Noble plc(NE) - 2025 Q2 - Quarterly Report

PART I. FINANCIAL INFORMATION Item 1. Financial Statements (Unaudited) Noble Corporation plc's unaudited condensed consolidated financial statements and detailed notes are presented for the periods ended June 30, 2025, and December 31, 2024 Condensed Consolidated Balance Sheets Total assets and liabilities decreased from December 2024 to June 2025, while cash and cash equivalents increased | Metric | June 30, 2025 (in thousands) | December 31, 2024 (in thousands) | | :----------------------------- | :----------------------------- | :----------------------------- | | Cash and cash equivalents | $338,185 | $247,303 | | Total current assets | $1,289,062 | $1,388,864 | | Property and equipment, net | $5,856,242 | $6,035,817 | | Total assets | $7,666,971 | $7,964,768 | | Total current liabilities | $715,973 | $940,362 | | Long-term debt | $1,978,027 | $1,980,186 | | Total liabilities | $3,038,644 | $3,313,382 | | Total shareholders' equity | $4,628,327 | $4,651,386 | Condensed Consolidated Statements of Operations Operating revenues increased for both periods ended June 30, 2025, but net income and diluted EPS significantly decreased due to higher costs and expenses Statements of Operations (Three Months Ended June 30) | Metric | 2025 (in thousands) | 2024 (in thousands) | Change ($) | Change (%) | | :----------------------------- | :------------------ | :------------------ | :--------- | :--------- | | Operating revenues | $848,652 | $692,844 | $155,808 | 22% | | Operating income (loss) | $135,253 | $209,959 | $(74,706) | (36)% | | Net income (loss) | $42,872 | $195,008 | $(152,136) | (78)% | | Diluted EPS | $0.27 | $1.34 | $(1.07) | (80)% | Statements of Operations (Six Months Ended June 30) | Metric | 2025 (in thousands) | 2024 (in thousands) | Change ($) | Change (%) | | :----------------------------- | :------------------ | :------------------ | :--------- | :--------- | | Operating revenues | $1,723,139 | $1,329,928 | $393,211 | 30% | | Operating income (loss) | $322,592 | $317,506 | $5,086 | 2% | | Net income (loss) | $151,175 | $290,489 | $(139,314) | (48)% | | Diluted EPS | $0.93 | $1.99 | $(1.06) | (53)% | Condensed Consolidated Statements of Comprehensive Income (Loss) Comprehensive income for the three and six months ended June 30, 2025, was $43.2 million and $151.7 million, respectively, reflecting net income adjusted for minor other comprehensive income Comprehensive Income (Loss) (Three Months Ended June 30) | Metric | 2025 (in thousands) | 2024 (in thousands) | | :----------------------------- | :------------------ | :------------------ | | Net income (loss) | $42,872 | $195,008 | | Other comprehensive income (loss), net | $345 | $50 | | Comprehensive income (loss) | $43,217 | $195,058 | Comprehensive Income (Loss) (Six Months Ended June 30) | Metric | 2025 (in thousands) | 2024 (in thousands) | | :----------------------------- | :------------------ | :------------------ | | Net income (loss) | $151,175 | $290,489 | | Other comprehensive income (loss), net | $546 | $21 | | Comprehensive income (loss) | $151,721 | $290,510 | Condensed Consolidated Statements of Cash Flows Net cash provided by operating activities significantly increased to $487.4 million for the six months ended June 30, 2025, while investing activities used less cash and financing activities used more cash Cash Flows (Six Months Ended June 30) | Metric | 2025 (in thousands) | 2024 (in thousands) | | :------------------------------------------ | :------------------ | :------------------ | | Net cash provided by (used in) operating activities | $487,417 | $235,480 | | Net cash provided by (used in) investing activities | $(191,726) | $(299,813) | | Net cash provided by (used in) financing activities | $(202,517) | $(134,926) | | Net increase (decrease) in cash, cash equivalents, and restricted cash | $93,174 | $(199,259) | | Cash, cash equivalents, and restricted cash, end of period | $345,453 | $168,486 | Condensed Consolidated Statements of Equity Total shareholders' equity slightly decreased from December 31, 2024, to June 30, 2025, primarily due to dividend payments and share repurchases Changes in Total Equity (Six Months Ended June 30, 2025) | Metric | Amount (in thousands) | | :-------------------------------- | :-------------------- | | Balance at December 31, 2024 | $4,651,386 | | Amortization of share-based