Noble Corp - Quarter Report: 2013 September (Form 10-Q)

10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

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

For the quarterly period ended: September 30, 2013

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

For the transition period from to

Commission file number: 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 6340

(Address of principal executive offices) (Zip Code)

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

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 Georgetown, Grand Cayman, Cayman Islands, BWI, KY-1 1206

(Address of principal executive offices) (Zip Code)

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

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 x No ¨

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 x No ¨

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 x	Accelerated filer ¨	Non-accelerated filer ¨	Smaller reporting company ¨
Noble-Cayman:	Large accelerated filer ¨	Accelerated filer ¨	Non-accelerated filer x	Smaller reporting company ¨

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

Number of shares outstanding and trading at October 31, 2013: Noble Corporation (Switzerland) — 253,407,310

Number of shares outstanding at October 31, 2013: 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 Sheets as of September 30, 2013 and December 31, 2012		3
	Consolidated Statements of Income for the three and nine months ended September 30, 2013 and 2012		4
	Consolidated Statements of Comprehensive Income for the three and nine months ended September 30, 2013 and 2012		5
	Consolidated Statements of Cash Flows for the nine months ended September 30, 2013 and 2012		6
	Consolidated Statements of Equity for the nine months ended September 30, 2013 and 2012		7

	Noble Corporation (Noble-Cayman) Financial Statements:
	Consolidated Balance Sheets as of September 30, 2013 and December 31, 2012		8
	Consolidated Statements of Income for the three and nine months ended September 30, 2013 and 2012		9
	Consolidated Statements of Comprehensive Income for the three and nine months ended September 30, 2013 and 2012		10
	Consolidated Statements of Cash Flows for the nine months ended September 30, 2013 and 2012		11
	Consolidated Statements of Equity for the nine months ended September 30, 2013 and 2012		12

	Notes to Combined Consolidated Financial Statements		13

Item 2	Management’s Discussion and Analysis of Financial Condition and Results of Operations		40
Item 3	Quantitative and Qualitative Disclosures About Market Risk		55
Item 4	Controls and Procedures		56
PART II	OTHER INFORMATION
Item 1	Legal Proceedings		57
Item 1A	Risk Factors		57
Item 2	Unregistered Sales of Equity Securities and Use of Proceeds		58
Item 6	Exhibits		58
	SIGNATURES		59
	Index to Exhibits		60

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 SHEETS

(In thousands)

(Unaudited)


	September 30,			December 31,
	2013			2012
ASSETS
Current assets
Cash and cash equivalents	$	178,370		$	282,092
Accounts receivable		865,746			743,673
Taxes receivable		143,635			112,423
Prepaid expenses		52,752			43,962
Other current assets		134,500			123,175

Total current assets		1,375,003			1,305,325

Property and equipment, at cost		18,606,931			16,971,666
Accumulated depreciation		(4,534,474	)		(3,945,694	)

Property and equipment, net		14,072,457			13,025,972

Other assets		281,871			276,477

Total assets	$	15,729,331		$	14,607,774

LIABILITIES AND EQUITY
Current liabilities
Accounts payable	$	318,013		$	350,147
Accrued payroll and related costs		137,481			132,728
Taxes payable		134,318			135,257
Dividends payable		192,352			66,369
Other current liabilities		202,422			226,948

Total current liabilities		984,586			911,449

Long-term debt		5,307,838			4,634,375
Deferred income taxes		187,648			226,045
Other liabilities		392,443			347,615

Total liabilities		6,872,515			6,119,484

Commitments and contingencies
Shareholders’ equity
Shares; 254,165 and 253,348 shares outstanding		712,421			710,130
Treasury shares, at cost; 777 and 589 shares		(28,627	)		(21,069	)
Additional paid-in capital		117,458			83,531
Retained earnings		7,417,890			7,066,023
Accumulated other comprehensive loss		(110,583	)		(115,449	)

Total shareholders’ equity		8,108,559			7,723,166
Noncontrolling interests		748,257			765,124

Total equity		8,856,816			8,488,290

Total liabilities and equity	$	15,729,331		$	14,607,774

See accompanying notes to the unaudited consolidated financial statements.

NOBLE CORPORATION (NOBLE-SWISS) AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME

(In thousands, except per share amounts)

(Unaudited)


	Three Months Ended						Nine Months Ended
	September 30,						September 30,
	2013			2012			2013			2012
Operating revenues
Contract drilling services	$	1,041,118		$	833,212		$	2,945,310		$	2,427,759
Reimbursables		29,242			28,137			78,676			94,090
Labor contract drilling services		8,493			22,667			43,150			58,538
Other		28			16			105			258

		1,078,881			884,032			3,067,241			2,580,645

Operating costs and expenses
Contract drilling services		488,250			449,125			1,464,320			1,292,638
Reimbursables		23,671			21,047			61,294			76,618
Labor contract drilling services		8,153			12,991			29,804			34,070
Depreciation and amortization		223,711			195,087			642,456			549,779
General and administrative		33,776			26,858			86,196			75,388
Loss on impairment		3,585			—			3,585			18,345
Gain on disposal of assets, net		(35,646	)		—			(35,646	)		—
Gain on contract settlements/extinguishments, net		(45,000	)		—			(46,800	)		(33,255	)

		700,500			705,108			2,205,209			2,013,583

Operating income		378,381			178,924			862,032			567,062
Other income (expense)
Interest expense, net of amount capitalized		(23,149	)		(25,635	)		(75,115	)		(56,783	)
Interest income and other, net		1,057			1,553			1,587			4,526

Income before income taxes		356,289			154,842			788,504			514,805
Income tax provision		(55,830	)		(25,162	)		(127,006	)		(93,107	)

Net income		300,459			129,680			661,498			421,698
Net income attributable to noncontrolling interests		(18,502	)		(14,906	)		(52,861	)		(26,931	)

Net income attributable to Noble Corporation	$	281,957		$	114,774		$	608,637		$	394,767

Net income per share
Basic	$	1.10		$	0.45		$	2.37		$	1.55
Diluted	$	1.10		$	0.45		$	2.37		$	1.55

See accompanying notes to the unaudited consolidated financial statements.

NOBLE CORPORATION (NOBLE-SWISS) AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(In thousands)

(Unaudited)


	Three Months Ended						Nine Months Ended
	September 30,						September 30,
	2013			2012			2013			2012
Net income	$	300,459		$	129,680		$	661,498		$	421,698
Other comprehensive income/(loss), net of tax
Foreign currency translation adjustments		(1,135	)		2,033			(658	)		(4,994	)
Foreign currency forward contracts		5,320			—			589			3,061
Amortization of deferred pension plan amounts (net of tax provision of $732 and $790 for the three months ended September 30, 2013 and 2012, respectively, and $2,192 and $2,157 for the nine months ended September 30, 2013 and 2012, respectively)		1,661			1,351			4,935			4,177

Other comprehensive income, net		5,846			3,384			4,866			2,244
Net comprehensive income attributable to noncontrolling interests		(18,502	)		(14,906	)		(52,861	)		(26,931	)

Comprehensive income attributable to Noble Corporation	$	287,803		$	118,158		$	613,503		$	397,011

See accompanying notes to the unaudited consolidated financial statements.

NOBLE CORPORATION (NOBLE-SWISS) AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

(Unaudited)


	Nine Months Ended
	September 30,
	2013			2012
Cash flows from operating activities
Net income	$	661,498		$	421,698
Adjustments to reconcile net income to net cash from operating activities:
Depreciation and amortization		642,456			549,779
Loss on impairment		3,585			18,345
Gain on disposal of assets, net		(35,646	)		—
Deferred income taxes		(41,400	)		(16,090	)
Amortization of share-based compensation		33,471			28,782
Net change in other assets and liabilities		(102,310	)		(71,010	)

Net cash from operating activities		1,161,654			931,504

Cash flows from investing activities
Capital expenditures		(1,724,727	)		(1,247,139	)
Change in accrued capital expenditures		(66,946	)		(195,044	)
Proceeds from disposal of assets		61,000			—

Net cash from investing activities		(1,730,673	)		(1,442,183	)

Cash flows from financing activities
Net change in borrowings outstanding on bank credit facilities		973,055			(630,000	)
Repayment of long-term debt		(300,000	)		—
Proceeds from issuance of senior notes, net of debt issuance costs		—			1,186,636
Dividends paid to joint venture partner		(69,728	)		—
Contributions from joint venture partner		—			40,000
Financing costs on credit facilities		(2,432	)		(5,014	)
Par value reduction/dividend payments		(130,787	)		(105,092	)
Proceeds from employee stock transactions		2,747			13,853
Repurchases of employee shares surrendered for taxes		(7,558	)		(10,433	)

Net cash from financing activities		465,297			489,950

Net change in cash and cash equivalents		(103,722	)		(20,729	)
Cash and cash equivalents, beginning of period		282,092			239,196

Cash and cash equivalents, end of period	$	178,370		$	218,467

See accompanying notes to the unaudited consolidated financial statements.

NOBLE CORPORATION (NOBLE-SWISS) AND SUBSIDIARIES

CONSOLIDATED STATEMENTS 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, 2011		252,639		$	766,595		$	48,356		$	6,676,444		$	(10,553	)	$	(74,321	)	$	691,331		$	8,097,852
Employee related equity activity
Amortization of share-based compensation		—			—			28,782			—			—			—			—			28,782
Issuance of share-based compensation shares		428			1,284			(1,276	)		—			—			—			—			8
Exercise of stock options		606			1,722			10,949			—			—			—			—			12,671
Tax benefit of employee stock transactions		—			—			1,174			—			—			—			—			1,174
Restricted shares forfeited or repurchased for taxes		(374	)		(1,138	)		1,138			—			(10,433	)		—			—			(10,433	)
Net income		—			—			—			394,767			—			—			26,931			421,698
Equity contribution by joint venture partner		—			—			—			—			—			—			40,000			40,000
Par value reduction payments		—			(58,470	)		(13,427	)		—			—			—			—			(71,897	)
Dividends declared		—			—			—			(132,777	)		—			—			—			(132,777	)
Other comprehensive income, net		—			—			—			—			—			2,244			—			2,244

Balance at September 30, 2012		253,299		$	709,993		$	75,696		$	6,938,434		$	(20,986	)	$	(72,077	)	$	758,262		$	8,389,322

Balance at December 31, 2012		253,348		$	710,130		$	83,531		$	7,066,023		$	(21,069	)	$	(115,449	)	$	765,124		$	8,488,290
Employee related equity activity
Amortization of share-based compensation		—			—			33,471			—			—			—			—			33,471
Issuance of share-based compensation shares		659			1,851			(1,834	)		—			—			—			—			17
Exercise of stock options		158			440			3,760			—			—			—			—			4,200
Tax benefit of employee stock transactions		—			—			(1,470	)		—			—			—			—			(1,470	)
Restricted shares forfeited or repurchased for taxes		—			—			—			—			(7,558	)		—			—			(7,558	)
Net income		—			—			—			608,637			—			—			52,861			661,498
Dividends declared		—			—			—			(256,770	)		—			—			—			(256,770	)
Dividends paid to joint venture partner		—			—			—			—			—			—			(69,728	)		(69,728	)
Other comprehensive income, net		—			—			—			—			—			4,866			—			4,866

Balance at September 30, 2013		254,165		$	712,421		$	117,458		$	7,417,890		$	(28,627	)	$	(110,583	)	$	748,257		$	8,856,816

See accompanying notes to the unaudited consolidated financial statements.

NOBLE CORPORATION (NOBLE-CAYMAN) AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(In thousands)

(Unaudited)


	September 30,			December 31,
	2013			2012
ASSETS
Current assets
Cash and cash equivalents	$	173,717		$	277,375
Accounts receivable		865,746			743,673
Taxes receivable		143,238			112,310
Prepaid expenses		49,329			41,232
Other current assets		134,004			122,649

Total current assets		1,366,034			1,297,239

Property and equipment, at cost		18,569,631			16,935,147
Accumulated depreciation		(4,526,002	)		(3,938,518	)

Property and equipment, net		14,043,629			12,996,629

Other assets		281,956			276,558

Total assets	$	15,691,619		$	14,570,426

LIABILITIES AND EQUITY
Current liabilities
Accounts payable	$	315,933		$	349,594
Accrued payroll and related costs		129,170			123,936
Taxes payable		130,071			130,844
Other current liabilities		202,422			226,935

Total current liabilities		777,596			831,309

Long-term debt		5,307,838			4,634,375
Deferred income taxes		187,648			226,045
Other liabilities		392,443			347,615

Total liabilities		6,665,525			6,039,344

Commitments and contingencies
Shareholders’ equity
Ordinary shares; 261,246 shares outstanding		26,125			26,125
Capital in excess of par value		489,058			470,454
Retained earnings		7,873,237			7,384,828
Accumulated other comprehensive loss		(110,583	)		(115,449	)

Total shareholders’ equity		8,277,837			7,765,958
Noncontrolling interests		748,257			765,124

Total equity		9,026,094			8,531,082

Total liabilities and equity	$	15,691,619		$	14,570,426

See accompanying notes to the unaudited consolidated financial statements.

NOBLE CORPORATION (NOBLE-CAYMAN) AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME

(In thousands)

(Unaudited)


	Three Months Ended						Nine Months Ended
	September 30,						September 30,
	2013			2012			2013			2012
Operating revenues
Contract drilling services	$	1,041,118		$	833,212		$	2,945,310		$	2,427,759
Reimbursables		29,242			28,137			78,676			94,090
Labor contract drilling services		8,493			22,667			43,150			58,538
Other		28			16			105			258

		1,078,881			884,032			3,067,241			2,580,645

Operating costs and expenses
Contract drilling services		486,113			444,225			1,448,119			1,280,969
Reimbursables		23,671			21,047			61,294			76,618
Labor contract drilling services		8,153			12,991			29,804			34,070
Depreciation and amortization		223,176			194,595			641,159			548,271
General and administrative		7,251			15,487			37,682			44,964
Loss on impairment		3,585			—			3,585			18,345
Gain on disposal of assets, net		(35,646	)		—			(35,646	)		—
Gain on contract settlements/extinguishments, net		(45,000	)		—			(46,800	)		(33,255	)

		671,303			688,345			2,139,197			1,969,982

Operating income		407,578			195,687			928,044			610,663
Other income (expense)
Interest expense, net of amount capitalized		(23,149	)		(25,635	)		(75,115	)		(56,783	)
Interest income and other, net		415			1,361			1,183			4,368

Income before income taxes		384,844			171,413			854,112			558,248
Income tax provision		(55,488	)		(24,784	)		(125,232	)		(91,972	)

Net income		329,356			146,629			728,880			466,276
Net income attributable to noncontrolling interests		(18,502	)		(14,906	)		(52,861	)		(26,931	)

Net income attributable to Noble Corporation	$	310,854		$	131,723		$	676,019		$	439,345

See accompanying notes to the unaudited consolidated financial statements.

NOBLE CORPORATION (NOBLE-CAYMAN) AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(In thousands)

(Unaudited)


	Three Months Ended						Nine Months Ended
	September 30,						September 30,
	2013			2012			2013			2012
Net income	$	329,356		$	146,629		$	728,880		$	466,276
Other comprehensive income/(loss), net of tax
Foreign currency translation adjustments		(1,135	)		2,033			(658	)		(4,994	)
Foreign currency forward contracts		5,320			—			589			3,061
Amortization of deferred pension plan amounts (net of tax provision of $732 and $790 for the three months ended September 30, 2013 and 2012, respectively, and $2,192 and $2,157 for the nine months ended September 30, 2013 and 2012, respectively)		1,661			1,351			4,935			4,177

Other comprehensive income, net		5,846			3,384			4,866			2,244
Net comprehensive income attributable to noncontrolling interests		(18,502	)		(14,906	)		(52,861	)		(26,931	)

Comprehensive income attributable to Noble Corporation	$	316,700		$	135,107		$	680,885		$	441,589

See accompanying notes to the unaudited consolidated financial statements.

