Noble Corp - Quarter Report: 2011 March (Form 10-Q)

Form 10-Q

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q


þ		QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended: March 31, 2011


o		TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission file number: 000-53604

NOBLE CORPORATION

(Exact name of registrant as specified in its charter)


Switzerland		98-0619597
(State or other jurisdiction of incorporation or organization)		(I.R.S. employer identification number)

Dorfstrasse 19A, Baar, Switzerland 6430
(Address of principal executive offices) (Zip Code)

Registrant’s Telephone Number, Including Area Code: 41 (41) 761-65-55

Securities registered pursuant to Section 12(b) of the Act:


Title of each class		Name of each exchange on which registered
Shares, Par Value 3.80 CHF per Share		New York Stock Exchange

Commission file number: 001-31306

NOBLE CORPORATION

(Exact name of registrant as specified in its charter)


Cayman Islands		98-0366361
(State or other jurisdiction of incorporation or organization)		(I.R.S. employer identification number)

Suite 3D, Landmark Square, 64 Earth Close, P.O. Box 31327 George Town, Grand Cayman, Cayman Islands, KY1-1206
(Address of principal executive offices) (Zip Code)

Registrant’s Telephone Number, Including Area Code: (345) 938-0293

Securities registered pursuant to Section 12(b) of the Act: None

Indicate by check mark whether each registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes þ No o

Indicate by check mark whether each registrant has submitted electronically and posted on its corporate website, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes þ No o

Indicate by check mark whether each 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. (Check one):


Noble-Swiss:	Large accelerated filer þ	Accelerated filer o	Non-accelerated filer o	Smaller reporting company o
Noble-Cayman:	Large accelerated filer o	Accelerated filer o	Non-accelerated filer þ	Smaller reporting company o

Indicate by check mark whether each registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes o No þ

Number of shares outstanding and trading at April 29, 2011: Noble Corporation (Switzerland) — 252,166,462

Number of shares outstanding at April 29, 2011: Noble Corporation (Cayman Islands) — 261,245,693

Noble Corporation, a Cayman Islands company and a wholly owned subsidiary of Noble Corporation, a Swiss corporation, meets the conditions set forth in General Instructions H(1) (a) and (b) to Form 10-Q and is therefore filing this Form 10-Q with the reduced disclosure format contemplated by paragraphs (b) and (c) of General Instruction H(2) of Form 10-Q.

TABLE OF CONTENTS


	Page
PART I FINANCIAL INFORMATION

Item 1 Financial Statements

Noble Corporation (Noble-Swiss) Financial Statements:

Consolidated Balance Sheet as of March 31, 2011 and December 31, 2010		3

Consolidated Statement of Income for the three months ended March 31, 2011 and 2010		4

Consolidated Statement of Cash Flows for the three months ended March 31, 2011 and 2010		5

Consolidated Statement of Equity for the three months ended March 31, 2011		6

Consolidated Statement of Comprehensive Income for the three months ended March 31, 2011 and 2010		7

Noble Corporation (Noble-Cayman) Financial Statements:

Consolidated Balance Sheet as of March 31, 2011 and December 31, 2010		8

Consolidated Statement of Income for the three months ended March 31, 2011 and 2010		9

Consolidated Statement of Cash Flows for the three months ended March 31, 2011 and 2010		10

Consolidated Statement of Equity for the three months ended March 31, 2011		11

Consolidated Statement of Comprehensive Income for the three months ended March 31, 2011 and 2010		12

Notes to Combined Consolidated Financial Statements		13

Item 2 Management’s Discussion and Analysis of Financial Condition and Results of Operations		34

Item 3 Quantitative and Qualitative Disclosures About Market Risk		47

Item 4 Controls and Procedures		49

PART II OTHER INFORMATION

Item 1 Legal Proceedings		49

Item 2 Unregistered Sales of Equity Securities and Use of Proceeds		49

Item 6 Exhibits		49

SIGNATURES		50

Index to Exhibits		51

Exhibit 3.1
Exhibit 4.2
Exhibit 10.2
Exhibit 31.1
Exhibit 31.2
Exhibit 31.3
Exhibit 32.1
Exhibit 32.2
Exhibit 32.3
EX-101 INSTANCE DOCUMENT
EX-101 SCHEMA DOCUMENT
EX-101 CALCULATION LINKBASE DOCUMENT
EX-101 LABELS LINKBASE DOCUMENT
EX-101 PRESENTATION LINKBASE DOCUMENT
EX-101 DEFINITION LINKBASE DOCUMENT

This combined Quarterly Report on Form 10-Q is separately filed by Noble Corporation, a Swiss corporation (“Noble-Swiss”), and Noble Corporation, a Cayman Islands company (“Noble-Cayman”). Information in this filing relating to Noble-Cayman is filed by Noble-Swiss and separately by Noble-Cayman on its own behalf. Noble-Cayman makes no representation as to information relating to Noble-Swiss (except as it may relate to Noble-Cayman) or any other affiliate or subsidiary of Noble-Swiss. Since Noble-Cayman meets the conditions specified in General Instructions H(1)(a) and (b) to Form 10-Q, it is permitted to use the reduced disclosure format for wholly owned subsidiaries of reporting companies. Accordingly, Noble-Cayman has omitted from this report the information called for by Item 3 (Quantitative and Qualitative Disclosures about Market Risk) of Part I of Form 10-Q and the following items of Part II of Form 10-Q: Item 2 (Unregistered Sales of Equity Securities and Use of Proceeds) and Item 3 (Defaults upon Senior Securities).

This report should be read in its entirety as it pertains to each Registrant. Except where indicated, the Consolidated Financial Statements and related Notes are combined. References in this Quarterly Report on Form 10-Q to “Noble,” the “Company,” “we,” “us,” “our” and words of similar meaning refer collectively to Noble-Swiss and its consolidated subsidiaries, including Noble-Cayman.

PART I. FINANCIAL INFORMATION


Item 1.		Financial Statements

NOBLE CORPORATION (NOBLE-SWISS) AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEET

(In thousands)

(Unaudited)


	March 31,			December 31,
	2011			2010
ASSETS
Current assets
Cash and cash equivalents	$	508,681		$	337,871
Accounts receivable		445,875			387,414
Prepaid expenses		73,517			35,502
Other current assets		96,917			69,941

Total current assets		1,124,990			830,728


Property and equipment
Drilling equipment and facilities		12,991,525			12,471,283
Other		175,431			172,583

		13,166,956			12,643,866
Accumulated depreciation		(2,727,227	)		(2,595,779	)

		10,439,729			10,048,087


Other assets		365,166			342,506

Total assets	$	11,929,885		$	11,221,321


LIABILITIES AND EQUITY
Current liabilities
Current maturities of long-term debt	$	—		$	80,213
Accounts payable		395,131			374,814
Accrued payroll and related costs		93,113			125,663
Interest payable		27,543			40,260
Other current liabilities		90,201			99,431

Total current liabilities		605,988			720,381


Long-term debt		3,167,646			2,686,484
Deferred income taxes		261,641			258,822
Other liabilities		218,044			268,000

Total liabilities		4,253,319			3,933,687


Commitments and contingencies

Shareholders’ equity
Shares; 262,446 and 262,415 shares outstanding		887,431			917,684
Treasury shares, at cost; 10,288 and 10,140 shares		(379,667	)		(373,967	)
Additional paid-in capital		44,947			39,006
Retained earnings		6,684,995			6,630,500
Accumulated other comprehensive loss		(46,731	)		(50,220	)

Total shareholders’ equity		7,190,975			7,163,003


Noncontrolling interests		485,591			124,631

Total equity		7,676,566			7,287,634

Total liabilities and equity	$	11,929,885		$	11,221,321

See accompanying notes to the unaudited consolidated financial statements.

NOBLE CORPORATION (NOBLE-SWISS) AND SUBSIDIARIES

CONSOLIDATED STATEMENT OF INCOME

(In thousands, except per share amounts)

(Unaudited)


	Three Months Ended
	March 31,
	2011			2010
Operating revenues
Contract drilling services	$	542,605		$	808,646
Reimbursables		22,291			24,233
Labor contract drilling services		13,547			7,761
Other		445			211

		578,888			840,851

Operating costs and expenses
Contract drilling services		306,363			254,431
Reimbursables		17,103			19,743
Labor contract drilling services		8,523			5,888
Depreciation and amortization		158,122			115,857
Selling, general and administrative		23,715			21,971
Gain on contract extinguishments, net		(21,202	)		—

		492,624			417,890


Operating income		86,264			422,961

Other income (expense)
Interest expense, net of amount capitalized		(19,041	)		(465	)
Interest income and other, net		2,592			3,626

Income before income taxes		69,815			426,122
Income tax provision		(15,359	)		(55,396	)

Net income		54,456			370,726

Net loss attributable to noncontrolling interests		39			—

Net income attributable to Noble Corporation	$	54,495		$	370,726


Net income per share
Basic	$	0.22		$	1.44
Diluted	$	0.21		$	1.43

Par value reduction per share	$	0.14		$	0.04

See accompanying notes to the unaudited consolidated financial statements.

NOBLE CORPORATION (NOBLE-SWISS) AND SUBSIDIARIES

CONSOLIDATED STATEMENT OF CASH FLOWS

(In thousands)

(Unaudited)


	Three Months Ended
	March 31,
	2011			2010
Cash flows from operating activities
Net income	$	54,456		$	370,726
Adjustments to reconcile net income to net cash from operating activities:
Depreciation and amortization		158,122			115,857
Gain on contract extinguishments, net		(21,202	)		—
Deferred income taxes		2,819			(444	)
Share-based compensation expense		8,271			8,100
Pension contributions		(1,602	)		(1,574	)
Net change in other assets and liabilities		(114,090	)		11,269

Net cash from operating activities		86,774			503,934


Cash flows from investing activities
New construction		(426,204	)		(141,404	)
Other capital expenditures		(149,062	)		(179,044	)
Major maintenance expenditures		(39,058	)		(18,316	)
Refund from contract extinguishments		18,642			—
Change in accrued capital expenditures		(471	)		54,476

Net cash from investing activities		(596,153	)		(284,288	)


Cash flows from financing activities
Borrowings on bank credit facilities		200,000			—
Repayments of bank credit facilities		(240,000	)		—
Proceeds from issuance of senior notes, net of debt issuance costs		1,087,833			—
Contribution from joint venture partners		361,000			—
Payments of joint venture debt		(693,494	)		—
Settlement of interest rate swaps		(29,032	)		—
Proceeds from issuance of notes to joint venture partner		35,000			—
Dividends/par value reduction payments paid		(34,920	)		(11,935	)
Financing costs on credit facilities		(2,835	)
Proceeds from employee stock transactions		2,337			2,443
Repurchases of employee shares surrendered for taxes		(5,700	)		(9,285	)
Repurchases of shares		—			(88,652	)

Net cash from financing activities		680,189			(107,429	)

Net change in cash and cash equivalents		170,810			112,217
Cash and cash equivalents, beginning of period		337,871			735,493

Cash and cash equivalents, end of period	$	508,681		$	847,710

See accompanying notes to the unaudited consolidated financial statements.

NOBLE CORPORATION (NOBLE-SWISS) AND SUBSIDIARIES

CONSOLIDATED STATEMENT OF EQUITY

(In thousands)

(Unaudited)


															Accumulated
							Additional								Other
	Shares						Paid-in			Retained		Treasury			Comprehensive			Noncontrolling			Total
	Balance			Par Value			Capital			Earnings		Shares			Loss			Interests			Equity

Balance at December 31, 2010		262,415		$	917,684		$	39,006		$	6,630,500	$	(373,967	)	$	(50,220	)	$	124,631		$	7,287,634

Employee related equity activity
Share-based compensation expense		—			—			8,271			—		—			—			—			8,271
Issuance of share-based compensation shares		176			598			(598	)		—		—			—			—			—
Exercise of stock options		167			566			2,890			—		—			—			—			3,456
Tax benefit of stock options exercised		—			—			(1,119	)		—		—			—			—			(1,119	)

Restricted shares forfeited or repurchased for taxes		(312	)		(1,074	)		1,074			—		(5,700	)		—			—			(5,700	)
Net income (loss)		—			—			—			54,495		—			—			(39	)		54,456
Equity contribution by joint venture partner		—			—			—			—		—			—			361,000			361,000
Par value reduction payments paid		—			(30,343	)		(4,577	)		—		—			—			—			(34,920	)
Other comprehensive income (loss), net		—			—			—			—		—			3,489			(1	)		3,488

Balance at March 31, 2011		262,446		$	887,431		$	44,947		$	6,684,995	$	(379,667	)	$	(46,731	)	$	485,591		$	7,676,566

See accompanying notes to the unaudited consolidated financial statements.

NOBLE CORPORATION (NOBLE-SWISS) AND SUBSIDIARIES

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

(In thousands)

(Unaudited)


	Three Months Ended
	March 31,
	2011			2010

Net income	$	54,456		$	370,726

Other comprehensive income (loss), net of tax
Foreign currency translation adjustments		3,040			(4,480	)
Gain (loss) on foreign currency forward contracts		162			(1,925	)
Gain (loss) on interest rate swaps		(366	)		—
Amortization of deferred pension plan amounts		653			639

Other comprehensive income (loss), net		3,489			(5,766	)


Net comprehensive loss attributable to noncontrolling interests		40			—


Comprehensive income attributable to Noble Corporation	$	57,985		$	364,960

See accompanying notes to the unaudited consolidated financial statements.

NOBLE CORPORATION (NOBLE-CAYMAN) AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEET

(In thousands)

(Unaudited)


	March 31,			December 31,
	2011			2010
ASSETS
Current assets
Cash and cash equivalents	$	501,051		$	333,399
Accounts receivable		445,875			387,414
Prepaid expenses		71,504			33,232
Other current assets		97,855			69,821

Total current assets		1,116,285			823,866


Property and equipment
Drilling equipment and facilities		12,991,525			12,471,283
Other		141,816			143,691

		13,133,341			12,614,974
Accumulated depreciation		(2,723,456	)		(2,594,954	)

		10,409,885			10,020,020


Other assets		365,251			342,592

Total assets	$	11,891,421		$	11,186,478


LIABILITIES AND EQUITY
Current liabilities
Current maturities of long-term debt	$	—		$	80,213
Accounts payable		394,817			374,559
Accrued payroll and related costs		87,517			120,634
Interest payable		27,543			40,260
Other current liabilities		89,186			96,825

Total current liabilities		599,063			712,491


Long-term debt		3,167,646			2,686,484
Deferred income taxes		261,641			258,822
Other liabilities		218,045			268,026

Total liabilities		4,246,395			3,925,823


Commitments and contingencies

Shareholder equity
Ordinary shares; 261,246 shares outstanding		26,125			26,125
Capital in excess of par value		421,383			416,232
Retained earnings		6,758,658			6,743,887
Accumulated other comprehensive loss		(46,731	)		(50,220	)

Total shareholder equity		7,159,435			7,136,024


Noncontrolling interests		485,591			124,631

Total equity		7,645,026			7,260,655

Total liabilities and equity	$	11,891,421		$	11,186,478

See accompanying notes to the unaudited consolidated financial statements.

NOBLE CORPORATION (NOBLE-CAYMAN) AND SUBSIDIARIES

CONSOLIDATED STATEMENT OF INCOME

(In thousands)

(Unaudited)


	Three Months Ended
	March 31,
	2011			2010
Operating revenues
Contract drilling services	$	542,605		$	808,646
Reimbursables		22,291			24,233
Labor contract drilling services		13,547			7,761
Other		445			211

		578,888			840,851

Operating costs and expenses
Contract drilling services		300,832			252,781
Reimbursables		17,103			19,743
Labor contract drilling services		8,523			5,888
Depreciation and amortization		157,655			115,664
Selling, general and administrative		16,531			15,888
Gain on contract extinguishments, net		(21,202	)		—

		479,442			409,964


Operating income		99,446			430,887

Other income (expense)
Interest expense, net of amount capitalized		(19,041	)		(465	)
Interest income and other, net		2,241			3,607

Income before income taxes		82,646			434,029
Income tax provision		(15,025	)		(55,396	)

Net income		67,621			378,633


Net loss attributable to noncontrolling interests		39			—

Net income attributable to Noble Corporation	$	67,660		$	378,633

See accompanying notes to the unaudited consolidated financial statements

NOBLE CORPORATION (NOBLE-CAYMAN) AND SUBSIDIARIES

CONSOLIDATED STATEMENT OF CASH FLOWS

(In thousands)

(Unaudited)


	Three Months Ended
	March 31,
	2011			2010
Cash flows from operating activities
Net income	$	67,621		$	378,633
Adjustments to reconcile net income to net cash from operating activities:
Depreciation and amortization		157,655			115,664
Gain on contract extinguishments, net		(21,202	)		—
Deferred income taxes		2,819			(444	)
Capital contribution by parent — share-based compensation		5,151			3,865
Pension contributions		(1,602	)		(1,574	)
Net change in other assets and liabilities		(116,943	)		7,972

Net cash from operating activities		93,499			504,116


Cash flows from investing activities
New construction		(426,204	)		(141,404	)
Other capital expenditures		(144,339	)		(178,859	)
Major maintenance expenditures		(39,058	)		(18,316	)
Change in accrued capital expenditures		(471	)		54,476
Refund from contract extinguishments		18,642			—

Net cash from investing activities		(591,430	)		(284,103	)


Cash flows from financing activities
Borrowings on bank credit facilities		200,000			—
Repayments of bank credit facilities		(240,000	)		—
Proceeds from issuance of senior notes, net of debt issuance costs		1,087,833			—
Contribution from joint venture partners		361,000			—
Payments of joint venture debt		(693,494	)		—
Settlement of interest rate swaps		(29,032	)		—
Proceeds from issuance of notes to joint venture partner		35,000			—
Financing costs on credit facilities		(2,835	)		—
Distributions to parent company, net		(52,889	)		(109,057	)

Net cash from financing activities		665,583			(109,057	)

Net change in cash and cash equivalents		167,652			110,956
Cash and cash equivalents, beginning of period		333,399			726,225

Cash and cash equivalents, end of period	$	501,051		$	837,181

See accompanying notes to the unaudited consolidated financial statements.

