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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
_________________________________________________________________________________________________
FORM 10-Q
_____________________________________________________________________________________________________
| | | | | |
| ☑ | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended: June 30, 2023
OR
| | | | | |
| ☐ | 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: 001-41520
Noble Corporation plc
(Exact name of registrant as specified in its charter)
_____________________________________________________________________________________________________
| | | | | | | | |
| England and Wales | | 98-1644664 |
| (State or other jurisdiction of incorporation or organization) | | (I.R.S. employer identification number) |
13135 Dairy Ashford, Suite 800, Sugar Land, Texas, 77478
(Address of principal executive offices) (Zip Code)
Registrant’s Telephone Number, Including Area Code: (281) 276-6100
_____________________________________________________________________________________________________
_______________________________________________________________________________________________
Securities registered pursuant to Section 12(b) of the Act:
| | | | | | | | |
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered |
| A Ordinary Shares, par value $0.00001 per share | NE | New York Stock Exchange |
| Tranche 1 Warrants of Noble Corporation plc | NE WS | New York Stock Exchange |
| Tranche 2 Warrants of Noble Corporation plc | NE WSA | New York Stock Exchange |
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Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (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 ☑ No ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☑ No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
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| Large accelerated filer | ☑ | | Accelerated filer | ☐ |
| Non-accelerated filer | ☐ | | Smaller reporting company | ☐ |
| | | Emerging growth company | ☐ |
| | | | |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☑
Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Sections 12, 13 or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court. Yes ☑ No ☐
Number of shares outstanding at July 31, 2023: Noble Corporation plc - 137,083,812
TABLE OF CONTENTS | | | | | | | | | | | | | | |
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| PART I | | | | |
| Item 1 | | | | |
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| Item 2 | | | | |
| Item 3 | | | | |
| Item 4 | | | | |
| PART II | | | | |
| Item 1 | | | | |
| Item 1A | | | | |
| Item 2 | | | | |
| Item 6 | | | | |
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PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
NOBLE CORPORATION plc AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
(Unaudited)
| | | | | | | | | | | | | | |
| | June 30, 2023 | | December 31, 2022 |
| ASSETS | | | | |
| Current assets | | | | |
| Cash and cash equivalents | | $ | 255,356 | | | $ | 476,206 | |
| Accounts receivable, net | | 516,800 | | | 468,802 | |
| Taxes receivable | | 54,371 | | | 34,087 | |
| Prepaid expenses and other current assets | | 106,091 | | | 72,695 | |
| Total current assets | | 932,618 | | | 1,051,790 | |
| Intangible assets | | 17,018 | | | 34,372 | |
| Property and equipment, at cost | | 4,329,002 | | | 4,163,205 | |
| Accumulated depreciation | | (322,444) | | | (181,904) | |
| Property and equipment, net | | 4,006,558 | | | 3,981,301 | |
| Goodwill | | 14,626 | | | 26,016 | |
| Other assets | | 226,582 | | | 141,385 | |
| Total assets | | $ | 5,197,402 | | | $ | 5,234,864 | |
| LIABILITIES AND EQUITY | | | | |
| Current liabilities | | | | |
| Current maturities of long-term debt | | $ | — | | | $ | 159,715 | |
| Accounts payable | | 310,723 | | | 290,690 | |
| Accrued payroll and related costs | | 77,049 | | | 76,185 | |
| Taxes payable | | 57,337 | | | 56,986 | |
| Interest payable | | 10,267 | | | 9,509 | |
| Other current liabilities | | 58,775 | | | 74,013 | |
| Total current liabilities | | 514,151 | | | 667,098 | |
| Long-term debt | | 585,389 | | | 513,055 | |
| Deferred income taxes | | 9,807 | | | 9,335 | |
| Noncurrent contract liabilities | | 79,792 | | | 181,883 | |
| Other liabilities | | 288,843 | | | 256,408 | |
| Total liabilities | | 1,477,982 | | | 1,627,779 | |
Commitments and contingencies (Note 13) | | | | |
| Shareholders’ equity | | | | |
Common stock, $0.00001 par value; 137,084 ordinary shares outstanding as of June 30, 2023; 134,681 ordinary shares outstanding as of December 31, 2022 | | 1 | | | 1 | |
| Additional paid-in capital | | 3,358,108 | | | 3,347,507 | |
| Retained earnings | | 359,809 | | | 255,930 | |
| Accumulated other comprehensive income (loss) | | 1,502 | | | 3,647 | |
Total shareholders’ equity | | 3,719,420 | | | 3,607,085 | |
| Total liabilities and equity | | $ | 5,197,402 | | | $ | 5,234,864 | |
See accompanying notes to the unaudited condensed consolidated financial statements.
NOBLE CORPORATION plc AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share amounts)
(Unaudited)
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| | Three Months Ended June 30, | | Six Months Ended June 30, |
| | 2023 | | 2022 | | 2023 | | 2022 |
| Operating revenues | | | | | | | | |
| Contract drilling services | | $ | 606,180 | | | $ | 262,463 | | | $ | 1,181,470 | | | $ | 457,498 | |
| Reimbursables and other | | 32,355 | | | 12,690 | | | 67,119 | | | 27,885 | |
| | 638,535 | | | 275,153 | | | 1,248,589 | | | 485,383 | |
| Operating costs and expenses | | | | | | | | |
| Contract drilling services | | 362,533 | | | 178,145 | | | 724,322 | | | 344,228 | |
| Reimbursables | | 24,796 | | | 10,333 | | | 50,802 | | | 23,811 | |
| Depreciation and amortization | | 71,324 | | | 26,636 | | | 141,266 | | | 52,241 | |
| General and administrative | | 32,352 | | | 16,687 | | | 62,389 | | | 34,211 | |
| Merger and integration costs | | 22,452 | | | 9,057 | | | 34,083 | | | 18,578 | |
(Gain) loss on sale of operating assets, net | | — | | | 1,103 | | | — | | | (3,459) | |
| Hurricane losses and (recoveries), net | | 15,934 | | | (14,407) | | | 19,478 | | | 2,805 | |
| | 529,391 | | | 227,554 | | | 1,032,340 | | | 472,415 | |
| Operating income (loss) | | 109,144 | | | 47,599 | | | 216,249 | | | 12,968 | |
| Other income (expense) | | | | | | | | |
| Interest expense, net of amounts capitalized | | (14,662) | | | (7,715) | | | (31,534) | | | (15,395) | |
| Gain (loss) on extinguishment of debt, net | | (26,397) | | | — | | | (26,397) | | | — | |
| Interest income and other, net | | (2,940) | | | 1,081 | | | (914) | | | 1,531 | |
| Income (loss) before income taxes | | 65,145 | | | 40,965 | | | 157,404 | | | (896) | |
| Income tax benefit (provision) | | 671 | | | (3,908) | | | 16,475 | | | 1,297 | |
| Net income (loss) | | $ | 65,816 | | | $ | 37,057 | | | $ | 173,879 | | | $ | 401 | |
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| Per share data | | | | | | | | |
| Basic: | | | | | | | | |
| Net income (loss) | | $ | 0.48 | | | $ | 0.53 | | | $ | 1.27 | | | $ | 0.01 | |
| Diluted: | | | | | | | | |
| Net income (loss) | | $ | 0.45 | | | $ | 0.45 | | | $ | 1.19 | | | $ | — | |
See accompanying notes to the unaudited condensed consolidated financial statements.
NOBLE CORPORATION plc AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
(In thousands)
(Unaudited)
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Three Months Ended June 30, | | Six Months Ended June 30, |
| | 2023 | | 2022 | | 2023 | | 2022 |
| Net income (loss) | | 65,816 | | | 37,057 | | | 173,879 | | | 401 | |
| Other comprehensive income (loss) | | | | | | | | |
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Net changes in pension and other postretirement plan assets and benefit obligations recognized in other comprehensive income (loss), net of tax provision (benefit) of zero and $2 for the three months ended June 30, 2023 and 2022, respectively, and $2,436 and $2 for the six months ended June 30, 2023 and 2022, respectively. | | 41 | | | (1,163) | | | (2,145) | | | (1,587) | |
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| Other comprehensive income (loss), net | | 41 | | | (1,163) | | | (2,145) | | | (1,587) | |
| Comprehensive income (loss) | | $ | 65,857 | | | $ | 35,894 | | | $ | 171,734 | | | $ | (1,186) | |
See accompanying notes to the unaudited condensed consolidated financial statements.
NOBLE CORPORATION plc AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
| | | | | | | | | | | | | | |
| | Six Months Ended June 30, |
| | 2023 | | 2022 |
| Cash flows from operating activities | | | | |
| Net income (loss) | | $ | 173,879 | | | $ | 401 | |
| Adjustments to reconcile net income (loss) to net cash flow from operating activities: | | | | |
| Depreciation and amortization | | 141,266 | | | 52,241 | |
| Amortization of intangible assets and contract liabilities, net | | (84,737) | | | 28,354 | |
| (Gain) loss on extinguishment of debt, net | | 26,397 | | | — | |
| (Gain) loss on sale of operating assets, net | | — | | | (6,767) | |
| Deferred income taxes | | (57,179) | | | (15,730) | |
| Amortization of share-based compensation | | 18,854 | | | 13,839 | |
| Other costs, net | | 5,404 | | | (3,364) | |
| Changes in components of working capital | | | | |
| Change in taxes receivable | | (20,284) | | | (345) | |
| Net changes in other operating assets and liabilities | | (55,520) | | | (32,330) | |
| Net cash provided by (used in) operating activities | | 148,080 | | | 36,299 | |
| Cash flows from investing activities | | | | |
| Capital expenditures | | (169,530) | | | (79,525) | |
| Proceeds from disposal of assets, net | | — | | | 15,756 | |
| Net cash provided by (used in) investing activities | | (169,530) | | | (63,769) | |
| Cash flows from financing activities | | | | |
| Issuance of debt | | 600,000 | | | — | |
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| Repayments of debt | | (673,411) | | | — | |
| Debt extinguishment costs | | (25,697) | | | — | |
| Debt issuance costs | | (24,914) | | | — | |
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| Warrants exercised | | 102 | | | 440 | |
| Share repurchases | | (70,000) | | | — | |
| Taxes withheld on employee stock transactions | | (8,355) | | | (4,926) | |
| Net cash provided by (used in) financing activities | | (202,275) | | | (4,486) | |
| Net increase (decrease) in cash, cash equivalents and restricted cash | | (223,725) | | | (31,956) | |
| Cash, cash equivalents and restricted cash, beginning of period | | 485,707 | | | 196,722 | |
| Cash, cash equivalents and restricted cash, end of period | | $ | 261,982 | | | $ | 164,766 | |
See accompanying notes to the unaudited condensed consolidated financial statements.
NOBLE CORPORATION plc AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF EQUITY
(In thousands)
(Unaudited)
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| | Shares | | Additional
Paid-in
Capital | | Retained
Earnings (Accumulated Deficit) | | Accumulated Other Comprehensive Income (Loss) | | Total
Equity | | | | | | | | | | |
| | Balance | | Par Value | | | | | | | | | | | | | | |
| Balance at December 31, 2022 | | 134,681 | | | $ | 1 | | | $ | 3,347,507 | | | $ | 255,930 | | | $ | 3,647 | | | $ | 3,607,085 | | | | | | | | | | | |
| Employee related equity activity | | | | | | | | | | | | | | | | | | | | | | |
| Amortization of share-based compensation | | — | | | — | | | 9,651 | | | — | | | — | | | 9,651 | | | | | | | | | | | |
| Issuance of share-based compensation shares | | 440 | | | — | | | — | | | — | | | — | | | — | | | | | | | | | | | |
| Shares withheld for taxes on equity transactions | | — | | | — | | | (8,327) | | | — | | | — | | | (8,327) | | | | | | | | | | | |
| Warrant exercises | | 3,772 | | | — | | | 21 | | | — | | | — | | | 21 | | | | | | | | | | | |
| Share repurchases | | (270) | | | — | | | — | | | (10,000) | | | — | | | (10,000) | | | | | | | | | | | |
| Net income (loss) | | — | | | — | | | — | | | 108,063 | | | — | | | 108,063 | | | | | | | | | | | |
| Other comprehensive income (loss), net | | — | | | — | | | — | | | — | | | (2,186) | | | (2,186) | | | | | | | | | | | |
| Balance at March 31, 2023 | | 138,623 | | | 1 | | | 3,348,852 | | | 353,993 | | | 1,461 | | | 3,704,307 | | | | | | | | | | | |
| Employee related equity activity | | | | | | | | | | | | | | | | | | | | | | |
| Amortization of share-based compensation | | — | | | — | | | 9,203 | | | — | | | — | | | 9,203 | | | | | | | | | | | |
| Issuance of share-based compensation shares | | 7 | | | — | | | — | | | — | | | — | | | — | | | | | | | | | | | |
| Shares withheld for taxes on equity transactions | | — | | | — | | | (28) | | | — | | | — | | | (28) | | | | | | | | | | | |
| Warrant exercises | | 4 | | | — | | | 81 | | | — | | | — | | | 81 | | | | | | | | | | | |
| Share repurchases | | (1,550) | | | — | | | — | | | (60,000) | | | — | | | (60,000) | | | | | | | | | | | |
| Net income (loss) | | — | | | — | | | — | | | 65,816 | | | — | | | 65,816 | | | | | | | | | | | |
| Other comprehensive income (loss), net | | — | | | — | | | — | | | — | | | 41 | | | 41 | | | | | | | | | | | |
| Balance at June 30, 2023 | | 137,084 | | | $ | 1 | | | $ | 3,358,108 | | | $ | 359,809 | | | $ | 1,502 | | | $ | 3,719,420 | | | | | | | | | | | |
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See accompanying notes to the unaudited condensed consolidated financial statements.
NOBLE CORPORATION plc AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF EQUITY - CONTINUED
(In thousands)
(Unaudited)
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Shares | | Additional
Paid-in
Capital | | Retained
Earnings (Accumulated Deficit) | | Accumulated Other
Comprehensive
Income (Loss) | | Total
Equity |
| | Balance | | Par Value | | | | |
| Balance at December 31, 2021 | | 60,172 | | | $ | 1 | | | $ | 1,393,255 | | | $ | 101,982 | | | $ | 5,389 | | | $ | 1,500,627 | |
| Employee related equity activity | | | | | | | | | | | | |
| Amortization of share-based compensation | | — | | | — | | | 6,795 | | | — | | | — | | | 6,795 | |
| Issuance of share-based compensation shares | | 365 | | | — | | | — | | | — | | | — | | | — | |
| Shares withheld for taxes on equity transactions | | — | | | — | | | (4,926) | | | — | | | — | | | (4,926) | |
| Warrant exercises | | 2,535 | | | — | | | 118 | | | — | | | — | | | 118 | |
| Net income (loss) | | — | | | — | | | — | | | (36,656) | | | — | | | (36,656) | |
| Other comprehensive income (loss), net | | — | | | — | | | — | | | — | | | (424) | | | (424) | |
| Balance at March 31, 2022 | | 63,072 | | | 1 | | | 1,395,242 | | | 65,326 | | | 4,965 | | | 1,465,534 | |
| Employee related equity activity | | | | | | | | | | | | |
| Amortization of share-based compensation | | — | | | — | | | 7,044 | | | — | | | — | | | 7,044 | |
| Issuance of share-based compensation shares | | 3,978 | | | — | | | 322 | | | — | | | — | | | 322 | |
| Shares withheld for taxes on equity transactions | | — | | | — | | | — | | | — | | | — | | | — | |
| Warrant exercises | | — | | | — | | | — | | | — | | | — | | | — | |
| Net income (loss) | | — | | | — | | | — | | | 37,057 | | | — | | | 37,057 | |
| Other comprehensive income (loss), net | | — | | | — | | | — | | | — | | | (1,163) | | | (1,163) | |
| Balance at June 30, 2022 | | 67,050 | | | $ | 1 | | | $ | 1,402,608 | | | $ | 102,383 | | | $ | 3,802 | | | $ | 1,508,794 | |
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See accompanying notes to the unaudited condensed consolidated financial statements.
NOBLE CORPORATION plc AND SUBSIDIARIES
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unless otherwise indicated, dollar and share 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”), is a leading offshore drilling contractor for the oil and gas industry. We provide contract drilling services to the international oil and gas industry with our global fleet of mobile offshore drilling units. Noble and its predecessors have been engaged in the contract drilling of oil and gas wells since 1921. As of June 30, 2023, our fleet of 32 drilling rigs consisted of 19 floaters and 13 jackups.
We report our contract drilling operations as a single reportable segment, Contract Drilling Services, which reflects how we manage our business. 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 primarily of large, integrated, independent and government-owned or controlled oil and gas companies throughout the world.
In September 2022, as a result of the Merger (as defined herein), Noble became the successor issuer to Noble Corporation, an exempted company incorporated in the Cayman Islands with limited liability (“Noble Cayman”), for purposes of and pursuant to Rule 12g-3(a) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). 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 and its consolidated subsidiaries.
The accompanying unaudited condensed consolidated financial statements of Noble have been prepared pursuant to the rules and regulations of the US 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 have been condensed or omitted pursuant to such rules and regulations. The unaudited financial statements are prepared on a going concern basis and reflect all adjustments that 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, 2022 Condensed Consolidated Balance Sheet presented herein is derived from the December 31, 2022 audited consolidated financial statements. These interim financial statements should be read in conjunction with the audited consolidated financial statements and notes included in our Annual Report on Form 10-K for the year ended December 31, 2022, filed by Noble. The results of operations for interim periods are not necessarily indicative of the results to be expected for the full year.
Note 2— Acquisitions and Divestitures
Business Combination with Maersk Drilling
On September 30, 2022 (the “Merger Effective Date”), pursuant to a Business Combination Agreement, dated November 10, 2021 (as amended, the “Business Combination Agreement”), by and among Noble, Noble Cayman, Noble Newco Sub Limited, a Cayman Islands exempted company and a direct, wholly owned subsidiary of Noble (“Merger Sub”), and The Drilling Company of 1972 A/S, a Danish public limited liability company (“Maersk Drilling”), Noble Cayman merged with and into Merger Sub (the “Merger”), with Merger Sub surviving the Merger as a wholly owned subsidiary of Noble. As a result of the Merger, Noble became the ultimate parent of Noble Cayman and its respective subsidiaries.
On October 3, 2022 (the “Closing Date”), pursuant to the Business Combination Agreement, Noble completed a voluntary tender exchange offer to Maersk Drilling’s shareholders (the “Offer” and, together with the Merger and the other transactions contemplated by the Business Combination Agreement, the “Business Combination”) and because Noble acquired more than 90% of the issued and outstanding shares of Maersk Drilling, nominal value Danish krone (“DKK”) 10 per share (“Maersk Drilling Shares”), Noble redeemed all remaining Maersk Drilling Shares not exchanged in the Offer for, at the election of the holder, either A ordinary shares, par value $0.00001 per share, of Noble (“Ordinary Shares”) or cash (or, for those holders that did not make an election, only cash), under Danish law by way of a compulsory purchase (the “Compulsory Purchase”), which was completed in early November 2022. Upon completion of the Compulsory Purchase, Maersk Drilling became a wholly owned subsidiary of Noble.
NOBLE CORPORATION plc AND SUBSIDIARIES
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unless otherwise indicated, dollar and share amounts in tables are in thousands, except per share data)
The Merger was accounted for as a business combination in accordance with Financial Accounting Standards Board Accounting Standards Codification Topic 805, Business Combinations, where Noble is the accounting acquirer. Under the acquisition method of accounting, the assets and liabilities of Maersk Drilling and its subsidiaries were recorded at their respective fair values on the Closing Date. Total consideration for the acquisition was $2.0 billion, which included $5.6 million in net cash paid and $2.0 billion in non-cash consideration, primarily related to Ordinary Shares issued to legacy Maersk shareholders and the replacement of legacy Maersk Drilling restricted stock unit awards. The purchase price allocation is preliminary and subject to change. The amounts recognized will be finalized as the information necessary to complete the analysis is obtained, but no later than one year after the Closing Date.
NOBLE CORPORATION plc AND SUBSIDIARIES
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unless otherwise indicated, dollar and share amounts in tables are in thousands, except per share data)
Determining the fair value of the assets and liabilities of Maersk Drilling requires judgment and certain assumptions to be made. The most significant fair value estimates related to the valuation of Maersk Drilling’s offshore drilling units and long term debt. The following table represents the preliminary allocation of the total purchase price of Maersk Drilling to the identifiable assets acquired and the liabilities assumed based on the fair values as of the Closing Date.
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| Purchase price consideration: | | |
| Fair value of Noble shares transferred to legacy Maersk Drilling shareholders | | $ | 1,793,351 | |
| Cash paid to legacy Maersk Drilling shareholders | | 887 | |
| Fair value of replacement Maersk Drilling RSU Awards attributable to the purchase price | | 6,780 | |
| Deal Completion Bonus | | 6,177 | |
| Fair Value of Compulsory Purchase | | 193,678 | |
| Total purchase price consideration | | $ | 2,000,873 | |
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| Assets acquired: | | |
| Cash and cash equivalents | | $ | 172,205 | |
| Accounts receivable, net | | 250,251 | |
| Taxes receivable | | 20,603 | |
Prepaid expenses and other current assets (1) | | 43,168 | |
| Total current assets | | 486,227 | |
| Intangible assets | | 22,991 | |
| Property, plant and equipment, net | | 2,756,096 | |
Other assets (1) | | 94,882 | |
| Total assets acquired | | 3,360,196 | |
| Liabilities assumed: | | |
| Current maturities of long-term debt | | 129,130 | |
| Accounts payable | | 130,273 | |
Accrued payroll and related costs (1) | | 23,884 | |
| Taxes payable | | 38,218 | |
| Interest payable | | 800 | |
| Other current liabilities | | 41,253 | |
| Total current liabilities | | 363,558 | |
| Long-term debt | | 596,692 | |
| Deferred income taxes | | 4,071 | |
| Noncurrent contract liabilities | | 237,703 | |
Other liabilities (1) | | 171,925 | |
| Total liabilities assumed | | 1,373,949 | |
| Net assets acquired | | 1,986,247 | |
Goodwill acquired (1) | | 14,626 | |
| Purchase price consideration | | $ | 2,000,873 | |
(1)During the six months ended June 30, 2023, the Company recorded tax adjustments, which resulted in a net increase to deferred tax assets of $25.2 million, a net increase to reserves for uncertain tax positions of $13.8 million, and a decrease of goodwill of $11.4 million. Other adjustments were made to remeasure certain payroll tax related balances. The effect of the changes to the provisional amounts on the current period statement of operations that would have been recognized in previous periods if the adjustment to provisional amounts had been recognized as of the Closing Date was immaterial.
NOBLE CORPORATION plc AND SUBSIDIARIES
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unless otherwise indicated, dollar and share amounts in tables are in thousands, except per share data)
The goodwill recognized in the Merger represents the excess of the gross consideration transferred over the fair value of the underlying net tangible and identifiable intangible assets acquired and liabilities assumed. Goodwill recognized is attributable to anticipated synergies expected to arise in connection with the acquisition. All of the goodwill was assigned to our single reporting unit, Contract Drilling Services. The goodwill is not deductible for tax purposes. The Company did not recognize any goodwill impairment during the three and six months ended June 30, 2023. See “Note 4— Acquisitions and Divestitures” in our Annual Report on Form 10-K for the year ended December 31, 2022 for additional information on the Business Combination.
Note 3— Accounting Pronouncements
Accounting Standards Adopted
We do not believe that any recently issued accounting standards would have a material effect on the accompanying unaudited condensed consolidated financial statements.
Recently Issued Accounting Standards
There have been no new accounting pronouncements not yet effective that have significance, or potential significance, to our unaudited condensed consolidated financial statements.
Note 4— Income (Loss) Per Share
The following table presents the computation of basic and diluted income (loss) per share:
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Three Months Ended June 30, | | Six Months Ended June 30, |
| | 2023 | | 2022 | | 2023 | | 2022 |
| Numerator: | | | | | | | | |
| | | | | | | | |
| Net income (loss) | | $ | 65,816 | | | $ | 37,057 | | | $ | 173,879 | | | $ | 401 | |
| | | | | | | | |
| | | | | | | | |
| Denominator: | | | | | | | | |
| Weighted average shares outstanding – basic | | 138,058 | | | 69,789 | | | 136,502 | | | 68,722 | |
| Dilutive effect of share-based awards | | 3,242 | | | 3,378 | | | 3,242 | | | 3,378 | |
| Dilutive effect of warrants | | 5,692 | | | 9,535 | | | 6,810 | | | 9,185 | |
| Weighted average shares outstanding – diluted | | 146,992 | | | 82,702 | | | 146,554 | | | 81,285 | |
| Per share data | | | | | | | | |
| Basic | | | | | | | | |
| Net income (loss) | | $ | 0.48 | | | $ | 0.53 | | | $ | 1.27 | | | $ | 0.01 | |
| Diluted | | | | | | | | |
| Net income (loss) | | $ | 0.45 | | | $ | 0.45 | | | $ | 1.19 | | | $ | — | |
Only those items having a dilutive impact on our basic income (loss) per share are included in diluted income (loss) per share. The following table displays the share-based instruments that have been excluded from diluted income (loss) per share since the effect would have been anti-dilutive:
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Three Months Ended June 30, | | Six Months Ended June 30, |
| | 2023 | | 2022 | | 2023 | | 2022 |
| Share-based awards | | — | | | — | | | — | | | — | |
Warrants (1) | | 2,774 | | | 2,778 | | | 2,774 | | | 2,778 | |
(1)Represents the total number of warrants outstanding which did not have a dilutive effect. In periods where the warrants are determined to be dilutive, the number of shares which will be included in the computation of diluted shares is determined using the treasury stock method, adjusted for mandatory exercise provisions under the warrant agreements if applicable.
NOBLE CORPORATION plc AND SUBSIDIARIES
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unless otherwise indicated, dollar and share amounts in tables are in thousands, except per share data)
Share Capital
As of June 30, 2023, Noble had approximately 137.1 million Ordinary Shares outstanding as compared to approximately 134.7 million Ordinary Shares outstanding at December 31, 2022. In addition, as of June 30, 2023, 3.6 million Tranche 1 Warrants, 3.6 million Tranche 2 Warrants and 2.8 million Tranche 3 Warrants (each as defined herein) were outstanding and exercisable. We also have 1.3 million Ordinary Shares authorized and reserved for issuance pursuant to equity awards under the Noble Corporation plc 2022 Long-Term Incentive Plan.
The declaration and payment of dividends require the authorization of the Board of Directors of Noble. Such may be paid only out of Noble’s “distributable reserves” on its statutory balance sheet in accordance with law. Therefore, Noble is not permitted to pay dividends out of share capital, which includes share premium. The payment of future dividends will depend on our results of operations, financial condition, cash requirements, future business prospects, contractual and indenture restrictions and other factors deemed relevant by our Board of Directors.
Share Repurchases
Under applicable law, the Company is only permitted to purchase its own Ordinary Shares by way of an “off-market purchase” in a plan approved by shareholders. Such may be made only out of Noble’s “distributable reserves” on its statutory balance sheet in accordance with applicable law. As of the date of this report, we have shareholder authority to repurchase up to 15% per annum of the issued share capital of the Company as of the beginning of each fiscal year for a five-year period (subject to an overall aggregate maximum of 20.6 million Ordinary Shares). During the three and six months ended June 30, 2023, respectively, we repurchased 1.6 million and 1.8 million of our Ordinary Shares, which were subsequently cancelled. The Inflation Reduction Act of 2022 imposes a 1% excise tax on stock repurchases by publicly traded U.S. corporations that occur after December 31, 2022. Such tax may also apply if a domestic affiliate of a publicly traded foreign corporation purchases, or is deemed to fund the purchase of, the shares of the publicly traded foreign corporation. None of these conditions were met for share repurchases to date, and are not expected to be met for future repurchases; as such, the excise tax should not be applicable to Noble.
Warrants
On the Merger Effective Date, immediately prior to the effective time of the Merger (the “Merger Effective Time”), we had outstanding 6.2 million Tranche 1 Warrants of Noble Cayman, 5.6 million Tranche 2 Warrants of Noble Cayman and 2.8 million Tranche 3 Warrants of Noble Cayman (collectively, the “Noble Cayman Warrants”). At the Merger Effective Time, each Noble Cayman Warrant outstanding immediately prior to the Merger Effective Time was converted automatically into a Warrant to acquire a number of Ordinary Shares equal to the number of Noble Cayman Shares underlying such Noble Cayman Warrant, with the same terms as were in effect immediately prior to the Merger Effective Time under the terms of the applicable Noble Cayman Warrant Agreement.
