Noble Corporation
Dorfstrasse 19a
6340 Baar
Switzerland
www.noblecorp.com
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Noble Corporation 2010 Annual Report
Year Ended December 31,
2010
2009
2008
$2,807,176
$3,640,784
$3,446,501
916,080
916,509
773,429
3.02
1,654,376
1,423,484
12%
2,010,744
2,015,902
1,678,642
6.42
2,136,716
1,431,498
34%
1,908,403
1,912,458
1,560,995
5.81
1,888,192
1,231,321
39%
$11,221,321
$8,396,896
$7,106,799
10,048,087
6,634,452
5,647,017
2,766,697
7,287,634
28.89
750,946
923,487
6,788,432
5,290,715
26.29
20.20
Noble Corporation Financial Highlights
(In thousands, except per share amounts and percentages)
Operating revenues
Operating income
Income before income taxes
Net income attributable to Noble Corporation
Net income per diluted share
Net cash provided by operating activities
Capital expenditures
Return on capital employed
At year end:
Total assets
Property and equipment, net
Total debt
Total equity
Book value per share
In 2010, Noble continued its
strategy to add rigs with the
latest technology, equipment,
and capabilities. With nine rigs
currently under construction,
including seven ultra-deepwater
drillships, which are slated to
join the recently delivered Noble
Jim Day (right), Noble Danny
Adkins, Noble Dave Beard,
and Noble Clyde Boudreaux,
Noble’s ultra-deepwater fleet is
becoming one of the finest in
the industry.
Board of Directors
Michael A. Cawley 2, 3, 4
President and Chief
Executive Officer –
The Samuel Roberts
Noble Foundation, Inc.
Director since 1985.
Contact the Board
If you would like to contact the
Noble Corporation Board of
Directors, write to:
Noble Corporation Board of Directors
Dorfstrasse 19a
6340 Baar, Switzerland
or send an e-mail to:
Nobleboard@noblecorp.com
Lawrence J. Chazen 1
Chief Executive Officer –
Lawrence J. Chazen, Inc.
Director since 1994.
Julie H. Edwards 1, 3
Former Senior Vice President
and Chief Financial Officer –
Southern Union Company.
Director since 2006.
For additional information about
Noble Corporation, please refer to
our proxy statement which is being
mailed or made available with this
Annual Report.
Gordon T. Hall 1
Chairman of the Board –
Exterran Holdings, Inc.
Director since 2009.
Marc E. Leland 2, 3
President – Marc E.
Leland & Associates, Inc.
Director since 1994.
Jack E. Little 2
Former President and
Chief Executive Officer –
Shell Oil Company.
Director since 2000.
Jon A. Marshall 2
Former President and Chief
Operating Officer –
Transocean Inc.
Director since 2009.
Mary P. Ricciardello 1
Former Senior Vice President
and Chief Accounting Officer –
Reliant Energy, Inc.
Director since 2003.
David W. Williams
Chairman, President and
Chief Executive Officer
Noble Corporation
Director since 2008.
1 Audit Committee 2 Compensation Committee 3 Nominating and Corporate Governance Committee 4 Lead Director
Corporate Information
Transfer Agent and Registrar
Computershare Trust Company, N.A.
Canton, Massachusetts
Independent Auditors
PricewaterhouseCoopers AG
Zug, Switzerland
PricewaterhouseCoopers LLP
Houston, Texas
Shares Listed on
New York Stock Exchange
Trading Symbol “NE”
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Form 10-K
A copy of Noble Corporation’s 2010 Annual
Report on Form 10-K, as filed with the U.S.
Securities and Exchange Commission, will be
furnished without charge to any shareholder
upon written request to:
Julie J. Robertson - Executive Vice President
and Corporate Secretary
Noble Corporation
Dorfstrasse 19a
6340 Baar, Switzerland
Annual Meeting
The Annual Meeting of Shareholders of Noble
Corporation will be held on April 29, 2011, at
3:00 p.m. local time at the Parkhotel Zug in
Zug, Switzerland.
Corporate Officers
David W. Williams
Chairman, President and
Chief Executive Officer
Julie J. Robertson
Executive Vice President
and Corporate Secretary
Roger B. Hunt
Senior Vice President –
Marketing & Contracts
Donald E. Jacobsen
Senior Vice President –
Operations
Scott W. Marks
Senior Vice President –
Engineering
Thomas L. Mitchell
Senior Vice President,
Chief Financial Officer,
Treasurer and Controller
William E. Turcotte
Senior Vice President and
General Counsel
Investor Information
You can learn more about our
operations and our Company
by visiting our Web site at
www.noblecorp.com.
Shareholders, brokers, securities
analysts or portfolio managers
seeking information about Noble
Corporation are welcome to contact:
Lee M. Ahlstrom, Vice President –
Investor Relations and Planning,
Noble Drilling Services Inc.,
by phone at: 281-276-6100 or by
e-mail at: lahlstrom@noblecorp.com.
Forward Looking Statements
Any statements included in this 2010
Annual Report that are not historical
facts, including without limitation
regarding future market trends and
results of operations are forward-
looking statements within the
meaning of applicable securities law.
To Our Shareholders
In April 1921, this great enterprise was created from very modest
means in the boom towns and oil fields of Oklahoma. Over the last
90 years it has led us from onshore drilling sites throughout the
United States to virtually every offshore drilling basin on the planet.
Across those nine decades since our founder, Lloyd Noble, conceived
this fantastic venture, there have been recessions, depressions, economic
booms and dramatic shifts in technology and processes. Some spurred
the industry on and others erased entire companies from the landscape.
And here we are.
Thousands of
employees, untold
numbers of shareholders, and countless
wells drilled by many rigs later, we
stand tall and thrive in exactly the same
business we pursued in our infancy—
contract drilling. Reaching this milestone
is no small feat and has required much
from the men and women who are the true
strength of this organization. And they
aren’t done yet—not by a long shot. In fact,
I believe Noble's best years are ahead of us
as we continue to build momentum in the
key areas that have made us an industry
leader: safety, operational excellence, and
sustainable growth.
suffered
While 2010 was a year marked
by unpredictable and unprecedented
challenges, I’m proud to say that our team
met those challenges with resilience,
determination and professionalism. Our
from
financial performance
the mandated suspension of drilling
activity in the U.S. Gulf of Mexico, which
dramatically reduced our earnings for
the last nine months of the year, but our
execution of other continuing operations,
our acquisition of Frontier, and creating
our landmark relationship with Shell
turned what could have been a disaster
into a platform from which we will
catapult this Company into the future.
$
4.0
3.5
3.0
2.5
2.0
1.5
1.0
$
7.50
6.25
5.00
3.75
2.50
1.25
0.00
2006
2007
2008
2009
2010
Revenues (Billions)
2006
2007
2008
2009
2010
Earnings per Share (Diluted)
As we entered 2010, nearly 30 percent
of our contract backlog was in the U.S.
Gulf of Mexico. As the events surrounding
the Macondo tragedy unfolded, we moved
quickly to reach agreements with our
customers to place rigs on “standby" rates.
Unfortunately, some customers decided
to cancel their contracts with us, idling a
number of units. Despite our best efforts to
find work outside the U.S. Gulf, there was
simply no way to make up for the shortfall
that was created by the industry-wide
suspension of U.S. offshore drilling.
With seven floaters in the U.S. Gulf at
mid-summer,
impacted
Noble more than many of our competitors.
With no clear end to the moratorium in
sight, we focused on controlling costs,
ensuring our rigs would be prepared
to meet the newly evolving regulatory
standards, and redeploying crew members
from the U.S. Gulf to other divisions
to help preserve our top-flight teams.
the shutdown
As part of our efforts, Noble participated
fully in the joint industry task force
which helped craft suggested workplace
and equipment enhancements.
Despite
the ongoing
turmoil and
regulatory uncertainty in the U.S. Gulf, it
is my belief that when the history of Noble
is written, 2010 will be remembered more
as a year of sustainability and transition
than for the suspension of activities in the
U.S. Gulf. Chief among our achievements
was our continued exemplary safety
results. Our team members delivered the
second best performance in our 90-year
history, coming in right behind 2009’s
record-breaking results. The majority of
our operating divisions extended their
outstanding results from the previous
year. That said, more work lies ahead of
us in 2011 as we continue to create a truly
injury-free culture.
Furthermore, in the midst of the
ongoing uncertainty that arose out of the
ashes of tragedy, we executed on the $2.16
billion Frontier transaction and started a
new chapter in customer relations with our
unparalleled agreements with Shell. Taken
together, these two events combined to
dramatically enhance our competitiveness
in terms of our fleet, our fire power and
our future earning potential. In total,
these transactions doubled our contract
backlog to almost $14 billion as of the
acquisition closing date and added close
to 50 years of contract work on nine rigs
plus an FPSO. Perhaps more importantly,
we have entered a new chapter in our
long-standing relationship with Shell, a
premium operator, who now comprises
more than half of our backlog just as
we will be the provider of the bulk of
their deepwater drilling capability. Both
organizations are aligned around each
other’s mutual success and it is my view
that this relationship will create value for
our shareholders for many years to come.
is
Headed into 2011, the composition
remarkably
of our drilling fleet
different than it was at this point last
year. We continued our growth within
the deepwater sector with the Frontier
transaction as well as the January and
March 2011 announcements of three
ultra-deepwater newbuild drillships. By
the conclusion of the current building
program, Noble will have 27 floaters,
of which, 15 are DP and 13 are ultra-
deepwater, capable of operating in water
depths greater than 7,500 feet. Moreover,
in 2014, as currently configured, over 40
percent of our floating fleet will be less
than 10 years old and will provide our
customers with some of the most modern
and capable units in the industry while
delivering good returns for Noble.
jackup fleet by
Likewise, we have begun to reshape
focusing on
our
technology. In addition to the three high
specification units we built in recent
years, we announced plans to construct
1500
$
1250
1000
750
500
250
0
2006
2007
2008
2009
2010
Capital Investment (Millions)
Deepwater
Other
%
30
25
20
15
10
5
0
2006
2007
2008
2009
2010
Percent Debt to Total Capital
two heavy-duty, harsh environment
jackups with capabilities that exceed
most rigs in the industry today. Units
such as these will help to solidify Noble’s
mark as a continuing leader in the
jackup drilling arena.
Noble didn’t reach its 90th anniversary
by resting on its laurels and we recognize
as we plan for the future that complacency
has no place in a successful venture. We
continue to press ahead and a significant
new initiative, known internally as “One
Noble,” was launched in September.
achieving
“One Noble" is a broad framework
further
continuous
for
improvement for
the benefit of our
customers, our employees and our
shareholders. The central drivers of this
initiative are the capturing and sharing of
our core strengths—across departments,
across the Company and across the
world. Anchored in our commitment to
operational integrity, we’re defining a
systematic approach to further improve
operating efficiency, personal safety and
process safety in order to sustain and
enhance our position as the industry
leader in these areas. This is an endeavor
that is a fundamental imperative at Noble
and has been for many years.
Another effort of “One Noble" is
a company-wide process
to analyze,
evaluate and formulate a plan to ensure
resources
we not only have the
to
human
meet the challenges of
the future, but the hard
assets, as well. This plan
is building on the seven
newbuilds we have delivered in the last
three years, the nine rigs we currently
have under construction, our ongoing
optimization of units currently in the
fleet and an evaluation of some that
we may need to divest of in the future.
Our goal is to operate the best fleet with
the best people and create real value for
our shareholders.
I
When
the many
consider
positives that occurred in 2010, despite
unprecedented challenges, I have no doubt
Noble will be an even more successful
company in the years ahead. I am once
again grateful for the unparalleled work,
dedication and sacrifice of our employees
worldwide. With their effort and your
support, we look forward to our future
with great confidence.
David W. Williams
Chairman, President and
Chief Executive Officer
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
(cid:1) ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
(cid:2)
ACT OF 1934
For the fiscal year ended December 31, 2010
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from to
Commission file number: 000-53604
NOBLE CORPORATION
(Exact name of registrant as specified in its charter)
Switzerland
(State or other jurisdiction of incorporation or organization)
98-0619597
(I.R.S. employer identification number)
Dorfstrasse 19A, Baar, Switzerland 6430
(Address of principal executive offices) (Zip Code)
Registrant’s Telephone Number, Including Area Code: 41 (41) 761-65-55
Securities registered pursuant to Section 12(b) of the Act:
Title of each class
Shares, Par Value 3.80 CHF per Share
Name of each exchange on which registered
New York Stock Exchange
Commission file number: 001-31306
NOBLE CORPORATION
(Exact name of registrant as specified in its charter)
Cayman Islands
(State or other jurisdiction of incorporation or organization)
98-0366361
(I.R.S. employer identification number)
Suite 3D Landmark Square, 64 Earth Close, P.O. Box 31327
George Town, Grand Cayman, Cayman Islands KY1-1206
(Address of principal executive offices) (Zip Code)
Registrant’s Telephone Number, Including Area Code: (345) 938-0293
Securities registered pursuant to Sections 12(b) and 12(g) of the Act:
None
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes (cid:1) No (cid:2)
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Exchange Act. Yes (cid:2) No (cid:1)
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act
of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject
to such filing requirements for the past 90 days. Yes (cid:1) No (cid:2)
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Website, if any, every Interactive Data File
required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the proceeding 12 months. Yes (cid:1) No (cid:2)
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be
contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form
10-K or any amendment to this Form 10-K. (cid:2)
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting
company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.
Smaller reporting company (cid:2)
Smaller reporting company (cid:2)
Accelerated filer (cid:2)
Accelerated filer (cid:2)
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes (cid:2) No (cid:1)
As of June 30, 2010, the aggregate market value of the registered shares of Noble Corporation (Switzerland) held by non-affiliates of the
registrant was $7.8 billion based on the closing sale price as reported on the New York Stock Exchange.
Number of shares outstanding and trading at February 14, 2011: Noble Corporation (Switzerland) — 252,336,929.
Number of shares outstanding and trading at February 14, 2011: Noble Corporation (Cayman Islands) — 261,245,693
Large accelerated filer (cid:1)
Large accelerated filer (cid:2)
Non-accelerated filer (cid:2)
Non-accelerated filer (cid:1)
Noble-Cayman:
Noble-Swiss:
DOCUMENTS INCORPORATED BY REFERENCE
The proxy statement for the 2011 annual general meeting of the shareholders of Noble Corporation (Switzerland) will be incorporated by
reference into Part III of this Form 10-K.
This Form 10-K is a combined annual report being filed separately by two registrants: Noble Corporation, a Swiss corporation (“Noble-
Swiss”), and its wholly-owned subsidiary Noble Corporation, a Cayman Islands company (“Noble-Cayman”). Noble-Cayman meets the
conditions set forth in General Instructions I (1) of Form 10-K and is therefore filing this Form 10-K with the reduced disclosure format
contemplated by paragraphs (a) and (c) of General Instruction I(2) of Form 10-K.
PART I
TABLE OF CONTENTS
PAGE
Item 1. Business...............................................................................................................................................
Item 1A. Risk Factors ......................................................................................................................................
Item 1B. Unresolved Staff Comments.............................................................................................................
Item 2. Properties.............................................................................................................................................
Item 3. Legal Proceedings ...............................................................................................................................
PART II
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of
Equity Securities............................................................................................................................................
Item 6. Selected Financial Data .......................................................................................................................
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations ..............
Item 7A. Quantitative and Qualitative Disclosures About Market Risk..........................................................
Item 8. Financial Statements and Supplementary Data ...................................................................................
Item 9. Changes in and Disagreements With Accountants on Accounting and Financial Disclosure .............
Item 9A. Controls and Procedures...................................................................................................................
Item 9B. Other Information .............................................................................................................................
PART III
Item 10. Directors, Executive Officers and Corporate Governance ................................................................
Item 11. Executive Compensation ...................................................................................................................
Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder
Matters...........................................................................................................................................................
Item 13. Certain Relationships and Related Transactions, and Director Independence ..................................
Item 14. Principal Accounting Fees and Services ...........................................................................................
PART IV
Item 15. Exhibits, Financial Statement Schedules...........................................................................................
SIGNATURES ...............................................................................................................................................
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114
This combined Annual Report on Form 10-K is separately filed by Noble Corporation, a Swiss corporation
(“Noble-Swiss”), and Noble Corporation, a Cayman Islands company (“Noble-Cayman”). Information in this filing
relating to Noble-Cayman is filed by Noble-Swiss and separately by Noble-Cayman on its own behalf. Noble-
Cayman makes no representation as to information relating to Noble-Swiss (except as it may relate to Noble-
Cayman) or any other affiliate or subsidiary of Noble-Swiss. Since Noble-Cayman meets the conditions specified in
General Instructions I(1) to Form 10-K, it is permitted to use the reduced disclosure format for wholly-owned
subsidiaries of reporting companies set forth in General Instruction I(2) to Form 10-K.
1
This report should be read in its entirety as it pertains to each Registrant. Except where indicated, the
Consolidated Financial Statements and the Notes to the Consolidated Financial Statements are combined.
References in this Annual Report on Form 10-K to “Noble,” the “Company,” “we,” “us,” “our” and words of similar
meaning refer collectively to Noble-Swiss and its consolidated subsidiaries, including Noble-Cayman, after March
26, 2009 and to Noble-Cayman and its consolidated subsidiaries for periods through March 26, 2009. Noble-Swiss
became a successor registrant to Noble-Cayman under the Securities Exchange Act of 1934, as amended (the
“Exchange Act”) pursuant to Rule 12g-3 of the Exchange Act as a result of consummation of the 2009 migration
transactions described in Item 1 of Part I of this Annual Report on Form 10-K.
Part I
Item 1. Business.
General
Noble Corporation, a Swiss corporation, is a leading offshore drilling contractor for the oil and gas industry.
We perform contract drilling services with our fleet of 73 mobile offshore drilling units and one floating production
storage and offloading unit (“FPSO”) located worldwide. Our fleet consists of 14 semisubmersibles, 12 drillships,
45 jackups and two submersibles. Our fleet includes eight units under construction: two dynamically positioned,
ultra-deepwater, harsh environment Globetrotter-class drillships, two dynamically positioned, ultra-deepwater, harsh
environment Bully-class drillships, two heavy-duty, harsh environment jackup rigs announced in December 2010
and two ultra-deepwater drillships announced in January 2011. For additional information on the specifications of
the fleet, see “Item 2. Properties. — Drilling Fleet.” As of January 19, 2011, approximately 81 percent of our fleet
was located outside the United States in the following areas: Middle East, India, Mexico, the Mediterranean, the
North Sea, Brazil, West Africa and Asian Pacific. Noble and its predecessors have been engaged in the contract
drilling of oil and gas wells since 1921.
Acquisition of Frontier Holdings Limited
On July 28, 2010, Noble-Swiss and Noble AM Merger Co., a Cayman Islands company and indirect wholly-
owned subsidiary of Noble-Swiss (“Merger Sub”), completed the acquisition of FDR Holdings Limited, a Cayman
Islands company (“Frontier”). Under the terms of the Agreement and Plan of Merger with Frontier and certain of
Frontier’s shareholders, Merger Sub merged with and into Frontier, with Frontier surviving as an indirect wholly-
owned subsidiary of Noble-Swiss and a wholly-owned subsidiary of Noble-Cayman. The Frontier acquisition was
for a purchase price of approximately $1.7 billion in cash plus liabilities assumed and strategically expanded and
enhanced our global fleet by adding three dynamically positioned drillships (including two Bully-class joint venture-
owned drillships under construction), two conventionally moored drillships, including one that is Arctic-class, a
conventionally moored deepwater semisubmersible and one dynamically positioned FPSO to our fleet. Frontier’s
results of operations were included in our results beginning July 28, 2010. We funded the cash consideration paid at
closing of approximately $1.7 billion using proceeds from our July 2010 offering of senior notes and existing cash
on hand.
Consummation of 2009 Migration
On March 26, 2009, we completed a series of transactions that effectively changed the place of incorporation
of our parent holding company from the Cayman Islands to Switzerland. As a result of these transactions, Noble-
Cayman, the previous publicly traded Cayman Islands parent holding company, became a direct, wholly-owned
subsidiary of Noble-Swiss, the current parent company. Noble-Swiss’ principal asset is 100 percent of the shares of
Noble-Cayman. The consolidated financial statements of Noble-Swiss include the accounts of Noble-Cayman, and
Noble-Swiss conducts substantially all of its business through Noble-Cayman and its subsidiaries. In connection
with this transaction, we relocated our principal executive offices, executive officers and selected personnel to
Geneva, Switzerland.
2
Business Strategy
Noble’s goal is to be the industry’s preferred drilling contractor based upon the following overarching
principles:
• operate in a manner that provides a safe working environment for our employees while protecting the
environment and our assets;
• provide an attractive investment vehicle for our shareholders; and
• deliver exceptional customer service via a large, diverse and technically advanced fleet operated by
competent personnel.
Our business strategy continues to be the active expansion of our worldwide offshore drilling and deepwater
capabilities whereby we move our fleet towards the latest technology while maintaining the highest level of
operational integrity with respect to health, safety, and the environment. Historically, we have accomplished this via
rig and hull upgrades and modifications, acquisitions, and divestitures of lower specification units. While
divestitures of non-competitive assets continue to be a part of the strategy, many of our existing units have been
upgraded to their technical limits and our ability to complete acquisitions has been limited by market conditions. As
a result, in recent years, we have actively expanded our fleet through the construction of new rigs, including jackups
and drillships. In all of our investment decisions we seek to achieve a strong return on capital for the benefit of our
shareholders. During 2010, we continued our strategy as indicated by the following activities:
• we completed the acquisition of Frontier, which added a total of five drillships (including two Bully-class
joint venture-owned drillships under construction and to be completed in 2011), one semisubmersible and an
FPSO to the fleet;
• we completed construction on the Noble Dave Beard, a dynamically positioned ultra-deepwater
semisubmersible that left the shipyard during the first quarter of 2010 and began operating under a long-term
contract in Brazil;
• we completed construction on the Noble Jim Day, a dynamically positioned ultra-deepwater semisubmersible
that left the shipyard during the third quarter of 2010;
• we continued construction on one dynamically positioned, ultra-deepwater, harsh environment Globetrotter-
class drillship, which is scheduled to be delivered to our customer in the fourth quarter of 2011;
• we began construction on one dynamically positioned, ultra-deepwater, harsh environment Globetrotter-class
drillship, which is scheduled to be delivered to our customer in the fourth quarter of 2013; and
• we announced we would construct two high-specification heavy duty, harsh environment jackup rigs, both of
which are scheduled to be delivered during 2013.
In addition to the projects listed above, in January 2011, we signed a contract for the construction of two
additional newbuild drillships at Hyundai Heavy Industry (“HHI”), increasing the number of floating drilling units
in our fleet to 26. The delivered cost of the new ultra-deepwater drillships, to be named at a later date, is expected to
be $605 million each, including the turnkey construction contract, Noble-furnished equipment, project management
and spares, but excluding capitalized interest. The expected deliveries from the shipyard are the second and fourth
quarters of 2013, respectively, after which time the units would be mobilized to their potential drilling locations and
undergo customer acceptance testing. We have a letter of intent for one of these units for a five and one-half year
contract with a subsidiary of Royal Dutch Shell plc (“Shell”) at a dayrate of $410,000, plus a 15 percent
performance bonus opportunity. We have also negotiated options for two additional jackups and two additional HHI
drillships.
Excluding the Frontier acquisition, capital expenditures totaled $1.4 billion during 2010.
3
As of January 31, 2011, shipyards worldwide reportedly had received commitments to construct 55 jackups
and 61 deepwater floaters, including our units. These jackups and floaters are expected to be delivered between 2011
and 2014. Of these totals, approximately 21 jackups and 12 floating drilling units have been announced since fourth
quarter 2010, signifying that the industry has entered into another new building phase, and more announcements are
expected. These totals do not include options for additional units that many companies have negotiated with
shipyards and therefore, the number of units which could ultimately come to market could increase significantly.
The majority of these jackups and floaters reportedly do not have a contractual commitment from a customer and are
being built on speculation without an underlying contract. The introduction of non-contracted rigs into the
marketplace will increase the supply of vessels which compete for drilling service contracts, which could negatively
impact the dayrates we are able to achieve. Our strategy on new construction has generally been to expand our
drilling fleet in connection with a long-term drilling contract that covers a substantial portion of our capital
investment and provides an acceptable return on our capital employed. However, with the addition of a significant
number of new, technologically advanced units to the global fleet as well as changes in customer requirements and
preferences, we believe that in order to maintain the long-term competitiveness of our fleet as well as our significant
contract backlog, it has become both necessary and desirable for us to engage in building speculative highly
advanced jackups and floating units. Of the units we currently have under construction, one of the ultra-deepwater
drillships and both heavy duty, harsh environment jackups are being built on speculation. We will attempt to secure
contracts for these units prior to their completion. We may also engage in additional speculative building in the
future even in the absence of contracts for units already under construction.
As part of our strategy, we intend to participate in the consolidation of the offshore drilling industry to the
extent we believe we can create shareholder value. From time to time, we evaluate other individual rig transactions
and business combinations with other parties, and we will continue to consider business opportunities that promote
our growth strategy and optimize shareholder value.
In previous years, the drilling industry has experienced significant increases in dayrates for drilling services
in most market segments, a tightening market for drilling equipment, and a shortage of personnel. This environment
drove operating costs higher and magnified the importance of recruiting, training and retaining skilled personnel.
While the global financial turmoil and the governmental actions following the events of the Deepwater Horizon in
April 2010 have created an environment of uncertainty and downward pressure on both dayrates and certain types of
costs, we are not certain whether this downward pressure will continue in the future.
In recognition of the importance of our offshore operations personnel in achieving a safety record that has
consistently outperformed the offshore drilling industry sector and to retain such personnel, we have implemented a
number of key operations personnel retention programs. We believe these programs will complement our other short
and long-term incentive programs to attract and retain the skilled personnel we need to maintain safe and efficient
operations.
Drilling Contracts
We typically employ each drilling unit under an individual contract. Although the final terms of the contracts
result from negotiations with our customers, many contracts are awarded based upon a competitive bidding process.
Our drilling contracts generally contain the following terms:
• contract duration extending over a specific period of time or a period necessary to drill a defined number
wells;
• provisions permitting early termination of the contract by the customer (i) if the unit is lost or destroyed or
(ii) if operations are suspended for a specified period of time due to breakdown of equipment;
• provisions allowing the impacted party to terminate the contract if specified “force majeure” events beyond
the contracting parties’ control occur for a defined period of time;
• payment of compensation to us (generally in U.S. Dollars although some customers, typically national oil
companies, require a part of the compensation to be paid in local currency) on a “daywork” basis, so that we
receive a fixed amount for each day (“dayrate”) that the drilling unit is operating under contract (a lower rate
or no compensation is payable during periods of equipment breakdown and repair or adverse weather or in
the event operations are interrupted by other conditions, some of which may be beyond our control);
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• payment by us of the operating expenses of the drilling unit, including labor costs and the cost of incidental
supplies; and
• provisions that allow us to recover certain cost increases from certain of our customers.
The terms of some of our drilling contracts permit early termination of the contract by the customer, without
cause, generally exercisable upon advance notice to us and in some cases upon the making of an early termination
payment to us. Our drilling contracts with Petróleos Mexicanos (“Pemex”) in Mexico, for example, allow early
cancellation on 30 days or less notice to us without Pemex making an early termination payment.
Generally, our contracts allow us to recover our mobilization and demobilization costs associated with
moving a drilling unit from one regional location to another. When market conditions require us to bear these costs,
our operating margins are reduced accordingly. We cannot predict our ability to recover these costs in the future. For
shorter moves such as “field moves,” our customers have generally agreed to bear the costs of moving the unit by
paying us a reduced dayrate or “move rate” while the unit is being moved.
During times of depressed market conditions, our customers may seek to avoid or reduce their contractual
obligations to us under term drilling contracts or letter agreements or letters of intent for drilling contracts. A
customer may no longer need a rig due to a reduction in its exploration, development or production program, or it
may seek to obtain a comparable rig at a lower dayrate.
For a discussion of our backlog of commitments for contract drilling services, please read “Management’s
Discussion and Analysis of Financial Condition and Results of Operations — Contract Drilling Services Backlog.”
Offshore Drilling Operations
Contract Drilling Services
We conduct offshore contract drilling operations, which accounted for approximately 99 percent, 99 percent
and 98 percent of operating revenues for the years ended December 31, 2010, 2009 and 2008, respectively. We
conduct our contract drilling operations principally in the Middle East, India, the U.S. Gulf of Mexico, Mexico, the
Mediterranean, the North Sea, Brazil, West Africa and Asian Pacific. Revenues from Pemex accounted for
approximately 20 percent, 23 percent and 20 percent of our total operating revenues for the years ended December
31, 2010, 2009 and 2008, respectively. Revenues from Petróleo Brasileiro S.A. (“Petrobras”) accounted for 19
percent of total operating revenue in 2010. Petrobras did not account for more than 10 percent of total operating
revenue in 2009 or 2008. Revenues from Shell and its affiliates accounted for 12 percent of total operating revenues
during both 2010 and 2009. Shell did not account for more than 10 percent of total operating revenues in 2008. No
other single customer accounted for more than 10 percent of our total operating revenues in 2010, 2009 or 2008.
Labor Contracts
We perform services for drilling and workover activities covering two rigs under a labor contract (the
“Hibernia Contract”) off the east coast of Canada. We do not own or lease these rigs. Under our labor contracts, we
provide the personnel necessary to manage and perform the drilling operations from a drilling platform owned by
the operator. The Hibernia Contract extends through January 2013.
Competition
The offshore contract drilling industry is a highly competitive and cyclical business characterized by high
capital and maintenance costs. Some of our competitors may have access to greater financial resources than we do.
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In the provision of contract drilling services, competition involves numerous factors, including price, rig
availability and suitability, experience of the workforce, efficiency, safety performance record, condition and age of
equipment, operating integrity, reputation, industry standing and client relations. We believe that we compete
favorably with respect to all of these factors. We follow a policy of keeping our equipment well maintained and
technologically competitive. However, our equipment could be made obsolete by the development of new
techniques and equipment, regulations or customer preferences.
We compete on a worldwide basis, but competition may vary by region at any particular time. Demand for
offshore drilling equipment also depends on the exploration and development programs of oil and gas producers,
which in turn are influenced by the financial condition of such producers, by general economic conditions and prices
of oil and gas, and by political considerations and policies.
In addition, industry-wide shortages of supplies, services, skilled personnel and equipment necessary to
conduct our business can occur. We cannot assure that any such shortages experienced in the past would not happen
again in the future.
Governmental Regulations and Environmental Matters
Political developments and numerous governmental regulations, which may relate directly or indirectly to the
contract drilling industry, affect many aspects of our operations. Non-U.S. contract drilling operations are subject to
various laws and regulations in countries in which we operate, including laws and regulations relating to the
equipping and operation of drilling units, the reduction of greenhouse gas emissions to address climate change,
currency conversions and repatriation, oil and gas exploration and development, taxation of offshore earnings and
earnings of expatriate personnel and use of local employees and suppliers by foreign contractors. A number of
countries actively regulate and control the ownership of concessions and companies holding concessions, the
exportation of oil and gas and other aspects of the oil and gas industries in their countries. In addition, government
action, including initiatives by the Organization of Petroleum Exporting Countries (“OPEC”), may continue to
contribute to oil price volatility. In some areas of the world, this governmental activity has adversely affected the
amount of exploration and development work done by oil and gas companies and their need for drilling services and
may continue to do so.
The regulations applicable to our operations include provisions that regulate the discharge of materials into
the environment or require remediation of contamination under certain circumstances. Many of the other countries
in whose waters we operate from time to time also regulate the discharge of oil and other contaminants in
connection with drilling operations. Failure to comply with these laws and regulations or to obtain or comply with
permits may result in the assessment of administrative, civil and criminal penalties, imposition of remedial
requirements and the imposition of injunctions to force future compliance. We have made and will continue to make
expenditures to comply with environmental requirements. To date we have not expended material amounts in order
to comply, and we do not believe that our compliance with such requirements will have a material adverse effect
upon our results of operations or competitive position or materially increase our capital expenditures. Although
these requirements impact the energy and energy services industries, generally they do not appear to affect us in any
material respect that is different, or to any materially greater or lesser extent, than other companies in the energy
services industry. However, our business and prospects could be adversely affected to the extent laws are enacted or
other governmental action is taken that prohibits or restricts our customers’ exploration and production activities,
results in reduced demand for our services or imposes environmental protection requirements that result in increased
costs to us, our customers or the oil and natural gas industry in general.
On April 22, 2010, the Nigerian Oil and Gas Industry Content Development Bill was signed into law. The
law is designed to create Nigerian content in operations and transactions within the Nigerian oil and gas industry.
The law sets forth certain requirements for the utilization of Nigerian human resources and goods and services in oil
and gas projects and creates a Nigerian Content Development and Monitoring Board to implement and monitor the
law and develop regulations pursuant to the law. The law also establishes a Nigerian Content Development Fund to
fund the implementation of the law, and requires that one percent of the value of every contract awarded in the
Nigerian oil and gas industry be paid into the fund. We cannot predict what impact the new law may have on our
existing or future operations in Nigeria, but the effect on our operations there could be significant.
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The following is a summary of some of the existing laws and regulations to which our business operations in
the U.S. Gulf of Mexico are subject. However, there are also laws that apply to similar issues in most of the other
jurisdictions in which we operate.
Spills and Releases. The Comprehensive Environmental Response, Compensation, and Liability Act
(“CERCLA”), and analogous state laws and regulations, impose joint and several liabilities, without regard to fault
or the legality of the original act, on certain classes of persons that contributed to the release of a “hazardous
substance” into the environment. These persons include the “owner” and “operator” of the site where the release
occurred, past owners and operators of the site, and companies that disposed or arranged for the disposal of the
hazardous substances found at the site. Responsible parties under CERCLA may be liable for the costs of cleaning
up hazardous substances that have been released into the environment and for damages to natural resources. In the
course of our ordinary operations, we may generate waste that may fall within CERCLA’s definition of a
“hazardous substance.” However, we have not to date received notification that we are or may be potentially
responsible for cleanup costs under CERCLA.
In addition, the U.S. government has indicated that before any new deepwater drilling resumes, (i) operators
must demonstrate that containment resources are available promptly in the event of a deepwater blowout, (ii) the
chief executive officer of each operator seeking to perform deepwater drilling must certify that the operator has
complied with all applicable regulations and (iii) the Bureau of Ocean Energy Management, Regulation and
Enforcement will conduct inspections of each deepwater drilling operation for compliance with the applicable
regulations. In addition, regulations regarding blowout preventers are still being developed, but we are proceeding in
a manner to help ensure we will be in compliance with any final regulations.
The Oil Pollution Act. The U.S. Oil Pollution Act of 1990 (“OPA”) and regulations thereunder impose
certain operational requirements on offshore rigs operating in the U.S. Gulf of Mexico and govern liability for leaks,
spills and blowouts involving pollutants. The OPA imposes strict, joint and several liabilities on “responsible
parties” for damages, including natural resource damages, resulting from oil spills into or upon navigable waters,
adjoining shorelines or in the exclusive economic zone of the United States. A “responsible party” includes the
owner or operator of an onshore facility and the lessee or permittee of the area in which an offshore facility is
located. The OPA establishes a liability limit for onshore facilities of $350 million, while the liability limit for
offshore facilities is equal to all removal costs plus up to $75 million in other damages. These liability limits may
not apply if a spill is caused by a party’s gross negligence or willful misconduct, if the spill resulted from violation
of a federal safety, construction or operating regulation, or if a party fails to report a spill or to cooperate fully in a
clean-up.
Regulations under the OPA require owners and operators of rigs in United States waters to maintain certain
levels of financial responsibility. The failure to comply with the OPA’s requirements may subject a responsible
party to civil, criminal, or administrative enforcement actions. We are not aware of any action or event that would
subject us to liability under the OPA, and we believe that compliance with the OPA’s financial assurance and other
operating requirements will not have a material impact on our operations or financial condition.
Waste Handling. The U.S. Resource Conservation and Recovery Act (“RCRA”), and analogous state and
local laws and regulations govern the management of wastes, including the treatment, storage and disposal of
hazardous wastes. RCRA imposes stringent operating requirements, and liability for failure to meet such
requirements, on a person who is either a “generator” or “transporter” of hazardous waste or an “owner” or
“operator” of a hazardous waste treatment, storage or disposal facility. RCRA specifically excludes from the
definition of hazardous waste drilling fluids, produced waters, and other wastes associated with the exploration,
development, or production of crude oil and natural gas. A similar exemption is contained in many of the state
counterparts to RCRA. As a result, we are not required to comply with a substantial portion of RCRA’s
requirements because our operations generate minimal quantities of hazardous wastes. However, these wastes may
be regulated by the United States Environmental Protection Agency (“EPA”) or state agencies as solid waste. In
addition, ordinary industrial wastes, such as paint wastes, waste solvents, laboratory wastes, and waste compressor
oils, may be regulated under RCRA as hazardous waste. We do not believe the current costs of managing our
wastes, as they are presently classified, to be significant. However, any repeal or modification of the oil and natural
gas exploration and production exemption, or modifications of similar exemptions in analogous state statutes, would
increase the volume of hazardous waste we are required to manage and dispose of and would cause us, as well as
our competitors, to incur increased operating expenses with respect to our U.S. operations.
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Water Discharges. The U.S. Federal Water Pollution Control Act of 1972, as amended, also known as the
“Clean Water Act,” and analogous state laws and regulations impose restrictions and controls on the discharge of
pollutants into federal and state waters. These laws also regulate the discharge of storm water in process areas.
Pursuant to these laws and regulations, we are required to obtain and maintain approvals or permits for the discharge
of wastewater and storm water. We do not anticipate that compliance with these laws will cause a material impact
on our operations or financial condition.
Air Emissions. The U.S. Federal Clean Air Act and associated state laws and regulations restrict the emission
of air pollutants from many sources, including oil and natural gas operations. New facilities may be required to
obtain permits before operations can commence, and existing facilities may be required to obtain additional permits
and incur capital costs in order to remain in compliance. Federal and state regulatory agencies can impose
administrative, civil and criminal penalties for non-compliance with air permits or other requirements of the Clean
Air Act and associated state laws and regulations. Except as outlined below regarding climate change issues, we
believe that compliance with the Clean Air Act and analogous state laws and regulations will not have a material
impact on our operations or financial condition.
Climate Change. There is increasing attention in the United States and worldwide concerning the issue of
climate change and the effect of greenhouse gas (“GHG”) emissions. On September 22, 2009, the EPA issued a
“Mandatory Reporting of Greenhouse Gases” final rule (“Reporting Rule”). The Reporting Rule establishes a new
comprehensive scheme requiring operators of stationary sources emitting more than established annual thresholds of
carbon dioxide-equivalent GHG’s to inventory and report their GHG emissions annually on a facility-by-facility
basis. In addition, on December 15, 2009, the EPA published a Final Rule finding that current and projected
concentrations of six key GHG’s in the atmosphere threaten public health and welfare of current and future
generations. The EPA also found that the combined emissions of these GHG’s from new motor vehicles and new
motor vehicle engines contribute to pollution that threatens public health and welfare. This Final Rule, also known
as the EPA’s Endangerment Finding, does not impose any requirements on industry or other entities directly.
However, the EPA must now finalize motor vehicle GHG standards, the effect of which could reduce demand for
motor fuels refined from crude oil. Finally, according to the EPA, the final motor vehicle GHG standards will trigger
construction and operating permit requirements for stationary sources.
Further, proposed legislation has been introduced in Congress that would establish an economy-wide cap on
emissions of GHG’s in the United States and would require most sources of GHG emissions to obtain GHG
emission “allowances” corresponding to their annual emissions of GHG’s. Moreover, in 2005, the Kyoto Protocol to
the 1992 United Nations Framework Convention on Climate Change, which establishes a binding set of emission
targets for greenhouse gases, became binding on all those countries that had ratified it. International discussions are
currently underway to develop a treaty to replace the Kyoto Protocol after its expiration in 2012. While it is not
possible at this time to predict how legislation that may be enacted to address GHG emissions would impact our
business, the modification of existing laws or regulations or the adoption of new laws or regulations curtailing
exploratory or developmental drilling for oil and gas could materially and adversely affect our operations by limiting
drilling opportunities or imposing materially increased costs. Moreover, incentives to conserve energy or use
alternative energy sources could have a negative impact on our business if such incentives reduce the worldwide
demand for oil and gas.
Safety. The U.S. Occupational Safety and Health Act, or OSHA, and other similar laws and regulations
govern the protection of the health and safety of employees. The OSHA hazard communication standard, EPA
community right-to-know regulations under Title III of CERCLA and analogous state statutes require that
information be maintained about hazardous materials used or produced in our operations and that this information be
provided to employees, state and local governments and citizens. We believe that we are in substantial compliance
with these requirements and with other applicable OSHA requirements.
Employees
At December 31, 2010, we had approximately 5,900 employees, including employees engaged through labor
contractors or agencies. Approximately 78 percent of our employees were engaged in operations outside of the U.S.
and approximately 22 percent were engaged in U.S. operations. We are not a party to any collective bargaining
agreements that are material, and we consider our employee relations to be satisfactory.
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Financial Information About Segments and Geographic Areas
Information regarding our revenues from external customers, segment profit or loss and total assets
attributable to each segment for the last three fiscal years is presented in Note 16 to our consolidated financial
statements included in this Annual Report on Form 10-K.
Information regarding our operating revenues and identifiable assets attributable to each of our geographic
areas of operations for the last three fiscal years is presented in Note 16 to our consolidated financial statements
included in this Annual Report on Form 10-K.
Available Information
Our Annual Report on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and
amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the U.S. Securities Exchange
Act of 1934 are available free of charge at our internet website at http://www.noblecorp.com. These filings are also
available to the public at the U.S. Securities and Exchange Commission’s (“SEC”) Public Reference Room at 100 F
Street, NE, Room 1580, Washington, DC 20549. The public may obtain information on the operation of the Public
Reference Room by calling the SEC at 1-800-SEC-0330. Electronic filings with the SEC are also available on the
SEC internet website at http://www.sec.gov.
You may also find information related to our corporate governance, board committees and company code of
ethics (and any amendments thereto or waivers of compliance therewith) at our website. Among the information you
can find there is the following:
• Corporate Governance Guidelines;
• Audit Committee Charter;
• Nominating and Corporate Governance Committee Charter;
• Compensation Committee Charter; and
• Code of Business Conduct and Ethics.
Item 1A. Risk Factors.
You should carefully consider the following risk factors in addition to the other information included in this
Annual Report on Form 10-K. Each of these risk factors could affect our business, operating results and financial
condition, as well as affect an investment in our shares.
Risk Factors Relating to Our Business
Our business depends on the level of activity in the oil and gas industry, which is significantly affected by
volatile oil and gas prices.
Demand for drilling services depends on a variety of economic and political factors and the level of activity
in offshore oil and gas exploration, development and production markets worldwide. Commodity prices, and market
expectations of potential changes in these prices, may significantly affect this level of activity. However, higher
prices do not necessarily translate into increased drilling activity since our clients’ expectations of future commodity
prices typically drive demand for our rigs. Oil and gas prices are extremely volatile and are affected by numerous
factors beyond our control, including:
•
•
laws and regulations related to environmental or energy security matters, including those addressing
alternative energy sources and the risks of global climate change;
the political environment of oil-producing regions, including uncertainty or instability resulting from civil
disorder, an outbreak or escalation of armed hostilities or acts of war or terrorism;
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• worldwide demand for oil and gas, which is impacted by changes in the rate of economic growth in the U.S.
and other non-U.S. economies;
•
•
•
•
•
•
the ability of OPEC to set and maintain production levels and pricing;
the level of production in non-OPEC countries;
the laws and regulations of governments regarding exploration and development of their oil and gas reserves
or speculation regarding future laws or regulations;
the cost of exploring for, developing, producing and delivering oil and gas;
the discovery rate of new oil and gas reserves;
the rate of decline of existing and new oil and gas reserves;
• available pipeline and other oil and gas transportation capacity;
•
the ability of oil and gas companies to raise capital;
• adverse weather conditions (such as hurricanes and monsoons) and seas;
•
•
the development and exploitation of alternative fuels;
tax policy;
• advances in exploration, development and production technology; and
• availability of, and access to, suitable acreage bearing hydrocarbons for our customers.
Demand for our drilling services may decrease due to events beyond our control and some of our
customers could seek to cancel, terminate or renegotiate their contracts.
Our business could be impacted by events beyond our control including changes in our customers’ drilling
programs or budgets or their liquidity (including access to capital), changes in, or prolonged reductions of, prices for
oil and gas, or shifts in the relative strength of various geographic drilling markets brought on by economic
slowdown, or regional or worldwide recession, any of which could result in deterioration in demand for our drilling
services. In addition, our customers may cancel drilling contracts or letter agreements or letters of intent for drilling
contracts, or exercise early termination rights found in some of our drilling contracts or available under local law,
for a variety of reasons, many of which are beyond our control. Depending upon market conditions, our customers
may also seek renegotiation of firm drilling contracts to reduce their obligations. If the future level of demand for
our drilling services or if future conditions in the offshore contract drilling industry decline, our financial position,
results of operations and cash flows could be adversely affected.
We may not be able to renew or replace expiring contracts.
We have a number of contracts that will expire in 2011 and 2012. Our ability to renew these contracts or
obtain new contracts and the terms of any such contracts will depend on market conditions and the condition of our
customers. We may be unable to renew our expiring contracts or obtain new contracts for the rigs under contracts
that have expired or been terminated, and the dayrates under any new contracts may be below, perhaps substantially
below, the existing dayrates, which could have a material adverse effect on our results of operations and cash flows.
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The U.S. governmental, regulatory, and industry response to the Deepwater Horizon drilling rig accident
and resulting oil spill has, and could continue to have, a prolonged and material adverse impact on our U.S. Gulf
of Mexico operations.
Subsequent to the April 20, 2010 fire and explosion on the Deepwater Horizon, a competitor’s drilling rig in
the U.S. Gulf of Mexico, U.S. governmental authorities implemented a moratorium on and suspension of specified
types of drilling activities in the U.S. Gulf of Mexico. On October 12, 2010, the U.S. government lifted the
moratorium following adoption of new regulations including a drilling safety rule and a workplace safety rule, each
of which imposed multiple obligations relating to offshore drilling operations. These obligations relate to, among
other things, additional certifications and verifications relating to compliance with applicable regulations;
compatibility of blowout preventers with drilling rigs and well design; third-party inspections and design review of
blowout preventers; testing of casing installations; minimum requirements for personnel operating blowout
preventers; and training in deepwater well control. In January 2011, the government agency charged with reviewing
compliance with new regulations determined that it could not yet issue drilling permits under the new regulations.
In addition, the U.S. government has indicated that before any new deepwater drilling resumes, (i) operators
must demonstrate that containment resources are available promptly in the event of a deepwater blowout, (ii) the
chief executive officer of each operator seeking to perform deepwater drilling must certify that the operator has
complied with all applicable regulations and (iii) the Bureau of Ocean Energy Management, Regulation and
Enforcement will conduct inspections of each deepwater drilling operation for compliance with the applicable
regulations.
There have been and may continue to be judicial and other challenges made with respect to some of the
government imposed restrictions on U.S. Gulf of Mexico drilling operations. However, we cannot predict (1) how
those challenges will be resolved, (2) how the resolution of those challenges may affect the scope or duration of the
government-imposed restrictions or (3) the actions the U.S. government may take, whether in response to those
challenges or otherwise. We also cannot predict when the applicable government agency will determine that any
deepwater driller is in compliance with the new regulations.
Our existing U.S. Gulf of Mexico operations have been and will continue to be negatively impacted by the
events and governmental actions described above. U.S. governmental restrictions and regulations have and may
continue to result in a number of our rigs and those of others being moved, or becoming available for moving, to
locations outside of the U.S. Gulf of Mexico, which could potentially reduce global dayrates and negatively affect
our ability to contract our rigs that are currently uncontracted or coming off contract. In addition, U.S. or other
governmental authorities could implement additional regulations concerning licensing, taxation, equipment
specifications and training requirements that could increase the costs of our operations. Additionally, increased costs
for our customers’ operations, along with permitting delays, could negatively affect the economics of currently
planned or future exploration and development activity and result in a reduction in demand for our services.
Furthermore, due to the Deepwater Horizon accident and resulting oil spill, insurance costs across the industry could
increase, and certain insurance may be less available or not available at all, which could negatively affect us over
time.
At this time, we cannot predict for how long or to what extent our operations will be adversely impacted by
the governmental, regulatory and industry response to the Deepwater Horizon drilling rig accident and resulting oil
spill nor can we predict:
•
•
•
•
•
the extent of additional or substitute regulations and restrictions that may be imposed on drilling operations
in the U.S. Gulf of Mexico;
the extent to which drilling operations subsequent to the moratorium period will be impacted or the delay in
issuing permits for new or continued drilling;
the extent to which customers may seek to terminate existing contracts or the demand by customers for new
or renewed drilling contracts;
the availability of, or delays in delivery of, equipment required to comply with any new regulations;
the effect of the developments described above on demand for our services in the U.S. Gulf of Mexico.
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Depending on their duration and extent, these and related developments could continue to have a material
adverse effect on our results of operations, cash flows and liquidity relating to the U.S. Gulf of Mexico.
The recent worldwide instability in the financial and credit sectors and economic recession could have a
material adverse effect on our financial position, results of operations and cash flows.
The recent worldwide financial and credit situation reduced the availability of liquidity and credit to fund the
continuation and expansion of industrial business operations worldwide. The shortage of liquidity and credit
combined with substantial losses in worldwide equity markets led to a recession in the United States, Europe and
Japan. A slowdown in economic activity caused by a worldwide recession, combined with lower prices for oil and
gas, reduced worldwide demand for energy and demand for drilling services. If demand for drilling services declines
further, we could experience a decline in dayrates for new contracts and a slowing in the pace of new contract
activity. Demand for our services depends on oil and natural gas industry activity and expenditure levels that are
directly affected by trends in oil and natural gas prices. Demand for our services is particularly sensitive to the level
of exploration, development, and production activity of, and the corresponding capital spending by, oil and natural
gas companies. Any prolonged reduction in oil and natural gas prices or material impairment of our customers’ cash
flow or liquidity, including their access to capital, could result in lower levels of exploration, development and
production activity. Lower levels of exploration activity could result in a corresponding decline in the demand for
our drilling services, which could have a material adverse effect on our financial position, results of operations and
cash flows. The financial situation may also adversely affect the ability of shipyards to meet scheduled deliveries of
our newbuilds and our ability to renew our fleet through new vessel construction projects and conversion projects.
We are substantially dependent on several of our customers including Shell, Petrobras and Pemex, and
the loss of these customers could have a material adverse effect on our financial condition and results of
operations.
We estimate Shell and Petrobras represents more than 62 percent and 26 percent, respectively, of our backlog
at December 31, 2010 and revenues from Pemex, Petrobras and Shell accounted for 20 percent, 19 percent and 12
percent of our total operating revenues for the year ended December 31, 2010. This concentration of customers
increases the risks associated with any possible termination or nonperformance of contracts by either customer in
addition to our exposure to credit risk of either customer. If either of these customers were to terminate or fail to
perform their obligations under their contracts and we were not able to find other customers for the affected drilling
units promptly, our financial condition and results of operations could be materially adversely affected.
Construction, conversion or upgrades of rigs are subject to risks, including delays and cost overruns,
which could have an adverse impact on our available cash resources and results of operations.
We currently have significant new construction projects and conversion projects underway and we may
undertake additional such projects in the future. In addition, we make significant upgrade, refurbishment and repair
expenditures for our fleet from time to time, particularly as our rigs become older. Some of these expenditures are
unplanned. These projects and other efforts of this type are subject to risks of cost overruns or delays inherent in any
large construction project as a result of numerous factors, including the following:
•
shortages of equipment, materials or skilled labor;
• work stoppages and labor disputes;
• unscheduled delays in the delivery of ordered materials and equipment;
•
local customs strikes or related work slowdowns that could delay importation of equipment or materials;
• weather interferences;
• difficulties in obtaining necessary permits or approvals or in meeting permit or approval conditions;
• design and engineering problems;
12
•
latent damages or deterioration to hull, equipment and machinery in excess of engineering estimates and
assumptions;
• unforeseen increases in the cost of equipment, labor and raw materials, particularly steel;
• unanticipated actual or purported change orders;
• client acceptance delays;
• disputes with shipyards and suppliers;
• delays in, or inability to obtain, access to funding;
•
•
shipyard failures and difficulties, including as a result of financial problems of shipyards or their
subcontractors; and
failure or delay of third-party equipment vendors or service providers.
Failure to complete a rig upgrade or new construction on time, or the inability to complete a rig conversion or
new construction in accordance with its design specifications, may, in some circumstances, result in loss of
revenues, penalties, or delay, renegotiation or cancellation of a drilling contract or the recognition of an asset
impairment. Additionally, capital expenditures for rig upgrade, refurbishment and construction projects could
materially exceed our planned capital expenditures. Moreover, our rigs undergoing upgrade, refurbishment and
repair may not earn a dayrate during the period they are out of service.
We could be adversely affected by violations of applicable anti-corruption laws and our failure to comply
with the terms of our settlement agreements with the DOJ and SEC.
We operate in a number of countries throughout the world, including countries known to have a reputation
for corruption. We are committed to doing business in accordance with applicable anti-corruption laws and our code
of business conduct and ethics. We are subject, however, to the risk that we, our affiliated entities or their respective
officers, directors, employees and agents may take action determined to be in violation of such anti-corruption laws,
including the U.S. Foreign Corrupt Practices Act of 1977 (“FCPA”) and similar laws in other countries. Any
violation of the FCPA or other applicable anti-corruption laws could result in substantial fines, sanctions, civil
and/or criminal penalties and curtailment of operations in certain jurisdictions and might adversely affect our
business, results of operations or financial condition. In addition, actual or alleged violations could damage our
reputation and ability to do business. Further, detecting, investigating, and resolving actual or alleged violations is
expensive and can consume significant time and attention of our senior management.