NOBLE CORPORATION (NOBLE-CAYMAN) AND SUBSIDIARIES

CONSOLIDATED STATEMENT OF EQUITY

(In thousands)

(Unaudited)


										Accumulated
					Capital in					Other
	Shares				Excess of		Retained			Comprehensive			Noncontrolling			Total
	Balance		Par Value		Par Value		Earnings			Loss			Interests			Equity

Balance at December 31, 2010		261,246	$	26,125	$	416,232	$	6,743,887		$	(50,220	)	$	124,631		$	7,260,655
Net income		—		—		—		67,660			—			(39	)		67,621
Capital contributions by parent — share-based compensation		—		—		5,151		—			—			—			5,151
Distributions to parent		—		—		—		(52,889	)		—			—			(52,889	)
Equity contribution by joint venture partner		—		—		—		—			—			361,000			361,000
Other comprehensive income (loss), net		—		—		—		—			3,489			(1	)		3,488

Balance at March 31, 2011		261,246	$	26,125	$	421,383	$	6,758,658		$	(46,731	)	$	485,591		$	7,645,026

See accompanying notes to the unaudited consolidated financial statements.

NOBLE CORPORATION (NOBLE-CAYMAN) AND SUBSIDIARIES

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

(In thousands)

(Unaudited)


	Three Months Ended
	March 31,
	2011			2010

Net income	$	67,621		$	378,633

Other comprehensive income (loss), net of tax
Foreign currency translation adjustments		3,040			(4,480	)
Gain (loss) on foreign currency forward contracts		162			(1,925	)
Gain (loss) on interest rate swaps		(366	)		—
Amortization of deferred pension plan amounts		653			639

Other comprehensive income (loss), net		3,489			(5,766	)


Net comprehensive loss attributable to noncontrolling interests		40			—

Comprehensive income attributable to Noble Corporation	$	71,150		$	372,867

See accompanying notes to the unaudited consolidated financial statements.

NOBLE CORPORATION (NOBLE-SWISS) AND SUBSIDIARIES
NOBLE CORPORATION (NOBLE-CAYMAN) AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unless otherwise indicated, dollar amounts in tables are in thousands, except per share data)

Note 1 — Organization and Basis of Presentation

Noble Corporation, a Swiss corporation, is a leading offshore drilling contractor for the oil and gas industry. We perform contract drilling services with our fleet of 76 mobile offshore drilling units and one floating production storage and offloading unit (“FPSO”) located worldwide. Our fleet consists of 14 semisubmersibles, 13 drillships, 47 jackups and two submersibles. Our fleet includes 11 units under construction: two dynamically positioned, ultra-deepwater, harsh environment Globetrotter-class drillships, two dynamically positioned, ultra-deepwater, harsh environment Bully-class drillships, three ultra-deepwater harsh environment drillships and four harsh environment jackup rigs. Our global fleet is currently located in the following areas: the Middle East, India, the U.S. Gulf of Mexico, Mexico, the Mediterranean, the North Sea, Brazil, West Africa and the Asian Pacific. Noble and its predecessors have been engaged in the contract drilling of oil and gas wells since 1921.

Noble-Cayman is a direct, wholly-owned subsidiary of Noble-Swiss, our publicly-traded parent company. Noble-Swiss’ principal asset is all of the shares of Noble-Cayman. Noble-Cayman has no public equity outstanding. The consolidated financial statements of Noble-Swiss include the accounts of Noble-Cayman, and Noble-Swiss conducts substantially all of its business through Noble-Cayman and its subsidiaries.

The accompanying unaudited consolidated financial statements of Noble-Swiss and Noble-Cayman have been prepared pursuant to the rules and regulations of the U.S. Securities and Exchange Commission (“SEC”) as they pertain to Form 10-Q. Accordingly, certain information and disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) have been condensed or omitted pursuant to such rules and regulations. The unaudited financial statements reflect all adjustments which are, in the opinion of management, necessary for a fair statement of the financial position and results of operations for the interim periods, on a basis consistent with the annual audited consolidated financial statements. All such adjustments are of a normal recurring nature. The December 31, 2010 Consolidated Balance Sheets presented herein are derived from the December 31, 2010 audited consolidated financial statements. These interim financial statements should be read in conjunction with the consolidated financial statements and notes thereto included in our Annual Report on Form 10-K for the year ended December 31, 2010, filed by both Noble-Swiss and Noble-Cayman. The results of operations for interim periods are not necessarily indicative of the results to be expected for the full year.

Certain amounts in prior periods have been reclassified to conform to the current year presentation.

Note 2 — Acquisition of FDR Holdings Limited

On July 28, 2010, Noble-Swiss and Noble AM Merger Co., a Cayman Islands company and indirect wholly-owned subsidiary of Noble-Swiss (“Merger Sub”), completed the acquisition of FDR Holdings Limited, a Cayman Islands company (“Frontier”). Under the terms of the Agreement and Plan of Merger with Frontier and certain of Frontier’s shareholders, Merger Sub merged with and into Frontier, with Frontier surviving as an indirect wholly-owned subsidiary of Noble-Swiss and a wholly-owned subsidiary of Noble-Cayman. The Frontier acquisition was for a purchase price of approximately $1.7 billion in cash plus liabilities assumed and strategically expanded and enhanced our global fleet by adding three dynamically positioned drillships (including two Bully-class joint venture-owned drillships under construction), two conventionally moored drillships, including one that is Arctic-class, a conventionally moored deepwater semisubmersible and one dynamically positioned FPSO. Frontier’s results of operations were included in our results beginning July 28, 2010. We funded the cash consideration paid at closing of approximately $1.7 billion using proceeds from our July 2010 offering of senior notes and existing cash on hand.

NOBLE CORPORATION (NOBLE-SWISS) AND SUBSIDIARIES
NOBLE CORPORATION (NOBLE-CAYMAN) AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unless otherwise indicated, dollar amounts in tables are in thousands, except per share data)

The following unaudited pro forma financial information for the three months ended March 31, 2010 gives effect to the Frontier acquisition as if it had occurred at January 1, 2009. The pro forma results are based on historical data and are not intended to be indicative of the results of future operations.


	Three months
	ended
	March 31, 2010
Total operating revenues	$	908,615
Net income		361,224
Net income per share	$	1.40

Note 3 — Consolidated Joint Ventures

In connection with the Frontier acquisition, we acquired Frontier’s 50 percent interest in two joint ventures, each with a subsidiary of Royal Dutch Shell, PLC (“Shell”), for the construction and operation of the two Bully-class drillships. Since these entities’ equity at risk is insufficient to permit them to carry on their activities without additional financial support, they each meet the criteria for a variable interest entity. We have determined that we are the primary beneficiary for accounting purposes. Accordingly, we consolidate the entities in our consolidated financial statements after eliminating intercompany transactions. Shell’s equity interest is presented as noncontrolling interests on our Consolidated Balance Sheets.

In the first quarter of 2011, the joint venture credit facilities, which had a combined outstanding balance of $693 million, were repaid in full through contributions to the joint ventures from Noble and Shell. Shell contributed $361 million in equity to fund their portion of the repayment of joint venture credit facilities and related interest rate swaps, which were settled concurrent with the repayment and termination of the joint venture credit facilities.

At March 31, 2011, the combined carrying amount of the drillships was $1.03 billion, which was primarily funded through equity contributions and joint venture partner debt.

At March 31, 2011, the joint ventures had issued notes to the joint venture partners totaling $142 million in the aggregate. Our portion of these joint venture partner notes, which totaled $71 million, has been eliminated in our Consolidated Balance Sheets. Subsequent to March 31, 2011, the joint venture partners entered into a subscription agreement which converted all outstanding joint venture partner notes into equity of the joint ventures.

NOBLE CORPORATION (NOBLE-SWISS) AND SUBSIDIARIES
NOBLE CORPORATION (NOBLE-CAYMAN) AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unless otherwise indicated, dollar amounts in tables are in thousands, except per share data)

Note 4 — Share Data

Share capital

The following is a detail of Noble-Swiss’ share capital as of March 31, 2011 and December 31, 2010:


	March 31,		December 31,
	2011		2010

Shares outstanding and trading		252,158		252,275
Treasury shares		10,288		10,140

Total shares outstanding		262,446		262,415
Treasury shares held for share-based compensation plans		13,820		13,851

Total shares authorized for issuance		276,266		276,266


Par value per share (in Swiss Francs)		3.80		3.93

Shares authorized for issuance by Noble-Swiss at March 31, 2011 totalled 276.3 million shares and include 10.3 million shares held in treasury and 13.8 million treasury shares held by a wholly-owned subsidiary. Repurchased treasury shares are recorded at cost, and include shares repurchased pursuant to our approved share repurchase program discussed below and shares surrendered by employees for taxes payable upon the vesting of restricted stock.

Our Board of Directors may further increase Noble-Swiss’ share capital through the issuance of up to 138.1 million conditionally authorized registered shares without obtaining shareholder approval. The issuance of these conditionally authorized registered shares is subject to certain conditions regarding their use.

Treasury shares/share repurchases

Share repurchases were made pursuant to the share repurchase program that our Board of Directors authorized and adopted. Subsequent to our 2009 Swiss migration, all shares repurchased under our share repurchase program are held in treasury. At March 31, 2011, 6.8 million shares remained available for repurchase under this authorization. Treasury shares held at March 31, 2011 include 9.9 million shares repurchased under our share repurchase program and 0.4 million shares surrendered by employees for taxes payable upon the vesting of restricted stock.

The number of shares that we may hold in treasury is limited under Swiss law. In April 2011, our shareholders approved the cancellation of 10.1 million shares held in treasury. Subsequent to this approval and cancellation, which is subject to a creditor notice period and filing with the Swiss Commercial Register, the total number of shares authorized for issuance will be reduced to 266.2 million shares.

NOBLE CORPORATION (NOBLE-SWISS) AND SUBSIDIARIES
NOBLE CORPORATION (NOBLE-CAYMAN) AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unless otherwise indicated, dollar amounts in tables are in thousands, except per share data)

Earnings per share

The following table sets forth the computation of basic and diluted earnings per share for Noble-Swiss.


	Three months ended
	March 31,
	2011			2010
Allocation of net income
Basic
Net income attributable to Noble Corporation	$	54,495		$	370,726
Earnings allocated to unvested share-based payment awards		(509	)		(3,476	)

Net income to common shareholders — basic	$	53,986		$	367,250


Diluted
Net income attributable to Noble Corporation	$	54,495		$	370,726
Earnings allocated to unvested share-based payment awards		(509	)		(3,461	)

Net income to common shareholders — diluted	$	53,986		$	367,265


Weighted average shares outstanding — basic		251,026			255,122
Incremental shares issuable from assumed exercise of stock options		775			1,099

Weighted average shares outstanding — diluted		251,801			256,221


Weighted average unvested share-based payment awards		2,419			2,381


Earnings per share
Basic	$	0.22		$	1.44
Diluted	$	0.21		$	1.43

Only those items having a dilutive impact on our basic earnings per share are included in diluted earnings per share. At March 31, 2011, stock options totaling approximately 0.7 million were excluded from the diluted earnings per share as they were not dilutive as compared to 0.4 million at March 31, 2010.

Note 5 — Property and Equipment

Interest is capitalized on construction-in-progress at the weighted average cost of debt outstanding during the period of construction. Capitalized interest was $27 million and $13 million for the three months ended March 31, 2011 and 2010, respectively.

Note 6 — Gain on contract extinguishments, net

In January 2011, we announced the signing of a Memorandum of Understanding (“MOU”) with Petroleo Brasileiro S.A. (“Petrobras”) regarding operations in Brazil. Under the terms of the MOU, we agreed to substitute the Noble Phoenix, then under contract with Shell in Southeast Asia, for the Noble Muravlenko. In January 2011, Shell agreed to release the Noble Phoenix from its contract, which was effective in March 2011. The Noble Phoenix is undergoing limited contract preparations, after which the unit will mobilize to Brazil. We expect that acceptance of the Noble Phoenix will take place in the fourth quarter of 2011. In connection with the cancelation of the contract with Shell on the Noble Phoenix, we recognized a non-cash gain of approximately $52.5 million during the first quarter of 2011, which represented the unamortized fair value of the in-place contract assumed in connection with the Frontier acquisition.

Also in January 2011, as a result of the substitution discussed above, we reached a decision not to proceed with the previously announced reliability upgrade to the Noble Muravlenko that was scheduled to take place in 2013. As a result, we incurred a non-cash charge of approximately $32.6 million related to the termination of outstanding shipyard contracts.

In February 2011, the outstanding balances of the Bully joint venture credit facilities, which totaled $693 million, were repaid in full and the credit facilities terminated using a portion of the proceeds from our February 2011 debt offering and equity contributions from our joint venture partner. In addition, the related interest rate swaps were settled and terminated concurrent with the repayment and termination of the credit facilities. As a result of these transactions, we recognized a gain of approximately $1.3 million during the first quarter of 2011.

NOBLE CORPORATION (NOBLE-SWISS) AND SUBSIDIARIES
NOBLE CORPORATION (NOBLE-CAYMAN) AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unless otherwise indicated, dollar amounts in tables are in thousands, except per share data)

Note 7 — Receivables from Customers

In June 2010, a subsidiary of Frontier entered into a charter contract with a subsidiary of BP PLC (“BP”) for the Seillean with a term of a minimum of 100 days. The unit went on hire on July 23, 2010. In October 2010, BP initiated an arbitration proceeding against us claiming the contract was void ab initio, or never existed, due to a fundamental breach and has made other claims and is demanding that we reimburse the amounts already paid to us under the charter. We believe BP owes us the amounts due under the charter. The charter has a “hell or high water” provision requiring payment, and we believe we have satisfied our obligations under the charter. Outstanding receivables related to this charter totaled $35 million as of March 31, 2011. We believe that if BP were to be successful in claiming the contract void ab initio we would have an indemnity claim against the former shareholders of Frontier, and we have put them on notice to that effect. We can make no assurances as to the outcome of this dispute.

Note 8 — Debt

Total debt consisted of the following at March 31, 2011 and December 31, 2010:


	March 31,		December 31,
	2011		2010
Wholly-owned debt instruments:
5.875% Senior Notes due 2013	$	299,919	$	299,911
7.375% Senior Notes due 2014		249,539		249,506
3.45% Senior Notes due 2015		350,000		350,000
3.05% Senior Notes due 2016		299,927		—
7.50% Senior Notes due 2019		201,695		201,695
4.90% Senior Notes due 2020		498,699		498,672
4.625% Senior Notes due 2021		399,446		—
6.20% Senior Notes due 2040		399,889		399,889
6.05% Senior Notes due 2041		397,560		—
Credit facilities		—		40,000

Consolidated joint venture debt instruments:
Joint venture credit facilities	$	—	$	691,052
Joint venture partner notes		70,972		35,972

Total Debt		3,167,646		2,766,697

Less: Current Maturities		—		(80,213	)

Long-term Debt	$	3,167,646	$	2,686,484

We have two separate revolving credit facilities in place which provide us with a total borrowing capacity of $1.2 billion. Our previously existing credit facility, which has a capacity of $600 million, matures in 2013, and during the first quarter of 2011, we entered into an additional $600 million revolving credit facility which matures in 2015 (together referred to as the “Credit Facilities”). 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. We were in compliance with all covenants as of March 31, 2011.

In February 2011, we issued through our indirect wholly-owned subsidiary, Noble Holding International Limited (“NHIL”), $1.1 billion aggregate principal amount of senior notes in three separate tranches, comprising $300 million of 3.05% Senior Notes due 2016, $400 million of 4.625% Senior Notes due 2021, and $400 million of 6.05% Senior Notes due 2041. A portion of the net proceeds of approximately $1.09 billion, after expenses, was used to repay the outstanding balance on our revolving credit facility and to repay our portion of outstanding debt under the joint venture credit facilities discussed below.

