Unassociated Document

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-K

S	ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF

THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended December 31, 2007

£	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: 001-31306

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, Sugar Land, Texas 77478

(Address of principal executive offices) (Zip Code)

Registrant’s Telephone Number, Including Area Code: (281) 276-6100

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Name of each exchange on which registered
Ordinary Shares, Par Value $.10 Per Share	New York Stock Exchange

Securities registered pursuant to Section 12(g) of the Act:

None

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.

Yes S No £

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Exchange Act.

Yes £ No S

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 S No £

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. S

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

Large accelerated filer S

Accelerated filer £

Non-accelerated filer £

Smaller reporting company £

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes £ No S

As of June 29, 2007, the aggregate market value of the registrant’s ordinary shares held by non-affiliates of the registrant was $12.9 billion based on the closing sale price as reported on the New York Stock Exchange.

Number of Ordinary Shares outstanding as of February 15, 2008: 268,645,643

DOCUMENTS INCORPORATED BY REFERENCE

Listed below are documents parts of which are incorporated herein by reference and the part of this report into which the document is incorporated:

(1) Proxy statement for the 2008 annual general meeting of members scheduled to be held on May 1, 2008 - Part III

TABLE OF CONTENTS

PAGE
PART	ITEM 1. BUSINESS	1
I	General	1
	Business Strategy	1
	Business Development During 2007	2
	Drilling Contracts	3
	Offshore Drilling Operations	4
	Contract Drilling Services	4
	Labor Contracts	4
	Competition	4
	Governmental Regulation and Environmental Matters	5
	Employees	5
	Financial Information about Segments and Geographic Areas	5
	Available Information	5
	ITEM 1A. RISK FACTORS	6
	Risk Factors	6
	Forward-Looking Statements	12
	ITEM 1B. UNRESOLVED STAFF COMMENTS	12
	ITEM 2. PROPERTIES	13
	Drilling Fleet	13
	Semisubmersibles	13
	Dynamically Positioned Drillships	13
	Independent Leg Cantilevered Jackups	13
	Submersibles	13
	Drilling Fleet Table	14
	Facilities	17
	ITEM 3. LEGAL PROCEEDINGS	17
	ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS	17
	EXECUTIVE OFFICERS OF THE REGISTRANT	17
PART	ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES	18
II	ITEM 6.SELECTED FINANCIAL DATA	20
	ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS	20
	Executive Overview	21
	Internal Investigation	22
	Results of Operations	24
	Liquidity and Capital Resources	32
	Critical Accounting Policies and Estimates	35
	ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK	38
	ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA	40
	ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE	90
	ITEM 9A. CONTROLS AND PROCEDURES	90
	ITEM 9B. OTHER INFORMATION	90
PART	ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE	91
III	ITEM 11. EXECUTIVE COMPENSATION	91
	ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS	91
	ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE	91
	ITEM 14.PRINCIPAL ACCOUNTANT FEES AND SERVICES	91
PART	ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES	92
IV	SIGNATURES	93

PART I

ITEM 1.

BUSINESS.

GENERAL

Noble Corporation, a Cayman Islands exempted company limited by shares (“Noble” or, together with its consolidated subsidiaries, unless the context requires otherwise, the “Company”, “we”, “our” and words of similar import) is a leading offshore drilling contractor for the oil and gas industry. We perform contract drilling services with our fleet of 62 mobile offshore drilling units located worldwide. This fleet consists of 13 semisubmersibles, three dynamically positioned drillships, 43 jackups and three submersibles. The fleet count includes two F&G JU-2000E enhanced premium jackups and three deepwater dynamically positioned semisubmersibles under construction. As previously reported, we have secured customer contracts for these jackups and semisubmersibles. For additional information on the specifications of the fleet, see “Item 2. Properties. - Drilling Fleet”. Approximately 85 percent of our fleet is currently deployed internationally, principally in the Middle East, India, Mexico, the North Sea, Brazil, and West Africa. Our other operations include labor contract drilling services and engineering and consulting services.

Noble became the successor to Noble Drilling Corporation, a Delaware corporation (which we sometimes refer to as “Noble Drilling”) that was organized in 1939, as part of the 2002 internal corporate restructuring of Noble Drilling and its subsidiaries. Noble and its predecessors have been engaged in the contract drilling of oil and gas wells for others in the United States since 1921 and internationally during various periods since 1939.

