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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549
 FORM 10-Q þ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934  OR o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934  Commission file number: 0-13857 NOBLE CORPORATION  Cayman Islands(State or other jurisdiction of incorporation or organization)
    
    98-0366361(I.R.S. employer identification number)13135 South Dairy Ashford, Suite 800
Sugar Land, Texas(Address of principal executive offices)
    
    77478(Zip code)
 Registrants telephone number, including area code: (281) 276-6100 Indicate by check mark whether the registrant (1) has filed all reports required to be filed
by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or
for such shorter period that the registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days. Yes
þ  No o Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule
12b-2 of the Act). Yes
þ  No o Number
of Ordinary Shares outstanding as of May 4, 2005: 135,849,186




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FORM 10-Q TABLE OF CONTENTS PART I
    
    ITEM 1. FINANCIAL STATEMENTSITEM 2. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONSForward-Looking StatementsExecutive OverviewResults of OperationsLiquidity and Capital ResourcesAccounting PronouncementsITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISKITEM 4. CONTROLS AND PROCEDURESPART II
    
    ITEM 1. LEGAL PROCEEDINGSITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERSITEM 6. EXHIBITSSIGNATURESINDEX TO EXHIBITSSpecial ResolutionArticles of Association of the RegistrationShort Term Incentive PlanCertification of James C. Day Pursuant to Rule 13a-14a/15d-14aCertification of Mark A. Jackson Pursuant to Rule 13a-14a/15d-14aCertification of James C. Day Pursuant to Section 906Certification of Mark A. Jackson Pursuant to Section 906
  2




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FORM 10-Q 
 PART I. FINANCIAL INFORMATION 
 ITEM 1. FINANCIAL STATEMENTS NOBLE CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In thousands)
(Unaudited) March 31,
    
    
    December 31,2005
    
    
    2004ASSETSCURRENT ASSETSCash and cash equivalents
    
    $
    107,759
    
    
    $
    58,790Investment in marketable securities
    
    
    88,628
    
    
    
    132,788Accounts receivable
    
    
    202,945
    
    
    
    205,023Inventories
    
    
    3,939
    
    
    
    4,013Prepaid expenses
    
    
    25,269
    
    
    
    12,454Other current assets
    
    
    15,744
    
    
    
    12,215Total current assets
    
    
    444,284
    
    
    
    425,283PROPERTY AND EQUIPMENTDrilling equipment and facilities
    
    
    3,789,512
    
    
    
    3,739,338Other
    
    
    65,964
    
    
    
    65,5503,855,476
    
    
    
    3,804,888Accumulated depreciation
    
    
    (1,106,343
    )
    
    
    (1,061,268
    )2,749,133
    
    
    
    2,743,620INVESTMENT IN AND ADVANCES TO JOINT VENTURES
    
    
    18,767
    
    
    
    18,804OTHER ASSETS
    
    
    121,276
    
    
    
    120,266$
    3,333,460
    
    
    $
    3,307,973LIABILITIES AND SHAREHOLDERS EQUITYCURRENT LIABILITIESCurrent maturities of long-term debt
    
    $
    8,510
    
    
    $
    8,361Accounts payable
    
    
    69,436
    
    
    
    83,012Accrued payroll and related costs
    
    
    61,057
    
    
    
    60,911Taxes payable
    
    
    18,947
    
    
    
    22,883Interest payable
    
    
    2,493
    
    
    
    8,981Other current liabilities
    
    
    28,020
    
    
    
    30,018Total current liabilities
    
    
    188,463
    
    
    
    214,166LONG-TERM DEBT
    
    
    461,106
    
    
    
    503,288DEFERRED INCOME TAXES
    
    
    208,722
    
    
    
    206,506OTHER LIABILITIES
    
    
    8,072
    
    
    
    8,110866,363
    
    
    
    932,070COMMITMENTS AND CONTINGENCIES (Note 5)MINORITY INTEREST
    
    
    (8,363
    )
    
    
    (8,531
    )SHAREHOLDERS EQUITYOrdinary Shares-par value $0.10 per share; 400,000 shares authorized;
135,655 shares issued and outstanding in 2005; 134,407 shares issued and
outstanding in 2004
    
    
    13,566
    
    
    
    13,441Capital in excess of par value
    
    
    974,257
    
    
    
    926,652Retained earnings
    
    
    1,495,794
    
    
    
    1,452,974Restricted stock (unearned compensation)
    
    
    (9,753
    )
    
    
    (11,171
    )Accumulated other comprehensive income
    
    
    1,596
    
    
    
    2,5382,475,460
    
    
    
    2,384,434$
    3,333,460
    
    
    $
    3,307,973
 See accompanying notes to the consolidated financial statements. 3




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FORM 10-Q NOBLE CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(In thousands, except per share amounts)
(Unaudited) Three Months Ended March 31,2005
    
    
    2004OPERATING REVENUESContract drilling services
    
    $
    262,404
    
    
    $
    218,583Reimbursables
    
    
    24,502
    
    
    
    10,049Labor contract drilling services
    
    
    18,141
    
    
    
    8,391Engineering, consulting and other
    
    
    5,278
    
    
    
    8,410310,325
    
    
    
    245,433OPERATING COSTS AND EXPENSESContract drilling services
    
    
    144,022
    
    
    
    124,323Reimbursables
    
    
    22,906
    
    
    
    9,077Labor contract drilling services
    
    
    15,189
    
    
    
    6,806Engineering, consulting and other
    
    
    5,888
    
    
    
    8,097Depreciation and amortization
    
    
    56,377
    
    
    
    50,427Selling, general and administrative
    
    
    7,818
    
    
    
    7,861252,200
    
    
    
    206,591OPERATING INCOME
    
    
    58,125
    
    
    
    38,842OTHER INCOME (EXPENSE)Interest expense
    
    
    (5,935
    )
    
    
    (9,068
    )Other, net
    
    
    3,335
    
    
    
    2,486INCOME BEFORE INCOME TAXES
    
    
    55,525
    
    
    
    32,260INCOME TAX PROVISION
    
    
    (9,995
    )
    
    
    (4,000
    )NET INCOME
    
    $
    45,530
    
    
    $
    28,260NET INCOME PER SHARE:Basic
    
    $
    0.34
    
    
    $
    0.21Diluted
    
    $
    0.33
    
    
    $
    0.21
 See accompanying notes to the consolidated financial statements. 4




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FORM 10-Q NOBLE CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited) Three Months Ended March 31,2005
    
    
    2004CASH FLOWS
FROM OPERATING ACTIVITIESNet income
    
    $
    45,530
    
    
    $
    28,260Adjustments to reconcile net income to net cash provided by
operating activities:Depreciation and amortization
    
    
    56,377
    
    
    
    50,427Deferred income tax provision
    
    
    3,302
    
    
    
    1,200Loss on sales of marketable securities
    
    
    48
    
    
    
    44Equity in income of joint venture
    
    
    (1,072
    )
    
    
    (998
    )Distributions received from joint venture
    
    
    1,109
    
    
    
    Compensation expense from stock-based plans
    
    
    1,418
    
    
    
    1,086Other
    
    
    (615
    )
    
    
    (938
    )Changes in current assets and liabilities:Accounts receivable
    
    
    2,078
    
    
    
    4,007Other current assets
    
    
    (16,002
    )
    
    
    (5,329
    )Accounts payable
    
    
    (13,576
    )
    
    
    (14,672
    )Other current liabilities
    
    
    (7,052
    )
    
    
    (1,535
    )Net cash provided by operating activities
    
    
    71,545
    
    
    
    61,552CASH FLOWS FROM INVESTING ACTIVITIESAcquisitions and related capital upgrades
    
    
    (22,309
    )
    
    
    Other capital expenditures
    
    
    (28,938
    )
    
    
    (13,871
    )Deferred repair and maintenance expenditures
    
    
    (12,151
    )
    
    
    (9,401
    )Proceeds from sales of property and equipment
    
    
    678
    
    
    
    Repayments from joint venture
    
    
    
    
    
    
    1,024Investment in marketable securities
    
    
    (17,129
    )
    
    
    (69,547
    )Proceeds from sales and maturities of marketable securities
    
    
    61,229
    
    
    
    57,121Net cash used for investing activities
    
    
    (18,620
    )
    
    
    (34,674
    )CASH FLOWS FROM FINANCING ACTIVITIESPayments of borrowing on credit facility
    
    
    (40,000
    )
    
    
    Payments of other long-term debt
    
    
    (2,036
    )
    
    
    (18,883
    )Proceeds from issuance of ordinary shares
    
    
    40,790
    
    
    
    23,175Payment of dividends
    
    
    (2,710
    )
    
    
    Net cash provided by (used for) financing activities
    
    
    (3,956
    )
    
    
    4,292NET INCREASE IN CASH AND CASH EQUIVALENTS
    
    
    48,969
    
    
    
    31,170CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD
    
    
    58,790
    
    
    
    62,567CASH AND CASH EQUIVALENTS, END OF PERIOD
    
    $
    107,759
    
    
    $
    93,737
 See accompanying notes to the consolidated financial statements. 5




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FORM 10-Q NOBLE CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(In thousands)
(Unaudited) Three Months Ended March 31,2005
    
    
    2004NET INCOME
    
    $
    45,530
    
    
    $
    28,260OTHER COMPREHENSIVE INCOME (LOSS), NET OF TAX:Foreign currency translation adjustments
    
    
    (1,345
    )
    
    
    4,619Unrealized holding gains on securities arising during period
    
    
    134
    
    
    
    179Unrealized gain on foreign currency forward contracts
    
    
    269
    
    
    
    32Other comprehensive income (loss)
    
    
    (942
    )
    
    
    4,830COMPREHENSIVE INCOME
    
    $
    44,588
    
    
    $
    33,090
 See accompanying notes to the consolidated financial statements. 6




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FORM 10-Q NOBLE CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS NOTE 1  BASIS OF ACCOUNTING The accompanying consolidated financial statements of Noble Corporation (Noble or, together
with its consolidated subsidiaries, unless the context requires otherwise, the Company, we,
our and words of similar import) have been prepared in accordance with accounting principles
generally accepted in the United States of America for interim financial information and with the
instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all
disclosures required by accounting principles generally accepted in the United States of America
for complete financial statements. All significant intercompany accounts and transactions have
been eliminated. In
order to allow readers of our financial statements to identify more easily
costs that benefit multiple years associated with our rigs, amortization of deferred costs for major maintenance projects is reflected in
the consolidated financial statements with depreciation in
Depreciation and amortization beginning with the first
quarter of 2005. In
prior periods, amortization of deferred costs for major maintenance projects was included in
expenses for contract drilling services and labor contract drilling services. The amount of such
amortization was $10,882,000 and $9,502,000 for the three months ended March 31, 2005 and 2004,
respectively. This revision in classification had no impact on
previously reported net income. In connection with the preparation of
the 2004 financial statements, we concluded that it was appropriate
to classify our auction rate securities as marketable debt securities
and include such investments in Investments in marketable
securities on our Consolidated Balance Sheets. Previously, such
investments had been classified as cash equivalents and included in
Cash and cash equivalents. Accordingly, we made
adjustments to the Consolidated Statements of Cash Flows for the
three months ended March 31, 2004 to reflect the beginning of
period and end of period balances of cash and cash equivalents and to
reflect the gross purchases and sales of these securities as
investing activities rather than as a component of cash and cash
equivalents. For the three months ended March 31, 2004, net cash
used for investing activities related to these current
investments of $10,000,000 was previously included in cash and cash
equivalents in our Consolidated Statements of Cash Flows. This
revision in classification does not affect previously reported net
cash provided by operating activities or net cash used for
financing activities, or our previously reported Consolidated
Statements of Income for any period. The interim consolidated
financial statements have not been audited. However, in the opinion of management, all
adjustments, consisting only of normal recurring adjustments, necessary for a fair presentation of
the consolidated financial statements have been included. Results of operations for interim
periods are not necessarily indicative of the results of operations that may be expected for the
entire year. These interim consolidated financial statements should be read in conjunction with
the audited consolidated financial statements and notes thereto included in the Annual Report on
Form 10-K of Noble for the year ended December 31, 2004 (2004 Form 10-K). NOTE 2  STOCK-BASED COMPENSATION PLANS We have several stock-based compensation plans. As permitted by Statement of Financial
Accounting Standards (SFAS) No. 123, Accounting for Stock-Based Compensation(SFAS 123) and as
amended by SFAS No. 148, Accounting for Stock-Based Compensation-Transition and Disclosure(SFAS
148), we have chosen to continue using the intrinsic value method of accounting for stock-based
compensation awards in accordance with APB Opinion No. 25, Accounting
for Stock Issued to Employees (APB 25). No compensation expense was recognized in
the three month periods ended March 31, 2005 and 2004 related to stock option awards. The following table reflects pro forma net income and net income per share had we elected to
adopt the fair value approach of SFAS 123 (in thousands, except per share amounts): Three Months EndedMarch 31,2005
    
    
    2004Net income  as reported
    
    $
    45,530
    
    
    $
    28,260Stock-based compensation expense, net of tax  as reported
    
    
    922
    
    
    