NOBLE CORPORATION (NOBLE-CAYMAN) AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

(Unaudited)


	Nine Months Ended
	September 30,
	2013			2012
Cash flows from operating activities
Net income	$	728,880		$	466,276
Adjustments to reconcile net income to net cash from operating activities:
Depreciation and amortization		641,159			548,271
Loss on impairment		3,585			18,345
Gain on disposal of assets, net		(35,646	)		—
Deferred income taxes		(41,400	)		(16,090	)
Capital contribution by parent—share-based compensation		18,604			15,412
Net change in other assets and liabilities		(102,238	)		(75,357	)

Net cash from operating activities		1,212,944			956,857

Cash flows from investing activities
Capital expenditures		(1,723,941	)		(1,245,671	)
Change in accrued capital expenditures		(66,946	)		(195,044	)
Proceeds from disposal of assets		61,000			—

Net cash from investing activities		(1,729,887	)		(1,440,715	)

Cash flows from financing activities
Net change in borrowings outstanding on bank credit facilities		973,055			(630,000	)
Repayment of long-term debt		(300,000	)		—
Proceeds from issuance of senior notes, net of debt issuance costs		—			1,186,636
Dividends paid to joint venture partner		(69,728	)		—
Contributions from joint venture partner		—			40,000
Financing costs on credit facilities		(2,432	)		(5,014	)
Distributions to parent company, net		(187,610	)		(129,139	)

Net cash from financing activities		413,285			462,483

Net change in cash and cash equivalents		(103,658	)		(21,375	)
Cash and cash equivalents, beginning of period		277,375			235,056

Cash and cash equivalents, end of period	$	173,717		$	213,681

See accompanying notes to the unaudited consolidated financial statements.

NOBLE CORPORATION (NOBLE-CAYMAN) AND SUBSIDIARIES

CONSOLIDATED STATEMENTS 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, 2011		261,246	$	26,125	$	450,616	$	6,979,882		$	(74,321	)	$	691,331		$	8,073,633
Net income		—		—		—		439,345			—			26,931			466,276
Capital contributions by parent—share-based compensation		—		—		15,412		—			—			—			15,412
Distributions to parent		—		—		—		(129,139	)		—			—			(129,139	)
Equity contribution by joint venture partner		—		—		—		—			—			40,000			40,000
Other comprehensive income, net		—		—		—		—			2,244			—			2,244

Balance at September 30, 2012		261,246	$	26,125	$	466,028	$	7,290,088		$	(72,077	)	$	758,262		$	8,468,426

Balance at December 31, 2012		261,246	$	26,125	$	470,454	$	7,384,828		$	(115,449	)	$	765,124		$	8,531,082
Net income		—		—		—		676,019			—			52,861			728,880
Capital contributions by parent—share-based compensation		—		—		18,604		—			—			—			18,604
Distributions to parent		—		—		—		(187,610	)		—			—			(187,610	)
Dividends paid to joint venture partner		—		—		—		—			—			(69,728	)		(69,728	)
Other comprehensive income, net		—		—		—		—			4,866			—			4,866

Balance at September 30, 2013		261,246	$	26,125	$	489,058	$	7,873,237		$	(110,583	)	$	748,257		$	9,026,094

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

(Unaudited)

(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 (“Noble-Swiss”), is a leading offshore drilling contractor for the oil and gas industry. We perform contract drilling services with our fleet of 79 mobile offshore drilling units located worldwide. We also own one floating production storage and offloading unit (“FPSO”). Currently, our fleet consists of 14 semisubmersibles, 14 drillships, 49 jackups and two submersibles. At September 30, 2013, we had nine units under construction as follows:

•

three dynamically positioned, ultra-deepwater, harsh environment drillships; and

•

six high-specification heavy-duty, harsh environment jackups.

Subsequent to September 30, 2013, one newbuild drillship, the Noble Bob Douglas, and one newbuild jackup, the Noble Regina Allen, were delivered from the shipyard. These units are currently mobilizing, undergoing final commissioning and customer acceptance testing before commencing their respective contracts.

Our fleet is deployed globally in oil and gas producing regions. Noble and its predecessors have been engaged in the contract drilling of oil and gas wells since 1921.

Noble Corporation, a Cayman Islands company (“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 recurring nature. The December 31, 2012 Consolidated Balance Sheets presented herein are derived from the December 31, 2012 audited consolidated financial statements. These interim financial statements should be read in conjunction with the consolidated financial statements and notes included in our Annual Report on Form 10-K for the year ended December 31, 2012, 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.

Migration to the United Kingdom

In October 2013, our shareholders approved the previously announced proposed corporate reorganization transaction (the “Transaction”) of Noble-Swiss and the group of companies it controls. The Transaction will merge Noble-Swiss into a newly formed subsidiary incorporated under English law, Noble Corporation plc (“Noble-UK”), which will become our new holding company. The Transaction will effectively change the place of incorporation of our publicly traded parent company from Switzerland to the United Kingdom. Subject to the completion of certain closing requirements, the Transaction is expected to be completed in November 2013.

In the Transaction, all of the outstanding ordinary shares of Noble-Swiss will be cancelled, and Noble-UK will issue, through an exchange agent, one ordinary share of Noble-UK in exchange for each ordinary share of Noble-Swiss. Upon completion of the Transaction, Noble-UK will own and continue to conduct the same businesses through the Noble group as Noble-Swiss conducted prior to the Transaction, except that Noble-UK will be the parent company of the Noble group of companies. Noble-UK is expected to become subject to SEC reporting requirements and its ordinary shares have been approved for listing on the New York Stock Exchange under the symbol “NE”, subject to notice of issuance.

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)

Proposed Spin-off Transaction

In September 2013, we announced that our Board of Directors approved a plan to reorganize our business by means of a separation and spin-off of a newly formed subsidiary whose assets and liabilities would consist of most of our standard specification drilling units and related assets, liabilities and business (the “Separation”), resulting in the creation of two separate offshore drilling companies. The drilling units to be owned and operated by the new company include five drillships, three semisubmersibles, 34 jackups, two submersibles and one FPSO, as well as the Hibernia platform operations offshore Canada. We will continue to own and operate our high-specification assets with particular operating focus in deepwater and ultra-deepwater markets for drillships and semisubmersibles and harsh environment and high-specification markets for jackups. The Separation is subject to several conditions, including final board approval and shareholder approval.

Note 2 — Consolidated Joint Ventures

We maintain a 50 percent interest in two joint ventures, each with a subsidiary of Royal Dutch Shell plc. (“Shell”), that own and operate the two Bully-class drillships. We have determined that we are the primary beneficiary for accounting purposes. Accordingly, we consolidate the entities in our consolidated financial statements after eliminating intercompany transactions. Shell’s equity interests are presented as noncontrolling interests on our Consolidated Balance Sheets.

In April 2011, the Bully joint venture partners entered into capital contribution agreements whereby capital calls up to a total of $360 million could be made for funds needed to complete the construction of the drillships. All contributions under these agreements have been made, with the final contribution made in the first quarter of 2012.

During the nine months ended September 30, 2013, the Bully joint venture partners approved and paid dividends totaling $139 million.

The combined carrying amount of the Bully-class drillships at both September 30, 2013 and December 31, 2012 totaled $1.4 billion. These assets were primarily funded through partner equity contributions. During 2012, these rigs commenced operations. Operational results for the three and nine months ended September 30, 2013 and 2012 are as follows:


	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2013		2012		2013		2012
Operating revenues	$	94,847	$	78,447	$	272,620	$	162,892
Net income	$	36,488	$	28,679	$	103,123	$	52,152

NOBLE CORPORATION (NOBLE-SWISS) AND SUBSIDIARIES

NOBLE CORPORATION (NOBLE-CAYMAN) AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

Note 3 — Share Data

Share capital

The following table details Noble-Swiss’ share capital as of September 30, 2013 and December 31, 2012:


	September 30,		December 31,
	2013		2012
Shares outstanding and trading		253,388		252,759
Treasury shares		777		589

Total shares outstanding		254,165		253,348
Treasury shares held for share-based compensation plans		11,985		12,802

Total shares authorized for issuance		266,150		266,150

Par value per share (in Swiss Francs)		3.15		3.15

Repurchased treasury shares are recorded at cost, and relate to shares surrendered by employees for taxes payable upon the vesting of restricted stock.

Our Board of Directors may increase Noble-Swiss’ share capital through the issuance of up to 133.1 million authorized shares without obtaining shareholder approval. The issuance of these authorized shares is subject to certain conditions regarding their use.

In April 2012, our shareholders approved the payment of a dividend aggregating $0.52 per share, which was paid in four equal installments, with the final payment having been made in May 2013.

In April 2013, our shareholders approved the payment of a dividend aggregating $1.00 per share to be paid in four equal installments, the first of which was paid in August 2013, with the remaining three installments currently scheduled for November 2013, February 2014 and May 2014, respectively. As of September 30, 2013, we had $192 million of dividends payable outstanding. Our Board of Directors has the authority to accelerate the payment of any installment, or portions thereof, at its sole discretion at any time prior to payment of the final installment.

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						Nine months ended
	September 30,						September 30,
	2013			2012			2013			2012
Allocation of net income
Basic
Net income attributable to Noble Corporation	$	281,957		$	114,774		$	608,637		$	394,767
Earnings allocated to unvested share-based payment awards		(3,393	)		(1,192	)		(7,191	)		(4,008	)

Net income to common shareholders—basic	$	278,564		$	113,582		$	601,446		$	390,759

Diluted
Net income attributable to Noble Corporation	$	281,957		$	114,774		$	608,637		$	394,767
Earnings allocated to unvested share-based payment awards		(3,390	)		(1,190	)		(7,184	)		(4,002	)

Net income to common shareholders—diluted	$	278,567		$	113,584		$	601,453		$	390,765

Weighted average shares outstanding—basic		253,357			252,657			253,242			252,339
Incremental shares issuable from assumed exercise of stock options		261			317			265			385

Weighted average shares outstanding—diluted		253,618			252,974			253,507			252,724

Weighted average unvested share-based payment awards		3,086			2,651			3,028			2,588

Earnings per share
Basic	$	1.10		$	0.45		$	2.37		$	1.55
Diluted	$	1.10		$	0.45		$	2.37		$	1.55

Only those items having a dilutive impact on our basic earnings per share are included in diluted earnings per share. For the three months ended September 30, 2013 and 2012, stock options representing approximately 0.9 million and 1.1 million shares, respectively, were excluded from the diluted earnings per share as they were not dilutive.

Note 4 — Receivables from Customers

At September 30, 2013, we had receivables of approximately $14 million related to the Noble Max Smith, which are being disputed by our customer, Pemex Exploracion y Produccion (“Pemex”). These receivables have been classified as long-term and are included in “Other assets” on our Consolidated Balance Sheet. The disputed amounts relate to lost revenues for downtime that occurred after our rig was damaged when one of Pemex’s supply boats collided with our rig in 2010. In January 2012, we filed a lawsuit against Pemex in Mexican court seeking recovery of these amounts. While we can make no assurances as to the outcome of this dispute, we believe we are entitled to the disputed amounts.

Note 5 — Property and Equipment

Property and equipment, at cost, as of September 30, 2013 and December 31, 2012 consisted of the following:


	September 30,		December 31,
	2013		2012
Drilling equipment and facilities	$	15,835,848	$	14,099,628
Construction in progress		2,569,052		2,677,385
Other		202,031		194,653

Property and equipment, at cost	$	18,606,931	$	16,971,666

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)

Capital expenditures, including capitalized interest, totaled $1.7 billion and $1.2 billion for the nine months ended September 30, 2013 and 2012, respectively. Interest is capitalized on construction-in-progress at the weighted average cost of debt outstanding during the period of construction. Capitalized interest was $31 million and $92 million for the three and nine months ended September 30, 2013, respectively, as compared to $31 million and $108 million for the three and nine months ended September 30, 2012.

Note 6 — Loss on Impairment

During the second quarter of 2012, we determined that our submersible rig fleet, consisting of two cold stacked rigs, was partially impaired due to the declining market outlook for drilling services for this rig type. We estimated the fair value of the rigs based on the salvage value of the rigs and a recent transaction involving a similar unit owned by a peer company (Level 2 fair value measurement). Based on these estimates, we recognized a charge of approximately $13 million in 2012. Also, during the second quarter of 2012, we determined that certain corporate assets were partially impaired due to a declining market for, and the potential disposal of, the assets. We estimated the fair value of the assets based on a signed letter of intent to sell the assets (Level 2 fair value measurement). Based on these estimates, we recognized a charge of approximately $5 million in 2012.

During the third quarter of 2013, we recorded an additional impairment charge of approximately $4 million on our two cold stacked submersible rigs arising from the potential disposition of these assets to an unrelated third party.

Note 7 — Gain on Disposal of Assets, net

During the third quarter of 2013, we completed the sale of the Noble Lewis Dugger for $61 million to an unrelated third party in Mexico. In connection with the sale, we recorded a pre-tax gain of approximately $36 million.

Note 8 – Gain on Contract Settlements/Extinguishments, net

During the third quarter of 2013, we received $45 million related to the settlement of all claims against the former shareholders of FDR Holdings, Ltd., which we acquired in July 2010, relating to alleged breaches of various representations and warranties contained in the purchase agreement.

During the second quarter of 2012, we received approximately $5 million from the settlement of a claim relating to the Noble David Tinsley, which had experienced a “punch-through” while being positioned on location in 2009. We had originally recorded a $17 million charge during 2009 related to this incident. Additionally, during the second quarter of 2012, we settled an action against certain vendors for damages sustained during Hurricane Ike. We recognized a net gain of approximately $28 million related to this settlement. We also resolved all outstanding matters with Anadarko Petroleum Company in the second quarter of 2012 related to the previously disclosed force majeure action, Hurricane Ike matters and receivables relating to the Noble Amos Runner.

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 — Debt

Total debt consisted of the following at September 30, 2013 and December 31, 2012:


	September 30,		December 31,
	2013		2012
Senior unsecured notes:
5.875% Senior Notes due 2013	$	—	$	299,985
7.375% Senior Notes due 2014		249,922		249,799
3.45% Senior Notes due 2015		350,000		350,000
3.05% Senior Notes due 2016		299,963		299,952
2.50% Senior Notes due 2017		299,877		299,852
7.50% Senior Notes due 2019		201,695		201,695
4.90% Senior Notes due 2020		498,991		498,900
4.625% Senior Notes due 2021		399,563		399,527
3.95% Senior Notes due 2022		399,157		399,095
6.20% Senior Notes due 2040		399,892		399,891
6.05% Senior Notes due 2041		397,638		397,613
5.25% Senior Notes due 2042		498,276		498,257

Total senior unsecured notes		3,994,974		4,294,566
Commercial paper program		1,312,864		339,809

Total long-term debt	$	5,307,838	$	4,634,375

Credit Facilities and Commercial Paper Program

We currently have three separate credit facilities with an aggregate maximum available capacity of $2.9 billion (together, the “Credit Facilities”), which includes a $600 million 364-day unsecured revolving credit agreement we entered into in August 2013. In addition, we have an $800 million credit facility maturing in 2015 and a $1.5 billion credit facility maturing in 2017. We also established a commercial paper program in September 2012, which allows us to issue up to $1.8 billion in unsecured commercial paper notes. Amounts issued under the commercial paper program are supported by our Credit Facilities and, therefore, are classified as long-term on our Consolidated Balance Sheet. Our total debt related to the Credit Facilities and commercial paper program was $1.3 billion at September 30, 2013 as compared to $340 million at December 31, 2012. At September 30, 2013, we had approximately $1.6 billion of available capacity under the Credit Facilities.

The Credit Facilities provide us with the ability to issue up to $375 million in letters of credit in the aggregate. The issuance of letters of credit does not increase our borrowings outstanding under the Credit Facilities, but it does reduce the amount available. At September 30, 2013, we had no letters of credit issued under the Credit Facilities.

