Noble Corp plc 8-K/A, filed Oct 19, 2022
Noble Corp plc (NE)
About this 8-K/A
Noble Corp plc filed this 8-K/A on October 19, 2022, reporting on events of October 3, 2022.
Items reported
- Item 9.01: Financial statements and exhibits
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
(AMENDMENT NO. 1)
CURRENT REPORT
Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported):
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Registrant’s telephone number, including area code:
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Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
| Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
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Securities registered pursuant to Section 12(b) of the Act:
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Trading Symbol: |
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Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
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. ☐
EXPLANATORY
NOTE
On October 3, 2022, Noble Corporation plc (the “Company”) filed with the U.S. Securities and Exchange Commission a Current Report on Form 8-K (the “Initial Form 8-K”) to report the consummation of the transactions contemplated by that certain business combination agreement, dated November 10, 2021 (as amended, the “Business Combination Agreement”), by and among the Company, 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 the Company (“Merger Sub”), and The Drilling Company of 1972 A/S, a Danish public limited liability company (“Maersk Drilling”). Pursuant to the Business Combination Agreement, among other things, (i) Noble Cayman merged with and into Merger Sub (the “Merger”), with Merger Sub surviving the Merger as a wholly owned subsidiary of the Company, and (ii) the Company completed a voluntary tender exchange offer to Maersk Drilling’s shareholders (together with the Merger and the other transactions contemplated by the Business Combination Agreement, the “Business Combination”).
The Company is filing this Amendment No. 1 on Form 8-K/A to the Initial Form 8-K (this “Amendment”) solely for the purpose of amending the Initial Form 8-K to provide certain historical financial information of Maersk Drilling and unaudited pro forma condensed combined financial data of the Company in accordance with Items 9.01(a) and 9.01(b) of Form 8-K, respectively. No other changes to the Initial Form 8-K are being made hereby. This Amendment should be read in conjunction with the Initial Form 8-K, which provides a more complete description of the Business Combination.
| Item 9.01. | Financial Statements and Exhibits. |
| (a) | Financial Statements of Business Acquired. |
The audited consolidated financial statements of Maersk Drilling as of December 31, 2021, 2020 and 2019, and for each of the years ended December 31, 2021, 2020 and 2019, are filed as Exhibit 99.1 to this Current Report on Form 8-K and incorporated herein by reference.
The unaudited interim consolidated financial statements of Maersk Drilling as of and for the six months ended June 30, 2022 and 2021 are filed as Exhibit 99.2 to this Current Report on Form 8-K and incorporated herein by reference.
| (b) | Pro Forma Financial Information. |
The unaudited pro forma condensed combined financial information of the Company as of June 30, 2022 and for the six months ended June 30, 2022 and the year ended December 31, 2022 is filed as Exhibit 99.3 to this Current Report on Form 8-K and incorporated herein by reference.
(d) Exhibits.
2
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 hereunto duly authorized.
| NOBLE CORPORATION plc | ||
| By: | /s/ William E. Turcotte | |
| Name: | William E. Turcotte | |
| Title: | Senior Vice President, General Counsel and Corporate Secretary | |
Date: October 19, 2022
3
Exhibit 23.1
CONSENT OF INDEPENDENT AUDITORS
We hereby consent to the incorporation by reference in the Registration Statement on Form S-8 (No. 333-267698) of Noble Corporation plc of our report dated March 9, 2022 relating to the financial statements of The Drilling Company of 1972 A/S, which is incorporated by reference in this Current Report on Form 8-K/A.
PricewaterhouseCoopers Statsautoriseret Revisionspartnerselskab
Copenhagen, Denmark
October 19, 2022
Exhibit 99.2
INDEX TO THE DRILLING COMPANY OF 1972 A/S FINANCIAL STATEMENTS
1
THE DRILLING COMPANY OF 1972 A/S
CONSOLIDATED INCOME STATEMENTS
| For the 6 months ended June 30, |
||||||||||||
| Notes | 2022 | 2021 | ||||||||||
| USD million | ||||||||||||
| Revenue |
1.1, 1.2 | 532 | 614 | |||||||||
| Cost of sales (exclusive of depreciation and amortisation shown separately below) |
(437 | ) | (451 | ) | ||||||||
| Special items |
1.3 | (11 | ) | (11 | ) | |||||||
| Depreciation and amortisation |
(97 | ) | (106 | ) | ||||||||
| Impairment reversals (losses), net |
1.4 | (118 | ) | 11 | ||||||||
| Gain/(loss) on sale of non-current assets |
1.5 | — | 17 | |||||||||
| Share of results in joint ventures |
(1 | ) | (1 | ) | ||||||||
|
|
|
|
|
|||||||||
| Profit/loss before financial items |
(132 | ) | 73 | |||||||||
| Financial expenses |
(38 | ) | (37 | ) | ||||||||
| Financial income |
10 | 5 | ||||||||||
|
|
|
|
|
|||||||||
| Profit/loss before tax |
(160 | ) | 41 | |||||||||
| Tax |
(12 | ) | (12 | ) | ||||||||
|
|
|
|
|
|||||||||
| Profit/loss for the period |
(172 | ) | 29 | |||||||||
|
|
|
|
|
|||||||||
| Earnings in USD per share of DKK 10 for the period |
1.6 | (4.2 | ) | 0.7 | ||||||||
| Diluted earnings in USD per share of DKK 10 for the period |
1.6 | (4.2 | ) | 0.7 | ||||||||
The accompanying notes are an integral part of these consolidated financial statements
2
THE DRILLING COMPANY OF 1972 A/S
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
| For the 6 months ended June 30, |
||||||||
| 2022 | 2021 | |||||||
| USD million | ||||||||
| Profit/loss for the period |
(172 | ) | 29 | |||||
| Cash flow hedges: |
||||||||
| Value adjustment of hedges |
4 | (2 | ) | |||||
| Reclassified to income statement |
11 | 4 | ||||||
|
|
|
|
|
|||||
| Total items that have or will be reclassified to the income statement |
15 | 2 | ||||||
|
|
|
|
|
|||||
| Other comprehensive income, net of tax |
15 | 2 | ||||||
|
|
|
|
|
|||||
| Total comprehensive income for the period |
(157 | ) | 31 | |||||
|
|
|
|
|
|||||
The accompanying notes are an integral part of these consolidated financial statements
3
THE DRILLING COMPANY OF 1972 A/S
CONSOLIDATED CASH FLOW STATEMENTS
| For the 6 months ended June 30, |
||||||||
| 2022 | 2021 | |||||||
| USD million | ||||||||
| Profit/loss before financial items |
(132 | ) | 73 | |||||
| Depreciation, amortisation and impairment reversals (losses), net |
215 | 95 | ||||||
| Gain/loss on sale of non-current assets |
— | (17 | ) | |||||
| Change in working capital |
(17 | ) | (39 | ) | ||||
| Change in provisions |
(1 | ) | (2 | ) | ||||
| Other non-cash items |
3 | 2 | ||||||
| Taxes paid |
(27 | ) | (18 | ) | ||||
|
|
|
|
|
|||||
| Cash flow from operating activities |
41 | 94 | ||||||
|
|
|
|
|
|||||
| Purchase of intangible assets and property, plant and equipment |
(71 | ) | (43 | ) | ||||
| Sale of property, plant and equipment |
4 | 33 | ||||||
| Other financial investments |
— | (1 | ) | |||||
|
|
|
|
|
|||||
| Cash flow from/used for investing activities |
(67 | ) | (11 | ) | ||||
|
|
|
|
|
|||||
| Interest received |
1 | — | ||||||
| Interest paid |
(21 | ) | (28 | ) | ||||
| Repayment of borrowings |
(295 | ) | (81 | ) | ||||
|
|
|
|
|
|||||
| Cash flow from financing activities |
(315 | ) | (109 | ) | ||||
|
|
|
|
|
|||||
| Net cash flow for the period |
(341 | ) | (26 | ) | ||||
|
|
|
|
|
|||||
| Cash and bank balances 1 January |
557 | 226 | ||||||
| Currency translation effect on cash and bank balances |
(2 | ) | (1 | ) | ||||
|
|
|
|
|
|||||
| Cash and bank balances, end of period |
214 | 199 | ||||||
|
|
|
|
|
|||||
Cash and bank balances at June 30, 2022 include USD 20 million (June 30, 2021: USD 25 million) that relates to cash and bank balances in countries with exchange control or other restrictions. These funds are not readily available for general use by Maersk Drilling.
The accompanying notes are an integral part of these consolidated financial statements
4
THE DRILLING COMPANY OF 1972 A/S
| June 30, | ||||||||||||
| Note | 2022 | 2021 | ||||||||||
| USD million | ||||||||||||
| Assets |
||||||||||||
| Intangible assets |
20 | 11 | ||||||||||
| Property, plant and equipment |
2,622 | 2,848 | ||||||||||
| Right-of-use assets |
21 | 26 | ||||||||||
| Financial non-current assets |
8 | 6 | ||||||||||
| Deferred tax |
17 | 18 | ||||||||||
|
|
|
|
|
|||||||||
| Total non-current assets |
2,688 | 2,909 | ||||||||||
|
|
|
|
|
|||||||||
| Trade receivables |
214 | 258 | ||||||||||
| Tax receivables |
3 | 18 | ||||||||||
| Other receivables |
50 | 73 | ||||||||||
| Prepayments |
49 | 61 | ||||||||||
|
|
|
|
|
|||||||||
| Receivables, etc. |
316 | 410 | ||||||||||
|
|
|
|
|
|||||||||
| Cash and bank balances |
214 | 199 | ||||||||||
| Assets held for sale |
1.5 | 39 | 139 | |||||||||
|
|
|
|
|
|||||||||
| Total current assets |
569 | 748 | ||||||||||
|
|
|
|
|
|||||||||
| Total assets |
3,257 | 3,657 | ||||||||||
|
|
|
|
|
|||||||||
| Equity and liabilities |
||||||||||||
| Share capital |
63 | 63 | ||||||||||
| Reserves and retained earnings |
2,102 | 1,987 | ||||||||||
|
|
|
|
|
|||||||||
| Total equity |
2,165 | 2,050 | ||||||||||
|
|
|
|
|
|||||||||
| Borrowings, non-current1 |
633 | 1,072 | ||||||||||
| Provisions |
9 | 5 | ||||||||||
| Deferred tax |
26 | 15 | ||||||||||
| Derivatives |
— | 25 | ||||||||||
|
|
|
|
|
|||||||||
| Other non-current liabilities |
35 | 45 | ||||||||||
|
|
|
|
|
|||||||||
| Total non-current liabilities |
668 | 1,117 | ||||||||||
|
|
|
|
|
|||||||||
| Borrowings, current |
136 | 136 | ||||||||||
| Provisions |
2 | 13 | ||||||||||
| Trade payables |
137 | 185 | ||||||||||
| Tax payables |
61 | 64 | ||||||||||
| Other payables |
50 | 47 | ||||||||||
| Deferred income |
38 | 45 | ||||||||||
|
|
|
|
|
|||||||||
| Other current liabilities |
288 | 354 | ||||||||||
|
|
|
|
|
|||||||||
| Total current liabilities |
424 | 490 | ||||||||||
|
|
|
|
|
|||||||||
| Total liabilities |
1,092 | 1,607 | ||||||||||
|
|
|
|
|
|||||||||
| Total equity and liabilities |
3,257 | 3,657 | ||||||||||
|
|
|
|
|
|||||||||
| 1 | Maersk Drilling made a voluntary loan repayment of USD 226 million in March 2022. |
The accompanying notes are an integral part of these consolidated financial statements
5
THE DRILLING COMPANY OF 1972 A/S
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
| Share Capital |
Hedge Reserve |
Retained Earnings |
Total Equity |
|||||||||||||
| USD million | ||||||||||||||||
| Equity January 1, 2022 |
63 | (22 | ) | 2,279 | 2,320 | |||||||||||
| Other comprehensive income, net of tax |
— | 15 | — | 15 | ||||||||||||
| Loss for the period |
— | — | (172 | ) | (172 | ) | ||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Total comprehensive income for the period |
— | 15 | (172 | ) | (157 | ) | ||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Value of share-based payments |
— | — | 2 | 2 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Total transactions with shareholders |
— | — | 2 | 2 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Equity June 30, 2022 |
63 | (7 | ) | 2,109 | 2,165 | |||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Equity January 1, 2021 |
63 | (30 | ) | 1,984 | 2,017 | |||||||||||
| Other comprehensive income, net of tax |
— | 2 | — | 2 | ||||||||||||
| Profit for the period |
— | — | 29 | 29 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Total comprehensive income for the period |
— | 2 | 29 | 31 | ||||||||||||
|
|
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|
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|
|
|
|||||||||
| Value of share-based payments |
— | — | 2 | 2 | ||||||||||||
|
|
|
|
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|
|
|
|
|||||||||
| Total transactions with shareholders |
— | — | 2 | 2 | ||||||||||||
|
|
|
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|
|
|
|
|
|||||||||
| Equity June 30, 2021 |
63 | (28 | ) | 2,015 | 2,050 | |||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
The accompanying notes are an integral part of these consolidated financial statements
6
Date of authorization for issue:
These unaudited interim consolidated financial statements for the six months period ended June 30, 2022 and 2021 were authorized for issue by the Board of Directors on August 19, 2022.
1.1 Segment Information
| For the 6 months ended June 30, | ||||||||||||||||||||||||||||||||
| 2022 | 2021 | |||||||||||||||||||||||||||||||
| North Sea |
International | Unallocated Activities |
Total | North Sea |
International | Unallocated Activities |
Total | |||||||||||||||||||||||||
| USD million | ||||||||||||||||||||||||||||||||
| Revenue |
237 | 279 | 16 | 532 | 326 | 274 | 14 | 614 | ||||||||||||||||||||||||
| EBITDA before special items |
61 | 26 | 8 | — | 130 | 25 | 8 | — | ||||||||||||||||||||||||
| Depreciation and amortisation |
(48 | ) | (43 | ) | (6 | ) | (97 | ) | (63 | ) | (37 | ) | (6 | ) | (106 | ) | ||||||||||||||||
| Impairment reversals (losses), net |
— | (99 | ) | (19 | ) | (118 | ) | 11 | — | — | 11 | |||||||||||||||||||||
| Investments in non-current assets |
21 | 36 | 10 | 67 | 13 | 17 | 6 | 36 | ||||||||||||||||||||||||
| Non-current assets(1) |
1,577 | 1,033 | 32 | 2,642 | 1,640 | 1,139 | 80 | 2,859 | ||||||||||||||||||||||||
| (1) | Comprises intangible assets and property, plant and equipment. |
The allocation of business activities into segments is in line with the internal management reporting provided to the chief operating decision maker which is Executive Management. Management has organised its business around the North Sea segment which utilises Jack-up rigs and an International segment which utilises semi-submersible rigs and drillships. The organisation is based on differences in the requirements of the drilling equipment due to geographical conditions and regulatory considerations. In general, rigs will be deployed in the operating areas for which they are designed, we therefore typically refer to them as “two different operating segments”. Jack-up rigs and floaters typically form separate segments as they are used for drilling programmes at different water depths. No operating segments have been aggregated.
