Noble Corp plc

Previous wording

The following discussion is intended to assist you in understanding our financial position at June 30, 2024, and our results of operations for the three and six months ended June 30, 2024 and 2023. The following discussion should be read in conjunction with the unaudited condensed consolidated financial statements and related notes contained in this Quarterly Report on Form 10-Q, the audited consolidated financial statements and notes thereto included in our Annual Report on Form 10-K for the year ended December 31, 2023 (the “Form 10-K”), filed by Noble Corporation plc, a public limited company incorporated under the laws of England and Wales (“Noble”) and our other filings with the US Securities and Exchange Commission (“SEC”). References in this Quarterly Report on Form 10-Q to “Noble,” the “Company,” “we,” “us,” “our” and words of similar meaning refer collectively to Noble and its consolidated subsidiaries.

Current wording

The following discussion is intended to assist you in understanding our financial position at September 30, 2024, and our results of operations for the three and nine months ended September 30, 2024 and 2023. The following discussion should be read in conjunction with the unaudited condensed consolidated financial statements and related notes contained in this Quarterly Report on Form 10-Q, the audited consolidated financial statements and notes thereto included in our Annual Report on Form 10-K for the year ended December 31, 2023 (the “Form 10-K”), filed by Noble Corporation plc, a public limited company incorporated under the laws of England and Wales (“Noble”) and our other filings with the US Securities and Exchange Commission (“SEC”). References in this Quarterly Report on Form 10-Q to “Noble,” the “Company,” “we,” “us,” “our,” and words of similar meaning refer collectively to Noble and its consolidated subsidiaries.

Previous wording

This Quarterly Report on Form 10-Q includes “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Exchange Act, as amended. All statements other than statements of historical facts included in this report or in the documents incorporated by reference, are forward looking statements, including those regarding expected financial performance, revenues, expected utilization, and fleet status, stacking of rigs, effects of new rigs on the market revenues, operating expenses, cash flows, contract status, tenders, terms and duration, dayrates, termination and extensions, contract backlog, the availability, delivery, mobilization, stacking or reactivation, contract commencement, relocation or other movement of rigs and the timing thereof, contract claims, capital expenditures, insurance maintenance and renewals, access to financing, rig demand, peak oil, the offshore drilling market, oil prices, production levels among members of the Organization of Petroleum Exporting Countries (“OPEC”) and other oil and gas producing nations (together with OPEC, “OPEC+”), and any expectations we may have with respect thereto, our future financial position, business strategy, impairments, repayment of debt, credit ratings, liquidity, borrowings under any credit facilities or other instruments, sources of funds, cost inflation, planned acquisitions or divestitures of assets, governmental regulations and permitting, taxes and tax rates, indebtedness covenant compliance, dividends and distributable reserves, share repurchases, progress, plans and goals related to environmental, social, and governance matters; the outcome of tax disputes; assessments and settlements; and expense management, the outcome of any dispute, litigation, audit or investigation, plans, foreign currency requirements, results of joint ventures, general economic, market, including inflation and recessions, trends and outlook; general political conditions, including political tensions, conflicts and war, timing for compliance with any new regulations the benefits or results of acquisitions or dispositions (including the Business Combination (as defined herein) and the Diamond Transaction (as defined herein), our plans, objectives, expectations, and intentions related to the Business Combination and Diamond Transaction). Forward-looking statements involve risks, uncertainties, and assumptions, and actual results may differ materially from any future results expressed or implied by such forward-looking statements. When used in this report or in the documents incorporated by reference, the words “anticipate,” “believe,” “continue,” “could,” “estimate,” “expect,” “intend,” “may,” “might,” “on track,” “plan,” “possible,” “potential,” “predict,” “project,” “should,” “would,” “shall,” “target,” “will,” and similar expressions are intended to be among the terms that identify forward-looking statements. Although we b…

Excerpt shortened here; the source contains the full paragraph.

