NOBLE CORP - 10-Q Quarterly Report

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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

FORM 10-Q

[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 2002

OR

[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from _____________ to _____________

COMMISSION FILE NUMBER: 0-13857

NOBLE CORPORATION
(Exact name of registrant as specified in its charter)

CAYMAN ISLANDS 98-0366361
(State or other jurisdiction of incorporation or organization) (I.R.S. employer identification number)

13135 SOUTH DAIRY ASHFORD, SUITE 800 77478
SUGAR LAND, TEXAS (Zip code)
(Address of principal executive offices)

REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (281) 276-6100

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

Number of Ordinary Shares outstanding as of August 9, 2002: 134,213,175

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FORM 10-Q

PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

NOBLE CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In thousands)

See accompanying notes to the consolidated financial statements.

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FORM 10-Q

NOBLE CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(In thousands, except per share amounts)
(Unaudited)

See accompanying notes to the consolidated financial statements.

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FORM 10-Q

NOBLE CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(In thousands, except per share amounts)
(Unaudited)

See accompanying notes to the consolidated financial statements.

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FORM 10-Q

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

See accompanying notes to the consolidated financial statements.

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FORM 10-Q

NOBLE CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)

See accompanying notes to the consolidated financial statements.

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FORM 10-Q

NOBLE CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1 - CORPORATE RESTRUCTURING

On April 30, 2002, Noble Corporation, a Cayman Islands company (which
we sometimes refer to in this report as "Noble"), became the successor to Noble
Drilling Corporation, a Delaware corporation (which we sometimes refer to as
"Noble Drilling"), as part of the internal corporate restructuring of Noble
Drilling and its subsidiaries. This restructuring was approved by the
stockholders of Noble Drilling at its 2002 annual stockholders meeting. The
restructuring was accomplished through the merger of an indirect, wholly owned
subsidiary of Noble Drilling with and into Noble Drilling. Noble Drilling
survived the merger and is now an indirect, wholly owned subsidiary of Noble. In
addition, as a result of the merger, all of the outstanding shares of common
stock (and the related preferred stock purchase rights) of Noble Drilling were
exchanged for ordinary shares (and related preferred share purchase rights) of
Noble. Noble and its subsidiaries, including Noble Drilling, continue to conduct
the businesses previously conducted by the Noble Drilling corporate group prior
to the merger. We accounted for the restructuring as a reorganization of
entities under common control. Consequently, the consolidated amounts of assets,
liabilities or shareholders' equity did not change as a result of the
restructuring.

Noble Drilling sought stockholder approval of and effected the
restructuring as a means to remain competitive in the global marketplace to
provide diversified services to the oil and gas industry. Under the restructured
organization, we gain flexibility to reduce our worldwide corporate effective
tax rate, to increase the operational efficiencies of our business, and to
create a corporate structure that is generally more favorable for expansion of
our business. Additionally, we believe Noble could be a more attractive
investment alternative to a wider range of investors.

For the six months ended June 30, 2002, 64 percent of our revenues and
87 percent of our net income was derived from drilling operations outside of the
United States. Our restructuring was in part driven by inequitable treatment
under current U.S. tax laws, which impose taxes on the worldwide income of U.S.
companies. This method of taxation places U.S.-based multinationals at a
competitive disadvantage. The parent companies of our largest competitors are
incorporated in the Cayman Islands and other non-U.S. countries that impose
either no tax or tax at rates substantially less than the United States.

As previously disclosed and widely reported in the media, several bills
have been introduced in the U.S. House of Representatives and the U.S. Senate
which deal with various aspects of corporate "inversions." Certain proposed
legislation, if enacted in its form as originally filed, would substantially
reduce or eliminate the benefits of the restructuring to Noble. Other proposed
legislation is also directed towards leveling the playing field with respect to
provisions in the U.S. Internal Revenue Code that put U.S. companies competing
in a global marketplace at a competitive disadvantage. Pending further
legislative developments, we have not included any potential benefit that may
result from the restructuring in our worldwide effective corporate tax rate for
the six months ended June 30, 2002.

NOTE 2 - BASIS OF ACCOUNTING

The accompanying consolidated financial statements of Noble (together
with its consolidated subsidiaries, unless the context requires otherwise, the
"Company", "we", "our" and words of similar import) were adopted and assumed
from Noble Drilling upon the corporate restructuring (see Note 1). These
condensed consolidated financial statements have been prepared in accordance
with accounting principles generally accepted in the United States for interim
financial information and with the instructions to Form 10-Q and Article 10 of
Regulation S-X. Accordingly, they do not include all disclosures required by
generally accepted accounting principles for complete financial statements. All
significant transactions among Noble and its consolidated subsidiaries have been
eliminated. The interim consolidated financial statements have not been audited.
However, in the opinion of management, all adjustments, consisting only of
normal recurring adjustments, necessary for a fair presentation of the
consolidated financial statements have been included. Results of operations for
interim periods are not necessarily indicative of the results of operations that
may be expected for the entire year. These interim consolidated financial
statements should be read in conjunction with the audited consolidated financial
statements and notes thereto included in the Annual Report on Form 10-K of Noble
Drilling for the year ended December 31, 2001.

Noble Drilling (Paul Romano) Inc. was formed on April 3, 1998 for the
purpose of owning the Noble Paul Romano and financing its conversion to a Noble
EVA-4000(TM) semisubmersible. Noble Drilling (Paul Romano) Inc. is an indirect,
wholly owned subsidiary of Noble and is operated in a fashion that is intended
to ensure that its assets and liabilities are distinct and separate from those
of the Company and its affiliates and that the creditors of Noble Drilling (Paul
Romano) Inc.

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FORM 10-Q

would be entitled to satisfy their claims from the assets of Noble Drilling
(Paul Romano) Inc. prior to any distribution to the Company or its affiliates.

NOTE 3 - ACQUISITIONS

On May 3, 2002, as part of our strategy to expand our technology
initiative, we made several related acquisitions. We acquired all of the shares
of WELLDONE Engineering GmbH ("WELLDONE") for $5,750,000 in cash. We agreed to
pay up to an additional $3,500,000 provided WELLDONE's tools achieve certain
operational and financial milestones during the period through May 3, 2004.
WELLDONE's primary asset is its ownership in the "Well Director(TM)" automatic
rotary steerable drilling system, which was designed by and is manufactured and
marketed through DMT WELLDONE Drilling Services GmbH ("DMT WELLDONE"). As a
result of our acquisition of WELLDONE, we acquired WELLDONE's 50 percent joint
venture interest in DMT WELLDONE, which is further described below. We paid
2,900,000 Euros to Deutsche Montan Technologie GmbH ("DMT"), the other joint
venturer in DMT WELLDONE, for the remaining 50 percent interest in the joint
venture.