In 2007, we began an internal investigation of the legality under the FCPA of certain activities in Nigeria. In
November 2010, we finalized settlements of this matter with each of the SEC and the DOJ. Under the settlements
with the DOJ and SEC, we agreed to, among other things, pay certain fines and interest and disgorge certain profits,
cooperate with the DOJ, comply with the FCPA, comply with certain self-reporting and annual reporting obligations
and comply with an injunction restraining us from violating the anti-bribery, books and records and internal controls
provisions of the FCPA. Our ability to comply with the terms of the settlements is dependent on the success of our
ongoing compliance program, including our ability to continue to manage our agents and supervise, train and retain
competent employees, and the efforts of our employees to comply with applicable law and our code of business
conduct and ethics.
Also, in January 2011, the Nigerian Economic and Financial Crimes Commission and the Nigerian Attorney
General Office initiated an investigation into these same activities. A subsidiary of Noble-Swiss resolved this matter
through the execution of a non-prosecution agreement dated January 28, 2011. Pursuant to this agreement, the
subsidiary paid $2.5 million to resolve all charges and claims of the Nigerian government. Any additional sanctions
we may incur as a result of any such investigation could damage our reputation and result in substantial fines,
sanctions, civil and/or criminal penalties and curtailment of operations in certain jurisdictions and might adversely
affect our business, results of operations or financial condition. Further, resolving any such additional investigations
could be expensive and consume significant time and attention of our senior management.
13
Possible changes in tax laws could affect us and our shareholders.
We are a Swiss company and operate through various subsidiaries in numerous countries throughout the
world including the United States. Consequently, we are subject to changes in tax laws, treaties or regulations or the
interpretation or enforcement thereof in the U.S., Switzerland or jurisdictions in which we or any of our subsidiaries
operate or are resident.
Tax laws and regulations are highly complex and subject to interpretation. Consequently, we are subject to
changing tax laws, treaties and regulations in and between countries in which we operate, including treaties between
the United States and other nations. Our income tax expense is based upon our interpretation of the tax laws in effect
in various countries at the time that the expense was incurred. If these laws, treaties or regulations change or if the
U.S. Internal Revenue Service or other taxing authorities do not agree with our assessment of the effects of such
laws, treaties and regulations, this could have a material adverse effect on us, including the imposition of a higher
effective tax rate on our worldwide earnings or a reclassification of the tax impact of our significant corporate
restructuring transactions.
In addition, the manner in which our shareholders are taxed on distributions on, and dispositions of, our
shares could be affected by changes in tax laws, treaties or regulations or the interpretation or enforcement thereof in
the U.S., Switzerland or other jurisdictions in which our shareholders are resident. Any such changes could affect
the trading price of our shares.
Our business involves numerous operating hazards.
Our operations are subject to many hazards inherent in the drilling business, including blowouts, fires and
collisions or groundings of offshore equipment, and damage or loss from adverse weather and seas. These hazards
could cause personal injury or loss of life, suspend drilling operations or seriously damage or destroy the property
and equipment involved, result in claims by employees, customers or third parties and, in addition to causing
environmental damage, could cause substantial damage to oil and natural gas producing formations or facilities.
Operations also may be suspended because of machinery breakdowns, abnormal drilling conditions, and failure of
subcontractors to perform or supply goods or services, or personnel shortages. Damage to the environment could
also result from our operations, particularly through oil spillage or extensive uncontrolled fires. We may also be
subject to damage claims by oil and gas companies.
The contract drilling industry is a highly competitive and cyclical business with intense price competition.
If we are not able to compete successfully, our profitability may be reduced.
The offshore contract drilling industry is a highly competitive and cyclical business characterized by high
capital and maintenance costs. Drilling contracts are traditionally awarded on a competitive bid basis. Intense price
competition, rig availability, location and suitability, experience of the workforce, efficiency, safety performance
record, technical capability and condition of equipment, operating integrity, reputation, industry standing and client
relations are all factors in determining which contractor is awarded a job. Mergers among oil and natural gas
exploration and production companies from time to time may reduce the number of available clients, resulting in
increased price competition.
Our industry has historically been cyclical. There have been periods of high demand, short rig supply and
high dayrates, followed by periods of lower demand, excess rig supply and low dayrates. Periods of excess rig
supply intensify the competition in the industry and may result in some of our rigs being idle for long periods of
time. Prolonged periods of low utilization and low dayrates could result in the recognition of impairment charges on
certain of our drilling rigs if future cash flow estimates, based upon information available to management at the
time, indicate that the carrying value of these rigs may not be recoverable.
The increase in supply created by the number of rigs being built, as well as changes in our competitors’
drilling rig fleets, could intensify price competition and require higher capital investment to keep our rigs
competitive. In addition, the supply attributable to newbuild rigs, especially those being built on speculation, could
cause a reduction in future dayrates. In certain markets, for example, we are experiencing competition from
newbuild jackups that are scheduled to enter the market in 2011 and beyond. The entry of these newbuild jackups
into the market may result in lower marketplace dayrates for jackups. Similarly, there are a number of deepwater
newbuilds that are scheduled to enter the market over the next several years, which could also adversely affect the
dayrates for these units.
14
We may have difficulty obtaining or maintaining insurance in the future and we cannot fully insure
against all of the risks and hazards we face.
No assurance can be given that we will be able to obtain insurance against all risks or that we will be able to
obtain or maintain adequate insurance in the future at rates and with deductibles or retention amounts that we
consider commercially reasonable.
The damage sustained to offshore oil and gas assets as a result of hurricanes in 2005 and 2008 caused the
insurance market for U.S. named windstorm perils to deteriorate significantly. Consequently, beginning in 2009, we
elected to self insure U.S. named windstorm coverage. Currently, our units deployed in the U.S. Gulf of Mexico
include eight semisubmersibles, four jackups, two submersibles and one FPSO. We have not yet concluded the
March 2011 renewal of our insurance program, but we expect to continue self insuring U.S. named windstorm
perils. Our rigs located in the Mexican portion of the Gulf of Mexico remain covered by commercial insurance for
windstorm damage up to the declared value of each unit. If one or more future significant weather-related events
occur in the Gulf of Mexico, or in any other geographic area in which we operate, we may experience further
increases in insurance costs, additional coverage restrictions or unavailability of certain insurance products.
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 onboard our rigs and losses relating to shore-based terrorist acts or strikes. If a
significant accident or other event occurs and is not fully covered by insurance or contractual indemnity, it could
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.
Governmental laws and regulations, including environmental laws and regulations, may add to our costs
or limit our drilling activity.
Our business is affected by public policy and laws and regulations relating to the energy industry and the
environment in the geographic areas where we operate.
The drilling industry is dependent on demand for services from the oil and gas exploration and production
industry, and accordingly, we are directly affected by the adoption of laws and regulations that for economic,
environmental or other policy reasons curtail exploration and development drilling for oil and gas. We may be
required to make significant capital expenditures to comply with governmental laws and regulations. It is also
possible that these laws and regulations may in the future add significantly to our operating costs or significantly
limit drilling activity. Governments in some foreign countries are increasingly active in regulating and controlling
the ownership of concessions, the exploration for oil and gas, and other aspects of the oil and gas industries.
Additionally, there is increasing attention in the United States and worldwide concerning the issue of climate change
and the effect of greenhouse gases. For further discussion, see “Part I, Item 1. Business — Governmental
Regulations and Environmental Matters.” The modification of existing laws or regulations or the adoption of new
laws or regulations that result in the curtailment of exploratory or developmental drilling for oil and gas could
materially and adversely affect our operations by limiting drilling opportunities or imposing materially increased
costs.
Our operations are also subject to numerous laws and regulations controlling the discharge of materials into
the environment or otherwise relating to the protection of the environment. As a result, the application of these laws
could have a material adverse effect on our results of operations by increasing our cost of doing business,
discouraging our customers from drilling for hydrocarbons or subjecting us to liability. For example, we, as an
operator of mobile offshore drilling units in navigable U.S. waters and certain offshore areas, including the U.S.
Outer Continental Shelf, are liable for damages and for the cost of removing oil spills for which we may be held
responsible, subject to certain limitations. Our operations may involve the use or handling of materials that are
classified as environmentally hazardous. Laws and regulations protecting the environment have generally become
more stringent and in certain circumstances impose “strict liability”, rendering a person liable for environmental
damage without regard to negligence or fault. Environmental laws and regulations may expose us to liability for the
conduct of or conditions caused by others or for acts that were in compliance with all applicable laws at the time
they were performed.
15
Our global operations involve additional risks.
We operate in various regions throughout the world that may expose us to political and other uncertainties,
including risks of:
•
•
terrorist acts, war and civil disturbances;
seizure, nationalization or expropriation of property or equipment;
• monetary policies and foreign currency fluctuations and devaluations;
•
the inability to repatriate income or capital;
• complications associated with repairing and replacing equipment in remote locations;
• piracy;
•
•
import-export quotas, wage and price controls, imposition of trade barriers and other forms of government
regulation and economic conditions that are beyond our control;
regulatory or financial requirements to comply with foreign bureaucratic actions; and
• changing taxation policies.
Our operations are subject to various laws and regulations in countries in which we operate, including laws
and regulations relating to:
•
•
the importing, exporting, equipping and operation of drilling units;
repatriation of foreign earnings;
• currency exchange controls;
• oil and gas exploration and development;
•
taxation of offshore earnings and earnings of expatriate personnel; and
• use and compensation of local employees and suppliers by foreign contractors.
Our ability to do business in a number of jurisdictions is subject to maintaining required licenses and permits
and complying with applicable laws and regulations. We have historically operated our drilling units offshore
Nigeria under temporary import permits. We have one jackup rig in Nigeria which is operating under a temporary
import permit which expired in November 2008 and we have a pending application to renew this permit. We have
received approval from the Nigerian Customs office that we will be allowed to obtain a new temporary import
permit for this rig. We recently received a new temporary import permit for another rig in Nigeria that had been
waiting for a temporary import permit based on a long-standing application. We continue to seek to avoid material
disruption to our Nigerian operations; however, there can be no assurance that we will be able to obtain new permits
or further extensions of permits necessary to continue the operation of our rigs in Nigeria. If we cannot obtain a new
permit or an extension necessary to continue operations of any rig, we may need to cease operations under the
drilling contract for such rig and relocate such rig from Nigerian waters. We cannot predict what impact these events
may have on any such contract or our business in Nigeria, and we could face additional fines and sanctions in
Nigeria. Furthermore, we cannot predict what changes, if any, relating to temporary import permit policies and
procedures may be established or implemented in Nigeria in the future, or how any such changes may impact our
business there.
16
For additional information regarding our internal investigation of our Nigerian operations and the status of
our temporary import permits in Nigeria, see “Part II Item 8. Financial Statements and Supplementary Data, Note 14
— Commitments and Contingencies.” Changes in, compliance with, or our failure to comply with the laws and
regulations of the countries where we operate, including Nigeria, may negatively impact our operations in those
countries and could have a material adverse effect on our results of operations.
The Nigerian Maritime Administration and Safety Agency (“NIMASA”) is seeking to collect a two percent
surcharge on contract amounts under contracts performed by “vessels”, within the meaning of Nigeria’s cabotage
laws, engaged in the Nigerian coastal shipping trade. We do not believe that our offshore drilling units are engaged
in the Nigerian coastal shipping trade nor that our units are “vessels” within the meaning of Nigeria’s cabotage laws.
In January 2008 we filed a declaratory judgment action in the Federal High Court of Nigeria seeking relief from
NIMASA’s attempt to apply the cabotage laws to our operations. In February 2009, NIMASA filed suit against us in
the Federal High Court of Nigeria seeking collection of this surcharge. In August 2009, the court ruled in our favor
in our declaratory judgment action. NIMASA has appealed the court’s ruling, but NIMASA’s suit against us was
subsequently dismissed. The outcome of any such legal action and the extent to which we may ultimately be
responsible for the surcharge is uncertain. We may be required to pay the surcharge and comply with other aspects
of the Nigerian cabotage laws, which could adversely affect our operations in Nigerian waters and require us to
incur additional costs of compliance. For additional information regarding these actions relating to the application of
the cabotage laws, see “Part II, Item 8. Financial Statements and Supplementary Data, Note 14 — Commitments and
Contingencies.”
NIMASA has also informed the Nigerian Content Division of its position that we are not in compliance with
the cabotage laws. The Nigerian Content Division makes determinations of companies’ compliance with applicable
local content regulations for purposes of government contracting, including contracting for services in connection
with oil and gas concessions where the Nigerian national oil company is a partner. The Nigerian Content Division
had barred us from participating in tenders for new projects as a result of NIMASA’s allegations, but we are
currently able to participate based on the court’s ruling in our favor. However, no assurance can be given with
respect to our ability to bid for future work in Nigeria until our dispute with NIMASA is resolved.
Governmental action, including initiatives by OPEC, may continue to cause oil price volatility. In some areas
of the world, this governmental activity has adversely affected the amount of exploration and development work
done by major oil companies, which may continue. In addition, some governments favor or effectively require the
awarding of drilling contracts to local contractors, require use of a local agent or require foreign contractors to
employ citizens of, or purchase supplies from, a particular jurisdiction. These practices may adversely affect our
ability to compete and our results of operations.
Failure to attract and retain highly skilled personnel or an increase in personnel costs could hurt our
operations.
We require highly skilled personnel to operate and provide technical services and support for our drilling
units. As the demand for drilling services and the size of the worldwide industry fleet increases, shortages of
qualified personnel have occurred from time to time. These shortages could result in our loss of qualified personnel
to competitors, impair our ability to attract and retain qualified personnel for our new or existing drilling units,
impair the timeliness and quality of our work and create upward pressure on personnel costs, any of which could
adversely affect our operations.
Fluctuations in exchange rates and nonconvertibility of currencies could result in losses to us.
We may experience currency exchange losses where revenues are received or expenses are paid in
nonconvertible currencies or where we do not hedge an exposure to a foreign currency. We may also incur losses as
a result of an inability to collect revenues because of a shortage of convertible currency available to the country of
operation, controls over currency exchange or controls over the repatriation of income or capital.
17
We are subject to litigation that could have an adverse effect on us.
We are, from time to time, involved in various litigation matters. These matters may include, among other
things, contract disputes, personal injury claims, asbestos and other toxic tort claims, environmental claims or
proceedings, employment matters, governmental claims for taxes or duties, and other litigation that arises in the
ordinary course of our business. Although we intend to defend these matters vigorously, we cannot predict with
certainty the outcome or effect of any claim or other litigation matter, and there can be no assurance as to the
ultimate outcome of any litigation. Litigation may have an adverse effect on us because of potential negative
outcomes, costs of attorneys, the allocation of management’s time and attention, and other factors.
Forward-Looking Statements
This report on Form 10-K includes “forward-looking statements” within the meaning of Section 27A of the
U.S. Securities Act of 1933, as amended, and Section 21E of the U.S. Securities Exchange Act of 1934, as amended.
All statements other than statements of historical facts included in this report regarding our financial position,
business strategy, plans and objectives of management for future operations, industry conditions, and indebtedness
covenant compliance are forward-looking statements. When used in this report, the words “anticipate,” “believe,”
“estimate,” “expect,” “intend,” “may,” “plan,” “project,” “should” and similar expressions are intended to be among
the statements that identify forward-looking statements. Although we believe that the expectations reflected in such
forward-looking statements are reasonable, we cannot assure you that such expectations will prove to have been
correct. We have identified factors that could cause actual plans or results to differ materially from those included in
any forward-looking statements. These factors include those described in “Risk Factors” above, or in our other SEC
filings, among others. Such risks and uncertainties are beyond our ability to control, and in many cases, we cannot
predict the risks and uncertainties that could cause our actual results to differ materially from those indicated by the
forward-looking statements. You should consider these risks when you are evaluating us.
Item 1B. Unresolved Staff Comments.
None.
Item 2. Properties.
Drilling Fleet
Our drilling fleet is composed of the following types of units: semisubmersibles, drillships, jackups and
submersibles. Each type of drilling rig is described further below. We also own one FPSO. Several factors determine
the type of unit most suitable for a particular job, the most significant of which include the water depth and ocean
floor conditions at the proposed drilling location, whether the drilling is being done over a platform or other
structure, and the intended well depth.
Semisubmersibles
Semisubmersibles are floating platforms which, by means of a water ballasting system, can be submerged to
a predetermined depth so that a substantial portion of the hull is below the water surface during drilling operations.
These units maintain their position over the well through the use of either a fixed mooring system or a computer
controlled dynamic positioning system and can drill in many areas where jackups cannot drill. However,
semisubmersibles normally require water depth of at least 200 feet in order to conduct operations. Our
semisubmersibles are capable of drilling in water depths of up to 12,000 feet, depending on the unit.
Semisubmersibles are more expensive to construct and operate than jackups.
Our semisubmersible fleet consists of 14 units, including:
•
•
five units that have been converted to Noble EVA-4000™ semisubmersibles;
three Friede & Goldman 9500 Enhanced Pacesetter semisubmersibles;
18
•
•
two Pentagone 85 semisubmersibles;
two Bingo 9000 design unit submersibles;
• one Aker H-3 Twin Hull S1289 Column semisubmersible; and
• one Offshore Co. SCP III Mark 2 semisubmersible.
Drillships
All of our drillships are self-propelled vessels. The dynamically positioned drillships operate through the use
of a computer controlled operating system that is used to maintain the vessel’s position. Our conventionally moored
drillships drill over the well through a fixed mooring system which keeps the drillship in place over the well. Our
drillships vary in maximum drillable water depth ranging from 1,500 to 12,000 feet. The maximum drilling depth of
our drillships ranges from 20,000 feet up to 40,000 feet. Like semisubmersibles, drillships are more expensive to
construct and operate than standard jackups.
Our drillship fleet consists of 12 units, including:
•
•
•
two dynamically positioned harsh environment drillships currently under construction with HHI with
scheduled completion dates in the second and fourth quarters of 2013, respectively;
two dynamically positioned Globetrotter-class drillships currently under construction with scheduled
completion dates of the fourth quarter of 2011 and the third quarter of 2013, respectively;
two dynamically positioned Bully-class drillships currently under construction and to be operated by us
through a 50 percent joint venture with a subsidiary of Shell with estimated completion dates in the third
quarter and fourth quarter of 2011, respectively;
• one conventionally moored Sonat Discoverer Class drillship capable of drilling in Arctic environments;
• one dynamically positioned NAM Nedlloyd-C drillship;
•
three dynamically positioned Gusto Engineering Pelican Class drillships; and
• one conventionally moored conversion class drillship.
Jackups
We currently have 45 jackups in the fleet, including two high-specification heavy duty, harsh environment
jackups currently under construction. Jackups are mobile, self-elevating drilling platforms equipped with legs that
can be lowered to the ocean floor until a foundation is established for support. The rig hull includes the drilling rig,
jacking system, crew quarters, loading and unloading facilities, storage areas for bulk and liquid materials,
helicopter landing deck and other related equipment. All of our jackups are independent leg (i.e., the legs can be
raised or lowered independently of each other) and cantilevered. A cantilevered jackup has a feature that permits the
drilling platform to be extended out from the hull, allowing it to perform drilling or workover operations over pre-
existing platforms or structures. Moving a rig to the drill site involves jacking up its legs until the hull is floating on
the surface of the water. The hull is then towed to the drill site by tugs and the legs are jacked down to the ocean
floor. The jacking operation continues until the hull is raised out of the water, and drilling operations are conducted
with the hull in its raised position. Our jackups are capable of drilling to a maximum depth of 30,000 feet in water
depths ranging between eight and 400 feet, depending on the jackup.
Submersibles
We have two submersibles in the fleet that are cold-stacked. Submersibles are mobile drilling platforms that
are towed to the drill site and submerged to drilling position by flooding the lower hull until it rests on the sea floor,
with the upper deck above the water surface. Our submersibles are capable of drilling to a maximum depth of 25,000
feet in water depths ranging between 12 and 70 feet.
19
Drilling Fleet Table
The following table sets forth certain information concerning our offshore fleet at January 19, 2011. The
table does not include any units owned by operators for which we had labor contracts. We operate and own all of the
units included in the table.
Name
Semisubmersibles — 14
Noble Amos Runner ................. Noble EVA-4000™
Noble Clyde Boudreaux............ F&G 9500 Enhanced Pacesetter
Noble Danny Adkins................. Bingo 9000 — DP
Noble Dave Beard..................... F&G 9500 Enhanced Pacesetter —
Make
Year Built
or Rebuilt (1)
Water
Depth
Rating
(feet)
Drilling
Depth
Capacity
(feet)
Location
Status (2)
1999 R/2008 M
2007 R/M
2009 R
8,000
10,000
12,000
32,500 U.S. Gulf of Mexico Active
35,000 U.S. Gulf of Mexico Active
35,000 U.S. Gulf of Mexico Active
DP
2008 R
10,000
35,000 Brazil
Active
2007 R
2004 R
2010 R
1999 R/2006 M
2003 R
1999 R
1998 R/2007 M
2006 R
2004 R
2000 R
Noble Driller ............................. Aker H-3 Twin Hull S1289
Column
Noble Homer Ferrington........... F&G 9500 Enhanced Pacesetter
Noble Jim Day .......................... Bingo 9000 — DP
Noble Jim Thompson................ Noble EVA-4000™
Noble Lorris Bouzigard ............ Pentagone 85
Noble Max Smith...................... Noble EVA-4000™
Noble Paul Romano .................. Noble EVA-4000™
Noble Paul Wolff ...................... Noble EVA-4000™ — DP
Noble Therald Martin................ Pentagone 85
Noble Ton van Langeveld (3)....... Offshore Co. SCP III Mark 2
Drillships — 12
Noble Bully I (3)(6) ...................... GustoMSC Bully PRD 12000
Noble Bully II (3)(6)..................... GustoMSC Bully PRD 12000
Noble Discoverer (3) .................. Sonat Discoverer Class
Noble Duchess .......................... Conversion
Noble Globetrotter I (3) .............. Globetrotter Class
Noble Globetrotter II (3)............. Globetrotter Class
Noble Leo Segerius................... Gusto Engineering Pelican Class
Noble Muravlenko .................... Gusto Engineering Pelican Class
Noble Phoenix........................... Gusto Engineering Pelican Class
Noble Roger Eason ................... NAM Nedlloyd — C
Noble Newbuild Drillship #1 (3)... Hyundai Gusto P 10000
Noble Newbuild Drillship #2 (3)... Hyundai Gusto P 10000
Independent Leg Cantilevered Jackups — 45 (Continued to next page)
Dhabi II ..................................... Baker Marine BMC 150
Noble Al White (3) ..................... CFEM T-2005-C
Noble Alan Hay ........................ Levingston Class 111-C
Noble Bill Jennings................... MLT Class 84 — E.R.C.
Noble Byron Welliver (3) ........... CFEM T-2005-C
Noble Carl Norberg................... MLT Class 82-C
Noble Charles Copeland ........... MLT Class 82-SD-C
Noble Charlie Yester................. MLT Class 116-C
Noble Chuck Syring.................. MLT Class 82-C
Noble David Tinsley ................. Modec 300C-38
Noble Dick Favor...................... Baker Marine BMC 150
Noble Don Walker .................... Baker Marine BMC 150-SD
Noble Earl Frederickson ........... MLT Class 82-SD-C
Noble Ed Holt ........................... Levingston Class 111-C
Noble Ed Noble......................... MLT Class 82-SD-C
Noble Eddie Paul ...................... MLT Class 84 — E.R.C.
Noble Gene House .................... Modec 300C-38
Noble Gene Rosser.................... Levingston Class 111-C
Noble George McLeod ............. F&G L-780 MOD II
Noble George Sauvageau (3)...... NAM Nedlloyd-C
Noble Gus Androes................... Levingston Class 111-C
Noble Hans Deul (3) ................... F&G JU-2000E
Noble Harvey Duhaney............. Levingston Class 111-C
2011 N
2011 N
2009 R
1975
2011 N
2013 N
2002 R
1997 R
2008 R
2005 R
2013 N
2013 N
2006 R
2005 R
2005 R
1997 R
1982
2003 R
2001 R
1980
1996 R
2010 R
2004 R
1992 R
1999 R
2003 R
2003 R
1995 R
1998 R
1996 R
1995 R
1981
2004 R
2009 N
2001 R
5,000
7,200
12,000
6,000
4,000
7,000
6,000
9,200
4,000
1,500
8,200
8,200
2,000
1,500
10,000
10,000
5,600
4,900
5,000
7,200
12,000
12,000
150
360
300
390
300
250
280
300
250
300
150
150
250
300
250
390
300
300
300
250
300
400
300
30,000 U.S. Gulf of Mexico Active
30,000 Malta
Active
35,000 U.S. Gulf of Mexico Active
32,500 U.S. Gulf of Mexico Active
25,000 U.S. Gulf of Mexico Active
30,000 Mexico
Active
32,500 U.S. Gulf of Mexico Active
Active
30,000 Brazil
Active
25,000 Brazil
Active
25,000 U.K.
40,000 Singapore
40,000 Singapore
20,000 New Zealand
25,000 Nigeria
30,000 China
30,000 China
20,000 Brazil
20,000 Brazil
25,000 Brunei
25,000 Brazil
40,000 South Korea
40,000 South Korea
20,000 U.A.E.
30,000 The Netherlands
25,000 U.A.E.
25,000 Mexico
30,000 U.K.
20,000 Mexico
20,000 U.A.E.
25,000 India
20,000 U.A.E.
25,000 U.A.E.
20,000 U.A.E.
20,000 Cameroon
20,000 Mexico
25,000 India
20,000 Nigeria
25,000 Mexico
25,000 Qatar
25,000 Mexico
25,000 India
25,000 The Netherlands
30,000 Qatar
30,000 The Netherlands
25,000 Qatar
Shipyard
Shipyard
Active
Active
Shipyard
Shipyard
Active
Active
Active
Active
Shipyard
Shipyard
Active
Active
Active
Active
Active
Active
Active
Active
Active
Active
Active
Active
Active
Active
Active
Active
Active
Active
Active
Active
Active
Active
Active
See footnotes on the following page.
20
Year Built
or Rebuilt (1)
Name
Independent Leg Cantilevered Jackups — 45 (Continued from previous page)
Make
Noble Jimmy Puckett ........... F&G L-780 MOD II
Noble Joe Beall .................... Modec 300C-38
Noble John Sandifer ............. Levingston Class 111-C
Noble Johnnie Hoffman ....... Baker Marine BMC 300
Noble Julie Robertson (3) (4)....... BMC 300 Harsh Weather Class
Noble Kenneth Delaney ....... F&G L-780 MOD II
Noble Leonard Jones............ MLT Class 53 - E.R.C.
Noble Lewis Dugger ............ Levingston Class 111-C
Noble Lloyd Noble............... MLT Class 82-SD-C
Noble Lynda Bossler (3) ........ MSC/CJ-46
Noble Alan Hay.................... Levingston Class 111-C
Noble Percy Johns................ F&G L-780 MOD II
Noble Piet van Ede (3) ........... MSC/CJ-46
Noble Roger Lewis (3)........... F&G JU-2000E
Noble Ronald Hoope (3) ........ MSC/CJ-46
Noble Roy Butler (5).............. F&G L-780 MOD II
Noble Roy Rhodes ............... MLT Class 116-C
Noble Sam Noble ................. Levingston Class 111-C
Noble Scott Marks (3)............ F&G JU-2000E
Noble Tom Jobe ................... MLT Class 82-SD-C
Noble Tommy Craighead ..... F&G L-780 MOD II
Noble Jackup I- Newbuild (3)...... F&G JU-3000N
Noble Jackup II- Newbuild (3) .... F&G JU-3000N
Submersibles — 2
Noble Joe Alford .................. Pace Marine 85G
Noble Lester Pettus .............. Pace Marine 85G
FPSO- 1
Seillean................................. Harland & Wolf Shipbuilding
2002 R
2004 R
1995 R
1993 R
2001 R
1998 R
1998 R
1997 R
1990 R
1982
2005 R
1995 R
1982
2007
1982
1998 R
2009 R
1982
2009 N
1982
2003 R
2013 N
2013 N
2006 R
2007 R
2008 R
Water
Depth
Rating
(feet)
Drilling
Depth
Capacity
(feet)
Location
Status (2)
300
300
300
300
390
300
390
300
250
250
300
300
250
400
250
300
300
300
400
250
300
400
400
25,000 Qatar
25,000 Qatar
25,000 Mexico
25,000 Mexico
25,000 U.K.
25,000 India
25,000 Mexico
25,000 Mexico
20,000 Nigeria
25,000 The Netherlands
25,000 U.A.E.
25,000 Nigeria
25,000 The Netherlands
30,000 Qatar
25,000 The Netherlands
25,000 Mexico
25,000 U.A.E.
25,000 Mexico
30,000 The Netherlands
25,000 Mexico
25,000 Cameroon
30,000 Singapore
30,000 Singapore
Active
Active
Active
Active
Active
Active
Active
Active
Active
Active
Active
Active
Active
Active
Active
Active
Active
Active
Active
Active
Active
Shipyard
Shipyard
70
70
25,000 U.S. Gulf of Mexico Stacked
25,000 U.S. Gulf of Mexico Stacked
N/A
N/A U.S. Gulf of Mexico Active
Footnotes to Drilling Fleet Table
1. Rigs designated with an “R” were modified, refurbished or otherwise upgraded in the year indicated by capital
expenditures in an amount deemed material by management. Rigs designated with an “N” are newbuilds. Rigs
designated with an “M” have been upgraded to the Noble NC-5SM mooring standard.
2. Rigs listed as “active” were either operating under contract as of January 19, 2011 or were actively seeking
contracts; rigs listed as “shipyard” are in a shipyard for construction, repair, refurbishment or upgrade; rigs
listed as “stacked” are idle without a contract and are not actively marketed in present market conditions.
3. Harsh environment capability.
4. Although designed for a water depth rating of 390 feet of water in a non-harsh environment, the rig is currently
equipped with legs adequate to drill in approximately 200 feet of water in a harsh environment. We own the
additional leg sections required to extend the drilling depth capability to 390 feet of water.
5. Although designed for a water depth rating of 300 feet of water, the rig is currently equipped with legs
adequate to drill in approximately 250 feet of water. We own the additional leg sections required to extend the
drilling depth capability to 300 feet of water.
6. We will operate the Noble Bully I and Noble Bully II through joint ventures with a subsidiary of Shell.
Facilities
Our corporate office is located in Baar, Switzerland. In addition, we maintain executive offices for executive
officers and selected personnel in Geneva, Switzerland. We also maintain office space in Sugar Land, Texas where
significant worldwide global support activity occurs. We own and lease administrative and marketing offices, and
sites used primarily for storage, maintenance and repairs, and research and development for drilling rigs and
equipment in various locations worldwide.
21
Item 3. Legal Proceedings.
Information regarding legal proceedings is set forth in Note 14 to our consolidated financial statements
included in Item 8 of this Annual Report on Form 10-K.
PART II
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of
Equity Securities.
Market for Shares and Related Shareholder Information
Noble-Swiss shares are listed and traded on the New York Stock Exchange under the symbol “NE”. The
following table sets forth for the periods indicated the high and low sales prices and dividends or returns of capital
declared and paid in U.S. Dollars per share:
High
Low
Dividends
Declared and
Paid
2010
Fourth quarter ................................................................................................. $ 38.00 $ 33.14 $
Third quarter...................................................................................................
Second quarter ................................................................................................
First quarter ....................................................................................................
30.36
27.04
38.94
35.95
43.63
44.87
2009
Fourth quarter ................................................................................................. $ 44.78 $ 36.15 $
Third quarter...................................................................................................
Second quarter ................................................................................................
First quarter ....................................................................................................
28.14
24.16
20.81
39.39
37.03
28.48
0.13
0.66
0.04
0.05
0.05
0.09
—
0.04
The declaration and payment of dividends or distributions and returns of capital in the future by Noble-Swiss
and the making of distributions of capital, including returns of capital in the form of par value reductions, require
authorization of the shareholders of Noble-Swiss. The amount of such dividends, distributions and returns of capital
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 and our shareholders.
On February 14, 2011, there were 252,336,929 of our shares outstanding held by 1,598 shareholder accounts
of record.
Swiss Tax Consequences to Shareholders of Noble
The tax consequences discussed below are not a complete analysis or listing of all the possible tax
consequences that may be relevant to shareholders of Noble. Shareholders should consult their own tax advisors in
respect of the tax consequences related to receipt, ownership, purchase or sale or other disposition of our shares and
the procedures for claiming a refund of withholding tax.
Swiss Income Tax on Dividends and Similar Distributions
A non-Swiss holder will not be subject to Swiss income taxes on dividend income and similar distributions in
respect of our shares, unless the shares are attributable to a permanent establishment or a fixed place of business
maintained in Switzerland by such non-Swiss holder. However, dividends and similar distributions are subject to
Swiss withholding tax. See “—Swiss Withholding Tax—Distributions to Shareholders.”
22
Swiss Wealth Tax
A non-Swiss holder will not be subject to Swiss wealth taxes unless the holder’s shares are attributable to a
permanent establishment or a fixed place of business maintained in Switzerland by such non-Swiss holder.
Swiss Capital Gains Tax upon Disposal of Shares
A non-Swiss holder will not be subject to Swiss income taxes for capital gains unless the holder’s shares are
attributable to a permanent establishment or a fixed place of business maintained in Switzerland by such non-Swiss
holder. In such case, the non-Swiss holder is required to recognize capital gains or losses on the sale of such shares,
which will be subject to cantonal, communal and federal income tax.
Swiss Withholding Tax—Dividends to Shareholders
A Swiss withholding tax of 35 percent is due on dividends to our shareholders from us, regardless of the
place of residency of the shareholder (subject to the exceptions discussed under “—Exemption from Swiss
Withholding Tax—Distributions to Shareholders” below). We will be required to withhold at such rate and remit on
a net basis any payments made to a holder of our shares and pay such withheld amounts to the Swiss federal tax
authorities. Please see “—Refund of Swiss Withholding Tax on Dividends and Other Distributions.”
Exemption from Swiss Withholding Tax—Distributions to Shareholders
Under present Swiss tax law, distributions to shareholders in relation to a reduction of par value are exempt
from Swiss withholding tax. Since January 1, 2011, distributions to shareholders out of qualifying additional paid-in
capital for Swiss statutory purposes are exempt from the Swiss withholding tax. Consequently, we expect that a
substantial amount of any potential future distributions, whether distributed as a reduction of par value or directly
out of qualifying additional paid-in capital may be exempt from Swiss withholding tax.
Repurchases of Shares
Under present Swiss tax law, repurchases of shares for the purposes of capital reduction are treated as a
partial liquidation subject to the 35 percent Swiss withholding tax. However, for shares repurchased for capital
reduction, the portion of the repurchase price attributable to the par value of the shares repurchased will not be
subject to the Swiss withholding tax. Since January 1, 2011, the portion of the repurchase price attributable to the
qualifying additional paid-in capital for Swiss statutory reporting purposes of the shares repurchased will also not be
subject to the Swiss withholding tax. We would be required to withhold at such rate the tax from the difference
between the repurchase price and the related amount of par value and the related amount of qualifying additional
paid-in capital. We would be required to remit on a net basis the purchase price with the Swiss withholding tax
deducted to a holder of our shares and pay the withholding tax to the Swiss federal tax authorities.
With respect to the refund of Swiss withholding tax from the repurchase of shares, see “—Refund of Swiss
Withholding Tax on Dividends and Other Distributions” below.
In most instances, Swiss companies listed on the SIX Swiss Exchange (“SIX”), carry out share repurchase
programs through a “second trading line” on the SIX. Swiss institutional investors typically purchase shares from
shareholders on the open market and then sell the shares on the second trading line back to the company. The Swiss
institutional investors are generally able to receive a full refund of the withholding tax. Due to, among other things,
the time delay between the sale to the company and the institutional investors’ receipt of the refund, the price
companies pay to repurchase their shares has historically been slightly higher (but less than one percent) than the
price of such companies’ shares in ordinary trading on the SIX first trading line.
We do not expect to be able to use the SIX second trading line process to repurchase our shares because we
do not currently intend to list our shares on the SIX. However, we have in the past and intend to continue to follow
an alternative process whereby we expect to be able to repurchase our shares in a manner that should allow Swiss
institutional market participants selling the shares to us to receive a refund of the Swiss withholding tax and,
therefore, accomplish the same purpose as share repurchases on the second trading line at substantially the same cost
to us and such market participants as share repurchases on a second trading line.
23
The repurchase of shares for purposes other than capital reduction, such as to retain as treasury shares for use
in connection with stock incentive plans, convertible debt or other instruments within certain periods, will generally
not be subject to Swiss withholding tax.
Refund of Swiss Withholding Tax on Dividends and Other Distributions
Swiss holders — A Swiss tax resident, corporate or individual, can recover the withholding tax in full if such
resident is the beneficial owner of our shares at the time the dividend or other distribution becomes due and provided
that such resident reports the gross distribution received on such resident’s income tax return, or in the case of an
entity, includes the taxable income in such resident’s income statement.
Non-Swiss holders — If the shareholder that receives a distribution from us is not a Swiss tax resident, does
not hold our shares in connection with a permanent establishment or a fixed place of business maintained in
Switzerland, and resides in a country that has concluded a treaty for the avoidance of double taxation with
Switzerland for which the conditions for the application and protection of and by the treaty are met, then the
shareholder may be entitled to a full or partial refund of the withholding tax described above. The procedures for
claiming treaty refunds (and the time frame required for obtaining a refund) may differ from country to country.
Switzerland has entered into bilateral treaties for the avoidance of double taxation with respect to income
taxes with numerous countries, including the U.S., whereby under certain circumstances all or part of the
withholding tax may be refunded.
U.S. residents — The Swiss-U.S. tax treaty provides that U.S. residents eligible for benefits under the treaty
can seek a refund of the Swiss withholding tax on dividends for the portion exceeding 15 percent (leading to a
refund of 20 percent) or a full refund in the case of qualified pension funds.
As a general rule, the refund will be granted under the treaty if the U.S. resident can show evidence of:
• beneficial ownership,
• U.S. residency, and
• meeting the U.S.-Swiss tax treaty’s limitation on benefits requirements.
The claim for refund must be filed with the Swiss federal tax authorities (Eigerstrasse 65, 3003 Berne,
Switzerland), no later than December 31 of the third year following the year in which the dividend payments became
due. The relevant Swiss tax form is Form 82C for companies, 82E for other entities and 82I for individuals. These
forms can be obtained from any Swiss Consulate General in the U.S. or from the Swiss federal tax authorities at the
address mentioned above or at www.estv.admin.ch (English, Anticipatory Tax, Services, Domicile abroad). Each
form needs to be filled out in triplicate, with each copy duly completed and signed before a notary public in the U.S.
Evidence that the withholding tax was withheld at the source must also be included.
Stamp duties in relation to the transfer of shares — The purchase or sale of our shares may be subject to
Swiss federal stamp taxes on the transfer of securities irrespective of the place of residency of the purchaser or seller
if the transaction takes place through or with a Swiss bank or other Swiss securities dealer, as those terms are
defined in the Swiss Federal Stamp Tax Act and no exemption applies in the specific case. If a purchase or sale is
not entered into through or with a Swiss bank or other Swiss securities dealer, then no stamp tax will be due. The
applicable stamp tax rate is 0.075 percent for each of the two parties to a transaction and is calculated based on the
purchase price or sale proceeds. If the transaction does not involve cash consideration, the transfer stamp duty is
computed on the basis of the market value of the consideration.
24
Purchases of Shares
The following table sets forth for the periods indicated certain information with respect to repurchases by
Noble-Swiss of its shares:
Period
October 2010 .........................
November 2010 .....................
December 2010......................
Total Number
of Shares
Purchased
Average
Price Paid
per Share
0.00
— $
174 $
4,240 $
34.18(2)
34.95(3)
Total Number of
Shares Purchased
as Part of Publicly
Announced Plans
or Programs
Maximum Number
of Shares that May
Yet Be Purchased
Under the Plans
or Programs (1)
6,769,891
6,769,891
6,769,891
—
—
—
(1) All share purchases made in the open market and were pursuant to the share repurchase program which our
Board of Directors authorized and adopted and our shareholders approved. Our repurchase program has no
date of expiration.
(2)
(3)
Includes 174 shares at an average price of $34.18 per share surrendered by employees for withholding taxes
payable upon the vesting of restricted stock.
Includes 4,240 shares at an average price of $34.95 per share surrendered by employees for withholding taxes
payable upon the vesting of restricted stock.
25
Stock Performance Graph
This graph shows the cumulative total shareholder return of our shares over the five-year period from
January 1, 2006 to December 31, 2010. The graph also shows the cumulative total returns for the same five-year
period of the S&P 500 Index and the Dow Jones U.S. Oil Equipment & Services Index. The graph assumes that
$100 was invested in our shares and the two indices on January 1, 2006 and that all dividends or distributions and
returns of capital were reinvested on the date of payment.
Company Name / Index
Noble Corporation .......................................................... $ 108.20 $ 161.00 $ 64.01 $ 118.59 $ 107.14
111.99
S&P 500 Index ...............................................................
140.78
Dow Jones U.S. Oil Equipment & Services ...................
97.33
110.56
122.16
164.47
115.79
113.47
76.96
66.94
2010
2006
2007
INDEXED RETURNS
Year Ended December 31,
2009
2008
Investors are cautioned against drawing any conclusions from the data contained in the graph, as past results
are not necessarily indicative of future performance.
The above graph and related information shall not be deemed “soliciting material” or to be “filed” with the
SEC, nor shall such information be incorporated by reference into any future filing under the Securities Act of 1933
or Securities Exchange Act of 1934, each as amended, except to the extent that we specifically incorporate it by
reference into such filing.
26
Item 6. Selected Financial Data.
The following table sets forth selected financial data of us and our consolidated subsidiaries over the five-
year period ended December 31, 2010, which information is derived from our audited financial statements. This
information should be read in connection with, and is qualified in its entirety by, the more detailed information in
our financial statements included in Item 8 of this Annual Report on Form 10-K.
2010
Year Ended December 31,
2008
(In thousands, except per share amounts)
2007
2009
2006
Statement of Income Data
Operating revenues .......................... $ 2,807,176 $ 3,640,784 $ 3,446,501 $ 2,995,311 $ 2,100,239
Net income attributable to Noble
Corporation................................
Net income per share:
Basic ........................................
Diluted .....................................
773,429
1,678,642
1,560,995
1,206,011
731,866
3.03
3.02
6.44
6.42
5.85
5.81
4.49
4.45
2.68
2.65
Balance Sheet Data (at end of
period)
Cash and marketable securities.... $
Property and equipment, net ........
Total assets ..................................
Long-term debt ............................
Total debt (1) ...............................
Total equity..................................
337,871 $
735,493 $
513,311 $
161,058 $
10,048,087
11,221,321
2,686,484
2,766,697
7,287,634
6,634,452
8,396,896
750,946
750,946
6,788,432
5,647,017
7,106,799
750,789
923,487
5,290,715
4,795,916
5,876,006
774,182
784,516
4,308,322
61,710
3,858,393
4,585,914
684,469
694,098
3,228,993
Other Data
Net cash from operating activities..... $ 1,654,376 $ 2,136,716 $ 1,888,192 $ 1,414,373 $
Net cash from investing activities .....
Net cash from financing activities.....
Capital expenditures ....................
Working capital ...........................
Cash dividends/par value reduction
declared per share (2) (3) ..............
(1,495,059)
(419,475)
1,431,498
1,049,243
(1,129,293)
(406,646)
1,231,321
561,348
(2,913,943)
861,945
1,423,484
110,347
(1,223,873)
(91,152)
1,287,043
367,419
0.88
0.91
0.12
0.18
988,715
(349,910)
(698,940)
1,122,061
143,720
0.08
____________
(1) Consists of Long-Term Debt and Current Maturities of Long-Term Debt.
(2) During the third quarter of 2009, we began paying a return on capital in the form of par value reductions, in lieu
of dividends, based upon an amount in Swiss Francs. Amounts listed are in U.S. Dollars at the exchange rate
that the dividend was paid.
(3) The par value reductions or cash dividends declared in 2010 and 2008 includes a special dividend of
approximately $0.56 and $0.75 per share, respectively.
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations.
The following discussion is intended to assist you in understanding our financial position at December 31,
2010 and 2009, and our results of operations for each of the years in the three-year period ended December 31,
2010. You should read the accompanying consolidated financial statements and related notes in conjunction with
this discussion.
Executive Overview
Our 2010 financial and operating results include:
• operating revenues totaling $2.8 billion;
• net income of $773 million or $3.02 per diluted share;
• net cash from operating activities totaling $1.7 billion; and
• an increase in debt to 27.5 percent of total capitalization at the end of 2010, up from 10.0 percent at
the end of 2009 due to the issuance of $1.25 billion in debt and the assumption of $689 million in
consolidated joint venture debt to fund the acquisition of Frontier.
27
The overall offshore drilling market has been challenging since the events occurring in connection with the
Deepwater Horizon and the U.S. governmental response to the incident. Despite the lifting of the moratorium and
publication of new safety rules, we are unable to predict when normal drilling operations will resume in the U.S.
Gulf of Mexico and we believe it is unlikely that we will see significant activity in the U.S. Gulf of Mexico for some
time as indicated by the difficulties surrounding the issuance of new drilling permits. Outside of the U.S. Gulf of
Mexico, demand has been fairly steady, but well below the previous peak levels of 2008. We believe the risk for
early contract terminations or defaults under existing contracts has decreased and the overall future market for
offshore drilling activity is positive.
Despite improvements in the economy, there is still uncertainty regarding the sustainability of the global
economic recovery, which is proceeding unevenly in different geographic regions. In addition, there is still
uncertainty regarding the sustainability of the recovery of the global financial markets highlighted by issues in the
credit markets. During 2010, oil prices increased fifteen percent while U.S. natural gas prices decreased almost
twenty percent. While we believe that this improvement in oil prices will result in increased drilling activity in 2011,
we continue to anticipate volatility in our industry for the foreseeable future.
Despite the increase in commodity prices, we have not seen a significant increase in demand for offshore
drilling services. Developments in the U.S. Gulf of Mexico will continue to have an impact on the deepwater market
segment in the short-term, however, we believe that the long-term outlook is stronger. Market dayrates for new
ultra-deepwater units remain generally above $400,000, which is a significantly lower than the rates in 2007-2008.
Demand in the jackup segment increased during 2010 and utilization for units operating outside the U.S. Gulf of
Mexico was approximately 80 percent. We did not operate any jackups in the U.S. Gulf of Mexico in 2010. During
2010, we started to see differentiation in the jackup market segment with newer units having utilization rates
exceeding 90 percent, while units that entered service before 2000 having utilization rates closer to 70 percent.
Likewise, there has been a bifurcation of dayrates between older and newer units in the jackup market with new
units earning a premium. Dayrates for both older and newer units have been relatively stable over the second half of
2010, but significantly lower than the highs reached during 2007 and 2008.
Demand for our drilling services generally depends on a variety of economic and political factors, including
worldwide demand for oil and gas, the ability of the Organization of Petroleum Exporting Countries (“OPEC”) to
set and maintain production levels and pricing, the level of production of non-OPEC countries and the policies of
various governments regarding exploration and development of their oil and gas reserves. Our results of operations
depend on offshore drilling activity worldwide. Historically, oil and gas prices and market expectations of potential
changes in these prices have significantly affected that level of activity. Generally, higher oil and natural gas prices
or our customers’ expectations of higher prices result in greater demand for our services and lower oil and gas prices
result in reduced demand for our services. Demand for our services is also a function of the worldwide supply of
mobile offshore drilling units. Industry sources report that a total of 55 newbuild jackups and 61 deepwater
newbuilds are planned or under construction with scheduled delivery dates in 2011 and beyond. Industry analysts
have predicted that a new wave of speculative building of both jackups and ultra-deepwater units has commenced.
The introduction of additional non-contracted rigs into the marketplace could have an adverse effect on demand for
our services or the dayrates we are able to achieve.
In addition, as a result of exploration discoveries offshore Brazil, Petrobras, the Brazilian national oil
company, announced a plan to construct up to 28 deepwater rigs in Brazil and recently accepted bids to construct
these units from a number of shipyards and drilling contractors. Petrobras originally declared its intention to finance
and own the first nine of these additional rigs. Petrobras also stated that they would seek long-term contracts for the
remaining 19 rigs to support construction and to allow drilling contractors to bid for the opportunity to supply up to
four rigs per contractor. During 2010, shipyards and Brazilian contractors submitted bids to build deepwater rigs for
Petrobras. A deepwater drilling rig construction industry does not currently exist in Brazil and Noble did not
participate in these bids primarily because we felt the capital risk associated with constructing a unit in Brazil at this
time was inappropriate. On February 11, 2011, media reported that Petrobras had awarded the first tranche of seven
drillships to a Brazilian shipyard for delivery beginning in 2015. The future of Petrobras’ building program remains
uncertain and the ultimate number of deepwater rigs to be built in Brazil is still unknown. While Petrobras is
currently in the market tendering for existing deepwater drilling units, the potential increase in supply from the
Petrobras newbuild could also adversely impact overall industry dayrates and economics.
28
As of January 19, 2011, we had five jackup units operating with Pemex in Mexico, all of which have
contracts scheduled to expire in 2011. Pemex has approved extensions to contracts for certain of these rigs as the
contracts have reached expiration and has issued four ‘fast-track’ tenders aimed at keeping units working through
the first quarter of 2011, but has allowed some of our other rigs to become available. Some recent tenders published
by Pemex contain a requirement that certain units must have entered service since the year 2000. While Pemex has
not yet succeeded in securing a significant number of younger rigs, we cannot predict whether this age requirement
will be present in future Pemex tenders. If this requirement is present in future tenders, it could require us to seek
work for our rigs in other locations, as the ages of our rigs currently operating in Mexico do not meet this
requirement. If such work is not available, it could lead to additional idle time on some of our rigs. We cannot
predict how many rigs might be affected or how long they could remain idle. As of February 11, 2011, tenders for
14 jackup rigs had been published. These tenders do not contain age restrictions and are due to be opened in the first
quarter of 2011 with work commencing in the first and second quarters of 2011. We remain optimistic that many, if
not all, of our rigs currently operating in Mexico will continue to work for Pemex.
In January 2011, we announced the signing of a Memorandum of Understanding (“MOU”) with Petrobras
regarding operations in Brazil. Under the terms of the MOU, we would substitute the dynamically positioned
deepwater drillship Noble Phoenix, then under contract with Shell in Southeast Asia, for the dynamically positioned
drillship Noble Muravlenko. In January 2011, Shell agreed to release the Noble Phoenix from its contract. Upon
release by Shell, the Noble Phoenix will undergo limited contract preparations, after which the unit would mobilize
to Brazil. We expect that acceptance of the Noble Phoenix in Brazil by Petrobras will take place in the fourth quarter
of 2011. In connection with the cancelation of the contract on the Noble Phoenix, we recognized a non-cash gain of
approximately $55 million in the first quarter of 2011.
In January 2011, we reached a decision that we will not proceed with the previously announced reliability
upgrade to the Noble Muravlenko that was scheduled to take place in 2013. As a result of the cancelation of the
upgrade, we expect that our first quarter 2011 results will include an associated non-cash impairment charge
currently estimated to be approximately $40 million.
In connection with our existing drilling contracts with Petrobras for two of our drillships operating in Brazil,
we approved certain shipyard reliability upgrade projects for these drillships, the Noble Leo Segerius, and the Noble
Roger Eason. These upgrade projects, planned for 2010 through 2012, are designed to enhance the reliability and
operational performance of these drillships. There are a number of risks associated with shipyard projects of this
nature, particularly in Brazil, including potential project delays and cost overruns due to labor, customs, local
shipyard, local content and other issues. In addition, the drilling contracts for these vessels provide Petrobras with
certain rights of termination in the event of excessive downtime, and it is possible that Petrobras could exercise this
right in the future with respect to one or more of these drillships. We intend to continue to closely monitor and
discuss with Petrobras the status of these projects and plan to take appropriate steps to mitigate identified risks,
which depending upon the circumstances could involve a variety of options. In January 2011, we canceled an
upgrade project on a third drillship in Brazil, the Noble Muravlenko.
While we cannot predict the future level of demand for our drilling services or future conditions in the
offshore contract drilling industry, we continue to believe we are well positioned within the industry and believe our
acquisition of Frontier further strengthens our position, especially in deepwater drilling. Furthermore, we believe
that our financial strength as demonstrated by our entrance into a new credit facility and our recent sale of $1.1
billion of senior notes will continue to serve us well if additional opportunities present themselves in the future.
Our business strategy continues to be the active expansion of our worldwide offshore drilling and deepwater
capabilities whereby we move our fleet towards the latest technology while maintaining the highest level of
operational integrity with respect to health, safety, and the environment. Historically, we have accomplished this via
rig and hull upgrades and modifications, acquisitions, and divestitures of lower specification units. While
divestitures of non-competitive assets continue to be a part of the strategy, many of our existing units have been
upgraded to their technical limits and our ability to complete acquisitions has been limited by market conditions. As
a result, in recent years, we have actively expanded our fleet through the construction of new rigs, including jackups
and drillships. In all of our investment decisions we seek to achieve a strong return on capital for the benefit of our
shareholders. During 2010, we continued our strategy as indicated by the following activities:
• we completed the acquisition of Frontier which added a total of five drillships (including two Bully-class
joint venture-owned drillships under construction and to be completed in 2011), one semisubmersible and an
FPSO to the fleet;
• we completed construction on the Noble Dave Beard, a dynamically positioned ultra-deepwater
semisubmersible that left the shipyard during the first quarter of 2010 and began operating under a long-term
contract in Brazil;
29
• we completed construction on the Noble Jim Day, a dynamically positioned ultra-deepwater semisubmersible
that left the shipyard during the third quarter of 2010;
• we continued construction on one dynamically positioned, ultra-deepwater, harsh environment Globetrotter-
class drillship, which is scheduled to be delivered to our customer in the fourth quarter of 2011;
• we began construction on one dynamically positioned, ultra-deepwater, harsh environment Globetrotter-class
drillship, which is scheduled to be delivered to our customer in the fourth quarter of 2013; and
• we announced we would construct two high-specification heavy duty, harsh environment jackup rigs both of
which are scheduled to be delivered during 2013.