Current wording

This Quarterly Report on Form 10-Q includes “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Exchange Act, as amended. All statements other than statements of historical facts included in this report or in the documents incorporated by reference, are forward looking statements, including those regarding expected financial performance, revenues, expected utilization, and fleet status, stacking of rigs, effects of new rigs on the market revenues, operating expenses, cash flows, contract status, tenders, terms and duration, dayrates, termination and extensions, contract backlog, the availability, delivery, mobilization, stacking or reactivation, contract commencement, relocation or other movement of rigs and the timing thereof, contract claims, capital expenditures, insurance maintenance and renewals, access to financing, rig demand, peak oil, the offshore drilling market, oil prices, production levels among members of the Organization of Petroleum Exporting Countries (“OPEC”) and other oil and gas producing nations (together with OPEC, “OPEC+”), and any expectations we may have with respect thereto, our future financial position, business strategy, impairments, repayment of debt, credit ratings, liquidity, borrowings under any credit facilities or other instruments, sources of funds, cost inflation, planned acquisitions or divestitures of assets, governmental regulations and permitting, taxes and tax rates, indebtedness covenant compliance, dividends and distributable reserves, share repurchases, progress, plans and goals related to environmental, social, and governance matters; the outcome of tax disputes; assessments and settlements; and expense management, the outcome of any dispute, litigation, audit or investigation, plans, foreign currency requirements, results of joint ventures, general economic, market, including inflation and recessions, trends and outlook; general political conditions, including political tensions, conflicts and war, timing for compliance with any new regulations the benefits or results of acquisitions or dispositions (including the Business Combination (as defined herein) and the Diamond Transaction (as defined herein), our plans, objectives, expectations, and intentions related to the Business Combination and Diamond Transaction). Forward-looking statements involve risks, uncertainties, and assumptions, and actual results may differ materially from any future results expressed or implied by such forward-looking statements. When used in this report or in the documents incorporated by reference, the words “anticipate,” “believe,” “continue,” “could,” “estimate,” “expect,” “intend,” “may,” “might,” “on track,” “plan,” “possible,” “potential,” “predict,” “project,” “should,” “would,” “shall,” “target,” “will,” and similar expressions are intended to be among the terms that identify forward-looking statements. Although we b…

Excerpt shortened here; the source contains the full paragraph.

Previous wording

Noble is a leading offshore drilling contractor for the oil and gas industry. As of the filing date of this Quarterly Report on Form 10-Q, Noble performs, through its subsidiaries, contract drilling services with a fleet of 31 drilling rigs, consisting of 18 floaters and 13 jackups focused largely on ultra-deepwater and high-specification jackup drilling opportunities in both established and emerging regions worldwide. We typically employ each drilling unit under an individual contract, and many contracts are awarded based upon a competitive bidding process.

Current wording

Noble is a leading offshore drilling contractor for the oil and gas industry. As of the filing date of this Quarterly Report on Form 10-Q, Noble performs, through its subsidiaries, contract drilling services with a fleet of 41 drilling rigs, consisting of 28 floaters and 13 jackups focused largely on ultra-deepwater and high-specification jackup drilling opportunities in both established and emerging regions worldwide. Following the recent Diamond Transaction, our total floater count now also includes several lower specification semisubmersibles. We typically employ each drilling unit under an individual contract, and many contracts are awarded based upon a competitive bidding process.

Previous wording

Diamond Transaction. On June 9, 2024, Noble entered into an agreement and plan of merger (the “Diamond Merger Agreement”) with Diamond Offshore Drilling, Inc. (“Diamond”), Dolphin Merger Sub 1, Inc., and Dolphin Merger Sub 2, Inc., under which Noble will acquire Diamond in a stock plus cash transaction (the “Diamond Transaction”). Pursuant to the terms and conditions set forth in the Diamond Merger Agreement, Diamond shareholders will receive 0.2316 shares of Noble, plus cash consideration of $5.65 per share for each share of Diamond stock, representing a premium of 11.4% to Diamond’s closing share price on June 7, 2024. Upon closing of the Diamond Transaction, Diamond shareholders are expected to own approximately 14.5% of Noble’s outstanding shares. Noble intends to fund the cash portion of the Diamond Transaction through new debt financing, which Noble has secured through a $600.0 million committed bridge financing facility.

Current wording

Diamond Transaction. On June 9, 2024, Noble entered into an agreement and plan of merger (the “Diamond Merger Agreement”) with Diamond Offshore Drilling, Inc. (“Diamond”), Dolphin Merger Sub 1, Inc., and Dolphin Merger Sub 2, Inc., under which Noble would acquire Diamond in a stock plus cash transaction (the “Diamond Transaction”). On September 4, 2024 (“the Diamond Closing Date”), Noble completed its acquisition of Diamond. Pursuant to the terms and conditions set forth in the Diamond Merger Agreement, Diamond shareholders received 0.2316 shares of Noble, plus cash consideration of $5.65 per share for each share of Diamond.

Previous wording

Although the market outlook in our business varies by geographical region and water depth, we remain encouraged by the outlook in the ultra-deepwater floater market, with overall demand having increased from 2020 lows. However, within this ultra-deepwater market, our customers continue to focus on our highest specification floaters, which represents the majority of our floater fleet. Assuming current market fundamentals, continued customer prioritization towards these highest specification floaters is likely to result in lower utilization for our lower specification drillships and our semi-submersibles. We have also observed an overall demand increase in the global jackup market, with the Middle East being the largest component of this increase. While we remain encouraged about the increasing overall rig demand, to the extent global macroeconomic concerns become more prevalent and produce downward pressure on oil and gas prices, we could experience downward pressure on overall rig demand for both floaters and jackups.

