Shaping our Future
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Noble Corporation plc
Devonshire House
1 Mayfair Place
London W1J8AJ
www.noblecorp.com
Noble Corporation 2013 Annual Report
Noble Corporation Financial Highlights
Year Ended December 31,
2013
2012
2011
2010
2009
Revenues
$4,234,290
$3,547,012
$2,695,832
$2,807,176
$3,640,784
Net Income Attributable to Noble
782,697
522,344
370,898
773,429
1,678,642
Diluted Earnings Per Share
3.05
2.05
1.46
3.02
6.42
Cash Flow from Operations
1,702,317
1,381,693
740,240
1,636,902
2,131,267
Total Assets
Total Debt (1)
Total Equity
16,217,957
14,607,774
13,495,159
11,302,387
8,396,896
5,556,251
4,634,375
4,071,964
2,766,697
750,946
9,050,028
8,488,290
8,097,852
7,287,634
6,788,432
Debt to Total Capitalization
38.0%
35.3%
33.5%
27.5%
10.0%
***All numbers in thousands except per share data
(1) Includes both short-term and long-term debt.
On the Cover:
From the bridge of the Noble Don Taylor, the
approching sunrise heralds another promising
day in the Gulf of Mexico. The Taylor is one of
eight ultra-deepwater drillships Noble owns,
providing excellent performance for
customers and shareholders alike.
Investor Information
Shareholders, brokers, securities analysts or portfolio
managers seeking information about Noble Corporation
should contact Jeff Chastain, Vice President–Investor
Relations, Noble Drilling Services Inc., by phone at:
281-276-6100 or by e-mail at: jchastain@noblecorp.com.
Forward Looking Statements
Any statements included in this 2013 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. Please see “Forward-Looking Statements” in
this 2013 Annual Report for more information.
Corporate Information
Transfer Agent and Registrar
Computershare Trust Company, N.A.
Canton, Massachusetts
Independent Auditors
PricewaterhouseCoopers LLP
Reading, Berkshire UK
PricewaterhouseCoopers LLP
Houston, Texas
Shares Listed on
New York Stock Exchange
Trading Symbol “NE”
Form 10-K
A copy of Noble Corporation’s 2013 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 & Corporate Secretary
Noble Corporation plc
Devonshire House
1 Mayfair Place
London W1J8AJ
Annual Meeting
The Annual Meeting of Shareholders of Noble Corporation
will be held on June 10, 2014, at 3:00 p.m. local time at
Claridge’s Hotel in London, England.
Contact the Board
If you would like to contact the Noble Corporation Board of
Directors, write to:
Noble Corporation Board of Directors
Devonshire House
1 Mayfair Place
London W1J8AJ
or send an e-mail to: Nobleboard@noblecorp.com
For additional information about Noble Corporation, please
refer to our proxy statement which is being mailed or made
available with this Annual Report.
1 Audit Committee 2 Compensation Committee
3 Nominating and Corporate Governance Committee
4 Health, Safety, Environment and Engineering Committee
5 Lead Director
Board of Directors
Ashley Almanza 1, 4
Chief Executive Officer – G4S
The Samuel Roberts Noble Foundation, Inc.
Director since 2013.
Michael A. Cawley 2, 4
Former President & Chief Executive Officer –
The Samuel Roberts Noble Foundation, Inc.
Director since 1985.
Lawrence J. Chazen 1, 3
Chief Executive Officer – Lawrence J. Chazen, Inc.
Director since 1994.
Julie H. Edwards 2, 3
Former Senior Vice President
& Chief Financial Officer – Southern Union Company.
Director since 2006.
Gordon T. Hall 2, 3, 5
Chairman of the Board – Exterran Holdings, Inc.
Director since 2009.
Jon A. Marshall 2, 4
Former President & Chief Operating Officer –
Transocean Inc.
Director since 2009.
Mary P. Ricciardello 1, 3
Former Senior Vice President & Chief Accounting
Officer – Reliant Energy, Inc.
Director since 2003.
David W. Williams
Chairman, President & Chief Executive Officer
Noble Corporation
Director since 2008.
Corporate Officers
David W. Williams
Chairman, President & Chief Executive Officer
Julie J. Robertson
Executive Vice President & Corporate Secretary
James A. MacLennan
Senior Vice President & Chief Financial Officer
William E. Turcotte
Senior Vice President & General Counsel
Simon W. Johnson
Senior Vice President – Marketing & Contracts
Lee M. Ahlstrom
Senior Vice President – Strategic Development
Scott W. Marks
Senior Vice President – Engineering
Bernie G. Wolford
Senior Vice President – Operations
Dennis J. Lubojacky
Vice President & Controller
Randall D. Stilley
Executive Vice President
To Our Shareholders
N
oble exemplifies the true
measure of a great company,
the ability to shape its future.
Building on the underlying strengths of our business, we
acted with strategic foresight in 2013 in transforming the Noble fleet, taking steps
to establish our standard specification business as a standalone company, and
expanding our customer base and global footprint. We believe these actions will
drive results today, while building an even stronger platform for creating value
in the future. In 2013, a year in which revenues reached a record $4.2 billion,
we achieved a number of key milestones in this process, and as a result, the
trajectory of the Company is decidedly positive and the future for Noble is bright.
The past few years have witnessed the continued increase in demand for
more sophisticated and technically capable drilling units. As this reality will
undoubtedly continue, we are delighted that we recognized this potential
opportunity early and stepped forward with our fleet enhancement program,
which began in earnest in the mid-2000s.
With the five newbuilds that exited shipyards in 2013, the Company has
deployed 15 highly advanced jackups and floaters around the world since 2007.
Add to that the six additional new construction projects that our best-in-class
projects teams are scheduled to deliver in 2014 and the Company will have
developed, constructed, manned and deployed 21 advanced drilling units, which
will serve as the foundation of Noble for years to come.
Adding equipment is not enough. In 2013, we also made great strides in
improving our overall operational effectiveness, with significant gains in reliability
and revenue efficiency. These results are not based on a single initiative, but
rather the long-held conviction that the pursuit of overall operational excellence
is a cornerstone of our success. Working on many fronts, ranging from increased
oversight on technical processes to improved contract terms and conditions, we
are systematically improving the productive time across our fleet.
Drilling simulator training
Central to everything we do are the exceptional people who crew, manage
and maintain our rigs and the shore-based team members who support them
every day. Noble’s reputation as a leader in our industry is no accident. It is the
result of the tremendous dedication and true professionalism of our team. In
2013, we achieved outstanding results in hiring, training and retaining the talent
needed to ensure our success now and in the future. We also elevated training
and development to a whole new level with the opening of our Noble Excellence
through Technology (NEXT) Center in Sugar Land, Texas.
The NEXT Center, which became operational in the summer of 2013, provides
state-of-the-art simulator and classroom training, as well as space where experts
from around the world can convene and collaborate to drive productivity and
safety performance. We have also high-graded our approach to competency
assurance. While formal training programs played a prominent role in the past,
we also relied heavily on tenure as one of the measures to gauge competency.
Today, we face the twin challenges of not only delivering consistent and complete
training on a scale that keeps pace with the rate of change in our industry, but also
meeting dramatically higher recruiting requirements and a younger workforce.
With the NEXT Center fully operational, we can accelerate the learning process
and employee development to create levels of competency that once took years of
experience to establish. The NEXT Center will serve as a catalyst for systematic
and ongoing improvement in the knowledge and skills of our workforce of
tomorrow and drive our performance today.
Noble Regina Allen
While the offshore drilling industry is inherently cyclical, today we enjoy a
level of cycle transparency that is unprecedented in our history. Noble’s contract
backlog totaling $15.4 billion at the end of 2013 coupled with our strong and
diversified customer base provide us with an element of security in the face
of uncertain market dynamics ahead. Our contract coverage provides a strong
revenue base through the next few years that will ensure the health of the
enterprise and propel us into the future. This financial capability is the result of
a well timed and well executed strategy to build and deploy some of the best and
most capable rigs in the world. It has also allowed us to increase our dividend.
As we look at our allocation of capital going forward, dividends have been
an important component of our strategy as demonstrated by our Board’s support
for an increasing dividend throughout this period of significant newbuild capital
requirements. Today our annualized dividend stands at $1.50 per share, or
250 percent higher than what we paid in 2011. With improvements in our cash
flow expected in the coming years, we will continue to review and consider
mechanisms for creating value for our shareholders.
In September 2013, our Board of Directors approved a plan to reorganize our
business by means of a separation and spin-off of a newly formed wholly-owned
subsidiary, Paragon Offshore Limited. This action will result in the creation of
two separate and highly focused offshore drilling companies. The mobile offshore
drilling units to be owned and operated by Paragon Offshore provide outstanding
customer, asset and geographic diversity, as well as significant contract
backlog. Following the separation, we will continue to own and operate our
high-specification assets with particular operating focus in deepwater and ultra-
deepwater markets for drillships and semisubmersibles, and harsh environment
and high-specification markets for jackups.
We believe the strategic separation of the standard specification business
creates value for our shareholders. The separation is expected to be effected
through the distribution of the shares of Paragon Offshore to our shareholders in
a spin-off that is expected to be tax-free. Subject to business, market, regulatory
and other considerations, the separation may be preceded by an initial public
offering (“IPO”) of up to 20 percent of the shares of Paragon Offshore. The
separation is subject to several conditions, including final approval by our Board
of Directors and approval by our shareholders, which we anticipate seeking in the
second quarter of 2014. More information about the proposed spin is included in
our proxy and filings with the Securities Exchange Commission. I encourage you
to review those documents fully as you consider this important step in shaping
Noble’s future.
I am confident that focusing on creating long term value for our shareholders,
delivering the highest possible levels of operational excellence for our customers
and providing meaningful, safe and rewarding employment for our team members
is building Noble’s strong heritage and shaping our future for success. I want
to thank our Board for their support of our strategic plans and the entire Noble
team for their exemplary dedication and professionalism as we move forward in
achieving our full potential. My thanks also go to our customers for their business
and our shareholders for their investment in Noble.
David W. Williams
Chairman, President and
Chief Executive Officer
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 2013
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
Commission file number: 001-36211
Noble Corporation plc
(Exact name of registrant as specified in its charter)
England and Wales (Registered Number 83549545)
(State or other jurisdiction of
incorporation or organization)
98-0619597
(I.R.S. employer
identification number)
Devonshire House, 1 Mayfair Place, London, England, W1J 8AJ
(Address of principal executive offices) (Zip Code)
Registrant’s telephone number, including area code: +44 20 3300 2300
Securities registered pursuant to Section 12(b) of the Act:
Title of each class
Shares, Nominal Value $0.01 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 No
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes No
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, and (2) has been subject to such filing requirements for the past 90 days. Yes No
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 during the preceding 12 months. Yes No
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.
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.
Noble Corporation plc:
Large accelerated filer
Accelerated filer
Non-accelerated filer
Smaller reporting company
Noble Corporation:
Large accelerated filer
Accelerated filer
Non-accelerated filer
Smaller reporting company
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes No
As of June 28, 2013, the aggregate market value of the registered shares of Noble Corporation plc held by non-affiliates of the registrant was $9.5 billion based on the closing
sale price as reported on the New York Stock Exchange.
Number of shares outstanding and trading at February 14, 2014: Noble Corporation plc – 254,138,833
Number of shares outstanding: Noble Corporation – 261,245,693
DOCUMENTS INCORPORATED BY REFERENCE
The proxy statement for the 2014 annual general meeting of the shareholders of Noble Corporation plc (England and Wales) 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 plc, a company registered under the laws of England and
Wales (“Noble-UK”), 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.
TABLE OF CONTENTS
Business
Risk Factors
Unresolved Staff Comments
Properties
Legal Proceedings
Mine Safety Disclosures
Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity
Securities
Selected Financial Data
Management’s Discussion and Analysis of Financial Condition and Results of Operations
Quantitative and Qualitative Disclosures About Market Risk
Financial Statements and Supplementary Data
Changes in and Disagreements With Accountants on Accounting and Financial Disclosure
Controls and Procedures
Other Information
Directors, Executive Officers and Corporate Governance
Executive Compensation
Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
Certain Relationships, Related Transactions and Director Independence
Principal Accounting Fees and Services
Exhibits, Financial Statement Schedules
PART I
Item 1.
Item 1A.
Item 1B.
Item 2.
Item 3.
Item 4.
PART II
Item 5.
Item 6.
Item 7.
Item 7A.
Item 8.
Item 9.
Item 9A.
Item 9B.
PART III
Item 10.
Item 11.
Item 12.
Item 13.
Item 14.
PART IV
Item 15.
SIGNATURES
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This combined Annual Report on Form 10-K is separately filed by Noble Corporation plc, a company
registered under the laws of England and Wales (“Noble-UK”), and Noble Corporation, a Cayman Islands company
(“Noble-Cayman”). Information in this filing relating to Noble-Cayman is filed by Noble-UK and separately by Noble-
Cayman on its own behalf. Noble-Cayman makes no representation as to information relating to Noble-UK (except as it
may relate to Noble-Cayman) or any other affiliate or subsidiary of Noble-UK.
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-UK and its consolidated subsidiaries, including Noble-Cayman after November 20, 2013 and to
Noble Corporation, a Swiss corporation (“Noble-Swiss”), and its consolidated subsidiaries for periods through
November 20, 2013. Noble-UK became a successor registrant to Noble-Swiss 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 the consummation of the
Transaction described in Part I, Item 1 of this Annual Report on Form 10-K.
PART I
Item 1.
Consummation of Merger and Redomiciliation
Business.
On November 20, 2013, pursuant to the Merger Agreement dated as of June 30, 2013 between Noble
Corporation, a Swiss corporation (“Noble-Swiss”), and Noble Corporation plc, a company registered under the laws of
England and Wales (“Noble-UK” or “we”), Noble-Swiss merged with and into Noble-UK, with Noble-UK as the surviving
company (the “Transaction”). In the Transaction, all of the outstanding ordinary shares of Noble-Swiss were cancelled, and
Noble-UK issued, through an exchange agent, one ordinary share of Noble-UK in exchange for each ordinary share of
Noble-Swiss.
The Transaction effectively changed the place of incorporation of our publicly traded parent holding company
from Switzerland to the United Kingdom. As a result of the Transaction, Noble-UK owns and conducts the same businesses
through the Noble group as Noble-Swiss conducted prior to the Transaction, except that Noble-UK is the parent company
of the Noble group of companies.
Noble Corporation, a Cayman Islands company (“Noble-Cayman”), is a direct, wholly-owned subsidiary of
Noble-UK. Noble-UK’s principal asset is all of the shares of Noble-Cayman. Noble-Cayman has no public equity
outstanding. The consolidated financial statements of Noble-UK include the accounts of Noble-Cayman, and Noble-UK
conducts substantially all of its business through Noble-Cayman and its subsidiaries.
General
Noble-UK is a leading offshore drilling contractor for the oil and gas industry. We perform contract drilling
services with our fleet of mobile offshore drilling units located worldwide. We also own one floating production storage
and offloading unit (“FPSO”). Currently, our fleet consists of 14 semisubmersibles, 14 drillships and 49 jackups, including
six units under construction as follows:
•
•
two dynamically positioned, ultra-deepwater, harsh environment drillships; and
four high-specification, heavy-duty, harsh environment jackups.
For additional information on the specifications of our fleet, see “Item 2. Properties.—Drilling Fleet.” Our fleet
is located in the United States, Mexico, Brazil, the North Sea, the Mediterranean, West Africa, the Middle East, India, Asia
and Australia. Noble and its predecessors have been engaged in the contract drilling of oil and gas wells since 1921.
Proposed Spin-off Transaction
In September 2013, we announced that our Board of Directors approved a plan to reorganize our business by
means of a separation and spin-off of a newly formed wholly-owned subsidiary, Paragon Offshore Limited (“Paragon
Offshore”), whose assets and liabilities would consist of most of our standard specification drilling units and related assets,
liabilities and business (the “Separation”), resulting in the creation of two separate and highly focused offshore drilling
companies. The drilling units to be owned and operated by Paragon Offshore consist of five drillships, three
semisubmersibles and 34 jackups. Paragon Offshore would also be responsible for the Hibernia platform operations
offshore Canada and one FPSO. Following the Separation, we will continue to own and operate our high-specification
assets with particular operating focus in deepwater and ultra-deepwater markets for drillships and semisubmersibles and
harsh environment and high-specification markets for jackups.
The Separation of the standard specification business will be effected through the distribution of the shares of
Paragon Offshore to Noble-UK shareholders in a spin-off that would be tax-free to shareholders. Subject to business,
market, regulatory and other considerations, the Separation may be preceded by an initial public offering (“IPO”) of up to
20 percent of the shares of Paragon Offshore. The Separation is subject to several conditions, including final approval by
our Board of Directors and approval by our shareholders, which we anticipate seeking in the second quarter of 2014. We
have received a private letter ruling from the U.S. Internal Revenue Service stating that the Separation is expected to
qualify as a tax-free transaction under sections 368(a)(1)(D) and 355, and related provisions, of the Internal Revenue Code
of 1986, as amended. We anticipate that the Separation would be completed by the end of 2014. We expect that Paragon
Offshore would use the net proceeds from borrowings and the IPO, if undertaken, to repay its indebtedness to Noble. We
expect that, in turn, Noble would use such proceeds to repay outstanding third-party debt of Noble-Cayman and its
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subsidiaries. There can be no assurance that our proposed plan will lead to an IPO or Separation of Paragon Offshore or any
other transaction, or that if any transaction is pursued, that it will be consummated.
Business Strategy
Our goal is to be the preferred offshore drilling contractor for the oil and gas industry based upon the following
overriding 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 through a diverse and technically advanced fleet operated by competent
personnel.
Our business strategy also focuses on the following:
the active expansion of our worldwide deepwater and high-specification jackup capabilities through
construction, modifications and acquisitions;
•
• divestitures of our standard specification drilling units; and
•
the deployment of our drilling assets in important oil and gas producing areas throughout the world.
We have actively expanded our offshore deepwater drilling and high specification jackup capabilities in recent
years through the construction and acquisition of rigs. As part of this technical and operational expansion, we plan to
continue pursuing opportunities to upgrade our fleet to achieve greater technological capability, which we believe will lead
to increased drilling efficiencies and the ability to complete the increasingly more complex programs required by our
customers. During 2013, we continued to execute our newbuild program, completing the following milestones:
• we commenced operations on the Noble Don Taylor, a dynamically positioned, ultra-deepwater, harsh
environment drillship, under a long-term contract in the U.S. Gulf of Mexico in the third quarter of 2013;
• we commenced operations on the Noble Globetrotter II, a dynamically positioned, ultra-deepwater, harsh
environment Globetrotter-class drillship, under a long-term contract in West Africa in the third quarter of 2013;
• we commenced operations on the Noble Mick O’Brien, a high-specification, heavy duty, harsh environment
jackup, under a 150-day contract in the Middle East in the fourth quarter of 2013;
• we commenced operations on the Noble Bob Douglas, a dynamically positioned, ultra-deepwater, harsh
environment drillship, under a three-year contract in the fourth quarter of 2013. The rig is currently performing
a 120-day assignment in New Zealand, after which it will mobilize and operate in the U.S. Gulf of Mexico for
the remainder of its contract;
• we completed construction of the Noble Regina Allen, a high-specification, heavy duty, harsh environment
jackup, which left the shipyard during the fourth quarter of 2013 and began operations under an 18-month
contract in the North Sea in January 2014;
• we continued construction of two additional dynamically positioned, ultra-deepwater, harsh environment
drillships at Hyundai Heavy Industries Co. Ltd.;
• we continued construction of four high-specification, heavy duty, harsh environment jackups; and
• we began construction of one ultra-high specification jackup.
Subsequent to December 31, 2013, the newbuild jackup, Noble Houston Colbert, was delivered from the
shipyard. This unit underwent contract-related winterization upgrades, and is currently mobilizing and undergoing final
commissioning and customer acceptance testing before commencing its contract in Argentina.
Demand for our services is a function of the worldwide supply of mobile offshore drilling units. In recent years,
there has been a significant expansion of industry supply of both jackups and ultra-deepwater units, many of which are
currently under construction without a contract. The introduction of non-contracted newbuild rigs into the marketplace will
increase the supply of rigs which compete for drilling service contracts, and could negatively impact the dayrates we are
able to achieve. Our historical strategy on newbuild construction has typically 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, in response to the addition of a significant number of new,
technologically advanced units in the global fleet, changes in customer requirements and preferences and our strong
3
backlog, we have determined that in order to maintain long-term competitiveness, it is both necessary and desirable for us
to engage in building high specification jackups and floating units on a speculative basis. While our current newbuild
program, which dates back to 2011 and includes four drillships and six jackups, was initiated without long-term drilling
contracts, of the units we currently have under construction, only two of the heavy-duty, harsh environment jackups are
currently being constructed without customer contracts. We will continue our efforts to secure contracts for these units, and
believe that we will have these rigs contracted prior to their shipyard completion. Depending on market conditions, we may
continue to conduct new speculative building in the future.
In previous years, the drilling industry has experienced significant increases in dayrates for drilling services in
most markets, coupled with higher demand for drilling equipment and shortages of personnel. This environment drove
operating costs higher and magnified the importance of recruiting, training and retaining skilled personnel.
In recognition of the importance of our offshore operations personnel in achieving a safety record that has
historically outperformed the offshore drilling industry sector and to retain such personnel, we have implemented a number
of key personnel retention programs. We believe these programs are necessary to complement our other short and long-
term incentive programs to attract and retain the skilled personnel we need to maintain a safe and efficient operating
environment.
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);
• 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 our customers in certain long-term contracts.
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 without requiring an early termination payment to
us. Our drilling contracts with Petróleos Mexicanos (“Pemex”) in Mexico, for example, allow early cancellation with 30
days 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 assume these costs, our
operating margins are reduced accordingly. For shorter moves, such as “field moves,” our customers have generally agreed
to assume the costs of moving the unit in the form of a reduced dayrate or “move rate” while the unit is being moved.
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 over 97 percent of our operating
revenues for the years ended December 31, 2013, 2012 and 2011. We conduct our contract drilling operations principally in
4
the United States, Mexico, Brazil, the North Sea, the Mediterranean, West Africa, the Middle East, India, Asia and
Australia. Revenues from Royal Dutch Shell, PLC (“Shell”) and its affiliates accounted for approximately 41 percent, 32
percent and 24 percent of our total operating revenues in 2013, 2012 and 2011, respectively. Revenues from Petróleo
Brasileiro S.A. (“Petrobras”) accounted for approximately 12 percent, 14 percent and 18 percent of our total operating
revenues in 2013, 2012 and 2011, respectively. Revenues from Pemex accounted for approximately 15 percent of our total
operating revenues in 2011. Pemex did not account for more than 10 percent of our total operating revenues in either 2013
or 2012. No other single customer accounted for more than 10 percent of our total operating revenues in 2013, 2012 or
2011.
Labor Contracts
We perform services for drilling and workover activities covering one platform with two drilling units off the
east coast of Canada; this contract extends through July 2018. We do not own or lease these platforms. Under our labor
contracts, we provide the personnel necessary to manage and perform the drilling operations from a drilling platform owned
by the operator.
During 2011, we commenced a refurbishment project with our customer, Shell, for one of its rigs. Under the
contract, we provided the management and oversight of the project, as well as the personnel necessary to complete the
refurbishment. During 2012, the construction phase of the project was completed and the rig began operating off the coast
of Alaska. In 2013, in connection with Shell’s delay of the Alaskan Arctic drilling project, our contract was terminated. As
with the Canadian labor contract noted above, we provided labor personnel and management services on the project but did
not own or lease the related rig.
Competition
The offshore contract drilling industry is a highly competitive and cyclical business characterized by high
capital and maintenance costs. We compete with other providers of offshore drilling rigs. Some of our competitors may
have access to greater financial resources than we do.
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, 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 have historically occurred. We cannot assure that any such shortages experienced in the past will 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. Our 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 likely will continue to do so.
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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 countries in whose waters
we operate from time to time regulate the discharge of oil and other contaminants in connection with drilling operations.
Failure to comply with these laws and regulations, or failure 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 by regulatory activity 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.
The following is a summary of some of the existing laws and regulations that apply to certain key jurisdictions,
which serves as an example of the various laws and regulations to which we are subject. While laws vary widely in each
jurisdiction, each of the laws and regulations below addresses environmental issues similar to those in most of the other
jurisdictions in which we operate.
Spills and Releases. The Comprehensive Environmental Response, Compensation, and Liability Act
(“CERCLA”), and similar 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 to date not received any
notification that we are, or may be, potentially responsible for cleanup costs under CERCLA.
Offshore Regulation. The U.S. government has indicated that before any recipient of a deepwater drilling
permit may commence drilling, (i) the operator must demonstrate that containment resources are available promptly in the
event of a deepwater blowout, (ii) the chief executive officer of the 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
(“BOEM”) and the Bureau of Safety and Environmental Enforcement (“BSEE”) will conduct inspections of such deepwater
drilling operation for compliance with the applicable regulations. We cannot predict when the applicable government
agency will determine that any deepwater driller is in compliance with the new regulations. Third party challenges to
industry operations in the U.S. Gulf of Mexico may also serve to further delay or restrict activities. Further, in 2010 and
2011, the BSEE and its predecessor agency issued initial regulations on the design and operation of well control and other
equipment at offshore production sites, implementation of safety and environmental management systems (“SEMS”), and
mandatory third-party compliance audits. On August 22, 2012, BSEE published a final rule amending the regulations
regarding design and operation of well control and other equipment. In addition, BSEE issued revised regulations in 2013
to require, among other things, increased employee involvement in certain safety measures and third-party audits of
operators’ SEMS. BSEE has also proposed stricter requirements for subsea drilling production equipment and has indicated
that there will be an additional, separate rulemaking to govern the design, performance and maintenance of blowout
preventers but that rule has not yet been published. BSEE has also published a draft statement of policy on safety culture
with nine proposed characteristics of a robust safety culture. Finally, together with BOEM, BSEE is drafting new standards
governing drilling in the Arctic. If the new regulations, policies, operating procedures and possibility of increased legal
liability are viewed by our current or future customers as a significant impairment to expected profitability on projects, then
they could discontinue or curtail their offshore operations, thereby adversely affecting our operations by limiting drilling
opportunities or imposing materially increased costs.
The Oil Pollution Act. The U.S. Oil Pollution Act of 1990 (“OPA”) and similar regulations, including but not
limited to the International Convention for the Prevention of Pollution from Ships (“MARPOL”), adopted by the
International Maritime Organization (“IMO”), as enforced in the United States through domestic implementing called the
Act to Prevent Pollution from Ships, impose certain operational requirements on offshore rigs operating in the U.S. 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
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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 permit holder 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 similar 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 as 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, a petition is currently before the EPA to revoke the oil
and natural gas exploration and production exemption. Any repeal or modification of this or similar exemption in similar
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.
Water Discharges. The U.S. Federal Water Pollution Control Act of 1972, as amended, also known as the
“Clean Water Act,” and similar 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. In addition, the U.S. Coast Guard has promulgated requirements for ballast water management as well as
supplemental ballast water requirements, which include limits applicable to specific discharge streams, such as deck runoff,
bilge water and gray 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. In general, we believe that compliance with the Clean Air Act and similar state laws and regulations will not
have a material impact on our operations or financial condition.
Climate Change. There is increasing attention concerning the issue of climate change and the effect of
greenhouse gas (“GHG”) emissions. In December 2009, the EPA determined that current and projected concentrations of
six key GHG’s in the atmosphere threaten public health and welfare. The EPA subsequently finalized GHG standards for
motor vehicles, the effect of which could reduce demand for motor fuels refined from crude oil, and a final rule to address
permitting of GHG emissions from stationary sources under the Clean Air Act’s Prevention of Significant Deterioration
(“PSD”) and Title V permitting programs, which require the use of “best available control technology” for GHG emissions
from new and modified major stationary sources, which can sometimes include drillships. EPA regulations known as the
“Tailoring Rule” also require the PSD program to address GHG emissions from relatively smaller stationary sources in the
future. The EPA has also adopted rules requiring the monitoring and reporting of GHG emissions from specified sources in
the United States, including, among other things, certain onshore and offshore oil and natural gas production facilities, on
an annual basis. Facilities containing petroleum and natural gas systems that emit 25,000 metric tons or more of CO2
equivalent per year are now required to report annual GHG emissions to the EPA.
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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 countries that had ratified it. Recent international discussions in advance of the United Nations
Climate Change Conference in Paris in 2015 are exploring options to replace the Kyoto Protocol. While it is not possible at
this time to predict how new treaties and 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.
On June 10, 2013, the European Union adopted a new directive, Directive 2013/30/EU, on the safety of
offshore oil and gas operations within the exclusive economic zone (which can extend up to 200 nautical miles from a
coast) or the continental shelf of any of its member states. The directive establishes minimum requirements for preventing
major accidents in offshore oil and gas operations, and aims to limit the consequences of such accidents. All European
Union member states will be required to adopt national legislation or regulations by July 19, 2015 to implement the new
directive’s requirements, which also include reporting requirements related to major safety and environmental hazards that
must be satisfied before drilling can take place, as well as the use of “all suitable measures” to both prevent major accidents
and limit the human health and environmental consequences of such a major accident should one occur. We believe that our
operations are in substantial compliance with the requirements of the directive (as well as the extensive current health and
safety regimes implemented in the member states in which we operate), but future developments could require the company
to incur significant costs to comply with its implementation.
Countries in the European Union implement the U.N.’s Kyoto Protocol on GHG emissions through the
Emissions Trading System (“ETS”), though ETS will continue to require GHG reductions in the future that are not
currently prescribed by the Kyoto Protocol or related agreements. The ETS program establishes a GHG “cap and trade”
system for certain industry sectors, including power generation at some offshore facilities. Total GHG from these sectors is
capped, and the cap is reduced over time to achieve a 21% GHG reduction from these sectors between 2005 and 2020.
More generally, the EU Commission has proposed a roadmap for reducing emissions by 80% by 2050 compared to 1990
levels. Some EU member states have enacted additional and more long-term legally binding targets. For example, the U.K.
has committed to reduce greenhouse gas emissions by 80% by 2050. These reduction targets may also be affected by future
negotiations under the United Nations Framework Convention on Climate Change and its Kyoto Protocol.
Entities operating under the cap must either reduce their GHG emissions, purchase tradable emissions
allowances, or EUAs, from other program participants, or purchase international GHG offset credits generated under the
Kyoto Protocol’s Clean Development Mechanisms or Joint Implementation. As the cap declines, prices for emissions
allowances or GHG offset credits may rise. However, due to the over-allocation of EUAs by EU member states in earlier
phases and the impact of the recession in the EU, there has been a general over-supply of EUAs. The EU has recently
approved amending legislation to withhold the auction of EUAs in a process known as “backloading.” EU proposals for
wider structural reform of the EU ETS may follow the enactment of the backloading proposal. Both backloading and wider
structural reforms are aimed at reviving the EU carbon price.
In addition, the U.K. government, which implements ETS in the U.K. North Sea, has introduced a carbon price
floor mechanism to place an incrementally increasing minimum price on carbon. Thus, the cost of compliance with ETS
can be expected to increase over time. Additional member state climate change legislation may result in potentially material
capital expenditures.
We have determined that combustion of diesel fuel (Scope 1) aboard all of our vessels worldwide is the
primary source of greenhouse gas emissions, including carbon dioxide, methane and nitrous oxide. The data necessary to
report indirect emissions from generation of purchased power (Scope 2) has not been previously collected. We will
establish the necessary procedures to collect and report Scope 2 data in 2014.
For the year ended December 31, 2013, our estimated carbon dioxide equivalent (“CO2e”) gas emissions were
792,783 tonnes as compared to 722,155 tonnes for the year ended December 31, 2012 due to fleet expansion. When
expressed as an intensity measure of tonnes of C02e gas emissions per dollar of contract drilling revenues, both the 2012
and 2013 intensity measure was .0002.
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Our Scope 1 CO2e gas emissions reporting has been prepared with reference to the requirements set out in the
UK Companies Act 2006 Regulations 2013, the Environmental Reporting Guidelines (June 2013) issued by the Department
for Environment Food & Rural Affairs, the World Resources Institute and World Business Council for Sustainable
Development GHG Protocol Corporate Accounting and Reporting Standard Revised and the International Organization for
Standardization (“ISO”) 14064-1, “Specification with guidance at the organizational level for quantification and reporting
of greenhouse gas emissions and removals (2006).” We have used SANGEA™ Emissions Estimation Software to estimate
CO2e gas of Scope 1 emissions based on diesel fuel consumption.
It is our intent to have the procedures related to greenhouse gas emissions independently assured in the future.
Safety. The U.S. Occupational Safety and Health Act (“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 similar 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.
International Regulatory Regime. IMO provides international regulations governing shipping and international
maritime trade. IMO regulations have been widely adopted by U.N. member countries, and in some jurisdictions in which
we operate, these regulations have been expanded upon. The requirements contained in the International Management Code
for the Safe Operation of Ships and for Pollution Prevention, or ISM Code, promulgated by the IMO, govern much of our
drilling operations. Among other requirements, the ISM Code requires the party with operational control of a vessel to
develop an extensive safety management system that includes, among other things, the adoption of a safety and
environmental protection policy setting forth instructions and procedures for operating its vessels safely and describing
procedures for responding to emergencies.
The IMO has also adopted MARPOL, including Annex VI to MARPOL which sets limits on sulfur dioxide and
nitrogen oxide emissions from ship exhausts and prohibits deliberate emissions of ozone depleting substances. Annex VI,
which applies to all ships, fixed and floating drilling rigs and other floating platforms, imposes a global cap on the sulfur
content of fuel oil and allows for specialized areas to be established internationally with even more stringent controls on
sulfur emissions. For vessels 400 gross tons and greater, platforms and drilling rigs, Annex VI imposes various survey and
certification requirements. Moreover, 2008 amendments to Annex VI require the imposition of progressively stricter
limitations on sulfur emissions from ships. These limitations require that fuels of vessels in covered Emission Control
Areas, or ECAs, contain no more than 1% sulfur. The North American ECA became effective in August 2012, capping the
sulfur limit in marine fuel at 1%, which has been the capped amount for the North Sea and Baltic Sea ECAs since July 1,
2010. The North Sea ECA encompasses all of the North Sea and the full length of the English Channel. These capped
amounts are to decrease progressively until they reach 0.5% by January 1, 2020 for non-ECA areas and 0.1% by January 1,
2015 for ECA areas, including the North American ECA. The amendments also establish new tiers of stringent nitrogen
oxide emissions standards for new marine engines, depending on their date of installation.
The IMO has negotiated international conventions that impose liability for oil pollution in international waters
and the territorial waters of the signatory to such conventions such as the Ballast Water Management Convention, or BWM
Convention. The BWM Convention’s implementing regulations call for a phased introduction of mandatory ballast water
exchange requirements (beginning in 2009), to be replaced in time with a requirement for mandatory ballast water
treatment. The BWM Convention will not become effective until 12 months after it has been adopted by 30 states, the
combined merchant fleets of which represent not less than 35% of the gross tonnage of the world’s merchant shipping.
Though this has not occurred to date, the IMO has passed a resolution encouraging the ratification of the BWM Convention
and calling upon those countries that have already ratified to encourage the installation of ballast water management
systems on new ships. Under the requirements of the BWM Convention for rigs with ballast water capacity of more than
5000 cubic meters that were constructed in 2011 or before, ballast water management exchange or treatment will be
accepted until 2016. From 2016 (or not later than the first intermediate or renewal survey after 2016), only ballast water
treatment will be accepted by the BWM Convention. All of our drilling rigs are in substantial compliance with the proposed
terms of the BWM Convention.
The IMO has also adopted the International Convention for Civil Liability for Bunker Oil Pollution Damage of
2001, or Bunker Convention. The Bunker Convention provides a liability, compensation and compulsory insurance system
for the victims of oil pollution damage caused by spills of bunker oil. Under the Bunker Convention, ship owners must pay
compensation for pollution damage (including the cost of preventive measures) caused in the territory, including the
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territorial sea of a State Party, as well as its exclusive economic zone or equivalent area. Registered owners of any seagoing
vessel and seaborne craft over 1,000 gross tons, of any type whatsoever, and registered in a State Party, or entering or
leaving a port in the territory of a State Party, must maintain insurance which meets the requirements of the Bunker
Convention and to obtain a certificate issued by a State Party attesting that such insurance is in force. The State issued
certificate must be carried on board at all times. We believe that all of our drilling rigs are currently compliant in all
material respects with these regulations.
On July 15, 2011, the IMO approved mandatory measures to reduce emissions of greenhouse gases from
international shipping. The amendments to MARPOL Annex VI Regulations for the prevention of air pollution from ships
add a new Chapter 4 on energy efficiency requiring compliance with the Energy Efficiency Design Index, or EEDI, for new
ships, and the Ship Energy Efficiency Management Plan, or SEEMP, for all ships. Other amendments to Annex VI add new
definitions and requirements for survey and certification, including the format for the International Energy Efficiency
Certificate. The regulations apply to all ships of 400 gross tonnage and above and entered into force on January 1, 2013.
These new rules will likely affect the operations of vessels that are registered in countries that are signatories to MARPOL
Annex VI or vessels that call upon ports located within such countries. The implementation of the EEDI and SEEMP
standards could cause us to incur additional compliance costs. The IMO is also considering the development of market-
based mechanisms to reduce greenhouse gas emissions from ships.
The IMO continues to review and introduce new regulations. It is impossible to predict what additional
regulations, if any, may be passed by the IMO and what effect, if any, such regulation may have on our operations.
Insurance and Indemnification Matters
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 sea conditions. These
hazards could cause personal injury or loss of life, loss of revenues, pollution and other environmental damage, damage to
or destruction of property and equipment and oil and natural gas producing formations, and could result in claims by
employees, customers or third parties.
Our drilling contracts provide for varying levels of indemnification from our customers and in most cases also
require us to indemnify our customers for certain losses. Under our drilling contracts, liability with respect to personnel and
property is typically assigned on a “knock-for-knock” basis, which means that we and our customers assume liability for
our respective personnel and property, irrespective of the fault or negligence of the party indemnified. In addition, our
customers may indemnify us in certain instances for damage to our down-hole equipment and, in some cases, our subsea
equipment.
Our customers typically assume responsibility for and indemnify us from loss or liability resulting from
pollution or contamination, including third-party damages and clean-up and removal, arising from operations under the
contract and originating below the surface of the water. We are generally responsible for pollution originating above the
surface of the water and emanating from our drilling units. Additionally, our customers typically indemnify us for liabilities
incurred as a result of a blow-out or cratering of the well and underground reservoir loss or damage.
In addition to the contractual indemnities described above, we also carry Protection and Indemnity (“P&I”)
insurance, which is a comprehensive general liability insurance program covering liability resulting from offshore
operations. Our P&I insurance includes coverage for liability resulting from personal injury or death of third parties and our
offshore employees, third party property damage, pollution, spill clean-up and containment and removal of wrecks or
debris. Our insurance policy does not exclude losses resulting from our gross negligence or willful misconduct. Our P&I
insurance program is renewed in March of each year and currently has a standard deductible of $10 million per occurrence,
with maximum liability coverage of $750 million.
Our insurance policies and contractual rights to indemnity may not adequately cover our losses and liabilities in
all cases. For additional information, please read “We may have difficulty obtaining or maintaining insurance in the future
and our insurance coverage and contractual indemnity rights may not protect us against all of the risks and hazards we face”
included in Part I, Item 1A, “Risk Factors,” of this Annual Report on Form 10-K.
The above description of our insurance program and the indemnification provisions of our drilling contracts is
only a summary as of the time of preparation of this report, and is general in nature. Our insurance program and the terms
of our drilling contracts may change in the future. In addition, the indemnification provisions of our drilling contracts may
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be subject to differing interpretations, and enforcement of those provisions may be limited by public policy and other
considerations.
Employees
At December 31, 2013, we had approximately 6,000 employees, excluding approximately 2,400 persons
engaged through labor contractors or agencies. Approximately 83 percent of our employees are located offshore. Of our
shorebased employees, approximately 71 percent are male. We are not a party to any material collective bargaining
agreements, and we consider our employee relations to be satisfactory.
We place considerable value on the involvement of our employees and maintain a practice of keeping them
informed on matters affecting them, as well as on the performance of the Company. Accordingly, we conduct formal and
informal meetings with employees, maintain a Company intranet website with matters of interest, issue a quarterly
publication of Company activities and other matters of interest, and offer a variety of in-house training.
We are committed to a policy of recruitment and promotion on the basis of aptitude and ability without
discrimination of any kind. Management actively pursues both the employment of disabled persons whenever a suitable
vacancy arises and the continued employment and retraining of employees who become disabled while employed by the
company. Training and development is undertaken for all employees, including disabled persons.
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 “Part II Item 8. Financial Statements and Supplementary Data,
Note 17 — Segment and Related Information.”
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 “Part II Item 8. Financial Statements and Supplementary
Data, Note 17 — Segment and Related Information.”
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 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’s 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 or waivers of compliance) at our website. Among the documents you can find there are the
following:
• Corporate Governance Guidelines;
• Audit Committee Charter;
• Nominating and Corporate Governance Committee Charter;
• Health, Safety, Environment and Engineering 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.
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Risk Factors Relating to Our Business
Our business depends on the level of activity in the oil and gas industry. Adverse developments affecting the
industry, including a decline in oil or gas prices, reduced demand for oil and gas products and increased regulation of
drilling and production, could have a material adverse effect on our business, financial condition and results of
operations.
Demand for drilling services depends on a variety of economic and political factors and the level of activity in
offshore oil and gas exploration and development and production markets worldwide. Commodity prices, and market
expectations of potential changes in these prices, may significantly affect this level of activity, as well as dayrates for our
services. However, higher prices do not necessarily translate into increased drilling activity because our clients’
expectations of future commodity prices typically drive demand for our rigs. Oil and gas prices and the level of activity in
offshore oil and gas exploration and development are extremely volatile and are affected by numerous factors beyond our
control, including:
the cost of exploring for, developing, producing and delivering oil and gas;
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• potential acceleration in the development, and the price and availability, of alternative fuels;
•
increased supply of oil and gas resulting from growing onshore hydraulic fracturing activity and shale
development;
• worldwide production and demand for oil and gas, which are impacted by changes in the rate of economic
growth in the global economy;
• worldwide financial instability or recessions;
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•
•
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regulatory restrictions or any moratorium on offshore drilling;
expectations regarding future energy prices;
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;
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• oil refining capacity;
•
the ability of oil and gas companies to raise capital;
• worldwide instability in the financial and credit sectors and a reduction in the availability of liquidity and
•
credit;
advances in exploration, development and production technology;
technical advances affecting energy consumption;
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• merger and divestiture activity among oil and gas producers;
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•
•
•
•
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•
•
the availability of, and access to, suitable locations from which our customers can produce hydrocarbons;
rough seas and adverse weather conditions, including hurricanes and typhoons;
tax laws, regulations and policies;
laws and regulations related to environmental 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;
the ability of the Organization of Petroleum Exporting Countries, or OPEC, to set and maintain production
levels and pricing;
the level of production in non-OPEC countries; and
the laws and regulations of governments regarding exploration and development of their oil and gas reserves or
speculation regarding future laws or regulations.
12
Adverse developments affecting the industry as a result of one or more of these factors, including a decline in
oil or gas prices, a global recession, reduced demand for oil and gas products and increased regulation of drilling and
production, particularly if several developments were to occur in a short period of time as in 2008 and 2009, could have a
material adverse effect on our business, financial condition and results of operations.
The contract drilling industry is a highly competitive and cyclical business with intense price competition. If
we are unable 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 operating costs and evolving capability of newer rigs. 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. Our future success
and profitability will partly depend upon our ability to keep pace with our customers’ demands with respect to these factors.
If current competitors or new market entrants implement new technical capabilities, services or standards that are more
attractive to our customers, it could have an adverse effect on our operations.
In addition to intense 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 low demand or excess rig supply intensify the competition in the industry and may result in some of our rigs
being idle or earning substantially lower dayrates for long periods of time.
An over-supply of jackup rigs may lead to a reduction in dayrates and demand for our rigs and therefore
may materially impact our profitability.
During the recent period of high utilization and high dayrates, industry participants have increased the supply
of drilling rigs by building new drilling rigs, including some drilling rigs that have not yet entered service. Historically, this
has often resulted in an oversupply of drilling rigs, which has contributed to a decline in utilization and dayrates, sometimes
for extended periods of time.
The increase in supply created by the number and types 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. To the extent that the drilling rigs currently under construction or on order have not been contracted for future
work, there may be increased price competition as such vessels become operational, which could lead to a reduction in
dayrates. We are experiencing competition from newbuild rigs that are scheduled to enter the market in 2014 and beyond.
The entry of these rigs into the market may result in lower dayrates for rigs than currently expected. Lower utilization and
dayrates would adversely affect our revenues and profitability. Prolonged periods of low utilization or 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.
Our business involves numerous operating hazards.
Our operations are subject to many hazards inherent in the drilling business, including:
• well blowouts;
•
fires;
collisions or groundings of offshore equipment;
•
• punch-throughs;
• mechanical or technological failures;
failure of our employees to comply with our internal environmental, health and safety guidelines;
•
• pipe or cement failures and casing collapses, which could release oil, gas or drilling fluids;
• geological formations with abnormal pressures;
spillage handling and disposing of materials; and
adverse weather conditions, including hurricanes, typhoons, winter storms and rough seas.
•
•
13
These hazards could cause personal injury or loss of life, suspend drilling operations, result in regulatory
investigation or penalties, seriously damage or destroy property and equipment, result in claims by employees, customers or
third parties, cause environmental damage and cause substantial damage to oil and 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. The occurrence of any of the hazards we face
could have a material adverse effect on our business, financial condition and results of operations.
On Friday, February 28, 2014, the Noble Paul Wolff, a dynamically positioned semisubmersible rig operating
off the coast of Brazil, experienced a ballast control incident. While the event did not result in any reported pollution or
injury, we will incur costs to resolve it and we have stopped operations on the rig until we can resume them safely. Because
the incident occurred so recently and is ongoing, we cannot at this time determine the final effects of the incident.
We may not be able to renew or replace expiring contracts or obtain contracts for our uncontracted
newbuilds.
We have a number of customer contracts that will expire in 2014 and 2015. Our ability to renew these contracts
or obtain new contracts and the terms of any such contracts will depend on market conditions and our customers. Also, of
the units we currently have under construction as part of our newbuild program, two of the heavy-duty, harsh environment
jackups are being constructed without customer contracts. We will attempt to secure contracts for these units prior to their
completion. We may be unable to renew our expiring contracts or obtain new contracts for our newbuilds or 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. We may continue speculative building, even in the absence of contracts for our units already under construction.
Our customers may generally terminate our term drilling contracts if a drilling rig is destroyed or lost or if we
have to suspend drilling operations for a specified period of time as a result of a breakdown of major equipment or, in some
cases, due to other events beyond the control of either party. In the case of nonperformance and under certain other
conditions, our drilling contracts generally allow our customers to terminate without any payment to us. The terms of some
of our drilling contracts permit the customer to terminate the contract after specified notice periods by tendering
contractually specified termination amounts. These termination payments may not fully compensate us for the loss of a
contract. Our drilling contracts with Pemex allow early cancellation with 30 days or less notice to us without any early
termination payment. Petrobras has the right to terminate its contracts in the event of downtime that exceeds certain
thresholds. The early termination of a contract may result in a rig being idle for an extended period of time and a reduction
in our contract backlog and associated revenue, which could have a material adverse effect on our business, financial
condition and results of operations.
In addition, during periods of depressed market conditions, we may be subject to an increased risk of our
customers seeking to repudiate their contracts. Our customers’ ability to perform their obligations under drilling contracts
with us may also be adversely affected by restricted credit markets and economic downturns. If our customers cancel or are
unable to renew some of their contracts and we are unable to secure new contracts on a timely basis and on substantially
similar terms, if contracts are disputed or suspended for an extended period of time or if a number of our contracts are
renegotiated, it could have a material adverse effect on our business, financial condition and results of operations.
