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| Name | Symbol | Market | Type |
|---|---|---|---|
| Noble Corporation PLC (PK) | USOTC:NBLWF | OTCMarkets | Equity Warrant |
| Price Change | % Change | Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Traded | Last Trade | |
|---|---|---|---|---|---|---|---|---|---|---|
| 0.00 | 0.00% | 0.20 | 0.20 | 0.20 | 0.00 | 00:00:00 |
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported):
| (Exact name of registrant as specified in its charter) |
| (State or other jurisdiction of incorporation) | (Commission File Number) | (I.R.S. Employer Identification No.) |
| (Address of Principal Executive Offices) | (Zip Code) |
| ( |
| Registrant’s telephone number, including area code |
|
N/A |
| (Former name or former address, if changed since last report) |
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligations of the registrant under any of the following provisions:
| Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) | |
| Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) | |
| Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) | |
| Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbols | Name of each exchange on which registered | ||
|
|
| |||
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Explanatory Note
On September 4, 2024, Noble Corporation plc, a public limited company organized under the laws of England and Wales (“Noble”), filed with the U.S. Securities and Exchange Commission (the “SEC”) a Current Report on Form 8-K (the “Original Form 8-K”) reporting, among other events, the completion of Noble’s acquisition of Diamond Offshore Drilling, Inc. a Delaware corporation (“Diamond” and such acquisition, the “Acquisition”), pursuant to the Agreement and Plan of Merger, dated as of June 9, 2024, by and among Noble, Dolphin Merger Sub 1, Inc., a Delaware corporation and indirect wholly owned subsidiary of Noble, Dolphin Merger Sub 2, Inc., a Delaware corporation and indirect wholly owned subsidiary of Noble, and Diamond.
This Current Report on Form 8-K/A amends the Original Form 8-K to include (i) the financial statements of Diamond required by Item 9.01(a) of Form 8-K and (ii) the pro forma financial information of Noble required by Item 9.01(b) of Form 8-K. Noble had previously indicated in the Original Form 8-K that such financial statements and pro forma financial information would be provided no later than 71 days from the date on which the Original Form 8-K was required to be filed. No other changes to the Original Form 8-K are being made hereby.
| Item 9.01 | Financial Statements and Exhibits. |
| (a) | Financial Statements of Business Acquired. |
The audited consolidated financial statements of Diamond as of December 31, 2023 and 2022 and for each of the years ended December 31, 2023, 2022, and 2021 are filed as Exhibit 99.1 to this Current Report on Form 8-K and are incorporated herein by reference.
The unaudited consolidated financial statements of Diamond as of June 30, 2024, and for the six months ended June 30, 2024 and 2023 are filed as Exhibit 99.2 to this Current Report on Form 8-K and are incorporated herein by reference.
| (b) | Pro Forma Financial Information. |
The unaudited pro forma condensed combined balance sheet of Noble as of June 30, 2024, and the unaudited pro forma condensed combined statement of operations for the six months ended June 30, 2024, and the twelve months ended December 31, 2023, giving effect to the Acquisition, are filed as Exhibit 99.3 to this Current Report on Form 8-K/A and are incorporated herein by reference.
| (d) | Exhibits. |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| Dated: November 12, 2024 | NOBLE CORPORATION PLC | ||
| By: | /s/ Jennie Howard | ||
| Name: | Jennie Howard | ||
| Title: | Senior Vice President, General Counsel and Corporate Secretary |
||
EXHIBIT 23.1
CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
We consent to the incorporation by reference in Registration Statement No. 333-267941 on Form S-3 and Registration Statement Nos. 333-267698, 333-279586, 333-283029, and 333-280726 on Form S-8 of Noble Corporation plc of our reports dated February 28, 2024, relating to the financial statements of Diamond Offshore Drilling, Inc., and the effectiveness of Diamond Offshore Drilling, Inc.’s internal control over financial reporting, appearing in this Current Report on Form 8-K dated November 12, 2024.
/s/ Deloitte & Touche LLP
Houston, Texas
November 12, 2024
EXHIBIT 99.3
UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION
On June 9, 2024, Noble Corporation plc (“Noble”) entered into an Agreement and Plan of Merger (the “Merger Agreement”) with Diamond Offshore Drilling, Inc. (“Diamond”) and other indirect, wholly owned subsidiaries of Noble. Pursuant to the Merger Agreement, among other things, Diamond became through a number of steps an indirect wholly owned subsidiary of Noble (the “Merger”). The Merger was completed on September 4, 2024.
The Merger is accounted for as a business combination pursuant to Accounting Standards Codification Topic 805, Business Combinations (“ASC 805”), where Noble is the accounting acquirer.
