Noble Corp - Quarter Report: 2015 June (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: June 30, 2015

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

For the transition period from to

Commission file number: 001-36211

Noble Corporation plc

(Exact name of registrant as specified in its charter)

England and Wales (Registered Number 08354954)

98-0619597

(State or other jurisdiction of

incorporation or organization)

(I.R.S. employer

identification number)

Devonshire House, 1 Mayfair Place, London, England, W1J8AJ

(Address of principal executive offices) (Zip Code)

Registrant’s Telephone Number, Including Area Code: +44 20 3300 2300

Commission file number: 001-31306

Noble Corporation

(Exact name of registrant as specified in its charter)

Cayman Islands

98-0366361

(State or other jurisdiction of

incorporation or organization)

(I.R.S. employer

identification number)

Suite 3D Landmark Square, 64 Earth Close, P.O. Box 31327 George Town, Grand Cayman, Cayman Islands, KY1-1206

(Address of principal executive offices) (Zip Code)

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

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 Corporation plc:	Large accelerated filer x	Accelerated filer ¨	Non-accelerated filer ¨	Smaller reporting company ¨
Noble Corporation:	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 July 24, 2015: Noble Corporation plc — 241,969,586

Number of shares outstanding at July 24, 2015: Noble Corporation — 261,245,693

Noble Corporation, a Cayman Islands company and a wholly owned subsidiary of Noble Corporation plc, a public limited company incorporated under the laws of England and Wales, meets the conditions set forth in General Instructions H(1) (a) and (b) to Form 10-Q and is therefore filing this Quarterly Report on 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 plc (Noble-UK) Financial Statements:
	Consolidated Balance Sheets as of June 30, 2015 and December 31, 2014		3
	Consolidated Statements of Income for the three and six months ended June 30, 2015 and 2014		4
	Consolidated Statements of Comprehensive Income for the three and six months ended June 30, 2015 and 2014		5
	Consolidated Statements of Cash Flows for the six months ended June 30, 2015 and 2014		6
	Consolidated Statements of Equity for the six months ended June 30, 2015 and 2014		7

	Noble Corporation (Noble-Cayman) Financial Statements:
	Consolidated Balance Sheets as of June 30, 2015 and December 31, 2014		8
	Consolidated Statements of Income for the three and six months ended June 30, 2015 and 2014		9
	Consolidated Statements of Comprehensive Income for the three and six months ended June 30, 2015 and 2014		10
	Consolidated Statements of Cash Flows for the six months ended June 30, 2015 and 2014		11
	Consolidated Statements of Equity for the six months ended June 30, 2015 and 2014		12

	Notes to Combined Consolidated Financial Statements		13

Item 2	Management’s Discussion and Analysis of Financial Condition and Results of Operations		39
Item 3	Quantitative and Qualitative Disclosures About Market Risk		52
Item 4	Controls and Procedures		53
PART II	OTHER INFORMATION
Item 1	Legal Proceedings		54
Item 2	Unregistered Sales of Equity Securities and Use of Proceeds		55
Item 6	Exhibits		55
	SIGNATURES		56
	Index to Exhibits		57

This combined Quarterly Report on Form 10-Q is separately filed by Noble Corporation plc, a public limited company incorporated under the laws of England and Wales (“Noble-UK”), and Noble Corporation, a Cayman Islands company (“Noble-Cayman”). Information in this filing relating to Noble-Cayman is filed by Noble-UK and separately by Noble-Cayman on its own behalf. Noble-Cayman makes no representation as to information relating to Noble-UK (except as it may relate to Noble-Cayman) or any other affiliate or subsidiary of Noble-UK. 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 as stated in General Instructions H(2). 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-UK and its consolidated subsidiaries, including Noble-Cayman.

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

NOBLE CORPORATION PLC AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(In thousands)

(Unaudited)


	June 30, 2015			December 31, 2014
ASSETS
Current assets
Cash and cash equivalents	$	247,683		$	68,510
Accounts receivable		540,423			569,096
Taxes receivable		60,564			107,490
Prepaid expenses and other current assets		161,634			183,466

Total current assets		1,010,304			928,562


Property and equipment, at cost		14,610,963			14,442,922
Accumulated depreciation		(2,640,518	)		(2,330,413	)

Property and equipment, net		11,970,445			12,112,509


Other assets		223,967			245,751

Total assets	$	13,204,716		$	13,286,822


LIABILITIES AND EQUITY
Current liabilities
Current maturities of long-term debt	$	350,000		$	—
Accounts payable		220,475			265,389
Accrued payroll and related costs		81,804			102,520
Taxes payable		109,786			94,230
Interest payable		80,300			61,964
Other current liabilities		111,529			144,571

Total current liabilities		953,894			668,674


Long-term debt		4,488,541			4,869,020
Deferred income taxes		104,402			120,589
Other liabilities		310,481			341,505

Total liabilities		5,857,318			5,999,788


Commitments and contingencies

Shareholders’ equity
Shares; 241,970 and 247,501 shares outstanding		2,420			2,475
Additional paid-in capital		609,667			695,638
Retained earnings		6,087,800			5,936,035
Accumulated other comprehensive loss		(69,173	)		(69,418	)

Total shareholders’ equity		6,630,714			6,564,730

Noncontrolling interests		716,684			722,304

Total equity		7,347,398			7,287,034

Total liabilities and equity	$	13,204,716		$	13,286,822

See accompanying notes to the unaudited consolidated financial statements.

NOBLE CORPORATION PLC AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME

(In thousands, except per share amounts)

(Unaudited)


	Three Months Ended June 30,						Six Months Ended June 30,
	2015			2014			2015			2014
Operating revenues
Contract drilling services	$	771,307		$	779,368		$	1,550,668		$	1,550,005
Reimbursables		22,248			24,413			47,229			48,963

		793,555			803,781			1,597,897			1,598,968

Operating costs and expenses
Contract drilling services		319,207			370,902			640,957			723,782
Reimbursables		17,652			17,732			37,809			39,236
Depreciation and amortization		159,123			152,862			313,261			299,060
General and administrative		22,424			27,080			46,362			52,717

		518,406			568,576			1,038,389			1,114,795


Operating income		275,149			235,205			559,508			484,173

Other income (expense)
Interest expense, net of amount capitalized		(57,465	)		(36,351	)		(106,509	)		(76,743	)
Interest income and other, net		(431	)		(1,361	)		6,151			(2,629	)

Income from continuing operations before income taxes		217,253			197,493			459,150			404,801
Income tax provision		(39,405	)		(34,265	)		(82,852	)		(69,843	)

Net income from continuing operations		177,848			163,228			376,298			334,958
Net income from discontinued operations, net of tax		—			94,234			—			195,746

Net income		177,848			257,462			376,298			530,704
Net income attributable to noncontrolling interests		(18,817	)		(22,903	)		(38,864	)		(39,819	)

Net income attributable to Noble Corporation plc	$	159,031		$	234,559		$	337,434		$	490,885


Net income attributable to Noble Corporation plc
Income from continuing operations	$	159,031		$	140,325		$	337,434		$	295,139
Income from discontinued operations		—			94,234			—			195,746

Net income attributable to Noble Corporation plc	$	159,031		$	234,559		$	337,434		$	490,885


Per share data:
Basic:
Income from continuing operations	$	0.64		$	0.54		$	1.36		$	1.14
Income from discontinued operations		—			0.37			—			0.76

Net income attributable to Noble Corporation plc	$	0.64		$	0.91		$	1.36		$	1.90


Diluted:
Income from continuing operations	$	0.64		$	0.54		$	1.36		$	1.14
Income from discontinued operations		—			0.37			—			0.76

Net income attributable to Noble Corporation plc	$	0.64		$	0.91		$	1.36		$	1.90

See accompanying notes to the unaudited consolidated financial statements.

NOBLE CORPORATION PLC AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(In thousands)

(Unaudited)


	Three Months Ended June 30,						Six Months Ended June 30,
	2015			2014			2015			2014

Net income	$	177,848		$	257,462		$	376,298		$	530,704

Other comprehensive income (loss), net of tax
Foreign currency translation adjustments		1,425			1,711			(1,874	)		2,720
Foreign currency forward contracts		3,054			706			(91	)		6,652
Amortization of deferred pension plan amounts (net of tax provision of $582 and $253 for the three months ended June 30, 2015 and 2014, respectively, and $1,148 and $505 for the six months ended June 30, 2015 and 2014, respectively)		1,129			765			2,210			1,528

Other comprehensive income, net		5,608			3,182			245			10,900

Net comprehensive income attributable to noncontrolling interests		(18,817	)		(22,903	)		(38,864	)		(39,819	)

Comprehensive income attributable to Noble Corporation plc	$	164,639		$	237,741		$	337,679		$	501,785

See accompanying notes to the unaudited consolidated financial statements.

NOBLE CORPORATION PLC AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

(Unaudited)


	Six Months Ended June 30,
	2015			2014
Cash flows from operating activities
Net income	$	376,298		$	530,704
Adjustments to reconcile net income to net cash from operating activities:
Depreciation and amortization		313,261			500,299
Deferred income taxes		(17,312	)		10,127
Amortization of share-based compensation		21,147			26,517
Net change in other assets and liabilities		74,484			(35,824	)

Net cash from operating activities		767,878			1,031,823


Cash flows from investing activities
Capital expenditures		(170,283	)		(1,216,404	)
Change in accrued capital expenditures		(38,408	)		(11,813	)

Net cash from investing activities		(208,691	)		(1,228,217	)


Cash flows from financing activities
Net change in borrowings outstanding on bank credit facilities		(1,123,495	)		707,472
Repayment of long-term debt		—			(250,000	)
Issuance of senior notes		1,092,728			—
Debt issuance costs on senior notes and credit facilities		(16,070	)		(386	)
Dividends paid to noncontrolling interests		(44,484	)		(41,910	)
Repurchases of shares		(100,630	)		—
Dividend payments		(185,669	)		(193,740	)
Employee stock transactions		(2,394	)		1,037

Net cash from financing activities		(380,014	)		222,473

Net change in cash and cash equivalents		179,173			26,079
Cash and cash equivalents, beginning of period		68,510			114,458

Cash and cash equivalents, end of period	$	247,683		$	140,537

See accompanying notes to the unaudited consolidated financial statements.

NOBLE CORPORATION PLC AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF EQUITY

(In thousands)

(Unaudited)


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

Balance at December 31, 2013		253,448		$	2,534		$	810,286		$	7,591,927		$	(82,164	)	$	727,445		$	9,050,028

Employee related equity activity
Amortization of share-based compensation		—			—			26,517			—			—			—			26,517
Issuance of share-based compensation shares		683			6			(8,952	)		—			—			—			(8,946	)
Exercise of stock options		127			3			2,548			—			—			—			2,551
Tax benefit of equity transactions		—			—			(1,520	)		—			—			—			(1,520	)
Net income		—			—			—			490,885			—			39,819			530,704
Dividends paid to noncontrolling interests		—			—			—			—			—			(41,910	)		(41,910	)
Dividends		—			—			—			(65,491	)		—			—			(65,491	)
Other comprehensive income, net		—			—			—			—			10,900			—			10,900

Balance at June 30, 2014		254,258		$	2,543		$	828,879		$	8,017,321		$	(71,264	)	$	725,354		$	9,502,833


Balance at December 31, 2014		247,501		$	2,475		$	695,638		$	5,936,035		$	(69,418	)	$	722,304		$	7,287,034

Employee related equity activity
Amortization of share-based compensation		—			—			21,147			—			—			—			21,147
Issuance of share-based compensation shares		678			7			(4,149	)		—			—			—			(4,142	)
Tax benefit of equity transactions		—			—			(2,401	)		—			—			—			(2,401	)
Repurchases of shares		(6,209	)		(62	)		(100,568	)		—			—			—			(100,630	)
Net income		—			—			—			337,434			—			38,864			376,298
Dividends paid to noncontrolling interests		—			—			—			—			—			(44,484	)		(44,484	)
Dividends		—			—			—			(185,669	)		—			—			(185,669	)
Other comprehensive income, net		—			—			—			—			245			—			245

Balance at June 30, 2015		241,970		$	2,420		$	609,667		$	6,087,800		$	(69,173	)	$	716,684		$	7,347,398

See accompanying notes to the unaudited consolidated financial statements.

NOBLE CORPORATION AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(In thousands)

(Unaudited)


	June 30, 2015			December 31, 2014
ASSETS
Current assets
Cash and cash equivalents	$	245,120		$	65,780
Accounts receivable		540,423			569,096
Taxes receivable		60,157			107,289
Prepaid expenses and other current assets		138,604			139,669

Total current assets		984,304			881,834


Property and equipment, at cost		14,572,411			14,404,371
Accumulated depreciation		(2,627,726	)		(2,318,220	)

Property and equipment, net		11,944,685			12,086,151


Other assets		220,764			222,254

Total assets	$	13,149,753		$	13,190,239


LIABILITIES AND EQUITY
Current liabilities
Current maturities of long-term debt	$	350,000		$	—
Accounts payable		218,066			261,012
Accrued payroll and related costs		74,405			91,487
Taxes payable		107,716			91,471
Interest payable		80,300			61,964
Other current liabilities		107,567			139,950

Total current liabilities		938,054			645,884


Long-term debt		4,488,541			4,869,020
Deferred income taxes		104,402			120,589
Other liabilities		304,938			335,964

Total liabilities		5,835,935			5,971,457


Commitments and contingencies

Shareholder equity
Ordinary shares; 261,246 shares outstanding		26,125			26,125
Capital in excess of par value		545,352			530,657
Retained earnings		6,094,830			6,009,114
Accumulated other comprehensive loss		(69,173	)		(69,418	)

Total shareholder equity		6,597,134			6,496,478

Noncontrolling interests		716,684			722,304

Total equity		7,313,818			7,218,782

Total liabilities and equity	$	13,149,753		$	13,190,239

See accompanying notes to the unaudited consolidated financial statements.

NOBLE CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME

(In thousands)

(Unaudited)


	Three Months Ended June 30,						Six Months Ended June 30,
	2015			2014			2015			2014
Operating revenues
Contract drilling services	$	771,307		$	779,368		$	1,550,668		$	1,550,005
Reimbursables		22,248			24,413			47,229			48,963

		793,555			803,781			1,597,897			1,598,968

Operating costs and expenses
Contract drilling services		318,967			363,206			638,446			713,783
Reimbursables		17,652			17,732			37,809			39,236
Depreciation and amortization		158,797			152,242			312,663			297,845
General and administrative		13,509			11,489			25,717			23,421

		508,925			544,669			1,014,635			1,074,285


Operating income		284,630			259,112			583,262			524,683

Other income (expense)
Interest expense, net of amount capitalized		(57,465	)		(36,351	)		(106,509	)		(76,743	)
Interest income and other, net		(1,901	)		(1,248	)		4,547			(2,643	)

Income from continuing operations before income taxes		225,264			221,513			481,300			445,297
Income tax provision		(39,536	)		(34,063	)		(83,094	)		(69,533	)

Net income from continuing operations		185,728			187,450			398,206			375,764
Net income from discontinued operations, net of tax		—			100,692			—			214,609

Net income		185,728			288,142			398,206			590,373
Net income attributable to noncontrolling interests		(18,817	)		(22,903	)		(38,864	)		(39,819	)

Net income attributable to Noble Corporation	$	166,911		$	265,239		$	359,342		$	550,554

See accompanying notes to the unaudited consolidated financial statements.