We are substantially dependent on several of our customers, including Shell, Petrobras and Freeport-
McMoRan Copper & Gold (“Freeport”), and the loss of these customers could have a material adverse effect on our
financial condition and results of operations.
Any concentration of customers increases the risks associated with any possible termination or nonperformance
of drilling contracts. We estimate Shell, Petrobras and Freeport represented approximately 50 percent, 9 percent and 9
percent, respectively, of our backlog at December 31, 2013 and revenues from Shell and Petrobras accounted for
approximately 41 percent and 12 percent, respectively, of our total operating revenue for the year ended December 31,
2013. For the year ended December 31, 2013, no revenue was recognized related to Freeport. This concentration of
customers increases the risks associated with any possible termination or nonperformance of contracts in addition to our
exposure to credit risk. Our floaters working for Petrobras are under contracts that expire in 2017. Petrobras has announced
a program to construct 29 newbuild floaters, which may reduce or eliminate its need for our rigs. These new drilling units,
if built, would compete with, and could displace, our floaters completing contracts and could materially adversely affect our
utilization rates, particularly in Brazil. If any 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.
14
We are exposed to risks relating to operations in international locations.
We operate in various regions throughout the world that may expose us to political and other uncertainties,
including risks of:
•
seizure, nationalization or expropriation of property or equipment;
• monetary policies, government credit rating downgrades and potential defaults, and foreign currency
•
•
•
•
•
fluctuations and devaluations;
limitations on the ability to repatriate income or capital;
complications associated with repairing and replacing equipment in remote locations;
repudiation, nullification, modification or renegotiation of contracts;
limitations on insurance coverage, such as war risk coverage, in certain areas;
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;
• delays in implementing private commercial arrangements as a result of government oversight;
•
financial or operational difficulties in complying with foreign bureaucratic actions;
changing taxation rules or policies;
other forms of government regulation and economic conditions that are beyond our control and that create
operational uncertainty;
governmental corruption;
•
•
•
• piracy; and
•
terrorist acts, war, revolution and civil disturbances.
Further, we operate in certain less-developed countries with legal systems that are not as mature or predictable
as those in more developed countries, which can lead to greater uncertainty in legal matters and proceedings. Examples of
challenges of operating in these countries include:
•
potential restrictions presented by local content regulations in Nigeria;
• ongoing changes in Brazilian laws related to the importation of rigs and equipment that may impose bonding,
insurance or duty-payment requirements;
• procedural requirements for temporary import permits, which may be difficult to obtain; and
•
the effect of certain temporary import permit regimes, such as in Nigeria, where the duration of the permit does
not coincide with the general term of the drilling contract.
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. For example, in the past, we have experienced delays in Nigeria in
receiving permits to operate as an oil industry service company, licenses to operate our rigs and temporary import permits
for our rigs. For additional information regarding our completed internal investigation of our Nigerian operations and the
status of certain legal actions in Nigeria, see “Part II Item 8. Financial Statements and Supplementary Data, Note 16 —
Commitments and Contingencies.” Changes in, compliance with, or our failure to comply with the laws and regulations of
the countries where we operate may negatively impact our operations in those countries and could have a material adverse
effect on our results of operations.
In addition, other governmental actions, 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.
15
Operating and maintenance costs of our rigs may be significant and may not correspond to revenue earned.
Our operating expenses and maintenance costs depend on a variety of factors including crew costs, costs of
provisions, equipment, insurance, maintenance and repairs, and shipyard costs, many of which are beyond our control. Our
total operating costs are generally related to the number of drilling rigs in operation and the cost level in each country or
region where such drilling rigs are located. Equipment maintenance costs fluctuate depending upon the type of activity that
the drilling rig is performing and the age and condition of the equipment. Operating and maintenance costs will not
necessarily fluctuate in proportion to changes in operating revenues. While operating revenues may fluctuate as a function
of changes in dayrate, costs for operating a rig may not be proportional to the dayrate received and may vary based on a
variety of factors, including the scope and length of required rig preparations and the duration of the contractual period over
which such expenditures are amortized. Any investments in our rigs may not result in an increased dayrate for or income
from such rigs. A disproportionate amount of operating and maintenance costs in comparison to dayrates could have a
material adverse effect on our business, financial condition and results of operations.
The proposed Separation of our standard specification business is contingent upon the satisfaction of a
number of conditions, may require significant time and attention of our management, may not achieve the intended
results, and difficulties in connection with the Separation could have an adverse effect on us.
As previously disclosed, our Board of Directors has approved a plan to reorganize our business by means of a
separation and spin-off of a newly formed subsidiary whose assets would consist of most of our standard specification
drilling units. For more information, please read “Proposed Spin-Off Transaction” in Part I, Item 1 of this Annual Report on
Form 10-K. The Separation, including any related potential IPO of our subsidiary that would own and operate most of our
standard specification business, is contingent upon the final approval of our Board of Directors, the approval of our
shareholders, and other conditions, some of which are beyond our control. We may also choose to abandon the Separation
at any time. For these and other reasons, the Separation may not be completed in the expected timeframe or at all.
Additionally, execution of the proposed Separation will continue to require significant expense, time and attention of our
management. The Separation could distract management from the operation of our business and the execution of our other
strategic initiatives. Our employees may also be uncertain about their future roles within the separate companies pending
the completion of the Separation, which could lead to departures. Further, if the Separation is completed, we may not
realize the benefits we expect to realize. Any such difficulties could have an adverse effect on our business, results of
operations and financial condition. If completed, the Separation may also expose us to certain risks that could have an
adverse effect on our results of operations and financial condition.
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. 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. There is increasing attention in the United States and worldwide concerning
the issue of climate change and the effect of greenhouse gases.
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. 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. 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.
16
In November 2012, the U.S. Coast Guard in Alaska conducted an inspection of our drillship, the Noble
Discoverer, and cited a number of deficiencies that needed to be remediated, including issues relating to the main
propulsion and safety management system. We began an internal investigation in conjunction with the Coast Guard
inspection, and the Coast Guard began its own investigation. We reported certain potential violations of applicable law to
the Coast Guard identified as a result of our internal investigation. These related to what we believe were certain
unauthorized disposals of collected deck and sea water from the Noble Discoverer, collected, treated deck water from the
Kulluk and potential record-keeping issues with the oil record books for the Noble Discoverer, Kulluk and other rigs, and
with the garbage log for the Kulluk. The Coast Guard referred the Noble Discoverer and Kulluk matters to the U.S.
Department of Justice (“DOJ”) for further investigation. For additional information regarding these actions relating to the
Alaska investigation, see “Part II, Item 8. Financial Statements and Supplementary Data, Note 16— Commitments and
Contingencies.”
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 multiple new construction and conversion projects underway and we may undertake
additional projects in the future. In addition, we make significant upgrade, refurbishment and repair expenditures to our
fleet from time to time, particularly as our rigs become older. Some of these expenditures are unplanned. Our customers
may also require certain shipyard reliability upgrade projects for our drillships. 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;
inadequate regulatory support infrastructure in the local jurisdiction;
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 availability, 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.
The failure to complete a rig repair, upgrade, refurbishment or new construction on time, or at all, or the
inability to complete a rig conversion or new construction in accordance with its design specifications, may 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 repair, 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. If we experience substantial delays and cost overruns in our shipyard projects, it
could have a material adverse effect on our business, financial condition and results of operations.
17
We can provide no assurance that our current backlog of contract drilling revenue will be ultimately
realized.
Generally, contract backlog only includes future revenues under firm commitments; however, from time to
time, we may report anticipated commitments for which definitive agreements have not yet been, but are expected to be,
executed. In addition, we may not receive some or all of the bonuses that we include in our backlog. We can provide no
assurance that we will be able to perform under these contracts due to events beyond our control or that we will be able to
ultimately execute a definitive agreement in cases where one does not currently exist. Moreover, we can provide no
assurance that our customers will be able to or willing to fulfill their contractual commitments to us. Our inability to
perform under our contractual obligations or to execute definitive agreements or our customers’ inability or unwillingness
to fulfill their contractual commitments to us may have a material adverse effect on our business, financial condition and
results of operations.
Any violation of anti-bribery or anti-corruption laws, including the Foreign Corrupt Practices Act, the
United Kingdom Bribery Act, or similar laws and regulations could result in significant expenses, divert management
attention, and otherwise have a negative impact on us.
We operate in countries known to have a reputation for corruption. We are subject 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, or FCPA, the United Kingdom
Bribery Act 2010, or U.K. Bribery Act, and similar laws in other countries.
In 2007, we began, and voluntarily contacted the SEC and the U.S. Department of Justice, or DOJ, to advise
them of, an internal investigation of the legality under the FCPA and local laws of certain reimbursement payments made
by our Nigerian affiliate to our customs agents in Nigeria. In 2010, we finalized settlements of this matter and paid fines
and penalties to the DOJ and the SEC. Any violation of the FCPA, the U.K. Bribery Act 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.
Changes in, compliance with, or our failure to comply with the certain laws and regulations may negatively
impact our operations and could have a material adverse effect on our results of operations.
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 rigs;
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.
Legal and regulatory proceedings relating to the energy industry, and the complex government regulations to
which our business is subject, have at times adversely affected our business and may do so in the future. Governmental
actions and initiatives by OPEC may continue to cause oil price volatility. In some areas of the world, this 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.
Public and regulatory scrutiny of the energy industry has resulted in increased regulations being either
proposed or implemented. In addition, existing regulations might be revised or reinterpreted, new laws, regulations and
permitting requirements might be adopted or become applicable to us, our rigs, our customers, our vendors or our service
providers, and future changes in laws and regulations could significantly increase our costs and could have a material
adverse effect on our business, financial condition and results of operations. In addition, we may be required to post
18
additional surety bonds to secure performance, tax, customs and other obligations relating to our rigs in jurisdictions where
bonding requirements are already in effect and in other jurisdictions where we may operate in the future. These
requirements would increase the cost of operating in these countries, which could materially adversely affect our business,
financial condition and results of operations.
Adverse effects may continue as a result of the uncertainty of ongoing inquiries, investigations and court
proceedings, or additional inquiries and proceedings by federal or state regulatory agencies or private plaintiffs. In addition,
we cannot predict the outcome of any of these inquiries or whether these inquiries will lead to additional legal proceedings
against us, civil or criminal fines or penalties, or other regulatory action, including legislation or increased permitting
requirements. Legal proceedings or other matters against us, including environmental matters, suits, regulatory appeals,
challenges to our permits by citizen groups and similar matters, might result in adverse decisions against us. The result of
such adverse decisions, either individually or in the aggregate, could be material and may not be covered fully or at all by
insurance.
Possible changes in tax laws could affect us and our shareholders.
We operate through various subsidiaries in numerous countries throughout the world. Consequently, we are
subject to changes in tax laws, treaties or regulations or the interpretation or enforcement thereof in the United Kingdom,
the U.S. or jurisdictions in which we or any of our subsidiaries operate or are incorporated. For example, recently proposed
legislation in the U.K. could restrict deductions on certain related party transactions and, if enacted, could result in a higher
effective tax rate on our operations on the U.K. continental shelf. Changes in existing or new tax laws or regulations may
increase our cost of operating in certain countries.
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. 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 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, resulting in 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 United
Kingdom, the U.S. or other jurisdictions in which our shareholders are resident. Any such changes could result in increased
taxes for our shareholders and affect the trading price of our shares.
Operational interruptions or maintenance or repair work may cause our customers to suspend or reduce
payment of dayrates until operation of the respective drilling rig is resumed, which may lead to loss of revenue or
termination or renegotiation of the drilling contract.
If our drilling rigs are idle for reasons that are not related to the ability of the rig to operate, our customers are
entitled to pay a waiting, or standby, rate lower than the full operational rate. In addition, if our drilling rigs are taken out of
service for maintenance and repair for a period of time exceeding the scheduled maintenance periods set forth in our
drilling contracts, we will not be entitled to payment of dayrates until the rig is able to work. Several factors could cause
operational interruptions, including:
breakdowns of equipment and other unforeseen engineering problems;
•
• work stoppages, including labor strikes;
shortages of material and skilled labor;
•
• delays in repairs by suppliers;
surveys by government and maritime authorities;
•
• periodic classification surveys;
inability to obtain permits;
severe weather, strong ocean currents or harsh operating conditions; and
force majeure events.
•
•
•
19
If the interruption of operations were to exceed a determined period due to an event of force majeure, our
customers have the right to pay a rate that is significantly lower than the waiting rate for a period of time, and, thereafter,
may terminate the drilling contracts related to the subject rig. Suspension of drilling contract payments, prolonged payment
of reduced rates or termination of any drilling contract as a result of an interruption of operations as described herein could
materially adversely affect our business, financial condition and results of operations.
As a result of our significant cash flow needs, we may be required to incur additional indebtedness, and in
the event of lost market access, may have to delay or cancel discretionary capital expenditures.
Our currently anticipated cash flow needs, both in the short-term and long-term, may include the following:
committed capital expenditures, including expenditures for newbuild projects currently underway;
•
• normal recurring operating expenses;
discretionary capital expenditures, including various capital upgrades;
•
• payments of dividends; and
repayment of maturing debt.
•
In order to fund our capital expenditures, we may need funding beyond the amount available to us from cash
generated by our operations, cash on hand and borrowings under our existing bank credit facilities and commercial paper
program. We may raise such additional capital in a number of ways, including accessing capital markets, obtaining
additional lines of credit or disposing of assets. However, we can provide no assurance that any of these options will be
available to us on terms acceptable to us or at all.
Our debt instruments could limit our operations and our debt level may limit our flexibility to obtain financing
and pursue business opportunities. Our ability to obtain financing or to access the capital markets may be limited by our
financial condition at the time of any such financing and the covenants in our existing debt agreements, as well as by
adverse market conditions resulting from, among other things, general economic conditions and uncertainties that are
beyond our control. Even if we are successful in obtaining additional capital through debt financings, incurring additional
indebtedness may significantly increase our interest expense and may reduce our flexibility to respond to changing business
and economic conditions or to fund working capital needs, because we will require additional funds to service our
outstanding indebtedness.
We may delay or cancel discretionary capital expenditures, which could have certain adverse consequences
including delaying upgrades or equipment purchases that could make the affected rigs less competitive, adversely affect
customer relationships and negatively impact our ability to contract such rigs.
We may have difficulty obtaining or maintaining insurance in the future and our insurance coverage and
contractual indemnity rights may not protect us against all of the risks and hazards we face.
We do not procure insurance coverage for all of the potential risks and hazards we may face. Furthermore, no
assurance can be given that we will be able to obtain insurance against all of the risks and hazards we face or that we will
be able to obtain or maintain adequate insurance at rates and with deductibles or retention amounts that we consider
commercially reasonable.
Our insurance carriers may interpret our insurance policies such that they do not cover losses for which we
make claims. Our insurance policies may also have exclusions of coverage for some losses. Uninsured exposures may
include expatriate activities prohibited by U.S. laws, radiation hazards, certain loss or damage to property onboard our rigs
and losses relating to shore-based terrorist acts or strikes. Furthermore, the damage sustained to offshore oil and gas assets
as a result of hurricanes in recent years has negatively impacted the energy insurance market, resulting in more restrictive
and expensive coverage for U.S. named windstorm perils. Accordingly, we have elected to significantly reduce the named
windstorm insurance on our rigs operating in the U.S. Gulf of Mexico. Presently, we insure the Noble Jim Thompson, Noble
Amos Runner and Noble Driller for “total loss only” when caused by a named windstorm. For the Noble Bully I, our
customer assumes the risk of loss due to a named windstorm event, pursuant to the terms of the drilling contract, through
the purchase of insurance coverage (provided that we are responsible for any deductible under such policy) or, at its option,
the assumption of the risk of loss up to the insured value in lieu of the purchase of such insurance. The remaining rigs in the
U.S. Gulf of Mexico are self-insured for named windstorm perils. Our remaining rigs, including those in the Mexico
portion of the Gulf of Mexico, continue to be covered by commercial insurance for windstorm damage. If one or more
20
future significant weather-related events occur in the Gulf of Mexico, or in any other geographic area in which we operate,
we may experience increases in insurance costs, additional coverage restrictions or unavailability of certain insurance
products.
Under our drilling contracts, liability with respect to personnel and property is customarily assigned on a
“knock-for-knock” basis, which means that we and our customers assume liability for our respective personnel and
property, irrespective of the fault or negligence of the party indemnified. Although our drilling contracts generally provide
for indemnification from our customers for certain liabilities, including liabilities resulting from pollution or contamination
originating below the surface of the water, enforcement of these contractual rights to indemnity may be limited by public
policy and other considerations and, in any event, may not adequately cover our losses from such incidents. There can also
be no assurance that those parties with contractual obligations to indemnify us will necessarily be in a financial position to
do so.
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 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 business, financial condition and results of operations.
A loss of a major tax dispute or a successful tax challenge to our operating structure, intercompany pricing
policies or the taxable presence of our subsidiaries in certain countries could result in a higher tax rate on our
worldwide earnings, which could result in a material adverse effect on our financial condition.
Income tax returns that we file will be subject to review and examination. We will not recognize the benefit of
income tax positions we believe are more likely than not to be disallowed upon challenge by a tax authority. If any tax
authority successfully challenges our operational structure, intercompany pricing policies or the taxable presence of our
subsidiaries in certain countries, if the terms of certain income tax treaties are interpreted in a manner that is adverse to our
structure, or if we lose a material tax dispute in any country, our effective tax rate on our worldwide earnings could increase
substantially and result in a material adverse effect on our financial condition.
We may record losses or impairment charges related to sold or idle rigs.
Prolonged periods of low utilization or low dayrates, the cold stacking of idle assets, the sale of assets below
their then carrying value or the decline in market value of our assets may cause us to experience losses. These events could
result in the recognition of impairment charges on our fleet, as we have previously recorded on our submersibles, 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 or if we sell assets at below their then carrying value.
Our operations are subject to numerous laws and regulations relating to the protection of the environment
and of human health and safety, and compliance with these laws and regulations could impose significant costs and
liabilities that exceed our current expectations.
Substantial costs, liabilities, delays and other significant issues could arise from environmental, health and
safety laws and regulations covering our operations, and we may incur substantial costs and liabilities in maintaining
compliance with such laws and regulations. Our operations are subject to extensive international conventions and treaties,
and national or federal, state and local laws and regulations, governing environmental protection, including with respect to
the discharge of materials into the environment and the security of chemical and industrial facilities. These laws govern a
wide range of environmental issues, including:
•
•
•
•
the release of oil, drilling fluids, natural gas or other materials into the environment;
air emissions from our drilling rigs or our facilities;
handling, cleanup and remediation of solid and hazardous wastes at our drilling rigs or our facilities or at
locations to which we have sent wastes for disposal;
restrictions on chemicals and other hazardous substances; and
• wildlife protection, including regulations that ensure our activities do not jeopardize endangered or threatened
animals, fish and plant species, nor destroy or modify the critical habitat of such species.
21
Various governmental authorities have the power to enforce compliance with these laws and regulations and
the permits issued under them, oftentimes requiring difficult and costly actions. Failure to comply with these laws,
regulations and permits, or the release of oil or other materials into the environment, may result in the assessment of
administrative, civil and criminal penalties, the imposition of remedial obligations, the imposition of stricter conditions on
or revocation of permits, the issuance of moratoria or injunctions limiting or preventing some or all of our operations,
delays in granting permits and cancellation of leases, or could affect our relationship with certain consumers.
There is an inherent risk of the incurrence of environmental costs and liabilities in our business, some of which
may be material, due to the handling of our customers’ hydrocarbon products as they are gathered, transported, processed
and stored, air emissions related to our operations, historical industry operations, and water and waste disposal practices.
Joint, several or strict liability may be incurred without regard to fault under certain environmental laws and regulations for
the remediation of contaminated areas and in connection with past, present or future spills or releases of natural gas, oil and
wastes on, under, or from past, present or future facilities. Private parties may have the right to pursue legal actions to
enforce compliance as well as to seek damages for non-compliance with environmental laws and regulations or for personal
injury or property damage arising from our operations. In addition, increasingly strict laws, regulations and enforcement
policies could materially increase our compliance costs and the cost of any remediation that may become necessary. Our
insurance may not cover all environmental risks and costs or may not provide sufficient coverage if an environmental claim
is made against us.
Our business may be adversely affected by increased costs due to stricter pollution control equipment
requirements or liabilities resulting from non-compliance with required operating or other regulatory permits. Also, we
might not be able to obtain or maintain from time to time all required environmental regulatory approvals for our
operations. If there is a delay in obtaining any required environmental regulatory approvals, or if we fail to obtain and
comply with them, the operation or construction of our facilities could be prevented or become subject to additional costs.
In addition, the steps we could be required to take to bring certain facilities into regulatory compliance could be
prohibitively expensive, and we might be required to shut down, divest or alter the operation of those facilities, which
might cause us to incur losses.
We make assumptions and develop expectations about possible expenditures related to environmental
conditions based on current laws and regulations and current interpretations of those laws and regulations. If the
interpretation of laws or regulations, or the laws and regulations themselves, change, our assumptions may change, and new
capital costs may be incurred to comply with such changes. In addition, new environmental laws and regulations might
adversely affect our operations, as well as waste management and air emissions. For instance, governmental agencies could
impose additional safety requirements, which could affect our profitability. Further, new environmental laws and
regulations might adversely affect our customers, which in turn could affect our profitability.
Finally, although some of our drilling rigs will be separately owned by our subsidiaries, under certain
circumstances a parent company and all of the unit-owning affiliates in a group under common control engaged in a joint
venture could be held liable for damages or debts owed by one of the affiliates, including liabilities for oil spills under
environmental laws. Therefore, it is possible that we could be subject to liability upon a judgment against us or any one of
our subsidiaries.
Failure to attract and retain skilled personnel or an increase in personnel costs could adversely affect our
operations.
We require 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.
Any failure to comply with the complex laws and regulations governing international trade could adversely
affect our operations.
The shipment of goods, services and technology across international borders subjects our business to extensive
trade laws and regulations. Import activities are governed by unique customs laws and regulations in each of the countries
of operation. Moreover, many countries, including the United States, control the export and re-export of certain goods,
services and technology and impose related export recordkeeping and reporting obligations. Governments also may impose
economic sanctions against certain countries, persons and other entities that may restrict or prohibit transactions involving
22
such countries, persons and entities. U.S. sanctions, in particular, are targeted against certain countries that are heavily
involved in the petroleum and petrochemical industries, which includes drilling activities.
The laws and regulations concerning import activity, export recordkeeping and reporting, export control and
economic sanctions are complex and constantly changing. These laws and regulations may be enacted, amended, enforced
or interpreted in a manner materially impacting our operations. Shipments can be delayed and denied export or entry for a
variety of reasons, some of which are outside our control and some of which may result from failure to comply with
existing legal and regulatory regimes. Shipping delays or denials could cause unscheduled operational downtime. Any
failure to comply with applicable legal and regulatory trading obligations could also result in criminal and civil penalties
and sanctions, such as fines, imprisonment, debarment from government contracts, seizure of shipments and loss of import
and export privileges.
Currently, we do not, nor do we intend to, operate in countries that are subject to significant sanctions and
embargoes imposed by the U.S. government or identified by the U.S. government as state sponsors of terrorism, such as
Cuba, Iran, Sudan and Syria. The U.S. sanctions and embargo laws and regulations vary in their application, as they do not
all apply to the same covered persons or proscribe the same activities, and such sanctions and embargo laws and regulations
may be amended or strengthened over time. Although we believe that we will be in compliance with all applicable
sanctions and embargo laws and regulations at the closing of this offering, and intend to maintain such compliance, there
can be no assurance that we will be in compliance in the future, particularly as the scope of certain laws may be unclear and
may be subject to changing interpretations. Any such violation could result in fines or other penalties and could result in
some investors deciding, or being required, to divest their interest, or not to invest, in us. In addition, certain institutional
investors may have investment policies or restrictions that prevent them from holding securities of companies that have
contracts with countries identified by the U.S. government as state sponsors of terrorism. In addition, our reputation and the
market for our securities may be adversely affected if we engage in certain other activities, such as entering into drilling
contracts with individuals or entities in countries subject to significant U.S. sanctions and embargo laws that are not
controlled by the governments of those countries, or engaging in operations associated with those countries pursuant to
contracts with third parties that are unrelated to those countries or entities controlled by their governments.
Our operations present hazards and risks that require significant and continuous oversight, and we depend
upon the security and reliability of our technologies, systems and networks in numerous locations where we conduct
business.
Our floaters and high-specification units utilize certain technologies that make us vulnerable to cyber-attacks
that we may not be able to adequately protect against. These cyber security risks could disrupt certain of our operations for
an extended period of time and result in the loss of critical data and in higher costs to correct and remedy the effects of such
incidents. If our systems for protecting against information technology and cyber security risks prove to be insufficient, we
could be materially adversely affected by having our business and financial systems compromised, our proprietary
information altered, lost or stolen, or our business operations and safety procedures disrupted.
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.
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.
We are a holding company, and we are dependent upon cash flow from subsidiaries to meet our obligations.
We currently conduct our operations through both U.S. and foreign subsidiaries, and our operating income and
cash flow are generated by our subsidiaries. As a result, cash we obtain from our subsidiaries is the principal source of
23
funds necessary to meet our debt service obligations. Contractual provisions or laws, as well as our subsidiaries’ financial
condition and operating requirements, may limit our ability to obtain cash from our subsidiaries that we require to pay our
debt service obligations. Applicable tax laws may also subject such payments to us by our subsidiaries to further taxation.
The inability of our subsidiaries to transfer cash to us may mean that, even though we may have sufficient
resources on a consolidated basis to meet our obligations, we may not be permitted to make the necessary transfers from
subsidiaries to us in order to provide funds for the payment of our obligations.
Forward-Looking Statements
This Annual 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 contract backlog, fleet status, our
financial position, business strategy, timing or results of acquisitions or dispositions, a potential Separation, including any
related potential IPO, of our standard specification business (including form, timing and fleet composition), repayment of
debt, borrowings under our credit facilities or other instruments, completion, delivery dates and acceptance of our newbuild
rigs, future capital expenditures, contract commitments, dayrates, contract commencements, extension or renewals, contract
tenders, the outcome of any dispute, litigation, audit or investigation, plans and objectives of management for future
operations, foreign currency requirements, results of joint ventures, indemnity and other contract claims, construction and
upgrade of rigs, industry conditions, access to financing, impact of competition, governmental regulations and permitting,
availability of labor, worldwide economic conditions, taxes and tax rates, indebtedness covenant compliance, dividends and
distributable reserves, and timing for compliance with any new regulations 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 be correct. 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.
Drilling Fleet
Properties.
Our drilling fleet is composed of the following types of units: semisubmersibles, drillships and jackups. 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 the environment of the intended
drilling location, whether the drilling is being done over a platform or other structure, and the intended well depth.
24
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 in order to
improve stability. 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. 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.
•
•
•
The semisubmersible fleet consists of 14 units, including:
five Noble EVA-4000™ semisubmersibles;
three Friede & Goldman 9500 Enhanced Pacesetter semisubmersibles;
two Pentagone 85 semisubmersibles;
two Bingo 9000 design unit semisubmersibles;
•
• one Aker H-3 Twin Hull S1289 Column semisubmersible; and
•
one Offshore Co. SCP III Mark 2 semisubmersible.
Drillships
Our drillships are self-propelled vessels. These units maintain their position over the well through the use of
either a fixed mooring system or a computer-controlled dynamic positioning system. Our drillships are capable of drilling
in water depths up to 12,000 feet.
•
•
•
•
The drillship fleet consists of 14 units, including:
three dynamically positioned Gusto Engineering Pelican Class drillships;
two dynamically positioned, ultra-deepwater, harsh environment drillships;
two dynamically positioned, ultra-deepwater, harsh environment drillships currently under construction, the
first of which is estimated to be delivered from the shipyard in the second quarter of 2014;
two dynamically positioned Bully-class drillships operated by us through a 50 percent joint venture with a
subsidiary of Shell;
two dynamically positioned Globetrotter-class drillships;
•
• one conventionally moored Sonat Discoverer Class drillship capable of drilling in Arctic environments;
• one dynamically positioned NAM Nedlloyd-C drillship; and
one conventionally moored conversion class drillship.
•
Jackups
We currently have 49 jackups in our fleet, including four 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 in
water depths up to 492 feet.
25
Offshore Fleet Table
The following table sets forth certain information concerning our offshore fleet at February 13, 2014. 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.
Make
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—DP
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—14
Noble Bob Douglas ........................................................... Hyundai Gusto P 10000
Noble Bully I (3)(5) .............................................................. GustoMSC Bully PRD 12000
Noble Bully II (3)(5) ............................................................ GustoMSC Bully PRD 12000
Noble Discoverer (3) ........................................................... Sonat Discoverer Class
Noble Don Taylor (3) ......................................................... Hyundai Gusto P 10000
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 Sam Croft (3) ........................................................... Hyundai Gusto P 10000
Noble Tom Madden (3) ...................................................... Hyundai Gusto P 10000
Independent Leg Cantilevered Jackups—49
(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
Year Built
or Rebuilt (1)
1999 R/2008 M
2007 R/M
2009 R
2009 R
2007 R
2004 R
2010 R
1999 R/2006 M
2003 R
1999 R
1998 R/2007 M
2006 R
2004 R
2000 R
2013 N
2011 N
2011 N
2009 R
2013 N
2012 R
2011 N
2013 N
2012 R
1997 R
2009 R
2013 R
2014 N
2014 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
Water
Depth
Rating
(feet)
8,000
10,000
12,000
10,000
5,000
7,200
12,000
6,000
4,000
7,000
6,000
9,200
4,000
1,500
12,000
8,200
8,200
1,000
12,000
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
See footnotes on the following page.
26
Drilling
Depth
Capacity
(feet)
Location
Status (2)
32,500 U.S. Gulf of Mexico Active
35,000 Australia
Active
35,000 U.S. Gulf of Mexico Active
35,000 Brazil
Active
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 Stacked
30,000 Brazil
Active
32,500 Malta
Active
30,000 Brazil
Active
25,000 Brazil
Active
25,000 U.K.
Active
India
40,000 New Zealand
Active
40,000 U.S. Gulf of Mexico Active
40,000 Brazil
Active
20,000 South Korea
Active
40,000 U.S. Gulf of Mexico Active
25,000
Active
30,000 U.S. Gulf of Mexico Active
30,000 Benin
Active
20,000 Brazil
Active
20,000 U.S. Gulf of Mexico Stacked
25,000 Brazil
Active
25,000 Brazil
Active
40,000 South Korea
Shipyard
40,000 South Korea
Shipyard
20,000 U.A.E.
30,000 U.K.
25,000 U.A.E.
25,000 Mexico
30,000 U.K.
20,000 Mexico
20,000 Saudi Arabia
25,000 U.A.E.
20,000 Qatar
25,000 Oman
20,000 U.A.E.
20,000 Cameroon
20,000 Mexico
25,000
20,000 Cameroon
25,000 Mexico
25,000 Saudi Arabia
25,000 Mexico
25,000 Malaysia
25,000 Germany
30,000 Qatar
30,000 U.K
India
Active
Active
Active
Active
Active
Active
Active
Active
Active
Active
Active
Stacked
Active
Active
Active
Active
Active
Active
Active
Active
Active
Active
Name
Independent Leg Cantilevered Jackups—49 (Continued from previous page)
Make
Noble Harvey Duhaney .................................................................. Levingston Class 111-C
Noble Houston Colbert (3) .............................................................. F&G JU-3000N
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 Lloyd Noble ......................................................................... MLT Class 82-SD-C
Noble Lynda Bossler (3) ................................................................. MSC/CJ-46
Noble Mick O’Brien (3) .................................................................. F&G JU-3000N
Noble Percy Johns .......................................................................... F&G L-780 MOD II
Noble Piet van Ede (3) .................................................................... MSC/CJ-46
Noble Regina Allen (3) ................................................................... F&G JU-3000N
Noble Roger Lewis ......................................................................... F&G JU-2000E
Noble Ronald Hoope (3) ................................................................. MSC/CJ-46
Noble Roy Butler ........................................................................... F&G L-780 MOD II
Noble Roy Rhodes ......................................................................... MLT Class 116-C
Noble Sam Hartley (3) ..................................................................... F&G JU-3000N
Noble Sam Noble ........................................................................... Levingston Class 111-C
Noble Sam Turner (3) ..................................................................... F&G JU-3000N
Noble Scott Marks (3) ...................................................................... F&G JU-2000E
Noble Tom Jobe ............................................................................. MLT Class 82-SD-C
Noble Tom Prosser (3) .................................................................... F&G JU-3000N
Noble Tommy Craighead ............................................................... F&G L-780 MOD II
Noble Newbuild Jackup #7 (3) ........................................................ Gusto MSC CJ70-x 150-ST
FPSO- 1
Seillean ........................................................................................... Harland & Wolf Shipbuilding
Water
Depth
Rating
(feet)
Drilling
Depth
Capacity
(feet)
Year Built
or Rebuilt (1)
Location
Status (2)
2001 R
2013 N
2002 R
2004 R
1995 R
1993 R
2001 R
1998 R
1998 R
1990 R
1982
2013 N
1995 R
1982
2013 N
2007
1982
1998 R
2009 R
2014 N
1982
2014 N
2009 N
1982
2014 N
2003 R
2016 N
300
400
300
300
300
300
390
300
390
250
250
400
300
250
400
400
250
300
300
400
300
400
400
250
400
300
492
25,000 Qatar
30,000 Singapore
25,000 Qatar
25,000 Saudi Arabia
25,000 Mexico
25,000 Mexico
25,000 U.K.
25,000
India
25,000 Mexico
20,000 Cameroon
25,000 The Netherlands
30,000 U.A.E.
25,000 Cameroon
25,000 The Netherlands
30,000 The Netherlands
30,000 Saudi Arabia
25,000 The Netherlands
25,000 Mexico
25,000 U.A.E.
30,000 Singapore
25,000 Mexico
30,000 Singapore
30,000 Saudi Arabia
25,000 Mexico
30,000 Singapore
25,000 Benin
32,000 Singapore
Active
Shipyard
Active
Active
Active
Active
Active
Active
Active
Active
Active
Active
Active
Active
Active
Active
Active
Active
Active
Shipyard
Active
Shipyard
Active
Active
Shipyard
Active
Shipyard
2008 R
N/A
N/A U.S. Gulf of Mexico Stacked
Footnotes to Drilling Fleet Table
1.
2.
3.
4.
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.
Rigs listed as “active” were either operating under contract 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.
Harsh environment capability.
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. We own and operate the Noble Bully I and Noble Bully II through joint ventures with a subsidiary of Shell. Under the
terms of the joint venture agreements, each party has an equal 50 percent ownership stake in both vessels.
Facilities
Our corporate headquarters is located in London, England. We also maintain office space in Sugar Land,
Texas, where significant worldwide global support activity occurs. In addition, we own and lease administrative and
marketing offices, and sites used primarily for storage and maintenance and repairs for drilling rigs and equipment in
various locations worldwide.
Item 3.
Legal Proceedings.
Information regarding legal proceedings is set forth in Note 16 to our consolidated financial statements
included in Item 8 of this Annual Report on Form 10-K.
27
Item 4.
Mine Safety Disclosures.
Not applicable.
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-UK 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:
2013
Fourth quarter .......................................................................... $
Third quarter ............................................................................
Second quarter .........................................................................
First quarter ..............................................................................
2012
Fourth quarter .......................................................................... $
Third quarter ............................................................................
Second quarter .........................................................................
First quarter ..............................................................................
High
Low
40.41
41.14
42.26
41.42
39.81
38.60
38.82
41.25
$
$
36.11
37.04
34.67
34.84
33.51
32.21
29.13
30.29
$
$
Dividends
Declared and
Paid
0.25
0.25
0.13
0.13
0.13
0.13
0.14
0.14
The declaration and payment of dividends or returns of capital require authorization of the shareholders of
Noble-UK. 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, 2014, there were 254,138,833 shares outstanding held by 581 shareholder accounts of record.
UK Tax Consequences to Shareholders of Noble-UK
The tax consequences discussed below do not reflect 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.
UK Income Tax on Dividends and Similar Distributions
A non-UK tax resident holder will not be subject to UK 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 the UK by such non-UK holder.
Disposition of Noble-UK Shares
Shareholders who are neither UK tax resident nor holding their Noble-UK shares in connection with a trade
carried on through a permanent establishment in the UK will not be subject to any UK taxes on chargeable gains as a result
of any disposals of their shares. Noble-UK shares held outside the facilities of The Depository Trust Company (“DTC”)
should be treated as UK situs assets for the purpose of U.K. inheritance tax.
UK Withholding Tax—Dividends to Shareholders
Payments of dividends by Noble-UK will not be subject to any withholding in respect of UK taxation,
regardless of the tax residence of the recipient shareholder.
28
Stamp Duty and Stamp Duty Reserve Tax in Relation to the Transfer of Shares
Stamp duty and/or stamp duty reserve tax (“SDRT”) are imposed by the UK on certain transfers of chargeable
securities (which include shares in companies incorporated in the UK) at a rate of 0.5 percent of the consideration paid for
the transfers in question. Certain transfers of shares to depositaries or into clearance systems are charged at a higher rate of
1.5 percent. Her Majesty’s Revenue and Customs (“HMRC”) regard DTC as a clearance system for these purposes.
Transfers of the Ordinary Shares through the facilities of DTC will not attract a charge to stamp duty or SDRT
in the UK. Any transfer of title to Ordinary Shares from within those facilities to a holder outside those facilities, and any
subsequent transfers that occur entirely outside those facilities, will ordinarily attract stamp duty or SDRT at a rate of 0.5
percent. This duty must be paid (and, where relevant, the transfer document stamped by HMRC) before the transfer can be
registered in the books of Noble-UK. However, if those Ordinary Shares of Noble-UK are redeposited into the facilities of
DTC, that redeposit will attract stamp duty or SDRT at the rate of 1.5 percent.
Share Repurchases
Under UK law, the company is only permitted to purchase its own shares by way of an “off market purchase”
in a plan approved by shareholders. Prior to our redomiciliation to the UK, a resolution was adopted authorizing the
repurchase of 6,769,891 shares during the five-year period commencing on the date of the redomiciliation. This number of
shares corresponds to the number of shares that Noble-Swiss had authority to repurchase at the time of the
redomiciliation. The company may only fund the purchase of its own shares out of distributable reserves or the proceeds of
a new issue of shares made expressly for that purpose. The company currently has adequate distributable reserves to fund
its currently approved repurchase plan. If any premium above the nominal value of the purchased shares is paid, it must be
paid out of distributable reserves. Any shares purchased by the company out of distributable reserves may be held as
treasury shares. The following table sets forth for the periods indicated certain information with respect to repurchases by
Noble-UK of its shares:
Period
October 2013 ....................................................
November 2013 ................................................
December 2013 ................................................
Total Number
of Shares
Purchased (2)
Average
Price Paid
per Share
384 $
2,043 $
— $
38.10
39.33
—
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) Our repurchase program has no date of expiration.
(2) Amounts represent shares surrendered by employees for withholding taxes payable upon the vesting of restricted
stock or exercise of stock options.
29
Stock Performance Graph
This graph shows the cumulative total shareholder return of our shares over the five-year period from
January 1, 2009 to December 31, 2013. 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, 2009 and that all dividends or distributions and returns of capital were
reinvested on the date of payment.
INDEXED RETURNS
Year Ended December 31,
Company Name / Index
Noble Corporation .................................................................................. $ 185.26 $ 167.38 $ 143.67 $ 168.06 $ 184.54
228.19
S&P 500 Index ........................................................................................
237.25
Dow Jones U.S. Oil Equipment & Services ............................................
126.46
165.15
145.51
210.29
172.37
184.76
148.59
184.16
2012
2011
2013
2009
2010
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.
30
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, 2013, 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.
Year Ended December 31,
2013
2012
2011
2010
2009
(In thousands, except per share amounts)
Statement of Income Data
Operating revenues ............................................................ $ 4,234,290 $ 3,547,012 $ 2,695,832 $ 2,807,176 $ 3,640,784
1,678,642
370,898
522,344
782,697
773,429
Net income attributable to Noble Corporation .........
Net income per share:
Basic ...............................................................
Diluted ............................................................
3.05
3.05
2.05
2.05
1.46
1.46
3.03
3.02
6.44
6.42
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 ..............................................................
14,558,090
16,217,957
5,556,251
5,556,251
9,050,028
13,025,972
14,607,774
4,634,375
4,634,375
8,488,290
12,130,345
13,495,159
4,071,964
4,071,964
8,097,852
337,871 $ 735,493
6,815,637
8,396,896
750,946
750,946
6,788,432
10,213,158
11,302,387
2,686,484
2,766,697
7,287,634
114,458 $
282,092 $
239,196 $
Other Data
Net cash from operating activities ............................ $ 1,702,317 $ 1,381,693 $
Net cash from investing activities ............................
Net cash from financing activities ............................
Capital expenditures .................................................
Working capital(2) .....................................................
Cash distributions declared per share(3).....................
(2,485,107)
615,156
2,487,520
339,020
0.76
(1,790,888)
452,091
1,669,811
393,876
0.54
740,240 $ 1,636,902 $ 2,131,267
(1,489,610)
(419,475)
1,426,049
1,049,243
0.18
(2,521,546) (2,896,469)
861,945
1,682,631
1,406,010
2,621,235
110,347
232,432
0.88
0.60
(1) Consists of Long-Term Debt and Current Maturities of Long-Term Debt.
(2) Working capital is calculated as current assets less current liabilities.
(3) Amounts in 2010 include a special dividend of approximately $0.56.
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, 2013
and 2012, and our results of operations for each of the years in the three-year period ended December 31, 2013. You should
read the accompanying consolidated financial statements and related notes in conjunction with this discussion.
Executive Overview
Our 2013 financial and operating results include:
operating revenues totaling $4.2 billion;
•
• net income of $783 million or $3.05 per diluted share;
•
•
net cash from operating activities totaling $1.7 billion; and
an increase in debt to 38.0 percent of total capitalization at the end of 2013, up from 35.3 percent
at the end of 2012, primarily from the funding of our capital expenditure program.
Overall, the business environment for offshore drillers in 2013 was positive. The price of Brent Crude, a key
factor in determining customer activity levels, remained generally steady throughout the year, ending slightly higher than it
began. Drilling activity was steady during most of 2013, particularly for ultra-deepwater and jackup rigs. Nevertheless, as
the year progressed, we observed a number of factors that have led to a decrease in contracting activity, especially for ultra-
deepwater and deepwater rigs. These factors include a projected decrease in the rate of global exploration and development
spending increases relative to previous years, a significant number of newbuild units announced which is expected to
increase the supply of both floating and jackup rigs and a reduction of deepwater drilling activity in some regions, including
Brazil. However, while we believe the short-term outlook may have some downside risks, we have confidence in the long-
31
term outlook for the industry as we witnessed positive developments, including the energy reform legislation in Mexico
which could potentially lead to an increase in drilling activity in Mexican waters.
Our business strategy also focuses on the active expansion of our worldwide deepwater and high specification
jackup capabilities through construction, modifications and acquisitions, the deployment of our drilling assets in important
oil and gas producing areas throughout the world and the potential divestiture of our standard specification drilling units.
We have actively expanded our offshore deepwater drilling and high specification jackup capabilities in recent
years through the construction and acquisition of rigs. As part of this technical and operational expansion, we plan to
continue to evaluate opportunities to enhance our fleet to achieve greater technological capability, which we believe will
lead to increased drilling efficiencies and the ability to complete the increasingly more complex programs required by our
customers. During 2013, we continued to execute our newbuild program, completing the following milestones:
• we commenced operations on the Noble Don Taylor, a dynamically positioned, ultra-deepwater, harsh
environment drillship, under a long-term contract in the U.S. Gulf of Mexico in the third quarter of 2013;
• we commenced operations on the Noble Globetrotter II, a dynamically positioned, ultra-deepwater, harsh
environment Globetrotter-class drillship, under a long-term contract in West Africa in the third quarter of 2013;
• we commenced operations on the Noble Mick O’Brien, a high-specification, heavy duty, harsh environment
jackup, under a 150-day contract in the Middle East in the fourth quarter of 2013;
• we commenced operations on the Noble Bob Douglas, a dynamically positioned, ultra-deepwater, harsh
environment drillship, under a three-year contract in the fourth quarter of 2013. The rig is currently performing
a 120-day assignment in New Zealand, after which it will mobilize and operate in the U.S. Gulf of Mexico for
the remainder of its contract;
• we completed construction of the Noble Regina Allen, a high-specification, heavy duty, harsh environment
jackup, which left the shipyard during the fourth quarter of 2013 and began operations under an 18-month
contract in the North Sea in January 2014;
• we continued construction of two additional dynamically positioned, ultra-deepwater, harsh environment
drillships at Hyundai Heavy Industries Co. Ltd.;
• we continued construction of four high-specification, heavy duty, harsh environment jackups; and
• we began construction of one ultra-high specification jackup.
Subsequent to December 31, 2013, the newbuild jackup, Noble Houston Colbert, was delivered from the
shipyard. This unit underwent contract-related winterization upgrades, and is currently mobilizing and undergoing final
commissioning and customer acceptance testing before commencing its contract in Argentina.
While we cannot predict the future level of demand or dayrates 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 that our
newbuild activity will further strengthen our position.
Proposed Spin-off Transaction
In September 2013, we announced that our Board of Directors approved a plan to reorganize our business by
means of a separation and spin-off of a newly formed wholly-owned subsidiary, Paragon Offshore Limited (“Paragon
Offshore”), whose assets and liabilities would consist of most of our standard specification drilling units and related assets,
liabilities and business (the “Separation”), resulting in the creation of two separate and highly focused offshore drilling
companies. The drilling units to be owned and operated by Paragon Offshore consist of five drillships, three
semisubmersibles and 34 jackups. Paragon Offshore would also be responsible for the Hibernia platform operations
offshore Canada and one FPSO. Following the Separation, we will continue to own and operate our high-specification
assets with particular operating focus in deepwater and ultra-deepwater markets for drillships and semisubmersibles and
harsh environment and high-specification markets for jackups.
The plan involves the separation of the standard specification business through the distribution of the shares of
Paragon Offshore to Noble-UK shareholders in a spin-off that would be tax-free to shareholders. Subject to business,
market, regulatory and other considerations, the Separation may be preceded by IPO of up to 20 percent of the shares of
Paragon Offshore. The Separation is subject to several conditions, including final approval by our Board of Directors and
approval by our shareholders, which we anticipate seeking in the second quarter of 2014. We have received a private letter
32
ruling from the U.S. Internal Revenue Service stating that the Separation is expected to qualify as a tax-free transaction
under sections 368(a)(1)(D) and 355, and related provisions, of the Internal Revenue Code of 1986, as amended. We
anticipate that the spin-off would be completed by the end of 2014. We expect that Paragon Offshore would use the net
proceeds from borrowings and the IPO, if undertaken, to repay its indebtedness to Noble. We expect that, in turn, Noble
would use such proceeds to repay outstanding third-party debt of Noble-Cayman and its subsidiaries. There can be no
assurance that our proposed plan will lead to an IPO or spin-off of Paragon Offshore or any other transaction, or that if any
transaction is pursued, that it will be consummated.
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, 2013 the amount of our contract drilling services backlog and the percent of available
operating days committed for the periods indicated:
Total
2014
2015
2016
2017
2018-2024
Year Ending December 31,
(In millions)
Contract Drilling Services Backlog
Semisubmersibles/Drillships (1) (5) ......................... $ 11,623 $ 3,042
Jackups (2) .............................................................
1,675
Total (3) .......................................................................... $ 15,378 $ 4,717
3,755
$ 2,756
996
$ 3,752
$ 1,964
417
$ 2,381
$ 1,195
230
$ 1,425
$
$
2,666
437
3,103
Percent of Available Days Committed(4)
Semisubmersibles/Drillships ...............................
