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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934 (No Fee Required)
For the fiscal year ended December 31, 1996
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934 (No Fee Required)
For the transition period from __________________to____________________
Commission file number: 0-13857
NOBLE DRILLING CORPORATION
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(Exact name of registrant as specified in its charter)
Delaware 73-0374541
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(State of incorporation) (I.R.S. employer identification number)
10370 Richmond Avenue, Suite 400, Houston, Texas 77042
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (713) 974-3131
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Securities registered pursuant to Section 12(b) of the Act:
Common Stock, par value $.10 per share New York Stock Exchange
9 1/8% Senior Notes due 2006 New York Stock Exchange
Preferred Stock Purchase Rights New York Stock Exchange
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Title of each class Name of each exchange on which registered
Securities registered pursuant to Section 12(g) of the Act:
NONE
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
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Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained herein, and will not be contained,
to the best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. [X]
Aggregate market value of Common Stock held by nonaffiliates as of
March 12, 1997: $2,365,000,000
Number of shares of Common Stock outstanding as of March 12, 1997:
132,313,617
DOCUMENTS INCORPORATED BY REFERENCE
Listed below are documents parts of which are incorporated herein by
reference and the part of this report into which the document is incorporated:
(1) Proxy statement for the 1997 annual meeting of stockholders - Part III
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TABLE OF CONTENTS
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PART ITEM 1. BUSINESS.......................................................................................1
I General........................................................................................1
Business Strategy..............................................................................1
Recent Development.............................................................................1
Development Of Business During 1996............................................................1
Neddrill Acquisition......................................................................1
1996 Rig Acquisitions.....................................................................2
Modifications and Upgrades................................................................2
Redeployments.............................................................................2
Asset Rationalization Program.............................................................2
EVA-4000 Letter of Intent.................................................................3
Drilling Contracts.............................................................................3
Offshore Drilling Operations...................................................................4
International Contract Drilling...........................................................4
Domestic Contract Drilling................................................................4
Labor Contracts...........................................................................5
Turnkey Drilling and Engineering Services......................................................5
Competition and Risks..........................................................................5
Governmental Regulation and Environmental Matters..............................................7
Employees......................................................................................7
Financial Information About Foreign and Domestic Operations....................................7
ITEM 2. PROPERTIES.....................................................................................8
Drilling Fleet.................................................................................8
Jackup Rigs...............................................................................8
Submersible Rigs..........................................................................8
Drillships................................................................................8
Semisubmersible Rigs......................................................................9
Drilling Fleet................................................................................10
Facilities....................................................................................12
ITEM 3. LEGAL PROCEEDINGS.............................................................................12
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS...........................................12
EXECUTIVE OFFICERS OF THE REGISTRANT..................................................................12
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PART ITEM 5 MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED
II STOCKHOLDER MATTERS...........................................................................13
ITEM 6. SELECTED FINANCIAL DATA.......................................................................14
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS...........................................................15
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA...................................................23
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURE...........................................................48
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PART ITEM 10.DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT............................................48
III ITEM 11 EXECUTIVE COMPENSATION........................................................................48
ITEM 12.SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT................................................................................... 48
ITEM 13.CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS................................................48
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PART ITEM 14.EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON
IV FORM 8-K..................................................................................... 48
SIGNATURES........................................................................................... 49
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PART I
ITEM 1. BUSINESS
GENERAL
Noble Drilling Corporation is a leading provider of diversified services
for the oil and gas industry worldwide. The Company's activities include
offshore drilling services, turnkey drilling services and engineering and
production management services. The Company's drilling fleet is broadly
diversified, allowing it to work in a variety of operating conditions.
Noble Drilling Corporation ("Noble Drilling") was organized as a Delaware
corporation in 1939. Noble Drilling and its predecessors have been engaged in
the contract drilling of oil and gas wells for others domestically since 1921
and internationally during various periods since 1939. As used herein, unless
otherwise required by the context, the term "Noble Drilling" refers to Noble
Drilling Corporation and the term "Company" refers to Noble Drilling and its
consolidated subsidiaries.
BUSINESS STRATEGY
The Company's business strategy has been to actively expand its
international and offshore capabilities through acquisitions, 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 offshore contract drilling industry has, in recent years, experienced
a series of asset sales and consolidations among drilling contractors, and 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 this business strategy.
RECENT DEVELOPMENT
On February 19, 1997, the Company signed a definitive agreement to sell 12
mat supported jackup rigs to Pride Petroleum Services, Inc. ("Pride"). The sale
will also include the hull of one former mat supported jackup rig (Linn
Richardson) which has had all drilling machinery and equipment removed. The
sales price is $265,000,000 in cash. The closing of the transaction, which is
subject to receipt of financing by Pride, satisfaction of Hart-Scott-Rodino
Antitrust Improvements Act governmental clearance and routine closing
conditions, is scheduled to occur on June 3, 1997. Pride has deposited
$20,000,000 of the purchase price into an escrow account which is payable to
the Company in the event Pride does not obtain its financing or is unable to
complete the acquisition by June 30, 1997.
DEVELOPMENT OF BUSINESS DURING 1996
NEDDRILL ACQUISITION
On July 1, 1996, the Company completed the acquisition from Royal Nedlloyd
N.V. ("Nedlloyd") and its wholly owned subsidiary, Neddrill Holding B.V., of
the assets, including approximately $28,000,000 in net working capital, of
Nedlloyd's offshore drilling division, Neddrill ("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 and sale of 21,850,000 shares of its common stock and $125,000,000
principal amount of 9 1/8% Senior Notes due 2006.
The Neddrill acquisition promoted the Company's strategic goals of
expanding its international presence and enhancing its deepwater drilling
capabilities. The Neddrill acquisition added deepwater and harsh environment
capabilities to the Company's fleet, diversified the fleet to include
drillships and a semisubmersible rig and increased the Company's geographic
diversification by providing entry into the Brazilian offshore market and
expanding its presence in the North Sea. See "Item 2. Properties - Drilling
Fleet" for additional information on the Neddrill fleet.
Neddrill's operations are managed from its headquarters in Rotterdam, The
Netherlands. Neddrill maintains shorebase facilities in Brazil, Denmark, the
United Kingdom and The Netherlands. At December 31, 1996, Neddrill had
approximately 730 personnel in offshore/field positions and 55 personnel in
administrative positions.
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1996 RIG ACQUISITIONS
The Company purchased the Shelf 4, a Friede & Goldman 9500 Enhanced
Pacesetter semisubmersible rig, on December 30, 1996 for $6,000,000 in cash.
The rig is stacked in the United Kingdom, and substantial capital expenditures
are required to return the rig to operational status.
On December 24, 1996, the Company purchased the Noble Jimmy Puckett
(formerly the Essar Explorer), a 300-foot Friede & Goldman L-780 Mod II
independent leg cantilevered unit built in 1982, for $35,400,000 in cash. The
Company chartered the rig back to the seller for the duration of the seller's
current contract with the Oil and Natural Gas Corporation Ltd. of India, which
expires in October 1997.
On September 4, 1996, the Company purchased the Noble Kenneth Delaney
(formerly the Miss Kitty), a Friede & Goldman L-780 Mod II independent leg
cantilevered unit rated for a water depth of 300 feet, for $26,250,000 in cash.
The rig is currently working offshore India under a bareboat charter
arrangement that expires in September 1997.
The Company purchased the Noble Chuck Syring (formerly the Dana), a
Marathon LeTourneau 82-C independent leg cantilevered rig capable of drilling
in 250 feet of water, on March 20, 1996, for $15,800,000 in cash. The rig is
currently operating under a long-term contract through October 1999 for Qatar
General Petroleum Corporation in Qatar.
On February 26, 1996, the Company purchased the Gus Androes (formerly the
Odin Explorer), a Levingston 111-C independent leg cantilevered unit rated for
a water depth of 300 feet, for $15,300,000 in cash. The rig has been
refurbished and is under contract offshore Qatar with an international oil and
gas company through October 1997, plus two one-year options.
MODIFICATIONS AND UPGRADES
The Company has pursued an extensive rig modification, refurbishment and
upgrade program in recent years which continues to date. The Gene Rosser, Roy
Butler, Noble Chuck Syring and Gus Androes rigs were upgraded in 1996. The Gene
Rosser was converted to a cantilevered rig with a top drive drilling system and
cascading mud system. The Roy Butler's legs were extended to increase its water
depth capability from 125 to 250 feet. The Noble Chuck Syring received an
enhanced strengthened cantilever, a top drive drilling system, new solids
control equipment, an enlarged mud system, a jacking system overhaul and
refurbished crew quarters. The Gus Androes received an extended cantilever and
was equipped with a top drive drilling system. The total cost of these projects
was approximately $32,600,000.
See "Item 7. Management's Discussion and Analysis of Financial Condition
and Results of Operations-Liquidity and Capital Resources" for a discussion of
capital expenditures.
REDEPLOYMENTS
From time to time, the Company has strategically redeployed certain
drilling units in its fleet, primarily from the Gulf of Mexico to other
drilling markets worldwide, in order to position assets in important geological
areas. During 1996, the Company transferred one jackup rig from the U.S. Gulf
of Mexico to the Bay of Campeche and one drillship from West Africa to Brazil.
Additionally, the Company is currently deploying the Neddrill Muravlenko to
Brazil. The Neddrill Trigon was recently redeployed from Argentina to the North
Sea.
ASSET RATIONALIZATION PROGRAM
Consistent with the Company's focus on enhancing the deepwater capability
of its fleet, the Company sold its four posted barge rigs in 1996. On December
13, 1996, the Company completed the sale of its land drilling assets for
$60,000,000 in cash to Nabors Industries, Inc. The assets sold consisted
principally of (i) 19 marketed land drilling rigs and 28 mothballed land
drilling rigs, (ii) certain inventory related to the maintenance and operation
of the rigs, (iii) leasehold interests and real property interests related to
the maintenance and operation of the rigs and (iv) drilling contracts in
existence on the closing date for the employment of the rigs. See "Item 7.
Management's Discussion and Analysis of Financial Condition and Results of
Operations - Results of Operations - Significant 1996 Events."
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EVA-4000 LETTER OF INTENT
In December 1996, the Company announced that it had entered into a letter
of intent with Shell Deepwater Development Inc. ("SDDI"), an affiliate of Shell
Oil Company, for a drilling contract for a Noble Drilling designed Economic
Value Advantage ("EVA-4000") semisubmersible unit. The semisubmersible rig for
SDDI, the Paul Romano, will be Noble Drilling's initial conversion project
since the Company's announcement that it had conducted, over an 11-month
period, engineering feasibility studies regarding conversion of a submersible
drilling unit into a deepwater semisubmersible drilling unit. The conversion
will result in a rig designed for and capable of performing drilling operations
in water depths of up to 6,000 feet.
The initial term of the drilling contract will be four years, with an
option to SDDI to extend the contract for a fifth year at predetermined
dayrates. The Company anticipates that delivery of the EVA-4000 semisubmersible
rig to SDDI will occur late in the first quarter of 1998. The letter of intent
is subject to the execution of a mutually agreed upon Marine Drilling Order
(drilling contract). The Company expects the conversion to cost approximately
$90,000,000 to $100,000,000.
DRILLING CONTRACTS
Each of the Company's drilling units is employed under an individual
contract. Although the final terms of such contracts are the result of
negotiations between the Company and its customers, many contracts are awarded
based upon competitive bidding. The Company's drilling contracts generally
contain the following terms:
o a term extending over a specific period of time or the period
necessary to drill one or more wells (in general, the Company seeks to
have a reasonable balance of short- and long-term contracts to
minimize the downside impact of a decline in the market, while
obtaining the benefit of increasing market prices in a rising market);
o early termination by the customer without cause and extension options
to drill additional wells, in each case, generally exercisable by the
customer upon advance notice to the Company;
o early termination by the customer if the unit is lost or destroyed, if
operations are suspended for a specified period of time due to
breakdown of major equipment or if operations are suspended for a
specified period of time due to "force majeure" events beyond the
control of the Company and the customer;
o payment of compensation to the Company (generally in U.S. dollars) on
a "daywork" basis, under which the Company receives a fixed amount per
day that the drilling unit is operating under contract, with lower
rates or no compensation payable during periods of equipment breakdown
and repair, adverse weather or in the event operations are interrupted
by other conditions, some of which may be beyond the Company's
control; and
o payment by the Company of the operating expenses of the drilling unit,
including labor costs and the cost of incidental supplies.
Most contracts allow the Company to recover its mobilization and
demobilization costs associated with moving a drilling unit from one location
to another. If market conditions required the Company to bear these costs, the
Company's operating margins would be reduced. Market conditions prevailing in
1996 and year to date in 1997 have permitted the Company to recover its
mobilization and demobilization costs to move a unit long distances between
operating areas. For shorter moves such as "field moves", the Company's
customers have generally agreed to pay or reimburse the Company for the costs
of moving the unit and pay to the Company a reduced dayrate or "move rate"
while the unit is being moved.
The Company, through Triton Engineering Services Company and its
subsidiaries, also participates in "turnkey" contracts (see "Item 1. Business -
Turnkey Drilling and Engineering Services"). The risk of loss to the Company is
generally higher with respect to the Company's turnkey drilling operations than
it is for daywork contract drilling operations.
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OFFSHORE DRILLING OPERATIONS
The Company's offshore contract drilling operations are conducted
worldwide. The Company's offshore drilling fleet consisted of 57 units at
January 31, 1997. See "Item 2. Properties - Drilling Fleet." The Company's
principal regions of offshore contract drilling operations include the North
Sea, the Gulf of Mexico, Africa, South America, the Middle East and India. In
1996 there were no customers who accounted for more than 10 percent of the
Company's total operating revenues.
INTERNATIONAL CONTRACT DRILLING
The Company's international offshore contract drilling operations are
conducted in the North Sea, Mexico, Africa, South America, the Middle East and
India. Offshore contract drilling services from international sources accounted
for approximately 62 percent and 55 percent of the Company's total offshore
contract drilling services revenues for the years ended December 31, 1996 and
1995, respectively. In 1996, approximately 62 percent of the Company's
international offshore contract drilling services revenues was derived from
contracts with major oil and gas companies, 35 percent from contracts with
government-owned companies and the balance from contracts with independent
operators.
The Company's international contract drilling fleet consisted of 30 rigs
at January 31, 1997, of which 26 were working under contract, three were being
upgraded, modified and/or refurbished and one was being held pending evaluation
of the economics of re-entering the market. Substantial capital expenditures
would be required to return the latter rig to operational status.
The Company has seven jackup rigs located along the west coast of Africa.
Six of the jackup rigs are under contracts extending through dates ranging from
March 1997 to December 1998, with major oil companies. The seventh jackup rig
(which is under contract to be sold (see "Item 1. Business - Recent
Development")) is under a short-term turnkey contract to complete two wells,
with an option for one further well.
The Company has four jackup rigs located in Venezuela. One of these rigs
is under a long-term contract terminating in the year 2000, and contracts for
the other three rigs are expected to be renewed for periods of 12 months or
longer when they expire in the second half of 1997.
The Company has three jackup rigs located in Qatar under contracts
extending through dates ranging from October 1997 to October 1999.
The Company has three jackup rigs working in India. Two of these rigs are
under bareboat charter agreements that expire in October 1997. The third rig is
under contract until September 1997.
Neddrill's one semisubmersible and six of its jackup rigs are currently
under contract, with commitments extending through dates ranging from April
1997 to 2001, depending on the rig. One of its jackup rigs is currently being
upgraded, modified and/or refurbished. Neddrill's three drillships are
committed under five to six year contracts to work for Petroleo Brasileiro S.A.
(Petrobras), offshore Brazil. One of the two drillships currently on location
in Brazil recently completed an upgrade. The third drillship, in the course of
its mobilization to Brazil, has entered a U.S. Gulf of Mexico shipyard for
additional repair and upgrade. It is scheduled to arrive offshore Brazil in
April 1997.
DOMESTIC CONTRACT DRILLING
The Company's domestic offshore contract drilling fleet consisted of 27
rigs at January 31, 1997, of which 17 were working under contract, six were
being upgraded, modified and/or refurbished and four were being held in various
stages of readiness to enter the marketplace. The Company continually evaluates
the economics of re-entering the market with these rigs and expects to do so
when conditions warrant.
In 1996, approximately 66 percent of the Company's domestic offshore
contract drilling revenues was derived from contracts with major oil and gas
companies and the remaining 34 percent was derived from contracts with
independent operators.
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LABOR CONTRACTS
The Company's offshore operations also include labor contracts for
drilling and workover activities covering 14 rigs operating in the U.K. North
Sea. These rigs are not owned or leased by the Company. Under its labor
contracts, the Company provides the personnel necessary to manage and perform
the drilling operations from drilling platforms owned by the operator. The
contracts are generally renewable no more frequently than on an annual basis.
After drilling operations are completed, workover operations usually become an
important element of each platform's activity. Thus, drilling contractor crews
usually remain on the platform until a field is depleted by production.
The Company was awarded a contract in 1994 by Hibernia Management and
Development Company Ltd. ("Hibernia") for offshore production drilling and
related services. The contract calls for the Company to commission, operate and
maintain two state-of-the-art platform rigs to be installed on the concrete
gravity-based structure that will be used to develop the Hibernia field off the
coast of Newfoundland, Canada. The Company established an office in St. Johns,
Newfoundland in late 1994. There are 75 employees in St. Johns who are
presently participating in the preparation of operating, equipment maintenance
and procedures manuals, and the procurement of equipment. Commissioning of the
drilling and related equipment occurred in May 1996 through November 1996. The
gravity-based structure is scheduled for tow out to location in May 1997, with
commencement of the first well scheduled to occur in early September 1997. The
Company's five-year contract with Hibernia extends through August 2002 with an
option to Hibernia for a five-year extension. It is anticipated that the
Company will have approximately 120 employees assigned to this project at its
peak in 1997.
TURNKEY DRILLING AND ENGINEERING SERVICES
Through its wholly owned subsidiary, Triton Engineering Services Company
("Triton"), the Company provides turnkey drilling, drilling project management,
drilling and completion planning and design, specialized drilling tools and
services, and contract engineering and consulting manpower. Turnkey drilling,
Triton's major service, involves the coordination of all equipment, materials,
services and management to drill a well to a specified depth, for a fixed
price. Under turnkey drilling contracts, Triton bears the financial risk of
delays in the completion of the well. In providing its services, Triton can use
drilling rigs owned either by the Company or by a third party, depending on
availability. The drilling of a turnkey well is generally completed within 30
to 50 days. Triton completed 28 wells in 1996 compared to 27 wells in 1995.
Revenues from turnkey drilling services represented 22 percent of consolidated
operating revenues in each of the years ended December 31, 1996 and 1995.
The Company provides engineering services relating primarily to the design
of drilling equipment for offshore development and production services and to
the recertification of oilfield equipment. The Company works, on a contract
basis, with operators and prime construction contractors of drilling and
production platforms in the design of drilling equipment configurations aimed
at optimizing the operational efficiency of developmental drilling by
maximizing platform space utilization and load capability.
COMPETITION AND RISKS
The contract drilling industry is a highly competitive and cyclical
business characterized by high capital and maintenance costs. Various
independent drilling contractors in recent years have sought protection from
creditors under bankruptcy laws or have combined with other companies as a
result of the depressed conditions then existing in the contract drilling
industry. Although this has reduced the total number of competitors, management
of the Company believes that competition for drilling contracts will continue
to be intense for the foreseeable future. It is impracticable to estimate the
number of competitors of the Company. Certain competitors may have access to
greater financial resources than the Company.
Competition in contract drilling involves numerous factors, including
price, the experience of the workforce, rig availability and suitability,
efficiency, condition of equipment, operating integrity, reputation, industry
standing and customer relations. Price is the major consideration in most
markets, especially with respect to domestic drilling. The Company believes it
competes favorably with respect to all these factors. Competition is primarily
on a regional basis and may vary significantly by region at a particular time.
Demand for offshore drilling equipment is also dependent on the exploration and
development programs of oil and gas producers, which are in turn influenced by
the financial condition of such producers, by general economic conditions and
prices of oil and gas, and, from time to time, by political considerations and
policies.
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The Company follows a policy of keeping its equipment well maintained and
technologically competitive. However, its equipment could be made obsolete by
the development of new techniques and equipment. In addition, industry-wide
shortages of supplies, services, skilled personnel and equipment necessary to
conduct the Company's business, such as drill pipe, have occurred from time to
time in the past, and such shortages could occur again.
The offshore contract drilling industry has experienced a series of
consolidations and acquisitions among drilling contractors as such contractors
have positioned 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 domestic price of natural gas decreases, the Company's dayrates on
new contracts and utilization rates in the U.S. Gulf of Mexico ("U.S. Gulf")
could be adversely affected. Similarly, if the price of natural gas decreases
in the North Sea market, the Company's dayrates 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 operations are subject to the many hazards inherent in the
drilling business, including blowouts, cratering, fires, and collisions or
groundings of offshore equipment, which could cause substantial damage to the
environment. In addition, the Company's operations are subject to damage or
loss from adverse weather and seas. These hazards could cause personal injury
and loss of life, suspend drilling operations or seriously damage or destroy
the property and equipment involved and, in addition to environmental damage,
could cause substantial damage to producing formations and surrounding areas.
Although the Company maintains insurance against many of these hazards, such
insurance is subject to substantial deductibles and provides for premium
adjustments based on claims. It also excludes certain matters from coverage,
such as loss of earnings on certain rigs. Also, while the Company generally
obtains indemnification from its customers for environmental damage with
respect to offshore drilling, such indemnification is generally only in excess
of a specified amount, which typically ranges from $100,000 to $250,000.
In the case of turnkey drilling operations, the Company maintains
insurance against pollution and environmental damage in amounts ranging from
$5,000,000 to $50,000,000 depending on location, subject to self-insured
retentions of $25,000 to $1,000,000. Under turnkey drilling contracts, Triton
generally assumes the risk of pollution and environmental damage, but on
occasion receives indemnification from the customer for environmental and
pollution liabilities in excess of Triton's pollution insurance coverage.
Further, Triton is not insured against certain drilling risks that could result
in delays or nonperformance of a turnkey drilling contract, although it
generally maintains insurance against delays related to loss of well control.
Triton typically obtains contractual indemnification from the drilling
contractors that provide the rigs for Triton's turnkey drilling operations for
pollution arising from certain acts of such contractors.
The Company's international operations are also subject to certain
political, economic and other uncertainties including, among others, risks of
war and civil disturbances, expropriation, nationalization, renegotiation or
modification of existing contracts, taxation policies, foreign exchange
restrictions, international monetary fluctuations and other hazards arising out
of foreign governmental sovereignty over certain areas in which the Company
conducts operations. The Company has sought to obtain, where economic,
insurance against certain political risks. However, there can be no assurance
that such insurance would be available to the Company or, if available, would
cover all losses that the Company may incur in respect of foreign operations.
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GOVERNMENTAL REGULATION AND ENVIRONMENTAL MATTERS
Many aspects of the Company's operations are affected by domestic and
foreign political developments and are subject to numerous governmental
regulations that may relate directly or indirectly to the contract drilling
industry. The regulations applicable to the Company's operations include
certain provisions that regulate the discharge of materials into the
environment or require remediation of contamination, under certain
circumstances. Usually these environmental laws and regulations impose "strict
liability," rendering a person liable without regard to negligence or fault on
the part of such person. Such environmental laws and regulations may expose the
Company to liability for the conduct of, or conditions caused by, others, or
for acts of the Company that were in compliance with all applicable laws at the
time such acts were performed.
The U.S. Oil Pollution Act of 1990 ("OPA `90") and the regulations
promulgated pursuant thereto impose certain additional operational requirements
on the Company's domestic offshore rigs and govern liability for leaks, spills
and blowouts. Regulations under OPA `90 may increase the level of financial
assurance required of owners and operators of rigs in the waters of the United
States. The Company has monitored these regulations and does not believe that
they are likely to have a material adverse effect on the Company's financial
condition or results of operations.
The Company has made and will continue to make expenditures to comply with
environmental requirements. The Company has not to date expended material
amounts in connection with such activities and does not believe that compliance
with such requirements will have a material adverse effect upon its capital
expenditures, results of operations or competitive position. Although such
requirements do have a substantial impact upon the energy and energy services
industries, generally they do not appear to affect the Company any differently
or to any greater or lesser extent than other companies in the energy services
industry.
The modification of existing laws or regulations or the adoption of new
laws or regulations curtailing exploratory or development drilling for oil and
gas for economic, environmental or other reasons could materially and adversely
affect the Company's operations by limiting drilling opportunities.
EMPLOYEES
At December 31, 1996, the Company had approximately 3,173 employees, of
which 58 percent were engaged in international operations and 42 percent were
engaged in domestic operations. Over many years, the Company has developed and
maintained a well-trained and experienced workforce.
Depending on location, some employees of Neddrill are covered by a labor
agreement or are represented by labor unions. The Company is not a party to any
collective bargaining agreements that are material to the Company. The Company
considers its employee relations to be satisfactory.
Shortages of supplies and equipment in the drilling industry, and of
qualified personnel for rig crews, have occurred from time to time in the past.
A continued increase in demand for oilfield services could make it more
difficult to retain and recruit qualified rig crew members without significant
increases in compensation.
FINANCIAL INFORMATION ABOUT FOREIGN AND DOMESTIC OPERATIONS
Information regarding operating revenues, operating income and loss, and
identifiable assets attributable to each of the Company's geographic areas of
operations for the last three fiscal years is presented in Note 14 of Notes to
Consolidated Financial Statements included elsewhere herein.
7
<PAGE> 10
ITEM 2. PROPERTIES
DRILLING FLEET
The Company's offshore drilling rig fleet at January 31, 1997 consisted of
57 units comprising 44 jackup rigs, seven submersible rigs, three
semisubmersible rigs (including one submersible that is currently undergoing
conversion to an EVA-4000 semisubmersible unit) and three dynamically
positioned drillships. The rig counts include one drillship in which the
Company has a 41 percent interest through a joint venture arrangement, one
jackup rig owned by a limited partnership of which Noble Drilling is the
general partner and one jackup rig over which the Company has operating control
under a long-term bareboat charter from the owner. Each type of rig is
described further below. There are several factors that determine the type of
rig most suitable for a particular job, the more significant of which include
the water depth and bottom conditions at the proposed drilling location,
whether the drilling is being done over a platform or other structure, and the
intended well depth. The Company recently agreed to sell its 12 mat supported
jackup rigs (see "Item 1. Business - Recent Development").
Twenty-eight of the Company's 57 rigs have a top drive unit, which is a
technologically-advanced drilling tool used in many drilling applications both
offshore and on land. In addition, 14 of the Company's 57 rigs are equipped
with zero discharge capability.
JACKUP RIGS
The Company had 44 jackup rigs in the fleet at January 31, 1997. Jackup
rigs are mobile self-elevating drilling platforms equipped with legs which can
be lowered to the ocean floor until a foundation is established to support the
drilling platform. The rig hull includes the drilling rig, jacking system, crew
quarters, loading and unloading facilities, storage areas for bulk and liquid
materials, a helicopter landing deck and other related equipment. The rig legs
may operate independently or have a mat attached to the bottom of them in order
to provide a more stable foundation in soft bottom areas. Thirty-two of the
Company's jackup rigs are independent leg rigs and 12 are mat supported rigs.
Moving a rig to the drill site involves jacking up its legs until the hull is
floating on the surface of the water. The hull is then towed to the drill site
by tugs and the legs are jacked down to the ocean floor. The jacking operation
continues until the hull is raised out of the water and drilling operations are
conducted with the hull in its raised position. A cantilevered jackup has a
feature that permits the drilling platform to be extended out from the hull,
allowing it to perform drilling or workover operations over pre-existing
platforms or structures. The Company's jackup rigs are capable of drilling to a
maximum depth of 25,000 feet in water depths ranging between 8 and 390 feet,
depending on the jackup rig.
SUBMERSIBLE RIGS
The Company had seven submersibles in the fleet at January 31, 1997.
Submersible rigs are mobile drilling platforms which are towed to the drill
site and submerged to drilling position by flooding the lower hull until it
rests on the sea floor, with the upper deck above the water surface. The
Company's submersible rigs are capable of drilling to a maximum depth of 30,000
feet in water depths ranging between 12 and 100 feet, depending on the
submersible rig. The Company believes that four of these seven submersibles are
candidates for conversion to a Noble Drilling EVA-4000 semisubmersible rig. See
"Item 1. Business - Development of Business During 1996 - EVA-4000 Letter of
Intent" and "Item 2. Properties - Drilling Fleet - Semisubmersible Rigs."
DRILLSHIPS
The Company had three drillships in the fleet at January 31, 1997,
including one drillship in which the Company owns a 41 percent interest through
a joint venture arrangement. Drillships are ships that are equipped for
drilling and are typically self-propelled and move from one location to another
under their own power. Drillships are positioned over the well through use of
either an anchoring system or a computer controlled thruster system (dynamic
positioning). The Company's two wholly owned drillships, the Neddrill 1 and
Neddrill 2, are capable of drilling in water depths of up to 4,500 feet and
6,000 feet, respectively. The Neddrill Muravlenko is capable of drilling in
water depths of up to 4,000 feet. Drillships are typically more expensive to
construct and operate than jackup rigs.
8
<PAGE> 11
SEMISUBMERSIBLE RIGS
The Company had three semisubmersible rigs (including a submersible that
is currently undergoing conversion to an EVA-4000 semisubmersible unit) in the
fleet at January 31, 1997. Semisubmersible rigs are floating platforms which,
by means of a water ballasting system, can be submerged to a predetermined
depth so that a substantial portion of the hull is below the water surface
during drilling operations. The Neddrill 6 maintains its position over the well
through the use of a mooring system, is designed to work in water depths of up
to 1,500 feet and can drill in many areas where the Company's jackup rigs can
also drill. However, semisubmersible rigs normally require water depth of at
least 200 feet in order to conduct operations. Semisubmersible rigs are
typically more expensive to construct and operate than jackup rigs.
The following table sets forth certain information concerning the
Company's drilling rig fleet, including the 12 mat supported jackup rigs which
the Company has agreed to sell, at January 31, 1997. The table does not include
14 rigs owned by operators for which the Company had labor contracts as of
January 31, 1997. Unless otherwise indicated, the Company owns and operates the
rigs included in the table.
9
<PAGE> 12
DRILLING FLEET
<TABLE>
<CAPTION>
YEAR WATER MAXIMUM
BUILT OR DEPTH DRILLING
NAME MAKE TYPE (1) REBUILT (2) RATING DEPTH LOCATION STATUS (3)
---- ---- -------- ----------- ------ ----- -------- ----------
(FEET) (FEET)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
JACKUP RIGS - 44
Eddie Paul (4) MLT 84 - E.R.C. IC 1995 R 390 25,000 U.S. Gulf Active
Noble Bill Jennings (4) MLT 84 - E.R.C. IC 1997 R 390 25,000 U.S. Gulf Shipyard
Noble Leonard Jones (4) MLT 53 - E.R.C. IC 1997 R 390 25,000 U.S. Gulf Shipyard
Noble Chuck Syring (4) MLT Class 82-C IC 1996 R 250 20,000 Qata r Active
Carl Norberg MLT Class 82-C IC 1976 250 20,000 Venezuela Active
Charles Copeland (4) MLT Class 82-SD-C IC 1995 R 250 20,000 Venezuela Active
Earl Frederickson MLT Class 82-SD-C IC 1979 R 250 20,000 Venezuela Active
Ed Noble (4) MLT Class 82-SD-C IC 1990 R 250 20,000 Nigeria Active
Lloyd Noble (4) MLT Class 82-SD-C IC 1990 R 250 20,000 Nigeria Active
Tom Jobe (4) MLT Class 82-SD-C IC 1982 250 25,000 U.S. Gulf Active
Gene Rosser (4) Levingston 111-C IC 1996 R 300 20,000 Bay of Campeche Active
Ed Holt (5) Levingston 111-C IC 1994 R 300 25,000 India Active
John Sandifer (4) Levingston 111-C IC 1995 R 300 25,000 U.S. Gulf Active
Noble Lewis Dugger (4) Levingston 111-C IC 1997 R 300 20,000 U.S. Gulf Shipyard
Gus Androes (4) Levingston 111-C IC 1996 R 300 25,000 Qatar Active
Sam Noble (4) Levingston 111-C IC 1982 300 25,000 U.S. Gulf Shipyard
George McLeod (4) F&G L-780 MOD II IC 1995 R 300 25,000 Qatar Active
Percy Johns (4) F&G L-780 MOD II IC 1995 R 300 25,000 Nigeria Active
Tommy Craighead (4) F&G L-780 MOD II IC 1990 R 300 25,000 Nigeria Active
Noble Kenneth Delaney F&G L-780 MOD II IC 1982 300 25,000 India Active
Noble Jimmy Puckett F&G L-780 MOD II IC 1982 300 25,000 India Active
Roy Butler (4)(6) F&G L-780 MOD II IC 1996 R 300 25,000 Zaire Active
Johnnie Hoffman (4) Baker Marine BMC 300 IC 1993 R 300 25,000 U.S. Gulf Active
Dick Favor Baker Marine BMC 150 IC 1993 R 150 20,000 Venezuela Active
Don Walker (4) Baker Marine BMC 150 IC 1992 R 150 20,000 Nigeria Active
Neddrill Trigon (4)(7) CFEM T-2005C IC 1997 R 360 25,000 Netherlands Shipyard
Neddrill 10 (4)(7) CFEM T-2005C IC 1982 300 25,000 Denmark Active
Neddrill Kolskaya (7)(8) Gusto Engineering IC 1983 330 N/A Denmark Active
Neddrill 3 (4)(7) Marine Structure CJ-46 IC 1982 250 25,000 Netherlands Active
Neddrill 9 (4)(7)(9) Marine Structure CJ-46 IC 1982 230 25,000 Netherlands Active
Neddrill 7 (4)(7)(9) Marine Structure CJ-46 IC 1981 205 25,000 Netherlands Active
Neddrill 4 (4) Neddrill IC 1982 330 20,000 Netherlands Active
Marvin Winters Bethlehem JU-250 MC 1982 250 20,000 U.S. Gulf Active
Duke Hinds Bethlehem JU-200 MC 1990 R 200 25,000 U.S. Gulf Active
Frank Lamaison Bethlehem JU-200 MC 1982 200 20,000 U.S. Gulf Active
Mac McCoy Bethlehem JU-200 MC 1982 200 20,000 U.S. Gulf Active
Red McCarty Bethlehem JU-200 MC 1982 200 25,000 U.S. Gulf Active
W.T. Johnson Bethlehem JU-200 MC 1982 200 20,000 U.S. Gulf Active
Cecil Forbes Bethlehem JU-300 MS 1974 300 20,000 U.S. Gulf Stacked
Cliff Matthews Bethlehem JU-250 MS 1976 250 20,000 U.S. Gulf Active
Frank Reiger Bethlehem JU-250 MS 1975 250 20,000 U.S. Gulf Shipyard
Jack Clark Bethlehem JU-250 MS 1996 R 250 20,000 U.S. Gulf Active
Jim Bawcom Bethlehem JU-250 MS 1981 250 25,000 U.S. Gulf Active
NN-1 (10) Bethlehem JU-45 MS 1990 R 45 20,000 Nigeria Active
SUBMERSIBLE RIGS - 7
Amos Runner (4) Column Stabilized 1982 100 25,000 U.S. Gulf Active
Jim Thompson Column Stabilized 1993 R 100 25,000 U.S. Gulf Active
Max Smith Column Stabilized 1996 R 100 25,000 U.S. Gulf Active
Joe Alford Column Stabilized 1982 85 25,000 U.S. Gulf Shipyard
Lester Pettus Column Stabilized 1982 85 25,000 U.S. Gulf Shipyard
Fri Rodli Column Stabilized 1979 70 25,000 U.S. Gulf Shipyard
Paul Wolff Column Stabilized 1981 100 30,000 U.S. Gulf Active
DYNAMICALLY POSITIONED
DRILLSHIPS - 3
Neddrill 1 Gusto Engineering 1996 R 4,500 20,000 Brazil Active
Pelican Class (enhanced)
Neddrill Muravlenko (11) Gusto Engineering 1996 R 4,000 21,000 Brazil Shipyard
Pelican Class (Mobilizing)
Neddrill 2 Neddrill 1997 R 6,000 25,000 Brazil Shipyard
SEMISUBMERSIBLES - 3
Neddrill 6 (4)(7) Offshore Co. SCP III 1991 R 1,500 25,000 U.K. Active
Shelf 4 (12) Friede & Goldman 9500 1985 650 20,000 U.K. Stacked
Enhanced Pacesetter
Paul Romano (4)(13) Noble 4th Generation 1997/1998R 6,000 30,000 U.S. Gulf Shipyard
</TABLE>
(See footnotes on following page.)
10
<PAGE> 13
(1) Type codes are defined as follows:
IC......Independent Leg Cantilevered jackup rig
MC......Mat Supported Cantilevered jackup rig
MS......Mat Supported Slot jackup rig
(2) Rigs designated with an "R" were modified, refurbished or otherwise
upgraded in the year indicated by capital expenditures in an amount
material to the net book value of such rig.
(3) Rigs listed as "active" were operating under contract. Rigs listed as
"stacked" were not operating under contract and were either in need of
expenditures to reactivate or not being actively marketed at such
date. Rigs listed as "shipyard" are in a shipyard for repair,
refurbishment or upgrade. Shipyard work is scheduled to be completed
during 1997 except for the Paul Romano which is scheduled to be
completed in early 1998. Since January 31, 1997, the Sam Noble,
Neddrill Trigon and Neddrill 2 have returned to "active" status.
(4) Equipped with a top drive unit.
(5) Bareboat chartered to a third party under which the Company maintains
operating control of the rig.
(6) Although designed to drill in up to 300 feet of water, the rig is
currently equipped with legs adequate to drill in approximately 250
feet of water. The Company owns the additional legs required to extend
the drilling depth capability to 300 feet of water.
(7) Harsh environment capability.
(8) The Company has operating control of the unit under a long-term
bareboat charter from the owner. The Company currently is using the
unit in offshore hotel accommodation mode (at a capacity of 250 bunks)
instead of drilling mode under an agreement which expires in April
1997. At that time, the Company will convert the unit to drilling mode
with a maximum drilling depth of 25,000 feet.
(9) Legs to be extended to operate in 250 feet of water in the North Sea.
(10) Owned by NN-1 Limited Partnership, of which Noble Drilling is the
general partner and in which it has a majority interest. The rig is
mortgaged under a first preferred ship mortgage in favor of the United
States government to secure repayment of the U.S. Government
Guaranteed Ship Financing Sinking Fund Bonds issued in 1978 by the
predecessor of the partnership in connection with the construction and
purchase of the rig. As the general partner of the NN-1 Limited
Partnership, Noble Drilling has called the bonds for redemption on
March 31, 1997.
(11) Neddrill owns a 41 percent interest in the drillship through a joint
venture arrangement.
(12) Substantial capital expenditures would be required to return the rig
to operational status.
(13) Currently undergoing conversion to an EVA-4000 semisubmersible unit.
11
<PAGE> 14
FACILITIES
The Company's principal executive offices are located in Houston, Texas,
and leased through the year 2000. The Company also leases administrative and
marketing offices, and sites used primarily for storage, maintenance and
repairs for drilling rigs and equipment in New Orleans and Lafitte, Louisiana;
Leduc and St. Johns, Canada; Warri, Lagos and Port Harcourt, Nigeria; Aberdeen,
Scotland; Maracaibo and Cuidad Ojeda, Venezuela; Doha, Qatar; Rotterdam and
Beverwijk, The Netherlands; Macae, Brazil; and Esjberg, Denmark.
The Company owns certain tracts of land, including office and
administrative buildings, warehouse facilities and a manufacturing facility, in
Harris and Waller Counties, Texas; Lafayette and Bayou Black, Louisiana; and
Aberdeen, Scotland.
ITEM 3. LEGAL PROCEEDINGS
There are no material pending legal proceedings to which the Company is a
party or of which certain of its property is the subject. The Company is
involved in certain routine litigation incidental to the business of the
Company.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
Not applicable.
EXECUTIVE OFFICERS OF THE REGISTRANT
The following table sets forth certain information as of March 12, 1997
with respect to the executive officers of Noble Drilling.
<TABLE>
<CAPTION>
NAME AGE POSITION
---- ----- --------
<S> <C> <C>
James C. Day 53 Chairman, President and Chief
Executive Officer and Director
Byron L. Welliver 51 Senior Vice President - Finance,
Treasurer and Controller
Julie J. Robertson 41 Vice President - Administration
and Corporate Secretary
</TABLE>
James C. Day has served as Chairman of Noble Drilling since October 22,
1992, and as President and Chief Executive Officer since January 1, 1984. From
January 1983 until his election as President and Chief Executive Officer, Mr.
Day served as Vice President of Noble Drilling. Prior to 1983, Mr. Day served
as Vice President and Assistant Secretary of Noble Affiliates, Inc. He has been
a director of Noble Drilling since 1984. Mr. Day is also a director of Global
Industries Limited, Noble Affiliates, Inc., and Phillips University.
Byron L. Welliver has served as Senior Vice President - Finance of Noble
Drilling since April 1989, as Treasurer of Noble Drilling since July 1986, and
as Controller of Noble Drilling since September 1994. Mr. Welliver had served
as Controller from April 1989 to April 1991. From July 1986 to April 1989, he
also served as Vice President - Finance for Noble Drilling. He joined Noble
Drilling in October 1985, as Controller. Prior to joining Noble Drilling, Mr.
Welliver served consecutively as Tax Manager, Controller and Treasurer of Noble
Affiliates, Inc. beginning in March 1981.
Julie J. Robertson has served as Vice President - Administration of Noble
Drilling since April 1996 and as Corporate Secretary of Noble Drilling since
December 1993. From January 1989 to September 1994, Ms. Robertson served
consecutively as Manager of Benefits and Director of Human Resources at which
time she became Vice President - Administration of Noble Drilling Services Inc.
Prior to 1989, she served in the capacities of Risk and Benefits Manager and
Marketing Services Coordinator for Bawden Drilling Inc. Ms. Robertson joined
Bawden Drilling Inc. in 1979.
12
<PAGE> 15
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
Noble Drilling's Common Stock, par value $.10 per share ("Common
Stock"), has been listed and traded on the New York Stock Exchange since March
29, 1996, under the symbol "NE." Prior to that date, the Common Stock was
traded through the Nasdaq National Market. The following table sets forth for
the periods indicated the high and low sales prices of the Common Stock.
<TABLE>
<CAPTION>
HIGH LOW
--------- --------
<S> <C> <C>
1996
First quarter................................. $ 13 $ 8
Second quarter................................ 16 3/8 11 3/4
Third quarter................................. 16 3/4 13 1/4
Fourth quarter................................ 22 14 7/8
1995
First quarter................................. $ 6 1/2 $ 5
Second quarter................................ 7 7/8 5 7/8
Third quarter................................. 8 3/8 6 5/16
Fourth quarter................................ 9 1/8 6 1/2
</TABLE>
The Company has not paid any cash dividends on the Common Stock since
becoming a publicly held corporation in October 1985, and does not anticipate
paying dividends on the Common Stock at any time in the foreseeable future.
Certain provisions of the indentures governing the Company's 9 1/4% Senior
Notes Due 2003 issued in 1993 and its 9 1/8% Senior Notes due 2006 issued in
1996 restrict the Company's ability to pay cash dividends on the Common Stock.
At March 12, 1997, there were 2,314 record holders of Common Stock.
