<PAGE> 1
===============================================================================
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
/X/ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1996
OR
/ / TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from _____________ to _____________
COMMISSION FILE NUMBER: 0-13857
NOBLE DRILLING CORPORATION
(Exact name of registrant as specified in its charter)
DELAWARE 73-374541
(State of incorporation) (I.R.S. employer identification number)
10370 RICHMOND AVENUE, SUITE 400 77042
HOUSTON, TEXAS (Zip code)
(Address of principal executive offices
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (713) 974-3131
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 /X/ No. / /
Number of shares of Common Stock outstanding as of August 12, 1996: 121,849,988
===============================================================================
<PAGE> 2
FORM 10-Q
PART 1. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
NOBLE DRILLING CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In thousands)
(Unaudited)
<TABLE>
<CAPTION>
JUNE 30, DECEMBER 31,
1996 1995
------------- -------------
<S> <C> <C>
ASSETS
CURRENT ASSETS
Cash and cash equivalents .................................... $ 32,563 $ 41,307
Investment in marketable equity securities ................... 1,440 6,131
Investment in marketable debt securities ..................... 13,309 17,031
Accounts receivable (net of allowance of $1,307 and $1,280) .. 78,343 60,251
Costs of uncompleted contracts in excess of billings ......... 9,346 6,646
Inventories .................................................. 26,355 19,795
Assets held for sale (See Note 6) ............................ 31,968 -
Other current assets ......................................... 34,157 36,851
------------- ------------
Total current assets ..................................... 227,481 188,012
------------- ------------
PROPERTY AND EQUIPMENT
Drilling equipment and facilities ............................ 860,764 871,539
Other ........................................................ 26,390 23,891
------------- ------------
887,154 895,430
Accumulated depreciation ..................................... (349,234) (352,452)
------------- ------------
537,920 542,978
------------- ------------
OTHER ASSETS ................................................... 10,394 10,402
------------- ------------
$ 775,795 $ 741,392
============= ============
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Short-term debt and current installments of long-term debt ... $ 9,342 $ 12,210
Accounts payable ............................................. 41,532 30,782
Accrued payroll and related costs ............................ 18,384 13,674
Taxes payable ................................................ 16,663 12,953
Interest payable ............................................. 2,858 2,860
Other current liabilities .................................... 12,375 13,910
------------- ------------
Total current liabilities ................................ 101,154 86,389
LONG-TERM DEBT ................................................. 125,766 129,923
OTHER LIABILITIES .............................................. 1,072 1,338
MINORITY INTEREST .............................................. 937 249
------------- ------------
228,929 217,899
------------- ------------
SHAREHOLDERS' EQUITY
Preferred stock .............................................. 4,025 4,025
Common stock ................................................. 9,486 9,455
Capital in excess of par value ............................... 590,718 589,866
Unrealized losses on marketable securities ................... (106) (115)
Minimum pension liability .................................... (3,403) (3,403)
Cumulative translation adjustment ............................ (2,148) (2,081)
Accumulated deficit .......................................... (49,843) (73,802)
Treasury stock, at cost ...................................... (1,863) (452)
------------- ------------
546,866 523,493
------------- ------------
COMMITMENTS AND CONTINGENCIES .................................. - -
------------- ------------
$ 775,795 $ 741,392
============= ============
</TABLE>
See accompanying notes to the interim financial statements.
2
<PAGE> 3
FORM 10-Q
NOBLE DRILLING CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share amounts)
(Unaudited)
<TABLE>
<CAPTION>
THREE MONTHS ENDED JUNE 30,
--------------------------------
1996 1995
------------ -----------
<S> <C> <C>
OPERATING REVENUES
Contract drilling services ..................................... $ 67,713 $ 43,603
Labor contract drilling services ............................... 7,711 9,331
Turnkey drilling services ...................................... 30,671 17,515
Engineering and consulting services ............................ 1,280 960
Other revenue .................................................. 2,311 2,576
------------ -----------
109,686 73,985
------------ -----------
OPERATING COSTS AND EXPENSES
Contract drilling services ..................................... 39,439 29,057
Labor contract drilling services ............................... 5,462 6,795
Turnkey drilling services ...................................... 21,859 18,029
Engineering and consulting services ............................ 937 1,599
Other expense .................................................. 1,161 1,981
Depreciation and amortization .................................. 9,353 9,007
Selling, general and administrative ............................ 12,072 9,805
Impairments, net of gains on asset sales (See Notes 4 and 6) ... - -
Minority interest .............................................. (36) 15
------------ -----------
90,247 76,288
------------ -----------
OPERATING INCOME (LOSS) ........................................... 19,439 (2,303)
OTHER INCOME (EXPENSE)
Interest expense ............................................... (3,168) (3,058)
Interest income ................................................ 555 1,594
Other, net ..................................................... 1,028 387
------------ -----------
INCOME (LOSS) BEFORE INCOME TAXES ................................. 17,854 (3,380)
INCOME TAX PROVISION .............................................. (1,601) (958)
------------ -----------
NET INCOME (LOSS) ................................................. 16,253 (4,338)
PREFERRED STOCK DIVIDENDS ......................................... (1,509) (1,509)
------------ -----------
NET INCOME (LOSS) APPLICABLE TO COMMON SHARES ..................... $ 14,744 $ (5,847)
============ ===========
NET INCOME (LOSS) APPLICABLE TO COMMON SHARES
PER SHARE (See Note 3) ......................................... $ 0.15 $ (0.07)
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING ........................ 96,728 88,519
</TABLE>
See accompanying notes to the interim financial statements.