In addition to the 2010 projects listed above, in January 2011 we announced we would construct two
additional newbuild drillships at Hyundai Heavy Industry (“HHI”). The new ultra-deepwater drillships, to be named
at a later date, will be constructed on a fixed price basis with expected deliveries from the shipyard in the second and
fourth quarters of 2013, respectively. We have a letter of intent for one of these units for a five and one-half year
contract with a subsidiary of Shell at a dayrate of $410,000, plus a 15 percent performance bonus opportunity. We
have also negotiated options for two additional jackups and two additional HHI drillships.
Excluding the Frontier acquisition, capital expenditures totaled $1.4 billion during 2010.
Acquisition of Frontier Holdings Limited
On July 28, 2010, Noble-Swiss and Noble AM Merger Co., a Cayman Islands company and indirect wholly-
owned subsidiary of Noble-Swiss (“Merger Sub”), completed the acquisition of FDR Holdings Limited, a Cayman
Islands company (“Frontier”). Under the terms of the Agreement and Plan of Merger with Frontier and certain of
Frontier’s shareholders, Merger Sub merged with and into Frontier, with Frontier surviving as an indirect wholly-
owned subsidiary of Noble-Swiss and a wholly-owned subsidiary of Noble-Cayman. The Frontier acquisition was
for a purchase price of approximately $1.7 billion in cash plus liabilities assumed and strategically expanded and
enhanced our global fleet by adding three dynamically positioned drillships (including two Bully-class joint venture-
owned drillships under construction), two conventionally moored drillships, including one that is Arctic-class, a
conventionally moored deepwater semisubmersible and one dynamically positioned FPSO to our fleet. Frontier’s
results of operations were included in our results beginning July 28, 2010. We funded the cash consideration paid at
closing of approximately $1.7 billion using proceeds from our July 2010 offering of senior notes and existing cash
on hand.
U.S. Gulf of Mexico Operations
Subsequent to the April 20, 2010 fire and explosion on the Deepwater Horizon, a competitor’s drilling rig in
the U.S. Gulf of Mexico, U.S. governmental authorities implemented a moratorium on and suspension of specified
types of drilling activities in the U.S. Gulf of Mexico.
On October 12, 2010, the U.S. government lifted the moratorium following adoption of new regulations
including a drilling safety rule and a workplace safety rule, each of which imposed multiple obligations relating to
offshore drilling operations. These obligations relate to, among other things, additional certifications and
verifications relating to compliance with applicable regulations; compatibility of blowout preventers with drilling
rigs and well design; third-party inspections and design review of blowout preventers; testing of casing installations;
minimum requirements for personnel operating blowout preventers; and training in deepwater well control.
In addition, the U.S. government has indicated that before any new deepwater drilling resumes, (i) operators
must demonstrate that containment resources are available promptly in the event of a deepwater blowout, (ii) the
chief executive officer of each operator seeking to perform deepwater drilling must certify that the operator has
complied with all applicable regulations and (iii) the Bureau of Ocean Energy Management, Regulation and
Enforcement will conduct inspections of each deepwater drilling operation for compliance with the applicable
regulations.
30
Our existing U.S. Gulf of Mexico operations have been and will continue to be negatively impacted by the
events and governmental action described above. As of December 31, 2010, our U.S. Gulf of Mexico operations
included eight deepwater drilling units: the Noble Amos Runner, Noble Clyde Boudreaux, Noble Danny Adkins,
Noble Jim Thompson, Noble Driller, Noble Paul Romano, Noble Lorris Bouzigard and Noble Jim Day. We estimate
the negative impact to our revenues for the year ended December 31, 2010 to be approximately $450 million. We
have worked and continue to work closely with our customers for drilling services in the U.S. Gulf of Mexico to
address the hardships imposed by the governmental actions described above. The discussion below briefly describes
the current status of each of these drilling units.
• Noble Amos Runner. The Noble Amos Runner received its blow out preventer (“BOP”) certification and
is currently operating in place of the Noble Lorris Bouzigard for LLOG Exploration, LLC (“LLOG”) at
the full dayrate under the Noble Lorris Bouzigard contract.
• Noble Clyde Boudreaux. In late June 2010, we reached agreement with our customer, Noble Energy, Inc.
(“Noble Energy”), relating to the Noble Clyde Boudreaux to place the drilling unit on standby for a daily
rate of $145,000 per day from June 15 through December 12, 2010. This unit has received its BOP
certification. We have been awarded a letter of intent for this drilling unit by a subsidiary of Shell for
work in Brazil. We expect to mobilize the unit in the first quarter of 2011.
• Noble Danny Adkins. This unit received its BOP certification. The unit currently is operating under a
permit, however, we cannot guarantee that our customer Shell will be able to continue to secure required
permits, at which point, it could return to the lower stand-by rate.
• Noble Jim Thompson. This unit is under contract with Shell and is receiving a reduced stand-by rate. This
unit has received its BOP certification.
• Noble Driller. This unit is under contract with Shell and is receiving a reduced stand-by rate while
undergoing a shipyard project. This unit is expected to receive its BOP certification in the second quarter
of 2011.
• Noble Paul Romano. This unit is idle, having completed its drilling contract in June 2010. The unit has
received its BOP certification and is being actively marketed to potential customers.
• Noble Lorris Bouzigard. Prior to being swapped with the Noble Amos Runner this unit was under contract
with LLOG. Currently, this drilling unit is cold stacked, but is being actively marketed to potential
customers.
• Noble Jim Day. Effective December 31, 2010 Marathon Oil Company (“Marathon”) terminated the
drilling contract for the ultra-deepwater semisubmersible drilling rig Noble Jim Day. Marathon’s stated
reason for the termination was that the rig had not been accepted by Marathon by the contracted deadline
of December 31, 2010. We believe the rig was ready to commence operations and should have been
accepted by Marathon. This rig has received its BOP certification. We intend to pursue our rights under
the contract against Marathon. In February 2011, we were awarded a letter of intent for this drilling unit
by a subsidiary of Shell for work in the U.S. Gulf of Mexico.
It is still unclear when normal operations will resume, what the cost of additional safety measures will be and
how additional regulations will impact our operations in the U.S. Gulf of Mexico.
Consummation of Migration and Internal Restructuring
On March 26, 2009, we completed a series of transactions that effectively changed the place of incorporation
of our parent holding company from the Cayman Islands to Switzerland. As a result of these transactions, Noble-
Cayman, our former publicly-traded parent company, became a direct, wholly-owned subsidiary of Noble-Swiss,
our current publicly-traded parent company. Noble-Swiss’ principal asset is all of the shares of Noble-Cayman.
Noble-Cayman has no public equity outstanding after March 26, 2009. The consolidated financial statements of
Noble-Swiss include the accounts of Noble-Cayman, and Noble-Swiss conducts substantially all of its business
through Noble-Cayman and its subsidiaries. In connection with these transactions, we relocated our principal
executive offices, executive officers and selected personnel to Geneva, Switzerland.
31
Contract Drilling Services Backlog
We maintain a backlog (as defined below) of commitments for contract drilling services. The following table
sets forth as of December 31, 2010 the amount of our contract drilling services backlog and the percent of available
operating days committed for the periods indicated:
Contract Drilling Services Backlog
Semisubmersibles/Drillships (1) (5)
Total
2011
Year Ending December 31,
2014
2012
2013
(In millions)
2015-2023
(6) (7) (8) (9).................................... $ 11,430 $ 1,637
707
—
Total (3) ................................................. $ 12,693 $ 2,344
Jackups/Submersibles (2) ..................
Other ..................................................
1,263
—
$ 1,760
304
—
$ 2,064
$ 1,642
182
—
$ 1,824
$ 1,707
67
—
$ 1,774
$
$
4,684
3
—
4,687
Percent of Available Operating Days
Committed (4) .....................................
____________
53%
31%
25%
19%
5%
(1) Our drilling contracts with Petroleo Brasileiro S.A. (“Petrobras”) provide an opportunity for us to earn
performance bonuses based on downtime experienced for our rigs operating offshore Brazil. With respect to our
semisubmersibles operating offshore Brazil, we have included in our backlog an amount equal to 75 percent of
potential performance bonuses for such semisubmersibles, which amount is based on and generally consistent
with our historical earnings of performance bonuses for these rigs. With respect to our drillships operating
offshore Brazil, we (a) have not included in our backlog any performance bonuses for periods prior to the
commencement of certain upgrade projects planned for 2011 through 2012, which projects are designed to
enhance the reliability and operational performance of our drillships, and (b) have included in our backlog an
amount equal to 75 percent of potential performance bonuses for periods after the estimated completion of such
upgrade projects. Our backlog for semisubmersibles/drillships includes approximately $269 million attributable
to these performance bonuses.
The drilling contracts with Shell for the Noble Globetrotter I, Noble Globetrotter II, and Noble Phoenix, as well
as the three-year extension for the Noble Jim Thompson, provide opportunities for us to earn performance
bonuses based on key performance indicators as defined by Shell. With respect to these contracts, we have
included in our backlog an amount equal to 75 percent of the potential performance bonuses for these rigs. Our
backlog for these rigs includes approximately $410 million attributable to these performance bonuses.
(2) Our drilling contracts with Pemex Exploracion y Produccion (“Pemex”) for certain jackups operating offshore in
Mexico are subject to price review and adjustment of the rig dayrate. Presently, the contract for one jackup has a
dayrate indexed to the world average of the highest dayrates published by ODS-Petrodata. After an initial firm
dayrate period, the dayrate is generally adjusted quarterly based on formulas calculated from the index. Our
contract drilling services backlog has been calculated using the December 31, 2010 index-based dayrate for
periods subsequent to the firm dayrate period.
(3) Pemex has the ability to cancel its drilling contracts on 30 days or less notice without Pemex’s making an early
termination payment. At December 31, 2010 we had six rigs contracted to Pemex in Mexico and our backlog
includes approximately $147 million related to such contracts. Also, our drilling contracts generally provide the
customer an early termination right in the event we fail to meet certain performance standards, including
downtime thresholds. While we do not currently anticipate any cancellations as a result of events that have
occurred to date, clients may from time to time have the contractual right to do so.
(4) Percentages take into account additional capacity from the estimated dates of deployment of our newbuild rigs
that are scheduled to commence operations during 2011 through 2013.
(5) It is not possible to determine the impact to our revenues or backlog resulting from the U.S. government-
imposed restrictions, efforts by operators to cancel or modify drilling contracts, and other consequences of the
actions by the U.S. government. At December 31, 2010, backlog related to our U.S. Gulf of Mexico deepwater
rigs totaled $5.6 billion, $471 million of which represents backlog for the twelve-month period ending
December 31, 2011.
32
We entered into an agreement with Shell, effective June 27, 2010, which provides that Shell may suspend the
contracts on three of our units operating in the U.S. Gulf of Mexico during any period of regulatory restriction by
paying reduced suspension dayrates in lieu of the normal operating dayrates. The term of the initial contract is
also extended by the suspension period. The impact of this agreement is to shift backlog among periods with an
immaterial increase to total backlog because of the reduced suspension rates.
(6) The Noble Homer Ferrington is under contract with a subsidiary of ExxonMobil Corporation (“ExxonMobil”),
who entered into an assignment agreement with BP for a two well farmout of the rig in Libya after successfully
drilling two wells with the rig for ExxonMobil. In August 2010, BP attempted to terminate the assignment
agreement claiming that the rig was not in the required condition. ExxonMobil has informed us that we must
look to BP for payment of the dayrate during the assignment period. In August 2010, we initiated arbitration
proceedings under the drilling contract against both BP and ExxonMobil. We do not believe BP had the right to
terminate the assignment agreement and believe the rig continues to be fully ready to operate under the drilling
contract. We believe we are owed dayrate by either or both of these customers. The operating dayrate was
approximately $538,000 per day for the work in Libya. We are proceeding with the arbitration process and
intend to vigorously pursue these claims.
(7) Noble and a subsidiary of Shell are involved in joint venture agreements to build, operate, and own both the
Noble Bully I and the Noble Bully II. Pursuant to these agreements, each party has an equal 50 percent share in
both vessels. As of December 31, 2010, the combined amount of backlog for these rigs totals $2.4 billion, all of
which is included in backlog. Noble’s net interest in the backlog for these rigs is $1.2 billion.
(8) As described in “U.S. Gulf of Mexico Operations,” effective December 31, 2010, Marathon terminated the
drilling contract for the Noble Jim Day, which represented approximately $752 million in contract backlog. Such
amounts have been excluded from our backlog as of December 31, 2010.
(9) As described in “Executive Overview,” subsequent to December 31, 2010, we announced an MOU with
Petrobras whereby we would substitute the Noble Phoenix for the Noble Muravlenko and Shell agreed to release
the Noble Phoenix from its contract. These transactions have not been reflected in backlog as of December 31,
2010 and will reduce our prospective backlog by approximately $460 million.
Our contract drilling services backlog reported above reflects estimated future revenues attributable to both
signed drilling contracts and letters of intent that we expect to become firm. A letter of intent is generally subject to
customary conditions, including the execution of a definitive drilling contract. It is possible that some customers that
have entered into letters of intent will not enter into signed drilling contracts. We calculate backlog for any given
unit and period by multiplying the full contractual operating dayrate for such unit by the number of days remaining
in the period. The reported contract drilling services backlog does not include amounts representing revenues for
mobilization, demobilization and contract preparation, which are not expected to be significant to our contract
drilling services revenues, amounts constituting reimbursables from customers or amounts attributable to
uncommitted option periods under drilling contracts or letters of intent.
The amount of actual revenues earned and the actual periods during which revenues are earned may be
different than the backlog amounts and backlog periods set forth in the table above due to various factors, including,
but not limited to, shipyard and maintenance projects, unplanned downtime, weather conditions and other factors
that result in applicable dayrates lower than the full contractual operating dayrate. In addition, amounts included in
the backlog may change because drilling contracts may be varied or modified by mutual consent or customers may
exercise early termination rights contained in some of our drilling contracts or decline to enter into a drilling
contract after executing a letter of intent. As a result, our backlog as of any particular date may not be indicative of
our actual operating results for the periods for which the backlog is calculated.
33
Internal Investigation
In 2007, we began, and voluntarily contacted the SEC and the U.S. Department of Justice (“DOJ”) to advise
them of, an internal investigation of the legality under the United States Foreign Corrupt Practices Act (“FCPA”)
and local laws of certain reimbursement payments made by our Nigerian affiliate to our customs agents in Nigeria.
In November 2010, we finalized settlements of this matter with each of the SEC and the DOJ. In order to resolve the
DOJ investigation, we entered into a non-prosecution agreement with the DOJ, which provides for the payment of a
fine of $2.6 million, as well as certain undertakings, including continued cooperation with the DOJ, compliance with
the FCPA, certain self-reporting and annual reporting obligations and certain restrictions on our public discussion
regarding the agreement. The agreement does not require that we install a monitor to oversee our activities and
compliance with laws. In order to resolve the SEC investigation, we agreed to the entry of a civil judgment against
us for violations of the FCPA. Pursuant to the agreed judgment, we agreed to disgorge profits of $4.3 million, pay
prejudgment interest of $1.3 million and refrain from denying the allegations contained in the SEC’s petition, except
in other litigation to which the SEC is not a party. We also agreed to an injunction restraining us from violating the
anti-bribery, books and records, and internal controls provisions of the FCPA, and we waived a variety of litigation
rights with respect to the conduct at issue. The agreed judgment does not require a monitor. Our ability to comply
with the terms of the settlements is dependent on the success of our ongoing compliance program, including our
ability to continue to manage our agents and supervise, train and retain competent employees, and the efforts of our
employees to comply with applicable law and our code of business conduct and ethics.
In January 2011, the Nigerian Economic and Financial Crimes Commission and the Nigerian Attorney
General Office initiated an investigation into these same activities. A subsidiary of Noble-Swiss resolved this matter
through the execution of a non-prosecution agreement dated January 28, 2011. Pursuant to this agreement, the
subsidiary paid $2.5 million to resolve all charges and claims of the Nigerian government. Any additional sanctions
we may incur as a result of any such investigation could damage our reputation and result in substantial fines,
sanctions, civil and/or criminal penalties and curtailment of operations in certain jurisdictions and might adversely
affect our business, results of operations or financial condition. Further, resolving any such investigation could be
expensive and consume significant time and attention of our senior management.
We have one jackup rig in Nigeria which is operating under a temporary import permit which expired in
November 2008 and we have a pending application to renew this permit. We have received approval from the
Nigerian Customs office that we will be allowed to obtain a new temporary import permit for this rig. We recently
received a new temporary import permit for another rig in Nigeria that had been waiting for a temporary import
permit based on a long-standing application. We continue to seek to avoid material disruption to our Nigerian
operations; however, there can be no assurance that we will be able to obtain new permits or further extensions of
permits necessary to continue the operation of our rigs in Nigeria. If we cannot obtain a new permit or an extension
necessary to continue operations of any rig, we may need to cease operations under the drilling contract for such rig
and relocate such rig from Nigerian waters. We cannot predict what impact these events may have on any such
contract or our business in Nigeria, and we could face additional fines and sanctions in Nigeria. Furthermore, we
cannot predict what changes, if any, relating to temporary import permit policies and procedures may be established
or implemented in Nigeria in the future, or how any such changes may impact our business there.
RESULTS OF OPERATIONS
2010 Compared to 2009
General
Net income attributable to Noble Corporation for 2010 was $773 million, or $3.02 per diluted share, on
operating revenues of $2.8 billion, compared to net income for 2009 of $1.7 billion, or $6.42 per diluted share, on
operating revenues of $3.6 billion.
The consolidated financial statements of Noble-Swiss include the accounts of Noble-Cayman, and Noble-
Swiss conducts substantially all of its business through Noble-Cayman and its subsidiaries. As a result, the financial
position and results of operations for Noble-Cayman, and the reasons for material changes in the amount of revenue
and expense items between 2010 and 2009, would be the same as the information presented below regarding Noble-
Swiss in all material respects, except operating income for Noble-Cayman for the year ended December 31, 2010
was $42 million higher than operating income for Noble-Swiss for the same period, primarily as a result of costs
directly attributable to Noble-Swiss for stewardship related services.
34
Rig Utilization, Operating Days and Average Dayrates
Operating revenues and operating costs and expenses for our contract drilling services segment are dependent
on three primary metrics — rig utilization, operating days and dayrates. The following table sets forth the average
rig utilization, operating days and average dayrates for our rig fleet for 2010 and 2009:
Average Rig
Utilization (1)
2010
2009
Operating
Days (2)
2010 2009 % Change
Average
Dayrates
79%
86%
89%
11%
82% 12,376 12,719
100% 3,837 3,673
993
418
91% 1,392
95
51%
2010
2009
% Change
-3% $ 96,935 $ 147,701
288,163 368,398
4%
256,067 254,084
40%
355,986 61,711
-77%
-34%
-22%
1%
477%
78%
84% 17,700 17,803
-1% $ 152,292 $ 197,144
-23%
Jackups ..................
Semisubmersibles...
Drillships ...............
FPSO/Submersibles (3)...
Total ..................
____________
(1) Information reflects our policy of reporting on the basis of the number of actively marketed rigs in our fleet
excluding newbuild rigs under construction.
(2) Information reflects the number of days that our rigs were operating under contract.
(3) Effective March 31, 2009, the Noble Fri Rodli, which had been cold stacked since October 2007, was removed
from our rig fleet.
Contract Drilling Services
The following table sets forth the operating revenues and the operating costs and expenses for our contract
drilling services segment for 2010 and 2009:
2010
2009
Change
$
%
Operating revenues:
Contract drilling services ..................................................... $ 2,695,493 $ 3,509,755 $
Reimbursables (1) ................................................................
Other ....................................................................................
73,959
2,332
96,161
1,302
$ 2,771,784 $ 3,607,218 $
Operating costs and expenses:
Contract drilling services ..................................................... $ 1,177,800 $ 1,006,764 $
Reimbursables (1) ................................................................
Depreciation and amortization.............................................
Selling, general and administrative......................................
(Gain)/Loss on asset disposal/involuntary conversion, net..
82,122
398,572
80,004
31,053
1,853,579 1,598,515
56,674
528,011
91,094
—
(814,262)
(22,202)
1,030
(835,434)
171,036
(25,448)
129,439
11,090
(31,053)
255,064
Operating income .................................................................. $ 918,205 $ 2,008,703 $ (1,090,498)
____________
-23%
-23%
79%
-23%
17%
-31%
32%
14%
**
16%
-54%
(1) We record reimbursements from customers for out-of-pocket expenses as revenues and the related direct costs as
operating expenses. Changes in the amount of these reimbursables do not have a material effect on our financial
position, results of operations or cash flows.
** Not a meaningful percentage.
Operating Revenues. The decrease in contract drilling services revenue for 2010 as compared to the prior
year was primarily driven by reductions in both average dayrates and utilization. Lower dayrates decreased revenues
approximately $798 million, while fewer operating days decreased revenues by approximately $16 million. The
reduction in utilization was partially offset by the acquisition of Frontier and the addition of newbuilds.
35
The decrease in contract drilling services revenue related primarily to our jackups and semisubmersibles,
which generated approximately $679 million and $248 million less revenue for the current year as compared to the
prior year, respectively. The decrease in jackup revenue was from a 34 percent decline in dayrates primarily from
the contractual re-pricing of rigs in the Middle East, the North Sea, and Mexico resulting from changes in market
conditions in the global shallow water market. Reductions in average dayrates by 22 percent contributed to the
decline in semisubmersible revenue. These reductions resulted from the drilling restrictions in the U.S. Gulf of
Mexico where lower standby rates replaced the standard operating dayrates for a majority of our customers, lower
utilization from the termination of certain contracts and a dispute with a customer over the Noble Homer Ferrington
contract.
The decreases in revenue for the above rig classes were partially offset by higher revenues from our drillships
and other rigs, which increased $113 million in the current year as compared to the prior year. The increase was
primarily due to the addition of the drillships and FPSO added to the fleet as part of the Frontier acquisition of $143
million, partially offset by a decrease in revenues from our drillships operating in Brazil.
Operating Costs and Expenses. Contract drilling services operating costs and expenses increased $171
million for the current year as compared to the prior year. Our newbuild rigs, the Noble Scott Marks, Noble Danny
Adkins and Noble Dave Beard, which were added to the fleet in June 2009, October 2009 and March 2010,
respectively, added approximately $109 million of operating costs in 2010. The acquisition of the Frontier rigs
added an additional $55 million of operating costs. Excluding the additional expenses related to these newbuild and
Frontier rigs, our contract drilling costs increased $7 million in 2010 as compared to 2009. This change was
principally due to acquisition costs of $19 million coupled with increases in safety costs of $4 million, partially
offset by a decrease in maintenance expenses of $9 million and a decrease in transportation and other expenses of $7
million.
Depreciation and amortization increased $129 million in 2010 over 2009 as a result of depreciation on
newbuilds placed into service, and additional depreciation related to other capital expenditures on our fleet since the
beginning of 2009. Also, the acquisition of Frontier added approximately $39 million in depreciation during the
current year.
Loss on asset disposal/involuntary conversion in 2009 primarily consists of a charge of $17 million for our
jackup, the Noble David Tinsley, which experienced a “punch-through” while being positioned on location offshore
Qatar. The $17 million charge includes approximately $9 million for the write-off of the damaged legs and $8
million for non-reimbursable expenses. Also during 2009, we recorded an impairment charge of $12 million for the
Noble Fri Rodli as a result of a decision to evaluate disposition alternatives for this submersible drilling unit.
Other
The following table sets forth the operating revenues and the operating costs and expenses for our other
services for 2010 and 2009 (in thousands):
2010
2009
Change
$
%
Operating revenues:
Labor contract drilling services ................................................... $ 32,520
2,872
Reimbursables (1) ........................................................................
—
Other ............................................................................................
$ 35,392
$ 30,298
3,040
228
$ 33,566
$ 2,222
(168)
(228)
$ 1,826
7%
-6%
-100%
5%
Operating costs and expenses:
Labor contract drilling services ................................................... $ 22,056
Reimbursables (1) ........................................................................
2,740
11,818
Depreciation and amortization.....................................................
903
Selling, general and administrative..............................................
—
(Gain)/Loss on asset disposal, net...............................................
37,517
$ 18,827
2,913
9,741
258
(214)
31,525
Operating income .......................................................................... $ (2,125) $ 2,041
____________
$ 3,229
(173)
2,077
645
214
5,992
$ (4,166)
17%
-6%
21%
250%
**
19%
-204%
(1) We record reimbursements from customers for out-of-pocket expenses as operating revenues and the related
direct costs as operating expenses. Changes in the amount of these reimbursables generally do not have a
material effect on our financial position, results of operations or cash flows.
** Not a meaningful percentage.
36
Operating Revenues and Costs and Expenses. Revenues and expenses associated with our Canadian labor
contract drilling services increased in the current year primarily for fluctuations in foreign currency exchange rates
coupled with increased labor and contract drilling services costs. The increase in depreciation results from fixed
asset additions in conjunction with the relocation of our corporate offices to Switzerland.
Other Income and Expenses
Selling, general and administrative expenses. Overall selling, general and administrative expenses increased
$12 million in 2010 from 2009 primarily as a result of the FCPA settlement of $8 million, along with increases in
employee related costs of $2 million, increases in consulting fees of $2 million and Swiss VAT taxes of $2 million,
partially offset by the worldwide asset consolidation project and migration costs and other expenses in 2009 of $2
million.
Interest Expense, net of amount capitalized. Interest expense, net of amount capitalized increased $8 million
primarily for the addition of $1.25 billion of debt issued in July 2010 to partially fund the Frontier acquisition.
Income Tax Provision. Our income tax provision decreased $194 million in 2010 compared to 2009
primarily due to a reduction in pre-tax earnings combined with a lower effective tax rate. Pre-tax earnings decreased
approximately 55 percent in 2010 compared to 2009 resulting in a reduction of approximately $184 million in
income tax expense. The lower effective tax rate, which was 15.6 percent in 2010 compared to 16.7 percent in 2009,
reduced income tax expense by approximately $10 million.
2009 Compared to 2008
General
Net income for 2009 was $1.7 billion, or $6.42 per diluted share, on operating revenues of $3.6 billion,
compared to net income for 2008 of $1.6 billion, or $5.81 per diluted share, on operating revenues of $3.4 billion.
Rig Utilization, Operating Days and Average Dayrates
Operating revenues and operating costs and expenses for our contract drilling services segment are dependent
on three primary metrics — rig utilization, operating days and dayrates. The following table sets forth the average
rig utilization, operating days and average dayrates for our rig fleet for 2009 and 2008:
Average Rig
Utilization (1)
2009
2008
Operating
Days (2)
2008
% Change
2009
Average
Dayrates
2009
2008
% Change
82%
98%
92% 12,719 13,879
-8% $ 147,701 $ 148,532
96% 2,578 2,466
5% 417,177 327,558
100%
91%
51%
84%
100% 1,095 1,098
732
993
67%
729
418
66%
90% 17,803 18,904
0% 253,557 220,475
36% 254,084 201,819
54,106
61,711
-43%
-6% $ 197,143 $ 174,506
-1%
27%
15%
26%
14%
13%
Jackups .................................
Semisubmersibles
> 6000’ (3)...............................
Semisubmersibles
< 6000’ (4)...............................
Drillships ..............................
Submersibles (5) ...................
Total.................................
____________
(1) Information reflects our policy of reporting on the basis of the number of actively marketed rigs in our fleet
excluding newbuild rigs under construction.
(2) Information reflects the number of days that our rigs were operating under contract.
(3) These units have water depth ratings of 6,000 feet or greater.
(4) These units have water depth ratings of less than 6,000 feet.
(5) Effective March 31, 2009, the Noble Fri Rodli, which had been cold stacked since October 2007, was removed
from our rig fleet.
37
Contract Drilling Services
The following table sets forth the operating revenues and the operating costs and expenses for our contract
drilling services segment for 2009 and 2008:
2009
2008
Change
$
%
Operating revenues:
Contract drilling services...................................................... $ 3,509,755 $ 3,298,850 $ 210,905
20,062
Reimbursables (1).................................................................
27
Other.....................................................................................
$ 3,607,218 $ 3,376,224 $ 230,994
96,161
1,302
76,099
1,275
Operating costs and expenses:
Contract drilling services...................................................... $ 1,006,764 $ 1,011,882 $
Reimbursables (1).................................................................
Depreciation and amortization..............................................
Selling, general and administrative ......................................
(Gain)/Loss on asset disposal/involuntary conversion, net .......
(5,118)
16,871
49,124
7,623
21,053
89,553
Operating income ................................................................... $ 2,008,703 $ 1,867,262 $ 141,441
____________
65,251
349,448
72,381
10,000
1,508,962
82,122
398,572
80,004
31,053
1,598,515
6%
26%
2%
7%
-1%
26%
14%
11%
**
6%
8%
(1) We record reimbursements from customers for out-of-pocket expenses as revenues and the related direct costs as
operating expenses. Changes in the amount of these reimbursables do not have a material effect on our financial
position, results of operations or cash flows.
** Not a meaningful percentage.
Operating Revenues. Contract drilling services revenue increases for 2009 as compared to 2008 were
primarily driven by increases in average dayrates. Average dayrates increased revenues approximately $428 million
for 2009, while fewer operating days reduced revenues approximately $217 million.
Average dayrates increased 13 percent in 2009 as compared to 2008. Except for our jackup rigs, which were
impacted by the weakening demand in the shallow waters worldwide, higher average dayrates were received across
all other rig categories as scheduled contractual increases for deepwater rigs, coupled with the completion of
additional deepwater rigs, drove average dayrates higher in those classes.
The decrease in operating days in 2009 as compared 2008 was primarily due to downtime of certain rigs in
2009. Unpaid shipyard days increased 498 days in 2009 as compared to 2008, as we had 21 rigs spend time in the
shipyard during 2009. We had only 12 rigs with unpaid shipyard days in 2008. Additionally, stacked days increased
850 days as the Noble Al White, Noble Byron Welliver, Noble Dick Favor, Noble Don Walker, Noble Fri Rodli,
Noble Joe Beall, Noble Joe Alford, Noble Lester Pettus, Noble Lloyd Noble and Noble Tommy Craighead each were
stacked for certain periods during 2009. In 2008, five rigs, the Noble Carl Norberg, Noble Don Walker, Noble Fri
Rodli, Noble Joe Alford, and the Noble Roy Butler, spent a significant number of days stacked. The decrease in
operating days in 2009 was partially offset by a 576 day increase in available days for the enhanced premium
jackups Noble Hans Deul and Noble Scott Marks, which were placed into service in November 2008 and June 2009,
respectively, and the addition of the semisubmersible Noble Danny Adkins, which began operating under contract in
October 2009. We also had 275 less available days in 2009 as compared to 2008 due to the Noble Fri Rodli being
removed from our rig fleet effective March 31, 2009. Additionally, 2009 had one less available operating day than
2008 due to the leap year, which reduced available days in 2009 by 54 days.
38
Operating Costs and Expenses. Contract drilling services operating costs and expenses decreased $5 million
in 2009 as compared to 2008. Our newbuild rigs, the Noble Hans Deul, Noble Scott Marks, and the Noble Danny
Adkins, which were placed into service in November 2008, June 2009, and October 2009, respectively, added
approximately $34 million of operating costs in 2009. Excluding the additional expenses related to our newbuild
rigs, our contract drilling costs decreased $39 million in 2009 versus 2008. This change was primarily driven by a
$42 million decrease in local labor costs due to the increased number of rigs stacked during 2009 and an $18 million
decrease in insurance costs from our insurance program under which we are predominately self-insured. These
decreases were partially offset by a $9 million increase in miscellaneous transportation and fuel costs, a $9 million
increase in mobilization costs and a $3 million increase in other operating cost and expenses.
Depreciation and amortization increased $49 million in 2009 over 2008 due to depreciation on newbuilds
placed into service, and additional depreciation related to other capital expenditures on our fleet since the beginning
of 2008. Since the beginning of 2008, we have spent $2.6 billion on contract drilling capital expenditures.
Loss on asset disposal/involuntary conversion in 2009 primarily consists of a charge of $17 million for our
jackup, the Noble David Tinsley, which experienced a “punch-through” while being positioned on location offshore
Qatar. The $17 million charge includes approximately $9 million for the write-off of the damaged legs and $8
million for non-reimbursable expenses. Also during 2009, we recorded an impairment charge of $12 million for the
Noble Fri Rodli as a result of a decision to evaluate disposition alternatives for this submersible drilling unit.
Other
The following table sets forth the operating revenues and the operating costs and expenses for our other
services for 2009 and 2008 (in thousands):
2009
2008
Change
$
%
Operating revenues:
Labor contract drilling services ................................................ $ 30,298 $ 55,078 $ (24,780)
(11,710)
Reimbursables (1).....................................................................
(221)
Other.........................................................................................
$ 33,566 $ 70,277 $ (36,711)
14,750
449
3,040
228
Operating costs and expenses:
Labor contract drilling services ................................................ $ 18,827 $ 42,573 $ (23,746)
(11,163)
Reimbursables (1).....................................................................
2,531
Depreciation and amortization..................................................
(1,504)
Selling, general and administrative ..........................................
36,271
(Gain)/Loss on asset disposal, net ............................................
2,389
Operating income ....................................................................... $ 2,041 $ 41,141 $ (39,100)
____________
2,913
9,741
258
(214)
31,525
14,076
7,210
1,762
(36,485)
29,136
-45%
-79%
-49%
-52%
-56%
-79%
35%
-85%
**
8%
-95%
(1) We record reimbursements from customers for out-of-pocket expenses as revenues and the related direct cost as
operating expenses. Changes in the amount of these reimbursables do not have a material effect on our financial
position, results of operations or cash flows. The reduction in reimbursables for 2009 as compared to 2008 is
due to the sale of our North Sea labor contract drilling services business in 2008.
** Not a meaningful percentage.
Operating Revenues. Our labor contract drilling services revenues decreased primarily due to the sale of our
North Sea labor contract drilling services business in April 2008. Additionally, during the second quarter of 2008,
we returned the jackup Noble Kolskaya, which we had operated under a bareboat charter, to its owner. Revenues
during 2008 related to our North Sea labor contract drilling services business and the Noble Kolskaya were $22
million in 2008. The remaining variance is due to currency exchange fluctuations and decreases related to revenue
from the platform that we operate in Canada.
Operating Costs and Expenses. Labor contract drilling services costs and expenses decreased $24 million
due to the sale of our North Sea labor contract drilling services business and the return of the Noble Kolskaya to its
owner in 2008. Expenses during 2008 related to our North Sea labor contract drilling services business and Noble
Kolskaya were $19 million. Operating costs associated with our Canadian labor contracts in 2009 decreased $5
million from 2008 primarily as a result of decreases in operations under the Hibernia contract and fluctuations in
foreign currency exchange rates.
39
Other Income and Expenses
Selling, general and administrative expenses. Overall selling, general and administrative expenses increased
$6 million in 2009 from 2008 primarily due to $7 million in costs related to our re-domestication from the Cayman
Islands to Switzerland, a $6 million increase in salaries and employment related costs, $4 million in charges related
to our worldwide internal restructuring, and a $3 million increase due to our Restoration Plan mark-to-market
adjustment, partially offset by a $12 million decrease in costs incurred in the internal investigation of our Nigerian
operations, and a $2 million decrease in other selling general and administrative expenses.
Interest Expense, net of amount capitalized. Interest expense, net of amount capitalized decreased $3
million primarily due to repayments of debt not subject to interest capitalization coupled with higher capital
expenditures, and capitalized interest, in 2009 as compared to 2008. Capitalized interest was $55 million for 2009
versus $48 million for 2008.
Income Tax Provision. Our income tax provision decreased $14 million primarily due to a lower effective
tax rate in 2009 compared to 2008. The lower effective tax rate of 16.7 percent in 2009 compared to 18.4 percent in
2008 decreased income tax expense by approximately $34 million. The lower effective tax rate in 2009 resulted
primarily from the worldwide internal restructuring that took place in October 2009 and from higher pre-tax
earnings of non-U.S. owned assets, which generally have a lower statutory tax rate. This decrease was partially
offset by increased pre-tax earnings of approximately $103 million.
LIQUIDITY AND CAPITAL RESOURCES
Overview
Our principal capital resource in 2010 was net cash from operating activities of $1.7 billion, which compared
to $2.1 billion and $1.9 billion in 2009 and 2008, respectively. The decrease in net cash from operating activities in
2010 compared to 2009 was primarily attributable to lower operating revenues partially offset by a decrease in
accounts receivable. At December 31, 2010, we had cash and cash equivalents of $338 million and $560 million
available under our bank credit facility. Total debt as a percentage of total debt plus total equity was 27.5 percent
and 10.0 percent at December 31, 2010 and 2009, respectively.
As a result of the cash generated by our operations, our cash on hand, the availability under our bank credit
facilities and the bond offering proceeds discussed below, we believe our liquidity and financial condition are
sufficient to meet all of our reasonably anticipated cash flow needs for 2011 including:
• normal recurring operating expenses;
• capital expenditures, including expenditures for newbuilds and upgrades;
•
repurchase of shares;
• payments of return of capital in the form of a reduction of par value of our shares (in-lieu of
dividends); and
• contributions to our pension plans.
Capital Expenditures
Our primary liquidity requirement in 2011 will be for capital expenditures. Excluding the fair value of assets
acquired as part of the Frontier acquisition, we had total capital expenditures of $1.4 billion, $1.4 billion and $1.2
billion for 2010, 2009 and 2008, respectively.
40
At December 31, 2010, we had six rigs under construction, and capital expenditures for new construction in
2010 totaled $653 million. Capital expenditures for newbuild rigs consisted of the following (in millions):
Project
Noble Globetrotter II ...................................................................................................................... $
Noble Globetrotter I .......................................................................................................................
Noble Jim Day ................................................................................................................................
Noble Bully II .................................................................................................................................
Newbuild Jackup #1 .......................................................................................................................
Newbuild Jackup #2 .......................................................................................................................
Noble Bully I...................................................................................................................................
Other ...............................................................................................................................................
Total................................................................................................................................................ $
174.9
134.6
115.2
58.0
40.0
40.0
32.1
58.5
653.3
Expenditures
in 2010
Our total capital expenditures budget for 2011 is approximately $2.1 billion. At December 31, 2010, we had
entered into certain commitments, including shipyard and purchase commitments for approximately $1.5 billion, of
which we expect to spend approximately $955 million in 2011. Subsequent to December 31, 2010, we entered into
shipyard commitments of approximately $1.0 billion in connection with the signing of construction contracts for two
additional newbuild drillships, and canceled shipyard contracts totaling $77 million in connection with the decision
not to proceed with the reliability upgrade on the Noble Muravlenko. We expect to spend approximately $300
million on the two additional newbuild drillships in 2011. Our remaining 2011 capital expenditure budget will
generally be spent at our discretion. We may accelerate, delay or cancel certain capital projects, as needed.
From time to time we consider possible projects that would require capital expenditures or other cash
expenditures that are not included in our capital budget, and such unbudgeted capital or cash expenditures could be
significant. In addition, we will continue to evaluate acquisitions of drilling units from time to time. Other factors
that could cause actual capital expenditures to materially exceed planned capital expenditures include delays and
cost overruns in shipyards (including costs attributable to labor shortages), shortages of equipment, latent damage or
deterioration to hull, equipment and machinery in excess of engineering estimates and assumptions, and changes in
design criteria or specifications during repair or construction.
Share Repurchases, Distributions of Capital and Dividends
Our Board of Directors and shareholders have authorized and adopted a share repurchase program. At
December 31, 2010, 6.8 million shares remained available under this authorization. Future repurchases will be
subject to the requirements of Swiss law, including the requirement that we and our subsidiaries may only
repurchase shares if and to the extent that sufficient freely distributable reserves are available. Also, the aggregate
par value of all registered shares held by us and our subsidiaries, including treasury shares, may not exceed 10
percent of our registered share capital without shareholder approval. Our existing share repurchase program received
the required shareholder approval prior to completion of our 2009 Swiss migration transaction. Share repurchases
for each of the three years ended December 31, 2010 were as follows:
Year Ended
December 31,
2010 ................................................................................
2009 ................................................................................
2008 ................................................................................
Total Number
of Shares
Purchased
Total Cost
(in thousands)
Average
Price Paid
per Share
36.14
34.10
41.62
230,936 $
186,506
331,514
6,390,488(1) $
5,470,000(1)
7,965,109
(1) Repurchases made subsequent to March 26, 2009, which totaled 10.1 million shares, are being held as treasury
shares at December 31, 2010
Our most recent quarterly payment to shareholders, in the form of a capital reduction, which was declared on
February 4, 2011 and is to be paid on February 24, 2011 to holders of record on February 14, 2011, was 0.13 CHF
per share, or an aggregate of approximately $35 million. The declaration and payment of dividends in the future by
Noble-Swiss and the making of distributions of capital, including returns of capital in the form of par value
reductions, require authorization of the shareholders of Noble-Swiss. The amount of such dividends, distributions
and returns of capital 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 and
shareholders.
41
Recently, our Board of Directors approved, subject to shareholder authorization at our upcoming annual
general meeting scheduled for April 29, 2011, the payment of a regular return of capital through a reduction of the
par value of our shares in a total amount equal to 0.52 CHF per share to be paid in four equal installments scheduled
for August 2011, November 2011, February 2012 and May 2012. The payments will be made in U.S. Dollars based
on the CHF/USD exchange rate available approximately two business days prior to the payment date. Although the
amount of the return of capital, expressed in Swiss francs, is fixed, the amount of the payment in U.S. Dollars will
fluctuate based on the exchange rate. The exchange rate as published by the Swiss National Bank on February 4,
2011 was 0.9463 CHF/1.0 USD. If approved by our shareholders, these returns of capital will require us to make
total cash payments of approximately $140 million in 2011 (based on the exchange rate on February 4, 2011).
Contributions to Pension Plans
In August 2006, the Pension Protection Act of 2006 (“PPA”) was signed into law in the U.S. The PPA
requires that pension plans fund towards a target of at least 100 percent with a transition through 2011 and increases
the amount we are allowed to contribute to our U.S. pension plans in the near term. During 2010, 2009 and 2008 we
made contributions to our non-U.S. and U.S. pension plans totaling $16 million, $18 million and $21 million,
respectively. Due to improving market conditions, we expect the minimum aggregate contributions to our non-U.S.
and U.S. plans in 2011, subject to applicable law, to be $6 million. We continue to monitor and evaluate funding
options based upon market conditions and may increase contributions at our discretion.
Credit Facilities and Long-Term Debt
Noble Credit Facilities and Long-Term Debt
We have a $600 million unsecured bank credit facility (the “Credit Facility”). The Credit Facility contains
various covenants, including a debt to total tangible capitalization covenant that limits this ratio (as defined in the
Credit Facility) to 0.60. As of December 31, 2010, our ratio of debt to total tangible capitalization as defined by the
agreement was 0.22.
The Credit Facility provides us with the ability to issue up to $150 million in letters of credit. While the
issuance of letters of credit does not increase our borrowings outstanding, it does reduce the amount available. At
December 31, 2010, we had $40 million in borrowings outstanding and no letters of credit issued under the Credit
Facility. We believe that we maintain good relationships with our lenders under the Credit Facility, and we believe
that our lenders have the liquidity and capability to perform should the need arise for us to draw on the Credit
Facility.
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 sale and lease-back transactions. At December 31,
2010, we were in compliance or received a waiver on all our debt covenants. We continually monitor compliance
with the covenants under our notes and, based on our expectations for 2011, expect to remain in compliance during
the year.
At December 31, 2010, we had letters of credit of $126 million and performance and tax assessment bonds
totaling $350 million supported by surety bonds outstanding. Of the letters of credit outstanding, $75 million were
issued to support bank bonds in connection with our drilling units in Nigeria. Additionally, certain of our
subsidiaries issue, from time to time, guarantees to the temporary import status of rigs or equipment imported into
certain countries in which we operate. These guarantees are issued in lieu of payment of custom, value added or
similar taxes in those countries.
In February 2011, we entered into an additional revolving credit facility with an initial capacity of $300
million. The facility will be syndicated to a broader bank group and, subject to certain conditions, have a targeted
capacity of $600 million. The facility matures in 2015 and provides us with the ability to issue up to $150 million in
letters of credit. The covenants and events of default under the additional revolving credit facility are substantially
similar to the Credit Facility, which remains in place. The new facility is guaranteed by our indirect wholly-owned
subsidiaries, Noble Holding International Limited (“NHIL”) and Noble Drilling Corporation.
42
Our total debt was $2.8 billion at December 31, 2010 as compared to $751 million at December 31, 2009.
The increase in debt is due to the debt issuances of $1.25 billion aggregate principal amount of senior notes
discussed below, the assumption of $691 million of joint venture debt related to the Frontier acquisition and $36
million in joint venture partner debt. For additional information on our long-term debt, see Note 7 to our
Consolidated Financial Statements.
On July 26, 2010, we issued through NHIL, $1.25 billion aggregate principal amount of senior notes in three
separate tranches, comprising $350 million of 3.45% Senior Notes due 2015, $500 million of 4.90% Senior Notes
due 2020, and $400 million of 6.20% Senior Notes due 2040. Proceeds, net of discount and issuance costs, totaled
$1.24 billion and were used to finance a portion of the cash consideration for the Frontier acquisition. Noble-
Cayman fully and unconditionally guaranteed the notes on a senior unsecured basis. Interest on all three series of
these senior notes is payable semi-annually, in arrears, on February 1 and August 1 of each year, beginning on
February 1, 2011.
In February 2011, NHIL completed a debt offering of $1.1 billion aggregate principal amount of senior notes
in three separate tranches, with $300 million of 3.05% Senior Notes due 2016, $400 million of 4.625% Senior Notes
due 2021, and $400 million of 6.05% Senior Notes due 2041. The weighted average coupon of all three tranches is
4.71%. A portion of the net proceeds of approximately $1.09 billion, after expenses, was used to repay the
outstanding balance on our revolving credit facility and to repay our portion of outstanding debt under the Bully 1
and Bully 2 credit facilities. We expect to use the remaining proceeds for general corporate purposes, including
financing a portion of our 2011 capital program.
Joint Venture Credit Facilities and Long-Term Debt
As part of the Frontier acquisition, we assumed secured non-recourse debt related to the Bully 1 and Bully 2
joint ventures. In February 2011, the outstanding balances of the Bully 1 and Bully 2 credit facilities, which totaled
$691 million, were repaid in full and the credit facilities terminated using a portion of the proceeds from our
February 2011 debt offering and equity contributions from our joint venture partner. In addition, the related interest
rate swaps were settled and terminated concurrent with the repayment and termination of the credit facilities. The
Bully 1 and Bully 2 credit facilities are discussed further below.
The Bully 1 secured non-recourse credit facility consisted of a $375 million senior term loan facility, a $40
million senior revolving loan facility and a $50 million junior term loan facility. As of December 31, 2010, loans in
an aggregate principal amount of $370 million were outstanding under the senior term loan facility. The senior term
loan facility provided for floating interest rates that were fixed for one-, three- or six-month periods at LIBOR plus
2.5% prior to delivery and acceptance of the Noble Bully I drillship. As noted in Note 12- “Derivative Instruments
and Hedging Activities”, the joint venture maintained interest rate swaps, with a notional amount of $278 million, to
satisfy bank covenants and to hedge the impact of interest rate changes on interest paid. The Bully 1 credit facility
was secured by assignments of the major contracts for the construction of the Noble Bully I drillship and its
equipment, the drilling contract for the drillship, and various other rights. In connection with the termination of the
credit facility, the security interest and related collateral has been released.
The Bully 2 secured non-recourse credit facility consisted of a $435 million senior term loan facility, a $10
million senior revolving loan facility and a $50 million cost overrun term loan facility. As of December 31, 2010,
loans in an aggregate principal amount of $321 million were outstanding under the senior term loan facility. The
senior term loan facility provided for floating interest rates that were fixed for three months or such other period
selected by the borrower and agreed by the agent (but not to exceed three months), at LIBOR plus 2.5% prior to the
occurrence of the delivery date of the hull and thereafter at LIBOR plus 2.3%, until contract commencement. As
noted in Note 12- “Derivative Instruments and Hedging Activities”, the joint venture maintained an interest rate
swap, with a notional amount of $326 million, to satisfy bank covenants and to hedge the impact of interest rate
changes on interest paid. The Bully 2 credit facility was secured by assignments of the major contracts for the
construction of the Noble Bully II drillship and its equipment, the drilling contract for the drillship, and various other
rights. In connection with the termination of the credit facility, the security interest and related collateral has been
released.
43
Certain amendments to the underlying drilling contracts and the revised vessel delivery impact to loan
amortization schedules required consent from lenders to both Bully joint ventures. On the Bully 1 credit facility we
obtained a waiver regarding certain covenants related to the completion date of the Noble Bully I drillship. The
waiver was set to expire on February 28, 2011.
In September 2010, the Bully joint ventures issued notes to the joint venture partners totaling $70 million.
The interest rate on these notes is 10%, payable semi-annually in arrears and in kind on June 30 and December 31
commencing in December 2010. The interest payable due in 2010 was rolled into the principal loan balance of the
notes. The purpose of these notes is to provide additional liquidity to these joint ventures in connection with the
shipyard construction of the Bully vessels. Our portion of the joint venture partner notes, which totaled $36 million
at December 31, 2010, has been eliminated in our Consolidated Balance Sheets. The non-eliminated portions of
these joint venture partner notes totaled $19 million for Bully 1 and $17 million for Bully 2 at December 31, 2010
and are due in 2016 and 2018, respectively.
Summary of Contractual Cash Obligations and Commitments
The following table summarizes our contractual cash obligations and commitments at December 31, 2010 (in
thousands):
Payments Due by Period
Total
2011
2012
2013
2014
2015
Thereafter
Other
Contractual Cash Obligations
—
Long-term debt obligations (1).......... $ 2,766,697 $
—
Interest payments ..............................
—
Operating leases ................................
—
Pension plan contributions ................
—
Purchase commitments (2) ................
Tax reserves (3).................................
144,537
Total contractual cash obligations ..... $ 5,961,407 $ 1,200,006 $ 664,999 $ 727,852 $ 488,132 $ 574,371 $ 2,161,510 $ 144,537
80,213 $ 113,457 $ 456,405 $ 369,543 $ 472,232 $ 1,274,847 $
1,437,398
36,964
97,364
1,478,447
144,537
131,122
4,733
6,715
128,877
—
146,302
4,993
5,895
394,352
—
151,502
6,844
6,229
955,218
—
810,893
12,699
63,071
—
—
106,667
4,658
7,264
—
—
90,912
3,037
8,190
—
—
(1) Includes approximately $691 million in Bully debt which was paid off in February 2011.
(2) Purchase commitments consist of obligations outstanding to external vendors primarily related to future capital
purchases.
(3) Tax reserves are included in “Other” due to the difficulty in making reasonably reliable estimates of the timing
of cash settlements to taxing authorities. See Note 10 to our accompanying consolidated financial statements.
At December 31, 2010, we had other commitments that we are contractually obligated to fulfill with cash if
the obligations are called. These obligations include letters of credit and surety bonds that guarantee our
performance as it relates to our drilling contracts, tax and other obligations in various jurisdictions. These letters of
credit and surety bond obligations are not normally called as we typically comply with the underlying performance
requirement.
The following table summarizes our other commercial commitments at December 31, 2010 (in thousands):
Amount of Commitment Expiration Per Period
Total 2011
2012
2013
2014
2015
Thereafter
Contractual Cash Obligations
Letters of Credit.............................. $ 126,486 $ 89,798 $ 28,588 $ — $ 8,100 $ — $
Surety bonds ...................................
Total commercial commitments ..... $ 476,754 $ 418,962 $ 49,692 $ — $ 8,100 $ — $
350,268 329,164 21,104
—
—
—
—
—
—
44
CRITICAL ACCOUNTING POLICIES AND ESTIMATES
Our consolidated financial statements are impacted by the accounting policies used and the estimates and
assumptions made by management during their preparation. Critical accounting policies and estimates that most
significantly impact our consolidated financial statements are described below.
Principles of Consolidation
The consolidated financial statements include our accounts, those of our wholly-owned subsidiaries and
entities in which we hold a controlling financial interest.
The Financial Accounting Standards Board (“FASB”) issued authoritative guidance for noncontrolling
interests in December 2007, which establishes accounting and reporting standards for the noncontrolling interest in a
subsidiary and for the deconsolidation of a subsidiary. The guidance clarifies that a noncontrolling interest in a
subsidiary, which is sometimes referred to as an unconsolidated investment, is an ownership interest in the
consolidated entity that should be reported as a component of equity in the consolidated financial statements.
Among other requirements, the guidance requires consolidated net income to be reported at amounts attributable to
both the parent and the noncontrolling interest. It also requires disclosure, on the face of the consolidated income
statement, of the amounts of consolidated net income attributable to the parent and to the noncontrolling interest. We
adopted the provisions of the FASB guidance on January 1, 2009 and applied the provisions retrospectively, with no
material impact.
Our 2010 consolidated financial statements include the accounts of two 50 percent joint ventures where we
hold a variable interest as defined under FASB codification where we have determined that we are the primary
beneficiary. Intercompany balances and transactions have been eliminated in consolidation.