The unaudited pro forma condensed combined financial statements of Noble and the accompanying footnotes (the “Pro Forma Financial Information”) reflect the impact of the Merger and has been prepared under the following assumptions:
| · | The unaudited pro forma condensed combined statements of operations for the six months ended June 30, 2024, and the twelve months ended December 31, 2023, assume that the Merger had occurred on January 1, 2023. |
| · | The unaudited pro forma condensed combined balance sheet as of June 30, 2024, assumes that the Merger had occurred on June 30, 2024. |
The Pro Forma Financial Information does not represent what the actual consolidated results of operations or the consolidated financial position of Noble would have been had the Merger occurred on the dates assumed, nor are they necessarily indicative of future consolidated results of operations or consolidated financial position. The assumptions underlying the pro forma adjustments are described in the accompanying notes to these unaudited pro forma condensed combined financial statements. Adjustments are based on information available to management during the preparation of the Pro Forma Financial Information and assumptions that management believes are reasonable and supportable. The pro forma adjustments, which are described in the accompanying notes, are affected by the valuation of certain assets and liabilities and the allocation of the total purchase price which will be finalized as the information necessary to complete the analysis is obtained, but no later than one year after the closing of the Merger. Any final adjustment to the valuation could change the fair values assigned to the assets and liabilities, and it is possible the differences may be material.
The Pro Forma Financial Information should be read in conjunction with the following:
| · | The audited consolidated financial statements and notes included in Noble’s Annual Report on Form 10-K for the year ended December 31, 2023, filed with the Securities and Exchange Commission (the “SEC”) on February 23, 2024. |
| · | The audited consolidated financial statements and notes included in Diamond’s Annual Report on Form 10-K for the year ended December 31, 2023, filed with the SEC on February 28, 2024. |
| · | The unaudited condensed consolidated financial statements and notes included in Noble’s Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2024, filed with the SEC on August 1, 2024. |
| · | The unaudited condensed consolidated financial statements and notes included in Diamond’s Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2024, filed with the SEC on August 7, 2024. |
| · | The Merger Agreement, which is attached as Exhibit 2.1 to Noble’s Form 8-K, filed with the SEC on June 10, 2024. |
Unaudited Pro Forma Condensed Combined Statement of Operations
Six Months Ended June 30, 2024
(in thousands, except per share amounts)
| Historical | ||||||||||||||||||
| Noble | Diamond As Adjusted (Note 3) | Merger Transaction Accounting Adjustments (Note 4) | Pro Forma Combined | |||||||||||||||
| Operating revenues | ||||||||||||||||||
| Contract drilling services, revenue | $ | 1,273,135 | $ | 498,999 | $ | — | $ | 1,772,134 | ||||||||||
| Reimbursables and other | 56,793 | 28,497 | — | 85,290 | ||||||||||||||
| 1,329,928 | 527,496 | — | 1,857,424 | |||||||||||||||
| Operating costs and expense | ||||||||||||||||||
| Contract drilling services, expense | 725,721 | 344,955 | — | 1,070,676 | ||||||||||||||
| Reimbursables | 41,011 | 27,599 | — | 68,610 | ||||||||||||||
| Depreciation and amortization | 177,468 | 63,052 | 1,403 | (A) | 241,923 | |||||||||||||
| General and administrative | 65,630 | 41,796 | (2,173 | ) | (B) | 105,253 | ||||||||||||
| Merger and integration costs | 19,949 | — | — | 19,949 | ||||||||||||||
| (Gain) loss on sale of operating assets, net | (17,357 | ) | — | — | (17,357 | ) | ||||||||||||
| 1,012,422 | 477,402 | (770 | ) | 1,489,054 | ||||||||||||||
| Operating income (loss) | 317,506 | 50,094 | 770 | 368,370 | ||||||||||||||
| Other income (expense) | ||||||||||||||||||
| Interest expense, net of amounts capitalized | (29,540 | ) | (30,407 | ) | (32,976 | ) | (C) | (92,923 | ) | |||||||||
| Interest income and other, net | (12,918 | ) | 5,492 | — | (7,426 | ) | ||||||||||||
| Income (loss) before income taxes | 275,048 | 25,179 | (32,206 | ) | 268,021 | |||||||||||||
| Income tax benefit (provision) | 15,441 | (4,240 | ) | 1,950 | (D) | 13,151 | ||||||||||||
| Net income (loss) | $ | 290,489 | $ | 20,939 | $ | (30,256 | ) | $ | 281,172 | |||||||||
| Basic earnings (loss) per share | $ | 2.04 | $ | 0.20 | $ | 1.69 | (I) | |||||||||||
| Diluted earnings (loss) per share | $ | 1.99 | $ | 0.20 | $ | 1.64 | (I) | |||||||||||
| Weighted average shares outstanding | ||||||||||||||||||
| Basic | 142,404 | 102,491 | 166,308 | (I) | ||||||||||||||
| Diluted | 145,614 | 104,927 | 171,630 | (I) | ||||||||||||||
The accompanying notes are an integral part of these unaudited pro forma condensed combined financial statements.