On May 30, 2002, we also acquired 24 Well Director drilling tools and
related assets owned by Phoenix Technology Services, Ltd. ("Phoenix") for
$6,000,000 in cash. We agreed to pay up to an additional $3,000,000 provided
certain operating performance milestones are achieved during the period through
year end 2004. In the transaction we also acquired from Phoenix its worldwide
marketing rights to the Well Director drilling tools.

Pursuant to a related agreement, we and DMT each committed to fund
2,100,000 Euros to a new joint venture in which each party will have a 50
percent interest. The joint venture will in turn use such funds to retain DMT to
conduct research and development. This joint venture will own the intellectual
property rights of all new technology it develops.

On March 27, 2002, we purchased two semisubmersible baredecks, the
Bingo 9000 Rig 3 and Bingo 9000 Rig 4, from subsidiaries of Ocean Rig ASA
("Ocean Rig") for an aggregate purchase price of $45,000,000 in an all cash
transaction. Ocean Rig has an option to buy the two baredecks back within one
year from the purchase date, subject to a 90-day written notice of intent to
repurchase, at a purchase price of $56,000,000.

On March 26, 2002, we purchased two semisubmersible drilling rigs, the
Noble Lorris Bouzigard (ex Transocean 96) and Noble Therald Martin (ex
Transocean 97), from subsidiaries of Transocean Sedco Forex Inc. for an
aggregate purchase price of $31,000,000 in an all cash transaction. Each unit is
a pentagon designed semisubmersible currently capable of operating in water
depths up to 2,350 feet and was upgraded in 1997. We plan to upgrade these units
to work in deeper water depths.

NOTE 4 - EARNINGS PER SHARE

The following table reconciles the basic and diluted earnings per share
computations for the three and six month periods ended June 30, 2002 and 2001
(in thousands, except per share amounts):

Included in diluted shares are common stock equivalents relating to
outstanding stock options of 1,625,000 shares and 1,592,000 shares for the three
month periods ended June 30, 2002 and 2001, respectively, and 1,423,000 shares
and 1,735,000 shares for the six month periods ended June 30, 2002 and 2001,
respectively.

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FORM 10-Q

NOTE 5 - MARKETABLE SECURITIES

As of June 30, 2002, we owned marketable equity securities with a fair
market value of $8,337,000, of which $7,451,000 was included in a Rabbi Trust
for the Noble Drilling Corporation 401(k) Savings Restoration Plan. The
marketable securities included in the Rabbi Trust are classified as trading
securities and are included in "Investment in marketable securities" in the
Consolidated Balance Sheet at June 30, 2002 at their fair value. We recognized a
net unrealized holding loss of $256,000 and $359,000 related to these assets for
the three and six month periods ended June 30, 2002, respectively. In addition,
we recognized a net realized gain of $14,000 and a net realized loss of $81,000
related to these assets in the three month and six month periods ended June 30,
2002, respectively. The remaining investment in marketable equity securities,
with a fair market value of $886,000 at June 30, 2002, is classified as
available for sale and is included in "Other assets" in the Consolidated Balance
Sheets at its fair market value. On March 31, 2002, we recognized a realized
loss of $9,758,000 on this investment for a decline in fair value considered by
management to be other than temporary. We recognized an unrealized holding loss
of $322,000 and $316,000 on this investment for the three month and six month
periods ended June 30, 2002, respectively.

As of June 30, 2002, we also owned marketable debt securities with a
fair market value of $50,034,000. These investments are classified as available
for sale and are included in "Investment in marketable securities" in the
Consolidated Balance Sheet at June 30, 2002 at their fair market value. We
recognized a net unrealized holding loss of $16,000 and $67,000 related to these
assets for the three month and six month periods ended June 30, 2002,
respectively. In addition, we recognized a net realized loss of $72,000 related
to these assets in the three month and six month periods ended June 30, 2002.

NOTE 6 - CREDIT FACILITIES

We have an unsecured revolving bank credit facility totaling
$200,000,000 (the "Credit Agreement"), including a letter of credit facility
totaling $50,000,000, through May 30, 2006. In connection with our
restructuring, Noble and one of its wholly owned subsidiaries, Noble Holding
(U.S.) Corporation ("Noble Holding"), have unconditionally guaranteed the
performance of Noble Drilling under the Credit Agreement. We are required to
maintain various affirmative and negative covenants, including two financial
covenants relating to interest coverage and debt to capital ratios. The Credit
Agreement contains restrictive covenants, including restrictions on incurring
additional indebtedness, and restrictions on permitting additional liens,
payment of dividends, transactions with affiliates, and mergers or
consolidations. As of June 30, 2002, we had outstanding letters of credit of
$26,247,000 and no outstanding borrowings under the Credit Agreement, with
$173,753,000 remaining available thereunder. Additionally, as of June 30, 2002,
we had other letters of credit and third-party corporate guarantees totaling
$12,300,000 outstanding, of which $3,300,000 is supported by a restricted cash
deposit. Also, $9,151,000 of bid and performance bonds had been supported by
surety bonds.

NOTE 7 - SALE OF INTEREST IN DEEPWATER EXPLORATION PROPERTY

On March 28, 2002, we sold our five percent working interest in one of
Mariner Energy, Inc.'s deepwater exploration properties, which included their
Falcon prospect, to Pioneer Natural Resources USA, Inc. for $6,200,000 in cash
and the assumption of liabilities related to our share of drilling and related
development costs on this property subsequent to June 30, 2001. We received this
interest, along with interests in other Mariner Energy deepwater exploration
properties, in March 2000 pursuant to the settlement of a lawsuit with Mariner
Energy over employment of the Noble Homer Ferrington semisubmersible and upon
entering into a long-term contract with Mariner Energy for use of the unit in
the U.S. Gulf of Mexico. We realized a gain of $5,908,000 upon the sale of our
interest in this property.