Amounts related to these two joint ventures at December 31, 2010, include the combined carrying amount of
the drillships owned by the joint ventures of $869 million and total outstanding debt of $691 million, which excludes
$72 million of joint venture partner notes. Our portion of these joint venture partner notes, which totaled $36
million, has been eliminated in our Consolidated Balance Sheets.
Property and Equipment
Property and equipment is stated at cost, reduced by provisions to recognize economic impairment in value
whenever events or changes in circumstances indicate an asset’s carrying value may not be recoverable. At
December 31, 2010 and 2009, we had $3.6 billion and $2.3 billion of construction-in-progress, respectively. Such
amounts are included in “Drilling equipment and facilities” in the accompanying Consolidated Balance Sheets.
Major replacements and improvements are capitalized. When assets are sold, retired or otherwise disposed of, the
cost and related accumulated depreciation are eliminated from the accounts and the gain or loss is recognized.
Drilling equipment and facilities are depreciated using the straight-line method over their estimated useful lives as of
the date placed in service or date of major refurbishment. Estimated useful lives of our drilling equipment range
from three to thirty years. Other property and equipment is depreciated using the straight-line method over useful
lives ranging from two to thirty years.
Interest is capitalized on construction-in-progress at the interest rate on debt incurred for construction or at
the weighted average cost of debt outstanding during the period of construction. Capitalized interest for the years
ended December 31, 2010, 2009 and 2008 was $83 million, $55 million and $48 million, respectively.
Overhauls and scheduled maintenance of equipment are performed based on the number of hours operated in
accordance with our preventative maintenance program. Routine repair and maintenance costs are charged to
expense as incurred; however, the costs of the overhauls and scheduled major maintenance projects that benefit
future periods and which typically occur every three to five years are deferred when incurred and amortized over an
equivalent period. The deferred portion of these major maintenance projects is included in “Other Assets” in the
Consolidated Balance Sheets. Such amounts totaled $183 million and $181 million at December 31, 2010 and 2009,
respectively.
45
Amortization of deferred costs for major maintenance projects is reflected in “Depreciation and
amortization” in the accompanying Consolidated Statements of Income. The amount of such amortization was $107
million, $102 million and $91 million for the years ended December 31, 2010, 2009 and 2008, respectively. Total
repair and maintenance expense for the years ended December 31, 2010, 2009 and 2008, exclusive of amortization
of deferred costs for major maintenance projects, was $186 million, $175 million and $169 million, respectively.
In addition to our annual review of impairment which occurs during the fourth quarter each year, we evaluate
the realization of property and equipment whenever events or changes in circumstances indicate that the carrying
amount of an asset may not be recoverable. In evaluating the need for impairment we utilize a number of
methodologies in the valuation of our rigs including utilizing both a market-based and a modified income-based
approach. An impairment loss on our property and equipment exists when both the market-based approach and the
estimated undiscounted cash flows expected to result from the use of the asset and its eventual disposition are less
than its carrying amount. Any impairment loss recognized represents the excess of the asset’s carrying value over
the estimated fair value.
In May 2009, our jackup the Noble David Tinsley experienced a “punch-through” while the rig was being
positioned on location offshore Qatar. The incident involved the sudden penetration of all three legs through the sea
bottom, which resulted in severe damage to the legs and the rig. We recorded a charge of $17 million during the
quarter ended June 30, 2009 related to this involuntary conversion, which includes approximately $9 million for the
write-off of the damaged legs.
During the first quarter of 2009, we recognized a charge of $12 million related to the Noble Fri Rodli, a
submersible that has been cold stacked since October 2007. We recorded the charge as a result of a decision to
evaluate disposition alternatives for this rig.
Insurance Reserves
We maintain various levels of self-insured retention for certain losses including property damage, loss of
hire, employment practices liability, employers’ liability, and general liability, among others. We accrue for property
damage and loss of hire charges on a per event basis.
Employment practices liability claims are accrued based on actual claims during the year. Maritime
employer’s liability claims are generally estimated using actuarial determinations. General liability claims are
estimated by our internal claims department by evaluating the facts and circumstances of each claim (including
incurred but not reported claims) and making estimates based upon historical experience with similar claims. At
December 31, 2010 and 2009, loss reserves for personal injury and protection claims totaled $21 million and $23
million, respectively, and such amounts are included in “Other current liabilities” in the accompanying Consolidated
Balance Sheets.
Revenue Recognition
Revenues generated from our dayrate-basis drilling contracts and labor contracts are recognized as services
are performed.
We may receive lump-sum fees for the mobilization of equipment and personnel. Mobilization fees received
and costs incurred to mobilize a drilling unit from one market to another are recognized over the term of the related
drilling contract. Costs incurred to relocate drilling units to more promising geographic areas in which a contract has
not been secured are expensed as incurred. Lump-sum payments received from customers relating to specific
contracts, including equipment modifications, are deferred and amortized to income over the term of the drilling
contract. Deferred revenues under drilling contracts totaled $104 million and $32 million at December 31, 2010 and
2009, respectively. Such amounts are included in either “Other Current Liabilities” or “Other Liabilities” in our
Consolidated Balance Sheets, based upon our expected time of recognition.
Consistent with FASB pronouncements, we record reimbursements from customers for “out-of-pocket”
expenses as revenues and the related direct cost as operating expenses. Reimbursements for loss of hire under our
insurance coverages are included in “(Gain)/loss on assets disposal/involuntary conversion, net” in the Consolidated
Statements of Income.
46
Income Taxes
We operate through various subsidiaries in numerous countries throughout the world including the United
States. Income taxes have been provided based on the laws and rates in effect in the countries in which operations
are conducted or in which we or our subsidiaries are considered resident for income tax purposes. The income and
withholding tax rates and methods of computing taxable income vary significantly for each jurisdiction.
Consequently, we are subject to changes in tax laws, treaties or regulations or the interpretation or enforcement
thereof in the U.S., Switzerland or jurisdictions in which we or any of our subsidiaries operate or is resident. Our
income tax expense is based upon our interpretation of the tax laws in effect in various countries at the time that the
expense was incurred. If the U.S. Internal Revenue Service or other taxing authorities do not agree with our
assessment of the effects of such laws, treaties and regulations, this could have a material adverse effect on us,
including the imposition of a higher effective tax rate on our worldwide earnings or a reclassification of the tax
impact of our significant corporate restructuring transactions. Our income tax expense is expected to fluctuate from
year to year as our operations and income fluctuates in the different taxing jurisdictions.
As required by law, we file tax returns that are subject to review and examination by various tax authorities
in the jurisdictions in which we operate. We are currently undergoing examinations in a number of jurisdictions for
various fiscal years. We review our liabilities and tax exposure on an ongoing basis and, to the extent audits,
settlements or other events cause us to adjust the prior period liabilities, we recognize such adjustments in the period
of the event. We do not believe it is possible to reasonably project the impact of current or future examinations. Any
settlement is based on a number of factors, which include among others, the amount asserted by the tax authorities,
their willingness to negotiate and settle through their administrative process, the impartiality of their courts and the
ability to offset such tax changes in other countries.
We maintain liabilities for potential tax exposures in our areas of operations and any provision or benefit
resulting from changes to such liabilities are included in our tax provision along with related penalties and interest as
applicable. Tax exposures include potential challenges to our intercompany transaction pricing methods,
withholding tax rates, deductibility of operating and intercompany expenses and restructuring transactions. These
exposures are typically resolved through audit settlements or through judicial means but can also be affected by
changes in tax laws or other factors, which cause us to revise prior estimates. In addition, we may conduct future
operations in certain tax jurisdictions where tax laws are not well developed and it may be difficult to obtain
adequate professional advice.
Applicable income and withholding taxes have not been provided on undistributed earnings of our
subsidiaries. We do not intend to repatriate such undistributed earnings for the foreseeable future except for
distributions upon which incremental income and withholding taxes would not be material.
In certain jurisdictions we have recognized deferred tax assets and liabilities. Judgment and assumptions are
required in determining whether deferred tax assets will be fully or partially utilized. When we estimate that all or
some portion of certain deferred tax assets such as net operating loss carryforwards will not be utilized, we establish
a valuation allowance for the amount ascertained to be unrealizable. We continually evaluate strategies that could
allow for future utilization of our deferred assets. Any change in the ability to utilize such deferred assets will be
accounted for in the period of the event affecting the valuation allowance. If facts and circumstances cause us to
change our expectations regarding future tax consequences, the resulting adjustments could have a material effect on
our financial results or cash flow.
In certain circumstances, we expect that, due to changing demands of the offshore drilling markets and the
ability to redeploy our offshore drilling units, certain of such units will not reside in a location long enough to give
rise to future tax consequences. As a result, no deferred tax asset or liability has been recognized in these
circumstances. Should our expectations change regarding the length of time an offshore drilling unit will be used in
a given location, we will adjust deferred taxes accordingly.
47
Certain Significant Estimates and Contingent Liabilities
The preparation of financial statements in conformity with accounting principles generally accepted in the
United States of America requires management to make estimates and assumptions that affect the reported amounts
of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and
the reported amount of revenues and expenses during the reporting period. Certain accounting policies involve
judgments and uncertainties to such an extent that there is reasonable likelihood that materially different amounts
could have been reported under different conditions, or if different assumptions had been used. We evaluate our
estimates and assumptions on a regular basis. We base our estimates on historical experience and various other
assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for
making judgments about carrying values of assets and liabilities that are not readily apparent from other sources.
Actual results may differ from these estimates and assumptions used in preparation of our consolidated financial
statements. In addition, we are involved in several litigation matters, some of which could lead to potential liability
to us. We follow FASB standards regarding contingent liabilities which are discussed in Note 14 “Commitments and
Contingencies” in our Consolidated Financial Statements.
New Accounting Pronouncements
In June 2009, the FASB issued guidance which expanded disclosures that a reporting entity provides about
transfers of financial assets and their effect on the financial statements. This guidance is effective for annual and
interim reporting periods beginning after November 15, 2009. The adoption of this guidance did not have a material
impact on our financial condition, results of operations, cash flows or financial disclosures.
Also in June 2009, the FASB issued guidance that revises how an entity evaluates variable interest entities.
This guidance is effective for annual and interim reporting periods beginning after November 15, 2009. The
adoption of this guidance did not have a material impact on our financial condition, results of operations, cash flows
or financial disclosures.
In October 2009, the FASB issued guidance that impacts the recognition of revenue in multiple-deliverable
arrangements. The guidance establishes a selling-price hierarchy for determining the selling price of a deliverable.
The goal of this guidance is to clarify disclosures related to multiple-deliverable arrangements and to align the
accounting with the underlying economics of the multiple-deliverable transaction. This guidance is effective for
fiscal years beginning on or after June 15, 2010. We do not believe this guidance will have a material impact on our
financial condition, results of operations, cash flows or financial disclosures.
In January 2010, the FASB issued guidance relating to the disclosure of the fair value of assets. This
guidance calls for additional information to be given regarding the transfer of items in and out of respective
categories. In addition, it requires additional disclosures regarding purchases, sales, issuances, and settlements of
assets that are classified as level three within the FASB fair value hierarchy. This guidance is generally effective for
annual and interim periods ending after December 15, 2009. However, the disclosures about purchases, sales,
issuances and settlements in the roll-forward activity in level three fair value measurements are deferred until fiscal
years beginning after December 15, 2010. These additional disclosures did not have and are not expected to have a
material impact on our financial condition, results of operations, cash flows or financial disclosures.
In February 2010, the FASB issued guidance that clarifies the disclosure of subsequent events for SEC
registrants. Under this guidance an SEC registrant can disclose that the company has considered subsequent events
through the date of filing with the SEC as opposed to specifically stating the date to which subsequent events were
considered. This guidance is effective upon the issuance of the guidance. Our adoption of this guidance did not have
a material impact on our financial condition, results of operations, cash flows or financial disclosures.
In April 2010, the FASB issued guidance that codifies the need for disclosure relating to the disallowance of
various credits as a result of the passage of both the Health Care and Education Reconciliation Act of 2010 and the
Patient Protection and Affordable Care Act, which were signed into law in March 2010. The passage of these acts
did not have an impact on our financial condition, results of operations, cash flows or financial disclosures.
48
In December 2010, the FASB issued guidance that requires a public entity to disclose pro forma information
for business combinations that occurred in the current reporting period. The disclosures include pro forma revenue
and earnings of the combined entity for the current reporting period as though the acquisition date for all business
combinations that occurred during the year had been as of the beginning of the annual reporting period. If
comparative financial statements are presented, the pro forma revenue and earnings of the combined entity for the
comparable prior reporting period should be reported as though the acquisition date for all business combinations
that occurred during the current year had been as of the beginning of the comparable prior annual reporting period.
The guidance is effective for annual reporting periods beginning on or after December 15, 2010. We do not
anticipate the adoption of this guidance to have a material impact on our financial condition, results of operations,
cash flows or financial disclosures.
Item 7A. Quantitative and Qualitative Disclosures About Market Risk.
Market risk is the potential for loss due to a change in the value of a financial instrument as a result of
fluctuations in interest rates, currency exchange rates or equity prices, as further described below.
Interest Rate Risk
We are subject to market risk exposure related to changes in interest rates on borrowings under the Credit
Facility. Interest on borrowings under the Credit Facility is at an agreed upon percentage point spread over LIBOR,
or a base rate stated in the agreement. At December 31, 2010, we had $40 million in borrowings outstanding under
the Credit Facility.
As part of the Frontier acquisition, we acquired an interest in the two Bully joint ventures with Shell. These
joint ventures maintain interest rate swaps which are classified as cash flow hedges. The interest rate swaps relate to
debt for the construction of the two Bully-class rigs undertaken by the two joint ventures, and the hedges are
designed to fix the cash paid for interest on these projects. The purpose of these hedges is to satisfy bank covenants
and to limit exposure to changes in interest rates. There are no credit risk related contingency features embedded in
these swap agreements. The aggregate notional amounts of the interest rate swaps totaled $604 million as of
December 31, 2010. The notional amounts and settlement dates for the Bully 1 are $278 million, with $47 million
settling June 30, 2011 and the remainder settling quarterly, with the final amounts settling in December 2014. The
notional amount and settlement dates for the Bully 2 interest rate swap is $326 million which settles quarterly, with
the final amount settling in January 2018. The carrying amount of these interest rate swaps was $27 million which
includes $31 million included in liabilities as part of the purchase price allocation for the Frontier acquisition and
$0.4 million of unrealized gains included in “Accumulated other comprehensive income (loss)” at December 31,
2010 in our Consolidated Balance Sheets. A one percent change in the LIBOR rate would result in approximately an
additional $1 million of interest charges per year. In February 2011, the outstanding balances of the Bully 1 and
Bully 2 credit facilities, which totaled $691 million, were repaid in full and the credit facilities terminated. In
addition, the related interest rate swaps were settled and terminated concurrent with the repayment and termination
of the credit facilities.
We maintain certain debt instruments at a fixed rate whose fair value will fluctuate based on changes in
interest rates and market perceptions of our credit risk. The fair value of our total debt was $2.9 billion and $839
million at December 31, 2010 and 2009, respectively. The increase was a result of our issuance of $1.25 billion in
debt, the assumption of $689 million of debt in the Frontier acquisition, the issuance of $40 million in our revolving
credit facility, and the issuance of $36 million of joint venture partner debt, coupled with changes in fair value
related to changes in interest rates and market perceptions of our credit risk.
Foreign Currency Risk
As a multinational company, we conduct business in approximately 16 countries. Our functional currency is
primarily the U.S. Dollar, which is consistent with the oil and gas industry. However, outside the United States, a
portion of our expenses are incurred in local currencies. Therefore, when the U.S. Dollar weakens (strengthens) in
relation to the currencies of the countries in which we operate, our expenses reported in U.S. Dollars will increase
(decrease).
49
We are exposed to risks on future cash flows to the extent that local currency expenses exceed revenues
denominated in local currency that are other than the functional currency. To help manage this potential risk, we
periodically enter into derivative instruments to manage our exposure to fluctuations in currency exchange rates, and
we may conduct hedging activities in future periods to mitigate such exposure. These contracts are primarily
accounted for as cash flow hedges, with the effective portion of changes in the fair value of the hedge recorded on
the Consolidated Balance Sheet and in “Accumulated other comprehensive income (loss)”. Amounts recorded in
“Accumulated other comprehensive income (loss)” are reclassified into earnings in the same period or periods that
the hedged item is recognized in earnings. The ineffective portion of changes in the fair value of the hedged item is
recorded directly to earnings. We have documented policies and procedures to monitor and control the use of
derivative instruments. We do not engage in derivative transactions for speculative or trading purposes, nor are we a
party to leveraged derivatives; however, we do maintain certain derivatives which were not designated for hedge
accounting under FASB standards.
Our North Sea and Brazil operations have a significant amount of their cash operating expenses payable in
local currencies. To limit the potential risk of currency fluctuations, we typically maintain short-term forward
contracts settling monthly in their respective local currencies to mitigate exchange exposure. The forward contract
settlements in 2011 represent approximately 20 percent of these forecasted local currency requirements. The
notional amount of the forward contracts outstanding, expressed in U.S. Dollars, was approximately $53 million at
December 31, 2010. Total unrealized gains related to these forward contracts were $2 million and $0.4 million as of
December 31, 2010 and 2009, respectively, and were recorded as part of “Accumulated other comprehensive loss”
in our Consolidated Balance Sheets. A ten percent change in the exchange rate for the local currencies would change
the fair value of these forward contracts by approximately $5 million.
We have entered into a firm commitment for the construction of our Noble Globetrotter I drillship. The
drillship will be constructed in two phases, with the second phase being installation and commissioning of the
topside equipment. Our payment obligation for this second phase of construction is denominated in Euros, and in
order to mitigate the risk of fluctuations in foreign currency exchange rates, we entered into forward contracts to
purchase Euros. As of December 31, 2010, the aggregate notional amount of the remaining forward contracts was 30
million Euros. Each forward contract settles in connection with required payments under the contract. We are
accounting for these forward contracts as fair value hedges. The fair market value of these derivative instruments is
included in “Other current assets/liabilities” or “Other assets/liabilities” in our Consolidated Balance Sheets,
depending on when the forward contract is expected to be settled. Gains and losses from these fair value hedges are
recognized in earnings currently along with the change in fair value of the hedged item attributable to the risk being
hedged. The fair market value of these outstanding forward contracts, which are included in “Other current
assets/liabilities” and “Other assets/liabilities,” totaled approximately $3 million at December 31, 2010 and $0.8
million at December 31, 2009. A ten percent change in the exchange rate for the Euro would change the fair value of
these forward contracts by approximately $4 million.
The Bully 2 joint venture maintained foreign exchange forward contracts to help mitigate the risk of currency
fluctuation of the Singapore Dollar for the construction of the Bully II vessel taking place in a Singapore shipyard.
The notional amount on these contracts totaled approximately $31 million as of December 31, 2010. These contracts
do not qualify for hedge accounting treatment under FASB standards and therefore changes in fair values are
recognized as either income or loss in our consolidated income statement. For the year ended December 31, 2010,
we have recognized a gain of $2 million related to these foreign exchange forward contracts. A ten percent change
in the exchange rate for the local currencies would change the fair value of these forward contracts and impact net
income by approximately $3 million.
50
Market Risk
We sponsor the Noble Drilling Corporation 401(k) Savings Restoration Plan (“Restoration Plan”). The
Restoration Plan is a nonqualified, unfunded employee benefit plan under which certain highly compensated
employees may elect to defer compensation in excess of amounts deferrable under our 401(k) savings plan. The
Restoration Plan has no assets, and amounts withheld for the Restoration Plan are kept by us for general corporate
purposes. The investments selected by employees and the associated returns are tracked on a phantom basis.
Accordingly, we have a liability to employees for amounts originally withheld plus phantom investment income or
less phantom investment losses. We are at risk for phantom investment income and, conversely, benefit should
phantom investment losses occur. At December 31, 2010, our liability under the Restoration Plan totaled $7 million.
We have purchased investments that closely correlate to the investment elections made by participants in the
Restoration Plan in order to mitigate the impact of the phantom investment income and losses on our consolidated
financial statements. The value of these investments held for our benefit totaled $7 million at December 31, 2010. A
ten percent change in the fair value of the phantom investments would change our liability by approximately $0.7
million. Any change in the fair value of the phantom investments would be mitigated by a change in the investments
held for our benefit.
We also have a U.S. noncontributory defined benefit pension plan that covers certain salaried employees and
a U.S. noncontributory defined benefit pension plan that covers certain hourly employees, whose initial date of
employment is prior to August 1, 2004 (collectively referred to as our “qualified U.S. plans”). These plans are
governed by the Noble Drilling Corporation Retirement Trust (the “Trust”). The benefits from these plans are based
primarily on years of service and, for the salaried plan, employees’ compensation near retirement. These plans are
designed to qualify under the Employee Retirement Income Security Act of 1974 (“ERISA”), and our funding
policy is consistent with funding requirements of ERISA and other applicable laws and regulations. We make cash
contributions, or utilize credits available to us, for the qualified U.S. plans when required. The benefit amount that
can be covered by the qualified U.S. plans is limited under ERISA and the Internal Revenue Code (“IRC”) of 1986.
Therefore, we maintain an unfunded, nonqualified excess benefit plan designed to maintain benefits for all
employees at the formula level in the qualified U.S. plans. We refer to the qualified U.S. plans and the excess benefit
plan collectively as the “U.S. plans”.
In addition to the U.S. plans, each of Noble Drilling (Land Support) Limited, Noble Enterprises Limited and
Noble Drilling (Nederland) B.V., all indirect, wholly-owned subsidiaries of Noble-Swiss, maintains a pension plan
that covers all of its salaried, non-union employees (collectively referred to as our “non-U.S. plans”). Benefits are
based on credited service and employees’ compensation near retirement, as defined by the plans.
Changes in market asset value related to the pension plans noted above could have a material impact upon
our Consolidated Statements of Comprehensive Income and could result in material cash expenditures in future
periods.
51
Item 8. Financial Statements and Supplementary Data.
The following financial statements are filed in this Item 8:
Page
Report of Independent Registered Public Accounting Firm (Noble-Swiss) ...................................................
53
Noble Corporation (Noble-Swiss) and Subsidiaries Consolidated Balance Sheets as of December 31,
2010 and 2009 ..............................................................................................................................................
54
Noble Corporation (Noble-Swiss) and Subsidiaries Consolidated Statements of Income for the Years
Ended December 31, 2010, 2009 and 2008 ..................................................................................................
55
Noble Corporation (Noble-Swiss) and Subsidiaries Consolidated Statements of Cash Flows for the Years
Ended December 31, 2010, 2009 and 2008 ..................................................................................................
56
Noble Corporation (Noble-Swiss) and Subsidiaries Consolidated Statements of Equity for the Years
Ended December 31, 2010, 2009 and 2008 ..................................................................................................
57
Noble Corporation (Noble-Swiss) and Subsidiaries Consolidated Statements of Comprehensive Income
for the Years Ended December 31, 2010, 2009 and 2008 ............................................................................
Report of Independent Registered Public Accounting Firm (Noble-Cayman) ...............................................
58
59
Noble Corporation (Noble-Cayman) and Subsidiaries Consolidated Balance Sheets as of December 31,
2010 and 2009 ..............................................................................................................................................
60
Noble Corporation (Noble-Cayman) and Subsidiaries Consolidated Statements of Income for the Years
Ended December 31, 2010, 2009 and 2008 ..................................................................................................
61
Noble Corporation (Noble-Cayman) and Subsidiaries Consolidated Statements of Cash Flows for the
Years Ended December 31, 2010, 2009 and 2008........................................................................................
62
Noble Corporation (Noble-Cayman) and Subsidiaries Consolidated Statements of Equity for the Years
Ended December 31, 2010, 2009 and 2008 ..................................................................................................
63
Noble Corporation (Noble-Cayman) and Subsidiaries Consolidated Statements of Comprehensive Income
for the Years Ended December 31, 2010, 2009 and 2008 ............................................................................
Notes to Consolidated Financial Statements ..................................................................................................
64
65
52
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Directors and Shareholders of Noble Corporation, a Swiss Corporation (“Noble-Swiss”)
In our opinion, the accompanying consolidated balance sheets and the related consolidated statements of income,
comprehensive income, equity and cash flows present fairly, in all material respects, the financial position of Noble-
Swiss and its subsidiaries at December 31, 2010 and 2009, and the results of their operations and their cash flows for
each of the three years in the period ended December 31, 2010 in conformity with accounting principles generally
accepted in the United States of America. Also in our opinion, the Company maintained, in all material respects,
effective internal control over financial reporting as of December 31, 2010, based on criteria established in Internal
Control — Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway
Commission (COSO). The Company’s management is responsible for these financial statements, for maintaining
effective internal control over financial reporting and for its assessment of the effectiveness of internal control over
financial reporting, included in Management’s Annual Report on Internal Control over Financial Reporting
appearing under Item 9A. Our responsibility is to express opinions on these financial statements and on the
Company’s internal control over financial reporting based on our integrated audits. We conducted our audits in
accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards
require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are
free of material misstatement and whether effective internal control over financial reporting was maintained in all
material respects. Our audits of the financial statements included examining, on a test basis, evidence supporting the
amounts and disclosures in the financial statements, assessing the accounting principles used and significant
estimates made by management, and evaluating the overall financial statement presentation. Our audit of internal
control over financial reporting included obtaining an understanding of internal control over financial reporting,
assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness
of internal control based on the assessed risk. Our audits also included performing such other procedures as we
considered necessary in the circumstances. We believe that our audits provide a reasonable basis for our opinions.
A company’s internal control over financial reporting is a process designed to provide reasonable assurance
regarding the reliability of financial reporting and the preparation of financial statements for external purposes in
accordance with generally accepted accounting principles. A company’s internal control over financial reporting
includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail,
accurately and fairly reflect the transactions and dispositions of the assets of the company; (ii) provide reasonable
assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance
with generally accepted accounting principles, and that receipts and expenditures of the company are being made
only in accordance with authorizations of management and directors of the company; and (iii) provide reasonable
assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s
assets that could have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements.
Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become
inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may
deteriorate.
/s/ PricewaterhouseCoopers LLP
Houston, Texas
February 25, 2011
53
NOBLE CORPORATION (NOBLE-SWISS) AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
(In thousands)
December 31,
2010
December 31,
2009
ASSETS
Current assets
Cash and cash equivalents ............................................................................ $
Accounts receivable......................................................................................
Prepaid expenses ..........................................................................................
Other current assets ......................................................................................
Total current assets ...........................................................................................
$
337,871
387,414
35,502
69,941
830,728
735,493
647,454
26,938
73,305
1,483,190
Property and equipment
Drilling equipment and facilities ..................................................................
Other.............................................................................................................
Accumulated depreciation ............................................................................
12,471,283
172,583
12,643,866
(2,595,779)
10,048,087
Other assets.......................................................................................................
342,506
Total assets .............................................................................................. $ 11,221,321
LIABILITIES AND EQUITY
Current liabilities
Current maturities of long-term debt ............................................................ $
Accounts payable .........................................................................................
Accrued payroll and related costs.................................................................
Taxes payable ...............................................................................................
Interest payable.............................................................................................
Other current liabilities.................................................................................
Total current liabilities......................................................................................
Long-term debt .................................................................................................
Deferred income taxes ......................................................................................
Other liabilities .................................................................................................
Total liabilities ........................................................................................
80,213
374,814
125,663
15,382
40,260
84,049
720,381
2,686,484
258,822
268,000
3,933,687
$
$
8,666,750
143,477
8,810,227
(2,175,775)
6,634,452
279,254
8,396,896
—
197,800
100,167
68,760
11,258
55,962
433,947
750,946
300,231
123,340
1,608,464
Commitments and contingencies
Shareholders’ equity
Shares; 262,415 shares and 261,975 shares outstanding ..............................
Treasury shares, at cost; 10,140 shares and 3,750 shares .............................
Additional paid-in capital .............................................................................
Retained earnings .........................................................................................
Accumulated other comprehensive loss .......................................................
Total shareholders’ equity .....................................................................
917,684
(373,967)
39,006
6,630,500
(50,220)
7,163,003
1,130,607
(143,031)
—
5,855,737
(54,881)
6,788,432
Noncontrolling interests ...............................................................................
124,631
—
Total equity .............................................................................................
7,287,634
6,788,432
Total liabilities and equity ..................................................................... $ 11,221,321
$
8,396,896
See accompanying notes to the consolidated financial statements.
54
NOBLE CORPORATION (NOBLE-SWISS) AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(In thousands, except per share amounts)
Year Ended December 31,
2009
2010
2008
Operating revenues
Contract drilling services................................................................ $ 2,695,493 $ 3,509,755 $ 3,298,850
90,849
Reimbursables ................................................................................
55,078
Labor contract drilling services ......................................................
Other...............................................................................................
1,724
3,446,501
99,201
30,298
1,530
3,640,784
76,831
32,520
2,332
2,807,176
Operating costs and expenses
Contract drilling services................................................................
Reimbursables ................................................................................
Labor contract drilling services ......................................................
Depreciation and amortization........................................................
Selling, general and administrative ................................................
(Gain)/loss on asset disposal/involuntary conversion, net.............
1,177,800
59,414
22,056
539,829
91,997
—
1,891,096
1,006,764
85,035
18,827
408,313
80,262
30,839
1,630,040
1,011,882
79,327
42,573
356,658
74,143
(26,485)
1,538,098
Operating income .............................................................................
916,080
2,010,744
1,908,403
Other income (expense)
Interest expense, net of amount capitalized ....................................
Interest income and other, net.........................................................
Income before income taxes .............................................................
Income tax provision ......................................................................
Net income .........................................................................................
(9,457)
9,886
916,509
(143,077)
773,432
(1,685)
6,843
2,015,902
(337,260)
1,678,642
(4,388)
8,443
1,912,458
(351,463)
1,560,995
Net income attributable to noncontrolling interests........................
Net income attributable to Noble Corporation .............................. $
(3)
—
773,429 $ 1,678,642 $ 1,560,995
—
Net income per share attributable to Noble Corporation
Basic ............................................................................................... $
Diluted ............................................................................................ $
3.03 $
3.02 $
6.44 $
6.42 $
Dividends per share .......................................................................... $
0.88 $
0.18 $
5.85
5.81
0.91
Weighted-Average Shares Outstanding:
Basic ...............................................................................................
Diluted ............................................................................................
253,123
253,936
258,035
258,891
264,782
266,805
See accompanying notes to the consolidated financial statements.
55
NOBLE CORPORATION (NOBLE-SWISS) AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
Year Ended December 31,
2009
2010
2008
773,432
$ 1,678,642
$ 1,560,995
Cash flows from operating activities
Net income ............................................................................... $
Adjustments to reconcile net income to net cash from
operating activities:
Depreciation and amortization..............................................
(Gain)/Loss on asset disposal/involuntary conversion, net ........
Deferred income tax provision .............................................
Share-based compensation ...................................................
Pension contributions ...........................................................
Other changes in assets and liabilities:
Accounts receivable..............................................................
Other current assets ..............................................................
Other assets...........................................................................
Accounts payable..................................................................
Other current liabilities.........................................................
Other liabilities .....................................................................
Net cash from operating activities ....................................
Cash flows from investing activities
New construction......................................................................
Other capital expenditures ........................................................
Major maintenance expenditures..............................................
Accrued capital expenditures....................................................
Acquisition of FDR Holdings, Ltd., net of cash acquired ........
Hurricane insurance receivables...............................................
Proceeds from disposal of assets ..............................................
Net cash from investing activities.....................................
Cash flows from financing activities
Borrowings on bank credit facilities.........................................
Payments on bank credit facilities ............................................
Proceeds from issuance of notes to joint venture partner .........
Proceeds from issuance of senior notes, net of debt issuance
539,829
—
(41,409)
34,930
(16,464)
343,844
3,976
16,171
(43,938)
15,975
28,030
1,654,376
(653,269)
(666,673)
(103,542)
139,185
(1,629,644)
—
—
(2,913,943)
40,000
—
35,000
costs........................................................................................
Payments of other long-term debt ............................................
Settlement of interest rate swap................................................
Net proceeds from employee stock transactions.......................
Repurchases of employee shares ..............................................
Dividends/par value reduction payments paid..........................
Repurchases of ordinary shares ................................................
Net cash from financing activities ....................................
Net (decrease) increase in cash and cash equivalents .......
Cash and cash equivalents, beginning of period ......................
Cash and cash equivalents, end of period................................. $
1,238,074
—
(6,186)
11,828
(10,116)
(227,325)
(219,330)
861,945
(397,622)
735,493
337,871
$
408,313
30,839
36,866
37,995
(17,639)
(48,839)
(17,723)
3,589
11,646
(1,979)
15,006
2,136,716
(717,148)
(594,957)
(119,393)
(63,561)
—
—
—
(1,495,059)
—
—
—
—
(172,700)
—
12,168
(7,106)
(47,939)
(203,898)
(419,475)
222,182
513,311
735,493
356,658
(26,485)
51,026
35,899
(21,439)
(31,725)
(18,237)
8,575
2,490
(19,620)
(9,945)
1,888,192
(799,736)
(323,955)
(107,630)
40,830
—
21,747
39,451
(1,129,293)
30,000
(130,000)
—
249,238
(10,335)
—
12,771
—
(244,198)
(314,122)
(406,646)
352,253
161,058
513,311
$
See accompanying notes to the consolidated financial statements.
56
NOBLE CORPORATION (NOBLE-SWISS) AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF EQUITY
(In thousands)
Shares
Balance
Par Value
Capital in
Excess of
Par Value
Retained
Earnings
Treasury
Shares
Noncontrolling
Interests
Accumulated
Other
Comprehensive
Loss
Total
Equity
Balance at January 1, 2008......................... 268,223 $
26,822 $
683,697 $ 3,602,870 $
— $
— $
(5,067) $ 4,308,322
Share-based compensation
Share-based compensation ....................
Contribution to employee benefit
plans....................................................
Exercise of stock options.......................
Tax benefit of stock options exercised.......
Restricted shares surrendered for
1,176
10
1,008
—
117
1
102
—
35,782
629
19,339
3,467
—
—
—
—
withholding taxes or forfeited .............
Repurchases of ordinary shares .................
Net income................................................
Dividends paid ($0.91 per Share) ..............
Other comprehensive income (loss), net....
(553)
(7,965)
—
—
—
(56)
(796)
—
—
—
(10,081)
(330,718)
—
—
—
—
—
1,560,995
(244,198)
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
(52,190)
35,899
630
19,441
3,467
(10,137)
(331,514)
1,560,995
(244,198)
(52,190)
Balance at December 31, 2008.................... 261,899 $
26,190 $
402,115 $ 4,919,667 $
— $
— $
(57,257) $ 5,290,715
Share-based compensation
Share-based compensation ....................
Contribution to employee benefit
plans....................................................
Exercise of stock options.......................
Tax benefit of stock options exercised.......
Restricted shares surrendered for
1,472
17
720
—
(413)
withholding taxes or forfeited .............
Repurchases of ordinary shares .................
(1,720)
Cancellation of shares in Transaction........ (261,246)
Issuance of shares in Transaction .............. 261,246
Net income................................................
—
Dividends/par value reduction payments
766
49
3,098
—
(597)
(172)
(26,125)
1,162,332
—
8,255
28,974
339
8,908
9,144
152
162
(1,597)
(5,527)
(43,303)
26,125
(386,382)
—
(982)
—
(143,031)
(775,950)
—
1,678,642
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
37,995
540
12,168
7,547
(7,106)
(186,506)
(775,950)
775,950
1,678,642
—
2,376
(47,939)
2,376
paid ($0.18 per share)..............................
Other comprehensive income (loss), net....
—
—
(34,934)
—
—
—
(13,005)
—
Balance at December 31, 2009.................... 261,975 $ 1,130,607 $
— $ 5,855,737 $ (143,031) $
— $
(54,881) $ 6,788,432
Employee related equity activity
Share-based compensation ....................
Contribution to employee benefit
plans....................................................
Exercise of stock options.......................
Tax benefit of stock options exercised.......
Restricted shares forfeited or
repurchased for taxes...........................
Repurchases of shares ...............................
Net income................................................
Dividends/par value reduction payments
paid ($0.88).............................................
Noncontrolling interests from FDR
Holdings, Ltd. acquisition .......................
Other comprehensive income (loss), net....
313
34,617
78
8
538
—
30
2,119
—
(184)
—
—
(809)
—
—
196
9,483
6,494
965
—
—
—
—
—
(214,576)
(12,749)
—
—
—
—
—
—
—
—
—
—
—
—
1,334
(11,606)
(219,330)
773,429
—
—
—
—
—
—
—
—
—
—
—
—
—
3
—
—
—
—
—
—
—
—
—
34,930
226
11,602
6,494
(10,116)
(219,330)
773,432
(227,325)
124,628
—
—
4,661
124,628
4,661
Balance at December 31, 2010.................... 262,415 $ 917,684 $
39,006 $ 6,630,500 $ (373,967) $
124,631 $
(50,220) $ 7,287,634
See accompanying notes to the consolidated financial statements.
57
NOBLE CORPORATION (NOBLE-SWISS) AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(In thousands)
Year Ended December 31,
2010
2009
2008
Net income ............................................................................................... $ 773,432 $ 1,678,642 $ 1,560,995
Other comprehensive income (loss), net of tax
Foreign currency translation adjustments .........................................
Gain (loss) on foreign currency forward contracts ...........................
Gain (loss) on interest rate swaps .....................................................
Net pension plan gain (loss) (net of a tax benefit of $2,888 in 2010,
$1,635 in 2009 and $16,630 in 2008) .............................................
Amortization of deferred pension plan amounts (net of tax
2,456
1,187
366
277
417
—
(19,095)
(2,219)
—
(1,898)
(1,424)
(31,806)
provision of $1,286 in 2010, $653 in 2009 and $413 in 2008 ........
Other comprehensive income (loss), net ..............................................
2,550
4,661
3,106
2,376
930
(52,190)
Total comprehensive income ....................................................................
778,093
1,681,018
1,508,805
Less: Net income attributable to noncontrolling interests ........................
(3)
Less: Noncontrolling portion of gain on interest rate swaps.....................
(183)
—
—
—
—
Comprehensive income attributable to Noble Corporation................ $ 777,907 $ 1,681,018 $ 1,508,805
See accompanying notes to the consolidated financial statements.
58
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Directors and Shareholder of Noble Corporation, a Cayman Islands Company (“Noble-Cayman”):
In our opinion, the accompanying consolidated balance sheets and the related consolidated statements of income,
comprehensive income, equity and cash flows present fairly, in all material respects, the financial position of Noble-
Cayman and its subsidiaries at December 31, 2010 and 2009, and the results of their operations and their cash flows
for each of the three years in the period ended December 31, 2010 in conformity with accounting principles
generally accepted in the United States of America. Also in our opinion, the Company maintained, in all material
respects, effective internal control over financial reporting as of December 31, 2010, based on criteria established in
Internal Control — Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway
Commission (COSO). The Company’s management is responsible for these financial statements, for maintaining
effective internal control over financial reporting and for its assessment of the effectiveness of internal control over
financial reporting, included in Management’s Annual Report on Internal Control Over Financial Reporting
appearing under Item 9A. Our responsibility is to express opinions on these financial statements and on the
Company’s internal control over financial reporting based on our integrated audits. We conducted our audits in
accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards
require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are
free of material misstatement and whether effective internal control over financial reporting was maintained in all
material respects. Our audits of the financial statements included examining, on a test basis, evidence supporting the
amounts and disclosures in the financial statements, assessing the accounting principles used and significant
estimates made by management, and evaluating the overall financial statement presentation. Our audit of internal
control over financial reporting included obtaining an understanding of internal control over financial reporting,
assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness
of internal control based on the assessed risk. Our audits also included performing such other procedures as we
considered necessary in the circumstances. We believe that our audits provide a reasonable basis for our opinions.
A company’s internal control over financial reporting is a process designed to provide reasonable assurance
regarding the reliability of financial reporting and the preparation of financial statements for external purposes in
accordance with generally accepted accounting principles. A company’s internal control over financial reporting
includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail,
accurately and fairly reflect the transactions and dispositions of the assets of the company; (ii) provide reasonable
assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance
with generally accepted accounting principles, and that receipts and expenditures of the company are being made
only in accordance with authorizations of management and directors of the company; and (iii) provide reasonable
assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s
assets that could have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements.
Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become
inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may
deteriorate.
/s/ PricewaterhouseCoopers LLP
Houston, Texas
February 25, 2011
59
NOBLE CORPORATION (NOBLE-CAYMAN) AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
(In thousands)
December 31,
2010
December 31,
2009
ASSETS
Current assets
Cash and cash equivalents ............................................................................ $
Accounts receivable......................................................................................
Prepaid expenses ..........................................................................................
Other current assets ......................................................................................
Total current assets ...........................................................................................
333,399 $
387,414
33,232
69,821
823,866
726,225
647,454
26,289
72,917
1,472,885
Property and equipment
Drilling equipment and facilities ..................................................................
Other.............................................................................................................
Accumulated depreciation ............................................................................
12,471,283
143,691
12,614,974
(2,594,954)
10,020,020
Other assets.......................................................................................................
342,592
Total assets .............................................................................................. $ 11,186,478 $
LIABILITIES AND EQUITY
Current liabilities
Current maturities of long-term debt ............................................................ $
Accounts payable .........................................................................................
Accrued payroll and related costs.................................................................
Taxes payable ...............................................................................................
Interest payable.............................................................................................
Other current liabilities.................................................................................
Total current liabilities......................................................................................
Long-term debt .................................................................................................
Deferred income taxes ......................................................................................
Other liabilities .................................................................................................
Total liabilities ........................................................................................
80,213 $
374,559
120,634
13,066
40,260
83,759
712,491
2,686,484
258,822
268,026
3,925,823
8,666,750
115,414
8,782,164
(2,175,775)
6,606,389
279,139
8,358,413
—
197,712
99,372
61,577
11,258
55,988
425,907
750,946
300,231
123,137
1,600,221
Commitments and contingencies
Shareholder equity
Ordinary shares; 261,246 shares outstanding ...............................................
Capital in excess of par value .......................................................................
Retained earnings .........................................................................................
Accumulated other comprehensive loss .......................................................
Total shareholder equity ........................................................................
26,125
416,232
6,743,887
(50,220)
7,136,024
26,125
395,628
6,391,320
(54,881)
6,758,192
Noncontrolling interests ...............................................................................
124,631
—
Total equity .............................................................................................
7,260,655
6,758,192
Total liabilities and equity ..................................................................... $ 11,186,478 $
8,358,413
See accompanying notes to the consolidated financial statements.
60
NOBLE CORPORATION (NOBLE-CAYMAN) AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(In thousands, except per share amounts)
Year Ended December 31,
2009
2010
2008
Operating revenues
Contract drilling services................................................................... $ 2,695,493 $ 3,509,755 $ 3,298,850
90,849
Reimbursables ...................................................................................
55,078
Labor contract drilling services .........................................................
Other..................................................................................................
1,724
3,446,501
76,831
32,520
2,332
2,807,176
99,201
30,298
1,157
3,640,411
Operating costs and expenses
Contract drilling services...................................................................
Reimbursables ...................................................................................
Labor contract drilling services .........................................................
Depreciation and amortization...........................................................
Selling, general and administrative ...................................................
(Gain)/loss on asset disposal/involuntary conversion, net.................
1,172,801
59,414
22,056
539,004
55,568
—
1,848,843
1,006,764
85,035
18,827
408,313
58,543
30,839
1,608,321
1,011,882
79,327
42,573
356,658
74,143
(26,485)
1,538,098
Operating income ................................................................................
958,333
2,032,090
1,908,403
Other income (expense)
Interest expense, net of amount capitalized .......................................
Interest income and other, net............................................................
Income before income taxes ................................................................
Income tax provision .........................................................................
Net income ............................................................................................
Net income attributable to noncontrolling interests...........................
Net income attributable to Noble Corporation ................................. $
(9,457)
8,527
957,403
(141,866)
815,537
(1,685)
6,810
2,037,215
(336,834)
1,700,381
(4,388)
8,443
1,912,458
(351,463)
1,560,995
(3)
—
815,534 $ 1,700,381 $ 1,560,995
—
See accompanying notes to the consolidated financial statements.
61
NOBLE CORPORATION (NOBLE-CAYMAN) AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
Cash flows from operating activities
Net income .................................................................................... $
Adjustments to reconcile net income to net cash from operating
activities:
Depreciation and amortization...................................................
Loss/(Gain) on disposal of assets, net........................................
Deferred income tax provision ..................................................
Share-based compensation ........................................................
Capital contribution by parent — share-based compensation ...
Pension contributions ................................................................
Other changes in assets and liabilities:
Year ended December 31,
2009
2008
2010
815,537 $ 1,700,381 $ 1,560,995
539,004
—
(41,409)
—
20,604
(16,464)
408,313
30,839
36,866
8,399
27,254
(17,639)
356,658
(26,485)
51,026
35,899
—
(21,439)
Accounts receivable...................................................................
Other current assets ...................................................................
Other assets................................................................................
Accounts payable.......................................................................
Other current liabilities..............................................................
Other liabilities ..........................................................................
Net cash from operating activities .........................................
343,844
5,329
15,971
(44,105)
9,798
28,258
1,676,367
(48,839)
(16,686)
3,704
11,558
(10,318)
14,803
2,148,635
(31,725)
(18,237)
8,575
2,490
(19,620)
(9,945)
1,888,192
Cash flows from investing activities
New construction...........................................................................
Other capital expenditures .............................................................
Major maintenance expenditures...................................................
Accrued capital expenditures.........................................................
Hurricane insurance receivables....................................................
Proceeds from disposal of assets ...................................................
Acquisition of FDR Holdings, Ltd., net of cash acquired .............
Net cash from investing activities..........................................
Cash flows from financing activities
Borrowings on bank credit facilities..............................................
Payments on bank credit facilities .................................................
Proceeds from issuance of notes to joint venture partner ..............
Proceeds from issuance of senior notes, net of debt issuance
costs.............................................................................................
Payments of other long-term debt .................................................
Settlement of interest rate swaps ...................................................
Distributions to parent ...................................................................
Net proceeds from employee stock transactions............................
Tax benefit of employee stock transactions...................................
Proceeds from issuance of senior notes, net of debt issuance
costs.............................................................................................
Dividends paid...............................................................................
Repurchases of ordinary shares .....................................................
Net cash from financing activities .........................................
Net (decrease) increase in cash and cash equivalents ............
Cash and cash equivalents, beginning of period ...........................
Cash and cash equivalents, end of period...................................... $
—
—
—
843,921
(392,826)
726,225
333,399 $
(653,269)
(665,844)
(103,542)
139,185
—
—
(1,629,644)
(2,913,114)
(717,148)
(566,894)
(119,393)
(63,561)
—
—
—
(1,466,996)
(799,736)
(323,955)
(107,630)
40,830
21,747
39,451
—
(1,129,293)
40,000
—
35,000
1,238,074
—
(6,186)
(462,967)
—
—
—
—
—
—
(172,700)
—
(218,258)
(6,430)
—
—
(10,470)
(60,867)
(468,725)
212,914
513,311
726,225 $
30,000
(130,000)
—
—
(10,335)
—
—
9,304
3,467
249,238
(244,198)
(314,122)
(406,646)
352,253
161,058
513,311
See accompanying notes to the consolidated financial statements.
62
NOBLE CORPORATION (NOBLE-CAYMAN) AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF EQUITY
(In thousands)
Shares
Balance Par Value
Capital in
Excess of
Par Value
Retained
Earnings
Non-controlling
Interests
Accumulated
Other
Comprehensive
Loss
Total
Equity
Balance at January 1, 2008
268,223 $
26,822 $
683,697 $ 3,602,870 $
— $
(5,067) $ 4,308,322
Balance at December 31, 2008 ....... 261,899 $
26,190 $
402,115 $ 4,919,667 $
— $
(57,257) $ 5,290,715
Share-based compensation
Share-based compensation .....
Contribution to employee
benefit plans.........................
Exercise of stock options........
Tax benefit of stock options
exercised ..............................
Restricted shares
surrendered for
withholding taxes or
forfeited................................
1,176
10
1,008
—
117
35,782
1
102
629
19,339
—
3,467
—
—
—
—
(553)
Repurchases of ordinary shares....... (7,965)
Net income .................................
Dividends paid ($0.91 per
—
Share).......................................
Other comprehensive income
(loss), net..................................
—
—
(56)
(796)
—
—
—
(10,081)
(330,718)
—
—
—
—
—
1,560,995
(244,198)
—
Share-based compensation
Share-based compensation .....
Contribution to employee
benefit plans.........................
Exercise of stock options........
Tax benefit of stock options
exercised ..............................
Restricted shares
surrendered for
withholding taxes or
forfeited................................
(285)
Repurchases of ordinary shares....... (1,720)
Net income .................................
Dividends/par value reduction
payments paid ($0.04 per
share) .......................................
—
—
Distributions to parent................
Capital contributions by parent
— share-based compensation...
Other comprehensive income
1,331
133
8,266
6
15
—
1
2
152
145
—
6,533
—
—
—
(29)
(172)
—
—
(5,534)
(43,303)
—
—
—
—
1,700,381
(10,470)
(218,258)
27,254
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
35,899
630
19,441
3,467
(10,137)
(331,514)
1,560,995
(244,198)
(52,190)
(52,190)
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
8,399
153
147
6,533
(5,563)
(43,475)
1,700,381
(10,470)
(218,258)
27,254
(loss), net..................................
—
—
—
—
—
2,376
2,376
Balance at December 31, 2009 ....... 261,246 $
26,125 $
395,628 $ 6,391,320 $
— $
(54,881) $ 6,758,192
Distributions to parent................
Capital contributions by parent
— share-based compensation...
Net income .................................
Noncontrolling interests from
FDR Holdings, Ltd.
acquisition................................
Other comprehensive income
—
—
—
—
(462,967)
—
20,604
—
815,534
—
3
124,628
—
(462,967)
—
—
20,604
815,537
124,628
(loss), net..................................
—
—
—
—
—
4,661
4,661
Balance at December 31, 2010 ....... 261,246 $
26,125 $
416,232 $ 6,743,887 $
124,631 $
(50,220) $ 7,260,655
See accompanying notes to the consolidated financial statements.
63
NOBLE CORPORATION (NOBLE-CAYMAN) AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(In thousands)
Year Ended December 31,
2010
2009
2008
Net income ............................................................................................... $ 815,537 $ 1,700,381 $ 1,560,995
Other comprehensive income (loss), net of tax
Foreign currency translation adjustments .........................................
Gain (loss) on foreign currency forward contracts ...........................
Gain (loss) on interest rate swaps .....................................................
Net pension plan gain (loss) (net of a tax benefit of $2,888 in 2010,
$1,635 in 2009 and $16,630 in 2008) .............................................
Amortization of deferred pension plan amounts (net of tax
2,456
1,187
366
277
417
—
(19,095)
(2,219)
—
(1,898)
(1,424)
(31,806)
provision of $1,286 in 2010, $653 in 2009 and $413 in 2008 ........
Other comprehensive income (loss), net ..............................................
2,550
4,661
3,106
2,376
930
(52,190)
Total comprehensive income................................................................
820,198
1,702,757
1,508,805
Less: Net income attributable to noncontrolling interests ........................
(3)
Less: Noncontrolling portion of gain on interest rate swaps.....................
(183)
—
—
—
—
Comprehensive income attributable to Noble Corporation................ $ 820,012 $ 1,702,757 $ 1,508,805
See accompanying notes to the consolidated financial statements.
64
NOBLE CORPORATION (NOBLE-SWISS) AND SUBSIDIARIES
NOBLE CORPORATION (NOBLE-CAYMAN) AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unless otherwise indicated, dollar amounts in tables are in thousands, except per share data)
Note 1 — Organization and Significant Accounting Policies
Organization and Business
Noble Corporation, a Swiss corporation, is a leading offshore drilling contractor for the oil and gas industry. We
perform contract drilling services with our fleet of 73 mobile offshore drilling units and one floating production
storage and offloading unit (“FPSO”) located worldwide. Our fleet consists of 14 semisubmersibles, 12 drillships,
45 jackups and two submersibles. Our fleet includes eight units under construction: two dynamically positioned,
ultra-deepwater, harsh environment Globetrotter-class drillships, two dynamically positioned, ultra-deepwater, harsh
environment Bully-class drillships, two harsh environment jackup rigs announced in December 2010 and two ultra-
deepwater drillships announced in January 2011. As of January 19, 2011, approximately 81 percent of our fleet was
located outside the United States in the following areas: Middle East, India, Mexico, the Mediterranean, the North
Sea, Brazil, West Africa and Asian Pacific. Noble and its predecessors have been engaged in the contract drilling of
oil and gas wells since 1921.
Consummation of Migration and Worldwide Internal Restructuring
On March 26, 2009, we completed a series of transactions that effectively changed the place of incorporation of
our parent holding company from the Cayman Islands to Switzerland. As a result of these transactions, Noble-
Cayman, the previous publicly traded Cayman Islands parent holding company, became a direct, wholly-owned
subsidiary of Noble-Swiss, the current parent company. Noble-Swiss’ principal asset is all of the shares of Noble-
Cayman. The consolidated financial statements of Noble-Swiss include the accounts of Noble-Cayman, and Noble-
Swiss conducts substantially all of its business through Noble-Cayman and its subsidiaries. In connection with this
transaction, we relocated our principal executive offices, executive officers and selected personnel to Geneva,
Switzerland.
Principles of Consolidation
The consolidated financial statements include our accounts and those subsidiaries either wholly-owned or
entities in which we hold a controlling financial interest.
The Financial Accounting Standards Board (“FASB”) issued authoritative guidance for noncontrolling interests
in December 2007, which establishes accounting and reporting standards for the noncontrolling interest in a
subsidiary and for the deconsolidation of a subsidiary. The guidance clarifies that a noncontrolling interest in a
subsidiary, which is sometimes referred to as an unconsolidated investment, is an ownership interest in the
consolidated entity that should be reported as a component of equity in the consolidated financial statements.