BUSINESS STRATEGY

Our long-standing business strategy continues to be the active expansion of our worldwide offshore drilling and deepwater capabilities through acquisitions, upgrades and modifications, and the deployment of our drilling assets in important geological areas. We have also actively expanded our offshore drilling and deepwater capabilities in recent years through the construction of new rigs. In 2007 we continued execution of our active expansion strategy as indicated by the following developments and activities:

a long-term drilling contract was signed for a fourth newbuild ultra-deepwater semisubmersible, the Noble Jim Day;

construction was completed and we took delivery of the newbuild ultra-deepwater semisubmersible, the Noble Clyde Boudreaux, which is now operating under a long-term contract in the U.S. Gulf of Mexico;

construction continued on two other newbuild ultra-deepwater semisubmersibles, the Noble Dave Beard and Noble Danny Adkins, which are scheduled for delivery in the fourth quarter of 2008 and the first quarter of 2009, respectively;

we took delivery of our newbuild F&G JU-2000E enhanced premium independent leg cantilevered jackup, the Noble Roger Lewis, which is now operating under a long-term drilling contract in Qatar; and

construction continued on two F&G JU-2000E enhanced premium independent leg cantilevered jackups, the Noble Hans Deul and Noble Scott Marks, which are being constructed in China and are scheduled for delivery in the third quarter of 2008 and the second quarter of 2009, respectively.

Newbuild capital expenditures totaled $755 million in 2007 for our seven rigs under construction during the year.

The strategy we have followed of constructing rigs only with a customer’s contractual commitment for the rig is in contrast to the approach of a number of competitors in our industry. At the end of 2007, shipyards worldwide reportedly had received commitments to construct 79 jackups and 44 deepwater floaters, including Noble’s units. The majority of these jackup units reportedly do not have a contractual commitment from a customer and are referred to in the offshore drilling industry as “being built on speculation”. Our strategy on new construction has been to expand our drilling fleet with technologically advanced units only in connection with a long-term drilling contract that covers a substantial portion of our capital investment and provides an acceptable return on our capital employed.

We have developed personnel retention programs that we believe are important to allow us to attract and retain the skilled personnel required to maintain safe and efficient operations in our competitive industry. Because hydrocarbon exploration and development activities have increased in recent years, the drilling industry has experienced significant increases in dayrates for drilling services in most markets, a tightening market for drilling equipment, and a shortage of personnel. This environment has driven operating costs higher and magnified the importance of recruiting, training and retaining skilled personnel. In recognition of the importance of our offshore operations personnel in achieving a safety record that has consistently outperformed the offshore drilling industry sector and to retain such personnel, since 2005 we have implemented three separate key operations personnel retention programs. First, in 2005 we implemented an incentive program for personnel associated with our day-to-day rig-based operations. Under this program, we distribute incentive payments based upon individual performance over the three-year period 2006-2008. Second, in 2006 we implemented a program for shore-based and engineering personnel under which participants may receive payments over the four-year period 2006-2009. Third, in 2007 we implemented a follow-on to the first program for personnel associated with our day-to-day rig-based operations. Under the 2007 program, we will make performance-based payments over the three-year period 2008-2010. We believe these programs will complement our other short- and long-term incentive programs to attract and retain the skilled personnel we need to maintain safe and efficient operations.

Our active participation in the consolidation of the offshore drilling industry continues to be an important element of our growth strategy. Consolidation typically takes one of two forms: an individual transaction for specific mobile offshore drilling units or a transaction for an entire company. In the last five years, we have added six premium jackups to our fleet through individual rig transactions. From time to time, we evaluate other individual rig transactions and business combinations with other parties, and we will continue to consider business opportunities that promote our business strategy.

BUSINESS DEVELOPMENT DURING 2007

We entered into a drilling contract with a wholly-owned subsidiary of Marathon Oil Corporation for the Noble Jim Day, a Bingo 9000 design to be completed as a dynamically positioned (DP-3) unit capable of operating in water depths up to 12,000 feet with living accommodations for 200 persons. The unit's highly efficient operational design is similar to that of the Noble Danny Adkins, currently under construction in Singapore. The Noble Jim Day, currently under construction in Singapore, is expected to operate in the U.S. Gulf of Mexico at a dayrate of $515,000 commencing in the fourth quarter of 2009.

We entered into a drilling contract with Petróleos Mexicanos (“Pemex”) for the Noble Max Smith at a dayrate of $484,000. The Noble Max Smith will be the first mobile offshore rig capable of drilling in water depths up to 7,000 feet to operate offshore Mexico. The Noble Max Smith is expected to commence operating under its Pemex contract in the third quarter of 2008 after completion of its current contract in the U.S. Gulf of Mexico and time in the shipyard for regulatory inspections and contract preparation.

In response to the effects of Hurricanes Ivan, Katrina and Rita during the 2004 and 2005 hurricane seasons, the U.S. Minerals Management Service (“MMS”), working together with the U.S. Coast Guard and industry, has developed and issued interim guidelines for moored drilling rig fitness requirements in the U.S. Gulf of Mexico. We worked closely with the MMS in the formulation of these guidelines, which were designed to improve performance in the area of moored rig station-keeping during the environmental loading that may be experienced during hurricanes. The interim guidelines were in effect for the 2006 and 2007 hurricane seasons. Our recently developed Noble Category 5 (NC-5SM) mooring standard meets the interim guidelines. We upgraded the mooring systems on the Noble Paul Romano and the Noble Jim Thompson to the NC-5SM standard in 2007 and 2006, respectively. The mooring system on the Noble Amos Runner semisubmersible is scheduled to be upgraded in 2008.