NOTE 8 - COMMITMENTS AND CONTINGENCIES

We have entered into agreements with various vendors to purchase or
construct property and equipment that generally have long lead times for
delivery in connection with several projects. If we do not proceed with any
particular project, we may either seek to cancel outstanding purchase
commitments related to that project or complete the purchase of the property and
equipment. Any equipment purchased for a project on which we do not proceed
would be used, where applicable, as capital spares for other units in our fleet.
If we cancel any of the purchase commitments, the amounts ultimately paid by us,
if any, would be subject to negotiation. As of June 30, 2002, we had
approximately $83,000,000 of outstanding purchase commitments related to these
projects.

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FORM 10-Q

NOTE 9 - PARENT GUARANTEE OF REGISTERED SECURITIES ISSUED BY SUBSIDIARY

Upon completion of our corporate restructuring, Noble and Noble Holding
became guarantors for certain debt securities issued by Noble Drilling. These
debt securities include Noble Drilling's 6.95% Senior Notes due 2009 and its
7.50% Senior Notes due 2019. The outstanding principal balance of the 6.95%
Senior Notes and the 7.50% Senior Notes at June 30, 2002 was $149,928,000 and
$206,695,000, respectively. Noble Drilling is an indirect, wholly owned
subsidiary of Noble and a direct, wholly owned subsidiary of Noble Holding.
Noble's and Noble Holding's guarantee of these securities is full and
unconditional.

The following consolidating financial statements of Noble, Noble
Holding, Noble Drilling and all other subsidiaries are included so that separate
financial statements of Noble Drilling are not required to be filed with the
Securities and Exchange Commission. These consolidating financial statements are
presented using the equity method of accounting.

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FORM 10-Q

NOBLE CORPORATION AND OTHER SUBSIDIARIES
CONSOLIDATING BALANCE SHEET
JUNE 30, 2002
(In thousands)
(Unaudited)

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FORM 10-Q

NOBLE CORPORATION AND OTHER SUBSIDIARIES
CONSOLIDATING BALANCE SHEET
DECEMBER 31, 2001
(In thousands)

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FORM 10-Q

NOBLE CORPORATION AND OTHER SUBSIDIARIES
CONSOLIDATING STATEMENT OF INCOME
THREE MONTHS ENDED JUNE 30, 2002
(In thousands)
(Unaudited)

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FORM 10-Q

NOBLE CORPORATION AND OTHER SUBSIDIARIES
CONSOLIDATING STATEMENT OF INCOME
THREE MONTHS ENDED JUNE 30, 2001
(In thousands)
(Unaudited)

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FORM 10-Q

NOBLE CORPORATION AND OTHER SUBSIDIARIES
CONSOLIDATING STATEMENT OF INCOME
SIX MONTHS ENDED JUNE 30, 2002
(In thousands)
(Unaudited)

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FORM 10-Q

NOBLE CORPORATION AND OTHER SUBSIDIARIES
CONSOLIDATING STATEMENT OF INCOME
SIX MONTHS ENDED JUNE 30, 2001
(In thousands)
(Unaudited)

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FORM 10-Q

NOBLE CORPORATION AND OTHER SUBSIDIARIES
CONSOLIDATING STATEMENT OF CASH FLOWS
SIX MONTHS ENDED JUNE 30, 2002
(In thousands)
(Unaudited)

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FORM 10-Q

NOBLE CORPORATION AND OTHER SUBSIDIARIES
CONSOLIDATING STATEMENT OF CASH FLOWS
SIX MONTHS ENDED JUNE 30, 2001
(In thousands)
(Unaudited)

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FORM 10-Q

NOTE 10 - SEGMENT AND RELATED INFORMATION

We provide diversified services for the oil and gas industry. Our
reportable segments consist of the primary services we provide, which include
offshore contract drilling and engineering and consulting services. Although
both of these segments are generally influenced by the same economic factors,
each represents a distinct service to the oil and gas industry. Offshore
contract drilling services is then separated into international and domestic
contract drilling segments since there are certain economic and political risks
associated with each of these geographic markets and our management makes
decisions based on these markets accordingly.

Our international contract drilling segment conducts contract drilling
services in the North Sea, Brazil, West Africa, the Middle East, India and
Mexico. Our domestic contract drilling is conducted in the U.S. Gulf of Mexico.
Our engineering and consulting segment consists of the design and development of
drilling products and drilling related software programs by our Noble
Engineering & Development Limited and Maurer Technology Incorporated
subsidiaries, in addition to well site management, project management and
technical services performed by our Triton Engineering Services Company
subsidiary.

All intersegment sales pricing is based on current market conditions.
We evaluate the performance of our operating segments based on operating
revenues and earnings. Summarized financial information of our reportable
segments for the three and six months ended June 30, 2002 and 2001 is shown in
the following table (in thousands). The "Other" column includes results of labor
contract drilling services, other insignificant operations and corporate related
items.

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FORM 10-Q

The following table is a reconciliation of reportable segment profit to
our consolidated totals for the three and six months ended June 30, 2002 and
2001 (in thousands).

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FORM 10-Q

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS

FORWARD-LOOKING STATEMENTS

This report on Form 10-Q includes "forward-looking statements" within
the meaning of Section 27A of the Securities Act of 1933, as amended, and
Section 21E of the Securities Exchange Act of 1934, as amended. All statements
other than statements of historical facts included in this Form 10-Q, including,
without limitation, statements contained in this "Management's Discussion and
Analysis of Financial Condition and Results of Operations", regarding our
financial position, business strategy, plans and objectives of management for
future operations, industry conditions, and indebtedness covenant compliance,
are 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 have been correct. Important factors
that could cause actual results to differ materially from our expectations
include, but are not limited to, changes in United States tax laws, or the
enactment of new United States tax laws, that may result in Noble being subject
to taxation in the United States on its worldwide earnings, other material
changes in the tax laws of the United States or other countries in which we
operate which could increase our effective tax rate, volatility in crude oil and
natural gas prices, the discovery of significant additional oil and/or gas
reserves or the construction of significant oil and/or gas delivery or storage
systems that impact regional or worldwide energy markets, potential
deterioration in the demand for our drilling services and resulting declining
dayrates, changes in our customers' drilling programs or budgets due to factors
discussed herein or due to their own internal corporate events, the cancellation
by our customers of drilling contracts or letter agreements or letters of intent
for drilling contracts or their exercise of early termination provisions
generally found in our drilling contracts, intense competition in the drilling
industry, changes in oil and gas drilling technology or in our competitors'
drilling fleets that could make our drilling rigs less competitive or require
major capital investment to keep them competitive, political and economic
conditions in the United States and in international markets where we operate,
acts of war or terrorism and the aftermath of the September 11, 2001 terrorist
attacks on the United States, cost overruns or delays on shipyard repair,
maintenance, conversion or upgrade projects, adverse weather (such as
hurricanes) and seas, operational risks (such as blowouts and fires),
limitations on our insurance coverage, and requirements and potential liability
imposed by governmental regulation of the drilling industry (including
environmental regulation). All of the foregoing risks and uncertainties are
beyond our ability to control, 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. When used in this Form 10-Q,
the words "believes", "anticipates", "expects", "plans" and similar expressions
as they relate to the Company or its management are intended to identify
forward-looking statements.