| 2 |
Unaudited Pro Forma Condensed Combined Statement of Operations
Twelve Months Ended December 31, 2023
(in thousands, except per share amounts)
| Historical | ||||||||||||||||||
| Noble | Diamond As Adjusted (Note 3) | Merger Transaction Accounting Adjustments (Note 4) | Pro Forma Combined |
|||||||||||||||
| Operating revenues | ||||||||||||||||||
| Contract drilling services, revenue | $ | 2,461,715 | $ | 983,983 | $ | 28 | (E) | $ | 3,445,726 | |||||||||
| Reimbursables and other | 127,303 | 72,196 | — | 199,499 | ||||||||||||||
| 2,589,018 | 1,056,179 | 28 | 3,645,225 | |||||||||||||||
| Operating costs and expense | ||||||||||||||||||
| Contract drilling services, expense | 1,452,281 | 752,811 | — | 2,205,092 | ||||||||||||||
| Reimbursables | 91,642 | 68,758 | — | 160,400 | ||||||||||||||
| Depreciation and amortization | 301,345 | 111,301 | 17,739 | (A) | 430,385 | |||||||||||||
| General and administrative | 128,413 | 72,248 | 3,097 | (B) | 203,758 | |||||||||||||
| Merger and integration costs | 60,335 | — | 18,905 | (F) | 104,406 | |||||||||||||
| 1,450 | (G) | |||||||||||||||||
| 23,716 | (H) | |||||||||||||||||
| Hurricane losses and (recoveries), net | (19,703 | ) | — | — | (19,703 | ) | ||||||||||||
| 2,014,313 | 1,005,118 | 64,907 | 3,084,338 | |||||||||||||||
| Operating income (loss) | 574,705 | 51,061 | (64,879 | ) | 560,887 | |||||||||||||
| Other income (expense) | ||||||||||||||||||
| Interest expense, net of amounts capitalized | (59,139 | ) | (53,416 | ) | (53,795 | ) | (C) | (166,350 | ) | |||||||||
| Gain (loss) on extinguishment of debt, net | (26,397 | ) | (6,529 | ) | — | (32,926 | ) | |||||||||||
| Interest income and other, net | 18,069 | (4,839 | ) | — | 13,230 | |||||||||||||
| Gain on bargain purchase | 5,005 | — | — | 5,005 | ||||||||||||||
| Income (loss) before income taxes | 512,243 | (13,723 | ) | (118,674 | ) | 379,846 | ||||||||||||
| Income tax benefit (provision) | (30,341 | ) | (30,983 | ) | (1,720 | ) | (D) | (63,044 | ) | |||||||||
| Net income (loss) | $ | 481,902 | $ | (44,706 | ) | $ | (120,394 | ) | $ | 316,802 | ||||||||
| Basic earnings (loss) per share | $ | 3.48 | $ | (0.44 | ) | $ | 1.95 | (I) | ||||||||||
| Diluted earnings (loss) per share | $ | 3.32 | $ | (0.44 | ) | $ | 1.85 | (I) | ||||||||||
| Weighted average shares outstanding | ||||||||||||||||||
| Basic | 138,380 | 101,842 | 162,284 | (I) | ||||||||||||||
| Diluted | 145,197 | 101,842 | 171,213 | (I) | ||||||||||||||
The accompanying notes are an integral part of these unaudited pro forma condensed combined financial statements.