EBITDA before special items reconciles to the consolidated income statements as follows:
| For the 6 months ended June 30, |
||||||||
| 2022 | 2021 | |||||||
| USD million | ||||||||
| Profit/Loss for the period |
(172 | ) | 29 | |||||
| Adjustments: |
||||||||
| Tax expenses |
12 | 12 | ||||||
| Financial expenses |
38 | 37 | ||||||
| Financial income |
(10 | ) | (5 | ) | ||||
| Share of results in joint ventures |
1 | 1 | ||||||
| Gain (loss) on sale of non-current assets |
— | (17 | ) | |||||
| Impairment reversals (losses), net |
118 | (11 | ) | |||||
| Depreciation and amortisation |
97 | 106 | ||||||
| Special items |
11 | 11 | ||||||
| EBITDA from unallocated activities |
(8 | ) | (8 | ) | ||||
|
|
|
|
|
|||||
| EBITDA before special items and unallocated activities |
87 | 155 | ||||||
|
|
|
|
|
|||||
7
1.2 Revenue
Revenue from drilling activities typically comprise fixed amounts for each day the rig is under contract differentiated by the activities undertaken (“day rate revenue”) and other revenue components such as lump sum payments for rig mobilisation and demobilisation and payments for investments in equipment or rig upgrades required to meet the operational needs of the drilling campaign, both of which are amortised over the contract period; bonuses linked to performance in terms of time, efficiency or drilling outcome measures such as reservoir targeting; or payments for third-party services to be delivered by Maersk Drilling.
For revenue, geographical information is based on geographical location where earned. The geographical split and types of revenue are as follows:
| For the 6 months ended June 30, 2022 |
||||||||||||||||
| North Sea |
International | Other | Total | |||||||||||||
| USD million | ||||||||||||||||
| Geographical split |
||||||||||||||||
| Denmark |
10 | — | 1 | 11 | ||||||||||||
| Norway |
178 | — | — | 178 | ||||||||||||
| United Kingdom |
32 | — | — | 32 | ||||||||||||
| The Netherlands |
17 | — | — | 17 | ||||||||||||
| Australia |
— | 63 | — | 63 | ||||||||||||
| Ghana |
— | 51 | — | 51 | ||||||||||||
| Guyana |
— | 12 | — | 12 | ||||||||||||
| Malaysia |
— | 33 | — | 33 | ||||||||||||
| Namibia |
— | 13 | — | 13 | ||||||||||||
| Sao Tome |
— | 25 | — | 25 | ||||||||||||
| Suriname |
— | 40 | — | 40 | ||||||||||||
| Trinidad |
— | 23 | — | 23 | ||||||||||||
| Other |
— | 19 | 15 | 34 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Total |
237 | 279 | 16 | 532 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Composition of revenue |
||||||||||||||||
| Day rate revenue |
194 | 219 | 14 | 427 | ||||||||||||
| Other revenue |
43 | 60 | 2 | 105 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Total |
237 | 279 | 16 | 532 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Type of revenue |
||||||||||||||||
| Services component |
140 | 224 | 10 | 374 | ||||||||||||
| Lease component |
97 | 55 | 6 | 158 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Total |
237 | 279 | 16 | 532 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
8
| For the 6 months ended June 30, 2021 |
||||||||||||||||
| North Sea |
International | Other | Total | |||||||||||||
| USD million | ||||||||||||||||
| Geographical split |
||||||||||||||||
| Denmark |
7 | — | 1 | 8 | ||||||||||||
| Norway |
242 | — | — | 242 | ||||||||||||
| United Kingdom |
66 | — | — | 66 | ||||||||||||
| The Netherlands |
11 | — | — | 11 | ||||||||||||
| Angola |
— | 45 | — | 45 | ||||||||||||
| Australia |
— | 44 | — | 44 | ||||||||||||
| Azerbaijan |
— | 37 | — | 37 | ||||||||||||
| Ghana |
— | 23 | — | 23 | ||||||||||||
| Suriname |
— | 56 | — | 56 | ||||||||||||
| Trinidad |
— | 42 | — | 42 | ||||||||||||
| Other |
— | 27 | 13 | 40 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Total |
326 | 274 | 14 | 614 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Composition of revenue |
||||||||||||||||
| Day rate revenue |
265 | 218 | 12 | 495 | ||||||||||||
| Other revenue |
61 | 56 | 2 | 119 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Total |
326 | 274 | 14 | 614 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Type of revenue |
||||||||||||||||
| Services component |
171 | 183 | 12 | 366 | ||||||||||||
| Lease component |
155 | 91 | 2 | 248 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Total |
326 | 274 | 14 | 614 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
At June 30, 2022, the revenue backlog of contracted future service and lease revenue amounted to USD 2.0 billion (December 31, 2021: USD 1.9 billion).
1.3 Special items
| For the 6 months ended June 30, |
||||||||
| 2022 | 2021 | |||||||
| USD million | ||||||||
| Merger related costs |
9 | — | ||||||
| Transformation and restructuring costs |
— | 1 | ||||||
| COVID-19 costs not recharged to customers |
2 | 10 | ||||||
|
|
|
|
|
|||||
| Special items, costs |
11 | 11 | ||||||
|
|
|
|
|
|||||
Special items comprise income and expenses that are not considered to be part of Maersk Drilling’s ordinary operations such as merger related costs, major restructuring projects and COVID-19 related costs. COVID-19 related costs are defined as additional costs triggered by the COVID-19 pandemic in the form of costs incurred to comply with local travel and quarantine rules and customer requirements, additional costs incurred with procuring testing kits for crews operating rigs, additional crew change costs for quarantine hotels, charter flights, per diems as well as additional costs to reimburse subcontractors in instances where they need to comply with quarantine regulations.
Special items incurred in the first six months of 2022 comprised USD 9 million merger related costs and USD 2 million of COVID-19 related costs not recharged to customers. Special items incurred in the first
9
six months of 2021 comprised redundancy costs from the establishment of virtual rig teams and a new technical hub in Gdansk of USD 1 million and net COVID-19 related costs of USD 10 million.
1.4 Impairment test
2022
Maersk Explorer was cold stacked in May 2022 due to lack of commercial outlook and therefore it was impaired to estimated scrapping value. This resulted in an impairment loss of USD 99 million.
Apart from the USD 99 million impairment loss on Maersk Explorer and the USD 19 million impairment loss in connection with the sale of Maersk Convincer, no impairment triggers have been identified that would lead to an impairment test. Therefore, no further impairment reversals were recognised in the first six months ended June 30, 2022.
2021
In connection with the sale of Mærsk Gallant in May 2021, an impairment loss of USD 11 million has been reversed.
In connection with the valuation of the Company in a contemplated business combination, Maersk Drilling’s net assets were assessed by the accounting acquirer as part of this transaction at values below their carrying amounts as at September 30, 2021 and Management concluded that an impairment test needed to be performed.
An impairment test based on a value in use calculation was therefore performed, and the conclusion was that the impairment test did not lead to impairment or reversal of previously recognised impairments.
1.5 Sale of non-current assets
| For the 6 months ended June 30, |
||||||||
| 2022 | 2021 | |||||||
| USD million | ||||||||
| Gains |
— | 17 | ||||||
|
|
|
|
|
|||||
| Gains/losses on sale of non-current assets, net |
— | 17 | ||||||
|
|
|
|
|
|||||
| Carrying amount of non-current assets |
— | 15 | ||||||
| Gain/loss on sale of non-current asset |
— | 17 | ||||||
| Cash advance from sale of non-current assets |
4 | — | ||||||
| Change in payables from the sale |
— | 1 | ||||||
|
|
|
|
|
|||||
| Cash flow from sale of non-current assets |
4 | 33 | ||||||
|
|
|
|
|
|||||
| Carrying amount of assets held for sale |
39 | 139 | ||||||
|
|
|
|
|
|||||
In April 2022, Maersk Drilling announced that it entered into an agreement to sell the jack-up rig Maersk Convincer to ADES Saudi Limited Company. The sales price is USD 42.5 million in an all cash transaction of which USD 4 million was received in April 2022. Expecting closing date is mid September 2022 after the completion of its current drilling programme with Brunei Shell Petroleum Company Sdn. Bhd. An impairment loss of USD 19 million was recognised after the sales agreement was announced and the rig was subsequently classified as asset held for sale.
During the second quarter of 2021, Maersk Drilling completed the divestment of the jack-up rigs Maersk Guardian (now named Guardian) and Mærsk Gallant (now named Gallant) to New Fortress Energy. The total
10
sales price for the two rigs was USD 31 million in all-cash transactions. Additionally, USD 2 million were collected from the sale of spare parts owned by Mærsk Gallant.
In May 2021, Maersk Drilling further announced that it entered into an agreement to divest the combined drilling and production unit Mærsk Inspirer to Havila Sirius for a price of USD 373 million in an all-cash transaction. In connection with the sale announcement, Mærsk Inspirer was classified as held for sale and depreciation of the asset was ceased. The sale was completed in 2021.
1.6 Share capital and earnings per share
The share capital comprises 41,532,112 shares of DKK 10. At June 30, 2022, the Company holds 141,402 treasury shares (June 30, 2021: 241,397) and the average number of shares in circulation during the first six months of 2022 was 41,340,712 (June 30, 2021: 41,289,832).
Earnings per share amounted to USD -4.2 (USD 0.7) and diluted earnings per share USD -4.2 (USD 0.7).
Earnings per share is equal to profit/loss for the period divided by the average number of shares in circulation or the average diluted number of shares in circulation.
At June 30, 2022, a potential dilutive effect of 297,031 shares (June 30, 2021: 291,342 shares) outstanding under the long-term incentive programme is excluded from the calculation of diluted earnings per share as the inclusion of such a dilutive effect would result in a reduction in the loss per share, while in 2021 it was included.
1.7 Capital commitments
At June 30, 2022, capital commitments relating to rig upgrades and special periodic surveys amounted to USD 64 million (December 31, 2021: USD 38 million). Maersk Drilling does not have capital commitments related to new buildings.
1.8 Subsequent events
In connection with the business combination between Noble and Maersk Drilling, which was announced on November 10, 2021, on August 8, 2022 Noble published an offer document setting out the full terms and conditions to the voluntary public share exchange offer to be made to the shareholders of Maersk Drilling. The offer period commenced on August 10, 2022 and expired on September 8, 2022, with completion of the exchange offer expected on October 3, 2022.
Subject to completion of the exchange offer, Noble intends to delist Maersk Drilling from Nasdaq Copenhagen at an appropriate time and to the extent permitted by Nasdaq Copenhagen. Further, because the exchange offer was accepted by shareholders representing in total more than 90% of all Maersk Drilling shares and voting rights, Noble intends to initiate and complete a compulsory purchase of the remaining minority Maersk Drilling shares in accordance with the Danish Companies Act.
No other events have occurred after the balance sheet date which are expected to have a material impact on the consolidated financial statements.
1.9 Basis of preparation
These interim consolidated financial statements reflect the consolidated figures for The Drilling Company of 1972 A/S (the “Company”) and its subsidiaries (the “Group” or “Maersk Drilling”). All amounts in these interim consolidated financial statements are stated in United States Dollars (USD) and rounded to the nearest million.
11
Accounting policies
These interim consolidated financial statements have been prepared in accordance with IAS 34 ‘Interim Financial Reporting’ as issued by the IASB.
The accounting policies, areas of judgement and areas of significant estimates are consistent with those set out in the notes to Maersk Drilling’s consolidated financial statements for 2021.
New reporting requirements
New standards and amendments effective for the financial years 2022 and 2021 have not had any material impact on the accounting policies applied.
New standards, amendments and interpretations adopted in 2022 include:
| • | IAS 16, Property, Plant and Equipment—Proceeds before intended use. The amendment prohibits deducting from the cost of an item of property, plant and equipment any proceeds from selling items produced while bringing that asset to the location and condition necessary for it to be capable of operating in the manner intended by management. |
| • | IAS 37, Onerous Contracts: The amendment clarifies which costs to include when determining whether a contract in onerous |
| • | IFRS 3, Business Combinations: The amendment includes updates to references to follow the new Conceptual Framework. |
| • | Annual Improvements to IFRS Standards 2018–2020: These improvements relate to clarifications and reliefs within IFRS 1, IFRS 9, IFRS 16 and IAS 41. |
New standards, amendments and interpretations adopted in 2021 include:
| • | IFRS 9, IAS 39, IFRS 7, IFRS 4 and IFRS 16: IBOR reform, phase 2. A number of amendments which provide relief from modification accounting arising from changes in contractual cash flows on debt instruments and lease contracts and redesignation of designated hedge relationships as a consequence of the IBOR reform. |
12
Exhibit 99.3
UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION
The unaudited pro forma condensed combined financial information of Noble Corporation plc, a public limited company formed under the laws of England and Wales (“Topco”), and the accompanying footnotes (the “Pro Forma Financial Information”) reflects the impact of the following transactions:
| • | Business Combination: Pursuant to the business combination agreement, dated November 10, 2021 (as amended, the “Business Combination Agreement”), by and among Noble Corporation, an exempted company incorporated in the Cayman Islands with limited liability (“Old Noble”), Topco, Noble Newco Sub Limited, a Cayman Islands exempted company and a direct, wholly owned subsidiary of Topco (“Merger Sub”), and The Drilling Company of 1972 A/S, a Danish public limited liability company (“Maersk Drilling”), among other things, (i) on September 30, 2022 (the “Merger Effective Date”) (x) Old Noble merged with and into Merger Sub (the “Merger”), with Merger Sub surviving the Merger as a wholly owned subsidiary of Topco, and (y) each ordinary share, par value $0.00001 per share, of Old Noble (collectively, the “Noble Shares”), issued and outstanding prior to the effective time of the Merger (the “Merger Effective Time”), was converted into one newly and validly issued, fully paid and non-assessable A ordinary share, par value $0.00001 per share, of Topco (the “Topco Shares”), and (ii) on October 3, 2022 (the “Closing Date”), Topco 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 Topco acquired more than 90% of the issued and outstanding shares of Maersk Drilling, nominal value Danish krone (“DKK”) 10 per share (“Maersk Drilling Shares”), Topco will redeem all remaining Maersk Drilling Shares not exchanged in the Offer (the “Minority Shares”) for, at the election of the holder, either Topco Shares or cash (or, for those holders that do not make an election, only cash), under Danish law by way of a compulsory purchase. Topco, Old Noble and their subsidiaries collectively are referred to as “Noble.” The Business Combination is accounted for as a business combination pursuant to Accounting Standards Codification Topic 805, Business Combinations (“ASC 805”), where Noble is the accounting acquirer. Refer to Note 2 of the Pro Forma Financial Information for more information on the terms of the Business Combination Agreement, the purchase price consideration provided in connection with the Business Combination, and Noble’s determination of the accounting acquirer. |
| • | Noble 2022 Rig Disposal: On April 22, 2022, the UK Competition and Markets Authority (the “UK CMA”) announced its Phase 1 decision, pursuant to which it concluded that the Business Combination gives rise to a realistic prospect of a substantial lessening of competition in relation to the supply of jack-up rigs in NW Europe and that a remedy to address such effect would be required to avoid a reference to a Phase 2 review under the UK CMA regime. On April 29, 2022, Noble and Maersk Drilling submitted proposals (the “Remedy Proposals”) to the UK CMA to address such effect identified in the UK CMA’s decision of April 22, 2022. Each of the Remedy Proposals was designed to replicate the competitive constraint provided by Noble in respect of jack-up rigs in NW Europe by the divestment of certain jack-up rigs to a suitable purchaser. On May 9, 2022, the UK CMA published its decision that there are reasonable grounds for believing that one of these Remedy Proposals might be accepted by the UK CMA. This one Remedy Proposal comprises the divestment of the rigs Noble Hans Deul, Noble Sam Hartley, Noble Sam Turner, Noble Houston Colbert, and Noble Lloyd Noble (the “NLN Rig” and, collectively, the “Remedy Rigs”), including all of the related support and infrastructure that the purchaser will need to run the Remedy Rigs as an effective standalone business, including relevant off-shore and on-shore staff (the “Noble 2022 Rig Disposal”). |
On June 23, 2022, Noble announced that it had entered into an Asset Purchase Agreement (as amended, the “Asset Purchase Agreement”) with a potential purchaser, Shelf Drilling, Ltd. (“Shelf
1
Drilling”) and one of its subsidiaries (the “Shelf Buyer”), regarding the sale of the Remedy Rigs under the Remedy Proposal described above, conditional upon, among other things, the UK CMA formally approving Shelf Drilling as a suitable purchaser and also formally accepting the Remedy Proposal. On September 1, 2022, the UK CMA issued its formal decision and accepted the Remedy Proposal and Shelf Drilling as a suitable purchaser. On October 5, 2022, Topco, Shelf Drilling and Shelf Buyer completed the Noble 2022 Rig Disposal. On the Completion (as defined in the Asset Purchase Agreement), Noble Drilling Norway AS (“Noble Norway”) and a member of the Shelf Group, which is now the owner of the NLN Rig, entered into a charter agreement (the “NLN Charter Agreement”), pursuant to which Noble Norway will charter the NLN Rig from the Shelf Group during the period from the Completion until the date of the NLN Completion (as defined in the Asset Purchase Agreement) in order to allow Noble Norway to complete its current obligations under the NLN Drilling Agreement (as defined in the Asset Purchase Agreement) with the NLN Customer (as defined in the Asset Purchase Agreement). At the end of the charter period, Noble Norway will redeliver the NLN Rig to the Shelf Group.