In 2007, we continued to upgrade the capabilities of our deepwater fleet through the use of our patented aluminum alloy drilling riser (“AAR”), which is used in place of steel risers to connect floating drilling units to equipment on the seabed. We have equipped each of the newbuild semisubmersible rigs, including the Noble Clyde Boudreaux which went into service in the second quarter of 2007, with the AAR. The AAR can be manufactured cost competitively as compared to a steel riser, but the AAR weighs significantly less (up to 40 percent less) than the typical steel riser. This significant savings in weight allows us to extend the water depth specifications of our floating drilling units with less capital investment.

We completed the planned rationalization of our technology services division in the fourth quarter of 2007 with the sale of the rotary steerable system assets and intellectual property of our Noble Downhole Technology Ltd. (“Downhole Technology”) subsidiary. In the first quarter of 2007, we closed the operations of our Triton Engineering Services Inc. (“Triton”) subsidiary.

At January 11, 2008, our contracted backlog totaled approximately $6.7 billion with 39 of our rigs contracted for 2008 and thereafter. We anticipate that the primary terms of the current contracts on 21 of our rigs will expire at varying times in 2008. At January 11, 2008, approximately 81 percent of our available operating days were committed for 2008, approximately 40 percent for 2009 and approximately 15 percent for 2010, which percentages take into account new capacity under our newbuild rigs that we anticipate commencing operations during the 2008 through 2009 period.

DRILLING CONTRACTS

We typically employ each drilling unit under an individual contract. Although the final terms of the contracts result from negotiations with our customers, many contracts are awarded based upon competitive bidding. Our drilling contracts generally contain the following terms:

contract duration extending over a specific period of time or a period necessary to drill one or more wells;

provisions permitting early termination of the contract by the customer (i) if the unit is lost or destroyed or (ii) if operations are suspended for a specified period of time due to either breakdown of major equipment or “force majeure” events beyond our control and the control of the customer;

options in favor of the customer to extend the contract term, generally upon advance notice to us and usually (but not always) at mutually agreed upon rates;

payment of compensation to us (generally in U.S. Dollars although some customers, typically national oil companies, require a part of the compensation to be paid in local currency) on a “daywork” basis, so that we receive a fixed amount for each day (“dayrate”) that the drilling unit is operating under contract (a lower rate or no compensation is payable during periods of equipment breakdown and repair or adverse weather or in the event operations are interrupted by other conditions, some of which may be beyond our control);

payment by us of the operating expenses of the drilling unit, including labor costs and the cost of incidental supplies; and

provisions that allow us to recover certain cost increases from our customers (in contracts for approximately 67 percent of our rigs).

The terms of some of our drilling contracts permit early termination of the contract by the customer, without cause, generally exercisable upon advance notice to us and in some cases upon the making of an early termination payment to us. Certain of our drilling contracts with Pemex in Mexico, for example, contain provisions that allow early cancellation on 30 days or less notice to us without Pemex making an early termination payment.

During times of depressed market conditions, our customers may seek to avoid or reduce their obligations to us under term drilling contracts or letter agreements or letters of intent for drilling contracts. A customer may no longer need a rig, due to a reduction in its exploration, development or production program, or it may seek to obtain a comparable rig at a lower dayrate.

Generally, our contracts allow us to recover our mobilization and demobilization costs associated with moving a drilling unit from one regional location to another. When market conditions require us to bear these costs, our operating margins are reduced accordingly. We cannot predict our ability to recover these costs in the future. For shorter moves such as “field moves”, our customers have generally agreed to bear the costs of moving the unit by paying us a reduced dayrate or “move rate” while the unit is being moved.

OFFSHORE DRILLING OPERATIONS

Contract Drilling Services

We conduct offshore contract drilling operations, which accounted for approximately 93 percent, 93 percent and 90 percent of operating revenues for the years ended December 31, 2007, 2006 and 2005, respectively. We conduct our contract drilling operations principally in the Middle East, India, U.S. Gulf of Mexico, Mexico, the North Sea, Brazil, and West Africa. In 2007, Pemex accounted for approximately 15 percent of our total operating revenues. No other single customer accounted for more than 10 percent of our total operating revenues in 2007.

Our contract drilling services revenues from international sources accounted for approximately 76 percent, 72 percent and 77 percent of total contract drilling services revenues for 2007, 2006 and 2005, respectively.