Jackups ................................................................
Total ..............................................................................
78%
75%
73%
61%
38%
44%
40%
11%
21%
24%
4%
11%
9%
2%
4%
(1) Our drilling contracts with Petrobras provide an opportunity for us to earn performance bonuses based on downtime
experienced for our rigs operating offshore Brazil. Our backlog includes an amount equal to 50 percent of potential
performance bonuses for such rigs, or $88 million.
The drilling contracts with Shell for the Noble Globetrotter I, Noble Globetrotter II, Noble Jim Thompson, Noble
Clyde Boudreaux, Noble Max Smith, Noble Don Taylor and the Noble Jim Day, provide opportunities for us to earn
performance bonuses based on key performance indicators as defined by the contract. With respect to these contracts,
we have included in our backlog an amount equal to 25 percent of the potential performance bonuses for these rigs.
Our backlog for these rigs includes approximately $187 million attributable to these performance bonuses.
(2) 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, 2013, we had 10 rigs contracted to Pemex in Mexico, and our backlog
includes approximately $472 million related to such contracts.
(3) Some of our drilling contracts provide the customer with certain early termination rights. For example, Petrobras has
the right to terminate its contracts in the event of excessive downtime. While we have exceeded downtime thresholds
in the past on certain rigs contracted with Petrobras, we have not received any notification concerning contract
cancellations nor do we anticipate receiving any such notifications.
(4) Percent of available days committed is calculated by dividing the total number of days our rigs are operating under
contract for such period by the product of the number of our rigs and the number of calendar days in such period.
Percentages take into account additional capacity from the estimated dates of deployment of our newbuild rigs that
are scheduled to commence operations during 2014 through 2016.
(5) Noble and a subsidiary of Shell are involved in joint ventures that own and operate both the Noble Bully I and the
Noble Bully II. Under the terms of the joint venture agreements, each party has an equal 50 percent share in both
vessels. As of December 31, 2013, the combined amount of backlog for these rigs totals $2.0 billion, all of which is
included in our backlog. Noble’s proportional interest in the backlog for these rigs was $1.0 billion.
Our contract drilling services backlog reflects estimated future revenues attributable to both signed drilling
contracts and letters of intent that we expect to realize. 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
33
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
materially 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, achievement of bonuses, 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. Please read Part I, Item 1A, “Risk Factors—We
can provide no assurance that our current backlog of contract drilling revenue will be ultimately realized.”
RESULTS OF OPERATIONS
2013 Compared to 2012
General
Net income attributable to Noble-UK for 2013 was $783 million, or $3.05 per diluted share, on operating
revenues of $4.2 billion, compared to net income for 2012 of $522 million, or $2.05 per diluted share, on operating
revenues of $3.5 billion.
As a result of Noble-UK conducting all of its business through Noble-Cayman and its subsidiaries, the financial
position and results of operations for Noble-Cayman, and the reasons for material changes in the amount of revenue and
expense items between 2013 and 2012, are the same as the information presented below regarding Noble-UK in all material
respects, except operating income for Noble-Cayman for the year ended December 31, 2013 and 2012 was $83 million and
$58 million, respectively, higher than operating income for Noble-UK for the same period. The operating income difference
is primarily a result of executive costs directly attributable to Noble-UK for operations support and stewardship related
services.
Rig Utilization, Operating Days and Average Dayrates
Operating results 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 2013 and 2012 (dollars in thousands):
Average Rig
Utilization (1)
Jackups ...................................
Semisubmersibles ...................
Drillships ................................
Other .......................................
Total .............................
2013
91%
80%
81%
0%
84%
2012
82%
86%
69%
0%
2013
14,187
4,112
2,876
—
78% 21,175
Operating
Days (2)
2012
12,966
4,382
2,023
—
19,371
Average
Dayrates
% Change
2013
9% $ 112,441 $
-6%
42%
2012
96,696
349,205
368,424
279,432
333,788
—
—
9% $ 192,210 $ 172,904
—
% Change
16%
6%
19%
—
11%
(1) We define utilization for a specific period as the total number of days our rigs, including cold stacked rigs, are
operating under contract, divided by the product of the number of our rigs and the number of calendar days in such
period. Information reflects our policy of reporting on the basis of the number of available rigs in our fleet, excluding
newbuild rigs under construction.
Information reflects the number of days that our rigs were operating under contract.
(2)
34
Contract Drilling Services
The following table sets forth the operating results for our contract drilling services segment for 2013 and 2012
(dollars in thousands):
Operating revenues:
Contract drilling services ................................................ $
Reimbursables (1) .............................................................
Other ...............................................................................
$
Operating costs and expenses:
Contract drilling services ................................................ $
Reimbursables (1) .............................................................
Depreciation and amortization ........................................
General and administrative .............................................
Incremental spin-off related costs ...................................
Loss on impairment ........................................................
Gain on disposal of assets, net ........................................
Gain on contract settlements/extinguishments, net .........
Operating income ................................................................... $
2013
2012
$
%
Change
4,070,070 $
109,071
105
4,179,246 $
3,349,362 $
112,956
265
3,462,583 $
720,708
(3,885)
(160)
716,663
2,014,217 $
83,548
865,126
116,334
17,453
43,688
(35,646)
(46,800)
3,057,920
1,121,326 $
1,769,428 $
91,646
745,027
97,967
7,053
12,710
—
(33,255)
2,690,576
772,007 $
244,789
(8,098)
120,099
18,367
10,400
30,978
(35,646)
(13,545)
367,344
349,319
22%
-3%
-60%
21%
14%
-9%
16%
19%
147%
244%
**
41%
14%
45%
(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.
Operating Revenues. Changes in contract drilling services revenues for the current year as compared to the
prior year were driven by increases in both average dayrates and operating days. The 11 percent increase in average
dayrates increased revenues by approximately $409 million while the 9 percent increase in operating days increased
revenues by an additional $312 million.
The increase in contract drilling services revenues relates to our drillships and jackups, which generated
approximately $395 million and $341 million more revenue, respectively, in 2013. These amounts were offset by decreases
in revenues for our semisubmersibles, which declined $15 million from the prior year.
The increase in drillship revenues was driven by a 42 percent increase in operating days and a 19 percent
increase in average dayrates, resulting in a $239 million and a $156 million increase in revenues, respectively, from the
prior year. The increase in both average dayrates and operating days was the result of the timing of contract
commencements of our newbuilds during the period. Additionally, the Noble Leo Segerius and the Noble Duchess operated
during the current year after being off contract for a portion of the prior year. These increases were partially offset by the
Noble Roger Eason, which received a reduced dayrate while it was in the shipyard to undergo its reliability upgrade project.
The 16 percent increase in jackup average dayrates resulted in a $223 million increase in revenues, which was
coupled with a 9 percent increase in jackup operating days, resulting in a $118 million increase in revenues from the prior
year. The increase in average dayrates resulted from improved market conditions in the global shallow water market.
Additionally, revenue of $18 million was recognized in connection with the cancellation of a contract by our customer on
the Noble Houston Colbert. The increase in utilization primarily related to rigs in Mexico, West Africa and the Middle East,
which experienced increased operating days after being uncontracted for portions of the prior year.
The decrease in semisubmersible revenues of $15 million primarily relates to the Noble Paul Romano, which
was off contract during the current year but operated during the prior year, the Noble Homer Ferrington, which was off
contract for a portion of the current year but experienced full utilization during the prior year, and increased downtime on
the Noble Paul Wolff and the Noble Therald Martin during the current year. These decreases were partially offset by
35
favorable dayrate changes on new contracts across the semisubmersible fleet, as well as the Noble Max Smith, which
experienced full utilization during the current year after being off contract during the prior year.
Operating Costs and Expenses. Contract drilling services operating costs and expenses increased $245 million
for the current year as compared to the prior year. A portion of the increase is due to the crew-up and operating expenses
for our newbuild rigs as they commenced operating under contracts, which added approximately $134 million in expense in
the current year. Excluding the additional expenses related to these rigs, our contract drilling costs increased $111 million
in the current year from the prior year. This change was primarily driven by a $61 million increase in rig and operations
support labor due to rigs returning, or preparing to return, to work and salary increases effective in the second and third
quarters of the prior year, a $51 million increase in shorebase support due to increased project-related costs, an $8 million
increase in agency and other miscellaneous expenses and a $2 million increase in insurance costs related to increased
premiums on our policy renewed in March 2013. These increases were partially offset by an $11 million decrease in
maintenance and rig-related expense.
Depreciation and amortization increased $120 million in 2013 over 2012, which is primarily attributable to
newbuild rigs placed in service since the beginning of 2012.
Loss on impairment during the current year primarily relates to a $40 million charge on our FPSO, Noble
Seillean, as a result of our annual impairment test and the current market outlook for this unit. Loss on impairment during
the prior year related to an impairment charge on our submersible fleet, primarily as a result of the declining market for
drilling services for that rig type. During the current year, we recorded an additional impairment charge of approximately
$4 million on our two cold stacked submersible rigs arising from the potential disposition of these assets to an unrelated
third party. In January 2014, we completed the sale of the submersibles for a total sales price of $7 million.
Gain on disposal of assets during the current year was attributable to the sale of the Noble Lewis Dugger to an
unrelated third party in Mexico.
Gain on contract settlements/extinguishments during the current year was primarily attributable to the
settlement of all claims against the former shareholders of FDR Holdings, Ltd., which we acquired in July 2010, relating to
alleged breaches of various representations and warranties contained in the purchase agreement. During the prior year, we
recognized a $28 million gain on the settlement of an action with certain vendors for damages sustained during Hurricane
Ike. Additionally, we recognized a $5 million gain from a claims settlement on the Noble David Tinsley, which had
experienced a “punch-through” while being positioned on location in 2009.
36
Other
The following table sets forth the operating results for our other services for 2013 and 2012 (dollars in
thousands):
2013
2012
$
%
Change
Operating revenues:
Labor contract drilling services ................................................... $
Reimbursables (1) ..........................................................................
$
Operating costs and expenses:
Labor contract drilling services ................................................... $
Reimbursables (1) ..........................................................................
Depreciation and amortization .....................................................
General and administrative ..........................................................
Incremental spin-off related costs ................................................
Loss on impairment .....................................................................
52,241 $
2,803
55,044 $
81,890 $
2,539
84,429 $
(29,649)
264
(29,385)
36,604 $
2,000
14,296
1,663
249
—
54,812
46,752 $
2,450
13,594
2,023
143
7,674
72,636
11,793 $
(10,148)
(450)
702
(360)
106
(7,674)
(17,824)
(11,561)
-36%
10%
-35%
-22%
-18%
5%
-18%
74%
**
-25%
-98%
Operating income ................................................................................ $
232 $
(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.
Operating Revenues and Costs and Expenses. The change in both revenues and expenses for our labor
contract drilling services primarily relates to the cancellation of a project with our customer, Shell, for one of its rigs
operating under a labor contract in Alaska. The project was cancelled on March 31, 2013.
Loss on impairment during the prior year related to an impairment charge on certain corporate assets, as a
result of a declining market for, and the potential disposal of, the assets.
Other Income and Expenses
General and administrative expenses. Overall, general and administrative expenses increased $18 million in
2013 from 2012 primarily as a result of increased legal and tax expenses related to ongoing projects of $9 million, coupled
with increases in employee-related costs of $9 million.
Incremental spin-off related costs. Incremental spin-off related costs increased $11 million in 2013 from 2012
for professional fees and other costs incurred related to the proposed Separation of most of our standard specification assets.
Interest Expense, net of amount capitalized. Interest expense, net of amount capitalized, increased $21 million
in 2013 from 2012. The increase is a result of a reduction in capitalized interest in the current year as compared to the prior
year due primarily to the completion of construction on three of our newbuild drillships and two of our newbuild jackups,
coupled with increased borrowings outstanding under our credit facilities and commercial paper program. During the
current year, we capitalized approximately 52 percent of total interest charges versus approximately 61 percent during the
prior year.
Income Tax Provision. Our income tax provision increased $21 million in 2013 compared to 2012, of which
$13 million is related to the sale of the Noble Lewis Dugger. Excluding the sale of the Noble Lewis Dugger, an $8 million
increase in our income tax provision was driven by higher pre-tax earnings, which resulted in a $58 million increase in
income tax expense. This was partially offset by a lower effective tax rate in the current year as a result of favorable
changes in the geographic mix of pre-tax earnings and the recognition of certain discrete benefits during the current year.
37
2012 Compared to 2011
General
Net income attributable to Noble-UK for 2012 was $522 million, or $2.05 per diluted share, on operating
revenues of $3.5 billion, compared to net income for 2011 of $371 million, or $1.46 per diluted share, on operating
revenues of $2.7 billion.
As a result of Noble-UK conducting all of its business through Noble-Cayman and its subsidiaries, the financial
position and results of operations for Noble-Cayman, and the reasons for material changes in the amount of revenue and
expense items between 2012 and 2011, are the same as the information presented below regarding Noble-UK in all material
respects, except operating income for Noble-Cayman for the year ended December 31, 2012 and 2011 was $58 million and
$49 million, respectively, higher than operating income for Noble-UK for the same period. The operating income difference
is primarily a result of executive costs directly attributable to Noble-UK for operations support and stewardship related
services.
Rig Utilization, Operating Days and Average Dayrates
Operating results 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 2012 and 2011 (dollars in thousands):
Jackups
Semisubmersibles
Drillships
Other
Total
Average Rig
Utilization (1)
2012
2011
2012
82%
86%
69%
0%
78%
75%
82%
59%
0%
12,966
4,382
2,023
—
72% 19,371
Operating
Days (2)
2011
11,794
4,176
1,284
—
17,254
% Change
10 %
5 %
58 %
—
2012
$ 96,696
349,205
279,432
—
12 % $ 172,904
Average
Dayrates
2011
$ 85,510
296,331
242,019
—
$ 148,185
% Change
13%
18%
15%
—
17%
(1) We define utilization for a specific period as the total number of days our rigs, including cold stacked rigs, are
operating under contract, divided by the product of the number of our rigs and the number of calendar days in such
period. Information reflects our policy of reporting on the basis of the number of available rigs in our fleet, excluding
newbuild rigs under construction.
Information reflects the number of days that our rigs were operating under contract.
(2)
38
Contract Drilling Services
The following table sets forth the operating results for our contract drilling services segment for 2012 and 2011
(dollars in thousands):
2012
2011
$
%
Change
Operating revenues:
Contract drilling services ................................................. $
Reimbursables (1) ..............................................................
Other ................................................................................
$
Operating costs and expenses:
Contract drilling services ................................................. $
Reimbursables (1) ..............................................................
Depreciation and amortization .........................................
General and administrative ..............................................
Incremental spin-off related costs ....................................
Loss on impairment .........................................................
Gain on contract settlements/extinguishments, net ..........
3,349,362 $
112,956
265
3,462,583 $
2,556,758 $
77,278
875
2,634,911 $
792,604
35,678
(610)
827,672
1,769,428 $
91,646
745,027
97,967
7,053
12,710
(33,255)
2,690,576
1,384,200 $
56,589
647,142
90,262
—
—
(21,202)
2,156,991
385,228
35,057
97,885
7,705
7,053
12,710
(12,053)
533,585
294,087
31%
46%
-70%
31%
28%
62%
15%
9%
**
**
57%
25%
62%
Operating income .................................................................... $
772,007 $
477,920 $
(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.
Operating Revenues. Changes in contract drilling services revenues for 2012 as compared to 2011 were driven
by increases in both average dayrates and operating days. The 17 percent increase in average dayrates increased revenues
by approximately $479 million while the 12 percent increase in operating days increased revenues by an additional $314
million.
The increase in contract drilling services revenues relates to our semisubmersibles, drillships and jackups,
which generated approximately $293 million, $255 million and $245 million more revenue, respectively, in 2012.
The 18 percent increase in semisubmersible average dayrates resulted in a $232 million increase in revenues
from 2011 while the increase in operating days of 5 percent resulted in an additional $61 million increase in revenues. The
increase in semisubmersibles revenue is a result of our rigs returning to standard operating dayrates after experiencing
lower standby rates due to drilling restrictions in the U.S. Gulf of Mexico in 2011, as well as the Noble Paul Romano
returning to work after being stacked for most of 2011. The increase in operating days is primarily from the Noble Jim Day,
the Noble Homer Ferrington, the Noble Paul Romano, the Noble Clyde Boudreaux and the Noble Amos Runner, which all
operated during 2012 after being off contract for the majority of 2011.
The increase in drillship revenues was driven by a 58 percent increase in operating days and a 15 percent
increase in average dayrates, resulting in a $179 million and a $76 million increase in revenues, respectively, from 2011.
The increase in both average dayrates and operating days was the result of the Noble Bully I, Noble Bully II and Noble
Globetrotter I, which commenced their contracts with Shell in March 2012, April 2012 and July 2012, respectively. These
increases were partially offset by the Noble Phoenix, which completed its shipyard project and was substituted for the
Noble Muravlenko in Brazil during 2012, and a reduced rate on the Noble Roger Eason while it is in the shipyard to
undergo its reliability upgrade project.
The 13 percent increase in jackup average dayrates resulted in a $145 million increase in revenues, which was
coupled with a 10 percent increase in jackup operating days, resulting in a $100 million increase in revenues from 2011.
The increase in average dayrates resulted from improved market conditions in the global shallow water market throughout
the jackup fleet. The increase in utilization primarily related to rigs in Mexico, West Africa and the Middle East, which
experienced less downtime during 2012.
39
Operating Costs and Expenses. Contract drilling services operating costs and expenses increased $385 million
for 2012 as compared to 2011. A portion of the increase is due to the crew-up and operating expenses for the recently
completed rigs noted above, which have added approximately $139 million in expense in 2012. Excluding the additional
expenses related to these rigs, our contract drilling costs increased $246 million in 2012 from 2011. This change was
primarily driven by a $75 million increase in labor due to rigs returning, or preparing to return, to work and salary increases
effective in the second and third quarters of 2011, a $44 million increase in maintenance and rig-related expense, a $40
million increase in shorebase support due to salary increases in 2012 and increased project-related costs, a $26 million
increase in mobilization due to the amortization of certain rig moves and the demobilization of rigs primarily in Mexico, a
$20 million increase in insurance costs related to increased premiums on our policy renewed in March 2012, a $14 million
increase in rig catering and communications, a $13 million increase in safety, training and regulatory inspections, a $6
million increase in agency and other miscellaneous expenses, a $5 million increase in fuel and transportation costs and a $3
million increase in rotation costs.
Depreciation and amortization increased $98 million in 2012 over 2011, which is primarily attributable to
assets placed in service during 2012, including the Noble Bully I, Noble Bully II and the Noble Globetrotter I.
Loss on impairment during 2012 related to an impairment charge on our submersible fleet, primarily as a result
of the declining market outlook for drilling services for that rig type.
Gain on contract settlements/extinguishments during 2012 related to a $28 million gain on the settlement of an
action with certain vendors for damages sustained during Hurricane Ike. Additionally, we received $5 million from a claims
settlement on the Noble David Tinsley, which had experienced a “punch-through” while being positioned on location in
2009.
Other
The following table sets forth the operating results for our other services for 2012 and 2011 (dollars in
thousands):
Operating revenues:
Labor contract drilling services ..................................................... $
Reimbursables (1) ............................................................................
$
Operating costs and expenses:
Labor contract drilling services ..................................................... $
Reimbursables (1) ............................................................................
Depreciation and amortization .......................................................
General and administrative ............................................................
Incremental spin-off related costs ..................................................
Loss on impairment .......................................................................
Operating income .................................................................................. $
2012
2011
$
%
Change
81,890 $
2,539
84,429 $
59,004 $
1,917
60,921 $
22,886
622
23,508
46,752 $
2,450
13,594
2,023
143
7,674
72,636
11,793 $
33,885 $
1,850
11,498
1,115
—
—
48,348
12,573 $
12,867
600
2,096
908
143
7,674
24,288
(780)
39%
32%
39%
38%
32%
18%
81%
**
**
50%
-6%
(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.
Operating Revenues and Costs and Expenses. The increase in both revenues and expenses for our labor
contract drilling services primarily relates to a project with our customer, Shell, for one of its rigs operating under a labor
contract in Alaska.
Loss on impairment during 2012 related to an impairment charge on certain corporate assets, as a result of a
declining market for, and the potential disposal of, the assets.
40
Other Income and Expenses
General and administrative expenses. Overall, general and administrative expenses increased $9 million in
2012 from 2011 primarily as a result of increased legal and tax expenses related to ongoing projects of $5 million, coupled
with increases in employee-related costs of $4 million.
Incremental spin-off related costs. Incremental spin-off related costs of $7 million in 2012 relate to
professional fees and other costs incurred for the proposed Separation of most of our standard specification assets.
Interest Expense, net of amount capitalized. Interest expense, net of amount capitalized, increased $30 million
in 2012 from 2011. The increase is a result of the $1.2 billion of senior notes issued in February 2012, coupled with lower
capitalized interest due primarily to the completion of construction on three of our newbuild drillships. During 2012, we
capitalized approximately 61 percent of total interest charges versus approximately 69 percent during 2011.
Income Tax Provision. Our income tax provision increased $74 million in 2012 compared to 2011 primarily as
a result of a higher pre-tax earnings and effective tax rate during 2012. Pre-tax earnings increased approximately 61 percent
in 2012 compared to 2011 resulting in a $45 million increase in income tax expense. The higher effective tax rate, which
was 20.9 percent in 2012 compared to 16.7 percent in 2011, contributed to the increase in income tax expense by
approximately $29 million. The increase in the effective tax rate was a result of a change in our geographic mix of our
revenues and the resolution of certain discrete tax items.
LIQUIDITY AND CAPITAL RESOURCES
Overview
Net cash from operating activities in 2013 was $1.7 billion, which compared to $1.4 billion and $740 million in
2012 and 2011, respectively. The increase in net cash from operating activities in 2013 compared to 2012 was primarily
attributable to a significant increase in net income. We had working capital of $339 million and $394 million at
December 31, 2013 and 2012, respectively. Our total debt as a percentage of total debt plus equity increased to 38.0 percent
at December 31, 2013 from 35.3 percent at December 31, 2012 as a result of an increase in commercial paper outstanding
as of December 31, 2013.
Our principal sources of capital in 2013 were cash generated from operating activities noted above and
borrowings through our commercial paper program. Cash generated during the current year was primarily used to fund our
capital expenditure program.
Our currently anticipated cash flow needs, both in the short-term and long-term, may include the following:
committed capital expenditures, including expenditures for newbuild projects currently underway;
•
• normal recurring operating expenses;
discretionary capital expenditures, including various capital upgrades;
•
• payments of dividends; and
repayment of maturing debt.
•
We currently expect to fund these cash flow needs with cash generated by our operations, cash on hand,
borrowings under our existing or future credit facilities and commercial paper program, potential issuances of long-term
debt, or asset sales. However, to adequately cover our expected cash flow needs, we may require capital in excess of the
amount available from these sources, and we may seek additional sources of liquidity and/or delay or cancel certain
discretionary capital expenditures as necessary.
At December 31, 2013, we had a total contract drilling services backlog of approximately $15.4 billion. Our
backlog as of December 31, 2013 reflects a commitment of 73 percent of available days for 2014. See “Contract Drilling
Services Backlog” for additional information regarding our backlog.
Capital Expenditures
Our primary use of available liquidity during 2014 will be for capital expenditures. Capital expenditures,
including capitalized interest, totaled $2.5 billion, $1.7 billion and $2.6 billion for 2013, 2012 and 2011, respectively.
41
At December 31, 2013, we had seven rigs under construction, and capital expenditures, excluding capitalized
interest, for new construction during 2013 totaled $1.5 billion, as follows (in millions):
Rig type/name
Currently under construction
Drillships
Noble Sam Croft ................................................................................... $
Noble Tom Madden ..............................................................................
Jackups ...........................................................................................................
Noble Jackup VII (CJ70-Mariner) ........................................................
Noble Houston Colbert** .....................................................................
Noble Sam Turner .................................................................................
Noble Tom Prosser ................................................................................
Noble Sam Hartley ................................................................................
Recently completed construction projects
Noble Bob Douglas ...............................................................................
Noble Don Taylor ..................................................................................
Noble Mick O’Brien ..............................................................................
Noble Regina Allen ...............................................................................
Noble Globetrotter II ............................................................................
Other .....................................................................................................
Total Newbuild Capital Expenditures ........................................................
$
89.6
71.9
182.1
13.9
6.1
3.8
3.3
403.4
377.8
135.6
125.8
105.4
7.8
1,526.5
** This unit was delivered from the shipyard subsequent to December 31, 2013.
In addition to the newbuild expenditures noted above, capital expenditures during 2013 consisted of the
following:
•
•
$846 million for major projects, subsea related expenditures and upgrades and replacements to drilling
equipment; and
$115 million in capitalized interest.
Our total capital expenditures budget for 2014 is approximately $2.6 billion, which is currently anticipated to
be spent as follows:
•
approximately $1.4 billion in newbuild expenditures; and
• $1.2 billion for major projects, subsea related expenditures and upgrades and replacements to drilling
equipment.
In addition to the amounts noted above, we anticipate incurring capitalized interest, which may fluctuate as a
result of the timing of completion of ongoing projects. In connection with our capital expenditure program, we have entered
into certain commitments, including shipyard and purchase commitments, for approximately $2.0 billion at December 31,
2013, of which we expect to spend approximately $1.6 billion in 2014.
From time to time we consider possible projects that would require expenditures that are not included in our
capital budget, and such unbudgeted expenditures could be significant. In addition, we will continue to evaluate
acquisitions of drilling units from time to time. Other factors that could cause actual capital expenditures to materially
exceed plan include delays and cost overruns in shipyards (including costs attributable to labor shortages), shortages of
equipment, latent damage or deterioration to hull, equipment and machinery in excess of engineering estimates and
assumptions, changes in governmental regulations and requirements and changes in design criteria or specifications during
repair or construction.
Dividends
Our most recent quarterly dividend payment to shareholders, totaling approximately $97 million (or $0.375 per
share), was declared on January 30, 2014 and paid on February 20, 2014 to holders of record on February 10, 2014. This
payment represented the third tranche ($0.25 per share) of our previously approved annual dividend payment to
42
shareholders, and includes an increase of $0.125 per share that was approved by the Board of Directors in January 2014.
Including the increase approved in January 2014, our current dividend is $1.50 per share on an annualized basis.
The declaration and payment of dividends require authorization of the Board of Directors of Noble-UK,
provided that such dividends on issued share capital may be paid only out of Noble-UK’s “distributable reserves” on its
statutory balance sheet. Noble-UK is not permitted to pay dividends out of share capital, which includes share premiums.
The amount of any such dividends will depend on our results of operations, financial condition, cash requirements, future
business prospects, contractual restrictions and other factors deemed relevant by our Board of Directors.
Credit Facilities and Senior Unsecured Notes
Credit Facilities and Commercial Paper Program
We currently have three separate credit facilities with an aggregate maximum available capacity of $2.9 billion
(together, the “Credit Facilities”). Our total debt related to the Credit Facilities and commercial paper program was $1.6
billion at December 31, 2013 as compared to $340 million at December 31, 2012. At December 31, 2013, we had
approximately $1.3 billion of available capacity under the Credit Facilities. During 2013, we undertook a series of
transactions related to our Credit Facilities, which are summarized by the following:
•
•
•
in August 2013, we entered into a $600 million 364-day unsecured revolving credit agreement;
in November 2013, we increased our commercial paper program by $900 million. As a result, we are
able to issue up to an aggregate of $2.7 billion in unsecured commercial paper notes. Amounts issued
under the commercial paper program are supported by our Credit Facilities and, therefore, are classified
as long-term on our Consolidated Balance Sheet. Commercial paper issued reduces availability under
our Credit Facilities; and
in December 2013, we extended the maturity date of the $800 million credit facility maturing in 2015
for a one-year period to February 11, 2016. During the extended period, availability under this credit
facility will be reduced by $36 million.
In addition to the above transactions, we continue to maintain a $1.5 billion credit facility that matures in 2017.
The Credit Facilities provide us with the ability to issue up to $375 million in letters of credit in the aggregate.
The issuance of letters of credit does not increase our borrowings outstanding under the Credit Facilities, but it does reduce
the amount available. At December 31, 2013, we had no letters of credit issued under the Credit Facilities.
Senior Unsecured Notes
Our total debt related to senior unsecured notes was $4.0 billion at December 31, 2013 as compared to $4.3
billion at December 31, 2012. The decrease in senior unsecured notes outstanding is a result of the maturity of our $300
million 5.875% Senior Notes during the second quarter of 2013, which was repaid using proceeds from our commercial
paper program.
In February 2012, we issued, through our indirect wholly-owned subsidiary, Noble Holding International
Limited (“NHIL”), $1.2 billion aggregate principal amount of senior notes in three separate tranches, comprising $300
million of 2.50% Senior Notes due 2017, $400 million of 3.95% Senior Notes due 2022, and $500 million of 5.25% Senior
Notes due 2042. The weighted average coupon of all three tranches is 4.13%. The net proceeds of approximately $1.19
billion, after expenses, were primarily used to repay the then outstanding balance on our Credit Facilities.
Our $250 million 7.375% Senior Notes mature during the first quarter of 2014. We anticipate using availability
under our Credit Facilities or commercial paper program to repay the outstanding balance; therefore, we continue to report
the balance as long-term at December 31, 2013.
Covenants
The Credit Facilities and commercial paper program are guaranteed by our indirect wholly-owned subsidiaries,
NHIL and Noble Drilling Corporation (“NDC”). The covenants and events of default under the Credit Facilities are
substantially similar, and each facility contains a covenant that limits our ratio of debt to total tangible capitalization, as
defined in the Credit Facilities, to 0.60. At December 31, 2013, our ratio of debt to total tangible capitalization was
approximately 0.38. We were in compliance with all covenants under the Credit Facilities as of December 31, 2013.
43
In addition to the covenants from the Credit Facilities noted above, the indentures governing our outstanding
senior unsecured notes contain covenants that place restrictions on certain merger and consolidation transactions, unless we
are the surviving entity or the other party assumes the obligations under the indenture, and on the ability to sell or transfer
all or substantially all of our assets. In addition, there are restrictions on incurring or assuming certain liens and sale and
lease-back transactions. At December 31, 2013, we were in compliance with all of our debt covenants. We continually
monitor compliance with the covenants under our notes and expect to remain in compliance during 2014.
Other
At December 31, 2013, we had letters of credit of $314 million and performance and temporary import bonds
totaling $131 million supported by surety bonds outstanding. Certain of our subsidiaries issue 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.
Summary of Contractual Cash Obligations and Commitments
The following table summarizes our contractual cash obligations and commitments at December 31, 2013 (in
thousands):
Total
2014
2015
2016
2017
2018
Thereafter
Other
Payments Due by Period
Contractual Cash Obligations
Long-term debt obligations (1) ............... $
Interest payments ..................................
Operating leases....................................
Pension plan contributions ...................
Purchase commitments (2)......................
Dividends ..............................................
Tax reserves (3) .......................................
5,556,251 $
2,743,902
113,498
148,141
2,046,079
128,249
127,121
1,811,105 $
186,765
33,109
9,671
1,632,169
128,249
—
350,000 $
177,902
26,425
8,995
—
—
—
299,967 $
161,252
15,157
11,269
413,910
—
—
299,886 $
153,240
8,535
11,309
—
—
—
— $
149,177
7,248
12,439
—
—
—
2,795,293 $
1,915,566
23,024
94,458
—
—
—
—
—
—
—
—
—
127,121
Total contractual cash obligations ........ $ 10,863,241 $
3,801,068 $
563,322 $
901,555 $
472,970 $
168,864 $
4,828,341 $
127,121
(1)
In 2014, our $250 million 7.375% Senior Notes and amounts outstanding under our commercial paper program
mature. We anticipate using availability on our Credit Facilities or commercial paper program to repay these
outstanding balances; therefore, we have shown the entire $250 million Senior Notes balance and $1.6 billion
commercial paper program balance as long-term on our December 31, 2013 Consolidated Balance Sheet.
(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 12 to our accompanying consolidated financial statements.
At December 31, 2013, 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, 2013 (in thousands):
Contractual Cash Obligations
Letters of Credit ................................................................................ $ 313,915 $
Surety bonds .....................................................................................
131,047
152,655 $
24,006
160,988 $
46,443
— $
21,945
— $ — $
—
38,653
Total commercial commitments ....................................................... $
444,962 $
176,661 $
207,431 $ 21,945 $ 38,653 $ — $
272
—
272
Total
2014
2015
2016
2017
2018
Thereafter
Amount of Commitment Expiration Per Period
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.
44
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. Our consolidated financial statements include the accounts of two joint
ventures, in each of which we own a 50 percent interest. Our ownership interest meets the definition of variable interest
under Financial Accounting Standards Board (“FASB”) codification and we have determined that we are the primary
beneficiary. Intercompany balances and transactions have been eliminated in consolidation.
The combined joint venture carrying amount of the Bully-class drillships at December 31, 2013 totaled $1.4
billion, which was primarily funded through partner equity contributions. During 2012, these rigs commenced the operating
phases of their contracts. For 2013, operating revenues and net income related to these joint ventures totaled $355 million
and $145 million, respectively, as compared to operating revenues and net income of $237 million and $72 million in 2012.
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,
2013 and 2012, we had $1.9 billion and $2.7 billion of construction-in-progress, respectively. Such amounts are included in
“Property and equipment, at cost” in the accompanying Consolidated Balance Sheets. Major replacements and
improvements are capitalized. When assets are sold, retired or otherwise disposed of, the cost and related accumulated
depreciation are eliminated from the accounts and the gain or loss is recognized. Drilling equipment and facilities are
depreciated using the straight-line method over their estimated useful lives as of the date placed in service or date of major
refurbishment. Estimated useful lives of our drilling equipment range from three to thirty years. Other property and
equipment is depreciated using the straight-line method over useful lives ranging from two to twenty-five years.
Interest is capitalized on construction-in-progress at the weighted average cost of debt outstanding during the
period of construction. Capitalized interest for the years ended December 31, 2013, 2012 and 2011 was $115 million, $136
million and $122 million, respectively.
Scheduled maintenance of equipment is performed based on the number of hours operated in accordance with
our preventative maintenance program. Routine repair and maintenance costs are charged to expense as incurred; however,
the costs of the overhauls and asset replacement projects that benefit future periods and which typically occur every three to
five years are capitalized when incurred and depreciated over an equivalent period. These overhauls and asset replacement
projects are included in “Property and equipment, at cost” in the Consolidated Balance Sheets. Such amounts, net of
accumulated depreciation, totaled $400 million and $303 million at December 31, 2013 and 2012, respectively.
Depreciation expense related to overhauls and asset replacement totaled $140 million, $113 million and $103 million for
the years ended December 31, 2013, 2012 and 2011, respectively.
We evaluate the impairment of property and equipment whenever events or changes in circumstances indicate
that the carrying amount of an asset may not be recoverable. In addition, on an annual basis, we complete an impairment
analysis on our rig fleet. An impairment loss on our property and equipment exists when the estimated undiscounted cash
flows expected to result from the use of the asset and its eventual disposition are less than its carrying amount. Any
impairment loss recognized represents the excess of the asset’s carrying value over the estimated fair value. As part of this
analysis, we make assumptions and estimates regarding future market conditions. To the extent actual results do not meet
our estimated assumptions, for a given rig class, we may take an impairment loss in the future.
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, 2013 and 2012, loss reserves for
personal injury and protection claims totaled $29 million and $20 million, respectively, and such amounts are included in
“Other current liabilities” in the accompanying Consolidated Balance Sheets.
45
Revenue Recognition
Revenues generated from our dayrate-basis drilling contracts and labor contracts are recognized as services are
performed and begin upon the contract commencement, as defined under the specified drilling or labor contract. Revenues
from bonuses are recognized when earned.
It is typical, in our dayrate drilling contracts, to receive compensation for mobilization, equipment
modification, or other activities prior to the commencement of the contract. These payments take either the form of a lump-
sum payment or other daily compensation. We defer pre-contract compensation and related costs over the term of the initial
contract period to which the compensation and costs relate. Upon completion of our drilling contracts, any demobilization
revenues received are recognized as income, as are any related expenses.
Deferred revenues under drilling contracts totaled $303 million and $252 million at December 31, 2013 and
2012, 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. Related expenses deferred under drilling contracts totaled
$157 million at December 31, 2013 as compared to $150 million at December 31, 2012, and are included in either “Other
current assets” or “Other assets” in our Consolidated Balance Sheets based upon our expected time of recognition.
We record reimbursements from customers for “out-of-pocket” expenses as revenues and the related direct cost
as operating expenses.
Income Taxes
We operate in a number of countries throughout the world and our tax returns filed in those jurisdictions are
subject to review and examination by tax authorities within those jurisdictions. The U.S. Internal Revenue Service (“IRS”)
has completed its examination of our tax reporting for the taxable year ended December 31, 2008. In June 2013, the IRS
examination team notified us that they were no longer proposing any adjustments with respect to our tax reporting for the
taxable year ended December 31, 2008. We are due a refund for the 2008 tax year. In November 2013, the congressional
Joint Committee on Taxation completed its review of this refund with no exception to the conclusions reached by the IRS.
The IRS began its examination of our tax reporting for the taxable year ended December 31, 2009. We believe that we have
accurately reported all amounts in our 2009 tax returns. Furthermore, we are currently contesting several non-U.S. tax
assessments and may contest 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. We cannot
predict or provide assurance as to the ultimate outcome of any existing or future assessments.
During the second quarter of 2013, we reached an agreement with the tax authorities in Mexico resolving
certain previously disclosed tax assessments. This settlement removed potential contingent tax exposure of $502 million for
periods prior to 2007, which includes the assessments for years 2002 through 2005 of approximately $348 million, as well
as settlement for 2006. The settlement of these assessments did not have a material impact on our consolidated financial
statements.
Audit claims of approximately $320 million attributable to income, customs and other business taxes have been
assessed against us. We have contested, or intend to contest, these assessments, including through litigation if necessary,
and we believe the ultimate resolution, for which we have not made any accrual, will not have a material adverse effect on
our consolidated financial statements. Tax authorities may issue additional assessments or pursue legal actions as a result of
tax audits and we cannot predict or provide assurance as to the ultimate outcome of such assessments and legal actions.
Applicable income and withholding taxes have not been provided on undistributed earnings of our subsidiaries.
We do not intend to repatriate such undistributed earnings 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.
46
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 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.
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 “Part II Item 8. Financial Statements and Supplementary Data, Note 16- Commitments and
Contingencies.”
New Accounting Pronouncements
In February 2013, the FASB issued Accounting Standards Update (“ASU”) No. 2013-02, which amends FASB
Accounting Standards Codification (“ASC”) Topic 220, “Comprehensive Income.” This amended guidance requires
additional information about reclassification adjustments out of comprehensive income, including changes in
comprehensive income balances by component and significant items reclassified out of comprehensive income. This
guidance is effective for reporting periods beginning after December 15, 2012. The adoption of this guidance did not have a
material impact on our financial condition, results of operations, cash flows or financial disclosures.
In March 2013, the FASB issued ASU No. 2013-05, which amends ASC Topic 830, “Foreign Currency
Matters.” This ASU provides guidance on foreign currency translation adjustments when a parent entity ceases to have a
controlling interest on a previously consolidated subsidiary or group of assets. The guidance is effective for fiscal years
beginning on or after December 15, 2013. We are still evaluating what impact, if any, the adoption of this guidance will
have on our financial condition, results of operations, cash flows or financial disclosures.
In July 2013, the FASB issued ASU No. 2013-11, which amends ASC Topic 740, “Taxes.” This ASU provides
guidance on the presentation of tax benefits when a net operating loss carryforward or other tax credit carryforward
exists. The guidance is effective for fiscal years beginning on or after December 15, 2013. We are still evaluating what
impact, if any, the adoption of this guidance will have 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
Facilities and commercial paper program. Interest on borrowings under the Credit Facilities is at an agreed upon percentage
point spread over LIBOR, or a base rate stated in the agreement. At December 31, 2013, we had $1.6 billion in borrowings
outstanding under our commercial paper program, which is supported by the Credit Facilities. Assuming our current level
of debt, a change in LIBOR rates of 1 percent would increase our interest charges by approximately $16 million per year.
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 $5.7 billion and $5.1 billion at
December 31, 2013 and 2012, respectively. The increase in fair value was primarily a result of increased indebtedness
outstanding under our commercial paper program coupled with changes in interest rates and market perceptions of our
credit risk, partially offset by the repayment of our $300 million fixed rate senior note.
47
Foreign Currency Risk
Although we are a UK company, we define foreign currency as any non-U.S. denominated currency. Our
functional currency is primarily the U.S. Dollar, which is consistent with the oil and gas industry. However, outside the
United States, some 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).
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 loss” (“AOCL”). Amounts recorded in AOCL 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.
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 periodically enter into forward contracts, all of
which have a maturity of less than 12 months. At December 31, 2013, we had no outstanding derivative contracts.
Depending on market conditions, we may elect to utilize short-term forward currency contracts in the future.
Market Risk
We 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 salary U.S. plan. 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-UK, 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.
48
Item 8.
Financial Statements and Supplementary Data.
The following financial statements are filed in this Item 8:
Report of Independent Registered Public Accounting Firm (Noble-UK) ......................................................................................
Page
50
Noble Corporation plc (Noble-UK) and Subsidiaries Consolidated Balance Sheet as of December 31, 2013 and 2012 ..............
51
Noble Corporation plc (Noble-UK) and Subsidiaries Consolidated Statements of Income for the Years Ended December 31,
2013, 2012 and 2011 .................................................................................................................................................................
52
Noble Corporation plc (Noble-UK) and Subsidiaries Consolidated Statements of Comprehensive Income for the Years Ended
December 31, 2013, 2012 and 2011 ..........................................................................................................................................
53
Noble Corporation plc (Noble-UK) and Subsidiaries Consolidated Statements of Cash Flows for the Years Ended
December 31, 2013, 2012 and 2011 ..........................................................................................................................................
54
Noble Corporation plc (Noble-UK) and Subsidiaries Consolidated Statements of Equity for the Years Ended December 31,
2013, 2012 and 2011 .................................................................................................................................................................
55
Report of Independent Registered Public Accounting Firm (Noble-Cayman) ..............................................................................
56
Noble Corporation (Noble-Cayman) and Subsidiaries Consolidated Balance Sheet as of December 31, 2013 and 2012 ............
57
Noble Corporation (Noble-Cayman) and Subsidiaries Consolidated Statements of Income for the Years Ended December 31,
2013, 2012 and 2011 .................................................................................................................................................................
58
Noble Corporation (Noble-Cayman) and Subsidiaries Consolidated Statements of Comprehensive Income for the Years
Ended December 31, 2013, 2012 and 2011 ...............................................................................................................................
59
Noble Corporation (Noble-Cayman) and Subsidiaries Consolidated Statements of Cash Flows for the Years Ended
December 31, 2013, 2012 and 2011 ..........................................................................................................................................
60
Noble Corporation (Noble-Cayman) and Subsidiaries Consolidated Statements of Equity for the Years Ended December 31,
2013, 2012 and 2011 .................................................................................................................................................................
61
Notes to Consolidated Financial Statements ..................................................................................................................................
62
49
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Directors and
Shareholders of Noble Corporation plc
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
Corporation plc and its subsidiaries at December 31, 2013 and 2012, and the results of their operations and their cash flows
for each of the three years in the period ended December 31, 2013 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, 2013, based on criteria established in Internal Control -
Integrated Framework (1992) issued by the Committee of Sponsoring Organizations of the Treadway Commission
(COSO). Noble Corporation plc’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 as appearing under Item
9A. Our responsibility is to express opinions on these financial statements and on Noble Corporation plc’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 28, 2014
50
NOBLE CORPORATION PLC AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
(In thousands)
December 31,
2013
December 31,
2012
ASSETS
Current assets
Cash and cash equivalents ........................................................................................................... $
Accounts receivable ....................................................................................................................
Taxes receivable ..........................................................................................................................
Prepaid expenses and other current assets ...................................................................................
Total current assets ...............................................................................................................................
Property and equipment, at cost ............................................................................................................
Accumulated depreciation ...........................................................................................................
Property and equipment, net .................................................................................................................
Other assets ...........................................................................................................................................
282,092
743,673
112,423
167,137
1,305,325
16,971,666
(3,945,694)
13,025,972
276,477
Total assets ....................................................................................................................... $ 16,217,957 $ 14,607,774
114,458 $
949,069
140,269
187,139
1,390,935
19,198,767
(4,640,677)
14,558,090
268,932
LIABILITIES AND EQUITY
Current liabilities
Accounts payable ........................................................................................................................ $
Accrued payroll and related costs ................................................................................................
Taxes payable ..............................................................................................................................
Dividends payable .......................................................................................................................
Other current liabilities ................................................................................................................
Total current liabilities ..........................................................................................................................
Long-term debt .....................................................................................................................................
Deferred income taxes ..........................................................................................................................
Other liabilities .....................................................................................................................................
Total liabilities ..................................................................................................................
347,214 $
151,161
125,119
128,249
300,172
1,051,915
5,556,251
225,455
334,308
7,167,929
350,147
132,728
135,257
66,369
226,948
911,449
4,634,375
226,045
347,615
6,119,484
Commitments and contingencies
Equity
Shares ..........................................................................................................................................
710,130
Treasury shares ............................................................................................................................
(21,069)
Additional paid-in capital ............................................................................................................
83,531
7,066,023
Retained earnings ........................................................................................................................
Accumulated other comprehensive loss ......................................................................................
(115,449)
7,723,166
Total shareholders’ equity ..............................................................................................
765,124
Noncontrolling interests ..............................................................................................................
8,488,290
Total equity .......................................................................................................................
Total liabilities and equity ............................................................................................... $ 16,217,957 $ 14,607,774
2,534
—
810,286
7,591,927
(82,164)
8,322,583
727,445
9,050,028
See accompanying notes to the consolidated financial statements.
51
NOBLE CORPORATION PLC AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(In thousands, except per share amounts)
Operating revenues
Year Ended December 31,
2013
2012
2011
Contract drilling services ...................................................................................... $ 4,070,070 $ 3,349,362 $ 2,556,758
79,195
Reimbursables ......................................................................................................
59,004
Labor contract drilling services ............................................................................
875
Other .....................................................................................................................
2,695,832
111,874
52,241
105
4,234,290
115,495
81,890
265
3,547,012
Operating costs and expenses
Contract drilling services ......................................................................................
Reimbursables ......................................................................................................
Labor contract drilling services ............................................................................
Depreciation and amortization .............................................................................
General and administrative ...................................................................................
Incremental spin-off related costs ........................................................................
Loss on impairment ..............................................................................................
Gain on disposal of assets, net ..............................................................................
Gain on contract settlements/extinguishments, net ..............................................
Operating income .........................................................................................................
Other income (expense)
2,014,217
85,548
36,604
879,422
117,997
17,702
43,688
(35,646)
(46,800)
3,112,732
1,121,558
1,769,428
94,096
46,752
758,621
99,990
7,196
20,384
—
(33,255)
2,763,212
783,800
Interest expense, net of amount capitalized ..........................................................
Interest income and other, net ..............................................................................
Income before income taxes ........................................................................................
Income tax provision ............................................................................................
Net income ....................................................................................................................
Net loss (income) attributable to noncontrolling interests ....................................
Net income attributable to Noble Corporation .......................................................... $
(106,300)
2,754
1,018,012
(167,606)
850,406
(67,709)
782,697 $
(85,763)
5,188
703,225
(147,088)
556,137
(33,793)
522,344 $
1,384,200
58,439
33,885
658,640
91,377
—
—
—
(21,202)
2,205,339
490,493
(55,727)
1,484
436,250
(72,625)
363,625
7,273
370,898
Net income per share attributable to Noble Corporation
Basic ..................................................................................................................... $
Diluted ..................................................................................................................