The Pro Forma Financial Information also reflects the impact of the following transactions that have been completed since January 1, 2021 but have not been included in the results of operations for the entire periods presented for the pro forma condensed combined statements of operations (collectively, the “Completed Transactions”):
| • | Noble 2021 Rig Disposal: On November 3, 2021, Noble completed the sales of jackup rigs Noble Roger Lewis, Noble Scott Marks, Noble Joe Knight, and Noble Johnny Whitstine in Saudi Arabia to ADES International Holding Limited (the “Noble 2021 Rig Disposal”). |
| • | Maersk Drilling Rig Disposal: On October 27, 2021, Maersk Drilling completed the divesture of the combined drilling and production unit Maersk Inspirer in Norway to Havila Sirius (the “Maersk Drilling Rig Disposal”). |
| • | Pacific Drilling Merger: On April 15, 2021, Noble completed the acquisition of Pacific Drilling Company LLC (“Pacific”; and the acquisition, the “Pacific Drilling Merger”). The Pacific Drilling Merger was accounted for as a business combination pursuant to ASC 805, where Noble was the accounting acquirer. |
| • | Noble Reorganization: On February 5, 2021, Noble successfully consummated its plan of reorganization (the “Noble Plan”) and emerged from bankruptcy reorganization under Chapter 11 (the “Noble Reorganization”). |
The Pro Forma Financial Information has been prepared under the following assumptions:
| • | The unaudited pro forma condensed combined statements of operations for the six months ended June 30, 2022 and for the twelve months ended December 31, 2021 assume that the Business Combination, the Noble 2022 Rig Disposal, and the Completed Transactions had occurred on January 1, 2021. |
| • | The unaudited pro forma condensed combined balance sheet as of June 30, 2022 assumes that the Business Combination and the Noble 2022 Rig Disposal had occurred on June 30, 2022. The impacts from the Completed Transactions have already been reflected in the historical consolidated balance sheets of either Noble or Maersk Drilling as of June 30, 2022; therefore, no pro forma adjustments were made for these transactions in the unaudited pro forma condensed combined balance sheet as of June 30, 2022. |
The Pro Forma Financial Information does not represent what the actual consolidated results of operations or the consolidated financial position of Topco would have been had the Business Combination, the Noble 2022 Rig Disposal, and the Completed Transactions occurred on the dates assumed, nor are they necessarily indicative
2
of future consolidated results of operations or consolidated financial position. The assumptions made by Noble underlying the pro forma adjustments are described in the accompanying notes to these unaudited pro forma condensed combined financial statements. Adjustments are based on information available to Noble’s management during the preparation of the Pro Forma Financial Information and assumptions that Noble’s management believes are reasonable and supportable. The pro forma adjustments, which are described in the accompanying notes, may be revised by Noble as additional information becomes available and is evaluated. Therefore, it is likely that the actual adjustments will differ from the pro forma adjustments, and it is possible the differences may be material.
Noble’s management has not presented the effects of anticipated costs or savings associated with certain restructuring, severance, termination-related benefits, or other integration activities resulting from the Business Combination as the specificity of the timing and nature of such items is still under evaluation as of the date of this filing.
The Pro Forma Financial Information should be read in conjunction with the following:
| • | The consolidated financial statements and notes included in Old Noble’s Annual Report on Form 10-K for the year ended December 31, 2021, filed with the SEC on February 17, 2022, and Amendment No. 1 thereto on Form 10-K/A, filed with the SEC on March 11, 2022 (together, the “2021 Form 10-K”). |
| • | The condensed consolidated financial statements and notes included in Old Noble’s Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2022, filed with the SEC on August 9, 2022. |
| • | The historical Maersk Drilling consolidated financial statements and notes for the year ended December 31, 2021 included in Exhibit 99.1 to this filing and the interim period ended June 30, 2022 included in Exhibit 99.2 to this filing. |
| • | The Pacific condensed consolidated financial statements and notes for the interim period ended March 31, 2021 included in Old Noble’s Current Report on Form 8-K/A, filed with the SEC on June 23, 2021. |
3
Unaudited Pro Forma Condensed Combined Statement of Operations
Six Months Ended June 30, 2022
(in thousands, except per share amounts)
| Maersk Drilling Historical | ||||||||||||||||||||||||||||||||||
| Noble Pro Forma (Note 7) |
Maersk Drilling Historical (IFRS) (Note 4) |
Maersk
Drilling IFRS-to-GAAP Adjustments (Note 6) |
Maersk Drilling Historical Adjusted (U.S. GAAP) |
Business Combination Transaction Accounting Adjustments (Note 3) |
Topco Pro Forma Combined |
|||||||||||||||||||||||||||||
| Operating revenues |
||||||||||||||||||||||||||||||||||
| Contract drilling services |
$ | 433,383 | $ | 520,180 | $ | — | $ | 520,180 | $ | — | $ | 953,563 | ||||||||||||||||||||||
| Reimbursables and other |
23,921 | 12,298 | — | 12,298 | — | 36,219 | ||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||||
| 457,304 | 532,478 | — | 532,478 | — | 989,782 | |||||||||||||||||||||||||||||
| Operating costs and expense |
|
|||||||||||||||||||||||||||||||||
| Contract drilling services |
315,558 | 391,634 | 4,959 | (C) (D) |
396,593 | 592 | (EE) | 712,743 | ||||||||||||||||||||||||||
| Reimbursables |
20,319 | 6,776 | — | 6,776 | — | 27,095 | ||||||||||||||||||||||||||||
| Depreciation and amortization |
40,334 | 97,831 | 105,500 | (C) (E) |
203,331 | (130,562 | ) | (AA) | 113,103 | |||||||||||||||||||||||||
| General and administrative |
34,211 | 39,245 | 1,364 | (C) |
40,609 | — | 74,820 | |||||||||||||||||||||||||||
| Merger and integration costs |
18,578 | — | 8,619 | (D) |
8,619 | — | 27,197 | |||||||||||||||||||||||||||
| Gain on sale of operating assets, net |
(3,459 | ) | (84 | ) | — | (84 | ) | — | (3,543 | ) | ||||||||||||||||||||||||
| Hurricane losses |
2,805 | — | — | — | — | 2,805 | ||||||||||||||||||||||||||||
| Special items |
— | 11,150 | (11,150 | ) | (D) |
— | — | — | ||||||||||||||||||||||||||
| Loss on impairment |
— | 117,956 | 74,639 | (E) |
192,595 | 192,595 | ||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||||
| 428,346 | 664,508 | 183,931 | 848,439 | (129,970 | ) | 1,146,815 | ||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||||
| Operating income (loss) |
28,958 | (132,030 | ) | (183,931 | ) | (315,961 | ) | 129,970 | (157,033 | ) | ||||||||||||||||||||||||
| Other income (expense) |
||||||||||||||||||||||||||||||||||
| Interest expense, net of amounts capitalized |
(15,395 | ) | (18,081 | ) | 422 | (C) |
(17,659 | ) | 2,865 | (DD) | (30,189 | ) | ||||||||||||||||||||||
| Interest income and other, net |
1,531 | (10,556 | ) | — | (10,556 | ) | — | (9,025 | ) | |||||||||||||||||||||||||
| Gain on extinguishment of debt, net |
— | — | — | — | — | — | ||||||||||||||||||||||||||||
| Gain on bargain purchase |
— | — | — | — | — | — | ||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||||
| Loss before income taxes |
15,094 | (160,667 | ) | (183,509 | ) | (344,176 | ) | 132,835 | (196,247 | ) | ||||||||||||||||||||||||
| Income tax benefit (provision) |
949 | (11,772 | ) | 4,406 | (F) |
(7,366 | ) | 5,714 | (EE) | (703 | ) | |||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||||
| Net income (loss) |
$ | 16,043 | $ | (172,439 | ) | $ | (179,103 | ) | $ | (351,542 | ) | $ | 138,549 | $ | (196,950 | ) | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||||
| Basic net income (loss) per share |
$ | 0.23 | $ | (4.17 | ) | — | — | — | $ | (1.53 | ) | (CC) | ||||||||||||||||||||||
| Diluted net income (loss) per share |
$ | 0.21 | $ | (4.17 | ) | — | — | — | $ | (1.53 | ) | (CC) | ||||||||||||||||||||||
| Weighted average shares outstanding |
||||||||||||||||||||||||||||||||||
| Basic |
68,722 | 41,341 | — | — | — | 128,886 | (CC) | |||||||||||||||||||||||||||
| Diluted |
77,059 | 41,341 | — | — | — | 128,886 | (CC) | |||||||||||||||||||||||||||
4
Unaudited Pro Forma Condensed Combined Statement of Operations
Twelve Months Ended December 31, 2021
(in thousands, except per share amounts)
| Maersk Drilling Historical | ||||||||||||||||||||||||||||||||||||
| Noble Pro Forma (Note 7) |
Maersk Drilling Historical (IFRS) (Note 4) |
Maersk Drilling Rig Disposal (IFRS) (Note 5) |
Maersk Drilling IFRS-to-GAAP Adjustments (Note 6) |
Maersk Drilling Historical Adjusted (U.S. GAAP) |
Business Combination Transaction Accounting Adjustments (Note 3) |
Topco Pro Forma Combined |
||||||||||||||||||||||||||||||
| Operating revenues |
||||||||||||||||||||||||||||||||||||
| Contract drilling services |
$ | 674,950 | $ | 1,232,397 | $ | (45,869 | ) | (A) |
$ | — | $ | 1,186,528 | $ | — | $ | 1,861,478 | ||||||||||||||||||||
| Reimbursables and other |
62,220 | 34,739 | — | — | 34,739 | — | 96,959 | |||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||||
| 737,170 | 1,267,136 | (45,869 | ) | — | 1,221,267 | — | 1,958,437 | |||||||||||||||||||||||||||||
| Operating costs and expense |
||||||||||||||||||||||||||||||||||||
| Contract drilling services |
562,565 | 807,261 | (29,790 | ) | (A) |
17,999 | (C) (D) |
795,470 | 2,640 | (EE) | 1,360,675 | |||||||||||||||||||||||||
| Reimbursables |
55,565 | 17,704 | — | — | 17,704 | — | 73,269 | |||||||||||||||||||||||||||||
| Depreciation and amortization |
74,975 | 213,202 | (7,967 | ) | (A) |
227,491 | (C) (E) |
432,726 | (287,648 | ) | (AA) | 220,053 | ||||||||||||||||||||||||
| General and administrative |
94,447 | 86,604 | — | 2,794 | (C) |
89,398 | — | 183,845 | ||||||||||||||||||||||||||||
| Merger and integration costs |
24,792 | — | — | 7,592 | (D) |
7,592 | 33,633 | (BB) | 66,017 | |||||||||||||||||||||||||||
| Gain on sale of operating assets, net |
(259,433 | ) | (256,292 | ) | — | — | (256,292 | ) | — | (515,725 | ) | |||||||||||||||||||||||||
| Hurricane losses |
23,350 | — | — | — | — | — | 23,350 | |||||||||||||||||||||||||||||
| Special items |
— | 20,533 | 194 | (A) |
(20,727 | ) | (D) |
— | — | — | ||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||||
| 576,261 | 889,012 | (37,563 | ) | 235,149 | 1,086,598 | (251,375 | ) | 1,411,484 | ||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||||
| Operating income (loss) |
160,909 | 378,124 | (8,306 | ) | (235,149 | ) | 134,669 | 251,375 | 546,953 | |||||||||||||||||||||||||||
| Other income (expense) |
||||||||||||||||||||||||||||||||||||
| Interest expense, net of amounts capitalized |
(24,799 | ) | (49,664 | ) | 1,198 | (A) (B) |
1,072 | (C) |
(47,394 | ) | 5,769 | (DD) | (66,424 | ) | ||||||||||||||||||||||
| Interest income and other, net |
11,319 | (11,239 | ) | — | — | (11,239 | ) | — | 80 | |||||||||||||||||||||||||||
| Gain on extinguishment of debt, net |
(2,664 | ) | — | — | — | — | — | (2,664 | ) | |||||||||||||||||||||||||||
| Gain on bargain purchase |
62,305 | — | — | — | — | — | 62,305 | |||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||||
| Loss before income taxes |
207,070 | 317,221 | (7,108 | ) | (234,077 | ) | 76,036 | 257,144 | 540,250 | |||||||||||||||||||||||||||
| Income tax benefit (provision) |
(5,014 | ) | (26,248 | ) | 2,066 | (A) |
10,442 | (F) |
(13,740 | ) | (16,686 | ) | (EE) | (35,440 | ) | |||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||||
| Net income (loss) |
$ | 202,056 | $ | 290,973 | $ | (5,042 | ) | $ | (223,635 | ) | $ | 62,296 | $ | 240,458 | $ | 504,810 | ||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||||
| Basic net income (loss) per share |
$ | 3.03 | $ | 7.05 | — | — | — | — | $ | 3.98 | (CC) | |||||||||||||||||||||||||
| Diluted net income (loss) per share |
$ | 2.84 | $ | 7.00 | — | — | — | — | $ | 3.83 | (CC) | |||||||||||||||||||||||||
| Weighted average shares outstanding |
||||||||||||||||||||||||||||||||||||
| Basic |
66,615 | 41,290 | — | — | — | — | 126,779 | (CC) | ||||||||||||||||||||||||||||
| Diluted |
71,058 | 41,583 | — | — | — | — | 131,700 | (CC) | ||||||||||||||||||||||||||||
5
Unaudited Pro Forma Condensed Combined Balance Sheet
As of June 30, 2022
(in thousands)
| Maersk Drilling Historical | ||||||||||||||||||||||||||||
| Noble Pro Forma (Note 8) |
Maersk Drilling Historical (IFRS) (Note 4) |
Maersk Drilling IFRS-to-GAAP Adjustments (Note 6) |
Maersk Drilling Historical Adjusted (U.S. GAAP) |
Business Combination Transaction Accounting Adjustments (Note 3) |
Topco Pro Forma Combined |
|||||||||||||||||||||||
| Assets |
||||||||||||||||||||||||||||
| Current assets: |
||||||||||||||||||||||||||||
| Cash and cash equivalents |
$ | 527,253 | $ | 209,326 | $ | — | $ | 209,326 | $ | (49,639 | ) | (FF) | $ | 686,940 | ||||||||||||||
| Accounts receivable, net |
258,780 | 229,126 | — | 229,126 | — | 487,906 | ||||||||||||||||||||||
| Taxes receivable |
16,906 | 26,419 | — | 26,419 | — | 43,325 | ||||||||||||||||||||||
| Prepaid expenses and other current assets |
40,226 | 64,823 | (7,000 | ) | (F) | 57,823 | (32,320 | ) | (GG) | 65,729 | ||||||||||||||||||
| Assets held for sale |
— | 39,338 | — | 39,338 | — | 39,338 | ||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||
| Total current assets |
843,165 | 569,032 | (7,000 | ) | 562,032 | (81,959 | ) | 1,323,238 | ||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||
| Intangible assets |
33,495 | — | — | — | — | 33,495 | ||||||||||||||||||||||
| Property and equipment, at cost |
1,306,160 | 8,684,312 | 3,677,277 | (E) | 12,361,589 | (9,477,020 | ) | (HH) | 4,190,729 | |||||||||||||||||||
| Accumulated depreciation |
(98,525 | ) | (6,315,334 | ) | (945,866 | ) | (E) | (7,261,200 | ) | 7,261,200 | (HH) | (98,525 | ) | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||