| 3 |
Unaudited Pro Forma Condensed Combined Balance Sheet
As of June 30, 2024
(in thousands)
| Historical | ||||||||||||||||||
| Noble | Diamond As Adjusted (Note 3) | Merger Transaction Accounting Adjustments (Note 4) |
Pro Forma Combined | |||||||||||||||
| Assets | ||||||||||||||||||
| Current assets: | ||||||||||||||||||
| Cash and cash equivalents | $ | 162,852 | $ | 165,536 | $ | (610,286 | ) | (AA) | $ | 531,568 | ||||||||
| 813,998 | (BB) | |||||||||||||||||
| (1,450 | ) | (CC) | ||||||||||||||||
| 918 | (DD) | |||||||||||||||||
| Accounts receivable, net | 637,034 | 220,668 | — | 857,702 | ||||||||||||||
| Taxes receivable | 67,577 | — | — | 67,577 | ||||||||||||||
| Prepaid expenses and other current assets | 119,402 | 72,165 | (13,436 | ) | (EE) | 177,213 | ||||||||||||
| (918 | ) | (DD) | ||||||||||||||||
| Assets held for sale | — | 1,000 | — | 1,000 | ||||||||||||||
| Total current assets | 986,865 | 459,369 | 188,826 | 1,635,060 | ||||||||||||||
| Intangible assets | 4,356 | — | — | (EE) | 4,356 | |||||||||||||
| Property and equipment, at cost | 4,853,998 | 1,480,975 | 673,574 | (EE) | 7,008,547 | |||||||||||||
| Accumulated depreciation | (640,185 | ) | (341,174 | ) | 341,174 | (EE) | (640,185 | ) | ||||||||||
| Property and equipment, net | 4,213,813 | 1,139,802 | 1,014,748 | 6,368,363 | ||||||||||||||
| Other assets | 382,100 | 84,392 | (11,821 | ) | (EE) | 454,671 | ||||||||||||
| Total assets | $ | 5,587,134 | $ | 1,683,563 | $ | 1,191,753 | $ | 8,462,450 | ||||||||||
| Current liabilities | ||||||||||||||||||
| Accounts payable | $ | 340,161 | $ | 44,294 | $ | 23,716 | (FF) | $ | 427,076 | |||||||||
| 18,905 | (GG) | |||||||||||||||||
| Accrued payroll and related costs | 68,179 | 164,727 | 11,536 | (FF) | 244,442 | |||||||||||||
| Taxes payable | 56,128 | 33,397 | — | 89,525 | ||||||||||||||
| Interest payable | 10,887 | — | — | 10,887 | ||||||||||||||
| Other current liabilities | 161,643 | 16,525 | — | 178,168 | ||||||||||||||
| Total current liabilities | 636,998 | 258,943 | 54,157 | 950,098 | ||||||||||||||
| Long-term debt | 622,051 | 534,480 | 813,998 | (BB) | 1,995,729 | |||||||||||||
| 25,200 | (EE) | |||||||||||||||||
| Deferred income taxes | 7,772 | 19,831 | 119,270 | (HH) | 146,873 | |||||||||||||
| Noncurrent contract liabilities | 2,241 | — | 27,663 | (EE) | 29,904 | |||||||||||||
| Other liabilities | 333,070 | 198,963 | (1,521 | ) | 530,512 | |||||||||||||
| Total liabilities | $ | 1,602,132 | $ | 1,012,217 | $ | 1,038,767 | $ | 3,653,116 | ||||||||||
| Shareholders’ equity | ||||||||||||||||||
| Common stock | 1 | 10 | (9 | ) | (II) | 2 | ||||||||||||
| Treasury stock | — | (9,810 | ) | 9,810 | (II) | — | ||||||||||||
| Additional paid-in-capital | 3,338,030 | 985,460 | (105,522 | ) | (II) | 4,217,968 | ||||||||||||
| Retained earnings (accumulated deficit) | 643,918 | (304,322 | ) | — | (EE) | 588,311 | ||||||||||||
| (1,450 | ) | (CC) | ||||||||||||||||
| (35,252 | ) | (FF) | ||||||||||||||||
| (18,905 | ) | (GG) | ||||||||||||||||
| 304,322 | (II) | |||||||||||||||||
| Accumulated other comprehensive income (loss) | 3,053 | 8 | (8 | ) | (II) | 3,053 | ||||||||||||
| Total shareholders' equity | $ | 3,985,002 | $ | 671,346 | $ | 152,986 | $ | 4,809,334 | ||||||||||
| Total liabilities and equity | $ | 5,587,134 | $ | 1,683,563 | $ | 1,191,753 | $ | 8,462,450 | ||||||||||
The accompanying notes are an integral part of these unaudited pro forma condensed combined financial statements.
| 4 |
NOTES TO UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION
Note 1. Basis of Presentation
The Pro Forma Financial Information has been prepared in accordance with Article 11 of Regulation S-X as amended by the final rule, Release No. 33-10786 “Amendments to Financial Disclosures about Acquired and Disposed Businesses,” using assumptions set forth in the notes herein. Article 11 permits presentation of reasonably estimable synergies and other transaction effects that have occurred or are reasonably expected to occur (“Management’s Adjustments”). Noble has elected not to present Management’s Adjustments and will only be presenting transaction accounting adjustments in the Pro Forma Financial Information.
The historical consolidated financial statements of Noble and Diamond were prepared in accordance with accounting policies generally accepted in the United States of America and shown in U.S. dollars.