Current wording

Although the market outlook in our business varies by geographical region and water depth, we remain encouraged by the long-term outlook in the ultra-deepwater floater market, with overall demand having increased from 2020 lows. However, within this ultra-deepwater market, our customers continue to focus on our highest specification floaters, which represents the majority of our floater fleet. Assuming current market fundamentals, continued customer prioritization towards these highest specification floaters is likely to result in lower utilization for our lower specification drillships and our semi-submersibles. Demand for midwater semisubmersibles is primarily driven by brownfield activity in mature basins, especially in Northwest Europe and the Asia Pacific regions, where a generally stable level of baseload demand is supported by infield drilling and plug and abandonment requirements. We have also observed an overall demand increase in the global jackup market since 2020, with the Middle East being the largest component of this increase. While we remain encouraged about overall rig demand, to the extent global macroeconomic concerns become more prevalent and produce downward pressure on oil and gas prices, we could experience downward pressure on overall rig demand for both floaters and jackups.

Previous wording

Returning to the broader offshore drilling market, while the length of contract terms has started to moderately increase, the overall market remains characterized by generally shorter-term contracts. This leads to an increased number of rig contract start-ups, both with different customers and among different regions. These rig contract start-ups and other shipyard projects may result in incremental resources and costs and, in certain cases, may delay delivery of the applicable rig which may trigger applicable late delivery clauses. Additionally, shorter-term contracts have resulted in, and are likely to continue to result in, lower overall utilization for our fleet driven by more idle time between contracts.

Current wording

Returning to the broader offshore drilling market, while the length of contract terms has started to moderately increase, the overall market remains characterized by generally shorter-term contracts. This leads to an increased number of rig contract start-ups, both with different customers and among different regions. These rig contract start-ups and other shipyard projects may result in incremental resources and costs and, in certain cases, may delay delivery of the applicable rig which may trigger applicable late delivery clauses. A combination of customers delaying certain drilling programs and shorter-term contracts, have resulted in, and are likely to continue to result in, lower overall utilization for our fleet.

Previous wording

We maintain a backlog of commitments for contract drilling services. Our contract drilling services backlog reflects estimated future revenues attributable to signed drilling contracts. While backlog did not include any letters of intent as of June 30, 2024, in the past we have included in backlog certain letters of intent that we expect to result in binding drilling contracts. As of June 30, 2024, contract drilling services backlog totaled approximately $4.2 billion, which includes a commitment of approximately 69% of available days for the remainder of 2024.

Current wording

We maintain a backlog of commitments for contract drilling services. Our contract drilling services backlog reflects estimated future revenues attributable to signed drilling contracts. While backlog did not include any letters of intent as of September 30, 2024, in the past we have included in backlog certain letters of intent that we expect to result in binding drilling contracts. As of September 30, 2024, contract drilling services backlog totaled approximately $6.5 billion, which includes a commitment of approximately 70% of available days for the remainder of 2024.

Previous wording

(1)Represents a six-month period beginning July 1, 2024.

Current wording

(1)Represents a three-month period beginning October 1, 2024.

Previous wording

As of June 30, 2024, ExxonMobil, Aker BP, and Petrobras represented approximately 41.4%, 16.0%, and 14.5% of our backlog, respectively.

Current wording

As of September 30, 2024, ExxonMobil, Petrobras, and BP represented approximately 38.0%, 13.5%, and 13.3% of our backlog, respectively.

Previous wording

Net income for the three months ended June 30, 2024 (the “current quarter”), was $195.0 million, or $1.34 per diluted share, on operating revenues of $692.8 million compared to net income for the three months ended June 30, 2023, of $65.8 million, or $0.45 per diluted share, on operating revenues of $638.5 million.

Current wording

Net income for the three months ended September 30, 2024 (the “current quarter”), was $61.2 million, or $0.40 per diluted share, on operating revenues of $800.5 million compared to net income for the three months ended September 30, 2023, of $158.3 million, or $1.09 per diluted share, on operating revenues of $697.5 million.

Previous wording

Jackups. During the second quarter of 2024, jackups generated revenue of $143.0 million, as compared to $112.2 million in the second quarter of 2023. The increase in revenue was mainly attributable to $27.8 million from an increase in average dayrates in the current period and $11.5 million from rigs with net changes in operating days in the current period.