| Property and equipment, net |
1,207,635 | 2,368,978 | 2,731,411 | 5,100,389 | (2,215,820 | ) | 4,092,204 | |||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||
| Other assets |
81,698 | 318,833 | (8,262 | ) | (E) | 310,571 | (276,832 | ) | (II)(JJ) | 115,437 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||
| Total assets |
$ | 2,165,993 | $ | 3,256,843 | $ | 2,716,149 | $ | 5,972,992 | $ | (2,574,611 | ) | $ | 5,564,374 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||
| Current liabilities |
||||||||||||||||||||||||||||
| Accounts payable |
$ | 136,144 | $ | 137,391 | $ | — | $ | 137,391 | $ | (14,948 | ) | (LL) | $ | 258,587 | ||||||||||||||
| Accrued payroll and related costs |
33,754 | 25,587 | — | 25,587 | — | 59,341 | ||||||||||||||||||||||
| Current maturities of long-term debt |
— | 129,925 | — | 129,925 | — | 129,925 | ||||||||||||||||||||||
| Taxes payable |
26,854 | 27,707 | 17,156 | (F) | 44,863 | 5,066 | (JJ) | 76,783 | ||||||||||||||||||||
| Interest payable |
8,921 | 656 | — | 656 | — | 9,577 | ||||||||||||||||||||||
| Other current liabilities |
44,263 | 51,305 | — | 51,305 | — | 95,568 | ||||||||||||||||||||||
| Compulsory purchase liability |
— | — | — | — | 186,055 | (KK) | 186,055 | |||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||
| Total current liabilities |
249,936 | 372,571 | 17,156 | 389,727 | 176,173 | 815,836 | ||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||
| Long-term debt |
216,000 | 618,809 | — | 618,809 | 9,505 | (MM) | 844,314 | |||||||||||||||||||||
| Deferred income taxes |
6,700 | 26,080 | 68,828 | (E) | 94,908 | (72,806 | ) | (JJ) | 28,802 | |||||||||||||||||||
| Other liabilities |
116,922 | 74,639 | 34,180 | (F) | 108,819 | 143,350 | (JJ) | 369,091 | ||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||
| Total liabilities |
589,558 | 1,092,099 | 120,164 | 1,212,263 | 256,222 | 2,058,043 | ||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||
| Shareholders’ equity |
||||||||||||||||||||||||||||
| Common stock |
1 | 62,520 | — | 62,520 | (62,519 | ) | (NN) | 2 | ||||||||||||||||||||
| Additional paid-in-capital |
1,402,608 | — | — | — | 1,963,928 | (NN) | 3,366,536 | |||||||||||||||||||||
| Retained earnings (accumulated deficit) |
170,024 | 2,108,680 | 2,595,985 | (E) (F) | 4,704,665 | (4,738,698 | ) | (NN) | 135,991 | |||||||||||||||||||
| Accumulated other comprehensive income (loss) |
3,802 | (6,456 | ) | — | (6,456 | ) | 6,456 | (NN) | 3,802 | |||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||
| Total shareholders’ equity |
1,576,435 | 2,164,744 | 2,595,985 | 4,760,729 | (2,830,833 | ) | 3,506,331 | |||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||
| Total liabilities and equity |
$ | 2,165,993 | $ | 3,256,843 | $ | 2,716,149 | $ | 5,972,992 | $ | (2,574,611 | ) | $ | 5,564,374 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||
6
NOTES TO UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION
(in thousands, except per share amounts or otherwise indicated)
Note 1. Basis of Presentation
The Pro Forma Financial Information has been prepared by Topco in accordance with Article 11 of Regulation S-X as amended by the final rule, Release No. 33-10786 “Amendments to Financial Disclosures about Acquired and Disposed Businesses,” which was adopted in May 2020 and became effective on January 1, 2021. The pro forma adjustments include transaction accounting adjustments, which reflect the application of required accounting for the Business Combination, the Noble 2022 Rig Disposal, and the Completed Transactions.
The historical consolidated financial statements of Noble were prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) and shown in U.S. dollars. The historical consolidated financial statements of Maersk Drilling were prepared in accordance with International Financial Reporting Standards (“IFRS”) as issued by the International Accounting Standards Board (“IASB”) and shown in U.S. dollars. Refer to Note 4 for the adjustments identified by Maersk Drilling to convert Maersk Drilling’s historical financial statements prepared in accordance with IFRS to Noble’s basis of accounting under U.S. GAAP.
Noble adopted fresh start accounting in accordance with Accounting Standards Codification Topic 852, Reorganizations (“ASC 852”), upon Noble’s emergence from reorganization under Chapter 11, resulting in reorganized Noble becoming the successor entity (“Successor”) for financial reporting purposes. In accordance with ASC 852, with the application of fresh start accounting, Noble allocated its reorganization value to its individual assets based on their estimated fair values in conformity with ASC 805. Liabilities subject to compromise of the predecessor entity of Noble (“Predecessor”) were either reinstated or extinguished as part of the reorganization.
Note 2. Business Combination with Maersk Drilling and Estimated Purchase Consideration
Business Combination Agreement
On the Merger Effective Date, pursuant to the Business Combination Agreement, Old Noble merged with and into Merger Sub, with Merger Sub surviving the Merger as a wholly owned subsidiary of Topco, and (i) each Noble Share issued and outstanding prior to the Merger Effective Time was converted into one newly and validly issued, fully paid and non-assessable Topco Share, and (ii) each warrant to purchase Noble Shares issued pursuant to the applicable Tranche 1 Warrant Agreement, Tranche 2 Warrant Agreement and Tranche 3 Warrant Agreement, each dated as of February 5, 2021, by and among Old Noble, Computershare Inc. and Computershare Trust Company, N.A. (collectively, the “Noble Cayman Warrant Agreements”) and outstanding immediately prior to the Merger Effective Time was converted automatically into a warrant to acquire a number of Topco Shares equal to the number of Noble Shares underlying such 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. In addition, each award of restricted share units representing the right to receive Noble Shares, or value based on the value of Noble Shares (each, a “Noble RSU Award”) outstanding immediately prior to the Merger Effective Time ceased to represent a right to acquire Noble Shares (or value equivalent to Noble Shares) and was converted into the right to acquire, on the same terms and conditions as were applicable under the Noble RSU Award (including any vesting conditions), that number of Topco Shares equal to the number of Noble Shares subject to such Noble RSU Award immediately prior to the Merger Effective Time.
On the Closing Date, pursuant to the Business Combination Agreement, Topco completed the Offer, and because Topco acquired more than 90% of the issued and outstanding Maersk Drilling Shares, Topco will redeem all remaining Maersk Drilling Shares not exchanged in the Offer for, at the election of the holder, either Topco Shares or cash (or, for those holders that do not make an election, only cash), under Danish law by way of a compulsory purchase.
7
In connection with the Offer and the Compulsory Purchase (as defined herein), each Maersk Drilling Share was (in the case of the Offer) or will be (in the case of the Compulsory Purchase) exchanged for either (i) 1.6137 newly and validly issued, fully paid and non-assessable Topco Shares (the “Exchange Ratio”) or (ii) cash consideration (payable in DKK). The Offer was subject to a cash consideration cap per Maersk Drilling shareholder of $1,000 and an aggregate cap on cash consideration payable to all Maersk Drilling shareholders of $50 million. Consequently, in relation to the Offer, Maersk Drilling shareholders who elected to receive cash consideration received, as applicable, (a) $1,000 for the applicable portion of their Maersk Drilling Shares and the balance of Maersk Drilling Shares in Topco Shares in accordance with the Exchange Ratio, or (b) the amount corresponding to the total holding of their Maersk Drilling Shares if such holding of Maersk Drilling Shares represents a value equal to or less than $1,000 in the aggregate, subject to any reduction under the aggregate cap described in the preceding sentence. Further, during the Offer, a Maersk Drilling shareholder holding Maersk Drilling Shares exceeding a value of $1,000 in the aggregate could not elect to receive less than $1,000 in cash consideration if the cash consideration in lieu of Topco Shares was elected.
In addition, each Maersk Drilling restricted stock unit award (a “Maersk Drilling RSU Award”) that was outstanding immediately prior to the acceptance time of the Offer (the “Acceptance Time”) was exchanged, at the Acceptance Time, with the right to receive on the same terms and conditions as were applicable under the Maersk Drilling RSU Long-Term Incentive Programme for Executive Management 2019 and the Maersk Drilling RSU Long-Term Incentive Programme 2019 (including any vesting conditions), that number of Topco Shares equal to the product of (1) the number of Maersk Drilling Shares subject to such Maersk Drilling RSU Award immediately prior to the Acceptance Time and (2) the Exchange Ratio, with any fractional Maersk Drilling Shares rounded to the nearest whole share. Upon conversion such Maersk Drilling RSU Awards ceased to represent a right to receive Maersk Drilling Shares (or value equivalent to Maersk Drilling Shares).
The acquisition method of accounting for business combinations was used by Noble in accordance with ASC 805, with Noble expected to be the accounting acquirer of Maersk Drilling. Following the closing of the Business Combination, assuming all remaining Maersk Drilling Shares are issued Topco Shares for the Compulsory Purchase, Noble shareholders are expected to hold a majority interest in the combined company, with former shareholders of Noble and Maersk Drilling owning approximately 53% and 47%, respectively, of outstanding Topco Shares. Assuming all remaining Maersk Drilling Shares are settled in cash for the Compulsory Purchase, the percentage relative to former shareholders of Noble will be higher. The board of directors of Topco is comprised of seven members, including three individuals designated by Noble, three individuals designated by Maersk Drilling, and Robert W. Eifler, current President and Chief Executive Officer of Topco, who previously served as President and Chief Executive Officer of Old Noble. Of the three individuals designated by Maersk Drilling, up to two individuals may be designated by APMH Invest A/S (“AMPH Invest”) (which right APMH Invest will continue to have on a going-forward basis, subject to certain minimum holding conditions). Further, the combined company name, ticker symbol, and headquarters remain consistent with that of Noble. Based on Noble shareholders’ majority equity stake in the combined company, the composition of the board of directors of the combined company, and the other factors noted herein, Noble is expected to be the accounting acquirer of Maersk Drilling in accordance with the guidance of ASC 805.
8
Preliminary Purchase Price Consideration
The following table presents the calculation of preliminary purchase price consideration based on an average of the closing price per share of Noble Shares on the New York Stock Exchange (“NYSE”) for the seven trailing days ended on September 21, 2022, which is used as a proxy for the market price of the Topco Shares at the Closing Date (table below in thousands, except ratios and per share price):
| Preliminary purchase price consideration |
||||
| Maersk Drilling share acceptances per the Offer (net of fractional shares and shares for which cash settlement was elected) |
37,228 | |||
| Exchange Ratio |
1.6137 | |||
|
|
|
|||
| Number of Topco shares issued |
60,075 | |||
| Noble Share Price for seven trailing days ended September 21, 2022 |
$ | 32.55 | ||
|
|
|
|||
| Preliminary purchase price paid for Maersk Drilling shares |
$ | 1,955,441 | ||
| Company Shares for which cash settlement was elected |
16 | |||
| Exchange Ratio |
1.6137 | |||
| Parent VWAP(1) |
$ | 29.00 | ||
|
|
|
|||
| Cash settlement election consideration |
$ | 749 | ||
| Cash payout for fractional shares of Maersk Drilling |
1,000 | |||
| Fair value of replacement Maersk Drilling RSU Awards attributable to the purchase price |
7,397 | |||
|
|
|
|||
| Total preliminary purchase price consideration transferred to Maersk Drilling |
$ | 1,964,587 | ||
| Fair value of Compulsory Purchase |
186,055 | |||
|
|
|
|||
| Total preliminary purchase price consideration |
$ | 2,150,642 | ||
|
|
|
| (1) | Parent VWAP, as defined in the Business Combination Agreement, represents the volume-weighted average closing price of Noble Shares on the NYSE for the ten trading days ending on the date two days prior to the publication of the offer document relating to the Offer. |
The purchase price consideration calculated above and applied in the Pro Forma Financial Information is preliminary and subject to modification based on the final purchase price, which includes any changes to the value of Topco Shares and the number of vested Maersk Drilling RSU Awards at the Closing Date. The final value of Topco’s consideration transferred will be determined based on the actual number of Topco Shares issued, the number of Maersk Drilling Shares outstanding at the Closing Date, and the market price of the Topco Shares at the Closing Date. This will likely result in a difference from the preliminary purchase consideration calculated above and that difference may be material. For example, with other assumptions held constant, an increase or decrease of 10% in the price per Noble Shares would increase or decrease the fair value of the preliminary purchase price by $196.3 million. Increases in the market price of the Topco Shares at the Closing Date over the share price assumption used in the Pro Forma Financial Information would result in the recognition of goodwill. However, a change in the closing share price does not change the number of Topco Shares issued in connection with the Business Combination or the number of underlying Topco Shares issued as replacement for the Maersk Drilling RSU Awards to be granted.