NOBLE CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(In thousands)

(Unaudited)


	Three Months Ended June 30,						Six Months Ended June 30,
	2015			2014			2015			2014

Net income	$	185,728		$	288,142		$	398,206		$	590,373

Other comprehensive income (loss), net of tax
Foreign currency translation adjustments		1,425			1,711			(1,874	)		2,720
Foreign currency forward contracts		3,054			706			(91	)		6,652
Amortization of deferred pension plan amounts (net of tax provision of $582 and $253 for the three months ended June 30, 2015 and 2014, respectively, and $1,148 and $505 for the six months ended June 30, 2015 and 2014, respectively)		1,129			765			2,210			1,528

Other comprehensive income, net		5,608			3,182			245			10,900

Net comprehensive income attributable to noncontrolling interests		(18,817	)		(22,903	)		(38,864	)		(39,819	)

Comprehensive income attributable to Noble Corporation	$	172,519		$	268,421		$	359,587		$	561,454

See accompanying notes to the unaudited consolidated financial statements.

NOBLE CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

(Unaudited)


	Six Months Ended June 30,
	2015			2014
Cash flows from operating activities
Net income	$	398,206		$	590,373
Adjustments to reconcile net income to net cash from operating activities:
Depreciation and amortization		312,663			499,084
Deferred income taxes		(17,312	)		10,127
Capital contribution by parent - share-based compensation		14,695			18,792
Net change in other assets and liabilities		44,726			(37,241	)

Net cash from operating activities		752,978			1,081,135


Cash flows from investing activities
Capital expenditures		(170,283	)		(1,216,270	)
Change in accrued capital expenditures		(38,408	)		(11,813	)

Net cash from investing activities		(208,691	)		(1,228,083	)


Cash flows from financing activities
Net change in borrowings outstanding on bank credit facilities		(1,123,495	)		707,472
Repayment of long-term debt		—			(250,000	)
Issuance of senior notes		1,092,728			—
Debt issuance costs on senior notes and credit facilities		(16,070	)		(386	)
Dividends paid to noncontrolling interests		(44,484	)		(41,910	)
Distributions to parent company, net		(273,626	)		(240,900	)

Net cash from financing activities		(364,947	)		174,276

Net change in cash and cash equivalents		179,340			27,328
Cash and cash equivalents, beginning of period		65,780			110,382

Cash and cash equivalents, end of period	$	245,120		$	137,710

See accompanying notes to the unaudited consolidated financial statements.

NOBLE CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF EQUITY

(In thousands)

(Unaudited)


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

Balance at December 31, 2013		261,246	$	26,125	$	497,316	$	7,986,762		$	(82,164	)	$	727,445		$	9,155,484
Distributions to parent		—		—		—		(240,900	)		—			—			(240,900	)
Capital contributions by parent - share-based compensation		—		—		18,792		—			—			—			18,792
Net income		—		—		—		550,554			—			39,819			590,373
Dividends paid to noncontrolling interests		—		—		—		—			—			(41,910	)		(41,910	)
Other comprehensive income, net		—		—		—		—			10,900			—			10,900

Balance at June 30, 2014		261,246	$	26,125	$	516,108	$	8,296,416		$	(71,264	)	$	725,354		$	9,492,739


Balance at December 31, 2014		261,246	$	26,125	$	530,657	$	6,009,114		$	(69,418	)	$	722,304		$	7,218,782
Distributions to parent		—		—		—		(273,626	)		—			—			(273,626	)
Capital contributions by parent - share-based compensation		—		—		14,695		—			—			—			14,695
Net income		—		—		—		359,342			—			38,864			398,206
Dividends paid to noncontrolling interests		—		—		—		—			—			(44,484	)		(44,484	)
Other comprehensive income, net		—		—		—		—			245			—			245

Balance at June 30, 2015		261,246	$	26,125	$	545,352	$	6,094,830		$	(69,173	)	$	716,684		$	7,313,818

See accompanying notes to the unaudited consolidated financial statements.

NOBLE CORPORATION PLC AND SUBSIDIARIES

NOBLE CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

Note 1 — Organization and Basis of Presentation

Noble Corporation plc, a public limited company incorporated under the laws of England and Wales (“Noble-UK”), is a leading offshore drilling contractor for the oil and gas industry. We perform contract drilling services with our global fleet of mobile offshore drilling units. As of the filing date of this Quarterly Report on Form 10-Q, our fleet consisted of 15 jackups, nine drillships and eight semisubmersibles, including one high-specification, harsh environment jackup under construction.

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 and gas industry. The mobile offshore drilling units comprising our offshore rig fleet operate in a global market for contract drilling services and are often redeployed to different regions due to changing demands of our customers, which consist largely of major independent and government owned/controlled oil and gas companies throughout the world. As of June 30, 2015, our contract drilling services segment conducts operations in the United States, Brazil, Argentina, the North Sea, the Mediterranean Sea, the Black Sea, the Middle East, Asia and Australia. 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 an indirect, wholly-owned subsidiary of Noble-UK, our publicly-traded parent company. Noble-UK’s principal asset is all of the shares of Noble-Cayman. Noble-Cayman has no public equity outstanding. The consolidated financial statements of Noble-UK include the accounts of Noble-Cayman, and Noble-UK conducts substantially all of its business through Noble-Cayman and its subsidiaries.

The accompanying unaudited consolidated financial statements of Noble-UK 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 Quarterly Reports on 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, 2014 Consolidated Balance Sheets presented herein are derived from the December 31, 2014 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, 2014, filed by both Noble-UK and Noble-Cayman. The results of operations for interim periods are not necessarily indicative of the results to be expected for the full year.

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

Note 2 – Spin-off of Paragon Offshore plc (“Paragon Offshore”)

On August 1, 2014, Noble-UK completed the separation and spin-off of a majority of its standard specification offshore drilling business (the “Spin-off”) through a pro rata distribution of all of the ordinary shares of its wholly-owned subsidiary, Paragon Offshore, to the holders of Noble’s ordinary shares. Our shareholders received one share of Paragon Offshore for every three shares of Noble owned as of July 23, 2014, the record date for the distribution. Through the Spin-off, we disposed of most of our standard specification drilling units and related assets, liabilities and business. Prior to the Spin-off, Paragon Offshore issued approximately $1.7 billion of long-term debt. We used the proceeds from this debt to repay certain amounts outstanding under our commercial paper program.

Prior to the completion of the Spin-off, Noble and Paragon Offshore entered into a series of agreements to effect the separation and Spin-off and govern the relationship between the parties after the Spin-off.

NOBLE CORPORATION PLC AND SUBSIDIARIES

NOBLE CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

Master Separation Agreement (“MSA”)

The general terms and conditions relating to the separation and Spin-off are set forth in the MSA. The MSA identifies the assets transferred, liabilities assumed and contracts assigned either to Paragon Offshore by us or by Paragon Offshore to us in the separation and describes when and how these transfers, assumptions and assignments would occur. The MSA provides for, among other things, Paragon Offshore’s responsibility for liabilities relating to its business and the responsibility of Noble for liabilities related to our, and in certain limited cases, Paragon Offshore’s business, in each case irrespective of when the liability arose. The MSA also contains indemnification obligations and ongoing commitments by us and Paragon Offshore.

Employee Matters Agreement (“EMA”)

The EMA allocates liabilities and responsibilities between us and Paragon Offshore relating to employment, compensation and benefits and other employment related matters.

Tax Sharing Agreement (“TSA”)

The TSA provides for the allocation of tax liabilities and benefits between us and Paragon Offshore and governs the parties’ assistance with tax-related claims.

Transition Services Agreements

Under two transition services agreements, we agreed to continue, for a limited period of time, to provide various interim support services to Paragon Offshore, and Paragon Offshore agreed to provide various interim support services to us, including providing operational and administrative support for our remaining Brazilian operations.

Note 3 — Discontinued Operations

Paragon Offshore, which had been reflected as continuing operations in our consolidated financial statements prior to the Spin-Off, meets the criteria for being reported as discontinued operations and has been reclassified as such in our results of operations. The results of discontinued operations for the three and six months ended June 30, 2014 include the historical results of Paragon Offshore, including $6 million and $19 million, respectively, of non-recurring costs incurred by Noble related to the Spin-Off.

NOBLE CORPORATION PLC AND SUBSIDIARIES

NOBLE CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

The following table provides the components of net income from discontinued operations, net of tax for Noble-UK for the three and six months ended June 30, 2014:


	Three months ended June 30, 2014			Six months ended June 30, 2014
Operating revenues
Contract drilling services	$	421,038		$	856,705
Reimbursables		7,398			19,501
Labor contract drilling services		8,146			16,358
Other		—			1

Operating revenues from discontinued operations	$	436,582		$	892,565


Income from discontinued operations
Income from discontinued operations before income taxes	$	112,404		$	232,774
Income tax provision		(18,170	)		(37,028	)

Net income from discontinued operations	$	94,234		$	195,746

Note 4 — Consolidated Joint Ventures

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

During the six months ended June 30, 2015 and 2014, the Bully joint ventures approved and paid dividends totaling $89 million and $84 million, respectively. Of these amounts, 50 percent were paid to our joint venture partner.

The combined carrying amount of the Bully-class drillships at both June 30, 2015 and December 31, 2014 totaled $1.4 billion. These assets were primarily funded through partner equity contributions. Cash held by the Bully joint ventures was approximately $41 million at June 30, 2015 as compared to approximately $47 million at December 31, 2014.

NOBLE CORPORATION PLC AND SUBSIDIARIES

NOBLE CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

Note 5 — Share Data

Earnings per share

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


	Three months ended June 30,						Six months ended June 30,
	2015			2014			2015			2014
Numerator:
Basic
Income from continuing operations	$	159,031		$	140,325		$	337,434		$	295,139
Earnings allocated to unvested share-based payment awards		(3,555	)		(2,257	)		(7,489	)		(4,767	)

Income from continuing operations to common shareholders		155,476			138,068			329,945			290,372


Income from discontinued operations		—			94,234			—			195,746
Earnings allocated to unvested share-based payment awards		—			(1,519	)		—			(3,281	)

Income from discontinued operations, net of tax to common shareholders		—			92,715			—			192,465


Net income attributable to Noble-UK		159,031			234,559			337,434			490,885
Earnings allocated to unvested share-based payment awards		(3,555	)		(3,776	)		(7,489	)		(8,048	)

Net income to common shareholders - basic	$	155,476		$	230,783		$	329,945		$	482,837


Diluted
Income from continuing operations	$	159,031		$	140,325		$	337,434		$	295,139
Earnings allocated to unvested share-based payment awards		(3,555	)		(2,256	)		(7,489	)		(4,766	)

Income from continuing operations to common shareholders		155,476			138,069			329,945			290,373


Income from discontinued operations		—			94,234			—			195,746
Earnings allocated to unvested share-based payment awards		—			(1,518	)		—			(3,280	)

Income from discontinued operations, net of tax to common shareholders		—			92,716			—			192,466


Net income attributable to Noble-UK		159,031			234,559			337,434			490,885
Earnings allocated to unvested share-based payment awards		(3,555	)		(3,774	)		(7,489	)		(8,046	)

Net income to common shareholders - diluted	$	155,476		$	230,785		$	329,945		$	482,839


Denominator:
Weighted average shares outstanding - basic		241,966			254,238			242,324			254,090
Incremental shares issuable from assumed exercise of stock options		—			97			—			116

Weighted average shares outstanding - diluted		241,966			254,335			242,324			254,206


Weighted average unvested share-based payment awards		5,533			4,156			5,500			4,172


Earnings per share
Basic
Continuing operations	$	0.64		$	0.54		$	1.36		$	1.14
Discontinued operations		—			0.37			—			0.76

Net income attributable to Noble-UK	$	0.64		$	0.91		$	1.36		$	1.90


Diluted
Continuing operations	$	0.64		$	0.54		$	1.36		$	1.14
Discontinued operations		—			0.37			—			0.76

Net income attributable to Noble-UK	$	0.64		$	0.91		$	1.36		$	1.90


Dividends per share	$	0.375		$	0.375		$	0.75		$	0.75

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 June 30, 2015 and 2014, approximately 2 million and 1 million shares underlying stock options, respectively, were excluded from the diluted earnings per share as such stock options were not dilutive.

NOBLE CORPORATION PLC AND SUBSIDIARIES

NOBLE CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

Share capital

As of June 30, 2015, Noble-UK had approximately 242.0 million shares outstanding and trading as compared to approximately 247.5 million shares outstanding and trading at December 31, 2014. The decrease in shares outstanding is primarily related to the repurchase of 6.2 million shares pursuant to our approved share repurchase program, discussed below. Our Board of Directors may increase our share capital through the issuance of up to 53 million authorized shares (at current nominal value of $0.01 per share) without obtaining shareholder approval.

Our most recent quarterly dividend payment to shareholders, totaling approximately $93 million (or $0.375 per share), was declared on April 24, 2015 and paid on May 14, 2015 to holders of record on May 4, 2015.

Share repurchases

Under UK law, the company is only permitted to purchase its own shares by way of an “off-market purchase” in a plan approved by shareholders. In December 2014, we received shareholder approval to repurchase up to 37,000,000 ordinary shares, or approximately 15 percent of our outstanding ordinary shares at the time of the shareholder approval. Any repurchases are expected to be funded using cash on hand, cash from operations or short-term borrowings under our Credit Facilities. The authority to make such repurchases will expire on the later of April 2016 or the end of the Company’s 2016 annual general meeting of shareholders, at which time we could seek shareholder approval for further repurchases. During the six months ended June 30, 2015, we repurchased 6.2 million of our ordinary shares covered by this authorization for a total cost of approximately $101 million. During the three months ended June 30, 2015, we did not repurchase any of our shares.

Note 6 — Receivables from Customers

At June 30, 2015, we had receivables of approximately $14 million related to the Noble Max Smith that are being disputed by our former customer, Petróleos Mexicanos (“Pemex”). These receivables have been classified as long-term and are included in “Other assets” on our Consolidated Balance Sheet. The disputed amounts relate to lost revenues for downtime that occurred after our rig was damaged when one of Pemex’s supply boats collided with our rig in 2010. In January 2012, we filed a lawsuit against Pemex in a Mexican court seeking recovery of these amounts. While we can make no assurances as to the outcome of this dispute, we believe we are entitled to the disputed amounts.

Note 7 — Property and Equipment

Property and equipment, at cost, as of June 30, 2015 and December 31, 2014 for Noble-UK consisted of the following:


	June 30, 2015		December 31, 2014
Drilling equipment and facilities	$	13,691,525	$	13,254,240
Construction in progress		683,410		969,985
Other		236,028		218,697

Property and equipment, at cost	$	14,610,963	$	14,442,922

Capital expenditures, including capitalized interest, totaled $170 million and $1.2 billion for the six months ended June 30, 2015 and 2014, respectively. Capitalized interest was $6 million and $12 million for the three and six months ended June 30, 2015, respectively, as compared to $13 million and $27 million for the three and six months ended June 30, 2014.

NOBLE CORPORATION PLC AND SUBSIDIARIES

NOBLE CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

Capital expenditures related to Paragon Offshore for the six months ended June 30, 2014 totaled $135 million. Depreciation expense for Paragon Offshore that was classified as discontinued operations totaled $102 million and $201 million, respectively, for the three and six months ended June 30, 2014.

