NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unless otherwise indicated, dollar amounts in tables are in thousands, except per share data)
Note 1— Organization and Basis of Presentation
Noble Corporation plc, a public limited company incorporated under the laws of England and Wales (“Noble-UK”), is a leading offshore drilling contractor for the oil and gas industry. We perform contract drilling services with our global fleet of mobile offshore drilling units. As of
September 30, 2017
, our fleet consisted of
14
jackups,
eight
drillships and
six
semisubmersibles.
We report our contract drilling operations as a single reportable segment, Contract Drilling Services, which reflects how we manage our business. 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 U.S. Securities and Exchange Commission (“SEC”) as they pertain to Quarterly Reports on Form 10-Q. Accordingly, certain information and disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) have been condensed or omitted pursuant to such rules and regulations. The unaudited financial statements reflect all adjustments which are, in the opinion of management, necessary for a fair statement of the financial position and results of operations for the interim periods, on a basis consistent with the annual audited condensed consolidated financial statements. All such adjustments are of a recurring nature. The
December 31, 2016
Condensed Consolidated Balance Sheets presented herein are derived from the
December 31, 2016
audited consolidated financial statements, and as a result, they do not include all disclosures required by GAAP. These interim financial statements should be read in conjunction with the consolidated financial statements and notes included in our Annual Report on Form 10-K for the year ended
December 31, 2016
, filed by both Noble-UK and Noble-Cayman. The results of operations for interim periods are not necessarily indicative of the results to be expected for the full year.
Certain amounts in prior periods have been reclassified to conform to the current year presentation. In accordance with our adoption of Accounting Standards Update (“ASU”) No. 2016-9, Compensation—Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting, prior period excess tax benefits of approximately
$5.5 million
, previously classified as a financing activity in “Employee stock transactions” in the Consolidated Statement of Cash Flows for the nine months ended
September 30, 2016
, are now classified as an operating activity in “Net change in other assets and liabilities” on the accompanying Condensed Consolidated Statement of Cash Flows for the comparative period. Prior period shares withheld for taxes on employee stock transactions of approximately
$3.2 million
, previously classified as an operating activity in “Net change in other assets and liabilities” in the Consolidated Statement of Cash Flows for the
nine
months ended
September 30, 2016
, are now classified as a financing activity in “Employee stock transactions” on the accompanying Condensed Consolidated Statement of Cash Flows for the comparative period. See
Note 13— Accounting Pronouncements
for additional information.
We have made certain reclassifications to our prior period amounts in our operating revenue by combining our other revenue with reimbursables revenue to conform to the current period presentation. Such reclassification did not have a material effect on our condensed consolidated statement of financial position, results of operations or cash flows.
Note 2— Consolidated Joint Ventures
We maintain a
50 percent
interest in
two
joint ventures, each with a subsidiary of Royal Dutch Shell plc (“Shell”), that own and operate the
two
Bully
-class drillships. We have determined that we are the primary beneficiary of the joint ventures. Accordingly, we consolidate the entities in our condensed consolidated financial statements after eliminating intercompany transactions. Shell’s equity interests are presented as noncontrolling interests on our Condensed Consolidated Balance Sheets.
During the three and
nine
months ended
September 30, 2017
, the
Bully
joint ventures approved dividends totaling
$30.9 million
and
$83.5 million
, respectively, and paid dividends totaling
$41.8 million
and
$52.6 million
, respectively. During the three and
nine
months ended
September 30, 2016
, the
Bully
joint ventures approved and paid dividends totaling
$41.8 million
and
$124.0 million
, respectively. Of these amounts,
50 percent
was paid to our joint venture partner.
The combined carrying amount of the
Bully
-class drillships at
September 30, 2017
and
December 31, 2016
totaled
$1.3 billion
and
$1.4 billion
, respectively. These assets were primarily funded through partner equity contributions. Cash held by the
Bully
joint ventures totaled approximately
$79.3 million
at
September 30, 2017
as compared to approximately
$34.7 million
at
December 31, 2016
.
NOBLE CORPORATION PLC AND SUBSIDIARIES
NOBLE CORPORATION AND SUBSIDIARIES
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unless otherwise indicated, dollar amounts in tables are in thousands, except per share data)
Note 3— Earnings Per Share
The following table presents the computation of basic and diluted earnings per share for Noble-UK:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
Numerator:
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
|
|
|
|
|
|
|
Net income (loss) attributable to Noble-UK
|
|
$
|
(96,792
|
)
|
|
$
|
(55,081
|
)
|
|
$
|
(491,836
|
)
|
|
$
|
373,270
|
|
Net loss from discontinued operations, net of tax
|
|
—
|
|
|
—
|
|
|
1,486
|
|
|
—
|
|
Earnings allocated to unvested share-based payment awards
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(12,754
|
)
|
Net income (loss) from continuing operations to common shareholders - basic
|
|
$
|
(96,792
|
)
|
|
$
|
(55,081
|
)
|
|
$
|
(490,350
|
)
|
|
$
|
360,516
|
|
Diluted
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss) attributable to Noble-UK
|
|
$
|
(96,792
|
)
|
|
$
|
(55,081
|
)
|
|
$
|
(491,836
|
)
|
|
$
|
373,270
|
|
Net loss from discontinued operations, net of tax
|
|
—
|
|
|
—
|
|
|
1,486
|
|
|
—
|
|
Net income (loss) from continuing operations to common shareholders - diluted
|
|
$
|
(96,792
|
)
|
|
$
|
(55,081
|
)
|
|
$
|
(490,350
|
)
|
|
$
|
373,270
|
|
Denominator:
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average shares outstanding - basic
|
|
244,940
|
|
|
243,224
|
|
|
244,666
|
|
|
243,089
|
|
Incremental shares issuable from assumed exercise of stock
options and unvested share-based payment awards
|
|
—
|
|
|
—
|
|
|
—
|
|
|
8,600
|
|
Weighted average shares outstanding - diluted
|
|
244,940
|
|
|
243,224
|
|
|
244,666
|
|
|
251,689
|
|
Earnings per share
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic:
|
|
|
|
|
|
|
|
|
Income (loss) from continuing operations
|
|
$
|
(0.40
|
)
|
|
$
|
(0.23
|
)
|
|
$
|
(2.00
|
)
|
|
$
|
1.48
|
|
Loss from discontinued operations
|
|
—
|
|
|
—
|
|
|
(0.01
|
)
|
|
—
|
|
Net income (loss) attributable to Noble-UK
|
|
$
|
(0.40
|
)
|
|
$
|
(0.23
|
)
|
|
$
|
(2.01
|
)
|
|
$
|
1.48
|
|
Diluted:
|
|
|
|
|
|
|
|
|
|
Income (loss) from continuing operations
|
|
$
|
(0.40
|
)
|
|
$
|
(0.23
|
)
|
|
$
|
(2.00
|
)
|
|
$
|
1.48
|
|
Loss from discontinued operations
|
|
—
|
|
|
—
|
|
|
(0.01
|
)
|
|
—
|
|
Net income (loss) attributable to Noble-UK
|
|
$
|
(0.40
|
)
|
|
$
|
(0.23
|
)
|
|
$
|
(2.01
|
)
|
|
$
|
1.48
|
|
Dividends per share
|
|
$
|
—
|
|
|
$
|
0.02
|
|
|
$
|
—
|
|
|
$
|
0.19
|
|
Only those items having a dilutive impact on our basic earnings per share are included in diluted earnings per share. In the
three and nine
months ended
September 30, 2017
, approximately
12.1 million
share-based awards, were excluded from the diluted earnings per share since the effect would have been anti-dilutive. In the three months ended
September 30, 2016
, approximately
10.6 million
share-based awards were excluded from the diluted earnings per share since the effect would have been anti-dilutive. For the
nine
months ended
September 30, 2016
, approximately
1.5 million
shares underlying stock options were excluded from the diluted earnings per share as such stock options were anti-dilutive.
Share capital
As of
September 30, 2017
, Noble-UK had approximately
245.0 million
shares outstanding and trading as compared to approximately
243.2 million
shares outstanding and trading at
December 31, 2016
. Our Board of Directors may increase our share capital through the issuance of up to
53.0 million
authorized shares (at current nominal value of
$0.01
per share) without obtaining shareholder approval.
The declaration and payment of dividends require authorization of the Board of Directors of Noble-UK, provided that such dividends on issued share capital may be paid only out of Noble-UK’s “distributable reserves” on its statutory balance sheet. Noble-UK is not permitted to pay dividends out of share capital, which includes share premiums. The resumption of the payment of future dividends will depend on our results of operations, financial condition, cash requirements, future business prospects, contractual restrictions and other factors deemed relevant by our Board of Directors.
NOBLE CORPORATION PLC AND SUBSIDIARIES
NOBLE CORPORATION AND SUBSIDIARIES
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unless otherwise indicated, dollar amounts in tables are in thousands, except per share data)
Share repurchases
Under UK law, the Company is only permitted to purchase its own shares by way of an “off-market purchase” in a plan approved by shareholders. At
September 30, 2017
, we do not have shareholder authority to repurchase shares. During the
three and nine
months ended
September 30, 2017
, no shares were repurchased.
Note 4— Receivables from Customers
In prior periods, we had receivables of approximately
$14.4 million
related to the
Noble Max Smith
, which had been disputed by our former customer, Petróleos Mexicanos (“Pemex”) and were classified as long-term and included in “Other assets” on our Condensed Consolidated Balance Sheet. The receivables were related to lost revenues for downtime that occurred after our rig was damaged when one of Pemex's supply boats collided with our rig in 2010.
Paragon Offshore has announced that, as part of its bankruptcy plan, it will liquidate the Mexican entity currently prosecuting the
Noble Max Smith
claim against Pemex. While Noble owns all rights to amounts from that claim and will take available actions to recover such amounts, we believe the announced actions by Paragon Offshore creates uncertainty relating to the prosecution of the claim and associated recovery, and accordingly, the disputed amounts of approximately
$14.4 million
were written off through “Contract drilling services” costs on the accompanying Condensed Consolidated Statements of Operations during the
nine
months ended
September 30, 2017
.
Note 5— Property and Equipment
Property and equipment, at cost, as of
September 30, 2017
and December 31,
2016
for Noble-UK consisted of the following:
|
|
|
|
|
|
|
|
|
|
|
|
September 30, 2017
|
|
December 31, 2016
|
Drilling equipment and facilities
|
|
$
|
12,156,374
|
|
|
$
|
12,048,571
|
|
Construction in progress
|
|
75,331
|
|
|
112,103
|
|
Other
|
|
190,060
|
|
|
204,214
|
|
Property and equipment, at cost
|
|
$
|
12,421,765
|
|
|
$
|
12,364,888
|
|
Capital expenditures, including capitalized interest, totaled
$74.4 million
and
$592.0 million
for the
nine
months ended
September 30, 2017
and
2016
, respectively. During the
three and nine
months ended
September 30, 2017
, there was
no
capitalized interest due to the completion of our newbuild program. Capitalized interest was
$8.5 million
and
$15.9 million
for the
three and nine
months ended
September 30, 2016
, respectively.
During the
three and nine
months ended
September 30, 2017
, we recognized
$14.3 million
in "Contract drilling services" costs related to damages sustained on the
Noble Danny Adkins
and the
Noble Jim Day
during Hurricane Harvey in the U.S. Gulf of Mexico region.
