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Noble Corporation plc
Devonshire House
1 Mayfair Place
London W1J8AJ
www.noblecorp.com
Noble Corporation plc
2014 Annual Report
Noble Corporation plc Financial Highlights
Operating Revenues
From Continuing Operations (2)
Net Income / (Loss)
From Continuing Operations (2)
2014 (1)
$3,232,504
2013 (1)
$2,538,143
Year Ended December 31,
2012 (1)
$2,200,699
2011
$1,429,826
2010
$1,194,089
(152,011)
478,595
414,389
190,745
243,176
Diluted Income / (Loss)
From Continuing Operations Per Share (2)
(0.60)
1.86
1.63
0.75
0.95
Cash Flow from Operations
1,778,208
1,702,317
1,381,693
740,240
1,636,902
Total Assets
Total Debt (3)
Total Equity
13,286,822
16,217,957
14,607,774
13,495,159
11,302,387
4,869,020
5,556,251
4,634,375
4,071,964
2,766,697
7,287,034
9,050,028
8,488,290
8,097,852
7,287,634
Debt to Total Capitalization
40.1%
38.0%
35.3%
33.5%
27.5%
All numbers in thousands except per share data
(1) Results for 2014, 2013 and 2012 include impairment charges of $745 million, $4 million and $20 million, respectively.
(2) All periods presented have been recast to reflect the Spin-off of Paragon Offshore plc as discontinued operations.
(3) Includes both short-term and long-term debt.
With the addition of eleven new rigs in the past two years, including the Noble Don Taylor (cover) and the
Noble Tom Madden (below), Noble has one of the most modern and capable fleets in the world.
Investor Information
Shareholders, brokers, securities analysts or portfolio
managers seeking information about Noble Corporation
plc 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 2014 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 2014 Annual Report for more information.
Corporate Information
Transfer Agent and Registrar
Computershare Trust Company, N.A.
Canton, Massachusetts
Independent Registered Public Accounting Firm
PricewaterhouseCoopers LLP
Houston, Texas
Independent Auditors
PricewaterhouseCoopers LLP
London, UK
Shares Listed on
New York Stock Exchange
Trading Symbol “NE”
Form 10-K
A copy of Noble Corporation plc’s 2014 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
plc will be held on April 24, 2015, at 3:00 p.m. local time at
The Ritz Hotel in London, England.
Contact the Board
Board of Directors
Ashley Almanza 1, 4
Chief Executive Officer & Director
G4S
Director since 2013.
Michael A. Cawley 2, 3
Former President & Chief Executive Officer
The Samuel Roberts Noble Foundation, Inc.
Director since 1985.
Julie H. Edwards 2, 3
Former Senior Vice President & Chief Financial Officer
Southern Union Company
Director since 2006.
Gordon T. Hall 2, 3, 5
Vice Chairman of the Board & Lead Independent Director
Exterran Holdings, Inc.
Director since 2009.
Scott D. Josey 2, 4
Chairman, Chief Executive Officer & President
Sequitur Energy Resources, LLC
Director since 2014.
Jon A. Marshall 1, 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 plc
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
If you would like to contact the Noble Corporation plc Board
of Directors, write to:
Simon W. Johnson
Senior Vice President – Marketing & Contracts
Noble Corporation plc 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 plc,
please refer to our proxy statement which is being mailed
or made available with this Annual Report.
Scott W. Marks
Senior Vice President – Engineering
Bernie G. Wolford
Senior Vice President – Operations
Dennis J. Lubojacky
Vice President & Controller
1 Audit Committee 2 Compensation Committee
3 Nominating and Corporate Governance Committee
4 Health, Safety, Environment and Engineering Committee
5 Lead Director
To Our Shareholders
In many ways it was a simpler time in 1921 when
Lloyd Noble put a single rig to work drilling for oil
and gas. Simpler, maybe, but no less challenging.
Others had similar plans and business aspirations, but few survived the
inevitable cycles that impact the drilling and energy industry. In 2015, the
company he founded stands strong and continues to be a leader in the offshore
drilling business by being focused on excellence — despite the challenging
market dynamics.
Throughout the decades as technology advances, drilling opportunities
expand and well designs have become more challenging. Noble has consistently
responded with innovative solutions, top-tier assets and team members who
are prepared to deliver operational performance across our fleet. At the same
time, Noble’s ability to manage through cycles and swings in demand has been
a hallmark of the Company for almost 95 years. The current cycle is no different,
and today we are well-equipped to execute our work, manage our business and
drive performance.
Our strategy for securing the future of our Company revolves around
investing in our employees, pursuing operational excellence and managing
our financial resources with foresight while maintaining flexibility. As with all
cyclical businesses, we believe there will be a time when stability and clarity
will return and rig demand and dayrates will respond. Noble’s time-proven track
record of managing our costs and spending in periods of growth as well as
industry decline will serve us well in the years ahead.
In light of the reduction in drilling activity, in 2015 you can expect Noble
to be focused on operating efficiencies and cost control while maintaining our
operational and environmental and safety standards. As a part of this effort, we
will concentrate on continued improvement in rig up-time, and in particular,
continuation of our subsea BOP relaibility improvement efforts. Also, we believe
that a safe operation is an efficient one and we will maintain our focus in this area.
By adhering to our strategy, we can continue to differentiate Noble from our
peers, retain our financial stability and maintain flexibility as we extend our
legacy of success into the future.
Noble’s achievements in 2014, including our spin-off of Paragon Offshore in
August, our stellar performance in nearing completion of our newbuild program
and record-setting well construction programs aboard our rigs, are a testament
to our talented team of professionals who share our vision and desire for
excellence. One of Noble’s strengths is our ability to attract, develop and retain
these highly professional industry leaders, which include both our offshore and
shorebase colleagues.
Consistent with our core value of Environmental Stewardship, members
of the Noble team are committed to the duty and responsibility to ensure that
day-to-day activities are in compliance with the letter and spirit of the law, our
Code of Business Conduct and Ethics, and our environmental, health and safety
policies and procedures.
There are no exceptions to our requirements to act safely and in a way that
protects human health and the environment in all of our activities. We recognize
and continuously reinforce that each of our team members play an important
role in maintaining and fostering Noble’s reputation for safety, protection of the
environment and honesty and integrity.
In no small measure, the dedication and effort of these team members made
our dramatic transformation over the past few years possible. Moreover, these
individuals are central to our strategy for success. In our view, our team and
their ability to deliver operational excellence will set us apart during this cyclical
downturn and situate us for the leadership position in the inevitable recovery of
the industry that will follow.
Looking ahead, it is clear that we will face a challenging offshore drilling
market in 2015. Noble’s well-timed shipyard program, contracting success and
dedication to operational execution position us to perform well and continue
to deliver high levels of service to our customers and create value for our
shareholders even in this industry downturn.
Despite the current offshore rig supply imbalance, we believe it will be self-
correcting, and global demand and production will certainly come back into
balance. There may be many days ahead with fluctuating crude prices, but the
long-term prospects for our industry are decidedly favorable. Demand for energy
can, and will, rise and today’s lower prices will play a role in the commodity’s
ultimate price recovery.
It would be wrong, however, to ignore the headwinds we face today. Dayrates
across the industry are down and for the near-term there are more rigs available
than current demand can accommodate. Some drillers, including Noble, are
stacking or retiring rigs. This is a normal stage of the offshore cycle. Some of
these rigs won’t work again as the cost of reactivation outweighs contracting
opportunities. Our decision to retire three rigs from the fleet is a part of that
process. Retiring these units also underscores our willingness to act decisively
to manage the current environment and our capital investment spending.
On the plus side, we have been here before and managing through cycles is
a Noble hallmark. The Noble fleet, one of the most modern and capable in the
industry, is well-contracted. For those rigs that do have exposure to the current
cycle — we expect to rely on all of our experience and renowned reputation
to compete intensely for the work that becomes available, and we are already
meeting with some success. Our focus on excellence equips us to deliver high
levels of performance that appeal all the more to customers when their budgets
are constrained.
Our people, training and development programs are first-rate, and
improvements made in our operations, procurement, maintenance and planning
efforts are yielding solid benefits. The investments we have made in our fleet
in recent years will yield both a near and long-term competitive advantage.
Likewise, the health of our balance sheet and commitment to financial discipline
underpin our ability to weather the current drilling environment. In all, the
Noble team is well prepared for the challenge.
As we have done in the past, Noble will continue to define excellence in
offshore drilling. On behalf of the men and women of our team, I thank you for
your confidence and your 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, 2014
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
Commission file number: 001-36211
Noble Corporation plc
(Exact name of registrant as specified in its charter)
England and Wales (Registered Number 08354954)
(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 30, 2014, the aggregate market value of the registered shares of Noble Corporation plc held by non-affiliates of the registrant was $8.5 billion based on the closing sale price as
reported on the New York Stock Exchange.
Number of shares outstanding and trading at February 13, 2015: Noble Corporation plc – 241,954,168
Number of shares outstanding: Noble Corporation – 261,245,693
DOCUMENTS INCORPORATED BY REFERENCE
The proxy statement for the 2015 annual general meeting of the shareholders of Noble Corporation plc 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 public limited company incorporated 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
PART I
Item 1.
Item 1A. Risk Factors
Item 1B. Unresolved Staff Comments
Item 2.
Item 3.
Item 4.
Properties
Legal Proceedings
Mine Safety Disclosures
PART II
Item 5.
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
Item 6.
Item 7.
Item 7A. Quantitative and Qualitative Disclosures About Market Risk
Financial Statements and Supplementary Data
Item 8.
Item 9.
Changes in and Disagreements With Accountants on Accounting and Financial Disclosure
Item 9A. Controls and Procedures
Item 9B. Other Information
PART III
Item 10.
Item 11.
Item 12.
Item 13.
Item 14.
PART IV
Item 15.
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
SIGNATURES
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This combined Annual Report on Form 10-K is separately filed by Noble Corporation plc, a public limited company
incorporated under the laws of England and Wales (“Noble-UK”), and Noble Corporation, a Cayman Islands company (“Noble-
Cayman”). Information in this filing relating to Noble-Cayman is filed by Noble-UK and separately by Noble-Cayman on its own
behalf. Noble-Cayman makes no representation as to information relating to Noble-UK (except as it may relate to Noble-Cayman) or
any other affiliate or subsidiary of Noble-UK.
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.
General
Business.
Noble Corporation plc, a public limited company incorporated under the laws of England and Wales (“Noble-UK”), is a leading
offshore drilling contractor for the oil and gas industry. We perform contract drilling services with our fleet of mobile offshore drilling
units located worldwide. As of the filing date of this Annual Report on Form 10-K, our fleet consisted of 15 jackups, nine drillships
and eight semisubmersibles, including one high-specification, harsh environment jackup under construction. This excludes the
semisubmersibles, Noble Driller, Noble Jim Thompson and Noble Paul Wolff.
For additional information on the specifications of our fleet, see “Item 2. Properties.—Drilling Fleet.” At December 31, 2014,
our fleet was located in the United States, Brazil, Argentina, the North Sea, the Mediterranean, the Middle East, Asia and Australia.
Noble and its predecessors have been engaged in the contract drilling of oil and gas wells since 1921.
Spin-off of Paragon Offshore plc (“Paragon Offshore”)
On August 1, 2014, Noble-UK completed the separation and spin-off of a majority of its standard specification offshore drilling
business (the “Spin-off”) through a pro rata distribution of all of the ordinary shares of its wholly-owned subsidiary, Paragon
Offshore, to the holders of Noble’s ordinary shares. Our shareholders received one share of Paragon Offshore for every three shares of
Noble owned as of July 23, 2014, the record date for the distribution. Through the Spin-off, we disposed of most of our standard
specification drilling units and related assets, liabilities and business. Prior to the Spin-off, Paragon Offshore issued approximately
$1.7 billion of long-term debt. We used the proceeds from this debt to repay certain amounts outstanding under our commercial paper
program. The results of operations for Paragon Offshore prior to the Spin-off date and incremental Spin-off related costs have been
classified as discontinued operations for all periods presented in this Annual Report on Form 10-K. For additional information
regarding the Spin-off, see “Part II Item 8 Financial Statements and Supplementary Data, Note 2—Spin-off of Paragon Offshore plc.”
Consummation of Merger and Redomiciliation
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.
Noble Corporation, a Cayman Islands company (“Noble-Cayman”), is an indirect, wholly-owned subsidiary of Noble-UK, our
publicly-traded parent company. Noble-UK’s principal asset is all of the shares of Noble-Cayman. Noble-Cayman has no public
equity outstanding. The consolidated financial statements of Noble-UK include the accounts of Noble-Cayman, and Noble-UK
conducts substantially all of its business through Noble-Cayman and its subsidiaries.
Business Strategy
Our goal is to be the preferred offshore drilling contractor for the oil and gas industry based upon the following core 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 superior customer service through a diverse and technically advanced fleet operated by proficient crews.
Our business strategy has also focused on reshaping our fleet to emphasize our deepwater and high specification jackup
capabilities, coupled with utilizing those drilling assets in important oil and gas producing areas throughout the world.
2
We have actively expanded our deepwater and high-specification drilling capabilities in recent years through the construction of
rigs. As part of this technical and operational expansion, we believe that we have a fleet which gives us a competitive advantage for
the increasingly complex programs required by our customers. During 2014, we continued to execute our newbuild program,
completing the following milestones:
• we commenced operations in the first quarter of 2014 on the Noble Houston Colbert, a high-specification, harsh environment
jackup, under a 22-month contract in Argentina;
• we commenced operations in the first quarter of 2014 on the Noble Regina Allen, a high-specification, harsh environment
jackup, under an 18-month contract in the North Sea;
• we commenced operations in the third quarter of 2014 on the Noble Sam Croft, a dynamically positioned, ultra-deepwater, harsh
environment drillship, under a three-year contract in the U.S. Gulf of Mexico;
• we commenced operations in the third quarter of 2014 on the Noble Sam Turner, a high-specification, harsh environment
jackup, under a two-year contract in the North Sea;
• we commenced operations in the fourth quarter of 2014 on the Noble Tom Madden, a dynamically positioned, ultra-deepwater,
harsh environment drillship, under a three-year contract in the U.S. Gulf of Mexico;
• we completed construction of the Noble Tom Prosser, a high-specification, harsh environment jackup, which was delivered
from the shipyard during the second quarter of 2014. This unit is currently undergoing final commissioning and crew
familiarization and is scheduled to begin mobilizing to Australia in the third quarter of 2015, after which it will begin operations
under an 18-month contract;
• we accepted delivery of the Noble Sam Hartley, a high-specification, harsh environment jackup, which was delivered from the
shipyard during the fourth quarter of 2014. The rig is currently undergoing rig modifications before exiting the shipyard in the
second quarter of 2015; and
• we continued construction of the Noble Lloyd Noble, (formerly CJ70-Mariner), a high-specification, harsh environment jackup,
that is scheduled to commence operations under a four-year contract in the North Sea in mid-2016.
Our historical strategy with respect to construction of new rigs 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 backlog, we determined that in order to maintain long-term
competitiveness, it was both necessary and desirable for us to engage in building high-specification jackups and floating units on a
speculative basis. In 2011, we began our current newbuild program. To date, we have completed and are operating four drillships and
four jackups. Currently, we have one newbuild project remaining, the heavy-duty, harsh environment jackup, Noble Lloyd Noble.
Additionally, the Noble Sam Hartley, a newbuild heavy-duty, harsh environment jackup, is currently undergoing post-delivery
modifications in the shipyard. The Noble Sam Hartley does not have a customer contract and we continue to market the unit. We
currently do not have plans to build additional units on speculation given the market uncertainty. While we may decide to pursue new
speculative building in the future, we do not plan to do so until we have better visibility into the offshore drilling market.
Demand for our services is, in part, a function of the worldwide demand for oil and gas and the global supply of mobile offshore
drilling units. In recent years, there has been a significant increase in the number of jackups and ultra-deepwater drilling units, many
of which are currently under construction without a contract. The introduction of non-contracted newbuild rigs into the marketplace
has increased the supply of rigs competing for drilling service contracts. Further, since June 2014 the price of oil has dropped by more
than 50 percent. As a result, our customers have reduced their planned exploration and development spending and the number of rigs
they have under contract and plan to contract during 2015. This combination of increased supply of drilling rigs and reduced demand
for such rigs has resulted in falling dayrates and may result in reduced utilization of our units if current contracts expire.
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;
3
• 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 the customer to terminate the contract after specified notice periods by
tendering contractually specified termination amounts and, in some cases, without any 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 98 percent of our operating revenues for the years
ended December 31, 2014, 2013 and 2012. During the three years ended December 31, 2014, we principally conducted our contract
drilling operations in the United States, Argentina, Brazil, the North Sea, the Mediterranean, West Africa, the Middle East, Asia and
Australia. Revenues from Royal Dutch Shell, plc (“Shell”) and its affiliates accounted for approximately 55 percent, 67 percent and 51
percent of our consolidated operating revenues in 2014, 2013 and 2012, respectively. Revenues from Saudi Arabian Oil Company
(“Saudi Aramco”) accounted for approximately 10 percent of our consolidated operating revenues in both 2013 and 2012. Saudi
Aramco did not account for more than 10 percent of our consolidated operating revenues in 2014. Revenues from Petróleo Brasileiro
S.A. (“Petrobras”) accounted for approximately 11 percent of our consolidated operating revenues in 2012. Petrobras did not account
for more than 10 percent of our consolidated operating revenues in either 2014 or 2013. No other single customer accounted for more
than 10 percent of our consolidated operating revenues in 2014, 2013 or 2012.
Labor Contracts
During 2011, we commenced a refurbishment project with 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, this contract was terminated. We provided labor personnel and management
services on the project, but did not own or lease the related rig. During 2014, we did not have any active labor contracts nor did we
have any revenues or expenses from continuing operations related to labor services contracts.
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. In addition
to having one of the newest fleets in the industry among large peer companies, 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.
4
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 many
factors, including: the financial condition of such producers, general global economic conditions, prices of oil and gas, political
considerations and national oil and gas production 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, environmental
discharges and related recordkeeping, safety management systems, 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, content 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 actions, 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 government activity
has adversely affected the amount of exploration and development work done by oil and gas companies and their need for offshore
drilling services, and likely will continue to do so.
The regulations applicable to our operations include provisions that regulate the discharge of materials into the environment or
require remediation of contamination under certain circumstances. Many of the countries in whose waters we operate from time to
time regulate the discharge of oil and other contaminants in connection with drilling and marine 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 made material expenditures
in order to comply, and we do not believe that our compliance with such requirements will have a material adverse effect on our
results of operations, our 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 in the United States and Europe, 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 in the U.S. (“CERCLA”),
and similar state and foreign 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. In response to the Macondo well blowout incident in April 2010, the U.S. Department of Interior, through
the Bureau of Ocean Energy Management (“BOEM”) and the Bureau of Safety and Environmental Enforcement (“BSEE”), has
undertaken an aggressive overhaul of the offshore oil and natural gas regulatory process that has significantly impacted oil and gas
development in the U.S. Gulf of Mexico. From time to time, new rules, regulations and requirements have been proposed and
implemented by BOEM, BSEE or the United States Congress that materially limit or prohibit, and increase the cost of, offshore
drilling. These new rules, regulations and requirements including the adoption of new safety requirements and policies relating to the
approval of drilling permits, restrictions on oil and gas development and production activities in the U.S. Gulf of Mexico and the
Arctic, implementation of safety and environmental management systems, mandatory third party compliance audits, and the
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promulgation of numerous Notices to Lessees have impacted and may continue to impact our operations. In addition to these rules,
regulations and requirements, the U.S. federal government is considering new legislation that could impose additional equipment and
safety requirements on operators and drilling contractors in the U.S. Gulf of Mexico, as well as regulations relating to the protection of
the environment. 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 in the impacted region, 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 the domestic implementing law 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. OPA imposes strict, joint and several liabilities on “responsible parties” for damages, including natural
resource damages, resulting from oil spills into or upon navigable waters, adjoining shorelines or in the exclusive economic zone of
the United States. A “responsible party” includes the owner or operator of an onshore facility and the lessee or permit holder of the
area in which an offshore facility is located. 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. In December 2014, BOEM proposed
increasing this liability limit to $134 million. 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 OPA require owners and operators of rigs in United States waters to maintain certain levels of financial
responsibility. The failure to comply with 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 OPA, and we believe that
compliance with 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, local and foreign 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 and
many state counterparts specifically exclude 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. As a result, our operations generate minimal
quantities of RCRA hazardous wastes. However, these wastes may be regulated by the United States Environmental Protection
Agency (“EPA”) or state agencies as solid waste. In addition, ordinary industrial wastes, such as paint wastes, waste solvents,
laboratory wastes, and waste compressor oils may be regulated under RCRA as hazardous waste. We do not believe the current costs
of managing our wastes, as they are presently classified, to be significant. However, any repeal or modification of 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. The EPA regulates the 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. The EPA has also adopted
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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.
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 GHGs, 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.
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 GHG 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 company’s primary
source of GHG 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 2015.
For the year ended December 31, 2014, our estimated carbon dioxide equivalent (“CO2e”) gas emissions, including Paragon
Offshore through the Spin-off date, were 832,845 tonnes as compared to 873,971 tonnes for the year ended December 31, 2013.
Excluding Paragon Offshore, our estimated CO2e gas emissions for the year ended December 31, 2014 were 631,612 tonnes as
compared to 505,223 tonnes for the year ended December 31, 2013 due to fleet expansion. When expressed as an intensity measure of
tonnes of C02e gas emissions per dollar of contract drilling revenues from continuing operations, both the 2014 and 2013 intensity
measure was .0002.
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 GHG emissions independently assessed in the future.
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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.
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.
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. On July 15, 2011, the IMO
approved mandatory measures to reduce emissions of GHGs from international shipping, requiring energy efficiency and survey and
certification measures. These amendments to Annex VI apply to all ships of 400 gross tonnage and above and entered into force on
January 1, 2013, affecting 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. 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 has not become
effective, but 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 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
8
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.
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 be subject to differing interpretations,
and enforcement of those provisions may be limited by public policy and other considerations.
Employees
At December 31, 2014, we had approximately 3,700 employees, excluding approximately 1,100 persons we engaged through
labor contractors or agencies. Approximately 81 percent of our employees are located offshore. Of our shorebased employees,
approximately 70 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.
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Financial Information about Segments and Geographic Areas
Information regarding our revenues from external customers, segment profit or loss and total assets attributable to each segment
for the last three fiscal years is presented in “Part II Item 8. Financial Statements and Supplementary Data, Note 19 — 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 19 — 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 (the “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:
• Articles of Association;
• Code of Business Conduct and Ethics
• Corporate Governance Guidelines;
• Audit Committee Charter;
• Nominating and Corporate Governance Committee Charter;
• Health, Safety, Environment and Engineering Committee Charter; and
• Compensation Committee Charter.
Item 1A.
Risk Factors.
You should carefully consider the following risk factors in addition to the other information included in this Annual Report on
Form 10-K. Each of these risk factors could affect our business, operating results and financial condition, as well as affect an
investment in our shares.
Risk Factors Relating to Our Business
Our business depends on the level of activity in the oil and gas industry. 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, including oil and gas 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;
•
• 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;
the ability of OPEC to set and maintain production levels and pricing;
•
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the level of production in non-OPEC countries;
•
• worldwide financial instability or recessions;
• regulatory restrictions or any moratorium on offshore drilling;
• expectations regarding future energy prices;
•
the discovery rate of new oil and gas reserves either onshore or offshore;
the rate of decline of existing and new oil and gas reserves;
•
• available pipeline and other oil and gas transportation capacity;
• 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;
the relative cost of offshore drilling versus onshore oil and gas production;
•
• advances in exploration, development and production technology either onshore or offshore;
•
technical advances affecting energy consumption, including the displacement of hydrocarbons through increasing transportation
fuel efficiencies;
• merger and divestiture activity among oil and gas producers;
the availability of, and access to, suitable locations from which our customers can produce hydrocarbons;
•
• adverse weather conditions, including hurricanes, typhoons, winter storms and rough seas;
•
•
•
•
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; and
the laws and regulations of governments regarding exploration and development of their oil and gas reserves or speculation
regarding future laws or regulations.
Adverse developments affecting the industry as a result of one or more of these factors, including a decline in oil or gas prices
(such as the decline since June 2014, any further decline, or the failure of oil prices to recover from their current levels), a global
recession, reduced demand for oil and gas products, increased supply due to the development of new onshore drilling and production
technologies, and increased regulation of drilling and production, particularly if several developments were to occur in a short period
of time, would 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 materially 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 a material adverse effect on our business,
financial condition and results of operations.
In addition to intense competition, our industry has historically been cyclical. The contract drilling industry is currently in a
period characterized by low demand for drilling services and excess rig supply. 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
times. We cannot provide you with any assurances as to when such period will end, or when there will be higher demand for contract
drilling services or a reduction in the number of drilling rigs.
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An over-supply of rigs may lead to a reduction in dayrates and demand for our rigs and, therefore, may adversely impact our
revenues and profitability.
Prior to the recent downturn, we experienced a period of high utilization and high dayrates, and industry participants increased
the supply of drilling rigs by building new drilling rigs, including some drilling rigs that have not yet entered service. This increase in
supply, combined with the decrease in demand for drilling rigs resulting from the substantial decline in the price of oil since June
2014, has resulted in an oversupply of drilling rigs, which has contributed to the recent decline in utilization and dayrates.
We are currently experiencing competition from newbuild rigs that have either already entered the market or are scheduled to
enter the market in 2015 and beyond. The entry of these rigs into the market has resulted in lower dayrates for both newbuilds and
experienced rigs rolling off their current contracts. Lower utilization and dayrates adversely affect our revenues and profitability. In
addition, our competitors may relocate rigs to markets in which we operate, which could exacerbate excess rig supply which may
lower dayrates and utilization in those markets. 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
further reduction in dayrates and in utilization, and we may be required to idle additional drilling rigs.
We may record additional 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. If future cash flow estimates, based upon
information available to management at the time, indicate that the carrying value of any of our rigs may not be recoverable or if we
sell assets for less than their then carrying value, we may recognize additional impairment charges on our fleet. For example, in the
fourth quarter of 2014, we decided that we would discontinue marketing the Noble Driller, Noble Paul Wolff and Noble Jim
Thompson. In connection with this decision, we recorded an impairment charge of $685 million on these three units.
We may not be able to renew or replace expiring contracts or obtain contracts for our uncontracted newbuilds, and our
customers may terminate or seek to renegotiate or repudiate our drilling contracts.
We have a number of customer contracts that will expire in 2015 and 2016. 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. During the fourth quarter of 2014
and the first quarter of 2015, a number of oil and gas companies, including some of our customers, have publicly announced
significant reductions in their planned exploration and development spending during 2015 and beyond. These reductions in spending
could further reduce the demand for contract drilling services and as a result, our business, financial condition and results of
operations would be materially adversely affected.
In addition, the Noble Sam Hartley, a newbuild heavy-duty, harsh environment jackup that is currently undergoing post-delivery
modifications in the shipyard, does not have a customer contract. We will attempt to secure a contract for this unit prior to the
completion of the modification project, but we may be unable to obtain a contract for this rig. In addition, for our rigs under contract
that have expired or have been terminated by our customers, we may be unable to secure extensions or new contracts, or in the
alternative, may receive dayrates under new contracts which may be below, perhaps substantially below, the existing dayrates. This
would have a material adverse effect on our results of operations and cash flows.
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 a specified notice period by tendering contractually specified termination amounts and, in some cases,
without any payment. These termination payments may not fully compensate us for the loss of a contract. 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, such as the one we are currently experiencing and which we expect
to continue during 2015, we may be subject to an increased risk of our customers seeking to renegotiate or repudiate their contracts.
Our customers’ ability to perform their obligations under drilling contracts with us may also be adversely affected by restricted credit
markets, economic downturns and industry downturns, such as the one we are currently experiencing. 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.
12
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 under letters of intent or award 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 or that they will not seek to renegotiate or repudiate their contracts,
especially during the current industry downturn. 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, including as a result of contract
repudiations during currently depressed market conditions, may 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 and Freeport-McMoRan, Inc. (“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, failure to renew contracts or award new contracts or reduction of their drilling programs. We estimate Shell and Freeport
represented approximately 60 percent and 12 percent, respectively, of our backlog at December 31, 2014. Revenues from Shell and
Freeport accounted for approximately 55 percent and 4 percent, respectively, of our consolidated operating revenues for the year
ended December 31, 2014. This concentration of customers increases the risks associated with any possible termination or
nonperformance of contracts, in addition to our exposure to credit risk. 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.
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.
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.
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;
•
13
• 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:
• 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;
•
the effect of certain temporary import permit regimes, where the duration of the permit does not coincide with the general term
of the drilling contract; and
• ongoing claims in Brazil related to withholding taxes payable on our service contracts.
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. 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, require partial local ownership 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.
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.
14
In connection with the Spin-off, we agreed to indemnify Paragon Offshore for certain liabilities, and Paragon Offshore
agreed to indemnify us for certain liabilities. We have significant exposure to losses resulting from this obligation, and there can
be no assurances that the Paragon Offshore indemnities will be sufficient to insure us against the full amount of the related
liabilities, or that Paragon Offshore’s ability to satisfy its indemnification obligations will not be impaired in the future.
We entered into certain agreements with Paragon Offshore in connection with the Spin-off, including a master separation
agreement, tax sharing agreement, transition services agreement and transition services agreement relating to our operations offshore
Brazil. Pursuant to the agreements, we agreed to indemnify Paragon Offshore for certain liabilities, and Paragon Offshore agreed to
indemnify us for certain liabilities. We have significant exposure to losses resulting from our obligations under these agreements.
Third parties could seek to hold us responsible for any of the liabilities that Paragon Offshore has agreed to retain, and there can be no
assurance that the indemnity from Paragon Offshore will be sufficient to protect us against the full amount of such liabilities, or that
Paragon Offshore will be able to fully satisfy its indemnification obligations. Moreover, even if we ultimately succeed in recovering
from Paragon Offshore any amounts for which we are held liable, we may be temporarily required to bear these losses. If Paragon
Offshore is unable to satisfy its indemnification obligations, the underlying liabilities could have a material adverse effect on our
business, financial condition and results of operations.
Following the Spin-off, we continue to rely on Paragon Offshore to assist us in operations offshore Brazil. In addition,
Paragon Offshore has significant payables owed to us in connection with the Spin-off and agreements executed in connection with
our separation.
Pursuant to the transition services agreement relating to our operations offshore Brazil, Paragon Offshore has agreed to provide
local administrative and operational services for rigs operating in Brazil at the time of the Spin-off. We currently have one rig in
Brazil operating under this arrangement. In addition, in connection with the Spin-off, we executed a number of agreements with
Paragon Offshore that govern our relationship after the Spin-off. If Paragon Offshore is unable to perform under its obligations under
the transition services agreement relating to our operations offshore Brazil or is unable or unwilling to repay its obligations under the
agreements executed in connection with our separation, it could have a material adverse effect on our business, financial condition and
results of operations.
Governmental laws and regulations, including environmental laws and regulations, may add to our costs, result in delays, 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 GHGs.
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, disrupting revenue through permitting or similar delays, 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.
As disclosed in “Part II Item 8. Financial Statements and Supplementary Data, Note 18 — Commitments and Contingencies”, in
November 2012, the U.S. Coast Guard in Alaska conducted an inspection and investigation of the Noble Discoverer and the Kulluk,
and referred the matters to the U.S. Department of Justice (“DOJ”) for further investigation. In December 2014, a subsidiary reached a
settlement with the DOJ regarding its investigation of the Noble Discoverer and the Kulluk. Under the terms of the plea agreement, the
subsidiary pled guilty to violations relating to maintaining proper oil record books for the Noble Discoverer and Kulluk, maintaining
15
proper ballast records for the Noble Discoverer and notification of hazardous conditions with respect to the Noble Discoverer. The
subsidiary paid $8.2 million in fines and $4 million in community service payments and implemented a comprehensive environmental
compliance plan. Under the plea agreement, we were also placed on probation for four years. If during the term of probation, the
subsidiary fails to adhere to the terms of the plea agreement, the DOJ may withdraw from the plea agreement and would be free to
prosecute the subsidiary on all charges arising out of its investigation, including any charges dismissed pursuant to the terms of the
plea agreement, as well as potentially other charges.
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 2010, we finalized settlements with the SEC and the DOJ relating to certain reimbursement payments made by our then
Nigerian affiliate to our customs agents in Nigeria in the years 2003 to 2007 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 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.
16
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, the Organization for Economic Co-Operation and
Development (“OECD”) published a Base Erosion and Profit Shifting Action Plan (“BEPS”) in July 2013. BEPS seeks to reform the
taxation of multinational companies. Although any recommendations made by the OECD are not changes in tax law, this may result in
unilateral country action which may be uncoordinated, may create double taxation and increase controversy, both of which would be
adverse for the global economy and may result in a material adverse effect on our financial statements.
Tax laws and regulations are highly complex and subject to interpretation. 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.
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.
17
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:
• normal recurring operating expenses;
• committed and discretionary capital expenditures;
• payments of dividends;
• repayment of maturing debt; and
• repurchase of shares.
In the future, we may require funding for capital expenditures that is 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 and
our credit ratings 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, a depressed oil price, 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.
Access to our commercial paper program is dependent upon our credit ratings. A decline in our credit ratings below investment
grade would prohibit us from accessing the commercial paper market, and we would likely transfer our outstanding borrowings to our
revolving credit facilities. Our revolving credit facilities have interest rates that are generally higher than those found in the
commercial paper market, which would result in increased interest expense in the future.
In addition, our revolving credit facilities have provisions which change the applicable interest rates based upon our credit
ratings. If our credit ratings were to decline, the interest expense under our revolving credit facilities would increase.
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 shorebased
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 certain aspects of 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. Further, we may decide to
discontinue named windstorm insurance on all of our rigs in the U.S. Gulf of Mexico. If one or more future significant weather-related
events occur in the Gulf of Mexico, or in any other geographic area in which we operate, we may experience increases in insurance
costs, additional coverage restrictions or unavailability of certain insurance products.
18
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 shorebased 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.
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 one remaining ongoing new construction project. In addition, we will continue to make significant upgrade,
refurbishment and repair expenditures to our fleet from time to time; some of which may be unplanned. Our customers may also
require certain shipyard reliability upgrade projects for our rigs. 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.
19
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, when
our rigs are undergoing upgrade, refurbishment and repair, they 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.
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.
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.
20
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. In the past, during
periods of high demand for drilling services and increasing worldwide industry fleet size, shortages of qualified personnel have
occurred. 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 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 filing date,
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.
Pension expenses associated with our retirement benefit plans may fluctuate significantly depending upon changes in
actuarial assumptions, future investment performance of plan assets and legislative or other regulatory actions.