Senior Unsecured Notes

In February 2012, we issued, through our indirect wholly-owned subsidiary, Noble Holding International Limited (“NHIL”), $1.2 billion aggregate principal amount of senior notes in three separate tranches, comprising $300 million of 2.50% Senior Notes due 2017, $400 million of 3.95% Senior Notes due 2022, and $500 million of 5.25% Senior Notes due 2042. The weighted average coupon of all three tranches is 4.13%. The net proceeds of approximately $1.19 billion, after expenses, were primarily used to repay the then outstanding balance on our Credit Facilities.

Our 5.875% Senior Notes matured during the second quarter of 2013. We used proceeds from our commercial paper program to repay the $300 million outstanding balance.

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)

Covenants

The Credit Facilities are guaranteed by our indirect wholly-owned subsidiaries, NHIL and Noble Drilling Corporation (“NDC”). The covenants and events of default under the Credit Facilities are substantially similar, and each facility contains a covenant that limits our ratio of debt to total tangible capitalization, as defined in the Credit Facilities, to 0.60. At September 30, 2013, our ratio of debt to total tangible capitalization was approximately 0.37. We were in compliance with all covenants under the Credit Facilities as of September 30, 2013.

In addition to the covenants from the Credit Facilities noted above, the indentures governing our outstanding senior unsecured notes contain covenants that place restrictions on certain merger and consolidation transactions, unless we are the surviving entity or the other party assumes the obligations under the indenture, and on the ability to sell or transfer all or substantially all of our assets. In addition, there are restrictions on incurring or assuming certain liens and sale and lease-back transactions. At September 30, 2013, we were in compliance with all of our debt covenants. We continually monitor compliance with the covenants under our notes and, based on our expectations for 2013, expect to remain in compliance during the year.

Fair Value of Debt

Fair value represents the amount at which an instrument could be exchanged in a current transaction between willing parties. The estimated fair value of our senior notes was based on the quoted market prices for similar issues or on the current rates offered to us for debt of similar remaining maturities (Level 2 measurement).

The following table presents the estimated fair value of our long-term debt as of September 30, 2013 and December 31, 2012, respectively:


	September 30, 2013				December 31, 2012
	Carrying		Estimated		Carrying		Estimated
	Value		Fair Value		Value		Fair Value
Senior unsecured notes:
5.875% Senior Notes due 2013	$	—	$	—	$	299,985	$	305,594
7.375% Senior Notes due 2014		249,922		257,442		249,799		269,008
3.45% Senior Notes due 2015		350,000		363,551		350,000		368,824
3.05% Senior Notes due 2016		299,963		309,374		299,952		316,268
2.50% Senior Notes due 2017		299,877		301,995		299,852		309,846
7.50% Senior Notes due 2019		201,695		235,014		201,695		249,358
4.90% Senior Notes due 2020		498,991		523,400		498,900		562,530
4.625% Senior Notes due 2021		399,563		407,416		399,527		442,776
3.95% Senior Notes due 2022		399,157		385,207		399,095		422,227
6.20% Senior Notes due 2040		399,892		407,789		399,891		477,327
6.05% Senior Notes due 2041		397,638		400,740		397,613		468,256
5.25% Senior Notes due 2042		498,276		451,050		498,257		533,422

Total senior unsecured notes		3,994,974		4,042,978		4,294,566		4,725,436
Commercial paper program		1,312,864		1,312,864		339,809		339,809

Total long-term debt	$	5,307,838	$	5,355,842	$	4,634,375	$	5,065,245

Note 10 — Income Taxes

At December 31, 2012, the reserves for uncertain tax positions totaled $125 million (net of related tax benefits of $10 million). At September 30, 2013, the reserves for uncertain tax positions totaled $138 million (net of related tax benefits of $2 million), and if not utilized, would reduce the provision for income taxes by $138 million.

It is possible that our existing liabilities related to our reserves for uncertain tax positions may change in the next 12 months primarily due to the completion of open audits or the expiration of statutes of limitation. However, we cannot reasonably estimate a range of changes in our existing liabilities due to various uncertainties, such as the unresolved nature of various audits.

NOBLE CORPORATION (NOBLE-SWISS) AND SUBSIDIARIES

NOBLE CORPORATION (NOBLE-CAYMAN) AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

Note 11 — Employee Benefit Plans

Pension costs include the following components:


	Three Months Ended September 30,
	2013						2012
	Non-U.S.			U.S.			Non-U.S.			U.S.
Service cost	$	1,361		$	2,681		$	1,072		$	2,431
Interest cost		1,259			2,263			1,317			2,196
Return on plan assets		(1,443	)		(3,275	)		(1,313	)		(2,793	)
Amortization of prior service cost		—			57			—			57
Recognized net actuarial loss		426			1,910			199			1,885

Net pension expense	$	1,603		$	3,636		$	1,275		$	3,776


	Nine Months Ended September 30,
	2013						2012
	Non-U.S.			U.S.			Non-U.S.			U.S.
Service cost	$	4,089		$	8,043		$	3,306		$	7,237
Interest cost		3,793			6,787			4,025			6,556
Return on plan assets		(4,351	)		(9,827	)		(4,001	)		(8,379	)
Amortization of prior service cost		—			171			—			171
Recognized net actuarial loss		1,226			5,730			600			5,563

Net pension expense	$	4,757		$	10,904		$	3,930		$	11,148

During the three and nine months ended September 30, 2013, we made contributions to our pension plans totaling $5 million and $13 million, respectively.

Note 12 — Derivative Instruments and Hedging Activities

We periodically enter into derivative instruments to manage our exposure to fluctuations in interest rates and foreign currency exchange rates. We have documented policies and procedures to monitor and control the use of derivative instruments. We do not engage in derivative transactions for speculative or trading purposes, nor are we a party to leveraged derivatives.

For foreign currency forward contracts, hedge effectiveness is evaluated at inception based on the matching of critical terms between derivative contracts and the hedged item. Any change in fair value resulting from ineffectiveness is recognized immediately in earnings.

Cash Flow Hedges

Our North Sea and Brazil operations have a significant amount of their cash operating expenses payable in local currencies. To limit the potential risk of currency fluctuations, we periodically enter into forward contracts, all of which have a maturity of less than 12 months. The forward contracts maturing during the remainder of 2013 represent approximately 59 percent of these forecasted local currency requirements. The notional amount of the forward contracts outstanding, expressed in U.S. Dollars, was approximately $42 million at September 30, 2013. Total unrealized gain related to these forward contracts was approximately $0.6 million as of September 30, 2013 and was recorded as part of “Accumulated other comprehensive loss” (“AOCL”).

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


	Three Months Ended					Nine Months Ended
	September 30,					September 30,
	2013			2012		2013		2012
Net unrealized loss at beginning of period	$	(4,731	)	$	—	$	—	$	(3,061	)
Activity during period:
Settlement of foreign currency forward contracts during the period		2,849			—		—		3,061
Net unrealized gain on outstanding foreign currency forward contracts		2,471			—		589		—

Net unrealized gain at end of period	$	589		$	—	$	589	$	—

Financial Statement Presentation

The following tables, together with Note 13, summarize the financial statement presentation and fair value of our derivative positions as of September 30, 2013 and December 31, 2012:


		Estimated fair value
	Balance sheet classification	September 30, 2013		December 31, 2012
Asset derivatives
Cash flow hedges
Short-term foreign currency forward contracts	Other current assets	$	1,927	$	—
Liability derivatives
Cash flow hedges
Short-term foreign currency forward contracts	Other current liabilities	$	1,338	$	—

To supplement the fair value disclosures in Note 13, the following summarizes the recognized gains and losses of cash flow hedges through AOCL or through “other income” for the three months ended September 30, 2013 and 2012:


	Gain/(loss) recognized through AOCL				Gain/(loss) reclassified from AOCL to “other income”				Gain/(loss) recognized through “other income”
	2013		2012		2013		2012		2013		2012
Cash flow hedges
Foreign currency forward contracts	$	2,471	$	—	$	2,849	$	—	$	—	$	—

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)

To supplement the fair value disclosures in Note 13, the following summarizes the recognized gains and losses of cash flow hedges through AOCL or through “other income” for the nine months ended September 30, 2013 and 2012:


	Gain/(loss) recognized through AOCL					Gain/(loss) reclassified from AOCL to “other income”				Gain/(loss) recognized through “other income”
	2013			2012		2013		2012		2013		2012
Cash flow hedges
Foreign currency forward contracts	$	(2,525	)	$	—	$	3,114	$	3,061	$	—	$	—

Note 13 — 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:


	September 30, 2013
			Estimated Fair Value Measurements
			Quoted		Significant
			Prices in		Other		Significant
			Active		Observable		Unobservable
	Carrying		Markets		Inputs		Inputs
	Amount		(Level 1)		(Level 2)		(Level 3)
Assets—
Marketable securities	$	7,072	$	7,072	$	—	$	—
Foreign currency forward contracts		1,927		—		1,927		—
Liabilities—
Foreign currency forward contracts	$	1,338	$	—	$	1,338	$	—

December 31, 2012

Estimated Fair Value Measurements

Quoted

Significant

Prices in

Other

Significant

Active

Observable

Unobservable

Carrying

Markets

Inputs

Amount

(Level 1)

(Level 2)

(Level 3)

Assets—

Marketable securities

5,816

—

The foreign currency 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.

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 14 — Accumulated Other Comprehensive Loss

The following tables set forth the changes in AOCL by component for the three and nine months ended September 30, 2013. All amounts within the tables are shown net of tax.


	Three months ended September 30, 2013
	Gain / (Loss)			Defined
	on			Benefit			Foreign
	Cash Flow			Pension			Currency
	Hedges⁽¹⁾			Items⁽²⁾			Items			Total
Balance at beginning of period	$	(4,731	)	$	(91,797	)	$	(19,901	)	$	(116,429	)

Activity during period:
Other comprehensive income/(loss) before reclassifications		2,471			—			(1,135	)		1,336
Amounts reclassified from AOCL		2,849			1,661			—			4,510

Net current period other comprehensive income/(loss)		5,320			1,661			(1,135	)		5,846

Balance at end of period	$	589		$	(90,136	)	$	(21,036	)	$	(110,583	)


	Nine months ended September 30, 2013
				Defined
	Gain on			Benefit			Foreign
	Cash Flow			Pension			Currency
	Hedges⁽¹⁾			Items⁽²⁾			Items			Total
Balance at beginning of period	$	—		$	(95,071	)	$	(20,378	)	$	(115,449	)

Activity during period:
Other comprehensive income/(loss) before reclassifications		589			—			(658	)		(69	)
Amounts reclassified from AOCL		—			4,935			—			4,935

Net current period other comprehensive income/(loss)		589			4,935			(658	)		4,866

Balance at end of period	$	589		$	(90,136	)	$	(21,036	)	$	(110,583	)

(1)	Gain / (loss) on cash flow hedges are related to our foreign currency forward contracts. Reclassifications from AOCL are recognized through “other income” on our Consolidated Statement of Income. See Note 12 for additional information.

(2)

Defined benefit pension items relate to actuarial losses and the amortization of prior service costs. Reclassifications from AOCL are recognized as expense on our Consolidated Statement of Income through either “contract drilling services” or “general and administrative”. See Note 11 for additional information

Note 15 — Commitments and Contingencies

The Noble Homer Ferrington was under contract with a subsidiary of ExxonMobil Corporation (“ExxonMobil”), which entered into an assignment agreement with BP for a two-well farmout of the rig in Libya after successfully drilling two wells with the rig for ExxonMobil. In August 2010, BP attempted to terminate the assignment agreement claiming that the rig was not in the required condition, and ExxonMobil informed us that we must look to BP for payment of the dayrate during the assignment period. In August 2010, we initiated arbitration proceedings under the drilling contract against both BP and ExxonMobil. We do not believe BP had the right to terminate the assignment agreement and believe the rig was ready to operate under the drilling contract. The rig operated under farmout arrangements from March 2011 to the conclusion of the contract in the second quarter of 2012. We believe we are owed dayrate by either or both of these clients. The operating dayrate was approximately $538,000 per day for the work in Libya. The arbitration process is proceeding, and we intend to vigorously pursue these claims. As a result of the uncertainties noted above, we have not recognized any revenue during the assignment period.

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. No revenue has been recognized under this contract. We have contracted the rig for much of the original term with other customers. In March 2011, we filed suit in Texas State District Court against Marathon seeking damages for its actions. We are in advanced settlement discussions with Marathon and have postponed the trial date. We cannot predict the outcome of this lawsuit, including any settlement discussions.

In November 2012, the U.S. Coast Guard in Alaska conducted an inspection of our drillship, the Noble Discoverer, and cited a number of deficiencies to be remediated, including issues relating to the main propulsion and safety management systems. We initiated a comprehensive effort to address the deficiencies identified by the Coast Guard and commenced an ongoing dialogue with the agency to keep it apprised of our progress. We began an internal investigation in conjunction with the Coast Guard inspection, and the Coast Guard then began its own investigation. We reported certain potential violations of applicable law to the Coast Guard identified as a result of our internal investigation. These related to what we believe were certain unauthorized disposals of collected deck and sea water from the Noble Discoverer, collected, treated deck water from the Kulluk and potential record-keeping issues with the oil record books for the Noble Discoverer, Kulluk and other rigs, and with the garbage log for the Kulluk. The Coast Guard referred the Noble Discoverer and Kulluk matters to the U.S. Department of Justice (“DOJ”) for further investigation. We are cooperating with the DOJ and Coast Guard in connection with their investigation, and are maintaining a dialogue with the DOJ. We cannot predict when the DOJ and Coast Guard will conclude the investigation and cannot provide any assurances with respect to the outcome. If the DOJ or Coast Guard determines that violations of applicable law have occurred, they could seek civil and criminal sanctions, including monetary penalties and operational sanctions, against us and/or certain of our employees, as well as oversight of our operational compliance programs. Based on information obtained to date, we believe it is probable that we will have to pay some amount in fines and penalties to resolve this matter. However, at this time we cannot appropriately estimate the potential liability that may result and we have not made any accrual in our consolidated financial statements at September 30, 2013 related to the matter.

We are from time to time a party to various lawsuits that are incidental to our operations in which the claimants seek an unspecified amount of monetary damages for personal injury, including injuries purportedly resulting from exposure to asbestos on drilling rigs and associated facilities. At September 30, 2013, there were 33 asbestos related 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 4, the resolution of which, in the opinion of management, will not be material to our financial position, results of operations or cash flows. There is inherent risk in any litigation or dispute and no assurance can be given as to the outcome of these claims.

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 tax returns filed in those jurisdictions are subject to review and examination by tax authorities within those jurisdictions. The U.S. Internal Revenue Service (“IRS”) has completed its examination of our tax reporting for the taxable year ended December 31, 2008. In June 2013, the IRS examination team notified us that they were no longer proposing any adjustments with respect to our tax reporting for the taxable year ended December 31, 2008. We are due a refund for the 2008 tax year, and our refund claim is currently under review. The IRS began its examination of our tax reporting for the taxable year ended December 31, 2009. We believe that we have accurately reported all amounts in our 2009 tax returns. Furthermore, we are currently contesting several non-U.S. tax assessments and may contest future assessments. We believe the ultimate resolution of the outstanding assessments, for which we have not made any accrual, will not have a material adverse effect on our consolidated financial statements. We recognize uncertain tax positions that we believe have a greater than 50 percent likelihood of being sustained. We cannot predict or provide assurance as to the ultimate outcome of any existing or future assessments.

During the second quarter of 2013, we reached an agreement with the Mexican tax authorities resolving certain previously disclosed tax assessments. This settlement removes potential contingent tax exposure of $502 million in Mexico for periods prior to 2007, which includes the assessments for years 2002 through 2005 of approximately $348 million, as well as settlement for 2006. The settlement of these assessments did not have a material impact on our consolidated financial statements.

Audit claims of approximately $300 million attributable to income, customs and other business taxes have been assessed against us. We have contested, or intend to contest, these assessments, including through litigation if necessary, and we believe the ultimate resolution, for which we have not made any accrual, will not have a material adverse effect on our consolidated financial statements. Tax authorities may issue additional assessments or pursue legal actions as a result of tax audits and we cannot predict or provide assurance as to the ultimate outcome of such assessments and legal actions.