Current wording

Jackups. During the third quarter of 2024, jackups generated revenue of $158.2 million, as compared to $121.9 million in the third quarter of 2023. The increase in revenue was mainly attributable to $24.8 million from an increase in average dayrates in the current period and $20.3 million from rigs with net changes in operating days in the current period. Additionally, jackup revenue from net non-cash amortization related to off-market customer contract assets and liabilities decreased $5.7 million in the current period.

Previous wording

Floaters. During the second quarter of 2024, total contract drilling services costs related to floaters was $246.0 million, as compared to $278.4 million in the second quarter 2023. The primary drivers of this decrease were $31.4 million in mobilization, $4.7 million in insurance, and $13.4 million in non-labor crew costs and operations support costs across the fleet. These decreases were partially offset by increases of $5.8 million in labor, $4.5 million in transportation and storage, and $6.8 million in repairs and maintenance.

Current wording

Floaters. During the third quarter of 2024, total contract drilling services costs related to floaters was $332.6 million, as compared to $266.9 million in the third quarter 2023. The primary drivers of this increase were $44.0 million related to the 10 additional floaters acquired in connection with the Diamond Transaction, $7.6 million in repairs and maintenance, $4.0 million in transportation and storage, and $19.3 million in non-labor crew costs and operations support costs across the fleet. These increases were partially offset by decreases of $3.3 million in labor, and $6.0 million in mobilization.

Previous wording

Jackups. During the second quarter of 2024, total contract drilling services cost related to jackups was $86.8 million, as compared to $84.1 million in the second quarter 2023. The primary drivers of an aggregate increase of $16.0 million related to labor costs, repairs and maintenance, operations support, and other costs across the fleet. These increases were partially offset by decreases in mobilization, insurance, fuel, and other costs across the fleet. Further, there was a decrease of $13.4 million after the completion of disposal activities regarding certain rigs.

Current wording

Jackups. During the third quarter of 2024, total contract drilling services cost related to jackups was $101.6 million, as compared to $87.3 million in the third quarter 2023. The primary drivers of the aggregate increase of $29.6 million related to labor costs, repairs and maintenance, mobilization, operations support, and other costs across the fleet. These increases were partially offset by decreases in fuel and other costs across the fleet. Further, there was a decrease of $15.3 million after the completion of disposal activities regarding certain rigs.

Previous wording

Depreciation and amortization. Depreciation and amortization totaled $90.8 million and $71.3 million during the second quarter of 2024 and 2023, respectively. Depreciation and amortization increased by $19.4 million in the current quarter primarily due to the timing of capital additions that were placed in service as compared to retirements among the periods.

Current wording

Depreciation and amortization. Depreciation and amortization totaled $109.9 million and $77.1 million during the third quarter of 2024 and 2023, respectively. Depreciation and amortization increased by $32.7 million in the current quarter primarily due to the timing of capital additions that were placed in service as compared to retirements among the periods and the Diamond Transaction.

Previous wording

General and administrative. General and administrative expenses totaled $39.7 million and $32.4 million during the second quarter of 2024 and 2023, respectively. The increase was primarily related to individually insignificant items within certain corporate charges such as professional fees, corporate leases, and employee related costs.

Current wording

General and administrative. General and administrative expenses totaled $43.6 million and $33.0 million during the third quarter of 2024 and 2023, respectively. The increase was primarily a result of the Diamond Transaction and other individually insignificant items within certain corporate charges such as professional fees, corporate leases, and employee related costs.

Previous wording

Merger and integration costs. Noble incurred $10.6 million and $22.5 million of merger and integration costs during the second quarter of 2024 and 2023, respectively. Costs incurred prior to the second quarter of 2024 related to the Business Combination with Maersk Drilling in October 2022. In the second quarter 2024, $6.2 million and $4.4 million of costs related to the Diamond Transaction and the Business Combination with Maersk Drilling, respectively. The costs directly attributable to the Diamond Transaction related to professional services fees for pre-merger preparation and the costs directly attributable to the Business Combination with Maersk Drilling primarily related to severance plans, professional fees, and certain other integration-related activities.

Current wording

Merger and integration costs. Noble incurred $69.2 million and $13.0 million of merger and integration costs during the third quarter of 2024 and 2023, respectively. In the third quarter of 2024, $63.1 million and $6.1 million of costs related directly to the Diamond Transaction and the Business Combination with Maersk Drilling, respectively. Costs incurred prior to the third quarter of 2024 related to the Business Combination with Maersk Drilling in October 2022. A majority of the costs in the third quarter of 2024 attributable to the Diamond Transaction related to the closing of the transaction and included charges for professional fees, severance, and share-based compensation.