Note 2. Accounting for the Merger with Diamond
Merger Agreement
Subject to the terms and conditions set forth in the Merger Agreement, at the effective time of the Merger (the “Effective Time”):
| (i) | Conversion of Diamond Common Stock (“Diamond Common Stock”): As part of the transaction, each issued and outstanding share of Diamond Common Stock immediately preceding the Effective Time was converted into a right to receive (i) 0.2316 shares of Noble (“Stock Exchange Ratio”), (ii) cash consideration of $5.65 per share and (iii) any cash in lieu of fractional Noble shares (collectively, the “Merger Consideration”). |
| (ii) | Conversion of Diamond Warrants (“Diamond Warrants” or “Warrants”): Each Diamond Warrant that was outstanding and unexercised as of immediately prior to Effective Time, was assumed by Noble and for 90 days after the Effective Time, these Warrants will continue to remain outstanding and be exercisable for the same Merger Consideration as if they had been exercised in full right before the Merger. The exercise price of the Warrants significantly exceeds the value of the underlying shares, thus the fair market value of the Warrants is estimated to be de minimis. |
| (iii) | Conversion of Diamond Restricted Stock Units (“RSU” or “Diamond RSU”) Awards: At the Effective Time, each outstanding Diamond RSU Award ceased to represent a right to acquire shares of Diamond Common Stock (or value equivalent to shares of Diamond Common Stock) and was converted into the right to acquire a number of Noble shares rather than shares of Diamond Common Stock, calculated by multiplying the shares of Diamond Common Stock assigned to each RSU immediately prior to the Effective Time by the Equity Award Exchange Ratio (“Equity Award Exchange Ratio”), defined as the sum of the Stock Exchange Ratio and the cash consideration per share of Diamond Common Stock divided by the closing price of Noble shares on the New York Stock Exchange (“NYSE”) on the day before the Effective Time. Fractional shares resulting from this conversion were cashed out based on the closing price of Noble shares on the NYSE on the last trading day before the Effective Time. |
| (iv) | Conversion of Diamond Performance Share Units (“PSU” or “Diamond PSU”) Awards: At the Effective Time, each Diamond PSU outstanding ceased to represent a right to acquire shares of |
| 5 |
Diamond Common Stock (or value equivalent to shares of Diamond Common Stock) and was converted into the right to acquire a number of Noble shares rather than shares of Diamond Common Stock but excluding any continued performance-based vesting requirements. The conversion into Noble shares was determined by the Equity Award Exchange Ratio, factoring in the actual performance level achieved by the PSU holder at the time of the Merger, whether it met the target level or exceeded it in accordance with the original PSU performance criteria. Similar to RSU Awards, fractional shares from this conversion were cashed out based on Noble's closing share price on the NYSE on the last trading day before the Effective Time.
Purchase Price Consideration
The following table presents the calculation of purchase price consideration (in thousands, except ratios and per share price):
Preliminary purchase price consideration
| Total Diamond shares outstanding as of the Merger | 103,213 | |||
| Exchange Ratio as defined in the Merger Agreement | 0.2316 | |||
| Number of Noble shares to be issued | 23,904 | |||
| Noble share price (1) | $ | 35.88 | ||
| Equity consideration for the conversion of Diamond shares outstanding | $ | 857,676 | ||
| Fair value of replacement Diamond RSUs and PSUs attributable to the purchase price | 22,263 | |||
| Equity consideration | $ | 879,939 | ||
| Total Diamond shares outstanding as of the Merger | 103,213 | |||
| Per Share Cash Consideration as defined in the Merger Agreement | $ | 5.65 | ||
| $ | 583,153 | |||
| Cash paid to settle Diamond debt | 309 | |||
| Cash paid to settle contingent success fees | 17,316 | |||
| Cash paid for retention bonuses | 4,422 | |||
| Cash paid for short-term incentive plans | 5,086 | |||
| Cash consideration | $ | 610,286 | ||
| Total preliminary purchase price consideration | $ | 1,490,225 |
| (1) | The per unit price applied to shares of Diamond Common Stock issued and outstanding reflects the volume weighted-average price per share of Noble common stock as of September 4, 2024. |
Allocation of Purchase Price Consideration to Assets Acquired and Liabilities Assumed
The allocation of the consideration, including any related tax effects, is preliminary and pending finalization of various estimates, inputs and analyses used in the valuation assessment of the specifically identifiable tangible and intangible assets acquired and liabilities assumed. Since the Pro Forma Financial Information has been prepared based on preliminary estimates of fair values attributable to the Merger, the actual amounts eventually recorded in accordance with the acquisition method of accounting may differ materially from the information presented.
ASC 805 requires, among other things, that the assets acquired and liabilities assumed in a business combination be recognized at their fair values as of the acquisition date. Any consideration transferred or paid in a business combination in excess of the fair value of the assets acquired and liabilities assumed should be recognized as goodwill. Management’s estimate as of the date of this Current Report on Form 8-K/A is that the fair value of the net assets and liabilities acquired equals purchase price.
The preliminary purchase price allocation is subject to change due to several factors, including, but not limited to:
| • | changes in the estimated fair value of Diamond’s identifiable assets acquired and liabilities assumed, including the identifiable intangible assets and liabilities and measurement of deferred tax assets and liabilities, third-party appraisals, and other potential adjustments. |
| 6 |
The allocation of the purchase price consideration is as follows (in thousands):
Purchase Price Allocation
| Estimated Fair Value | ||||
| Total current assets | $ | 445,933 | ||
| Property and equipment, net | 2,154,550 | |||
| Intangible assets | — | |||
| Other assets | 72,571 | |||
| Total assets acquired | 2,673,054 | |||
| Total current liabilities | 258,943 | |||
| Long-term debt | 559,680 | |||
| Deferred income taxes | 139,101 | |||
| Noncurrent contract liabilities | 27,663 | |||
| Other liabilities | 197,442 | |||
| Total liabilities assumed | 1,182,829 | |||
| Net assets acquired | 1,490,225 | |||
| Total preliminary purchase consideration | $ | 1,490,225 | ||
Note 3. Accounting Policies and Reclassification Adjustments
Upon completion of the acquisition, Noble performed a comprehensive review of Diamond’s accounting policies. Based on an initial analysis, management did not identify any differences that would have a material impact on the unaudited pro forma condensed combined financial information, except the presentation reclassifications further discussed below.
| 7 |
The following reclassifications were made to conform Diamond’s historical financial information to Noble’s presentation:
Statement of Operations for the Six Months Ended June 30, 2024
(in thousands)
| Financial Statement Line Item | Diamond Historical Presentation | Diamond Historical As Adjusted | ||||||
| Contract drilling | $ | 498,999 | $ | — | ||||
| Contract drilling services, revenue | — | 498,999 | ||||||
| Revenues related to reimbursable expenses | 28,497 | — | ||||||
| Reimbursables and other | — | 28,497 | ||||||
| Contract drilling, excluding depreciation | 348,665 | — | ||||||
| Loss (gain) on disposition of assets | (3,710 | ) | — | |||||
| Contract drilling services, expense | — | 344,955 | ||||||
| Reimbursable expenses | 27,599 | — | ||||||
| Reimbursables | — | 27,599 | ||||||
| Depreciation | 63,052 | — | ||||||
| Depreciation and amortization | — | 63,052 | ||||||
| Interest income | 3,740 | — | ||||||
| Foreign currency transaction gain (loss) | 218 | — | ||||||
| Other, net | 1,534 | — | ||||||
| Interest income and other, net | — | 5,492 | ||||||
| Income tax benefit | (4,240 | ) | — | |||||
| Income tax benefit (provision) | — | (4,240 | ) | |||||
Statement of Operations for the Twelve Months Ended December 31, 2023
(in thousands)
| Financial Statement Line Item | Diamond Historical Presentation | Diamond Historical As Adjusted | ||||||
| Contract drilling | $ | 983,983 | $ | — | ||||
| Contract drilling services, revenue | — | 983,983 | ||||||
| Revenues related to reimbursable expenses | 72,196 | — | ||||||
| Reimbursables and other | — | 72,196 | ||||||
| Contract drilling, excluding depreciation | 757,193 | — | ||||||
| Gain on disposition of assets | (4,382 | ) | — | |||||
| Contract drilling services, expense | — | 752,811 | ||||||
| Reimbursable expenses | 68,758 | — | ||||||
| Reimbursables | — | 68,758 | ||||||
| Depreciation | 111,301 | — | ||||||
| Depreciation and amortization | — | 111,301 | ||||||
| Interest income | 1,637 | — | ||||||
| Foreign currency transaction loss | (5,920 | ) | — | |||||
| Other, net | (556 | ) | — | |||||
| Interest income and other, net | — | (4,839 | ) | |||||
| Income tax (expense) benefit | (30,983 | ) | — | |||||
| Income tax benefit (provision) | — | (30,983 | ) | |||||
Balance Sheet as of June 30, 2024
(in thousands)
| Financial Statement Line Item | Diamond Historical Presentation | Diamond Historical As Adjusted | ||||||
| Restricted cash | $ | 10,565 | $ | — | ||||
| Prepaid expenses and other current assets | 61,600 | 72,165 | ||||||
| Drilling and other property and equipment, net of accumulated depreciation | 1,139,802 | — | ||||||
| Property and equipment, at cost | — | 1,480,975 | ||||||
| Accumulated depreciation | — | (341,174 | ) | |||||
| Current finance lease liabilities | 16,525 | — | ||||||
| Other current liabilities | — | 16,525 | ||||||
| Noncurrent finance lease liabilities | 103,742 | — | ||||||
| Other liabilities | 95,221 | 198,963 | ||||||
| Deferred tax liability | 19,831 | — | ||||||
| Deferred income taxes | — | 19,831 | ||||||
| Accumulated deficit | (304,322 | ) | — | |||||
| Retained Earnings | — | (304,322 | ) | |||||
| 8 |
Note 4. Merger Transaction Accounting Adjustments
The Merger transaction accounting adjustments below are prepared based on the purchase price presented in Note 2.
Condensed Combined Statements of Operations
| (A) | Depreciation and amortization |
Reflects the removal of historical depreciation expense and the recording of the pro forma depreciation expense based on the estimated fair value and useful lives of property and equipment upon the Merger. Drilling equipment and facilities are depreciated using the straight-line method over their estimated useful lives as of the date placed in service or date of major refurbishment. Estimated useful lives of our drilling equipment range from three to thirty years. Other property and equipment is depreciated using the straight-line method over useful lives ranging from two to forty years.
| (B) | Share-based compensation |
Reflects the difference between Diamond’s historical share-based compensation expense and the estimated share-based compensation expense related to replacement awards issued to continuing employees as part of the Merger. The fair value of the replacement share-based awards will be recognized ratably over post-combination service period.
| (C) | Interest expense |
Reflects the net change in interest expense related to the following activities (in thousands):
Condensed Combined Statements of Operations Adjustments
Interest expense
| Six Months Ended June 30, 2024 | Twelve Months Ended December 31, 2023 | |||||||
| Removal of historical interest expense on Diamond’s revolving credit facility terminated upon the closing of the Merger | $ | 1,754 | $ | 15,666 | ||||
| Recognition of interest expense accretion related to the fair value adjustment to Diamond's second lien notes assumed by Noble as a result of the Merger | (2,016 | ) | (4,032 | ) | ||||
| Recognition of interest expense on Noble’s new $800M unsecured notes issued in connection with the Merger | (32,000 | ) | (64,000 | ) | ||||
| Recognition of the amortization of deferred financing cost related to Noble's new $800M unsecured notes issued in connection with the Merger | (714 | ) | (1,429 | ) | ||||
| Pro forma adjustment for interest expense | $ | (32,976 | ) | $ | (53,795 | ) | ||
| (D) | Taxes |
Reflects the pro forma adjustments to tax amounts as a result of the book adjustments discussed elsewhere herein. The income tax benefit (provision) impact was calculated by applying the appropriate statutory rates of the respective jurisdictions to which the pro forma adjustments relate.
| (E) | Amortization of off-market contracts |
Reflects the amortization of off-market contract intangible assets and liabilities identified as a result of the Merger.
| 9 |
| (F) | Severance costs |
Reflects severance costs expected to be incurred by Noble subsequent to June 30, 2024 payable to certain Diamond employees who were terminated pursuant to the Merger Agreement.
| (G) | Directors’ and officers’ insurance |
Reflects the expensing of the premium of the directors’ and officers’ insurance purchased by Noble prior to the closing of the Merger as stipulated by the Merger Agreement.
| (H) | Transaction costs |
Reflects the recognition of Noble’s transaction costs incurred prior to and subsequent to June 30, 2024. These transaction costs were incurred directly in connection with the Merger, consisting primarily of legal and professional fees. The costs above are not expected to recur in any period beyond twelve months from the close of the Merger. No transaction costs have been incurred by Noble in the twelve months ended December 31, 2023.
| (I) | Weighted average shares outstanding and earnings per share |
As the Merger is being reflected as if it had occurred at the beginning of the earliest period presented, the calculation of weighted average shares outstanding for basic and diluted net loss per share assumes that the shares issuable relating to the Merger have been outstanding for the entire period presented.
The table below presents the components of the numerator and denominator for the pro forma earnings per share calculation for the periods presented (in thousands, except per share price):
Weighted average shares outstanding and earnings per share
Six Months Ended June 30, 2024 | Twelve Months Ended December 31, 2023 | |||||||
| Numerator | ||||||||
| Net income | $ | 281,172 | $ | 316,802 | ||||
| Denominator | ||||||||
| Historical Noble weighted-average shares outstanding - basic | 142,404 | 138,380 | ||||||
| Number of Noble shares to be issued | 23,904 | 23,904 | ||||||
| Pro forma weighted-average shares outstanding - basic | 166,308 | 162,284 | ||||||
| Pro forma weighted average shares outstanding, basic | 166,308 | 162,284 | ||||||
| Dilutive effect of Noble share-based awards | 1,559 | 3,158 | ||||||
| Dilutive effect of Noble warrants | 1,651 | 3,659 | ||||||
| Dilutive effect of Noble shares convertible from unvested Diamond RSUs | 679 | 679 | ||||||
| Dilutive effect of Noble shares convertible from unvested Diamond PSUs | 1,433 | 1,433 | ||||||
| Pro forma weighted-average shares outstanding - diluted (1) | 171,630 | 171,213 | ||||||
| Earnings per share - basic | $ | 1.69 | $ | 1.95 | ||||
| Earnings per share - diluted | $ | 1.64 | $ | 1.85 | ||||
| (1) | The diluted share count excludes the potentially dilutive effect of 7.5 million out-of-money warrants converted from Diamond Warrants. |
Condensed Combined Balance Sheet
| (AA) | Cash and cash equivalents |
Reflects the cash consideration that was paid as a result of the Merger.
| 10 |
| (BB) | Long-term debt |
In connection with the Merger, Diamond’s revolving credit facility was terminated, and Noble issued new unsecured notes of $800 million at a premium of $24 million. As of June 30, 2024, there were no borrowings outstanding on Diamond’s revolving credit facility. The impact on long-term debt from Noble’s new unsecured notes is reflected in the table below (in thousands):
Condensed Combined Balance Sheet Adjustments
Debt Adjustment
| As of June 30, 2024 | ||||
| Issuance of Noble’s new $800M unsecured notes issued in connection with the Merger | $ | 800,000 | ||
| Bond premium of Noble’s new $800M unsecured notes issued in connection with the Merger | 24,000 | |||
| Recognition of deferred financing cost related to Noble's new $800M unsecured notes issued in connection with the Merger | (10,002 | ) | ||
| Pro forma adjustment for Long-term Debt | $ | 813,998 | ||
| (CC) | Directors’ and officers’ insurance |
Reflects the payment for the premium of the directors’ and officers’ insurance purchased by Noble prior to the close of the Merger as stipulated by the Merger Agreement. The premium was expensed by Noble after the Merger.
| (DD) | D&O Insurance |
Reflects the outstanding amount of Diamond's existing directors' and officers' insurance policy to be written off.
| (EE) | Purchase price allocation fair value adjustments |
Reflects the preliminary allocation of the fair value of total consideration to the net assets acquired in connection with the application of the acquisition method of accounting. See Note 2 for further discussion regarding the preliminary purchase price allocation.
| (FF) | Transaction costs |
Reflects the recognition of Noble’s transaction costs incurred prior to and subsequent to June 30, 2024. These transaction costs were incurred directly in connection with the Merger, consisting primarily of legal and professional fees. The costs above are not expected to recur in any period beyond twelve months from the close of the Merger. No transaction costs have been incurred by Noble in the twelve months ended December 31, 2023.
| (GG) | Severance costs |
Reflects the accrual of severance costs expected to be incurred by Noble subsequent to June 30, 2024, payable to certain Diamond employees who were terminated pursuant to the Merger Agreement.
| (HH) | Taxes |
Reflects the pro forma adjustments to income tax related accounts on the balance sheet as a result of the Merger.
| 11 |
| (II) | Equity |
Reflects additional impact on the stockholders’ equity as a result of the Merger (in thousands):
Equity Pro Forma Adj Reconciliation
| Removal of Diamond historical equity (1) | Equity consideration issued for the Merger (2) | Total Pro Forma Adjustment | ||||||||||
| Common stock | $ | (10 | ) | $ | 1 | $ | (9 | ) | ||||
| Treasury stock | 9,810 | — | 9,810 | |||||||||
| Additional paid-in capital | (985,460 | ) | 879,938 | (105,522 | ) | |||||||
| Retained earnings (accumulated deficit) | 304,322 | — | 304,322 | |||||||||
| Accumulated other comprehensive income (loss) | (8 | ) | — | (8 | ) | |||||||
| Total stockholders' equity | $ | (671,346 | ) | $ | 879,939 | $ | 208,593 | |||||
| (1) | To remove the historical equity of Diamond as a result of the Merger. |
| (2) | To recognize the fair value of the equity consideration paid by Noble for the Merger. Refer to Note 2 for the components of the purchase price consideration. |
| 12 |
1 Year Noble (PK) Chart |
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