|
|
$
|
129,401
|
|
|
$
|
36,329
|
|
|
$
|
—
|
|
As of December 31, 2019, no single security made up more than 10 percent of total assets of either the US or the non-US plans.
Defined Benefit Plans—Cash Flows
In 2019, we made no contributions to our non-US plan and we made contributions of $1.3 million to our US plans. In 2018, we made no contributions to our non-US plan and contributions of $4.6 million to our US plans. In 2017, we made total contributions of $0.7 million and $2.3 million to our non-US and US plans, respectively. We expect our aggregate minimum contributions to our non-US and US plans in 2020, subject to applicable law, to be zero and $2.5 million, respectively. We continue to monitor and evaluate funding options based upon market conditions and may increase contributions at our discretion.
NOBLE CORPORATION PLC AND SUBSIDIARIES
NOBLE CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unless otherwise indicated, dollar amounts in tables are in thousands)
The following table summarizes our estimated benefit payments at December 31, 2019:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Payments by Period
|
|
|
Total
|
|
2020
|
|
2021
|
|
2022
|
|
2023
|
|
2024
|
|
Thereafter
|
Estimated benefit payments
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-US plans
|
|
$
|
38,196
|
|
|
$
|
5,947
|
|
|
$
|
3,128
|
|
|
$
|
3,232
|
|
|
$
|
3,341
|
|
|
$
|
3,454
|
|
|
$
|
19,094
|
|
US plans
|
|
113,979
|
|
|
11,034
|
|
|
14,419
|
|
|
10,104
|
|
|
10,611
|
|
|
10,791
|
|
|
57,020
|
|
Total estimated benefit payments
|
|
$
|
152,175
|
|
|
$
|
16,981
|
|
|
$
|
17,547
|
|
|
$
|
13,336
|
|
|
$
|
13,952
|
|
|
$
|
14,245
|
|
|
$
|
76,114
|
|
Other Benefit Plans
We sponsor a 401(k) Restoration Plan, which is a nonqualified, unfunded employee benefit plan under which specified employees may elect to defer compensation in excess of amounts deferrable under our 401(k) savings plan. The 401(k) Restoration Plan has no assets, and amounts withheld for the 401(k) Restoration Plan are kept by us for general corporate purposes. The investments selected by employees and associated returns are tracked on a phantom basis. Accordingly, we have a liability to the employee for amounts originally withheld plus phantom investment income or less phantom investment losses. We are at risk for phantom investment income and, conversely, benefit should phantom investment losses occur. At December 31, 2019 and 2018, our liability for the 401(k) Restoration Plan was $8.4 million and $8.2 million, respectively, and is included in “Accrued payroll and related costs.”
In 2005, we enacted a profit sharing plan, the Noble Drilling Services Inc. Profit Sharing Plan, which covers eligible employees, as defined in the plan. Participants in the plan become fully vested in the plan after three years of service. We sponsor other retirement, health and welfare plans and a 401(k) savings plan for the benefit of our employees. On January 1, 2019, the 401(k) savings plan and the profit sharing plan were merged into the Noble Drilling Services Inc. 401(k) and Profit Sharing Plan.
Profit sharing contributions are discretionary, require Board of Directors approval and are made in the form of cash. Contributions recorded related to this plan totaled $2.4 million, $2.3 million and $3.1 million, respectively, for three years ended December 31, 2019, 2018 and 2017. The cost of maintaining these plans for continuing operations aggregated approximately $28.1 million, $25.0 million and $27.6 million in 2019, 2018 and 2017, respectively. We do not provide post-retirement benefits (other than pensions) or any post-employment benefits to our employees.
Note 14— Derivative Instruments and Hedging Activities
We are exposed to certain concentrations of interest rate and foreign currency exchange rate risk: periodically, we enter into derivative instruments to manage our exposure to fluctuations in these 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.
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 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 have historically settled monthly in the operations’ respective local currencies. All of these contracts had a maturity of less than 12 months. During 2019 and 2018, we entered into forward contracts of approximately $15.8 million and zero, respectively, all of which settled during their respective years. At both December 31, 2019 and 2018, we had no outstanding derivative contracts.
NOBLE CORPORATION PLC AND SUBSIDIARIES
NOBLE CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unless otherwise indicated, dollar amounts in tables are in thousands)
Financial Statement Presentation
The following table, together with “Note 15— Fair Value of Financial Instruments,” summarizes the recognized gains and losses of cash flow hedges and non-designated derivatives through AOCI or as “Contract drilling services” revenue or costs for the years ended December 31, 2019 and 2018:
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended December 31,
|
|
|
2019
|
|
2018
|
|
|
Gain/(loss) reclassified from AOCI to “Contract drilling services” costs
|
Cash flow hedges
|
|
|
|
|
Foreign currency forward contracts
|
|
$
|
320
|
|
|
$
|
—
|
|
There were no foreign currency forward contracts outstanding as of December 31, 2019.
Note 15— Fair Value of Financial Instruments
The following tables present the carrying amount and estimated fair value of our financial instruments recognized at fair value on a recurring basis:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2019
|
|
|
|
|
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
|
|
$
|
10,433
|
|
|
$
|
10,433
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2018
|
|
|
|
|
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
|
|
$
|
8,659
|
|
|
$
|
8,659
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Our cash and cash equivalents, and restricted cash, accounts receivable, marketable securities and accounts payable are by their nature short-term. As a result, the carrying values included in our Consolidated Balance Sheets approximate fair value.
Note 16— Commitments and Contingencies
Transocean Ltd.
In January 2017, a subsidiary of Transocean Ltd. (“Transocean”) filed suit against us and certain of our subsidiaries seeking damages for patent infringement in a Texas federal court. The suit claims that five of our newbuild rigs that operated in the US Gulf of Mexico violated Transocean patents relating to what is generally referred to as dual-activity drilling, and Transocean is seeking royalties of a $10.0 million fee and a five percent license fee for the pertinent period of operation for each vessel and damages for the breach of contract. We were aware of the patents when we constructed the rigs. The patents are now expired in the United States and most other countries. While there is inherent risk in litigation, we do not believe that our rigs infringe the Transocean patents. Transocean also recently added another claim alleging that we breached a 2007 settlement agreement we entered into with Transocean relating to patent claims in respect of another Noble rig. We also do not believe there has been any breach of the 2007 agreement. The litigation continues, and a trial date has been set for May 2020. We continue to defend ourselves vigorously against this claim.
NOBLE CORPORATION PLC AND SUBSIDIARIES
NOBLE CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unless otherwise indicated, dollar amounts in tables are in thousands)
Paragon Offshore
On August 1, 2014, Noble-UK completed the Spin-off of a majority of its standard specification offshore drilling business 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”). The Prior Plan was rejected by the bankruptcy court in October 2016.
In April 2017, Paragon Offshore filed a revised plan of reorganization (the “New Plan”) in its bankruptcy proceeding. Under the New Plan, Paragon Offshore no longer needed the Mexican tax bonding that Noble-UK was required to provide under the Settlement Agreement. 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 create and fund a 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.