We maintain certain insurance coverage against specified marine perils, which includes physical damage and loss of hire. Damage caused by hurricanes has negatively impacted the energy insurance market, resulting in more restrictive and expensive coverage for U.S. named windstorm perils. Accordingly, we have elected to significantly reduce the named windstorm insurance on our rigs operating in the U.S. Gulf of Mexico. Presently, we insure the Noble Jim Thompson, Noble Amos Runner and Noble Driller for “total loss only” when caused by a named windstorm. For the Noble Bully I, our customer assumes the risk of loss due to a named windstorm event, pursuant to the terms of the drilling contract, through the purchase of insurance coverage (provided that we are responsible for any deductible under such policy) or, at its option, the assumption of the risk of loss up to the insured value in lieu of the purchase of such insurance. The remaining rigs in the U.S. Gulf of Mexico are self-insured for named windstorm perils. Our remaining rigs, including those in the Mexico portion of the Gulf of Mexico, continue to be covered by commercial insurance for windstorm damage. In addition, we maintain physical damage deductibles on our rigs ranging from $15 million to $25 million per occurrence, depending on location. The loss of hire coverage applies only to our rigs operating under contract with a dayrate equal to or greater than $200,000 a day and is subject to a 45-day waiting period for each unit and each occurrence.

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

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

In connection with our capital expenditure program, we had outstanding commitments, including shipyard and purchase commitments of approximately $2.6 billion at September 30, 2013.

NOBLE CORPORATION (NOBLE-SWISS) AND SUBSIDIARIES

NOBLE CORPORATION (NOBLE-CAYMAN) AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

We have 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.

Nigerian Operations

During the fourth quarter of 2007, our Nigerian subsidiary received letters from the Nigerian Maritime Administration and Safety Agency (“NIMASA”) seeking to collect a 2 percent surcharge on contract amounts under contracts performed by “vessels,” within the meaning of Nigeria’s cabotage laws, engaged in the Nigerian coastal shipping trade. Although we do not believe that these laws apply to our ownership of drilling 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 previously informed the Nigerian Content Division of its position that we were 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 previously 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.

Under the Nigerian Industrial Training Fund Act of 2004, as amended (the “Act”), Nigerian companies with five or more employees must contribute annually 1 percent of their payroll to the Industrial Training Fund (“ITF”) established under the Act to be used for the training of Nigerian nationals with a view towards generating a pool of indigenously trained manpower. We have not paid this amount on our expatriate workers employed by our non-Nigerian employment entity in the past as we did not believe the contribution obligation was applicable to them. In October 2012, we received a demand from the ITF for payments going back to 2004 and associated penalties in respect of these expatriate employees. In February 2013, the ITF filed suit seeking payment of these amounts. We do not believe that we owe the amount claimed. We are in discussions with the ITF to resolve the issue and do not believe the resolution of this matter will have a material adverse effect on our financial position or cash flows.

NOBLE CORPORATION (NOBLE-SWISS) AND SUBSIDIARIES

NOBLE CORPORATION (NOBLE-CAYMAN) AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

Note 16 — Segment and Related Information

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

We evaluate the performance of our operating segment based on revenues from external customers and segment profit. Summarized financial information of our reportable segment for the three and nine months ended September 30, 2013 and 2012 is shown in the following table. The “Other” column includes results of labor contract drilling services in Canada and Alaska, as well as corporate related items. The consolidated financial statements of Noble-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 summarized financial information for Noble-Cayman is substantially the same as Noble-Swiss.


	Three Months Ended September 30,
	2013									2012
	Contract									Contract
	Drilling									Drilling
	Services			Other			Total			Services			Other			Total
Revenues from external customers	$	1,069,986		$	8,895		$	1,078,881		$	860,315		$	23,717		$	884,032
Depreciation and amortization		219,695			4,016			223,711			191,638			3,449			195,087
Segment operating income/(loss)		382,475			(4,094	)		378,381			173,285			5,639			178,924
Interest expense, net of amount capitalized		(317	)		(22,832	)		(23,149	)		(121	)		(25,514	)		(25,635	)
Income tax (provision)/benefit		(59,854	)		4,024			(55,830	)		(28,307	)		3,145			(25,162	)
Segment profit/(loss)		303,617			(21,660	)		281,957			130,983			(16,209	)		114,774
Total assets (at end of period)		15,058,076			671,255			15,729,331			13,983,223			477,183			14,460,406


	Nine Months Ended September 30,
	2013									2012
	Contract									Contract
	Drilling									Drilling
	Services			Other			Total			Services			Other			Total
Revenues from external customers	$	3,022,966		$	44,275		$	3,067,241		$	2,519,930		$	60,715		$	2,580,645
Depreciation and amortization		631,396			11,060			642,456			539,698			10,081			549,779
Segment operating income		861,219			813			862,032			559,713			7,349			567,062
Interest expense, net of amount capitalized		(539	)		(74,576	)		(75,115	)		(315	)		(56,468	)		(56,783	)
Income tax (provision)/benefit		(138,695	)		11,689			(127,006	)		(102,005	)		8,898			(93,107	)
Segment profit/(loss)		669,107			(60,470	)		608,637			434,561			(39,794	)		394,767
Total assets (at end of period)		15,058,076			671,255			15,729,331			13,983,223			477,183			14,460,406

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 17 — Accounting Pronouncements

In February 2013, the FASB issued Accounting Standards Update (“ASU”) No. 2013-02, which amends FASB Accounting Standards Codification (“ASC”) Topic 220, “Comprehensive Income.” This amended guidance requires additional information about reclassification adjustments out of comprehensive income, including changes in comprehensive income balances by component and significant items reclassified out of comprehensive income. This guidance is effective for reporting periods beginning after December 15, 2012. The adoption of this guidance did not have a material impact on our financial condition, results of operations, cash flows or financial disclosures.

In March 2013, the FASB issued ASU No. 2013-05, which amends ASC Topic 830, “Foreign Currency Matters.” This ASU provides guidance on foreign currency translation adjustments when a parent entity ceases to have a controlling interest on a previously consolidated subsidiary or group of assets. The guidance is effective for fiscal years beginning on or after December 15, 2013. We are still evaluating what impact, if any, the adoption of this guidance will have on our financial condition, results of operations, cash flows or financial disclosures.

In July 2013, the FASB issued ASU No. 2013-11, which amends ASC Topic 740, “Taxes.” This ASU provides guidance on the presentation of tax benefits when a net operating loss carryforward or other tax credit carryforward exists. The guidance is effective for fiscal years beginning on or after December 15, 2013. We are still evaluating what impact, if any, the adoption of this guidance will have on our financial condition, results of operations, cash flows or financial disclosures.

Note 18 — 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
	Nine months ended						Nine months ended
	September 30,						September 30,
	2013			2012			2013			2012
Accounts receivable	$	(92,073	)	$	(163,051	)	$	(92,073	)	$	(163,051	)
Other current assets		(50,738	)		(58,303	)		(49,791	)		(59,764	)
Other assets		(8,129	)		(25,543	)		(8,133	)		(25,546	)
Accounts payable		9,357			29,470			7,830			29,353
Other current liabilities		4,042			76,035			4,702			79,436
Other liabilities		35,231			70,382			35,227			64,215

	$	(102,310	)	$	(71,010	)	$	(102,238	)	$	(75,357	)

NOBLE CORPORATION (NOBLE-SWISS) AND SUBSIDIARIES

NOBLE CORPORATION (NOBLE-CAYMAN) AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

Note 19 — Guarantees of Registered Securities

Guarantees of Registered Securities

Noble-Cayman, or one or more subsidiaries of Noble-Cayman, are a co-issuer or guarantor or otherwise obligated as of September 30, 2013 as follows:


	Issuer
Notes	(Co-Issuer(s))	Guarantor(s)
$250 million 7.375% Senior Notes due 2014	NHIL	Noble-Cayman
$350 million 3.45% Senior Notes due 2015	NHIL	Noble-Cayman
$300 million 3.05% Senior Notes due 2016	NHIL	Noble-Cayman
$300 million 2.50% Senior Notes due 2017	NHIL	Noble-Cayman
$202 million 7.50% Senior Notes due 2019	NDC;	Noble-Cayman;
	Noble Drilling Services 6 LLC (“NDS6”)	Noble Holding (U.S.) Corporation (“NHC”);
		Noble Drilling Holding LLC (“NDH”)
$500 million 4.90% Senior Notes due 2020	NHIL	Noble-Cayman
$400 million 4.625% Senior Notes due 2021	NHIL	Noble-Cayman
$400 million 3.95% Senior Notes due 2022	NHIL	Noble-Cayman
$400 million 6.20% Senior Notes due 2040	NHIL	Noble-Cayman
$400 million 6.05% Senior Notes due 2041	NHIL	Noble-Cayman
$500 million 5.25% Senior Notes due 2042	NHIL	Noble-Cayman

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

Revision

As part of our worldwide asset consolidation completed in 2009, NDC received a limited partnership interest in one of our Other Non-Guarantor Subsidiaries of Noble. This limited partnership interest has historically been included as a component of Total Shareholder Equity and income attributable to this limited partnership interest has been included in Net Income Attributable to Noble Corporation in the Other Non-Guarantor Subsidiaries of Noble column in the condensed consolidating financial statements.

During the first quarter of 2013, we amended the presentation of this limited partnership interest in the Other Non-guarantor Subsidiaries of Noble column to correctly present it as a noncontrolling interest and to record the income attributable to NDC as Net Income Attributable to Noncontrolling Interests. We also made appropriate adjustments to the Consolidating Adjustments column. We concluded these errors were not material individually or in the aggregate to any of the previously issued financial statements taken as a whole. The following chart presents the impact of this change in presentation in the Other Non-Guarantor Subsidiaries of Noble and Consolidating Adjustments columns on the historical Condensed Consolidating Balance Sheet and Condensed Consolidating Statement of Income. The revisions below did not impact our Condensed Consolidating Statement of Cash Flows.

NOBLE CORPORATION (NOBLE-SWISS) AND SUBSIDIARIES

NOBLE CORPORATION (NOBLE-CAYMAN) AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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


	Other Non-Guarantor
	Subsidiaries of Noble						Consolidating Adjustments
	As reported			As adjusted			As reported			As adjusted
December 31, 2010
Income statement- Twelve months ended
Net income	$	1,023,782		$	1,023,782		$	(2,963,512	)	$	(2,963,512	)
Net income attributable to noncontrolling interests		(3	)		(41,889	)		—			41,886

Net income attributable to Noble Corporation	$	1,023,779		$	981,893		$	(2,963,512	)	$	(2,921,626	)

December 31, 2011
Income statement- Twelve months ended
Net income	$	634,128		$	634,128		$	(1,758,285	)	$	(1,758,285	)
Net loss attributable to noncontrolling interests		7,273			(15,808	)		—			23,081

Net income attributable to Noble Corporation	$	641,401		$	618,320		$	(1,758,285	)	$	(1,735,204	)

Balance Sheet
Total shareholder equity	$	9,853,129		$	9,483,809		$	(28,268,572	)	$	(27,899,252	)
Noncontrolling interests		691,331			1,060,651			—			(369,320	)

Total equity	$	10,544,460		$	10,544,460		$	(28,268,572	)	$	(28,268,572	)

March 31, 2012
Income statement- Three months ended
Net income	$	173,657		$	173,657		$	(591,588	)	$	(591,588	)
Net income attributable to noncontrolling interests		6,832			(1,196	)		—			8,028

Net income attributable to Noble Corporation	$	180,489		$	172,461		$	(591,588	)	$	(583,560	)

June 30, 2012
Income statement- Three months ended
Net income	$	253,086		$	253,086		$	(662,439	)	$	(662,439	)
Net income attributable to noncontrolling interests		(18,857	)		(29,201	)		—			10,344

Net income attributable to Noble Corporation	$	234,229		$	223,885		$	(662,439	)	$	(652,095	)

Income statement- Six months ended
Net income	$	426,743		$	426,743		$	(1,254,027	)	$	(1,254,027	)
Net income attributable to noncontrolling interests		(12,025	)		(30,397	)		—			18,372

Net income attributable to Noble Corporation	$	414,718		$	396,346		$	(1,254,027	)	$	(1,235,655	)

September 30, 2012
Income statement- Three months ended
Net income	$	211,597		$	211,597		$	(569,368	)	$	(569,368	)
Net income attributable to noncontrolling interests		(14,906	)		(22,246	)		—			7,340

Net income attributable to Noble Corporation	$	196,691		$	189,351		$	(569,368	)	$	(562,028	)

Income statement- Nine months ended
Net income	$	638,340		$	638,340		$	(1,823,395	)	$	(1,823,395	)
Net income attributable to noncontrolling interests		(26,931	)		(52,643	)		—			25,712

Net income attributable to Noble Corporation	$	611,409		$	585,697		$	(1,823,395	)	$	(1,797,683	)

NOBLE CORPORATION (NOBLE-SWISS) AND SUBSIDIARIES

NOBLE CORPORATION (NOBLE-CAYMAN) AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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


	Other Non-Guarantor
	Subsidiaries of Noble						Consolidating Adjustments
	As reported			As adjusted			As reported			As adjusted
December 31, 2012
Income statement- Twelve months ended
Net income	$	280,763		$	280,763		$	(1,891,202	)	$	(1,891,202	)
Net income attributable to noncontrolling interests		(33,793	)		(68,969	)		—			35,176

Net income attributable to Noble Corporation	$	246,970		$	211,794		$	(1,891,202	)	$	(1,856,026	)

Balance Sheet
Total shareholder equity	$	9,913,839		$	9,509,343		$	(29,719,135	)	$	(29,314,639	)
Noncontrolling interests		765,124			1,169,620			—			(404,496	)

Total equity	$	10,678,963		$	10,678,963		$	(29,719,135	)	$	(29,719,135	)

NOBLE CORPORATION (NOBLE-CAYMAN) AND SUBSIDIARIES

CONDENSED CONSOLIDATING BALANCE SHEET

September 30, 2013

(in thousands)


	Noble-		NHC and NDH										Subsidiaries			Consolidating
	Cayman		Combined			NDC			NHIL		NDS6		of Noble			Adjustments			Total
ASSETS
Current assets
Cash and cash equivalents	$	5	$	123		$	—		$	8	$	—	$	173,581		$	—		$	173,717
Accounts receivable		—		59,250			3,388			—		—		803,108			—			865,746
Taxes receivable		—		41,407			—			—		—		101,831			—			143,238
Prepaid expenses		—		749			8			—		—		48,572			—			49,329
Short-term notes receivable from affiliates		—		869,476			—			—		606,269		319,201			(1,794,946	)		—
Accounts receivable from affiliates		978,461		157,252			1,154,776			172,379		65,991		6,311,688			(8,840,547	)		—
Other current assets		—		4,418			196			—		—		129,390			—			134,004

Total current assets		978,466		1,132,675			1,158,368			172,387		672,260		7,887,371			(10,635,493	)		1,366,034

Property and equipment, at cost		—		2,518,896			77,253			—		—		15,973,482			—			18,569,631
Accumulated depreciation		—		(328,045	)		(61,592	)		—		—		(4,136,365	)		—			(4,526,002	)

Property and equipment, net		—		2,190,851			15,661			—		—		11,837,117			—			14,043,629

Notes receivable from affiliates		3,816,463		675,000			—			3,524,814		5,000		1,827,879			(9,849,156	)		—
Investments in affiliates		8,507,009		12,100,603			3,310,205			8,521,927		2,332,612		—			(34,772,356	)		—
Other assets		6,144		5,266			266			23,395		668		246,217			—			281,956

Total assets	$	13,308,082	$	16,104,395		$	4,484,500		$	12,242,523	$	3,010,540	$	21,798,584		$	(55,257,005	)	$	15,691,619