NOBLE CORPORATION (NOBLE-SWISS) AND SUBSIDIARIES
NOBLE CORPORATION (NOBLE-CAYMAN) AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unless otherwise indicated, dollar amounts in tables are in thousands, except per share data)

In January 2011, the Bully joint ventures issued notes to the joint venture partners totaling $70 million. The interest rate on these notes was 10%, payable semi-annually in arrears and in kind on June 30 and December 31 commencing in June 2011. The purpose of these notes was to provide additional liquidity to the joint ventures in connection with the shipyard construction of the Bully vessels. Our portion of these joint venture partner notes, which totaled $35 million, has been eliminated in our Consolidated Balance Sheets.

On April 15, 2011, the Bully joint venture partners entered into a subscription agreement, pursuant to which each partner was issued equity in each of the Bully joint ventures in exchange for the cancellation of all outstanding joint venture partner notes. The subscription agreement has the effect of converting all joint venture partner notes into equity of the respective joint venture. The total capital contributed as a result of these agreements was $146 million, which included $142 million in outstanding notes, plus accrued interest. Our portion of the capital contribution, totaling $73 million, will be eliminated in consolidation.

Fair Value of Debt

Fair value represents the amount at which an instrument could be exchanged in a current transaction between willing parties. The estimated fair value of our senior notes was based on the quoted market prices for similar issues or on the current rates offered to us for debt of similar remaining maturities. The following table presents the estimated fair value of our long-term debt as of March 31, 2011 and December 31, 2010.


	March 31, 2011				December 31, 2010
	Carrying		Estimated		Carrying		Estimated
	Value		Fair Value		Value		Fair Value
Wholly-owned debt instruments
5.875% Senior Notes due 2013	$	299,919	$	325,316	$	299,911	$	324,281
7.375% Senior Notes due 2014		249,539		286,057		249,506		282,078
3.45% Senior Notes due 2015		350,000		356,097		350,000		357,292
3.05% Senior Notes due 2016		299,927		296,467		—		—
7.50% Senior Notes due 2019		201,695		240,548		201,695		242,464
4.90% Senior Notes due 2020		498,699		506,617		498,672		516,192
4.625% Senior Notes due 2021		399,446		394,839		—		—
6.20% Senior Notes due 2040		399,889		407,192		399,889		423,345
6.05% Senior Notes due 2041		397,560		397,353		—		—
Credit facilities		—		—		40,000		40,000
Consolidated joint venture debt instruments
Joint venture credit facilities		—		—		691,052		691,052
Joint venture partner notes		70,972		70,972		35,972		35,972

The Bully joint venture partner notes were subordinated debt, with the most recent tranche in January 2011 being issued at the same terms as the prior notes. Therefore, any difference between carrying value and estimated fair value is considered immaterial.

NOBLE CORPORATION (NOBLE-SWISS) AND SUBSIDIARIES
NOBLE CORPORATION (NOBLE-CAYMAN) AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unless otherwise indicated, dollar amounts in tables are in thousands, except per share data)

Note 9 — Income Taxes

At December 31, 2010, the reserves for uncertain tax positions totaled $145 million (net of related tax benefits of $8 million). At March 31, 2011, the reserves for uncertain tax positions totaled $147 million (net of related tax benefits of $9 million). If the March 31, 2011 reserves are not realized, the provision for income taxes would be reduced by $131 million and equity would be directly increased by $16 million.

It is possible that our existing liabilities related to our reserve for uncertain tax position amounts may increase or decrease in the next twelve months primarily due to the completion of open audits or the expiration of statutes of limitation. However, we cannot reasonably estimate a range of changes in our existing liabilities due to various uncertainties, such as the unresolved nature of various audits.

Note 10 — Employee Benefit Plans

Pension costs include the following components:


	Three Months Ended March 31,
	2011						2010
	Non-U.S.			U.S.			Non-U.S.			U.S.
Service cost	$	1,093		$	2,152		$	1,116		$	1,912
Interest cost		1,383			2,143			1,266			1,957
Return on plan assets		(1,403	)		(2,768	)		(1,366	)		(2,392	)
Amortization of prior service cost		—			56			—			57
Amortization of transition obligation		18			—			18			—
Recognized net actuarial loss		120			844			181			705

Net pension expense	$	1,211		$	2,427		$	1,215		$	2,239

During each of the three months ended March 31, 2011 and 2010, we made contributions to our pension plans totaling $2 million. We expect the minimum funding to our non-U.S. and U.S. plans in 2011, subject to applicable law, to be approximately $7 million.

We sponsor the Noble Drilling Corporation 401(k) Savings Restoration Plan (“Restoration Plan”). The Restoration Plan is a nonqualified, unfunded employee benefit plan under which certain highly compensated employees may elect to defer compensation in excess of amounts deferrable under our 401(k) savings plan. The Restoration Plan has no assets, and amounts withheld for the Restoration Plan are kept by us for general corporate purposes. The investments selected by employees and the associated returns are tracked on a phantom basis. Accordingly, we have a liability to employees for amounts originally withheld plus phantom investment income or less phantom investment losses. We are at risk for phantom investment income and, conversely, we benefit should phantom investment losses occur. At March 31, 2011 and December 31, 2010, our liability under the Restoration Plan totaled $8 million and $7 million, respectively. We have purchased investments that closely correlate to the investment elections made by participants in the Restoration Plan in order to mitigate the impact of the phantom investment income and losses on our financial statements. The value of these investments held for our benefit totaled $7 million at both March 31, 2011 and December 31, 2010.

Note 11 — Derivative Instruments and Hedging Activities

We periodically enter into derivative instruments to manage our exposure to fluctuations in interest rates and foreign currency exchange rates. We have documented policies and procedures to monitor and control the use of derivative instruments. We do not engage in derivative transactions for speculative or trading purposes, nor were we a party to leveraged derivatives. We maintain certain foreign exchange forward contracts that do not qualify under the Financial Accounting Standards Board (“FASB”) standards for hedge accounting treatment and therefore, changes in fair values are recognized as either income or loss in our consolidated income statement.

For foreign currency forward contracts, hedge effectiveness is evaluated at inception based on the matching of critical terms between derivative contracts and the hedged item. For interest rate swaps, we evaluate all material terms between the swap and the underlying debt obligation, known in FASB standards as the “long-haul method.” Any change in fair value resulting from ineffectiveness is recognized immediately in earnings.

NOBLE CORPORATION (NOBLE-SWISS) AND SUBSIDIARIES
NOBLE CORPORATION (NOBLE-CAYMAN) AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unless otherwise indicated, dollar amounts in tables are in thousands, except per share data)

Cash Flow Hedges

Our North Sea and Brazil operations have a significant amount of their cash operating expenses payable in local currencies. To limit the potential risk of currency fluctuations, we typically maintain short-term forward contracts settling monthly in their respective local currencies. The forward contract settlements in the remainder of 2011 represent approximately 37 percent of these forecasted local currency requirements. The notional amount of the forward contracts outstanding, expressed in U.S. Dollars, was approximately $91 million at March 31, 2011. Total unrealized gains related to these forward contracts were $2 million as of March 31, 2011 and were recorded as part of “Accumulated other comprehensive loss” (“AOCL”).

Our two joint ventures had maintained interest rate swaps which were classified as cash flow hedges. The purpose of these hedges was to satisfy bank covenants of the then outstanding credit facilities and to limit exposure to changes in interest rates. In February 2011, the outstanding balances of the joint venture credit facilities and the related interest rate swaps were settled and terminated. As a result of these transactions we recognized a gain of $1 million during the quarter ended March 31, 2011.

The balance of the net unrealized gain/(loss) related to our cash flow hedges included in AOCL and related activity is as follows:


	Three Months Ended
	March 31,
	2011			2010

Net unrealized gain at beginning of period	$	1,970		$	417
Activity during period:
Settlement of foreign currency forward contracts during the period		(1,152	)		(287	)
Settlement of interest rate swaps during the period		(366	)		—
Net unrealized gain/(loss) on outstanding foreign currency forward contracts		1,314			(1,638	)

Net unrealized gain/(loss) at end of period	$	1,766		$	(1,508	)

Fair Value Hedges

We have entered into a firm commitment for the construction of the Noble Globetrotter I drillship. The drillship will be constructed in two phases, with the second phase being installation and commissioning of the topside equipment. The contract for this second phase of construction is denominated in Euros, and in order to mitigate the risk of fluctuations in foreign currency exchange rates, we entered into forward contracts to purchase Euros. As of March 31, 2011, the aggregate notional amount of the forward contracts was 30 million Euros. Each forward contract settles in connection with required payments under the construction contract. We are accounting for these forward contracts as fair value hedges. The fair market value of these derivative instruments is included in “Other current assets/liabilities.” Gains and losses from these fair value hedges would be recognized in earnings currently, along with the change in fair value of the hedged item attributable to the risk being hedged, if any portion was found to be ineffective. The fair market value of these outstanding forward contracts totaled approximately $0.8 million at March 31, 2011 and $3 million at December 31, 2010. No gains or losses related to fair value hedges were recognized in the income statement for either of the three months ended March 31, 2011 or 2010.

NOBLE CORPORATION (NOBLE-SWISS) AND SUBSIDIARIES
NOBLE CORPORATION (NOBLE-CAYMAN) AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unless otherwise indicated, dollar amounts in tables are in thousands, except per share data)

Foreign Exchange Forward Contracts

One of our joint ventures maintained foreign exchange forward contracts to help mitigate the risk of currency fluctuation of the Singapore Dollar for the construction of the Noble Bully II drillship. These contracts were not designated for hedge accounting treatment under FASB standards, and therefore, changes in fair values were recognized as either income or loss in our Consolidated Income Statement. These contracts are referred to as non-designated derivatives in the tables to follow, and all were settled during the first quarter of 2011. For the three months ended March 31, 2011, we recognized a loss of $0.5 million related to these foreign exchange forward contracts.

Financial Statement Presentation

The following tables, together with Note 12, summarize the financial statement presentation and fair value of our derivative positions as of March 31, 2011 and December 31, 2010:


		Estimated fair value
	Balance sheet	March 31,		December 31,
	classification	2011		2010
Asset derivatives
Cash flow hedges
Short-term foreign currency forward contracts	Other current assets	$	2,003	$	2,015

Non-designated derivatives
Short-term foreign currency forward contracts	Other current assets	$	—	$	2,603

Liability derivatives
Fair value hedges
Short-term foreign currency forward contracts	Other current liabilities	$	827	$	3,306

Cash flow hedges
Short-term foreign currency forward contracts	Other current liabilities		237		412
Short-term interest rate swaps	Other current liabilities		—		15,697
Long-term interest rate swaps	Other liabilities		—		10,893

To supplement the fair value disclosures in Note 12, the following summarizes the recognized gains and losses of cash flow hedges and non-designated derivatives through AOCL or through “other income” for the three months ended March 31, 2011 and 2010:


	Gain/(loss)					Gain/(loss) reclassified
	recognized					from AOCL to “other						Gain/(loss) recognized
	through AOCL					income”						through “other income”
	2011		2010			2011			2010			2011			2010

Cash flow hedges
Foreign currency forward contracts	$	1,314	$	(1,638	)	$	(1,152	)	$	(287	)	$	—		$	—

Non-designated derivatives
Foreign currency forward contracts	$	—	$	—		$	—		$	—		$	(546	)	$	—

For cash flow presentation purposes, a total use of cash of $29 million was recognized in the financing activities section related to the settlement of the interest rate swaps. All other amounts were recognized as changes in operating activities.

NOBLE CORPORATION (NOBLE-SWISS) AND SUBSIDIARIES
NOBLE CORPORATION (NOBLE-CAYMAN) AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unless otherwise indicated, dollar amounts in tables are in thousands, except per share data)

Note 12 — Fair Value of Financial Instruments

The following table presents the carrying amount and estimated fair value of our financial instruments recognized at fair value on a recurring basis:


	March 31, 2011								December 31, 2010
			Estimated Fair Value Measurements
			Quoted		Significant
			Prices in		Other		Significant
			Active		Observable		Unobservable
	Carrying		Markets		Inputs		Inputs		Carrying		Estimated
	Amount		(Level 1)		(Level 2)		(Level 3)		Amount		Fair Value
Assets —
Marketable securities	$	7,264	$	7,264	$	—	$	—	$	6,854	$	6,854
Foreign currency forward contracts		2,003		—		2,003		—		4,618		4,618
Firm commitment		827		—		827		—		3,306		3,306

Liabilities —
Interest rate swaps	$	—	$	—	$	—	$	—	$	26,590	$	26,590
Foreign currency forward contracts		1,064		—		1,064		—		3,718		3,718

The derivative instruments have been valued using actively quoted prices and quotes obtained from the counterparties to the derivative instruments. 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.

Note 13 — Commitments and Contingencies

In May 2010, Anadarko Petroleum Corporation (“Anadarko”) sent a letter asserting that the initial attempted deepwater drilling moratorium in the U.S. Gulf of Mexico, issued on May 28, 2010 by U.S. Secretary of the Interior Ken Salazar, was an event of force majeure under the drilling contract for the Noble Amos Runner. In June 2010, Anadarko filed a declaratory judgment action in Federal District Court in Houston, Texas seeking to have the court declare that a force majeure condition had occurred and that the drilling contract was terminated by virtue of the initial proclaimed moratorium. We disagree that a force majeure event occurred and that Anadarko had the right to terminate the contract. In August 2010, we filed a counterclaim seeking damages from Anadarko for breach of contract. We do not believe the ultimate resolution of this matter will have a material adverse effect on our financial position, results of operations or cash flows. Due to the uncertainties noted above, we have not recognized any revenue under the disputed portion of this contract and the matter could have a material positive effect on our results of operations or cash flows for the period in which the matter is resolved.

The Noble Homer Ferrington is under contract with a subsidiary of ExxonMobil Corporation (“ExxonMobil”), who entered into an assignment agreement with BP for a two well farmout of the rig in Libya after successfully drilling two wells with the rig for ExxonMobil. In August 2010, BP attempted to terminate the assignment agreement claiming that the rig was not in the required condition. ExxonMobil has informed us that we must look to BP for payment of the dayrate during the assignment period. In August 2010, we initiated arbitration proceedings under the drilling contract against both BP and ExxonMobil. We do not believe BP had the right to terminate the assignment agreement and believe the rig continues to be fully ready to operate under the drilling contract. We believe we are owed dayrate by either or both of these clients. The operating dayrate was approximately $538,000 per day for the work in Libya. We are proceeding with the arbitration process and intend to vigorously pursue these claims. Due to the uncertainties noted above, we have not recognized any revenue during the assignment period. As the amounts in dispute have been fully reserved, the matter could have a material positive effect on our results of operations or cash flows in the period the matter is resolved.

NOBLE CORPORATION (NOBLE-SWISS) AND SUBSIDIARIES
NOBLE CORPORATION (NOBLE-CAYMAN) AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unless otherwise indicated, dollar amounts in tables are in thousands, except per share data)

In August 2007, we entered into a drilling contract with Marathon Oil Company (“Marathon”) for the Noble Jim Day to operate in the U.S. Gulf of Mexico. On January 1, 2011, Marathon provided notice that it was terminating the contract. Marathon’s stated reason for the termination was that the rig had not been accepted by Marathon by December 31, 2010, and Marathon also maintained that a force majeure condition existed under the contract. The contract contained a provision allowing Marathon to terminate if the rig had not commenced operations by December 31, 2010. We believe the rig was ready to commence operations and should have been accepted by Marathon. The contract term was for four years and represented approximately $752 million in contract backlog at the time of termination. In March 2011, we filed suit in Texas state district court against Marathon seeking damages for its actions. We cannot provide assurance as to the outcome of this lawsuit.

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 March 31, 2011, there were approximately 29 of these lawsuits in which we are one of many defendants. These lawsuits have been filed in the United States in the states of Louisiana, Mississippi and Texas. We intend to 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, including certain disputes with customers over receivables discussed in Note 7, 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.