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 6— Debt
Our total debt consisted of the following at
September 30, 2017
and
December 31, 2016
:
|
|
|
|
|
|
|
|
|
|
|
|
September 30, 2017
|
|
December 31, 2016
|
Senior unsecured notes
|
|
|
|
|
2.50% Senior Notes due March 2017
|
|
$
|
—
|
|
|
$
|
299,992
|
|
5.75% Senior Notes due March 2018
|
|
249,911
|
|
|
249,771
|
|
7.50% Senior Notes due March 2019
|
|
201,695
|
|
|
201,695
|
|
4.90% Senior Notes due August 2020
|
|
167,612
|
|
|
167,576
|
|
4.625% Senior Notes due March 2021
|
|
208,561
|
|
|
208,538
|
|
3.95% Senior Notes due March 2022
|
|
125,510
|
|
|
125,488
|
|
7.75% Senior Notes due January 2024
|
|
981,738
|
|
|
980,117
|
|
7.70% Senior Notes due April 2025
|
|
448,983
|
|
|
448,909
|
|
6.20% Senior Notes due August 2040
|
|
399,899
|
|
|
399,898
|
|
6.05% Senior Notes due March 2041
|
|
397,790
|
|
|
397,758
|
|
5.25% Senior Notes due March 2042
|
|
498,393
|
|
|
498,369
|
|
8.70% Senior Notes due April 2045
|
|
394,647
|
|
|
394,613
|
|
Total debt
|
|
4,074,739
|
|
|
4,372,724
|
|
Less: Unamortized debt issuance costs
|
|
(29,760
|
)
|
|
(32,613
|
)
|
Less: Current maturities of long-term debt
(1)
|
|
(249,652
|
)
|
|
(299,882
|
)
|
Long-term debt, net of debt issuance costs
|
|
$
|
3,795,327
|
|
|
$
|
4,040,229
|
|
|
|
(1)
|
Presented net of current portion of unamortized debt issuance costs of
$0.3 million
and
$0.1 million
at
September 30, 2017
and
December 31, 2016
, respectively.
|
Credit Facility and Commercial Paper Program
We currently have a
five
-year
$2.4 billion
senior unsecured credit facility that matures in January 2020 and is guaranteed by our indirect, wholly owned subsidiaries, Noble Holding (U.S.) LLC (“NHUS”) and Noble Holding International Limited (“NHIL”). The credit facility provides us with the ability to issue up to
$500.0 million
in letters of credit. The issuance of letters of credit under the facility reduces the amount available for borrowing.
Throughout the term of the credit facility, we pay a facility fee on the daily unused amount of the underlying commitment which ranges from
0.1
percent to
0.35
percent depending on our debt ratings with each agency. At
September 30, 2017
, based on our debt ratings on that date, the facility fee was
0.35
percent. At
September 30, 2017
, we had no borrowings outstanding or letters of credit issued. In addition, our credit facility has provisions which vary the applicable interest rates based upon our debt ratings. At
September 30, 2017
, the interest rate in effect is the highest permitted interest rate under the credit facility.
Debt Issuances
In December 2016, we issued
$1.0 billion
aggregate principal amount of
7.75%
Senior Notes, which we issued through our indirect wholly-owned subsidiary, NHIL. The net proceeds of approximately
$967.6 million
, after estimated expenses, were primarily used to retire a portion of our near-term Senior Notes in a related tender offer and the remaining portion was used for general corporate purposes.
Senior Notes Interest Rate Adjustments
During 2016 and to date in 2017, we experienced debt rating downgrades by Moody’s Investors Service and S&P Global Ratings (“S&P”), which reduced our debt ratings below investment grade. As a result of these downgrades, we experienced interest rate increases during 2016 and 2017 on our Senior Notes due
2018, 2025
and
2045
, all of which are subject to provisions that vary the applicable interest rates based on our debt rating. On October 18, 2017, S&P further reduced our debt rating, which will increase the interest rates on our
2025
and
2045
Senior Notes to
7.95%
and
8.95%
, respectively, beginning in April 2018. Once the new interest rates take effect in April 2018, these Senior Notes will have reached the contractually-defined maximum interest rate set for each rating agency. 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.
NOBLE CORPORATION PLC AND SUBSIDIARIES
NOBLE CORPORATION AND SUBSIDIARIES
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unless otherwise indicated, dollar amounts in tables are in thousands, except per share data)
Our other outstanding senior notes, including the Senior Notes due
2024
issued in December 2016, do not contain provisions varying applicable interest rates based upon our credit rating.
Debt Tender Offers and Repayments
In December 2016, we commenced cash tender offers for our
4.90%
Senior Notes due
2020
, of which
$467.8 million
principal amount was outstanding, our
4.625%
Senior Notes due
2021
, of which
$396.6 million
principal amount was outstanding and our
3.95%
Senior Notes due
2022
, of which
$400.0 million
principal amount was outstanding. On December 28, 2016, we purchased
$762.3 million
of these Senior Notes for
$750.0 million
, plus accrued interest, using a portion of the net proceeds of the
$1.0 billion
Senior Notes due
2024
issuance in December 2016. In December 2016, as a result of this transaction, we recognized a net gain of approximately
$6.7 million
.
In March 2016, we commenced cash tender offers for our
4.90%
Senior Notes due
2020
, of which
$500.0 million
principal amount was outstanding, and our
4.625%
Senior Notes due
2021
, of which
$400.0 million
principal amount was outstanding. On April 1, 2016, we purchased
$36.0 million
of these Senior Notes for
$24.0 million
, plus accrued interest, using cash on hand. In April 2016, as a result of this transaction, we recognized a net gain of approximately
$11.1 million
.
In March 2017, we repaid our
$300.0 million
2.50%
Senior Notes using cash on hand.
Covenants
The credit facility is guaranteed by NHUS and NHIL. The credit facility contains a covenant that limits our ratio of debt to total tangible capitalization, as defined in the credit facility, to
0.60
. At
September 30, 2017
, our ratio of debt to total tangible capitalization was approximately
0.41
. We were in compliance with all covenants under the credit facility as of
September 30, 2017
.
In addition to the covenants from the credit facility noted above, the indentures governing our outstanding senior unsecured notes contain covenants that place restrictions on certain merger and consolidation transactions, unless we are the surviving entity or the other party assumes the obligations under the indenture, and on the ability to sell or transfer all or substantially all of our assets. In addition, there are restrictions on incurring or assuming certain liens and on entering into sale and lease-back transactions. At
September 30, 2017
, we were in compliance with all of our debt covenants. We continually monitor compliance with the covenants under our notes and expect to remain in compliance during the remainder of
2017
.
Fair Value of Debt
Fair value represents the amount at which an instrument could be exchanged in a current transaction between willing parties. The estimated fair value of our senior notes was based on the quoted market prices for similar issues or on the current rates offered to us for debt of similar remaining maturities (Level 2 measurement). All remaining fair value disclosures are presented in
Note 10— Fair Value of Financial Instruments
.
The following table presents the estimated fair value of our total debt, not including the effect of unamortized debt issuance costs, as of
September 30, 2017
and
December 31, 2016
, respectively:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
September 30, 2017
|
|
December 31, 2016
|
|
|
Carrying Value
|
|
Estimated Fair Value
|
|
Carrying Value
|
|
Estimated Fair Value
|
Senior unsecured notes:
|
|
|
|
|
|
|
|
|
2.50% Senior Notes due March 2017
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
299,992
|
|
|
$
|
299,128
|
|
5.75% Senior Notes due March 2018
|
|
249,911
|
|
|
252,638
|
|
|
249,771
|
|
|
249,808
|
|
7.50% Senior Notes due March 2019
|
|
201,695
|
|
|
208,347
|
|
|
201,695
|
|
|
209,524
|
|
4.90% Senior Notes due August 2020
|
|
167,612
|
|
|
164,664
|
|
|
167,576
|
|
|
167,329
|
|
4.625% Senior Notes due March 2021
|
|
208,561
|
|
|
194,303
|
|
|
208,538
|
|
|
196,416
|
|
3.95% Senior Notes due March 2022
|
|
125,510
|
|
|
104,816
|
|
|
125,488
|
|
|
112,791
|
|
7.75% Senior Notes due January 2024
|
|
981,738
|
|
|
890,160
|
|
|
980,117
|
|
|
945,317
|
|
7.70% Senior Notes due April 2025
|
|
448,983
|
|
|
386,802
|
|
|
448,909
|
|
|
423,267
|
|
6.20% Senior Notes due August 2040
|
|
399,899
|
|
|
278,956
|
|
|
399,898
|
|
|
280,221
|
|
6.05% Senior Notes due March 2041
|
|
397,790
|
|
|
274,376
|
|
|
397,758
|
|
|
273,854
|
|
5.25% Senior Notes due March 2042
|
|
498,393
|
|
|
329,460
|
|
|
498,369
|
|
|
325,814
|
|
8.70% Senior Notes due April 2045
|
|
394,647
|
|
|
325,600
|
|
|
394,613
|
|
|
328,608
|
|
Total debt
|
|
$
|
4,074,739
|
|
|
$
|
3,410,122
|
|
|
$
|
4,372,724
|
|
|
$
|
3,812,077
|
|
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— Income Taxes
At
September 30, 2017
, the reserves for uncertain tax positions totaled
$192.3 million
(net of related tax benefits of
$1.0 million
). If the
September 30, 2017
reserves are not realized, the provision for income taxes would be reduced by
$186.8 million
. At
December 31, 2016
, the reserves for uncertain tax positions totaled
$172.5 million
(net of related tax benefits of
$1.0 million
).
It is reasonably possible that our existing liabilities related to our reserve for uncertain tax positions may fluctuate in the next
12 months
primarily due to the completion of open audits or the expiration of statutes of limitation. However, we cannot reasonably estimate a range of changes in our existing liabilities due to various uncertainties, such as the unresolved nature of various audits.
During the
nine
months ended
September 30, 2017
, our income tax provision included a non-cash, discrete item of
$260.7 million
as the result of an internal tax restructuring, which was implemented to reduce costs associated with the ownership of multiple legal entities, simplify the overall legal entity structure, ease deployment of cash throughout the business and consolidate operations into one centralized group of entities.
As of
September 30, 2017
, we recorded deferred charges of
$147.5 million
related to the deferral of income tax expense on intercompany asset transfers as a result of our internal tax restructuring. The deferred charges are included in “Other assets” on the accompanying Condensed Consolidated Balance Sheet and are amortized as a component of income tax expense over the remaining life of the underlying assets.
Note 8— Employee Benefit Plans
Pension costs include the following components for the three and
nine
months ended
September 30, 2017
and
2016
:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended September 30,
|
|
|
2017
|
|
2016
|
|
|
Non-U.S.
|
|
U.S.
|
|
Non-U.S.
|
|
U.S.
|
Service cost
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
763
|
|
|
$
|
1,662
|
|
Interest cost
|
|
506
|
|
|
2,148
|
|
|
589
|
|
|
2,389
|
|
Return on plan assets
|
|
(739
|
)
|
|
(2,941
|
)
|
|
(828
|
)
|
|
(3,097
|
)
|
Amortization of prior service cost
|
|
—
|
|
|
—
|
|
|
25
|
|
|
30
|
|
Recognized net actuarial loss
|
|
264
|
|
|
366
|
|
|
35
|
|
|
1,099
|
|
Settlement and curtailment gains
|
|
(620
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
Net pension benefit cost (gain)
|
|
$
|
(589
|
)
|
|
$
|
(427
|
)
|
|
$
|
584
|
|
|
$
|
2,083
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nine Months Ended September 30,
|
|
|
2017
|
|
2016
|
|
|
Non-U.S.
|
|
U.S.
|
|
Non-U.S.
|
|
U.S.
|
Service cost
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
2,337
|
|
|
$
|
4,986
|
|
Interest cost
|
|
1,476
|
|
|
6,445
|
|
|
1,864
|
|
|
7,167
|
|
Return on plan assets
|
|
(2,161
|
)
|
|
(8,823
|
)
|
|
(2,627
|
)
|
|
(9,291
|
)
|
Amortization of prior service cost
|
|
—
|
|
|
—
|
|
|
78
|
|
|
88
|
|
Recognized net actuarial loss
|
|
775
|
|
|
1,098
|
|
|
110
|
|
|
3,299
|
|
Settlement and curtailment gains
|
|
(620
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
Net pension benefit cost (gain)
|
|
$
|
(530
|
)
|
|
$
|
(1,280
|
)
|
|
$
|
1,762
|
|
|
$
|
6,249
|
|
During the
three and nine
months ended
September 30, 2017
, we made contributions to our pension plans of approximately
$0.4 million
and
$0.6 million
, which satisfied our obligations under our defined benefit plan for the North Sea region.
During the fourth quarter of 2016, we approved amendments, effective as of
December 31, 2016
, to our non-U.S. and U.S. defined benefit plans. With these amendments, employees and alternate payees will accrue no future benefits under the plans after December 31, 2016. However, these amendments will not affect any benefits earned through that date.
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 9— Derivative Instruments and Hedging Activities
We periodically enter into derivative instruments to manage our exposure to fluctuations in interest rates and foreign currency exchange rates. We have documented policies and procedures to monitor and control the use of derivative instruments. We do not engage in derivative transactions for speculative or trading purposes, nor are we a party to leveraged derivatives.
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.
On May 10, 2016, Freeport-McMoRan Inc. (“Freeport”), Freeport-McMoRan Oil & Gas LLC and one of our subsidiaries entered into an agreement terminating the contracts on the
Noble Sam Croft
and the
Noble Tom Madden
(“FCX Settlement”), which were scheduled to end in July 2017 and November 2017, respectively. The FCX Settlement included
two
contingent payments, which are further discussed below. We accounted for these contingent payments as derivative instruments that did not qualify under the Financial Accounting Standards Board (“FASB”) standards for hedge accounting treatment, and therefore, changes in fair values were recognized as a loss in the accompanying Condensed Consolidated Statements of Operations.
Cash Flow Hedges
Several of our regional shorebases, including our North Sea operations, have a significant amount of their cash operating expenses payable in local currencies. To limit the potential risk of currency fluctuations, we periodically enter into forward contracts, which settle monthly in the operations’ respective local currencies. All of these contracts have a maturity of less than 12 months. The forward contract settlements in the remainder of
2017
represent approximately
70 percent
of these forecasted local currency requirements. The notional amount of the forward contracts outstanding, expressed in U.S. Dollars, was approximately
$10.1 million
at
September 30, 2017
. Total unrealized gains related to these forward contracts were approximately
$0.7 million
as of
September 30, 2017
and were recorded as part of “Accumulated other comprehensive income (loss)” (“AOCL”).
FCX Settlement
Pursuant to the FCX Settlement, Noble could have received contingent payments from the FCX Settlement on September 30, 2017, depending on the average price of oil over a
12
-month period from June 30, 2016 through June 30, 2017. The average price of oil was calculated using the daily closing price of West Texas Intermediate crude oil (“WTI”) (CL1) on the New York Mercantile Exchange for the period of June 30, 2016 through June 30, 2017. If the price of WTI averaged more than
$50
per barrel during such period, Freeport would have paid
$25.0 million
to Noble. In addition to the
$25.0 million
contingent payment, if the price of WTI averaged more than
$65
per barrel during such period, Freeport would have paid an additional
$50.0 million
to Noble. These contingent payments did not qualify for hedge accounting treatment under FASB standards, and therefore, the change in fair value was recognized as a loss in the accompanying Condensed Consolidated Statements of Operations. These contingent payments are referred to as non-designated derivatives in the following tables.
The price of WTI did not average more than
$50
per barrel during the 12-month period. As of June 30, 2017, the fair value of these contingent payments was reduced to
zero
, as the period for earning the contingent payments had ended.
Financial Statement Presentation
The following table, together with
Note 10— Fair Value of Financial Instruments
, summarizes the financial statement presentation and fair value of our derivative positions as of
September 30, 2017
and
December 31, 2016
:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Estimated fair value
|
|
|
Balance sheet
classification
|
|
September 30,
2017
|
|
December 31,
2016
|
Asset derivatives
|
|
|
|
|
|
|
Cash flow hedges
|
|
|
|
|
|
|
Foreign currency forward contracts
|
|
Prepaid expenses and other current assets
|
|
$
|
674
|
|
|
$
|
—
|
|
Non-designated derivatives
|
|
|
|
|
|
|
FCX Settlement
|
|
Prepaid expenses and other current assets
|
|
$
|
—
|
|
|
$
|
14,400
|
|
NOBLE CORPORATION PLC AND SUBSIDIARIES
NOBLE CORPORATION AND SUBSIDIARIES
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unless otherwise indicated, dollar amounts in tables are in thousands, except per share data)
The following table, together with
Note 10— Fair Value of Financial Instruments
, summarizes the recognized gains and losses of cash flow hedges and non-designated derivatives through AOCL or as “Contract drilling services” revenue or costs for the three and
nine
months ended
September 30, 2017
and
2016
:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended September 30,
|
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
|
|
Unrealized gain/(loss) recognized through AOCL
|
|
Gain/(loss) reclassified from AOCL to "Contract drilling services" costs
|
|
Gain/(loss) recognized through "Contract drilling services" revenue
|
Cash flow hedges
|
|
|
|
|
|
|
|
|
|
|
|
|
Foreign currency forward contracts
|
|
$
|
(65
|
)
|
|
$
|
463
|
|
|
$
|
542
|
|
|
$
|
(540
|
)
|
|
$
|
—
|
|
|
$
|
—
|
|
Non-designated derivatives
|
|
|
|
|
|
|
|
|
|
|
|
|
FCX Settlement
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
(5,194
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nine Months Ended September 30,
|
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
|
|
Unrealized gain/(loss) recognized through AOCL
|
|
Gain/(loss) reclassified from AOCL to "Contract drilling services" costs
|
|
Gain/(loss) recognized through "Contract drilling services" revenue
|
Cash flow hedges
|
|
|
|
|
|
|
|
|
|
|
|
|
Foreign currency forward contracts
|
|
$
|
674
|
|
|
$
|
(605
|
)
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
679
|
|
|
$
|
(158
|
)
|
Non-designated derivatives
|
|
|
|
|
|
|
|
|
|
|
|
|
FCX Settlement
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
(14,400
|
)
|
|
$
|
12,406
|
|
Note 10— Fair Value of Financial Instruments
The FASB guidance establishes a fair value hierarchy that distinguishes between assumptions based on market data from independent sources (“observable inputs”) and a reporting entity’s internal assumptions based upon the best information available when external market data is limited or unavailable (“unobservable inputs”). The fair value hierarchy under FASB guidance prioritizes inputs within three levels:
Level 1: Valuations based on quoted prices in active markets for identical assets;
Level 2: Valuations based on observable inputs that do not meet the criteria for Level 1, including quoted prices in inactive markets and quoted prices in active markets for similar but not identical instruments; and
Level 3: Valuations based on unobservable inputs.
The following tables present the carrying amount and estimated fair value of our financial instruments recognized at fair value on a recurring basis:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
September 30, 2017
|
|
|
Estimated Fair Value Measurements
|
|
|
Carrying Amount
|
|
Quoted Prices in Active Markets (Level 1)
|
|
Significant Other Observable Inputs
(Level 2)
|
|
Significant Unobservable Inputs
(Level 3)
|
Assets
-
|
|
|
|
|
|
|
|
|
Marketable securities
|
|
$
|
7,326
|
|
|
$
|
7,326
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Foreign currency forward contracts
|
|
$
|
674
|
|
|
$
|
—
|
|
|
$
|
674
|
|
|
$
|
—
|
|
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)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2016
|
|
|
Estimated Fair Value Measurements
|
|
|
Carrying Amount
|
|
Quoted Prices in Active Markets (Level 1)
|
|
Significant Other Observable Inputs
(Level 2)
|
|
Significant Unobservable Inputs
(Level 3)
|
Assets
-
|
|
|
|
|
|
|
|
|
Marketable securities
|
|
$
|
6,246
|
|
|
$
|
6,246
|
|
|
$
|
—
|
|
|
$
|
—
|
|
FCX Settlement
|
|
$
|
14,400
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
14,400
|
|
Our cash and cash equivalents, accounts receivable, marketable securities and accounts payable are by their nature short-term. As a result, the carrying values included in the accompanying Condensed Consolidated Balance Sheets approximate fair value. The foreign currency forward contracts have been valued using actively quoted prices and quotes obtained from the counterparties to the contracts.
The following tables present the activity related to the FCX Settlement asset classified within Level 3 of the valuation hierarchy for the
nine
months ended
September 30, 2017
and
2016
:
|
|
|
|
|
|
Balance as of December 31, 2015
|
|
$
|
—
|
|
Fair value recognized in earnings
|
|
17,600
|
|
Change in fair value recognized in earnings
|
|
(5,194
|
)
|
Balance as of September 30, 2016
|
|
$
|
12,406
|
|
|
|
|
|
|
|
Balance as of December 31, 2016
|
|
$
|
14,400
|
|
Change in fair value recognized in earnings
|
|
(14,400
|
)
|
Balance as of September 30, 2017
|
|
$
|
—
|
|
NOBLE CORPORATION PLC AND SUBSIDIARIES
NOBLE CORPORATION AND SUBSIDIARIES
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unless otherwise indicated, dollar amounts in tables are in thousands, except per share data)
Note 11— Accumulated Other Comprehensive Income (Loss)
The following table presents the changes in the accumulated balances for each component of AOCL for the
nine
months ended
September 30, 2017
and
2016
. All amounts within the tables are shown net of tax.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unrealized Gains /(Losses) on Cash Flow Hedges
(1)
|
|
Defined Benefit Pension Items
(2)
|
|
Foreign Currency Items
|
|
Total
|
Balance at December 31, 2015
|
|
$
|
—
|
|
|
$
|
(46,919
|
)
|
|
$
|
(16,256
|
)
|
|
$
|
(63,175
|
)
|
Activity during period:
|
|
|
|
|
|
|
|
|
Other comprehensive income (loss) before reclassifications
|
|
(605
|
)
|
|
—
|
|
|
263
|
|
|
(342
|
)
|
Amounts reclassified from AOCL
|
|
—
|
|
|
2,348
|
|
|
—
|
|
|
2,348
|
|
Net other comprehensive income (loss)
|
|
(605
|
)
|
|
2,348
|
|
|
263
|
|
|
2,006
|
|
Balance at September 30, 2016
|
|
$
|
(605
|
)
|
|
$
|
(44,571
|
)
|
|
$
|
(15,993
|
)
|
|
$
|
(61,169
|
)
|
Balance at December 31, 2016
|
|
$
|
—
|
|
|
$
|
(35,865
|
)
|
|
$
|
(16,275
|
)
|
|
$
|
(52,140
|
)
|
Activity during period:
|
|
|
|
|
|
|
|
|
Other comprehensive income before reclassifications
|
|
674
|
|
|
—
|
|
|
749
|
|
|
1,423
|
|
Amounts reclassified from AOCL
|
|
—
|
|
|
1,156
|
|
|
—
|
|
|
1,156
|
|
Net other comprehensive income
|
|
674
|
|
|
1,156
|
|
|
749
|
|
|
2,579
|
|
Balance at September 30, 2017
|
|
$
|
674
|
|
|
$
|
(34,709
|
)
|
|
$
|
(15,526
|
)
|
|
$
|
(49,561
|
)
|
|
|
(1)
|
Gains/(losses) on cash flow hedges are related to foreign currency forward contracts. Reclassifications from AOCL are recognized through “Contract drilling services” costs on our Condensed Consolidated Statements of Operations. See
Note 9— Derivative Instruments and Hedging Activities
for additional information.
|
|
|
(2)
|
Defined benefit pension items relate to actuarial changes and the amortization of prior service costs. Reclassifications from AOCL are recognized as expense on our Condensed Consolidated Statements of Operations through either “Contract drilling services” or “General and administrative.” See
Note 8— Employee Benefit Plans
for additional information.
|
Note 12— Commitments and Contingencies
Transocean Ltd
.
In January 2017, a subsidiary of Transocean Ltd. (“Transocean”) filed suit against us and certain of our subsidiaries for patent infringement in a Texas federal court. The suit claims that
five
of our newbuild rigs that operated in the U.S. Gulf of Mexico violated Transocean patents relating to what is generally referred to as dual-activity drilling. We were aware of the patents when we constructed the rigs, and we do not believe that our rigs infringe the Transocean patents, which are now expired. The lawsuit is proceeding and we intend to defend ourselves vigorously against this claim.
Department of Justice settlement.
In December 2014, one of our subsidiaries reached a settlement with the U.S. Department of Justice (“DOJ”) regarding our former drillship, the
Noble Discoverer
, and the
Kulluk,
a rig we were providing contract labor services for, in respect of violations of applicable law discovered in connection with a 2012 Coast Guard inspection in Alaska and our own subsequent internal investigation. Under the terms of the agreement, the subsidiary pled guilty to oil record book, ballast record and required hazardous condition reporting violations with respect to the
Noble Discoverer
and an oil record book violation with respect to the
Kulluk
. The subsidiary paid
$8.2 million
in fines and
$4.0 million
in community service payments and was placed on probation for
four years
, provided that we may petition the court for early dismissal of probation after
three years
. If, during the term of probation, the subsidiary fails to adhere to the terms of the plea agreement, the DOJ may withdraw from the plea agreement and would be free to prosecute the subsidiary on all charges arising out of its investigation, including any charges dismissed pursuant to the terms of the plea agreement, as well as potentially other charges. We also implemented a comprehensive environmental compliance plan in connection with the settlement.
Brazil commercial agent.
We have used a commercial agent in Brazil in connection with our Petróleo Brasileiro S.A. (“Petrobras”) drilling contracts. We understand that this agent has represented a number of different companies in Brazil over many years, including several offshore drilling contractors. In November 2015, this agent pled guilty in Brazil in connection with the award of a drilling contract to a competitor and implicated a Petrobras official as part of a wider investigation of Petrobras’ business practices. Following news reports relating to the agent’s involvement in the Brazil investigation in connection with his activities with other companies, we conducted a review, which is now substantially complete, of our relationship with the agent and with Petrobras. We have been in contact with the SEC, the Brazilian federal prosecutor’s office and the DOJ about this matter. We have cooperated with these agencies and they are aware of our internal review. To our knowledge, neither the
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)
agent, nor the government authorities investigating the matter, has alleged that the agent or Noble acted improperly in connection with our contracts with Petrobras.
Paragon Offshore
.
On August 1, 2014, Noble-UK completed the separation and spin-off of a majority of its standard specification offshore drilling business (the "Spin-off") through a pro rata distribution of all of the ordinary shares of its wholly-owned subsidiary, Paragon Offshore, to the holders of Noble’s ordinary shares.
In February 2016, Paragon Offshore sought approval of a pre-negotiated plan of reorganization (the "Prior Plan") by filing for voluntary relief under Chapter 11 of the United States Bankruptcy Code. As part of the Prior Plan,
we entered into a settlement agreement with Paragon Offshore (the "Settlement Agreement") under which, in exchange for a full and unconditional release of any claims by Paragon Offshore in connection with the Spin-off (including fraudulent conveyance claims that could be brought on behalf of Paragon Offshore’s creditors), we agreed to provide certain tax bonding in Mexico as well as assume certain tax liabilities and the administration of Mexican tax claims for specified years.
The bonding to be provided by Noble-UK was a key benefit to Paragon Offshore of the Settlement Agreement, which was subject to bankruptcy court confirmation as part of a bankruptcy plan. The Prior Plan was rejected by the bankruptcy court in October 2016.
In April 2017, Paragon Offshore filed an updated disclosure statement and a revised plan of reorganization (the "New Plan") in its bankruptcy proceeding. Under the New Plan, including Paragon Offshore
’s
revised business plan, Paragon Offshore no longer needed the Mexican tax bonding that Noble-UK was to provide under the
Settlement Agreement
. As a result, the Settlement Agreement was no longer applicable to the ongoing business of Paragon Offshore. Consequently, Paragon Offshore abandoned the Settlement Agreement as part of the New Plan, and the Settlement Agreement was terminated at the time of the filing of the New Plan. On May 2, 2017, Paragon Offshore announced that it had reached an agreement in principle with both its secured and unsecured creditors to revise the New Plan to, among other things, create and fund a
$10.0 million
litigation trust to pursue litigation against us. On June 7, 2017, the revised New Plan was approved by the bankruptcy court and Paragon Offshore emerged from bankruptcy on
July 18, 2017
.
We expect Paragon Offshore or its creditors will use the litigation trust to pursue claims against us relating to the Spin-off, including alleged fraudulent conveyance claims. We
continue to believe that Paragon Offshore, at the time of the Spin-off, was properly funded, solvent and had appropriate liquidity and that any fraudulent conveyance claim or other claim related to the Spin-off that may be brought by Paragon Offshore or its creditors, would be without merit and would be contested vigorously by us. If litigation is instituted against Noble and we are unsuccessful in defending such claims, it could have a material adverse effect on our financial position, results of operations and/or cash flows.
Prior to the completion of the Spin-off, Noble-UK and Paragon Offshore entered into the Separation Agreements to effect the separation and Spin-off and govern the relationship between the parties after the Spin-off, including the MSA and TSA.
As part of its final bankruptcy plan, Paragon Offshore rejected the Separation Agreements. Accordingly, the indemnity obligations that Paragon Offshore potentially would have owed us under the Separation Agreements have now terminated, including indemnities arising under the MSA and the TSA in respect of obligations related to Paragon Offshore’s business that were incurred through Noble-retained entities prior to the Spin-off. Likewise, any potential indemnity obligations that we would have owed Paragon Offshore under the Separation Agreements, including those under the MSA and the TSA in respect of Noble-UK’s business that was conducted prior to the Spin-off through Paragon Offshore-retained entities, are now also extinguished. In the absence of the Separation Agreements, liabilities relating to the respective parties will be borne by the owner of the legal entity or asset at issue and neither party will look to an allocation based on the historic relationship of an entity or asset to one of the party’s business, as had been the case under the Separation Agreements.
The rejection and ultimate termination of the indemnity and related obligations under the Separation Agreements has resulted in a number of accounting charges and benefits for the
nine
months ended
September 30, 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
nine
months ended
September 30, 2017
, we recognized net charges of
$15.9 million
, with a non-cash loss of
$1.5 million
recorded in "Net loss from discontinued operations, net of tax" on our Condensed Consolidated Statement of Operations relating to the emergence from bankruptcy of Paragon Offshore.
For more information on the Separation Agreements, see our Annual Report on Form 10-K for the year ended December 31, 2016.
Tax matters.
During 2014, the IRS began its examination of our tax reporting in the U.S. for the taxable years ended December 31, 2010 and 2011. The IRS examination team has completed its examination of our 2010 and 2011 U.S. tax returns and proposed adjustments and deficiencies with respect to certain items that were reported by us for the 2010 and 2011 tax year. On December 19, 2016, we received the Revenue Agent Report ("RAR") from the IRS. We believe that we have accurately reported all amounts in our tax returns, and have submitted administrative
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)
protests with the IRS Office of Appeals contesting the examination team’s proposed adjustments. We intend to vigorously defend our reported positions, and believe the ultimate resolution of the adjustments proposed by the IRS examination team will not have a material adverse effect on our condensed consolidated financial statements. During the third quarter of 2017, the IRS initiated its examination of our 2012, 2013, 2014 and 2015 tax returns.
In previous periods, we reported that Mexican and Brazilian authorities had made significant tax assessments against Paragon Offshore entities, a portion of which related to Noble’s business that operated through Paragon Offshore-retained entities in Mexico and Brazil prior to the spin-off. As a result of the termination of the Separation Agreements, we no longer have any indemnity obligations in respect of these tax claims made against Paragon Offshore entities, and responsibility for these claims has reverted back to the applicable Paragon Offshore entity. Audit claims of approximately
$51.4 million
attributable to income and other business taxes have been assessed against Noble entities in Mexico.
In previous periods, we also reported that Petrobras had notified us that it was challenging assessments by Brazilian tax authorities of withholding taxes associated with the provision of drilling rigs for its operations in Brazil during 2008 and 2009. Petrobras had also notified us that if Petrobras was ultimately forced to pay such withholding taxes, it would seek reimbursement from Paragon Offshore who would then seek reimbursement from us for the portion of the withholding that was allocable to our drilling rigs. As a result of the termination of the Separation Agreements, we no longer have any indemnity obligation in respect of these withholding claims made against a Paragon Offshore entity, and responsibility for these claims has reverted back to the applicable Paragon Offshore entity.
We operate in a number of countries throughout the world and our tax returns filed in those jurisdictions are subject to review and examination by tax authorities within those jurisdictions. We recognize uncertain tax positions that we believe have a greater than
50 percent
likelihood of being sustained. We cannot predict or provide assurance as to the ultimate outcome of any existing or future assessments.
Other legal matters.
We maintain certain insurance coverage against specified marine perils, which includes physical damage and loss of hire to our drilling rigs along with other associated coverage common in our industry. We maintain a physical damage deductible on our rigs of
$25.0 million
per occurrence. With respect to the U.S. Gulf of Mexico, hurricane risk has generally resulted in more restrictive and expensive coverage for U.S. named windstorm perils, and we have opted in certain years to maintain limited or no windstorm coverage. Our current program provides for
$500.0 million
in named windstorm coverage in the U.S. Gulf of Mexico. The loss of hire coverage applies only to our rigs operating under contract with a dayrate equal to or greater than
$200,000
a day and is subject to a
45
-day waiting period for each unit and each occurrence.
Although we maintain insurance in the geographic areas in which we operate, pollution, reservoir damage and environmental risks generally are not fully insurable. Our insurance policies and contractual rights to indemnity may not adequately cover our losses or may have exclusions of coverage for some losses. We do not have insurance coverage or rights to indemnity for all risks, including loss of hire insurance on most of the rigs in our fleet. Uninsured exposures may include expatriate activities prohibited by U.S. laws and regulations, radiation hazards, certain loss or damage to property on board our rigs and losses relating to shore-based terrorist acts, strikes or cyber risks. If a significant accident or other event occurs and is not fully covered by insurance or contractual indemnity, it could materially adversely affect our financial position, results of operations or cash flows. Additionally, there can be no assurance that those parties with contractual obligations to indemnify us will necessarily be financially able to indemnify us against all these risks.
We carry protection and indemnity insurance covering marine third party liability exposures, which also includes coverage for employer’s liability resulting from personal injury to our offshore drilling crews. Our protection and indemnity policy currently has a standard deductible of
$10.0 million
per occurrence, with maximum liability coverage of
$750.0 million
.
We have entered into agreements with certain of our executive officers, as well as certain other employees. These agreements become effective upon a change of control of Noble-UK (within the meaning set forth in the agreements) or a termination of employment in connection with or in anticipation of a change of control, and remain effective for
three years
thereafter. These agreements provide for compensation and certain other benefits under such circumstances.
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.
Note 13— Accounting Pronouncements
In May 2014, the FASB issued ASU No. 2014-9, which creates Accounting Standards Codification (“ASC”) Topic 606, “Revenue from Contracts with Customers,” and supersedes the revenue recognition requirements in Topic 605, “Revenue Recognition,” including most industry-specific revenue recognition guidance throughout the Industry Topics of the Codification. In addition, ASU No. 2014-9 supersedes the cost guidance in Subtopic 605-35, “Revenue Recognition—Construction-Type and Production-Type Contracts,” and creates new Subtopic 340-40, “Other Assets and Deferred Costs—Contracts with Customers.” In summary, the core principle of Topic 606 is to recognize revenue when promised goods or
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)
services are transferred to customers in an amount that reflects the consideration that is expected to be received for those goods or services. The amendments in ASU No. 2014-9 are effective for annual reporting periods beginning after December 15, 2017, including interim periods within that reporting period, and early application is permitted for periods beginning after December 15, 2016. We have formed an implementation work team, completed training on ASC Topic 606 and have begun a project to review relevant contracts.
We plan on adopting the new standard effective January 1, 2018 concurrently with ASU No. 2016-2, Leases (ASC Topic 842) as discussed below and applying it retrospectively to all comparative periods presented.
Our adoption will have an impact on how our condensed consolidated financial statements and related disclosures will be presented. Upon adoption of these two new standards, we expect to disaggregate our “Contract drilling services” revenue on our Condensed Consolidated Statement of Operations into a lease component and a service component of revenue related to our drilling contracts.
In February 2016, the FASB issued ASU No. 2016-2, which creates ASC Topic 842, “Leases.” This update increases transparency and comparability among organizations by recognizing lease assets and lease liabilities on the balance sheet and disclosing key information about leasing arrangements. This standard is effective for interim and annual reporting periods beginning after December 15, 2018. Under the updated accounting standards, we have preliminarily determined that our drilling contracts contain a lease component, and our adoption, therefore, will require that we separately recognize revenues associated with the lease and services components. Our adoption, and the ultimate effect on our condensed consolidated financial statements, will be based on an evaluation of the contract-specific facts and circumstances. Due to the interaction with the issued accounting standard on revenue recognition, we expect to adopt ASC 842 effective January 1, 2018, concurrently with ASC 606. We expect to apply the modified retrospective approach to our adoption. Our adoption will have an impact on how our condensed consolidated financial statements and related disclosures will be presented. With respect to leases whereby we are the lessee, we are currently expecting to recognize lease liabilities and offsetting “right of use” assets ranging from approximately
$20.0 million
to
$40.0 million
upon adoption, based on our portfolio of leases as of September 30, 2017. We are currently evaluating any other impacts ASC 842 will have on our consolidated financial statements and related disclosures. To facilitate that evaluation, we have completed training on the ASU, formed an implementation team and started the review and documentation of contracts.
In March 2016, the FASB issued ASU No. 2016-9, which amends ASC Topic 718, “Compensation – Stock Compensation.” This amendment simplifies several aspects of the accounting for share-based payment transactions, including the income tax consequences, classification of awards as either equity or liabilities and classification on the statement of cash flows. This standard is effective for interim and annual reporting periods beginning after December 15, 2016 and we adopted the standard as of January 1, 2017. Under the new provision, current period excess tax benefits related to stock compensation are now recognized in our Condensed Consolidated Statement of Operations in “Provision for income taxes,” rather than on our Condensed Consolidated Balance Sheet and Condensed Consolidated Statement of Cash Flows. This update has been applied on a prospective basis. Changes to our Condensed Consolidated Statement of Cash Flows related to the reclassification of prior period excess tax benefits and employee taxes paid for share-based payment arrangements have been implemented on a retrospective basis. In accordance with our adoption of this update, prior period excess tax benefits of approximately
$5.5 million
, previously classified as a financing activity in “Employee stock transactions” in the Consolidated Statement of Cash Flows for the nine months ended
September 30, 2016
, are now classified as an operating activity in “Net change in other assets and liabilities” on the accompanying Condensed Consolidated Statement of Cash Flows for the comparative period. Additionally, prior period employee taxes paid for share-based payment arrangements of approximately
$3.2 million
, previously classified as an operating activity in “Net change in other assets and liabilities” in the Consolidated Statement of Cash Flows for the nine months ended
September 30, 2016
, are now classified as a financing activity in “Employee stock transactions” on the accompanying Condensed Consolidated Statement of Cash Flows for the comparative period.
In October 2016, the FASB issued ASU No. 2016-16 which amends ASC Topic 740, “Income Taxes.” The amendments in this update improve the accounting for the income tax consequences of intra-entity transfers of assets other than inventory. This standard is effective for interim and annual reporting periods beginning after December 15, 2017 and will be applied on a modified retrospective basis. As a result of the modified retrospective application, we will reduce "Other Assets" in our Condensed Consolidated Balance Sheet with a cumulative adjustment to retained earnings of approximately
$152.2 million
as of January 1, 2018.
In February 2017, the FASB issued ASU No. 2017-6, which amends ASC Topic 960, “Defined Benefit Pension Plans,” ASC Topic 962, “Defined Contribution Pension Plans” and ASC Topic 965, “Health and Welfare Benefit Plans.” The amendments in this update clarify presentation requirements for an employee benefit plan’s interest in a master trust and require more detailed disclosures of the plan’s interest in the master trust. The amendments also eliminate a redundancy relating to 401(h) account disclosures. This standard is effective for fiscal years beginning after December 15, 2018, with early application permitted. We are evaluating what impact, if any, the adoption of this guidance will have on our financial condition, results of operations, cash flows or financial disclosures.
With the exception of the updated standards discussed above, there have been no new accounting pronouncements not yet effective that have significance, or potential significance, to our condensed consolidated financial statements.
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 14— Supplemental Financial Information
Condensed Consolidated Balance Sheets Information
Deferred revenues from drilling contracts totaled
$126.5 million
and
$134.4 million
at
September 30, 2017
and
December 31, 2016
, respectively. Such amounts are included in either “Other current liabilities” or “Other liabilities” in the accompanying Condensed Consolidated Balance Sheets, based upon our expected time of recognition. Related expenses deferred under drilling contracts totaled
$52.1 million
at
September 30, 2017
as compared to
$53.8 million
at
December 31, 2016
, and are included in either “Prepaid expenses and other current assets” or “Other assets” in the accompanying Condensed Consolidated Balance Sheets, based upon our expected time of recognition.
In April 2015, we agreed to contract dayrate reductions for
five
rigs working for Saudi Arabian Oil Company (“Saudi Aramco”), which were effective from January 1, 2015 through December 31, 2015. During the first quarter of 2016, we agreed to further contract dayrate reductions for the remaining
four
contracted rigs through the end of 2016. Given current market conditions and based on discussions with the customer, we do not expect the rates to return to the original contract rates. In accordance with accounting standards, we are recognizing the reductions on a straight-line basis over the remaining life of the existing Saudi Aramco contracts. At
September 30, 2017
and
December 31, 2016
, revenues recorded in excess of billings as a result of this recognition totaled
$10.8 million
and
$17.9 million
, respectively, of which
$8.5 million
and
$9.2 million
, respectively, are included in “Prepaid expenses and other current assets” and
$2.3 million
and
$8.7 million
, respectively, are included in “Other assets,” in the accompanying Condensed Consolidated Balance Sheets, based upon our expected time of recognition.
Condensed Consolidated Statements of Cash Flows Information
The net effect of changes in other assets and liabilities on cash flows from operating activities is as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Noble-UK
|
|
Noble-Cayman
|
|
|
Nine Months Ended September 30,
|
|
Nine Months Ended September 30,
|
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
Accounts receivable
|
|
$
|
116,619
|
|
|
$
|
179,364
|
|
|
$
|
116,619
|
|
|
$
|
179,364
|
|
Other current assets
|
|
18,421
|
|
|
91,606
|
|
|
15,860
|
|
|
89,858
|
|
Other assets
|
|
(76,002
|
)
|
|
34,382
|
|
|
(80,172
|
)
|
|
19,147
|
|
Accounts payable
|
|
(11,901
|
)
|
|
(70,778
|
)
|
|
(11,656
|
)
|
|
(68,909
|
)
|
Other current liabilities
|
|
21,503
|
|
|
(71,789
|
)
|
|
22,631
|
|
|
(67,663
|
)
|
Other liabilities
|
|
(92,970
|
)
|
|
(33,619
|
)
|
|
(88,087
|
)
|
|
(18,886
|
)
|
|
|
$
|
(24,330
|
)
|
|
$
|
129,166
|
|
|
$
|
(24,805
|
)
|
|
$
|
132,911
|
|
In accordance with our adoption of ASU No. 2016-9, prior period excess tax benefits, which were previously classified as a financing activity in “Employee stock transactions,” are now classified as an operating activity in “Net change in other assets and liabilities” on our Condensed Consolidated Statement of Cash Flows and current period excess tax benefits are now recognized in our Condensed Consolidated Statement of Operations through income taxes. Additionally, shares withheld for taxes on employee stock transactions, which were previously classified as an operating activity in “Net change in other assets and liabilities,” are now classified as a financing activity in “Employee stock transactions” on our Condensed Consolidated Statement of Cash Flows.
NOBLE CORPORATION PLC AND SUBSIDIARIES
NOBLE CORPORATION AND SUBSIDIARIES
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unless otherwise indicated, dollar amounts in tables are in thousands, except per share data)
Note 15— Condensed Consolidating Financial Information
Guarantees of Registered Securities
Noble-Cayman, or one or more 100 percent owned subsidiaries of Noble-Cayman, is a co-issuer or full and unconditional guarantor or otherwise obligated as of
September 30, 2017
as follows:
|
|
|
|
|
|
|
|
Issuer
|
|
|
Notes
|
|
(Co-Issuer(s))
|
|
Guarantor
|
$250 million 5.75% Senior Notes due 2018
|
|
NHIL
|
|
Noble-Cayman
|
$202 million 7.50% Senior Notes due 2019
|
|
NHUS
|
|
Noble-Cayman
|
|
|
Noble Drilling Holding, LLC (“NDH” )
|
|
|
|
|
Noble Drilling Services 6 LLC (“NDS6”)
|
|
|
$168 million 4.90% Senior Notes due 2020
|
|
NHIL
|
|
Noble-Cayman
|
$209 million 4.625% Senior Notes due 2021
|
|
NHIL
|
|
Noble-Cayman
|
$126 million 3.95% Senior Notes due 2022
|
|
NHIL
|
|
Noble-Cayman
|
$1 billion 7.75% Senior Notes due 2024
|
|
NHIL
|
|
Noble-Cayman
|
$450 million 7.70% Senior Notes due 2025
|
|
NHIL
|
|
Noble-Cayman
|
$400 million 6.20% Senior Notes due 2040
|
|
NHIL
|
|
Noble-Cayman
|
$400 million 6.05% Senior Notes due 2041
|
|
NHIL
|
|
Noble-Cayman
|
$500 million 5.25% Senior Notes due 2042
|
|
NHIL
|
|
Noble-Cayman
|
$400 million 8.70% Senior Notes due 2045
|
|
NHIL
|
|
Noble-Cayman
|
The following condensed consolidating financial statements of Noble-Cayman, NHUS, NDH, NHIL, NDS6 and all other subsidiaries present investments in both consolidated and unconsolidated affiliates using the equity method of accounting.
NOBLE CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATING BALANCE SHEET
September 30, 2017
(in thousands)
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Noble -
Cayman
|
|
NHUS
|
|
NDH
|
|
NHIL
|
|
NDS6
|
|
Other
Non-guarantor
Subsidiaries
of Noble
|
|
Consolidating
Adjustments
|
|
Total
|
ASSETS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current assets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
$
|
13
|
|
|
$
|
—
|
|
|
$
|
39
|
|
|
$
|
57
|
|
|
$
|
—
|
|
|
$
|
607,849
|
|
|
$
|
—
|
|
|
$
|
607,958
|
|
Accounts receivable
|
|
—
|
|
|
—
|
|
|
23,936
|
|
|
—
|
|
|
—
|
|
|
178,597
|
|
|
—
|
|
|
202,533
|
|
Taxes receivable
|
|
—
|
|
|
29,357
|
|
|
3
|
|
|
—
|
|
|
—
|
|
|
26,034
|
|
|
—
|
|
|
55,394
|
|
Short-term notes receivable from affiliates
|
|
—
|
|
|
—
|
|
|
119,476
|
|
|
—
|
|
|
2,373,452
|
|
|
—
|
|
|
(2,492,928
|
)
|
|
—
|
|
Accounts receivable from affiliates
|
|
593,643
|
|
|
1,454
|
|
|
124,519
|
|
|
60,945
|
|
|
411,853
|
|
|
5,780,487
|
|
|
(6,972,901
|
)
|
|
—
|
|
Prepaid expenses and other current assets
|
|
96
|
|
|
—
|
|
|
967
|
|
|
19
|
|
|
1
|
|
|
72,566
|
|
|
—
|
|
|
73,649
|
|
Total current assets
|
|
593,752
|
|
|
30,811
|
|
|
268,940
|
|
|
61,021
|
|
|
2,785,306
|
|
|
6,665,533
|
|
|
(9,465,829
|
)
|
|
939,534
|
|
Property and equipment, at cost
|
|
—
|
|
|
—
|
|
|
1,071,989
|
|
|
—
|
|
|
—
|
|
|
11,349,776
|
|
|
—
|
|
|
12,421,765
|
|
Accumulated depreciation
|
|
—
|
|
|
—
|
|
|
(260,496
|
)
|
|
—
|
|
|
—
|
|
|
(2,449,002
|
)
|
|
—
|
|
|
(2,709,498
|
)
|
Property and equipment, net
|
|
—
|
|
|
—
|
|
|
811,493
|
|
|
—
|
|
|
—
|
|
|
8,900,774
|
|
|
—
|
|
|
9,712,267
|
|
Notes receivable from affiliates
|
|
3,177,249
|
|
|
—
|
|
|
1,077,773
|
|
|
—
|
|
|
3,943,299
|
|
|
1,173,281
|
|
|
(9,371,602
|
)
|
|
—
|
|
Investments in affiliates
|
|
4,941,085
|
|
|
4,601,780
|
|
|
5,340,411
|
|
|
12,539,320
|
|
|
7,254,988
|
|
|
—
|
|
|
(34,677,584
|
)
|
|
—
|
|
Other assets
|
|
3,046
|
|
|
16,775
|
|
|
6,026
|
|
|
—
|
|
|
—
|
|
|
218,901
|
|
|
—
|
|
|
244,748
|
|
Total assets
|
|
$
|
8,715,132
|
|
|
$
|
4,649,366
|
|
|
$
|
7,504,643
|
|
|
$
|
12,600,341
|
|
|
$
|
13,983,593
|
|
|
$
|
16,958,489
|
|
|
$
|
(53,515,015
|
)
|
|
$
|
10,896,549
|
|
LIABILITIES AND EQUITY
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current liabilities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current maturities of long-term debt
|
|
—
|
|
|
1,605,243
|
|
|
—
|
|
|
249,652
|
|
|
—
|
|
|
887,685
|
|
|
(2,492,928
|
)
|
|
249,652
|
|
Accounts payable
|
|
—
|
|
|
—
|
|
|
2,004
|
|
|
—
|
|
|
—
|
|
|
81,871
|
|
|
—
|
|
|
83,875
|
|
Accrued payroll and related costs
|
|
—
|
|
|
—
|
|
|
4,959
|
|
|
—
|
|
|
—
|
|
|
41,885
|
|
|
—
|
|
|
46,844
|
|
Accounts payable to affiliates
|
|
3,407,065
|
|
|
391,266
|
|
|
1,802,128
|
|
|
553,930
|
|
|
—
|
|
|
818,512
|
|
|
(6,972,901
|
)
|
|
—
|
|
Taxes payable
|
|
—
|
|
|
—
|
|
|
1
|
|
|
—
|
|
|
—
|
|
|
53,202
|
|
|
—
|
|
|
53,203
|
|
Interest payable
|
|
2,211
|
|
|
—
|
|
|
—
|
|
|
53,833
|
|
|
8,236
|
|
|
—
|
|
|
—
|
|
|
64,280
|
|
Other current liabilities
|
|
16
|
|
|
—
|
|
|
945
|
|
|
—
|
|
|
—
|
|
|
95,827
|
|
|
—
|
|
|
96,788
|
|
Total current liabilities
|
|
3,409,292
|
|
|
1,996,509
|
|
|
1,810,037
|
|
|
857,415
|
|
|
8,236
|
|
|
1,978,982
|
|
|
(9,465,829
|
)
|
|
594,642
|
|
Long-term debt
|
|
—
|
|
|
—
|
|
|
—
|
|
|
3,593,814
|
|
|
201,513
|
|
|
—
|
|
|
—
|
|
|
3,795,327
|
|
Notes payable to affiliates
|
|
—
|
|
|
700,000
|
|
|
472,620
|
|
|
3,175,662
|
|
|
—
|
|
|
5,023,320
|
|
|
(9,371,602
|
)
|
|
—
|
|
Deferred income taxes
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
253,444
|
|
|
—
|
|
|
253,444
|
|
Other liabilities
|
|
19,929
|
|
|
—
|
|
|
10,774
|
|
|
—
|
|
|
—
|
|
|
258,627
|
|
|
—
|
|
|
289,330
|
|
Total liabilities
|
|
3,429,221
|
|
|
2,696,509
|
|
|
2,293,431
|
|
|
7,626,891
|
|
|
209,749
|
|
|
7,514,373
|
|
|
(18,837,431
|
)
|
|
4,932,743
|
|
Commitments and contingencies
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total shareholder equity
|
|
5,285,911
|
|
|
1,952,857
|
|
|
5,211,212
|
|
|
4,973,450
|
|
|
13,773,844
|
|
|
8,766,221
|
|
|
(34,677,584
|
)
|
|
5,285,911
|
|
Noncontrolling interests
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
677,895
|
|
|
—
|
|
|
677,895
|
|
Total equity
|
|
5,285,911
|
|
|
1,952,857
|
|
|
5,211,212
|
|
|
4,973,450
|
|
|
13,773,844
|
|
|
9,444,116
|
|
|
(34,677,584
|
)
|
|
5,963,806
|
|
Total liabilities and equity
|
|
$
|
8,715,132
|
|
|
$
|
4,649,366
|
|
|
$
|
7,504,643
|
|
|
$
|
12,600,341
|
|
|
$
|
13,983,593
|
|
|
$
|
16,958,489
|
|
|
$
|
(53,515,015
|
)
|
|
$
|
10,896,549
|
|
NOBLE CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATING BALANCE SHEET
December 31, 2016
(in thousands)
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Noble-
Cayman
|
|
NHUS
|
|
NDH
|
|
NHIL
|
|
NDS6
|
|
Other
Non-guarantor
Subsidiaries
of Noble
|
|
Consolidating
Adjustments
|
|
Total
|
ASSETS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current assets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
$
|
2,537
|
|
|
$
|
—
|
|
|
$
|
10,855
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
640,441
|
|
|
$
|
—
|
|
|
$
|
653,833
|
|
Accounts receivable
|
|
—
|
|
|
—
|
|
|
33,162
|
|
|
—
|
|
|
—
|
|
|
285,990
|
|
|
—
|
|
|
319,152
|
|
Taxes receivable
|
|
—
|
|
|
21,428
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
34,052
|
|
|
—
|
|
|
55,480
|
|
Short-term notes receivable from affiliates
|
|
—
|
|
|
—
|
|
|
243,915
|
|
|
—
|
|
|
1,349,708
|
|
|
52,611
|
|
|
(1,646,234
|
)
|
|
—
|
|
Accounts receivable from affiliates
|
|
361,313
|
|
|
—
|
|
|
137,476
|
|
|
67,560
|
|
|
85,274
|
|
|
3,038,658
|
|
|
(3,690,281
|
)
|
|
—
|
|
Prepaid expenses and other current assets
|
|
270
|
|
|
—
|
|
|
1,611
|
|
|
—
|
|
|
—
|
|
|
86,868
|
|
|
—
|
|
|
88,749
|
|
Total current assets
|
|
364,120
|
|
|
21,428
|
|
|
427,019
|
|
|
67,560
|
|
|
1,434,982
|
|
|
4,138,620
|
|
|
(5,336,515
|
)
|
|
1,117,214
|
|
Property and equipment, at cost
|
|
—
|
|
|
—
|
|
|
2,376,862
|
|
|
—
|
|
|
—
|
|
|
9,988,026
|
|
|
—
|
|
|
12,364,888
|
|
Accumulated depreciation
|
|
—
|
|
|
—
|
|
|
(428,308
|
)
|
|
—
|
|
|
—
|
|
|
(1,874,632
|
)
|
|
—
|
|
|
(2,302,940
|
)
|
Property and equipment, net
|
|
—
|
|
|
—
|
|
|
1,948,554
|
|
|
—
|
|
|
—
|
|
|
8,113,394
|
|
|
—
|
|
|
10,061,948
|
|
Notes receivable from affiliates
|
|
3,304,672
|
|
|
—
|
|
|
112,706
|
|
|
69,564
|
|
|
5,000
|
|
|
1,798,614
|
|
|
(5,290,556
|
)
|
|
—
|
|
Investments in affiliates
|
|
2,848,855
|
|
|
2,007,016
|
|
|
1,411,874
|
|
|
8,369,728
|
|
|
6,129,082
|
|
|
—
|
|
|
(20,766,555
|
)
|
|
—
|
|
Other assets
|
|
4,292
|
|
|
—
|
|
|
5,687
|
|
|
—
|
|
|
—
|
|
|
168,573
|
|
|
—
|
|
|
178,552
|
|
Total assets
|
|
$
|
6,521,939
|
|
|
$
|
2,028,444
|
|
|
$
|
3,905,840
|
|
|
$
|
8,506,852
|
|
|
$
|
7,569,064
|
|
|
$
|
14,219,201
|
|
|
$
|
(31,393,626
|
)
|
|
$
|
11,357,714
|
|
LIABILITIES AND EQUITY
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current liabilities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Short-term notes payables to affiliates
|
|
$
|
—
|
|
|
$
|
171,925
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
1,474,309
|
|
|
$
|
(1,646,234
|
)
|
|
$
|
—
|
|
Current maturities of long-term debt
|
|
—
|
|
|
—
|
|
|
—
|
|
|
299,882
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
299,882
|
|
Accounts payable
|
|
—
|
|
|
—
|
|
|
4,228
|
|
|
—
|
|
|
—
|
|
|
103,640
|
|
|
—
|
|
|
107,868
|
|
Accrued payroll and related costs
|
|
—
|
|
|
—
|
|
|
4,882
|
|
|
—
|
|
|
—
|
|
|
43,437
|
|
|
—
|
|
|
48,319
|
|
Accounts payable to affiliates
|
|
818,737
|
|
|
111,801
|
|
|
1,995,788
|
|
|
123,642
|
|
|
—
|
|
|
640,313
|
|
|
(3,690,281
|
)
|
|
—
|
|
Taxes payable
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
46,561
|
|
|
—
|
|
|
46,561
|
|
Interest payable
|
|
48
|
|
|
—
|
|
|
—
|
|
|
56,839
|
|
|
4,412
|
|
|
—
|
|
|
—
|
|
|
61,299
|
|
Other current liabilities
|
|
12
|
|
|
—
|
|
|
4,296
|
|
|
—
|
|
|
—
|
|
|
63,004
|
|
|
—
|
|
|
67,312
|
|
Total current liabilities
|
|
818,797
|
|
|
283,726
|
|
|
2,009,194
|
|
|
480,363
|
|
|
4,412
|
|
|
2,371,264
|
|
|
(5,336,515
|
)
|
|
631,241
|
|
Long-term debt
|
|
—
|
|
|
—
|
|
|
—
|
|
|
3,838,807
|
|
|
201,422
|
|
|
—
|
|
|
—
|
|
|
4,040,229
|
|
Notes payable to affiliates
|
|
—
|
|
|
700,000
|
|
|
467,139
|
|
|
744,181
|
|
|
—
|
|
|
3,379,236
|
|
|
(5,290,556
|
)
|
|
—
|
|
Deferred income taxes
|
|
—
|
|
|
—
|
|
|
534
|
|
|
—
|
|
|
—
|
|
|
1,550
|
|
|
—
|
|
|
2,084
|
|
Other liabilities
|
|
19,929
|
|
|
—
|
|
|
24,035
|
|
|
—
|
|
|
—
|
|
|
248,219
|
|
|
—
|
|
|
292,183
|
|
Total liabilities
|
|
838,726
|
|
|
983,726
|
|
|
2,500,902
|
|
|
5,063,351
|
|
|
205,834
|
|
|
6,000,269
|
|
|
(10,627,071
|
)
|
|
4,965,737
|
|
Commitments and contingencies
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total shareholder equity
|
|
5,683,213
|
|
|
1,044,718
|
|
|
1,404,938
|
|
|
3,443,501
|
|
|
7,363,230
|
|
|
7,106,323
|
|
|
(20,362,710
|
)
|
|
5,683,213
|
|
Noncontrolling interests
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1,112,609
|
|
|
(403,845
|
)
|
|
708,764
|
|
Total equity
|
|
5,683,213
|
|
|
1,044,718
|
|
|
1,404,938
|
|
|
3,443,501
|
|
|
7,363,230
|
|
|
8,218,932
|
|
|
(20,766,555
|
)
|
|
6,391,977
|
|
Total liabilities and equity
|
|
$
|
6,521,939
|
|
|
$
|
2,028,444
|
|
|
$
|
3,905,840
|
|
|
$
|
8,506,852
|
|
|
$
|
7,569,064
|
|
|
$
|
14,219,201
|
|
|
$
|
(31,393,626
|
)
|
|
$
|
11,357,714
|
|
NOBLE CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS and COMPREHENSIVE INCOME (LOSS)
Three Months Ended
September 30, 2017
(in thousands)
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Noble-
Cayman
|
|
NHUS
|
|
NDH
|
|
NHIL
|
|
NDS6
|
|
Other
Non-guarantor
Subsidiaries
of Noble
|
|
Consolidating
Adjustments
|
|
Total
|
Operating revenues
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Contract drilling services
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
37,675
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
231,873
|
|
|
$
|
(9,808
|
)
|
|
$
|
259,740
|
|
Reimbursables and other
|
|
—
|
|
|
—
|
|
|
863
|
|
|
—
|
|
|
—
|
|
|
5,609
|
|
|
—
|
|
|
6,472
|
|
Total operating revenues
|
|
—
|
|
|
—
|
|
|
38,538
|
|
|
—
|
|
|
—
|
|
|
237,482
|
|
|
(9,808
|
)
|
|
266,212
|
|
Operating costs and expenses
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Contract drilling services
|
|
67
|
|
|
3,056
|
|
|
10,306
|
|
|
852
|
|
|
—
|
|
|
160,095
|
|
|
(9,808
|
)
|
|
164,568
|
|
Reimbursables
|
|
—
|
|
|
—
|
|
|
490
|
|
|
—
|
|
|
—
|
|
|
3,344
|
|
|
—
|
|
|
3,834
|
|
Depreciation and amortization
|
|
—
|
|
|
—
|
|
|
13,971
|
|
|
—
|
|
|
—
|
|
|
122,680
|
|
|
—
|
|
|
136,651
|
|
General and administrative
|
|
28
|
|
|
1,229
|
|
|
—
|
|
|
371
|
|
|
—
|
|
|
8,195
|
|
|
—
|
|
|
9,823
|
|
Total operating costs and expenses
|
|
95
|
|
|
4,285
|
|
|
24,767
|
|
|
1,223
|
|
|
—
|
|
|
294,314
|
|
|
(9,808
|
)
|
|
314,876
|
|
Operating income (loss)
|
|
(95
|
)
|
|
(4,285
|
)
|
|
13,771
|
|
|
(1,223
|
)
|
|
—
|
|
|
(56,832
|
)
|
|
—
|
|
|
(48,664
|
)
|
Other income (expense)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) of unconsolidated affiliates
|
|
(88,898
|
)
|
|
(64,360
|
)
|
|
7,347
|
|
|
22,238
|
|
|
(20,878
|
)
|
|
—
|
|
|
144,551
|
|
|
—
|
|
Interest income (expense), net of amounts capitalized
|
|
(2,592
|
)
|
|
(4,492
|
)
|
|
(3,533
|
)
|
|
(108,892
|
)
|
|
(3,813
|
)
|
|
(24,877
|
)
|
|
75,312
|
|
|
(72,887
|
)
|
Interest income and other, net
|
|
1,602
|
|
|
(50
|
)
|
|
16,273
|
|
|
(52
|
)
|
|
53,897
|
|
|
3,916
|
|
|
(75,312
|
)
|
|
274
|
|
Income (loss) before income taxes
|
|
(89,983
|
)
|
|
(73,187
|
)
|
|
33,858
|
|
|
(87,929
|
)
|
|
29,206
|
|
|
(77,793
|
)
|
|
144,551
|
|
|
(121,277
|
)
|
Income tax benefit (provision)
|
|
—
|
|
|
53,957
|
|
|
(19
|
)
|
|
—
|
|
|
—
|
|
|
(25,333
|
)
|
|
—
|
|
|
28,605
|
|
Net income (loss)
|
|
(89,983
|
)
|
|
(19,230
|
)
|
|
33,839
|
|
|
(87,929
|
)
|
|
29,206
|
|
|
(103,126
|
)
|
|
144,551
|
|
|
(92,672
|
)
|
Net (income) loss attributable to noncontrolling interests
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
3,867
|
|
|
(1,178
|
)
|
|
2,689
|
|
Net income (loss) attributable to Noble Corporation
|
|
(89,983
|
)
|
|
(19,230
|
)
|
|
33,839
|
|
|
(87,929
|
)
|
|
29,206
|
|
|
(99,259
|
)
|
|
143,373
|
|
|
(89,983
|
)
|
Other comprehensive income (loss), net
|
|
793
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
793
|
|
|
(793
|
)
|
|
793
|
|
Comprehensive income (loss) attributable to Noble Corporation
|
|
$
|
(89,190
|
)
|
|
$
|
(19,230
|
)
|
|
$
|
33,839
|
|
|
$
|
(87,929
|
)
|
|
$
|
29,206
|
|
|
$
|
(98,466
|
)
|
|
$
|
142,580
|
|
|
$
|
(89,190
|
)
|
NOBLE CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS and COMPREHENSIVE INCOME (LOSS)
Nine Months Ended
September 30, 2017
(in thousands)
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Noble-
Cayman
|
|
NHUS
|
|
NDH
|
|
NHIL
|
|
NDS6
|
|
Other
Non-guarantor
Subsidiaries
of Noble
|
|
Consolidating
Adjustments
|
|
Total
|
Operating revenues
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Contract drilling services
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
124,767
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
798,085
|
|
|
$
|
(36,921
|
)
|
|
$
|
885,931
|
|
Reimbursables and other
|
|
—
|
|
|
—
|
|
|
2,891
|
|
|
—
|
|
|
—
|
|
|
18,508
|
|
|
—
|
|
|
21,399
|
|
Total operating revenues
|
|
—
|
|
|
—
|
|
|
127,658
|
|
|
—
|
|
|
—
|
|
|
816,593
|
|
|
(36,921
|
)
|
|
907,330
|
|
Operating costs and expenses
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Contract drilling services
|
|
202
|
|
|
8,989
|
|
|
34,492
|
|
|
2,505
|
|
|
—
|
|
|
477,174
|
|
|
(36,921
|
)
|
|
486,441
|
|
Reimbursables
|
|
—
|
|
|
—
|
|
|
1,782
|
|
|
—
|
|
|
—
|
|
|
11,592
|
|
|
—
|
|
|
13,374
|
|
Depreciation and amortization
|
|
—
|
|
|
—
|
|
|
44,491
|
|
|
—
|
|
|
—
|
|
|
362,511
|
|
|
—
|
|
|
407,002
|
|
General and administrative
|
|
99
|
|
|
4,074
|
|
|
—
|
|
|
1,263
|
|
|
9
|
|
|
26,673
|
|
|
—
|
|
|
32,118
|
|
Total operating costs and expenses
|
|
301
|
|
|
13,063
|
|
|
80,765
|
|
|
3,768
|
|
|
9
|
|
|
877,950
|
|
|
(36,921
|
)
|
|
938,935
|
|
Operating income (loss)
|
|
(301
|
)
|
|
(13,063
|
)
|
|
46,893
|
|
|
(3,768
|
)
|
|
(9
|
)
|
|
(61,357
|
)
|
|
—
|
|
|
(31,605
|
)
|
Other income (expense)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) of unconsolidated affiliates - continuing operations
|
|
(469,274
|
)
|
|
(477,279
|
)
|
|
48,830
|
|
|
167,531
|
|
|
35,388
|
|
|
—
|
|
|
694,804
|
|
|
—
|
|
Income (loss) of unconsolidated affiliates - discontinued operations, net of tax
|
|
2,967
|
|
|
4,566
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(7,533
|
)
|
|
—
|
|
Interest income (expense), net of amounts capitalized
|
|
(7,775
|
)
|
|
(28,348
|
)
|
|
(9,916
|
)
|
|
(322,580
|
)
|
|
(11,484
|
)
|
|
(105,324
|
)
|
|
265,884
|
|
|
(219,543
|
)
|
Interest income and other, net
|
|
8,880
|
|
|
(141
|
)
|
|
70,484
|
|
|
4,871
|
|
|
170,875
|
|
|
15,036
|
|
|
(265,884
|
)
|
|
4,121
|
|
Income (loss) from continuing operations before income taxes
|
|
(465,503
|
)
|
|
(514,265
|
)
|
|
156,291
|
|
|
(153,946
|
)
|
|
194,770
|
|
|
(151,645
|
)
|
|
687,271
|
|
|
(247,027
|
)
|
Income tax benefit (provision)
|
|
—
|
|
|
170,543
|
|
|
(345
|
)
|
|
—
|
|
|
—
|
|
|
(380,753
|
)
|
|
—
|
|
|
(210,555
|
)
|
Net income (loss) from continuing operations
|
|
(465,503
|
)
|
|
(343,722
|
)
|
|
155,946
|
|
|
(153,946
|
)
|
|
194,770
|
|
|
(532,398
|
)
|
|
687,271
|
|
|
(457,582
|
)
|
Net income (loss) from discontinuing operations, net of tax
|
|
—
|
|
|
(1,598
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
4,565
|
|
|
—
|
|
|
2,967
|
|
Net Income (loss)
|
|
(465,503
|
)
|
|
(345,320
|
)
|
|
155,946
|
|
|
(153,946
|
)
|
|
194,770
|
|
|
(527,833
|
)
|
|
687,271
|
|
|
(454,615
|
)
|
Net income attributable to noncontrolling interests
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(8,894
|
)
|
|
(1,994
|
)
|
|
(10,888
|
)
|
Net income (loss) attributable to Noble Corporation
|
|
(465,503
|
)
|
|
(345,320
|
)
|
|
155,946
|
|
|
(153,946
|
)
|
|
194,770
|
|
|
(536,727
|
)
|
|
685,277
|
|
|
(465,503
|
)
|
Other comprehensive income (loss), net
|
|
2,579
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
2,579
|
|
|
(2,579
|
)
|
|
2,579
|
|
Comprehensive income (loss) attributable to Noble Corporation
|
|
$
|
(462,924
|
)
|
|
$
|
(345,320
|
)
|
|
$
|
155,946
|
|
|
$
|
(153,946
|
)
|
|
$
|
194,770
|
|
|
$
|
(534,148
|
)
|
|
$
|
682,698
|
|
|
$
|
(462,924
|
)
|
NOBLE CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATING STATEMENT OF INCOME and COMPREHENSIVE INCOME (LOSS)
Three Months Ended
September 30, 2016
(in thousands)
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Noble-
Cayman
|
|
NHUS
|
|
NDH
|
|
NHIL
|
|
NDS6
|
|
Other
Non-guarantor
Subsidiaries
of Noble
|
|
Consolidating
Adjustments
|
|
Total
|
Operating revenues
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Contract drilling services
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
52,333
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
331,916
|
|
|
$
|
(10,992
|
)
|
|
$
|
373,257
|
|
Reimbursables and other
|
|
—
|
|
|
—
|
|
|
2,933
|
|
|
—
|
|
|
—
|
|
|
8,963
|
|
|
—
|
|
|
11,896
|
|
Total operating revenues
|
|
—
|
|
|
—
|
|
|
55,266
|
|
|
—
|
|
|
—
|
|
|
340,879
|
|
|
(10,992
|
)
|
|
385,153
|
|
Operating costs and expenses
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Contract drilling services
|
|
857
|
|
|
3,914
|
|
|
20,487
|
|
|
17,483
|
|
|
—
|
|
|
174,323
|
|
|
(10,992
|
)
|
|
206,072
|
|
Reimbursables
|
|
—
|
|
|
—
|
|
|
2,702
|
|
|
—
|
|
|
—
|
|
|
6,440
|
|
|
—
|
|
|
9,142
|
|
Depreciation and amortization
|
|
—
|
|
|
—
|
|
|
22,661
|
|
|
—
|
|
|
—
|
|
|
132,581
|
|
|
—
|
|
|
155,242
|
|
General and administrative
|
|
203
|
|
|
1,552
|
|
|
—
|
|
|
7,231
|
|
|
—
|
|
|
3,047
|
|
|
—
|
|
|
12,033
|
|
Loss on impairment
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
Total operating costs and expenses
|
|
1,060
|
|
|
5,466
|
|
|
45,850
|
|
|
24,714
|
|
—
|
|
—
|
|
|
316,391
|
|
|
(10,992
|
)
|
|
382,489
|
|
Operating income (loss)
|
|
(1,060
|
)
|
|
(5,466
|
)
|
|
9,416
|
|
|
(24,714
|
)
|
|
—
|
|
|
24,488
|
|
|
—
|
|
|
2,664
|
|
Other income (expense)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) of unconsolidated affiliates
|
|
(49,010
|
)
|
|
17,529
|
|
|
(6,572
|
)
|
|
10,186
|
|
|
12,187
|
|
|
—
|
|
|
15,680
|
|
|
—
|
|
Interest expense, net of amounts capitalized
|
|
(2,472
|
)
|
|
(25,311
|
)
|
|
(2,872
|
)
|
|
(52,073
|
)
|
|
(3,258
|
)
|
|
(10,278
|
)
|
|
43,695
|
|
|
(52,569
|
)
|
Gain on extinguishment of debt, net
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
Interest income and other, net
|
|
1,666
|
|
|
30
|
|
|
2,816
|
|
|
525
|
|
|
6,046
|
|
|
33,180
|
|
|
(43,695
|
)
|
|
568
|
|
Income (loss) from continuing operations before income taxes
|
|
(50,876
|
)
|
|
(13,218
|