The Tranche 1 Warrants of Noble (the “Tranche 1 Warrants”) are exercisable for one Ordinary Share per warrant at an exercise price of $19.27 per warrant, the Tranche 2 Warrants of Noble (the “Tranche 2 Warrants”) are exercisable for one Ordinary Share per warrant at an exercise price of $23.13 per warrant and the Tranche 3 Warrants of Noble (the “Tranche 3 Warrants”) are exercisable for one Ordinary Share per warrant at an exercise price of $124.40 per warrant (in each case as may be adjusted from time to time pursuant to the applicable Warrant Agreement). The Tranche 1 Warrants and the Tranche 2 Warrants are exercisable until 5:00 p.m., Eastern time, on February 4, 2028 and the Tranche 3 Warrants are exercisable until 5:00 p.m., Eastern time, on February 4, 2026. The Tranche 1 Warrants and the Tranche 2 Warrants have Black-Scholes protection, including in the event of a Fundamental Transaction (as defined in the applicable warrant agreement). The Tranche 1 Warrants and the Tranche 2 Warrants also provide that while the Mandatory Exercise Condition (as defined in the applicable Warrant Agreement) set forth in the applicable Warrant Agreement has occurred and is continuing, Noble or the Required Mandatory Exercise Warrantholders (as defined in the applicable Warrant Agreement) have the right and option (but not the obligation) to cause all or a portion of the Warrants to be exercised on a cashless basis. In the case of Noble, under the Mandatory Exercise Condition, all of the Tranche 1 Warrants or the Tranche 2 Warrants (as applicable) would be exercised. In the case of the electing Required Mandatory Exercise Warrantholders, under the Mandatory Exercise Condition, all of their respective Tranche 1 Warrants or Tranche 2 Warrants (as applicable) would be exercised. Mandatory exercises entitle the holder of each Warrant subject thereto to (i) the number of Ordinary Shares issuable upon exercise of such Warrant on a cashless basis and (ii) an amount payable in cash, Ordinary Shares or a combination thereof (in Noble’s sole discretion) equal to the Black-Scholes Value (as defined in the applicable Warrant Agreement) with respect to the number of Ordinary Shares withheld upon exercise of such Warrant on a cashless basis. At June 30, 2023, the Mandatory Exercise Condition set forth in the Warrant Agreements for the Tranche 1 Warrants and the
NOBLE CORPORATION plc AND SUBSIDIARIES
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unless otherwise indicated, dollar and share amounts in tables are in thousands, except per share data)
Tranche 2 Warrants was satisfied. On June 26, 2023 the Company was approved to list the Tranche 1 Warrants and the Tranche 2 Warrants on the New York Stock Exchange under the symbols “NE WS” and “NE WSA,” respectively.
Note 5— Property and Equipment
Property and equipment, at cost, for Noble consisted of the following:
| | | | | | | | | | | | | | |
| | June 30, 2023 | | December 31, 2022 |
| Drilling equipment and facilities | | $ | 4,100,796 | | | $ | 3,997,498 | |
| Construction in progress | | 188,062 | | | 123,911 | |
| Other | | 40,144 | | | 41,796 | |
| Property and equipment, at cost | | $ | 4,329,002 | | | $ | 4,163,205 | |
Capital expenditures, including capitalized interest, during the three months ended June 30, 2023 and 2022, totaled $115.9 million and $31.3 million, respectively, and totaled $170.9 million and $76.1 million during the six months ended June 30, 2023 and 2022, respectively.
During the first quarter of 2022, we sold the Noble Clyde Boudreaux for total net proceeds of $14.2 million, resulting in a gain of $6.8 million, which was offset by additional costs related to the sale of rigs in Saudi Arabia in 2021.
Note 6— Debt
Senior Secured Revolving Credit Facility
On February 5, 2021, Noble Finance Company (“Finco”) and Noble International Finance Company (“NIFCO”), each indirect wholly owned subsidiaries of Noble, entered into a senior secured revolving credit agreement (the “2021 Revolving Credit Agreement”) providing for a $675 million senior secured revolving credit facility (with a $67.5 million sublimit for the issuance of letters of credit thereunder) (the “2021 Revolving Credit Facility”) in connection with Noble's emergence from bankruptcy. The 2021 Revolving Credit Facility was set to mature on July 31, 2025. Subject to the satisfaction of certain conditions, Finco could from time to time designate one or more of Finco’s other wholly owned subsidiaries as additional borrowers under the 2021 Revolving Credit Agreement (collectively with Finco and NIFCO, the “Borrowers”).
All obligations of the Borrowers under the 2021 Revolving Credit Agreement, certain cash management obligations and certain swap obligations were unconditionally guaranteed, on a joint and several basis, by Finco and certain of its direct and indirect subsidiaries (collectively with the Borrowers, the “Credit Parties”), including a guarantee by each Borrower of the obligations of each other Borrower under the 2021 Revolving Credit Agreement. All such obligations, including the guarantees of the 2021 Revolving Credit Facility, were secured by senior priority liens on substantially all assets of, and the equity interests in, each Credit Party, subject to certain exceptions and limitations described in the 2021 Revolving Credit Agreement. None of Pacific Drilling Company LLC, Maersk Drilling or any of their respective current subsidiaries was a guarantor of the 2021 Revolving Credit Facility, and none of their assets secured the 2021 Revolving Credit Facility.
The loans outstanding under the 2021 Revolving Credit Facility bore interest at a rate per annum equal to the applicable margin plus, at Finco’s option, either: (i) the reserve-adjusted London Inter-Bank Offered Rate ("LIBOR") or (ii) a base rate, determined as the greatest of (x) the prime loan rate as published in The Wall Street Journal, (y) the federal funds effective rate plus 1/2 of 1%, and (z) the reserve-adjusted one-month LIBOR plus 1%. The applicable margin was initially 4.75% per annum for LIBOR loans and 3.75% per annum for base rate loans and would be increased by 50 basis points after July 31, 2024, and could be increased by an additional 50 basis points under certain conditions described in the 2021 Revolving Credit Agreement.
The Borrowers were required to pay customary quarterly commitment fees and letter of credit and fronting fees.
Availability of credit (whether borrowings or letters of credit) under the 2021 Revolving Credit Agreement was subject to the satisfaction of certain conditions, including, after giving effect to any such credit and the application of the proceeds (if any) thereof, (i) the aggregate amount of Available Cash (as defined in the 2021 Revolving Credit Agreement) could not exceed $100.0 million, (ii) if the Consolidated First Lien Net Leverage Ratio (as defined in the 2021 Revolving Credit Agreement)
NOBLE CORPORATION plc AND SUBSIDIARIES
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unless otherwise indicated, dollar and share amounts in tables are in thousands, except per share data)
would be greater than 5.50 to 1.00, then the aggregate principal amount outstanding under the 2021 Revolving Credit Facility could not exceed $610.0 million, and (iii) the Asset Coverage Ratio (as described below) must be at least 2.00 to 1.00.
Mandatory prepayments and, under certain circumstances, commitment reductions were required under the Revolving Credit Facility in connection with (i) certain asset sales, asset swaps and events of loss (subject to reinvestment rights if no event of default existed) and (ii) certain debt issuances. Available Cash in excess of $150.0 million was also required to be applied periodically to prepay loans (without a commitment reduction). The loans under the 2021 Revolving Credit Facility could be voluntarily prepaid, and the commitments thereunder voluntarily terminated or reduced, by the Borrowers at any time without premium or penalty, other than customary breakage costs.
The 2021 Revolving Credit Agreement obligated Finco and its restricted subsidiaries to comply with the following financial maintenance covenants:
•as of the last day of each fiscal quarter, the ratio of Adjusted EBITDA to Cash Interest Expense (each as defined in the 2021 Revolving Credit Agreement) was not permitted to be less than (i) 2.00 to 1.00 for each four fiscal quarter period ending on or before June 30, 2024, and (ii) 2.25 to 1.00 for each four fiscal quarter period ending thereafter; and
•as of the last day of each fiscal quarter, the ratio of (i) Asset Coverage Aggregate Rig Value (as defined in the 2021 Revolving Credit Agreement) to (ii) the aggregate principal amount of loans and letters of credit outstanding under the 2021 Revolving Credit Facility (the “Asset Coverage Ratio”) was not permitted to be less than 2.00 to 1.00.
The 2021 Revolving Credit Facility contained financial maintenance, affirmative and negative covenants, representations and warranties and events of default that the Company considered customary for facilities of this type.
Amended and Restated Senior Secured Revolving Credit Agreement
On April 18, 2023, certain subsidiaries of Noble entered into an Amended and Restated Senior Secured Revolving Credit Agreement, dated April 18, 2023 (the “2023 Revolving Credit Agreement” and the facility thereunder, the "2023 Revolving Credit Facility"), by and among Noble Finance II, LLC (“Noble Finance II”), NIFCO and Noble Drilling A/S, as borrowers, the lenders and issuing banks party thereto from time to time and JPMorgan Chase Bank, N.A., as administrative agent, collateral agent and security trustee. The 2023 Revolving Credit Facility provides for commitments of $550 million with maturity in 2028. The guarantors under the 2023 Revolving Credit Facility are the same subsidiaries of Noble Finance II that are or will be guarantors of the 2030 Notes (as defined below). As of June 30, 2023, we had no loans outstanding and $19.1 million of letters of credit issued under the 2023 Revolving Credit Agreement.
All obligations of the Borrowers under the 2023 Revolving Credit Agreement, certain cash management obligations, certain letter of credit obligations and certain swap obligations are unconditionally guaranteed, on a joint and several basis, by the Noble Finance II and certain of its direct and indirect subsidiaries (the Guarantors, and together with the Borrowers, the “Credit Parties”), including a guarantee by each Borrower of the obligations of each other Borrower under the 2023 Revolving Credit Agreement. All such obligations, including the guarantees of the 2023 Revolving Credit Facility, are secured by senior priority liens on substantially all assets of, and the equity interests in, each Credit Party, including substantially all rigs owned by subsidiaries of Noble as of the date of the 2023 Revolving Credit Agreement (the “Effective Date”), along with certain other rigs in the future such that collateral rigs shall generate at least 80% of the revenue of all rigs owned by Noble Finance II and its restricted subsidiaries and the ratio of the aggregate rig value of the collateral rigs to the commitments under the 2023 Revolving Credit Facility is at least 5.00 to 1.00, in each case, subject to certain exceptions and limitations described in the 2023 Revolving Credit Agreement.
The loans outstanding under the 2023 Revolving Credit Facility bear interest at a rate per annum equal to the applicable margin plus, at Noble Finance II’s option, either: (i) the Term SOFR Rate (as defined in the 2023 Revolving Credit Agreement) plus 0.10%; or (ii) a base rate, determined as the greatest of (x) the prime loan rate as published in the Wall Street Journal, (y) the NYFRB Rate (as defined in the 2023 Revolving Credit Agreement) plus 1/2 of 1%, and (z) the one-month Term SOFR Rate plus 0.10% plus 1%. The applicable margin is initially 2.75% per annum for Term SOFR Rate loans and 1.75% per annum for base rate loans and will range based on the Consolidated Total Net Leverage Ratio (as defined in the 2023 Revolving Credit Agreement, which allows for certain cash netting depending on the amount of loans and letters of credit outstanding under the 2023 Revolving Credit Facility at the time of calculation), from 2.75% per annum to 3.75% per annum for Term SOFR Rate loans and 1.75% per annum to 2.75% per annum for base rate loans. The Borrowers are required to pay interest on (i) overdue principal at the rate equal to 2.00% per annum in excess of the applicable interest rate under the
NOBLE CORPORATION plc AND SUBSIDIARIES
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unless otherwise indicated, dollar and share amounts in tables are in thousands, except per share data)
2023 Revolving Credit Facility, to the extent lawful, and (ii) overdue installments of interest, if any, without regard to any applicable grace period, at 2% in excess of the interest rate applicable to base rate loans, to the extent lawful.
The Borrowers are required to pay a quarterly commitment fee to each lender under the 2023 Revolving Credit Facility, which accrues at a rate per annum equal to (i) 0.50% on the average daily unused portion of such lender’s commitments under the 2023 Revolving Credit Facility during the period from and including the Effective Date to and including the third anniversary of the Effective Date, (ii) during the period from the third anniversary of the Effective Date to and including the fourth anniversary of the Effective Date, a rate per annum equal to 0.75% and (iii) thereafter, a rate per annum equal to 1.00%. The Borrowers are also required to pay customary letter of credit and fronting fees.
Borrowings under the 2023 Revolving Credit Agreement may be used for working capital and other general corporate purposes. Availability of borrowings under the 2023 Revolving Credit Facility is subject to the satisfaction of certain conditions, including that, after giving effect to any such borrowings and the application of the proceeds thereof, the aggregate amount of Available Cash (as defined in the 2023 Revolving Credit Agreement) would not exceed $250 million.
Mandatory prepayments and, under certain circumstances, commitment reductions are required under the 2023 Revolving Credit Facility in connection with (i) certain asset sales, asset swaps and events of loss (subject to reinvestment rights if no event of default exists) and (ii) certain debt issuances. Available Cash in excess of $250 million at the end of any month is also required to be applied to prepay loans (without a commitment reduction). The loans under the 2023 Revolving Credit Facility may be voluntarily prepaid, and the commitments thereunder voluntarily terminated or reduced, by the Borrowers at any time without premium or penalty, other than customary breakage costs.
The 2023 Revolving Credit Agreement obligates Noble Finance II and its restricted subsidiaries to comply with the following financial covenants:
•as of the last day of each fiscal quarter, the Interest Coverage Ratio (as defined in the 2023 Revolving Credit Agreement) is not permitted to be less than 2.50 to 1.00; and
•as of the last day of each fiscal quarter, the Consolidated Total Net Leverage Ratio is not permitted to be greater than 3.00 to 1.00.
The 2023 Revolving Credit Agreement contains other affirmative and negative covenants, representations and warranties and events of default that Noble views as customary for a financing of this type. The occurrence of any event of default under the 2023 Credit Agreement would permit all obligations under the 2023 Revolving Credit Facility to be declared due and payable immediately and all commitments thereunder to be terminated.
8.000% Senior Notes due 2030
On April 18, 2023, Noble Finance II, a wholly owned subsidiary of Noble, issued $600 million in aggregate principal amount of its 8.000% Senior Notes due 2030 (the “2030 Notes”). The 2030 Notes were issued pursuant to an indenture, dated April 18, 2023, among Noble Finance II, the subsidiaries of Noble Finance II party thereto (the “Guarantors”), as guarantors, and U.S. Bank Trust Company, National Association, as trustee.
The 2030 Notes are unconditionally guaranteed on a senior unsecured basis by the Guarantors and will be unconditionally guaranteed on the same basis by certain of Noble Finance II’s future subsidiaries that guarantee certain indebtedness of Noble Finance II and the Guarantors, including the 2023 Revolving Credit Facility.
The 2030 Notes will mature on April 15, 2030, and interest on the 2030 Notes is payable semi-annually in arrears on each April 15 and October 15, commencing October 15, 2023, to holders of record on the April 1 and October 1 immediately preceding the related interest payment date, at a rate of 8.000% per annum.
At any time prior to April 15, 2026, Noble Finance II may, from time to time, redeem up to 40% of the aggregate principal amount of 2030 Notes at a redemption price of 108% of the principal amount of the 2030 Notes redeemed, plus accrued and unpaid interest, if any, to, but excluding, the redemption date (subject to the right of holders of record on the relevant record date to receive interest due on an interest payment date that is on or prior to the redemption date), in an amount not greater than the net cash proceeds of one or more equity offerings by Noble Finance II, subject to certain requirements. In addition, prior to April 15, 2026, Noble Finance II may redeem the 2030 Notes at a redemption price equal to 100% of the principal amount of the 2030 Notes redeemed, plus an applicable make-whole premium and accrued and unpaid interest, if any, to, but excluding, the redemption date. At any time on or after April 15, 2026, Noble Finance II may redeem all or part
NOBLE CORPORATION plc AND SUBSIDIARIES
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unless otherwise indicated, dollar and share amounts in tables are in thousands, except per share data)
of the 2030 Notes at fixed redemption prices (expressed as percentages of the principal amount) beginning at 104.00% and decreasing thereafter, plus accrued and unpaid interest, if any, to, but excluding, the redemption date.
If a Change of Control Triggering Event (as defined in the indenture governing the 2030 Notes) occurs, each holder of 2030 Notes may require Noble Finance II to repurchase all or any part of that holder’s 2030 Notes for cash at a price equal to 101% of the aggregate principal amount of the 2030 Notes repurchased, plus any accrued and unpaid interest thereon, if any, to, but excluding, the date on which the notes are repurchased (subject to the right of holders of record on the relevant record date to receive interest due on the relevant interest payment date).
The indenture governing the 2030 Notes contain customary covenants and events of default.
The indenture governing the 2030 Notes contains a covenant that requires Noble Finance II to furnish to holders of the 2030 Notes certain financial information relating to Noble Finance II and its restricted subsidiaries. The obligation to furnish such information may be satisfied by providing financial information of Noble along with a description of the differences between such information and the financial information of Noble Finance II and its restricted subsidiaries on a standalone basis. As a result of Noble conducting substantially all of its business through Noble Finance II, the financial position and results of operations for Noble Finance II are the same as the information presented for Noble in all material respects, with the exception of operating income (loss) and gain (loss) on extinguishment of debt. For the three and six months ended June 30, 2023, Noble Finance II’s operating income (loss) was $16.3 million and $30.8 million higher, respectively, than that of Noble. The operating income (loss) difference is primarily a result of expenses related to corporate legal costs and administration charges attributable to Noble for operations support and stewardship-related services.
Second Lien Notes
On February 5, 2021, pursuant to the Backstop Commitment Agreement, dated October 12, 2020, Noble Cayman and Finco consummated a rights offering (the “Rights Offering”) of senior secured second lien notes (the “Second Lien Notes”) and associated Noble Cayman Shares at an aggregate subscription price of $200.0 million.
An aggregate principal amount of $216.0 million of Second Lien Notes was issued in the Rights Offering, which included the aggregate subscription price of $200.0 million plus a backstop fee of $16.0 million which was paid in kind. The Second Lien Notes were set to mature on February 15, 2028. The Second Lien Notes were fully and unconditionally guaranteed, jointly and severally, on a senior secured second-priority basis, by the direct and indirect subsidiaries of Finco that are Credit Parties under the 2021 Revolving Credit Facility. None of Pacific Drilling Company LLC, Maersk Drilling or any of their respective current subsidiaries was a guarantor of the Second Lien Notes, and none of their assets secured the Second Lien Notes.
The Second Lien Notes and such guarantees were secured by senior priority liens on the assets subject to liens securing the 2021 Revolving Credit Facility, including the equity interests in Finco and each guarantor of the Second Lien Notes, all of the rigs owned by the Company as of February 5, 2021 or acquired by Restricted Subsidiaries of the Company thereafter, certain assets related thereto, and substantially all other assets of Finco and such guarantors, in each case, subject to certain exceptions and limitations.
Interest on the Second Lien Notes accrued, at Finco’s option, at a rate of: (i) 11% per annum, payable in cash; (ii) 13% per annum, with 50% of such interest to be payable in cash and 50% of such interest to be payable by issuing additional Second Lien Notes (“PIK Notes”); or (iii) 15% per annum, with the entirety of such interest to be payable by issuing PIK Notes. Finco paid interest semi-annually in arrears on February 15 and August 15 of each year, commencing August 15, 2021. The Company accrued interest at the rate of 11% per annum, as the most recent payment and the payment upon the full redemption of the Second Lien Notes were made in cash.
The Second Lien Notes contained covenants and events of default that the Company considered customary for notes of this type.
On April 18, 2023, we redeemed the approximately $173.7 million aggregate principal amount of outstanding Second Lien Notes using a portion of the proceeds from the offering of the 2030 Notes, and recognized a loss of approximately $25.7 million.
DNB Credit Facility and New DNB Credit Facility
Upon closing the Business Combination with Maersk Drilling (the “Closing Date”), Noble guaranteed the Term and Revolving Facilities Agreement dated December 6, 2018, by and among Maersk Drilling, the rig owners and material intra-group charterers party thereto and DNB Bank ASA as agent (as amended from time to time, the “DNB Credit Facility”).
NOBLE CORPORATION plc AND SUBSIDIARIES
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unless otherwise indicated, dollar and share amounts in tables are in thousands, except per share data)
On November 22, 2022, Maersk Drilling, as the borrower, the Company, as parent guarantor, certain subsidiaries of Maersk Drilling as guarantors, and the lenders identified therein, with DNB Bank ASA, New York Branch acting as Agent entered into a new Term Facility Agreement (the “New DNB Credit Facility”). On December 22, 2022, the Utilization Date (as defined in the New DNB Credit Facility) occurred under the New DNB Credit Facility, at which time the loans outstanding under the DNB Credit Facility were repaid with the proceeds of the full $350.0 million available under the New DNB Credit Facility.
The term loan under the New DNB Credit Facility required quarterly amortization payments on March 15, June 15, September 15 and December 15 of $2.5 million per quarter in the first year, $7.5 million per quarter in the second year, $12.5 million per quarter in the third year, and a balloon payment payable on the termination of the New DNB Credit Facility in an amount equal to the remaining outstanding principal amount of the loan. The loan under the New DNB Credit Facility accrued interest at an initial rate of Term SOFR (as defined therein) + 3.50% with quarterly step-ups commencing on the first anniversary of the Utilization Date of an additional (i) 0.15% per quarter during months 13 to 24 after the Utilization Date (with total Margin (as defined therein) payable during the fourth quarter of that period being Term SOFR + 4.10%) and (ii) 0.25% per quarter during months 25 to 36 after the Utilization Date (with total Margin payable during the fourth quarter of that period being Term SOFR + 5.10%). The New DNB Credit Facility had the following financial covenants (each as defined in the New DNB Credit Facility): (i)) The Company’s liquidity could not at any time be less than $200.0 million; (ii) Maersk Drilling’s liquidity could not at any time be less than $50 million; (iii) Maersk Drilling’s leverage ratio could not at any time be greater than 4.75:1.00; and (iv) Maersk Drilling’s equity ratio could not at any time be less than 35%. The New DNB Credit Facility also contained affirmative and negative covenants, representations and warranties, and events of default that the Company considered customary for facilities of this type. The New DNB Credit Facility was set to mature in December 2025.
On April 18, 2023, we repaid the $347.5 million of outstanding borrowings under the New DNB Credit Facility using a portion of the proceeds from the offering of the 2030 Notes, and recognized a loss of approximately $0.7 million.
DSF Credit Facility
The Company guaranteed the Term Loan Facility Agreement dated December 10, 2018 by and between Maersk Drilling and Danmarks Skibskredit A/S as lender, agent, and security agent (as amended from time to time, the “DSF Credit Facility”) in connection with the Business Combination with Maersk Drilling that closed on October 3, 2022. The DSF Credit Facility was repaid in full on February 23, 2023 using cash on hand.
Debt Open Market Repurchases
In August 2022, we purchased $1.6 million aggregate principal amount of our Second Lien Notes for approximately $1.8 million, plus accrued interest, as open market repurchases and recognized a loss of approximately $0.2 million. In the fourth quarter of 2022, we purchased $40.7 million aggregate principal amount of our Second Lien Notes for approximately $45.1 million, plus accrued interest, as open market repurchases and recognized a loss of approximately $4.4 million.
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 debt instruments was based on the quoted market prices for similar issues or on the current rates offered to us for debt of similar remaining maturities (Level 2 measurement). The fair value of each of the Revolving Credit Facility, the New DNB Credit Facility and the DSF Credit Facility approximates its respective carrying amount as its interest rate is variable and reflective of market rates. All remaining fair value disclosures are presented in “Note 11— Fair Value of Financial Instruments.”
NOBLE CORPORATION plc AND SUBSIDIARIES
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unless otherwise indicated, dollar and share amounts in tables are in thousands, except per share data)
The following table presents the carrying value, net of unamortized debt issuance costs and discounts or premiums, and the estimated fair value of our total debt, not including the effect of unamortized debt issuance costs, respectively:
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| | June 30, 2023 | | December 31, 2022 |
| | Carrying Value | | Estimated Fair Value | | Carrying Value | | Estimated Fair Value |
| Senior secured notes | | | | | | | | |
8.000% Senior Notes due April 2030 | | $ | 585,389 | | | $ | 608,058 | | | $ | — | | | $ | — | |
11.000% Senior Notes due February 2028 | | — | | | — | | | 173,695 | | | 192,353 | |
| Credit facility | | | | | | | | |
| Amended and Restated Senior Secured Revolving Credit Facility matures April 2028 | | — | | | — | | | — | | | — | |
| Term Loans | | | | | | | | |
| New DNB Credit Facility matures December 2025 | | — | | | — | | | 349,360 | | | 350,000 | |
| DSF Credit Facility matures December 2023 | | — | | | — | | | 149,715 | | | 149,715 | |
| Total debt | | 585,389 | | | 608,058 | | | 672,770 | | | 692,068 | |
| Less: Current maturities of long-term debt | | — | | | — | | | 159,715 | | | — | |
| Long-term debt | | $ | 585,389 | | | $ | 608,058 | | | $ | 513,055 | | | $ | 692,068 | |
Note 7— Accumulated Other Comprehensive Income (Loss)
The following table presents the changes in the accumulated balances for each component of “Accumulated other comprehensive income (loss)” for the three and six months ended June 30, 2023 and 2022. All amounts within the table are shown net of tax.
| | | | | | | | | | | | |
| | Defined Benefit Pension Items (1) | | | | |
| Balance at December 31, 2022 | | $ | 3,647 | | | | | |
| Activity during period: | | | | | | |
| Other comprehensive income before reclassifications | | (2,186) | | | | | |
| Amounts reclassified from AOCI | | — | | | | | |
| Net other comprehensive income (loss) | | (2,186) | | | | | |
| Balance at March 31, 2023 | | 1,461 | | | | | |
| Activity during period: | | | | | | |
| Other comprehensive loss before reclassifications | | 41 | | | | | |
| Amounts reclassified from AOCI | | — | | | | | |
| Net other comprehensive loss | | 41 | | | | | |
| Balance at June 30, 2023 | | $ | 1,502 | | | | | |
| | | | | | |
| | | | | | |
| | | | | | |
| | | | | | |
| | | | | | |
NOBLE CORPORATION plc AND SUBSIDIARIES
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unless otherwise indicated, dollar and share amounts in tables are in thousands, except per share data)
| | | | | | | | | | | | |
| | Defined Benefit Pension Items (1) | | | | |
| Balance at December 31, 2021 | | $ | 5,389 | | | | | |
| Activity during period: | | | | | | |
| Other comprehensive income before reclassifications | | (424) | | | | | |
| Amounts reclassified from AOCI | | — | | | | | |
| Net other comprehensive income (loss) | | (424) | | | | | |
| Balance at March 31, 2022 | | 4,965 | | | | | |
| Activity during period: | | | | | | |
| Other comprehensive loss before reclassifications | | (1,163) | | | | | |
| Amounts reclassified from AOCI | | — | | | | | |
| Net other comprehensive loss | | (1,163) | | | | | |
| Balance at June 30, 2022 | | $ | 3,802 | | | | | |
| | | | | | |
| | | | | | |
| | | | | | |
| | | | | | |
| | | | | | |
(1)Defined benefit pension items relate to actuarial changes, the amortization of prior service costs and the unrealized gain (loss) on foreign exchange on pension assets. Reclassifications from AOCI are recognized as expense on our Condensed Consolidated Statements of Operations through “Other income (expense).” See “Note 10— Employee Benefit Plans” for additional information.
Note 8— Revenue and Customers
Disaggregation of Revenue
The following table provides information about contract drilling revenue by rig types:
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Three Months Ended June 30, | | Six Months Ended June 30, |
| | 2023 | | 2022 | | 2023 | | 2022 |
| Floaters | | $ | 493,983 | | | $ | 202,690 | | | $ | 970,216 | | | 343,903 | |
| Jackups | | 112,197 | | | 59,773 | | | 211,254 | | | 113,595 | |
| Total | | $ | 606,180 | | | $ | 262,463 | | | $ | 1,181,470 | | | $ | 457,498 | |
Accounts receivable are recognized when the right to consideration becomes unconditional based upon contractual billing schedules. Payment terms on invoiced amounts are typically 30 to 60 days. Customer contract assets and liabilities generally consist of deferred revenue and contract costs resulting from past transactions related to the provision of services under contracts with customers. Current contract asset and liability balances are included in “Prepaid expenses and other current assets” and “Other current liabilities,” respectively, and noncurrent contract assets and liabilities are included in “Other assets” and “Other liabilities,” respectively, on our Consolidated Balance Sheets. Off-market customer contract assets and liabilities have been recognized in connection with our emergence from Chapter 11 and the Business Combination with Maersk Drilling and are included in “Intangible assets” and “Noncurrent contract liabilities,” respectively.
NOBLE CORPORATION plc AND SUBSIDIARIES
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unless otherwise indicated, dollar and share amounts in tables are in thousands, except per share data)
The following table provides information about contract assets and contract liabilities from contracts with customers:
| | | | | | | | | | | | | | |
| | June 30, 2023 | | December 31, 2022 |
| Current customer contract assets | | $ | 9,051 | | | $ | 11,169 | |
| Noncurrent customer contract assets | | 289 | | | 368 | |
| Total customer contract assets | | 9,340 | | | 11,537 | |
| | | | |
| Current deferred revenue | | (26,163) | | | (40,214) | |
| Noncurrent deferred revenue | | (14,727) | | | (19,583) | |
| Total deferred revenue | | $ | (40,891) | | | $ | (59,797) | |
Significant changes in the remaining performance obligation contract assets and the contract liabilities balances for the six months ended June 30, 2023 and 2022 are as follows:
| | | | | | | | | | | | | | |
| | Contract Assets | | Contract Liabilities |
| Net balance at December 31, 2022 | | $ | 11,537 | | | $ | (59,797) | |
| | | | |
| Amortization of deferred costs | | (14,206) | | | — | |
| Additions to deferred costs | | 12,009 | | | — | |
| Amortization of deferred revenue | | — | | | 38,481 | |
| Additions to deferred revenue | | — | | | (19,575) | |
| Total | | (2,197) | | | 18,906 | |
| | | | |
| Net balance at June 30, 2023 | | $ | 9,340 | | | $ | (40,891) | |
| | | | |
| Net balance at December 31, 2021 | | $ | 5,744 | | | $ | (27,755) | |
| | | | |
| Amortization of deferred costs | | (13,870) | | | — | |
| Additions to deferred costs | | 21,323 | | | — | |
| Amortization of deferred revenue | | — | | | 29,462 | |
| Additions to deferred revenue | | — | | | (46,507) | |
| Total | | 7,453 | | | (17,045) | |
| | | | |
| Net balance at June 30, 2022 | | $ | 13,197 | | | $ | (44,800) | |
| | | | |
Certain direct and incremental costs incurred for upfront preparation, initial rig mobilization and modifications are costs of fulfilling a contract and are recoverable. These recoverable costs are deferred and amortized ratably to contract drilling expense as services are rendered over the initial term of the related drilling contract. Certain of our contracts include capital rig enhancements used to satisfy our performance obligations.