3.05 $
3.05
2.05 $
2.05
1.46
1.46
Weighted-Average Shares Outstanding:
Basic .....................................................................................................................
Diluted ..................................................................................................................
253,288
253,547
252,435
252,791
251,405
251,989
See accompanying notes to the consolidated financial statements.
52
NOBLE CORPORATION PLC AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(In thousands)
Net income .............................................................................................................................. $ 850,406 $ 556,137 $ 363,625
Other comprehensive income (loss), net of tax
Year Ended December 31,
2013
2012
2011
Foreign currency translation adjustments .............................................................
Foreign currency forward contracts ......................................................................
Interest rate swaps .................................................................................................
Net pension plan gain (loss) (net of tax provision (benefit) of $14,155 in 2013,
($3,777) in 2012 and ($12,845) in 2011) .........................................................
Amortization of deferred pension plan amounts (net of tax provision of $2,924
2,047
in 2013, $2,841 in 2012 and $1,146 in 2011) ...................................................
(24,101)
Other comprehensive income (loss), net ........................................................................
339,524
Total comprehensive income ...................................................................................................
7,273
Net comprehensive loss (income) attributable to noncontrolling interests ..............................
183
Noncontrolling portion of gain on interest rate swaps .............................................................
Comprehensive income attributable to Noble Corporation ............................................... $ 815,982 $ 481,216 $ 346,980
6,612
33,285
883,691
(67,709)
—
5,545
(41,128)
515,009
(33,793)
—
(3,188)
—
—
(2,566)
(4,665)
(366)
(8,076)
3,061
—
(41,658)
(18,551)
29,861
See accompanying notes to the consolidated financial statements.
53
NOBLE CORPORATION PLC AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
Year Ended December 31,
2013
2012
2011
850,406 $
556,137 $
363,625
658,640
—
—
(21,202)
(82,325)
31,904
(210,402)
740,240
(2,621,235)
81,047
18,642
—
(2,521,546)
935,000
—
1,087,833
—
536,000
(693,494)
(29,032)
(2,835)
9,924
(10,233)
(150,532)
1,682,631
(98,675)
337,871
239,196
Cash flows from operating activities
Net income ........................................................................................................ $
Adjustments to reconcile net income to net cash from operating activities: .....
Depreciation and amortization .................................................................
Loss on impairment .................................................................................
Gain on disposal of assets, net .................................................................
Gain on contract extinguishments, net .....................................................
Deferred income taxes .............................................................................
Amortization of share-based compensation .............................................
Net change in other assets and liabilities .................................................
Net cash from operating activities ..................................................
Cash flows from investing activities
Capital expenditures ..........................................................................................
Change in accrued capital expenditures ............................................................
Refund from contract extinguishments ..............................................................
Proceeds from disposal of assets .......................................................................
Net cash from investing activities ..................................................
Cash flows from financing activities
879,422
43,688
(35,646)
—
(15,955)
43,620
(63,218)
1,702,317
(2,487,520)
(58,587)
—
61,000
(2,485,107)
758,621
20,384
—
—
(20,119)
35,930
30,740
1,381,693
(1,669,811)
(121,077)
—
—
(1,790,888)
Net change in borrowings outstanding on bank credit facilities ........................
Repayment of long-term debt ............................................................................
Proceeds from issuance of senior notes, net of debt issuance costs ...................
Dividends paid to noncontrolling interests ........................................................
Contributions from noncontrolling interests ......................................................
Payments of joint venture debt ..........................................................................
Settlement of interest rate swaps .......................................................................
Financing costs on credit facilities ....................................................................
Proceeds from employee stock transactions ......................................................
Repurchases of employee shares surrendered for taxes .....................................
Par value reduction/dividend payments .............................................................
Net cash from financing activities ..................................................
Net change in cash and cash equivalents ........................................
Cash and cash equivalents, beginning of period .....................................................
Cash and cash equivalents, end of period ............................................................... $
1,221,333
(300,000)
—
(105,388)
—
—
—
(2,484)
4,261
(7,653)
(194,913)
615,156
(167,634)
282,092
114,458 $
(635,192)
—
1,186,636
—
40,000
—
—
(5,221)
14,677
(10,516)
(138,293)
452,091
42,896
239,196
282,092 $
See accompanying notes to the consolidated financial statements.
54
NOBLE CORPORATION PLC AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF EQUITY
(In thousands)
Shares
Balance
Par Value
Capital in
Excess of
Par Value
Retained
Earnings
Treasury
Shares
Noncontrolling Comprehensive
Interests
Loss
Total
Equity
Accumulated
Other
Balance at December 31, 2010
262,415 $ 917,684
$
39,006
$ 6,630,500
$ (373,967 )
$
124,631
$
(50,220 )
$ 7,287,634
Employee related equity activity ....
Amortization of share-based
compensation ..................
Issuance of share-based
compensation shares .......
Exercise of stock options ......
Tax benefit of stock options
exercised .........................
Restricted shares forfeited or
repurchased for taxes ......
Retirement of treasury shares ........
Settlement of FIN 48 provision .....
Net income .....................................
Contributions from noncontrolling
interests ....................................
Par value reduction payments .......
Other comprehensive loss, net ......
—
—
31,904
252
501
848
1,661
—
—
(413 )
(10,116)
—
—
(1,401)
(33,035)
—
—
(838)
7,303
950
1,401
—
—
—
—
—
—
—
(119,162)
—
—
(31,370)
—
—
—
—
—
—
(340,612 )
15,658
370,898
—
—
—
—
—
—
—
(10,233 )
373,647
—
—
—
—
—
—
—
—
—
—
—
—
(7,273 )
573,973
—
—
—
—
—
—
—
—
—
—
—
—
(24,101 )
31,904
10
8,964
950
(10,233 )
—
15,658
363,625
573,973
(150,532 )
(24,101 )
Balance at December 31, 2011
252,639
$ 766,595
$
48,356
$ 6,676,444
$
(10,553 )
$
691,331
$
(74,321 )
$ 8,097,852
Employee related equity activity ....
Amortization of share-based
compensation .................
Issuance of share-based
compensation shares ......
Exercise of stock options .....
Tax benefit of stock options
exercised ........................
Restricted shares forfeited or
repurchased for taxes .....
Net income .....................................
Contributions from noncontrolling
interests .....................................
Par value reduction/dividend
—
—
35,930
437
646
1,307
1,836
(1,299)
11,705
—
—
(374 )
—
(1,138)
—
—
—
1,128
1,138
—
—
—
—
—
—
—
522,344
—
payments ...................................
Dividends ........................................
Other comprehensive loss, net .......
—
—
—
(58,470)
—
—
(13,427)
—
—
—
(132,765 )
—
—
—
—
—
(10,516 )
—
—
—
—
—
—
—
—
—
—
33,793
40,000
—
—
—
—
—
—
—
—
—
—
—
—
(41,128 )
35,930
8
13,541
1,128
(10,516 )
556,137
40,000
(71,897 )
(132,765 )
(41,128 )
Balance at December 31, 2012
253,348
$ 710,130
$
83,531
$ 7,066,023
$
(21,069 )
$
765,124
$
(115,449 )
$ 8,488,290
Employee related equity activity ....
Amortization of share-based
compensation ................
Issuance of share-based
compensation
shares .............................
Exercise of stock options ....
Tax benefit of stock options
exercised ........................
Restricted shares forfeited
or repurchased for
taxes ..............................
Retirement of treasury shares .........
Redomiciliation to the United
Kingdom ...................................
Net income .....................................
Dividends paid to noncontrolling
interests .....................................
Dividends ........................................
Other comprehensive income, net ..
—
—
43,620
—
667
212
1,872
496
(1,855)
5,155
—
—
(1,407)
—
—
—
—
—
(28,722)
—
—
—
—
—
(779 )
—
(709,964)
—
709,964
—
—
782,697
—
—
—
—
—
—
—
—
—
—
(256,793 )
—
Balance at December 31, 2013 ........... 253,448
$
2,534
$ 810,286
$ 7,591,927
$
—
—
—
—
(7,653 )
28,722
—
—
—
—
—
—
—
—
—
—
—
—
—
67,709
(105,388 )
—
—
—
43,620
—
—
—
—
—
—
—
—
—
33,285
17
5,651
(1,407 )
(7,653 )
—
—
850,406
(105,388 )
(256,793 )
33,285
$
727,445
$
(82,164 )
$ 9,050,028
See accompanying notes to the consolidated financial statements.
55
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Directors and
Shareholder of Noble Corporation
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
Corporation and its subsidiaries at December 31, 2013 and 2012, and the results of their operations and their cash flows for
each of the three years in the period ended December 31, 2013 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, 2013, based on criteria established in Internal Control - Integrated
Framework (1992) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Noble
Corporation’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 as appearing under Item 9A. Our responsibility
is to express opinions on these financial statements and on Noble Corporation’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 28, 2014
56
NOBLE CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
(In thousands)
December 31,
2013
December 31,
2012
ASSETS
Current assets
Cash and cash equivalents ........................................................................................................... $
Accounts receivable ....................................................................................................................
Taxes receivable ..........................................................................................................................
Prepaid expenses and other current assets ...................................................................................
Total current assets ...............................................................................................................................
Property and equipment, at cost ............................................................................................................
Accumulated depreciation ...........................................................................................................
Property and equipment, net .................................................................................................................
Other assets ...........................................................................................................................................
277,375
743,673
112,310
163,881
1,297,239
16,935,147
(3,938,518)
12,996,629
276,558
Total assets ....................................................................................................................... $ 16,181,514 $ 14,570,426
110,382 $
949,069
140,029
184,348
1,383,828
19,160,350
(4,631,678)
14,528,672
269,014
LIABILITIES AND EQUITY
Current liabilities
Accounts payable ........................................................................................................................ $
Accrued payroll and related costs ................................................................................................
Taxes payable ..............................................................................................................................
Other current liabilities ................................................................................................................
Total current liabilities ..........................................................................................................................
Long-term debt .....................................................................................................................................
Deferred income taxes ..........................................................................................................................
Other liabilities .....................................................................................................................................
Total liabilities ..................................................................................................................
345,910 $
143,346
120,588
300,172
910,016
5,556,251
225,455
334,308
7,026,030
349,594
123,936
130,844
226,935
831,309
4,634,375
226,045
347,615
6,039,344
Commitments and contingencies
Equity
Ordinary shares; 261,246 shares outstanding ..............................................................................
26,125
Capital in excess of par value ......................................................................................................
470,454
Retained earnings ........................................................................................................................
7,384,828
Accumulated other comprehensive loss ......................................................................................
(115,449)
7,765,958
Total shareholder equity .................................................................................................
765,124
Noncontrolling interests ..............................................................................................................
8,531,082
Total equity .......................................................................................................................
Total liabilities and equity ............................................................................................... $ 16,181,514 $ 14,570,426
26,125
497,316
7,986,762
(82,164)
8,428,039
727,445
9,155,484
See accompanying notes to the consolidated financial statements.
57
NOBLE CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(In thousands, except per share amounts)
Operating revenues
Year Ended December 31,
2013
2012
2011
Contract drilling services ....................................................................................... $ 4,070,070 $ 3,349,362 $ 2,556,758
Reimbursables .......................................................................................................
79,195
Labor contract drilling services .............................................................................
59,004
Other ......................................................................................................................
875
2,695,832
111,874
52,241
105
4,234,290
115,495
81,890
265
3,547,012
Operating costs and expenses.......................................................................................
Contract drilling services .......................................................................................
Reimbursables .......................................................................................................
Labor contract drilling services .............................................................................
Depreciation and amortization ..............................................................................
General and administrative ....................................................................................
Loss on impairment ...............................................................................................
Gain on disposal of assets, net ...............................................................................
Gain on contract settlements/extinguishments, net ...............................................
Operating income ..........................................................................................................
Other income (expense) ................................................................................................
Interest expense, net of amount capitalized ...........................................................
Interest income and other, net ...............................................................................
Income before income taxes .........................................................................................
Income tax provision .............................................................................................
Net income .....................................................................................................................
Net loss (income) attributable to noncontrolling interests .....................................
Net income attributable to Noble Corporation ........................................................... $
2,004,624
85,548
36,604
877,250
64,859
43,688
(35,646)
(46,800)
3,030,127
1,204,163
1,760,965
94,096
46,895
756,689
59,366
20,384
—
(33,255)
2,705,140
841,872
(106,300)
2,126
1,099,989
(164,466)
935,523
(67,709)
867,814 $
(85,763)
4,695
760,804
(146,088)
614,716
(33,793)
580,923 $
1,371,415
58,439
33,885
657,205
56,787
—
—
(21,202)
2,156,529
539,303
(55,727)
2,480
486,056
(71,286)
414,770
7,273
422,043
See accompanying notes to the consolidated financial statements.
58
NOBLE CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(In thousands)
Year Ended December 31,
2013
2012
2011
Net income .............................................................................................................................. $ 935,523 $ 614,716 $ 414,770
Other comprehensive income (loss), net of tax ....................................................................
Foreign currency translation adjustments .............................................................
Foreign currency forward contracts ......................................................................
Interest rate swaps .................................................................................................
Net pension plan gain (loss) (net of tax provision (benefit) of $14,155 in 2013,
($3,777) in 2012 and ($12,845) in 2011) .........................................................
Amortization of deferred pension plan amounts (net of tax provision of $2,924
2,047
in 2013, $2,841 in 2012 and $1,146 in 2011) ...................................................
(24,101)
Other comprehensive income (loss), net ........................................................................
390,669
Total comprehensive income ...................................................................................................
7,273
Net comprehensive loss (income) attributable to noncontrolling interests ..............................
183
Noncontrolling portion of gain on interest rate swaps .............................................................
Comprehensive income attributable to Noble Corporation ............................................... $ 901,099 $ 539,795 $ 398,125
6,612
33,285
968,808
(67,709)
—
5,545
(41,128)
573,588
(33,793)
—
(3,188)
—
—
(2,566)
(4,665)
(366)
(8,076)
3,061
—
(41,658)
(18,551)
29,861
See accompanying notes to the consolidated financial statements.
59
NOBLE CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
Year ended December 31,
2013
2012
2011
Cash flows from operating activities
Net income ........................................................................................................ $
Adjustments to reconcile net income to net cash from operating activities:
935,523 $
614,716 $
414,770
Depreciation and amortization .................................................................
Loss on impairment .................................................................................
Gain on disposal of assets, net .................................................................
Gain on contract extinguishments, net .....................................................
Deferred income taxes .............................................................................
Capital contribution by parent—share-based compensation ....................
Net change in other assets and liabilities .................................................
Net cash from operating activities ..................................................
Cash flows from investing activities
Capital expenditures ..........................................................................................
Change in accrued capital expenditures ............................................................
Refund from contract extinguishments ..............................................................
Proceeds from disposal of assets .......................................................................
Net cash from investing activities ..................................................
Cash flows from financing activities
877,250
43,688
(35,646)
—
(15,955)
26,862
(63,092)
1,768,630
(2,485,617)
(58,587)
—
61,000
(2,483,204)
756,689
20,384
—
—
(20,119)
19,838
29,119
1,420,627
(1,667,477)
(121,077)
—
—
(1,788,554)
Net change in borrowings outstanding on bank credit facilities ........................
Repayment of long-term debt ............................................................................
Proceeds from issuance of senior notes, net of debt issuance costs ...................
Dividends paid to noncontrolling interests ........................................................
Contributions from noncontrolling interests ......................................................
Payments of joint venture debt ..........................................................................
Settlement of interest rate swaps .......................................................................
Financing costs on credit facilities ....................................................................
Distributions to parent company, net .................................................................
Net cash from financing activities ..................................................
Net change in cash and cash equivalents ........................................
Cash and cash equivalents, beginning of period .....................................................
Cash and cash equivalents, end of period ............................................................... $
1,221,333
(300,000)
—
(105,388)
—
—
—
(2,484)
(265,880)
547,581
(166,993)
277,375
110,382 $
(635,192)
—
1,186,636
—
40,000
—
—
(5,221)
(175,977)
410,246
42,319
235,056
277,375 $
657,205
—
—
(21,202)
(82,325)
18,726
(216,687)
770,487
(2,615,943)
81,047
18,642
—
(2,516,254)
935,000
—
1,087,833
—
536,000
(693,494)
(29,032)
(2,835)
(186,048)
1,647,424
(98,343)
333,399
235,056
See accompanying notes to the consolidated financial statements.
60
NOBLE CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF EQUITY
(In thousands)
Shares
Balance
Par Value
Capital in
Excess of
Par Value
Retained
Earnings
Noncontrolling
Interests
Accumulated
Other
Comprehensive
Loss
Total
Equity
261,246
—
$
26,125
—
$
416,232
—
$ 6,743,887
(186,048 )
$
124,631
—
$
(50,220 )
—
$ 7,260,655
(186,048 )
Balance at December 31, 2010 ......................
Distributions to parent .........................
Capital contributions by parent- ..........
Share-based compensation.......
Net income ...........................................
Settlement of FIN 48 provision ...........
Contributions from noncontrolling
—
—
—
interests ..........................................
Other comprehensive loss, net .............
—
—
Balance at December 31, 2011 ......................
Distributions to parent .........................
Capital contributions by parent- ..........
Share-based compensation.......
Net income ...........................................
Contributions from noncontrolling int
erests ...............................................
Other comprehensive loss, net .............
Balance at December 31, 2012 ......................
Distributions to parent .........................
Capital contributions by parent- ..........
Share-based compensation.......
Net income ...........................................
Dividends paid to noncontrolling inte
rests ................................................
Other comprehensive income, net .......
—
—
—
—
261,246
—
—
—
—
—
—
—
—
—
—
18,726
—
15,658
—
—
—
422,043
—
—
—
261,246
—
$
26,125
—
$
450,616
—
$ 6,979,882
(175,977 )
$
—
—
—
—
19,838
—
—
—
—
580,923
—
—
$
26,125
—
$
470,454
—
$ 7,384,828
(265,880 )
$
—
—
—
—
26,862
—
—
—
—
867,814
—
—
(105,388)
—
—
(7,273)
—
573,973
—
691,331
—
—
33,793
40,000
—
765,124
—
—
67,709
$
—
—
—
—
(24,101 )
(74,321 )
—
—
—
—
(41,128 )
18,726
414,770
15,658
573,973
(24,101 )
$ 8,073,633
(175,977 )
19,838
614,716
40,000
(41,128 )
$
(115,449 )
—
$ 8,531,082
(265,880 )
—
—
—
33,285
26,862
935,523
(105,388 )
33,285
Balance at December 31, 2013 ......................
261,246
$
26,125
$
497,316
$ 7,986,762
$
727,445
$
(82,164 )
$ 9,155,484
See accompanying notes to the consolidated financial statements.
61
NOBLE CORPORATION PLC AND SUBSIDIARIES
NOBLE CORPORATION 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
On November 20, 2013, pursuant to the Merger Agreement dated as of June 30, 2013 between Noble
Corporation, a Swiss corporation (“Noble-Swiss”), and Noble Corporation plc, a company registered under the laws of
England and Wales (“Noble-UK”), Noble-Swiss merged with and into Noble-UK, with Noble-UK as the surviving
company (the “Transaction”). In the Transaction, all of the outstanding ordinary shares of Noble-Swiss were cancelled, and
Noble-UK issued, through an exchange agent, one ordinary share of Noble-UK in exchange for each ordinary share of
Noble-Swiss.
The Transaction effectively changed the place of incorporation of our publicly traded parent holding company
from Switzerland to the United Kingdom. As a result of the Transaction, Noble-UK owns and conducts the same businesses
through the Noble group as Noble-Swiss conducted prior to the Transaction, except that Noble-UK is the parent company
of the Noble group of companies.
Noble Corporation, a Cayman Islands company (“Noble-Cayman”), is a direct, wholly-owned subsidiary of
Noble-UK. Noble-UK’s principal asset is all of the shares of Noble-Cayman. Noble-Cayman has no public equity
outstanding. The consolidated financial statements of Noble-UK include the accounts of Noble-Cayman, and Noble-UK
conducts substantially all of its business through Noble-Cayman and its subsidiaries.
Noble-UK is a leading offshore drilling contractor for the oil and gas industry. We perform contract drilling
services with our fleet of mobile offshore drilling units located worldwide. We also own one floating production storage
and offloading unit (“FPSO”). Currently, our fleet consists of 14 semisubmersibles, 14 drillships and 49 jackups, including
six units under construction as follows:
•
•
two dynamically positioned, ultra-deepwater, harsh environment drillships; and
four high-specification, heavy-duty, harsh environment jackups.
Our fleet is located in the United States, Mexico, Brazil, the North Sea, the Mediterranean, West Africa, the
Middle East, India, Asia and Australia. Noble and its predecessors have been engaged in the contract drilling of oil and gas
wells since 1921.
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. Our consolidated financial statements include the accounts of two joint
ventures, in each of which we own a 50 percent interest. Our ownership interest meets the definition of variable interest
under Financial Accounting Standards Board (“FASB”) codification and we have determined that we are the primary
beneficiary. Intercompany balances and transactions have been eliminated in consolidation.
Foreign Currency Translation
Although we are a UK company, 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 factors
including the markets in which the subsidiary operates, inflation, generation of cash flow, financing activities and
intercompany arrangements), local currency transaction gains and losses are included in net income. 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 statement 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 loss” in the Consolidated Balance Sheets. We did not recognize any material gains or
losses on foreign currency transactions or translations during the three years ended December 31, 2013.
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
62
NOBLE CORPORATION PLC AND SUBSIDIARIES
NOBLE CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unless otherwise indicated, dollar amounts in tables are in thousands, except per share data)
potential credit risk, and certain of our cash accounts carry balances greater than the federally insured limits. Cash and cash
equivalents are primarily held by major banks or investment firms. Our cash management and investment policies restrict
investments to lower risk, highly liquid securities and we perform periodic evaluations of the relative credit standing of the
financial institutions with which we conduct business.
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. 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 were $88 million and $141 million of capital accruals as of December 31, 2013 and
2012, respectively.
Interest is capitalized on construction-in-progress at the weighted average cost of debt outstanding during the
period of construction.
Scheduled maintenance of equipment is performed based on the number of hours operated in accordance with
our preventative maintenance program. Routine repair and maintenance costs are charged to expense as incurred; however,
the costs of the overhauls and asset replacement projects that benefit future periods and which typically occur every three to
five years are capitalized when incurred and depreciated over an equivalent period. These overhauls and asset replacement
projects are included in “Drilling equipment and facilities” in Note 5. Such amounts, net of accumulated depreciation,
totaled $400 million and $303 million at December 31, 2013 and 2012, respectively. Depreciation expense related to
overhauls and asset replacement totaled $140 million, $113 million and $103 million for the years ended December 31,
2013, 2012 and 2011, respectively.
We evaluate the impairment of property and equipment whenever events or changes in circumstances indicate
that the carrying amount of an asset may not be recoverable. In addition, on an annual basis, we complete an impairment
analysis on our rig fleet. An impairment loss on our property and equipment exists when the estimated undiscounted cash
flows expected to result from the use of the asset and its eventual disposition are less than its carrying amount. Any
impairment loss recognized represents the excess of the asset’s carrying value over the estimated fair value. As part of this
analysis, we make assumptions and estimates regarding future market conditions. To the extent actual results do not meet
our estimated assumptions, for a given rig class, we may take an impairment loss in the future.
Deferred Costs
Deferred debt issuance costs are being amortized through interest expense over the life of the debt securities.
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, 2013 and 2012, loss reserves for
personal injury and protection claims totaled $29 million and $20 million, respectively, and such amounts are included in
“Other current liabilities” in the accompanying Consolidated Balance Sheets.
63
NOBLE CORPORATION PLC AND SUBSIDIARIES
NOBLE CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unless otherwise indicated, dollar amounts in tables are in thousands, except per share data)
Revenue Recognition
Revenues generated from our dayrate-basis drilling contracts and labor contracts are recognized as services are
performed and begin upon the contract commencement, as defined under the specified drilling or labor contract. Revenues
from bonuses are recognized when earned.
It is typical, in our dayrate drilling contracts, to receive compensation for mobilization, equipment
modification, or other activities prior to the commencement of the contract. These payments take either the form of a lump-
sum payment or other daily compensation. We defer pre-contract compensation and related costs over the term of the initial
contract period to which the compensation and costs relate. Upon completion of our drilling contracts, any demobilization
revenues received are recognized as income, as are any related expenses.
Deferred revenues under drilling contracts totaled $303 million at December 31, 2013 as compared to $252
million at December 31, 2012. Such amounts are included in either “Other current liabilities” or “Other liabilities” in our
Consolidated Balance Sheets, based upon our expected time of recognition. Related expenses deferred under drilling
contracts totaled $157 million at December 31, 2013 as compared to $150 million at December 31, 2012, and are included
in either “Other current assets” or “Other assets” in our Consolidated Balance Sheets based upon our expected time of
recognition.
We record reimbursements from customers for “out-of-pocket” expenses as revenues and the related direct cost
as operating expenses.
Income Taxes
Income taxes are based on the laws and rates in effect in the countries in which operations are conducted or in
which we or our subsidiaries are considered resident for income tax purposes. Applicable income and withholding taxes
have not been provided on undistributed earnings of our subsidiaries. We do not intend to repatriate such undistributed
earnings 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., UK or jurisdictions in which we or any of our subsidiaries operate or are resident. Our income tax
expense is based upon our interpretation of the tax laws in effect in various countries at the time that the expense was
incurred. If the U.S. Internal Revenue Service (“IRS”) or other taxing authorities do not agree with our assessment of the
effects of such laws, treaties and regulations, this could have a material adverse effect on us including the imposition of a
higher effective tax rate on our worldwide earnings or a reclassification of the tax impact of our significant corporate
restructuring transactions.
Net Income per Share
Our unvested share-based payment awards, which contain non-forfeitable rights to dividends, are participating
securities and are included in the computation of earnings per share pursuant to the “two-class” method. The “two-class”
method allocates undistributed earnings between common shares and participating securities. The diluted earnings per share
calculation under the “two-class” method also includes the dilutive effect of potential shares issued in connection with stock
options. The dilutive effect of stock options is determined using the treasury stock method.
Share-Based Compensation Plans
We record the grant date fair value of share-based compensation arrangements as compensation cost using a
straight-line method over the service period. Share-based compensation is expensed or capitalized based on the nature of
the employee’s activities.
64
NOBLE CORPORATION PLC AND SUBSIDIARIES
NOBLE CORPORATION 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 GAAP requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the
date of the financial statements and the reported amount of revenues and expenses during the reporting period. Certain
accounting policies involve judgments and uncertainties to such an extent that there is reasonable likelihood that materially
different amounts could have been reported under different conditions, or if different assumptions had been used. We
evaluate our estimates and assumptions on a regular basis. We base our estimates on historical experience and various other
assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making
judgments about carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may
differ from these estimates and assumptions used in preparation of our consolidated financial statements.
Reclassifications
Certain amounts in prior periods have been reclassified to conform to the current year presentation.
Accounting Pronouncements
In February 2013, the FASB issued Accounting Standards Update (“ASU”) No. 2013-02, which amends FASB
Accounting Standards Codification (“ASC”) Topic 220, “Comprehensive Income.” This amended guidance requires
additional information about reclassification adjustments out of comprehensive income, including changes in
comprehensive income balances by component and significant items reclassified out of comprehensive income. This
guidance is effective for reporting periods beginning after December 15, 2012. The adoption of this guidance did not have a
material impact on our financial condition, results of operations, cash flows or financial disclosures.
In March 2013, the FASB issued ASU No. 2013-05, which amends ASC Topic 830, “Foreign Currency
Matters.” This ASU provides guidance on foreign currency translation adjustments when a parent entity ceases to have a
controlling interest on a previously consolidated subsidiary or group of assets. The guidance is effective for fiscal years
beginning on or after December 15, 2013. We are still evaluating what impact, if any, the adoption of this guidance will
have on our financial condition, results of operations, cash flows or financial disclosures.
In July 2013, the FASB issued ASU No. 2013-11, which amends ASC Topic 740, “Taxes.” This ASU provides
guidance on the presentation of tax benefits when a net operating loss carryforward or other tax credit carryforward
exists. The guidance is effective for fiscal years beginning on or after December 15, 2013. We are still evaluating what
impact, if any, the adoption of this guidance will have on our financial condition, results of operations, cash flows or
financial disclosures.
Note 2 – Consolidated Joint Ventures
We maintain a 50 percent interest in two joint ventures, each with a subsidiary of Royal Dutch Shell plc
(“Shell”) that own and operate the two Bully-class drillships. We have determined that we are the primary beneficiary.
Accordingly, we consolidate the entities in our consolidated financial statements after eliminating intercompany
transactions. Shell’s equity interests are presented as noncontrolling interests on our Consolidated Balance Sheets.
In January 2011, the Bully joint ventures issued notes to the joint venture partners totaling $70 million. The
interest rate on these notes was 10%, payable semi-annually in arrears and in kind on June 30 and December 31
commencing in June 2011. The purpose of these notes was to provide additional liquidity to the joint ventures in connection
with the shipyard construction of the Bully vessels.
In April 2011, the Bully joint venture partners entered into a subscription agreement, pursuant to which each
partner was issued equity in each of the Bully joint ventures in exchange for the cancellation of all outstanding joint venture
partner notes. The subscription agreement converted all joint venture partner notes into equity of the respective joint
venture. The total capital contributed as a result of these agreements was $146 million, which included $142 million in
outstanding notes, plus accrued interest. Our portion of the capital contribution, totaling $73 million, was eliminated in
consolidation.
65
NOBLE CORPORATION PLC AND SUBSIDIARIES
NOBLE CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unless otherwise indicated, dollar amounts in tables are in thousands, except per share data)
In April 2011, the Bully joint venture partners also entered into capital contribution agreements whereby capital
calls up to a total of $360 million could be made for funds needed to complete the construction of the drillships. All
contributions under these agreements have been made, with the final contribution made in the first quarter of 2012.
During 2013, the Bully joint ventures approved and paid dividends totaling $211 million, of which $105
million was paid to our joint venture partner.
The combined carrying amount of the Bully-class drillships at both December 31, 2013 and 2012 totaled $1.4
billion. These assets were primarily funded through partner equity contributions. During 2012, these rigs commenced the
operating phases of their contracts. Cash held by the Bully joint ventures totaled approximately $50 million at
December 31, 2013. Operational results for the years ended December 31, 2013 and 2012 are as follows:
Operating revenues
Net income
Note 3 – Earnings per Share
Year Ended
December 31,
2013
355,115
145,447
$
$
2012
237,123
71,629
$
$
The following table sets forth the computation of basic and diluted net income per share for Noble-UK:
Allocation of income from continuing operations Basic
Net income attributable to Noble Corporation ....... $
Earnings allocated to unvested share-based
payment awards ................................................
Net income to common shareholders—
Year Ended December 31,
2013
2012
2011
782,697
$
522,344
$
370,898
(9,271)
(5,309)
(3,727)
basic ........................................................ $
773,426
$
517,035
$
367,171
Diluted
Net income attributable to Noble Corporation ....... $
Earnings allocated to unvested share-based
payment awards ................................................
Net income to common shareholders—
782,697
$
522,344
$
370,898
(9,261)
(5,302)
(3,719)
diluted ..................................................... $
773,436
$
517,042
$
367,179
Weighted average shares outstanding—basic.............
Incremental shares issuable from assumed
exercise of stock options ...................................
Weighted average shares outstanding—diluted .........
Weighted average unvested share-based payment
253,288
252,435
251,405
259
253,547
356
252,791
584
251,989
awards .......................................................................
3,036
2,592
2,552
Earnings per share
Basic ................................................................................ $
Diluted ............................................................................. $
Dividends per share ................................................................ $
3.05
3.05
0.76
$
$
$
2.05
2.05
0.54
$
$
$
1.46
1.46
0.60
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, 2013, 2012 and 2011, approximately 1 million shares underlying stock options
were excluded from the diluted net income per share calculation as such stock options were not dilutive.
66
NOBLE CORPORATION PLC AND SUBSIDIARIES
NOBLE CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unless otherwise indicated, dollar amounts in tables are in thousands, except per share data)
Note 4 – Receivables from Customers
At December 31, 2013, we had receivables of approximately $14 million related to the Noble Max Smith,
which are being disputed by our customer, Petróleos Mexicanos (“Pemex”). These receivables have been classified as long-
term and are included in “Other assets” on our Consolidated Balance Sheet. The disputed amounts relate to lost revenues
for downtime that occurred after our rig was damaged when one of Pemex’s supply boats collided with our rig in 2010. In
January 2012, we filed a lawsuit against Pemex in Mexican court seeking recovery of these amounts. While we can make
no assurances as to the outcome of this dispute, we believe we are entitled to the disputed amounts.
Note 5 – Property and Equipment
Property and equipment, at cost, as of December 31, 2013 and 2012 for Noble-UK consisted of the following:
Drilling equipment and facilities .............................. $
Construction in progress ..........................................
Other ........................................................................
Property and equipment, at cost ...................... $
2013
17,130,986
1,854,434
213,347
19,198,767
2012
14,043,717
2,733,296
194,653
16,971,666
$
$
Capital expenditures, including capitalized interest, totaled $2.5 billion and $1.7 billion for the years ended
December 31, 2013 and 2012, respectively. Capitalized interest was $115 million for the year ended December 31, 2013 as
compared to $136 million for the year ended December 31, 2012.
Note 6 – Debt
Long-term debt consists of the following at December 31, 2013 and 2012:
December 31,
2013
December 31,
2012
Senior unsecured notes:
5.875% Senior Notes due 2013........................ $
7.375% Senior Notes due 2014........................
3.45% Senior Notes due 2015 .........................
3.05% Senior Notes due 2016 .........................
2.50% Senior Notes due 2017 .........................
7.50% Senior Notes due 2019 .........................
4.90% Senior Notes due 2020 .........................
4.625% Senior Notes due 2021........................
3.95% Senior Notes due 2022 .........................
6.20% Senior Notes due 2040 .........................
6.05% Senior Notes due 2041 .........................
5.25% Senior Notes due 2042 .........................
Total senior unsecured notes ..................
Commercial paper program ...................................
Total long-term debt ............................... $
—
249,964
350,000
299,967
299,886
201,695
499,022
399,576
399,178
399,893
397,646
498,283
3,995,110
1,561,141
5,556,251
$
$
299,985
249,799
350,000
299,952
299,852
201,695
498,900
399,527
399,095
399,891
397,613
498,257
4,294,566
339,809
4,634,375
Credit Facilities and Commercial Paper Program
Noble currently has three separate credit facilities with an aggregate maximum available capacity of $2.9
billion (together, the “Credit Facilities”). During 2013, we undertook a series of transactions related to our Credit Facilities,
which are summarized by the following:
•
•
in August 2013, we entered into a $600 million 364-day unsecured revolving credit agreement;
in November 2013, we increased our commercial paper program by $900 million. As a result, we
are able to issue up to an aggregate of $2.7 billion in unsecured commercial paper notes. Amounts
67
NOBLE CORPORATION PLC AND SUBSIDIARIES
NOBLE CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unless otherwise indicated, dollar amounts in tables are in thousands, except per share data)
issued under the commercial paper program are supported by our Credit Facilities and, therefore,
are classified as long-term on our Consolidated Balance Sheet. Commercial paper issued reduces
availability under our Credit Facilities; and
•
in December 2013, we extended the maturity date of the $800 million credit facility maturing in
2015 for a one-year period to February 11, 2016. During the extended period, availability under
this credit facility will be reduced by $36 million.
In addition to the above transactions, we continue to maintain a $1.5 billion credit facility that matures in 2017.
The Credit Facilities provide us with the ability to issue up to $375 million in letters of credit in the aggregate.
The issuance of letters of credit does not increase our borrowings outstanding under the Credit Facilities, but it does reduce
the amount available. At December 31, 2013, we had no letters of credit issued under the Credit Facilities.
Senior Unsecured Notes
During the second quarter of 2013, we repaid our $300 million 5.875% Senior Notes using proceeds from our
commercial paper program.
In February 2012, we issued, through our indirect wholly-owned subsidiary, Noble Holding International
Limited (“NHIL”), $1.2 billion aggregate principal amount of senior notes in three separate tranches, comprising of $300
million of 2.50% Senior Notes due 2017, $400 million of 3.95% Senior Notes due 2022, and $500 million of 5.25% Senior
Notes due 2042. The weighted average coupon of all three tranches is 4.13%. The net proceeds of approximately $1.19
billion, after expenses, were primarily used to repay the then outstanding balance on our Credit Facilities.
Our $250 million 7.375% Senior Notes mature during the first quarter of 2014. We anticipate using availability
under our Credit Facilities or commercial paper program to repay the outstanding balance; therefore, we continue to report
the balance as long-term at December 31, 2013.
Covenants
The Credit Facilities are guaranteed by our indirect wholly-owned subsidiaries, NHIL and Noble Drilling
Corporation (“NDC”). The covenants and events of default under the Credit Facilities are substantially similar, and each
facility contains a covenant that limits our ratio of debt to total tangible capitalization, as defined in the Credit Facilities, to
0.60. At December 31, 2013, our ratio of debt to total tangible capitalization was approximately 0.38. We were in
compliance with all covenants under the Credit Facilities as of December 31, 2013.
In addition to the covenants from the Credit Facilities noted above, the indentures governing our outstanding
senior unsecured notes contain covenants that place restrictions on certain merger and consolidation transactions, unless we
are the surviving entity or the other party assumes the obligations under the indenture, and on the ability to sell or transfer
all or substantially all of our assets. In addition, there are restrictions on incurring or assuming certain liens and sale and
lease-back transactions. At December 31, 2013, we were in compliance with all our debt covenants. We continually
monitor compliance with the covenants under our notes and expect to remain in compliance during 2014.
Joint Venture Debt
In the first quarter of 2011, the joint venture credit facilities, which had a combined outstanding balance of
$693 million, were repaid in full through contributions to the joint ventures from Noble and Shell. Shell contributed $361
million in equity to fund their portion of the repayment of joint venture credit facilities and related interest rate swaps,
which were settled concurrently with the repayment and termination of the joint venture credit facilities.
Other
At December 31, 2013, we had letters of credit of $314 million and performance and temporary import bonds
totaling $131 million supported by surety bonds outstanding. Certain of our subsidiaries issue 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.
68
NOBLE CORPORATION PLC AND SUBSIDIARIES
NOBLE CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unless otherwise indicated, dollar amounts in tables are in thousands, except per share data)
Aggregate principal repayments of total debt for the next five years and thereafter are as follows:
2014(1)(2)
1,811,105
$
$
2015
350,000
$
2016
299,967
$
2017
299,886
2018
Thereafter
— $ 2,795,293
$
Total
5,556,251
$
(1)
In March 2014, our $250 million 7.375% senior notes mature. We anticipate using availability on our Credit
Facilities or commercial paper program to repay the outstanding balance; therefore, we have shown the entire balance
as long-term on our December 31, 2013 Consolidated Balance Sheet.
(2) Amounts outstanding under our commercial paper program mature during 2014. As amounts issued under the
commercial paper program are supported by the unused committed capacity under our Credit Facilities, they are
classified as long-term on our Consolidated Balance Sheet at December 31, 2013
Fair Value of Financial Instruments
Fair value represents the amount at which an instrument could be exchanged in a current transaction between
willing parties. The estimated fair value of our senior notes was based on the quoted market prices for similar issues or on
the current rates offered to us for debt of similar remaining maturities (Level 2 measurement).
The following table presents the estimated fair value of our long-term debt as of December 31, 2013 and 2012:
December 31, 2013
December 31, 2012
Carrying
Value
Estimated
Fair Value
Carrying
Value
Estimated
Fair Value
— $
249,964
350,000
299,967
299,886
201,695
499,022
399,576
399,178
399,893
397,646
498,283
3,995,110
1,561,141
5,556,251 $
— $
253,634
363,019
309,878
302,891
232,839
528,597
413,868
390,520
421,720
417,312
476,873
4,111,151
1,561,141
5,672,292 $
299,985 $
249,799
350,000
299,952
299,852
201,695
498,900
399,527
399,095
399,891
397,613
498,257
4,294,566
339,809
4,634,375 $
305,594
269,008
368,824
316,268
309,846
249,358
562,530
442,776
422,227
477,327
468,256
533,422
4,725,436
339,809
5,065,245
Senior unsecured notes:
5.875% Senior Notes due 2013 ........................... $
7.375% Senior Notes due 2014 ...........................
3.45% Senior Notes due 2015 .............................
3.05% Senior Notes due 2016 .............................
2.50% Senior Notes due 2017 .............................
7.50% Senior Notes due 2019 .............................
4.90% Senior Notes due 2020 .............................
4.625% Senior Notes due 2021 ...........................
3.95% Senior Notes due 2022 .............................
6.20% Senior Notes due 2040 .............................
6.05% Senior Notes due 2041 .............................
5.25% Senior Notes due 2042 .............................
Total senior unsecured notes .....................
Commercial paper program ......................................
Total long-term debt .................................. $
Note 7 – Equity
Share Capital
The following table provides a detail of Noble-UK’s share capital as of December 31, 2013 and 2012:
Shares outstanding and trading
Treasury shares ..........................................................
Total shares outstanding
Treasury shares held for share-based compensation
plans ......................................................................
Total shares authorized for issuance
69
2013
253,448
—
253,448
—
253,448
December 31,
2012
252,759
589
253,348
12,802
266,150
NOBLE CORPORATION PLC AND SUBSIDIARIES
NOBLE CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unless otherwise indicated, dollar amounts in tables are in thousands, except per share data)
Repurchased treasury shares are recorded at cost, and relate to shares surrendered by employees for taxes
payable upon the vesting of restricted stock.
In November 2013, concurrent with our change in place of incorporation, 0.8 million repurchased shares held
in treasury were cancelled. Additionally, in December 2013, as part of the capital reduction in connection with our change
in place of incorporation, 12.0 million treasury shares held by a wholly-owned subsidiary were cancelled.
Our Board of Directors may increase our share capital through the issuance of up to approximately 53 million
authorized shares (at current nominal value of $0.01 per share) without obtaining shareholder approval.
In April 2013, our shareholders approved the payment of a dividend aggregating $1.00 per share to be paid in
four equal installments. As of December 31, 2013, we had $128 million of dividends payable outstanding on this
obligation. Any additional issuances of shares would further increase our obligation. Our Board of Directors has the
authority to accelerate the payment of any installment, or portions thereof, at its sole discretion at any time prior to payment
of the final installment.
Our most recent quarterly dividend payment to shareholders, totaling approximately $97 million (or $0.375 per
share), was declared on January 30, 2014 and paid on February 20, 2014 to holders of record on February 10, 2014. This
payment represented the third tranche ($0.25 per share) of our previously approved annual dividend payment to
shareholders, and includes an increase of $0.125 per share that was approved by the Board of Directors in January 2014.
Including the increase approved in January 2014, our current dividend is $1.50 per share on an annualized basis.
Share Repurchases
Under UK law, the company is only permitted to purchase its own shares by way of an “off market purchase”
in a plan approved by shareholders. Prior to our redomiciliation to the UK, a resolution was adopted authorizing the
repurchase of 6,769,891 shares during the five-year period commencing on the date of the redomiciliation. This number of
shares corresponds to the number of shares that Noble-Swiss had authority to repurchase at the time of the
redomiciliation. The company may only fund the purchase of its own shares out of distributable reserves or the proceeds of
a new issue of shares made expressly for that purpose. The company currently has adequate distributable reserves to fund
its currently approved repurchase plan. If any premium above the nominal value of the purchased shares is paid, it must be
paid out of distributable reserves. Any shares purchased by the company out of distributable reserves may be held as
treasury shares.
Share repurchases for each of the three years ended December 31 are as follows:
Year Ended
December 31,
Total Number
of Shares
Purchased (1)
Total Cost
Average
Price Paid
per Share
2013 ................................................................................................
2012 ................................................................................................
2011 ................................................................................................
190,187 $
302,150
261,721
7,653 $
10,516
10,233
40.24
34.80
39.10
(1)
Includes shares surrendered by employees for taxes payable upon the vesting of restricted stock.
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. The 1991 Plan limits the total number of shares issuable under the plan to 50.1
million. As of December 31, 2013, we had 6.4 million shares remaining available for grants to employees under the 1991
Plan.
70
NOBLE CORPORATION PLC AND SUBSIDIARIES
NOBLE CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unless otherwise indicated, dollar amounts in tables are in thousands, except per share data)
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. 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 2.0 million. As of December 31, 2013, we had 0.5 million shares remaining available
for award to non-employee directors under the 1992 Plan.
Stock Options
In general, options have a term of 10 years, an exercise price equal to the fair market value of a share on the
date of grant and generally vest over a three-year period. A summary of the status of stock options granted under both the
1991 Plan and 1992 Plan as of December 31, 2013, 2012 and 2011 and the changes during the year ended on those dates is
presented below:
2013
2012
2011
Number of
Shares
Underlying
Options
Weighted
Average
Exercise
Price
Number of
Shares
Underlying
Options
Weighted
Average
Exercise
Price
Number of
Shares
Underlying
Options
Weighted
Average
Exercise
Price
Outstanding at beginning of year .............................
Granted ....................................................................
Exercised (1) ..............................................................
Forfeited ...................................................................
Outstanding at end of year (2) ....................................
2,027,089 $
—
(212,017)
(6,085)
1,808,987
32.44
—
26.66
31.35
33.13
2,498,662 $
358,772
(645,731)
(184,614)
2,027,089
29.22 2,767,486 $
322,567
36.04
(506,149)
20.97
35.92
(85,242)
32.44 2,498,662
26.22
37.71
17.89
31.33
29.22
Exercisable at end of year (2) .....................................
1,510,929 $
32.47
1,453,945 $
30.70 2,004,370 $
27.55
(1) The intrinsic value of options exercised during the year ended December 31, 2013 was $6 million.
(2) The aggregate intrinsic value of options outstanding and exercisable at December 31, 2013 was $9 million.
The following table summarizes additional information about stock options outstanding at December 31, 2013:
$16.06 to $26.46 ..........................................................................
$26.47 to $35.79 ..........................................................................
$35.80 to $43.01 ..........................................................................
Total .............................................................................................
Options Outstanding
Options Exercisable
Number of
Shares
Underlying
Options
579,471
269,300
960,216
1,808,987
Weighted
Average
Remaining
Life (Years)
Weighted
Average
Exercise
Price
Number
Exercisable
Weighted
Average
Exercise
Price
2.54 $
3.66
6.30
4.70 $
24.30
32.63
38.59
33.13
579,471 $
239,431
692,027
1,510,929 $
24.30
32.88
39.18
32.47
No stock options were granted during the year ended December 31, 2013. Fair value information and related
valuation assumptions for stock options granted during the years ended December 31, 2012 and 2011 are as follows:
Weighted average fair value per option granted ..................... $
Valuation assumptions:
Expected option term (years) .................................................
Expected volatility .................................................................
Historical dividend yield ........................................................
Risk-free interest rate .............................................................
2012
13.41
6
43.0%
1.4%
1.1%
2011
13.20
$
6
38.6%
1.5%
2.6%
71
NOBLE CORPORATION PLC AND SUBSIDIARIES
NOBLE CORPORATION 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 each option is estimated on the date of grant using a Black-Scholes 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, 2013, and changes during the year
ended December 31, 2013, is presented below:
Non-Vested Options at January 1, 2013 .........
Vested ............................................................
Non-Vested Options at December 31, 2013 ...
Shares
Under Outstanding
Options
Weighted-Average
Grant-Date
Fair Value
573,144
(275,086)
298,058
$
$
13.44
13.78
13.13
At December 31, 2013, there was $2 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 0.82 years. Compensation cost recognized
during the years ended December 31, 2013, 2012 and 2011 related to stock options totaled $3 million, $4 million and $3
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 Units (“RSU’s”)
We have awarded both time-vested restricted stock units (“TVRSU’s”) and market based performance-vested
restricted stock units (“PVRSU’s”) under the 1991 Plan. The TVRSU’s generally vest over a three year period. The number
of PVRSU’s 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 TVRSU is valued on the date of award at our underlying share price. The total compensation for units that
ultimately vest is recognized over the service period. The shares and related nominal value are recorded when the restricted
stock unit vests and additional paid-in capital is adjusted as the share-based compensation cost is recognized for financial
reporting purposes.