During the fourth quarter of 2007, our Nigerian subsidiary received letters from the Nigerian Maritime Administration and Safety Agency (“NIMASA”) seeking to collect a two percent surcharge on contract amounts under contracts performed by “vessels,” within the meaning of Nigeria’s cabotage laws, engaged in the Nigerian coastal shipping trade. Although we do not believe that these laws apply to our ownership of drilling units, NIMASA is seeking to apply a provision of the Nigerian cabotage laws (which became effective on May 1, 2004) to our offshore drilling units by considering these units to be “vessels” within the meaning of those laws and therefore subject to the surcharge, which is imposed only upon “vessels.” Our offshore drilling units are not engaged in the Nigerian coastal shipping trade and are not in our view “vessels” within the meaning of Nigeria’s cabotage laws. In January 2008, we filed an originating summons against NIMASA and the Minister of Transportation in the Federal High Court of Lagos, Nigeria seeking, among other things, a declaration that our drilling operations do not constitute “coastal trade” or “cabotage” within the meaning of Nigeria’s cabotage laws and that our offshore drilling units are not “vessels” within the meaning of those laws. In February 2009, NIMASA filed suit against us in the Federal High Court of Nigeria seeking collection of the cabotage surcharge. In August 2009, the court issued a favorable ruling in response to our originating summons stating that drilling operations do not fall within the cabotage laws and that drilling rigs are not vessels for purposes of those laws. The court also issued an injunction against the defendants prohibiting their interference with our drilling rigs or drilling operations. NIMASA has appealed the court’s ruling, although the court dismissed NIMASA’s lawsuit filed against us in February 2009. We intend to take all further appropriate legal action to resist the application of Nigeria’s cabotage laws to our drilling units. The outcome of any such legal action and the extent to which we may ultimately be responsible for the surcharge is uncertain. If it is ultimately determined that offshore drilling units constitute vessels within the meaning of the Nigerian cabotage laws, we may be required to pay the surcharge and comply with other aspects of the Nigerian cabotage laws, which could adversely affect our operations in Nigerian waters and require us to incur additional costs of compliance.

NIMASA had also informed the Nigerian Content Division of its position that we are not in compliance with the cabotage laws. The Nigerian Content Division makes determinations of companies’ compliance with applicable local content regulations for purposes of government contracting, including contracting for services in connection with oil and gas concessions where the Nigerian national oil company is a partner. The Nigerian Content Division had originally barred us from participating in new tenders as a result of NIMASA’s allegations, although the Division reversed its actions based on the favorable Federal High Court ruling. However, no assurance can be given with respect to our ability to bid for future work in Nigeria until our dispute with NIMASA is resolved.

NOBLE CORPORATION (NOBLE-SWISS) AND SUBSIDIARIES
NOBLE CORPORATION (NOBLE-CAYMAN) AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unless otherwise indicated, dollar amounts in tables are in thousands, except per share data)

We operate in a number of countries throughout the world and our income tax returns filed in those jurisdictions are subject to review and examination by tax authorities within those jurisdictions. Our 2008 tax return is currently under audit by the U.S. Internal Revenue Service. In addition, a U.S. subsidiary of Frontier is also under audit for its 2007 and 2008 tax returns. Furthermore, we are currently contesting several non-U.S. tax assessments and may contest future assessments when we believe the assessments are in error. We cannot predict or provide assurance as to the ultimate outcome of the existing or future assessments. We believe the ultimate resolution of the outstanding assessments, for which we have not made any accrual, will not have a material adverse effect on our consolidated financial statements. We recognize uncertain tax positions that we believe have a greater than 50 percent likelihood of being sustained.

Certain of our non-U.S. income tax returns have been examined for the 2002 through 2008 periods and audit claims have been assessed for approximately $319 million (including interest and penalties), primarily in Mexico. We do not believe we owe these amounts and are defending our position. However, we expect increased audit activity in Mexico and anticipate the tax authorities will issue additional assessments and continue to pursue legal actions for all audit claims. We believe additional audit claims in the range of $11 to $13 million attributable to other business tax returns may be assessed against us. We have contested, or intend to contest, the audit findings, including through litigation if necessary, and we do not believe that there is greater than 50 percent likelihood that additional taxes will be incurred. Accordingly, no accrual has been made for such amounts.

We maintain certain insurance coverage against specified marine perils, including liability for physical damage to our drilling rigs, and loss of hire on certain of our rigs. The damage caused in 2005 and 2008 by Hurricanes Katrina, Rita and Ike negatively impacted the energy insurance market, resulting in more restricted and more expensive coverage for U.S. named windstorm perils. Accordingly, effective March 2009, we elected to self insure this exposure to our units in the U.S. portion of the Gulf of Mexico. Our rigs located in the Mexican portion of the Gulf of Mexico remain covered by commercial insurance for windstorm damage. In addition, we maintain physical damage deductibles of $25 million per occurrence for rigs located in the U.S., Mexico, Brazil, Southeast Asia, the North Sea and New Zealand and $15 million per occurrence for rigs operating in West Africa, the Middle East, India, and the Mediterranean Sea. The loss of hire coverage applies only to our rigs operating under contract with a dayrate equal to or greater than $200,000 a day and is subject to a 45-day waiting period for each unit and each occurrence.

Although we maintain insurance in the geographic areas in which we operate, pollution, reservoir damage and environmental risks generally are not fully insurable. Our insurance policies and contractual rights to indemnity may not adequately cover our losses or may have exclusions of coverage for some losses. We do not have insurance coverage or rights to indemnity for all risks, including loss of hire insurance on most of the rigs in our fleet. Uninsured exposures may include expatriate activities prohibited by U.S. laws and regulations, radiation hazards, certain loss or damage to property on board our rigs and losses relating to shore-based terrorist acts or strikes. If a significant accident or other event occurs and is not fully covered by insurance or contractual indemnity, it could adversely affect our financial position, results of operations or cash flows. Additionally, there can be no assurance that those parties with contractual obligations to indemnify us will necessarily be financially able to indemnify us against all these risks.

We carry protection and indemnity insurance covering marine third party liability exposures, which also includes coverage for employer’s liability resulting from personal injury to our offshore drilling crews. Our protection and indemnity policy currently has a standard deductible of $10 million per occurrence, with maximum liability coverage of $750 million.

In connection with our capital expenditure program, we had outstanding commitments, including shipyard and purchase commitments of approximately $3.1 billion at March 31, 2011.

We have entered into agreements with certain of our executive officers, as well as certain other employees. These agreements become effective upon a change of control of Noble-Swiss (within the meaning set forth in the agreements) or a termination of employment in connection with or in anticipation of a change of control, and remain effective for three years thereafter. These agreements provide for compensation and certain other benefits under such circumstances.

NOBLE CORPORATION (NOBLE-SWISS) AND SUBSIDIARIES
NOBLE CORPORATION (NOBLE-CAYMAN) AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unless otherwise indicated, dollar amounts in tables are in thousands, except per share data)

Internal Investigation

In 2007, we began, and voluntarily contacted the SEC and the U.S. Department of Justice (“DOJ”) to advise them of, an internal investigation of the legality under the United States Foreign Corrupt Practices Act (“FCPA”) and local laws of certain reimbursement payments made by our Nigerian affiliate to our customs agents in Nigeria. In 2010, we finalized settlements of this matter with each of the SEC and the DOJ. In order to resolve the DOJ investigation, we entered into a non-prosecution agreement with the DOJ, which provides for the payment of a fine of $2.6 million, as well as certain undertakings, including continued cooperation with the DOJ, compliance with the FCPA, certain self-reporting and annual reporting obligations and certain restrictions on our public discussion regarding the agreement. The agreement does not require that we install a monitor to oversee our activities and compliance with laws. In order to resolve the SEC investigation, in 2010, we agreed to the entry of a civil judgment against us. Pursuant to the agreed judgment, we agreed to disgorge profits of $4.3 million, pay prejudgment interest of $1.3 million and refrain from denying the allegations contained in the SEC’s petition, except in other litigation to which the SEC is not a party. We also agreed to an injunction restraining us from violating the anti-bribery, books and records, and internal controls provisions of the FCPA, and we waived a variety of litigation rights with respect to the conduct at issue. The agreed judgment does not require a monitor. Our ability to comply with the terms of the settlements is dependent on the success of our ongoing compliance program, including our ability to continue to manage our agents and supervise, train and retain competent employees, and the efforts of our employees to comply with applicable law and our code of business conduct and ethics.

In January 2011, the Nigerian Economic and Financial Crimes Commission and the Nigerian Attorney General Office initiated an investigation into these same activities. A subsidiary of Noble-Swiss resolved this matter through the execution of a non-prosecution agreement dated January 28, 2011. Pursuant to this agreement, the subsidiary paid $2.5 million to resolve all charges and claims of the Nigerian government.

Any similar investigations or charges and any additional sanctions we may incur as a result of any such investigation could damage our reputation and result in substantial fines, sanctions, civil and/or criminal penalties and curtailment of operations in certain jurisdictions and might adversely affect our business, results of operations or financial condition. Further, resolving any such investigation could be expensive and consume significant time and attention of our senior management.

In March 2011, we received a new temporary import permit for our final rig in Nigeria that had been waiting for a temporary import permit based on a long-standing application. However, there can be no assurance that we will be able to obtain new permits or further extensions of permits necessary to continue the operation of our rigs in Nigeria. If we cannot obtain a new permit or an extension necessary to continue operations of any rig, we may need to cease operations under the drilling contract for such rig and relocate such rig from Nigerian waters. We cannot predict what impact these events may have on any such contract or our business in Nigeria, and we could face additional fines and sanctions in Nigeria. Furthermore, we cannot predict what changes, if any, relating to temporary import permit policies and procedures may be established or implemented in Nigeria in the future, or how any such changes may impact our business there.

Note 14 — Segment and Related Information

We report our contract drilling operations as a single reportable segment: Contract Drilling Services. The consolidation of our contract drilling operations into one reportable segment is attributable to how we manage our business, and the fact that all of our drilling fleet is dependent upon the worldwide oil and gas industry. The mobile offshore drilling units comprising our offshore rig fleet operate in a single, global market for contract drilling services and are often redeployed globally due to changing demands of our customers, which consist largely of major non-U.S. and government owned/controlled oil and gas companies throughout the world. Our contract drilling services segment currently conducts contract drilling operations principally in the Middle East, India, the U.S. Gulf of Mexico, Mexico, the Mediterranean, the North Sea, Brazil, West Africa and the Asian Pacific.

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

We evaluate the performance of our operating segment primarily based on operating revenues and net income. Summarized financial information of our reportable segments for the three months ended March 31, 2011 and 2010 is shown in the following table. The “Other” column includes results of labor contract drilling services and corporate related items.


	Three Months Ended March 31,
	2011									2010
	Contract									Contract
	Drilling									Drilling
	Services			Other			Total			Services			Other			Total

Revenues from external customers	$	564,654		$	14,234		$	578,888		$	832,160		$	8,691		$	840,851
Depreciation and amortization		154,888			3,234			158,122			113,173			2,684			115,857
Segment operating income/ (loss)		84,716			1,548			86,264			423,944			(983	)		422,961
Interest expense, net of amount capitalized		(1,085	)		(17,956	)		(19,041	)		(58	)		(407	)		(465	)
Income tax provision/ (benefit)		18,863			(3,504	)		15,359			55,592			(196	)		55,396
Segment profit/ (loss)		66,880			(12,385	)		54,495			372,036			(1,310	)		370,726
Total assets (at end of period)		11,716,530			213,355			11,929,885			7,882,139			851,963			8,734,102
Capital expenditures		612,988			1,336			614,324			335,583			3,181			338,764

Note 15 — Accounting Pronouncements

In October 2009, the FASB issued guidance that impacts the recognition of revenue in multiple-deliverable arrangements. The guidance establishes a selling-price hierarchy for determining the selling price of a deliverable. The goal of this guidance is to clarify disclosures related to multiple-deliverable arrangements and to align the accounting with the underlying economics of the multiple-deliverable transaction. This guidance is effective for fiscal years beginning on or after June 15, 2010. The adoption of this guidance did not have a material impact on our financial condition, results of operations, cash flows or financial disclosures.

In January 2010, the FASB issued guidance relating to the disclosure of the fair value of assets. This guidance calls for additional information to be given regarding the transfer of items in and out of respective categories. In addition, it requires additional disclosures regarding the purchase, sales, issuances, and settlements of assets that are classified as level three within the FASB fair value hierarchy. This guidance is generally effective for annual and interim periods ending after December 15, 2009. However, the disclosures about purchases, sales, issuances and settlements in the roll-forward activity in Level 3 fair value measurements is deferred until fiscal years beginning after December 15, 2010. The adoption of this guidance did not have a material impact on our financial condition, results of operations, cash flows or financial disclosures.

In December 2010, the FASB issued guidance that requires a public entity to disclose pro forma information for business combinations that occurred in the current reporting period. The disclosures include pro forma revenue and earnings of the combined entity for the current reporting period as though the acquisition date for all business combinations that occurred during the year had been as of the beginning of the annual reporting period. If comparative financial statements are presented, the pro forma revenue and earnings of the combined entity for the comparable prior reporting period should be reported as though the acquisition date for all business combinations that occurred during the current year had been as of the beginning of the comparable prior annual reporting period. The guidance is effective for annual reporting periods beginning on or after December 15, 2010. The adoption of this guidance did not have a material impact on our financial condition, results of operations, cash flows or financial disclosures.

Note 16 — Net Change in Other Assets and Liabilities

The net effect of changes in other assets and liabilities on cash flows from operating activities is as follows:


	Noble-Swiss						Noble-Cayman
	Three months ended						Three months ended
	March 31,						March 31,
	2011			2010			2011			2010

Accounts receivable	$	(58,461	)	$	25,241		$	(58,461	)	$	25,241
Other current assets		(64,003	)		(25,625	)		(65,318	)		(24,993	)
Other assets		4,611			(6,162	)		2,132			(6,276	)
Accounts payable		1,864			(2,429	)		1,805			(2,396	)
Other current liabilities		(18,626	)		(1,367	)		(17,602	)		(5,418	)
Other liabilities		20,525			21,611			20,501			21,814

	$	(114,090	)	$	11,269		$	(116,943	)	$	7,972

Note 17 — Guarantees of Registered Securities

Noble-Cayman and Noble Holding (U.S.) Corporation (“NHC”), a wholly-owned subsidiary of Noble-Cayman, are full and unconditional guarantors of NDC’s 7.50% Senior Notes due 2019 which had an outstanding principal balance at March 31, 2011 of $202 million. NDC is a direct, wholly-owned subsidiary of NHC. Noble Drilling Holding LLC (“NDH”), a wholly-owned subsidiary of Noble-Cayman, is also a co-obligor on (and effectively a guarantor of) the 7.50% Senior Notes. Noble Drilling Services 6 LLC (“NDS6”), also a wholly-owned subsidiary of Noble-Cayman, is a co-issuer of the 7.50% Senior Notes.

NDC and NHIL are full and unconditional guarantors of Noble-Cayman’s 5.875% Senior Notes due 2013, which had an outstanding principal balance of $300 million at March 31, 2011.

Noble-Cayman is a full and unconditional guarantor of NHIL’s 7.375% Senior Notes due 2014, which had an outstanding principal balance of $250 million at March 31, 2011.

Noble-Cayman is a full and unconditional guarantor of NHIL’s 3.45% Senior Notes due 2015, 4.90% Senior Notes due 2020 and 6.20% Senior Notes due 2040. The aggregate principal balance of these three tranches of senior notes at March 31, 2011 was $1.25 billion.

Noble-Cayman is a full and unconditional guarantor of NHIL’s 3.05% Senior Notes due 2016, 4.625% Senior Notes due 2021 and 6.05% Senior Notes due 2041. The aggregate principal balance of these three tranches of senior notes at March 31, 2011 was $1.1 billion.

The following consolidating financial statements of Noble-Cayman, NHC and NDH combined, NDC, NHIL, NDS6 and all other subsidiaries present investments in both consolidated and unconsolidated affiliates using the equity method of accounting.