As used herein, unless otherwise required by the context, the term
"Noble" refers to Noble Corporation (see "Corporate Restructuring" below), the
term "Noble Drilling" refers to Noble Drilling Corporation and the terms
"Company", "we", "our", and words of similar import refer to Noble and its
consolidated subsidiaries. The use herein of such terms as group, organization,
we, us, our and its, or references to specific entities, is not intended to be a
precise description of corporate relationships.

CORPORATE RESTRUCTURING

On April 30, 2002, Noble Corporation, a Cayman Islands company (which
we sometimes refer to in this report as "Noble"), became the successor to Noble
Drilling Corporation, a Delaware corporation (which we sometimes refer to as
"Noble Drilling"), as part of the internal corporate restructuring of Noble
Drilling and its subsidiaries. This restructuring was approved by the
stockholders of Noble Drilling at its 2002 annual stockholders meeting. The
restructuring was accomplished through the merger of an indirect, wholly owned
subsidiary of Noble Drilling with and into Noble Drilling. Noble Drilling
survived the merger and is now an indirect, wholly owned subsidiary of Noble. In
addition, as a result of the merger, all of the outstanding shares of common
stock (and the related preferred stock purchase rights) of Noble Drilling were
exchanged for ordinary shares (and related preferred share purchase rights) of
Noble. Noble and its subsidiaries, including Noble Drilling, continue to conduct
the businesses previously conducted by the Noble Drilling corporate group prior
to the merger. We accounted for the restructuring as a reorganization of
entities under common control. Consequently, the consolidated amounts of assets,
liabilities or shareholders' equity did not change as a result of the
restructuring.

Noble Drilling sought stockholder approval of and effected the
restructuring as a means to remain competitive in the global marketplace to
provide diversified services to the oil and gas industry. Under the restructured
organization, we gain flexibility to reduce our worldwide corporate effective
tax rate, to increase the operational efficiencies of our business, and to
create a corporate structure that is generally more favorable for expansion of
our business. Additionally, we believe Noble could be a more attractive
investment alternative to a wider range of investors.

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FORM 10-Q

For the six months ended June 30, 2002, 64 percent of our revenues and
87 percent of our net income was derived from drilling operations outside of the
United States. Our restructuring was in part driven by inequitable treatment
under current U.S. tax laws, which impose taxes on the worldwide income of U.S.
companies. This method of taxation places U.S.-based multinationals at a
competitive disadvantage. The parent companies of our largest competitors are
incorporated in the Cayman Islands and other non-U.S. countries that impose
either no tax or tax at rates substantially less than the United States.

As previously disclosed and widely reported in the media, several bills
have been introduced in the U.S. House of Representatives and the U.S. Senate
which deal with various aspects of corporate "inversions." Certain proposed
legislation, if enacted in its form as originally filed, would substantially
reduce or eliminate the benefits of the restructuring to Noble. Other proposed
legislation is also directed towards leveling the playing field with respect to
provisions in the U.S. Internal Revenue Code that put U.S. companies competing
in a global marketplace at a competitive disadvantage. Pending further
legislative developments, we have not included any potential benefit that may
result from the restructuring in our worldwide effective corporate tax rate for
the six months ended June 30, 2002.

THE COMPANY

We are a leading provider of diversified services for the oil and gas
industry. We perform contract drilling services with our fleet of 53 offshore
drilling units located in key markets worldwide. Our fleet of floating deepwater
units consists of 13 semisubmersibles and three dynamically positioned
drillships, seven of which are designed to operate in water depths greater than
5,000 feet. Our premium fleet of 34 independent leg, cantilever jackup rigs
includes 21 units that operate in water depths of 300 feet and greater, four of
which operate in water depths of 360 feet and greater, and 11 units that operate
in water depths up to 250 feet. In addition, our fleet includes three
submersible drilling units. Nine of our drilling units are capable of operating
in harsh environments. Over 60 percent of the fleet is currently deployed in
international markets, principally including the North Sea, Brazil, West Africa,
the Middle East, India and Mexico. We also provide labor contract drilling
services, well site and project management services, and engineering services.
In addition, as part of our technology initiative, we design and develop
drilling products, drilling related software programs and technical solutions to
enhance drilling efficiency.

Demand for drilling services 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 the various governments regarding exploration and development of
their oil and gas reserves.

Oil and natural gas prices remained steady during the second quarter of
2002. Demand for offshore drilling rigs in the U.S. Gulf of Mexico increased,
and as a result, rig utilization rates and dayrates in the Gulf began to improve
during the recent quarter. Despite increasing during the first half of 2002,
natural gas prices remained below prices of a year ago due principally to a
build-up in natural gas inventory storage levels from a strong supply of natural
gas during the first half of 2001. We believe that a continuation of high
natural gas inventory storage levels could adversely impact natural gas prices
and the demand for offshore drilling rigs in the U.S. Gulf of Mexico. Drilling
activity in many international markets, which are influenced more by oil prices,
remained strong as reflected by continued high utilization rates and dayrates.
Oil companies continue to work through the effects of industry consolidation,
which has inhibited capital spending on exploration and development. We expect
that further consolidation among our customer base would dampen drilling
activity levels near-term. We cannot predict the future level of demand for our
drilling services or future conditions in the offshore contract drilling
industry.

In recent years, we have focused on increasing the number of rigs in
our fleet capable of deepwater offshore drilling. We have incorporated this
focus into our broader, long-standing business strategy to actively expand our
international and offshore deepwater capabilities through acquisitions, rig
upgrades and modifications and to redeploy assets in important geological areas.