    706Stock-based compensation expense, net of tax  pro forma
    
    
    (2,478
    )
    
    
    (3,397
    )Net income  pro forma
    
    $
    43,974
    
    
    $
    25,569Net income per share:Basic  as reported
    
    $
    0.34
    
    
    $
    0.21Basic  pro forma
    
    $
    0.33
    
    
    $
    0.19Diluted  as reported
    
    $
    0.33
    
    
    $
    0.21Diluted  pro forma
    
    $
    0.32
    
    
    $
    0.19
 7




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FORM 10-Q In
December 2004, the FASB issued SFAS No. 123 (revised 2004), Share-Based Payment(SFAS 123
(revised 2004)). SFAS 123 (revised 2004) is a revision to SFAS No. 123 and supersedes APB 25. SFAS 123 (revised 2004) establishes standards for accounting for
exchanges of an entitys equity instruments for goods or services, focusing primarily on
transactions in which an entity obtains employee services in share-based payment transactions.
The statement requires that entities measure the cost of employee services received in exchange
for an award of equity instruments based on the grant-date fair value of the award and that the
cost is recognized over the period in which the employee services are performed, which is usually
the equity instruments vesting period. SFAS 123 (revised 2004) eliminates the alternative
allowed under SFAS 123 under which equity instruments could be measured at their intrinsic value, as
prescribed by APB 25, with only pro forma disclosure in the entitys notes to its financial
statements of the impact on net income and earnings per share had the equity instruments been
measured at fair value. For public companies (other than small business issuers) with calendar
fiscal years, SFAS 123 (revised 2004) required adoption as of the beginning of the third quarter
of 2005. On April 14, 2005, the U.S. Securities and Exchange Commission announced the adoption of a
new rule that amends the compliance dates for SFAS 123 (revised 2004), and as a result, such
public companies, including Noble, will not be required to adopt SFAS 123 (revised 2004) until the
first quarter of 2006. The impact that the adoption of SFAS 123 (revised 2004) will have on our consolidated results
of operations will be determined primarily by the number of stock options granted to employees in
future periods. Based on recent stock option grants, we estimate that the adoption of this
statement in 2006 will reduce that years  net income by
approximately $7,000,000 to $9,000,000, or $0.05 to $0.07
per diluted share. We do not expect the adoption of SFAS 123 (revised 2004) to have a material
impact on our consolidated cash flows or financial position. NOTE 3  NET INCOME PER SHARE The following table reconciles the basic and diluted net income per share (EPS)
computations for the three month periods ended March 31, 2005 and 2004 (in thousands, except per
share amounts): Net
    
    
    Basic
    
    
    Basic
    
    
    Diluted
    
    
    DilutedIncome
    
    
    Shares
    
    
    EPS
    
    
    Shares
    
    
    EPSThree
Months Ended:March 31, 2005
    
    $
    45,530
    
    
    
    135,209
    
    
    $
    0.34
    
    
    
    136,581
    
    
    $
    0.33March 31, 2004
    
    $
    28,260
    
    
    
    132,626
    
    
    $
    0.21
    
    
    
    133,827
    
    
    $
    0.21
 Included in diluted shares are ordinary share equivalents relating to outstanding stock
options of 1,372,000 shares and 1,201,000 shares for the three month periods ended March 31, 2005
and 2004, respectively. The computation of diluted net income per share for the three month
period ended March 31, 2004 did not include options to purchase 1,772,000 ordinary shares because
the options respective exercise prices were greater than the average market price of the ordinary shares.
Excluded from the basic and diluted share amounts above for the three month period ended March 31,
2004 are ordinary shares held in a Rabbi Trust, which was liquidated and
terminated in December 2004. Ordinary shares held by the trust,
which were to have been used for future funding of the Companys
benefits, were cancelled and retired upon the dissolution of the trust.
The number of shares in the trust was 1,679,000 at March 31, 2004. NOTE 4  MARKETABLE SECURITIES As of March 31, 2005, we owned marketable equity securities with a fair market value of
$674,000. The investment is classified as available for sale and is included in Other assets in
the Consolidated Balance Sheets at its fair market value. As of March 31, 2005, we also owned
marketable debt securities with a fair market value of $88,628,000. These investments are
classified as available for sale and are included in Investment in marketable securities in the
Consolidated Balance Sheet at March 31, 2005 at their fair market value. NOTE 5  COMMITMENTS AND CONTINGENCIES In August 2004, an indirect, wholly-owned subsidiary of Noble was served as a named defendant
in two lawsuits filed in the Circuit Courts of the State of Mississippi involving numerous other
companies (not affiliated with Noble) as co-defendants. In December 2004, such subsidiary was
served as a named defendant in a third lawsuit filed in Mississippi Circuit Court. The lawsuits
seek an unspecified amount of monetary damages on behalf of approximately 130 named individuals alleging personal injury or death, including claims
under the Jones Act, purportedly resulting from exposure to asbestos on drilling rigs and
associated facilities during the period 1965 through 1986. The lawsuits are in preliminary stages
and we have 8




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FORM 10-Q not confirmed the number of plaintiffs, if any, that were employed by our subsidiary or
otherwise associated with our drilling operations during the relevant period. We intend to defend
vigorously against the litigation, and based on information currently available, we do not believe
the resolution of these lawsuits will have a material adverse effect on our financial position,
results of operations or cash flows. Noble Asset Company Limited (NACL), a wholly-owned, indirect subsidiary of Noble, was named
one of 21 parties served a Show Cause Notice (SCN) issued by the Commissioner of Customs (Prev.),
Mumbai, India in August 2003. The SCN concerned alleged violations of Indian Customs laws and
regulations regarding one of our jackup drilling rigs. The Commissioner alleged certain violations
to have occurred before, at the time of, and after NACL acquired the rig from the rigs previous
owner. In the purchase agreement for the rig, NACL received contractual indemnification against
liability for Indian customs duty from the rigs previous owner. In connection with the export of
the rig from India in 2001, NACL posted a bank guarantee in the amount of $3,440,000 and a customs
bond in the amount of $22,200,000, both of which remain in place. NACL filed its initial replies
to the SCN in December 2003. NACL appeared through counsel before the Commissioner in September
2004 and made oral arguments and written submissions. In March 2005, the Commissioner passed an
order against NACL and the other parties cited in the SCN, as anticipated, confirming his findings
consistent with his allegations in the SCN and seeking (i) to invoke the bank guarantee posted on
behalf of NACL as a fine, (ii) to demand duty of (a) $17,300,000 plus interest related to a 1997
alleged import and (b) $19,700,000 plus interest related to a 1999 alleged import, provided that
the duty and interest demanded in (b) shall not be payable if the duty and interest demanded in (a)
is paid by NACL, and (iii) to assess penalty ($458,000) against NACL. NACL promptly filed a Writ
Petition in the High Court, Bombay, and obtained from the court a favorable order staying the
Commissioner from invoking the guarantee and confirming NACLs right to appeal the order of the
Commissioner to the Central Excise and Sales Tax Appellate Tribunal. We continue to maintain that
NACL has acted in accordance with all Indian Customs laws and regulations and believe the
Commissioners order is without merit as against NACL. NACL intends vigorously to pursue its
appeal. We do not believe the resolution of this matter will have a material adverse effect on our
financial position, results of operations or cash flows. We are a defendant in certain claims and litigation arising out of operations in the normal
course of business. In the opinion of management, uninsured losses, if any, will not be material
to our financial position, results of operations or cash flows. In connection with several projects, we have entered into agreements with various vendors to
purchase or construct property and equipment that generally have long lead times for delivery. Any
equipment purchased for a project on which we do not proceed would be used, where applicable, as
capital spares for other units in our fleet. As of March 31, 2005, we had approximately
$53,000,000 of outstanding purchase commitments related to these projects. NOTE 6  SHAREHOLDERS EQUITY Changes in shareholders equity for the three months ended March 31, 2005 are as follows (in
thousands): Restricted
    
    
    AccumulatedCapital in
    
    
    
    
    
    
    Stock
    
    
    Other
    
    
    TotalOrdinary Shares
    
    
    Excess of
    
    
    Retained
    
    
    (unearned
    
    
    Comprehensive
    
    
    ShareholdersShares
    
    
    Amount
    
    
    Par Value
    
    
    Earnings
    
    
    compensation)
    
    
    Income
    
    
    EquityBalance at December 31, 2004
    
    
    134,407
    
    
    $
    13,441
    
    
    $
    926,652
    
    
    $
    1,452,974
    
    
    $
    (11,171
    )
    
    $
    2,538
    
    
    $
    2,384,434Exercise of stock options
    
    
    1,318
    
    
    
    132
    
    
    
    40,658
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    40,790Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    45,530
    
    
    
    
    
    
    
    
    
    
    
    45,530Other
comprehensive loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (942
    )
    
    
    (942
    )Dividends
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (2,710
    )
    
    
    
    
    
    
    
    
    
    
    (2,710
    )Tax benefit of stock options
    
    
    
    
    
    
    
    
    
    
    6,050
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    6,050Compensation expense recognized
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,418
    
    
    
    
    
    
    
    1,418Other
    
    
    (70
    )
    
    
    (7
    )
    
    
    897
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    890Balance at March 31, 2005
    
    
    135,655
    
    
    $
    13,566
    
    
    $
    974,257
    
    
    $
    1,495,794
    
    
    $
    (9,753
    )
    
    $
    1,596
    
    
    $
    2,475,460
 NOTE 7  EMPLOYEE BENEFIT PLANS We have a U.S. noncontributory defined benefit pension plan which covers substantially all
salaried employees and a U.S. noncontributory defined benefit pension plan which covers certain
field hourly employees, whose initial date of employment is prior to August 1, 2004 (collectively
referred to as our qualified domestic plans). These plans are governed 9




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FORM 10-Q by the Noble Drilling
Corporation Retirement Trust. The benefits from these plans are based primarily on years of
service and, for the salaried plan, employees compensation near retirement. These plans qualify
under the Employee Retirement Income Security Act of 1974 (ERISA), and our funding policy is
consistent with funding requirements of ERISA and other applicable laws and regulations. We make
cash contributions to the qualified domestic plans when required. The benefit amount that can be
covered by the qualified domestic plans is limited under ERISA and the Internal Revenue Code of
1986, as amended. Therefore, we maintain an unfunded, nonqualified excess benefit plan designed to
maintain benefits for all employees at the formula level in the qualified domestic plans. We refer
to the qualified domestic plans and the excess benefit plan collectively as the domestic plans. Each of Noble Drilling (U.K.) Limited, Noble Enterprises Limited and Noble Drilling
(Nederland) B.V., all indirect, wholly-owned subsidiaries of Noble, maintains a pension plan which
covers all of its salaried, non-union employees (collectively referred to as our international
plans). Benefits are based on credited service and the average of the highest three years of
qualified salary within the past 10 years of participation. Pension costs for the three months ended March 31, 2005 and 2004 include the following
components (in thousands): Three Months Ended March 31,2005
    
    
    2004International
    
    
    Domestic
    
    
    International
    
    
    DomesticService cost
    
    $
    635
    
    
    $
    1,162
    
    
    $
    604
    
    
    $
    1,114Interest cost
    
    
    685
    
    
    
    1,024
    
    
    
    598
    
    
    
    1,024Return on plan assets
    
    
    (767
    )
    
    
    (1,068
    )
    
    
    (747
    )
    
    
    (1,068
    )Amortization of prior service cost
    
    
    
    
    
    
    65
    
    
    
    
    
    
    
    65Amortization of transition obligation
    
    
    63
    
    
    
    
    
    
    
    91
    
    
    
    Recognized net actuarial (gain) loss
    
    
    (20
    )
    
    
    225
    
    
    
    (65
    )
    
    
    225Net pension expense
    
    $
    596
    
    
    $
    1,408
    
    
    $
    481
    
    
    $
    1,360
 We previously disclosed in our financial statements for the year ended December 31, 2004 that
we expect to contribute approximately $1,500,000 to our pension plans in 2005. As of March 31,
2005, this estimate has been revised to $6,000,000, $250,000 of which was paid during the three
months ended March 31, 2005. The increase reflects actuarial
information, which was not previously available, on the level of qualifying contributions
that can be made to our domestic plans. NOTE 8  DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES Our North Sea operations have a significant amount of their cash operating expenses payable
in either the Euro or British Pound. To reduce our exposure to fluctuations in these currencies
during 2005, we entered into forward contracts in February and
March 2005 to purchase 24,780,000
Euros and 18,199,000 British Pounds, respectively, for the period from April 2005 through March
2006. These forward contracts represented approximately 72 percent of our forecasted Euro and
British Pound requirements for 2005 after the respective dates on which we entered into the
forward contracts. These forward contracts are being accounted for as cash flow hedges under SFAS
No. 133, Accounting for Derivative Instruments and Hedging Activities,as amended by SFAS No. 138,
Accounting for Certain Derivative Instruments and Certain Hedging Activities (an amendment of FASB
Statement No. 133),and SFAS No. 149, Amendment of Statement 133 on Derivative Instruments and
Hedging Activities. The cumulative net unrealized gain on these forward contracts is included in
Accumulated other comprehensive income in our Consolidated Balance Sheet at March 31, 2005. We
did not recognize a gain or loss due to hedge ineffectiveness in our Consolidated Statements of
Income for the three months ended March 31, 2005 related to these forward contracts. 10