The market based PVRSU 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 PVRSU’s 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 .................................................................................
2013
2012
2011
34.8%
0.5%
0.4%
41.4%
0.6%
0.3%
57.7%
0.6%
1.3%
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.
72
NOBLE CORPORATION PLC AND SUBSIDIARIES
NOBLE CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unless otherwise indicated, dollar amounts in tables are in thousands, except per share data)
A summary of the RSU awards for each of the years in the period ended December 31 is as follows:
TVRSU
Units awarded (maximum available) .................................
Weighted-average share price at award date ...................... $
Weighted-average vesting period (years) ..........................
PVRSU
Units awarded (maximum available) .................................
Weighted-average share price at award date ...................... $
Three-year performance period ended December 31 .........
Weighted-average award-date fair value ........................... $
2013
2012
2011
1,033,009
41.32
3.0
565,650
41.42
2015
24.97
932,274
36.53
3.0
481,206
36.90
2014
20.05
$
$
$
660,124
37.68
3.0
508,206
37.60
2013
16.77
$
$
$
We award unrestricted shares under the 1992 Plan. During the years ended December 31, 2013, 2012 and 2011,
we awarded 57,095, 65,329 and 69,711 unrestricted shares to non-employee directors, resulting in related compensation
cost of $2 million, $2 million and $3 million, respectively.
A summary of the status of non-vested RSU’s at December 31, 2013 and changes during the year ended
December 31, 2013 is presented below:
Non-vested RSU’s at January 1, 2013 ............................
Awarded .........................................................................
Vested .............................................................................
Forfeited .........................................................................
Non-vested RSU’s at December 31, 2013 ......................
TVRSU’s
Outstanding
1,355,721 $
1,033,009
(609,843)
(126,527)
1,652,360 $
Weighted
Average
Award-Date
Fair Value
37.13
41.32
37.58
39.45
39.40
PVRSU’s
Outstanding (1)
1,151,338 $
565,650
—
(319,851)
1,397,137 $
Weighted
Average
Award-Date
Fair Value
18.32
24.97
—
18.12
21.06
(1) The number of PVRSU’s shown equals the units that would vest if the “maximum” level of performance is achieved.
The minimum number of units is zero and the “target” level of performance is 67 percent of the amounts shown.
At December 31, 2013 there was $39 million of total unrecognized compensation cost related to the TVRSU’s
which is expected to be recognized over a remaining weighted-average period of 1.6 years. The total award-date fair value
of TVRSU’s vested during the year ended December 31, 2013 was $23 million.
At December 31, 2013, there was $12 million of total unrecognized compensation cost related to the PVRSU’s
which is expected to be recognized over a remaining weighted-average period of 1.6 years. The total potential
compensation for PVRSU’s is recognized over the service period regardless of whether the performance thresholds are
ultimately achieved. During the year ended December 31, 2013, 285,656 PVRSU’s for the 2010-2012 performance period
were forfeited. In January 2014, 218,195 PVRSU’s for the 2011-2013 performance period were forfeited.
Share-based amortization recognized during the years ended December 31, 2013, 2012 and 2011 related to all
restricted stock totaled $44 million ($36 million net of income tax), $36 million ($31 million net of income tax) and $32
million ($28 million net of income tax), respectively. Capitalized share-based amortization totaled approximately $1
million for each year in 2013, 2012 and 2011, respectively.
73
NOBLE CORPORATION PLC AND SUBSIDIARIES
NOBLE CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unless otherwise indicated, dollar amounts in tables are in thousands, except per share data)
Note 8 – Accumulated Other Comprehensive Loss
The following tables set forth the components of “Accumulated other comprehensive loss” (“AOCL”) for the
years ended December 31, 2013 and 2012 and changes in AOCL by component for the year ended December 31, 2013. All
amounts within the tables are shown net of tax.
Defined
Benefit
Pension
Items(1)
Foreign
Currency
Items
Total
Balance at December 31, 2012 ............................................ $
(95,071)
$
(20,378)
$
(115,449)
Activity during period:
Other comprehensive loss before reclassifications .....
Amounts reclassified from AOCL .............................
Net current period other comprehensive income/(loss) .......
—
36,473
36,473
(3,188)
—
(3,188)
(3,188)
36,473
33,285
Balance at December 31, 2013 ............................................ $
(58,598)
$
(23,566)
$
(82,164)
(1) Defined benefit pension items relate to actuarial losses and the amortization of prior service costs. Reclassifications
from AOCL are recognized as expense on our Consolidated Statement of Income through either “contract drilling
services” or “general and administrative”. See Note 13 for additional information.
Note 9 – Loss on Impairment
During 2013, we determined that our FPSO, Noble Seillean, was partially impaired as a result of our annual
impairment test and the current market outlook for this unit. We estimated the fair value of this unit by considering both
income and market-based valuation approaches utilizing statistics for comparable rigs (Level 2 fair value measurement).
Based on these estimates, we recognized a charge of $40 million for the year ended December 31, 2013.
In 2012, we determined that our submersible rig fleet, consisting of two cold stacked rigs, was partially
impaired due to the declining market outlook for drilling services for that rig type. We estimated the fair value of the rigs
based on the salvage value of the rigs and a recent transaction involving a similar unit owned by a peer company (Level 2
fair value measurement). Based on these estimates, we recognized a charge of approximately $13 million for the year ended
December 31, 2012. During the current year, we recorded an additional impairment charge of approximately $4 million on
these rigs arising from the potential disposition of these assets to an unrelated third party. In January 2014, we completed
the sale of the submersibles for a total sales price of $7 million.
In addition, during the prior year we determined that certain corporate assets were partially impaired due to a
declining market for, and the potential disposal of, the assets. We estimated the fair value of the assets based on a signed
letter of intent to sell the assets (Level 2 fair value measurement). Based on these estimates, we recognized a charge of
approximately $7 million for the year ended December 31, 2012.
Note 10 – Gain on Disposal of Assets, net
During the third quarter of 2013, we completed the sale of the Noble Lewis Dugger for $61 million to an
unrelated third party in Mexico. In connection with the sale, we recorded a pre-tax gain of approximately $36 million.
Note 11 – Gain on Contract Settlements/Extinguishments, Net
During the third quarter of 2013, we received $45 million related to the settlement of all claims against the
former shareholders of FDR Holdings, Ltd., which we acquired in July 2010, relating to alleged breaches of various
representations and warranties contained in the purchase agreement.
During the second quarter of 2012, we received approximately $5 million from the settlement of a claim
relating to the Noble David Tinsley, which had experienced a “punch-through” while being positioned on location in 2009.
We had originally recorded a $17 million charge during 2009 related to this incident. Additionally, during the second
quarter of 2012, we settled an action against certain vendors for damages sustained during Hurricane Ike. We recognized a
74
NOBLE CORPORATION PLC AND SUBSIDIARIES
NOBLE CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unless otherwise indicated, dollar amounts in tables are in thousands, except per share data)
net gain of approximately $28 million related to this settlement. We also resolved all outstanding matters with Anadarko
Petroleum Company (“Anadarko”) related to the previously disclosed force majeure action, Hurricane Ike matters and
receivables relating to the Noble Amos Runner.
In January 2011, we announced the signing of a Memorandum of Understanding (“MOU”) with Petróleo
Brasileiro S.A. (“Petrobras”) regarding operations in Brazil. Under the terms of the MOU, we agreed to substitute the Noble
Phoenix, then under contract with Shell in Southeast Asia, for the Noble Muravlenko. In connection with the cancellation of
the contract on the Noble Phoenix, we recognized a non-cash gain of approximately $52.5 million during the first quarter of
2011, which represented the unamortized fair value of the in-place contract at acquisition. As a result of the substitution, we
reached a decision not to proceed with the previously announced reliability upgrade to the Noble Muravlenko that was
scheduled to take place in 2013, and therefore, incurred a non-cash charge of approximately $32.6 million related to the
termination of outstanding shipyard contracts. The substitution was completed during the fourth quarter of 2012.
In February 2011, the outstanding balances of the Bully joint venture credit facilities, which totaled $693
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. As a result of these transactions, we
recognized a gain of approximately $1.3 million during the first quarter of 2011.
Note 12 – Income Taxes
Noble-UK is a company which is tax resident in the UK and, as such, will be subject to UK corporation tax on
its taxable profits and gains. A UK tax exemption is available in respect of qualifying dividends income and capital gains
related to the sale of qualifying participations. We operate in various countries throughout the world, including the United
States. The income of the non-UK subsidiaries is not expected to be subject to UK corporation tax. Prior to the
redomiciliation, Noble-Swiss was the group holding company and was exempt from Swiss cantonal and communal income
tax on its worldwide income, and was 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 do not expect the redomiciliation from
Switzerland to the UK to have a material impact on our effective tax rate.
Consequently, we have taken account of those tax exemptions and provided for income taxes based on the laws
and rates in effect in the countries in which operations are conducted, or in which we or our subsidiaries have a taxable
presence for income tax purposes.
75
NOBLE CORPORATION PLC AND SUBSIDIARIES
NOBLE CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unless otherwise indicated, dollar amounts in tables are in thousands, except per share data)
The components of the net deferred taxes are as follows:
Deferred tax assets
United States ...........................................................................
Deferred pension plan amounts ..................................... $
Accrued expenses not currently deductible ...................
Other .............................................................................
Non-U.S. .................................................................................
Net operating loss carry forwards .................................
Deferred pension plan amounts .....................................
Other .............................................................................
Deferred tax assets ...........................................................................
Less: valuation allowance .......................................................
Net deferred tax assets ..................................................................... $
Deferred tax liabilities
United States ...........................................................................
Excess of net book basis over remaining tax basis ........ $
Other .............................................................................
Non-U.S. .................................................................................
Excess of net book basis over remaining tax basis ........
Other .............................................................................
Deferred tax liabilities ...................................................................... $
Net deferred tax liabilities ................................................................ $
Income before income taxes consists of the following:
2013
2012
8,859 $
31,769
14,542
33,021
2,130
300
90,621
(16,847)
73,774 $
14,382
20,431
259
43,314
3,832
3,631
85,849
—
85,849
(275,073) $
(6,002)
(254,724)
(2,102)
(1,034)
(2,452)
(284,561) $
(210,787) $
(38,726)
—
(295,552)
(209,703)
United States ...................................................................... $
Non-U.S. ............................................................................
Total ................................................................................... $
The income tax provision consists of the following:
Year Ended December 31,
2013
253,770
764,242
1,018,012
2012
209,662
493,563
703,225
$
$
2011
142,922
293,328
436,250
$
$
Current—United States .......................................................... $
Current—Non-U.S. ................................................................
Deferred—United States ........................................................
Deferred—Non-U.S. ..............................................................
Total ....................................................................................... $
Year Ended December 31,
2013
88,956
94,605
(11,531)
(4,424)
167,606
2012
88,183
79,024
(21,228)
1,109
147,088
$
$
2011
68,254
86,696
(39,167)
(43,158)
72,625
$
$
76
NOBLE CORPORATION PLC AND SUBSIDIARIES
NOBLE CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unless otherwise indicated, dollar amounts in tables are in thousands, except per share data)
The following is a reconciliation of our reserve for uncertain tax positions, excluding interest and penalties:
Gross balance at January 1, .................................................. $
Additions based on tax positions related to current
year ........................................................................
Additions for tax positions of prior years ...................
Reductions for tax positions of prior years .................
Expiration of statutes (1)...............................................
Tax settlements ...........................................................
Gross balance at December 31, ............................................
Related tax benefits ...........................................
Net reserve at December 31, ................................................ $
2013
115,009
2012
108,036
2011
128,581
$
$
2,318
18,906
(7,910)
(2,633)
(9,721)
115,969
(2,038)
113,931
3,704
16,432
(7,917)
(1,903)
(3,343)
115,009
(9,981)
105,028
$
5,130
5,718
(2,354)
(28,846)
(193)
108,036
(8,127)
99,909
$
(1)
$(15.7) million relate to transactions recorded directly to equity for the years ended December 31, 2011. There were
no transactions recorded directly to equity for the years ended December 31, 2013 and 2012.
The liabilities related to our reserve for uncertain tax positions are comprised of the following:
Reserve for uncertain tax positions, excluding interest and
penalties ...................................................................................... $
Interest and penalties included in “Other liabilities” .............
113,931
13,190
$
105,028
19,944
Reserve for uncertain tax positions, including interest and
penalties ...................................................................................... $
127,121
$
124,972
2013
2012
If these reserves of $127 million are not realized, the provision for income taxes will be reduced by $127
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 resulted in an income tax benefit of $7
million in 2013, an income tax expense of $5 million in 2012 and an income tax benefit of $5 million in 2011.
It is reasonably possible that our existing liabilities related to our reserve for uncertain tax positions 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, Saudi Arabia, Switzerland, the United
Kingdom and the United States. We are no longer subject to U.S. Federal income tax examinations for years before 2009
and non-U.S. income tax examinations for years before 2003.
77
NOBLE CORPORATION PLC AND SUBSIDIARIES
NOBLE CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unless otherwise indicated, dollar amounts in tables are in thousands, except per share data)
Noble-UK conducts substantially all of its business through Noble-Cayman and its subsidiaries. The income of
our non-UK subsidiaries is not subject to UK income tax. Earnings are taxable in the United Kingdom at the UK statutory
rate of 23.25 percent. Ongoing consultative process in the United Kingdom and a possible change in law could materially
impact our tax rate on operations in the United Kingdom continental shelf. A reconciliation of tax rates outside of the
United Kingdom and the Cayman Islands to our Noble-UK effective rate is shown below:
Effect of:
Tax rates which are different than the UK and Cayman Island
rates ............................................................................................
Reserve for (resolution of) tax authority audits ...............................
Total ..........................................................................................................
17.1%
-0.6%
16.5%
20.7%
0.2%
20.9%
18.9%
-2.2%
16.7%
Year Ended December 31,
2013
2012
2011
We generated and fully utilized U.S. foreign tax credits of $15 million, $22 million and $21 million in 2013,
2012 and 2011, respectively.
Deferred income taxes have not been provided on approximately $80 million of undistributed earnings of our
subsidiaries. We consider such earnings to be permanently reinvested. If such earnings were to be distributed, we may be
subject to additional income taxes of approximately $20 to $25 million.
Note 13 – Employee Benefit Plans
Defined Benefit Plans
We have two U.S. noncontributory defined benefit pension plans: one which covers certain salaried employees
and one 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 salary U.S. plan. 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-UK, 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.
78
NOBLE CORPORATION PLC AND SUBSIDIARIES
NOBLE CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unless otherwise indicated, dollar amounts in tables are in thousands, except per share data)
A reconciliation of the changes in projected benefit obligations (“PBO”) for our non-U.S. and U.S. plans is as
follows:
Benefit obligation at beginning of year .................................... $
Service cost .....................................................................
Interest cost .....................................................................
Actuarial loss (gain) ........................................................
Plan amendments ............................................................
Benefits paid ...................................................................
Plan participants’ contributions ......................................
Foreign exchange rate changes .......................................
Benefit obligation at end of year .............................................. $
2013
Non-U.S.
151,781 $
5,496
5,085
(4,584)
(227)
(2,558)
956
5,642
161,591 $
Year Ended December 31,
U.S.
225,885 $
10,724
9,049
(17,652)
—
(4,068)
—
—
223,938 $
2012
Non-U.S.
111,164 $
4,461
5,372
28,442
—
(2,442)
747
4,037
151,781 $
U.S.
192,042
9,612
8,719
19,115
—
(3,603)
—
—
225,885
A reconciliation of the changes in fair value of plan assets is as follows:
Year Ended December 31,
2013
2012
Non-U.S.
U.S.
Non-U.S.
U.S.
Fair value of plan assets at beginning of year ........... $
Actual return on plan assets ............................
Employer contributions ...................................
Benefits and expenses paid .............................
Plan participants’ contributions ......................
Foreign exchange rate changes .......................
151,819 $
8,470
9,365
(2,558)
956
6,205
167,170 $
31,518
6,391
(4,068)
—
—
143,110 $
935
5,647
(2,442)
747
3,822
140,828
19,251
10,694
(3,603)
—
—
Fair value of plan assets at end of year ..................... $
174,257 $
201,011 $
151,819 $
167,170
The funded status of the plans is as follows:
Year Ended December 31,
2013
2012
Non-U.S.
U.S.
Non-U.S.
U.S.
Funded status .................................................................................. $
12,666 $
(22,927) $
38 $
(58,715)
Amounts recognized in the Consolidated Balance Sheets consist of:
Other assets (noncurrent) ................................................................ $
Other liabilities (current) ................................................................
Other liabilities (noncurrent) ..........................................................
13,586 $
—
(920)
6,132 $
(2,120)
(26,939)
3,486 $
—
(3,448)
—
(1,988)
(56,727)
Net amount recognized ................................................................... $
12,666 $
(22,927) $
38 $
(58,715)
2013
2012
Non-U.S.
U.S.
Non-U.S.
U.S.
79
NOBLE CORPORATION PLC AND SUBSIDIARIES
NOBLE CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unless otherwise indicated, dollar amounts in tables are in thousands, except per share data)
Amounts recognized in AOCL consist of:
Year Ended December 31,
2013
2012
Non-U.S.
U.S.
Non-U.S.
U.S.
Net actuarial loss ........................................................................... $
Prior service cost ...........................................................................
Deferred income tax asset .............................................................
30,902 $
(232)
(2,130)
45,338 $
905
(16,185)
40,288 $
—
(3,832)
89,046
1,131
(31,562)
Accumulated other comprehensive loss ........................................ $
28,540 $
30,058 $
36,456 $
58,615
Pension cost includes the following components:
Year Ended December 31,
2013
2012
2011
Non-U.S.
U.S.
Non-U.S.
U.S.
Non-U.S.
U.S.
Service Cost ................................................................. $
Interest Cost .................................................................
Return on plan assets ...................................................
Amortization of prior service cost ...............................
Amortization of transition obligation ...........................
Recognized net actuarial loss .......................................
5,496 $
5,085
(5,836)
—
—
1,670
10,724 $
9,049
(13,102)
227
—
7,639
4,461 $
5,372
(5,344)
—
—
803
9,612 $
8,719
(11,171)
227
—
7,356
4,545 $
5,586
(5,647)
483
74
—
8,608
8,570
(11,072)
227
—
3,374
Net pension expense .................................................... $
6,415 $
14,537 $
5,292 $
14,743 $
5,041 $
9,707
The estimated prior service cost, transition obligation and net actuarial loss that will be amortized from AOCL
into net periodic pension cost in 2014 are $0 million, $0 million and $1.3 million, respectively, for non-U.S. plans and $0.2
million, $0 million and $2.6 million, respectively, for U.S. plans.
Defined Benefit Plans—Disaggregated Plan Information
Disaggregated information regarding our non-U.S. and U.S. plans is summarized below:
Year Ended December 31,
2013
2012
Non-U.S.
U.S.
Non-U.S.
U.S.
Projected benefit obligation ....................................................... $
Accumulated benefit obligation ................................................
Fair value of plan assets ............................................................
161,591 $
154,140
174,257
223,938 $
185,383
201,011
151,781 $
146,612
151,819
225,885
185,961
167,170
The following table provides information related to those plans in which the PBO exceeded the fair value of the
plan assets at December 31, 2013 and 2012. 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,
2013
2012
Non-U.S.
U.S.
Non-U.S.
U.S.
Projected benefit obligation .......................................................... $
Fair value of plan assets ...............................................................
6,740 $
5,820
200,472 $
171,413
87,455 $
84,007
225,885
167,170
The PBO for the unfunded excess benefit plan was $13 million at December 31, 2013 as compared to $14
million in 2012, and is included under “U.S.” in the above tables.
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NOBLE CORPORATION PLC AND SUBSIDIARIES
NOBLE CORPORATION 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 accumulated benefit obligation
(“ABO”) exceeded the fair value of plan assets at December 31, 2013 and 2012. 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,
2013
2012
Non-U.S.
U.S.
Non-U.S.
U.S.
Accumulated benefit obligation ......................................... $
Fair value of plan assets ....................................................
6,493 $
5,820
11,997 $
—
6,481 $
5,074
185,961
167,170
The ABO for the unfunded excess benefit plan was $12 million at December 31, 2013 as compared to $13
million in 2012, and is included under “U.S.” in the above tables.
Defined Benefit Plans—Key Assumptions
The key assumptions for the plans are summarized below:
Year Ended December 31,
2013
2012
Non-U.S.
U.S.
Non-U.S.
U.S.
Weighted-average assumptions used to determine
benefit obligations:
Discount Rate .......................................................
Rate of compensation increase .............................
3.9%-4.7%
3.6%-4.5%
3.9%-5.1%
5.0%
3.6%-4.5%
3.6%-4.1%
3.1%-4.2%
5.0%
Weighted-average assumptions used to determine
periodic benefit cost:
Year Ended December 31,
2013
2012
2011
Non-U.S.
U.S.
Non-U.S.
U.S.
Non-U.S.
U.S.
Discount Rate .......................................................... 2.5%-4.5% 3.1%-4.2% 4.7%-5.0% 4.3%-4.7% 5.3%-5.4% 5.0%-5.8%
Expected long-term return on assets ........................ 2.3%-5.7%
Rate of compensation increase ................................ 3.6%-4.1%
3.9%-5.4%
2.3%-4.4%
2.2%-6.3%
3.9%-4.6%
7.8%
5.0%
7.8%
5.0%
7.8%
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.
81
NOBLE CORPORATION PLC AND SUBSIDIARIES
NOBLE CORPORATION 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 (“NEL”) and the Noble Drilling (Nederland) B.V.
(“NDNBV”) 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.
The Noble Drilling (Land Support) Limited pension plan has a target asset allocation of 70 percent equity
securities and 30 percent debt securities. 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 as of December 31, 2013 and 2012 are as follows:
December 31, 2013
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 ........................................................................................ $
Equity securities:
207 $
207 $
— $
International companies ................................................. $
54,722 $
54,722 $
— $
Fixed income securities:
Corporate bonds ............................................................. $
Other ..............................................................................
41,767 $
77,561
— $
—
41,767 $
—
Total ........................................................................................ $
174,257 $
54,929 $
41,767 $
—
—
—
77,561
77,561
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NOBLE CORPORATION PLC AND SUBSIDIARIES
NOBLE CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unless otherwise indicated, dollar amounts in tables are in thousands, except per share data)
December 31, 2012
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 ....................................................................................... $
Equity securities:
7,158 $
7,158 $
— $
International companies ................................................ $
45,560 $
45,560 $
— $
Fixed income securities:
Corporate bonds ............................................................ $
Other .............................................................................
22,189 $
76,912
— $
—
22,189 $
—
Total ....................................................................................... $
151,819 $
52,718 $
22,189 $
—
—
—
76,912
76,912
At December 31, 2013, assets of both NEL and NDNBV are invested in instruments that are similar in form to
a guaranteed insurance contract. There are no observable market values for these assets (Level 3); however, the amounts
listed as plan assets were materially similar to the anticipated benefit obligations that were anticipated under the
plan. Amounts were therefore calculated using actuarial assumptions completed by third-party consultants employed by
Noble. The following table details the activity related to these investments during the year.
Balance as of December 31, 2012 ....................... $
Assets sold/benefits paid .............................
Gain on exchange rate .................................
Loss on investment ......................................
Market
Value
76,912
(776)
3,478
(2,053)
Balance as of December 31, 2013 ....................... $
77,561
U.S. Plans
The 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 67 percent in
equity securities, 32 percent in debt securities and 1 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
83
NOBLE CORPORATION PLC AND SUBSIDIARIES
NOBLE CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unless otherwise indicated, dollar amounts in tables are in thousands, except per share data)
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 target amount in international equities is 20 percent of plan assets and may not exceed 23 percent of plan
assets. Of the international equities amount, no more than 30 percent can be related to any particular country. 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. 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 the Barclays Capital Aggregate Bond Index by 1.5 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.
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 (2.1 percent of total U.S. plan assets) and $4
million (2.3 percent of total U.S. plan assets) at December 31, 2013 and 2012, respectively.
The actual fair values of U.S. pension plan assets as of December 31, 2013 and 2012 are as follows:
December 31, 2013
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 ...................................................................................... $
Equity securities:
2,184 $
2,184 $
— $
United States ................................................................ $
International .................................................................
104,899 $
33,012
80,714 $
33,012
24,185 $
—
Fixed income securities:
Corporate bonds ........................................................... $
Total ...................................................................................... $
60,916 $
201,011 $
60,916 $
176,826 $
— $
24,185 $
—
—
—
—
—
84
NOBLE CORPORATION PLC AND SUBSIDIARIES
NOBLE CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unless otherwise indicated, dollar amounts in tables are in thousands, except per share data)
December 31, 2012
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 ................................................................................ $
Equity securities:
1,609 $
1,609 $
— $
United States .......................................................... $
International ...........................................................
79,264 $
34,466
60,112 $
34,466
19,152 $
—
Fixed income securities:
Corporate bonds ..................................................... $
51,831 $
51,831 $
— $
Total ............................................................................... $
167,170 $
148,018 $
19,152 $
—
—
—
—
—
While the underlying investments related to the equity securities are traded in active markets, which is a Level
1 measurement, the funds we own the investments through are not themselves actively traded, and therefore are being
presented as a Level 2 measurement at both December 31, 2013 and 2012.
As of December 31, 2013, 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 2013, we made total contributions of $9 million and $6 million to our non-U.S. and U.S. pension plans,
respectively. In 2012, we made total contributions of $6 million and $11 million to our non-U.S. and U.S. pension plans,
respectively. In 2011, we made total contributions of $6 million and $5 million to our non-U.S. and U.S. pension plans,
respectively. We expect our aggregate minimum contributions to our non-U.S. and U.S. plans in 2014, subject to applicable
law, to be $11 million and $2 million, respectively. We continue to monitor and evaluate funding options based upon
market conditions and may increase contributions at our discretion.
The following table summarizes our estimated benefit payments at December 31, 2013:
Total
2014
2015
2016
2017
2018
Thereafter
Payments by Period
Estimated benefit payments
Non U.S. plan .................................. $
U.S. plan ..........................................
40,007 $ 2,585 $ 2,792 $
7,086
108,134
6,203
2,997 $
8,272
3,308 $
8,001
3,327 $
9,112
24,998
69,460
Total estimated benefit payments .... $ 148,141 $ 9,671 $ 8,995 $ 11,269 $ 11,309 $ 12,439 $
94,458
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, 2013 and 2012, our liability for the Restoration Plan was $8 million and $7 million,
respectively, and is included in “Accrued payroll and related costs.”
85
NOBLE CORPORATION PLC AND SUBSIDIARIES
NOBLE CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unless otherwise indicated, dollar amounts in tables are in thousands, except per share data)
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 $5 million, $4 million and $2 million in 2013, 2012 and
2011, respectively.
We sponsor a 401(k) savings plan and other retirement, health and welfare plans for the benefit of our
employees. The cost of maintaining these plans aggregated $94 million, $84 million and $61 million in 2013, 2012 and
2011, respectively. We do not provide post-retirement benefits (other than pensions) or any post-employment benefits to
our employees.
Note 14 – Derivative Instruments and Hedging Activities
We 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. During the period, we maintained certain foreign currency forward contracts that did not qualify
under the FASB standards for hedge accounting treatment and therefore, changes in fair values were recognized as either
income or loss in our consolidated income statement.
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. During 2011, we recognized a loss of $1.2
million in other income due to interest rate swap hedge ineffectiveness. No income or loss was recognized during 2013 and
2012 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 have historically maintained short-term forward
contracts settling monthly in their respective local currencies. During 2013, we entered into forward contracts of
approximately $128 million, all of which settled during the year. At both December 31, 2013 and 2012, we had no
outstanding derivative contracts.
Our two joint ventures had maintained interest rate swaps which were classified as cash flow hedges. The
purpose of these hedges was to satisfy bank covenants of the then outstanding credit facilities and to limit exposure to
changes in interest rates. In February 2011, the outstanding balances of the joint venture credit facilities and the related
interest rate swaps were settled and terminated. As a result of these transactions, we recognized a gain of $1 million during
the year ended December 31, 2011.
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:
2012
2011
Net unrealized gain (loss) at beginning of period ................. $ (3,061)
Activity during period:
$ 1,970
Settlement of foreign currency forward contracts
during the period .....................................................
Settlement of interest rate swaps during the period .....
Net unrealized loss on outstanding foreign currency
3,061
—
(1,604)
(366)
forward contracts ....................................................
—
(3,061)
Net unrealized loss at end of period ...................................... $ —
$ (3,061)
86
NOBLE CORPORATION PLC AND SUBSIDIARIES
NOBLE CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unless otherwise indicated, dollar amounts in tables are in thousands, except per share data)
Foreign Currency Forward Contracts
The Bully 2 joint venture maintained foreign currency forward contracts to help mitigate the risk of currency
fluctuation of the Singapore Dollar for the construction of the Noble Bully II drillship. These contracts were not designated
for hedge accounting treatment under FASB standards, and therefore, changes in fair values were 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, and all were settled during the first quarter of 2011. For the year ended December 31, 2011, we recognized
a loss of $0.5 million related to these foreign currency forward contracts.
Financial Statement Presentation
To supplement the fair value disclosures in Note 15, the following summarizes the recognized gains and losses
of cash flow hedges and non-designated derivatives through AOCL or through “other income” for the years ended
December 31, 2013 and 2012:
Gain/(loss) recognized
through AOCL
Gain reclassified from
AOCL to “other
income”
Gain/(loss) recognized
through “other income”
2013
2012
2013
2012
2013
2012
Cash flow hedges
Foreign currency forward contracts ........................... $
(2,526) $ — $ 2,526 $ 3,061 $ — $ —
During the year ended December 31, 2011, in connection with the settlement of our interest rate swaps, $1
million was reclassified from AOCL to “gain on contract extinguishments, net”.
For cash flow presentation purposes, cash outflows of $29 million were recognized in the financing activities
section related to the settlement of interest rate swaps in 2011. All other amounts are recognized through changes in
operating activities and are recognized through changes in other assets and liabilities.
Note 15 – Financial Instruments and Credit Risk
The following table presents the carrying amount and estimated fair value as of December 31, 2013 and 2012
of our financial instruments recognized at fair value on a recurring basis:
December 31, 2013
Estimated Fair Value Measurements
Quoted
Prices in
Active
Markets
(Level 1)
Significant
Other
Observable
Inputs
(Level 2)
Significant
Unobservable
Inputs
(Level 3)
Carrying
Amount
Assets—
Marketable securities ................................................................. $
7,230 $ 7,230 $
— $
—
December 31, 2012
Estimated Fair Value
Measurements
Quoted
Prices in
Active
Markets
(Level 1)
Significant
Other
Observable
Inputs
(Level 2)
Significant
Unobservable
Inputs
(Level 3)
Carrying
Amount
Assets—
Marketable securities ................................................................. $
5,816 $ 5,816 $
— $
—
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
87
NOBLE CORPORATION PLC AND SUBSIDIARIES
NOBLE CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unless otherwise indicated, dollar amounts in tables are in thousands, except per share data)
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 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.
Revenues from Shell and its affiliates accounted for approximately 41 percent, 32 percent and 24 percent of our
consolidated operating revenues in 2013, 2012 and 2011, respectively. Revenues from Petrobras accounted for
approximately 12 percent, 14 percent and 18 percent of our consolidated operating revenues in 2013, 2012 and 2011,
respectively. Revenues from Pemex accounted for approximately 15 percent of our consolidated operating revenues in
2011. Pemex did not account for more than 10 percent of our total operating revenues in either 2013 or 2012. No other
customer accounted for more than 10 percent of our consolidated operating revenues in 2013, 2012 and 2011.
Note 16 – Commitments and Contingencies
The Noble Homer Ferrington was under contract with a subsidiary of ExxonMobil Corporation
(“ExxonMobil”), which 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, and ExxonMobil 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 was ready to operate under the drilling contract. The rig operated under farmout arrangements
from March 2011 to the conclusion of the contract in the second quarter of 2012. 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. BP and
ExxonMobil have asserted counterclaims against us for alleged costs and damages incurred in connection with the
assignment agreement. The arbitration process is proceeding, and we intend to vigorously pursue these claims. As a result
of the uncertainties noted above, we have not recognized any revenue during the assignment period and the matter could
have a material positive effect on our results of operations or cash flows in the period the matter is resolved should the
arbitration panel ultimately rule in our favor.
In August 2007, we entered into a drilling contract with Marathon Oil Company (“Marathon”) for the Noble
Jim Day to operate in the U.S. Gulf of Mexico. On January 1, 2011, Marathon provided notice that it was terminating the
contract. Marathon’s stated reason for the termination was that the rig had not been accepted by Marathon by December 31,
2010, and Marathon also maintained that a force majeure condition existed under the contract. The contract contained a
provision allowing Marathon to terminate if the rig had not commenced operations by December 31, 2010. We believe the
rig was ready to commence operations and should have been accepted by Marathon. In March 2011, we filed suit in Texas
State District Court against Marathon seeking damages for its actions. The contract term was for four years, and we
contracted the rig for much of the original term with other customers. In December 2013, we amicably settled the lawsuit
with Marathon.
In November 2012, the U.S. Coast Guard in Alaska conducted an inspection of our drillship, the Noble
Discoverer, and cited a number of deficiencies to be remediated, including issues relating to the main propulsion and safety
management systems. We initiated a comprehensive effort to address the deficiencies identified by the Coast Guard and
commenced an ongoing dialogue with the agency to keep it apprised of our progress. We began an internal investigation in
conjunction with the Coast Guard inspection, and the Coast Guard then began its own investigation. We reported certain
potential violations of applicable law to the Coast Guard identified as a result of our internal investigation. These related to
what we believe were certain unauthorized disposals of collected deck and sea water from the Noble Discoverer, collected,
treated deck water from the Kulluk and potential record-keeping issues with the oil record books for the Noble Discoverer,
Kulluk and other rigs, and with the garbage log for the Kulluk. The Coast Guard referred the Noble Discoverer and Kulluk
88
NOBLE CORPORATION PLC AND SUBSIDIARIES
NOBLE CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unless otherwise indicated, dollar amounts in tables are in thousands, except per share data)
matters to the U.S. Department of Justice (“DOJ”) for further investigation. We are cooperating with the DOJ and Coast
Guard in connection with their investigation, and are maintaining a dialogue with the DOJ. We cannot predict when the
DOJ and Coast Guard will conclude the investigation and cannot provide any assurances with respect to the outcome. We
expect the DOJ to seek criminal sanctions, including monetary penalties, against us, as well as potentially seek oversight of
our operational compliance programs. Based on information obtained to date, we believe it is probable that we will have to
pay some amount in fines and penalties to resolve this matter. However, at this time we cannot appropriately estimate the
potential liability that may result and we have not made any accrual in our consolidated financial statements at
December 31, 2013 related to the matter.
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, 2013, there were approximately 34 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 4, the resolution of which, in the opinion of
management, will not be material to our financial position, results of operations or cash flows. There is inherent risk in any
litigation or dispute and no assurance can be given as to the outcome of these claims.
We operate in a number of countries throughout the world and our tax returns filed in those jurisdictions are
subject to review and examination by tax authorities within those jurisdictions. The IRS has completed its examination of
our tax reporting for the taxable year ended December 31, 2008. In June 2013, the IRS examination team notified us that
they were no longer proposing any adjustments with respect to our tax reporting for the taxable year ended December 31,
2008. We are due a refund for the 2008 tax year. In November 2013, the congressional Joint Committee on Taxation
completed its review of this refund with no exception to the conclusions reached by the IRS. The IRS began its examination
of our tax reporting for the taxable year ended December 31, 2009. We believe that we have accurately reported all
amounts in our 2009 tax returns. Furthermore, we are currently contesting several non-U.S. tax assessments and may
contest 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. We cannot predict or provide
assurance as to the ultimate outcome of any existing or future assessments.
During the second quarter of 2013, we reached an agreement with the tax authorities in Mexico resolving
certain previously disclosed tax assessments. This settlement removed potential contingent tax exposure of $502 million for
periods prior to 2007, which includes the assessments for years 2002 through 2005 of approximately $348 million, as well
as settlement for 2006. The settlement of these assessments did not have a material impact on our consolidated financial
statements.
Audit claims of approximately $320 million attributable to income, customs and other business taxes have been
assessed against us. We have contested, or intend to contest, these assessments, including through litigation if necessary,
and we believe the ultimate resolution, for which we have not made any accrual, will not have a material adverse effect on
our consolidated financial statements. Tax authorities may issue additional assessments or pursue legal actions as a result of
tax audits and we cannot predict or provide assurance as to the ultimate outcome of such assessments and legal actions.
We maintain certain insurance coverage against specified marine perils, which includes physical damage and
loss of hire. Damage caused by hurricanes has negatively impacted the energy insurance market, resulting in more
restrictive and expensive coverage for U.S. named windstorm perils. Accordingly, we have elected to significantly reduce
the named windstorm insurance on our rigs operating in the U.S. Gulf of Mexico. Presently, we insure the Noble Jim
Thompson, Noble Amos Runner and Noble Driller for “total loss only” when caused by a named windstorm. For the Noble
Bully I, our customer assumes the risk of loss due to a named windstorm event, pursuant to the terms of the drilling
contract, through the purchase of insurance coverage (provided that we are responsible for any deductible under such
policy) or, at its option, the assumption of the risk of loss up to the insured value in lieu of the purchase of such insurance.
The remaining rigs in the U.S. Gulf of Mexico are self-insured for named windstorm perils. Our rigs located in the Mexico
89
NOBLE CORPORATION PLC AND SUBSIDIARIES
NOBLE CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unless otherwise indicated, dollar amounts in tables are in thousands, except per share data)
portion of the Gulf of Mexico remain covered by commercial insurance for windstorm damage. In addition, we maintain
physical damage deductibles on our rigs ranging from $15 million to $25 million per occurrence, depending on
location. The loss of hire coverage applies only to our rigs operating under contract with a dayrate equal to or greater than
$200,000 a day and is subject to a 45-day waiting period for each unit and each occurrence.
Although we maintain insurance in the geographic areas in which we operate, pollution, reservoir damage and
environmental risks generally are not fully insurable. Our insurance policies and contractual rights to indemnity may not
adequately cover our losses or may have exclusions of coverage for some losses. We do not have insurance coverage or
rights to indemnity for all risks, including loss of hire insurance on most of the rigs in our fleet. Uninsured exposures may
include expatriate activities prohibited by U.S. laws and regulations, radiation hazards, certain loss or damage to property
on board our rigs and losses relating to shore-based terrorist acts or strikes. If a significant accident or other event occurs
and is not fully covered by insurance or contractual indemnity, it could materially adversely affect our financial position,
results of operations or cash flows. Additionally, there can be no assurance that those parties with contractual obligations to
indemnify us will necessarily be financially able to indemnify us against all these risks.
We carry protection and indemnity insurance covering marine third party liability exposures, which also
includes coverage for employer’s liability resulting from personal injury to our offshore drilling crews. Our protection and
indemnity policy currently has a standard deductible of $10 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 $2.0 billion at December 31, 2013.
We have entered into agreements with certain of our executive officers, as well as certain other employees.
These agreements become effective upon a change of control of Noble-UK (within the meaning set forth in the agreements)
or a termination of employment in connection with or in anticipation of a change of control, and remain effective for three
years thereafter. These agreements provide for compensation and certain other benefits under such circumstances.
Nigerian Operations
During the fourth quarter of 2007, our Nigerian subsidiary received letters from the Nigerian Maritime
Administration and Safety Agency, or NIMASA, seeking to collect a 2 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 rigs, NIMASA is seeking to apply a
provision of the Nigerian cabotage laws (which became effective on May 1, 2004) to our offshore drilling rigs by
considering these rigs to be “vessels” within the meaning of those laws and therefore subject to the surcharge, which is
imposed only upon “vessels.” Our offshore drilling rigs 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 rigs 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 with
respect to one of our rigs. 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 appealed the court’s ruling on procedural grounds, and the court dismissed NIMASA’s
lawsuit filed against us in February 2009. In December 2013, the court of appeals ruled in favor of NIMASA and quashed
the High Court’s decision in our favor, although there is no adverse ruling against us with respect to the merits. We intend
to appeal this latest decision and take further appropriate legal action to resist the application of Nigeria’s cabotage laws to
our drilling rigs. 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 rigs 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 future operations in Nigerian waters and require us to incur additional costs of
compliance.
90
NOBLE CORPORATION PLC AND SUBSIDIARIES
NOBLE CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unless otherwise indicated, dollar amounts in tables are in thousands, except per share data)
Under the Nigerian Industrial Training Fund Act of 2004, as amended (“the Act”), Nigerian companies with
five or more employees must contribute annually 1 percent of their payroll to the Industrial Training Fund, or ITF,
established under the Act to be used for the training of Nigerian nationals with a view towards generating a pool of
indigenously trained manpower. We have not paid this amount on our expatriate workers employed by our non-Nigerian
employment entity in the past as we did not believe the contribution obligation was applicable to them. In October 2012, we
received a demand from the ITF for payments going back to 2004 and associated penalties in respect of these expatriate
employees. In February 2013, the ITF filed suit seeking payment of these amounts. We do not believe that we owe the
amount claimed. We have had discussions with the ITF to resolve the issue and do not believe the resolution of this matter
will have a material adverse effect on our financial position or cash flows.
In 2007, we began, and voluntarily contacted the U.S. Securities and Exchange Commission (“SEC”) and the
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 2010, we finalized settlements of this matter with each of the SEC and the DOJ. Pursuant to these settlements,
we agreed to pay fines and penalties to the DOJ and the SEC and to certain undertakings, including refraining from
violating the FCPA and other anti-corruption laws, self-reporting any violations of the FCPA or such laws to the DOJ and
reporting to the DOJ on an annual basis our progress on anti-corruption compliance matters. There are no remaining
obligations under either settlement.
Note 17 – Segment and Related Information
We report our contract drilling operations as a single reportable segment, Contract Drilling Services, which
reflects how we manage our business, 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 United States, Mexico, Brazil, the North Sea, the Mediterranean, West Africa,
the Middle East, India, Asia and Australia.
91
NOBLE CORPORATION PLC AND SUBSIDIARIES
NOBLE CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unless otherwise indicated, dollar amounts in tables are in thousands, except per share data)
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, 2013, 2012 and 2011 is shown in the following table. The “Other” column includes results of labor contract
drilling services in Canada and Alaska, as well as corporate related items. The consolidated financial statements of Noble-
UK include the accounts of Noble-Cayman, and Noble-UK conducts substantially all of its business through Noble-
Cayman and its subsidiaries. As a result, the summarized financial information for Noble-Cayman is substantially the same
as Noble-UK.
2013
Revenues from external customers ............................ $
Depreciation and amortization ...................................
Segment operating income .........................................
Interest expense, net of amount capitalized ...............
Income tax (provision)/ benefit ..................................
Segment profit/ (loss) ................................................
Total assets (at end of period) ....................................
2012
Revenues from external customers ............................ $
Depreciation and amortization ...................................
Segment operating income .........................................
Interest expense, net of amount capitalized ...............
Income tax (provision)/ benefit ..................................
Segment profit/ (loss) ................................................
Total assets (at end of period) ....................................
2011
Revenues from external customers ............................ $
Depreciation and amortization ...................................
Segment operating income .........................................
Interest expense, net of amount capitalized ...............
Income tax (provision)/ benefit ..................................
Segment profit/ (loss) ................................................
Contract
Drilling
Services
4,179,246
865,126
1,121,326
(695)
(183,945)
864,810
15,495,071
3,462,583
745,027
772,007
(394)
(163,346)
580,468
13,971,189
2,634,911
647,142
477,920
(1,959)
(80,317)
406,112
Other
Total
$
$
$
$
$
$
55,044
14,296
232
(105,605)
16,339
(82,113)
722,886
84,429
13,594
11,793
(85,369)
16,258
(58,124)
636,585
60,921
11,498
12,573
(53,768)
7,692
(35,214)
4,234,290
879,422
1,121,558
(106,300)
(167,606)
782,697
16,217,957
3,547,012
758,621
783,800
(85,763)
(147,088)
522,344
14,607,774
2,695,832
658,640
490,493
(55,727)
(72,625)
370,898
92
NOBLE CORPORATION PLC AND SUBSIDIARIES
NOBLE CORPORATION 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:
Revenues
Year Ended December 31,
Identifiable Assets
As of December 31,
2013
2012
2012
5,259,294
United States ............................................................. $ 1,338,634 $ 1,061,255 $
635,171
Australia ....................................................................
—
Benin .........................................................................
3,851,387
Brazil .........................................................................
9,220
Cameroon ..................................................................
13,952
Canada ......................................................................
China (1) .....................................................................
552,721
21,999
Denmark ...................................................................
—
Egypt .........................................................................
216,686
India ..........................................................................
203,442
Israel .........................................................................
—
Malaysia ....................................................................
165,297
Malta .........................................................................
537,931
Mexico ......................................................................
—
New Zealand .............................................................
65,340
Nigeria ......................................................................
72,637
Oman .........................................................................
94,151
Qatar .........................................................................
654,551
Saudi Arabia .............................................................
Singapore (1) ...............................................................
586,510
South Korea (1) ...........................................................
858,909
Switzerland (2) ............................................................
37,432
95,465
The Netherlands ........................................................
190,440
United Arab Emirates ...............................................
350,333
United Kingdom .......................................................
Other .........................................................................
134,906
Total .......................................................................... $ 4,234,290 $ 3,547,012 $ 2,695,832 $ 16,217,957 $ 14,607,774
2013
5,525,839 $
624,238
803,788
3,921,306
48,973
13,672
—
—
—
188,609
—
23,002
454,951
439,098
663,165
31,701
47,664
119,156
584,230
618,341
894,347
32,162
339,560
443,166
400,989
—
2011
524,750 $
—
—
572,015
17,029
39,186
—
—
11,261
102,432
25,566
—
44,713
402,129
68,153
58,501
4,607
132,917
96,655
—
—
—
220,489
84,253
164,559
126,617
133,214
50,821
839,993
55,803
36,965
—
22,850
33,685
103,282
21,109
33,841
7,453
367,734
11,995
107,739
12,051
139,891
246,083
—
—
—
179,718
118,290
333,697
39,442
42,353
—
714,798
—
38,709
—
14,119
103,380
58,355
118,485
—
35,776
329,896
9,563
149,082
35,400
78,047
220,657
—
—
—
210,598
79,945
207,667
38,927
(1) China, Singapore and South Korea consist primarily of asset values for newbuild rigs under construction in shipyards.
(2) Switzerland assets consist of general corporate assets, which generate no external revenue for the Company.
Note 18 – Supplemental Cash Flow Information (Noble-UK)
The net effect of changes in other assets and liabilities on cash flows from operating activities is as follows:
Accounts receivable ................................................... $
Other current assets ...................................................
Other assets ................................................................
Accounts payable .......................................................
Other current liabilities ..............................................
Other liabilities ..........................................................
2013
(165,233)
(47,848)
34,757
50,731
61,644
2,731
December 31,
2012
$
(143,010) $
(43,246)
(385)
28,565
108,385
80,431
2011
(283,268)
(51,409)
(23,821)
(12,502)
72,861
87,737
$
(63,218)
$
30,740
$
(210,402)
93
NOBLE CORPORATION PLC AND SUBSIDIARIES
NOBLE CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unless otherwise indicated, dollar amounts in tables are in thousands, except per share data)
Additional cash flow information is as follows:
Year Ended December 31,
2013
2012
2011
Cash paid during the period for:
Interest, net of amounts capitalized ............................ $
Income taxes (net of refunds) ..................................... $
81,897
219,088
$
$
56,144
148,612
$
$
46,180
128,162
Note 19- Supplemental Cash Flow Information (Noble-Cayman)
The net effect of changes in other assets and liabilities on cash flows from operating activities is as follows:
Accounts receivable .......................................................... $
Other current assets ...........................................................