13
<PAGE> 16
ITEM 6. SELECTED FINANCIAL DATA
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
--------------------------------------------------------------------
1996 1995 1994 1993 1992
---------- --------- --------- ---------- ---------
(In thousands, except per share amounts)
<S> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA (1)
Operating revenues.......................... $ 514,253 $ 327,968 $ 351,988 $ 264,531 $ 184,166
Operating costs (2)......................... 331,582 240,102 243,208 178,684 135,252
Depreciation and amortization (3)........... 52,159 36,492 39,519 28,886 27,248
Selling, general and administrative......... 54,504 40,139 47,606 28,284 30,716
Gains on sales of property and equipment,
net of impairments (4)................... (36,115) (829) (8,858) - -
Minority interest (5)....................... (428) (214) (169) (232) 89
Restructuring charges (6)................... - - 3,661 - 21,120
---------- --------- --------- ---------- ---------
Operating income (loss)..................... 112,551 12,278 27,021 28,909 (30,259)
Interest expense............................ (18,758) (12,156) (12,351) (8,038) (13,274)
Interest income............................. 6,409 5,323 5,640 2,497 3,276
Other income, net........................... 1,757 (579) 6,885 1,047 3,675
---------- --------- --------- ---------- ---------
Income (loss) from continuing operations
before income taxes and extraordinary
charge.................................... 101,959 4,866 27,195 24,415 (36,582)
Income tax provision........................ (22,662) (3,272) (5,672) (3,333) (3,396)
---------- --------- --------- ---------- ---------
Income (loss) from continuing operations.... 79,297 1,594 21,523 21,082 (39,978)
Discontinued operations..................... - - - - (3,372)
Extraordinary charge, net of tax (7)........ (660) - - 1,770 -
---------- --------- --------- ---------- ---------
Net income (loss)........................... 78,637 1,594 21,523 22,852 (43,350)
Preferred stock dividends................... (6,040) (7,199) (12,764) (7,936) (6,728)
---------- --------- --------- ---------- ---------
Net income (loss) applicable to common shares $ 72,597 $ (5,605) $ 8,759 $ 14,916 $ (50,078)
========== ========= ========= ========== =========
Net income (loss) applicable to common
shares per share (8)(9)................... $ 0.66 $ (0.08) $ 0.11 $ 0.22 $ (1.05)
Weighted average common shares outstanding.. 110,252 89,736 77,576 66,923 47,762
BALANCE SHEET DATA (AT END OF PERIOD) (1)
Working capital............................. $ 236,977 $ 101,623 $ 157,885 $ 150,535 $ 42,993
Property and equipment, net................. $ 957,034 $ 542,978 $ 493,322 $ 482,029 $ 338,382
Total assets................................ $1,367,407 $ 742,530 $ 739,889 $ 696,553 $ 456,529
Long-term debt.............................. $ 239,506 $ 129,923 $ 126,546 $ 127,144 $ 87,280
Total debt (10)............................. $ 243,128 $ 142,133 $ 132,790 $ 127,690 $ 114,477
Shareholders' equity........................ $ 925,249 $ 523,493 $ 527,611 $ 516,770 $ 301,634
OTHER DATA (1)..............................
Cash dividends per common share............. $ 0.00 $ 0.00 $ 0.00 $ 0.00 $ 0.00
Capital expenditures........................ $ 216,887 $ 91,202 $ 55,834 $ 173,501 $ 5,997
</TABLE>
(1) The Selected Financial Data present the restatement of the Company's
historical financial statements for 1994 and prior periods to reflect
the 1994 merger of Chiles Offshore Corporation ("Chiles") into Noble
Offshore Corporation ("NOC"), a wholly owned subsidiary of the
Company, which was accounted for as a pooling of interests. The
Selected Financial Data also include the July 1996 acquisition of
Neddrill, the acquisition of Triton in April 1994 and the October 1993
acquisition of nine offshore rigs and associated assets from The
Western Company of North America, all of which were accounted for
under the purchase method.
(2) Consists of operating costs and expenses other than depreciation and
amortization, selling, general and administrative, gains on sales of
property and equipment, net of impairments, minority interest and
restructuring charges.
(3) Effective January 1, 1995, the Company revised its estimates of
salvage values and remaining depreciable lives of certain rigs. The
effect of this change in estimate was a decrease to depreciation and
amortization of $6,160,000, or $0.07 per common share, for the year
ended December 31, 1995.
(4) The amount for 1996 includes $45,414,000 and $7,527,000 related to
gains on the sales of land drilling assets and posted barge rigs,
respectively, partially offset by impairment charges of $17,800,000.
The amount for 1994 includes a gain of $8,000,000 related to the sale
of a drilling rig.
(5) The amount for 1996 includes ($289,000) relating to an impairment
charge of $10,200,000.
(6) Consists of provisions resulting from write-downs of certain assets,
facility consolidation costs and, to a lesser extent, severance costs.
(7) Consists of a loss on extinguishment of debt in 1996 and a gain on
extinguishment of debt in 1993.
(footnotes continued on following page.)
14
<PAGE> 17
(8) Net income applicable to common shares per share before extraordinary
item was $0.20 for the year ended December 31, 1993. Loss applicable
to common shares per share from discontinued operations was $ (0.07)
for the year ended December 31, 1992.
(9) Includes the $0.02 per share effect of the March 1995 preferred
conversion payment related to the conversion of 923,862 shares of
Noble Drilling's $2.25 Convertible Exchangeable Preferred Stock. The
payment of $1,524,000 was accounted for as a reduction of net earnings
applicable to common shares when calculating the net loss per common
share.
(10) Consists of short-term debt and current installments of long-term debt
and long-term debt.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
FORWARD LOOKING STATEMENTS
This report on Form 10-K 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-K, 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 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 following discussion is intended to assist in understanding the
Company's financial position as of December 31, 1996 and 1995, and its results
of operations for each of the three years in the period ended December 31,
1996. Reference is also made to the Consolidated Financial Statements and the
Notes thereto, included elsewhere herein, which should be read in conjunction
with this discussion.
OUTLOOK
The Company's operating strategy has been to pursue drilling opportunities
in the U.S. and various international markets. Worldwide drilling conditions
vary substantially from region to region; however, the Company operates in many
markets where there is a demand for offshore rigs. During late 1992, U.S.
natural gas prices improved, resulting in greater demand and higher dayrates
for drilling rigs. Increasing U.S. natural gas prices resulted in significant
improvements in the U.S. Gulf rig demand and dayrates during the second half of
1993. Declining world oil prices during this period reduced rig demand outside
the U.S. Gulf. As a result of declining international rig demand and improved
market conditions in the U.S. Gulf, many contractors mobilized rigs from
international markets to the U.S. Gulf in late 1993 and early 1994. The
increased supply of drilling rigs in the U.S. Gulf more than offset the
increased level of U.S. Gulf rig demand during 1994 and the first half of 1995,
causing increased pressure on dayrates. By mid-year 1995, rig demand in the
international arena began to strengthen. Improved political stability and
strengthened world oil prices caused more favorable market conditions which led
the Company to mobilize rigs out of the U.S. Gulf to international markets.
Simultaneously, the U.S. Gulf market strengthened due to improved gas prices,
subsalt drilling and deepwater drilling. In 1996, offshore rig utilization
levels in the industry reached their highest point since 1982.
15
<PAGE> 18
The Company anticipates that the U.S. Gulf market will continue to
experience significant activity levels in 1997, notwithstanding the recent
softening in the domestic price of natural gas. The international market is
anticipated to remain strong in 1997, assuming oil prices remain at current
levels and the political environment remains stable. If the domestic price of
natural gas decreases materially in the near future, the Company's dayrates on
new contracts and utilization rates in the U.S. Gulf 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. Although turnkey drilling gross margin for 1997 is budgeted to
increase over 1996, turnkey drilling results for the first quarter of 1997 will
be negatively affected from a well which experienced drilling difficulties. As a
result, Triton's first quarter 1997 operating results may not exceed a breakeven
level.
RESULTS OF OPERATIONS
SIGNIFICANT 1996 EVENTS
The consolidated results of operations for the year ended December 31,
1996 reflect several significant transactions and events. Management believes
that these events reflect the Company's efforts to enhance its position within
the offshore contract drilling services industry by focusing on the deepwater
capabilities of its rig fleet.
On July 1, 1996, the Company acquired Neddrill for $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 and sale of 21,850,000
shares of its common stock and $125,000,000 principal amount of 9 1/8% Senior
Notes due 2006 (the "9 1/8% Senior Notes"). The net proceeds from the public
offerings of common stock and debt in excess of the $300,000,000 cash portion
of the purchase price were added to the Company's working capital.
The Company sold two of its posted barge rigs during the first quarter of
1996. The Gus Androes, located in the U.S. Gulf, was sold for $6,000,000. The
Gene Rosser, located offshore Nigeria, was sold for $13,000,000. The Company
recorded pre-tax gains of $4,815,000 and $2,712,000, respectively, related to
the sales of these posted barge rigs. The Lewis Dugger and Chuck Syring posted
barge rigs, which were also located offshore Nigeria, were sold in August 1996
for $24,500,000 in cash and $7,500,000 in drill pipe credit. These two barges
had been written down at March 31, 1996 to their estimated net realizable
values based on then recent offers received for these assets from third
parties, resulting in a pre-tax charge to earnings of $7,600,000. The gains on
the sales of the Gus Androes and Gene Rosser barge rigs net of the write-downs
are included in "Gains on sales of property and equipment, net of impairments"
in the accompanying Consolidated Statement of Operations for the year ended
December 31, 1996.
In December 1996, the Company sold its land drilling assets to Nabors
Industries, Inc. for $60,000,000 in cash, resulting in a pre-tax gain of
$45,414,000, which is included in "Gains on sales of property and equipment,
net of impairments" in the accompanying Consolidated Statement of Operations
for the year ended December 31, 1996. Revenues, gross margin and operating
income generated from the land drilling assets were $24,743,000, $6,756,000 and
$3,048,000, respectively, for the year ended December 31, 1996.
As a result of the Company's asset rationalization program and the
acquisition of Neddrill, the Company finalized its review of the status of
worldwide inventories and long-term assets in the fourth quarter of 1996 and
determined that certain adjustments were appropriate to properly reflect the
estimated net realizable values of these assets. These adjustments consisted
primarily of write-downs for inventory obsolescence totaling approximately
$14,808,000, an impairment charge of $10,200,000 (excluding a $289,000
reduction for minority interest) and adjustments to depreciation for assets
which were determined to have shorter economic lives than originally estimated,
totaling approximately $3,350,000. The impairment charge is included in "Gains
on sales of property and equipment, net of impairments" and the inventory
write-down is included in "Contract drilling services" expense in the
accompanying Consolidated Statement of Operations for the year ended December
31, 1996.
Results for 1996 also included an extraordinary charge of $660,000, net of
taxes of $355,000, related to the Company's purchase of $11,000,000 principal
amount of its 9 1/4% Senior Notes Due 2003. The extraordinary charge represents
the difference between the acquisition price and the net carrying value of the
notes, including unamortized debt issuance costs.
16
<PAGE> 19
RECENT DEVELOPMENT
On February 19, 1997, the Company signed a definitive agreement to sell 12
mat supported jackup rigs to Pride. The sale will also include the hull of one
former mat supported jackup rig (Linn Richardson) which has had all drilling
machinery and equipment removed. The sales price is $265,000,000 in cash. The
closing of the transaction, which is subject to receipt of financing by Pride,
satisfaction of Hart-Scott-Rodino Antitrust Improvements Act governmental
clearance and routine closing conditions, is scheduled to occur on June 3,
1997. Pride has deposited $20,000,000 of the purchase price into an escrow
account which is payable to the Company in the event Pride does not obtain its
financing or is unable to complete the acquisition by June 30, 1997. Revenues,
gross margin and operating income generated from the 12 mat supported jackup
rigs were $68,747,000, $31,026,000 and $16,674,000, respectively, for the year
ended December 31, 1996. Assuming the closing of the sale occurs on schedule,
the Company's 1997 financial results will reflect only five months of
operations of the sold mat supported jackup rigs.
1996 COMPARED TO 1995
GENERAL
For the year ended December 31, 1996, net income applicable to common
shares was $72,597,000, or $0.66 per share, on operating revenues of
$514,253,000 compared to a net loss applicable to common shares of $5,605,000,
or $0.08 per share, on operating revenues of $327,968,000 for the year ended
December 31, 1995. For the year ended December 31, 1996, operating income,
excluding non-recurring items, increased to $95,279,000 from operating income
of $12,278,000 in 1995. The increases in operating revenues and net income were
due principally to increased rig utilization rates, improved dayrates in the
U.S. Gulf and the contribution of Neddrill, which was acquired on July 1, 1996.
RIG UTILIZATION, OPERATING DAYS AND AVERAGE DAYRATE
The following table sets forth the average rig utilization rates,
operating days and average dayrate for the Company's rig fleet for the years
ended December 31, 1996 and 1995:
<TABLE>
<CAPTION>
AVERAGE RIG
UTILIZATION RATES (1) OPERATING DAYS AVERAGE DAYRATE
-------------------- ----------------- ------------------
1996 (2) 1995 1996 (2) 1995 1996 (2) 1995
-------- ---- -------- ---- -------- ----
<S> <C> <C> <C> <C> <C> <C>
OFFSHORE
International......................... 95% 75% 7,372 4,442 $ 27,207 $ 22,104
Domestic.............................. 96% 84% 5,349 4,949 $ 23,332 $ 16,376
LAND
International......................... 39% 53% 1,228 1,746 $ 8,174 $ 7,923
Domestic.............................. 75% 69% 2,577 2,175 $ 5,666 $ 5,538
</TABLE>
- ------------------
(1) Information reflects the policy of the Company to report utilization
rates based on the number of actively marketed rigs owned in the
fleet. During the periods presented, the Company purchased and sold
certain drilling rigs. Utilization rates for the periods prior to
sales and purchases of such rigs have not been adjusted.
(2) Includes the results of Neddrill from July 1, 1996.
17
<PAGE> 20
INTERNATIONAL OPERATIONS
The following table sets forth the revenues and gross margin (excluding
non-recurring items) for the Company's international operations for the years
ended December 31, 1996 and 1995:
<TABLE>
<CAPTION>
REVENUES GROSS MARGIN
------------------------ -----------------------
1996 1995 1996 1995
----------- ---------- ---------- ---------
(In thousands)
<S> <C> <C> <C> <C>
Contract drilling services
Offshore..................................................... $ 200,566 $ 98,187 $ 81,916(1) $ 36,584
Land......................................................... 10,037 13,833 3,178 4,937
----------- ---------- ------------ ---------
Total contract drilling services............................... 210,603 112,020 85,094 41,521
Labor contract drilling services............................... 33,425 35,136 9,299(2) 8,596
Engineering and consulting services............................ 2,509 4,001 611 2,313
Other revenue.................................................. 5,675 3,805 4,060 1,914
----------- ---------- ------------ ---------
Total.......................................................... $ 252,212 $ 154,962 $ 99,064 $ 54,344
=========== ========== ========== =========
</TABLE>
- ------------------
(1) Excludes $13,624,000 of non-recurring inventory charges.
(2) Excludes $1,184,000 of non-recurring inventory charges.
OPERATING REVENUES. Offshore contract drilling services revenues increased
$102,379,000 in 1996 as compared to 1995. The increase is primarily
attributable to the July 1, 1996 acquisition of Neddrill. Neddrill contributed
$70,015,000 in contract drilling services revenues in 1996. The drilling
operations in India and Qatar, which benefited from the addition of the Gus
Androes, Noble Chuck Syring and Noble Kenneth Delaney jackup rigs in 1996,
contributed $20,903,000 of contract drilling services revenues in 1996 as
compared to $4,495,000 in 1995. The remaining increase is attributable to
higher utilization rates and average dayrates in 1996 as compared to 1995.
GROSS MARGIN. Offshore contract drilling services gross margin (excluding
non-recurring items) increased $45,332,000 in 1996 as compared to 1995. The
increase in gross margin is primarily attributable to the July 1, 1996
acquisition of Neddrill, which contributed gross margin of $28,756,000 in 1996.
Increased operations in India and Qatar, resulting from the addition of the Gus
Androes, Noble Chuck Syring and Noble Kenneth Delaney jackup rigs, contributed
gross margin of $4,072,000 in 1996 compared to a loss of $143,000 in 1995. The
remaining increase is attributable primarily to higher utilization rates and
average dayrates in 1996 as compared to 1995.
DOMESTIC OPERATIONS
The following table sets forth the operating revenues and gross margin for
the Company's domestic operations for the years ended December 31, 1996 and
1995:
<TABLE>
<CAPTION>
REVENUES GROSS MARGIN
------------------------ ------------------------
1996 1995 1996 1995
----------- ---------- ---------- -----------
(In thousands)
<S> <C> <C> <C> <C>
Contract drilling services
Offshore..................................................... $ 124,805 $ 81,045 $ 58,386 $ 22,751
Land......................................................... 14,600 12,045 3,555 2,498
----------- ---------- ---------- -----------
Total contract drilling services............................... 139,405 93,090 61,941 25,249
Turnkey contract drilling services............................. 114,948 71,273 34,171 6,802
Engineering and consulting services............................ 2,445 7,263 956 1,640
Other revenue.................................................. 5,243 1,380 1,347 (169)
----------- ---------- ---------- -----------
Total.......................................................... $ 262,041 $ 173,006 $ 98,415 $ 33,522
=========== ========== ========== ===========
</TABLE>
OPERATING REVENUES. Offshore contract drilling services revenues increased
$43,760,000 in 1996 as compared to 1995 due to significantly higher utilization
rates and higher average dayrates. The increases were attributable to overall
increased drilling activity in the U.S. Gulf in 1996 as compared to 1995.
Turnkey contract drilling services revenues increased $43,675,000 in 1996 as
compared to 1995. There were 28 well completions in 1996 as compared to 27 in
1995, combined with contracts of longer duration and increased prices caused by
growing demand for equipment and services in the U.S. Gulf.
18
<PAGE> 21
GROSS MARGIN. Offshore contract drilling services gross margin increased
$35,635,000 in 1996 as compared to 1995 due to higher average dayrates. The
average dayrate in 1996 was $23,332 compared to $16,376 in 1995. Turnkey
drilling services gross margin increased $27,369,000 in 1996 as compared to
1995 due to an improved success rate on turnkey wells and increased turnkey
activity. The turnkey success ratio was low in 1995, primarily because of
significant operational problems on two wells which resulted in aggregate
losses of $7,293,000.
OTHER OPERATING ITEMS
DEPRECIATION AND AMORTIZATION EXPENSE. Depreciation and amortization
expense increased $12,317,000 (excluding non-recurring depreciation of
$3,350,000) in 1996 as compared to 1995. Of this amount, $10,142,000 is
attributable to the July 1, 1996 acquisition of Neddrill. The remaining
increase is primarily attributable to increases resulting from rig acquisitions
and refurbishments during late 1995 and 1996.
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES. Selling, general and
administrative ("SG&A") expenses were $54,504,000 in 1996 as compared to
$40,139,000 in 1995. The increase is primarily attributable to the July 1, 1996
acquisition of Neddrill combined with other general increases resulting from
the higher activity levels for 1996.
GAINS ON SALES OF PROPERTY AND EQUIPMENT, NET OF IMPAIRMENTS. In 1996, the
Company sold its land drilling assets and the Gus Androes and Gene Rosser
posted barge rigs, resulting in pre-tax gains of $45,414,000, $4,815,000 and
$2,712,000, respectively, which have been partially offset by the recognition
of impairment charges totaling $17,800,000. See "Results of Operations -
Significant 1996 Events."
INTEREST EXPENSE. Interest expense increased to $18,758,000 in 1996 from
$12,156,000 in 1995 due to the July 1, 1996 issuance of $125,000,000 principal
amount of 9 1/8% Senior Notes due 2006. The proceeds from the issuance of the
9 1/8% Senior Notes were used to finance the Neddrill acquisition.
OTHER, NET. Other, net increased by $2,336,000 in 1996 as compared to 1995
due primarily to an increase in net realized gains on marketable investments
and unrealized gains on marketable equity investments.
INCOME TAX PROVISION. Provisions for income taxes of $22,662,000 and
$3,272,000 were recorded in 1996 and 1995, respectively. The increase is due
primarily to taxes of $16,259,000 recorded for 1996 in connection with the gain
on the sale of land drilling assets.
At December 31, 1996, the Company had approximately $4,122,000 in
withholding tax receivables related to withholding taxes in Nigeria. Management
believes that this amount will be realized by obtaining the required tax
certificates from the related operators.
1995 COMPARED TO 1994
RIG UTILIZATION, OPERATING DAYS AND AVERAGE DAYRATES
The following table sets forth the average rig utilization rates,
operating days and average dayrate for the Company's rig fleet for the years
ended December 31, 1995 and 1994:
<TABLE>
<CAPTION>
AVERAGE RIG
UTILIZATION RATES (1) OPERATING DAYS AVERAGE DAYRATE
-------------------- --------------- ---------------
1995 1994 1995 1994 1995 1994
------- ------- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
OFFSHORE
International................................. 75% 82% 4,442 4,549 $ 22,104 $ 22,979
Domestic...................................... 84% 82% 4,949 6,464 $ 16,376 $ 17,945
LAND
International................................. 53% 77% 1,746 2,642 $ 7,923 $ 7,457
Domestic...................................... 69% 51% 2,175 1,690 $ 5,538 $ 5,677
</TABLE>
- ------------------
(1) Information reflects the policy of the Company to report utilization
rates based on the number of actively marketed rigs owned in the
fleet. During the periods presented, the Company purchased and sold
certain drilling rigs. Utilization rates for the periods prior to
sales and purchases of such rigs have not been adjusted.
19
<PAGE> 22
INTERNATIONAL OPERATIONS
The following table sets forth the operating revenues and gross margin for
the Company's international operations for the years ended December 31, 1995
and 1994:
<TABLE>
<CAPTION>
REVENUES GROSS MARGIN
-------------------------- --------------------------
1995 1994 1995 1994
------------ ----------- ------------ -----------
(In thousands)
<S> <C> <C> <C> <C>
Contract drilling services
Offshore................................................. $ 98,187 $ 104,530 $ 36,584 $ 45,263
Land..................................................... 13,833 19,702 4,937 6,334
------------ ----------- ------------ -----------
Total contract drilling services........................... 112,020 124,232 41,521 51,597
Labor contract drilling services........................... 35,136 36,203 8,596 7,848
Engineering and consulting services........................ 4,001 1,111 2,313 34
Other revenue.............................................. 3,805 3,684 1,914 2,132
------------ ----------- ------------ -----------
Total...................................................... $ 154,962 $ 165,230 $ 54,344 $ 61,611
============ =========== ============ ===========
</TABLE>
OPERATING REVENUES. Total contract drilling services revenues decreased
$12,212,000 in 1995 as compared to 1994 due primarily to softer market
conditions. Labor contract drilling services revenue decreased by $1,067,000 in
1995 due to a decrease in labor contracts and fewer operating days in the U.K.
Engineering and consulting revenues increased to $4,001,000 in 1995 from
$1,111,000 in 1994 due to bonus revenues generated from the alliance program
between the Company and Lagoven, a subsidiary of the government-owned oil
company in Venezuela.
GROSS MARGIN. Contract drilling services gross margin decreased by
$10,076,000 in 1995 as compared to 1994 due primarily to softer market
conditions in 1995, which resulted in overall decreased drilling activity.
DOMESTIC OPERATIONS
The following table sets forth the revenues and gross margin for the
Company's domestic operations for the years ended December 31, 1995 and 1994:
<TABLE>
<CAPTION>
REVENUES GROSS MARGIN
-------------------------- --------------------------
1995 1994 1995 1994
------------ ----------- ------------ -----------
(In thousands)
<S> <C> <C> <C> <C>
Contract drilling services
Offshore................................................. $ 81,045 $ 115,994 $ 22,751 $ 36,865
Land..................................................... 12,045 9,594 2,498 1,249
------------ ----------- ------------ -----------
Total contract drilling services........................... 93,090 125,588 25,249 38,114
Turnkey contract drilling services......................... 71,273 56,380 6,802 9,494
Engineering and consulting services........................ 7,263 2,685 1,640 804
Other revenue.............................................. 1,380 2,105 (169) (1,243)
------------ ----------- ------------ -----------
Total...................................................... $ 173,006 $ 186,758 $ 33,522 $ 47,169
============ =========== ============ ===========
</TABLE>
OPERATING REVENUES. The decrease of $32,498,000 in total contract
drilling services revenues in 1995 as compared to 1994 was due primarily to a
softening of market conditions in the U.S. Gulf during 1995. This decrease was
partially offset by increased turnkey engineering and consulting services
revenues. Turnkey contract drilling services revenues increased by $14,893,000
in 1995 as compared to 1994. Twenty-seven wells were completed in 1995,
compared to 28 in 1994. The increase in turnkey revenues was due to completion
of turnkey wells of longer duration in 1995. In 1995, the average turnkey well
was drilled in 50 days compared to the 1994 average of 30 days.
GROSS MARGIN. Contract drilling services gross margin decreased
$12,865,000 in 1995 as compared to 1994 as a result of reduced activity levels.
Triton's average turnkey well drilling time increased in 1995, partially due to
operational issues on certain domestic wells. These operational issues were
also the primary cause of the decline in turnkey profit margins to 10 percent
in 1995 compared to 17 percent in 1994.
20
<PAGE> 23
OTHER OPERATING ITEMS
DEPRECIATION AND AMORTIZATION EXPENSE. Depreciation and amortization
expenses were $36,492,000 in 1995 compared to $39,519,000 in 1994. The decrease
of $3,027,000 was primarily due to a change in accounting estimates partially
offset by the effects of 1995 capital spending. Effective January 1, 1995, the
estimated salvage values and remaining depreciable lives of certain rigs were
adjusted to better reflect their economic lives and to be consistent with other
similar assets owned by the Company. The effect of this change in estimate was
a decrease in depreciation and amortization of $6,160,000, or $0.07 per share.
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES. SG&A expenses were
$40,139,000 during 1995 as compared to $47,606,000 in 1994. The decrease of
$7,467,000 was due in part to reductions in overhead achieved as a result of
restructuring and consolidation efforts. The 1994 SG&A expenses included
approximately $5,300,000 in pooling expenses related to the Chiles Merger.
GAINS ON SALES OF PROPERTY AND EQUIPMENT, NET OF IMPAIRMENTS. In 1994, the
Company recognized a gain of $8,000,000 related to the sale of a drilling rig.
RESTRUCTURING CHARGES. A restructuring charge of $3,661,000 related to the
Chiles Merger was recorded in 1994 as a result of facility consolidation,
including the write-down of certain of the Company's owned properties and, to a
lesser extent, severance costs.
OTHER, NET. Other, net was $(579,000) during 1995 compared to $6,885,000
during 1994. This decrease was principally due to net unrealized gains of
$4,162,000 on marketable equity investments and a gain of $1,530,000 on the
recovery of a previously written-off note receivable, offset by realized losses
on marketable debt securities of $2,199,000.
INCOME TAX PROVISION. Provisions for income taxes of $3,272,000 and
$5,672,000 were recorded in 1995 and 1994, respectively. This decrease was
primarily due to a $2,100,000 U.S. separate return year loss carryback benefit
recorded by Triton.
At December 31, 1995, the Company had approximately $6,000,000 in
withholding tax receivables related to withholding taxes in Nigeria.
LIQUIDITY AND CAPITAL RESOURCES
OVERVIEW
The Company had working capital of $236,977,000 and $101,623,000 as of
December 31, 1996 and 1995, respectively. The increase in working capital was
primarily due to an increase in cash, cash equivalents and marketable debt
securities and the effect of Neddrill's working capital components obtained
through the acquisition. The increase in cash, cash equivalents and marketable
debt securities was due primarily to excess proceeds from the Company's public
offerings of securities in 1996 related to the Neddrill acquisition. Long-term
debt as a percentage of long-term debt plus shareholders' equity was 21 percent
at December 31, 1996 compared to 20 percent at December 31, 1995.
At December 31, 1996, the Company had cash, cash equivalents, and
investments in marketable debt securities of $168,970,000 and had $19,184,000
of funds available under its lines of credit. The Company expects to generate
positive cash flow from operations for 1997, assuming no material decrease in
demand for contract drilling and turnkey drilling services. The Company will
continue to have cash requirements for debt principal and interest payments.
For 1997, required debt principal and interest payments for currently
outstanding debt are estimated to be approximately $25,843,000. The Company
expects to fund these obligations out of cash and short-term investments as
well as cash expected to be provided by operations.
Capital expenditures totaled $216,887,000 for the year ended December 31,
1996 compared to $91,202,000 for the year ended December 31, 1995. Included in
the amount for 1996 is $98,750,000 related to rig purchases. The Company also
pursued an extensive rig modification, refurbishment and upgrade program in
1996 which continues to date. The Gene Rosser, Roy Butler, Noble Chuck Syring
and Gus Androes rigs were upgraded in 1996. The total cost of these projects
was approximately $32,600,000. Two of the Company's independent leg rigs, the
Eddie Paul and John Sandifer, completed refurbishment projects in 1995. The
total cost of these two projects was approximately $35,100,000.
21
<PAGE> 24
Capital expenditures for 1997 are expected to aggregate approximately
$330,000,000, 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.
The amount for 1997 includes $90,000,000 for the conversion of the Paul Romano
to an EVA-4000 semisubmersible unit in 1997 and $71,000,000 for the conversion
of two additional submersible rigs to EVA-4000 semisubmersible units. The
conversion of these latter two rigs would not be completed until 1998. These
capital expenditures will be funded from operating cash flows, existing cash
balances, available lines of credit and/or net proceeds expected from the sale
of the 12 mat supported jackup rigs. The Company is currently reviewing
proposals from several financial institutions to provide project financing for
the EVA-4000 semisubmersible rig conversions. Certain projects currently being
considered by the Company could require, if they materialize, capital
expenditures or other cash requirements not included in the above estimate. In
addition, the Company will continue to evaluate acquisitions of drilling units
from time to time.
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. 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 December 31, 1996, the Company had lines of credit totaling
$25,000,000, of which $15,000,000 was available to support letters of credit,
and letter of credit facilities totaling $5,000,000, subject to the Company's
maintenance of certain levels of collateral. At December 31, 1996, $10,186,000
had been used to support outstanding letters of credit. At December 31, 1996,
borrowings of $19,184,000 were available under the lines of credit, including
$9,184,000 to support 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. The amount outstanding
at December 31, 1996 totaled $3,102,000.
In November 1996, the Company acquired $11,000,000 principal amount of its
9 1/4% Senior Notes Due 2003 (the "9 1/4% Senior Notes"), resulting in
$114,000,000 principal amount of 9 1/4% Senior Notes outstanding at December
31, 1996. The 9 1/4% Senior Notes 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 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. The Company has acquired an
additional $27,800,000 principal amount of 9 1/4% Senior Notes since December
31, 1996.
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 $1,026,000 was outstanding at December 31, 1996.
Interest and principal are payable semiannually on June 15 and December 15 of
each year with interest at 8.95 percent per annum, and the bonds mature in
1998. The bonds are secured by the NN-1, 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. As the general partner of NN-1 Limited Partnership,
Noble Drilling has called the bonds for redemption on March 31, 1997.
Minimum principal payments on the long-term debt as described above are
$3,622,000 due in 1997, $506,000 due in 1998, $31,250,000 due in each of the
years 2001 and 2002, $51,500,000 due in 2003 and $125,000,000 due in 2006.
22
<PAGE> 25
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The following financial statements are filed in this Item 8:
Report of Independent Accountants
Consolidated Balance Sheets at December 31, 1996 and 1995
Consolidated Statements of Operations for each of the three
years in the period ended December 31, 1996
Consolidated Statements of Cash Flows for each of the three
years in the period ended December 31, 1996
Consolidated Statements of Shareholders' Equity for each of the
three years in the period ended December 31, 1996
Notes to Consolidated Financial Statements
23
<PAGE> 26
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors and Shareholders of Noble Drilling Corporation
In our opinion, the accompanying consolidated balance sheets and the related
consolidated statements of operations, of cash flows and of changes in
shareholders' equity present fairly, in all material respects, the financial
position of Noble Drilling Corporation and its subsidiaries (the "Company") at
December 31, 1996 and 1995, and the results of their operations and their cash
flows for the three years ended December 31, 1996, in conformity with generally
accepted accounting principles. These financial statements are the
responsibility of the Company's management; our responsibility is to express an
opinion on these financial statements based on our audits. We conducted our
audits of these statements in accordance with generally accepted auditing
standards which require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements, assessing the
accounting principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for the opinion expressed above.
PRICE WATERHOUSE LLP
Houston, Texas
January 30, 1997, except as to Note 15, which is as of February 19, 1997
24
<PAGE> 27
NOBLE DRILLING CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In thousands, except par value amounts)
<TABLE>
<CAPTION>
December 31,
------------------------
1996 1995
---------- ---------
<S> <C> <C>
ASSETS
CURRENT ASSETS
Cash and cash equivalents............................................................. $ 149,632 $ 41,307
Restricted cash....................................................................... 2,000 -
Investment in marketable equity securities............................................ 2,533 6,131
Investment in marketable debt securities.............................................. 19,296 17,031
Accounts receivable (net allowance of $1,494 and $1,280).............................. 101,619 60,251
Costs of uncompleted contracts in excess of billings.................................. 18,505 6,646
Inventories........................................................................... 3,287 19,795
Deferred income taxes................................................................. 39,248 -
Prepaid expenses...................................................................... 19,572 15,364
Other current assets.................................................................. 32,785 21,487
---------- ---------
Total current assets.................................................................... 388,477 188,012
---------- ---------
PROPERTY AND EQUIPMENT
Drilling equipment and facilities..................................................... 1,176,145 871,539
Other................................................................................. 27,924 23,891
---------- ---------
1,204,069 895,430
Accumulated depreciation.............................................................. (247,035) (352,452)
---------- ---------
957,034 542,978
---------- ---------
DEFERRED INCOME TAXES................................................................... 2,296 -
OTHER ASSETS............................................................................ 19,600 11,540
---------- ---------
$1,367,407 $ 742,530
========== =========
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Current installments of long-term debt................................................ $ 3,622 $ 12,210
Accounts payable...................................................................... 66,906 30,782
Accrued payroll and related costs..................................................... 28,475 13,674
Taxes payable......................................................................... 20,304 12,953
Interest payable...................................................................... 8,557 2,860
Deferred income taxes................................................................. 285 -
Other current liabilities............................................................. 23,351 13,910
---------- ---------
Total current liabilities............................................................... 151,500 86,389
LONG-TERM DEBT.......................................................................... 239,506 129,923
DEFERRED INCOME TAXES................................................................... 50,331 2,476
OTHER LIABILITIES....................................................................... 245 -
MINORITY INTEREST....................................................................... 576 249
---------- ---------
442,158 219,037
---------- ---------
SHAREHOLDERS' EQUITY
$1.50 Preferred stock-par value $1; convertible; cumulative; redeemable at the
option of the Company; aggregate liquidation preference of $100,625; 15,000 shares
authorized; 4,025 issued and outstanding in 1995.................................... - 4,025
Common stock-par value $0.10; 200,000 shares authorized; 132,189 issued and 131,980
outstanding in 1996; 94,548 issued and 94,483 outstanding in 1995................... 13,219 9,455
Capital in excess of par value........................................................ 916,004 589,866
Unrealized losses on marketable debt securities....................................... (35) (115)
Minimum pension liability............................................................. - (3,403)
Cumulative translation adjustment..................................................... (882) (2,081)
Accumulated deficit................................................................... (1,205) (73,802)
Treasury stock, at cost............................................................... (1,852) (452)
---------- ---------
925,249 523,493
---------- ---------
COMMITMENTS AND CONTINGENCIES........................................................... - -
$1,367,407 $ 742,530
========== =========
</TABLE>
See accompanying notes to consolidated financial statements.
25
<PAGE> 28
NOBLE DRILLING CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share amounts)
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
--------------------------------------
1996 1995 1994
--------- ---------- ---------
<S> <C> <C> <C>
OPERATING REVENUES
Contract drilling services.............................................. $ 350,008 $ 205,110 $ 249,820
Labor contract drilling services........................................ 33,425 35,136 36,203
Turnkey drilling services............................................... 114,948 71,273 56,380
Engineering and consulting services..................................... 4,954 11,264 3,796
Other revenue........................................................... 10,918 5,185 5,789
--------- ---------- ---------
514,253 327,968 351,988
--------- ---------- ---------
OPERATING COSTS AND EXPENSES
Contract drilling services.............................................. 216,597 138,340 160,109
Labor contract drilling services........................................ 25,310 26,540 28,355
Turnkey drilling services............................................... 80,777 64,471 46,886
Engineering and consulting services..................................... 3,387 7,311 2,958
Other expense........................................................... 5,511 3,440 4,900
Depreciation and amortization........................................... 52,159 36,492 39,519
Selling, general and administrative..................................... 54,504 40,139 47,606
Gains on sales of property and equipment, net of impairments............ (36,115) (829) (8,858)
Minority interest....................................................... (428) (214) (169)
Restructuring charges................................................... - - 3,661
--------- ---------- ---------
401,702 315,690 324,967
--------- ---------- ---------
OPERATING INCOME.......................................................... 112,551 12,278 27,021
OTHER INCOME (EXPENSE)
Interest expense........................................................ (18,758) (12,156) (12,351)
Interest income......................................................... 6,409 5,323 5,640
Other, net.............................................................. 1,757 (579) 6,885
--------- ---------- ---------
INCOME BEFORE INCOME TAXES AND EXTRAORDINARY CHARGE....................... 101,959 4,866 27,195
INCOME TAX PROVISION...................................................... (22,662) (3,272) (5,672)
--------- ---------- ---------
INCOME BEFORE EXTRAORDINARY CHARGE........................................ 79,297 1,594 21,523
EXTRAORDINARY CHARGE, NET OF TAX.......................................... (660) - -
--------- ---------- ---------
NET INCOME................................................................ 78,637 1,594 21,523
PREFERRED STOCK DIVIDENDS................................................. (6,040) (7,199) (12,764)
--------- ---------- ---------
NET INCOME (LOSS) APPLICABLE TO COMMON SHARES............................. $ 72,597 $ (5,605) $ 8,759
========= ========== =========
NET INCOME (LOSS) APPLICABLE TO COMMON SHARES PER SHARE................... $ 0.66 $ (0.08) $ 0.11
========= ========== =========
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING................................ 110,252 89,736 77,576
</TABLE>
See accompanying notes to consolidated financial statements.
26
<PAGE> 29
NOBLE DRILLING CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
--------------------------------------
1996 1995 1994
--------- ---------- ---------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income.............................................................. $ 78,637 $ 1,594 $ 21,523
Adjustments to reconcile net income to net cash provided (used) by
operating activities:
Depreciation and amortization........................................... 52,159 36,492 39,519
Gains on sales of property and equipment................................ (53,915) (829) (8,858)
Gains on marketable securities.......................................... (2,010) (300) (1,963)
Inventory charge........................................................ 14,808 - -
Impairment charge....................................................... 17,511 - -
(Gain) loss on foreign exchange......................................... (310) (206) 76
Deferred income tax provision (benefit)................................. 6,596 (449) 3,433
Restructuring charges................................................... - - 3,661
Extraordinary charge, net of tax........................................ 660 - -
Other................................................................... 969 132 (6,009)
Changes in current assets and liabilities:
Accounts receivable.................................................. (18,752) (8,480) 20,208
Proceeds from sale of marketable equity securities, net.............. 5,615 3,398 -
Other assets......................................................... (6,783) (17,061) 22,066
Accounts payable..................................................... 16,178 11,356 (2,635)
Other liabilities.................................................... 27,016 3,836 (12,365)
--------- ---------- ---------
Net cash provided by operating activities............................ 138,379 29,483 78,656
--------- ---------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of property and equipment...................................... (216,887) (91,202) (55,834)
Acquisition of Neddrill, net of cash acquired........................... (284,726) - -
Proceeds from Triton acquisition, net of negative noncash working capital
of $3,532 acquired.................................................... - - 13,600
Proceeds from sale of property and equipment............................ 103,500 1,879 13,792
Proceeds from sale of (investment in) marketable debt securities........ (2,192) 24,374 (2,069)
Proceeds from insurance settlement...................................... 14,142 - -
Investment in unconsolidated affiliate.................................. (410) - (342)
Payments to minority interest holders, net.............................. - - (4,478)
--------- ---------- ---------
Net cash used by investing activities................................ (386,573) (64,949) (35,331)
--------- ---------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES
Preferred stock conversion costs........................................ (31) (2,406) -
Proceeds from long-term debt, net....................................... 121,470 - -
Payment of long-term debt............................................... (26,130) (520) (598)
Proceeds from issuance of common stock, net............................. 271,312 356 2,604
Dividends paid on preferred stock....................................... (7,549) (8,881) (12,764)
Purchase of shares returned to treasury stock........................... (2,250) - -
Payment of short-term debt.............................................. - (6,698) (7,500)
Other................................................................... - 898 1,211
--------- ---------- ---------
Net cash provided (used) by financing activities..................... 356,822 (17,251) (17,047)
--------- ---------- ---------
EFFECT OF EXCHANGE RATE CHANGES ON CASH................................... (303) (1,139) (292)
--------- ---------- ---------
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS.......................... 108,325 (53,856) 25,986
CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR.............................. 41,307 95,163 69,177
--------- ---------- ---------
CASH AND CASH EQUIVALENTS, END OF YEAR.................................... $ 149,632 $ 41,307 $ 95,163
========= ========== =========
</TABLE>
See accompanying notes to consolidated financial statements.
27
<PAGE> 30
NOBLE DRILLING CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
(In thousands)
<TABLE>
<CAPTION>
$2.25 PREFERRED STOCK $1.50 PREFERRED STOCK COMMON STOCK
----------------------- ------------------------ -----------------------
SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT
-------- ---------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
JANUARY 1, 1994............... 2,990 $ 2,990 4,025 $ 4,025 76,371 $ 7,637
Net income.................... - - - - - -
Issuance of stock:
Purchase of Triton.......... - - - - 752 75
Exercise of stock options... - - - - 197 20
Contribution to benefit plans - - - - 271 27
Exchange of Chiles options.. - - - - 480 48
Stock options granted at discount - - - - - -
Conversion of preferred stock. (1) (1) - - 5 1
Dividends on preferred stock.. - - - - - -
Net unrealized losses on
marketable securities....... - - - - - -
Minimum pension liability..... - - - - - -
Translation adjustment........ - - - - - -
-------- ---------- --------- --------- --------- ---------
DECEMBER 31, 1994............. 2,989 2,989 4,025 4,025 78,076 7,808
Net income.................... - - - - - -
Conversion/redemption of
preferred stock............. (2,989) (2,989) - - 16,199 1,620
Preferred stock conversion costs - - - - - -
Net unrealized losses on
marketable securities....... - - - - - -
Minimum pension liability..... - - - - - -
Translation adjustment........ - - - - - -
Dividends on preferred stock.. - - - - - -
Issuance of stock:
Exercise of stock options... - - - - 109 11
Contribution to benefit plans - - - - 164 16
Contribution of treasury stock
to restricted stock plan.. - - - - - -
Restricted stock plan shares
returned to treasury...... - - - - - -
-------- ---------- --------- --------- --------- ---------
DECEMBER 31, 1995............. - - 4,025 4,025 94,548 9,455
Net income.................... - - - - - -
Conversion/redemption of
preferred stock........... - - (4,025) (4,025) 9,836 984
Net unrealized losses on
marketable securities....... - - - - - -
Minimum pension liability..... - - - - - -
Translation adjustment........ - - - - - -
Dividends on preferred stock.. - - - - - -
Issuance of stock:
Sale of common stock........ - - - - 21,850 2,185
Purchase of Neddrill........ - - - - 5,000 500
Settlement of Triton purchase
contingency............... - - - - 67 7
Exercise of stock options... - - - - 602 60
Contribution to benefit plans - - - - 286 28
Contribution of treasury stock
to restricted stock plan.. - - - - - -
Restricted stock plan shares
returned to treasury...... - - - - - -
-------- ---------- --------- --------- --------- ---------
DECEMBER 31, 1996............. - $ - - $ - 132,189 $ 13,219
======== ========== ========= ========= ========= =========
</TABLE>
See accompanying notes to consolidated financial statements.