Note 8 — Debt

Long-term debt consisted of the following at June 30, 2015 and December 31, 2014:


	June 30, 2015			December 31, 2014
Senior unsecured notes:
3.45% Senior Notes due August 2015	$	350,000		$	350,000
3.05% Senior Notes due March 2016		299,990			299,982
2.50% Senior Notes due March 2017		299,938			299,920
4.00% Senior Notes due March 2018		249,516			—
7.50% Senior Notes due March 2019		201,695			201,695
4.90% Senior Notes due August 2020		499,218			499,151
4.625% Senior Notes due March 2021		399,653			399,627
3.95% Senior Notes due March 2022		399,309			399,264
5.95% Senior Notes due April 2025		448,767			—
6.20% Senior Notes due August 2040		399,895			399,895
6.05% Senior Notes due March 2041		397,700			397,681
5.25% Senior Notes due March 2042		498,324			498,310
6.95% Senior Notes due April 2045		394,536			—

Total senior unsecured notes		4,838,541			3,745,525

Credit facilities & commercial paper program		—			1,123,495

Total debt		4,838,541			4,869,020

Less: Current maturities		(350,000	)		—

Long-term debt	$	4,488,541		$	4,869,020

Credit Facilities and Commercial Paper Program

We currently have two credit facilities with an aggregate maximum capacity of $2.7 billion, which are comprised of a five year $2.4 billion senior unsecured credit facility that matures in January 2020 and a $225 million 364-day senior unsecured credit facility that matures in January 2016 (together, the “Credit Facilities”).

We have a commercial paper program that allows us to issue up to $2.4 billion in unsecured commercial paper notes. Amounts issued under the commercial paper program are supported by the unused capacity under our Credit Facilities and, therefore, are classified as long-term on our Consolidated Balance Sheet. The outstanding amounts of commercial paper reduce availability under our Credit Facilities.

The $2.4 billion facility provides us with the ability to issue up to $500 million in letters of credit. The issuance of letters of credit under the facility reduces the amount available for borrowing. At June 30, 2015, we had no letters of credit issued under the facility.

Senior Unsecured Notes

In March 2015, our indirect wholly-owned subsidiary, Noble Holding International Limited (“NHIL”), issued $1.1 billion aggregate principal amount of senior notes in three separate tranches, comprised of $250 million of 4.00% Senior Notes due 2018, $450 million of 5.95% Senior Notes due 2025, and $400 million of 6.95% Senior Notes due 2045. The weighted average coupon of all three tranches is 5.87%. The interest rate on these senior notes

NOBLE CORPORATION PLC AND SUBSIDIARIES

NOBLE CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

may be increased if the credit rating applicable to the notes is downgraded below certain specified levels. The net proceeds of approximately $1.08 billion, after expenses, were used to repay indebtedness outstanding under our Credit Facilities and commercial paper program.

On August 1, 2015, our $350 million 3.45% Senior Notes matured, which we repaid using cash on hand. We have, therefore, classified these balances as “Current maturities of long-term debt” on our Consolidated Balance Sheet as of June 30, 2015.

Our $300 million 3.05% Senior Notes mature during the first quarter of 2016. We anticipate using availability under our Credit Facilities to repay the outstanding balances; therefore, we continue to report these balances as long-term as of June 30, 2015.

Covenants

The Credit Facilities are guaranteed by NHIL and Noble Holding Corporation (“NHC”). The covenants and events of default under the two 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 June 30, 2015, our ratio of debt to total tangible capitalization was approximately 0.40. We were in compliance with all covenants under the Credit Facilities as of June 30, 2015.

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 on entering into sale and lease-back transactions. At June 30, 2015, we were in compliance with all of our debt covenants. We continually monitor compliance with the covenants under our notes and expect to remain in compliance during the remainder of 2015.

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). All remaining fair value disclosures are presented in Note 12.

NOBLE CORPORATION PLC AND SUBSIDIARIES

NOBLE CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

The following table presents the estimated fair value of our total debt as of June 30, 2015 and December 31, 2014, respectively:


	June 30, 2015				December 31, 2014
	Carrying Value		Estimated Fair Value		Carrying Value		Estimated Fair Value
Senior unsecured notes:
3.45% Senior Notes due August 2015	$	350,000	$	350,341	$	350,000	$	354,992
3.05% Senior Notes due March 2016		299,990		302,419		299,982		302,515
2.50% Senior Notes due March 2017		299,938		299,126		299,920		287,014
4.00% Senior Notes due March 2018		249,516		255,442		—		—
7.50% Senior Notes due March 2019		201,695		223,947		201,695		212,068
4.90% Senior Notes due August 2020		499,218		514,130		499,151		471,095
4.625% Senior Notes due March 2021		399,653		396,118		399,627		363,837
3.95% Senior Notes due March 2022		399,309		367,077		399,264		346,425
5.95% Senior Notes due April 2025		448,767		442,302		—		—
6.20% Senior Notes due August 2040		399,895		338,989		399,895		350,351
6.05% Senior Notes due March 2041		397,700		329,678		397,681		343,653
5.25% Senior Notes due March 2042		498,324		376,746		498,310		385,181
6.95% Senior Notes due April 2045		394,536		367,827		—		—

Total senior unsecured notes		4,838,541		4,564,142		3,745,525		3,417,131

Credit facilities & commercial paper program		—		—		1,123,495		1,123,495

Total debt	$	4,838,541	$	4,564,142	$	4,869,020	$	4,540,626

Note 9 — Income Taxes

At June 30, 2015, the reserves for uncertain tax positions totaled $112 million (net of related tax benefits of $1 million). If the June 30, 2015 reserves are not realized, the provision for income taxes would be reduced by $112 million. At December 31, 2014, the reserves for uncertain tax positions totaled $116 million (net of related tax benefits of $1 million).

It is reasonably possible that our existing liabilities related to our reserve for uncertain tax positions may increase or decrease 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.

Note 10 — Employee Benefit Plans

Pension costs include the following components for the three months ended June 30, 2015 and 2014:


	Three Months Ended June 30,
	2015						2014
	Non-U.S.			U.S.			Non-U.S.			U.S.
Service cost	$	846		$	2,149		$	1,433		$	2,541
Interest cost		632			2,300			1,472			2,714
Return on plan assets		(911	)		(3,286	)		(1,856	)		(3,846	)
Amortization of prior service cost		26			36			(5	)		56
Recognized net actuarial loss		110			1,539			316			651

Net pension expense	$	703		$	2,738		$	1,360		$	2,116

NOBLE CORPORATION PLC AND SUBSIDIARIES

NOBLE CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

Included in net pension expense for the three months ended June 30, 2014 for our non-U.S. and U.S. plans was approximately $0.8 million and $0.5 million, respectively, related to Paragon Offshore that was classified as discontinued operations.

Pension costs include the following components for the six months ended June 30, 2015 and 2014:


	Six Months Ended June 30,
	2015						2014
	Non-U.S.			U.S.			Non-U.S.			U.S.
Service cost	$	1,720		$	4,298		$	2,853		$	5,082
Interest cost		1,274			4,599			2,928			5,428
Return on plan assets		(1,837	)		(6,573	)		(3,691	)		(7,692	)
Amortization of prior service cost		53			71			(10	)		112
Recognized net actuarial loss		155			3,079			629			1,302

Net pension expense	$	1,365		$	5,474		$	2,709		$	4,232

Included in net pension expense for the six months ended June 30, 2014 for our non-U.S. and U.S. plans was approximately $2 million and $0.9 million, respectively, related to Paragon Offshore that was classified as discontinued operations.

During the three and six months ended June 30, 2015, we made contributions to our pension plans totaling approximately $0.1 million and $0.3 million, respectively.

Note 11 — Derivative Instruments and Hedging Activities

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

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

Cash Flow Hedges

Several of our regional shorebases, including our North Sea, Australian and Brazilian operations, have a significant amount of their cash operating expenses payable in local currencies. To limit the potential risk of currency fluctuations, we periodically enter into forward contracts, which settle monthly in the operations’ respective local currencies. All of these contracts have a maturity of less than 12 months. The forward contract settlements in the remainder of 2015 represent approximately 60 percent of these forecasted local currency requirements. The notional amount of the forward contracts outstanding, expressed in U.S. Dollars, was approximately $47 million at June 30, 2015. Total unrealized losses related to these forward contracts were approximately $0.1 million as of June 30, 2015 and were recorded as part of “Accumulated other comprehensive loss” (“AOCL”).

NOBLE CORPORATION PLC AND SUBSIDIARIES

NOBLE CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

Financial Statement Presentation

The following table, together with Note 12, summarizes the financial statement presentation and fair value of our derivative positions as of June 30, 2015 and December 31, 2014:


		Estimated fair value
	Balance sheet classification	June 30, 2015		December 31, 2014
Asset derivatives
Cash flow hedges
Short-term foreign currency forward contracts	Other current assets	$	1,103	$	—

Liability derivatives
Cash flow hedges
Short-term foreign currency forward contracts	Other current liabilities	$	1,194	$	—

To supplement the fair value disclosures in Note 12, the following summarizes the recognized gains and losses of cash flow hedges and non-designated derivatives through AOCL or through “contract drilling services” expense for the three months ended June 30, 2015 and 2014:


	Gain/(loss) recognized through AOCL				Gain/(loss) reclassified from AOCL to “contract drilling services” expense					Gain/(loss) recognized through “contract drilling services” expense
	2015		2014		2015			2014		2015		2014
Cash flow hedges
Foreign currency forward contracts	$	479	$	5,067	$	(570	)	$	1,585	$	—	$	—


	Gain/(loss) recognized through AOCL				Gain/(loss) reclassified from AOCL to “contract drilling services” expense					Gain/(loss) recognized through “contract drilling services” expense
	2015		2014		2015			2014		2015		2014
Cash flow hedges
Foreign currency forward contracts	$	513	$	3,873	$	(604	)	$	2,779	$	—	$	—

NOBLE CORPORATION PLC AND SUBSIDIARIES

NOBLE CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

Note 12 — Fair Value of Financial Instruments

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


	June 30, 2015
			Estimated Fair Value Measurements
	Carrying Amount		Quoted Prices in Active Markets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Assets -
Marketable securities	$	7,170	$	7,170	$	—	$	—
Foreign currency forward contracts		1,103		—		1,103		—
Liabilities -
Foreign currency forward contracts	$	1,194	$	—	$	1,194	$	—

	December 31, 2014
			Estimated Fair Value Measurements
	Carrying Amount		Quoted Prices in Active Markets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Assets -
Marketable securities	$	6,175	$	6,175	$	—	$	—

The foreign currency forward contracts have been valued using actively quoted prices and quotes obtained from the counterparties to the contracts. Our cash and cash equivalents, accounts receivable and accounts payable are by their nature short-term. As a result, the carrying values included in the accompanying Consolidated Balance Sheets approximate fair value.

NOBLE CORPORATION PLC AND SUBSIDIARIES

NOBLE CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

Note 13 — Accumulated Other Comprehensive Loss

The following tables set forth the components of, and changes in the accumulated balances for each component of, AOCL for the six months ended June 30, 2015 and 2014. All amounts within the tables are shown net of tax.


	Gains / (Losses) on Cash Flow Hedges⁽¹⁾			Defined Benefit Pension Items⁽²⁾			Foreign Currency Items			Total
Balance at December 31, 2013	$	—		$	(58,598	)	$	(23,566	)	$	(82,164	)

Activity during period:
Other comprehensive income before reclassifications		9,431			—			2,720			12,151
Amounts reclassified from AOCL		(2,779	)		1,528			—			(1,251	)

Net other comprehensive income		6,652			1,528			2,720			10,900

Balance at June 30, 2014	$	6,652		$	(57,070	)	$	(20,846	)	$	(71,264	)



Balance at December 31, 2014	$	—		$	(58,440	)	$	(10,978	)	$	(69,418	)

Activity during period:
Other comprehensive loss before reclassifications		(695	)		—			(1,874	)		(2,569	)
Amounts reclassified from AOCL		604			2,210			—			2,814

Net other comprehensive income (loss)		(91	)		2,210			(1,874	)		245

Balance at June 30, 2015	$	(91	)	$	(56,230	)	$	(12,852	)	$	(69,173	)

(1)	Gains / (losses) on cash flow hedges are related to our foreign currency forward contracts. Reclassifications from AOCL are recognized through “contract drilling services” expense on our Consolidated Statements of Income. See Note 11 for additional information.

(2)

Defined benefit pension items relate to actuarial changes, the amortization of prior service costs and curtailment and settlement expenses. Reclassifications from AOCL are recognized as expense on our Consolidated Statements of Income through either “contract drilling services” or “general and administrative”. See Note 10 for additional information.

Note 14 — Commitments and Contingencies

The Noble Homer Ferrington was under contract with a subsidiary of Exxon Mobil Corporation (“Exxon”), which entered into an assignment agreement with British Petroleum plc (“BP”) for a two-well farmout of the rig in Libya after successfully drilling two wells with the rig for Exxon. In August 2010, BP attempted to terminate the assignment agreement claiming that the rig was not in the required condition, and Exxon 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 the Libyan operating subsidiaries of both BP and Exxon (the “Defendants”). The arbitration panel issued an award in our favor for the amount of $136 million plus interest and fees, and on July 10, 2015, the period under which the Defendants could seek clarification or correction of the award under the applicable arbitration rules expired. On July 31, 2015, BP paid us $149 million under the award, and we expect Exxon to promptly resolve their portion of the award. We anticipate recognizing award amounts received in our statement of operations during the third quarter.

NOBLE CORPORATION PLC AND SUBSIDIARIES

NOBLE CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

In December 2014, one of our subsidiaries reached a settlement with the U.S. Department of Justice (“DOJ”) regarding our drillship, the Noble Discoverer, and the Kulluk in respect of violations of applicable law discovered in connection with a 2012 coast guard inspection in Alaska and our own subsequent internal investigation. Under the terms of the agreement, the subsidiary pled guilty to oil record book, ballast record and required hazardous condition reporting violations with respect to the Noble Discoverer and an oil record book violation with respect to the Kulluk. The subsidiary paid $8.2 million in fines and $4 million in community service payments, and was placed on probation for four years, provided that we may petition the court for early dismissal of probation after three years. If during the term of probation, the subsidiary fails to adhere to the terms of the plea agreement, the DOJ may withdraw from the plea agreement and would be free to prosecute the subsidiary on all charges arising out of its investigation, including any charges dismissed pursuant to the terms of the plea agreement, as well as potentially other charges. We also implemented a comprehensive environmental compliance plan in connection with the settlement.

We have used a commercial agent in Brazil in connection with our Petróleo Brasileiro S.A. (“Petrobras”) drilling contracts. We understand that this agent has represented a number of different companies in Brazil over many years, including several offshore drilling contractors. Recent reports indicate that this agent has entered into a plea agreement in Brazil in connection with the award of a drilling contract to a competitor, and has implicated a Petrobras official as part of a wider investigation of Petrobras’ business practices. We are not aware of any improper activity by Noble in connection with contracts that Noble has entered into with Petrobras, and we have not been contacted by any authorities regarding such contracts or the investigation into Petrobras’ business practices.

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 June 30, 2015, there were 45 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, the resolution of which, in the opinion of management, will not be material to our financial position, results of operations or cash flows. There is inherent risk in any litigation or dispute and no assurance can be given as to the outcome of these claims.