On December 15, 2017, the litigation trust filed claims relating to the Spin-off against us and certain of our current and former officers and directors in the Delaware bankruptcy court that heard Paragon Offshore’s bankruptcy, and the litigation trust filed an amended complaint in October 2019. The amended complaint alleges claims of actual and constructive fraudulent conveyance, unjust enrichment and recharacterization of intercompany notes as equity claims against Noble and claims of breach of fiduciary duty and aiding and abetting breach of fiduciary duty against the officer and director defendants. The litigation trust is seeking damages of (i) approximately $1.7 billion from the Company, an amount equal to the amount borrowed by Paragon Offshore immediately prior to the Spin-off, (ii) an additional approximately $935 million relating to the transfer of intercompany receivables and notes from a Paragon subsidiary to a Noble subsidiary prior to the Spin-off (bringing the total claimed damages to approximately $2.6 billion), and (iii) unspecified amounts in respect of the claims against the officer and director defendants, all of whom have indemnification agreements with us. A trial date has been set for September 2020.
We believe that Paragon Offshore, at the time of the Spin-off, was properly funded, solvent and had appropriate liquidity and that the claims brought by the litigation trust are without merit. However, the Company continually assesses potential outcomes, including the probability of the parties ultimately resolving the matter through settlement in light of various factors, including given the complex factual issues involved, the uncertainty and risk inherent in this type of litigation, the time commitment and distraction of our organization, the potential effect of the ongoing litigation and uncertainty on our business, and the substantial expense incurred in litigating the claims. As such, the Company’s current estimated loss related to the final disposition of this matter is $100.0 million, which the Company recorded as a general and administrative expense for the year ended December 31, 2019 and is reflected as a current liability as of December 31, 2019. As pre-trial matters progress, the Company’s estimated loss could change from time to time, and any such change individually or in the aggregate could be material.
There is inherent risk and substantial expense in litigation, and the amount of damages that the plaintiff is seeking is substantial. If any of the litigation trust’s claims are successful, or if we elect to settle any claims (in part to reduce or eliminate the ongoing cost of defending the litigation and eliminate any risk of a larger judgment against us), any damages or other amounts we would be required to or agree to pay in excess of the amount we recognized at December 31, 2019, could have a material adverse effect on our business, financial condition and results of operations, including impeding our ability to meet ongoing financial obligations or to continue as a going concern. Given the risks and considerations discussed above, we cannot predict with any degree of certainty what the outcome of the litigation may be. Furthermore, as discussed below, we cannot predict the amount of insurance coverage, if any, that we may have if we were to settle or be found liable in the litigation.
We have directors’ and officers’ indemnification coverage for the officers and directors who have been sued by the litigation trust. The insurers have accepted coverage for the director and officer claims and we are continuing to discuss with them the scope of their reimbursement of litigation expenses. In addition, at the time of the Spin-off, we had entity coverage, or “Side C” coverage, which was meant to cover certain litigation claims up to the coverage limit of $150.0 million, including litigation expenses. We have made a claim for coverage of the litigation trust’s claims against Noble under such entity insurance. The insurers have rejected coverage for these claims. However, we intend to pursue coverage should the litigation be concluded adversely to us or should we settle the litigation. We cannot predict the amount of claims and expenses we may incur, pay or settle in the Paragon Offshore litigation that such insurance will cover, if any.
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 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
NOBLE CORPORATION PLC AND SUBSIDIARIES
NOBLE CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unless otherwise indicated, dollar amounts in tables are in thousands)
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 resulted in a number of accounting charges and benefits during the year ended December 31, 2017, 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.
During the year ended December 31, 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 Consolidated Statement of Operations relating to Paragon Offshore’s emergence from bankruptcy.
During the year ended December 31, 2019, we recognized charges of $3.8 million recorded in “Net loss from discontinued operations, net of tax” on our Consolidated Statement of Operations relating to settlement of Mexico customs audits from rigs included in the Spin-off.
Tax matters
The Internal Revenue Service (“IRS”) has completed its examination procedures including all appeals and administrative reviews for the taxable years ended December 31, 2010 and 2011. In June 2019, the IRS examination team notified us that it was no longer proposing any adjustments with respect to our tax reporting for the taxable years ended December 31, 2010 and December 31, 2011. During the third quarter of 2017, the IRS initiated its examination of our 2012, 2013, 2014 and 2015 tax returns. In October 2019, we received a notice that the IRS added our 2016 and 2017 tax returns to its examination. We believe that we have accurately reported all amounts in our 2012, 2013, 2014, 2015, 2016 and 2017 tax returns.
Audit claims of approximately $74.0 million attributable to income and other business taxes were assessed against Noble entities in Mexico related to tax years 2005 and 2007 and in Australia related to tax years 2013 to 2016. We intend to vigorously defend our reported positions, and believe the ultimate resolution of the audit claims will not have a material adverse effect on our consolidated financial statements.
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 upon challenge by a tax authority. We cannot predict or provide assurance as to the ultimate outcome of any existing or future assessments.
Other contingencies
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.
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 lease certain office space and warehouse facilities under cancelable and non-cancelable leases. Rent expense under these arrangements totaled $7.5 million and $8.3 million for the years ended December 31, 2018 and 2017, respectively.
NOBLE CORPORATION PLC AND SUBSIDIARIES
NOBLE CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unless otherwise indicated, dollar amounts in tables are in thousands)
Note 17— Segment and Related Information
We report our contract drilling operations as a single reportable segment, Contract Drilling Services, which reflects how we manage our business. 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 primarily of large, integrated, independent and government-owned or controlled oil and gas companies throughout the world. As of December 31, 2019, our contract drilling services segment conducts contract drilling operations in Canada, Far East Asia, the Middle East, the North Sea, Oceania, South America and the US Gulf of Mexico.