28
<PAGE> 31
NOBLE DRILLING CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY (CONTINUED)
(In thousands)
<TABLE>
<CAPTION>
UNREALIZED
CAPITAL LOSSES ON MINIMUM CUMULATIVE TREASURY STOCK
IN EXCESS OF MARKETABLE DEBT PENSION TRANSLATION ACCUMULATED ---------------------------
PAR VALUE SECURITIES LIABILITY ADJUSTMENT DEFICIT SHARES AMOUNT
- ------------- --------------- ------------ ----------- ------------ ---------- ------------
<S> <C> <C> <C> <C> <C> <C>
$ 583,110 - - $ (2,286) $ (76,956) 250 $ (1,750)
- - - - 21,523 - -
5,094 - - - - - -
1,208 - - - - - -
1,781 - - - - - -
(480) - - - - - -
20 - - - - - -
- - - - - - -
- - - - (12,764) - -
- $ (1,847) - - - - -
- - $ (3,825) - - - -
- - - (39) - - -
- ------------ ------------ ------------ ----------- ------------ ---------- ------------
590,733 (1,847) (3,825) (2,325) (68,197) 250 (1,750)
- - - - 1,594 - -
1,369 - - - - - -
(2,406) - - - - - -
- 1,732 - - - - -
- - 422 - - - -
- - - 244 - - -
- - - - (7,199) - -
345 - - - - - -
1,123 - - - - - -
(1,480) - - - - (211) 1,480
182 - - - - 26 (182)
- ------------ ------------ ------------ ----------- ------------ ---------- ------------
589,866 (115) (3,403) (2,081) (73,802) 65 (452)
- - - - 78,637 - -
3,012 - - - - - -
- 80 - - - - -
- - 3,403 - - - -
- - - 1,199 - - -
- - - - (6,040) - -
266,261 - - - - - -
49,500 - - - - - -
1,003 - - - - - -
2,806 - - - - - -
4,406 - - - - - -
(850) - - - - (109) 850
- - - - - 253 (2,250)
- ------------ ------------ ------------ ----------- ------------ ---------- ------------
$ 916,004 $ (35) $ - $ (882) $ (1,205) 209 $ (1,852)
============ ============ ============ =========== ============ ========== ============
</TABLE>
See accompanying notes to consolidated financial statements.
29
<PAGE> 32
NOBLE DRILLING CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unless otherwise indicated, dollar amounts in tables are in thousands,
except per share amounts)
NOTE 1 -- ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES
ORGANIZATION AND BUSINESS
Noble Drilling Corporation ("Noble Drilling" or, together with its
consolidated subsidiaries, unless the context requires otherwise, the
"Company") is primarily engaged in domestic and international contract oil and
gas drilling and workover operations. The Company's international operations
are conducted in the North Sea, Mexico, Africa, South America, the Middle East
and India.
Results of operations and financial condition of the Company should be
considered in light of the potentially significant fluctuations in demand for
the Company's services as rapid changes in oil and gas producers' expectations,
budgets and drilling plans occur. These fluctuations can rapidly impact the
Company's results of operations and financial condition as supply and demand
factors directly affect utilization and dayrates, which are the primary
determinants of cash flow from operations.
CONSOLIDATION
The consolidated financial statements include the accounts of the Company,
its wholly owned subsidiaries, and the Company's share of the assets,
liabilities and operations of Perforadora Faja de Oro, S.A. de C.V. ("Faja
Joint Venture") and NN-1 Limited Partnership, of which the Company is the
general partner. The minority interest in Faja Joint Venture (10 percent) and
NN-1 Limited Partnership (approximately 10 percent) is included in the balance
sheets and the statements of operations as minority interest. In 1994, the
Company made distributions of approximately $4,500,000 to its partner in Faja
Joint Venture. All significant intercompany accounts and transactions have been
eliminated in consolidation. The equity method of accounting is used for
investments in affiliates.
Certain reclassifications have been made in prior year 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.
FOREIGN CURRENCY TRANSLATION
The Company follows a translation policy in accordance with Statement of
Financial Accounting Standards ("SFAS") No. 52, Foreign Currency Translation.
The U.S. dollar has been designated as the functional currency where
appropriate, based on an evaluation of such factors as the markets in which the
subsidiary operates, generation of cash flow, financing activities and
intercompany arrangements. For the Company's subsidiaries in the United Kingdom
and Canada, the local currency is the functional currency. Assets and
liabilities are translated at the rates of exchange on the balance sheet date.
Income and expense items are translated at average rates of exchange. The
resulting gains or losses arising from the translation of accounts from the
functional currency to the U.S. dollar are included as a separate component of
shareholders' equity designated as cumulative translation adjustment.
CASH AND CASH EQUIVALENTS
Cash and cash equivalents include cash on hand, demand deposits with banks
and all highly liquid investments with original maturities of three months or
less.
In accordance with SFAS No. 95, Statement of Cash Flows, cash flows from
the Company's operations in the United Kingdom and Canada are calculated based
on their functional currency. As a result, amounts related to assets and
liabilities reported on the Consolidated Statements of Cash Flows will not
necessarily agree with changes in the corresponding balances on the
Consolidated Balance Sheets. The effect of exchange rate changes on cash
balances held in foreign currencies is reported on a separate line below net
cash provided (used) by financing activities.
Of the cash on hand at December 31, 1996, $2,000,000 was restricted as a
result of cash collateral requirements for letters of credit which expire in
1997.
30
<PAGE> 33
NOBLE DRILLING CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(Unless otherwise indicated, dollar amounts in tables are in thousands,
except per share amounts)
INVENTORIES
Inventories are stated principally at average cost. As a result of the
Company's asset rationalization program and the acquisition of Neddrill (see
Note 2), the Company finalized its review of the status of worldwide
inventories in the fourth quarter of 1996 and determined certain adjustments
were appropriate to properly reflect the estimated net realizable value of
these assets. These adjustments consisted primarily of write-downs for
inventory obsolescence totaling approximately $14,808,000 and reclassifications
of approximately $16,555,000 to property and equipment to better reflect their
economic lives and to be consistent with other assets owned by the Company. The
inventory write-down is included in "Contract drilling services" expense in the
Consolidated Statement of Operations for the year ended December 31, 1996.
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. All other property and equipment is depreciated using the
straight-line method over useful lives ranging from three to twenty years.
Effective January 1, 1995, the Company revised its estimates of salvage
values and remaining depreciable lives of certain rigs to better reflect their
economic lives and to be consistent with other similar assets owned by the
Company. The effect of this change in estimates was a reduction in the net loss
applicable to common shares of $6,160,000, or $0.07 per common share, for the
year ended December 31, 1995.
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.
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 based on then recent offers
received for these assets from third parties, resulting in a pre-tax charge to
earnings of $7,600,000. See Note 2.
In the fourth quarter of 1996, the Company reviewed the status of the
NN-1. As of December 31, 1996, the NN-1 had not been under contract since March
of 1993. Given the strength of the international markets in 1996 and the
expected continued strength in 1997, coupled with the Company's unsuccessful
marketing efforts with respect to the NN-1, recoverability of the NN-1 was
considered doubtful. The Company considered expected future cash flows over the
remaining life of the rig and determined that the NN-1 was impaired.
Accordingly, an impairment charge of $10,200,000 (excluding a $289,000
reduction for minority interest) was recorded in the fourth quarter of 1996.
The net book value of the NN-1 was $1,022,000 at December 31, 1996. The
impairment charge is included in "Gains on sales of property and equipment, net
of impairments" in the Consolidated Statement of Operations for the year ended
December 31, 1996.
Maintenance and repairs on drilling equipment are charged to expense as
incurred. Total maintenance and repair expenses for the years ended December
31, 1996, 1995 and 1994, were approximately $41,759,000, $26,189,000 and
$33,700,000, respectively. When assets are sold, retired or otherwise disposed
of, the cost and related accumulated depreciation are eliminated from the
accounts and the gain or loss is recognized.
In 1995, a jackup rig lost two legs during mobilization to West Africa.
The third leg of the rig was removed prior to tow to the U.S. Gulf of Mexico
for a complete damage evaluation. A charge of $1,778,000 related to the cost of
mobilization was recorded in the fourth quarter of 1995. After evaluation of
the rig, the Company negotiated a constructive total loss with its insurance
underwriters and received $14,142,000 in net proceeds for the insurance
settlement. There was no material gain or loss recorded as a result of the
insurance settlement.
31
<PAGE> 34
NOBLE DRILLING CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(Unless otherwise indicated, dollar amounts in tables are in thousands,
except per share amounts)
On September 15, 1994, Chiles Offshore Corporation ("Chiles") merged with
Noble Offshore Corporation ("NOC"), a wholly owned subsidiary of Noble Drilling
(the "Chiles Merger"). See Note 2. A restructuring charge of $3,661,000 related
to the Chiles Merger was recorded in 1994 as a result of facility consolidation,
including the write-down of certain of the Company's owned properties, and to a
lesser extent severance costs. This restructuring plan was developed in the
fourth quarter of 1994 and approved by the Company's board of directors.
OTHER ASSETS
The excess of cost over the fair value of net tangible assets acquired in
the acquisition of Triton Engineering Services Company ("Triton") is being
amortized over seventeen years. Prepaid insurance is amortized over the term of
the insurance policy. Deferred debt issuance costs, which totalled $5,933,000 at
December 31, 1996, are being amortized over the life of the debt securities.
Amortization related to debt issuance costs was $526,000, $404,000 and $404,000
for the years ended December 31, 1996, 1995 and 1994, respectively.
REVENUE RECOGNITION
Revenues generated from the Company's dayrate-basis drilling contracts
are recognized as services are performed. The Company's turnkey drilling
contracts are of a short-term, fixed fee nature, and accordingly, revenues and
expenses are recognized using the completed contract method. When estimates of
projected revenues and costs indicate a loss, the total estimated loss is
accrued.
CONCENTRATION OF CREDIT RISK
The primary market for the Company's services is the offshore oil and gas
industry, and the Company's customers consist primarily of major oil companies,
independent oil and gas producers and government-owned oil companies. The
Company performs ongoing credit evaluations of its customers and generally does
not require material collateral. The Company provides allowances for potential
credit losses when necessary.
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.
Each outstanding share of the $1.50 Convertible Preferred Stock ("$1.50
Preferred Stock") was assumed to be converted, at January 1, 1996, into 2.4446
shares of common stock for purposes of calculating fully diluted earnings per
share. 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 (see Note 7) was accounted for as a reduction of net earnings
applicable to common shares for purposes of calculating the net loss applicable
to common shares per share. This accounting treatment increased the net loss
applicable to common shares per share from $0.06 to $0.08 for the year ended
December 31, 1995. See Note 12.
32
<PAGE> 35
NOBLE DRILLING CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(Unless otherwise indicated, dollar amounts in tables are in thousands,
except per share amounts)
SUPPLEMENTAL CASH FLOW INFORMATION
<TABLE>
<CAPTION>
DECEMBER 31,
----------------------------------------
1996 1995 1994
----------- ---------- -----------
<S> <C> <C> <C>
Cash paid during the period for:
Interest................................................................ $ 13,061 $ 11,738 $ 11,947
Income taxes............................................................ $ 6,471 $ 3,946 $ 6,254
Noncash investing and financing activities:
Neddrill acquisition with common stock.................................. $ 50,000 $ - $ -
Insurance financing agreement........................................... $ 1,214 $ 14,838 $ -
Triton acquisition with common stock.................................... $ - $ - $ 5,169
Triton acquisition with notes payable................................... $ - $ - $ 4,000
Triton acquisition, minority interest assumed........................... $ - $ - $ 5,392
</TABLE>
CERTAIN SIGNIFICANT ESTIMATES
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amount of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
NOTE 2 -- ACQUISITIONS, MERGERS AND DISPOSITIONS
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 gas exploration and production related service
businesses of Nedlloyd's offshore drilling division ("Neddrill"), including the
acquisition of approximately $28,000,000 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 issuance and sale of 21,850,000 shares of
Noble Drilling common stock and $125,000,000 principal amount of 9 1/8% Senior
Notes due 2006 (the "9 1/8% Senior Notes"). The net proceeds from the public
offerings of common stock and debt in excess of the $300,000,000 cash portion
of the purchase price were added to the Company's working capital.
The Neddrill acquisition was accounted for using the purchase method of
accounting and Neddrill's results of operations are included in the
Consolidated Statements of Operations from the date of the acquisition. The
respective assets and liabilities have been recorded at their estimated fair
values at the date of acquisition, and the allocation of the purchase price is
based on the best estimates of the Company using information currently
available. Certain adjustments relating to this acquisition are subject to
change based upon final appraisals and determination of the fair values of the
net assets acquired and liabilities assumed.
The Chiles Merger was consummated on September 15, 1994 through the
exchange of 28,598,777 shares of Noble Drilling common stock for all the
outstanding common stock of Chiles and the exchange of 4,025,000 shares of
Noble Drilling $1.50 convertible preferred stock ("$1.50 Preferred Stock")
(liquidation preference $25.00 per share), par value $1.00 per share, for all
the outstanding shares of Chiles $1.50 convertible preferred stock. The Chiles
Merger was accounted for as a pooling of interests and all financial
information for the year of the transaction and prior periods has been restated
to reflect this merger. In addition, Noble Drilling issued an additional
480,000 shares of its common stock in exchange for the cancellation of
outstanding Chiles stock options.
On April 22, 1994, the Company acquired all of the issued and outstanding
shares of common stock (the "Shares") of Triton Engineering Services Company
("Triton") pursuant to the terms of the Stock Purchase Agreement dated April
22, 1994. In consideration for the Shares, the Company paid approximately
$4,085,000 in cash, issued promissory notes in the aggregate amount of
$4,000,000, which were paid by the Company on October 21, 1994, and issued
751,864 shares of Noble Drilling common stock valued at $5,169,000. In 1996,
the Company issued 67,332 shares of Noble Drilling common stock and paid
$20,000 as additional consideration pursuant to the Stock Purchase Agreement.
The acquisition of Triton has been accounted for under the purchase method, and
accordingly, Triton's operating results have been included in the Consolidated
Statements of Operations since the date of acquisition.
33
<PAGE> 36
NOBLE DRILLING CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(Unless otherwise indicated, dollar amounts in tables are in thousands,
except per share amounts)
The following table provides selected consolidated financial information
for the Company on a pro forma basis assuming that the Neddrill acquisition,
the issuance of 21,850,000 shares of common stock and $125,000,000 principal
amount of the 9 1/8% Senior Notes and the application of the net proceeds
therefrom had occurred on January 1, 1995. The pro forma information set forth
below is not necessarily indicative of what the Company's results of operations
would have been had the transactions been consummated as of January 1, 1995,
nor is such information necessarily indicative of the Company's future results
of operations.
<TABLE>
<CAPTION>
DECEMBER 31,
--------------------------
1996 1995
------------ -----------
<S> <C> <C>
Operating revenues................................. $ 596,090 $ 449,493
Net income applicable to common shares............. $ 83,705 $ 2,524
Net income applicable to common shares per share... $ 0.68 $ 0.01
</TABLE>
The Company purchased the Shelf 4, a Friede & Goldman 9500 Enhanced
Pacesetter semisubmersible rig, on December 30, 1996 for $6,000,000 in cash.
The rig is stacked in the United Kingdom, and substantial capital expenditures
are required to return the rig to operational status.
On December 24, 1996, the Company purchased the Noble Jimmy Puckett
(formerly the Essar Explorer), a 300-foot Friede & Goldman L-780 Mod II
independent leg cantilevered unit built in 1982, for $35,400,000 in cash. The
Company chartered the rig back to the seller for the duration of the seller's
current contract with the Oil and Natural Gas Corporation Ltd. of India, which
expires in October 1997.
On September 4, 1996, the Company purchased the Noble Kenneth Delaney
(formerly the Miss Kitty), a Friede & Goldman L-780 Mod II independent leg
cantilevered unit rated for a water depth of 300 feet, for $26,250,000 in cash.
The rig is currently working offshore India under a bareboat charter
arrangement that expires in September 1997.
The Company purchased the Noble Chuck Syring (formerly the Dana), a
Marathon LeTourneau 82-C independent leg cantilevered rig capable of drilling
in 250 feet of water, on March 20, 1996, for $15,800,000 in cash. The rig is
currently operating under a long-term contract through October 1999 for Qatar
General Petroleum Corporation in Qatar.
On February 26, 1996, the Company purchased the Gus Androes (formerly the
Odin Explorer), a Levingston 111-C independent leg cantilevered unit rated for
a water depth of 300 feet, for $15,300,000 in cash. The rig has been
refurbished and is under contract offshore Qatar with an international oil and
gas company through October 1997, plus two one-year options.
On December 13, 1996, the Company completed the sale of its land drilling
assets for $60,000,000 in cash to Nabors Industries, Inc. The assets sold
consisted principally of (i) 19 marketed land drilling rigs and 28 mothballed
land drilling rigs, (ii) certain inventory related to the maintenance and
operation of the rigs, (iii) leasehold interest and real property interest
related to the maintenance and operation of the rigs and (iv) drilling
contracts for the employment of the rigs in existence on the closing date. The
Company recognized a pre-tax gain of $45,414,000 in connection with the sale
which has been included in "Gains on sales of property and equipment, net of
impairments" in the Consolidated Statement of Operations for the year ended
December 31, 1996. Revenues, gross margin and operating income generated from
the land drilling assets were $24,743,000, $6,756,000 and $3,048,000,
respectively, for the year ended December 31, 1996.
The Company sold two of its posted barge rigs during the first quarter of
1996. The Gus Androes, located in the U.S. Gulf, was sold for $6,000,000. The
Gene Rosser, located offshore Nigeria, was sold for $13,000,000. The Company
recorded pre-tax gains of $4,815,000 and $2,712,000, respectively, related to
the sales of these posted barge rigs. The Lewis Dugger and Chuck Syring posted
barge rigs, which were located offshore Nigeria, were sold on August 22, 1996,
for $24,500,000 in cash and $7,500,000 in drill pipe credit. These two barges
had been written down at March 31, 1996 to their estimated net realizable
values based on then recent offers received for these assets
34
<PAGE> 37
NOBLE DRILLING CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(Unless otherwise indicated, dollar amounts in tables are in thousands,
except per share amounts)
from third parties, resulting in a pre-tax charge to earnings of $7,600,000.
The gains on the sales of the Gus Androes and Gene Rosser barge rigs net of the
write-downs are included in "Gains on sales of property and equipment, net of
impairments" in the Consolidated Statement of Operations for the year ended
December 31, 1996.
NOTE 3 -- MARKETABLE SECURITIES
As of December 31, 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 marketable securities within current assets on
the Consolidated Balance Sheets. The following table highlights information
applicable to the Company's debt securities classified as available for sale
as of December 31, 1996 and 1995:
<TABLE>
<CAPTION>
DECEMBER 31, 1996
--------------------------------------------
AMORTIZED FAIR NET UNREALIZED
DEBT SECURITY/MATURITY COST VALUE GAINS (LOSSES)
- ----------------------------------------------------------------------- ----------- ------------ --------------
<S> <C> <C> <C> <C>
Corporate Obligations
Mature within 1 year................................................. $ 3,067 $ 3,069 $ 2
U.S. Government Obligations
Mature within 1 year................................................. 16,264 16,227 (37)
----------- ------------ --------------
Total.................................................................. $ 19,331 $ 19,296 $ (35)
=========== ============ ==============
<CAPTION>
DECEMBER 31, 1995
-------------------------------------------
AMORTIZED FAIR NET UNREALIZED
DEBT SECURITY/MATURITY COST VALUE LOSSES
- ----------------------------------------------------------------------- ----------- ------------ --------------
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>
The net unrealized losses on debt securities of $35,000 and $115,000 as of
December 31, 1996 and 1995, respectively, are included as a reduction of
shareholders' equity in accordance with SFAS No. 115. Total realized losses
related to sales of debt securities for the years ended December 31, 1996 and
1995 were $7,000 and $15,000, respectively.
The Company categorizes its investments in marketable equity securities as
trading securities. These investments are classified as current assets and were
recorded at a fair value of $2,533,000 at December 31, 1996. Total proceeds
from the sales of marketable equity securities were $5,615,000 and $3,670,000
for the years ended December 31, 1996 and 1995, respectively. Total realized
gains on marketable equity securities, computed on a specific identification
basis as the difference between proceeds received and carrying value, for the
years ended December 31, 1996 and 1995 were $669,000 and $371,000, respectively.
Total net unrealized gains (losses) related to marketable equity securities for
the years ended December 31, 1996 and 1995, were $1,348,000 and $(56,000),
respectively.
NOTE 4 -- INVESTMENTS IN AFFILIATES
The Company acquired a 41 percent interest in Arktik Drilling Ltd., Inc.
("Arktik") in connection with the July 1, 1996 acquisition of Neddrill and
accounts for this investment using the equity method. Arktik is a Bahamian
joint venture company that owns and operates the drillship Neddrill Muravlenko.
The investment balance at December 31, 1996 was $410,000 and equity in earnings
was not material for the year ended December 31, 1996. There were no
distributions or dividends received during the year ended December 31, 1996.
35
<PAGE> 38
NOBLE DRILLING CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(Unless otherwise indicated, dollar amounts in tables are in thousands,
except per share amounts)
NOTE 5 -- DEBT
On July 1, 1996, in connection with the Neddrill acquisition and the
issuance of 21,850,000 shares of Noble Drilling common stock in an underwritten
public offering (the "1996 Stock Offering") (see Note 7), the Company issued
$125,000,000 principal amount 9 1/8% Senior Notes due July 1, 2006 (the "9 1/8%
Senior Notes") (the 1996 Stock Offering and the issuance of the 9 1/8% Senior
Notes are collectively referred to as the "1996 Public Offerings"). Interest on
the 9 1/8% Senior Notes is payable semi-annually on January 1 and July 1 of
each year. The Senior Notes are redeemable at the option of the Company, in
whole or in part, at any time on or after July 1, 2001 at 104.56 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, restrictions on dividends and certain investments and limitations
on additional indebtedness, restrictions on dividend and certain investments
and limitations on certain sale and lease-back transactions, disposals of
assets, transactions with affiliates, and mergers or consolidations.
On November 3, 1995, the Company entered into a financing agreement 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. The amount outstanding at December 31, 1996 totaled
$3,102,000.
On October 7, 1993, the Company issued $125,000,000 principal amount of
9 1/4% Senior Notes Due October 1, 2003 (the "9 1/4% Senior Notes"). Interest on
the 9 1/4% Senior Notes is payable semi-annually 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, on or after October 1, 1998 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 leaseback, transactions with affiliates, and
mergers or consolidations.
In November 1996, the Company purchased $11,000,000 principal amount of
its 9 1/4% Senior Notes, which resulted in an extraordinary charge of $660,000,
net of taxes of $355,000. The extraordinary charge represents the difference
between the acquisition price and the net carrying value of the notes,
including unamortized debt issuance costs. After giving effect to the purchase,
the Company had $114,000,000 principal amount of 9 1/4% Senior Notes
outstanding at December 31, 1996.
In connection with the initial construction of the jackup rig, NN-1, the
predecessor of NN-1 Limited Partnership issued U.S. Government Guaranteed Ship
Financing Sinking Fund Bonds, of which $1,026,000 principal amount was
outstanding at December 31, 1996. The bonds mature in 1998, and bear interest
at the rate of 8.95 percent per annum, payable semi-annually on June 15 and
December 15 each year. The bonds are secured by the NN-1, and the applicable
security agreement contains certain restrictions, among others, on
distributions to partners, dispositions of assets and 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. As the general partner of NN-1 Limited Partnership, Noble Drilling
has called the bonds for redemption on March 31, 1997. The Company's sharing
percentage in NN-1 Limited Partnership's distributions from operations is
generally 90 percent. See Note 1.
Annual maturities of long-term debt are $3,622,000 due in 1997, $506,000
due in 1998, $31,250,000 due in each of the years 2001 and 2002, $51,500,000
due in 2003 and $125,000,000 due in 2006.
36
<PAGE> 39
NOBLE DRILLING CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(Unless otherwise indicated, dollar amounts in tables are in thousands,
except per share amounts)
The following table summarizes the Company's long-term debt:
<TABLE>
<CAPTION>
DECEMBER 31,
--------------------------
1996 1995
------------ -----------
<S> <C> <C>
9 1/4% Senior Notes Due 2003.............................................. $ 114,000 $ 125,000
9 1/8% Senior Notes due 2006.............................................. 125,000 -
U.S. Government Guaranteed Ship Financing Sinking Fund Bonds.............. 1,026 1,546
Insurance financing....................................................... 3,102 15,587
------------ -----------
243,128 142,133
Current installments...................................................... (3,622) (12,210)
------------ -----------
$ 239,506 $ 129,923
============ ===========
</TABLE>
The fair value of the Company's long-term debt at December 31, 1996,
estimated based on the quoted market prices for similar issues or on the
current rates offered to the Company for debt of similar remaining maturities,
was approximately $255,700,000.
NOTE 6 -- CREDIT FACILITIES
The Company has an unsecured credit agreement with First Interstate Bank
of Texas, N.A., which provided for a $25,000,000 revolving credit line
facility, of which $15,000,000 was available to support letters of credit, and
a $5,000,000 letter of credit facility at December 31, 1996. The Company pays a
quarterly commitment fee on the unused portion of the facility. The agreement
contains certain restrictive and financial covenants, including those related
to indebtedness, net worth and fixed charges, and provides for guarantees of
the indebtedness by certain subsidiaries of Noble Drilling. At December 31,
1996, $10,816,000 had been used to support outstanding letters of credit. At
December 31, 1996, borrowings of $19,184,000 were available under the lines of
credit, including $9,184,000 to support letters of credit.
NOTE 7 -- SHAREHOLDERS' EQUITY
On July 1, 1996, the Company issued and sold 21,850,000 shares of common
stock in the 1996 Stock Offering (see Note 5) at an initial price to the public
of $13.00 per share. This resulted in net proceeds of $272,033,000, after
deducting the underwriting discount and other related costs. The net proceeds
of the 1996 Public Offerings (see Note 5) were used to purchase Neddrill as
discussed previously in Note 2, with the balance of the proceeds, approximately
$89,916,000, used for general corporate purposes.
In the Chiles Merger, 4,025,000 shares of $1.50 convertible preferred
stock of Chiles were converted into and exchanged for an equivalent number of
shares of $1.50 Preferred Stock of the Company having substantially the same
rights, privileges, preferences and voting power as the Chiles preferred stock.
Holders of the $1.50 Preferred Stock received a cash dividend at an annual rate
of $1.50 per share. In December 1996, 4,023,779 shares of $1.50 Preferred Stock
were converted into 9,836,475 shares of Noble Drilling common stock. The
remaining 1,221 shares of $1.50 Preferred Stock were redeemed at $26.05 per
share, plus accrued dividends.
In 1991, the Company issued and sold 2,990,000 shares of a new series of
$2.25 Convertible Exchangeable Preferred Stock ("$2.25 Preferred Stock"), par
value $1.00 per share. Holders of the $2.25 Preferred Stock received a cash
dividend at an annual rate of $2.25 per share. In March 1995, an aggregate of
923,862 shares of $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 the redemption of 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).
37
<PAGE> 40
NOBLE DRILLING CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(Unless otherwise indicated, dollar amounts in tables are in thousands,
except per share amounts)
NOTE 8 -- STOCK-BASED COMPENSATION PLANS
The Company has several stock-based compensation plans, which are
described below. The Company applies APB Opinion 25 and related Interpretations
in accounting for its stock-based compensation plans. In 1995, the FASB issued
FASB Statement No. 123, "Accounting for Stock-Based Compensation" ("SFAS 123")
which, if fully adopted by the Company, would change the methods the Company
applies in recognizing the cost of its stock-based compensation plans. Adoption
of the cost recognition provisions of SFAS 123 is optional and the Company has
decided not to elect these provisions of SFAS 123. However, pro forma
disclosures as if the Company adopted the cost recognition provisions of SFAS
123 in 1995 are required by SFAS 123 and are presented below.
NONQUALIFIED STOCK OPTIONS
1991 STOCK OPTION AND RESTRICTED STOCK PLAN
The Company's 1991 Stock Option and Restricted Stock Plan, as amended (the
"1991 Plan"), provides for the granting of options to purchase the Company's
common stock, with or without stock appreciation rights ("SARs"), and the
awarding of shares of restricted stock to selected employees. A maximum of
5,200,000 shares is available under the 1991 Plan. Options may be either
incentive stock options (intended to qualify under Section 422 of the Internal
Revenue Code of 1986, as amended) or nonqualified stock options. The 1991 Plan
provides that the exercise price of any nonqualified stock option may not be
less than 50 percent of the fair market value of the common stock on the date
of grant and the exercise price of any incentive stock option may not be less
than the fair market value of the common stock on the date of grant. At
December 31, 1996, 1,022,437 shares were available for grant under the 1991
Plan.
In 1995 and 1996, the Company granted only nonqualified stock options
under the 1991 Plan. All such options have a term of 10 years and an exercise
price equal to the fair market value of the common stock on the date of grant
and vest at the rate of 33 1/3 percent on each anniversary of the date of
grant, commencing on the first anniversary of the date of grant. The Company
granted options on 1,240,400 shares in 1995 and 1,358,600 shares in 1996. In
accordance with APB 25, the Company has not recognized any compensation cost
for the options granted in 1995 and 1996 under the 1991 Plan.
OTHER PLANS AND AGREEMENTS
In 1987 the Company granted nonqualified stock options on 300,000 shares
of common stock to certain non-employee directors of the Company pursuant to
stock option agreements which were approved by stockholders. The exercise price
of these options was the fair market value of the common stock on the date of
grant. Under these agreements, options to purchase 60,000 shares were
outstanding and exercisable at December 31, 1996.
The Company's 1992 Nonqualified Stock Option Plan for Non-Employee
Directors (the "1992 Plan") provides for the granting of nonqualified stock
options to non-employee directors. Under the 1992 Plan, non-employee directors
of the Company receive an annual grant of an option to purchase 3,500 shares of
common stock. New non-employee directors receive a one-time grant of an option
to purchase 10,000 shares of common stock immediately after the date of their
first annual meeting of stockholders. The options are granted at fair market
value on the grant date and are exercisable from time to time over a period
commencing one year from the grant date and ending on the expiration of ten
years from the grant date, unless terminated sooner as described in the 1992
Plan. Under the 1992 Plan, options to purchase 118,500 shares were outstanding
and exercisable at December 31, 1996.
38
<PAGE> 41
NOBLE DRILLING CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(Unless otherwise indicated, dollar amounts in tables are in thousands,
except per share amounts)
A summary of the status of the Company's stock options as of December 31,
1996 and 1995 and the changes during the year ended on those dates is presented
below:
<TABLE>
<CAPTION>
1996 1995
------------------------ ------------------------
NUMBER OF WEIGHTED NUMBER OF WEIGHTED
SHARES AVERAGE SHARES AVERAGE
UNDERLYING EXERCISE UNDERLYING EXERCISE
OPTIONS PRICE OPTIONS PRICE
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
Outstanding at beginning of the year....................... 2,799,747 $ 5.38 1,810,472 $ 5.45
Granted.................................................... 1,358,600 9.91 1,240,400 5.19
Exercised.................................................. (515,281) 5.05 (109,150) 3.25
Forfeited.................................................. (158,163) 7.36 (141,975) 6.30
--------- --------- --------- ---------
Outstanding at end of year................................. 3,484,903 $ 7.11 2,799,747 $ 5.38
========= ========= ========= =========
Exercisable at end of year................................. 1,432,250 $ 5.56 1,273,505 $ 3.33
========= ========= ========= =========
Weighted average fair value per share of the options granted
during the year.......................................... $ 3.97 $ 2.28
========= =========
</TABLE>
The fair value of each stock option granted is estimated on the date of
grant using the Black-Scholes option-pricing model with the following
weighted-average assumptions for grants in 1995 and 1996, respectively:
dividend yield of 0.0 percent for both years; expected volatility of 35.45
percent for both years; risk-free interest rates are different for each grant
and range from 5.27 percent to 7.59 percent; and the expected life of the
options is five years for both years.
The following table summarizes information about stock options outstanding
at December 31, 1996:
<TABLE>
<CAPTION>
OPTIONS OUTSTANDING OPTIONS EXERCISABLE
----------------------------------------------- -------------------------------
NUMBER WEIGHTED WEIGHTED NUMBER WEIGHTED
OUTSTANDING AVERAGE AVERAGE EXERCISABLE AVERAGE
RANGE OF EXERCISE PRICES AT 12/31/96 REMAINING LIFE EXERCISE PRICE AT 12/31/96 EXERCISE PRICE
- ------------------------------ ----------- -------------- -------------- ------------ --------------
<S> <C> <C> <C> <C> <C> <C>
$ 1.72 to $ 7.00 1,605,141 6.81 $ 4.74 872,724 $ 4.36
7.00 to 10.00 1,848,762 8.59 9.04 559,526 7.43
10.00 to 14.00 31,000 9.56 14.00 - 14.00
- ------------------------------ ----------- -------------- -------------- ------------ -----------------
$ 1.72 to $ 14.00 3,484,903 7.53 $ 7.11 1,432,250 $ 5.56
=========== ============== ============== ============ =================
</TABLE>
SHARE APPRECIATION RIGHTS
Effective as of July 25, 1996, a subsidiary of Noble Drilling granted
share appreciation rights covering 309,500 shares of Noble Drilling common
stock. The share appreciation rights, which are payable solely in cash, have a
term of five years and an exercise price of fair market value on the date of
grant and vest fully on the first anniversary of the date of grant. As of
December 31, 1996, these share appreciation rights had an intrinsic aggregate
value of $1,779,625. In accordance with APB 25, the Company recognized an
expense in the year ended December 31, 1996 in the amount of $776,000
associated with these awards.
RESTRICTED STOCK
The Company has awarded restricted (i.e., nonvested) shares of Noble
Drilling common stock pursuant to the 1991 Plan. A total of 58,863 shares of
restricted common stock were awarded in July 1996 ("July 1996 Award") to
selected employees. These shares will vest (subject only to future employment)
50 percent each year on a cumulative basis commencing one year from the date of
award.
Additionally, in December 1994 and January 1996, the Company awarded
185,500 and 105,250 performance restricted shares, respectively. The vesting of
these shares is dependent, among other things, on the achievement of certain
specified corporate performance criteria. For the performance restricted shares
awarded in 1994, the level of actual performance will be determined as of
December 31, 1997 relative to the specified criteria, and the number of the
performance restricted shares available for vesting will be determined under a
schedule relating vesting to performance. The number of shares as so determined
will then vest (subject only to future employment) at the rate of 33 1/3
percent thereof on March 31, 1998, March 31, 1999 and March 31, 2000. Nonvested
shares will be forfeited.
39
<PAGE> 42
NOBLE DRILLING CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(Unless otherwise indicated, dollar amounts in tables are in thousands,
except per share amounts)
The vesting of the performance restricted shares awarded in 1996 will be
determined in a similar manner, substituting December 31, 1998 as the
performance evaluation date and March 31, 1999 as the first vesting date.
In accordance with APB 25, the Company recognized a compensation cost
relating to the shares of the July 1996 Award in the amount of $161,000 for the
year ended December 31, 1996. The share price at date of grant for such 58,863
restricted shares was $14.13. It is not possible for the Company to determine
the estimated amount of compensation cost relating to the shares of restricted
common stock discussed in the immediately preceding paragraph because of the
performance criteria that must be achieved and assessed at December 31, 1997 at
the earliest; accordingly, the Company recognized no compensation cost relating
thereto in 1995 or 1996.
PRO FORMA NET INCOME AND NET INCOME PER COMMON SHARE
Pursuant to APB 25, the Company recognized a charge of $937,000 as
compensation expense for equity-based compensation awarded in 1996. Had the
compensation cost for the Company's stock-based compensation plans been
determined consistent with SFAS 123, the Company would have recognized $825,000
in 1995 and $3,117,000 in 1996 as compensation expense. The Company's net
income (loss) applicable to common shares and net income (loss) applicable to
common shares per share for 1995 and 1996 would have approximated the pro forma
amounts below (in millions except per share data):
<TABLE>
<CAPTION>
AS REPORTED PRO FORMA AS REPORTED PRO FORMA
12/31/96 12/31/96 12/31/95 12/31/95
------------ ----------- ------------ -----------
<S> <C> <C> <C> <C>
Net Income (Loss) Applicable to Common Shares.............. $ 72,597 $ 71,180 $ (5,605) $ (6,141)
Net Income (Loss) Applicable to Common Shares per Share... $ 0.66 $ 0.65 $ (0.08) $ (0.09)
</TABLE>
The effects of applying SFAS 123 in this pro forma disclosure are not
indicative of future amounts. SFAS 123 does not apply to awards prior to 1995,
and the Company anticipates making awards in the future under its stock-based
compensation plans.
STOCKHOLDER RIGHTS PLAN
The Company adopted a stockholder rights plan on June 28, 1995, designed
to assure that the Company's stockholders receive fair and equal treatment in
the event of any proposed takeover of the Company and to guard against partial
tender offers and other abusive takeover tactics to gain control of the Company
without paying all stockholders a fair price. The rights plan was not adopted
in response to any specific takeover proposal. Under the rights plan, the
Company declared a dividend of one right ("Right") on each share of Noble
Drilling common stock. Each Right will entitle the holder to purchase one
one-hundredth of a share of a new Series A Junior Participating Preferred
Stock, par value $1.00 per share, at an exercise price of $35.00. The Rights
are not currently exercisable and will become exercisable only in the event a
person or group acquires beneficial ownership of 15 percent or more of Noble
Drilling common stock. The dividend distribution was made on July 10, 1995 to
stockholders of record at the close of business on that date. The Rights will
expire on July 10, 2005.
40
<PAGE> 43
NOBLE DRILLING CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(Unless otherwise indicated, dollar amounts in tables are in thousands,
except per share amounts)
NOTE 9 -- INCOME TAXES
The Company follows SFAS No. 109, Accounting for Income Taxes, which
requires the use of the liability method of accounting for deferred income
taxes. Under SFAS No. 109, deferred tax assets and liabilities are recognized
based upon differences between the financial statement and tax bases of assets
and liabilities using presently enacted tax rates. If it is more likely than
not that some portion or all of a deferred tax asset will not be realized, a
valuation allowance is recognized.
Amounts of deferred tax assets and liabilities are as follows at:
<TABLE>
<CAPTION>
DECEMBER 31,
-----------------------
1996 1995
---------- --------
<S> <C> <C>
Deferred tax assets, net of valuation allowance of $0 in 1996 and $22,243 in 1995....... $ 41,544 $ 57,443
Deferred tax liabilities................................................................ (50,616) (59,919)
---------- ---------
Net deferred tax liabilities............................................................ $ (9,072) $ (2,476)
========== =========
</TABLE>
The components of and changes in the net deferred taxes were as
follows:
<TABLE>
<CAPTION>
DEFERRED
DECEMBER 31, EXPENSE DECEMBER 31,
1995 (CREDIT) 1996
--------- ---------- ---------
<S> <C> <C> <C>
Deferred tax assets:
Domestic
Net operating loss carryforwards...................................... $ 74,780 $ (41,791) $ 32,989
Investment tax credit carryforward.................................... 1,457 (758) 699
Other ................................................................ 149 2,779 2,928
Book basis of assets in excess of tax basis........................... - 2,241 2,241
International
Net operating loss carryforwards...................................... 2,651 (1,279) 1,372
Tax basis of assets in excess of book basis........................... 649 666 1,315
--------- ---------- ---------
Total..................................................................... 79,686 (38,142) 41,544
Valuation allowance ...................................................... (22,243) 22,243 -
--------- ---------- ---------
Net deferred tax assets .................................................. $ 57,443 $ (15,899) $ 41,544
========= ========== =========
Deferred tax liabilities:
Domestic
Excess of net book basis over remaining tax basis..................... $ (56,794) $ 11,998 $ (44,796)
International
Excess of net book basis over remaining tax basis..................... (3,125) (2,695) (5,820)
--------- ---------- ---------
Deferred tax liabilities.................................................. $ (59,919) $ 9,303 $ (50,616)
========= ========== =========
</TABLE>
Income before income taxes and extraordinary items consisted of the
following:
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-------------------------------------
1996 1995 1994
--------- ---------- --------
<S> <C> <C> <C>
Domestic.................................................................. $ 94,096 $ (9,578) $ 7,024
International............................................................. 7,863 14,444 20,171
--------- ---------- ---------
Total..................................................................... $ 101,959 $ 4,866 $ 27,195
========= ========== =========
</TABLE>
The income tax provision consisted of the following:
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-------------------------------------
1996 1995 1994
--------- ---------- --------
<S> <C> <C> <C>
Current - domestic........................................................ $ 2,322 $ (2,093) $ -
Current - international................................................... 13,744 6,282 2,599
Deferred - domestic....................................................... 3,288 - -
Deferred - international.................................................. 3,308 (917) 3,073
--------- ---------- --------
Total .................................................................... $ 22,662 $ 3,272 $ 5,672
========= ========== =========
</TABLE>
41
<PAGE> 44
NOBLE DRILLING CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(Unless otherwise indicated, dollar amounts in tables are in thousands,
except per share amounts)
Included in the current domestic tax benefit for the year ended December
31, 1995, is $2,100,000 related to a separate return year loss carryback
benefit recorded by Triton.
A reconciliation of Federal statutory and effective income tax rates is
shown below:
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
----------------------------------
1996 1995 1994
----- ----- ----
<S> <C> <C> <C>
Statutory rate............................................................ 35.0% 35.0% 35.0%
Effect of:
U.S. operating loss generating no current tax benefit................... - 68.9 -
U.S. operating loss carryforward/ carryback benefit..................... (29.1) (43.1) (9.0)
Canadian operating loss carryforward benefit............................ (0.7) - -
International tax rates which are different than the U.S. rate.......... 14.7 6.4 (5.8)
Other................................................................... 2.3 - 0.7
----- ----- ----
Effective rate............................................................ 22.2% 67.2% 20.9%
===== ===== ====
</TABLE>
The Company had available at December 31, 1996, unused investment tax
credits, which may be used to offset future U.S. taxes payable, of $669,367
expiring in various years from 1998 to 2001. In addition, Noble Drilling had
net operating loss carryforwards ("NOLs") for tax purposes of approximately
$26,497,000 at December 31, 1996, which expire in the years 2000 through 2010,
and NOC has NOLs for tax purposes of approximately $67,756,000 which expire in
the years 2004 through 2009.
The Chiles Merger qualifies as a tax-free reorganization. NOC, as the
surviving entity, inherited all of Chiles' tax attributes, including NOL
carryforwards. In accordance with the "Separate Return Limitation Year" rules
of the Internal Revenue Code of 1986, as amended (the "Code"), Chiles' NOL
carryforwards may only be used to reduce Noble Drilling's future taxable income
to the extent of NOC's taxable income.
If a corporation undergoes an "ownership change" within the meaning of
Section 382 of the Code, the corporation's right to use its then existing NOLs
(and certain other tax attributes) is limited during each future year to a
percentage of the fair market value of such corporation's stock immediately
before the ownership change (the "Section 382 Limitation"). In general, there
is an "ownership change" under Section 382 if over a three-year period certain
shareholders increase their percentage ownership of a corporation by more than
50 percent. To the extent the amount of the NOLs existing at the time of an
ownership change that are used in any subsequent year is less than the annual
Section 382 Limitation, the otherwise available Section 382 Limitation is
correspondingly increased for future years. An ownership change for purposes of
Section 382 took place on September 15, 1994, as a result of the Chiles Merger.
The cumulative Section 382 Limitation attributable to the Noble Drilling
pre-merger carryforwards is $47,231,000. The cumulative Section 382 Limitation
attributable to NOC is $22,185,000.
Applicable U.S. income and foreign withholding taxes have not been
provided on undistributed earnings of the Company's international subsidiaries.
Management does not intend to repatriate such undistributed earnings for the
foreseeable future except for distributions upon which incremental income taxes
would not be material.