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FORM 10-Q The balance of the net unrealized gain related to our foreign currency forward contracts
included in Accumulated other comprehensive income and related activity for the three months
ended March 31, 2005 is presented in the following table (in thousands): Net unrealized gain at December 31, 2004
    
    $
    Activity during period:Settlement of forward contracts outstanding at December
31, 2004
    
    
    Net unrealized gain on outstanding forward contracts
    
    
    269Net unrealized gain at March 31, 2005
    
    $
    269
 NOTE 9  PARENT GUARANTEE OF REGISTERED SECURITIES ISSUED BY SUBSIDIARY Noble and Noble Holding (U.S.) Corporation (Noble Holding), a wholly-owned subsidiary of
Noble, are guarantors for certain debt securities issued by Noble Drilling Corporation (Noble
Drilling). These debt securities include Noble Drillings 6.95% Senior Notes due 2009 and its
7.50% Senior Notes due 2019. The outstanding principal balances of the 6.95% Senior Notes and the
7.50% Senior Notes at March 31, 2005 were $149,958,000 and $201,695,000, respectively. Noble
Drilling is an indirect, wholly-owned subsidiary of Noble and a direct, wholly-owned subsidiary of
Noble Holding. Nobles and Noble Holdings guarantees of these securities are full and
unconditional. The following consolidating financial statements of Noble, Noble Holding, Noble Drilling and
all other subsidiaries are included so that separate financial statements of Noble Drilling are
not required to be filed with the U.S. Securities and Exchange Commission. These consolidating
financial statements present Nobles and Noble Holdings investments in both consolidated and
unconsolidated affiliates using the equity method of accounting. 11




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##### Table of Contents



FORM 10-Q NOBLE CORPORATION AND OTHER SUBSIDIARIES
CONSOLIDATING BALANCE SHEET
March 31, 2005
(In thousands)
(Unaudited) NobleHoldingNoble
    
    
    (Subsidiary
    
    
    Noble Drilling
    
    
    Other
    
    
    Consolidating(Guarantor)
    
    
    Guarantor)
    
    
    (Issuer)
    
    
    Subsidiaries
    
    
    Adjustments
    
    
    TotalASSETSCURRENT ASSETSCash and cash equivalents
    
    $
    76,253
    
    
    $
    
    
    
    $
    
    
    
    $
    31,506
    
    
    $
    
    
    
    $
    107,759Investment in marketable securities
    
    
    200
    
    
    
    
    
    
    
    
    
    
    
    88,428
    
    
    
    
    
    
    
    88,628Accounts receivable
    
    
    
    
    
    
    
    
    
    
    6,417
    
    
    
    196,528
    
    
    
    
    
    
    
    202,945Inventories
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    3,939
    
    
    
    
    
    
    
    3,939Prepaid expenses
    
    
    
    
    
    
    
    
    
    
    867
    
    
    
    24,402
    
    
    
    
    
    
    
    25,269Accounts receivable from affiliates
    
    
    176,253
    
    
    
    
    
    
    
    542,055
    
    
    
    
    
    
    
    (718,308
    )
    
    
    Other current assets
    
    
    3,194
    
    
    
    
    
    
    
    247
    
    
    
    40,227
    
    
    
    (27,924
    )
    
    
    15,744Total current assets
    
    
    255,900
    
    
    
    
    
    
    
    549,586
    
    
    
    385,030
    
    
    
    (746,232
    )
    
    
    444,284PROPERTY AND EQUIPMENTDrilling equipment and facilities
    
    
    
    
    
    
    
    
    
    
    99,588
    
    
    
    3,689,924
    
    
    
    
    
    
    
    3,789,512Other
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    65,964
    
    
    
    
    
    
    
    65,964
    
    
    
    
    
    
    
    99,588
    
    
    
    3,755,888
    
    
    
    
    
    
    
    3,855,476Accumulated depreciation
    
    
    
    
    
    
    
    
    
    
    (52,702
    )
    
    
    (1,053,641
    )
    
    
    
    
    
    
    (1,106,343
    )
    
    
    
    
    
    
    
    46,886
    
    
    
    2,702,247
    
    
    
    
    
    
    
    2,749,133NOTES RECEIVABLE FROM AFFILIATES
    
    
    511,835
    
    
    
    
    
    
    
    44,159
    
    
    
    486,950
    
    
    
    (1,042,944
    )
    
    
    INVESTMENTS IN AFFILIATES
    
    
    1,708,970
    
    
    
    2,025,193
    
    
    
    1,813,518
    
    
    
    
    
    
    
    (5,547,681
    )
    
    
    INVESTMENT IN AND ADVANCES
TO JOINT VENTURES
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    18,767
    
    
    
    
    
    
    
    18,767OTHER ASSETS
    
    
    
    
    
    
    
    
    
    
    5,399
    
    
    
    115,877
    
    
    
    
    
    
    
    121,276$
    2,476,705
    
    
    $
    2,025,193
    
    
    $
    2,459,548
    
    
    $
    3,708,871
    
    
    $
    (7,336,857
    )
    
    $
    3,333,460LIABILITIES AND SHAREHOLDERS EQUITYCURRENT LIABILITIESCurrent maturities of long-term debt
    
    $
    
    
    
    $
    20,136
    
    
    $
    
    
    
    $
    8,510
    
    
    $
    (20,136
    )
    
    $
    8,510Accounts payable
    
    
    
    
    
    
    
    
    
    
    2,073
    
    
    
    67,363
    
    
    
    
    
    
    
    69,436Accrued payroll and related costs
    
    
    
    
    
    
    
    
    
    
    14,810
    
    
    
    46,247
    
    
    
    
    
    
    
    61,057Taxes payable
    
    
    1,244
    
    
    
    
    
    
    
    
    
    
    
    17,703
    
    
    
    
    
    
    
    18,947Interest payable
    
    
    
    
    
    
    7,542
    
    
    
    1,460
    
    
    
    1,279
    
    
    
    (7,788
    )
    
    
    2,493Accounts payable to affiliates
    
    
    
    
    
    
    119,023
    
    
    
    
    
    
    
    599,285
    
    
    
    (718,308
    )
    
    
    Other current liabilities
    
    
    1
    
    
    
    
    
    
    
    351
    
    
    
    27,668
    
    
    
    
    
    
    
    28,020Total current liabilities
    
    
    1,245
    
    
    
    146,701
    
    
    
    18,694
    
    
    
    768,055
    
    
    
    (746,232
    )
    
    
    188,463LONG-TERM DEBT
    
    
    
    
    
    
    
    
    
    
    411,653
    
    
    
    49,453
    
    
    
    
    
    
    
    461,106NOTES PAYABLE TO AFFILIATES
    
    
    
    
    
    
    486,950
    
    
    
    
    
    
    
    555,994
    
    
    
    (1,042,944
    )
    
    
    DEFERRED INCOME TAXES
    
    
    
    
    
    
    (2,700
    )
    
    
    15,234
    
    
    
    196,188
    
    
    
    
    
    
    
    208,722OTHER LIABILITIES
    
    
    
    
    
    
    1,043
    
    
    
    4,572
    
    
    
    2,457
    
    
    
    
    
    
    
    8,0721,245
    
    
    
    631,994
    
    
    
    450,153
    
    
    
    1,572,147
    
    
    
    (1,789,176
    )
    
    
    866,363COMMITMENTS AND CONTINGENCIESMINORITY INTEREST
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (8,363
    )
    
    
    
    
    
    
    (8,363
    )SHAREHOLDERS EQUITYOrdinary Shares-par value $0.10 per share
    
    
    13,566
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    13,566Capital in excess of par value
    
    
    974,257
    
    
    
    870,744
    
    
    
    870,744
    
    
    
    692,216
    
    
    
    (2,433,704
    )
    
    
    974,257Retained earnings
    
    
    1,495,794
    
    
    
    522,455
    
    
    
    1,138,651
    
    
    
    1,451,275
    
    
    
    (3,112,381
    )
    
    
    1,495,794Restricted stock (unearned compensation).
    
    
    (9,753
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (9,753
    )Accumulated other comprehensive income
    
    
    1,596
    
    
    
    
    
    
    
    
    
    
    
    1,596
    
    
    
    (1,596
    )
    
    
    1,5962,475,460
    
    
    
    1,393,199
    
    
    
    2,009,395
    
    
    
    2,145,087
    
    
    
    (5,547,681
    )
    
    
    2,475,460$
    2,476,705
    
    
    $
    2,025,193
    
    
    $
    2,459,548
    
    
    $
    3,708,871
    
    
    $
    (7,336,857
    )
    
    $
    3,333,460
 12




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FORM 10-Q NOBLE CORPORATION AND OTHER SUBSIDIARIES
CONSOLIDATING BALANCE SHEET
December 31, 2004
(In thousands)
(Unaudited) NobleHolding
    
    
    NobleNoble
    
    
    (Subsidiary
    
    
    Drilling
    
    
    Other
    
    
    Consolidating(Guarantor)
    
    
    Guarantor)
    
    
    (Issuer)
    
    
    Subsidiaries
    
    
    Adjustments
    
    
    TotalASSETSCURRENT ASSETSCash and cash equivalents
    
    $
    8,130
    
    
    $
    
    
    
    $
    
    
    
    $
    50,660
    
    
    $
    
    
    
    $
    58,790Investments in marketable securities
    
    
    23,707
    
    
    
    
    
    
    
    
    
    
    
    109,081
    
    
    
    
    
    
    
    132,788Accounts receivable
    
    
    
    
    
    
    
    
    
    
    7,434
    
    
    
    197,589
    
    
    
    
    
    
    
    205,023Inventories
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    4,013
    
    
    
    
    
    
    
    4,013Prepaid expenses
    
    
    
    
    
    
    
    
    
    
    1,285
    
    
    
    11,169
    
    
    
    
    
    
    
    12,454Accounts receivable from affiliates
    
    
    177,091
    
    
    
    
    
    
    
    588,705
    
    
    
    
    
    
    
    (765,796
    )
    
    
    Other current assets
    
    
    19,918
    
    
    
    
    
    
    
    262
    
    
    
    11,963
    
    
    
    (19,928
    )
    
    
    12,215Total current assets
    
    
    228,846
    
    
    
    
    
    
    
    597,686
    
    
    
    384,475
    
    
    
    (785,724
    )
    
    
    425,283PROPERTY AND EQUIPMENTDrilling equipment and facilities
    
    
    
    
    
    
    
    
    
    
    99,624
    
    
    
    3,639,714
    
    
    
    
    
    
    
    3,739,338Other
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    65,550
    
    
    
    
    
    
    
    65,550
    
    
    
    
    
    
    
    99,624
    
    
    
    3,705,264
    
    
    
    
    
    
    
    3,804,888Accumulated depreciation
    
    
    
    
    
    
    
    
    
    
    (51,581
    )
    
    
    (1,009,687
    )
    
    
    
    
    
    
    (1,061,268
    )
    
    
    
    
    
    
    
    48,043
    
    
    
    2,695,577
    
    
    
    
    
    
    
    2,743,620NOTES RECEIVABLE FROM AFFILIATES
    
    
    492,139
    
    
    
    
    
    
    
    44,159
    
    
    
    
    
    
    
    (536,298
    )
    
    
    INVESTMENTS IN AFFILIATES
    
    
    1,664,904
    
    
    
    1,987,843
    
    
    
    1,773,952
    
    
    
    
    
    
    
    (5,426,699
    )
    
    
    INVESTMENT IN AND ADVANCES
TO JOINT VENTURES
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    18,804
    
    
    
    
    
    
    
    18,804OTHER ASSETS
    
    
    
    
    
    
    
    
    
    
    5,929
    
    
    
    114,337
    
    
    
    
    
    
    
    120,266$
    2,385,889
    
    
    $
    1,987,843
    
    
    $
    2,469,769
    
    
    $
    3,213,193
    
    
    $
    (6,748,721
    )
    
    $
    3,307,973LIABILITIES AND SHAREHOLDERS EQUITYCURRENT LIABILITIESCurrent maturities of long-term debt
    
    $
    
    
    
    $
    19,682
    
    
    $
    
    
    
    $
    8,361
    
    
    $
    (19,682
    )
    
    $
    8,361Accounts payable
    
    
    
    
    
    
    
    
    
    
    2,374
    
    
    
    80,638
    
    
    
    
    
    
    
    83,012Accrued payroll and related costs
    
    
    26
    
    
    
    
    
    
    
    15,222
    
    
    
    45,663
    
    
    
    
    
    
    
    60,911Taxes payable
    
    
    1,429
    
    
    
    
    
    
    
    
    
    
    
    21,454
    
    
    
    
    
    
    
    22,883Interest payable
    
    
    
    
    
    
    
    
    
    
    7,912
    
    
    
    1,315
    
    
    