3
<PAGE> 4
FORM 10-Q
NOBLE DRILLING CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share amounts)
(Unaudited)
<TABLE>
<CAPTION>
SIX MONTHS ENDED JUNE 30,
--------------------------------
1996 1995
------------ -----------
<S> <C> <C>
OPERATING REVENUES
Contract drilling services . . . . . . . . . . . . . . . . . . . . . $ 127,963 $ 97,535
Labor contract drilling services . . . . . . . . . . . . . . . . . . 15,705 19,921
Turnkey drilling services . . . . . . . . . . . . . . . . . . . . . 63,726 34,693
Engineering and consulting services . . . . . . . . . . . . . . . . 3,042 2,527
Other revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,007 4,405
------------ -----------
214,443 159,081
------------ -----------
OPERATING COSTS AND EXPENSES
Contract drilling services . . . . . . . . . . . . . . . . . . . . . 77,975 65,176
Labor contract drilling services . . . . . . . . . . . . . . . . . . 11,387 14,905
Turnkey drilling services . . . . . . . . . . . . . . . . . . . . . 45,065 34,406
Engineering and consulting services . . . . . . . . . . . . . . . . 2,034 3,056
Other expense . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,061 3,669
Depreciation and amortization . . . . . . . . . . . . . . . . . . . 18,283 17,841
Selling, general and administrative . . . . . . . . . . . . . . . . 24,097 20,361
Impairments, net of gains on asset sales (See Notes 4 and 6) . . . . 73 -
Minority interest . . . . . . . . . . . . . . . . . . . . . . . . . (68) (43)
------------ -----------
180,907 159,371
------------ -----------
OPERATING INCOME (LOSS) . . . . . . . . . . . . . . . . . . . . . . . 33,536 (290)
OTHER INCOME (EXPENSE)
Interest expense . . . . . . . . . . . . . . . . . . . . . . . . . (6,344) (6,082)
Interest income . . . . . . . . . . . . . . . . . . . . . . . . . . 1,380 3,086
Other, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,511 965
------------ -----------
INCOME (LOSS) BEFORE INCOME TAXES . . . . . . . . . . . . . . . . . . 30,083 (2,321)
INCOME TAX PROVISION . . . . . . . . . . . . . . . . . . . . . . . . (3,104) (2,678)
------------ -----------
NET INCOME (LOSS) . . . . . . . . . . . . . . . . . . . . . . . . . . 26,979 (4,999)
PREFERRED STOCK DIVIDENDS . . . . . . . . . . . . . . . . . . . . . . (3,020) (4,179)
------------ -----------
NET INCOME (LOSS) APPLICABLE TO COMMON SHARES . . . . . . . . . . . . $ 23,959 $ (9,178)
============ ===========
NET INCOME (LOSS) APPLICABLE TO COMMON SHARES
PER SHARE (See Note 3) . . . . . . . . . . . . . . . . . . . . . . $ 0.25 $ (0.13)
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING . . . . . . . . . . . . . . 96,221 84,293
</TABLE>
See accompanying notes to the interim financial statements.
4
<PAGE> 5
FORM 10-Q
NOBLE DRILLING CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
<TABLE>
<CAPTION>
SIX MONTHS ENDED JUNE 30,
---------------------------------
1996 1995
------------ -------------
<S> <C> <C>
CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES
Net income (loss) . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 26,979 $ (4,999)
Adjustments to reconcile net income (loss) to net cash provided by
operating activities:
Depreciation and amortization . . . . . . . . . . . . . . . . . . . 18,283 17,841
(Gain) loss on sale of assets . . . . . . . . . . . . . . . . . . . (8,207) 133
Loss (gain) on foreign exchange . . . . . . . . . . . . . . . . . . 166 (1,348)
Deferred income tax provision (benefit) . . . . . . . . . . . . . . - (578)
Asset impairments . . . . . . . . . . . . . . . . . . . . . . . . . 7,600 -
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 684 (208)
Changes in current assets and liabilities:
Accounts receivable . . . . . . . . . . . . . . . . . . . . . . . (18,086) 1,518
Proceeds from sale of marketable equity securities . . . . . . . 4,945 2,055
Other assets . . . . . . . . . . . . . . . . . . . . . . . . . . (6,462) (4,016)
Accounts payable . . . . . . . . . . . . . . . . . . . . . . . . 9,994 (3,533)
Other liabilities . . . . . . . . . . . . . . . . . . . . . . . 8,358 (8,835)
------------ -------------
44,254 (1,970)
------------ -------------
CASH (USED IN) INVESTING ACTIVITIES
Purchase of property and equipment . . . . . . . . . . . . . . . . . . (76,155) (26,828)
Proceeds from sale of property and equipment . . . . . . . . . . . . . 30,903 483
Proceeds from sale of marketable debt securities . . . . . . . . . . . 3,731 7,527
------------ -------------
(41,521) (18,818)
------------ -------------
CASH (USED IN) FINANCING ACTIVITIES
Payment of long-term debt . . . . . . . . . . . . . . . . . . . . . . . (4,157) (260)
Dividends paid on preferred stock . . . . . . . . . . . . . . . . . . . (3,020) (7,370)
Issuance of common stock . . . . . . . . . . . . . . . . . . . . . . . 831 23
Purchase of shares returned to treasury . . . . . . . . . . . . . . . . (2,052) -
Preferred stock conversion payment (See Note 2) . . . . . . . . . . . . - (1,524)
Payment of short-term debt . . . . . . . . . . . . . . . . . . . . . . (2,868) (3,816)
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . - 69
------------ -------------
(11,266) (12,878)
------------ -------------
EFFECT OF EXCHANGE RATE CHANGES ON CASH . . . . . . . . . . . . . . . . (211) 227
------------ -------------
DECREASE IN CASH AND CASH EQUIVALENTS . . . . . . . . . . . . . . . . . . (8,744) (33,439)
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD . . . . . . . . . . . . . 41,307 95,163
------------ -------------
CASH AND CASH EQUIVALENTS, END OF PERIOD . . . . . . . . . . . . . . . . $ 32,563 $ 61,724
============ =============
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
Cash paid during the period for:
Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 6,165 $ 5,781
Income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 41 $ 3,265
Noncash investing and financing activities:
Triton acquisition . . . . . . . . . . . . . . . . . . . . . . . . . . $ - $ 1,500
</TABLE>
See accompanying notes to the interim financial statements.
5
<PAGE> 6
FORM 10-Q
NOBLE DRILLING CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED INTERIM FINANCIAL STATEMENTS
(Dollar amounts in tables are in thousands, except per share amounts)
(Unaudited)
NOTE 1 - BASIS OF ACCOUNTING
The Consolidated Balance Sheets as of June 30, 1996 and December 31,
1995 of Noble Drilling Corporation ("Noble Drilling" or, together with its
consolidated subsidiaries, unless the context requires otherwise, the
"Company"), the related Consolidated Statements of Operations for the
three-month and six-month periods ended June 30, 1996 and 1995 and the
Consolidated Statements of Cash Flows for the six months ended June 30, 1996 and
1995, are unaudited. In the opinion of management, all adjustments, consisting
only of normal recurring adjustments, necessary for a fair presentation of such
financial statements have been included. These interim financial statements and
notes are presented in condensed form as permitted by Form 10-Q.