Previous wording

Hurricane losses and (recoveries), net. During the second quarter of 2024, costs incurred in connection with the Hurricane Ida incident were offset by accrued recoveries. For additional information about the Hurricane Ida incident, see “Note 10 — Commitments and Contingencies” to our unaudited condensed consolidated financial statements.

Current wording

Hurricane losses and (recoveries), net. During the third quarter of 2024, costs incurred in connection with the Hurricane Ida incident were offset by accrued recoveries. For additional information about the Hurricane Ida incident, see “Note 10 — Commitments and Contingencies” to our unaudited condensed consolidated financial statements.

Previous wording

Interest expense, net of amounts capitalized. Interest expense totaled $12.0 million and $14.7 million during the second quarter of 2024 and 2023, respectively. Interest expense primarily relates to our 8.000% Senior Notes issued in April 2023, which refinanced prior debt assumed in the Business Combination with Maersk Drilling in October 2022. For additional information, see “Note 6 — Debt” to our unaudited condensed consolidated financial statements.

Current wording

Interest expense, net of amounts capitalized. Interest expense totaled $25.0 million and $13.0 million during the third quarter of 2024 and 2023, respectively. Interest expense primarily relates to our 8.000% Senior Notes issued in August 2024 and April 2023 as well as 8.500% Senior Secured Second Lien Notes assumed in connection with the Diamond Transaction. For additional information, see “Note 6 — Debt” to our unaudited condensed consolidated financial statements.

Previous wording

Income tax benefit (provision). Noble recorded an income tax benefit of $5.2 million and $0.7 million during the second quarter of 2024 and 2023, respectively.

Current wording

Income tax benefit (provision). Noble recorded an income tax provision of $31.6 million and $51.7 million during the third quarter of 2024 and 2023, respectively.

Previous wording

During the second quarter of 2024, our tax provision included tax benefits of $63.1 million mainly related to releases of valuation allowance for deferred tax benefits in Luxembourg. Such tax benefits are offset by tax expenses related to recurring quarterly accruals of $57.8 million mostly in Guyana, Luxembourg, Switzerland, and Nigeria.

Current wording

During the third quarter of 2024, our tax provision included tax benefits of$36.2 million related to releases of valuation allowance for deferred tax benefits primarily in Luxembourg. Such tax benefits are offset by tax expenses related to recurring quarterly accruals of$67.8 million mostly in Guyana, Luxembourg, Switzerland, and Nigeria.

Previous wording

During the second quarter of 2023, our tax provision included tax benefits of $50.7 million related to releases and adjustments of valuation allowance for deferred tax benefits in Guyana, Norway, Switzerland and Luxembourg and a tax benefit of $6.8 million related to a Ghana uncertain tax position release. Such tax benefits are offset by tax expenses related to a Mexico uncertain tax position of $9.8 million, contract fair value amortization of $4.7 million, and various recurring quarterly accruals of $42.2 million primarily in Guyana, Australia, and Luxembourg.

Current wording

During the third quarter of 2023, our tax provision included tax benefits of $17.2 million related to releases and adjustments of valuation allowance for deferred tax benefits in Guyana, Norway, Switzerland, and Luxembourg and a tax benefit of $2.0 million related to a foreign tax credit refund. Such tax benefits are offset by tax expenses related to contract fair value amortization of $7.4 million and various recurring quarterly accruals of $63.5 million primarily in Guyana, Australia, Denmark, and Luxembourg.

Previous wording

Net income for the six months ended June 30, 2024, was $290.5 million, or $1.99 per diluted share, on operating revenues of $1.3 billion compared to compared to net income for the six months ended June 30, 2023, of $173.9 million, or $1.19 per diluted share, on operating revenues of $1.2 billion.

Current wording

Net income for the nine months ended September 30, 2024, was $351.7 million, or $2.37 per diluted share, on operating revenues of $2.1 billion compared to compared to net income for the nine months ended September 30, 2023, of $332.2 million, or $2.29 per diluted share, on operating revenues of $1.9 billion.

Previous wording

Floaters. During the six months ended June 30, 2024, floaters generated revenue of $1.0 billion, as compared to $970.2 million in the six months ended June 30, 2023. The increase in revenue was mainly attributable to $183.9 million from an increase in average dayrates in the current period and was partly offset by $119.9 million from rigs with net changes in operating days in the current period. Additionally, floater revenue from net non-cash amortization related to off-market customer contract assets and liabilities decreased $22.0 million in the current period.