Allocation of Purchase Price Consideration to Asset Acquired and Liabilities Assumed
The allocation of the consideration, including any related tax effects, is preliminary and pending finalization of various estimates, inputs and analyses used in the valuation assessment of the specifically identifiable tangible and intangible assets acquired. Since the Pro Forma Financial Information has been prepared by Topco based on preliminary estimates of consideration and fair values attributable to the Business Combination, the actual amounts eventually recorded in accordance with the acquisition method of accounting may differ materially from the information presented.
9
ASC 805 requires, among other things, that the assets acquired and liabilities assumed in a business combination be recognized at their fair values as of the acquisition date. Any consideration transferred or paid in a business combination in excess of the fair value of the assets acquired and liabilities assumed should be recognized as goodwill, while any excess fair value of the assets acquired and liabilities assumed beyond the consideration transferred or paid in a business combination should be recognized as a bargain purchase gain. Noble management’s estimate as of the date of this filing is that the fair value of the net assets and liabilities acquired is equal to the purchase price. Thus, no goodwill or bargain purchase gain has been recognized on the pro forma condensed combined balance sheet as of June 30, 2022. This preliminary determination is subject to further assessment and adjustments by Noble pending additional information sharing between the parties, more detailed third-party appraisals, natural changes in net assets acquired between the pro forma date used herein and the Closing Date, and other potential adjustments.
In October 2021, the FASB issued Accounting Standards Update (“ASU”) No. 2021-08, Business Combinations (Topic 805): Accounting for Contract Assets and Contract Liabilities from Contracts with Customers (“ASU 2021-08”). Upon the adoption of this update, contract assets and contract liabilities (i.e., deferred revenue) acquired in a business combination will be recognized and measured by the acquirer on the acquisition date in accordance with ASC Topic 606, Revenue from Contracts with Customers (“ASC 606”) as if the acquirer had originated the contracts, which would generally result in an acquirer recognizing and measuring acquired contract assets and contract liabilities consistent with how they were recognized and measured in the acquiree’s financial statements. Noble adopted ASU 2021-08 on January 1, 2022, prior to the consummation of the Business Combination. Therefore, Maersk Drilling’s historical deferred revenue balance as of June 30, 2022 has been included in the preliminary purchase price allocation in accordance with ASU 2021-08 based on a preliminary assessment of the ASC 606 polices of Noble and Maersk Drilling made by Topco.
The preliminary allocation of the purchase price consideration is as follows:
| Estimated Fair Value |
||||
| Total current assets |
$ | 529,712 | ||
| Property and equipment, net |
2,884,569 | |||
| Other noncurrent assets |
33,739 | |||
|
|
|
|||
| Total assets acquired |
3,448,020 | |||
|
|
|
|||
| Total current liabilities |
394,793 | |||
| Long-term debt |
628,314 | |||
| Deferred income taxes |
22,102 | |||
| Other liabilities |
252,169 | |||
|
|
|
|||
| Total liabilities assumed |
1,297,378 | |||
|
|
|
|||
| Net assets acquired & total preliminary purchase price consideration |
$ | 2,150,642 | ||
|
|
|
|||
Compulsory Purchase
Subject to the terms and conditions set forth in the Business Combination Agreement, in the scenario in which more than 90% of shareholders of Maersk Drilling vote to accept the Offer, Topco will initiate and complete the acquisition of the Minority Shares of Maersk Drilling (the “Compulsory Purchase”). The Compulsory Purchase allows Topco to effectuate a 100% merger with Maersk Drilling if more than 90% of Maersk Drilling shareholders approve of the merger. In accordance with the Danish Companies Act, Topco has a legal right and obligation to enforce the Compulsory Purchase of any remaining shares of Maersk Drilling if 90% approval is achieved by Maersk Drilling shareholders.
Acceptances representing more than 90% of the outstanding share capital and voting rights in Maersk Drilling were obtained by Topco in the Offer, thus Topco has exercised its rights under the Danish Companies
10
Act to conduct a Compulsory Purchase of the Maersk Drilling shares held by the remaining minority shareholders in Maersk Drilling. After close of the Business Combination, subject to the terms and conditions set forth in the Business Combination Agreement and in accordance with the Danish Companies Act, Topco will execute and effectuate the Compulsory Purchase. The consideration payable in respect of each minority share shall be equal in value to the Offer Consideration and paid net to the holder thereof in accordance with applicable law (i) either in cash or in Topco Shares (and cash in lieu of fractional Topco Shares, if any) at the election of each holder of minority shares which have responded during the mandatory notice period pursuant to sections 70-72 of the Danish Companies Act, and (ii) in cash only for any holder of Minority Shares who does not transfer their minority shares during the Squeeze-out Period.
As of the date of this filing, management has performed a preliminary assessment of the accounting treatment for the Compulsory Purchase and acquisition of Minority Shares of Maersk Drilling. Based on this preliminary assessment, management has determined that the Compulsory Purchase is a mandatorily redeemable instrument and should be classified as a liability and measured at fair value in accordance with ASC Topic 480, Distinguishing Liabilities from Equity. Additionally, no noncontrolling interest will be recognized by Topco and no earnings will be allocated to the noncontrolling interest. Thus, in effect, Topco will account for the Compulsory Purchase as a financing transaction and recognize 100% of Maersk Drilling’s assets and liabilities.
The Pro Forma Financial Information reflects a liability of $186.1 million for the estimated fair value of the Compulsory Purchase. For pro forma purposes it is assumed that the Compulsory Purchase will be 100% settled in cash. If the Compulsory Purchase was assumed to be 100% settled in Topco Shares, the estimated liability would be approximately $216.6 million, which is estimated based on an average of the closing price per share of Noble Shares on the NYSE for the seven trailing days ended on September 21, 2022 (used as a proxy for the market price of the Topco Shares at the Closing Date), and would result in goodwill being recognized of $30.6 million. The final value of the Compulsory Purchase will be determined based on the market price of the Topco Shares at the Closing Date, the amount of Minority Shares settled in cash, and the amount of Minority Shares settled in Topco Shares. This will likely result in a difference from the preliminary fair value above and that difference may be material. Further, if the Compulsory Purchase was 100% settled in cash on the Closing Date, the pro forma cash balance would be approximately $500.9 million as of June 30, 2022. This preliminary fair value estimate is subject to change as additional information becomes available and as additional analysis is performed by management.
Note 3. Business Combination Transaction Accounting Adjustments
The Business Combination transaction adjustments below are prepared based on the purchase price assumptions presented in Note 2, Business Combination with Maersk Drilling Merger and Estimated Purchase Consideration.
Condensed Combined Statement of Operations
(AA) Depreciation and amortization
Reflects the removal of historical depreciation expense and the recording of the pro forma depreciation expense based on the estimated fair value of Maersk Drilling’s property and equipment upon the Business Combination. For pro forma purposes it is assumed that the Business Combination occurred on January 1, 2021. The pro forma adjustments to depreciation expense for the six months ended June 30, 2022 and for the twelve months ended December 31, 2021 were calculated as follows:
| Six Months Ended June 30, 2022 |
Twelve Months Ended December 31, 2021 |
|||||||
| Removal of historical depreciation expense |
$ | (203,331 | ) | $ | (432,726 | ) | ||
| Pro forma depreciation expense |
72,769 | 145,078 | ||||||
|
|
|
|
|
|||||
| Pro forma adjustment for depreciation and amortization |
$ | (130,562 | ) | $ | (287,648 | ) | ||
|
|
|
|
|
|||||
11
Drilling equipment and facilities are depreciated using the straight-line method over their estimated useful lives as of the date placed in service or date of major refurbishment. Estimated useful lives of the acquired drilling equipment range from three to thirty years. Maersk Drilling’s other property and equipment is depreciated using the straight-line method over useful lives ranging from two to forty years.
(BB) Merger and integration costs
Reflects the recognition of the following items in the pro forma statement of operations for the twelve months ended December 31, 2021:
| (i) | the incremental estimated transaction costs to be incurred directly in connection with the Business Combination, consisting primarily of legal and professional fees. Approximately $12.4 million and $16.9 million of estimated transaction costs are expected to be incurred subsequent to June 30, 2022 by Noble and Maersk Drilling, respectively, and such costs are reflected in the pro forma statement of operations for the twelve months ended December 31, 2021. |
For the six months ended June 30, 2022, $11.4 million and $6.0 million of transaction costs were incurred by Noble and Maersk Drilling, respectively. For the twelve months ended December 31, 2021, $8.3 million and $5.5 million of transaction costs, were incurred by Noble and Maersk Drilling, respectively. The costs above are not expected to recur any period beyond twelve months from the close of the Business Combination;
| (ii) | stock-based compensation expense of $1.9 million due to the accelerated vesting of cash and equity settled Noble RSU Awards held by Noble’s non-employee directors in connection with the Business Combination. This cost is non-recurring and is not expected to have a continuing impact on the combined company’s operating results in future periods; and |
| (iii) | estimated expense of $2.4 million related to the cash-based bonus paid to executive officers and certain other employees of Maersk Drilling upon completion of the Business Combination. This estimate is preliminary and subject to change based on statutory and other legal contingency matters. This cost is non-recurring and is not expected to have a continuing impact on the combined company’s operating results in future periods. |
(CC) Weighted average shares outstanding and income per share
As the Business Combination is being reflected as if it had occurred at the beginning of the period presented, the calculation of weighted average shares outstanding for basic and diluted net income per share assumes that the shares issuable relating to the Business Combination have been outstanding for the entire period presented.
12
The table below presents the components of the numerator and denominator for the pro forma income per share calculation for the periods presented:
| Six Months Ended June 30, 2022 |
Twelve Months Ended December 31, 2021 |
|||||||
| Numerator |
||||||||
| Net income attributable to Topco |
$ | (196,950 | ) | $ | 504,810 | |||
|
|
|
|
|
|||||
| Denominator |
||||||||
| Basic shares: |
||||||||
| Topco shares converted from Noble shares |
62,259 | |
60,152 |
| ||||
| Topco shares converted from Noble Penny Warrants |
6,463 | 6,463 | ||||||
| Topco shares converted from vested Noble RSUs |
89 | 89 | ||||||
| Topco shares converted from Maersk Drilling shares |
60,075 | 60,075 | ||||||
|
|
|
|
|
|||||
| Pro forma weighted average shares outstanding, basic |
128,886 | 126,779 | ||||||
|
|
|
|
|
|||||
| Diluted shares: |
||||||||
| Pro forma weighted average shares outstanding, basic |
128,886 | 126,779 | ||||||
| Dilutive effect of Topco shares convertible from Noble in-the-money warrants |
— | 1,263 | ||||||
| Dilutive effect of Topco shares convertible from unvested Noble RSU Awards |
|
— |
|
3,180 | ||||
| Dilutive effect of Topco shares convertible from unvested Maersk Drilling RSU Awards |
— | 478 | ||||||
|
|
|
|
|
|||||
| Pro forma weighted average shares outstanding, diluted(1) |
128,886 | 131,700 | ||||||
|
|
|
|
|
|||||
| Net income per share attributable to Topco, basic |
$ | (1.53 | ) | $ | 3.98 | |||
| Net income per share attributable to Topco, diluted |
$ | (1.53 | ) | $ | 3.83 | |||
| (1) | For the six months ended June 30, 2022 the diluted pro forma share count excludes the potentially dilutive effect of Topco warrants or Topco Shares convertible from the following instruments because they are anti-dilutive due to the pro forma net loss position: 14,652 Noble warrants, 3,378 unvested Noble RSU Awards, and 478 Maersk Drilling RSU Awards. For the twelve months ended December 31, 2021 the diluted pro forma share count excludes the potentially dilutive effect of Topco warrants convertible from 11,097 out-of-the-money Noble warrants. |
(DD) Interest expense
Reflects the elimination of Maersk Drilling’s historical amortization of deferred financing costs as a result of the elimination of deferred financing costs upon applying purchase accounting. No amortization of deferred financing costs would have been recorded during the six months ended June 30, 2022 and the twelve months ended December 31, 2021 had the Business Combination occurred on January 1, 2021.
13
(EE) Taxes
Reflects the pro forma adjustments to penalties and interest for tax contingencies booked as income tax benefit (provision) or contract drilling services expense as a result of the Business Combination. The income tax benefit (provision) impact was calculated by applying the appropriate statutory tax rates of the respective tax jurisdictions to which the pro forma adjustments relate.
Condensed Combined Balance Sheet
(FF) Cash and cash equivalents
Adjustment reflects (i) payment of estimated cash consideration of $1.7 million, (ii) the payment of estimated transaction costs of $29.3 million for legal, professional and success fees incurred subsequent to June 30, 2022 by Noble and Maersk Drilling related to the Business Combination, (iii) the payment of total accrued transaction costs of $10.7 million as of June 30, 2022 for legal, professional and success fees incurred by Noble and Maersk Drilling in connection with the Business Combination, (iv) the payment of $0.8 million to Noble’s non-employee directors due to the accelerated vesting of cash settled Noble RSU Awards in connection with the Business Combination, and (v) the payment of estimated cash-based bonus of $6.6 million paid to executive officers and certain other employees of Maersk Drilling upon completion of the Business Combination.
(GG) Deferred costs
Represents the elimination of Maersk Drilling’s balances related to deferred costs on drilling contracts for items such as mobilization and precontract costs as a result of applying purchase accounting on a pro forma basis. These deferred costs are written off as there are no further performance obligations related to these costs.
(HH) Property and equipment, net
Represents the preliminary fair value adjustments to property and equipment to reduce the pro forma adjusted historical net book value, on a U.S. GAAP basis, of Maersk Drilling’s floaters, jackup rigs and related equipment to fair value.
(II) Other assets
Represents the elimination of Maersk Drilling’s balances within Other assets of $269.0 million related to deferred regulatory inspection costs incurred for Maersk Drilling rig inspections as a result of applying purchase accounting on a pro forma basis. These deferred regulatory inspection costs are written off as there are no further performance obligations related to these costs.
(JJ) Taxes
Reflects the pro forma adjustments to tax contingencies and income tax related accounts on the balance sheet as a result of the Business Combination.
(KK) Compulsory Purchase liability
Reflects the pro forma adjustment to recognize the Compulsory Purchase liability. See Note 2, Business Combination with Maersk Drilling Merger and Estimated Purchase Consideration—Compulsory Purchase.
(LL) Accounts payable
Adjustment reflects (i) the payment of accrued cash-based bonuses of $4.2 million paid to executive officers and certain other employees of Maersk Drilling upon completion of the Business Combination, and (ii) the payment of total accrued transaction costs of $10.7 million as of June 30, 2022 for legal, professional and success fees incurred by Noble and Maersk Drilling in connection with the Business Combination.