We operate in a number of countries throughout the world and our tax returns filed in those jurisdictions are subject to review and examination by tax authorities within those jurisdictions. During the first quarter of 2014, the IRS began its examination of our tax reporting in the U.S. for the taxable years ended December 31, 2010 and 2011. We believe that we have accurately reported all amounts in our 2010 and 2011 tax returns. We believe the ultimate resolution of the outstanding assessments in the U.S., for which we have not made any accrual, will not have a material adverse effect on our consolidated financial statements. We recognize uncertain tax positions that we believe have a greater than 50 percent likelihood of being sustained. We cannot predict or provide assurance as to the ultimate outcome of any existing or future assessments.

Audit claims of approximately $110 million attributable to income, customs and other business taxes have been assessed against us in Mexico and Brazil. Tax assessments of approximately $52 million have been made against Noble entities in Mexico, of which approximately $38 million relates to Paragon Offshore assets that operated through Noble-retained entities in Mexico prior to the Spin-off. Paragon Offshore has received tax assessments of approximately $220 million against Paragon Offshore entities in Mexico, of which approximately $50 million relates to Noble assets that operated through Paragon Offshore-retained entities in Mexico prior to the Spin-off. In Brazil, Paragon Offshore has received tax assessments of approximately $150 million, of which $46 million relates to Noble assets that operated through a Paragon Offshore-retained entity in Brazil prior to the Spin-off. Under the TSA, Paragon Offshore must indemnify us for all assessed amounts that are related to Paragon Offshore’s Mexico assets, approximately $38 million as noted above, and we must indemnify Paragon Offshore for all assessed amounts that are related to Noble’s Mexico and Brazil assets, approximately $50 million and $46 million, respectively, as noted above, if and when such payments become due.

NOBLE CORPORATION PLC AND SUBSIDIARIES

NOBLE CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

We have contested, or intend to contest or cooperate with Paragon Offshore where it is contesting, the assessments described above, 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 or our ability to collect indemnities from Paragon Offshore under the TSA.

On January 23, 2015, Noble received an official notification of a ruling from the Second Chamber of the Supreme Court in Mexico. The ruling settled an ongoing dispute in Mexico relating to the classification of a Noble subsidiary’s business activity and the applicable rate of depreciation under the Mexican law applicable to the activities of that subsidiary. The ruling did not result in any additional tax liability to Noble. Additionally, the ruling is only applicable to the Noble subsidiary named in the ruling and, therefore, does not establish the depreciation rate applicable to the assets of other Noble subsidiaries. We will continue to contest future assessments received. Any claim by the tax authorities relating to this depreciation issue would be related to the businesses transferred to Paragon Offshore in the Spin-off and, therefore, would be subject to indemnification by Paragon Offshore under the TSA.

We have been notified by Petrobras that it is currently challenging assessments by Brazilian tax authorities of withholding taxes associated with the provision of drilling rigs for its operations in Brazil during 2008 and 2009. Petrobras has also notified us that if Petrobras must ultimately pay such withholding taxes, it will seek reimbursement from us for the portion allocable to our drilling rigs. The amount of withholding tax that Petrobras indicates may be allocable to Noble drilling rigs is R$79 million (approximately $25 million). We believe that our contract with Petrobras requires Petrobras to indemnify us for these withholding taxes. We will, if necessary, vigorously defend our rights.

We maintain certain insurance coverage against specified marine perils, which includes physical damage and loss of hire. The rigs in the U.S. Gulf of Mexico are self-insured for named windstorm perils. In addition, we maintain a physical damage deductible on our rigs of $25 million per occurrence. The loss of hire coverage applies only to our rigs operating under contract with a dayrate equal to or greater than $200,000 a day and is subject to a 45-day waiting period for each unit and each occurrence.

Although we maintain insurance in the geographic areas in which we operate, pollution, reservoir damage and environmental risks generally are not fully insurable. Our insurance policies and contractual rights to indemnity may not adequately cover our losses or may have exclusions of coverage for some losses. We do not have insurance coverage or rights to indemnity for all risks, including loss of hire insurance on most of the rigs in our fleet. Uninsured exposures may include expatriate activities prohibited by U.S. laws and regulations, radiation hazards, certain loss or damage to property on board our rigs and losses relating to shore-based terrorist acts, strikes or cyber risks. 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 $697 million at June 30, 2015.

NOBLE CORPORATION PLC AND SUBSIDIARIES

NOBLE CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

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

NOBLE CORPORATION PLC AND SUBSIDIARIES

NOBLE CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

Note 15 — Accounting Pronouncements

In April 2014, the FASB issued Accounting Standards Update (“ASU”) No. 2014-08, which amends FASB Accounting Standards Codification (“ASC”) Topic 205, “Presentation of Financial Statements” and ASC Topic 360, “Property, Plant, and Equipment.” This ASU alters the definition of a discontinued operation to cover only asset disposals that are a strategic shift with a major effect on an entity’s operations and finances, and calls for more extensive disclosures about a discontinued operation’s assets, liabilities, income and expenses. The guidance is effective for all disposals, or classifications as held-for-sale, of components of an entity that occur within annual periods beginning on or after December 15, 2014. This standard was not early adopted in connection with the Spin-Off. The adoption of this guidance did not have a material impact on our financial condition, results of operations, cash flows or financial disclosures.

In May 2014, the FASB issued ASU No. 2014-09, which amends ASC Topic 606, “Revenue from Contracts with Customers.” The amendments in this ASU are intended to provide a more robust framework for addressing revenue issues, improve comparability of revenue recognition practices and improve disclosure requirements. Under the deferred adoption date, the new guidance will be effective for interim and annual reporting periods beginning after December 15, 2017. We are evaluating what impact, if any, the adoption of this guidance will have on our financial condition, results of operations, cash flows or financial disclosures.

In June 2014, the FASB issued ASU No. 2014-12, which amends ASC Topic 718, “Compensation-Stock Compensation.” The guidance requires that a performance target that affects vesting and that could be achieved after the requisite service period be treated as a performance condition and should not be reflected in the estimate of the grant-date fair value of the award. The guidance is effective for annual periods beginning after December 15, 2015. The guidance can be applied prospectively for all awards granted or modified after the effective date or retrospectively to all awards with performance targets outstanding as of the beginning of the earliest annual period presented in the financial statements and to all new or modified awards thereafter. We are evaluating what impact, if any, the adoption of this guidance will have on our financial condition, results of operations, cash flows or financial disclosures.

In August 2014, the FASB issued ASU No. 2014-15, which amends ASC Subtopic 205-40, “Disclosure of Uncertainties about an Entity’s Ability to continue as a Going Concern.” The amendments in this ASU provide guidance related to management’s responsibility to evaluate whether there is substantial doubt about an entity’s ability to continue as a going concern and to provide related footnote disclosures. The amendments are effective for the annual period ending after December 15, 2016, and for annual periods and interim periods thereafter. We are evaluating what impact, if any, the adoption of this guidance will have on our financial condition, results of operations, cash flows or financial disclosures.

In January 2015, the FASB issued ASU No. 2015-01, which amends ASC Subtopic 225-20, “Income Statement – Extraordinary and Unusual Items.” The amendment in this ASU eliminates from GAAP the concept of extraordinary items. The amendments in this update are effective for interim and annual reporting periods beginning after December 15, 2015. We are evaluating what impact, if any, the adoption of this guidance will have on our financial condition, results of operations, cash flows or financial disclosures.

In February 2015, the FASB issued ASU No. 2015-02 which amends ASC Subtopic 810, “Consolidations.” This amendment affects reporting entities that are required to evaluate whether they should consolidate certain legal entities. Specifically, the amendments modify the evaluation of whether limited partnerships and similar legal entities are VIEs or voting interest entities; eliminate the presumption that a general partner should consolidate a limited partnership; affect the consolidation analysis of reporting entities that are involved with VIEs, particularly those that have fee arrangements and related party relationships. The standard is effective for interim and annual reporting periods beginning after December 15, 2015. The standard may be applied retrospectively or through a cumulative effect adjustment to retained earnings as of the beginning of the year of adoption. We are evaluating what impact, if any, the adoption of this guidance will have on our financial condition, results of operations, cash flows or financial disclosures.

NOBLE CORPORATION PLC AND SUBSIDIARIES

NOBLE CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

In April 2015, the FASB issued ASU No. 2015-03 which amends ASC Subtopic 835-30, “Interest – Imputation of Interest.” The guidance requires debt issuance costs to be presented in the balance sheet as a direct reduction from the associated debt liability. The standard is effective for interim and annual reporting periods beginning after December 15, 2015. Early adoption is permitted for financial statements that have not been previously issued. The new guidance will be applied on a retrospective basis. We are evaluating what impact the adoption of this guidance will have on our financial condition, results of operations, cash flows or financial disclosures.

In April 2015, the FASB issued ASU No. 2015-04 which amends ASC Topic 715, “Compensation – Retirement Benefits.” The guidance gives an employer whose fiscal year end does not coincide with a calendar month end the ability, as a practical expedient, to measure defined benefit retirement obligations and related plan assets as of the month end that is closest to its fiscal year end. The ASU also provides a similar practical expedient for interim remeasurements of significant events. The standard is effective for interim and annual reporting periods beginning after December 15, 2015. Early adoption is permitted. We are 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 16 — Supplemental Financial Information

Consolidated Balance Sheets Information

Deferred revenues from drilling contracts totaled $223 million and $263 million at June 30, 2015 and December 31, 2014, respectively. Such amounts are included in either “Other current liabilities” or “Other liabilities” in the accompanying Consolidated Balance Sheets, based upon our expected time of recognition. Related expenses deferred under drilling contracts totaled $90 million at June 30, 2015 as compared to $94 million at December 31, 2014, and are included in either “Prepaid expenses and other current assets” or “Other assets” in the accompanying Consolidated Balance Sheets, based upon our expected time of recognition.

In April 2015, we agreed to contract dayrate reductions for five rigs working for Saudi Arabian Oil Company (“Aramco”), which are effective from January 1, 2015 through December 31, 2015. In accordance with accounting guidance, we are recognizing the reductions on a straight-line basis over the remaining life of the existing Aramco contracts. At June 30, 2015, revenues recorded in excess of billings as a result of this recognition totaled $37 million, and are included in “Other assets” in the accompanying Consolidated Balance Sheets.

Consolidated Statements of Cash Flows Information

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


	Noble-UK						Noble-Cayman
	Six months ended June 30,						Six months ended June 30,
	2015			2014			2015			2014

Accounts receivable	$	28,673		$	67,689		$	28,673		$	67,689
Other current assets		68,667			(47,537	)		48,106			(48,834	)
Other assets		39,132			(39,612	)		18,838			(39,603	)
Accounts payable		(9,915	)		17,497			(7,947	)		5,073
Other current liabilities		(19,481	)		(46,749	)		(10,350	)		(34,454	)
Other liabilities		(32,592	)		12,888			(32,594	)		12,888

	$	74,484		$	(35,824	)	$	44,726		$	(37,241	)

NOBLE CORPORATION PLC AND SUBSIDIARIES

NOBLE CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

Note 17 — Information about Noble-Cayman

Guarantees of Registered Securities

Noble-Cayman, or one or more wholly-owned subsidiaries of Noble-Cayman, are a co-issuer or full and unconditional guarantor or otherwise obligated as of June 30, 2015 as follows:


Notes	Issuer (Co-Issuer(s))	Guarantor
$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
$250 million 4.00% Senior Notes due 2018	NHIL		Noble-Cayman
$202 million 7.50% Senior Notes due 2019	NHC		Noble-Cayman
	Noble Drilling Holding, LLC (“NDH”)
	Noble Drilling Services 6 LLC (“NDS6”)
$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
$450 million 5.95% Senior Notes due 2025	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
$400 million 6.95% Senior Notes due 2045	NHIL		Noble-Cayman

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

NOBLE CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATING BALANCE SHEET

June 30, 2015

(in thousands)


	Noble- Cayman		NHC		NDH			NHIL		NDS6		Other Non-guarantor Subsidiaries of Noble			Consolidating Adjustments			Total
ASSETS
Current assets
Cash and cash equivalents	$	29	$	—	$	126		$	—	$	—	$	244,965		$	—		$	245,120
Accounts receivable		—		—		16,141			—		—		524,282			—			540,423
Taxes receivable		—		16,063		281			—		—		43,813			—			60,157
Short-term notes receivable from affiliates		125,330		—		1,077,965			—		333,965		171,925			(1,709,185	)		—
Accounts receivable from affiliates		693,834		437,455		234,677			1,164,504		121,829		4,258,806			(6,911,105	)		—
Prepaid expenses and other current assets		1,436		—		4,961			—		—		132,207			—			138,604

Total current assets		820,629		453,518		1,334,151			1,164,504		455,794		5,375,998			(8,620,290	)		984,304

Property and equipment, at cost		—		—		2,081,631			—		—		12,490,780			—			14,572,411
Accumulated depreciation		—		—		(315,372	)		—		—		(2,312,354	)		—			(2,627,726	)

Property and equipment, net		—		—		1,766,259			—		—		10,178,426			—			11,944,685

Notes receivable from affiliates		3,304,653		—		236,920			1,980,391		5,000		1,583,587			(7,110,551	)		—
Investments in affiliates		4,971,977		1,316,576		2,913,930			8,777,006		6,634,018		—			(24,613,507	)		—
Other assets		6,773		—		6,523			27,668		455		179,345			—			220,764

Total assets	$	9,104,032	$	1,770,094	$	6,257,783		$	11,949,569	$	7,095,267	$	17,317,356		$	(40,344,348	)	$	13,149,753

LIABILITIES AND EQUITY
Current liabilities
Short-term notes payables from affiliates	$	—	$	171,925	$	—		$	—	$	371,720	$	1,165,540		$	(1,709,185	)	$	—
Current maturities of long-term debt		—		—		—			350,000		—		—			—			350,000
Accounts payable		—		—		7,658			—		—		210,408			—			218,066
Accrued payroll and related costs		—		—		6,412			—		—		67,993			—			74,405
Accounts payable to affiliates		717,632		65,849		3,460,644			78,638		23,959		2,564,383			(6,911,105	)		—
Taxes payable		—		—		—			—		—		107,716			—			107,716
Interest payable		—		—		—			75,888		4,412		—			—			80,300
Other current liabilities		273		—		7,097			—		—		100,197			—			107,567

Total current liabilities		717,905		237,774		3,481,811			504,526		400,091		4,216,237			(8,620,290	)		938,054

Long-term debt		—		—		—			4,286,846		201,695		—			—			4,488,541
Notes payable to affiliates		1,769,064		—		600,874			1,169,181		192,215		3,379,217			(7,110,551	)		—
Deferred income taxes		—		—		—			—		—		104,402			—			104,402
Other liabilities		19,929		—		27,703			—		—		257,306			—			304,938

Total liabilities		2,506,898		237,774		4,110,388			5,960,553		794,001		7,957,162			(15,730,841	)		5,835,935

Commitments and contingencies
Total shareholder equity		6,597,134		1,532,320		2,147,395			5,989,016		6,301,266		8,221,330			(24,191,327	)		6,597,134
Noncontrolling interests		—		—		—			—		—		1,138,864			(422,180	)		716,684

Total equity		6,597,134		1,532,320		2,147,395			5,989,016		6,301,266		9,360,194			(24,613,507	)		7,313,818

Total liabilities and equity	$	9,104,032	$	1,770,094	$	6,257,783		$	11,949,569	$	7,095,267	$	17,317,356		$	(40,344,348	)	$	13,149,753

NOBLE CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATING BALANCE SHEET

December 31, 2014

(in thousands)