LIABILITIES AND EQUITY
Current liabilities
Short-term notes payables from affiliates	$	78,016	$	127,036		$	114,149		$	—	$	750,000	$	725,745		$	(1,794,946	)	$	—
Accounts payable		—		4,338			537			—		—		311,058			—			315,933
Accrued payroll and related costs		—		8,085			8,865			—		—		112,220			—			129,170
Accounts payable to affiliates		1,061,152		4,998,213			3,908			236,008		77,296		2,463,970			(8,840,547	)		—
Taxes payable		—		13,434			9			—		—		116,628			—			130,071
Other current liabilities		496		5,270			240			17,128		630		178,658			—			202,422

Total current liabilities		1,139,664		5,156,376			127,708			253,136		827,926		3,908,279			(10,635,493	)		777,596

Long-term debt		1,312,864		—			—			3,793,279		201,695		—			—			5,307,838
Notes payable to affiliates		2,557,787		586,979			—			975,000		811,000		4,918,390			(9,849,156	)		—
Deferred income taxes		—		—			15,731			—		—		171,917			—			187,648
Other liabilities		19,930		23,106			—			—		—		349,407			—			392,443

Total liabilities		5,030,245		5,766,461			143,439			5,021,415		1,840,621		9,347,993			(20,484,649	)		6,665,525

Commitments and contingencies
Total shareholder equity		8,277,837		10,337,934			4,341,061			7,221,108		1,169,919		11,261,974			(34,331,996	)		8,277,837
Noncontrolling interest		—		—			—			—		—		1,188,617			(440,360	)		748,257

Total equity		8,277,837		10,337,934			4,341,061			7,221,108		1,169,919		12,450,591			(34,772,356	)		9,026,094

Total liabilities and equity	$	13,308,082	$	16,104,395		$	4,484,500		$	12,242,523	$	3,010,540	$	21,798,584		$	(55,257,005	)	$	15,691,619

NOBLE CORPORATION (NOBLE-CAYMAN) AND SUBSIDIARIES

CONDENSED CONSOLIDATING BALANCE SHEET

December 31, 2012

(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	$	1,003	$	904		$	—		$	2	$	—	$	275,466		$	—		$	277,375
Accounts receivable		—		14,885			3,335			—		—		725,453			—			743,673
Taxes receivable		—		8,341			—			—		—		103,969			—			112,310
Prepaid expenses		—		396			9			—		—		40,827			—			41,232
Short-term notes receivable from affiliates		—		119,476			—			—		586,769		252,138			(958,383	)		—
Accounts receivable from affiliates		664,375		140,014			1,015,204			526,483		38,895		5,855,066			(8,240,037	)		—
Other current assets		235		639			196			—		—		121,579			—			122,649

Total current assets		665,613		284,655			1,018,744			526,485		625,664		7,374,498			(9,198,420	)		1,297,239

Property and equipment, at cost		—		2,735,223			76,428			—		—		14,123,496			—			16,935,147
Accumulated depreciation		—		(283,028	)		(58,411	)		—		—		(3,597,079	)		—			(3,938,518	)

Property and equipment, net		—		2,452,195			18,017			—		—		10,526,417			—			12,996,629

Notes receivable from affiliates		3,816,463		1,206,000			—			3,524,814		479,107		2,171,875			(11,198,259	)		—
Investments in affiliates		7,770,066		9,170,923			3,386,879			7,413,361		1,977,906		—			(29,719,135	)		—
Other assets		5,798		320			543			25,895		759		243,243			—			276,558

Total assets	$	12,257,940	$	13,114,093		$	4,424,183		$	11,490,555	$	3,083,436	$	20,316,033		$	(50,115,814	)	$	14,570,426

LIABILITIES AND EQUITY
Current liabilities
Short-term notes payables from affiliates	$	90,314	$	51,054		$	110,770		$	—	$	—	$	706,245		$	(958,383	)	$	—
Accounts payable		—		6,522			1,183			—		—		341,889			—			349,594
Accrued payroll and related costs		—		6,176			7,611			—		—		110,149			—			123,936
Accounts payable to affiliates		900,063		4,806,235			5,444			165,065		77,075		2,286,155			(8,240,037	)		—
Taxes payable		—		9,152			—			—		—		121,692			—			130,844
Other current liabilities		1,594		—			240			62,430		4,412		158,259			—			226,935

Total current liabilities		991,971		4,879,139			125,248			227,495		81,487		3,724,389			(9,198,420	)		831,309

Long-term debt		639,794		—			—			3,792,886		201,695		—			—			4,634,375
Notes payable to affiliates		2,840,287		648,475			—			975,000		1,342,000		5,392,497			(11,198,259	)		—
Deferred income taxes		—		—			15,731			—		—		210,314			—			226,045
Other liabilities		19,930		17,815			—			—		—		309,870			—			347,615

Total liabilities		4,491,982		5,545,429			140,979			4,995,381		1,625,182		9,637,070			(20,396,679	)		6,039,344

Commitments and contingencies
Total shareholder equity		7,765,958		7,568,664			4,283,204			6,495,174		1,458,254		9,509,343			(29,314,639	)		7,765,958
Noncontrolling interest		—		—			—			—		—		1,169,620			(404,496	)		765,124

Total equity		7,765,958		7,568,664			4,283,204			6,495,174		1,458,254		10,678,963			(29,719,135	)		8,531,082

Total liabilities and equity	$	12,257,940	$	13,114,093		$	4,424,183		$	11,490,555	$	3,083,436	$	20,316,033		$	(50,115,814	)	$	14,570,426

NOBLE CORPORATION (NOBLE-CAYMAN) AND SUBSIDIARIES

CONDENSED CONSOLIDATING STATEMENT OF INCOME

Three Months Ended September 30, 2013

(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	$	—		$	67,831		$	5,126		$	—		$	—		$	991,221		$	(23,060	)	$	1,041,118
Reimbursables		—			1,796			—			—			—			27,446			—			29,242
Labor contract drilling services		—			—			—			—			—			8,493			—			8,493
Other		—			—			—			—			—			28			—			28

Total operating revenues		—			69,627			5,126			—			—			1,027,188			(23,060	)		1,078,881

Operating costs and expenses
Contract drilling services		1,665			24,776			2,231			29,339			—			451,162			(23,060	)		486,113
Reimbursables		—			1,509			—			—			—			22,162			—			23,671
Labor contract drilling services		—			—			—			—			—			8,153			—			8,153
Depreciation and amortization		—			15,937			1,174			—			—			206,065			—			223,176
General and administrative		252			831			—			2,672			—			3,496			—			7,251
Loss on impairment		—			—			—			—			—			3,585			—			3,585
Gain on disposal of assets, net		—			—			—			—			—			(35,646	)		—			(35,646	)
Gain on contract settlements/extinguishments, net		(45,000	)		—			—			—			—			—			—			(45,000	)

Total operating costs and expenses		(43,083	)		43,053			3,405			32,011			—			658,977			(23,060	)		671,303

Operating income (loss)		43,083			26,574			1,721			(32,011	)		—			368,211			—			407,578
Other income (expense)
Equity earnings in affiliates, net of tax		301,048			189,686			40,619			330,102			(1,381,410	)		—			519,955			—
Interest expense, net of amounts capitalized		(34,941	)		(5,604	)		(503	)		(32,646	)		(14,998	)		(1,548,475	)		1,614,018			(23,149	)
Interest income and other, net		1,664			20,354			(7	)		44,809			1,524,744			22,869			(1,614,018	)		415

Income before income taxes		310,854			231,010			41,830			310,254			128,336			(1,157,395	)		519,955			384,844
Income tax provision		—			(51,021	)		—			—			—			(4,467	)		—			(55,488	)

Net Income		310,854			179,989			41,830			310,254			128,336			(1,161,862	)		519,955			329,356
Net income attributable to noncontrolling interests		—			—			—			—			—			(34,004	)		15,502			(18,502	)

Net income attributable to Noble Corporation		310,854			179,989			41,830			310,254			128,336			(1,195,866	)		535,457			310,854

Other comprehensive income, net		5,846			—			—			—			—			5,846			(5,846	)		5,846

Comprehensive income attributable to Noble Corporation	$	316,700		$	179,989		$	41,830		$	310,254		$	128,336		$	(1,190,020	)	$	529,611		$	316,700

NOBLE CORPORATION (NOBLE-CAYMAN) AND SUBSIDIARIES

CONDENSED CONSOLIDATING STATEMENT OF INCOME

Nine Months Ended September 30, 2013

(in thousands)


	Noble- Cayman			NHC and NDH Combined			NDC			NHIL			NDS6			Other Non-guarantor Subsidiaries of Noble			Consolidating Adjustments			Total
Operating revenues
Contract drilling services	$	—		$	201,101		$	15,135		$	—		$	—		$	2,795,505		$	(66,431	)	$	2,945,310
Reimbursables		—			5,117			—			—			—			73,559			—			78,676
Labor contract drilling services		—			—			—			—			—			43,150			—			43,150
Other		—			—			—			—			—			105			—			105

Total operating revenues		—			206,218			15,135			—			—			2,912,319			(66,431	)		3,067,241

Operating costs and expenses
Contract drilling services		3,600			61,079			5,842			79,188			—			1,364,841			(66,431	)		1,448,119
Reimbursables		—			4,332			—			—			—			56,962			—			61,294
Labor contract drilling services		—			—			—			—			—			29,804			—			29,804
Depreciation and amortization		—			46,120			3,377			—			—			591,662			—			641,159
General and administrative		1,544			4,845			1			20,788			1			10,503			—			37,682
Loss on impairment		—			—			—			—			—			3,585			—			3,585
Gain on disposal of assets, net		—			—			—			—			—			(35,646	)		—			(35,646	)
Gain on contract settlements/extinguishments, net		(45,000	)		—			—			—			—			(1,800	)		—			(46,800	)

Total operating costs and expenses		(39,856	)		116,376			9,220			99,976			1			2,019,911			(66,431	)		2,139,197

Operating income (loss)		39,856			89,842			5,915			(99,976	)		(1	)		892,408			—			928,044
Other income (expense)
Equity earnings in affiliates, net of tax		736,942			392,101			53,787			796,217			(1,177,957	)		—			(801,090	)		—
Interest expense, net of amounts capitalized		(105,720	)		(18,604	)		(1,842	)		(99,911	)		(38,388	)		(1,595,902	)		1,785,252			(75,115	)
Interest income and other, net		4,941			42,205			(7	)		129,601			1,537,410			72,285			(1,785,252	)		1,183

Income before income taxes		676,019			505,544			57,853			725,931			321,064			(631,209	)		(801,090	)		854,112
Income tax provision		—			(41,278	)		—			—			—			(83,954	)		—			(125,232	)

Net Income		676,019			464,266			57,853			725,931			321,064			(715,163	)		(801,090	)		728,880
Net income attributable to noncontrolling interests		—			—			—			—			—			(88,725	)		35,864			(52,861	)

Net income attributable to Noble Corporation		676,019			464,266			57,853			725,931			321,064			(803,888	)		(765,226	)		676,019

Other comprehensive income, net		4,866			—			—			—			—			4,866			(4,866	)		4,866

Comprehensive income attributable to Noble Corporation	$	680,885		$	464,266		$	57,853		$	725,931		$	321,064		$	(799,022	)	$	(770,092	)	$	680,885

NOBLE CORPORATION (NOBLE-CAYMAN) AND SUBSIDIARIES

CONDENSED CONSOLIDATING STATEMENT OF INCOME

Three Months Ended September 30, 2012

(in thousands)


	Noble- Cayman			NHC and NDH Combined			NDC			NHIL			NDS6			Other Non-guarantor Subsidiaries of Noble			Consolidating Adjustments			Total
Operating revenues
Contract drilling services	$	—		$	36,149		$	5,061		$	—		$	—		$	809,858		$	(17,856	)	$	833,212
Reimbursables		—			389			—			—			—			27,748			—			28,137
Labor contract drilling services		—			—			—			—			—			22,667			—			22,667
Other		—			—			—			—			—			16			—			16

Total operating revenues		—			36,538			5,061			—			—			860,289			(17,856	)		884,032

Operating costs and expenses
Contract drilling services		1,355			13,948			1,919			19,636			—			425,223			(17,856	)		444,225
Reimbursables		—			216			—			—			—			20,831			—			21,047
Labor contract drilling services		—			—			—			—			—			12,991			—			12,991
Depreciation and amortization		—			15,500			1,181			—			—			177,914			—			194,595
General and administrative		426			1,447			—			9,700			1			3,913			—			15,487

Total operating costs and expenses		1,781			31,111			3,100			29,336			1			640,872			(17,856	)		688,345

Operating income (loss)		(1,781	)		5,427			1,961			(29,336	)		(1	)		219,417			—			195,687
Other income (expense)
Equity earnings in affiliates, net of tax		162,311			69,069			36,463			172,364			129,161			—			(569,368	)		—
Interest expense, net of amounts capitalized		(30,496	)		(8,964	)		(852	)		(33,509	)		(11,832	)		(20,221	)		80,239			(25,635	)
Interest income and other, net		1,689			11,080			9			37,430			2,846			28,546			(80,239	)		1,361

Income before income taxes		131,723			76,612			37,581			146,949			120,174			227,742			(569,368	)		171,413
Income tax provision		—			(8,639	)		—			—			—			(16,145	)		—			(24,784	)

Net Income		131,723			67,973			37,581			146,949			120,174			211,597			(569,368	)		146,629
Net income attributable to noncontrolling interests		—			—			—			—			—			(22,246	)		7,340			(14,906	)

Net income attributable to Noble Corporation		131,723			67,973			37,581			146,949			120,174			189,351			(562,028	)		131,723

Other comprehensive income, net		3,384			—			—			—			—			3,384			(3,384	)		3,384

Comprehensive income attributable to Noble Corporation	$	135,107		$	67,973		$	37,581		$	146,949		$	120,174		$	192,735		$	(565,412	)	$	135,107

NOBLE CORPORATION (NOBLE-CAYMAN) AND SUBSIDIARIES

CONDENSED CONSOLIDATING STATEMENT OF INCOME

Nine Months Ended September 30, 2012

(in thousands)


	Noble- Cayman			NHC and NDH Combined			NDC			NHIL			NDS6			Other Non-guarantor Subsidiaries of Noble			Consolidating Adjustments			Total
Operating revenues
Contract drilling services	$	—		$	117,488		$	14,941		$	—		$	—		$	2,352,618		$	(57,288	)	$	2,427,759
Reimbursables		—			6,199			—			—			—			87,891			—			94,090
Labor contract drilling services		—			—			—			—			—			58,538			—			58,538
Other		—			—			—			—			—			1,190			(932	)		258

Total operating revenues		—			123,687			14,941			—			—			2,500,237			(58,220	)		2,580,645

Operating costs and expenses
Contract drilling services		3,794			42,642			5,529			56,048			—			1,231,176			(58,220	)		1,280,969
Reimbursables		—			5,641			—			—			—			70,977			—			76,618
Labor contract drilling services		—			—			—			—			—			34,070			—			34,070
Depreciation and amortization		—			45,577			3,278			—			—			499,416			—			548,271
General and administrative		1,237			4,258			—			28,137			1			11,331			—			44,964
Loss on impairment		—			—			—			—			—			18,345			—			18,345
Gain on contract settlements/extinguishments, net		—			(4,869	)		—			—			—			(28,386	)		—			(33,255	)

Total operating costs and expenses		5,031			93,249			8,807			84,185			1			1,836,929			(58,220	)		1,969,982

Operating income (loss)		(5,031	)		30,438			6,134			(84,185	)		(1	)		663,308			—			610,663
Other income (expense)
Equity earnings in affiliates, net of tax		515,132			358,234			92,343			583,122			274,564			—			(1,823,395	)		—
Interest expense, net of amounts capitalized		(76,396	)		(37,881	)		(3,040	)		(83,975	)		(31,020	)		(60,193	)		235,722			(56,783	)
Interest income and other, net		5,640			29,771			4			99,609			8,771			96,295			(235,722	)		4,368

Income before income taxes		439,345			380,562			95,441			514,571			252,314			699,410			(1,823,395	)		558,248
Income tax provision		—			(30,902	)		—			—			—			(61,070	)		—			(91,972	)

Net Income		439,345			349,660			95,441			514,571			252,314			638,340			(1,823,395	)		466,276
Net income attributable to noncontrolling interests		—			—			—			—			—			(52,643	)		25,712			(26,931	)