Certain reclassifications have been made in the 1995 consolidated
financial statements to conform to the classifications used in the 1996
consolidated financial statements. These reclassifications have no impact on
net income or loss.
NOTE 2 - CONVERSION OF $2.25 CONVERTIBLE EXCHANGEABLE PREFERRED STOCK
In March 1995, an aggregate of 923,862 shares of Noble Drilling's
$2.25 Convertible Exchangeable Preferred Stock ("$2.25 Preferred Stock") were
converted into 5,006,830 shares of Noble Drilling common stock. The Company
paid an aggregate of approximately $1,524,000 in cash ("Preferred Conversion
Payment") in the first quarter of 1995 in connection with this conversion. In
the second quarter of 1995, the Company called for redemption all remaining
outstanding shares of the $2.25 Preferred Stock. Of the 2,065,238 shares then
outstanding, 2,062,537 were surrendered for conversion and 2,701 were redeemed
by the Company, resulting in the Company's issuance of 11,192,359 shares of
common stock (including 14,637 shares sold to a standby underwriter).
NOTE 3 - NET INCOME (LOSS) APPLICABLE TO COMMON SHARES PER SHARE
Net income (loss) applicable to common shares per share has been
computed on the basis of the weighted average number of common shares and,
where dilutive, common share equivalents outstanding during the indicated
periods. The calculation of net income (loss) applicable to common shares per
share assuming full dilution was antidilutive; therefore, fully diluted amounts
are not presented. The Preferred Conversion Payment of approximately $1,524,000
in March 1995 was accounted for as a reduction of net earnings applicable to
common shares for purposes of calculating the net loss per common share. This
accounting treatment increased the net loss applicable to common shares per
share from $0.11 to $0.13 for the six months ended June 30, 1995.
NOTE 4 - ACQUISITION AND SALE OF ASSETS
Consistent with its business strategy, the Company sold two of its
posted barge units during the first quarter of 1996. The Gus Androes, located
in the U.S. Gulf of Mexico ("U.S. Gulf"), was sold for $6,000,000 on January 5,
1996. A second posted barge unit, the Gene Rosser, located offshore Nigeria
was sold for $13,000,000; payments of $2,000,000, $8,000,000 and $2,000,000
were received in the fourth quarter of 1995, the first quarter of 1996 and the
second quarter of 1996, respectively. The remaining proceeds of $1,000,000 will
be received in the first quarter of 1997. The Company recorded gains of
$4,815,000 and $2,712,000, respectively, related to the sales of these posted
barge units in the first quarter of 1996. The Company's remaining two posted
barges are located offshore Nigeria and are classified as held for sale at June
30, 1996. (See Note 6)
On February 26, 1996, the Company purchased the Odin Explorer, renamed
the Gus Androes, a Levingston III-C independent leg cantilevered unit rated for
a water depth of 300 feet. The rig is presently undergoing refurbishment
offshore Sharjah, U.A.E. The Company was awarded a drilling contract from an
international oil and gas company that will commence in the third quarter of
1996, following refurbishment, for a term of one year plus two one-year
options.
The Company purchased the Dana, a Marathon LeTourneau 82-C independent
leg cantilevered rig capable of drilling in 250 feet of water, on March 20,
1996. The rig is currently in the shipyard undergoing enhancements. Upon
completion, the rig will commence a three-year contract for Qatar General
Petroleum Corporation in Qatar.
6
<PAGE> 7
FORM 10-Q
NOBLE DRILLING CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED INTERIM FINANCIAL STATEMENTS - (CONTINUED)
(Dollar amounts in tables are in thousands, except per share amounts)
(Unaudited)
NOTE 5 - MARKETABLE SECURITIES
The Company accounts for its investments in debt and equity securities
in accordance with Statement of Financial Accounting Standards ("SFAS") No.
115, Accounting for Certain Investments in Debt and Equity Securities. Under
the provisions of SFAS No. 115, investments in debt and equity securities are
required to be classified into one of three categories: held to maturity,
available for sale or trading securities. At each reporting date, the
appropriateness of such classification is required to be reassessed. Realized
gains and losses on sales of investments are included in income on a specific
identification basis.
As of June 30, 1996, the Company classified all of its debt securities
with original maturities of more than three months as available for sale.
These investments are classified as current assets on the accompanying
consolidated balance sheets. The following table highlights information
applicable to the Company's investments classified as available for sale as of
June 30, 1996 and December 31, 1995:
<TABLE>
<CAPTION>
JUNE 30, 1996
-------------------------------------------
NET
AMORTIZED UNREALIZED
DEBT SECURITY/MATURITY COST FAIR VALUE LOSSES
---------------------- --------- ---------- ----------
<S> <C> <C> <C>
U.S. Government Obligations:
Mature within 1 year . . . . . . . . . . . . $ 8,295 $ 8,239 $(56)
Mature after 1 year through 3 years . . . . 5,120 5,070 (50)
---------- ---------- -----
Total . . . . . . . . . . . . . . . . . . . . . $ 13,415 $ 13,309 $(106)
========== ========== =====
</TABLE>
<TABLE>
<CAPTION>
DECEMBER 31, 1995
-------------------------------------------
NET
AMORTIZED UNREALIZED
DEBT SECURITY/MATURITY COST FAIR VALUE LOSSES
---------------------- --------- ---------- ----------
<S> <C> <C> <C>
Corporate obligations:
Mature within 1 year . . . . . . . . . . . $ 1,520 $ 1,520 -
Mature after 1 year through 5 years . . . . 7,258 7,214 $(44)
---------- ---------- -----
8,778 8,734 (44)
---------- ---------- -----
U.S. Government obligations:
Mature after 1 year through 5 years . . . . 8,368 8,297 (71)
---------- ---------- -----
Total . . . . . . . . . . . . . . . . . . . . $ 17,146 $17,031 $(115)
========== ========== =====
</TABLE>
An allowance for unrealized losses has been included as a reduction
of shareholders' equity. Total realized losses related to short-term
investments amounted to $52,000 and $15,000 for the six-month periods ended
June 30, 1996 and 1995, respectively. Total realized (losses) gains related to
short-term investments amounted to ($36,000) and $7,000 for the three-month
periods ended June 30, 1996 and 1995, respectively.