    (246
    )
    
    
    8,981Accounts payable to affiliates
    
    
    
    
    
    
    114,330
    
    
    
    
    
    
    
    651,466
    
    
    
    (765,796
    )
    
    
    Other current liabilities
    
    
    
    
    
    
    
    
    
    
    809
    
    
    
    29,209
    
    
    
    
    
    
    
    30,018Total current liabilities
    
    
    1,455
    
    
    
    134,012
    
    
    
    26,317
    
    
    
    838,106
    
    
    
    (785,724
    )
    
    
    214,166LONG-TERM DEBT
    
    
    
    
    
    
    
    
    
    
    451,650
    
    
    
    51,638
    
    
    
    
    
    
    
    503,288NOTES PAYABLE TO AFFILIATES
    
    
    
    
    
    
    492,139
    
    
    
    
    
    
    
    44,159
    
    
    
    (536,298
    )
    
    
    DEFERRED INCOME TAXES
    
    
    
    
    
    
    (2,700
    )
    
    
    15,083
    
    
    
    194,123
    
    
    
    
    
    
    
    206,506OTHER LIABILITIES
    
    
    
    
    
    
    1,043
    
    
    
    4,674
    
    
    
    2,393
    
    
    
    
    
    
    
    8,1101,455
    
    
    
    624,494
    
    
    
    497,724
    
    
    
    1,130,419
    
    
    
    (1,322,022
    )
    
    
    932,070COMMITMENTS AND CONTINGENCIESMINORITY INTEREST
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (8,531
    )
    
    
    
    
    
    
    (8,531
    )SHAREHOLDERS EQUITYOrdinary Shares-par value $0.10 per
share
    
    
    13,441
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    13,441Capital in excess of par value
    
    
    926,652
    
    
    
    870,744
    
    
    
    870,744
    
    
    
    691,289
    
    
    
    (2,432,777
    )
    
    
    926,652Retained earnings
    
    
    1,452,974
    
    
    
    492,605
    
    
    
    1,101,301
    
    
    
    1,397,478
    
    
    
    (2,991,384
    )
    
    
    1,452,974Restricted stock (unearned
compensation)
    
    
    (11,171
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (11,171
    )Accumulated other comprehensive
income
    
    
    2,538
    
    
    
    
    
    
    
    
    
    
    
    2,538
    
    
    
    (2,538
    )
    
    
    2,5382,384,434
    
    
    
    1,363,349
    
    
    
    1,972,045
    
    
    
    2,091,305
    
    
    
    (5,426,699
    )
    
    
    2,384,434$
    2,385,889
    
    
    $
    1,987,843
    
    
    $
    2,469,769
    
    
    $
    3,213,193
    
    
    $
    (6,748,721
    )
    
    $
    3,307,973
 13




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##### Table of Contents



FORM 10-Q NOBLE CORPORATION AND OTHER SUBSIDIARIES
CONSOLIDATING STATEMENT OF INCOME
Three Months Ended March 31, 2005
(In thousands)
(Unaudited) NobleHolding
    
    
    NobleNoble
    
    
    (Subsidiary
    
    
    Drilling
    
    
    Other
    
    
    Consolidating(Guarantor)
    
    
    Guarantor)
    
    
    (Issuer)
    
    
    Subsidiaries
    
    
    Adjustments
    
    
    TotalOPERATING REVENUESContract drilling services
    
    $
    
    
    
    $
    
    
    
    $
    7,416
    
    
    $
    254,988
    
    
    $
    
    
    
    $
    262,404Reimbursables
    
    
    
    
    
    
    
    
    
    
    1
    
    
    
    24,501
    
    
    
    
    
    
    
    24,502Labor contract drilling services
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    18,141
    
    
    
    
    
    
    
    18,141Engineering, consulting, and other
    
    
    
    
    
    
    
    
    
    
    30
    
    
    
    5,248
    
    
    
    
    
    
    
    5,278
    
    
    
    
    
    
    
    7,447
    
    
    
    302,878
    
    
    
    
    
    
    
    310,325OPERATING COSTS AND EXPENSESContract drilling services
    
    
    25
    
    
    
    
    
    
    
    1,914
    
    
    
    142,083
    
    
    
    
    
    
    
    144,022Reimbursables
    
    
    
    
    
    
    
    
    
    
    1
    
    
    
    22,905
    
    
    
    
    
    
    
    22,906Labor contract drilling services
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    15,189
    
    
    
    
    
    
    
    15,189Engineering, consulting and other
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    5,888
    
    
    
    
    
    
    
    5,888Depreciation and amortization
    
    
    
    
    
    
    
    
    
    
    1,442
    
    
    
    54,935
    
    
    
    
    
    
    
    56,377Selling, general and administrative
    
    
    (154
    )
    
    
    
    
    
    
    248
    
    
    
    7,724
    
    
    
    
    
    
    
    7,818(129
    )
    
    
    
    
    
    
    3,605
    
    
    
    248,724
    
    
    
    
    
    
    
    252,200OPERATING INCOME
    
    
    129
    
    
    
    
    
    
    
    3,842
    
    
    
    54,154
    
    
    
    
    
    
    
    58,125OTHER INCOME (EXPENSE)Equity earnings in affiliates (net
of tax)
    
    
    44,081
    
    
    
    37,350
    
    
    
    39,566
    
    
    
    
    
    
    
    (120,997
    )
    
    
    Interest expense
    
    
    
    
    
    
    (11,592
    )
    
    
    (7,250
    )
    
    
    1,315
    
    
    
    11,592
    
    
    
    (5,935
    )Other, net
    
    
    1,404
    
    
    
    
    
    
    
    (1
    )
    
    
    13,524
    
    
    
    (11,592
    )
    
    
    3,335INCOME BEFORE INCOME TAXES
    
    
    45,614
    
    
    
    25,758
    
    
    
    36,157
    
    
    
    68,993
    
    
    
    (120,997
    )
    
    
    55,525INCOME TAX (PROVISION) BENEFIT
    
    
    (84
    )
    
    
    4,092
    
    
    
    1,193
    
    
    
    (15,196
    )
    
    
    
    
    
    
    (9,995
    )NET INCOME
    
    $
    45,530
    
    
    $
    29,850
    
    
    $
    37,350
    
    
    $
    53,797
    
    
    $
    (120,997
    )
    
    $
    45,530
 14




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##### Table of Contents



FORM 10-Q NOBLE CORPORATION AND OTHER SUBSIDIARIES
CONSOLIDATING STATEMENT OF INCOME
Three Months Ended March 31, 2004
(In thousands)
(Unaudited) NobleHolding
    
    
    NobleNoble
    
    
    (Subsidiary
    
    
    Drilling
    
    
    Other
    
    
    Consolidating(Guarantor)
    
    
    Guarantor)
    
    
    (Issuer)
    
    
    Subsidiaries
    
    
    Adjustments
    
    
    TotalOPERATING REVENUESContract drilling services
    
    $
    
    
    
    $
    
    
    
    $
    7,232
    
    
    $
    211,351
    
    
    $
    
    
    
    $
    218,583Reimbursables
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    10,049
    
    
    
    
    
    
    
    10,049Labor contract drilling services
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    8,391
    
    
    
    
    
    
    
    8,391Engineering, consulting, and other
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    8,410
    
    
    
    
    
    
    
    8,410
    
    
    
    
    
    
    
    7,232
    
    
    
    238,201
    
    
    
    
    
    
    
    245,433OPERATING COSTS AND EXPENSESContract drilling services
    
    
    (102
    )
    
    
    
    
    
    
    2,314
    
    
    
    122,111
    
    
    
    
    
    
    
    124,323Reimbursables
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    9,077
    
    
    
    
    
    
    
    9,077Labor contract drilling services
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    6,806
    
    
    
    
    
    
    
    6,806Engineering, consulting and other
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    8,097
    
    
    
    
    
    
    
    8,097Depreciation and amortization
    
    
    
    
    
    
    
    
    
    
    1,445
    
    
    
    48,982
    
    
    
    
    
    
    
    50,427Selling, general and administrative
    
    
    (232
    )
    
    
    
    
    
    
    153
    
    
    
    7,940
    
    
    
    
    
    
    
    7,861(334
    )
    
    
    
    
    
    
    3,912
    
    
    
    203,013
    
    
    
    
    
    
    
    206,591OPERATING INCOME
    
    
    334
    
    
    
    
    
    
    
    3,320
    
    
    
    35,188
    
    
    
    
    
    
    
    38,842OTHER INCOME (EXPENSE)Equity earnings in affiliates (net
of tax)
    
    
    16,556
    
    
    
    20,109
    
    
    
    21,519
    
    
    
    
    
    
    
    (58,184
    )
    
    
    Interest expense
    
    
    
    
    
    
    (11,941
    )
    
    
    (6,907
    )
    
    
    (3,095
    )
    
    
    12,875
    
    
    
    (9,068
    )Other, net
    
    
    12,105
    
    
    
    
    
    
    
    1,418
    
    
    
    1,838
    
    
    
    (12,875
    )
    
    
    2,486INCOME BEFORE INCOME TAXES
    
    
    28,995
    
    
    
    8,168
    
    
    
    19,350
    
    
    
    33,931
    
    
    
    (58,184
    )
    
    
    32,260INCOME TAX (PROVISION) BENEFIT
    
    
    (735
    )
    
    
    4,179
    
    
    
    759
    
    
    
    (8,203
    )
    
    
    
    
    
    
    (4,000
    )NET INCOME
    
    $
    28,260
    
    
    $
    12,347
    
    
    $
    20,109
    
    
    $
    25,728
    
    
    $
    (58,184
    )
    
    $
    28,260
 15




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##### Table of Contents



FORM 10-Q NOBLE CORPORATION AND OTHER SUBSIDIARIES
CONSOLIDATING STATEMENT OF CASH FLOWS
Three Months Ended March 31, 2005
(In thousands)
(Unaudited) NobleHolding
    
    
    NobleNoble
    
    
    (Subsidiary
    
    
    Drilling
    
    
    Other
    
    
    Consolidating(Guarantor)
    
    
    Guarantor)
    
    
    (Issuer)
    
    
    Subsidiaries
    
    
    Adjustments
    
    
    TotalCASH FLOWS FROM OPERATING ACTITIVIESNet income
    
    $
    45,530
    
    
    $
    29,850
    
    
    $
    37,350
    
    
    $
    53,797
    
    
    $
    (120,997
    )
    
    $
    45,530Adjustments to reconcile net income to net cash
provided by operating activities:Depreciation and amortization
    
    
    
    
    
    
    
    
    
    
    1,442
    
    
    
    54,935
    
    
    
    
    
    
    
    56,377Deferred income tax provision
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    3,302
    
    
    
    
    
    
    
    3,302Loss on sales of marketable securities
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    48
    
    
    
    
    
    
    
    48Equity in income of joint venture
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1,072
    )
    
    
    
    
    
    
    (1,072
    )Distributions received from joint venture
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,109
    
    
    
    
    
    
    
    1,109Compensation expense from stock-based plans
    
    
    1,418
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,418Equity earnings in affiliates
    
    
    (44,081
    )
    
    
    (37,350
    )
    
    
    (39,566
    )
    
    
    
    
    
    
    120,997
    
    
    
    Other
    
    
    
    
    
    
    
    
    
    
    579
    
    
    
    (1,194
    )
    
    
    
    
    
    
    (615
    )Changes in current assets and liabilities:Accounts receivable
    
    
    
    
    
    
    
    
    
    
    1,017
    
    
    
    1,061
    
    
    
    
    
    
    
    2,078Accounts receivable from affiliates
    
    
    (12,938
    )
    
    
    
    
    
    
    46,294
    
    
    
    
    
    
    
    (33,356
    )
    
    
    Other current assets
    
    
    16,724
    
    
    
    
    
    
    
    433
    
    
    
    (33,159
    )
    
    
    
    
    
    
    (16,002
    )Accounts payable
    
    
    
    
    
    
    
    
    
    
    (301
    )
    
    
    (13,275
    )
    
    
    
    
    
    
    (13,576
    )Accounts payable to affiliates
    
    
    
    
    
    
    4,693
    
    
    
    
    
    
    
    (38,049
    )
    
    
    33,356
    
    
    
    Other current liabilities
    
    
    (210
    )
    
    
    7,542
    
    
    
    (7,322
    )
    
    
    (7,062
    )
    
    
    
    
    
    
    (7,052
    )Net cash provided by
operating
activities
    
    
    6,443
    
    
    
    4,735
    
    
    
    39,926
    
    
    
    20,441
    
    
    
    
    
    
    
    71,545CASH FLOWS FROM INVESTING ACTIVITIESAcquisitions and related capital upgrades
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (22,309
    )
    
    
    
    
    
    
    (22,309
    )Other capital expenditures
    
    
    
    
    
    
    
    
    
    
    39
    
    
    
    (28,977
    )
    
    
    
    
    
    
    (28,938
    )Deferred repair and maintenance expenditures
    
    
    
    
    
    
    
    
    
    
    35
    
    
    
    (12,186
    )
    
    
    
    
    
    
    (12,151
    )Proceeds from sales of property and equipment
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    678
    
