NOBLE CORP - 10-Q Quarterly Report

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

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

For the quarterly period ended March 31, 2005

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

13135 South Dairy Ashford, Suite 800 Sugar Land, Texas (Address of principal executive offices)		77478 (Zip code)

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 þ No o

Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Act). Yes þ No o

Number of Ordinary Shares outstanding as of May 4, 2005: 135,849,186

FORM 10-Q

PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

NOBLE CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In thousands)
(Unaudited)


	March 31,			December 31,
	2005			2004
ASSETS
CURRENT ASSETS
Cash and cash equivalents	$	107,759		$	58,790
Investment in marketable securities		88,628			132,788
Accounts receivable		202,945			205,023
Inventories		3,939			4,013
Prepaid expenses		25,269			12,454
Other current assets		15,744			12,215

Total current assets		444,284			425,283


PROPERTY AND EQUIPMENT
Drilling equipment and facilities		3,789,512			3,739,338
Other		65,964			65,550

		3,855,476			3,804,888
Accumulated depreciation		(1,106,343	)		(1,061,268	)

		2,749,133			2,743,620


INVESTMENT IN AND ADVANCES TO JOINT VENTURES		18,767			18,804
OTHER ASSETS		121,276			120,266

	$	3,333,460		$	3,307,973

LIABILITIES AND SHAREHOLDERS’ EQUITY
CURRENT LIABILITIES
Current maturities of long-term debt	$	8,510		$	8,361
Accounts payable		69,436			83,012
Accrued payroll and related costs		61,057			60,911
Taxes payable		18,947			22,883
Interest payable		2,493			8,981
Other current liabilities		28,020			30,018

Total current liabilities		188,463			214,166

LONG-TERM DEBT		461,106			503,288
DEFERRED INCOME TAXES		208,722			206,506
OTHER LIABILITIES		8,072			8,110

		866,363			932,070

COMMITMENTS AND CONTINGENCIES (Note 5)

MINORITY INTEREST		(8,363	)		(8,531	)


SHAREHOLDERS’ EQUITY
Ordinary Shares-par value $0.10 per share; 400,000 shares authorized; 135,655 shares issued and outstanding in 2005; 134,407 shares issued and outstanding in 2004		13,566			13,441
Capital in excess of par value		974,257			926,652
Retained earnings		1,495,794			1,452,974
Restricted stock (unearned compensation)		(9,753	)		(11,171	)
Accumulated other comprehensive income		1,596			2,538

		2,475,460			2,384,434

	$	3,333,460		$	3,307,973

See accompanying notes to the consolidated financial statements.

FORM 10-Q

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


	Three Months Ended March 31,
	2005			2004
OPERATING REVENUES
Contract drilling services	$	262,404		$	218,583
Reimbursables		24,502			10,049
Labor contract drilling services		18,141			8,391
Engineering, consulting and other		5,278			8,410

		310,325			245,433

OPERATING COSTS AND EXPENSES
Contract drilling services		144,022			124,323
Reimbursables		22,906			9,077
Labor contract drilling services		15,189			6,806
Engineering, consulting and other		5,888			8,097
Depreciation and amortization		56,377			50,427
Selling, general and administrative		7,818			7,861

		252,200			206,591


OPERATING INCOME		58,125			38,842

OTHER INCOME (EXPENSE)
Interest expense		(5,935	)		(9,068	)
Other, net		3,335			2,486


INCOME BEFORE INCOME TAXES		55,525			32,260
INCOME TAX PROVISION		(9,995	)		(4,000	)


NET INCOME	$	45,530		$	28,260


NET INCOME PER SHARE:
Basic	$	0.34		$	0.21
Diluted	$	0.33		$	0.21

See accompanying notes to the consolidated financial statements.

FORM 10-Q

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


	Three Months Ended March 31,
	2005			2004
CASH FLOWS FROM OPERATING ACTIVITIES
Net income	$	45,530		$	28,260
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		56,377			50,427
Deferred income tax provision		3,302			1,200
Loss on sales of marketable securities		48			44
Equity in income of joint venture		(1,072	)		(998	)
Distributions received from joint venture		1,109			—
Compensation expense from stock-based plans		1,418			1,086
Other		(615	)		(938	)
Changes in current assets and liabilities:
Accounts receivable		2,078			4,007
Other current assets		(16,002	)		(5,329	)
Accounts payable		(13,576	)		(14,672	)
Other current liabilities		(7,052	)		(1,535	)

Net cash provided by operating activities		71,545			61,552


CASH FLOWS FROM INVESTING ACTIVITIES
Acquisitions and related capital upgrades		(22,309	)		—
Other capital expenditures		(28,938	)		(13,871	)
Deferred repair and maintenance expenditures		(12,151	)		(9,401	)
Proceeds from sales of property and equipment		678			—
Repayments from joint venture		—			1,024
Investment in marketable securities		(17,129	)		(69,547	)
Proceeds from sales and maturities of marketable securities		61,229			57,121

Net cash used for investing activities		(18,620	)		(34,674	)


CASH FLOWS FROM FINANCING ACTIVITIES
Payments of borrowing on credit facility		(40,000	)		—
Payments of other long-term debt		(2,036	)		(18,883	)
Proceeds from issuance of ordinary shares		40,790			23,175
Payment of dividends		(2,710	)		—

Net cash provided by (used for) financing activities		(3,956	)		4,292


NET INCREASE IN CASH AND CASH EQUIVALENTS		48,969			31,170

CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD		58,790			62,567


CASH AND CASH EQUIVALENTS, END OF PERIOD	$	107,759		$	93,737

See accompanying notes to the consolidated financial statements.

FORM 10-Q

NOBLE CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1 – BASIS OF ACCOUNTING

The accompanying consolidated financial statements of Noble Corporation (“Noble” or, together with its consolidated subsidiaries, unless the context requires otherwise, the “Company”, “we”, “our” and words of similar import) have been prepared in accordance with accounting principles generally accepted in the United States of America 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 accounting principles generally accepted in the United States of America for complete financial statements. All significant intercompany accounts and transactions have been eliminated.

In order to allow readers of our financial statements to identify more easily costs that benefit multiple years associated with our rigs, amortization of deferred costs for major maintenance projects is reflected in the consolidated financial statements with depreciation in “Depreciation and amortization” beginning with the first quarter of 2005. In prior periods, amortization of deferred costs for major maintenance projects was included in expenses for contract drilling services and labor contract drilling services. The amount of such amortization was $10,882,000 and $9,502,000 for the three months ended March 31, 2005 and 2004, respectively. This revision in classification had no impact on previously reported net income.

In connection with the preparation of the 2004 financial statements, we concluded that it was appropriate to classify our auction rate securities as marketable debt securities and include such investments in “Investments in marketable securities” on our Consolidated Balance Sheets. Previously, such investments had been classified as cash equivalents and included in “Cash and cash equivalents.” Accordingly, we made adjustments to the Consolidated Statements of Cash Flows for the three months ended March 31, 2004 to reflect the beginning of period and end of period balances of cash and cash equivalents and to reflect the gross purchases and sales of these securities as investing activities rather than as a component of cash and cash equivalents. For the three months ended March 31, 2004, net cash used for investing activities related to these current investments of $10,000,000 was previously included in cash and cash equivalents in our Consolidated Statements of Cash Flows. This revision in classification does not affect previously reported net cash provided by operating activities or net cash used for financing activities, or our previously reported Consolidated Statements of Income for any period.

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 for the year ended December 31, 2004 (“2004 Form 10-K”).

NOTE 2 – STOCK-BASED COMPENSATION PLANS

We have several stock-based compensation plans. As permitted by Statement of Financial Accounting Standards (“SFAS”) No. 123, Accounting for Stock-Based Compensation (“SFAS 123”) and as amended by SFAS No. 148, Accounting for Stock-Based Compensation-Transition and Disclosure (“SFAS 148”), we have chosen to continue using the intrinsic value method of accounting for stock-based compensation awards in accordance with APB Opinion No. 25, Accounting for Stock Issued to Employees (“APB 25”). No compensation expense was recognized in the three month periods ended March 31, 2005 and 2004 related to stock option awards.

The following table reflects pro forma net income and net income per share had we elected to adopt the fair value approach of SFAS 123 (in thousands, except per share amounts):


	Three Months Ended
	March 31,
	2005			2004
Net income – as reported	$	45,530		$	28,260
Stock-based compensation expense, net of tax – as reported		922			706
Stock-based compensation expense, net of tax – pro forma		(2,478	)		(3,397	)

Net income – pro forma	$	43,974		$	25,569


Net income per share:
Basic – as reported	$	0.34		$	0.21
Basic – pro forma	$	0.33		$	0.19

Diluted – as reported	$	0.33		$	0.21
Diluted – pro forma	$	0.32		$	0.19

FORM 10-Q

In December 2004, the FASB issued SFAS No. 123 (revised 2004), Share-Based Payment (“SFAS 123 (revised 2004)”). SFAS 123 (revised 2004) is a revision to SFAS No. 123 and supersedes APB 25. SFAS 123 (revised 2004) establishes standards for accounting for exchanges of an entity’s equity instruments for goods or services, focusing primarily on transactions in which an entity obtains employee services in share-based payment transactions. The statement requires that entities measure the cost of employee services received in exchange for an award of equity instruments based on the grant-date fair value of the award and that the cost is recognized over the period in which the employee services are performed, which is usually the equity instrument’s vesting period. SFAS 123 (revised 2004) eliminates the alternative allowed under SFAS 123 under which equity instruments could be measured at their intrinsic value, as prescribed by APB 25, with only pro forma disclosure in the entity’s notes to its financial statements of the impact on net income and earnings per share had the equity instruments been measured at fair value. For public companies (other than small business issuers) with calendar fiscal years, SFAS 123 (revised 2004) required adoption as of the beginning of the third quarter of 2005. On April 14, 2005, the U.S. Securities and Exchange Commission announced the adoption of a new rule that amends the compliance dates for SFAS 123 (revised 2004), and as a result, such public companies, including Noble, will not be required to adopt SFAS 123 (revised 2004) until the first quarter of 2006.