NOBLE CORPORATION plc AND SUBSIDIARIES
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unless otherwise indicated, dollar and share amounts in tables are in thousands, except per share data)
Future Amortization of Deferred Revenue
The following table reflects revenue expected to be recognized in the future related to deferred revenue, by rig type, as of June 30, 2023:
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | For the Years Ended December 31, |
| | 2023 | | 2024 | | 2025 | | 2026 | | 2027 and beyond | | Total |
| Floaters | | $ | 19,341 | | | $ | 8,268 | | | $ | 6,846 | | | $ | — | | | $ | — | | | $ | 34,455 | |
| Jackups | | 1,164 | | | 2,228 | | | 2,205 | | | 622 | | | — | | | 6,219 | |
| Other | | 217 | | | — | | | — | | | — | | | — | | | 217 | |
| Total | | $ | 20,722 | | | $ | 10,496 | | | $ | 9,051 | | | $ | 622 | | | $ | — | | | $ | 40,891 | |
The revenue included above substantially consists of expected mobilization, demobilization, and upgrade revenue for unsatisfied performance obligations. The amounts are derived from the specific terms within drilling contracts that contain such provisions, and the expected timing for recognition of such revenue is based on the estimated start date and duration of each respective contract based on information known at June 30, 2023. The actual timing of recognition of such amounts may vary due to factors outside of our control. We have taken the optional exemption, permitted by accounting standards, to exclude disclosure of the estimated transaction price related to the variable portion of unsatisfied performance obligations at the end of the reporting period, as our transaction price is based on a single performance obligation consisting of a series of distinct hourly, or more frequent, periods, the variability of which will be resolved at the time of the future services.
Off-market Customer Contract Assets and Liabilities
Upon emergence from the Chapter 11 Cases and in connection with the Business Combination with Maersk Drilling, the Company recognized fair value adjustments of $113.4 million and $23.0 million, respectively, related to intangible assets for certain favorable customer contracts. These intangible assets will be amortized as a reduction of contract drilling services revenue from February 5, 2021 and the Closing Date, respectively, through the remainder of the contracts.
In connection with the Business Combination with Maersk Drilling, the Company recognized a fair value adjustment of $237.7 million related to certain unfavorable customer contracts acquired. These liabilities will be amortized as an increase to contract drilling services revenue from the Closing Date through the remainder of the contracts.
| | | | | | | | | | | | | | | |
| | Unfavorable contracts | | Favorable
contracts | |
| Balance at December 31, 2022 | | $ | (181,883) | | | $ | 34,372 | | |
| Additions | | — | | | — | | |
| Amortization | | 102,091 | | | (17,354) | | |
| Balance at June 30, 2023 | | $ | (79,792) | | | $ | 17,018 | | |
| | | | | |
| Balance at December 31, 2021 | | $ | — | | | $ | 61,849 | | |
| Additions | | — | | | — | | |
| Amortization | | — | | | (28,355) | | |
| Balance at June 30, 2022 | | $ | — | | | $ | 33,494 | | |
Estimated future amortization over the expected remaining contract periods:
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| | For the Years Ended December 31, |
| | 2023 | | 2024 | | 2025 | | Total |
| Unfavorable contracts | | $ | 31,145 | | | $ | 40,439 | | | $ | 8,208 | | | $ | 79,792 | |
| Favorable contracts | | $ | (6,394) | | | $ | (10,624) | | | $ | — | | | $ | (17,018) | |
| Total | | $ | 24,751 | | | $ | 29,815 | | | $ | 8,208 | | | $ | 62,774 | |
NOBLE CORPORATION plc AND SUBSIDIARIES
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unless otherwise indicated, dollar and share amounts in tables are in thousands, except per share data)
Note 9— Income Taxes
At June 30, 2023, the Company had deferred tax assets of $181.6 million, net of valuation allowance. Additionally, the Company also had deferred tax liabilities of $9.8 million, inclusive of a valuation allowance of $19.2 million.
During the three months ended June 30, 2023, the Company recognized additional discrete deferred tax benefits of $50.7 million related to releases and adjustments of valuation allowance for deferred tax benefits in Guyana, Norway, Switzerland and Luxembourg.
During the six months ended June 30, 2023, the Company recognized additional discrete deferred tax benefits of $84.6 million, $3.9 million and $7.2 million in Guyana, Norway and Switzerland, respectively.
In deriving the above net deferred tax benefits, the Company relied on sources of income attributable to the projected taxable income for the period covered by the Company’s relevant existing drilling contracts based on the assumption that the relevant rigs will be owned by the relevant rig owners during the relevant existing drilling contract periods. Given the mobile nature of the Company’s assets, we are not able to reasonably forecast the jurisdictions in which taxable income from future drilling contracts may arise. We also have limited objective positive evidence in historical periods. Accordingly, in determining the amount of additional deferred tax assets to recognize, we did not consider projected book income beyond the conclusion of existing drilling contracts. As new drilling contracts are executed or as current contracts are extended, we will reassess the amount of deferred tax assets that are realizable. Finally, once we have established sufficient objective positive evidence for historical periods, we may consider reliance on forecasted taxable income from future drilling contracts.
At June 30, 2023, the reserves for uncertain tax positions totaled $196.9 million (net of related tax benefits of $0.1 million). At December 31, 2022, the reserves for uncertain tax positions totaled $175.9 million (net of related tax benefits of $0.3 million).
It is reasonably possible that our existing liabilities related to our reserve for uncertain tax positions may fluctuate in the next 12 months primarily due to the completion of open audits or the expiration of statutes of limitation.
During the three months ended June 30, 2023, our tax provision included tax benefits of $50.7 million related to releases and adjustments of valuation allowance for deferred tax benefits in Guyana, Norway, Switzerland and Luxembourg, and a tax benefit of $6.8 million related to a Ghana uncertain tax position release. Such tax benefits are offset by tax expenses related to a Mexico uncertain tax position of $9.8 million, contract fair value amortization of $4.7 million and various recurring quarterly accruals of $42.2 million primarily in Guyana, Australia and Luxembourg.
During the six months ended June 30, 2023, our tax provision included tax benefits of $95.8 million related to releases of valuation allowance for deferred tax benefits in Guyana, Norway and Switzerland, a tax benefit of $6.8 million related to a Ghana uncertain tax position release. Such tax benefits are offset by tax expenses related to a Mexico uncertain tax position of $9.8 million, contract fair value amortization of $8.9 million and various recurring quarterly accruals of $67.4 million primarily in Guyana, Australia and Luxembourg.
In Denmark, prior to the Merger, Maersk Drilling was subject to a mandatory joint taxation scheme with all other Danish entities under the common control of A.P. Møller Holding A/S. To the extent Maersk Drilling incurred tax losses in Denmark until the Merger, such losses may be utilized by other jointly taxed entities. Noble may be compensated through a joint taxation contribution when such losses are utilized. In the event that A.P. Møller Holding A/S or any jointly taxed entity is subject to audits for years and periods prior to and until the Merger and such audits result in adjustments to relevant tax returns, adjustments to the prior year joint tax contributions may be required. This could result in additional compensation to Noble or refunds payable by Noble to A.P. Møller Holding A/S or to any previous joint taxation group administration company of previously received joint taxation contributions. Since the Merger and through June 30, 2023, Noble has not recognized adjustments under this arrangement related to the period beginning with the Merger.
The Finance (No 2) Act 2023, which includes the UK’s introduction of Pillar 2, received Royal Assent on July 11, 2023. We are continuing to evaluate the impact of this legislation, but we do not currently believe the implications should have a material adverse effect on the Company’s unaudited condensed consolidated financial statements.
NOBLE CORPORATION plc AND SUBSIDIARIES
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unless otherwise indicated, dollar and share amounts in tables are in thousands, except per share data)
Note 10— Employee Benefit Plans
Pension costs (gain) include the following components for the three months ended June 30, 2023 and 2022:
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Three Months Ended June 30, |
| | 2023 | | 2022 |
| | Non-US | | US | | Non-US | | US |
| Interest cost | | $ | 575 | | | $ | 2,248 | | | $ | 298 | | | $ | 1,688 | |
| Return on plan assets | | (491) | | | (2,396) | | | (347) | | | (3,145) | |
| Recognized net actuarial (gain) loss | | 63 | | | (57) | | | — | | | (5) | |
| Net pension benefit cost (gain) | | $ | 147 | | | $ | (205) | | | $ | (49) | | | $ | (1,462) | |
| | | | | | | | |
| | Six Months Ended June 30, |
| | 2023 | | 2022 |
| | Non-US | | US | | Non-US | | US |
| Interest cost | | $ | 1,124 | | | $ | 4,496 | | | 621 | | | 3,376 | |
| Return on plan assets | | (959) | | | (4,790) | | | (723) | | | (6,290) | |
| Recognized net actuarial (gain) loss | | 122 | | | (115) | | | — | | | (10) | |
| Net pension benefit cost (gain) | | $ | 287 | | | $ | (409) | | | $ | (102) | | | $ | (2,924) | |
During the three and six months ended June 30, 2023 and 2022, we made no contributions to our pension plans. Effective December 31, 2016, employees and alternate payees accrue no future benefits under the US plans and, as such, Noble recognized no service costs with the plans for three and six months ended June 30, 2023 and 2022.
Note 11— 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, 2023 |
| | | | 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 | | | | | | | | |
| Foreign currency forward contracts | | $ | 1,052 | | | $ | — | | | $ | 1,052 | | | $ | — | |
| Liabilities | | | | | | | | |
| Foreign currency forward contracts | | $ | 659 | | | $ | — | | | $ | 659 | | | $ | — | |
| | | | | | | | |
| | | | | | | | |
| | | | | | | | |
NOBLE CORPORATION plc AND SUBSIDIARIES
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unless otherwise indicated, dollar and share amounts in tables are in thousands, except per share data)
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| | December 31, 2022 |
| | | | 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 | | | | | | | | |
| Foreign currency forward contracts | | $ | 2,422 | | | $ | — | | | $ | 2,422 | | | $ | — | |
| Liabilities | | | | | | | | |
| Foreign currency forward contracts | | $ | 1,124 | | | $ | — | | | $ | 1,124 | | | $ | — | |
Our cash, cash equivalents and restricted cash, accounts receivable and accounts payable are by their nature short-term. As a result, the carrying values included in our Condensed Consolidated Balance Sheets approximate fair value.
Note 12— Derivative Instruments
Although we are a UK company, we define foreign currency as any non-US dollar denominated currency. Our functional currency is the US Dollar. We are exposed to risks on future cash flows to the extent that expenses denominated in a foreign currency are not equal to revenues denominated in the same foreign currency. The Company uses foreign currency forward contracts to manage our net exposure to fluctuations in currency exchange rates. Currencies of the Company’s derivative instruments include DKK, the Australian dollar (“AUD”) and the British pound sterling (“GBP”). Currency derivatives are mainly realized within one year. We did not enter into any derivative contracts during the three and six months ended June 30, 2022.
We have exposure related to changes in interest rates on borrowings under the 2023 Revolving Credit Facility and may be subject to similar exposure on future borrowing arrangements. We were subject to changes in interest rates on borrowings under the DSF Facility and the New DNB Credit Facility prior to repayment of these instruments. The Company may use interest rate swap contracts to manage our exposure to fluctuations in interest rates. The Company did not enter into any interest rate swap contracts during the six months ended June 30, 2023 or 2022.
Derivative financial instruments are recognized on the trading date and measured at fair value using generally accepted valuation techniques based on relevant observable inputs. The Company does not enter into derivative transactions for speculative purposes and for accounting purposes we have not elected to apply hedge accounting for these transactions. Realized gains and losses as well as changes in the fair values of derivative financial instruments are recognized in the income statement in “Interest income and other, net.”
The following table summarizes notional value of currency derivative contracts as of June 30, 2023:
| | | | | | | | | | | | | | |
| | June 30, 2023 |
| | Foreign Currency | | USD Equivalent |
| DKK to USD | | 194,424 | | 27,759 |
| AUD to USD | | 22,494 | | 15,432 |
| GBP to USD | | 4,327 | | 5,287 |
The following gains (losses) from derivative instruments were recognized on our Condensed Consolidated Statements of Operations:
| | | | | | | | | | | | | | | | | | | | |
Derivative Instrument | | Description | | Three Months Ended
June 30, 2023 | | Six Months Ended
June 30, 2023 |
| Foreign currency forward contracts | | Realized gain (loss) | | 581 | | | 464 | |
| Foreign currency forward contracts | | Unrealized gain (loss) | | (918) | | | (905) | |
NOBLE CORPORATION plc AND SUBSIDIARIES
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unless otherwise indicated, dollar and share amounts in tables are in thousands, except per share data)
Note 13— Commitments and Contingencies
Audit claims of approximately $587.6 million attributable to income and other business taxes remain outstanding and are under continued objection by Noble. Such audit claims are attributable to Mexico related to tax years 2007 and 2009, Australia related to tax years 2013 to 2016, Guyana related to tax years 2018 to 2021, Saudi Arabia related to tax years 2015 to 2019, Nigeria related to tax years 2010 to 2019, Ghana related to tax years 2011 to 2017 and Egypt related to tax years 2012 to 2016. We intend to vigorously defend our reported positions and currently believe the ultimate resolution of the audit claims will not have a material adverse effect on our condensed consolidated financial statements. This remains under continued monitoring and evaluation on a quarterly basis as facts change and as audits and/or litigation continue to progress.
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. We recognize uncertain tax positions that we believe have a greater than 50% likelihood of being sustained upon challenge by a tax authority. We cannot predict or provide assurance as to the ultimate outcome of any existing or future assessments.
Hurricane Ida Personal Injury Claims
In preparation for Hurricane Ida in the US Gulf of Mexico in August 2021, the Noble Globetrotter II successfully secured the well it was drilling and detached from the blowout preventer without incident. Due to the environmental conditions, a number of crew members were treated for injuries and released from medical care. We have had multiple parties, some of which are subject to a third-party contractual indemnity to our benefit, who have filed answers to the Limitation of Liability Action in the United States District Court Western District of Louisiana, seeking damages related to physical and emotional harm allegedly suffered as a result of the Hurricane Ida incident. We are in the discovery phase and we intend to defend ourselves vigorously against these claims, although there is inherent risk in litigation, and we cannot predict or provide assurance as to the ultimate outcome of this lawsuit. As claims progress, the Company’s estimated loss could change from time to time, and any such change individually or in the aggregate could be material. We have insurance for such claims with a deductible of $5.0 million, in addition to contractual indemnity owed to us for a portion of the third-party claims. Timing differences are likely to exist between any losses incurred and the recognition and receipt of insurance proceeds reflected in the Company’s financial statements. Costs, as well as insurance recoveries, are presented in “Hurricane losses and (recoveries), net” on the Condensed Consolidated Statement of Operations.
Letters of credit and surety bonds
As of June 30, 2023, we had $19.1 million of letters of credit issued under the 2023 Revolving Credit Facility and an additional $76.5 million in letters of credit and surety bonds issued under bilateral arrangements which guarantee our performance as it relates to our drilling contracts, contract bidding, tax appeals, customs duties, and other obligations in various jurisdictions. We expect to comply with the underlying performance requirements and we expect obligations under these letters of credit and surety bonds will not be called.
Other contingencies
We have entered into agreements with certain of our executive officers, as well as certain other employees. These agreements generally provide for certain compensation and other benefits if the employee is terminated without cause or if the employee resigns for good reason (within the meaning set forth in the agreements). In addition, certain of these agreements contain provisions that are triggered upon a change of control of Noble (within the meaning set forth in the agreements) and a termination of employment without cause or if the employee resigns for good reason in connection with a change of control. The agreements initially have three year terms and automatically extend, unless either party provides notice not to extend, and provide for certain compensation and other benefits depending on the circumstances.
We are a defendant in certain claims and litigation arising out of operations in the ordinary course of business, including other personal injury claims, the resolution of which, in the opinion of management, will not be material to our financial position, results of operations or cash flows. There is inherent risk in any litigation or dispute and no assurance can be given as to the outcome of these claims.
NOBLE CORPORATION plc AND SUBSIDIARIES
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unless otherwise indicated, dollar and share amounts in tables are in thousands, except per share data)
Note 14— Supplemental Financial Information
Condensed Consolidated Balance Sheets Information
Noble’s restricted cash balance as of June 30, 2023 and December 31, 2022 was $6.6 million and $9.5 million, respectively. All restricted cash is recorded in “Prepaid expenses and other current assets.”
Condensed Consolidated Statements of Cash Flows Information
Operating cash activities
The net effect of changes in other assets and liabilities on cash flows from operating activities is as follows:
| | | | | | | | | | | |
| Six Months Ended June 30, |
| 2023 | | 2022 |
| Accounts receivable | $ | (47,998) | | | $ | (58,361) | |
| Other current assets | (35,641) | | | 2,239 | |
| Other assets | 4,287 | | | (3,971) | |
| Accounts payable | 18,754 | | | 19,221 | |
| Other current liabilities | (13,450) | | | (17,281) | |
| Other liabilities | 18,528 | | | 25,823 | |
| Total net change in assets and liabilities | $ | (55,520) | | | $ | (32,330) | |
Non-cash investing and financing activities
Additions to property and equipment, at cost for which we had accrued a corresponding liability in accounts payable as of June 30, 2023 and December 31, 2022 were $71.3 million and $70.0 million, respectively.
Note 15— Subsequent Events
On July 11, 2023, Noble announced that its board of directors approved a declaration of a quarterly cash interim dividend on its Ordinary Shares of $0.30 per share. This dividend is to be payable on September 14, 2023, to shareholders of record at close of business on August 17, 2023. On July 26, 2023, Noble received an exercise notice for approximately 2.4 million Tranche 1 Warrants and approximately 2.5 million Tranche 2 Warrants which have not yet settled as of the filing date of this Quarterly Report and is expected to result in the issuance of approximately 4.1 million Ordinary Shares.
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, 2023, and our results of operations for the three and six months ended June 30, 2022 and 2022. The following discussion should be read in conjunction with the unaudited condensed consolidated financial statements and related notes contained in this Quarterly Report on Form 10-Q, the audited consolidated financial statements and notes thereto included in our Annual Report on Form 10-K for the year ended December 31, 2022, filed by Noble Corporation plc, a public limited company incorporated under the laws of England and Wales (“Noble”) and our other filings with the US Securities and Exchange Commission (“SEC”).
On September 30, 2022 , pursuant to a Business Combination Agreement, dated November 10, 2021 (as amended, the “Business Combination Agreement”), by and among Noble, Noble Corporation, an exempted company incorporated in the Cayman Islands with limited liability (“Noble Cayman”), Noble Newco Sub Limited, a Cayman Islands exempted company and a direct, wholly owned subsidiary of Noble (“Merger Sub”), and The Drilling Company of 1972 A/S, a Danish public limited liability company (“Maersk Drilling”), Noble Cayman merged with and into Merger Sub (the “Merger”), with Merger Sub surviving the Merger as a wholly owned subsidiary of Noble. As a result of the Merger, Noble became the ultimate parent of Noble Cayman and its respective subsidiaries.
On October 3, 2022, pursuant to the Business Combination Agreement, Noble completed a voluntary tender exchange offer to Maersk Drilling’s shareholders (the “Offer” and, together with the Merger and the other transactions contemplated by the Business Combination Agreement, the “Business Combination”) and because Noble acquired more than 90% of the issued and outstanding shares of Maersk Drilling, nominal value Danish krone 10 per share (“Maersk Drilling Shares”), Noble redeemed all remaining Maersk Drilling Shares not exchanged in the Offer for, at the election of the holder, either A ordinary shares, par value $0.00001 per share, of Noble (“Ordinary Shares”) or cash (or, for those holders that did not make an election, only cash), under Danish law by way of a compulsory purchase (the “Compulsory Purchase”), which was completed in early November 2022. Upon completion of the Compulsory Purchase, Maersk Drilling became a wholly owned subsidiary of Noble.
The Merger was accounted for as a business combination in accordance with Financial Accounting Standards Board Accounting Standards Codification Topic 805, Business Combinations, where Noble is the accounting acquirer. See “Note 4— Acquisitions and Divestitures” in our Annual Report on Form 10-K for the year ended December 31, 2022 for additional information on the Business Combination.
As a result of the Merger, Noble became the successor issuer to Noble Cayman for purposes of and pursuant to Rule 12g-3(a) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). 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 and its consolidated subsidiaries.
Forward-Looking Statements
This Quarterly Report on Form 10-Q includes “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Exchange Act, as amended. All statements other than statements of historical facts included in this report or in the documents incorporated by reference, are forward looking statements, including those regarding expected financial performance, revenues, expected utilization and fleet status, stacking of rigs, effects of new rigs on the market revenues, operating expenses, cash flows, contract status, tenders, terms and duration, dayrates, termination and extensions, contract backlog, the availability, delivery, mobilization, stacking or reactivation, contract commencement, relocation or other movement of rigs and the timing thereof, contract claims, capital expenditures, insurance maintenance and renewals, access to financing, rig demand, peak oil, the offshore drilling market, oil prices, production levels among members of the Organization of Petroleum Exporting Countries (“OPEC”) and other oil and gas producing nations (together with OPEC, “OPEC+”), and any expectations we may have with respect thereto, our future financial position, business strategy, impairments, repayment of debt, credit ratings, liquidity, borrowings under any credit facilities or other instruments, sources of funds, cost inflation, planned acquisitions or divestitures of assets, governmental regulations and permitting, taxes and tax rates, indebtedness covenant compliance, dividends and distributable reserves, share repurchases, progress, plans and goals related to environmental, social and governance matters; the outcome of tax disputes; assessments and settlements; and expense management, the outcome of any dispute, litigation, audit or investigation, plans, foreign currency requirements results of joint ventures, general economic, market, including inflation and recessions, trends and outlook; general political conditions, including political tensions, conflicts and war, timing, benefits or results of acquisitions or dispositions (including the Business Combination (as defined herein) and our plans, objectives, expectations and intentions related to the Business Combination), and timing for compliance with any new regulations. Forward-looking statements involve risks, uncertainties and assumptions, and actual results may differ materially from any future results expressed or implied by such forward-looking statements. When used in this report or in the documents incorporated by reference, the words “anticipate,” “believe,” “continue,” “could,” “estimate,” “expect,” “intend,” “may,” “might,” “on track,” “plan,” “possible,” “potential,” “predict,” “project,” “should,” “would,” “shall,” “target,” “will” 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 Quarterly 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. Risks and uncertainties include, but are not limited to: a decline in the price of oil or gas, reduced demand for oil and gas products and increased regulation of drilling and production, price competition and cyclicality in the offshore drilling industry, offshore rig supply, dayrates and demand for rigs, contract duration, renewal, terminations and repricing, national oil companies and governmental clients, contract backlog, customer concentration, operational hazards and risks, labor force unionization, labor interruptions and labor regulations, public health issues, including epidemics or pandemics such as the COVID-19 pandemic, joint ventures as well as investments in associates, international operations and related mobilization and de-mobilization of rigs, operational interruptions, delays, maintenance and resulting reduced payment of dayrates, maintenance and renewal of insurance, protection of sensitive information, operational technology systems and critical data, upgrades, refurbishment and repair of rigs and any related delays and cost overruns, the ability to attract and retain skilled personnel or the increased cost in doing so, supplier capacity constraints or shortages in parts or equipment, supplier production disruptions, supplier quality and sourcing issues or price increases, future mergers, acquisitions or dispositions of businesses or assets or other strategic transactions, acts of terrorism, piracy and political and social unrest, hurricanes and related windstorm damage, responding to energy rebalancing, non-performance of suppliers or third-party subcontractors, the Business Combination and related integration, the maintenance of effective internal controls, impairments on property and equipment, including rigs and related capital spares, operating, financial restrictions and maintenance of covenants in our debt financing, tax disputes or tax challenges, compliance with Governmental laws and regulations including those related to anti-bribery or anti-corruption, environmental protection and health and safety and disputes and litigation that could cause actual plans or results to differ materially from those included in any forward-looking statements. Actual results could differ materially from those expressed as a result of various factors and could, among other impacts, impact our ability to repurchase shares and declare and pay dividends such that we suspend our share repurchase program and reduce, suspend, or totally eliminate dividend payments in the future. These factors include those “Risk Factors” referenced or described in Part I, Item 1A. “Risk Factors” of our Annual Report on Form 10-K for the year ended December 31, 2022 and in our other filings with the 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. Future quarterly dividends and other shareholder returns will be subject to, amongst other things, approval by the board of directors, and may be modified as market conditions dictate.
Our Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Exchange Act are available free of charge at our website. The SEC maintains an internet site that contains reports, proxy and information statements, and other information regarding issuers that file electronically with the SEC at http://www.sec.gov.
Our website address is http://www.noblecorp.com. Investors should also note that we announce material financial information in SEC filings, press releases and public conference calls. Based on guidance from the SEC, we may use the investor relations section of our website to communicate with our investors. It is possible that the financial and other information (including fleet status reports) posted there could be deemed to be material information. Noble may also use social media channels including, but not limited to, Noble's accounts on LinkedIn, Facebook, Instagram and Twitter, to communicate with investors and the public about its business, services and other matters, and those communications could be deemed to be material information. Except to the extent explicitly stated herein, documents and information on our website or our social media channels are not incorporated by reference herein.
Executive Overview
Noble is a leading offshore drilling contractor for the oil and gas industry. As of the filing date of this Quarterly Report on Form 10-Q, Noble performs, through its subsidiaries, contract drilling services with a fleet of 32 drilling rigs, consisting of 19 floaters and 13 jackups focused largely on ultra-deepwater and high-specification jackup drilling opportunities in both established and emerging regions worldwide. We typically employ each drilling unit under an individual contract, and many contracts are awarded based upon a competitive bidding process.
We report our contract drilling operations as a single reportable segment, Contract Drilling Services, which reflects how we manage our business. 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 primarily of large, integrated, independent and government-owned or controlled oil and gas companies throughout the world.
Recent Events
Dividends. On July 11, 2023, Noble announced that its board of directors approved a declaration of a quarterly cash interim dividend on its Ordinary Shares of $0.30 per share. This dividend is to be payable on September 14, 2023, to shareholders of record at close of business on August 17, 2023. Going forward, the Company intends to pay dividends on a quarterly basis, and this initial dividend represents $1.20 on an annualized basis. However, any future dividend is subject to declaration by our board of directors based on our earnings, capital requirements, financial condition, and other factors considered relevant by our board of directors.
Debt Refinancing. On April 18, 2023, Noble Finance II, LLC (“Noble Finance II”), a wholly owned subsidiary of Noble, issued $600 million in aggregate principal amount of its 8.000% Senior Notes due 2030 (“2030 Notes”). The 2030 Notes were issued pursuant to an indenture, dated April 18, 2023, among Noble Finance II, the subsidiaries of Noble Finance II party thereto, as guarantors, and U.S. Bank Trust Company, National Association, as trustee. The net proceeds from the offering of 2030 Notes were primarily used to (i) repay the approximately $347.5 million of outstanding borrowings under the New DNB Credit Facility, (ii) to redeem (the “Redemption”) the approximately $173.7 million aggregate principal amount of outstanding Second Lien Notes, and (iii) to pay any premiums, fees and expenses related to the Redemption and the issuance of the 2030 Notes.
The indenture governing the 2030 Notes contains a covenant that requires Noble Finance II to furnish to holders of the 2030 Notes certain financial information relating to Noble Finance II and its restricted subsidiaries. The obligation to furnish such information may be satisfied by providing financial information of Noble along with a description of the differences between such information and the financial information of Noble Finance II and its restricted subsidiaries on a standalone basis. As a result of Noble conducting substantially all of its business through Noble Finance II, the financial position and results of operations for Noble Finance II are the same as the information presented for Noble in all material respects, with the exception of operating income (loss) and gain (loss) on extinguishment of debt. For the three and six months ended June 30, 2023, Noble Finance II’s operating income (loss) was $16.3 million and $30.8 million higher, respectively, than that of Noble. The operating income (loss) difference is primarily a result of expenses related to corporate legal costs and administration charges attributable to Noble for operations support and stewardship-related services.
Amendment and Restatement of Revolving Credit Agreement. On April 18, 2023, subsidiaries of Noble amended and restated the 2021 Revolving Credit Agreement by entering into an Amended and Restated Senior Secured Revolving Credit Agreement, dated April 18, 2023 (the “2023 Revolving Credit Agreement”), by and among Noble Finance II, NIFCO and Noble Drilling A/S, as borrowers, the lenders and issuing banks party thereto from time to time and JPMorgan Chase Bank, N.A., as administrative agent, collateral agent and security trustee. The revolving credit facility under the 2023 Revolving Credit Agreement (the “2023 Revolving Credit Facility”) provides for commitments of $550 million with maturity in 2028. The guarantors under the 2023 Revolving Credit Facility are the same subsidiaries of Noble Finance II that are or will be guarantors of the 2030 Notes.