Other assets .......................................................................
Accounts payable ..............................................................
Other current liabilities .....................................................
Other liabilities .................................................................
2013
(165,233)
(48,186)
35,103
49,980
62,516
2,728
$
December 31,
2012
(143,010)
(44,632)
(385)
28,289
108,425
80,432
$
2011
(283,268)
(49,044)
(26,800)
(12,524)
67,238
87,711
$
(63,092)
$
29,119
$
(216,687)
Additional cash flow information is as follows:
Cash paid during the period for:
Interest, net of amounts capitalized ............................ $
Income taxes (net of refunds) ..................................... $
81,897
216,391
$
$
56,144
148,612
$
$
46,180
128,162
Year Ended December 31,
2013
2012
2011
Note 20 – Information about Noble-Cayman
Guarantees of Registered Securities
Noble-Cayman, or one or more wholly-owned subsidiaries of Noble-Cayman, are a co-issuer or full and
unconditional guarantor or otherwise obligated as of December 31, 2013 as follows:
Notes
$250 million 7.375% Senior Notes due 2014
$350 million 3.45% Senior Notes due 2015
$300 million 3.05% Senior Notes due 2016
$300 million 2.50% Senior Notes due 2017
$202 million 7.50% Senior Notes due 2019
$500 million 4.90% Senior Notes due 2020
$400 million 4.625% Senior Notes due 2021
$400 million 3.95% Senior Notes due 2022
$400 million 6.20% Senior Notes due 2040
$400 million 6.05% Senior Notes due 2041
$500 million 5.25% Senior Notes due 2042
Issuer
(Co-Issuer(s))
NHIL
NHIL
NHIL
NHIL
NDC;
Noble Drilling Services 6
LLC (“NDS6”)
NHIL
NHIL
NHIL
NHIL
NHIL
NHIL
94
Guarantor(s)
Noble-Cayman
Noble-Cayman
Noble-Cayman
Noble-Cayman
Noble-Cayman;
Noble Holding (U.S.) Corporation (“NHC”);
Noble Drilling Holding LLC (“NDH”)
Noble-Cayman
Noble-Cayman
Noble-Cayman
Noble-Cayman
Noble-Cayman
Noble-Cayman
NOBLE CORPORATION PLC AND SUBSIDIARIES
NOBLE CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unless otherwise indicated, dollar amounts in tables are in thousands, except per share data)
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.
Revision
As part of our worldwide asset consolidation completed in 2009, NDC received a limited partnership interest in
one of our Other Non-Guarantor Subsidiaries of Noble. This limited partnership interest has historically been included as a
component of Total Shareholder Equity and income attributable to this limited partnership interest has been included in Net
Income Attributable to Noble Corporation in the Other Non-Guarantor Subsidiaries of Noble column in the condensed
consolidating financial statements.
During the first quarter of 2013, we amended the presentation of this limited partnership interest in the Other
Non-guarantor Subsidiaries of Noble column to correctly present it as a noncontrolling interest and to record the income
attributable to NDC as Net Income Attributable to Noncontrolling Interests. We also made appropriate adjustments to the
Consolidating Adjustments column. We concluded these errors were not material individually or in the aggregate to any of
the previously issued financial statements taken as a whole. The following chart presents the impact of this change in
presentation in the Other Non-Guarantor Subsidiaries of Noble and Consolidating Adjustments columns on the historical
Condensed Consolidating Balance Sheet and Condensed Consolidating Statement of Income. The revisions below did not
impact our Condensed Consolidating Statement of Cash Flows.
December 31, 2010
Income statement- Twelve months ended ........................
Net income .............................................................. $
Net income attributable to noncontrolling
interests ..............................................................
Net income attributable to Noble Corporation ........ $
December 31, 2011
Income statement- Twelve months ended ........................
Other Non-Guarantor
Subsidiaries of Noble
Consolidating Adjustments
As reported
As adjusted
As reported
As adjusted
1,023,782 $
1,023,782 $
(2,963,512) $
(2,963,512)
(3)
1,023,779 $
(41,889)
981,893 $
—
(2,963,512) $
41,886
(2,921,626)
Net income .............................................................. $
Net loss attributable to noncontrolling interests ......
Net income attributable to Noble Corporation ........ $
634,128 $
7,273
641,401 $
634,128 $
(15,808)
618,320 $
(1,758,285) $
—
(1,758,285) $
(1,758,285)
23,081
(1,735,204)
Balance Sheet ...................................................................
Total shareholder equity ......................................... $
Noncontrolling interests ..........................................
Total equity ............................................................. $ 10,544,460 $ 10,544,460 $
9,853,129 $
691,331
9,483,809 $
1,060,651
(28,268,572) $
—
(28,268,572) $
(27,899,252)
(369,320)
(28,268,572)
December 31, 2012
Income statement- Twelve months ended ........................
Net income .............................................................. $
Net income attributable to noncontrolling
interests ..............................................................
Net income attributable to Noble Corporation ........ $
Balance Sheet ...................................................................
280,763 $
280,763 $
(1,891,202) $
(1,891,202)
(33,793)
246,970 $
(68,969)
211,794 $
—
(1,891,202) $
35,176
(1,856,026)
Total shareholder equity ......................................... $
Noncontrolling interests ..........................................
Total equity ............................................................. $ 10,678,963 $ 10,678,963 $
9,913,839 $
765,124
9,509,343 $
1,169,620
(29,719,135) $
—
(29,719,135) $
(29,314,639)
(404,496)
(29,719,135)
95
NOBLE CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATING BALANCE SHEET
December 31, 2013
(in thousands)
Noble- NHC and NDH
Cayman
Combined
NDC
NHIL
NDS6
Other
Non-guarantor
Subsidiaries
of Noble
Consolidating
Adjustments
Total
1
—
—
$
402 $
34,038
52,307
$
—
3,325
—
$
4
—
—
$
—
—
—
109,975 $
911,706
87,722
$
—
—
—
110,382
949,069
140,029
ASSETS
Current assets
Cash and cash
equivalents ................ $
Accounts receivable .......
Taxes receivable .............
Short-term notes
receivable from
affiliates ....................
Accounts receivable
—
—
—
1,456,245
—
139,195
19,500
166,760
(1,781,700 )
from affiliates ........... 1,244,019
108,208
1,137,137
210,868
27,537
6,302,784
(9,030,553 )
Prepaid expenses and
other current assets ...
—
6,336
204
—
Total current assets ..................... 1,244,020
1,657,536
1,140,666
350,067
Property and equipment, at cost .
Accumulated
depreciation ..............
Property and equipment, net ......
Notes receivable from
—
—
—
2,340,216
75,856
(310,171 )
2,030,045
(60,950 )
14,906
—
—
—
—
47,037
—
—
—
177,808
—
184,348
7,756,755
(10,812,253 )
1,383,828
16,744,278
—
19,160,350
(4,260,557 )
12,483,721
—
—
(4,631,678 )
14,528,672
affiliates ................................ 3,304,753
Investments in affiliates ............. 8,601,712
6,256
Other assets .................................
124,216
9,502,970
6,332
—
2,523,808
173
2,367,555
9,456,735
22,681
5,000
5,440,004
639
1,390,500
—
232,933
(7,192,024 )
(35,525,229 )
—
—
—
269,014
Total assets ........ $13,156,741
$ 13,321,099 $ 3,679,553
$ 12,197,038
$ 5,492,680
$
21,863,909 $
(53,529,506 ) $ 16,181,514
LIABILITIES AND EQUITY
Current liabilities
Short-term notes
payables from
affiliates .................... $
Accounts payable ...........
Accrued payroll and
related costs ..............
Accounts payable to
—
—
—
$
191,806 $ 114,149
452
5,310
$
8,582
9,141
affiliates .................... 1,104,410
—
Taxes payable .................
Other current
liabilities ...................
412
4,685,825
827
292,354
9
22,106
240
Total current liabilities ............... 1,104,822
4,914,456
416,345
—
—
—
216,866
—
62,431
279,297
Long-term debt ........................... 1,561,141
Notes payable to affiliates .......... 2,042,808
Deferred income taxes ................
—
19,931
Other liabilities ...........................
—
534,683
—
24,502
—
—
3,275
—
3,793,414
975,000
—
—
Total
$
750,000
—
$
725,745 $
340,148
(1,781,700 ) $
—
—
345,910
—
125,623
—
143,346
21,173
—
4,412
775,585
201,696
260,216
—
—
2,709,925
119,752
(9,030,553 )
—
210,571
—
4,231,764
(10,812,253 )
—
120,588
300,172
910,016
—
3,379,317
222,180
289,875
—
(7,192,024 )
—
—
5,556,251
—
225,455
334,308
liabilities ...... 4,728,702
5,473,641
419,620
5,047,711
1,237,497
8,123,136
(18,004,277 )
7,026,030
Commitments and
contingencies
Total
Noncontrolling interests .............
shareholder
equity ........... 8,428,039
—
7,847,458
—
3,259,933
—
7,149,327
—
4,255,183
—
12,502,531
1,238,242
(35,014,432 )
(510,797 )
8,428,039
727,445
Total equity ....... 8,428,039
7,847,458
3,259,933
7,149,327
4,255,183
13,740,773
(35,525,229 )
9,155,484
Total liabilities
and equity .... $13,156,741
$ 13,321,099 $ 3,679,553
$ 12,197,038
$ 5,492,680
$
21,863,909 $
(53,529,506 ) $ 16,181,514
96
NOBLE CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATING BALANCE SHEET
December 31, 2012
(in thousands)
Noble- NHC and NDH
Combined
Cayman
NDC
NHIL
NDS6
Other
Non-guarantor
Subsidiaries
of Noble
Consolidating
Adjustments
Total
1,003 $
—
—
$
904
14,885
8,341
—
119,476
$
—
3,335
—
—
2
—
—
—
$
$
—
—
—
275,466
725,453
103,969
$
—
—
—
$
277,375
743,673
112,310
586,769
252,138
(958,383)
664,375
140,014
1,015,204
526,483
38,895
5,855,066
(8,240,037)
—
—
ASSETS
Current assets
Cash and cash
equivalents ................... $
Accounts receivable ...........
Taxes receivable.................
Short-term notes receivable
from affiliates ...............
Accounts receivable from
affiliates ........................
Prepaid expenses and other
current assets ................
235
1,035
205
—
—
162,406
—
163,881
Total current assets ........................
665,613
284,655
1,018,744
526,485
625,664
7,374,498
(9,198,420)
1,297,239
Property and equipment, at cost .....
Accumulated
depreciation ..................
Property and equipment, net ..........
—
—
—
Notes receivable from affiliates .....
Investments in affiliates .................
Other assets ....................................
3,816,463
7,770,066
5,798
2,452,195
1,206,000
9,170,923
320
2,735,223
76,428
(283,028 )
(58,411 )
18,017
—
—
—
—
14,123,496
—
16,935,147
—
(3,597,079 )
—
10,526,417
—
—
(3,938,518 )
12,996,629
—
3,386,879
543
3,524,814
7,413,361
25,895
479,107
1,977,906
759
2,171,875
—
243,243
(11,198,259)
(29,719,135)
—
—
—
276,558
Total assets ............ $12,257,940 $ 13,114,093
$ 4,424,183
$11,490,555
$ 3,083,436
$ 20,316,033
$ (50,115,814)
$14,570,426
LIABILITIES AND EQUITY
Current liabilities
Short-term notes payables
from affiliates ............... $
Accounts payable ...............
Accrued payroll and related
costs ..............................
Accounts payable to
affiliates ........................
Taxes payable .....................
Other current liabilities ......
90,314 $
—
51,054
6,522
$ 110,770
1,183
$
—
6,176
900,063
—
1,594
4,806,235
9,152
—
7,611
5,444
—
240
Total current liabilities ...................
991,971
4,879,139
125,248
$
—
—
—
165,065
—
62,430
227,495
—
—
—
77,075
—
4,412
81,487
$
706,245
341,889
$
(958,383)
—
$
—
349,594
110,149
—
123,936
2,286,155
121,692
158,259
(8,240,037)
—
—
3,724,389
(9,198,420)
—
130,844
226,935
831,309
Long-term debt ...............................
Notes payable to affiliates ..............
Deferred income taxes ...................
Other liabilities ...............................
639,794
2,840,287
—
19,930
—
648,475
—
17,815
—
—
15,731
—
3,792,886
975,000
—
—
201,695
1,342,000
—
—
—
5,392,497
210,314
309,870
—
(11,198,259)
—
—
4,634,375
—
226,045
347,615
Total liabilities ......
4,491,982
5,545,429
140,979
4,995,381
1,625,182
9,637,070
(20,396,679)
6,039,344
Commitments and contingencies
Total shareholder
equity ...............
Noncontrolling interests .................
7,765,958
—
7,568,664
—
4,283,204
—
6,495,174
—
1,458,254
—
9,509,343
1,169,620
(29,314,639)
(404,496)
7,765,958
765,124
Total equity ...........
7,765,958
7,568,664
4,283,204
6,495,174
1,458,254
10,678,963
(29,719,135)
8,531,082
Total liabilities
and equity ....... $12,257,940 $ 13,114,093
$ 4,424,183
$11,490,555
$ 3,083,436
$ 20,316,033
$ (50,115,814)
$14,570,426
97
NOBLE CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATING STATEMENT OF INCOME
Year Ended December 31, 2013
(in thousands)
Noble-
Cayman
NHC and NDH
Combined
NDC
NHIL
NDS6
Other
Non-guarantor
Subsidiaries
of Noble
Consolidating
Adjustments
Total
—
—
—
—
—
24,039
—
—
—
7,380
—
—
$
240,631
8,498
$ 20,183
—
$
—
—
—
—
249,129
20,183
92,554
6,850
—
7,930
—
—
62,778
4,539
7,396
—
—
340
—
—
—
—
—
—
—
110,138
—
—
—
36,050
—
—
$
—
—
—
—
$
3,886,617
103,376
$
(77,361)
—
$ 4,070,070
111,874
52,241
105
—
—
52,241
105
—
4,042,339
(77,361)
4,234,290
—
—
—
—
1
—
—
1,847,324
78,698
(77,361)
—
2,004,624
85,548
36,604
809,933
13,692
43,688
(35,646)
—
—
—
—
—
36,604
877,250
64,859
43,688
(35,646 )
(45,000)
—
—
—
—
(1,800)
—
(46,800 )
(13,581)
13,581
169,578
12,809
146,188
79,551
7,374
(146,188)
1
(1)
2,792,493
1,249,846
(77,361)
3,030,127
—
1,204,163
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 ................
General and
administrative .............
Loss on impairment ..........
Gain on disposal of
assets, net ....................
Gain on contract
settlements/
extinguishments, net ...
Total operating
costs and
expenses .........
Operating income (loss) .............
Other income (expense)
Equity earnings in
affiliates, net of tax .....
975,619
365,919
106,038
1,072,304
(1,073,596)
—
(1,446,284)
—
(127,995)
(24,237 )
(2,346)
(139,784)
(45,897)
(1,850,077)
2,084,036
(106,300 )
6,609
(99)
154,442
1,569,003
93,490
(2,084,036)
2,126
Income before income taxes ......
Income tax provision ........
867,814
—
110,967
—
940,774
—
867,814
646,463
110,967
940,774
449,509
—
449,509
(506,741)
(126,979)
(1,446,284)
—
1,099,989
(164,466 )
(633,720)
(1,446,284)
935,523
262,717
683,950
(37,487 )
Interest expense, net of
amounts capitalized ....
Interest income and other,
net ...............................
Net Income ..................................
Net income attributable to
noncontrolling
interests .......................
—
—
—
—
—
(114,314)
46,605
(67,709 )
Net income attributable to
Noble Corporation ................
867,814
Other comprehensive
income, net .................
33,285
Comprehensive income
attributable to Noble
Corporation ........................... $ 901,099
646,463
110,967
940,774
449,509
(748,034)
(1,399,679)
867,814
—
—
—
—
33,285
(33,285)
33,285
$
646,463
$ 110,967
$ 940,774
$
449,509
$
(714,749)
$ (1,432,964)
$ 901,099
98
NOBLE CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATING STATEMENT OF INCOME
Year Ended December 31, 2012
(in thousands)
Noble-
Cayman
NHC and NDH
Combined
NDC
NHIL
NDS6
Other
Non-guarantor
Subsidiaries
of Noble
Consolidating
Adjustments
Total
— $
—
161,577
6,637
$
20,033
—
$
—
—
—
2,646
—
—
—
3,036
—
—
—
—
—
168,214
20,033
63,025
5,886
—
60,738
7,786
—
7,476
—
—
4,526
—
—
—
—
—
—
—
82,736
—
—
—
35,606
—
$ —
—
$ 3,246,332
108,858
$
(78,580 )
—
$ 3,349,362
115,495
—
—
81,890
1,196
—
(931 )
81,890
265
—
3,438,276
(79,511 )
3,547,012
—
—
—
—
1
—
1,684,593
88,210
(79,511 )
—
1,760,965
94,096
46,895
691,425
12,937
20,384
—
—
—
—
46,895
756,689
59,366
20,384
—
(4,869 )
—
—
—
(28,386 )
—
(33,255)
5,682
(5,682)
132,566
35,648
12,002
8,031
118,342
(118,342)
1
(1)
2,516,058
922,218
(79,511 )
2,705,140
—
841,872
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....................
General and administrative ..
Loss on impairment ..............
Gain on contract
settlements/
extinguishments, net.......
Total operating costs
and expenses ......
Operating income (loss) .................
Other income (expense)
Equity earnings in affiliates,
net of tax .........................
Interest expense, net of
684,446
472,509
110,820
807,590
(184,163)
—
(1,891,202 )
—
amounts capitalized ........
(105,147)
(44,055 )
(3,892 )
(120,361)
(43,090)
(663,076 )
893,858
(85,763)
Interest income and other,
net ...................................
7,306
Income before income taxes ..........
Income tax provision ............
580,923
—
Net Income ......................................
580,923
40,845
504,947
(46,644 )
458,303
8
135,001
594,328
114,967
—
114,967
703,888
—
367,074
—
703,888
367,074
121,065
380,207
(99,444 )
280,763
(893,858 )
(1,891,202 )
—
4,695
760,804
(146,088)
(1,891,202 )
614,716
Net income attributable to
noncontrolling
interests ..........................
Net income attributable to Noble
—
—
—
—
—
(68,969 )
35,176
(33,793)
Corporation...............................
580,923
458,303
114,967
703,888
367,074
211,794
(1,856,026 )
580,923
Other comprehensive loss,
net ...................................
(41,128)
—
—
—
—
(41,128 )
41,128
(41,128)
Comprehensive income
attributable to Noble
Corporation............................... $ 539,795 $
458,303
$ 114,967
$ 703,888
$ 367,074
$
170,666
$ (1,814,898 )
$ 539,795
99
NOBLE CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATING STATEMENT OF INCOME
Year Ended December 31, 2011
(in thousands)
Noble-
Cayman
NHC and NDH
Combined
NDC
NHIL
NDS6
Other
Non-guarantor
Subsidiaries
of Noble
Consolidating
Adjustments
Total
Operating revenues
Contract drilling services . $ —
—
Reimbursables ..................
Labor contract drilling
$
134,602
4,351
$ 19,913
12
$
services .......................
Other .................................
Total operating
revenues ..........
Operating costs and expenses
Contract drilling services .
Reimbursables ..................
Labor contract drilling
services .......................
Depreciation and
amortization ................
General and
—
—
—
3,038
—
—
—
4
—
—
—
138,957
19,925
46,305
4,125
7,478
—
59,865
—
—
—
50,462
3,767
—
—
—
—
—
—
—
$
—
—
—
—
$
2,466,701
74,832
$
(64,458 )
—
$ 2,556,758
79,195
59,000
875
—
—
59,004
875
—
2,601,408
(64,458 )
2,695,832
—
—
—
—
1
1,319,187
54,314
(64,458 )
—
1,371,415
58,439
33,885
—
33,885
602,976
—
657,205
17,163
—
56,787
Interest expense, net of
amounts capitalized ....
Interest income and other,
net ...............................
administrative .............
1,242
5,025
1
33,355
Gain on contract
settlements/extinguish
ments, net ....................
Total operating
costs and
expenses..........
Operating income (loss) .............
Other income (expense)
Equity earnings in
—
—
—
—
—
(21,202 )
—
(21,202 )
4,280
(4,280)
105,917
11,246
93,220
33,040
8,679
(93,220 )
1
(1 )
2,006,323
(64,458 )
2,156,529
595,085
—
539,303
affiliates, net of tax .....
488,735
296,751
64,626
579,730
328,443
—
(1,758,285 )
—
(69,180)
(61,271)
(6,110)
(88,396 )
(29,050 )
(38,778 )
237,058
(55,727 )
Income before income taxes ......
Income tax provision ........
422,043
—
294,811
(14,933)
67,184
—
461,721
—
308,101
—
6,768
26,291
(11)
63,607
8,709
134,174
690,481
(56,353 )
(237,058 )
2,480
(1,758,285 )
—
486,056
(71,286 )
Net Income ...................................
422,043
279,878
67,184
461,721
308,101
634,128
(1,758,285 )
414,770
Net loss attributable to
noncontrolling
interests .......................
Net income attributable to
Noble Corporation ................
Other comprehensive loss,
net ...............................
Noncontrolling portion of
gain on interest rate
swaps ..........................
—
—
—
—
—
(15,808 )
23,081
7,273
422,043
279,878
67,184
461,721
308,101
618,320
(1,735,204 )
422,043
(24,101)
—
—
—
—
(24,101 )
24,101
(24,101 )
183
—
—
—
—
183
(183 )
183
Comprehensive income
attributable to Noble
Corporation ........................... $ 398,125
$
279,878
$ 67,184
$ 461,721
$ 308,101
$
594,402
$ (1,711,286 )
$ 398,125
100
NOBLE CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS
Year Ended December 31, 2013
(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 ...................... $ (117,993) $
290,552 $ (1,799) $ (128,315) $ 1,523,225 $
202,960 $
— $ 1,768,630
Cash flows from investing activities
New construction and capital
expenditures.............................
Proceeds from disposal of assets ...
Notes receivable from affiliates ....
—
—
—
(1,594,449)
—
—
(751)
—
—
Net cash from investing
activities ......................
Cash flows from financing activities
—
(1,594,449)
(751)
Net change in borrowings
outstanding on bank credit
facilities ...................................
Repayment of long-term debt........
Dividends paid to noncontrolling
interests ....................................
Financing cost on credit facilities .
Distributions to parent company,
net ............................................
Advances (to) from affiliates ........
Notes payable to affiliates .............
Net cash from financing
1,221,333
(300,000)
—
(2,484)
(265,880)
(241,180)
(294,798)
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
1,303,395
—
—
2,550
—
—
128,317
—
—
(1,523,225)
—
(949,004)
61,000
294,798
—
—
(294,798)
(2,544,204)
61,000
—
(593,206)
(294,798)
(2,483,204)
—
—
(105,388)
—
—
330,143
—
—
—
1,221,333
(300,000)
—
—
(105,388)
(2,484)
—
—
294,798
(265,880)
—
—
activities ......................
116,991
1,303,395
2,550
128,317
(1,523,225)
224,755
294,798
547,581
Net change in cash and
cash equivalents ..........
Cash and cash equivalents, beginning of
period ...................................................
Cash and cash equivalents, end of
(1,002)
1,003
(502)
—
904
—
2
2
—
—
(165,491)
—
(166,993)
275,466
—
277,375
period ................................................... $
1 $
402 $ — $
4 $
— $
109,975 $
— $ 110,382
101
NOBLE CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS
Year Ended December 31, 2012
(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 ..................... $ (86,784 ) $
35,177
$ 9,950 $
(96,642) $ 551,358 $
1,007,568 $
— $ 1,420,627
Cash flows from investing activities
New construction and capital
expenditures............................
Notes receivable from affiliates ...
—
—
(682,477 )
—
(2,106)
—
—
(1,188,287)
Net cash from investing
activities .....................
—
(682,477 )
(2,106)
(1,188,287)
Cash flows from financing activities
Net change in borrowings
outstanding on bank credit
facilities ..................................
Proceeds from issuance of senior
notes, net .................................
Contributions from
noncontrolling interests ..........
Financing cost on credit
facilities ..................................
Distributions to parent company,
net ...........................................
Advances (to) from affiliates .......
Notes payable to affiliates ............
Net cash from financing
(635,192 )
—
—
—
—
—
—
—
1,186,636
—
—
(5,221 )
—
—
—
—
(175,977 )
(284,256 )
1,188,287
—
647,819
—
—
(7,844)
—
—
98,295
—
—
(551,358)
—
—
—
—
—
—
—
—
(1,103,971)
—
—
1,188,287
(1,788,554)
—
(1,103,971)
1,188,287
(1,788,554)
—
—
40,000
—
—
97,344
—
—
(635,192)
—
1,186,636
—
—
40,000
(5,221)
—
—
(1,188,287)
(175,977)
—
—
activities .....................
87,641
647,819
(7,844)
1,284,931
(551,358)
137,344
(1,188,287)
410,246
Net change in cash and
cash equivalents .........
Cash and cash equivalents, beginning of
period ..................................................
Cash and cash equivalents, end of
857
146
519
—
385
—
2
—
—
—
40,941
234,525
—
—
42,319
235,056
period .................................................. $
1,003 $
904
$ — $
2 $
— $
275,466 $
— $
277,375
102
NOBLE CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS
Year Ended December 31, 2011
(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 ....................... $ (48,906 ) $
17,107
$ (5,616) $
(109,171) $ (20,222) $
937,295 $
— $
770,487
Cash flows from investing activities
New construction and capital
expenditures..............................
Notes receivable from affiliates .....
Refund from contract
—
20,000
(1,495,056 )
—
(1,380)
—
—
(1,096,927)
extinguishments ........................
—
—
—
—
Net cash from investing
activities .......................
20,000
(1,495,056 )
(1,380)
(1,096,927)
Cash flows from financing activities
Net change in borrowings
outstanding on bank credit
facilities ....................................
Proceeds from issuance of senior
notes, net ...................................
Contributions from noncontrolling
interests .....................................
Payments of joint venture debt .......
Settlement of interest rate swaps ....
Financing cost on credit facilities ..
Distributions to parent company,
net .............................................
Advances (to) from affiliates .........
Notes payable to affiliates ..............
Net cash from financing
935,000
—
—
—
—
(2,835 )
(186,048 )
(597,305 )
(119,802 )
—
—
—
—
—
—
—
—
—
1,087,833
—
—
—
—
—
—
—
—
—
1,495,688
(17,500 )
—
41,996
(35,000)
—
118,265
—
—
20,222
—
—
—
—
—
—
—
—
—
—
—
(1,038,460)
172,302
—
904,625
(2,534,896)
—
18,642
—
18,642
(847,516)
904,625
(2,516,254)
—
—
536,000
(693,494)
(29,032)
—
—
(1,078,866)
1,076,927
—
935,000
—
1,087,833
—
—
—
—
—
—
(904,625)
536,000
(693,494)
(29,032)
(2,835)
(186,048)
—
—
activities .......................
29,010
1,478,188
6,996
1,206,098
20,222
(188,465)
(904,625)
1,647,424
Net change in cash and
cash equivalents ...........
104
Cash and cash equivalents, beginning of
period ....................................................
42
Cash and cash equivalents, end of
239
146
—
—
—
—
—
—
(98,686)
333,211
—
—
(98,343)
333,399
period .................................................... $
146 $
385
$ — $
— $ — $
234,525 $
— $
235,056
103
NOBLE CORPORATION PLC AND SUBSIDIARIES
NOBLE CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unless otherwise indicated, dollar amounts in tables are in thousands, except per share data)
Note 21 – Unaudited Interim Financial Data
Unaudited interim consolidated financial information for Noble-UK for the years ended December 31, 2013
and 2012 is as follows:
Quarter Ended
Mar. 31
Jun. 30
Sep. 30
Dec. 31
2013
Operating revenues ............................................................................... $ 970,975 $ 1,017,385 $ 1,078,881 $ 1,167,049
259,526
Operating income .................................................................................
Net Income attributable to Noble Corporation .....................................
174,060
Net income per share attributable to Noble Corporation (1)
229,791
150,060
253,860
176,620
378,381
281,957
Basic ...........................................................................................
Diluted ........................................................................................
0.59
0.59
0.69
0.69
1.10
1.10
0.68
0.68
Quarter Ended
Mar. 31
Jun. 30
Sep. 30
Dec. 31
2012
Operating revenues ............................................................................... $ 797,690 $ 898,923 $ 884,032 $ 966,367
216,738
Operating income .................................................................................
Net Income attributable to Noble Corporation .....................................
127,577
Net income per share attributable to Noble Corporation (1)
143,643
120,175
244,495
159,818
178,924
114,774
Basic ...........................................................................................
Diluted ........................................................................................
0.47
0.47
0.63
0.63
0.45
0.45
0.50
0.50
(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.
104
Item 9.
Changes in and Disagreements With Accountants on Accounting and Financial Disclosure
None.
Item 9A.
Evaluation of Disclosure Controls and Procedures
Controls and Procedures.
David W. Williams, Chairman, President and Chief Executive Officer of Noble Corporation plc, a company
registered under the laws of England and Wales (“Noble-UK”), and James A. MacLennan, Senior Vice President and Chief
Financial Officer of Noble-UK, have evaluated the disclosure controls and procedures of Noble-UK as of the end of the
period covered by this report. On the basis of this evaluation, Mr. Williams and Mr. MacLennan have concluded that
Noble-UK’s disclosure controls and procedures were effective as of December 31, 2013. Noble-UK’s disclosure controls
and procedures are designed to ensure that information required to be disclosed by Noble-UK 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, 2013. 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-UK’s or Noble-Cayman’s internal control over financial reporting that
occurred during the quarter ended December 31, 2013 that has materially affected, or is reasonably likely to materially
affect, the internal control over financial reporting of each of Noble-UK or Noble-Cayman.
Management’s Annual Report on Internal Control Over Financial Reporting
The management of Noble-UK 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 in 1992. Based on the management of Noble-UK and Noble-Cayman assessment, both
Noble-UK and Noble-Cayman maintained effective internal control over financial reporting as of December 31, 2013.
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, 2013 as stated in their report, which is provided in this Annual Report on Form 10-K.
Item 9B.
Other Information.
None.
105
PART III
Item 10.
Directors, Executive Officers and Corporate Governance.
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
2014 annual general meeting of shareholders (the “2014 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 28, 2014 with respect to our executive
officers:
Name
David W. Williams
Julie J. Robertson
Randall D. Stilley
James A. MacLennan
William E. Turcotte
Roger B. Hunt
Lee M. Ahlstrom
Scott W. Marks
Bernie G. Wolford
Dennis J. Lubojacky
Age
56
58
60
54
50
64
46
54
54
61
Position
Chairman, President and Chief Executive Officer
Executive Vice President and Corporate Secretary
Executive Vice President
Senior Vice President and Chief Financial Officer
Senior Vice President and General Counsel
Senior Vice President – Marketing and Contracts
Senior Vice President – Strategic Development
Senior Vice President – Engineering
Senior Vice President – Operations
Vice President and Controller
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. In this role,
Ms. Robertson is responsible for overseeing human resources, procurement and supply chain, learning and development,
health, safety and environmental functions, and information technology. 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.
Randall D. Stilley was named Executive Vice President of Noble Drilling Services, Inc. effective February 4,
2014 and was selected to serve as President and Chief Executive Officer of Paragon Offshore Limited, the standard
specification offshore drilling company to be created upon separation from Noble. From May 2011 to February 2014,
Mr. Stilley served as an independent business consultant and managed private investments. Mr. Stilley previously served as
President and Chief Executive Officer of Seahawk Drilling, Inc. from August 2009 to May 2011 and Chief Executive
Officer of the mat-supported jackup rig business at Pride International Inc. from September 2008 to August 2009. Seahawk
Drilling filed for reorganization under Chapter 11 of the United States Bankruptcy Code in 2011. From October 2004 to
June 2008, Mr. Stilley served as President and Chief Executive Officer of Hercules Offshore, Inc. Prior to that, Mr. Stilley
was Chief Executive Officer of Seitel, Inc., an oilfield services company, President of the Oilfield Services Division at
Weatherford International, Inc., and served in a variety of positions at Halliburton Company. He is a registered professional
engineer in the state of Texas and a member of the Society of Petroleum Engineers. Mr. Stilley holds a Bachelor of Science
degree in Aerospace Engineering from the University of Texas at Austin.
James A. MacLennan was named Senior Vice President and Chief Financial Officer effective January 9, 2012.
Prior to joining Noble, Mr. MacLennan served as Chief Financial Officer and Corporate Secretary of Ennis Traffic Safety
106
Solutions, a leading producer of pavement marking materials, from January 2011 to December 2011. From June 2010 to
January 2011, Mr. MacLennan did not hold a principal employment. Mr. MacLennan served as Executive Vice President
and Chief Financial Officer of Lodgian, Inc., a publicly-traded independent owner and operator of hotels in the United
States from March 2006 until Lodgian was acquired by and merged into Lone Star Funds in May 2010. Prior to joining
Lodgian, Mr. MacLennan was Chief Financial Officer and Treasurer of Theragenics Corporation, a New York Stock
Exchange-listed company that manufactures medical devices. Previously, Mr. MacLennan was Executive Vice President
and Chief Financial Officer of Lanier Worldwide, Inc., a publicly-traded technical products company. Mr. MacLennan
spent much of his early career in financial positions of increasing responsibility in the oil and gas industry, most notably
with Exxon Corporation and later with Noble Corporation. Mr. MacLennan is a Chartered Accountant.
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.
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.
Lee M. Ahlstrom was named Senior Vice President – Strategic Development effective May 5, 2011.
Mr. Ahlstrom served as Vice President of Investor Relations and Planning from May 2006 to May 2011. Prior to joining
Noble, Mr. Ahlstrom served as Director of Investor Relations at Burlington Resources, held various management positions
at UNOCAL Corporation and served as an Engagement Manager with McKinsey & Company.
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.
Bernie G. Wolford was named Senior Vice President – Operations effective February 6, 2012. Mr. Wolford
served as Vice President—Operational Excellence from March 2010 to February 2012. From January 2003 until March
2010, Mr. Wolford was self-employed. During that time, he provided consulting services to Noble as a contractor on the
construction of the Noble Dave Beard from March 2009 to December 2009. He also supported the operations of Mass
Technology Corp., an independent downstream refining and storage company, as a significant shareholder of that company,
from February 2007 to February 2009. Mr. Wolford began his career in the offshore drilling industry with Transworld
Drilling in 1981, which was acquired by Noble in 1991. From 1981 through December 2002, he served in various roles in
engineering, project management and operations with Transworld and Noble.
Dennis J. Lubojacky was named Vice President and Controller effective April 27, 2012. In this position,
Mr. Lubojacky also serves as principal accounting officer of Noble-UK. Since February 2010, Mr. Lubojacky has also
served as Vice President and Chief Financial Officer of Noble-Cayman. Mr. Lubojacky has also served as Vice President
and Controller of a subsidiary of Noble-UK from July 2007 through October 2011 and from January 2012 until his new
appointment. Mr. Lubojacky served as principal financial officer and principal accounting officer of Noble Corporation
from October 2011 through January 2012. From April 2006 to June 2007, he served as Controller and Chief Accounting
Officer of TODCO, a public oil and gas contract drilling company. Mr. Lubojacky is a Certified Public Accountant.
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.
107
Item 11.
Executive Compensation.
The sections entitled “Executive Compensation” and “Compensation Committee Report” appearing in the 2014
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” and “Security Ownership of Certain Beneficial
Owners and Management” appearing in the 2014 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 2014 Proxy Statement set forth
certain information with respect to director independence and transactions with related persons, and are incorporated in this
report by reference.
Item 14.
Principal Accounting Fees and Services.
The section entitled “Auditors” appearing in the 2014 Proxy Statement sets forth certain information with
respect to accounting fees and services, and is incorporated in this report by reference.
PART IV
ITEM 15.
(a) The following documents are filed as part of this report:
EXHIBITS, FINANCIAL STATEMENT SCHEDULES.
(1) A list of the financial statements filed as a part of this report is set forth in Item 8 on page 49 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.
108
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 plc, a company registered under the laws of England and Wales
Date: February 28, 2014
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
/s/ DAVID W. WILLIAMS
David W. Williams
/s/ JAMES A. MACLENNAN
James A. MacLennan
/s/ DENNIS J. LUBOJACKY
Dennis J. Lubojacky
/s/ ASHLEY ALMANZA
Ashley Almanza
Capacity In Which Signed
Date
Chairman, President and
Chief Executive Officer
(Principal Executive Officer)
Senior Vice President and
Chief Financial Officer
(Principal Financial Officer)
Vice President and Controller
(Principal Accounting Officer)
February 28, 2014
February 28, 2014
February 28, 2014
Director
February 28, 2014
/s/ MICHAEL A. CAWLEY
Director
February 28, 2014
Michael A. Cawley
/s/ LAWRENCE J. CHAZEN
Director
February 28, 2014
Lawrence J. Chazen
/s/ JULIE H. EDWARDS
Julie H. Edwards
/s/ GORDON T. HALL
Gordon T. Hall
/s/ JON A. MARSHALL
Jon A. Marshall
Director
Director
Director
February 28, 2014
February 28, 2014
February 28, 2014
/s/ MARY P. RICCIARDELLO
Director
February 28, 2014
Mary P. Ricciardello
109
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.
SIGNATURES
Noble Corporation, a Cayman Islands company
Date: February 28, 2014
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
President, Chief Executive Officer and
February 28, 2014
David W. Williams
Director (Principal Executive Officer)
/s/ DENNIS J. LUBOJACKY
Vice President, Chief Financial
February 28, 2014
Dennis J. Lubojacky
Officer and Director
(Principal Financial and Accounting Officer)
/s/ DAVID M.J. DUJACQUIER
Director
February 28, 2014
David M.J. Dujacquier
/s/ ALAN P. DUNCAN
Alan P. Duncan
/s/ ALAN R. HAY
Alan R. Hay
Director
Director
February 28, 2014
February 28, 2014
110
Exhibit
Number
INDEX TO EXHIBITS
Exhibit
2.1
2.2
2.3
3.1
3.2
4.1
4.2
4.3
4.4
4.5
4.6
4.7
4.8
Merger Agreement, dated as of June 30, 2013, between Noble Corporation, a Swiss corporation (“Noble-
Swiss”) and Noble Corporation Limited (“Noble-UK”)(filed as Exhibit 2.1 to Noble-Swiss’ Current Report on
Form 8-K filed on July 1, 2013 and incorporated herein by reference).
Agreement and Plan of Merger, Reorganization and Consolidation, dated as of December 19, 2008, among
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-UK (filed as Exhibit 3.1 to Noble-UK’s Current Report on Form 8-K filed on
November 20, 2013 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 Noble
Drilling Corporation’s Current Report on Form 8-K 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
Current Report on 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 Noble-
Cayman’s Quarterly Report on Form 10-Q for the quarter 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’ Current Report on 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’ Current Report on Form 8-K filed on October 1, 2009 and incorporated herein by reference).
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 Noble-Cayman’s Current Report on Form 8-
K filed on May 26, 2006 and incorporated herein by reference).
111
Exhibit
Number
4.9
4.10
4.11
4.12
4.13
4.14
4.15
4.16
4.17
Exhibit
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’ Current Report on 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 herein by reference).
First Amendment to Revolving Credit Agreement dated as of March 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 4.2 to Noble-Swiss’ Quarterly Report on Form 10-Q for
the quarter ended March 31, 2011 and incorporated herein by reference).
Second Amendment to Revolving Credit Agreement dated as of January 11, 2013 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 4.12 to Noble-Swiss’ Annual Report on Form 10-K for
the year ended December 31, 2012 and incorporated herein by reference).
Third Amendment to Revolving Credit Agreement dated as of December 6, 2013, by and among Noble-
Cayman, as borrower, Wells Fargo Bank, National Association, as administrative agent, and the lenders party
thereto, and consented and agreed to by Noble Drilling Corporation and Noble Holding International Limited,
as guarantors (filed as Exhibit 4.1 to Noble-UK’s Current Report on Form 8-K filed on December 12, 2013 and
incorporated herein by reference).
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).
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 4.1 to Noble-Cayman’s Current Report on Form 8-K filed on February 3, 2011 and
incorporated herein by reference).
112
Exhibit
Number
4.18
4.19
4.20
4.21
4.22
4.23
4.24
4.25
4.26
10.1*
10.2*
Exhibit
Fourth Supplemental Indenture, dated as of February 10, 2012, 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 2.5% senior notes due 2017 of Noble Holding International Limited, 3.95% senior notes due 2022 of
Noble Holding International Limited, and 5.25% senior notes due 2042 of Noble Holding International Limited
(filed as Exhibit 4.2 to Noble-Cayman’s Current Report on Form 8-K filed on February 13, 2012 and
incorporated herein by reference).
Revolving Credit Agreement dated as of June 8, 2012 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; SunTrust Bank, as Syndication Agent; Barclays Bank PLC,
HSBC Securities (USA) Inc. and The Bank of Tokyo-Mitsubishi UFJ, Ltd., as Co-Documentation Agents; and
Wells Fargo Securities, LLC, SunTrust Robinson Humphrey, Inc., Barclays Bank PLC, HSBC Securities
(USA) Inc. and The Bank of Tokyo-Mitsubishi UFJ, Ltd., as Joint Lead Arrangers and Joint Lead Bookrunners
(filed as Exhibit 4.1 to Noble-Swiss’ Current Report on Form 8-K filed on June 11, 2012 and incorporated
herein by reference).
First Amendment to Revolving Credit Agreement dated as of December 6, 2013, by and among Noble-Cayman,
as borrower, Wells Fargo Bank, National Association, as administrative agent, and the lenders party thereto,
and consented and agreed to by Noble Drilling Corporation and Noble Holding International Limited, as
guarantors (filed as Exhibit 4.2 to Noble-UK’s Current Report on Form 8-K filed on December 12, 2013 and
incorporated herein by reference).
Guaranty Agreement dated as of June 8, 2012, between Noble Drilling Corporation, a Delaware corporation,
and Wells Fargo Bank, National Association (filed as Exhibit 4.2 to Noble-Swiss’ Current Report on Form 8-K
filed on June 11, 2012 and incorporated herein by reference).
Guaranty Agreement dated as of June 8, 2012, between Noble Holding International Limited, a Cayman Islands
company, and Wells Fargo Bank, National Association (filed as Exhibit 4.3 to Noble-Swiss’ Current Report on
Form 8-K filed on June 11, 2012 and incorporated herein by reference).
364-Day Revolving Credit Agreement dated as of August 22, 2013 among Noble Corporation, a Cayman
Islands company; the Lenders from time to time parties thereto; JPMorgan Chase Bank, N.A., as Administrative
Agent and Swingline Lender; Barclays Bank PLC, Citibank, N.A., Deutsche Bank Securities, Inc. and Wells
Fargo Bank, National Association, as Co-Syndication Agents; and BNP Paribas, Credit Agricole Corporate &
Investment Bank, Credit Suisse AG, Cayman Islands Branch, Goldman Sachs Bank USA, HSBC Bank USA,
N.A., SunTrust Bank and The Bank of Tokyo-Mitsubishi UFJ, LTD., as Co-Documentation agents (filed as
Exhibit 4.1 to Noble-Swiss’ Current Report on Form 8-K filed on August 22, 2013 and incorporated herein by
reference).
First Amendment to 364-Day Revolving Credit Agreement dated as of December 6, 2013, by and among
Noble-Cayman, as borrower, JPMorgan Chase Bank, N.A., as administrative agent, and the lenders party
thereto, and consented and agreed to by Noble Drilling Corporation and Noble Holding International Limited,
as guarantors (filed as Exhibit 4.3 to Noble-UK’s Current Report on Form 8-K filed on December 12, 2013 and
incorporated herein by reference).
Guaranty Agreement dated as of August 22, 2013 between Noble Drilling Corporation, a Delaware corporation,
and JPMorgan Chase Bank, N.A. (filed as Exhibit 4.2 to Noble-Swiss’ Current Report on Form 8-K filed on
August 22, 2013 and incorporated herein by reference).
Guaranty Agreement dated as of August 22, 2013 between Noble Holding International Limited, a Cayman
Islands company, and JPMorgan Chase Bank, N.A. (filed as Exhibit 4.3 to Noble-Swiss’ Current Report on
Form 8-K filed on August 22, 2013 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).
113
Exhibit
Number
10.3*
10.4*
10.5*
10.6*
10.7*
10.8*
10.9*
Exhibit
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 (filed as Exhibit 10.5 to Noble-Swiss’ Annual Report on Form 10-K for the year ended
December 31, 2010 and incorporated herein by reference).
Noble Corporation Equity Compensation Plan for Non-Employee Directors, effective as of November 20, 2013
(filed as Exhibit 10.7 to Noble-UK’s Current Report on Form 8-K filed on November 20, 2013 and incorporated
herein by reference).
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’s Annual Report on Form 10-K for the year ended December 31, 2005
and incorporated herein by reference).
10.10* 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’s Annual Report on Form 10-K for the year ended December 31, 2005
and incorporated herein by reference).
10.11* 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’s Annual Report on Form 10-K for the year ended December 31, 2007
and incorporated herein by reference).
10.12* Amendment No. 5 to the Noble Drilling Corporation 401(k) Savings Restoration Plan effective May 1, 2010
(filed as Exhibit 10.11 to Noble-Swiss’ Annual Report on Form 10-K for the year ended December 31, 2010
and incorporated herein by reference).
10.13* 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 quarter ended March 31, 1995 and incorporated
herein by reference).
10.14* 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).
10.15* 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’s Annual Report on Form 10-K for the year ended
December 31, 2005 and incorporated herein by reference).
10.16* 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).
10.17* Amendment No. 1 to Noble Drilling Corporation Retirement Restoration Plan dated July 10, 2009 (filed as
Exhibit 10.16 to Noble-Swiss’ Annual Report on Form 10-K for the year ended December 31, 2010 and
incorporated herein by reference).
10.18* 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’s Annual Report on Form
10-K for the year ended December 31, 2004 and incorporated herein by reference).
114
Exhibit
Number
Exhibit
10.19* 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’s Quarterly Report on Form 10-Q for the quarter
ended September 25, 2007 and incorporated herein by reference).
10.20* 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).
10.21* Third Amendment to Second Amended and Restated Noble Corporation 1992 Nonqualified Stock Option and
Share Plan for Non-Employee Directors effective March 27, 2009 (filed as Exhibit 10.20 to Noble-Cayman’s
Annual Report on Form 10-K for the year ended December 31, 2010 and incorporated herein by reference).
10.22* Fourth Amended and Restated Noble Corporation 1992 Nonqualified Stock Option and Share Plan for Non-
Employee Directors effective February 1, 2013 (filed as Exhibit 10.1 to Noble-Swiss’ Current Report on Form
8-K filed on February 5, 2013 and incorporated herein by reference).
10.23* Fifth Amended and Restated Noble Corporation 1992 Nonqualified Stock Option and Share Plan for Non-
Employee Directors, effective as of November 20, 2013 (filed as Exhibit 10.6 to Noble-UK’s Current Report on
Form 8-K filed on November 20, 2013 and incorporated herein by reference).
10.24* Sixth Amended and Restated Noble Corporation 1992 Nonqualified Stock Option and Share Plan for Non-
Employee Directors, effective as of January 30, 2014.
10.25* 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’s Annual Report on Form 10-K for the year ended December 31,
2009 and incorporated herein by reference).