42
<PAGE> 45
NOBLE DRILLING CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(Unless otherwise indicated, dollar amounts in tables are in thousands,
except per share amounts)
NOTE 10 -- EMPLOYEE BENEFIT PLANS
The Company has a noncontributory defined benefit plan which covers
substantially all salaried employees and a noncontributory defined benefit
pension plan which covers certain field employees. The benefits from these
plans are based primarily on years of service and employees' compensation near
retirement. The Company's funding policy is consistent with funding
requirements of applicable laws and regulations. The assets of these plans
consist of corporate equity securities, municipal and government bonds, and
cash equivalents. The Company, when required, makes contributions to the
domestic plan in the form of Noble Drilling common stock. As of September 30,
1996, the domestic plan assets included $3,700,000 of Noble Drilling's common
stock valued at fair value at that date. The Company changed the measurement
date of the plan to September 30 beginning in 1995. This change did not have a
material impact to the financial results of the Company.
Noble Drilling (U.K.) Limited, a wholly owned subsidiary of Noble
Drilling, maintains a pension plan which covers all of its salaried, nonunion
employees. Benefits are based on credited service and the average of the
highest three years of qualified salary within the past ten years of
participation. In connection with the acquisition of Neddrill, approximately 55
salaried administrative employees and 730 offshore/field personnel became
employees of the Company. At July 1, 1996, the accumulated benefit obligations
relating to these employees were fully funded pursuant to the terms of the
Neddrill purchase agreement.
Pension cost includes the following components:
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
----------------------------------------------------------------------------------
1996 1995 1994
------------------------ ------------------------ ------------------------
INTERNATIONAL DOMESTIC INTERNATIONAL DOMESTIC INTERNATIONAL DOMESTIC
------------- ---------- ------------- --------- ------------- ---------
<S> <C> <C> <C> <C> <C> <C>
Service costs (benefits earned
during the year)............ $ 523 $ 1,589 $ 581 $ 1,201 $ 544 $ 758
Interest cost on projected
benefit obligation.......... 726 2,023 702 1,890 607 1,698
Actual return on assets....... (928) (4,500) (870) (2,439) (787) 1,806
Amortization of net (gain)
loss at January 1........... (55) 2,607 (44) 757 (77) (3,758)
--------- ---------- --------- --------- ---------- ---------
Net pension expense........... $ 266 $ 1,719 $ 369 $ 1,409 $ 287 $ 504
========= ========== ========= ========= ========== =========
</TABLE>
The funded status of the plans is as follows:
<TABLE>
<CAPTION>
DECEMBER 31,
------------------------------------------------------
1996 1995
------------------------ -------------------------
INTERNATIONAL DOMESTIC INTERNATIONAL DOMESTIC
------------- -------- ------------- --------
<S> <C> <C> <C> <C>
Actuarial present value of benefit obligations
Vested benefits.......................................... $ (8,756) $ (21,869) $ (7,449) $ (21,359)
Nonvested benefits....................................... - (988) - (780)
--------- --------- ---------- ---------
Accumulated benefits..................................... (8,756) (22,857) (7,449) (22,139)
Effect of projected future compensation levels........... (1,389) (4,269) (1,114) (3,982)
--------- --------- ---------- ---------
Projected benefits......................................... (10,145) (27,126) (8,563) (26,121)
Plan assets at fair value.................................. 11,880 27,856 9,725 21,274
--------- --------- ---------- ---------
Plan assets in excess (shortfall) of projected benefit
obligations.............................................. 1,735 730 1,162 (4,847)
Unrecognized net (loss) gain............................... (2,169) 5,431 (1,831) 9,708
Unrecognized prior service cost............................ - (59) - (69)
Unrecognized transition obligation (asset)................. 95 (1,053) 107 (1,509)
Additional liability....................................... - - - (3,403)
--------- --------- ---------- ---------
(Accrued liability) prepaid asset ......................... $ (339) $ 5,049 $ (562) $ (120)
========= ========= ========== =========
</TABLE>
In accordance with SFAS No. 87, Employers' Accounting for Pensions, the
Company recorded an additional minimum liability of $3,403,000 at December 31,
1995. This liability represents the excess of the accumulated benefit
obligations over the fair value of plan assets and accrued pension liabilities
of the domestic salaried pension plan. This additional minimum pension
liability is reported as a separate reduction of shareholders' equity.
43
<PAGE> 46
NOBLE DRILLING CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(Unless otherwise indicated, dollar amounts in tables are in thousands,
except per share amounts)
The projected benefit obligations for the international and domestic plans
were determined using an assumed discount rate of 8.25 percent and 7.5 percent,
respectively, in 1996, 8.5 percent and 7.5 percent, respectively, in 1995 and
9.0 percent and 8.5 percent, respectively, in 1994. Assumed long-term rate of
return on international plan assets was 9.0 percent, 9.25 percent and 9.75
percent in 1996, 1995 and 1994, respectively. Assumed long-term rate of return
on domestic plan assets was 9.0 percent in each of the years presented. The
projected benefit obligations for the international plan assume a compensation
increase of 6.0 percent, 6.25 percent and 6.75 percent in 1996, 1995 and 1994,
respectively, and 6.0 percent per annum for the domestic plan in each of the
years presented.
The Company presently sponsors medical and other plans for the benefit of
its employees. The cost of maintaining these plans aggregated $8,912,000,
$6,628,000 and $5,500,000 in 1996, 1995 and 1994, respectively.
The Company does not provide post-retirement benefits (other than
pensions) or any post-employment benefits to its employees.
NOTE 11 -- COMMITMENTS, CONTINGENCIES AND OBLIGATIONS
On October 25, 1993, the Company purchased two submersible offshore
drilling rigs from Portal Rig Corporation ("Portal") for 626,410 shares of
Noble Drilling common stock. The Company acquired the rigs subject to certain
federal income tax "safe harbor leases" and a related preferred ship mortgage
relating to a tax benefit transaction entered into in 1982 by a predecessor of
Portal. Portal has agreed to indemnify the Company for any potential
liabilities as a result of this earlier tax benefit transaction.
The Company is involved in certain claims and litigation resulting from
personal injury, and from time to time, performance of contract services and
property damage. The Company has accrued for the anticipated cost of settlement
of these claims. In the opinion of management, uninsured losses, if any, will
not be material to the Company's financial position or results of operations.
At December 31, 1996, the Company had certain noncancellable long-term
operating leases, principally for office space and facilities, with various
expiration dates. Total lease expense incurred under noncancellable operating
leases was approximately $4,377,000, $1,918,000 and $1,200,000 for the years
ended December 31, 1996, 1995 and 1994, respectively. Future minimum rentals
under sub-leases aggregate $5,583,000 for 1997, $5,456,000 for 1998, $5,350,000
for 1999, $5,318,000 for each of the years 2000 and 2001, and $29,054,000
thereafter.
NOTE 12 -- SUPPLEMENTAL LOSS PER SHARE DISCLOSURE
Assuming that all shares of $2.25 Preferred Stock had been converted on
January 1, 1995, the supplemental primary net loss applicable to common shares
per share for the year ended December 31, 1995 would have changed from $0.08 to
$0.06. Supplemental fully diluted net loss applicable to common shares per
share for the year ended December 31, 1995 is the same as supplemental primary
net loss applicable to common shares per share since the effect of the
conversion is anti-dilutive.
44
<PAGE> 47
NOBLE DRILLING CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(Unless otherwise indicated, dollar amounts in tables are in thousands,
except per share amounts)
NOTE 13 -- UNAUDITED INTERIM FINANCIAL DATA
Unaudited interim financial information for the years ended
December 31, 1996 and 1995 is as follows:
<TABLE>
<CAPTION>
QUARTER ENDED
-------------------------------------------------------
1996 MAR. 31 JUNE 30 SEPT. 30 DEC. 31
------------ ----------- ------------ -----------
<S> <C> <C> <C> <C>
Operating revenues......................................... $ 104,757 $ 109,686 $ 158,072 $ 141,738
Operating income (1)(2).................................... $ 14,097 $ 20,413 $ 30,549 $ 47,492
Income before extraordinary charge......................... $ 10,726 $ 16,253 $ 25,221 $ 27,097
Extraordinary charge, net of tax (3)....................... - - - $ (660)
Net income (4)............................................. $ 10,726 $ 16,253 $ 25,221 $ 26,437
Preferred stock dividends.................................. $ (1,511) $ (1,509) $ (1,509) $ (1,511)
Net income applicable to common shares .................... $ 9,215 $ 14,744 $ 23,712 $ 24,926
Net income applicable to common shares
per share (1)(2)(3)(4).................................. $ 0.10 $ 0.15 $ 0.19 $ 0.20
<CAPTION>
QUARTER ENDED
-------------------------------------------------------
1995 MAR. 31 JUNE 30 SEPT. 30 DEC. 31
------------ ----------- ------------ -----------
<S> <C> <C> <C> <C>
Operating revenues......................................... $ 85,096 $ 73,985 $ 84,652 $ 84,235
Operating income (loss) (5)................................ $ 2,013 $ (2,303) $ 3,240 $ 9,328
Net income (6)............................................. $ (661) $ (4,338) $ 2,315 $ 4,278
Preferred stock dividends.................................. $ (2,670) $ (1,509) $ (1,509) $ (1,511)
Net (loss) income applicable to common shares ............. $ (3,331) $ (5,847) $ 806 $ 2,767
Net (loss) income applicable to common shares
per share (5)(6)(7)..................................... $ (0.06) $ (0.07) $ 0.01 $ 0.03
</TABLE>
- ------------------
(1) Included in the quarter ended March 31, 1996, were non-recurring items
consisting of $7,600,000 ($0.08 per share) of impairment charges and
$7,527,000 ($0.08 per share) of gains on sales of posted barge rigs.
(2) Included in the quarter ended December 31, 1996, were non-recurring
items consisting of $45,414,000 ($0.36 per share) of gain on the sale
of the land drilling assets partially offset by $10,200,000 ($0.08 per
share) of impairment charges, excluding a reduction of $289,000
relating to minority interest, $14,808,000 ($0.12 per share) of
inventory charges and $3,350,000 ($0.03 per share) of adjustments to
depreciation.
(3) Included in the quarter ended December 31, 1996, is an extraordinary
charge of $660,000, net of taxes of $355,000, related to the purchase
of $11,000,000 principal amount of the Company's 9 1/4% Senior Notes.
See Note 5.
(4) Included in the quarter ended December 31, 1996, were taxes of
$16,259,000 ($0.13 per share) related to the gain on the sale of the
land drilling assets.
(5) Included in the quarters ended March 31, June 30, September 30 and
December 31, 1995 were $1,116,000 ($0.01 per share), $1,116,000 ($0.01
per share), $1,116,000 ($0.01 per share) and $2,812,000 ($0.03 per
share), respectively, related to the effect of change in estimates of
salvage values and remaining depreciable lives. See Note 1.
(6) Included in the quarters ended September 30, 1995 and December 31,
1995 were $800,000 ($0.01 per share) and $1,300,000 ($0.01 per share),
respectively, of separate return year loss carryback benefit related
to Triton. See Note 9. Included in the quarter ended December 31, 1995
is a credit of $1,078,000 ($0.01 per share) related to the adjustment
of the Triton acquisition contingency. Included in the quarter ended
December 31, 1995 is a charge of $1,778,000 ($0.02 per share) related
to the mobilization of a jackup rig to west Africa. See Note 1.
(7) Included in the quarter ended March 31, 1995 is the $0.02 per share
impact of the $1,524,000 Preferred Conversion Payment made in
conjunction with the conversion of 923,862 shares of $2.25 Preferred
Stock into common stock. See Note 7.
45
<PAGE> 48
NOBLE DRILLING CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(Unless otherwise indicated, dollar amounts in tables are in thousands,
except per share amounts)
NOTE 14 -- GEOGRAPHICAL INFORMATION
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
--------------------------------------
1996 1995 1994
--------- ---------- ---------
<S> <C> <C> <C>
Operating revenues
Domestic................................................................ $ 259,745 $ 165,391 $ 181,950
International
Argentina............................................................. 4,617 - -
Brazil................................................................ 8,722 - -
Canada................................................................ 10,107 13,929 20,059
Congo................................................................. 2,353 - -
Denmark............................................................... 11,414 - -
India ................................................................ 5,443 3,771 2,041
Mexico................................................................ 9,807 9,398 21,269
Nigeria............................................................... 57,158 45,860 44,195
Qatar................................................................. 15,825 2,452 -
The Netherlands....................................................... 29,350 - -
United Kingdom........................................................ 52,297 37,891 39,939
Venezuela............................................................. 38,723 40,223 34,155
Zaire................................................................. 8,692 8,860 7,781
Other................................................................. - 193 599
--------- ---------- ---------
Total..................................................................... $ 514,253 $ 327,968 $ 351,988
========= ========== =========
<CAPTION>
YEAR ENDED DECEMBER 31,
--------------------------------------
1996 1995 1994
--------- ---------- ---------
Operating income (loss)
Domestic................................................................ $ 90,413 $ (5,239) $ 5,006
International
Argentina............................................................. (1,755) - -
Brazil................................................................ (1,183) - -
Canada................................................................ 9,899 2,521 4,549
Congo................................................................. (835) - -
Denmark............................................................... 1,831 - -
India................................................................. 882 283 (676)
Mexico................................................................ 1,894 94 5,434
Nigeria............................................................... (6,703) 3,597 1,727
Qatar................................................................. (6,756) (2,455) -
The Netherlands....................................................... 8,313 - -
United Kingdom ....................................................... 12,132 4,766 3,505
Venezuela............................................................. 5,819 7,178 6,289
Zaire ................................................................ 68 2,139 1,613
Other ................................................................ (1,468) (606) (426)
--------- ---------- ---------
Total..................................................................... $ 112,551 $ 12,278 $ 27,021
========= ========== =========
<CAPTION>
DECEMBER 31,
--------------------------------------
1996 1995 1994
--------- ---------- ---------
<S> <C> <C> <C>
Identifiable assets
Domestic................................................................ $ 515,810 $ 313,237 $ 404,010
International
Argentina............................................................. 48,936 - -
Brazil................................................................ 57,833 - -
Canada................................................................ 8,077 13,206 12,421
Congo................................................................. 40,038 - -
Denmark............................................................... 43,375 - -
India................................................................. 81,749 21,104 20,912
Mexico................................................................ 30,817 32,328 51,167
Nigeria............................................................... 110,357 179,934 138,716
Qatar................................................................. 85,358 37,506 -
The Netherlands....................................................... 153,479 - -
United Kingdom........................................................ 70,565 15,051 14,147
Venezuela............................................................. 85,988 84,042 73,977
Zaire................................................................. 25,571 25,023 22,833
Other................................................................. 9,454 21,099 1,706
--------- ---------- ---------
Total..................................................................... $1,367,407 $ 742,530 $ 739,889
========== ========== =========
</TABLE>
46
<PAGE> 49
NOBLE DRILLING CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(Unless otherwise indicated, dollar amounts in tables are in thousands,
except per share amounts)
There were no customers who accounted for more than 10 percent of the
Company's consolidated operating revenues during 1996. Customer A accounted for
approximately 11 percent of the Company's consolidated operating revenues
during 1995. Customer B accounted for approximately 11 percent of the Company's
consolidated operating revenues during 1994.
NOTE 15 -- SUBSEQUENT EVENT
On February 19, 1997, the Company signed a definitive agreement to sell 12
mat supported jackup rigs to Pride Petroleum Services, Inc. ("Pride"). The sale
will also include the hull of one former mat supported jackup rig (Linn
Richardson) which has had all drilling machinery and equipment removed. The
sales price is $265,000,000 in cash. The closing of the transaction, which is
subject to receipt of financing by Pride, satisfaction of Hart-Scott-Rodino
Antitrust Improvements Act governmental clearance and routine closing
conditions, is scheduled to occur on June 3, 1997. Pride has deposited
$20,000,000 of the purchase price into an escrow account which is payable to
the Company in the event Pride does not obtain its financing or is unable to
complete the acquisition by June 30, 1997.
47
<PAGE> 50
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
Not Applicable.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
The sections entitled "Election of Directors" and "Section 16(a)
Beneficial Ownership Reporting Compliance" appearing in Noble Drilling's proxy
statement for the annual meeting of stockholders to be held on April 24, 1997
(the "1997 Proxy Statement"), set forth certain information with respect to the
directors of Noble Drilling and with respect to reporting under Section 16(a)
of the Securities Exchange Act of 1934, and are incorporated herein by
reference.
Certain information with respect to the executive officers of Noble
Drilling is set forth under the caption "Executive Officers of the Registrant"
in Part I of this report.
ITEM 11. EXECUTIVE COMPENSATION
The section entitled "Executive Compensation" appearing in the 1997 Proxy
Statement sets forth certain information with respect to the compensation of
management of Noble Drilling, and, except for the report of the compensation
committee of the board of directors of Noble Drilling on executive compensation
and the information therein under "Performance Graph," is incorporated herein
by reference.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The sections entitled "Security Ownership of Certain Beneficial Owners"
and "Security Ownership of Management" appearing in the 1997 Proxy Statement
set forth certain information with respect to the ownership of voting
securities and equity securities of Noble Drilling, and are incorporated herein
by reference.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Not applicable.
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
(a) The following documents are filed as part of this report:
(1) A list of the financial statements filed as a part of this
report is set forth in Item 8 on page 23 and is incorporated
herein by reference.
(2) Financial Statement Schedules:
All schedules are omitted because they are either not applicable
or the required information is shown in the financial statements
or notes thereto.
(3) Exhibits:
The information required by this Item 14(a)(3) is set forth in
the Index to Exhibits accompanying this Annual Report on Form
10-K.
(4) Financial Statements required by Form 11-K for the fiscal year
ended December 31, 1996, with respect to the Noble Drilling
Corporation Thrift Plan (to be filed by amendment).
(b) One report on Form 8-K/A was filed by the Company during the quarter
ended December 31, 1996. A report on Form 8-K/A dated December 30,
1996, which reported the sale of the land drilling assets to Nabors
Industries, Inc., was filed on the date thereof.
48
<PAGE> 51
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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: March 27, 1997 By: JAMES C. DAY
-------------------------------
James C. Day, Chairman, President
and Chief Executive Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed by the following individuals on behalf of the Registrant
and in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE CAPACITY IN WHICH SIGNED DATE
- -------------------- ------------------------------------------------------- -------------
<S> <C> <C>
JAMES C. DAY Chairman, President and Chief March 27, 1997
- -------------------- Executive Officer and Director
James C. Day
BYRON L. WELLIVER Senior Vice President - Finance, Treasurer and March 27, 1997
- -------------------- Controller (Principal Financial and Accounting Officer)
Byron L. Welliver
MICHAEL A. CAWLEY Director March 27, 1997
- --------------------
Michael A. Cawley
LAWRENCE J. CHAZEN Director March 27, 1997
- --------------------
Lawrence J. Chazen
TOMMY C. CRAIGHEAD Director March 27, 1997
- --------------------
Tommy C. Craighead
JAMES L. FISHEL Director March 27, 1997
- --------------------
James L. Fishel
MARC E. LELAND Director March 27, 1997
- --------------------
Marc E. Leland
BILL M. THOMPSON Director March 27, 1997
- --------------------
Bill M. Thompson
</TABLE>
49
<PAGE> 52
INDEX TO EXHIBITS
EXHIBIT
NUMBER EXHIBIT
------ -------------------------------------------------------------------
2.1 Assets Purchase Agreement dated as of August 20, 1993 (the "Western
Assets Purchase Agreement"), between the Registrant and The Western
Company of North America (filed as Exhibit 2.1 to the Registrant's
Registration Statement on Form S-3 (No. 33-67130) and incorporated
herein by reference).
2.2 Agreement dated as of October 7, 1993, among the Registrant, Noble
Drilling (U.S.) Inc., Noble International Limited, The Western Company
of North America and Offshore International Ltd., amending the Western
Assets Purchase Agreement (filed as Exhibit 2.2 to the Registrant's
Form 8-K dated October 15, 1993 and incorporated herein by reference).
2.3 Assets Purchase Agreement dated as of August 20, 1993 (the "Portal
Assets Purchase Agreement"), between the Registrant and Portal Rig
Corporation (filed as Exhibit 2.3 to the Registrant's Registration
Statement on Form S-3 (No. 33-67130) and incorporated herein by
reference).
2.4 Agreement dated as of October 25, 1993, among the Registrant, Noble
(Gulf of Mexico) Inc. and Portal Rig Corporation, amending the Portal
Assets Purchase Agreement (filed as Exhibit 2.5 to the Registrant's
Quarterly Report on Form 10-Q for the three-month period ended
September 30, 1993 and incorporated herein by reference).
2.5 Stock Purchase Agreement dated April 22, 1994 among Joseph E. Beall,
George H. Bruce, Triton Engineering Services Company and the
Registrant (filed as Exhibit 2.1 to the Registrant's Form 8-K dated
May 6, 1994 and incorporated herein by reference).
2.6 Agreement and Plan of Merger dated June 13, 1994 among the Registrant,
Chiles Offshore Corporation and Noble Offshore Corporation (filed as
Appendix I to the joint proxy statement/prospectus of the Registrant
and Chiles Offshore Corporation dated August 12, 1994 constituting
Part I of the Registration Statement on Form S-4 (No. 33-54495) and
incorporated herein by reference).
2.7 Agreement of Sale and Purchase dated as of April 25, 1996 between the
Registrant and Royal Nedlloyd N.V. and Neddrill Holding B.V. (filed as
Exhibit 2.1 to the Registrant's Registration Statement on Form S-3 (No.
333-2927) and incorporated herein by reference).
2.8 Asset Purchase Agreement dated November 15, 1996 by and between the
Registrant, Noble Properties, Inc. and Noble Drilling (Canada) Ltd. and
Nabors Industries, Inc. (filed as Exhibit 2.1 to the Registrant's Form
8-K/A dated December 13, 1996 and incorporated herein by reference).
2.9 Agreement dated December 13, 1996 by and among the Registrant, Noble
Properties, Inc., Noble Drilling (Canada) Ltd., Noble Drilling (U.S.)
Inc., and Noble Drilling Land Limited and Nabors Industries, Inc.,
Nabors Drilling USA, Inc. and Nabors Drilling Limited (filed as
Exhibit 2.2 to the Registrant's Form 8-K dated December 13, 1996 and
incorporated herein by reference).
50
<PAGE> 53
2.10 Asset Purchase Agreement dated as of February 19, 1997 between the
Registrant, Noble Drilling (U.S.) Inc., Noble Offshore Corporation,
Noble Drilling (Mexico) Inc. and NN-1 Limited Partnership and Pride
Petroleum Services, Inc.
3.1 Restated Certificate of Incorporation of the Registrant dated
August 29, 1985 (filed as Exhibit 3.7 to the Registrant's Registration
Statement on Form 10 (No. 0-13857) and incorporated herein by
reference).
3.2 Certificate of Amendment of Restated Certificate of Incorporation of
the Registrant dated May 5, 1987 (filed as Exhibit 4.2 to the
Registrant's Registration Statement on Form S-3 (No. 33-67130) and
incorporated herein by reference).
3.3 Certificate of Amendment of Certificate of Incorporation of the
Registrant dated July 31, 1991 (filed as Exhibit 3.16 to the
Registrant's Annual Report on Form 10-K for the year ended December
31, 1991 and incorporated herein by reference).
3.4 Certificate of Designations of $1.50 Convertible Preferred Stock, par
value of $1.00 per share, of the Registrant, dated as of September 15,
1994 (filed as Exhibit 3.8 to the Registrant's Annual Report on Form
10-K for the year ended December 31, 1994 and incorporated herein by
reference).
3.5 Certificate of Amendment of Certificate of Incorporation of the
Registrant dated September 15, 1994 (filed as Exhibit 3.1 to the
Registrant's Quarterly Report on Form 10-Q for the three-month period
ended March 31, 1995 and incorporated herein by reference).
3.6 Certificate of Designations of Series A Junior Participating Preferred
Stock, par value $1.00 per share, of the Registrant dated as of
June 29, 1995 (filed as Exhibit 3.2 to the Registrant's Quarterly
Report on Form 10-Q for the three-month period ended June 30, 1995 and
incorporated herein by reference).
3.7 Certificate of Elimination of shares of $1.50 Convertible Preferred
Stock of the Registrant dated March 21, 1997.
3.8 Composite copy of the Bylaws of the Registrant as currently in effect
(filed as Exhibit 3.4 to the Registrant's Quarterly Report on Form
10-Q for the three-month period ended June 30, 1995 and incorporated
herein by reference).
4.1 Indenture governing the 9 1/4% Senior Notes Due 2003 (including form
of Note)(filed as Exhibit 4.1 to the Registrant's Quarterly Report on
Form 10-Q for the three-month period ended September 30, 1993 and
incorporated herein by reference).
4.2 Rights Agreement dated as of June 28, 1995 between the Registrant and
Liberty Bank and Trust Company of Oklahoma City, N.A. (filed as
Exhibit 4 to the Registrant's Form 8-K dated June 30, 1995 and
incorporated herein by reference).
51
<PAGE> 54
4.3 Indenture dated as of July 1, 1996 governing the 9 1/8% Senior Notes
due 2006 (including form of Note) (filed as Exhibit 4.1 to the
Registrant's Form 8-K dated July 1, 1996 and incorporated herein by
reference).
10.1 Limited Partnership Agreement between the Registrant and National
Enerdrill Corporation dated as of January 16, 1992 (filed as Exhibit
10.5 to the Registrant's Annual Report on Form 10-K for the year ended
December 31, 1991 and incorporated herein by reference).
10.2* Noble Drilling Corporation 1991 Stock Option and Restricted Stock Plan
(as amended and restated on January 30, 1997, subject to the approval
of stockholders except for Section 9(a)(i)(x)).
10.3* Noble Drilling Corporation 1987 Stock Option Plan (filed as Exhibit
10.7 to the Registrant's Annual Report on Form 10-K for the year ended
December 31, 1986, as amended, and incorporated herein by reference).
10.4* Directors' Option Agreement dated October 29, 1987, between the
Registrant and Michael A. Cawley (filed as Exhibit 10.11 to the
Registrant's Annual Report on Form 10-K for the year ended December
31, 1988 and incorporated herein by reference).
10.5 Amended and Restated Letter of Credit Agreement, dated as of
October 25, 1993, among Portal Rig Corporation, Noble (Gulf of Mexico)
Inc., NationsBank of Texas, N.A., as agent and as one of the "Banks"
thereunder, and Marine Midland Bank, N.A., Bank of America National
Trust and Savings Association, and Norwest Bank Minnesota, National
Association (collectively, the "Banks") (filed as Exhibit 10.1 to the
Registrant's Quarterly Report on Form 10-Q for the three-month period
ended September 30, 1993 and incorporated herein by reference).
10.6 Assignment, Assumption and Amended and Restated Preferred Ship
Mortgage, dated October 25, 1993, by Noble (Gulf of Mexico) Inc. to
the Banks (filed as Exhibit 10.2 to the Registrant's Quarterly Report
on Form 10-Q for the three-month period ended September 30, 1993 and
incorporated herein by reference).
10.7 Security Agreement and Assignment, dated October 25, 1993, by Noble
(Gulf of Mexico) Inc. to the Banks (filed as Exhibit 10.3 to the
Registrant's Quarterly Report on Form 10-Q for the three-month period
ended September 30, 1993 and incorporated herein by reference).
10.8 Noble Support Agreement, dated October 25, 1993, among the Registrant
and the Banks (filed as Exhibit 10.4 to the Registrant's Quarterly
Report on Form 10-Q for the three-month period ended
September 30, 1993 and incorporated herein by reference).
10.9* Noble Drilling Corporation 1992 Nonqualified Stock Option Plan for
Non-Employee Directors (filed as Exhibit 4.1 to the Registrant's
Registration Statement on Form S-8 (No. 33-62394) and incorporated
herein by reference).
10.10 Registration Agreement dated April 22, 1994 between the Registrant and
Joseph E. Beall (filed as Exhibit 10.1 to the Registrant's Form 8-K
dated May 6, 1994 and incorporated herein by reference).
52
<PAGE> 55
10.11 Employment Agreement dated April 22, 1994 between Triton Engineering
Services Company and Joseph E. Beall (filed as Exhibit 10.2 to the
Registrant's Form 8-K dated May 6, 1994 and incorporated herein by
reference).
10.12 Credit Agreement dated as of June 16, 1994 among the Registrant, First
Interstate Bank of Texas, N.A., in its individual capacity and as
agent, and Credit Lyonnais Cayman Island Branch (filed as Exhibit 10.1
to the Registrant's Registration Statement on Form S-4 (No. 33-54495)
and incorporated herein by reference).
10.13 Revolving Credit Note dated June 16, 1994 of the Registrant in the
amount of $12,500,000 in favor of Credit Lyonnais Cayman Island Branch
(filed as Exhibit 10.2 to the Registrant's Registration Statement on
Form S-4 (No. 33-54495) and incorporated herein by reference).
10.14 Revolving Credit Note dated June 16, 1994 of the Registrant in the
amount of $12,500,000 in favor of First Interstate Bank of Texas, N.A.
(filed as Exhibit 10.3 to the Registrant's Registration Statement on
Form S-4 (No. 33-54495) and incorporated herein by reference).
10.15 Guaranty Agreement dated as of June 16, 1994 by and among Noble
Drilling (U.S.) Inc., Noble Drilling (West Africa) Inc. and Noble
Drilling (Mexico) Inc. (filed as Exhibit 10.4 to the Registrant's
Registration Statement on Form S-4 (No. 33-54495) and incorporated
herein by reference).
10.16 Registration Rights Agreement dated as of September 15, 1994 between
the Registrant and P.A.J.W. Corporation (filed as Exhibit 10.1 to the
Registrant's Form 10-Q for the three month period ended September 30,
1994 and incorporated herein by reference).
10.17* Amendment No. 1 to the Noble Drilling Corporation 1992 Nonqualified
Stock Option Plan for Non-Employee Directors dated as of July 28, 1994
(filed as Exhibit 10.44 to the Registrant's Annual Report on Form 10-K
for the year ended December 31, 1994 and incorporated herein by
reference).
10.18 Guarantee dated August 26, 1994 between the Registrant and Hibernia
Management and Development Company Ltd. (filed as Exhibit 10.45 to the
Registrant's Annual Report on Form 10-K for the year ended December
31, 1994 and incorporated herein by reference).
10.19* Noble Drilling Corporation Amended and Restated Thrift Restoration
Plan (filed as Exhibit 10.46 to the Registrant's Annual Report on Form
10-K for the year ended December 31, 1994 and incorporated herein by
reference).
10.20* Noble Drilling Corporation Retirement Restoration Plan dated April 27,
1995 (filed as Exhibit 10.2 to the Registrant's Quarterly Report on
Form 10-Q for the three-month period ended March 31, 1995 and
incorporated herein by reference).
10.21* Noble Drilling Corporation Short-Term Incentive Plan (revised
April 1996).
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<PAGE> 56
10.22 First Amendment dated as of June 30, 1995 to Credit Agreement dated as
of June 16, 1994 among the Registrant, First Interstate Bank of Texas,
N.A., in its individual capacity and as Agent, and Credit Lyonnais
Cayman Island Branch (filed as Exhibit 10.44 to the Registrant's Annual
Report on Form 10-K for the year ended December 31, 1995 and
incorporated herein by reference).
10.23 Second Amendment dated as of February 28, 1996 to Credit Agreement
dated as of June 16, 1994 among the Registrant, First Interstate Bank
of Texas, N.A., in its individual capacity and as Agent, and Credit
Lyonnais Cayman Island Branch (filed as Exhibit 10.45 to the
Registrant's Annual Report on Form 10-K for the year ended December
31, 1995 and incorporated herein by reference).
10.24* Form of Indemnity Agreement entered into between the Registrant and
each of the Registrant's directors and bylaw officers (filed as
Exhibit 10.46 to the Registrant's Annual Report on Form 10-K for the
year ended December 31, 1995 and incorporated herein by reference).
10.25 Registration Rights Agreement dated as of July 1, 1996 between the
Registrant and Royal Nedlloyd N.V.
10.26* Noble Drilling Corporation Equity Compensation Plan for Non-Employee
Directors (filed as Exhibit 10.1 to the Registrant's Quarterly Report
on Form 10-Q for the three-month period ended September 30, 1996 and
incorporated herein by reference).
21.1 Subsidiaries of the Registrant.
23.1 Consent of Price Waterhouse LLP.
27 Financial Data Schedule.
- ---------
* Management contract or compensatory plan or arrangement required to be
filed as an exhibit hereto.
54
<PAGE> 1
EXHIBIT 2.10
================================================================================
ASSET PURCHASE AGREEMENT
by and between
Noble Drilling Corporation,
Noble Drilling (U.S.) Inc.,
Noble Offshore Corporation,
Noble Drilling (Mexico) Inc. and
NN-1 Limited Partnership
and
Pride Petroleum Services, Inc.
February 19, 1997
================================================================================
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
<S> <C>
PARTIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
RECITALS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
ARTICLE I -- CERTAIN DEFINITIONS . . . . . . . . . . . . . . . . . . . . . 1
ARTICLE II -- PURCHASE AND SALE OF ASSETS . . . . . . . . . . . . . . . . . 4
2.1 Assets to be Purchased . . . . . . . . . . . . . . . . . . . 4
2.2 Excluded Assets . . . . . . . . . . . . . . . . . . . . . . 5
2.3 Assumed Liabilities . . . . . . . . . . . . . . . . . . . . 5
2.4 Limitation on Assignments . . . . . . . . . . . . . . . . . 6
2.5 Delivery of Records . . . . . . . . . . . . . . . . . . . . 6
ARTICLE III -- PURCHASE PRICE . . . . . . . . . . . . . . . . . . . . . . . 7
3.1 Consideration for the Purchased Assets . . . . . . . . . . . 7
3.2 Buyer's Default . . . . . . . . . . . . . . . . . . . . . . 7
3.3 Return of Deposit . . . . . . . . . . . . . . . . . . . . . 8
3.4 Allocation of Purchase Price . . . . . . . . . . . . . . . . 8
ARTICLE IV -- THE CLOSING . . . . . . . . . . . . . . . . . . . . . . . . . 8
4.1 Time and Place of Closing . . . . . . . . . . . . . . . . . 8
4.2 Deliveries by Parent and Sellers . . . . . . . . . . . . . . 8
4.3 Deliveries by Buyer . . . . . . . . . . . . . . . . . . . . 9
ARTICLE V -- REPRESENTATIONS AND WARRANTIES OF SELLERS . . . . . . . . . . 9
5.1 Organization and Existence . . . . . . . . . . . . . . . . . 9
5.2 Authority; Etc . . . . . . . . . . . . . . . . . . . . . . . 9
5.3 No Violations . . . . . . . . . . . . . . . . . . . . . . . 10
5.4 Ownership of Rigs . . . . . . . . . . . . . . . . . . . . . 10
5.5 Inventory . . . . . . . . . . . . . . . . . . . . . . . . . 11
5.6 Contracts . . . . . . . . . . . . . . . . . . . . . . . . . 11
5.7 Litigation . . . . . . . . . . . . . . . . . . . . . . . . . 11
5.8 Governmental Approval . . . . . . . . . . . . . . . . . . . 12
5.9 Compliance With Laws . . . . . . . . . . . . . . . . . . . . 12
5.10 Reserved . . . . . . . . . . . . . . . . . . . . . . . . . . 12
5.11 Rig Classifications and Certifications . . . . . . . . . . . 12
5.12 Environmental Matters . . . . . . . . . . . . . . . . . . . 12
5.13 No Brokers . . . . . . . . . . . . . . . . . . . . . . . . . 13
5.14 Decrees, etc. . . . . . . . . . . . . . . . . . . . . . . . 13
5.15 Performance Bonds; Letters of Credit . . . . . . . . . . . . 13
ARTICLE VI -- REPRESENTATIONS AND WARRANTIES OF PARENT . . . . . . . . . . 13
6.1 Organization and Existence . . . . . . . . . . . . . . . . . 13
</TABLE>
i
<PAGE> 3
<TABLE>
<S> <C>
6.2 Authority; Etc . . . . . . . . . . . . . . . . . . . . . . . 14
6.3 No Violations . . . . . . . . . . . . . . . . . . . . . . . 14
6.4 Governmental Approval . . . . . . . . . . . . . . . . . . . 14
6.5 Litigation . . . . . . . . . . . . . . . . . . . . . . . . . 15
6.6 No Brokers . . . . . . . . . . . . . . . . . . . . . . . . . 15
6.7 Employees and Related Matters . . . . . . . . . . . . . . . 15
ARTICLE VII -- REPRESENTATIONS AND WARRANTIES OF BUYER . . . . . . . . . . 15
7.1 Organization and Existence . . . . . . . . . . . . . . . . . 15
7.2 Authority; Etc . . . . . . . . . . . . . . . . . . . . . . . 15
7.3 No Violations . . . . . . . . . . . . . . . . . . . . . . . 16
7.4 Inspections . . . . . . . . . . . . . . . . . . . . . . . . 16
7.5 Litigation . . . . . . . . . . . . . . . . . . . . . . . . . 16
7.6 Governmental Approval . . . . . . . . . . . . . . . . . . . 17
7.7 No Brokers . . . . . . . . . . . . . . . . . . . . . . . . . 17
7.8 Certain Knowledge Regarding Assignment of Contracts . . . . 17
7.9 Registration Statement . . . . . . . . . . . . . . . . . . . 17
ARTICLE VIII -- CONDITIONS TO THE OBLIGATIONS OF
PARENT AND SELLERS . . . . . . . . . . . . . . . . . . 17
8.1 Accuracy of Representations and Warranties . . . . . . . . . 17
8.2 Covenants and Agreements Performed . . . . . . . . . . . . . 17
8.3 Officer's Certificate . . . . . . . . . . . . . . . . . . . 17
8.4 Legal Opinion . . . . . . . . . . . . . . . . . . . . . . . 18
8.5 HSR Act . . . . . . . . . . . . . . . . . . . . . . . . . . 18
ARTICLE IX -- CONDITIONS TO THE OBLIGATIONS OF BUYER . . . . . . . . . . . 18
9.1 Accuracy of Representations and Warranties . . . . . . . . . 18
9.2 Covenants and Agreements Performed . . . . . . . . . . . . . 18
9.3 Officer's Certificate . . . . . . . . . . . . . . . . . . . 18
9.4 Legal Opinion . . . . . . . . . . . . . . . . . . . . . . . 19
9.5 HSR Act . . . . . . . . . . . . . . . . . . . . . . . . . . 19
9.6 Financing by Buyer . . . . . . . . . . . . . . . . . . . . . 19
ARTICLE X -- COVENANTS AND AGREEMENTS OF THE PARTIES BEFORE,
RELATING TO AND SUBSEQUENT TO THE CLOSING . . . . . . . . 19
10.1 Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . 19
10.2 HSR Act Compliance . . . . . . . . . . . . . . . . . . . . . 19
10.3 Access . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
10.4 Conduct of Business and Preservation of Assets . . . . . . . 20
10.5 Transition of Business Operations . . . . . . . . . . . . . 20
10.6 Litigation . . . . . . . . . . . . . . . . . . . . . . . . . 20
10.7 Certain Taxes . . . . . . . . . . . . . . . . . . . . . . . 21
10.8 Actions with Respect to Closing . . . . . . . . . . . . . . 21
10.9 Public Statements . . . . . . . . . . . . . . . . . . . . . 21
10.10 Books and Records . . . . . . . . . . . . . . . . . . . . . 21
</TABLE>
ii
<PAGE> 4
<TABLE>
<S> <C>
10.11 Rig Loss . . . . . . . . . . . . . . . . . . . . . . . . . . 22
10.12 Use of Names . . . . . . . . . . . . . . . . . . . . . . . . 22
10.13 Continued Effectiveness of Representations and Warranties . 22
10.14 Post-Closing Collection, Payment and Administrative Procedures 22
10.15 Action of Buyer Regarding Financing . . . . . . . . . . . . 23
10.16 Certain Financial Statements . . . . . . . . . . . . . . . . 23
10.17 Import Duties; Performance Bonds . . . . . . . . . . . . . . 23
10.18 Availability of Rigs to Triton Engineering Services Company 24
10.19 Acquisition Proposal . . . . . . . . . . . . . . . . . . . . 24
ARTICLE XI -- EMPLOYEES . . . . . . . . . . . . . . . . . . . . . . . . . . 25
11.1 Employees . . . . . . . . . . . . . . . . . . . . . . . . . 25
11.2 Non-Solicitation of Certain Employees . . . . . . . . . . . 26
ARTICLE XII -- TERMINATION . . . . . . . . . . . . . . . . . . . . . . . . 26
12.1 Termination . . . . . . . . . . . . . . . . . . . . . . . . 26
12.2 Effect of Termination . . . . . . . . . . . . . . . . . . . 27
ARTICLE XIII -- EXTENT AND SURVIVAL OF REPRESENTATIONS,
WARRANTIES, COVENANTS AND AGREEMENTS . . . . . . . . . 28
13.1 Scope of Representations of Sellers . . . . . . . . . . . . 28
13.2 Indemnification by Parent . . . . . . . . . . . . . . . . . 28
13.3 Indemnification by Buyer . . . . . . . . . . . . . . . . . . 29
13.4 Indemnification Procedure . . . . . . . . . . . . . . . . . 29
13.5 Survival . . . . . . . . . . . . . . . . . . . . . . . . . . 30
13.6 Tax Benefits; Insurance Proceeds . . . . . . . . . . . . . . 30
13.7 Applicability of Indemnification Obligation . . . . . . . . 30
ARTICLE XIV -- PARENT GUARANTEE . . . . . . . . . . . . . . . . . . . . . . 30
ARTICLE XV -- MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . 31
15.1 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . 31
15.2 Entire Agreement . . . . . . . . . . . . . . . . . . . . . . 32
15.3 Amendments and Waiver; Rights and Remedies . . . . . . . . . 32
15.4 Governing Law . . . . . . . . . . . . . . . . . . . . . . . 32
15.5 Binding Effect; Assignment . . . . . . . . . . . . . . . . . 32
15.6 Counterparts . . . . . . . . . . . . . . . . . . . . . . . . 33
15.7 References . . . . . . . . . . . . . . . . . . . . . . . . . 33
15.8 Severability of Provisions . . . . . . . . . . . . . . . . . 33
15.9 Gender . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
15.10 Descriptive Headings . . . . . . . . . . . . . . . . . . . . 33
</TABLE>
iii
<PAGE> 5
ASSET PURCHASE AGREEMENT
This ASSET PURCHASE AGREEMENT (this "Agreement"), dated as of February
19, 1997, is by and between Pride Petroleum Services, Inc., a Louisiana
corporation ("Buyer"), and Noble Drilling Corporation, a Delaware corporation
("Parent"), Noble Drilling (U.S.) Inc., a Delaware corporation ("NDUS"), Noble
Offshore Corporation, a Delaware corporation ("NOC"), Noble Drilling (Mexico)
Inc., a Delaware corporation ("NDMEX"), and NN-1 Limited Partnership, a Texas
limited partnership ("NN-1") (NDUS, NOC, NDMEX and NN-1 are sometimes referred
to herein, collectively, as "Sellers" and, individually, as a "Seller");
W I T N E S S E T H:
WHEREAS, Buyer desires to purchase the Purchased Assets (as hereinafter
defined) from Sellers; and
WHEREAS, Sellers desire to sell the Purchased Assets to Buyer in
exchange for the payment by Buyer of the Purchase Price (as hereinafter
defined) and the assumption by Buyer of the Assumed Liabilities (as hereinafter
defined); and
WHEREAS, Parent desires to take such actions as are necessary or
appropriate to cause Sellers to effect the transactions above described in this
preamble and, in connection therewith, to guarantee the agreements and
obligations of Sellers in and under this Agreement;
NOW, THEREFORE, in consideration of the premises and the mutual terms,
covenants and conditions herein contained, and intending to be legally bound
hereby, the parties hereto hereby agree as follows:
ARTICLE I
CERTAIN DEFINITIONS
As used in this Agreement, the following terms have the following
respective meanings:
"Acquisition Proposal" has the meaning specified in Section 10.19.