)
|
|
2,788
|
|
|
(66,076
|
)
|
|
14,975
|
|
|
47,390
|
|
|
15,680
|
|
|
(49,337
|
)
|
Income tax provision
|
|
—
|
|
|
(10,050
|
)
|
|
(167
|
)
|
|
—
|
|
|
—
|
|
|
19,524
|
|
|
—
|
|
|
9,307
|
|
Net income (loss)
|
|
(50,876
|
)
|
|
(23,268
|
)
|
|
2,621
|
|
|
(66,076
|
)
|
|
14,975
|
|
|
66,914
|
|
|
15,680
|
|
|
(40,030
|
)
|
Net (income) loss attributable to noncontrolling interests
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(5,933
|
)
|
|
(4,913
|
)
|
|
(10,846
|
)
|
Net income (loss) attributable to Noble Corporation
|
|
(50,876
|
)
|
|
(23,268
|
)
|
|
2,621
|
|
|
(66,076
|
)
|
|
14,975
|
|
|
60,981
|
|
|
10,767
|
|
|
(50,876
|
)
|
Other comprehensive income (loss), net
|
|
701
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
701
|
|
|
(701
|
)
|
|
701
|
|
Comprehensive income (loss) attributable to Noble Corporation
|
|
$
|
(50,175
|
)
|
|
$
|
(23,268
|
)
|
|
$
|
2,621
|
|
|
$
|
(66,076
|
)
|
|
$
|
14,975
|
|
|
$
|
61,682
|
|
|
$
|
10,066
|
|
|
$
|
(50,175
|
)
|
NOBLE CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATING STATEMENT OF INCOME and COMPREHENSIVE INCOME (LOSS)
Nine Months Ended
September 30, 2016
(in thousands)
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Noble-
Cayman
|
|
NHUS
|
|
NDH
|
|
NHIL
|
|
NDS6
|
|
Other
Non-guarantor
Subsidiaries
of Noble
|
|
Consolidating
Adjustments
|
|
Total
|
Operating revenues
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Contract drilling services
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
169,379
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
1,728,374
|
|
|
$
|
(56,432
|
)
|
|
$
|
1,841,321
|
|
Reimbursables and other
|
|
—
|
|
|
—
|
|
|
6,301
|
|
|
—
|
|
|
—
|
|
|
44,987
|
|
|
—
|
|
|
51,288
|
|
Total operating revenues
|
|
—
|
|
|
—
|
|
|
175,680
|
|
|
—
|
|
|
—
|
|
|
1,773,361
|
|
|
(56,432
|
)
|
|
1,892,609
|
|
Operating costs and expenses
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Contract drilling services
|
|
3,574
|
|
|
15,627
|
|
|
47,005
|
|
|
69,087
|
|
|
—
|
|
|
618,735
|
|
|
(56,432
|
)
|
|
697,596
|
|
Reimbursables
|
|
—
|
|
|
—
|
|
|
5,589
|
|
|
—
|
|
|
—
|
|
|
33,857
|
|
|
—
|
|
|
39,446
|
|
Depreciation and amortization
|
|
—
|
|
|
—
|
|
|
66,431
|
|
|
—
|
|
|
—
|
|
|
389,422
|
|
|
—
|
|
|
455,853
|
|
General and administrative
|
|
928
|
|
|
7,207
|
|
|
—
|
|
|
32,696
|
|
|
1
|
|
|
(4,341
|
)
|
|
—
|
|
|
36,491
|
|
Loss on impairment
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
16,616
|
|
|
—
|
|
|
16,616
|
|
Total operating costs and expenses
|
|
4,502
|
|
|
22,834
|
|
|
119,025
|
|
|
101,783
|
|
|
1
|
|
|
1,054,289
|
|
|
(56,432
|
)
|
|
1,246,002
|
|
Operating income (loss)
|
|
(4,502
|
)
|
|
(22,834
|
)
|
|
56,655
|
|
|
(101,783
|
)
|
|
(1
|
)
|
|
719,072
|
|
|
—
|
|
|
646,607
|
|
Other income (expense)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) of unconsolidated affiliates
|
|
331,777
|
|
|
58,134
|
|
|
(64,854
|
)
|
|
640,942
|
|
|
610,992
|
|
|
—
|
|
|
(1,576,991
|
)
|
|
—
|
|
Interest income (expense), net of amounts capitalized
|
|
(25,256
|
)
|
|
(47,977
|
)
|
|
(8,436
|
)
|
|
(173,294
|
)
|
|
(11,722
|
)
|
|
(109,781
|
)
|
|
209,491
|
|
|
(166,975
|
)
|
Gain on extinguishment of debt, net
|
|
—
|
|
|
—
|
|
|
—
|
|
|
11,066
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
11,066
|
|
Interest income and other, net
|
|
94,974
|
|
|
80
|
|
|
9,719
|
|
|
19,885
|
|
|
6,808
|
|
|
76,657
|
|
|
(209,491
|
)
|
|
(1,368
|
)
|
Income (loss) from continuing operations before income taxes
|
|
396,993
|
|
|
(12,597
|
)
|
|
(6,916
|
)
|
|
396,816
|
|
|
606,077
|
|
|
685,948
|
|
|
(1,576,991
|
)
|
|
489,330
|
|
Income tax (provision) benefit
|
|
—
|
|
|
(43,788
|
)
|
|
(545
|
)
|
|
—
|
|
|
—
|
|
|
4,023
|
|
|
—
|
|
|
(40,310
|
)
|
Net income (loss)
|
|
396,993
|
|
|
(56,385
|
)
|
|
(7,461
|
)
|
|
396,816
|
|
|
606,077
|
|
|
689,971
|
|
|
(1,576,991
|
)
|
|
449,020
|
|
Net (income) loss attributable to noncontrolling interests
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(70,980
|
)
|
|
18,953
|
|
|
(52,027
|
)
|
Net income (loss) attributable to Noble Corporation
|
|
396,993
|
|
|
(56,385
|
)
|
|
(7,461
|
)
|
|
396,816
|
|
|
606,077
|
|
|
618,991
|
|
|
(1,558,038
|
)
|
|
396,993
|
|
Other comprehensive income (loss), net
|
|
2,006
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
2,006
|
|
|
(2,006
|
)
|
|
2,006
|
|
Comprehensive income (loss) attributable to Noble Corporation
|
|
$
|
398,999
|
|
|
$
|
(56,385
|
)
|
|
$
|
(7,461
|
)
|
|
$
|
396,816
|
|
|
$
|
606,077
|
|
|
$
|
620,997
|
|
|
$
|
(1,560,044
|
)
|
|
$
|
398,999
|
|
NOBLE CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS
Nine Months Ended
September 30, 2017
(in thousands)
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Noble-
Cayman
|
|
NHUS
|
|
NDH
|
|
NHIL
|
|
NDS6
|
|
Other
Non-guarantor
Subsidiaries
of Noble
|
|
Consolidating
Adjustments
|
|
Total
|
Cash flows from operating activities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash provided by (used in) operating activities
|
|
$
|
26,122
|
|
|
$
|
102,689
|
|
|
$
|
141,843
|
|
|
$
|
(324,502
|
)
|
|
$
|
163,205
|
|
|
$
|
212,606
|
|
|
$
|
—
|
|
|
$
|
321,963
|
|
Cash flows from investing activities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Capital expenditures
|
|
—
|
|
|
—
|
|
|
(2,552
|
)
|
|
—
|
|
|
—
|
|
|
(84,148
|
)
|
|
—
|
|
|
(86,700
|
)
|
Proceeds from disposal of assets
|
|
—
|
|
|
—
|
|
|
46
|
|
|
—
|
|
|
—
|
|
|
1,260
|
|
|
—
|
|
|
1,306
|
|
Net cash used in investing activities
|
|
—
|
|
|
—
|
|
|
(2,506
|
)
|
|
—
|
|
|
—
|
|
|
(82,888
|
)
|
|
—
|
|
|
(85,394
|
)
|
Cash flows from financing activities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Repayment of long-term debt
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(300,000
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(300,000
|
)
|
Debt issuance costs on senior notes and credit facility
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(42
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(42
|
)
|
Dividends paid to noncontrolling interests
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(26,293
|
)
|
|
—
|
|
|
(26,293
|
)
|
Distributions to parent company, net
|
|
43,891
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
43,891
|
|
Advances (to) from affiliates
|
|
(72,537
|
)
|
|
(102,689
|
)
|
|
(150,153
|
)
|
|
624,601
|
|
|
(163,205
|
)
|
|
(136,017
|
)
|
|
—
|
|
|
—
|
|
Net cash provided by (used in) financing activities
|
|
(28,646
|
)
|
|
(102,689
|
)
|
|
(150,153
|
)
|
|
324,559
|
|
|
(163,205
|
)
|
|
(162,310
|
)
|
|
—
|
|
|
(282,444
|
)
|
Net change in cash and cash equivalents
|
|
(2,524
|
)
|
|
—
|
|
|
(10,816
|
)
|
|
57
|
|
|
—
|
|
|
(32,592
|
)
|
|
—
|
|
|
(45,875
|
)
|
Cash and cash equivalents, beginning of period
|
|
2,537
|
|
|
—
|
|
|
10,855
|
|
|
—
|
|
|
—
|
|
|
640,441
|
|
|
—
|
|
|
653,833
|
|
Cash and cash equivalents, end of period
|
|
$
|
13
|
|
|
$
|
—
|
|
|
$
|
39
|
|
|
$
|
57
|
|
|
$
|
—
|
|
|
$
|
607,849
|
|
|
$
|
—
|
|
|
$
|
607,958
|
|
NOBLE CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS
Nine Months Ended
September 30, 2016
(in thousands)
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Noble-
Cayman
|
|
NHUS
|
|
NDH
|
|
NHIL
|
|
NDS6
|
|
Other
Non-guarantor
Subsidiaries
of Noble
|
|
Consolidating
Adjustments
|
|
Total
|
Cash flows from operating activities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash provided by (used in) operating activities
|
|
$
|
91,918
|
|
|
$
|
(124,190
|
)
|
|
$
|
81,355
|
|
|
$
|
(278,331
|
)
|
|
$
|
(8,697
|
)
|
|
$
|
1,223,801
|
|
|
$
|
—
|
|
|
$
|
985,856
|
|
Cash flows from investing activities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Capital expenditures
|
|
—
|
|
|
—
|
|
|
(473,460
|
)
|
|
—
|
|
|
—
|
|
|
(159,813
|
)
|
|
—
|
|
|
(633,273
|
)
|
Proceeds from disposal of assets
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
23,390
|
|
|
—
|
|
|
23,390
|
|
Net cash used in investing activities
|
|
—
|
|
|
—
|
|
|
(473,460
|
)
|
|
—
|
|
|
—
|
|
|
(136,423
|
)
|
|
—
|
|
|
(609,883
|
)
|
Cash flows from financing activities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Repayment of long-term debt
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(322,207
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(322,207
|
)
|
Premiums paid on early repayment of long-term debt
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(1,781
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(1,781
|
)
|
Dividends paid to noncontrolling interests
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(61,980
|
)
|
|
—
|
|
|
(61,980
|
)
|
Distributions to parent company, net
|
|
(76,051
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(76,051
|
)
|
Advances (to) from affiliates
|
|
(15,513
|
)
|
|
124,190
|
|
|
390,122
|
|
|
602,320
|
|
|
8,697
|
|
|
(1,109,816
|
)
|
|
—
|
|
|
—
|
|
Net cash provided by (used in) financing activities
|
|
(91,564
|
)
|
|
124,190
|
|
|
390,122
|
|
|
278,332
|
|
|
8,697
|
|
|
(1,171,796
|
)
|
|
—
|
|
|
(462,019
|
)
|
Net change in cash and cash equivalents
|
|
354
|
|
|
—
|
|
|
(1,983
|
)
|
|
1
|
|
|
—
|
|
|
(84,418
|
)
|
|
—
|
|
|
(86,046
|
)
|
Cash and cash equivalents, beginning of period
|
|
1,627
|
|
|
—
|
|
|
2,101
|
|
|
—
|
|
|
—
|
|
|
508,067
|
|
|
—
|
|
|
511,795
|
|
Cash and cash equivalents, end of period
|
|
$
|
1,981
|
|
|
$
|
—
|
|
|
$
|
118
|
|
|
$
|
1
|
|
|
$
|
—
|
|
|
$
|
423,649
|
|
|
$
|
—
|
|
|
$
|
425,749
|
|