NOBLE CORPORATION (NOBLE-CAYMAN) AND SUBSIDIARIES

CONDENSED CONSOLIDATING BALANCE SHEET
March 31, 2011
(in thousands)


													Other
													Non-guarantor
	Noble-		NHC and NDH										Subsidiaries			Consolidating
	Cayman		Combined			NDC			NHIL		NDS6		of Noble			Adjustments			Total
ASSETS
Current assets
Cash and cash equivalents	$	76	$	328		$	—		$	—	$	—	$	500,647		$	—		$	501,051
Accounts receivable		—		8,094			1,797			—		—		435,984			—			445,875
Prepaid expenses		—		309			11			—		—		71,184			—			71,504
Short-term notes receivable from affiliates		—		119,476			—			—		—		90,500			(209,976	)		—
Accounts receivable from affiliates		1,895,646		—			799,567			1,269,552		—		4,241,460			(8,206,225	)		—
Other current assets		8,770		80,775			241			7,414		11,207		230,975			(241,527	)		97,855

Total current assets		1,904,492		208,982			801,616			1,276,966		11,207		5,570,750			(8,657,728	)		1,116,285


Property and equipment
Drilling equipment, facilities and other		—		1,655,800			71,013			—		—		11,406,528			—			13,133,341
Accumulated depreciation		—		(185,003	)		(50,937	)		—		—		(2,487,516	)		—			(2,723,456	)

Total property and equipment, net		—		1,470,797			20,076			—		—		8,919,012			—			10,409,885


Notes receivable from affiliates		3,507,062		675,000			—			1,239,600		572,107		2,880,400			(8,874,169	)		—
Investments in affiliates		6,922,746		8,789,542			3,533,598			6,093,309		1,922,249		—			(27,261,444	)		—
Other assets		4,385		8,415			2,214			19,940		972		329,325			—			365,251

Total assets	$	12,338,685	$	11,152,736		$	4,357,504		$	8,629,815	$	2,506,535	$	17,699,487		$	(44,793,341	)	$	11,891,421


LIABILITIES AND EQUITY
Current liabilities
Short-term notes payables from affiliates	$	40,500	$	50,000		$	—		$	—	$	—	$	119,476		$	(209,976	)	$	—
Accounts payable and accrued liabilities		5,875		17,260			9,793			19,233		630		546,272			—			599,063
Accounts payable to affiliates		2,978,526		3,094,159			31,913			73,925		16,599		2,252,630			(8,447,752	)		—

Total current liabilities		3,024,901		3,161,419			41,706			93,158		17,229		2,918,378			(8,657,728	)		599,063


Long-term debt		299,920		—			—			2,595,062		201,695		70,969			—			3,167,646
Notes payable to affiliates		1,834,500		1,147,500			120,000			975,000		811,000		3,986,169			(8,874,169	)		—
Other liabilities		19,929		51,691			25,640			—		—		382,426			—			479,686

Total liabilities		5,179,250		4,360,610			187,346			3,663,220		1,029,924		7,357,942			(17,531,897	)		4,246,395


Commitments and contingencies

Total equity		7,159,435		6,792,126			4,170,158			4,966,595		1,476,611		10,341,545			(27,261,444	)		7,645,026

Total liabilities and equity	$	12,338,685	$	11,152,736		$	4,357,504		$	8,629,815	$	2,506,535	$	17,699,487		$	(44,793,341	)	$	11,891,421

NOBLE CORPORATION (NOBLE-CAYMAN) AND SUBSIDIARIES

CONDENSED CONSOLIDATING BALANCE SHEET
December 31, 2010
(in thousands)


													Other
													Non-guarantor
	Noble-		NHC and NDH										Subsidiaries			Consolidating
	Cayman		Combined			NDC			NHIL		NDS6		of Noble			Adjustments			Total
ASSETS
Current assets
Cash and cash equivalents	$	42	$	146		$	—		$	—	$	—	$	333,211		$	—		$	333,399
Accounts receivable		—		6,984			1,795			—		—		378,635			—			387,414
Prepaid expenses		—		310			—			—		—		32,922			—			33,232
Short-term notes receivable from affiliates		—		119,476			—			—		—		75,000			(194,476	)		—
Accounts receivable from affiliates		607,207		—			751,623			199,235		1,958		3,646,623			(5,206,646	)		—
Other current assets		7,057		76,789			240			19,980		9,416		208,075			(251,736	)		69,821

Total current assets		614,306		203,705			753,658			219,215		11,374		4,674,466			(5,652,858	)		823,866


Property and equipment
Drilling equipment, facilities and other		—		1,254,482			70,945			—		—		11,289,547			—			12,614,974
Accumulated depreciation		—		(153,638	)		(50,250	)		—		—		(2,391,066	)		—			(2,594,954	)


Total property and equipment, net		—		1,100,844			20,695			—		—		8,898,481			—			10,020,020


Notes receivable from affiliates		3,507,062		675,000			—			1,239,600		479,107		2,492,900			(8,393,669	)		—
Investments in affiliates		6,835,466		9,150,129			3,561,451			5,618,248		1,879,831		—			(27,045,125	)		—
Other assets		1,872		7,700			2,451			11,336		1,001		318,232			—			342,592

Total assets	$	10,958,706	$	11,137,378		$	4,338,255		$	7,088,399	$	2,371,313	$	16,384,079		$	(41,091,652	)	$	11,186,478


LIABILITIES AND EQUITY
Current liabilities
Short-term notes payables from affiliates	$	25,000	$	50,000		$	—		$	—	$	—	$	119,476		$	(194,476	)	$	—
Current maturities of long-term debt		—		—			—			—		—		80,213			—			80,213
Accounts payable and accrued liabilities		1,473		19,218			8,779			31,973		4,413		566,422			—			632,278
Accounts payable to affiliates		1,601,869		2,695,651			30,095			64,192		7,134		1,059,441			(5,458,382	)		—

Total current liabilities		1,628,342		2,764,869			38,874			96,165		11,547		1,825,552			(5,652,858	)		712,491


Long-term debt		339,911		—			—			1,498,066		201,695		646,812			—			2,686,484
Notes payable to affiliates		1,834,500		1,092,000			120,000			550,000		811,000		3,986,169			(8,393,669	)		—
Other liabilities		19,929		48,595			25,485			—		—		432,839			—			526,848

Total liabilities		3,822,682		3,905,464			184,359			2,144,231		1,024,242		6,891,372			(14,046,527	)		3,925,823


Commitments and contingencies

Total equity		7,136,024		7,231,914			4,153,896			4,944,168		1,347,071		9,492,707			(27,045,125	)		7,260,655

Total liabilities and equity	$	10,958,706	$	11,137,378		$	4,338,255		$	7,088,399	$	2,371,313	$	16,384,079		$	(41,091,652	)	$	11,186,478

NOBLE CORPORATION (NOBLE-CAYMAN) AND SUBSIDIARIES

CONDENSED CONSOLIDATING STATEMENT OF INCOME
Three Months Ended March 31, 2011
(in thousands)


																Other
																Non-guarantor
	Noble-			NHC and NDH												Subsidiaries			Consolidating
	Cayman			Combined			NDC			NHIL			NDS6			of Noble			Adjustments			Total
Operating revenues
Contract drilling services	$	—		$	25,964		$	4,990		$	—		$	—		$	523,594		$	(11,943	)	$	542,605
Reimbursables		—			912			12			—			—			21,367			—			22,291
Labor contract drilling services		—			—			—			—			—			13,547			—			13,547
Other		—			—			—			—			—			445			—			445

Total operating revenues		—			26,876			5,002			—			—			558,953			(11,943	)		578,888


Operating costs and expenses
Contract drilling services		1,461			8,984			1,823			8,570			—			291,937			(11,943	)		300,832
Reimbursables		—			904			—			—			—			16,199			—			17,103
Labor contract drilling services		—			—			—			—			—			8,523			—			8,523
Depreciation and amortization		—			10,124			909			—			—			146,622			—			157,655
Selling, general and administrative		1,511			1,509			—			7,877			—			5,634			—			16,531
Gain on contract extinguishments, net		—			—			—			—			—			(21,202	)		—			(21,202	)

Total operating costs and expenses		2,972			21,521			2,732			16,447			—			447,713			(11,943	)		479,442


Operating income (loss)		(2,972	)		5,355			2,270			(16,447	)		—			111,240			—			99,446

Other income (expense)
Equity earnings in affiliates, net of tax		87,280			37,939			15,801			50,061			35,820			—			(226,901	)		—
Interest expense, net of amounts capitalized		(18,361	)		(14,592	)		(1,820	)		(22,496	)		(7,671	)		(2,131	)		48,030			(19,041	)
Interest income and other, net		1,713			5,538			11			11,309			1,792			29,908			(48,030	)		2,241


Income before income taxes		67,660			34,240			16,262			22,427			29,941			139,017			(226,901	)		82,646
Income tax provision		—			(858	)		—			—			—			(14,167	)		—			(15,025	)

Net Income		67,660			33,382			16,262			22,427			29,941			124,850			(226,901	)		67,621

Net loss attributable to noncontrolling interests		—			—			—			—			—			39			—			39


Net income attributable to Noble Corporation	$	67,660		$	33,382		$	16,262		$	22,427		$	29,941		$	124,889		$	(226,901	)	$	67,660

NOBLE CORPORATION (NOBLE-CAYMAN) AND SUBSIDIARIES

CONDENSED CONSOLIDATING STATEMENT OF INCOME
Three Months Ended March 31, 2010
(in thousands)


															Other
															Non-guarantor
	Noble-			NHC and NDH											Subsidiaries			Consolidating
	Cayman			Combined			NDC			NHIL			NDS6		of Noble			Adjustments			Total
Operating revenues
Contract drilling services	$	—		$	28,309		$	2,468		$	—		$	—	$	791,169		$	(13,300	)	$	808,646
Reimbursables		—			250			—			—			—		23,983			—			24,233
Labor contract drilling services		—			—			—			—			—		7,761			—			7,761
Other		—			—			—			—			—		211			—			211

Total operating revenues		—			28,559			2,468			—			—		823,124			(13,300	)		840,851


Operating costs and expenses
Contract drilling services		5			7,881			1,948			—			—		256,247			(13,300	)		252,781
Reimbursables		—			111			—			—			—		19,632			—			19,743
Labor contract drilling services		—			—			—			—			—		5,888			—			5,888
Depreciation and amortization		—			8,783			738			—			—		106,143			—			115,664
Selling, general and administrative		—			863			133			43			—		14,849			—			15,888

Total operating costs and expenses		5			17,638			2,819			43			—		402,759			(13,300	)		409,964


Operating income (loss)		(5	)		10,921			(351	)		(43	)		—		420,365			—			430,887

Other income (expense)
Equity earnings in affiliates, net of tax		377,338			175,025			(438	)		389,881			177,391		—			(1,119,197	)		—
Interest expense, net of amounts capitalized		(413	)		(14,881	)		(1,818	)		(9,629	)		—		(3,445	)		29,721			(465	)
Interest income and other, net		1,713			1,816			—			—			1,938		27,861			(29,721	)		3,607


Income before income taxes		378,633			172,881			(2,607	)		380,209			179,329		444,781			(1,119,197	)		434,029
Income tax provision		—			1,259			—			—			—		(56,655	)		—			(55,396	)

Net Income	$	378,633		$	174,140		$	(2,607	)	$	380,209		$	179,329	$	388,126		$	(1,119,197	)	$	378,633

NOBLE CORPORATION (NOBLE-CAYMAN) AND SUBSIDIARIES

CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS
Three Months Ended March 31, 2011
(in thousands)


																Other
																Non-guarantor
	Noble-			NHC and NDH												Subsidiaries			Consolidating
	Cayman			Combined			NDC			NHIL			NDS6			of Noble			Adjustments			Total
Cash flows from operating activities
Net cash from operating activities	$	(12,580	)	$	6,411		$	2,762		$	(48,978	)	$	(9,633	)	$	155,517		$	—		$	93,499


Cash flows from investing activities
New construction and capital expenditures		—			(318,916	)		—			—			—			(291,156	)		—			(610,072	)
Notes receivable from affiliates		—			—			—			—			—			2,000			(2,000	)		—
Refund from contract extinguishments		—			—			—			—			—			18,642			—			18,642

Net cash from investing activities		—			(318,916	)		—			—			—			(270,514	)		(2,000	)		(591,430	)


Cash flows from financing activities
Borrowings on bank credit facilities		200,000			—			—			—			—			—			—			200,000
Repayments of bank credit facilities		(240,000	)		—			—			—			—			—			—			(240,000	)
Proceeds from issuance of senior notes, net		—			—			—			1,087,833			—			—			—			1,087,833
Contribution from joint venture partners		—			—			—			—			—			361,000			—			361,000
Payments of joint venture debt		—			—			—			—			—			(693,494	)		—			(693,494	)
Settlement of interest rate swaps		—			—			—			—			—			(29,032	)		—			(29,032	)
Proceeds from issuance of notes to joint venture partner		—			—			—			—			—			35,000			—			35,000
Financing cost on credit facilities		(2,835	)		—			—			—			—			—			—			(2,835	)
Distributions to parent		(52,889	)		—			—			—			—			—			—			(52,889	)
Advances (to) from affiliates		92,838			330,187			(2,762	)		(1,038,855	)		9,633			608,959			—			—
Notes payable to affiliates		15,500			(17,500	)		—			—			—			—			2,000			—

Net cash from financing activities		12,614			312,687			(2,762	)		48,978			9,633			282,433			2,000			665,583

Net change in cash and cash equivalents		34			182			—			—			—			167,436			—			167,652
Cash and cash equivalents, beginning of period		42			146			—			—			—			333,211			—			333,399

Cash and cash equivalents, end of period	$	76		$	328		$	—		$	—		$	—		$	500,647		$	—		$	501,051

NOBLE CORPORATION (NOBLE-CAYMAN) AND SUBSIDIARIES

CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS
Three Months Ended March 31, 2010
(in thousands)


																Other
																Non-guarantor
	Noble-			NHC and NDH												Subsidiaries			Consolidating
	Cayman			Combined			NDC			NHIL			NDS6			of Noble			Adjustments		Total
Cash flows from operating activities
Net cash from operating activities	$	9,783		$	9,367		$	(3,983	)	$	(14,186	)	$	(1,814	)	$	504,949		$	—	$	504,116


Cash flows from investing activities
New construction and capital expenditures		—			(141,404	)		—			—			—			(142,699	)		—		(284,103	)

Net cash from investing activities		—			(141,404	)		—			—			—			(142,699	)		—		(284,103	)


Cash flows from financing activities
Distributions to parent		(109,057	)																			(109,057	)
Advances (to) from affiliates		99,480			131,875			3,983			14,186			1,814			(251,338	)		—		—

Net cash from financing activities		(9,577	)		131,875			3,983			14,186			1,814			(251,338	)		—		(109,057	)

Net change in cash and cash equivalents		206			(162	)		—			—			—			110,912			—		110,956
Cash and cash equivalents, beginning of period		3			268			—			—			—			725,954			—		726,225

Cash and cash equivalents, end of period	$	209		$	106		$	—		$	—		$	—		$	836,866		$	—	$	837,181


Item 2.		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 March 31, 2011, and our results of operations for the three months ended March 31, 2011 and 2010. The following discussion should be read in conjunction with the consolidated financial statements and related notes contained in this Quarterly Report on Form 10-Q and the consolidated financial statements and notes thereto included in the Annual Report on Form 10-K for the year ended December 31, 2010 filed by Noble Corporation, a Swiss corporation (“Noble-Swiss”) and Noble Corporation, a Cayman Islands company (“Noble-Cayman”).

Forward-Looking Statements

This Quarterly Report on Form 10-Q 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 the Frontier transaction and integration, contract backlog, fleet and benefits, our financial position, business strategy, backlog, completion and acceptance of our newbuild rigs, contract commitments, dayrates, contract commencements, extension or renewals, contract tenders, the outcome of any dispute, litigation or investigation, plans and objectives of management for future operations, foreign currency requirements, results of joint ventures, indemnity and other contract claims, construction of rigs, industry conditions including the effect of disruptions of drilling in the U.S. Gulf of Mexico, access to financing, impact of competition, taxes and tax rates, advantages of our worldwide internal restructuring, indebtedness covenant compliance, 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 forward-looking statements speak only as of the date of this report on Form 10-Q and we undertake no obligation to revise or update any forward-looking statement for any reason, except as required by law. We have identified factors including but not limited to operating hazards and delays, risks associated with operations outside the U.S., actions by regulatory authorities, customers, joint venture partners, contractors, lenders and other third parties, legislation and regulations affecting drilling operations, costs and difficulties relating to the integration of businesses, factors affecting the level of activity in the oil and gas industry, supply and demand of drilling rigs, factors affecting the duration of contracts, the actual amount of downtime, factors that reduce applicable dayrates, violations of anti-corruption laws, hurricanes and other weather conditions and the future price of oil and gas that could cause actual plans or results to differ materially from those included in any forward-looking statements. These factors include those referenced or described in Part I, Item 1A. “Risk Factors” of our Annual Report on Form 10-K for the year ended December 31, 2010, and in our other filings with the U.S. Securities and Exchange Commission (“SEC”). We cannot control such risk factors and other uncertainties, 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 and uncertainties when you are evaluating us.

Executive Overview

Noble is a leading offshore drilling contractor for the oil and gas industry. We perform, through our subsidiaries, contract drilling services with a fleet of 76 mobile offshore drilling units (including 11 drilling rigs currently under construction) located worldwide, including in the Middle East, India, the U.S. Gulf of Mexico, Mexico, the Mediterranean, the North Sea, Brazil, West Africa and Asian Pacific. We also own and operate one dynamically positioned floating production, storage and offloading vessel (“FPSO”).

Outlook

The overall offshore drilling market has been volatile since the events occurring in connection with the Deepwater Horizon, and the U.S. governmental response to the incident. In the U.S. Gulf of Mexico, despite the lifting of the moratorium and publication of new safety rules, we have only recently seen progress in returning activity to more normal levels as indicated by the recent issuance of new drilling permits. However, while the issuance of a limited number of permits is a positive development, there are a number of ongoing risks which make it impossible to predict whether or when industry activity will return to levels seen prior to the Deepwater Horizon incident. These risks include the potential for third party environmental lawsuits targeting the permitting process, possible new drilling regulations and a failure of the Bureau of Ocean Energy Management, Regulation and Enforcement (“BOEMRE”) to issue permits in a timely manner. Outside of the U.S. Gulf of Mexico, we believe the risk for early contract terminations or defaults under existing contracts has decreased over the last twelve months, although, the risk has not been eliminated.