Market Outlook
The offshore contract drilling industry is a highly competitive and cyclical business. Demand for offshore drilling services is driven by the offshore exploration and development programs of oil and gas operators, which in turn are influenced by many factors. Those factors include, but are not limited to, the price and price stability of oil and gas, the relative cost and
carbon footprint of offshore resources within each operator’s broader energy portfolio, global macroeconomic conditions, world energy demand, the operator’s strategy toward renewable energy sources, environmental considerations and governmental policies.
In the provision of offshore contract drilling services, success in securing contracts is primarily governed by price, a rig’s availability, drilling capabilities and technical specifications and the drilling contractor’s safety performance record. Other factors include experience of the workforce, process efficiency, condition of equipment, operating integrity, reputation, industry standing and client relations.
We maintain a global operational presence and compete in many of the major offshore oil and gas basins worldwide with a primary focus on the ultra-deepwater market and the harsh, and ultra-harsh environment jackup markets. All our drilling rigs are mobile, and we may reposition our drilling rigs among regions for a variety of reasons, including in response to customer requirements. We compete in both the jackup and floating rig markets, each of which may have different supply and demand dynamics at a given period in time or in different regions.
The Business Combination with Maersk Drilling in October 2022 created one of the youngest and highest specification fleets of global scale in the industry, with diversification across asset classes, geographic regions and customers. The combined company has a track record of high utilization; coupled with an unwavering commitment to safety and customer satisfaction. We strive to be a leader in industry innovation and sustainability.
Oil prices generally remain at levels that are supportive of offshore exploration and development activity and global rig demand is increasing. This demand increase was caused by the combination of growing confidence in commodity prices, heightened focus on energy security, recent multi-year underinvestment in the development and exploration of hydrocarbons, and relative attractiveness of offshore plays with respect to both cost and carbon emissions. This increase had a positive impact on both utilization and dayrates for certain of our rig classes.
The global rig supply has come down from historic highs as Noble and other offshore drilling contractors have retired less capable and idle assets. Concurrently, the incoming supply of newbuild offshore drilling rigs has diminished materially, with several newbuild rigs stranded in shipyards. However, several of these stranded newbuild rigs are making their way into the global market and we expect this trend to continue over the next few years for the most capable units.
Although the market outlook in our business varies by geographical region and water depth, we remain encouraged by the recovery in the ultra-deepwater floater market, with overall demand having increased from 2020 lows. Our customers continue to focus on the highest specification floaters, which represents the majority of our floater fleet. We have also experienced an overall increase in the global jack-up market, with the Middle East being the largest component of this increase.
However, as of the date of this report, the majority of our jack-up fleet is positioned in the North Sea. While we are starting to see some increased tender activity in the UK North Sea, overall activity levels in this region remain subdued compared to historical levels. The Norway ultra-harsh environment jackup market is similar, where current activity also remains below historical levels, despite the market being attractive to operators given it is characterized by low-cost and low-emission barrels.
The energy transition from hydrocarbons to renewables poses a challenge to the oil and gas sector and our market. Energy rebalancing trends have accelerated in recent years as evidenced by promulgated or proposed government policies and commitments by many of our customers to further invest in sustainable energy sources. Our industry could be further challenged as our customers rebalance their capital investments more towards alternative energy sources. However, at the same time, there continues to be a global dependence on the combustion of hydrocarbons to provide reliable and affordable energy. Low-cost and low-emission barrels are expected to be the most attractive conventional source to meet energy needs, both currently and in the future. Global energy demand is predicted to increase over the coming decades, and we expect that offshore oil and gas will continue to play an important and lasting role in meeting this demand.
We expect inflationary pressures and supply chain disruptions to persist, and potentially accelerate, which has led or may lead to increased costs of services.
Contract Drilling Services Backlog
We maintain a backlog of commitments for contract drilling services. Our contract drilling services backlog reflects estimated future revenues attributable to signed drilling contracts. While backlog did not include any letters of intent as of June 30, 2023, in the past we have included in backlog certain letters of intent that we expect to result in binding drilling contracts. As of June 30, 2023, contract drilling services backlog totaled approximately $5.0 billion, which includes a commitment of approximately 64% of available days for the remainder of 2023.
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, and include certain assumptions based on the terms of certain contractual arrangements, discussed in the notes to the table below. 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 table below presents the amount of our contract drilling services backlog as of June 30, 2023, and the percent of available operating days committed for the periods indicated:
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | Year Ending December 31, |
| | Total | | 2023 (1) | | 2024 | | 2025 | | 2026 | | 2027 |
| | (In thousands) |
| Contract Drilling Services Backlog | | | | | | | | | | | | |
Floaters (2)(3) | | $3,898,418 | | $934,286 | | $1,177,310 | | $871,001 | | $663,132 | | $252,689 |
| Jackups | | 1,134,377 | | 172,948 | | 326,073 | | 254,798 | | 205,598 | | 174,960 |
| Total | | $5,032,795 | | $1,107,234 | | $1,503,383 | | $1,125,799 | | $868,730 | | $427,649 |
Percent of Available Days Committed (4) | | | | | | | | | | | | |
Floaters (3) | | | | 68 | % | | 43 | % | | 30 | % | | 23 | % | | 9 | % |
| Jackups | | | | 58 | % | | 42 | % | | 27 | % | | 18 | % | | 14 | % |
| Total | | | | 64 | % | | 43 | % | | 29 | % | | 21 | % | | 11 | % |
(1)Represents a six-month period beginning July 1, 2023.
(2)One of our long-term drilling contracts with Shell, the Noble Globetrotter II, contains a dayrate adjustment mechanism that utilizes an average of market rates that match a set of distinct technical attributes and is subject to a modest discount, beginning on the fifth-year anniversary of the contract and continuing every six months thereafter. The contract now has a contractual dayrate floor of $275,000 per day. The dayrate for this rig will not be lower than the higher of (i) the contractual dayrate floor or (ii) the market rate as calculated under the adjustment mechanism.
(3)Noble entered into a multi-year Commercial Enabling Agreement (the “CEA”) with ExxonMobil in February 2020. Under the CEA, dayrates earned by each rig will be updated twice per year to the projected market rate at the time the new rate goes into effect, subject to a scale-based discount and a performance bonus that appropriately aligns the interests of Noble and ExxonMobil. Under the CEA, the table above includes awarded and remaining term of two years and 4 months related to each of the four following rigs: the Noble Tom Madden, Noble Bob Douglas, Noble Don Taylor and Noble Sam Croft. Under the CEA, ExxonMobil may reassign terms among rigs.
(4)Percent of available days committed is calculated by dividing the total number of days our rigs are operating under contract for such period by the product of the number of our rigs, including cold-stacked rigs, and the number of calendar days in such period.
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 presented in the table above due to various factors, including, but not limited to, shipyard and maintenance projects, unplanned downtime, the operation of market benchmarks for dayrate resets, achievement of bonuses, weather conditions, reduced standby or mobilization rates and other factors that result in
applicable dayrates lower than the full contractual operating dayrate. In addition, amounts included in the backlog may change because drilling contracts may be varied or modified by mutual consent or customers may exercise early termination rights contained in some of our drilling contracts or decline to enter into a drilling contract after executing a letter of intent. As a result, our backlog as of any particular date may not be indicative of our actual operating results for the periods for which the backlog is calculated. See Part I, Item 1A, “Risk Factors – Risks Related to Our Business and Operations – Our current backlog of contract drilling revenue may not be ultimately realized” in our Annual Report on Form 10-K for the year ended December 31, 2022.
As of June 30, 2023, ExxonMobil and Aker BP represented approximately 46.2% and 15.9% of our backlog, respectively.
Strategy
Our business strategy is centered around efficient, reliable and safe offshore drilling to provide the best services for our customers. The Business Combination with Maersk Drilling created one of the youngest and highest specification fleets of global scale in the industry, with diversification across asset classes, geographic regions and customers. The combined company has a track record of high utilization; coupled with an unwavering commitment to safety and customer satisfaction. We strive to be a leader in industry innovation and sustainability.
Our fleet consists predominately of technologically advanced units, equipped with sophisticated systems and components prepared to execute our customers’ increasingly complicated offshore drilling programs safely and with greater efficiency, including with respect to our carbon footprint. We are primarily focused on the ultra-deepwater market and the harsh, and ultra-harsh environment jackup markets, which typically present more technically challenging conditions in which to operate.
We emphasize safe operations, environmental stewardship, and superior performance through a structured management system, the employment of qualified and well-trained crews and onshore support staff, the care of our surroundings and the neighboring communities where we operate, and other activities advancing our environmental sustainability, social responsibility, and good governance. We also manage rig operating costs through the implementation and continuous improvement of innovative systems and processes, which includes the use of data analytics and predictive maintenance technology.
Our organization prioritizes financial discipline, cash flow generation and returning cash to shareholders. We will focus on maintaining the quality of our fleet in order to meet the demands of increasingly complex drilling programs required by our customers as well as maintaining a strong financial position.
We are committed to building on the Company’s strategy of enabling long-term sustainable value creation. Noble’s sustainability mission is to help provide affordable energy efficiently, safely and sustainably, by leveraging longstanding customer relationships and unique innovation capabilities. We actively look to collaborate with our customers to evaluate economic alternatives for reducing the carbon footprint of our drilling rigs such as by equipping our crews offshore with real-time energy consumption data and analysis to optimize efficiency, modifying our offshore assets with more energy efficient equipment, and testing fuel additives designed to improve generator efficiency. Oversight of our sustainability is at the board level, with the Safety and Sustainability Committee assisting in that oversight role with respect to our sustainability policies and practices.
Results of Operations
Results for the Three Months Ended June 30, 2023 and 2022
Net income for the three months ended June 30, 2023, (the “current quarter”), was $65.8 million, or $0.45 per diluted share, on operating revenues of $638.5 million compared to net income for the three months ended June 30, 2022, of $37.1 million, or $0.45 per diluted share, on operating revenues of $275.2 million.
Key Operating Metrics
Operating results for our contract drilling services segment are dependent on three primary metrics: operating days, dayrates and operating costs. We also track rig utilization, which is a function of operating days and the number of rigs in our fleet. For more information on operating costs, see “Contract Drilling Services” below.
The following table presents the average rig utilization, operating days and average dayrates for our rig fleet for the periods indicated:
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Average Rig Utilization (1) | | Operating Days (2) | | Average Dayrates (2) | | |
| | Three Months Ended June 30, | | Three Months Ended June 30, | | Three Months Ended June 30, | | |
| | 2023 | | 2022 | | 2023 | | 2022 | | 2023 | | 2022 | | |
| Floaters | | 76 | % | | 81 | % | | 1,305 | | | 813 | | | 363,167 | | | 266,887 | | | |
| Jackups | | 62 | % | | 68 | % | | 786 | | | 495 | | | 128,885 | | | 120,824 | | | |
| Total | | 70 | % | | 76 | % | | 2,091 | | | 1,308 | | | $ | 275,066 | | | $ | 211,626 | | | |
(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.
(2)An operating day is defined as a calendar day during which a rig operated under a drilling contract. We define average dayrates as revenue from contract drilling services earned per operating day. Average dayrates exclude the effect of non-cash amortization related to favorable and unfavorable off-market customer contract assets and liabilities.
Contract Drilling Services
The following table presents the operating results for our contract drilling services segment for the periods indicated (dollars in thousands):
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | |
| | | | | | | | |
| | | | | | |
| | Three Months Ended June 30, | | Change |
| Operating revenues: | | 2023 | | 2022 | | $ | | % |
| Contract drilling services | | $ | 606,180 | | | $ | 262,463 | | | $ | 343,717 | | | 131 | % |
Reimbursables and other (1) | | 32,355 | | | 12,690 | | | 19,665 | | | 155 | % |
| | 638,535 | | | 275,153 | | | 363,382 | | | 132 | % |
| Operating costs and expenses: | | | | | | | | |
| Contract drilling services | | $ | 362,533 | | | $ | 178,145 | | | $ | 184,388 | | | 104 | % |
Reimbursables (1) | | 24,796 | | | 10,333 | | | 14,463 | | | 140 | % |
| Depreciation and amortization | | 71,324 | | | 26,636 | | | 44,688 | | | 168 | % |
| General and administrative | | 32,352 | | | 16,687 | | | 15,665 | | | 94 | % |
| Merger and integration costs | | 22,452 | | | 9,057 | | | 13,395 | | | 148 | % |
(Gain) loss on sale of operating assets, net | | — | | | 1,103 | | | (1,103) | | | (100) | % |
| Hurricane losses and (recoveries), net | | 15,934 | | | (14,407) | | | 30,341 | | | (211) | % |
| | 529,391 | | | 227,554 | | | 301,837 | | | 133 | % |
| Operating income (loss) | | $ | 109,144 | | | $ | 47,599 | | | $ | 61,545 | | | 129 | % |
(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.
The following table provides information about contract drilling revenue and costs by rig types (dollars in millions except average dayrates):
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | Three Months Ended June 30, |
| | | 2023 | | 2022 |
| | | Floaters | | Jackups | | Floaters | | Jackups |
| Contract drilling services revenues | | $ | 494.0 | | $ | 112.2 | | $ | 202.7 | | $ | 59.8 |
| Contract drilling services costs | | $ | 278.4 | | $ | 84.1 | | $ | 117.4 | | $ | 60.7 |
| Average Rig Utilization | | | 76 | % | | 62 | % | | 81 | % | | 68 | % |
| Operating Days | | | 1,305 | | | 786 | | | 813 | | | 495 | |
| Average Dayrates | | | $ | 363,167 | | | $ | 128,885 | | | $ | 266,887 | | | $ | 120,824 | |
| Total rigs | — Beginning | | 19 | | | 13 | | | 11 | | | 8 | |
| — Acquired | | — | | | — | | | — | | | — | |
| — Disposed | | — | | | — | | | — | | | — | |
| — Ending | | 19 | | | 13 | | | 11 | | | 8 | |
Contract Drilling Services Revenues
Floaters. During the second quarter of 2023, floaters generated revenue of $494.0 million, as compared to $202.7 million in the second quarter of 2022. The increase in revenue is mainly attributable to (i) $170.9 million provided by the eight additional floaters acquired in the Business Combination with Maersk Drilling in October 2022; and (ii) $99.6 million due to an increase in average dayrates in the current period. These increases were partly offset by $5.9 million from rigs with fewer operating days in the current period. Additionally, floater revenue for the current period increased $27.0 million due to additional net non-cash amortization related to off-market customer contract assets and liabilities.
Jackups. During the second quarter of 2023, jackups generated revenue of $112.2 million, as compared to $59.8 million in the second quarter of 2022. The increase in revenue is mainly attributable to $79.1 million provided by the 10 additional jackups acquired in the Business Combination with Maersk Drilling in October 2022. This increase was offset by (i) $21.1 million for the divestiture of jackup rigs (the “Remedy Rigs”) in October 2022 in connection with the Business Combination with Maersk Drilling; and (ii) $17.5 million from rigs with less operating days in the current period. Additionally, contract drilling revenue for the current period increased $10.9 million due to additional net non-cash amortization related to off-market customer contract assets and liabilities.
Operating Costs and Expenses
Floaters. During the second quarter of 2023, total contract drilling services costs related to floaters was $278.4 million, as compared to $117.4 million in the second quarter 2022. The primary drivers of the increase are: (i) $117.1 million related to the eight additional floaters acquired in the Business Combination with Maersk Drilling in October 2022; and (ii) $43.9 million in increased crew, repairs and maintenance and material costs across the remainder of the fleet, some of which was driven by inflation.
Jackups. During the second quarter of 2023, total contract drilling services cost related to jackups was $84.1 million, as compared to $60.7 million in the second quarter 2022. During the current quarter, cost increases are primarily driven by $55.5 million related to the 10 additional jackups acquired in conjunction with the Business Combination with Maersk Drilling in October 2022. These increases were partly offset by the reduction of $25.9 million in expenses after the sale of the Remedy Rigs in October 2022.
Depreciation and Amortization. Depreciation and amortization totaled $71.3 million and $26.6 million during the second quarter of 2023 and 2022, respectively. Depreciation and amortization increased by $44.7 million in the current quarter primarily due to $48.0 million related to 18 rigs and related equipment acquired in the Business Combination with Maersk Drilling in October 2022. This increase was partially offset by the sale of the five Remedy Rigs in October 2022.
General and Administrative Expenses. General and administrative expenses totaled $32.4 million and $16.7 million during the second quarter of 2023 and 2022, respectively. The increase is primarily related to the Business Combination with Maersk Drilling in October 2022, with increases across several categories including employee related costs.
Merger and Integration Costs. Noble incurred $22.5 million and $9.1 million of merger and integration costs during the second quarter of 2023 and 2022, respectively, primarily as a result of the Business Combination with Maersk Drilling in October 2022. Cumulative costs primarily relate to severance plans and share-based compensation charges, transaction-related acquisition costs, professional fees, and certain integration-related activities that are directly attributable to the Business Combination. In the second quarter of 2023, we incurred incremental severance costs as compared to the same period in the prior year. For additional information, see “Note 2— Acquisitions and Divestitures” to our unaudited condensed consolidated financial statements.
(Gain) Loss on Sale of Operating Assets. During the second quarter of 2022, Noble incurred costs of $1.1 million related to professional fees in connection with the anticipated sale of the Remedy Rigs in October 2022.
Hurricane losses and (recoveries), net. Noble incurred $15.9 million of costs, net of recoveries, during the second quarter of 2023 in connection with the Hurricane Ida incident. For additional information about the Hurricane Ida incident, see “Note 13— Commitments and Contingencies” to our unaudited condensed consolidated financial statements.
Other Income and Expenses
Interest Expense. Interest expense totaled $14.7 million and $7.7 million during the second quarter of 2023 and 2022 respectively. The increase was mainly due to the additional debt assumed in the Business Combination with Maersk Drilling in October 2022 and the issuance of 8.000% Senior Notes in April 2023. For additional information, see “Note 6— Debt” to our unaudited condensed consolidated financial statements.
Income Tax (Provision) Benefit. We recorded an income tax benefit of $0.7 million and an income tax provision of $3.9 million during the second quarter of 2023 and 2022, respectively.
During the second quarter of 2023, our tax provision included tax benefits of $50.7 million related to releases and adjustments of valuation allowance for deferred tax benefits in Guyana, Norway, Switzerland and Luxembourg, and a tax benefit of $6.8 million related to a Ghana uncertain tax position release. Such tax benefits are offset by tax expenses related to a Mexico uncertain tax position of $9.8 million, contract fair value amortization of $4.7 million and various recurring quarterly accruals of $42.2 million primarily in Guyana, Australia and Luxembourg.
During the second quarter of 2022, our tax provision included net tax benefits of $4.5 million related to a release of valuation allowance for Guyana deferred tax benefits, a tax benefit of $6.5 million related to a release of valuation allowance for Luxembourg deferred tax benefits. Such tax benefits were offset by tax expenses related to various recurring items comprised of Guyana excess withholding tax on gross revenue of $8.8 million and quarterly tax expense accrual of $6.1 million mostly in Luxembourg and Switzerland.
Results for the Six Months Ended June 30, 2023 and 2022
Net income for the six months ended June 30, 2023 was $173.9 million, or $1.19 per diluted share, on operating revenues of $1.2 billion compared to compared to net income for the six months ended June 30, 2022 of $0.4 million, or zero per diluted share, on operating revenues of $485.4 million.
Key Operating Metrics
Operating results for our contract drilling services segment are dependent on three primary metrics: operating days, dayrates and operating costs. We also track rig utilization, which is a function of operating days and the number of rigs in our fleet. For more information on operating costs, see “—Contract Drilling Services” below.
The following table presents the average rig utilization, operating days and average dayrates for our rig fleet for the periods indicated:
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Average Rig Utilization (1) | | Operating Days (2) | | Average Dayrates (2) | | |
| | Six Months Ended June 30, | | Six Months Ended June 30, | | Six Months Ended June 30, | | |
| | 2023 | | 2022 | | 2023 | | 2022 | | 2023 | | 2022 | | |
| Floaters | | 76 | % | | 76 | % | | 2,618 | | | 1,541 | | | 347,383 | | | 241,510 | | | |
| Jackups | | 66 | % | | 65 | % | | 1,663 | | | 945 | | | 112,571 | | | 120,244 | | | |
| Total | | 72 | % | | 72 | % | | 4,281 | | | 2,486 | | | $ | 256,170 | | | $ | 195,429 | | | |
(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.
(2)An operating day is defined as a calendar day during which a rig operated under a drilling contract. We define average dayrates as revenue from contract drilling services earned per operating day. Average dayrates exclude the effect of non-cash amortization related to favorable and unfavorable off-market customer contract assets and liabilities.
Contract Drilling Services
The following table presents the operating results for our contract drilling services segment for the periods indicated (dollars in thousands):
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | |
| | | | | | | | |
| | | | | | |
| | Six Months Ended June 30, | | Change |
| Operating revenues: | | 2023 | | 2022 | | $ | | % |
| Contract drilling services | | $ | 1,181,470 | | | $ | 457,498 | | | $ | 723,972 | | | 158 | % |
Reimbursables and other (1) | | $ | 67,119 | | | $ | 27,885 | | | 39,234 | | | 141 | % |
| | $ | 1,248,589 | | | $ | 485,383 | | | $ | 763,206 | | | 157 | % |
| Operating costs and expenses: | | | | | | | | |
| Contract drilling services | | $ | 724,322 | | | $ | 344,228 | | | $ | 380,094 | | | 110 | % |
Reimbursables (1) | | 50,802 | | | 23,811 | | | 26,991 | | | 113 | % |
| Depreciation and amortization | | 141,266 | | | 52,241 | | | 89,025 | | | 170 | % |
| General and administrative | | 62,389 | | | 34,211 | | | 28,178 | | | 82 | % |
| Merger and integration costs | | 34,083 | | | 18,578 | | | 15,505 | | | 83 | % |
(Gain) loss on sale of operating assets, net | | — | | | (3,459) | | | 3,459 | | | (100) | % |
| Hurricane losses and (recoveries), net | | 19,478 | | | 2,805 | | | 16,673 | | | 594 | % |
| | 1,032,340 | | | 472,415 | | | 559,925 | | | 119 | % |
| Operating income (loss) | | $ | 216,249 | | | $ | 12,968 | | | $ | 203,281 | | | 1,568 | % |
(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.
The following table provides information about contract drilling revenue and costs by rig types (dollars in millions except average dayrates):
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | Six Months Ended June 30, |
| | | 2023 | | 2022 |
| | | Floaters | | Jackups | | Floaters | | Jackups |
| Contract drilling services revenues | | $ | 970.2 | | $ | 211.3 | | $ | 343.9 | | $ | 113.6 |
| Contract drilling services costs | | $ | 549.4 | | $ | 174.9 | | $ | 221.5 | | $ | 122.7 |
| Average Rig Utilization | | | 76 | % | | 66 | % | | 76 | % | | 65 | % |
| Operating Days | | | 2,618 | | | 1,663 | | | 1,541 | | | 945 | |
| Average Dayrates | | | $ | 347,383 | | | $ | 112,571 | | | $ | 241,510 | | | $ | 120,244 | |
| Total rigs | — Beginning | | 19 | | | 13 | | | 12 | | | 8 | |
| — Acquired | | — | | | — | | | — | | | — | |
| — Disposed | | — | | | — | | | 1 | | | — | |
| — Ending | | 19 | | | 13 | | | 13 | | | 8 | |
Contract Drilling Services Revenues
Floaters. During the six months ended June 30, 2023, floaters generated revenue of $970.2 million, as compared to $343.9 million in the six months ended June 30, 2022. The increase in revenue is mainly attributable to (i) $358.1 million provided by the eight additional floaters acquired in the Business Combination with Maersk Drilling in October 2022; and (ii) $198.2 million due to an increase in average dayrates in the current period. These increases were partly offset by $21.0 million from rigs with fewer operating days in the current period. Additionally, floater revenue for the current period increased $74.4 million due to additional net non-cash amortization related to off-market customer contract assets and liabilities.
Jackups. During the six months ended June 30, 2023, jackups generated revenue of $211.3 million , as compared to $113.6 million in the six months ended June 30, 2022. The increase in revenue is mainly attributable to $139.8 million provided by the 10 additional jackups acquired in the Business Combination with Maersk Drilling in October 2022. This increase was offset by (i) $43.9 million for the divestiture of the Remedy Rigs in October 2022 in connection with the Business Combination with Maersk Drilling; and (ii) $24.6 million from rigs with less operating days in the current period. Additionally, contract drilling revenue for the current period increased $24.0 million due to additional net non-cash amortization related to off-market customer contract assets and liabilities.
Operating Costs and Expenses
Floaters. During the six months ended June 30, 2023, total contract drilling services costs related to floaters was $549.4 million, as compared to $221.5 million in the six months ended June 30, 2022. The primary drivers of the increase are: (i) $238.1 million related to the eight additional floaters acquired in the Business Combination with Maersk Drilling in October 2022; and (ii) $93.6 million in increased crew, repairs and maintenance and material costs across the remainder of the fleet, some of which was driven by inflation. These increases were offset by $3.8 million due to the divestiture of a semi-submersible unit late in the first quarter of 2022.
Jackups. During the six months ended June 30, 2023, total contract drilling services cost related to jackups was $174.9 million, as compared to $122.7 million in the six months ended June 30, 2022. During the current quarter, cost increases are primarily driven by $114.5 million related to the 10 additional jackups acquired in conjunction with the Business Combination with Maersk Drilling in October 2022. These increases were partly offset by the reduction of $54.8 million in expenses after the sale of the Remedy Rigs in October 2022.
Depreciation and Amortization. Depreciation and amortization totaled $141.3 million and $52.2 million during the six months ended June 30, 2023 and 2022, respectively. Depreciation and amortization increased by $89.1 million in the current year primarily due to $95.2 million related to 18 rigs and related equipment acquired in the Business Combination with Maersk Drilling in October 2022. This increase was partially offset by the sale of the five Remedy Rigs in October 2022 and the divestiture of a semi-submersible unit in the first quarter of 2022.
General and Administrative Expenses. General and administrative expenses totaled $62.4 million and $34.2 million during the six months ended June 30, 2023 and 2022, respectively. The increase is primarily related to the Business
Combination with Maersk Drilling in October 2022, with increases across several categories including employee related costs.
Merger and Integration Costs. Noble incurred $34.1 million and $18.6 million of merger and integration costs during the six months ended June 30, 2023 and 2022, respectively, primarily as a result of the Business Combination with Maersk Drilling in October 2022. Cumulative costs primarily relate to severance plans and share-based compensation charges, transaction-related acquisition costs, professional fees, and certain integration-related activities that are directly attributable to the Business Combination. In the six months ended June 30, 2023, we incurred incremental severance costs and costs related to integration-related activities as compared to the same period in the prior year. For additional information, see “Note 2— Acquisitions and Divestitures” to our unaudited condensed consolidated financial statements.
(Gain) Loss on Sale of Operating Assets. During the six months ended June 30, 2022, Noble recognized a gain of $6.8 million in connection with the sale of the Noble Clyde Boudreaux, offset by costs incurred of $1.1 million related to professional fees in connection with the anticipated sale of the Remedy Rigs in October 2022 and additional costs recognized of $2.2 million related to the sale of rigs in Saudi Arabia in 2021.
Hurricane Losses and (Recoveries), net. Noble incurred $19.5 million of costs, net of recoveries, during the six months ended June 30, 2023 in connection with the Hurricane Ida incident. For additional information about the Hurricane Ida incident, see “Note 13— Commitments and Contingencies” to our unaudited condensed consolidated financial statements.
Other Income and Expenses.
Interest Expense. Interest expense totaled $31.5 million and $15.4 million during the six months ended June 30, 2023 and 2022 respectively. The increase was mainly due to the additional debt assumed in the Business Combination with Maersk Drilling in October 2022, and the issuance of 8.000% Senior Notes in April 2023. For additional information, see “Note 6— Debt” to our unaudited condensed consolidated financial statements.
Income Tax (Provision) Benefit. We recorded an income tax benefit of $16.5 million and $1.3 million during the six months ended June 30, 2023 and 2022, respectively.
During the six months ended June 30, 2023, our tax provision included tax benefits of $95.8 million related to releases of valuation allowance for deferred tax benefits in Guyana, Norway and Switzerland, a tax benefit of $6.8 million related to a Ghana uncertain tax position release. Such tax benefits are offset by tax expenses related to a Mexico uncertain tax position of $9.8 million, contract fair value amortization of $8.9 million and various recurring quarterly accruals of $67.4 million primarily in Guyana, Australia and Luxembourg.
During the six months ended June 30, 2022, our tax provision included net tax benefits of $8.2 million related to a release of valuation allowance for Guyana deferred tax benefits, a tax benefit of $6.5 million related to a release of valuation allowance for Luxembourg deferred tax benefits, $0.9 million related to an adjustment to Swiss deferred tax benefits, and $1.3 million related primarily to deferred tax adjustments. Such tax benefits were partially offset by tax expenses related to various recurring items comprised of Guyana excess withholding tax on gross revenue of $10.5 million and quarterly tax expense accrual of $5.0 million mostly in Luxembourg and Switzerland.
Liquidity and Capital Resources
Debt Refinancing
On April 18, 2023, Noble Finance II, LLC (“Noble Finance II”), a wholly owned subsidiary of Noble, issued $600 million in aggregate principal amount of its 8.000% Senior Notes due 2030 (“2030 Notes”). The 2030 Notes were issued pursuant to an indenture, dated April 18, 2023, among Noble Finance II, the subsidiaries of Noble Finance II party thereto, as guarantors, and U.S. Bank Trust Company, National Association, as trustee. The net proceeds from the offering of 2030 Notes were primarily used to (i) repay the approximately $347.5 million of outstanding borrowings under the New DNB Credit Facility, (ii) to redeem (the “Redemption”) the approximately $173.7 million aggregate principal amount of outstanding Second Lien Notes, and (iii) to pay any premiums, fees and expenses related to the Redemption and the issuance of the 2030 Notes. As of June 30, 2023, we had outstanding $600.0 million aggregate principal amount of our 2030 Notes.