A portion of our current and retired employee population is covered by pension and other post-retirement benefit plans, the costs
of which are dependent upon various assumptions, including estimates of rates of return on benefit plan assets, discount rates for
future payment obligations, mortality assumptions, rates of future cost growth and trends for future costs. In addition, funding
requirements for benefit obligations of our pension and other post-retirement benefit plans are subject to legislative and other
government regulatory actions. Recently, the Society of Actuaries released revised mortality tables, which update life expectancy
assumptions. In consideration of these tables, we modified the mortality assumptions used in determining our pension and post-
retirement benefit obligations as of December 31, 2014, which increased our pension liability by $14 million as of December 31,
2014. This will have a related impact on our annual pension cost in future years. The new mortality assumptions may result in
additional funding requirements dependent upon the funded status of our plans. These expectations presume all other assumptions
21
remain constant and there are no changes to applicable funding regulations. Future changes in estimates and assumptions associated
with our pension and other post-retirement benefit plans could have a material adverse effect on our financial condition, results of
operations, cash flows and/or financial disclosures.
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 when revenues are received or expenses are paid in nonconvertible currencies,
when we do not hedge an exposure to a foreign currency or when the result of a hedge is a loss. We may also incur losses as a result of
an inability to collect revenues due to 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 our 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 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 the cash that we require from our subsidiaries to pay our debt service obligations. Applicable tax laws may also
subject such payments to us by our subsidiaries to further taxation.
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 rig demand, the offshore drilling market, oil prices, contract
backlog, fleet status, our financial position, business strategy, impairments, repayment of debt, timing or number of share repurchases,
borrowings under our credit facilities or other instruments, sources of funds, 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, timing
or results of acquisitions or dispositions, 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.
22
Item 1B. Unresolved Staff Comments.
None.
Properties.
Item 2.
Drilling Fleet
Our drilling fleet is composed of the following types of units: drillships, semisubmersibles, and jackups. Each type of drilling rig
is described further below. 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.
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. Certain of our drillships are capable of drilling in water depths
up to 12,000 feet.
As of the filing date of this Annual Report on Form 10-K, our drillship fleet consisted of the following 9 units:
• four dynamically positioned Gusto Engineering Pelican Class drillships;
•
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; and
•
• one conventionally moored Sonat Discoverer Class drillship capable of drilling in Arctic environments.
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 depths of at least
200 feet in order to conduct operations. Certain of our semisubmersibles are capable of drilling in water depths of up to 12,000 feet.
As of the filing date of this Annual Report on Form 10-K, our semisubmersible fleet consisted of the following eight units:
three Noble EVA-4000™ semisubmersibles;
three Friede & Goldman 9500 Enhanced Pacesetter semisubmersibles; and
two Bingo 9000 design unit semisubmersibles.
•
•
•
Jackups
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 approximately 500 feet. As of the filing date of this Annual Report on Form 10-K, we had 15 jackups in our fleet,
including one high-specification, harsh environment jackup under construction.
23
Offshore Fleet Table
The following table sets forth certain information concerning our offshore fleet at February 12, 2015. We operate and own all of
the units included in the table.
Name
Make
Year Built
or Rebuilt (1)
Drilling
Depth
Water
Depth
Rating Capacity
(feet)
(feet)
Location
Status (2)
Bingo 9000—DP
F&G 9500 Enhanced Pacesetter—DP
Noble EVA-4000™
Hyundai Gusto P 10000
Hyundai Gusto P 10000
Drillships—9
Hyundai Gusto P 10000
Noble Bob Douglas
GustoMSC Bully PRD 12000
Noble Bully I (3)(4)
GustoMSC Bully PRD 12000
Noble Bully II (3)(4)
Sonat Discoverer Class
Noble Discoverer (3)
Hyundai Gusto P 10000
Noble Don Taylor(3)
Noble Globetrotter I (3)
Globetrotter Class
Noble Globetrotter II (3) Globetrotter Class
Noble Sam Croft(3)
Noble Tom Madden(3)
Semisubmersibles—8
Noble Amos Runner
Noble Clyde Boudreaux F&G 9500 Enhanced Pacesetter
Noble Danny Adkins
Noble Dave Beard
Noble Homer Ferrington F&G 9500 Enhanced Pacesetter
Noble Jim Day
Noble Max Smith
Noble Paul Romano
Independent Leg Cantilevered Jackups—15
Noble Alan Hay
Noble Charles Copeland MLT Class 82-SD-C
Modec 300C-38
Noble David Tinsley
Modec 300C-38
Noble Gene House
F&G JU-2000E
Noble Hans Deul (3)
Noble Houston Colbert (3) F&G JU-3000N
Modec 300C-38
Noble Joe Beall
Noble Lloyd Noble (3)
Gusto MSC CJ70-x150-ST
Noble Mick O’Brien (3) F&G JU-3000N
F&G JU-3000N
Noble Regina Allen (3)
F&G JU-2000E
Noble Roger Lewis (3)
F&G JU-3000N
Noble Sam Hartley (3)
F&G JU-3000N
Noble Sam Turner (3)
F&G JU-2000E
Noble Scott Marks (3)
F&G JU-3000N
Noble Tom Prosser (3)
Bingo 9000—DP
Noble EVA-4000™
Noble EVA-4000™
Levingston Class 111-C
2013 N
2011 N
2011 N
2009 R
2013 N
2011 N
2013 N
2014 N
2014 N
12,000 40,000 U.S. Gulf of Mexico Active
40,000 U.S. Gulf of Mexico Active
8,200
Active
10,000 40,000 In transit
1,000
Active
20,000 Malaysia
12,000 40,000 U.S. Gulf of Mexico Active
10,000 30,000 U.S. Gulf of Mexico Active
Active
10,000 30,000 Turkey
12,000 40,000 U.S. Gulf of Mexico Active
12,000 40,000 U.S. Gulf of Mexico Active
1999 R/2008 M 8,000
32,500 U.S. Gulf of Mexico Active
10,000 35,000 Australia
Active
12,000 35,000 U.S. Gulf of Mexico Active
Active
10,000 35,000 Brazil
7,200
Stacked
12,000 35,000 U.S. Gulf of Mexico Active
Active
7,000
Active
1998 R/2007 M 6,000
2007 R/M
2009 R
2009 R
2004 R
2010 R
1999 R
30,000 Singapore
32,500 Canary Islands
30,000 Italy
2005 R
2001 R
2010 R
1998 R
2009 N
2013 N
2004 R
2016 N
2013 N
2013 N
2007 N
2015 N
2014 N
2009 N
2014 N
300
280
300
300
400
400
300
500
400
400
400
400
400
400
400
25,000 U.A.E.
20,000 Saudi Arabia
25,000 U.A.E.
25,000 Saudi Arabia
30,000 U.K.
30,000 Argentina
25,000 Saudi Arabia
32,000 Singapore
30,000 U.A.E.
30,000 The Netherlands
30,000 Saudi Arabia
30,000 Singapore
30,000 Denmark
30,000 Saudi Arabia
30,000 Singapore
Active
Active
Active
Active
Active
Active
Active
Active
Active
Active
Active
Shipyard
Active
Active
Shipyard
Footnotes to Drilling Fleet Table
1.
2.
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 have reduced
or no crew.
Harsh environment capability.
3.
4. 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.
24
Facilities
Our corporate headquarters are located in London, England. We also maintain offices in Sugar Land, Texas, where significant
worldwide global support activity occurs. In addition, we own and lease operational, administrative and marketing offices, as well as
other sites used primarily for operations, 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 18 to our consolidated financial statements included in Item 8 of this
Annual Report on Form 10-K.
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
and are adjusted retroactively to reflect the impact of the Spin-off of Paragon Offshore, which was completed on August 1, 2014:
2014
Fourth quarter
Third quarter
Second quarter
First quarter
2013
Fourth quarter
Third quarter
Second quarter
First quarter
High
Low
$ 21.83
28.59
30.44
33.01
$ 36.48
37.21
38.33
37.49
$ 14.52
22.22
25.77
25.05
$ 32.18
33.11
30.74
30.91
Cash
Dividends
Declared and
Paid
$
$
0.375
0.375
0.375
0.375
0.250
0.250
0.130
0.130
The declaration and payment of dividends or 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 13, 2015, there were 241,954,168 shares outstanding held by 421 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.
25
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.
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 by Noble-UK’s sole shareholder 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. During 2014, we
repurchased all shares covered by this authorization.
In December 2014, we received shareholder approval to repurchase up to 37,000,000 additional ordinary shares, or
approximately 15 percent of our outstanding ordinary shares at the time of shareholder approval. Any repurchases are expected to be
funded using cash on hand, cash from operations or short-term borrowings under our credit facilities. The authority to make such
repurchases will expire on the later of April 2016 or at the end of the Company’s 2016 annual general meeting of shareholders, at
which time we could seek shareholder approval for further repurchases.
The following table sets forth for the periods indicated certain information with respect to purchases of shares by Noble-UK
during the fourth quarter of 2014:
Period
October 2014
November 2014
December 2014
Total Number
of Shares
Purchased
—
4,759,891
—
Average
Price Paid
per Share(1)
$
$
$
—
21.13
—
Total Number of
Shares Purchased
as Part of Publicly
Announced Plans
or Programs
Maximum Number
of Shares that May
Yet Be Purchased
Under Plans
or Programs
—
4,759,891
—
4,759,891
—
37,000,000
(1) The average price paid per share does not include the impact of commissions and stamp tax. Including these items, the average
price paid per share during the fourth quarter of 2014 was $21.26.
All share repurchases were made in the open market and were pursuant to the share repurchase program discussed above. All
shares repurchased during the quarter were immediately cancelled.
26
In January 2015, we repurchased 6.2 million of our ordinary shares at an average price of $16.10 per share, excluding
commissions and stamp tax. Including these items, the average price paid per share during January 2015 was $16.21. There can be no
assurance as to the timing or amount of any additional repurchases. However, we intend to take a cautious approach to future share
repurchases at least until market conditions in the offshore drilling business stabilize.
Stock Performance Graph
This graph shows the cumulative total shareholder return of our shares over the five-year period from January 1, 2010 to
December 31, 2014. 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, 2010 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
INDEXED RETURNS
Year Ended December 31,
2010
2011
2012
2013
2014
$ 90.35
115.06
127.34
$ 77.55
117.49
111.51
$ 90.72
136.30
111.88
$ 99.61
180.44
143.66
$ 52.56
205.14
118.91
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.
27
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, 2014, 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.
Statement of Income Data
Operating revenues from continuing
operations
Net income (loss) from continuing operations
attributable to Noble-UK(1)
Net income (loss) from continuing operations
per share attributable to Noble-UK:
Basic
Diluted
Balance Sheet Data (at end of period)
Cash and marketable securities
Property and equipment, net
Total assets
Long-term debt
Total debt(2)
Total equity
Other Data
Net cash from operating activities
Net cash from investing activities
Net cash from financing activities
Capital expenditures(3)
Working capital(4)
Cash distributions declared per share(5)
Year Ended December 31,
2014
2013
2012
2011
2010
(In thousands, except per share amounts)
$ 3,232,504
$ 2,538,143
$ 2,200,699
$ 1,429,826
$ 1,194,089
(152,011)
478,595
414,389
190,745
243,176
(0.60)
(0.60)
1.86
1.86
1.63
1.63
0.75
0.75
0.95
0.95
68,510
$
12,112,509
13,286,822
4,869,020
4,869,020
7,287,034
$ 1,778,208
(2,109,268)
285,112
2,072,885
259,888
1.50
114,458
$
14,558,090
16,217,957
5,556,251
5,556,251
9,050,028
$ 1,702,317
(2,485,107)
615,156
2,487,520
339,020
0.76
282,092
$
13,025,972
14,607,774
4,634,375
4,634,375
8,488,290
$ 1,381,693
(1,790,888)
452,091
1,669,811
393,876
0.54
239,196
$
12,130,345
13,495,159
4,071,964
4,071,964
8,097,852
$
740,240
(2,521,546)
1,682,631
2,621,235
232,432
0.60
337,871
$
10,213,158
11,302,387
2,686,484
2,766,697
7,287,634
$ 1,636,902
(2,896,469)
861,945
1,406,010
110,347
0.88
(1) Results for 2014, 2013 and 2012 include impairment charges of $745 million, $4 million and $20 million, respectively.
(2) Consists of Long-Term Debt and Current Maturities of Long-Term Debt.
(3) Capital expenditures includes expenditures made for rigs that were ultimately transferred to Paragon Offshore as part of the
Spin-off.
(4) Working capital is calculated as current assets less current liabilities.
(5) 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, 2014 and 2013, and
our results of operations for each of the years in the three-year period ended December 31, 2014. The following discussion should be
read in conjunction with the consolidated financial statements and related notes contained in this Annual Report on Form 10-K for the
year ended December 31, 2014 filed by Noble-UK and Noble-Cayman.
The results of operations for Paragon Offshore prior to August 1, 2014, the Spin-off date, and non-recurring costs related to the
Spin-off have been classified as discontinued operations for all periods presented in this report. The terms “earnings” and “loss” as
used in this “Management’s Discussion and Analysis of Financial Condition and Results of Operations” refer to income/(loss) from
continuing operations. Income/ (loss) from continuing operations is representative of the Company’s current business operations and
focus.
28
Executive Overview
Our 2014 financial and operating results from continuing operations include:
•
operating revenues totaling $3.2 billion;
• net loss of $152 million, or $0.60 per diluted share, which includes a $713 million after-tax impairment charge recognized
on three of our rigs and our total goodwill balance;
• net cash from operating activities totaling $1.8 billion; and
•
an increase in debt to 40.1 percent of total capitalization at the end of 2014, up from 38.0 percent at the end of 2013 as a
result of a decrease in our total equity from the Spin-off and the impairment charge recognized in the current year.
The business environment for offshore drillers during 2014 and early 2015 has been challenging. The supply of offshore drilling
rigs from newbuilds and rigs completing current contracts increased while demand for these same rigs decreased. Beginning in
June 2014, the price of oil, a key factor in determining customer activity levels, began to decline rapidly, with the Brent crude price
declining from approximately $112 per barrel on June 30, 2014 to approximately $52 per barrel on January 30, 2015. In this
environment, operators reacted quickly and began to curtail drilling programs. This environment resulted in a dramatic reduction in
dayrates for new contracts and lower utilization.
We expect 2015 to be a challenging year with potential for further deterioration of the offshore drilling market. The present
level of global economic activity and the lack of production cuts within OPEC are contributing to the uncertainty. Current conditions
do not support the capital expenditure programs that the offshore drilling industry has undertaken in recent years. We cannot give any
assurances as to when these conditions in the offshore drilling market will improve, or when there will be higher demand for contract
drilling services or a decline in the number of drilling rigs. While current market conditions persist, we intend to focus on operating
efficiency and cost control, which could include stacking additional drilling rigs.
We do continue to believe in the long-term fundamentals for the industry, especially for those contractors with a modern fleet of
high-specification rigs. Also, we believe the ultimate recovery will benefit from any sustained under-investment by clients in this
current market phase.
In October 2014, we announced that our Board of Directors authorized the development of a master limited partnership
(“MLP”), which would be comprised of interests in select drilling rigs from our existing fleet. The anticipated offering was subject to
the final approval of our Board of Directors and market conditions. We believed that the MLP in the then-current market conditions
would provide financial flexibility. The drilling market and related MLP market conditions have deteriorated significantly, and we
have consequently decided not to pursue an MLP. We will monitor the MLP market and may or may not decide to resume
development of an MLP.
In December 2014, we received shareholder approval to repurchase up to 37,000,000 additional ordinary shares, or
approximately 15 percent of our outstanding ordinary shares at the time of the shareholder approval. Any repurchases are expected to
be funded using cash on hand, cash from operations or short-term borrowings under our credit facilities. During January 2015, we
repurchased 6.2 million of our ordinary shares at an average price of $16.10 per share, excluding commissions and stamp tax. There
can be no assurance as to the timing or amount of any additional repurchases. However, we intend to take a cautious approach to
future share repurchases at least until market conditions in the offshore drilling business stabilize. The authority to make such
repurchases will expire on the later of April 2016 or at the end of the Company’s 2016 annual general meeting of shareholders, at
which time we could seek shareholder approval for further repurchases.
Our business strategy has focused on reshaping our fleet to emphasize our deepwater drilling and high-specification jackup
capabilities 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 of rigs. Although we plan to focus on capital preservation and liquidity based on current market conditions, we also 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
2014, we continued to execute our newbuild program, completing the following milestones:
• we commenced operations in the first quarter of 2014 on the Noble Houston Colbert, a high-specification, harsh environment
jackup, under a 22-month contract in Argentina;
• we commenced operations in the first quarter of 2014 on the Noble Regina Allen, a high-specification, harsh environment
jackup, under an 18-month contract in the North Sea;
29
• we commenced operations in the third quarter of 2014 on the Noble Sam Croft, a dynamically positioned, ultra-deepwater, harsh
environment drillship, under a three-year contract in the U.S. Gulf of Mexico;
• we commenced operations in the third quarter of 2014 on the Noble Sam Turner, a high-specification, harsh environment
jackup, under a two-year contract in the North Sea;
• we commenced operations in the fourth quarter of 2014 on the Noble Tom Madden, a dynamically positioned, ultra-deepwater,
harsh environment drillship, under a three-year contract in the U.S. Gulf of Mexico;
• we completed construction of the Noble Tom Prosser, a high-specification, harsh environment jackup, which was delivered
from the shipyard during the second quarter of 2014. This unit is currently undergoing final commissioning and crew
familiarization and is scheduled to begin mobilizing to Australia in the third quarter of 2015, after which it will begin operations
under an 18-month contract;
• we accepted delivery of the Noble Sam Hartley, a high-specification, harsh environment jackup, which was delivered from the
shipyard during the fourth quarter of 2014. The rig is currently undergoing rig modifications before exiting the shipyard in the
second quarter of 2015; and
• we continued construction of the Noble Lloyd Noble, (formerly CJ70-Mariner), a high-specification, harsh environment jackup,
that is scheduled to commence operations under a four-year contract in the North Sea in mid-2016.
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.
Spin-off of Paragon Offshore plc
On August 1, 2014, Noble-UK completed the separation and spin-off of a majority of its standard specification offshore drilling
business through a pro rata distribution of all of the ordinary shares of its wholly-owned subsidiary, Paragon Offshore, to the holders
of Noble’s ordinary shares. Our shareholders received one share of Paragon Offshore for every three shares of Noble owned as of
July 23, 2014, the record date for the distribution. Through the Spin-off, we disposed of most of our standard specification drilling
units and related assets, liabilities and business. Prior to the Spin-off, Paragon Offshore issued approximately $1.7 billion of long-term
debt. We used the proceeds from this debt to repay certain amounts outstanding under our commercial paper program. The results of
operations for Paragon Offshore prior to the Spin-off date and incremental Spin-off related costs have been classified as discontinued
operations for all periods presented in this Annual Report on Form 10-K. For additional information regarding the Spin-off, see “Part
II Item 8 Financial Statements and Supplementary Data Note 2—Spin-off of Paragon Offshore plc.”
Prior to the completion of the Spin-off, Noble and Paragon Offshore entered into a series of agreements to effect the separation
and Spin-off and govern the relationship between the parties after the Spin-off.
Master Separation Agreement (“MSA”)
The general terms and conditions relating to the separation and Spin-off are set forth in the MSA. The MSA identifies the assets
transferred, liabilities assumed and contracts assigned either to Paragon Offshore by us or by Paragon Offshore to us in the separation
and describes when and how these transfers, assumptions and assignments would occur. The MSA provides for, among other things,
Paragon Offshore’s responsibility for liabilities relating to its business and the responsibility of Noble for liabilities related to our, and
in certain limited cases, Paragon Offshore’s business, in each case irrespective of when the liability arose. The MSA also contains
indemnification obligations and ongoing commitments by us and Paragon Offshore.
Employee Matters Agreement (“EMA”)
The EMA allocates liabilities and responsibilities between us and Paragon Offshore relating to employment, compensation and
benefits and other employment related matters.
Tax Sharing Agreement
The tax sharing agreement provides for the allocation of tax liabilities and benefits between us and Paragon Offshore and
governs the parties’ assistance with tax-related claims.
30
Transition Services Agreements
Under two transition services agreements, we agreed to continue, for a limited period of time, to provide various interim support
services to Paragon Offshore, and Paragon Offshore agreed to provide various interim support services to us, including providing
operational and administrative support for our remaining Brazilian operations.
Impairment
In the fourth quarter of 2014, we decided that we would discontinue marketing the semisubmersibles, Noble Driller, Noble Jim
Thompson and Noble Paul Wolff, as a result of current market conditions. In connection with the preparation of the consolidated
financial statements included in this Annual Report, we evaluated these units for impairments and recorded an impairment charge of
$685 million on these units. Additionally, we fully impaired the $60 million of goodwill on our books, which originated from the
acquisition of FDR Holdings Limited (“Frontier”) in 2010, as a result of a significant decline in the market value of our stock, a
decrease in oil and gas prices, significant reductions in the projected dayrates for new contracts and reduced utilization forecasts.
Consistent with our policy, we will continue to evaluate property and equipment for impairment on an annual basis or whenever
events or changes in circumstances indicate that the carrying amount may not be recoverable. Further sustained declines in the
offshore drilling market, or lack of recovery in market conditions, to the extent actual results do not meet our estimated assumptions,
may lead to additional impairments losses in the future.
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, 2014, the amount of our contract drilling services backlog and the percent of available operating days committed for the
periods indicated:
Contract Drilling Services Backlog
Semisubmersibles/Drillships (1) (4)
Jackups
Total (2)
Percent of Available Days Committed(3)
Semisubmersibles/Drillships
Jackups
Total
Total
2015
2016
2017
2018
2019-2023
Year Ending December 31,
(In millions)
$ 8,027
2,083
$ 2,371
700
$ 1,785
520
$ 1,123
333
$ 10,110
$ 3,071
$ 2,305
$ 1,456
$ 714
252
$ 966
$ 2,034
278
$ 2,312
80%
82%
58%
46%
35% 24%
25% 19%
81%
52%
30% 21%
14%
2%
8%
(1) Our drilling contract with Petróleo Brasileiro S.A. (“Petrobras”) provides an opportunity for us to earn performance bonuses
based on reaching targets for downtime experienced for our rig operating offshore Brazil. Our backlog includes an amount equal
to 50 percent of potential performance bonuses for this rig, or approximately $9 million. The drilling contracts with Royal Dutch
Shell, plc (“Shell”) for the Noble Globetrotter I, Noble Globetrotter II, Noble Clyde Boudreaux, 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
contracts. Our backlog includes an amount equal to 25 percent of potential performance bonuses for these rigs, or approximately
$141 million.
(2) Some of our drilling contracts provide the customer with certain early termination rights and, in very limited cases, these
termination rights require minimal or no notice and financial penalties. However, we have not received any notification of
contract cancellations as of February 15, 2015.
(3) Percent of available days committed is calculated by dividing the total number of days our rigs are operating under contract for
such period, or committed days, by the product of the total number of our rigs, including cold stacked rigs, and the number of
calendar days in such period. Committed days do not include the days that a rig is stacked or the days that a rig is expected to be
out of service for significant overhaul, repairs or maintenance. Percentages take into account additional capacity from the
estimated dates of deployment of our newbuild rigs that are scheduled to commence operations during 2015 and 2016.
31
(4) 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 rigs. As of December 31,
2014, the combined amount of backlog for these rigs totals approximately $1.7 billion, all of which is included in our backlog.
Noble’s proportional interest in the backlog for these rigs totals $830 million.
Our contract drilling services backlog reflects estimated future revenues attributable to both signed drilling contracts and letters
of intent that we expect to result in binding drilling contracts. 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. As of December 31, 2014, our contract drilling services backlog did not include any letters of intent.
We calculate backlog for any given unit and period by multiplying the full contractual operating dayrate for such unit by the
number of days remaining in the period. The reported contract drilling services backlog does not include amounts representing
revenues for mobilization, demobilization and contract preparation, which are not expected to be significant to our contract drilling
services revenues, amounts constituting reimbursables from customers or amounts attributable to uncommitted option periods under
drilling contracts or letters of intent.
The amount of actual revenues earned and the actual periods during which revenues are earned may be 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
2014 Compared to 2013
General
Net loss from continuing operations attributable to Noble-UK for 2014 was $152 million, or $0.60 per diluted share, on
operating revenues of $3.2 billion, compared to net income from continuing operations for 2013 of $479 million, or $1.86 per diluted
share, on operating revenues of $2.5 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
2014 and 2013, would be the same as the information presented below regarding Noble-UK in all material respects, except operating
income for Noble-Cayman for the years ended December 31, 2014 and 2013 was $50 million and $65 million higher, respectively,
than operating income for Noble-UK for the same periods. The operating income difference is primarily a result of executive costs
directly attributable to Noble-UK for operations support and stewardship related services. In addition, we had non-recurring costs of
$63 million and $18 million in 2014 and 2013, respectively, related to the Spin-off, which we recognized as part of discontinued
operations at the Noble-UK level.
32
Rig Utilization, Operating Days and Average Dayrates
Operating results from continuing operations 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 2014 and 2013:
Jackups
Semisubmersibles
Drillships
Other
Total
Average Rig
Utilization (1)
Operating
Days (2)
2014
91%
71%
100%
0%
86%
2013
2014
95% 3,682
86% 2,844
100% 2,756
0% —
85% 9,282
2013
2,987
3,448
1,715
—
8,150
% Change
23%
-18%
61%
—
2014
$ 177,345
409,848
482,426
—
14% $ 339,154
Average
Dayrates
2013
$ 145,257
385,118
403,947
—
$ 301,181
% Change
22%
6%
19%
—
13%
(1) We define utilization for a specific period as the total number of days our rigs are operating under contract, divided by the
product of the total number of our rigs, including cold stacked rigs, and the number of calendar days in such period. Information
reflects our policy of reporting on the basis of the number of available rigs in our fleet, excluding newbuild rigs under
construction.
Information reflects the number of days that our rigs were operating under contract.
(2)
Contract Drilling Services
The following table sets forth the operating results from continuing operations for our contract drilling services segment for
2014 and 2013 (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
Loss on impairment
Gain on disposal of assets, net
Gain on contract settlements/extinguishments,
net
Operating income
2014
2013
$
%
Change
$ 3,147,859
82,393
1
$ 2,454,745
65,308
11
$ 693,114
17,085
(10)
$ 3,230,253
$ 2,520,064
$ 710,189
28%
26%
-91%
28%
$ 1,500,512
65,080
608,590
106,278
745,428
—
$ 1,168,764
50,161
497,303
116,334
3,585
(35,646)
$ 331,748
14,919
111,287
(10,056)
741,843
35,646
28%
30%
22%
-9%
20693%
**
—
(30,618)
30,618
3,025,888
1,769,883
1,256,005
$ 204,365
$ 750,181
$ (545,816)
**
71%
-73%
(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 13 percent increase in average dayrates increased revenues by
approximately $352 million while the 14 percent increase in operating days increased revenues by an additional $341 million.
33
The increase in contract drilling services revenues relates to our drillships and jackups, which generated approximately $636
million and $219 million more revenue, respectively, in 2014. These amounts were offset by decreases in revenues for our
semisubmersibles, which declined $162 million from the prior year.
The increase in drillship revenues was driven by a 61 percent increase in operating days and a 19 percent increase in average
dayrates, resulting in a $420 million and a $216 million increase in revenues, respectively, from the prior year. The increase in both
average dayrates and operating days was primarily the result of the newbuilds Noble Don Taylor, Noble Globetrotter II, Noble Bob
Douglas, Noble Sam Croft and Noble Tom Madden, which commenced their contracts in August 2013, September 2013, December
2013, July 2014 and November 2014, respectively. Additionally, there were favorable dayrate changes on the contracts for the Noble
Bully II and the Noble Discoverer during the current year.
The 22 percent increase in jackup average dayrates resulted in a $118 million increase in revenues, which was coupled with a 23
percent increase in jackup operating days, resulting in a $101 million increase in revenues from the prior year. The increase in average
dayrates and operating days resulted from the contract commencements of the Noble Mick O’Brien, Noble Regina Allen, Noble
Houston Colbert and Noble Sam Turner in November 2013, January 2014, March 2014, and August 2014, respectively. Additionally,
a contract extension on the Noble Roger Lewis resulted in a favorable dayrate change during 2014. This was partially offset by
increased downtime on the Noble Scott Marks and the Noble David Tinsley. Furthermore, the Noble Lewis Dugger, which was sold in
July 2013, was utilized during a portion of the prior year.
The 6 percent increase in average dayrates on our semisubmersibles resulted in a $70 million increase in revenues from 2013.
The increase in average dayrates was due to favorable dayrate changes on new contracts across the semisubmersible fleet, as well as
the Noble Paul Romano returning to work during the current year. The 18 percent decline in operating days resulted in a $232 million
decrease in revenues driven by contract completions on the Noble Paul Wolff, Noble Homer Ferrington and Noble Max Smith.
Additionally, the Noble Amos Runner was in the shipyard undergoing regulatory inspections and maintenance during a portion of the
current year but operated during the prior year.
Operating Costs and Expenses. Contract drilling services operating costs and expenses increased $332 million for the current
year as compared to the prior year. A significant portion of the increase was due to the crew-up and operating expenses for our
newbuild rigs as they commenced, or prepared to commence, operating under contracts, which added approximately $322 million in
expense in the current year. The remaining change was primarily driven by a $20 million increase in mobilization expense due to
certain rig moves and the demobilization of certain rigs, partially offset by a $5 million decrease in operations support and rig-related
expenses and a $5 million decrease in rig and operations support labor.
Depreciation and amortization increased $111 million in 2014 over 2013, which is primarily attributable to newbuild rigs placed
in service since the beginning of 2013 as noted above.
Loss on impairment during the current year relates to a $685 million charge on our semisubmersibles, Noble Driller, Noble Jim
Thompson and Noble Paul Wolff, which we decided to no longer actively market as a result of current market conditions. Additionally,
we fully impaired the $60 million of goodwill on our books, which originated from the acquisition of FDR Holdings Limited
(“Frontier”) in 2010, as a result of a significant decline in the market value of our stock, coupled with a decrease in oil and gas prices,
significant reductions in the projected dayrates for new contracts and reduced utilization forecasts. Loss on impairment during the
prior year was related to our two cold stacked submersible rigs. These rigs were subsequently sold to an unrelated third party in
January 2014.
Gain on disposal of assets during the prior 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 prior year was attributable to the $45 million settlement of all claims
against the former shareholders of Frontier, which we acquired in July 2010, relating to alleged breaches of various representations
and warranties contained in the purchase agreement. A portion of the settlement, totaling approximately $14 million, was allocated to
discontinued operations as it related to certain standard specification rigs.
34
Other
The following table sets forth the operating results from continuing operations for our other services for 2014 and 2013 (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
Operating loss
2014
2013
$
%
Change
$ —
2,251
$ 17,095
984
$(17,095)
1,267
-100%
129%
$ 2,251
$ 18,079
$(15,828)
-88%
$ —
1,298
18,883
493
$ 11,601
249
14,210
1,663
$(11,601)
1,049
4,673
(1,170)
20,674
27,723
(7,049)
$(18,423)
$ (9,644)
$ (8,779)
-100%
421%
33%
-70%
-25%
-91%
(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.
Operating Revenues and Costs and Expenses. The change in both revenues and expenses relates to the cancellation of a project
with Shell for one of its rigs operating under a labor contract in Alaska during 2013.
Other Income and Expenses
General and administrative expenses. Overall, general and administrative expenses decreased $11 million in 2014 from 2013
primarily as a result of decreased legal and tax expenses related to ongoing projects.
Interest Expense, net of amount capitalized. Interest expense, net of amount capitalized, increased $49 million in 2014 from
2013. The increase is a result of lower capitalized interest in the current year as compared to the prior year due primarily to the
completion of construction on four of our newbuild drillships and four of our newbuild jackups, partially offset by the repayment of
our $300 million fixed rate senior note in June 2013 and our $250 million fixed rate senior note in March 2014 using availability
under our commercial paper program at lower interest rates. During the current year, we capitalized approximately 23 percent of total
interest charges versus approximately 52 percent during the prior year.
Income Tax Provision. Our income tax provision increased $15 million in the current year. Excluding the impact of the
impairment charges recognized in 2014 and 2013 and the sale of the Noble Lewis Dugger in 2013, taxes increased $58 million driven
by a higher worldwide effective tax rate and higher pre-tax income. A 34 percent increase in the worldwide effective tax rate during
the current year increased income tax expense by $36 million. The increase in the worldwide effective tax rate was a result of a change
in the geographic mix of pre-tax earnings and the effect of the new UK tax law, which became effective retroactively to April 1, 2014,
offset by favorable discrete items. Additionally, a 28 percent increase in pre-tax earnings generated a $22 million increase in income
tax expense.
Discontinued Operations. Net income from discontinued operations for the current year was $161 million as compared to $304
million for the prior year. Revenues reported within discontinued operations were $1.0 billion during the current year as compared to
$1.7 billion for the prior year. Operating income included within discontinued operations was $220 million during the current year and
$381 million for the prior year. The variance is attributable to seven months of operations in the current year versus a full year of
operations in 2013, coupled with a $45 million increase in non-recurring Spin-off costs during the current year.
35
2013 Compared to 2012
General
Net income from continuing operations attributable to Noble-UK for 2013 was $479 million, or $1.86 per diluted share, on
operating revenues of $2.5 billion, compared to net income from continuing operations for 2012 of $414 million, or $1.63 per diluted
share, on operating revenues of $2.2 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, would be the same as the information presented below regarding Noble-UK in all material respects, except operating
income for Noble-Cayman for the years ended December 31, 2013 and 2012 was $65 million and $51 million higher, respectively,
than operating income for Noble-UK for the same periods. The operating income difference is primarily a result of executive costs
directly attributable to Noble-UK for operations support and stewardship related services. In addition, we had non-recurring costs of
$18 million and $7 million in 2013 and 2012, respectively, related to the Spin-off, which we recognized as part of discontinued
operations at the Noble-UK level.
Rig Utilization, Operating Days and Average Dayrates
Operating results from continuing operations 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:
Average Rig
Utilization (1)
Operating
Days (2)
Average
Dayrates
2013
2012
2013
2012
% Change
2013
2012
% Change
Jackups
Semisubmersibles
Drillships
Other
95%
86%
100%
0%
93% 2,987
91% 3,448
100% 1,715
0% —
3,079
3,650
1,092
—
-3% $ 145,257
-6% 385,118
57% 403,947
—
—
$ 121,598
368,258
339,959
—
Total
85% 86% 8,150
7,821
4% $ 301,181
$ 267,181
19%
5%
19%
—
13%
(1) We define utilization for a specific period as the total number of days our rigs are operating under contract, divided by the
product of the total number of our rigs, including cold stacked rigs, and the number of calendar days in such period. Information
reflects our policy of reporting on the basis of the number of available rigs in our fleet, excluding newbuild rigs under
construction.