	Noble- Cayman		NHC		NDH			NHIL		NDS6		Other Non-guarantor Subsidiaries of Noble			Consolidating Adjustments			Total
ASSETS
Current assets
Cash and cash equivalents	$	5	$	—	$	254		$	—	$	—	$	65,521		$	—		$	65,780
Accounts receivable		—		—		37,655			2,336		—		529,105			—			569,096
Taxes receivable		—		63,373		752			—		—		43,164			—			107,289
Short-term notes receivable from affiliates		123,449		—		1,077,965			—		333,966		171,925			(1,707,305	)		—
Accounts receivable from affiliates		2,019,319		374,012		192,771			157,164		125,834		4,191,406			(7,060,506	)		—
Prepaid expenses and other current assets		14,274		—		1,764			—		—		123,631			—			139,669

Total current assets		2,157,047		437,385		1,311,161			159,500		459,800		5,124,752			(8,767,811	)		881,834

Property and equipment, at cost		—		—		2,040,168			—		—		12,364,203			—			14,404,371
Accumulated depreciation		—		—		(278,147	)		—		—		(2,040,073	)		—			(2,318,220	)

Property and equipment, net		—		—		1,762,021			—		—		10,324,130			—			12,086,151

Notes receivable from affiliates		3,304,654		—		236,921			1,980,391		5,000		1,581,429			(7,108,395	)		—
Investments in affiliates		4,567,335		1,318,239		2,921,452			8,266,444		6,290,918		—			(23,364,388	)		—
Other assets		2,908		—		6,212			19,826		517		192,791			—			222,254

Total assets	$	10,031,944	$	1,755,624	$	6,237,767		$	10,426,161	$	6,756,235	$	17,223,102		$	(39,240,594	)	$	13,190,239

LIABILITIES AND EQUITY
Current liabilities
Short-term notes payables from affiliates	$	—	$	171,925	$	—		$	—	$	371,720	$	1,163,660		$	(1,707,305	)	$	—
Accounts payable		600		—		10,130			—		—		250,282			—			261,012
Accrued payroll and related costs		—		—		7,738			—		—		83,749			—			91,487
Accounts payable to affiliates		606,224		63,602		3,513,705			61,982		16,869		2,798,124			(7,060,506	)		—
Taxes payable		—		—		—			—		—		91,471			—			91,471
Interest payable		499		—		—			57,053		4,412		—			—			61,964
Other current liabilities		15,651		—		13,409			—		—		110,890			—			139,950

Total current liabilities		622,974		235,527		3,544,982			119,035		393,001		4,498,176			(8,767,811	)		645,884

Long-term debt		1,123,495		—		—			3,543,830		201,695		—			—			4,869,020
Notes payable to affiliates		1,769,068		—		598,715			1,169,180		192,216		3,379,216			(7,108,395	)		—
Deferred income taxes		—		—		—			—		—		120,589			—			120,589
Other liabilities		19,929		—		29,093			—		—		286,942			—			335,964

Total liabilities		3,535,466		235,527		4,172,790			4,832,045		786,912		8,284,923			(15,876,206	)		5,971,457

Commitments and contingencies
Total shareholder equity		6,496,478		1,520,097		2,064,977			5,594,116		5,969,323		7,812,656			(22,961,169	)		6,496,478
Noncontrolling interests		—		—		—			—		—		1,125,523			(403,219	)		722,304

Total equity		6,496,478		1,520,097		2,064,977			5,594,116		5,969,323		8,938,179			(23,364,388	)		7,218,782

Total liabilities and equity	$	10,031,944	$	1,755,624	$	6,237,767		$	10,426,161	$	6,756,235	$	17,223,102		$	(39,240,594	)	$	13,190,239

NOBLE CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATING STATEMENT OF INCOME

Three Months Ended June 30, 2015

(in thousands)


	Noble- Cayman			NHC			NDH			NHIL			NDS6			Other Non-guarantor Subsidiaries of Noble			Consolidating Adjustments			Total
Operating revenues
Contract drilling services	$	—		$	—		$	64,269		$	—		$	—		$	755,585		$	(48,547	)	$	771,307
Reimbursables		—			—			8,537			—			—			13,711			—			22,248

Total operating revenues		—			—			72,806			—			—			769,296			(48,547	)		793,555

Operating costs and expenses
Contract drilling services		2,792			8,302			17,864			23,389			—			315,167			(48,547	)		318,967
Reimbursables		—			—			3,299			—			—			14,353			—			17,652
Depreciation and amortization		—			—			20,683			—			—			138,114			—			158,797
General and administrative		482			3,672			—			9,045			1			309			—			13,509

Total operating costs and expenses		3,274			11,974			41,846			32,434			1			467,943			(48,547	)		508,925

Operating income (loss)		(3,274	)		(11,974	)		30,960			(32,434	)		(1	)		301,353			—			284,630
Other income (expense)
Income (loss) of unconsolidated affiliates		187,575			34,898			37,017			248,725			164,049			—			(672,264	)		—
Income (loss) of unconsolidated affiliates - discontinued operations, net of tax		—			—			—			—			—			—			—			—

Total income (loss) of unconsolidated affiliates		187,575			34,898			37,017			248,725			164,049			—			(672,264	)		—
Interest expense, net of amounts capitalized		(21,133	)		(1,229	)		(3,310	)		(60,552	)		(7,753	)		(14,215	)		50,727			(57,465	)
Interest income and other, net		3,743			(1	)		14,275			21,011			1,414			8,384			(50,727	)		(1,901	)

Income from continuing operations before income taxes		166,911			21,694			78,942			176,750			157,709			295,522			(672,264	)		225,264
Income tax provision		—			(17,592	)		(1,397	)		—			—			(20,547	)		—			(39,536	)

Net income from continuing operations		166,911			4,102			77,545			176,750			157,709			274,975			(672,264	)		185,728
Net income from discontinued operations, net of tax		—			—			—			—			—			—			—			—

Net Income		166,911			4,102			77,545			176,750			157,709			274,975			(672,264	)		185,728
Net income attributable to noncontrolling interests		—			—			—			—			—			(27,360	)		8,543			(18,817	)

Net income attributable to Noble Corporation		166,911			4,102			77,545			176,750			157,709			247,615			(663,721	)		166,911

Other comprehensive income, net		5,608			—			—			—			—			5,608			(5,608	)		5,608

Comprehensive income attributable to Noble Corporation	$	172,519		$	4,102		$	77,545		$	176,750		$	157,709		$	253,223		$	(669,329	)	$	172,519

NOBLE CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATING STATEMENT OF INCOME

Six Months Ended June 30, 2015

(in thousands)


	Noble- Cayman			NHC			NDH			NHIL			NDS6			Other Non-guarantor Subsidiaries of Noble			Consolidating Adjustments			Total
Operating revenues
Contract drilling services	$	—		$	—		$	139,328		$	—		$	—		$	1,493,392		$	(82,052	)	$	1,550,668
Reimbursables		—			—			10,916			—			—			36,313			—			47,229

Total operating revenues		—			—			150,244			—			—			1,529,705			(82,052	)		1,597,897

Operating costs and expenses
Contract drilling services		4,607			16,593			47,242			46,228			—			605,828			(82,052	)		638,446
Reimbursables		—			—			4,781			—			—			33,028			—			37,809
Depreciation and amortization		—			—			38,051			—			—			274,612			—			312,663
General and administrative		939			7,060			—			17,394			1			323			—			25,717

Total operating costs and expenses		5,546			23,653			90,074			63,622			1			913,791			(82,052	)		1,014,635

Operating income (loss)		(5,546	)		(23,653	)		60,170			(63,622	)		(1	)		615,914			—			583,262
Other income (expense)
Income (loss) of unconsolidated affiliates		404,301			66,979			92,041			538,483			343,099			—			(1,444,903	)		—
Income (loss) of unconsolidated affiliates - discontinued operations, net of tax		—			—			—			—			—			—			—			—

Total income (loss) of unconsolidated affiliates		404,301			66,979			92,041			538,483			343,099			—			(1,444,903	)		—
Interest expense, net of amounts capitalized		(45,886	)		(2,248	)		(6,565	)		(108,888	)		(13,969	)		(27,942	)		98,989			(106,509	)
Interest income and other, net		6,473			4,831			26,987			41,790			2,813			20,642			(98,989	)		4,547

Income from continuing operations before income taxes		359,342			45,909			172,633			407,763			331,942			608,614			(1,444,903	)		481,300
Income tax provision		—			(33,685	)		(1,776	)		—			—			(47,633	)		—			(83,094	)

Net income from continuing operations		359,342			12,224			170,857			407,763			331,942			560,981			(1,444,903	)		398,206
Net income from discontinued operations, net of tax		—			—			—			—			—			—			—			—

Net Income		359,342			12,224			170,857			407,763			331,942			560,981			(1,444,903	)		398,206
Net income attributable to noncontrolling interests		—			—			—			—			—			(57,824	)		18,960			(38,864	)

Net income attributable to Noble Corporation		359,342			12,224			170,857			407,763			331,942			503,157			(1,425,943	)		359,342

Other comprehensive income, net		245			—			—			—			—			245			(245	)		245

Comprehensive income attributable to Noble Corporation	$	359,587		$	12,224		$	170,857		$	407,763		$	331,942		$	503,402		$	(1,426,188	)	$	359,587

NOBLE CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATING STATEMENT OF INCOME

Three Months Ended June 30, 2014

(in thousands)


	Noble- Cayman			NHC			NDH			NHIL			NDS6			Other Non-guarantor Subsidiaries of Noble			Consolidating Adjustments			Total
Operating revenues
Contract drilling services	$	—		$	—		$	85,664		$	—		$	—		$	725,970		$	(32,266	)	$	779,368
Reimbursables		—			—			2,575			—			—			21,838			—			24,413

Total operating revenues		—			—			88,239			—			—			747,808			(32,266	)		803,781

Operating costs and expenses
Contract drilling services		2,615			13,267			26,516			35,214			—			317,860			(32,266	)		363,206
Reimbursables		—			—			1,662			—			—			16,070			—			17,732
Depreciation and amortization		—			—			15,711			—			—			136,531			—			152,242
General and administrative		334			3,156			—			8,263			1			(265	)		—			11,489

Total operating costs and expenses		2,949			16,423			43,889			43,477			1			470,196			(32,266	)		544,669

Operating income (loss)		(2,949	)		(16,423	)		44,350			(43,477	)		(1	)		277,612			—			259,112
Other income (expense)
Income (loss) of unconsolidated affiliates		184,704			64,955			22,653			164,952			114,022			—			(551,286	)		—
Income (loss) of unconsolidated affiliates - discontinued operations, net of tax		100,692			28,089			93,520			118,125			4,083			—			(344,509	)		—

Total income (loss) of unconsolidated affiliates		285,396			93,044			116,173			283,077			118,105			—			(895,795	)		—
Interest expense, net of amounts capitalized		(22,466	)		(736	)		(7,151	)		(39,998	)		(7,955	)		(12,452	)		54,407			(36,351	)
Interest income and other, net		5,258			—			13,069			21,011			317			13,504			(54,407	)		(1,248	)

Income from continuing operations before income taxes		265,239			75,885			166,441			220,613			110,466			278,664			(895,795	)		221,513
Income tax provision		—			(17,194	)		(1,522	)		—			(1,547	)		(13,800	)		—			(34,063	)

Net income from continuing operations		265,239			58,691			164,919			220,613			108,919			264,864			(895,795	)		187,450
Net income from discontinued operations, net of tax		—			(9,860	)		(55	)		—			—			110,607			—			100,692

Net Income		265,239			48,831			164,864			220,613			108,919			375,471			(895,795	)		288,142
Net income attributable to noncontrolling interests		—			—			—			—			—			(33,655	)		10,752			(22,903	)

Net income attributable to Noble Corporation		265,239			48,831			164,864			220,613			108,919			341,816			(885,043	)		265,239

Other comprehensive income, net		3,182			—			—			—			—			3,182			(3,182	)		3,182

Comprehensive income attributable to Noble Corporation	$	268,421		$	48,831		$	164,864		$	220,613		$	108,919		$	344,998		$	(888,225	)	$	268,421

NOBLE CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATING STATEMENT OF INCOME

Six Months Ended June 30, 2014

(in thousands)


	Noble- Cayman			NHC			NDH			NHIL			NDS6			Other Non-guarantor Subsidiaries of Noble			Consolidating Adjustments			Total
Operating revenues
Contract drilling services	$	—		$	—		$	162,617		$	—		$	—		$	1,461,912		$	(74,524	)	$	1,550,005
Reimbursables		—			—			3,253			—			—			45,710			—			48,963

Total operating revenues		—			—			165,870			—			—			1,507,622			(74,524	)		1,598,968

Operating costs and expenses
Contract drilling services		12,686			20,486			61,090			61,330			—			632,715			(74,524	)		713,783
Reimbursables		—			—			2,493			—			—			36,743			—			39,236
Depreciation and amortization		—			—			30,345			—			—			267,500			—			297,845
General and administrative		907			5,003			—			15,224			1			2,286			—			23,421

Total operating costs and expenses		13,593			25,489			93,928			76,554			1			939,244			(74,524	)		1,074,285

Operating income (loss)		(13,593	)		(25,489	)		71,942			(76,554	)		(1	)		568,378			—			524,683
Other income (expense)
Income (loss) of unconsolidated affiliates		391,000			110,710			120,767			420,510			284,171			—			(1,327,158	)		—
Income (loss) of unconsolidated affiliates - discontinued operations, net of tax		214,609			53,067			104,560			181,326			6,125			—			(559,687	)		—

Total income (loss) of unconsolidated affiliates		605,609			163,777			225,327			601,836			290,296			—			(1,886,845	)		—
Interest expense, net of amounts capitalized		(48,350	)		(963	)		(12,974	)		(86,491	)		(15,904	)		(24,746	)		112,685			(76,743	)
Interest income and other, net		6,888			—			26,749			46,968			630			28,807			(112,685	)		(2,643	)

Income from continuing operations before income taxes		550,554			137,325			311,044			485,759			275,021			572,439			(1,886,845	)		445,297
Income tax provision		—			(38,593	)		(2,206	)		—			(1,547	)		(27,187	)		—			(69,533	)

Net income from continuing operations		550,554			98,732			308,838			485,759			273,474			545,252			(1,886,845	)		375,764
Net income from discontinued operations, net of tax		—			(18,655	)		6,634			—			—			226,630			—			214,609

Net Income		550,554			80,077			315,472			485,759			273,474			771,882			(1,886,845	)		590,373
Net income attributable to noncontrolling interests		—			—			—			—			—			(63,641	)		23,822			(39,819	)

Net income attributable to Noble Corporation		550,554			80,077			315,472			485,759			273,474			708,241			(1,863,023	)		550,554

Other comprehensive income, net		10,900			—			—			—			—			10,900			(10,900	)		10,900

Comprehensive income attributable to Noble Corporation	$	561,454		$	80,077		$	315,472		$	485,759		$	273,474		$	719,141		$	(1,873,923	)	$	561,454

NOBLE CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS

Six Months Ended June 30, 2015

(in thousands)


	Noble- Cayman			NHC			NDH			NHIL			NDS6			Other Non-guarantor Subsidiaries of Noble			Consolidating Adjustments		Total
Cash flows from operating activities

Net cash from operating activities	$	(37,768	)	$	(7,445	)	$	123,844		$	(117,391	)	$	(11,095	)	$	802,833		$	—	$	752,978