"Affiliate" means, as to the person specified, any person controlling,
controlled by or under common control with such person, with the concept of
control in such context meaning the possession, directly or indirectly, of the
power to direct or cause the direction of the management and policies of
another, whether through the ownership of voting securities, by contract or
otherwise.
"Agreement" has the meaning specified in the preamble.
"Applicable Environmental Laws" has the meaning specified in Section
5.12(b).
"Applicable Laws" has the meaning specified in Section 5.9.
"Assumed Liabilities" has the meaning specified in Section 2.3.
1
<PAGE> 6
"Best Efforts" means a party's best efforts in accordance with
reasonable commercial practice and without the incurrence of unreasonable
expense.
"Business Day" means a day on which national banks are generally open
for the transaction of business in Houston, Texas.
"Buyer" has the meaning specified in the preamble.
"Buyer Basket" has the meaning specified in Section 13.2.
"Buyer Designee" has the meaning specified in Section 15.5(b)(ii).
"Claims" has the meaning specified in Section 13.2.
"Closing" means the consummation of the transactions contemplated by
Article II of this Agreement in accordance with the terms and upon the
conditions set forth in Article II.
"Closing Date" has the meaning specified in Section 4.1.
"Code" means the Internal Revenue Code of 1986, as amended.
"Consent Required Contract" has the meaning specified in Section 2.4.
"Deposit" has the meaning specified in Section 3.1(a).
"Drilling Contracts" has the meaning specified in Section 2.1(e)(i).
"Employer" and "Employers" have the meanings specified in Section
11.1(c).
"Employment Arrangements" has the meaning specified in Section 11.1(d).
"Encumbrances" means liens, charges, pledges, options, mortgages,
security interests, claims, title defects and other encumbrances of every type
and description, whether imposed by law, agreement, understanding or otherwise.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"ERISA Affiliate" has the meaning specified in Section 6.7.
"Escrow Agent" has the meaning specified in Section 3.1(a).
"Escrow Agreement" has the meaning specified in Section 3.1(a).
"Escrow Funds" has the meaning specified in Section 3.1(a).
"Excluded Assets" has the meaning specified in Section 2.2.
2
<PAGE> 7
"General Assignment" has the meaning specified in Section 4.2(a).
"Governmental Entity" means any court or tribunal in any jurisdiction
(domestic or foreign) or any public, governmental or regulatory body, agency,
department, commission, board, bureau or other authority or instrumentality
(domestic or foreign).
"hazardous material" has the meaning specified in Section 5.12(b).
"HSR Act" means the Hart-Scott-Rodino Antitrust Improvements Act of
1976, as amended, and the rules and regulations promulgated thereunder.
"Indemnified Party" has the meaning specified in Section 13.4.
"Indemnifying Party" has the meaning specified in Section 13.4.
"Inventory" has the meaning specified in Section 2.1(c).
"NDMEX" has the meaning specified in the preamble.
"NDUS" has the meaning specified in the preamble.
"NN-1" has the meaning specified in the preamble.
"NN-1 Partner's Consent" has the meaning specified in Section 5.2.
"NOC" has the meaning specified in the preamble.
"Nonassigned Contract" has the meaning specified in Section 2.4.
"Other Contracts" has the meaning specified in Section 2.1(e)(ii).
"Parent" has the meaning specified in the preamble.
"PEMEX Contracts" has the meaning specified in Section 10.18(a).
"Permits" has the meaning specified in Section 2.1(d)(ii).
"Permitted Encumbrances" means (i) Encumbrances for taxes, assessments
and governmental charges not yet due and payable or the validity of which are
being contested in good faith by appropriate proceedings; (ii) statutory liens
arising in the ordinary course of business relating to obligations as to which
there is no default on the part of Parent or Sellers, excluding any mortgage;
(iii) the Drilling Contracts and Other Contracts; (iv) outstanding
recommendations to class against any of the Rigs; and (v) any other
Encumbrances which in the aggregate do not exceed $200,000; provided, however,
that at the Closing "Permitted Encumbrances" shall not include any Encumbrances
for taxes, assessments or governmental charges filed of record against the
Purchased Assets, or statutory liens filed of record against
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the Purchased Assets, unless any such Encumbrances are being diligently
contested in good faith by appropriate proceedings.
"Proceedings" means all proceedings, actions, claims, suits,
investigations and inquiries by or before any arbitrator or Governmental
Entity.
"Purchased Assets" has the meaning specified in Section 2.1.
"Purchase Price" shall mean $265,000,000.
"Registration Statement" has the meaning specified in Section 7.9.
"Retained Employees" has the meaning specified in Section 11.1(b).
"Richardson Hull" has the meaning specified in Section 2.1(b).
"Rigs" has the meaning specified in Section 2.1(b).
"Securities Act" has the meaning specified in Section 7.9.
"Seller Basket" has the meaning specified in Section 13.3.
"Seller Designee" has the meaning specified in Section 15.5(b)(i).
"Seller" and "Sellers" have the meanings specified in the preamble.
"Taxes" has the meaning specified in Section 10.7.
"Triton" has the meaning specified in Section 10.18(a).
"Triton Contracts" has the meaning specified in Section 10.18(a).
ARTICLE II
PURCHASE AND SALE OF ASSETS
2.1 Assets to be Purchased. Upon the terms and subject to the
conditions set forth in this Agreement, at the Closing, Sellers agree to sell,
assign, transfer, deliver and convey to Buyer, and Buyer agrees to purchase,
the following (collectively, the "Purchased Assets"):
(a) the 12 mat supported jackup drilling rigs described on Schedule
2.1(a), of which the Cecil Forbes is "cold-stacked";
(b) the hull from the former mat supported jackup drilling rig, Linn
Richardson, which has become a constructive total loss and no longer has any
drilling machinery or other equipment onboard or associated therewith (the
"Richardson Hull", and, together with the mat supported jackup drilling rigs
described in Section 2.1(a), collectively referred to herein as the "Rigs");
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(c) the stocks owned by Sellers or any of their Affiliates described
on Schedule 2.1(c) (collectively, "Inventory"), as such Inventory may be
reduced through consumption thereof, or increased through replacement thereof
or addition thereto, in the ordinary course of the maintenance and operation of
the Rigs through the Closing Date;
(d) the following tangible and intangible assets used or held for use
in connection with the ownership, maintenance and operation of the Rigs, to the
extent assignable by law and Sellers or their Affiliates have the right to
assign and transfer such assets:
(i) all records to be delivered to Buyer pursuant to Section
2.5; and
(ii) the certificates, licenses, permits, consents, operating
authorities, orders, exemptions, franchises, approvals, registrations
and other authorizations and applications therefor specifically
associated with the maintenance and operation of a Rig and listed on
Schedule 2.1(d)(ii) hereto ("Permits"); and
(e) the benefit and burden subsequent to the Closing Date of:
(i) all drilling contracts and any amendments thereto for the
employment of the Rigs in effect on the Closing Date (the "Drilling
Contracts"), including without limitation the Drilling Contracts
identified on Schedule 2.1(e)(i) hereto in effect on the Closing Date;
and
(ii) all other contracts to which Sellers or any of their
Affiliates is a party relating to the ownership, maintenance and
operation of the Rigs in effect on the Closing Date and described on
Schedule 2.1(e)(ii) (the "Other Contracts").
2.2 Excluded Assets. The Purchased Assets to be transferred by
Sellers to Buyer hereunder shall include only those described or referred to in
Section 2.1, and no other assets or properties of Sellers shall be transferred
to Buyer hereunder. Without limiting the generality of the preceding sentence,
the Purchased Assets shall not include (i) Parent's subsidiaries, (ii) cash,
accounts receivable, prepaid expenses and deposits, (iii) the blowout preventer
(and related BOP handling equipment) currently installed on the NN-1, it being
understood that the blowout preventer shown on Schedule 2.1(a) for the NN-1
will be installed therefor, (iv) equipment and stores owned by third-party
suppliers (such as catering consumables, cement units or logging equipment) or
(v) claims and rights under contracts not assigned to and assumed by Buyer
hereunder and, in the case of contracts that are assigned to and assumed by
Buyer, claims and rights thereunder to the extent, but only to the extent, that
such claims and rights relate to the ownership or operation of the Purchased
Assets prior to the Closing, including, without limitation, claims for
reimbursements, day, footage or turnkey rates, lost equipment, indemnity or
escalation of fees that relate to periods prior to the Closing Date, whether or
not billed on or before the Closing Date (collectively, the "Excluded Assets").
2.3 Assumed Liabilities. As of the Closing Date, Buyer shall not
assume or otherwise be obligated for any obligations of Parent or Sellers or
their Affiliates except for all obligations under the Drilling Contracts and
Other Contracts being assumed by Buyer to the extent, but only to the extent,
that such obligations relate to the conduct of the ownership or operation of
the
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Purchased Assets after the Closing, but, excluding accounts payable and accrued
liabilities for property received by Parent or any Seller or for services
performed, on or prior to the Closing (collectively, the "Assumed
Liabilities"), which Drilling Contracts and Other Contracts Buyer shall assume
and thereafter perform.
2.4 Limitation on Assignments. Notwithstanding any other provision
hereof, this Agreement shall not constitute nor require an assignment to Buyer
of any Drilling Contract, Other Contract or Permit if an attempted assignment
of the same without the consent of any party would constitute a breach thereof
or a violation of any law or any judgment, decree, order, writ, injunction,
rule or regulation of any Governmental Entity unless and until such consent
shall have been obtained. In the case of any such Drilling Contract, Other
Contract or Permit that cannot be effectively transferred to Buyer without such
consent (a "Consent Required Contract"), Sellers agree that between the date
hereof and the Closing Date they will use their Best Efforts to obtain or cause
to be obtained the necessary consents to the transfer of any Consent Required
Contract. Buyer agrees to cooperate and to cause any Buyer Designee to
cooperate with Sellers in obtaining such consents and to enter into such
arrangement of assumption as may be reasonably requested by Sellers or the
other contracting party under a Consent Required Contract. In the event that
Sellers shall have failed prior to the Closing Date to obtain consents to the
transfer of any Consent Required Contract, the terms of this Section 2.4 shall
govern the transfer of the benefits of each such contract. Sellers and Buyer
shall use their Best Efforts after the Closing Date to obtain any required
consent to the assignment to, and assumption by, Buyer of each Consent Required
Contract that is not transferred to Buyer at the Closing (a "Nonassigned
Contract"). Sellers, or a Seller Designee, and Buyer, or a Buyer Designee,
shall enter into an agreement substantially in the form of that attached hereto
as Exhibit 2.4 on the Closing Date with respect to each Nonassigned Contract
providing that until the rights and obligations of Sellers thereunder are
transferred to or assumed by Buyer, or, if earlier, until termination of such
Nonassigned Contract, Sellers shall continue to perform their obligations
thereunder and Buyer shall provide such assistance, at the sole expense of
Buyer, as Sellers may reasonably request for such purpose, including, without
limitation, the use of personnel and assets (by lease or otherwise) of Buyer
and its Affiliates of the type and quantity that Sellers would have used to
perform such Nonassigned Contract had the transactions contemplated by this
Agreement not been consummated. Such agreement shall also provide that in
consideration of the provision of such assistance, Sellers shall, promptly
after payment of any amounts to Sellers by the other party to a Nonassigned
Contract, pay such amounts to Buyer after subtracting therefrom the costs and
expenses incurred by Sellers as a result of Sellers' performance of the
Nonassigned Contract.
2.5 Delivery of Records.
(a) Buyer shall be entitled to the records physically located on the
Rigs on the Closing Date and relevant to the Rigs.
(b) As promptly following the Closing as practicable, Sellers shall
deliver or cause to be delivered to Buyer at the offices where such records are
located or such other location as mutually agreed, a copy of the technical
records described on Schedule 2.5(b) in the possession of Sellers or their
Affiliates related to the Rigs or the Inventory, and that are not physically
located on the Rigs.
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(c) Each Seller shall be entitled to retain all originals of its
corporate, financial, accounting, legal, tax and audit records.
ARTICLE III
PURCHASE PRICE
3.1 Consideration for the Purchased Assets.
(a) Concurrently with the execution and delivery of this Agreement,
Buyer, Parent and Southwest Bank of Texas, N.A. (the "Escrow Agent") have
executed and delivered the escrow agreement among Buyer, Parent and the Escrow
Agent (the "Escrow Agreement"), a copy of which is attached as Exhibit 3.1(a),
and Buyer has delivered to the Escrow Agent an amount in cash equal to
$10,000,000. Buyer shall deliver an additional $10,000,000 to the Escrow Agent
by no later than February 21, 1997 (such $10,000,000, together with the
$10,000,000 delivered concurrently with the execution and delivery of this
Agreement, is referred to herein as the "Escrow Funds"). Buyer, Parent and
Sellers agree that the Escrow Agent shall hold and deliver the Escrow Funds in
accordance with the terms and conditions set forth in the Escrow Agreement.
Buyer shall have the right at any time to substitute on a dollar for dollar
basis an irrevocable letter of credit in favor of Parent (drawn on a bank and
containing terms and conditions satisfactory to Parent) for all or a part of
the Escrow Funds. For purposes of this Agreement, any such letter of credit,
together with the Escrow Funds, if any, held by the Escrow Agent shall be
referred to herein as the "Deposit".
(b) At the Closing, (i) Buyer shall pay to Parent and Sellers the
Purchase Price by delivering to Sellers the amount of $265,000,000 in
immediately available funds by confirmed wire transfer to a bank account or
accounts to be designated by Parent (such designation to occur no later than
the second business day prior to the Closing Date), and (ii) Parent shall
cooperate with Buyer to (y) cause the Escrow Agent to deliver the Escrow Funds
to Buyer, in accordance with the Escrow Agreement, and (z) release any letter
of credit constituting part of the Deposit.
(c) As additional consideration for the Purchased Assets, the Buyer
shall assume at Closing and shall thereafter perform the Assumed Liabilities.
3.2 Buyer's Default. Parent shall be entitled to receive the
Deposit, as liquidated damages and not as a penalty, without right on the part
of Buyer to a return of any part thereof if the Closing
(i) does not occur on the Closing Date by reason of Buyer's
default under the terms of this Agreement; or
(ii) does not occur by June 30, 1997 and Parent and Sellers
have performed their covenants set forth in Section 10.2, unless Buyer
has performed its covenants set forth in Section 10.2 and the sole
reason the Closing has not occurred by such date is that the conditions
in Sections 8.5 and 9.5 have not been satisfied;
provided, however, that Parent and Sellers must show themselves then able and
willing to satisfy the conditions set forth in Section 9.1, 9.2, 9.3 and 9.4.
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Buyer shall be deemed in default for the purpose of this Section 3.2 if
Buyer (i) shall have been unable to satisfy any of the conditions set forth in
Sections 8.1, 8.2, 8.3, 8.4 or 9.6, or (ii) shall have failed to perform any of
Buyer's material covenants of this Agreement or have been in material and
willful breach of this Agreement, including by not delivering or having
insufficient funds to deliver the Purchase Price. Notwithstanding anything to
the contrary contained in this Agreement, if the Closing does not occur on the
Closing Date or there is no Closing by June 30, 1997 by reason of Buyer's
default under the terms of the immediately preceding sentence, Parent and
Sellers' sole and exclusive remedy against Buyer and its Affiliates shall be to
receive the Deposit, which the parties stipulate shall be liquidated damages
and not a penalty.
3.3 Return of Deposit. In the event the Closing shall not occur and
Parent is not entitled to receive the Deposit pursuant to Section 3.2, the
Escrow Funds shall be returned to Buyer in the manner specified in the Escrow
Agreement and the letter of credit, if any, constituting part of the Deposit
shall be released to Buyer.
3.4 Allocation of Purchase Price. The Purchase Price shall be
allocated among the Purchased Assets in the manner set forth on Schedule 3.4.
After the Closing, Parent and Buyer shall cooperate with each other in the
preparation, execution and filing of (i) all information returns and
supplements thereto required to be filed with the Internal Revenue Service by
the parties under Section 1060 of the Code and the Treasury Regulations
promulgated thereunder relating to the allocation of the Purchase Price and
(ii) all similar filings required to be filed with respect to the transactions
contemplated by this Agreement with the Internal Revenue Service and other
appropriate taxing authorities.
ARTICLE IV
THE CLOSING
4.1 Time and Place of Closing. The Closing shall take place (i) at
the offices of Thompson & Knight, P.C., 1700 Texas Commerce Tower, 600 Travis
Street, Houston, Texas 77002, at 9:00 a.m., local time, on the later of (y)
June 3, 1997 or (z) the third Business Day following the satisfaction of the
conditions to the obligations of the parties set forth in Sections 8.5 and 9.5,
or (ii) at such other place, date or time as the parties may agree in writing.
The date on which the Closing is required to take place is herein referred to
as the "Closing Date."
4.2 Deliveries by Parent and Sellers. At the Closing, Parent and
Sellers shall deliver the following to Buyer:
(a) a duly executed General Conveyance, Assignment and Bill of Sale
and Transfer and Assumption of Liabilities (the "General Assignment") in the
form of Exhibit 4.2(a), together with such other bills of sale, assignments and
other instruments of transfer, assignment and conveyance as Buyer shall
reasonably request to vest in Buyer or a Buyer Designee good and marketable
title to the Purchased Assets;
(b) instructions in accordance with the Escrow Agreement;
(c) copies of any consents obtained as contemplated by Section 2.4;
and
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(d) the officer's certificates and opinion of counsel contemplated by
Sections 9.3 and 9.4, respectively.
4.3 Deliveries by Buyer. At the Closing, Buyer shall deliver the
following to Parent and Sellers:
(a) the Purchase Price;
(b) a duly executed General Assignment and such other instruments of
transfer and assumption as Parent shall reasonably request in order to cause an
effective assignment to and assumption by Buyer of the Drilling Contracts and
Other Contracts;
(c) instructions in accordance with the Escrow Agreement;
(d) the officer's certificate and opinion of counsel contemplated by
Sections 8.3 and 8.4, respectively; and
(e) the Triton Contracts, duly executed.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF SELLERS
Each Seller hereby represents and warrants, with respect to itself and
the Purchased Assets owned by it, to Buyer as follows:
5.1 Organization and Existence.
(a) Seller, if a corporation, is duly incorporated, validly existing
and in good standing under the laws of the state of its incorporation, with all
necessary corporate power and authority to own the Purchased Assets and to
carry on its business as such business is currently conducted.
(b) Seller, if a partnership, is duly formed, validly existing and in
good standing under the laws of the state of its formation, with all necessary
partnership power and authority to own the Purchased Assets and to carry on its
business as such business is currently conducted.
(c) Seller is duly qualified or licensed to transact business as a
foreign corporation or partnership, as the case may be, and is in good standing
in all jurisdictions in which the character of the Purchased Assets or the
nature of the business currently conducted by it requires it so to be qualified
or licensed unless the failure so to qualify or be licensed would not
reasonably be expected to have a material adverse effect on the business of
Parent and Sellers taken as a whole or create an Encumbrance on any of the
Purchased Assets, except for a Permitted Encumbrance.
5.2 Authority; Etc. Seller has all necessary corporate or
partnership, as the case may be, power and authority to execute and deliver
this Agreement and all agreements, instruments and documents to be executed and
delivered hereunder by Seller, to consummate the transactions
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contemplated hereby and to perform all terms and conditions hereof to be
performed by it, except that Parent, as general partner of NN-1, must obtain
the consent of the sole limited partner in NN-1 to the sale of the Rig, NN-1
(the "NN-1 Partner's Consent"). The execution and delivery of this Agreement
by Seller and all agreements, instruments and documents to be executed and
delivered by Seller hereunder, the performance by Seller of all the terms and
conditions hereof to be performed by it and the consummation of the
transactions contemplated hereby have been duly authorized and approved by all
necessary corporate or partnership proceedings of Seller, and no other
corporate or partnership proceedings of Seller are necessary with respect
thereto, except that (i) stockholder approval may be necessary in the case of
NDUS, NOC and NDMEX and (ii) Parent must obtain the NN-1 Partner's Consent,
which approvals and consent will be obtained, if necessary, prior to the
Closing Date. All persons who have executed and delivered this Agreement, and
all persons who will execute and deliver the other agreements, documents and
instruments to be executed and delivered by Seller hereunder, have been duly
authorized to do so by all necessary actions on the part of Seller. This
Agreement constitutes, and each other agreement or instrument to be executed by
Seller hereunder, when executed and delivered by Seller, will constitute, the
legal, valid and binding obligation of Seller, enforceable against it in
accordance with its terms, except to the extent the enforceability hereof and
thereof may be limited by bankruptcy, insolvency, moratorium, reorganization or
other laws relating to or affecting creditors' rights generally or by general
principles of equity (regardless of whether such enforceability is considered
in a proceeding in equity or at law).
5.3 No Violations. The execution and delivery of this Agreement by
Seller, the fulfillment of and compliance by it with the terms and conditions
hereof and the consummation by it of the transactions contemplated hereby will
not:
(a) violate any of the terms of the certificate of incorporation or
bylaws (or the equivalent), or partnership agreement, as appropriate, of
Seller;
(b) (i) except for the consents to assignment referred to in
Section 2.4, result in a breach of or constitute a default under (whether with
notice or the lapse of time or both) any note, bond, mortgage, loan agreement,
indenture or other instrument evidencing borrowed money to which Seller is a
party or by which Seller is bound or to which any of the Purchased Assets is
subject which breach or default would reasonably be expected to have a material
adverse effect on the ownership or operation of the Purchased Assets, or (ii)
result in the creation of any Encumbrance on any of the Purchased Assets, or
otherwise give any person the right to terminate any Drilling Contract, Permit
or Other Contract assumed by Buyer; or
(c) to Seller's knowledge, violate any provision of any law, statute,
rule or administrative regulation or any judgment, order, injunction or decree
of any Governmental Entity applicable to or binding upon Seller, or its assets,
except that no representation is made as to the application of any United
States antitrust law or regulation to the transactions contemplated by this
Agreement, which violation with respect to the matters specified in clauses (b)
and (c) of this Section 5.3 would reasonably be expected to have a material
adverse effect on the ownership or operation of the Purchased Assets taken as a
whole.
5.4 Ownership of Rigs. Seller (other than NN-1) owns and, upon the
execution and delivery of the General Assignment at Closing by each Seller
(including NN-1), Buyer will own,
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good and marketable title to the Rigs, free and clear of all Encumbrances
except for Permitted Encumbrances.
5.5 Inventory. Seller owns, and upon Seller's execution and delivery
of the General Assignment, Buyer will own, good and marketable title to the
Inventory reflected on Schedule 2.1(c), as such Inventory may be reduced
through the consumption thereof, or increased through replacement thereof or
additions thereto, in the ordinary course of the maintenance and operation of
the Rigs through the Closing Date, free and clear of all Encumbrances except
for Permitted Encumbrances.
5.6 Contracts. Seller has made available to Buyer for review
complete and correct copies of all the Drilling Contracts and Other Contracts.
Except as separately identified on Schedule 2.1(f)(i) or 2.1(f)(ii), each of
the Drilling Contracts and Other Contracts may be transferred to Buyer without
the consent of any person. All the Drilling Contracts and Other Contracts are
valid, binding and in full force and effect against Seller or its Affiliates,
as the case may be, and, to Seller's knowledge, are valid, binding and in full
force and effect against the other parties thereto. Except as set forth on
Schedule 5.6, neither Seller nor any of its Affiliates is in default in any
material respect, and no notice of alleged default has been received by Seller
or any of its Affiliates, under any of the Drilling Contracts and Other
Contracts, no other party thereto is, to the knowledge of Seller or its
Affiliates, in default thereunder in any material respect, and, to the
knowledge of Seller or its Affiliates, there exists no condition or event
which, with or without notice or lapse of time or both, would constitute a
material default under any of the Drilling Contracts and Other Contracts by
Seller, any of its Affiliates or any other party thereto.
5.7 Litigation.
(a) Except for litigation adequately covered by insurance or
otherwise described on Schedule 5.7(a), there is no litigation and there are no
Proceedings, suits or investigations pending, instituted or, to the knowledge
of Seller, overtly threatened against any of the Purchased Assets or against
Seller or any of its Affiliates and relating to the ownership and operation of
the Purchased Assets before any Governmental Entity applicable to or binding
upon Seller or any of the Purchased Assets that (i) seeks permanent injunctive
relief, (ii) if adversely determined would delay or prevent the consummation of
the transactions contemplated by this Agreement or (iii) would reasonably be
expected to have a material adverse effect on the ownership, maintenance or
operation of the Purchased Assets taken as a whole.
(b) Except for matters described on Schedule 5.7(b), neither Seller
nor any of its properties or assets is subject to any judicial or
administrative judgment, order, decree or restraint currently affecting the
ownership, maintenance and operation of the Purchased Assets in a manner that
is material and adverse to the ownership, maintenance and operation of the
Purchased Assets taken as a whole. Except as referred to on Schedule 5.7(b),
Seller has not received any notifications or charges in writing from any
Governmental Entity involving alleged violations of or alleged obligations to
remediate under occupational safety and health or water quality or other
environmental matters that materially and adversely affect the conduct by
Seller of the ownership, maintenance and operation of the Purchased Assets
taken as a whole or that have not been finally dismissed or otherwise disposed
of.
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5.8 Governmental Approval. Except for required filings under the HSR
Act and as set forth on Schedule 5.8, no consent, approval, waiver, order or
authorization of, or registration, declaration or filing with, any Governmental
Entity is required to be obtained or made in connection with the execution and
delivery of this Agreement by Seller or the consummation by Seller of the
transactions contemplated hereby, the failure of which to obtain would have a
material adverse effect on the ownership, maintenance and operation of the
Purchased Assets taken as a whole.
5.9 Compliance With Laws. Except as set forth on Schedule 5.9,
Seller is not to its knowledge in violation of or in default under any
applicable law, rule, regulation, code, governmental determination, order,
governmental certification requirement or other public limitation, other than
Applicable Environmental Laws (collectively, "Applicable Laws"), relating to
the ownership, maintenance or operation of the Purchased Assets, which
violation or default materially and adversely affects Seller's ownership,
maintenance or operation (as presently conducted) of the Purchased Assets, and
no claim is pending or, to Seller's knowledge, overtly threatened with respect
to any such matters which if determined adversely to Seller would have such
effect.
5.10 Reserved.
5.11 Rig Classifications and Certifications.
(a) The classification of each Rig and the flag, if any, under which
it is documented are set forth on Schedule 1(a).
(b) Set forth on Schedule 5.11(b) is a summary of the outstanding
recommendations to class against each of the Rigs based on the most recent
survey received by Seller for such Rig as of the date of this Agreement, as
well as a listing of certifications (including American Bureau of Shipping and
United States Coast Guard certifications) maintained by Seller for the present
operation of such and the expiration date of each such certification.
(c) Except as set forth on Schedule 5.11(c), to the knowledge of
Seller, no Rig has suffered any material damage to its condition (ordinary wear
and tear excepted) since February 10, 1997, the date of completion of Buyer's
inspection of the Rigs.
5.12 Environmental Matters.
(a) Seller has received no written notice of any investigation or
inquiry by any Governmental Entity under any Applicable Environmental Laws (as
defined below) relating to the ownership or operation of the Purchased Assets.
To the actual current knowledge of Seller, Seller has not disposed of any
hazardous material (as defined below) on any of the Purchased Assets and no
condition exists on any of the Purchased Assets which would subject Seller or
the Purchased Assets to any remedial obligations under any Applicable
Environmental Laws.
(b) For purposes of this Agreement, "Applicable Environmental Laws"
means any and all Applicable Laws pertaining to health, safety, or the
environment in effect in any and all jurisdictions in which the Purchased
Assets are located or in which Seller has conducted
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operations using any of the Purchase Assets, including, without limitation, the
Clear Air Act, as amended, the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, as amended, the Rivers and Harbors Act
of 1899, as amended, the Federal Water Pollution Control Act, as amended, the
Occupational Safety and Health Act of 1970, as amended, the Resource
Conservation and Recovery Act of 1976, as amended, the Safe Drinking Water Act,
as amended, the Toxic Substances Control Act, as amended, the Superfund
Amendments and Reauthorization Act of 1986, as amended, the Hazardous Materials
Transportation Act, as amended, and other environmental conservation or
protection laws. For purposes of this Agreement, the term "hazardous material"
means (i) any substance which is listed or defined as a hazardous substance,
hazardous constituent, or solid waste pursuant to any Applicable Environmental
Laws and (ii) petroleum (including crude oil and any fraction thereof), natural
gas and natural gas liquids.
5.13 No Brokers. Seller has not employed or authorized anyone to
represent it as a broker or finder in connection with the transactions
contemplated by this Agreement, and no broker or other person is entitled to
any commission or finder's fee from Seller in connection with such
transactions. Seller agrees to indemnify and hold harmless Buyer from and
against any and all losses, claims, demands, damages, costs and expenses,
including, without limitation, reasonable attorneys' fees and expenses, Buyer
may sustain or incur as a result of any claim for a commission or fee by a
broker or finder acting on behalf of Seller.
5.14 Decrees, etc. No order, writ, injunction, decree, judgment,
award or determination of any court or Governmental Entity has been issued or
entered against Seller or any of its Affiliates which continues to be in effect
and affects the ownership or operation of the Purchased Assets.
5.15 Performance Bonds; Letters of Credit. Set forth on Schedule 5.15
is a listing of all performance and similar bonds and letters of credit
currently posted by, or any certificate of financial responsibility or similar
evidence of financial accountability obtained or procured by, Seller or any of
its Affiliates for the purpose of operating the Rigs.
ARTICLE VI
REPRESENTATIONS AND WARRANTIES OF PARENT
Parent hereby represents and warrants to Buyer as follows:
6.1 Organization and Existence. Parent is a corporation duly
incorporated, validly existing and in good standing under the laws of the state
of its incorporation, with all necessary corporate power and authority to own
and lease the assets it currently owns and leases and to carry on its business
as such business is currently conducted. Parent is duly qualified or licensed
to transact business as a foreign corporation and is in good standing in all
jurisdictions in which the character of the assets currently owned or leased by
it or the nature of the business currently conducted by it requires it so to be
qualified or licensed unless the failure so to qualify or be licensed would not
reasonably be expected to have a material adverse effect on the business or
financial condition of Parent and its subsidiaries taken as a whole.
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6.2 Authority; Etc. Parent has all necessary corporate power and
authority to execute and deliver this Agreement and all agreements, instruments
and documents to be executed and delivered hereunder by Parent, to consummate
the transactions contemplated hereby and to perform all terms and conditions
hereof to be performed by it. The execution and delivery of this Agreement by
Parent and all agreements, instruments and documents to be executed and
delivered by Parent hereunder, the performance by Parent of all the terms and
conditions hereof to be performed by it and the consummation of the
transactions contemplated hereby have been duly authorized and approved by the
board of directors of Parent, and no other corporate proceedings of Parent are
necessary with respect thereto. All persons who have executed and delivered
this Agreement, and all persons who will execute and deliver the other
agreements, documents and instruments to be executed and delivered by Parent
hereunder, have been duly authorized to do so by all necessary actions on the
part of Parent. This Agreement constitutes, and each other agreement or
instrument to be executed by Parent hereunder, when executed and delivered by
Parent, will constitute, the legal, valid and binding obligation of Parent,
enforceable against it in accordance with its terms, except to the extent the
enforceability hereof and thereof may be limited by bankruptcy, insolvency,
moratorium, reorganization or other laws relating to or affecting creditors'
rights generally or by general principles of equity (regardless of whether such
enforceability is considered in a proceeding in equity or at law).
6.3 No Violations. The execution and delivery of this Agreement by
Parent, the fulfillment of and compliance by it with the terms and conditions
hereof and the consummation by it of the transactions contemplated hereby will
not:
(a) violate any of the terms of the certificate of incorporation or
bylaws of Parent;
(b) result in a breach of or constitute a default under (whether with
notice or the lapse of time or both) any note, bond, mortgage, loan agreement,
indenture or other instrument evidencing borrowed money to which Parent is a
party or by which Parent is bound or to which any of its assets is subject or
result in the creation of any Encumbrance on any of its assets, which breach or
default would reasonably be expected to have a material adverse effect on its
ability to perform its obligations hereunder; or
(c) to Parent's knowledge, violate any provision of any law, statute,
rule or administrative regulation or any judgment, order, injunction or decree
of any Governmental Entity applicable to or binding upon Parent or any of its
subsidiaries, except that no representation is made as to the application of
any United States antitrust law or regulation to the transactions contemplated
by this Agreement, which violation with respect to the matters specified in
clauses (b) and (c) of this Section 6.3 would reasonably be expected to have a
material adverse effect on its ability to perform its obligations hereunder.
6.4 Governmental Approval. Except for required filings under the HSR
Act and as contemplated by Section 10.2 or set forth on Schedule 6.4, no
consent, approval, waiver, order or authorization of, or registration,
declaration or filing with, any Governmental Entity is required to be obtained
or made in connection with the execution and delivery of this Agreement by
Parent or the consummation by Parent of the transactions contemplated hereby,
the failure of which to obtain would delay or prevent the consummation of the
transactions contemplated by this Agreement.
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6.5 Litigation. There is no litigation and there are no Proceedings,
suits or investigations pending, instituted or, to the knowledge of Parent
overtly threatened against Parent or its subsidiaries that could reasonably be
expected to delay or prevent the consummation of the transactions contemplated
by this Agreement.
6.6 No Brokers. Except for Schroder Wertheim & Co. Incorporated
(whose fee in respect of the transactions contemplated hereby shall be paid
solely by Parent), Parent has not employed or authorized anyone to represent it
as a broker or finder in connection with the transactions contemplated by this
Agreement, and no broker or other person is entitled to any commission or
finder's fee from Parent in connection with such transactions. Parent will
indemnify and hold harmless Buyer from and against any and all losses, claims,
demands, damages, costs and expenses, including, without limitation, reasonable
attorneys' fees and expenses, Buyer may sustain or incur as a result of any
claim for a commission or fee by a broker or finder acting on behalf of Parent.
6.7 Employees and Related Matters. To Parent's knowledge, all of the
employee benefit plans (as defined in Section 3(3) of ERISA) which are or have
been maintained or contributed to by Parent or any incorporated or
unincorporated trade or business (an "ERISA Affiliate") which together with
Parent would be treated as a single employer under Section 414 of the Code have
been maintained and contributed to in compliance with the requirements of
ERISA, the Code and other applicable law; and to Parent's knowledge, Parent and
its ERISA Affiliates have paid and discharged when due all obligations and
liabilities arising under such plans, ERISA, the Code and other Applicable Law
of a character which, if not paid or discharged, are likely to result in the
imposition of an Encumbrance or the assertion of a liability enforceable
against the Purchased Assets. There are no labor agreements between Parent or
any Affiliate of Parent and any collective bargaining representative who
represents employees employed by Parent or any of its Affiliates which relate
to or affect the ownership, maintenance or operation of the Purchased Assets.
ARTICLE VII
REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer hereby represents and warrants to Parent and each of the Sellers
as follows:
7.1 Organization and Existence. Buyer is a corporation duly
incorporated, validly existing and in good standing under the laws of the state
of its incorporation, with all necessary corporate power and authority to own
and lease the assets it currently owns and leases and to carry on its business
as such business is currently conducted. Buyer is duly qualified or licensed
to transact business as a foreign corporation and is in good standing in all
jurisdictions in which the character of the assets currently owned or leased by
it or the nature of the business currently conducted by it requires it so to be
qualified or licensed unless the failure so to qualify or be licensed would not
reasonably be expected to have a material adverse effect on the business or
financial condition of Buyer and its subsidiaries taken as a whole.
7.2 Authority; Etc. Buyer has all necessary corporate power and
authority to execute and deliver this Agreement and all agreements, instruments
and documents to be executed and
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delivered hereunder by Buyer, to consummate the transactions contemplated
hereby and to perform all terms and conditions hereof to be performed by it.
The execution and delivery of this Agreement by Buyer and all agreements,
instruments and documents to be executed and delivered by Buyer hereunder, the
performance by Buyer of all the terms and conditions hereof to be performed by
it and the consummation of the transactions contemplated hereby have been duly
authorized and approved by the board of directors of Buyer, and no other
corporate proceedings of Buyer are necessary with respect thereto. All persons
who have executed and delivered this Agreement, and all persons who will
execute and deliver the other agreements, documents and instruments to be
executed and delivered by Buyer hereunder, have been duly authorized to do so
by all necessary actions on the part of Buyer. This Agreement constitutes, and
each other agreement or instrument to be executed by Buyer hereunder, when
executed and delivered by Buyer, will constitute, the legal, valid and binding
obligation of Buyer, enforceable against it in accordance with its terms,
except to the extent the enforceability hereof and thereof may be limited by
bankruptcy, insolvency, moratorium, reorganization or other laws relating to or
affecting creditors' rights generally or by general principles of equity
(regardless of whether such enforceability is considered in a proceeding in
equity or at law).
7.3 No Violations. The execution and delivery of this Agreement by
Buyer, the fulfillment of and compliance by it with the terms and conditions
hereof and the consummation by it of the transactions contemplated hereby will
not:
(a) violate any of the terms of the certificate of incorporation or
bylaws of Buyer;
(b) result in a breach of or constitute a default under (whether with
notice or the lapse of time or both) any note, bond, mortgage, loan agreement,
indenture or other instrument evidencing borrowed money to which Buyer is a
party or by which Buyer is bound or to which any of its assets is subject or
result in the creation of any Encumbrance on any of its assets, which breach or
default would reasonably be expected to have a material adverse effect on its
ability to perform its obligations hereunder; or
(c) to Buyer's knowledge, violate any provision of any law, statute,
rule or administrative regulation or any judgment, order, injunction or decree
of any Governmental Entity applicable to or binding upon Buyer or any of its
subsidiaries, except that no representation is made as to the application of
any United States antitrust law or regulation to the transactions contemplated
by this Agreement, which violation with respect to the matters specified in
clauses (b) and (c) of this Section 7.3 would reasonably be expected to have a
material adverse effect on its ability to perform its obligations hereunder.
7.4 Inspections. Buyer has made its own inspection of each of the
Rigs except the NN-1 and the Richardson Hull.
7.5 Litigation. There is no litigation and there are no Proceedings,
suits or investigations pending, instituted or, to the knowledge of Buyer
overtly threatened against Buyer or its subsidiaries that could reasonably be
expected to delay or prevent the consummation of the transactions contemplated
by this Agreement.
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7.6 Governmental Approval. Except for required filings under the HSR
Act and as contemplated by Section 10.2 or set forth on Schedule 7.6, no
consent, approval, waiver, order or authorization of, or registration,
declaration or filing with, any Governmental Entity is required to be obtained
or made in connection with the execution and delivery of this Agreement by
Buyer or the consummation by Buyer of the transactions contemplated hereby, the
failure of which to obtain would delay or prevent the consummation of the
transactions contemplated by this Agreement.
7.7 No Brokers. Buyer has not employed or authorized anyone to
represent it as a broker or finder in connection with the transactions
contemplated by this Agreement, and no broker or other person is entitled to
any commission or finder's fee from Buyer in connection with such transactions.
Buyer will indemnify and hold harmless Parent and Sellers from and against any
and all losses, claims, demands, damages, costs and expenses, including,
without limitation, reasonable attorneys' fees and expenses, Parent and/or any
Seller may sustain or incur as a result of any claim for a commission or fee by
a broker or finder acting on behalf of Buyer.
7.8 Certain Knowledge Regarding Assignment of Contracts. To the
knowledge of Buyer, no condition or circumstance exists that would prevent the
obtainment of any necessary consents to the effective assignment to and
assumption by Buyer of the Drilling Contracts or Other Contracts.
7.9 Registration Statement. On February 7, 1997, Buyer filed a
registration statement on Form S-3 (file no. 333-21385) (the "Registration
Statement") with the SEC under the Securities Act of 1933, as amended (the
"Securities Act"), covering a maximum aggregate offering of $500,000,000 of
Buyer's debt securities and common stock.
ARTICLE VIII
CONDITIONS TO THE OBLIGATIONS OF PARENT AND SELLERS
The obligations of Parent and Sellers to proceed with the Closing
contemplated by this Agreement are subject to the satisfaction, on or before
the Closing Date, of all the following conditions, any one or more of which may
be waived, in whole or in part, by Parent:
8.1 Accuracy of Representations and Warranties. Each representation
and warranty of Buyer contained in this Agreement shall be true and correct in
all material respects as of the Closing Date with the same effect as though
made on the Closing Date, except as otherwise specifically contemplated by this
Agreement.
8.2 Covenants and Agreements Performed. Buyer shall have complied on
or before the Closing Date in all material respects with each of its covenants
or agreements contained in this Agreement to be performed on or before the
Closing Date.
8.3 Officer's Certificate. Parent and Sellers shall have received a
certificate in the form of Exhibit 8.3 hereto, dated as of the Closing Date, of
the President or a Vice President of Buyer certifying as to the matters
specified in Sections 8.1 and 8.2.
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8.4 Legal Opinion. Parent and Sellers shall have received from
Robert W. Randall, Esq., Vice President, General Counsel and Secretary of
Buyer, an opinion dated the Closing Date, substantially in the form of Exhibit
8.4 hereto.
8.5 HSR Act. All required filings under the HSR Act shall have been
made as required and the waiting period (and any extension thereof) under the
HSR Act relating to the transactions contemplated hereby shall have expired or
been terminated without governmental objection thereto.
ARTICLE IX
CONDITIONS TO THE OBLIGATIONS OF BUYER
The obligations of Buyer to proceed with the Closing contemplated by
this Agreement are subject to the satisfaction, on or before the Closing Date,
of all the following conditions, any one or more of which may be waived, in
whole or in part, by Buyer:
9.1 Accuracy of Representations and Warranties.
(a) Each representation and warranty of Sellers contained in this
Agreement shall be true and correct in all material respects as of the Closing
Date with the same effect as though made on the Closing Date, except as
otherwise specifically contemplated by this Agreement.
(b) Each representation and warranty of Parent contained in this
Agreement shall be true and correct in all material respects as of the Closing
Date with the same effect as though made on the Closing Date, except as
otherwise specifically contemplated by this Agreement.
9.2 Covenants and Agreements Performed.
(a) Sellers shall have complied on or before the Closing Date in all
material respects with each of the covenants or agreements of Sellers contained
in this Agreement to be performed on or before the Closing Date.
(b) Parent shall have complied on or before the Closing Date in all
material respects with each of the covenants or agreements of Parent contained
in this Agreement to be performed on or before the Closing Date.
9.3 Officer's Certificate.
(a) Buyer shall have received a certificate in the form of Exhibit
9.3(a) hereto, dated as of the Closing Date, of the President or a Vice
President, or the general partner of each Seller certifying as to the matters
specified in Sections 9.1(a) and 9.2(a).
(b) Buyer shall have received a certificate in the form of Exhibit
9.3(b) hereto, dated as of the Closing Date, of the President or a Vice
President of Parent certifying as to the matters specified in Sections 9.1(b)
and 9.2(b).
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9.4 Legal Opinion. Buyer shall have received from Thompson & Knight,
P.C., counsel for Parent and Sellers, an opinion dated the Closing Date,
substantially in the form of Exhibit 9.4 hereto.
9.5 HSR Act. All required filings under the HSR Act shall have been
made as required and the waiting period (and any extension thereof) under the
HSR Act relating to the transactions contemplated hereby shall have expired or
been terminated without governmental objection thereto.
9.6 Financing by Buyer. Buyer shall have obtained financing for the
Purchased Assets in an amount no less than the Purchase Price.
ARTICLE X
COVENANTS AND AGREEMENTS OF THE PARTIES BEFORE,
RELATING TO AND SUBSEQUENT TO THE CLOSING
Parent, Sellers and Buyer hereby covenant and agree as follows:
10.1 Expenses. Except as otherwise expressly provided in this
Agreement, each of the parties hereto shall assume and bear all expenses, costs
and fees incurred or assumed by such party in the preparation and execution of
this Agreement and in compliance with and performance of the agreements and
covenants contained in this Agreement, regardless of whether the transactions
contemplated hereby are consummated.