compensation | $15,574 | | Shares withheld for taxes on equity transactions | $(9,447) | | Warrants exercised | $38 | | Share repurchases | $(20,000) | | Dividends | $(160,945) | | Net income (loss) | $151,175 | | Other comprehensive income (loss), net | $546 | | Balance at June 30, 2025 | $4,628,327 | Notes to Unaudited Condensed Consolidated Financial Statements These notes provide essential context and detail for the unaudited condensed consolidated financial statements, covering the company's business, acquisition, accounting, debt, revenue, taxes, benefits, commitments, and subsequent events Note 1 — Organization and Basis of Presentation Noble Corporation plc is a leading offshore drilling contractor operating a global fleet of 38 drilling rigs, reporting as a single segment - Noble Corporation plc is a leading offshore drilling contractor for the oil and gas industry, providing contract drilling services with a global fleet of 38 drilling rigs (25 floaters and 13 jackups)[27] - The company reports its contract drilling operations as a single reportable segment, Contract Drilling Services[28] Note 2 — Acquisitions Noble completed the acquisition of Diamond Offshore Drilling, Inc. on September 4, 2024, for a total consideration of $1.5 billion - Noble completed the acquisition of Diamond Offshore Drilling, Inc. on September 4, 2024[30] - Total consideration for the acquisition was $1.5 billion, comprising $610.3 million in cash and $879.9 million in non-cash consideration (primarily Ordinary Shares)[30] Note 3 — Accounting Pronouncements No new accounting standards were adopted in the current quarter, and the company is evaluating the impact of recently issued ASUs - No new accounting standards were adopted during the current quarter[31] - ASU No 2025-03, Business Combinations, is not expected to have any impact on consolidated financial statements[32] - The Company is evaluating the potential impact of ASU No 2024-03 (Expense Disaggregation Disclosures) and ASU No 2023-09 (Income Tax Disclosures)[33][34] Note 4 — Income (Loss) Per Share Basic and diluted net income per share decreased significantly for both the three and six months ended June 30, 2025, compared to 2024 Income (Loss) Per Share (Three Months Ended June 30) | Metric | 2025 | 2024 | | :----------------------------- | :--- | :--- | | Net income (loss) | $42,872 | $195,008 | | Weighted average shares outstanding – basic | 158,798 | 142,854 | | Weighted average shares outstanding – diluted | 161,528 | 146,060 | | Basic Net income (loss) per share | $0.27 | $1.37 | | Diluted Net income (loss) per share | $0.27 | $1.34 | Income (Loss) Per Share (Six Months Ended June 30) | Metric | 2025 | 2024 | | :----------------------------- | :--- | :--- | | Net income (loss) | $151,175 | $290,489 | | Weighted average shares outstanding – basic | 158,901 | 142,404 | | Weighted average shares outstanding – diluted | 161,772 | 145,614 | | Basic Net income (loss) per share | $0.95 | $2.04 | | Diluted Net income (loss) per share | $0.93 | $1.99 | - As of June 30, 2025, Noble had approximately 158.8 million Ordinary Shares outstanding, slightly down from 158.9 million at December 31, 2024[36] Note 5 — Property and Equipment Property and equipment, at cost, increased to $6.999 billion as of June 30, 2025, with capital additions totaling $204.3 million for the six months, and two rigs held for sale Property and Equipment, at Cost | Category | June 30, 2025 (in thousands) | December 31, 2024 (in thousands) | | :----------------------------- | :----------------------------- | :----------------------------- | | Drilling equipment and facilities | $6,787,350 | $6,650,034 | | Construction in progress | $136,933 | $197,789 | | Other | $75,004 | $56,908 | | Total Property and equipment, at cost | $6,999,287 | $6,904,731 | - Capital additions for the six months ended June 30, 2025, totaled $204.3 million[41] - During Q2 2025, the company sold the Pacific Scirocco for $15.6 million, resulting in a gain of $4.8 million[42] - The Noble Highlander and Pacific Meltem were classified as held for sale[43] Note 6 — Debt Noble's debt structure includes a $550.0 million revolving credit facility with no outstanding borrowings, $1.4 billion in 8.000% Senior Notes, and $550.0 million in 8.500% Senior Secured Second Lien Notes assumed from the Diamond Transaction - The 2023 Revolving Credit Facility provides $550.0 million in commitments, with no outstanding borrowings as of June 30, 2025[44] - Noble Finance II has $1.4 billion in 8.000% Senior Notes due 2030 outstanding[45] - The company assumed $550.0 million aggregate principal amount of 8.500% Senior Secured Second Lien Notes due October 2030 from the Diamond Transaction[48] - The Diamond's $300.0 million senior secured revolving credit facility was terminated upon the closing of the Diamond Transaction[50] Note 7 — Revenue and Customers Contract drilling services revenue increased significantly for floaters but decreased for jackups for the three months ended June 30, 2025, compared to 2024, with floater growth driven by the Diamond Transaction Contract Drilling Services Revenue by Rig Type (Three Months Ended June 30) | Rig Type | 2025 (in thousands) | 2024 (in thousands) | | :--------- | :------------------ | :------------------ | | Floaters | $684,320 | $517,755 | | Jackups | $127,757 | $142,955 | | Total | $812,077 | $660,710 | Contract Drilling Services Revenue by Rig Type (Six Months Ended June 30) | Rig Type | 2025 (in thousands) | 2024 (in thousands) | | :--------- | :------------------ | :------------------ | | Floaters | $1,377,771 | $1,012,222 | | Jackups | $266,734 | $260,913 | | Total | $1,644,505 | $1,273,135 | Contract Assets and Liabilities (June 30, 2025 vs. December 31, 2024) | Metric | June 30, 2025 (in thousands) | December 31, 2024 (in thousands) | | :----------------------------- | :----------------------------- | :----------------------------- | | Total customer contract assets | $32,710 | $37,091 | | Total deferred revenue | $(93,633) | $(101,945) | Note 8 — Income Taxes As of June 30, 2025, the company had net deferred tax assets of $297.5 million and is evaluating the impact of the recently signed "One Big Beautiful Bill Act" - At June 30, 2025, the Company had deferred tax assets of $297.5 million, net of valuation allowance, and deferred tax liabilities of $5.5 million[64] - During Q2 2025, the tax provision included $22.3 million in tax benefits from valuation allowance releases (primarily Luxembourg), offset by $10.3 million from uncertain tax position movements and $69.1 million in recurring quarterly accruals[70][71] - The company is evaluating the impact of the 'One Big Beautiful Bill Act' (OBBBA), signed into law on July 4, 2025, which includes significant changes to the US tax code[73] Note 9 — Employee Benefit Plans Net pension benefit costs for the three and six months ended June 30, 2025, were $237 thousand and $464 thousand, respectively, with no contributions made during these periods Net Pension Benefit Cost (Three Months Ended June 30) | Metric | 2025 (Non-US) | 2025 (US) | 2024 (Non-US) | 2024 (US) | | :----------------------------- | :------------ | :-------- | :------------ | :-------- | | Net pension benefit cost (gain) | $135 | $102 | $(24) | $(123) | Net Pension Benefit Cost (Six Months Ended June 30) | Metric | 2025 (Non-US) | 2025 (US) | 2024 (Non-US) | 2024 (US) | | :----------------------------- | :------------ | :-------- | :------------ | :-------- | | Net pension benefit cost (gain) | $260 | $204 | $(48) | $(246) | - No contributions were made to pension plans during the three and six months ended June 30, 2025 and 2024[74] Note 10 — Commitments and Contingencies Noble faces outstanding tax audit claims of approximately $357.3 million, primarily in Brazil, and has settled all personal injury claims related to Hurricane Ida - Audit claims of approximately $357.3 million, mostly attributable to Brazil, remain outstanding and are under continued objection by Noble[75] - All parties involved in the Hurricane Ida personal injury claims have entered into settlement and release agreements[78] - Future commitments under a services agreement are estimated at $55.3 million in aggregate[79] - As of June 30, 2025, the company had $18.2 million in letters of credit under its revolving credit facility and an additional $140.4 million under bilateral arrangements[80] Note 11 — Supplemental Financial Information Restricted cash balances increased to $7.3 million at June 30, 2025, and the net effect of changes in operating assets and liabilities on cash flows was a $6.6 million provision - Noble's restricted cash balance was $7.3 million as of June 30, 2025, up from $5.0 million at December 31, 2024[82] Net Change in Operating Assets and Liabilities (Six Months Ended June 30) | Metric | 2025 (in thousands) | 2024 (in thousands) | | :------------------------------------------ | :------------------ | :------------------ | | Total net change in operating assets and liabilities | $6,561 | $(133,792) | Note 12 — Information about Noble Finance II Noble Finance II, the issuer of the 2030 Notes, reported cash and cash equivalents of $176.4 million and total debt of $1.4 billion as of June 30, 2025 - Noble Finance II is the issuer of the 2030 Notes[85] Noble Finance II Summarized Balance Sheet (June 30, 2025) | Metric | Amount (in thousands) | | :---------------------- | :-------------------- | | Cash and cash equivalents | $176,431 | | Total current assets | $1,853,882 | | Total current liabilities | $671,334 | | Total debt | $1,401,098 | | Total shareholders' equity | $4,658,572 | Noble Finance II Summarized Statement of Operations & Cash Flows (Six Months Ended June 30, 2025) | Metric | Amount (in thousands) | | :------------------------------------------ | :-------------------- | | Operating revenues | $1,211,076 | | Operating costs and expenses | $1,021,240 | | Depreciation and amortization | $213,663 | | Net cash provided by (used in) operating activities | $393,034 | | Capital expenditures | $(177,161) | | Proceeds from disposal of assets, net | $16,190 | Note 13 — Subsequent Events In August 2025, Noble announced its intent to dispose of two rigs, expecting a non-cash charge of $60.0 million to $85.0 million in Q3 2025 - In August 2025, the Company announced its intent to dispose of the Noble Globetrotter II and Noble Reacher[88] - This planned disposal is expected to result in an estimated non-cash charge ranging between $60.0 million and $85.0 million in the third quarter of 2025[88] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations This section provides management's perspective on Noble's financial condition and results of operations for the three and six months ended June 30, 2025 and 2024, covering business overview, market outlook, contract backlog, detailed analysis of operating revenues and costs, and liquidity and capital resources Executive Overview Noble is a leading offshore drilling contractor with a fleet of 38 drilling rigs, specializing in ultra-deepwater and high-specification jackup opportunities globally - Noble operates a fleet of 38 drilling rigs (25 floaters and 13 jackups) focused on ultra-deepwater and high-specification jackup drilling[95] - Contract drilling operations are reported as a single segment, Contract Drilling Services[96] Market Outlook The offshore drilling market is supported by long-term commodity prices and energy security focus, leading to increased global rig demand, though dayrates have plateaued and near-term utilization is expected to be lower - Global rig demand recovered to eclipse pre-pandemic levels, supported by long-term commodity prices and energy security focus, but dayrates have generally plateaued[97] - Near-term utilization outlook for both floaters and jackups is anticipated to be lower than the prior two years due to economic uncertainty, lower commodity prices, and OPEC's stated intent to increase oil production[99] - The company remains encouraged by the long-term outlook in the ultra-deepwater floater market, with customers focusing on highest specification floaters[99] Contract Drilling Services Backlog As of June 30, 2025, Noble's contract drilling services backlog totaled approximately $7.4 billion, with 59% of available days committed for the remainder of 2025 - As of June 30, 2025, contract drilling services backlog totaled approximately $7.4 billion[104] Contract Drilling Services Backlog and Percent of Available Days Committed (June 30, 2025) | Category | Total (in thousands) | 2025 (%) | 2026 (%) | 2027 (%) | 2028 (%) | Thereafter (%) | | :----------------------------- | :------------------- | :------- | :------- | :------- | :------- | :------------- | | Floaters Backlog | $6,628,953 | 63% | 53% | 40% | 30% | 23% | | Jackups Backlog | $737,164 | 51% | 26% | 21% | 0% | 0% | | Total Backlog | $7,366,117 | 59% | 44% | 34% | 20% | 15% | - ExxonMobil, Shell, and TotalEnergies represented approximately 26.5%, 18.6%, and 12.2% of the backlog, respectively[108] Results for the Three Months Ended June 30, 2025 and 2024 For Q2 2025, net income significantly decreased to $42.9 million from $195.0 million in