The impact that the adoption of SFAS 123 (revised 2004) will have on our consolidated results of operations will be determined primarily by the number of stock options granted to employees in future periods. Based on recent stock option grants, we estimate that the adoption of this statement in 2006 will reduce that year’s net income by approximately $7,000,000 to $9,000,000, or $0.05 to $0.07 per diluted share. We do not expect the adoption of SFAS 123 (revised 2004) to have a material impact on our consolidated cash flows or financial position.

NOTE 3 – NET INCOME PER SHARE

The following table reconciles the basic and diluted net income per share (“EPS”) computations for the three month periods ended March 31, 2005 and 2004 (in thousands, except per share amounts):


	Net		Basic		Basic		Diluted		Diluted
	Income		Shares		EPS		Shares		EPS
Three Months Ended:
March 31, 2005	$	45,530		135,209	$	0.34		136,581	$	0.33
March 31, 2004	$	28,260		132,626	$	0.21		133,827	$	0.21

Included in diluted shares are ordinary share equivalents relating to outstanding stock options of 1,372,000 shares and 1,201,000 shares for the three month periods ended March 31, 2005 and 2004, respectively. The computation of diluted net income per share for the three month period ended March 31, 2004 did not include options to purchase 1,772,000 ordinary shares because the options’ respective exercise prices were greater than the average market price of the ordinary shares. Excluded from the basic and diluted share amounts above for the three month period ended March 31, 2004 are ordinary shares held in a Rabbi Trust, which was liquidated and terminated in December 2004. Ordinary shares held by the trust, which were to have been used for future funding of the Company’s benefits, were cancelled and retired upon the dissolution of the trust. The number of shares in the trust was 1,679,000 at March 31, 2004.

NOTE 4 – MARKETABLE SECURITIES

As of March 31, 2005, we owned marketable equity securities with a fair market value of $674,000. The investment is classified as available for sale and is included in “Other assets” in the Consolidated Balance Sheets at its fair market value. As of March 31, 2005, we also owned marketable debt securities with a fair market value of $88,628,000. These investments are classified as available for sale and are included in “Investment in marketable securities” in the Consolidated Balance Sheet at March 31, 2005 at their fair market value.

NOTE 5 – COMMITMENTS AND CONTINGENCIES

In August 2004, an indirect, wholly-owned subsidiary of Noble was served as a named defendant in two lawsuits filed in the Circuit Courts of the State of Mississippi involving numerous other companies (not affiliated with Noble) as co-defendants. In December 2004, such subsidiary was served as a named defendant in a third lawsuit filed in Mississippi Circuit Court. The lawsuits seek an unspecified amount of monetary damages on behalf of approximately 130 named individuals alleging personal injury or death, including claims under the Jones Act, purportedly resulting from exposure to asbestos on drilling rigs and associated facilities during the period 1965 through 1986. The lawsuits are in preliminary stages and we have

FORM 10-Q

not confirmed the number of plaintiffs, if any, that were employed by our subsidiary or otherwise associated with our drilling operations during the relevant period. We intend to defend vigorously against the litigation, and based on information currently available, we do not believe the resolution of these lawsuits will have a material adverse effect on our financial position, results of operations or cash flows.

Noble Asset Company Limited (“NACL”), a wholly-owned, indirect subsidiary of Noble, was named one of 21 parties served a Show Cause Notice (“SCN”) issued by the Commissioner of Customs (Prev.), Mumbai, India in August 2003. The SCN concerned alleged violations of Indian Customs laws and regulations regarding one of our jackup drilling rigs. The Commissioner alleged certain violations to have occurred before, at the time of, and after NACL acquired the rig from the rig’s previous owner. In the purchase agreement for the rig, NACL received contractual indemnification against liability for Indian customs duty from the rig’s previous owner. In connection with the export of the rig from India in 2001, NACL posted a bank guarantee in the amount of $3,440,000 and a customs bond in the amount of $22,200,000, both of which remain in place. NACL filed its initial replies to the SCN in December 2003. NACL appeared through counsel before the Commissioner in September 2004 and made oral arguments and written submissions. In March 2005, the Commissioner passed an order against NACL and the other parties cited in the SCN, as anticipated, confirming his findings consistent with his allegations in the SCN and seeking (i) to invoke the bank guarantee posted on behalf of NACL as a fine, (ii) to demand duty of (a) $17,300,000 plus interest related to a 1997 alleged import and (b) $19,700,000 plus interest related to a 1999 alleged import, provided that the duty and interest demanded in (b) shall not be payable if the duty and interest demanded in (a) is paid by NACL, and (iii) to assess penalty ($458,000) against NACL. NACL promptly filed a Writ Petition in the High Court, Bombay, and obtained from the court a favorable order staying the Commissioner from invoking the guarantee and confirming NACL’s right to appeal the order of the Commissioner to the Central Excise and Sales Tax Appellate Tribunal. We continue to maintain that NACL has acted in accordance with all Indian Customs laws and regulations and believe the Commissioner’s order is without merit as against NACL. NACL intends vigorously to pursue its appeal. We do not believe the resolution of this matter will have a material adverse effect on our financial position, results of operations or cash flows.

We are a defendant in certain claims and litigation arising out of operations in the normal course of business. In the opinion of management, uninsured losses, if any, will not be material to our financial position, results of operations or cash flows.

In connection with several projects, we have entered into agreements with various vendors to purchase or construct property and equipment that generally have long lead times for delivery. 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. As of March 31, 2005, we had approximately $53,000,000 of outstanding purchase commitments related to these projects.

NOTE 6 – SHAREHOLDERS’ EQUITY

Changes in shareholders’ equity for the three months ended March 31, 2005 are as follows (in thousands):


												Restricted			Accumulated
							Capital in					Stock			Other			Total
	Ordinary Shares						Excess of		Retained			(unearned			Comprehensive			Shareholders’
	Shares			Amount			Par Value		Earnings			compensation)			Income			Equity
Balance at December 31, 2004		134,407		$	13,441		$	926,652	$	1,452,974		$	(11,171	)	$	2,538		$	2,384,434
Exercise of stock options		1,318			132			40,658		—			—			—			40,790
Net income					—			—		45,530			—			—			45,530
Other comprehensive loss					—			—		—			—			(942	)		(942	)
Dividends					—			—		(2,710	)		—			—			(2,710	)
Tax benefit of stock options					—			6,050		—			—			—			6,050
Compensation expense recognized					—			—		—			1,418			—			1,418
Other		(70	)		(7	)		897		—			—			—			890


Balance at March 31, 2005		135,655		$	13,566		$	974,257	$	1,495,794		$	(9,753	)	$	1,596		$	2,475,460

NOTE 7 – EMPLOYEE BENEFIT PLANS

We have a U.S. noncontributory defined benefit pension plan which covers substantially all salaried employees and a U.S. noncontributory defined benefit pension plan which covers certain field hourly employees, whose initial date of employment is prior to August 1, 2004 (collectively referred to as our “qualified domestic plans”). These plans are governed

FORM 10-Q

by the Noble Drilling Corporation Retirement Trust. The benefits from these plans are based primarily on years of service and, for the salaried plan, employees’ compensation near retirement. These plans qualify under the Employee Retirement Income Security Act of 1974 (“ERISA”), and our funding policy is consistent with funding requirements of ERISA and other applicable laws and regulations. We make cash contributions to the qualified domestic plans when required. The benefit amount that can be covered by the qualified domestic plans is limited under ERISA and the Internal Revenue Code of 1986, as amended. Therefore, we maintain an unfunded, nonqualified excess benefit plan designed to maintain benefits for all employees at the formula level in the qualified domestic plans. We refer to the qualified domestic plans and the excess benefit plan collectively as the “domestic plans.”

Each of Noble Drilling (U.K.) Limited, Noble Enterprises Limited and Noble Drilling (Nederland) B.V., all indirect, wholly-owned subsidiaries of Noble, maintains a pension plan which covers all of its salaried, non-union employees (collectively referred to as our “international plans”). Benefits are based on credited service and the average of the highest three years of qualified salary within the past 10 years of participation.

Pension costs for the three months ended March 31, 2005 and 2004 include the following components (in thousands):


	Three Months Ended March 31,
	2005						2004
	International			Domestic			International			Domestic
Service cost	$	635		$	1,162		$	604		$	1,114
Interest cost		685			1,024			598			1,024
Return on plan assets		(767	)		(1,068	)		(747	)		(1,068	)
Amortization of prior service cost		—			65			—			65
Amortization of transition obligation		63			—			91			—
Recognized net actuarial (gain) loss		(20	)		225			(65	)		225

Net pension expense	$	596		$	1,408		$	481		$	1,360

We previously disclosed in our financial statements for the year ended December 31, 2004 that we expect to contribute approximately $1,500,000 to our pension plans in 2005. As of March 31, 2005, this estimate has been revised to $6,000,000, $250,000 of which was paid during the three months ended March 31, 2005. The increase reflects actuarial information, which was not previously available, on the level of qualifying contributions that can be made to our domestic plans.