Among other requirements, the guidance requires consolidated net income to be reported at amounts attributable to
both the parent and the noncontrolling interest. It also requires disclosure, on the face of the consolidated income
statement, of the amounts of consolidated net income attributable to the parent and to the noncontrolling interest. We
adopted the provisions of the FASB guidance on January 1, 2009 and applied the provisions retrospectively, with no
material impact.
Our 2010 consolidated financial statements include the accounts of two 50 percent joint ventures where we hold
a variable interest as defined under FASB codification where we have determined that we are the primary
beneficiary. Intercompany balances and transactions have been eliminated in consolidation.
65
NOBLE CORPORATION (NOBLE-SWISS) AND SUBSIDIARIES
NOBLE CORPORATION (NOBLE-CAYMAN) AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unless otherwise indicated, dollar amounts in tables are in thousands, except per share data)
Foreign Currency Translation
Although we are a Swiss corporation, we define foreign currency as any non-U.S. denominated currency. In non-
U.S. locations where the U.S. Dollar has been designated as the functional currency (based on an evaluation of such
factors as the markets in which the subsidiary operates, inflation, generation of cash flow, financing activities and
intercompany arrangements), local currency transaction gains and losses are included in net income. In non-U.S.
locations where the local currency is the functional currency, assets and liabilities are translated at the rates of
exchange on the balance sheet date, while income and expense items are translated at average rates of exchange
during the year. The resulting gains or losses arising from the translation of accounts from the functional currency to
the U.S. Dollar are included in “Accumulated other comprehensive income (loss)” in the Consolidated Balance
Sheets. We did not recognize any material gains or losses on foreign currency transactions or translations during the
years ended December 31, 2010, 2009 and 2008. We use the Canadian Dollar as the functional currency for our
labor contract drilling services in Canada.
Cash and Cash Equivalents
Cash and cash equivalents include cash on hand, demand deposits with banks and all highly liquid investments
with original maturities of three months or less. Our cash, cash equivalents and short-term investments are subject to
potential credit risk, and certain of our cash accounts carry balances greater than the federally insured limits. Cash
and cash equivalents are held by major banks or investment firms. Our cash management and investment policies
restrict investments to lower risk, highly liquid securities and we perform periodic evaluations of the relative credit
standing of the financial institutions with which we conduct business.
In accordance with FASB standards, cash flows from our labor contract drilling services in Canada are
calculated based on the Canadian Dollar. As a result, amounts related to assets and liabilities reported on the
Consolidated Statements of Cash Flows will not necessarily agree with changes in the corresponding balances on the
Consolidated Balance Sheets. The effect of exchange rate changes on cash balances held in foreign currencies was
not material in 2010, 2009 or 2008.
Investments in Marketable Securities
Investments in marketable securities held at December 31, 2010 and 2009 were classified as trading securities
and carried at fair value in “Other Current Assets” with the unrealized gain or loss included in “Other Income” in the
accompanying Consolidated Statements of Income.
Property and Equipment
Property and equipment is stated at cost, reduced by provisions to recognize economic impairment in value
whenever events or changes in circumstances indicate an asset’s carrying value may not be recoverable. At both
December 31, 2010 and 2009, there was $3.6 billion and $2.3 billion of construction-in-progress, respectively. Such
amounts are included in “Drilling equipment and facilities” in the accompanying Consolidated Balance Sheets.
Major replacements and improvements are capitalized. When assets are sold, retired or otherwise disposed of, the
cost and related accumulated depreciation are eliminated from the accounts and the gain or loss is recognized.
Drilling equipment and facilities are depreciated using the straight-line method over their estimated useful lives as of
the date placed in service or date of major refurbishment. Estimated useful lives of our drilling equipment range
from three to thirty years. Other property and equipment is depreciated using the straight-line method over useful
lives ranging from two to twenty-five years. Included in accounts payable was $161 million and $47 million of
capital accruals as of December 31, 2010 and 2009, respectively.
Interest is capitalized on construction-in-progress at the interest rate on debt incurred for construction or at the
weighted average cost of debt outstanding during the period of construction. Capitalized interest for the years ended
December 31, 2010, 2009 and 2008 was $83 million, $55 million and $48 million, respectively.
66
NOBLE CORPORATION (NOBLE-SWISS) AND SUBSIDIARIES
NOBLE CORPORATION (NOBLE-CAYMAN) AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unless otherwise indicated, dollar amounts in tables are in thousands, except per share data)
Overhauls and scheduled maintenance of equipment are performed based on the number of hours operated in
accordance with our preventative maintenance program. Routine repair and maintenance costs are charged to
expense as incurred; however, the costs of the overhauls and scheduled major maintenance projects that benefit
future periods and which typically occur every three to five years are deferred when incurred and amortized over an
equivalent period. The deferred portion of these major maintenance projects is included in “Other Assets” in the
Consolidated Balance Sheets. Such amounts totaled $183 million and $181 million at December 31, 2010 and 2009,
respectively.
Amortization of deferred costs for major maintenance projects is reflected in “Depreciation and amortization” in
the accompanying Consolidated Statements of Income. The amount of such amortization was $107 million, $102
million and $91 million for the years ended December 31, 2010, 2009 and 2008, respectively. Total repair and
maintenance expense for the years ended December 31, 2010, 2009 and 2008, exclusive of amortization of deferred
costs for major maintenance projects, was $186 million, $175 million and $169 million, respectively.
We evaluate the realization of property and equipment whenever events or changes in circumstances indicate
that the carrying amount of an asset may not be recoverable. An impairment loss on our property and equipment
exists when estimated undiscounted cash flows expected to result from the use of the asset and its eventual
disposition are less than its carrying amount. Any impairment loss recognized represents the excess of the asset’s
carrying value over the estimated fair value.
In May 2009, our jackup, the Noble David Tinsley, experienced a “punch-through” while the rig was being
positioned on location offshore Qatar. The incident involved the sudden penetration of all three legs through the sea
bottom, which resulted in severe damage to the legs and the rig. We recorded a charge of $17 million during the
quarter ended June 30, 2009 related to this involuntary conversion, which includes approximately $9 million for the
write-off of the damaged legs.
During the first quarter of 2009, we recognized a charge of $12 million related to the Noble Fri Rodli, a
submersible that has been cold stacked since October 2007. We recorded the charge as a result of a decision to
evaluate disposition alternatives for this rig.
Deferred Costs
Deferred debt issuance costs are being amortized over the life of the debt securities. The amortization of debt
issuance costs is included in interest expense.
Insurance Reserves
We maintain various levels of self-insured retention for certain losses including property damage, loss of hire,
employment practices liability, employers’ liability, and general liability, among others. We accrue for property
damage and loss of hire charges on a per event basis.
Employment practices liability claims are accrued based on actual claims during the year. Maritime employer’s
liability claims are generally estimated using actuarial determinations. General liability claims are estimated by our
internal claims department by evaluating the facts and circumstances of each claim (including incurred but not
reported claims) and making estimates based upon historical experience with similar claims. At December 31, 2010
and 2009, loss reserves for personal injury and protection claims totaled $21 million and $23 million, respectively,
and such amounts are included in “Other current liabilities” in the accompanying Consolidated Balance Sheets.
Revenue Recognition
Revenues generated from our dayrate-basis drilling contracts and labor contracts are recognized as services are
performed.
67
NOBLE CORPORATION (NOBLE-SWISS) AND SUBSIDIARIES
NOBLE CORPORATION (NOBLE-CAYMAN) AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unless otherwise indicated, dollar amounts in tables are in thousands, except per share data)
We may receive lump-sum fees for the mobilization of equipment and personnel. Mobilization fees received and
costs incurred to mobilize a drilling unit from one market to another are recognized over the term of the related
drilling contract. Costs incurred to relocate drilling units to more promising geographic areas in which a contract has
not been secured are expensed as incurred. Lump-sum payments received from customers relating to specific
contracts, including equipment modifications, are deferred and amortized to income over the term of the drilling
contract. Deferred revenues under drilling contracts totaled $104 million at December 31, 2010, including $65
million in fair value contract adjustments in connection with our acquisition of FDR Holdings Ltd. discussed in Note
2, as compared to $32 million at December 31 2009. Such amounts are included in either “Other Current Liabilities”
or “Current Liabilities” in our Consolidated Balance Sheets, based upon our expected time of recognition. As
discussed in Note 19 “Subsequent Events,” in connection with the cancelation of the contract on the Noble Phoenix,
we recognized a non-cash gain of approximately $55 million in the first quarter of 2011 which represented the
unamortized balance of the contract’s fair value adjustment.
We record reimbursements from customers for “out-of-pocket” expenses as revenues and the related direct cost
as operating expenses. Reimbursements for loss of hire under our insurance coverages are included in “(Gain)/loss
on assets disposal/involuntary conversion, net” in the Consolidated Statements of Income.
Income Taxes
Income taxes have been provided based on the laws and rates in effect in the countries in which operations are
conducted or in which we or our subsidiaries are considered resident for income tax purposes. Applicable income
and withholding taxes have not been provided on undistributed earnings of our subsidiaries. We do not intend to
repatriate such undistributed earnings for the foreseeable future except for distributions upon which incremental
income and withholding taxes would not be material. In certain circumstances, we expect that, due to changing
demands of the offshore drilling markets and the ability to redeploy our offshore drilling units, certain of such units
will not reside in a location long enough to give rise to future tax consequences. As a result, no deferred tax asset or
liability has been recognized in these circumstances. Should our expectations change regarding the length of time an
offshore drilling unit will be used in a given location, we will adjust deferred taxes accordingly.
We operate through various subsidiaries in numerous countries throughout the world including the United States.
Consequently, we are subject to changes in tax laws, treaties or regulations or the interpretation or enforcement
thereof in the U.S., Switzerland or jurisdictions in which we or any of our subsidiaries operate or is resident. Our
income tax expense is based upon our interpretation of the tax laws in effect in various countries at the time that the
expense was incurred. If the U.S. Internal Revenue Service or other taxing authorities do not agree with our
assessment of the effects of such laws, treaties and regulations, this could have a material adverse effect on us
including the imposition of a higher effective tax rate on our worldwide earnings or a reclassification of the tax
impact of our significant corporate restructuring transactions.
Net Income per Share
According to FASB standards, we have determined that our unvested share-based payment awards, which
contain non-forfeitable rights to dividends, are participating securities and should be included in the computation of
earnings per share pursuant to the “two-class” method. The “two-class” method allocates undistributed earnings
between common shares and participating securities. The diluted earnings per share calculation under the “two-
class” method also includes the dilutive effect of potential registered shares issued in connection with stock options.
The dilutive effect of stock options is determined using the treasury stock method. Our adoption of the “two-class”
method for calculating earnings per share did not have a material impact on prior year earnings per share amounts.
Share-Based Compensation Plans
We account for share-based compensation pursuant to FASB standards. Accordingly, we record the grant date
fair value of share-based compensation arrangements as compensation cost using a straight-line method over the
service period. Share-based compensation is expensed or capitalized based on the nature of the employee’s
activities.
68
NOBLE CORPORATION (NOBLE-SWISS) AND SUBSIDIARIES
NOBLE CORPORATION (NOBLE-CAYMAN) AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unless otherwise indicated, dollar amounts in tables are in thousands, except per share data)
Certain Significant Estimates
The preparation of financial statements in conformity with accounting principles generally accepted in the
United States of America requires management to make estimates and assumptions that affect the reported amounts
of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and
the reported amount of revenues and expenses during the reporting period. Certain accounting policies involve
judgments and uncertainties to such an extent that there is reasonable likelihood that materially different amounts
could have been reported under different conditions, or if different assumptions had been used. We evaluate our
estimates and assumptions on a regular basis. We base our estimates on historical experience and various other
assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for
making judgments about carrying values of assets and liabilities that are not readily apparent from other sources.
Actual results may differ from these estimates and assumptions used in preparation of our consolidated financial
statements.
Reclassifications
Certain reclassifications have been made to amounts in prior period financial statements to conform to current
period presentations. We believe these reclassifications are immaterial as they do not have a material impact on our
financial position, results of operations or cash flows.
Accounting Pronouncements
In June 2009, the FASB issued guidance which expanded disclosures that a reporting entity provides about
transfers of financial assets and its effect on the financial statements. This guidance is effective for annual and
interim reporting periods beginning after November 15, 2009. The adoption of this guidance did not have a material
impact on our financial condition, results of operations, cash flows or financial disclosures.
Also in June 2009, the FASB issued guidance that revises how an entity evaluates variable interest entities. This
guidance is effective for annual and interim reporting periods beginning after November 15, 2009. The adoption of
this guidance did not have a material impact on our financial condition, results of operations, cash flows or financial
disclosures.
In October 2009, the FASB issued guidance that impacts the recognition of revenue in multiple-deliverable
arrangements. The guidance establishes a selling-price hierarchy for determining the selling price of a deliverable.
The goal of this guidance is to clarify disclosures related to multiple-deliverable arrangements and to align the
accounting with the underlying economics of the multiple-deliverable transaction. This guidance is effective for
fiscal years beginning on or after June 15, 2010. We are in the process of evaluating this guidance but do not believe
this guidance will have a material impact on our financial condition, results of operations, cash flows or financial
disclosures.
In January 2010, the FASB issued guidance relating to the disclosure of the fair value of assets. This guidance
calls for additional information to be given regarding the transfer of items in and out of respective categories. In
addition, it requires additional disclosures regarding purchases, sales, issuances, and settlements of assets that are
classified as level three within the FASB fair value hierarchy. This guidance is generally effective for annual and
interim periods ending after December 15, 2009. However, the disclosures about purchases, sales, issuances and
settlements in the roll-forward activity in level three fair value measurements is deferred until fiscal years beginning
after December 15, 2010. These additional disclosures did not have and are not expected to have a material impact
on our financial condition, results of operations, cash flows or financial disclosures.
In February 2010, the FASB issued guidance that clarifies the disclosure of subsequent events for SEC
registrants. Under this guidance an SEC registrant can disclose that the company has considered subsequent events
through the date of filing with the SEC as opposed to specifically stating the date to which subsequent events were
considered. This guidance is effective upon the issuance of the guidance. Our adoption of this guidance did not have
a material impact on our financial condition, results of operations, cash flows or financial disclosures.
69
NOBLE CORPORATION (NOBLE-SWISS) AND SUBSIDIARIES
NOBLE CORPORATION (NOBLE-CAYMAN) AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unless otherwise indicated, dollar amounts in tables are in thousands, except per share data)
In April 2010, the FASB issued guidance that codifies the need for disclosure relating to the disallowance of
various credits as a result of the passage of both the Health Care and Education Reconciliation Act of 2010 and the
Patient Protection and Affordable Care Act, which were signed into law in March 2010. The passage of these acts
did not have an impact on our financial condition, results of operations, cash flows or financial disclosures.
In December 2010, the FASB issued guidance that requires a public entity to disclose pro forma information for
business combinations that occurred in the current reporting period. The disclosures include pro forma revenue and
earnings of the combined entity for the current reporting period as though the acquisition date for all business
combinations that occurred during the year had been as of the beginning of the annual reporting period. If
comparative financial statements are presented, the pro forma revenue and earnings of the combined entity for the
comparable prior reporting period should be reported as though the acquisition date for all business combinations
that occurred during the current year had been as of the beginning of the comparable prior annual reporting period.
The guidance is effective for annual reporting periods beginning on or after December 15, 2010. We do not
anticipate the adoption of this guidance to have a material impact on our financial condition, results of operations,
cash flows or financial disclosures.
Note 2 — Acquisition of FDR Holdings Limited
On July 28, 2010, Noble-Swiss and Noble AM Merger Co., a Cayman Islands company and indirect wholly-
owned subsidiary of Noble-Swiss (“Merger Sub”), completed the acquisition of FDR Holdings Limited, a Cayman
Islands company (“Frontier”). Under the terms of the Agreement and Plan of Merger with Frontier and certain of
Frontier’s shareholders, Merger Sub merged with and into Frontier, with Frontier surviving as an indirect wholly-
owned subsidiary of Noble-Swiss and a wholly-owned subsidiary of Noble-Cayman. The Frontier acquisition was
for a purchase price of approximately $1.7 billion in cash plus liabilities assumed and strategically expanded and
enhanced our global fleet by adding three dynamically positioned drillships (including two Bully-class joint venture-
owned drillships under construction), two conventionally moored drillships, including one that is Arctic-class, a
conventionally moored deepwater semisubmersible and one dynamically positioned FPSO to our fleet. Frontier’s
results of operations were included in our results beginning July 28, 2010. We funded the cash consideration paid at
closing of approximately $1.7 billion using proceeds from our July 2010 offering of senior notes and existing cash
on hand.
The following table summarizes our allocation of the purchase price to the estimated fair values of the assets
acquired and liabilities assumed on the acquisition date of July 28, 2010:
ASSETS
Cash and cash equivalents ................................................................................................................. $
Accounts receivable, net of $2,111 reserve .......................................................................................
Other current assets ...........................................................................................................................
Other assets........................................................................................................................................
Drilling equipment ............................................................................................................................
Value of in-place contracts ................................................................................................................
77,375
51,541
11,296
11,469
2,527,148
77,260
Total assets acquired.............................................................................................................................. $ 2,756,089
Fair value
LIABILITIES
81,767
Accounts payable .............................................................................................................................. $
32,860
Other current liabilities......................................................................................................................
688,748
Consolidated joint ventures credit facilities ......................................................................................
36,824
Other liabilities ..................................................................................................................................
124,628
Non-controlling interests ...................................................................................................................
84,243
Value of in-place contracts ................................................................................................................
Total liabilities assumed ........................................................................................................................
1,049,070
Cash consideration paid......................................................................................................................... $ 1,707,019
70
NOBLE CORPORATION (NOBLE-SWISS) AND SUBSIDIARIES
NOBLE CORPORATION (NOBLE-CAYMAN) AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unless otherwise indicated, dollar amounts in tables are in thousands, except per share data)
The fair value of cash and cash equivalents, accounts receivable, other current assets, accounts payable and other
current liabilities was generally determined using historical carrying values given the short term nature of these
items. The fair values of drilling equipment, in-place contracts and noncontrolling interests were determined using
management’s estimates of future net cash flows. Such estimated future cash flows were discounted at an
appropriate risk-adjusted rate of return. The fair values of the consolidated joint venture credit facilities and
derivatives were determined based on a discounted cash flow model utilizing an appropriate market or risk-adjusted
yield. The fair value of other assets and other liabilities, related to long-term tax items, was derived using estimates
made by management. Fair value estimates for in-place contracts are located in “Other assets” and “Other liabilities”
in our Consolidated Balance Sheet and will be amortized over the life of the respective contract. The weighted
average life of those contracts totaled approximately 3.0 years as of the date of the acquisition.
As our allocation is final, any adjustment to the fair value of assets acquired and liabilities assumed, will be
directly recorded in earnings. We currently do not anticipate any further changes to the purchase price allocation.
As of December 31, 2010, we have incurred $19 million in acquisition costs related to the Frontier acquisition.
These costs have been expensed and are included in contract drilling services expense.
The following unaudited pro forma financial information for the year ended December 31, 2010 and 2009, gives
effect to the Frontier acquisition as if it had occurred at the beginning of the periods presented. The pro forma
financial information for the year ended December 31, 2010 includes pro forma results for the period prior to the
closing date of July 28, 2010 and actual results for the period from July 28, 2010 through December 31, 2010. The
pro forma results are based on historical data and are not intended to be indicative of the results of future operations.
Total operating revenues................................................................................................. $ 2,985,439 $ 3,965,457
1,674,722
Net income to Noble Corporation...................................................................................
6.40
Net income per share (Diluted)....................................................................................... $
716,875
2.80 $
2010
2009
Revenues from the Frontier rigs totaled $147 million from the closing date of July 28, 2010 through December
31, 2010. Operating expenses for this same period totaled $98 million for the Frontier rigs.
Consolidated joint ventures
In connection with the Frontier acquisition, we acquired Frontier’s 50 percent interest in two joint ventures, each
with a subsidiary of Royal Dutch Shell, PLC (“Shell”), for the construction and operation of the two Bully-class
drillships. Since these entities’ equity at risk is insufficient to permit them to carry on their activities without
additional subordinated financial support, they each meet the criteria for a variable interest entity. We have
determined that we are the primary beneficiary for accounting purposes. Our determination is based on our ability to
effectively control the principal activities of the entity as the primary maker of operational decisions. Additionally,
we receive a management fee to oversee the construction of, and to manage the operation and maintenance of, the
drillships, which is deemed a preference payment under current accounting literature. Accordingly, we consolidate
the entities in our consolidated financial statements, eliminate intercompany transactions. The equity interest that is
not owned by us is presented as noncontrolling interests on our Consolidated Balance Sheets.
Amounts related to these two joint ventures at December 31, 2010, include the combined carrying amount of the
drillships owned by the joint ventures of $869 million and total outstanding debt of $691 million, which excludes
$72 million of joint venture partner notes. Our portion of these joint venture partner notes, which totaled $36
million, has been eliminated in our Consolidated Balance Sheets. As discussed in Note 7 – “Debt,” the outstanding
balances of the joint ventures’ credit facilities were repaid in full and the credit facilities terminated in February
2011.
71
NOBLE CORPORATION (NOBLE-SWISS) AND SUBSIDIARIES
NOBLE CORPORATION (NOBLE-CAYMAN) AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unless otherwise indicated, dollar amounts in tables are in thousands, except per share data)
Note 3 — Earnings per Share
Our unvested share-based payment awards, which include restricted shares and restricted units are considered
participating securities as they contain non-forfeitable rights to dividends and should be included in the computation
of earnings per share pursuant to the “two-class” method. The “two-class” method allocates undistributed earnings
between common shares and participating securities. The diluted earnings per share calculation under the “two-
class” method also includes the dilutive effect of potential share issuances in connection with stock options. The
dilutive effect of stock options is determined using the treasury stock method. The following table sets forth the
computation of basic and diluted net income per share for Noble-Swiss:
Year Ended December 31,
2010
2009
2008
Allocation of net income
Basic
Net income attributable to Noble Corporation............................. $ 773,429 $ 1,678,642 $ 1,560,995
Earnings allocated to unvested share-based payment awards.......
(13,195)
Net income — basic ................................................................ $ 765,932 $ 1,661,831 $ 1,547,800
(16,811)
(7,497)
Diluted
Net income attributable to Noble Corporation............................. $ 773,429 $ 1,678,642 $ 1,560,995
(13,131)
Earnings allocated to unvested share-based payment awards.......
Net income — diluted ............................................................. $ 765,948 $ 1,661,884 $ 1,547,864
(16,758)
(7,481)
Weighted average shares outstanding — basic................................
Incremental shares issuable from assumed exercise of stock
253,123
258,035
264,782
options ............................................................................................
Weighted average shares outstanding — diluted.............................
813
253,936
856
258,891
2,023
266,805
Weighted average unvested share-based payment awards.............
2,438
2,611
2,224
Earnings per share
Basic ..................................................................................................... $
Diluted .................................................................................................. $
3.03 $
3.02 $
6.44 $
6.42 $
5.85
5.81
Only those items having a dilutive impact on our basic net income per share are included in diluted net income
per share. For the years ended December 31, 2010, 2009 and 2008, stock options totaling 0.8 million, 0.1 million
and 0.7 million, respectively, were excluded from the diluted net income per share calculation as they were not
dilutive.
Note 4 — Marketable Securities
Marketable Equity Securities
During 2008, we purchased investments that closely correlate to the investment elections made by participants in
the Noble Drilling Corporation 401(k) Savings Restoration Plan (“Restoration Plan”) in order to mitigate the impact
of the investment income and losses from the Restoration Plan on our consolidated financial statements. The value
of these investments held for our benefit totaled $7 million and $8 million at December 31, 2010 and 2009,
respectively. These assets were classified as trading securities and carried at fair value in “Other current assets” with
the realized and unrealized gain or loss included in “Other income” in the accompanying Consolidated Statements of
Income. We recognized a gain of $0.7 million during 2010 and a loss of $2 million on these investments in both
2009 and 2008.
72
NOBLE CORPORATION (NOBLE-SWISS) AND SUBSIDIARIES
NOBLE CORPORATION (NOBLE-CAYMAN) AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unless otherwise indicated, dollar amounts in tables are in thousands, except per share data)
Note 5 — Receivables from Customers
We had an agreement with one of our customers in the U.S. Gulf of Mexico regarding outstanding receivables
owed to us, which totaled approximately $59 million at December 31, 2009. The customer conveyed to us an
overriding royalty interest (“ORRI”) as security for the outstanding receivables and agreed to a payment plan to
repay all past due amounts. Amounts received by us pursuant to the ORRI have been applied to the customer’s
payment obligations under the payment plan. As of December 31, 2010, the customer had repaid all amounts due to
us under this agreement therefore our right to the ORRI has been extinguished.
In June 2010, a subsidiary of Frontier entered into a charter contract with a subsidiary of BP, plc (“BP”) for the
FPSO, Seillean, with a term of a minimum of 100 days in connection with BP’s oil spill relief efforts in the U.S.
Gulf of Mexico. The unit went on hire on July 23, 2010. In October 2010, after the Macondo well was sealed, BP
initiated an arbitration proceeding against us claiming the contract was void ab initio, or never existed, due to a
fundamental breach and demanded that we reimburse the amounts already paid to us under the charter. We believe
BP owes us the amounts due under the charter and do not believe BP can successfully make such a claim. The
charter has a “hell or high water” provision requiring payment, and we believe we have satisfied our obligations
under the charter. Based on the available information and the analysis we have performed to date, we have recorded
the revenue under the charter, which was $29 million through the end of the contract. In the event BP is successful
in its claim, we would take a charge for revenue recorded. However, we also believe that if BP were to be successful
in claiming the contract void ab initio, we would have an indemnity claim against the former shareholders of
Frontier, and have put them on notice to that effect.
Note 6 — Supplemental Cash Flow Information
Cash paid during the period for:
Interest, net of amounts capitalized .............................................................. $
3,014
Income taxes (net of refunds) ....................................................................... $ 194,423 $ 332,287 $ 258,392
1,618 $
4,044 $
Year Ended December 31,
2008
2009
2010
Note 7 — Debt
Long-term debt consists of the following at December 31, 2010 and 2009:
December 31,
2010
December 31,
2009
5.875% Senior Notes due 2013 ...................................................................... $
7.375% Senior Notes due 2014 ......................................................................
3.45% Senior Notes due 2015 ........................................................................
7.50% Senior Notes due 2019 ........................................................................
4.90% Senior Notes due 2020 ........................................................................
6.20% Senior Notes due 2040 ........................................................................
Bully 1 joint venture debt ...............................................................................
Bully 2 joint venture debt ...............................................................................
Bully 1 joint venture partner debt ...................................................................
Bully 2 joint venture partner debt ...................................................................
Credit Facility .................................................................................................
Total Debt...................................................................................................
299,911 $
249,506
350,000
201,695
498,672
399,889
370,000
321,052
18,500
17,472
40,000
2,766,697
299,874
249,377
—
201,695
—
—
—
—
—
—
—
750,946
Less: Current Maturities .................................................................................
(80,213)
—
Long-term Debt .......................................................................................... $
2,686,484 $
750,946
73
NOBLE CORPORATION (NOBLE-SWISS) AND SUBSIDIARIES
NOBLE CORPORATION (NOBLE-CAYMAN) AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unless otherwise indicated, dollar amounts in tables are in thousands, except per share data)
We have a $600 million unsecured bank credit facility (the “Credit Facility”) which matures March of 2013, of
which we had drawn $40 million as of December 31, 2010. The credit facility contains various covenants including
a covenant that limits our ratio of debt to total tangible capitalization (as defined in the Credit Facility) to 0.60. As of
December 31, 2010, our ratio of debt to total tangible capitalization, as defined by the facility, was 0.22.
In February 2011, we entered into an additional revolving credit facility with an initial capacity of $300 million.
The facility matures in 2015 and provides us with the ability to issue up to $150 million in letters of credit. The
covenants and events of default under the additional revolving credit facility are substantially similar to the Credit
Facility, which remains in place. The new facility is guaranteed by our indirect wholly-owned subsidiaries, Noble
Holding International Limited (“NHIL”) and Noble Drilling Corporation (“NDC”).
At December 31, 2010, we had letters of credit of $126 million and performance and tax assessment bonds
totaling $350 million supported by surety bonds outstanding. Of the letters of credit outstanding, $75 million were
issued to support bank bonds in connection with our drilling units in Nigeria. Additionally, certain of our
subsidiaries issue, from time to time, guarantees of the temporary import status of rigs or equipment imported into
certain countries in which we operate. These guarantees are issued in lieu of payment of custom, value added or
similar taxes in those countries.
On July 26, 2010, we issued through NHIL, $1.25 billion aggregate principal amount of senior notes in three
separate tranches, comprising $350 million of 3.45% Senior Notes due 2015, $500 million of 4.90% Senior Notes
due 2020, and $400 million of 6.20% Senior Notes due 2040. Proceeds, net of discount and issuance costs, totaled
$1.24 billion and were used to finance a portion of the cash consideration for the Frontier acquisition. Noble-
Cayman fully and unconditionally guaranteed the notes on a senior unsecured basis. Interest on all three series of
these senior notes is payable semi-annually, in arrears, on February 1 and August 1 of each year, beginning on
February 1, 2011.
In February 2011, NHIL completed a debt offering of $1.1 billion aggregate principal amount of senior notes in
three separate tranches, with $300 million of 3.05% Senior Notes due 2016, $400 million of 4.625% Senior Notes
due 2021, and $400 million of 6.05% Senior Notes due 2041. The weighted average coupon of all three tranches is
4.71%. A portion of the net proceeds of approximately $1.09 billion after expenses was used to repay the
outstanding balance on our revolving credit facility and to repay our portion of outstanding debt under the Bully 1
and Bully 2 credit facilities.
As part of the Frontier acquisition, we assumed secured non-recourse debt related to the Bully 1 and Bully 2
joint ventures. In February 2011, the outstanding balances of the Bully 1 and Bully 2 credit facilities, which totaled
$691 million, were repaid in full and the credit facilities terminated using a portion of the proceeds from our
February 2011 debt offering and equity contributions from our joint venture partner. In addition, the related interest
rate swaps were settled and terminated concurrent with the repayment and termination of the credit facilities. The
Bully 1 and Bully 2 credit facilities are discussed further below.
The Bully 1 secured non-recourse credit facility consisted of a $375 million senior term loan facility, a $40
million senior revolving loan facility and a $50 million junior term loan facility. As of December 31, 2010, loans in
an aggregate principal amount of $370 million were outstanding under the senior term loan facility. The senior term
loan facility provided for floating interest rates that were fixed for one-, three- or six-month periods at LIBOR plus
2.5% prior to delivery and acceptance of the Noble Bully I drillship. As noted in Note 12- “Derivative Instruments
and Hedging Activities”, the joint venture maintained interest rate swaps, with a notional amount of $278 million, to
satisfy bank covenants and to hedge the impact of interest rate changes on interest paid. The Bully 1 credit facility
was secured by assignments of the major contracts for the construction of the Noble Bully I drillship and its
equipment, the drilling contract for the drillship, and various other rights. In connection with the termination of the
credit facility, the security interest and related collateral has been released.
The Bully 2 secured non-recourse credit facility consisted of a $435 million senior term loan facility, a $10
million senior revolving loan facility and a $50 million cost overrun term loan facility. As of December 31, 2010,
loans in an aggregate principal amount of $321 million were outstanding under the senior term loan facility. The
senior term loan facility provided for floating interest rates that were fixed for three months or such other period
selected by the borrower and agreed by the agent (but not to exceed three months), at LIBOR plus 2.5% prior to the
occurrence of the delivery date of the hull and thereafter at LIBOR plus 2.3%, until contract commencement. As
noted in Note 12- “Derivative Instruments and Hedging Activities”, the joint venture maintained an interest rate
swap, with a notional amount of $326 million, to satisfy bank covenants and to hedge the impact of interest rate
changes on interest paid. The Bully 2 credit facility was secured by assignments of the major contracts for the
construction of the Noble Bully II drillship and its equipment, the drilling contract for the drillship, and various other
rights. In connection with the termination of the credit facility, the security interest and related collateral has been
released.
74
NOBLE CORPORATION (NOBLE-SWISS) AND SUBSIDIARIES
NOBLE CORPORATION (NOBLE-CAYMAN) AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unless otherwise indicated, dollar amounts in tables are in thousands, except per share data)
Certain amendments to the underlying drilling contracts and the revised vessel delivery impact to loan
amortization schedules required consent from lenders to both Bully joint ventures. On the Bully 1 credit facility we
obtained a waiver regarding certain covenants related to the completion date of the Noble Bully I drillship. The
waiver was set to expire on February 28, 2011. As these credit facilities have been refinanced using a portion of the
proceeds from our February 2011 debt offering and equity contributions from our joint venture partner, we
continued to classify the non-current portions of the Bully 1 credit facilities as “Long-term debt” in our Consolidated
Balance Sheets.
In September 2010, the Bully joint ventures issued notes to the joint venture partners totaling $70 million. The
interest rate on these notes is 10%, payable semi-annually in arrears and in kind on June 30 and December 31
commencing in December 2010. The interest payable due in 2010 was rolled into the principal loan balance of the
notes. The purpose of these notes is to provide additional liquidity to these joint ventures in connection with the
shipyard construction of the Bully vessels. Our portion of the joint venture partner notes, which totaled $36 million
at December 31, 2010, has been eliminated in our Consolidated Balance Sheets. The non-eliminated portions of
these joint venture partner notes totaled $19 million for Bully 1 and $17 million for Bully 2 at December 31, 2010
and are due in 2016 and 2018, respectively.
Aggregate principal repayments of total debt for the next five years and thereafter are as follows:
Total
2011
2012
5.875% Senior Notes due 2013 ..... $
7.375% Senior Notes due 2014 .....
3.45% Senior Notes due 2015 .......
7.50% Senior Notes due 2019 .......
4.90% Senior Notes due 2020 .......
6.20% Senior Notes due 2040 .......
Bully 1 joint venture debt..............
Bully 2 joint venture debt..............
Bully 1 joint venture partner debt.....
Bully 2 joint venture partner debt.....
Credit Facility ...............................
299,911 $
249,506
350,000
201,695
498,672
399,889
370,000
321,052
18,500
17,472
40,000
— $
—
—
—
—
—
63,000
17,213
—
—
—
2014
2015
2013
— $ 299,911 $
—
—
—
—
—
63,000
50,457
—
—
—
— $
— 249,506
—
—
—
—
63,000
53,494
—
—
40,000
— $
—
— 350,000
—
—
—
—
—
—
63,000
63,000
59,232
57,037
—
—
—
—
—
—
Thereafter
—
—
—
201,695
498,672
399,889
55,000
83,619
18,500
17,472
—
Total................................................... $ 2,766,697 $ 80,213 $ 113,457 $ 456,405 $ 369,543 $ 472,232 $ 1,274,847
Fair Value of Financial Instruments
Fair value, as used in FASB standards, represents the amount at which an instrument could be exchanged in a
current transaction between willing parties. The 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. The following table
presents the estimated fair value of our long-term debt as of December 31, 2010 and 2009.
December 31, 2010
December 31, 2009
Carrying
Value
Estimated
Fair Value
Carrying
Value
5.875% Senior Notes due 2013 ..................... $
7.375% Senior Notes due 2014 .....................
3.45% Senior Notes due 2015 .......................
7.50% Senior Notes due 2019 .......................
4.90% Senior Notes due 2020 .......................
6.20% Senior Notes due 2040 .......................
Bully 1 joint venture debt ..............................
Bully 2 joint venture debt ..............................
Bully 1 joint venture partner debt ..................
Bully 2 joint venture partner debt ..................
Credit Facility ................................................
299,911 $
249,506
350,000
201,695
498,672
399,889
370,000
321,052
18,500
17,472
40,000
324,281 $
282,078
357,292
242,464
516,192
423,345
370,000
321,052
18,500
17,472
40,000
Estimated
Fair Value
325,398
282,105
—
231,015
—
—
—
—
—
—
—
299,874 $
249,377
—
201,695
—
—
—
—
—
—
—
75
NOBLE CORPORATION (NOBLE-SWISS) AND SUBSIDIARIES
NOBLE CORPORATION (NOBLE-CAYMAN) AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unless otherwise indicated, dollar amounts in tables are in thousands, except per share data)
As both the Bully joint venture debt and the credit facility bears interest at a variable rate, we have deemed the
fair value to approximate the carrying value as of December 31, 2010. The Bully joint venture partner debt is
subordinated debt with joint venture partners and was entered into in September 2010 with interest in kind added to
the outstanding balance on December 31, 2010, with no modification, therefore any difference between carrying
value and estimated fair value is considered immaterial.
Note 8 — Shareholders’ Equity
Share capital
The following is a detail of Noble-Swiss’ share capital as of December 31, 2010 and 2009 (in thousands):
December 31,
2010
2009
Shares outstanding and trading .............................................................................................
Treasury shares......................................................................................................................
Total shares outstanding .........................................................................................................
252,275
10,140
262,415
258,225
3,750
261,975
Treasury shares held for share-based compensation plans ....................................................
Total shares authorized for issuance......................................................................................
13,851
276,266
14,291
276,266
Par value (in Swiss Francs)........................................................................................................
3.93
4.85
Shares authorized for issuance by Noble-Swiss at December 31, 2010 totaled 276.3 million shares and include
10.1 million shares held in treasury and 13.9 million shares held by a wholly-owned subsidiary. Repurchased
treasury shares are recorded at cost, and include shares repurchased pursuant to our approved share repurchase
program discussed below and shares surrendered by employees for taxes payable upon the vesting of restricted
stock. Our Board of Directors is authorized to issue up to a maximum of 414.4 million shares without additional
shareholder approval and without conditions regarding use.
Our Board of Directors may further increase Noble-Swiss’ share capital through the issuance of up to 138.1
million conditionally authorized registered shares without obtaining additional shareholder approval. The issuance
of these conditionally authorized registered shares is subject to certain conditions regarding their use.
Share Repurchases
Share repurchases were made pursuant to the share repurchase program which our Board of Directors authorized
and adopted. At December 31, 2010, 6.8 million shares remained available under this authorization. Future
repurchases will be subject to the requirements of Swiss law, including the requirement that we and our subsidiaries
may only repurchase shares if and to the extent that sufficient freely distributable reserves are available. Also, the
aggregate par value of all registered shares held by us and our subsidiaries, including treasury shares, may not
exceed 10 percent of our registered share capital without shareholder approval. Our existing share repurchase
program received the required shareholder approval prior to completion of our 2009 Swiss migration transaction.
Share repurchases for each of the three years ended December 31, 2010 are as follows:
Year Ended
December 31,
2010 ................................................................................................
2009 ................................................................................................
2008 ................................................................................................
Total Number
of Shares
Purchased
Total Cost
6,390,488(1) $
5,470,000(1)
7,965,109
230,936 $
186,506
331,514
Average
Price Paid
per Share
36.14
34.10
41.62
(1) Repurchases made subsequent to March 26, 2009, which totaled 10.1 million shares are being held as treasury
shares at December 31, 2010.
76
NOBLE CORPORATION (NOBLE-SWISS) AND SUBSIDIARIES
NOBLE CORPORATION (NOBLE-CAYMAN) AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unless otherwise indicated, dollar amounts in tables are in thousands, except per share data)
Share-Based Compensation Plans
Stock Plans
The Noble Corporation 1991 Stock Option and Restricted Stock Plan, as amended (the “1991 Plan”), provides
for the granting of options to purchase our shares, with or without stock appreciation rights, and the awarding of
restricted shares or units to selected employees. In general, all options granted under the 1991 Plan have a term of 10
years, an exercise price equal to the fair market value of a share on the date of grant and generally vest over a three-
year period. The 1991 Plan limits the total number of shares issuable under the plan to 45.1 million. As of December
31, 2010, we had 4.4 million shares remaining available for grants to employees under the 1991 Plan.
Prior to October 25, 2007, the Noble Corporation 1992 Nonqualified Stock Option and Share Plan for Non-
Employee Directors (the “1992 Plan”) provided for the granting of nonqualified stock options to our non-employee
directors. We granted options at fair market value on the grant date. The options are exercisable from time to time
over a period commencing one year from the grant date and ending on the expiration of 10 years from the grant date,
unless terminated sooner as described in the 1992 Plan. On October 25, 2007, the 1992 Plan was amended and
restated to, among other things, eliminate grants of stock options to non-employee directors and modify the annual
award of restricted shares from a fixed number of restricted shares to an annually-determined variable number of
restricted or unrestricted shares. The 1992 Plan limits the total number of shares issuable under the plan to 1.6
million. As of December 31, 2010, we had 0.7 million shares remaining available for award to non-employee
directors under the 1992 Plan.
Stock Options
A summary of the status of stock options granted under both the 1991 Plan and 1992 Plan as of December 31,
2010, 2009 and 2008 and the changes during the year ended on those dates is presented below:
2010
2009
2008
Number of
Shares
Underlying
Options
Weighted
Average
Exercise
Price
Number of
Shares
Underlying
Options
Weighted
Average
Exercise
Price
Number of
Shares
Underlying
Options
Weighted
Average
Exercise
Price
212,730
(549,405)
(17,156)
3,121,317 $ 24.39
39.46
21.12
20.78
2,767,486
26.22
2,310,614 $ 24.79
3,553,999 $
302,815
(718,283)
(17,214)
3,121,317
2,688,179 $
4,397,773 $
168,277
(1,007,750)
(4,301)
22.84
24.63
16.94
19.52
24.39 3,553,999
23.52 3,232,260 $
21.28
43.01
19.29
24.07
22.84
21.25
Outstanding at beginning of
year .........................................
Granted .....................................
Exercised (1).............................
Forfeited ...................................
Outstanding at end of year (2) ..
Exercisable at end of year (2) ...
____________
(1) The intrinsic value of options exercised during the year ended December 31, 2010 was $11.6 million.
(2) The aggregate intrinsic value of options outstanding and exercisable at December 31, 2010 was $26.7 million.
The following table summarizes additional information about stock options outstanding at December 31, 2010:
Options Outstanding
Options Exercisable
Number of
Shares
Underlying
Options
Weighted
Average
Remaining
Life (Years)
Weighted
Average
Exercise
Price
Number
Exercisable
16.82
26.45
28.42
23.19
1,096,484 $
666,710
547,420
2,310,614 $
Weighted
Average
Exercise
Price
16.79
26.97
38.18
24.79
$15.55 to $24.65 ....
$24.66 to $34.67 ....
$34.68 to $43.01 ....
Total.......................
1,101,845
857,487
808,154
2,767,486
2.54 $
6.77
6.97
5.00 $
77
NOBLE CORPORATION (NOBLE-SWISS) AND SUBSIDIARIES
NOBLE CORPORATION (NOBLE-CAYMAN) AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unless otherwise indicated, dollar amounts in tables are in thousands, except per share data)
Fair value information and related valuation assumptions for stock options granted are as follows:
2010
Weighted average fair value per option granted ...................................................... $ 16.14
2009
$ 8.64
2008
$ 16.00
Valuation assumptions:
Expected option term (years)...................................................................................
Expected volatility...................................................................................................
Expected dividend yield ..........................................................................................
Risk-free interest rate...............................................................................................
6
5
44.6% 38.5%
0.7%
2.1%
1.2%
2.6%
5
35.6%
0.4%
2.9%
The fair value of each option grant is estimated on the date of grant using a Black-Scholes option pricing model.
Assumptions used in the valuation are shown in the table above. The expected term of options granted represents the
period of time that the options are expected to be outstanding and is derived from historical exercise behavior,
current trends and values derived from lattice-based models. Expected volatilities are based on implied volatilities of
traded options on our shares, historical volatility of our shares, and other factors. The expected dividend yield is
based on historical yields on the date of grant. The risk-free rate is based on the U.S. Treasury yield curve in effect
at the time of grant.
A summary of the status of our non-vested stock options at December 31, 2010, and changes during the year
ended December 31, 2010, is presented below:
Non-Vested Options at January 1, 2010 ............................................
Granted ..............................................................................................
Vested ................................................................................................
Forfeited ............................................................................................
Non-Vested Options at December 31, 2010 ......................................
Shares
Under Outstanding
Options
Weighted-Average
Grant-Date
Fair Value
433,138 $
212,730
(188,996)
—
456,872 $
10.71
16.14
11.63
—
12.91
At December 31, 2010, there was $3 million of total unrecognized compensation cost remaining for option
grants awarded under the 1991 Plan. We attribute the service period to the vesting period and the unrecognized
compensation is expected to be recognized over a weighted-average period of 1.2 years. Compensation cost
recognized during the years ended December 31, 2010, 2009 and 2008 related to stock options totaled $3 million, $2
million and $2 million, respectively.
We issue new shares to meet the share requirements upon exercise of stock options. We have historically
repurchased shares in the open market from time to time which minimizes the dilutive effect of share-based
compensation.
Restricted Stock
We have awarded both time-vested restricted stock and market based performance-vested restricted stock under
the 1991 Plan. The time-vested restricted stock awards generally vest over a three year period. The number of
performance-vested restricted shares which vest will depend on the degree of achievement of specified corporate
performance criteria over a three-year performance period. These criteria are strictly market based criteria as defined
by FASB standards.
The time-vested restricted stock is valued on the date of award at our underlying share price. The total
compensation for shares that ultimately vest is recognized over the service period. The shares and related par value
are recorded when the restricted stock is issued and retained earnings is adjusted as the share-based compensation
cost is recognized for financial reporting purposes.
78
NOBLE CORPORATION (NOBLE-SWISS) AND SUBSIDIARIES
NOBLE CORPORATION (NOBLE-CAYMAN) AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unless otherwise indicated, dollar amounts in tables are in thousands, except per share data)
The market based performance-vested restricted stock is valued on the date of grant based on the estimated fair
value. Estimated fair value is determined based on numerous assumptions, including an estimate of the likelihood
that our stock price performance will achieve the targeted thresholds and the expected forfeiture rate. The fair value
is calculated using a Monte Carlo Simulation Model. The assumptions used to value the performance-vested
restricted stock awards include historical volatility, risk-free interest rates, and expected dividends over a time
period commensurate with the remaining term prior to vesting, as follows:
Valuation assumptions:
Expected volatility..................................................................................
Expected dividend yield .........................................................................
Risk-free interest rate..............................................................................
2010
2009
2008
57.2%
0.5%
1.3%
47.6%
0.5%
2.1%
40.9%
0.5%
2.2%
Additionally, similar assumptions were made for each of the companies included in the defined index and the
peer group of companies in order to simulate the future outcome using the Monte Carlo Simulation Model.
A summary of the restricted share awards for each of the years in the period ended December 31 is as follows:
Time-vested restricted shares:
Shares awarded (maximum available) ....................................................
Weighted-average share price at award date .......................................... $
Weighted-average vesting period (years) ...............................................
537,269
39.69
3.0
2010
Performance-vested restricted shares:
Shares awarded (maximum available) ....................................................
Weighted-average share price at award date .......................................... $
Three-year performance period ended
December 31...........................................................................................
Weighted-average award-date fair value ................................................ $
349,784
39.73
2009
2008
820,523
26.99
$
3.0
752,160
43.18
$
3.0
579,160
24.46
$
348,758
43.92
$
2012
17.76
$
2011
13.55
2010
24.26
$
We award both time-vested restricted stock and unrestricted shares under the 1992 Plan. The time-vested
restricted stock awards generally vest over a three-year period. During the years ended December 31, 2010, 2009
and 2008, we awarded 78,714, 67,280 and 45,281 unrestricted shares to non-employee directors, resulting in related
compensation cost of $3 million, $2 million and $2 million, respectively. We did not award any time-vested
restricted stock under the 1992 Plan during the year ended December 31, 2010.
A summary of the status of non-vested restricted shares at December 31, 2010 and changes during the year
ended December 31, 2010 is presented below:
Time-Vested
Restricted
Shares
Outstanding
Weighted
Average
Award-Date
Fair Value
Performance-Vested
Restricted
Shares
Outstanding (1)
Weighted
Average
Award-Date
Fair Value
1,445,719 $
537,269
(731,422)
(52,015)
33.61
39.69
35.45
35.68
1,225,786 $
349,784
(158,931)
(190,770)
1,199,551 $
35.13
1,225,869 $
16.28
17.76
13.63
13.63
17.01
Non-vested restricted shares at
January 1, 2010.............................
Awarded .........................................
Exercised ........................................
Forfeited .........................................
Non-vested restricted shares at
December 31, 2010.......................
____________
(1) The number of performance-vested restricted shares shown equals the shares that would vest if the “maximum”
level of performance is achieved. The minimum number of shares is zero and the “target” level of performance
is 67 percent of the amounts shown.
79
NOBLE CORPORATION (NOBLE-SWISS) AND SUBSIDIARIES
NOBLE CORPORATION (NOBLE-CAYMAN) AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unless otherwise indicated, dollar amounts in tables are in thousands, except per share data)
At December 31, 2010 there was $24 million of total unrecognized compensation cost related to the time-vested
restricted shares which is expected to be recognized over a remaining weighted-average period of 1.4 years. The
total award-date fair value of time-vested restricted shares vested during the year ended December 31, 2010 was $26
million.
At December 31, 2010, there was $7 million of total unrecognized compensation cost related to the performance-
vested restricted shares which is expected to be recognized over a remaining weighted-average period of 1.4 years.
The total potential compensation for performance-vested restricted stock is recognized over the service period
regardless of whether the performance thresholds are ultimately achieved. During the year ended December 31,
2010, 190,770 performance-vested shares for the 2007-2009 performance period were forfeited. On January 1, 2011,
no shares of the performance-vested shares for the 2008-2010 performance period vested and, in February 2011,
310,200 shares for the same performance period were forfeited.
Compensation expense recognized during the years ended December 31, 2010, 2009 and 2008 related to all
restricted stock totaled $35 million ($30 million net of income tax), $32 million ($27 million net of income tax) and
$29 million ($24 million net of income tax), respectively. Capitalized compensation costs totaled approximately $1
million in 2010, 2009, and 2008.
Note 9 — Accumulated Comprehensive Loss
The following table sets forth the components of “Accumulated other comprehensive loss,” net of deferred taxes:
December 31,
Foreign currency translation adjustments ........................................................ $
Gain (loss) on foreign currency forward contracts ..........................................
Gain (loss) on interest rate swaps ....................................................................
Deferred pension amounts ...............................................................................
Accumulated Other comprehensive (loss), net ................................................
(9,736) $ (12,192) $ (12,469)
—
417
1,604
—
366
—
(44,788)
(42,454)
(57,257)
(50,220)
(43,106)
(54,881)
2010
2009
2008
Less: Noncontrolling interest portion of gain on interest rate swaps...............
(183)
—
—
Other comprehensive (loss), net attributable to Noble Corporation ................ $ (50,403) $ (54,881) $ (57,257)
Note 10 — Income Taxes
Noble Corporation, a Swiss resident holding company, is exempt from Swiss cantonal and communal income tax
on its worldwide income. Noble Corporation is also granted participation relief from Swiss federal tax for qualifying
dividend income and capital gains related to the sale of qualifying participations. It is expected that the participation
relief will result in a full exemption of participation income from Swiss federal income tax.
We operate through various subsidiaries in numerous countries throughout the world, including the United
States. Consequently, income taxes have been provided based on the laws and rates in effect in the countries in
which operations are conducted, or in which we or our subsidiaries are considered resident for income tax purposes.
In certain circumstances, management expects that, due to changing demands of the offshore drilling markets
and the ability to re-deploy our offshore drilling units, certain of such units will not reside in a location long enough
to give rise to future tax consequences. As a result, no deferred tax asset or liability has been recognized in these
circumstances. If management’s expectations change regarding the length of time an offshore drilling unit will be
used in a given location, we will adjust deferred taxes accordingly. The components of the net deferred taxes were as
follows:
Deferred tax assets:
United States
2010
2009
Net operating loss carry forwards............................................................................
Deferred pension plan amounts ...............................................................................
Accrued expenses not currently deductible .............................................................
Other........................................................................................................................
$
$
7,256
4,288
37,258
1,124
—
958
12,436
1,316
80
NOBLE CORPORATION (NOBLE-SWISS) AND SUBSIDIARIES
NOBLE CORPORATION (NOBLE-CAYMAN) AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unless otherwise indicated, dollar amounts in tables are in thousands, except per share data)
Non-U.S.:
2010
2009
Net operating loss carry forwards............................................................................
Deferred pension plan amounts ...............................................................................
Other........................................................................................................................
Deferred tax assets...........................................................................................................
Less: valuation allowance........................................................................................
Net deferred tax assets .....................................................................................................
71,160
4,018
130
125,234
(6,000)
$ 119,234
$
—
4,870
185
19,765
—
19,765
Deferred tax liabilities:
United States
Excess of net book basis over remaining tax basis ......................................................
Other............................................................................................................................
Non-U.S.:
$ (297,284) $ (308,789)
(4,790)
(3,019)
Excess of net book basis over remaining tax basis ..................................................
Deferred tax liabilities .....................................................................................................
(67,087)
(6,417)
$ (367,390) $ (319,996)
Net deferred tax liabilities ...............................................................................................
$ (248,156) $ (300,231)
Income before income taxes consisted of the following:
2008
745,276
United States............................................................................................... $ 132,326 $
Non-U.S......................................................................................................
784,183 1,277,772 1,167,182
Total............................................................................................................ $ 916,509 $ 2,015,902 $ 1,912,458
2010
Year Ended December 31,
2009
738,130 $
The income tax provision consisted of the following:
Current- United States ................................................................................ $
Current- Non-U.S. ......................................................................................
Deferred- United States ..............................................................................
Deferred- Non-U.S. ....................................................................................
Total............................................................................................................ $ 143,077 $
101,192
(36,403)
(2,607)
2010
80,895 $
Year Ended December 31,
2009
240,188 $
64,210
33,530
(668)
337,260 $
2008
215,412
86,339
47,307
2,405
351,463
The following is a reconciliation of our reserve for uncertain tax position amounts, excluding interest and
penalties:
Gross Balance at January 1,........................................................................ $
Additions based on tax positions related to current year (1) ....................