Current wording

Floaters. During the nine months ended September 30, 2024, floaters generated revenue of $1.6 billion, as compared to $1.5 billion in the nine months ended September 30, 2023. The increase in revenue was mainly attributable to $84.0 million provided by the 10 additional floaters acquired in connection with the Diamond Transaction as well as $247.0 million from an increase in average dayrates in the current period. These increases were partly offset by $209.6 million from rigs with net changes in operating days in the current period. Additionally, floater revenue from net non-cash amortization related to off-market customer contract assets and liabilities decreased $23.2 million in the current period.

Previous wording

Jackups. During the six months ended June 30, 2024, jackups generated revenue of $260.9 million, as compared to $211.3 million in the six months ended June 30, 2023. The increase in revenue was mainly attributable to $55.6 million from an increase in average dayrates in the current period and $13.3 million from rigs with net changes in operating days in the current period. Additionally, jackup revenue from net non-cash amortization related to off-market customer contract assets and liabilities decreased $19.9 million in the current period.

Current wording

Jackups. During the nine months ended September 30, 2024, jackups generated revenue of $419.1 million, as compared to $333.1 million in the nine months ended September 30, 2023. The increase in revenue was mainly attributable to $72.8 million from an increase in average dayrates in the current period and $41.2 million from rigs with net changes in operating days in the current period. Additionally, jackup revenue from net non-cash amortization related to off-market customer contract assets and liabilities decreased $25.6 million in the current period.

Previous wording

Floaters. During the six months ended June 30, 2024, total contract drilling services costs related to floaters was $535.6 million, as compared to $549.4 million in the six months ended June 30, 2023. The primary drivers of this decrease were $30.2 million in mobilization and $12.8 million in non-labor crew costs and operations support costs across the fleet. These decreases were offset by increases of $12.7 million in labor, $6.5 million in transportation and storage, $5.7 million in fuel, and $4.3 million in repairs and maintenance.

Current wording

Floaters. During the nine months ended September 30, 2024, total contract drilling services costs related to floaters was $870.9 million, as compared to $816.3 million in the nine months ended September 30, 2023. The primary drivers of this increase were $44.0 million related to the 10 additional floaters acquired in connection with the Diamond Transaction, $13.2 million in repairs and maintenance, $10.9 million in labor, $10.5 million in transportation and storage, $6.0 million in fuel, and $6.3 million in non-labor crew costs and operations support costs across the fleet. These increases were offset by a decrease of $36.3 million in mobilization.

Previous wording

Jackups. During the six months ended June 30, 2024, total contract drilling services cost related to jackups was $187.1 million, as compared to $174.9 million in the six months ended June 30, 2023. The primary drivers of an aggregate increase of $35.9 million related to labor costs, repairs and maintenance, operations support, and other costs across the fleet. These increases were partially offset by decreases in mobilization, fuel, and other costs across the fleet. Further, there was a decrease of $23.8 million after the completion of disposal activities regarding certain rigs.

Current wording

Jackups. During the nine months ended September 30, 2024, total contract drilling services cost related to jackups was $289.0 million, as compared to $262.2 million in the nine months ended September 30, 2023. The primary drivers of the aggregate increase of $65.7 million related to labor costs, repairs and maintenance, operations support, and other costs across the fleet. These increases were partially offset by decreases in fuel and other costs across the fleet. Further, there was a decrease of $38.9 million after the completion of disposal activities regarding certain rigs.

Previous wording

Depreciation and amortization. Depreciation and amortization totaled $177.5 million and $141.3 million during the six months ended June 30, 2024 and 2023, respectively. Depreciation and amortization increased by $36.2 million in the current period primarily due to the timing of capital additions that were placed in service as compared to retirements among the periods.

Current wording

Depreciation and amortization. Depreciation and amortization totaled $287.3 million and $218.4 million during the nine months ended September 30, 2024 and 2023, respectively. Depreciation and amortization increased by $68.9 million in the current period primarily due to the timing of capital additions that were placed in service as compared to retirements among the periods as well as an incremental amount added in connection with the Diamond Transaction.

Previous wording

General and administrative. General and administrative expenses totaled $65.6 million and $62.4 million during the six months ended June 30, 2024 and 2023, respectively. The increase was primarily related to individually insignificant items within certain corporate charges such as professional fees, corporate leases, and employee related costs.

Current wording

General and administrative. General and administrative expenses totaled $109.2 million and $95.4 million during the nine months ended September 30, 2024 and 2023, respectively. The increase was primarily a result of the Diamond Transaction and other individually insignificant items within certain corporate charges such as professional fees, corporate leases, and employee related costs.