Information reflects the number of days that our rigs were operating under contract.
(2)
36
Contract Drilling Services
The following table sets forth the operating results from continuing operations 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
Loss on impairment
Gain on disposal of assets, net
Gain on contract settlements/extinguishments, net
Operating income
2013
2012
$
%
Change
$ 2,454,745
65,308
11
$ 2,089,621
65,347
12
$ 365,124
(39)
(1)
17%
0%
-8%
$ 2,520,064
$ 2,154,980
$ 365,084
17%
$ 1,168,764
50,161
497,303
116,334
3,585
(35,646)
(30,618)
$ 969,310
55,002
427,234
97,967
12,710
—
(33,255)
$ 199,454
(4,841)
70,069
18,367
(9,125)
(35,646)
2,637
21%
-9%
16%
19%
-72%
**
-8%
1,769,883
1,528,968
240,915
16%
$ 750,181
$ 626,012
$ 124,169
20%
(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 2013 as compared to 2012 were driven by increases in
both average dayrates and operating days. The 13 percent increase in average dayrates increased revenues by approximately $277
million while the 4 percent increase in operating days increased revenues by an additional $88 million.
The increase in contract drilling services revenues relates to our drillships and jackups, which generated approximately $321
million and $60 million more revenue, respectively, in 2013. These amounts were offset by decreases in revenues for our
semisubmersibles, which declined $16 million from 2012.
The increase in drillship revenues was driven by a 57 percent increase in operating days and a 19 percent increase in average
dayrates, resulting in a $212 million and a $109 million increase in revenues, respectively, from 2012. The increase in both average
dayrates and operating days was the result of the timing of contract commencements of our newbuilds during the period.
The 19 percent increase in jackup average dayrates resulted in a $71 million increase in revenues from 2012. The increase in
average dayrates resulted from favorable dayrate changes on new contracts across the jackup fleet and the contract commencement of
the Noble Mick O’Brien in November 2013. Additionally, revenue of $18 million was recognized in 2013 in connection with the
cancellation of a contract by our customer on the Noble Houston Colbert. The 3 percent decline in operating days resulted in an $11
million decrease in revenues driven by the Noble Lewis Dugger, which was sold in July 2013 but fully utilized during 2012.
The 5 percent increase in average dayrates on our semisubmersibles resulted in a $58 million increase in revenues from 2012.
The increase in average dayrates is due to favorable dayrate changes on new contracts across the semisubmersible fleet. The 6 percent
decline in operating days resulted in a $74 million decrease in revenues driven by the Noble Paul Romano, which was off contract
during 2013 but operated during a portion of 2012 and the Noble Homer Ferrington, which completed its contract during 2013 but
experienced full utilization during 2012. These decreases were partially offset by the Noble Max Smith, which experienced full
utilization during 2013 after being off contract during 2012.
Operating Costs and Expenses. Contract drilling services operating costs and expenses increased $199 million for 2013 as
compared to 2012. 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 2013. The remaining change was primarily driven
37
by a $43 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 2012 and a $33 million increase in shorebase support due to increased project-related
costs. These increases were partially offset by an $11 million decrease in maintenance and rig-related expense.
Depreciation and amortization increased $70 million in 2013 over 2012, which is primarily attributable to newbuild rigs placed
in service since the beginning of 2012.
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. During 2013, 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 2013 was attributable to the sale of the Noble Lewis Dugger to an unrelated third party in
Mexico.
Gain on contract settlements/extinguishments during 2013 was attributable to the $45 million settlement of all claims against the
former shareholders of Frontier, which we acquired in July 2010, relating to alleged breaches of various representations and warranties
contained in the purchase agreement. A portion of the settlement, totaling approximately $14 million, was allocated to discontinued
operations as it related to certain standard specification rigs. During 2012, 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.
Other
The following table sets forth the operating results from continuing operations for our other services for 2013 and 2012 (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
Loss on impairment
2013
2012
$
%
Change
$ 17,095
984
$ 45,299
420
$(28,204)
564
$ 18,079
$ 45,719
$(27,640)
$ 11,601
249
14,210
1,663
—
$ 22,976
422
13,072
2,023
7,674
$(11,375)
(173)
1,138
(360)
(7,674)
27,723
46,167
(18,444)
-62%
134%
-60%
-50%
-41%
9%
-18%
**
-40%
Operating loss
$ (9,644)
$
(448)
$ (9,196)
-2053%
(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 2013 cancellation of a project with 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.
38
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.
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 2013 as compared to 2012 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 2013, we capitalized approximately 52 percent of total interest
charges versus approximately 61 percent during 2012.
Income Tax Provision. Our income tax provision decreased $3 million in 2013 as compared to 2012. Excluding the impact of
the impairment charges recognized in 2013 and 2012 and the sale of the Noble Lewis Dugger in 2013, taxes decreased $19 million
driven by a lower effective tax rate, partially offset by higher pre-tax earnings. A 25 percent decrease in the worldwide effective tax
rate during 2013 decreased income tax expense by $26 million. The decrease in the effective tax rate was a result of a change in the
geographic mix of pre-tax earnings and the resolution of certain discrete tax items. Additionally, an 8 percent increase in pre-tax
earnings generated a $7 million increase in income tax expense.
Discontinued Operations. Net income from discontinued operations for 2013 was $304 million as compared to $108 million for
2012. Revenues reported within discontinued operations were $1.7 billion during 2013 as compared to $1.3 billion for 2012.
Operating income included within discontinued operations was $381 million during 2013 and $158 million for 2012. The variance is
attributable to an increase in average dayrates as a result of improved market conditions and increased operating days as rigs returned
to work, partially offset by an $11 million increase in non-recurring Spin-off costs during 2013.
LIQUIDITY AND CAPITAL RESOURCES
Overview
Cash flows from discontinued operations are combined with cash flows from continuing operations within each cash flow
statement category on our Consolidated Statements of Cash Flows included in this Annual Report on Form 10-K. Net cash from
operating activities in 2014 was $1.8 billion, which compared to $1.7 billion and $1.4 billion in 2013 and 2012, respectively. We had
working capital of $260 million and $339 million at December 31, 2014 and 2013, respectively. Our total debt as a percentage of total
debt plus equity increased to 40.1 percent at December 31, 2014, up from 38.0 percent at December 31, 2013 as a result of a decrease
in our total equity from the Spin-off and the impairment charge recognized in the current year.
Net cash used in investing activities in 2014 was $2.1 billion, which compared to $2.5 billion and $1.8 billion in 2013 and 2012,
respectively. The variance primarily relates to lower expenditures related to the completion of a majority of our newbuild projects,
coupled with seven months of expenditures for Paragon Offshore in 2014 as compared to a full year in 2013 and 2012.
Net cash from financing activities in 2014 was $285 million, which compared to $615 million and $452 million in 2013 and
2012, respectively. The variance from 2013 to 2014 primarily relates to an increase in our dividends paid to $1.50 per share in 2014 as
compared to $0.76 per share in 2013. In 2014, we repurchased approximately 6.8 million shares in accordance with our share
repurchase program. Additionally, 2014 includes the proceeds from the issuance of approximately $1.7 billion of long-term debt by
Paragon Offshore prior to the Spin-off, which we used to repay commercial paper issuances.
Our principal sources of capital in 2014 were the proceeds from the indebtedness incurred by Paragon Offshore, the cash
generated from operating activities noted above and borrowings under 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:
• normal recurring operating expenses;
• committed and discretionary capital expenditures;
• payments of dividends;
• repayment of maturing debt; and
• repurchase of shares.
39
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 or other payments as
necessary.
At December 31, 2014, we had a total contract drilling services backlog of approximately $10.1 billion. Our backlog as of
December 31, 2014 includes a commitment of 81 percent of available days for 2015. See “Contract Drilling Services Backlog” for
additional information regarding our backlog.
Capital Expenditures
We expect our primary use of available liquidity during 2015 to be for capital expenditures. Capital expenditures, including
capitalized interest, totaled $2.1 billion, $2.5 billion and $1.7 billion for 2014, 2013 and 2012, respectively.
At December 31, 2014, we had one rig under construction, and capital expenditures, excluding capitalized interest, for new
construction during 2014 totaled $1.4 billion, as follows (in millions):
Rig type/name
Currently under construction
Jackups
Noble Lloyd Noble (formerly CJ70-Mariner)
Recently completed construction projects
Noble Tom Madden
Noble Sam Croft
Noble Sam Hartley
Noble Tom Prosser
Noble Sam Turner
Noble Houston Colbert
Noble Globetrotter II
Noble Bob Douglas
Noble Don Taylor
Noble Regina Allen
Noble Mick O’Brien
Other
Total Newbuild Capital Expenditures
$
7.8
$ 378.2
355.7
158.0
149.1
143.5
134.7
10.9
10.2
3.2
1.6
0.5
0.2
$ 1,353.6
In addition to the newbuild expenditures noted above, capital expenditures during 2014, including expenditures related to
Paragon Offshore through the date of the Spin-off, consisted of the following:
• $522 million for Noble-related major projects, subsea related expenditures and upgrades and replacements to drilling
equipment;
• $150 million for Paragon-related major projects, subsea related expenditures and upgrades and replacements to drilling
equipment; and
• $47 million in capitalized interest.
Our total capital expenditure budget for 2015 is approximately $555 million, which is currently anticipated to be spent as
follows:
• $484 million for major projects, subsea related expenditures and upgrades and replacements to drilling equipment;
and
approximately $71 million in newbuild expenditures.
•
40
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 $729 million at December 31, 2014, of which we expect to spend
approximately $308 million in 2015.
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 $93 million (or $0.375 per share), was
declared on January 30, 2015 and paid on February 20, 2015 to holders of record on February 10, 2015.
The declaration and payment of dividends require authorization of the Board of Directors of Noble-UK and 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 future dividends will depend on our
results of operations, financial condition, cash requirements, future business prospects, contractual restrictions and other factors
deemed relevant by our Board of Directors.
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 by Noble-UK’s sole shareholder 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. During 2014, we
repurchased all shares covered by this authorization.
Share repurchases for each of the three years ended December 31 are as follows:
Year Ended
December 31,
2014
2013
2012
Total Number
of Shares
Purchased
6,769,891
190,187
302,150
Total Cost(1)
$ 154,145
7,653
10,516
Average
Price Paid
per Share(1)
$
22.77
40.24
34.80
(1) The total cost and average price paid per share includes the impact of commissions and stamp tax for share repurchases made in
the open market.
In December 2014, we received shareholder approval to repurchase up to 37,000,000 additional ordinary shares, or
approximately 15 percent of our outstanding ordinary shares at the time of the shareholder approval. Any repurchases are expected to
be funded using cash on hand, cash from operations or short-term borrowings under our credit facilities. The authority to make such
repurchases will expire on the later of April 2016 or the end of the Company’s 2016 annual general meeting of shareholders, at which
time we could seek shareholder approval for further repurchases.
In January 2015, we repurchased 6.2 million of our ordinary shares at an average price of $16.10 per share, excluding
commissions and stamp tax. Including these items, the average price paid per share during January 2015 was $16.21. There can be no
assurance as to the timing or amount of any such repurchases. However, we intend to take a cautious approach to future share
repurchases at least until market conditions in the offshore drilling business stabilize.
41
Credit Facilities and Senior Unsecured Notes
Credit Facilities and Commercial Paper Program
At December 31, 2014, we had three credit facilities with an aggregate maximum available capacity of $2.9 billion, and a
commercial paper program, which allowed us to issue up to $2.7 billion in unsecured commercial paper notes. Amounts issued under
the commercial paper program are supported by the unused capacity under our credit facilities and, therefore, are classified as long-
term on our Consolidated Balance Sheet. The outstanding amounts of commercial paper reduce availability under our credit facilities.
Our total debt related to the credit facilities and commercial paper program was $1.1 billion at December 31, 2014 as compared
to $1.6 billion at December 31, 2013. At December 31, 2014, we had no letters of credit issued under the credit facilities.
In January 2015, we replaced the credit facilities discussed above with two new credit facilities, a five year $2.4 billion senior
unsecured credit facility that matures in January 2020 and a $225 million 364-day senior unsecured credit facility that matures in
January 2016 (together, the “Credit Facilities”). The $2.4 billion facility provides us with the ability to issue up to $500 million in
letters of credit. The issuance of letters of credit under the facility reduces the amount available for borrowing. Following the
establishment of the new Credit Facilities, we reduced the size of our commercial paper program to $2.4 billion from $2.7 billion. We
believe this provides us with sufficient borrowing capacity for our current cash flow needs.
Senior Unsecured Notes
Our total debt related to senior unsecured notes was $3.7 billion at December 31, 2014 as compared to $4.0 billion at
December 31, 2013. The decrease in senior unsecured notes outstanding is a result of the maturity of our $250 million 7.375% Senior
Notes during March 2014, which was repaid using proceeds from issuances under our commercial paper program.
Our $350 million 3.45% Senior Notes mature during the third quarter of 2015. We anticipate using availability under our Credit
Facilities or commercial paper issuances to repay the outstanding balance; therefore, we continue to report the balance as long-term at
December 31, 2014.
Covenants
The Credit Facilities and commercial paper program are guaranteed by our indirect, wholly-owned subsidiaries, Noble Holding
International Limited (“NHIL”) and Noble Holding Corporation (“NHC”). 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, 2014, our ratio of debt to total tangible capitalization was approximately
0.40. We were in compliance with all covenants under the credit facilities as of December 31, 2014.
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, 2014, 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 2015.
Other
At December 31, 2014, we had letters of credit of $149 million, including bonds covering the temporary importation of
equipment, performance bonds and expatriate visa guarantees.
42
Summary of Contractual Cash Obligations and Commitments
The following table summarizes our contractual cash obligations and commitments at December 31, 2014 (in thousands):
Total
2015
2016
2017
2018
2019
Thereafter
Other
Payments Due by Period
Contractual Cash Obligations
Long-term debt obligations (1)
Interest payments
Operating leases
Pension plan contributions
Purchase commitments (2)
Tax reserves (3)
Total contractual cash
obligations
$4,869,020 $1,473,495 $ 299,982
161,252
2,557,636
17,682
73,575
8,380
128,229
421,777
729,453
—
115,787
178,401
22,509
9,659
307,676
—
$ 299,920
153,240
11,492
9,209
—
—
$ —
149,177
5,289
9,944
—
—
$ 201,695 $2,593,928 $ —
—
140,983 1,774,583
—
11,469
—
79,916
—
—
115,787
—
5,134
11,121
—
—
$8,473,700 $1,991,740 $ 909,073
$ 473,861
$ 164,410
$ 358,933 $4,459,896 $ 115,787
(1)
In 2015, our $350 million 3.45% Senior Notes and amounts outstanding under our credit facilities and commercial paper
program mature. We anticipate drawing on our Credit Facilities or issuances under our commercial paper program to repay
these outstanding balances; therefore, we have shown the entire $350 million Senior Notes balance and $1.1 billion balance on
our credit facilities and commercial paper program as long-term on our December 31, 2014 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 14 to our accompanying consolidated financial statements.
At December 31, 2014, we had other commitments that we are contractually obligated to fulfill with cash if the obligations are
called. These obligations include letters of credit that guarantee our performance as it relates to our drilling contracts, tax and other
obligations in various jurisdictions. These letters of credit obligations are not normally called, as we typically comply with the
underlying performance requirement.
The following table summarizes our other commercial commitments at December 31, 2014 (in thousands):
Contractual Cash Obligations
Letters of Credit
Total commercial commitments
Total
2015
2016
2017
2018
2019
Thereafter
Amount of Commitment Expiration Per Period
$ 148,870
$ 148,309
$ —
$ —
$ —
$ —
$ 148,870
$ 148,309
$ —
$ —
$ —
$ —
$
$
561
561
CRITICAL ACCOUNTING POLICIES AND ESTIMATES
Our consolidated financial statements are impacted by the accounting policies used and the estimates and assumptions made by
management during their preparation. Critical accounting policies and estimates that most significantly impact our consolidated
financial statements are described below.
Principles of Consolidation
The consolidated financial statements include our accounts, those of our wholly-owned subsidiaries and entities in which we
hold a controlling financial interest. 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, 2014 totaled $1.4 billion, which was
primarily funded through partner equity contributions. For 2014, operating revenues and net income related to these joint ventures
totaled $372 million and $157 million, respectively, as compared to operating revenues and net income of $355 million and $145
million in 2013.
43
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, 2014 and 2013, we had $970
million and $1.9 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 forty years.
Interest is capitalized on construction-in-progress using the weighted average cost of debt outstanding during the period of
construction. Capitalized interest for the years ended December 31, 2014, 2013 and 2012 was $47 million, $115 million and $136
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 $179 million and
$400 million at December 31, 2014 and 2013, respectively. Depreciation expense from continuing operations related to overhauls and
asset replacement totaled $77 million, $70 million and $53 million for the years ended December 31, 2014, 2013 and 2012,
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.
As a result of our annual impairment test conducted during the fourth quarter of 2014, we recognized a $685 million charge on
our semisubmersibles, Noble Driller, Noble Jim Thompson and Noble Paul Wolff, which we decided to no longer actively market as a
result of current market conditions. During 2012, we recognized a $13 million impairment charge on our submersible fleet, primarily
as a result of the declining market outlook for drilling services for that rig type. During 2013, 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. In 2012, we
also recognized an impairment charge of $8 million related to certain corporate assets as a result of a declining market for, and the
potential disposal of, the assets.
Goodwill
We conduct impairment testing for our goodwill annually during the fourth quarter, and on an interim basis when an event
occurs or circumstances change that indicate that the fair value of a reporting unit or the indefinite-lived intangible asset may have
declined below its carrying value.
We test goodwill at the reporting unit level, which is defined as an operating segment or one level below an operating segment
that constitutes a business for which financial information is available and is regularly reviewed by management. Our goodwill is
identified to one reporting unit Contract Drilling Services.
Before testing goodwill, we consider whether or not to first assess qualitative factors to determine whether the existence of
events or circumstances lead to a determination that it is more likely than not that the fair value of a reporting unit is less than its
carrying amount and whether the two-step impairment test is required.
If, as the result of our qualitative assessment, we determine that the two-step impairment test is required, or, alternatively, if we
elect to forgo the qualitative assessment, we test goodwill for impairment by comparing the carrying amount of the reporting unit, to
the fair value of the reporting unit utilizing both market and income evaluation methodologies. If this test suggests that the goodwill is
not supportable, we proceed to the second step which compares the implied goodwill at the date of the test, to the book value of
44
goodwill of the reporting unit. If the implied goodwill is lower than the book value of goodwill a write-down is taken to the implied
value.
As a result of our annual impairment test conducted during the fourth quarter of 2014, we determined that the goodwill
associated with the acquisition of Frontier in 2010 was impaired as a result of a significant decline in the market value of our stock,
coupled with a decrease in oil and gas prices, significant reductions in the projected dayrates for new contracts and reduced utilization
forecasts. For the year ended December 31, 2014, we fully impaired the $60 million of goodwill on our books.
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, 2014 and 2013, loss reserves for personal injury and protection claims
totaled $21 million and $29 million, respectively, and such amounts are included in “Other current liabilities” in the accompanying
Consolidated Balance Sheets.
Revenue Recognition
Our typical dayrate drilling contracts require our performance of a variety of services for a specified period of time. We
determine progress towards completion of the contract by measuring efforts expended and the cost of services required to perform
under a drilling contract, as the basis for our revenue recognition. Revenues generated from our dayrate-basis drilling contracts and
labor contracts are recognized on a per day basis as services are performed and begin upon the contract commencement, as defined
under the specified drilling or labor contract. Dayrate revenues are typically earned, and contract drilling expenses are typically
incurred ratably over the term of our drilling contracts. We review and monitor our performance under our drilling contracts to
confirm the basis for our revenue recognition. Revenues from bonuses are recognized when earned, and when collectability is
reasonably assured.
In our dayrate drilling contracts, we typically receive compensation and incur costs for mobilization, equipment modification or
other activities prior to the commencement of a contract. Any such compensation may be paid through a lump-sum payment or other
daily compensation. Pre-contract compensation and costs are deferred until the contract commences. The deferred pre-contract
compensation and costs are amortized into income, using the straight-line method, over the term of the initial contract period,
regardless of the activity taking place. This approach is consistent with the economics for which the parties have contracted. Once a
contract commences, we may conduct various activities, including drilling and well bore related activities, rig maintenance and
equipment installation, movement between well locations or other activities.
Deferred revenues from drilling contracts totaled $263 million and $303 million at December 31, 2014 and 2013, respectively.
Such amounts are included in either “Other current liabilities” or “Other liabilities” in the accompanying Consolidated Balance Sheets,
based upon our expected time of recognition. Related expenses deferred under drilling contracts totaled $94 million at December 31,
2014 as compared to $157 million at December 31, 2013, and are included in either “Other current assets” or “Other assets” in the
accompanying Consolidated Balance Sheets, based upon our expected time of recognition.
We record reimbursements from customers for “out-of-pocket” expenses as revenues and the related direct cost as operating
expenses.
Income Taxes
We 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. During 2013, the U.S. Internal Revenue Service (“IRS”) completed its
examination of our tax reporting for the taxable year ended December 31, 2008 and concluded that we were entitled to a refund. The
congressional Joint Committee on Taxation took no exception to the conclusions reached by the IRS, and the refund, plus interest, was
received in March 2014. The IRS also completed its examination of our tax reporting for the taxable year ended December 31, 2009,
and informed us that it made no changes to our reported tax. During the first quarter of 2014, the IRS began its examination of our tax
reporting for the taxable years ended December 31, 2010 and 2011. We believe that we have accurately reported all amounts in our
2010 and 2011 tax returns. We believe the ultimate resolution of the outstanding assessments will not have a material adverse effect
45
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.
Audit claims of approximately $66 million attributable to income, customs and other business taxes have been assessed against
us. We have received tax assessments of approximately $141 million related to Paragon Offshore’s assets that operated through
Noble-retained entities in Mexico, and Paragon Offshore has received tax assessments of approximately $165 million for Noble assets
that operated through a Paragon Offshore-retained entity in Brazil. Of these tax assessments in Mexico and Brazil, approximately $20
million and $46 million, respectively, relate to Noble’s share of the tax liability. Under the tax sharing agreement (“TSA”) entered into
at the time of the Spin-off, Paragon Offshore has an obligation to indemnify us for all assessed amounts that are related to Paragon
Offshore’s Mexico assets, approximately $121 million, and we have an obligation to indemnify Paragon Offshore for all assessed
amounts that are related to Noble’s Brazil assets, approximately $46 million, in each case, if and when such payments become due.
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.
On January 23, 2015, Noble received an official notification of a ruling from the Second Chamber of the Supreme Court in
Mexico. The ruling settled an ongoing dispute in Mexico relating to the classification of a Noble subsidiary’s business activity and the
applicable rate of depreciation under the Mexican law. The ruling did not result in any additional tax liability to Noble. Additionally,
the ruling does not constitute mandatory jurisprudence in Mexico, and thus is only applicable to the Noble subsidiary named in the
ruling. We will continue to contest future assessments received. Any claim by the tax authorities relating to this issue is subject to a
full indemnification from Paragon Offshore under the TSA.
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 tax assets. Any
change in the ability to utilize such deferred tax assets will be accounted for in the period of the event affecting the valuation
allowance. If facts and circumstances cause us to change our expectations regarding future tax consequences, the resulting adjustments
could have a material effect on our financial results or cash flow.
In certain circumstances, we expect that, due to changing demands of the offshore drilling markets and the ability to redeploy
our offshore drilling units, certain 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 (“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. 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 18—Commitments
and Contingencies.”
New Accounting Pronouncements
In April 2014, the FASB issued Accounting Standards Update (“ASU”) No. 2014-08, which amends FASB Accounting
Standards Codification (“ASC”) Topic 205, “Presentation of Financial Statements” and ASC Topic 360, “Property, Plant, and
Equipment.” This ASU alters the definition of a discontinued operation to cover only asset disposals that are a strategic shift with a
major effect on an entity’s operations and finances, and calls for more extensive disclosures about a discontinued operation’s assets,
liabilities, income and expenses. The guidance is effective for all disposals, or classifications as held-for-sale, of components of an
entity that occur within annual periods beginning on or after December 15, 2014. This standard was not early adopted in connection
46
with the Spin-off. 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 May 2014, the FASB issued ASU No. 2014-09, which amends ASC Topic 606, “Revenue from Contracts with Customers.”
The amendments in this ASU are intended to provide a more robust framework for addressing revenue issues, improve comparability
of revenue recognition practices and improve disclosure requirements. The amendments in this update are effective for interim and
annual reporting periods beginning after December 15, 2016. 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 June 2014, the FASB issued ASU No. 2014-12, which amends ASC Topic 718, “Compensation-Stock Compensation.” The
guidance requires that a performance target that affects vesting and that could be achieved after the requisite service period be treated
as a performance condition and should not be reflected in the estimate of the grant-date fair value of the award. The guidance is
effective for annual periods beginning after December 15, 2015. The guidance can be applied prospectively for all awards granted or
modified after the effective date or retrospectively to all awards with performance targets outstanding as of the beginning of the
earliest annual period presented in the financial statements and to all new or modified awards thereafter. 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 August 2014, the FASB issued ASU No. 2014-15, which amends ASC Subtopic 205-40, “Disclosure of Uncertainties about
an Entity’s Ability to continue as a Going Concern.” The amendments in this ASU provide guidance related to management’s
responsibility to evaluate whether there is substantial doubt about an entity’s ability to continue as a going concern and to provide
related footnote disclosures. The amendments are effective for the annual period ending after December 15, 2016, and for annual
periods and interim periods thereafter. 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 January 2015, the FASB issued ASU No. 2015-01, which amends ASC Subtopic 225-20, “Income Statement – Extraordinary
and Unusual Items.” The amendment in this ASU eliminates from GAAP the concept of extraordinary items. The amendments in this
update are effective for interim and annual reporting periods beginning after December 15, 2015. 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 February 2015, the FASB issued ASU No. 2015-02 which amends ASC Subtopic 810, “Consolidations.” This amendment
affects reporting entities that are required to evaluate whether they should consolidate certain legal entities. Specifically, the
amendments modify the evaluation of whether limited partnerships and similar legal entities are VIEs or voting interest entities;
eliminate the presumption that a general partner should consolidate a limited partnership; affect the consolidation analysis of reporting
entities that are involved with VIEs, particularly those that have fee arrangements and related party relationships. The standard is
effective for interim and annual reporting periods beginning after December 15, 2015. The standard may be applied retrospectively or
through a cumulative effect adjustment to retained earnings as of the beginning of the year of adoption. 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 agreements. At December 31, 2014, we had $1.1 billion in borrowings outstanding under our credit
facilities and 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 $11 million per year.
Access to our commercial paper program is dependent upon our credit ratings. A decline in our credit ratings below investment
grade would prohibit us from accessing the commercial paper market. If we were unable to access the commercial paper market, we
would likely transfer our outstanding borrowings to our revolving credit facilities. Our revolving credit facilities have interest rates
that are generally higher than those found in the commercial paper market, which would result in increased interest expense in the
future.
47
In addition, our revolving credit facilities have provisions which vary the applicable interest rates based upon the Company’s
credit ratings. If our credit ratings were to decline, the interest expense under our revolving credit facilities would increase.
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 $4.5 billion and $5.7 billion at December 31, 2014 and
December 31, 2013, respectively. The decrease in fair value was a result of a decrease in the value of our senior notes stemming from
market conditions, coupled with a decrease in the amount of debt outstanding under our credit facilities and commercial paper
program and the repayment of our $250 million fixed rate senior note.
Foreign Currency Risk
Although we are a U.K. 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, a portion of our
expenses are incurred in local currencies. Therefore, when the U.S. Dollar weakens (strengthens) in relation to the currencies of the
countries in which we operate, our expenses reported in U.S. Dollars will increase (decrease).
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.
Specifically, our North Sea and Brazilian operations have a significant amount of their cash operating expenses payable in local
currencies. To limit the potential risk of currency fluctuations, we periodically enter into forward contracts, which settle monthly in
the operations’ respective local currencies. All of these contracts have a maturity of less than 12 months. At December 31, 2014, 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 Employees’ Retirement Trust.
The benefits from these plans are based primarily on years of service and, for the salaried plan, employees’ compensation near
retirement. These plans are designed to qualify under the Employee Retirement Income Security Act of 1974 (“ERISA”), and our
funding policy is consistent with funding requirements of ERISA and other applicable laws and regulations. We make cash
contributions, or utilize credits available to us, for the qualified 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 specified 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 and Noble Resources Limited, both indirect,
wholly-owned subsidiaries of Noble-UK, maintains a pension plan that covers all of its salaried, non-union employees. Benefits are
based on credited service and employees’ compensation, as defined by the plans.
Changes in market asset values related to the pension plans noted above could have a material impact upon our Consolidated
Statement of Comprehensive Income (Loss) 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)
Noble Corporation plc (Noble-UK) and Subsidiaries Consolidated Balance Sheet as of December 31, 2014 and 2013
Noble Corporation plc (Noble-UK) and Subsidiaries Consolidated Statements of Income for the Years Ended December 31,
2014, 2013 and 2012
Noble Corporation plc (Noble-UK) and Subsidiaries Consolidated Statements of Comprehensive Income (Loss) for the Years
Ended December 31, 2014, 2013 and 2012
Noble Corporation plc (Noble-UK) and Subsidiaries Consolidated Statements of Cash Flows for the Years Ended
December 31, 2014, 2013 and 2012
Noble Corporation plc (Noble-UK) and Subsidiaries Consolidated Statements of Equity for the Years Ended December 31,
2014, 2013 and 2012
Report of Independent Registered Public Accounting Firm (Noble-Cayman)
Noble Corporation (Noble-Cayman) and Subsidiaries Consolidated Balance Sheet as of December 31, 2014 and 2013
Noble Corporation (Noble-Cayman) and Subsidiaries Consolidated Statements of Income for the Years Ended December 31,
2014, 2013 and 2012
Noble Corporation (Noble-Cayman) and Subsidiaries Consolidated Statements of Comprehensive Income for the Years
Ended December 31, 2014, 2013 and 2012
Noble Corporation (Noble-Cayman) and Subsidiaries Consolidated Statements of Cash Flows for the Years Ended
December 31, 2014, 2013 and 2012
Noble Corporation (Noble-Cayman) and Subsidiaries Consolidated Statements of Equity for the Years Ended December 31,
2014, 2013 and 2012
Notes to Consolidated Financial Statements
Page
50
51
52
53
54
55
56
57
58
59
60
61
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 (loss), equity, and cash flows present fairly, in all material respects, the financial position of Noble Corporation plc and its
subsidiaries at December 31, 2014 and 2013, and the results of their operations and their cash flows for each of the three years in the
period ended December 31, 2014 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,
2014, based on criteria established in Internal Control—Integrated Framework (2013) 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 27, 2015
50
NOBLE CORPORATION PLC AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
(In thousands)
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
Total assets
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
Commitments and contingencies
Equity
Shares; 247,501 and 253,448 shares outstanding
Additional paid-in capital
Retained earnings
Accumulated other comprehensive loss
Total shareholders’ equity
Noncontrolling interests
Total equity
Total liabilities and equity
December 31,
2014
December 31,
2013
$
68,510
569,096
107,490
183,466
$
114,458
949,069
140,269
187,139
928,562
1,390,935
14,442,922
(2,330,413)
19,198,767
(4,640,677)
12,112,509
14,558,090
245,751
268,932
$ 13,286,822
$ 16,217,957
$
265,389
102,520
94,230
—
206,535
$
347,214
151,161
125,119
128,249
300,172
668,674
1,051,915
4,869,020
120,589
341,505
5,556,251
225,455
334,308
5,999,788
7,167,929
2,475
695,638
5,936,035
(69,418)
2,534
810,286
7,591,927
(82,164)
6,564,730
8,322,583
722,304
727,445
7,287,034
9,050,028
$ 13,286,822
$ 16,217,957
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
Contract drilling services
Reimbursables
Labor contract drilling services
Other
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 from continuing operations before income taxes
Income tax provision
Net income (loss) from continuing operations
Net income from discontinued operations, net of tax
Net income
Net income attributable to noncontrolling interests
Year Ended December 31,
2014
2013
2012
$ 3,147,859
84,644
—
1
$ 2,454,745
66,292
17,095
11
$ 2,089,621
65,767
45,299
12
3,232,504
2,538,143
2,200,699
1,500,512
66,378
—
627,473
106,771
745,428
—
—
1,168,764
50,410
11,601
511,513
117,997
3,585
(35,646)
(30,618)
969,310
55,424
22,976
440,306
99,990
20,384
—
(33,255)
3,046,562
1,797,606
1,575,135
185,942
740,537
625,564
(155,179)
(1,298)
29,465
(106,651)
(77,186)
160,502
83,316
(74,825)
(106,300)
4,184
638,421
(92,117)
546,304
304,102
850,406
(67,709)
(85,763)
3,564
543,365
(95,183)
448,182
107,955
556,137
(33,793)
Net income attributable to Noble Corporation plc
$
8,491
$ 782,697
$ 522,344
Net income (loss) attributable to Noble Corporation plc
Income (loss) from continuing operations
Income from discontinued operations
Net income attributable to Noble Corporation plc
Per share data:
Basic:
Income (loss) from continuing operations
Income from discontinued operations
Net income attributable to Noble Corporation plc
Diluted:
Income (loss) from continuing operations
Income from discontinued operations
Net income attributable to Noble Corporation plc
Weighted- Average Shares Outstanding
$ (152,011)
160,502
$ 478,595
304,102
$ 414,389
107,955
$
8,491
$ 782,697
$ 522,344
$
$
$
$
(0.60)
0.63
0.03
(0.60)
0.63
0.03
$
$
$
$
1.86
1.19
3.05
1.86
1.19
3.05
$
$
$
$
1.63
0.42
2.05
1.63
0.42
2.05
Basic
Diluted
252,909
252,909
See accompanying notes to the consolidated financial statements.
253,288
253,547
252,435
252,791
52
NOBLE CORPORATION PLC AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
(In thousands)
Net income
Other comprehensive income (loss), net of tax
Foreign currency translation adjustments
Foreign currency forward contracts
Net pension plan gain (loss) (net of tax provision (benefit) of ($21,429) in 2014,
$14,155 in 2013 and ($3,777) in 2012 )
Amortization of deferred pension plan amounts (net of tax provision of $1,102
in 2014, $2,924 in 2013 and $2,841 in 2012)
Net pension plan curtailment and settlement expense (net of tax provision of
$9,902 in 2014)
Prior service cost arising during the period (net of tax benefit of $317 in 2014)
Other comprehensive income (loss), net
Total comprehensive income
Net comprehensive income attributable to noncontrolling interests
Comprehensive income (loss) attributable to Noble Corporation plc
Year Ended December 31,
2014
2013
2012
$ 83,316
$ 850,406
$ 556,137
(118)
—
(3,188)
—
(8,076)
3,061
(41,608)
29,861
(41,658)
2,764
6,612
5,545
18,389
(1,159)
—
—
—
—
(21,732)
33,285
(41,128)
61,584
(74,825)
883,691
(67,709)
515,009
(33,793)
$ (13,241)
$ 815,982
$ 481,216
See accompanying notes to the consolidated financial statements.