NOTE 8 – DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES

Our North Sea operations have a significant amount of their cash operating expenses payable in either the Euro or British Pound. To reduce our exposure to fluctuations in these currencies during 2005, we entered into forward contracts in February and March 2005 to purchase 24,780,000 Euros and 18,199,000 British Pounds, respectively, for the period from April 2005 through March 2006. These forward contracts represented approximately 72 percent of our forecasted Euro and British Pound requirements for 2005 after the respective dates on which we entered into the forward contracts. These forward contracts are being accounted for as cash flow hedges under SFAS No. 133, Accounting for Derivative Instruments and Hedging Activities, as amended by SFAS No. 138, Accounting for Certain Derivative Instruments and Certain Hedging Activities (an amendment of FASB Statement No. 133), and SFAS No. 149, Amendment of Statement 133 on Derivative Instruments and Hedging Activities. The cumulative net unrealized gain on these forward contracts is included in “Accumulated other comprehensive income” in our Consolidated Balance Sheet at March 31, 2005. We did not recognize a gain or loss due to hedge ineffectiveness in our Consolidated Statements of Income for the three months ended March 31, 2005 related to these forward contracts.

FORM 10-Q

The balance of the net unrealized gain related to our foreign currency forward contracts included in “Accumulated other comprehensive income” and related activity for the three months ended March 31, 2005 is presented in the following table (in thousands):


Net unrealized gain at December 31, 2004	$	—
Activity during period:
Settlement of forward contracts outstanding at December 31, 2004		—
Net unrealized gain on outstanding forward contracts		269

Net unrealized gain at March 31, 2005	$	269

NOTE 9 – PARENT GUARANTEE OF REGISTERED SECURITIES ISSUED BY SUBSIDIARY

Noble and Noble Holding (U.S.) Corporation (“Noble Holding”), a wholly-owned subsidiary of Noble, are guarantors for certain debt securities issued by Noble Drilling Corporation (“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 balances of the 6.95% Senior Notes and the 7.50% Senior Notes at March 31, 2005 were $149,958,000 and $201,695,000, 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 guarantees of these securities are 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 U.S. Securities and Exchange Commission. These consolidating financial statements present Noble’s and Noble Holding’s investments in both consolidated and unconsolidated affiliates using the equity method of accounting.

FORM 10-Q

NOBLE CORPORATION AND OTHER SUBSIDIARIES
CONSOLIDATING BALANCE SHEET
March 31, 2005
(In thousands)
(Unaudited)


				Noble
				Holding
	Noble			(Subsidiary			Noble Drilling			Other			Consolidating
	(Guarantor)			Guarantor)			(Issuer)			Subsidiaries			Adjustments			Total
ASSETS
CURRENT ASSETS
Cash and cash equivalents	$	76,253		$	—		$	—		$	31,506		$	—		$	107,759
Investment in marketable securities		200			—			—			88,428			—			88,628
Accounts receivable		—			—			6,417			196,528			—			202,945
Inventories		—			—			—			3,939			—			3,939
Prepaid expenses		—			—			867			24,402			—			25,269
Accounts receivable from affiliates		176,253			—			542,055			—			(718,308	)		—
Other current assets		3,194			—			247			40,227			(27,924	)		15,744

Total current assets		255,900			—			549,586			385,030			(746,232	)		444,284


PROPERTY AND EQUIPMENT
Drilling equipment and facilities		—			—			99,588			3,689,924			—			3,789,512
Other		—			—			—			65,964			—			65,964

		—			—			99,588			3,755,888			—			3,855,476
Accumulated depreciation		—			—			(52,702	)		(1,053,641	)		—			(1,106,343	)

		—			—			46,886			2,702,247			—			2,749,133


NOTES RECEIVABLE FROM AFFILIATES		511,835			—			44,159			486,950			(1,042,944	)		—
INVESTMENTS IN AFFILIATES		1,708,970			2,025,193			1,813,518			—			(5,547,681	)		—
INVESTMENT IN AND ADVANCES TO JOINT VENTURES		—			—			—			18,767			—			18,767
OTHER ASSETS		—			—			5,399			115,877			—			121,276

	$	2,476,705		$	2,025,193		$	2,459,548		$	3,708,871		$	(7,336,857	)	$	3,333,460


LIABILITIES AND SHAREHOLDERS’ EQUITY
CURRENT LIABILITIES
Current maturities of long-term debt	$	—		$	20,136		$	—		$	8,510		$	(20,136	)	$	8,510
Accounts payable		—			—			2,073			67,363			—			69,436
Accrued payroll and related costs		—			—			14,810			46,247			—			61,057
Taxes payable		1,244			—			—			17,703			—			18,947
Interest payable		—			7,542			1,460			1,279			(7,788	)		2,493
Accounts payable to affiliates		—			119,023			—			599,285			(718,308	)		—
Other current liabilities		1			—			351			27,668			—			28,020

Total current liabilities		1,245			146,701			18,694			768,055			(746,232	)		188,463

LONG-TERM DEBT		—			—			411,653			49,453			—			461,106
NOTES PAYABLE TO AFFILIATES		—			486,950			—			555,994			(1,042,944	)		—
DEFERRED INCOME TAXES		—			(2,700	)		15,234			196,188			—			208,722
OTHER LIABILITIES		—			1,043			4,572			2,457			—			8,072

		1,245			631,994			450,153			1,572,147			(1,789,176	)		866,363


COMMITMENTS AND CONTINGENCIES

MINORITY INTEREST		—			—			—			(8,363	)		—			(8,363	)


SHAREHOLDERS’ EQUITY
Ordinary Shares-par value $0.10 per share		13,566			—			—			—			—			13,566
Capital in excess of par value		974,257			870,744			870,744			692,216			(2,433,704	)		974,257
Retained earnings		1,495,794			522,455			1,138,651			1,451,275			(3,112,381	)		1,495,794
Restricted stock (unearned compensation).		(9,753	)		—			—			—			—			(9,753	)
Accumulated other comprehensive income		1,596			—			—			1,596			(1,596	)		1,596

		2,475,460			1,393,199			2,009,395			2,145,087			(5,547,681	)		2,475,460

	$	2,476,705		$	2,025,193		$	2,459,548		$	3,708,871		$	(7,336,857	)	$	3,333,460

FORM 10-Q

NOBLE CORPORATION AND OTHER SUBSIDIARIES
CONSOLIDATING BALANCE SHEET
December 31, 2004
(In thousands)
(Unaudited)


				Noble
				Holding			Noble
	Noble			(Subsidiary			Drilling			Other			Consolidating
	(Guarantor)			Guarantor)			(Issuer)			Subsidiaries			Adjustments			Total
ASSETS
CURRENT ASSETS
Cash and cash equivalents	$	8,130		$	—		$	—		$	50,660		$	—		$	58,790
Investments in marketable securities		23,707			—			—			109,081			—			132,788
Accounts receivable		—			—			7,434			197,589			—			205,023
Inventories		—			—			—			4,013			—			4,013
Prepaid expenses		—			—			1,285			11,169			—			12,454
Accounts receivable from affiliates		177,091			—			588,705			—			(765,796	)		—
Other current assets		19,918			—			262			11,963			(19,928	)		12,215

Total current assets		228,846			—			597,686			384,475			(785,724	)		425,283


PROPERTY AND EQUIPMENT
Drilling equipment and facilities		—			—			99,624			3,639,714			—			3,739,338
Other		—			—			—			65,550			—			65,550

		—			—			99,624			3,705,264			—			3,804,888
Accumulated depreciation		—			—			(51,581	)		(1,009,687	)		—			(1,061,268	)

		—			—			48,043			2,695,577			—			2,743,620


NOTES RECEIVABLE FROM AFFILIATES		492,139			—			44,159			—			(536,298	)		—
INVESTMENTS IN AFFILIATES		1,664,904			1,987,843			1,773,952			—			(5,426,699	)		—
INVESTMENT IN AND ADVANCES TO JOINT VENTURES		—			—			—			18,804			—			18,804
OTHER ASSETS		—			—			5,929			114,337			—			120,266

	$	2,385,889		$	1,987,843		$	2,469,769		$	3,213,193		$	(6,748,721	)	$	3,307,973


LIABILITIES AND SHAREHOLDERS’ EQUITY
CURRENT LIABILITIES
Current maturities of long-term debt	$	—		$	19,682		$	—		$	8,361		$	(19,682	)	$	8,361
Accounts payable		—			—			2,374			80,638			—			83,012
Accrued payroll and related costs		26			—			15,222			45,663			—			60,911
Taxes payable		1,429			—			—			21,454			—			22,883
Interest payable		—			—			7,912			1,315			(246	)		8,981
Accounts payable to affiliates		—			114,330			—			651,466			(765,796	)		—
Other current liabilities		—			—			809			29,209			—			30,018

Total current liabilities		1,455			134,012			26,317			838,106			(785,724	)		214,166