Cash flows from investing activities
Capital expenditures		—			—			(48,227	)		—			—			(160,464	)		—		(208,691	)

Net cash from investing activities		—			—			(48,227	)		—			—			(160,464	)		—		(208,691	)

Cash flows from financing activities
Net change in borrowings outstanding on bank credit facilities		(1,123,495	)		—			—			—			—			—			—		(1,123,495	)
Issuance of senior notes		—			—			—			1,092,728			—			—			—		1,092,728
Debt issuance costs on senior notes and credit facilities		(6,450	)		—			—			(9,620	)		—			—			—		(16,070	)
Dividends paid to noncontrolling interests		—			—			—			—			—			(44,484	)		—		(44,484	)
Distributions to parent company, net		(273,626	)		—			—			—			—			—			—		(273,626	)
Advances (to) from affiliates		1,441,363			7,445			(75,745	)		(965,717	)		11,095			(418,441	)		—		—

Net cash from financing activities		37,792			7,445			(75,745	)		117,391			11,095			(462,925	)		—		(364,947	)

Net change in cash and cash equivalents		24			—			(128	)		—			—			179,444			—		179,340
Cash and cash equivalents, beginning of period		5			—			254			—			—			65,521			—		65,780

Cash and cash equivalents, end of period	$	29		$	—		$	126		$	—		$	—		$	244,965		$	—	$	245,120

NOBLE CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS

Six Months Ended June 30, 2014

(in thousands)


	Noble- Cayman			NHC			NDH			NHIL			NDS6			Other Non-guarantor Subsidiaries of Noble			Consolidating Adjustments			Total
Cash flows from operating activities

Net cash from operating activities	$	(33,190	)	$	(89,407	)	$	132,085		$	(120,048	)	$	(16,759	)	$	1,208,454		$	—		$	1,081,135

Cash flows from investing activities
Capital expenditures		—			—			(860,876	)		—			—			(367,207	)		—			(1,228,083	)
Notes receivable from affiliates		—			—			—			273,744			—			—			(273,744	)		—

Net cash from investing activities		—			—			(860,876	)		273,744			—			(367,207	)		(273,744	)		(1,228,083	)

Cash flows from financing activities
Net change in borrowings outstanding on bank credit facilities		707,472			—			—			—			—			—			—			707,472
Repayment of long-term debt		—			—			—			(250,000	)		—			—			—			(250,000	)
Debt issuance costs on senior notes and credit facilities		(386	)		—			—			—			—			—			—			(386	)
Dividends paid to noncontrolling interests		—			—			—			—			—			(41,910	)		—			(41,910	)
Distributions to parent company, net		(240,900	)		—			—			—			—			—			—			(240,900	)
Advances (to) from affiliates		(159,248	)		89,407			729,719			96,300			16,759			(772,937	)		—			—
Notes payable to affiliates		(273,744	)		—			—			—			—			—			273,744			—

Net cash from financing activities		33,194			89,407			729,719			(153,700	)		16,759			(814,847	)		273,744			174,276

Net change in cash and cash equivalents		4			—			928			(4	)		—			26,400			—			27,328
Cash and cash equivalents, beginning of period		1			—			402			4			—			109,975			—			110,382

Cash and cash equivalents, end of period	$	5		$	—		$	1,330		$	—		$	—		$	136,375		$	—		$	137,710

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 June 30, 2015, and our results of operations for the three and six months ended June 30, 2015 and 2014. 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, 2014 filed by Noble Corporation plc, a public limited company incorporated under the laws of England and Wales (“Noble-UK”), and Noble Corporation, a Cayman Islands company (“Noble-Cayman”).

As a result of the spin-off of Paragon Offshore plc, a public limited company incorporated under the laws of England and Wales (“Paragon Offshore”), on August 1, 2014, the results of operations for Paragon Offshore are reported as discontinued operations in this report. The terms “earnings” and “loss” as used in this “Management’s Discussion and Analysis of Financial Condition and Results of Operations” refer to income/(loss) from continuing operations. Income/(loss) from continuing operations is representative of the Company’s current business operations and focus.

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, including those regarding rig demand, the offshore drilling market, oil prices, contract backlog, fleet status, our financial position, business strategy, impairments, level of debt, repayment of debt, costs, expense management, timing or number of share repurchases, borrowings under our credit facilities or other instruments, sources of funds, completion, delivery dates and acceptance of our newbuild rigs, future capital expenditures, contract commitments, dayrates, contract amendments, commencements, extensions, renewals, renegotiations or terminations, contract tenders, the outcome of any dispute, litigation, audit or investigation, plans and objectives of management for future operations, foreign currency requirements, results of joint ventures, indemnity and other contract claims, construction and upgrade of rigs, industry conditions, access to financing, impact of competition, governmental regulations and permitting, availability of labor, worldwide economic conditions, taxes and tax rates, indebtedness covenant compliance, dividends and distributable reserves, timing or results of acquisitions or dispositions, and timing for compliance with any new regulations are forward-looking statements. When used in this report, the words “anticipate,” “believe,” “estimate,” “expect,” “intend,” “may,” “plan,” “project,” “should” and similar expressions are intended to be among the statements that identify forward-looking statements. Although we believe that the expectations reflected in such forward-looking statements are reasonable, we cannot assure you that such expectations will prove to be correct. These 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, market conditions, legislation and regulations affecting drilling operations, costs and difficulties relating to the integration of businesses, factors affecting the level of activity in the oil and gas industry, supply and demand of drilling rigs, factors affecting the duration of contracts, the actual amount of downtime, factors that reduce applicable dayrates, violations of anti-corruption laws, hurricanes and other weather conditions and the future price of oil and gas that could cause actual plans or results to differ materially from those included in any forward-looking statements. These factors include those referenced or described in Part I, Item 1A. “Risk Factors” of our Annual Report on Form 10-K for the year ended December 31, 2014, 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

We are a leading offshore drilling contractor for the oil and gas industry. We perform contract drilling services with our global fleet of mobile offshore drilling units. As of the filing date of this Quarterly Report on Form 10-Q, our fleet consisted of 15 jackups, nine drillships and eight semisubmersibles, including one high-specification, harsh environment jackup under construction.

Outlook

The business environment for offshore drillers during the first six months of 2015 remained challenging. The rig capacity imbalance, caused in part by the addition of newbuild units and rigs completing current contracts increased while customer demand for these rigs has decreased. Beginning in June 2014, the price of oil, a key factor in determining customer activity levels, began to decline rapidly, with the Brent crude price declining from approximately $112 per barrel on June 30, 2014 to approximately $63 per barrel on June 30, 2015. In this environment, operators have curtailed drilling programs, especially exploration activity, resulting in a dramatic reduction in dayrates for new contracts as well as lower rig utilization. The industry has responded by accelerating the pace of rig retirements and reducing the supply of marketed rigs across the worldwide fleet.

We expect that the business environment for the remainder of 2015 and 2016 will remain challenging and could potentially deteriorate further. The present level of global economic activity, high levels of US onshore oil production, the potential increase of oil supply from Iran and a lack of production cuts within OPEC are contributing to an uncertain oil price environment, leading to a persistent disruption in our customers’ exploration and production spending plans. Current and expected demand from customers over the remainder of 2015 and 2016 is not expected to support the current supply of offshore drilling rigs resulting from capital expenditures that the offshore drilling industry has undertaken in recent years or the continuation of capital expenditures at similar levels. We cannot give any assurances as to when these conditions in the offshore drilling market will improve, or when there will be higher demand for contract drilling services or a decline in the supply of available drilling rigs. While current market conditions persist, we will continue to focus on operating efficiency, cost control and operating margin preservation, which could include stacking or scrapping additional drilling rigs.

We believe in the long-term fundamentals for the industry, especially for those contractors with a modern fleet of high-specification rigs like ours. Also, we believe the ultimate recovery will benefit from any sustained under-investment by clients during this current market phase.

Consistent with our policy, we evaluate property and equipment for impairment on an annual basis or whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. Further declines in the offshore drilling market, or lack of recovery in market conditions, to the extent actual results do not meet our estimated assumptions, may lead to potential impairments in the future.

Results and Strategy

Our business strategy focuses on deepwater drilling and high-specification jackups and the deployment of our drilling rigs in important oil and gas basins around the world.

We have actively expanded our offshore deepwater drilling and high-specification jackup capabilities in recent years through the construction of rigs. Currently, we have one newbuild project remaining, the heavy-duty, harsh environment jackup, Noble Lloyd Noble, which is scheduled to commence operations under a four-year

contract in the North Sea in mid-2016. Although we plan to focus on capital preservation and liquidity based on current market conditions, we also plan to continue to evaluate opportunities to enhance our fleet to achieve greater technological capability, which we believe will lead to increased drilling efficiencies and an enhanced ability to execute the increasingly more complex drilling programs required by our customers.

While we cannot predict the future level of demand or dayrates for our services or future conditions in the offshore contract drilling industry, we believe we are strategically well positioned.

Spin-off of Paragon Offshore plc

On August 1, 2014, Noble-UK completed the separation and spin-off of a majority of its standard specification offshore drilling business (the “Spin-Off”) through a pro rata distribution of all of the ordinary shares of its wholly-owned subsidiary, Paragon Offshore, to the holders of Noble’s ordinary shares. Our shareholders received one share of Paragon Offshore for every three shares of Noble owned as of July 23, 2014, the record date for the distribution. Through the Spin-Off, we disposed of most of our standard specification drilling units and related assets, liabilities and business. Prior to the Spin-off, Paragon Offshore issued approximately $1.7 billion of long-term debt. We used the proceeds from this debt to repay certain amounts outstanding under our commercial paper program. The results of operations for Paragon Offshore prior to the Spin-off date and incremental Spin-off related costs have been classified as discontinued operations for all periods presented in this Quarterly Report on Form 10-Q. For additional information regarding the Spin-off, see Note 2 to the consolidated financial statements included in this report.

Contract Drilling Services Backlog

We maintain a backlog (as defined below) of commitments for contract drilling services. The following table sets forth, as of June 30, 2015, 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		2015 ⁽¹⁾			2016			2017			2018			2019-2023
	(In millions)
Contract Drilling Services Backlog
Semisubmersibles/Drillships^{(2) (5)}	$	6,788	$	1,180		$	1,811		$	1,100		$	701		$	1,996
Jackups		1,901		299			665			424			252			261

Total ⁽³⁾	$	8,689	$	1,479		$	2,476		$	1,524		$	953		$	2,257


Percent of Available Days Committed ⁽⁴⁾
Semisubmersibles/Drillships				78	%		58	%		35	%		24	%		14	%
Jackups				80	%		68	%		41	%		19	%		2	%

Total				79	%		63	%		38	%		21	%		8	%

(1)	Represents a six-month period beginning July 1, 2015.

(2)

The drilling contracts with Royal Dutch Shell, plc (“Shell”) for the Noble Globetrotter I, Noble Globetrotter II, Noble Clyde Boudreaux, Noble Don Taylor and the Noble Jim Day provide opportunities for us to earn performance bonuses based on key performance indicators as defined by the contracts. Our backlog includes an amount equal to 25 percent of potential performance bonuses for these rigs, or approximately $117 million.

(3)	Some of our drilling contracts provide the customer with certain termination rights and, in certain cases, these termination rights require minimal or no notice or financial penalties. However, as of July 27, 2015, we have not received any notification of contract cancellations.

(4)

Percent of available days committed is calculated by dividing the total number of days our rigs are operating under contract for such period, or committed days, by the product of the total number of our rigs, including cold stacked rigs, and the number of calendar days in such period. Committed days do not include the days that a rig is stacked or the

days that a rig is expected to be out of service for significant overhaul, repairs or maintenance. Percentages take into account additional capacity from the estimated dates of deployment of our newbuild rigs that are scheduled to commence operations during 2015 and 2016.

(5)

Noble and a subsidiary of Shell are involved in joint ventures that own and operate both the Noble Bully I and the Noble Bully II. Under the terms of the joint venture agreements, each party has an equal 50 percent share in both rigs. As of June 30, 2015, the combined amount of backlog for these rigs totals approximately $1.4 billion, all of which is included in our backlog. Noble’s proportional interest in the backlog for these rigs totals $720 million.

Our contract drilling services backlog reflects estimated future revenues attributable to both signed drilling contracts and letters of intent that we expect to result in binding drilling contracts. A letter of intent is generally subject to customary conditions, including the execution of a definitive drilling contract. It is possible that some customers that have entered into letters of intent will not enter into signed drilling contracts. As of June 30, 2015, our contract drilling services backlog did not include any letters of intent.

We calculate backlog for any given unit and period by multiplying the full contractual operating dayrate for such unit by the number of days remaining in the period. The reported contract drilling services backlog does not include amounts representing revenues for mobilization, demobilization and contract preparation, which are not expected to be significant to our contract drilling services revenues, amounts constituting reimbursables from customers or amounts attributable to uncommitted option periods under drilling contracts or letters of intent.

The amount of actual revenues earned and the actual periods during which revenues are earned may be materially different than the backlog amounts and backlog periods set forth in the table above due to various factors, including, but not limited to, shipyard and maintenance projects, unplanned downtime, achievement of bonuses, weather conditions and other factors that result in applicable dayrates lower than the full contractual operating dayrate. In addition, amounts included in the backlog may change because drilling contracts may be varied or modified by mutual consent or customers may exercise 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. See Part I, Item 1A, “Risk Factors – We can provide no assurance that our current backlog of contract drilling revenue will be ultimately realized” in our Annual Report on Form 10-K for the year ended December 31, 2014.

As of June 30, 2015, Shell and Freeport-McMoRan Inc. represented approximately 61 percent and 12 percent of our backlog, respectively.

Results of Operations

For the Three Months Ended June 30, 2015 and 2014

Net income from continuing operations attributable to Noble-UK for the three months ended June 30, 2015 (the “Current Quarter”) was $159 million, or $0.64 per diluted share, on operating revenues of $794 million, compared to net income from continuing operations for the three months ended June 30, 2014 (the “Comparable Quarter”) of $140 million, or $0.54 per diluted share, on operating revenues of $804 million.

As a result of Noble-UK conducting all of its business through Noble-Cayman and its subsidiaries, the financial position and results of operations for Noble-Cayman, and the reasons for material changes in the amount of revenue and expense items between the Current Quarter and the Comparable Quarter, would be the same as the information presented below regarding Noble-UK in all material respects, except operating income for Noble-Cayman for the three months ended June 30, 2015 and 2014 was $9 million and $24 million higher, respectively, than operating income for Noble-UK for the same periods. The operating income difference is primarily a result of executive costs directly attributable to Noble-UK for operations support and stewardship related services. In addition, we had non-recurring costs of $6 million during the Comparable Quarter related to the Spin-off, which we recognized as part of discontinued operations at the Noble-UK level.

Rig Utilization, Operating Days and Average Dayrates

Operating results from continuing operations for our contract drilling services segment are dependent on three primary metrics: rig utilization, operating days and dayrates. The following table sets forth the average rig utilization, operating days and average dayrates for our rig fleet for the three months ended June 30, 2015 and 2014:


	Average Rig Utilization (1)						Operating Days (2)							Average Dayrates
	Three Months Ended June 30,						Three Months Ended June 30,							Three Months Ended June 30,
	2015			2014			2015		2014		% Change			2015		2014		% Change

Jackups		84	%		87	%		993		870		14	%	$	171,482	$	178,259		-4	%
Semisubmersibles		63	%		74	%		455		742		-39	%		403,319		424,199		-5	%
Drillships		100	%		100	%		819		637		29	%		509,783		485,686		5	%

Total		83	%		85	%		2,267		2,249		1	%	$	340,217	$	346,494		-2	%

(1)

We define utilization for a specific period as the total number of days our rigs are operating under contract, divided by the product of the total number of our rigs, including cold stacked rigs, and the number of calendar days in such period. Information reflects our policy of reporting on the basis of the number of available rigs in our fleet, excluding newbuild rigs under construction.