10.2 HSR Act Compliance. The parties shall comply with all provisions
of the HSR Act. Parent, Sellers and Buyer agree to cooperate with each other
and furnish all information to the other party that is necessary in connection
with the HSR Act filings required to be made by the parties hereto. Buyer and
Parent each agree to request early termination of any applicable waiting period
under the HSR Act.
10.3 Access. Until the Closing, Parent and Sellers shall give the
officers, employees and attorneys of Buyer reasonable access, subject to
Applicable Laws, during normal business hours upon Buyer's reasonable prior
notice to Parent, to the Purchased Assets and the records of Sellers
specifically relating thereto. Parent and Sellers will cooperate fully with
such representatives of Buyer in connection with such review. Buyer will hold
in strict confidence and not use for purposes other than those contemplated by
this Agreement any documents or information furnished concerning Parent,
Sellers or the Purchased Assets. Such confidence shall be maintained for at
least two years after the date of this Agreement. If the transactions
contemplated by this Agreement shall not be consummated, all such documents and
all copies thereof shall immediately thereafter be returned to Parent, and all
documents prepared by Buyer or any of its Affiliates or their representatives
shall be destroyed. The confidentiality obligations set forth in the preceding
sentence shall not apply to information (i) in the public domain, (ii) obtained
by Buyer from a third party source with the right to disclose such information
or (iii) with respect to which disclosure is required by law in the opinion of
counsel to Buyer reasonably acceptable to Parent. Buyer agrees to assume the
risk of personal injury to its representatives or loss of or damage to its and
its representatives' property occurring during the course of investigating the
Purchased Assets, Parent and Sellers, regardless of any fault
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(including the negligence) of any of Parent, Sellers or their Affiliates, and
Buyer will indemnify and hold harmless Parent, Sellers and their Affiliates
from and against any and all losses, claims, demands, damages, costs and
expenses, including, without limitation, reasonable attorneys' fees and
expenses, Parent, any Seller and/or any of their Affiliates may sustain or
incur as a result of any such personal injury or loss of or damage to property.
10.4 Conduct of Business and Preservation of Assets.
(a) Until the Closing, Buyer and Sellers agree to cooperate with each
other to effect an orderly transition of the ongoing operation of the Purchased
Assets and Sellers shall use their respective Best Efforts to preserve,
maintain and protect the Purchased Assets. From and after the date of this
Agreement and until the Closing Date, without the prior express written consent
of Buyer, which consent shall not be unreasonably withheld or delayed, Sellers
will not, and Parent will not permit any of its Affiliates to, (i) make any
material change in the conduct of the ongoing operation of the Rigs taken as a
whole, (ii) enter into any new drilling contracts with respect to the Rigs or
any other contracts or agreements with respect to the Rigs other than the PEMEX
Contracts and other contracts entered into in the ordinary course of business
that are not expected to extend beyond 180 days, or amend, in any respect
adverse to Sellers or Buyer, any Drilling Contract or Other Contract or (iii)
commit itself to do any of the foregoing.
(b) Buyer, Parent and Sellers acknowledge that the Frank Reiger is
currently undergoing refurbishment at Texas Drydock, Inc., in Port Arthur,
Texas. NDUS agrees, at its expense, to complete the refurbishment contemplated
under its shipyard contract for such refurbishment work, and upon completion of
such refurbishment, to obtain such certifications from Governmental Entities as
are necessary to permit the Frank Reiger to engage in offshore oil and gas
drilling and workover operations in the U.S. Gulf of Mexico.
10.5 Transition of Business Operations. Buyer will use its Best
Efforts to obtain and to cause any Buyer Designee to obtain prior to the
Closing Date all requisite qualifications or licenses to transact business as a
foreign corporation in each jurisdiction in which the consummation of the
transactions contemplated hereby or the nature of the business to be conducted
by it after the Closing requires it so to be qualified or licensed. If Buyer
or any Buyer Designee is not so duly qualified or licensed on the Closing Date,
then (i) Buyer agrees to use its Best Efforts to become or to cause each Buyer
Designee to become so qualified or licensed at the earliest practicable date
and (ii) Sellers agree to cooperate with Buyer to effect the consummation of
the transactions contemplated by this Agreement, provided same can be effected
without violation of law in the jurisdiction involved and any additional
expense associated with same is borne by Buyer.
10.6 Litigation. Until the Closing, Parent will promptly notify Buyer
of any action, suit, proceeding, claim or investigation which is overtly
threatened or commenced against a Seller which is not fully insured against
(except standard deductible or self-retention amounts) and which relates to or
affects the Purchased Assets or this Agreement or the transactions contemplated
hereby, and Buyer will promptly notify Parent of any action, suit, proceeding,
claim or investigation which is overtly threatened or commenced against Buyer
which is not fully insured against (except standard deductible or self-
retention amounts) and which relates to and
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materially and adversely affects Buyer or its business or affects this
Agreement or the transactions contemplated hereby.
10.7 Certain Taxes. Buyer shall be liable for and shall pay all
applicable duties, sales, use, transfer, stamp, recording, value added or
similar taxes and assessments payable as a result of the consummation of the
transactions contemplated hereby, and Buyer and Sellers agree to cooperate to
obtain all available exemptions from such taxes. All ad valorem taxes, utility
and other service charges and other taxes, fees and expenses relating to the
Purchased Assets (collectively, "Taxes"), for all periods up to and including
the Closing Date shall be the obligations of Sellers and for all periods
following the Closing Date shall be the obligation of Buyer. All Taxes
relating to periods prior to the Closing that have been assessed prior to
Closing and that are not then being diligently contested in good faith by
appropriate proceedings shall be paid by a Seller prior to the Closing. Each
Seller shall promptly pay from time to time such Seller's prorated share of all
Taxes to Buyer upon Buyer's request accompanied by appropriate documentation
that such Taxes are due and payable. Buyer agrees to pay such amounts on
behalf of such Seller and to indemnify such Seller with respect to any Claims
(as defined in Section 13.2) for such Taxes if a Seller shall have paid to
Buyer such Seller's pro rata share thereof, if any. Sellers and Buyer agree to
cooperate with each other in order to reduce the amount of taxes or other
assessments imposed on or charged to any Seller or Buyer as a result of the
consummation of the transactions contemplated by this Agreement, including,
without limitation, by (i) accommodating a tax-deferred exchange by one or more
Sellers under Section 1031 of the Code or (ii) effectively transferring
ownership of Purchased Assets to Buyer by transferring to Buyer all of the
outstanding ownership interest in the entity that owns such Purchased Assets;
provided, that none of Parent, any Seller nor Buyer shall be obligated to take
any action that it determines in its sole discretion may subject it to
additional taxes, liabilities or expenses.
10.8 Actions with Respect to Closing. Each of Parent and each Seller
will use its Best Efforts to obtain and to cause any Seller Designee to obtain
the satisfaction of the conditions to Closing applicable to Parent and Sellers
set forth in Article IX as soon as practicable. Buyer will use its Best
Efforts to obtain and to cause each Buyer Designee to obtain the satisfaction
of the conditions to Closing applicable to Buyer set forth in Article VIII as
soon as practicable.
10.9 Public Statements. Prior to making any news release or other
announcement concerning the transactions contemplated hereby, Buyer and Parent
shall consult with each other regarding the proposed contents thereof (but no
approval thereof shall be required).
10.10 Books and Records. Parent and Sellers shall have the right, at
their own expense, at any time or from time to time within five years after the
Closing Date during reasonable business hours upon reasonable notice to Buyer
to inspect, and make copies of or extracts from, any of the records delivered
to Buyer at the Closing that are in the possession of Buyer or its Affiliates.
None of the records in the possession of Buyer or its Affiliates shall be
destroyed prior to December 31, 2002 or five years after generated, whichever
is earlier, without the consent of Parent, unless first reproduced by microfilm
or any other similar process. In the event that Buyer shall wish to destroy
any of such records at any time or from time to time after the Closing Date,
Buyer shall give not less than 60 days' notice to Parent and Parent shall
have
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the right, at its own expense, during reasonable business hours to remove such
records and to keep possession of the same.
10.11 Rig Loss. Notwithstanding any other provision of this Agreement:
(a) If any Rig (other than the Richardson Hull) shall become an
actual or constructive total loss (as determined by Parent's insurance
underwriter's marine surveyor) prior to the Closing Date: (i) Buyer shall not
be required to purchase such Rig, (ii) the Purchase Price shall be reduced by
the amount allocated to such Rig pursuant to Schedule 3.4, (iii) the term
"Purchased Assets" shall be deemed not to include such Rig and (iv) the other
provisions of this Agreement shall continue to be in effect and the Closing
shall take place in the manner contemplated herein.
(b) Without limiting the obligations of any Seller or Parent under
Section 10.4(a), if a Rig sustains damage not amounting to an actual or
constructive total loss prior to the Closing Date, either (i) the Seller owning
such Rig shall repair or cause to be repaired the damage to the Rig at such
Seller's own expense or (ii) in the case of damage to a Rig in respect of which
insurance proceeds are available, Buyer, at its option, may require the Seller
to assign to Buyer at the Closing the rights the Seller has to receive
insurance proceeds in respect of such loss or damage and pay to Buyer the
amount by which any such insurance proceeds otherwise payable to Buyer are
reduced by any deductible or deductibles under the terms of the relevant policy
or policies (offset by any amounts paid through the Closing Date by the Seller
for such repair), and, in the case of either (i) or (ii) above, Buyer shall
remain obligated to purchase the Purchased Assets on the Closing Date and the
Purchase Price shall not be reduced. If, pursuant to this subsection (b),
Buyer is to conduct or cause to be conducted repairs to a damaged Rig
subsequent to Closing, then Parent and Buyer shall agree on a plan for the
manner of conduct and the scope of such repairs, and neither Parent nor any
Seller shall be obligated to pay costs resulting from any deviation from such
plan.
10.12 Use of Names. Buyer agrees that (i) it will not use the name
"Noble" or "Noble Drilling" or any derivative thereof, (ii) it will within 90
days of the Closing Date, change the name of each Rig to other than the name of
a current or former personnel or associate of Parent, and (iii) it will within
90 days from the Closing Date, remove from the Purchased Assets or paint over
such name and any logos, symbols or trademarks relating thereto.
10.13 Continued Effectiveness of Representations and Warranties. Each
of Parent, each Seller and Buyer shall use its Best Efforts to cause the
representations and warranties made by it herein to continue to be true and
correct on and as of the Closing Date as if made on and as of the Closing Date.
Nothing contained in this Section 10.13 shall be construed as being
inconsistent with or in derogation of Section 13.1 or 13.5.
10.14 Post-Closing Collection, Payment and Administrative Procedures.
Subsequent to Closing, (i) Buyer agrees to deliver to Parent, within three
Business Days of receipt of same, any and all (A) monies paid to or received by
Buyer or its Affiliates in respect of amounts due Sellers or their Affiliates,
including, but not limited to, payment of receivables, refunds, rebates,
release of performance or similar bonds or letters of credit, and (B)
inquiries, correspondence or documents received by Buyer or its Affiliates
related to such amounts; and (ii) Sellers and
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Parent agree to deliver to Buyer, within three Business Days of receipt of
same, any and all (A) monies paid to or received by Sellers or their Affiliates
in respect of amounts due Buyer or its Affiliates, including, but not limited
to, payment of receivables, refunds, rebates, release of performance or similar
bonds or letters of credit, and (B) inquiries, correspondence or documents
received by Sellers or their Affiliates related to such amounts.
10.15 Action of Buyer Regarding Financing.
(a) Buyer shall promptly after the date of this Agreement initiate
and diligently pursue action to obtain financing in an amount not less than the
Purchase Price. In such connection, Buyer agrees to amend the Registration
Statement or supplement to the prospectus forming a part thereof to provide for
the firm commitment underwritten offer and sale of its debt securities and/or
common stock and/or arrange for bank financing in an amount not less than the
Purchase Price. Buyer shall consult with Parent, and Parent shall cooperate
with and assist Buyer, in preparing any amendment to the Registration Statement
or supplement to the prospectus forming a part thereof, particularly with
respect to the information therein relating to Parent or Sellers. Buyer agrees
to use its Best Efforts to cause the Registration Statement to become effective
under the Securities Act as soon as practicable.
(b) Buyer shall keep Parent informed at all times with respect to the
status of the financing contemplated by subsection (a) of this Section 10.15
and in any event shall inform Parent (i) of notice from the SEC of the
effectiveness of the Registration Statement under the Securities Act, (ii) upon
pricing of the securities under the Registration Statement or (iii) upon
receipt by Buyer of notice from the SEC of the issuance of a stop order with
respect to the Registration Statement.
10.16 Certain Financial Statements. Parent agrees to prepare, or cause
the preparation of, and to deliver to Buyer as soon as practicable following
the date of this Agreement for inclusion in the Registration Statement or
otherwise in connection with the financing contemplated by Section 10.15 or in
any Form 8-K or other form of Buyer relating to the transactions contemplated
hereby required, if any, to be filed with the SEC, such financial statements
relating to Sellers or the Purchased Assets as Buyer may be required by
Applicable Law to include therein. Buyer shall pay the fees of Price
Waterhouse LLP, independent accountants for Parent and Sellers, relating to the
preparation and audit of such financial statements and the participation, if
any, of Price Waterhouse LLP in the preparation of an amendment to the
Registration Statement or other documents filed by Buyer with the SEC or
otherwise in connection with the financing contemplated by Section 10.15.
10.17 Import Duties; Performance Bonds. If any Seller or any
subsidiary of any Seller has posted a performance or other similar bond or
letter of credit or procured any certificate of financial responsibility or
similar evidence of financial accountability in connection with any Seller's or
any such subsidiary's ownership or operation of any of the Rigs or the
performance by any Seller or any such subsidiary under a Drilling Contract or
Other Contract, Buyer and Sellers shall cooperate in order (i) for Sellers or
any of Sellers' subsidiaries to obtain the release of any such bond, letter of
credit or certificate and (ii) to the extent required, for Buyer to obtain a
substitute bond, letter of credit or certificate or to assume the existing
bond, letter of credit or certificate of any Seller or any subsidiary of any
Seller. Sellers and Buyer agree to cooperate
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with each other in order to reduce import duties assessed against any Seller or
any subsidiary of any Seller, or Buyer as a result of the consummation of the
transactions contemplated by this Agreement, including by postponing the date
of transfer of legal title to any Rig operating in foreign waters until
completion of the Drilling Contract under which such a Rig is operating on the
Closing Date; provided, that neither Sellers, any subsidiary of any Seller nor
Buyer shall be obligated to take any action that it determines in its sole
discretion may subject it to additional import duties, liabilities or expenses.
Buyer shall reimburse Sellers or any subsidiary of any Seller for all out-of-
pocket costs incurred by any Seller or any such subsidiary as a result of their
leaving a performance or similar bond, letter of credit or certificate in place
after the Closing Date in order to permit Buyer to operate the Purchased Assets
after the Closing Date.
10.18 Availability of Rigs to Triton Engineering Services Company.
(a) On or before the Closing Date and subject to the occurrence of
the Closing, Buyer and Triton Engineering Services Company or one or more of
its subsidiaries ("Triton") shall enter into a drilling contract for each of
four of the Rigs, pursuant to which, effective as of the termination of the
drilling contract for such Rig in existence on the Closing Date, Buyer will
agree to contract each of such Rigs to Triton for drilling and workover
operations. Parent shall designate the four Rigs prior to the Closing Date.
Each of such drilling contracts (the "Triton Contracts") shall be substantially
in the form of Exhibit 10.18. Anything in this Section 10.18(a) to the
contrary notwithstanding, if prior to the Closing Date a Seller has entered
into a contract with Triton to provide one or two of the Rigs to Triton for
operations in the Mexican Gulf of Mexico on behalf of PEMEX for terms exceeding
the one-year anniversary of the Closing Date and containing operating day rates
(fixed for the term of such contracts) of at least $32,000 per day and such
other terms as are acceptable to Buyer ("PEMEX Contracts"), then Buyer shall
assume at Closing and agree to perform thereafter such PEMEX Contracts in
accordance with the terms thereof and the number of Rigs which shall become
subject to Triton Contracts under this Section 10.18(a) shall be reduced by the
number of such Rigs that are subject to the PEMEX Contracts as of the Closing
Date.
(b) Parent shall have the option, exercisable within one year after
the Closing Date, to cause Buyer to contract to Triton up to three additional
Rigs (other than the Richardson Hull and the Cecil Forbes) on contracts
containing the same terms and conditions as specified in Section 10.18(a)
except that the term of any such contract will be one year from the effective
date of such contract. During the one-year term of such option, Buyer shall
give Parent 30 days advance notice of the expected date of completion of any
drilling contract with respect to a Rig other than the Rigs referred to in
Subsection 10.18(a). Parent shall have until the later of 15 days after
receipt of Buyer's notice and 30 days prior to such date of completion of such
contract to notify Buyer of Parent's election to cause Buyer to contract such
Rig to Triton. Any drilling contracts entered into pursuant to this Section
10.18(b) shall also be referred to herein as a "Triton Contract".
10.19 Acquisition Proposal. Seller shall immediately cease or cause to
be terminated any existing activities, discussions or negotiations with any
persons conducted heretofore with respect to any Acquisition Proposal. Parent
and Sellers hereby agree that, without the prior express written consent of
Buyer, which consent shall not be unreasonably withheld or delayed, neither
Parent nor Sellers nor any director, officer, employee, representative or
advisor of Parent
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<PAGE> 29
or Sellers will, directly or indirectly, (i) solicit, initiate or pursue any
Acquisition Proposal (as defined below) or (ii) except to the extent the Board
of Directors of Parent determines, upon advice of counsel, that it is otherwise
legally required by its fiduciary duties, engage in discussions or negotiations
with, or disclose any nonpublic information relating to Parent or Sellers or
afford access to the properties, books or records of Parent or Sellers to, any
person that may be considering making or has made an Acquisition Proposal.
Should Parent or Sellers receive an Acquisition Proposal, Parent will
immediately notify Buyer of such proposal. Subject to payment of the
$15,000,000 liquidated damages amount provided for in Section 12.2, nothing
contained in this Agreement shall prevent the Board of Directors of Parent from
approving any unsolicited Acquisition Proposal if required in the exercise of
its fiduciary duties, as determined by the Board of Directors of Parent after
consultation with legal counsel. The term "Acquisition Proposal," as used
herein, means any offer or proposal for, or any indication of interest in the
acquisition of any two or more of the Rigs (other than the transactions
contemplated by this Agreement). The provisions of this Section 10.19 shall
remain in effect until the earlier of the termination of this Agreement
pursuant to Section 12.1 or the Closing.
ARTICLE XI
EMPLOYEES
11.1 Employees.
(a) The employment of all employees of Sellers or any of their
Affiliates who work on any of the Rigs, other than the Retained Employees,
shall be terminated effective as of the Closing Date. Buyer may, but is not in
any way obligated to, offer employment to some or all of the terminated
employees upon such terms and conditions as Buyer shall determine.
(b) For the purposes of this Agreement, "Retained Employees" shall
mean the employees of Sellers or any of their Affiliates identified by Parent
in a schedule delivered by Parent to Buyer at least five days prior to the
Closing Date. Such schedule shall set forth a list of the names, positions and
salaries or hourly rates, as applicable, of the Retained Employees as of the
date thereof. At the Closing, Parent shall deliver to Buyer, if necessary, a
revised schedule updating such information as of the Closing Date. Parent
shall have the right to identify on such schedule a number of Retained
Employees sufficient to crew not more than five of the Rigs.
(c) Neither Sellers nor Parent, nor any of their Affiliates, shall be
required to terminate the employment of the Retained Employees in connection
with the consummation of the transactions contemplated hereby. Each Seller and
any Affiliate of such Seller that employs a Retained Employee (an "Employer"
and collectively, "Employers") shall enter into an Employee Leasing Agreement
with Buyer pursuant to which such Employer shall agree to provide to Buyer the
services of the Retained Employees for purposes of manning one or more of the
Rigs. Such agreement shall provide, among other things, that (i) the term of
such agreement shall be for up to one year after the Closing Date, (ii) Buyer
shall bear all salary, insurance and benefit costs incurred by an Employer
in respect of any Retained Employee during the period such agreement is in
effect as to such Retained Employee, (iii) it is understood that Parent has
made such arrangement available to Buyer to provide an orderly transition,
and Buyer shall use its Best Efforts to engage its own personnel to
replace Retained Employees, from time
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<PAGE> 30
to time, as soon as reasonably practicable and (iv) Buyer shall indemnify and
hold harmless Parent and its Affiliates from and against any Claims arising in
favor of Buyer, any of its Affiliates or any of its employees and Parent shall
indemnify and hold harmless Buyer and its Affiliates from and against any
Claims arising in favor of any Retained Employee. The parties shall agree to a
form of Employee Leasing Agreement as soon as practicable after the date hereof
and in any event at least 10 days before the Closing Date.
(d) Buyer is not hereby, and at no time hereafter will be, adopting,
accepting or assuming any employee benefit plan or collective bargaining
agreement of Parent or any Employer relating to any of their employees or any
other agreement, trust, plan, fund or other arrangement of Parent or any
Employer that provides for employee benefits or perquisites (collectively,
"Employment Arrangements"), and Buyer shall have no liability or obligation
whatsoever under any Employment Arrangement to Parent or any Employer or to any
employees of Parent or any Employer, whether or not any of such employees are
offered employment by or become employees of Buyer. Buyer is not obligated to
replace any of the Employment Arrangements for any employee of any Employer who
becomes an employee of Buyer, nor is Buyer obligated to provide any such person
with any similar agreements, plans or arrangements.
11.2 Non-Solicitation of Certain Employees.
(a) Buyer agrees that, for a period of two years from and after the
Closing Date, neither Buyer nor any of its Affiliates will, directly or
indirectly, solicit to employ (as an employee, consultant, independent
contractor or otherwise) any Retained Employee or any drilling superintendent
or rig manager of Parent or any Seller or any of their respective Affiliates,
or otherwise induce or attempt to persuade any such Retained Employee or
drilling superintendent or rig manager to leave such employment.
(b) Parent and Sellers agree that, for a period of two years after
the Closing Date, neither Parent nor Sellers, nor any of their Affiliates,
will, directly or indirectly, solicit to employ (as an employee, consultant,
independent contractor or otherwise) any employee of Buyer or any of its
Affiliates that has become an employee of Buyer or any of its Affiliates in
connection with the acquisition of the Rigs from Sellers, or any drilling
superintendent or rig manger of Buyer or any of its Affiliates, or otherwise
induce or attempt to persuade any such employee, drilling superintendent or rig
manager to leave such employment.
ARTICLE XII
TERMINATION
12.1 Termination. This Agreement may be terminated and the
transactions contemplated hereby may be abandoned at any time prior to the
Closing:
(a) by mutual written consent of Buyer and Parent;
(b) by either Buyer or Parent, if there shall be any statute, rule or
regulation that makes consummation of the transactions contemplated hereby
illegal or otherwise prohibited or a Governmental Entity shall have issued an
order, decree or ruling or taken any other action permanently restraining,
enjoining or otherwise prohibiting the consummation of the transactions
26
<PAGE> 31
contemplated hereby, and such order, decree, ruling or other action shall have
become final and nonappealable;
(c) by Buyer, if
(i) the Closing shall not have occurred by June 30, 1997
(provided that the right to terminate this Agreement under this clause
(i) shall not be available to Buyer if Buyer's failure to fulfill any of
its obligations under this Agreement or its misrepresentation or breach
of warranty hereunder has been the sole cause thereof); or
(ii) there has been a material breach by any Seller of any
covenant or agreement, or a material inaccuracy of any representation or
warranty of any Seller, contained in this Agreement which has rendered
the satisfaction of any condition to the obligations of Buyer impossible
and such breach or inaccuracy has not been cured by any Seller within
five Business Days after Parent's receipt of notice thereof from Buyer,
or waived by Buyer.
(d) by Parent, if
(i) the Closing shall not have occurred by June 30, 1997
(provided that the right to terminate this Agreement under this clause
(i) shall not be available to Parent if Sellers' failure to fulfill any
of their obligations under this Agreement or their misrepresentation or
breach of warranty hereunder has been the sole cause thereof); or
(ii) there has been a material breach by Buyer of any covenant
or agreement, or a material inaccuracy of any representation or warranty
of Buyer, contained in this Agreement which has rendered the
satisfaction of any condition to the obligations of Sellers impossible
and such breach or inaccuracy has not been cured by Buyer within five
Business Days after Buyer's receipt of notice thereof from any Seller,
or waived by Parent; or
(iii) the Board of Directors of Parent shall have determined to
approve an Acquisition Proposal.
12.2 Effect of Termination. In the event of the termination of this
Agreement pursuant to Section 12.1 by Buyer or Parent, written notice thereof
shall forthwith be given to the other party specifying the provision hereof
pursuant to which such termination is made, and this Agreement shall become
void and have no effect, and there shall be no liability hereunder on the part
of Buyer, Parent or Sellers or any of their respective directors, officers,
employees, stockholders or representatives, except that (i) the agreements
contained in this Section 12.2 and in Article XIII and Sections 5.13, 6.6, 7.7,
10.1 and 10.3 shall survive the termination hereof; (ii) Parent shall have the
right to receive the Deposit to the extent permitted under Section 3.2, as
liquidated damages and not as a penalty; and (iii) in the event of termination
by Parent under Section 12.1(d)(iii) and an Acquisition Proposal is consummated
within one year after the date of this Agreement, then Parent shall promptly
pay to Buyer $15,000,000 as liquidated damages and not as a penalty. Nothing
contained in this Section 12.2 shall relieve any party from liability for
damages actually incurred (excluding consequential damages) for breach of any
27
<PAGE> 32
covenant or agreement, or for the inaccuracy of any representation or
warranty, contained herein, except that a party receiving liquidated damages
under this agreement pursuant to Section 3.2 or the preceding sentence shall
not be entitled to recover any additional damages for any breach of this
Agreement.
ARTICLE XIII
EXTENT AND SURVIVAL OF REPRESENTATIONS,
WARRANTIES, COVENANTS AND AGREEMENTS
13.1 Scope of Representations of Sellers.
(a) BUYER UNDERSTANDS AND AGREES THAT, OTHER THAN REPRESENTATIONS,
WARRANTIES, COVENANTS AND AGREEMENTS SET FORTH HEREIN AND ANY WARRANTIES OF OR
CONCERNING TITLE SET FORTH HEREIN OR IN ANY INSTRUMENT OF CONVEYANCE TO BE
EXECUTED AND DELIVERED PURSUANT TO THIS AGREEMENT, NEITHER PARENT NOT SELLERS
NOR ANYONE ACTING ON THEIR BEHALF, MAKE ANY EXPRESS OR IMPLIED REPRESENTATIONS
OR WARRANTIES WITH RESPECT TO THE ASSUMED LIABILITIES, THE RIGS, OR THE OTHER
PURCHASED ASSETS (CURRENT, FIXED, PERSONAL, REAL, TANGIBLE AND INTANGIBLE)
REFERRED TO HEREIN, INCLUDING BUT NOT LIMITED TO SEAWORTHINESS, CONDITION OR
WORKMANSHIP THEREOF, OR THE ABSENCE OF ANY DEFECTS THEREIN, WHETHER LATENT OR
PATENT, CAPACITY, SUITABILITY, UTILITY, SALABILITY, AVAILABILITY,
COLLECTIBILITY, OPERATIONS, CONDITION, MERCHANTABILITY OR FITNESS FOR A
PARTICULAR PURPOSE, AND BUYER ACCEPTS SAID RIGS AND PURCHASED ASSETS ON AN "AS
IS, WHERE IS, WITH ALL FAULTS" BASIS.
(b) Parent and Sellers expressly disclaim, and Buyer accepts such
disclaimer, with respect to any and all obligations or liabilities for
representations and warranties, express or implied, contained in, or from
omissions from, any written or oral communications furnished by or on behalf of
Parent or Sellers (including without limitation, any representations or
warranties contained in or omissions from the confidential selling memorandum
furnished by Schroder Wertheim & Co. Incorporated dated November 20, 1996,
relating to "Selected Mat Supported Jackup Rigs of Noble Drilling
Corporation"), other than those set forth in this Agreement or in any document,
certificate or other writing required to be furnished by Parent or Sellers
pursuant hereto. Buyer acknowledges and affirms that it will have had the
opportunity to complete its own independent investigation, inspection, analysis
and evaluation of the Purchased Assets, and that in making its decision to
enter into this Agreement and to consummate the transactions contemplated
hereby it has relied solely on its own independent investigation, inspection,
analysis and evaluation of the Purchased Assets and on the express
representations and warranties by Parent and Sellers made in Articles V and VI
hereof as a basis for entering into this Agreement, and that it has made all
such reviews and inspections of the foregoing as it has deemed necessary or
appropriate.
13.2 Indemnification by Parent. With respect only to the
representations, warranties, covenants and agreements made herein that,
pursuant to Section 13.5, shall survive after the Closing Date, Parent
agrees to indemnify, defend and hold Buyer and its Affiliates harmless
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<PAGE> 33
from, any losses, liabilities, claims, demands, damages (excluding
consequential damages), costs or expenses (including reasonable attorneys'
fees) of every kind, nature and description (collectively, "Claims") arising
out of or resulting from (i) any inaccuracy in or breach of any of the
representations, warranties, covenants or agreements made by Sellers herein;
(ii) the operation, ownership or use of the Purchased Assets prior to the
Closing; (iii) any Proceedings relating solely to facts that existed before the
Closing, which affect the ownership or operation by the Buyer or its Affiliates
of the Purchased Assets or results in any change in the Assumed Liabilities;
(iv) any Claim by any person who is an employee of the Parent or any of its
Affiliates on the date of this Agreement that relates solely to any employment
of such employee by Parent or any of its Affiliates prior to the Closing; or
(v) any Claim related to any of the matters set forth on Schedules 5.7(a) or
5.9; provided, however, that Parent shall have no liability pursuant to this
Section 13.2 for the first $200,000 of aggregate Claims incurred by Buyer (the
"Buyer Basket") and Parent shall be responsible only for such amounts or such
Claims as exceed the Buyer Basket; and provided further, however, that the
aggregate of all Claims for which Buyer is entitled to reimbursement hereunder
shall not exceed the Purchase Price.
13.3 Indemnification by Buyer. Subject to Section 13.5, Buyer hereby
agrees to indemnify, defend and hold Parent and Sellers and their Affiliates
harmless from any Claims arising out of or resulting from (i) any inaccuracy in
or breach of any of the representations, warranties, covenants or agreements
made by Buyer herein; or (ii) the operation, ownership or use of the Purchased
Assets after the Closing; provided, however, that Buyer shall have no liability
pursuant to this Section 13.3 for the first $200,000 of aggregate Claims
incurred by Parent and Sellers (the "Seller Basket") and Buyer shall be
responsible only for such amounts of such Claims as exceed the Seller Basket;
and provided further, however, that the aggregate of all Claims for which
Parent and Sellers are entitled to reimbursement hereunder shall not exceed the
Purchase Price.
13.4 Indemnification Procedure. Any party seeking information or
reimbursement for Claims hereunder (the "Indemnified Party") shall notify the
party from which such indemnification is sought (the "Indemnifying Party")
within 45 Business Days of the assertion of any Claim or discovery of any fact
(which fact has been brought to the attention of a responsible executive
officer of the Indemnified Party) upon which the Indemnified Party intends to
base a claim for indemnification or reimbursement hereunder. The failure of
the Indemnified Party so to notify the Indemnifying Party shall relieve the
Indemnifying Party from any liability under this Agreement to the Indemnifying
Party with respect to such claim for indemnification or reimbursement. In the
event of any claims for indemnification or reimbursement, the Indemnifying
Party, at its option, may assume (with legal counsel reasonably acceptable to
the Indemnified Party) the defense of any claim, demand, lawsuit or other
proceeding brought against the Indemnified Party, which claim, demand, lawsuit
or other proceeding may give rise to the indemnity or reimbursement obligation
of the Indemnifying Party hereunder, and may assert any defense of any party;
provided, however, that the Indemnified Party shall have the right at its own
expense to participate jointly with the Indemnifying Party in the defense of
any claim, demand, lawsuit or other proceeding in connection with which the
Indemnified Party claims indemnification or reimbursement hereunder.
Notwithstanding the right of the Indemnified Party so to participate, the
Indemnifying Party shall have the sole right to settle or otherwise
dispose of such claim, demand, lawsuit or other proceeding on such terms as the
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<PAGE> 34
Indemnifying Party, in its sole discretion, shall deem appropriate with respect
to any issue involved in such claim, demand, lawsuit or other proceeding as to
which (i) the Indemnifying Party shall have acknowledged the obligation to
indemnify the Indemnified Party hereunder, or (ii) the Indemnified Party shall
have declined so to participate; provided, however, that no such Claim shall be
settled by the Indemnifying Party in any manner that could reasonably be
expected to have a material adverse effect on the business of the Indemnified
Party and its subsidiaries, taken as a whole, without the prior written consent
of the Indemnifying Party.
13.5 Survival. The representations, warranties, covenants and
agreements set forth in this Agreement and in any certificate or instrument
delivered in connection herewith shall terminate upon Closing, following which
no party may bring any action or present any claim for the inaccuracy or breach
of such representations, warranties, covenants or agreements, except that the
representations, warranties, covenants and agreements set forth in Sections
3.2, 3.4, 5.1, 5.2, 5.13, 6.1, 6.2, 6.6, 7.1, 7.2, 7.7, 10.1, 10.3 (last
sentence only), 10.4 (last sentence only), 10.5, 10.7, 10.9, 10.10, 10.11(b),
10.12, 10.14, 10.16, 10.17, 10.18 and 12.2 and Articles II, XI, XIII, XIV and
XV and in the General Assignment shall survive the Closing Date.
13.6 Tax Benefits; Insurance Proceeds. In determining the amount of
any Claim, for which any party is entitled to reimbursement under Article XIII
of this Agreement, the gross amount thereof will be reduced by any correlative
net tax benefit or insurance proceeds realized or to be realized by such party
and such correlative insurance benefit shall be net of any insurance premium
that becomes due as a result of such claim.
13.7 Applicability of Indemnification Obligation. EACH OF THE
AGREEMENTS TO INDEMNIFY, DEFEND OR HOLD HARMLESS CONTAINED IN SECTION 13.2 OR
13.3 SHALL APPLY IRRESPECTIVE OF WHETHER THE SUBJECT CLAIM IS BASED IN WHOLE OR
IN PART UPON THE SOLE OR CONTRIBUTORY NEGLIGENCE (WHETHER ACTIVE, PASSIVE OR
GROSS), BREACH OF WARRANTY, OR BREACH OR VIOLATION OF ANY DUTY IMPOSED BY ANY
LAW OR REGULATION, ON THE PART OF THE BENEFICIARY OF THE AGREEMENT, EXCEPT AS
OTHERWISE EXPRESSLY PROVIDED IN THIS AGREEMENT.
ARTICLE XIV
PARENT GUARANTEE
Parent irrevocably and unconditionally guarantees as primary obligor
the due and punctual performance by Sellers of the agreements and obligations
of Sellers and the completeness and accuracy of the representations and
warranties made by Sellers, under this Agreement and all agreements and
instruments to be executed by Sellers hereunder, including, without
limitation, Article XIII INDEMNIFICATION, and the instruments of conveyance
referred to in Section 4.3(b). This guaranty shall survive the Closing and
any liquidation of any Seller.
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ARTICLE XV
MISCELLANEOUS
15.1 Notices. All notices and other communications required or
permitted to be given or made hereunder by either party hereto shall be in
writing and shall be deemed to have been duly given if delivered personally or
transmitted by first class registered or certified mail, postage prepaid,
return receipt requested, or sent by prepaid overnight delivery service, or
sent by cable, telegram, telefax or telex, to the parties at the following
addresses (or at such other addresses as shall be specified by the parties by
like notice):
If to Buyer:
Pride Petroleum Services, Inc.
1500 City West Boulevard
Suite 400
Houston, Texas 77042
Attention: Ray H. Tolson, Chairman and
Chief Executive Officer
Telephone: 713-789-1400
Facsimile: 713-789-1450
If to Parent or any Seller:
Noble Drilling Corporation
10370 Richmond Avenue
Suite 400
Houston, Texas 77042
Attention: James C. Day, Chairman, President and
Chief Executive Officer
Telephone: (713) 974-3131
Facsimile: (713) 953-1126
with a copy to:
Thompson & Knight, P.C.
1700 Pacific Avenue
Suite 3300
Dallas, Texas 75201
Attention: Robert D. Campbell
Telephone: (214) 969-1353
Facsimile: (214) 969-1751
Such notices, demands and other communications shall be effective (i) if
delivered personally or sent by courier service, upon actual receipt by the
intended receipt, (ii) if mailed, upon the earlier of five days after deposit
in the mail or the date of delivery as shown by the return receipt therefor, or
(iii) if sent by telecopy or facsimile transmission, when confirmation of
receipt is received.
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15.2 Entire Agreement. This Agreement, including the Schedules,
Exhibits, Annexes and other writings referred to herein or delivered pursuant
hereto, constitutes the entire agreement between the parties hereto with
respect to the subject matter hereof and supersedes all prior agreements and
understandings, both written and oral, between the parties with respect to
the subject matter hereof.
15.3 Amendments and Waiver; Rights and Remedies. This Agreement may
be amended, superseded, cancelled, renewed or extended, and the terms hereof
may be waived, only by a written instrument signed by the parties or, in the
case of a waiver, by the party waiving compliance. No delay on the part of
either party in exercising any right, power or privilege hereunder shall
operate as a waiver thereof, nor shall any waiver on the part of either party
of any such right, power or privilege, or any single or partial exercise of any
such right, power or privilege, preclude any further exercise thereof or the
exercise of any other such right, power or privilege. The rights and remedies
herein provided are cumulative and are not exclusive of any rights or remedies
that any party may otherwise have at law or in equity. The rights and remedies
of either party based upon, arising out of or otherwise in respect of any
inaccuracy in or breach of any representation, warranty, covenant or agreement
contained in this Agreement shall in no way be limited by the fact that the
act, omission, occurrence or other state of facts upon which any claim of any
such inaccuracy or breach is based may also be the subject matter of any other
representation, warranty, covenant or agreement contained in this Agreement (or
in any other agreement between the parties) as to which there is no inaccuracy
or breach.
15.4 Governing Law. This Agreement shall be governed by, and
construed and enforced in accordance with, the laws of the State of Texas,
without regard to the principles of conflicts of laws thereof.
15.5 Binding Effect; Assignment.
(a) This Agreement and all the provisions hereof shall be binding
upon and inure to the benefit of the parties and their respective successors
and permitted assigns; provided, however, that neither this Agreement nor any
of the rights, interests or obligations hereunder shall be assigned by either
of the parties hereto (by operation of law or otherwise) without the prior
written consent of the other party, except as provided in subsection (b) below.
(b) (i) Parent and Sellers may upon notice to Buyer cause one or
more of Parent's wholly owned subsidiaries (direct or indirect) (a
"Seller Designee") to purchase any or all of the Purchased Assets from a
Seller in order to allow such Seller Designee to become a transferor of
such Purchased Assets hereunder; provided, however, that (y) each Seller
Designee shall be made a party to this Agreement at or prior to the
Closing and (z) no such designation shall relieve Parent or any Seller
of any of its duties, liabilities or obligations hereunder.
(ii) Buyer may upon notice to Parent and Sellers direct that
title to all or part of the Purchased Assets be taken in one or more
of Buyer's wholly owned subsidiaries (direct or indirect) (a "Buyer
Designee"); provided, however, that (y) each Buyer Designee shall be
made a party to this Agreement at or prior to the Closing and (z) no
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<PAGE> 37
such designation shall relieve Buyer of any of its duties, liabilities
or obligations hereunder.
15.6 Counterparts. This Agreement may be executed simultaneously in
two or more counterparts, each of which shall be deemed an original, but all of
which together shall constitute one and the same agreement.
15.7 References. All references in this Agreement to Articles,
Sections and other subdivisions refer to the Articles, Sections and other
subdivisions of this Agreement unless expressly provided otherwise. The words
"this Agreement," "herein," "hereof," "hereby," "hereunder" and words of
similar import refer to this Agreement as a whole and not to any particular
subdivision unless expressly so limited.
15.8 Severability of Provisions. If any provision of this Agreement
is held to be unenforceable, this Agreement shall be considered divisible and
such provision shall be deemed inoperative to the extent it is deemed
unenforceable, and in all other respects this Agreement shall remain in full
force and effect; provided, however, that if any such provision may be made
enforceable by limitation thereof, then such provision shall be deemed to be so
limited and shall be enforceable to the maximum extent permitted by applicable
law.
15.9 Gender. Pronouns in masculine, feminine and neuter genders shall
be construed to include any other gender, and words in the singular form shall
be construed to include the plural and vice versa, unless the context otherwise
requires.
15.10 Descriptive Headings. The descriptive headings herein are
inserted for convenience of reference only, do not constitute a part of this
Agreement, and shall not affect in any manner the meaning or interpretation of
this Agreement.
[Remainder of Page Intentionally Left Blank]
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<PAGE> 38
IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed by their respective officers hereunto duly authorized as of the date
first above written.
PRIDE PETROLEUM SERVICES, INC.
By: /s/ RAY H. TOLSON
-----------------------------------
Ray H. Tolson, Chairman and
Chief Executive Officer
NOBLE DRILLING CORPORATION
By: /s/ JAMES C. DAY
-----------------------------------
James C. Day, Chairman, President
and Chief Executive Officer
NOBLE DRILLING (U.S.) INC.
By: /s/ BYRON L. WELLIVER
-----------------------------------
Byron L. Welliver, President
NOBLE OFFSHORE CORPORATION
By: /s/ JAMES C. DAY
-----------------------------------
James C. Day, President
NOBLE DRILLING (MEXICO) INC.
By: /s/ JAMES C. DAY
-----------------------------------
James C. Day, President
NN-1 LIMITED PARTNERSHIP
By Noble Drilling Corporation, General
Partner
By: /s/ JAMES C. DAY
-----------------------------------
James C. Day, Chairman, President
and Chief Executive Officer
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<PAGE> 39
INDEX TO SCHEDULES AND EXHIBITS
<TABLE>
<CAPTION>
Schedule
Number Description
- -------- -----------------------------------------------------------
<S> <C>
2.1(a) Rigs (excluding the Richardson Hull)
2.1(c) Inventory
2.1(d)(ii) Permits
2.1(e)(i) Drilling Contracts
2.1(e)(ii) Other Contracts
2.5(b) Technical Records
3.4 Allocation of Purchase Price
5.6 Sellers' Defaults
5.7(a) Sellers' Litigation
5.7(b) Sellers' Governmental Notifications
5.8 Sellers' Governmental Approvals
5.9 Sellers' Compliance with Laws
5.11(b) Rig Class Recommendation
5.11(c) Rig Damage
5.15 Sellers' Performance Bonds; Letters of Credit
6.4 Parent's Governmental Approvals
7.6 Buyer's Governmental Approvals
<CAPTION>
Exhibit
Number
- ------
<S> <C>
2.4 Form of Agreement Regarding Nonassigned Contracts
3.1(a) Form of Escrow Agreement
4.2(a) Form of General Assignment
8.3 Form of Buyer's Officer's Certificate
8.4 Buyer's Opinion of Counsel
9.3(a) Form of Sellers' Officer's Certificate
9.3(b) Form of Parent's Officer's Certificate
9.4 Parent's and Sellers' Opinion of Counsel
10.18 Form of Triton Contract
</TABLE>
35
<PAGE> 1
EXHIBIT 3.7
STATE OF DELAWARE
OFFICE OF THE SECRETARY OF STATE
--------------------------------
I, EDWARD J. FREEL, SECRETARY OF STATE OF THE STATE OF DELAWARE, DO
HEREBY CERTIFY THE ATTACHED IS A TRUE AND CORRECT COPY OF THE CERTIFICATE OF
DESIGNATION OF "NOBLE DRILLING CORPORATION", FILED IN THIS OFFICE ON THE
TWENTY-FIRST DAY OF MARCH, A.D. 1997, AT 10:30 O'CLOCK A.M.