53
NOBLE CORPORATION PLC AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
Cash flows from operating activities
Net income
Adjustments to reconcile net income to net cash from operating activities:
Depreciation and amortization
Loss on impairment
Gain on disposal of assets, net
Deferred income taxes
Amortization of share-based compensation
Net change in other assets and liabilities
Year Ended December 31,
2014
2013
2012
$
83,316
$ 850,406
$ 556,137
863,547
745,428
—
(10,999)
46,389
50,527
879,422
43,688
(35,646)
(15,955)
43,620
(63,218)
758,621
20,384
—
(20,119)
35,930
30,740
Net cash from operating activities
1,778,208
1,702,317
1,381,693
Cash flows from investing activities
Capital expenditures
Change in accrued capital expenditures
Proceeds from disposal of assets
Net cash from investing activities
Cash flows from financing activities
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
Financing costs on credit facilities
Long-term borrowings of Paragon Offshore
Financing costs on long-term borrowings of Paragon Offshore
Cash balances of Paragon Offshore in Spin-off
Dividends paid to noncontrolling interests
Contributions from noncontrolling interests
Repurchases of shares
Repurchases of employee shares surrendered for taxes
Employee stock transactions
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
(2,072,885)
(36,383)
—
(2,487,520)
(58,587)
61,000
(1,669,811)
(121,077)
—
(2,109,268)
(2,485,107)
(1,790,888)
(437,647)
(250,000)
—
(398)
1,710,550
(14,676)
(104,152)
(79,966)
—
(154,145)
—
2,125
(386,579)
285,112
(45,948)
114,458
1,221,333
(300,000)
—
(2,484)
—
—
—
(105,388)
—
—
(7,653)
4,261
(194,913)
615,156
(167,634)
282,092
(635,192)
—
1,186,636
(5,221)
—
—
—
—
40,000
—
(10,516)
14,677
(138,293)
452,091
42,896
239,196
$
68,510
$ 114,458
$ 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 Noncontrolling Comprehensive
Shares
Interests
Loss
Total
Equity
Accumulated
Other
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 equity
transactions
—
—
35,930
437
646
1,307
1,836
(1,299 )
11,705
—
—
1,128
—
—
—
—
—
—
—
—
Restricted shares forfeited or
repurchased for taxes
Net income
Contributions from noncontrolling
interests
Par value reduction/dividend
payments
Dividends
Other comprehensive loss, net
(374)
—
(1,138 )
—
1,138
—
—
522,344
(10,516)
—
—
—
—
—
—
—
—
(58,470 )
—
—
(13,427 )
—
—
—
(132,765)
—
—
—
—
—
—
—
—
—
—
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 equity
transactions
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)
—
—
—
—
—
(7,653)
28,722
—
—
—
—
—
—
—
—
—
—
—
—
67,709
(105,388)
—
—
—
—
—
—
—
—
—
—
—
—
33,285
43,620
17
5,651
(1,407)
(7,653)
—
—
850,406
(105,388)
(256,793)
33,285
Balance at December 31, 2013
253,448 $
2,534
$ 810,286
$7,591,927 $ — $
727,445 $
(82,164)
$ 9,050,028
Employee related equity activity
Amortization of share-based
compensation
Issuance of share-based
compensation shares
Exercise of stock options
Tax benefit of equity
transactions
Repurchases of shares
Net income
Dividends paid to noncontrolling
interests
Dividends
Spin-off of Paragon Offshore
Other comprehensive loss, net
—
—
46,389
(9,076 )
2,644
(528 )
(154,077 )
—
692
131
—
(6,770)
—
—
—
—
—
6
3
—
(68 )
—
—
—
—
—
—
—
—
—
—
(258,330)
(1,406,053)
—
—
—
—
—
—
8,491
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
74,825
(79,966)
—
—
—
—
—
—
—
—
—
46,389
(9,070)
2,647
(528)
(154,145)
83,316
—
—
34,478
(21,732)
(79,966)
(258,330)
(1,371,575)
(21,732)
Balance at December 31, 2014
247,501 $
2,475
$ 695,638
$ 5,936,035
$ — $
722,304 $
(69,418)
$ 7,287,034
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, 2014 and 2013, and the results of their operations and their cash flows for each of the three years in the period ended
December 31, 2014 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, 2014, based on
criteria established in Internal Control—Integrated Framework (2013) 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 27, 2015
56
NOBLE CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
(In thousands)
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
Total assets
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
Commitments and contingencies
Equity
Ordinary shares; 261,246 shares outstanding
Capital in excess of par value
Retained earnings
Accumulated other comprehensive loss
Total shareholder equity
Noncontrolling interests
Total equity
Total liabilities and equity
December 31,
2014
December 31,
2013
$
65,780
569,096
107,289
139,669
$
110,382
949,069
140,029
184,348
881,834
1,383,828
14,404,371
(2,318,220)
19,160,350
(4,631,678)
12,086,151
14,528,672
222,254
269,014
$ 13,190,239
$ 16,181,514
$
261,012
91,487
91,471
201,914
645,884
$
345,910
143,346
120,588
300,172
910,016
4,869,020
120,589
335,964
5,556,251
225,455
334,308
5,971,457
7,026,030
26,125
530,657
6,009,114
(69,418)
26,125
497,316
7,986,762
(82,164)
6,496,478
8,428,039
722,304
727,445
7,218,782
9,155,484
$ 13,190,239
$ 16,181,514
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
Contract drilling services
Reimbursables
Labor contract drilling services
Other
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 from continuing operations before income taxes
Income tax provision
Net income (loss) from continuing operations
Net income from discontinued operations, net of tax
Net income
Net income attributable to noncontrolling interests
Year Ended December 31,
2014
2013
2012
$ 3,147,859
84,644
—
1
$ 2,454,745
66,292
17,095
11
$ 2,089,621
65,767
45,299
12
3,232,504
2,538,143
2,200,699
1,507,471
66,378
—
624,278
52,994
745,428
—
—
1,159,171
50,410
11,601
509,341
64,859
3,585
(35,646)
(30,618)
960,837
55,424
23,129
438,374
59,366
20,384
—
(33,255)
2,996,549
1,732,703
1,524,259
235,955
805,440
676,440
(155,179)
1,124
81,900
(105,930)
(24,030)
223,083
199,053
(74,825)
(106,300)
3,556
702,696
(88,977)
613,719
321,804
935,523
(67,709)
(85,763)
3,071
593,748
(94,183)
499,565
115,151
614,716
(33,793)
Net income attributable to Noble Corporation
$ 124,228
$ 867,814
$ 580,923
See accompanying notes to the consolidated financial statements.
58
NOBLE CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(In thousands)
Net income
Other comprehensive income (loss), net of tax
Foreign currency translation adjustments
Foreign currency forward contracts
Net pension plan gain (loss) (net of tax provision (benefit) of ($21,429) in
2014, $14,155 in 2013 and ($3,777) in 2012 )
Amortization of deferred pension plan amounts (net of tax provision of $1,102
in 2014, $2,924 in 2013 and $2,841 in 2012)
Net pension plan curtailment and settlement expense (net of tax provision of
$9,902 in 2014)
Prior service cost arising during the period (net of tax benefit of $317 in 2014)
Other comprehensive income (loss), net
Total comprehensive income
Net comprehensive income attributable to noncontrolling interests
Comprehensive income attributable to Noble Corporation
Year Ended December 31,
2014
2013
2012
$ 199,053
$ 935,523
$ 614,716
(118)
—
(3,188)
—
(8,076)
3,061
(41,608)
29,861
(41,658)
2,764
6,612
5,545
18,389
(1,159)
—
—
—
—
(21,732)
33,285
(41,128)
177,321
(74,825)
968,808
(67,709)
573,588
(33,793)
$ 102,496
$ 901,099
$ 539,795
See accompanying notes to the consolidated financial statements.
59
NOBLE CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
Cash flows from operating activities
Net income
Adjustments to reconcile net income to net cash from operating activities:
Depreciation and amortization
Loss on impairment
Gain on disposal of assets, net
Deferred income taxes
Capital contribution by parent—share-based compensation
Net change in other assets and liabilities
Year ended December 31,
2014
2013
2012
$ 199,053
$ 935,523
$ 614,716
860,353
745,428
—
(10,999)
33,341
44,740
877,250
43,688
(35,646)
(15,955)
26,862
(63,092)
756,689
20,384
—
(20,119)
19,838
29,119
Net cash from operating activities
1,871,916
1,768,630
1,420,627
Cash flows from investing activities
Capital expenditures
Change in accrued capital expenditures
Proceeds from disposal of assets
Net cash from investing activities
Cash flows from financing activities
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
Financing costs on credit facilities
Long-term borrowings of Paragon Offshore
Financing costs on long-term borrowing of Paragon Offshore
Cash balances of Paragon Offshore in Spin-off
Dividends paid to noncontrolling interests
Contributions from noncontrolling interests
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
(2,072,751)
(36,383)
—
(2,485,617)
(58,587)
61,000
(1,667,477)
(121,077)
—
(2,109,134)
(2,483,204)
(1,788,554)
(437,647)
(250,000)
—
(398)
1,710,550
(14,676)
(104,152)
(79,966)
—
(631,095)
192,616
(44,602)
110,382
1,221,333
(300,000)
—
(2,484)
—
—
—
(105,388)
—
(265,880)
547,581
(166,993)
277,375
(635,192)
—
1,186,636
(5,221)
—
—
—
—
40,000
(175,977)
410,246
42,319
235,056
$
65,780
$ 110,382
$ 277,375
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
—
$ 450,616
—
$ 6,979,882
(175,977)
$
691,331
—
$
(74,321)
—
$ 8,073,633
(175,977)
—
—
—
—
19,838
—
—
580,923
—
33,793
—
—
19,838
614,716
—
—
—
—
—
—
—
—
40,000
—
40,000
—
(41,128)
(41,128)
261,246
—
$ 26,125
—
$ 470,454
—
$ 7,384,828
(265,880)
$
765,124
—
$
(115,449)
—
$ 8,531,082
(265,880)
—
—
—
—
26,862
—
—
867,814
—
67,709
—
—
26,862
935,523
—
—
—
—
—
—
—
—
(105,388)
—
(105,388)
—
33,285
33,285
261,246
—
$ 26,125
—
$ 497,316
—
$ 7,986,762
(631,095)
$
727,445
—
$
(82,164)
—
$ 9,155,484
(631,095)
—
—
—
—
33,341
—
—
124,228
—
74,825
—
—
33,341
199,053
—
—
—
—
(79,966)
—
(79,966)
—
—
—
(1,470,781)
—
—
—
—
—
—
34,478
(1,436,303)
(21,732)
(21,732)
261,246
$ 26,125
$ 530,657
$ 6,009,114
$
722,304
$
(69,418)
$ 7,218,782
Balance at
December 31, 2011
Distributions to parent
Capital contributions
by parent-
Share-based
compensation
Net income
Contributions from
noncontrolling
interests
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
interests
Other comprehensive
income, net
Balance at
December 31, 2013
Distributions to parent
Capital contributions
by parent-
Share-based
compensation
Net income
Dividends paid to
noncontrolling
interests
Spin-off of Paragon
Offshore
Other comprehensive
loss, net
Balance at
December 31, 2014
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
Noble Corporation plc, a public limited company incorporated under the laws of England and Wales (“Noble-UK”), is a leading
offshore drilling contractor for the oil and gas industry. We perform contract drilling services with our fleet of mobile offshore drilling
units located worldwide. As of the filing date of this Annual Report on Form 10-K, our fleet consisted of 15 jackups, nine drillships
and eight semisubmersibles, including one high-specification, harsh environment jackup under construction. This excludes the
semisubmersibles, Noble Driller, Noble Jim Thompson and Noble Paul Wolff.
At December 31, 2014, our fleet was located in the United States, Brazil, Argentina, the North Sea, the Mediterranean, the
Middle East, Asia and Australia. Noble and its predecessors have been engaged in the contract drilling of oil and gas wells since 1921.
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.
Noble Corporation, a Cayman Islands company (“Noble-Cayman”), is an indirect, wholly-owned subsidiary of Noble-UK, our
publicly-traded parent company. Noble-UK’s principal asset is all of the shares of Noble-Cayman. Noble-Cayman has no public
equity outstanding. The consolidated financial statements of Noble-UK include the accounts of Noble-Cayman, and Noble-UK
conducts substantially all of its business through Noble-Cayman and its subsidiaries.
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,
2014.
Cash and Cash Equivalents
Cash and cash equivalents include cash on hand, demand deposits with banks and all highly liquid investments with original
maturities of three months or less. Our cash, cash equivalents and short-term investments are subject to potential credit risk, and
certain of our cash accounts carry balances greater than the federally insured limits. Cash and cash equivalents are primarily held by
major banks or investment firms. Our cash management and investment policies restrict investments to lower risk, highly liquid
securities and we perform periodic evaluations of the relative credit standing of the financial institutions with which we conduct
business.
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)
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 forty years. Included in accounts payable were $70 million and $88 million of capital accruals as of
December 31, 2014 and 2013, respectively.
Interest is capitalized on construction-in-progress using the weighted average cost of debt outstanding during the period of
construction.
Scheduled maintenance of equipment is performed based on the number of hours operated in accordance with our preventative
maintenance program. Routine repair and maintenance costs are charged to expense as incurred; however, the costs of the overhauls
and asset replacement projects that benefit future periods and which typically occur every three to five years are capitalized when
incurred and depreciated over an equivalent period. These overhauls and asset replacement projects are included in “Drilling
equipment and facilities” in Note 7. Such amounts, net of accumulated depreciation, totaled $179 million and $400 million at
December 31, 2014 and 2013, respectively. Depreciation expense from continuing operations related to overhauls and asset
replacement totaled $77 million, $70 million and $53 million for the years ended December 31, 2014, 2013 and 2012, 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. For additional information, see Note 11.
Goodwill
We conduct impairment testing for our goodwill annually during the fourth quarter, and on an interim basis when an event
occurs or circumstances change that indicate that the fair value of a reporting unit or the indefinite-lived intangible asset may have
declined below its carrying value.
We test goodwill at the reporting unit level, which is defined as an operating segment or one level below an operating segment
that constitutes a business for which financial information is available and is regularly reviewed by management. Our goodwill is
identified to one reporting unit Contract Drilling Services.
Before testing goodwill, we consider whether or not to first assess qualitative factors to determine whether the existence of
events or circumstances lead to a determination that it is more likely than not that the fair value of a reporting unit is less than its
carrying amount and whether the two-step impairment test is required.
If, as the result of our qualitative assessment, we determine that the two-step impairment test is required, or, alternatively, if we
elect to forgo the qualitative assessment, we test goodwill for impairment by comparing the carrying amount of the reporting unit, to
the fair value of the reporting unit utilizing both market and income evaluation methodologies. If this test suggests that the goodwill is
not supportable, we proceed to the second step which compares the implied goodwill at the date of the test, to the book value of
goodwill of the reporting unit. If the implied goodwill is lower than the book value of goodwill a write-down is taken to the implied
value. For additional information, see Note 11.
Deferred Costs
Deferred debt issuance costs are being amortized through interest expense over the life of the debt securities.
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)
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, 2014 and 2013, loss reserves for personal injury and protection claims
totaled $21 million and $29 million, respectively, and such amounts are included in “Other current liabilities” in the accompanying
Consolidated Balance Sheets.
Revenue Recognition
Our typical dayrate drilling contracts require our performance of a variety of services for a specified period of time. We
determine progress towards completion of the contract by measuring efforts expended and the cost of services required to perform
under a drilling contract, as the basis for our revenue recognition. Revenues generated from our dayrate-basis drilling contracts and
labor contracts are recognized on a per day basis as services are performed and begin upon the contract commencement, as defined
under the specified drilling or labor contract. Dayrate revenues are typically earned, and contract drilling expenses are typically
incurred ratably over the term of our drilling contracts. We review and monitor our performance under our drilling contracts to
confirm the basis for our revenue recognition. Revenues from bonuses are recognized when earned, and when collectability is
reasonably assured.
In our dayrate drilling contracts, we typically receive compensation and incur costs for mobilization, equipment modification or
other activities prior to the commencement of a contract. Any such compensation may be paid through a lump-sum payment or other
daily compensation. Pre-contract compensation and costs are deferred until the contract commences. The deferred pre-contract
compensation and costs are amortized, using the straight-line method, into income over the term of the initial contract period,
regardless of the activity taking place. This approach is consistent with the economics for which the parties have contracted. Once a
contract commences, we may conduct various activities, including drilling and well bore related activities, rig maintenance and
equipment installation, movement between well locations or other activities.
Deferred revenues from drilling contracts totaled $263 million and $303 million at December 31, 2014 and 2013, respectively.
Such amounts are included in either “Other current liabilities” or “Other liabilities” in the accompanying Consolidated Balance Sheets,
based upon our expected time of recognition. Related expenses deferred under drilling contracts totaled $94 million at December 31,
2014 as compared to $157 million at December 31, 2013, and are included in either “Other current assets” or “Other assets” in the
accompanying Consolidated Balance Sheets, based upon our expected time of recognition.
We record reimbursements from customers for “out-of-pocket” expenses as revenues and the related direct cost as operating
expenses.
Income Taxes
Income taxes are based on the laws and rates in effect in the countries in which operations are conducted or in which we or our
subsidiaries are considered resident for income tax purposes. In certain circumstances, we expect that, due to changing demands of the
offshore drilling markets and the ability to redeploy our offshore drilling units, certain of such units will not reside in a location long
enough to give rise to future tax consequences. As a result, no deferred tax asset or liability has been recognized in these
circumstances. Should our expectations change regarding the length of time an offshore drilling unit will be used in a given location,
we will adjust deferred taxes accordingly.
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.
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)
Earnings per Share
Our unvested share-based payment awards, which contain non-forfeitable rights to dividends, are participating securities and are
included in the computation of earnings per share pursuant to the “two-class” method. The “two-class” method allocates undistributed
earnings between common shares and participating securities. The diluted earnings per share calculation under the “two-class” method
also includes the dilutive effect of potential shares issued in connection with stock options. The dilutive effect of stock options is
determined using the treasury stock method.
Share-Based Compensation Plans
We record the grant date fair value of share-based compensation arrangements as compensation cost using a straight-line
method over the service period. Share-based compensation is expensed or capitalized based on the nature of the employee’s activities.
Certain Significant Estimates
The preparation of financial statements in conformity with accounting principles generally accepted in the United States of
America (“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 April 2014, the FASB issued Accounting Standards Update (“ASU”) No. 2014-08, which amends FASB Accounting
Standards Codification (“ASC”) Topic 205, “Presentation of Financial Statements” and ASC Topic 360, “Property, Plant, and
Equipment.” This ASU alters the definition of a discontinued operation to cover only asset disposals that are a strategic shift with a
major effect on an entity’s operations and finances, and calls for more extensive disclosures about a discontinued operation’s assets,
liabilities, income and expenses. The guidance is effective for all disposals, or classifications as held-for-sale, of components of an
entity that occur within annual periods beginning on or after December 15, 2014. This standard was not early adopted in connection
with the Spin-off. 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 May 2014, the FASB issued ASU No. 2014-09, which amends ASC Topic 606, “Revenue from Contracts with Customers.”
The amendments in this ASU are intended to provide a more robust framework for addressing revenue issues, improve comparability
of revenue recognition practices and improve disclosure requirements. The amendments in this update are effective for interim and
annual reporting periods beginning after December 15, 2016. 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 June 2014, the FASB issued ASU No. 2014-12, which amends ASC Topic 718, “Compensation-Stock Compensation.” The
guidance requires that a performance target that affects vesting and that could be achieved after the requisite service period be treated
as a performance condition and should not be reflected in the estimate of the grant-date fair value of the award. The guidance is
effective for annual periods beginning after December 15, 2015. The guidance can be applied prospectively for all awards granted or
modified after the effective date or retrospectively to all awards with performance targets outstanding as of the beginning of the
earliest annual period presented in the financial statements and to all new or modified awards thereafter. 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.
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 August 2014, the FASB issued ASU No. 2014-15, which amends ASC Subtopic 205-40, “Disclosure of Uncertainties about
an Entity’s Ability to continue as a Going Concern.” The amendments in this ASU provide guidance related to management’s
responsibility to evaluate whether there is substantial doubt about an entity’s ability to continue as a going concern and to provide
related footnote disclosures. The amendments are effective for the annual period ending after December 15, 2016, and for annual
periods and interim periods thereafter. 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 January 2015, the FASB issued ASU No. 2015-01, which amends ASC Subtopic 225-20, “Income Statement – Extraordinary
and Unusual Items.” The amendment in this ASU eliminates from GAAP the concept of extraordinary items. The amendments in this
update are effective for interim and annual reporting periods beginning after December 15, 2015. 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 February 2015, the FASB issued ASU No. 2015-02 which amends ASC Subtopic 810, “Consolidations.” This amendment
affects reporting entities that are required to evaluate whether they should consolidate certain legal entities. Specifically, the
amendments modify the evaluation of whether limited partnerships and similar legal entities are VIEs or voting interest entities;
eliminate the presumption that a general partner should consolidate a limited partnership; affect the consolidation analysis of reporting
entities that are involved with VIEs, particularly those that have fee arrangements and related party relationships. The standard is
effective for interim and annual reporting periods beginning after December 15, 2015. The standard may be applied retrospectively or
through a cumulative effect adjustment to retained earnings as of the beginning of the year of adoption. 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 – Spin-off of Paragon Offshore plc (“Paragon Offshore”)
On August 1, 2014, Noble-UK completed the separation and spin-off of a majority of its standard specification offshore drilling
business (the “Spin-off”) through a pro rata distribution of all of the ordinary shares of its wholly-owned subsidiary, Paragon
Offshore, to the holders of Noble’s ordinary shares. Our shareholders received one share of Paragon Offshore for every three shares of
Noble owned as of July 23, 2014, the record date for the distribution. Through the Spin-off, we disposed of most of our standard
specification drilling units and related assets, liabilities and business. Prior to the Spin-off, Paragon Offshore issued approximately
$1.7 billion of long-term debt. We used the proceeds from this debt to repay certain amounts outstanding under our commercial paper
program.
Prior to the completion of the Spin-off, Noble and Paragon Offshore entered into a series of agreements to effect the separation
and Spin-off and govern the relationship between the parties after the Spin-off.
Master Separation Agreement (“MSA”)
The general terms and conditions relating to the separation and Spin-off are set forth in the MSA. The MSA identifies the assets
transferred, liabilities assumed and contracts assigned either to Paragon Offshore by us or by Paragon Offshore to us in the separation
and describes when and how these transfers, assumptions and assignments would occur. The MSA provides for, among other things,
Paragon Offshore’s responsibility for liabilities relating to its business and the responsibility of Noble for liabilities related to our, and
in certain limited cases, Paragon Offshore’s business, in each case irrespective of when the liability arose. The MSA also contains
indemnification obligations and ongoing commitments by us and Paragon Offshore.
Employee Matters Agreement (“EMA”)
The EMA allocates liabilities and responsibilities between us and Paragon Offshore relating to employment, compensation and
benefits and other employment related matters.
Tax Sharing Agreement (“TSA”)
The TSA provides for the allocation of tax liabilities and benefits between us and Paragon Offshore and governs the parties’
assistance with tax-related claims.
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)
Transition Services Agreements
Under two transition services agreements, we agreed to continue, for a limited period of time, to provide various interim support
services to Paragon Offshore, and Paragon Offshore agreed to provide various interim support services to us, including providing
operational and administrative support for our remaining Brazilian operations.
Note 3 — Discontinued Operations
Paragon Offshore, which had been reflected as continuing operations in our consolidated financial statements prior to the Spin-
off, meets the criteria for being reported as discontinued operations and has been reclassified as such in our results of operations. The
results of discontinued operations for the three years ended December 31, 2014 include the historical results of Paragon Offshore
through the Spin-off date, including costs incurred by Noble to complete the Spin-off. Non-recurring Spin-off related costs totaled $63
million, $18 million and $7 million for the years ended December 31, 2014, 2013 and 2012, respectively.
Prior to the Spin-off, Paragon Offshore issued approximately $1.7 billion of debt consisting of:
•
•
$1.08 billion aggregate principal amount of senior notes in two separate tranches, comprising $500 million of
6.75% Senior Notes due 2022 and $580 million of 7.25% Senior Notes due 2024; and
$650 million of a senior secured term credit agreement, at an interest rate of LIBOR plus 2.75%, subject to a
LIBOR floor of 1%, which has an initial term of seven years.
We allocated interest expense on this debt, which is directly related to Paragon Offshore, to discontinued operations. For the
year ended December 31, 2014, we allocated approximately $4 million of interest expense related to such debt. No interest was
allocated to discontinued operations for the years ended December 31, 2013 and 2012.
The following table provides the results of operations from discontinued operations:
Operating revenues
Contract drilling services
Reimbursables
Labor contract drilling services
Other
Year Ended December 31,
2014
2013
2012
$ 993,253
21,899
19,304
2
$ 1,615,325
45,582
35,146
94
$ 1,259,741
49,728
36,591
253
Operating revenues from discontinued operations
$ 1,034,458
$ 1,696,147
$ 1,346,313
Income from discontinued operations
Income from discontinued operations before
income taxes
Income tax provision
Net income from discontinued operations, net of
tax
$ 216,391
(55,889)
$ 379,591
(75,489)
$ 159,860
(51,905)
$ 160,502
$ 304,102
$ 107,955
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)
The carrying value of the major categories of assets and liabilities of Paragon Offshore immediately preceding the Spin-off on
August 1, 2014, which are excluded from our Consolidated Balance Sheet at December 31, 2014, were as follows:
ASSETS
Current assets
Cash and cash equivalents
Accounts receivable
Prepaid expenses and other current assets
Total current assets of discontinued operations
Property and equipment, at cost
Accumulated depreciation
Property and equipment, net
Other assets
Total assets of discontinued operations
LIABILITIES
Current liabilities
Accounts payable
Accrued payroll and related costs
Other current liabilities
Total current liabilities of discontinued operations
Long-term debt
Other liabilities
Total liabilities of discontinued operations
$ 104,152
362,100
90,089
556,341
5,609,119
(2,640,943)
2,968,176
84,894
$ 3,609,411
$ 132,446
64,580
103,768
300,794
1,726,750
172,467
$ 2,200,011
Included in “Other assets” of Paragon Offshore at August 1, 2014 was approximately $15 million of goodwill from the
acquisition of FDR Holdings Limited (“Frontier”) that was allocated to Paragon Offshore. The above amounts do not include the
impact of the agreements entered into as a result of the Spin-off, which are discussed further in Note 2.
Note 4 – Consolidated Joint Ventures
We maintain a 50 percent interest in two joint ventures, each with a subsidiary of Royal Dutch Shell plc (“Shell”), that own and
operate the two Bully-class drillships. We have determined that we are the primary beneficiary of the joint ventures. Accordingly, we
consolidate the entities in our consolidated financial statements after eliminating intercompany transactions. Shell’s equity interests
are presented as noncontrolling interests on our Consolidated Balance Sheets.
During the years ended December 31, 2014 and 2013, the Bully joint ventures approved and paid dividends totaling $160
million and $211 million, respectively. Of these amounts approximately $80 million and $105 million, respectively, were paid to our
joint venture partner.
The combined carrying amount of the Bully-class drillships at both December 31, 2014 and 2013 totaled $1.4 billion. These
assets were primarily funded through partner equity contributions. Cash held by the Bully joint ventures totaled approximately $47
million at December 31, 2014 as compared to approximately $50 million at December 31, 2013. Operational results for the years
ended December 31, 2014 and 2013 are as follows:
Operating revenues
Net income
68
Year Ended
December 31,
2014
2013
$ 372,313
$ 157,171
$ 355,115
$ 145,447
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 5- Earnings per Share
The following table sets forth the computation of basic and diluted earnings per share for Noble-UK:
Year Ended December 31,
2014
2013
2012
Basic
Income (loss) from continuing operations
$ (152,011)
$ 478,595
$ 414,389
Earnings allocated to unvested share-based
payment awards
Income (loss) from continuing operations to
common shareholders
Income from discontinued operations
Earnings allocated to unvested share-based
—
(5,669)
(4,212)
(152,011)
160,502
472,926
304,102
410,177
107,955
payment awards
—
(3,602)
(1,097)
Income from discontinued operations, net of tax to
common shareholders
Net income attributable to Noble-UK
Earnings allocated to unvested share-based
payment awards
Net income to common shareholders—
basic
160,502
8,491
—
300,500
782,697
106,858
522,344
(9,271)
(5,309)
$
8,491
$ 773,426
$ 517,035
Diluted
Income (loss) from continuing operations
$ (152,011)
$ 478,595
$ 414,389
Earnings allocated to unvested share-based
payment awards
Income (loss) from continuing operations to
common shareholders
Income from discontinued operations
Earnings allocated to unvested share-based
—
(5,663)
(4,206)
(152,011)
160,502
472,932
304,102
410,183
107,955
payment awards
—
(3,598)
(1,096)
Income from discontinued operations, net of tax to
common shareholders
Net income attributable to Noble-UK
Earnings allocated to unvested share-based
payment awards
Net income to common shareholders—
diluted
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
awards
Earnings per share
Basic
Continuing operations
Discontinued operations
Net income attributable to Noble-UK
Diluted
Continuing operations
Discontinued operations
Net income attributable to Noble-UK
Dividends per share
69
160,502
8,491
—
$
8,491
252,909
—
252,909
300,504
782,697
106,859
522,344
(9,261)
(5,302)
$ 773,436
253,288
259
253,547
$ 517,042
252,435
356
252,791
—
3,036
2,592
$
$
$
$
$
(0.60)
0.63
0.03
(0.60)
0.63
0.03
1.50
$
$
$
$
$
1.86
1.19
3.05
1.86
1.19
3.05
0.76
$
$
$
$
$
1.63
0.42
2.05
1.63
0.42
2.05
0.54
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)
Only those items having a dilutive impact on our basic earnings per share are included in diluted earnings per share. The effect
of stock options and unvested share-based payment awards is not included in the computation for periods in which a net loss from
continuing operations occurs because to do so would be anti-dilutive. For the years ended December 31, 2014, 2013 and 2012,
approximately 2 million shares, 0.9 million shares and 1 million shares underlying stock options, respectively, were excluded from the
diluted earnings per share as such stock options were not dilutive. For the year ended December 31, 2014, we experienced a net loss
from continuing operations. As such, approximately 4 million unvested share-based payment awards were excluded from the diluted
earnings per share calculation at December 31, 2014 as such awards were not dilutive.
Note 6- Receivables from Customers
At December 31, 2014, we had receivables of approximately $14 million related to the Noble Max Smith, which are being
disputed by our former 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 7- Property and Equipment
Property and equipment, at cost, as of December 31, 2014 and 2013 for Noble-UK consisted of the following:
Drilling equipment and facilities
Construction in progress
Other
Property and equipment, at cost
2014
2013
$ 13,254,240
969,985
218,697
$ 17,130,986
1,854,434
213,347
$ 14,442,922
$ 19,198,767
Capital expenditures, including capitalized interest, totaled $2.1 billion, $2.5 billion and $1.7 billion for the years ended
December 31, 2014, 2013 and 2012, respectively. Capitalized interest was $47 million, $115 million and $136 million for the years
ended December 31, 2014, 2013 and 2012, respectively.
Capital expenditures related to Paragon Offshore for the years ended December 31, 2014, 2013 and 2012 totaled $150 million,
$359 million and $525 million, respectively. Additionally, a portion of our property and equipment at December 31, 2013 was related
to Paragon Offshore. Depreciation expense for Paragon Offshore that was classified as discontinued operations totaled $236 million,
$368 million and $318 million for the years ended December 31, 2014, 2013 and 2012, respectively.
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)
Note 8- Debt
Long-term debt consists of the following at December 31, 2014 and 2013:
December 31,
2014
December 31,
2013
Senior unsecured notes:
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
$
—
350,000
299,982
299,920
201,695
499,151
399,627
399,264
399,895
397,681
498,310
Total senior unsecured notes
Credit facilities & commercial paper program
3,745,525
1,123,495
$ 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
Total long-term debt
$ 4,869,020
$ 5,556,251
Credit Facilities and Commercial Paper Program
At December 31, 2014, we had three credit facilities with an aggregate maximum available capacity of $2.9 billion, and a
commercial paper program, which allowed us to issue up to $2.7 billion in unsecured commercial paper notes. Amounts issued under
the commercial paper program are supported by the unused capacity under our credit facilities and, therefore, are classified as long-
term on our Consolidated Balance Sheet. The outstanding amounts of commercial paper reduce availability under our credit facilities.
In January 2015, we replaced the credit facilities discussed above with two new credit facilities, a five year $2.4 billion senior
unsecured credit facility that matures in January 2020 and a $225 million 364-day senior unsecured credit facility that matures in
January 2016 (together, the “Credit Facilities”). The $2.4 billion facility provides us with the ability to issue up to $500 million in
letters of credit. The issuance of letters of credit under the facility reduces the amount available for borrowing. At December 31, 2014,
we had no letters of credit issued under the credit facilities. Following the establishment of the new Credit Facilities, we reduced the
size of our commercial paper program to $2.4 billion from $2.7 billion.
Senior Unsecured Notes
In March 2014, we repaid our $250 million 7.375% Senior Notes using issuances under our commercial paper program.
Our $350 million 3.45% Senior Notes mature during the third quarter of 2015. We anticipate using availability under our Credit
Facilities or commercial paper issuances to repay the outstanding balance; therefore, we continue to report the balance as long-term at
December 31, 2014.
Covenants
The Credit Facilities are guaranteed by our indirect, wholly-owned subsidiaries, Noble Holding International Limited (“NHIL”)
and Noble Holding Corporation (“NHC”). 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, 2014, our ratio of debt to total tangible capitalization was approximately 0.40. We were in compliance with all
covenants under the credit facilities as of December 31, 2014.
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)
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, 2014, we
were in compliance with all of our debt covenants.
Other
Interest payable related to our long-term debt was $62 million and $67 million at December 31, 2014 and 2013, respectively.
Such amounts are included in “Other current liabilities” in the accompanying Consolidated Balance Sheets.
At December 31, 2014, we had letters of credit of $149 million, including bonds covering the temporary importation of
equipment, performance bonds and expatriate visa guarantees.