14
(MM) Long-term debt
Represents the elimination of Maersk Drilling’s unamortized deferred financing costs as a result of applying purchase accounting on a pro forma basis.
(NN) Equity
The following adjustments were made to equity captions based on the Business Combination transaction:
| Common stock: |
||||
| Add: Topco converted shares (at par of $0.00001) |
$ | (62,519 | ) | |
|
|
|
|||
| Pro forma adjustment |
$ | (62,519 | ) | |
|
|
|
|||
| Additional paid-in capital: |
||||
| Add: Topco shares issued (less par value) to acquire Maersk Drilling |
$ | 1,955,440 | ||
| Add: Fair value of replacement Maersk Drilling RSU Awards attributable to the purchase price |
7,397 | |||
| Add: Unrecognized compensation costs for vested equity settled Noble non-employee director RSUs |
1,091 | |||
|
|
|
|||
| Pro forma adjustment |
$ | 1,963,928 | ||
|
|
|
|||
| Retained earnings: |
||||
| Remove Maersk Drilling balance |
$ | (4,704,665 | ) | |
| Subtract: Estimated transaction costs for Business Combination. See adjustment (BB) |
(29,748 | ) | ||
| Subtract: Unrecognized compensation costs for vested cash settled Noble non-employee director RSUs |
(1,902 | ) | ||
| Subtract: Estimated Maersk Drilling cash-based transaction bonus |
|
(2,383 |
) | |
|
|
|
|||
| Pro forma adjustment |
$ | (4,738,698 | ) | |
|
|
|
|||
| Accumulated other comprehensive income (loss): |
||||
| Remove Maersk Drilling balance |
$ | 6,456 | ||
|
|
|
|||
| Pro forma adjustment |
$ | 6,456 | ||
|
|
|
15
Note 4. Reclassification of Maersk Drilling’s Historical Financial Statement Presentation
The following reclassifications were made as a result of the Business Combination to conform Maersk Drilling’s historical financial information to Noble’s presentation:
Statement of Operations for the Six Months Ended June 30, 2022
(in thousands)
| Financial Statement Line Item |
Maersk Drilling Historical Presentation |
Maersk Drilling Historical as Presented |
||||||
| Revenue |
$ | 532,478 | $ | — | ||||
| Reimbursables and other |
— | 12,298 | ||||||
| Contract drilling services (revenue) |
— | 520,180 | ||||||
| Cost of sales |
(437,031 | ) | — | |||||
| Contract drilling services (expense) |
— | 391,634 | ||||||
| General and administrative |
— | 38,621 | ||||||
| Reimbursables |
— | 6,776 | ||||||
| Special items |
(11,150 | ) | — | |||||
| Special items |
— | 11,150 | ||||||
| Depreciation and amortization |
(97,831 | ) | — | |||||
| Depreciation and amortization |
— | 97,831 | ||||||
| Impairment reversals (losses), net |
(117,956 | ) | — | |||||
| Loss on impairment |
— | 117,956 | ||||||
| Gain/(loss) on sale of non-current assets |
84 | — | ||||||
| Gain on sale of operating assets, net |
— | (84 | ) | |||||
| Share of results in joint ventures |
(1,021 | ) | — | |||||
| Interest income and other, net |
— | (1,021 | ) | |||||
| Financial expenses, net |
(28,240 | ) | — | |||||
| Interest expense, net of amounts capitalized |
— | (18,081 | ) | |||||
| Interest income and other, net |
— | (9,535 | ) | |||||
| General and administrative |
— | 624 | ||||||
| Tax |
(11,772 | ) | — | |||||
| Income tax benefit (provision) |
— | (11,772 | ) | |||||
|
|
|
|
|
|||||
16
Statement of Operations for the Twelve Months Ended December 31, 2021
(in thousands)
| Financial Statement Line Item |
Maersk Drilling Historical Presentation |
Maersk Drilling Historical as Presented |
||||||
| Revenue |
$ | 1,267,136 | $ | — | ||||
| Reimbursables and other |
— | 34,739 | ||||||
| Contract drilling services (revenue) |
— | 1,232,397 | ||||||
| Cost of sales |
(920,945 | ) | — | |||||
| Contract drilling services (expense) |
— | 818,295 | ||||||
| General and administrative |
— | 84,946 | ||||||
| Reimbursables |
— | 17,704 | ||||||
| Impairment reversals (losses), net |
11,034 | — | ||||||
| Contract drilling services (expense) |
— | (11,034 | ) | |||||
| Special items |
(20,533 | ) | — | |||||
| Special items |
— | 20,533 | ||||||
| Depreciation and amortization |
(213,202 | ) | — | |||||
| Depreciation and amortization |
— | 213,202 | ||||||
| Gain/(loss) on sale of non-current assets |
256,292 | — | ||||||
| Gain on sale of operating assets, net |
— | (256,292 | ) | |||||
| Share of results in joint ventures |
(1,424 | ) | — | |||||
| Interest income and other, net |
— | (1,424 | ) | |||||
| Financial expenses, net |
(61,137 | ) | — | |||||
| Interest expense, net of amounts capitalized |
— | (49,664 | ) | |||||
| Interest income and other, net |
— | (9,815 | ) | |||||
| General and administrative |
— | 1,658 | ||||||
| Tax |
(26,248 | ) | — | |||||
| Income tax benefit (provision) |
— | (26,248 | ) | |||||
|
|
|
|
|
|||||
17
Balance Sheet as of June 30, 2022
(in thousands)
| Financial Statement Line Item |
Maersk Drilling Historical Presentation |
Maersk Drilling Historical as Presented |
||||||
| Cash and bank balances |
$ | 214,044 | $ | — | ||||
| Cash and cash equivalents |
— | 209,326 | ||||||
| Prepaid expenses and other current assets |
— | 4,718 | ||||||
| Trade receivables |
214,121 | — | ||||||
| Accounts receivable, net |
— | 214,121 | ||||||
| Tax receivable |
2,665 | — | ||||||
| Taxes receivable |
— | 2,665 | ||||||
| Other receivables |
49,717 | — | ||||||
| Prepaid expenses and other current assets |
— | 10,958 | ||||||
| Taxes receivable |
— | 23,754 | ||||||
| Accounts receivable, net |
— | 15,005 | ||||||
| Prepayments |
49,147 | — | ||||||
| Prepaid expenses and other current assets |
— | 49,147 | ||||||
| Intangible assets |
20,242 | — | ||||||
| Property and equipment, at cost |
— | 16,279 | ||||||
| Other assets |
— | 3,963 | ||||||
| Right-of-use assets |
20,572 | — | ||||||
| Other assets |
— | 20,572 | ||||||
| Deferred tax (asset) |
16,697 | — | ||||||
| Other assets |
— | 16,697 | ||||||
| Property, plant and equipment |
2,621,729 | — | ||||||
| Property and equipment, at cost |
— | 8,668,033 | ||||||
| Accumulated depreciation |
— | (6,315,334 | ) | |||||
| Other assets |
269,030 | |||||||
| Financial non-current assets, etc. |
8,571 | — | ||||||
| Other assets |
— | 8,571 | ||||||
| Assets held for sale |
39,338 | |||||||
| Assets held for sale |
39,338 | |||||||
| Trade payables |
137,391 | — | ||||||
| Accounts payable |
— | 137,391 | ||||||
| Deferred income |
37,704 | — | ||||||
| Other current liabilities |
— | 37,704 | ||||||
| Provisions (current) |
1,500 | — | ||||||
| Other current liabilities |
— | 1,500 | ||||||
| Borrowings, current |
136,048 | — | ||||||
| Current maturities of long-term debt |
— | 129,925 | ||||||
| Other current liabilities |
— | 6,123 | ||||||
| Other payables |
50,344 | — | ||||||
| Taxes payable |
— | 18,123 | ||||||
| Interest payable |
— | 656 | ||||||
| Accrued payroll and related costs |
— | 25,587 | ||||||
| Other current liabilities |
— | 5,978 | ||||||
| Tax payable |
61,684 | — | ||||||
| Taxes payable |
9,584 | |||||||
| Other liabilities |
— | 52,100 | ||||||
18
| Financial Statement Line Item |
Maersk Drilling Historical Presentation |
Maersk Drilling Historical as Presented |
||||||
| Borrowings, non-current |
632,846 | — | ||||||
| Long-term debt |
— | 618,809 | ||||||
| Other liabilities |
— | 14,037 | ||||||
| Provisions (non-current) |
8,502 | — | ||||||
| Other liabilities |
— | 8,502 | ||||||
| Deferred tax (liability) |
26,080 | — | ||||||
| Deferred income taxes |
— | 26,080 | ||||||
| Share capital |
62,520 | — | ||||||
| Common stock |
— | 62,520 | ||||||
| Reserves and retained earnings |
2,102,224 | — | ||||||
| Retained earnings (accumulated deficit) |
— | 2,108,680 | ||||||
| Accumulated other comprehensive income (loss) |
— | (6,456 | ) | |||||
|
|
|
|
|
|||||
Note 5. Maersk Drilling Rig Disposal
The adjustments outlined below reflect adjustments to Maersk Drilling’s historical income statement for the year ended December 31, 2021 assuming the Maersk Drilling Rig Disposal had occurred on January 1, 2021. For the year ended December 31, 2021, Maersk Drilling recognized a non-recurring after-tax gain of $206.1 million on the Maersk Drilling Rig Disposal.
(A) Maersk Drilling Inspirer rig historical activity
Reflects the pro forma adjustments to eliminate the historical income statement activity attributed to the disposed Inspirer rig, which included foreign currency revaluation gains of $1.1 million presented within interest expense.
(B) Interest expense
Reflects the elimination of historical interest expense of $2.3 million associated with Maersk Drilling’s term loan facility, as the Inspirer rig triggered an $80.0 million mandatory repayment of Maersk Drilling’s outstanding borrowings under its term loan facility.
Note 6. Maersk Drilling IFRS to U.S. GAAP Conversion
The Pro Forma Financial Information reflects the material adjustments necessary to convert Maersk Drilling’s historical financial statements to U.S. GAAP and conform to Noble’s accounting policies based on an initial policy conversion assessment performed by management. Management is currently performing a comprehensive review of the two entities’ accounting policies. The adjustments outlined below are preliminary and are subject to change as additional information becomes available and as additional analysis is performed.
(C) Leases
Under IFRS, Maersk Drilling recognized right of use assets and lease liabilities for all leases, with the exceptions described in the paragraph below. However, as required by IFRS, Maersk Drilling did not distinguish between operating leases and finance leases and accounted for all leases recorded on the balance sheets similarly to finance leases under U.S. GAAP. Maersk Drilling recorded depreciation on all right-of-use assets and interest expense on all lease liabilities, while a straight-line operating expense is presented for operating leases under U.S. GAAP.
19
IFRS includes an exemption for leases of low-value assets, where a lessee may elect to recognize lease payments on a straight-line basis over the lease term instead of capitalizing them on the balance sheet. This exemption can be elected on a lease-by-lease basis. U.S. GAAP does not have explicit exemptions for leases of low-value assets, however, Maersk Drilling’s leases of low-value assets were not deemed material for purposes of the Pro Forma Financial Information.
The following table presents the pro forma adjustments to reclassify Maersk Drilling’s historical interest on lease liabilities and depreciation on right-of-use assets to general and administrative expense and contract drilling services expense to align with Noble’s accounting treatment under U.S. GAAP:
| Six Months Ended June 30, 2022 |
Twelve Months Ended December 31, 2021 |
|||||||
| Elimination of Maersk Drilling’s historical interest on lease liabilities |
$ | 422 | $ | 1,072 | ||||
| Elimination of Maersk Drilling’s historical depreciation on right-of-use assets |
(3,370 | ) | (6,586 | ) | ||||
| Reclassification of amounts to general and administrative expense |
1,364 | 2,794 | ||||||
| Reclassification of amounts to contract drilling services expense |
2,428 | 4,864 | ||||||
(D) Special items
Maersk Drilling has historically chosen to present as a separate line item within its historical income statements called ‘special items’ that was intended to capture the impact from non-recurring, infrequent or unusual events on the statement of operations. Such presentation of special items is disallowed under U.S. GAAP. The following table presents the pro forma adjustments to reclassify Maersk Drilling’s historical expenses presented within special items to general and administrative expense and contract drilling services expense to align with Noble’s treatment of such items under U.S. GAAP:
| Six Months Ended June 30, 2022 |
Twelve Months Ended December 31, 2021 |
|||||||
| Special items reclassified to merger and integration costs |
$ | 8,619 | $ | 7,592 | ||||
| Special items reclassified to contract drilling services expense |
2,531 | 13,135 | ||||||
|
|
|
|
|
|||||
| Total Maersk Drilling special items |
$ | 11,150 | $ | 20,727 | ||||
|
|
|
|
|
|||||
(E) Impairment of property and equipment
Under IFRS, an asset must not be carried in the financial statements at more than the highest amount to be recovered through its use or sale. If the carrying amount of an asset exceeds the asset’s recoverable amount (i.e., the higher of an asset’s or cash-generating unit’s fair value less costs of disposal or its value in use), the asset is deemed to be impaired and an impairment loss is recognized immediately in profit or loss and the value of the cash-generating unit, or the carrying amount of the asset, is reduced.
Under U.S. GAAP, an impairment loss is triggered for long-lived assets only if the asset’s, or asset group’s, carrying amount is not recoverable (i.e., the asset or asset group’s carrying amount is less than the undiscounted future cash flows expected to be derived from the asset or asset group). Additionally, the reversal of an impairment loss is not permitted. As a result of the differences in impairment calculation, an updated impairment
20
test was prepared for Maersk Drilling as if U.S. GAAP method was applied in 2016 through June 30, 2022 to assess the effect of the different accounting treatment between IFRS and U.S. GAAP for impairment. 2016 was selected as the beginning period for the assessment because it was the earliest year in which an impairment on its property and equipment occurred and had a continuing impact on the balance as of June 30, 2022. The analysis has been performed by adjusting the discount rate to zero percent in the impairment models that were used under IFRS and recalculating the impact on depreciation expense and deferred taxes for any impairments that would not have been recorded under U.S. GAAP.