ACQUISITIONS

On May 3, 2002, as part of our strategy to expand our technology
initiative, we made several related acquisitions. We acquired all of the shares
of WELLDONE Engineering GmbH ("WELLDONE") for $5,750,000 in cash. We agreed to
pay up to an additional $3,500,000 provided WELLDONE's tools achieve certain
operational and financial milestones during the period through May 3, 2004.
WELLDONE's primary asset is its ownership in the "Well Director(TM)" automatic
rotary steerable drilling system, which was designed by and is manufactured and
marketed through DMT WELLDONE Drilling Services GmbH ("DMT WELLDONE"). As a
result of our acquisition of WELLDONE, we acquired WELLDONE's 50 percent joint
venture interest

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FORM 10-Q

in DMT WELLDONE, which is further described below. We paid 2,900,000 Euros to
Deutsche Montan Technologie GmbH ("DMT"), the other joint venturer in DMT
WELLDONE, for the remaining 50 percent interest in the joint venture.

On May 30, 2002, we also acquired 24 Well Director drilling tools and
related assets owned by Phoenix Technology Services, Ltd. ("Phoenix") for
$6,000,000 in cash. We agreed to pay up to an additional $3,000,000 provided
certain operating performance milestones are achieved during the period through
year end 2004. In the transaction we also acquired from Phoenix its worldwide
marketing rights to the Well Director drilling tools.

Pursuant to a related agreement, we and DMT each committed to fund
2,100,000 Euros to a new joint venture in which each party will have a 50
percent interest. The joint venture will in turn use such funds to retain DMT to
conduct research and development. This joint venture will own the intellectual
property rights of all new technology it develops.

On March 27, 2002, we purchased two semisubmersible baredecks, the
Bingo 9000 Rig 3 and Bingo 9000 Rig 4, from subsidiaries of Ocean Rig ASA
("Ocean Rig") for an aggregate purchase price of $45,000,000 in an all cash
transaction. Ocean Rig has an option to buy the two baredecks back within one
year from the purchase date, subject to a 90-day written notice of intent to
repurchase, at a purchase price of $56,000,000.

On March 26, 2002, we purchased two semisubmersible drilling rigs, the
Noble Lorris Bouzigard (ex Transocean 96) and Noble Therald Martin (ex
Transocean 97), from subsidiaries of Transocean Sedco Forex Inc. for an
aggregate purchase price of $31,000,000 in an all cash transaction. Each unit is
a pentagon designed semisubmersible currently capable of operating in water
depths up to 2,350 feet and was upgraded in 1997. We plan to upgrade these units
to work in deeper water depths.

RESULTS OF OPERATIONS

FOR THE THREE MONTHS ENDED JUNE 30, 2002 AND 2001

GENERAL

Net income for the second quarter of 2002 (the "Current Quarter") was
$57,438,000, or $0.43 per diluted share, on operating revenues of $247,391,000,
compared to net income for the second quarter of 2001 (the "Comparable Quarter")
of $68,003,000, or $0.50 per diluted share, on operating revenues of
$246,646,000.

RIG UTILIZATION, OPERATING DAYS AND AVERAGE DAYRATES

The following table sets forth the average rig utilization rates,
operating days and average dayrates for our rig fleet for the three months ended
June 30, 2002 and 2001:

- ----------

(1) Information reflects our policy to report utilization rates based on
the number of actively marketed rigs in our fleet.

23

FORM 10-Q

INTERNATIONAL OPERATIONS

The following table sets forth the operating revenues and gross margin
(operating revenues less direct operating expenses) for our international
operations for the three months ended June 30, 2002 and 2001:

OPERATING REVENUES. International contract drilling services revenues
increased $47,881,000 due to higher average dayrates in the North Sea and West
Africa, higher rig utilization in the Middle East and the acquisition in August
2001 of the remaining 50 percent equity interest in the joint venture that owned
the Noble Julie Robertson. As a result of this acquisition, the results of
operations of the Noble Julie Robertson are included in our consolidated
statements of income from the purchase date. Prior to that date, the investment
was accounted for under the equity method. Labor contract drilling services
revenues decreased $1,242,000 due to lower utilization on our North Sea labor
contracts and fewer equipment rentals on the Hibernia project in Canada.
International engineering, consulting and other revenues increased $863,000 due
to an additional engineering services contract in the North Sea and the
expansion of our technology initiative to certain international markets during
2002.

GROSS MARGIN. International contract drilling services gross margin
increased $35,153,000 due to higher average dayrates in the North Sea and West
Africa, higher rig utilization in the Middle East and the acquisition in August
2001 of the remaining 50 percent equity interest in the joint venture that owned
the Noble Julie Robertson. Despite lower revenue, international labor contract
drilling services gross margin increased $229,000 due to lower utilization on
labor contracts in the North Sea that have lower gross margins than our average
labor contract.

DOMESTIC OPERATIONS

The following table sets forth the operating revenues and gross margin
(operating revenues less direct operating expenses) for our domestic operations
for the three months ended June 30, 2002 and 2001:

OPERATING REVENUES. Domestic contract drilling services revenues
decreased $46,303,000, as weak market conditions in the U.S. Gulf of Mexico
resulted in lower average dayrates and utilization rates on our domestic jackup
and submersible rigs. In addition, average dayrates and utilization rates on our
domestic deepwater units decreased in the Current Quarter as compared to the
Comparable Quarter. Domestic engineering, consulting and other revenues
decreased $454,000 due to reduced demand for drilling engineering services
provided by our Triton Engineering Services Company subsidiary ("Triton"), which
was attributable to the soft market conditions in the U.S. Gulf of Mexico. This
was partially offset by higher revenue earned by our Noble Engineering &
Development Limited ("NED") and Maurer Technology Incorporated ("Maurer")
technology subsidiaries.

24

FORM 10-Q

GROSS MARGIN. Domestic contract drilling services gross margin
decreased $51,299,000 due to lower average dayrates and utilization rates on our
jackup, submersible and deepwater semisubmersible rigs in the U.S. Gulf of
Mexico. Domestic engineering, consulting and other gross margin decreased
$1,202,000 due to reduced demand for Triton's drilling engineering services and
higher operating costs for NED.

OTHER ITEMS

DEPRECIATION AND AMORTIZATION EXPENSE. Depreciation and amortization
expense increased $2,123,000 in the Current Quarter as compared to the
Comparable Quarter due to various capital upgrades to our rig fleet and the
acquisition in August 2001 of the remaining 50 percent equity interest in the
joint venture that owned the Noble Julie Robertson.

SELLING, GENERAL AND ADMINISTRATIVE EXPENSES. Selling, general and
administrative expenses decreased $159,000 due to lower marketing and
advertising costs in the Current Quarter.