Aggregate principal repayments of total debt for the next five years and thereafter are as follows:
2015(1)(2)
$1,473,495
2016
2017
$ 299,982
$ 299,920
2018
$ —
2019
Thereafter
Total
$ 201,695
$2,593,928
$4,869,020
(1)
In August 2015, our $350 million 3.45% Senior Notes mature. We anticipate using availability on our Credit Facilities or
commercial paper issuances to repay the outstanding balance; therefore, we have shown the entire balance as long-term on our
Consolidated Balance Sheet at December 31, 2014.
(2) Amounts outstanding under our credit facilities and commercial paper program mature during 2015. 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, 2014.
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). All remaining fair value disclosures are presented in Note 15 and
Note 17.
The following table presents the estimated fair value of our long-term debt as of December 31, 2014 and 2013:
Senior unsecured notes:
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
Credit facilities and commercial paper program
Total long-term debt
December 31, 2014
December 31, 2013
Carrying
Value
Estimated
Fair Value
Carrying
Value
Estimated
Fair Value
$
—
354,992
302,515
287,014
212,068
471,095
363,837
346,425
350,351
343,653
385,181
3,417,131
1,123,495
$ 4,540,626
$ 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
$
—
350,000
299,982
299,920
201,695
499,151
399,627
399,264
399,895
397,681
498,310
3,745,525
1,123,495
$ 4,869,020
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)
Note 9- Equity
Share Capital
As of December 31, 2014, Noble-UK had approximately 247.5 million shares outstanding and trading as compared to
approximately 253.4 million shares outstanding and trading at December 31, 2013. Repurchased shares are recorded at cost, and
include shares repurchased pursuant to our approved share repurchase program discussed below. Our Board of Directors may increase
our share capital through the issuance of up to 53 million authorized shares (at current nominal value of $0.01 per share) without
obtaining shareholder approval.
Our most recent quarterly dividend payment to shareholders, totaling approximately $93 million (or $0.375 per share), was
declared on January 30, 2015 and paid on February 20, 2015 to holders of record on February 10, 2015.
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.
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 by Noble-UK’s sole shareholder 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. During 2014, we
repurchased all shares covered by this authorization.
Share repurchases for each of the three years ended December 31 are as follows:
Year Ended
December 31,
2014
2013
2012
Total Number
of Shares
Purchased
6,769,891
190,187
302,150
Total Cost(1)
$ 154,145
7,653
10,516
Average
Price Paid
per Share(1)
$
22.77
40.24
34.80
(1) The total cost and average price paid per share includes the impact of commissions and stamp tax for share repurchases made in
the open market.
In December 2014, we received shareholder approval to repurchase up to 37,000,000 additional ordinary shares, or
approximately 15 percent of our outstanding ordinary shares at the time of the shareholder approval. Any repurchases are expected to
be funded using cash on hand, cash from operations or short-term borrowings under our credit facilities. The authority to make such
repurchases will expire on the later of April 2016 or the end of the Company’s 2016 annual general meeting of shareholders, at which
time we could seek shareholder approval for further repurchases.
Share-Based Compensation Plans
Stock Plans
The Noble Corporation 1991 Stock Option and Restricted Stock Plan, as amended (the “1991 Plan”), provides for the granting
of options to purchase our shares, with or without stock appreciation rights, and the awarding of restricted shares or units to selected
employees. In connection with the Spin-off, the total number of shares subject to issue under existing awards under the 1991 Plan was
increased from 50.1 million to 60.3 million. As of December 31, 2014, we had 6.5 million shares remaining available for grants to
employees under the 1991 Plan.
Prior to October 25, 2007, the Noble Corporation 1992 Nonqualified Stock Option and Share Plan for Non-Employee Directors
(the “1992 Plan”) provided for the granting of nonqualified stock options to our non-employee directors. On October 25, 2007, the
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)
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. In connection with the Spin-off, the total number of shares subject to issue under existing awards under the
1992 Plan was increased from 2.0 million to 2.3 million. As of December 31, 2014, we had 0.6 million shares remaining available for
award to non-employee directors under the 1992 Plan.
Stock Options
Pursuant to the EMA (see Note 2), we modified the outstanding stock options for our employees in connection with the Spin-
off. As the awards contained an antidilution provision, we made certain adjustments to the exercise price and number of our stock
options to preserve the economic value of the grants immediately prior to the Spin-off. Each outstanding stock option of Noble,
whether or not exercisable, that was held by a current or former Noble employee was adjusted such that the holder received an
additional number of stock options of Noble based on a price ratio. The exercise price was adjusted by a factor equal to exercise price
of the option prior to the Spin-off divided by the price ratio. The price ratio was calculated by dividing the average closing price of our
stock during the 10 trading-day period prior to the Spin-off by the average closing price of our stock during the 10 trading-day period
subsequent to the Spin-off. Each outstanding stock option of Noble, whether or not exercisable, that was held by an employee
transferring to Paragon Offshore was vested at the Spin-off date and the exercise price and number of awards were adjusted in the
same manner as explained above for Noble employees. At the Spin-off, we recognized the remaining expense for the accelerated
vesting of stock options held by Paragon Offshore employees.
As a result of the Spin-off, an additional 339,223 stock options were issued to preserve the economic value of the grants
immediately prior to the Spin-off, as discussed above. As no incremental fair value was awarded as a result of the issuance of these
additional awards, the modification did not result in additional compensation expense.
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, 2014, 2013 and 2012 and the changes during the year ended on those dates is presented below:
Outstanding at beginning of year
Granted
Exercised (1)
Forfeited
Spin-off adjustment
Outstanding at end of year (2)
Exercisable at end of year (2)
2014
2013
2012
Number of
Shares
Underlying
Options
1,808,987
—
(131,706)
(57,871)
339,223
Weighted
Average
Exercise
Price
$ 33.13
—
20.08
30.18
N/A
Number of
Shares
Underlying
Options
2,027,089
—
(212,017)
(6,085)
—
Weighted
Average
Exercise
Price
$ 32.44
—
26.66
31.35
—
Number of
Shares
Underlying
Options
2,498,662
358,772
(645,731)
(184,614)
—
Weighted
Average
Exercise
Price
$ 29.22
36.04
20.97
35.92
—
1,958,633
28.43
1,808,987
33.13
2,027,089
32.44
1,846,465
$ 28.35
1,510,929
$ 32.47
1,453,945
$ 30.70
(1) The intrinsic value of options exercised during the year ended December 31, 2014 was $3 million.
(2) The aggregate intrinsic value of options outstanding and exercisable at December 31, 2014 was $0.
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)
The following table summarizes additional information about stock options outstanding at December 31, 2014:
$20.49 to $21.99
$22.00 to $29.74
$29.75 to $35.73
Total
Options Outstanding
Options Exercisable
Number of
Shares
Underlying
Options
513,103
312,531
1,132,999
1,958,633
Weighted
Average
Remaining
Life (Years)
2.25
2.71
5.37
4.13
Weighted
Average
Exercise
Price
$ 21.24
27.13
32.04
Number
Exercisable
513,103
294,553
1,038,809
Weighted
Average
Exercise
Price
$ 21.24
27.24
32.17
$ 28.43
1,846,465
$ 28.35
No stock options were granted during the years ended December 31, 2014 and 2013, respectively. Fair value information and
related valuation assumptions for stock options granted during the year ended December 31, 2012 is 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%
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, 2014, and changes during the year ended
December 31, 2014, is presented below:
Non-Vested Options at January 1, 2014
Vested
Spin-off adjustment
Non-Vested Options at December 31, 2014
Shares
Under Outstanding
Options
Weighted-Average
Grant-Date
Fair Value
298,058
(204,877)
18,987
112,168
$
$
13.13
13.16
N/A
13.05
At December 31, 2014, there was $0.1 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 0.08 years. Compensation cost recognized during the years ended December 31, 2014,
2013 and 2012 related to stock options totaled $2 million, $3 million and $4 million, respectively. We issue new shares to meet the
share requirements upon exercise of stock options.
Restricted Stock Units (“RSU’s)
Pursuant to the EMA (see Note 2), we modified the outstanding RSU awards, both time-vested restricted stock units
(“TVRSUs”) and market-based performance-vested restricted stock units (“PVRSUs”), for our employees in connection with the
Spin-off. As the awards contained an antidilution provision, we made certain adjustments to the number of our share-based
compensation awards to preserve the economic value of the grants immediately prior to the Spin-off. Each outstanding and unvested
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)
RSU of Noble that was held by a current or former Noble employee was adjusted such that the holder received an additional number
of RSUs of Noble based on a price ratio, which was calculated as noted above in “Stock Options”. Each outstanding and unvested
TVRSU of Noble that was held by an employee transferring to Paragon Offshore was cancelled and an equivalent award was granted
by Paragon Offshore. Each outstanding and unvested PVRSU of Noble that was held by an employee transferring to Paragon Offshore
was continued pro-rata at the time of Spin-off, subject to the achievement of the performance condition at the end of the performance
period. The remaining unvested PVRSUs were cancelled and an equivalent award was granted by Paragon Offshore, except for the
2012 PVRSU grants. For the 2012 PVRSU grants, a bonus will be paid by Paragon Offshore for the cancelled portion of the award
should the performance factor be achieved.
As a result of the Spin-off, an additional 326,853 TVRSUs and 329,937 PVRSUs were issued to preserve the economic value of
the grants immediately prior to the Spin-off, as discussed above. As no incremental fair value was awarded as a result of the issuance
of these additional awards, the modification did not result in additional compensation expense.
We have awarded both TVRSU’s and 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
2014
2013
2012
33.0%
4.7%
0.7%
34.8%
1.3%
0.4%
41.4%
1.5%
0.3%
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.
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
2014
2013
2012
1,617,534
31.56
$
3.0
740,364
31.66
$
2016
19.66
$
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
In October 2014, our Board of Directors approved a modification of certain PVRSU awards. The modification related to the
composition of our peer groups for a portion of the 2013 and 2014 grants currently in place. The value of the modification was
determined by taking the fair value of the modified award as compared to the fair value of the previous award immediately prior to
modification, using a Monte Carlo Simulation Model to value both grants. In connection with this modification, we expect to incur
approximately $0.5 million of related compensation cost over the life of the grant.
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)
We award shares under the 1992 Plan. During the years ended December 31, 2014, 2013 and 2012, we awarded 50,796, 57,095
and 65,329 shares to non-employee directors, resulting in related compensation cost of $2 million in each of the three years.
A summary of the status of non-vested RSU’s at December 31, 2014 and changes during the year ended December 31, 2014 is
presented below:
Non-vested RSU’s at January 1, 2014
Awarded
Vested
Forfeited
Surrendered in connection with Spin-off
Spin-off adjustment
TVRSU’s
Outstanding
1,652,360
1,617,534
(749,935)
(149,006)
(816,627)
326,853
Non-vested RSU’s at December 31, 2014
1,881,179
$
Weighted
Average
Award-Date
Fair Value
$
39.40
31.56
38.76
35.50
34.22
N/A
34.66
PVRSU’s
Outstanding (1)
1,397,137
740,364
(180,975)
(253,882)
(89,612)
329,937
Weighted
Average
Award-Date
Fair Value
$
21.06
19.66
16.77
17.66
20.95
N/A
1,942,969
$
21.44
(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 50 percent of the amounts shown.
At December 31, 2014 there was $31 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, 2014 was $29 million.
At December 31, 2014, there was $13 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, 2014, 218,195 PVRSU’s for the 2011-2013 performance period were forfeited. In January 2015, 517,223 PVRSU’s for
the 2012-2014 performance period were forfeited.
Share-based amortization recognized during the years ended December 31, 2014, 2013 and 2012 related to all restricted stock
totaled $46 million ($37 million net of income tax), $44 million ($36 million net of income tax) and $36 million ($31 million net of
income tax), respectively. Included in share-based amortization for the years ended December 31, 2014, 2013 and 2012 was
approximately $7 million, $10 million and $8 million, respectively, related to Paragon Offshore that was classified as discontinued
operations. Capitalized share-based amortization totaled approximately $1 million per year in 2014, 2013 and 2012, respectively.
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)
Note 10- Accumulated Other Comprehensive Loss
The following tables set forth the components of “Accumulated other comprehensive loss” (“AOCL”) for the years ended
December 31, 2014 and 2013 and changes in AOCL by component for the year ended December 31, 2014. All amounts within the
tables are shown net of tax.
Balance at December 31, 2012
Activity during period:
Other comprehensive income (loss) before
reclassifications
Amounts reclassified from AOCL
Net other comprehensive income (loss)
Gains /
(Losses) on
Cash Flow
Hedges(1)
Defined
Benefit
Pension
Items(2)
Foreign
Currency
Items
Total
$
—
$ (95,071)
$ (20,378)
$ (115,449)
(1,200)
1,200
29,861
6,612
(3,188)
—
—
36,473
(3,188)
25,473
7,812
33,285
Balance at December 31, 2013
$ —
$ (58,598)
$ (23,566)
$ (82,164)
Activity during period:
Other comprehensive income (loss) before
reclassifications
Amounts reclassified from AOCL
Net other comprehensive income (loss)
Spin-off of Paragon Offshore(3)
(4,286)
4,286
—
—
(30,952)
9,338
(21,614)
21,772
(118)
—
(118)
12,706
(35,356)
13,624
(21,732)
34,478
Balance at December 31, 2014
$ —
$ (58,440)
$ (10,978)
$ (69,418)
(1) Gains on cash flow hedges are related to our foreign currency forward contracts. Reclassifications from AOCL are recognized
through “contract drilling services” expense on our Consolidated Statements of Income. See Note 16 for additional information.
(2) Defined benefit pension items relate to actuarial changes, the amortization of prior service costs and curtailment and settlement
expenses. Reclassifications from AOCL are recognized as expense on our Consolidated Statements of Income through either
“contract drilling services” or “general and administrative”. See Note 15 for additional information.
(3) Reclassifications for the Spin-off of Paragon Offshore represent accumulated balances in AOCL that were transferred as part of
the Spin-off.
Note 11- Loss on Impairment
Asset impairments
In connection with the preparation of the consolidated financial statements included in this Annual Report, consistent with our
accounting policies discussed in Note 1, we evaluate our drilling fleet assets for impairment on an annual basis or whenever there are
changes in facts which suggest that the value of the asset is not recoverable.
During the fourth quarter of 2014, in connection with our annual impairment analysis, we reviewed assumptions on the future
marketability of the Noble Driller, the Noble Jim Thompson and the Noble Paul Wolff (together the “impaired rigs”) with
consideration given to their years in service, limited technical features and anticipated capital requirements in light of the current
market conditions and decided to discontinue marketing these units. We evaluated these units for impairment and recorded an
impairment of approximately $685 million on these rigs for the year ended December 31, 2014. The total remaining book value at of
$47 million at December 31, 2014 represented the equipment present on the rigs, which will be redeployed within our fleet. The
remaining book value is a level 3 fair value measurement under accounting literature as it contains significant estimation and non-
observable inputs.
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)
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 then 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 2013, 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.
Also in 2012, 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 $8 million for the year ended December 31, 2012.
Goodwill
In connection with our acquisition of Frontier in 2010, we recognized goodwill in our Contract Drilling Services reporting unit.
In connection with the preparation of the consolidated financial statements included in this Annual Report, as discussed in Note 1, we
conduct goodwill impairment testing annually in the fourth quarter of each year and when events occur that would potentially reduce
the fair value of our reporting unit below its carrying amount.
As part of our annual test completed during the fourth quarter, we noted a significant decline in the market value of our stock,
coupled with a decrease in oil and gas prices, significant reductions in the projected dayrates for new contracts and reduced utilization
forecasts. These factors drove our fair value of the reporting unit below the book value, and we concluded that the goodwill in the
Contract Drilling Services reporting unit was impaired. We deemed this to be a level 3 fair value measurement under accounting
literature as it contains significant estimation and non-observable inputs. During the fourth quarter, we fully impaired the $60 million
of goodwill on our books.
Note 12- 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 13- Gain on Contract Settlements/Extinguishments, Net
In 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. A portion of the settlement, totaling approximately $14 million, was allocated to discontinued operations as it related to
certain standard specification rigs.
In 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 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.
Note 14- 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.
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)
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.
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
$ 23,497
14,250
11,267
$
8,859
31,769
14,542
2014
2013
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
6,907
3,096
—
59,017
(6,907)
33,021
2,130
300
90,621
(16,847)
$ 52,110
$ 73,774
Excess of net book basis over remaining tax basis
Other
$ (166,959)
(4,969)
$ (275,073)
(6,002)
Non-U.S.
Excess of net book basis over remaining tax basis
Other
(200)
(397)
(1,034)
(2,452)
Deferred tax liabilities
Net deferred tax liabilities
$ (172,525)
$ (284,561)
$ (120,415)
$ (210,787)
Income (loss) from continuing operations before income taxes consists of the following:
United States
Non-U.S.
Total
Year Ended December 31,
2014
$ 38,206
(8,741)
$ 29,465
2013
2012
$ 178,090
460,331
$ 638,421
$ 135,618
407,747
$ 543,365
The income tax provision for continuing operations consists of the following:
Current- United States
Current- Non-U.S.
Deferred- United States
Deferred- Non-U.S.
Total
Year Ended December 31,
2014
2013
2012
$ 50,829
74,288
(18,655)
189
$ 83,302
23,836
(14,032)
(989)
$ 65,244
45,593
(16,256)
602
$ 106,651
$ 92,117
$ 95,183
80
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
Reduction due to Spin-off
Tax settlements
Gross balance at December 31,
Related tax benefits
Net reserve at December 31,
2014
2013
2012
$ 115,969
$ 115,009
$ 108,036
16,880
12,928
(8)
(2,852)
(26,870)
(7,235)
108,812
(1,064)
$ 107,748
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
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”
Reserve for uncertain tax positions, including interest and penalties
2014
2013
$ 107,748
8,039
$ 113,931
13,190
$ 115,787
$ 127,121
If these reserves of $116 million are not realized, the provision for income taxes will be reduced by $116 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 $1 million in 2014, an income
tax benefit of $7 million in 2013 and an income tax expense of $5 million in 2012.
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 2010 and non-U.S. income tax examinations for years before
2000.
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)
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 21.5 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 for continuing operations is shown below:
Effect of:
Tax rates which are different than the UK and Cayman Island
rates
Tax impact of asset impairment
Resolution of tax authority audits
Total
Year Ended
December 31,
2014
2013
2012
19.3%
344.0%
-1.3%
362.0%
15.5%
0.0%
-1.1%
14.4%
18.6%
0.0%
-1.1%
17.5%
We generated and fully utilized U.S. foreign tax credits of $17 million, $15 million and $22 million in 2014, 2013 and 2012,
respectively.
For the year ended December 31, 2013, deferred income taxes were not provided on approximately $80 million of undistributed
earnings of our subsidiaries. We considered such earnings to be permanently reinvested. If such earnings would have been distributed,
we may have been subject to additional income taxes of approximately $20 to $25 million. All aforementioned earnings were held by
subsidiaries which, as a result of the Spin-off, are now subsidiaries of Paragon Offshore. Therefore, at December 31, 2014, we have no
undistributed earnings of our subsidiaries for which deferred income taxes have not been provided.
Note 15- Employee Benefit Plans
Defined Benefit Plans
Prior to the Spin-off, each of Noble Drilling (Land Support) Limited (“NDLS”), Noble Enterprises Limited (“NEL”) and Noble
Drilling (Nederland) B.V. (“NDNBV”), all indirect, wholly-owned subsidiaries of Noble-UK, maintained a pension plan that covered
all of its salaried, non-union employees. Benefits were based on credited service and employees’ compensation near retirement, as
defined by the respective plan.
As a result of the Spin-off, employees of Paragon Offshore no longer participate in benefit plans sponsored or maintained by
Noble. At the time of the Spin-off, NEL and NDNBV transferred all assets and obligations to Paragon Offshore. The benefits of
retained Noble employees who participated in the NEL plan prior to the Spin-off were frozen in the NEL plan and their future benefits
were replicated into a new plan maintained by an indirect, wholly-owned subsidiary of Noble-UK, Noble Resources Limited (“NRL”).
Subsequent to the Spin-off, Noble maintains the NDLS and NRL plans. Benefits are based on credited service and employees’
compensation near retirement, as defined by the respective plan. Reference to our “non-U.S. plans” included throughout this report
relates to the Noble-maintained NDLS and NRL plans, as well as activity for the NEL and NDNBV plans prior to the Spin-off.
In addition to the non-U.S. plans discussed above, 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 Employees’
Retirement Trust (the “Trust”). The benefits from these plans are based primarily on years of service and, for the salaried plan,
employees’ compensation near retirement. These plans 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 specified 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”.
82
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)
Employees participating in the U.S. plans that transferred to Paragon Offshore at the time of the Spin-off terminated under these
plans as of July 31, 2014. In connection with the termination of these employees, we recognized a curtailment expense of $0.2 million
for the year ended December 31, 2014. Additionally in 2014, we recognized a settlement expense of $10 million related to those
terminated employees that elected to receive their accumulated benefits as a lump sum distribution.
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
Settlement
Curtailment
Plan participants’ contributions
Foreign exchange rate changes
Spin-off adjustment
Year Ended December 31,
2014
2013
Non-U.S.
$ 161,591
4,777
4,650
6,145
1,595
(2,819)
—
—
266
(7,071)
(96,581)
U.S.
$ 223,938
8,901
10,546
51,524
—
(4,262)
(34,397)
(18,178)
—
—
—
Non-U.S.
$ 151,781
5,496
5,085
(4,584)
(227)
(2,558)
—
—
956
5,642
—
U.S.
$ 225,885
10,724
9,049
(17,652)
—
(4,068)
—
—
—
—
—
Benefit obligation at end of year
$ 72,553
$ 238,072
$ 161,591
$ 223,938
A reconciliation of the changes in fair value of plan assets is as follows:
Fair value of plan assets at beginning of year
Actual return on plan assets
Employer contributions
Benefits and expenses paid
Settlement
Plan participants’ contributions
Foreign exchange rate changes
Spin-off adjustment
Year Ended December 31,
2014
2013
U.S.
Non-U.S.
U.S.
$ 201,011
7,750
2,017
(4,262)
(34,397)
—
—
—
$ 151,819
8,470
9,365
(2,558)
—
956
6,205
—
$ 167,170
31,518
6,391
(4,068)
—
—
—
—
Non-U.S.
$ 174,257
6,717
6,863
(2,819)
—
266
(11,068)
(96,502)
Fair value of plan assets at end of year
$ 77,714
$ 172,119
$ 174,257
$ 201,011
The funded status of the plans is as follows:
Funded status
Year Ended December 31,
2014
2013
Non-U.S.
U.S.
Non-U.S.
U.S.
$ 5,161
$ (65,953)
$ 12,666
$ (22,927)
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)
Amounts recognized in the Consolidated Balance Sheets consist of:
Other assets (noncurrent)
Other liabilities (current)
Other liabilities (noncurrent)
Net amount recognized
Amounts recognized in AOCL consist of:
Net actuarial loss
Prior service cost
Deferred income tax asset
Year Ended December 31,
2014
2013
Non-U.S.
$ 7,725
—
(2,564)
U.S.
$ —
(3,037)
(62,916)
Non-U.S.
$ 13,586
—
(920)
U.S.
$ 6,132
(2,120)
(26,939)
$ 5,161
$(65,953)
$ 12,666
$(22,927)
Year Ended December 31,
2014
2013
Non-U.S.
$ 11,793
1,531
(3,096)
U.S.
$ 73,705
468
(25,961)
Non-U.S.
$ 30,902
(232)
(2,130)
U.S.
$ 45,338
905
(16,185)
Accumulated other comprehensive loss
$ 10,228
$ 48,212
$ 28,540
$ 30,058
Pension cost includes the following components:
Service Cost
Interest Cost
Return on plan assets
Amortization of prior service cost
Recognized net actuarial loss
Curtailment expense
Settlement expense
Net pension expense
Year Ended December 31,
2014
2013
2012
Non-U.S.
$ 4,777
4,650
(6,117)
46
769
—
—
U.S.
$ 8,901
10,546
(15,499)
196
2,857
241
9,872
Non-U.S.
$ 5,496
5,085
(5,836)
—
1,670
—
—
U.S.
$ 10,724
9,049
(13,102)
227
7,639
—
—
Non-U.S.
$ 4,461
5,372
(5,344)
—
803
—
—
U.S.
$ 9,612
8,719
(11,171)
227
7,356
—
—
$ 4,125
$ 17,114
$ 6,415
$ 14,537
$ 5,292
$ 14,743
Included in net pension expense for the years ended December 31, 2014, 2013 and 2012 for non-U.S. plans was approximately
$2 million, $4 million and $3 million, respectively, related to Paragon Offshore that was classified as discontinued operations.
Included in net pension expense for the years ended December 31, 2014, 2013 and 2012 for U.S. plans was approximately $11
million, $4 million and $4 million, respectively, related to Paragon Offshore that was classified as discontinued operations.
The estimated prior service cost and net actuarial loss that will be amortized from AOCL into net periodic pension cost in 2015
are $0.1 million and $0.3 million, respectively, for non-U.S. plans and $0.1 million and $6.2 million, respectively, for U.S. plans.
During 2014, we adopted the Retirement Plan (“RP”) 2014 mortality tables with the Mortality Projection (“MP”) scale as issued
by the Society of Actuaries. The RP 2014 mortality tables represent the new standard for defined benefit mortality assumptions due to
longer life expectancies. The adoption of the updated mortality tables and the mortality improvement scales increased our pension
liability on our U.S. plans by approximately $14 million as of December 31, 2014.
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)
Defined Benefit Plans—Disaggregated Plan Information
Disaggregated information regarding our non-U.S. and U.S. plans is summarized below:
Projected benefit obligation
Accumulated benefit obligation
Fair value of plan assets
Year Ended December 31,
2014
2013
Non-U.S.
$ 72,553
68,902
77,714
U.S.
$ 238,072
202,716
172,119
Non-U.S.
$ 161,591
154,140
174,257
U.S.
$ 223,938
185,383
201,011
The following table provides information related to those plans in which the PBO exceeded the fair value of the plan assets at
December 31, 2014 and 2013. 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.
Projected benefit obligation
Fair value of plan assets
Year Ended December 31,
2014
2013
Non-U.S.
$ 3,157
592
U.S.
$ 238,072
172,119
Non-U.S.
$ 6,740
5,820
U.S.
$ 200,472
171,413
The PBO for the unfunded excess benefit plan was $20 million at December 31, 2014 as compared to $13 million in 2013, and
is included under “U.S.” in the above tables.
The following table provides information related to those plans in which the accumulated benefit obligation (“ABO”) exceeded
the fair value of plan assets at December 31, 2014 and 2013. 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.
Accumulated benefit obligation
Fair value of plan assets
Year Ended December 31,
2014
2013
Non-U.S.
$ 1,355
592
U.S.
$ 202,716
172,119
Non-U.S.
$ 6,493
5,820
U.S.
$ 11,997
—
The ABO for the unfunded excess benefit plan was $13 million at December 31, 2014 as compared to $12 million in 2013, and
is included under “U.S.” in the above tables.
Defined Benefit Plans—Key Assumptions
The key assumptions for the plans are summarized below:
Weighted-average assumptions used to
determine benefit obligations:
Discount Rate
Rate of compensation increase
Year Ended December 31,
2014
2013
Non-U.S.
U.S.
Non-U.S.
U.S.
2.6%-3.7%
3.6%-4.1%
3.0%-4.1%
5.0%
3.9%-4.7%
3.6%-4.5%
3.9%-5.1%
5.0%
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)
2014
2013
2012
Non-U.S.
U.S.
Non-U.S.
U.S.
Non-U.S.
U.S.
Year Ended December 31,
Weighted-average assumptions used to
determine periodic benefit cost:
Discount Rate
Expected long-term return on assets
Rate of compensation increase
2.7%-4.7% 3.9%-5.1% 2.5%-4.5% 3.1%-4.2%
2.3%-6.0%
3.6%-4.5%
2.3%-5.7%
3.6%-4.1%
7.8%
5.0%
7.8%
5.0%
4.7%-5.0% 4.3%-4.7%
3.9%-5.4%
2.3%-4.4%
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.
Defined Benefit Plans—Plan Assets
Non-U.S. Plans
Both the NEL and NDNBV pension plans assets and liabilities were transferred to Paragon Offshore as part of the Spin-off.
The NRL pension plan has a targeted asset allocation of 100 percent debt securities. The investment objective for the NRL Plan
assets is to earn a favorable return against the Barclays Capital Euro-Treasury AAA index. We evaluate the performance of this plan
on an annual basis.
The NDLS 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.
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)
The actual fair values of Non-U.S. pension plans as of December 31, 2014 and 2013 are as follows:
December 31, 2014
Estimated Fair Value
Measurements
Quoted
Prices in
Active
Markets
(Level 1)
Significant
Other
Observable
Inputs
(Level 2)
Significant
Unobservable
Inputs
(Level 3)
Carrying
Amount
$
87
$
87
$ —
$ 53,261
$ 53,261
$ —
$ 23,774
592
$ —
—
$ 23,774
—
$ 77,714
$ 53,348
$ 23,774
$
$
$
$
—
—
—
592
592
December 31, 2013
Estimated Fair Value
Measurements
Quoted
Prices in
Active
Markets
(Level 1)
Significant
Other
Observable
Inputs
(Level 2)
Carrying
Amount
$
207
$
207
$ —
$ 54,722
$ 54,722
$ —
$ 41,767
77,561
$ —
—
$ 41,767
—
Significant
Unobservable
Inputs
(Level 3)
$
$
$
—
—
—
77,561
$ 174,257
$ 54,929
$ 41,767
$
77,561
Cash and cash equivalents
Equity securities:
International companies
Fixed income securities:
Corporate bonds
Other
Total
Cash and cash equivalents
Equity securities:
International companies
Fixed income securities:
Corporate bonds
Other
Total
At December 31, 2013, assets of both NEL and NDNBV were invested in instruments that are similar in form to a guaranteed
insurance contract, which were transferred to Paragon Offshore in the Spin-off. At December 31, 2014, assets of NRL were 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 plans. 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, 2013
Assets transferred out in Spin-off
Assets purchased
Assets sold/benefits paid
Balance as of December 31, 2014
87
Market
Value
$ 77,561
(77,561)
749
(157)
$
592
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)
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 66.5 percent in equity
securities, 32 percent in debt securities and 1.5 percent in cash holdings. Actual results may deviate from the target range, however
any deviation from the target range of asset allocations must be approved by the Trust’s governing committee.
The performance objective of the Trust is to outperform the return of the Total Index Composite as constructed to reflect the
target allocation weightings for each asset class. This objective should be met over a market cycle, which is defined as a period not
less than three years or more than five years. U.S. equity securities (common stock, convertible preferred stock and convertible bonds)
should achieve a total return (after fees) that exceeds the total return of an appropriate market index over a full market cycle of three to
five years. Non-U.S. equity securities (common stock, convertible preferred stock and convertible bonds), either from developed or
emerging markets, should achieve a total return (after fees) that exceeds the total return of an appropriate market index over a full
market cycle of three to five years. Fixed income debt securities should achieve a total return (after fees) that exceeds the total return
of an appropriate market index over a full market cycle of three to five years. Cash equivalent and short-term investments should
achieve relative performance better than the 90-day Treasury bills. When mutual funds are used by the Trust, those mutual funds
should achieve a total return that equals or exceeds the total return of each fund’s appropriate Lipper or Morningstar peer category
over a full market cycle of three to five years. Lipper and Morningstar are independent mutual fund rating and information services.
For investments in equity securities, no individual options or financial futures contracts are purchased unless approved in
writing by the Trust’s governing committee. In addition, no private placements or purchases of venture capital are allowed. The 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 42 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 $4 million (2.1 percent of total U.S. plan assets) at December 31, 2013. No
shares of Noble were included in equity securities at December 31, 2014.
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)
The actual fair values of U.S. pension plan assets as of December 31, 2014 and 2013 are as follows:
December 31, 2014
Estimated Fair Value
Measurements
Quoted
Prices in
Active
Markets
(Level 1)
Significant
Other
Observable
Inputs
(Level 2)
Significant
Unobservable
Inputs
(Level 3)
Carrying
Amount
$ 5,998
$ —
$
5,998
$ 80,823
33,392
$ 80,823
33,392
$ —
—
$ 51,906
$ 51,906
$ —
$ 172,119
$ 166,121
$
5,998
$
$
$
$
—
—
—
—
—
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
$ 2,184
$ —
$
2,184
$ 104,899
33,012
$ 80,714
33,012
$ 24,185
—
$ 60,916
$ 60,916
$ —
$ 201,011
$ 174,642
$ 26,369
$
$
$
$
—
—
—
—
—
Cash and cash equivalents
Equity securities:
United States
International
Fixed income securities:
Corporate bonds
Total
Cash and cash equivalents
Equity securities:
United States
International
Fixed income securities:
Corporate bonds
Total
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 December 31, 2013.
As of December 31, 2014, 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 2014, we made total contributions of $7 million and $2 million to our non-U.S. and U.S. pension plans, respectively. 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. We expect our aggregate minimum
contributions to our non-U.S. and U.S. plans in 2015, subject to applicable law, to be $2 million and $3 million, respectively. We
continue to monitor and evaluate funding options based upon market conditions and may increase contributions at our discretion.
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)
The following table summarizes our estimated benefit payments at December 31, 2014:
Estimated benefit payments
Non U.S. plans
U.S. plans
Total
2015
2016
2017
2018
2019
Thereafter
Payments by Period
$ 23,037
105,192
$ 1,630
8,029
$ 1,693
6,687
$ 1,882
7,327
$ 1,955
7,989
$ 2,207
8,914
$ 13,670
66,246
Total estimated benefit payments
$ 128,229
$ 9,659
$ 8,380
$ 9,209
$ 9,944
$ 11,121
$ 79,916
Other Benefit Plans
We sponsor a 401(k) Restoration Plan, which is a nonqualified, unfunded employee benefit plan under which specified
employees may elect to defer compensation in excess of amounts deferrable under our 401(k) savings plan. The 401(k) Restoration
Plan has no assets, and amounts withheld for the 401(k) Restoration Plan are kept by us for general corporate purposes. The
investments selected by employees and associated returns are tracked on a phantom basis. Accordingly, we have a liability to the
employee for amounts originally withheld plus phantom investment income or less phantom investment losses. We are at risk for
phantom investment income and, conversely, benefit should phantom investment losses occur. At December 31, 2014 and 2013, our
liability for the 401(k) Restoration Plan was $7 million and $8 million, respectively, and is included in “Accrued payroll and related
costs.”
In 2005 we enacted a profit sharing plan, the Noble Drilling Services Inc. 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 $6 million, $5 million and $4 million in 2014, 2013 and 2012, 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 for continuing operations aggregated approximately $70 million, $80 million and $69 million in 2014, 2013
and 2012, respectively. We do not provide post-retirement benefits (other than pensions) or any post-employment benefits to our
employees.