The Company categorizes its investment in marketable equity securities
of $1,440,000 at June 30, 1996 as trading securities and such investments are
classified as current assets and are recorded at fair value at such date.
Total unrealized gains related to these equity investments for the six-month
period ended June 30, 1996 were $254,000 compared to unrealized gains of
$184,000 for the six-month period ended June 30, 1995. Total unrealized gains
related to these investments for the three-month period ended June 30, 1996
were $311,000 compared with $386,000 for the three-month period ended June 30,
1995.
7
<PAGE> 8
FORM 10-Q
NOBLE DRILLING CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED INTERIM FINANCIAL STATEMENTS - (CONTINUED)
(Dollar amounts in tables are in thousands, except per share amounts)
(Unaudited)
NOTE 6 - PROPERTY AND EQUIPMENT
Property and equipment is stated at cost, reduced by provisions to
recognize economic impairment in value when management determines that such
impairment has occurred. Drilling equipment and facilities are depreciated
using the straight-line method over estimated remaining useful lives ranging
from three to twenty-five years from the date of construction or major
refurbishment. The salvage value used in the calculation of depreciation for
all offshore rigs is $500,000. All other property and equipment is depreciated
using the straight-line method over useful lives ranging from three to twenty
years.
In March 1995, SFAS No. 121, Accounting for the Impairment of
Long-Lived Assets and for Long-Lived Assets to Be Disposed Of, was issued. This
statement requires that long-lived assets and certain identifiable intangibles
held and used by an entity be reviewed for impairment whenever events or
changes in circumstances indicate that the carrying amount of an asset may not
be recoverable. The Company adopted this standard effective January 1, 1996. In
accordance with SFAS No. 121, the Company recorded an impairment loss of
$7,600,000 in the first quarter of 1996.
Consistent with the Company's strategic objective to focus on the
deepwater capabilities of its fleet, the Company formalized a plan to dispose
of its two remaining posted barges, the Lewis Dugger and the Chuck Syring,
during the first quarter of 1996. The two barges were written down at March 31,
1996 to their estimated net realizable values, which the Company determined to
be $31,968,000 based on then recent offers received for these assets from third
parties. The write-down of these two barges to their estimated net realizable
values represents the total impairment and resulted in a charge to earnings of
$7,600,000 in the 1996 first quarter. This charge is classified in
"Impairments, net of gains on asset sales" in the Consolidated Statement of
Operations for the six-month period ended June 30, 1996. These two rigs were
employed under drilling contracts and contributed gross margins of $1,968,000
and $3,463,000 during the three-month and six-month periods ended June 30,
1996, respectively. In the second quarter of 1996, the Company entered into an
agreement to sell these two barges for $32,000,000, composed of $24,500,000 in
cash and $7,500,000 in drill pipe credit. Closing is expected to occur in the
third quarter of 1996.
NOTE 7 - STOCK REPURCHASE
In January 1996, 250,000 shares of common stock were repurchased by
the Company and returned to treasury stock. Subsequent to the repurchase,
108,750 shares of treasury stock were awarded to certain employees as
restricted stock under the Company's 1991 Stock Option and Restricted Stock
Plan and have been placed in escrow subject to satisfaction of various
performance criteria during a three-year period.
NOTE 8 - SUBSEQUENT EVENTS
On July 1, 1996, the Company completed the agreement of sale and
purchase with Royal Nedlloyd N.V. ("Nedlloyd") and its wholly owned subsidiary,
Neddrill Holding B.V., to acquire the assets utilized in the offshore contract
drilling, accommodation and other oil and gas exploration and production
related service businesses of Nedlloyd's offshore drilling division
("Neddrill"), including the acquisition of $25,000,000 in net working capital,
and the personnel employed by Neddrill. The purchase price was $300,000,000 in
cash plus 5,000,000 shares of Noble Drilling common stock. The cash portion of
the purchase price was financed by the Company's issuance of 21,850,000 shares
of its common stock and $125,000,000 principal amount of 9-1/8 % Senior Notes
due 2006. The net proceeds from the public offerings of securities in excess of
the $300,000,000 cash portion of the purchase price has been added to the
Company's working capital and is available for general corporate purposes.
8
<PAGE> 9
FORM 10-Q
NOBLE DRILLING CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED INTERIM FINANCIAL STATEMENTS - (CONTINUED)
(Dollar amounts in tables are in thousands, except per share amounts)
(Unaudited)
The following table reflects unaudited pro forma consolidated
statement of operations data for the three-month and six-month periods ended
June 30, 1996 and for the year ended December 31, 1995 as if the Neddrill
acquisition had occurred at the beginning of these periods.
<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED YEAR ENDED
JUNE 30, 1996 JUNE 30, 1996 DECEMBER 31, 1995
------------------ ---------------- -----------------
<S> <C> <C> <C>
Operating revenues ..................................... $ 150,087 $ 296,280 $ 449,493
Net income applicable to common shares ................. $ 20,763 $ 35,067 $ 2,524
Net income applicable to common shares per share ....... $ 0.17 $ 0.29 $ 0.01
</TABLE>
Subsequent to June 30, 1996, the Company entered into a memorandum of
agreement to purchase the Miss Kitty, a 300-foot Friede and Goldman, Ltd. L-780
MOD II independent leg cantilevered rig, for $26,250,000 in cash. The rig is
currently working offshore India under a bareboat charter agreement with a term
through July 1997, with a one-year extension option. Closing is expected to
occur in the third quarter of 1996.