Our contract drilling services revenues generated in the U.S. accounted for approximately 24 percent, 28 percent and 23 percent of our total contract drilling services revenues for 2007, 2006 and 2005, respectively.

Labor Contracts

We perform services under labor contracts for drilling and workover activities covering 11 rigs operating in the United Kingdom sector of the North Sea and two rigs under a labor contract (the “Hibernia Contract”) off the east coast of Canada. We do not own or lease these rigs.

Under our labor contracts, we provide the personnel necessary to manage and perform the drilling operations from drilling platforms owned by the operator. With the exception of the Hibernia Contract, which is operating under a recently renewed five-year agreement that extends through January 2013, our labor contracts are generally renewable on an annual basis.

In January 2008, we reached agreement to sell our North Sea labor contract drilling services business to Seawell Holding UK Limited (“Seawell”) for $35 million. The sale to Seawell includes labor contracts covering 11 platform operations in the United Kingdom sector of the North Sea. These operations employ approximately 450 people and generated $96.2 million of revenue in 2007. The Hibernia Contract is not included in this sale. Closing is subject to regulatory approval and other customary closing conditions and is expected to occur on or about March 31, 2008.

Additionally, we operate the Noble Kolskaya through a bareboat charter that expires by its terms in July 2008. Under the bareboat charter, we receive a 30 percent effective net profit interest in the Noble Kolskaya operations.

COMPETITION

The offshore contract drilling industry is a highly competitive and cyclical business characterized by high capital and maintenance costs. Some of our competitors may have access to greater financial resources than we do.

In the provision of contract drilling services, competition involves numerous factors, including price, rig availability and suitability, experience of the workforce, efficiency, safety performance record, condition of equipment, operating integrity, reputation, industry standing and client relations. We believe that we compete favorably with respect to all of these factors. We follow a policy of keeping our equipment well maintained and technologically competitive. However, our equipment could be made obsolete by the development of new techniques and equipment.

We compete on a worldwide basis, but competition may vary significantly by region at any particular time. Demand for offshore drilling equipment also depends on the exploration and development programs of oil and gas producers, which in turn are influenced by the financial condition of such producers, by general economic conditions and prices of oil and gas, and by political considerations and policies.

In addition, industry-wide shortages of supplies, services, skilled personnel and equipment necessary to conduct our business can occur. We cannot assure that any such shortages experienced in the past would not happen again or that any shortages, to the extent currently existing, will not continue or worsen in the future.

GOVERNMENTAL REGULATION AND ENVIRONMENTAL MATTERS

Political developments and numerous governmental regulations, which may relate directly or indirectly to the contract drilling industry, affect many aspects of our operations. The regulations applicable to our operations include provisions that regulate the discharge of materials into the environment or require remediation of contamination under certain circumstances.

The U.S. Oil Pollution Act of 1990 (“OPA 90”) and regulations thereunder impose certain additional operational requirements on our offshore rigs operating in the U.S. Gulf of Mexico and govern liability for leaks, spills and blowouts involving pollutants. Regulations under OPA 90 require owners and operators of rigs in United States waters to maintain certain levels of financial responsibility. We have made and will continue to make expenditures to comply with environmental requirements. To date we have not expended material amounts in order to comply, and we do not believe that our compliance with such requirements will have a material adverse effect upon our results of operations or competitive position or materially increase our capital expenditures. Although these requirements impact the energy and energy services industries, generally they do not appear to affect us any differently or to any greater or lesser extent than other companies in the energy services industry.

EMPLOYEES

At December 31, 2007, we employed approximately 6,600 persons, including persons engaged through labor contractors or agencies. Of the 6,600 persons, approximately 79 percent were engaged in international operations and approximately 21 percent were engaged in U.S. operations. We are not a party to any collective bargaining agreements that are material, and we consider our employee relations to be satisfactory.

FINANCIAL INFORMATION ABOUT SEGMENTS AND GEOGRAPHIC AREAS

Information regarding our revenues from external customers, segment profit or loss and total assets attributable to each segment for the last three fiscal years is presented in Note 15 to our consolidated financial statements included in this Annual Report on Form 10-K.

Information regarding our operating revenues and identifiable assets attributable to each of our geographic areas of operations for the last three fiscal years is presented in Note 15 to our consolidated financial statements included in this Annual Report on Form 10-K.

AVAILABLE INFORMATION

Our Annual Report on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the U.S. Securities Exchange Act of 1934 are available free of charge at our internet website at http://www.noblecorp.com. These filings are also available to the public at the U.S. Securities and Exchange Commission’s (“SEC”) Public Reference Room at 100 F Street, NE, Room 1580, Washington, DC 20549. The public may obtain information on the operation of the Public Reference Room by calling the SEC at 1-800-SEC-0330. Electronic filings with the SEC are also available on the SEC internet website at http://www.sec.gov.

ITEM 1A.

RISK FACTORS.

Risk Factors