The following table presents revenues and identifiable assets by country based on the location of the service provided:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues for Year Ended December 31,
|
|
Identifiable Assets as of December 31,
|
|
|
2019
|
|
2018
|
|
2017
|
|
2019
|
|
2018
|
Australia
|
|
$
|
33,623
|
|
|
$
|
—
|
|
|
$
|
12,262
|
|
|
$
|
244,244
|
|
|
$
|
243,388
|
|
Brazil
|
|
—
|
|
|
—
|
|
|
—
|
|
|
8,910
|
|
|
13,299
|
|
Brunei
|
|
—
|
|
|
3,080
|
|
|
45,450
|
|
|
—
|
|
|
—
|
|
Bulgaria
|
|
61,525
|
|
|
84,757
|
|
|
55,145
|
|
|
—
|
|
|
645,689
|
|
Canada
|
|
46,147
|
|
|
47,085
|
|
|
1,639
|
|
|
199,696
|
|
|
219,421
|
|
Curacao
|
|
—
|
|
|
—
|
|
|
—
|
|
|
75,776
|
|
|
82,521
|
|
Denmark
|
|
31,076
|
|
|
35,855
|
|
|
44,671
|
|
|
238,413
|
|
|
242,831
|
|
East Timor
|
|
—
|
|
|
33,733
|
|
|
—
|
|
|
—
|
|
|
—
|
|
Egypt
|
|
49,209
|
|
|
112,473
|
|
|
—
|
|
|
—
|
|
|
689,965
|
|
Gabon
|
|
—
|
|
|
—
|
|
|
—
|
|
|
4,160
|
|
|
8,065
|
|
Guyana
|
|
132,414
|
|
|
50,839
|
|
|
—
|
|
|
1,807,296
|
|
|
1,250,390
|
|
Malaysia
|
|
251,497
|
|
|
91,052
|
|
|
131,696
|
|
|
30,012
|
|
|
665,822
|
|
Mexico
|
|
—
|
|
|
—
|
|
|
—
|
|
|
28,032
|
|
|
27,542
|
|
Myanmar
|
|
56,207
|
|
|
16,572
|
|
|
—
|
|
|
151,116
|
|
|
152,629
|
|
Qatar
|
|
36,948
|
|
|
35,180
|
|
|
16,488
|
|
|
219,569
|
|
|
478,708
|
|
Saudi Arabia
|
|
154,807
|
|
|
156,989
|
|
|
140,453
|
|
|
673,884
|
|
|
380,421
|
|
Singapore
|
|
—
|
|
|
1,769
|
|
|
—
|
|
|
—
|
|
|
125,574
|
|
South Africa
|
|
—
|
|
|
—
|
|
|
48,228
|
|
|
—
|
|
|
—
|
|
Suriname
|
|
17,374
|
|
|
(3
|
)
|
|
13,034
|
|
|
599,659
|
|
|
—
|
|
Tanzania
|
|
—
|
|
|
381
|
|
|
1,526
|
|
|
—
|
|
|
—
|
|
Turkey
|
|
—
|
|
|
—
|
|
|
(3
|
)
|
|
—
|
|
|
—
|
|
United Arab Emirates
|
|
—
|
|
|
(17
|
)
|
|
99,825
|
|
|
31,150
|
|
|
45,205
|
|
United Kingdom
|
|
243,063
|
|
|
194,602
|
|
|
209,338
|
|
|
1,373,524
|
|
|
1,152,596
|
|
United States
|
|
191,548
|
|
|
218,479
|
|
|
417,163
|
|
|
2,599,057
|
|
|
2,840,857
|
|
Total
|
|
$
|
1,305,438
|
|
|
$
|
1,082,826
|
|
|
$
|
1,236,915
|
|
|
$
|
8,284,498
|
|
|
$
|
9,264,923
|
|
Note 18— Supplemental Financial Information
Consolidated Balance Sheets Information
Deferred revenues from drilling contracts totaled $65.1 million and $80.8 million at December 31, 2019 and 2018, respectively. Such amounts are included in either “Other current liabilities” or “Other liabilities” in the accompanying Consolidated Balance Sheets, based upon our expected time of recognition. Related expenses deferred under drilling contracts totaled $30.8 million at December 31, 2019 as compared to $47.7 million at December 31, 2018, and are included in either “Prepaid expenses and other current assets,” “Other assets” or “Property and equipment, net” in the accompanying Consolidated Balance Sheets, based upon our expected time of recognition.
NOBLE CORPORATION PLC AND SUBSIDIARIES
NOBLE CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unless otherwise indicated, dollar amounts in tables are in thousands)
Consolidated Statements of Cash Flows Information
Operating cash activities
The net effect of changes in other assets and liabilities on cash flows from operating activities is as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Noble-UK
|
|
Noble-Cayman
|
|
|
December 31,
|
|
December 31,
|
|
|
2019
|
|
2018
|
|
2017
|
|
2019
|
|
2018
|
|
2017
|
Accounts receivable
|
|
$
|
2,057
|
|
|
$
|
3,974
|
|
|
$
|
114,456
|
|
|
$
|
2,057
|
|
|
$
|
3,974
|
|
|
$
|
114,456
|
|
Other current assets
|
|
3,573
|
|
|
(2,722
|
)
|
|
26,155
|
|
|
4,046
|
|
|
(2,700
|
)
|
|
23,309
|
|
Other assets
|
|
16,218
|
|
|
(10,378
|
)
|
|
(89,021
|
)
|
|
18,749
|
|
|
(6,424
|
)
|
|
(91,236
|
)
|
Accounts payable
|
|
(2,279
|
)
|
|
14,955
|
|
|
(14,625
|
)
|
|
(2,182
|
)
|
|
14,795
|
|
|
(14,429
|
)
|
Other current liabilities
|
|
(4,700
|
)
|
|
(13,940
|
)
|
|
33,906
|
|
|
(4,549
|
)
|
|
(13,495
|
)
|
|
35,033
|
|
Other liabilities
|
|
(24,577
|
)
|
|
(26,829
|
)
|
|
(92,096
|
)
|
|
(24,577
|
)
|
|
(26,829
|
)
|
|
(87,213
|
)
|
Total net change in assets and liabilities
|
|
$
|
(9,708
|
)
|
|
$
|
(34,940
|
)
|
|
$
|
(21,225
|
)
|
|
$
|
(6,456
|
)
|
|
$
|
(30,679
|
)
|
|
$
|
(20,080
|
)
|
Non-cash investing and financing activities
Additions to property and equipment, at cost for which we had accrued a corresponding liability in accounts payable as of December 31, 2019, 2018 and 2017 were $36.0 million, $52.1 million and $25.5 million, respectively.
We entered into the $60.0 million 2018 Seller Loan to finance a portion of the purchase price for the Noble Johnny Whitstine in September 2018. We entered into the $53.6 million 2019 Seller Loan to finance a portion of the purchase price for the Noble Joe Knight in February 2019. See “Note 7— Debt” for additional information.
Additional cash flow information is as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Noble - UK
|
|
Noble - Cayman
|
|
|
December 31,
|
|
December 31,
|
|
|
2019
|
|
2018
|
|
2017
|
|
2019
|
|
2018
|
|
2017
|
Cash paid during the period for:
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest, net of amounts capitalized
|
|
$
|
289,457
|
|
|
$
|
286,506
|
|
|
$
|
246,960
|
|
|
$
|
289,457
|
|
|
$
|
286,506
|
|
|
$
|
246,960
|
|
Income taxes (net of refunds)
|
|
8,181
|
|
|
(107,554
|
)
|
|
30,590
|
|
|
8,181
|
|
|
(107,554
|
)
|
|
30,590
|
|
NOBLE CORPORATION PLC AND SUBSIDIARIES
NOBLE CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unless otherwise indicated, dollar amounts in tables are in thousands
Note 19— Condensed Consolidating Financial Information
Guarantees of Registered Securities
Noble-Cayman, or one or more 100 percent owned subsidiaries of Noble-Cayman, is an issuer or full and unconditional guarantor or otherwise obligated as of December 31, 2019 with respect to registered securities as follows (see “Note 7— Debt” for additional information):
|
|
|
|
|
|
Notes (1)
|
|
Issuer
|
|
Guarantor
|
4.90% Senior Notes due 2020
|
|
NHIL
|
|
Noble-Cayman
|
4.625% Senior Notes due 2021
|
|
NHIL
|
|
Noble-Cayman
|
3.95% Senior Notes due 2022
|
|
NHIL
|
|
Noble-Cayman
|
7.75% Senior Notes due 2024
|
|
NHIL
|
|
Noble-Cayman
|
7.95% Senior Notes due 2025
|
|
NHIL
|
|
Noble-Cayman
|
6.20% Senior Notes due 2040
|
|
NHIL
|
|
Noble-Cayman
|
6.05% Senior Notes due 2041
|
|
NHIL
|
|
Noble-Cayman
|
5.25% Senior Notes due 2042
|
|
NHIL
|
|
Noble-Cayman
|
8.95% Senior Notes due 2045
|
|
NHIL
|
|
Noble-Cayman
|
(1) Our 2026 Notes are excluded from this list as they are unregistered securities issued in a non-public offering.