Additions for tax positions of prior years ...............................................
Reductions for tax positions of prior years.............................................
Expiration of statutes (2)..........................................................................
Tax Settlements ......................................................................................
Gross balance at December 31, ..................................................................
Related tax benefits ............................................................................
2010
87,668 $
6,942
40,264
—
(6,293)
—
128,581
(7,693)
Net Reserve at December 31, ..................................................................... $ 120,888 $
2009
84,942 $
9,087
29,024
(21,659)
(9,487)
(4,239)
87,668
(6,883)
80,785 $
2008
58,167
32,846
—
(4,810)
(220)
(1,041)
84,942
(4,776)
80,166
(1) $0.5 million related to transactions recorded directly to equity for the year ended December 31, 2008
(2) $(4.9) and $(5.8) million related to transactions recorded directly to equity for the year ended December 31,
2010 and December 31, 2009, respectively.
81
NOBLE CORPORATION (NOBLE-SWISS) AND SUBSIDIARIES
NOBLE CORPORATION (NOBLE-CAYMAN) AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unless otherwise indicated, dollar amounts in tables are in thousands, except per share data)
The liabilities related to our reserve for uncertain tax position amounts were comprised of the following:
2010
2009
Reserve for uncertain tax position amounts, excluding interest and penalties..........................
Interest and penalties ............................................................................................................
Reserve for uncertain tax position amounts, including interest and penalties ..........................
$ 120,888 $ 80,785
23,649 17,577
$ 144,537 $ 98,362
The increase in uncertain tax positions at December 31, 2010 was primarily due to tax positions taken on returns
filed and from the acquisition of FDR Holdings Limited. If these reserves of $145 million are not realized, the
provision for income taxes will be reduced by $129 million and equity would be directly increased by $16 million.
We include as a component of our income tax provision potential interest and penalties related to recognized tax
contingencies within our global operations. Interest and penalties included in income tax expense totaled $6 million,
$5 million, and $3 million in 2010, 2009 and 2008, respectively. Total interest and penalties accrued in “Other
liabilities” totaled $24 million and $18 million as of December 31, 2010 and 2009, respectively.
It is reasonably possible that our existing liabilities related to our reserve for uncertain tax position amounts may
increase or decrease in the next twelve 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.
We conduct business globally and, as a result, we file numerous income tax returns in the U.S. and non-U.S.
jurisdictions. In the normal course of business we are subject to examination by taxing authorities throughout the
world, including major jurisdictions such as Brazil, India, Mexico, Nigeria, Norway, Qatar, Switzerland, the United
Kingdom and the United States. We are no longer subject to U.S. Federal income tax examinations for years before
2007 and non-U.S. income tax examinations for years before 2000.
Noble-Swiss conducts substantially all of its business through Noble-Cayman and its subsidiaries. Earnings
taxable in Switzerland at the Swiss statutory rate of 8.5% are not material due to participation exemption, and the
Cayman Islands does not impose a corporate income tax. A reconciliation of tax rates outside of Switzerland and the
Cayman Islands to our Noble-Swiss effective rate is shown below:
Year Ended December 31,
2008
2009
2010
Effect of:
Tax Rates which are different than the Swiss and Cayman Island rates.................
Reserve for (resolution of) tax authority audits ......................................................
14.6%
1.0%
17.3%
-0.6%
18.0%
0.4%
Total........................................................................................................................
15.6%
16.7%
18.4%
In 2010, we generated and utilized $17 million of U.S. foreign tax credits. In 2009, we fully utilized our foreign
tax credits of $71 million. In 2008, we fully utilized our foreign tax credits of $71 million.
Deferred income taxes and the related dividend withholding taxes have not been provided on approximately $1.6
billion of undistributed earnings of our U.S. subsidiaries. We consider such earnings to be permanently reinvested in
the U.S. It is not practicable to estimate the amount of deferred income taxes associated with these unremitted
earnings. If such earnings were to be distributed, we would be subject to U.S. taxes, which would have a material
impact on our results of operations.
82
NOBLE CORPORATION (NOBLE-SWISS) AND SUBSIDIARIES
NOBLE CORPORATION (NOBLE-CAYMAN) AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unless otherwise indicated, dollar amounts in tables are in thousands, except per share data)
Note 11 — Employee Benefit Plans
Defined Benefit Plans
We have a U.S. noncontributory defined benefit pension plan which covers certain salaried employees and a
U.S. noncontributory defined benefit pension plan which covers certain hourly employees, whose initial date of
employment is prior to August 1, 2004 (collectively referred to as our “qualified U.S. plans”). These plans are
governed by the Noble Drilling Corporation Retirement Trust (the “Trust”). The benefits from these plans are based
primarily on years of service and, for the salaried plan, employees’ compensation near retirement. These plans
qualify under the Employee Retirement Income Security Act of 1974 (“ERISA”), and our funding policy is
consistent with funding requirements of ERISA and other applicable laws and regulations. We make cash
contributions, or utilize credit balances available to us under the plan, for the qualified U.S. plans when required.
The benefit amount that can be covered by the qualified U.S. plans is limited under ERISA and the Internal Revenue
Code (“IRC”) of 1986. Therefore, we maintain an unfunded, nonqualified excess benefit plan designed to maintain
benefits for all employees at the formula level in the qualified U.S. plans. We refer to the qualified U.S. plans and
the excess benefit plan collectively as the “U.S. plans”.
Each of Noble Drilling (Land Support) Limited, Noble Enterprises Limited and Noble Drilling (Nederland)
B.V., all indirect, wholly-owned subsidiaries of Noble, maintains a pension plan which covers all of its salaried,
non-union employees (collectively referred to as our “non-U.S. plans”). Benefits are based on credited service and
employees’ compensation near retirement, as defined by the plans.
A reconciliation of the changes in projected benefit obligations (“PBO”) for our non-U.S. and U.S. plans is as
follows:
Year Ended December 31,
2010
2009
Non-U.S.
U.S.
Non-U.S.
U.S.
Benefit obligation at the beginning of year ................................ $ 94,988 $ 132,517 $ 67,517 $ 116,363
7,213
Service cost.................................................................................
6,854
Interest cost.................................................................................
4,950
Actuarial loss (gain)....................................................................
(2,863)
Benefits paid ...............................................................................
—
Plan participants’ contributions ..................................................
—
Foreign exchange rate changes ...................................................
—
Curtailment gain .........................................................................
Benefit obligation at end of year ............................................ $ 101,133 $ 157,903 $ 94,988 $ 132,517
3,674
4,279
16,498
(1,771)
544
4,247
—
7,648
7,829
13,012
(3,103)
—
—
—
4,260
4,926
3,837
(2,438)
669
(5,109)
—
For the U.S. plans, the actuarial loss in 2010 is primarily the result of updated actuarial assumptions related to
the deterioration of market conditions.
A reconciliation of the changes in fair value of plan assets is as follows:
Year Ended December 31,
2010
2009
Non-U.S.
U.S.
Non-U.S.
U.S.
Fair value of plan assets at beginning of year............................. $ 117,340 $ 124,874 $ 95,932 $ 93,548
22,480
Actual return on plan assets........................................................
11,709
Employer contributions ..............................................................
(2,863)
Benefits and expenses paid.........................................................
—
Plan participants’ contributions ..................................................
—
Expenses paid .............................................................................
—
Foreign exchange rate changes ...................................................
Fair value of plan assets at end of year................................... $ 128,695 $ 144,542 $ 117,340 $ 124,874
11,623
5,938
(1,364)
544
(407)
5,074
12,522
10,250
(3,104)
—
—
—
13,434
6,202
(2,075)
669
(364)
(6,511)
83
NOBLE CORPORATION (NOBLE-SWISS) AND SUBSIDIARIES
NOBLE CORPORATION (NOBLE-CAYMAN) AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unless otherwise indicated, dollar amounts in tables are in thousands, except per share data)
The funded status of the plans is as follows:
Year Ended December 31,
2010
2009
Funded status ................................................................................ $ 27,562 $ (13,361) $
22,352 $
(7,643)
Non-U.S.
U.S.
Non-U.S.
U.S.
Amounts recognized in the Consolidated Balance Sheets consist of:
2010
2009
6,594 $
Other assets (noncurrent).............................................................. $ 28,240 $
Other liabilities (current) ..............................................................
(1,353)
Other liabilities (noncurrent) ........................................................
(18,602)
Net amount recognized ................................................................. $ 27,562 $ (13,361) $
—
(678)
23,098 $
—
6,307
(443)
(746) (13,507)
(7,643)
22,352 $
Non-U.S.
U.S.
Non-U.S.
U.S.
Amounts recognized in the “Accumulated other comprehensive loss” consist of:
Year Ended December 31,
2010
2009
Net actuarial loss .......................................................................... $ 11,591 $ 51,966 $
Prior service cost ..........................................................................
Transition obligation.....................................................................
Deferred income tax asset.............................................................
Accumulated other comprehensive loss ....................................... $
1,586
—
—
70
(4,017)
(18,742)
7,644 $ 34,810 $
—
150
17,575 $ 44,726
1,813
—
(4,869) (16,289)
12,856 $ 30,250
Non-U.S.
U.S.
Non-U.S.
U.S.
Pension cost includes the following components:
2010
Year Ended December 31,
2009
2008
Service Cost.............................................. $
Interest Cost..............................................
Return on plan assets ................................
Pension obligation settlement ...................
Amortization of prior service cost ............
Amortization of transition obligation .......
Recognized net actuarial loss....................
Net curtailment (gain)...............................
Net pension expense ................................. $
Non-U.S.
Non-U.S.
Non-U.S.
U.S.
U.S.
4,260 $ 7,648 $
4,926
(5,321)
718
70
—
—
—
7,829
(9,568)
227
—
—
2,821
—
U.S.
3,674 $ 7,213 $
4,279
(5,377)
—
249
73
—
—
6,854
(7,143)
—
294
—
4,124
—
4,653 $ 8,957 $
2,898 $ 11,342 $
3,883 $ 6,295
6,459
4,545
(8,909)
(6,642)
—
—
391
(21)
—
624
349
—
—
(1,993)
396 $ 4,585
Defined Benefit Plans — Disaggregated Plan Information
Disaggregated information regarding our non-U.S. and U.S. plans is summarized below:
Year Ended December 31,
2009
2010
Non-U.S.
Projected benefit obligation.......................................................... $ 101,133
Accumulated benefit obligation.................................................... 97,913
Fair value of plan assets................................................................ 128,694
84
Non-U.S.
U.S.
94,988 $ 132,517
$ 157,903 $
122,475
92,392 99,235
144,543 117,340 124,874
U.S.
NOBLE CORPORATION (NOBLE-SWISS) AND SUBSIDIARIES
NOBLE CORPORATION (NOBLE-CAYMAN) AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unless otherwise indicated, dollar amounts in tables are in thousands, except per share data)
The following table provides information related to those plans in which the PBO exceeded the fair value of the
plan assets at December 31, 2010 and 2009. The PBO is the actuarially computed present value of earned benefits
based on service to date and includes the estimated effect of any future salary increases.
Year Ended December 31,
2010
2009
Projected benefit obligation................................................ $
Fair value of plan assets......................................................
Non-U.S.
4,906
4,228
U.S.
$ 140,320 $
120,365
Non-U.S.
4,859
4,112
U.S.
$ 116,374
102,424
The PBO for the unfunded excess benefit plan was $13 million and $10 million at December 31, 2010 and 2009,
respectively, and is included under “U.S.” in the above tables.
The following table provides information related to those plans in which the accumulated benefit obligation
(“ABO”) exceeded the fair value of plan assets at December 31, 2010 and 2009. The ABO is the actuarially
computed present value of earned benefits based on service to date, but differs from the PBO in that it is based on
current salary levels.
Year Ended December 31,
2010
2009
Accumulated benefit obligation.......................................... $
Fair value of plan assets......................................................
Non-U.S.
4,588
4,228
U.S.
$ 7,943 $
Non-U.S.
4,516
4,112
U.S.
$
5,784
—
—
The ABO for the unfunded excess benefit plan was $8 million at December 31, 2010 as compared to $6 million
in 2009, and is included under “U.S.” in the above tables.
Defined Benefit Plans — Key Assumptions
The key assumptions for the plans are summarized below:
Weighted-average assumptions used to determine
benefit obligations:
Discount Rate .................................................................
Rate of compensation increase .......................................
5.3%-5.4%
3.9%-4.6%
5%-5.8% 5.3%-5.7% 5.8%-6.0%
5.0%
5.0% 3.9%-4.4%
Year Ended December 31,
2010
2009
Non-U.S.
U.S.
Non-U.S.
U.S.
2010
2009
2008
Non-U.S.
U.S.
Non-U.S.
U.S.
Non-U.S.
U.S.
Year Ended December 31,
Weighted-average assumptions used to determine
periodic benefit cost:
Discount Rate..................................................................
Expected long-term return on assets................................
Rate of compensation increase ........................................
5.3%-5.4%
3.0%-6.5%
3.9%-4.0%
5.8%-6.0%
7.8%
5.0%
5.3%-5.7%
3.0%-6.5%
3.9%-4.4%
5.8%-6.0%
7.8%
5.0%
5.3%-6.7% 6.5%
4.5%-6.5% 7.8%
3.9%-4.0% 5.0%
The discount rate used to calculate the net present value of future benefit obligations for our U.S. plan is based
on the average of current rates earned on long-term bonds that receive a Moody’s rating of “Aa” or better We have
determined that the timing and amount of expected cash outflows on our plan reasonably match this index. For non-
U.S. plans, the discount rates used to calculate the net present value of future benefit obligations are determined by
using a yield curve of high quality bond portfolios with an average maturity approximating that of the liabilities.
We employ third-party consultants for our U.S. and non-U.S. plans that use a portfolio return model to assess the
initial reasonableness of the expected long-term rate of return on plan assets. To develop the expected long-term rate
of return on assets, we considered the current level of expected returns on risk free investments (primarily
government bonds), the historical level of risk premium associated with the other asset classes in which the portfolio
is invested and the expectations for future returns of each asset class. The expected return for each asset class was
then weighted based on the target asset allocation to develop the expected long-term rate of return on assets for the
portfolio.
85
NOBLE CORPORATION (NOBLE-SWISS) AND SUBSIDIARIES
NOBLE CORPORATION (NOBLE-CAYMAN) AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unless otherwise indicated, dollar amounts in tables are in thousands, except per share data)
Defined Benefit Plans — Plan Assets
Non-U.S. Plans
Both the Noble Enterprises Limited and Noble Drilling (Nederland) B.V. pension plans have a targeted asset
allocation of 100 percent debt securities. The investment objective for the Noble Enterprises Limited U.S. Dollar
plan assets is to earn a favorable return against the Citigroup World Governmental Bond Index for all maturities
greater than one year. The investment objective for both the Noble Enterprises Limited and the Noble Drilling
(Nederland) B.V. Euro plan assets is to earn a favorable return against the Barclays Capital Euro Aggregate
Unhedged index and the Customized Benchmark for Long Duration Fund for all maturities greater than one year.
We evaluate the performance of these plans on an annual basis.
There is no target asset allocation for the Noble Drilling (Land Support) Limited pension plan. However, the
investment objective of the plan, as adopted by the plan’s trustees, is to achieve a favorable return against a
benchmark of blended United Kingdom market indices. By achieving this objective, the trustees believe the plan
will be able to avoid significant volatility in the contribution rate and provide sufficient plan assets to cover the
plan’s benefit obligations were the plan to be liquidated. To achieve these objectives, the trustees have given the
plan’s investment managers full discretion in the day-to-day management of the plan’s assets. The plan’s assets are
invested with two investment managers. The performance objective communicated to one of these investment
managers is to exceed a blend of FTSE A Over 15 Year Gilts index and iBoxx Sterling Non Gilts index by 1.25
percent per annum. The performance objective communicated to the other investment manager is to exceed a blend
of FTSE’s All Share index, North America index, Europe index and Pacific Basin index by 1.00 to 2.00 percent per
annum. This investment manager is prohibited by the trustees from investing in real estate. The trustees meet with
the investment managers periodically to review and discuss their investment performance.
The actual fair values of Non-U.S. pension plans at December 31, 2010 and 2009 were as follows:
December 31, 2010
Estimated Fair Value
Measurements
Quoted
Prices in
Active
Markets
(Level 1)
Significant
Other
Observable
Inputs
(Level 2)
Significant
Unobservable
Inputs
(Level 3)
Carrying
Amount
Cash ...................................................................... $
12 $
12 $
Equity securities:
International companies..................................... $
42,698 $ 42,698 $
Fixed income securities:
Corporate bonds ................................................ $
85,984 $ 17,421 $
Total...................................................................... $ 128,694 $ 60,131 $
— $
— $
68,563 $
68,563 $
—
—
—
—
December 31, 2009
Estimated Fair Value
Measurements
Quoted
Prices in
Active
Markets
(Level 1)
Significant
Other
Observable
Inputs
(Level 2)
Significant
Unobservable
Inputs
(Level 3)
Carrying
Amount
Equity securities:
International companies..................................... $
39,433 $ 39,433 $
— $
—
Fixed income securities:
Corporate bonds ................................................ $
Other..................................................................
73,795 $ 17,703 $
4,112
—
Total...................................................................... $ 117,340 $ 57,136 $
56,092 $
—
56,092 $
—
4,112
4,112
86
NOBLE CORPORATION (NOBLE-SWISS) AND SUBSIDIARIES
NOBLE CORPORATION (NOBLE-CAYMAN) AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unless otherwise indicated, dollar amounts in tables are in thousands, except per share data)
At December 31, 2009 the assets of Noble Drilling (Nederland) B.V. are invested in instruments which are
similar in form to annuity contracts. There were no observable market value in these assets. However, the amounts
listed as plan assets did materially resemble the obligations which were anticipated under the plan. Amounts were
therefore calculated using actuarial assumptions and were calculated by third-party consultants employed by the
Company. On April 20, 2010 the assets were transferred to the NEL plan and moved into level two in assets above.
The following details a roll-forward of the fair value of these assets from December 31, 2009 up until the transfer of
these assets to level two on April 20, 2010.
Carrying
Amount
Balance as of December 31, 2009........................................................................................................... $ 4,112
48
94
(35)
(4)
72
Balance as of April 20, 2010................................................................................................................... $ 4,287
Return on plan assets ............................................................................................................................
Employer contributions ........................................................................................................................
Benefits paid.........................................................................................................................................
Expenses paid .......................................................................................................................................
Loss on foreign exchange .....................................................................................................................
U.S. Plans
The qualified U.S. plans’ Trust invests in equity securities, fixed income debt securities, and cash equivalents
and other short-term investments. The Trust may invest in these investments directly or through pooled vehicles,
including mutual funds.
The Company’s overall investment strategy, or target range, is to achieve a mix of approximately 65 percent in
equity securities, 32 percent in debt securities and 3 percent in cash holdings. Actual results may deviate from the
target range, however any deviation from the target range of asset allocations must be approved by the Trust’s
governing committee.
The performance objective of the Trust is to outperform the return of the Total Index Composite as constructed
to reflect the target allocation weightings for each asset class. This objective should be met over a market cycle,
which is defined as a period not less than three years or more than five years. U.S. equity securities (common stock,
convertible preferred stock and convertible bonds) should achieve a total return (after fees) that exceeds the total
return of an appropriate market index over a full market cycle of three to five years. Non-U.S. equity securities
(common stock, convertible preferred stock and convertible bonds), either from developed or emerging markets,
should achieve a total return (after fees) that exceeds the total return of an appropriate market index over a full
market cycle of three to five years. Fixed income debt securities should achieve a total return (after fees) that
exceeds the total return of an appropriate market index over a full market cycle of three to five years. Cash
equivalent and short-term investments should achieve relative performance better than the 90-day Treasury bills.
When mutual funds are used by the Trust, those mutual funds should achieve a total return that equals or exceeds the
total return of each fund’s appropriate Lipper or Morningstar peer category over a full market cycle of three to five
years. Lipper and Morningstar are independent mutual fund rating and information services.
For investments in equity securities, no individual options or financial futures contracts are purchased unless
approved in writing by the Trust’s governing committee. In addition, no private placements or purchases of venture
capital are allowed. The maximum commitment to a particular industry, as defined by Standard & Poor’s, may not
exceed 20 percent. The Trust’s equity managers vote all proxies in the best interest of the Trust without regards to
social issues. The Trust’s governing committee reserves the right to comment on and exercise control over the
response to any individual proxy solicitation.
For fixed income debt securities, corporate bonds purchased are primarily limited to investment grade securities
as established by Moody’s or Standard & Poor’s. At no time shall the lowest investment grade make up more than
20 percent of the total market value of the Trust’s fixed income holdings. The total fixed income exposure from any
single non-government or government agency issuer shall not exceed 10 percent of the Trust’s fixed income
holdings. The average duration of the total portfolio shall not exceed seven years. All interest and principal receipts
are swept, as received, into an alternative cash management vehicle until reallocated in accordance with the Trust’s
core allocation.
87
NOBLE CORPORATION (NOBLE-SWISS) AND SUBSIDIARIES
NOBLE CORPORATION (NOBLE-CAYMAN) AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unless otherwise indicated, dollar amounts in tables are in thousands, except per share data)
For investments in mutual funds, the assets of the Trust are subject to the guidelines and limits imposed by such
mutual fund’s prospectus and the other governing documentation at the fund level.
For investments in cash equivalent and short-term investments, the Trust utilizes a money market mutual fund
which invests in U.S. government and agency obligations, repurchase agreements collateralized by U.S. government
or agency securities, commercial paper, bankers’ acceptances, certificate of deposits, delayed delivery transactions,
reverse repurchase agreements, time deposits and Euro obligations. Bankers’ acceptances shall be made in larger
banks (ranked by assets) rated “Aa” or better by Moody’s and in conformance with all FDIC regulations concerning
capital requirements.
Equity securities include our shares in the amounts of $4 million (2.7 percent of total U.S. plan assets) and $4
million (3.6 percent of total U.S. plan assets) at December 31, 2010 and 2009, respectively.
The actual fair values of U.S. plan assets were as follows:
December 31, 2010
Estimated Fair Value
Measurements
Significant
Other
Observable
Inputs
(Level 2)
Significant
Unobservable
Inputs
(Level 3)
Quoted
Prices in
Active
Markets
(Level 1)
Carrying
Amount
December 31, 2009
Carrying
Amount
Estimated
Fair Value
Cash ........................................ $
2,824 $
2,824 $
— $
— $
3,682 $
3,682
Equity securities:
U.S. Companies ................... $ 100,409 $ 100,409 $
— $
— $ 83,684 $
83,684
Fixed income securities:
Corporate bonds .................. $ 41,310 $ 41,310 $
Total........................................ $ 144,543 $ 144,543 $
— $
— $
— $ 37,508 $
37,508
— $ 124,874 $ 124,874
As of December 31, 2010 no single security made up more than 10 percent of total assets of either the U.S. or the
Non-U.S. plans.
Defined Benefit Plans — Cash Flows
In 2010, we made total contributions of $6 million and $10 million to our non-U.S. and U.S. pension plans,
respectively. In 2009, we made total contributions of $6 million and $12 million to our non-U.S. and U.S. pension
plans, respectively. In 2008, we made total contributions of $7 million to each of our non-U.S. and $15 million to
our U.S. pension plans. Due to improving market conditions, we expect our aggregate minimum contributions to our
non-U.S. and U.S. plans in 2011, subject to applicable law, to be $6 million and $0 million, respectively. We
continue to monitor and evaluate funding options based upon market conditions and may increase contributions at
our discretion.
In August 2006, the Pension Protection Act of 2006 (“PPA”) was signed into law in the U.S. The PPA requires
that pension plans become fully funded over a seven-year period beginning in 2008 and increases the amount we are
allowed to contribute to our U.S. pension plans in the near term.
Estimated benefit payments from our non-U.S. plans are $6 million for 2011, $2 million for 2012, $2 million for
2013, $2 million for 2014, $2 million for 2015 and $14 million in the aggregate for the five years thereafter.
Estimated benefit payments from our U.S. plans are $0 million for 2011, $4 million for 2012, $5 million for
2013, $5 million for 2014, $6 million for 2015 and $49 million in the aggregate for the five years thereafter.
88
NOBLE CORPORATION (NOBLE-SWISS) AND SUBSIDIARIES
NOBLE CORPORATION (NOBLE-CAYMAN) AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unless otherwise indicated, dollar amounts in tables are in thousands, except per share data)
Other Benefit Plans
We sponsor the Restoration Plan, which is a nonqualified, unfunded employee benefit plan under which certain
highly compensated employees may elect to defer compensation in excess of amounts deferrable under our 401(k)
savings plan. The Restoration Plan has no assets, and amounts withheld for the Restoration Plan are kept by us for
general corporate purposes. The investments selected by employees and associated returns are tracked on a phantom
basis. Accordingly, we have a liability to the employee for amounts originally withheld plus phantom investment
income or less phantom investment losses. We are at risk for phantom investment income and, conversely, benefit
should phantom investment losses occur. At December 31, 2010 and 2009, our liability for the Restoration Plan was
$7 million and $8 million, respectively, and is included in “Accrued payroll and related costs.”
In 2005 we enacted a profit sharing plan, the Noble Drilling Corporation Profit Sharing Plan, which covers
eligible employees, as defined. Participants in the plan become fully vested in the plan after five years of service, or
three years beginning in 2007. Profit sharing contributions are discretionary, require Board of Directors approval
and are made in the form of cash. Contributions recorded related to this plan totaled $2 million, $1 million and $2
million in 2010, 2009 and 2008, respectively.
We sponsor a 401(k) savings plan, a medical plan and other plans for the benefit of our employees. The cost of
maintaining these plans aggregated $45 million, $36 million and $37 million in 2010, 2009 and 2008, respectively.
We do not provide post-retirement benefits (other than pensions) or any post-employment benefits to our employees.
Note 12 — 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 were we
a party to leveraged derivatives. As a result of the Frontier acquisition, discussed in Note 2, we maintain certain
foreign exchange forward contracts that do not qualify under the Financial Accounting Standards Board (“FASB”)
standards for hedge accounting treatment and therefore, changes in fair values are recognized as either income or
loss in our consolidated income statement. These contracts are discussed further below.
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. For interest rate swaps, we evaluate all material
terms between the swap and the underlying debt obligation, known in FASB standards as the “long-haul method”.
Any change in fair value resulting from ineffectiveness is recognized immediately in earnings. We recognized a loss
of $0.3 million in other income due to interest rate swap hedge ineffectiveness during the year ended December 31,
2010. No income or loss was recognized during 2009 or 2008 due to hedge ineffectiveness.
Cash Flow Hedges
Our North Sea and Brazil operations have a significant amount of their cash operating expenses payable in local
currencies. To limit the potential risk of currency fluctuations, we typically maintain short-term forward contracts
settling monthly in their respective local currencies to mitigate exchange exposure. The forward contract settlements
in 2011 represent approximately 20 percent of these forecasted local currency requirements. The notional amount of
the forward contracts outstanding, expressed in U.S. Dollars, was approximately $53 million at December 31, 2010.
Total unrealized gains related to these forward contracts were $2 million and $0.4 million as of December 31, 2010
and 2009, respectively, and were recorded as part of “Accumulated other comprehensive loss” in the Consolidated
Balance Sheets.
As part of the Frontier acquisition discussed in Note 2, we acquired an interest in the two Bully joint ventures.
These joint ventures maintain interest rate swaps which are classified as cash flow hedges. The interest rate swaps
relate to debt for the construction of the two Bully-class rigs undertaken by the two joint ventures, and the hedges are
designed to fix the cash paid for interest on these projects. The purpose of these hedges is to satisfy bank covenants
and to limit exposure to changes in interest rates. There are no credit risk related contingency features embedded in
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NOBLE CORPORATION (NOBLE-SWISS) AND SUBSIDIARIES
NOBLE CORPORATION (NOBLE-CAYMAN) AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unless otherwise indicated, dollar amounts in tables are in thousands, except per share data)
these swap agreements. The aggregate notional amounts of the interest rate swaps totaled $604 million as of
December 31, 2010. The notional amounts and settlement dates for the Bully 1 interest rate swaps is $47 million
settling on June 30, 2011 and $231 million settling quarterly, with the final amounts settling in December 2014. The
notional amount and settlement dates for the Bully 2 interest rate swap is $326 million settling quarterly, with the
final amount settling in January 2018. The carrying amount of these interest rate swaps was a liability of $27 million
as of December 31, 2010. For the year ended December 31, 2010, $0.1 million was recognized in the income
statement for the ineffective portion of our interest rate swaps. As of December 31, 2010, we do not expect to
reclassify material amounts from “Accumulated other comprehensive loss” to “other income” within the next twelve
months.
As noted in Note 7 — “Debt,” in February 2011, the outstanding balances of the Bully 1 and Bully 2 credit
facilities, which totaled $691 million, were repaid in full and the credit facilities terminated. In addition, the related
interest rate swaps were settled and terminated concurrent with the repayment and termination of the credit facilities.
The balance of the net unrealized gain/(loss) related to our cash flow hedges included in AOCL in the
Consolidated Balance Sheets and related activity is as follows:
Net unrealized gain at beginning of period.................................................................... $
Activity during period:
417 $ — $ 2,219
2010
2009
2008
Settlement of foreign currency forward contracts during the period .........................
Net unrealized gain/(loss) on outstanding foreign currency forward contracts .........
Net unrealized gain/(loss) on outstanding interest rate swaps ...................................
(2,219)
—
—
Net unrealized gain/(loss) at end of period .................................................................... $ 1,970 $ 417 $ —
(417) —
417
—
1,604
366
Fair Value Hedges
During 2008, we entered into a firm commitment for the construction of the Noble Globetrotter I drillship. The
drillship will be constructed in two phases, with the second phase being installation and commissioning of the
topside equipment. The contract for this second phase of construction is denominated in Euros, and in order to
mitigate the risk of fluctuations in foreign currency exchange rates, we entered into forward contracts to purchase
Euros. As of December 31, 2010, the aggregate notional amount of the forward contracts was 30 million Euros.
Each forward contract settles in connection with required payments under the construction contract. We are
accounting for these forward contracts as fair value hedges. The fair market value of these derivative instruments is
included in “Other current assets/liabilities” or “Other assets/liabilities,” in the Consolidated Balance Sheets
depending on when the forward contract is expected to be settled. Gains and losses from these fair value hedges
would be recognized in earnings currently along with the change in fair value of the hedged item attributable to the
risk being hedged, if any portion was found to be ineffective. The fair market value of these outstanding forward
contracts, which are included in “Other current assets/liabilities” and “Other assets/liabilities,” totaled approximately
$3 million at December 31, 2010 and $0.8 million at December 31, 2009. No gains or losses related to fair value
hedges were recognized in the income statement for the years ended December 31, 2010, 2009 and 2008.
Foreign Exchange Forward Contracts
The Bully 2 joint venture maintains foreign exchange forward contracts to help mitigate the risk of currency
fluctuation of the Singapore Dollar for the construction of the Bully II vessel taking place in a Singapore shipyard as
of December 31, 2010. The notional amount on these contracts totaled approximately $31 million as of December
31, 2010. These contracts were not designated for hedge accounting treatment under FASB standards and therefore
changes in fair values are recognized as either income or loss in our consolidated income statement. These contracts
are referred to as non-designated derivatives in the tables to follow. For the year ended December 31, 2010, we have
recognized a gain of $2 million related to these foreign exchange forward contracts.
90
NOBLE CORPORATION (NOBLE-SWISS) AND SUBSIDIARIES
NOBLE CORPORATION (NOBLE-CAYMAN) AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unless otherwise indicated, dollar amounts in tables are in thousands, except per share data)
Financial Statement Presentation
The following tables, together with Note 13, summarize the financial statement presentation and fair value of our
derivative positions as of December 31, 2010 and 2009:
Asset derivatives
Cash flow hedges
Balance sheet
classification
Estimated fair value
2009
2010
Short-term foreign currency forward contracts ..............
Other current assets
$
2,015 $
654
Non-designated derivatives
Short-term foreign currency forward contracts ..............
Other current assets
2,603
—
Liability derivatives
Fair value hedges
Short-term foreign currency forward contracts .............. Other current liabilities $
Long-term foreign currency forward contracts...............
Other liabilities
3,306 $
—
Cash flow hedges
Short-term foreign currency forward contracts .............. Other current liabilities
Short-term interest rate swaps ........................................ Other current liabilities
Long-term interest rate swaps.........................................
Other liabilities
412
15,697
10,893
301
464
237
—
—
To supplement the fair value disclosures in Note 13, the following summarizes the recognized gains and losses
of cash flow hedges and non-designated derivatives through AOCL or through “other income” for the year ended
December 31, 2010 and 2009:
Gain/(loss)
recognized through
AOCL
Gain/(loss) reclassified
from AOCL to “other
income”
2010
2009
2010
2009
Gain/(loss) recognized
through “other income”
2010
2009
Cash flow hedges
Foreign currency forward
contracts ..................................... $ 1,187 $
Interest rate swaps ........................
366
417 $ —
—
—
$ —
—
$ —
(96)
$ —
—
Non-designated derivatives
Foreign currency forward
contracts ..................................... $ — $ — $ —
$ —
$ 2,253
$ —
For cash flow presentation purposes, a total use of cash of $7 million was recognized through the financing
section related to interest rate swaps, all other amounts are recognized through changes in operating activities and
are recognized through changes in other assets and liabilities.
91
NOBLE CORPORATION (NOBLE-SWISS) AND SUBSIDIARIES
NOBLE CORPORATION (NOBLE-CAYMAN) AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unless otherwise indicated, dollar amounts in tables are in thousands, except per share data)
Note 13 — Financial Instruments and Credit Risk
The following table presents the carrying amount and estimated fair value of our financial instruments
recognized at fair value on a recurring basis:
December 31, 2010
Estimated Fair Value
Measurements
Significant
Other
Observable
Inputs
(Level 2)
Quoted
Prices in
Active
Markets
(Level 1)
Significant
Unobservable
Inputs
(Level 3)
Carrying
Amount
December 31, 2009
Carrying
Amount
Estimated
Fair Value
6,854 $
6,854 $
— $
— $
8,483 $
8,483
Assets -
Marketable securities............. $
Foreign currency forward
contracts ..............................
4,618
—
4,618
—
654
654
Liabilities -
Interest rate swaps ................. $ 26,590 $
Foreign currency forward
— $
26,590 $
— $
— $
—
contracts ..............................
3,718
—
3,718
—
1,002
1,002
The derivative instruments have been valued using actively quoted prices and quotes obtained from the
counterparties to the derivative agreements. Our cash and cash equivalents, accounts receivable and accounts
payable are by their nature short-term. As a result, the carrying values included in the accompanying Consolidated
Balance Sheets approximate fair value.
Concentration of Credit Risk
The market for our services is the offshore oil and gas industry, and our customers consist primarily of
government-owned oil companies, major integrated oil companies and independent oil and gas producers. We
perform ongoing credit evaluations of our customers and generally do not require material collateral. We maintain
reserves for potential credit losses when necessary. Our results of operations and financial condition should be
considered in light of the fluctuations in demand experienced by drilling contractors as changes in oil and gas
producers’ expenditures and budgets occur. These fluctuations can impact our results of operations and financial
condition as supply and demand factors directly affect utilization and dayrates, which are the primary determinants
of our net cash provided by operating activities.
In 2010, three customers combined for approximately 50 percent of our consolidated operating revenues. No
other customer accounted for more than 10 percent of consolidated operating revenues in 2010. In 2009, two
customers accounted for approximately 35 percent of consolidated operating revenues. In 2008, one customer
accounted for approximately 20 percent of our revenues. No other customer accounted for more than 10 percent of
consolidated operating revenues in 2010, 2009 or 2008.
Note 14 — Commitments and Contingencies
Noble Asset Company Limited (“NACL”), our wholly-owned, indirect subsidiary, was named one of 21 parties
served a Show Cause Notice (“SCN”) issued by the Commissioner of Customs (Prev.), Mumbai, India (the
“Commissioner”) in August 2003. The SCN concerned alleged violations of Indian customs laws and regulations
regarding one of our jackups. The Commissioner alleged certain violations to have occurred before, at the time of,
and after NACL acquired the rig from the rig’s previous owner. In the purchase agreement for the rig, NACL
received contractual indemnification against liability for Indian customs duty from the rig’s previous owner. In
connection with the export of the rig from India in 2001, NACL posted a bank guarantee in the amount of 150
million Indian Rupees (or $3 million at December 31, 2010) and a customs bond in the amount of 970 million Indian
92
NOBLE CORPORATION (NOBLE-SWISS) AND SUBSIDIARIES
NOBLE CORPORATION (NOBLE-CAYMAN) AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unless otherwise indicated, dollar amounts in tables are in thousands, except per share data)
Rupees (or $22 million at December 31, 2010), both of which remain in place. In March 2005, the Commissioner
passed an order against NACL and the other parties cited in the SCN seeking (i) to invoke the bank guarantee posted
on behalf of NACL as a fine, (ii) to demand duty of (a) $19 million plus interest related to a 1997 alleged import and
(b) $22 million plus interest related to a 1999 alleged import, provided that the duty and interest demanded in (b)
would not be payable if the duty and interest demanded in (a) were paid by NACL, and (iii) to assess a penalty of
$500,000 against NACL. NACL appealed the order of the Commissioner to the Customs, Excise & Service Tax
Appellate Tribunal (“CESTAT”). In 2006, CESTAT upheld NACL’s appeal and overturned the Commissioner’s
March 2005 order against NACL in its entirety. The Commissioner filed an appeal in the Bombay High Court,
which dismissed the appeal. In 2008, the Commissioner appealed to the Supreme Court of India, appealing the order
of the Bombay High Court. NACL is opposing admission of the Appeal in the Supreme Court of India, and is
seeking the return or cancellation of its previously posted custom bond and bank guarantee. NACL continues to
pursue contractual indemnification against liability for Indian customs duty and related costs and expenses against
the rig’s previous owner in arbitration proceedings in London, which proceedings the parties have temporarily
stayed pending further developments in the Indian proceeding. We do not believe the ultimate resolution of this
matter will have a material adverse effect on our financial position, results of operations or cash flows.
In May 2010, Anadarko Petroleum Corporation (“Anadarko”) sent a letter asserting that the initial attempted
deepwater drilling moratorium in the U.S. Gulf of Mexico, issued on May 28, 2010 by U.S. Secretary of the Interior
Ken Salazar, was an event of force majeure under the drilling contract for the Noble Amos Runner. In June 2010,
Anadarko filed a declaratory judgment action in Federal District Court in Houston, Texas seeking to have the court
declare that a force majeure condition had occurred and that the drilling contract was terminated by virtue of the
initial proclaimed moratorium. We disagree that a force majeure event occurred and that Anadarko had the right to
terminate the contract. In August 2010, we filed a counterclaim seeking damages from Anadarko for breach of
contract. We do not believe the ultimate resolution of this matter will have a material adverse effect on our financial
position, results of operations or cash flows. Due to the uncertainties noted above, we have not recognized any
revenue under the disputed portion of this contract. As the amounts in dispute have been fully reserved, the matter
could have a material positive effect on our results of operations or cash flows in the period the matter is resolved.
The Noble Homer Ferrington is under contract with a subsidiary of ExxonMobil Corporation (“ExxonMobil”),
who entered into an assignment agreement with BP for a two well farmout of the rig in Libya after successfully
drilling two wells with the rig for ExxonMobil. In August 2010, BP attempted to terminate the assignment
agreement claiming that the rig was not in the required condition. ExxonMobil has informed us that we must look to
BP for payment of the dayrate during the assignment period. In August 2010, we initiated arbitration proceedings
under the drilling contract against both BP and ExxonMobil. We do not believe BP had the right to terminate the
assignment agreement and believe the rig continues to be fully ready to operate under the drilling contract. We
believe we are owed dayrate by either or both of these clients. The operating dayrate was approximately $538,000
per day for the work in Libya. We are proceeding with the arbitration process and intend to vigorously pursue these
claims. Due to the uncertainties noted above, we have not recognized any revenue during the assignment period. We
do not believe the ultimate resolution of these matters will have a material effect on our financial position. As the
amounts in dispute have been fully reserved, the matter could have a material positive effect on our results of
operations or cash flows in the period the matter is resolved.
We are from time to time a party to various lawsuits that are incidental to our operations in which the claimants
seek an unspecified amount of monetary damages for personal injury, including injuries purportedly resulting from
exposure to asbestos on drilling rigs and associated facilities. At December 31, 2010, there were approximately 36
of these lawsuits in which we are one of many defendants. These lawsuits have been filed in the United States in the
states of Louisiana, Mississippi and Texas. We intend to defend vigorously against the litigation. We do not believe
the ultimate resolution of these matters will have a material adverse effect on our financial position, results of
operations or cash flows.
We are a defendant in certain claims and litigation arising out of operations in the ordinary course of business,
including certain disputes with customers over receivables discussed in Note 5, 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.
93
NOBLE CORPORATION (NOBLE-SWISS) AND SUBSIDIARIES
NOBLE CORPORATION (NOBLE-CAYMAN) AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unless otherwise indicated, dollar amounts in tables are in thousands, except per share data)
During the fourth quarter of 2007, our Nigerian subsidiary received letters from the Nigerian Maritime
Administration and Safety Agency (“NIMASA”) seeking to collect a two percent surcharge on contract amounts
under contracts performed by “vessels,” within the meaning of Nigeria’s cabotage laws, engaged in the Nigerian
coastal shipping trade. Although we do not believe that these laws apply to our ownership of drilling units,
NIMASA is seeking to apply a provision of the Nigerian cabotage laws (which became effective on May 1, 2004) to
our offshore drilling units by considering these units to be “vessels” within the meaning of those laws and therefore
subject to the surcharge, which is imposed only upon “vessels.” Our offshore drilling units are not engaged in the
Nigerian coastal shipping trade and are not in our view “vessels” within the meaning of Nigeria’s cabotage laws. In
January 2008, we filed an originating summons against NIMASA and the Minister of Transportation in the Federal
High Court of Lagos, Nigeria seeking, among other things, a declaration that our drilling operations do not
constitute “coastal trade” or “cabotage” within the meaning of Nigeria’s cabotage laws and that our offshore drilling
units are not “vessels” within the meaning of those laws. In February 2009, NIMASA filed suit against us in the
Federal High Court of Nigeria seeking collection of the cabotage surcharge. In August 2009, the court issued a
favorable ruling in response to our originating summons stating that drilling operations do not fall within the
cabotage laws and that drilling rigs are not vessels for purposes of those laws. The court also issued an injunction
against the defendants prohibiting their interference with our drilling rigs or drilling operations. NIMASA has
appealed the court’s ruling, although the court dismissed NIMASA’s lawsuit filed against us in February 2009. We
intend to take all further appropriate legal action to resist the application of Nigeria’s cabotage laws to our drilling
units. The outcome of any such legal action and the extent to which we may ultimately be responsible for the
surcharge is uncertain. If it is ultimately determined that offshore drilling units constitute vessels within the meaning
of the Nigerian cabotage laws, we may be required to pay the surcharge and comply with other aspects of the
Nigerian cabotage laws, which could adversely affect our operations in Nigerian waters and require us to incur
additional costs of compliance.
NIMASA had also informed the Nigerian Content Division of its position that we are not in compliance with the
cabotage laws. The Nigerian Content Division makes determinations of companies’ compliance with applicable
local content regulations for purposes of government contracting, including contracting for services in connection
with oil and gas concessions where the Nigerian national oil company is a partner. The Nigerian Content Division
had originally barred us from participating in new tenders as a result of NIMASA’s allegations, although the
Division reversed its actions based on the favorable Federal High Court ruling. However, no assurance can be given
with respect to our ability to bid for future work in Nigeria until our dispute with NIMASA is resolved.
We operate in a number of countries throughout the world and our income tax returns filed in those jurisdictions
are subject to review and examination by tax authorities within those jurisdictions. We have been informed by the
U.S. Internal Revenue Service that our 2008 tax return is currently under audit. In addition, a U.S. subsidiary of
Frontier is also under audit for its 2007 and 2008 tax returns. Furthermore, we are currently contesting several non-
U.S. tax assessments and may contest future assessments when we believe the assessments are in error. We cannot
predict or provide assurance as to the ultimate outcome of the existing or future assessments. We believe the
ultimate resolution of the outstanding assessments, for which we have not made any accrual, will not have a material
adverse effect on our consolidated financial statements. We recognize uncertain tax positions that we believe have a
greater than 50 percent likelihood of being sustained.
Certain of our non-U.S. income tax returns have been examined for the 2002 through 2008 periods and audit
claims have been assessed for approximately $305 million (including interest and penalties), primarily in Mexico.
We do not believe we owe these amounts and are defending our position. However, we expect increased audit
activity in Mexico and anticipate the tax authorities will issue additional assessments and continue to pursue legal
actions for all audit claims. We believe additional audit claims in the range of $16 to $18 million attributable to
other business tax returns may be assessed against us. We have contested, or intend to contest, the audit findings,
including through litigation if necessary, and we do not believe that there is greater than 50 percent likelihood that
additional taxes will be incurred. Accordingly, no accrual has been made for such amounts.
94
NOBLE CORPORATION (NOBLE-SWISS) AND SUBSIDIARIES
NOBLE CORPORATION (NOBLE-CAYMAN) AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unless otherwise indicated, dollar amounts in tables are in thousands, except per share data)
We maintain certain insurance coverage against specified marine perils, including liability for physical damage
to our drilling rigs, and loss of hire on certain of our rigs. The damage caused in 2005 and 2008 by Hurricanes
Katrina, Rita and Ike to oil and gas assets situated in the U.S. Gulf of Mexico negatively impacted the energy
insurance market, resulting in more restricted and more expensive coverage. We also cannot predict what the impact
of the recent events in the U.S. Gulf of Mexico will have on the cost or availability of future insurance coverage. We
evaluate and renew our operational insurance policies on a yearly basis during the month of March.
We have elected to self insure U.S. named windstorm physical damage and loss of hire exposures due to the high
cost of coverage for these perils. This self insurance applies only to our units in the U.S. portion of the Gulf of
Mexico. Our rigs located in the Mexican portion of the Gulf of Mexico remain covered by commercial insurance for
windstorm damage. In addition, we maintain physical damage deductibles of $25 million per occurrence for rigs
located in the U.S., Mexico, Brazil, Southeast Asia and the North Sea and $15 million per occurrence for rigs
operating in West Africa, the Middle East, India, and the Mediterranean Sea. 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 onboard our rigs and losses relating to shore-based terrorist acts or strikes. If a
significant accident or other event occurs and is not fully covered by insurance or contractual indemnity, it could
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 million per occurrence, with maximum liability
coverage of $750 million.
In connection with our capital expenditure program, we had outstanding commitments, including shipyard and
purchase commitments of approximately $1.5 billion at December 31, 2010. Subsequent to December 31, 2010, we
entered into shipyard commitments of approximately $1.0 billion in connection with the signing of construction
contracts for two additional newbuild drillships, and canceled shipyard contracts totaling $77 million in connection
with the decision not to proceed with the reliability upgrade on the Noble Muravlenko. See Note 19, “Subsequent
Events,” for additional information regarding these transactions.
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-Swiss (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.
Internal Investigation
In 2007, we began, and voluntarily contacted the SEC and the U.S. Department of Justice (“DOJ”) to advise
them of, an internal investigation of the legality under the United States Foreign Corrupt Practices Act (“FCPA”)
and local laws of certain reimbursement payments made by our Nigerian affiliate to our customs agents in Nigeria.
In November 2010, we finalized settlements of this matter with each of the SEC and the DOJ. In order to resolve the
DOJ investigation, we entered into a non-prosecution agreement with the DOJ, which provides for the payment of a
fine of $2.6 million, as well as certain undertakings, including continued cooperation with the DOJ, compliance with
the FCPA, certain self-reporting and annual reporting obligations and certain restrictions on our public discussion
95
NOBLE CORPORATION (NOBLE-SWISS) AND SUBSIDIARIES
NOBLE CORPORATION (NOBLE-CAYMAN) AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unless otherwise indicated, dollar amounts in tables are in thousands, except per share data)
regarding the agreement. The agreement does not require that we install a monitor to oversee our activities and
compliance with laws. In order to resolve the SEC investigation, we agreed to the entry of a civil judgment against
us for violations of the FCPA. Pursuant to the agreed judgment, we agreed to disgorge profits of $4.3 million, pay
prejudgment interest of $1.3 million and refrain from denying the allegations contained in the SEC’s petition, except
in other litigation to which the SEC is not a party. We also agreed to an injunction restraining us from violating the
anti-bribery, books and records, and internal controls provisions of the FCPA, and we waived a variety of litigation
rights with respect to the conduct at issue. The agreed judgment does not require a monitor. Our ability to comply
with the terms of the settlements is dependent on the success of our ongoing compliance program, including our
ability to continue to manage our agents and supervise, train and retain competent employees, and the efforts of our
employees to comply with applicable law and our code of business conduct and ethics.
In January 2011, the Nigerian Economic and Financial Crimes Commission and the Nigerian Attorney General
Office initiated an investigation into these same activities. A subsidiary of Noble-Swiss resolved this matter through
the execution of a non-prosecution agreement dated January 28, 2011. Pursuant to this agreement, the subsidiary
paid $2.5 million to resolve all charges and claims of the Nigerian government. Any additional sanctions we may
incur as a result of any such investigation could damage our reputation and result in substantial fines, sanctions, civil
and/or criminal penalties and curtailment of operations in certain jurisdictions and might adversely affect our
business, results of operations or financial condition. Further, resolving any such investigation could be expensive
and consume significant time and attention of our senior management.
We have one jackup rig in Nigeria which is operating under a temporary import permit which expired in
November 2008 and we have a pending application to renew this permit. We have received approval from the
Nigerian Customs office that we will be allowed to obtain a new temporary import permit for this rig. We recently
received a new temporary import permit for another rig in Nigeria that had been waiting for a temporary import
permit based on a long-standing application. We continue to seek to avoid material disruption to our Nigerian
operations; however, there can be no assurance that we will be able to obtain new permits or further extensions of
permits necessary to continue the operation of our rigs in Nigeria. If we cannot obtain a new permit or an extension
necessary to continue operations of any rig, we may need to cease operations under the drilling contract for such rig
and relocate such rig from Nigerian waters. We cannot predict what impact these events may have on any such
contract or our business in Nigeria, and we could face additional fines and sanctions in Nigeria. Furthermore, we
cannot predict what changes, if any, relating to temporary import permit policies and procedures may be established
or implemented in Nigeria in the future, or how any such changes may impact our business there.
Note 15 — (Gain)/Loss on Asset Disposal/Involuntary Conversion, Net
In May 2009, our jackup, the Noble David Tinsley, experienced a “punch-through” while the rig was being
positioned on location offshore Qatar. The incident involved the sudden penetration of all three legs through the sea
bottom, which resulted in severe damage to the legs and the rig. We recorded a charge of $17 million during the
quarter ended June 30, 2009 related to this involuntary conversion, which includes approximately $9 million for the
write-off of the damaged legs.
In March 2009, we recognized a charge of $12 million related to the Noble Fri Rodli, a submersible that has
been cold stacked since October 2007. We recorded the charge as a result of a decision to evaluate disposition
alternatives for this rig.
During the third quarter of 2008, Hurricane Ike caused damage to certain of our rigs. The $200 million aggregate
insurance limit available to our rigs operating in the U.S. Gulf of Mexico was sufficient to cover the loss, with the
exception of the physical damage deductible and the loss of hire waiting period. During 2008, we recorded a charge
of $10 million, which represents our deductible under our then existing insurance program.
During the second quarter of 2008, we sold our North Sea labor contract drilling services business to Seawell
Holding UK Limited (“Seawell”) for $35 million plus working capital. This sale included labor contracts covering
11 platform operations in the United Kingdom sector of the North Sea. In connection with this sale, we recognized a
gain of $36 million, net of closing costs. This gain included approximately $5 million in cumulative currency
translation adjustments.
96
NOBLE CORPORATION (NOBLE-SWISS) AND SUBSIDIARIES
NOBLE CORPORATION (NOBLE-CAYMAN) AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unless otherwise indicated, dollar amounts in tables are in thousands, except per share data)
Note 16 — Segment and Related Information
We report our contract drilling operations as a single reportable segment: Contract Drilling Services. The
consolidation of our contract drilling operations into one reportable segment is attributable to how we manage our
business, and the fact that all of our drilling fleet is dependent upon the worldwide oil industry. The mobile offshore
drilling units comprising our offshore rig fleet operate in a single, global market for contract drilling services and are
often redeployed globally due to changing demands of our customers, which consist largely of major non-U.S. and
government owned/controlled oil and gas companies throughout the world. Our contract drilling services segment
conducts contract drilling operations in the Middle East, India, U.S. Gulf of Mexico, Mexico, the North Sea, Brazil
and West Africa.
The accounting policies of our reportable segment are the same as those described in the summary of significant
accounting policies (see Note 1). We evaluate the performance of our operating segment based on revenues from
external customers and segment profit. Summarized financial information of our reportable segment for the years
ended December 31, 2010, 2009 and 2008 is shown in the following table. The “Other” column includes results of
labor contract drilling services, other insignificant operations and corporate related items.
Contract
Drilling
Services
Other
Total
2010
Revenues from external customers ....................................................... $ 2,771,784 $ 35,392 $ 2,807,176
539,829
Depreciation and amortization..............................................................
916,080
Segment operating income ...................................................................
(9,457)
Interest expense, net of amount capitalized ..........................................
(143,077)
Income tax provision ............................................................................
Segment profit ......................................................................................
773,429
11,221,321
Total assets (at end of period)...............................................................
1,423,484
Capital expenditures .............................................................................
