Form 10-Q

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q


þ		QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2009


o		TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Noble Corporation

(Exact name of registrant as specified in its charter)

(Commission File No. 000-53604)

98-0619597 (IRS Employer Identification No.)

Dorfstrasse 19A Baar, Switzerland 6430

(Address of principal executive offices, including zip code)

41 (41) 761-6555

(Registrant’s telephone number, including area code)

Switzerland

(State or other jurisdiction of incorporation)

Noble Corporation

(Exact name of registrant as specified in its charter)

(Commission File No. 001-31306)

98-0366361 (IRS Employer Identification No.)

13135 South Dairy Ashford, Suite 800, Sugar Land, Texas 77478

(Address of principal executive offices, including zip code)

(281) 276-6100

(Registrant’s telephone number, including area code)

Cayman Islands

(State or other jurisdiction of incorporation)

Indicate by check mark whether each registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes þ No o

Indicate by check mark whether each registrant has submitted electronically and posted on its corporate website, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes þ No o

Indicate by check mark whether each registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):


Large accelerated filer þ		Accelerated filer o		Non-accelerated filer o		Smaller reporting company o

Indicate by check mark whether each registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes o No þ

Number of shares outstanding at November 3, 2009: Noble Corporation (Switzerland) — 261,936,953; Noble Corporation (Cayman Islands) — 261,245,693

Noble Corporation, a Cayman Islands company and a wholly owned subsidiary of Noble Corporation, a Swiss corporation, meets the conditions set forth in General Instructions H(1) (a) and (b) of Form 10-Q and is therefore filing this Form 10-Q with the reduced disclosure format contemplated by paragraphs (b) and (c) of General Instruction H(2) of Form 10-Q.

TABLE OF CONTENTS


	Page
PART I FINANCIAL INFORMATION

Item 1 Financial Statements

Consolidated Balance Sheets as of September 30, 2009 and December 31, 2008		3

Consolidated Statements of Income for the three and nine months ended September 30, 2009 and 2008		4

Consolidated Statements of Cash Flows for the nine months ended September 30, 2009 and 2008		6

Consolidated Statements of Shareholders’ Equity for the nine months ended September 30, 2009		7

Consolidated Statements of Comprehensive Income for the three and nine months ended September 30, 2009 and 2008		8

Notes to Consolidated Financial Statements		9

Item 2 Management’s Discussion and Analysis of Financial Condition and Results of Operations		30

Item 3 Quantitative and Qualitative Disclosures About Market Risk		47

Item 4 Controls and Procedures		48

PART II OTHER INFORMATION

Item 1 Legal Proceedings		49

Item 1A Risk Factors		49

Item 2 Unregistered Sales of Equity Securities and Use of Proceeds		49

Item 6 Exhibits		49

SIGNATURES		50

Index to Exhibits		51

Exhibit 31.1
Exhibit 31.2
Exhibit 32.1
Exhibit 32.2
EX-101 INSTANCE DOCUMENT
EX-101 SCHEMA DOCUMENT
EX-101 CALCULATION LINKBASE DOCUMENT
EX-101 LABELS LINKBASE DOCUMENT
EX-101 PRESENTATION LINKBASE DOCUMENT
EX-101 DEFINITION LINKBASE DOCUMENT

This combined Quarterly Report on Form 10-Q is separately filed by Noble Corporation, a Swiss corporation (“Noble-Swiss”), and Noble Corporation, a Cayman Islands company (“Noble-Cayman”). Information in this filing relating to Noble-Cayman is filed by Noble-Swiss and separately by Noble-Cayman on its own behalf. Noble-Cayman makes no representation as to information relating to Noble-Swiss (except as it may relate to Noble-Cayman) or any other affiliate or subsidiary of Noble-Swiss. Because Noble-Cayman meets the conditions specified in General Instructions H(1)(a) and (b) to Form 10-Q, it is permitted to use the reduced disclosure format for wholly owned subsidiaries of reporting companies. Accordingly, Noble-Cayman has omitted from this report the information called for by Item 3 (Quantitative and Qualitative Disclosures about Market Risk) of Part I of Form 10-Q and the following items of Part II of Form 10-Q: Item 2 (Unregistered Sales of Equity Securities and Use of Proceeds), Item 3 (Defaults upon Senior Securities) and Item 4 (Submission of Matters to a Vote of Security Holders).

This report should be read in its entirety as it pertains to each Registrant. Except where indicated, the Unaudited Consolidated Financial Statements and the Notes to the Unaudited Consolidated Financial Statements are combined. References in this Quarterly Report on Form 10-Q to “Noble,” the “Company,” “we,” “us,” “our” and words of similar meaning refer collectively to Noble-Swiss and its consolidated subsidiaries, including Noble-Cayman, after March 26, 2009 and to Noble-Cayman and its consolidated subsidiaries for periods through March 26, 2009. Noble-Swiss became a successor registrant to Noble-Cayman under the Securities Exchange Act of 1934 (the “Exchange Act”) pursuant to Rule 12g-3 of the Exchange Act as a result of consummation of the Transaction described in Note 1 to Item 1, Part I of this Quarterly Report on Form 10-Q.

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

CONSOLIDATED BALANCE SHEETS

(In thousands, except per share amounts)

(Unaudited)


	Noble Corporation						Noble Corporation
	(Noble-Swiss)						(Noble-Cayman)
	September 30,			December 31,			September 30,			December 31,
	2009			2008			2009			2008
ASSETS
Current assets
Cash and cash equivalents	$	756,093		$	513,311		$	742,481		$	513,311
Accounts receivable		717,718			644,840			717,718			644,840
Due from affiliate		—			—			73,729			—
Insurance receivables		32,302			13,516			32,302			13,516
Prepaid expenses		41,897			21,207			41,366			21,207
Other current assets		55,505			47,467			55,446			47,467

Total current assets		1,603,515			1,240,341			1,663,042			1,240,341


Property and equipment
Drilling equipment and facilities		8,182,537			7,427,908			8,182,537			7,427,908
Other		114,908			105,340			114,773			105,340

		8,297,445			7,533,248			8,297,310			7,533,248
Accumulated depreciation		(2,091,011	)		(1,886,231	)		(2,091,011	)		(1,886,231	)

		6,206,434			5,647,017			6,206,299			5,647,017


Other assets		279,426			219,441			279,333			219,441

Total assets	$	8,089,375		$	7,106,799		$	8,148,674		$	7,106,799


LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities
Current maturities of long-term debt	$	—		$	172,698		$	—		$	172,698
Accounts payable		232,713			259,107			232,713			259,107
Accrued payroll and related costs		87,569			75,449			87,569			75,449
Taxes payable		103,714			107,211			98,263			107,211
Interest payable		7,267			11,325			7,267			11,325
Other current liabilities		66,419			53,203			66,171			53,203

Total current liabilities		497,682			678,993			491,983			678,993


Long-term debt		750,906			750,789			750,906			750,789
Deferred income taxes		293,281			265,018			293,281			265,018
Other liabilities		130,566			121,284			130,383			121,284

Total liabilities		1,672,435			1,816,084			1,666,553			1,816,084


Commitments and contingencies

Shareholders’ equity
Shares — par value 4.90 Swiss francs per share; 414,399 shares authorized; 138,133 shares conditionally authorized, 276,266 shares issued and 261,825 shares outstanding as of September 30, 2009		1,141,611			—			—			—
Ordinary shares — par value $.10 per share; 400,000 shares authorized; 261,246 shares and 261,899 shares issued and outstanding at September 30, 2009 and December 31, 2008, respectively		—			26,190			26,125			26,190
Capital in excess of par value		—			402,115			368,374			402,115
Treasury Stock; 2,000 shares		(69,430	)		—			—			—
Retained earnings		5,398,530			4,919,667			6,141,393			4,919,667
Accumulated other comprehensive loss		(53,771	)		(57,257	)		(53,771	)		(57,257	)

Total shareholders’ equity		6,416,940			5,290,715			6,482,121			5,290,715

Total liabilities and shareholders’ equity	$	8,089,375		$	7,106,799		$	8,148,674		$	7,106,799

See accompanying notes to the consolidated financial statements.

NOBLE CORPORATION (NOBLE-SWISS) AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME

(In thousands, except per share amounts)

(Unaudited)


	Three Months Ended						Nine Months Ended
	September 30,						September 30,
	2009			2008			2009			2008
Operating revenues
Contract drilling services	$	874,969		$	835,198		$	2,615,571		$	2,416,312
Reimbursables		22,455			18,087			61,967			71,509
Labor contract drilling services		7,490			8,197			21,843			47,346
Other		721			499			1,277			1,180

		905,635			861,981			2,700,658			2,536,347

Operating costs and expenses
Contract drilling services		250,842			253,729			742,752			746,117
Reimbursables		18,717			16,494			52,081			63,786
Labor contract drilling services		4,642			5,410			13,899			37,294
Depreciation and amortization		103,245			92,671			295,646			263,406
Selling, general and administrative		21,700			16,027			60,901			56,967
(Gain)/loss on asset disposal/involuntary conversion, net		2,076			10,000			31,053			(25,521	)

		401,222			394,331			1,196,332			1,142,049


Operating income		504,413			467,650			1,504,326			1,394,298

Other income (expense)
Interest expense, net of amount capitalized		(379	)		(601	)		(1,261	)		(2,432	)
Interest income and other, net		2,605			2,304			4,995			7,013

Income before income taxes		506,639			469,353			1,508,060			1,398,879
Income tax provision		(80,556	)		(86,831	)		(275,833	)		(256,451	)

Net income	$	426,083		$	382,522		$	1,232,227		$	1,142,428


Net income per share
Basic	$	1.63		$	1.43		$	4.72		$	4.26
Diluted	$	1.63		$	1.42		$	4.70		$	4.23

See accompanying notes to the consolidated financial statements.

NOBLE CORPORATION (NOBLE-CAYMAN) AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(In thousands)
(Unaudited)


	Three Months Ended						Nine Months Ended
	September 30,						September 30,
	2009			2008			2009			2008
Operating revenues
Contract drilling services	$	874,969		$	835,198		$	2,615,571		$	2,416,312
Reimbursables		22,455			18,087			61,967			71,509
Labor contract drilling services		7,490			8,197			21,843			47,346
Other		721			499			1,277			1,180

		905,635			861,981			2,700,658			2,536,347

Operating costs and expenses
Contract drilling services		250,842			253,729			742,752			746,117
Reimbursables		18,717			16,494			52,081			63,786
Labor contract drilling services		4,642			5,410			13,899			37,294
Depreciation and amortization		103,245			92,671			295,646			263,406
Selling, general and administrative		22,623			16,027			60,901			56,967
(Gain)/loss on asset disposal/involuntary conversion, net		2,076			10,000			31,053			(25,521	)

		402,145			394,331			1,196,332			1,142,049


Operating income		503,490			467,650			1,504,326			1,394,298

Other income (expense)
Interest expense, net of amount capitalized		(379	)		(601	)		(1,261	)		(2,432	)
Interest income and other, net		2,574			2,304			4,964			7,013

Income before income taxes		505,685			469,353			1,508,029			1,398,879
Income tax provision		(80,556	)		(86,831	)		(275,833	)		(256,451	)

Net income	$	425,129		$	382,522		$	1,232,196		$	1,142,428

See accompanying notes to the consolidated financial statements.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)
(Unaudited)


	Noble Corporation						Noble Corporation
	(Noble-Swiss)						(Noble-Cayman)
	Nine Months Ended						Nine Months Ended
	September 30,						September 30,
	2009			2008			2009			2008
Cash flows from operating activities
Net income	$	1,232,227		$	1,142,428		$	1,232,196		$	1,142,428
Adjustments to reconcile net income to net cash from operating activities:
Depreciation and amortization		295,646			263,406			295,646			263,406
(Gain)/loss on asset disposal/involuntary conversion, net		31,053			(25,521	)		31,053			(25,521	)
Deferred income tax provision		29,916			14,102			29,916			14,102
Share-based compensation expense		28,543			28,274			8,399			28,274
Pension contributions		(13,022	)		(17,445	)		(13,022	)		(17,445	)
Other changes in assets and liabilities:
Accounts receivable		(88,773	)		(49,063	)		(88,773	)		(49,063	)
Due from affiliate		—			—			(73,729	)		—
Other current assets		(45,607	)		(26,572	)		(45,017	)		(26,572	)
Other assets		2,609			(8,853	)		2,702			(8,853	)
Accounts payable		27,491			(2,406	)		27,491			(2,406	)
Other current liabilities		21,881			8,397			15,797			8,397
Other liabilities		(6,751	)		4,918			(6,917	)		4,918

Net cash from operating activities		1,515,213			1,331,665			1,415,742			1,331,665


Cash flows from investing activities
New construction		(457,233	)		(563,349	)		(457,233	)		(563,349	)
Other capital expenditures		(342,399	)		(243,843	)		(342,281	)		(243,843	)
Major maintenance expenditures		(93,112	)		(72,918	)		(93,112	)		(72,918	)
Accrued capital expenditures		(44,493	)		92,719			(44,493	)		92,719
Hurricane insurance receivables		—			21,747			—			21,747
Proceeds from disposal of assets		—			39,134			—			39,134

Net cash from investing activities		(937,237	)		(726,510	)		(937,119	)		(726,510	)


Cash flows from financing activities
Payments on bank credit facilities		—			(50,000	)		—			(50,000	)
Payments of other long-term debt		(172,700	)		(7,682	)		(172,700	)		(7,682	)
Employee stock transactions		2,896			10,070			(5,416	)		10,070
Dividends/par value reduction payments paid		(35,093	)		(233,638	)		(10,470	)		(233,638	)
Repurchases of ordinary shares		(130,297	)		(271,310	)		(60,867	)		(271,310	)

Net cash from financing activities		(335,194	)		(552,560	)		(249,453	)		(552,560	)

Net increase in cash and cash equivalents		242,782			52,595			229,170			52,595
Cash and cash equivalents, beginning of period		513,311			161,058			513,311			161,058

Cash and cash equivalents, end of period	$	756,093		$	213,653		$	742,481		$	213,653

See accompanying notes to the consolidated financial statements.

NOBLE CORPORATION (NOBLE-SWISS) AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY

(In thousands)

(Unaudited)


																Accumulated
							Capital in									Other			Total
	Shares						Excess of			Retained			Treasury			Comprehensive			Shareholders’
	Balance			Par Value			Par Value			Earnings			Shares			Loss			Equity

Balance at December 31, 2008		261,899		$	26,190		$	402,115		$	4,919,667		$	—		$	(57,257	)	$	5,290,715

Share-based compensation
Share-based compensation		1,445			647			8,255			19,641						—			28,543
Contribution to employee benefit plans		17			49			152			337						—			538
Exercise of stock options		571			2,453			162			6,756						—			9,371
Tax benefit of stock options exercised		—			—			(1,597	)		8,130						—			6,533
Restricted shares surrendered for withholding taxes or forfeited		(387	)		(483	)		(5,527	)		(465	)					—			(6,475	)

Repurchases of ordinary shares		(1,720	)		(172	)		(43,303	)		—			(69,430	)		—			(112,905	)
Cancellation of shares in Transaction		(261,246	)		(26,125	)		26,125			(775,950	)					—			(775,950	)
Issuance of shares in Transaction		261,246			1,162,332			(386,382	)								—			775,950
Net income		—			—			—			1,232,227						—			1,232,227
Dividends/par value reduction payments paid		—			(23,280	)		—			(11,813	)					—			(35,093	)
Other comprehensive income (loss), net		—			—			—			—						3,486			3,486


Balance at September 30, 2009		261,825		$	1,141,611		$	—		$	5,398,530		$	(69,430	)	$	(53,771	)	$	6,416,940

NOBLE CORPORATION (NOBLE-CAYMAN) AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY
(In thousands)
(Unaudited)


													Accumulated
							Capital in						Other			Total
	Shares						Excess of			Retained			Comprehensive			Shareholders’
	Balance			Par Value			Par Value			Earnings			Loss			Equity

Balance at December 31, 2008		261,899		$	26,190		$	402,115		$	4,919,667		$	(57,257	)	$	5,290,715

Share-based compensation
Share-based compensation		1,331			133			8,266			—			—			8,399
Contribution to employee benefit plans		6			1			152			—			—			153
Exercise of stock options		15			2			145			—			—			147
Tax benefit of stock options exercised		—			—			6,533			—			—			6,533
Restricted shares surrendered for withholding taxes or forfeited		(285	)		(29	)		(5,534	)		—			—			(5,563	)

Repurchases of ordinary shares		(1,720	)		(172	)		(43,303	)		—			—			(43,475	)
Net income		—			—			—			1,232,196			—			1,232,196
Dividends paid ($0.04 per share)		—			—			—			(10,470	)		—			(10,470	)
Other comprehensive income (loss), net		—			—			—			—			3,486			3,486


Balance at September 30, 2009		261,246		$	26,125		$	368,374		$	6,141,393		$	(53,771	)	$	6,482,121

See accompanying notes to the consolidated financial statements.