LONG-TERM DEBT		—			—			451,650			51,638			—			503,288
NOTES PAYABLE TO AFFILIATES		—			492,139			—			44,159			(536,298	)		—
DEFERRED INCOME TAXES		—			(2,700	)		15,083			194,123			—			206,506
OTHER LIABILITIES		—			1,043			4,674			2,393			—			8,110

		1,455			624,494			497,724			1,130,419			(1,322,022	)		932,070

COMMITMENTS AND CONTINGENCIES

MINORITY INTEREST		—			—			—			(8,531	)		—			(8,531	)


SHAREHOLDERS’ EQUITY
Ordinary Shares-par value $0.10 per share		13,441			—			—			—			—			13,441
Capital in excess of par value		926,652			870,744			870,744			691,289			(2,432,777	)		926,652
Retained earnings		1,452,974			492,605			1,101,301			1,397,478			(2,991,384	)		1,452,974
Restricted stock (unearned compensation)		(11,171	)		—			—			—			—			(11,171	)
Accumulated other comprehensive income		2,538			—			—			2,538			(2,538	)		2,538

		2,384,434			1,363,349			1,972,045			2,091,305			(5,426,699	)		2,384,434

	$	2,385,889		$	1,987,843		$	2,469,769		$	3,213,193		$	(6,748,721	)	$	3,307,973

FORM 10-Q

NOBLE CORPORATION AND OTHER SUBSIDIARIES
CONSOLIDATING STATEMENT OF INCOME
Three Months Ended March 31, 2005
(In thousands)
(Unaudited)


				Noble
				Holding			Noble
	Noble			(Subsidiary			Drilling			Other			Consolidating
	(Guarantor)			Guarantor)			(Issuer)			Subsidiaries			Adjustments			Total
OPERATING REVENUES
Contract drilling services	$	—		$	—		$	7,416		$	254,988		$	—		$	262,404
Reimbursables		—			—			1			24,501			—			24,502
Labor contract drilling services		—			—			—			18,141			—			18,141
Engineering, consulting, and other		—			—			30			5,248			—			5,278

		—			—			7,447			302,878			—			310,325


OPERATING COSTS AND EXPENSES
Contract drilling services		25			—			1,914			142,083			—			144,022
Reimbursables		—			—			1			22,905			—			22,906
Labor contract drilling services		—			—			—			15,189			—			15,189
Engineering, consulting and other		—			—			—			5,888			—			5,888
Depreciation and amortization		—			—			1,442			54,935			—			56,377
Selling, general and administrative		(154	)		—			248			7,724			—			7,818

		(129	)		—			3,605			248,724			—			252,200


OPERATING INCOME		129			—			3,842			54,154			—			58,125

OTHER INCOME (EXPENSE)
Equity earnings in affiliates (net of tax)		44,081			37,350			39,566			—			(120,997	)		—
Interest expense		—			(11,592	)		(7,250	)		1,315			11,592			(5,935	)
Other, net		1,404			—			(1	)		13,524			(11,592	)		3,335


INCOME BEFORE INCOME TAXES		45,614			25,758			36,157			68,993			(120,997	)		55,525
INCOME TAX (PROVISION) BENEFIT		(84	)		4,092			1,193			(15,196	)		—			(9,995	)


NET INCOME	$	45,530		$	29,850		$	37,350		$	53,797		$	(120,997	)	$	45,530

FORM 10-Q

NOBLE CORPORATION AND OTHER SUBSIDIARIES
CONSOLIDATING STATEMENT OF INCOME
Three Months Ended March 31, 2004
(In thousands)
(Unaudited)


				Noble
				Holding			Noble
	Noble			(Subsidiary			Drilling			Other			Consolidating
	(Guarantor)			Guarantor)			(Issuer)			Subsidiaries			Adjustments			Total
OPERATING REVENUES
Contract drilling services	$	—		$	—		$	7,232		$	211,351		$	—		$	218,583
Reimbursables		—			—			—			10,049			—			10,049
Labor contract drilling services		—			—			—			8,391			—			8,391
Engineering, consulting, and other		—			—			—			8,410			—			8,410

		—			—			7,232			238,201			—			245,433


OPERATING COSTS AND EXPENSES
Contract drilling services		(102	)		—			2,314			122,111			—			124,323
Reimbursables		—			—			—			9,077			—			9,077
Labor contract drilling services		—			—			—			6,806			—			6,806
Engineering, consulting and other		—			—			—			8,097			—			8,097
Depreciation and amortization		—			—			1,445			48,982			—			50,427
Selling, general and administrative		(232	)		—			153			7,940			—			7,861

		(334	)		—			3,912			203,013			—			206,591


OPERATING INCOME		334			—			3,320			35,188			—			38,842

OTHER INCOME (EXPENSE)
Equity earnings in affiliates (net of tax)		16,556			20,109			21,519			—			(58,184	)		—
Interest expense		—			(11,941	)		(6,907	)		(3,095	)		12,875			(9,068	)
Other, net		12,105			—			1,418			1,838			(12,875	)		2,486


INCOME BEFORE INCOME TAXES		28,995			8,168			19,350			33,931			(58,184	)		32,260
INCOME TAX (PROVISION) BENEFIT		(735	)		4,179			759			(8,203	)		—			(4,000	)


NET INCOME	$	28,260		$	12,347		$	20,109		$	25,728		$	(58,184	)	$	28,260

FORM 10-Q

NOBLE CORPORATION AND OTHER SUBSIDIARIES
CONSOLIDATING STATEMENT OF CASH FLOWS
Three Months Ended March 31, 2005
(In thousands)
(Unaudited)


				Noble
				Holding			Noble
	Noble			(Subsidiary			Drilling			Other			Consolidating
	(Guarantor)			Guarantor)			(Issuer)			Subsidiaries			Adjustments			Total
CASH FLOWS FROM OPERATING ACTITIVIES
Net income	$	45,530		$	29,850		$	37,350		$	53,797		$	(120,997	)	$	45,530
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		—			—			1,442			54,935			—			56,377
Deferred income tax provision		—			—			—			3,302			—			3,302
Loss on sales of marketable securities		—			—			—			48			—			48
Equity in income of joint venture		—			—			—			(1,072	)		—			(1,072	)
Distributions received from joint venture		—			—			—			1,109			—			1,109
Compensation expense from stock-based plans		1,418			—			—			—			—			1,418
Equity earnings in affiliates		(44,081	)		(37,350	)		(39,566	)		—			120,997			—
Other		—			—			579			(1,194	)		—			(615	)
Changes in current assets and liabilities:
Accounts receivable		—			—			1,017			1,061			—			2,078
Accounts receivable from affiliates		(12,938	)		—			46,294			—			(33,356	)		—
Other current assets		16,724			—			433			(33,159	)		—			(16,002	)
Accounts payable		—			—			(301	)		(13,275	)		—			(13,576	)
Accounts payable to affiliates		—			4,693			—			(38,049	)		33,356			—
Other current liabilities		(210	)		7,542			(7,322	)		(7,062	)		—			(7,052	)

Net cash provided by operating activities		6,443			4,735			39,926			20,441			—			71,545


CASH FLOWS FROM INVESTING ACTIVITIES
Acquisitions and related capital upgrades		—			—			—			(22,309	)		—			(22,309	)
Other capital expenditures		—			—			39			(28,977	)		—			(28,938	)
Deferred repair and maintenance expenditures		—			—			35			(12,186	)		—			(12,151	)
Proceeds from sales of property and equipment		—			—			—			678			—			678
Repayments from affiliate		—			—			—			4,735			(4,735	)		—
Investment in marketable securities		—			—			—			(17,129	)		—			(17,129	)
Proceeds from sales and maturities of marketable securities		23,600			—			—			37,629			—			61,229

Net cash provided by (used for) investing activities		23,600			—			74			(37,559	)		(4,735	)		(18,620	)


CASH FLOWS FROM FINANCING ACTIVITIES
Payments of borrowings on credit facility		—			—			(40,000	)		—			—			(40,000	)
Payments of other long-term debt		—			(4,735	)		—			(2,036	)		4,735			(2,036	)
Proceeds from issuance of ordinary shares		40,790			—			—			—			—			40,790
Payment of dividends		(2,710	)		—			—			—			—			(2,710	)

Net cash provided by (used for) financing activities		38,080			(4,735	)		(40,000	)		(2,036	)		4,735			(3,956	)

INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS		68,123			—			—			(19,154	)		—			48,969
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD		8,130			—			—			50,660			—			58,790

CASH AND CASH EQUIVALENTS, END OF PERIOD	$	76,253		$	—		$	—		$	31,506		$	—		$	107,759

FORM 10-Q

NOBLE CORPORATION AND OTHER SUBSIDIARIES
CONSOLIDATING STATEMENT OF CASH FLOWS
Three Months Ended March 31, 2004
(In thousands)
(Unaudited)