Q2 2024, despite a 22% increase in operating revenues, driven by a 48% increase in operating costs and expenses Key Operating Metrics (Three Months Ended June 30) | Metric | 2025 | 2024 | | :----------------------------- | :--- | :--- | | Floaters Average Rig Utilization | 70% | 70% | | Jackups Average Rig Utilization | 61% | 77% | | Total Average Rig Utilization | 67% | 73% | | Floaters Operating Days | 1,705 | 1,138 | | Jackups Operating Days | 724 | 914 | | Total Operating Days | 2,429 | 2,052 | | Floaters Average Dayrates | $400,802 | $435,677 | | Jackups Average Dayrates | $176,503 | $155,585 | | Total Average Dayrates | $333,960 | $310,962 | Operating Results (Three Months Ended June 30) | Metric | 2025 (in thousands) | 2024 (in thousands) | Change ($) | Change (%) | | :----------------------------- | :------------------ | :------------------ | :--------- | :--------- | | Operating revenues | $848,652 | $692,844 | $155,808 | 22% | | Operating costs and expenses | $713,399 | $482,885 | $230,514 | 48% | | Operating income (loss) | $135,253 | $209,959 | $(74,706) | (36)% | | Net income (loss) | $42,872 | $195,008 | $(152,136) | (78)% | - Floater revenue increased by $166.6 million, mainly due to additional floaters from the Diamond Transaction, while jackup revenue decreased by $15.2 million due to fewer operating days[114][115] - Contract drilling services costs for floaters increased by $148.1 million, driven by the Diamond Transaction, mobilization, and operations support costs[116] - Jackup costs increased by $18.4 million due to mobilization and non-labor costs[117] - Depreciation and amortization increased by $56.3 million, primarily due to the Diamond Transaction[118] - Interest expense increased by $28.0 million due to the Diamond Transaction and related debt[122] Results for the Six Months Ended June 30, 2025 and 2024 For the six months ended June 30, 2025, net income was $151.2 million, down from $290.5 million in the prior year, despite a 30% increase in operating revenues, primarily due to a 38% rise in operating costs and expenses Key Operating Metrics (Six Months Ended June 30) | Metric | 2025 | 2024 | | :----------------------------- | :--- | :--- | | Floaters Average Rig Utilization | 72% | 67% | | Jackups Average Rig Utilization | 68% | 72% | | Total Average Rig Utilization | 71% | 69% | | Floaters Operating Days | 3,505 | 2,240 | | Jackups Operating Days | 1,595 | 1,709 | | Total Operating Days | 5,100 | 3,949 | | Floaters Average Dayrates | $390,716 | $434,660 | | Jackups Average Dayrates | $167,233 | $150,286 | | Total Average Dayrates | $320,835 | $311,567 | Operating Results (Six Months Ended June 30) | Metric | 2025 (in thousands) | 2024 (in thousands) | Change ($) | Change (%) | | :----------------------------- | :------------------ | :------------------ | :--------- | :--------- | | Operating revenues | $1,723,139 | $1,329,928 | $393,211 | 30% | | Operating costs and expenses | $1,400,547 | $1,012,422 | $388,125 | 38% | | Operating income (loss) | $322,592 | $317,506 | $5,086 | 2% | | Net income (loss) | $151,175 | $290,489 | $(139,314) | (48)% | - Floater revenue increased by $365.6 million, mainly due to additional floaters from the Diamond Transaction[129] - Jackup revenue increased by $5.8 million, driven by higher average dayrates[130] - Contract drilling services costs for floaters increased by $250.3 million, primarily due to the Diamond Transaction, mobilization, and operations support costs[132] - Jackup costs decreased by $11.5 million, mainly due to lower repairs and maintenance and insurance proceeds[133] - Depreciation and amortization increased by $112.8 million, primarily due to the Diamond Transaction[134] - Interest expense increased by $51.0 million due to the Diamond Transaction and related debt[138] Liquidity and Capital Resources Noble's primary capital sources were operating activities, which generated $487.4 million in cash for the six months ended June 30, 2025, with future needs expected to be funded through operations, cash on hand, asset sales, or borrowings - Net cash provided by operating activities was $487.4 million for the six months ended June 30, 2025, an increase from $235.5 million in the prior year[144] - Capital additions totaled $204.3 million for the six months ended June 30, 2025, and the full-year estimate is $400.0 million to $450.0 million[147] - The company