A CERTIFIED COPY OF THIS CERTIFICATE HAS BEEN FORWARDED TO THE NEW
CASTLE COUNTY RECORDER OF DEEDS FOR RECORDING.
[SEAL] /s/ EDWARD J. FREEL
-----------------------------------
Edward J. Freel, Secretary of State
AUTHENTICATION:
0372723 8100 8384162
DATE:
971092496 03-24-97
<PAGE> 2
CERTIFICATE OF ELIMINATION
OF
SHARES OF $1.50 CONVERTIBLE PREFERRED STOCK
OF
NOBLE DRILLING CORPORATION
Noble Drilling Corporation, a corporation organized and existing under
the General Corporation Law of the State of Delaware,
Does hereby certify:
FIRST: That the total number of shares which said corporation has
authority to issue is 200,000,000 shares of Common Stock of the par value of
$.10 each and 15,000,000 shares of Preferred Stock of the par value of $1.00
each.
SECOND: That pursuant to the provisions of the Certificate of
Designations filed by the corporation with the Delaware Secretary of State on
September 15, 1994 (the "Certificate of Designations"), the corporation created
a series of the class of authorized Preferred Stock designated as "$1.50
Convertible Preferred Stock."
THIRD: That pursuant to the provisions of the Certificate of
Designations, 4,023,779 shares of $1.50 Convertible Preferred Stock have been
surrendered to the corporation for conversion into shares of its Common Stock,
and 1,221 shares of $1.50 Convertible Preferred Stock have been redeemed.
FOURTH: That the 4,023,779 shares of $1.50 Convertible Preferred Stock
so surrendered for conversion and the 1,221 shares of $1.50 Convertible
Preferred Stock so redeemed, in the aggregate constitute all the outstanding
shares of said $1.50 Convertible Preferred Stock; and that pursuant to Section
6 of the Certificate of Designations, said shares of $1.50 Convertible
Preferred Stock when so redeemed or surrendered for conversion were restored to
the status of authorized and unissued shares of Preferred Stock, without
designation as to series, and may thereafter be issued, but not as shares of
$1.50 Convertible Preferred Stock.
IN WITNESS WHEREOF, Noble Drilling Corporation has caused this
certificate to be signed by James C. Day, its Chairman, President and Chief
Executive Officer on this 20th day of March, 1997.
NOBLE DRILLING CORPORATION
By: /s/ JAMES C. DAY
--------------------------------
James C. Day, Chairman,
President and Chief Executive
Officer
<PAGE> 1
EXHIBIT 10.2
NOBLE DRILLING CORPORATION
1991 STOCK OPTION AND RESTRICTED STOCK PLAN
AS AMENDED AND RESTATED
THROUGH SEPTEMBER 15, 1994
AND AS AMENDED AND RESTATED ON JANUARY 30, 1997,
SUBJECT TO THE APPROVAL OF STOCKHOLDERS EXCEPT FOR SECTION 9(a)(i)(x)
SECTION 1. PURPOSE
The purpose of this Plan is to assist Noble Drilling Corporation, a
Delaware corporation, in attracting and retaining, as officers and key
employees of the Company and its Affiliates, persons of training, experience
and ability and to furnish additional incentive to such persons by encouraging
them to become owners of Shares of the Company's capital stock, by granting to
such persons Incentive Options, Nonqualified Options, Restricted Stock, or any
combination of the foregoing.
SECTION 2. DEFINITIONS
Unless the context otherwise requires, the following words as used
herein shall have the following meanings:
(a) "Affiliate" means any corporation (other than the Company)
in any unbroken chain of corporations (i) beginning with the Company if,
at the time of the granting of the Option or award of Restricted Stock,
each of the corporations other than the last corporation in the unbroken
chain owns stock possessing 50 percent or more of the total combined
voting power of all classes of stock in one of the other corporations in
such chain, or (ii) ending with the Company if, at the time of the
granting of the Option or award of Restricted Stock, each of the
corporations, other than the Company, owns stock possessing 50 percent
or more of the total combined voting power of all classes of stock in
one of the other corporations in such chain.
(b) "Agreement" means the written agreement (i) between the
Company and the Optionee evidencing the Option and any SARs that relate
to such Option granted by the Company and the understanding of the
parties with respect thereto or (ii) between the Company and a recipient
of Restricted Stock evidencing the restrictions, terms and conditions
applicable to such award of Restricted Stock and the understanding of
the parties with respect thereto.
(c) "Board" means the Board of Directors of the Company as the
same may be constituted from time to time.
(d) "Code" means the Internal Revenue Code of 1986, as
amended.
(e) "Committee" means the Committee provided for in Section 3
of the Plan as the same may be constituted from time to time.
(f) "Company" means Noble Drilling Corporation, a Delaware
corporation.
(g) "Corporate Transaction" shall have the meaning as defined
in Section 8 of the Plan.
(h) "Disability" means any termination of employment with the
Company or an Affiliate because of a long-term or total disability, as
determined by the Committee in its sole discretion.
(i) "Exchange Act" means the Securities Exchange Act of 1934,
as amended.
<PAGE> 2
(j) "Fair Market Value" means the fair market value per Share
as determined by the Committee in good faith; provided, however, that if
a Share is listed or admitted to trading on a securities exchange
registered under the Exchange Act, the Fair Market Value per Share shall
be the average of the reported high and low sales price on the date in
question (or if there was no reported sale on such date, on the last
preceding date on which any reported sale occurred) on the principal
securities exchange on which such Share is listed or admitted to
trading, or if a Share is not listed or admitted to trading on any such
exchange but is listed as a national market security on the National
Association of Securities Dealers, Inc. Automated Quotations System
("NASDAQ") or any similar system then in use, the Fair Market Value per
Share shall be the average of the reported high and low sales price on
the date in question (or if there was no reported sale on such date, on
the last preceding date on which any reported sale occurred) on such
system, or if a Share is not listed or admitted to trading on any such
exchange and is not listed as a national market security on NASDAQ but
is quoted on NASDAQ or any similar system then in use, the Fair Market
Value per Share shall be the average of the closing high bid and low
asked quotations on such system for such Share on the date in question.
For purposes of valuing Shares to be made subject to Incentive Options,
the Fair Market Value per Share shall be determined without regard to
any restriction other than one which, by its terms, will never lapse.
(k) "Incentive Option" means an Option that is intended to
satisfy the requirements of Section 422(b) of the Code and Section 17 of
the Plan.
(l) "Non-Employee Director" means a director of the Company
who satisfies the definition thereof under Rule 16b-3 promulgated under
the Exchange Act.
(m) "Nonqualified Option" means an Option that does not
qualify as a statutory stock option under Section 422 or 423 of the
Code.
(n) "Option" means an option to purchase one or more Shares
granted under and pursuant to the Plan. Such Option may be either an
Incentive Option or a Nonqualified Option.
(o) "Optionee" means a person who has been granted an Option
and who has executed an Agreement with the Company.
(p) "Outside Director" means a director of the Company who is
an outside director within the meaning of Section 162(m) of the Code and
the regulations promulgated thereunder.
(q) "Plan" means this Noble Drilling Corporation 1991 Stock
Option and Restricted Stock Plan, as amended.
(r) "Restricted Stock" means Shares issued or transferred
pursuant to Section 20 of the Plan.
(s) "Retirement" means a termination of employment with the
Company or an Affiliate either (i) on a voluntary basis by a person who
is at least 55 years of age and has at least five years of continuous
service with the Company or one or more Affiliates immediately prior to
such termination of employment or (ii) otherwise with the written
consent of the Committee in its sole discretion.
(t) "SARs" means stock appreciation rights granted pursuant to
Section 7 of the Plan.
(u) "Securities Act" means the Securities Act of 1933, as
amended.
(v) "Share" means a share of the Company's present common
stock, par value $.10 per share, and any share or shares of capital
stock or other securities of the Company hereafter issued or issuable in
respect of or in substitution or exchange for each such present share.
Such Shares may be unissued or reacquired Shares, as the Board, in its
sole and absolute discretion, shall from time to time determine.
2
<PAGE> 3
SECTION 3. ADMINISTRATION
The Plan shall be administered by, and the decisions concerning the Plan
shall be made solely by, a Committee of two or more directors of the Company,
all of whom are (a) Non-Employee Directors and (b) beginning immediately after
the first meeting of stockholders of the Company at which directors are to be
elected that occurs after December 31, 1994, Outside Directors. Each member of
the Committee shall be appointed by and shall serve at the pleasure of the
Board. The Board shall have the sole continuing authority to appoint members
of the Committee. In making grants or awards, the Committee shall take into
consideration the contribution the person has made or may make to the success
of the Company or its Affiliates and such other considerations as the Board may
from time to time specify.
The Committee shall elect one of its members as its chairman and shall
hold its meetings at such times and places as it may determine. A majority of
the members of the Committee shall constitute a quorum. All decisions and
determinations of the Committee shall be made by the majority vote or decision
of the members present at any meeting at which a quorum is present; provided,
however, that any decision or determination reduced to writing and signed by
all members of the Committee shall be as fully effective as if it had been made
by a majority vote or decision at a meeting duly called and held. The
Committee may appoint a secretary (who need not be a member of the Committee)
who shall keep minutes of its meetings. The Committee may make any rules and
regulations for the conduct of its business that are not inconsistent with the
express provisions of the Plan, the bylaws or certificate of incorporation of
the Company or any resolutions of the Board.
All questions of interpretation or application of the Plan, or of a
grant of an Option and any SARs that relate to such Option or an award of
Restricted Stock, including questions of interpretation or application of an
Agreement, shall be subject to the determination of the Committee, which
determination shall be final and binding upon all parties.
Subject to the express provisions of the Plan, the Committee shall have
the authority, in its sole and absolute discretion, (a) to adopt, amend or
rescind administrative and interpretive rules and regulations relating to the
Plan; (b) to construe the Plan; (c) to make all other determinations necessary
or advisable for administering the Plan; (d) to determine the terms and
provisions of the respective Agreements (which need not be identical),
including provisions defining or otherwise relating to (i) the term and the
period or periods and extent of exercisability of the Options, (ii) the extent
to which the transferability of Shares issued upon exercise of Options or any
SARs that relate to such Options is restricted, (iii) the effect of termination
of employment upon the exercisability of the Options, and (iv) the effect of
approved leaves of absence (consistent with any applicable regulations of the
Internal Revenue Service) upon the exercisability of such Options; (e) subject
to Sections 9 and 11 of the Plan, to accelerate, for any reason, regardless of
whether the Agreement so provides, the time of exercisability of any Option and
any SARs that relate to such Option that have been granted or the time of the
lapsing of restrictions on Restricted Stock; (f) to construe the respective
Agreements; and (g) to exercise the powers conferred on the Committee under the
Plan. The Board may correct any defect or supply any omission or reconcile any
inconsistency in the Plan in the manner and to the extent it shall deem
expedient to carry it into effect, and it shall be the sole and final judge of
such expediency. The determinations of the Committee or Board, as the case may
be, on the matters referred to in this Section 3 shall be final and conclusive.
SECTION 4. SHARES SUBJECT TO THE PLAN
(a) The total number of Shares that may be purchased pursuant
to Options, issued or transferred pursuant to the exercise of SARs or
awarded as Restricted Stock shall not exceed 10,700,000 in the
aggregate, and the total number of shares for which Options and SARs may
be granted, and which may be awarded as Restricted Stock, to any one
person during any continuous five-year period shall not exceed 1,500,000
in the aggregate; provided that each such maximum number of shares shall
be increased or decreased as provided in Section 13 of the Plan.
(b) At any time and from time to time after the Plan takes
effect, the Committee, pursuant to the provisions herein set forth, may
grant Options and any SARs that relate to such Options and award
Restricted
3
<PAGE> 4
Stock until the maximum number of Shares shall be exhausted or the Plan
shall be sooner terminated; provided, however, that no Incentive Option
and any SARs that relate to such Option shall be granted after January
29, 2007.
(c) Shares subject to an Option that expires or terminates
prior to exercise and Shares that had been previously awarded as
Restricted Stock that have since been forfeited shall be available for
further grant of Options or award as Restricted Stock. No Option shall
be granted and no Restricted Stock shall be awarded if the number of
Shares for which Options have been granted and which pursuant to this
Section are not again available for Option grant, plus the number of
Shares that have been awarded as Restricted Stock, would, if such Option
were granted or such Restricted Stock were awarded, exceed 10,700,000.
(d) Any Shares withheld pursuant to Section 19(c) of the Plan
shall not be available after such withholding for being optioned or
awarded pursuant to the provisions hereof.
(e) Unless the Shares awarded as Restricted Stock are Shares
that have been reacquired by the Company as treasury shares, Restricted
Stock shall be awarded only for services actually rendered, as
determined by the Committee.
SECTION 5. ELIGIBILITY
The persons who shall be eligible to receive grants of Options and any
SARs that relate to such Options, and to receive awards of Restricted Stock,
shall be regular salaried officers or other employees of the Company or one or
more of its Affiliates.
SECTION 6. GRANT OF OPTIONS
(a) From time to time while the Plan is in effect, the
Committee may, in its sole and absolute discretion, select from among
the persons eligible to receive a grant of Options under the Plan
(including persons who have already received such grants of Options)
such one or more of them as in the opinion of the Committee should be
granted Options. The Committee shall thereupon, likewise in its sole
and absolute discretion, determine the number of Shares to be allotted
for option to each person so selected.
(b) Each person so selected shall be offered an Option to
purchase the number of Shares so allotted to him, upon such terms and
conditions, consistent with the provisions of the Plan, as the Committee
may specify. Each such person shall have a reasonable period of time,
to be fixed by the Committee, within which to accept or reject the
proffered Option. Failure to accept within the period so fixed may be
treated as a rejection.
(c) Each person who accepts an Option offered to him shall
enter into an Agreement with the Company, in such form as the Committee
may prescribe, setting forth the terms and conditions of the Option,
whereupon such person shall become a participant in the Plan. In the
event a person is granted both one or more Incentive Options and one or
more Nonqualified Options, such grants shall be evidenced by separate
Agreements, one for each Incentive Option grant and one for each
Nonqualified Option grant. The date on which the Committee completes
all action constituting an offer of an Option to a person, including the
specification of the number of Shares to be subject to the Option, shall
constitute the date on which the Option covered by such Agreement is
granted. In no event, however, shall an Optionee gain any rights in
addition to those specified by the Committee in its grant, regardless of
the time that may pass between the grant of the Option and the actual
signing of the Agreement by the Company and the Optionee.
(d) Each Agreement that includes SARs in addition to an Option
shall comply with the provisions of Section 7 of the Plan.
4
<PAGE> 5
SECTION 7. GRANT OF SARS
The Committee may from time to time grant SARs in conjunction with all
or any portion of any Option either (i) at the time of the initial Option grant
(not including any subsequent modification that may be treated as a new grant
of an Incentive Option for purposes of Section 424(h) of the Code) or (ii) with
respect to Nonqualified Options, at any time after the initial Option grant
while the Nonqualified Option is still outstanding. SARs shall not be granted
other than in conjunction with an Option granted hereunder.
SARs granted hereunder shall comply with the following conditions and
also with the terms of the Agreement governing the Option in conjunction with
which they are granted:
(a) The SAR shall expire no later than the expiration of the
underlying Option.
(b) Upon the exercise of an SAR, the Optionee shall be
entitled to receive payment equal to the excess of the aggregate Fair
Market Value of the Shares with respect to which the SAR is then being
exercised (determined as of the date of such exercise) over the
aggregate purchase price of such Shares as provided in the related
Option. Payment may be made in Shares, valued at their Fair Market
Value on the date of exercise, or in cash, or partly in Shares and
partly in cash, as determined by the Committee in its sole and absolute
discretion.
(c) SARs shall be exercisable (i) only at such time or times
and only to the extent that the Option to which they relate shall be
exercisable, (ii) only when the Fair Market Value of the Shares subject
to the related Option exceeds the purchase price of the Shares as
provided in the related Option, and (iii) only upon surrender of the
related Option or any portion thereof with respect to the Shares for
which the SARs are then being exercised.
(d) Upon exercise of an SAR, a corresponding number of Shares
subject to option under the related Option shall be canceled. Such
canceled Shares shall be charged against the Shares reserved for the
Plan, as provided in Section 4 of the Plan, as if the Option had been
exercised to such extent and shall not be available for future Option
grants or Restricted Stock awards hereunder.
SECTION 8. OPTION PRICE
The option price for each Share covered by an Incentive Option shall not
be less than the greater of (a) the par value of such Share or (b) the Fair
Market Value of such Share at the time such Option is granted. The option
price for each Share covered by a Nonqualified Option shall not be less than
the greater of (a) the par value of such Share or (b) 50 percent of the Fair
Market Value of such Share at the time the Option is granted. Notwithstanding
the two immediately preceding sentences, if the Company or an Affiliate agrees
to substitute a new Option under the Plan for an old Option, or to assume an
old Option, by reason of a corporate merger, consolidation, acquisition of
property or stock, separation, reorganization, or liquidation (any of such
events being referred to herein as a "Corporate Transaction"), the option price
of the Shares covered by each such new Option or assumed Option may be other
than the Fair Market Value of the Shares at the time the Option is granted as
determined by reference to a formula, established at the time of the Corporate
Transaction, which will give effect to such substitution or assumption;
provided, however, in no event shall:
(a) the excess of the aggregate Fair Market Value of the
Shares subject to the Option immediately after the substitution or
assumption over the aggregate option price of such Shares be more than
the excess of the aggregate Fair Market Value of all Shares subject to
the Option immediately prior to the substitution or assumption over the
aggregate option price of such Shares;
(b) in the case of an Incentive Option, the new Option or the
assumption of the old Option give the Optionee additional benefits that
he would not have under the old Option; or
5
<PAGE> 6
(c) the ratio of the option price to the Fair Market Value of
the stock subject to the Option immediately after the substitution or
assumption be more favorable to the Optionee than the ratio of the
option price to the Fair Market Value of the stock subject to the old
Option immediately prior to such substitution or assumption, on a Share
by Share basis.
Notwithstanding the above, the provisions of this Section 8 with respect to the
option price in the event of a Corporate Transaction shall, in the case of an
Incentive Option, be subject to the requirements of Section 424(a) of the Code
and the Treasury regulations and revenue rulings promulgated thereunder. In
the case of an Incentive Option, in the event of a conflict between the terms
of this Section 8 and the above cited statute, regulations and rulings, or in
the event of an omission in this Section 8 of a provision required by said
laws, the latter shall control in all respects and are hereby incorporated
herein by reference as if set out at length.
SECTION 9. OPTION PERIOD AND TERMS OF EXERCISE
(a) Each Option shall be exercisable during such period of
time as the Committee may specify, but in no event for longer than 10
years from the date when the Option is granted; provided, however, that
(i) All rights to exercise an Option and any SARs that
relate to such Option shall, subject to the provisions of
subsection (c) of this Section 9, terminate six months after the
date the Optionee ceases to be employed by at least one of the
employers in the group of employers consisting of the Company and
its Affiliates, for any reason other than death, Disability or
Retirement, except that, in the event of the termination of
employment of the Optionee on account of fraud, dishonesty or
other acts detrimental to the interests of the Company or one or
more of its Affiliates, the Option and any SARs that relate to
such Option shall thereafter be null and void for all purposes.
Employment shall not be deemed to have ceased by reason of the
transfer of employment, without interruption of service, between
or among the Company and any of its Affiliates. In addition, for
purposes of this Plan, employment shall not be deemed to have
ceased by reason of the termination of employment with the
Company or an Affiliate, followed by a reemployment with the
Company or an Affiliate within six months of such initial
termination, provided such reemployment is approved for purposes
of this Section 9(a)(i) by the Committee in its sole discretion,
of (x) a person whose employment terminated initially in December
1996 in connection with the sale by the Company and its
Affiliates of their land drilling assets to Nabors Industries,
Inc. and its affiliates and (y) any person not otherwise provided
for in clause (x) immediately preceding.
(ii) If the Optionee ceases to be employed by at least
one of the employers in the group of employers consisting of the
Company and its Affiliates, by reason of his death, Disability or
Retirement, all rights to exercise such Option and any SARs that
relate to such Option shall, subject to the provisions of
subsection (c) of this Section 9, terminate five years
thereafter.
(b) If an Option is granted with a term shorter than 10 years,
the Committee may extend the term of the Option and any SARs that relate
to such Option, but for not more than 10 years from the date when the
Option was originally granted.
(c) In no event may an Option or any SARs that relate to such
Option be exercised after the expiration of the term thereof.
SECTION 10. OPTIONS AND SARS NOT TRANSFERABLE
No Option or any SARs that relate to such Option shall be transferable
by the Optionee otherwise than by will or the applicable laws of descent and
distribution.
6
<PAGE> 7
SECTION 11. EXERCISE OF OPTIONS AND SARS
(a) During the lifetime of an Optionee, only such Optionee may
exercise an Option or any SARs that relate to such Option granted to
him. In the event of his death, any then exercisable portion of his
Option and any SARs that relate to such Option may, within three years
thereafter, or earlier date of termination of the Option, be exercised
in whole or in part by the duly authorized representative of the
deceased Optionee's estate.
(b) At any time, and from time to time, during the period when
any Option and any SARs that relate to such Option, or a portion
thereof, are exercisable, such Option or SARs, or portion thereof, may
be exercised in whole or in part; provided, however, that the Committee
may require any Option or SAR that is partially exercised to be so
exercised with respect to at least a stated minimum number of Shares.
(c) Each exercise of an Option, or a portion thereof, shall be
evidenced by a notice in writing to the Company accompanied by payment
in full of the option price of the Shares then being purchased. Payment
in full shall mean payment of the full amount due, either in cash, by
certified check or cashier's check, or, with the consent of the
Committee, with Shares owned by the Optionee, including an actual or
deemed multiple series of exchanges of such Shares.
Notwithstanding anything contained herein to the contrary, at the
request of an Optionee and to the extent permitted by applicable law,
the Committee may, in its sole and absolute discretion, selectively
approve arrangements with a brokerage firm or firms under which any such
brokerage firm shall, on behalf of the Optionee, make payment in full to
the Company of the option price of the Shares then being purchased, and
the Company, pursuant to an irrevocable notice in writing from the
Optionee, shall make prompt delivery of one or more certificates for the
appropriate number of Shares to such brokerage firm. Payment in full
for purposes of the immediately preceding sentence shall mean payment of
the full amount due, either in cash or by certified check or cashier's
check.
(d) Each exercise of SARs, or a portion thereof, shall be
evidenced by a notice in writing to the Company.
(e) No Shares shall be issued upon exercise of an Option until
full payment therefor has been made, and an Optionee shall have none of
the rights of a stockholder until Shares are issued to him.
(f) Nothing herein or in any Agreement shall require the
Company to issue any Shares upon exercise of an Option or SAR if such
issuance would, in the opinion of counsel for the Company, constitute a
violation of the Securities Act or any similar or superseding statute or
statutes, or any other applicable statute or regulation, as then in
effect. Upon the exercise of an Option or SAR (as a result of which the
Optionee receives Shares), or portion thereof, the Optionee shall give
to the Company satisfactory evidence that he is acquiring such Shares
for the purposes of investment only and not with a view to their
distribution; provided, however, if or to the extent that the Shares
delivered to the Optionee shall be included in a registration statement
filed by the Company under the Securities Act, such investment
representation shall be abrogated.
SECTION 12. DELIVERY OF STOCK CERTIFICATES
As promptly as may be practicable after an Option or SAR (as a result of
the exercise of which the Optionee receives Shares), or a portion thereof, has
been exercised as hereinabove provided, the Company shall make delivery of one
or more certificates for the appropriate number of Shares. In the event that
an Optionee exercises both (i) an Incentive Option or SARs that relate to such
Option (as a result of which the Optionee receives Shares), or a portion
thereof, and (ii) a Nonqualified Option or SARs that relate to such Option (as
a result of which the Optionee receives Shares), or a portion thereof, separate
stock certificates shall be issued, one for the Shares subject to the Incentive
Option and one for the Shares subject to the Nonqualified Option.
7
<PAGE> 8
SECTION 13. CHANGES IN COMPANY'S SHARES AND CERTAIN CORPORATE
TRANSACTIONS
If at any time while the Plan is in effect there shall be any increase
or decrease in the number of issued and outstanding Shares of the Company
effected without receipt of consideration therefor by the Company, through the
declaration of a stock dividend or through any recapitalization or merger or
otherwise in which the Company is the surviving corporation, resulting in a
stock split-up, combination or exchange of Shares of the Company, then and in
each such event:
(a) An appropriate adjustment shall be made in the maximum
number of Shares then subject to being optioned or awarded as Restricted
Stock under the Plan, to the end that the same proportion of the
Company's issued and outstanding Shares shall continue to be subject to
being so optioned and awarded;
(b) Appropriate adjustment shall be made in the number of
Shares and the option price per Share thereof then subject to purchase
pursuant to each Option previously granted and then outstanding, to the
end that the same proportion of the Company's issued and outstanding
Shares in each such instance shall remain subject to purchase at the
same aggregate option price; and
(c) In the case of Incentive Options, any such adjustments
shall in all respects satisfy the requirements of Section 424(a) of the
Code and the Treasury regulations and revenue rulings promulgated
thereunder.
Except as is otherwise expressly provided herein, the issue by the
Company of shares of its capital stock of any class, or securities convertible
into shares of capital stock of any class, either in connection with a direct
sale or upon the exercise of rights or warrants to subscribe therefor, or upon
conversion of shares or obligations of the Company convertible into such shares
or other securities, shall not affect, and no adjustment by reason thereof
shall be made with respect to, the number of or option price of Shares then
subject to outstanding Options granted under the Plan. Furthermore, the
presence of outstanding Options granted under the Plan shall not affect in any
manner the right or power of the Company to make, authorize or consummate (i)
any or all adjustments, recapitalizations, reorganizations or other changes in
the Company's capital structure or its business; (ii) any merger or
consolidation of the Company; (iii) any issue by the Company of debt securities
or preferred stock that would rank above the Shares subject to outstanding
Options granted under the Plan; (iv) the dissolution or liquidation of the
Company; (v) any sale, transfer or assignment of all or any part of the assets
or business of the Company; or (vi) any other corporate act or proceeding,
whether of a similar character or otherwise.
SECTION 14. EFFECTIVE DATE
The Plan was originally adopted by the Board on January 31, 1991 and
approved by the stockholders of the Company on April 25, 1991. The Plan as
amended and restated on January 30, 1997 shall be effective as of that date,
the date of the adoption thereof by the Board, but shall be submitted to the
stockholders of the Company for approval and ratification at the next regular
or special meeting thereof to be held after December 31, 1996. If at such a
meeting of the stockholders of the Company a quorum is present, the Plan as
amended and restated shall be presented for approval and ratification, and
unless at such a meeting the Plan as amended and restated is approved and
ratified by the affirmative vote of a majority of the outstanding shares of
common stock, par value $.10 per share, of the Company present in person or by
proxy and entitled to vote, then, and in such event, the amendments to the Plan
adopted by the Board on January 30, 1997 (except for the amendment set forth in
Section 9(a)(i)(x) which shall, notwithstanding anything herein contained to
the contrary, be effective from and after the date of its adoption by the
Board) and any then outstanding Options (and any SARs that relate to such
Options) that may have been conditionally granted prior to such stockholder
meeting dependent upon an increase in the number of Shares subject to the Plan
shall become null and void and of no further force or effect. No award of
Restricted Stock dependent upon an increase in the number of Shares subject to
the Plan shall be made prior to the approval and ratification of the Plan as
amended and restated by stockholders in accordance with this Section 14.
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SECTION 15. AMENDMENT, SUSPENSION OR TERMINATION
The Board may at any time amend, suspend or terminate the Plan;
provided, however, that after the stockholders have approved and ratified the
Plan in accordance with Section 14 of the Plan, the Board may not, without
approval of the stockholders of the Company, amend the Plan so as to (a)
increase the maximum number of Shares subject thereto, as specified in Sections
4(a) and 13 of the Plan, or (b) reduce the option price for Shares covered by
Options granted hereunder below the price specified in Section 8 of the Plan;
and provided further, that the Board may not modify, impair or cancel any
outstanding Option or SAR that relates to such Option, or the restrictions,
terms or conditions applicable to Shares of Restricted Stock, without the
consent of the holder thereof.
SECTION 16. REQUIREMENTS OF LAW
Notwithstanding anything contained herein or in any Agreement to the
contrary, the Company shall not be required to sell or issue Shares under any
Option or SAR if the issuance thereof would constitute a violation by the
Optionee or the Company of any provision of any law or regulation of any
governmental authority or any national securities exchange; and as a condition
of any sale or issuance of Shares upon exercise of an Option or SAR, the
Company may require such agreements or undertakings, if any, as the Company may
deem necessary or advisable to assure compliance with any such law or
regulation.
SECTION 17. INCENTIVE OPTIONS
The Committee may, in its sole and absolute discretion, designate any
Option granted under the Plan as an Incentive Option intended to qualify under
Section 422(b) of the Code. Any provision of the Plan to the contrary
notwithstanding, (a) no Incentive Option shall be granted to any person who, at
the time such Incentive Option is granted, owns stock possessing more than 10
percent of the total combined voting power of all classes of stock of the
Company or any Affiliate unless the option price under such Incentive Option is
at least 110 percent of the Fair Market Value of the Shares subject to the
Incentive Option at the date of its grant and such Incentive Option is not
exercisable after the expiration of five years from the date of its grant; and
(b) the aggregate Fair Market Value of the Shares subject to an Incentive
Option and the aggregate Fair Market Value of the shares of stock of the
Company or any Affiliate (or a predecessor corporation of the Company or an
Affiliate) subject to any other incentive stock option (within the meaning of
Section 422(b) of the Code) of the Company and its Affiliates (or a predecessor
corporation of any such corporation), that may become first exercisable in any
calendar year, shall not (with respect to any Optionee) exceed $100,000,
determined as of the date the Incentive Option is granted.
SECTION 18. MODIFICATION OF OPTIONS AND SARS
Subject to the terms and conditions of and within the limitations of the
Plan, the Committee may modify, extend or renew outstanding Options and any
SARs that relate to such Options granted under the Plan, or accept the
surrender of Options and any SARs that relate to such Options outstanding
hereunder (to the extent not theretofore exercised) and authorize the granting
of new Options and any SARs that relate to such new Options hereunder in
substitution therefor (to the extent not theretofore exercised).
Notwithstanding the foregoing provisions of this Section 18, no modification of
an Option and any SARs that relate to such Option granted hereunder shall,
without the consent of the Optionee, alter or impair any rights or obligations
under any Option and any SARs that relate to such Option theretofore granted
hereunder to such Optionee, except as may be necessary, with respect to
Incentive Options, to satisfy the requirements of Section 422(b) of the Code.
SECTION 19. AGREEMENT PROVISIONS
(a) Each Agreement shall contain such provisions (including,
without limitation, restrictions or the removal of restrictions upon the
exercise of the Option and any SARs that relate to such Option and the
9
<PAGE> 10
transfer of shares thereby acquired) as the Committee shall deem
advisable. Each Agreement relating to an Option shall identify the
Option evidenced thereby as an Incentive Option or Nonqualified Option,
as the case may be. Incentive Options and Nonqualified Options may not
both be covered by a single Agreement. Each such Agreement relating to
Incentive Options shall contain such limitations and restrictions upon
the exercise of the Incentive Option as shall be necessary for the
Incentive Option to which such Agreement relates to constitute an
incentive stock option, as defined in Section 422(b) of the Code.
(b) Each Agreement shall recite that it is subject to the Plan
and that the Plan shall govern where there is any inconsistency between
the Plan and the Agreement.
(c) Each Agreement shall contain a covenant by the Optionee,
in such form as the Committee may require in its discretion, that he
consents to and will take whatever affirmative actions are required, in
the opinion of the Committee, to enable the Company or appropriate
Affiliate to satisfy its Federal income tax and FICA and any applicable
state and local withholding obligations. An Agreement may contain such
provisions as the Committee deems appropriate to enable the Company or
its Affiliates to satisfy such withholding obligations, including
provisions permitting the Company, upon the exercise of an Option or SAR
(as a result of which the Optionee receives Shares), to withhold Shares
otherwise issuable to the Optionee exercising the Option or SAR, or to
accept delivery of Shares owned by the Optionee, to satisfy the
applicable withholding obligations.
(d) Each Agreement relating to an Incentive Option shall
contain a covenant by the Optionee immediately to notify the Company in
writing of any disqualifying disposition (within the meaning of Section
421(b) of the Code) of Shares received upon the exercise of an Incentive
Option.
SECTION 20. RESTRICTED STOCK
(a) Subject to the provisions of Section 14 of the Plan, the
Committee may from time to time, in its sole and absolute discretion,
award Shares of Restricted Stock to such persons as it shall select from
among those persons who are eligible under Section 5 of the Plan to
receive awards of Restricted Stock. Any award of Restricted Stock shall
be made from Shares subject hereto as provided in Section 4 of the Plan.
(b) A Share of Restricted Stock shall be subject to such
restrictions, terms and conditions, including forfeitures, if any, as
may be determined by the Committee, which may include, without
limitation, the rendition of services to the Company or its Affiliates
for a specified time or the achievement of specific goals, and to the
further restriction that no such Share may be sold, assigned,
transferred, discounted, exchanged, pledged or otherwise encumbered or
disposed of until the terms and conditions set by the Committee at the
time of the award of the Restricted Stock have been satisfied. Each
recipient of an award of Restricted Stock shall enter into an Agreement
with the Company, in such form as the Committee shall prescribe, setting
forth the restrictions, terms and conditions of such award, whereupon
such recipient shall become a participant in the Plan.
If a person is awarded Shares of Restricted Stock, whether or not
escrowed as provided below, the person shall be the record owner of such
Shares and shall have all the rights of a stockholder with respect to
such Shares (unless the escrow agreement, if any, specifically provides
otherwise), including the right to vote and the right to receive
dividends or other distributions made or paid with respect to such
Shares. Any certificate or certificates representing Shares of
Restricted Stock shall bear a legend similar to the following:
The shares represented by this certificate have been
issued pursuant to the terms of the Noble Drilling Corporation
1991 Stock Option and Restricted Stock Plan and may not be sold,
assigned, transferred, discounted, exchanged, pledged or
otherwise encumbered or disposed of in any manner except as set
forth in the terms of the agreement embodying the award of such
shares dated , 19 .
10
<PAGE> 11
In order to enforce the restrictions, terms and conditions that
may be applicable to a person's Shares of Restricted Stock, the
Committee may require the person, upon the receipt of a certificate or
certificates representing such Shares, or at any time thereafter, to
deposit such certificate or certificates, together with stock powers and
other instruments of transfer, appropriately endorsed in blank, with the
Company or an escrow agent designated by the Company under an escrow
agreement in such form as by the Committee shall prescribe.
After the satisfaction of the restrictions, terms and conditions
set by the Committee at the time of an award of Restricted Stock to a
person, a new certificate, without the legend set forth above, for the
number of Shares that are no longer subject to such restrictions, terms
and conditions shall be delivered to the person.
If a person to whom Restricted Stock has been awarded dies after
satisfaction of the restrictions, terms and conditions for the payment
of all or a portion of the award but prior to the actual payment of all
or such portion thereof, such payment shall be made to the person's
beneficiary or beneficiaries at the time and in the same manner that
such payment would have been made to the person.
The Committee shall have the authority (and the Agreement
evidencing an award of Restricted Stock may so provide) to cancel all or
any portion of any outstanding restrictions prior to the expiration of
such restrictions with respect to any or all of the Shares of Restricted
Stock awarded to a person hereunder on such terms and conditions as the
Committee may deem appropriate.
(c) Without limiting the provisions of the first paragraph of
subsection (b) of this Section 20, if a person to whom Restricted Stock
has been awarded ceases to be employed by at least one of the employers
in the group of employers consisting of the Company and its Affiliates,
for any reason, prior to the satisfaction of any terms and conditions of
an award, any Restricted Stock remaining subject to restrictions shall
thereupon be forfeited by the person and transferred to, and reacquired
by, the Company or an Affiliate at no cost to the Company or the
Affiliate; provided, however, if the cessation is due to the person's
death, Retirement or Disability, the Committee may, in its sole and
absolute discretion, deem that the terms and conditions have been met
for all or part of such remaining portion. In the event of such
forfeiture, the person, or in the event of his death, his personal
representative, shall forthwith deliver to the Secretary of the Company
the certificates for the Shares of Restricted Stock remaining subject to
such restrictions, accompanied by such instruments of transfer, if any,
as may reasonably be required by the Secretary of the Company.
(d) In case of any consolidation or merger of another
corporation into the Company in which the Company is the surviving
corporation and in which there is a reclassification or change
(including a change to the right to receive cash or other property) of
the Shares (other than a change in par value, or from par value to no
par value, or as a result of a subdivision or combination, but including
any change in such shares into two or more classes or series of shares),
the Committee may provide that payment of Restricted Stock shall take
the form of the kind and amount of shares of stock and other securities
(including those of any new direct or indirect parent of the Company),
property, cash or any combination thereof receivable upon such
consolidation or merger.
SECTION 21. GENERAL
(a) The proceeds received by the Company from the sale of
Shares pursuant to Options shall be used for general corporate purposes.
(b) Nothing contained in the Plan or in any Agreement shall
confer upon any Optionee or recipient of Restricted Stock the right to
continue in the employ of the Company or any Affiliate, or interfere in
any way with the rights of the Company or any Affiliate to terminate his
employment at any time, with or without cause.
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<PAGE> 12
(c) Neither the members of the Board nor any member of the
Committee shall be liable for any act, omission or determination taken
or made in good faith with respect to the Plan or any Option and any
SARs that relate to such Option granted hereunder or any Restricted
Stock awarded hereunder; and the members of the Board and the Committee
shall be entitled to indemnification and reimbursement by the Company in
respect of any claim, loss, damage or expenses (including counsel fees)
arising therefrom to the full extent permitted by law and under any
directors' and officers' liability or similar insurance coverage that
may be in effect from time to time.
(d) Any payment of cash or any issuance or transfer of Shares
to the Optionee, or to his legal representative, heir, legatee or
distributee, in accordance with the provisions hereof, shall, to the
extent thereof, be in full satisfaction of all claims of such persons
hereunder. The Committee may require any Optionee, legal
representative, heir, legatee or distributee, as a condition precedent
to such payment, to execute a release and receipt therefor in such form
as it shall determine.
(e) Neither the Committee, the Board nor the Company
guarantees the Shares from loss or depreciation.
(f) All expenses incident to the administration, termination
or protection of the Plan, including, but not limited to, legal and
accounting fees, shall be paid by the Company or its Affiliates.
(g) Records of the Company and its Affiliates regarding a
person's period of employment, termination of employment and the reason
therefor, leaves of absence, re-employment and other matters shall be
conclusive for all purposes hereunder, unless determined by the
Committee to be incorrect.
(h) Any action required of the Company shall be by resolution
of its Board or by a person authorized to act by resolution of the
Board. Any action required of the Committee shall be by resolution of
the Committee or by a person authorized to act by resolution of the
Committee.
(i) If any provision of the Plan or any Agreement is held to
be illegal or invalid for any reason, the illegality or invalidity shall
not affect the remaining provisions of the Plan or such Agreement, as
the case may be, but such provision shall be fully severable and the
Plan or such Agreement, as the case may be, shall be construed and
enforced as if the illegal or invalid provision had never been included
herein or therein.
(j) Whenever any notice is required or permitted hereunder,
such notice must be in writing and personally delivered or sent by mail.
Any notice required or permitted to be delivered hereunder shall be
deemed to be delivered on the date on which it is personally delivered,
or, whether actually received or not, on the third business day after it
is deposited in the United States mail, certified or registered, postage
prepaid, addressed to the person who is to receive it at the address
which such person has theretofore specified by written notice delivered
in accordance herewith. The Company, an Optionee or a recipient of
Restricted Stock may change, at any time and from time to time, by
written notice to the other, the address that it or he had theretofore
specified for receiving notices. Until changed in accordance herewith,
the Company and each Optionee and recipient of Restricted Stock shall
specify as its and his address for receiving notices the address set
forth in the Agreement pertaining to the Shares to which such notice
relates.
(k) Any person entitled to notice hereunder may waive such
notice.
(l) The Plan shall be binding upon the Optionee or recipient
of Restricted Stock, his heirs, legatees, distributees and legal
representatives, upon the Company, its successors and assigns, and upon
the Committee, and its successors.
(m) The titles and headings of Sections and paragraphs are
included for convenience of reference only and are not to be considered
in the construction of the provisions hereof.
(n) All questions arising with respect to the provisions of
the Plan shall be determined by application of the laws of the State of
Texas except to the extent Texas law is preempted by Federal law.
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(o) Words used in the masculine shall apply to the feminine
where applicable, and wherever the context of the Plan dictates, the
plural shall be read as the singular and the singular as the plural.
13
<PAGE> 1
EXHIBIT 10.21
NOBLE DRILLING CORPORATION
SHORT TERM INCENTIVE PLAN
Revised: April 1996*
PURPOSE
The success of Noble Drilling Corporation ("Noble Drilling") and its
subsidiaries (collectively, unless the context otherwise requires, the
"Company") is a result of the collective efforts of all employees. Each position
within the Company has the ability to make a positive contribution to key
factors making up the components used to measure a successful year. Those
components include factors such as: Increase in Shareholder Value, Cash Flow
from Operations, Major New Contracts/Operating Days, Net Income and Safety. In
order to intensify each employee's attention on available opportunities to
increase revenues, control costs and seek out profitable ventures, the Company
maintains a bonus program that rewards employees for successful achievement of
specific goals. It is management's belief that shareholders will benefit from
the creation of an environment that ties employee compensation to the success of
the Company.
PARTICIPATION AND ELIGIBILITY
The bonus plan covers all full-time employees in salary classifications 18 and
higher who have completed one year of service at the close of the bonus plan
year, which will be a calendar year. The bonus earned by employees with less
than two full years of service will be adjusted based upon the number of full
months employed compared to twenty-four months. Additionally, no bonus payments
will be made for partial year's service; the eligibility will be determined from
the employee roster at the close of the bonus plan year.
STRUCTURE
TARGET BONUS
The target bonus amount shall be determined on an aggregate basis for each
division and department. The target bonus shall be the base salary at year end
of eligible employees multiplied times the appropriate percentage factor
assigned to the salary classification. Salary classifications and target bonus
factors are as follows:
Salary Classification(1) Target Factor
------------------------ -------------
18N through 23N 15%
24N through 25N 20%
26N through 27N 25%
28N through 32N 30%
30C through 32C 30%
33C through 36C 35%
37C 70%
- ------------------
(1) There is some grade classification variance by division.
* Established 1977.
- 1 -
<PAGE> 2
GOALS
At the end of each year, the total bonus pool will be determined by the Board of
Directors, considering target bonus levels, the Board's assessment of overall
company results, and attainment of specific, predetermined division or corporate
goals. Goals in the following categories will be recommended each year by the
Chief Executive Officer of Noble Drilling and approved by the Board of Directors
for the corporation and for each division. The percentage weighting assigned to
each goal shall be as follows subject to annual review by the Board of
Directors.
Corporate Goals Assigned Weight
--------------- ---------------
1. Increase shareholder value 30%
2. Budgeted cash flow from operations 30%
3. Major new contracts(2)/operating days 20%
4. Budgeted net income 10%
5. Safety results 10%
Division Goals Assigned Weight
-------------- ---------------
(Gulf Coast Land, Gulf Coast Marine, Canada,
Nigeria, Venezuela, Middle East and Zaire)
1. Budgeted cash flow 35%
2. Budgeted total daily operating costs 35%
3. Budgeted capital expenditures 10%
4. Safety results 10%
5. Rig maintenance and appearance 10%
* Rig Managers in land divisions and Assistant Rig Managers in all divisions
will be in a special 10% bonus category. Platform Superintendents and
Toolpushers in the U.K. division will be in a special 5% bonus category.