				Noble
				Holding			Noble
	Noble			(Subsidiary			Drilling			Other			Consolidating
	(Guarantor)			Guarantor)			(Issuer)			Subsidiaries			Adjustments			Total
CASH FLOWS FROM OPERATING ACTITIVIES
Net income	$	28,260		$	12,347		$	20,109		$	25,728		$	(58,184	)	$	28,260
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		—			—			1,445			48,982			—			50,427
Deferred income tax provision		—			—			—			1,200			—			1,200
Loss on sales of marketable securities		—			—			—			44			—			44
Equity in income of joint venture		—			—			—			(998	)		—			(998	)
Compensation expense from stock-based plans		1,086			—			—			—			—			1,086
Equity earnings in affiliates		(16,556	)		(20,109	)		(21,519	)		—			58,184			—
Other		—			—			1,029			(1,967	)		—			(938	)
Changes in current assets and liabilities:
Accounts receivable		—			—			(4,949	)		8,956			—			4,007
Accounts receivable from affiliates		1,259			—			8,967			—			(10,226	)		—
Other current assets		(464	)					(468	)		(4,397	)		—			(5,329	)
Accounts payable		—			—			(1,136	)		(13,536	)		—			(14,672	)
Accounts payable to affiliates		—			12,295			—			(22,521	)		10,226			—
Other current liabilities		1,532			(219	)		(3,093	)		245			—			(1,535	)

Net cash provided by operating activities		15,117			4,314			385			41,736			—			61,552


CASH FLOWS FROM INVESTING ACTIVITIES
Acquisitions and related capital upgrades		—			—			—			—			—			—
Other capital expenditures		—			—			(96	)		(13,775	)		—			(13,871	)
Deferred repair and maintenance expenditures		—			—			(289	)		(9,112	)		—			(9,401	)
Repayments from joint venture		—			—			—			1,024			—			1,024
Repayments from affiliates		4,314			—			—			—			(4,314	)		—
Investment in marketable securities		(51,500	)		—			—			(18,047	)		—			(69,547	)
Proceeds from sales and maturities of marketable securities		31,000			—			—			26,121			—			57,121

Net cash used for investing activities		(16,186	)		—			(385	)		(13,789	)		(4,314	)		(34,674	)


CASH FLOWS FROM FINANCING ACTIVITIES
Payment of other long-term debt		—			(4,314	)		—			(18,883	)		4,314			(18,883	)
Proceeds from issuance of ordinary shares		23,175			—			—			—			—			23,175

Net cash provided by (used for) financing activities		23,175			(4,314	)		—			(18,883	)		4,314			4,292


INCREASE IN CASH AND CASH EQUIVALENTS		22,106			—			—			9,064			—			31,170

CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD		33,991			—			—			28,576			—			62,567

CASH AND CASH EQUIVALENTS, END OF PERIOD	$	56,097		$	—			—		$	37,640		$	—		$	93,737

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 domestic and international offshore contract drilling and engineering and consulting services. Although these segments are generally influenced by the same economic factors, each represents a distinct service to the oil and gas industry. Each of our drilling rigs is considered by us to be an operating segment within our domestic and international offshore contract drilling services reportable segments, and these operating segments are aggregated to comprise our domestic and international contract drilling services reportable segments in accordance with SFAS No. 131, Disclosure about Segments of an Enterprise and Related Information (“SFAS 131”).

Our international contract drilling services segment conducts operations in the Middle East, Mexico, the North Sea, Brazil, West Africa, India and the Mediterranean Sea. Our domestic contract drilling services segment conducts operations in the U.S. Gulf of Mexico. Our engineering and consulting services segment, as represented by our Noble Technology Services Division, provides drilling products and drilling-related software programs, well site management, project management, technical services, and operations support for our downhole technology tools.

We evaluate the performance of our operating segments based on operating revenues and net income. Summarized financial information of our reportable segments for the three months ended March 31, 2005 and 2004 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.


	International		Domestic		Engineering
	Contract		Contract		&
	Drilling		Drilling		Consulting
	Services		Services		Services			Other		Total
Three Months Ended March 31, 2005

Revenues from external customers	$	214,901	$	60,811	$	11,107		$	23,506	$	310,325
Depreciation and amortization		44,343		11,013		98			923		56,377
Operating costs and expenses		171,894		46,169		12,405			21,732		252,200
Equity in income of unconsolidated subsidiaries		1,072		—		—			—		1,072
Net income (loss)		35,159		8,144		(1,094	)		3,321		45,530
Total assets		2,128,752		1,001,405		39,229			164,074		3,333,460

Three Months Ended March 31, 2004

Revenues from external customers	$	158,034	$	68,200	$	6,046		$	13,153	$	245,433
Depreciation and amortization		36,489		12,877		171			890		50,427
Operating costs and expenses		136,660		49,368		7,142			13,421		206,591
Equity in income of unconsolidated subsidiaries		998		—		—			—		998
Net income (loss)		11,204		16,170		(857	)		1,743		28,260
Total assets		1,614,640		1,256,350		35,743			305,428		3,212,161

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.

We have identified factors that could cause actual plans or results to differ materially from those included in any forward-looking statements. These factors include, but are not limited to, the following:

•   volatility in crude oil and natural gas prices;

•   changes in our customers’ drilling programs or budgets due to their own internal corporate events, changes in the markets and prices for oil and gas, or shifts in the relative strengths of various geographic drilling markets brought on by things such as a general economic slowdown, or regional or worldwide recession, any of which could result in deterioration in demand for our drilling services;

•   our inability to execute any of our business strategies;

•   cost overruns or delays in shipyard repair, maintenance, conversion or upgrade projects;

•   changes in tax laws, tax treaties or tax regulations or the interpretation or enforcement thereof, including taxing authorities not agreeing with our assessment of the effects of such laws, treaties and regulations;

•   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 the rate of economic growth in the U.S. or in other major international economies;

•   political and economic conditions in markets where we from time to time operate;

•   adverse weather (such as hurricanes and monsoons) and seas;

•   operational risks (such as blowouts, fires and loss of production);

•   changes in oil and gas drilling technology or in our competitors’ drilling rig fleets that could make our drilling rigs less competitive or require major capital investment to keep them competitive;

•   costs and effects of unanticipated legal and administrative proceedings;

•   limitations on our insurance coverage or our inability to obtain or maintain insurance coverage at rates and with deductible amounts that we believe are commercially reasonable;

•   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;

•   requirements and potential liability imposed by governmental regulation of the drilling industry (including environmental regulation);

•   acts of war or terrorism;

FORM 10-Q

• significant changes in trade, monetary or fiscal policies worldwide, including changes in interest rates; and

• currency fluctuations between the U.S. dollar and other currencies.

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.

EXECUTIVE OVERVIEW

We are a leading provider of diversified services for the oil and gas industry. We perform contract drilling services with our fleet of 60 offshore drilling units located in key markets worldwide. This fleet consists of 13 semisubmersibles (including five Noble EVA-4000^TM semisubmersibles and four ultra-deepwater hulls, including the Noble Clyde Boudreaux), three dynamically positioned drillships, 41 jackup rigs and three submersibles. Approximately 80 percent of the fleet is currently deployed in international markets, principally including the Middle East, Mexico, the North Sea, Brazil, West Africa, India and the Mediterranean Sea. We provide technologically advanced drilling-related products and services designed to create value for our customers. We also provide labor contract drilling services, well site and project management services, and engineering services.

Our results of operations depend on the levels of activity in offshore oil and gas exploration, development and production in markets worldwide. Historically, oil and gas prices and market expectations of potential changes in these prices have significantly affected that level of activity. Generally speaking, higher oil and natural gas prices or our customers’ expectations of higher prices result in a greater demand for our services. These prices are extremely volatile. Due to the continuation of favorable oil prices in 2005, drilling activity in certain international markets, which are influenced more by oil prices than natural gas prices, was generally stronger in the current quarter as compared to the first quarter of 2004. As a result, our operating days in the North Sea, West Africa and the Middle East improved in the first quarter of 2005 versus the first quarter of 2004.

Domestic natural gas prices during the first quarter of 2005 averaged $6.27 per thousand cubic feet (source: average Henry Hub closing bidweek price). Natural gas prices in the current quarter were higher than in the same quarter of the previous year which averaged $5.69, and significantly higher than historical prices. In response to the higher natural gas prices, operators have increased their drilling activities in the U.S. Gulf of Mexico in water depths applicable to jackups and submersibles in the fourth quarter of 2004. Drilling activity levels in water depths applicable to semisubmersibles improved significantly in the current quarter compared to the first quarter of 2004.

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. We believe that a significant decrease from recent historical average oil and gas prices could depress the level of exploration and production activity and result in a corresponding decline in demand for our services.

For the foregoing reasons, we cannot predict the future level of demand for our drilling services or future conditions in the offshore contract drilling industry.

Our long-standing business strategy continues to be the active expansion of our international offshore drilling and deepwater capabilities through acquisitions, rig upgrades and modifications, and the deployment of assets in important geological areas.

Since the beginning of 2000, we have mobilized nine jackup rigs and one semisubmersible from the U.S. Gulf of Mexico to international markets. In addition, since the beginning of 2000 we have added nine jackups to our international fleet through acquisitions. We continue to evaluate other opportunities to deploy units in our fleet, including certain deepwater units, in important geological areas worldwide.

Both the level of drilling activity and the number of announced discoveries and related development programs in water depths greater than 5,000 feet have increased substantially in recent years, thus increasing the demand for rigs capable of drilling in these water depths. As such, in recent years we have focused on increasing

FORM 10-Q

the number of rigs in our fleet capable of ultra-deepwater offshore drilling. Since the beginning of 2000, we have added two deepwater semisubmersibles to our fleet and have acquired two additional semisubmersible baredeck hulls.

RESULTS OF OPERATIONS

For the Three Months Ended March 31, 2005 and 2004

General

Net income for the three months ended March 31, 2005 (the “Current Quarter”) was $45,530,000, or $0.33 per diluted share, on operating revenues of $310,325,000, compared to net income for the three months ended March 31, 2004 (the “Comparable Quarter”) of $28,260,000, or $0.21 per diluted share, on operating revenues of $245,433,000.