Net income attributable to Noble Corporation		439,345			349,660			95,441			514,571			252,314			585,697			(1,797,683	)		439,345

Other comprehensive income, net		2,244			—			—			—			—			2,244			(2,244	)		2,244

Comprehensive income attributable to Noble Corporation	$	441,589		$	349,660		$	95,441		$	514,571		$	252,314		$	587,941		$	(1,799,927	)	$	441,589

NOBLE CORPORATION (NOBLE-CAYMAN) AND SUBSIDIARIES

CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS

Nine Months Ended September 30, 2013

(in thousands)


	Noble- Cayman			NHC and NDH Combined			NDC			NHIL			NDS6			Other Non-guarantor Subsidiaries of Noble			Consolidating Adjustments			Total
Cash flows from operating activities
Net cash from operating activities	$	(79,174	)	$	46,344		$	8,285		$	(113,088	)	$	1,495,330		$	(144,753	)	$	—		$	1,212,944

Cash flows from investing activities
New construction and capital expenditures		—			(1,070,669	)		(559	)		—			—			(719,659	)		—			(1,790,887	)
Proceeds from disposal of assets		—			—			—			—			—			61,000			—			61,000
Notes receivable from affiliates		—			—			—			—			—			294,798			(294,798	)		—

Net cash from investing activities		—			(1,070,669	)		(559	)		—			—			(363,861	)		(294,798	)		(1,729,887	)

Cash flows from financing activities
Net change in borrowings outstanding on bank credit facilities		973,055			—			—			—			—			—			—			973,055
Repayment of long-term debt		(300,000	)		—			—			—			—			—			—			(300,000	)
Financing costs on credit facilities		(2,432	)		—			—			—			—			—			—			(2,432	)
Dividends paid to joint venture partner		—			—			—			—			—			(69,728	)		—			(69,728	)
Distributions to parent company, net		(187,610	)		—			—			—			—			—			—			(187,610	)
Advances (to) from affiliates		(110,039	)		1,023,544			(7,726	)		113,094			(1,495,330	)		476,457			—			—
Notes payable to affiliates		(294,798	)		—			—			—			—			—			294,798			—

Net cash from financing activities		78,176			1,023,544			(7,726	)		113,094			(1,495,330	)		406,729			294,798			413,285

Net change in cash and cash equivalents		(998	)		(781	)		—			6			—			(101,885	)		—			(103,658	)
Cash and cash equivalents, beginning of period		1,003			904			—			2			—			275,466			—			277,375

Cash and cash equivalents, end of period	$	5		$	123		$	—		$	8		$	—		$	173,581		$	—		$	173,717

NOBLE CORPORATION (NOBLE-CAYMAN) AND SUBSIDIARIES

CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS

Nine Months Ended September 30, 2012

(in thousands)


	Noble- Cayman			NHC and NDH Combined			NDC			NHIL			NDS6			Other Non-guarantor Subsidiaries of Noble			Consolidating Adjustments			Total
Cash flows from operating activities
Net cash from operating activities	$	(59,614	)	$	7,563		$	8,989		$	(107,638	)	$	(25,942	)	$	1,133,499		$	—		$	956,857

Cash flows from investing activities
New construction and capital expenditures		—			(499,141	)		(1,040	)		—			—			(940,534	)		—			(1,440,715	)
Notes receivable from affiliates		—			—			—			(1,188,287	)		—			—			1,188,287			—

Net cash from investing activities		—			(499,141	)		(1,040	)		(1,188,287	)		—			(940,534	)		1,188,287			(1,440,715	)

Cash flows from financing activities
Net change in borrowings outstanding on bank credit facilities		(630,000	)		—			—			—			—			—			—			(630,000	)
Proceeds from issuance of senior notes, net		—			—			—			1,186,636			—			—			—			1,186,636
Contributions from joint venture partner		—			—			—			—			—			40,000			—			40,000
Financing costs on credit facilities		(5,014	)		—			—			—			—			—			—			(5,014	)
Distributions to parent company, net		(129,139	)		—			—			—			—			—			—			(129,139	)
Advances (to) from affiliates		(364,666	)		491,628			(7,949	)		109,308			25,942			(254,263	)		—			—
Notes payable to affiliates		1,188,287			—			—			—			—			—			(1,188,287	)		—

Net cash from financing activities		59,468			491,628			(7,949	)		1,295,944			25,942			(214,263	)		(1,188,287	)		462,483

Net change in cash and cash equivalents		(146	)		50			—			19			—			(21,298	)		—			(21,375	)
Cash and cash equivalents, beginning of period		146			385			—			—			—			234,525			—			235,056

Cash and cash equivalents, end of period	$	—		$	435		$	—		$	19		$	—		$	213,227		$	—		$	213,681

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 September 30, 2013, and our results of operations for the three and nine months ended September 30, 2013 and 2012. 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, 2012 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 contract backlog, fleet status, our financial position, business strategy, timing or results of acquisitions or dispositions, the pending migration to the United Kingdom, a potential separation and spin-off of our standard specification business (including form, timing and fleet composition), repayment of debt, borrowings under our credit facilities or other instruments, completion, delivery dates and acceptance of our newbuild rigs, future capital expenditures, contract commitments, dayrates, contract commencements, extension or renewals, contract tenders, the outcome of any dispute, litigation, audit or investigation, plans and objectives of management for future operations, foreign currency requirements, results of joint ventures, indemnity and other contract claims, construction and upgrade of rigs, industry conditions, access to financing, impact of competition, governmental regulations and permitting, availability of labor, worldwide economic conditions, taxes and tax rates, indebtedness covenant compliance, dividends and distributable reserves, and timing for compliance with any new regulations are forward-looking statements. When used in this report, the words “anticipate,” “believe,” “estimate,” “expect,” “intend,” “may,” “plan,” “project,” “should” and similar expressions are intended to be among the statements that identify forward-looking statements. Although we believe that the expectations reflected in such forward-looking statements are reasonable, we cannot assure you that such expectations will prove to be correct. These 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, the inability to consummate a potential spin-off transaction or change in corporate domicile or the inability to realize the benefits of such transactions, 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, 2012, our Quarterly Reports on Form 10-Q 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-Swiss is a leading offshore drilling contractor for the oil and gas industry. We perform contract drilling services with our fleet of 79 mobile offshore drilling units located worldwide. We also own one floating production storage and offloading unit. Currently, our fleet consists of 14 semisubmersibles, 14 drillships, 49 jackups and two submersibles. At September 30, 2013, we had nine units under construction as follows:

•

three dynamically positioned, ultra-deepwater, harsh environment drillships; and

•

six high-specification heavy-duty, harsh environment jackups.

Our fleet is deployed globally in oil and gas producing regions. Noble and its predecessors have been engaged in the contract drilling of oil and gas wells since 1921.

Migration to the United Kingdom

In October 2013, our shareholders approved the previously announced proposed corporate reorganization transaction (the “Transaction”) of Noble-Swiss and the group of companies it controls. The Transaction will merge Noble-Swiss into a newly formed subsidiary incorporated under English law, Noble Corporation plc. (“Noble-UK”), which will become our new holding company. The Transaction will effectively change the place of incorporation of our publicly traded parent company from Switzerland to the United Kingdom. Subject to the completion of certain closing requirements, the Transaction is expected to be completed in November 2013.

Proposed Spin-off Transaction

The plan approved by the Board of Directors involves the separation of the standard specification business through the distribution of the shares of the new company to Noble-Swiss shareholders in a spin-off that would be tax-free to shareholders. Subject to business, market, regulatory and other considerations, the Separation is expected to be preceded by an initial public offering (“IPO”) of up to 20 percent of the shares of the new company. The Separation is subject to several conditions, including final approval of our Board of Directors and approval of our shareholders, which we expect to seek in the second quarter of 2014. We have received a private letter ruling from the U.S. Internal Revenue Service stating that the Separation is expected to qualify as a tax-free transaction under sections 368(a)(1)(D) and 355, and related provisions of the Internal Revenue Code of 1986, as amended. We anticipate that the spin-off would be completed by the end of 2014. We expect that the net proceeds received by the new company from borrowings, and the IPO if undertaken, would be used to repay indebtedness to Noble incurred by the new company. We expect that, in turn, Noble would use such proceeds to repay outstanding indebtedness of Noble-Cayman and its subsidiaries. There can be no assurance that our proposed plan will lead to an IPO or spin-off of the new company or any other transaction, or that if any transaction is pursued, that it will be consummated.

Outlook

The business environment for the first nine months of 2013 has remained positive, with steady to higher drilling activity, especially for ultra-deepwater and jackup rigs. The overall contractual environment has been positive and underlying commodity prices have been stable, with Brent crude oil averaging $107 per barrel in the third quarter. The stability of crude oil prices remains a key factor supporting customer exploration and production spending, which has positively influenced both shallow and deepwater drilling activity. Customer drilling activity, which continues to expand globally, has resulted in rig supply constraints in some regions, leading customers to contract rigs for longer durations.

We believe both the short-term and long-term outlook for the ultra-deepwater market remains positive. Market dayrates for new ultra-deepwater units have consistently remained above $500,000 throughout the year, which is higher than rates seen in recent years. A number of fixtures have exceeded $550,000, and in certain cases even exceeded $600,000. Our market analysis indicates that availability of ultra-deepwater units in 2014 continues to decrease. We have seen some early indications of softening in deepwater rates, as some units in the global deepwater fleet transition to new contracts. The softening dayrate environment is especially noticeable in older deepwater rigs that lack the technical features found on the new ultra-deepwater units delivered in recent quarters.

Utilization rates for jackups improved in most regions during the first nine months of 2013. While there is differentiation in the jackup market, with high-specification units having utilization rates and dayrates exceeding those for units that entered service before 2000, we continue to see improvement in the standard capability jackup market with strong utilization and rising dayrates in most regions.

Despite the positive market conditions noted above, global economic risk remains. In addition, political instability, especially in the Middle East and North Africa, has further created uncertainty within the marketplace. While these factors create a potential risk for postponement or cancellation of some drilling opportunities, we believe the outlook for the offshore drilling industry remains positive.

Results and Strategy

Our goal is to be the preferred offshore drilling contractor for the oil and gas industry based upon the following core principles:

•

operate in a manner that provides a safe working environment for our employees while protecting the environment and our assets;

•

provide an attractive investment vehicle for our shareholders; and

•

deliver exceptional customer service through a large, diverse and technically advanced fleet operated by competent personnel.

Our business strategy also focuses on the active expansion of our worldwide deepwater and high specification jackup capabilities through acquisitions, upgrades and modifications, the deployment of our drilling assets in important oil and gas producing areas throughout the world and potential divestitures of our standard specification drilling units.

We have actively expanded our offshore drilling, deepwater and high specification jackup capabilities in recent years through the construction and acquisition of rigs. As part of this technical and operational expansion, we plan to continue pursuing opportunities to upgrade our fleet to achieve greater technological capability, which we believe will lead to increased drilling efficiencies and the ability to complete the increasingly more complex well programs required by our customers. During the first nine months of 2013, we continued to execute our newbuild program, completing the following milestones:

•

we commenced operations on the Noble Don Taylor, a dynamically positioned, ultra-deepwater, harsh environment drillship, under a long-term contract in the U.S. Gulf of Mexico in the third quarter of 2013;

•

we commenced operations on the Noble Globetrotter II, a dynamically positioned, ultra-deepwater, harsh environment Globetrotter-class drillship, under a long-term contract in West Africa in the third quarter of 2013;

•

we completed construction of the Noble Mick O’Brien, a high-specification, heavy duty, harsh environment jackup that left the shipyard during the third quarter of 2013 and is scheduled to complete acceptance testing and begin operations under a five-month contract in the Middle East in the fourth quarter of 2013;

•

we continued construction of three additional dynamically positioned, ultra-deepwater, harsh environment drillships at Hyundai Heavy Industries Co. Ltd.;

•

we continued construction of five high-specification, heavy duty, harsh environment jackups; and

•

we began construction of one ultra-high specification jackup.

Total capital expenditures, including expenditures related to our newbuild program, were $1.7 billion for the nine months ended September 30, 2013.

Demand for our services is a function of the worldwide supply of mobile offshore drilling units. In recent years, there has been a significant expansion of industry supply of both jackups and ultra-deepwater units, many of which are currently under construction without a contract. The introduction of non-contracted newbuild rigs into the marketplace will increase the supply of rigs which compete for drilling service contracts, and could negatively impact the dayrates we are able to achieve. Our strategy on newbuild construction has generally been to expand our drilling fleet in connection with a long-term drilling contract that covers a substantial portion of our capital investment and provides an acceptable return on our capital employed. In response to the addition of a significant number of new, technologically advanced units in the global fleet and changes in customer requirements and preferences, we determined that in order to maintain long-term competitiveness, it was both necessary and desirable for us to engage in building high specification jackups and floating units on a speculative basis. Of the units we currently have under construction, two of the heavy-duty, harsh environment jackups are being constructed without customer contracts. We will continue our efforts to secure contracts for these units, and believe that we will have these rigs contracted prior to their shipyard completion. We may continue to conduct new speculative building in the future.

From time to time, we evaluate individual rig transactions and business combinations with other parties where we believe we can create shareholder value. We will continue to consider business opportunities that promote our growth strategy and optimize shareholder value.

While we cannot predict the future level of demand or dayrates for our drilling services or future conditions in the offshore contract drilling industry, we believe we are well positioned within the industry and that our newbuild program will further strengthen our position, especially in deepwater drilling.

Contract Drilling Services Backlog

We maintain a backlog (as defined below) of commitments for contract drilling services. The following table sets forth, as of September 30, 2013, 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		2013 ⁽¹⁾			2014			2015			2016			2017-2023
	(In millions)
Contract Drilling Services Backlog
Semisubmersibles/Drillships^{(2) (6)}	$	12,242	$	783		$	3,012		$	2,661		$	1,876		$	3,910
Jackups/Submersibles ⁽³⁾		3,976		393			1,555			942			421			665

Total ⁽⁴⁾	$	16,218	$	1,176		$	4,567		$	3,603		$	2,297		$	4,575

Percent of Available Operating Days Committed ⁽⁵⁾				80	%		71	%		42	%		20	%		5	%

(1)	Represents a three-month period beginning October 1, 2013.

(2)

Our drilling contracts with Petróleo 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/drillships operating offshore Brazil for Petrobras, we have included in our backlog an amount equal to 75 percent of potential performance bonuses for such semisubmersibles. Our backlog for semisubmersibles/drillships includes approximately $151 million attributable to these performance bonuses.

The drilling contracts with Royal Dutch Shell plc. (“Shell”) for the Noble Globetrotter I, Noble Globetrotter II, Noble Jim Thompson, Noble Clyde Boudreaux, Noble Max Smith, Noble Don Taylor and Noble Jim Day 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 50 percent of the potential performance bonuses for these rigs. Our backlog for these rigs includes approximately $395 million attributable to these performance bonuses.

(3)

Petróleos Mexicanos (“Pemex”) has the ability to cancel its drilling contracts on 30 days or less notice without Pemex’s making an early termination payment. As of September 30, 2013, we had eleven rigs contracted to Pemex in Mexico, and our backlog includes approximately $562 million related to such contracts.

(4)

Our drilling contracts generally provide the customer an early termination right in the event we fail to meet certain performance standards, including downtime thresholds. For example, Petrobras has the right to terminate its contracts in the event of excessive downtime. While we have exceeded downtime thresholds in the past on certain rigs contracted with Petrobras, we have not received any notification concerning contract cancellations nor do we anticipate receiving any such notifications.

(5)	Percentages take into account additional capacity from the estimated dates of deployment of our newbuild rigs that are scheduled to commence operations during 2013 through 2016.

(6)

Noble and a subsidiary of Shell are involved in joint ventures that own and operate both the Noble Bully I and the Noble Bully II. Under the terms of the joint venture agreements, each party has an equal 50 percent share in both vessels. As of September 30, 2013, the combined amount of backlog for these rigs totals $2.0 billion, all of which is included in our backlog. Noble’s net interest in the backlog for these rigs is $1.0 billion.