(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 from continuing operations for our contract drilling services segment for the three months ended June 30, 2015 and 2014 (dollars in thousands):


	Three Months Ended June 30				Change
	2015		2014		$			%
Operating revenues:
Contract drilling services	$	771,307	$	779,368	$	(8,061	)		-1	%
Reimbursables (1)		22,248		22,243		5			0	%

	$	793,555	$	801,611	$	(8,056	)		-1	%

Operating costs and expenses:
Contract drilling services	$	319,207	$	370,902	$	(51,695	)		-14	%
Reimbursables (1)		17,652		17,097		555			3	%
Depreciation and amortization		153,579		148,324		5,255			4	%
General and administrative		22,424		26,845		(4,421	)		-16	%

		512,862		563,168		(50,306	)		-9	%

Operating income	$	280,693	$	238,443	$	42,250			18	%

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

Operating Revenues. Changes in contract drilling services revenues for the Current Quarter as compared to the Comparable Quarter were driven by a decrease in average dayrates, partially offset by an increase in operating days. The 2 percent decrease in average dayrates decreased revenues by $14 million, which was partially offset by the 1 percent increase in operating days which increased revenues by $6 million.

The decrease in contract drilling services revenues was related to our semisubmersibles, which generated $131 million less revenue than in the Comparable Quarter. This was partially offset by increased revenues related to our drillships and jackups, which generated $108 million and $15 million more revenue, respectively, in the Current Quarter.

The decrease in semisubmersible revenues was driven by a 39 percent decrease in operating days and a 5 percent decrease in average dayrates, resulting in a $122 million and a $9 million decrease in revenues, respectively, from the Comparable Quarter. The decrease in both operating days and average dayrates was primarily attributable to the retirement of the Noble Jim Thompson, the Noble Driller and the Noble Paul Wolff as a result of our decision to discontinue marketing these rigs based on current market conditions. Additionally, the Noble Max Smith and the Noble Paul Romano were operational during the Comparable Quarter but were off contract during the Current Quarter.

The increase in drillship revenues was driven by a 29 percent increase in operating days and a 5 percent increase in average dayrates, resulting in an $88 million and a $20 million increase in revenues, respectively, from the Comparable Quarter. The increase in both average dayrates and operating days was the result of the newbuilds Noble Sam Croft and the Noble Tom Madden, which commenced their contracts in July 2014 and November 2014, respectively.

The 14 percent increase in operating days on our jackups resulted in a $22 million increase in revenues from the Comparable Quarter. The increase in operating days was the result of the commencement of the Noble Sam Turner in August 2014 and the Noble David Tinsley, which was fully operational during the Current Quarter but was off contract during the Comparable Quarter. This was partially offset by the Noble Mick O’Brien, which was off contract during the Current Quarter but experienced full utilization during the Comparable Quarter. The 4 percent decline in average dayrates resulted in a $7 million decrease in revenues driven by unfavorable dayrate changes on contracts across the jackup fleet.

Operating Costs and Expenses. Contract drilling services operating costs and expenses decreased $52 million for the Current Quarter as compared to the Comparable Quarter. Crew-up and operating expenses for our newbuild rigs as they commenced, or prepared to commence, operating under contracts added approximately $41 million in expense in the Current Quarter. This was partially offset by decreased costs of $34 million related to the retirement of the Noble Jim Thompson, the Noble Driller and the Noble Paul Wolff and $34 million related to idle or stacked rigs. The remaining $25 million decrease in costs was primarily driven by a $27 million decrease in mobilization and transportation expenses related to certain rig moves during the Comparable Quarter and a $2 million decrease in insurance costs related to our policy renewal in March 2015, which was partially offset by a $4 million increase in other rig-related expenses.

The increase in depreciation and amortization in the Current Quarter from the Comparable Quarter was primarily attributable to assets placed in service, including the newbuilds noted above.

Other Income and Expenses

General and administrative expenses. Overall, general and administrative expenses decreased $5 million in the Current Quarter as compared to the Comparable Quarter primarily as a result of decreased legal and other professional fees.

Interest Expense, net of amount capitalized. Interest expense, net of amount capitalized, increased $21 million in the Current Quarter as compared to the Comparable Quarter. The increase is a result of the $1.1 billion of senior notes issued in March 2015, coupled with a reduction in capitalized interest in the Current Quarter as compared to the Comparable Quarter due primarily to the completion of construction on two of our newbuild drillships and two of our newbuild jackups. During the Current Quarter, we capitalized approximately 10 percent of total interest charges versus approximately 27 percent during the Comparable Quarter.

Income Tax Provision. Our income tax provision increased $5 million in the Current Quarter. A 10 percent increase in pre-tax earnings generated a $3 million increase in income tax expense. Additionally, a 5 percent increase in the worldwide effective tax rate generated a $2 million increase in income tax expense. The increase in the worldwide effective tax rate was primarily a result of a change in the geographic mix of pre-tax earnings.

Discontinued Operations. Net income from discontinued operations for the Comparable Quarter was $94 million. Revenues reported within discontinued operations were $437 million during the Comparable Quarter. Operating income included within discontinued operations was $111 million during the Comparable Quarter. There was no activity related to discontinued operations during the Current Quarter.

For the Six Months Ended June 30, 2015 and 2014

Net income from continuing operations attributable to Noble-UK for the six months ended June 30, 2015 (the “Current Period”) was $337 million, or $1.36 per diluted share, on operating revenues of $1.6 billion, compared to net income from continuing operations for the six months ended June 30, 2014 (the “Comparable Period”) of $295 million, or $1.14 per diluted share, on operating revenues of $1.6 billion.

As a result of Noble-UK conducting all of its business through Noble-Cayman and its subsidiaries, the financial position and results of operations for Noble-Cayman, and the reasons for material changes in the amount of revenue and expense items between the Current Period and the Comparable Period, would be the same as the information presented below regarding Noble-UK in all material respects, except operating income for Noble-Cayman for the six months ended June 30, 2015 and 2014 was $24 million and $41 million higher, respectively, than operating income for Noble-UK for the same periods. The operating income difference is primarily a result of executive costs directly attributable to Noble-UK for operations support and stewardship related services. In addition, we had non-recurring costs of $19 million during the Comparable Period related to the Spin-off, which we recognized as part of discontinued operations at the Noble-UK level.

Rig Utilization, Operating Days and Average Dayrates


	Average Rig Utilization (1)						Operating Days (2)							Average Dayrates
	Six Months Ended June 30,						Six Months Ended June 30,							Six Months Ended June 30,
	2015			2014			2015		2014		% Change			2015		2014		% Change

Jackups		88	%		92	%		1,983		1,740		14	%	$	172,090	$	170,672		1	%
Semisubmersibles		64	%		78	%		948		1,556		-39	%		397,839		421,250		-6	%
Drillships		100	%		100	%		1,629		1,267		29	%		511,014		471,753		8	%
Other		N/A			0	%		N/A		—			**		N/A		—			**

Total		85	%		88	%		4,560		4,563		0	%	$	340,089	$	339,682		0	%

(1)

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

**	Not a meaningful percentage.

Contract Drilling Services

The following table sets forth the operating results from continuing operations for our contract drilling services segment for the six months ended June 30, 2015 and 2014 (dollars in thousands):


	Six Months Ended June 30,				Change
	2015		2014		$			%
Operating revenues:
Contract drilling services	$	1,550,668	$	1,550,005	$	663			0	%
Reimbursables (1)		47,229		46,793		436			1	%

	$	1,597,897	$	1,596,798	$	1,099			0	%

Operating costs and expenses:
Contract drilling services	$	640,957	$	723,782	$	(82,825	)		-11	%
Reimbursables (1)		37,809		38,600		(791	)		-2	%
Depreciation and amortization		301,787		290,212		11,575			4	%
General and administrative		46,362		52,273		(5,911	)		-11	%

		1,026,915		1,104,867		(77,952	)		-7	%

Operating income	$	570,982	$	491,931	$	79,051			16	%

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

Operating Revenues. Changes in contract drilling services revenues for the Current Period as compared to the Comparable Period were driven by a slight increase in average dayrates, partially offset by a slight decrease in operating days. The slight increase in average dayrates increased revenues by approximately $2 million, while the slight decrease in operating days decreased revenues by $1 million.

The marginal increase in contract drilling services revenues relates to our drillships and jackups, which generated approximately $235 million and $44 million more revenue, respectively, in the Current Period. This was partially offset by decreased revenues related to our semisubmersibles, which declined $278 million from the Comparable Period.

The increase in drillship revenues was driven by a 29 percent increase in operating days and an 8 percent increase in average dayrates, resulting in a $171 million and a $64 million increase in revenues, respectively, from the Comparable Period. The increase in both average dayrates and operating days was the result of the newbuilds Noble Sam Croft and the Noble Tom Madden, which commenced their contracts in July 2014 and November 2014, respectively.

The increase in jackup revenues was driven by a 14 percent increase in operating days and a 1 percent increase in average dayrates, resulting in a $41 million and a $3 million increase in revenues, respectively, from the Comparable Period. The increase in both operating days and average dayrates was the result of the commencements of the following newbuilds: Noble Regina Allen, Noble Houston Colbert and Noble Sam Turner in January 2014, March 2014 and August 2014, respectively. This was partially offset by the Noble Mick O’Brien, which was off contract during the Current Period but experienced full utilization during the Comparable Period.

The decrease in semisubmersible revenues was driven by a 39 percent decline in operating days and a 6 percent decline in average dayrates, resulting in a $256 million and a $22 million decrease in revenues, respectively, from the Comparable Period. The decrease in both operating days and average dayrates was primarily attributable to the retirement of the Noble Jim Thompson, the Noble Driller and the Noble Paul Wolff during the Current Period as a result of our decision to discontinue marketing these rigs based on current market conditions. Additionally, the Noble Max Smith and Noble Paul Romano were operational during the Comparable Period but were off contract during the Current Period.

Operating Costs and Expenses. Contract drilling services operating costs and expenses decreased $83 million for the Current Period as compared to the Comparable Period. Crew-up and operating expenses for our newbuild rigs as they commenced, or prepared to commence, operating under contracts added approximately $93 million in expense in the Current Period. This was partially offset by decreased costs of $74 million related to the retirement of the Noble Jim Thompson, the Noble Driller and the Noble Paul Wolff and $54 million related to idle or stacked rigs. The remaining $48 million decrease in costs was primarily driven by a $32 million decrease in mobilization and transportation expenses related to certain rig moves during the Comparable Period, an $8 million decrease in other rig-related expenses, a $5 million decrease in labor costs and a $3 million decrease in operations support.

The increase in depreciation and amortization in the Current Period from the Comparable Period was primarily attributable to assets placed in service, including the newbuilds noted above.

Other Income and Expenses

General and administrative expenses. Overall, general and administrative expenses decreased $6 million in the Current Period as compared to the Comparable Period primarily as a result of decreased legal and other professional fees.

Interest Expense, net of amount capitalized. Interest expense, net of amount capitalized, increased $30 million in the Current Period as compared to the Comparable Period. The increase is a result of the $1.1 billion of senior notes issued in March 2015, coupled with a reduction in capitalized interest in the Current Period as compared to the Comparable Period due primarily to the completion of construction on four of our newbuild jackups and two of our newbuild drillships. During the Current Period, we capitalized approximately 10 percent of total interest charges versus approximately 26 percent during the Comparable Period.

Income Tax Provision. Our income tax provision increased $13 million in the Current Period. A 13 percent increase in pre-tax earnings generated a $9 million increase in income tax expense. Additionally, a 5 percent increase in the worldwide effective tax rate generated a $4 million increase in income tax expense. The increase in the worldwide effective tax rate was primarily a result of a change in the geographic mix of pre-tax earnings offset by favorable changes in discrete items.

Discontinued Operations. Net income from discontinued operations for the Comparable Period was $196 million. Revenues reported within discontinued operations were $893 million during the Comparable Period. Operating income included within discontinued operations was $232 million during the Comparable Period. There was no activity related to discontinued operations during the Current Period.

Liquidity and Capital Resources

Overview

Cash flows from discontinued operations are combined with cash flows from continuing operations within each cash flow statement category on our Consolidated Statements of Cash Flows for the six months ended June 30, 2014 included in this Quarterly Report on Form 10-Q. Net cash from operating activities was $768 million in the Current Period and $1.0 billion in the Comparable Period. We had working capital of $56 million and $260 million at June 30, 2015 and December 31, 2014, respectively.

Net cash used in investing activities in the Current Period was $209 million as compared to $1.2 billion in the Comparable Period. The variance primarily relates to lower newbuild expenditures, coupled with expenditures for Paragon Offshore in the Comparable Period.

Net cash used in financing activities in the Current Period was $380 million as compared to net cash provided from financing activities of $222 million in the Comparable Period. The variance primarily relates to the Current Period proceeds of $1.1 billion from the senior notes offering, which we used to repay indebtedness outstanding on our credit facilities and commercial paper program, while the Comparable Period includes the repayment of our $250 million 7.375% Senior Notes. Additionally, during the Current Period we repurchased

6.2 million shares as part of our share repurchase program. Our total debt as a percentage of total debt plus equity was 39.7 percent at June 30, 2015 as compared to 40.1 percent at December 31, 2014. Although we issued $1.1 billion senior notes in March 2015, this amount was substantially offset by a net reduction in indebtedness outstanding on our Credit Facilities and commercial paper program during the Current Period as a result of the application of proceeds from the senior note offering.

Our principal sources of capital in the Current Period were our $1.1 billion senior notes offering in March 2015 and the cash generated from operating activities noted above. Cash generated during the Current Period was primarily used for the following:

•

repay indebtedness outstanding under our Credit Facilities and commercial paper program;

•

normal recurring operating expenses;

•

payment of our quarterly dividends;

•

repurchase 6.2 million shares; and

•

capital expenditures.

Our currently anticipated cash flow needs, both in the short-term and long-term, may include the following:

•

normal recurring operating expenses;

•

committed and discretionary capital expenditures;

•

repayment of maturing debt;

•

payments of dividends; and

•

repurchase of shares.

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

At June 30, 2015, we had a total contract drilling services backlog of approximately $8.7 billion. Our backlog as of June 30, 2015 includes a commitment of 79 percent of available days for the remainder of 2015 and 63 percent of available days for 2016. For additional information regarding our backlog, see “Contract Drilling Services Backlog.”

Capital Expenditures

Capital expenditures, including capitalized interest, totaled $170 million and $1.2 billion for the six months ended June 30, 2015 and 2014, respectively. Capital expenditures during the first six months of 2015 consisted of the following:

•

$135 million for major projects, subsea related expenditures and upgrades and replacements to drilling equipment;

•

$23 million on newbuilds, including costs for the Noble Lloyd Noble and trailing costs on our recently completed newbuilds; and

•

$12 million in capitalized interest.

Our total capital expenditure estimate for 2015 is approximately $503 million. In addition, we anticipate recording capitalized interest, which may fluctuate as a result of the timing of completion of ongoing projects.