Note 16- Derivative Instruments and Hedging Activities
We periodically enter into derivative instruments to manage our exposure to fluctuations in interest rates and foreign currency
exchange rates. We have documented policies and procedures to monitor and control the use of derivative instruments. We do not
engage in derivative transactions for speculative or trading purposes, nor are we a party to leveraged derivatives.
For foreign currency forward contracts, hedge effectiveness is evaluated at inception based on the matching of critical terms
between derivative contracts and the hedged item. Any change in fair value resulting from ineffectiveness is recognized immediately
in earnings.
Cash Flow Hedges
Several of our regional shorebases, including our North Sea and Brazilian operations, have a significant amount of their cash
operating expenses payable in local currencies. To limit the potential risk of currency fluctuations, we periodically enter into forward
contracts, which settle monthly in the operations’ respective local currencies. All of these contracts have a maturity of less than 12
months. During 2014 and 2013, we entered into forward contracts of approximately $195 million and $128 million, respectively, all of
which settled during their respective years. At both December 31, 2014 and 2013, we had no outstanding derivative contracts.
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)
Financial Statement Presentation
To supplement the fair value disclosures in Note 17, 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, 2014 and 2013:
Gain/(loss) recognized
through AOCL
Gain reclassified from
AOCL to “contract
drilling services”
expense
Gain/(loss) recognized
through “contract
drililng services” expense
2014
2013
2014
2013
2014
2013
Cash flow hedges
Foreign currency forward contracts
$ 4,286
$ 1,200
$ (4,286)
$ (1,200)
$ —
$ —
Note 17- Financial Instruments and Credit Risk
The following tables present the carrying amount and estimated fair value as of December 31, 2014 and 2013 of our financial
instruments recognized at fair value on a recurring basis:
Assets—
Marketable securities
Assets—
Marketable securities
December 31, 2014
Estimated Fair Value Measurements
Quoted
Prices in
Active
Markets
(Level 1)
Significant
Other
Observable
Inputs
(Level 2)
Significant
Unobservable
Inputs
(Level 3)
Carrying
Amount
$ 6,175
$ 6,175
$
—
$
—
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
$ 7,230
$ 7,230
$
—
$
—
The foreign currency forward contracts have been valued using actively quoted prices and quotes obtained from the
counterparties to the contracts. Our cash and cash equivalents, accounts receivable and accounts payable are by their nature short-
term. As a result, the carrying values included in the accompanying Consolidated Balance Sheets approximate fair value.
Concentration of Credit Risk
The market for our services is the offshore oil and gas industry, and our customers consist primarily of major integrated oil
companies, government-owned 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.
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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)
Revenues from Shell and its affiliates accounted for approximately 55 percent, 67 percent and 51 percent of our consolidated
operating revenues in 2014, 2013 and 2012, respectively. Revenues from Saudi Arabian Oil Company (“Saudi Aramco”) accounted
for approximately 10 percent of our consolidated operating revenues in both 2013 and 2012. Saudi Aramco did not account for more
than 10 percent of our consolidated operating revenues in 2014. Revenues from Petróleo Brasileiro S.A. (“Petrobras”) accounted for
approximately 11 percent of our consolidated operating revenues in 2012. Petrobras did not account for more than 10 percent of our
consolidated operating revenues in either 2014 or 2013. No other customer accounted for more than 10 percent of our consolidated
operating revenues in 2014, 2013 or 2012.
Note 18- Commitments and Contingencies
The Noble Homer Ferrington was under contract with a subsidiary of ExxonMobil Corporation (“ExxonMobil”), which entered
into an assignment agreement with British Petroleum plc (“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. 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 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 system. We initiated
a comprehensive effort to address the deficiencies identified by the Coast Guard and worked with the agency to keep it apprised of our
progress. We also conducted an internal investigation in conjunction with the Coast Guard inspection, and the Coast Guard conducted
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 and Kulluk and other matters. The Coast Guard referred the Noble Discoverer and Kulluk matters to the U.S. Department
of Justice (“DOJ”) for further investigation. In December 2014, one of our subsidiaries reached a settlement with the DOJ regarding
its investigation of the Noble Discoverer and the Kulluk. Under the terms of the agreement, the subsidiary pled guilty to oil record
book, ballast record and required hazardous condition reporting violations with respect to the Noble Discoverer and an oil record book
violation with respect to the Kulluk. The subsidiary paid $8.2 million in fines and $4 million in community service payments, and was
placed on probation for four years, provided that we may petition the court for early dismissal of probation after three years. If during
the term of probation, the subsidiary fails to adhere to the terms of the plea agreement, the DOJ may withdraw from the plea
agreement and would be free to prosecute the subsidiary on all charges arising out of its investigation, including any charges
dismissed pursuant to the terms of the plea agreement, as well as potentially other charges. We also implemented a comprehensive
environmental compliance plan.
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, 2014, there were 42 asbestos related lawsuits in which we are one of many
defendants. These lawsuits have been filed in the United States in the states of Illinois, Louisiana, Mississippi and Texas. We intend to
vigorously defend 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, 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. During 2013, the IRS completed its examination of our tax reporting for
the taxable year ended December 31, 2008 and concluded that we were entitled to a refund. The congressional Joint Committee on
Taxation took no exception to the conclusions reached by the IRS, and the refund, plus interest, was received in March 2014. The IRS
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)
also completed its examination of our tax reporting for the taxable year ended December 31, 2009, and informed us that it made no
changes to our reported tax. During the first quarter of 2014, the IRS began its examination of our tax reporting for the taxable years
ended December 31, 2010 and 2011. We believe that we have accurately reported all amounts in our 2010 and 2011 tax returns. 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.
Audit claims of approximately $66 million attributable to income, customs and other business taxes have been assessed against
us. We have received tax assessments of approximately $141 million related to Paragon Offshore assets that operated through Noble-
retained entities in Mexico, and Paragon Offshore has received tax assessments of approximately $165 million for Noble assets that
operated through a Paragon Offshore-retained entity in Brazil. Of these tax assessments in Mexico and Brazil, approximately $20
million and $46 million, respectively, relate to Noble’s share of the tax liability. Under the TSA, Paragon Offshore has an obligation
to indemnify us for all assessed amounts that are related to Paragon Offshore’s Mexico assets, approximately $121 million, and we
have an obligation to indemnify Paragon Offshore for all assessed amounts that are related to Noble’s Brazil assets, approximately $46
million, in each case, if and when such payments become due. 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.
On January 23, 2015, Noble received an official notification of a ruling from the Second Chamber of the Supreme Court in
Mexico. The ruling settled an ongoing dispute in Mexico relating to the classification of a Noble subsidiary’s business activity and the
applicable rate of depreciation under the Mexican law. The ruling did not result in any additional tax liability to Noble. Additionally,
the ruling does not constitute mandatory jurisprudence in Mexico, and thus is only applicable to the Noble subsidiary named in the
ruling. We will continue to contest future assessments received. Any claim by the tax authorities relating to this issue is subject to a
full indemnification from Paragon Offshore under the TSA.
We have been notified by Petrobras that it is currently challenging assessments by Brazilian tax authorities of withholding taxes
associated with the provision of drilling rigs for its operations in Brazil during 2008 and 2009. Petrobras has also notified us that if
Petrobras must ultimately pay such withholding taxes, it will seek reimbursement from us for the portion allocable to our drilling rigs.
The amount of withholding tax that Petrobras indicates may be allocable to Noble drilling rigs is R$79 million (approximately $30
million). We believe that our contract with Petrobras requires Petrobras to indemnify us for these withholding taxes. We will, if
necessary, vigorously defend our rights.
We maintain certain insurance coverage against specified marine perils, which includes physical damage and loss of hire.
Damage caused by hurricanes has negatively impacted certain aspects of 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. In addition, we maintain a physical damage deductible on our rigs of $25 million per occurrence. 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 shorebased 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.
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)
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 $729 million at December 31, 2014.
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.
Note 19- 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. As of December 31, 2014, our contract drilling services segment conducts contract drilling
operations in the United States, Brazil, Argentina, the North Sea, the Mediterranean, the Middle East, Asia and Australia.
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 continuing operations for the years ended December 31, 2014, 2013
and 2012 is shown in the following tables. The “Other” column includes results of labor contract drilling services in Alaska for 2013
and 2012, as well as corporate related items for all periods. 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.
2014
Revenues from external customers
Depreciation and amortization
Segment operating income (loss)
Interest expense, net of amount capitalized
Income tax (provision) benefit
Segment profit (loss)
Total assets (at end of period)
2013
Revenues from external customers
Depreciation and amortization
Segment operating income (loss)
Interest expense, net of amount capitalized
Income tax provision
Segment profit (loss)
Total assets (at end of period)
2012
Revenues from external customers
Depreciation and amortization
Segment operating income (loss)
Interest expense, net of amount capitalized
Income tax (provision) benefit
Segment profit (loss)
Contract
Drilling
Services
$ 3,230,253
608,590
204,365
(164)
(130,654)
216,659
13,019,089
$ 2,520,064
497,303
750,181
(694)
(90,468)
874,816
15,495,071
$ 2,154,980
427,234
626,012
(394)
(110,373)
645,560
94
Other
Total
$
2,251
18,883
(18,423)
(155,015)
24,003
(208,168)
267,733
$ 18,079
14,210
(9,644)
(105,606)
(1,649)
(92,119)
722,886
$ 45,719
13,072
(448)
(85,369)
15,190
(123,216)
$ 3,232,504
627,473
185,942
(155,179)
(106,651)
8,491
13,286,822
$ 2,538,143
511,513
740,537
(106,300)
(92,117)
782,697
16,217,957
$ 2,200,699
440,306
625,564
(85,763)
(95,183)
522,344
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:
United States
Argentina
Australia
Benin
Brazil
Denmark
Egypt
Malaysia
Malta
Mexico
Morocco
New Zealand
Saudi Arabia
Singapore (1)
South Korea (1)
Switzerland (2)
The Netherlands
Turkey
United Arab Emirates
United Kingdom
Other
Total
Revenues
Year Ended December 31,
Identifiable Assets
As of December 31,
2014
2013
2012
2014
2013 (3)
$ 1,639,509
97,743
146,474
66,077
447,266
28,980
19,961
11,126
15,495
127
69,056
56,911
260,544
—
—
—
82,026
13,960
108,044
84,078
85,127
$ 1,338,634
—
133,214
41,251
527,706
—
33,685
—
7,453
14,529
—
11,995
246,083
—
—
—
—
—
71,896
87,908
23,789
$ 1,061,254
—
42,353
—
430,737
—
103,380
—
35,776
40,218
—
9,563
220,657
—
—
—
—
—
59,321
66,232
131,208
$ 6,739,636
304,131
541,655
—
799,599
272,788
—
1,144,498
—
35,994
—
—
479,525
982,731
—
27,645
249,074
740,362
331,812
248,835
388,537
$ 5,525,839
—
624,238
803,788
3,921,306
—
—
23,002
454,951
439,098
—
663,165
584,230
618,341
894,347
32,162
339,560
—
443,166
400,989
449,775
$ 3,232,504
$ 2,538,143
$ 2,200,699
$ 13,286,822
$ 16,217,957
(1) 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.
(3) Amounts in 2013 include identifiable assets that were ultimately transferred to Paragon Offshore as part of the Spin-off.
Note 20- 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. Amounts for 2014
are shown net of Paragon Offshore, which was distributed to shareholders in a non-cash transaction.
Accounts receivable
Other current assets
Other assets
Accounts payable
Other current liabilities
Other liabilities
2014
$ 29,730
(3,201)
(96,941)
63,546
(28,644)
86,037
$ 50,527
December 31,
2013
2012
$(165,233)
(47,848)
34,757
50,731
61,644
2,731
$(143,010)
(43,246)
(385)
28,565
108,385
80,431
$ (63,218)
$ 30,740
95
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:
Cash paid during the period for:
Interest, net of amounts capitalized
Income taxes (net of refunds)
Non-cash activities during the period:
Spin-off of Paragon Offshore
Year Ended December 31,
2014
2013
2012
$ 159,835
$ 132,527
$ 81,897
$ 219,088
$ 56,144
$ 148,612
$ 1,409,400
N/A
N/A
Note 21- 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. Amounts for 2014
are shown net of Paragon Offshore, which was distributed to shareholders in a non-cash transaction.
Accounts receivable
Other current assets
Other assets
Accounts payable
Other current liabilities
Other liabilities
Additional cash flow information is as follows:
Cash paid during the period for:
Interest, net of amounts capitalized
Income taxes (net of refunds)
Non-cash activities during the period:
Spin-off of Paragon Offshore
Note 22- Information about Noble-Cayman
Guarantees of Registered Securities
2014
$ 29,730
(12,670)
(96,925)
60,488
(21,921)
86,038
$ 44,740
December 31,
2013
2012
$(165,233)
(48,186)
35,103
49,980
62,516
2,728
$(143,010)
(44,632)
(385)
28,289
108,425
80,432
$ (63,092)
$ 29,119
Year Ended December 31,
2014
2013
2012
$ 159,835
$ 130,356
$ 81,897
$ 216,391
$ 56,144
$ 148,612
$ 1,409,400
N/A
N/A
In May 2014, as part of the separation of Paragon Offshore, NHC assumed all of the obligations of Noble Drilling Corporation
(“NDC”) under the Senior Notes due 2019, and NDC was released from all obligations under the Senior Notes due 2019. As such, we
removed NDC from the guarantor financial statements and NHC is no longer combined with Noble Drilling Holding, LLC (“NDH”),
as they are now issuers and guarantors on separate debt instruments. We have recast prior periods presented to conform to the
guarantor structure as it existed at December 31, 2014.
96
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-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, 2014 as follows:
Notes
$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
NHC
NDH
Noble Drilling Services 6 LLC (“NDS6”)
NHIL
NHIL
NHIL
NHIL
NHIL
NHIL
Guarantor(s)
Noble-Cayman
Noble-Cayman
Noble-Cayman
Noble-Cayman;
Noble-Cayman
Noble-Cayman
Noble-Cayman
Noble-Cayman
Noble-Cayman
Noble-Cayman
The following consolidating financial statements of Noble-Cayman, NHC, NDH, NHIL, NDS6 and all other subsidiaries present
investments in both consolidated and unconsolidated affiliates using the equity method of accounting.
97
ASSETS
Current assets
Cash and cash equivalents
Accounts receivable
Taxes receivable
Short-term notes receivable
from affiliates
Accounts receivable from
NOBLE CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATING BALANCE SHEET
December 31, 2014
(in thousands)
Noble-
Cayman
NHC
NDH
NHIL
NDS6
Other
Non-guarantor
Subsidiaries Consolidating
Adjustments
of Noble
Total
$
$
5
—
—
—
—
63,373
$
$
254
37,655
752
—
2,336
—
$
— $
—
—
65,521 $
529,105
43,164
—
—
—
$
65,780
569,096
107,289
123,449
—
1,077,965
—
333,966
171,925
(1,707,305 )
affiliates
2,019,319
374,012
192,771
157,164
125,834
4,191,406
(7,060,506 )
Prepaid expenses and other
current assets
14,274
—
1,764
—
—
123,631
—
Total current assets
2,157,047
437,385
1,311,161
159,500
459,800
5,124,752
(8,767,811 )
Property and equipment, at cost
Accumulated depreciation
Property and equipment, net
Notes receivable from affiliates
Investments in affiliates
Other assets
—
—
—
—
—
—
3,304,654
4,567,335
2,908
—
1,318,239
—
2,040,168
(278,147 )
1,762,021
236,921
2,921,452
6,212
—
—
—
—
—
12,364,203
(2,040,073 )
—
10,324,130
—
—
—
14,404,371
(2,318,220 )
12,086,151
1,980,391
8,266,444
19,826
5,000
6,290,918
517
1,581,429
(7,108,395 )
— (23,364,388 )
—
192,791
—
—
222,254
Total assets
$ 10,031,944
$ 1,755,624
$ 6,237,767
$ 10,426,161
$ 6,756,235 $ 17,223,102 $ (39,240,594 )
$ 13,190,239
—
—
139,669
881,834
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
Total current liabilities
Long-term debt
Notes payable to affiliates
Deferred income taxes
Other liabilities
Total liabilities
Commitments and contingencies
Total shareholder
equity
Noncontrolling interests
—
600
—
606,224
—
16,150
622,974
1,123,495
1,769,068
—
19,929
3,535,466
$
171,925
—
$
—
10,130
$
—
7,738
63,602
—
—
3,513,705
—
13,409
—
—
—
61,982
—
57,053
235,527
3,544,982
119,035
—
—
—
—
—
598,715
—
29,093
3,543,830
1,169,180
—
—
235,527
4,172,790
4,832,045
$ 371,720 $ 1,163,660 $ (1,707,305 )
—
250,282
—
$
—
261,012
—
83,749
—
91,487
16,869
—
4,412
393,001
201,695
192,216
—
—
786,912
2,798,124
91,471
110,890
(7,060,506 )
—
—
4,498,176
(8,767,811 )
—
3,379,216
120,589
286,942
—
(7,108,395 )
—
—
—
91,471
201,914
645,884
4,869,020
—
120,589
335,964
8,284,923 (15,876,206 )
5,971,457
6,496,478
—
1,520,097
—
2,064,977
—
5,594,116
—
5,969,323
—
7,812,656 (22,961,169 )
(403,219 )
1,125,523
6,496,478
722,304
Total equity
6,496,478
1,520,097
2,064,977
5,594,116
5,969,323
8,938,179 (23,364,388 )
7,218,782
Total liabilities and
equity
$ 10,031,944
$ 1,755,624
$ 6,237,767
$ 10,426,161
$ 6,756,235 $ 17,223,102 $ (39,240,594 )
$ 13,190,239
98
NOBLE CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATING BALANCE SHEET
December 31, 2013
(in thousands)
NHC
NDH
NHIL
NDS6
Other
Non-guarantor
Subsidiaries
of Noble
Consolidating
Adjustments
Total
$
$
—
—
52,307
402
34,038
—
$
$
4
—
—
— $
—
—
109,975 $
915,031
87,722
—
—
—
$ 110,382
949,069
140,029
Noble-
Cayman
$
1
—
—
—
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
1,244,019
—
—
—
—
1,456,245
139,195
19,500
52,611
(1,667,551 )
108,208
210,868
27,537
6,010,430
(7,601,062 )
—
—
6,336
—
—
178,012
—
184,348
Total current assets
1,244,020
52,307
1,605,229
350,067
47,037
7,353,781
(9,268,613 )
1,383,828
Property and equipment, at cost
Accumulated
depreciation
Property and equipment, net
—
—
—
—
2,340,216
—
(310,171)
—
2,030,045
—
—
—
—
16,820,134
—
19,160,350
—
(4,321,507)
—
12,498,627
—
—
(4,631,678)
14,528,672
Notes receivable from affiliates
Investments in affiliates
Other assets
3,304,753
8,601,712
6,256
—
2,907,379
—
124,216
6,595,591
6,332
2,367,555
9,456,735
22,681
5,000
5,440,004
639
1,390,500
—
233,106
(7,192,024 )
(33,001,421 )
—
—
—
269,014
Total assets
$ 13,156,741
$ 2,959,686
$ 10,361,413
$ 12,197,038
$ 5,492,680 $
21,476,014 $ (49,462,058 )
$16,181,514
LIABILITIES AND EQUITY
Current liabilities
Short-term notes
payables from
affiliates
Accounts payable
Accrued payroll and
related costs
Accounts payable to
$
—
—
—
$
52,611
—
$
139,195
5,310
$
—
8,582
affiliates
Taxes payable
Other current liabilities
1,104,410
—
412
653,049
—
—
4,032,776
827
22,106
Total current liabilities
1,104,822
705,660
4,208,796
—
—
—
216,866
—
62,431
279,297
$ 750,000 $
—
725,745 $
340,600
(1,667,551 )
—
$
—
345,910
—
134,764
—
143,346
21,173
—
4,412
1,572,788
119,761
210,811
(7,601,062 )
—
—
775,585
3,104,469
(9,268,613 )
—
120,588
300,172
910,016
Long-term debt
Notes payable to affiliates
Deferred income taxes
Other liabilities
1,561,141
2,042,808
—
19,931
—
—
—
—
—
534,683
—
24,502
3,793,414
975,000
—
—
201,696
260,216
—
—
—
3,379,317
225,455
289,875
—
(7,192,024 )
—
—
5,556,251
—
225,455
334,308
Total liabilities
4,728,702
705,660
4,767,981
5,047,711
1,237,497
6,999,116
(16,460,637 )
7,026,030
Commitments and
contingencies
Total
shareholder
equity
Noncontrolling interests
8,428,039
—
2,254,026
—
5,593,432
—
7,149,327
—
4,255,183
—
13,238,656
1,238,242
(32,490,624 )
(510,797 )
8,428,039
727,445
Total equity
8,428,039
2,254,026
5,593,432
7,149,327
4,255,183
14,476,898
(33,001,421 )
9,155,484
Total liabilities
and equity
$ 13,156,741
$ 2,959,686
$ 10,361,413
$ 12,197,038
$ 5,492,680 $
21,476,014 $ (49,462,058 )
$16,181,514
99
NOBLE CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATING STATEMENT OF INCOME
Year Ended December 31, 2014
(in thousands)
Noble-
Cayman
NHC
NDH
NHIL
NDS6
Other
Non-guarantor
Subsidiaries
of Noble
Consolidating
Adjustments
Total
Operating revenues
Contract drilling services
Reimbursables
Other
$
—
—
—
$ —
—
—
$ 327,070
6,239
—
$ —
—
—
$ — $
—
—
3,067,195 $
78,405
1
(246,406)
—
—
$ 3,147,859
84,644
1
Total operating
revenues
Operating costs and expenses
Contract drilling services
Reimbursables
Depreciation and
amortization
General and administrative
Loss on impairment
Total operating
costs and
expenses
Operating income (loss)
Other income (expense)
Income (loss) of
unconsolidated
affiliates—continuing
operations
Income (loss) of
unconsolidated
affiliates—discontinued
operations, net of tax
Total income (loss) of
unconsolidated affiliates
Interest expense, net of
amounts capitalized
Interest income and other,
net
Income from continuing
operations before income
taxes
Income tax provision
Net income from continuing
operations
Net income from discontinued
operations, net of tax
—
—
333,309
—
30,885
—
39,039
—
120,971
4,687
115,909
—
—
2,437
—
—
11,376
—
65,164
—
—
—
31,620
—
33,322
50,415
190,822
147,529
(33,322)
(50,415 )
142,487
(147,529 )
—
—
—
—
1
—
1
(1)
3,145,601
(246,406)
3,232,504
1,447,073
61,691
(246,406)
—
1,507,471
66,378
559,114
7,560
745,428
—
—
—
624,278
52,994
745,428
2,820,866
(246,406)
2,996,549
324,735
—
235,955
(2,885,628)
157,648
(80,080 )
604,419
448,785
—
1,754,856
—
223,083
50,565
28,580
170,845
6,240
—
(479,313)
(2,662,545)
208,213
(51,500 )
775,264
455,025
—
1,275,543
—
—
(93,536)
(3,046 )
(24,974 )
(169,666 )
(33,671)
(3,148,822)
3,318,536
(155,179)
2,913,631
—
249,005
89,449
3,308
64,267
(3,318,536)
1,124
124,228
—
154,752
(68,805 )
315,018
(3,574 )
547,518
—
424,661
(1,546)
(2,759,820)
(32,005)
1,275,543
—
81,900
(105,930)
124,228
85,947
311,444
547,518
423,115
(2,791,825)
1,275,543
(24,030)
—
(18,655 )
6,634
—
—
235,104
—
223,083
199,053
Net Income
124,228
67,292
318,078
547,518
423,115
(2,556,721)
1,275,543
Net income attributable to
noncontrolling interests
Net income attributable to Noble
Corporation
Other comprehensive loss,
net
Comprehensive income
attributable to Noble
Corporation
—
—
—
—
—
(98,603)
23,778
(74,825)
124,228
67,292
318,078
547,518
423,115
(2,655,324)
1,299,321
124,228
(21,732)
—
—
—
—
(21,732)
21,732
(21,732)
$ 102,496
$ 67,292
$ 318,078
$ 547,518
$ 423,115 $
(2,677,056) $
1,321,053
$ 102,496
100
NOBLE CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATING STATEMENT OF INCOME
Year Ended December 31, 2013
(in thousands)
Noble-
Cayman
NHC
NDH
NHIL
NDS6
$ —
—
$ —
—
$ 240,631
8,498
$
—
—
—
—
—
—
—
—
249,129
24,039
—
22,195
—
70,359
6,850
—
—
7,380
—
—
—
—
—
7,396
—
62,778
—
—
—
—
(45,000)
—
—
$
—
—
—
—
—
110,138
—
—
—
36,050
—
—
—
(13,581)
29,591
139,987
146,188
13,581
(29,591)
109,142
(146,188)
—
—
—
—
—
—
—
—
—
1
—
—
—
1
(1)
Other
Non-guarantor
Subsidiaries
of Noble
Consolidating
Adjustments
Total
$
2,291,475
57,794
$
(77,361 )
—
$ 2,454,745
66,292
17,095
11
—
—
17,095
11
2,366,375
(77,361 )
2,538,143
1,009,801
43,560
(77,361 )
—
1,159,171
50,410
11,601
446,563
14,032
3,585
(35,646 )
—
—
—
—
—
11,601
509,341
64,859
3,585
(35,646 )
14,382
—
(30,618 )
1,507,878
858,497
(77,361 )
1,732,703
—
805,440
653,815
65,868
(53,235)
641,155
(1,136,831)
—
(170,772 )
—
321,804
45,098
308,188
431,149
63,235
—
(1,169,474 )
—
975,619
110,966
254,953
1,072,304
(1,073,596)
—
(1,340,246 )
—
(127,995)
(1,081)
(23,156)
(139,784)
(45,897)
(1,852,423 )
2,084,036
(106,300 )
6,609
—
262,717
154,442
1,569,003
94,821
(2,084,036 )
3,556
867,814
—
80,294
(24,592)
603,656
3,655
940,774
—
449,509
—
(899,105 )
(68,040 )
(1,340,246 )
—
702,696
(88,977 )
867,814
55,702
607,311
940,774
449,509
(967,145 )
(1,340,246 )
613,719
—
(16,569)
24,529
(55)
—
313,899
—
321,804
935,523
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)
Income (loss) of
unconsolidated
affiliates—continuing
operations
Income (loss) of
unconsolidated
affiliates—
discontinued
operations, net of tax
Total income (loss) of
unconsolidated
affiliates
Interest expense, net of
amounts capitalized
Interest income and other,
net
Income from continuing
operations before income
taxes
Income tax provision
Net income from continuing
operations
Net income from discontinued
operations, net of tax
Net Income
867,814
39,133
631,840
940,719
449,509
(653,246 )
(1,340,246 )
Net income attributable to
noncontrolling interests
Net income attributable to Noble
Corporation
Other comprehensive
income, net
Comprehensive income
attributable to Noble
Corporation
—
—
—
—
—
(114,314 )
46,605
(67,709 )
867,814
39,133
631,840
940,719
449,509
(767,560 )
(1,293,641 )
867,814
33,285
—
—
—
—
33,285
(33,285 )
33,285
$ 901,099
$ 39,133
$ 631,840
$ 940,719
$ 449,509
$
(734,275 )
$
(1,326,926 )
$ 901,099
101
NOBLE CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATING STATEMENT OF INCOME
Year Ended December 31, 2012
(in thousands)
Noble-
Cayman
NHC
NDH
NHIL
NDS6
$ —
—
$ —
—
$ 161,577
6,637
$ —
—
$
—
—
—
—
—
—
—
—
168,214
—
—
—
2,646
—
17,551
—
45,474
5,886
82,736
—
—
—
—
—
—
3,036
—
—
7,786
—
60,738
—
—
—
35,606
—
—
—
(4,869)
—
5,682
25,337
107,229
118,342
(5,682)
(25,337)
60,985
(118,342)
—
—
—
—
—
—
—
—
—
1
—
—
1
(1 )
Other
Non-
guarantor
Subsidiaries
of Noble
Consolidating
Adjustments
Total
$
2,006,624
59,130
$
(78,580)
—
$ 2,089,621
65,767
45,299
943
—
(931)
45,299
12
2,111,996
(79,511)
2,200,699
891,941
49,538
23,129
377,636
12,937
20,384
(28,386)
(79,511)
—
—
—
—
—
—
960,837
55,424
23,129
438,374
59,366
20,384
(33,255)
1,347,179
(79,511)
1,524,259
764,817
—
676,440
569,295
82,257
168,972
527,469
(244,644 )
—
(1,103,349)
—
115,151
32,769
188,511
280,121
60,481
—
(677,033)
684,446
115,026
357,483
807,590
(184,163 )
—
(1,780,382)
—
—
(105,147)
7,306
(20,950)
—
(23,105)
40,845
(120,361)
135,001
(43,090 )
594,328
(666,968)
119,449
893,858
(893,858)
(85,763)
3,071
580,923
—
68,739
(18,446)
436,208
(4,576)
703,888
—
367,074
—
217,298
(71,161)
(1,780,382)
—
593,748
(94,183)
580,923
50,293
431,632
703,888
367,074
146,137
(1,780,382)
499,565
—
(23,622)
10,160
—
—
128,613
—
115,151
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)
Income (loss) of
unconsolidated
affiliates—continuing
operations
Income (loss) of
unconsolidated
affiliates—discontinued
operations, net of tax
Total income (loss) of
unconsolidated affiliates
Interest expense, net of
amounts capitalized
Interest income and other, net
Income from continuing operations
before income taxes
Income tax provision
Net income from continuing
operations
Net income from discontinued
operations, net of tax
Net Income
580,923
26,671
441,792
703,888
367,074
274,750
(1,780,382)
614,716
Net income attributable to
noncontrolling interests
Net income attributable to Noble
Corporation
—
—
—
—
—
(68,969)
35,176
(33,793)
580,923
26,671
441,792
703,888
367,074
205,781
(1,745,206)
580,923
Other comprehensive loss, net
(41,128)
—
—
—
—
(41,128)
41,128
(41,128)
Comprehensive income
attributable to Noble
Corporation
$ 539,795
$ 26,671
$ 441,792
$ 703,888
$ 367,074
$
164,653
$
(1,704,078)
$ 539,795
102
NOBLE CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS
Year Ended December 31, 2014
(in thousands)
Noble-
Cayman
NHC
NDH
NHIL
NDS6
Other
Non-guarantor
Subsidiaries
of Noble
Consolidating
Adjustments
Total
$ 2,825,524
$ (151,987 ) $ 366,583
$ (232,605)
$ (31,788) $
(903,811) $
—
$ 1,871,916
—
50
—
(1,404,560)
—
—
—
273,744
—
—
(704,574)
—
(2,109,134 )
—
(273,794)
—
50
—
(1,404,560)
273,744
—
(704,574)
(273,794)
(2,109,134 )
Cash flows from operating
activities
Net cash from
operating
activities
Cash flows from investing
activities
New construction and
capital expenditures
Notes receivable from
affiliates
Net cash from
investing
activities
Cash flows from financing
activities
Net change in borrowings
outstanding on bank
credit facilities
Repayment of long-term
debt
Long-term borrowings of
Paragon Offshore
Financing costs on long-
term borrowings of
Paragon Offshore
Cash balances of Paragon
Offshore in Spin-Off
Dividends paid to
noncontrolling
interests
Financing costs on credit
facilities
Distributions to parent
company, net
Advances (to) from
affiliates
Notes payable to affiliates
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
(437,647)
—
—
—
—
—
(398)
(631,095)
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
(250,000)
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
(437,647 )
(250,000 )
1,710,550
—
1,710,550
(14,676)
(14,676 )
(104,152)
—
(104,152 )
(79,966)
—
—
—
—
—
(79,966 )
(398 )
(631,095 )
—
—
(1,482,686)
(273,744)
151,987
—
1,037,829
—
208,857
—
31,788
—
52,225
(50)
—
273,794
(2,825,570)
151,987
1,037,829
(41,143)
31,788
1,563,931
273,794
192,616
4
1
—
—
(148)
402
(4)
4
—
—
(44,454)
109,975
—
—
(44,602 )
110,382
$
5
$
— $
254
$
—
$ —
$
65,521 $
—
$
65,780
103
NOBLE CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS
Year Ended December 31, 2013
(in thousands)
Noble-
Cayman
NHC
NDH
NHIL
NDS6
Other
Non-guarantor
Subsidiaries Consolidating
Adjustments
of Noble
Total
$
(117,993)
$ (133,595)
$
424,147
$ (128,315)
$ 1,523,225 $
201,161 $
—
$ 1,768,630
—
—
—
—
(1,594,449)
—
—
—
—
—
—
—
—
—
—
(949,755 )
—
(2,544,204)
294,798
(294,798)
—
61,000
—
61,000
—
—
(1,594,449)
—
—
(593,957 )
(294,798)
(2,483,204)
1,221,333
(300,000)
—
(2,484)
—
—
—
—
(265,880)
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
(105,388 )
—
—
(241,180)
133,595
1,169,800
128,317
(1,523,225)
332,693
—
—
—
—
—
—
(294,798)
—
—
—
—
—
294,798
1,221,333
(300,000)
(105,388)
(2,484)
(265,880)
—
—
116,991
133,595
1,169,800
128,317
(1,523,225)
227,305
294,798
547,581
(1,002)
1,003
—
—
(502)
904
2
2
—
—
(165,491 )
275,466
—
—
(166,993)
277,375
$
1
$
—
$
402
$
4
$
— $
109,975 $
—
$
110,382
Cash flows from operating
activities
Net cash from
operating
activities
Cash flows from investing
activities
New construction and
capital
expenditures
Notes receivable from
affiliates
Proceeds from
disposal of assets
Net cash from
investing
activities
Cash flows from financing
activities
Net change in
borrowings
outstanding on
bank credit
facilities
Repayment of long-
term debt
Dividends paid to
noncontrolling
interests
Financing costs on
credit facilities
Distributions to
parent company,
net
Advances (to) from
affiliates
Notes payable to
affiliates
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
104
Cash flows from operating
activities
Net cash from
operating
activities
Cash flows from investing
activities
New construction and
capital expenditures
Notes receivable from
affiliates
Net cash from
investing
activities
Cash flows from financing
activities
Net change in
borrowings
outstanding on bank
credit facilities
Proceeds from issuance
of senior notes, net of
debt issuance costs
Financing costs on credit
facilities
Contributions from joint
venture partners
Distributions to parent
company, net
Advances (to) from
affiliates
Notes payable to
affiliates
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
NOBLE CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS
Year Ended December 31, 2012
(in thousands)
Noble-
Cayman
NHC
NDH
NHIL
NDS6
Other
Non-
guarantor
Subsidiaries
of Noble
Consolidating
Adjustments
Total
$
(86,784 )
$ (99,193) $ 134,370
$
(96,642)
$ 551,358
$
1,017,518 $
—
$ 1,420,627
—
—
(682,477)
—
—
—
—
(1,188,287)
—
—
(1,106,077 )
—
(1,788,554)
—
1,188,287
—
—
—
(682,477)
(1,188,287)
—
(1,106,077 )
1,188,287
(1,788,554)
(635,192 )
—
—
—
—
—
—
—
1,186,636
(5,221 )
—
—
—
(175,977 )
—
—
—
—
—
—
—
—
—
—
—
—
—
—
40,000
—
(284,256 )
99,193
548,626
98,295
(551,358)
89,500
—
(635,192)
—
—
—
—
—
1,186,636
(5,221)
40,000
(175,977)
—
—
1,188,287
—
—
—
—
—
(1,188,287 )
87,641
99,193
548,626
1,284,931
(551,358)
129,500
(1,188,287 )
410,246
857
—
146
—
519
385
2
—
—
—
40,941
234,525
—
—
42,319
235,056
$
1,003
$ — $
904
$
2
$ —
$
275,466 $
—
$
277,375
105
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 23- Unaudited Interim Financial Data
Unaudited interim consolidated financial information from continuing operations for Noble-UK for the years ended
December 31, 2014 and 2013 is as follows:
2014
Operating revenues
Operating income (loss)
Net income (loss) from continuing operations attributable
to Noble-UK
Net income (loss) per share from continuning operations
attributable to Noble-UK (1)
Basic
Diluted
2013
Operating revenues
Operating income
Net income from continuing operations attributable to
Noble-UK
Net income per share from continuning operations
attributable to Noble-UK (1)
Basic
Diluted
Mar. 31
Jun. 30
Sep. 30
Dec. 31
Quarter Ended
$ 795,187
248,968
$ 803,781
235,205
$ 828,796
243,633
$ 804,740
(541,864)
154,814
140,325
147,389
(594,539)
0.60
0.60
0.54
0.54
0.57
0.57
(2.38)
(2.38)
Mar. 31
Jun. 30
Sep. 30
Dec. 31
Quarter Ended
$ 566,061
135,437
$ 606,480
159,973
$ 640,513
239,248
$ 725,089
205,879
66,899
102,406
165,267
144,023
0.26
0.26
0.40
0.40
0.64
0.64
0.56
0.56
(1) Net income (loss) per share is computed independently for each of the quarters presented. Therefore, the sum of the quarters’ net
income (loss) per share may not equal the total computed for the year.