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

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

As of September 30, 2013, we estimate Shell and Petrobras represented approximately 49 percent and 10 percent, respectively, of our backlog.

Nigerian Operations

In April 2010, the Nigerian Oil and Gas Industry Content Development Bill was signed into law. The law is designed to create Nigerian content in operations and transactions within the Nigerian oil and gas industry. The law sets forth certain requirements for the utilization of Nigerian human resources and goods and services in oil and gas projects and creates a Nigerian Content Development and Monitoring Board to implement and monitor the law and develop regulations pursuant to the law. The Nigerian Content Development and Monitoring Board has indicated that it will require all non-Nigerian offshore drilling companies to reorganize their local operations to include Nigerian indigenous minority interests in the operating assets and to obtain the approval of the Nigerian Content Development and Monitoring Board for future work in Nigeria. The law also establishes a Nigerian Content Development Fund to fund the implementation of the law, and requires that one percent of the value of every contract awarded in the Nigerian oil and gas industry be paid into the fund. We cannot predict what impact the new law may have on our existing or future operations in Nigeria, but the effect on our operations there could be significant.

Results of Operations

For the Three Months Ended September 30, 2013 and 2012

Net income attributable to Noble-Swiss for the three months ended September 30, 2013 (the “Current Quarter”) was $282 million, or $1.10 per diluted share, on operating revenues of $1.1 billion, compared to net income for the three months ended September 30, 2012 (the “Comparable Quarter”) of $115 million, or $0.45 per diluted share, on operating revenues of $884 million.

As a result of Noble-Swiss conducting all of its business through Noble-Cayman and its subsidiaries, the financial position and results of operations for Noble-Cayman, and the reasons for material changes in the amount of revenue and expense items between 2013 and 2012, are the same as the information presented below regarding Noble-Swiss in all material respects, except operating income for Noble-Cayman for the three months ended September 30, 2013 and 2012 was $29 million and $17 million higher than operating income for Noble-Swiss for the same period. The operating income difference is primarily a result of executive costs directly attributable to Noble-Swiss for operations support and stewardship related services.

Rig Utilization, Operating Days and Average Dayrates

Operating results for our contract drilling services segment are dependent on three primary metrics — rig utilization, operating days and dayrates. The following table sets forth the average rig utilization, operating days and average dayrates for our rig fleet for the three months ended September 30, 2013 and 2012:


	Average Rig						Operating							Average
	Utilization (1)						Days (2)							Dayrates
	Three Months Ended						Three Months Ended							Three Months Ended
	September 30,						September 30,							September 30,
	2013			2012			2013		2012		% Change			2013		2012		% Change
Jackups		94	%		83	%		3,635		3,285		11	%	$	112,414	$	97,857		15	%
Semisubmersibles		79	%		83	%		1,012		1,067		-5	%		380,048		331,900		15	%
Drillships		79	%		73	%		702		590		19	%		353,278		267,166		32	%
Other		0	%		0	%		—		—		—			—		—		—

Total		85	%		78	%		5,349		4,942		8	%	$	194,645	$	168,608		15	%

(1)	Information reflects our policy of reporting on the basis of the number of rigs in our fleet, excluding newbuild rigs not placed in service.

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

Contract Drilling Services

The following table sets forth the operating results for our contract drilling services segment for the three months ended September 30, 2013 and 2012 (in thousands):


	Three Months Ended
	September 30,					Change
	2013			2012		$			%
Operating revenues:
Contract drilling services	$	1,041,118		$	833,212	$	207,906			25	%
Reimbursables (1)		28,840			27,087		1,753			6	%
Other		28			16		12			75	%

	$	1,069,986		$	860,315	$	209,671			24	%

Operating costs and expenses:
Contract drilling services	$	488,250		$	449,125	$	39,125			9	%
Reimbursables (1)		23,281			20,039		3,242			16	%
Depreciation and amortization		219,695			191,638		28,057			15	%
General and administrative		33,346			26,228		7,118			27	%
Loss on impairment		3,585			—		3,585				**
Gain on disposal of assets, net		(35,646	)		—		(35,646	)			**
Gain on contract settlements/extinguishments, net		(45,000	)		—		(45,000	)			**

		687,511			687,030		481			0	%

Operating income	$	382,475		$	173,285	$	209,190			121	%

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

**	Not a meaningful percentage.

Operating Revenues. Changes in contract drilling services revenues for the Current Quarter as compared to the Comparable Quarter were driven by increases in both average dayrates and operating days. The 15 percent increase in average dayrates increased revenue by $139 million while the 8 percent increase in operating days increased revenues by approximately $69 million.

The increase in contract drilling services revenues relates to our drillships, jackups and semisubmersibles, which generated approximately $90 million, $87 million and $31 million more revenue, respectively, in the Current Quarter.

The 32 percent increase in drillship average dayrates resulted in a $60 million increase in revenues, and the 19 percent increase in drillship operating days resulted in a $30 million increase in revenues from the Comparable Quarter. The increase in both average dayrates and operating days was the result of the Noble Don Taylor and Noble Globetrotter II, which commenced their contracts with Shell in August 2013 and September 2013, respectively. Additionally, the Noble Leo Segerius operated during the Current Quarter after being off contract during the Comparable Quarter.

The 15 percent increase in jackup average dayrates resulted in a $53 million increase in revenues, and the 11 percent increase in jackup operating days resulted in a $34 million increase in revenues from the Comparable Quarter. The increase in average dayrates resulted from improved market conditions in the global shallow water market. The increase in utilization is primarily related to certain rigs in the Middle and Far East, which were operating during the Current Quarter but not in the Comparable Quarter.

The 15 percent increase in semisubmersibles average dayrates resulted in a $49 million increase in revenues from the Comparable Quarter. The increase in average dayrates resulted from favorable dayrate changes on new contracts across the semisubmersible fleet, as well as the Noble Max Smith and the Noble Clyde Boudreaux, which operated during the Current Quarter after being off contract for part the Comparable Quarter. The 5 percent decline in operating days resulted in an $18 million decline in revenues driven by downtime on the Noble Paul Romano and the Noble Homer Ferrington during the Current Quarter.

Operating Costs and Expenses. Contract drilling services operating costs and expenses increased $39 million for the Current Quarter as compared to the Comparable Quarter. A portion of the increase was due to the crew-up and operating expenses for the recently completed newbuild drillships, which added approximately $18 million in expenses during the Current Quarter. Excluding the additional expenses related to these newbuilds, our contract drilling costs increased $21 million in the Current Quarter from the Comparable Quarter. This change was primarily driven by a $15 million increase in labor costs, a $13 million increase in shorebase support and an $8 million increase in mobilization due to the amortization of certain rig moves and the demobilization of rigs primarily in Mexico, partially offset by a $14 million decrease in repair and maintenance and a $1 million decrease in other miscellaneous costs.

The increase in depreciation and amortization in the Current Quarter from the Comparable Quarter was primarily attributable to assets placed in service, including the Noble Globetrotter I, Noble Don Taylor and Noble Globetrotter II.

Loss on impairment during the Current Quarter was related to our two cold stacked submersible rigs arising from the potential disposition of these assets to an unrelated third party.

Gain on disposal of assets during the Current Quarter was attributable to the sale of the Noble Lewis Dugger to an unrelated third party in Mexico.

Gain on contract settlements/extinguishments during the Current Quarter was attributable to the settlement of all claims against the former shareholders of FDR Holdings, Ltd., which we acquired in July 2010, relating to alleged breaches of various representations and warranties contained in the purchase agreement.

Other

The following table sets forth the operating results for our other services for the three months ended September 30, 2013 and 2012:


	Three Months Ended
	September 30,					Change
	2013			2012		$			%
Operating revenues:
Labor contract drilling services	$	8,493		$	22,667	$	(14,174	)		-63	%
Reimbursables (1)		402			1,050		(648	)		-62	%

	$	8,895		$	23,717	$	(14,822	)		-62	%

Operating costs and expenses:
Labor contract drilling services	$	8,153		$	12,991	$	(4,838	)		-37	%
Reimbursables (1)		390			1,008		(618	)		-61	%
Depreciation and amortization		4,016			3,449		567			16	%
General and administrative		430			630		(200	)		-32	%

		12,989			18,078		(5,089	)		-28	%

Operating income (loss)	$	(4,094	)	$	5,639	$	(9,733	)			**

(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 decrease in both revenue and expense primarily relates to the cancellation of a project with our customer, Shell, for one of its rigs that was operating under a labor contract in Alaska. The project was cancelled on March 31, 2013.

Other Income and Expenses

Interest Expense, net of amount capitalized. Interest expense, net of amount capitalized, was $2 million lower in the Current Quarter as compared to the Comparable Quarter. The decrease is a result of the repayment of our 5.875 percent senior notes in June 2013 using proceeds from our commercial paper program, which are at a lower interest rate.

Income Tax Provision. Our income tax provision increased $31 million in the Current Quarter, of which $15 million is related to the tax on the sale of the Noble Lewis Dugger. Excluding the sale of the Noble Lewis Dugger, the increase in in our income tax provision was driven by higher pre-tax income, which increased our income tax provision by $27 million. This was partially offset by a lower tax rate in the Current Quarter as a result of favorable changes in the geographic mix of pre-tax income and the recognition of certain discrete benefits during the Current Quarter.

For the Nine Months Ended September 30, 2013 and 2012

Net income attributable to Noble-Swiss for the nine months ended September 30, 2013 (the “Current Period”) was $609 million, or $2.37 per diluted share, on operating revenues of $3.1 billion, compared to net income for the nine months ended September 30, 2012 (the “Comparable Period”) of $395 million, or $1.55 per diluted share, on operating revenues of $2.6 billion.

As a result of Noble-Swiss conducting all of its business through Noble-Cayman and its subsidiaries, the financial position and results of operations for Noble-Cayman, and the reasons for material changes in the amount of revenue and expense items between 2013 and 2012, are the same as the information presented below regarding Noble-Swiss in all material respects, except operating income for Noble-Cayman for the nine months ended September 30, 2013 and 2012 was $66 million and $44 million higher than operating income for Noble-Swiss for the same period. The operating income difference is primarily a result of executive costs directly attributable to Noble-Swiss for operations support and stewardship related services.

Rig Utilization, Operating Days and Average Dayrates


	Average Rig						Operating							Average
	Utilization (1)						Days (2)							Dayrates
	Nine Months Ended						Nine Months Ended							Nine Months Ended
	September 30,						September 30,							September 30,
	2013			2012			2013		2012		% Change			2013		2012		% Change
Jackups		93	%		80	%		10,826		9,447		15	%	$	111,414	$	95,333		17	%
Semisubmersibles		79	%		86	%		3,036		3,286		-8	%		356,396		345,530		3	%
Drillships		80	%		64	%		2,008		1,344		49	%		327,336		291,448		12	%
Other		0	%		0	%		—		—		—			—		—		—

Total		84	%		76	%		15,870		14,077		13	%	$	185,589	$	172,466		8	%

(1)	Information reflects our policy of reporting on the basis of the number of rigs in our fleet, excluding newbuild rigs not placed in service.

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

Contract Drilling Services

The following table sets forth the operating results for our contract drilling services segment for the nine months ended September 30, 2013 and 2012 (in thousands):


	Nine Months Ended
	September 30,						Change
	2013			2012			$			%
Operating revenues:
Contract drilling services	$	2,945,310		$	2,427,759		$	517,551			21	%
Reimbursables (1)		77,551			91,913			(14,362	)		-16	%
Other		105			258			(153	)		-59	%

	$	3,022,966		$	2,519,930		$	503,036			20	%

Operating costs and expenses:
Contract drilling services	$	1,464,320		$	1,292,638		$	171,682			13	%
Reimbursables (1)		60,219			74,519			(14,300	)		-19	%
Depreciation and amortization		631,396			539,698			91,698			17	%
General and administrative		84,673			73,907			10,766			15	%
Loss on impairment		3,585			12,710			(9,125	)			**
Gain on disposal of assets, net		(35,646	)		—			(35,646	)			**
Gain on contract settlements/extinguishments, net		(46,800	)		(33,255	)		(13,545	)		41	%

		2,161,747			1,960,217			201,530			10	%

Operating income	$	861,219		$	559,713		$	301,506			54	%

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

**	Not a meaningful percentage.

Operating Revenues. Changes in contract drilling services revenues for the Current Period as compared to the Comparable Period were driven by increases in both operating days and average dayrates. The 13 percent increase in operating days increased revenue by $309 million while the 8 percent increase in average dayrates increased revenues by approximately $209 million.

The change in contract drilling services revenues relates to our jackups and drillships, which generated approximately $305 million and $266 million more revenue, respectively, in the Current Period. These amounts were offset by decreases in revenues from our semisubmersibles, which declined $53 million from the Comparable Period.

The 17 percent increase in jackup average dayrates resulted in a $174 million increase in revenues, which was coupled with a 15 percent increase in operating days, resulting in a $131 million increase in revenues from the Comparable Period. The increase in average dayrates resulted from improved market conditions in the global shallow water market. Additionally, revenue of $18 million was recognized in connection with the cancellation of a contract by our customer on the Noble Houston Colbert. The increase in utilization primarily related to rigs in Mexico and the Middle East, which experienced increased operating days during the Current Period.

The increase in drillship revenues was driven by a 49 percent increase in operating days and a 12 percent increase in average dayrates, resulting in a $194 million and a $72 million increase in revenues, respectively, from the Comparable Period. The increase in both average dayrates and operating days was the result of the Noble Bully I, Noble Bully II, Noble Globetrotter I, Noble Globetrotter II and the Noble Don Taylor, which commenced their contracts with Shell in March 2012, April 2012, July 2012, August 2013 and September 2013, respectively. Additionally, the Noble Duchess and the Noble Leo Segerius operated during the Current Period after being off contract during the Comparable Period. These increases were partially offset by the Noble Roger Eason, which was in the shipyard during the Current Period to undergo its reliability upgrade project.

The decrease in semisubmersible revenues of $53 million primarily relates to the Noble Paul Romano and the Noble Homer Ferrington, which were off contract during the Current Period but operated during the Comparable Period, coupled with downtime on the Noble Paul Wolff and the Noble Therald Martin during the Current Period. These decreases were partially offset by favorable dayrate changes on new contracts across the semisubmersible fleet, as well as the Noble Max Smith, which experienced full utilization during the Current Period after being off contract during the Comparable Period.

Operating Costs and Expenses. Contract drilling services operating costs and expenses increased $172 million for the Current Period as compared to the Comparable Period. A portion of the increase was due to the crew-up and operating expenses for the recently completed newbuild drillships, which added approximately $82 million in expenses during the Current Period. Excluding the additional expenses related to these rigs, our contract drilling costs increased $90 million in the Current Period from the Comparable Period. This change was primarily driven by a $50 million increase in labor, the majority of which is due to rigs returning to work during the Current Period and a $50 million increase related to shorebase support, partially offset by a $10 million decrease in mobilization due to the amortization of certain rig moves and the demobilization of rigs primarily in the North Sea and Mexico.

The increase in depreciation and amortization in the Current Period from the Comparable Period was primarily attributable to assets placed in service, including the Noble Bully I, Noble Bully II, Noble Globetrotter I, Noble Don Taylor and Noble Globetrotter II.

Loss on impairment during the Comparable Period related to an impairment charge on our submersible fleet, primarily as a result of the declining market for drilling services for this rig type. During the Current Period, we recorded an additional impairment charge of approximately $4 million on our two cold stacked submersible rigs arising from the potential disposition of these assets to an unrelated third party.

Gain on disposal of assets during the Current Period was attributable to the sale of the Noble Lewis Dugger to an unrelated third party in Mexico.

Gain on contract settlements/extinguishments during the Current Period was attributable to the settlement of all claims against the former shareholders of FDR Holdings, Ltd., which we acquired in July 2010, relating to alleged breaches of various representations and warranties contained in the purchase agreement. During the Comparable Period, we recognized a $28 million gain on the settlement of an action with certain vendors for damages sustained during Hurricane Ike. Additionally, we recognized a $5 million gain from a claims settlement on the Noble David Tinsley, which had experienced a “punch-through” while being positioned on location in 2009.