Other Debt Repayments
On February 23, 2023, we repaid the remaining amount under the Term Loan Facility Agreement dated December 10, 2018 by and between Maersk Drilling and Danmarks Skibskredit A/S as lender, agent, and security agent (as amended from time to time, the “DSF Credit Facility”) in full using cash on hand.
Senior Secured Revolving Credit Facility
On April 18, 2023, certain subsidiaries of Noble entered into an Amended and Restated Senior Secured Revolving Credit Agreement, dated April 18, 2023 (the “2023 Revolving Credit Agreement”), by and among Noble Finance II, NIFCO and Noble Drilling A/S, as borrowers, the lenders and issuing banks party thereto from time to time and JPMorgan Chase Bank, N.A., as administrative agent, collateral agent and security trustee. The revolving credit facility under the 2023 Revolving Credit Agreement (the “2023 Revolving Credit Facility”) provides for commitments of $550 million with maturity in 2028. The guarantors under the 2023 Revolving Credit Facility are the same subsidiaries of Noble Finance II that are or will be guarantors of the 2030 Notes.
As of June 30, 2023, we had no loans outstanding and $19.1 million of letters of credit issued under the 2023 Revolving Credit Facility. For additional information about our 2023 Revolving Credit Facility as of June 30, 2023, see “Note 6— Debt” to our unaudited condensed consolidated financial statements.
Letters of credit and surety bonds
As of June 30, 2023, we had $19.1 million of letters of credit issued under the 2023 Revolving Credit Facility and an additional $76.5 million in letters of credit and surety bonds issued under bilateral arrangements which guarantee our performance as it relates to our drilling contracts, contract bidding, tax appeals, customs duties, and other obligations in various jurisdictions. We expect to comply with the underlying performance requirements and we expect obligations under these letters of credit and surety bonds will not be called.
Sources and Uses of Cash
Our principal sources of capital in the current period were cash generated from operating activities as well as net proceeds from the issuance of the 2030 Notes. Cash on hand during the current period was primarily used for the following:
•normal recurring operating expenses;
•repurchase, redemptions or repayments of debt and interest,
•fees and expenses related to merger and integration costs;
•share repurchases; and
•capital expenditures.
Currently, our anticipated cash flow needs, both in the short-term and long-term, may include the following:
•normal recurring operating expenses;
•planned and discretionary capital expenditures;
•repurchase, redemptions or repayments of debt and interest, including related fees;
•fees and expenses related to merger and integration costs;
•share repurchases and dividends; and
•certain contractual cash obligations and commitments.
We currently expect to fund our cash flow needs with cash generated by our operations, cash on hand, proceeds from sales of assets, or borrowings under our 2023 Revolving Credit Facility and we believe this will provide us with sufficient liquidity to fund our cash flow needs over the next 12 months. Subject to market conditions and other factors, we may also issue equity or long-term debt securities to fund our cash flow needs and for other purposes.
Net cash provided by operating activities was $148.1 million and $36.3 million for the six months ended June 30, 2023 and 2022, respectively. The six months ended June 30, 2023 and 2022 had cash outflows from operating assets and liabilities. We had working capital of $418.5 million at June 30, 2023 and $384.7 million at December 31, 2022.
Net cash used in investing activities was $169.5 million and $63.8 million for the six months ended June 30, 2023 and 2022, respectively. During the six months ended June 30, 2023, our capital expenditures consisted primarily of routine projects associated with overhauls and upgrades on various rigs in the newly combined fleet. During the six months ended June 30, 2022, our capital expenditures includes the managed pressure upgrade on the Noble Gerry de Souza, and was offset against proceeds from the sale of the Noble Clyde Boudreaux.
Net cash used in financing activities was $202.3 million and $4.5 million for the six months ended June 30, 2023 and 2022, respectively. The six months ended June 30, 2023 include the repayment of the DSF Credit Facility in full, using cash on
hand, redemption of Second Lien Notes, repayment of the DNB Credit Facility and issuance of 2030 Notes. We also repurchased 1.8 million of our Ordinary Shares for total of $70.0 million.
At June 30, 2023, we had a total contract drilling services backlog of approximately $5.0 billion, which includes a commitment of approximately 64% of available days for our Noble rigs for the remainder of 2023. For additional information regarding our backlog, see “Contract Drilling Services Backlog.”
Capital Expenditures
Capital expenditures totaled $170.9 million for the six months ended June 30, 2023 and consisted of the following:
•$94.2 million for sustaining capital;
•$57.7 million in major projects, including subsea and other related projects; and
•$19.0 million for rebillable capital and contract modifications.
Our total capital expenditure estimate for the year ending December 31, 2023, net of client reimbursables, is expected to range between $325 million and $365 million, of which approximately $210 to $230 million is currently anticipated to be spent for sustaining capital. We anticipate additional capital costs to repair the Noble Regina Allen, however, we are in the process of completing an insurance claim for reimbursement.
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, while liquidity and preservation of capital remains our top priority, we will continue to evaluate acquisitions of drilling units from time to time.
Critical Accounting Estimates
We prepare our unaudited condensed consolidated financial statements in accordance with accounting principles generally accepted in the United States, which require us to make estimates that affect the reported amounts of assets, liabilities, revenues, expenses and related disclosures of contingent assets and liabilities. We disclose our significant accounting policies in “Note 1— Organization and Significant Accounting Policies” to our audited consolidated financial statements included in Part II, Item 8 of our Annual Report on Form 10-K for the year ended December 31, 2022.
For information about our critical accounting policies and estimates, see Part II, Item 7, “Management's Discussion and Analysis of Financial Condition and Results of Operations—Critical Accounting Estimates” in our Annual Report on Form 10-K for the year ended December 31, 2022. As of June 30, 2023, there have been no material changes to the judgments, assumptions and estimates upon which our critical accounting policies and estimates are based.
See Part I, Item 1, Financial Statements, “Note 3— Accounting Pronouncements,” to the unaudited condensed consolidated financial statements for a description of the recent accounting pronouncements.
Item 3. Quantitative and Qualitative Disclosures about Market Risk
There has been no significant change in our exposure to market risk when compared to those disclosed in Part II, Item 7A. “Quantitative and Qualitative Disclosures about Market Risk” in our Annual Report on Form 10-K for the year ended December 31, 2022.
Item 4. Controls and Procedures
Robert W. Eifler, President and Chief Executive Officer (Principal Executive Officer) of Noble, and Richard B. Barker, Senior Vice President and Chief Financial Officer (Principal Financial Officer) of Noble, have evaluated the disclosure controls and procedures of Noble as of the end of the period covered by this report. On the basis of this evaluation, Mr. Eifler and Mr. Barker have concluded that Noble’s disclosure controls and procedures were effective as of June 30, 2023. Noble’s disclosure controls and procedures are designed to ensure that information required to be disclosed by Noble in the reports that it files with or submits to the SEC are recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms and is accumulated and communicated to management as appropriate to allow timely decisions regarding required disclosure.
In accordance with interpretive guidance issued by SEC staff, companies are allowed to exclude an acquired business from the assessment of internal control over financial reporting during the first year following the date on which the acquisition is completed and from the assessment of disclosure controls and procedures to the extent subsumed in such internal control over financial reporting. In accordance with this guidance, as the Company acquired Maersk Drilling on October 3, 2022, management’s evaluation and conclusion as to the effectiveness of the Company’s disclosure controls and procedures as of December 31, 2022 excluded the portion of disclosure controls and procedures that are subsumed by internal control over financial reporting of Maersk Drilling as of June 30, 2023.
Other than the aforementioned acquisition, during the quarter ended June 30, 2023, there were no changes in our internal control over financial reporting that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
Information regarding legal proceedings is presented in “Note 13— Commitments and Contingencies,” to our unaudited condensed consolidated financial statements included in Item 1 of Part I of this Quarterly Report on Form 10-Q and is incorporated herein by reference.
Item 1A. Risk Factors
There are numerous factors that affect our business and results of operations, many of which are beyond our control. You should carefully read and consider “Item 1A. Risk Factors” in Part I and “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Part II of our Annual Report on Form 10-K for the year ended December 31, 2022, which contains descriptions of significant risks that might cause our actual results of operations in future periods to differ materially from those currently anticipated or expected. There have been no material changes from the risk factors disclosed in our Annual Report on Form 10-K for the year ended December 31, 2022.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
Exercises of Warrants
During the three months ended June 30, 2023:
•2,097 Ordinary Shares were issued to holders of our Tranche 1 Warrants pursuant to exercises of 2,135 Tranche 1 Warrants; and
•1,784 Ordinary Shares were issued to holders of our Tranche 2 Warrants pursuant to exercises of 1,830 Tranche 2 Warrants; and
•2 Ordinary Shares were issued to holders of our Tranche 3 Warrants pursuant to exercises of 46 Tranche 3 Warrants.
Such Ordinary Shares were issued pursuant to the exemptions from the registration requirements of the Securities Act under Section 4(a)(2) under the Securities Act or Section 1145 of the Bankruptcy Code. For more information on the terms of exercise and other features of the warrants, see our Annual Report on Form 10-K for the year ended December 31, 2022.
Share Repurchases
The following table presents information about our purchases of equity securities for the three months ended June 30, 2023:
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| Period | | Total Number of Shares Purchased (1) | | Average Price Paid per Share | | Total Number of Shares Purchased as Part of a Publicly Announced Plans or Programs (1) | | Maximum Number (or Approximate Dollar Value) of Shares that may yet be Purchased Under the Plans or Programs (1) |
| April 1 - 30, 2023 | | — | | | — | | | — | | | $ | 375,000,141 | |
| May 1 - 31, 2023 | | 869,548 | | | $ | 38.40 | | | 869,548 | | | $ | 341,593,701 | |
| June 1 - 30, 2023 | | 680,561 | | | $ | 39.06 | | | 680,561 | | | $ | 315,000,160 | |
| Total | | 1,550,109 | | | | | 1,550,109 | | | $ | 315,000,160 | |
| | | | | | | | |
| | | | | | | | |
| | | | | | | | |
(1)Subject to restrictions under applicable law discussed in “Note 4— Income (Loss) Per Share” to our unaudited condensed consolidated financial statements, we announced a share repurchase plan on Nov 2, 2022 to purchase up to $400 million of outstanding Ordinary Shares or Warrants. The $400 million authorization does not have a fixed expiration, and may be modified, suspended or discontinued at any time. The program does not obligate us to acquire any particular amount of shares. During the three months ended June 30, 2023, we repurchased 1,550,109 of our Ordinary Shares, which were subsequently cancelled.
Item 5. Other Information
Our directors and executive officers may from time to time enter into plans or other arrangements for the purchase or sale of our shares that are intended to satisfy the affirmative defense conditions of Rule 10b5-1(c) or may represent a non-Rule 10b5-1 trading arrangement under the Exchange Act. During the three months ended June 30, 2023, no such plans or other arrangements were adopted, terminated or modified.
On August 2, 2023, Noble adopted the Noble Corporation plc Executive Change in Control Severance Plan (the “Change in Control Plan”), which provides “double trigger” severance payments and benefits to certain employees including our named executive officers (other than William E. Turcotte). The policy provides an eligible participant with certain payments and benefits in the event that the participant experiences a qualifying termination following a change in control. In the event that an eligible executive’s employment is terminated without cause by Noble or for good reason by the executive within the 24-month period following the occurrence of a change in control, such executive would become entitled to receive, subject to their execution of a release of claims: (1) a lump sum cash payment equal to the sum of the executive’s base salary and target annual cash bonus multiplied by the multiple applicable for such executive’s role (i.e., 3.0 for our Chief Executive Officer and 2.0 for all other covered named executive officers); (2) any unpaid annual cash bonus for the year preceding the year of termination; (3) a pro-rated annual cash bonus for the year of termination based on actual performance; (4) Noble-paid COBRA continuation coverage for up to 18 months following the date of termination; (5) reimbursement for up to $50,000 in outplacement services; and (6) accelerated vesting of equity awards, with any outstanding performance-based equity awards determined based on (i) with respect to any completed performance periods or achieved performance measures, actual performance as of the termination date, and (ii) with respect to incomplete performance periods and performance measures, the target or 100% performance level. The Change in Control Plan contains a modified cutback provision whereby payments payable to an executive may be reduced if doing so would put the executive in a more advantageous after-tax provision than if payments were not reduced and the executive became subject to excise taxes under Section 4999 of the Code.
On August 2, 2023, Noble also adopted the Noble Corporation plc Executive Severance Plan (the “Severance Plan”), which provides severance payments and benefits to certain employees, including our named executive officers (other than William E. Turcotte), outside the context of a change in control. The Severance Plan provides an eligible participant with payments and benefits in the event of an involuntary termination without cause or, for certain employees including our eligible named executive officers, a termination due to good reason. In the event of such a qualifying termination under the Severance Plan, each executive would become entitled to receive, subject to the executive’s execution of a release of claims: (1) a lump sum cash payment equal to the sum of the executive’s base salary and target annual cash bonus multiplied by the multiple applicable for such executive’s role (i.e., 2.0 for our Chief Executive Officer and 1.0 for all other covered named
executive officers); (2) any unpaid annual cash bonus for the year preceding the year of termination; (3) a pro-rated annual cash bonus for the year of termination based on actual performance; (4) Noble-paid COBRA continuation coverage for up to 12 months following the date of termination; (5) reimbursement for up to $50,000 in outplacement services; (6) accelerated vesting of time-based equity awards; and (7) continued eligibility to vest in outstanding performance-based equity awards determined based on (i) with respect to any completed performance periods or achieved performance measures, actual performance, and (ii) with respect to incomplete performance periods and performance measures, actual performance over the full performance period and pro-rated based on the number of months the executive was employed during the applicable performance period.
The foregoing descriptions of the Change in Control Plan and the Severance Plan do not purport to be complete and are qualified in their entirety by reference to the full text of the plans, which are filed as Exhibits 10.1 and 10.2, respectively, to this Quarterly Report on Form 10-Q and are incorporated herein by reference.
Item 6. Exhibits
The following exhibits are filed as part of this Quarterly Report on Form 10-Q.
Index to Exhibits
| | | | | | | | |
Exhibit
Number | | Exhibit |
| | |
| 2.1† | | |
| | |
| 2.2 | | |
| | |
| 3.1 | | |
| | |
| 4.1 | | |
| | |
| 10.1*^ | | |
| | |
| 10.2*^ | | |
| | |
| 10.3* | | |
| | |
| 10.4* | | |
| | |
| 10.5* | | |
| | |
| 10.6† | | Amended and Restated Senior Secured Revolving Credit Agreement, dated as of April 18, 2023, by and among Noble Finance II LLC, Noble International Finance Company and Noble Drilling A/S, as borrowers, the lenders and issuing banks party thereto from time to time and JPMorgan Chase Bank, N.A., as administrative agent, collateral agent and security trustee (filed as Exhibit 10.1 to Noble’s Current Report on Form 8-K filed on April 18, 2023 and incorporated herein by reference). |
| | |
| 31.1 | | |
| | |
| 31.2 | | |
| | |
| 32.1+ | | |
| | |
| 32.2+ | | |
| | |
| 101.INS | | Inline XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document. |
| | | | | | | | |
Exhibit
Number | | Exhibit |
| | |
| | |
| 101.SCH | | Inline XBRL Taxonomy Extension Schema Document. |
| | |
| 101.CAL | | Inline XBRL Taxonomy Extension Calculation Linkbase Document. |
| | |
| 101.DEF | | Inline XBRL Taxonomy Extension Definition Linkbase Document. |
| | |
| 101.LAB | | Inline XBRL Taxonomy Extension Label Linkbase Document. |
| | |
| 101.PRE | | Inline XBRL Taxonomy Extension Presentation Linkbase Document. |
| | |
| 104 | | Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101). |
______________________________________________________
* Management contract or compensatory plan or arrangement.
† Certain portions of the exhibit have been omitted. The Company agrees to furnish a supplemental copy with any omitted information to the SEC upon request.
^ Certain personally identifiable information contained in this exhibit has been redacted pursuant to Item 601 (a)(6) of Regulation S-K.
+ Furnished in accordance with Item 601(b)(32)(ii) of Regulation S-K.
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 formed under the laws of England and Wales
| | | | | | | | |
| /s/ Richard B. Barker | | August 3, 2023 |
Richard B. Barker
Senior Vice President and Chief Financial Officer
(Principal Financial Officer) | | Date |
| | |
| /s/ Laura D. Campbell | | August 3, 2023 |
Laura D. Campbell
Vice President, Chief Accounting Officer and Controller
(Principal Accounting Officer) | | Date |
NOBLE CORPORATION PLC
EXECUTIVE CHANGE IN CONTROL SEVERANCE PLAN
Section 1. Purpose.
The purpose of this Noble Corporation plc Executive Change in Control Severance Plan (this “Plan”), effective as of August 2, 2023 (the “Effective Date”), is to provide assurances of specified benefits to eligible employees of the Company and its Affiliates whose employment is subject to being terminated in a Qualifying Termination in connection with a Change in Control. This Plan is intended to be an “employee welfare benefit plan” within the meaning of Section 3(1) of ERISA and is maintained as an unfunded plan for the purpose of providing benefits to a select group of management or highly compensated employees within the meaning of 29 C.F.R. § 2520.104-24.
Section 2. Definitions.
a)“Act” means the Securities Exchange Act of 1934, as amended.
b)“Affiliate” means any company directly or indirectly controlling, controlled by or under common control with the Company.
c)“Base Pay” means the annual base salary in effect for the Covered Executive immediately prior to termination of employment, and excludes any bonuses, incentive compensation or any other special payments.
d)“Beneficial Owner” shall have the meaning set forth in Rule 13d-3 under the Act.
e)“Board” means the Board of Directors of the Company.
f)“Cause” has the meaning set forth in a Covered Executive’s Participation Agreement, or, if none, means:
i.the willful and continued failure of the Covered Executive to perform substantially all of the Covered Executive’s duties (other than any such failure resulting from bodily injury or disease or any other incapacity due to mental or physical illness) after a written demand for substantial performance is delivered to the Covered Executive by the Company (or an Affiliate), which specifically identifies the manner in which the Company believes the Covered Executive has not substantially performed the Covered Executive’s duties;
ii.the Covered Executive’s willful refusal to comply with the lawful instructions of the Board or the Covered Executive’s manager (or reporting officer) that are consistent with the Covered Executive’s position, which failure, to the extent curable, is not cured within 15 days following receipt of written notice from the Company (or an Affiliate) or such other later time as may be reasonably required for such compliance in the Company’s sole discretion;
iii.the Covered Executive engages in illegal conduct or gross misconduct that is materially and demonstrably detrimental to the Company and/or its Affiliates, monetarily or otherwise;
iv.the Covered Executive commits a material breach of the terms of any material policy of the Company and/or its Affiliates applicable to the Covered Executive, or any other agreement with the Company and/or its Affiliates, including any agreement containing restrictive covenants to which the Covered Executive is a party, which breach, to the extent curable, is not cured within 15 days following receipt of written notice from the Company (or an Affiliate); or
v.the Covered Executive is indicted on charges of, is convicted of, or enters into a plea of guilty or nolo contendere to (A) a felony; or (B) a crime involving any of fraud, material dishonesty, or moral turpitude.
For purposes of this provision, no act, or failure to act, on the part of the Covered Executive shall be considered “willful” unless done, or omitted to be done, by the Covered Executive in bad faith or without reasonable belief that the Covered Executive’s action or omission was in the best interests of the Company. Any act, or failure to act, based upon authority given pursuant to a resolution duly adopted by the Board or based upon the written advice of counsel for the Company or, with respect to Covered Executives who are not the Chief Executive Officer of the Company, upon the instructions of the Chief Executive Officer of the Company, shall be conclusively presumed to be done, or omitted to be done, by the Covered Executive in good faith and in the best interests of the Company and its Affiliates.
g)“Change in Control” means the occurrence of any of the following events:
i.any Person becomes the Beneficial Owner, directly or indirectly, of more than 50% of either (1) the then outstanding securities of the Company or (2) the combined voting power of the Company’s then outstanding securities, excluding any Person who becomes such a Beneficial Owner in connection with a transaction that meets the requirements of clauses (1), (2), and (3) of paragraph (iii) of this definition;
ii.individuals who, as of the Effective Date, constitute the Board (the “Incumbent Board”) cease for any reason to constitute a majority of such Board; provided, however, that any individual becoming a director of the Company subsequent to the Effective Date whose election, or nomination for election by the Company’s shareholders, was approved by a vote of a majority of the directors of the Company then comprising the Incumbent Board shall be considered as though such individual were a member of the Incumbent Board, but excluding, for this purpose, any such individual whose initial assumption of office occurs as a result of either an actual or threatened election contest or other actual or threatened solicitation of proxies or consents by or on behalf of a Person other than the Board;
iii.consummation of a reorganization, merger, scheme of arrangement, amalgamation or consolidation of the Company (a “Transaction”), with or without approval by the shareholders of the Company, in each case, unless, immediately following such Transaction:
1. all of the Persons who were the respective Beneficial Owners of the voting securities of the Company immediately before such Transaction Beneficially Owns, directly or indirectly, in substantially the same proportions, more than 50% of, respectively, the then outstanding shares of common stock (or equivalent security) of the company resulting from the Transaction and the combined voting power of the then outstanding voting securities of such company entitled to vote generally in the election of directors;
2. no Person (excluding the company resulting from the Transaction, and any Person Beneficially Owning, as of immediately prior to the Transaction, directly or indirectly, 25% or more of the then outstanding securities of the Company or the combined voting power of the Company’s then outstanding securities) Beneficially Owns, directly or indirectly, 25% or more of, respectively, the then outstanding shares of common stock (or equivalent security) of the company resulting from the Transaction or the combined voting power of the then outstanding voting
securities of the company resulting from the Transaction entitled to vote generally in the election of directors; and
3. a majority of the members of the board of directors of the company resulting from the Transaction were members of the Incumbent Board at the time of the execution of the initial agreement providing for such Transaction;
iv.approval by the shareholders of the Company of a complete liquidation or dissolution of the Company; or
v.consummation of a sale or disposition by the Company of all or substantially all of the Company’s assets, other than a sale or disposition by the Company of all or substantially all of the Company’s assets to an entity for which, following such sale, the conditions described in clauses (1), (2), and (3) of paragraph (iii) of this definition are satisfied.
Notwithstanding the foregoing, or anything to the contrary set forth herein, for any payments or benefits subject to Code Section 409A and where Change in Control is a payment event or impacts the time and form of payment, a transaction or series of related transactions will not be considered to be a Change in Control unless such transaction or series of transactions would also be a “change in control” under Code Section 409A.
h)“COBRA” means the Consolidated Omnibus Budget Reconciliation Act of 1985, as amended, and any guidance and/or regulations promulgated thereunder.
i)“Code” means the Internal Revenue Code of 1986, as amended, and any guidance and/or regulations promulgated thereunder.
j)“Committee” means the Compensation Committee of the Board or another duly constituted committee of members of the Board designated by the Board to administer this Plan.
k)“Company” means Noble Corporation plc, a public limited company incorporated under the laws of England and Wales, and any successor corporation or other entity.
l)“Covered Executive” means those officers or other management-level employees of the Company and its Affiliates designated by the Board or the Committee in its discretion to participate in this Plan who meet the eligibility requirements set forth in Section 3(a) of this Plan.
m)“Covered Period” means the period commencing on the date a Change in Control is consummated and ending on the 24-month anniversary thereof.
n)“Disability” has the meaning set forth in a Covered Executive’s Participation Agreement, or, if none, means a medically determinable physical or mental impairment (i) that prevents the Covered Executive from performing his or her employment duties in a satisfactory manner and is expected either to result in death or to last for a continuous period of not less than twelve months as determined by the Committee, or (ii) for which the Covered Executive is eligible to receive disability income benefits under a long-term disability insurance plan maintained by the Company or an Affiliate. Notwithstanding the foregoing, to the extent any benefit herein is subject to Section 409A of the Code, the definition of Disability shall conform to the requirements of Treasury Regulation § 1.409A-3(i)(4)(i) to the extent necessary to avoid the imposition of any tax by such Section 409A of the Code.
o)“ERISA” means the Employee Retirement Income Security Act of 1974, as amended, and any guidance and/or regulations promulgated thereunder.
p)“Good Reason” has the meaning set forth in a Covered Executive’s Participation Agreement, or, if none, means the Covered Executive’s termination of employment due to any of the following, without the Covered Executive’s express written consent:
i.a material diminution in the Covered Executive’s position (including titles and reporting requirements, provided that a change in direct reporting structure from the Chief Executive Officer to an Executive Vice President shall not trigger Good Reason hereunder), duties, functions, and responsibilities;
ii.(x) a reduction in the Covered Executive’s base salary, or (y) a reduction in the Covered Executive’s Target Bonus (in each case, other than as part of an across the board reduction applicable to substantially all senior executives of the Company in substantially the same proportion, but in no event more than a 10% reduction in the aggregate);
iii.the Company’s requiring the Covered Executive to be based at any office or location other than at the location where the Covered Executive has been regularly employed prior to the requested relocation or any other office which is the headquarters of the Company and that is less than 50 miles from such location where the Covered Executive has been regularly employed prior to the requested relocation; or
iv.any other action that constitutes a material breach by the Company of the provisions of any other material compensation agreement between the Covered Executive and the Company.
Notwithstanding the foregoing, the Covered Executive shall not have the right to terminate the Covered Executive’s employment for Good Reason unless (1) the Covered Executive provides written notice to the Company detailing the specific circumstances of the existence of the condition or conditions that the Covered Executive claims give rise to Good Reason within 90 days of the initial existence of such condition, (2) the Company fails to remedy such condition or conditions within 30 days following the receipt of such written notice and (3) the Covered Executive terminates employment within 30 days following the end of such cure period.
q)“Participation Agreement” means an agreement between a Covered Executive and the Company that acknowledges the Covered Executive’s participation in this Plan.
r)“Person” means any individual, corporation, firm, partnership, joint venture, limited liability company, estate, trust, business association, organization, governmental entity, or other entity and any group of such individuals or entities, the acting together of which would constitute a “group” for purposes of Section 13(d) of the Act, or any successor provisions thereto, excluding (i) the Company or any of its Affiliates, (ii) a trustee or other fiduciary holding securities under an employee benefit plan of the Company or any of its Affiliates, (iii) an underwriter temporarily holding securities pursuant to an offering of such securities or (iv) a corporation owned, directly or indirectly, by the stockholders of the Company in substantially the same proportions as their ownership of stock of the Company.
s)“Qualifying Termination” means a termination of employment with the Company (or applicable Affiliate) either by the Company (or applicable Affiliate) without Cause or by the Covered Executive for Good Reason.
t)“Target Bonus” means the target annual cash bonus amount in effect for the Covered Executive under the Company’s Short-Term Incentive Plan.
Section 3. Eligibility.
a)The Covered Executives listed on Exhibit A, as the same may be amended by the Board or the Committee from time to time, shall be eligible to participate in this Plan upon their execution of a Participation Agreement with the Company in substantially the form attached hereto as Exhibit C.
b)A Covered Executive shall not be eligible for Severance Benefits under this Plan if:
i.he or she does not meet the eligibility criteria described in Section 3(a);
ii.he or she voluntarily terminates employment with the Company and its Affiliates for any reason other than Good Reason, including retirement or job abandonment;
iii.he or she terminates employment as a result of death or Disability;
iv.his or her employment is terminated by the Company or its applicable Affiliate for Cause; or
v.he or she is terminated at any time outside of the Covered Period.
Section 4. Severance Benefits.
A Covered Executive whose employment with the Company (or an applicable Affiliate) is terminated in a Qualifying Termination during the Covered Period and who executes, within the time period specified therein, and does not revoke a Separation Agreement and Release of Claims in the form provided by the Company (the “Separation Agreement”) shall receive the following severance payments and benefits (the “Severance Benefits”):
a)A lump sum cash payment, payable within 30 days following the date on which the Separation Agreement becomes effective and irrevocable (or if the period in which such Separation Agreement may become effective and irrevocable spans two calendar years, in the later calendar year), in an amount equal to (i) the sum of the Covered Executive’s Base Pay and Target Bonus multiplied by (ii) the multiple set forth in Exhibit B for the Covered Executive’s role;
b)Any unpaid annual cash bonus earned under the Company’s Short-Term Incentive Plan for the fiscal year prior to the year in which the Covered Executive’s termination of employment occurs, payable in a cash lump-sum on or about the date such bonuses are paid to other employees of the Company, provided such payment occurs no later than March 15th of the year following the year to which the bonus relates (or, if later, the date on which the Separation Agreement becomes effective and irrevocable);
c)A pro-rata annual cash bonus for the year in which the Covered Executive’s termination of employment occurs (the “Pro-Rata Bonus”) equal to the product of (i) the Covered Executive’s actual bonus that would otherwise be paid for the year (provided, however, in calculating such bonus, to the extent that any of the performance metrics are subjective, such subjective performance metrics shall be deemed to have been met at target) multiplied by (ii) a fraction, the numerator of which is the number of days the Covered Executive was employed by the Company (or an applicable Affiliate) during the year of termination and the denominator of which is the total number of days in such year. The Pro-Rata Bonus shall be paid to the Covered Executive in a cash lump-sum on or about the date such bonuses are paid to other employees of the Company, provided such payment occurs no later than March 15th of the year following the year to which the bonus relates;
d)Subject to the Covered Executive’s eligibility for and timely election of continued coverage under COBRA, continued medical, dental and vision benefits coverage for the Covered Executive and his or her covered dependents for up to 18 months; provided, that if the continued coverage contemplated hereunder cannot be provided under applicable Company plans or policies or would be discriminatory and would result in the imposition of excise taxes or other liabilities on the Company or its Affiliates for failure to comply with any requirements of the Patient Protection and Affordable Care Act of 2010, as amended, and the Health Care and Education Reconciliation Act of 2010, as amended (to the extent applicable), or other applicable law, the Covered Executive shall instead receive a lump sum cash payment equal to the monthly COBRA premium amount for the Covered Executive and his or her covered dependents’ continuation of medical, dental and vision coverage multiplied by the difference between 18 and any months of coverage previously provided pursuant to this Section 4(d);
e)Outplacement services with a provider designated by the Company, provided that such services must be provided within 18 months following termination and the cost of such payments shall not exceed $25,000 for each calendar year during such period;
f)Full vesting, effective as of the date of termination, of all of the Covered Executive’s outstanding equity awards that are subject solely to time-based vesting conditions (provided that, for the avoidance of doubt, settlement of such awards shall continue to be governed by the applicable award agreement); and
g)Full and accelerated vesting, effective as of the date of termination, of all of the Covered Executive’s outstanding equity awards that are subject to performance-based vesting conditions determined based on (i) with respect to any completed performance periods or achieved performance measures, the actual performance as of the termination date, and (ii) with respect to incomplete performance periods and performance measures, the target or 100% performance level.