repurchased 0.7 million Ordinary Shares for $20.0 million and made dividend payments of $160.9 million during the six months ended June 30, 2025[146] - Noble has a $550.0 million 2023 Revolving Credit Facility with no outstanding borrowings[152] - The company also has $1.4 billion in 8.000% Senior Notes due 2030, plus $550.0 million in 8.500% Senior Secured Second Lien Notes due 2030[153][154] Critical Accounting Estimates There have been no material changes to the judgments, assumptions, and estimates underlying Noble's critical accounting policies and estimates as of June 30, 2025 - As of June 30, 2025, there have been no material changes to the judgments, assumptions, and estimates upon which our critical accounting policies and estimates are based[168] Item 3. Quantitative and Qualitative Disclosures about Market Risk There has been no significant change in Noble's exposure to market risk compared to what was disclosed in its latest Form 10-K - There has been no significant change in Noble's exposure to market risk when compared to those disclosed in Part II, Item 7A 'Quantitative and Qualitative Disclosures about Market Risk' in our Form 10-K[171] Item 4. Controls and Procedures Noble's Principal Executive Officer and Principal Financial Officer concluded that the company's disclosure controls and procedures were effective as of June 30, 2025, excluding the portion subsumed by internal control over financial reporting of Diamond Offshore Drilling, Inc. due to its recent acquisition - Noble's Principal Executive Officer and Principal Financial Officer concluded that the company's disclosure controls and procedures were effective as of June 30, 2025[172] - The evaluation of disclosure controls and procedures excluded the portion subsumed by internal control over financial reporting of Diamond Offshore Drilling, Inc., due to its acquisition on September 4, 2024[173] - There were no changes in Noble's internal control over financial reporting that materially affected or are reasonably likely to materially affect it during the quarter ended June 30, 2025[174] PART II. OTHER INFORMATION Item 1. Legal Proceedings Information regarding legal proceedings is incorporated by reference from Note 10 — Commitments and Contingencies in the unaudited condensed consolidated financial statements - Information regarding legal proceedings is presented in 'Note 10 — Commitments and Contingencies' and incorporated by reference[177] Item 1A. Risk Factors There have been no material changes to the risk factors disclosed in Noble's Form 10-K for the year ended December 31, 2024 - There have been no material changes from the risk factors disclosed in our Form 10-K for the year ended December 31, 2024[178] Item 2. Unregistered Sales of Equity Securities and Use of Proceeds During the three months ended June 30, 2025, Noble issued 12 Ordinary Shares from Tranche 1 Warrants and 3 Ordinary Shares from Tranche 2 Warrants, with no shares issued from Tranche 3 Warrants - During the three months ended June 30, 2025, 12 Ordinary Shares were issued from Tranche 1 Warrants and 3 Ordinary Shares were issued from Tranche 2 Warrants[182] - Zero Ordinary Shares were issued from Tranche 3 Warrants during the period[182] Item 5. Other Information No Rule 10b5-1(c) trading arrangements or other similar plans were adopted, terminated, or modified by directors and executive officers during the three months ended June 30, 2025 - During the three months ended June 30, 2025, no Rule 10b5-1(c) trading arrangements or other similar plans were adopted, terminated, or modified by directors and executive officers[180] Item 6. Exhibits This section lists all exhibits filed as part of the Quarterly Report on Form 10-Q, including business combination agreements, articles of association, certifications, and XBRL documents - The exhibits include business combination agreements, amended and restated articles of association, certifications from executive officers, and Inline XBRL documents[184] SIGNATURES The report was duly signed on August 6, 2025, by Richard B. Barker, Executive Vice President and Chief Financial Officer, and Jennifer Yeung, Vice President, Chief Accounting Officer and Controller - The report was signed by Richard B Barker, Executive Vice President and Chief Financial Officer, and Jennifer Yeung, Vice President, Chief Accounting Officer and Controller, on August 6, 2025[187]