INTEREST EXPENSE. Interest expense decreased $1,810,000 due to lower
average debt balances in the Current Quarter.

OTHER, NET. Other net decreased $2,329,000 due principally to the
acquisition in August 2001 of the remaining 50 percent equity interest in the
joint venture that owned the Noble Julie Robertson.

INCOME TAX PROVISION. Income tax provision decreased $9,078,000 due to
a lower effective tax rate and lower pretax earnings. The effective tax rate was
18 percent in the Current Quarter compared to 24 percent in the Comparable
Quarter. The lower effective tax rate in the Current Quarter was a result of a
higher percentage of our pretax earnings being derived from international
operations, which generally have lower effective tax rates than our domestic
operations.

FOR THE SIX MONTHS ENDED JUNE 30, 2002 AND 2001

GENERAL

Net income for the six months ended June 30, 2002 (the "Current
Period") was $108,868,000, or $0.81 per diluted share, on operating revenues of
$482,864,000, compared to net income for the six months ended June 30, 2001 (the
"Comparable Period") of $122,466,000, or $0.90 per diluted share, on operating
revenues of $469,037,000.

RIG UTILIZATION, OPERATING DAYS AND AVERAGE DAYRATES

The following table sets forth the average rig utilization rates,
operating days and average dayrates for our rig fleet for the six months ended
June 30, 2002 and 2001:

- ----------

(1) Information reflects our policy to report utilization rates based on
the number of actively marketed rigs in our fleet.

25

FORM 10-Q

INTERNATIONAL OPERATIONS

The following table sets forth the operating revenues and gross margin
(operating revenues less direct operating expenses) for our international
operations for the six months ended June 30, 2002 and 2001:

OPERATING REVENUES. International contract drilling services revenues
increased $101,733,000 due to higher average dayrates in the North Sea, the
Middle East and West Africa, higher rig utilization in the Middle East and the
acquisition in August 2001 of the remaining 50 percent equity interest in the
joint venture that owned the Noble Julie Robertson. Labor contract drilling
services revenues decreased $799,000 due to fewer equipment rentals on the
Hibernia project in Canada and lower utilization on our North Sea labor
contracts. International engineering, consulting and other revenues increased
$1,962,000 due to an additional engineering services contract in the North Sea
and the expansion of our technology initiative to certain international markets
during 2002.

GROSS MARGIN. International contract drilling services gross margin
increased $69,469,000 due to higher average dayrates in the North Sea, the
Middle East and West Africa, higher rig utilization in the Middle East and the
acquisition in August 2001 of the remaining 50 percent equity interest in the
joint venture that owned the Noble Julie Robertson. International labor contract
drilling services gross margin increased $424,000 due to lower utilization on
labor contracts in the North Sea that have lower gross margins than our average
labor contract. International engineering, consulting and other gross margin
increased $191,000 due to an additional engineering services contract in the
North Sea.

DOMESTIC OPERATIONS

The following table sets forth the operating revenues and gross margin
(operating revenues less direct operating expenses) for our domestic operations
for the six months ended June 30, 2002 and 2001:

OPERATING REVENUES. Domestic contract drilling services revenues
decreased $89,777,000, as weak market conditions in the U.S. Gulf of Mexico
resulted in lower average dayrates and utilization on our domestic assets,
especially our jackup rigs. Domestic engineering, consulting and other revenues
increased $708,000 due to additional revenues provided by Maurer, which was
acquired during the Comparable Period, partially offset by reduced demand for
Triton's drilling engineering services.

GROSS MARGIN. Domestic contract drilling services gross margin
decreased $93,187,000 due to lower average dayrates and utilization rates on our
jackup, submersible and deepwater semisubmersible rigs in the U.S. Gulf of
Mexico. Domestic engineering, consulting and other gross margin decreased
$1,221,000 due to reduced demand for Triton's drilling engineering services and
higher operating costs for NED.

26

FORM 10-Q

OTHER ITEMS

DEPRECIATION AND AMORTIZATION EXPENSE. Depreciation and amortization
expense increased $4,477,000 in the Current Period as compared to the Comparable
Period due to various capital upgrades to our rig fleet and the acquisition in
August 2001 of the remaining 50 percent equity interest in the joint venture
that owned the Noble Julie Robertson.

SELLING, GENERAL AND ADMINISTRATIVE EXPENSES. Selling, general and
administrative expenses increased $2,528,000 due to costs incurred related to
our corporate restructuring.

INTEREST EXPENSE. Interest expense decreased $3,665,000 due to lower
average debt balances in the Current Period.

OTHER, NET. Other, net decreased $3,441,000 due to recognition of a
realized loss of $9,758,000 on an investment in marketable equity securities for
a decline in fair value considered by management to be other than temporary.
This loss was partially offset by a gain of $5,908,000 on the sale of our five
percent working interest in one of Mariner Energy, Inc.'s deepwater exploration
properties to Pioneer Natural Resources USA, Inc. for $6,200,000 in cash and the
assumption of liabilities related to our share of drilling and related
development costs on this property subsequent to June 30, 2001.

INCOME TAX PROVISION. Income tax provision decreased $17,507,000 due to
a lower effective tax rate and lower pretax earnings. The effective tax rate was
17 percent in the Current Period compared to 25 percent in the Comparable
Period. The lower effective tax rate in the Current Period was a result of a
higher percentage of our pretax earnings being derived from international
operations, which generally have lower effective tax rates than our domestic
operations.

LIQUIDITY AND CAPITAL RESOURCES

OVERVIEW

At June 30, 2002, we had cash and cash equivalents of $197,692,000 and
$173,753,000 of funds available under our bank credit facility. We had working
capital, including cash, of $270,345,000 and $286,500,000 at June 30, 2002 and
December 31, 2001, respectively. Total debt as a percentage of total debt plus
shareholders' equity decreased to 23 percent at June 30, 2002 from 25 percent at
December 31, 2001.

As of August 6, 2002, we have repurchased 400,000 of our ordinary
shares at a total cost of $12,362,000 since June 30, 2002. Additional
repurchases, if any, may be made on the open market or in private transactions
at prices determined by us.