NOBLE CORPORATION (NOBLE-SWISS) AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(In thousands)

(Unaudited)


	Noble Corporation						Noble Corporation
	(Noble-Swiss)						(Noble-Swiss)
	Three Months Ended						Nine Months Ended
	September 30,						September 30,
	2009			2008			2009			2008

Net income	$	426,083		$	382,522		$	1,232,227		$	1,142,428

Other comprehensive income (loss), net of tax
Foreign currency translation adjustments		(1,734	)		(4,259	)		(479	)		(8,323	)
Settlements and gain (loss) on foreign currency forward contracts		(1,445	)		(663	)		1,407			(2,219	)
Amortization of deferred pension plan amounts		850			169			2,558			585

Other comprehensive income (loss), net		(2,329	)		(4,753	)		3,486			(9,957	)

Comprehensive income	$	423,754		$	377,769		$	1,235,713		$	1,132,471

NOBLE CORPORATION (NOBLE-CAYMAN) AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(In thousands)
(Unaudited)


	Noble Corporation						Noble Corporation
	(Noble-Cayman)						(Noble-Cayman)
	Three Months Ended						Nine Months Ended
	September 30,						September 30,
	2009			2008			2009			2008

Net income	$	425,129		$	382,522		$	1,232,196		$	1,142,428

Other comprehensive income (loss), net of tax
Foreign currency translation adjustments		(1,734	)		(4,259	)		(479	)		(8,323	)
Settlements and gain (loss) on foreign currency forward contracts		(1,445	)		(663	)		1,407			(2,219	)
Amortization of deferred pension plan amounts		850			169			2,558			585

Other comprehensive income (loss), net		(2,329	)		(4,753	)		3,486			(9,957	)

Comprehensive income	$	422,800		$	377,769		$	1,235,682		$	1,132,471

See accompanying notes to the consolidated financial statements.

NOBLE CORPORATION (NOBLE-SWISS) AND SUBSIDIARIES
NOBLE CORPORATION (NOBLE-CAYMAN) AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unless otherwise indicated, dollar amounts in tables are in thousands, except per share data)

Note 1 — Basis of Presentation

On March 26, 2009, pursuant to the previously announced Agreement and Plan of Merger, Reorganization and Consolidation, dated as of December 19, 2008 (as amended, the “Merger Agreement”), among Noble-Swiss, Noble-Cayman, and Noble Cayman Acquisition Ltd., a Cayman Islands company and a wholly-owned subsidiary of Noble-Swiss (“Noble-Acquisition”), Noble-Cayman merged by way of schemes of arrangement under Cayman Islands law (the “Schemes of Arrangement”) with Noble-Acquisition, with Noble-Cayman as the surviving company (the “Transaction”). Under the terms of the Schemes of Arrangement, each holder of Noble-Cayman ordinary shares outstanding immediately prior to the Transaction received, through an exchange agent, one Noble-Swiss registered share in exchange for each outstanding Noble-Cayman ordinary share, and Noble-Swiss received, through an exchange agent, a number of newly issued Noble-Cayman ordinary shares equal to the number of Noble-Cayman ordinary shares outstanding immediately prior to the Transaction. Noble-Swiss also issued 15 million Noble-Swiss registered shares to Noble-Cayman in connection with the Transaction that are being held in treasury by a wholly owned subsidiary.

The Transaction effectively changed the place of incorporation of our parent holding company from the Cayman Islands to Switzerland. As a result of the Transaction, Noble-Cayman became a direct, wholly-owned subsidiary of Noble-Swiss. Currently, Noble-Swiss’ principal asset is 100% of the shares of Noble-Cayman. The consolidated financial statements of Noble-Swiss include the accounts of its wholly-owned subsidiary, Noble-Cayman. Noble-Swiss conducts substantially all of its business through Noble-Cayman and its subsidiaries.

The accompanying unaudited consolidated financial statements of Noble-Swiss and Noble-Cayman have been prepared pursuant to the rules and regulations of the U.S. Securities and Exchange Commission (“SEC”) as they pertain to Form 10-Q. Accordingly, certain information and disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) have been condensed or omitted pursuant to such rules and regulations. The unaudited financial statements reflect all adjustments which are, in the opinion of management, necessary for a fair presentation of the financial position and results of operations for the interim periods, on a basis consistent with the annual audited consolidated financial statements. All such adjustments are of a normal recurring nature. The Consolidated Balance Sheet at December 31, 2008 presented herein is derived from the December 31, 2008 audited consolidated financial statements. These interim financial statements should be read in conjunction with the consolidated financial statements and notes thereto included in our Annual Report on Form 10-K for the year ended December 31, 2008 filed by Noble-Cayman. The results of operations for interim periods are not necessarily indicative of the results to be expected for the full year.

Certain amounts in prior periods have been reclassified to conform to the current year presentation.

NOBLE CORPORATION (NOBLE-SWISS) AND SUBSIDIARIES
NOBLE CORPORATION (NOBLE-CAYMAN) AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unless otherwise indicated, dollar amounts in tables are in thousands, except per share data)

Note 2 — Net Income per Share

We have determined that our unvested share-based payment awards, which contain non-forfeitable rights to dividends, are participating securities and should be included in the computation of earnings per share pursuant to the “two-class” method. The “two-class” method allocates undistributed earnings between common shares and participating securities. The diluted earnings per share calculation under the “two-class” method also includes the dilutive effect of potential registered shares issued in connection with stock options. The dilutive effect of stock options is determined using the treasury stock method.

The following table sets forth the computation of basic and diluted net income per share for Noble-Swiss. As a result of the consummation of the Transaction, Noble-Cayman has no public equity outstanding after March 26, 2009 as all Noble-Cayman ordinary shares are held by Noble-Swiss. Therefore, no earnings per share information is presented for Noble-Cayman.


	Three months ended						Nine months ended
	September 30,						September 30,
	2009			2008			2009			2008
Allocation of net income
Basic
Net income	$	426,083		$	382,522		$	1,232,227		$	1,142,428
Earnings allocated to unvested share-based payment awards		(4,520	)		(3,362	)		(12,176	)		(9,674	)

Net income to common shareholders — basic	$	421,563		$	379,160		$	1,220,051		$	1,132,754


Diluted
Net income	$	426,083		$	382,522		$	1,232,227		$	1,142,428
Earnings allocated to unvested share-based payment awards		(4,505	)		(3,342	)		(12,141	)		(9,622	)

Net income to common shareholders — diluted	$	421,578		$	379,180		$	1,220,086		$	1,132,806


Weighted average shares outstanding — basic		257,913			264,746			258,550			265,883
Incremental shares issuable from assumed exercise of stock options		925			1,656			778			1,862

Weighted average shares outstanding — diluted		258,838			266,402			259,328			267,745


Weighted average unvested share-based payment awards		2,765			2,348			2,581			2,223


Earnings per share
Basic	$	1.63		$	1.43		$	4.72		$	4.26
Diluted	$	1.63		$	1.42		$	4.70		$	4.23

Note 3 — Property and Equipment

Interest is capitalized on construction-in-progress at the weighted average cost of debt outstanding during the period of construction. Capitalized interest was $13 million and $42 million for the three and nine months ended September 30, 2009, and $11 million and $35 million for the three and nine months ended September 30, 2008, respectively.

In May 2009, our jackup, the Noble David Tinsley, experienced a “punch-through” while the rig was being positioned on location offshore Qatar. The incident involved the sudden penetration of all three legs through the sea bottom, which resulted in severe damage to the legs and the rig. The rig is currently in the shipyard to replace the legs and repair the damage to the rig. We recorded a charge of $17 million during the quarter ended June 30, 2009 related to this involuntary conversion, which includes approximately $9 million for the write-off of the damaged legs.

During the first quarter of 2009, we recognized a charge of $12 million related to the Noble Fri Rodli, a submersible that has been cold stacked since October 2007. We recorded the charge as a result of a decision to evaluate disposition alternatives for this rig.

During the second quarter of 2008, we sold our North Sea labor contract drilling services business to Seawell Holding UK Limited for $35 million plus working capital. This sale included labor contracts covering 11 platform operations in the United Kingdom sector of the North Sea. In connection with this transaction, we recognized a gain of $35 million, net of closing costs, which includes approximately $5 million in cumulative currency translation adjustments.

Note 4 — Accounts Receivable

During the second quarter of 2009, we reached an agreement with one of our customers in the U.S. Gulf of Mexico regarding outstanding receivables owed to us, which totaled approximately $59 million at September 30, 2009. The customer has conveyed to us an overriding royalty interest (“ORRI”) as security for the outstanding receivables and has agreed to a payment plan to repay all past due amounts. Amounts received by us pursuant to the ORRI will be applied to the customer’s payment obligations under the payment plan. We have agreed that we will not sell, assign or otherwise dispose of the ORRI as long as the customer meets its payment obligations and complies with the terms of the agreement, which runs through June 2011. Through the date of this report, the customer has met its payment obligations under the agreement. The customer has a right to reacquire the ORRI at the end of the term of the agreement, or earlier, subject to certain conditions, which include the customer being current on all payment obligations. In connection with this agreement, during the second quarter of 2009, we reclassified certain amounts from “Accounts receivable” to “Other assets”.

Note 5 — Debt

Long-term debt consisted of the following at September 30, 2009 and December 31, 2008:


	September 30,		December 31,
	2009		2008
Credit Facility	$	—	$	—
6.95% Senior Notes due 2009		—		149,998
5.875% Senior Notes due 2013		299,865		299,837
7.375% Senior Notes due 2014		249,346		249,257
7.50% Senior Notes due 2019		201,695		201,695
Project Financing — Thompson Notes		—		22,700

Total Debt		750,906		923,487
Current Maturities		—		(172,698	)

Long-term Debt	$	750,906	$	750,789

We have a $600 million unsecured bank credit facility (the “Credit Facility”), which was originally scheduled to mature on March 15, 2012. During the first quarter of 2008, the term of the Credit Facility was extended for an additional one-year period to March 15, 2013. During this one-year extension period, the total amount available under the Credit Facility will be $575 million, but we have the right to seek an increase of the total amount available during that period to $600 million. We may, subject to certain conditions, request that the term of the Credit Facility be further extended for an additional one-year period. Our subsidiary, Noble Drilling Corporation (“Noble Drilling”), has guaranteed the obligations under the Credit Facility. In connection with our recently completed worldwide internal restructuring (see Note 13), our subsidiary, Noble Holding International Limited, issued a subsidiary guarantee under the Credit Facility effective October 1, 2009. Pursuant to the terms of the Credit Facility, we may, subject to certain conditions, elect to increase the amount available up to $800 million. Borrowings under the Credit Facility will bear interest (i) at the sum of Adjusted LIBOR (as defined in the Credit Facility) plus the Applicable Margin (as defined in the Credit Facility; 0.235 percent based on our current credit ratings), or (ii) at the base rate, determined as the greater of the prime rate for U.S. Dollar loans announced by Citibank, N.A. in New York or the sum of the weighted average overnight federal funds rate published by the Federal Reserve Bank of New York plus 0.50 percent. The Credit Facility contains various covenants, including a debt to total tangible capitalization covenant that limits this ratio to 0.60. As of September 30, 2009, our ratio of debt to total tangible capitalization was 0.10. In addition, the Credit Facility includes restrictions on certain fundamental changes such as mergers, unless we are the surviving entity or the other party assumes the obligations under the Credit Facility, and the ability to sell or transfer all or substantially all of our assets unless to a subsidiary. The Credit Facility also limits our subsidiaries’ additional indebtedness, excluding intercompany advances and loans, to 10 percent of our consolidated net assets, as defined in the Credit Facility, unless a subsidiary guarantee is issued to the parent company borrower. There are also restrictions on our incurring or assuming additional liens in certain circumstances. We were in compliance with all covenants under the Credit Facility at September 30, 2009.

During the first quarter of 2009, we repaid $150 million principal amount of 6.95% Senior Notes due 2009 and $23 million principal amount of project financing Thompson Notes using cash on hand at maturity.

Fair Value of Financial Instruments

Fair value represents the amount at which an instrument could be exchanged in a current transaction between willing parties. The estimated fair value of our senior notes was based on the quoted market prices for similar issues or on the current rates offered to us for debt of similar remaining maturities. The following table presents the estimated fair value of our long-term debt as of September 30, 2009 and December 31, 2008.


	September 30, 2009				December 31, 2008
	Carrying		Estimated		Carrying		Estimated
	Value		Fair Value		Value		Fair Value
Long-term debt
6.95% Senior Notes due 2009	$	—	$	—	$	149,998	$	149,185
5.875% Senior Notes due 2013		299,865		310,235		299,837		294,495
7.375% Senior Notes due 2014		249,346		272,598		249,257		249,838
7.50% Senior Notes due 2019		201,695		226,349		201,695		196,991
Project Financing — Thompson Notes		—		—		22,700		22,700

Note 6 — Income Taxes

At December 31, 2008, the reserves for uncertain tax positions totaled $93 million (net of related tax benefits of $5 million). At September 30, 2009, the reserves for uncertain tax positions totaled $99 million (net of related tax benefits of $7 million). If the September 30, 2009 reserves are not realized, the provision for income taxes would be reduced by $78 million and equity would be directly increased by $21 million.

We do not anticipate that any tax contingencies resolved in the next 12 months will have a material impact on our consolidated financial position or results of operations.

Note 7 — Employee Benefit Plans

Pension costs include the following components:


	Three Months Ended September 30,
	2009						2008
	Non-U.S.			U.S.			Non-U.S.			U.S.

Service cost	$	770		$	1,803		$	1,030		$	1,574
Interest cost		1,117			1,713			1,057			1,615
Return on plan assets		(1,390	)		(1,786	)		(1,463	)		(2,228	)
Amortization of prior service cost		—			73			—			97
Amortization of transition obligation		19			—			35			—
Recognized net actuarial loss		66			1,031			16			88

Net pension expense	$	582		$	2,834		$	675		$	1,146


	Nine Months Ended September 30,
	2009						2008
	Non-U.S.			U.S.			Non-U.S.			U.S.

Service cost	$	2,275		$	5,409		$	3,871		$	4,721
Interest cost		3,202			5,139			3,557			4,844
Return on plan assets		(3,983	)		(5,358	)		(4,841	)		(6,682	)
Amortization of prior service cost		—			219			—			293
Amortization of transition obligation		54			—			121			—
Recognized net actuarial loss		184			3,093			96			262

Net pension expense	$	1,732		$	8,502		$	2,804		$	3,438

During the nine months ended September 30, 2009, we made contributions to our pension plans totaling $13 million. We expect to contribute a total of approximately $14 million to our pension plans during 2009.

We sponsor the Noble Drilling Corporation 401(k) Savings Restoration Plan (“Restoration Plan”). The Restoration Plan is a nonqualified, unfunded employee benefit plan under which certain highly compensated employees may elect to defer compensation in excess of amounts deferrable under our 401(k) savings plan. The Restoration Plan has no assets, and amounts withheld for the Restoration Plan are kept by us for general corporate purposes. The investments selected by employees and the associated returns are tracked on a phantom basis. Accordingly, we have a liability to employees for amounts originally withheld plus phantom investment income or less phantom investment losses. We are at risk for phantom investment income and, conversely, we benefit should phantom investment losses occur. At both September 30, 2009 and December 31, 2008, our liability under the Restoration Plan totaled $8 million. We have purchased investments that closely correlate to the investment elections made by participants in the Restoration Plan in order to mitigate the impact of the phantom investment income and losses on our financial statements. The value of these investments held for our benefit totaled $8 million at September 30, 2009 and $7 million at December 31, 2008.