The Consolidated Statements of Comprehensive Income included for both Noble-UK and Noble-Cayman in our Quarterly
Report on Form 10-Q for the quarter ended September 30, 2014 erroneously included an adjustment related to the Spin-off for the
historical accumulated other comprehensive income of Paragon Offshore and omitted the line item “Total comprehensive income”.
We concluded these errors were not material individually, or in the aggregate, to either Noble-UK or Noble-Cayman in our Quarterly
Report on Form 10-Q for the quarter ended September 30, 2014 and we will revise these numbers accordingly in the Quarterly Report
on Form 10-Q for the quarter ended September 30, 2015.
106
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 chart presents the recast of Noble-UK for the three and nine months ended September 30, 2014 to properly reflect
the activity for the respective periods:
Net income
Other comprehensive income (loss), net of tax
Foreign currency translation adjustments
Foreign currency forward contracts
Net pension plan loss (net of tax benefit
of $386 for both the three and nine
months ended September 30, 2014)
Net pension plan curtailment and
settlement expense (net of tax
provision of $193 for both the three
and nine months ended
September 30, 2014)
Amortization of deferred pension plan
amounts (net of tax provision of $253
and $732 for the three months ended
September 30, 2014 and 2013,
respectively, and $758 and $2,192 for
the nine months ended September 30,
2014 and 2013, respectively)
Other comprehensive income (loss), net
Spin-off of Paragon Offshore
Total comprehensive income
Net comprehensive income attributable to
noncontrolling interests
Comprehensive income attributable to Noble
Corporation plc
Three Months Ended
September 30, 2014
Nine Months Ended
September 30, 2014
As Reported
As Adjusted
As Reported
As Adjusted
$ 147,646
$ 147,646
$ 678,350
$ 678,350
(1,577)
(6,925)
(1,577)
(6,925)
1,143
(273)
1,143
(273)
(1,409)
(1,409)
(1,409)
(1,409)
358
358
358
358
571
(8,982)
34,478
571
(8,982)
—
2,099
1,918
34,478
2,099
1,918
—
n/a
138,664
n/a
680,268
(20,471)
(20,471)
(60,290)
(60,290)
$ 152,671
$ 118,193
$ 654,456
$ 619,978
107
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 chart presents the recast of Noble-Cayman for the three and nine months ended September 30, 2014 to properly
reflect the activity for the respective periods:
Net income
Other comprehensive income (loss), net of tax
Foreign currency translation adjustments
Foreign currency forward contracts
Net pension plan loss (net of tax benefit of
$386 for both the three and nine months
ended September 30, 2014)
Net pension plan curtailment and settlement
expense (net of tax provision of $193 for
both the three and nine months ended
September 30, 2014)
Amortization of deferred pension plan
amounts (net of tax provision of $253 and
$732 for the three months ended
September 30, 2014 and 2013, respectively,
and $758 and $2,192 for the nine months
ended September 30, 2014 and 2013,
respectively)
Other comprehensive income (loss), net
Spin-off of Paragon Offshore
Total comprehensive income
Net comprehensive income attributable to
noncontrolling interests
Comprehensive income attributable to Noble
Corporation
Note 24- Subsequent Event
Three Months Ended
September 30, 2014
Nine Months Ended
September 30, 2014
As
Reported
As
Adjusted
As
Reported
As
Adjusted
$ 193,705
$ 193,705
$ 784,078
$ 784,078
(1,577)
(6,925)
(1,577)
(6,925)
1,143
(273)
1,143
(273)
(1,409)
(1,409)
(1,409)
(1,409)
358
358
358
358
571
(8,982)
34,478
571
(8,982)
—
2,099
1,918
34,478
2,099
1,918
—
n/a
184,723
n/a
785,996
(20,471)
(20,471)
(60,290)
(60,290)
$ 198,730
$ 164,252
$ 760,184
$ 725,706
In January 2015, we repurchased 6.2 million of our ordinary shares at an average price of $16.10 per share, excluding
commissions and stamp tax. Including these items, the average price paid per share during January 2015 was $16.21. There can be no
assurance as to the timing or amount of any additional repurchases. However, we intend to take a cautious approach to future share
repurchases at least until market conditions in the offshore drilling business stabilize.
108
Item 9.
Changes in and Disagreements With Accountants on Accounting and Financial Disclosure
None.
Item 9A. Controls and Procedures.
Evaluation of Disclosure Controls and Procedures
David W. Williams, Chairman, President and Chief Executive Officer of Noble Corporation plc, a public limited company
incorporated 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, 2014. 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, 2014. 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 were no changes in either Noble-UK’s or Noble-Cayman’s internal control over financial reporting that occurred during
the quarter ended December 31, 2014 that have materially affected, or are 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 2013.
Based on the assessment by management of Noble-UK and Noble-Cayman, both Noble-UK and Noble-Cayman maintained effective
internal control over financial reporting as of December 31, 2014.
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,
2014 as stated in their report, which is provided in this Annual Report on Form 10-K.
Item 9B. Other Information.
None.
109
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 2015 annual general
meeting of shareholders (the “2015 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 27, 2015 with respect to our executive officers:
Name
David W. Williams
Julie J. Robertson
James A. MacLennan
William E. Turcotte
Simon W. Johnson
Scott W. Marks
Bernie G. Wolford
Dennis J. Lubojacky
Age
Position
57 Chairman, President and Chief Executive Officer
Executive Vice President and Corporate Secretary
59
Senior Vice President and Chief Financial Officer
55
Senior Vice President and General Counsel
51
Senior Vice President – Marketing and Contracts
44
Senior Vice President – Engineering
55
55
Senior Vice President – Operations
62 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.
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 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.
Simon W. Johnson was named Senior Vice President - Marketing and Contracts effective 1 March 2014. Mr. Johnson joined
Noble Corporation in 2010 and most recently served as Vice President - Marketing (Europe, Africa and Middle East). Prior to joining
Noble, Mr. Johnson served as a Commercial Director at Seadrill Limited, an offshore driller. Mr. Johnson has held numerous
110
international marketing roles in the offshore drilling industry during the past 16 years. His early career was spent in offshore and
shorebase operations roles.
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, an oil and gas drilling contractor. 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.
Item 11.
Executive Compensation.
The sections entitled “Executive Compensation” and “Compensation Committee Report” appearing in the 2015 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 2015 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 2015 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 2015 Proxy Statement sets forth certain information with respect to accounting
fees and services, and is incorporated in this report by reference.
111
PART IV
ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES.
(a) The following documents are filed as part of this report:
(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.
112
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 plc, a company registered under the laws of England and Wales
Date: February 27, 2015
By: /s/ DAVID W. WILLIAMS
David W. Williams
Chairman, President and Chief Executive Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed by the following persons on
behalf of the Registrant and in the capacities and on the dates indicated.
Signature
Capacity In Which Signed
Date
/s/ DAVID W. WILLIAMS
David W. Williams
/s/ JAMES A. MACLENNAN
James A. MacLennan
/s/ DENNIS J. LUBOJACKY
Dennis J. Lubojacky
/s/ ASHLEY ALMANZA
Ashley Almanza
/s/ MICHAEL A. CAWLEY
Michael A. Cawley
/s/ JULIE H. EDWARDS
Julie H. Edwards
/s/ GORDON T. HALL
Gordon T. Hall
/s/ SCOTT D. JOSEY
Scott D. Josey
/s/ JON A. MARSHALL
Jon A. Marshall
/s/ MARY P. RICCIARDELLO
Mary P. Ricciardello
February 27, 2015
February 27, 2015
February 27, 2015
February 27, 2015
February 27, 2015
February 27, 2015
February 27, 2015
February 27, 2015
February 27, 2015
February 27, 2015
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)
Director
Director
Director
Director
Director
Director
Director
113
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this
report to be signed on its behalf by the undersigned, thereunto duly authorized.
Noble Corporation, a Cayman Islands company
Date: February 27, 2015
By: /s/ DAVID W. WILLIAMS
David W. Williams
President, Chief Executive Officer and Director
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed by the following persons on
behalf of the Registrant and in the capacities and on the dates indicated.
Signature
Capacity In Which Signed
Date
/s/ DAVID W. WILLIAMS
David W. Williams
President, Chief Executive Officer and
February 27, 2015
Director (Principal Executive Officer)
/s/ DENNIS J. LUBOJACKY
Vice President, Chief Financial
February 27, 2015
Dennis J. Lubojacky
/s/ DAVID M.J. DUJACQUIER
David M.J. Dujacquier
/s/ ALAN R. HAY
Alan R. Hay
/s/ ANDREW J. STRONG
Andrew J. Strong
Officer and Director
(Principal Financial and Accounting Officer)
Director
Director
Director
February 27, 2015
February 27, 2015
February 27, 2015
114
Exhibit
Number
2.1
2.2
2.3
2.4
3.1
3.2
4.1
4.2
4.3
4.4
4.5
4.6
4.7
4.8
INDEX TO EXHIBITS
Exhibit
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).
Master Separation Agreement, dated as of July 31, 2014, between Noble-Cayman and Paragon Offshore plc. (filed as
Exhibit 2.1 to Noble-UK’s Current Report on Form 8-K filed on August 5, 2014 and incorporated herein by reference).
Composite Copy of Articles of Association of Noble-UK, as of June 10, 2014 (filed as Exhibit 3.1 to Noble-UK’s
Quarterly Report on Form 10-Q for the quarter ended September 30, 2014 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).
115
Exhibit
Number
4.9
4.10
4.11
4.12
4.13
4.14
4.15
4.16
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).
116
Exhibit
Number
4.17
4.18
4.19
4.20
4.21
4.22
4.23
4.24
4.25
4.26
4.27
Exhibit
Third Supplemental Indenture, dated as of February 3, 2011, among Noble Holding International Limited, as Issuer,
Noble Corporation, as Guarantor, and The Bank of New York Mellon Trust Company, N.A., as Trustee, relating to
3.05% senior notes due 2016 of Noble Holding International Limited, 4.625% senior notes due 2021 of Noble Holding
International Limited, and 6.05% senior notes due 2041 of Noble Holding International Limited (filed as Exhibit 4.1 to
Noble-Cayman’s Current Report on Form 8-K filed on February 3, 2011 and incorporated herein by reference).
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).
Second Amendment to 364-Day Revolving Credit Agreement dated as of August 18, 2014, 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 Holding (U.S.) 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 August 20, 2014 and incorporated herein by reference).
117
Exhibit
Number
4.28
4.29
10.1*
10.2*
10.3*
10.4*
10.5*
10.6*
Exhibit
Revolving Credit Agreement dated as of January 26, 2015, among Noble-Cayman and Noble International Finance
Company, a Cayman Islands company, as borrowers; JPMorgan Chase Bank, N.A., as administrative agent and a
swingline lender; Wells Fargo Bank, National Association, as a swingline lender; the lenders party thereto; Barclays
Bank PLC, Citibank, N.A., DNB Bank ASA New York Branch, HSBC Bank USA, N.A., SunTrust Bank and Wells
Fargo, as co-syndication agents; BNP Paribas, Credit Suisse AG, Cayman Islands Branch and Mizuho Bank, Ltd, as co-
documentation agents; and J.P. Morgan Securities LLC, Barclays Bank PLC, Citigroup Global Markets Inc., DNB
Markets, Inc., HSBC Securities (USA) Inc., SunTrust Robinson Humphrey, Inc. and Wells Fargo Securities, LLC, as
joint lead arrangers and joint lead bookrunners (filed as Exhibit 4.1 to Noble-UK’s Current Report on Form 8-K filed on
January 29, 2015 and incorporated herein by reference).
364-Day Revolving Credit Agreement dated as of January 29, 2015, among Noble-Cayman and Noble International
Finance Company, a Cayman Islands company, as borrowers; JPMorgan, as administrative agent; the lenders party
thereto; Barclays Bank PLC, Citibank, N.A. and HSBC Bank USA, N.A., as co-syndication agents; BNP Paribas, as
documentation agent; and J.P. Morgan Securities LLC, Barclays Bank PLC, Citigroup Global Markets Inc., and HSBC
Securities (USA) Inc., as joint lead arrangers and joint lead bookrunners (filed as Exhibit 4.2 to Noble-UK’s Current
Report on Form 8-K filed on January 29, 2015 and incorporated herein by reference).
Noble Drilling Corporation Equity Compensation Plan for Non-Employee Directors (filed as Exhibit 4.1 to Noble
Drilling Corporation’s Registration Statement on Form S-8 (No. 333-17407) dated December 6, 1996 and incorporated
herein by reference).
Amendment, effective as of May 1, 2002, to the Noble Drilling Corporation Equity Compensation Plan for Non-
Employee Directors (filed as Exhibit 10.1 to Post-Effective Amendment No. 1 to Noble-Cayman’s Registration
Statement on Form S-8 (No. 333-17407) and incorporated herein by reference).
Amendment No. 2 to the Noble Corporation Equity Compensation Plan for Non-Employee Directors dated February 4,
2005 (filed as Exhibit 10.20 to Noble-Cayman’s Annual Report on Form 10-K for the year ended December 31, 2004 and
incorporated herein by reference).
Amendment to the Noble Corporation Equity Compensation Plan for Non-Employee Directors dated December 31, 2008
(filed as Exhibit 10.29 to Noble-Cayman’s Annual Report on Form 10-K for the year ended December 31, 2008 and
incorporated herein by reference).
Amended and Restated Noble Corporation Equity Compensation Plan for Non-Employee Directors effective March 27,
2009 (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).
10.7*
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).
10.8*
10.9*
10.10*
10.11*
10.12*
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).
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).
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).
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).
118
Exhibit
Number
10.13*
10.14*
10.15*
10.16*
10.17*
10.18*
10.19*
10.20*
10.21*
10.22*
10.23*
10.24*
10.25*
10.26*
Exhibit
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).
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).
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).
Noble Drilling Corporation Retirement Restoration Plan dated December 29, 2008, effective January 1, 2009 (filed as
Exhibit 10.32 to Noble-Cayman’s Annual Report on Form 10-K for the year ended December 31, 2008 and incorporated
herein by reference).
Amendment No. 1 to Noble Drilling Corporation Retirement Restoration Plan dated July 10, 2009 (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).
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).
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).
Amendment to the Second Amended and Restated Noble Corporation 1992 Nonqualified Stock Option and Share Plan
for Non-Employee Directors dated December 31, 2008 (filed as Exhibit 10.28 to Noble-Cayman’s Annual Report on
Form 10-K for the year ended December 31, 2008 and incorporated herein by reference).
Third 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).
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).
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).
Sixth Amended and Restated Noble Corporation 1992 Nonqualified Stock Option and Share Plan for Non-Employee
Directors, effective as of January 30, 2014 (filed as Exhibit 10.24 to Noble-UK’s Annual Report on Form 10-K for the
year ended December 31, 2013 and incorporated herein by reference).
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).
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*
10.29*
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).
Noble Corporation 1991 Stock Option and Restricted Stock Plan, effective as of January 30, 2014 (filed as Exhibit 10.29
to Noble-UK’s Annual Report on Form 10-K for the year ended December 31, 2013 and incorporated herein by
reference).
119
Exhibit
Number
10.30*
10.31*
10.32*
Exhibit
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).
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).
Amendment No. 2 to the Noble Drilling Corporation 2009 401(k) Savings Restoration Plan effective November 1, 2013
(filed as Exhibit 10.32 to Noble-UK’s Annual Report on Form 10-K for the year ended December 31, 2013 and
incorporated herein by reference).
10.33*
Noble Corporation Summary of Directors’ Compensation.
10.34*
10.35*
10.36*
10.37*
10.38*
10.39*
10.40*
10.41*
10.42*
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).
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).
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).
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).
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).
Form of Noble Corporation Performance-Vested Restricted Stock Unit Award under the Noble Corporation 1991 Stock
Option and Restricted Stock Plan (filed as Exhibit 10.39 to Noble-UK’s Annual Report on Form 10-K for the year ended
December 31, 2013 and incorporated herein by reference).
Form of Noble Corporation Time-Vested Restricted Stock Unit Award under the Noble Corporation 1991 Stock Option
and Restricted Stock Plan (filed as Exhibit 10.40 to Noble-UK’s Annual Report on Form 10-K for the year ended
December 31, 2013 and incorporated herein by reference).
Amended and Restated Form of Noble-UK 2013 Performance-Vested Restricted Stock Unit Award under the Noble-UK
1991 Stock Option and Restricted Stock Plan (filed as Exhibit 10.1 to Noble-UK’s Current Report on Form 8-K for the
year filed on October 16, 2014 and incorporated herein by reference).
Amended and Restated Form of Noble-UK 2014 Performance-Vested Restricted Stock Unit Award under the Noble-UK
1991 Stock Option and Restricted Stock Plan (filed as Exhibit 10.2 to Noble-UK’s Current Report on Form 8-K for the
year filed on October 16, 2014 and incorporated herein by reference).
10.43*
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).
10.44*
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).
10.45*
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).
10.46*
Noble Corporation 2014 Short Term Incentive Plan (filed as Exhibit 10.5 to Noble-UK’s Quarterly Report on Form 10-Q
for the quarter ended September 30, 2014 and incorporated herein by reference).
10.47*
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).
10.48*
Form of Restated Employment Agreement and Guaranty Agreement (2011 Form) (filed as Exhibit 10.3 to Noble-UK’s
120
Exhibit
Number
Exhibit
Current Report on Form 8-K filed on November 20, 2013 and incorporated herein by reference).
10.49*
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).
10.50*
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).
10.51*
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).
10.52*
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).
10.53
Tax Sharing Agreement, dated as of July 31, 2014, between Noble-UK and Paragon Offshore plc. (filed as Exhibit 10.1
to Noble-UK’s Current Report on Form 8-K filed on August 5, 2014 and incorporated herein by reference).
10.54
10.55
10.56
21.1
23.1
31.1
31.2
31.3
Employee Matters Agreement, dated as of July 31, 2014, between Noble-Cayman and Paragon Offshore plc. (filed as
Exhibit 10.2 to Noble-UK’s Current Report on Form 8-K filed on August 5, 2014 and incorporated herein by reference).
Transition Services Agreement, dated as of July 31, 2014, between Noble-Cayman and Paragon Offshore plc. (filed as
Exhibit 10.3 to Noble-UK’s Current Report on Form 8-K filed on August 5, 2014 and incorporated herein by reference).
Transition Services Agreement (Brazil), dated as of July 31, 2014, among Paragon Offshore do Brasil Limitada, Paragon
Offshore (Nederland) B.V., Paragon Offshore plc, Noble-Cayman, Noble Dave Beard Limited and Noble Drilling
(Nederland) II B.V. (filed as Exhibit 10.4 to Noble-UK’s Current Report on Form 8-K filed on August 5, 2014 and
incorporated herein by reference).
Subsidiaries of Noble-UK and Noble-Cayman.
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).
32.1+
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.
32.2+
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.
32.3+
Certification of Dennis J. Lubojacky pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002.
101
Interactive data files
* Management contract or compensatory plan or arrangement.
+ Furnished in accordance with Item 601(b)(32)(ii) of Regulation S-K.
121
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
2014
2013(1)
3,981
876
4,857
4,882
931
5,813
______________
(1) The 2013 headcount information includes employees that were ultimately transferred to Paragon Offshore as part of the Spin-off.
(ii) Employee costs (in thousands)
Group
Salaries
Pensions
Social insurance
Total employee costs(1)
2014
$
906,676
20,679
4,335
931,690
$
2013
946,688
23,514
4,820
975,022
$
$
______________
(1) Total employee costs for both 2014 and 2013 include expenses for employees that were ultimately transferred to Paragon Offshore as part of
the Spin-off. Total employees costs related to Paragon Offshore employees are through July 31, 2014, the date of the Spin-off.
(iii) Auditor remuneration
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
2014
2013
Fees payable to company's auditor and its associates for the audit of
parent company and consolidated financial statements
$
1,900
$
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
2,227
1,955
130
851
448
7,511
$
3,081
2,865
148
1,724
476
9,963
$
1
Independent auditors’ report to the members of Noble
Corporation Plc
Report on the group financial statements
Our opinion
In our opinion, Noble Corporation Plc’s group financial statements (the “financial statements”):
give a true and fair view of the state of the group’s affairs as at 31 December 2014 and of its profit and cash flows
for the year then ended;
have been properly prepared in accordance with accounting principles generally accepted in the United States of
America (US GAAP);
have been prepared in accordance with the requirements of the Companies Act 2006.
What we have audited
Noble Corporation Plc’s financial statements comprise:
the Consolidated Balance Sheet as at 31 December 2014;
the Consolidated Statements of Income and Consolidated Statements of Comprehensive Income for the year
then ended;
the Consolidated Statements of Cash Flows for the year then ended;
the Consolidated Statements of Equity for the year then ended; and
the notes to the financial statements, which include a summary of significant accounting policies and other
explanatory information.
The financial reporting framework that has been applied in the preparation of the financial statements is US GAAP.
In applying the financial reporting framework, the directors have made a number of subjective judgements, for example in
respect of significant accounting estimates. In making such estimates, they have made assumptions and considered future
events.
Opinions on other matters prescribed by the Companies Act 2006
In our opinion the information given in the UK Statutory Strategic Report and the UK Statutory Directors’ Report for the
financial year for which the financial statements are prepared is consistent with the financial statements.
Other matters on which we are required to report by exception
Adequacy of information and explanations received
Under the Companies Act 2006 we are required to report to you if, in our opinion, we have not received all the information
and explanations we require for our audit. We have no exceptions to report arising from this responsibility.
Directors’ remuneration
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. We have no exceptions to report arising from this responsibility.
Responsibilities for the financial statements and the audit
Our responsibilities and those of the directors
As explained more fully in the Statement of directors' responsibilities, the directors are responsible for the preparation of
the 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 financial statements in accordance with applicable law and
International Standards on Auditing (UK and Ireland) (“ISAs (UK & 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.
What an audit of financial statements involves
We conducted our audit in accordance with ISAs (UK & Ireland). 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.
We primarily focus our work in these areas by assessing the directors’ judgements against available evidence, forming our
own judgements, and evaluating the disclosures in the financial statements.
We test and examine information, using sampling and other auditing techniques, to the extent we consider necessary to
provide a reasonable basis for us to draw conclusions. We obtain audit evidence through testing the effectiveness of
controls, substantive procedures or a combination of both.
In addition, we read all the financial and non-financial information in the Annual Report and Financial Statements to
identify material inconsistencies with the audited financial statements and to identify any information that is apparently
materially incorrect based on, or materially inconsistent with, the knowledge acquired by us in the course of performing the
audit. If we become aware of any apparent material misstatements or inconsistencies we consider the implications for our
report.
Other matter
We have reported separately on the company financial statements of Noble Corporation Plc for the year ended 31 December
2014 and on the information in the Directors’ Remuneration Report that is described as having been audited.
Stephen G Mount (Senior Statutory Auditor)
for and on behalf of PricewaterhouseCoopers LLP
Chartered Accountants and Statutory Auditors
Reading
27 February 2015
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 27, 2015
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
Additionally, for the reasons discussed above in the Annual Report on
Form 10-K, we also performed a similar analysis of our investment in
subsidiaries for our parent company. As a result of this analysis, we
recorded an impairment of approximately $4.4 billion on our investment
in subsidiaries due to both the current market conditions and the Spin-off
of Paragon Offshore.
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 27, 2015
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
Names of all directors and their interests
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.
Part II, Item 8. Financial Statements and Supplementary Data, Note 24 -
Subsequent Event
Part III, Item 10. Directors, Executive Officers and Corporate Governance
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 10.52)
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 16 -
Derivative Instruments and Hedging Activities and Note 17 - Financial
Instruments and Credit Risk
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 materially
reduced."
Part I, Item 1A. Risk Factors, "An over-supply of rigs may lead to a
reduction in dayrates and demand for our rigs and, therefore, may
adversely impact our revenues and profitability."
Part I, Item 1A. Risk Factors, "We are substantially dependent on several
of our customers, including Shell and Freeport-McMoRan, Inc.
("Freeport"), and the loss of these customers could have a material
adverse effect on our financial condition and results of operations."
Part II, Item 8. Financial Statements and Supplementary Data, Note 17 -
Financial Instruments and Credit Risk
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 27, 2015
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 our policy on directors’ compensation, and which was approved
by binding vote of our shareholders at our 2014 Annual General Meeting of Shareholders for a three year period
beginning on the date of such Meeting, and thereafter will be approved at least every third year; and
(C) the annual report on compensation which sets out director compensation and details the link between Company
performance and compensation for 2014. The annual report on compensation together with this statement is subject
to an advisory vote at the 2015 Annual General Meeting of Shareholders (“2015 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.
1
2013-2014 Compensation Program Changes and Highlights
The Committee has taken a number of key actions over the past few years to strengthen the Company’s commitment to pay-
for-performance and corporate governance. In making these changes, the Committee considered feedback from shareholders
and proxy advisory services in evaluating these changes to our compensation program. The changes are set out in the
following table.
Salary and Equity
Awards for 2015
No 2015 salary increase for executive directors; and
The value of 2015 equity for executive directors (both time and performance vested-
awards) were reduced by 10% as compared to 2014.
Modification of
Peer Group
Changes to Short
Term Incentive
Plan (STIP)
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. The
resulting peer group, which consists of the type of companies we compete against to attract and
retain executive talent, remains our primary benchmarking tool for comparing each component
of our compensation program.
In 2014, we began to use a new driller peer group, consisting of our direct competitors in the
offshore drilling industry, to measure our performance for the vesting of performance-based
long-term equity incentives. We believe the driller peer group is an appropriate benchmark
against which to measure Company performance in the complex and cyclical offshore drilling
industry.
In 2013 and 2014, 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 formula-based and determined based on
EBITDA performance relative to budget and safety performance relative to industry
standard; and
so that individual payments will be formula-based based on EBITDA and safety
performance and the achievement of specific company, team and individual
objectives.
Changes to Long
Term Incentive
Plan (LTIP)
Program
Elimination of
Cash Buyouts of
Options and
Option Repricing
In 2013, we refocused our LTIP program:
to award restricted stock units instead of stock option awards; and
to increase the portion of senior executive’s awards under the LTIP comprising
performance-vested restricted stock unit awards to 50%, with the remainder being in
the form of time-vested restricted stock unit awards.
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
2
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.
If approved by shareholders at our 2015 Annual General Meeting, a new incentive plan will
replace our 1991 Plan. The new incentive plan codifies in one plan many of the best practices
we have adopted.
Share Ownership
Policy and Equity
Holding Period
In 2014, we adopted a new 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.
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 27, 2015
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
The Compensation Policy set out in this report was approved by a vote of shareholders at the 2014 Annual General Meeting
of Shareholders on June 10, 2014, and will continue in effect until December 31, 2017 unless amended and approved by
shareholders prior to such date.
1
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
2
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
3
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)
4
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
5
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.
6
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.
7
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, 2014 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
2015 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 2015 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.
8
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
In the past few years, we have conducted an extensive shareholder outreach effort regarding executive compensation matters
through a wide-ranging dialogue between management and numerous shareholders. We also took into consideration certain
proxy advisory firms’ reports regarding our compensation program. The Committee considered all of such feedback in
designing and making changes to our compensation program. Our current compensation program is largely a reflection of
this shareholder input.
We are committed to continued engagement between shareholders and the Company to fully understand and consider
shareholders’ input and concerns.
9
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.
10
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, full year
2013 compensation totals are included to provide a more meaningful discussion.
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 2014:
Base Salary
$
1,050,000
STIP(1)
2,113,650
$
LTIP(2)
4,214,594
$
Pensions(3)
$
1,208,327
All Other
Compensation(4)
$
2,460,156
2014
Total
11,046,727
$
2013
Total
7,039,906
$
(1) Short Term Incentive Plan (“STIP”) payment attributable to 2014 performance.
(2) The amounts disclosed in this column represent the vesting date fair market value of awards as follows:
PVRSU(a)
$
2,061,798
2014
TVRSU
2,152,796
$
Total
4,214,594
$
2013
Total
2,514,259
$
_____________
(a) 45.34% of the PVRSU’s for the 2011-2013 performance period vested in January 2014 based on the performance target achieved.
(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 all other compensation received by our CEO for the years ended December 31, 2014 and 2013:
Expatriate/
Relocation
Benefits(a)
Dividends on
Non-Vested
Restricted
Stock Units
$
1,117,995
$
1,312,809
_____________
(a) Relocation/expatriate assistance consists of the following:
$
29,352
$
Benefits
and Other
2014
Total
2,460,156
2013
Total
1,840,708
$
Housing/Car
Allowance
$
388,966
Foreign
Service
Premium
$
168,000
Resident
Area
Allowance
$
96,250
Annual
Home Leave
$
14,572
Tax
Equalization
$
645,021
2014
Total
1,312,809
$
2013
Total
1,317,929
$
Compensation of Non-executive Directors
The following table sets forth the compensation of our Non-executive Directors during 2014:
Ashley Almanza
Michael Cawley
Lawrence Chazen(1)
Julie Edwards
Gordon Hall
Scott Josey(2)
Jon Marshall
Mary Ricciardello
Total
Annual
Retainer
47,500
$
47,500
32,115
47,500
47,500
25,000
47,500
47,500
342,115
$
Board/Committee
Meeting Fees
$
Lead Director/
Committee Chairman
$
-
21,250
-
-
35,000
-
15,000
25,000
96,250
$
$
Total
Fees
96,500
104,750
62,115
85,500
120,500
43,000
99,500
126,000
737,865
Annual
Equity Award(3)
230,994
$
230,994
-
230,994
230,994
136,625
230,994
230,994
1,522,589
$
49,000
36,000
30,000
38,000
38,000
18,000
37,000
53,500
299,500
Other
Compensation
2014
Total
2013
Total
$
$
$
137
132
-
132
132
-
132
132
797
327,631
335,876
62,115
316,626
351,626
179,625
330,626
357,126
2,261,251
317,753
398,253
381,253
370,753
390,753
-
383,753
403,753
2,646,271
$
$
$
$
$
(1) Retired from the Board on June 10, 2014.
(2) Appointed to the Board on June 10, 2014.
(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 2014 and outstanding options at December
31, 2014 held by the Directors:
Outstanding
at
1/1/2014
Granted
during
Year(1)
Exercised
during
Year
Spin-off
Adjustment(3)
Outstanding
at
12/31/2014
Number of
Securities
Underlying
Unexercised
Options (#)
Exercisable
Number of
Securities
Underlying
Unexercised
Options (#)
Unexercisable
David Williams
Michael Cawley
Lawrence Chazen
Julie Edwards
Mary Ricciardello
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
20,000
4,000
4,000
28,000
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
15,000
-
-
15,000
-
-
-
-
20,000
-
-
20,000
20,380
5,596
10,481
20,603
14,154
18,457
18,200
107,871
-
815
815
1,630
815
815
4,076
4,076
-
815
815
1,630
120,380
33,056
61,907
121,695
83,603
109,023
107,502
637,166
-
4,815
4,815
9,630
4,815
4,815
24,076
24,076
-
4,815
4,815
9,630
120,380
33,056
61,907
121,695
83,603
109,023
71,668
601,332
-
4,815
4,815
9,630
4,815
4,815
24,076
24,076
-
4,815
4,815
9,630
-
-
-
-
-
-
35,834
35,834
(2)
-
-
-
-
-
-
-
-
-
-
-
-
Exercise
Price(3)
$
26.18
$
29.74
$
35.73
$
20.49
$
32.78
$
31.33
$
30.59
Expiry
Date
September 20, 2016
February 13, 2017
February 7, 2018
February 25, 2019
February 6, 2020
February 4, 2021
February 3, 2022
$
$
$
18.93
22.12
34.27
April 23, 2014
April 29, 2015
April 28, 2016
$
34.27
April 28, 2016
$
34.27
April 28, 2016
$
$
$
18.93
22.12
34.27
April 23, 2014
April 29, 2015
April 28, 2016
In 2013, we discontinued the use of stock option awards.
(1)
(2) Exercisable on February 3, 2015.
(3) As a result of the spin-off of Paragon Offshore, additional options were issued to preserve the economic value of the grants immediately prior to
the Spin-off.
The market price of the company’s shares at the end of the financial year was $16.57. The range of market prices during the
year was between $36.94 and $14.52.