The following table reflects the pro forma adjustments related to impairment to align Maersk Drilling’s historical treatment of impairment under IFRS to the treatment under U.S. GAAP, including (i) the elimination of any previously recognized impairment reversals, (ii) increasing the carrying value of property and equipment to reverse impairment losses which would not have been recorded under U.S. GAAP in prior periods, (iii) adjusting accumulated depreciation balance as of June 30, 2022 and depreciation expense for six months ended June 30, 2022 and twelve months ended December 31, 2021 as a result of the increase in carrying value of property and equipment, and (iv) any related tax effects from the aforementioned adjustments. The remaining impairment charge in the pro forma statement or operations for the period ended June 30, 2022 of $74.6 million represents the incremental charge for two rigs impaired under U.S. GAAP once all other pro forma IFRS to U.S. GAAP adjustments have been recognized.
| Pro forma Condensed Combined Balance Sheet | As of June 30, 2022 | |||
| Increase to carrying amount of property and equipment |
$ | 3,677,277 | ||
| Increase to accumulated depreciation |
(945,866 | ) | ||
| Decrease to deferred income tax assets |
(8,262 | ) | ||
| Increase to deferred income tax liabilities |
68,828 | |||
| Pro forma Condensed Combined Statements of Operations | Six Months Ended June 30, 2022 |
Twelve Months Ended December 31, 2021 |
||||||
| Increase to depreciation expense |
$ | 108,870 | $ | 234,077 | ||||
| Recognize additional impairment losses under U.S. GAAP impairment model |
74,639 | — | ||||||
| Cumulative adjustment to income tax benefit (provision) |
4,406 | 10,442 | ||||||
(F) Income Taxes
Reflects conversion adjustments recorded for tax positions that are not probable to be sustained under IFRS upon a tax audit and would therefore be fully reserved under U.S. GAAP. Under IFRS, such tax positions are recorded at either a weighted average or the most-likely outcome; whereas under U.S. GAAP, such positions are fully reserved.
Note 7. Noble Pro Forma Results of Operations
The following table provides for the Noble pro forma results of operations for the six months ended June 30, 2022 and twelve months ended December 31, 2021 assuming the Noble 2022 Rig Disposal, the Noble Reorganization, the Pacific Drilling Merger, and the Noble 2021 Rig Disposal had occurred on January 1, 2021.
21
Unaudited Pro Forma Condensed Combined Statement of Operations
June Months Ended June 30, 2022
(in thousands, except per share amounts)
| Six Months Ended June 30, 2022 |
Noble 2022 Rig Disposal Accounting Adjustments |
Noble Pro Forma |
||||||||||||||||||
| Operating revenues |
||||||||||||||||||||
| Contract drilling services (revenue) |
$ | 457,498 | $ | (24,115 | ) | (n) | $ | 433,383 | ||||||||||||
| Reimbursables and other |
27,885 | (3,964 | ) | (n) (o) | 23,921 | |||||||||||||||
|
|
|
|
|
|
|
|||||||||||||||
| 485,383 | (28,079 | ) | 457,304 | |||||||||||||||||
|
|
|
|
|
|
|
|||||||||||||||
| Operating costs and expense |
||||||||||||||||||||
| Contract drilling services (expense) |
344,228 | (28,670 | ) | (n) (p) | 315,558 | |||||||||||||||
| Reimbursables |
23,811 | (3,492 | ) | (n) | 20,319 | |||||||||||||||
| Depreciation and amortization |
52,241 | (11,907 | ) | (n) | 40,334 | |||||||||||||||
| General and administrative |
34,211 | — | 34,211 | |||||||||||||||||
| Merger and integration costs |
18,578 | — | 18,578 | |||||||||||||||||
| Gain on sale of operating assets, net |
(3,459 | ) | — | (3,459 | ) | |||||||||||||||
| Hurricane losses |
2,805 | — | 2,805 | |||||||||||||||||
|
|
|
|
|
|
|
|||||||||||||||
| 472,415 | (44,069 | ) | 428,346 | |||||||||||||||||
|
|
|
|
|
|
|
|||||||||||||||
| Operating income (loss) |
12,968 | 15,990 | 28,958 | |||||||||||||||||
| Other income (expense) |
||||||||||||||||||||
| Interest expense, net of amounts capitalized |
(15,395 | ) | — | (15,395 | ) | |||||||||||||||
| Gain on extinguishment of debt, net |
— | — | — | |||||||||||||||||
| Interest income and other, net |
1,531 | — | 1,531 | |||||||||||||||||
| Reorganization items, net |
— | — | — | |||||||||||||||||
| Gain on bargain purchase |
— | — | — | |||||||||||||||||
|
|
|
|
|
|
|
|||||||||||||||
| Income (loss) from continuing operations before income taxes |
(896 | ) | 15,990 | 15,094 | ||||||||||||||||
| Income tax benefit (provision) |
1,297 | (348 | ) | (r) | 949 | |||||||||||||||
|
|
|
|
|
|
|
|||||||||||||||
| Net income (loss) |
$ | 401 | $ | 15,642 | $ | 16,043 | ||||||||||||||
|
|
|
|
|
|
|
|||||||||||||||
| Basic net income (loss) per share |
$ | 0.01 | $ | 0.23 | (j) | |||||||||||||||
| Diluted net income (loss) per share |
$ | 0.00 | $ | 0.21 | (j) | |||||||||||||||
| Weighted average shares outstanding |
||||||||||||||||||||
| Basic |
68,722 | 68,722 | (j) | |||||||||||||||||
| Diluted |
81,285 | 77,059 | (j) | |||||||||||||||||
22
Unaudited Pro Forma Condensed Combined Statement of Operations
Twelve Months Ended December 31, 2021
(in thousands, except per share amounts)
| Noble Reorganization | ||||||||||||||||||||||||||||||||||||||
| Noble Predecessor Historical Period From January 1, 2021 through February 5, 2021 |
Noble Successor Historical Period From February 6, 2021 through December 31, 2021 |
Twelve Months Ended December 31, 2021 |
Reorganization Adjustments |
Fresh Start Adjustments |
Pro Forma Noble (including reorganization items, net) |
Removal of Noble Reorganization items, net |
Noble Post- reorganization Pro Forma |
|||||||||||||||||||||||||||||||
| Operating revenues |
||||||||||||||||||||||||||||||||||||||
| Contract drilling services (revenue) |
$ | 74,051 | $ | 708,131 | $ | 782,182 | $ | — | $ | (5,210 | ) | (c) | $ | 776,972 | $ | — | $ | 776,972 | ||||||||||||||||||||
| Reimbursables and other |
3,430 | 62,194 | 65,624 | — | — | 65,624 | — | 65,624 | ||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||||
| 77,481 | 770,325 | 847,806 | — | (5,210 | ) | 842,596 | — | 842,596 | ||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||||
| Operating costs and expense |
||||||||||||||||||||||||||||||||||||||
| Contract drilling services (expense) |
46,965 | 639,442 | 686,407 | 920 | (a) | — | 687,327 | — | 687,327 | |||||||||||||||||||||||||||||
| Reimbursables |
2,737 | 55,832 | 58,569 | — | — | 58,569 | — | 58,569 | ||||||||||||||||||||||||||||||
| Depreciation and amortization |
20,622 | 89,535 | 110,157 | — | (11,123 | ) | (d) | 99,034 | — | 99,034 | ||||||||||||||||||||||||||||
| General and administrative |
5,727 | 62,476 | 68,203 | 803 | (a) | — | 69,006 | — | 69,006 | |||||||||||||||||||||||||||||
| Merger and integration costs |
— | 24,792 | 24,792 | — | — | 24,792 | — | 24,792 | ||||||||||||||||||||||||||||||
| Gain on sale of operating assets, net |
— | (185,934 | ) | (185,934 | ) | — | — | (185,934 | ) | — | (185,934 | ) | ||||||||||||||||||||||||||
| Hurricane losses |
— | 23,350 | 23,350 | — | — | 23,350 | — | 23,350 | ||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||||
| 76,051 | 709,493 | 785,544 | 1,723 | (11,123 | ) | 776,144 | — | 776,144 | ||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||||
| Operating income (loss) |
1,430 | 60,832 | 62,262 | (1,723 | ) | 5,913 | 66,452 | — | 66,452 | |||||||||||||||||||||||||||||
| Other income (expense) |
||||||||||||||||||||||||||||||||||||||
| Interest expense, net of amounts capitalized |
(229 | ) | (31,735 | ) | (31,964 | ) | (3,518 | ) | (b) | — | (35,482 | ) | — | (35,482 | ) | |||||||||||||||||||||||
| Gain on extinguishment of debt, net |
— | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||
| Interest income and other, net |
399 | 10,945 | 11,344 | — | — | 11,344 | — | 11,344 | ||||||||||||||||||||||||||||||
| Reorganization items, net |
252,051 | — | 252,051 | — | — | 252,051 | (252,051 | ) | (k) | — | ||||||||||||||||||||||||||||
| Gain on bargain purchase |
— | 62,305 | 62,305 | — | — | 62,305 | — | 62,305 | ||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||||
| Income (loss) from continuing operations before income taxes |
253,651 | 102,347 | 355,998 | (5,241 | ) | 5,913 | 356,670 | (252,051 | ) | 104,619 | ||||||||||||||||||||||||||||
| Income tax benefit (provision) |
(3,423 | ) | (365 | ) | (3,788 | ) | 353 | (e) | 1,094 | (e) | (2,341 | ) | — | (2,341 | ) | |||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||||
| Net income (loss) |
$ | 250,228 | $ | 101,982 | $ | 352,210 | $ | (4,888 | ) | $ | 7,007 | $ | 354,329 | $ | (252,051 | ) | $ | 102,278 | ||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||||
| Basic net income (loss) per share |
$ | 1.00 | $ | 1.61 | ||||||||||||||||||||||||||||||||||
| Diluted net income (loss) per share |
$ | 0.98 | $ | 1.51 | ||||||||||||||||||||||||||||||||||
| Weighted average shares outstanding |
||||||||||||||||||||||||||||||||||||||
| Basic |
251,115 | 63,186 | ||||||||||||||||||||||||||||||||||||
| Diluted |
256,571 | 67,628 | ||||||||||||||||||||||||||||||||||||
23
| Pacific Drilling Merger | ||||||||||||||||||||||||||||||||||||||||||
| Noble Post- reorganization Pro Forma |
Pacific Successor Historical From January 1, 2021 through April 15, 2021 |
Pacific Drilling Merger Transaction Accounting Adjustments |
Noble /Pacific Pro Forma Combined |
Noble 2021 Rig Disposal Accounting Adjustments |
Noble 2022 Rig Disposal Accounting Adjustments |
Noble Pro Forma |
||||||||||||||||||||||||||||||||||||
| Operating revenues |
||||||||||||||||||||||||||||||||||||||||||
| Contract drilling services (revenue) |
$ | 776,972 | $ | 30,893 | $ | — | $ | 807,865 | $ | (84,546 | ) | (l) |
$ | (48,369 | ) | (n) | $ | 674,950 | ||||||||||||||||||||||||
| Reimbursables and other |
65,624 | 1,791 | — | 67,415 | (1,874 | ) | (l) |
(3,321 | ) | (n) (o) | 62,220 | |||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||||||||||
| 842,596 | 32,684 | — | 875,280 | (86,420 | ) | (51,690 | ) | 737,170 | ||||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||||||||||
| Operating costs and expense |
||||||||||||||||||||||||||||||||||||||||||
| Contract drilling services (expense) |
687,327 | 43,586 | 2,108 | (f) | 733,021 | (56,746 | ) | (l) |
(113,710 | ) | (n) (p) | 562,565 | ||||||||||||||||||||||||||||||
| Reimbursables |
58,569 | 1,090 | — | 59,659 | (1,008 | ) | (l) |
(3,086 | ) | (n) | 55,565 | |||||||||||||||||||||||||||||||
| Depreciation and amortization |
99,034 | 12,026 | (7,656 | ) | (g) | 103,404 | (7,593 | ) | (l) |
(20,836 | ) | (n) | 74,975 | |||||||||||||||||||||||||||||
| General and administrative |
69,006 | 25,441 | — | 94,447 | — | — | 94,447 | |||||||||||||||||||||||||||||||||||
| Merger and integration costs |
24,792 | — | — | 24,792 | — | — | 24,792 | |||||||||||||||||||||||||||||||||||
| Gain on sale of operating assets, net |
(185,934 | ) | — | — | (185,934 | ) | — | (73,499 | ) | (q) | (259,433 | ) | ||||||||||||||||||||||||||||||
| Hurricane losses |
23,350 | — | — | 23,350 | — | — | 23,350 | |||||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||||||||||
| 776,144 | 82,143 | (5,548 | ) | 852,739 | (65,347 | ) | (211,131 | ) | 576,261 | |||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||||||||||
| Operating income (loss) |
66,452 | (49,459 | ) | 5,548 | 22,541 | (21,073 | ) | 159,441 | 160,909 | |||||||||||||||||||||||||||||||||
| Other income (expense) |
||||||||||||||||||||||||||||||||||||||||||
| Interest expense, net of amounts capitalized |
(35,482 | ) | (371 | ) | 371 | (h) | (35,482 | ) | 10,683 | (l) (m) |
— | (24,799 | ) | |||||||||||||||||||||||||||||
| Gain on extinguishment of debt, net |
— | (2,664 | ) | — | (2,664 | ) | — | — | (2,664 | ) | ||||||||||||||||||||||||||||||||
| Interest income and other, net |
11,344 | (25 | ) | — | 11,319 | — | — | 11,319 | ||||||||||||||||||||||||||||||||||
| Reorganization items, net |
— | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||
| Gain on bargain purchase |
62,305 | — | — | 62,305 | — | — | 62,305 | |||||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||||||||||
| Income (loss) from continuing operations before income taxes |
104,619 | (52,519 | ) | 5,919 | 58,019 | (10,390 | ) | 159,441 | 207,070 | |||||||||||||||||||||||||||||||||
| Income tax benefit (provision) |
(2,341 | ) | (263 | ) | (8 | ) | (i) | (2,612 | ) | 1,544 | (l) |
(3,946 | ) | (r) | (5,014 | ) | ||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||||||||||
| Net income (loss) |
$ | 102,278 | $ | (52,782 | ) | $ | 5,911 | $ | 55,407 | $ | (8,846 | ) | $ | 155,495 | $ | 202,056 | ||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||||||||||
| Basic net income (loss) per share |
$ | 3.03 | (j) | |||||||||||||||||||||||||||||||||||||||
| Diluted net income (loss) per share |
$ | 2.84 | (j) | |||||||||||||||||||||||||||||||||||||||
| Weighted average shares outstanding |
||||||||||||||||||||||||||||||||||||||||||
| Basic |
66,615 | (j) | ||||||||||||||||||||||||||||||||||||||||
| Diluted |
71,058 | (j) | ||||||||||||||||||||||||||||||||||||||||
24
Noble Reorganization
Reorganization Adjustments
(a) Stock based compensation
Reflects an increase in stock-based compensation expense based on the new awards issued in connection with the Noble Reorganization.
(b) Interest expense
The adjustment reflects change of interest expense for the Predecessor as a result of the Noble Plan. Under the Noble Plan, all amounts outstanding under the 2017 Credit Facility (as defined in the 2021 Form 10-K), including the interest, were paid in full and all of Noble’s then outstanding senior notes were settled for the Noble Shares, Tranche 1 Warrants and Tranche 2 Warrants (each as defined in the 2021 Form 10-K). Upon emergence, Noble entered into a senior secured revolving credit agreement (the “Revolving Credit Agreement”) that provides for a $675.0 million senior secured revolving credit facility (with a $67.5 million sublimit for the issuance of letters of credit thereunder) (the “Successor Revolving Credit Facility”) and issued $216.0 million senior secured second lien notes (the “Notes”) with an interest rate of LIBOR + 4.75% and 11% payable semi-annually, respectively. The pro forma adjustment to interest expense was calculated as follows:
| Twelve Months Ended 31 December 2021 |
||||
| Reversal of Predecessor interest expense |
$ | (229 | ) | |
| Pro forma interest on the Successor Revolving Credit Facility and Notes |
3,505 | |||
| Amortization of Successor deferred financing costs |
242 | |||
|
|
|
|||
| Pro forma adjustment for interest expense |
$ | 3,518 | ||
|
|
|
|||
Assuming an increase in interest rates on the Revolving Credit Agreement and Notes of 1/8%, pro forma interest would increase by $0.1 million.