Note 8 — Derivative Instruments and Hedging Activities

We periodically enter into derivative instruments to manage our exposure to fluctuations in interest rates and foreign currency exchange rates, and we may conduct hedging activities in future periods to mitigate such exposure. We have documented policies and procedures to monitor and control the use of derivative instruments. We do not engage in derivative transactions for speculative or trading purposes, nor are we a party to leveraged derivatives.

Hedge effectiveness is evaluated based on the matching of critical terms between derivative contracts and the hedged item. Any change in fair value resulting from ineffectiveness is recognized immediately in earnings. We did not recognize a gain or loss due to hedge ineffectiveness in our Consolidated Statements of Income during the three or nine months ended September 30, 2009 and 2008 related to these derivative instruments.

Effective January 1, 2009, we adopted a new accounting standard which requires entities with derivative instruments to disclose information to enable financial statement users to understand how and why the entity uses derivative instruments, how derivative instruments and related hedged items are accounted for and how derivative instruments and related hedged items affect the entity’s financial position, financial performance and cash flows. This adoption did not have a material impact on our financial position or results of operations.

Cash Flow Hedges

Our North Sea operations have a significant amount of their cash operating expenses payable in either the Euro or British Pound, and we typically maintain forward contracts settling monthly in Euros and British Pounds. The Euro-denominated forward contracts settling in the remainder of 2009 represent approximately 61 percent of our forecasted Euro requirements. The British Pound-denominated forward contracts settling in the remainder of 2009 represent approximately 61 percent of our forecasted British Pound requirements. The notional amount of forward contracts outstanding at September 30, 2009 was approximately 7 million Euros and 12 million British Pounds. The aggregate notional amount of these forward contracts, expressed in U.S. Dollars, was $27 million at September 30, 2009. We had no Euro-denominated or British Pound-denominated forward contracts outstanding at December 31, 2008.

The balance of the net unrealized gain related to our forward contracts included in “Accumulated other comprehensive loss” and related activity is as follows:


	Three Months Ended						Nine Months Ended
	September 30,						September 30,
	2009			2008			2009		2008

Net unrealized gain at beginning of period	$	2,852		$	663		$	—	$	2,219
Activity during period:
Settlement of forward contracts during period		(1,301	)		(663	)		—		(2,219	)
Net unrealized gain/(loss) on outstanding forward contracts		(144	)		—			1,407		—

Net unrealized gain at end of period	$	1,407		$	—		$	1,407	$	—

Fair Value Hedges

We have entered into a firm commitment for the construction of a newbuild drillship. The drillship will be constructed in two phases, with the second phase being installation and commissioning of the topside equipment. Our payment obligation for this second phase of construction is denominated in Euros, and in order to mitigate the risk of fluctuations in foreign currency exchange rates, we entered into forward contracts to purchase Euros. As of September 30, 2009, the aggregate notional amount of the remaining forward contracts was 70 million Euros. Each forward contract settles in connection with required payments under the contract. We are accounting for these forward contracts as fair value hedges. The fair market value of those derivative instruments is included in “Other current assets/liabilities” or “Other assets/liabilities,” depending on when the forward contract is expected to be settled. Gains and losses from these fair value hedges are recognized in earnings currently along with the change in fair value of the hedged item attributable to the risk being hedged. The fair market value of these outstanding forward contracts, which are included in “Other current assets” and “Other assets,” totaled approximately $1 million at September 30, 2009.

Note 9 — Fair Value of Financial Instruments

The following table presents the carrying amount and estimated fair value of our financial instruments recognized at fair value on a recurring basis:


			September 30, 2009						December 31, 2008
			Estimated Fair Value
			Measurements
			Quoted		Significant
			Prices in		Other		Significant
			Active		Observable		Unobservable
	Carrying		Markets		Inputs		Inputs		Carrying		Estimated
	Amount		(Level 1)		(Level 2)		(Level 3)		Amount		Fair Value
Assets —
Marketable securities	$	7,736	$	7,736	$	—	$	—	$	7,104	$	7,104
Forward contracts	$	2,446	$	—	$	2,446	$	—	$	—	$	—

Liabilities —
Forward contracts	$	—	$	—	$	—	$	—	$	5,418	$	5,418

The derivative instruments have been valued using actively quoted prices and quotes obtained from the counterparties to the derivative instruments. Our cash and cash equivalents, accounts receivable and accounts payable are by their nature short-term. As a result, the carrying values included in the accompanying Consolidated Balance Sheets approximate fair value.

Note 10 — Commitments and Contingencies

Noble Asset Company Limited (“NACL”), our wholly-owned, indirect subsidiary, was named one of 21 parties served a Show Cause Notice (“SCN”) issued by the Commissioner of Customs (Prev.), Mumbai, India (the “Commissioner”) in August 2003. The SCN concerned alleged violations of Indian customs laws and regulations regarding one of our jackups. The Commissioner alleged certain violations to have occurred before, at the time of, and after NACL acquired the rig from the rig’s previous owner. In the purchase agreement for the rig, NACL received contractual indemnification against liability for Indian customs duty from the rig’s previous owner. In connection with the export of the rig from India in 2001, NACL posted a bank guarantee in the amount of 150 million Indian Rupees (or $3 million at September 30, 2009) and a customs bond in the amount of 970 million Indian Rupees (or $20 million at September 30, 2009), both of which remain in place. In March 2005, the Commissioner passed an order against NACL and the other parties cited in the SCN seeking (i) to invoke the bank guarantee posted on behalf of NACL as a fine, (ii) to demand duty of (a) $19 million plus interest related to a 1997 alleged import and (b) $22 million plus interest related to a 1999 alleged import, provided that the duty and interest demanded in (b) would not be payable if the duty and interest demanded in (a) were paid by NACL, and (iii) to assess a penalty of $500,000 against NACL. NACL appealed the order of the Commissioner to the Customs, Excise & Service Tax Appellate Tribunal (“CESTAT”). At a hearing on April 5, 2006, CESTAT upheld NACL’s appeal and overturned the Commissioner’s March 2005 order against NACL in its entirety. CESTAT thereafter issued its written judgment dated August 8, 2006 upholding NACL’s appeal on all grounds and setting aside the duty demand, interest, fine and penalty. The Commissioner filed an appeal in the Bombay High Court challenging the order passed by CESTAT. In August 2008, the Division Bench of the Bombay High Court dismissed the Commissioner’s appeal of CESTAT’s order. In November 2008, the Commissioner filed a Special Leave Petition, an Appeal in the Supreme Court of India, appealing the order of the Bombay High Court. NACL has filed an Affidavit-in-reply opposing admission of the Appeal in the Supreme Court of India, and is seeking the return or cancellation of its previously posted custom bond and bank guarantee. NACL continues to pursue contractual indemnification against liability for Indian customs duty and related costs and expenses against the rig’s previous owner in arbitration proceedings in London, which proceedings the parties have temporarily stayed pending further developments in the Indian proceeding. We do not believe the ultimate resolution of this matter will have a material adverse effect on our financial position, results of operations or cash flows.

We operate in a number of countries throughout the world and our income tax returns filed in those jurisdictions are subject to review and examination by tax authorities within those jurisdictions. We are currently contesting several tax assessments and may contest future assessments when we believe the assessments are in error. We cannot predict or provide assurance as to the ultimate outcome of the existing or future assessments. We believe the ultimate resolution of the outstanding assessments, for which we have not made any accrual, will not have a material adverse effect on our consolidated financial statements. We recognize uncertain tax positions that we believe have a greater than 50 percent likelihood of being sustained. See Note 6 for additional information.

Certain of our non-U.S. income tax returns have been examined for the 2002 through 2004 periods and audit claims have been assessed for approximately $167 million (including interest and penalties), primarily in Mexico. We do not believe we owe these amounts and are defending our position. However, we expect increased audit activity in Mexico and anticipate the tax authorities will issue additional assessments and continue to pursue legal actions for all audit claims. We believe audit claims in the range of an additional $15 to $18 million attributable to other business tax returns may be assessed against us. We have contested, or intend to contest the audit findings, including through litigation if necessary, and we do not believe that there is greater than 50 percent likelihood that additional taxes will be incurred. Accordingly, no accrual has been made for such amounts.

We are from time to time a party to various lawsuits that are incidental to our operations in which the claimants seek an unspecified amount of monetary damages for personal injury, including injuries purportedly resulting from exposure to asbestos on drilling rigs and associated facilities. At September 30, 2009, there were approximately 38 of these lawsuits in which we are one of many defendants. These lawsuits have been filed in the states of Louisiana, Mississippi and Texas. Exposure related to these lawsuits is not currently determinable. We intend to defend vigorously against the litigation.

We are a defendant in certain claims and litigation arising out of operations in the ordinary course of business, the resolution of which, in the opinion of management, will not be material to our financial position, results of operations or cash flows.

During the fourth quarter of 2007, our Nigerian subsidiary received letters from the Nigerian Maritime Administration and Safety Agency (“NIMASA”) seeking to collect a two percent surcharge on contract amounts under contracts performed by “vessels,” within the meaning of Nigeria’s cabotage laws, engaged in the Nigerian coastal shipping trade. Although we do not believe that these laws apply to our ownership of drilling units, NIMASA is seeking to apply a provision of the Nigerian cabotage laws (which became effective on May 1, 2004) to our offshore drilling units by considering these units to be “vessels” within the meaning of those laws and therefore subject to the surcharge, which is imposed only upon “vessels.” Our offshore drilling units are not engaged in the Nigerian coastal shipping trade and are not in our view “vessels” within the meaning of Nigeria’s cabotage laws. In January 2008, we filed an originating summons against NIMASA and the Minister of Transportation in the Federal High Court of Lagos, Nigeria seeking, among other things, a declaration that our drilling operations do not constitute “coastal trade” or “cabotage” within the meaning of Nigeria’s cabotage laws and that our offshore drilling units are not “vessels” within the meaning of those laws. In February 2009, NIMASA filed suit against us in the Federal High Court of Nigeria seeking collection of the cabotage surcharge. In August 2009, the court issued a favorable ruling in response to our originating summons stating that drilling operations do not fall within the cabotage laws and that drilling rigs are not vessels for purposes of those laws, and the court also issued an injunction against the defendants prohibiting their interference with our drilling rigs or drilling operations. NIMASA has appealed the court’s ruling. We have asked that NIMASA’s suit against us be dismissed based on this ruling, and this motion is pending. We intend to take all further appropriate legal action to resist the application of Nigeria’s cabotage laws to our drilling units. The outcome of any such legal action and the extent to which we may ultimately be responsible for the surcharge is uncertain. If it is ultimately determined that offshore drilling units constitute vessels within the meaning of the Nigerian cabotage laws, we may be required to pay the surcharge and comply with other aspects of the Nigerian cabotage laws, which could adversely affect our operations in Nigerian waters and require us to incur additional costs of compliance.

NIMASA had also informed the Nigerian Content Division of its position that we are not in compliance with the cabotage laws. The Nigerian Content Division makes determinations of companies’ compliance with applicable local content regulations for purposes of government contracting, including contracting for services in connection with oil and gas concessions where the Nigerian national oil company is a partner. The Nigerian Content Division had barred us from participating in new tenders as a result of NIMASA’a allegations. We have requested that the Nigerian Content Division reverse its actions based on the favorable Federal High Court ruling, and we continue to discuss this matter with the Nigerian Content Division. However, no assurance can be given with respect to our ability to bid for future work in Nigeria until our dispute with NIMASA is resolved.

We maintain certain insurance coverage against specified marine liabilities, including liability for physical damage to our drilling rigs, and loss of hire on certain of our rigs. The damage caused in 2005 and 2008 by Hurricanes Katrina, Rita and Ike to oil and gas assets situated in the U.S. Gulf of Mexico has negatively impacted the energy insurance market, resulting in more restricted and more expensive coverage. Beginning March 1, 2009, we elected to self insure U.S. named windstorm physical damage and loss of hire exposures due to the high cost of coverage for these perils. This self insurance applies only to our units in the U.S. portion of the Gulf of Mexico. We presently have five semisubmersibles and two submersibles in the U.S. Gulf of Mexico. Our rigs located in the Mexican portion of the Gulf of Mexico remain covered by commercial insurance for windstorm damage up to the declared value of each unit. We maintain physical damage deductibles of $25 million per occurrence for jack-ups and submersibles and $50 million per occurrence for semi-submersibles and drillships. The loss of hire coverage applies only to our rigs operating under contract with a dayrate equal to or greater than $200,000 a day and is subject to a 45-day waiting period for each unit and each occurrence.

Although we maintain insurance in the geographic areas in which we operate, pollution, reservoir damage and environmental risks generally are not fully insurable. Our insurance policies and contractual rights to indemnity may not adequately cover our losses or may have exclusions of coverage for some losses. We do not have insurance coverage or rights to indemnity for all risks, including loss of hire insurance on most of the rigs in our fleet. Uninsured exposures may include war risk, activities prohibited by U.S. laws and regulations, radiation hazards, certain loss or damage to property on board our rigs and losses relating to terrorist acts or strikes. If a significant accident or other event occurs and is not fully covered by insurance or contractual indemnity, it could adversely affect our financial position, results of operations or cash flows. There can be no assurance that those parties with contractual obligations to indemnify us will necessarily be financially able to indemnify us against all these risks.

We carry protection and indemnity insurance covering marine third party liability exposures, which also includes coverage for employer’s liability resulting from personal injury to our offshore drilling crews. Our protection and indemnity policy currently has a standard deductible of $10 million per occurrence.

In connection with our capital expenditure program, we had outstanding commitments, including shipyard and purchase commitments of approximately $970 million at September 30, 2009.

We have entered into employment agreements with certain of our executive officers, as well as certain other employees. These agreements become effective upon a change of control of Noble-Swiss (within the meaning set forth in the agreements) or a termination of employment in connection with or in anticipation of a change of control, and remain effective for three years thereafter. These agreements provide for compensation and certain other benefits under such circumstances.

Internal Investigation

In June 2007, we announced that we were conducting an internal investigation of our Nigerian operations, focusing on the legality under the U.S. Foreign Corrupt Practices Act of 1977, as amended (the “FCPA”), and local laws of our Nigerian affiliate’s reimbursement of certain expenses incurred by our customs agents in connection with obtaining and renewing permits for the temporary importation of drilling units and related equipment into Nigerian waters, including permits that are necessary for our drilling units to operate in Nigerian waters. We also announced that the audit committee of our Board of Directors had engaged a leading law firm with significant experience in investigating and advising on FCPA matters to lead the investigation as independent outside counsel. The scope of the investigation also includes our dealings with customs agents and customs authorities in certain parts of the world other than Nigeria in which we conduct our operations, as well as dealings with other types of local agents in Nigeria and such other parts of the world. There can be no assurance that evidence of additional potential FCPA violations may not be uncovered through the investigation.

The audit committee commissioned the internal investigation after our management brought to the attention of the audit committee a news release issued by another company. The news release disclosed that the other company was conducting an internal investigation into the FCPA implications of certain actions by a customs agent in Nigeria in connection with the temporary importation of that company’s vessels into Nigeria. Our drilling units that conduct operations in Nigeria do so under temporary import permits, and management considered it prudent to review our own practices in this regard.

We voluntarily contacted the SEC and the U.S. Department of Justice (“DOJ”) to advise them that an independent investigation was underway. We have been cooperating, and intend to continue to cooperate fully with both agencies. If the SEC or the DOJ determines that violations of the FCPA have occurred, they could seek civil and criminal sanctions, including monetary penalties, against us and/or certain of our employees, as well as additional changes to our business practices and compliance programs, any of which could have a material adverse effect on our business or financial condition. In addition, such actions, whether actual or alleged, could damage our reputation and ability to do business, to attract and retain employees, and to access capital markets. Further, detecting, investigating, and resolving such actions is expensive and consumes significant time and attention of our senior management.

The independent outside counsel appointed by the audit committee to perform the internal investigation made a presentation of the results of its investigation to the DOJ and the SEC in June 2008. The SEC and the DOJ have been reviewing these results and information gathered by the independent outside counsel in the course of the investigation. Neither the SEC nor the DOJ has indicated what action it may take, if any, against us or any individual, or whether it may request that the audit committee’s independent outside counsel conduct further investigation. Therefore, we consider the internal investigation to be ongoing and cannot predict when it will conclude. Furthermore, we cannot predict whether either the SEC or the DOJ will open its own proceeding to investigate this matter, or if a proceeding is opened, what potential remedies these agencies may seek. We could also face fines or sanctions in relevant foreign jurisdictions. Based on information obtained to date in our internal investigation, we have not determined that any potential liability that may result is probable or remote or can be reasonably estimated. As a result, we have not made any accrual in our consolidated financial statements at September 30, 2009.

We are currently operating three jackup rigs offshore Nigeria. The temporary import permits covering two of these rigs expired in November 2008 and we have pending applications to renew these permits. However, as of October 31, 2009, the Nigerian customs office had not acted on our applications. We have obtained a temporary import permit for the third rig, which was recently imported into the country. We continue to seek to avoid material disruption to our Nigerian operations; however, there can be no assurance that we will be able to obtain new permits or further extensions of permits necessary to continue the operation of our rigs in Nigeria. If we cannot obtain a new permit or an extension necessary to continue operations of any rig, we may need to cease operations under the drilling contract for such rig and relocate such rig from Nigerian waters. In any case, we also could be subject to actions by Nigerian customs for import duties and fines for these two rigs, as well as other drilling rigs that operated in Nigeria in the past. We cannot predict what impact these events may have on any such contract or our business in Nigeria. Furthermore, we cannot predict what changes, if any, relating to temporary import permit policies and procedures may be established or implemented in Nigeria in the future, or how any such changes may impact our business there.

Notwithstanding that the internal investigation is ongoing, we concluded that certain changes to our FCPA compliance program would provide us greater assurance that our assets are not used, directly or indirectly, to make improper payments, including customs payments, and that we are in compliance with the FCPA’s record-keeping requirements. Although we have had a long-standing published policy requiring compliance with the FCPA and broadly prohibiting any improper payments by us to foreign or U.S. officials, we adopted additional measures intended to enhance FCPA compliance procedures. Further measures may be required once the investigation concludes.

We incurred legal fees and related costs of $0.2 million and $0.8 million for the three and nine months ended September 30, 2009, respectively, and $2 million and $14 million for the three and nine months ended September 30, 2008, respectively, related to the internal investigation. It is anticipated that additional costs will be incurred in future periods, but the amount of these costs cannot be presently determined.

Note 11 — Segment and Related Information

We report our contract drilling operations as a single reportable segment: Contract Drilling Services. The consolidation of our contract drilling operations into one reportable segment is attributable to how we manage our business, and the fact that all of our drilling fleet is dependent upon the worldwide oil and gas industry. The mobile offshore drilling units comprising our offshore rig fleet operate in a single, global market for contract drilling services and are often redeployed globally due to changing demands of our customers, which consist largely of major non-U.S. and government owned/controlled oil and gas companies throughout the world. Our contract drilling services segment currently conducts contract drilling operations in the Middle East, India, the U.S. Gulf of Mexico, Mexico, the North Sea, Brazil and West Africa.

We evaluate the performance of our operating segment primarily based on operating revenues and net income. Summarized financial information of our reportable segment for the three and nine months ended September 30, 2009 and 2008 is shown in the following table. The “Other” column includes results of labor contract drilling services, other insignificant operations and corporate related items.


	Three Months Ended September 30,
	2009						2008
	Contract						Contract
	Drilling						Drilling
	Services		Other		Total		Services		Other			Total

Revenues from external customers	$	896,989	$	8,646	$	905,635	$	852,519	$	9,462		$	861,981
Depreciation and amortization		100,669		2,576		103,245		90,923		1,748			92,671
Segment operating income		503,962		451		504,413		466,377		1,273			467,650
Interest expense, net of amount capitalized		166		213		379		581		20			601
Income tax provision		80,374		182		80,556		75,179		11,652			86,831
Segment profit		425,120		963		426,083		392,224		(9,702	)		382,522
Total assets (at end of period)		7,307,345		782,030		8,089,375		6,197,987		413,170			6,611,157
Capital expenditures		356,447		10,737		367,184		347,207		8,010			355,217


	Nine Months Ended September 30,
	2009						2008
	Contract						Contract
	Drilling						Drilling
	Services		Other		Total		Services		Other		Total

Revenues from external customers	$	2,676,583	$	24,075	$	2,700,658	$	2,475,096	$	61,251	$	2,536,347
Depreciation and amortization		288,519		7,127		295,646		258,344		5,062		263,406
Segment operating income		1,503,398		928		1,504,326		1,354,405		39,893		1,394,298
Interest expense, net of amount capitalized		516		745		1,261		2,184		248		2,432
Income tax provision		275,418		415		275,833		247,619		8,832		256,451
Segment profit		1,230,303		1,924		1,232,227		1,109,827		32,601		1,142,428
Total assets (at end of period)		7,307,345		782,030		8,089,375		6,197,987		413,170		6,611,157
Capital expenditures		850,575		42,169		892,744		849,226		30,884		880,110

Note 12 — Accounting Pronouncements

In April 2009, the FASB updated guidance which requires disclosures about fair value of financial instruments for interim reporting periods. This guidance is effective for interim reporting periods ending after June 15, 2009 and has applied to our disclosures beginning with our second fiscal quarter of 2009. The adoption of this guidance did not have a material impact on our financial condition or results of operations.

In April 2009, the FASB also issued updated guidance which provides additional guidance for estimating fair value when the volume and level of activity for the asset or liability have significantly decreased. This guidance is effective for interim reporting periods ending after June 15, 2009 and has applied to our disclosures beginning with our second fiscal quarter of 2009. Our adoption of this guidance did not have a material impact on our financial condition or results of operations.

Also in April 2009, the FASB issued updated guidance which amends the other-than-temporary impairment guidance for debt securities to make the guidance more operational and to improve the presentation and disclosure of other-than-temporary impairments on debt and equity securities in the financial statements. This guidance is effective for interim reporting periods ending after June 15, 2009 and has applied to our disclosures beginning with our second fiscal quarter of 2009. Our adoption of this guidance did not have a material impact on our financial condition or results of operations.

In May 2009, the FASB issued guidance which expands disclosures of subsequent events and requires management to disclose the date through which subsequent events have been evaluated. This guidance is effective for interim reporting periods ending after June 15, 2009 and has applied to our disclosures beginning with our second fiscal quarter of 2009. Our adoption of this guidance did not have a material impact on our financial condition or results of operations.

In June 2009, the FASB issued the following guidance:

•

expanded disclosures that a reporting entity provides about transfers of financial assets and its effect on the financial statements. This guidance is effective for annual and interim reporting periods beginning after November 15, 2009;

•

revisions to how an entity evaluates variable interest entities. This guidance is effective for annual and interim reporting periods beginning after November 15, 2009; and

•

modified the GAAP hierarchy and how authoritative guidance is referenced in financial statements. This guidance is effective for annual and interim reporting periods ending after September 15, 2009.

We do not expect our adoption of these new accounting pronouncements will have a material impact on our financial condition or results of operations.

Note 13 — Subsequent Events

On October 1, 2009, we completed a worldwide internal restructuring of the ownership of substantially all of our drilling rigs under a single non-U.S. entity. This worldwide restructuring did not have a material impact on our consolidated financial position, results of operations, or cash flows for the period ended September 30, 2009. As a result of this restructuring, our effective tax rate in future periods will be beneficially impacted, however, the effect of this impact cannot be estimated.

Management has evaluated subsequent events through November 6, 2009, which is the date the consolidated financial statements were filed with the SEC, and has determined that no other material reportable events have occurred between October 1, 2009 and November 6, 2009.

Note 14 — Guarantees of Registered Securities

Noble-Cayman and Noble Holding (U.S.) Corporation (“NHC”), each a wholly-owned subsidiary of Noble-Swiss, are guarantors of Noble Drilling Corporation’s (“NDC”) 7.50% Senior Notes due 2019. The outstanding principal balance of the 7.50% Senior Notes at September 30, 2009 was $202 million. NDC is an indirect, wholly-owned subsidiary of Noble-Swiss and a direct, wholly-owned subsidiary of NHC. Noble-Cayman’s and NHC’s guarantees of the 7.50% Senior Notes are full and unconditional. In December 2005, Noble Drilling Holding LLC (“NDH”), an indirect wholly-owned subsidiary of Noble-Swiss, became a co-obligor on (and effectively a guarantor of) the 7.50% Senior Notes.

In connection with our recently completed worldwide internal restructuring (see Note 13), prior to September 30, 2009, Noble Drilling Services 1 LLC (“NDS1”), an indirect wholly-owned subsidiary of Noble-Swiss, became a co-issuer of the 7.50% Senior Notes. Subsequent to September 30, 2009, NDS1 merged with Noble Drilling Services 6 LLC (“NDS6”), also an indirect wholly-owned subsidiary of Noble-Swiss, as part of the internal restructuring. NDS6 was the surviving company in this merger and assumed NDS1’s obligations under, and became a co-issuer of, the 7.50% Senior Notes.

In connection with the issuance of Noble-Cayman’s 5.875% Senior Notes due 2013, NDC guaranteed the payment of the 5.875% Senior Notes. In connection with our recently completed worldwide internal restructuring (see Note 13), subsequent to the end of the quarter, Noble Holding International Limited (“NHIL”), an indirect wholly-owned subsidiary of Noble Cayman and Noble-Swiss, also guaranteed the payment of the 5.875% Senior Notes. NDC’s and NHIL’s guarantees of the 5.875% Senior Notes are full and unconditional. The outstanding principal balance of the 5.875% Senior Notes at September 30, 2009 was $300 million.

In November 2008, NHIL issued $250 million principal amount of 7.375% Senior Notes due 2014, which are fully and unconditionally guaranteed by Noble-Cayman. The outstanding principal balance of the 7.375% Senior Notes at September 30, 2009 was $249 million.

NOBLE CORPORATION (NOBLE-CAYMAN) AND SUBSIDIARIES
CONDENSED CONSOLIDATING BALANCE SHEET
September 30, 2009
(in thousands)

The following consolidating financial statements of Noble-Cayman, NHC and NDH combined, NDC, NDS1, NHIL and all other subsidiaries present investments in both consolidated and unconsolidated affiliates using the equity method of accounting.


													Other
	Noble-		NHC and NDH										Subsidiaries			Consolidating
	Cayman		Combined			NDC			NHIL		NDS1		of Noble			Adjustments			Total
ASSETS
Current assets
Cash and cash equivalents	$	1	$	184		$	11,497		$	—	$	—	$	730,799		$	—		$	742,481
Accounts receivable		—		19,374			5,387			—		—		692,957			—			717,718
Prepaid expenses		—		843			1			—		—		40,522			—			41,366
Accounts receivable from affiliates		—		—			528,248			231,422		1		1,101,387			(1,787,329	)		73,729
Other current assets		—		14,270			1			—		—		151,621			(78,144	)		87,748

Total current assets		1		34,671			545,134			231,422		1		2,717,286			(1,865,473	)		1,663,042


Property and equipment
Drilling equipment, facilities and other		—		1,869,325			131,369			—		—		6,296,616			—			8,297,310
Accumulated depreciation		—		(113,993	)		(76,498	)		—		—		(1,900,520	)		—			(2,091,011	)

Total property and equipment, net		—		1,755,332			54,871			—		—		4,396,096			—			6,206,299


Notes receivable from affiliates		3,461,463		10,363			1,384			—		190,269		1,414,821			(5,078,300	)		—
Investments in affiliates		3,762,768		7,748,618			3,664,898			3,538,233		1,026,787		—			(19,741,304	)		—
Other assets		2,949		7,422			4,360			1,846		—		262,756			—			279,333

Total assets	$	7,227,181	$	9,556,406		$	4,270,647		$	3,771,501	$	1,217,057	$	8,790,959		$	(26,685,077	)	$	8,148,674


LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities
Current maturities of long-term debt	$	—	$	—		$	—		$	—	$	—	$	—		$	—		$	—
Accounts payable and accrued liabilities		10,962		53,500			38,860			16,067		631		450,107			(78,144	)		491,983
Accounts payable to affiliates		285,570		1,501,759			—			—		—		—			(1,787,329	)		—

Total current liabilities		296,532		1,555,259			38,860			16,067		631		450,107			(1,865,473	)		491,983


Long-term debt		299,865		—			—			249,346		201,695		—			—			750,906
Notes payable to affiliates		129,900		1,164,921			120,000			—		—		3,663,479			(5,078,300	)		—
Other liabilities		18,763		37,120			23,137			—		—		344,644			—			423,664

Total liabilities		745,060		2,757,300			181,997			265,413		202,326		4,458,230			(6,943,773	)		1,666,553


Commitments and contingencies

Shareholders’ Equity		6,482,121		6,799,106			4,088,650			3,506,088		1,014,731		4,332,729			(19,741,304	)		6,482,121

Total liabilities and shareholders’ equity	$	7,227,181	$	9,556,406		$	4,270,647		$	3,771,501	$	1,217,057	$	8,790,959		$	(26,685,077	)	$	8,148,674

NOBLE CORPORATION (NOBLE-CAYMAN) AND SUBSIDIARIES
CONDENSED CONSOLIDATING BALANCE SHEET
December 31, 2008
(in thousands)


											Other
	Noble-		NHC and NDH								Subsidiaries			Consolidating
	Cayman		Combined			NDC			NHIL		of Noble			Adjustments			Total
ASSETS
Current assets
Cash and cash equivalents	$	661	$	445		$	26		$	—	$	512,179		$	—		$	513,311
Accounts receivable		—		26,604			13,099			—		605,137			—			644,840
Prepaid expenses		—		725			1			—		20,481			—			21,207
Accounts receivable from affiliates		32,807		—			562,679			247,174		961,230			(1,803,890	)		—
Other current assets		7,395		2,768			8			—		134,524			(83,712	)		60,983

Total current assets		40,863		30,542			575,813			247,174		2,233,551			(1,887,602	)		1,240,341


Property and equipment
Drilling equipment, facilities and other		—		2,296,241			116,995			—		5,120,012			—			7,533,248
Accumulated depreciation		—		(113,481	)		(70,326	)		—		(1,702,424	)		—			(1,886,231	)

Total property and equipment, net		—		2,182,760			46,669			—		3,417,588			—			5,647,017


Notes receivable from affiliates		511,835		20,963			44,159			—		1,757,321			(2,334,278	)		—
Investments in affiliates		5,498,928		6,374,623			3,460,873			2,727,556		—			(18,061,980	)		—
Other assets		2,957		10,117			6,418			2,017		197,932			—			219,441

Total assets	$	6,054,583	$	8,619,005		$	4,133,932		$	2,976,747	$	7,606,392		$	(22,283,860	)	$	7,106,799


LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities
Current maturities of long-term debt	$	—	$	21,066		$	149,998		$	—	$	22,700		$	(21,066	)	$	172,698
Accounts payable and accrued liabilities		27,452		57,797			40,968			2,075		440,649			(62,646	)		506,295
Accounts payable to affiliates		—		1,642,231			—			—		161,659			(1,803,890	)		—

Total current liabilities		27,452		1,721,094			190,966			2,075		625,008			(1,887,602	)		678,993


Long-term debt		299,837		—			201,695			249,257		—			—			750,789
Notes payable to affiliates		429,900		1,207,421			120,000			—		576,957			(2,334,278	)		—
Other liabilities		6,679		42,520			21,394			—		315,709			—			386,302

Total liabilities		763,868		2,971,035			534,055			251,332		1,517,674			(4,221,880	)		1,816,084


Commitments and contingencies

Shareholders’ Equity		5,290,715		5,647,970			3,599,877			2,725,415		6,088,718			(18,061,980	)		5,290,715

Total liabilities and shareholders’ equity	$	6,054,583	$	8,619,005		$	4,133,932		$	2,976,747	$	7,606,392		$	(22,283,860	)	$	7,106,799

NOBLE CORPORATION (NOBLE-CAYMAN) AND SUBSIDIARIES
CONDENSED CONSOLIDATING STATEMENT OF INCOME
Three Months Ended September 30, 2009
(in thousands)


															Other
	Noble-			NHC and NDH											Subsidiaries			Consolidating
	Cayman			Combined			NDC			NHIL			NDS1		of Noble			Adjustments			Total
Operating revenues
Contract drilling services	$	—		$	29,500		$	15,015		$	—		$	—	$	841,975		$	(11,521	)	$	874,969
Reimbursables		—			443			—			—			—		22,012			—			22,455
Labor contract drilling services		—			—			—			—			—		7,490			—			7,490
Other		—			51			—			—			—		670			—			721

Total operating revenues		—			29,994			15,015			—			—		872,147			(11,521	)		905,635


Operating costs and expenses
Contract drilling services		(10,518	)		(2,249	)		1,591			3			—		273,536			(11,521	)		250,842
Reimbursables		—			89			—			—			—		18,628			—			18,717
Labor contract drilling services		—			—			—			—			—		4,642			—			4,642
Depreciation and amortization		—			7,718			3,026			—			—		92,501			—			103,245
Selling, general and administrative		(6,229	)		622			481								27,749						22,623
Loss on involuntary conversion		—			—			—			—			—		2,076			—			2,076

Total operating costs and expenses		(16,747	)		6,180			5,098			3			—		419,132			(11,521	)		402,145


Operating income (loss)		16,747			23,814			9,917			(3	)		—		453,015			—			503,490

Other income (expense)
Equity earnings in affiliates (net of tax)		371,533			324,605			172,466			305,632			8,555		—			(1,182,791	)		—
Interest expense, net of amounts capitalized		36,847			(16,185	)		(3,782	)		(14,592	)		—		(30,718	)		28,051			(379	)
Interest income and other, net		2			—			2			—			—		30,621			(28,051	)		2,574


Income before income taxes		425,129			332,234			178,603			291,037			8,555		452,918			(1,182,791	)		505,685
Income tax (provision) benefit		—			(15,163	)		5,434			—			—		(70,827	)		—			(80,556	)

Net income	$	425,129		$	317,071		$	184,037		$	291,037		$	8,555	$	382,091		$	(1,182,791	)	$	425,129

NOBLE CORPORATION (NOBLE-CAYMAN) AND SUBSIDIARIES
CONDENSED CONSOLIDATING STATEMENT OF INCOME
Nine Months Ended September 30, 2009
(in thousands)


														Other
	Noble-		NHC and NDH											Subsidiaries			Consolidating
	Cayman		Combined			NDC			NHIL			NDS1		of Noble			Adjustments			Total
Operating revenues
Contract drilling services	$	—	$	113,722		$	40,882		$	—		$	—	$	2,508,449		$	(47,482	)	$	2,615,571
Reimbursables		—		1,493			—			—			—		60,474			—			61,967
Labor contract drilling services		—		—			—			—			—		21,843			—			21,843
Other		—		51			—			—			—		1,226			—			1,277

Total operating revenues		—		115,266			40,882			—			—		2,591,992			(47,482	)		2,700,658


Operating costs and expenses
Contract drilling services		—		25,348			5,239			29			—		759,618			(47,482	)		742,752
Reimbursables		—		820			—			—			—		51,261			—			52,081
Labor contract drilling services		—		—			—			—			—		13,899			—			13,899
Depreciation and amortization		—		24,206			7,738			—			—		263,702			—			295,646
Selling, general and administrative		—		3,643			1,342								55,916						60,901
Loss on asset disposal/involuntary conversion		—		—			—			—			—		31,053			—			31,053

Total operating costs and expenses		—		54,017			14,319			29			—		1,175,449			(47,482	)		1,196,332


Operating income (loss)		—		61,249			26,563			(29	)		—		1,416,543			—			1,504,326

Other income (expense)
Equity earnings in affiliates (net of tax)		1,207,667		1,154,569			444,078			810,236			8,555		—			(3,625,105	)		—
Interest expense, net of amounts capitalized		22,943		(48,486	)		(13,517	)		(29,530	)		—		(6,450	)		73,779			(1,261	)
Interest income and other, net		1,203		—			2			—			—		77,538			(73,779	)		4,964


Income before income taxes		1,231,813		1,167,332			457,126			780,677			8,555		1,487,631			(3,625,105	)		1,508,029
Income tax (provision) benefit		383		(16,970	)		—			—			—		(259,246	)		—			(275,833	)

Net income	$	1,232,196	$	1,150,362		$	457,126		$	780,677		$	8,555	$	1,228,385		$	(3,625,105	)	$	1,232,196

NOBLE CORPORATION (NOBLE-CAYMAN) AND SUBSIDIARIES
CONDENSED CONSOLIDATING STATEMENT OF INCOME
Three Months Ended September 30, 2008
(in thousands)


												Other
	Noble-			NHC and NDH								Subsidiaries			Consolidating
	Cayman			Combined			NDC			NHIL		of Noble			Adjustments			Total
Operating revenues
Contract drilling services	$	—		$	69,695		$	14,583		$	—	$	779,920		$	(29,000	)	$	835,198
Reimbursables		—			277			41			—		17,769			—			18,087
Labor contract drilling services		—			—			—			—		8,197			—			8,197
Other		—			(10	)		—			—		509			—			499

Total operating revenues		—			69,962			14,624			—		806,395			(29,000	)		861,981


Operating costs and expenses
Contract drilling services		5,294			10,536			6,171			—		260,728			(29,000	)		253,729
Reimbursables		—			254			34			—		16,206			—			16,494
Labor contract drilling services		—			—			—			—		5,410			—			5,410
Depreciation and amortization		—			9,185			1,930			—		81,556			—			92,671
Selling, general and administrative		2,328			1,634			460			—		11,605			—			16,027
Gain on asset disposal, net		—			—			—			—		10,000			—			10,000

Total operating costs and expenses		7,622			21,609			8,595			—		385,505			(29,000	)		394,331


Operating income (loss)		(7,622	)		48,353			6,029			—		420,890			—			467,650

Other income (expense)
Equity earnings in affiliates (net of tax)		393,270			343,368			71,773			257,505		—			(1,065,916	)		—
Interest expense, net of amounts capitalized		(5,047	)		(10,138	)		(6,388	)		—		8,975			11,997			(601	)
Interest income and other, net		2,352			1			—			—		11,948			(11,997	)		2,304


Income before income taxes		382,953			381,584			71,414			257,505		441,813			(1,065,916	)		469,353
Income tax (provision) benefit		(431	)		2,176			(2,613	)		—		(85,963	)		—			(86,831	)

Net income	$	382,522		$	383,760		$	68,801		$	257,505	$	355,850		$	(1,065,916	)	$	382,522

NOBLE CORPORATION (NOBLE-CAYMAN) AND SUBSIDIARIES
CONDENSED CONSOLIDATING STATEMENT OF INCOME
Nine Months Ended September 30, 2008
(in thousands)


													Other
	Noble-			NHC and NDH									Subsidiaries			Consolidating
	Cayman			Combined			NDC			NHIL			of Noble			Adjustments			Total
Operating revenues
Contract drilling services	$	—		$	185,769		$	38,875		$	—		$	2,267,968		$	(76,300	)	$	2,416,312
Reimbursables		—			1,177			200			—			70,132			—			71,509
Labor contract drilling services		—			—			—			—			47,346			—			47,346
Other		—			(8	)		1			—			1,187			—			1,180

Total operating revenues		—			186,938			39,076			—			2,386,633			(76,300	)		2,536,347


Operating costs and expenses
Contract drilling services		17,639			29,017			19,022			14			756,725			(76,300	)		746,117
Reimbursables		—			1,011			188			—			62,587			—			63,786
Labor contract drilling services		—			—			—			—			37,294			—			37,294
Depreciation and amortization		—			25,314			5,342			—			232,750			—			263,406
Selling, general and administrative		7,532			4,621			1,381			—			43,433			—			56,967
Gain on asset disposal, net		—			—			—			—			(25,521	)		—			(25,521	)

Total operating costs and expenses		25,171			59,963			25,933			14			1,107,268			(76,300	)		1,142,049


Operating income (loss)		(25,171	)		126,975			13,143			(14	)		1,279,365			—			1,394,298

Other income (expense)
Equity earnings in affiliates (net of tax)		1,180,153			1,046,513			361,425			732,378			—			(3,320,469	)		—
Interest expense, net of amounts capitalized		(18,430	)		(30,684	)		(19,164	)		—			27,117			38,729			(2,432	)
Interest income and other, net		6,703			1			—			—			39,038			(38,729	)		7,013


Income before income taxes		1,143,255			1,142,805			355,404			732,364			1,345,520			(3,320,469	)		1,398,879
Income tax (provision) benefit		(827	)		6,205			(3,873	)		—			(257,956	)		—			(256,451	)

Net income	$	1,142,428		$	1,149,010		$	351,531		$	732,364		$	1,087,564		$	(3,320,469	)	$	1,142,428

NOBLE CORPORATION (NOBLE-CAYMAN) AND SUBSIDIARIES
CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS
Nine Months Ended September 30, 2009
(in thousands)


																Other
	Noble-			NHC and NDH												Subsidiaries			Consolidating
	Cayman			Combined			NDC			NHIL			NDS1			of Noble			Adjustments			Total
Cash flows from operating activities
Net cash from operating activities		35,925			17,508			30,414			(15,396	)		631			1,346,660			—			1,415,742


Cash flows from investing activities
New construction and capital expenditures		—			(457,233	)		(14,564	)		—			—			(465,322	)		—			(937,119	)
Repayments of notes from affiliates		—			—			42,775			—			—			331,900			(374,675	)		—
Other		—			—			—			—			—			—			—			—

Net cash from investing activities		—			(457,233	)		28,211			—			—			(133,422	)		(374,675	)		(937,119	)


Cash flows from financing activities
Payments of other long-term debt		—			—			(150,000	)		—			—			(22,700	)		—			(172,700	)
Advances (to) from affiliates		340,168			471,364			102,846			15,396			(631	)		(929,143	)		—			—
Repayments of notes to affiliates		(300,000	)		(31,900	)		—			—			—			(42,775	)		374,675			—
Repurchases of ordinary shares		(60,867	)		—			—			—			—			—			—			(60,867	)
Other		(15,886	)		—			—			—			—			—			—			(15,886	)

Net cash from financing activities		(36,585	)		439,464			(47,154	)		15,396			(631	)		(994,618	)		374,675			(249,453	)

Net increase (decrease) in cash and cash equivalents		(660	)		(261	)		11,471			—			—			218,620			—			229,170
Cash and cash equivalents, beginning of period		661			445			26									512,179						513,311

Cash and cash equivalents, end of period	$	1		$	184		$	11,497		$	—		$	—		$	730,799		$	—		$	742,481

NOBLE CORPORATION (NOBLE-CAYMAN) AND SUBSIDIARIES
CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS
Nine Months Ended September 30, 2008
(in thousands)


													Other
	Noble-			NHC and NDH									Subsidiaries			Consolidating
	Cayman			Combined			NDC			NHIL			of Noble			Adjustments			Total
Cash flows from operating activities
Net cash from operating activities		13,755			152,584			318			(14	)		1,165,022			—			1,331,665


Cash flows from investing activities
New construction and capital expenditures		—			(563,349	)		(5,392	)		—			(218,650	)		—			(787,391	)
Repayments of notes from affiliates		—			—			—			—			(300,000	)		300,000			—
Other		—			—			—			—			81,946			(21,065	)		60,881

Net cash from investing activities		—			(563,349	)		(5,392	)		—			(436,704	)		278,935			(726,510	)


Cash flows from financing activities
Payments on bank credit facilities		(50,000	)		—			—			—			—			—			(50,000	)
Payments of other long-term debt		—			—			—			—			(7,682	)		—			(7,682	)
Advances (to) from affiliates		281,832			432,162			5,028			14			(719,036	)		—			—
Notes payable to affiliates		300,000			—			—			—			—			(300,000	)		—
Repayments of notes to affiliates		—			(21,065	)		—			—			—			21,065			—
Dividends paid		(233,638	)																	(233,638	)
Repurchases of ordinary shares		(271,310	)		—			—			—			—			—			(271,310	)
Other		10,070			—			—			—			—			—			10,070

Net cash from financing activities		36,954			411,097			5,028			14			(726,718	)		(278,935	)		(552,560	)

Net increase (decrease) in cash and cash equivalents		50,709			332			(46	)		—			1,600			—			52,595
Cash and cash equivalents, beginning of period		12,544			—			73						148,441						161,058

Cash and cash equivalents, end of period	$	63,253		$	332		$	27		$	—		$	150,041		$	—		$	213,653

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following discussion is intended to assist you in understanding our financial position at September 30, 2009, and our results of operations for the three and nine months ended September 30, 2009 and 2008. The following discussion should be read in conjunction with the consolidated financial statements and related notes contained in this Quarterly Report on Form 10-Q and the consolidated financial statements and notes thereto included in the Annual Report on Form 10-K for the year ended December 31, 2008 filed by Noble-Cayman.

Forward-Looking Statements

This Quarterly Report on Form 10-Q includes “forward-looking statements” within the meaning of Section 27A of the U.S. Securities Act of 1933, as amended, and Section 21E of the U.S. Securities Exchange Act of 1934, as amended. All statements other than statements of historical facts included in this report regarding our financial position, business strategy, backlog, plans and objectives of management for future operations, foreign currency requirements, industry conditions, taxes and tax rates, advantages of our worldwide internal restructuring and indebtedness covenant compliance are forward-looking statements. When used in this report, the words “anticipate,” “believe,” “estimate,” “expect,” “intend,” “may,” “plan,” “project,” “should” and similar expressions are intended to be among the statements that identify forward-looking statements. Although we believe that the expectations reflected in such forward-looking statements are reasonable, we cannot assure you that such expectations will prove to be correct. These forward-looking statements speak only as of the date of this report on Form 10-Q and we undertake no obligation to revise or update any forward-looking statement for any reason, except as required by law. We have identified factors that could cause actual plans or results to differ materially from those included in any forward-looking statements. These factors include those referenced or described in “Item 1A. Risk Factors” of Part II included herein, and in our other filings with the U.S. Securities and Exchange Commission (“SEC”). We cannot control such risk factors and other uncertainties, and in many cases, we cannot predict the risks and uncertainties that could cause our actual results to differ materially from those indicated by the forward-looking statements. You should consider these risks and uncertainties when you are evaluating us.

Consummation of Migration

On March 26, 2009, pursuant to the previously announced Agreement and Plan of Merger, Reorganization and Consolidation, dated as of December 19, 2008 (as amended, the “Merger Agreement”), among Noble-Swiss, Noble-Cayman, and Noble Cayman Acquisition Ltd., a Cayman Islands company and a wholly-owned subsidiary of Noble-Swiss (“Noble-Acquisition”), Noble-Cayman merged by way of schemes of arrangement under Cayman Islands law (the “Schemes of Arrangement”) with Noble-Acquisition, with Noble-Cayman as the surviving company (the “Transaction”). Under the terms of the Schemes of Arrangement, each holder of Noble-Cayman ordinary shares outstanding immediately prior to the Transaction received, through an exchange agent, one Noble-Swiss registered share in exchange for each outstanding Noble-Cayman ordinary share, and Noble-Cayman received, through an exchange agent, a number of newly issued Noble-Cayman ordinary shares equal to the number of Noble-Cayman ordinary shares outstanding immediately prior to the Transaction. Noble-Swiss also issued 15 million Noble-Swiss registered shares to Noble-Cayman in connection with the Transaction that are being held in treasury by a wholly owned subsidiary.

The Transaction effectively changed the place of incorporation of our parent holding company from the Cayman Islands to Switzerland. As a result of the Transaction, Noble-Cayman became a direct, wholly-owned subsidiary of Noble-Swiss. Currently, Noble-Swiss’ principal asset is 100% of the shares of common stock of Noble-Cayman. The consolidated financial statements of Noble-Swiss include the accounts of its wholly-owned subsidiary, Noble-Cayman. Noble-Swiss conducts substantially all of its business through Noble-Cayman and its subsidiaries.

In connection with the Transaction, we also decided to relocate our principal executive offices, including selected officers and their personnel, to Geneva, Switzerland. The first phase of this process was completed during the third quarter of 2009.

Worldwide Internal Restructuring

On October 1, 2009, we completed a worldwide internal restructuring of the ownership of substantially all of our drilling rigs under a single non-U.S. entity. The advantages of this restructuring include better alignment of fleet ownership and operation with our predominately international drilling business, facilitation of more efficient fleet deployment on a worldwide basis, and greater efficiency in managing cash and enhancing borrowing opportunities. Additionally, we expect our effective tax rate will be beneficially impacted as a result of this restructuring.

Executive Overview

We are a leading offshore drilling contractor for the oil and gas industry. We perform contract drilling services with our fleet of 62 offshore drilling units located worldwide, currently including the Middle East, India, the U.S. Gulf of Mexico, Mexico, the North Sea, Brazil, and West Africa. Our fleet count includes three rigs currently under construction.

Economic Outlook

While the global macro environment improved during the third quarter 2009 compared to the previous two quarters, the worldwide economy remains uncertain. Oil prices remained steady during the quarter in the $60 to $70 per barrel range; however, prices continue to be subject to volatility. Various economic indicators also continue to be mixed, leading to broad concern about length of the economic recovery. In spite of higher oil prices, we have not seen a substantial increase in demand for offshore drilling services with relatively few new contract commitments signed regardless of water depth. We believe that demand remains strong in the deepwater market segment, but there is little new contract activity across the midwater or shallow water segments. In particular, dayrates for jackup units have decreased up to fifty percent in most regions and utilization has dropped significantly. While we believe that the risk for early contract terminations or defaults under existing contracts has decreased, that risk is not eliminated. We believe the contracting environment will continue to be challenging throughout the remainder of 2009, and possibly into 2010. If the global economy continues to improve and oil prices continue to fluctuate in the current range, we may see increased demand for contract drilling services during 2010. However, due to the introduction of newbuild jackup units into the market, it is possible that dayrates for jackup units may not improve from current levels and could decline further as more units compete for available jobs.

We cannot be certain of the future price of oil or when the global economy will recover. However, we believe that the current reduced demand for hydrocarbons is largely a result of the global financial crisis and that an economic recovery combined with the continued natural decline of worldwide hydrocarbon basins will be positive factors for the demand for future contract drilling services. We continue to believe we are well positioned within the industry. Furthermore, our liquidity and financial strength may create potential acquisition opportunities for us.

Demand for our drilling services generally depends on a variety of economic and political factors, including worldwide demand for oil and gas, the ability of the Organization of Petroleum Exporting Countries (“OPEC”) to set and maintain production levels and pricing, the level of production of non-OPEC countries and the policies of various governments regarding exploration and development of their oil and gas reserves. Our results of operations depend on activity in the oil and gas production and development markets worldwide. Historically, oil and gas prices and market expectations of potential changes in these prices have significantly affected that level of activity. Generally, higher oil and natural gas prices or our customers’ expectations of higher prices result in greater demand for our services and lower oil and gas prices result in reduced demand for our services.

Demand for our services is also a function of the worldwide supply of mobile offshore drilling units. Industry sources report that a total of 69 newbuild jackups and 80 deepwater newbuilds are scheduled to be delivered worldwide between November 1, 2009 and 2012. A significant number of these units, particularly among the jackup units, reportedly do not have a contractual commitment from a customer and are referred to in the offshore drilling industry as “being built on speculation.” The introduction of non-contracted rigs into the marketplace could have an adverse affect on the level of demand for our services or the dayrates we are able to achieve.

We cannot predict the future level of demand for our drilling services or future conditions in the offshore contract drilling industry. Decreases in commodity prices or the level of demand for our drilling services or increases in the supply of drilling rigs in the market could have an adverse effect on our results of operations.

Results and Strategy

In the third quarter of 2009, we recognized net income of $426 million, or $1.63 per diluted share, on total revenues of $906 million. The average dayrate across our worldwide fleet decreased slightly to $196,900 for the third quarter of 2009 from $198,270 for the second quarter of 2009. Fleetwide average utilization was 83 percent in the third quarter of 2009, as compared to 84 percent in the second quarter of 2009. Daily contract drilling services costs decreased to $56,446 for the third quarter of 2009 from $57,332 for the second quarter of 2009. As a result, our contract drilling services margin remained consistent with the second quarter at 71 percent.

Our long-standing business strategy continues to be the active expansion of our worldwide offshore drilling and deepwater capabilities through upgrades and modifications, acquisitions, and the deployment of our drilling assets in important geological areas. We have also actively expanded our offshore drilling and deepwater capabilities in recent years through the construction of new rigs. During the third quarter of 2009, we continued our expansion strategy as indicated by the following activities:

	•		we completed construction on the Noble Scott Marks, an F&G JU-2000E enhanced premium independent leg cantilevered jackup, which left the shipyard in the second quarter of 2009 and began operations in the third quarter of 2009;

	•		construction continued on three newbuild ultra-deepwater semisubmersibles, the Noble Danny Adkins, completed in October 2009, the Noble Dave Beard, which is scheduled for delivery in the first quarter of 2010, and the Noble Jim Day, which is scheduled for delivery in the second quarter of 2010; and

	•		construction continued on one dynamically positioned, ultra-deepwater, harsh environment Globetrotter-class drillship, which is scheduled to be delivered in the second half of 2011.

Contract Drilling Services Backlog

We maintain a backlog (as defined below) of commitments for contract drilling services. The following table sets forth as of September 30, 2009 the amount of our contract drilling services backlog and the percent of available operating days committed for the periods indicated:


			Year Ending December 31,
	Total		2009 (1)			2010			2011			2012			2013-2017
			(In millions)
Contract Drilling Services Backlog
Semisubmersibles/Drillships (2)		7,628	$	466		$	1,984		$	1,617		$	1,123		$	2,438
Jackups/Submersibles (3)		1,262		409			664			188			1			—

Total (4) (5)	$	8,890	$	875		$	2,648		$	1,805		$	1,124		$	2,438


Percent of Available Operating Days Committed (6)				79	%		48	%		25	%		13	%		7	%


(1)		Represents a three-month period beginning October 1, 2009.

(2)		Our drilling contracts with Petroleo Brasileiro S.A. (“Petrobras”) provide an opportunity for us to earn performance bonuses based on downtime experienced for our rigs operating offshore Brazil. With respect to our semisubmersibles operating offshore Brazil, we have included in our backlog an amount equal to 75 percent of potential performance bonuses for such semisubmersibles, which amount is based on and generally consistent with our historical earnings of performance bonuses for these rigs. With respect to our drillships operating offshore Brazil, we (a) have not included in our backlog any performance bonuses for periods prior to the commencement of certain upgrade projects planned for 2010 and 2011, which projects are designed to enhance the reliability and operational performance of our drillships, and (b) have included in our backlog an amount equal to 75 percent of potential performance bonuses for periods after the estimated completion of such upgrade projects. Our backlog for semisubmersibles/drillships includes approximately $340 million attributable to these performance bonuses.

(3)		Our drilling contracts with Pemex Exploracion y Produccion (“Pemex”) for certain jackups operating offshore in Mexico are subject to price review and adjustment of the rig dayrate. Presently, contracts for five jackups have dayrates indexed to the world average of the highest dayrates published by ODS-Petrodata. After an initial firm dayrate period, the dayrates are generally adjusted quarterly based on formulas calculated from the index. Our contract drilling services backlog has been calculated using the September 30, 2009 index-based dayrates for periods subsequent to the initial firm dayrate period.

(4)		Pemex has the ability to cancel its drilling contracts on 30 days or less notice without any early termination payment. We currently have 13 rigs contracted to Pemex in Mexico, and our backlog includes approximately $738 million related to such contracts at September 30, 2009. Also, our drilling contracts generally give the customer an early termination right in the event we fail to meet certain performance standards, including downtime thresholds. While we do not currently anticipate any cancellations as a result of events that have occurred to date, clients may from time to time have the contractual right to do so, which is the case with the drilling contract for the Noble Roger Eason. However, we do not believe that the customer will terminate this contract.

(5)		The drilling contract for the Noble Jim Day contains a termination right in the event the rig is not ready to commence operations by December 31, 2010. The drilling contract for the Noble Dave Beard gave the customer the right to terminate the contract if the rig did not commence operations by December 2008 and also gives the customer the right to apply a penalty for delay beyond the date upon which it had the right to cancel. We continue to discuss an extension for commencement and a reduction in penalty for this rig and believe we will come to an accommodation with the client that is acceptable to us.

(6)		Percentages take into account additional capacity from the estimated dates of deployment of our newbuild rigs that are scheduled to commence operations during the remainder of 2009 through 2011.

Our contract drilling services backlog consists of commitments we believe to be firm. Our contract drilling services backlog reported above reflects estimated future revenues attributable to both signed drilling contracts and letters of intent. A letter of intent is generally subject to customary conditions, including the execution of a definitive drilling contract. If worldwide economic conditions continue to deteriorate, it is possible that some customers that have entered into letters of intent will not enter into signed drilling contracts. We calculate backlog for any given unit and period by multiplying the full contractual operating dayrate for such unit by the number of days remaining in the period. The reported contract drilling services backlog does not include amounts representing revenues for mobilization, demobilization and contract preparation, which are not expected to be significant to our contract drilling services revenues, reimbursable amounts from customers or amounts attributable to uncommitted option periods under drilling contracts or letters of intent.

The amount of actual revenues earned and the actual periods during which revenues are earned may differ from the backlog amounts and backlog periods set forth in the table above due to various factors, including, but not limited to, shipyard and maintenance projects, unplanned downtime, weather conditions and other factors that result in applicable dayrates lower than the full contractual operating dayrate. In addition, amounts included in the backlog may change because drilling contracts may be varied or modified by mutual consent or customers may exercise early termination rights or decline to enter into a drilling contract after executing a letter of intent. As a result, our backlog as of any particular date may not be indicative of our actual operating results for the subsequent periods for which the backlog is calculated.

Internal Investigation

The independent outside counsel appointed by the audit committee to perform the internal investigation made a presentation of the results of its investigation to the DOJ and the SEC in June 2008. The SEC and the DOJ have begun to review these results and information gathered by the independent outside counsel in the course of the investigation. Neither the SEC nor the DOJ has indicated what action it may take, if any, against us or any individual, or whether it may request that the audit committee’s independent outside counsel conduct further investigation. Therefore, we consider the internal investigation to be ongoing and cannot predict when it will conclude. Furthermore, we cannot predict whether either the SEC or the DOJ will open its own proceeding to investigate this matter, or if a proceeding is opened, what potential remedies these agencies may seek. We could also face fines or sanctions in relevant foreign jurisdictions. Based on information obtained to date in our internal investigation, we have not determined that any potential liability that may result is probable or remote or can be reasonably estimated. As a result, we have not made any accrual in our consolidated financial statements at September 30, 2009.

Results of Operations

In the following discussion, we address the consolidated results of operations of Noble-Swiss. With the exception of nominal administrative expenses, the results of operations of Noble-Swiss are substantially identical to those of Noble-Cayman. The discussion related to operating revenues and costs and expenses is identical for, and applies to, both companies. Per share information relates only to Noble-Swiss.

For the Three Months Ended September 30, 2009 and 2008

General

Net income for the three months ended September 30, 2009 (the “Current Quarter”) was $426 million, or $1.63 per diluted share, on operating revenues of $906 million, compared to net income for the three months ended September 30, 2008 (the “Comparable Quarter”) of $383 million, or $1.42 per diluted share, on operating revenues of $862 million.

Rig Utilization, Operating Days and Average Dayrates

Operating revenues and operating costs and expenses for our contract drilling services segment are dependent on three primary metrics — rig utilization, operating days and dayrates. The following table sets forth the average rig utilization, operating days and average dayrates for our rig fleet for the three months ended September 30, 2009 and 2008:


	Average Rig						Operating							Average
	Utilization (1)						Days (2)							Dayrates
	Three Months Ended						Three Months Ended							Three Months Ended
	September 30,						September 30,							September 30,
	2009			2008			2009		2008		% Change			2009		2008		% Change

Jackups		80	%		91	%		3,183		3,444		-8	%	$	143,388	$	150,350		-5	%
Semisubmersibles
> 6000’ (3)		98	%		95	%		631		613		3	%		434,435		329,586		32	%
Semisubmersibles
< 6000’ (4)		100	%		100	%		276		276		0	%		261,167		237,674		10	%
Drillships		100	%		67	%		276		184		50	%		243,186		214,758		13	%
Submersibles (5)		42	%		67	%		78		184		-58	%		65,944		55,177		20	%


Total		83	%		90	%		4,444		4,701		-5	%	$	196,900	$	177,683		11	%


(1)		Information reflects our policy of reporting on the basis of the number of actively marketed rigs in our fleet excluding newbuild rigs under construction.

(2)		Information reflects the number of days that our rigs were operating under contract.

(3)		These units have water depth ratings of 6,000 feet or greater.

(4)		These units have water depth ratings of less than 6,000 feet.

(5)		Effective March 31, 2009, the Noble Fri Rodli, which had been cold stacked since October 2007, was removed from our rig fleet.

Contract Drilling Services

The following table sets forth the operating revenues and the operating costs and expenses for our contract drilling services segment for the three months ended September 30, 2009 and 2008:


	Three Months Ended
	September 30,				Change
	2009		2008		$			%
Operating revenues:
Contract drilling services	$	874,969	$	835,198	$	39,771			5	%
Reimbursables (1)		21,511		17,227		4,284			25	%
Other		509		94		415			441	%

	$	896,989	$	852,519	$	44,470			5	%

Operating costs and expenses:
Contract drilling services	$	250,842	$	253,729	$	(2,887	)		-1	%
Reimbursables (1)		17,811		15,604		2,207			14	%
Depreciation and amortization		100,669		90,923		9,746			11	%
Selling, general and administrative		21,629		15,886		5,743			36	%
Loss on involuntary conversion		2,076		10,000		(7,924	)		-79	%

		393,027		386,142		6,885			2	%

Operating income	$	503,962	$	466,377	$	37,585			8	%


(1)		We record reimbursements from customers for out-of-pocket expenses as revenues and the related direct costs as operating expenses. Changes in the amount of these reimbursables generally do not have a material effect on our financial position, results of operations or cash flows.

Operating Revenues. Contract drilling services revenue increases for the Current Quarter as compared to the Comparable Quarter were primarily driven by increases in average dayrates. Higher average dayrates increased revenues approximately $90 million, while fewer operating days reduced revenues approximately $50 million.

Average dayrates increased 11 percent in the Current Quarter as compared to the Comparable Quarter as we received higher average dayrates across all rig categories except for our jackups, which have been impacted by a softening in the market for shallow water rigs worldwide.

The decrease in operating days in the Current Quarter as compared to the Comparable Quarter was primarily due to an increase in downtime of certain rigs in the Current Quarter. Unpaid shipyard days increased 71 days in the Current Quarter as compared to the Comparable Quarter, as we had eight rigs spend time in the shipyard during the Current Quarter. We had only four rigs with unpaid shipyard days in the Comparable Quarter. Additionally, stacked days increased 278 days as the Noble Byron Welliver, Noble Cees van Diemen, Noble Dick Favor, Noble Don Walker, Noble Joe Alford, Noble Lester Pettus, Noble Lloyd Noble and Noble Tommy Craighead each were stacked for certain periods during the Current Quarter. In the Comparable Quarter, four rigs, the Noble Carl Norberg, Noble Don Walker, Noble Fri Rodli and Noble Roy Butler, spent a significant number of days stacked. The decrease in operating days in the Current Quarter was partially offset by an increase in available days of 184 days for the enhanced premium jackups Noble Hans Deul and Noble Scott Marks, which were added to the fleet in November 2008 and June 2009, respectively. Additionally, the Current Quarter had 92 less available operating days than the Comparable Quarter due to the Noble Fri Rodli being removed from our rig fleet effective March 31, 2009.

Operating Costs and Expenses. Contract drilling services operating costs and expenses decreased $3 million for the Current Quarter as compared to the Comparable Quarter. Our newbuild rigs, the Noble Hans Deul and the Noble Scott Marks, which were added to the fleet in November 2008 and June 2009, respectively, added approximately $4 million of operating costs in the Current Quarter. Excluding the additional expenses related to these rigs, our contract drilling costs decreased $7 million in the Current Quarter from the Comparable Quarter. This change was primarily driven by a $12 million decrease in labor costs due to the increased number of rigs stacked during the Current Quarter and a $3 million decrease in insurance costs from our insurance program under which we are predominately self-insured. These decreases were partially offset by a $5 million increase in maintenance expenses, coupled with a $3 million increase in mobilization expense.

The increase in depreciation and amortization in the Current Quarter over the Comparable Quarter was primarily due to depreciation on newbuilds added to the fleet and additional depreciation related to other capital expenditures on our fleet since the Comparable Quarter.

Other

The following table sets forth the operating revenues and the operating costs and expenses for our other services for the three months ended September 30, 2009 and 2008:


	Three Months Ended
	September 30,				Change
	2009		2008		$			%
Operating revenues:
Labor contract drilling services	$	7,490	$	8,197	$	(707	)		-9	%
Reimbursables (1)		944		860		84			10	%
Other		212		405		(193	)		-48	%

	$	8,646	$	9,462	$	(816	)		-9	%

Operating costs and expenses:
Labor contract drilling services	$	4,642	$	5,410	$	(768	)		-14	%
Reimbursables (1)		906		890		16			2	%
Depreciation and amortization		2,576		1,748		828			47	%
Selling, general and administrative		71		141		(70	)		-50	%

		8,195		8,189		6			0	%

Operating income	$	451	$	1,273	$	(822	)		-65	%


(1)		We record reimbursements from customers for out-of-pocket expenses as revenues and the related direct costs as operating expenses. Changes in the amount of these reimbursables generally do not have a material effect on our financial position, results of operations or cash flows.

Operating Revenues and Costs and Expenses. Revenues and expenses associated with our Canadian labor contract drilling services decreased in the Current Quarter and were impacted by fluctuations in foreign currency exchange rates.

Other Income and Expenses

Selling, General and Administrative Expenses. Consolidated selling, general and administrative expenses increased $6 million in the Current Quarter as compared to the Comparable Quarter. The increase between periods resulted primarily from a $3 million increase in employee-related costs, $2 million in costs related to our recent re-domestication from the Cayman Islands to Switzerland, a $2 million increase in costs related to our recently completed worldwide internal restructuring, and a $1 million increase in other general and administrative costs. These increases were partially offset by a $2 million reduction in costs incurred in the internal investigation of our Nigerian operations.

Income Tax Provision. The income tax provision decreased $6 million in the Current Quarter primarily due to a lower effective tax rate in the Current Quarter from the Comparable Quarter. The lower effective tax rate, which was 15.9 percent in the Current Quarter compared to 18.5 percent in the Comparable Quarter, reduced income tax expense by approximately $13 million. This reduction was partially offset by higher pre-tax earnings, which increased income tax expense by $7 million. The lower effective tax rate in the Current Quarter resulted from the settlement of discrete tax related items in several jurisdictions. Excluding the settlement of these issues, our effective tax rate would have been approximately 18.9 percent.

For the Nine Months Ended September 30, 2009 and 2008

General

Net income for the nine months ended September 30, 2009 (the “Current Period”) was $1.2 billion, or $4.70 per diluted share, on operating revenues of $2.7 billion, compared to net income for the nine months ended September 30, 2008 (the “Comparable Period”) of $1.1 billion, or $4.23 per diluted share, on operating revenues of $2.5 billion.

Rig Utilization, Operating Days and Average Dayrates


	Average Rig						Operating							Average
	Utilization (1)						Days (2)							Dayrates
	Nine Months Ended						Nine Months Ended							Nine Months Ended
	September 30,						September 30,							September 30,
	2009			2008			2009		2008		% Change			2009		2008		% Change

Jackups		82	%		94	%		9,502		10,525		-10	%	$	153,027	$	147,554		4	%
Semisubmersibles
> 6000’ (3)		97	%		95	%		1,857		1,822		2	%		404,254		314,612		28	%
Semisubmersibles
< 6000’ (4)		100	%		100	%		819		822		0	%		253,132		210,695		20	%
Drillships		87	%		67	%		716		548		31	%		248,102		160,066		55	%
Submersibles (5)		66	%		66	%		418		545		-23	%		61,711		53,161		16	%


Total		85	%		91	%		13,312		14,262		-7	%	$	196,476	$	169,419		16	%


(1)		Information reflects our policy of reporting on the basis of the number of actively marketed rigs in our fleet excluding newbuild rigs under construction.

(2)		Information reflects the number of days that our rigs were operating under contract.

(3)		These units have water depth ratings of 6,000 feet or greater.

(4)		These units have water depth ratings of less than 6,000 feet.

(5)		Effective March 31, 2009, the Noble Fri Rodli, which had been cold stacked since October 2007, was removed from our rig fleet.

Contract Drilling Services

The following table sets forth the operating revenues and the operating costs and expenses for our contract drilling services segment for the nine months ended September 30, 2009 and 2008:


	Nine Months Ended
	September 30,				Change
	2009		2008		$			%
Operating revenues:
Contract drilling services	$	2,615,571	$	2,416,312	$	199,259			8	%
Reimbursables (1)		59,962		58,039		1,923			3	%
Other		1,050		745		305			41	%

	$	2,676,583	$	2,475,096	$	201,487			8	%

Operating costs and expenses:
Contract drilling services	$	742,752	$	746,117	$	(3,365	)		0	%
Reimbursables (1)		50,154		50,922		(768	)		-2	%
Depreciation and amortization		288,517		258,344		30,173			12	%
Selling, general and administrative		60,707		55,308		5,399			10	%
Loss on asset disposal/involuntary conversion		31,053		10,000		21,053			211	%

		1,173,183		1,120,691		52,492			5	%

Operating income	$	1,503,400	$	1,354,405	$	148,995			11	%


(1)		We record reimbursements from customers for out-of-pocket expenses as revenues and the related direct costs as operating expenses. Changes in the amount of these reimbursables generally do not have a material effect on our financial position, results of operations or cash flows.

Operating Revenues. Contract drilling services revenue increases for the Current Period as compared to the Comparable Period were primarily driven by increases in average dayrates. Higher average dayrates increased revenues approximately $386 million, while fewer operating days reduced revenues approximately $187 million.

Average dayrates increased 16 percent in the Current Period as compared to the Comparable Period as we received higher average dayrates across all rig categories.

The decrease in operating days in the Current Period as compared to the Comparable Period was primarily due to downtime of certain rigs in the Current Period. Unpaid shipyard days increased 464 days in the Current Period as compared to the Comparable Period, as we had 18 rigs spend time in the shipyard during the Current Period. We had only seven rigs with unpaid shipyard days in the Comparable Period. Additionally, stacked days increased 619 days as the Noble Byron Welliver, Noble Cees van Diemen, Noble Dick Favor, Noble Don Walker, Noble Fri Rodli, Noble Joe Alford, Noble Lester Pettus, Noble Lloyd Noble and Noble Tommy Craighead each were stacked for certain periods during the Current Period. In the Comparable Period, four rigs, the Noble Carl Norberg Noble Don Walker, Noble Fri Rodli, and the Noble Roy Butler, spent a significant number of days stacked. The decrease in operating days in the Current Period was partially offset by an increase in available days of 371 days for the enhanced premium jackups Noble Hans Deul and Noble Scott Marks, which were added to the fleet in November 2008 and June 2009, respectively. The Current Period also had 184 less available days than the Comparable Period due to the Noble Fri Rodli being removed from our rig fleet effective March 31, 2009. Additionally, the Current Period had one less available operating day than the Comparable Period due to the leap year in 2008, which reduced available days in the Current Period by 54 days.

Operating Costs and Expenses. Contract drilling services operating costs and expenses decreased $3 million in the Current Period as compared to the Comparable Period. Our newbuild rigs, the Noble Hans Deul and the Noble Scott Marks, which were added to the fleet in November 2008 and June 2009, respectively, added approximately $12 million of operating costs in the Current Period. Excluding the additional expenses related to our newbuild rigs, our contract drilling costs decreased $15 million in the Current Period from the Comparable Period. This change was primarily driven by a $34 million decrease in local labor costs due to the increased number of rigs stacked during the Current Period, a $11 million decrease in insurance costs from our insurance program under which we are predominately self-insured, and $1 million in other operating costs and expenses. These decreases were partially offset by a $15 million increase in maintenance expenses, a $9 million increase in mobilization costs and a $7 million increase in miscellaneous transportation and fuel costs.

The increase in depreciation and amortization in the Current Period over the Comparable Period was primarily due to depreciation on newbuilds added to the fleet and additional depreciation related to other capital expenditures on our fleet since the Comparable Period.

Loss on asset disposal/involuntary conversion during the Current Period includes a charge of $17 million for our jackup, the Noble David Tinsley, which experienced a “punch-through” while being positioned on location offshore Qatar. The $17 million charge includes approximately $9 million for the write-off of the damaged legs and $8 million for non-reimbursable expenses. Also during the Current Period, we recorded a charge of $12 million for the Noble Fri Rodli as a result of a decision to evaluate disposition alternatives for this submersible drilling unit.

Other

The following table sets forth the operating revenues and the operating costs and expenses for our other services for the nine months ended September 30, 2009 and 2008:


	Nine Months Ended
	September 30,					Change
	2009		2008			$			%
Operating revenues:
Labor contract drilling services	$	21,843	$	47,346		$	(25,503	)		-54	%
Reimbursables (1)		2,005		13,470			(11,465	)		-85	%
Other		227		435			(208	)		-48	%

	$	24,075	$	61,251		$	(37,176	)		-61	%

Operating costs and expenses:
Labor contract drilling services	$	13,899	$	37,294		$	(23,395	)		-63	%
Reimbursables (1)		1,927		12,864			(10,937	)		-85	%
Depreciation and amortization		7,127		5,062			2,065			41	%
Selling, general and administrative		194		1,659			(1,465	)		-88	%
Gain on asset disposal, net		—		(35,521	)		35,521			-100	%

		23,147		21,358			1,789			8	%

Operating income	$	928	$	39,893		$	(38,965	)		-98	%


(1)		We record reimbursements from customers for out-of-pocket expenses as revenues and the related direct costs as operating expenses. Changes in the amount of these reimbursables generally do not have a material effect on our financial position, results of operations or cash flows.

Operating Revenues. Our labor contract drilling services revenues decreased in the Current Period primarily due to the sale of our North Sea labor contract drilling services business in April 2008. Additionally, during the Comparable Period, we returned the jackup Noble Kolskaya, which was operated under a bareboat charter, to its owner. The drilling contract for the Noble Kolskaya had been terminated and the jackup had been warm stacked since February 2008. Revenues during the Comparable Period related to our North Sea labor contract drilling services business and Noble Kolskaya were $22 million. Revenues associated with our Canadian labor contracts decreased $4 million from the Comparable Period due to a reduction in the number of rigs we operated under labor contracts and fluctuations in foreign currency exchange rates.

Operating Costs and Expenses. Labor contract drilling services costs and expenses decreased $23 million due to the sale of our North Sea labor contract drilling services business and the return of the Noble Kolskaya to its owner in 2008. Expenses during the Comparable Period related to our North Sea labor contract drilling services business and Noble Kolskaya were $19 million. Operating costs associated with our Canadian labor contracts decreased $4 million from the Comparable Period primarily as a result of fluctuations in foreign currency exchange rates.

Gain on asset disposal, net, for the Comparable Period relates to the sale of our North Sea labor contract drilling services business in April 2008. In connection with this transaction, we recognized a gain of $35 million, net of closing costs, which included approximately $5 million in cumulative currency translation adjustments.

Other Income and Expenses

Selling, General and Administrative Expenses. Consolidated selling, general and administrative expenses increased $4 million in the Current Period as compared to the Comparable Period. The increase between periods resulted primarily from $7 million in costs related to our recent re-domestication from the Cayman Islands to Switzerland, a $7 million increase in employee related costs, and a $4 million increase for costs related to our recently completed worldwide internal restructuring, partially offset by a $13 million reduction in costs incurred in the internal investigation of our Nigerian operations, and a $1 million decrease in other general and administrative costs.

Interest Expense, net of amount capitalized. Interest expense, net of amount capitalized decreased $1 million primarily due to higher capital expenditures, and capitalized interest, in the Current Period as compared to the Comparable Period. Capitalized interest was $42 million for the Current Period as compared to $35 million for the Comparable Period.

Interest Income and Other, net. Interest income and other, net decreased $2 million in the Current Period from the Comparable Period primarily due to foreign currency exchange rate adjustments and lower yields on cash investments during the Current Period partially offset by higher average cash balances.

Income Tax Provision. The income tax provision increased $19 million primarily due to higher pre-tax earnings in the Current Period over the Comparable Period. The higher pre-tax earnings increased income tax expense by $20 million, slightly offset by a lower effective tax rate, which decreased income tax expense by $1 million.

Liquidity and Capital Resources

Overview

Our principal capital resource in the Current Period was net cash from operating activities of $1.5 billion, which compared to $1.3 billion in the Comparable Period. The increase in net cash from operating activities in the Current Period was primarily attributable to higher net income. At September 30, 2009, we had cash and cash equivalents of $756 million and $600 million available under our bank credit facility described under “Credit Facility and Long-Term Debt” below. We had working capital of $1.1 billion and $561 million at September 30, 2009 and December 31, 2008, respectively. Total debt as a percentage of total debt plus shareholders’ equity was 10.5 percent at September 30, 2009 and 14.9 percent at December 31, 2008. Additionally, at September 30, 2009, we had a total contract drilling services backlog of approximately $8.9 billion. Our backlog reflects a commitment of 79 percent of operating days for the remainder of 2009 and 48 percent for 2010. See additional information regarding our backlog at “Contract Drilling Services Backlog.”

As a result of the cash generated by our operations, our cash on hand and the availability under our bank credit facility, we believe our liquidity and financial condition are sufficient to meet all of our reasonably anticipated cash flow needs for the remainder of 2009 including:

	•		normal recurring operating expenses;

	•		capital expenditures, including new construction and other expenditures;

	•		repurchase of, and distributions on, our shares; and

	•		contributions to our pension plans.

Although credit markets have shown improvement in the recent months, the availability of capital and credit to fund the continuation and expansion of industrial business operations worldwide could impact our liquidity and financial condition in the future. It may be difficult or more expensive for us to access the capital markets or borrow money at a time when we would like, or need, to access capital, which could have an adverse impact on our ability to react to changing economic and business conditions, and to fund our operations and capital expenditures and to make acquisitions.

Capital Expenditures

Our primary capital requirement in 2009 will be for capital expenditures. Capital expenditures totaled $893 million and $880 million for the nine months ended September 30, 2009 and 2008, respectively.

At September 30, 2009, we had four rigs under construction, and capital expenditures for new construction in the Current Period totaled $457 million. Capital expenditures for newbuild rigs in the Current Period included $120 million for the Noble Danny Adkins, $122 million for the Noble Jim Day, $107 million for the Noble Dave Beard and $57 million for our Globetrotter-class drillship. Additionally, new construction capital expenditures for the Current Period included $51 million for our remaining newbuilds, which includes the recently completed Noble Scott Marks. Other capital expenditures totaled $342 million in the Current Period, which included approximately $161 million for major upgrade projects. Capitalized major maintenance expenditures, which typically occur every 3 to 5 years, totaled $93 million in the Current Period.

Our total capital expenditure budget for 2009 is approximately $1.3 billion. In connection with our 2009 and future capital expenditure programs, as of September 30, 2009, we had outstanding commitments, including shipyard and purchase commitments, for approximately $970 million. Our remaining 2009 capital expenditure budget will generally be spent at our discretion. We may accelerate or delay capital projects as needed.

From time to time we consider possible projects that would require capital expenditures or other cash expenditures that are not included in our capital budget, and such unbudgeted capital or cash expenditures could be significant. In addition, we will continue to evaluate acquisitions of drilling units from time to time. Other factors that could cause actual capital expenditures to materially exceed planned capital expenditures include delays and cost overruns in shipyards (including costs attributable to labor shortages), shortages of equipment, latent damage or deterioration to hull, equipment and machinery in excess of engineering estimates and assumptions, and changes in design criteria or specifications during repair or construction.

Ordinary Share Repurchases and Dividends

At September 30, 2009, 14.6 million registered shares remained available under the existing authorization for our share repurchase program. Share repurchases for the nine months ended September 30, 2009 totaled 3.7 million shares and were repurchased in open market transactions for approximately $113 million. Future repurchases by Noble-Swiss will be subject to the requirements of Swiss law, including the requirement that Noble-Swiss and its subsidiaries may only repurchase shares if and to the extent that sufficient freely distributable reserves are available. Also, the aggregate par value of all Noble-Swiss registered shares held by Noble-Swiss and its subsidiaries, including treasury shares, may not exceed 10 percent of Noble-Swiss’ registered share capital without shareholder approval.

Our most recent quarterly payment to shareholders, in the form of a capital reduction, was declared on August 11, 2009 and paid on August 26, 2009 in the amount of approximately $0.094 per share of Noble-Swiss. The declaration and payment of dividends in the future will depend on our results of operations, financial condition, cash requirements, future business prospects, contractual restrictions and other factors deemed relevant by our Board of Directors, and must be approved in advance by our shareholders. We have proposed, and our shareholders have approved, to effect distributions on Noble-Swiss shares through a reduction in par value, which could affect the timing of the distribution payments. We may propose additional distributions in the future.

Contributions to Pension Plans

The Pension Protection Act of 2006 requires that pension plans fund towards a target of at least 100 percent with a transition through 2011 and increases the amount we are allowed to contribute to our U.S. pension plans in the near term. During the nine months ended September 30, 2009 and 2008, we made contributions to our pension plans totaling $13 million and $17 million, respectively. We expect the aggregate contributions to our non-U.S. and U.S. plans in 2009, subject to applicable law, to be approximately $14 million. We continue to monitor and evaluate funding options based upon market conditions and may increase contributions at our discretion.

Credit Facility and Long-Term Debt

We have a $600 million unsecured bank credit facility (the “Credit Facility”), which was originally scheduled to mature on March 15, 2012. During the first quarter of 2008, the term of the Credit Facility was extended for an additional one-year period to March 15, 2013. During this one-year extension period, the total amount available under the Credit Facility will be $575 million, but we have the right to seek an increase of the total amount available during that period to $600 million. We may, subject to certain conditions, request that the term of the Credit Facility be further extended for an additional one-year period. Our subsidiary, Noble Drilling Corporation (“Noble Drilling”), has guaranteed the obligations under the Credit Facility. In connection with our recently completed worldwide internal restructuring (see Note 13 in Part I, Item I of this quarterly report), our subsidiary, Noble Holding International Limited, issued a subsidiary guarantee under the Credit Facility effective October 1, 2009. Pursuant to the terms of the Credit Facility, we may, subject to certain conditions, elect to increase the amount available up to $800 million. Borrowings under the Credit Facility will bear interest (i) at the sum of Adjusted LIBOR (as defined in the Credit Facility) plus the Applicable Margin (as defined in the Credit Facility; 0.235 percent based on our current credit ratings), or (ii) at the base rate, determined as the greater of the prime rate for U.S. Dollar loans announced by Citibank, N.A. in New York or the sum of the weighted average overnight federal funds rate published by the Federal Reserve Bank of New York plus 0.50 percent. The Credit Facility contains various covenants, including a debt to total tangible capitalization covenant that limits this ratio to 0.60. As of September 30, 2009, our ratio of debt to total tangible capitalization was 0.10. In addition, the Credit Facility includes restrictions on certain fundamental changes such as mergers, unless we are the surviving entity or the other party assumes the obligations under the Credit Facility, and the ability to sell or transfer all or substantially all of our assets unless to a subsidiary. The Credit Facility also limits our subsidiaries’ additional indebtedness, excluding intercompany advances and loans, to 10 percent of our consolidated net assets, as defined in the Credit Facility, unless a subsidiary guarantee is issued to the parent company borrower. There are also restrictions on our incurring or assuming additional liens in certain circumstances. We were in compliance with all covenants under the Credit Facility at September 30, 2009. We continually monitor compliance under our Credit Facility covenants and, based on our expectations for 2009, expect to remain in compliance.

The Credit Facility provides us with the ability to issue up to $150 million in letters of credit. While the issuance of letters of credit does not increase our borrowings outstanding, it does reduce the amount available. At September 30, 2009, we had no borrowing or letters of credit outstanding under the Credit Facility. We believe that we maintain good relationships with our lenders under the Credit Facility, and we believe that our lenders have the liquidity and capability to perform should the need arise for us to draw on the Credit Facility.

The indentures governing our outstanding senior unsecured notes contain covenants that place restrictions on certain merger and consolidation transactions, unless we are the surviving entity or the other party assumes the obligations under the indenture, and on the ability to sell or transfer all or substantially all of our assets. In addition, there are restrictions on incurring or assuming certain liens and sale and lease-back transactions. At September 30, 2009, we were in compliance with all our debt covenants. We continually monitor compliance with the covenants under our notes and, based on our expectations for the remainder of 2009, expect to remain in compliance during the year.

At September 30, 2009, we had letters of credit of $96 million and performance and tax assessment bonds totaling $298 million supported by surety bonds outstanding. Of the letters of credit outstanding, $53 million were issued to support bank bonds in connection with our drilling units in Nigeria. Additionally, certain of our subsidiaries issue, from time to time, guarantees of the temporary import status of rigs or equipment imported into certain countries in which we operate. These guarantees are issued in lieu of payment of custom, value added or similar taxes in those countries.

Our debt decreased to $751 million at September 30, 2009 from $923 million (including current maturities of $173 million) at December 31, 2008, primarily due to the repayment of $173 million principal amount of maturing notes during the first quarter of 2009. Repayments of maturing notes were made with cash on hand at maturity. Other than our outstanding letters of credit and surety bonds discussed above, at September 30, 2009, we had no other off-balance sheet debt or other off-balance sheet arrangements. For additional information on our long-term debt, see Note 5 to our accompanying consolidated financial statements.

New Accounting Pronouncements

In June 2009, the FASB issued the following guidance:

	•		expanded disclosures that a reporting entity provides about transfers of financial assets and its effect on the financial statements. This guidance is effective for annual and interim reporting periods beginning after November 15, 2009;

	•		revisions to how an entity evaluates variable interest entities. This guidance is effective for annual and interim reporting periods beginning after November 15, 2009; and

	•		modified the GAAP hierarchy and how authoritative guidance is referenced in financial statements. This guidance is effective for annual and interim reporting periods ending after September 15, 2009.

We do not expect our adoption of these new accounting pronouncements will have a material impact on our financial condition or results of operations.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

Market risk is the potential for loss due to a change in the value of a financial instrument as a result of fluctuations in interest rates, currency exchange rates or equity prices, as further described below.

Interest Rate Risk

We are subject to market risk exposure related to changes in interest rates on borrowings under the Credit Facility. Interest on borrowings under the Credit Facility is at an agreed upon percentage point spread over LIBOR, or a base rate stated in the agreement. At September 30, 2009, we had no amounts outstanding under the Credit Facility.

Foreign Currency Risk

Although we conduct business globally, a substantial majority of the value of our foreign transactions are denominated in U.S. Dollars. With certain exceptions, typically involving national oil companies, we structure our drilling contracts entirely in U.S. Dollars to mitigate our exposure to fluctuations in foreign currencies. Other than trade accounts receivable and trade accounts payable, which mostly offset one another, we do not currently have material amounts of assets, liabilities, or financial instruments that are sensitive to foreign currency exchange rates.

Our North Sea operations have a significant amount of their cash operating expenses payable in either the Euro or British Pound, and we typically maintain forward contracts settling monthly in Euro and British Pounds. The Euro-denominated forward currency contracts settling in the remainder of 2009 represent approximately 61 percent of our forecasted Euro requirements. The British Pound-denominated forward contracts settling in the remainder of 2009 represent approximately 61 percent of our forecasted British Pound requirements. The notional amount of forward contracts outstanding at September 30, 2009 was approximately 7 million Euros and 12 million British Pounds. The aggregate notional amount of these forward contracts, expressed in U.S. Dollars, was $27 million at September 30, 2009. The fair market value of these outstanding forward contracts was $1 million at September 30, 2009. A ten percent change in exchange rates for the Euro and British Pound would change the fair value of these forward contracts by approximately $3 million.

We have entered into a firm commitment for the construction of a newbuild drillship. The drillship will be constructed in two phases, with the second phase being installation and commissioning of the topside equipment. Our payment obligation for this second phase of construction is denominated in Euros, and in order to mitigate the risk of fluctuations in foreign currency exchange rates, we entered into forward contracts to purchase Euros. As of September 30, 2009, the aggregate notional amount of the remaining forward contracts was 70 million Euros. Each forward contract settles in connection with required payments under the contract. We are accounting for these forward contracts as fair value hedges. The fair market value of those derivative instruments is included in “Other current assets/liabilities” or “Other assets/liabilities,” depending on when the forward contract is expected to be settled. Gains and losses from these fair value hedges are recognized in earnings currently along with the change in fair value of the hedged item attributable to the risk being hedged. The fair market value of these outstanding forward contracts, which are included in “Other current liabilities” and “Other liabilities,” totaled approximately $1 million at September 30, 2009. A ten percent change in exchange rates for the Euro would change the fair value of these forward contracts by approximately $10 million.

Market Risk

We sponsor the Noble Drilling Corporation 401(k) Savings Restoration Plan (“Restoration Plan”). The Restoration Plan is a nonqualified, unfunded employee benefit plan under which certain highly compensated employees may elect to defer compensation in excess of amounts deferrable under our 401(k) savings plan. The Restoration Plan has no assets, and amounts withheld for the Restoration Plan are kept by us for general corporate purposes. The investments selected by employees and the associated returns are tracked on a phantom basis. Accordingly, we have a liability to employees for amounts originally withheld plus phantom investment income or less phantom investment losses. We are at risk for phantom investment income and, conversely, benefit should phantom investment losses occur. At September 30, 2009, our liability under the Restoration Plan totaled $8 million. During 2008, we purchased investments that closely correlate to the investment elections made by participants in the Restoration Plan in order to mitigate the impact of the phantom investment income and losses on our financial statements. The value of these investments held for our benefit totaled $8 million at September 30, 2009. A ten percent change in the fair value of the phantom investments would change our liability by approximately $1 million. Any change in the fair value of the phantom investments would be mitigated by a change in the investments held for our benefit.

Item 4. Controls and Procedures

Our Chairman, President and Chief Executive Officer, David W. Williams, and Senior Vice President, Chief Financial Officer, Treasurer and Controller, Thomas L. Mitchell, have evaluated the disclosure controls and procedures for each of Noble-Swiss and Noble-Cayman as of the end of the period covered by this report. On the basis of this evaluation, Mr. Williams and Mr. Mitchell have concluded that the disclosure controls and procedures for each of Noble-Swiss and Noble-Cayman were effective as of September 30, 2009. These disclosure controls and procedures are designed to ensure that information required to be disclosed by each of Noble-Swiss and Noble-Cayman in the reports that they file with or submit to the SEC is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms and is accumulated and communicated to management as appropriate to allow timely decisions regarding required disclosure.

There was no change in either Noble-Swiss’ or Noble-Cayman’s internal control over financial reporting that occurred during the quarter ended September 30, 2009 that has materially affected, or is reasonably likely to materially affect, the internal control over financial reporting of each of Noble-Swiss or Noble-Cayman.

PART II. OTHER INFORMATION

Item 1. Legal Proceedings

Information regarding legal proceedings is set forth in Note 10 to our consolidated financial statements included in Item 1 of Part I of this Quarterly Report on Form 10-Q and is incorporated herein by reference.

Item 1A. Risk Factors

There have been no material changes from the risk factors as previously disclosed in the Annual Report on Form 10-K for the year ended December 31, 2008 filed by Noble-Cayman in response to Item 1A of Part I of Form 10-K and in the Quarterly Reports on Form 10-Q for the quarters ended March 31 and June 30, 2009 filed by Noble-Swiss and Noble-Cayman in response to Item 1A of Part II of Form 10-Q.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

The following table sets forth for the periods indicated certain information with respect to purchases by Noble-Swiss of shares:


						Total Number of		Maximum Number
						Shares Purchased		of Shares that May
	Total Number		Average			as Part of Publicly		Yet Be Purchased
	of Shares		Price Paid			Announced Plans		Under the Plans
Period	Purchased		per Share			or Programs		or Programs (1)

July 2009		10,518	$	33.86	(2)		—		16,619,891
August 2009		1,500,728	$	34.68	(3)		1,500,000		15,119,891
September 2009		512,151	$	34.90	(4)		500,000		14,619,891


(1)		All share purchases have been made in the open market and were pursuant to the share repurchase program which our Board of Directors authorized and adopted and that we announced on January 31, 2002. Our repurchase program has no date of expiration.

(2)		Includes 10,518 registered shares at an average price of $33.86 per share acquired by surrender to us by employees for withholding taxes payable upon the vesting of restricted stock.

(3)		Includes 728 registered shares at an average price of $34.64 per share acquired by surrender to us by employees for withholding taxes payable upon the vesting of restricted stock.

(4)		Includes 12,151 registered shares at an average price of $38.21 per share acquired by surrender to us by employees for withholding taxes payable upon the vesting of restricted stock.

Item 6. Exhibits

The information required by this Item 6 is set forth in the Index to Exhibits accompanying this Quarterly Report on Form 10-Q and is incorporated herein by reference.

Index to Exhibits


Exhibit
Number		Exhibit

	2.1	Agreement and Plan of Merger, Reorganization and Consolidation, dated as of December 19, 2008, among Noble Corporation, a Swiss corporation (“Noble-Swiss”), Noble Corporation, a Cayman Islands company (“Noble-Cayman”), and Noble Cayman Acquisition Ltd. (filed as Exhibit 1.1 to Noble-Cayman’s Current Report on Form 8-K filed on December 22, 2008 and incorporated herein by reference).

	2.2	Amendment No. 1 to Agreement and Plan of Merger, Reorganization and Consolidation, dated as of February 4, 2009, among Noble-Swiss, Noble-Cayman and Noble Cayman Acquisition Ltd. (filed as Exhibit 2.2 to Noble-Cayman’s Current Report on Form 8-K filed on February 4, 2009 and incorporated herein by reference).

	3.1	Articles of Association of Noble-Swiss (filed as Exhibit 3.1 to the Noble-Swiss’ Current Report on Form 8-K filed on March 27, 2009 and incorporated herein by reference).

	3.2	By-laws of Noble-Swiss (filed as Exhibit 3.2 to Noble-Swiss’ Current Report on Form 8-K filed on March 27, 2009 and incorporated herein by reference).

	3.3	Memorandum and Articles of Association of Noble-Cayman (filed as Exhibit 3.1 to Noble-Cayman’s Current Report on Form 8-K filed on March 30, 2009 and incorporated herein by reference).

	4.1	Form of Limited Consent of Noble-Cayman (filed as Exhibit 1.1 to Noble-Cayman’s Current Report on Form 8-K filed on January 21, 2009 and incorporated herein by reference).

	4.2	Fourth Supplemental Indenture, dated as of September 25, 2009, among Noble Drilling Corporation, as Issuer, Noble Drilling Holding LLC, as Co-Issuer, Noble Drilling Services 1 LLC, as Co-Issuer, Noble Holding (U.S.) Corporation, as Guarantor, Noble Corporation, as Guarantor, and The Bank of New York Mellon Trust Company, N.A., as Trustee (filed as Exhibit 4.1 to Noble-Swiss’ Current Report on Form 8-K filed on October 1, 2009 and incorporated herein by reference).

	4.3	Fifth Supplemental Indenture, dated as of October 1, 2009, among Noble Drilling Corporation, as Issuer, Noble Drilling Holding LLC, as Co-Issuer, Noble Drilling Services 6 LLC, as Co-Issuer, Noble Holding (U.S.) Corporation, as Guarantor, Noble Corporation, as Guarantor, and The Bank of New York Mellon Trust Company, N.A., as Trustee (filed as Exhibit 4.2 to Noble-Swiss’ Current Report on Form 8-K filed on October 1, 2009 and incorporated herein by reference).

	4.4	Second Supplemental Indenture, dated as of October 1, 2009, among Noble Corporation, as Issuer, Noble Drilling Corporation, as Guarantor, Noble Holding International Limited, as Guarantor, and The Bank of New York Mellon Trust Company, N.A., as Trustee (filed as Exhibit 4.3 to Noble-Swiss’ Current Report on Form 8-K filed on October 1, 2009 and incorporated herein by reference).

	4.5	Subsidiary Guaranty Agreement, dated as of October 1, 2009, among Noble Holding International Limited, Noble Corporation and Citibank, N.A., as Administrative Agent (filed as Exhibit 4.4 to Noble-Swiss’ Current Report on Form 8-K filed on October 1, 2009 and incorporated herein by reference).


Noble Corporation, a Swiss corporation

/s/ David W. Williams				November 6, 2009

David W. Williams				Date
Chairman, President and Chief Executive Officer
(Principal Executive Officer)

/s/ Thomas L. Mitchell

Thomas L. Mitchell
Senior Vice President, Chief Financial Officer, Treasurer and Controller
(Principal Financial and Accounting Officer)

Noble Corporation, a Cayman Islands company

/s/ David W. Williams				November 6, 2009

David W. Williams				Date
President and Chief Executive Officer
(Principal Executive Officer)

/s/ Thomas L. Mitchell

Thomas L. Mitchell
Senior Vice President, Chief Financial Officer, Treasurer and Controller
(Principal Financial and Accounting Officer)


+		Furnished in accordance with Item 601(b)(32)(ii) of Regulation S-K.