Other

The following table sets forth the operating results for our other services for the nine months ended September 30, 2013 and 2012:


	Nine Months Ended
	September 30,				Change
	2013		2012		$			%
Operating revenues:
Labor contract drilling services	$	43,150	$	58,538	$	(15,388	)		-26	%
Reimbursables (1)		1,125		2,177		(1,052	)		-48	%

	$	44,275	$	60,715	$	(16,440	)		-27	%

Operating costs and expenses:
Labor contract drilling services	$	29,804	$	34,070	$	(4,266	)		-13	%
Reimbursables (1)		1,075		2,099		(1,024	)		-49	%
Depreciation and amortization		11,060		10,081		979			10	%
General and administrative		1,523		1,481		42			3	%
Loss on impairment		—		5,635		(5,635	)			**

		43,462		53,366		(9,904	)		-19	%

Operating income	$	813	$	7,349	$	(6,536	)			**

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

**	Not a meaningful percentage.

Operating Revenues and Costs and Expenses. The change in both revenue and expense primarily relates to the cancellation of a project with our customer, Shell, for one of its rigs operating under a labor contract in Alaska. The project was cancelled on March 31, 2013.

Loss on impairment during the Comparable Period related to an impairment charge on certain corporate assets, as a result of a declining market for, and the potential disposal of, such assets.

Other Income and Expenses

Interest Expense, net of amount capitalized. Interest expense, net of amount capitalized, increased $18 million in the Current Period as compared to the Comparable Period. The increase is a result of lower capitalized interest in the Current Period as compared to the Comparable Period due primarily to the completion of construction on five of our newbuild drillships, coupled with increased borrowings outstanding under our credit facilities and commercial paper program. During the Current Period, we capitalized approximately 55 percent of total interest charges versus approximately 66 percent during the Comparable Period.

Income Tax Provision. Our income tax provision increased $34 million in the Current Period, of which $15 million is related to the tax on the sale of the Noble Lewis Dugger. Excluding the sale of the Noble Lewis Dugger, the increase in our income tax provision was driven by higher pre-tax income, which increased our income tax provision by $43 million. This was partially offset by a lower tax rate in the Current Period as a result of favorable changes in the geographic mix of pre-tax income and the recognition of certain discrete benefits during the Current Period.

Liquidity and Capital Resources

Net cash from operating activities for the Current Period was $1.2 billion and $932 million in the Comparable Period. The increase in net cash from operating activities in the Current Period was primarily attributable to an increase in net income. We had working capital of $390 million and $394 million at September 30, 2013 and December 31, 2012, respectively. Our total debt as a percentage of total debt plus equity increased to 37.5 percent at September 30, 2013 from 35.3 percent at December 31, 2012 as a result of an increase in commercial paper outstanding during the Current Period.

Our principal source of capital in the Current Period was the $1.2 billion in cash generated from operating activities noted above, coupled with borrowings through our commercial paper program. Cash generated during the Current Period was primarily used to fund our capital expenditure program.

Our currently anticipated cash flow needs may include the following:

•

committed capital expenditures, including expenditures for newbuild projects currently underway;

•

normal recurring operating expenses;

•

discretionary capital expenditures, including various capital upgrades;

•

payments of dividends; and

•

repayment of maturing debt.

We currently expect to fund these cash flow needs with cash generated by our operations, cash on hand, borrowings under our existing credit facilities and commercial paper program, borrowings under potential new credit facilities, issuances of long-term debt, or asset sales. However, to adequately cover our expected cash flow needs, we may require capital in excess of the amount provided through these sources, and we may seek additional sources of liquidity and/or delay or cancel certain discretionary capital expenditures as necessary.

At September 30, 2013, we had a total contract drilling services backlog of approximately $16.2 billion. Our backlog as of September 30, 2013 reflects a commitment of 80 percent of available days for the remainder of 2013 and 71 percent for 2014. See additional information regarding our backlog at “Contract Drilling Services Backlog.”

Capital Expenditures

Our primary use of available liquidity during 2013 is for capital expenditures. Capital expenditures, including capitalized interest, totaled $1.7 billion and $1.2 billion for the nine months ended September 30, 2013 and 2012, respectively.

At September 30, 2013, we had nine rigs under construction, and capital expenditures, excluding capitalized interest, for new construction during the first nine months of 2013 totaled $1.0 billion, as follows (in millions):


Rig type/name
Currently under construction
Drillships
Noble Sam Croft	$	70.9
Noble Tom Madden		64.8
Noble Bob Douglas **		63.3
Jackups
Noble Jackup VII (CJ70-Mariner)		179.6
Noble Regina Allen **		8.6
Noble Houston Colbert		7.4
Noble Sam Turner		4.2
Noble Tom Prosser		3.3
Noble Sam Hartley		2.6
Recently completed construction projects
Noble Don Taylor		376.1
Noble Mick O’Brien		134.4
Noble Globetrotter II		98.9
Other		7.7

Total Newbuild Capital Expenditures	$	1,021.8

**	These units were delivered from the shipyard subsequent to September 30, 2013.

In addition to the newbuild expenditures noted above, capital expenditures during the first nine months of 2013 consisted of the following:

•

$610 million for capital expenditures, which includes major projects, subsea related expenditures and upgrades and replacements to drilling equipment; and

•

$92 million in capitalized interest.

Our total capital expenditure estimate for 2013 is approximately $2.6 billion, including capitalized interest.

In connection with our capital expenditure program, as of September 30, 2013, we had outstanding commitments, including shipyard and purchase commitments, for approximately $2.6 billion, of which we expect to spend approximately $1.7 billion within the next twelve months.

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

Dividends

Our most recent quarterly dividend payment to shareholders, totaling $64 million (or $0.25 per share), was declared on July 26, 2013 and paid on August 15, 2013 to holders of record on August 5, 2013. This payment represented the first tranche of our previously approved annual dividend payment to shareholders discussed below.

In April 2013, our shareholders approved the payment of a dividend aggregating $1.00 per share to be paid in four equal installments, the first of which was paid in August 2013, with the remaining three installments currently scheduled for November 2013, February 2014 and May 2014, respectively. Our Board of Directors has the authority to accelerate the payment of any installment, or portions thereof, at its sole discretion at any time prior to payment of the final installment.

The declaration and payment of dividends, or 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.

Credit Facilities and Senior Unsecured Notes

Credit Facilities and Commercial Paper Program

Senior Unsecured Notes

Our 5.875% Senior Notes matured during the second quarter of 2013. We used proceeds from our commercial paper program to repay the $300 million outstanding balance.

Covenants

The Credit Facilities and commercial paper program are guaranteed by our indirect wholly-owned subsidiaries, NHIL and Noble Drilling Corporation (“NDC”). The covenants and events of default under the Credit Facilities are substantially similar, and each facility contains a covenant that limits our ratio of debt to total tangible capitalization, as defined in the Credit Facilities, to 0.60. At September 30, 2013, our ratio of debt to total tangible capitalization was approximately 0.37. We were in compliance with all covenants under the Credit Facilities as of September 30, 2013.

In addition to the covenants from the Credit Facilities noted above, the indentures governing our outstanding senior unsecured notes contain covenants that place restrictions on certain merger and consolidation transactions, unless we are the surviving entity or the other party assumes the obligations under the indenture, and on the ability to sell or transfer all or substantially all of our assets. In addition, there are restrictions on incurring or assuming certain liens and sale and lease-back transactions. At September 30, 2013, we were in compliance with all our debt covenants. We continually monitor compliance with the covenants under our notes and, based on our expectations for 2013, expect to remain in compliance during the year.

Other

At September 30, 2013, we had letters of credit of $214 million and performance and tax assessment bonds totaling $131 million supported by surety bonds outstanding. Additionally, certain of our subsidiaries issue guarantees to the temporary import status of rigs or equipment imported into certain countries in which we operate. These guarantees are issued in-lieu of payment of custom, value added or similar taxes in those countries.

New Accounting Pronouncements

Item 3. Quantitative and Qualitative Disclosures About Market Risk

Market risk is the potential for loss from 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 September 30, 2013, we had $1.3 billion in borrowings outstanding under our commercial paper program, which is supported by the Credit Facilities. Assuming our current level of debt, a change in LIBOR rates of 1 percent would increase our interest charges by approximately $13 million per year.

We maintain certain debt instruments at a fixed rate whose fair value will fluctuate based on changes in interest rates and market perceptions of our credit risk. The fair value of our long-term debt was $5.4 billion and $5.1 billion at September 30, 2013 and December 31, 2012, respectively. The increase in fair value was primarily a result of increased indebtedness outstanding under our commercial paper program coupled with changes in interest rates and market perceptions of our credit risk, partially offset by the repayment of our $300 million fixed rate senior note.

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 settled and recognized in earnings. The ineffective portion of changes in the fair value of the hedged item is recorded directly to earnings. We have documented policies and procedures to monitor and control the use of derivative instruments. We do not engage in derivative transactions for speculative or trading purposes, nor are we a party to leveraged derivatives.

Our North Sea and Brazil operations have a significant amount of their cash operating expenses payable in local currencies. To limit the potential risk of currency fluctuations, we periodically enter into forward contracts, all of which have a maturity of less than 12 months. The forward contracts maturing during the remainder of 2013 represent approximately 59 percent of these forecasted local currency requirements. The notional amount of the forward contracts outstanding, expressed in U.S. dollars, was approximately $42 million at September 30, 2013. Total unrealized gain related to these forward contracts was $0.6 million as of September 30, 2013 and was recorded as part of AOCL. A 10 percent change in the exchange rate for the local currencies would change the fair value of these forward contracts by approximately $4 million.

Market Risk

We have a U.S. noncontributory defined benefit pension plan that covers certain salaried employees and a U.S. noncontributory defined benefit pension plan that covers certain hourly employees, whose initial date of employment is prior to August 1, 2004 (collectively referred to as our “qualified U.S. plans”). These plans are governed by the Noble Drilling Corporation Retirement Trust. The 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 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, 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 James A. MacLennan, Senior Vice President and Chief Financial Officer 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. MacLennan have concluded that Noble-Swiss’ disclosure controls and procedures were effective as of September 30, 2013. 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 September 30, 2013. Noble-Cayman’s disclosure controls and procedures are designed to ensure that information required to be disclosed by Noble-Cayman in the reports that it files with or submits to the SEC 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 September 30, 2013 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 Notes 4, 8 and 15 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 1A. Risk Factors

Risks Relating to Our Business

The risk factors below update and supplement the risks described under “Risk Factors Relating to Our Business” in Part I, Item 1A, “Risk Factors,” of our Annual Report on Form 10-K for the year ended December 31, 2012, and should be considered together with the risk factors described in that report.

We may not complete the proposed change in the place of incorporation of Noble-Swiss from Switzerland to the United Kingdom. If we do complete the change in the place of incorporation, we may not realize the benefits we anticipate from the migration, or the migration may adversely impact us or our shareholders.

We cannot assure that we will complete the announced change of place of incorporation of our parent company from Switzerland to the United Kingdom if certain conditions, including receiving final regulatory clearance, are not satisfied.

Even if we complete the migration to the United Kingdom, we may not realize the benefits that we expect to realize from the migration. The migration may also expose us to certain risks that could have an adverse effect on us or our results of operations. Further, if the migration is completed, the rights of our shareholders as shareholders of an English company will differ from the rights they have currently as shareholders of a Swiss company.

In connection with the proposed migration, we filed with the U.S. Securities and Exchange Commission (“SEC”) a registration statement on Form S-4, which was declared effective by the SEC, and we distributed to our shareholders a definitive proxy statement/prospectus. You should read the definitive proxy statement/prospectus carefully because it contains important information about us and the migration, including risks related thereto.

The proposed separation and spin-off of our standard specification business is contingent upon the satisfaction of a number of conditions, may require significant time and attention of our management and may not achieve the intended results, and difficulties in connection with the spin-off could have an adverse effect on us.

As previously disclosed, our Board of Directors has approved a plan to reorganize our business by means of a separation and spin-off of a newly formed subsidiary whose assets would consist of most of our standard specification drilling units. For more information, please read “The Proposed Spin-Off” in Item 2 of Part I of this Quarterly Report on Form 10-Q. The spin-off, including any potential IPO of our subsidiary that would own and operate most of our standard specification business, is contingent upon the final approval of our Board of Directors, the approval of our shareholders, and other conditions, some of which are beyond our control. We may also choose to abandon the spin-off at any time. For these and other reasons, the spin-off may not be completed in the expected timeframe or at all. Additionally, execution of the proposed spin-off will likely continue to require significant expense, time and attention of our management. The spin-off could distract management from the operation of our business and the execution of our other strategic initiatives. Our employees may also be uncertain about their future roles within the separate companies pending the completion of the spin-off, which could lead to departures. Further, if the spin-off is completed, we may not realize the benefits we expect to realize. Any such difficulties could have an adverse effect on our business, results of operations and financial condition. If completed, the spin-off may also expose us to certain risks that could have an adverse effect on our results of operations and financial condition.

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:


Period	Total Number of Shares Purchased ⁽²⁾		Average Price Paid per Share		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs		Maximum Number of Shares that May Yet Be Purchased Under the Plans or Programs ⁽¹⁾
July 2013		10,912	$	38.64		—		6,769,891
August 2013		863	$	38.73		—		6,769,891
September 2013		630	$	40.44		—		6,769,891

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

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

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				November 4, 2013
David W. Williams Chairman, President and Chief Executive Officer (Principal Executive Officer)				Date

/s/ James A. MacLennan
James A. MacLennan Senior Vice President and Chief Financial Officer (Principal Financial Officer)

Noble Corporation, a Cayman Islands company

/s/ David W. Williams				November 4, 2013
David W. Williams President and Chief Executive Officer (Principal Executive Officer)				Date

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

Index to Exhibits


Exhibit Number		Exhibit

2.1		Merger Agreement, dated as of June 30, 2013, between Noble Corporation, a Swiss corporation (“Noble-Swiss”) and Noble Corporation Limited (“Noble-UK”) (filed as Exhibit 2.1 to Noble-Swiss’ Current Report on Form 8-K filed on July 1, 2013 and incorporated herein by reference).

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

2.3		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 (filed as Exhibit 3.1 to Noble-Swiss’ Quarterly Report on Form 10-Q filed on August 5, 2013 and incorporated herein by reference).

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		364-Day Revolving Credit Agreement dated as of August 22, 2013 among Noble-Cayman; the Lenders from time to time parties thereto; JPMorgan Chase Bank, N.A., as Administrative Agent and Swingline Lender; Barclays Bank PLC, Citibank, N.A., Deutsche Bank Securities, Inc. and Wells Fargo Bank, National Association, as Co-Syndication Agents; and BNP Paribas, Credit Agricole Corporate & Investment Bank, Credit Suisse AG, Cayman Islands Branch, Goldman Sachs Bank USA, HSBC Bank USA, N.A., SunTrust Bank and The Bank of Tokyo-Mitsubishi UFJ, LTD., as Co-Documentation agents (filed as Exhibit 4.1 to Noble-Swiss and Noble-Cayman’s Current Report on Form 8-K filed on August 22, 2013 and incorporated herein by reference).

4.2		Guaranty Agreement dated as of August 22, 2013 between Noble Drilling Corporation, a Delaware corporation, and JPMorgan Chase Bank, N.A. (filed as Exhibit 4.2 to Noble-Swiss and Noble-Cayman’s Current Report on Form 8-K filed on August 22, 2013 and incorporated herein by reference).

4.3		Guaranty Agreement dated as of August 22, 2013 between Noble Holding International Limited, a Cayman Islands company, and JPMorgan Chase Bank, N.A. (filed as Exhibit 4.3 to Noble-Swiss and Noble-Cayman’s Current Report on Form 8-K filed on August 22, 2013 and incorporated herein by reference).

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.

31.2		Certification of James A. MacLennan 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 James A. MacLennan 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 arrangement

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