The following table sets forth operating revenues and operating costs and expenses for each of our reportable segments (for additional information regarding our reportable segments, see Note 10 of our accompanying consolidated financial statements) for the periods indicated:


	International		Domestic
	Contract		Contract		Engineering
	Drilling		Drilling		& Consulting
	Services		Services		Services		Other		Total
			(In thousands)
Three Months Ended March 31, 2005

Operating Revenues:
Contract drilling services	$	205,162	$	57,242	$	—	$	—	$	262,404
Reimbursables		9,334		3,336		7,026		4,806		24,502
Labor contract drilling services		—		—		—		18,141		18,141
Engineering, consulting and other		405		233		4,081		559		5,278

	$	214,901	$	60,811	$	11,107	$	23,506	$	310,325


Operating Costs and Expenses:
Contract drilling services	$	114,418	$	29,604	$	—	$	—	$	144,022
Reimbursables		7,912		3,205		7,038		4,751		22,906
Labor contract drilling services		—		—		—		15,189		15,189
Engineering, consulting and other		152		172		5,035		529		5,888
Depreciation and amortization		44,343		11,013		98		923		56,377
Selling, general and administrative		5,069		2,175		234		340		7,818

	$	171,894	$	46,169	$	12,405	$	21,732	$	252,200

FORM 10-Q


	International			Domestic
	Contract			Contract		Engineering
	Drilling			Drilling		& Consulting
	Services			Services		Services		Other		Total
				(In thousands)
Three Months Ended March 31, 2004

Operating Revenues:
Contract drilling services	$	153,975		$	64,608	$	—	$	—	$	218,583
Reimbursables		3,969			2,950		541		2,589		10,049
Labor contract drilling services		—			—		—		8,391		8,391
Engineering, consulting and other		90			642		5,505		2,173		8,410

	$	158,034		$	68,200	$	6,046	$	13,153	$	245,433


Operating Costs and Expenses:
Contract drilling services	$	93,003		$	31,320	$	—	$	—	$	124,323
Reimbursables		3,143			2,883		554		2,497		9,077
Labor contract drilling services		—			—		—		6,806		6,806
Engineering, consulting and other		(860	)		243		6,107		2,607		8,097
Depreciation and amortization		36,489			12,877		171		890		50,427
Selling, general and administrative		4,885			2,045		310		621		7,861

	$	136,660		$	49,368	$	7,142	$	13,421	$	206,591

Rig Utilization, Operating Days and Average Dayrates

The following table sets forth the average rig utilization, operating days and average dayrates for our rig fleet for the three months ended March 31, 2005 and 2004:


	Average Rig
	Utilization (1)						Operating Days (2)				Average Dayrate
	Three Months Ended						Three Months Ended				Three Months Ended
	March 31,						March 31,				March 31,
	2005			2004			2005		2004		2005		2004
International (3):
Jackups		94	%		80	%		3,086		2,557	$	51,158	$	49,962
Semisubmersibles — >6,000’(4)		100	%		100	%		180		91	$	145,047	$	130,510
Semisubmersibles — <6,000’(5)		86	%		100	%		77		91	$	62,410	$	40,147
Drillships		67	%		67	%		180		182	$	90,963	$	58,755

Total International		92	%		80	%		3,523		2,921	$	58,235	$	52,713


Domestic (6):
Jackups		100	%		95	%		180		173	$	55,819	$	41,292
Semisubmersibles — >6,000’(4)		75	%		100	%		270		455	$	104,426	$	110,322
Semisubmersibles — < 6,000’(5)		100	%		32	%		180		58	$	53,727	$	38,103
Submersibles		100	%		79	%		270		215	$	34,549	$	23,523

Total Domestic		91	%		83	%		900		901	$	63,602	$	71,707

(1)		Information reflects our policy of reporting on the basis of the number of actively marketed rigs in our fleet. Percentages reflect the results of rigs only during the period in which they are owned or operated by us.

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

(3)		“International” encompasses contract drilling services conducted in the Middle East, Mexico, the North Sea, Brazil, West Africa, India and the Mediterranean Sea.

(4)		These units have water depth ratings of 6,000 feet or greater depending on the unit.

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

(6)		“Domestic” encompasses contract drilling services conducted in the U.S. Gulf of Mexico.

FORM 10-Q

International Contract Drilling Services

The following table sets forth the operating revenues and the operating costs and expenses for our international contract drilling services for the three months ended March 31, 2005 and 2004:


					Operating Costs
	Operating Revenues				and Expenses
	Three Months Ended				Three Months Ended
	March 31,				March 31,
	2005		2004		2005		2004
	(In thousands)
Contract drilling services	$	205,162	$	153,975	$	114,418	$	93,003
Reimbursables (1)		9,334		3,969		7,912		3,143
Labor contract drilling services		—		—		—		—
Engineering, consulting and other		405		90		152		(860	)
Depreciation and amortization		N/A		N/A		44,343		36,489
Selling, general and administrative		N/A		N/A		5,069		4,885

Total	$	214,901	$	158,034	$	171,894	$	136,660

(1)

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

Operating Revenues. International contract drilling services revenues increased $51,187,000 due to additional operating days in West Africa and the Middle East and higher average dayrates in Brazil and the North Sea. These items were partially offset by lower utilization in Mexico. We had an additional 367 operating days in West Africa on our jackups due to improved demand in Nigeria, which traditionally has the largest concentration of drilling rigs in West Africa. Demand in Nigeria in 2002 and 2003 declined due to political unrest attributable to elections and strikes. In the Comparable Quarter, four of the six rigs in West Africa were stacked. Improved demand over the course of 2004 and continuing into 2005 has resulted in 100 percent utilization in the Current Quarter and increased revenues by approximately $18,000,000. In addition, revenues increased by approximately $12,000,000 as we deployed the Noble Homer Ferrington semisubmersible to our West Africa division in July 2004 from the U.S. Gulf of Mexico for a two-year contract that commenced in November 2004. In the Middle East, we operated an additional 228 days due primarily to the acquisitions of the Noble Cees van Diemen and Noble David Tinsley in July 2004 and October 2004, respectively, and additional operating days on the Noble Dick Favor, Noble Gus Androes and Noble Gene House partially offset by lower operating days on the Noble George McLeod. The additional operating days in our Middle East division resulted in additional revenues of approximately $11,000,000. The average dayrate for our drilling rigs in Brazil increased 37 percent from the Comparable Quarter. Improved market conditions in the North Sea resulted in a 12 percent increase in average dayrate for our drilling rigs in the region. Operating days in Mexico decreased 94 days primarily due to the mobilization of the Noble Lewis Dugger from Mexico to the U.S. Gulf of Mexico for upgrades and refurbishments following the completion of its contract in early January 2005. Upon completion of this shipyard work, the rig will return to work in Mexico for Pemex under a two-year contract that is expected to commence in May 2005.

Operating Costs and Expenses. International contract drilling services expenses increased $21,415,000 primarily due to additional operating days in our Middle East and West Africa divisions. The increase was largely attributable to the acquisition of the Noble Cees van Diemen and Noble David Tinsley jackup rigs, which are both in our Middle East division, and the mobilization of the Noble Homer Ferrington from the U.S. Gulf of Mexico to West Africa. Also, we incurred additional costs attributable to our shipyard project in Brazil on the Noble Roger Eason drillship. This drillship commenced a 700-day contract for Petrobras in April 2005 at a dayrate of $96,250. We also experienced labor increases in all regions. Depreciation and amortization expense in our international contract drilling services segment increased $7,854,000 due mainly to the acquisition of the Noble Cees van Diemen and Noble David Tinsley and the transfer of the Noble Homer Ferrington to our West Africa division.

FORM 10-Q

Domestic Contract Drilling Services

The following table sets forth the operating revenues and the operating costs and expenses for our domestic contract drilling services for the three months ended March 31, 2005 and 2004:


					Operating Costs
	Operating Revenues				and Expenses
	Three Months Ended				Three Months Ended
	March 31,				March 31,
	2005		2004		2005		2004
	(In thousands)
Contract drilling services	$	57,242	$	64,608	$	29,604	$	31,320
Reimbursables (1)		3,336		2,950		3,205		2,883
Labor contract drilling services		—		—		—		—
Engineering, consulting and other		233		642		172		243
Depreciation and amortization		N/A		N/A		11,013		12,877
Selling, general and administrative		N/A		N/A		2,175		2,045

Total	$	60,811	$	68,200	$	46,169	$	49,368

(1)

Operating Revenues. Domestic contract drilling services revenues decreased $7,366,000 due to fewer operating days and lower average dayrate for our semisubmersibles, partially offset by additional operating days and higher average dayrate on our jackups. Operating days for our semisubmersibles decreased 63 days primarily as a result of the Noble Paul Romano being in the shipyard for the entire Current Quarter and the mobilization of the Noble Homer Ferrington to West Africa. Average dayrates were lower for our deepwater semisubmersibles because in 2004 two of these rigs were in the process of completing five-year contracts at higher dayrates. These items were partially offset by additional operating days on the Noble Therald Martin and Noble Lorris Bouzigard.