    
    
    
    
    
    
    678Repayments from affiliate
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    4,735
    
    
    
    (4,735
    )
    
    
    Investment in marketable securities
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (17,129
    )
    
    
    
    
    
    
    (17,129
    )Proceeds from sales and maturities of
marketable securities
    
    
    23,600
    
    
    
    
    
    
    
    
    
    
    
    37,629
    
    
    
    
    
    
    
    61,229Net cash provided by (used for)
investing activities
    
    
    23,600
    
    
    
    
    
    
    
    74
    
    
    
    (37,559
    )
    
    
    (4,735
    )
    
    
    (18,620
    )CASH FLOWS FROM FINANCING ACTIVITIESPayments of borrowings on credit facility
    
    
    
    
    
    
    
    
    
    
    (40,000
    )
    
    
    
    
    
    
    
    
    
    
    (40,000
    )Payments of other long-term debt
    
    
    
    
    
    
    (4,735
    )
    
    
    
    
    
    
    (2,036
    )
    
    
    4,735
    
    
    
    (2,036
    )Proceeds from issuance of ordinary shares
    
    
    40,790
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    40,790Payment of dividends
    
    
    (2,710
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (2,710
    )Net cash provided by (used for)
financing activities
    
    
    38,080
    
    
    
    (4,735
    )
    
    
    (40,000
    )
    
    
    (2,036
    )
    
    
    4,735
    
    
    
    (3,956
    )INCREASE (DECREASE) IN CASH
AND CASH EQUIVALENTS
    
    
    68,123
    
    
    
    
    
    
    
    
    
    
    
    (19,154
    )
    
    
    
    
    
    
    48,969CASH AND CASH EQUIVALENTS,
BEGINNING OF PERIOD
    
    
    8,130
    
    
    
    
    
    
    
    
    
    
    
    50,660
    
    
    
    
    
    
    
    58,790CASH AND CASH EQUIVALENTS,
END OF PERIOD
    
    $
    76,253
    
    
    $
    
    
    
    $
    
    
    
    $
    31,506
    
    
    $
    
    
    
    $
    107,759
 16




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##### Table of Contents



FORM 10-Q NOBLE CORPORATION AND OTHER SUBSIDIARIES
CONSOLIDATING STATEMENT OF CASH FLOWS
Three Months Ended March 31, 2004
(In thousands)
(Unaudited) NobleHolding
    
    
    NobleNoble
    
    
    (Subsidiary
    
    
    Drilling
    
    
    Other
    
    
    Consolidating(Guarantor)
    
    
    Guarantor)
    
    
    (Issuer)
    
    
    Subsidiaries
    
    
    Adjustments
    
    
    TotalCASH FLOWS FROM OPERATING ACTITIVIESNet income
    
    $
    28,260
    
    
    $
    12,347
    
    
    $
    20,109
    
    
    $
    25,728
    
    
    $
    (58,184
    )
    
    $
    28,260Adjustments to reconcile net income to net cash
provided by operating activities:Depreciation and amortization
    
    
    
    
    
    
    
    
    
    
    1,445
    
    
    
    48,982
    
    
    
    
    
    
    
    50,427Deferred income tax provision
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,200
    
    
    
    
    
    
    
    1,200Loss on sales of marketable securities
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    44
    
    
    
    
    
    
    
    44Equity in income of joint venture
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (998
    )
    
    
    
    
    
    
    (998
    )Compensation expense from stock-based plans
    
    
    1,086
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,086Equity earnings in affiliates
    
    
    (16,556
    )
    
    
    (20,109
    )
    
    
    (21,519
    )
    
    
    
    
    
    
    58,184
    
    
    
    Other
    
    
    
    
    
    
    
    
    
    
    1,029
    
    
    
    (1,967
    )
    
    
    
    
    
    
    (938
    )Changes in current assets and liabilities:Accounts receivable
    
    
    
    
    
    
    
    
    
    
    (4,949
    )
    
    
    8,956
    
    
    
    
    
    
    
    4,007Accounts receivable from affiliates
    
    
    1,259
    
    
    
    
    
    
    
    8,967
    
    
    
    
    
    
    
    (10,226
    )
    
    
    Other current assets
    
    
    (464
    )
    
    
    
    
    
    
    (468
    )
    
    
    (4,397
    )
    
    
    
    
    
    
    (5,329
    )Accounts payable
    
    
    
    
    
    
    
    
    
    
    (1,136
    )
    
    
    (13,536
    )
    
    
    
    
    
    
    (14,672
    )Accounts payable to affiliates
    
    
    
    
    
    
    12,295
    
    
    
    
    
    
    
    (22,521
    )
    
    
    10,226
    
    
    
    Other current liabilities
    
    
    1,532
    
    
    
    (219
    )
    
    
    (3,093
    )
    
    
    245
    
    
    
    
    
    
    
    (1,535
    )Net cash provided by operating activities
    
    
    15,117
    
    
    
    4,314
    
    
    
    385
    
    
    
    41,736
    
    
    
    
    
    
    
    61,552CASH FLOWS FROM INVESTING ACTIVITIESAcquisitions and related capital upgrades
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Other capital expenditures
    
    
    
    
    
    
    
    
    
    
    (96
    )
    
    
    (13,775
    )
    
    
    
    
    
    
    (13,871
    )Deferred repair and maintenance expenditures
    
    
    
    
    
    
    
    
    
    
    (289
    )
    
    
    (9,112
    )
    
    
    
    
    
    
    (9,401
    )Repayments from joint venture
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,024
    
    
    
    
    
    
    
    1,024Repayments from affiliates
    
    
    4,314
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (4,314
    )
    
    
    Investment in marketable securities
    
    
    (51,500
    )
    
    
    
    
    
    
    
    
    
    
    (18,047
    )
    
    
    
    
    
    
    (69,547
    )Proceeds from sales and maturities of
marketable securities
    
    
    31,000
    
    
    
    
    
    
    
    
    
    
    
    26,121
    
    
    
    
    
    
    
    57,121Net cash used for investing activities
    
    
    (16,186
    )
    
    
    
    
    
    
    (385
    )
    
    
    (13,789
    )
    
    
    (4,314
    )
    
    
    (34,674
    )CASH FLOWS FROM FINANCING ACTIVITIESPayment of other long-term debt
    
    
    
    
    
    
    (4,314
    )
    
    
    
    
    
    
    (18,883
    )
    
    
    4,314
    
    
    
    (18,883
    )Proceeds from issuance of ordinary shares
    
    
    23,175
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    23,175Net cash provided by (used for)
financing activities
    
    
    23,175
    
    
    
    (4,314
    )
    
    
    
    
    
    
    (18,883
    )
    
    
    4,314
    
    
    
    4,292INCREASE IN CASH
AND CASH EQUIVALENTS
    
    
    22,106
    
    
    
    
    
    
    
    
    
    
    
    9,064
    
    
    
    
    
    
    
    31,170CASH AND CASH EQUIVALENTS,
BEGINNING OF PERIOD
    
    
    33,991
    
    
    
    
    
    
    
    
    
    
    
    28,576
    
    
    
    
    
    
    
    62,567CASH AND CASH EQUIVALENTS,
END OF PERIOD
    
    $
    56,097
    
    
    $
    
    
    
    
    
    
    
    $
    37,640
    
    
    $
    
    
    
    $
    93,737
 17




---



##### Table of Contents



FORM 10-Q NOTE 10  SEGMENT AND RELATED INFORMATION We provide diversified services for the oil and gas industry. Our reportable segments consist
of the primary services we provide, which include domestic and international offshore contract
drilling and engineering and consulting services. Although these segments are generally influenced
by the same economic factors, each represents a distinct service to the oil and gas industry. Each
of our drilling rigs is considered by us to be an operating segment within our domestic and
international offshore contract drilling services reportable segments, and these operating segments
are aggregated to comprise our domestic and international contract drilling services reportable
segments in accordance with SFAS No. 131, Disclosure about Segments of an Enterprise and Related
Information(SFAS 131). Our international contract drilling services segment conducts operations in the Middle East,
Mexico, the North Sea, Brazil, West Africa, India and the Mediterranean Sea. Our domestic contract
drilling services segment conducts operations in the U.S. Gulf of Mexico. Our engineering and
consulting services segment, as represented by our Noble Technology Services Division, provides
drilling products and drilling-related software programs, well site management, project management,
technical services, and operations support for our downhole technology tools. We evaluate the performance of our operating segments based on operating revenues and net
income. Summarized financial information of our reportable segments for the three months ended
March 31, 2005 and 2004 is shown in the following table (in thousands). The Other column
includes results of labor contract drilling services, other insignificant operations and corporate
related items. International
    
    
    Domestic
    
    
    EngineeringContract
    
    
    Contract
    
    
    &Drilling
    
    
    Drilling
    
    
    ConsultingServices
    
    
    Services
    
    
    Services
    
    
    Other
    
    
    TotalThree Months Ended
March 31, 2005Revenues from external customers
    
    $
    214,901
    
    
    $
    60,811
    
    
    $
    11,107
    
    
    $
    23,506
    
    
    $
    310,325Depreciation and amortization
    
    
    44,343
    
    
    
    11,013
    
    
    
    98
    
    
    
    923
    
    
    
    56,377Operating costs and expenses
    
    
    171,894
    
    
    
    46,169
    
    
    
    12,405
    
    
    
    21,732
    
    
    
    252,200Equity in income of
unconsolidated subsidiaries
    
    
    1,072
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,072Net income (loss)
    
    
    35,159
    
    
    
    8,144
    
    
    
    (1,094
    )
    
    
    3,321
    
    
    
    45,530Total assets
    
    
    2,128,752
    
    
    
    1,001,405
    
    
    
    39,229
    
    
    
    164,074
    
    
    
    3,333,460Three Months Ended
March 31, 2004Revenues from external customers
    
    $
    158,034
    
    
    $
    68,200
    
    
    $
    6,046
    
    
    $
    13,153
    
    
    $
    245,433Depreciation and amortization
    
    
    36,489
    
    
    
    12,877
    
    
    
    171
    
    
    
    890
    
    
    
    50,427Operating costs and expenses
    
    
    136,660
    
    
    
    49,368
    
    
    
    7,142
    
    
    
    13,421
    
    
    
    206,591Equity in income of
unconsolidated subsidiaries
    
    
    998
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    998Net income (loss)
    
    
    11,204
    
    
    
    16,170
    
    
    
    (857
    )
    
    
    1,743
    
    
    
    28,260Total assets
    
    
    1,614,640
    
    
    
    1,256,350
    
    
    
    35,743
    
    
    
    305,428
    
    
    
    3,212,161
 18




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##### Table of Contents



FORM 10-Q 
 ITEM 2. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS 
 FORWARD-LOOKING STATEMENTS This report on Form 10-Q includes forward-looking statements within the meaning of Section
27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of
1934, as amended. All statements other than statements of historical facts included in this Form
10-Q, including, without limitation, statements contained in this Managements Discussion and
Analysis of Financial Condition and Results of Operations regarding our financial position,
business strategy, plans and objectives of management for future operations, industry conditions,
and indebtedness covenant compliance, are forward-looking statements. Although we believe that
the expectations reflected in such forward-looking statements are reasonable, we cannot assure you
that such expectations will prove to have been correct. We have identified factors that could cause actual plans or results to differ materially from
those included in any forward-looking statements. These factors include, but are not limited to,
the following:  
    volatility in crude oil and natural gas prices;
    changes in our customers drilling programs or budgets due to their own internal
corporate events, changes in the markets and prices for oil and gas, or shifts in the
relative strengths of various geographic drilling markets brought on by things such as a
general economic slowdown, or regional or worldwide recession, any of which could result in
deterioration in demand for our drilling services;
    our inability to execute any of our business strategies;
    cost overruns or delays in shipyard repair, maintenance, conversion or upgrade projects;
    changes in tax laws, tax treaties or tax regulations or the interpretation or
enforcement thereof, including taxing authorities not agreeing with our assessment of the
effects of such laws, treaties and regulations;
    cancellation by our customers of drilling contracts or letter agreements or letters of
intent for drilling contracts or their exercise of early termination provisions generally
found in our drilling contracts;
    intense competition in the drilling industry;
    changes in the rate of economic growth in the U.S. or in other major international economies;
    political and economic conditions in markets where we from time to time operate;
    adverse weather (such as hurricanes and monsoons) and seas;
    operational risks (such as blowouts, fires and loss of production);
    changes in oil and gas drilling technology or in our competitors drilling rig fleets
that could make our drilling rigs less competitive or require major capital investment to
keep them competitive;
    costs and effects of unanticipated legal and administrative proceedings;
    limitations on our insurance coverage or our inability to obtain or maintain insurance
coverage at rates and with deductible amounts that we believe are commercially reasonable;
    the discovery of significant additional oil and/or gas reserves or the construction of
significant oil and/or gas delivery or storage systems that impact regional or worldwide
energy markets;
    requirements and potential liability imposed by governmental regulation of the drilling
industry (including environmental regulation);
    acts of war or terrorism; 19