In connection with our capital expenditure program, as of June 30, 2015, we had outstanding commitments, including shipyard and purchase commitments, for approximately $697 million, all of which we expect to spend 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

On July 24, 2015, our Board of Directors approved the payment of a quarterly dividend to shareholders of $0.375 per share. The payment is expected to total approximately $93 million, based on the number of shares currently outstanding.

The declaration and payment of dividends require authorization of the Board of Directors of Noble-UK and such dividends on issued share capital may be paid only out of Noble-UK’s “distributable reserves” on its statutory balance sheet. Noble-UK is not permitted to pay dividends out of share capital, which includes share premiums. The amount, or continuance, of future dividends will depend on our results of operations, financial condition, cash requirements, future business prospects, contractual restrictions, anticipated capital needs and other factors deemed relevant by our Board of Directors and we may decide to change our dividend at any time.

Share Repurchases

In December 2014, we received shareholder approval to repurchase up to 37,000,000 additional ordinary shares, or approximately 15 percent of our outstanding ordinary shares at the time of the shareholder approval. Any repurchases are expected to be funded using cash on hand, cash from operations or short-term borrowings under our credit facilities. The authority to make such repurchases will expire on the later of April 2016 or the end of the Company’s 2016 annual general meeting of shareholders, at which time we could seek shareholder approval for further repurchases.

In January 2015, we repurchased 6.2 million of our ordinary shares at an average price of $16.10 per share, excluding commissions and stamp tax. Including these items, the average price paid per share during January 2015 was $16.21. There can be no assurance as to the timing or amount of any such further repurchases. However, we intend to take a cautious approach to future share repurchases at least until market conditions in the offshore drilling business stabilize.

Credit Facilities and Senior Unsecured Notes

Credit Facilities and Commercial Paper Program

We have a commercial paper program, which allows us to issue up to $2.4 billion in unsecured commercial paper notes. Amounts issued under the commercial paper program are supported by the unused capacity under our Credit Facilities and, therefore, are classified as long-term on our Consolidated Balance Sheet. The outstanding amounts of commercial paper reduce availability under our Credit Facilities.

Our total debt related to the Credit Facilities and commercial paper program was $1.1 billion at December 31, 2014. At June 30, 2015, we had no amounts outstanding under the Credit Facilities and commercial paper program, therefore, we had $2.7 billion of available capacity under the Credit Facilities.

Senior Unsecured Notes

Our total debt related to senior unsecured notes was $4.8 billion at June 30, 2015 as compared to $3.7 billion at December 31, 2014. The increase in senior unsecured notes outstanding is a result of the issuance of $1.1 billion aggregate principal amount of senior notes in March 2015, which we issued through our indirect wholly-owned subsidiary, Noble Holding International Limited (“NHIL”). These senior notes were issued in three separate tranches, consisting of $250 million of 4.00% Senior Notes due 2018, $450 million of 5.95% Senior Notes due 2025, and $400 million of 6.95% Senior Notes due 2045. The weighted average coupon of all three tranches is 5.87%. The interest rate on these senior notes may be increased if the credit rating applicable to the notes is downgraded below certain specified levels. The net proceeds of approximately $1.08 billion, after expenses, were used to repay indebtedness outstanding under our Credit Facilities and commercial paper program.

Covenants

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 entering into sale and lease-back transactions. At June 30, 2015, we were in compliance with all of our debt covenants. We continually monitor compliance with the covenants under our notes and expect to remain in compliance during the remainder of 2015.

New Accounting Pronouncements

requirements. Under the deferred adoption date, the new guidance will be effective for interim and annual reporting periods beginning after December 15, 2017. We are evaluating what impact, if any, the adoption of this guidance will have on our financial condition, results of operations, cash flows or financial disclosures.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

Market risk is the potential for loss due to a change in the value of a financial instrument as a result of fluctuations in interest rates, currency exchange rates or equity prices, as further described below.

Interest Rate Risk

We are subject to market risk exposure related to changes in interest rates on borrowings under the Credit Facilities and commercial paper program. Interest on borrowings under the Credit Facilities is at an agreed upon percentage point spread over LIBOR, or a base rate stated in the agreements. At June 30, 2015, we had no borrowings outstanding under our Credit Facilities and commercial paper program, which is supported by the Credit Facilities.

Access to our commercial paper program is dependent upon our credit ratings. A decline in our credit ratings below investment grade would prohibit us from accessing the commercial paper market. If we were unable to access the commercial paper market, we would likely transfer any outstanding borrowings to our Credit Facilities. Our Credit Facilities have interest rates that are generally higher than those found in the commercial paper market, which would result in increased interest expense in the future.

In addition, our Credit Facilities and certain of our senior unsecured notes have provisions which vary the applicable interest rates based upon our credit ratings. If our credit ratings were to decline to certain specified levels, the interest expense under our Credit Facilities and certain of our senior unsecured notes would increase.

We maintain certain debt instruments at a fixed rate whose fair value will fluctuate based on changes in interest rates and market perceptions of our credit risk. The fair value of our total debt was $4.6 billion and $4.5 billion at June 30, 2015 and December 31, 2014, respectively. The senior notes issuance of $1.1 billion in March 2015 was substantially offset by a reduction in indebtedness outstanding under our Credit Facilities and commercial paper program.

Foreign Currency Risk

Although we are a U.K. company, we define foreign currency as any non-U.S. denominated currency. Our functional currency is primarily the U.S. Dollar, which is consistent with the oil and gas industry. However, outside the United States, a portion of our expenses are incurred in local currencies. Therefore, when the U.S. Dollar weakens (strengthens) in relation to the currencies of the countries in which we operate, our expenses reported in U.S. Dollars will increase (decrease).

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

Our North Sea, Australian and Brazilian operations have a significant amount of their cash operating expenses payable in local currencies. To limit the potential risk of currency fluctuations, we periodically enter into forward contracts, which settle monthly in the operations’ respective local currencies. All of these contracts have a maturity of less than 12 months. The forward contract settlements in the remainder of 2015 represent approximately 60 percent of these forecasted local currency requirements. The notional amount of the forward contracts outstanding, expressed in U.S. dollars, was approximately $47 million at June 30, 2015. Total unrealized losses related to these forward contracts were approximately $0.1 million as of June 30, 2015 and were 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 $5 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 Employees’ Retirement Trust. The benefits from these plans are based primarily on years of service and, for the salaried plan, employees’ compensation near retirement. These plans are designed to qualify under the Employee Retirement Income Security Act of 1974 (“ERISA”), and our funding policy is consistent with funding requirements of ERISA and other applicable laws and regulations. We make cash contributions, or utilize credits available to us, for the qualified U.S. plans when required. The benefit amount that can be covered by the qualified U.S. plans is limited under ERISA and the Internal Revenue Code (“IRC”) of 1986. Therefore, we maintain an unfunded, nonqualified excess benefit plan designed to maintain benefits for specified employees at the formula level in the qualified salary U.S. plan. We refer to the qualified U.S. plans and the excess benefit plan collectively as the “U.S. plans”.

In addition to the U.S. plans, each of Noble Drilling (Land Support) Limited and Noble Resources Limited, both indirect, wholly-owned subsidiaries of Noble-UK, maintains a pension plan that covers all of its salaried, non-union employees, whose most recent date of employment is prior to April 1, 2014 (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-UK, and James A. MacLennan, Senior Vice President and Chief Financial Officer of Noble-UK, have evaluated the disclosure controls and procedures of Noble-UK as of the end of the period covered by this report. On the basis of this evaluation, Mr. Williams and Mr. MacLennan have concluded that Noble-UK’s disclosure controls and procedures were effective as of June 30, 2015. Noble-UK’s disclosure controls and procedures are designed to ensure that information required to be disclosed by Noble-UK in the reports that it files with or submits to the SEC 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 June 30, 2015. 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-UK’s or Noble-Cayman’s internal control over financial reporting that occurred during the quarter ended June 30, 2015 that has materially affected, or is reasonably likely to materially affect, the internal control over financial reporting of each of Noble-UK or Noble-Cayman, respectively.

PART II. OTHER INFORMATION

Item 1. Legal Proceedings

Information regarding legal proceedings is set forth in Notes 6 and 14 to our consolidated financial statements included in Item 1 of Part I of this Quarterly Report on Form 10-Q and is incorporated herein by reference.

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

Under UK law, the company is only permitted to purchase its own shares by way of an “off-market purchase” in a plan approved by shareholders. In December 2014, we received shareholder approval to repurchase up to 37,000,000 ordinary shares, or approximately 15 percent of our outstanding ordinary shares at the time of the shareholder approval. Any repurchases are expected to be funded using cash on hand, cash from operations or short-term borrowings under our Credit Facilities. The authority to make such repurchases will expire on the later of April 2016 or the end of the Company’s 2016 annual general meeting of shareholders, at which time we could seek shareholder approval for further repurchases. The company may only fund the purchase of its own shares out of distributable reserves or the proceeds of a new issue of shares made expressly for that purpose. The company currently has adequate distributable reserves to fund its currently approved repurchase plan. If any premium above the nominal value of the purchased shares is paid, it must be paid out of distributable reserves. Any shares purchased by the company out of distributable reserves may be held as treasury shares or cancelled at the company’s election. During the three months ended June 30, 2015, there were no repurchases by Noble-UK of its shares.

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 plc, a public limited company incorporated under the laws of England and Wales


/s/ David W. Williams				August 6, 2015
David W. Williams				Date
Chairman, President and Chief Executive Officer
(Principal Executive Officer)

/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				August 6, 2015
David W. Williams				Date
President and Chief Executive Officer
(Principal Executive Officer)

/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 Corporation, a Swiss corporation (“Noble-Swiss”), Noble Corporation, a Cayman Islands company (“Noble-Cayman”), and Noble Cayman Acquisition Ltd. (filed as Exhibit 1.1 to Noble-Cayman’s Current Report on Form 8-K filed on December 22, 2008 and incorporated herein by reference).

2.3		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).

2.4		Master Separation Agreement, dated as of July 31, 2014, between Noble-Cayman and Paragon Offshore plc. (filed as Exhibit 2.1 to Noble-UK’s Current Report on Form 8-K filed on August 5, 2014 and incorporated herein by reference).

3.1		Composite Copy of Articles of Association of Noble-UK, as of June 10, 2014 (filed as Exhibit 3.1 to Noble-UK’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2014 and incorporated herein by reference).

3.2		Memorandum and Articles of Association of Noble-Cayman (filed as Exhibit 3.1 to Noble-Cayman’s Current Report on Form 8-K filed on March 30, 2009 and incorporated herein by reference).

4.1		Revolving Credit Agreement dated as of January 26, 2015, among Noble-Cayman and Noble International Finance Company, a Cayman Islands company, as borrowers; JPMorgan Chase Bank, N.A., as administrative agent and a swingline lender; Wells Fargo Bank, National Association, as a swingline lender; the lenders party thereto; Barclays Bank PLC, Citibank, N.A., DNB Bank ASA New York Branch, HSBC Bank USA, N.A., SunTrust Bank and Wells Fargo, as co-syndication agents; BNP Paribas, Credit Suisse AG, Cayman Islands Branch and Mizuho Bank, Ltd, as co-documentation agents; and J.P. Morgan Securities LLC, Barclays Bank PLC, Citigroup Global Markets Inc., DNB Markets, Inc., HSBC Securities (USA) Inc., SunTrust Robinson Humphrey, Inc. and Wells Fargo Securities, LLC, as joint lead arrangers and joint lead bookrunners (filed as Exhibit 4.1 to Noble-UK’s Current Report on Form 8-K filed on January 29, 2015 and incorporated herein by reference).

4.2		364-Day Revolving Credit Agreement dated as of January 29, 2015, among Noble-Cayman and Noble International Finance Company, a Cayman Islands company, as borrowers; JPMorgan, as administrative agent; the lenders party thereto; Barclays Bank PLC, Citibank, N.A. and HSBC Bank USA, N.A., as co-syndication agents; BNP Paribas, as documentation agent; and J.P. Morgan Securities LLC, Barclays Bank PLC, Citigroup Global Markets Inc., and HSBC Securities (USA) Inc., as joint lead arrangers and joint lead bookrunners (filed as Exhibit 4.2 to Noble-UK’s Current Report on Form 8-K filed on January 29, 2015 and incorporated herein by reference).

4.3		Indenture, dated as of March 16, 2015, among Noble Holding International Limited, as Issuer, and Wells Fargo N.A., as Trustee, relating to 4.000% senior notes due 2018, 5.950% senior notes due 2025 and 6.95% senior notes due 2045 of Noble Holding International Limited (filed as Exhibit 4.1 to Noble-UK’s Current Report on Form 8-K filed on March 16, 2015 and incorporated herein by reference).

4.4		First Supplemental Indenture, dated as of March 16, 2015, among Noble Holding International Limited, as Issuer, Noble Corporation, as Guarantor, and Wells Fargo N.A., as Trustee, relating to 4.000% senior notes due 2018, 5.950% senior notes due 2025 and 6.95% senior notes due 2045 of Noble Holding International Limited (filed as Exhibit 4.2 to Noble-UK’s Current Report on Form 8-K filed on March 16, 2015 and incorporated herein by reference).

10.1		Tax Sharing Agreement, dated as of July 31, 2014, between Noble-UK and Paragon Offshore plc. (filed as Exhibit 10.1 to Noble-UK’s Current Report on Form 8-K filed on August 5, 2014 and incorporated herein by reference).

10.2		Employee Matters Agreement, dated as of July 31, 2014, between Noble-Cayman and Paragon Offshore plc. (filed as Exhibit 10.2 to Noble-UK’s Current Report on Form 8-K filed on August 5, 2014 and incorporated herein by reference).

10.3		Transition Services Agreement, dated as of July 31, 2014, between Noble-Cayman and Paragon Offshore plc. (filed as Exhibit 10.3 to Noble-UK’s Current Report on Form 8-K filed on August 5, 2014 and incorporated herein by reference).

10.4		Transition Services Agreement (Brazil), dated as of July 31, 2014, among Paragon Offshore do Brasil Limitada, Paragon Offshore (Nederland) B.V., Paragon Offshore plc, Noble-Cayman, Noble Dave Beard Limited and Noble Drilling (Nederland) II B.V. (filed as Exhibit 10.4 to Noble-UK’s Current Report on Form 8-K filed on August 5, 2014 and incorporated herein by reference).


10.5*		Noble Corporation 2015 Short Term Incentive Plan (filed as Exhibit 10.5 to Noble-UK’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2015 and incorporated herein by reference).

10.6*		Noble Corporation 2015 Omnibus Incentive Plan, effective May 1, 2015 (filed as Exhibit 10.1 to Noble-UK’s Current Report on Form 8-K filed on April 29, 2015 and incorporated herein by reference).

10.7*		Amended and Restated Form of Noble-UK 2013 Performance-Vested Restricted Stock Unit Award under the Noble-UK 1991 Stock Option and Restricted Stock Plan (filed as Exhibit 10.1 to Noble-UK’s Current Report on Form 8-K filed on October 16, 2014 and incorporated herein by reference).

10.8*		Amended and Restated Form of Noble-UK 2014 Performance-Vested Restricted Stock Unit Award under the Noble-UK 1991 Stock Option and Restricted Stock Plan (filed as Exhibit 10.2 to Noble-UK’s Current Report on Form 8-K filed on October 16, 2014 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-UK 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-UK.

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-UK 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-UK.

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.