During the Current Quarter, we sold put options covering an aggregate
of 300,000 of our ordinary shares in private transactions at an average price
paid to us of $2.80 per option. The options give the holder the right to require
us to purchase 300,000 of our ordinary shares from the holder at various
exercise prices, ranging from $35.10 to $37.93 per share, on their respective
expiration dates in November and December 2002. If we are required to purchase
the shares covered by the option, we have an option to settle in cash or net
shares of Noble. Also during the Current Quarter, 200,000 put options that we
previously sold expired unexercised so that we no longer have any purchase
requirement with regard to the shares covered by those options. As of August 6,
we have sold an additional 300,000 put options on our ordinary shares at an
average price of $2.90 per option since June 30, 2002. These put options, which
have the same characteristics as those sold in the Current Quarter, have
exercise prices ranging from $27.11 to $29.03 per share and expire in January
and February 2003. Another 300,000 put options that we previously sold expired
unexercised in July 2002.

These share repurchases and sales of put options were effected pursuant
to our share repurchase program covering up to 15,000,000 shares which has been
adopted and authorized by the board of directors of Noble. Giving effect to such
transactions, as of August 6, 2002, 10,204,000 shares were available and
unreserved out of such authorizations.

CAPITAL EXPENDITURES

Capital expenditures totaled $69,890,000 and $102,937,000 for the
Current Quarter and Current Period, respectively. During the Current Period, we
also purchased two semisubmersible drilling rigs and two baredecks for
$76,000,000 in the aggregate. In addition, deferred repair and maintenance
expenditures totaled $9,601,000 and $17,647,000 for the Current

27

FORM 10-Q

Quarter and Current Period, respectively. We expect our capital expenditures and
deferred repair and maintenance expenditures for the remainder of 2002 will
aggregate approximately $150,000,000 and $20,000,000, respectively.

We have entered into agreements with various vendors to purchase or
construct property and equipment that generally have long lead times for
delivery in connection with several projects. If we do not proceed with any
particular project, we may either seek to cancel outstanding purchase
commitments related to that project or complete the purchase of the property and
equipment. Any equipment purchased for a project on which we do not proceed
would be used, where applicable, as capital spares for other units in our fleet.
If we cancel any of the purchase commitments, the amounts ultimately paid by us,
if any, would be subject to negotiation. As of June 30, 2002, we had
approximately $83,000,000 of outstanding purchase commitments related to these
projects, which are included in the projected 2002 capital expenditure and
deferred repair and maintenance amounts above.

Certain projects currently under consideration could require, if they
materialize, capital expenditures or other cash requirements not included in the
above estimates. 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 the planned capital expenditures include
delays and cost overruns in shipyards, 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.

CREDIT FACILITIES AND LONG-TERM DEBT

Noble Drilling has in place a $200,000,000 bank credit agreement (the
"Credit Agreement"), which extends through May 30, 2006. In connection with our
restructuring, Noble and Noble Holding (U.S.) Corporation have unconditionally
guaranteed the performance of Noble Drilling under the Credit Agreement. As of
June 30, 2002, we had outstanding letters of credit of $26,247,000 and no
outstanding borrowings under the Credit Agreement, with $173,753,000 remaining
available thereunder. Additionally, as of June 30, 2002, we had other letters of
credit and third-party corporate guarantees totaling $12,300,000, of which
$3,300,000 is supported by a restricted cash deposit, and $9,151,000 of bid and
performance bonds had been supported by surety bonds.

At June 30, 2002, total long-term debt was $580,494,000, including
current maturities of $61,714,000, compared to total long-term debt of
$605,561,000, including current maturities of $55,430,000, at December 31, 2001.
In July 2002, we repurchased and retired $5 million principal amount of our
7.50% Senior Notes due 2019 for $5,350,000 plus accrued interest.

We believe that our cash and cash equivalents, net cash provided by
operating activities, available borrowings under lines of credit, and access to
other financing sources will be adequate to meet our anticipated short-term and
long-term liquidity requirements, including capital expenditures and scheduled
debt repayments.

ACCOUNTING PRONOUNCEMENTS

In July 2001, the FASB issued SFAS No. 141, Business Combinations
("SFAS 141"), and SFAS No. 142, Goodwill and Other Intangible Assets ("SFAS
142"). SFAS 141 requires that all business combinations initiated after June 30,
2001 be accounted for using the purchase method of accounting. As we had no
business combinations in process upon this statement becoming effective,
adoption of SFAS 141 did not have an impact on our consolidated results of
operations, cash flows or financial position. SFAS 142 requires that goodwill
and other intangible assets no longer be amortized, but rather tested for
impairment at least annually. SFAS 142 is effective for fiscal years beginning
after December 15, 2001. In conjunction with the adoption of SFAS 142 on January
1, 2002, we completed the initial transition impairment test required by SFAS
142 and determined that our existing goodwill was not impaired. Our adoption of
SFAS 142 did not have a material impact on our consolidated results of
operations, cash flows or financial position.

In October 2001, the FASB issued SFAS No. 144, Accounting for the
Impairment or Disposal of Long-Lived Assets ("SFAS 144"). SFAS 144 supersedes
SFAS No. 121, Accounting for the Impairment of Long-Lived Assets and for
Long-Lived Assets to Be Disposed Of ("SFAS 121") and the accounting and
reporting provisions of Accounting Principles Board Opinion No. 30, Reporting
the Results of Operations - Reporting the Effects of Disposal of a Segment of a
Business, and Extraordinary, Unusual and Infrequently Occurring Events and
Transactions, for the disposal of a segment of a business (as defined in that
Opinion). SFAS 144 retains the fundamental provisions of SFAS 121 concerning the
recognition and measurement of the impairment of long-lived assets to be held
and used and the measurement of long-lived assets to be disposed of by sale but
provides additional guidance with regard to discontinued operations and assets
to be disposed of. Furthermore, SFAS 144 excludes goodwill from its scope and,
therefore, eliminates the requirement under SFAS 121 to allocate goodwill to
long-lived

28

FORM 10-Q

assets to be tested for impairment. SFAS 144 is effective for fiscal years
beginning after December 15, 2001. Our adoption of SFAS 144 on January 1, 2002
did not have a material impact on our consolidated results of operations, cash
flows or financial position.