Furthermore, there is continued uncertainty regarding the sustainability of the global economic recovery, which is proceeding unevenly in different geographic regions. In addition to the political instability in certain oil producing nations in the Middle East and North Africa, there is also uncertainty regarding the sustainability of the recovery in the credit markets, particularly in Europe. During the first quarter of 2011, oil and gas prices increased primarily due to supply side concerns regarding the Middle East and North Africa. Natural gas prices in the United States fluctuated during the quarter, but ended the quarter in-line with year-end 2010 pricing. We believe, due to the competing factors noted above, the price for both commodities will continue to be volatile for the foreseeable future.

Despite the increase in commodity prices, we have only recently seen an increase in demand for offshore drilling services. Developments in the U.S. Gulf of Mexico will continue to have an impact on the deepwater market segment in the short-term, however, we believe that the long-term outlook is stronger. Market dayrates for new ultra-deepwater units remain generally above $400,000, which is a significantly lower than the rates in 2007-2008. Although demand in the jackup segment decreased slightly during 2010 utilization for units operating outside the U.S. Gulf of Mexico still averaged approximately 80 percent during the first quarter of 2011. We continue to see differentiation in the jackup market segment with newer units having utilization rates exceeding 90 percent, while units that entered service before 2000 have utilization rates closer to 70 percent. Likewise, there has been a bifurcation of dayrates between older and newer units in the jackup market with newer units earning a premium. Dayrates for both older and newer units were relatively stable throughout the second half of 2010 and while we are beginning to see some indications that rates in certain regions may be starting to increase, rates in general are significantly lower than the highs reached in 2007 and 2008.

Demand for our drilling services generally depends on a variety of economic and political factors, including worldwide demand for oil and gas, the ability of the Organization of Petroleum Exporting Countries (“OPEC”) to set and maintain production levels and pricing, the level of production of non-OPEC countries and the policies of various governments regarding exploration and development of their oil and gas reserves. Our results of operations depend on offshore drilling activity worldwide. Historically, oil and gas prices and market expectations of potential changes in these prices have significantly affected that level of activity. Generally, higher oil and natural gas prices or our customers’ expectations of higher prices result in greater demand for our services and lower oil and gas prices result in reduced demand for our services. Demand for our services is also a function of the worldwide supply of mobile offshore drilling units. Industry sources report that a total of 64 newbuild jackups and 73 deepwater newbuilds are planned or under construction with scheduled delivery dates in May 2011 and beyond. Drilling contractors are also reported to hold a significant number of priced options for additional units, many of which we expect will be exercised and industry analysts widely acknowledge that a new wave of speculative building of both jackups and ultra-deepwater units has commenced. The introduction of additional non-contracted rigs into the marketplace could have an adverse effect on demand for our services or the dayrates we are able to achieve.

In addition, as a result of exploration discoveries offshore Brazil, Petrobras, the Brazilian national oil company, announced a plan to construct up to 28 deepwater rigs in Brazil and accepted bids in 2010 to construct these units from a number of shipyards and drilling contractors. A deepwater drilling rig construction industry does not currently exist in Brazil and Noble did not participate in these bids primarily because we viewed the capital risk associated with constructing a unit in Brazil as inappropriate. Petrobras has awarded the first tranche of seven drillships to a Brazilian shipyard for delivery beginning in 2015. Recently, Petrobras informed us that they have cancelled the bids for the remaining 21 newbuild units, leading us to believe that they will tender for needed units in the marketplace as opposed to building new units in Brazil. Nevertheless, the future of Petrobras’ building program remains uncertain and the ultimate number of deepwater rigs to be built in Brazil is still unknown. While Petrobras is currently in the market tendering for existing deepwater drilling units, the potential increase in supply from the Petrobras newbuilds could also adversely impact overall industry dayrates and economics.

As of April 30, 2011, we had nine jackup units operating with Pemex in Mexico, seven of which have contracts scheduled to expire in 2011. Pemex currently has outstanding tenders for 13 jackup rigs including four “fast-track” tenders, two of which appear to be targeted at Noble units. We believe, based on current tendering activity, that we may be able to fully employ our jackup units in Mexico by the end of the third quarter of 2011. Some recent tenders published by Pemex contain a requirement that certain units must have entered service since the year 2000. While Pemex has not yet succeeded in securing a significant number of newer rigs, we cannot predict whether this age requirement will be present in future Pemex tenders. If this requirement is present in future tenders, it could require us to seek work for our rigs in other locations, as the ages of our rigs currently operating in Mexico do not meet this requirement. If such work is not available, it could lead to additional idle time on some of our rigs. We cannot predict how many rigs might be affected or how long they could remain idle. We remain optimistic that many, if not all, of our rigs currently operating in Mexico will secure long-term work with Pemex.

In January 2011, we announced the signing of a Memorandum of Understanding (“MOU”) with Petrobras regarding operations in Brazil. Under the terms of the MOU, we would substitute the Noble Phoenix, then under contract with Shell in Southeast Asia, for the Noble Muravlenko. In January 2011, Shell agreed to release the Noble Phoenix from its contract, which was effective in March 2011. The Noble Phoenix has undertaken limited contract preparations, after which the unit will mobilize to Brazil. We expect that acceptance of the Noble Phoenix will take place in the fourth quarter of 2011. In connection with the cancelation of the contract on the Noble Phoenix, we recognized a non-cash gain of approximately $52.5 million during the first quarter of 2011 which represents the unamortized fair value of the in-place contract assumed in connection with the Frontier acquisition.

In connection with our existing drilling contracts with Petrobras for two of our drillships operating in Brazil, we approved certain shipyard reliability upgrade projects for these drillships, the Noble Leo Segerius and the Noble Roger Eason. These upgrade projects, planned through 2012, are designed to enhance the reliability and operational performance of these drillships. Recently, the Noble Leo Segerius entered the shipyard and began preparations for its reliability upgrades. There are a number of risks associated with shipyard projects of this nature, particularly in Brazil, including potential project delays and cost overruns due to labor, customs, local shipyard, local content and other issues. In addition, the drilling contracts for these vessels provide Petrobras with certain rights of termination in the event of excessive downtime, and it is possible that Petrobras could exercise this right in the future with respect to one or more of these drillships. We intend to continue to closely monitor and discuss with Petrobras the status of these projects and plan to take appropriate steps to mitigate identified risks, which depending upon the circumstances, could involve a variety of options.

On April 25, 2011, the Noble Discoverer was operating off the coast of New Zealand when a severe weather event occurred. In anticipation of the severe weather, and in accordance with established procedures for severe weather events, the Noble Discoverer suspended drilling operations and secured and disconnected from the well. Due to the severe weather, the riser and the lower marine riser package were damaged and released from the vessel. While we are still evaluating the extent of the equipment damage, we currently believe the damage will not be material. We believe we are entitled to continue receiving dayrate from our customer until repairs are complete, and we are discussing the implications of this event with our customer. We can make no assurances as to the outcome of this event.

While we cannot predict the future level of demand for our drilling services or future conditions in the offshore contract drilling industry, we continue to believe we are well positioned within the industry and believe our acquisition of Frontier and recent newbuild announcements further strengthen our position, especially in deepwater drilling.

Results and Strategy

In the first quarter of 2011, we recognized net income attributable to Noble-Swiss of $54 million, or $0.21 per diluted share, on total revenues of $579 million. The average dayrate across our worldwide fleet increased to $150,294 for the first quarter of 2011 from $140,554 for the fourth quarter of 2010. Fleetwide average utilization was 61 percent in the first quarter of 2011, as compared to 73 percent in the fourth quarter of 2010. Daily contract drilling services costs increased to $84,858 for the first quarter of 2011 from $75,932 for the fourth quarter of 2010. As a result, our contract drilling services margin decreased in the first quarter of 2011 to 44 percent as compared to 46 percent in the fourth quarter of 2010. The first quarter of 2011 results reflect the effect of anticipated downtime on certain of our rigs for shipyard projects and contract completions.

We have actively expanded our offshore drilling and deepwater capabilities in recent years through the construction of new rigs, and as part of this technical and operational expansion we plan to continue to seek opportunities to high-grade our fleet. Our business strategy also focuses on the active expansion of our worldwide offshore drilling and deepwater capabilities through upgrades and modifications, acquisitions, divestitures of lower specification units and the deployment of our drilling assets in important oil and gas producing areas. During the first quarter of 2011, we continued our newbuild strategy as indicated by the following 11 projects:

•

two dynamically positioned, ultra-deepwater, harsh environment Globetrotter-class drillships, which are scheduled to complete acceptance testing and be delivered to our customer in the fourth quarter of 2011 and 2013, respectively;

•

two dynamically positioned, ultra-deepwater, harsh environment Bully-class drillships owned through a joint venture with Shell each of which are scheduled to complete acceptance testing and be delivered to our customer in the fourth quarter of 2011;

•

three dynamically positioned, ultra-deepwater, harsh environment drillships under construction at Hyundai Heavy Industry which are estimated to be delivered from the shipyard and begin acceptance testing as follows: the second quarter of 2013, the fourth quarter of 2013, and the second quarter of 2014, respectively; and

•

four high-specification heavy duty, harsh environment jackup rigs which are estimated to be delivered from the shipyard and begin acceptance testing as follows: fourth quarter of 2012, second quarter of 2013, fourth quarter of 2013 and first quarter of 2014, respectively.

Noble currently has seven ultra-deepwater rigs and four high-specification jackup rigs under construction. Of these, five of the ultra-deepwater units are contracted for five years or more. Two of the recently announced drillships and all four jackups are being constructed without contracts. In addition, we have options for one additional ultra-deepwater drillship and two additional high-specification jackups.

As part of our strategy, we continue to review our fleet and the strategic benefit of our lower specification units. We believe that we need to continue to migrate our fleet towards greater technological capability. As part of this process, we may decide to dispose of some of our lower specification jackups and/or floating units, and we are considering a number of options for these units. We believe these units are maintained in a manner that would allow us to successfully continue to operate them should we decide this is the appropriate course of action based on available alternatives.

U.S. Gulf of Mexico Operations

Subsequent to the April 20, 2010 fire and explosion on the Deepwater Horizon, a competitor’s drilling rig in the U.S. Gulf of Mexico, U.S. governmental authorities implemented a moratorium on and suspension of specified types of drilling activities in the U.S. Gulf of Mexico.

The U.S. government lifted the moratorium following adoption of new regulations including a drilling safety rule and a workplace safety rule, each of which imposed multiple obligations relating to offshore drilling operations. These obligations relate to, among other things, additional certifications and verifications relating to compliance with applicable regulations; compatibility of blowout preventers with drilling rigs and well design; third-party inspections and design review of blowout preventers; testing of casing installations; minimum requirements for personnel operating blowout preventers; and training in deepwater well control.

In addition, the U.S. government has indicated to receive a deepwater drilling permit, the operator must (i) demonstrate that containment resources are available promptly in the event of a deepwater blowout, (ii) have the chief executive officer of each operator certify that the operator has complied with all applicable regulations and (iii) allow the BOEMRE to conduct inspections of each deepwater drilling operation for compliance with the applicable regulations.

Our existing U.S. Gulf of Mexico operations have been and will continue to be negatively impacted by the events and governmental action described above. As of March 31, 2011, our U.S. Gulf of Mexico operations included seven deepwater drilling units: the Noble Amos Runner, Noble Danny Adkins, Noble Jim Thompson, Noble Driller, Noble Paul Romano, Noble Lorris Bouzigard and Noble Jim Day. We estimate the negative impact to our revenues for the three months ended March 31, 2011 to be in excess of $225 million. We have worked and continue to work closely with our customers for drilling services in the U.S. Gulf of Mexico to address the hardships imposed by the governmental actions described above. The discussion below briefly describes the current status of each of these drilling units.

•

Noble Amos Runner. This unit received its blow out preventer (“BOP”) certification and is currently operating for LLOG Exploration, LLC at the full dayrate.

•

Noble Danny Adkins. This unit received its BOP certification. The unit spent part of the first quarter operating under a permit and receiving full dayrate. However, our customer, Shell, was not able to secure additional permits for this rig and it returned to a lower stand-by rate pending the approval of required permits.

•

Noble Jim Thompson. During the first quarter, this unit was operating under contract with Shell at a reduced dayrate. At the end of March 2011, Shell received the required permits and the rig began operating under full dayrate in April 2011.

•

Noble Jim Day. This rig has received its BOP certification. In February 2011, this drilling unit went under contract for a subsidiary of Shell in the U.S. Gulf of Mexico, and it is currently receiving a reduced stand-by rate pending the approval of required permits.

•

Noble Driller. This unit is under contract with Shell and is receiving a reduced stand-by rate while undergoing a shipyard project. This unit is expected to receive its BOP certification in the second quarter of 2011.

•

Noble Paul Romano. This unit is idle, having completed its drilling contract in June 2010. The unit has received its BOP certification and is being actively marketed to potential customers.

•

Noble Lorris Bouzigard. This drilling unit is currently cold stacked, but is being actively marketed to potential customers.

Acquisition of FDR Holdings Limited

On July 28, 2010, Noble-Swiss and Noble AM Merger Co., a Cayman Islands company and indirect wholly-owned subsidiary of Noble-Swiss (“Merger Sub”), completed the acquisition of FDR Holdings Limited, a Cayman Islands company (“Frontier”). Under the terms of the Agreement and Plan of Merger with Frontier and certain of Frontier’s shareholders, Merger Sub merged with and into Frontier, with Frontier surviving as an indirect wholly-owned subsidiary of Noble-Swiss and a wholly-owned subsidiary of Noble-Cayman. The Frontier acquisition was for a purchase price of approximately $1.7 billion in cash plus liabilities assumed and strategically expanded and enhanced our global fleet by adding three dynamically positioned drillships (including two Bully-class joint venture-owned drillships under construction), two conventionally moored drillships, including one that is Arctic-class, a conventionally moored deepwater semisubmersible and one FPSO. Frontier’s results of operations were included in our results beginning July 28, 2010. We funded the cash consideration paid at closing of approximately $1.7 billion using proceeds from our July 2010 offering of senior notes and existing cash on hand.

Contract Drilling Services Backlog

We maintain a backlog (as defined below) of commitments for contract drilling services. The following table sets forth as of March 31, 2011 the amount of our contract drilling services backlog and the percent of available operating days committed for the periods indicated:


			Year Ending December 31,
	Total		2011 (1)			2012			2013			2014			2015-2023
	(In millions)
Contract Drilling Services Backlog
Semisubmersibles/Drillships (2) (6) (7)	$	11,792	$	1,319		$	1,690		$	1,660		$	1,779		$	5,344
Jackups/Submersibles (3)		1,325		680			383			193			67			2
Other		—		—			—			—			—			—

Total (4)	$	13,117	$	1,999		$	2,073		$	1,853		$	1,846		$	5,346


Percent of Available Operating Days Committed (5)				64	%		33	%		24	%		19	%		5	%


(1)		Represents a nine-month period beginning April 1, 2011.

(2)		Our drilling contracts with Petroleo Brasileiro S.A. (“Petrobras”) provide an opportunity for us to earn performance bonuses based on downtime experienced for our rigs operating offshore Brazil. With respect to our semisubmersibles operating offshore Brazil, we have included in our backlog an amount equal to 75 percent of potential performance bonuses for such semisubmersibles, which amount is based on and generally consistent with our historical earnings of performance bonuses for these rigs. With respect to our drillships presently operating offshore Brazil, we (a) have not included in our backlog any performance bonuses for periods prior to the commencement of certain upgrade projects planned for 2011 through 2012, which projects are designed to enhance the reliability and operational performance of our drillships, and (b) have included in our backlog an amount equal to 75 percent of potential performance bonuses for periods after the estimated completion of such upgrade projects. Our backlog for semisubmersibles/drillships includes approximately $289 million attributable to these performance bonuses.


		The drilling contracts with Shell for the Noble Globetrotter I, Noble Globetrotter II, Noble Jim Thompson, Noble Jim Day and Noble Clyde Boudreaux as well as the letter of intent for the unnamed HHI Drillship I, provide opportunities for us to earn performance bonuses based on key performance indicators as defined by Shell. With respect to these contracts, we have included in our backlog an amount equal to 75 percent of the potential performance bonuses for these rigs. Our backlog for these rigs includes approximately $502 million attributable to these performance bonuses.

(3)		Our drilling contracts with Pemex Exploracion y Produccion (“Pemex”) for certain jackups operating offshore in Mexico are subject to price review and adjustment of the rig dayrate. Presently, the contract for one jackup has a dayrate indexed to the world average of the highest dayrates published by ODS-Petrodata. After an initial firm dayrate period, the dayrate is generally adjusted quarterly based on formulas calculated from the index. Our contract drilling services backlog has been calculated using the March 31, 2011 index-based dayrate for periods subsequent to the firm dayrate period.