9
<PAGE> 10
FORM 10-Q
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
GENERAL
DISCLOSURES REGARDING 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 the Company's financial position, business strategy, plans and
objectives of management of the Company for future operations, industry
conditions, and indebtedness covenant compliance, are forward-looking
statements. Although the Company believes that the expectations reflected in
such forward-looking statements are reasonable, it can give no assurance that
such expectations will prove to have been correct. Important factors that could
cause actual results to differ materially from the Company's expectations
include, but are not limited to, intense competition in the drilling industry,
volatility of oil and gas prices, political and economic conditions in
international markets (including Brazil, Nigeria, the North Sea and Venezuela),
potential for decrease in demand for drilling services in the U.S. Gulf of
Mexico ("U.S. Gulf") where the Company has a concentration of drilling rigs,
risks associated with turnkey drilling contracts, early termination provisions
generally found in the Company's offshore drilling contracts, operational risks
(such as blowouts, fires and loss of production), insurance coverage
limitations, and requirements and potential liability imposed by governmental
regulation of the drilling industry (including environmental regulation).
THE COMPANY
The Company's business strategy has been to expand its international
and offshore drilling capabilities through acquisitions and rig upgrades and
modifications, and by redeploying assets in important geological areas. In
recent years, the Company has included within its strategic objectives a focus
on increasing the number of rigs in its fleet capable of drilling in deeper
water depths. The Company's land drilling operations have become less
significant as the Company has emphasized its offshore and international
operations. As used herein, unless otherwise required by the context, "Noble
Drilling" refers to Noble Drilling Corporation and the "Company" refers to
Noble Drilling and its consolidated subsidiaries.
The Company's offshore fleet at August 9, 1996, consisted of 55 rigs,
comprising 43 jackup drilling rigs, eight submersible rigs, three drillships,
and one semisubmersible rig. These rigs were diversified geographically as
follows: U.S. Gulf - 27 rigs, North Sea - seven rigs, Nigeria - six rigs,
Venezuela - four rigs, Persian Gulf - three rigs, India - two rigs, and one rig
each in Argentina, Brazil, the Congo, the Mexican Gulf, Zaire and one currently
undergoing refurbishment in Gibraltar. The rig counts above include one
drillship in which the Company has a 41 percent interest through a joint
venture arrangement, one jackup rig which the Company operates under a bareboat
charter agreement and one jackup rig which the Company has contracted to
purchase, and exclude two posted barges which the Company has contracted to
sell (see the discussion regarding the Miss Kitty, Lewis Dugger and Chuck
Syring in the following paragraph). The Company's offshore operations also
include labor contracts for drilling and workover activities covering 13 rigs
operating in the U.K. sector of the North Sea. These rigs are not owned or
leased by the Company. Through its wholly owned subsidiary, Triton Engineering
Services Company, the Company provides turnkey drilling services and other
engineering and consulting services to the oil and gas industry. The Company's
land drilling operations are conducted in Canada, Texas and Louisiana with an
active fleet of 19 land drilling rigs.
The Company has entered into a memorandum of agreement to purchase the
Miss Kitty, a 300-foot Friede and Goldman, Ltd. L-780 MOD II independent leg
cantilevered rig, for $26,250,000 in cash. The rig is currently working
offshore India under a bareboat charter agreement with a term through July
1997, with a one-year extension option. Closing is expected to occur in the
third quarter of 1996. The Company has also entered into an agreement to sell
the Lewis Dugger and Chuck Syring for $32,000,000, composed of $24,500,000 in
cash and $7,500,000 in drill pipe credit. Closing is expected to occur in the
third quarter of 1996.
NEDDRILL ACQUISITION
On July 1, 1996, the Company completed the agreement of sale and
purchase with Royal Nedlloyd N.V. ("Nedlloyd") and its wholly owned subsidiary,
Neddrill Holding B.V., to acquire the assets utilized in the offshore contract
drilling, accommodation and other oil and gas exploration and production
related service businesses of Nedlloyd's offshore drilling division
("Neddrill"), including the acquisition of $25,000,000 in net working capital,
and the personnel employed by Neddrill. The purchase price was $300,000,000 in
cash plus 5,000,000 shares of Noble Drilling common stock.
10
<PAGE> 11
FORM 10-Q
In connection with the closing of the Neddrill acquisition, the
Company completed its offering of 21,850,000 shares of Noble Drilling common
stock (including 2,850,000 shares issued in connection with the exercise by the
underwriters of the over-allotment options) and its offering of $125,000,000
principal amount of 9-1/8% Senior Notes due 2006 of the Company.
The Neddrill acquisition is consistent with the Company's strategic
goal of expanding its international presence and enhancing its deepwater
drilling capabilities. The Neddrill acquisition adds deepwater and harsh
environment capabilities to the Company's fleet, diversifies the fleet to
include drillships and a semisubmersible rig and increases the Company's
geographic diversification by providing entry into the Brazilian offshore market
and expanding its presence in the North Sea.
Neddrill's operations are managed from its headquarters in Rotterdam,
The Netherlands. Its fleet includes two dynamically positioned drillships (one
of which is currently operating offshore West Africa, the second offshore
Brazil); one second generation semisubmersible rig operating in the North Sea;
and six harsh environment jackup drilling rigs (five operating in the North Sea
and one offshore Argentina). Neddrill also owns, through a joint venture
arrangement, a 41 percent interest in a third dynamically positioned drillship
currently undergoing refurbishment in Gibraltar. In addition, Neddrill operates
under a bareboat charter a seventh harsh environment jackup rig as a hotel
accommodation unit in the North Sea. Neddrill's semisubmersible and jackup rigs
are all currently under contract, with commitments extending through August
1996 to 2001, depending on the rig. All three drillships are committed under
five to six year contracts to work for Petroleo Brasileiro S.A. (Petrobras)
offshore Brazil. In addition to the one drillship already on location, the
other two are scheduled to arrive in late 1996 and early 1997, respectively.
Neddrill currently employs approximately 615 personnel in
offshore/field positions and 60 employees in shorebase and administrative
positions. Depending on location, some employees are covered by a labor
agreement or are represented by labor unions. Neddrill maintains shorebase
facilities in Argentina, Brazil, Denmark, the United Kingdom and The
Netherlands.
INDUSTRY CONDITIONS AND RISKS
The offshore contract drilling industry has experienced a series of
consolidations and acquisitions among drilling contractors. The Company expects
this trend to continue as drilling contractors position themselves
strategically in the market. The Company, from time to time, has discussions
with third parties regarding asset acquisitions or business combinations and
intends to continue to consider business opportunities that it believes promote
its business strategy.