(1,123)
(144,220)
779,609
11,067,360
1,416,841
11,818
(2,125)
(8,334)
1,143
(6,180)
153,961
6,643
528,011
918,205
2009
Revenues from external customers ....................................................... $ 3,607,219 $ 33,565 $ 3,640,784
Depreciation and amortization..............................................................
408,313
2,010,744
Segment operating income ...................................................................
(1,685)
Interest expense, net of amount capitalized ..........................................
Income tax provision ............................................................................
(337,260)
1,678,642
Segment profit ......................................................................................
8,396,896
Total assets (at end of period)...............................................................
1,431,498
Capital expenditures .............................................................................
9,740
2,040
(1,021)
210
6,700
127,415
64,402
(664)
(337,470)
1,671,942
8,269,481
1,367,096
398,573
2,008,704
2008
Revenues from external customers ....................................................... $ 3,376,224 $ 70,277 $ 3,446,501
Depreciation and amortization..............................................................
356,658
1,908,403
Segment operating income ...................................................................
(4,388)
Interest expense, net of amount capitalized ..........................................
Income tax provision ............................................................................
(351,463)
1,560,995
Segment profit ......................................................................................
7,106,799
Total assets (at end of period)...............................................................
1,231,321
Capital expenditures .............................................................................
(491)
(1,158)
41,015
572,233
48,184
(3,897)
(350,305)
1,519,980
6,534,566
1,183,137
349,448
1,867,262
7,210
41,141
97
NOBLE CORPORATION (NOBLE-SWISS) AND SUBSIDIARIES
NOBLE CORPORATION (NOBLE-CAYMAN) AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unless otherwise indicated, dollar amounts in tables are in thousands, except per share data)
The following table presents revenues and identifiable assets by country based on the location of the service
provided:
2008
2010
—
568,392
Identifiable Assets
As of December 31,
2009
2008
676,225 $ 4,070,858 $ 2,649,411 $ 2,045,968
United States................. $
Benin ............................
—
—
Brunei ...........................
Brazil ............................
848,455
—
Cameroon .....................
21,040
Canada ..........................
China (2).......................
797,854
24,377
Denmark .......................
257,087
Equatorial Guinea .........
India..............................
107,911
—
Ivory Coast ...................
—
Libya.............................
—
Malta (1) .......................
823,462
Mexico..........................
136,545
Nigeria ..........................
481,724
Qatar .............................
905,107
Singapore (2) ................
—
Switzerland (3) .............
69,837
The Netherlands............
243,640
United Arab Emirates ...
343,792
United Kingdom ...........
Other .............................
—
Total.............................. $ 2,807,176 $ 3,640,784 $ 3,446,501 $ 11,221,321 $ 8,396,896 $ 7,106,799
____________
—
—
1,824,190 2,275,550
57,635
15,540
261,469
41,226
—
67,905
—
219,391
—
796,570
80,579
384,725
578,500
38,483
387,516
132,247
410,149
—
Revenues
Year Ended December 31,
2009
811,538 $
11,976
—
372,750
—
33,338
—
127,149
—
121,604
49,135
132,572
—
839,312
153,948
348,028
—
—
333,440
68,348
237,418
228
2010
550,683 $
—
49,487
527,678
21,991
35,292
—
—
—
108,190
—
75,390
—
553,209
135,096
158,107
32,212
—
238,460
56,388
264,891
102
51,098
15,333
570,985
—
—
123,271
—
—
205,483
629,024
162,014
364,739
1,283,071
35,687
629,859
361,626
325,691
—
—
—
268,778
—
37,953
—
69,417
115,669
80,669
—
—
—
678,001
304,844
438,754
—
—
303,313
186,601
285,902
375
(1) Assets in Malta are related to a semisubmersible rig that is currently available and is being marketed; however,
no revenue was earned by this rig during the period while in this jurisdiction.
(2) China and Singapore primarily consist of asset values for newbuild rigs under construction in shipyards.
(3) Switzerland assets consist of general corporate assets which generate no external revenue for the Company.
Note 17 — Other Financial Information
The following are Swiss statutory disclosure requirements:
(i) Expenses
Total personnel expenses amounted to $649 million, $564 million and $581 million for the years ended
December 31, 2010, 2009 and 2008, respectively.
(ii) Fire Insurance
Total fire insurance values of property and equipment amounted to $8.3 billion and $8.2 billion at December 31,
2010 and 2009, respectively.
(iii) Risk assessment and Management
The Board of Directors, together with the management of Noble, is responsible for assessing risks related to the
financial reporting process and for establishing and maintaining adequate internal control over financial reporting.
Internal control over financial reporting is a process designed by, or under the supervision of the Chief Executive
Officer and Chief Financial Officer to provide reasonable assurance regarding the reliability of financial reporting
and the preparation of Noble’s consolidated financial statements for external purposes in accordance with GAAP.
98
NOBLE CORPORATION (NOBLE-SWISS) AND SUBSIDIARIES
NOBLE CORPORATION (NOBLE-CAYMAN) AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unless otherwise indicated, dollar amounts in tables are in thousands, except per share data)
The Board, operating through its Audit Committee composed entirely of directors who are not officers or
employees of the Company, is responsible for oversight of the financial reporting process and safeguarding of assets
against unauthorized acquisition, use, or disposition. The Audit Committee meets with management, the
independent registered public accountants and the internal auditor; approves the overall scope of audit work and
related fee arrangements; and reviews audit reports and findings. In addition, the independent registered public
accountants and the internal auditor meet separately with the Audit Committee, without management representatives
present, to discuss the results of their audits; the adequacy of the Company’s internal control; the quality of its
financial reporting; and the safeguarding of assets against unauthorized acquisition, use, or disposition.
Note 18 — Information about Noble-Cayman
Reclassifications
Noble-Cayman historically recorded distributions to Noble-Swiss as “Due from affiliate” in its consolidated
balance sheet and classified the related cash flows as cash flows from operating activities based on nature of the
activity and the legal character of the distributions. However, based on Noble-Cayman’s current plan to discharge
the receivables from Noble-Swiss through the declaration of dividends, Noble-Cayman has determined that it will
present the distributions as a direct reduction of retained earnings and classify the related cash flows as cash flows
from financing activities. Accordingly, prior year amounts were reclassified in the consolidated balance sheet and
statements of cash flows and of equity to conform to the current year presentation.
Guarantees of Registered Securities
Noble-Cayman and Noble Holding (U.S.) Corporation (“NHC”), each a wholly-owned subsidiary of Noble-
Swiss, are full and unconditional guarantors of NDC’s 7.50% Senior Notes due 2019 which had an outstanding
principal balance at December 31, 2010 of $202 million. NDC is an indirect, wholly-owned subsidiary of Noble-
Swiss and a direct, wholly-owned subsidiary of NHC. In December 2005, Noble Drilling Holding LLC (“NDH”), an
indirect wholly-owned subsidiary of Noble-Swiss, became a co-obligor on (and effectively a guarantor of) the
7.50% Senior Notes.
In connection with our worldwide internal restructuring completed during 2009, prior to December 31, 2009,
Noble Drilling Services 1 LLC (“NDS1”), an indirect wholly-owned subsidiary of Noble-Swiss, became a co-issuer
of the 7.50% Senior Notes. Subsequent to December 31, 2009, NDS1 merged with Noble Drilling Services 6 LLC
(“NDS6”), also an indirect wholly-owned subsidiary of Noble-Swiss, as part of the internal restructuring. NDS6 was
the surviving company in this merger and assumed NDS1’s obligations under, and became a co-issuer of, the 7.50%
Senior Notes.
In connection with the issuance of Noble-Cayman’s 5.875% Senior Notes due 2013, NDC guaranteed the
payment of the 5.875% Senior Notes. In connection with the worldwide internal restructuring, NHIL, an indirect
wholly-owned subsidiary of Noble-Cayman and Noble-Swiss, also guaranteed the payment of the 5.875% Senior
Notes. NDC’s and NHIL’s guarantees of the 5.875% Senior Notes are full and unconditional. The outstanding
principal balance of the 5.875% Senior Notes at December 31, 2010 was $300 million.
In November 2008, NHIL issued $250 million principal amount of 7.375% Senior Notes due 2014, which are
fully and unconditionally guaranteed by Noble-Cayman. The outstanding principal balance of the 7.375% Senior
Notes at December 31, 2010 was $250 million.
In connection with the Frontier acquisition, in July 2010, NHIL issued a total of $1.25 billion principal amount
of senior notes in three separate tranches, comprising $350 million of 3.45% Senior Notes due 2015, $500 million of
4.90% Senior Notes due 2020 and $400 million of 6.20% Senior Notes due 2040. Noble-Cayman fully and
unconditionally guaranteed the notes on a senior unsecured basis. The aggregate principal balance of these three
tranches of senior notes at December 31, 2010 was $1.25 billion.
The following consolidating financial statements of Noble-Cayman, NHC and NDH combined, NDC, NHIL,
NDS6 and all other subsidiaries present investments in both consolidated and unconsolidated affiliates using the
equity method of accounting.
99
NOBLE CORPORATION (NOBLE-CAYMAN) AND SUBSIDIARIES
CONDENSED CONSOLIDATING BALANCE SHEET
December 31, 2010
(in thousands)
Noble-
Cayman
NHC and NDH
Combined
NDC
NHIL
NDS6
Other
Non-guarantor
Subsidiaries
of Noble
Consolidating
Adjustments
Total
ASSETS
Current assets
$
Cash and cash equivalents......
Accounts receivable ...............
Prepaid expenses....................
Short-term notes receivable
from affiliates.......................
Accounts receivable from
affiliates ...............................
Other current assets................
Total current assets.............
42 $
—
—
—
607,207
7,057
614,306
6,984
310
119,476
—
76,789
203,705
146 $
— $
1,795
—
—
— $
—
—
— $
—
—
333,211 $
378,635
32,922
— $
—
—
333,399
387,414
33,232
—
—
75,000
(194,476)
—
751,623
240
753,658
199,235
19,980
219,215
1,958
9,416
11,374
3,646,623
208,075
4,674,466
(5,206,646)
(251,736)
(5,652,858)
—
69,821
823,866
Property and equipment
Drilling equipment, facilities
and other ..............................
Accumulated depreciation..........
Total property and
equipment, net..................
—
—
—
1,254,482
(153,638)
70,945
(50,250)
1,100,844
20,695
—
—
—
—
—
—
11,289,547
(2,391,066)
—
—
12,614,974
(2,594,954)
8,898,481
—
10,020,020
Notes receivable from affiliates......
Investments in affiliates .............
Other assets................................
Total assets.........................
3,507,062
6,835,466
1,872
$ 10,958,706 $
675,000
9,150,129
7,700
—
3,561,451
2,451
1,239,600
5,618,248
11,336
479,107
1,879,831
1,001
11,137,378 $ 4,338,255 $ 7,088,399 $ 2,371,313 $
2,492,900
—
318,232
16,384,079 $
(8,393,669)
(27,045,125)
—
—
342,592
(41,091,652) $ 11,186,478
—
LIABILITIES AND EQUITY
Current liabilities
Short-term notes payables
from affiliates.......................
$
25,000 $
50,000 $
— $
— $
— $
119,476 $
(194,476) $
—
Current maturities of long-
term debt ..............................
Accounts payable and accrued
liabilities ..............................
Accounts payable to affiliates ....
Total current liabilities .......
1,473
1,601,869
1,628,342
Long-term debt ..........................
Notes payable to affiliates..........
Other liabilities ..........................
Total liabilities ...................
339,911
1,834,500
19,929
3,822,682
Commitments and
contingencies
—
—
—
—
—
80,213
19,218
2,695,651
2,764,869
—
1,092,000
48,595
3,905,464
8,779
30,095
38,874
31,973
64,192
96,165
4,413
7,134
11,547
—
120,000
25,485
184,359
1,498,066
550,000
—
2,144,231
201,695
811,000
—
1,024,242
566,422
1,059,441
1,825,552
646,812
3,986,169
432,839
6,891,372
—
—
(5,458,382)
(5,652,858)
80,213
632,278
—
712,491
—
(8,393,669)
2,686,484
—
526,848
(14,046,527) 3,925,823
—
Noncontrolling interest ..............
—
—
—
—
—
124,631
—
124,631
Equity ........................................
Total liabilities and equity......
7,136,024
$ 10,958,706 $
7,231,914
4,153,896
4,944,168
1,347,071
9,368,076
11,137,378 $ 4,338,255 $ 7,088,399 $ 2,371,313 $
16,384,079 $
(27,045,125) 7,136,024
(41,091,652) $ 11,186,478
100
NOBLE CORPORATION (NOBLE-CAYMAN) AND SUBSIDIARIES
CONDENSED CONSOLIDATING BALANCE SHEET
December 31, 2009
(in thousands)
Noble-
Cayman
NHC and NDH
Combined
NDC
NHIL
NDS6
Other
Non-guarantor
Subsidiaries
of Noble
Consolidating
Adjustments
Total
$
3 $
—
—
50,394
—
109
50,506
ASSETS
Current assets
Cash and cash equivalents.........
Accounts receivable ..................
Prepaid expenses.......................
Accounts receivable from
affiliates ..................................
Short-term notes receivable
from affiliates..........................
Other current assets...................
Total current assets................
Property and equipment
Drilling equipment, facilities
and other .................................
Accumulated depreciation.............
Total property and
equipment, net.....................
268 $
7,509
275
— $
—
—
— $
—
—
— $
—
—
725,954 $
639,945
26,014
— $ 726,225
647,454
—
26,289
—
35,778
573,238
251,232
168,681
57,484
269,995
—
—
573,238
—
—
251,232
—
—
—
1,419,193
(120,862)
69,601
(47,585)
1,298,331
22,016
—
—
—
2,663
—
—
2,663
—
—
—
2,796,109
(3,709,414)
—
—
149,806
4,337,828
(168,681)
(134,482)
(4,012,577)
—
72,917
1,472,885
7,293,370
(2,007,328)
—
—
8,782,164
(2,175,775)
5,286,042
—
6,606,389
Notes receivable from affiliates ....
Investments in affiliates ................
Other assets...................................
Total assets............................
3,507,062
4,258,135
2,735
$ 7,818,438 $
—
8,423,518
8,227
—
3,709,623
772
—
4,578,138
1,744
479,107
1,403,805
1,122
10,000,071 $ 4,305,649 $ 4,831,114 $ 1,886,697 $
1,964,821
—
264,539
11,853,230 $
(5,950,990)
(22,373,219)
—
—
—
279,139
(32,336,786) $ 8,358,413
LIABILITIES AND EQUITY
Current liabilities
Short-term notes payables from
affiliates ..................................
Accounts payable and accrued
liabilities .................................
Accounts payable to affiliates ...
Total current liabilities ..........
1,468
609,075
610,543
Long-term debt .............................
Notes payable to affiliates.............
Other liabilities .............................
Total liabilities ......................
299,874
129,900
19,929
1,060,246
Commitments and contingencies
$
— $
— $
— $
— $
— $
168,681 $
(168,681) $
—
10,815
1,922,049
1,932,864
—
1,164,921
41,501
3,139,286
9,067
24,462
33,529
—
120,000
23,883
177,412
5,382
25,148
30,530
249,377
550,000
—
829,907
4,412
2
4,414
201,695
—
—
206,109
394,763
1,263,160
1,826,604
—
3,986,169
338,055
6,150,828
—
(3,843,896)
(4,012,577)
425,907
—
425,907
—
(5,950,990)
—
(9,963,567)
750,946
—
423,368
1,600,221
Equity ...........................................
Total liabilities and equity.....
6,758,192
$ 7,818,438 $
6,860,785
4,128,237
4,001,207
1,680,588
10,000,071 $ 4,305,649 $ 4,831,114 $ 1,886,697 $
5,702,402
11,853,230 $
(22,373,219)
6,758,192
(32,336,786) $ 8,358,413
101
NOBLE CORPORATION (NOBLE-CAYMAN) AND SUBSIDIARIES
CONDENSED CONSOLIDATING STATEMENT OF INCOME
Year Ended December 31, 2010
(in thousands)
Noble-
Cayman
NHC and NDH
Combined
NDC
NHIL
NDS6
Other
Non-guarantor
Subsidiaries
of Noble
Consolidating
Adjustments
Total
$
— $
—
—
—
—
94,027 $ 17,942 $
1,483
—
78
95,588
71
—
—
18,013
— $
—
—
—
—
— $
—
—
—
—
2,621,424 $
75,277
32,520
2,254
2,731,475
(37,900) $ 2,695,493
76,831
32,520
2,332
2,807,176
—
—
—
(37,900)
Operating revenues
Contract drilling services .................
Reimbursables..................................
Labor contract drilling services ........
Other................................................
Total operating revenues ..............
Operating costs and expenses
Contract drilling services .................
Reimbursables..................................
Labor contract drilling services ........
Depreciation and amortization .........
Selling, general and administrative.......
Total operating costs and
24,103
—
—
—
7,979
40,994
1,641
—
37,324
4,674
6,363
66
—
3,449
2
42,932
—
—
—
30,210
—
—
—
—
1
1
1,096,309
57,707
22,056
498,231
12,702
(37,900)
—
—
—
—
1,172,801
59,414
22,056
539,004
55,568
1,687,005
(37,900)
1,848,843
expenses.....................................
32,082
84,633
9,880
73,142
Operating income (loss) .....................
(32,082)
10,955
8,133
(73,142)
(1)
1,044,470
—
958,333
Other income (expense)
Equity earnings in affiliates (net of
tax).................................................
870,322
620,747
24,898
1,040,110
407,435
—
(2,963,512)
—
Interest expense, net of amounts
capitalized......................................
Interest income and other, net ..........
(29,459)
6,753
(65,056)
28,452
(7,375)
3
(43,988)
19,980
(7,956)
9,416
(1,888)
90,188
146,265
(146,265)
(9,457)
8,527
Income before income taxes ..............
Income tax (provision) benefit .........
Net Income ......................................
815,534
—
815,534
595,098
(32,878)
562,220
25,659
—
25,659
942,960
—
942,960
408,894
—
408,894
1,132,770
(108,988)
1,023,782
(2,963,512)
—
(2,963,512)
957,403
(141,866)
815,537
Income/(loss) attributable to
noncontrolling interests..................
—
—
—
—
—
(3)
—
(3)
Net income ..........................................
$ 815,534 $
562,220 $ 25,659 $ 942,960 $ 408,894 $
1,023,779 $
(2,963,512) $ 815,534
102
NOBLE CORPORATION (NOBLE-CAYMAN) AND SUBSIDIARIES
CONDENSED CONSOLIDATING STATEMENT OF INCOME
Year Ended December 31, 2009
(in thousands)
Operating revenues
Contract drilling services ................
Reimbursables.................................
Labor contract drilling services .......
Other...............................................
Total operating revenues .............
Operating costs and expenses
Contract drilling services ................
Reimbursables.................................
Labor contract drilling services .......
Depreciation and amortization ........
Selling, general and administrative.......
Loss on asset disposal/involuntary
conversion, net ..............................
Total operating costs and
expenses....................................
Noble-
Cayman
NHC and NDH
Combined
NDC
NHIL
NDS6
Other
Non-guarantor
Subsidiaries
of Noble
Consolidating
Adjustments
Total
$
— $
—
—
—
—
145,687 $ 40,366 $
1,904
—
57
147,648
—
—
2
40,368
— $
—
—
—
—
— $
—
—
—
—
3,386,684 $
97,297
30,298
1,098
3,515,377
(62,982) $ 3,509,755
99,201
30,298
1,157
3,640,411
—
—
—
(62,982)
956
—
—
—
19,394
—
33,587
1,070
—
32,158
2,595
7,070
—
—
8,535
436
—
—
20,350
69,410
16,041
53
—
—
—
—
—
53
—
—
—
—
—
—
—
—
1,028,080
83,965
18,827
367,620
36,118
(62,982)
—
—
—
—
1,006,764
85,035
18,827
408,313
58,543
30,839
—
30,839
1,565,449
(62,982)
1,608,321
1,949,928
—
2,032,090
Operating income (loss) ....................
(20,350)
78,238
24,327
(53)
Other income (expense)
Equity earnings in affiliates (net of
tax)................................................
1,724,115
1,438,451
488,802
1,300,141
224,535
—
(5,176,044)
—
Interest expense, net of amounts
capitalized.....................................
Interest income and other, net .........
(5,080)
1,313
(63,316)
(459)
(15,106)
2
(25,143)
—
—
—
5,289
107,625
101,671
(101,671)
(1,685)
6,810
Income before income taxes .............
Income tax (provision) benefit ........
Net income .........................................
1,699,998
383
1,452,914
(7,082)
498,025
—
1,274,945
—
224,535
—
$ 1,700,381 $
1,445,832 $ 498,025 $ 1,274,945 $ 224,535 $
2,062,842
(330,135)
1,732,707 $
(5,176,044)
—
2,037,215
(336,834)
(5,176,044) $ 1,700,381
103
NOBLE CORPORATION (NOBLE-CAYMAN) AND SUBSIDIARIES
CONDENSED CONSOLIDATING STATEMENT OF INCOME
Year Ended December 31, 2008
(in thousands)
Noble-
Cayman
NHC and NDH
Combined
NDC
NHIL
Other
Non-guarantor
Subsidiaries
of Noble
Consolidating
Adjustments
Total
Operating revenues
Contract drilling services ......... $
Reimbursables..........................
Labor contract drilling services......
Other........................................
Total operating revenues ......
Operating costs and expenses
Contract drilling services .........
Reimbursables..........................
Labor contract drilling services......
Depreciation and amortization.......
Selling, general and
administrative.........................
Gain on asset disposal/
involuntary conversion, net....
Total operating costs and
expenses .............................
— $
—
—
—
—
22,789
—
—
—
9,713
—
251,285 $ 46,742 $
1,701
—
(8)
214
—
1
46,957
252,978
38,014
1,227
—
34,025
19,095
195
—
6,947
5,886
1,550
—
—
32,502
79,152
27,787
— $
—
—
—
—
3,101,523 $
88,934
55,078
1,731
3,247,266
(100,700) $ 3,298,850
90,849
55,078
1,724
(100,700) 3,446,501
—
—
—
51
—
—
—
—
—
51
1,032,633
77,905
42,573
315,686
56,994
(26,485)
(100,700) 1,011,882
79,327
42,573
356,658
—
—
—
—
—
74,143
(26,485)
1,499,306
(100,700) 1,538,098
Operating income (loss) ............
(32,502)
173,826
19,170
(51)
1,747,960
—
1,908,403
Other income (expense)
Equity earnings in affiliates
(net of tax)..............................
Interest expense, net of
amounts capitalized................
Interest income and other, net ......
1,596,506
1,491,354
452,252
1,004,775
—
(4,544,887)
—
(9,990)
8,732
(71,199)
2,428
—
—
(1,209)
—
(10,580)
85,873
88,590
(88,590)
(4,388)
8,443
Income before income taxes......
Income tax (provision) benefit.....
1,562,746
(1,751)
1,596,409
8,280
471,422
(18,996)
1,003,515
—
Net income ................................. $ 1,560,995 $
1,604,689 $ 452,426 $ 1,003,515 $
1,823,253
(338,996)
1,484,257 $
(4,544,887) 1,912,458
(351,463)
(4,544,887) $ 1,560,995
—
104
NOBLE CORPORATION (NOBLE-CAYMAN) AND SUBSIDIARIES
CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS
Year Ended December 31, 2010
(in thousands)
Noble-
Cayman
NHC and NDH
Combined
NDC
NHIL
NDS6
Other
Non-guarantor
Subsidiaries
of Noble
Consolidating
Adjustments
Total
Cash flows from operating
activities
Net cash from operating
activities ................................ $
(33,316) $
4,469 $ 1,810 $
(80,151) $ 1,581 $
1,781,974 $
— $ 1,676,367
Cash flows from investing
activities
New construction and capital
expenditures...............................
Notes receivable from affiliates....
Acquisition of FDR Holdings, Ltd.,
—
—
(563,095)
—
—
—
—
(1,239,600)
net of cash received ........................ (1,629,644)
—
—
—
Net cash from investing
activities ................................ (1,629,644)
(563,095)
—
(1,239,600)
Cash flows from financing
activities
Proceeds from issuance of senior
notes, net of debt issuance
costs...........................................
Proceeds from issuance of notes
to joint venture partner...............
Borrowings on bank credit
—
—
—
—
—
1,238,074
—
—
—
—
—
—
—
—
facility........................................
Settlement of interest rate swaps ..
(462,967)
Distributions to parent
Advances (to) from affiliates ........
356,366
Notes payable to affiliates ............ 1,729,600
40,000
—
Net cash from financing
—
—
—
558,504
—
—
—
—
(1,810)
—
—
—
—
81,677
—
—
—
—
(1,581)
—
(720,375)
(490,000)
—
1,729,600
(1,283,470)
—
—
—
(1,629,644)
(1,210,375)
1,729,600
(2,913,114)
—
35,000
—
(6,186)
—
(993,156)
—
—
—
—
—
—
—
(1,729,600)
1,238,074
35,000
40,000
(6,186)
(462,967)
—
—
activities ................................ 1,662,999
558,504
(1,810) 1,319,751
(1,581)
(964,342)
(1,729,600)
843,921
Net increase (decrease) in
cash and cash equivalents ......
Cash and cash equivalents,
beginning of period.......................
Cash and cash equivalents, end of
period ............................................ $
39
3
(122)
268
—
—
—
—
—
—
(392,743)
725,954
—
—
(392,826)
726,225
42 $
146 $
— $
— $
— $
333,211 $
— $
333,399
105
NOBLE CORPORATION (NOBLE-CAYMAN) AND SUBSIDIARIES
CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS
Year Ended December 31, 2009
(in thousands)
Noble-
Cayman
NHC and NDH
Combined
NDC
NHIL
NDS6
Other
Non-guarantor
Subsidiaries
of Noble
Consolidating
Adjustments
Total
Cash flows from operating activities
Net cash from operating activities .... $
11,850 $
47,633 $ 31,136 $ 3,526 $ 3,290 $
2,051,200 $
— $ 2,148,635
Cash flows from investing activities
New construction and capital
expenditures.......................................
Repayments of notes from affiliates .....
Notes receivable from affiliates............
Other....................................................
Net cash from investing activities.....
—
—
(45,600)
—
(717,148)
—
20,963
—
(45,600)
(696,185)
(16,037)
—
44,159
—
28,122
—
—
—
—
—
—
—
—
—
—
Cash flows from financing activities
Payments of other long-term debt ........
Distributions to parent..........................
Advances (to) from affiliates................
Repayments of notes to affiliates .........
Repurchases of ordinary shares ............
Other....................................................
Net cash from financing activities ....
Net increase (decrease) in cash and
—
(218,258)
629,117
(300,000)
(60,867)
(16,900)
33,092
—
—
690,875
(42,500)
—
—
648,375
(150,000)
—
90,716
—
—
—
(59,284)
cash equivalents .............................
(658)
(177)
661
445
(26)
26
Cash and cash equivalents, beginning
of period................................................
Cash and cash equivalents, end of
period.................................................... $
—
—
(3,526)
—
—
—
(3,526)
—
—
—
—
(3,290)
—
—
—
(3,290)
—
—
(733,811)
—
342,500
—
(391,311)
(22,700)
—
(1,403,892)
(19,522)
—
—
(1,446,114)
213,775
512,179
—
45,600
(407,622)
(1,466,996)
45,600
(45,600)
—
(362,022) (1,466,996)
—
—
—
—
362,022
—
—
362,022
—
—
(172,700)
(218,258)
—
—
(60,867)
(16,900)
(468,725)
212,914
513,311
3 $
268 $
— $ — $ — $
725,954 $
— $
726,225
106
NOBLE CORPORATION (NOBLE-CAYMAN) AND SUBSIDIARIES
CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS
Year Ended December 31, 2008
(in thousands)
Noble-
Cayman
NHC and NDH
Combined
NDC
NHIL
Other
Non-guarantor
Subsidiaries
of Noble
Consolidating
Adjustments
Total
Cash flows from operating
activities
Net cash from operating
activities................................... $ 21,672 $
189,673 $ 17,522 $
(1,202) $
1,660,527 $
— $ 1,888,192
Cash flows from investing
activities
New construction and capital
expenditures .................................
Repayments of notes from
affiliates .......................................
Notes receivable from affiliates......
Other ..............................................
Net cash from investing
activities...................................
Cash flows from financing
activities
Borrowings on bank credit
—
—
—
—
—
(799,736) (9,350)
—
—
—
—
—
—
(799,736) (9,350)
—
—
—
—
—
(381,405)
—
(1,190,491)
21,065
(315,600)
61,198
(21,065)
315,600
—
—
—
61,198
(614,742)
294,535
(1,129,293)
facilities........................................
30,000
Payments on bank credit facilities ..... (130,000)
Payments of other long-term debt......
—
Advances (to)/from affiliates.......... 296,394
Notes payable to affiliates .............. 315,600
Repayments of notes to affiliates....
—
Proceeds from issuance of senior
notes, net ......................................
—
Dividends paid ............................... (244,198)
Repurchases of ordinary shares ...... (314,122)
Other ..............................................
12,771
Net cash from financing
—
—
—
631,573
—
(21,065)
—
—
—
—
—
—
(8,219) (248,036)
—
—
—
—
—
—
—
—
—
—
—
—
249,238
—
—
—
—
—
(10,335)
(671,712)
—
—
—
—
—
—
—
—
—
—
(315,600)
21,065
—
—
—
—
30,000
(130,000)
(10,335)
—
—
—
249,238
(244,198)
(314,122)
12,771
activities...................................
(33,555)
610,508
(8,219)
1,202
(682,047)
(294,535)
(406,646)
Net increase (decrease) in cash
and cash equivalents.................
(11,883)
Cash and cash equivalents,
beginning of period ........................
Cash and cash equivalents, end of
period .............................................. $
12,544
445
—
(47)
73
—
—
363,738
148,441
—
—
352,253
161,058
661 $
445 $
26 $
— $
512,179 $
— $
513,311
107
NOBLE CORPORATION (NOBLE-SWISS) AND SUBSIDIARIES
NOBLE CORPORATION (NOBLE-CAYMAN) AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unless otherwise indicated, dollar amounts in tables are in thousands, except per share data)
Note 19 — Subsequent Events
In January 2011, we received notice from Marathon Oil Company (“Marathon”) that they are terminating the
drilling contract for the ultra-deepwater semisubmersible drilling rig Noble Jim Day. Marathon’s stated reason for
the termination was that the rig had not been accepted by Marathon by the contractual deadline of December 31,
2010. We believe the rig was ready to commence operations and should have been accepted by Marathon. We
intend to pursue our rights under the contract against Marathon. In February 2011, we were awarded a letter of intent
for this drilling unit by a subsidiary of Shell for work in the U.S. Gulf of Mexico.
In January 2011, we announced the signing of a Memorandum of Understanding (“MOU”) with Petrobras
regarding operations in Brazil. Under the terms of the MOU, we would substitute the dynamically positioned
deepwater drillship Noble Phoenix, then under contract with Shell in Southeast Asia, for the dynamically positioned
drillship Noble Muravlenko. In January 2011, Shell agreed to release the Noble Phoenix from its contract. Upon
release by Shell, the Noble Phoenix will undergo limited contract preparations, after which the unit would mobilize
to Brazil. We expect that acceptance of the Noble Phoenix in Brazil by Petrobras will take place in the fourth quarter
of 2011. In connection with the cancelation of the contract on the Noble Phoenix, we recognized a non-cash gain of
approximately $55 million in the first quarter of 2011.
Also in January 2011, we reached a decision that we will not proceed with the previously announced reliability
upgrade to the Noble Muravlenko that was scheduled to take place in 2013. As a result of the cancelation of the
upgrade, we expect that our first quarter 2011 results will include an associated non-cash impairment charge
currently estimated to be approximately $40 million.
In January 2011, we signed a contract for the construction of two additional newbuild drillships at Hyundai
Heavy Industry (“HHI”), increasing the number of floating drilling units in our fleet to 26. The delivered cost of the
new ultra-deepwater drillships, to be named at a later date, is expected to be $605 million each, including the
turnkey construction contract, Noble-furnished equipment, project management and spares, but excluding
capitalized interest. The expected deliveries from the shipyard are the second and fourth quarters of 2013,
respectively, after which time the units would be mobilized to their potential drilling locations and undergo customer
acceptance testing. We have a letter of intent for one of these units for a five and one-half year contract with a
subsidiary of Royal Dutch Shell plc (“Shell”) at a dayrate of $410,000, plus a 15 percent performance bonus
opportunity. We have also negotiated options for two additional jackups and two additional HHI drillships.
In February 2011, we entered into an additional revolving credit facility with an initial capacity of $300 million.
The facility matures in 2015 and provides us with the ability to issue up to $150 million in letters of credit. The
covenants and events of default under the additional revolving credit facility are substantially similar to the Credit
Facility, which remains in place. The new facility is guaranteed by NHIL and NDC.
In February 2011, NHIL completed a debt offering of $1.1 billion aggregate principal amount of senior notes in
three separate tranches, with $300 million of 3.05% Senior Notes due 2016, $400 million of 4.625% Senior Notes
due 2021, and $400 million of 6.05% Senior Notes due 2041. The weighted average coupon of all three tranches is
4.71%. A portion of the net proceeds of approximately $1.09 billion after expenses was used to repay the
outstanding balance on our revolving credit facility and to repay our portion of outstanding debt under the Bully 1
and Bully 2 credit facilities.
In February 2011, the outstanding balances of the Bully 1 and Bully 2 credit facilities, which totaled $691
million, were repaid in full and the credit facilities terminated using a portion of the proceeds from our February
2011 debt offering and equity contributions from our joint venture partner. In addition, the related interest rate swaps
were settled and terminated concurrent with the repayment and termination of the credit facilities.
108
NOBLE CORPORATION (NOBLE-SWISS) AND SUBSIDIARIES
NOBLE CORPORATION (NOBLE-CAYMAN) AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unless otherwise indicated, dollar amounts in tables are in thousands, except per share data)
Note 20 — Unaudited Interim Financial Data
Unaudited interim consolidated financial information for the years ended December 31, 2010 and 2009 is as
follows:
2010
Operating revenues .........................................................................
Operating income ...........................................................................
Net Income attributable to Noble Corporation ...............................
Quarter Ended
Mar. 31 Jun. 30 Sep. 30 Dec. 31
$ 840,851 $ 709,922 $ 612,618 $ 643,785
422,961 268,547 108,357 116,215
98,758
370,726 217,925
86,020
Net income per share attributable to Noble Corporation (1)
Basic ...........................................................................................
Diluted ........................................................................................
1.44
1.43
0.85
0.85
0.34
0.34
0.39
0.39
2009
Operating revenues .........................................................................
Operating income ...........................................................................
Net Income .....................................................................................
Net income per share (1)
Basic ...........................................................................................
Diluted ........................................................................................
____________
Quarter Ended
Mar. 31 Jun. 30 Sep. 30 Dec. 31
$ 896,151 $ 898,872 $ 905,635 $ 940,126
514,101 485,812 504,413 506,418
414,295 391,849 426,083 446,415
1.58
1.58
1.50
1.49
1.63
1.63
1.72
1.72
(1) Net income per share is computed independently for each of the quarters presented. Therefore, the sum of the
quarters’ net income per share may not equal the total computed for the year.
109
Item 9. Changes in and Disagreements With Accountants on Accounting and Financial Disclosure
None.
Item 9A. Controls and Procedures.
Evaluation of Disclosure Controls and Procedures
David W. Williams, Chairman, President and Chief Executive Officer of Noble Corporation, a Swiss corporation
(“Noble-Swiss”), and Thomas L. Mitchell, Senior Vice President, Chief Financial Officer, Treasurer and Controller
of Noble-Swiss have evaluated the disclosure controls and procedures of Noble-Swiss as of the end of the period
covered by this report. On the basis of this evaluation, Mr. Williams and Mr. Mitchell have concluded that Noble-
Swiss’ disclosure controls and procedures were effective as of December 31, 2010. Noble-Swiss’ disclosure controls
and procedures are designed to ensure that information required to be disclosed by Noble-Swiss in the reports that it
files with or submits to the SEC are recorded, processed, summarized and reported within the time periods specified
in the SEC’s rules and forms and is accumulated and communicated to management as appropriate to allow timely
decisions regarding required disclosure.
David W. Williams, President and Chief Executive Officer of Noble Corporation, a Cayman Islands company
(“Noble-Cayman”) and Dennis J. Lubojacky, Vice President and Chief Financial Officer of Noble-Cayman have
evaluated the disclosure controls and procedures of Noble-Cayman as of the end of the period covered by this report.
On the basis of this evaluation, Mr. Williams and Mr. Lubojacky have concluded that Noble-Cayman’s disclosure
controls and procedures were effective as of December 31, 2010. Noble-Cayman’s disclosure controls and
procedures are designed to ensure that information required to be disclosed by Noble-Cayman in the reports that it
files with or submits to the SEC are recorded, processed, summarized and reported within the time periods specified
in the SEC’s rules and forms and is accumulated and communicated to management as appropriate to allow timely
decisions regarding required disclosure.
Changes in Internal Control over Financial Reporting
There was no change in either Noble-Swiss’ or Noble-Cayman’s internal control over financial reporting that
occurred during the quarter ended December 31, 2010 that has materially affected, or is reasonably likely to
materially affect, the internal control over financial reporting of each of Noble-Swiss or Noble-Cayman.
Management’s Annual Report on Internal Control Over Financial Reporting
The management of Noble-Swiss and Noble-Cayman is responsible for establishing and maintaining adequate
internal control over financial reporting, as such term is defined in Rule 13a-15(f) promulgated under the U.S.
Securities Exchange Act of 1934, as amended.
Internal control over financial reporting includes the controls themselves, monitoring (including internal auditing
practices), and actions taken to correct deficiencies as identified. There are inherent limitations to the effectiveness
of internal control over financial reporting, however well designed, including the possibility of human error and the
possible circumvention or overriding of controls. The design of an internal control system is also based in part upon
assumptions and judgments made by management about the likelihood of future events, and there can be no
assurance that an internal control will be effective under all potential future conditions. As a result, even an effective
system of internal controls can provide no more than reasonable assurance with respect to the fair presentation of
financial statements and the processes under which they were prepared.
Under the supervision and with the participation of our management, including our Chief Executive Officer and
Chief Financial Officer, we conducted an evaluation of the effectiveness of our internal control over financial
reporting based on the framework in Internal Control — Integrated Framework issued by the Committee of
Sponsoring Organizations of the Treadway Commission. Based on the management of Noble-Swiss and Noble-
Cayman assessment, both Noble-Swiss and Noble-Cayman maintained effective internal control over financial
reporting as of December 31, 2010.
PricewaterhouseCoopers LLP, the independent registered public accounting firm that audited our financial
statements included in this Annual Report on Form 10-K, has audited the effectiveness of internal control over
financial reporting as of December 31, 2010 as stated in their report, which is provided in this Annual Report on
Form 10-K.
Item 9B. Other Information.
None.
110
Item 10. Directors, Executive Officers and Corporate Governance.
PART III
The sections entitled “Election of Directors”, “Additional Information Regarding the Board of Directors”,
“Section 16(a) Beneficial Ownership Reporting Compliance”, and “Other Matters” appearing in the proxy statement
for the 2011 annual general meeting of shareholders (the “2011 Proxy Statement”), will set forth certain information
with respect to directors, certain corporate governance matters and reporting under Section 16(a) of the Securities
Exchange Act of 1934, and are incorporated in this report by reference.
Executive Officers of the Registrant
The following table sets forth certain information as of February 15, 2011 with respect to our executive officers:
Name
Age
Position
David W. Williams
53
Chairman, President and Chief Executive Officer
Julie J. Robertson
54
Executive Vice President and Corporate Secretary
Thomas L. Mitchell
50
Senior Vice President, Chief Financial Officer, Treasurer and Controller
Donald E. Jacobsen
52
Senior Vice President — Operations
Roger B. Hunt
61
Senior Vice President — Marketing and Contracts
Scott W. Marks
51
Senior Vice President — Engineering
William E. Turcotte
47
Senior Vice President and General Counsel
David W. Williams was named Chairman, President and Chief Executive Officer effective January 2, 2008. Mr.
Williams served as Senior Vice President — Business Development of Noble Drilling Services Inc. from September
2006 to January 2007, as Senior Vice President — Operations of Noble Drilling Services Inc. from January to April
2007, and as Senior Vice President and Chief Operating Officer of Noble from April 2007 to January 2, 2008. Prior
to September 2006, Mr. Williams served for more than five years as Executive Vice President of Diamond Offshore
Drilling, Inc., an offshore oil and gas drilling contractor.
Julie J. Robertson was named Executive Vice President effective February 10, 2006. Ms. Robertson served as
Senior Vice President — Administration from July 2001 to February 10, 2006. Ms. Robertson has served
continuously as Corporate Secretary since December 1993. Ms. Robertson served as Vice President —
Administration of Noble Drilling from 1996 to July 2001. In 1994, Ms. Robertson became Vice President —
Administration of Noble Drilling Services Inc. From 1989 to 1994, Ms. Robertson served consecutively as Manager
of Benefits and Director of Human Resources for Noble Drilling Services Inc. Prior to 1989, Ms. Robertson served
consecutively in the positions of Risk and Benefits Manager and Marketing Services Coordinator for a predecessor
subsidiary of Noble, beginning in 1979.
Thomas L. Mitchell was named Senior Vice President, Chief Financial Officer, Treasurer and Controller
effective November 6, 2006. Prior to joining Noble, Mr. Mitchell served as Vice President and Controller of Apache
Corporation, an oil and gas exploration and production company, since 1997. From 1996 to 1997, he served as
Controller of Apache, and from 1989 to 1996 he served Apache in various positions including Assistant to Vice
President Production and Director Natural Gas Marketing. Prior to joining Apache, Mr. Mitchell spent seven years
with Arthur Andersen & Co. where he practiced as a Certified Public Accountant, managing clients in the oil and
gas, banking, manufacturing and government contracting industries.
111
Donald E. Jacobsen was named Senior Vice President — Operations effective July 30, 2009. Prior to joining
Noble, Mr. Jacobsen served as Vice President — Drilling and Completions of Hess Corporation, a global integrated
energy company engaged in exploration and production activities worldwide, from July 2008 to July 2009. He
served as Vice President — Health, Safety, Security, Environment and Sustainable Development of Shell
International Exploration & Production from September 2006 to July 2008 and as Vice President — Global Wells of
Shell International Exploration & Production from April 2003 to September 2006. Shell International Exploration &
Production is the upstream division of Royal Dutch Shell plc, a global group of energy and petrochemicals
companies involved in oil and gas exploration and production activities worldwide.
Roger B. Hunt was named Senior Vice President — Marketing and Contracts effective July 20, 2009. Prior to
joining Noble, Mr. Hunt served as Senior Vice President — Marketing at GlobalSantaFe Corporation, an offshore
oil and gas drilling contractor, from 1997 to 2007. In that capacity, Mr. Hunt was responsible for marketing and
pricing strategy, sales and contract activities for the company’s fleet of 57 offshore drilling units. Mr. Hunt did not
hold a principal employment from December 2007 to July 2009.
Scott W. Marks was named Senior Vice President — Engineering effective January 2007. Mr. Marks served as
Vice President — Project Management and Construction from August 2006 to January 2007, as Vice President —
Support Engineering from September 2005 to August 2006 and as Director of Engineering from January 2003 to
September 2005. Mr. Marks has been with Noble since 1991, serving as a Project Manager and as a Drilling
Superintendent prior to 2003.
William E. Turcotte was named Senior Vice President and General Counsel effective December 16, 2008. Prior
to joining Noble, Mr. Turcotte served as Senior Vice President, General Counsel and Corporate Secretary of Cornell
Companies, Inc., a private corrections company, since March 2007. He served as Vice President, Associate General
Counsel and Assistant Secretary of Transocean, Inc., an offshore oil and gas drilling contractor, from October 2005
to March 2007 and as Associate General Counsel and Assistant Secretary from January 2000 to October 2005. From
1992 to 2000, Mr. Turcotte served in various legal positions with Schlumberger Limited in Houston, Caracas and
Paris. Mr. Turcotte was in private practice prior to joining Schlumberger.
We have adopted a Code of Business Conduct and Ethics that applies to directors, officers and employees,
including our principal executive officer, principal financial officer and principal accounting officer. Our Code of
Business Conduct and Ethics is posted on our website at http://www.noblecorp.com in the “Governance” area.
Changes to and waivers granted with respect to our Code of Business Conduct and Ethics related to the officers
identified above, and our other executive officers and directors, that we are required to disclose pursuant to
applicable rules and regulations of the SEC will also be posted on our website.
Item 11. Executive Compensation.
The sections entitled “Executive Compensation” and “Compensation Committee Report” appearing in the 2011
Proxy Statement set forth certain information with respect to the compensation of our management and our
compensation committee report, and are incorporated in this report by reference.
Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder
Matters.
The sections entitled “Equity Compensation Plan Information”, “Security Ownership of Certain Beneficial
Owners” and “Security Ownership of Management” appearing in the 2011 Proxy Statement set forth certain
information with respect to securities authorized for issuance under equity compensation plans and the ownership of
our voting securities and equity securities, and are incorporated in this report by reference.
Item 13. Certain Relationships and Related Transactions and Director Independence.
The sections entitled “Additional Information Regarding the Board of Directors — Board Independence” and
“Policies and Procedures Relating to Transactions with Related Persons” appearing in the 2011 Proxy Statement set
forth certain information with respect to director independence and transactions with related persons, and are
incorporated in this report by reference.
112
Item 14. Principal Accounting Fees and Services.
The section entitled “Auditors” appearing in the 2011 Proxy Statement sets forth certain information with respect
to accounting fees and services, and is incorporated in this report by reference.
ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES.
(a) The following documents are filed as part of this report:
PART IV
(1) A list of the financial statements filed as a part of this report is set forth in Item 8 on page [52] and is
incorporated herein by reference.
(2) Financial Statement Schedules:
All schedules are omitted because they are either not applicable or required information is shown in the
financial statements or notes thereto.
(3) Exhibits:
The information required by this Item 15(a)(3) is set forth in the Index to Exhibits accompanying this
Annual Report on Form 10-K and is incorporated herein by reference.
113
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has
duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
NOBLE CORPORATION, a Swiss Corporation
Date: February 25, 2011
By: /s/ DAVID W. WILLIAMS
David W. Williams,
Chairman, President and Chief Executive Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed by the
following persons on behalf of the Registrant and in the capacities and on the dates indicated.
Signature
Capacity In Which Signed
Date
/s/ DAVID W. WILLIAMS
David W. Williams
Chairman, President and Chief Executive Officer
(Principal Executive Officer)
February 25, 2011
/s/ THOMAS L. MITCHELL
Thomas L. Mitchell
/s/ MICHAEL A. CAWLEY
Michael A. Cawley
/s/ LAWRENCE J. CHAZEN
Lawrence J. Chazen
/s/ JULIE H. EDWARDS
Julie H. Edwards
/s/ GORDON T. HALL
Gordon T. Hall
/s/ MARC E. LELAND
Marc E. Leland
/s/ JACK E. LITTLE
Jack E. Little
/s/ JON A. MARSHALL
Jon A. Marshall
/s/ MARY P. RICCIARDELLO
Mary P. Ricciardello
Senior Vice President, Chief Financial Officer,
Treasurer and Controller
(Principal Financial and Accounting Officer)
February 25, 2011
February 25, 2011
February 25, 2011
February 25, 2011
February 25, 2011
February 25, 2011
February 25, 2011
February 25, 2011
February 25, 2011
Director
Director
Director
Director
Director
Director
Director
Director
114
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has
duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
NOBLE CORPORATION, a Cayman Islands company
Date: February 25, 2011
By: /s/ DAVID W. WILLIAMS
David W. Williams,
President, Chief Executive Officer and Director
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed by the
following persons on behalf of the Registrant and in the capacities and on the dates indicated.
Signature
Capacity In Which Signed
Date
/s/ DAVID W. WILLIAMS
David W. Williams
President, Chief Executive Officer and Director
(Principal Executive Officer)
February 25, 2011
/s/ DENNIS J. LUBOJACKY
Dennis J. Lubojacky
Vice President and Chief Financial Officer and Director
(Principal Financial and Accounting Officer)
February 25, 2011
/s/ ALAN P. DUNCAN
Alan P. Duncan
/s/ ANDREW J. STRONG
Andrew J. Strong
/s/ ALAN R. HAY
Alan R. Hay
Director
Director
Director
February 25, 2011
February 25, 2011
February 25, 2011
115
Exhibit
Number
Exhibit
INDEX TO EXHIBITS
2.1
2.2
3.1
3.2
3.3
4.1
4.2
4.3
4.4
4.5
4.6
Agreement and Plan of Merger, Reorganization and Consolidation, dated as of December 19,
2008, among Noble Corporation, a Swiss corporation (“Noble-Swiss”), Noble Corporation, a
Cayman Islands company (“Noble-Cayman”), and Noble Cayman Acquisition Ltd. (filed as
Exhibit 1.1 to Noble-Cayman’s Current Report on Form 8-K filed on December 22, 2008 and
incorporated herein by reference).
Amendment No. 1 to Agreement and Plan of Merger, Reorganization and Consolidation, dated as
of February 4, 2009, among Noble-Swiss, Noble-Cayman and Noble Cayman Acquisition Ltd.
(filed as Exhibit 2.2 to Noble-Cayman’s Current Report on Form 8-K filed on February 4, 2009
and incorporated herein by reference).
Articles of Association of Noble-Swiss.
By-laws of Noble-Swiss (filed as Exhibit 3.2 to Noble-Swiss’ Current Report on Form 8-K filed
on March 27, 2009 and incorporated herein by reference).
Memorandum and Articles of Association of Noble-Cayman (filed as Exhibit 3.1 to Noble-
Cayman’s Current Report on Form 8-K filed on March 30, 2009 and incorporated herein by
reference).
Indenture dated as of March 1, 1999, between Noble Drilling Corporation and JP Morgan Chase
Bank, National Association (formerly Chase Bank of Texas, National Association), as trustee
(filed as Exhibit 4.1 to the Form 8-K of Noble Drilling Corporation filed on March 23, 1999 and
incorporated herein by reference).
Supplemental Indenture dated as of March 16, 1999, between Noble Drilling Corporation and JP
Morgan Chase Bank, National Association (formerly Chase Bank of Texas, National Association),
as trustee, relating to 7.50% senior notes due 2019 of Noble Drilling Corporation (filed as Exhibit
4.2 to Noble Drilling Corporation’s Form 8-K filed on March 23, 1999 and incorporated herein by
reference).
Second Supplemental Indenture, dated as of April 30, 2002, between Noble Drilling Corporation,
Noble Holding (U.S.) Corporation and Noble Corporation, and JP Morgan Chase Bank, National
Association, as trustee, relating to 7.50% senior notes due 2019 of Noble Drilling Corporation
(filed as Exhibit 4.6 to the Noble-Cayman Quarterly Report on Form 10-Q for the three-month
period ended March 31, 2002 and incorporated herein by reference).
Third Supplemental Indenture, dated as of December 20, 2005, between Noble Drilling
Corporation, Noble Drilling Holding LLC, Noble Holding (U.S.) Corporation and Noble
Corporation and JP Morgan Chase Bank, National Association, as trustee, relating to 7.50% senior
notes due 2019 of Noble Drilling Corporation (filed as Exhibit 4.14 to Noble-Cayman’s
Registration Statement on Form S-3 (No. 333-131885) and incorporated herein by reference).
Fourth Supplemental Indenture, dated as of September 25, 2009, among Noble Drilling
Corporation, as Issuer, Noble Drilling Holding LLC, as Co-Issuer, Noble Drilling Services 1 LLC,
as Co-Issuer, Noble Holding (U.S.) Corporation, as Guarantor, Noble-Cayman, as Guarantor, and
The Bank of New York Mellon Trust Company, N.A., as Trustee (relating to Noble Drilling
Corporation 7.50% Senior Notes due 2019) (filed as Exhibit 4.1 to Noble-Swiss’s Form 8-K filed
on October 1, 2009 and incorporated herein by reference).
Fifth Supplemental Indenture, dated as of October 1, 2009, among Noble Drilling Corporation, as
Issuer, Noble Drilling Holding LLC, as Co-Issuer, Noble Drilling Services 6 LLC, as Co-Issuer,
Noble Holding (U.S.) Corporation, as Guarantor, Noble-Cayman, as Guarantor, and The Bank of
New York Mellon Trust Company, N.A., as Trustee (relating to Noble Drilling Corporation
7.50% Senior Notes due 2019) (filed as Exhibit 4.2 to Noble-Swiss’s Form 8-K filed on October
1, 2009 and incorporated herein by reference).
116
Exhibit
Number
Exhibit
4.7
4.8
4.9
4.10
4.11
4.12
4.13
4.14
4.15
Indenture, dated as of May 26, 2006, between Noble Corporation, as Issuer, and JPMorgan Chase
Bank, National Association, as trustee (filed as Exhibit 4.1 to Noble-Cayman’s Current Report on
Form 8-K filed on May 26, 2006 and incorporated herein by reference).
First Supplemental Indenture, dated as of May 26, 2006, between Noble Corporation, as Issuer,
Noble Drilling Corporation, as Guarantor, and JP Morgan Chase Bank, National Association, as
trustee, relating to 5.875% senior notes due 2013 of Noble Corporation (filed as Exhibit 4.2 to the
Noble-Cayman’s Current Report on Form 8-K filed on May 26, 2006 and incorporated herein by
reference).
Second Supplemental Indenture, dated as of October 1, 2009, among Noble-Cayman, as Issuer,
Noble Drilling Corporation, as Guarantor, Noble Holding International Limited, as Guarantor, and
The Bank of New York Mellon Trust Company, N.A., as Trustee (relating to Noble-Cayman’s
5.875% Senior Notes due 2013) (filed as Exhibit 4.3 to Noble-Swiss’s Form 8-K filed on October
1, 2009 and incorporated herein by reference).