10.26* Third Amendment to the Noble Corporation 1991 Stock Option and Restricted Stock Plan, effective as of
February 3, 2012 (filed as Exhibit 10.2 to Noble-Cayman’s Current Report on Form 8-K filed on February 7,
2012 and incorporated herein by reference).
10.27* Amended and Restated 1991 Stock Option and Restricted Stock Plan (filed as Exhibit 10.2 to Noble-Cayman’s
Current Report on Form 8-K filed on April 30, 2012 and incorporated herein by reference).
10.28* Noble Corporation 1991 Stock Option and Restricted Stock Plan, effective as of November 20, 2013 (filed as
Exhibit 10.5 to Noble-UK’s Current Report on Form 8-K filed on November 20, 2013 and incorporated herein
by reference).
10.29* Noble Corporation 1991 Stock Option and Restricted Stock Plan, effective as of January 30, 2014.
10.30* 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).
10.31* Amendment No. 1 to the Noble Drilling Corporation 2009 401(k) Savings Restoration Plan effective May 1,
2010 (filed as Exhibit 10.23 to Noble-Swiss’ Annual Report on Form 10-K for the year ended December 31,
2010 and incorporated herein by reference).
10.32* Amendment No. 2 to the Noble Drilling Corporation 2009 401(k) Savings Restoration Plan effective November
1, 2013.
10.33* Noble Corporation Summary of Directors’ Compensation.
10.34* Form of Noble Corporation Performance-Vested Restricted Stock 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, 2011 and incorporated herein by reference).
10.35* 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 Current Report on Form 8-K
filed on January 13, 2012 and incorporated herein by reference).
10.36* 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 Current Report on Form 8-K filed
on January 13, 2012 and incorporated herein by reference).
115
Exhibit
Number
Exhibit
10.37* Form of Noble Corporation Performance-Vested Restricted Stock Unit Agreement under the Noble Corporation
1991 Stock Option and Restricted Stock Plan (filed as Exhibit 10.7 to Noble-Cayman’s Quarterly Report on
Form 10-Q for the quarter ended March 31, 2012 and incorporated herein by reference).
10.38* Form of Noble Corporation Performance-Vested Restricted Stock Unit Agreement under the Noble Corporation
1991 Stock Option and Restricted Stock Plan (filed as Exhibit 4.12 to Noble-Swiss’ Annual Report on Form 10-
K for the year ended December 31, 2012 and incorporated herein by reference).
10.39* Form of Noble Corporation Performance-Vested Restricted Stock Unit Award under the Noble Corporation
1991 Stock Option and Restricted Stock Plan.
10.40* Form of Noble Corporation Time-Vested Restricted Stock Unit Award under the Noble Corporation 1991 Stock
Option and Restricted Stock Plan.
10.41* Noble Corporation 2012 Short Term Incentive Plan (filed as Exhibit 10.6 to Noble-Cayman’s Quarterly Report
on Form 10-Q for the quarter ended March 31, 2012 and incorporated herein by reference).
10.42* Noble Corporation 2013 Short Term Incentive Plan (filed as Exhibit 10.41 to Noble-Swiss’ Annual Report on
Form 10-K for the year ended December 31, 2012 and incorporated herein by reference).
10.43* Noble Corporation 2013 Short Term Incentive Plan, effective as of November 20, 2013 (filed as Exhibit 10.8 to
Noble-UK’s Current Report on Form 8-K filed on November 20, 2013 and incorporated herein by reference).
10.44* Form of Restated Employment Agreement and Guaranty Agreement (2009 Form) (filed as Exhibit 10.2 to
Noble-UK’s Current Report on Form 8-K filed on November 20, 2013 and incorporated herein by reference).
10.45* Form of Restated Employment Agreement and Guaranty Agreement (2011 Form) (filed as Exhibit 10.3 to
Noble-UK’s Current Report on Form 8-K filed on November 20, 2013 and incorporated herein by reference).
10.46* Form of Restated Employment Agreement and Guaranty Agreement (2012 Form) (filed as Exhibit 10.4 to
Noble-UK’s Current Report on Form 8-K filed on November 20, 2013 and incorporated herein by reference).
10.47* Form of Commercial Paper Dealer Agreement dated as of September 19, 2012 between Noble Corporation, a
Cayman Islands company, Noble Holding International Limited, a Cayman Islands company, Noble Drilling
Corporation, a Delaware corporation, and certain investment banks (filed as Exhibit 10.1 to Noble-Swiss’
Current Report on Form 8-K filed on September 19, 2012 and incorporated herein by reference).
10.48* Form of Issuing and Paying Agent Agreement dated as of September 19, 2012 between Noble Corporation, a
Cayman Islands company, and the Issuing and Paying Agent (filed as Exhibit 10.2 to Noble-Swiss’ Current
Report on Form 8-K filed on September 19, 2012 and incorporated herein by reference).
10.49* Form of Indemnity Agreement (filed as Exhibit 10.1 to Noble-UK’s Current Report on Form 8-K filed on
November 20, 2013 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-UK 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 James A. MacLennan 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 James A. MacLennan 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.
116
Exhibit
Number
101+
Interactive data files
Exhibit
* Management contract or compensatory plan or arrangement.
+ Furnished in accordance with Item 601(b)(32)(ii) of Regulation S-K
117
UK FINANCIAL DOCUMENTS
INTRODUCTION
Noble Corporation plc is a public limited company incorporated under the laws of England and Wales and is listed
on the New York Stock Exchange. This section therefore covers the requirements for being a quoted company under
the UK Companies Act 2006, as follows:
Noble Corporation plc group reporting requirements
Statement of Director’s Responsibilities
UK Statutory Strategic Report
UK Statutory Directors' Report
Directors' Compensation Report
Noble Corporation plc parent company financial statements
NOBLE CORPORATION PLC
CERTAIN NOTE DISCLOSURES RELEVANT TO GROUP
Basis of Preparation
The consolidated financial statements have been prepared in accordance with accounting principles
generally accepted in the United States of America (“GAAP”), as permitted by Statutory Instrument 2012 No. 2405,
“The Accounting Standards (Prescribed Bodies) (United States of America and Japan) Regulations 2012” and in
accordance with the UK Companies Act 2006.
UK Statutory Disclosure Requirements
(i) Average number of people employed
Group
Average number of people (including executive directors) employed:
Offshore
Shorebased Administration
Total average headcount
(ii) Employee costs (in thousands)
Group
Salaries
Pensions
Social insurance
Total employee costs
(iii) Auditor remuneration
2013
2012
4,882
931
5,813
4,701
795
5,496
2013
$
946,688
23,514
4,820
975,022
$
2012
855,165
24,715
7,751
887,631
$
$
Services provided by the company’s auditor and its associates
During the year the group (including its overseas subsidiaries) obtained the following services from the
company’s auditor and its associates (in thousands):
Group
2013
2012
Fees payable to company's auditor and its associates for the audit of
parent company and consolidated financial statements
$
1,669
$
1,669
Fees payable to company's auditor and its associates for other services:
Audit of company's subsidiaries
Audit-related assurance services
Audit of benefit plans
Tax compliance services
Tax consulting services
3,081
2,865
148
1,724
476
9,963
2,854
652
121
2,110
2,154
9,560
$
$
1
INDEPENDENT AUDITORS’ REPORT TO THE MEMBERS OF NOBLE CORPORATION PLC
We have audited the group financial statements of Noble Corporation Plc for the year ended 31 December
2013 which comprise Consolidated Balance Sheet, Consolidated Statement of Income, Consolidated
Statement of Comprehensive Income, Consolidated Statement of Cash Flows and Consolidated Statement
of Equity and the related notes. The financial reporting framework that has been applied in their
preparation is applicable law and accounting principles generally accepted in the United States of America
(US GAAP).
Respective responsibilities of directors and auditors
As explained more fully in the Directors’ Responsibilities Statement, the directors are responsible for the
preparation of the group financial statements and for being satisfied that they give a true and fair view.
Our responsibility is to audit and express an opinion on the group financial statements in accordance with
applicable law and International Standards on Auditing (UK and Ireland). Those standards require us to
comply with the Auditing Practices Board’s Ethical Standards for Auditors.
This report, including the opinions, has been prepared for and only for the company’s members as a body
in accordance with Chapter 3 of Part 16 of the Companies Act 2006 and for no other purpose. We do not,
in giving these opinions, accept or assume responsibility for any other purpose or to any other person to
whom this report is shown or into whose hands it may come save where expressly agreed by our prior
consent in writing.
Scope of the audit of the financial statements
An audit involves obtaining evidence about the amounts and disclosures in the financial statements
sufficient to give reasonable assurance that the financial statements are free from material misstatement,
whether caused by fraud or error. This includes an assessment of: whether the accounting policies are
appropriate to the group’s circumstances and have been consistently applied and adequately disclosed; the
reasonableness of significant accounting estimates made by the directors; and the overall presentation of
the financial statements. In addition, we read all the financial and non-financial information in the annual
report to identify material inconsistencies with the audited financial statements. If we become aware of
any apparent material misstatements or inconsistencies we consider the implications for our report.
Opinion on financial statements
In our opinion the group financial statements:
give a true and fair view of the state of the group’s affairs as at 31 December 2013 and of its profit and
cash flows for the year then ended;
have been properly prepared in accordance with US GAAP; and
have been prepared in accordance with the requirements of the Companies Act 2006.
Opinion on other matters prescribed by the Companies Act 2006
In our opinion:
the information given in the Directors’ Report and Strategic Report for the financial year for which the
group financial statements are prepared is consistent with the group financial statements
PricewaterhouseCoopers LLP, PwC, One Reading Central, Forbury Road, Reading, Berkshire, RG1 3JH
T: +44 (0) 118 959 7111, F: +44 (0) 118 938 3020, www.pwc.co.uk
PricewaterhouseCoopers LLP is a limited liability partnership registered in England with registered number OC303525. The registered office of
PricewaterhouseCoopers LLP is 1 Embankment Place, London WC2N 6RH. PricewaterhouseCoopers LLP is authorised and regulated by the Financial Conduct Authority for
designated investment business.
Matters on which we are required to report by exception
We have nothing to report in respect of the following:
Under the Companies Act 2006 we are required to report to you if, in our opinion:
certain disclosures of directors’ remuneration specified by law are not made; or
we have not received all the information and explanations we require for our audit
Other matter
We have reported separately on the parent company financial statements of Noble Corporation Plc for the
year ended 31 December 2013 and on the information in the Directors’ Remuneration Report that is
described as having been audited.
Stephen Mount (Senior Statutory Auditor)
for and on behalf of PricewaterhouseCoopers LLP
Chartered Accountants and Statutory Auditors
London
28 February 2014
2
STATEMENT OF DIRECTOR’S RESPONSIBILITIES
The Directors are responsible for preparing the Annual Report, the Directors’ Compensation Report and the
financial statements in accordance with applicable law and regulations.
Company law requires the Directors to prepare financial statements for each financial year. Under that law,
the Directors have prepared the Noble Corporation plc and subsidiaries (“Group”) financial statements in
accordance with accounting principles generally accepted in the United States of America (“US GAAP”) and the
Noble Corporation plc (“Parent Company”) financial statements in accordance with United Kingdom Generally
Accepted Accounting Practice (UK Accounting Standards and applicable law). Under company law, the Directors
must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of
affairs of the Group and the Company and of the profit or loss of the Group and Company for that period. In
preparing these financial statements, the Directors are required to:
select suitable accounting policies and then apply them consistently;
make judgments and accounting estimates that are reasonable and prudent;
state whether US GAAP and applicable UK Accounting Standards have been followed, subject to any
material departures disclosed and explained in the Group and Parent company financial statements,
respectively; and
prepare the financial statements on the going concern basis unless it is inappropriate to presume that the
company will continue in business.
The Directors are responsible for keeping adequate accounting records that are sufficient to show and
explain the Company’s and the Group’s transactions and disclose with reasonable accuracy at any time the financial
position of the Company and the Group and enable them to ensure that the financial statements and the Directors’
Compensation Report comply with the Companies Act 2006 and, as regards the Group financial statements, Article
4 of the IAS Regulation. They are also responsible for safeguarding the assets of the Company and the Group and
hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.
The Directors are responsible for the maintenance and integrity of the Company’s website. Legislation in
the United Kingdom governing the preparation and dissemination of financial statements may differ from legislation
in other jurisdictions.
Each of the Directors, whose names and functions are listed in Item 10, Part III of this Annual Report on
Form 10-K confirm that, to the best of their knowledge:
the group financial statements, which have been prepared in accordance with US GAAP, give a true and
fair view of the assets, liabilities, financial position and profit of the group; and
the Directors’ report includes a fair review of the development and performance of the business and the
position of the group, together with a description of the principal risks and uncertainties that it faces.
In accordance with Section 418 of the Companies Act 2006, each Director in office at the date the
Directors’ report is approved confirms that:
so far as the Director is aware, there is no relevant audit information of which the Company’s auditor is
unaware; and
he/she has taken all the steps that he/she ought to have taken as a Director in order to make himself/herself
aware of any relevant audit information and to establish that the Company’s auditor is aware of that
information.
The auditors, PricewaterhouseCoopers LLP, have indicated their willingness to continue in office, and a
resolution that they be re-appointed will be proposed at the annual general meeting.
On behalf of the Board of Directors
David W. Williams
Executive Director
February 28, 2014
1
UK STATUTORY STRATEGIC REPORT
The information in this document below that is referred to in the following table shall be deemed to comply
with the UK Companies Act 2006 requirements for the UK Statutory Strategic Report:
Required item in the UK Statutory Strategic Report
Where information can be found in the Annual Report on Form 10-K
A fair review of the company's business, including use of KPI's
Part II, Item 7. Management's Discussion and Analysis of Financial
Condition and Results of Operations
A description of the principal risks and uncertainties
Part I, Item 1A. Risk Factors
Information on environmental matters (including the impact of the
company's business on the environment)
Part I, Item 1. Business, Governmental Regulations and Environmental
Matters
Information about the company's employees
Part I, Item 1. Business, Employees
Information about social, community and human rights issues
Part I, Item 1. Available Information
Description of the company's strategy
Part I, Item 1. Business, Business Strategy
Description of the company's business model
Part I, Item 1. Business, Business Strategy
Part I, Item 2. Properties, Drilling Fleet
Part I, Item 1. Business, Employees
Diversity
On behalf of the Board of Directors
David W. Williams
Executive Director
February 28, 2014
1
UK STATUTORY DIRECTORS’ REPORT
The information in this document below that is referred to in the following table shall be deemed to comply
with the UK Companies Act 2006 requirements for the UK Statutory Directors’ Report:
Required item in the UK Statutory Directors' Report
Where information can be found in the Annual Report on Form 10-K
Describe the principal activities of the group
Part I, Item 1. Business
Indication of the likely future developments of the group's business
Details of the recommended dividend
Indication of the group's research and development activities
Part II, Item 7. Management's Discussion and Analysis of Financial
Condition and Results of Operations
Part II, Item 7. Management's Discussion and Analysis of Financial
Condition and Results of Operations - Dividends
None.
Level of political donations and political expenditure
None.
Particulars of any important post balance sheet events
No material post balance sheet events.
Names of all directors and their interests
Part III, Item 10. Directors, Executive Officers and Corporate Governance
Statement on directors' third party indemnity provision
A statement is required describing the action that been taken during the
period to introduce, maintain or develop arrangements aimed at involving
UK employees in the entity's affairs.
The Company has granted a qualifying third party indemnity to each of its
Directors against liability in respect of proceedings brought by third
parties, which remains in force as at the date of approving the Directors'
report. (filed as Exhibit 10.54)
Part I, Item 1. Business, Employees
The financial risk management objectives and policies of the entity,
including the policy for hedging each major type of forecasted
transaction for which hedge accounting is used.
Part II, Item 8. Financial Statements and Supplementary Data, Note 14 -
Derivative Instruments and Hedging Activities
The exposure of the entity to:
price risk
credit risk
liquidity risk
cash flow risk
Part I, Item 1A. Risk Factors, "Our business depends on the level of
activity in the oil and gas industry. Adverse developments affecting the
industry, including a decline in oil or gas prices, reduced demand for oil
and gas products and increased regulation of drilling and production,
could have a material adverse effect on our business, financial condition
and results of operations."
Part I, Item 1A. Risk Factors, "The contract drilling industry is a highly
competitive and cyclical business with intense price competition. If we are
unable to compete successfully, our profitability may be reduced."
Part I, Item 1A. Risk Factors, "We are substantially dependent on several
of our customers, including Shell, Petrobras and Freeport-McMoRan
Copper & Gold ("Freeport"), and the loss of these customers could have a
material adverse effect on our financial condition and results of
operations."
Part II, Item 7. Management's Discussion and Analysis of Financial
Condition and Results of Operations, Liquidity and Capital Resources
Part I, Item 1A. Risk Factors, "As a result of our significant cash flow
needs, we may be required to incur additional indebtedness, and in the
event of lost market access, may have to delay or cancel discretionary
capital expenditures."
1
UK STATUTORY DIRECTORS’ REPORT
Required item in the UK Statutory Directors' Report
Where information can be found in the Annual Report on Form 10-K
Disclosures on purchases of own shares during the year.
The quantity of emissions in tonnes of carbon dioxide equivalent from
activities for which that company is responsible.
Part II, Item 5. Market for Registrant's Common Equity, Related
Stockholder Matters and Issuer Purchases of Equity Securities, Share
Repurchases
Part I, Item 1. Business, Governmental Regulations and Environmental
Matters
On behalf of the Board of Directors
David W. Williams
Executive Director
February 28, 2014
2
Noble Corporation plc
Directors’ Compensation Report
The following is provided on an unaudited basis.
Statement from the Compensation Committee Chairperson
The Directors’ Compensation Report is divided into three sections:
(A) this Statement from the Compensation Committee (“Committee”) Chairperson;
(B) the directors' compensation policy which sets out the proposed policy on directors’ compensation for the three year
period beginning on the date of the 2014 Annual General Meeting of Shareholders (“2014 AGM”), which will be
subject to a binding vote at the 2014 AGM and at least every third year thereafter;
(C) the annual report on compensation which sets out director compensation and details the link between Company
performance and compensation for 2013. The annual report on compensation together with this statement is subject
to an advisory vote at the 2014 AGM.
Compensation Philosophy
Our executive compensation program, which applies to our Executive Director, as Chairman, President and Chief Executive
Officer, 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, emphasizing equity and performance-based pay. The primary
objectives of the Company’s compensation program are to:
• motivate our executives to achieve key operating, safety and financial performance goals that enhance long-term
shareholder value;
•
•
reward performance in achieving targets without subjecting the Company to excessive or unnecessary risk; and
establish and maintain a competitive executive compensation program that enables the Company to attract, motivate
and retain experienced and highly capable executives who will contribute to the long-term success of the Company.
Consistent with this philosophy, we seek to provide a total compensation package for the executive directors that is
competitive with those of the companies in the Company’s peer group, as such group may be amended from time to time. A
substantial portion of executive compensation is subject to Company, individual and share price performance and is at risk of
forfeiture. In designing our compensation program, the Committee annually reviews each compensation component and
compares its use and level to various internal and external performance standards and market reference points.
Our compensation program for Non-executive Directors includes levels of compensation that we believe are necessary to
secure and retain the services of individuals possessing the skills, knowledge and experience to successfully support and
oversee the Company as a member of our Board of Directors. In addition, a substantial portion of the compensation of our
Non-executive Directors is in the form of equity, aligning their interests with the interests of our shareholders. These equity
awards are also subject to our share ownership policy and equity holding period as described below.
2013-2014 Operational and Financial Highlights
During 2013 and early 2014, the Company achieved numerous financial, operational and strategic milestones. Operational
and strategic milestones included the following:
• The Company continued its capital expansion program. Three of its ultra-deepwater newbuild drillships and three of
its high-specification jackup rigs were delivered from the shipyard and began operating for customers. The
Company announced long-term contracts for its remaining two newbuild drillships and secured commitments on
two of the four remaining jackups under construction. It also announced the construction of an additional high-
specification jackup that will operate under a four-year contract with Statoil ASA;
• The Company announced the proposed spin-off of many of its standard specification assets in a transaction expected
to be completed by the end of 2014;
•
In early 2014, the Company increased its cash dividend to shareholders by 50%; and
• The Company announced and completed the transaction resulting in the change in place of incorporation of the
Company from Switzerland to the United Kingdom.
1
Key financial highlights for 2013 as compared to 2012 included the following:
• Revenues increased by 19%;
• EPS increased by 49%; and
• Operating cash flows increased by 30%.
2013-2014 Compensation Program Changes and Highlights
The Committee took several key actions effective in 2013 and early 2014 consistent with the Company’s compensation
philosophy and strong commitment to pay-for-performance and corporate governance. The Committee considered feedback
from shareholders and proxy advisory services in evaluating changes to our compensation program. The changes are set out
in the following table.
Modification of Peer
Group
In 2013, as part of our commitment to aligning pay with performance, we reviewed our peer
group with a focus on size as measured by revenue and market capitalization, scope and type of
operations. As a result, certain companies were added or removed from our peer group.
Changes to Short
Term Incentive Plan
(STIP)
Changes to Long
Term Incentive Plan
(LTIP)
Elimination of Cash
Buyouts of Options
and Option
Repricing
In 2013, we amended our STIP:
to remove the discretionary bonus component so that all amounts are performance
based;
so that the aggregate funding of the STIP is determined based on EBITDA
performance relative to budget; and
so that individual payments will be based on EBITDA and safety performance and the
achievement of specific company, team and individual objectives.
In 2013, we amended our LTIP:
to eliminate stock option awards; and
to increase the portion of senior executive’s awards under the LTIP comprising
performance-vested RSUs (PVRSUs) to 50%, with the remainder being in the form of
time-vested RSUs (TVRSUs).
In 2014, we amended our 1991 Plan and 1992 Plan (each as defined below):
for the 1991 Plan (which governs equity awards to executives), to expressly prohibit
cash buyouts of stock options (option repricing was already prohibited under the 1991
Plan); and
for the 1992 Plan (which governs equity awards to Non-executive Directors), to
expressly prohibit cash buyouts of stock options and option repricing.
Even prior to such amendments, the Company did not reprice stock options or buy options out
for cash.
Share Ownership
Policy and Equity
Holding Period
In 2014, we adopted a share ownership policy that applies to our executive officers and Non-
executive Directors. The policy also prohibits sales of Company shares until minimum
ownership guidelines are met.
2
Conclusion
We believe our compensation program’s components and levels are appropriate for our industry and provide a direct link to
enhancing shareholder value and advancing the core principles of our compensation philosophy and objectives to ensure the
long-term success of the Company. We will continue to monitor current trends and issues in our industry, as well as the
effectiveness of our program with respect to our executives, and properly consider, from time to time, whether to modify our
program as appropriate.
Michael A. Cawley
Chairperson of the Compensation Committee
February 19, 2014
3
Noble Corporation plc
Directors’ Compensation Policy
Our Directors’ Compensation Policy applies to our Executive Director, as Chairman, President and Chief Executive Officer
(as well as any individual that may become an Executive Director while this policy is in effect) and our Non-executive
Directors.
Our Compensation Policy for our Executive Directors is primarily designed to:
Attract and retain individuals with the skills and experience necessary to successfully execute Noble’s strategic business
plan;
Motivate individuals to achieve key strategic, operational, safety and financial goals that will drive shareholder value
while not subjecting the Company to excessive or unnecessary risk; and
Align our Executive Directors’ interests with those of our shareholders.
Consistent with this philosophy, we seek to provide total compensation packages that are competitive with those of the
companies against which we compete on an operational basis and for key talent. In establishing our Compensation Policy,
the Compensation Committee (or “Committee”) has reviewed and considered various benchmarks and market reference
points. A substantial portion of total compensation for our Executive Directors is subject to Company, individual and share
price performance and is at risk of forfeiture.
Future Compensation Policy – Executive Directors
It is intended that the Compensation Policy set out in this report will be submitted to a vote of shareholders at the 2014
Annual General Meeting of Shareholders on April 25, 2014 (the “2014 AGM”), and, if approved, will take effect
immediately after the 2014 AGM and continue in effect until December 31, 2017 unless amended and approved by
shareholders prior to such date.
Compensation
Component
Base Salary
Purpose / Link to
Noble’s Business
Strategy
Attract and retain
high performing
individuals
Reflect an
individual’s skills,
experience and
performance
Align with market
value of role
How Component Operates
Maximum Opportunity
Reviewed annually by Committee
In establishing base salary levels and determining
increases, the Committee considers a variety of factors
including: (1) our compensation philosophy, (2) market
compensation data, (3) competition for key Director-level
talent, (4) the Director’s experience, leadership and
contributions to the Company’s success, (5) the
Company’s overall annual budget for merit increases and
(6) the Director’s individual performance in the prior year
If any adjustments are made, annual salary increases
generally take effect in January or February of each year,
but could occur throughout the year if circumstances merit
such an adjustment. Base salary is not subject to any
clawback measures
Annual increase not to
exceed 15% of prior year’s
highest annualized base
salary rate
For recruitment purposes,
the base salary limit set
forth in this policy will not
apply to any individual
hired from outside of
Noble
Committee reserves
discretion to set base salary
at a level it deems
appropriate to reflect a
material job promotion or a
material increase in
responsibility, provided
that the base salary level
set in these circumstances
will not exceed 115% of
the annualized salary of the
person who previously
held such similar position
for a period of at least 12
months
1
Compensation
Component
Annual Bonus
pursuant to
Short Term
Incentive Plan
(“STIP”) or
other Cash
Awards
Purpose / Link to
Noble’s Business
Strategy
Drive achievement of
annual financial,
safety and strategic
goals
Align interests and
wealth creation with
those of shareholders
Align with market
value of role
How Component Operates
Maximum Opportunity
Aggregate funding of the STIP linked directly to financial
and/or operational performance (e.g., EBITDA, safety,
etc.). Individual payouts will be based on financial,
operational and/or other team and individual metrics key to
the success of Noble
Threshold, target and maximum performance levels for
any metrics chosen cannot be disclosed currently as they
have not been determined for future years and, once
determined, are considered commercially sensitive.
Performance targets and actual results used to determine
STIP payouts will be disclosed in the Implementation
Report of the Directors’ Compensation Report in the year
in which corresponding STIP payouts are made
All metrics will be measured on a no longer than one year
basis
Performance below threshold levels for operational or
financial goals will result in a $0 payout for these goals
Payouts between threshold and maximum levels will be
interpolated. The Committee reserves the right in its
discretion to adjust earned awards in the event the funding
of the STIP is insufficient to satisfy individual awards at
the level earned
Payments are intended be made in cash, but can be settled
in Company shares or a combination of cash and shares at
the Committee’s discretion
The Committee will assess the performance of our CEO
and in the case of Executive Directors other than the CEO,
if any, it will consider input from the CEO
The treatment of STIP awards will differ from this policy
if a change in control were to occur. This treatment is
summarized in the Directors’ Compensation Report
STIP awards are subject to recoupment under the
provisions of Section 304 of the Sarbanes-Oxley Act and
would also be subject to any applicable legislation adopted
during the time in which this policy is in effect. See
“Clawback Provisions” below.
Cash awards outside the STIP will only be made in
connection with recruitment, promotion or inducement
awards
250% of the highest
annualized base salary in
effect for the fiscal year to
which the performance
targets relate
In exceptional
circumstances, which
would be limited to where
a cash award, under a
Company incentive plan or
otherwise, is used to
facilitate recruitment of
individuals via the buy-out
of awards, the limit set
forth in this policy will not
apply. The Committee will
consider market-based and
individual-specific factors
in these circumstances
In select cases (promotion
or recruitment), to secure
the services of certain
individuals, cash
inducement awards may be
granted at the Committee’s
discretion. These
inducement awards may
exceed the limit set forth in
this policy, but will not
exceed 250% of such
individual’s annualized
base salary
2
Compensation
Component
Long-term
Incentives
(“LTI”)
Purpose / Link to
Noble’s Business
Strategy
Equity awards
currently awarded
under Noble
Corporation 1991
Stock Option and
Restricted Stock Plan,
as may be amended
from time to time
(“1991 Plan”)
Drive achievement of
long-term financial
and strategic goals
Align interests and
wealth creation with
those of shareholders
Attract and retain
high performing
individuals
Align with market
value of role
How Component Operates
Maximum Opportunity
Annual equity grant will include at least 50%
performance-based awards. At present, these are
performance vested restricted stock units (“PVRSUs”), but
in the future, could include other incentive awards,
including non-qualified stock options (NQSOs)
For performance-based awards, including PVRSUs, the
Committee will use either TSR (absolute or relative)
and/or other financial or performance metrics set forth in
the 1991 Plan
Payout schedule for relative TSR performance or other
financial metrics will be established by the Committee and
will range from 0% for below-threshold performance to
100% of maximum for superior performance. Percentile
ranks, performance levels and corresponding payout levels
will be set by the Committee in its discretion
For performance awards, payouts between threshold and
maximum levels will be interpolated.
Performance targets for financial metrics and actual results
used to determine payouts (if applicable) for performance-
contingent awards will be disclosed in the Implementation
Report of the Directors’ Compensation Report in the year
in which corresponding payouts are made, provided that
the targets and results are not deemed at that time to be
commercially sensitive information
Time-vested restricted stock unit awards (“TVRSUs”) are
used by the Committee to (1) promote retention, (2)
reward individual and team achievement and (3) align
individual’s with the interests of shareholders
Vesting/performance period for all LTI awards consisting
of restricted stock and restricted stock units will be over at
least three-years from grant date, except in exceptional
circumstances, such as recruitment awards, where such
vesting period may be less, or upon the occurrence of
certain events
Earned/vested amounts are intended to be delivered in
shares of Company stock, but can be settled in Company
shares or a combination of cash and shares at the
Committee’s discretion, subject to the terms of the 1991
Plan
Any outstanding LTI awards made prior to the approval
and implementation of this Compensation Policy will
continue to vest and be subject to the same performance
conditions (if applicable) and other terms/conditions
prevailing at the time of grant of such awards
Performance-based LTI awards are subject to recoupment
under the provisions of Section 304 of the Sarbanes-Oxley
Act and would also be subject to any applicable legislation
adopted during the time in which this policy is in effect.
See “Clawback Provisions” below.
Value at grant (based on
commonly used valuation
methods) not to exceed
750% of base salary
In exceptional
circumstances, which
would be limited to where
the plan is used to facilitate
recruitment of certain
individuals, including the
buy-out of previously-
granted incentive awards
and inducement awards,
the limit set forth in this
policy will not apply. The
Committee will consider
market-based and
individual-specific factors
in these circumstances
To secure the services of
individuals in the case of a
promotion, inducement
awards may be granted at
the Committee’s
discretion. These
inducement grants may
exceed the limit set forth in
this policy, but will not
exceed 115% of the annual
target equity award value
of the person who
previously held such
similar position for a
period of at least 12
months
For performance-
contingent awards, such as
PVRSUs, maximum
payout not to exceed 200%
of target number of
units/shares (or cash
amount, if applicable) at
end of performance period,
plus any earned dividends
or cash equivalents (if
applicable, whether on
vested or unvested awards)
For all other LTI awards,
maximum payout not to
exceed 100% of the
original number of
units/shares/options (or
similar) granted at the end
of vesting period plus any
earned dividends or cash
equivalents (if applicable,
whether on vested or
unvested awards)
3
Compensation
Component
Benefits
Pension
Purpose / Link to
Noble’s Business
Strategy
Attract and retain
high performing
individuals
Align with market
value of role
Align with market
practice in country
of residence
Attract and retain
high performing
individuals
Align with market
value of role
How Component Operates
Maximum Opportunity
Taxable benefits not to
exceed 10% of base salary
The maximum benefit
under the pension plans is
determined pursuant to the
terms of the pension plans
in effect as of the effective
date of this policy (subject
to adjustment as provided
in the applicable plan)
Executive Directors are provided with healthcare, life and
disability insurance and other employee benefit programs.
These employee benefits plans are provided on a non-
discriminatory basis to all employees
These and additional programs are established to align with
market practice/levels and, as such, may be adjusted in the
discretion of the Committee from time to time
Salaried Employees’ Retirement Plan
Defined benefits provided in accordance with the terms of
the previously-adopted Salaried Employees’ Retirement
Plan
Benefits are accrued in the form of an annuity, providing
for payments to an individual during retirement and in
select cases to a designated beneficiary
Payments may be made in a single lump-sum, a single life
annuity and several forms of joint and survivor elections
Benefits are determined in accordance with the plan’s
terms and consider an individual’s average compensation
and years of service at Noble
Only available to employees hired originally on or before
July 31, 2004
Retirement Restoration Plan
Unfunded, nonqualified plan that provides the benefits
under the Salaried Employees’ Retirement Plan’s benefit
formula that cannot be provided by the Salaried
Employees’ Retirement Plan because of the annual
compensation and annual benefit limitations applicable to
the Salaried Employees’ Retirement Plan under the Code
Only available to employees hired originally on or before
July 31, 2004
Other
Retirement
Programs
Attract and retain
high performing
individuals
Align with market
value of role
401(k) Savings Plan
Qualified plan that enables qualified employees, including
Directors, to save for retirement through a tax-advantaged
combination of employee and Company contributions
Matched at the rate of $0.70 to $1.00 per $1.00 (up to 6%
of Basic Compensation) depending on years of service.
Fully vested after three years of service or upon retirement,
death or disability
401(k) plans: Maximum
amounts governed by the
applicable laws and
regulations of the United
States of America
Profit sharing plan: Not to
exceed 10% of covered
compensation
401(k) Savings Restoration Plan
Unfunded, nonqualified employee benefit plan under
which highly compensated employees may defer
compensation in excess of 401(k) plan limits
Profit Sharing Plan
Qualified defined contribution plan available to employees
hired on or after August 1, 2004 who do not participate in
the Salaried Employees’ Retirement Plan
Any contribution at Board of Directors’ discretion. Fully
vested after three years of service or upon retirement,
death or disability
4
Compensation
Component
Relocation /
Expatriate
Assistance (if
applicable)
Purpose / Link to
Noble’s Business
Strategy
Ensure Noble is able
to attract high caliber
talent regardless of
business location
Provide career and/or
personal development
options and
potentially help retain
the services of
individuals already
employed by the
Company
Align with market
value of role
Align with market
practice in country of
residence
How Component Operates
Maximum Opportunity
Expatriate benefits are set to be consistent with those of
comparable companies. These currently consist of:
− Housing allowance
− Foreign service premium
− Goods and services differential allowance
− Car allowance
− Reimbursement or payment of school fees for eligible
dependents to age 19
− Annual home leave allowance
− Tax equalization payments
− Tax preparation services
Relocation assistance is provided that is comparable to that
provided by other similar companies. Assistance includes
(provided to non-Director level employees also):
− Standard outbound services, such as “house hunting”
trips and shipment of personal effects
− Temporary housing
− Temporary relocation assistance
Future expatriate benefits and relocation assistance could
include other components not included in the above
There are a number of
variables affecting the
amount that may be
payable, but the
Committee would pay no
more than it judged
reasonably necessary in
light of all applicable
circumstances
Maximum
expatriate/relocation
assistance not to exceed
types of benefits described
and/or used by comparable
companies. The maximum
tax equalization payment
shall not exceed the
payment that would be
due if the director was paid
at the maximum amount
permitted under this policy
for each other component
of compensation (except
upon a change in control,
in which case amounts
would be calculated in
accordance with the terms
of the applicable
agreement)
Changes have been made to the STIP, LTIP and Share Ownership Policy and Equity Holding Period in response to comments
received in connection with our shareholder outreach effort. The changes are summarized in the Statement from the
Compensation Committee Chairperson.
Share Ownership Policy
The purpose of the share ownership policy is to align executive interests and wealth creation with the interests of
shareholders. Under the current share ownership policy, an Executive Director must meet the following stock ownership
requirements: (1) CEO = 5x base salary; (2) Executive Vice Presidents and Senior Vice Presidents = 4x base salary; and (3)
Vice Presidents = 2x base salary. For Non-executive Directors, the stock ownership requirement is 6x the director’s annual
retainer. A director may not sell or dispose of shares for cash unless the above share ownership policy is satisfied.
Performance Measure Selection
The measures used under the STIP and LTIP are selected annually to reflect the Company’s key short-term and long-term
strategic initiatives and reflect both financial and non-financial objectives. Performance targets are set to be challenging but
achievable, taking into account the Company’s business, financial and strategic priorities.
Compensation Policy for Other Employees
The Company’s approach to annual compensation reviews is consistent across the Company, with consideration given to the
scope of the role, level of experience, responsibility, individual performance and pay levels at comparable companies. Non-
Director level employees are eligible to participate in the Company’s annual and long-term incentive programs. Participation,
award opportunities and specific performance conditions vary by level within the Company, with corporate and business
division metrics incorporated as appropriate.
5
Illustration of Application of Compensation Policy for Executive Directors
The estimated compensation amounts received by the Executive Directors, which group currently includes only our
Chairman, President and Chief Executive Officer, for the first full year (e.g., 2014) in which the Compensation Policy applies
are shown in the following graphs. These amounts reflect three levels of performance as defined below:
Threshold: Includes sum of salary, benefits, pension, TVRSUs at grant date fair value, PVRSUs at grant date fair value,
and threshold payout (assuming no share price appreciation), and expatriate benefits, if applicable
Target (at expectation): Includes sum of: (1) fixed compensation plus annual bonus paid at target amount and (2)
PVRSUs at grant date fair value and target payout (assuming no share price appreciation)
Maximum: Includes sum of: (1) fixed compensation plus annual bonus paid at maximum amount and (2) PVRSUs at
grant date fair value and maximum payout (assuming no share price appreciation)
Additional assumptions used in compiling the chart illustrations are:
Salary: Reflects 2014 annualized rate.
Pension: Reflects aggregate change in the actuarial present value of accumulated benefits under the Salaried
Employees’ Retirement Plan and the Retirement Restoration Plan for the year. These amounts do not include any
amounts that are above-market or preferential earnings on deferred compensation.
Benefits: Sum of Company-paid benefits include: (1) expatriate benefits; (2) 401(k) Savings Plan matching
contributions; (3) health and welfare benefits; (4) tax preparation services; (5) annual home leave allowance; and (6)
dividend equivalents on restricted stock units.
Bonus: Reflects potential payments under the STIP based solely upon financial metrics (1) minimum = below threshold
performance, so no payout would occur; (2) target = “at expectation” performance, so 100% of target amount would be
paid; and (3) maximum = “stretch” performance where 200% of target amount would be paid.
Long-term Incentive (LTI) Awards: TVRSUs are shown at grant date fair value; PVRSUs reflect grant date fair value at
“target” or “maximum”, as applicable. In all scenarios, LTI values assume no share price change relative to the closing
price of Noble shares on grant date. These values do not represent actual amounts that an Executive Director will
receive in 2014 as the (1) TVRSUs vest ratably over a three-year period and (2) PVRSUs vest, only to the extent earned,
at the end of a three-year performance period.
Illustrative Compensation of Chairman, President & CEO
Recruitment of Executive Directors
The compensation package for a new Executive Director will be set in accordance with the terms of the Compensation Policy
in force at the time of appointment or hiring. To successfully facilitate recruitment of high caliber talent from outside of
Noble, the limits in this policy, if any, with respect to annual base salary, STIP or other cash awards, and LTI awards do not
apply except as set forth above. With respect to inducement-related STIP or other cash awards, amounts will not exceed
250% of such individual’s annualized base salary; no such limit will apply with respect to base salary amounts and LTI
awards used to help facilitate recruitment. In addition, to facilitate the recruitment of an individual to an Executive Director
position, the Committee can use cash and/or LTI awards to buy-out previously-granted incentive awards and no limits will
apply under this policy.
6
In the case of an internal appointment/promotion of an individual to an Executive Director position, the Committee reserves
discretion to set base salary at a level it deems appropriate to reflect the material increase in scope and responsibility,
provided that the base salary level set in these circumstances will not exceed 115% of the annualized salary of the person who
previously held such similar position for a period of at least 12 months. In addition, STIP, cash awards or LTI awards may be
granted as inducement awards at the Committee’s discretion. These STIP, cash awards or LTI grants used as inducement
awards may exceed the limit set forth in this policy, but will not exceed the following amounts: for STIP or cash awards,
250% of such individual’s annualized base salary, and for LTI awards, 115% of the annual target equity award value of the
person who previously held such similar position for a period of at least 12 months.
For external hires and internal appointments, the Committee may agree that the Company will meet certain relocation
expenses, as appropriate and within the limits set by the Committee. The Committee believes it needs to retain the flexibility
set forth in this policy to ensure that it can successfully secure the services of individuals with the background, experience
and skill-set needed to lead a company of the size and scope of Noble. In all cases, the Committee will consider market-
based and individual-specific factors when making its final decisions.
Executive Directors Service Agreements and Loss of Office Payments
The Company's general policy is that Executive Directors should be employed on an "at will" basis such that no notice
provision applies and no termination payments are payable. Executive Directors working in the United Kingdom will,
however, benefit from the statutory minimum notice period. This is enshrined in a written statement of particulars provided
to relevant individuals, which states that the amount of notice of termination of employment that they are entitled to receive
is one week. After two years’ continuous service they will be entitled to an extra week per year of service, up to a maximum
of 12 weeks’ notice.
The Committee may vary these terms if the particular circumstances surrounding the appointment of a new Executive
Director require it (in accordance with the policy on the appointment of new Executive Directors above). In particular, the
Committee may determine that these terms may vary substantially where it is necessary or desirable to recruit in a market in
which "at will" employment terms are not competitive.
An exception to the policy stated above will arise if the Change of Control Employment Agreements become effective.
Details of the terms of these Agreements are set out below.
Change of Control Employment Agreements
Certain of the executive officers serving at December 31, 2013 are parties to change of control employment agreements
which we have offered to certain senior executives since 1998. These agreements become effective only upon a change of
control (within the meaning set forth in the agreement). If a defined change of control occurs and the employment of the
executive officer is terminated either by us (for reasons other than death, disability or cause) or by the officer (for good
reason or upon the officer’s determination to leave without any reason during the 30-day period immediately following the
first anniversary of the change of control), which requirements can be referred to as a “double trigger”, the executive officer
will receive payments and benefits set forth in the agreement. The terms of the agreements are summarized in the Company’s
2014 Proxy Statement under the heading “Potential Payments on Termination or Change of Control – Change of Control
Employment Agreements.” We believe a “double trigger” requirement, rather than a “single trigger” requirement (which
would be satisfied simply if a change of control occurs), increases shareholder value because it prevents an immediate
unintended windfall to the executive officers in the event of a friendly (non-hostile) change of control.
David Williams, as CEO, is the only Director to have entered into such an agreement. He did so prior to June 27, 2012 (being
the relevant date under the applicable UK regulations from which prior commitments will continue to be honored by the
Company even if they are not in accordance with the compensation policy, provided that they are not modified or renewed).
Accordingly, as this agreement has not been modified or renewed since June 27, 2012, the Company will honor the
agreement and it will not be subject to separate shareholder approval. A copy of any Change of Control Agreement for a
Director will be available for inspection at the registered office of the Company.
The Company may, at the discretion of the Committee, enter into a Change of Control Employment Agreement with any
newly recruited or appointed Executive Director. It would be the policy of the Company that the terms of such agreement
would be substantially similar to those summarized in the Company’s 2014 Proxy Statement under the heading “Potential
Payments on Termination or Change of Control – Change of Control Employment Agreements” in the most recent version
approved by the Board.
7
Clawback Provisions
Section 304 of the Sarbanes-Oxley Act of 2002, generally requires U.S.-listed public company chief executive officers and
chief financial officers to disgorge bonuses, other incentive- or equity-based compensation and profits on sales of company
stock that they receive within the 12-month period following the public release of financial information if there is a
restatement because of material noncompliance, due to misconduct, with financial reporting requirements under the federal
securities laws. Other than these recoupment provisions or any other applicable legislation adopted during the time in which
this policy is in effect, the compensation of Directors of the Company is not subject to any clawback provisions.
Consideration of Employment Conditions and Consultation with Employees
Although the Committee does not consult directly with the broader employee population on the Company’s executive
compensation program, the Committee considers a variety of factors when determining the Directors’ Compensation Policy,
including but not limited to (1) the average and range of base salary increases provided to non-Director employees, (2)
compensation arrangements covering variable pay and benefits for all employees, (3) recent trends in talent attraction and
retention affecting the Company and the broader energy industry and (4) employment conditions for the broader employee
population. In addition to these considerations, the Committee believes that the Compensation Policy for Executive Directors
is necessary to reflect the increased qualifications and level of responsibility of the position relative to the typical employee.
The primary area of policy differentiation is the increased emphasis on performance-based compensation for Executive
Directors relative to the broader employee population.
Consideration of Shareholder Views
Since 2011, and continuing through early 2014, we conducted an extensive shareholder outreach effort regarding executive
compensation matters through a wide-ranging dialogue between management and numerous shareholders. This dialogue was
interactive and generally involved personal phone discussions with members of senior management. The outreach effort
generally targeted our largest 40 shareholders representing over 60% of the Company’s outstanding shares at that time. We
also took into consideration certain proxy advisory firms’ reports regarding our compensation program. We and our
shareholders share a desire to closely link pay and performance.
We received differing, and sometimes conflicting, recommendations on specific components of our compensation program
and how best to achieve the link between pay and performance. For instance, shareholders differed in their views regarding
whether TSR or financial performance metrics were most appropriate for performance awards, whether some level of
discretion was appropriate under our short-term incentive plan, and which companies are best suited for our peer group. We
reviewed all shareholder feedback throughout the process, and the Committee considered such feedback in developing and
evaluating our executive compensation program, including this Compensation Policy. In doing so, we engaged a number of
our largest shareholders on multiple occasions to discuss our compensation program. We are committed to continued
engagement between shareholders and the Company to fully understand and consider shareholders’ input and concerns.
8
Compensation Policy for Non-executive Directors
As of the effective date of this Policy, all of our Directors, with the exception of our Chairman, President and Chief
Executive Officer, are Non-executive Directors. The Company believes that the following program and levels of
compensation are necessary to secure and retain the services of individuals possessing the skills, knowledge and experience
to successfully support and oversee the Company as a member of our Board of Directors. Our Non-executive Directors
receive no compensation from the Company for their service as Directors other than as set forth below.
Compensation
Component
Annual Retainer
Board and
Committee
Meeting Fees
Lead Director and
Committee
Chairperson Fees
Annual Equity
Award
Benefits
Purpose / Link to Noble’s
Business Strategy
Attract and retain Non-executive
Directors with a diverse set of
skills, background and
experience
Align with market value of role
Attract and retain Non-executive
Directors with a specialized set
of skills, background and
experience
Recognize time devoted to
serving Company
Align with market value of role
Attract and retain Non-executive
Directors with a specialized set
of skills, background and
experience
Recognize additional time and
responsibility associated with
role
Align with market value of role
Attract and retain Non-executive
Directors with a diverse set of
skills, background and
experience
Align with market value of role
Facilitate Non-executive
Directors’ attendance at
meetings
Align with market value of role
How Component Operates
Maximum Opportunity
Reviewed annually by the Board
Market data from the peers serves as the
primary benchmark
Paid quarterly, in cash, with up to 100% paid in
shares (or a combination of cash and shares) at
the Director’s election
Reviewed annually by the Board
Market data from the peers serves as the
primary benchmark
Paid in cash
Not to exceed $125,000
per year
Not to exceed an
additional $500,000 per
year for a Non-executive
Chairperson (to the extent
one were to be appointed)
Not to exceed $3,000 per
meeting
Reviewed annually by the Board
Market data from the peers serves as the
Lead Director: not to
exceed $50,000 per year
primary benchmark
Paid in cash
Reviewed annually by the Board
Market data from the peers serves as the
primary benchmark
Paid in shares
Includes travel and other relevant out-of-pocket
expenses incurred in conjunction with meeting
attendance
Committee Chairperson:
not to exceed $50,000 per
year
Not to exceed $350,000
per year at time of grant
(based on commonly used
valuation methods)
Limited to out-of-pocket
expenses incurred. These
amounts will vary based
on meeting location and
duration
Our Non-executive Directors will only receive compensation for those services outlined in this Policy. There are no
contracts or agreements that provide guaranteed amounts payable for service as a Non-executive Director of Noble, and there
are no similar arrangements that provide for any guaranteed compensation (other than for any accrued amounts, if applicable,
for services rendered as a Non-executive Director) upon a Non-executive Director’s termination of service from our Board of
Directors.