For the avoidance of doubt, all terms and conditions applicable to the Covered Executive’s outstanding equity awards which are not specifically addressed above, including, without limitation, their treatment upon the Covered Executive’s termination of employment which does not constitute a Qualifying Termination, shall continue to be governed by the applicable award agreement and plan document.
Section 5. Administration.
a)This Plan shall be administered by the Committee in its sole and absolute discretion, and all determinations by the Committee shall be final, binding, and conclusive on all parties. The Company reserves the right to and may enhance a Covered Executive’s severance pay, in writing, in its sole discretion and without an amendment to this Plan, and may provide for other forms of severance pay or severance benefits.
b)In the event of any conflict or inconsistency between another document and the terms of this Plan, the terms and conditions of this Plan shall govern and control; provided, however, that a Covered Executive’s Participation Agreement will govern their participation in this Plan to the extent of any conflict between a Participation Agreement and this Plan.
c)The Committee shall have the authority, consistent with the terms of this Plan, to (i) designate Covered Executives, (ii) determine the terms and conditions relating to the Severance Benefits, if any, (iii) interpret, administer, reconcile any inconsistency, correct any defect and/or supply any omission in this Plan, (iv) establish, amend, suspend or waive any rules and procedures with respect to this Plan, (v) establish additional terms, conditions, rules, procedures or sub-plans as necessary or advisable to accommodate the customs, rules or laws of applicable non-U.S. jurisdictions and to afford Covered Executives located in such jurisdictions favorable treatment under such rules or laws, and
(vi) make any other determination and take any other action that the Committee deems necessary or desirable for administration of this Plan, including, without limitation, the timing and amount of payments. The Committee may delegate to one or more of the officers of the Company the authority to act on behalf of the Committee.
d)To the extent that any Covered Executive receives payment under the Plan in excess of the Severance Benefits to which he or she is entitled, the Covered Executive shall promptly return any excess to the Company upon request (to the fullest extent permitted by applicable law).
Section 6. Funding.
The obligations of the Company under this Plan are not funded through contributions to a trust or otherwise, and all benefits shall be payable from the general assets of the Company. Nothing contained in this Plan shall give a Covered Executive any right, title or interest in any property of the Company. Covered Executives shall be mere unsecured creditors of the Company.
Section 7. Code Section 409A.
a)Compliance. Notwithstanding anything herein to the contrary, this Plan is intended to be interpreted and applied so that the payments and benefits set forth herein either shall be exempt from the requirements of Code Section 409A or shall comply with the requirements of Code Section 409A, and, accordingly, to the maximum extent permitted, this Plan shall be interpreted to be exempt from or in compliance with Code Section 409A. To the extent that the Company determines that any provision of this Plan would cause a Covered Executive to incur any additional tax or interest under Code Section 409A, the Company shall be entitled to reform such provision to attempt to comply with or be exempt from Code Section 409A through good faith modifications. To the extent that any provision hereof is modified in order to comply with Code Section 409A, such modification shall be made in good faith and shall, to the maximum extent reasonably possible, maintain the original intent and economic benefit to Covered Executives and the Company without violating the provisions of Code Section 409A. Notwithstanding any of the foregoing to the contrary, none of the Company or its Affiliates, or any of their officers, directors, members, employees, agents, advisors, predecessors, successors, or equity holders, shall have any liability for the failure of this Plan to be exempt from, or to comply with, the requirements of Section 409A of the Code. Each payment and/or benefit provided hereunder shall be a payment in a series of separate payments for purposes of Code Section 409A.
b)Separation from Service. Notwithstanding anything in this Plan to the contrary, a termination of employment shall not be deemed to have occurred for purposes of any provision of this Plan unless such termination is also a “separation from service” within the meaning of Code Section 409A. In addition, if the Covered Executive is deemed at the time of such separation from service to be a specified employee (within the meaning of Code Section 409A) and such delayed commencement is otherwise required in order to avoid a prohibited distribution under Code Section 409A(a)(2), any payment or benefit hereunder that is deemed to constitute nonqualified deferred compensation (within the meaning of and subject to Code Section 409A) shall be delayed and paid, without interest, on the earlier of (i) the first day of the seventh month following the date of such Covered Executive’s separation from service or (ii) the date of the Covered Executive’s death.
c)Reimbursements. To the extent that any right to reimbursement of expenses or payment of any benefit in-kind under this Plan constitutes nonqualified deferred compensation (within the meaning of Code Section 409A):
i.any such expense reimbursement shall be made by the Company no later than the last day of the taxable year following the taxable year in which such expense was incurred by the Covered Executive;
ii.the right to reimbursement or in-kind benefits shall not be subject to liquidation or exchange for another benefit; and
iii.the amount of expenses eligible for reimbursement or in-kind benefits provided during any taxable year shall not affect the expenses eligible for reimbursement or in-kind benefits to be provided in any other taxable year; provided, that the foregoing clause shall not be violated with regard to expenses reimbursed under any arrangement covered by Section 105(b) of the Code solely because such expenses are subject to a limit related to the period in which the arrangement is in effect.
Section 8. Amendment and Termination.
Prior to the consummation of a Change in Control, the Committee may amend or terminate this Plan at any time, without notice, and for any or no reason, except as prohibited by law. No such action shall adversely affect the rights of any Covered Executive who has previously experienced a Qualifying Termination without the Covered Executive’s written consent. Upon or after the consummation of a Change in Control, the Company and the Committee may not, without a Covered Executive’s written consent, amend or terminate this Plan in any way, nor take any other action, that (i) prevents that Covered Executive from becoming eligible for the Severance Benefits under this Plan, or (ii) reduces or alters to the detriment of the Covered Executive the Severance Benefits payable, or potentially payable, to a Covered Executive under this Plan (including, without limitation, imposing additional conditions). This Plan shall automatically terminate upon the later of the (i) payment of all applicable benefits under this Plan or (ii) 90 days following the end of the Covered Period.
Section 9. Employment at Will.
Nothing in this Plan or any other act of the Company shall be considered effective to change a Covered Executive’s status as an at-will employee or guarantee any duration of employment. Either the Company or a Covered Executive may terminate the employment relationship at any time, for any reason or no reason, and with or without advance notice.
Section 10. Transfer and Assignment; Effect of Death.
In no event may any Covered Executive sell, transfer, anticipate, assign or otherwise dispose of any right or interest under this Plan. At no time will any such right or interest be subject to the claims of creditors nor liable to attachment, execution, or other legal process. If a Covered Executive dies prior to receiving full payment of benefits to which he or she is entitled, any unpaid benefits will be paid to the Covered Executive’s surviving spouse, or if the Covered Executive does not have a surviving spouse, to the Covered Executive’s estate.
Section 11. Severability.
If any provision of this Plan is held invalid or unenforceable, its invalidity or unenforceability will not affect any other provision of this Plan, and this Plan will be construed and enforced as if such provision had not been included.
Section 12. Successors.
Any successor to the Company of all or substantially all of the Company’s business and/or assets (whether direct or indirect and whether by purchase, merger, consolidation, liquidation or other transaction) will assume the obligations under this Plan and agree expressly to perform the obligations under this Plan in the same manner and to the same extent as the Company would be required to perform
such obligations in the absence of a succession. For all purposes under this Plan, the term “Company” will include any successor to the Company’s business and/or assets which become bound by the terms of this Plan by operation of law, or otherwise.
Section 13. Withholding; Taxes.
The Company shall withhold from the Severance Benefits all federal, state and local income or other taxes required to be withheld therefrom and any other required payroll deductions.
Section 14. Compensation.
Benefits payable hereunder shall not constitute compensation under any other plan or arrangement, except as expressly provided in such plan or arrangement.
Section 15. Entire Agreement.
This Plan and a Covered Executive’s Participation Agreement represent the entire agreement of the Company and such Covered Executive with respect to the subject matter hereof and supersede all prior understandings, whether written or oral.
Section 16. Governing Law.
The provisions of this Plan will be construed, administered, and enforced in accordance with the laws of the State of Texas without regard to its choice of law provisions.
Section 17. Clawback.
Notwithstanding anything to the contrary, any compensation received by the Covered Executive hereunder shall be subject to recovery or clawback by the Company under any clawback policy adopted by the Company whether before or after the Effective Date.
Section 18. Claims and Appeals.
a)Claims Procedure. Any Covered Executive or other person who believes he or she is entitled to any payment under this Plan may submit a claim in writing to the Committee (or its authorized delegate). Such claim must be submitted within 90 days of the earlier of:
i.the date the claimant learned the amount of his or her benefits under this Plan; or
ii.the date the claimant learned that he or she will not be entitled to any benefits under this Plan. If the claim is denied (in full or in part), the claimant will be provided a written notice explaining the specific reasons for the denial and referring to the provisions of this Plan on which the denial is based. The notice also will describe any additional information needed to support the claim and this Plan’s procedures for appealing the denial. The denial notice will be provided within 90 days after the claim is received. If special circumstances require an extension of time (up to 90 days), written notice of the extension will be given within the initial 90-day period. This notice of extension will indicate the special circumstances requiring the extension of time and the date by which the Committee expects to render its decision on the claim.
b)Appeal Procedure. If the claimant’s claim is denied, the claimant (or his or her authorized representative) may apply in writing to the Committee for a review of the decision denying the claim. Review must be requested within 60 days following the date the claimant received the written notice of their claim denial or else the claimant loses the right to review. The claimant (or representative) then has the right to review and obtain
copies of all documents and other information relevant to the claim, upon request and at no charge, and to submit issues and comments in writing. The Committee will provide written notice of its decision on review within 60 days after it receives a review request. If additional time (up to 60 days) is needed to review the request, the claimant (or representative) will be given written notice of the reason for the delay. This notice of extension will indicate the special circumstances requiring the extension of time and the date by which the Committee expects to render its decision. If the claim is denied (in full or in part), the claimant will be provided a written notice explaining the specific reasons for the denial and referring to the provisions of this Plan on which the denial is based. The notice also will include a statement that the claimant will be provided, upon request and free of charge, reasonable access to, and copies of, all documents and other information relevant to the claim and a statement regarding the claimant’s right to bring an action under Section 502(a) of ERISA.
Section 19. Certain Excise Taxes.
Notwithstanding anything to the contrary in this Plan, if a Covered Executive is a “disqualified individual” (as defined in Section 280G(c) of the Code), and the Severance Benefits provided for under this Plan, together with any other payments and benefits which the Covered Executive has the right to receive from the Company or any other Person, would constitute a “parachute payment” (as defined in Section 280G(b)(2) of the Code), then the Severance Benefits provided for under this Plan shall be either (a) reduced (but not below zero) so that the present value of such total amounts and benefits received by the Covered Executive will be one dollar ($1.00) less than three times the Covered Executive’s “base amount” (as defined in Section 280G(b)(3) of the Code) and so that no portion of such amounts and benefits received by the Covered Executive shall be subject to the excise tax imposed by Section 4999 of the Code, or (b) paid in full, whichever produces the better net after-tax position to the Covered Executive (taking into account any applicable excise tax under Section 4999 of the Code and any other applicable taxes). The determination as to whether any such reduction in the amount of the payments provided hereunder is necessary shall be made by the Company in good faith. If a reduced payment is made or provided and through error or otherwise that payment, when aggregated with other payments and benefits used in determining if a parachute payment exists, exceeds one dollar ($1.00) less than three times the Covered Executive’s base amount, then the Covered Executive shall immediately repay such excess to the Company upon notification that an overpayment has been made. Nothing in this Plan shall require the Company or any Affiliate to be responsible for, or have any liability or obligation with respect to, the Covered Executive’s excise tax liabilities under Section 4999 of the Code.
Exhibit A
COVERED EXECUTIVES
The following Covered Executives, as the same may be amended by the Board or the Committee from time to time, shall be eligible to participate in the Plan upon their execution of a Participation Agreement with the Company; provided that, once a Covered Executive has executed a Participation Agreement, such Participation Agreement may not be amended or revoked without the consent of the Covered Executive:
•[ ]
* Denotes Covered Executives who, as of the date hereof, are Section 16 officers who are direct reports to the Chief Executive Officer or an Executive Vice President. This denotation is for illustrative purposes as of the date hereof and, for the avoidance of doubt, the multiple applicable to the Covered Executive shall be based on the Covered Executive’s role immediately prior to his or her termination of employment in accordance with Exhibit B.
Exhibit B
SEVERANCE BENEFITS
The multiple that shall apply to the lump sum cash payment described in Section 4(a) of the Plan shall be as follows based on the Covered Executive’s role immediately prior to his or her termination of employment:
| | | | | |
| Position | Cash Payment Multiple |
| Chief Executive Officer | 3.0X |
| Section 16 officers who are direct reports to the Chief Executive Officer or an Executive Vice President, or for whom the Committee otherwise determines shall receive this multiple | 2.0X |
| Other Vice Presidents (not covered in the line above) | 1.0X |
Exhibit C
PARTICIPATION AGREEMENT
This Participation Agreement (this “Agreement”) is made and entered into by and between _____________________ (the “Covered Executive”) and Noble Corporation plc (the “Company”) for purposes of the Covered Executive’s participation in the Noble Corporation plc Executive Change in Control Severance Plan (as amended from time to time, the “Plan”). Capitalized terms used but not defined in this Agreement have the meanings ascribed to them in the Plan.
The Covered Executive agrees that the terms and conditions of the Plan and this Agreement govern the Covered Executive’s eligibility for any Severance Benefits provided under the Plan and[, except as expressly provided herein,]1 supersede any and all prior agreements or understandings with respect to any severance and termination benefits.
[Notwithstanding anything to the contrary in the Plan, the Covered Executive shall receive the higher of the (i) Severance Benefits provided under the Plan, and (ii) severance benefits (including, for the avoidance of doubt, any pay in lieu of notice or redundancy benefits that may be provided under any employment agreement or applicable law) provided pursuant to the [Employment Agreement dated [●]] and the addendums thereto, in each case, to the extent the Covered Executive is eligible for such benefits pursuant to their respective terms. In no event shall this provision be construed to provide for a duplication of benefits for the Covered Executive.]2
Notwithstanding Section 8 of the Plan, the Company and the Covered Executive agree that the Company shall not, without the prior written consent of the Covered Executive, amend, modify or terminate the Plan or this Agreement in any matter that is materially adverse to the Covered Executive. For the avoidance of doubt, to the extent the Plan is amended or modified in a manner than is not materially adverse to the Covered Executive, such amended or modified Plan provisions shall apply to the Covered Executive.
By signing this Agreement, the Covered Executive acknowledges and agrees that he or she has received a copy of the Plan and has read and understood all of the terms and condition of the Plan. He or she agrees to participate in the Plan, and expressly acknowledges and agrees that (i) such participation is subject to the terms and conditions of the Plan, (ii) any compensation (including any annual bonus and equity compensation) the Covered Executive received or may receive from the Company shall be subject to the terms and conditions of any written clawback or recoupment policy adopted by the Company, and (iii) in connection with the enforcement of such clawback policy, the Company shall have the right to reduce, cancel, or withhold against outstanding, unvested, vested, or future cash or equity-based compensation, including the Severance Benefits, owed or due to the Covered Executive to the maximum extent permitted under applicable law.
This Agreement shall be governed in all respects by the laws of the State of Texas without regard to the principles of conflict of laws.
This Agreement and the Plan represent the entire agreement between the parties with respect to the subject matter hereof and may not be amended except in a writing signed by the Company and the Covered Executive. If any dispute should arise under this Agreement, it shall be settled in accordance with the terms of the Plan.
1 For any executives who have enhanced severance benefits under their employment or retention addendums.
2 For any executives who have enhanced severance benefits under their employment or retention addendums.
IN WITNESS WHEREOF, the Covered Executive and the Company hereto have executed this Agreement.
| | | | | |
| Company Name | Covered Executive |
| By: ____________________________________ | By: ____________________________________ |
| Title: | Title: |
| Date: _________________________ | Date: _________________________ |
NOBLE CORPORATION PLC
EXECUTIVE SEVERANCE PLAN
Section 1. Purpose.
The purpose of this Noble Corporation plc Executive Severance Plan (this “Plan”), effective as of August 2, 2023 (the “Effective Date”), is to enable the Company and its Affiliates to provide eligible employees with severance pay and benefits in the event their employment is terminated in a Qualifying Termination. This Plan is intended to be an “employee welfare benefit plan” within the meaning of Section 3(1) of ERISA and is maintained as an unfunded plan for the purpose of providing benefits to a select group of management or highly compensated employees within the meaning of 29 C.F.R. § 2520.104-24.
Section 2. Definitions.
a)“Affiliate” means any company directly or indirectly controlling, controlled by or under common control with the Company.
b)“Base Pay” means the annual base salary in effect for the Covered Executive immediately prior to termination of employment, and excludes any bonuses, incentive compensation or any other special payments.
c)“Board” means the Board of Directors of the Company.
d)“Cause” has the meaning set forth in a Covered Executive’s Participation Agreement, or, if none, means:
i.the willful and continued failure of the Covered Executive to perform substantially all of the Covered Executive’s duties (other than any such failure resulting from bodily injury or disease or any other incapacity due to mental or physical illness) after a written demand for substantial performance is delivered to the Covered Executive by the Company (or an Affiliate), which specifically identifies the manner in which the Company believes the Covered Executive has not substantially performed the Covered Executive’s duties;
ii.the Covered Executive’s willful refusal to comply with the lawful instructions of the Board or the Covered Executive’s manager (or reporting officer) that are consistent with the Covered Executive’s position, which failure, to the extent curable, is not cured within 15 days following receipt of written notice from the Company (or an Affiliate) or such other later time as may be reasonably required for such compliance in the Company’s sole discretion;
iii.the Covered Executive engages in illegal conduct or gross misconduct that is materially and demonstrably detrimental to the Company and/or its Affiliates, monetarily or otherwise;
iv.the Covered Executive commits a material breach of the terms of any material policy of the Company and/or its Affiliates applicable to the Covered Executive, or any other agreement with the Company and/or its Affiliates, including any agreement containing restrictive covenants to which the Covered Executive is a party, which breach, to the extent curable, is not cured within 15 days following receipt of written notice from the Company (or an Affiliate); or
v.the Covered Executive is indicted on charges of, is convicted of, or enters into a plea of guilty or nolo contendere to (A) a felony; or (B) a crime involving any of fraud, material dishonesty, or moral turpitude.
For purposes of this provision, no act, or failure to act, on the part of the Covered Executive shall be considered “willful” unless done, or omitted to be done, by the Covered Executive in bad faith or without reasonable belief that the Covered Executive’s action or omission was in the best interests of the Company. Any act, or failure to act, based upon authority given pursuant to a resolution duly adopted by the Board or based upon the written advice of counsel for the Company or, with respect to Covered Executives who are not the Chief Executive Officer of the Company, upon the instructions of the Chief Executive Officer of the Company, shall be conclusively presumed to be done, or omitted to be done, by the Covered Executive in good faith and in the best interests of the Company and its Affiliates.
e)“COBRA” means the Consolidated Omnibus Budget Reconciliation Act of 1985, as amended, and any guidance and/or regulations promulgated thereunder.
f)“Code” means the Internal Revenue Code of 1986, as amended, and any guidance and/or regulations promulgated thereunder.
g)“Committee” means the Compensation Committee of the Board or another duly constituted committee of members of the Board designated by the Board to administer this Plan.
h)“Company” means Noble Corporation plc, a public limited company incorporated under the laws of England and Wales, and any successor corporation or other entity.
i)“Covered Executive” means those officers or other management-level employees of the Company and its Affiliates designated by the Board or the Committee in its discretion to participate in this Plan who meet the eligibility requirements set forth in Section 3(a) of this Plan.
j)“Disability” has the meaning set forth in a Covered Executive’s Participation Agreement, or, if none, means a medically determinable physical or mental impairment (i) that prevents the Covered Executive from performing his or her employment duties in a satisfactory manner and is expected either to result in death or to last for a continuous period of not less than twelve months as determined by the Committee, or (ii) for which the Covered Executive is eligible to receive disability income benefits under a long-term disability insurance plan maintained by the Company or an Affiliate. Notwithstanding the foregoing, to the extent any benefit herein is subject to Section 409A of the Code, the definition of Disability shall conform to the requirements of Treasury Regulation § 1.409A-3(i)(4)(i) to the extent necessary to avoid the imposition of any tax by such Section 409A of the Code.
k)“ERISA” means the Employee Retirement Income Security Act of 1974, as amended, and any guidance and/or regulations promulgated thereunder.
l)“Good Reason” has the meaning set forth in a Covered Executive’s Participation Agreement, or, if none, means the Covered Executive’s termination of employment due to any of the following, without the Covered Executive’s express written consent:
i.a material diminution in the Covered Executive’s position (including titles and reporting requirements, provided that a change in direct reporting structure from the Chief Executive Officer to an Executive Vice President shall not trigger Good Reason hereunder), duties, functions, and responsibilities;
ii.(x) a reduction in the Covered Executive’s base salary, or (y) a reduction in the Covered Executive’s Target Bonus (in each case, other than as part of an across the board reduction applicable to substantially all senior executives of the Company in substantially the same proportion, but in no event more than a 10% reduction in the aggregate);
iii.the Company’s requiring the Covered Executive to be based at any office or location other than at the location where the Covered Executive has been regularly employed prior to the requested relocation or any other office which is the headquarters of the Company and that is less than 50 miles from such location where the Covered Executive has been regularly employed prior to the requested relocation; or
iv.any other action that constitutes a material breach by the Company of the provisions of any other material compensation agreement between the Covered Executive and the Company.
Notwithstanding the foregoing, the Covered Executive shall not have the right to terminate the Covered Executive’s employment for Good Reason unless (1) the Covered Executive provides written notice to the Company detailing the specific circumstances of the existence of the condition or conditions that the Covered Executive claims give rise to Good Reason within 90 days of the initial existence of such condition, (2) the Company fails to remedy such condition or conditions within 30 days following the receipt of such written notice and (3) the Covered Executive terminates employment within 30 days following the end of such cure period.
m)“Participation Agreement” means an agreement between a Covered Executive and the Company that acknowledges the Covered Executive’s participation in this Plan.
n)“Qualifying Termination” means a termination of employment with the Company (or applicable Affiliate) by the Company (or applicable Affiliate) without Cause or, to the extent expressly provided for in the Covered Executive’s Participation Agreement, by the Covered Executive for Good Reason. For the avoidance of doubt, any Covered Executive who is not party to a Participation Agreement shall not be eligible for payments or benefits hereunder on a resignation for Good Reason.
o)“Target Bonus” means the target annual cash bonus amount in effect for the Covered Executive under the Company’s Short-Term Incentive Plan.
Section 3. Eligibility.
a)Those Covered Executives listed on Exhibit A, as the same may be amended by the Board or the Committee from time to time, shall be eligible to participate in this Plan upon their execution of a Participation Agreement with the Company in substantially the form attached hereto as Exhibit D. All other Covered Executives listed on Exhibit B, as the same may be amended by the Board or the Committee from time to time, including, for the avoidance of doubt, to remove any Covered Executives, shall be automatically eligible to participate in this Plan.
b)A Covered Executive shall not be eligible for Severance Benefits under this Plan if:
i.he or she does not meet the eligibility criteria described in Section 3(a);
ii.he or she voluntarily terminates employment with the Company and its Affiliates for any reason (other than circumstances which constitute a Qualifying Termination), including retirement or job abandonment;
iii.he or she terminates employment as a result of death or Disability;
iv.his or her employment is terminated by the Company or its applicable Affiliate for Cause; or
v.he or she receives severance pay and benefits under the Noble Corporation plc Executive Change in Control Severance Plan.
Section 4. Severance Benefits.
A Covered Executive whose employment with the Company (or an applicable Affiliate) is terminated in a Qualifying Termination and who executes, within the time period specified therein, and does not revoke a Separation Agreement and Release of Claims in the form provided by the Company (the “Separation Agreement”) shall receive the following severance payments and benefits (the “Severance Benefits”):
a)A lump sum cash payment, payable within 30 days following the date on which the Separation Agreement becomes effective and irrevocable (or if the period in which such Separation Agreement may become effective and irrevocable spans two calendar years, in the later calendar year), in an amount equal to (i) the sum of the Covered Executive’s Base Pay and Target Bonus multiplied by (ii) the multiple set forth in Exhibit C for the Covered Executive’s role;
b)Any unpaid annual cash bonus earned under the Company’s Short-Term Incentive Plan for the fiscal year prior to the year in which the Covered Executive’s termination of employment occurs, payable in a cash lump-sum on or about the date such bonuses are paid to other employees of the Company, provided such payment occurs no later than March 15th of the year following the year to which the bonus relates (or, if later, the date on which the Separation Agreement becomes effective and irrevocable);
c)A pro-rata annual cash bonus for the year in which the Covered Executive’s termination of employment occurs (the “Pro-Rata Bonus”) equal to the product of (i) the Covered Executive’s actual bonus that would otherwise be paid for the year (provided, however, in calculating such bonus, to the extent that any of the performance metrics are subjective, such subjective performance metrics shall be deemed to have been met at target) multiplied by (ii) a fraction, the numerator of which is the number of days the Covered Executive was employed by the Company (or an applicable Affiliate) during the year of termination and the denominator of which is the total number of days in such year. The Pro-Rata Bonus shall be paid to the Covered Executive in a cash lump-sum on or about the date such bonuses are paid to other employees of the Company, provided such payment occurs no later than March 15th of the year following the year to which the bonus relates;
d)Subject to the Covered Executive’s eligibility for and timely election of continued coverage under COBRA, continued medical, dental and vision benefits coverage for the Covered Executive and his or her covered dependents for up to 12 months; provided, that if the continued coverage contemplated hereunder cannot be provided under applicable Company plans or policies or would be discriminatory and would result in the imposition of excise taxes or other liabilities on the Company or its Affiliates for failure to comply with any requirements of the Patient Protection and Affordable Care Act of 2010, as amended, and the Health Care and Education Reconciliation Act of 2010, as amended (to the extent applicable), or other applicable law, the Covered Executive shall instead receive a lump sum cash payment equal to the monthly COBRA premium amount for the Covered Executive and his or her covered dependents’ continuation of medical, dental and vision coverage multiplied by the difference between 12 and any months of coverage previously provided pursuant to this Section 4(d);
e)Outplacement services with a provider designated by the Company, provided that such services must be provided within 18 months following termination and the cost of such payments shall not exceed $25,000 for each calendar year during such period;
f)Full vesting, effective as of the date of termination, of all of the Covered Executive’s outstanding equity awards that are subject solely to time-based vesting conditions
(provided that, for the avoidance of doubt, settlement of such awards shall continue to be governed by the applicable award agreement); and
g)The Covered Executive shall remain eligible to vest in the Covered Executive’s outstanding equity awards that are subject to performance-based vesting conditions, determined based on (i) with respect to any completed performance periods or achieved performance measures, actual performance, and (ii) with respect to incomplete performance periods and performance measures, actual performance of the Company over the full performance period and pro-rated using a fraction, the numerator of which is the number of months the Covered Executive was employed by the Company (or an applicable Affiliate) during the applicable performance period of the award and the denominator of which is the total number of months in such performance period. For the avoidance of doubt, settlement of any performance-based equity awards shall not be accelerated.
For the avoidance of doubt, all terms and conditions applicable to the Covered Executive’s outstanding equity awards which are not specifically addressed above, including, without limitation, their treatment upon the Covered Executive’s termination of employment which does not constitute a Qualifying Termination, shall continue to be governed by the applicable award agreement and plan document.