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##### Table of Contents



FORM 10-Q  
    significant changes in trade, monetary or fiscal policies worldwide, including changes
in interest rates; and
    currency fluctuations between the U.S. dollar and other currencies. All of the foregoing risks and uncertainties are beyond our ability to control, and in many
cases, we cannot predict the risks and uncertainties that could cause our actual results to differ
materially from those indicated by the forward-looking statements. When used in this Form 10-Q,
the words believes, anticipates, expects, plans and similar expressions as they relate to
the Company or its management are intended to identify forward-looking statements. 
 EXECUTIVE OVERVIEW We are a leading provider of diversified services for the oil and gas industry. We perform
contract drilling services with our fleet of 60 offshore drilling units located in key markets
worldwide. This fleet consists of 13 semisubmersibles (including five Noble EVA-4000TM
semisubmersibles and four ultra-deepwater hulls, including the Noble Clyde Boudreaux), three
dynamically positioned drillships, 41 jackup rigs and three submersibles. Approximately 80 percent
of the fleet is currently deployed in international markets, principally including the Middle East,
Mexico, the North Sea, Brazil, West Africa, India and the Mediterranean Sea. We provide
technologically advanced drilling-related products and services designed to create value for our
customers. We also provide labor contract drilling services, well site and project management
services, and engineering services. Our results of operations depend on the levels of activity in offshore oil and gas exploration,
development and production in markets worldwide. Historically, oil and gas prices and market
expectations of potential changes in these prices have significantly affected that level of
activity. Generally speaking, higher oil and natural gas prices or our customers expectations of
higher prices result in a greater demand for our services. These prices are extremely volatile.
Due to the continuation of favorable oil prices in 2005, drilling activity in certain international
markets, which are influenced more by oil prices than natural gas prices, was generally stronger in
the current quarter as compared to the first quarter of 2004. As a result, our operating days in
the North Sea, West Africa and the Middle East improved in the first quarter of 2005 versus the
first quarter of 2004. Domestic natural gas prices during the first quarter of 2005 averaged $6.27 per thousand cubic
feet (source: average Henry Hub closing bidweek price). Natural gas prices in the current quarter
were higher than in the same quarter of the previous year which
averaged $5.69, and significantly higher than historical
prices. In response to the higher natural gas prices, operators have increased their drilling
activities in the U.S. Gulf of Mexico in water depths applicable to jackups and submersibles in the
fourth quarter of 2004. Drilling activity levels in water depths applicable to semisubmersibles
improved significantly in the current quarter compared to the first quarter of 2004. Demand for
drilling services depends on a variety of economic and political factors, including
worldwide demand for oil and gas, the ability of the Organization of
Petroleum Exporting Countries (OPEC) to set and maintain
production levels and pricing, the level of production of non-OPEC
countries and the policies of the various governments regarding exploration and development of
their oil and gas reserves. We believe that a significant decrease from recent historical average
oil and gas prices could depress the level of exploration and production activity and result in a
corresponding decline in demand for our services. For the foregoing reasons, we cannot predict the future level of demand for our drilling
services or future conditions in the offshore contract drilling industry. Our long-standing business strategy continues to be the active expansion of our international
offshore drilling and deepwater capabilities through acquisitions, rig upgrades and modifications,
and the deployment of assets in important geological areas. Since the beginning of 2000, we have mobilized nine jackup rigs and one semisubmersible from
the U.S. Gulf of Mexico to international markets. In addition, since the beginning of 2000 we have
added nine jackups to our international fleet through acquisitions. We continue to evaluate other
opportunities to deploy units in our fleet, including certain deepwater units, in important
geological areas worldwide. Both the level of drilling activity and the number of announced discoveries and related
development programs in water depths greater than 5,000 feet have increased substantially in recent
years, thus increasing the demand for rigs capable of drilling in these water depths. As such, in
recent years we have focused on increasing 20




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##### Table of Contents



FORM 10-Q the number of rigs in our fleet capable of ultra-deepwater offshore drilling. Since the
beginning of 2000, we have added two deepwater semisubmersibles to our fleet and have acquired two
additional semisubmersible baredeck hulls. 
 RESULTS OF OPERATIONS For the Three Months Ended March 31, 2005 and 2004 General Net income for the three months ended March 31, 2005 (the Current Quarter) was $45,530,000,
or $0.33 per diluted share, on operating revenues of $310,325,000, compared to net income for the
three months ended March 31, 2004 (the Comparable Quarter) of $28,260,000, or $0.21 per diluted
share, on operating revenues of $245,433,000. The following table sets forth operating revenues and operating costs and expenses for each of
our reportable segments (for additional information regarding our reportable segments, see Note 10
of our accompanying consolidated financial statements) for the periods indicated: International
    
    
    DomesticContract
    
    
    Contract
    
    
    EngineeringDrilling
    
    
    Drilling
    
    
    & ConsultingServices
    
    
    Services
    
    
    Services
    
    
    Other
    
    
    Total(In thousands)Three Months Ended March 31, 2005Operating Revenues:Contract drilling services
    
    $
    205,162
    
    
    $
    57,242
    
    
    $
    
    
    
    $
    
    
    
    $
    262,404Reimbursables
    
    
    9,334
    
    
    
    3,336
    
    
    
    7,026
    
    
    
    4,806
    
    
    
    24,502Labor contract drilling services
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    18,141
    
    
    
    18,141Engineering, consulting and other
    
    
    405
    
    
    
    233
    
    
    
    4,081
    
    
    
    559
    
    
    
    5,278$
    214,901
    
    
    $
    60,811
    
    
    $
    11,107
    
    
    $
    23,506
    
    
    $
    310,325Operating Costs and Expenses:Contract drilling services
    
    $
    114,418
    
    
    $
    29,604
    
    
    $
    
    
    
    $
    
    
    
    $
    144,022Reimbursables
    
    
    7,912
    
    
    
    3,205
    
    
    
    7,038
    
    
    
    4,751
    
    
    
    22,906Labor contract drilling services
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    15,189
    
    
    
    15,189Engineering, consulting and other
    
    
    152
    
    
    
    172
    
    
    
    5,035
    
    
    
    529
    
    
    
    5,888Depreciation and amortization
    
    
    44,343
    
    
    
    11,013
    
    
    
    98
    
    
    
    923
    
    
    
    56,377Selling, general and administrative
    
    
    5,069
    
    
    
    2,175
    
    
    
    234
    
    
    
    340
    
    
    
    7,818$
    171,894
    
    
    $
    46,169
    
    
    $
    12,405
    
    
    $
    21,732
    
    
    $
    252,200
 21




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##### Table of Contents



FORM 10-Q International
    
    
    DomesticContract
    
    
    Contract
    
    
    EngineeringDrilling
    
    
    Drilling
    
    
    & ConsultingServices
    
    
    Services
    
    
    Services
    
    
    Other
    
    
    Total(In thousands)Three Months Ended March 31, 2004Operating Revenues:Contract drilling services
    
    $
    153,975
    
    
    $
    64,608
    
    
    $
    
    
    
    $
    
    
    
    $
    218,583Reimbursables
    
    
    3,969
    
    
    
    2,950
    
    
    
    541
    
    
    
    2,589
    
    
    
    10,049Labor contract drilling services
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    8,391
    
    
    
    8,391Engineering, consulting and other
    
    
    90
    
    
    
    642
    
    
    
    5,505
    
    
    
    2,173
    
    
    
    8,410$
    158,034
    
    
    $
    68,200
    
    
    $
    6,046
    
    
    $
    13,153
    
    
    $
    245,433Operating Costs and Expenses:Contract drilling services
    
    $
    93,003
    
    
    $
    31,320
    
    
    $
    
    
    
    $
    
    
    
    $
    124,323Reimbursables
    
    
    3,143
    
    
    
    2,883
    
    
    
    554
    
    
    
    2,497
    
    
    
    9,077Labor contract drilling services
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    6,806
    
    
    
    6,806Engineering, consulting and other
    
    
    (860
    )
    
    
    243
    
    
    
    6,107
    
    
    
    2,607
    
    
    
    8,097Depreciation and amortization
    
    
    36,489
    
    
    
    12,877
    
    
    
    171
    
    
    
    890
    
    
    
    50,427Selling, general and administrative
    
    
    4,885
    
    
    
    2,045
    
    
    
    310
    
    
    
    621
    
    
    
    7,861$
    136,660
    
    
    $
    49,368
    
    
    $
    7,142
    
    
    $
    13,421
    
    
    $
    206,591
 Rig Utilization, Operating Days and Average Dayrates The following table sets forth the average rig utilization, operating days and average
dayrates for our rig fleet for the three months ended March 31, 2005 and 2004: Average RigUtilization (1)
    
    
    Operating Days (2)
    
    
    Average DayrateThree Months Ended
    
    
    Three Months Ended
    
    
    Three Months EndedMarch 31,
    
    
    March 31,
    
    
    March 31,2005
    
    
    2004
    
    
    2005
    
    
    2004
    
    
    2005
    
    
    2004International (3):Jackups
    
    
    94
    %
    
    
    80
    %
    
    
    3,086
    
    
    
    2,557
    
    
    $
    51,158
    
    
    $
    49,962Semisubmersibles  >6,000(4)
    
    
    100
    %
    
    
    100
    %
    
    
    180
    
    
    
    91
    
    
    $
    145,047
    
    
    $
    130,510Semisubmersibles  <6,000(5)
    
    
    86
    %
    
    
    100
    %
    
    
    77
    
    
    
    91
    
    
    $
    62,410
    
    
    $
    40,147Drillships
    
    
    67
    %
    
    
    67
    %
    
    
    180
    
    
    
    182
    
    
    $
    90,963
    
    
    $
    58,755Total International
    
    
    92
    %
    
    
    80
    %
    
    
    3,523
    
    
    
    2,921
    
    
    $
    58,235
    
    
    $
    52,713Domestic (6):Jackups
    
    
    100
    %
    
    
    95
    %
    
    
    180
    
    
    
    173
    
    
    $
    55,819
    
    
    $
    41,292Semisubmersibles  >6,000(4)
    
    
    75
    %
    
    
    100
    %
    
    
    270
    
    
    
    455
    
    
    $
    104,426
    
    
    $
    110,322Semisubmersibles
 < 6,000(5)
    
    
    100
    %
    
    
    32
    %
    
    
    180
    
    
    
    58
    
    
    $
    53,727
    
    
    $
    38,103Submersibles
    
    
    100
    %
    
    
    79
    %
    
    
    270
    
    
    
    215
    
    
    $
    34,549
    
    
    $
    23,523Total Domestic
    
    
    91
    %
    
    
    83
    %
    
    
    900
    
    
    
    901
    
    
    $
    63,602
    
    
    $
    71,707
   (1)
    
    Information reflects our policy of reporting on the basis of the number of actively marketed
rigs in our fleet. Percentages reflect the results of rigs only during the period in which
they are owned or operated by us.(2)
    
    Information reflects the number of days that our rigs were operating under contractual
terms.(3)
    
    International encompasses contract drilling services conducted in the Middle East, Mexico,
the North Sea, Brazil, West Africa, India and the Mediterranean Sea.(4)
    
    These units have water depth ratings of 6,000 feet or greater depending on the unit.(5)
    
    These units have water depth ratings of less than 6,000 feet.(6)
    
    Domestic encompasses contract drilling services conducted in the U.S. Gulf of Mexico. 22




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##### Table of Contents



FORM 10-Q International Contract Drilling Services The following table sets forth the operating revenues and the operating costs and expenses
for our international contract drilling services for the three months ended March 31, 2005 and
2004: Operating CostsOperating Revenues
    
    
    and ExpensesThree Months Ended
    
    
    Three Months EndedMarch 31,
    
    
    March 31,2005
    
    
    2004
    
    
    2005
    
    
    2004(In thousands)Contract drilling services
    
    $
    205,162
    
    
    $
    153,975
    
    
    $
    114,418
    
    
    $
    93,003Reimbursables (1)
    
    
    9,334
    
    
    
    3,969
    
    
    
    7,912
    
    
    
    3,143Labor contract drilling services
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Engineering, consulting and other
    
    
    405
    
    
    
    90
    
    
    
    152
    
    
    
    (860
    )Depreciation and amortization
    
    
    N/A
    
    
    
    N/A
    
    
    
    44,343
    
    
    
    36,489Selling, general and administrative
    
    
    N/A
    
    
    
    N/A
    
    
    
    5,069
    
    
    
    4,885Total
    
    $
    214,901
    
    
    $
    158,034
    
    
    $
    171,894
    
    
    $
    136,660
   (1)
    