The Company's operations are materially dependent upon the levels of
activity in offshore world oil and U.S. natural gas exploration, development
and production. Such activity levels are affected by both short-term and
long-term trends in oil and natural gas prices. In recent years, oil and
natural gas prices, the expenditures by oil and gas companies for exploration
and production, and the availability of drilling rigs, and therefore the level
of offshore drilling and exploration activity, have been extremely volatile. For
a number of years, depressed oil and natural gas prices and an oversupply of
rigs have adversely affected the offshore drilling market, particularly in the
Gulf of Mexico, where the prolonged weakness and uncertainty in the demand for
and price of natural gas resulted in a significant decline in exploration and
production activities. Demand for drilling services outside the United States,
excluding the North Sea, has been less volatile in recent years, but remains
dependent on a variety of political and economic factors beyond the Company's
control, including worldwide demand for oil and natural 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 natural gas reserves.
If the price of natural gas decreases, the Company's dayrates and
utilization rates in the U.S. Gulf could be adversely affected. Similarly, if
the price of natural gas decreases in the North Sea market, where Neddrill's
jackup rigs principally compete, its rates there could be adversely affected.
The Company can predict neither the future level of demand for its drilling
services nor the future conditions in the offshore contract drilling industry.
The Company's revenues are balanced between international and domestic
sources. Revenues from international sources accounted for approximately 40
percent and 41 percent of the Company's operating revenues for the three-month
and six-month periods ended June 30, 1996, respectively, and 49 percent for the
year ended December 31, 1995. As a result of and following the Neddrill
acquisition, the percentage of the Company's total operating revenues
attributable to international sources will increase significantly.
11
<PAGE> 12
FORM 10-Q
Offshore Nigeria, the Company currently has five offshore drilling
units under contract and one offshore drilling rig available for bidding. This
rig count excludes two barges that are currently under a sale agreement which
is expected to close during the third quarter of 1996. Revenues from drilling
activities in Nigeria accounted for approximately 14 percent of the Company's
operating revenues for each of the three-month and six-month periods ended June
30, 1996, and the year ended December 31, 1995. In those periods, Nigeria
experienced labor strikes, high inflation and political turmoil, none of which
has materially affected the Company's operations; however, no assurance can be
given that the political and economic climate in Nigeria will not worsen or
that it will not materially affect the Company's operations in the future.
The Company currently has three rigs under contract with Lagoven, a
subsidiary of the government-owned oil company of Venezuela. Two of these rigs
are under long-term contracts terminating in the year 2000 and the third is
operating on a one year contract. A fourth rig is under a long-term contract
with Shell Venezuela S.A. through June 1997. In recent periods, the Venezuelan
economy has experienced high inflation and a shortage of foreign currency. In
1994, the Venezuelan government imposed a program of currency exchange controls
and taxes on certain financial transactions that temporarily limited the
ability of the government-owned oil companies and their affiliates to make
payment in U.S. dollars or other hard currencies to oilfield service
contractors. During this period, the Company's operations were not materially
affected, and the Company received timely payment for its services in U.S.
dollars. During April 1996, the Venezuelan government announced increases in
gas prices, interest rates and the value-added tax rate. In addition, the
government eased exchange controls and granted pay raises to public sector
employees. These events did not have a material impact on the Company's
operations in Venezuela during the second quarter and it is unknown what
impact, if any, these events will have on the Company's operations in Venezuela
in the future. Revenues from drilling activities in Venezuela accounted for
approximately seven percent and eight percent, respectively, of the Company's
operating revenues for the three-month and six-month periods ended June 30,
1996 and 10 percent for the year ended December 31, 1995.
12
<PAGE> 13
FORM 10-Q
SELECTED FINANCIAL INFORMATION
The following table sets forth selected consolidated financial
information of the Company expressed as a percentage of total operating
revenues for the periods indicated. The table does not reflect any financial
information attributable to Neddrill because the Neddrill acquisition was
closed on July 1, 1996.
<TABLE>
<CAPTION>
THREE MONTHS ENDED JUNE 30, SIX MONTHS ENDED JUNE 30,
--------------------------- -------------------------
1996 1995 1996 1995
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Operating revenues
Contract drilling services
International offshore . . . . . . . . . . . . 29.1% 28.4% 29.0% 28.0%
Domestic offshore . . . . . . . . . . . . . . 28.1 22.2 25.2 23.5
International land . . . . . . . . . . . . . . 1.4 4.3 2.3 6.3
Domestic land . . . . . . . . . . . . . . . . 3.1 4.1 3.2 3.5
Labor contract drilling services . . . . . . . . 7.0 12.5 7.3 12.5
Turnkey drilling services . . . . . . . . . . . 28.0 23.7 29.7 21.8
Engineering services . . . . . . . . . . . . . 1.2 1.3 1.4 1.6
Other revenue . . . . . . . . . . . . . . . . . 2.1 3.5 1.9 2.8
-------- -------- -------- --------
100.0 100.0 100.0 100.0
Operating costs
Contract drilling services . . . . . . . . . . . (36.0) (39.3) (36.4) (41.0)
Labor contract drilling services . . . . . . . . (5.0) (9.2) (5.3) (9.4)
Turnkey drilling services . . . . . . . . . . . (19.9) (24.4) (21.0) (21.6)
Engineering services . . . . . . . . . . . . . (0.9) (2.2) (0.9) (1.9)
Other expense . . . . . . . . . . . . . . . . . (1.1) (2.7) (1.0) (2.3)
Depreciation and amortization . . . . . . . . . . (8.5) (12.2) (8.5) (11.2)
Selling, general and administrative . . . . . . . (11.0) (13.2) (11.2) (12.8)
-------- -------- -------- --------
Operating income (loss) . . . . . . . . . . . . . 17.6 (3.2) 15.7 (0.2)
Interest expense . . . . . . . . . . . . . . . . . (2.9) (4.1) (3.0) (3.8)
Interest income . . . . . . . . . . . . . . . . . 0.5 2.2 0.6 1.9
Other income, net . . . . . . . . . . . . . . . . 0.9 0.5 0.7 0.6
-------- -------- -------- --------
Income (loss) from continuing operations
before income tax and extraordinary item . . . . 16.1 (4.6) 14.0 (1.5)
Income tax provision . . . . . . . . . . . . . . . (1.5) (1.3) (1.4) (1.7)
-------- -------- -------- --------
Net income (loss) . . . . . . . . . . . . . . . . 14.6 (5.9) 12.6 (3.2)
Preferred stock dividends . . . . . . . . . . . . (1.4) (2.0) (1.4) (2.6)
-------- -------- -------- --------
Net income (loss) applicable to common shares . . 13.2% (7.9)% 11.2% (5.8)%
======== ======== ======== ========
</TABLE>
13
<PAGE> 14
FORM 10-Q
RESULTS OF OPERATIONS
FOR THE THREE MONTHS ENDED JUNE 30, 1996 AND 1995
OPERATIONAL REVIEW. During the three months ended June 30, 1996 (the
"Current Quarter"), the Company generated operating revenues of $109,686,000
compared to $73,985,000 during the three months ended June 30, 1995 (the
"Comparable Quarter"). The increase in operating revenues was primarily due to
increased domestic offshore contract and turnkey drilling activity combined
with improved dayrates during the Current Quarter. Domestic offshore contract
drilling benefited in the Current Quarter from a 47 percent improvement in
average dayrates compared to the Comparable Quarter.