Operating Costs and Expenses. Domestic contract drilling services expenses decreased $1,716,000 primarily due to the transfer of the Noble Homer Ferrington semisubmersible to our West Africa division in July 2004. Depreciation and amortization expense also decreased $1,864,000, primarily as a result of this mobilization.

FORM 10-Q

Engineering & Consulting Services

The following table sets forth the operating revenues and the operating costs and expenses for our engineering and consulting services for the three months ended March 31, 2005 and 2004:


					Operating Costs
	Operating Revenues				and Expenses
	Three Months Ended				Three Months Ended
	March 31,				March 31,
	2005		2004		2005		2004
	(In thousands)
Contract drilling services	$	—	$	—	$	—	$	—
Reimbursables (1)		7,026		541		7,038		554
Labor contract drilling services		—		—		—		—
Engineering, consulting and other		4,081		5,505		5,035		6,107
Depreciation and amortization		N/A		N/A		98		171
Selling, general and administrative		N/A		N/A		234		310

Total	$	11,107	$	6,046	$	12,405	$	7,142

(1)

Operating Revenues. Excluding reimbursables, operating revenues for our engineering and consulting services segment decreased $1,424,000 due primarily to a license sale for our OptiDrill^TMdrilling efficiency technology by our Noble Engineering & Development Limited subsidiary in the Comparable Quarter, partially offset by additional project management engagements conducted by our Triton Engineering Services Company (“Triton”) subsidiary in the Current Quarter. The increase in reimbursables was attributable to a significant project management engagement by Triton, which was completed in March 2005.

Operating Costs and Expenses. Excluding reimbursables, operating costs and expenses for our engineering and consulting services segment decreased $1,072,000 due to the completion of a project in February 2005 for our Noble Technology Services Division.

Other

The following table sets forth the operating revenues and the operating costs and expenses for our other services for the three months ended March 31, 2005 and 2004:


					Operating Costs
	Operating Revenues				and Expenses
	Three Months Ended				Three Months Ended
	March 31,				March 31,
	2005		2004		2005		2004
	(In thousands)
Contract drilling services	$	—	$	—	$	—	$	—
Reimbursables (1)		4,806		2,589		4,751		2,497
Labor contract drilling services		18,141		8,391		15,189		6,806
Engineering, consulting and other		559		2,173		529		2,607
Depreciation and amortization		N/A		N/A		923		890
Selling, general and administrative		N/A		N/A		340		621

Total	$	23,506	$	13,153	$	21,732	$	13,421

(1)

Operating Revenues. Revenues from our labor contract drilling services increased $9,750,000 due to additional operating days in the North Sea, mostly attributable to new labor contracts with Apache Corporation on

FORM 10-Q

three platforms, ChevronTexaco on one platform and British Petroleum on one platform. Reimbursables were also favorably impacted by the new labor contracts.

Operating Costs and Expenses. Excluding reimbursables, operating costs and expenses for our other services increased $8,383,000 due to the additional labor contract operating days in the North Sea.

Other Items

Selling, General and Administrative Expenses. Selling, general and administrative expenses were consistent between the Current and Comparable Quarters.

Interest Expense. Interest expense decreased $3,133,000 due to $2,300,000 interest capitalized on the Noble Clyde Boudreaux and the continued retirement of debt since the beginning of the Comparable Quarter. Since January 1, 2004, we have made principal repayments of long-term debt totaling $119,969,000 including $42,036,000 in the Current Quarter.

Other, net. Other, net increased $849,000 attributable primarily to additional interest income earned on our cash and investments in marketable securities due to higher interest rates in 2005 than in 2004.

Income Tax Provision. Income tax provision increased $5,995,000 due primarily to higher pre-tax earnings.

LIQUIDITY AND CAPITAL RESOURCES

Overview

Our principal capital resource in the Current Period was net cash provided by operating activities of $71,545,000, which compared to $61,552,000 in the Comparable Period. Net income plus depreciation and amortization and deferred income tax provision in the Current Period was $25,322,000 more than the Comparable Period. Our change in working capital (excluding cash and cash equivalents) was $17,023,000 more in the Current Period than the Comparable Period.

We had working capital, including cash, of $255,821,000 and $211,117,000 at March 31, 2005 and December 31, 2004, respectively. Total debt as a percentage of total debt plus shareholders’ equity decreased to 16 percent at March 31, 2005 from 18 percent at December 31, 2004. At March 31, 2005, we had cash and cash equivalents of $107,759,000, $88,628,000 of marketable debt securities and $220,780,000 of funds available under our bank credit facility.

We did not repurchase any of our ordinary shares during the Current Quarter. However, during 2004, we repurchased 1,087,000 of our ordinary shares at an average price of $36.54 per ordinary share for a total cost of $39,714,000. Additional repurchases, if any, may be made on the open market or in private transactions at prices determined by us. Share repurchases made in 2004, 2003 and 2002 were effected pursuant to the share repurchase program which our board of directors authorized and adopted and which we announced on January 31, 2002. The program authorization covers an aggregate of 15,000,000 ordinary shares. As of April 29, 2005, 9,162,000 shares remained available under this authorization.

We expect total cash fundings in 2005 to our international and domestic pension plans to approximate $6,000,000, $250,000 of which was paid during the three months ended March 31, 2005.

Capital Expenditures

Capital expenditures totaled $51,247,000 and $13,871,000 for the Current Quarter and Comparable Quarter, respectively. Included in capital expenditures for the Current Quarter is $3,814,000 for the upgrade of the Noble Clyde Boudreaux semisubmersible in preparation for its commitment for a long-term contract with Shell Exploration & Production Company estimated to begin in the third quarter of 2006 and $8,482,000 for upgrade work on the Noble Mark Burns.

Deferred repair and maintenance expenditures totaled $12,151,000 and $9,401,000 for the Current Quarter and Comparable Quarter, respectively. We expect our capital expenditures and deferred repair and maintenance expenditures for the remainder of 2005 will aggregate approximately $250,000,000 and $70,000,000, respectively.

FORM 10-Q

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 Corporation (“Noble Drilling”), an indirect, wholly-owned subsidiary of Noble Corporation (“Noble”), has in place a $300,000,000 bank credit agreement (the “Credit Agreement”), which extends through November 30, 2009. Noble and one of its wholly-owned subsidiaries, Noble Holding (U.S.) Corporation, have unconditionally guaranteed the performance of Noble Drilling under the Credit Agreement. During the Current Quarter, we repaid $40,000,000 of the outstanding borrowings under the Credit Agreement. At March 31, 2005, we had outstanding borrowings and outstanding letters of credit of $60,000,000 and $19,220,000, respectively, under the Credit Agreement, with $220,780,000 remaining available thereunder. Additionally, at March 31, 2005, we had other letters of credit, customs bonds and third-party corporate guarantees totaling $47,697,000 and performance bonds totaling $41,386,000 supported by surety bonds.

During the Current Quarter, our debt decreased from $511,649,000, including current maturities of $8,361,000, at December 31, 2004 to $469,616,000, including current maturities of $8,510,000 at March 31, 2005, due to debt repayments during the Current Quarter of $42,036,000, including the repayment of $40,000,000 of borrowings under the Credit Agreement. At March 31, 2005 and December 31, 2004, we had no off-balance sheet debt.

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 December 2004, the FASB issued SFAS 123 (revised 2004), Share-Based Payment (“SFAS 123 (revised 2004)”). SFAS 123 (revised 2004) is a revision to SFAS No. 123, Accounting for Stock-Based Compensation (“SFAS 123”), and supersedes APB Opinion No. 25, Accounting for Stock Issued to Employees (“APB 25”). SFAS 123 (revised 2004) establishes standards for accounting for exchanges of an entity’s equity instruments for goods or services, focusing primarily on transactions in which an entity obtains employee services in share-based payment transactions. The statement requires that entities measure the cost of employee services received in exchange for an award of equity instruments based on the grant-date fair value of the award and that the cost is recognized over the period in which the employee services are performed, which is usually the equity instrument’s vesting period. SFAS 123 (revised 2004) eliminates the alternative allowed under SFAS 123 under which equity instruments could be measured at their intrinsic value, as prescribed by APB 25, with only pro forma disclosure in the entity’s notes to its financial statements of the impact on net income and earnings per share had the equity instruments been measured at fair value. For public companies (other than small business issuers) with calendar fiscal years, SFAS 123 (revised 2004) required adoption as of the beginning of the third quarter of 2005. On April 14, 2005, the Securities and Exchange Commission announced the adoption of a new rule that amends the compliance dates for SFAS 123 (revised 2004), and as a result, such public companies, including Noble, will not be required to adopt SFAS 123 (revised 2004) until the first quarter of 2006.

FORM 10-Q

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. Under the Noble Drilling Corporation 401(k) Savings Restoration Plan, certain highly compensated employees may elect to defer compensation into the plan and invest among several alternatives, primarily mutual funds. Any change in the fair value of these investments would result in a comparable change in the deferred compensation plan obligation.

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 March 31, 2005, there was $60,000,000 of outstanding borrowings under our Credit Agreement. An immediate change of one percent in the interest rate would cause a $600,000 change in interest expense on an annual basis.