The following condensed consolidating financial statements of Noble-Cayman, NHIL 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
December 31, 2019
(Unless otherwise indicated, dollar amounts in tables are in thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Noble -
Cayman
|
|
NHIL
|
|
Other
Non-guarantor
Subsidiaries
of Noble
|
|
Consolidating
Adjustments
|
|
Total
|
ASSETS
|
|
|
|
|
|
|
|
|
|
|
Current assets
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
104,575
|
|
|
$
|
—
|
|
|
$
|
104,575
|
|
Accounts receivable, net
|
|
—
|
|
|
—
|
|
|
198,665
|
|
|
—
|
|
|
198,665
|
|
Taxes receivable
|
|
—
|
|
|
243
|
|
|
59,528
|
|
|
—
|
|
|
59,771
|
|
Short-term notes receivable from affiliates
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
Accounts receivable from affiliates
|
|
—
|
|
|
61,075
|
|
|
1,403,347
|
|
|
(1,464,422
|
)
|
|
—
|
|
Prepaid expenses and other current assets
|
|
—
|
|
|
—
|
|
|
57,890
|
|
|
—
|
|
|
57,890
|
|
Total current assets
|
|
—
|
|
|
61,318
|
|
|
1,824,005
|
|
|
(1,464,422
|
)
|
|
420,901
|
|
Property and equipment, at cost
|
|
—
|
|
|
—
|
|
|
10,306,625
|
|
|
—
|
|
|
10,306,625
|
|
Accumulated depreciation
|
|
—
|
|
|
—
|
|
|
(2,572,701
|
)
|
|
—
|
|
|
(2,572,701
|
)
|
Property and equipment, net
|
|
—
|
|
|
—
|
|
|
7,733,924
|
|
|
—
|
|
|
7,733,924
|
|
Notes receivable from affiliates
|
|
—
|
|
|
—
|
|
|
15,812
|
|
|
(15,812
|
)
|
|
—
|
|
Investments in affiliates
|
|
3,765,687
|
|
|
7,690,324
|
|
|
—
|
|
|
(11,456,011
|
)
|
|
—
|
|
Other assets
|
|
—
|
|
|
—
|
|
|
128,467
|
|
|
—
|
|
|
128,467
|
|
Total assets
|
|
$
|
3,765,687
|
|
|
$
|
7,751,642
|
|
|
$
|
9,702,208
|
|
|
$
|
(12,936,245
|
)
|
|
$
|
8,283,292
|
|
LIABILITIES AND EQUITY
|
|
|
|
|
|
|
|
|
|
|
Current liabilities
|
|
|
|
|
|
|
|
|
|
|
Current maturities of long-term debt
|
|
$
|
—
|
|
|
$
|
62,505
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
62,505
|
|
Accounts payable
|
|
—
|
|
|
—
|
|
|
107,985
|
|
|
—
|
|
|
107,985
|
|
Accrued payroll and related costs
|
|
—
|
|
|
—
|
|
|
56,065
|
|
|
—
|
|
|
56,065
|
|
Accounts payable to affiliates
|
|
7,707
|
|
|
1,395,641
|
|
|
61,074
|
|
|
(1,464,422
|
)
|
|
—
|
|
Taxes payable
|
|
—
|
|
|
—
|
|
|
30,715
|
|
|
—
|
|
|
30,715
|
|
Interest payable
|
|
—
|
|
|
85,057
|
|
|
2,990
|
|
|
—
|
|
|
88,047
|
|
Other current liabilities
|
|
—
|
|
|
—
|
|
|
71,397
|
|
|
—
|
|
|
71,397
|
|
Total current liabilities
|
|
7,707
|
|
|
1,543,203
|
|
|
330,226
|
|
|
(1,464,422
|
)
|
|
416,714
|
|
Long-term debt
|
|
—
|
|
|
3,326,389
|
|
|
453,110
|
|
|
—
|
|
|
3,779,499
|
|
Notes payable to affiliates
|
|
—
|
|
|
15,812
|
|
|
—
|
|
|
(15,812
|
)
|
|
—
|
|
Deferred income taxes
|
|
—
|
|
|
—
|
|
|
68,201
|
|
|
—
|
|
|
68,201
|
|
Other liabilities
|
|
—
|
|
|
—
|
|
|
260,898
|
|
|
—
|
|
|
260,898
|
|
Total liabilities
|
|
7,707
|
|
|
4,885,404
|
|
|
1,112,435
|
|
|
(1,480,234
|
)
|
|
4,525,312
|
|
Commitments and contingencies
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total shareholder equity
|
|
3,757,980
|
|
|
2,866,238
|
|
|
8,589,773
|
|
|
(11,456,011
|
)
|
|
3,757,980
|
|
Noncontrolling interests
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
Total equity
|
|
3,757,980
|
|
|
2,866,238
|
|
|
8,589,773
|
|
|
(11,456,011
|
)
|
|
3,757,980
|
|
Total liabilities and equity
|
|
$
|
3,765,687
|
|
|
$
|
7,751,642
|
|
|
$
|
9,702,208
|
|
|
$
|
(12,936,245
|
)
|
|
$
|
8,283,292
|
|
NOBLE CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATING BALANCE SHEET
December 31, 2018
(Unless otherwise indicated, dollar amounts in tables are in thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Noble-
Cayman
|
|
NHIL
|
|
Other
Non-guarantor
Subsidiaries
of Noble
|
|
Consolidating
Adjustments
|
|
Total
|
ASSETS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current assets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
$
|
—
|
|
|
$
|
17,818
|
|
|
$
|
356,557
|
|
|
$
|
—
|
|
|
$
|
374,375
|
|
Accounts receivable, net
|
|
—
|
|
|
—
|
|
|
200,722
|
|
|
—
|
|
|
200,722
|
|
Taxes receivable
|
|
—
|
|
|
—
|
|
|
20,498
|
|
|
—
|
|
|
20,498
|
|
Short-term notes receivable from affiliates
|
|
—
|
|
|
—
|
|
|
3,175,662
|
|
|
(3,175,662
|
)
|
|
—
|
|
Accounts receivable from affiliates
|
|
275,726
|
|
|
61,046
|
|
|
4,823,902
|
|
|
(5,160,674
|
)
|
|
—
|
|
Prepaid expenses and other current assets
|
|
—
|
|
|
—
|
|
|
61,917
|
|
|
—
|
|
|
61,917
|
|
Total current assets
|
|
275,726
|
|
|
78,864
|
|
|
8,639,258
|
|
|
(8,336,336
|
)
|
|
657,512
|
|
Property and equipment, at cost
|
|
—
|
|
|
—
|
|
|
10,956,412
|
|
|
—
|
|
|
10,956,412
|
|
Accumulated depreciation
|
|
—
|
|
|
—
|
|
|
(2,475,694
|
)
|
|
—
|
|
|
(2,475,694
|
)
|
Property and equipment, net
|
|
—
|
|
|
—
|
|
|
8,480,718
|
|
|
—
|
|
|
8,480,718
|
|
Notes receivable from affiliates
|
|
5,145
|
|
|
—
|
|
|
—
|
|
|
(5,145
|
)
|
|
—
|
|
Investments in affiliates
|
|
7,716,068
|
|
|
12,300,840
|
|
|
—
|
|
|
(20,016,908
|
)
|
|
—
|
|
Other assets
|
|
609
|
|
|
—
|
|
|
124,540
|
|
|
—
|
|
|
125,149
|
|
Total assets
|
|
$
|
7,997,548
|
|
|
$
|
12,379,704
|
|
|
$
|
17,244,516
|
|
|
$
|
(28,358,389
|
)
|
|
$
|
9,263,379
|
|
LIABILITIES AND EQUITY