    We record reimbursements from customers for out-of-pocket expenses as revenues and the
related direct cost as operating expenses. Changes in the amount of these reimbursables do
not have a material effect on our financial position, results of operations or cash flows. Operating Revenues.International contract drilling services revenues increased $51,187,000
due to additional operating days in West Africa and the Middle East and higher average dayrates in
Brazil and the North Sea. These items were partially offset by lower utilization in Mexico. We
had an additional 367 operating days in West Africa on our jackups due to improved demand in
Nigeria, which traditionally has the largest concentration of drilling rigs in West Africa. Demand
in Nigeria in 2002 and 2003 declined due to political unrest attributable to elections and strikes.
In the Comparable Quarter, four of the six rigs in West Africa were stacked. Improved demand over
the course of 2004 and continuing into 2005 has resulted in 100 percent utilization in the Current
Quarter and increased revenues by approximately $18,000,000. In addition, revenues increased by
approximately $12,000,000 as we deployed the Noble Homer Ferringtonsemisubmersible to our West
Africa division in July 2004 from the U.S. Gulf of Mexico for a two-year contract that commenced in
November 2004. In the Middle East, we operated an additional 228 days due primarily to the
acquisitions of the Noble Cees van Diemenand Noble David Tinsleyin July 2004 and October 2004,
respectively, and additional operating days on the Noble Dick Favor, Noble Gus Androesand Noble
Gene Housepartially offset by lower operating days on the Noble George McLeod. The additional
operating days in our Middle East division resulted in additional revenues of approximately
$11,000,000. The average dayrate for our drilling rigs in Brazil increased 37 percent from the
Comparable Quarter. Improved market conditions in the North Sea resulted in a 12 percent increase
in average dayrate for our drilling rigs in the region. Operating days in Mexico decreased 94 days
primarily due to the mobilization of the Noble Lewis Duggerfrom Mexico to the U.S. Gulf of Mexico
for upgrades and refurbishments following the completion of its contract in early January 2005.
Upon completion of this shipyard work, the rig will return to work in Mexico for Pemex under a
two-year contract that is expected to commence in May 2005. Operating Costs and Expenses.International contract drilling services expenses increased
$21,415,000 primarily due to additional operating days in our Middle East and West Africa
divisions. The increase was largely attributable to the acquisition of the Noble Cees van Diemen
and Noble David Tinsleyjackup rigs, which are both in our Middle East division, and the
mobilization of the Noble Homer Ferringtonfrom the U.S. Gulf of Mexico to West Africa. Also, we
incurred additional costs attributable to our shipyard project in Brazil on the Noble Roger Eason
drillship.This drillship commenced a 700-day contract for Petrobras in April 2005 at a dayrate
of $96,250. We also experienced labor increases in all regions. Depreciation and amortization
expense in our international contract drilling services segment increased $7,854,000 due mainly to
the acquisition of the Noble Cees van Diemenand Noble David Tinsleyand the transfer of the Noble
Homer Ferringtonto our West Africa division. 23




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##### Table of Contents



FORM 10-Q Domestic Contract Drilling Services The following table sets forth the operating revenues and the operating costs and expenses
for our domestic contract drilling services for the three months ended March 31, 2005 and 2004: Operating CostsOperating Revenues
    
    
    and ExpensesThree Months Ended
    
    
    Three Months EndedMarch 31,
    
    
    March 31,2005
    
    
    2004
    
    
    2005
    
    
    2004(In thousands)Contract drilling services
    
    $
    57,242
    
    
    $
    64,608
    
    
    $
    29,604
    
    
    $
    31,320Reimbursables (1)
    
    
    3,336
    
    
    
    2,950
    
    
    
    3,205
    
    
    
    2,883Labor contract drilling services
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Engineering, consulting and other
    
    
    233
    
    
    
    642
    
    
    
    172
    
    
    
    243Depreciation and amortization
    
    
    N/A
    
    
    
    N/A
    
    
    
    11,013
    
    
    
    12,877Selling, general and administrative
    
    
    N/A
    
    
    
    N/A
    
    
    
    2,175
    
    
    
    2,045Total
    
    $
    60,811
    
    
    $
    68,200
    
    
    $
    46,169
    
    
    $
    49,368
   (1)
    
    We record reimbursements from customers for out-of-pocket expenses as revenues and the
related direct cost as operating expenses. Changes in the amount of these reimbursables do
not have a material effect on our financial position, results of operations or cash flows. Operating Revenues.Domestic contract drilling services revenues decreased $7,366,000 due to
fewer operating days and lower average dayrate for our semisubmersibles, partially offset by
additional operating days and higher average dayrate on our jackups. Operating days for our
semisubmersibles decreased 63 days primarily as a result of the Noble Paul Romanobeing in the shipyard for
the entire Current Quarter and the mobilization of the Noble Homer Ferringtonto West Africa.
Average dayrates were lower for our deepwater semisubmersibles because in 2004 two of these rigs
were in the process of completing five-year contracts at higher dayrates. These items were partially offset by
additional operating days on the Noble Therald Martinand Noble Lorris Bouzigard. Operating Costs and Expenses.Domestic contract drilling services expenses decreased $1,716,000
primarily due to the transfer of the Noble Homer Ferringtonsemisubmersible to our West Africa division in
July 2004. Depreciation and amortization expense also decreased $1,864,000, primarily as a result
of this mobilization. 24




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FORM 10-Q Engineering & Consulting Services The following table sets forth the operating revenues and the operating costs and expenses
for our engineering and consulting services for the three months ended March 31, 2005 and 2004: Operating CostsOperating Revenues
    
    
    and ExpensesThree Months Ended
    
    
    Three Months EndedMarch 31,
    
    
    March 31,2005
    
    
    2004
    
    
    2005
    
    
    2004(In thousands)Contract drilling services
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    Reimbursables (1)
    
    
    7,026
    
    
    
    541
    
    
    
    7,038
    
    
    
    554Labor contract drilling services
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Engineering, consulting and other
    
    
    4,081
    
    
    
    5,505
    
    
    
    5,035
    
    
    
    6,107Depreciation and amortization
    
    
    N/A
    
    
    
    N/A
    
    
    
    98
    
    
    
    171Selling, general and administrative
    
    
    N/A
    
    
    
    N/A
    
    
    
    234
    
    
    
    310Total
    
    $
    11,107
    
    
    $
    6,046
    
    
    $
    12,405
    
    
    $
    7,142
   (1)
    
    We record reimbursements from customers for out-of-pocket expenses as revenues and the
related direct cost as operating expenses. Changes in the amount of these reimbursables do
not have a material effect on our financial position, results of operations or cash flows. Operating Revenues.Excluding reimbursables, operating revenues for our engineering and
consulting services segment decreased $1,424,000 due primarily to a license sale for our
OptiDrillTMdrilling efficiency technology by our Noble Engineering & Development
Limited subsidiary in the Comparable Quarter, partially offset by additional project management
engagements conducted by our Triton Engineering Services Company (Triton) subsidiary in the
Current Quarter. The increase in reimbursables was attributable to a significant project
management engagement by Triton, which was completed in March 2005. Operating Costs and Expenses.Excluding reimbursables, operating costs and expenses for our
engineering and consulting services segment decreased $1,072,000 due to the completion of a
project in February 2005 for our Noble Technology Services Division. Other The following table sets forth the operating revenues and the operating costs and expenses
for our other services for the three months ended March 31, 2005 and 2004: Operating CostsOperating Revenues
    
    
    and ExpensesThree Months Ended
    
    
    Three Months EndedMarch 31,
    
    
    March 31,2005
    
    
    2004
    
    
    2005
    
    
    2004(In thousands)Contract drilling services
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    Reimbursables (1)
    
    
    4,806
    
    
    
    2,589
    
    
    
    4,751
    
    
    
    2,497Labor contract drilling services
    
    
    18,141
    
    
    
    8,391
    
    
    
    15,189
    
    
    
    6,806Engineering, consulting and other
    
    
    559
    
    
    
    2,173
    
    
    
    529
    
    
    
    2,607Depreciation and amortization
    
    
    N/A
    
    
    
    N/A
    
    
    
    923
    
    
    
    890Selling, general and administrative
    
    
    N/A
    
    
    
    N/A
    
    
    
    340
    
    
    
    621Total
    
    $
    23,506
    
    
    $
    13,153
    
    
    $
    21,732
    
    
    $
    13,421
   (1)
    
    We record reimbursements from customers for out-of-pocket expenses as revenues and the
related direct cost as operating expenses. Changes in the amount of these reimbursables do
not have a material effect on our financial position, results of operations or cash flows. Operating Revenues.Revenues from our labor contract drilling services increased $9,750,000
due to additional operating days in the North Sea, mostly attributable to new labor contracts with
Apache Corporation on 25




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FORM 10-Q three platforms, ChevronTexaco on one platform and British Petroleum on one platform.
Reimbursables were also favorably impacted by the new labor contracts. Operating Costs and Expenses.Excluding reimbursables, operating costs and expenses for our
other services increased $8,383,000 due to the additional labor contract operating days in the
North Sea. Other Items Selling, General and Administrative Expenses.Selling, general and administrative expenses
were consistent between the Current and Comparable Quarters. Interest Expense.Interest expense decreased $3,133,000 due to $2,300,000 interest
capitalized on the Noble Clyde Boudreauxand the continued retirement of debt since the beginning
of the Comparable Quarter. Since January 1, 2004, we have made principal repayments of long-term
debt totaling $119,969,000 including $42,036,000 in the Current Quarter. Other, net.Other, net increased $849,000 attributable primarily to additional interest
income earned on our cash and investments in marketable securities due to higher interest rates in
2005 than in 2004. Income Tax Provision.Income tax provision increased $5,995,000 due primarily to higher
pre-tax earnings. 
 LIQUIDITY AND CAPITAL RESOURCES Overview Our principal capital resource in the Current Period was net cash provided by operating
activities of $71,545,000, which compared to $61,552,000 in the Comparable Period. Net income
plus depreciation and amortization and deferred income tax provision in the Current Period was
$25,322,000 more than the Comparable Period. Our change in working capital (excluding cash and
cash equivalents) was $17,023,000 more in the Current Period than the Comparable Period. We had working capital, including cash, of $255,821,000 and $211,117,000 at March 31, 2005
and December 31, 2004, respectively. Total debt as a percentage of total debt plus shareholders
equity decreased to 16 percent at March 31, 2005 from 18 percent at December 31, 2004. At March
31, 2005, we had cash and cash equivalents of $107,759,000, $88,628,000 of marketable debt
securities and $220,780,000 of funds available under our bank credit facility. We did not repurchase any of our ordinary shares during the Current Quarter. However, during
2004, we repurchased 1,087,000 of our ordinary shares at an average price of $36.54 per ordinary
share for a total cost of $39,714,000. Additional repurchases, if any, may be made on the open
market or in private transactions at prices determined by us. Share repurchases made in 2004, 2003
and 2002 were effected pursuant to the share repurchase program which our board of directors
authorized and adopted and which we announced on January 31, 2002. The program authorization
covers an aggregate of 15,000,000 ordinary shares. As of April 29, 2005, 9,162,000 shares remained
available under this authorization. We expect total cash fundings in 2005 to our international and domestic pension plans to
approximate $6,000,000, $250,000 of which was paid during the three months ended March 31, 2005. Capital Expenditures Capital expenditures totaled $51,247,000 and $13,871,000 for the Current Quarter and
Comparable Quarter, respectively. Included in capital expenditures for the Current Quarter is
$3,814,000 for the upgrade of the Noble Clyde Boudreauxsemisubmersible in preparation for its
commitment for a long-term contract with Shell Exploration & Production Company estimated to begin
in the third quarter of 2006 and $8,482,000 for upgrade work on the Noble Mark Burns. Deferred repair and maintenance expenditures totaled $12,151,000 and $9,401,000 for the
Current Quarter and Comparable Quarter, respectively. We expect our capital expenditures and
deferred repair and maintenance expenditures for the remainder of 2005 will aggregate
approximately $250,000,000 and $70,000,000, respectively. 26