Previous wording

Merger and integration costs. Noble incurred $19.9 million and $34.1 million of merger and integration costs during the six months ended June 30, 2024 and 2023, respectively, primarily as a result of the Diamond Transaction and the Business Combination with Maersk Drilling in October 2022. During the current period, $6.2 million of pre-merger preparation costs related to professional services fees directly attributable to the Diamond Transaction while the remaining costs were directly attributable to the Business Combination with Maersk Drilling and primarily related to severance plans, professional fees, and certain other integration-related activities.

Current wording

Merger and integration costs. Noble incurred $89.2 million and $47.0 million of merger and integration costs during the nine months ended September 30, 2024 and 2023, respectively, primarily as a result of the Diamond Transaction and the Business Combination with Maersk Drilling. During the current period, $69.4 million and $19.8 million of costs related directly to the Diamond Transaction and the Business Combination with Maersk Drilling, respectively. Costs incurred prior to 2024 related to the Business Combination with Maersk Drilling in October 2022. A majority of the costs attributable to the Diamond Transaction related to the closing of the transaction and included charges for professional fees, severance, and share-based compensation.

Previous wording

Hurricane losses and (recoveries). During the six months ended June 30, 2024, costs incurred in connection with the Hurricane Ida incident were offset by accrued recoveries. For additional information about the Hurricane Ida incident, see “Note 10 — Commitments and Contingencies” to our unaudited condensed consolidated financial statements.

Current wording

Hurricane losses and (recoveries). During the nine months ended September 30, 2024, costs incurred in connection with the Hurricane Ida incident were offset by accrued recoveries. For additional information about the Hurricane Ida incident, see “Note 10 — Commitments and Contingencies” to our unaudited condensed consolidated financial statements.

Previous wording

Interest expense, net of amounts capitalized. Interest expense totaled $29.5 million and $31.5 million during the six months ended June 30, 2024 and 2023, respectively. Interest expense primarily relates to our 8.000% Senior Notes issued in April 2023, which refinanced prior debt assumed in the Business Combination with Maersk Drilling in October 2022. In the six months ended June 30, 2024, $2.8 million of interest expense related to non-income taxes partially offset decreases in interest on debt. For additional information, see “Note 6 — Debt” to our unaudited condensed consolidated financial statements.

Current wording

Interest expense, net of amounts capitalized. Interest expense totaled $54.5 million and $44.5 million during the nine months ended September 30, 2024 and 2023, respectively. Interest expense primarily relates to our 8.000% Senior Notes issued in August 2024 and in April 2023, which refinanced prior debt assumed in the Business Combination with Maersk Drilling in October 2022 as well as 8.500% Senior Secured Second Lien Notes assumed in connection with the Diamond Transaction. In the nine months ended September 30, 2024, $3.5 million of interest expense related to non-income taxes partially offset decreases in interest on debt. For additional information, see “Note 6 — Debt” to our unaudited condensed consolidated financial statements.

Previous wording

Interest income and other, net. Noble recognized other losses of $8.2 million and of $2.9 million during the second quarter of 2024 and 2023, respectively.

Current wording

Interest income and other, net. Noble recognized other losses of $10.6 million and other income of $16.3 million during the nine months ended September 30, 2024 and 2023, respectively. The nine months ended September 30, 2023, included approximately $18.0 million of compensation related to a joint taxation scheme with A.P. Møller Holding A/S.

Previous wording

Income tax benefit (provision). Noble recorded an income tax benefit of $15.4 million and $16.5 million during the six months ended June 30, 2024 and 2023, respectively.

Current wording

Income tax benefit (provision). Noble recorded an income tax provision of $16.2 million and $35.2 million during the nine months ended September 30, 2024 and 2023, respectively.

Previous wording

During the six months ended June 30, 2024, our tax provision included tax benefits of $81.6 million related to releases and adjustments of valuation allowance for deferred tax benefits in Nigeria, Switzerland, and Luxembourg. Such tax benefits are offset by tax expenses related to a net increase in uncertain tax positions of $6.9 million and recurring quarterly accruals of $59.3 million mostly in Guyana, Luxembourg, Switzerland, and Nigeria.

Current wording

During the nine months ended September 30, 2024, our tax provision included tax benefits of$117.8 million related to releases and adjustments of valuation allowance for deferred tax benefits in Nigeria, Switzerland, and Luxembourg. Such tax benefits are offset by recurring quarterly accruals of$134.0 million mostly in Guyana, Luxembourg, Switzerland, and Nigeria.