Revenues in the Current Quarter for international offshore contract
drilling operations increased primarily due to the strategic redeployment of
the Percy Johns and Lloyd Noble from the U.S. Gulf to Nigeria during the third
quarter of 1995 combined with the acquisition of the Dana, which is located in
Qatar, in March 1996. The Percy Johns and Lloyd Noble were replaced in the
U.S. Gulf by the redeployment of the John Sandifer and the Eddie Paul, which
completed extensive refurbishment programs in the third and fourth quarters of
1995, respectively.
Turnkey drilling services revenue increased $13,156,000 in the Current
Quarter as compared to the Comparable Quarter due to the completion of wells
under contracts of longer duration and at increased prices caused by growing
demand for equipment and services in the U.S. Gulf. Eight turnkey wells were
completed in each of the Current and Comparable Quarters.
The utilization rate for the Company's domestic offshore rig fleet
increased to 96 percent in the Current Quarter from 75 percent in the
Comparable Quarter. The Company's international offshore rig utilization rate
increased to 94 percent in the Current Quarter from 71 percent in the
Comparable Quarter. These increases were principally due to increased drilling
activity levels. At June 30, 1996, the Company had labor contracts on 13
operator-owned rigs in its international operations compared to 15 rigs at the
end of the Comparable Quarter.
Gross margin from contract drilling operations was $28,274,000, or 42
percent of contract drilling revenues, in the Current Quarter as compared to
$14,546,000, or 33 percent of contract drilling revenues, in the Comparable
Quarter. The increase in gross margin was principally due to higher average
dayrates from the domestic contract drilling operations. Labor contract gross
margin was $2,249,000, or 29 percent of labor contract revenues, in the Current
Quarter compared to $2,536,000, or 27 percent of labor contract revenues, in
the Comparable Quarter. Turnkey drilling operations gross margin was
$8,812,000, or 29 percent of turnkey drilling revenues, in the Current Quarter
compared to a gross margin deficit of ($514,000), in the Comparable Quarter.
The increase in turnkey drilling operations gross margin was due to an improved
success rate on turnkey wells.
FOR THE SIX MONTHS ENDED JUNE 30, 1996 AND 1995
OPERATIONAL REVIEW. During the six months ended June 30, 1996 (the
"Current Period"), the Company generated operating revenues of $214,443,000
compared to $159,081,000 during the six months ended June 30, 1995 (the
"Comparable Period"). The increase in operating revenues was primarily due to
increased domestic offshore contract and turnkey drilling activity combined
with improved dayrates during the Current Period. Domestic offshore contract
drilling benefited in the Current Period from a 30 percent improvement in
average dayrates compared to the Comparable Period.
Revenues in the Current Period for international offshore contract
drilling operations increased primarily due to the reasons discussed above
under the three months ended June 30, 1996.
Turnkey drilling services revenue increased $29,033,000 in the Current
Period as compared to the Comparable Period due to the completion of wells
under contracts of longer duration and at increased prices caused by stronger
demand for equipment and services in the U.S. Gulf. Sixteen turnkey wells were
completed in the Current Period compared to 17 completed wells in the
Comparable Period.
The utilization rate for the Company's domestic offshore rig fleet
increased to 96 percent in the Current Period from 78 percent in the Comparable
Period. The Company's international offshore rig utilization rate increased to
93 percent in the Current Period from 75 percent in the Comparable Period.
14
<PAGE> 15
FORM 10-Q
Gross margin from contract drilling operations was $49,988,000, or 39
percent of contract drilling revenues, in the Current Period as compared to
$32,359,000, or 33 percent of contract drilling revenues, in the Comparable
Period. The increase in gross margin was principally due to higher average
dayrates from the domestic contract drilling operations. Labor contract gross
margin was $4,318,000, or 27 percent of labor contract revenues, in the Current
Period compared to $5,016,000, or 25 percent of labor contract revenues, in the
Comparable Period. Turnkey drilling operations gross margin was $18,661,000, or
29 percent of turnkey drilling revenues, in the Current Period compared to
gross margin of $287,000, or one percent of turnkey drilling revenues, in the
Comparable Period. The increase in turnkey drilling operations gross margin was
due to an improved success rate on turnkey wells.
LIQUIDITY AND CAPITAL RESOURCES
OVERVIEW
The Company had working capital of $126,327,000 and $101,623,000 as of
June 30, 1996 and December 31, 1995, respectively. The increase in working
capital was primarily due to the reclassification of the Company's two
remaining barges as assets held for sale in the Current Period. Long-term debt
as a percentage of long-term debt plus shareholders' equity was 19 percent at
June 30, 1996 compared to 20 percent at December 31, 1995.
At June 30, 1996, the Company had cash, cash equivalents, and
investments in marketable debt securities of $45,872,000 and had $22,577,000 of
funds available under various lines of credit. The Company expects to generate
positive cash flow from operations for the remainder of 1996, assuming no
material decrease in demand for contract drilling and turnkey services. The
Company will continue to have cash requirements for debt principal and interest
payments and preferred dividends, when and if declared. For the remainder of
1996, debt principal and interest payments for currently outstanding debt
(including the 9-1/8% Senior Notes due 2006 issued on July 1, 1996) are
estimated to be approximately $20,570,000. Cumulative dividends on the $1.50
Convertible Preferred Stock for the remainder of 1996 are approximately
$3,019,000. The Company expects to fund these obligations, totaling
$23,589,000, out of cash and short-term investments as well as cash expected
to be provided by operations.
