Acquisitions and Divestitures

6 Months Ended

Jun. 30, 2023

Business Combination and Asset Acquisition [Abstract]

Note 2— Acquisitions and Divestitures

Business Combination with Maersk Drilling

On September 30, 2022 (the “Merger Effective Date”), pursuant to a Business Combination Agreement, dated November 10, 2021 (as amended, the “Business Combination Agreement”), by and among Noble, Noble Cayman, Noble Newco Sub Limited, a Cayman Islands exempted company and a direct, wholly owned subsidiary of Noble (“Merger Sub”), and The Drilling Company of 1972 A/S, a Danish public limited liability company (“Maersk Drilling”), Noble Cayman merged with and into Merger Sub (the “Merger”), with Merger Sub surviving the Merger as a wholly owned subsidiary of Noble. As a result of the Merger, Noble became the ultimate parent of Noble Cayman and its respective subsidiaries.

On October 3, 2022 (the “Closing Date”), pursuant to the Business Combination Agreement, Noble completed a voluntary tender exchange offer to Maersk Drilling’s shareholders (the “Offer” and, together with the Merger and the other transactions contemplated by the Business Combination Agreement, the “Business Combination”) and because Noble acquired more than 90% of the issued and outstanding shares of Maersk Drilling, nominal value Danish krone (“DKK”) 10 per share (“Maersk Drilling Shares”), Noble redeemed all remaining Maersk Drilling Shares not exchanged in the Offer for, at the election of the holder, either A ordinary shares, par value $0.00001 per share, of Noble (“Ordinary Shares”) or cash (or, for those holders that did not make an election, only cash), under Danish law by way of a compulsory purchase (the “Compulsory Purchase”), which was completed in early November 2022. Upon completion of the Compulsory Purchase, Maersk Drilling became a wholly owned subsidiary of Noble.

The Merger was accounted for as a business combination in accordance with Financial Accounting Standards Board Accounting Standards Codification Topic 805, Business Combinations, where Noble is the accounting acquirer. Under the acquisition method of accounting, the assets and liabilities of Maersk Drilling and its subsidiaries were recorded at their respective fair values on the Closing Date. Total consideration for the acquisition was $2.0 billion, which included $5.6 million in net cash paid and $2.0 billion in non-cash consideration, primarily related to Ordinary Shares issued to legacy Maersk shareholders and the replacement of legacy Maersk Drilling restricted stock unit awards. The purchase price allocation is preliminary and subject to change. The amounts recognized will be finalized as the information necessary to complete the analysis is obtained, but no later than one year after the Closing Date.

Determining the fair value of the assets and liabilities of Maersk Drilling requires judgment and certain assumptions to be made. The most significant fair value estimates related to the valuation of Maersk Drilling’s offshore drilling units and long term debt. The following table represents the preliminary allocation of the total purchase price of Maersk Drilling to the identifiable assets acquired and the liabilities assumed based on the fair values as of the Closing Date.


Purchase price consideration:
Fair value of Noble shares transferred to legacy Maersk Drilling shareholders	$	1,793,351
Cash paid to legacy Maersk Drilling shareholders	887
Fair value of replacement Maersk Drilling RSU Awards attributable to the purchase price	6,780
Deal Completion Bonus	6,177
Fair Value of Compulsory Purchase	193,678
Total purchase price consideration	$	2,000,873

Assets acquired:
Cash and cash equivalents	$	172,205
Accounts receivable, net	250,251
Taxes receivable	20,603
Prepaid expenses and other current assets (1)	43,168
Total current assets	486,227
Intangible assets	22,991
Property, plant and equipment, net	2,756,096
Other assets (1)	94,882
Total assets acquired	3,360,196
Liabilities assumed:
Current maturities of long-term debt	129,130
Accounts payable	130,273
Accrued payroll and related costs (1)	23,884
Taxes payable	38,218
Interest payable	800
Other current liabilities	41,253
Total current liabilities	363,558
Long-term debt	596,692
Deferred income taxes	4,071
Noncurrent contract liabilities	237,703
Other liabilities (1)	171,925
Total liabilities assumed	1,373,949
Net assets acquired	1,986,247
Goodwill acquired (1)	14,626
Purchase price consideration	$	2,000,873

(1)During the six months ended June 30, 2023, the Company recorded tax adjustments, which resulted in a net increase to deferred tax assets of $25.2 million, a net increase to reserves for uncertain tax positions of $13.8 million, and a decrease of goodwill of $11.4 million. Other adjustments were made to remeasure certain payroll tax related balances. The effect of the changes to the provisional amounts on the current period statement of operations that would have been recognized in previous periods if the adjustment to provisional amounts had been recognized as of the Closing Date was immaterial.

The goodwill recognized in the Merger represents the excess of the gross consideration transferred over the fair value of the underlying net tangible and identifiable intangible assets acquired and liabilities assumed. Goodwill recognized is attributable to anticipated synergies expected to arise in connection with the acquisition. All of the goodwill was assigned to our single reporting unit, Contract Drilling Services. The goodwill is not deductible for tax purposes. The Company did not recognize any goodwill impairment during the three and six months ended June 30, 2023. See “Note 4— Acquisitions and Divestitures” in our Annual Report on Form 10-K for the year ended December 31, 2022 for additional information on the Business Combination.