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FORM 10-Q In connection with several projects, we have entered into agreements with various vendors to
purchase or construct property and equipment that generally have long lead times for delivery.
Any equipment purchased for a project on which we do not proceed would be used, where applicable,
as capital spares for other units in our fleet. As of March 31, 2005, we had approximately
$53,000,000 of outstanding purchase commitments related to these projects, which are included in
the projected 2005 capital expenditure and deferred repair and maintenance amounts described
above. Certain projects currently under consideration could require, if they materialize, capital
expenditures or other cash requirements not included in the above estimates. In addition, we will
continue to evaluate acquisitions of drilling units from time to time. Other factors that could
cause actual capital expenditures to materially exceed the planned capital expenditures include
delays and cost overruns in shipyards, shortages of equipment, latent damage or deterioration to
hull, equipment and machinery in excess of engineering estimates and assumptions, and changes in
design criteria or specifications during repair or construction. Credit Facilities and Long-Term Debt Noble Drilling Corporation (Noble Drilling), an indirect, wholly-owned subsidiary of Noble
Corporation (Noble), has in place a $300,000,000 bank credit agreement (the Credit Agreement),
which extends through November 30, 2009. Noble and one of its wholly-owned subsidiaries, Noble
Holding (U.S.) Corporation, have unconditionally guaranteed the performance of Noble Drilling under
the Credit Agreement. During the Current Quarter, we repaid $40,000,000 of the outstanding
borrowings under the Credit Agreement. At March 31, 2005, we had outstanding borrowings and
outstanding letters of credit of $60,000,000 and $19,220,000, respectively, under the Credit
Agreement, with $220,780,000 remaining available thereunder. Additionally, at March 31, 2005, we
had other letters of credit, customs bonds and third-party corporate guarantees
totaling $47,697,000 and
performance bonds totaling $41,386,000 supported by surety bonds. During the Current Quarter, our debt decreased from $511,649,000, including current maturities
of $8,361,000, at December 31, 2004 to $469,616,000, including current maturities of $8,510,000 at
March 31, 2005, due to debt repayments during the Current Quarter of $42,036,000, including the
repayment of $40,000,000 of borrowings under the Credit Agreement. At March 31, 2005 and December
31, 2004, we had no off-balance sheet debt. We believe that our cash and cash equivalents, net cash provided by operating activities,
available borrowings under lines of credit, and access to other financing sources will be adequate
to meet our anticipated short-term and long-term liquidity requirements, including capital
expenditures and scheduled debt repayments. 
 ACCOUNTING PRONOUNCEMENTS In December 2004, the FASB issued SFAS 123 (revised 2004), Share-Based Payment(SFAS 123
(revised 2004)). SFAS 123 (revised 2004) is a revision to SFAS No. 123, Accounting for
Stock-Based Compensation(SFAS 123), and supersedes APB Opinion No. 25, Accounting for Stock
Issued to Employees(APB 25).SFAS 123 (revised 2004) establishes standards for accounting for
exchanges of an entitys equity instruments for goods or services, focusing primarily on
transactions in which an entity obtains employee services in share-based payment transactions.
The statement requires that entities measure the cost of employee services received in exchange
for an award of equity instruments based on the grant-date fair value of the award and that the
cost is recognized over the period in which the employee services are performed, which is usually
the equity instruments vesting period. SFAS 123 (revised 2004) eliminates the alternative
allowed under SFAS 123 under which equity instruments could be measured at their intrinsic value, as
prescribed by APB 25, with only pro forma disclosure in the entitys notes to its financial
statements of the impact on net income and earnings per share had the equity instruments been
measured at fair value. For public companies (other than small business issuers) with calendar
fiscal years, SFAS 123 (revised 2004) required adoption as of the beginning of the third quarter
of 2005. On April 14, 2005, the Securities and Exchange Commission announced the adoption of a
new rule that amends the compliance dates for SFAS 123 (revised 2004), and as a result, such
public companies, including Noble, will not be required to adopt SFAS 123 (revised 2004) until the
first quarter of 2006. The impact that the adoption of SFAS 123 (revised 2004) will have on our consolidated results
of operations will be determined primarily by the number of stock options granted to employees in
future periods. Based on recent stock option grants, we estimate that the adoption of this
statement in 2006 will reduce that years net income by
approximately $7,000,000 to $9,000,000, or $0.05 to $0.07
per diluted share. We do not expect the adoption of SFAS 123 (revised 2004) to have a material
impact on our consolidated cash flows or financial position. 27




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FORM 10-Q 
 ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK Market risk is the potential for loss due to a change in the value of a financial instrument
as a result of fluctuations in interest rates, currency exchange rates or equity prices. We own
investments in both marketable equity and debt securities. To mitigate the risk of losses, these
investments are marked to market periodically and are monitored by management to assure compliance
with policies established by the Company. Under the Noble Drilling Corporation 401(k) Savings
Restoration Plan, certain highly compensated employees may elect to defer compensation into the
plan and invest among several alternatives, primarily mutual funds. Any change in the fair value
of these investments would result in a comparable change in the deferred compensation plan
obligation. We are subject to market risk exposure related to changes in interest rates on our Credit
Agreement. Interest on our Credit Agreement is at an agreed upon percentage point spread from
LIBOR. At March 31, 2005, there was $60,000,000 of outstanding borrowings under our Credit
Agreement. An immediate change of one percent in the interest rate would cause a $600,000 change
in interest expense on an annual basis. Although we conduct business internationally, a substantial majority of the value of our
foreign transactions are denominated in U.S. Dollars. Generally, we
structure our drilling contracts in U.S. Dollars to mitigate our
exposure to fluctuations in foreign currencies. In certain
international markets, a part of the revenues received under our
drilling contracts is denominated in the applicable foreign currency
based on an estimate of the local labor and other costs we expect to
pay in such foreign currency to perform the contract. Other than
assets, liabilities and financial instruments associated with this
contracting strategy to offset contract revenues with costs payable
in the same foreign currency, and with the hedging activities
described in the following paragraph, we do not currently have any
significant assets, liabilities or financial instruments that are
sensitive to foreign currency exchange rates. We periodically enter into derivative instruments to manage our exposure to fluctuations in
interest rates and foreign currency exchange rates, and we may conduct hedging activities in
future periods to mitigate such exposure. Our North Sea operations have a significant amount of
their cash operating expenses payable in either the Euro or British Pound. To reduce our exposure
to fluctuations in these currencies during 2005, we entered into forward contracts in February and
March 2005 to purchase 24,780,000 Euros and 18,199,000 British Pounds, respectively, for the
period from April 2005 through March 2006. These forward
contracts represented approximately 72
percent of our forecasted Euro and British Pound requirements for 2005 after the respective dates
on which we entered into the forward contracts. These forward contracts are being accounted for as
cash flow hedges under SFAS No. 133, Accounting for Derivative Instruments and Hedging Activities,
as amended by SFAS No. 138, Accounting for Certain Derivative Instruments and Certain Hedging
Activities (an amendment of FASB Statement No. 133),and SFAS No. 149, Amendment of Statement 133
on Derivative Instruments and Hedging Activities. The cumulative net unrealized gain on these
forward contracts is included in Accumulated other comprehensive income in our Consolidated
Balance Sheet at March 31, 2005. We did not recognize a gain or loss due to hedge ineffectiveness
in our Consolidated Statements of Income for the three months ended March 31, 2005 related to
these forward contracts. See Note 8 to our accompanying consolidated financial statements for
additional information on the balance of the net unrealized gain on these forward contracts and
the related activity for the three months ended March 31, 2005. 
 ITEM 4. CONTROLS AND PROCEDURES Nobles Chairman, Chief Executive Officer and President, James C. Day, and Nobles Senior Vice
President, Chief Operating Officer and Chief Financial Officer, Mark A. Jackson, have overseen and
participated in an evaluation of the Companys disclosure controls and procedures as of the end of
the period covered by this report. On the basis of this evaluation, Mr. Day and Mr. Jackson have
concluded that the Companys disclosure controls and procedures are effective. The Companys
disclosure controls and procedures are designed to ensure that information required to be disclosed
by the Company in the reports that it files with or submits to the U.S. Securities and Exchange
Commission is recorded, processed, summarized and reported within the time periods specified in the
Commissions rules and forms. There were no changes in the Companys internal control over financial reporting that occurred
during the quarter ended March 31, 2005 that have materially affected, or are reasonably likely to
materially affect, the Companys internal control over financial reporting. 28




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FORM 10-Q 
 PART II. OTHER INFORMATION 
 ITEM 1. LEGAL PROCEEDINGS Noble Asset Company Limited (NACL), a wholly-owned, indirect subsidiary of Noble, was named
one of 21 parties served a Show Cause Notice (SCN) issued by the Commissioner of Customs (Prev.),
Mumbai, India in August 2003. The SCN concerned alleged violations of Indian Customs laws and
regulations regarding one of our jackup drilling rigs. The Commissioner alleged certain violations
to have occurred before, at the time of, and after NACL acquired the rig from the rigs previous
owner. In the purchase agreement for the rig, NACL received contractual indemnification against
liability for Indian customs duty from the rigs previous owner. In connection with the export of
the rig from India in 2001, NACL posted a bank guarantee in the amount of $3,440,000 and a customs
bond in the amount of $22,200,000, both of which remain in place. NACL filed its initial replies
to the SCN in December 2003. NACL appeared through counsel before the Commissioner in September
2004 and made oral arguments and written submissions. In March 2005, the Commissioner passed an
order against NACL and the other parties cited in the SCN, as anticipated, confirming his findings
consistent with his allegations in the SCN and seeking (i) to invoke the bank guarantee posted on
behalf of NACL as a fine, (ii) to demand duty of (a) $17,300,000 plus interest related to a 1997
alleged import and (b) $19,700,000 plus interest related to a 1999 alleged import, provided that
the duty and interest demanded in (b) shall not be payable if the duty and interest demanded in (a)
is paid by NACL, and (iii) to assess penalty ($458,000) against NACL. NACL promptly filed a Writ
Petition in the High Court, Bombay, and obtained from the court a favorable order staying the
Commissioner from invoking the guarantee and confirming NACLs right to appeal the order of the
Commissioner to the Central Excise and Sales Tax Appellate Tribunal. We continue to maintain that
NACL has acted in accordance with all Indian Customs laws and regulations and believe the
Commissioners order is without merit as against NACL. NACL intends vigorously to pursue its
appeal. We do not believe the resolution of this matter will have a material adverse effect on our
financial position, results of operations or cash flows. See Part I. Item 3. Legal Proceedings included in the Annual Report on Form 10-K of Noble
for the year ended December 31, 2004 for a discussion of other matters for which there were no
material developments since the filing of the 2004 Form 10-K. We are a defendant in certain claims and litigation arising out of operations in the normal
course of business. In the opinion of management, uninsured losses, if any, will not be material
to our financial position, results of operations or cash flows. 
 ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS  (a)
    The annual general meeting of members of Noble was held in Houston, Texas, at
10:00 a.m., local time, on April 28, 2005.(b)
    Proxies were solicited by the Board of Directors of Noble pursuant to
Regulation 14A under the Securities Exchange Act of 1934. There was no solicitation
in opposition to the Board of Directors nominees for election as directors as listed
in the proxy statement and all of such nominees were duly elected. The terms of
Michael A. Cawley, Luke R. Corbett, James C. Day, Marc E. Leland and Jack E. Little,
each an incumbent director, continued following the annual general meeting.(c)
    Out of a total of 135,569,061 ordinary shares of Noble outstanding and
entitled to vote at the annual general meeting, 121,743,560 shares were
present in person or by proxy, representing
approximately 90 percent of the
outstanding shares. Five matters, as fully described in the proxy statement for the
annual general meeting, were voted on by members. The first matter voted on was the
election of directors to serve three-year terms on the Board of Directors of Noble.
The results of voting were as follows: Number of SharesNumber of Shares
    
    WITHHOLDING AUTHORITYVoting FOR Re-election
    
    to Vote for Re-electionNominee
for Re-election as Director
    
    as Director
    
    as DirectorLawrence J. Chazen
    
    119,919,484
    
    1,824,076Mary P. Ricciardello
    
    120,804,063
    
    939,497William A. Sears
    
    120,793,486
    
    950,074
 29




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FORM 10-Q The second matter voted on was a proposal to amend the Companys articles of
association to increase director retirement age. The results of the voting on this
proposal were as follows: For:
120,541,721          
Against:
416,039                
Abstain: 785,800 The third matter voted on was a proposal regarding the Amended and Restated Noble
Corporation 1992 Nonqualified Stock Option Plan for Non-Employee Directors. The
results of the voting on this proposal were as follows: For:
87,908,393            
Against:
23,126,152          
Abstain: 1,236,970 The fourth matter voted on was a proposal to amend the Noble Corporation Equity
Compensation Plan for Non-Employee Directors. The results of the voting on this
proposal were as follows: For: 100,714,334          
Against:
10,310,762        
Abstain: 1,246,419 The fifth matter voted on was the appointment of PricewaterhouseCoopers LLP as
independent auditors for 2005. The results of the voting on this proposal were as
follows: For:
119,418,102          
Against:
1,632,230          
Abstain: 693,118 (d) Inapplicable. 
 ITEM 6. EXHIBITS The information required by this Item 6 is set forth in the Index to Exhibits accompanying this
quarterly report and is incorporated herein by reference.





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SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly
caused this report to be signed on its behalf by the undersigned thereunto duly authorized. NOBLE CORPORATIONDATE: May 9, 2005
    
    By:
    
    /s/ Mark A. JacksonMark A. Jackson,Senior Vice President, Chief Operating Officer,
Chief Financial Officer, Treasurer and
Controller
(Principal Financial and Accounting Officer)
 31




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FORM 10-Q 
 INDEX TO EXHIBITS EXHIBITNUMBER
    
    EXHIBIT3.1
    
    Special Resolution adopted by members on April 28, 2005 amending Article 54 of
the Articles of Association of the Registrant.3.2
    
    Articles of Association of the Registrant as currently in effect.10.1
    
    Noble Corporations Short Term Incentive Plan (revised April 2005).31.1
    
    Certification of James C. Day Pursuant to SEC Rule 13a-14(a) or Rule 15d-14(a).31.2
    
    Certification of Mark A. Jackson Pursuant to SEC Rule 13a-14(a) or Rule 15d-14(a).32.1*
    
    Certification of James C. Day Pursuant to 18 U.S.C. Section 1350, as Adopted
Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.32.2*
    
    Certification of Mark A. Jackson Pursuant to 18 U.S.C. Section 1350, as
Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
   *
    
    Furnished in accordance with Item 601(b)(32)(ii) of Regulation S-K.