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current liabilities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Short-term notes payables to affiliates
|
|
$
|
—
|
|
|
$
|
3,175,662
|
|
|
$
|
—
|
|
|
$
|
(3,175,662
|
)
|
|
$
|
—
|
|
Current maturities of long-term debt
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
Accounts payable
|
|
45
|
|
|
—
|
|
|
125,192
|
|
|
—
|
|
|
125,237
|
|
Accrued payroll and related costs
|
|
—
|
|
|
—
|
|
|
50,284
|
|
|
—
|
|
|
50,284
|
|
Accounts payable to affiliates
|
|
3,725,506
|
|
|
1,098,395
|
|
|
336,773
|
|
|
(5,160,674
|
)
|
|
—
|
|
Taxes payable
|
|
—
|
|
|
—
|
|
|
29,386
|
|
|
—
|
|
|
29,386
|
|
Interest payable
|
|
3
|
|
|
99,997
|
|
|
100
|
|
|
—
|
|
|
100,100
|
|
Other current liabilities
|
|
—
|
|
|
—
|
|
|
60,012
|
|
|
—
|
|
|
60,012
|
|
Total current liabilities
|
|
3,725,554
|
|
|
4,374,054
|
|
|
601,747
|
|
|
(8,336,336
|
)
|
|
365,019
|
|
Long-term debt
|
|
—
|
|
|
3,817,153
|
|
|
60,249
|
|
|
—
|
|
|
3,877,402
|
|
Notes payable to affiliates
|
|
—
|
|
|
—
|
|
|
5,145
|
|
|
(5,145
|
)
|
|
—
|
|
Deferred income taxes
|
|
—
|
|
|
—
|
|
|
91,695
|
|
|
—
|
|
|
91,695
|
|
Other liabilities
|
|
19,929
|
|
|
—
|
|
|
255,866
|
|
|
—
|
|
|
275,795
|
|
Total liabilities
|
|
3,745,483
|
|
|
8,191,207
|
|
|
1,014,702
|
|
|
(8,341,481
|
)
|
|
4,609,911
|
|
Commitments and contingencies
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total shareholder equity
|
|
4,252,065
|
|
|
4,188,497
|
|
|
15,828,411
|
|
|
(20,016,908
|
)
|
|
4,252,065
|
|
Noncontrolling interests
|
|
—
|
|
|
—
|
|
|
401,403
|
|
|
—
|
|
|
401,403
|
|
Total equity
|
|
4,252,065
|
|
|
4,188,497
|
|
|
16,229,814
|
|
|
(20,016,908
|
)
|
|
4,653,468
|
|
Total liabilities and equity
|
|
$
|
7,997,548
|
|
|
$
|
12,379,704
|
|
|
$
|
17,244,516
|
|
|
$
|
(28,358,389
|
)
|
|
$
|
9,263,379
|
|
NOBLE CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS and COMPREHENSIVE INCOME (LOSS)
Year Ended December 31, 2019
(Unless otherwise indicated, dollar amounts in tables are in thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Noble-
Cayman
|
|
NHIL
|
|
Other
Non-guarantor
Subsidiaries
of Noble
|
|
Consolidating
Adjustments
|
|
Total
|
Operating revenues
|
|
|
|
|
|
|
|
|
|
|
Contract drilling services
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
1,246,058
|
|
|
$
|
—
|
|
|
$
|
1,246,058
|
|
Reimbursables and other
|
|
—
|
|
|
—
|
|
|
59,380
|
|
|
—
|
|
|
59,380
|
|
Total operating revenues
|
|
—
|
|
|
—
|
|
|
1,305,438
|
|
|
—
|
|
|
1,305,438
|
|
Operating costs and expenses
|
|
|
|
|
|
|
|
|
|
|
Contract drilling services
|
|
82
|
|
|
—
|
|
|
696,183
|
|
|
—
|
|
|
696,265
|
|
Reimbursables
|
|
—
|
|
|
—
|
|
|
49,061
|
|
|
—
|
|
|
49,061
|
|
Depreciation and amortization
|
|
—
|
|
|
—
|
|
|
437,690
|
|
|
—
|
|
|
437,690
|
|
General and administrative
|
|
3
|
|
|
239
|
|
|
34,360
|
|
|
—
|
|
|
34,602
|
|
Loss on impairment
|
|
—
|
|
|
—
|
|
|
615,294
|
|
|
—
|
|
|
615,294
|
|
Total operating costs and expenses
|
|
85
|
|
|
239
|
|
|
1,832,588
|
|
|
—
|
|
|
1,832,912
|
|
Operating loss
|
|
(85
|
)
|
|
(239
|
)
|
|
(527,150
|
)
|
|
—
|
|
|
(527,474
|
)
|
Other income (expense)
|
|
|
|
|
|
|
|
|
|
|
Income (loss) of unconsolidated affiliates - continuing operations
|
|
(546,044
|
)
|
|
(259,796
|
)
|
|
—
|
|
|
805,840
|
|
|
—
|
|
Income (loss) of unconsolidated affiliates - discontinued operations, net of tax
|
|
(3,821
|
)
|
|
(3,821
|
)
|
|
—
|
|
|
7,642
|
|
|
—
|
|
Interest expense, net of amounts capitalized
|
|
(11,372
|
)
|
|
(255,460
|
)
|
|
(19,040
|
)
|
|
6,437
|
|
|
(279,435
|
)
|
Gain (loss) on extinguishment of debt, net
|
|
—
|
|
|
31,266
|
|
|
(650
|
)
|
|
—
|
|
|
30,616
|
|
Interest income and other, net
|
|
194
|
|
|
(10
|
)
|
|
12,923
|
|
|
(6,437
|
)
|
|
6,670
|
|
Income (loss) before income taxes
|
|
(561,128
|
)
|
|
(488,060
|
)
|
|
(533,917
|
)
|
|
813,482
|
|
|
(769,623
|
)
|
Income tax benefit
|
|
—
|
|
|
—
|
|
|
38,540
|
|
|
—
|
|
|
38,540
|
|
Net income (loss) from continuing operations
|
|
(561,128
|
)
|
|
(488,060
|
)
|
|
(495,377
|
)
|
|
813,482
|
|
|
(731,083
|
)
|
Net loss from discontinuing operations, net of tax
|
|
—
|
|
|
—
|
|
|
(3,821
|
)
|
|
—
|
|
|
(3,821
|
)
|
Net income (loss)
|
|
(561,128
|
)
|
|
(488,060
|
)
|
|
(499,198
|
)
|
|
813,482
|
|
|
(734,904
|
)
|
Net income attributable to noncontrolling interests
|
|
—
|
|
|
—
|
|
|
173,776
|
|
|
—
|
|
|
173,776
|
|
Net income (loss) attributable to Noble Corporation
|
|
(561,128
|
)
|
|
(488,060
|
)
|
|
(325,422
|
)
|
|
813,482
|
|
|
(561,128
|
)
|
Other comprehensive income (loss), net
|
|
(1,317
|
)
|
|
—
|
|
|
(1,317
|
)
|
|
1,317
|
|
|
(1,317
|
)
|
Comprehensive income (loss) attributable to Noble Corporation
|
|
$
|
(562,445
|
)
|
|
$
|
(488,060
|
)
|
|
$
|
(326,739
|
)
|
|
$
|
814,799
|
|
|
$
|
(562,445
|
)
|
NOBLE CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS and COMPREHENSIVE INCOME (LOSS)
Year Ended December 31, 2018
(Unless otherwise indicated, dollar amounts in tables are in thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Noble-
Cayman
|
|
NHIL
|
|
Other
Non-guarantor
Subsidiaries
of Noble
|
|
Consolidating
Adjustments
|
|
Total
|
Operating revenues
|
|
|
|
|
|
|
|
|
|
|
Contract drilling services
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