Section 5. Administration.
a)This Plan shall be administered by the Committee in its sole and absolute discretion, and all determinations by the Committee shall be final, binding, and conclusive on all parties. The Company reserves the right to and may enhance a Covered Executive’s severance pay, in writing, in its sole discretion and without an amendment to this Plan, and may provide for other forms of severance pay or severance benefits.
b)In the event of any conflict or inconsistency between another document and the terms of this Plan, the terms and conditions of this Plan shall govern and control; provided, however, that a Covered Executive’s Participation Agreement (if any) will govern their participation in this Plan to the extent of any conflict between a Participation Agreement and this Plan.
c)The Committee shall have the authority, consistent with the terms of this Plan, to (i) designate Covered Executives, (ii) determine the terms and conditions relating to the Severance Benefits, if any, (iii) interpret, administer, reconcile any inconsistency, correct any defect and/or supply any omission in this Plan, (iv) establish, amend, suspend or waive any rules and procedures with respect to this Plan, (v) establish additional terms, conditions, rules, procedures or sub-plans as necessary or advisable to accommodate the customs, rules or laws of applicable non-U.S. jurisdictions and to afford Covered Executives located in such jurisdictions favorable treatment under such rules or laws, and (vi) make any other determination and take any other action that the Committee deems necessary or desirable for administration of this Plan, including, without limitation, the timing and amount of payments. The Committee may delegate to one or more of the officers of the Company the authority to act on behalf of the Committee.
d)To the extent that any Covered Executive receives payment under the Plan in excess of the Severance Benefits to which he or she is entitled, the Covered Executive shall promptly return any excess to the Company upon request (to the fullest extent permitted by applicable law).
Section 6. Funding.
The obligations of the Company under this Plan are not funded through contributions to a trust or otherwise, and all benefits shall be payable from the general assets of the Company. Nothing contained in
this Plan shall give a Covered Executive any right, title or interest in any property of the Company. Covered Executives shall be mere unsecured creditors of the Company.
Section 7. Code Section 409A.
a)Compliance. Notwithstanding anything herein to the contrary, this Plan is intended to be interpreted and applied so that the payments and benefits set forth herein either shall be exempt from the requirements of Code Section 409A or shall comply with the requirements of Code Section 409A, and, accordingly, to the maximum extent permitted, this Plan shall be interpreted to be exempt from or in compliance with Code Section 409A. To the extent that the Company determines that any provision of this Plan would cause a Covered Executive to incur any additional tax or interest under Code Section 409A, the Company shall be entitled to reform such provision to attempt to comply with or be exempt from Code Section 409A through good faith modifications. To the extent that any provision hereof is modified in order to comply with Code Section 409A, such modification shall be made in good faith and shall, to the maximum extent reasonably possible, maintain the original intent and economic benefit to Covered Executives and the Company without violating the provisions of Code Section 409A. Notwithstanding any of the foregoing to the contrary, none of the Company or its Affiliates, or any of their officers, directors, members, employees, agents, advisors, predecessors, successors, or equity holders, shall have any liability for the failure of this Plan to be exempt from, or to comply with, the requirements of Section 409A of the Code. Each payment and/or benefit provided hereunder shall be a payment in a series of separate payments for purposes of Code Section 409A.
b)Separation from Service. Notwithstanding anything in this Plan to the contrary, a termination of employment shall not be deemed to have occurred for purposes of any provision of this Plan unless such termination is also a “separation from service” within the meaning of Code Section 409A. In addition, if the Covered Executive is deemed at the time of such separation from service to be a specified employee (within the meaning of Code Section 409A) and such delayed commencement is otherwise required in order to avoid a prohibited distribution under Code Section 409A(a)(2), any payment or benefit hereunder that is deemed to constitute nonqualified deferred compensation (within the meaning of and subject to Code Section 409A) shall be delayed and paid, without interest, on the earlier of (i) the first day of the seventh month following the date of such Covered Executive’s separation from service or (ii) the date of the Covered Executive’s death.
c)Reimbursements. To the extent that any right to reimbursement of expenses or payment of any benefit in-kind under this Plan constitutes nonqualified deferred compensation (within the meaning of Code Section 409A):
i.any such expense reimbursement shall be made by the Company no later than the last day of the taxable year following the taxable year in which such expense was incurred by the Covered Executive;
ii.the right to reimbursement or in-kind benefits shall not be subject to liquidation or exchange for another benefit; and
iii.the amount of expenses eligible for reimbursement or in-kind benefits provided during any taxable year shall not affect the expenses eligible for reimbursement or in-kind benefits to be provided in any other taxable year; provided, that the foregoing clause shall not be violated with regard to expenses reimbursed under any arrangement covered by Section 105(b) of the Code solely because such expenses are subject to a limit related to the period in which the arrangement is in effect.
Section 8. Amendment and Termination.
The Committee may amend or terminate this Plan at any time, without notice, and for any or no reason, except as prohibited by law. No such action shall adversely affect the rights of any Covered Executive who has previously experienced a Qualifying Termination without the Covered Executive’s written consent.
Section 9. Employment at Will.
Nothing in this Plan or any other act of the Company shall be considered effective to change a Covered Executive’s status as an at-will employee or guarantee any duration of employment. Either the Company or a Covered Executive may terminate the employment relationship at any time, for any reason or no reason, and with or without advance notice.
Section 10. Transfer and Assignment; Effect of Death.
In no event may any Covered Executive sell, transfer, anticipate, assign or otherwise dispose of any right or interest under this Plan. At no time will any such right or interest be subject to the claims of creditors nor liable to attachment, execution, or other legal process. If a Covered Executive dies prior to receiving full payment of benefits to which he or she is entitled, any unpaid benefits will be paid to the Covered Executive’s surviving spouse, or if the Covered Executive does not have a surviving spouse, to the Covered Executive’s estate.
Section 11. Severability.
If any provision of this Plan is held invalid or unenforceable, its invalidity or unenforceability will not affect any other provision of this Plan, and this Plan will be construed and enforced as if such provision had not been included.
Section 12. Successors.
Any successor to the Company of all or substantially all of the Company’s business and/or assets (whether direct or indirect and whether by purchase, merger, consolidation, liquidation or other transaction) will assume the obligations under this Plan and agree expressly to perform the obligations under this Plan in the same manner and to the same extent as the Company would be required to perform such obligations in the absence of a succession. For all purposes under this Plan, the term “Company” will include any successor to the Company’s business and/or assets which become bound by the terms of this Plan by operation of law, or otherwise.
Section 13. Withholding; Taxes.
The Company shall withhold from the Severance Benefits all federal, state and local income or other taxes required to be withheld therefrom and any other required payroll deductions.
Section 14. Compensation.
Benefits payable hereunder shall not constitute compensation under any other plan or arrangement, except as expressly provided in such plan or arrangement.
Section 15. Entire Agreement.
This Plan and a Covered Executive’s Participation Agreement (if any) represent the entire agreement of the Company and such Covered Executive with respect to the subject matter hereof and supersede all prior understandings, whether written or oral.
Section 16. Governing Law.
The provisions of this Plan will be construed, administered, and enforced in accordance with the laws of the State of Texas without regard to its choice of law provisions.
Section 17. Clawback.
Notwithstanding anything to the contrary, any compensation received by the Covered Executive hereunder shall be subject to recovery or clawback by the Company under any clawback policy adopted by the Company whether before or after the Effective Date.
Section 18. Claims and Appeals.
a)Claims Procedure. Any Covered Executive or other person who believes he or she is entitled to any payment under this Plan may submit a claim in writing to the Committee (or its authorized delegate). Such claim must be submitted within 90 days of the earlier of:
i.the date the claimant learned the amount of his or her benefits under this Plan; or
ii.the date the claimant learned that he or she will not be entitled to any benefits under this Plan. If the claim is denied (in full or in part), the claimant will be provided a written notice explaining the specific reasons for the denial and referring to the provisions of this Plan on which the denial is based. The notice also will describe any additional information needed to support the claim and this Plan’s procedures for appealing the denial. The denial notice will be provided within 90 days after the claim is received. If special circumstances require an extension of time (up to 90 days), written notice of the extension will be given within the initial 90-day period. This notice of extension will indicate the special circumstances requiring the extension of time and the date by which the Committee expects to render its decision on the claim.
b)Appeal Procedure. If the claimant’s claim is denied, the claimant (or his or her authorized representative) may apply in writing to the Committee for a review of the decision denying the claim. Review must be requested within 60 days following the date the claimant received the written notice of their claim denial or else the claimant loses the right to review. The claimant (or representative) then has the right to review and obtain copies of all documents and other information relevant to the claim, upon request and at no charge, and to submit issues and comments in writing. The Committee will provide written notice of its decision on review within 60 days after it receives a review request. If additional time (up to 60 days) is needed to review the request, the claimant (or representative) will be given written notice of the reason for the delay. This notice of extension will indicate the special circumstances requiring the extension of time and the date by which the Committee expects to render its decision. If the claim is denied (in full or in part), the claimant will be provided a written notice explaining the specific reasons for the denial and referring to the provisions of this Plan on which the denial is based. The notice also will include a statement that the claimant will be provided, upon request and free of charge, reasonable access to, and copies of, all documents and other information relevant to the claim and a statement regarding the claimant’s right to bring an action under Section 502(a) of ERISA.
Exhibit A
DESIGNATED COVERED EXECUTIVES
The following Covered Executives, as the same may be amended by the Board or the Committee from time to time, shall be eligible to participate in the Plan upon their execution of a Participation Agreement with the Company; provided that, once a Covered Executive has executed a Participation Agreement, such Participation Agreement may not be amended or revoked without the consent of the Covered Executive:
•[ ]
•Any future Section 16 officers of the Company who is a direct report to the Chief Executive Officer or an Executive Vice President
Exhibit B
OTHER COVERED EXECUTIVES
The following Covered Executives, as the same may be amended by the Board or the Committee from time to time, including the removal of any Covered Executives, are eligible to participate in the Plan:
•[ ]
*Notwithstanding anything to the contrary in the Plan, with respect to such Covered Executives, such Covered Executive shall receive the higher of the (i) Severance Benefits provided under the Plan, and (ii) the severance benefits (including, for the avoidance of doubt, any pay in lieu of notice or redundancy benefits that may be provided under any employment agreement or applicable law) provided pursuant to any employment agreement and addendums thereto by and between the Covered Executive and the Company (or an applicable Affiliate), in each case, to the extent the Covered Executive is eligible for such benefits pursuant to their respective terms. In no event shall this provision be construed to provide for a duplication of benefits for the Covered Executive.
Exhibit C
SEVERANCE BENEFITS
The multiple that shall apply to the lump sum cash payment described in Section 4(a) of the Plan shall be as follows based on the Covered Executive’s role immediately prior to his or her termination of employment:
| | | | | |
| Position | Cash Payment Multiple |
| Chief Executive Officer | 2.0X |
| Individuals who have executed a Participation Agreement, other than the Chief Executive Officer | 1.0X |
| Other Covered Executives (not covered in the lines above) | 0.5X |
Exhibit D
PARTICIPATION AGREEMENT
This Participation Agreement (this “Agreement”) is made and entered into by and between _____________________ (the “Covered Executive”) and Noble Corporation plc (the “Company”) for purposes of the Covered Executive’s participation in the Noble Corporation plc Executive Severance Plan (as amended from time to time, the “Plan”). Capitalized terms used but not defined in this Agreement have the meanings ascribed to them in the Plan.
The Covered Executive agrees that the terms and conditions of the Plan and this Agreement govern the Covered Executive’s eligibility for any Severance Benefits provided under the Plan and[, except as expressly provided herein,]1 supersede any and all prior agreements or understandings with respect to any severance and termination benefits. A Qualifying Termination with respect to the Covered Executive shall mean a termination by the Company without Cause or a termination by the Covered Executive for Good Reason.
[Notwithstanding anything to the contrary in the Plan, the Covered Executive shall receive the higher of the (i) Severance Benefits provided under the Plan, and (ii) severance benefits (including, for the avoidance of doubt, any pay in lieu of notice or redundancy benefits that may be provided under any employment agreement or applicable law) provided pursuant to the [Employment Agreement dated [●]], and the addendums thereto], in each case, to the extent the Covered Executive is eligible for such benefits pursuant to their respective terms. In no event shall this provision be construed to provide for a duplication of benefits for the Covered Executive.]2
Notwithstanding Section 8 of the Plan, the Company and the Covered Executive agree that the Company shall not, without the prior written consent of the Covered Executive, amend, modify or terminate the Plan or this Agreement with respect to the Covered Executive in any matter that is materially adverse to the Covered Executive. For the avoidance of doubt, (i) in no event shall the foregoing be construed to limit the Company’s ability to amend, modify or terminate the Plan with respect to other participants of the Plan, and (ii) to the extent the Plan is amended or modified in a manner than is not materially adverse to the Covered Executive, such amended or modified Plan provisions shall apply to the Covered Executive.
By signing this Agreement, the Covered Executive acknowledges and agrees that he or she has received a copy of the Plan and has read and understood all of the terms and condition of the Plan. He or she agrees to participate in the Plan, and expressly acknowledges and agrees that (i) such participation is subject to the terms and conditions of the Plan, (ii) any compensation (including any annual bonus and equity compensation) the Covered Executive received or may receive from the Company shall be subject to the terms and conditions of any written clawback or recoupment policy adopted by the Company, and (iii) in connection with the enforcement of such clawback policy, the Company shall have the right to reduce, cancel, or withhold against outstanding, unvested, vested, or future cash or equity-based compensation, including the Severance Benefits, owed or due to the Covered Executive to the maximum extent permitted under applicable law.
This Agreement shall be governed in all respects by the laws of the State of Texas without regard to the principles of conflict of laws. This Agreement and the Plan represent the entire agreement between the parties with respect to the subject matter hereof and may not be amended except in a writing signed by the Company and the Covered Executive. If any dispute should arise under this Agreement, it shall be settled in accordance with the terms of the Plan.
1 For any executives who have enhanced severance benefits under their existing employment agreements or retention addendums.
2 For any executives who have enhanced severance benefits under their existing employment agreements or retention addendums.
IN WITNESS WHEREOF, the Covered Executive and the Company hereto have executed this Agreement.
| | | | | |
| Company Name | Covered Executive |
| By: _________________________________ | By: __________________________________ |
| Title: | Title: |
| Date: __________________________ | Date: __________________________ |
NOBLE CORPORATION PLC
TIME-VESTED RESTRICTED STOCK UNIT AWARD
THIS INSTRUMENT (this “Instrument”), made effective as of ____________ (the “Effective Date”) by Noble Corporation plc, a public limited company formed under the laws of England and Wales (the “Company”) evidences the time-vested Restricted Stock Units (as defined in the Plan) awarded hereunder to ____________ (“Employee”) and sets forth the restrictions, terms and conditions that apply thereto.
W I T N E S S E T H:
WHEREAS, the Compensation Committee of the Board of Directors of the Company (the “Committee”) acting under the Noble Corporation plc 2022 Long-Term Incentive Plan (the “Plan”) has determined that it is desirable to award time-vested Restricted Stock Units to Employee pursuant to the Plan; and
WHEREAS, pursuant to the Plan, the Committee has determined that the time-vested Restricted Stock Units so awarded shall be subject to the restrictions, terms and conditions set forth in this Instrument;
NOW, THEREFORE, the award of time-vested Restricted Stock Units is hereby granted to Employee as follows:
1. Time-Vested Restricted Stock Unit Award. On the terms and conditions and subject to the restrictions, including forfeiture, hereinafter set forth, the Company hereby awards ______ Restricted Stock Units (the “Awarded Restricted Stock Units”) to Employee pursuant to the Plan. The Awarded Restricted Stock Units are being awarded to Employee effective as of the Effective Date and shall vest or be forfeited in accordance with (and otherwise be subject to) the provisions of this Instrument. The Awarded Restricted Stock Units are being awarded to Employee without the payment of any cash consideration by Employee, except that payment of nominal value in respect of the Shares hereunder may be required by the Committee or pursuant to procedures of the Committee in respect of the allotment and issuance, transfer or delivery of such Shares.
2. Vesting and Forfeiture. Except as set forth in Section 3 of this Instrument, the Awarded Restricted Stock Units shall vest and the forfeiture restrictions applicable to them under this Instrument shall terminate in accordance with the provisions of the attached Schedule I, provided that Employee remains continuously employed by the Company or an affiliate from the Effective Date to the applicable date of vesting. Any Awarded Restricted Stock Units that have not already vested shall be forfeited by Employee upon the termination of Employee’s employment with the Company or an affiliate for any reason other than (i) death, Disability or Retirement, (ii) the Company’s termination of Employee’s employment other than with Cause (as defined below) or (iii) Employee’s termination of Employee’s employment with Good Reason (as defined below). For purposes of this Instrument, transfers of employment without interruption of service between or among the Company and any of its affiliates shall not be considered a termination of employment.
3. Acceleration of Vesting.
(a) All of the Awarded Restricted Stock Units that have not already vested shall become fully vested and no longer subject to any forfeiture restrictions under this Instrument if Employee’s employment with the Company or an affiliate terminates (i) by reason of the death, Disability or Retirement of Employee, (ii) by reason of the Company’s termination of Employee’s employment other than with Cause or (iii) by reason of Employee’s termination of
Employee’s employment with Good Reason, provided Employee timely executes and does not revoke any release of claims as may be required by the Company.
(b) For purposes of this Instrument, (i) “Cause” and “Good Reason” shall have the meanings ascribed to such terms in the Noble Corporation plc Executive Change in Control Severance Plan and (ii) “Retirement” shall mean the termination of Employee’s employment with the Company or an affiliate for any reason (other than death, Disability or Cause) on or after the date as of which (x) the sum of Employee’s age and the number of Employee’s years of continuous service with the Company and its affiliates (including continuous service with a predecessor employer that is taken into account pursuant to an acquisition or other transaction agreement) equals or exceeds 65 and (y) Employee has attained age 55.
4. Allotment and Issuance of Shares. The Company shall, subject to Section 7(b) herein, allot and issue or transfer to Employee one Share in settlement of each outstanding and vested Awarded Restricted Stock Unit (and such Awarded Restricted Stock Unit shall be canceled) in accordance with the settlement schedule set forth in Schedule I. For the avoidance of doubt, any acceleration of vesting, pursuant to Section 3(a) or otherwise, shall not affect the settlement schedule of the applicable Awarded Restricted Stock Units in accordance with Schedule I. Notwithstanding the foregoing, if Employee is Retirement Eligible, the payment event related to Disability in Section 3(a)(i) shall be based on Employee’s Disability within the meaning of Treasury Regulation § 1.409A-3(i)(4)(i). For purpose of this Instrument, Employee shall be “Retirement Eligible” if Employee will satisfy the age and service requirements for Retirement prior to the calendar year in which the RSU becomes fully vested in accordance with the vesting schedule in the attached Schedule I. Shares issued pursuant to this Instrument may not be registered under the United States Securities Act of 1933, and the issuance of Shares under this Instrument is subject to any restrictions or conditions required by the Committee pursuant to Section 15 of the Plan.
5. No Rights as Shareholder. Employee shall have no rights as a shareholder of the Company, including, without limitation, voting rights or the right to receive dividends and distributions as a shareholder, with respect to the Shares subject to the Awarded Restricted Stock Units, unless and until and to the extent such Shares are allotted and issued or transferred to Employee as provided herein.
6. Dividend Equivalents. In connection with the Awarded Restricted Stock Units the Company hereby awards to Employee Dividend Equivalents with respect to any cash dividends payable with respect to the Shares. Such cash Dividend Equivalents shall be payable at the same time, and shall be subject to the same conditions, that are applicable to the Awarded Restricted Stock Units, and shall be payable in the form of a number of Shares (rounded down to nearest whole Share) equal to the amount of such cash Dividend Equivalents divided by the Fair Market Value of a Share at vesting, or shall be payable in cash in the sole discretion of the Committee. Accordingly, the right to receive such cash Dividend Equivalent payments shall be forfeited to the extent that the Awarded Restricted Stock Units do not vest, are forfeited or are otherwise cancelled pursuant to this Instrument.
7. Arrangements and Procedures Regarding Withholding Taxes.
(a) Employee shall make arrangements satisfactory to the Committee for the payment of taxes of any kind that are required by law to be withheld with respect to the Awarded Restricted Stock Units or the Dividend Equivalents awarded under this Instrument, including, without limitation, taxes applicable to (i) the awarding of the Awarded Restricted Stock Units or the allotment and issuance or transfer of Shares in settlement thereof, or (ii) the awarding of the Dividend Equivalents or the payments made with respect thereto.
(b) Unless and until the Committee shall determine otherwise and provide notice to Employee in accordance with Section 7(c), any obligation of Employee under Section 7(a) that
arises with respect to the allotment and issuance, transfer or delivery of Shares in settlement of Awarded Restricted Stock Units that have become vested may be satisfied, in accordance with procedures adopted by the Committee, by (i) Employee’s forfeiture or surrender of the right to require the Company to allot and issue, transfer or deliver Shares subject to such Awarded Restricted Stock Units, (ii) causing such Awarded Restricted Stock Units to be settled partly in cash or (iii) otherwise withholding a portion of such Shares. In the case of Shares as to which the right to require allotment and issuance, transfer or delivery is forfeited or surrendered pursuant to clause (i) and Shares withheld pursuant to clause (iii) such Shares or rights shall be valued at the Fair Market Value (of such Shares or the Shares to which such rights relate, as the case may be) as of the date on which the taxable event that gives rise to the withholding requirement occurs.
(c) The Committee may determine, after the Effective Date and on notice to Employee, to authorize one or more arrangements (in addition to or in lieu of the arrangement described in Section 7(b)) satisfactory to the Committee for Employee to satisfy the obligation of Employee under Section 7(a).
(d) If Employee does not, for whatever reason, satisfy the obligation of Employee under Section 7(a), then the Company and its affiliates shall, to the extent permitted by law, have the right to deduct from any payments of any kind otherwise due to Employee the amount required to satisfy the obligation of Employee under such Section 7(a).
8. Non-Assignability. This Instrument is not assignable or transferable by Employee. No right or interest of Employee under this Instrument or the Plan may be assigned, transferred or alienated, in whole or in part, either directly or by operation of law (except pursuant to a qualified domestic relations order within the meaning of Section 414(p) of the Code or a similar domestic relations order under applicable foreign law, either in such form as is acceptable to the committee), and no such right or interest shall be liable for or subject to any debt, obligation or liability of Employee.
9. Defined Terms; Plan Provisions. Unless the context clearly indicates otherwise, the capitalized terms used (and not otherwise defined) in this Instrument shall have the meanings assigned to them under the provisions of the Plan. The Awarded Restricted Stock Units and the Dividend Equivalents subject to this Instrument shall be governed by and subject to all applicable provisions of the Plan. This Instrument is subject to the Plan, and the Plan shall govern where there is any inconsistency between the Plan and this Instrument.
10. Governing Law. This Instrument shall be governed by and construed and enforced in accordance with the laws of the State of Texas, without regard to the principles of conflicts of laws thereof, except to the extent Texas law is preempted by federal law of the United States or by the laws of England and Wales.
11. Binding Effect. This Instrument shall be binding upon and inure to the benefit of the parties hereto and their respective heirs, personal representatives, successors and permitted assigns.
12. Prior Communications; Amendment. This Instrument, together with any Schedules and Exhibits and any other writings referred to herein or delivered pursuant hereto, evidences the Award granted hereunder, which shall be subject to the restrictions, terms and conditions hereof, and supersedes all prior agreements and understandings, whether written or oral, between the parties with respect to the subject matter hereof. To the fullest extent provided by applicable law, this Instrument may only be amended, modified and supplemented in accordance with the applicable terms and conditions set forth in the Plan. Notwithstanding the foregoing, in the event of a conflict between this Instrument and the Noble Corporation plc Executive Change in Control Severance Plan or between this Instrument and the Noble Corporation plc Executive Severance Plan, the terms of the applicable severance plan shall govern to the extent that Employee is then a participant in such applicable plan.
13. Notices. All notices and other communications hereunder shall be in writing and shall be deemed given if directed in the manner specified below, to the parties at the following addresses and numbers:
(a) If to the Company, when delivered by hand or mail (registered or certified mail with postage prepaid) to:
Noble Corporation plc
13135 Dairy Ashford Rd. #800
Sugar Land, TX 77478
Attention: Corporate Secretary
Email: Legal@noblecorp.com
(b) If to Employee, when delivered by hand or mail (registered or certified mail with postage prepaid) to:
The last known address and number for Employee as maintained in the personnel records of the Company
For purposes of this Section 13, the Company shall provide Employee with written notice of any change of the Company’s address, and Employee shall be responsible for providing the Company with proper notice of any change of Employee’s address pursuant to the Company’s personnel policies, and from and after the giving of such notice the address or addresses therein specified will be deemed to be the address of such party for the purposes of giving notice hereunder.
14. Severability. If any provision of this Instrument is held to be unenforceable, this Instrument shall be considered divisible and such provision shall be deemed inoperative to the extent it is deemed unenforceable, and in all other respects the restrictions, terms and conditions set forth in this Instrument shall remain in full force and effect; provided, however, that if any such provision may be made enforceable by limitation thereof, then such provision shall be deemed to be so limited and shall be enforceable to the maximum extent permitted by applicable law.
15. Descriptive Headings. The descriptive headings herein are inserted for convenience of reference only, do not constitute a part of this Instrument, and shall not affect in any manner the meaning or interpretation of this Instrument.
16. Gender. Pronouns in masculine, feminine and neuter genders shall be construed to include any other gender, and words in the singular form shall be construed to include the plural and vice versa, unless the context otherwise requires.
17. References. The words “this Instrument,” “herein,” “hereof,” “hereby,” “hereunder” and words of similar import refer to this Instrument as a whole and not to any particular subdivision unless expressly so limited. Whenever the words “include,” “includes” and “including” are used in this Instrument, such words shall be deemed to be followed by the words “without limitation.”
18. Unfunded Awards. The awards made under this Instrument are unfunded and unsecured obligations and rights to provide or receive compensation in accordance with the provisions hereof, and to the extent that Employee acquires a right to receive compensation from the Company or an affiliate pursuant to this Instrument, such right shall be no greater than the right of any unsecured general creditor of the Company or such affiliate.
19. Compliance with Code Section 409A. The compensation payable to or with respect to Employee pursuant to the Awarded Restricted Stock Units is intended to be compensation that is compliant with Code Section 409A or not subject to the tax imposed by
Code Section 409A, and this Instrument shall be administered and construed to the fullest extent possible to reflect and implement such intent. No acceleration or change in the time or form of payment shall be permitted hereunder unless compliant with the terms of Code Section 409A. For the avoidance of doubt, Employee acknowledges Employee shall be solely responsible for any taxes or penalties imposed under Code Section 409A.
IN WITNESS WHEREOF, the Company has signed and delivered this Instrument as of the date first above written.
NOBLE CORPORATION PLC
Jennie Howard
Senior Vice President, General Counsel
and Corporate Secretary
SCHEDULE I
NOBLE CORPORATION PLC
VESTING PERIODS
FOR AWARD OF TIME-VESTED RESTRICTED STOCK UNITS
The Committee has determined that the following specified vesting time periods shall be applicable to the Awarded Restricted Stock Units awarded pursuant to this Instrument:
Vesting Periods
(i) One-third of the Awarded Restricted Stock Units shall vest and no longer be subject to forfeiture on ______; and
(ii) One-third of the Awarded Restricted Stock Units shall vest and no longer be subject to forfeiture on ______; and
(iii) One-third of the Awarded Restricted Stock Units shall vest and no longer be subject to forfeiture on ______.
Settlement
To the extent then vested and outstanding:
(i) One-third of the Awarded Restricted Stock Units shall be settled within 60 days following ______; and
(ii) One-third of the Awarded Restricted Stock Units shall be settled within 60 days following ______; and
(iii) One-third of the Awarded Restricted Stock Units shall be settled within 60 days following______.
For the avoidance of doubt, it is the express intent that any acceleration of vesting of the Awarded Restricted Stock Units shall not affect the settlement schedule hereof.
NOBLE CORPORATION PLC
PERFORMANCE-VESTED RESTRICTED STOCK UNIT AWARD
THIS INSTRUMENT (this “Instrument”), made effective as of the ____ day of __________ (the “Effective Date”), by Noble Corporation plc, a public limited company formed under the laws of England and Wales (the “Company”) evidences the performance-vested Restricted Stock Units (as defined in the Plan) awarded hereunder to __________ (“Employee”) and sets forth the restrictions, terms and conditions that apply thereto.
W I T N E S S E T H:
WHEREAS, the Compensation Committee of the Board of Directors of the Company (the “Committee”) acting under the Noble Corporation plc 2022 Long-Term Incentive Plan, as amended (the “Plan”), has determined that it is desirable to award performance-vested Restricted Stock Units to Employee pursuant to the Plan; and
WHEREAS, pursuant to the Plan, the Committee has determined that the performance-vested Restricted Stock Units so awarded shall be subject to the restrictions, terms and conditions set forth in this Instrument.
NOW, THEREFORE, the award of performance-vested Restricted Stock Units is hereby granted to Employee as follows:
1. Performance-Vested Restricted Stock Unit Award. On the terms and conditions and subject to the restrictions, including forfeiture, hereinafter set forth, the Company hereby awards _______ Restricted Stock Units (such number the “Target Restricted Stock Units”, and generally, the “Awarded Restricted Stock Units”) to Employee pursuant to the Plan. The Awarded Restricted Stock Units are being awarded to Employee effective as of the Effective Date and the final number of Awarded Restricted Stock Units that vest, if any, will be adjusted based on the achievement of the “Performance Measures” as defined in the attached Schedule I, subject to the provisions of this Instrument. The Awarded Restricted Stock Units are awarded without the payment of any cash consideration by Employee, except that payment of nominal value in respect of the Shares hereunder may be required by the Committee or pursuant to procedures of the Committee in respect of the allotment and issuance, transfer or delivery of such Shares. This award of Restricted Stock Units made to Employee is hereby designated by the Committee to be a Performance Award for purposes of the Plan.