U.K. and Triton Goals Assigned Weight
--------------------- ---------------
1. Budgeted net income 80%
2. Safety results 20%
The goal weighting percentage will be used in measuring overall performance,
considering measurement of actual results measured against the goal for each
factor. The adjustment to the goal weighting will be based upon the following
schedule.
- ------------------
(2) Defined: One (1) year contract with a 20% internal rate of return,
$8.5 million in revenue - applicable to international divisions.
- 2 -
<PAGE> 3
Goal Achievement Range Adjustment Factor
---------------------- -----------------
Greater than 135% 2.00
126--135% 1.75
116--125% 1.50
106--115% 1.25
96--105% 1.00
86-- 95% .75
76-- 85% .50
Less than 75% .00
The target bonus for corporate employees will be adjusted to reflect the
combined percentage of achievement of all assigned corporate goals. The target
bonus for division employees will be adjusted to reflect the combined percentage
of achievement of all assigned goals using the ratio of 50 percent for division
goal achievement and 50 percent for corporate goal achievement. Accordingly, the
bonus payable to division employees is dependent on the level of achievement of
both division and corporate goals. The dollar amount of the bonus payable, if
any, will be calculated using the target bonus amount times the applicable
multiplier determined under the following adjustment schedule:
Combined Target Bonus
Goal Achievement Payable
---------------- ------------
Greater than 160% 2.00
141--160% 1.75
131--140% 1.50
121--130% 1.40
106--120% 1.20
96--105% 1.00
76-- 95% .75
66-- 75% .25
Below 65% .00
BONUS ALLOCATION
Each division manager, department head and operating committee member shall
receive a bonus (assuming a bonus is payable) as calculated using the target
bonus times the applicable multiplier. The remaining bonus pool shall be
allocated to eligible employees within the division or department based upon
merit. Deviation above or below the target bonus percent must be justified in
writing by the employee's supervisor. Division managers and department heads
shall submit the allocated bonus listing to the Chief Executive Officer of Noble
Drilling for review and approval. All bonus calculations, allocations and
recommendations are subject to review and approval by the Compensation Committee
of the Board of Directors.
- 3 -
<PAGE> 4
GOAL FLEXIBILITY
It is intended that the total bonus pool will reflect the best judgment of the
Board of Directors in determining overall Company performance for the year. In
determining overall Company performance, the Board will consider the Company's
performance in relation to the pre-determined goals and market conditions.
However, because the goals are established in November/December of the preceding
plan year, some consideration to subsequent budget revisions may be given. It is
expected that the Company will prepare budgets and forecasts in March/April of
the plan year. If such budgets have substantially changed due to subsequent
events, then the Chief Executive Officer of Noble Drilling shall, at his
discretion, submit revised goals to the Board of Directors of Noble Drilling for
its approval. Revision to the goals can be considered subsequent to April at the
Board's discretion.
CORPORATE WILL NOT BE ELIGIBLE TO RECEIVE BONUSES UNDER THE STIP UNLESS POSITIVE
NET EARNINGS ARE ACHIEVED.
- 4 -
<PAGE> 1
EXHIBIT 10.25
NOBLE DRILLING CORPORATION
REGISTRATION RIGHTS AGREEMENT
This REGISTRATION RIGHTS AGREEMENT dated as of July 1, 1996 (this
"Agreement") by and between NOBLE DRILLING CORPORATION, a Delaware corporation
(the "Company"), and ROYAL NEDLLOYD N.V., a Netherlands corporation (the
"Stockholder");
W I T N E S S E T H:
WHEREAS, the Company, the Stockholder and Neddrill Holding B.V., a
Netherlands corporation and a wholly owned subsidiary of the Stockholder
("Seller"), are parties to that certain Agreement of Sale and Purchase dated as
of April 25, 1996 (the "Purchase Agreement") pursuant to which the Company will
purchase the Assets (as defined in the Purchase Agreement) from Seller and its
subsidiaries (the "Acquisition"); and
WHEREAS, the Purchase Price (as defined in the Purchase Agreement)
payable by the Company under the Purchase Agreement includes 5,000,000 shares
of common stock, par value $.10 per share, of the Company ("Common Stock"),
which the Stockholder has agreed it will not, directly or indirectly, sell,
assign or otherwise transfer prior to the date that is nine months after the
Closing Date (as defined in the Purchase Agreement); and
WHEREAS, the Company has agreed to provide to the Stockholder the
limited registration rights set forth herein;
NOW, THEREFORE, in consideration of the premises and the mutual terms,
covenants and conditions herein contained, and intending to be legally bound
hereby, the parties hereto hereby agree as follows:
ARTICLE I
REGISTRATION RIGHTS
The Company and the Stockholder covenant and agree as follows:
1.1 Definitions. For purposes of this Agreement:
(a) The terms "register," "registered" and "registration" refer to a
registration of securities effected by preparing and filing a registration
statement or similar document in compliance with the Securities Act (as defined
below), and the declaration or ordering of effectiveness of such registration
statement or document.
(b) The term "Registrable Securities" means (i) the Common Stock
received by the Stockholder pursuant to the Acquisition and (ii) a dividend or
other distribution with respect to, or in exchange for or in replacement of,
such Common Stock.
(c) The term "Restricted Securities" means the Registrable Securities
upon original issuance thereof, subject to the provisions of Section 1.2
hereof.
<PAGE> 2
(d) The term "Person" means an individual, partnership, corporation,
limited liability company, trust or unincorporated organization, or government
or agency or political subdivision thereof.
(e) The term "Board" means the Board of Directors of the Company.
(f) The term "Commission" means the Securities and Exchange
Commission.
(g) The term "Securities Act" means the Securities Act of 1933, as
amended, and the term "Exchange Act" means the Securities Exchange Act of 1934,
as amended.
(h) The term "Beall Agreement" means that certain Registration
Agreement dated as of April 22, 1994 between the Company and Joseph E. Beall.
(i) The term "PAJW Holder" means any Person holding "Registrable
Securities" under that certain Registration Rights Agreement dated as of
September 15, 1994 between the Company and P.A.J.W. Corporation (the "PAJW
Agreement").
(j) The term "Best Efforts" means a Person's best efforts in
accordance with reasonable commercial practice and without the incurrence of
unreasonable expense.
1.2 Securities Subject to this Agreement. The securities entitled to
the benefits of this Agreement are the Registrable Securities but with respect
to any particular Registrable Security, only so long as such security continues
to be a Restricted Security. A Registrable Security ceases to be a Restricted
Security when (a) it has been effectively registered under the Securities Act
and disposed of in accordance with the registration statement covering it, (b)
it is sold pursuant to Rule 144 or Rule 145 (or any similar provision then in
force) under the Securities Act or (c) it has otherwise been transferred by the
Stockholder.
1.3 Registration on Request.
(a) If, at any time after April 1, 1997 and prior to July 1, 1999,
the Company shall receive a written request from the Stockholder that the
Company file a registration statement under the Securities Act covering the
registration of Registrable Securities, then the Company shall, subject to the
limitations of Sections 1.3(c), 1.5 and 1.7 hereof, effect the registration of
all Registrable Securities that the Stockholder requests to be registered
within 30 days of the receipt by the Company of such written request by means
of a shelf registration statement on any appropriate form under the Securities
Act for an offering to be made on a continuous basis pursuant to Rule 415 under
the Securities Act. The Company agrees to use its Best Efforts to keep such
shelf registration statement continuously effective for a period of six months
following the date on which such shelf registration statement is declared
effective (plus the number of days of any discontinuance described below).
(b) If the Stockholder intends to distribute the Registrable
Securities covered by the request by means of an underwriting, it shall so
advise the Company as a part of its request made pursuant to this Section 1.3.
(c) The Company is obligated to effect one registration pursuant to
this Section 1.3; provided, however, that the Company shall not be obligated to
effect any registration pursuant to this Section 1.3 if the number of shares of
Registrable
2
<PAGE> 3
Securities then held by the Stockholder shall be less than one percent of the
then outstanding Common Stock. A registration shall not be deemed to have been
effected (i) unless it has become effective and remained effective for the
period specified in Section 1.3(a) or until the Registrable Securities
registered under such registration statement have been sold, or (ii) if, after
it has become effective, such registration is terminated by a stop order,
injunction or other order of the Commission or other governmental agency or
court.
(d) Subject to Section 1.3(e), any holder of shares of Common Stock
that is a party to an agreement with the Company pursuant to which such holder
is granted registration rights under the Securities Act shall also have the
right to include such shares in any shelf registration pursuant to this Section
1.3.
(e) If any of the Registrable Securities registered pursuant to any
shelf registration pursuant to this Section 1.3 are to be sold in an
underwritten offering, and the managing underwriter or underwriters deliver an
opinion to the Company and the Stockholder that the total number of shares of
Common Stock which the Stockholder and any other Persons intend to include in
such offering exceeds the number of shares that can be sold in such offering,
then there shall be included in such underwritten offering the number of shares
of Common Stock which in the opinion of such underwriters can be sold, and such
shares shall be allocated pro rata among the holders of shares of Common Stock
to be sold on the basis of the number of shares of Common Stock to be
registered; provided, that if shares of Common Stock are being offered for the
account of other Persons as well as the Stockholder, a reduction in number of
shares shall first be made from the shares intended to be offered by such
Persons other than the Stockholder, except that the shares of Common Stock
intended to be offered by the Stockholder shall be reduced prior to any
reduction of the shares of Common Stock intended to be offered by any PAJW
Holder. Anything in this Agreement to the contrary notwithstanding, in the
event that the Stockholder requests registration of its Registrable Securities
pursuant to this Section 1.3 and shares representing 50 percent or more of the
Registrable Securities requested to be included by the Stockholder are excluded
from the offering by the managing underwriter or underwriters thereof, then
such registration shall not constitute, or be counted as, the registration
requested by the Stockholder pursuant to Section 1.3 hereof.
(f) Anything in this Agreement to the contrary notwithstanding, the
Company shall not be required to register any Registrable Securities pursuant
to this Section 1.3 if the Stockholder had the opportunity to register
Registrable Securities pursuant to Section 1.4 hereof within the six months
immediately preceding such request, but declined to do so; provided, however,
that the foregoing provisions of this paragraph (f) shall not apply if the
Stockholder requested registration of such Registrable Securities pursuant to
Section 1.4 hereof and 25 percent or more of such Registrable Securities were
excluded from the offering by the managing underwriter or underwriters thereof.
1.4 Company Registration. At any time prior to July 1, 1999 that the
Company proposes to register (including for this purpose a registration
effected by the Company for stockholders other than the Stockholder) any shares
of its Common Stock under the Securities Act for sale within such period (other
than registration of the Common Stock for issuance or sale (a) pursuant to
Section 1.3 hereof or (b) in connection with (i) employee or non-employee
director compensation or benefit programs, (ii) an exchange offer or an
offering of securities solely to the existing stockholders or employees of the
Company or (iii) an acquisition, merger or other business combination using a
registration statement on Form S-4 or any
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successor or other appropriate form), the Company will give prompt written
notice (which, in any event, shall be given no less than 15 days prior to the
filing of a registration statement with respect to such offering) to the
Stockholder of its intention so to do and, upon the written request of the
Stockholder sent within 15 days after the effective date of any such notice,
the Company will, subject to the provisions of Sections 1.5 and 1.7 hereof, use
its Best Efforts to cause all Registrable Securities as to which the
Stockholder shall have so requested registration, to be registered under the
Securities Act, all to the extent necessary to permit the sale in such offering
of the Registrable Securities so registered on behalf of the Stockholder in the
same manner as the Company (or stockholder other than the Stockholder, as the
case may be) proposes to offer its shares of Common Stock. The Company shall
use its Best Efforts to cause the managing underwriter or underwriters of a
proposed underwritten offering to permit the Registrable Securities requested
by the Stockholder to be included in the registration for such offering on the
same terms and conditions as the shares of Common Stock of the Company included
therein. Notwithstanding the foregoing, if the managing underwriter or
underwriters of such offering deliver an opinion to the Company and the
Stockholder that the total number of shares of Common Stock which the
Stockholder or the Company, and any other Person, intend to include in such
offering will in the good faith opinion of such managing underwriter or
underwriters materially and adversely affect the success of such offering, then
the number of shares of Common Stock to be offered for the account of the
Stockholder shall be reduced pro rata based upon the number of shares of Common
Stock proposed to be sold by the Company, the Stockholder and other Persons to
the extent necessary to reduce the total number of shares of Common Stock to be
included in such offering to the number of shares recommended by such managing
underwriter; provided, that if shares of Common Stock are being offered for the
account of other Persons as well as the Company, such reduction shall first be
made from the shares of Common Stock intended to be offered by such Persons
other than the Stockholder, except that the shares of Common Stock intended to
be offered by the Stockholder shall be reduced prior to any reduction of the
shares of Common Stock intended to be offered by any PAJW Holder.
1.5 Obligations of the Company. If and whenever the Company is
required by the provisions of this Agreement to use its Best Efforts to effect
the registration of any Registrable Securities, the Company shall as
expeditiously as reasonably practicable:
(a) Prepare and file with the Commission a registration statement on
an appropriate form under the Securities Act and use its Best Efforts to cause
such registration statement to become effective; provided, that before filing a
registration statement or prospectus or any amendments or supplements thereto,
including documents incorporated by reference after the initial filing of any
registration statement, as soon as practicable, the Company will furnish to the
Stockholder and the underwriters, if any, copies of all such documents proposed
to be filed, which documents will be subject to the review of the Stockholder
and the underwriters, and the Company will not file any registration statement
or amendment thereto, or any prospectus or any supplement thereto (including
such documents incorporated by reference) to which the Stockholder or the
underwriters, if any, shall reasonably object in the light of the requirements
of the Securities Act and any other applicable laws and regulations.
(b) Prepare and file with the Commission such amendments and post-
effective amendments to a registration statement as may be necessary to keep
such registration statement effective for the applicable period; cause the
related
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prospectus to be filed pursuant to Rule 424(b) under the Securities Act; cause
such prospectus to be supplemented by any required prospectus supplement and,
as so supplemented, to be filed pursuant to Rule 424(b) under the Securities
Act; and comply with the provisions of the Securities Act with respect to the
disposition of all securities covered by such registration statement during the
applicable period in accordance with the intended methods of disposition set
forth in such registration statement or supplement to such prospectus.
(c) Notify the Stockholder and the managing underwriters, if any,
promptly, and (if requested by any such Person) confirm such advice in writing,
(i) when a prospectus or any prospectus supplement or post-effective amendment
has been filed, and, with respect to a registration statement or any post-
effective amendment, when the same has become effective, (ii) of any request by
the Commission for amendments or supplements to a registration statement or
related prospectus or for additional information, (iii) of the issuance by the
Commission of any stop order suspending the effectiveness of a registration
statement or the initiation of any proceeding for that purpose, (iv) if at my
time the representations and warranties of the Company contemplated by Section
1.5(l) cease to be true and correct, (v) of the receipt by the Company of any
notification with respect to the suspension or qualification of any of the
Registrable Securities for sale in any jurisdiction or the initiation of any
proceeding for such purpose, (vi) of the happening of any event which requires
the making of any changes in a registration statement or related prospectus so
that such documents will not contain any untrue statement of a material fact or
omit to state any material fact required to be stated therein or necessary to
make the statements therein not misleading and (vii) of the Company's
reasonable determination that a post-effective amendment to a registration
statement would be appropriate or that there exist circumstances not yet
disclosed to the public which make further sales under such registration
statement inadvisable pending such disclosures and post-effective amendment.
(d) Make reasonable efforts to obtain the withdrawal of any order
suspending the effectiveness of a registration statement, or the lifting of any
suspension of the qualification of any of the Registrable Securities for sale
in any jurisdiction, at the earliest possible moment.
(e) If requested by the managing underwriters or the Stockholder in
connection with an underwritten offering, immediately incorporate in a
prospectus supplement or post effective amendment such information as the
managing underwriters and the Stockholder agree should be included therein
relating to such sale and distribution of Registrable Securities, including,
without limitation, information with respect to the number of shares of
Registrable Securities being sold to such underwriters and the purchase price
being paid therefor by such underwriters and with respect to any other terms of
the underwritten (or best efforts underwritten) offering of the Registrable
Securities to be sold in such offering; make all required filings of such
prospectus supplement or post-effective amendment as soon as notified of the
matters to be incorporated in such prospectus supplement or post-effective
amendment; and supplement or make amendments to any registration statement if
requested by the Stockholder or any underwriter of such Registrable Securities.
(f) Furnish to the Stockholder and each managing underwriter, if any,
without charge, at least one signed copy of the registration statement, any
post-effective amendment thereto, including financial statements and schedules,
all documents incorporated therein by reference and all exhibits (including
those incorporated by reference).
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(g) Deliver without charge to the Stockholder and the underwriters,
if any, as many copies of the prospectus or prospectuses (including each
preliminary prospectus) and any amendment or supplement thereto as such Persons
may reasonably request; and the Company consents to the use of such prospectus
or any amendment or supplement thereto by the Stockholder and the underwriters,
if any, in connection with the offer and sale of the Registrable Securities
covered by such prospectus or any amendment or supplement thereto.
(h) Prior to any public offering of Registrable Securities, register
or qualify or cooperate with the Stockholder, the underwriters, if any, and
respective counsel in connection with the registration or qualification of such
Registrable Securities for offer and sale under the securities or Blue Sky laws
of such jurisdictions as the Stockholder or an underwriter reasonably requests
in writing; keep each such registration or qualification effective during the
period such registration statement is required to be kept effective and do any
and all other acts or things necessary or advisable to enable the disposition
in such jurisdictions of the Registrable Securities covered by the applicable
registration statement; provided, however, that the Company will not be
required in connection therewith or as a condition thereto to qualify generally
to do business or subject itself to general service of process in any such
jurisdiction where it is not then so subject.
(i) Cooperate with the Stockholder and the managing underwriters, if
any, to facilitate the timely preparation and delivery of certificates
representing Registrable Securities to be sold and not bearing any restrictive
legends; and enable such Registrable Securities to be in such denominations and
registered in such names as the managing underwriters may request at least two
business days prior to any sale of Registrable Securities to the underwriters.
(j) Use its Best Efforts to cause the Registrable Securities covered
by the applicable registration statement to be registered with or approved by
such other governmental agencies or authorities as may be necessary, if any, to
consummate the disposition of such Registrable Securities.
(k) Upon the occurrence of any event contemplated by Section 1.5(c)
(ii) - (vii) above, prepare a supplement or post-effective amendment to the
applicable registration statement or related prospectus or any document
incorporated therein by reference or file any other required document so that,
as thereafter delivered to the purchaser of the Registrable Securities being
sold thereunder, such prospectus will not contain an untrue statement of a
material fact or omit to state any material fact necessary to make the
statements therein not misleading.
(l) Enter into such agreements (including an underwriting agreement)
and take all such other actions in connection therewith in order to expedite or
facilitate the disposition of such Registrable Securities and in such
connection, whether or not an underwriting agreement is entered into and
whether or not the Registrable Securities to be covered by such registration
are to be offered in an underwritten offering: (i) make such representations
and warranties to the Stockholder with respect to the registration statement,
prospectus and documents incorporated by reference, if any, in form, substance
and scope as are customarily made by issuers to underwriters in underwritten
offerings and confirm the same if and when requested; (ii) obtain opinions of
counsel to the Company and updates thereof with respect to the registration
statement and the prospectus in the form, scope and substance which are
customarily delivered in underwritten offerings; (iii) in the case of an
underwritten offering, enter into an underwriting agreement in form, scope and
substance as is customary in underwritten offerings and obtain opinions
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of counsel to the Company and updates thereof (which counsel and opinions (in
form, scope and substance) shall be reasonably satisfactory to the managing
underwriters and the Stockholder) addressed to the Stockholder and the
underwriters, if any, covering the matters customarily covered in opinions
delivered in underwritten offerings and such other matters as may be reasonably
requested by the Stockholder and such underwriters; (iv) obtain "cold comfort"
letters and updates thereof from the Company's independent certified public
accountants addressed to the Stockholder and the underwriters, if any, such
letters to be in customary form and covering matters of the type customarily
covered in "cold comfort" letters by accountants in connection with
underwritten offerings; (v) if any underwriting agreement is entered into, the
same shall set forth in full the indemnification provisions and procedures
customarily included in underwriting agreements in underwritten offerings; and
(vi) the Company shall deliver such documents and certificates as may be
requested by the Stockholder and the managing underwriters, if any, to evidence
compliance with clause (i) above and with any customary conditions contained in
the underwriting agreement or other agreement entered into by the Company. The
above shall be done at each closing under such underwriting or similar
agreement or as and to the extent required thereunder.
(m) Make available for inspection by a representative of the
Stockholder, any underwriter participating in any disposition pursuant to such
registration, and any attorney or accountant retained by the Stockholder or
such underwriter, all financial and other records, pertinent corporate
documents and properties of the Company, and cause the Company's officers,
directors and employees to supply all information reasonably requested by any
such representative, underwriter, attorney or accountant in connection with
such registration; provided that any records, information or documents that are
designated by the Company in writing as confidential shall be kept confidential
by such Persons unless disclosure of such records, information or documents is
required by court or administrative order.
(n) Otherwise use its Best Efforts to comply with all applicable
rules and regulations of the Commission and make generally available to its
security holders earning statements satisfying the provisions of Section 11(a)
of the Securities Act, no later than 90 days after the end of any 12-month
period (i) commencing at the end of any fiscal quarter in which Registrable
Securities are sold to underwriters in a firm or best efforts underwritten
offering and (ii) beginning with the first day of the Company's first fiscal
quarter next succeeding each sale of Registrable Securities after the effective
date of a registration statement, which statements shall cover said 12-month
periods.
(o) If the Company, in the exercise of its reasonable judgment,
objects to any change reasonably requested by the Stockholder or the
underwriters, if any, to any registration statement or prospectus or any
amendments or supplements thereto (including documents incorporated or to be
incorporated therein by reference) as provided for in this Section 1.5, the
Company shall not be obligated to make any such change and the Stockholder may
withdraw its Registrable Securities from such registration, in which event (i)
the Company shall pay all registration expenses (including its counsel fees and
expenses) incurred in connection with such registration statement or amendment
thereto or prospectus or supplement thereto, (ii) in the case of a shelf
registration, the shelf registration statement or amendment thereto shall be
filed as soon as agreement with respect to any proposed change shall be reached
among all the applicable parties and (iii) in the case of a registration being
effected pursuant to Section 1.3, such registration shall not count as the one
registration the Company is obligated to effect pursuant to Section 1.3(c).
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In connection with any registration of Registrable Securities, the
Company may require the Stockholder to furnish to the Company such information
regarding itself and the distribution of such securities as the Company may
from time to time reasonably request in writing.
The Stockholder agrees by acquisition of Registrable Securities that,
upon receipt of any notice from the Company of the happening of any event of
the kind described in Section 1.5(c)(ii)-(vii) hereof, the Stockholder will
forthwith discontinue disposition of Registrable Securities covered by such
registration statement or prospectus until the Stockholder's receipt of the
copies of the supplemented or amended prospectus contemplated by Section
1.5(c)(i) hereof, or until it is advised in writing by the Company that the use
of the applicable prospectus may be resumed, and has received copies of any
additional or supplemental filings which are incorporated by reference in such
prospectus, and, if so directed by the Company, the Stockholder will deliver to
the Company (at the Company's expense) all copies, other than permanent file
copies then in the Stockholder's possession, of the prospectus covering such
Registrable Securities current at the time of receipt of such notice. In the
event the Company shall give any such notice, the time period mentioned in
Section 1.3(a) shall be extended by the number of days during the time period
from and including the date of the giving of such notice pursuant to Section
1.5(c) hereof to and including the date when the Stockholder shall have
received the copies of the supplemented or amended prospectus contemplated by
Section 1.5(c) hereof.
1.6 Expenses of Registration. All expenses incurred in connection
with a registration, filing or qualification pursuant to Section 1.3 hereof
(other than fees and expenses of the Company's counsel), including, without
limitation, registration, filing and qualification fees, printers' and
accounting fees (other than accounting fees incurred by the Company in
connection with its compliance with the periodic reporting requirements set
forth in Regulation 13A under the Exchange Act), and the fees and disbursements
of counsel for the Stockholder, shall be borne and paid by the Stockholder, pro
rata in such proportion as the number of Registrable Securities registered
pursuant to such registration bears to the total amount of securities
registered pursuant thereto. All expenses incurred in connection with a
registration pursuant to Section 1.4 (including, but not limited to, the
expenses enumerated in the preceding sentence) shall be borne by the Company,
with the exception of fees and disbursements of the Stockholder's counsel,
which shall be borne by the Stockholder. In addition, the Stockholder shall
bear and pay all underwriting discounts and selling commissions attributable to
sales of Registrable Securities.
1.7 Underwritten Registrations.
(a) If any of the Registrable Securities covered by any registration
under Section 1.3 are to be sold in an underwritten offering, the investment
banker or investment bankers and manager or managers that will administer the
offering will be selected by the Stockholder; provided, that such investment
bankers and managers must be reasonably satisfactory to the Company.
(b) The Stockholder may not participate in any underwritten
registration under Section 1.4 hereunder unless it (i) agrees to sell its
securities on the basis provided in any underwriting arrangements approved by
the Persons entitled hereunder to approve such arrangements and (ii) completes
and executes all questionnaires, powers of attorney, indemnities, underwriting
agreements and other documents required under the terms of such underwriting
arrangements. In
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connection with any underwritten offering that includes securities being issued
or sold by the Company, the Company shall be the Person entitled to approve the
terms of the underwriting arrangements.
1.8 Indemnification. In the event any Registrable Securities are
included in a registration statement under this Agreement:
(a) To the extent permitted by law, the Company will indemnify and
hold harmless the Stockholder, the officers and directors of the Stockholder,
each underwriter of Registrable Securities and each other Person, if any, who
controls the Stockholder or such underwriter within the meaning of Section 15
of the Securities Act, against any losses, claims, damages, liabilities or
expenses, joint or several, to which any such Person may become subject under
the Securities Act or otherwise, insofar as such losses, claims, damages,
liabilities or expenses (or actions in respect thereof) arise out of or are
based upon (i) any untrue statement or alleged untrue statement of a material
fact contained in any registration statement under which such Registrable
Securities were registered under the Securities Act pursuant hereto, or any
post-effective amendment thereof, or the omission or alleged omission therefrom
of a material fact required to be stated therein or necessary to make the
statements therein not misleading, or (ii) any untrue statement or alleged
untrue statement of a material fact contained in any preliminary prospectus, if
used prior to the effective date of the registration statement and not
corrected in the final prospectus, or contained in the final prospectus (as
amended or supplemented, if the Company shall have filed with the Commission
any amendment thereof or supplement thereto), or the omission or alleged
omission therefrom of a material fact required to be stated therein or
necessary to make the statements therein not misleading; and will reimburse any
such Person for any legal or other expenses reasonably incurred by such Person
in connection with investigating or defending any such loss, claim, damage,
liability or expense; provided, however, that the indemnity agreement contained
in this Section 1.8(a) shall not apply to amounts paid in settlement of any
such loss, claim, damage, liability or expense if such settlement is effected
without the consent of the Company (which consent shall not be unreasonably
withheld); and provided further that the Company shall not be liable in any
such case to the extent that any such loss, claim, damage, liability or expense
arises out of or is based upon any such untrue statement or omission or alleged
untrue statement or omission which has been made in said registration
statement, preliminary prospectus, prospectus or amendment or supplement or
omitted therefrom in reliance upon and in conformity with information furnished
in writing to the Company by the Stockholder or such underwriter specifically
for use in the preparation thereof.
(b) To the extent permitted by law, the Stockholder will indemnify
and hold harmless the Company, each of its directors, each of its officers who
has signed the registration statement, each Person, if any, who controls the
Company within the meaning of Section 15 of the Securities Act, each
underwriter and each Person who controls any underwriter within the meaning of
Section 15 of the Securities Act, against any losses, claims, damages,
liabilities or expenses, joint or several, to which the Company or any such
Person, may become subject under the Securities Act or otherwise, and will
reimburse the Company or any such Person for any legal or other expenses
reasonably incurred by the Company or such Person in connection with
investigating or defending any such loss, claim, damage, liability or
expense, but only insofar as such losses, claims, damages, liabilities or
expenses (or actions in respect thereof) arise out of or are based upon any
untrue statement or omission or alleged untrue statement or omission of a
material fact referred to in clause (i) or (ii) of Section 1.8(a) hereof, in
each case to the extent (and only to the
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extent) that such untrue statement or omission or alleged untrue statement or
omission was made in reliance upon and in conformity with information furnished
in writing by or on behalf of the Stockholder specifically for use in
connection with such registration; provided, however, that the indemnity
agreement contained in this Section 1.8(b) shall not apply to amounts paid in
settlement of any such loss, claim, damage, liability or expense if such
settlement is effected without the consent of the Stockholder, which consent
shall not be unreasonably withheld; and, provided further, that the obligations
of Stockholder under this Section 1.8(b) shall be limited to an amount equal to
the amount of proceeds from the sale by the Stockholder of Registrable
Securities included in a registration statement under this Agreement to which
such obligations relate.
(c) Promptly after receipt by an indemnified party under this Section
1.8 of notice of the commencement of any action (including any governmental
action), such indemnified party will, if a claim in respect thereof is to be
made against an indemnifying party under this Section 1.8, notify the
indemnifying party in writing of the commencement thereof and the indemnifying
party shall have the right to participate in, and, to the extent the
indemnifying party so desires, to assume the defense thereof with counsel
mutually satisfactory to the parties; provided, however, that an indemnified
party shall have the right to retain its own counsel, with the fees and
expenses to be paid by the indemnifying party, if representation of such
indemnified party by the counsel retained by the indemnifying party would be
inappropriate due to actual or potential differing interests between such
indemnified party and any other party represented by such counsel in such
proceeding. The failure so to notify an indemnifying party within a reasonable
time of the commencement of any such action, if prejudicial to its ability to
defend such action, shall relieve such indemnifying party of any liability to
the indemnified party under this Section 1.8, but the omission so to notify the
indemnifying party will not relieve it of any liability that it may have to any
indemnified party otherwise than under this Section 1.8.
(d) If the indemnification provided for in this Section 1.8 from the
indemnifying party is unavailable to an indemnified party hereunder in respect
of any losses, claims, damages, liabilities or expenses referred to herein,
then the indemnifying party, in lieu of indemnifying such indemnified party,
shall contribute to the amount paid or payable by such indemnified party as a
result of such losses, claims, damages, liabilities or expenses in such
proportion as is appropriate to reflect the relative fault of the indemnifying
party and indemnified parties in connection with the actions which resulted in
such losses, claims, damages, liabilities or expenses, as well as any other
relevant equitable considerations; provided that the obligations of Stockholder
under this Section 1.8(d) shall be limited to an amount equal to the amount of
proceeds from the sale by the Stockholder of Registrable Securities included in
a registration statement under this Agreement to which such obligations relate.
The relative fault of such indemnifying party and indemnified parties shall be
determined by reference to, among other things, whether any action in question,
including any untrue or alleged untrue statement of a material fact or omission
or alleged omission to state a material fact, has been made by, or relates to
information supplied by, such indemnifying party or indemnified parties, and
the parties' relative intent, knowledge, access to information and opportunity
to correct or prevent such action. The amount paid or payable by a party as a
result of the losses, claims, damages, liabilities and expenses referred to
above shall be deemed to include, subject to the limitations set forth in
Section 1.8(c) hereof, any legal or other fees or expenses reasonably incurred
by such party in connection with any investigation or proceeding.
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The parties hereto agree that it would not be just and equitable if
contribution pursuant to this Section 1.8(d) were determined by pro rata
allocation or by any other method of allocation which does not take into
account the equitable considerations referred to in the immediately preceding
paragraph. No Person guilty of fraudulent misrepresentation (within the
meaning of Section 11(f) of the Securities Act) shall be entitled to
contribution from any Person who was not guilty of such fraudulent
misrepresentation.
1.9 Reports Under Exchange Act. With a view to making available to
the Stockholder the benefits of Rule 144 under the Securities Act and any other
rule or regulation of the Commission that may at any time permit the
Stockholder to sell securities of the Company to the public without
registration, the Company agrees to:
(a) file with the Commission in a timely manner all reports and other
documents required of the Company under the Securities Act and the Exchange
Act, and the rules and regulations adopted by the Commission thereunder; and
(b) furnish to the Stockholder forthwith upon request (i) a written
statement by the Company as to whether it has complied with the reporting
requirements of Rule 144, (ii) a copy of the most recent annual or quarterly
report of the Company and such other reports and documents filed by the Company
pursuant to the Exchange Act and (iii) such other information as may be
reasonably requested in availing the Stockholder of any rule or regulation of
the Commission which permits the sale of any securities without registration.
1.10 Assignment of Registration Rights. The right to cause the
Company to register Registrable Securities pursuant to this Agreement may not
be assigned, in whole or in part, by the Stockholder without the prior written
consent of the Company.
1.11 Limitations on Subsequent Registration Rights. From and after
the date of this Agreement, the Company shall not, without the prior written
consent of the Stockholder, enter into any agreement with any holder or
prospective holder of any securities of the Company which grants registration
rights under the Securities Act on terms and conditions more favorable than the
rights granted to the Stockholder in this Agreement. The Company is not a
party to any currently subsisting agreement with respect to its securities
granting any registration rights to any Person, except the Beall Agreement and
the PAJW Agreement.
1.12 Hold-Back Agreements.
(a) If a registration statement is filed pursuant to Section 1.3 or
1.4 hereof, the Stockholder agrees not to effect any public sale or
distribution of the issue being registered or similar security of the Company,
including a sale pursuant to Rule 144 under the Securities Act (except as part
of such underwritten registration), during the 14-day period prior to, and
during the 90-day period beginning on, the closing date of each underwritten
offering made pursuant to such registration statement, to the extent timely
notified in writing by the Company or the managing underwriters.
(b) The Company agrees (i) not to effect any public sale or
distribution of any securities similar to those being registered during the 14-
day period prior to, and during the 90-day period beginning on, the effective
date of a registration statement filed pursuant to Section 1.3 or 1.4 hereof
(except as part of such underwritten registration or in connection with (A)
employee or non-employee director compensation or benefit programs, (B) an
exchange offer or an offering of
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securities solely to the existing stockholders or employees of the Company, or
(C) an acquisition, merger or other business combination using a registration
statement on Form S-4 or any successor or other appropriate form), and (ii) to
cause each holder of its privately placed securities purchased from the Company
at any time on and after the date of this Agreement to agree not to effect any
public sale or distribution of any such securities during such period,
including a sale pursuant to Rule 144 under the Securities Act (except as part
of such underwritten registration, if permitted).
1.13 Investment Representations. The Stockholder makes the
representations, warranties, covenants and agreements set forth on Schedule A
hereto for the purpose of compliance with the United States federal securities
laws.
ARTICLE II
MISCELLANEOUS
2.1 Successors and Assigns; No Third Party Benefit. This Agreement
shall be binding upon and inure to the benefit of the parties and their
respective permitted successors and assigns. Nothing in this Agreement,
express or implied, is intended to confer upon any party other than the parties
hereto and their respective permitted successors and assigns any rights or
remedies under or by reason of this Agreement, except as expressly provided in
this Agreement.
2.2 Governing Law. This Agreement shall be governed by, and
construed and enforced in accordance with, the substantive laws of the State of
Texas, without giving effect to the principles of conflicts of law thereof.
2.3 Counterparts. This Agreement may be executed by the parties
hereto in separate counterparts, each of which when so executed and delivered
shall be deemed an original, but all such counterparts shall together
constitute one and the same instrument. Each counterpart may consist of a
number of copies hereof each signed by less than all, but together signed by
all, the parties hereto.
2.4 Titles and Subtitles. The titles and subtitles used in this
Agreement are inserted for convenience only and are not to be considered in
construing or interpreting this Agreement.
2.5 Notices. All notices and other communications provided for or
permitted hereunder shall be made in writing and shall be delivered by (a)
personal delivery, (b) expedited delivery service or (c) certified or
registered mail, postage prepaid. Any such notice shall be deemed given upon
its receipt at the following address:
(i) If to the Stockholder, initially at
Royal Nedlloyd N.V.
Attn: Mr. H.H. Meijer
Boompjes 40
3011 XB Rotterdam
The Netherlands
Telefax: 31 10 400 6190
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with a copy to:
W. Garney Griggs, Esq.
Griggs & Harrison, P.C.
1301 McKinney, Suite 3200
Houston, Texas 77010
Telefax: 713-651-1944
and thereafter at such other address, notice of which is given to the Company
in accordance with this Section 2.5; and
(ii) If to the Company, initially at
Noble Drilling Corporation
Attn: Mr. James C. Day
10370 Richmond Avenue, Suite 400
Houston, Texas 77042
Telefax: 713-953-1126
with a copy to:
Robert D. Campbell, Esq.
Thompson & Knight, P.C.
1700 Pacific Avenue, Suite 3300
Dallas, Texas 75201
Telefax: 214-969-1715
and thereafter at such other address, notice of which is given in accordance
with this Section 2.5.
2.6 Adjustments Affecting Registrable Securities. The Company will
not take any action, or permit any change to occur, with respect to the
Registrable Securities which would adversely affect (a) the ability of the
Stockholder to include such Registrable Securities in a registration undertaken
pursuant to this Agreement or (b) the marketability of such Registrable
Securities in any such registration.
2.7 Amendments and Waivers. The provisions of this Agreement,
including the provisions of this sentence, may not be amended, modified or
supplemented, and waivers or consents to departures from the provisions hereof
(which may be generally or in a particular instance and either retroactively or
prospectively) may not be given, unless the Company has obtained the written
consent of the Stockholder.
2.8 Severability. If any provision or any portion of any provision
of this Agreement or the application of such provision or any portion thereof
to any Person or circumstance shall be held invalid or unenforceable, the
remaining portion of such provision, as it applies to other Persons or
circumstances and the remaining provisions, shall not be affected or impaired
thereby.
2.9 Entire Agreement. This Agreement is intended by the parties as a
final expression of their agreement and intended to be a complete and exclusive
statement of the agreement and understanding of the parties hereto in respect
of the subject matter herein contained. There are no restrictions, promises,
warranties or undertakings, other than those set forth or referred to herein,
with respect to the registration rights granted by the Company with respect to
the securities received
13
<PAGE> 14
by the Stockholder pursuant to the Acquisition. This Agreement supersedes all
prior agreements and understandings between the parties with respect to such
subject matter.
* * *
14
<PAGE> 15
IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed as of the date first above written.
NOBLE DRILLING CORPORATION
By: /s/ James C. Day
------------------------------
James C. Day,
Chairman, President and Chief
Executive Officer
ROYAL NEDLLOYD N.V.
By: /s/ John P. Boots
------------------------------
Name: John P. Boots
Title: By Power of Attorney
15
<PAGE> 1
EXHIBIT 21.1
SUBSIDIARIES
The following table sets forth the direct and indirect subsidiaries of
Noble Drilling Corporation as of March 27, 1997:
SUBSIDIARY NAME INCORPORATED OR ORGANIZED IN
--------------- ----------------------------
NN-1 Limited Partnership(1) Texas
Noble Properties Inc.(2) Oklahoma
Noble Drilling International Inc.(2) Delaware
Noble Drilling (U.S.) Inc.(2) Delaware
Noble Drilling Services Inc.(2) Delaware
Noble Drilling (West Africa) Inc.(2) Delaware
Noble Offshore Corporation(2) Delaware
Triton Engineering Services Company(2) Texas
Noble Drilling (Mexico) Inc.(3) Delaware
Noble (Gulf of Mexico) Inc.(3) Delaware
Bawden Drilling Inc.(4) Delaware
Noble Drilling (Canada) Ltd.(4) Alberta
Drilhawk Service & Supply Ltd.(4) Alberta
Noble Offshore Limited (4) Alberta
372733 Alberta Inc.(4) Alberta
Noble International Limited(4) Cayman Islands
Noble Drilling International Ltd.(4) Bermuda
(Footnotes appear on page 4.)
-1-
<PAGE> 2
Noble Drilling (Europe) Ltd.(4) Bermuda
Noble Holdings Ltd.(4) Bermuda
International Directional Services Ltd.(4) Bermuda
Noble International Services Ltd.(4) Bermuda
Resolute Insurance Group Ltd.(4) Bermuda
Bawden Drilling International Ltd.(4) Bermuda
Noble Drilling (UK) Limited (4) Scotland
Noble Services SDN. BHD(4) Brunei
Noble Enterprises Limited(4) Cayman Islands
Noble Drilling Limited(4) Cayman Islands
Noble Drilling International Services PTE Ltd.(4) Singapore
Noble Drilling Arabia Ltd.(4) Saudi Arabia
Noble Drilling (West Africa) Ltd.(5) Cayman Islands
Noble Drilling (Nigeria) Ltd.(5) Nigeria
Noble Drilling (Malaysia) SDN. BHD.(6) Malaysia
Noble Drilling de Venezuela C.A.(4) Venezuela
Noble Offshore Africa Inc.(7) Cayman Islands
Threadneedle Oil Company(8) Texas
Triton International, Inc.(8) Delaware
Triton USA, Inc.(8) Delaware
Triton Tool & Supply, Inc.(8) Texas
Triton Engineering Services Company, S.A.(8) Venezuela
Asociacion en Participacion(8) Mexico
(Footnotes appear on page 4.)
-2-
<PAGE> 3
Triton International de Mexico, S.A. de C.V.(9) Mexico
Rigquip Ltd.(10) Scotland
Triton International (Europe) Ltd.(9) U.K.
Triton Drilling Services (Nigeria) Ltd.(9) Nigeria
Noble Drilling Land Limited(3) Texas LP
Noble-Neddrill International Limited(4) Cayman
Noble Asset Company Limited(4) Cayman
Noble Contracting Gmbh(4) Switzerland
Noble Asset (U.K.) Limited(4) Cayman
Noble Drilling (Land Support) Limited(10) U.K.
Noble Nederland B.V.(4) Rotterdam
Nedstaff Limited(4) Hong Kong
Nedstaff Europe Limited(4) U.K.
Neddrill do Brasil Limitada(4) Brazil
Noble Drilling Land Inc.(2) Nevada
(Footnotes appear on the following page.)
- 3 -
<PAGE> 4
Footnotes:
(1) Noble Drilling Corporation is the sole general partner. Noble Drilling
Corporation's sharing percentage in NN-1 Limited Partnership's
distributions from operations is generally 90 percent.
(2) 100% owned by Noble Drilling Corporation.
(3) Direct or indirect subsidiary of Noble Drilling (U.S.) Inc.
(4) Direct or indirect subsidiary of Noble Drilling International Inc.
(5) 100% owned by Noble Drilling (West Africa) Inc.
(6) 70% owned indirectly by Noble Drilling International Inc.
(7) 100% owned by Noble Offshore Corporation.
(8) 100% owned by Triton Engineering Services Company.
(9) 100% owned by Triton International, Inc.
(10) 100% owned by Noble Drilling (UK) Limited.
- 4 -
<PAGE> 1
EXHIBIT 23.1
NOBLE DRILLING CORPORATION AND SUBSIDIARIES
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in the Registration
Statements on Form S-8 (No. 33-3289), Form S-8 (33-15269), Form S-8 (No.
33-18966), Form S-8 (33-46724), Form S-8 (33-50270), Form S-8 (33-50272) and
Form S-8 (33-62394) of Noble Drilling Corporation of our report dated January
30, 1997, except as to Note 15, which is as of February 19, 1997, appearing on
page 24 of this Form 10-K.
PRICE WATERHOUSE LLP
Houston, Texas
March 27, 1997
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<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> DEC-31-1996
<CASH> 149,632
<SECURITIES> 21,829
<RECEIVABLES> 103,113
<ALLOWANCES> 1,494
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<CURRENT-ASSETS> 388,477
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<COMMON> 13,219
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<TOTAL-LIABILITY-AND-EQUITY> 1,367,407
<SALES> 0
<TOTAL-REVENUES> 514,253
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<INCOME-TAX> 22,662
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