Previous wording

During the six months ended June 30, 2023, our tax provision included tax benefits of $95.8 million related to releases of valuation allowance for deferred tax benefits in Guyana, Norway, and Switzerland and a tax benefit of $6.8 million related to a Ghana uncertain tax position release. Such tax benefits are offset by tax expenses related to a Mexico uncertain tax position of $9.8 million, contract fair value amortization of $8.9 million, and various recurring quarterly accruals of $67.4 million primarily in Guyana, Australia, and Luxembourg.

Current wording

During the nine months ended September 30, 2023, our tax provision included tax benefits of $113.5 million related to releases of valuation allowance for deferred tax benefits in Guyana, Luxembourg, Norway and Switzerland; a tax benefit of $6.8 million related to a Ghana uncertain tax position release, and a tax benefit of $2.0 million related to a foreign tax credit refund. Such tax benefits are offset by tax expenses related to a Mexico uncertain tax position of $9.8 million, contract fair value amortization of $16.3 million, and various recurring quarterly accruals of $131.3 million primarily in Guyana, Australia, Denmark, and Luxembourg.

Previous wording

As of June 30, 2024, we had $35.0 million of borrowings outstanding and $23.2 million of letters of credit issued under the 2023 Revolving Credit Facility. For additional information about our 2023 Revolving Credit Facility as of June 30, 2024, see “Note 6 — Debt” to our unaudited condensed consolidated financial statements.

Current wording

As of September 30, 2024, we had no borrowings outstanding and $24.0 million of letters of credit issued under the 2023 Revolving Credit Facility. For additional information about our 2023 Revolving Credit Facility as of September 30, 2024, see “Note 6 — Debt” to our unaudited condensed consolidated financial statements.

Previous wording

Our principal sources of capital in the current period were cash generated from operating activities and funding from the Revolving Credit Facility. Cash on hand during the current period was primarily used for the following:

Current wording

Our principal sources of capital in the current period were cash generated from operating activities as well as net proceeds from the issuance of additional 2030 Notes. Cash on hand during the current period was primarily used for the following:

Previous wording

Our anticipated cash flow needs, both in the short term and long term, may also include repurchases, redemptions, or repayments of debt and interest and share repurchases.

Current wording

Our anticipated cash flow needs, both in the short term and long term, may also include repurchases, redemptions, or repayments of debt and interest.

Previous wording

We currently expect to fund our cash flow needs with cash generated by our operations, cash on hand, proceeds from sales of assets, or borrowings under the 2023 Revolving Credit Facility and we believe this will provide us with sufficient liquidity to fund our cash flow needs over the next 12 months. Subject to market conditions and other factors, we may also issue equity or long-term debt securities to fund our cash flow needs and for other purposes. Regarding the Diamond Transaction, Noble intends to fund the cash portion of the transaction through new debt financing, which Noble has secured through a $600.0 million committed bridge financing facility. In 2023 and during the first half of 2024, we incurred additional expenses and capital costs related to the damage and repair of two jackup rigs. These incurred costs exceeded our deductible amount. As such, we have received partial insurance recoveries and we continue to seek insurance recoveries for the remainder of the incurred and anticipated costs.

Current wording

We currently expect to fund our cash flow needs with cash generated by our operations, cash on hand, proceeds from sales of assets, or borrowings under the 2023 Revolving Credit Facility and we believe this will provide us with sufficient liquidity to fund our cash flow needs over the next 12 months. Subject to market conditions and other factors, we may also issue equity or long-term debt securities to fund our cash flow needs and for other purposes. In 2023 and during the first three quarters of 2024, we incurred additional expenses and capital costs related to the damage and repair of two jackup rigs. Additionally, during the third quarter of 2024, we incurred additional expenses and capital costs related to the damage and repair of one floater. These incurred costs exceeded our deductible amount. As such, we have received partial insurance recoveries and we continue to seek insurance recoveries for the remainder of the incurred and anticipated costs.

Previous wording

Net cash provided by operating activities was $235.5 million and $148.1 million for the six months ended June 30, 2024 and 2023, respectively. The increase in net cash provided by operating activities for the six months ended June 30, 2024 was primarily attributable to improvements in cash flows from operating assets and liabilities, with key drivers being an increase in payments from customers offset by a reduction in payments to vendors. We had working capital of $349.9 million at June 30, 2024, and $420.1 million at December 31, 2023.

Current wording

Net cash provided by operating activities was $519.3 million and $286.8 million for the nine months ended September 30, 2024 and 2023, respectively. The increase in net cash provided by operating activities for the nine months ended September 30, 2024 was primarily attributable to improvements in cash flows from operating assets and liabilities, with key drivers being an increase in payments from customers offset by a reduction in payments to vendors. We had working capital of $510.2 million at September 30, 2024, and $420.1 million at December 31, 2023.