Capital expenditures (including Neddrill expenditures) for the
remainder of 1996 are planned to aggregate approximately $131,000,000, of which
the majority are discretionary and relate to upgrades of equipment. Management
considers such upgrades desirable to improve the marketability of the fleet,
but the upgrades could be deferred if necessary. These capital expenditures
will be funded from operating cash flows, existing cash balances, and/or
available lines of credit. Capital expenditures totaled $76,155,000 for the
six-month period ended June 30, 1996. Included in this amount is $31,100,000
related to rig purchases.
CREDIT FACILITIES AND LONG-TERM DEBT
In conjunction with the closing of the Neddrill acquisition on July 1,
1996, the Company issued $125,000,000 aggregate principal amount of 9-1/8%
Senior Notes due 2006 (the "9-1/8% Senior Notes"). The 9-1/8% Senior Notes will
mature on July 1, 2006. Interest on the 9-1/8% Senior Notes is payable
semiannually on January 1 and July 1 of each year. The 9-1/8% Senior Notes are
redeemable at the option of the Company, in whole or in part, at any time on or
after July 1, 2001 initially at 104.563 percent of principal amount, declining
ratably to par on or after July 1, 2004, plus accrued interest. The indenture
governing the 9-1/8% Senior Notes contains certain restrictive covenants,
including limitations on additional indebtedness and the ability to secure such
indebtedness; restrictions on dividends and certain investments; and
limitations on sales of assets, sales and leasebacks, transactions with
affiliates, and mergers or consolidations.
At June 30, 1996, the Company had lines of credit totaling
$26,000,000, of which $15,000,000 was available for letters of credit, and
letter of credit facilities totaling $5,000,000, subject to the Company's
maintenance of certain levels of collateral. At June 30, 1996, the Company had
$22,577,000 available under these lines of credit, including $12,577,000
available to support the issuance of letters of credit.
The Company entered into a financing agreement in November 1995 with
Transamerica Insurance Finance for a period of 18 months related to the renewal
of its Marine Package, Protection and Indemnity, and Excess Liability insurance
policies. The amount financed totaled $16,561,000 at a fixed interest rate of
6.23 percent per annum, repayable in 18 equal payments.
15
<PAGE> 16
FORM 10-Q
The Company has outstanding $125,000,000 aggregate principal amount of
9-1/4% Senior Notes Due 2003 (the "9-1/4% Senior Notes") which will mature on
October 1, 2003. Interest on the 9-1/4% Senior Notes is payable semiannually on
April 1 and October 1 of each year. The 9-1/4% Senior Notes are redeemable at
the option of the Company, in whole or in part, at any time on or after October
1, 1998 initially at 103.47 percent of principal amount, declining ratably to
par on or after October 1, 2001, plus accrued interest. Mandatory sinking fund
payments of 25 percent of the original principal amount of the 9-1/4% Senior
Notes at par plus accrued interest will be required on October 1, 2001 and
October 1, 2002. The indenture governing the 9-1/4% Senior Notes contains
certain restrictive covenants, including limitations on additional indebtedness
and the ability to secure such indebtedness; restrictions on dividends and
certain investments; and limitations on sales of assets, sales and leasebacks,
transactions with affiliates, and mergers or consolidations.
In connection with the initial construction of the NN-1, the
predecessor of NN-1 Limited Partnership issued U.S. Government Guaranteed Ship
Financing Sinking Fund Bonds, of which $1,286,000 was outstanding at June 30,
1996. Interest and principal are payable semiannually on June 15 and December
15 of each year with interest at 8.95 percent, and the bonds mature in 1998.
The bonds are secured by the vessel, and the applicable security agreement
contains certain restrictions, among others, on distributions to partners,
dispositions of assets, and the provision of services to related parties. In
addition, there are minimum working capital, net worth and long-term debt to
net worth requirements applicable to NN-1 Limited Partnership. The Company's
sharing percentage in NN-1 Limited Partnership's distributions from operations
is generally 90 percent.
16
<PAGE> 17
FORM 10-Q
PART II. OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits.
The information required by this Item 6(a) is set forth in the
Index to Exhibits accompanying this quarterly report and is
incorporated herein by reference.
(b) No reports on Form 8-K were filed by the Company during the
quarter ended June 30, 1996. A report on Form 8-K dated July
16, 1996, which reported the closing of the Neddrill
acquisition, was filed on the date thereof.
17
<PAGE> 18
FORM 10-Q
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 DRILLING CORPORATION
DATE: August 13, 1996 /S/ JAMES C. DAY
--------------------------------------
JAMES C. DAY, Chairman, President and
Chief Executive Officer
DATE: August 13, 1996 /S/ BYRON L. WELLIVER
--------------------------------------
BYRON L. WELLIVER,
Senior Vice President-Finance,
Treasurer and Controller
(Principal Financial and Accounting Officer)
18
<PAGE> 19
INDEX TO EXHIBITS
EXHIBIT
NUMBER EXHIBIT
------- -------
27 -- Financial Data Schedule
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> JUN-30-1996
<CASH> 32,563
<SECURITIES> 14,749
<RECEIVABLES> 79,650
<ALLOWANCES> 1,307
<INVENTORY> 26,355
<CURRENT-ASSETS> 227,481
<PP&E> 887,154
<DEPRECIATION> 349,234
<TOTAL-ASSETS> 775,795
<CURRENT-LIABILITIES> 101,154
<BONDS> 125,766
<COMMON> 9,486
0
4,025
<OTHER-SE> 533,355
<TOTAL-LIABILITY-AND-EQUITY> 775,795
<SALES> 0
<TOTAL-REVENUES> 214,443
<CGS> 0
<TOTAL-COSTS> 138,522
<OTHER-EXPENSES> 42,385
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 6,344
<INCOME-PRETAX> 30,083
<INCOME-TAX> 3,104
<INCOME-CONTINUING> 23,959
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 23,959
<EPS-PRIMARY> 0.25
<EPS-DILUTED> 0
</TABLE>