Fresh Start Adjustments
(c) Amortization of favorable contract
Adjustment reflects the amortization of favorable contracts with customers as a result of adopting fresh start accounting. The remaining useful life of the favorable contracts range between 1-3 years.
(d) Depreciation and amortization
Reflects the pro forma decrease in depreciation expense based on new preliminary asset values for the Predecessor as a result of adopting fresh start accounting. The pro forma adjustment to depreciation expense was calculated as follows:
| Twelve Months Ended 31 December 2021 |
||||
| Removal of Predecessor depreciation expense |
$ | (20,622 | ) | |
| Pro forma depreciation expense |
9,499 | |||
|
|
|
|||
| Pro forma adjustment for depreciation and amortization |
$ | (11,123 | ) | |
|
|
|
|||
25
Drilling equipment and facilities are depreciated using the straight-line method over their estimated useful lives as of the date placed in service or date of major refurbishment. Estimated useful lives of Noble’s drilling equipment range from three to thirty years. Other property and equipment is depreciated using the straight-line method over useful lives ranging from two to forty years.
(e) Income tax
Reflects the pro forma adjustment to tax expense as a result of reorganization adjustments and adopting fresh start accounting. The income tax impact was calculated by applying the appropriate statutory tax rate of the respective tax jurisdictions to which the pro forma adjustments relate, and which are reasonably expected to occur.
Pacific Successor Historical from January 1, 2021 through April 15, 2021
The following reclassifications were made as a result of the Pacific Drilling Merger to conform Pacific’s historical financial information to Noble’s presentation:
| Financial Statement Line Item |
Pacific Drilling Historical Presentation |
Pacific Drilling Historical as Presented |
||||||
| Contract drilling services |
$ | 1,791 | $ | — | ||||
| Reimbursables and other |
— | 1,791 | ||||||
| Operating expense |
44,959 | — | ||||||
| Contract drilling services (expense) |
— | 43,586 | ||||||
| Reimbursables |
— | 1,090 | ||||||
| Depreciation and amortization |
— | 283 | ||||||
| Other expense |
(25 | ) | — | |||||
| Interest income and other, net |
— | (25 | ) | |||||
Pacific Drilling Merger
(f) Contract drilling services
Noble has an accounting policy to expense costs for materials and supplies as received or deployed to the drilling units, while Pacific’s historical policy was to carry inventory at average cost and recognize them in earnings upon consumption. Adjustment reflects the change in contract drilling services expense related to Pacific’s materials and supplies inventory during the period from January 1, 2021 through April 15, 2021 to align with Noble’s treatment of such costs.
(g) Depreciation and amortization
Reflects the replacement of historical depreciation expense with the pro forma depreciation expense based on the estimated fair value of Pacific’s property and equipment upon the Pacific Drilling Merger. For pro forma purposes it is assumed that the Pacific Drilling Merger occurred on January 1, 2021. The pro forma adjustment to depreciation expense for the twelve months ended December 31, 2021 was calculated as follows:
| Twelve Months Ended 31 December 2021 |
||||
| Removal of historical depreciation expense |
$ | (12,026 | ) | |
| Pro forma depreciation expense |
4,370 | |||
|
|
|
|||
| Pro forma adjustment for depreciation and amortization |
$ | (7,656 | ) | |
|
|
|
|||
26
Drilling equipment and facilities are depreciated using the straight-line method over their estimated useful lives as of the date placed in service or date of major refurbishment. Estimated useful lives of Noble’s drilling equipment range from three to thirty years. Other property and equipment is depreciated using the straight-line method over useful lives ranging from two to forty years.
(h) Interest expense
Reflects the elimination of interest expense recorded at the successor entity of Pacific which was associated with the new senior secured delayed draw term loan facility entered into on December 31, 2020. In connection with the Pacific Drilling Merger, the facility was terminated, and the related interest expense removed from the unaudited pro forma condensed combined statement of operations.
(i) Income tax
Reflects the pro forma adjustment to tax expense. The income tax impact was calculated by applying the appropriate statutory tax rates of the respective tax jurisdictions to which the pro forma adjustments relate.
(j) Weighted average shares outstanding
The Noble pro forma weighted average shares outstanding calculation for the six months ended June 30, 2022 and twelve months ended December 31, 2021 assumes the Noble Reorganization, the Pacific Drilling Merger, the Noble 2021 Rig Disposal, and the Noble 2022 Rig Disposal had occurred on January 1, 2021. The table below presents the components of the numerator and denominator for the Noble pro forma income per share calculation for the periods presented:
| Six Months Ended June 30, 2022 |
Twelve Months Ended December 31, 2021 |
|||||||
| Numerator |
||||||||
| Net income attributable to Noble |
$ | 16,043 | $ | 202,056 | ||||
|
|
|
|
|
|||||
| Denominator |
||||||||
| Basic shares: |
||||||||
| Noble ordinary shares (excluding penny warrants) |
62,259 | 60,152 | ||||||
| Noble penny warrants |
6,463 | 6,463 | ||||||
|
|
|
|
|
|||||
| Pro forma weighted average shares outstanding, basic |
68,722 | 66,615 | ||||||
|
|
|
|
|
|||||
| Diluted shares: |
||||||||
| Pro forma weighted average shares outstanding, basic |
68,722 | 66,615 | ||||||
| Dilutive effect of Noble in-the-money warrants |
4,959 | 1,263 | ||||||
| Dilutive effect from unvested Noble RSU Awards |
3,378 | 3,180 | ||||||
|
|
|
|
|
|||||
| Pro forma weighted average shares outstanding, diluted |
77,059 | 71,058 | ||||||
|
|
|
|
|
|||||
| Net income per share attributable to Noble, basic |
$ | 0.23 | $ | 3.03 | ||||
| Net income per share attributable to Noble, diluted |
$ | 0.21 | $ | 2.84 | ||||
27
(k) Reorganization items
Reflects the removal of Reorganization items within the Predecessor period of Noble. All expenses are directly related to the Noble Reorganization and are not expected to have a continuing impact in future periods.
Noble 2021 Rig Disposal
The adjustments outlined below reflect adjustments to Noble’s historical statement of operations for the twelve months ended December 31, 2021 assuming the Noble 2021 Rig Disposal had occurred on January 1, 2021. For the twelve months ended December 31, 2021, Noble recognized a non-recurring after-tax gain of $168.3 million on the Noble 2021 Rig Disposal.
(l) Noble 2021 Rig Disposal historical activity
Reflects the pro forma adjustments to eliminate the historical activity attributed to the Noble 2021 Rig Disposal from the unaudited pro forma condensed combined statement of operations.
(m) Interest expense
Reflects the elimination of total interest expense of $10.7 million associated with the Successor Revolving Credit Facility, including $1.2 million of pro forma interest expense recorded for the Noble Predecessor historical period and $9.5 million of interest expense recorded during the Noble Successor historical period. The Successor Revolving Credit Facility was fully paid down using the cash proceeds obtained through the Noble 2021 Rig Disposal.
Noble 2022 Rig Disposal
The adjustments outlined below reflect adjustments to Noble’s historical statements of operations for the six months ended June 30, 2022 and twelve months ended December 31, 2021 assuming the Noble 2022 Rig Disposal had occurred on January 1, 2021.
(n) Noble 2022 Rig Disposal historical activity
Reflects the pro forma adjustments to eliminate the historical activity attributed to the disposed assets from the unaudited pro forma condensed combined statement of operations. The historical activity associated with the NLN Rig has not been eliminated as Noble is entitled to third-party contract drilling revenues and is responsible for third-party contract drilling expenses under the terms of NLN Charter Agreement with Shelf Drilling during the term of the agreement.
(o) Transitional Services Agreement
Reflects the estimated revenue of $0.8 million attributable to Noble’s transitional services agreement with Shelf Drilling to be entered into upon completion of the transactions contemplated under the Asset Purchase Agreement. These transitional services are not expected to recur in any period beyond twelve months from the close of the Noble 2022 Rig Disposal.
(p) Bareboat Charter
Noble will incur a charge for the charter rate value related to the NLN Charter Agreement with Shelf Drilling in periods where the activities associated with the NLN Rig result in income and be reimbursed for losses in periods where activities associated with the rig results in a loss. Assuming the Noble 2022 Rig Disposal occurred on January 1, 2021 for pro forma purposes resulted in a charter rate value charge of $7.3 million for the six months ended June 30, 2022 and a reimbursement of $40.1 million for the twelve months ended December 31, 2021.
28
(q) Gain on sale of Noble 2022 Rig Disposal
Reflects the estimated pre-tax gain on the Noble 2022 Rig Disposal. This adjustment includes total cash consideration of $375.0 million less (i) the cost basis of the net assets and liabilities divested of $284.2 million and (ii) approximately $7.9 million of estimated transaction costs to be incurred subsequent to June 30, 2022 by Noble in connection with the rig disposal, which were not reflected in Noble’s historical statement of operations. This adjustment excludes $1.1 million of transaction costs incurred in the six months ended June 30, 2022 by Noble in connection with the Noble 2022 Rig Disposal. No transaction costs related to the Noble 2022 Rig Disposal were incurred by Noble during 2021. These transaction costs and gain are not expected to recur in any period beyond twelve months from the close of the Noble 2022 Rig Disposal. The calculation of the gain on sale is preliminary and does not reflect final working capital and other post-closing adjustments. The actual gain or loss on the Noble 2022 Rig Disposal based on the Remedy Proposals could materially differ from the assumptions used herein.
(r) Income tax
Reflects the pro forma adjustments to tax expense related to the Noble 2022 Rig Disposal.
Note 8. Noble Pro Forma Financial Position
The following table provides for the Noble pro forma financial position assuming the Noble 2022 Rig Disposal had occurred on June 30, 2022. No pro forma adjustments were made for the Completed Transactions in the table below because the effects of these transactions were fully reflected in the historical balance sheet of Noble as of June 30, 2022.
29
Unaudited Pro Forma Condensed Combined Balance Sheet
As of June 30, 2022
(in thousands)
| Noble Successor Historical |
Noble 2022 Rig Disposal |
Noble Pro Forma |
||||||||||||
| Assets |
||||||||||||||
| Current assets: |
||||||||||||||
| Cash and cash equivalents |
$ | 160,175 | $ | 367,078 | (aa) |
$ | 527,253 | |||||||
| Accounts receivable, net |
258,780 | — | 258,780 | |||||||||||
| Taxes receivable |
16,906 | — | 16,906 | |||||||||||
| Prepaid expenses and other current assets |
44,794 | (4,568 | ) | (bb) |
40,226 | |||||||||
|
|
|
|
|
|
|
|||||||||
| Total current assets |
480,655 | 362,510 | 843,165 | |||||||||||
|
|
|
|
|
|
|
|||||||||
| Intangible assets |
33,495 | — | 33,495 | |||||||||||
| Property and equipment, at cost |
1,624,636 | (318,476 | ) | (bb) |
1,306,160 | |||||||||
| Accumulated depreciation |
(128,100 | ) | 29,575 | (bb) |
(98,525 | ) | ||||||||
|
|
|
|
|
|
|
|||||||||
| Property and equipment, net |
1,496,536 | (288,901 | ) | 1,207,635 | ||||||||||
|
|
|
|
|
|
|
|||||||||
| Other assets |
87,260 | (5,562 | ) | (bb)(cc) |
81,698 | |||||||||
|
|
|
|
|
|
|
|||||||||
| Total assets |
$ | 2,097,946 | $ | 68,047 | $ | 2,165,993 | ||||||||
|
|
|
|
|
|
|
|||||||||
| Current liabilities |
||||||||||||||
| Accounts payable |
$ | 136,144 | $ | — | 136,144 | |||||||||
| Accrued payroll and related costs |
33,754 | — | 33,754 | |||||||||||
| Taxes payable |
24,322 | 2,532 | (cc) |
26,854 | ||||||||||
| Interest payable |
8,921 | — | 8,921 | |||||||||||
| Other current liabilities |
44,498 | (235 | ) | (bb) |
44,263 | |||||||||
|
|
|
|
|
|
|
|||||||||
| Total current liabilities |
247,639 | 2,297 | 249,936 | |||||||||||
|
|
|
|
|
|
|
|||||||||
| Long-term debt |
216,000 | — | 216,000 | |||||||||||
| Deferred income taxes |
6,700 | — | 6,700 | |||||||||||
| Other liabilities |
118,813 | (1,891 | ) | (bb) |
116,922 | |||||||||
|
|
|
|
|
|
|
|||||||||
| Total liabilities |
589,152 | 406 | 589,558 | |||||||||||
|
|
|
|
|
|
|
|||||||||
| Shareholders’ equity |
||||||||||||||
| Common stock |
1 | — | 1 | |||||||||||
| Additional paid-in-capital |
1,402,608 | — | 1,402,608 | |||||||||||
| Retained earnings (accumulated deficit) |
102,383 | 67,641 | (dd) |
170,024 | ||||||||||
| Accumulated other comprehensive income (loss) |
3,802 | — | 3,802 | |||||||||||
|
|
|
|
|
|
|
|||||||||
| Total shareholders’ equity |
1,508,794 | 67,641 | 1,576,435 | |||||||||||
|
|
|
|
|
|
|
|||||||||
| Total liabilities and equity |
$ | 2,097,946 | $ | 68,047 | $ | 2,165,993 | ||||||||
|
|
|
|
|
|
|
|||||||||
(aa) Cash and cash equivalents
Reflects expected cash proceeds of $375.0 million from the Noble 2022 Rig Disposal less $7.9 million of estimated transaction costs to be incurred subsequent to June 30, 2022 by Noble in connection with the rig disposal, which were not reflected in Noble’s historical balance sheet.
(bb) Noble 2022 Rig Disposal historical balances
Reflects the pro forma adjustments to (i) eliminate the historical property and equipment and accumulated depreciation balances associated with the Noble 2022 Rig Disposal, (ii) eliminate the historical operating lease
30
right-of-use assets from other assets and the short-term and long-term portions of operating lease liabilities from other current liabilities and other liabilities, respectively, for office and equipment leases being transferred in connection with the Noble 2022 Rig Disposal, (iii) eliminate the fuel inventory balances associated with the Noble 2022 Rig Disposal from prepaid expenses and other current assets and (iv) eliminate the deferred costs associated with the Noble 2022 Rig Disposal from prepaid expenses and other current assets.
(cc) Income tax
Reflects the pro forma adjustments to income tax related accounts in connection with the Noble 2022 Rig Disposal.
(dd) Retained earnings (accumulated deficit)
Reflects the cumulative impact of the pro forma adjustments associated with the Noble 2022 Rig Disposal, such as the estimated pre-tax gain and related income tax effect.
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