1,036,082
|
|
|
$
|
—
|
|
|
$
|
1,036,082
|
|
Reimbursables and other
|
|
—
|
|
|
—
|
|
|
46,744
|
|
|
—
|
|
|
46,744
|
|
Total operating revenues
|
|
—
|
|
|
—
|
|
|
1,082,826
|
|
|
—
|
|
|
1,082,826
|
|
Operating costs and expenses
|
|
|
|
|
|
|
|
|
|
|
Contract drilling services
|
|
2
|
|
|
(22
|
)
|
|
628,148
|
|
|
—
|
|
|
628,128
|
|
Reimbursables
|
|
—
|
|
|
—
|
|
|
37,084
|
|
|
—
|
|
|
37,084
|
|
Depreciation and amortization
|
|
—
|
|
|
—
|
|
|
482,660
|
|
|
—
|
|
|
482,660
|
|
General and administrative
|
|
57
|
|
|
214
|
|
|
37,932
|
|
|
—
|
|
|
38,203
|
|
Loss on impairment
|
|
—
|
|
|
—
|
|
|
802,133
|
|
|
—
|
|
|
802,133
|
|
Total operating costs and expenses
|
|
59
|
|
|
192
|
|
|
1,987,957
|
|
|
—
|
|
|
1,988,208
|
|
Operating loss
|
|
(59
|
)
|
|
(192
|
)
|
|
(905,131
|
)
|
|
—
|
|
|
(905,382
|
)
|
Other income (expense)
|
|
|
|
|
|
|
|
|
|
|
Income (loss) of unconsolidated affiliates - continuing operations
|
|
(2,738,475
|
)
|
|
(258,687
|
)
|
|
—
|
|
|
2,997,162
|
|
|
—
|
|
Interest expense, net of amounts capitalized
|
|
(1,324
|
)
|
|
(449,824
|
)
|
|
(1,911,822
|
)
|
|
2,065,359
|
|
|
(297,611
|
)
|
Gain (loss) on extinguishment of debt, net
|
|
(2,336
|
)
|
|
12,651
|
|
|
(12,108
|
)
|
|
—
|
|
|
(1,793
|
)
|
Interest income (expense) and other, net
|
|
1,897,709
|
|
|
(74
|
)
|
|
176,006
|
|
|
(2,065,359
|
)
|
|
8,282
|
|
Income (loss) before income taxes
|
|
(844,485
|
)
|
|
(696,126
|
)
|
|
(2,653,055
|
)
|
|
2,997,162
|
|
|
(1,196,504
|
)
|
Income tax benefit
|
|
—
|
|
|
—
|
|
|
106,534
|
|
|
—
|
|
|
106,534
|
|
Net income (loss)
|
|
(844,485
|
)
|
|
(696,126
|
)
|
|
(2,546,521
|
)
|
|
2,997,162
|
|
|
(1,089,970
|
)
|
Net income attributable to noncontrolling interests
|
|
—
|
|
|
—
|
|
|
245,485
|
|
|
—
|
|
|
245,485
|
|
Net income (loss) attributable to Noble Corporation
|
|
(844,485
|
)
|
|
(696,126
|
)
|
|
(2,301,036
|
)
|
|
2,997,162
|
|
|
(844,485
|
)
|
Other comprehensive income (loss), net
|
|
(8,644
|
)
|
|
—
|
|
|
(8,644
|
)
|
|
8,644
|
|
|
(8,644
|
)
|
Comprehensive income (loss) attributable to Noble Corporation
|
|
$
|
(853,129
|
)
|
|
$
|
(696,126
|
)
|
|
$
|
(2,309,680
|
)
|
|
$
|
3,005,806
|
|
|
$
|
(853,129
|
)
|
NOBLE CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATING STATEMENT OF INCOME and COMPREHENSIVE INCOME (LOSS)
Year Ended December 31, 2017
(Unless otherwise indicated, dollar amounts in tables are in thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Noble-
Cayman
|
|
NHUS
|
|
NDH
|
|
NHIL
|
|
NDS6
|
|
Other
Non-guarantor
Subsidiaries
of Noble
|
|
Consolidating
Adjustments
|
|
Total
|
Operating revenues
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Contract drilling services
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
168,592
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
1,086,320
|
|
|
$
|
(47,886
|
)
|
|
$
|
1,207,026
|
|
Reimbursables and other
|
|
—
|
|
|
—
|
|
|
3,443
|
|
|
—
|
|
|
—
|
|
|
26,446
|
|
|
—
|
|
|
29,889
|
|
Total operating revenues
|
|
—
|
|
|
—
|
|
|
172,035
|
|
|
—
|
|
|
—
|
|
|
1,112,766
|
|
|
(47,886
|
)
|
|
1,236,915
|
|
Operating costs and expenses
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Contract drilling services
|
|
304
|
|
|
12,090
|
|
|
43,161
|
|
|
3,115
|
|
|
—
|
|
|
629,699
|
|
|
(47,886
|
)
|
|
640,483
|
|
Reimbursables
|
|
—
|
|
|
—
|
|
|
1,992
|
|
|
—
|
|
|
—
|
|
|
16,443
|
|
|
—
|
|
|
18,435
|
|
Depreciation and amortization
|
|
—
|
|
|
—
|
|
|
58,236
|
|
|
—
|
|
|
—
|
|
|
484,883
|
|
|
—
|
|
|
543,119
|
|
General and administrative
|
|
129
|
|
|
5,761
|
|
|
—
|
|
|
1,588
|
|
|
9
|
|
|
33,600
|
|
|
—
|
|
|
41,087
|
|
Loss on impairment
|
|
—
|
|
|
—
|
|
|
45,012
|
|
|
—
|
|
|
—
|
|
|
76,627
|
|
|
—
|
|
|
121,639
|
|
Total operating costs and expenses
|
|
433
|
|
|
17,851
|
|
|
148,401
|
|
|
4,703
|
|
|
9
|
|
|
1,241,252
|
|
|
(47,886
|
)
|
|
1,364,763
|
|
Operating income (loss)
|
|
(433
|
)
|
|
(17,851
|
)
|
|
23,634
|
|
|
(4,703
|
)
|
|
(9
|
)
|
|
(128,486
|
)
|
|
—
|
|
|
(127,848
|
)
|
Other income (expense)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) of unconsolidated affiliates - discontinued operations, net of tax
|
|
(476,382
|
)
|
|
(528,702
|
)
|
|
82,596
|
|
|
188,809
|
|
|
17,874
|
|
|
—
|
|
|
715,805
|
|
|
—
|
|
Income (loss) of unconsolidated affiliates - continuing operations
|
|
2,967
|
|
|
4,566
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(7,533
|
)
|
|
—
|
|
Interest expense, net of amounts capitalized
|
|
(10,951
|
)
|
|
(32,838
|
)
|
|
(13,493
|
)
|
|
(430,580
|
)
|
|
(15,288
|
)
|
|
(130,442
|
)
|
|
341,603
|
|
|
(291,989
|
)
|
Interest income (expense ) and other, net
|
|
10,483
|
|
|
(141
|
)
|
|
87,287
|
|
|
4,771
|
|
|
224,772
|
|
|
22,164
|
|
|
(341,603
|
)
|
|
7,733
|
|
Income (loss) before income taxes
|
|
(474,316
|
)
|
|
(574,966
|
)
|
|
180,024
|
|
|
(241,703
|
)
|
|
227,349
|
|
|
(236,764
|
)
|
|
708,272
|
|
|
(412,104
|
)
|
Income tax benefit (provision)
|
|
—
|
|
|
241,960
|
|
|
(440
|
)
|
|
—
|
|
|
—
|
|
|
(284,115
|
)
|
|
—
|
|
|
(42,595
|
)
|
Net income (loss) from continuing operations
|
|
(474,316
|
)
|
|
(333,006
|
)
|
|
179,584
|
|
|
(241,703
|
)
|
|
227,349
|
|
|
(520,879
|
)
|
|
708,272
|
|
|
(454,699
|
)
|
Net income (loss) from discontinued operations, net of tax
|
|
—
|
|
|
(1,598
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
4,565
|
|
|
—
|
|
|
2,967
|
|
Net income (loss)
|
|
(474,316
|
)
|
|
(334,604
|
)
|
|
179,584
|
|
|
(241,703
|
)
|
|
227,349
|
|
|
(516,314
|
)
|
|
708,272
|
|
|
(451,732
|
)
|
Net income attributable to noncontrolling interests
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(20,589
|
)
|
|
(1,995
|
)
|
|
(22,584
|
)
|
Net income (loss) attributable to Noble Corporation
|
|
(474,316
|
)
|
|
(334,604
|
)
|
|
179,584
|
|
|
(241,703
|
)
|
|
227,349
|
|
|
(536,903
|
)
|
|
706,277
|
|
|
(474,316
|
)
|
Other comprehensive income (loss), net
|
|
9,252
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
9,252
|
|
|
(9,252
|
)
|
|
9,252
|
|
Comprehensive income (loss) attributable to Noble Corporation
|
|
$
|
(465,064
|
)
|
|
$
|
(334,604
|
)
|
|
$
|
179,584
|
|
|
$
|
(241,703
|
)
|
|
$
|
227,349
|
|
|
$
|
(527,651
|
)
|
|
$
|
697,025
|
|
|
$
|
(465,064
|
)
|
NOBLE CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS
Year Ended December 31, 2019
(Unless otherwise indicated, dollar amounts in tables are in thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Noble-
Cayman
|
|
NHIL
|
|
Other
Non-guarantor
Subsidiaries
of Noble
|
|
Consolidating
Adjustments
|
|
Total
|
Cash flows from operating activities
|
|
|
|
|
|
|
|
|
|
|
Net cash provided by (used in) operating activities
|
|
$
|
(15,941
|
)
|
|
$
|
(266,939
|
)
|
|
$
|
509,786
|
|
|
$
|
—
|
|
|
$
|
226,906
|
|
Cash flows from investing activities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Capital expenditures
|
|
—
|
|
|
—
|
|
|
(268,783
|
)
|
|
—
|
|
|
(268,783
|
)
|
Proceeds from disposal of assets
|
|
—
|
|
|
—
|
|
|
12,753
|
|
|
—
|
|
|
12,753
|
|
Notes receivable to (from) affiliates
|
|
5,145
|
|
|
—
|
|
|
(15,812
|
)
|
|
10,667
|
|
|
—
|
|
Net cash provided by (used in) investing activities
|
|
5,145
|
|
|
—
|
|
|
(271,842
|
)
|
|
10,667
|
|
|
(256,030
|
)
|
Cash flows from financing activities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Borrowings on credit facilities
|
|
300,000
|
|
|
—
|
|
|
455,000
|
|
|
—
|
|
|
755,000
|
|
Debt issuance costs
|
|
—
|
|
|
—
|
|
|
(1,092
|
)
|
|
—
|
|
|
(1,092
|
)
|
Repayments of credit facilities
|
|
(300,000
|
)
|
|
—
|
|
|
(120,000
|
)
|
|
—
|
|
|
(420,000
|
)
|
Repayments of senior notes
|
|
—
|
|
|
(400,000
|
)
|
|
—
|
|
|
—
|
|
|
(400,000
|
)
|
Purchase of noncontrolling interests
|
|
—
|
|
|
—
|
|
|
(106,744
|
)
|
|
—
|
|
|
(106,744
|
)
|
Dividends paid to noncontrolling interests
|
|
—
|
|
|
—
|
|
|
(25,109
|
)
|
|
—
|
|
|
(25,109
|
)
|
Distributions to parent company, net
|
|
(42,103
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(42,103
|
)
|
Advances (to) from affiliates
|
|
52,899
|
|
|
633,309
|
|
|
(686,208
|
)
|
|
—
|
|
|
—
|
|
Notes payable to affiliates
|
|
—
|
|
|
15,812
|
|
|
(5,145
|
)
|
|
(10,667
|
)
|
|
—
|
|
Net cash provided by (used in) financing activities
|
|
10,796
|
|
|
249,121
|
|
|
(489,298
|
)
|
|
(10,667
|
)
|
|
(240,048
|
)
|
Net change in cash, cash equivalents and restricted cash
|
|
—
|
|
|
(17,818
|
)
|
|
(251,354
|
)
|
|
—
|
|
|
(269,172
|
)
|
Cash, cash equivalents and restricted cash, beginning of period
|
|
—
|
|
|
17,818
|
|
|
357,232
|
|
|
—
|
|
|
375,050
|
|
Cash, cash equivalents and restricted cash, end of period
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
105,878
|
|
|
$
|
—
|
|
|
$
|
105,878
|
|
NOBLE CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS
Year Ended December 31, 2018
(Unless otherwise indicated, dollar amounts in tables are in thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Noble-
Cayman
|
|
NHIL
|
|
Other
Non-guarantor
Subsidiaries
of Noble
|
|
Consolidating
Adjustments
|
|
Total
|
Cash flows from operating activities
|
|
|
|
|
|
|
|
|
|
|
Net cash provided by (used in) operating activities
|
|
$
|
1,920,724
|
|
|
$
|
(426,298
|
)
|
|
$
|
(1,281,667
|
)
|
|
$
|
—
|
|
|
$
|
212,759
|
|
Cash flows from investing activities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Capital expenditures
|
|
—
|
|
|
—
|
|
|
(194,779
|
)
|
|
—
|
|
|
(194,779
|
)
|
Proceeds from disposal of assets
|
|
—
|
|
|
—
|
|
|
5,402
|
|
|
—
|
|
|
5,402
|
|
Net cash used in investing activities
|
|
—
|
|
|
—
|
|
|
(189,377
|
)
|
|
—
|
|
|
(189,377
|
)
|
Cash flows from financing activities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Repayments of senior notes
|
|
—
|
|
|
(759,053
|
)
|
|
(213,655
|
)
|
|
—
|
|
|
(972,708
|
)
|
Issuance of senior notes
|
|
—
|
|
|
750,000
|
|
|
—
|
|
|
—
|
|
|
750,000
|
|
Debt issuance costs
|
|
(845
|
)
|
|
(13,027
|
)
|
|
(1,767
|
)
|
|
—
|
|
|
(15,639
|
)
|
Dividends paid to noncontrolling interests
|
|
—
|
|
|
—
|
|
|
(27,579
|
)
|
|
—
|
|
|
(27,579
|
)
|
Distributions to parent company, net
|
|
(44,417
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(44,417
|
)
|
Advances (to) from affiliates
|
|
(1,875,473
|
)
|
|
436,872
|
|
|
1,438,601
|
|
|
—
|
|
|
—
|
|
Net cash provided by (used in) financing activities
|
|
(1,920,735
|
)
|
|
414,792
|
|
|
1,195,600
|
|
|
—
|
|
|
(310,343
|
)
|
Net change in cash, cash equivalents and restricted cash
|
|
(11
|
)
|
|
(11,506
|
)
|
|
(275,444
|
)
|
|
—
|
|
|
(286,961
|
)
|
Cash, cash equivalents and restricted cash, beginning of period
|
|
11
|
|
|
29,324
|
|
|
632,676
|
|
|
—
|
|
|
662,011
|
|
Cash, cash equivalents and restricted cash, end of period
|
|
$
|
—
|
|
|
$
|
17,818
|
|
|
$
|
357,232
|
|
|
$
|
—
|
|
|
$
|
375,050
|
|
NOBLE CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS
Year Ended December 31, 2017
(Unless otherwise indicated, dollar amounts in tables are in thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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
|
|
$
|
32,195
|
|
|
$
|
100,883
|
|
|
$
|
209,898
|
|
|
$
|
(403,391
|
)
|
|
$
|
217,080
|
|
|
$
|
298,409
|
|
|
$
|
—
|
|
|
$
|
455,074
|
|
Cash flows from investing activities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Capital expenditures
|
|
—
|
|
|
—
|
|
|
(3,622
|
)
|
|
—
|
|
|
—
|
|
|
(117,085
|
)
|
|
—
|
|
|
(120,707
|
)
|
Proceeds from disposal of assets
|
|
—
|
|
|
—
|
|
|
46
|
|
|
—
|
|
|
—
|
|
|
2,336
|
|
|
—
|
|
|
2,382
|
|
Net cash provided by (used in) investing activities
|
|
—
|
|
|
—
|
|
|
(3,576
|
)
|
|
—
|
|
|
—
|
|
|
(114,749
|
)
|
|
—
|
|
|
(118,325
|
)
|
Cash flows from financing activities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Repayment of long-term debt
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(300,000
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(300,000
|
)
|
Issuance of senior notes
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
Tender offer premium
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
Debt issuance costs on senior notes and credit facilities
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(42
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(42
|
)
|
Dividends paid to noncontrolling interests
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(56,881
|
)
|
|
—
|
|
|
(56,881
|
)
|
Distributions to parent company, net
|
|
28,352
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
28,352
|
|
Advances (to) from affiliates
|
|
(63,073
|
)
|
|
(100,883
|
)
|
|
(194,017
|
)
|
|
732,757
|
|
|
(217,080
|
)
|
|
(157,704
|
)
|
|
—
|
|
|
—
|
|
Net cash provided by (used in) financing activities
|
|
(34,721
|
)
|
|
(100,883
|
)
|
|
(194,017
|
)
|
|
432,715
|
|
|
(217,080
|
)
|
|
(214,585
|
)
|
|
—
|
|
|
(328,571
|
)
|
Net change in cash, cash equivalents and restricted cash
|
|
(2,526
|
)
|
|
—
|
|
|
12,305
|
|
|
29,324
|
|
|
—
|
|
|
(30,925
|
)
|
|
—
|
|
|
8,178
|
|
Cash, cash equivalents and restricted cash, beginning of period
|
|
2,537
|
|
|
—
|
|
|
10,855
|
|
|
—
|
|
|
—
|
|
|
640,441
|
|
|
—
|
|
|
653,833
|
|
Cash, cash equivalents and restricted cash, end of period
|
|
$
|
11
|
|
|
$
|
—
|
|
|
$
|
23,160
|
|
|
$
|
29,324
|
|
|
$
|
—
|
|
|
$
|
609,516
|
|
|
$
|
—
|
|
|
$
|
662,011
|
|
NOBLE CORPORATION PLC AND SUBSIDIARIES
NOBLE CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unless otherwise indicated, dollar amounts in tables are in thousands)
Note 20— Unaudited Interim Financial Data
Unaudited interim consolidated financial information from continuing operations for Noble-UK is as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Quarter Ended
|
|
|
March 31
|
|
June 30
|
|
September 30
|
|
December 31
|
2019
|
|
|
|
|
|
|
|
|
Operating revenues
|
|
$
|
282,888
|
|
|
$
|
292,936
|
|
|
$
|
275,526
|
|
|
$
|
454,088
|
|
Operating income (loss)
|
|
(23,812
|
)
|
|
(118,710
|
)
|
|
(640,012
|
)
|
|
116,261
|
|
Net loss from continuing operations
|
|
(67,068
|
)
|
|
(151,960
|
)
|
|
(444,871
|
)
|
|
(32,870
|
)
|
Net loss from discontinued operations, net of tax
|
|
(3,821
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
Net loss per share from continuing operations attributable to Noble-UK (1)
|
|
|
|
|
|
|
|
|
Basic
|
|
|
|
|
|
|
|
|
Loss from continuing operations
|
|
(0.27
|
)
|
|
(0.61
|
)
|
|
(1.79
|
)
|
|
(0.13
|
)
|
Loss from discontinued operations
|
|
(0.02
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
Diluted
|
|
|
|
|
|
|
|
|
Loss from continuing operations
|
|
(0.27
|
)
|
|
(0.61
|
)
|
|
(1.79
|
)
|
|
(0.13
|
)
|
Loss from discontinued operations
|
|
(0.02
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Quarter Ended
|
|
|
March 31
|
|
June 30
|
|
September 30
|
|
December 31
|
2018
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating revenues
|
|
$
|
235,157
|
|
|
$
|
258,369
|
|
|
$
|
279,408
|
|
|
$
|
309,892
|
|
Operating loss
|
|
(56,880
|
)
|
|
(845,606
|
)
|
|
(21,843
|
)
|
|
(21,745
|
)
|
Net loss from continuing operations
|
|
(142,334
|
)
|
|
(628,063
|
)
|
|
(81,591
|
)
|
|
(33,062
|
)
|
Net loss from discontinued operations, net of tax
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
Net loss per share from continuing operations attributable to Noble-UK (1)
|
|
|
|
|
|
|
|
|
Basic
|
|
|
|
|
|
|
|
|
Loss from continuing operations
|
|
(0.58
|
)
|
|
(2.55
|
)
|
|
(0.33
|
)
|
|
(0.13
|
)
|
Diluted
|
|
|
|
|
|
|
|
|
Loss from continuing operations
|
|
(0.58
|
)
|
|
(2.55
|
)
|
|
(0.33
|
)
|
|
(0.13
|
)
|
|
|
(1)
|
Net loss per share is computed independently for each of the quarters presented. Therefore, the sum of the quarters’ net loss per share may not equal the total computed for the year.
|