2. Vesting and Forfeiture. The Awarded Restricted Stock Units shall be subject to being forfeited by Employee during the Performance Cycle as set forth in the attached Schedule I, and shall vest or be forfeited by Employee as follows:
(a) If Employee remains continuously employed by the Company or an affiliate from the Effective Date through the end of the Performance Cycle, the Awarded Restricted Stock Units shall vest and the forfeiture restrictions applicable to them under this Instrument shall terminate to the extent of the percentage of performance achieved under the Performance Measures as determined by the Committee, and any Awarded Restricted Stock Units that do not vest at the end of the Performance Cycle shall be forfeited by Employee.
(b) If Employee’s employment with the Company or an affiliate terminates during the Performance Cycle by reason of the death, Disability or Retirement (as defined below) of Employee, then, provided Employee timely executes and does not revoke any release of claims as may be required by the Company, Employee shall become vested in a number of Awarded Restricted Stock Units equal to (x) the actual percentage of performance achieved under the Performance Measures as determined
with respect to any interim performance period during the Performance Cycle that has elapsed or a Performance Measure that has been determined to have been achieved (each a “Determined Result”) as of the date of Employee’s termination, plus (y) with respect to performance periods during the Performance Cycle or Performance Measures that are not Determined Results as of the date of Employee’s termination, a corresponding number of the Target Restricted Stock Units multiplied by a fraction (not to exceed 1.0), (A) the numerator of which is the number of calendar months of Employee’s employment with the Company and its affiliates during the Performance Cycle, and (B) the denominator of which is the total number of calendar months during the Performance Cycle. The remaining number of Awarded Restricted Stock Units shall not vest and shall be forfeited by Employee.
(c) If Employee’s employment with the Company or an affiliate terminates during the Performance Cycle (i) by reason of the Company’s termination of Employee’s employment other than with Cause (as defined below) or (ii) by reason of Employee’s termination of Employee’s employment with Good Reason (as defined below), then, provided Employee timely executes and does not revoke any release of claims as may be required by the Company, as of the end of the Performance Cycle a number of the Awarded Restricted Stock Units shall vest and the forfeiture restrictions applicable to them under this Instrument shall terminate equal to (x) with respect to any Determined Result as of the date of Employee’s termination, the actual percentage of performance achieved plus (y) with respect to performance periods during the Performance Cycle or Performance Measures that are not Determined Results as of the date of Employee’s termination, the actual percentage of performance achieved as determined pursuant to Section 2(a) above multiplied by a fraction (not to exceed 1.0), (A) the numerator of which is the number of calendar months of Employee’s employment with the Company and its affiliates during the Performance Cycle and (B) the denominator of which is the total number of calendar months during the Performance Cycle. The remaining number of Awarded Restricted Stock Units shall not vest and shall be forfeited by Employee. For the avoidance of doubt, there shall be no duplication of benefits under this Section 2(c) and under Section 2(b) above or 2(d) below.
(d) If Employee’s employment with the Company or an affiliate terminates during the Performance Cycle and such termination is on, or within 24 months following, a Change in Control (as defined below) (i) by reason of the Company’s termination of Employee’s employment other than with Cause or (ii) by reason of Employee’s termination of Employee’s employment with Good Reason, then, provided Employee timely executes and does not revoke any release of claims as may be required by the Company, as soon as practicable after such termination (or, if later, after such Change in Control), Employee shall become vested in a number of Awarded Restricted Stock Units equal to (x) with respect to any Determined Result as of the date of Employee’s termination (or if later, as of the date of the Change in Control) the actual percentage of performance achieved, plus (y) with respect to performance periods during the Performance Cycle or Performance Measures that are not Determined Results as of the date of Employee’s termination (or, if later, as of the date of the Change in Control), a corresponding number of the Target Restricted Stock Units. If Employee’s employment with the Company or an affiliate terminates within the period commencing 60 days prior to the execution of a merger agreement or other definitive documentation evidencing an anticipated Change in Control, and if it is reasonably demonstrated by Employee that Employee’s termination was at the request of a third party who has taken steps reasonably calculated to effect the Change in Control or otherwise in contemplation of the Change in Control, then as of the end of the Performance Cycle Employee shall become entitled to vest in a number of Awarded Restricted Stock Units determined in accordance with this Section 2(d), which shall be paid to Employee within 60 days after the end of the Performance Cycle. For the avoidance of doubt, there shall be no duplication of benefits under this Section 2(d) and under Section 2(b) or 2(c) above.
(e) If Employee’s employment with the Company or an affiliate terminates during the Performance Cycle for any reason other than as set forth in Section 2(b), 2(c) or 2(d) above or terminates for Cause prior to the date of settlement of the Awarded Restricted Stock Units, all of the Awarded Restricted Stock Units shall be forfeited by Employee. If Employee’s employment with the Company or an affiliate terminates for any reason as set forth in Section 2(b), 2(c) or 2(d) above after the end of the Performance Cycle and prior to the date of settlement of the Awarded Restricted Stock Units pursuant to Section 3, Employee shall remain entitled to the number of Awarded Restricted Stock Units as determined in accordance with Section 2(a).
(f) For purposes of this Instrument, (i) “Cause”, “Good Reason”, and “Change in Control” shall have the meanings ascribed to such terms in the Noble Corporation plc Executive Change in Control Severance Plan and (ii) “Retirement” shall mean the termination of Employee’s employment with the Company or an affiliate for any reason (other than death, Disability or Cause) on or after the date as of which (x) the sum of Employee’s age and the number of Employee’s years of continuous service with the Company and its affiliates (including continuous service with a predecessor employer that is taken into account pursuant to an acquisition or other transaction agreement) equals or exceeds 65 and (y) Employee has attained age 55.
For purposes of this Instrument, transfers of employment without interruption of service between or among the Company and any of its affiliates shall not be considered a termination of employment.
3. Allotment and Issuance of Shares. With respect to any Awarded Restricted Stock Unit that vests pursuant to the provisions of Section 2(a) or Section 2(c) hereof, as soon as practicable after the percentage of performance achieved under the Performance Measures as attached on Schedule I has been determined and certified in writing by the Committee and during the period beginning at the end of the Performance Cycle and ending no later than March 15th of the calendar year after the end of the Performance Cycle, the Company shall, subject to Section 6(b) herein, allot and issue or transfer to Employee one Share in settlement of such Awarded Restricted Stock Unit and such Awarded Restricted Stock Unit shall be canceled. With respect to an Awarded Restricted Stock Unit that vests pursuant to the provisions of Section 2(b) or Section 2(d) hereof (except as otherwise specifically provided in Section 2(d)), as soon as practicable following the Employee’s termination of employment (but in no event later than 60 days after such termination occurs) the Company shall, subject to Section 6(b) herein, allot and issue or transfer to Employee one Share in settlement of such Awarded Restricted Stock Unit and such Awarded Restricted Stock Unit shall be canceled. Notwithstanding the foregoing, if Employee is Retirement Eligible (as defined below) (i) all payments shall be made in compliance with Code Section 409A, unless otherwise exempt from Code Section 409A, and (ii) the payment event related to Disability in Section 2(b) shall be based on Employee’s Disability within the meaning of Treasury Regulation § 1.409A-3(i)(4)(i). For purpose of this Instrument, Employee shall be “Retirement Eligible” if Employee will satisfy the age and service requirements for Retirement prior to the end of the Performance Cycle.
The applicable vesting or forfeiture of the Awarded Restricted Stock Units that are outstanding at the end of the Performance Cycle shall be determined and certified in writing by the Committee as soon as reasonably practicable after the end of the Performance Cycle, but in no event later than March 15th of the calendar year after the end of the Performance Cycle.
Shares issued pursuant to this Instrument may not be registered under the United States Securities Act of 1933, and the issuance of Shares under this Instrument is subject to any restrictions or conditions required by the Committee pursuant to Section 15 of the Plan.
4. No Rights as Shareholder. Employee shall have no rights as a shareholder of the Company, including, without limitation, voting rights or the right to receive dividends and distributions as a shareholder, with respect to the Shares subject to the Awarded Restricted Stock Units, unless and until and to the extent such Shares are allotted and issued or transferred to Employee as provided herein.
5. Dividend Equivalents. In connection with the Awarded Restricted Stock Units the Company hereby awards to Employee Dividend Equivalents with respect to any cash dividends payable with respect to the Shares. Such cash Dividend Equivalents shall be payable at the same time, and shall be subject to the same conditions, that are applicable to the Awarded Restricted Stock Units, and shall be payable in the form of a number of Shares (rounded down to nearest whole Share) equal to the amount of such cash Dividend Equivalents divided by the Fair Market Value of a Share at vesting, or shall be payable in cash in the sole discretion of the Committee. Accordingly, the right to receive such cash Dividend Equivalent payments shall be forfeited to the extent that the Awarded Restricted Stock Units do not vest, are forfeited or are otherwise cancelled pursuant to this Instrument. The award of cash Dividend Equivalents made to Employee pursuant to this Section 5 is not a Performance Award for the purposes of the Plan.
6. Arrangements and Procedures Regarding Withholding Taxes.
(a) Employee shall make arrangements satisfactory to the Committee for the payment of taxes of any kind that are required by law to be withheld with respect to the Awarded Restricted Stock Units or the Dividend Equivalents awarded under this Instrument, including, without limitation, taxes applicable to (i) the awarding of the Awarded Restricted Stock Units or the allotment and issuance or transfer of Shares in settlement thereof, or (ii) the awarding of the Dividend Equivalents or the payments made with respect thereto.
(b) Unless and until the Committee shall determine otherwise and provide notice to Employee in accordance with Section 6(c), any obligation of Employee under Section 6(a) that arises with respect to the allotment and issuance, transfer or delivery of Shares in settlement of Awarded Restricted Stock Units that have become vested may be satisfied, in accordance with procedures adopted by the Committee, by (i) Employee’s forfeiture or surrender of the right to require the Company to allot and issue, transfer or deliver Shares subject to such Awarded Restricted Stock Units, (ii) causing such Awarded Restricted Stock Units to be settled partly in cash, or (iii) otherwise withholding a portion of such Shares. In the case of Shares as to which the right to require allotment and issuance, transfer or delivery is forfeited or surrendered pursuant to clause (i) and Shares withheld pursuant to clause (iii), such Shares or rights shall be valued at the Fair Market Value (of such Shares or the Shares to which such rights relate, as the case may be) as of the date on which the taxable event that gives rise to the withholding requirement occurs.
(c) The Committee may determine, after the Effective Date and on notice to Employee, to authorize one or more arrangements (in addition to or in lieu of the arrangement described in Section 6(b)) satisfactory to the Committee for Employee to satisfy the obligation of Employee under Section 6(a).
(d) If Employee does not, for whatever reason, satisfy the obligation of Employee under Section 6(a), then the Company and its affiliates shall, to the extent permitted by law, have the right to deduct from any payments of any kind otherwise due to Employee the amount required to satisfy the obligation of Employee under such Section 6(a).
7. Non-Assignability. This Instrument is not assignable or transferable by Employee. No right or interest of Employee under this Instrument or the Plan may be
assigned, transferred or alienated, in whole or in part, either directly or by operation of law (except pursuant to a qualified domestic relations order within the meaning of Section 414(p) of the Code or a similar domestic relations order under applicable foreign law, either in such form as is acceptable to the committee), and no such right or interest shall be liable for or subject to any debt, obligation or liability of Employee.
8. Defined Terms; Plan Provisions. Unless the context clearly indicates otherwise, the capitalized terms used (and not otherwise defined) in this Instrument shall have the meanings assigned to them under the provisions of the Plan. The Awarded Restricted Stock Units and the Dividend Equivalents subject to this Instrument shall be governed by and subject to all applicable provisions of the Plan. This Instrument is subject to the Plan, and the Plan shall govern where there is any inconsistency between the Plan and this Instrument.
9. Governing Law. This Instrument shall be governed by and construed and enforced in accordance with the laws of the State of Texas, without regard to the principles of conflicts of laws thereof, except to the extent Texas law is preempted by federal law of the United States or by the laws of England and Wales.
10. Binding Effect. This Instrument shall be binding upon and inure to the benefit of the parties hereto and their respective heirs, personal representatives, successors and permitted assigns.
11. Prior Communications; Amendment. This Instrument, together with any Schedules and Exhibits and any other writings referred to herein or delivered pursuant hereto, evidences the Award granted hereunder, which shall be subject to the restrictions, terms and conditions hereof, and supersedes all prior agreements and understandings, whether written or oral, between the parties with respect to the subject matter hereof. To the fullest extent provided by applicable law, this Instrument may only be amended, modified and supplemented in accordance with the applicable terms and conditions set forth in the Plan. Notwithstanding the foregoing, in the event of a conflict between this Instrument and the Noble Corporation plc Executive Change in Control Severance Plan or between this Instrument and the Noble Corporation plc Executive Severance Plan, the terms of the applicable severance plan shall govern to the extent that Employee is then a participant in such applicable plan.
12. Notices. All notices and other communications hereunder shall be in writing and shall be deemed given if directed in the manner specified below, to the parties at the following addresses and numbers:
(a) If to the Company, when delivered by hand or mail (registered or certified mail with postage prepaid) to:
Noble Corporation plc
13135 Dairy Ashford Rd. #800
Sugar Land, TX 77478
Attention: Corporate Secretary
Email: Legal@noblecorp.com
(b) If to Employee, when delivered by hand or mail (registered or certified mail with postage prepaid) to:
The last known address and number for Employee as maintained in the personnel records of the Company
For purposes of this Section 12, the Company shall provide Employee with written notice of any change of the Company’s address, and Employee shall be responsible for providing the Company with proper notice of any change of Employee’s address pursuant to the Company’s personnel policies, and from and after the giving of such notice the address or
addresses therein specified will be deemed to be the address of such party for the purposes of giving notice hereunder.
13. Severability. If any provision of this Instrument is held to be unenforceable, this Instrument shall be considered divisible and such provision shall be deemed inoperative to the extent it is deemed unenforceable, and in all other respects the restrictions, terms and conditions set forth in this Instrument shall remain in full force and effect; provided, however, that if any such provision may be made enforceable by limitation thereof, then such provision shall be deemed to be so limited and shall be enforceable to the maximum extent permitted by applicable law.
14. Descriptive Headings. The descriptive headings herein are inserted for convenience of reference only, do not constitute a part of this Instrument, and shall not affect in any manner the meaning or interpretation of this Instrument.
15. Gender. Pronouns in masculine, feminine and neuter genders shall be construed to include any other gender, and words in the singular form shall be construed to include the plural and vice versa, unless the context otherwise requires.
16. References. The words “this Instrument,” “herein,” “hereof,” “hereby,” “hereunder” and words of similar import refer to this Instrument as a whole and not to any particular subdivision unless expressly so limited. Whenever the words “include,” “includes” and “including” are used in this Instrument, such words shall be deemed to be followed by the words “without limitation.”
17. Unfunded Awards. The awards made under this Instrument are unfunded and unsecured obligations and rights to provide or receive compensation in accordance with the provisions hereof, and to the extent that Employee acquires a right to receive compensation from the Company or an affiliate pursuant to this Instrument, such right shall be no greater than the right of any unsecured general creditor of the Company or such affiliate.
18. Compliance with Code Section 409A. The compensation payable to or with respect to Employee pursuant to the Awarded Restricted Stock Units is intended to be compensation that is compliant with Code Section 409A or not subject to the tax imposed by Code Section 409A, and this Instrument shall be administered and construed to the fullest extent possible to reflect and implement such intent. Notwithstanding any provisions of this Instrument to the contrary, any payments made hereunder shall be made in accordance with Section 17 of the Plan.
IN WITNESS WHEREOF, the Company has signed and delivered this Instrument as of the date first above written.
NOBLE CORPORATION PLC
________________________________
Jennie Howard
Senior Vice President, General Counsel
and Corporate Secretary
SCHEDULE I
NOBLE CORPORATION PLC
PERFORMANCE MEASURES FOR THE [______] PERFORMANCE CYCLE
AWARD OF PERFORMANCE-VESTED RESTRICTED STOCK UNITS
[Performance Schedule to be Updated as Applicable]
NOBLE CORPORATION PLC
DIRECTOR RESTRICTED STOCK UNIT AWARD
THIS INSTRUMENT (this “Instrument”), made effective as of the [____] day of [_______] 202[_] (the “Effective Date”) by Noble Corporation plc, a company organized under the laws of England and Wales (the “Company”) evidences the Restricted Stock Units (as defined in the Plan) awarded hereunder to [NAME] (“Director”) and sets forth the restrictions, terms and conditions that apply thereto.
W I T N E S S E T H:
WHEREAS, the Company’s Board of Directors (the “Board”) acting under the Noble Corporation plc 2022 Long-Term Incentive Plan (the “Plan”) has determined that it is desirable to award Restricted Stock Units to Director pursuant to the Plan; and
WHEREAS, pursuant to the Plan, the Board has determined that the Restricted Stock Units so awarded shall be subject to the restrictions, terms and conditions set forth in this Instrument;
NOW, THEREFORE, the award of Restricted Stock Units is hereby granted to Director as follows:
1.Restricted Stock Unit Award. On the terms and conditions and subject to the restrictions, including forfeiture, hereinafter set forth, the Company hereby awards [_____] Restricted Stock Units (the “Awarded Restricted Stock Units”) to Director pursuant to the Plan. The Awarded Restricted Stock Units are being awarded to Director effective as of the Effective Date and shall vest or be forfeited in accordance with (and otherwise be subject to) the provisions of this Instrument. The Awarded Restricted Stock Units are being awarded to Director without the payment of any cash consideration by Director, except that payment of nominal value in respect of the Shares hereunder may be required by the Compensation Committee of the Board (the “Committee”) or pursuant to procedures of the Committee in respect of the allotment and issuance, transfer or delivery of such Shares.
2.Vesting, Settlement, and Forfeiture. Except as set forth in Section 3 of this Instrument, the Awarded Restricted Stock Units shall vest, settle, and the forfeiture restrictions applicable to them under this Instrument shall terminate in accordance with the provisions of the attached Schedule I, provided that Director remains a director of the Company or an affiliate from the Effective Date to the date of vesting. Any Awarded Restricted Stock Units that have not already vested shall be forfeited by Director upon the termination of Director’s service as a director with the Company or an affiliate for any reason other than death or Disability. Upon the occurrence of any such forfeiture event, Director agrees to enter into any transactions or other arrangements, as determined by the Company to be necessary, with the Company or an affiliate in order to effect such forfeiture.
3.Acceleration of Vesting. The Awarded Restricted Stock Units that have not already vested or been forfeited shall become fully vested and no longer subject to any forfeiture restrictions under this Instrument (i) if Director’s service as a director with the Company or an affiliate terminates by reason of death or Disability or (ii) upon the occurrence of a Change in Control (as defined in the Noble Corporation plc Executive Change in Control Severance Plan).
4.Allotment and Issuance of Shares. As soon as practicable following the date any Awarded Restricted Stock Unit is settled in accordance with Section 2, such Awarded Restricted Stock Unit shall be cancelled. Shares issued pursuant to this Instrument may not be registered under the United States Securities Act of 1933, and the issuance of Shares under this Instrument is subject to any restrictions or conditions required by the Committee pursuant to Section 15 of the Plan.
5.No Rights as Shareholder. Director shall have no rights as a shareholder of the Company, including, without limitation, voting rights or the right to receive dividends and distributions as a shareholder, with respect to the Shares subject to the Awarded Restricted Stock Units, unless and until and to the extent such Shares are allotted and issued or transferred to Director as provided herein.
6.Dividend Equivalents. In connection with the Awarded Restricted Stock Units the Company hereby awards to Director Dividend Equivalents with respect to any cash dividends payable with respect to the Shares. Such cash Dividend Equivalents shall be payable at the same time, and shall be subject to the same conditions, that are applicable to the Awarded Restricted Stock Units, and shall be payable in the form of a number of Shares (rounded down to nearest whole Share) equal to the amount of such cash Dividend Equivalents divided by the Fair Market Value of a Share at the time of vesting, or shall be payable in cash in the sole discretion of the Board. Accordingly, the right to receive such cash Dividend Equivalent payments shall be forfeited to the extent that the Awarded Restricted Stock Units do not vest, are forfeited or are otherwise cancelled pursuant to this Instrument.
7.Arrangements and Procedures Regarding Withholding Taxes.
(a)Director shall make arrangements satisfactory to the Committee for the payment of taxes of any kind that are required by law to be withheld with respect to the Awarded Restricted Stock Units or the Dividend Equivalents awarded under this Instrument, including, without limitation, taxes applicable to (i) the awarding of the Awarded Restricted Stock Units or the allotment and issuance or transfer of Shares in settlement thereof, or (ii) the awarding of the Dividend Equivalents or the payments made with respect thereto.
(b)Unless and until the Committee shall determine otherwise and provide notice to Director in accordance with Section 7(c), any obligation of Director under Section 7(a) that arises with respect to the allotment and issuance, transfer or delivery of Shares in settlement of Awarded Restricted Stock Units that have become vested may be satisfied, in accordance with procedures adopted by the Committee, by (i) Director’s forfeiture or surrender of the right to require the Company to allot and issue, transfer or deliver Shares subject to such Awarded Restricted Stock Units, (ii) causing such Awarded Restricted Stock Units to be settled partly in cash or (iii) otherwise withholding a portion of such Shares. In the case of Shares as to which the right to require allotment and issuance, transfer or delivery is forfeited or surrendered pursuant to clause
(i) and Shares withheld pursuant to clause (iii) such Shares or rights shall be valued at the Fair Market Value (of such Shares or the Shares to which such rights relate, as the case may be) as of the date on which the taxable event that gives rise to the withholding requirement occurs.
(c)The Committee may determine, after the Effective Date and on notice to Director, to authorize one or more arrangements (in addition to or in lieu of the arrangement described in Section 7(b)) satisfactory to the Committee for Director to satisfy the obligation of Director under Section 7(a).
(d)If Director does not, for whatever reason, satisfy the obligation of Director under Section 7(a), then the Company and its affiliates shall, to the extent permitted by law, have the right to deduct from any payments of any kind otherwise due to Director the amount required to satisfy the obligation of Director under such Section 7(a).
8.Non-Assignability. This Instrument is not assignable or transferable by Director. No right or interest of Director under this Instrument or the Plan may be assigned, transferred or alienated, in whole or in part, either directly or by operation of law (except pursuant to a qualified domestic relations order within the meaning of Section 414(p) of the Code or a similar domestic relations order under applicable foreign law, either in such form as is acceptable to the Committee), and no such right or interest shall be liable for or subject to any debt, obligation or liability of Director.
9.Defined Terms; Plan Provisions. Unless the context clearly indicates otherwise, the capitalized terms used (and not otherwise defined) in this Instrument shall have the meanings assigned to them under the provisions of the Plan. The Awarded Restricted Stock Units and the Dividend Equivalents subject to this Instrument shall be governed by and subject to all applicable provisions of the Plan. This Instrument is subject to the Plan, and the Plan shall govern where there is any inconsistency between the Plan and this Instrument.
10.Governing Law. This Instrument shall be governed by and construed and enforced in accordance with the laws of the State of Texas, without regard to the principles of conflicts of laws thereof, except to the extent Texas law is preempted by federal law of the United States or by the laws of England and Wales.
11.Binding Effect. This Instrument shall be binding upon and inure to the benefit of the parties hereto and their respective heirs, personal representatives, successors and permitted assigns.
12.Prior Communications; Amendment. This Instrument, together with any Schedules and Exhibits and any other writings referred to herein or delivered pursuant hereto, evidences the Award granted hereunder, which shall be subject to the restrictions, terms and conditions hereof, and supersedes all prior agreements and understandings, whether written or oral, between the parties with respect to the subject matter hereof. To the fullest extent provided by applicable law, this Instrument may only be amended, modified and supplemented in accordance with the applicable terms and conditions set forth in the Plan.
13.Notices. All notices and other communications hereunder shall be in writing and shall be deemed given if directed in the manner specified below, to the parties at the following addresses and numbers:
(a) If to the Company, when delivered by hand or mail (registered or certified mail with postage prepaid) to:
Noble Corporation plc
13135 Dairy Ashford Rd. #800 Sugar Land, TX 77478 Attention: Corporate Secretary Email: Legal@noblecorp.com
(b) If to Director, when delivered by hand or mail (registered or certified mail with postage prepaid) to:
The last known address and number for Director as maintained in the personnel records of the Company
For purposes of this Section 13, the Company shall provide Director with written notice of any change of the Company’s address, and Director shall be responsible for providing the Company with proper notice of any change of Director’s address, and from and after the giving of such notice the address or addresses therein specified will be deemed to be the address of such party for the purposes of giving notice hereunder.
14.Severability. If any provision of this Instrument is held to be unenforceable, this Instrument shall be considered divisible and such provision shall be deemed inoperative to the extent it is deemed unenforceable, and in all other respects the restrictions, terms and conditions set forth in this Instrument shall remain in full force and effect; provided, however, that if any such provision may be made enforceable by limitation thereof, then such provision shall be deemed to be so limited and shall be enforceable to the maximum extent permitted by applicable law.
15.Descriptive Headings. The descriptive headings herein are inserted for convenience of reference only, do not constitute a part of this Instrument, and shall not affect in any manner the meaning or interpretation of this Instrument.
16.Gender. Pronouns in masculine, feminine and neuter genders shall be construed to include any other gender, and words in the singular form shall be construed to include the plural and vice versa, unless the context otherwise requires.
17.References. The words “this Instrument,” “herein,” “hereof,” “hereby,” “hereunder” and words of similar import refer to this Instrument as a whole and not to any particular subdivision unless expressly so limited. Whenever the words “include,” “includes” and “including” are used in this Instrument, such words shall be deemed to be followed by the words “without limitation.”
18.Unfunded Awards. The awards made under this Instrument are unfunded and unsecured obligations and rights to provide or receive compensation in accordance with the provisions hereof, and to the extent that Director acquires a right to receive compensation from the Company or an affiliate pursuant to this Instrument, such right shall be no greater than the right of any unsecured general creditor of the Company or such affiliate.
19.Compliance with Code Section 409A. The compensation payable to or with respect to Director pursuant to the Awarded Restricted Stock Units is intended to be compensation that is compliant with Code Section 409A or not subject to the tax imposed by Code Section 409A, and this Instrument shall be administered and construed to the fullest extent possible to reflect and implement such intent.
IN WITNESS WHEREOF, the Company has signed and delivered this Instrument as of the date first above written.
NOBLE CORPORATION PLC
[_______________]
Senior Vice President, General Counsel and Corporate Secretary
SCHEDULE I
NOBLE CORPORATION PLC
VESTING AND SETTLEMENT PERIODS
FOR AWARD OF DIRECTOR RESTRICTED STOCK UNITS
TERMS FOR GRANT
The Committee has determined that the following vesting and settlement time periods shall be applicable to the Awarded Restricted Stock Units awarded pursuant to this Instrument:
Vesting Period
All of the Awarded Restricted Stock Units shall vest and no longer be subject to forfeiture on [________] [__], 202[_].
Settlement
Unless an election is made otherwise, all Awarded Restricted Stock Units that have vested in accordance with this Instrument shall settle on the trading date on or next following the date of vesting. Awards will settle in two parts, 60 percent of Fair Market Value (as defined in the Plan) will be paid in Shares and 40 percent of Fair Market Value will be paid in cash.
CERTIFICATION PURSUANT TO
EXCHANGE ACT RULE 13a-14(a) OR RULE 15d-14(a)
I, Robert W. Eifler, certify that:
1.I have reviewed this quarterly report on Form 10-Q of Noble Corporation plc;
2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
b)Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
c)Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
d)Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
5.The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
a)All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
b)Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
| | | | | | | | |
| | |
| /s/ Robert W. Eifler | | August 3, 2023 |
| Robert W. Eifler | | Date |
| | | | | | | | |
President and Chief Executive Officer (Principal Executive Officer) of Noble Corporation plc, a public limited company incorporated under the laws of England and Wales | | |
CERTIFICATION PURSUANT TO
EXCHANGE ACT RULE 13a-14(a) OR RULE 15d-14(a)
I, Richard B. Barker, certify that:
1.I have reviewed this quarterly report on Form 10-Q of Noble Corporation plc;
2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
b)Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
c)Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
d)Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
5.The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
a)All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
b)Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
| | | | | | | | |
| | |
| /s/ Richard B. Barker | | August 3, 2023 |
| Richard B. Barker | | Date |
Senior Vice President and Chief Financial Officer (Principal Financial Officer) of Noble Corporation plc, a public limited company incorporated under the laws of England and Wales | | |
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Quarterly Report of Noble Corporation plc, a public limited company incorporated under the laws of England and Wales (the “Company”) on Form 10-Q for the period ended June 30, 2023, as filed with the United States Securities and Exchange Commission on the date hereof (the “Report”), I, Robert W. Eifler, President and Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to the best of my knowledge:
(1)The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
(2)The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
| | | | | |
| August 3, 2023 | /s/ Robert W. Eifler |
| Robert W. Eifler |
| President and Chief Executive Officer (Principal Executive Officer) of Noble Corporation plc, a public limited company incorporated under the laws of England and Wales |
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Quarterly Report of Noble Corporation plc, a public limited company incorporated under the laws of England and Wales (the “Company”) on Form 10-Q for the period ended June 30, 2023, as filed with the United States Securities and Exchange Commission on the date hereof (the “Report”), I, Richard B. Barker, Senior Vice President and Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to the best of my knowledge:
(1)The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
(2)The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
| | | | | |
| August 3, 2023 | /s/ Richard B. Barker |
| Richard B. Barker |
| Senior Vice President and Chief Financial Officer (Principal Financial Officer) of Noble Corporation plc, a public limited company incorporated under the laws of England and Wales |