Although we conduct business internationally, a substantial majority of the value of our foreign transactions are denominated in U.S. Dollars. Generally, we structure our drilling contracts in U.S. Dollars to mitigate our exposure to fluctuations in foreign currencies. In certain international markets, a part of the revenues received under our drilling contracts is denominated in the applicable foreign currency based on an estimate of the local labor and other costs we expect to pay in such foreign currency to perform the contract. Other than assets, liabilities and financial instruments associated with this contracting strategy to offset contract revenues with costs payable in the same foreign currency, and with the hedging activities described in the following paragraph, we do not currently have any significant assets, liabilities or financial instruments that are sensitive to foreign currency exchange rates.

We periodically enter into derivative instruments to manage our exposure to fluctuations in interest rates and foreign currency exchange rates, and we may conduct hedging activities in future periods to mitigate such exposure. Our North Sea operations have a significant amount of their cash operating expenses payable in either the Euro or British Pound. To reduce our exposure to fluctuations in these currencies during 2005, we entered into forward contracts in February and March 2005 to purchase 24,780,000 Euros and 18,199,000 British Pounds, respectively, for the period from April 2005 through March 2006. These forward contracts represented approximately 72 percent of our forecasted Euro and British Pound requirements for 2005 after the respective dates on which we entered into the forward contracts. These forward contracts are being accounted for as cash flow hedges under SFAS No. 133, Accounting for Derivative Instruments and Hedging Activities, as amended by SFAS No. 138, Accounting for Certain Derivative Instruments and Certain Hedging Activities (an amendment of FASB Statement No. 133), and SFAS No. 149, Amendment of Statement 133 on Derivative Instruments and Hedging Activities. The cumulative net unrealized gain on these forward contracts is included in “Accumulated other comprehensive income” in our Consolidated Balance Sheet at March 31, 2005. We did not recognize a gain or loss due to hedge ineffectiveness in our Consolidated Statements of Income for the three months ended March 31, 2005 related to these forward contracts. See Note 8 to our accompanying consolidated financial statements for additional information on the balance of the net unrealized gain on these forward contracts and the related activity for the three months ended March 31, 2005.

ITEM 4. CONTROLS AND PROCEDURES

Noble’s Chairman, Chief Executive Officer and President, James C. Day, and Noble’s Senior Vice President, Chief Operating Officer and Chief Financial Officer, Mark A. Jackson, have overseen and participated in an evaluation of the Company’s disclosure controls and procedures as of the end of the period covered by this report. On the basis of this evaluation, Mr. Day and Mr. Jackson have concluded that the Company’s disclosure controls and procedures are effective. The Company’s disclosure controls and procedures are designed to ensure that information required to be disclosed by the Company in the reports that it files with or submits to the U.S. Securities and Exchange Commission is recorded, processed, summarized and reported within the time periods specified in the Commission’s rules and forms.

There were no changes in the Company’s internal control over financial reporting that occurred during the quarter ended March 31, 2005 that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

FORM 10-Q

PART II. OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

See Part I. Item 3. “Legal Proceedings” included in the Annual Report on Form 10-K of Noble for the year ended December 31, 2004 for a discussion of other matters for which there were no material developments since the filing of the 2004 Form 10-K.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

(a)   The annual general meeting of members of Noble was held in Houston, Texas, at 10:00 a.m., local time, on April 28, 2005.

(b)   Proxies were solicited by the Board of Directors of Noble pursuant to Regulation 14A under the Securities Exchange Act of 1934. There was no solicitation in opposition to the Board of Directors’ nominees for election as directors as listed in the proxy statement and all of such nominees were duly elected. The terms of Michael A. Cawley, Luke R. Corbett, James C. Day, Marc E. Leland and Jack E. Little, each an incumbent director, continued following the annual general meeting.

(c)   Out of a total of 135,569,061 ordinary shares of Noble outstanding and entitled to vote at the annual general meeting, 121,743,560 shares were present in person or by proxy, representing approximately 90 percent of the outstanding shares. Five matters, as fully described in the proxy statement for the annual general meeting, were voted on by members. The first matter voted on was the election of directors to serve three-year terms on the Board of Directors of Noble. The results of voting were as follows:


		Number of Shares
	Number of Shares	WITHHOLDING AUTHORITY
	Voting FOR Re-election	to Vote for Re-election
Nominee for Re-election as Director	as Director	as Director
Lawrence J. Chazen	119,919,484	1,824,076
Mary P. Ricciardello	120,804,063	939,497
William A. Sears	120,793,486	950,074

FORM 10-Q

The second matter voted on was a proposal to amend the Company’s articles of association to increase director retirement age. The results of the voting on this proposal were as follows:

For: 120,541,721 Against: 416,039 Abstain: 785,800

The third matter voted on was a proposal regarding the Amended and Restated Noble Corporation 1992 Nonqualified Stock Option Plan for Non-Employee Directors. The results of the voting on this proposal were as follows:

For: 87,908,393 Against: 23,126,152 Abstain: 1,236,970

The fourth matter voted on was a proposal to amend the Noble Corporation Equity Compensation Plan for Non-Employee Directors. The results of the voting on this proposal were as follows:

For: 100,714,334 Against: 10,310,762 Abstain: 1,246,419

The fifth matter voted on was the appointment of PricewaterhouseCoopers LLP as independent auditors for 2005. The results of the voting on this proposal were as follows:

For: 119,418,102 Against: 1,632,230 Abstain: 693,118

(d) Inapplicable.

ITEM 6. EXHIBITS

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


PART I	ITEM 1. FINANCIAL STATEMENTS
	ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
		Forward-Looking Statements
		Executive Overview
		Results of Operations
		Liquidity and Capital Resources
		Accounting Pronouncements
	ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
	ITEM 4. CONTROLS AND PROCEDURES
PART II	ITEM 1. LEGAL PROCEEDINGS
	ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
	ITEM 6. EXHIBITS
	SIGNATURES
	INDEX TO EXHIBITS
Special Resolution
Articles of Association of the Registration
Short Term Incentive Plan
Certification of James C. Day Pursuant to Rule 13a-14a/15d-14a
Certification of Mark A. Jackson Pursuant to Rule 13a-14a/15d-14a
Certification of James C. Day Pursuant to Section 906
Certification of Mark A. Jackson Pursuant to Section 906


		NOBLE CORPORATION

DATE: May 9, 2005	By:	/s/ Mark A. Jackson

		Mark A. Jackson,
			Senior Vice President, Chief Operating Officer, Chief Financial Officer, Treasurer and Controller (Principal Financial and Accounting Officer)


EXHIBIT
NUMBER		EXHIBIT
3.1		Special Resolution adopted by members on April 28, 2005 amending Article 54 of the Articles of Association of the Registrant.

3.2		Articles of Association of the Registrant as currently in effect.

10.1		Noble Corporation’s Short Term Incentive Plan (revised April 2005).

31.1		Certification of James C. Day Pursuant to SEC Rule 13a-14(a) or Rule 15d-14(a).

31.2		Certification of Mark A. Jackson Pursuant to SEC Rule 13a-14(a) or Rule 15d-14(a).

32.1*		Certification of James C. Day Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

32.2*		Certification of Mark A. Jackson Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

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	•	volatility in crude oil and natural gas prices;

	•	changes in our customers’ drilling programs or budgets due to their own internal corporate events, changes in the markets and prices for oil and gas, or shifts in the relative strengths of various geographic drilling markets brought on by things such as a general economic slowdown, or regional or worldwide recession, any of which could result in deterioration in demand for our drilling services;

	•	our inability to execute any of our business strategies;

	•	cost overruns or delays in shipyard repair, maintenance, conversion or upgrade projects;

	•	changes in tax laws, tax treaties or tax regulations or the interpretation or enforcement thereof, including taxing authorities not agreeing with our assessment of the effects of such laws, treaties and regulations;

	•	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 the rate of economic growth in the U.S. or in other major international economies;

	•	political and economic conditions in markets where we from time to time operate;

	•	adverse weather (such as hurricanes and monsoons) and seas;

	•	operational risks (such as blowouts, fires and loss of production);

	•	changes in oil and gas drilling technology or in our competitors’ drilling rig fleets that could make our drilling rigs less competitive or require major capital investment to keep them competitive;

	•	costs and effects of unanticipated legal and administrative proceedings;

	•	limitations on our insurance coverage or our inability to obtain or maintain insurance coverage at rates and with deductible amounts that we believe are commercially reasonable;

	•	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;

	•	requirements and potential liability imposed by governmental regulation of the drilling industry (including environmental regulation);

	•	acts of war or terrorism;

	•	significant changes in trade, monetary or fiscal policies worldwide, including changes in interest rates; and

	•	currency fluctuations between the U.S. dollar and other currencies.

	(a)	The annual general meeting of members of Noble was held in Houston, Texas, at 10:00 a.m., local time, on April 28, 2005.

	(b)	Proxies were solicited by the Board of Directors of Noble pursuant to Regulation 14A under the Securities Exchange Act of 1934. There was no solicitation in opposition to the Board of Directors’ nominees for election as directors as listed in the proxy statement and all of such nominees were duly elected. The terms of Michael A. Cawley, Luke R. Corbett, James C. Day, Marc E. Leland and Jack E. Little, each an incumbent director, continued following the annual general meeting.

	(c)	Out of a total of 135,569,061 ordinary shares of Noble outstanding and entitled to vote at the annual general meeting, 121,743,560 shares were present in person or by proxy, representing approximately 90 percent of the outstanding shares. Five matters, as fully described in the proxy statement for the annual general meeting, were voted on by members. The first matter voted on was the election of directors to serve three-year terms on the Board of Directors of Noble. The results of voting were as follows: