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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
_________________________________________________________________________________________________
FORM 10-Q
_____________________________________________________________________________________________________
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended: March 31, 2020
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from             to             
Commission file number: 001-36211
_____________________________________________________________________________________________________
Noble Corporation plc
(Exact name of registrant as specified in its charter)
_____________________________________________________________________________________________________
England and Wales
(Registered Number 08354954)
 
98-0619597
(State or other jurisdiction of
incorporation or organization)
 
(I.R.S. employer
identification number)
10 Brook Street, London, England, W1S1BG
(Address of principal executive offices) (Zip Code)
Registrant’s Telephone Number, Including Area Code: +44 20 3300 2300
Commission file number: 001-31306
_____________________________________________________________________________________________________
Noble Corporation
(Exact name of registrant as specified in its charter)
_____________________________________________________________________________________________________
Cayman Islands
 
98-0366361
(State or other jurisdiction of
incorporation or organization)
 
(I.R.S. employer
identification number)
Suite 3D Landmark Square, 64 Earth Close, P.O. Box 31327 George Town, Grand Cayman, Cayman Islands, KY1-1206
(Address of principal executive offices) (Zip Code)
Registrant’s Telephone Number, Including Area Code: (345) 938-0293
_______________________________________________________________________________________________
Securities registered pursuant to Section 12(b) of the Act:
Name of Company
 
Title of each class
 
Trading symbol(s)
 
Name of each exchange on which registered
Noble Corporation plc
 
Ordinary Shares
 
NE
 
New York Stock Exchange
Noble Corporation
 
None
 
 
Indicate by check mark whether each registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes      No  
Indicate by check mark whether each registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).    Yes      No  
Indicate by check mark whether each registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Noble Corporation plc:
Large accelerated filer
Accelerated filer
Non-accelerated filer
Smaller reporting company
Emerging growth company
Noble Corporation:
Large accelerated filer
Accelerated filer
Non-accelerated filer
Smaller reporting company
Emerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
Indicate by check mark whether each registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes      No  
Number of shares outstanding and trading at May 5, 2020: Noble Corporation plc - 250,952,965
Number of shares outstanding: Noble Corporation - 261,245,693
Noble Corporation, a Cayman Islands company and a wholly owned subsidiary of Noble Corporation plc, a public limited company incorporated under the laws of England and Wales, meets the conditions set forth in General Instructions H(1) (a) and (b) of Form 10-Q and is therefore filing this Quarterly Report on Form 10-Q with the reduced disclosure format contemplated by paragraphs (b) and (c) of General Instruction H(2) of Form 10-Q.




TABLE OF CONTENTS
 
 
 
 
 
Page
PART I
 
 
 
Item 1
 
 
 
 
 
Noble Corporation plc (Noble-UK) Financial Statements:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Noble Corporation (Noble-Cayman) Financial Statements:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Item 2
 
 
Item 3
 
 
Item 4
 
 
PART II
 
 
 
Item 1
 
 
Item 1A
 
 
Item 2
 
 
Item 6
 
 
 
 
 
 
 
 
This combined Quarterly Report on Form 10-Q is separately filed by Noble Corporation plc, a public limited company incorporated under the laws of England and Wales (“Noble-UK”), and Noble Corporation, a Cayman Islands company (“Noble-Cayman”). Information in this filing relating to Noble-Cayman is filed by Noble-UK and separately by Noble-Cayman on its own behalf. Noble-Cayman makes no representation as to information relating to Noble-UK (except as it may relate to Noble-Cayman) or any other affiliate or subsidiary of Noble-UK. Since Noble-Cayman meets the conditions specified in General Instructions H(1)(a) and (b) to Form 10-Q, it is permitted to use the reduced disclosure format for wholly-owned subsidiaries of reporting companies as stated in General Instructions H(2). Accordingly, Noble-Cayman has omitted from this report the information called for by “Item 3 (Quantitative and Qualitative Disclosures about Market Risk)” of Part I of Form 10-Q and the following items of Part II of Form 10-Q, “Item 2 (Unregistered Sales of Equity Securities and Use of Proceeds),” and “Item 3 (Defaults upon Senior Securities).”
This report should be read in its entirety as it pertains to each Registrant. Except where indicated, the Condensed Consolidated Financial Statements and related Notes are combined. References in this Quarterly Report on Form 10-Q to “Noble,” the “Company,” “we,” “us,” “our” and words of similar meaning refer collectively to Noble-UK and its condensed consolidated subsidiaries, including Noble-Cayman.

2



PART I. FINANCIAL INFORMATION

Item 1. Financial Statements
NOBLE CORPORATION PLC AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
(Unaudited)
 
 
March 31, 2020
 
December 31, 2019
ASSETS
Current assets
 
 
 
 
Cash and cash equivalents
 
$
175,927

 
$
104,621

Accounts receivable, net
 
208,817

 
198,665

Taxes receivable
 
192,683

 
59,771

Prepaid expenses and other current assets
 
43,886

 
59,050

Total current assets
 
621,313

 
422,107

Property and equipment, at cost
 
8,692,837

 
10,306,625

Accumulated depreciation
 
(2,157,499
)
 
(2,572,701
)
Property and equipment, net
 
6,535,338

 
7,733,924

Other assets
 
104,448

 
128,467

Total assets
 
$
7,261,099

 
$
8,284,498

LIABILITIES AND EQUITY
Current liabilities
 
 
 
 
Current maturities of long-term debt
 
$
260,958

 
$
62,505

Accounts payable
 
87,871

 
108,208

Accrued payroll and related costs
 
40,265

 
56,056

Taxes payable
 
27,047

 
30,715

Interest payable
 
62,467

 
88,047

Other current liabilities
 
180,997

 
171,397

Total current liabilities
 
659,605

 
516,928

Long-term debt
 
3,692,479

 
3,779,499

Deferred income taxes
 
71,222

 
68,201

Other liabilities
 
241,261

 
260,898

Total liabilities
 
4,664,567

 
4,625,526

Commitments and contingencies (Note 13)
 


 


Shareholders’ equity
 
 
 
 
Common stock, $0.01 par value, ordinary shares; 250,952 and 249,200 shares outstanding as of March 31, 2020 and December 31, 2019, respectively
 
2,509

 
2,492

Additional paid-in capital
 
808,881

 
807,093

Retained earnings
 
1,845,099

 
2,907,776

Accumulated other comprehensive loss
 
(59,957
)
 
(58,389
)
Total shareholders equity
 
2,596,532

 
3,658,972

Total liabilities and equity
 
$
7,261,099

 
$
8,284,498

See accompanying notes to the unaudited condensed consolidated financial statements.

3



NOBLE CORPORATION PLC AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share amounts)
(Unaudited) 
 
 
Three Months Ended March 31,
 
 
2020
 
2019
Operating revenues
 
 
 
 
Contract drilling services
 
$
267,364

 
$
270,501

Reimbursables and other
 
13,947

 
12,387

 
 
281,311

 
282,888

Operating costs and expenses
 
 
 
 
Contract drilling services
 
161,145

 
171,728

Reimbursables
 
11,684

 
9,395

Depreciation and amortization
 
103,681

 
109,578

General and administrative
 
17,839

 
15,999

Loss on impairment
 
1,119,517

 

 
 
1,413,866

 
306,700

Operating loss
 
(1,132,555
)
 
(23,812
)
Other income (expense)
 
 
 
 
Interest expense, net of amounts capitalized
 
(70,880
)
 
(70,244
)
Gain on extinguishment of debt, net
 

 
31,266

Interest income and other, net
 
(2,282
)
 
2,506

Loss from continuing operations before income taxes
 
(1,205,717
)
 
(60,284
)
Income tax benefit (provision)
 
143,040

 
(2,865
)
Net loss from continuing operations
 
(1,062,677
)
 
(63,149
)
Net loss from discontinued operations, net of tax
 

 
(3,821
)
Net loss
 
(1,062,677
)
 
(66,970
)
Net income attributable to noncontrolling interests
 

 
(3,919
)
Net loss attributable to Noble Corporation plc
 
$
(1,062,677
)
 
$
(70,889
)
Net loss attributable to Noble Corporation plc
 
 
 
 
Net loss from continuing operations
 
$
(1,062,677
)
 
$
(67,068
)
Net loss from discontinued operations, net of tax
 

 
(3,821
)
Net loss attributable to Noble Corporation plc
 
$
(1,062,677
)
 
$
(70,889
)
Per share data
 
 
 
 
Basic:
 
 
 
 
Loss from continuing operations
 
$
(4.25
)
 
$
(0.27
)
Loss from discontinued operations
 

 
(0.02
)
Net loss attributable to Noble Corporation plc
 
$
(4.25
)
 
$
(0.29
)
 
 
 
 
 
Diluted:
 
 
 
 
Loss from continuing operations
 
$
(4.25
)
 
$
(0.27
)
Loss from discontinued operations
 

 
(0.02
)
Net loss attributable to Noble Corporation plc
 
$
(4.25
)
 
$
(0.29
)
 
 
 
 
 
See accompanying notes to the unaudited condensed consolidated financial statements.

4



NOBLE CORPORATION PLC AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
(In thousands)
(Unaudited)

 
 
Three Months Ended March 31,
 
 
2020
 
2019
Net loss
 
$
(1,062,677
)
 
$
(66,970
)
Other comprehensive income (loss)
 
 
 
 
Foreign currency translation adjustments
 
(2,136
)
 
508

Amortization of deferred pension plan amounts (net of tax provision of $150 and $145 for the three months ended March 31, 2020 and 2019, respectively.)
 
568

 
550

Other comprehensive income (loss), net
 
(1,568
)
 
1,058

Net comprehensive income attributable to noncontrolling interests
 

 
(3,919
)
Comprehensive loss attributable to Noble Corporation plc
 
$
(1,064,245
)
 
$
(69,831
)

See accompanying notes to the unaudited condensed consolidated financial statements.

5



NOBLE CORPORATION PLC AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
 
 
 
Three Months Ended March 31,
 
 
2020
 
2019
Cash flows from operating activities
 
 
 
 
Net loss
 
$
(1,062,677
)
 
$
(66,970
)
Adjustments to reconcile net loss to net cash flow from operating activities:
 
 
 
 
Depreciation and amortization
 
103,681

 
109,578

Loss on impairment
 
1,119,517

 

Gain on extinguishment of debt, net
 

 
(31,266
)
Deferred income taxes
 
6,014

 
2,208

Amortization of share-based compensation
 
3,245

 
2,952

Other costs, net
 
(3,195
)
 
(3,264
)
Changes in components of working capital:
 
 
 
 
Change in taxes receivable
 
(120,838
)
 
4,204

Net changes in other operating assets and liabilities
 
(46,557
)
 
(58,217
)
Net cash used in operating activities
 
(810
)
 
(40,775
)
Cash flows from investing activities
 
 
 
 
Capital expenditures
 
(36,461
)
 
(96,793
)
Proceeds from disposal of assets, net
 

 
7,930

Net cash used in investing activities
 
(36,461
)
 
(88,863
)
Cash flows from financing activities
 
 
 
 
Borrowings on credit facilities
 
110,000

 
350,000

Repayments of senior notes
 

 
(400,000
)
Debt issuance costs
 

 
(90
)
Dividends paid to noncontrolling interests
 

 
(5,020
)
Cash paid to settle equity awards
 
(1,010
)
 

Taxes withheld on employee stock transactions
 
(413
)
 
(2,763
)
Net cash provided by (used in) financing activities
 
108,577

 
(57,873
)
Net increase (decrease) in cash, cash equivalents and restricted cash
 
71,306

 
(187,511
)
Cash, cash equivalents and restricted cash, beginning of period
 
105,924

 
375,907

Cash, cash equivalents and restricted cash, end of period
 
$
177,230

 
$
188,396


See accompanying notes to the unaudited condensed consolidated financial statements.

6



NOBLE CORPORATION PLC AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF EQUITY
(In thousands)
(Unaudited)
 
 
Shares
 
Additional
Paid-in
Capital
 
Retained
Earnings
 
Accumulated
Other
Comprehensive
Loss
 
Noncontrolling
Interests
 
Total
Equity
 
 
Balance
 
Par Value
 
 
 
 
 
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
 

 

 
2,952

 

 

 

 
2,952

Issuance of share-based compensation shares
 
2,356

 
23

 
(23
)
 

 

 

 

Shares withheld for taxes on equity transactions
 

 

 
(2,786
)
 

 

 

 
(2,786
)
Net loss
 

 

 

 
(70,889
)
 

 
3,919

 
(66,970
)
Dividends paid to noncontrolling interests
 

 

 

 

 

 
(5,020
)
 
(5,020
)
Other comprehensive income, net
 

 

 

 

 
1,058

 

 
1,058

Balance at March 31, 2019
 
249,150

 
$
2,491

 
$
699,552

 
$
3,537,477

 
$
(56,014
)
 
$
400,302

 
$
4,583,808

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Balance at December 31, 2019
 
249,200

 
$
2,492

 
$
807,093

 
$
2,907,776

 
$
(58,389
)
 
$

 
$
3,658,972

Employee related equity activity
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Amortization of share-based compensation
 

 

 
2,235

 

 

 

 
2,235

Issuance of share-based compensation shares
 
1,752

 
17

 
(17
)
 

 

 

 

Shares withheld for taxes on equity transactions
 

 

 
(430
)
 

 

 

 
(430
)
Net loss
 

 

 

 
(1,062,677
)
 

 

 
(1,062,677
)
Other comprehensive income, net
 

 

 

 

 
(1,568
)
 

 
(1,568
)
Balance at March 31, 2020
 
250,952

 
$
2,509

 
$
808,881

 
$
1,845,099

 
$
(59,957
)
 
$

 
$
2,596,532


See accompanying notes to the unaudited condensed consolidated financial statements.

7



NOBLE CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
(Unaudited) 
 
 
March 31, 2020
 
December 31, 2019
ASSETS
Current assets
 
 
 
 
Cash and cash equivalents
 
$
175,891

 
$
104,575

Accounts receivable, net
 
208,817

 
198,665

Taxes receivable
 
192,683

 
59,771

Prepaid expenses and other current assets
 
43,223

 
57,890

Total current assets
 
620,614

 
420,901

Property and equipment, at cost
 
8,692,837

 
10,306,625

Accumulated depreciation
 
(2,157,499
)
 
(2,572,701
)
Property and equipment, net
 
6,535,338

 
7,733,924

Other assets
 
104,448

 
128,467

Total assets
 
$
7,260,400

 
$
8,283,292

LIABILITIES AND EQUITY
Current liabilities
 
 
 
 
Current maturities of long-term debt
 
$
260,958

 
$
62,505

Accounts payable
 
87,455

 
107,985

Accrued payroll and related costs
 
40,226

 
56,065

Taxes payable
 
27,047

 
30,715

Interest payable
 
62,467

 
88,047

Other current liabilities
 
80,997

 
71,397

Total current liabilities
 
559,150

 
416,714

Long-term debt
 
3,692,479

 
3,779,499

Deferred income taxes
 
71,222

 
68,201

Other liabilities
 
241,261

 
260,898

Total liabilities
 
4,564,112

 
4,525,312

Commitments and contingencies (Note 13)
 


 


Shareholders’ equity
 
 
 
 
Common stock, $0.10 par value, ordinary shares; 261,246 shares outstanding as of March 31, 2020 and December 31, 2019
 
26,125

 
26,125

Capital in excess of par value
 
760,790

 
757,545

Retained earnings
 
1,969,330

 
3,032,699

Accumulated other comprehensive loss
 
(59,957
)
 
(58,389
)
Total shareholders equity
 
2,696,288

 
3,757,980

Total liabilities and equity
 
$
7,260,400

 
$
8,283,292

See accompanying notes to the unaudited condensed consolidated financial statements.

8



NOBLE CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands)
(Unaudited)
 
 
 
Three Months Ended March 31,
 
 
2020
 
2019
Operating revenues
 
 
 
 
Contract drilling services
 
$
267,364

 
$
270,501

Reimbursables and other
 
13,947

 
12,387

 
 
281,311

 
282,888

Operating costs and expenses
 
 
 
 
Contract drilling services
 
160,841

 
170,862

Reimbursables
 
11,684

 
9,395

Depreciation and amortization
 
103,109

 
108,772

General and administrative
 
6,751

 
7,595

Loss on impairment
 
1,119,517

 

 
 
1,401,902

 
296,624

Operating loss
 
(1,120,591
)
 
(13,736
)
Other income (expense)
 
 
 
 
Interest expense, net of amounts capitalized
 
(70,880
)
 
(70,244
)
Gain on extinguishment of debt, net
 

 
31,266

Interest income and other, net
 
(2,294
)
 
2,506

Loss from continuing operations before income taxes
 
(1,193,765
)
 
(50,208
)
Income tax provision
 
143,040

 
(2,865
)
Net loss from continuing operations
 
(1,050,725
)
 
(53,073
)
Net loss from discontinued operations, net of tax
 

 
(3,821
)
Net loss
 
(1,050,725
)
 
(56,894
)
Net income attributable to noncontrolling interests
 

 
(3,919
)
Net loss attributable to Noble Corporation
 
$
(1,050,725
)
 
$
(60,813
)
See accompanying notes to the unaudited condensed consolidated financial statements.

9



NOBLE CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
(In thousands)
(Unaudited)

 
 
Three Months Ended March 31,
 
 
2020
 
2019
Net loss
 
$
(1,050,725
)
 
$
(56,894
)
Other comprehensive income (loss)
 
 
 
 
Foreign currency translation adjustments
 
(2,136
)
 
508

Amortization of deferred pension plan amounts (net of tax provision of $150 and $145 for the three months ended March 31, 2020 and 2019, respectively.)
 
568

 
550

Other comprehensive income (loss), net
 
(1,568
)
 
1,058

Net comprehensive income attributable to noncontrolling interests
 

 
(3,919
)
Comprehensive loss attributable to Noble Corporation
 
$
(1,052,293
)
 
$
(59,755
)
See accompanying notes to the unaudited condensed consolidated financial statements.



10



NOBLE CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
 
 
 
Three Months Ended March 31,
 
 
2020
 
2019
Cash flows from operating activities
 
 
 
 
Net loss
 
$
(1,050,725
)
 
$
(56,894
)
Adjustments to reconcile net loss to net cash flow from operating activities:
 
 
 
 
Depreciation and amortization
 
103,109

 
108,772

Loss on impairment
 
1,119,517

 

Gain on extinguishment of debt, net
 

 
(31,266
)
Deferred income taxes
 
6,014

 
2,208

Amortization of share-based compensation
 
3,245

 
2,940

Other costs, net
 
1,427

 
(3,264
)
Changes in components of working capital:
 
 
 
 
Change in taxes receivable
 
(120,838
)
 
4,195

Net changes in other operating assets and liabilities
 
(51,328
)
 
(57,373
)
Net cash provided by (used in) operating activities
 
10,421

 
(30,682
)
Cash flows from investing activities
 
 
 
 
Capital expenditures
 
(36,461
)
 
(96,793
)
Proceeds from disposal of assets, net
 

 
7,930

Net cash used in investing activities
 
(36,461
)
 
(88,863
)
Cash flows from financing activities
 
 
 
 
Borrowings on credit facilities
 
110,000

 
350,000

Repayments of senior notes
 

 
(400,000
)
Debt issuance costs
 

 
(90
)
Dividends paid to noncontrolling interests
 

 
(5,020
)
Distributions to parent company, net
 
(12,644
)
 
(12,077
)
Net cash provided by (used in) financing activities
 
97,356

 
(67,187
)
Net increase (decrease) in cash, cash equivalents and restricted cash
 
71,316

 
(186,732
)
Cash, cash equivalents and restricted cash, beginning of period
 
105,878

 
375,050

Cash, cash equivalents and restricted cash, end of period
 
$
177,194

 
$
188,318


See accompanying notes to the unaudited condensed consolidated financial statements.

11



NOBLE CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF EQUITY
(In thousands)
(Unaudited)
 
 
Shares
 
Additional
Paid-in
Capital
 
Retained
Earnings
 
Accumulated
Other
Comprehensive
Loss
 
Noncontrolling
Interests
 
Total
Equity
 
 
Balance
 
Par Value
 
 
 
 
 
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
 

 

 

 
(12,077
)
 

 

 
(12,077
)
Capital contribution by parent - share-based compensation
 

 

 
2,940

 

 

 

 
2,940

Net income (loss)
 

 

 

 
(60,813
)
 

 
3,919

 
(56,894
)
Dividends paid to noncontrolling interests
 

 

 

 

 

 
(5,020
)
 
(5,020
)
Other comprehensive income, net
 

 

 

 

 
1,058

 

 
1,058

Balance at March 31, 2019
 
261,246

 
$
26,125

 
$
650,022

 
$
3,563,040

 
$
(56,014
)
 
$
400,302

 
$
4,583,475

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Balance at December 31, 2019
 
261,246

 
$
26,125

 
$
757,545

 
$
3,032,699

 
$
(58,389
)
 
$

 
$
3,757,980

Distributions to parent company, net
 

 

 

 
(12,644
)
 

 

 
(12,644
)
Capital contribution by parent - share-based compensation
 

 

 
3,245

 

 

 

 
3,245

Net income (loss)
 

 

 

 
(1,050,725
)
 

 

 
(1,050,725
)
Other comprehensive income, net
 

 

 

 

 
(1,568
)
 

 
(1,568
)
Balance at March 31, 2020
 
261,246

 
$
26,125

 
$
760,790

 
$
1,969,330

 
$
(59,957
)
 
$

 
$
2,696,288


See accompanying notes to the unaudited condensed consolidated financial statements.

12

NOBLE CORPORATION PLC AND SUBSIDIARIES
NOBLE CORPORATION AND SUBSIDIARIES
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unless otherwise indicated, dollar amounts in tables are in thousands, except per share data)


Note 1— Organization and Basis of Presentation
Noble Corporation plc, a public limited company incorporated under the laws of England and Wales (“Noble-UK”), is a leading offshore drilling contractor for the oil and gas industry. We provide contract drilling services to the international oil and gas industry with our global fleet of mobile offshore drilling units. As of March 31, 2020, our fleet of 24 drilling rigs consisted of 12 floaters and 12 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 condensed consolidated financial statements of Noble-UK include the accounts of Noble-Cayman, and Noble-UK conducts substantially all of its business through Noble-Cayman and its subsidiaries.
The accompanying unaudited condensed consolidated financial statements of Noble-UK and Noble-Cayman have been prepared pursuant to the rules and regulations of the US Securities and Exchange Commission (“SEC”) as they pertain to Quarterly Reports on Form 10-Q. Accordingly, certain information and disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) have been condensed or omitted pursuant to such rules and regulations. The unaudited financial statements are prepared on a going concern basis and reflect all adjustments that are, in the opinion of management, necessary for a fair statement of the financial position and results of operations for the interim periods, on a basis consistent with the annual audited consolidated financial statements. All such adjustments are of a recurring nature. The December 31, 2019 Condensed Consolidated Balance Sheets presented herein are derived from the December 31, 2019 audited consolidated financial statements. These interim financial statements should be read in conjunction with the consolidated financial statements and notes included in our Annual Report on Form 10-K for the year ended December 31, 2019, filed by both Noble-UK and Noble-Cayman. The results of operations for interim periods are not necessarily indicative of the results to be expected for the full year.
Liquidity Concerns and Actions to Address Liquidity Needs; Going Concern
The offshore drilling industry experienced a significant expansion from the early 2000s to the mid-2010s, during which time the Company constructed or rebuilt each rig in our current fleet and incurred a substantial amount of debt in connection therewith. Since that time, the industry has experienced a significant sustained reduction in oil prices and a substantial increase in offshore rig supply, which have led to an industry-wide supply and demand imbalance and an extremely challenging environment. During such period of supply and demand imbalance, we had to accept contracts with dayrates and terms that were lower than anticipated when these capital projects and the associated debt were incurred. The Company has incurred significant losses since 2016 and significant impairment losses since 2014. The challenging environment experienced through 2019 has been further exacerbated by the novel strain of coronavirus (“COVID-19”) pandemic and production level disagreements that developed among members of the Organization of Petroleum Exporting Countries and other oil and gas producing nations (“OPEC+”) in the beginning of 2020.
We have experienced unprecedented challenges in the first few months of 2020. The development of COVID-19 into a pandemic, the actions taken to mitigate the spread of COVID-19 by governmental authorities around the world and the risk of infection have altered, and are expected to continue to alter, policies of governments and companies and behaviors of customers around the world in ways that we anticipate will have a significant negative effect on oil consumption, such as government-imposed or voluntary social distancing and quarantining, reduced travel, and remote work policies. At the start of the COVID-19 pandemic and related mitigation efforts, disagreements developed within OPEC+, and Saudi Arabia and Russia initiated efforts to aggressively increase oil production, thereby increasing inventory levels even further. The convergence of these events resulted in an unprecedented steep decline in the demand for oil and a substantial surplus in the supply of oil. Although OPEC+ agreed in April 2020 to reduce production, the continued decreased demand for crude oil and historically low oil prices are expected to continue for the foreseeable future. Such challenging conditions had, and are expected to continue to have, a severe impact on our business, operations and financial condition in various respects, including substantially reducing demand for our services. These unprecedented recent events have impacted our current and expected liquidity position in several meaningful ways since December 31, 2019 as set forth below.

Higher than previously anticipated free cash flow deficits over the next twelve months.
Reduced availability under our 2017 Credit Facility (as defined herein), primarily driven by:
The impact of the $1.1 billion in impairment losses incurred in the three months ended March 31, 2020 on the borrowing availability as calculated under the Indenture Secured Debt Basket (as defined in the First Amendment to the 2017 Credit Facility). See “Note 9— Loss on Impairment” for additional information.

13

NOBLE CORPORATION PLC AND SUBSIDIARIES
NOBLE CORPORATION AND SUBSIDIARIES
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unless otherwise indicated, dollar amounts in tables are in thousands, except per share data)

The impact of the expected reduction in Adjusted EBITDA (as defined herein) over the next twelve months on the borrowing availability as calculated under the Leverage Covenant (as defined herein).
Increased borrowings under the 2017 Credit Facility, primarily due to the early repayment of the Seller Loans (as defined herein) in April 2020. As a result of such early repayment, we avoided a default under the Seller Loans, as the impairment losses referred to above caused us to exceed the maximum debt to total capitalization ratio set forth in the Seller Loans at March 31, 2020.
Significantly reduced access to sources of new capital.
The impairment losses incurred since the First Amendment to the 2017 Credit Facility have led to a meaningful reduction in Consolidated Net Tangible Assets (“CNTA”) and consequently constrained our ability to access the full commitments under our 2017 Credit Facility. Commitments under our 2017 Credit Facility total $1.3 billion; however, the maximum availability is also currently limited by the Indenture Secured Debt Basket at approximately $1.05 billion. In addition, a certain amount of commitments is required to remain unused to satisfy the Minimum Liquidity Covenant (as defined herein). At April 23, 2020 and after using borrowings under our 2017 Credit Facility to repay the Seller Loans, we had $545.0 million of borrowings outstanding and could borrow up to an additional $297.8 million under our 2017 Credit Facility. Due to the current economic uncertainty and resulting impact on drilling activity, we anticipate even greater than previously expected continued losses and negative cash flow over the next twelve months. Unless we are able to access alternative financing in the current market or obtain a waiver from lenders of certain covenants under, or amendment to, our 2017 Credit Facility, we are forecasted to use all of the availability under our 2017 Credit Facility and breach the Minimum Liquidity Covenant by the end of 2020. See “Note 6— Debt”, for additional information.
Based on our evaluation of the circumstances described above, substantial doubt exists about our ability to continue as a going concern.
We are actively pursuing a variety of transactions and cost-cutting measures, including, but not limited to, reductions in corporate discretionary expenditures, potential refinancing transactions by us or our subsidiaries, potential capital exchange transactions, a potential waiver from lenders under, or amendment to, our 2017 Credit Facility, further reductions in capital expenditures and increased focus on operational efficiencies. However, the prospects of successfully obtaining sufficient liquidity, to meet near-term debt obligations through these efforts are highly challenging, particularly in the current environment. Consequently, we cannot predict the extent to which any of these measures will be successful, if at all. If we are not successful in achieving these results outside of a court process, there is substantial risk that it may be necessary for us to seek protection from our creditors under Chapter 11 of the US Bankruptcy Code.
In light of the foregoing, the unaudited condensed consolidated financial statements included herein were prepared on a going concern basis of accounting, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. The consolidated financial statements do not reflect any adjustments that might be necessary should we be unable to continue as a going concern
Note 2— Accounting Pronouncements
Accounting Standards Adopted
In June 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“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 is 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 adopted this standard effective January 1, 2020 and will not restate comparative periods. Our adoption did not have a material effect on our condensed consolidated financial statements. The Company will continue to actively monitor the impact of the COVID-19 pandemic on expected credit losses.
Issued Accounting Standards
In December 2019, the FASB issued ASU No. 2019-12, which amends Accounting Standards Codification (“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 condensed 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 condensed consolidated financial statements.

14

NOBLE CORPORATION PLC AND SUBSIDIARIES
NOBLE CORPORATION AND SUBSIDIARIES
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unless otherwise indicated, dollar amounts in tables are in thousands, except per share data)

Note 3— 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. Shell’s equity interests were presented as noncontrolling interests on our condensed consolidated financial statements. During the three months ended March 31, 2019, the Bully joint ventures approved and paid dividends totaling $10.0 million. Of these amounts, 50 percent was paid to our former joint venture partner, Shell.
Note 4— Loss Per Share
The following table presents the computation of basic and diluted loss per share for Noble-UK:
 
 
Three Months Ended March 31,
 
 
2020
 
2019
Numerator:
 
 

 
 
Basic
 
 
 
 
Net loss from continuing operations
 
$
(1,062,677
)
 
$
(67,068
)
Net loss from discontinued operations, net of tax
 

 
(3,821
)
Net loss attributable to Noble Corporation plc
 
$
(1,062,677
)
 
$
(70,889
)
Diluted
 
 

 
 

Net loss from continuing operations
 
$
(1,062,677
)
 
$
(67,068
)
Net loss from discontinued operations, net of tax
 

 
(3,821
)
Net loss attributable to Noble Corporation plc
 
$
(1,062,677
)
 
$
(70,889
)
Denominator:
 
 

 
 

Weighted average shares outstanding - basic
 
250,047

 
248,251

Weighted average shares outstanding - diluted
 
250,047

 
248,251

Loss per share
 
 

 
 

Basic:
 
 
 
 
Loss from continuing operations
 
$
(4.25
)
 
$
(0.27
)
Loss from discontinued operations
 

 
(0.02
)
Net loss attributable to Noble Corporation plc
 
$
(4.25
)
 
$
(0.29
)
Diluted:
 
 
 
 
Loss from continuing operations
 
$
(4.25
)
 
$
(0.27
)
Loss from discontinued operations
 

 
(0.02
)
Net loss attributable to Noble Corporation plc
 
$
(4.25
)
 
$
(0.29
)

Only those items having a dilutive impact on our basic loss per share are included in diluted loss per share. For the three months ended March 31, 2020 and 2019, approximately 12.4 million and 13.2 million share-based awards, respectively, were excluded from diluted loss per share since the effect would have been anti-dilutive.
Share capital
As of March 31, 2020, Noble-UK had approximately 251.0 million shares outstanding and trading as compared to approximately 249.2 million shares outstanding and trading at December 31, 2019. 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 three months ended March 31, 2020.
The declaration and payment of dividends require the authorization of the Board of Directors of Noble-UK, provided that such dividends

15

NOBLE CORPORATION PLC AND SUBSIDIARIES
NOBLE CORPORATION AND SUBSIDIARIES
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unless otherwise indicated, dollar amounts in tables are in thousands, except per share data)

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; however, at this time, we do not expect to pay any dividends in the foreseeable future.
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 three months ended March 31, 2020 and 2019, we did not repurchase any of our shares.
Note 5— Property and Equipment
Property and equipment, at cost consisted of the following:
 
 
March 31, 2020
 
December 31, 2019
Drilling equipment and facilities
 
$
8,422,110

 
$
10,014,314

Construction in progress
 
68,504

 
88,904

Other
 
202,223

 
203,407

Property and equipment, at cost
 
$
8,692,837

 
$
10,306,625


On February 28, 2019, we purchased a new GustoMSC CJ46 rig, the Noble Joe Knight, from the PaxOcean Group 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 6— Debt” for additional information.
During the three months ended March 31, 2020, we recognized a non-cash loss on impairment of $1.1 billion, related to our long-lived assets. During the three months ended March 31, 2019, we recognized no impairment charges to long-lived assets. See “Note 9— Loss on Impairment” for additional information.
Note 6— Debt
Credit Facilities
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”). 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 (the “Minimum Liquidity Covenant”) not exceed the amount of the Indenture Secured Debt Basket at the time of each borrowing. The maximum aggregate amount of commitments under the 2017 Credit Facility on March 31, 2020 was $1.3 billion with approximately $397.8 million available to borrow. As described below, in April 2020, in relation to the pay down of our indebtedness under the Seller Loans, we borrowed $100.0 million under the 2017 Credit Facility. 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,

16

NOBLE CORPORATION PLC AND SUBSIDIARIES
NOBLE CORPORATION AND SUBSIDIARIES
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unless otherwise indicated, dollar amounts in tables are in thousands, except per share data)

which is currently the maximum contractual rate of 4.25%. At March 31, 2020, we had $445.0 million of borrowings outstanding under the 2017 Credit Facility.
At March 31, 2020, we had $5.5 million of letters of credit issued under the 2017 Credit Facility and an additional $11.7 million in letters of credit and surety bonds issued under unsecured bilateral arrangements.
Our 2017 Credit Facility has provisions that vary the applicable interest rates for borrowings based upon our debt ratings. We also pay a commitment fee under the 2017 Credit Facility on the daily unused amount of the underlying commitments, which varies depending on our credit ratings. At March 31, 2020, the interest rates in effect under our 2017 Credit Facility were the highest permitted interest rates under that agreement.
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 and Noble Holding International Limited (as amended, the “2015 Credit Facility”). On December 20, 2019, we repaid $300.0 million of outstanding borrowings and terminated the 2015 Credit Facility.
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 had a term of four years and required 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 bore 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 was accelerated into the first year, resulting in an overall first year interest rate of 8.91%, of which only 4.25% was payable in cash. Thereafter, the paid-in-kind interest ended and the cash interest rate of 4.25% was 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 had a term of four years and required 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 bore 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 was accelerated into the first year, resulting in an overall first year interest rate of 8.91%, of which only 4.25% was payable in cash. Thereafter, the paid-in-kind interest ended and the cash interest rate of 4.25% was payable for the remainder of the term.
Both of the Seller Loans were guaranteed by Noble-Cayman and each was secured by a mortgage on the applicable rig and by the pledge of the shares of the applicable single-purpose entity that owned the relevant rig. Each Seller Loan contained 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 our Senior Notes due 2026 (the “2026 Notes”), as well as other covenants and provisions customarily found in secured transactions, including a cross default provision. Each Seller Loan required 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.
Upon completion of our financial statements for the quarter ended March 31, 2020, we would have exceeded the debt to total capitalization ratio requirement under the Seller Loans. In April 2020, the Company agreed with the lender under the Seller Loans to pay off 85% of the outstanding principal amount of the Seller Loans in exchange for a discount to the outstanding loan balance. On April 20, 2020, the Company made a payment of $48.1 million under the 2019 Seller Loan and $53.6 million under the 2018 Seller Loan, and, upon the lender’s receipt of such payment, the remaining principal balance under each Seller Loan was reduced to $1.00, interest ceased accruing, and the financial covenants set forth in the agreements relating to the Seller Loans ceased to apply. As a result of such early repayment, we avoided a default under the Seller Loans, and the discount was agreed to prior to any default. As long as certain events specified in the related deed of release do not occur within the 90-day period following the payment date, then the Seller Loans will be terminated, and all security interests will be released. See “Note 15— Subsequent Events” for additional information.

17

NOBLE CORPORATION PLC AND SUBSIDIARIES
NOBLE CORPORATION AND SUBSIDIARIES
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unless otherwise indicated, dollar amounts in tables are in thousands, except per share data)

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, Senior Notes due 2021, Senior Notes due 2022 and Senior Notes due 2024. 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.
Covenants
At March 31, 2020, 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 (the “Leverage Covenant”), (ii) the Minimum Liquidity Covenant, (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 Minimum Liquidity Covenant not exceed the amount of the Indenture Secured Debt Basket at the time of each borrowing. The Indenture Secured Debt Basket is fully defined in the credit agreement governing the 2017 Credit Facility but is generally calculated as 15% of CNTA of Noble-Cayman minus other secured debt excluding Permitted Liens such as those connected to the Seller Loans. Commitments under the 2017 Credit Facility total $1.3 billion; however, the maximum availability is currently constrained by the Indenture Secured Debt Basket. In addition, a certain amount of commitments is required to remain unused to satisfy the Minimum Liquidity Covenant. As of March 31, 2020, we had $445.0 million of borrowings and $5.5 million of letters of credit outstanding under the 2017 Credit Facility, and we would have been able to borrow a maximum of an additional approximately $397.8 million thereunder. In April 2020, in relation to the pay down of our indebtedness under the Seller Loans, we borrowed $100.0 million under the 2017 Credit Facility. As a result, as of April 23, 2020, we had $545.0 million of borrowings outstanding under the 2017 Credit Facility, and we would have been able to borrow a maximum of an additional approximately $297.8 million.
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.
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.
In addition to the covenants from the 2017 Credit Facility and the 2026 Notes described 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,

18

NOBLE CORPORATION PLC AND SUBSIDIARIES
NOBLE CORPORATION AND SUBSIDIARIES
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unless otherwise indicated, dollar amounts in tables are in thousands, except per share data)

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.
We continually monitor compliance with the covenants under our 2017 Credit Facility and our senior notes. The negative impact on our financial condition of the oversupply of oil, and the substantial decline in demand for oil as a result of COVID-19 and related mitigation steps, raises significant uncertainty as to whether we can remain in compliance throughout 2020. Our failure to comply with those covenants could result in an event of default that, if not cured or waived, would result in the acceleration of all our debt, which would result in substantial doubt about our ability to continue as a going concern.
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 12— 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:
 
 
March 31, 2020
 
December 31, 2019
 
 
Carrying Value
 
Estimated Fair Value
 
Carrying Value
 
Estimated Fair Value
Senior unsecured notes:
 
 
 
 
 
 
 
 
4.90% Senior Notes due August 2020
 
$
62,518

 
$
41,787

 
$
62,505

 
$
60,660

4.625% Senior Notes due March 2021
 
79,871

 
38,236

 
79,854

 
64,262

3.95% Senior Notes due March 2022
 
21,184

 
8,503

 
21,181

 
12,170

7.75% Senior Notes due January 2024
 
390,178

 
45,821

 
389,800

 
211,035

7.95% Senior Notes due April 2025
 
447,080

 
45,734

 
446,962

 
228,515

7.875% Senior Notes due February 2026
 
739,711

 
200,978

 
739,371

 
546,353

6.20% Senior Notes due August 2040
 
390,544

 
31,657

 
390,526

 
149,134

6.05% Senior Notes due March 2041
 
389,840

 
21,848

 
389,809

 
142,646

5.25% Senior Notes due March 2042
 
478,155

 
24,017

 
478,122

 
176,265

8.95% Senior Notes due April 2045
 
390,787

 
25,580

 
390,763

 
164,664

Seller loans:
 
 
 
 
 
 
 
 
Seller-financed secured loan due September 2022
 
62,488

 
24,487

 
62,453

 
36,968

Seller-financed secured loan due February 2023
 
56,081

 
15,264

 
55,658

 
31,175

Credit facility:
 
 
 
 
 
 
 
 
2017 Credit Facility matures January 2023
 
445,000

 
445,000

 
335,000

 
335,000

Total debt
 
3,953,437

 
968,912

 
3,842,004

 
2,158,847

Less: Current maturities of long-term debt
 
(260,958
)
 
(119,774
)
 
(62,505
)
 
(60,660
)
Long-term debt
 
$
3,692,479

 
$
849,138

 
$
3,779,499

 
$
2,098,187



19

NOBLE CORPORATION PLC AND SUBSIDIARIES
NOBLE CORPORATION AND SUBSIDIARIES
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unless otherwise indicated, dollar amounts in tables are in thousands, except per share data)

Note 7— Accumulated Other Comprehensive Income (Loss)
The following table presents the changes in the accumulated balances for each component of “Accumulated other comprehensive income (loss)” (“AOCI”) for the three months ended March 31, 2020 and 2019. All amounts within the table are shown net of tax.
 
 
Defined Benefit Pension Items (1)
 
Foreign Currency Items
 
Total
Balance at December 31, 2018
 
$
(39,058
)
 
$
(18,014
)
 
$
(57,072
)
Activity during period:
 
 
 
 
 
 
Other comprehensive income (loss) before reclassifications
 

 
508

 
508

Amounts reclassified from AOCI
 
550

 

 
550

Net other comprehensive income
 
550

 
508

 
1,058

Balance at March 31, 2019
 
$
(38,508
)
 
$
(17,506
)
 
$
(56,014
)
 
 
 
 
 
 
 
Balance at December 31, 2019
 
$
(40,635
)
 
$
(17,754
)
 
$
(58,389
)
Activity during period:
 
 
 
 
 
 
Other comprehensive income (loss) before reclassifications
 

 
(2,136
)
 
(2,136
)
Amounts reclassified from AOCI
 
568

 

 
568

Net other comprehensive income (loss)
 
568

 
(2,136
)
 
(1,568
)
Balance at March 31, 2020
 
$
(40,067
)
 
$
(19,890
)
 
$
(59,957
)
(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 Condensed Consolidated Statements of Operations through “Other income (expense)”. See “Note 11— Employee Benefit Plans” for additional information.
Note 8— 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 Condensed Consolidated Balance Sheets.
The following table provides information about contract assets and contract liabilities from contracts with customers:
 
 
March 31, 2020
 
December 31, 2019
Current contract assets
 
$
17,085

 
$
21,292

Noncurrent contract assets
 
7,494

 
9,508

Total contract assets
 
24,579

 
30,800

 
 
 
 
 
Current contract liabilities (deferred revenue)
 
(42,535
)
 
(34,196
)
Noncurrent contract liabilities (deferred revenue)
 
(26,171
)
 
(30,859
)
Total contract liabilities
 
$
(68,706
)
 
$
(65,055
)

20

NOBLE CORPORATION PLC AND SUBSIDIARIES
NOBLE CORPORATION AND SUBSIDIARIES
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unless otherwise indicated, dollar amounts in tables are in thousands, except per share data)

Significant changes in the remaining performance obligation contract assets and the contract liabilities balances for the three months ended March 31, 2020 and 2019 are as follows:
 
 
Contract Assets
 
Contract Liabilities
Net balance at December 31, 2018
 
$
47,664

 
$
(80,753
)
 
 
 
 
 
Amortization of deferred costs
 
(8,775
)
 

Additions to deferred costs
 
373

 

Amortization of deferred revenue
 

 
9,355

Additions to deferred revenue
 

 
(866
)
Total
 
(8,402
)
 
8,489

 
 
 
 
 
Net balance at March 31, 2019
 
$
39,262

 
$
(72,264
)
 
 
 
 
 
Net balance at December 31, 2019
 
$
30,800

 
$
(65,055
)
 
 
 
 
 
Amortization of deferred costs
 
(8,799
)
 

Additions to deferred costs
 
2,578

 

Amortization of deferred revenue
 

 
15,828

Additions to deferred revenue
 

 
(19,479
)
Total
 
(6,221
)
 
(3,651
)
 
 
 
 
 
Net balance at March 31, 2020
 
$
24,579

 
$
(68,706
)

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, as of March 31, 2020:    
 
 
For the Years Ended December 31,
 
 
2020 (1)
 
2021
 
2022
 
2023
 
2024 and beyond
 
Total
Floaters
 
$
23,912

 
$
11,210

 
$
7,853

 
$
3,546

 
$

 
$
46,521

Jackups
 
13,217

 
7,227

 
1,741

 

 

 
22,185

Total
 
$
37,129

 
$
18,437

 
$
9,594

 
$
3,546

 
$

 
$
68,706


(1) Represents a nine-month period beginning April 1, 2020.
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 March 31, 2020. 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.

21

NOBLE CORPORATION PLC AND SUBSIDIARIES
NOBLE CORPORATION AND SUBSIDIARIES
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unless otherwise indicated, dollar amounts in tables are in thousands, except per share data)

Disaggregation of Revenue
The following table provides information about contract drilling revenue by rig types:
 
 
Three Months Ended March 31,
 
 
2020
 
2019
Floaters
 
$
125,336

 
$
153,154

Jackups
 
142,028

 
117,347

Total
 
$
267,364

 
$
270,501


Note 9— Loss on Impairment
Asset Impairments
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 first quarter of 2020 and in light of the rapid and unexpected decline in demand for our services resulting from the global COVID-19 pandemic, the steep decline in the demand for oil and the substantial surplus in the supply of oil, we conducted a review of our fleet to determine recoverability. The review included an assessment of certain assumptions, including future marketability of each unit in light of the current market conditions and 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 in the near to medium term.
Based upon our impairment analysis, we impaired the carrying value to their corresponding estimated fair values for the Noble Bully I, Noble Bully II, Noble Danny Adkins and Noble Jim Day. 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 prolonged unfavorable changes to current market conditions, reactivation costs or dayrates, if we are unable to secure new or extended contracts for our active rigs at favorable rates, 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. During the three months ended March 31, 2020, we recognized approximately $1.1 billion in impairment charges related to the Noble Bully I, Noble Bully II, Noble Danny Adkins and Noble Jim Day, and $5.5 million of impairment charges related to certain capital spare equipment. The impact of the current global economic turmoil continues to evolve and its duration and ultimate disruption to our customers’ and our business cannot be estimated at this time. Should such disruption continue, weaker economic conditions generally could result in further impairments, During the three months ended March 31, 2019, we recognized no impairment charges on our fleet.
Note 10— Income Taxes
At March 31, 2020, the reserves for uncertain tax positions totaled $147.3 million (net of related tax benefits of $0.4 million). At December 31, 2019, the reserves for uncertain tax positions totaled $159.7 million (net of related tax benefits of $0.4 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.
On March 27, 2020, the President of the United States signed the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”) into law. The CARES Act makes significant changes to various areas of US federal income tax law by, among other things, allowing a five-year carryback period for 2018, 2019 and 2020 net operating losses (“NOL”), accelerating the realization of remaining alternative minimum tax credits, and increasing the interest expense limitation under Section 163(j) for years 2019 and 2020. The Company recognized an income tax benefit of $42.6 million as a result of the application of the CARES Act in its first quarter of 2020 financial statements in accordance with ASC Topic 740, Income Taxes. Such $42.6 million tax benefit is comprised primarily of a current income tax receivable of $151.4 million, which we expect to receive within the next 12 months, partially offset by non-cash deferred tax expense of $107.6 million related to NOL utilization.
At March 31, 2020, our income tax provision included a tax benefit of $4.6 million related to a non-US reserve release following a statute expiration and a non-cash item deferred tax benefit of $95.6 million related to the impairment of two rigs and certain capital spares.

22

NOBLE CORPORATION PLC AND SUBSIDIARIES
NOBLE CORPORATION AND SUBSIDIARIES
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unless otherwise indicated, dollar amounts in tables are in thousands, except per share data)

At March 31, 2020, we recorded a non-US reserve release of $22.2 million and an $11.8 million US reserve increase. Each of these items resulted in no profit and loss impact and were recorded as balance sheet reclassifications.
In light of the negative impact that the COVID-19 pandemic and production level disagreements among OPEC+ nations have had on our business and results of operations, we disclosed substantial doubt about the Company’s ability to continue as a going concern. As such, we re-evaluated assumptions we previously made with respect to the realization of our deferred tax assets and our ability to assert permanent reinvestment of the earnings and outside book/tax basis differences in our subsidiaries. We determined that no changes to our existing assumptions and assertions are warranted in the current period but we will continue to monitor such assumptions and assertions in subsequent quarters to determine whether or not changes to the tax provision are warranted.
Note 11— Employee Benefit Plans
Pension costs include the following components for the three months ended March 31, 2020 and 2019:
 
 
Three Months Ended March 31,
 
 
2020
 
2019
 
 
Non-US
 
US
 
Non-US
 
US
Interest cost
 
$
433

 
$
1,892

 
$
445

 
$
2,178

Return on plan assets
 
(499
)
 
(2,919
)
 
(634
)
 
(2,578
)
Recognized net actuarial loss
 
3

 
716

 
3

 
692

Net pension benefit cost (gain)
 
$
(63
)
 
$
(311
)
 
$
(186
)
 
$
292

During the three months ended March 31, 2020 and 2019, we made no contributions to our pension plans. Effective December 31, 2016, employees and alternate payees accrue no future benefits under the US plans and, as such, Noble recognized no service costs with the plans for the three months ended March 31, 2020 and 2019.
Note 12— 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:
 
 
March 31, 2020
 
 
 
 
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
 
$
8,984

 
$
8,984

 
$

 
$

 
 
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

 
$

 
$


Our cash, 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 Condensed Consolidated Balance Sheets approximate fair value.

23

NOBLE CORPORATION PLC AND SUBSIDIARIES
NOBLE CORPORATION AND SUBSIDIARIES