In April 2002, the FASB issued SFAS No. 145, Rescission of FASB
Statements No. 4, 44, and 64, Amendment of FASB Statement No. 13, and Technical
Corrections ("SFAS 145"). SFAS 145 rescinds FASB Statement No. 4, Reporting
Gains and Losses from Extinguishment of Debt, and an amendment of that
statement, FASB Statement No. 64, Extinguishments of Debt Made to Satisfy
Sinking-Fund Requirements. SFAS 145 also rescinds FASB Statement No. 44,
Accounting for Intangible Assets of Motor Carriers and amends FASB Statement No.
13, Accounting for Leases, to eliminate an inconsistency between the required
accounting for sale-leaseback transactions and the required accounting for
certain lease modifications that have economic effects that are similar to
sale-leaseback transactions. SFAS 145 also amends other existing authoritative
pronouncements to make various technical corrections, clarify meanings, or
describe their applicability under changed conditions. Under FASB Statement No.
4, all gains and losses from the extinguishment of debt were required to be
aggregated and, if material, classified as an extraordinary item, net of related
income taxes. Under SFAS 145, gains and losses from the extinguishment of debt
should be classified as extraordinary items only if they meet the criteria of
Accounting Principles Board Opinion No. 30 ("APB 30"). APB 30 distinguishes the
transactions that are part of an entity's recurring operations from those that
are unusual or infrequent or that meet the criteria for classification as an
extraordinary item. The provisions of SFAS 145 related to the rescission of FASB
Statement No. 4 are effective for fiscal years beginning after May 15, 2002. The
remaining provisions of SFAS 145 are effective for all financial statements
issued after May 15, 2002. The adoption of SFAS 145 is not expected to have a
material effect on our consolidated results of operations, cash flows or
financial position.

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. We own investments in both marketable equity
and debt securities. To mitigate the risk of losses, these investments are
marked to market periodically and are monitored by management to assure
compliance with policies established by the Company. A portion of the marketable
equity securities we own, consisting primarily of interests in mutual funds, are
held by a Rabbi Trust established and maintained by us in connection with the
Noble Drilling Corporation 401(k) Savings Restoration Plan and other stock-based
compensation plans and arrangements. Any decrease in the fair value of these
investments would result in a comparable decrease in the deferred compensation
plan obligation and would not materially affect our consolidated results of
operations, cash flows or financial position.

We are subject to market risk exposure related to changes in interest
rates on our Credit Agreement. Interest on our Credit Agreement is at an agreed
upon percentage point spread from LIBOR. At June 30, 2002, there were no
outstanding borrowings under our Credit Agreement. Therefore, an immediate
change of one percent in the interest rate would not cause a material change in
interest expense on an annual basis.

We conduct business internationally; however, a substantial majority of
the value of our foreign transactions are denominated in U.S. Dollars. With
minor exceptions, we structure our drilling contracts 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 each other,
we do not currently have any significant financial instruments that are
sensitive to foreign currency rates.

29

FORM 10-Q

PART II. OTHER INFORMATION

ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS

On April 25, 2002, at the annual meeting of stockholders of Noble
Drilling, the stockholders of Noble Drilling approved an internal corporate
restructuring which resulted in Noble becoming the publicly traded parent
company of the Noble corporate group, including Noble Drilling. Upon the
effective date of the restructuring, April 30, 2002, each share of Common Stock
of Noble Drilling was automatically converted into one Ordinary Share of Noble.
Noble was formed under and is governed by Cayman Islands law and Noble's
memorandum and articles of association. Noble Drilling was formed under and is
governed by Delaware law and Noble Drilling's certificate of incorporation and
bylaws. Although the principal attributes of Noble's Ordinary Shares and Noble
Drilling's Common Stock, and the rights of holders thereof, are similar, there
are differences. Material differences in the rights of our shareholders
resulting from our restructuring include an increase in the requisite
shareholder vote required under Cayman Islands law to approve business
combinations, the absence of shareholder appraisal rights under Cayman Islands
law, the absence under Cayman Islands laws of a statutory right of shareholders
to inspect a company's books and records (though the articles of association of
Noble provide rights of inspection similar to the rights available to holders of
Noble Drilling Common Stock) and limited rights of shareholders to bring
shareholder derivative actions under Cayman Islands law. This is not a complete
list of the differences between the rights of holders of Ordinary Shares of
Noble and holders of Common Stock of Noble Drilling.

During the three month period ended June 30, 2002, we sold European put
options covering 300,000 shares of our stock in three separate private
transactions of 100,000 put options each. The options give the holder the right
to require us to purchase shares of our stock from the holder at their
respective exercise prices on their respective expiration dates. If we are
required to purchase the shares covered by the options, we have the option to
settle in cash or net shares of Noble. On May 29, 2002, we sold 100,000 European
put options to Goldman Sachs for a premium price of $2.84 per option, resulting
in cash consideration of $284,000. These options have a strike price of $37.93,
representing 90 percent of the $42.15 spot price, and have a term of six months.
On June 3, 2002, we sold 100,000 European put options to Salomon Smith Barney
for a premium price of $2.80 per option, resulting in cash consideration of
$280,000. These options have a strike price of $37.12, representing 90 percent
of the $41.24 spot price, and have a term of six months. On June 5, 2002, we
sold 100,000 European put options to Merrill Lynch for a premium price of $2.77
per option, resulting in cash consideration of $277,000. These options have a
strike price of $35.10, representing 90 percent of the $39.00 spot price, and
have a term of six months.

30

FORM 10-Q

ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K

(a) Exhibits

The information required by this Item 6(a) is set forth in the
Index to Exhibits accompanying this quarterly report and is
incorporated herein by reference.

(b) Reports on Form 8-K

We furnished a Form 8-K on April 24, 2002, which included our
press release dated April 24, 2002 as Exhibit 99.1, announcing
financial results for the quarter ended March 31, 2002.

We filed a Form 8-K on April 25, 2002, which included our
press release dated April 25, 2002 as Exhibit 99.1, announcing
stockholder approval of our corporate restructuring.

We filed a Form 8-K on May 6, 2002, which included our press
release dated May 6, 2002 as Exhibit 99.1, announcing
completion of our corporate restructuring.

We furnished a Form 8-K on June 10, 2002, which included our
Fleet Status Update as of June 10, 2002 as Exhibit 99.1.

31

FORM 10-Q

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.

NOBLE CORPORATION

DATE: August 14, 2002 By: /s/ ROBERT D. CAMPBELL
-------------------------------
Robert D. Campbell,
President

DATE: August 14, 2002 By: /s/ MARK A. JACKSON
------------------------------------
Mark A. Jackson,
Senior Vice President - Finance,
Chief Financial Officer, Treasurer,
Controller and Assistant Secretary
(Principal Financial and Accounting
Officer)

32

FORM 10-Q

INDEX TO EXHIBITS