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 2014
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
2014
Results
174%
200%
Goal Achievement
Performance Component (as funded)
Component
Payout
1.13
0.70
1.83
1.83
Aggregate STIP Award
2,113,650
2
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 2014 and 2013 to our
Executive Director:
Year
2013
2014
TVRSU
3,290,902
3,228,592
$
$
PVRSU
3,967,833
4,009,911
$
$
Total
7,258,735
7,238,503
$
$
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, 2014 for our Executive Director:
Award
Date
2/4/2011
2/3/2012
2/1/2013
1/29/2014
End of
Vesting
Period (1)
2/4/2014
2/3/2015
2/1/2016
1/29/2017
Unvested RSU's
Outstanding at
1/1/2014
21,215
43,461
79,452
-
144,128
RSU's
Granted
-
-
-
101,977
101,977
RSU's
Vested
21,215
21,730
26,484
-
69,429
Spin-off
Adjustment (2)
-
4,429
10,795
20,783
36,007
Unvested RSU's
Outstanding at
12/31/2014
-
26,160
63,763
122,760
212,683
Market Price
Per Share on
Grant Date
$
$
$
$
37.60
36.90
41.42
31.66
Market Value
Per Share on
Vesting Date
$ 31.03
$ 30.70
$ 31.25
N/A
Value
on Vesting
Date
$ 658,301
$ 667,002
$ 827,493
N/A
$ 2,152,796
(1) Time-Vested restricted stock unit awards vest at a rate of 1/3 per year on each anniversary of the grant date.
(2) As a result of the spin-off of Paragon Offshore, additional RSU’s were issued to preserve the economic value of the grants immediately prior to the
Spin-off.
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, 2014 for our Executive Director:
Measurement
Period
2011-2013
2012-2014
2013-2015
2014-2016
Vesting
Date(1)
January 2014
January 2015
February 2016
January 2017
Unvested RSU's
Outstanding at
1/1/2014
142,688
136,870
158,904
-
438,462
RSU's
Granted
-
-
-
203,954
203,954
RSU's
Vested
64,694
-
-
-
64,694
RSU's
Forfeited
77,994
-
-
-
77,994
Spin-off
Adjustment (2)
-
27,894
32,385
41,566
101,845
Unvested RSU's
Outstanding at
12/31/2013
-
164,764
191,289
245,520
601,573
Fair Value
Per Share on
Grant Date
$
$
$
$
16.77
20.05
24.97
19.66
Market Value
Per Share on
Vesting Date
$ 31.87
N/A
N/A
N/A
Value
on Vesting
Date
$ 2,061,798
N/A
N/A
N/A
$ 2,061,798
(1) Performance-Vested restricted stock units vest, if at all, at the end of the three-year measurement period to which they relate.
(2) As a result of the spin-off of Paragon Offshore, additional RSU’s were issued to preserve the economic value of the grants immediately prior to the
Spin-off.
The following sets forth the PVRSU performance thresholds for the 2011-2013 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, 2013 resulted in 45.34% vesting of the PVRSU’s for such performance period; the remaining
54.66% were forfeited in January 2014.
3
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)
8.281
8.281
Present Value of
Accumulated
Benefit(1)(2)
$
$
295,593
2,986,925
Payments
During 2014
-
$
$
-
Change in
Pension Value and
Non-Qualified
Deferred
Compensation
Earnings(3)
$
$
100,979
1,107,348
(1) Computed as of December 31, 2014.
(2) For purposes of calculating the amounts in this column, retirement age was assumed to be the normal retirement age of 65, as defined in the Salaried
Employees’ Retirement Plan.
(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.
Payments to past / former directors
There were no payments to past / former directors for the year ended December 31, 2014.
Payments for loss of office
There were no payments for loss of office for the year ended December 31, 2014.
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, 2014:
Beneficially
Owned
Shares
390,282
9,969
90,683
55,291
60,334
42,363
2,419
40,442
90,871
%
Shareholding
Guideline
Achieved(1)
100%
55%
100%
100%
100%
100%
13%
100%
100%
Vested but
Unexercised
Options
601,332
-
9,630
4,815
24,076
-
-
-
9,630
Restricted Stock Unit
Awards Subject
to Performance or
Vesting Conditions
814,256
-
-
-
-
-
-
-
-
Weighted
Average
Exercise Price of
Vested Options
$
28.58
$
-
$
28.20
$
34.27
$
34.27
$
-
$
-
$
-
$
28.20
Director
David Williams
Ashley Almanza
Michael Cawley
Lawrence Chazen
Julie Edwards
Gordon Hall
Scott Josey
Jon Marshall
Mary Ricciardello
(1) Calculated using closing share price at December 31, 2014 of $16.57.
Gains made by the Directors on Option Exercises
The table below shows gains realized by Directors from the exercise of stock options during 2014. 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.
Michael Cawley
Mary Ricciardello
Aggregate gain on exercise of options
Number of
Options Exercised
15,000
20,000
35,000
Exercise
Price
$
$
18.93
18.93
Market
Value at
Exercise Date
$ 31.39
$ 30.75
Gains on
Exercise of
Options
$
$
$
186,965
236,300
423,265
4
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, 2010 to
December 31, 2014. 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, 2010 and that all dividends or distributions and returns
of capital were reinvested on the date of payment.
COMPARISON OF CUMULATIVE FIVE YEAR TOTAL RETURN
$250
$200
$150
$100
$50
$0
12/31/09
12/31/10
12/31/11
12/31/12
12/31/13
12/31/14
Noble Corporation
S&P 500 Index
Dow Jones U.S. Oil Equipment & Services Index
Company Name / Index
Noble Corporation
S&P 500 Index
Dow Jones U.S. Oil Equipment & Services
2010
$
90.35
115.06
127.34
Chief Executive Officer's compensation in the past five years
INDEXED RETURNS
Year Ended December 31,
2012
2011
2013
$
77.55
117.49
111.51
$
90.72
136.30
111.88
$
99.61
180.44
143.66
2014
$
52.56
205.14
118.91
CEO single figure ($'000)(1)
Bonus (% of maximum awarded)
Performance-based LTI (% of maximum vesting)
$
2010
7,449,879
63%
44%
2011
$ 6,124,526
28%
0%
$
2012
7,895,988
25%
21%
$
2013
7,039,906
71%
0%
$
2014
11,046,727
92%
45%
(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.
5
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, 2014 and the year ended December 31, 2013 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
0%
6%
STIP
41%
37%
LTIP(1)
-14%
-23%
(1) For comparability, this is calculated using the TVRSU award vestings in 2013 and 2014. 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, 2013 and the year ended December 31, 2014.
Relative importance of spend on pay
The table below shows the total pay for all employees compared to other key financial metrics and indicators:
Employee costs ($'000)(1)
Dividends paid ($000)
Average number of employees(2)
Revenues from continuing operations ($000)
Income from continuing operations before income taxes ($000)
Year Ended December 31,
2014
2013
$
$
$
$
931,690
386,579
4,857
3,232,504
29,465
$
$
975,022
194,913
5,813
2,538,143
638,421
$
$
% change
-4%
98%
-16%
27%
-95%
(1) Total employee costs for both 2014 and 2013 include expenses for employees that were ultimately transferred to Paragon Offshore as part of the
Spin-off. Total employee costs related to Paragon Offshore employees are through July 31, 2014, the date of the Spin-off.
(2) The 2013 average number of employees includes employees that were ultimately transferred to Paragon Offshore as part of the Spin-off.
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 83%) 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 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.
6
Statement of voting at general meeting
At the Annual General Meeting in June 2014, 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
183,343,957
8,007,328
191,351,285
797,826
% of Total Votes
96%
4%
100%
7
NOBLE CORPORATION PLC
UK STATUTORY FINANCIAL STATEMENTS
December 31, 2014
NOBLE CORPORATION PLC
COMPANY BALANCE SHEET
as at December 31
Notes
2014
$'000
2013
$'000
FIXED ASSETS
Investments in subsidiaries
CURRENT ASSETS
Debtors (including $23,563 due after one year)
Cash at bank and in hand
Creditors - amounts falling due within one year
NET CURRENT LIABILITIES
Creditors - amounts falling due after more than one year
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
4
5
6
7
8
8
9
5,126,364
9,506,779
66,467
45
66,512
1,410
319
1,729
(1,373,925)
(779,167)
(1,307,413)
(777,438)
(5,542)
-
3,813,409
8,729,341
2,475
78
4,154
3,806,702
3,813,409
2,534
78
1,017
8,725,712
8,729,341
The financial statements on pages 1 to 11 were approved by the Board of Directors on February 27, 2015
and were signed on its behalf by:
Director
Registered number: 08354954
1
NOBLE CORPORATION PLC
RECONCILIATION OF MOVEMENTS IN SHAREHOLDERS’ FUNDS
for the year ended December 31
Opening shareholders' funds
Merger with Noble-Swiss
Share capital impact of merger with Noble-Swiss
Issuance of deferred share capital
Exercise of stock options
Tax benefit of equity transactions
Dividends
Repurchases of shares
Share-based compensation cost
Issuance of share-based compensation shares
Receipt of Paragon Offshore from Noble-Cayman
Spin-off of Paragon Offshore
Loss for the year
Closing shareholders' funds
Notes
3
3
2
2014
$'000
8,729,341
-
-
-
2,647
(528)
(257,725)
(154,145)
46,389
(9,070)
1,593,350
(1,593,350)
(4,543,500)
3,813,409
2013
$'000
-
8,733,594
2,534
78
1,017
-
-
-
6,765
-
-
-
(14,647)
8,729,341
2
NOTES TO THE FINANCIAL STATEMENTS
for the year ended December 31, 2014
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 periods presented, 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. The 2013 financial statements presented herein,
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.
Noble Corporation, a Cayman Islands company (“Noble-Cayman”) is an indirect, 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.
Consolidated financial statements
The financial statements contain information included in the Annual Report on Form 10-K about Noble-UK as an
individual company and do not contain consolidated financial information as the parent of a group. The form 10-K
can be found on the Company’s website.
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 recoverable amount, being 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. Value in use is derived from taking the net discounted cash flows of the trading assets less the carrying
value of the liabilities. Net realizable value is derived from current market sales price, less any incidental selling
expenses.
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. When shares are cancelled, the nominal amount is recorded to the capital
redemption reserve.
3
NOTES TO THE FINANCIAL STATEMENTS
for the year ended December 31, 2014
(CONTINUED)
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.
Distributions from group entities
Distributions from group entities are recorded at the time of the transaction at fair value. For non-cash distributions
the fair value is determined based on the price that would be received to sell an asset or paid to transfer a liability in
an orderly transaction between market participants at the transaction date.
Translation of foreign currencies
The Company’s financial statements are presented in US dollars, the functional currency of the company. Transactions
in foreign currencies are recorded at the rate of exchange prevailing at the date of the respective transaction. 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. Any balance sheet transactions denominated in British pounds have been translated at a
December 31, 2014 closing rate of $1: £1.56.
Share based payments
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 re-measured 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 cost, 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.
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.
4
NOTES TO THE FINANCIAL STATEMENTS
for the year ended December 31, 2014
(CONTINUED)
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 in its standalone financial statements. The consolidated financial statements of
Noble, which includes cash flow statements, are publicly available.
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. LOSS FOR THE YEAR
As permitted by section 408 of the Companies Act 2006, the Company has elected not to present its own profit and
loss account for the year. The Company reported a loss for the financial year ended December 31, 2014 of $4.5 billion
(2013: loss of $15 million). Loss for 2014 includes an impairment charge related to our investment in subsidiaries of
$4.4 billion, which is discussed further in Note 4. In addition, 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 statement of
recognized gains and losses.
3. SPIN-OFF OF PARAGON OFFSHORE PLC (“Paragon Offshore”)
On August 1, 2014, the Company completed the separation and spin-off of a majority of its standard specification
offshore drilling business (the “Spin-off”) through a pro rata distribution of all of the ordinary shares of its wholly-
owned subsidiary, Paragon Offshore, to the holders of Noble’s ordinary shares. Our shareholders received one share
of Paragon Offshore for every three shares of Noble owned as of July 23, 2014, the record date for the distribution.
Through the Spin-off, we disposed of most of our standard specification drilling units and related assets, liabilities
and business. In connection with the distribution at fair value of Paragon Offshore, we reduced our equity reserves by
approximately $1.1 billion. This amount represents the impairment in investments following the spin-off.
Prior to the completion of the Spin-off, Noble and Paragon Offshore entered into a series of agreements to effect the
separation and Spin-off and govern the relationship between the parties after the Spin-off. Of these agreements, the
tax sharing agreement (“TSA”) and the transition services agreement were entered into by Noble-UK. The tax sharing
agreement provides for the allocation of tax liabilities and benefits between us and Paragon Offshore and governs the
parties’ assistance with tax-related claims. In the transition services agreement, we agreed to continue, for a limited
period of time, to provide various interim support services to Paragon Offshore, and Paragon Offshore agreed to
provide various interim support services to us.
4. INVESTMENT IN SUBSIDIARIES
At January 1, 2013
Arising on merger
Share-based compensation costs
At December 31, 2013
Share-based compensation costs
Receipt of Paragon Offshore from Noble-Cayman
Spin-off of Paragon Offshore
Impairment due to the Spin-off of Paragon Offshore
Impairment of investment in subsidiaries
At December 31, 2014
5
$'000
-
9,500,014
6,765
9,506,779
44,653
1,593,350
(1,593,350)
(1,108,733)
(3,316,335)
5,126,364
NOTES TO THE FINANCIAL STATEMENTS
for the year ended December 31, 2014
(CONTINUED)
Share-based compensation costs for both 2013 and 2014 in the table above are for awards granted to current and
former employees of subsidiaries of Noble-UK.
As discussed in Note 3, on August 1st 2014 we completed the Spin-off of Paragon Offshore. We initially recorded the
fair value of the investment in Paragon Offshore at approximately $1.5 billion. We then recorded the distribution of
Paragon Offshore at the same fair value, reducing the investment by approximately $1.5 billion. As a result of the
Spin-off, we impaired the value of our remaining investment in subsidiaries by approximately $1.1 billion to reflect
this transaction.
In connection with our impairment analysis completed during the fourth quarter, we recognized an impairment charge
of approximately $3.3 billion on our investment in subsidiaries. The impairment is the result of the current market
conditions that are being experienced in the offshore drilling industry. The carrying value of the investment in
subsidiaries was written down to the market capitalization of the group, plus a reasonable control premium.
Management deemed this to be the most appropriate valuation in arriving at the recoverable amount of the investment
in subsidiaries, given the current market conditions and uncertainties.
The company’s investments at the balance sheet date in the share capital of companies include the following:
Company
Noble Corporation Holdings Limited
Noble Services (Switzerland) GmbH
Noble Financing Services Limited
Noble (Servco) UK Limited
Country
Cayman Islands
Switzerland
Cayman Islands
United Kingdom
% of Possession
100%
100%
100%
100%
Currency
USD
CHF
USD
GBP
Nominal share
capital
USD 50,000
CHF 100,000
USD 50,000
GBP 2
The directors believe that the carrying value of the investments is supported by their underlying net assets or expected
cash generation.
6
NOTES TO THE FINANCIAL STATEMENTS
for the year ended December 31, 2014
(CONTINUED)
Principal subsidiaries and associates
The following are the principal subsidiary undertakings of the Group:
Name
Noble Corporation Holdings Limited
Noble Services (Switzerland) GmbH
Noble Financing Services Limited
Noble (Servco) UK Limited
Noble Corporation
Noble Aviation GmbH
Noble NDC Holding (Cyprus) Limited
Noble FDR Holdings Limited
Country of incorporation
Cayman Islands
Switzerland
Cayman Islands
United Kingdom
Cayman Islands
Switzerland
Cyprus
Cayman Islands
Noble Holding International (Luxembourg NHIL) S.à r.l
Luxembourg
Noble Holding International (Luxembourg) S.à r.l
Luxembourg
Noble Drilling (Luxembourg) S.à r.l
Noble Drillships Holdings, Ltd.
Noble Drillships Holdings 2, Ltd.
Frontier Driller, Ltd.
Luxembourg
Cayman Islands
Cayman Islands
Cayman Islands/Luxemburg
Frontier Drilling Cayman, Ltd.
Noble Holding S.C.S.
Noble Drilling (Cyprus) Limited (pending dissolution)
Noble Downhole Technology Ltd.
Noble Drilling International GmbH
Noble Drilling Holding GmbH
Noble Holding (U.S.) Corporation
Noble Drillships, S.à r.l
Noble Drillships 2, S.à r.l
Frontier Driller Kft.
Noble Leasing IV (Switzerland) GmbH
Noble Holding International LLC
Noble Holding International S.à r.l.
Noble Technology (Canada) Ltd.
Noble Engineering & Development de Venezuela C.A.
Triton Engineering Services Company
Noble Drilling (U.S.) LLC
Noble Drilling Services 3 LLC
Noble Drilling Services 2 LLC
Noble Drilling Services Inc.
Maurer Technology Incorporated
Bully 1 (Switzerland) GmbH
Bully 2 (Switzerland) GmbH
Frontier Driller, Inc.
Cayman Islands
Luxembourg
Cyprus
Cayman Islands
Switzerland
Switzerland
Delaware
Luxembourg
Luxembourg
Hungary
Switzerland
Delaware
Luxembourg
Alberta, Canada
Venezuela
Delaware
Delaware
Delaware
Delaware
Delaware
Delaware
Switzerland
Switzerland
Delaware
7
Nature of business
Holding company
Dormant
Holder of Treasury shares
Local office services; operator of
aircraft; payroll
Holding company; finance company;
borrower; guarantor
Holding company; owner of aircraft
Holding company
Holding company; foreign maritime
entity
Holding company; General Partner of
Luxembourg partnership
Holding company; General Partner of
Luxembourg partnership
Holding company
Holding company
Holding company
Holding company; foreign maritime
entity
Holding company
Holding company
Dormant
Dormant
Rig owner; foreign maritime entity
Finance company
Holding company; Limited Partner of
Luxembourg partnership; finance
company; guarantor; issuer of senior
notes
Holding company
Holding company
Holding company; rig owner; branch
registration; foreign maritime entity
Dormant; foreign maritime entity
Holding company; dormant; foreign
managed entity
Holding company; branch registration
Dormant
Dormant
Dormant
Holding company; contracting entity;
operating entity; payroll
Dormant
Dormant
Local office services; payroll; finance
company
Dormant
JV company; rig owner; foreign
maritime entity
JV company; operating entity; foreign
maritime entity
Dormant
NOTES TO THE FINANCIAL STATEMENTS
for the year ended December 31, 2014
(CONTINUED)
Name
Noble Holding International Limited
Country of incorporation
Cayman Islands
Noble Drilling (Jim Thompson) LLC
Noble Johnnie Hoffman LLC
Noble John Sandifer LLC
Noble Drilling Exploration Company
Bully 1 (US) Corporation
Bully 2 (Luxembourg) S.à r.l.
Noble Drilling Holding LLC
Noble International Services LLC
Noble Drilling Americas LLC
Delaware
Delaware
Delaware
Delaware
Delaware
Luxembourg
Delaware
Delaware
Delaware
Noble North Africa Limited
Noble Drilling Services 6 LLC
Cayman Islands
Delaware
Cayman Islands
Noble Cayman Limited
Delaware
Triton International, Inc.
Venezuela
Triton Engineering Services Company, S.A.
Cayman Islands
Frontier Deepwater, Ltd.
Mexico
Triton International de Mexico S.A. de C.V.
Frontier Deepwater (B) Sdn. Bhd.
Brunei
Noble Drilling West Africa Limited Nigeria
Noble Drilling Offshore Limited
Cayman Islands
TSIA International (Antilles) N.V. (pending dissolution)
Noble Drilling Singapore Pte. Ltd.
Noble Resources Limited
Noble Services International Limited
Curacao
Singapore
Cayman Islands
Cayman Islands
NE Drilling Servicos do Brasil Ltda.
Brazil
NE do Brasil Participacoes E Investimentos Ltda.
Noble Earl Frederickson LLC
Noble Bill Jennings LLC
Noble Asset Mexico LLC
Noble Holding (Luxembourg) S.à r.l
Noble Drilling Holdings (Cyprus) Limited
Noble Drilling Egypt LLC
Noble Leasing III (Switzerland) GmbH
Noble Drilling (N.S.) Limited
Noble Drilling (Nederland) II B.V.
Noble Contracting II GmbH
Noble Holding Europe S.à r.l.
Noble Leasing (Switzerland) GmbH
Brazil
Delaware
Delaware
Delaware
Luxembourg
Cyprus
Egypt
Switzerland
Scotland
Netherland
Switzerland
Luxembourg
Switzerland
8
Nature of business
Holding company; finance company;
guarantor; issuer of senior notes;
foreign maritime entity
Dormant
Dormant
Dormant
Dormant
Operating entity; contracting entity
Rig owner; contracting entity; foreign
maritime entity
Holding company; rig owner;
contracting entity; issuer of senior
notes; foreign maritime entity; foreign
managed entity
Holding company; contracting entity;
foreign managed entity
Rig owner; contracting entity; foreign
managed entity; foreign maritime entity
Dormant; foreign maritime entity
Holding company; issuer of senior
notes; foreign managed entity; foreign
maritime entity
Branch registration; payroll
Dormant
Dormant
Holding company
Dormant
Contracting entity
Dormant; contracting entity
Branch registration; rig owner;
contracting entity; foreign maritime
entity
Dormant
Contracting entity
Contracting entity; payroll
Contracting entity; payroll; branch
registration; foreign maritime entity
Contracting entity; local office
services; payroll; Owner of Blue Line
warehouse
Rig guarantor
Dormant; foreign managed entity
Dormant; foreign managed entity
Dormant; foreign managed entity
Holding company; local office
services; payroll; foreign maritime
entity
Holding company; foreign maritime
entity
Dormant; contracting entity
Rig owner; branch registration; foreign
maritime entity
Holding company
Operating entity; local office services;
purchasing
Contracting entity; branch registration
Holding company; rig owner; foreign
maritime entity
Rig owner; local office services;
payroll; foreign maritime entity
NOTES TO THE FINANCIAL STATEMENTS
for the year ended December 31, 2014
(CONTINUED)
Name
Noble Mexico Services Limited
Noble Mexico Limited
Noble International Finance Company
Noble Drilling (TVL) Ltd.
Noble Drilling (Carmen) Limited
Noble Gene Rosser Limited
Noble Campeche Limited
Noble Offshore Mexico Limited
Noble Offshore Contracting Limited
Noble Dave Beard Limited
Sedco Dubai LLC
International Directional Services Ltd.
Noble Drilling (Paul Wolff) Ltd.
Noble India Limited
Noble Drilling Arabia Company Ltd.
Noble Drilling (Land Support) Limited
Country of incorporation
Cayman Islands
Cayman Islands
Cayman Islands
Cayman Islands
Cayman Islands
Cayman Islands
Cayman Islands
Cayman Islands
Cayman Islands
Cayman Islands
Dubai, UAE
Bermuda
Cayman Islands
Cayman Islands
Saudi Arabia
Scotland
Noble Drilling (Norway) AS
Noble Drilling Offshore (Labuan) Pte Ltd.
Noble Contracting Offshore Drilling (M) Sdn Bhd
Noble Drilling International Services Pte. Ltd. (pending
dissolution)
Noble Drilling International Ltd.
Noble Offshore (North Sea) Ltd.
Noble Offshore Services de Mexico, S. de R.L. de C.V. Mexico
Norway
Labuan, Malaysia
Malaysia
Singapore
Bermuda
Cayman Islands
Nature of business
Dormant
Operating company; branch registration;
contracting entity
Finance company; foreign maritime entity
Rig owner; foreign maritime entity
Dormant
Dormant
Dormant
Dormant
Dormant
Rig owner; foreign maritime entity
JV company; contracting entity
Dormant
Rig owner; foreign maritime entity
Dormant; contracting entity
JV company; contracting entity
Logistics/support for North Sea Ops; local
office services; payroll; contracting entity;
purchasing
Operating entity; purchasing
Contracting entity
Contracting entity
Dormant
Dormant
Dormant; operating entity
Local office services
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.
5. DEBTORS
Other debtors
Prepayments
2014
$'000
65,579
888
66,467
2013
$'000
-
1,410
1,410
Other debtors includes approximately $24 million falling due after more than one year, and pertains to the TSA
discussed in Note 3. These receivables are interest free, have no fixed date of repayment and are repayable on demand.
6. CREDITORS – AMOUNTS FALLING DUE WITHIN ONE YEAR
Trade creditors
Dividend creditors
Amounts owed to group undertakings
Other creditors
2014
$'000
696
-
1,369,513
3,716
1,373,925
2013
$'000
400
128,853
649,914
-
779,167
Amounts owed to group undertakings primarily relates to intercompany payables which are unsecured, interest free
and are repayable on demand. Other creditors includes amounts owed to Paragon Offshore in connection with the TSA
discussed in Note 3.
9
NOTES TO THE FINANCIAL STATEMENTS
for the year ended December 31, 2014
(CONTINUED)
7. CREDITORS – AMOUNTS FALLING DUE AFTER MORE THAN ONE YEAR
Amounts falling due after more than one year of approximately $6 million pertains to amounts owed to Paragon
Offshore in connection with the TSA discussed in Note 3.
8. SHARE CAPITAL
Shares traded, alloted and fully paid
247.5 million (2013: 253.4 million) ordinary shares
Deferred Shares
50,000 (2013: 50,000) deferred shares
As of December 31,
2014
Nominal value
($'000)
2013
Nominal value
($'000)
2,475
2,534
78
78
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.
On September 6, 2013, the Company issued 50,000 ordinary shares of £1 each to Noble Financing Services Limited.
This corresponds to $78,000 as translated at the spot rate at the time of the transaction. These shares have been
deferred and, therefore, confer no voting rights.
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 by Noble-UK’s sole
shareholder 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. During 2014, we repurchased all shares covered by this authorization.
All shares repurchased during 2014 were immediately cancelled.
In addition to the share repurchases discussed above, Noble-UK issued approximately 0.8 million shares. These share
issuances were the result of vestings of restricted share-based compensation shares (0.7 million shares) and option
exercises (0.1 million shares) during the year.
In December 2014, we received shareholder approval to repurchase up to 37,000,000 additional ordinary shares, or
approximately 15 percent of our outstanding ordinary shares at the time of shareholder approval. Any repurchases are
expected to be funded using cash on hand, cash from operations or short-term borrowings under our credit facilities.
The authority to make such repurchases will expire on the later of April 2016 or at the end of the Company’s 2016
annual general meeting of shareholders, at which time we could seek shareholder approval for further repurchases.
10
NOTES TO THE FINANCIAL STATEMENTS
for the year ended December 31, 2014
(CONTINUED)
9. OTHER RESERVES
At January 10, 2013
Merger with Noble Swiss
Share-based compensation cost
Loss for the year
At December 31, 2013
Share-based compensation cost
Issuance of share-based compensation shares
Repurchases of shares
Cancellation of shares
Dividends
Receipt of Paragon Offshore from Noble-Cayman
Spin-off of Paragon Offshore
Loss for the year
At December 31, 2014
Merger reserves
$'000
-
8,733,594
-
-
8,733,594
-
-
(154,145)
-
(257,725)
-
-
-
8,321,724
Capital redemption
reserves
$'000
-
-
-
-
-
-
-
-
68
-
-
-
-
68
Share-based
payments
reserves
$'000
-
-
6,765
-
6,765
46,389
(10,097)
-
-
-
-
-
-
43,057
Profit and loss
reserves
$'000
-
-
-
(14,647)
(14,647)
-
-
-
-
-
1,593,350
(1,593,350)
(4,543,500)
(4,558,147)
Total
$'000
-
8,733,594
6,765
(14,647)
8,725,712
46,389
(10,097)
(154,145)
68
(257,725)
1,593,350
(1,593,350)
(4,543,500)
3,806,702
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, which comprised all of the “merger reserve” created at the
time of the change in place of incorporation.
10. POST BALANCE SHEET EVENTS
Our most recent quarterly dividend payment to shareholders, totaling approximately $93 million (or $0.375 per share),
was declared on January 30, 2015 and paid on February 20, 2015 to holders of record on February 10, 2015.
In January 2015, we repurchased 6.2 million of our ordinary shares at an average price of $16.10 per share, excluding
commissions and stamp tax. Including these items, the average price paid per share during January 2015 was $16.21.
There can be no assurance as to the timing or amount of any additional repurchases. However, we intend to take a
cautious approach to future share repurchases at least until market conditions in the offshore drilling business stabilize.
11
Independent auditors’ report to the members of Noble
Corporation Plc
Report on the company financial statements
Our opinion
In our opinion, Noble Corporation Plc’s company financial statements (the “financial statements”):
give a true and fair view of the state of the company’s affairs as at 31 December 2014;
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.
What we have audited
Noble Corporation Plc’s financial statements comprise:
the Company Balance Sheet as at 31 December 2014;
the Reconciliation of Movements in Shareholders' Funds for the year then ended; and
the notes to the financial statements, which include a summary of significant accounting policies and other
explanatory information.
The financial reporting framework that has been applied in the preparation of the financial statements is applicable law and
United Kingdom Accounting Standards (United Kingdom Generally Accepted Accounting Practice).
In applying the financial reporting framework, the directors have made a number of subjective judgements, for example in
respect of significant accounting estimates. In making such estimates, they have made assumptions and considered future
events.
Opinions on other matters prescribed by the Companies Act 2006
In our opinion:
the information given in the Strategic Report and the UK Statutory Directors’ Report for the financial year for
which the financial statements are prepared is consistent with the financial statements; and
the part of the Directors’ Remuneration Report to be audited has been properly prepared in accordance with
the Companies Act 2006.
Other matters on which we are required to report by exception
Adequacy of accounting records and information and explanations received
Under the Companies Act 2006 we are required to report to you if, in our opinion:
we have not received all the information and explanations we require for our audit; or
adequate accounting records have not been kept by the company, or returns adequate for our audit have not
been received from branches not visited by us; or
the financial statements and the part of the Directors’ Remuneration Report to be audited are not in
agreement with the accounting records and returns.
We have no exceptions to report arising from this responsibility.
Directors’ remuneration
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. We have no exceptions to report arising from this responsibility.
Responsibilities for the financial statements and the audit
Our responsibilities and those of the directors
As explained more fully in the Statement of directors' responsibilities, the directors are responsible for the preparation of
the 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 financial statements in accordance with applicable law and
International Standards on Auditing (UK and Ireland) (“ISAs (UK & 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.
What an audit of financial statements involves
We conducted our audit in accordance with ISAs (UK & Ireland). 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 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.
We primarily focus our work in these areas by assessing the directors’ judgements against available evidence, forming our
own judgements, and evaluating the disclosures in the financial statements.
We test and examine information, using sampling and other auditing techniques, to the extent we consider necessary to
provide a reasonable basis for us to draw conclusions. We obtain audit evidence through testing the effectiveness of
controls, substantive procedures or a combination of both.
In addition, we read all the financial and non-financial information in the Annual Report and Financial Statements to
identify material inconsistencies with the audited financial statements and to identify any information that is apparently
materially incorrect based on, or materially inconsistent with, the knowledge acquired by us in the course of performing the
audit. If we become aware of any apparent material misstatements or inconsistencies we consider the implications for our
report.
Other matter
We have reported separately on the group financial statements of Noble Corporation Plc for the year ended 31 December
2014.
Stephen G Mount (Senior Statutory Auditor)
for and on behalf of PricewaterhouseCoopers LLP
Chartered Accountants and Statutory Auditors
Reading
27 February 2015
Noble Corporation plc Financial Highlights
Operating Revenues
From Continuing Operations (2)
Net Income / (Loss)
From Continuing Operations (2)
2014 (1)
$3,232,504
2013 (1)
$2,538,143
Year Ended December 31,
2012 (1)
$2,200,699
2011
$1,429,826
2010
$1,194,089
(152,011)
478,595
414,389
190,745
243,176
Diluted Income / (Loss)
From Continuing Operations Per Share (2)
(0.60)
1.86
1.63
0.75
0.95
Cash Flow from Operations
1,778,208
1,702,317
1,381,693
740,240
1,636,902
Total Assets
Total Debt (3)
Total Equity
13,286,822
16,217,957
14,607,774
13,495,159
11,302,387
4,869,020
5,556,251
4,634,375
4,071,964
2,766,697
7,287,034
9,050,028
8,488,290
8,097,852
7,287,634
Debt to Total Capitalization
40.1%
38.0%
35.3%
33.5%
27.5%
All numbers in thousands except per share data
(1) Results for 2014, 2013 and 2012 include impairment charges of $745 million, $4 million and $20 million, respectively.
(2) All periods presented have been recast to reflect the Spin-off of Paragon Offshore plc as discontinued operations.
(3) Includes both short-term and long-term debt.
With the addition of eleven new rigs in the past two years, including the Noble Don Taylor (cover) and the
Noble Tom Madden (below), Noble has one of the most modern and capable fleets in the world.
Investor Information
Shareholders, brokers, securities analysts or portfolio
managers seeking information about Noble Corporation
plc 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 2014 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 2014 Annual Report for more information.
Corporate Information
Transfer Agent and Registrar
Computershare Trust Company, N.A.
Canton, Massachusetts
Independent Registered Public Accounting Firm
PricewaterhouseCoopers LLP
Houston, Texas
Independent Auditors
PricewaterhouseCoopers LLP
London, UK
Shares Listed on
New York Stock Exchange
Trading Symbol “NE”
Form 10-K
A copy of Noble Corporation plc’s 2014 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
plc will be held on April 24, 2015, at 3:00 p.m. local time at
The Ritz Hotel in London, England.
Contact the Board
Board of Directors
Ashley Almanza 1, 4
Chief Executive Officer & Director
G4S
Director since 2013.
Michael A. Cawley 2, 3
Former President & Chief Executive Officer
The Samuel Roberts Noble Foundation, Inc.
Director since 1985.
Julie H. Edwards 2, 3
Former Senior Vice President & Chief Financial Officer
Southern Union Company
Director since 2006.
Gordon T. Hall 2, 3, 5
Vice Chairman of the Board & Lead Independent Director
Exterran Holdings, Inc.
Director since 2009.
Scott D. Josey 2, 4
Chairman, Chief Executive Officer & President
Sequitur Energy Resources, LLC
Director since 2014.
Jon A. Marshall 1, 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 plc
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
If you would like to contact the Noble Corporation plc Board
of Directors, write to:
Simon W. Johnson
Senior Vice President – Marketing & Contracts
Noble Corporation plc 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 plc,
please refer to our proxy statement which is being mailed
or made available with this Annual Report.
Scott W. Marks
Senior Vice President – Engineering
Bernie G. Wolford
Senior Vice President – Operations
Dennis J. Lubojacky
Vice President & Controller
1 Audit Committee 2 Compensation Committee
3 Nominating and Corporate Governance Committee
4 Health, Safety, Environment and Engineering Committee
5 Lead Director
Focused on
Excellence
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Noble Corporation plc
Devonshire House
1 Mayfair Place
London W1J8AJ
www.noblecorp.com
Noble Corporation plc
2014 Annual Report