Revolving Credit Agreement, dated as of March 15, 2007, among Noble Corporation; the Lenders
from time to time parties thereto; Citibank, N.A., as Administrative Agent, Swingline Lender and
an Issuing Bank; SunTrust Bank, as Syndication Agent; The Bank of Tokyo-Mitsubishi UFJ, Ltd.,
Houston Agency, Fortis Capital Corp., and Wells Fargo Bank, N.A., as Co-Documentation
Agents; and Citigroup Global Markets Inc., and SunTrust Robinson Humphrey, a division of
SunTrust Capital Markets, Inc., as Co-Lead Arrangers and Co-Book Running Managers (filed as
Exhibit 4.1 to Noble-Cayman Current Report on Form 8-K filed on March 20, 2007 and
incorporated herein by reference).
Subsidiary Guaranty Agreement, dated as of October 1, 2009, among Noble Holding International
Limited, Noble-Cayman and Citibank, N.A., as Administrative Agent (relating to Noble-Cayman
revolving credit agreement) (filed as Exhibit 4.4 to Noble-Swiss’s Form 8-K filed on October 1,
2009 and incorporated herein by reference).
Revolving Credit Agreement dated as of February 11, 2011 among Noble Corporation, a Cayman
Islands company; the Lenders from time to time parties thereto; Wells Fargo Bank, National
Association, as Administrative Agent, Swingline Lender and an Issuing Bank; Barclays Capital, a
division of Barclays Bank PLC, and HSBC Securities (USA) Inc., as Co-Syndication Agents; and
Wells Fargo Securities, LLC, Barclays Capital, a division of Barclays Bank PLC, and HSBC
Securities (USA) Inc., as Joint Lead Arrangers and Joint Lead Bookrunners (filed as Exhibit 4.1 to
Noble-Cayman’s Current Report on Form 8-K filed on February 17, 2011 and incorporated by
reference herein).
Indenture, dated as of November 21, 2008, between Noble Holding International Limited, as
Issuer, and The Bank of New York Mellon Trust Company, N.A., as Trustee (filed as Exhibit 4.1
to Noble-Cayman’s Current Report on Form 8-K filed on November 21, 2008 and incorporated
herein by reference).
First Supplemental Indenture, dated as of November 21, 2008, among Noble Holding International
Limited, as Issuer, Noble Corporation, as Guarantor, and The Bank of New York Mellon Trust
Company, N.A., as Trustee, relating to 7.375% senior notes due 2014 of Noble Holding
International Limited (filed as Exhibit 4.2 to Noble-Cayman’s Current Report on Form 8-K filed on
November 21, 2008 and incorporated herein by reference).
Second Supplemental Indenture, dated as of July 26, 2010, among Noble Holding International
Limited, as Issuer, Noble Corporation, as Guarantor, and The Bank of New York Mellon Trust
Company, N.A., as Trustee, relating to 3.45% senior notes due 2015 of Noble Holding
International Limited, 4.90% senior notes due 2020 of Noble Holding International Limited, and
6.20% senior notes due 2040 of Noble Holding International Limited (filed as Exhibit 4.2 to
Noble-Cayman’s Current Report on Form 8-K filed on July 26, 2010 and incorporated herein by
reference).
117
Exhibit
Number
4.16
10.1*
10.2*
10.3*
10.4*
10.5*
10.6*
10.7*
10.8*
10.9*
10.10*
10.11*
10.12*
10.13*
Exhibit
Third Supplemental Indenture, dated as of February 3, 2011, among Noble Holding International
Limited, as Issuer, Noble Corporation, as Guarantor, and The Bank of New York Mellon Trust
Company, N.A., as Trustee, relating to 3.05% senior notes due 2016 of Noble Holding
International Limited, 4.625% senior notes due 2021 of Noble Holding International Limited, and
6.05% senior notes due 2041 of Noble Holding International Limited (filed as Exhibit 4.2 to
Noble-Cayman’s Current Report on Form 8-K filed on July 26, 2010 and incorporated herein by
reference).
Noble Drilling Corporation Equity Compensation Plan for Non-Employee Directors (filed as
Exhibit 4.1 to Noble Drilling Corporation’s Registration Statement on Form S-8 (No. 333-17407)
dated December 6, 1996 and incorporated herein by reference).
Amendment, effective as of May 1, 2002, to the Noble Drilling Corporation Equity Compensation
Plan for Non-Employee Directors (filed as Exhibit 10.1 to Post-Effective Amendment No. 1 to
Noble-Cayman’s Registration Statement on Form S-8 (No. 333-17407) and incorporated herein by
reference).
Amendment No. 2 to the Noble Corporation Equity Compensation Plan for Non-Employee
Directors dated February 4, 2005 (filed as Exhibit 10.20 to Noble-Cayman’s Annual Report on
Form 10-K for the year ended December 31, 2004 and incorporated herein by reference).
Amendment to the Noble Corporation Equity Compensation Plan for Non-Employee Directors dated
December 31, 2008 (filed as Exhibit 10.29 to Noble-Cayman’s Annual Report on Form 10-K for the
year ended December 31, 2008 and incorporated herein by reference).
Amended and Restated Noble Corporation Equity Compensation Plan for Non-Employee
Directors effective March 27, 2009
Noble Drilling Corporation 401(k) Savings Restoration Plan (filed as Exhibit 10.1 to Noble Drilling
Corporation’s Registration Statement on Form S-8 dated January 18, 2001 (No. 333-53912) and
incorporated herein by reference).
Amendment No. 1 to the Noble Drilling Corporation 401(k) Savings Restoration Plan (filed as
Exhibit 10.1 to Post-Effective Amendment No. 1 to Noble-Cayman’s Registration Statement on
Form S-8 (No. 333-53912) and incorporated herein by reference).
Amendment No. 2 to the Noble Drilling Corporation 401(k) Savings Restoration Plan dated
February 25, 2003 (filed as Exhibit 10.30 to Noble-Cayman Annual Report on Form 10-K for the
year ended December 31, 2005 and incorporated herein by reference).
Amendment No. 3 to the Noble Drilling Corporation 401(k) Savings Restoration Plan dated
March 9, 2005 (filed as Exhibit 10.31 to Noble-Cayman Annual Report on Form 10-K for the year
ended December 31, 2005 and incorporated herein by reference).
Amendment No. 4 to the Noble Drilling Corporation 401(k) Savings Restoration Plan dated
March 30, 2007 (filed as Exhibit 10.41 to Noble-Cayman Annual Report on Form 10-K for the
year ended December 31, 2007 and incorporated herein by reference).
Amendment No. 5 to the Noble Drilling Corporation 401(k) Savings Restoration Plan effective
May 1, 2010.
Noble Drilling Corporation Retirement Restoration Plan dated April 27, 1995 (filed as Exhibit
10.2 to Noble Drilling Corporation’s Quarterly Report on Form 10-Q for the three-month period
ended March 31, 1995 and incorporated herein by reference).
Amendment No. 1 to the Noble Drilling Corporation Retirement Restoration Plan dated January
29, 1998 (filed as Exhibit 10.18 to Noble Drilling Corporation’s Annual Report on Form 10-K for
the year ended December 31, 1997 and incorporated herein by reference).
118
Exhibit
Number
10.14*
10.15*
10.16*
10.17*
10.18*
10.19*
10.20*
10.21*
10.22*
Exhibit
Amendment No. 2 to the Noble Drilling Corporation Retirement Restoration Plan dated June 28,
2004, effective as of July 1, 2004 (filed as Exhibit 10.32 to Noble-Cayman Annual Report on
Form 10-K for the year ended December 31, 2005 and incorporated herein by reference).
Noble Drilling Corporation Retirement Restoration Plan dated December 29, 2008, effective
January 1, 2009 (filed as Exhibit 10.32 to Noble-Cayman’s Annual Report on Form 10-K for the
year ended December 31, 2008 and incorporated herein by reference).
Amendment No. 1 to Noble Drilling Corporation Retirement Restoration Plan dated July 10,
2009.
Amended and Restated Noble Corporation 1992 Nonqualified Stock Option and Restricted Share
Plan for Non-Employee Directors dated February 4, 2005 (filed as Exhibit 10.21 to Noble-
Cayman Annual Report on Form 10-K for the year ended December 31, 2004 and incorporated
herein by reference).
Second Amended and Restated Noble Corporation 1992 Nonqualified Stock Option and Share
Plan for Non-Employee Directors (filed as Exhibit 10.2 to Noble-Cayman Quarterly Report on
Form 10-Q for the three-month period ended September 25, 2007 and incorporated herein by
reference).
Amendment to the Second Amended and Restated Noble Corporation 1992 Nonqualified Stock
Option and Share Plan for Non-Employee Directors dated December 31, 2008 (filed as Exhibit
10.28 to Noble-Cayman’s Annual Report on Form 10-K for the year ended December 31, 2008
and incorporated herein by reference).
Third Amended and Restated Noble Corporation 1992 Nonqualified Stock Option and Share Plan
for Non-Employee Directors effective March 27, 2009
Composite copy of the Noble Corporation 1991 Stock Option and Restricted Stock Plan dated as
of February 6, 2010 (filed as Exhibit 10.18 to Noble-Cayman Annual Report on Form 10-K for
the year ended December 31, 2009 and incorporated herein by reference).
Noble Drilling Corporation 2009 401(k) Savings Restoration Plan effective January 1, 2009 (filed
as Exhibit 10.31 to Noble-Cayman’s Annual Report on Form 10-K for the year ended December
31, 2008 and incorporated herein by reference).
10.23*
Amendment No. 1 to the Noble Drilling Corporation 2009 401(k) Savings Restoration Plan dated
effective May 1, 2010.
10.24*
Noble Corporation Summary of Directors’ Compensation
10.25*
10.26*
10.27*
Form of Noble Corporation Performance-Vested Restricted Stock Agreement under the Noble
Corporation 1991 Stock Option and Restricted Stock Plan (filed as Exhibit 10.34 to Noble-
Cayman’s Annual Report on Form 10-K for the year ended December 31, 2008 and incorporated
herein by reference).
Form of Noble Corporation Time-Vested Restricted Stock Agreement under the Noble
Corporation 1991 Stock Option and Restricted Stock Plan (filed as Exhibit 10.35 to Noble-
Cayman’s Annual Report on Form 10-K for the year ended December 31, 2008 and incorporated
herein by reference).
Form of Noble Corporation Nonqualified Stock Option Agreement under the Noble Corporation
1991 Stock Option and Restricted Stock Plan (filed as Exhibit 10.36 to Noble-Cayman’s Annual
Report on Form 10-K for the year ended December 31, 2008 and incorporated herein by
reference).
119
Exhibit
Number
10.28*
Exhibit
Form of Noble Corporation Restricted Stock Agreement under the Amended and Restated Noble
Corporation 1992 Nonqualified Stock Option and Share Plan for Non-Employee Directors (filed
as Exhibit 10.37 to Noble-Cayman’s Annual Report on Form 10-K for the year ended December
31, 2008 and incorporated herein by reference).
10.29*
10.30*
10.31*
Form of Noble Corporation Performance-Vested Restricted Stock Unit Agreement under the
Noble Corporation 1991 Stock Option and Restricted Stock Plan (filed as Exhibit 10.1 to Noble-
Cayman’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2010 and incorporated
herein by reference).
Form of Noble Corporation Time-Vested Restricted Stock Unit Agreement under the Noble
Corporation 1991 Stock Option and Restricted Stock Plan (filed as Exhibit 10.2 to Noble-
Cayman’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2010 and incorporated
herein by reference).
Form of Noble Corporation Nonqualified Stock Option Agreement under the Noble Corporation
1991 Stock Option and Restricted Stock Plan (filed as Exhibit 10.3 to Noble-Cayman’s Quarterly
Report on Form 10-Q for the quarter ended March 31, 2010 and incorporated herein by reference).
10.32*
Noble Corporation 2011 Short Term Incentive Plan.
10.33*
Form of Employment Agreement and Guaranty Agreement (filed as Exhibit 10.1 to Noble-
Swiss’s Current Report on Form 8-K filed on December 4, 2009 and incorporated herein by
reference).
21.1
23.1
23.2
31.1
31.2
31.3
32.1+
32.2+
32.3+
Subsidiaries of Noble-Swiss and Noble-Cayman.
Consent of PricewaterhouseCoopers LLP.
Consent of PricewaterhouseCoopers LLP.
Certification of David W. Williams pursuant to SEC Rule 13a-14(a) or Rule 15d-14(a).
Certification of Thomas L. Mitchell pursuant to SEC Rule 13a-14(a) or Rule 15d-14(a).
Certification of Dennis J. Lubojacky pursuant to SEC Rule 13a-14(a) or Rule 15d-14(a).
Certification of David W. Williams pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002.
Certification of Thomas L. Mitchell pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002.
Certification of Dennis J. Lubojacky pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002.
101+
____________
Interactive data files
* Management contract or compensatory plan or arrangement.
+ Furnished in accordance with Item 601(b)(32)(ii) of Regulation S-K.
120
Report of the statutory auditor
to the general meeting of
Noble Corporation
Baar
PricewaterhouseCoopers AG
Grafenauweg 8
Postfach
6304 Zug
Phone +41 58 792 68 00
Fax +41 58 792 68 10
www.pwc.ch
Report of the statutory auditor on the consolidated financial statements
As statutory auditor, we have audited the consolidated financial statements of Noble Corporation,
which comprise the consolidated balance sheet (page 54), consolidated statement of income (page
55), consolidated statement of cash flows (page 56), consolidated statement of shareholders’
equity (page 57), consolidated statement of comprehensive income (page 58) and notes (pages 65
to 109, excluding Note 18, which solely relates to Noble Corporation, Cayman) for the year ended
December 31, 2010.
Board of Directors’ Responsibility
The Board of Directors is responsible for the preparation and fair presentation of the consolidated
financial statements in accordance with accounting principles generally accepted in the United
States of America (US GAAP) and the requirements of Swiss law. This responsibility includes
designing, implementing and maintaining an internal control system relevant to the preparation and
fair presentation of consolidated financial statements that are free from material misstatement,
whether due to fraud or error. The Board of Directors is further responsible for selecting and apply-
ing appropriate accounting policies and making accounting estimates that are reasonable in the
circumstances.
Auditor’s Responsibility
Our responsibility is to express an opinion on these consolidated financial statements based on our
audit. We conducted our audit in accordance with Swiss law, Swiss Auditing Standards and audit-
ing standards generally accepted in the United States of America. Those standards require that we
plan and perform the audit to obtain reasonable assurance whether the consolidated financial
statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclo-
sures in the consolidated financial statements. The procedures selected depend on the auditor’s
judgment, including the assessment of the risks of material misstatement of the consolidated finan-
cial statements, whether due to fraud or error. In making those risk assessments, the auditor con-
siders the internal control system relevant to the entity’s preparation and fair presentation of the
consolidated financial statements in order to design audit procedures that are appropriate in the
circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s
internal control system. An audit also includes evaluating the appropriateness of the accounting
policies used and the reasonableness of accounting estimates made, as well as evaluating the
overall presentation of the consolidated financial statements. We believe that the audit evidence we
have obtained is sufficient and appropriate to provide a basis for our audit opinion.
Opinion
In our opinion, the consolidated financial statements for the year ended December 31, 2010 pre-
sent fairly in all material respects the financial position, the results of operations and the cash flows
in accordance with accounting principles generally accepted in the United States of America (US
GAAP) and comply with Swiss law.
Report on other legal requirements
We confirm that we meet the legal requirements on licensing according to the Auditor Oversight Act
(AOA) and independence (article 728 CO and article 11 AOA) and that there are no circumstances
incompatible with our independence.
In accordance with article 728a paragraph 1 item 3 CO and Swiss Auditing Standard 890, we
confirm that an internal control system exists which has been designed for the preparation of con-
solidated financial statements according to the instructions of the Board of Directors.
We recommend that the consolidated financial statements submitted to you be approved.
PricewaterhouseCoopers AG
Claudia Muhlinghaus
Joanne Burgener
Audit expert
Auditor in charge
Zug, February 25, 2011
Enclosure:
Consolidated financial statements (balance sheet, statement of income, statement of cash
flows, statement of shareholders’ equity, statement of comprehensive income and notes)
NOBLE CORPORATION
SWISS STATUTORY FINANCIAL STATEMENTS
December 31, 2010
S-1
NOBLE CORPORATION
SWISS STATUTORY BALANCE SHEET
(In thousands of Swiss Francs)
ASSETS
Current assets
Cash and cash equivalents
Treasury shares
Prepaid expenses
Total current assets
Fixed assets
Treasury shares
Investment in subsidiaries
Total fixed assets
December 31, 2010
December 31, 2009
266
384,828
1,289
386,383
943
10,676,111
10,677,054
9,208
-
121
9,329
148,925
10,676,111
10,825,036
Total assets
11,063,437
10,834,365
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities
Accounts payable
Accrued capital taxes
Other current liabilities
Intercompany
Provision for unrealized exchange gains
Total liabilities
Shareholders' equity
Share capital
Legal reserves
Capital Contribution
Reserve for own shares to be acquired,
funded from capital contribution
Accumulated deficit
Profit / (loss) for the period
Total shareholders' equity
Total liabilities and shareholders' equity
620
103
168,623
-
169,346
1,085,724
8,694,772
600,000
(25,737)
539,332
10,894,091
11,063,437
6,622
110
218,050
659
225,441
1,339,889
8,694,772
600,000
-
(25,737)
10,608,924
10,834,365
S-2
NOBLE CORPORATION
SWISS STATUTORY STATEMENT OF INCOME
(In thousands of Swiss Francs)
Revenues
Dividend income
Financial income
Total revenues
Expenses
Administrative and other expenses - recharged from group companies
Administrative and other expenses - charged from third parties
Financial expenses
Total expenses
Profit / (loss) for the period
January 1, 2010 thru
December 31, 2010
December 18, 2008 thru
December 31, 2009
517,440
64,930
582,370
(42,326)
(706)
(6)
(43,038)
539,332
-
1
1
(24,980)
(207)
(551)
(25,738)
(25,737)
S-3
NOBLE CORPORATION (NOBLE-SWISS)
NOTES TO SWISS STATUTORY FINANCIAL STATEMENTS
Unless otherwise indicated, CHF amounts in tables are in thousands except per share data and compensation
1. Basis of presentation
Noble Corporation, a Swiss Corporation (“Noble”, “Noble Swiss”, the “Company”, “we”, “our”
and words of similar import), is a holding company listed on the New York Stock Exchange (“NYSE”),
engaged in the management of companies which provide offshore drilling contract services for the oil and
gas industry.
On March 26, 2009, pursuant to the previously announced Agreement and Plan of Merger,
Reorganization and Consolidation, dated as of December 19, 2008 (as amended, the “Merger Agreement”),
among Noble-Swiss, Noble Corporation, a Cayman Island Company, (“Noble-Cayman”), and Noble
Cayman Acquisition Ltd., a Cayman Islands company and a wholly-owned subsidiary of Noble-Swiss
(“Noble-Acquisition”), Noble-Cayman merged by way of schemes of arrangement under Cayman Islands
law (the “Schemes of Arrangement”) with Noble-Acquisition, with Noble-Cayman as the surviving
company (the “Transaction”). Under the terms of the Schemes of Arrangement, each holder of Noble-
Cayman ordinary shares outstanding immediately prior to the Transaction received, through an exchange
agent, one Noble-Swiss registered share in exchange for each outstanding Noble-Cayman ordinary share,
and Noble-Cayman received, through an exchange agent, a number of newly issued Noble-Cayman
ordinary shares equal to the number of Noble-Cayman ordinary shares outstanding immediately prior to the
Transaction. Shares of Noble-Swiss trade on the NYSE under the symbol “NE”. This transaction became
effective under Swiss law on March 27, 2009.
The financial statements present the financial position of the holding company on a standalone
basis and do not represent the consolidated financial position of the holding company and its subsidiaries.
The accounts are prepared in accordance with Swiss Law (Swiss Code of Obligations). All amounts in the
notes are shown in thousands of Swiss Francs, unless otherwise stated.
2. Significant accounting policies
a) Cash and cash equivalents
Cash and cash equivalents includes cash on hand and deposits with an original maturity of three
months or less at time of purchase.
b) Treasury shares
Treasury shares are classified as short-term or as long-term assets on the balance sheet and are
valued at the cost of the shares which are purchased. This classification in the balance sheet is consistent
with management’s intent to cancel or retire a majority of our treasury shares within a one year period.
c) Investments in subsidiaries
Investments in subsidiaries are equity interests, which are held on a long-term basis for the
purpose of the holding company’s business activities. They are carried at a value no higher than their cost,
determined via reference to fair market value or amounts paid for the investment, less adjustments for
impairment, if any. The cost of the Company's primary investment in Noble-Cayman was determined by
reference to fair market value of the contributed share capital of Noble-Cayman, on the basis of the closing
price of the ordinary shares of Noble-Cayman as reported on the NYSE on the date of transaction, plus a
premium, which was determined via a discounted cash flow analysis.
d) Translation of foreign currencies
Assets, other than investments in subsidiaries, and liabilities denominated in foreign currencies are
converted at year end exchange rates. Revenues and expenses denominated in foreign currencies are
S-4
NOBLE CORPORATION (NOBLE-SWISS)
NOTES TO SWISS STATUTORY FINANCIAL STATEMENTS
Unless otherwise indicated, CHF amounts in tables are in thousands except per share data and compensation
converted using an average exchange rate. Unrealized exchange losses are recorded in the statement of
income and unrealized exchange gains are deferred until realized.
3. Significant investments
As no changes occurred in the direct investment held by Noble Corporation in the year 2010, the
chart below details significant investments of the Company as of both December 31, 2010 and 2009:
Company
Noble Services (Switzerland), LLC
Noble Financing Services, Limited
Noble Corporation
Country
Switzerland
Cayman Islands
Cayman Islands
% of
Possession
100%
100%
100%
Currency
CHF
USD
USD
Purpose
Management Services
Financing Company
Holding Company
Amount
CHF 100
USD 50
USD 26,125
4. Shareholders Equity
The following chart details our share capital as of December 31, 2010 and 2009, respectively :
As of December 31, 2010
As of December 31, 2009
Shares
252,275,227
10,140,488
262,415,715
13,849,978
276,265,693
138,132,846
138,132,846
Par Value (CHF)
991,442
39,852
1,031,294
Shares
258,224,544
3,750,000
261,974,544
Par Value (CHF)
1,252,389
18,188
1,270,577
54,430
1,085,724
14,291,149
276,265,693
542,862
542,862
138,132,846
138,132,846
69,312
1,339,889
669,944
669,944
Shares traded
Treasury Shares
Subtotal
Shares held by wholly owned subsidiary
Total shares issued
Authorized capital
Conditional capital
a) Authorized capital
As of December 31, 2010 and 2009 we had a total of 276,265,693 shares issued, respectively. As
of December 31, 2010 we had 252,275,227 shares traded as compared to 258,224,544 shares traded as of
December 31, 2009.
As of December 31, 2010, the board of directors is authorized to issue new registered shares at any
time during the two-year period ending on March 26, 2011 and thereby increase the share capital, without
shareholder approval, by a maximum amount of CHF 542,862,000 divided into 138,132,846 registered
shares, each with a par value CHF 3.93 per share. After the expiration of the initial two-year period, and
each subsequent two-year period, authorized share capital will be available to the board of directors for
issuance of additional registered shares only if the authorization is reapproved by shareholders.
In addition to the 0.15 CHF reduction in par value completed in 2009 the amounts as of December
31, 2010 above include a return in capital of CHF 0.05, CHF 0.05, CHF 0.69 and CHF 0.13 respectively, in
the form of a par value reduction. As of December 31, 2010 our Board has proposed two additional
payments of CHF 0.13 each, in the form of a par value reduction, however these amounts are not reflected
in the financials as they have not been registered with the Swiss Commercial Registry.
S-5
NOBLE CORPORATION (NOBLE-SWISS)
NOTES TO SWISS STATUTORY FINANCIAL STATEMENTS
Unless otherwise indicated, CHF amounts in tables are in thousands except per share data and compensation
b) Conditional Capital
As of December 31, 2010, the share capital of the Company may be increased by an amount not
exceeding CHF 542,862,000 through the issuance from time to time of a maximum of 138,132,846
registered shares, payable in full, each with a par value of CHF 3.93, in connection with the exercise of
option or restricted share unit rights granted to any employee by the Company or a subsidiary.
c) Treasury shares
Treasury shares are valued at cost. Management’s intent is to cancel 10,115,693 shares within the
one year period and these shares are treated as current assets on the balance sheet. The remaining shares
are treated as a part of long term assets since Management intends to cancel outside of a one year period.
The chart below details the shares held in treasury for the period December 10, 2008 through December 31,
2010.
Number of Shares
Company
For year ended December 31, 2009
Opening Balance
Third Quarter
Fourth Quarter
Ending Balance
-
2,000,000
1,750,000
3,750,000
Lowest Cost
Highest Cost
Average Cost
Total Costs
CHF 36.08
CHF 41.64
CHF 36.08
CHF 37.54
CHF 44.40
CHF 44.40
CHF 37.18
CHF 42.61
CHF 39.71
CHF 74,354
CHF 74,571
CHF 148,925
For year ended December 31, 2010
First quarter
Second quarter
Third quarter
Fourth quarter
Ending balance
2,365,085
622
4,020,367
4,414
10,140,488
CHF 31.69
CHF 44.03
CHF 31.89
CHF 33.59
CHF 31.69
CHF 47.25
CHF 45.12
CHF 36.45
CHF 33.78
CHF 47.25
CHF 44.97
CHF 44.24
CHF 33.93
CHF 33.74
CHF 38.64
CHF 106,365
CHF 27
CHF 136,400
CHF 149
CHF 391,866
Less: Par reduction on Treasury Shares
(CHF 6,095)
Value of Treasury Shares
CHF 385,771
In addition to these treasury shares, as of December 31, 2010, a subsidiary holds a total
13,849,978 (14,291,l49 as of December 31, 2009) shares with a par value of CHF 54,430,000 (CHF
69,321,000 as of December 31, 2009) which are reserved for employee plans.
D) Share repurchase authorization
In March 2009, the Board of Directors (the Board) authorized the plan of the predecessor company
to repurchase the common shares, up to an aggregate total of 50,000,000 shares. At March 27, 2009 a total
of 16,619,891 shares remained available under this authorization. These purchases may take place from
time to time in the open market or in private purchase transactions. From March 27, 2009 through
December 31, 2010 a total of 9,850,000 shares (3,750,000 as of December 31, 2009) were purchased under
this authorization leaving a total of 6,769,891 shares which could be repurchased under this authorization
as of December 31, 2010.
5. Contingent liability
The company is a member of a VAT group and is therefore jointly and severably liable for the
payment of the VAT liabilities of the other members of the Swiss VAT group.
S-6
NOBLE CORPORATION (NOBLE-SWISS)
NOTES TO SWISS STATUTORY FINANCIAL STATEMENTS
Unless otherwise indicated, CHF amounts in tables are in thousands except per share data and compensation
6. Remuneration of the Board of Directors and the Group Executives
a) Basis of presentation
The following information sets forth the compensation for the years ended December 31, 2010 and
2009 for the members of the Board of Directors of Noble and Group Executives for all of the functions that
they have performed for the Company. Compensation is presented for the years ended December 31, 2010
and 2009. Compensation of the Board is paid by Noble or one of its subsidiaries. Compensation of the
Group Executives is paid by Noble and the group entities where they are employed. Compensation is paid
as a combination of both U.S dollars and Swiss francs though the following tables expresses all
remuneration details in whole Swiss francs with totals in both Swiss francs and U.S. dollars.
b) Remuneration of the Board of Directors
The compensation committee of our Board sets the compensation of our directors. In determining
the appropriate level of compensation for our directors, the compensation committee considers the
commitment required from our directors in performing their duties on behalf of the Company, as well as
comparative information the committee obtains from compensation consulting firms and from other
sources. During the years ended December 31, 2010 and 2009 no directors received benefits in kind or
waivers of claims and no compensation was paid to any related party of current or former directors nor did
any related parties of current or former directors receive any benefits in kind or waivers of claim. As of
December 31, 2010 and 2009 no current or former directors or any related party of current or former
directors had any outstanding loans or credits from the Company. Set forth below is a description of the
compensation of our directors.
i) Annual Retainers and Other Fees and Expenses.
We pay our non-employee directors an annual retainer of $50,000 (CHF 52,145 in 2010 and CHF
54,287 in 2009) of which 20 percent is paid in shares under the Noble Corporation Equity Compensation
Plan for Non-Employee Directors. Under this plan, non-employee directors may elect to receive up to all of
the remaining 80 percent in shares or cash. Non-employee directors make elections on a quarterly basis.
The number of shares to be issued under the plan in any particular quarter is generally determined using the
average of the daily closing prices of the shares for the last 15 consecutive trading days of the previous
quarter. No options are issuable under the plan, and there is no “exercise price” applicable to shares
delivered under the plan.
In addition, we pay our non-employee directors a Board meeting fee of $2,000 (CHF 2,086 in
2010 and CHF 2,171 in 2009). We pay each member of our audit committee a committee fee of $2,500
(CHF 2,607 in 2010 and CHF 2,714 in 2009) per meeting and each member of our other committees a
committee meeting fee of $2,000 (CHF 2,086 in 2010 and CHF 2,171 in 2009) per meeting. The chair of
the audit committee receives an annual retainer of $15,000 (CHF 15,644 in 2010 and CHF 16,286 in 2009),
the chair of the compensation committee receives an annual retainer of $12,500 (CHF 13,035 in 2010 and
CHF 13,572 in 2009) and the chair of each other standing Board committee receives an annual retainer of
$10,000 (CHF 10,429 in 2010 and CHF 10,857 in 2009). We also reimburse directors for travel, lodging
and related expenses they may incur in attending Board and committee meetings.
ii) Non-Employee Director Stock Options and Restricted Shares.
Under the 1992 Plan, each annually-determined award of a variable number of Restricted Shares
or unrestricted shares is made on a date selected by the Board, or if no such date is selected by the Board,
the date on which the Board action approving such award is taken. Any future award of Restricted Shares
will be evidenced by a written agreement that will include such terms and conditions not inconsistent with
the terms and conditions of the 1992 Plan as the Board considers appropriate in each case.
S-7
NOBLE CORPORATION (NOBLE-SWISS)
NOTES TO SWISS STATUTORY FINANCIAL STATEMENTS
Unless otherwise indicated, CHF amounts in tables are in thousands except per share data and compensation
On July 31, 2009, an award of 8,961 unrestricted shares under the 1992 Plan was made to each
non-employee director serving on that date. Based on a review of market data provided by the
compensation consultant, the market value of this award approximated the 75th percentile of the
compensation paid to non-employee directors in the comparator groups. The grant date fair value of the
53,766 unrestricted share award was $1.8 million (CHF 2.0 million) which value was immediately
recognized by the Company at the time of the award.
On October 31, 2009 two new directors were named to the Board. In connection with this election
the Company granted both elected board members 6,721 unrestricted shares. Based on a review of market
data provided by the compensation consultant, the market value of this award approximated the 75th
percentile of the compensation paid to non-employee directors in the comparator groups. The grant date
fair value of the 13,422 unrestricted share award was $0.5 million (CHF 0.6 million) which value was
immediately recognized by the Company at the time of the award.
On July 31, 2010, an award of 9,255 unrestricted shares under the 1992 Plan was made to each
non-employee director serving on that date. Based on a review of market data provided by the
compensation consultant, the market value of this award approximated the 75th percentile of the
compensation paid to non-employee directors in the comparator groups. The value of the 74,040
unrestricted share award was $2.4 million (CHF 2.5 million) which was immediately recognized by the
Company at the time of the award.
The following table shows the compensation of our directors for the year ended December 31,
2010 and 2009. Although David W. Williams is Chairman of the Board, details of Mr. Williams
compensation are included in Section C.
For the Year Ended December 31, 2010
Director Name
Michael A. Cawley
Lawrence J. Chazen
Julie H. Edwards
Gordon T. Hall
Marc E. Leland
Jack E. Little
Jon A. Marshall
Mary P. Ricciardello
Total
Board
Function
Lead Director
Director
Director
Director
Director
Director
Director
Director
Fee Earned or
Paid in Cash
90,993
88,647
91,775
88,647
100,640
77,175
79,260
104,290
721,427
Stock
Awards
313,692
313,692
313,692
313,692
313,692
313,692
313,692
313,692
2,509,536
All Other
-
-
-
-
-
-
-
-
-
Total in CHF
404,685
402,339
405,467
402,339
414,332
390,867
392,952
417,982
3,230,963
Total in USD
$
388,038
385,788
388,788
385,788
397,288
374,788
376,788
400,788
3,098,054
$
S-8
NOBLE CORPORATION (NOBLE-SWISS)
NOTES TO SWISS STATUTORY FINANCIAL STATEMENTS
Unless otherwise indicated, CHF amounts in tables are in thousands except per share data and compensation
For the Year Ended December 31, 2009
Director Name
Michael A. Cawley
Lawrence J. Chazen
Julie H. Edwards
Gordon T. Hall
Marc E. Leland
Jack E. Little
Jon A. Marshall
Mary P. Ricciardello
Total
Board
Function
Lead Director
Director
Director
Director
Director
Director
Director
Director
Fee Earned or
Paid in Cash
102,601
87,401
92,830
4,886
98,259
78,715
4,343
106,402
575,437
Stock
Awards
329,431
329,431
329,431
309,400
329,431
329,431
309,400
329,431
2,595,386
All Other
116
116
-
-
116
116
-
116
580
Total in CHF
432,148
416,948
422,261
314,286
427,806
408,262
313,743
435,949
3,171,403
Total in USD
$
398,026
384,026
388,919
289,470
394,026
376,026
288,970
401,526
2,920,989
$
c) Remuneration of Group Executives
The compensation committee of our Board is responsible for determining the compensation of our
directors and executive officers and for establishing, implementing and monitoring adherence to our
executive compensation philosophy. The compensation committee provides guidance to our Board in
incentive and equity-based
the compensation programs, benefits,
reviewing and administering
compensation plans. The compensation committee operates independently of management and receives
compensation advice and data from outside advisors.
The Company believes that its executive compensation program reflects the Company’s
philosophy that executive compensation should be structured so as to closely align each executive’s
interests with the interests of our shareholders. The program is designed to emphasize equity-based
incentive and performance-based pay and, in order to promote an atmosphere of teamwork, fairness and
motivation; these concepts extend beyond the named executive officers to other key employees throughout
the Company. The primary objectives of the Company’s total compensation package are to motivate our
executives to assist the Company in achieving certain operating and financial performance goals that
enhance shareholder value, to reward outstanding performance in achieving these goals and to establish and
maintain a competitive executive compensation program that enables the Company to attract, retain and
motivate high caliber executives who will contribute to the long-term success of the Company. When used
in this Remuneration section, the term “Group Executives” means those persons listed in the Summary
Compensation Table below.
There have been no changes in the composition of the Group Executives during the current year.
In addition there have been no payments to former Group Executives nor had any such person received
benefits in kind from the Company. As of December 31, 2010 and 2009, no current or former Group
Executives or any related party of current or former Group Executives had outstanding loans or credits
from the Company.
S-9
NOBLE CORPORATION (NOBLE-SWISS)
NOTES TO SWISS STATUTORY FINANCIAL STATEMENTS
Unless otherwise indicated, CHF amounts in tables are in thousands except per share data and compensation
The below chart details the compensation, based upon an accrual basis of accounting, of the Group
Executives:
Title
Chairman,
President and
Chief Executive
Officer
Title
Chairman,
President and
Chief Executive
Officer
Employee Name
David W. Williams
Other Group
Executives
Total
Employee Name
David W. Williams
Other Group
Executives
Total
Salary
Bonus
Stock Award (1)
Option Award (2)
All Other
Compensation
Total in CHF
Total in USD
For the Year Ended December 31, 2010
1,026,022
1,303,713
4,509,400
1,169,073
1,989,055
9,997,263
$
9,585,376
2,640,019
3,666,041
2,224,186
3,527,899
5,181,915
9,691,315
1,343,402
2,512,475
5,936,037
7,925,092
17,325,559
27,322,822
16,611,746
26,197,122
$
Salary
Bonus
Stock Award (1)
Option Award (2)
All Other
Compensation
Total in CHF
Total in USD
For the Year Ended December 31, 2009
870,393
1,628,595
4,744,272
948,315
884,583
9,076,158
$
8,359,498
2,118,768
2,989,161
2,790,326
4,418,921
6,128,488
10,872,760
856,712
1,805,027
2,166,631
3,051,214
14,060,925
23,137,083
12,950,663
21,310,161
$
(1) Valued based upon the fair value at the date of grant for all time vested awards and based upon a
Monte Carlo Simulation for all performance vested awards.
(2) Value based upon a Black-Scholes model on the date of the option grant.
S-10
NOBLE CORPORATION (NOBLE-SWISS)
NOTES TO SWISS STATUTORY FINANCIAL STATEMENTS
Unless otherwise indicated, CHF amounts in tables are in thousands except per share data and compensation
7. Common Share ownership of the Board of Directors and Group Executives
a) Board of Directors
The following table sets forth information, as of December 31, 2010 and 2009, with respect to the
beneficial ownership of Common Shares by each of our directors. No related parties own shares in the
Company. Although David W. Williams is Chairman of the Board, details of Mr. Williams share
ownership are included in Section B.
Director Name
Michael A. Cawley
Lawrence J. Chazen
Julie H. Edwards
Gordon T. Hall
Marc E. Leland
Jack E. Little
Jon A. Marshall
Mary P. Ricciardello
Total
Function
Lead Director
Director
Director
Director
Director &
Compensation
Committee Chair
Director
Director
Director & Audit
Committee Chair
As of December 31, 2010
Common Shares
Beneficially
Owned
Outstanding
Options
Weighted Average
Option Exercise
Price in CHF
Weighted Average
Option Exercise
Years
62,170
38,634
35,937
13,238
81,676
58,719
13,204
47,445
351,023
63,000
18,000
20,000
-
63,000
63,000
-
28,000
255,000
20.15
26.54
38.65
-
20.15
20.15
-
21.75
22.31
2.32
2.32
5.33
-
2.32
2.32
-
3.75
2.71
Director Name
Michael A. Cawley
Lawrence J. Chazen
Julie H. Edwards
Gordon T. Hall
Marc E. Leland
Jack E. Little
Jon A. Marshall
Mary P. Ricciardello
Total
Function
Lead Director
Director
Director
Director
Director &
Compensation
Committee Chair
Director
Director
Director & Audit
Committee Chair
As of December 31, 2009
Common Shares
Beneficially
Owned
Outstanding
Options
Weighted Average
Option Exercise
Price in CHF
Weighted Average
Option Exercise
Years
53,838
30,482
28,339
5,376
67,078
50,241
5,376
39,151
279,881
63,000
18,000
20,000
-
70,000
83,000
-
28,000
282,000
22.27
29.34
42.73
-
21.95
21.49
-
24.05
23.19
3.32
3.33
6.35
-
3.02
2.60
-
4.75
3.22
S-11
NOBLE CORPORATION (NOBLE-SWISS)
NOTES TO SWISS STATUTORY FINANCIAL STATEMENTS
Unless otherwise indicated, CHF amounts in tables are in thousands except per share data and compensation
b) Group Executives
The following table sets forth information, as of December 31, 2010 and 2009, with respect to the
beneficial ownership of Common Shares by each of our Group Executives. No related persons own shares
as of December 31, 2010 and 2009, respectively.
Director Name
Function
Common Shares
Beneficially
Owned
Outstanding
Options
Weighted Average
Option Exercise
Price in CHF
Option Exercise
Years
Restricted
Stock
As of December 31, 2010
David W. Williams
Julie J. Robertson
Thomas L. Mitchell
William E. Turcotte
Donald E. Jacobsen
Roger B. Hunt
Scott W. Marks
Total
Chairman of the Board,
President and Chief
Executive Officer
Executive Vice President
and Corporate Secretary
Senior Vice President,
Chief Financial Officer,
Treasurer and Controller
Senior Vice President and
General Counsel
Senior Vice President-
Operations
Senior Vice President –
Marketing and Contracts
Senior Vice President-
Engineering
501,350
571,739
349,427
430,116
216,454
169,330
50,780
26,913
20,311
22,523
12,184
12,184
62,260
1,449,807
30,679
1,026,443
31.04
20.84
32.38
30.21
36.97
36.97
25.95
26.96
7.34
3.30
6.84
8.68
9.11
9.11
5.44
5.58
363,272
144,743
125,635
34,641
19,678
14,850
25,952
728,771
Director Name
Function
Common Shares
Beneficially
Owned
Outstanding
Options
Weighted Average
Option Exercise
Price in CHF
Option Exercise
Years
Restricted
Stock
As of December 31, 2009
David W. Williams
Julie J. Robertson
Thomas L. Mitchell
William E. Turcotte
Donald E. Jacobsen
Roger B. Hunt
Scott W. Marks
Total
Chairman of the Board,
President and Chief
Executive Officer
Executive Vice President
and Corporate Secretary
Senior Vice President,
Chief Financial Officer,
Treasurer and Controller
Senior Vice President and
General Counsel
Senior Vice President-
Operations
Senior Vice President –
Marketing and Contracts
Senior Vice President-
Engineering
572,976
619,675
279,978
509,403
258,612
151,054
54,428
29,516
22,275
10,339
-
-
56,881
1,614,363
26,415
977,189
32.70
22.10
35.18
24.59
-
-
26.73
27.31
7.89
3.38
7.56
9.18
-
-
5.84
5.45
488,681
232,135
196,587
47,073
29,516
22,275
35,746
1,052,013
S-12
NOBLE CORPORATION (NOBLE-SWISS)
NOTES TO SWISS STATUTORY FINANCIAL STATEMENTS
Unless otherwise indicated, CHF amounts in tables are in thousands except per share data and compensation
8. Significant Shareholders
The following table sets forth information regarding each person, including corporate groups,
known to the Company to own beneficially or of record more than five percent of the Company’s
outstanding Trading Shares as of December 31, 2010 and 2009, respectively.
Name of Beneficial Owner
Fidelity Management and Research, LLC
Wentworth, Hauser & Violich, Inc.
Name of Beneficial Owner
Fidelity Management and Research, LLC
BlackRock, Inc.
Wentworth, Hauser & Violich, Inc.
9. Risk assessment and management
As of December 31, 2010
Number of Shares
Beneficially Owned
20,865,724
15,236,009
Percent of Class
8.27%
6.04%
As of December 31, 2009
Number of Shares
Beneficially Owned
25,440,095
18,014,199
13,892,238
Percent of Class
9.85%
6.98%
5.38%
The Board of Directors, together with the management of Noble, is responsible for assessing risks
related to the financial reporting process and for establishing and maintaining adequate internal control
over financial reporting. The Corporate Risk Management function coordinates and aligns the risk
management process and reports to the Board, the Audit Committee, and the Corporate Governance
Committee on a regular basis on risk assessment and risk management. Organizational and process
measures have been designed to identify and mitigate risks. Organizationally the responsibility for risk
assessment and management is allocated to the Divisions with specialized Corporate Functions such as
Financial Reporting & Accounting, Treasury, Health Safety and Environment, and Business Continuity
providing support and controlling the effectiveness of the risk management by the Divisions.
Internal control over financial reporting is a process designed by, or under the supervision of the
Chief Executive Officer and Chief Financial Officer to provide reasonable assurance regarding the
reliability of financial reporting and the preparation of Noble’s consolidated financial statements for
external purposes in accordance with GAAP.
The Board, operating through its Audit Committee composed entirely of directors who are not
officers or employees of the Company, is responsible for oversight of the financial reporting process and
safeguarding of assets against unauthorized acquisition, use, or disposition. The Audit Committee meets
with management, the independent registered public accountants and the internal auditor; approves the
overall scope of audit work and related fee arrangements; and reviews audit reports and findings. In
addition, the independent registered public accountants and the internal auditor meet separately with the
Audit Committee, without management representatives present, to discuss the results of their audits; the
adequacy of the Company’s internal control; the quality of its financial reporting; and the safeguarding of
assets against unauthorized acquisition, use, or disposition.
S-13
NOBLE CORPORATION (NOBLE-SWISS)
NOTES TO SWISS STATUTORY FINANCIAL STATEMENTS
Unless otherwise indicated, CHF amounts in tables are in thousands except per share data and compensation
10. Other Disclosures Required by Swiss Law
Expenses
Total personnel expenses and depreciation expenses related to property totaled CHF 0 and CHF 0,
respectively for the period for the year ended December 31, 2010 and the period from December 10, 2008
to December 31, 2009.
11. Movements on retained earnings (accumulated deficit)
The total retained earnings / (accumulated deficit) is as follows:
Retained earnings/(accumulated deficit) at
beginning of period
Net income/(loss)
Retained earnings/(accumulated deficit) at
disposal of the annual general meeting
January 1, 2010
thru December
31, 2010
December 10,
2008 thru
December 31,
2009
(25,737)
539,332
513,595
-
(25,737)
(25,737)
S-14
Proposal of the Board of Directors for appropriation of retained earnings
2010 Proposal of
the Board of
Directors
2009 Resolution
of the annual
general meeting
(CHF in thousands)
Proposal of the Board of Directors for appropriation of retained earnings
Accumulated deficit as of January 1, 2010 and December 18, 2008, respectively:
(25,737)
-
Profit/ (Loss) for the period January 1, 2010 thru December 31, 2010 and December 18, 2008 thru
December 31, 2009, respectively:
Retained earnings at the disposal of the annual general meeting
Allocation to legal reserve -- reserves for own shares to be acquired, funded from retained earnings
Retained earnings to be carried forward
539,332
513,595
(345,073)
168,522
(25,737)
(25,737)
-
(25,737)
The above appropriation of retained earnings is proposed by the Board of Directors in response to
the newly issued tax-related capital contribution principle coupled with the proposed capital reduction
through cancellation of 10,115,693 treasury shares. The potential approval of the cancellation of
10,115,693 treasury shares by the annual general shareholders' meeting will cause a partial reduction of the
reserve for own shares to be acquired, funded from capital contribution, in the amount of CHF 345,073.
This does not represent a tax beneficial solution, as the capital contribution principle allows for a
repayment to shareholders of capital contributions in the same way as a repayment of nominal capital. In
regards to withholding tax, such repayments are generally tax-free. Additionally, repayments of capital
contributions to Swiss tax resident individuals (who hold shares as private assets) will no longer be
considered taxable income. To avoid the loss of such potential tax beneficial repayments, the Board of
Directors recommends first creating a reserve for own shares, funded from retained earnings, and second
reducing this reserve for own shares, funded from retained earnings, when the cancellation of treasury
shares is approved and executed.
S-15
Report of the statutory auditor
to the general meeting of
Noble Corporation
Baar
Report of the statutory auditor on the financial statements
As statutory auditor, we have audited the financial statements of Noble Corporation, which comprise the
balance sheet, statement of income and notes (pages S2 to S14), for the year ended December 31, 2010.
Board of Directors’ Responsibility
The Board of Directors is responsible for the preparation of the financial statements in accordance with the
requirements of Swiss law and the company’s articles of incorporation. This responsibility includes
designing, implementing and maintaining an internal control system relevant to the preparation of financial
statements that are free from material misstatement, whether due to fraud or error. The Board of Directors
is further responsible for selecting and applying appropriate accounting policies and making accounting
estimates that are reasonable in the circumstances.
Auditor’s Responsibility
Our responsibility is to express an opinion on these financial statements based on our audit. We conducted
our audit in accordance with Swiss law and Swiss Auditing Standards. Those standards require that we plan
and perform the audit to obtain reasonable assurance whether the financial statements are free from
material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the
financial statements. The procedures selected depend on the auditor’s judgment, including the assessment
of the risks of material misstatement of the financial statements, whether due to fraud or error. In making
those risk assessments, the auditor considers the internal control system relevant to the entity’s preparation
of the financial statements in order to design audit procedures that are appropriate in the circumstances, but
not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control system. An
audit also includes evaluating the appropriateness of the accounting policies used and the reasonableness of
accounting estimates made, as well as evaluating the overall presentation of the financial statements. We
believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our
audit opinion.
Opinion
In our opinion, the financial statements for the year ended December 31, 2010 comply with Swiss law and
the company’s articles of incorporation.
S-16
Report on other legal requirements
We confirm that we meet the legal requirements on licensing according to the Auditor Oversight Act
(AOA) and independence (article 728 CO and article 11 AOA) and that there are no circumstances
incompatible with our independence.
In accordance with article 728a paragraph 1 item 3 CO and Swiss Auditing Standard 890, we confirm that
an internal control system exists which has been designed for the preparation of financial statements
according to the instructions of the Board of Directors.
We further confirm that the proposed appropriation of available earnings complies with Swiss law and the
company’s articles of incorporation. We recommend that the financial statements submitted to you be
approved.
PricewaterhouseCoopers AG
Joanne Burgener
Audit expert
Auditor in charge
Zug, February 25, 2011
Claudia Muhlinghaus
S-17
Year Ended December 31,
2010
2009
2008
$2,807,176
$3,640,784
$3,446,501
916,080
916,509
773,429
3.02
1,654,376
1,423,484
12%
2,010,744
2,015,902
1,678,642
6.42
2,136,716
1,431,498
34%
1,908,403
1,912,458
1,560,995
5.81
1,888,192
1,231,321
39%
$11,221,321
$8,396,896
$7,106,799
10,048,087
6,634,452
5,647,017
2,766,697
7,287,634
28.89
750,946
923,487
6,788,432
5,290,715
26.29
20.20
Noble Corporation Financial Highlights
(In thousands, except per share amounts and percentages)
Operating revenues
Operating income
Income before income taxes
Net income attributable to Noble Corporation
Net income per diluted share
Net cash provided by operating activities
Capital expenditures
Return on capital employed
At year end:
Total assets
Property and equipment, net
Total debt
Total equity
Book value per share
In 2010, Noble continued its
strategy to add rigs with the
latest technology, equipment,
and capabilities. With nine rigs
currently under construction,
including seven ultra-deepwater
drillships, which are slated to
join the recently delivered Noble
Jim Day (right), Noble Danny
Adkins, Noble Dave Beard,
and Noble Clyde Boudreaux,
Noble’s ultra-deepwater fleet is
becoming one of the finest in
the industry.
Board of Directors
Michael A. Cawley 2, 3, 4
President and Chief
Executive Officer –
The Samuel Roberts
Noble Foundation, Inc.
Director since 1985.
Contact the Board
If you would like to contact the
Noble Corporation Board of
Directors, write to:
Noble Corporation Board of Directors
Dorfstrasse 19a
6340 Baar, Switzerland
or send an e-mail to:
Nobleboard@noblecorp.com
Lawrence J. Chazen 1
Chief Executive Officer –
Lawrence J. Chazen, Inc.
Director since 1994.
Julie H. Edwards 1, 3
Former Senior Vice President
and Chief Financial Officer –
Southern Union Company.
Director since 2006.
For additional information about
Noble Corporation, please refer to
our proxy statement which is being
mailed or made available with this
Annual Report.
Gordon T. Hall 1
Chairman of the Board –
Exterran Holdings, Inc.
Director since 2009.
Marc E. Leland 2, 3
President – Marc E.
Leland & Associates, Inc.
Director since 1994.
Jack E. Little 2
Former President and
Chief Executive Officer –
Shell Oil Company.
Director since 2000.
Jon A. Marshall 2
Former President and Chief
Operating Officer –
Transocean Inc.
Director since 2009.
Mary P. Ricciardello 1
Former Senior Vice President
and Chief Accounting Officer –
Reliant Energy, Inc.
Director since 2003.
David W. Williams
Chairman, President and
Chief Executive Officer
Noble Corporation
Director since 2008.
1 Audit Committee 2 Compensation Committee 3 Nominating and Corporate Governance Committee 4 Lead Director
Corporate Information
Transfer Agent and Registrar
Computershare Trust Company, N.A.
Canton, Massachusetts
Independent Auditors
PricewaterhouseCoopers AG
Zug, Switzerland
PricewaterhouseCoopers LLP
Houston, Texas
Shares Listed on
New York Stock Exchange
Trading Symbol “NE”
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Form 10-K
A copy of Noble Corporation’s 2010 Annual
Report on Form 10-K, as filed with the U.S.
Securities and Exchange Commission, will be
furnished without charge to any shareholder
upon written request to:
Julie J. Robertson - Executive Vice President
and Corporate Secretary
Noble Corporation
Dorfstrasse 19a
6340 Baar, Switzerland
Annual Meeting
The Annual Meeting of Shareholders of Noble
Corporation will be held on April 29, 2011, at
3:00 p.m. local time at the Parkhotel Zug in
Zug, Switzerland.
Corporate Officers
David W. Williams
Chairman, President and
Chief Executive Officer
Julie J. Robertson
Executive Vice President
and Corporate Secretary
Roger B. Hunt
Senior Vice President –
Marketing & Contracts
Donald E. Jacobsen
Senior Vice President –
Operations
Scott W. Marks
Senior Vice President –
Engineering
Thomas L. Mitchell
Senior Vice President,
Chief Financial Officer,
Treasurer and Controller
William E. Turcotte
Senior Vice President and
General Counsel
Investor Information
You can learn more about our
operations and our Company
by visiting our Web site at
www.noblecorp.com.
Shareholders, brokers, securities
analysts or portfolio managers
seeking information about Noble
Corporation are welcome to contact:
Lee M. Ahlstrom, Vice President –
Investor Relations and Planning,
Noble Drilling Services Inc.,
by phone at: 281-276-6100 or by
e-mail at: lahlstrom@noblecorp.com.
Forward Looking Statements
Any statements included in this 2010
Annual Report that are not historical
facts, including without limitation
regarding future market trends and
results of operations are forward-
looking statements within the
meaning of applicable securities law.
Noble Corporation
Dorfstrasse 19a
6340 Baar
Switzerland
www.noblecorp.com
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Noble Corporation 2010 Annual Report