(4)		Pemex has the ability to cancel its drilling contracts on 30 days or less notice without Pemex’s making an early termination payment. At March 31, 2011, we had ten rigs contracted to Pemex in Mexico and our backlog includes approximately $268 million related to such contracts. Also, our drilling contracts generally provide the customer an early termination right in the event we fail to meet certain performance standards, including downtime thresholds. While we do not currently anticipate any cancellations as a result of events that have occurred to date, clients may from time to time have the contractual right to do so.

(5)		Percentages take into account additional capacity from the estimated dates of deployment of our newbuild rigs that are scheduled to commence operations during 2011 through 2014.

(6)		It is not possible to determine the impact to our revenues or backlog resulting from efforts by operators to cancel or modify drilling contracts due to the U.S. government imposed restrictions and the vigorous scrutiny for issuance of new drilling permits, and other consequences of the actions by the U.S. government. At March 31, 2011, backlog related to our U.S. Gulf of Mexico deepwater rigs totaled $5.6 billion, $448 million of which represents backlog for the nine-month period ending December 31, 2011.

		We entered into an agreement with Shell effective June 27, 2010 which provides that Shell may suspend the contracts on three of our units operating in the U.S. Gulf of Mexico during any period of regulatory restriction by paying reduced suspension dayrates in lieu of the normal operating dayrates. The term of the initial contract is also extended by the suspension period. The impact of this agreement is to shift backlog among periods with an immaterial increase to total backlog because of the reduced suspension rates.

(7)		Noble and a subsidiary of Shell are involved in joint venture agreements to build, operate, and own both the Noble Bully I and the Noble Bully II. Pursuant to these agreements, each party has an equal 50 percent share in both vessels. As of March 31, 2011, the combined amount of backlog for these rigs totals $2.4 billion, all of which is included in our backlog. Noble’s net interest in the backlog for these rigs is $1.2 billion.

Our contract drilling services backlog reported above reflects estimated future revenues attributable to both signed drilling contracts and letters of intent. A letter of intent is generally subject to customary conditions, including the execution of a definitive drilling contract. For a number of reasons, it is possible that some customers that have entered into letters of intent will not enter into signed drilling contracts. We calculate backlog for any given unit and period by multiplying the full contractual operating dayrate for such unit by the number of days remaining in the period. The reported contract drilling services backlog does not include amounts representing revenues for mobilization, demobilization and contract preparation, which are not expected to be significant to our contract drilling services revenues, amounts constituting reimbursables from customers or amounts attributable to uncommitted option periods under drilling contracts or letters of intent.

The amount of actual revenues earned and the actual periods during which revenues are earned may be different than the backlog amounts and backlog periods set forth in the table above due to various factors, including, but not limited to, shipyard and maintenance projects, operational downtime, weather conditions and other factors that result in applicable dayrates lower than the full contractual operating dayrate. In addition, amounts included in the backlog may change because drilling contracts may be varied or modified by mutual consent or customers may exercise early termination rights contained in some of our drilling contracts or decline to enter into a drilling contract after executing a letter of intent. As a result, our backlog as of any particular date may not be indicative of our actual operating results for the subsequent periods for which the backlog is calculated.

As of March 31, 2011, we estimate Shell and Petrobras represent more than 64% and 24%, respectively, of our backlog.

Internal Investigation

Any similar investigations or charges and any additional sanctions we may incur could damage our reputation and result in substantial fines, sanctions, civil and/or criminal penalties and curtailment of operations in certain jurisdictions and might adversely affect our business, results of operations or financial condition. Further, resolving any such investigation could be expensive and consume significant time and attention of our senior management.

In 2010, the Nigerian Oil and Gas Industry Content Development Bill was signed into law. The law is designed to create Nigerian content in operations and transactions within the Nigerian oil and gas industry. The law sets forth certain requirements for the utilization of Nigerian human resources and goods and services in oil and gas projects and creates a Nigerian Content Development and Monitoring Board (“NCD Board”) to implement and monitor the law and develop regulations pursuant to the law. The law also establishes a Nigerian Content Development Fund to fund the implementation of the law. The implementation of the law is ongoing and both the manner and timing of final implementation is uncertain. We have participated in a number of meetings with the NCD Board and are analyzing how we might reorganize our operations in Nigeria to meet these requirements, including creating third party minority interests in our operating assets. We cannot predict the impact the new law may have on our existing or future operations in Nigeria, but our operations there could be significantly and adversely affected.

Results of Operations

For the Three Months Ended March 31, 2011 and 2010

General

Net income attributable to Noble Corporation (Noble-Swiss) for the three months ended March 31, 2011 (the “Current Quarter”) was $54 million, or $0.21 per diluted share, on operating revenues of $579 million, compared to net income for the three months ended March 31, 2010 (the “Comparable Quarter”) of $371 million, or $1.43 per diluted share, on operating revenues of $841 million.

The consolidated financial statements of Noble-Swiss include the accounts of Noble-Cayman, and Noble-Swiss conducts substantially all of its business through Noble-Cayman and its subsidiaries. As a result, the financial position and results of operations for Noble-Cayman, and the reasons for material changes in the amount of revenue and expense items between 2010 and 2011, would be the same as the information presented below regarding Noble-Swiss in all material respects, except operating income for Noble-Cayman for the three months ended March 31, 2011 was $13 million higher than operating income for Noble-Swiss for the same period, primarily as a result of depreciation related to Swiss owned assets and operating costs directly attributable to Noble-Swiss for stewardship related services.

Rig Utilization, Operating Days and Average Dayrates

Operating revenues and operating costs and expenses for our contract drilling services segment are dependent on three primary metrics — rig utilization, operating days and dayrates. The following table sets forth the average rig utilization, operating days and average dayrates for our rig fleet for the three months ended March 31, 2011 and 2010:


	Average Rig						Operating							Average
	Utilization (1)						Days (2)							Dayrates
	Three Months Ended						Three Months Ended							Three Months Ended
	March 31,						March 31,							March 31,
	2011			2010			2011		2010		% Change			2011		2010		% Change

Jackups		62	%		81	%		2,381		3,141		-24	%	$	80,866	$	116,498		-31	%
Semisubmersibles		69	%		93	%		868		931		-7	%		277,859		416,572		-33	%
Drillships		70	%		92	%		361		247		46	%		301,647		222,306		36	%
FPSO/Submersibles		0	%		0	%		—		—		—			—		—		—

Total		61	%		81	%		3,610		4,319		-16	%	$	150,294	$	187,214		-20	%


(1)		Information reflects our policy of reporting on the basis of the number of rigs in our fleet excluding newbuild rigs under construction.

(2)		Information reflects the number of days that our rigs were operating under contract.

Contract Drilling Services

The following table sets forth the operating revenues and the operating costs and expenses for our contract drilling services segment for the three months ended March 31, 2011 and 2010 (in thousands):


	Three Months Ended
	March 31,					Change
	2011			2010		$			%
Operating revenues:
Contract drilling services	$	542,605		$	808,646	$	(266,041	)		-33	%
Reimbursables (1)		21,604			23,303		(1,699	)		-7	%
Other		445			211		234			111	%

	$	564,654		$	832,160	$	(267,506	)		-32	%

Operating costs and expenses:
Contract drilling services	$	306,363		$	254,431	$	51,932			20	%
Reimbursables (1)		16,440			18,869		(2,429	)		-13	%
Depreciation and amortization		154,888			113,173		41,715			37	%
Selling, general and administrative		23,449			21,743		1,706			8	%
Gain on contract extinguishments, net		(21,202	)		—		(21,202	)		*	*

		479,938			408,216		71,722			18	%

Operating income	$	84,716		$	423,944	$	(339,228	)		-80	%


(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. Decreases in contract drilling services revenue for the Current Quarter as compared to the Comparable Quarter were driven by reductions in both average dayrates and utilization. The 20% decrease in dayrates reduced revenues by approximately $133 million, and the 16% decrease in operating days decreased revenue by an additional $133 million.

The decrease in contract drilling services revenue primarily relates to our jackups and semisubmersibles, which generated approximately $173 million and $147 million less revenue, respectively, in the Current Quarter.

The decrease in jackup dayrates of 31 percent resulted in an $85 million decrease in revenues from the Comparable Quarter. The reduction in dayrates was primarily from the contractual re-pricing of rigs in the Middle East, the North Sea, and Mexico for changes in market conditions in the global shallow water market. The 24 percent decline in jackup operating days resulted in an $88 million decline in revenues. The decrease in utilization primarily related to rigs coming off of contract in Mexico.

The decrease in semisubmersible dayrates of 33 percent resulted in a $121 million decrease in revenues from the Comparable Quarter, and the 7 percent decline in operating days contributed an additional $26 million to the decline. The decrease in semisubmersibles revenue is a result of drilling restrictions in the U.S. Gulf of Mexico where lower standby rates replaced the standard operating dayrates for a majority of our contracts. Additional unpaid days in the U.S. Gulf of Mexico primarily related to the termination of contracts and a 77 day decrease for the Noble Homer Ferrington for which we only recorded revenue for 13 days in the Current Quarter.

The decreases in revenue for the above rig classes were partially offset by higher revenues from our drillships, which increased $54 million in the Current Quarter as compared to the Comparable Quarter. The increase was primarily from the drillships Noble Discoverer and the Noble Phoenix, which were added to the fleet as part of the Frontier acquisition on July 28, 2010.

Operating Costs and Expenses. Contract drilling services operating costs and expenses increased $52 million for the Current Quarter as compared to the Comparable Quarter. In addition to the acquisition of Frontier, our newbuild rigs, the Noble Dave Beard and the Noble Jim Day, were added to the fleet in March 2010 and January 2011, respectively, which added approximately $39 million of operating costs in the Current Quarter. Excluding the additional expenses related to these rigs, our contract drilling costs increased $13 million in the Current Quarter from the Comparable Quarter. This change was primarily driven by an $8 million increase in maintenance expense, a $7 million increase in transportation and fuel costs and a $5 million increase in mobilization and other expenses, which was partially offset by a $7 million decrease in labor resulting from the decrease in overall rig utilization.

The increase in depreciation and amortization in the Current Quarter from the Comparable Quarter was primarily attributable to depreciation on newbuilds added to the fleet, the addition of the Frontier rigs and additional depreciation related to other capital expenditures on our fleet since the Comparable Quarter.

Other

The following table sets forth the operating revenues and the operating costs and expenses for our other services for the three months ended March 31, 2011 and 2010:


	Three Months Ended
	March 31,					Change
	2011		2010			$			%
Operating revenues:
Labor contract drilling services	$	13,547	$	7,761		$	5,786			75	%
Reimbursables (1)		687		930			(243	)		-26	%

	$	14,234	$	8,691		$	5,543			64	%

Operating costs and expenses:
Labor contract drilling services	$	8,523	$	5,888		$	2,635			45	%
Reimbursables (1)		663		874			(211	)		-24	%
Depreciation and amortization		3,234		2,684			550			20	%
Selling, general and administrative		266		228			38			17	%

		12,686		9,674			3,012			31	%

Operating income (loss)	$	1,548	$	(983	)	$	2,531			*	*


(1)		We record reimbursements from customers for out-of-pocket expenses as operating revenues and the related direct costs as operating expenses. Changes in the amount of these reimbursables generally do not have a material effect on our financial position, results of operations or cash flows.

**		Not a meaningful percentage

Operating Revenues and Costs and Expenses. The increase in both revenue and expense primarily relates to the recent expansion of our labor contract services in Alaska coupled with operational increases and foreign exchange fluctuations in our existing Canadian operations. The increase in depreciation is for additional assets placed in service since the Comparable Quarter.

Other Income and Expenses

Selling, General and Administrative Expenses. Consolidated selling, general and administrative expenses increased $2 million in the Current Quarter as compared to the Comparable Quarter. The increase relates to a $2 million settlement under the non-prosecution agreement reached with the Nigerian authorities related to our recently concluded U.S. FCPA investigation.

Income Tax Provision. Our income tax provision decreased $40 million in the Current Quarter primarily from a decline in pre-tax earnings of approximately 84 percent, which reduced income tax expense by approximately $46 million in the Current Quarter. This decrease was partially offset by a higher effective tax rate of 22 percent in the Current Quarter as compared to 13 percent in the Comparable Quarter, which increased income tax expense by approximately $6 million. The increase in tax rate was primarily a result of a change in our geographic revenue mix mainly resulting from drilling restrictions in the U.S. Gulf of Mexico.

Liquidity and Capital Resources

Overview

Net cash from operating activities for the Current Quarter was $87 million, which compared to $504 million in the Comparable Quarter. The decrease in net cash from operating activities in the Current Quarter was primarily attributable to a significant decline in net income coupled with an increase in accounts receivable and other current assets. During the Current Quarter, we entered into an additional $600 million revolving credit facility, and at March 31, 2011 we had $1.2 billion available under our credit facilities. We had working capital of $519 million and $110 million at March 31, 2011 and December 31, 2010, respectively. Primarily as a result of our $1.1 billion debt offering in February 2011, total debt as a percentage of total debt plus equity increased to 29.2 percent at March 31, 2011 from 27.5 percent at December 31, 2010. Additionally, at March 31, 2011, we had a total contract drilling services backlog of approximately $13.1 billion. Our backlog as of March 31, 2011 reflects a commitment of 64 percent of operating days for the remainder of 2011 and 33 percent for 2012. See additional information regarding our backlog at “Contract Drilling Services Backlog.”

As a result of the cash generated by our operations, our cash on hand and the availability under our bank credit facilities, we believe our liquidity and financial condition are sufficient to meet all of our reasonably anticipated cash flow needs including:

•

normal recurring operating expenses;

•

capital expenditures, including expenditures for newbuilds and other miscellaneous capital upgrades; and

•

payments of return of capital in the form of a reduction of par value of our shares (in lieu of dividends).

Capital Expenditures

Our primary liquidity requirement for 2011 will be for capital expenditures. Capital expenditures, including capitalized interest, totaled $614 million and $339 million for the three months ended March 31, 2011 and 2010, respectively.

At March 31, 2011, we had 11 rigs under construction, and capital expenditures, including capitalized interest, for new construction in the first quarter of 2011 totaled $426 million. Capital expenditures for newbuild rigs consisted of the following (in millions):


	Expenditures
Project	in 2011
Noble Bully II	$	58.4
HHI Drillship II		58.1
HHI Drillship I		57.2
HHI Drillship III		52.8
Noble Bully I		50.7
Noble Globetrotter II		44.8
Noble Jackup III		42.8
Noble Jackup IV		42.8
Noble Globetrotter I		14.4
Noble Jackup I		0.8
Noble Jackup II		0.6
Other		2.8

Total	$	426.2

Other capital expenditures totaled $149 million in the first three months of 2011, which included approximately $105 million for major upgrade projects, including $48 million to upgrade two drillships currently operating under contracts with Petrobras. In addition, capitalized major maintenance expenditures, which have useful lives ranging from 3 to 5 years, totaled $39 million for the three months ended March 31, 2011.

Our total capital expenditure estimate for 2011 is approximately $2.5 billion. In connection with our 2011 and future capital expenditure programs, as of March 31, 2011, we had outstanding commitments, including shipyard and purchase commitments, for approximately $3.1 billion, of which $1.3 billion is anticipated to be spent within the next twelve months. Our remaining 2011 capital expenditure budget will generally be spent at our discretion. We may accelerate or delay capital projects as needed.

We continue to monitor regulatory developments in the U.S. Gulf of Mexico and resulting potential capital expenditures that will be required to comply with such regulations. Based on our preliminary expectations relating to the regulations adopted to date, we believe the additional capital expenditures in the U.S. Gulf of Mexico necessary to comply with the governmental regulations will not exceed $10 million per rig. We also anticipate incurring additional amounts on certain other rigs within our fleet that are located outside the U.S. Gulf of Mexico and are in the process of assessing what expenditures will be made and the amount of such expenditures.

From time to time we consider possible projects that would require capital expenditures or other cash expenditures that are not included in our capital budget, and such unbudgeted capital or cash expenditures could be significant. In addition, we will continue to evaluate acquisitions of drilling units from time to time. Other factors that could cause actual capital expenditures to materially exceed planned capital expenditures include delays and cost overruns in shipyards (including costs attributable to labor shortages), shortages of equipment, latent damage or deterioration to hull, equipment and machinery in excess of engineering estimates and assumptions, and changes in design criteria or specifications during repair or construction.

Share Repurchases and Dividends

At March 31, 2011, 6.8 million registered shares remained available under the existing Board authorization for our share repurchase program. During the three months ended March 31, 2011, we acquired approximately 0.1 million shares surrendered by employees for taxes payable upon the vesting of restricted stock for $6 million. Future repurchases by Noble-Swiss will be subject to the requirements of Swiss law, including the requirement that Noble-Swiss and its subsidiaries may only repurchase shares if and to the extent that sufficient freely distributable reserves are available.