9
Noble Corporation plc
Annual Report on Compensation
Noble Corporation plc became a UK company under the UK Companies Act 2006 on November 20, 2013; however, we are
presenting full year 2013 compensation data to provide a more meaningful discussion. In the following tables, 2012
compensation is shown as totals only.
The following is provided on an audited basis.
Compensation of Executive Director
The following table sets forth the compensation of David Williams, our Chairman, President and Chief Executive Officer,
and our only Executive Director, during 2013:
Base Salary
$
1,045,833
STIP(1)
1,500,000
$
LTIP(2)
2,514,259
$
Pensions(3)
$
139,106
Taxable
Benefits(4)
$
1,840,708
2013
2012
Total
7,039,906
$
Total
7,895,988
$
(1) Short Term Incentive Plan (“STIP”) payment attributable to 2013 performance.
(2) The amounts disclosed in this column represent the vesting date fair market value of awards as follows:
PVRSU(a)
$
-
_____________
2013
TVRSU
2,514,259
$
Total
2,514,259
$
2012
Total
3,950,665
$
(a) As the threshold performance target for the 2010-2012 performance period was not met, 100% of the PVRSU’s for such performance period
were forfeited in February 2013.
(3) The amounts in this column represent the aggregate change in the actuarial present value of the Executive Director’s accumulated benefit under
the Salaried Employees’ Retirement Plan and the Retirement Restoration Plan for the year. Does not include any amounts that are above-market
or preferential earnings on deferred compensation.
(4) The table below summarizes the taxable benefits received by our CEO for the years ended 31 December 2013 and 2012:
Expatriate/
Relocation
Benefits(a)
Dividends on
Non-Vested
Restricted
Stock Units
$
442,768
$
1,317,929
_____________
(a) Relocation/expatriate assistance consists of the following:
$
80,011
$
Benefits
and Other
2013
Total
1,840,708
2012
Total
1,663,981
$
Housing/Car
Allowance
$
296,841
Foreign
Service
Premium
$
167,333
Resident
Area
Allowance
$
95,833
Annual
Home Leave
$
12,812
Relocation
Allowance
$
87,500
Tax
Equalization
$
657,610
2013
Total
1,317,929
$
2012
Total
1,351,664
$
Compensation of Non-executive Directors
The following table sets forth the compensation of our Non-executive Directors during 2013:
Ashley Almanza(1)
Michael Cawley
Lawrence Chazen
Julie Edwards
Gordon Hall
Jack Little(2)
Jon Marshall
Mary Ricciardello
Total
Annual
Retainer
$
20,000
50,000
50,000
50,000
50,000
30,000
50,000
50,000
350,000
$
Board/Committee
Lead Director/
Meeting Fees
Committee Chairman
$
13,000
36,000
46,500
36,000
38,500
18,000
34,000
44,000
266,000
$
$
-
27,500
-
-
17,500
10,000
15,000
25,000
95,000
$
Total
Fees
$
33,000
113,500
96,500
86,000
106,000
58,000
99,000
119,000
711,000
$
Annual
Equity Award(3)
284,753
$
284,753
284,753
284,753
284,753
2013
Total
$
317,753
398,253
381,253
370,753
390,753
-
284,753
284,753
1,993,271
58,000
383,753
403,753
2,704,271
$
$
2012
Total
-
$
413,367
401,867
399,867
399,867
391,492
393,117
419,367
2,818,944
$
(1) Appointed to the Board on April 26, 2013.
(2) Retired from the Board on April 26, 2013.
(3) The amounts disclosed in this column represent the aggregate grant-date fair value of the unrestricted shares awarded, which is measured using
the market value of our shares on the date of grant.
1
Option Exercises and Outstanding Options at Fiscal Year End
The following table sets forth certain information about exercises of options during 2013 and outstanding options at
December 31, 2013 held by the Directors:
David Williams
Michael Cawley
Lawrence Chazen
Julie Edwards
Jack Little(4)
Mary Ricciardello
Outstanding
at
1/1/2013
Granted
during
Year(1)
Exercised
during
Year
100,000
27,460
51,426
101,092
69,449
90,566
89,302
529,295
15,000
15,000
4,000
4,000
38,000
4,000
4,000
8,000
20,000
20,000
15,000
15,000
4,000
4,000
38,000
20,000
4,000
4,000
28,000
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
15,000
-
-
-
15,000
4,000
-
4,000
-
-
15,000
-
-
-
15,000
-
-
-
-
Number of
Securities
Underlying
Unexercised
Options (#)
Exercisable
100,000
27,460
51,426
101,092
69,449
60,377
29,767
439,571
Number of
Securities
Underlying
Unexercised
Options (#)
Unexercisable
-
-
-
-
-
(2)
(3)
30,189
59,535
89,724
Outstanding
at
12/31/2013
100,000
27,460
51,426
101,092
69,449
90,566
89,302
529,295
-
15,000
4,000
4,000
23,000
-
4,000
4,000
20,000
20,000
-
15,000
4,000
4,000
23,000
20,000
4,000
4,000
28,000
-
15,000
4,000
4,000
23,000
-
4,000
4,000
20,000
20,000
-
15,000
4,000
4,000
23,000
20,000
4,000
4,000
28,000
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Exercise
Price
$
$
$
$
$
31.51
35.79
43.01
24.66
39.46
$
37.71
$
36.82
$
$
$
$
16.06
18.93
26.62
41.25
Expiry
Date
September 20, 2016
February 13, 2017
February 7, 2018
February 25, 2019
February 6, 2020
February 4, 2021
February 3, 2022
April 25, 2013
April 23, 2014
April 29, 2015
April 28, 2016
$
$
26.62
41.25
April 29, 2015
April 28, 2016
$
41.25
April 28, 2016
$
$
$
$
16.06
18.93
26.62
41.25
$
$
$
18.93
26.62
41.25
April 25, 2013
April 23, 2014
April 29, 2015
April 28, 2016
April 23, 2014
April 29, 2015
April 28, 2016
In 2013, we discontinued the use of stock option awards.
(1)
(2) Exercisable on February 4, 2014.
(3) Exercisable on February 3, 2014 (29,767) and February 3, 2015 (29,768).
(4) Retired from the Board on April 26, 2013.
The market price of the company’s shares at the end of the financial year was $37.47. The range of market prices during the
year was between $34.67 and $42.26.
2
Performance Against Performance Targets for STIP for our Executive Director
Cash awards under the STIP are earned by reference to the achievement of annual financial, operational, individual and team
performance goals and other key accomplishments, and are paid in February following the end of the financial year. The
calculation of the performance components of the STIP and the aggregate STIP award paid to the Executive Director for
2013 are shown below. All amounts paid under the STIP are performance-based.
Components of
Performance Bonus
EBITDA
How
Determined
EBITDA relative to target
Safety results
LTIR vs. IADC average
Weighting
0.65
0.35
2013
Results
115%
200%
Goal Achievement
Performance Component (as funded)
Component
Payout
0.75
0.70
1.45
1.43
Aggregate STIP Award
1,500,000
Performance Against Performance Targets for LTIP Vesting for our Executive Director
The following represents the aggregate grant date fair value of the restricted stock units granted in 2013 and 2012 to our
Executive Director:
Year
2013
2012
TVRSU
3,290,902
2,405,547
$
$
PVRSU
3,967,833
2,744,244
$
$
Options(1)
$
-
$
1,197,540
Total
7,258,735
6,347,331
$
$
(1)
In 2013, we discontinued the use of stock option awards.
Time-Vested Restricted Stock Unit Awards
The following sets forth information regarding the time-vested restricted stock units outstanding at the beginning and end of
the year ended December 31, 2013 for our Executive Director:
Award
Date
2/6/2010
2/4/2011
2/3/2012
2/1/2013
End of
Vesting Period (1)
2/6/2013
2/4/2014
2/3/2015
2/1/2016
Unvested RSU's
Outstanding at
1/1/2013
19,260
42,430
65,191
-
126,881
RSU's
RSU's
Granted
-
-
-
79,452
79,452
Vested
19,260
21,215
21,730
-
62,205
Unvested RSU's
Outstanding at
12/31/2013
-
21,215
43,461
79,452
144,128
Market Price
Per Share on
Grant Date
$
$
$
$
39.73
37.60
36.90
41.42
Market Value
Per Share on
Value
on Vesting
Vesting Date
$ 39.28
$ 40.96
$ 40.91
N/A
Date
$ 756,533
$ 868,860
$ 888,866
N/A
$ 2,514,259
(1) Time-Vested restricted stock unit awards vest at a rate of 1/3 per year on each anniversary of the grant date.
Performance-Vested Restricted Stock Unit Awards
The following sets forth information regarding the performance-vested restricted stock units outstanding at the beginning and
end of the year ended December 31, 2013 for our Executive Director:
Award
Date
2/6/2010
2/4/2011
2/3/2012
2/1/2013
Vesting
Date(1)
February 2013
January 2014
February 2015
February 2016
Measurement
Period
2010-2012
2011-2013
2012-2014
2013-2015
Unvested RSU's
Outstanding at
1/1/2013
114,190
142,688
136,870
-
393,748
RSU's
Granted
-
-
-
158,904
158,904
RSU's
Vested
-
-
-
-
-
RSU's
Forfeited
114,190
-
-
-
114,190
Unvested RSU's
Outstanding at
12/31/2013
-
142,688
136,870
158,904
438,462
Fair Value
Per Share on
Grant Date
$
17.76
$
16.77
$
20.05
$
24.97
Market Value
Per Share on
Vesting Date
$ 39.28
N/A
N/A
N/A
Value
on Vesting
Date
$ -
N/A
N/A
N/A
$ -
(1) Performance-Vested restricted stock units vest, if at all, at the end of the three-year measurement period to which they relate.
3
The following sets forth the PVRSU performance thresholds for the 2010-2012 measurement period:
Performance Table
TSR Relative
to Peer Group
(Percentile)(1)
90 and greater
75
51
25
Below 25
Percentage of
Maximum Vesting
100%
75%
50%
25%
0%
Level
Maximum
Above Target
Target
Threshold
Below Threshold
(1) Our TSR relative to our peer group at December 31, 2012 was below the threshold. As the threshold performance target for the 2010-2012
performance period was not met, 100% of the PVRSU’s for such performance period were forfeited in February 2013.
Pensions
The following table sets forth certain information about retirement programs and benefits under the defined benefit plans for
our Executive Director:
Plan
Name
Salaried Employees' Retirement Plan
Retirement Restoration Plan
Years of
Credited
Service(1)
7.281
7.281
Present Value of
Accumulated
Benefit(1)
$
$
13,901
1,811,828
Payments
During 2013
-
$
$
-
Change in
Pension Value and
Non-Qualified
Deferred
Compensation
Earnings(2)
$
$
13,903
125,203
(1) Computed as of December 31, 2013.
(2) The amounts in this column represent the aggregate change in the actuarial present value of the Executive Director’s accumulated benefit under
the Salaried Employees’ Retirement Plan and the Retirement Restoration Plan for the year. Does not include any amounts that are above-market
or preferential earnings on deferred compensation.
Payments to past / former directors
There were no payments to past / former directors for the year ended December 31, 2013.
Payments for loss of office
There were no payments for loss of office for the year ended December 31, 2013.
Statement of the Directors shareholding and share interests
We have a share ownership policy that applies to our directors and executive officers and provides for minimum share
ownership requirements. Share ownership guidelines for our Executive Director is five times his base salary and for our Non-
executive Directors is six times their annual retainer. A Director may not sell or dispose of shares for cash unless the above
share ownership policy is satisfied.
The following table provides details on the Directors’ shareholdings as at December 31, 2013:
Beneficially
Owned
Shares
286,696
6,097
85,992
63,291
56,284
33,068
35,431
67,021
Director
David Williams
Ashley Almanza
Michael Cawley
Lawrence Chazen
Julie Edwards
Gordon Hall
Jon Marshall
Mary Ricciardello
%
Shareholding
Guideline
Achieved(1)
100%
76%
100%
100%
100%
100%
100%
100%
Vested but
Unexercised
Options
439,571
-
23,000
4,000
20,000
-
-
28,000
Restricted Stock Unit
Awards Subject
to Performance or
Weighted
Average
Exercise Price of
Vesting Conditions
582,590
-
-
-
-
-
-
-
Vested Options
$
34.01
$
-
$
24.15
41.25
$
$
41.25
$
-
$
-
$
23.22
(1) Calculated using closing share price at December 31, 2013 of $37.47.
4
Gains made by the Directors on Option Exercises
The table below shows gains realized by Directors from the exercise of stock options during 2013. The aggregate gain is
calculated based on the market price at the time of exercise and the exercise price of options regardless of whether the
Director sold the underlying shares acquired.
Number of
Options Exercised
15,000
4,000
15,000
34,000
Exercise
Price
$
$
$
16.06
26.62
16.06
Market
Value at
Exercise Date
$ 37.60
$ 38.22
$ 40.57
Gains on
Exercise of
Options
$
$
$
$
323,100
46,400
367,650
737,150
Michael Cawley
Lawrence Chazen
Jack Little
Aggregate gain on exercise of options
The following information is unaudited.
Performance graph
This graph shows the cumulative total shareholder return of our shares over the five-year period from January 1, 2009 to
December 31, 2013. 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, which are considered key indices in our industry. The graph
assumes that $100 was invested in our shares and the two indices on January 1, 2009 and that all dividends or distributions
and returns of capital were reinvested on the date of payment.
Company Name / Index
Noble Corporation
S&P 500 Index
Dow Jones U.S. Oil Equipment & Services
$
2009
185.26
126.46
165.15
INDEXED RETURNS
Year Ended December 31,
2011
143.67
148.59
184.16
2010
167.38
145.51
210.29
$
$
2012
168.06
172.37
184.76
$
$
2013
184.54
228.19
237.25
5
Chief Executive Officer's compensation in the past five years
CEO single figure ($'000)(1)
Bonus (% of maximum awarded)
Performance-based LTI (% of maximum vesting)
2009
2010
2011
2012
2013
$ 5,102,182
93%
N/A
$
7,449,879
63%
44%
$ 6,124,526
28%
0%
$
7,895,988
25%
21%
$
7,039,906
71%
0%
(1) CEO compensation is composed of base salary, STIP attributable to the performance year, value of LTIP awards on vesting and all other
compensation, as defined on page 1.
Percentage change in the Chief Executive Officer's compensation
The table below shows the percentage year-on-year change in salary, STIP and LTIP award earned between the year ended
December 31, 2013 and the year ended December 31, 2012 for the CEO compared to the average of such compensation for
the U.S. shorebased administrative employees who were STIP eligible during each year. This comparative employee group
was chosen as the make-up and calculation of their compensation for the categories in the table below most closely resembles
that of our CEO. As the majority of our CEO’s taxable benefits are related to expatriate/relocation benefits that are not
applicable to the comparable employee group, this compensation category has been excluded from the below table.
%
CEO
Average of U.S. shorebased administrative
employees(2)
Base Salary
5%
8%
STIP
200%
127%
LTIP(1)
3%
10%
(1) For comparability, this is calculated using the TVRSU award vestings in 2012 and 2013. PVRSU vestings are excluded as the majority of the
comparable group are not eligible for these awards.
(2) Reflects the change in average pay for U.S. shorebased administrative employees who are STIP eligible employed in both the year ended
December 31, 2012 and the year ended December 31, 2013.
Relative importance of spend on pay
The table below shows the total pay for all employees compared to other key financial metrics and indicators:
Year Ended December 31,
2013
2012
$
$
$
$
Employee costs ($'000)
Dividends paid ($000)
Average number of employees
Revenues ($000)
Income before income taxes ($000)
975,022
194,913
5,813
4,234,290
1,018,012
$
$
887,631
138,293
5,496
3,547,012
703,225
$
$
% change
10%
41%
6%
19%
45%
Additional information on the average number of employees, total revenues and income before income taxes has been
provided for context. The majority of our employees (approximately 85%) are rig-based employees working offshore.
Consideration by the directors of matters relating to directors' compensation
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 compensation policy. The compensation
committee operates independently of management and receives compensation advice and data from outside independent
advisors.
The compensation committee charter authorizes the committee to retain and terminate, as the committee deems necessary,
independent advisors to provide advice and evaluation of the compensation of directors or executive offices, or other matters
relating to compensation, benefits, incentive and equity-based compensation plans and corporate performance. The
compensation committee is further authorized to approve the fees and retention terms of any independent advisor that it
retains. The compensation committee has engaged Mercer (US) Inc., a leading global human capital consulting firm, to serve
as the committee’s compensation consultant.
The compensation consultant reports to and acts at the direction of the compensation committee and is independent of
management, provides comparative market data regarding executive and director compensation to assist in establishing
reference points for the principal components of compensation and provides information regarding compensation trends in
6
the general marketplace, compensation practices of the Peer Group described below, and regulatory and compliance
developments. The compensation consultant regularly participates in the meetings of the compensation committee and meets
privately with the committee at each committee meeting.
Statement of voting at general meeting
At the Annual General Meeting in April 2013, the shareholder advisory vote on executive compensation received the
following votes:
Votes Cast in Favor
Votes Cast Against
Total Votes Cast in Favor or Against
Votes Withheld
Votes
180,843,902
10,744,358
191,588,260
1,466,522
% of Total Votes
94%
6%
100%
7
NOBLE CORPORATION PLC
UK STATUTORY FINANCIAL STATEMENTS
for the period ended December 31, 2013
1
NOBLE CORPORATION PLC
COMPANY BALANCE SHEET
as at December 31, 2013
FIXED ASSETS
Investments in subsidiaries
CURRENT ASSETS
Prepayments and other current assets
Cash at bank and in hand
CURRENT LIABILITIES
Accounts payable and accrued liabilities
Dividend creditor
Amounts owed to group undertakings
NET CURRENT ASSETS
TOTAL ASSETS LESS CURRENT LIABILITIES
NET ASSETS
CAPITAL AND RESERVES
Called up share capital: ordinary shares
Called up share capital: deferred shares (GBP 50,000)
Share premium
Other reserves
TOTAL SHAREHOLDERS' FUNDS
December 31,
2013
$'000
9,506,779
Notes
2
1,410
319
400
128,853
649,914
(777,438)
8,729,341
8,729,341
2,534
78
1,017
8,725,712
8,729,341
3
3
3
4
The financial statements on pages 1 to 10 were approved by the Board of directors on February 28, 2014
and were signed on its behalf by:
Director
Registered number: 83549545
2
NOBLE CORPORATION PLC
RECONCILIATION OF MOVEMENTS IN SHAREHOLDERS’ FUNDS
For the period ended December 31, 2013
Opening shareholders' funds
Issue of deferred share capital
Share capital impact of merger with Noble-Swiss
Merger with Noble-Swiss
Share-based compensation cost
Exercise of stock options
Loss for the financial period
Closing shareholders' funds
2013
$'000
-
78
2,534
8,733,594
6,765
1,017
(14,647)
8,729,341
3
1. ACCOUNTING POLICIES
Basis of preparation of financial statements
These financial statements have been prepared on the going concern basis, under the historical cost convention, and
in accordance with the Companies Act 2006 and applicable accounting standards in the United Kingdom. The
principal accounting policies, which have been applied consistently throughout the period, are set out below.
Accounting convention
Noble Corporation plc., a public limited company incorporated under the laws of England and Wales (“Noble”,
“Noble-UK”, the “Company”, “we”, “our” and words of similar import), is a holding company 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.
Noble Corporation Limited was incorporated on January 10, 2013. These financial statements, therefore, cover the
period from this date to December 31, 2013. On September 5, 2013, Noble Corporation Limited was re-registered as
Noble Corporation plc. There was no accounting activity until the effective date of the merger, November 20, 2013.
On November 20, 2013, pursuant to the Merger Agreement dated as of June 30, 2013 between Noble Corporation, a
Swiss corporation (“Noble-Swiss”), and Noble-UK, Noble-Swiss merged with and into Noble-UK, with Noble-UK
as the surviving company (the “Transaction”). In the Transaction, all of the outstanding ordinary shares of Noble-
Swiss were cancelled, and Noble-UK issued, through an exchange agent, one ordinary share of Noble-UK in
exchange for each ordinary share of Noble-Swiss.
The Transaction effectively changed the place of incorporation of our publicly traded parent holding company from
Switzerland to the United Kingdom. As a result of the Transaction, Noble-UK owns and conducts the same
businesses through the Noble group as Noble-Swiss conducted prior to the Transaction, except that Noble-UK is the
parent company of the Noble group of companies. Noble Corporation, a Cayman Islands company (“Noble-
Cayman”) is a direct, wholly-owned subsidiary of Noble-UK. Noble-UK’s principal asset is all of the shares of
Noble-Cayman. Noble-Cayman has no public equity outstanding. The consolidated financial statements of Noble-
UK include the accounts of Noble-Cayman, and Noble-UK conducts substantially all of its business through Noble-
Cayman and its subsidiaries.
On December 4, 2013, Noble-UK completed the capital reduction and created distributable reserves, which may be
utilized in the future to pay dividends to shareholders, from the “merger reserve” created at the time of the change in
place of incorporation. In addition, as part of the capital reduction, Noble-UK’s two initial subscriber shares, the
capitalization share issued in connection with the capital reduction procedure and the ordinary shares (formerly
treasury shares) held by Noble Financing Services Limited, a wholly owned subsidiary of Noble-UK, were
cancelled.
The principal accounting policies, which have been applied consistently throughout the period, are set out below.
Consolidated financial statements
The financial statements contain information about Noble-UK as an individual company and do not contain
consolidated financial information as the parent of a group.
Functional and presentational currency
The Company’s financial statements are presented in US dollars, the functional currency of the Company. Any
balance sheet transactions denominated in British pounds have been translated at a closing rate of $1: £1.65.
Investment in subsidiaries
Investments in subsidiary undertakings are shown at cost, plus incidental expenses less any provision for
impairment. Annually, the directors consider whether any events or circumstances have occurred which indicate that
the carrying value of fixed asset investments may not be recoverable. If such circumstances do exist, a full
impairment review is undertaken to establish whether the carrying amount exceeds the higher of net realizable value
or value in use. If this is the case, an impairment charge is recorded to reduce the carrying value of the related
investment.
4
Treasury shares
The consideration paid for own shares, including any incremental directly attributable costs, is recorded as a
deduction from shareholders’ equity. When such shares are sold any consideration received, net of any directly
attributable costs, is recorded within shareholders’ equity.
Taxation
Current taxation is provided at amounts expected to be paid (or recovered) using tax rates and laws that have been
enacted or substantively enacted at the balance sheet date.
Deferred tax is recognized in respect of all timing differences that have originated but not reversed at the balance
sheet date where transactions or events that result in an obligation to pay more tax in the future, or a right to pay less
tax in the future, have occurred at the balance sheet date. Timing differences are differences between the company's
taxable profits and its results as stated in the financial statements that arise from the inclusion of gains and losses in
tax assessments in periods different from those in which they are recognized in the financial statements.
Deferred tax is measured at the average tax rates that are expected to apply in the periods in which the timing
differences are expected to reverse, based on the tax rates and laws that have been enacted or substantively enacted
by the balance sheet date, and is not discounted. A net deferred tax asset is regarded as recoverable and therefore
recognized only when, on the basis of all available evidence, it can be regarded as more likely than not that there
will be suitable taxable profits from which the future reversal of the underlying timing differences can be deducted.
Translation of foreign currencies
Transactions in foreign currencies are recorded at the rate of exchange prevailing at the dates of the transactions.
Monetary assets and liabilities, denominated in foreign currencies at the balance sheet date, are reported at the rates
of exchange prevailing at that date. Exchange differences on retranslating monetary assets and liabilities are
recognized in the profit and loss account
Share based payments
The fair value of services received from employees is recognized as an expense in the profit and loss account over
the period for which services are received (‘the vesting period’).
For equity-settled awards, the fair value of an award is measured at the date of grant and reflects any market-based
vesting conditions. Non market-based vesting conditions are excluded from the fair value of the award. At the date
of grant, the Company estimates the number of awards expected to vest as a result of non-market-based vesting
conditions and the fair value of this estimated number of awards is recognized as an expense to the profit and loss
account on a straight-line basis over the vesting period. At each balance sheet date the Company revises its estimate
of the number of awards expected to vest as a result of non-market based vesting conditions and adjusts the amount
recognized cumulatively in the profit and loss account to reflect the revised estimate. Proceeds received, net of
directly attributable transaction costs, are credited to share capital and share premium.
For cash-settled awards, the total amount recognized is based on the fair value of the liability incurred. The fair
value of the liability is remeasured at each balance sheet date with changes in the fair value recognized in the profit
and loss account for the period.
The grant by the Company of options over its equity instruments to employees of subsidiary undertakings is treated
as a capital contribution. The fair value of the awards made are recognized, over the vesting period, as an increase in
investment in subsidiary undertakings, with a corresponding credit in the profit and loss reserve.
Loans
Loans are initially recognized at fair value, being proceeds received less directly attributable transaction costs
incurred. Loans are subsequently measured at amortized cost with transaction costs amortized to the profit and loss
account over the period of the loans. Any related interest accruals are included within loans. Loans are classified as
current liabilities unless the Company has an unconditional right to defer the settlement of the liability for at least
twelve months after the balance sheet date.
5
Capital instruments
Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of new shares or options
are deducted from the proceeds recorded in equity.
Cash flow statement
The Company has taken advantage of the exemption under the terms of FRS 1 (revised 1996) from the requirement
to produce a cash flow statement.
Profit and recognized gains and losses of the Company
The Company has taken advantage of the legal dispensation contained in Section 408 of the Companies Act 2006
allowing it not to publish a separate profit and loss account and related notes. The Company has also taken
advantage of the legal dispensation contained in Section 408 of the Companies Act 2006 allowing it not to publish a
separate statement of recognized gains and losses.
Related party transactions
The Company has taken advantage of the exemption contained in FRS 8 from the requirement to disclose related
party transactions within the Group.
Dividends
Dividends to be received are recognized as soon as the company acquires the right to them. Interim dividends are
recognized when they are approved by the Board. Final dividends are recognized when they are approved by the
Company’s shareholders.
2. INVESTMENT IN SUBSIDIARIES
At January 1, 2013
Arising on merger
Share-based compensation costs
At December 31, 2013
$'000
-
9,500,014
6,765
9,506,779
The company’s investments at the balance sheet date in the share capital of companies include the following:
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
Nominal share
capital
CHF 100
USD 50
USD 26,125
The directors believe that the carrying value of the investments is supported by their underlying net assets or
expected cash generation.
6
Principal subsidiaries and associates
The following are the principal subsidiary undertakings of the Group:
Name
Noble Services (Switzerland) LLC
Noble Financing Services Limited
Noble (Servco) UK Limited
Noble Corporation (Cayman)
Noble Aviation GmbH
Noble NDC Holding (Cyprus) Limited
FDR Holdings Limited
Group International Finance Company
Noble Spinco Limited
Noble Holding International (Luxembourg NHIL) S.à r.l
Noble Holding International (Luxembourg) S.à r.l
Noble Drilling (Luxembourg) S.à r.l
Noble Holding S.C.S.
Noble Drilling (Cyprus) Limited (pending dissolution)
Noble Downhole Technology Ltd.
Noble Drilling International GmbH
Noble Holding (U.S.) Corporation
Noble Drilling Holding GmbH
Noble Holding International LLC
Noble Holding International S.à r.l.
Noble Drilling (Deutschland) GmbH (pending dissolution)
Noble Technology (Canada) Ltd.
Noble Engineering & Development de Venezuela C.A.
Maurer Technology Incorporated
Noble Drilling Corporation
Noble Brasil Investimentos E Participacoes Ltda.
Noble Holding International Limited
Triton Engineering Services Company
Noble Holding SCS 1 Limited
Noble Drilling Services Inc.
Noble Drilling (U.S.) LLC
Noble Drilling Services 2 LLC
Noble Drilling Services 3 LLC
Noble Drilling Holding LLC
Noble International Services LLC
Noble Drilling Americas LLC
Noble North Africa Limited
Noble Drilling Services 6 LLC
Noble Cayman Properties Limited
Triton International, Inc.
Triton Engineering Services Company, S.A.
Noble Drilling Services 7 LLC
Noble Drilling Leasing S.a r.l.
Noble Drilling (Canada) Ltd.
Noble Drilling International (Cayman) Ltd.
Noble John Sandifer LLC
Noble Drilling Exploration Company
Noble (Gulf of Mexico) Inc.
Noble Drilling (Jim Thompson) LLC
Noble Johnnie Hoffman LLC
Country of Incorporation
Switzerland
Cayman Islands
United Kingdom
Cayman Islands
Switzerland
Cyprus
Cayman Islands
Cayman Islands
United Kingdom
Luxembourg
Luxembourg
Luxembourg
Luxembourg
Cyprus
Cayman Islands
Switzerland
Delaware
Switzerland
Delaware
Luxembourg
Germany
Alberta, Canada
Venezuela
Delaware
Delaware
Brazil
Cayman Islands
Delaware
Cayman Islands
Delaware
Delaware
Delaware
Delaware
Delaware
Delaware
Delaware
Cayman Islands
Delaware
Cayman Islands
Delaware
Venezuela
Delaware
Luxembourg
Alberta, Canada
Cayman Islands
Delaware
Delaware
Delaware
Delaware
Delaware
7
Nature of business
Management; operator of aircraft
Financing company
Local service provider
Holding company
Holding company; owner of aircraft
Holding company
Holding company
Financing company
Holding company
General Partner of Luxembourg
partnership
General Partner of Luxembourg
partnership
Holding company
Holding company
Dormant
Holding company
Holding company; rig owner
Holding company
Financing company
Holding company
Holding company
Dormant
Dormant
Dormant
Dormant
Holding company; rig owner; Limited
Partner of Luxembourg partnership
Rig Guarantor
Holding company
Dormant
Holding company
Management company
Contracting; operator; rig owner;
payroll
Operator - US
Operator - US
Holding company; rig owner
Contracting
Rig owner
Branch registration
Holding company
Real estate owner
Dormant
Dormant
Rig Owner
Rig Owner
Platform service company
Holding company
Branch registration
Oil & gas interest owner
Contracting entity
Operator - US
Branch registration
Name
Triton International de Mexico S.A. de C.V.
Noble Leasing II (Switzerland) GmbH
Bawden Drilling Inc.
Bawden Drilling International Ltd.
Noble Drilling Offshore Limited
Noble Holding SCS 2 Limited
TSIA International (Antilles) N.V.
Noble Drilling Singapore Pte. Ltd.
Noble Resources Limited
Noble Services International Limited
NE Drilling Servicos do Brasil Ltda.
NE do Brasil Participacoes E Investimentos Ltda.
Noble Earl Frederickson LLC
Noble Bill Jennings LLC
Noble Leonard Jones LLC
Noble Asset Mexico LLC
Noble Carl Norberg S.à r.l
Resolute Insurance Group Limited
Noble Holding NCS 2 S.à r.l.
Noble Drilling Egypt LLC
Noble Leasing III (Switzerland) GmbH
Noble International Limited
International Directional Services Ltd.
Noble Enterprises Limited
Noble Mexico Services Limited
Noble-Neddrill International Limited
Noble Asset Company Limited
Noble Asset (U.K.) Limited
Noble Drilling Nigeria Limited
Noble Drilling (Paul Wolff) Ltd.
Noble do Brasil Ltda.
Country of Incorporation
Mexico
Switzerland
Delaware
Bermuda
Cayman Islands
Cayman Islands
Curacao
Singapore
Cayman Islands
Cayman Islands
Brazil
Brazil
Delaware
Delaware
Delaware
Delaware
Luxembourg
Bermuda
Luxembourg
Egypt
Switzerland
Cayman Islands
Bermuda
Cayman Islands
Cayman Islands
Cayman Islands
Cayman Islands
Cayman Islands
Nigeria
Cayman Islands
Brazil
Cayman Islands
Noble Mexico Limited
Cayman Islands
Noble International Finance Company
Cayman Islands
Noble Drilling (TVL) Ltd.
Cayman Islands
Noble Drilling (Carmen) Limited
Cayman Islands
Noble Gene Rosser Limited
Cayman Islands
Noble Campeche Limited
Cayman Islands
Noble Offshore Mexico Limited
Cayman Islands
Noble Offshore Contracting Limited
Cayman Islands
Noble Dave Beard Limited
Dubai, UAE
Sedco Dubai LLC
Cayman Islands
Noble (Middle East) Limited
Cyprus
Noble Drilling Holdings (Cyprus) Limited
Saudi Arabia
Noble Drilling Arabia Limited
Venezuela
Noble Drilling de Venezuela C.A.
Noble Offshore de Venezuela C.A.
Venezuela
Noble Drilling International Services Pte. Ltd. (pending dissolution Singapore
Malaysia
Noble Drilling (Malaysia) Sdn. Bhd. (pending dissolution)
Bermuda
Noble Drilling International Ltd.
Bahamas
Arktik Drilling Limited, Inc.
Cayman Islands
Noble Rochford Drilling (North Sea) Ltd.
Cayman Islands
Noble Drilling Asset (M.E.) Ltd.
Scotland
Noble Drilling (Land Support) II Limited
Noble Corporation (Shelf UK) Limited
Noble Management Services S. de R.L. de C.V.
United Kingdom
Mexico
8
Nature of business
Dormant
Rig owner
Dormant
Dormant
Branch registration
Holding company
Dormant
Construction services
Rig owner; contracting entity
Rig owner; contracting entity
Personnel; administration; contracting
entity
Rig Guarantor
Branch registration
Branch registration
Contracting entity
Branch registration
Holding company
Dormant
Holding company
Contracting entity
Rig owner
Contracting; international personnel;
rig owner
Dormant
Payroll/personnel entity for North Sea
Operations
Branch registration
Contracting entity
Rig owner
Contracting entity
Rig owner; contracting entity
Rig owner
Personnel; administration; contracting
entity
Operating company
Financing company
Rig owner
Branch registration
Branch registration
Branch registration
Branch registration
Branch registration
Rig Owner
JV company
Rig owner
Holding company
JV company
Dormant
Dormant
Personnel
Dormant
Dormant
JV company
Dormant
Rig owner
Logistic support for North Sea
Operations
Shelf company
Management; administrative; payroll
Name
Noble Contracting II GmbH
Noble Drilling (N.S.) Limited
Noble Drilling (Nederland) II B.V.
Noble Contracting GmbH
Noble Holding Europe S.à r.l
Noble Leasing (Switzerland) GmbH
Noble Operating (M.E.) Ltd.
Noble Drilling (Land Support) Limited
Noble Drilling (Nederland) B.V.
Noble Drilling (Norway) AS
Noble Drillships Holdings, Ltd.
Noble Drillships Holdings 2, Ltd.
Noble Offshore (Luxembourg) S.à r.l.
Noble Drillships S.à r.l.
Noble Drillships 2 S.à r.l.
Frontier Drilling AS
Noble Duchess, Ltd.
Frontier Deepwater, Ltd.
Frontier Driller, Ltd.
Frontier Discoverer Kft.
Bully 1 (Switzerland) GmbH
Bully 2 (Switzerland) GmbH
Frontier Drilling (Malaysia) Sdn. Bhd.
Noble Drilling (Labuan) Pte. Ltd.
Frontier Deepwater (B) Sdn. Bhd.
Frontier Driller Cayman, Ltd.
Noble Leasing IV (Switzerland) GmbH
Bully 1 (US) Corporation
Bully Drilling, Ltd.
Bully 2 (Luxembourg) S.à r.l.
Frontier Offshore AS
Frontier Drilling USA, Inc.
Noble Drilling (Asia) Pte Ltd.
FD Frontier Drilling (Cyprus) Limited
Frontier Offshore Exploration India Limited
Frontier Driller Kft.
Frontier Drilling do Brasil Ltda.
Frontier Seillean AS
Kulluk Arctic Services, Inc.
Frontier Drilling Nigeria Limited
Frontier Driller, Inc.
Frontier Drilling Services Ltda.
KS Frontier Seillean
Country of Incorporation
Switzerland
Scotland
The Netherlands
Switzerland
Luxembourg
Switzerland
Cayman Islands
Scotland
The Netherlands
Norway
Cayman Islands
Cayman Islands
Luxembourg
Luxembourg
Luxembourg
Norway
Cayman Islands
Cayman Islands
Cayman Islands
Hungary
Switzerland
Switzerland
Malaysia
Malaysia
Brunei
Cayman Islands
Switzerland
Delaware
Cayman Islands
Luxembourg
Norway
Delaware
Singapore
Cyprus
India
Hungary
Brazil
Norway
Delaware
Nigeria
Delaware
Brazil
Norway
Nature of business
Contracting entity
Holding company
Contracting entity; administration;
Operator - Brazil
Contracting entity
Holding company
Rig owner; payroll
Contracting entity
Logistic support for North Sea
Operations
Contracting entity; administration;
Operator - Brazil
Dormant
Holding company
Holding company
Rig owner
Holding company
Holding company
Holding company
Holding company; rig owner
Operator
Holding company
Service company
JV company; rig owner
JV company; rig owner
Operator; services company
Operator; leasing company
Operator
Holding company
Rig owner
Operator
Operator
Operator
Holding company; dormant
Operator; administration
Administration; office services
Payroll company
JV company; dormant
Holding company; rig owner
Dormant
Holding company
Dormant
Contracting entity
Operator
Operator
Operator; rig owner
All subsidiaries are included in the consolidation. The proportion of the voting rights in the subsidiary undertakings
held directly by the parent company do not differ from the proportion of ordinary shares held. The parent company
further does not have any shareholdings in the preference shares of subsidiary undertakings included in the group.
3. SHARE CAPITAL
Allotted and fully paid
Shares traded
As of December 31, 2013
No. of shares
253,448,126
Nominal value
($'000)
2,534
Our Board of Directors may increase our share capital through the issuance of up to approximately 53 million
authorized shares (at current nominal value of $0.01 per share) without obtaining shareholder approval.
9
On September 6, 2013, the Company issued 50,000 ordinary shares of £1 each to Noble Financing Services Limited.
These shares have been deferred and, therefore, confer no voting rights.
4. MOVEMENT IN RESERVES
At January 10, 2013
Merger with Noble Swiss
Share based compensation cost
Loss for the financial period
At December 31, 2013
Profit and loss reserve Other reserves
$'000
-
-
-
(14,647)
(14,647)
$'000
-
8,733,594
6,765
-
8,740,359
Total
$'000
-
8,733,594
6,765
(14,647)
8,725,712
On November 20, 2013, pursuant to the Merger Agreement dated as of June 30, 2013 between Noble-Swiss, and
Noble-UK, Noble-Swiss merged with and into Noble-UK, with Noble-UK as the surviving company. On December
4, 2013, Noble-UK completed the capital reduction and created distributable reserves, which may be utilized in the
future to pay dividends to shareholders, from the “merger reserve” created at the time of the change in place of
incorporation.
5. POST BALANCE SHEET EVENTS
Our most recent quarterly dividend payment to shareholders, totaling approximately $97 million (or $0.375 per
share), was declared on January 30, 2014 and paid on February 20, 2014 to holders of record on February 10, 2014.
This payment represented the third tranche ($0.25 per share) of our previously approved annual dividend payment to
shareholders, and includes an increase of $0.125 per share that was approved by the Board of Directors in January
2014. Including the increase approved in January 2014, our current dividend is $1.50 per share on an annualized
basis.
10
INDEPENDENT AUDITORS’ REPORT TO THE MEMBERS OF NOBLE CORPORATION PLC
We have audited the parent company financial statements of Noble Corporation Plc for the year ended 31
December 2013 which comprise the Company Balance Sheet, the Company Reconciliation of Movements
in Shareholders’ Funds and the related notes. The financial reporting framework that has been applied in
their preparation is applicable law and United Kingdom Accounting Standards (United Kingdom
Generally Accepted Accounting Practice).
Respective responsibilities of directors and auditors
As explained more fully in the Directors’ Responsibilities Statement, the directors are responsible for the
preparation of the parent company financial statements and for being satisfied that they give a true and
fair view. Our responsibility is to audit and express an opinion on the parent company financial statements
in accordance with applicable law and International Standards on Auditing (UK and Ireland). Those
standards require us to comply with the Auditing Practices Board’s Ethical Standards for Auditors.
This report, including the opinions, has been prepared for and only for the company’s members as a body
in accordance with Chapter 3 of Part 16 of the Companies Act 2006 and for no other purpose. We do not,
in giving these opinions, accept or assume responsibility for any other purpose or to any other person to
whom this report is shown or into whose hands it may come save where expressly agreed by our prior
consent in writing.
Scope of the audit of the financial statements
An audit involves obtaining evidence about the amounts and disclosures in the financial statements
sufficient to give reasonable assurance that the financial statements are free from material misstatement,
whether caused by fraud or error. This includes an assessment of: whether the accounting policies are
appropriate to the parent company’s circumstances and have been consistently applied and adequately
disclosed; the reasonableness of significant accounting estimates made by the directors; and the overall
presentation of the financial statements. In addition, we read all the financial and non-financial
information in the the annual report to identify material inconsistencies with the audited financial
statements. If we become aware of any apparent material misstatements or inconsistencies we consider
the implications for our report.
Opinion on financial statements
In our opinion the parent company financial statements:
give a true and fair view of the state of the company’s affairs as at 31 December 2013 and of its loss for
the year then ended;
have been properly prepared in accordance with United Kingdom Generally Accepted Accounting
Practice; and
have been prepared in accordance with the requirements of the Companies Act
2006.
Opinion on other matters prescribed by the Companies Act 2006
In our opinion:
PricewaterhouseCoopers LLP, PwC, One Reading Central, Forbury Road, Reading, Berkshire, RG1 3JH
T: +44 (0) 118 959 7111, F: +44 (0) 118 938 3020, www.pwc.co.uk
PricewaterhouseCoopers LLP is a limited liability partnership registered in England with registered number OC303525. The registered office of
PricewaterhouseCoopers LLP is 1 Embankment Place, London WC2N 6RH. PricewaterhouseCoopers LLP is authorised and regulated by the Financial Conduct Authority for
designated investment business.
the part of the Directors’ Remuneration Report to be audited has been properly prepared in
accordance with the Companies Act 2006; and
the information given in the Directors’ and the Strategic Report for the financial year for which the
parent company financial statements are prepared is consistent with the parent company financial
statements.
Matters on which we are required to report by exception
We have nothing to report in respect of the following matters where the Companies Act 2006 requires us
to report to you if, in our opinion:
adequate accounting records have not been kept by the parent company, or returns adequate for our
audit have not been received from branches not visited by us; or
the parent company financial statements and the part of the Directors’ Remuneration Report to be
audited are not in agreement with the accounting records and returns; or
certain disclosures of directors’ remuneration specified by law are not made; or
we have not received all the information and explanations we require for our audit.
Other matter
We have reported separately on the group financial statements of Noble Corporation Plc for the year
ended 31 December 2013.
Stephen Mount (Senior Statutory Auditor)
for and on behalf of PricewaterhouseCoopers LLP
Chartered Accountants and Statutory Auditors
London
28 February 2014
2
Noble Corporation Financial Highlights
Year Ended December 31,
2013
2012
2011
2010
2009
Revenues
$4,234,290
$3,547,012
$2,695,832
$2,807,176
$3,640,784
Net Income Attributable to Noble
782,697
522,344
370,898
773,429
1,678,642
Diluted Earnings Per Share
3.05
2.05
1.46
3.02
6.42
Cash Flow from Operations
1,702,317
1,381,693
740,240
1,636,902
2,131,267
Total Assets
Total Debt (1)
Total Equity
16,217,957
14,607,774
13,495,159
11,302,387
8,396,896
5,556,251
4,634,375
4,071,964
2,766,697
750,946
9,050,028
8,488,290
8,097,852
7,287,634
6,788,432
Debt to Total Capitalization
38.0%
35.3%
33.5%
27.5%
10.0%
***All numbers in thousands except per share data
(1) Includes both short-term and long-term debt.
On the Cover:
From the bridge of the Noble Don Taylor, the
approching sunrise heralds another promising
day in the Gulf of Mexico. The Taylor is one of
eight ultra-deepwater drillships Noble owns,
providing excellent performance for
customers and shareholders alike.
Investor Information
Shareholders, brokers, securities analysts or portfolio
managers seeking information about Noble Corporation
should contact Jeff Chastain, Vice President–Investor
Relations, Noble Drilling Services Inc., by phone at:
281-276-6100 or by e-mail at: jchastain@noblecorp.com.
Forward Looking Statements
Any statements included in this 2013 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. Please see “Forward-Looking Statements” in
this 2013 Annual Report for more information.
Corporate Information
Transfer Agent and Registrar
Computershare Trust Company, N.A.
Canton, Massachusetts
Independent Auditors
PricewaterhouseCoopers LLP
Reading, Berkshire UK
PricewaterhouseCoopers LLP
Houston, Texas
Shares Listed on
New York Stock Exchange
Trading Symbol “NE”
Form 10-K
A copy of Noble Corporation’s 2013 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 & Corporate Secretary
Noble Corporation plc
Devonshire House
1 Mayfair Place
London W1J8AJ
Annual Meeting
The Annual Meeting of Shareholders of Noble Corporation
will be held on June 10, 2014, at 3:00 p.m. local time at
Claridge’s Hotel in London, England.
Contact the Board
If you would like to contact the Noble Corporation Board of
Directors, write to:
Noble Corporation Board of Directors
Devonshire House
1 Mayfair Place
London W1J8AJ
or send an e-mail to: Nobleboard@noblecorp.com
For additional information about Noble Corporation, please
refer to our proxy statement which is being mailed or made
available with this Annual Report.
1 Audit Committee 2 Compensation Committee
3 Nominating and Corporate Governance Committee
4 Health, Safety, Environment and Engineering Committee
5 Lead Director
Board of Directors
Ashley Almanza 1, 4
Chief Executive Officer – G4S
Director since 2013.
Michael A. Cawley 2, 4
Former President & Chief Executive Officer –
The Samuel Roberts Noble Foundation, Inc.
Director since 1985.
Lawrence J. Chazen 1, 3
Chief Executive Officer – Lawrence J. Chazen, Inc.
Director since 1994.
Julie H. Edwards 2, 3
Former Senior Vice President
& Chief Financial Officer – Southern Union Company.
Director since 2006.
Gordon T. Hall 2, 3, 5
Chairman of the Board – Exterran Holdings, Inc.
Director since 2009.
Jon A. Marshall 2, 4
Former President & Chief Operating Officer –
Transocean Inc.
Director since 2009.
Mary P. Ricciardello 1, 3
Former Senior Vice President & Chief Accounting
Officer – Reliant Energy, Inc.
Director since 2003.
David W. Williams
Chairman, President & Chief Executive Officer
Noble Corporation
Director since 2008.
Corporate Officers
David W. Williams
Chairman, President & Chief Executive Officer
Julie J. Robertson
Executive Vice President & Corporate Secretary
James A. MacLennan
Senior Vice President & Chief Financial Officer
William E. Turcotte
Senior Vice President & General Counsel
Simon W. Johnson
Senior Vice President – Marketing & Contracts
Lee M. Ahlstrom
Senior Vice President – Strategic Development
Scott W. Marks
Senior Vice President – Engineering
Bernie G. Wolford
Senior Vice President – Operations
Dennis J. Lubojacky
Vice President & Controller
Randall D. Stilley
Executive Vice President
Shaping our Future
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Noble Corporation plc
Devonshire House
1 Mayfair Place
London W1J8AJ
www.noblecorp.com
Noble Corporation 2013 Annual Report