Our most recent quarterly payment to shareholders in the form of a capital reduction, which was paid on February 24, 2011 to holders of record on February 14, 2011, was 0.13 CHF per share, or an aggregate of approximately $35 million. The declaration and payment of dividends in the future by Noble-Swiss and the making of distributions of capital, including returns of capital in the form of par value reductions, require authorization of the shareholders of Noble-Swiss. The amount of such dividends, distributions and returns of capital will depend on our results of operations, financial condition, cash requirements, future business prospects, contractual restrictions and other factors deemed relevant by our Board of Directors and shareholders.

Recently, our Board of Directors and shareholders approved the payment of a return of capital through a reduction of the par value of our shares in a total amount equal to 0.52 CHF per share to be paid in four equal installments scheduled for August 2011, November 2011, February 2012 and May 2012. The payments will be made in U.S. Dollars based on the CHF/USD exchange rate available approximately two business days prior to the payment date. Although the amount of the return of capital, expressed in Swiss francs, is fixed, the amount of the payment in U.S. Dollars will fluctuate based on the exchange rate. The exchange rate as published by the Swiss National Bank on April 29, 2011 was 0.8689 CHF/1.0 USD. These returns of capital will require us to make total cash payments of approximately $38 million in 2011 (based on the exchange rate on April 29, 2011).

Credit Facilities and Long-Term Debt

The Credit Facilities provide us with the ability to issue up to $300 million in letters of credit in the aggregate. While the issuance of letters of credit does not increase our borrowings outstanding under the Credit Facilities, it does reduce the amount available. At March 31, 2011, we had no borrowings or letters of credit outstanding under the Credit Facilities. We believe that we maintain good relationships with our lenders under the Credit Facilities, and we believe that our lenders have the liquidity and capability to perform should the need arise for us to draw on the Credit Facilities.

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 March 31, 2011, we were in compliance with all our debt covenants. We continually monitor compliance with the covenants under our Credit Facilities and senior notes and, based on our expectations for 2011, expect to remain in compliance during the year.

At March 31, 2011, we had letters of credit of $125 million and performance and tax assessment bonds totaling $382 million supported by surety bonds outstanding. Of the letters of credit outstanding, $74 million were issued to support bank bonds in connection with our drilling units in Nigeria. Additionally, certain of our subsidiaries issue, from time to time, guarantees of the temporary import status of rigs or equipment imported into certain countries in which we operate. These guarantees are issued in lieu of payment of custom, value added or similar taxes in those countries.

Our long-term debt was $3.2 billion at March 31, 2011 as compared to $2.8 billion at December 31, 2010. The increase in debt is due to the issuance of $1.1 billion aggregate principal amount of senior notes, partially offset by the repayment of $693 million in joint venture credit facilities. For additional information on our long-term debt, see Note 8 to our consolidated financial statements.

In February 2011, we issued through our indirect wholly-owned subsidiary, Noble Holding International Limited (“NHIL”), $1.1 billion aggregate principal amount of senior notes in three separate tranches, comprising of $300 million of 3.05% Senior Notes due 2016, $400 million of 4.625% Senior Notes due 2021, and $400 million of 6.05% Senior Notes due 2041. A portion of the net proceeds of approximately $1.09 billion, after expenses, was used to repay the outstanding balance on our revolving credit facility and to repay our portion of outstanding debt under the joint venture credit facilities.

On February 25, 2011, the outstanding balances of the joint venture credit facilities, which totaled $693 million, were repaid in full and the credit facilities terminated using a portion of the proceeds from our February 2011 debt offering and $361 million in equity contributions from our joint venture partner. In addition, the related interest rate swaps were settled and terminated concurrent with the repayment and termination of the credit facilities.

In January 2011, the Bully joint ventures issued notes to the joint venture partners totaling $70 million. The interest rate on these notes was 10%, payable semi-annually in arrears and in kind on June 30 and December 31 commencing in June 2011. The purpose of these notes was to provide additional liquidity to these joint ventures in connection with the shipyard construction of the Bully vessels. As of March 31, 2011, a total of $142 million in notes have been issued by the joint ventures to its partners. Our portion of these joint venture partner notes, which totaled $71 million, has been eliminated in our Consolidated Balance Sheets.

New Accounting Pronouncements

In January 2010, the FASB issued guidance relating to the disclosure of the fair value of assets. This guidance calls for additional information to be given regarding the transfer of items in and out of respective categories. In addition, it requires additional disclosures regarding purchases, sales, issuances, and settlements of assets that are classified as level three within the FASB fair value hierarchy. This guidance is generally effective for annual and interim periods ending after December 15, 2009. However, the disclosures about purchases, sales, issuances and settlements in the roll-forward activity in level three fair value measurements are deferred until fiscal years beginning after December 15, 2010. These additional disclosures did not have and are not expected to have a material impact on our financial condition, results of operations, cash flows or financial disclosures.


Item 3.		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. 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 March 31, 2011, we had no amounts outstanding under the Credit Facilities.

We maintain certain debt instruments at a fixed rate whose fair value will fluctuate based on changes in interest rates and market perceptions of our credit risk. The fair value of our total debt was $3.3 billion and $2.9 billion at March 31, 2011 and December 31, 2010, respectively. The increase was primarily a result of our issuance of $1.1 billion in debt in February 2011, partially offset by the repayment of $693 million in joint venture credit facilities coupled with changes in fair value related to changes in interest rates and market perceptions of our credit risk.

Foreign Currency Risk

As a multinational company, we conduct business worldwide. 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 different than the functional currency. To help manage this potential risk, we periodically enter into derivative instruments to manage our exposure to fluctuations in currency exchange rates, and we may conduct hedging activities in future periods to mitigate such exposure. These contracts are primarily accounted for as cash flow hedges, with the effective portion of changes in the fair value of the hedge recorded on the Consolidated Balance Sheet and in “Accumulated other comprehensive loss” (“AOCL”). Amounts recorded in AOCL are reclassified into earnings in the same period or periods that the hedged item is recognized in earnings. The ineffective portion of changes in the fair value of the hedged item is recorded directly to earnings. We have documented policies and procedures to monitor and control the use of derivative instruments. We do not engage in derivative transactions for speculative or trading purposes, nor are we a party to leveraged derivatives.

Our North Sea and Brazil operations have a significant amount of their cash operating expenses payable in local currencies. To limit the potential risk of currency fluctuations, we typically maintain short-term forward contracts settling monthly in their respective local currencies. The forward contract settlements in the remainder of 2011 represent approximately 37 percent of these forecasted local currency requirements. The notional amount of the forward contracts outstanding, expressed in U.S. dollars, was approximately $91 million at March 31, 2011. Total unrealized gains related to these forward contracts were $2 million as of March 31, 2011 and were recorded as part of AOCL. A ten percent change in the exchange rate for the local currencies would change the fair value of these forward contracts by approximately $9 million.

We have entered into a firm commitment for the construction of our Noble Globetrotter I drillship. The drillship will be constructed in two phases, with the second phase being installation and commissioning of the topside equipment. Our payment obligation for this second phase of construction is denominated in Euros, and in order to mitigate the risk of fluctuations in foreign currency exchange rates, we entered into forward contracts to purchase Euros. As of March 31, 2011, the aggregate notional amount of the remaining forward contracts was 30 million Euros. Each forward contract settles in connection with required payments under the construction contract. We are accounting for these forward contracts as fair value hedges. The fair market value of these derivative instruments is included in “Other current assets/liabilities.” Gains and losses from these fair value hedges would be recognized in earnings currently, along with the change in fair value of the hedged item attributable to the risk being hedged, if any portion was found to be ineffective. The fair market value of these outstanding forward contracts totaled approximately $0.8 million at March 31, 2011 and $3 million at December 31, 2010. No gains or losses related to fair value hedges were recognized in the income statement for either of the three months ended March 31, 2011 or 2010. A ten percent change in the exchange rate for the Euro would change the fair value of these forward contracts by approximately $4 million.

Market Risk

We sponsor the Noble Drilling Corporation 401(k) Savings Restoration Plan (“Restoration Plan”). The Restoration Plan is a nonqualified, unfunded employee benefit plan under which certain highly compensated employees may elect to defer compensation in excess of amounts deferrable under our 401(k) savings plan. The Restoration Plan has no assets, and amounts withheld for the Restoration Plan are kept by us for general corporate purposes. The investments selected by employees and the associated returns are tracked on a phantom basis. Accordingly, we have a liability to employees for amounts originally withheld plus phantom investment income or less phantom investment losses. We are at risk for phantom investment income and, conversely, benefit should phantom investment losses occur. At March 31, 2011, our liability under the Restoration Plan totaled $8 million. We previously purchased investments that closely correlate to the investment elections made by participants in the Restoration Plan in order to mitigate the impact of the phantom investment income and losses on our consolidated financial statements. The value of these investments held for our benefit totaled $7 million at March 31, 2011. A ten percent change in the fair value of the phantom investments would change our liability by approximately $0.7 million. Any change in the fair value of the phantom investments would be mitigated by a change in the investments held for our benefit.

We also have a U.S. noncontributory defined benefit pension plan that covers certain salaried employees and a U.S. noncontributory defined benefit pension plan that covers certain hourly employees, whose initial date of employment is prior to August 1, 2004 (collectively referred to as our “qualified U.S. plans”). These plans are governed by the Noble Drilling Corporation Retirement Trust. The benefits from these plans are based primarily on years of service and, for the salaried plan, employees’ compensation near retirement. These plans are designed to qualify under the Employee Retirement Income Security Act of 1974 (“ERISA”), and our funding policy is consistent with funding requirements of ERISA and other applicable laws and regulations. We make cash contributions, or utilize credits available to us, for the qualified U.S. plans when required. The benefit amount that can be covered by the qualified U.S. plans is limited under ERISA and the Internal Revenue Code (“IRC”) of 1986. Therefore, we maintain an unfunded, nonqualified excess benefit plan designed to maintain benefits for all employees at the formula level in the qualified U.S. plans.

In addition to the U.S. plans, each of Noble Drilling (Land Support) Limited, Noble Enterprises Limited and Noble Drilling (Nederland) B.V., all indirect, wholly-owned subsidiaries of Noble-Swiss, maintains a pension plan that covers all of its salaried, non-union employees (collectively referred to as our “non-U.S. plans”). Benefits are based on credited service and employees’ compensation near retirement, as defined by the plans.

Changes in market asset values related to the pension plans noted above could have a material impact upon our “Consolidated Statement of Comprehensive Income” and could result in material cash expenditures in future periods.


Item 4.		Controls and Procedures

David W. Williams, Chairman, President and Chief Executive Officer of Noble-Swiss, and Thomas L. Mitchell, Senior Vice President, Chief Financial Officer, Treasurer and Controller of Noble-Swiss, have evaluated the disclosure controls and procedures of Noble-Swiss as of the end of the period covered by this report. On the basis of this evaluation, Mr. Williams and Mr. Mitchell have concluded that Noble-Swiss’ disclosure controls and procedures were effective as of March 31, 2011. Noble-Swiss’ disclosure controls and procedures are designed to ensure that information required to be disclosed by Noble-Swiss in the reports that it files with or submits to the SEC is 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-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 March 31, 2011. 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 is 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.

There was no change in either Noble-Swiss’ or Noble-Cayman’s internal control over financial reporting that occurred during the quarter ended March 31, 2011 that has materially affected, or is reasonably likely to materially affect, the internal control over financial reporting of each of Noble-Swiss or Noble-Cayman, respectively.

PART II. OTHER INFORMATION


Item 1.		Legal Proceedings

Information regarding legal proceedings is set forth in Note 13 to our consolidated financial statements included in Item 1 of Part I of this Quarterly Report on Form 10-Q and is incorporated herein by reference.


Item 2.		Unregistered Sales of Equity Securities and Use of Proceeds

The following table sets forth for the periods indicated certain information with respect to purchases of shares by Noble-Swiss:

Total Number of

Maximum Number

Shares Purchased

of Shares that May

Total Number

Average

as Part of Publicly

Yet Be Purchased

of Shares

Price Paid

Announced Plans

Under the Plans

Period

Purchased

per Share

or Programs⁽¹⁾

January 2011

35,206

37.35

⁽²⁾

—

6,769,891

February 2011

111,641

39.00

⁽²⁾

—

6,769,891

March 2011

713

43.67

⁽²⁾

—

6,769,891


(1)		All share purchases made in the open market and were pursuant to the share repurchase program which our Board of Directors authorized and adopted. Our repurchase program has no date of expiration.

(2)		Amounts represent shares surrendered by employees for withholding taxes payable upon the vesting of restricted stock.


Item 6.		Exhibits

The information required by this Item 6 is set forth in the Index to Exhibits accompanying this Quarterly Report on Form 10-Q and is incorporated herein by reference.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.


Noble Corporation, a Swiss corporation

/s/ David W. Williams David W. Williams				May 6, 2011 Date
Chairman, President and Chief Executive Officer
(Principal Executive Officer)

/s/ Thomas L. Mitchell Thomas L. Mitchell
Senior Vice President, Chief Financial Officer, Treasurer and Controller
(Principal Financial and Accounting Officer)

Noble Corporation, a Cayman Islands company

/s/ David W. Williams David W. Williams				May 6, 2011 Date
President and Chief Executive Officer
(Principal Executive Officer)

/s/ Dennis J. Lubojacky
Dennis J. Lubojacky
Vice President and Chief Financial Officer
(Principal Financial and Accounting Officer)

Index to Exhibits


Exhibit
Number			Exhibit

	2.1		Agreement and Plan of Merger, Reorganization and Consolidation, dated as of December 19, 2008, among Noble Corporation, a Swiss corporation (“Noble-Swiss”), Noble Corporation, a Cayman Islands company (“Noble-Cayman”), and Noble Cayman Acquisition Ltd. (filed as Exhibit 1.1 to Noble-Cayman’s Current Report on Form 8-K filed on December 22, 2008 and incorporated herein by reference).

	2.2		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).

	3.1		Articles of Association of Noble-Swiss.

	3.2		By-laws of Noble-Swiss (filed as Exhibit 3.2 to Noble-Swiss’ Current Report on Form 8-K filed on March 27, 2009 and incorporated herein by reference).

	3.3		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).

	4.1		Revolving Credit Agreement dated as of February 11, 2011 among Noble Corporation, a Cayman Islands company; the Lenders from time to time parties thereto; Wells Fargo Bank, National Association, as Administrative Agent, Swingline Lender and an Issuing Bank; Barclays Capital, a division of Barclays Bank PLC, and HSBC Securities (USA) Inc., as Co-Syndication Agents; and Wells Fargo Securities, LLC, Barclays Capital, a division of Barclays Bank PLC, and HSBC Securities (USA) Inc., as Joint Lead Arrangers and Joint Lead Bookrunners (filed as Exhibit 4.1 to Noble-Cayman’s Current Report on Form 8-K filed on February 17, 2011 and incorporated by reference herein).

	4.2		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.

	4.3		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).

	4.4		Third Supplemental Indenture, dated as of February 3, 2011, among Noble Holding International Limited, as Issuer, Noble Corporation, as Guarantor, and The Bank of New York Mellon Trust Company, N.A., as Trustee, relating to 3.05% Senior Notes due 2016 of Noble Holding International Limited, 4.625% Senior Notes due 2021 of Noble Holding International Limited, and 6.05% Senior Notes due 2041 of Noble Holding International Limited (filed as Exhibit 4.2 to Noble-Cayman’s Current Report on Form 8-K filed on July 26, 2010 and incorporated herein by reference).

	10.1	*	Noble Corporation 2011 Short Term Incentive Plan (filed as Exhibit 10.32 to Noble-Swiss’ Annual Report on Form 10-K filed on February 25, 2011 and incorporated herein by reference).

	10.2	*	Form of Noble Corporation Performance-Vested Restricted Stock Unit Agreement under the Noble Corporation 1991 Stock Option and Restricted Stock Plan.

	31.1		Certification of David W. Williams pursuant to the U.S. Securities Exchange Act of 1934, as amended, Rule 13a-14(a) or Rule 15d-14(a), for Noble-Swiss and for Noble-Cayman.


Exhibit
Number			Exhibit

	31.2		Certification of Thomas L. Mitchell pursuant to the U.S. Securities Exchange Act of 1934, as amended, Rule 13a-14(a) or Rule 15d-14(a), for Noble-Swiss.

	31.3		Certification of Dennis J. Lubojacky pursuant to the U.S. Securities Exchange Act of 1934, as amended, Rule 13a-14(a) or Rule 15d-14(a), for Noble-Cayman.

	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, for Noble-Swiss and for Noble-Cayman.

	32.2	+	Certification of Thomas L. Mitchell pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, for Noble-Swiss.

	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, for Noble-Cayman.

	101	+	Interactive Data File


*		Management contract or compensatory plan or agreement.

+		Furnished in accordance with Item 601(b)(32)(ii) of Regulation S-K.