Noble Drilling Operating Services A/S

Management's review

Particular risks
Operating risks
Currency risks
Interest rate risks
Social and personnel matters
Anti-corruption and anti-bribery
Our business depends on the level of activity in the oil and gas industry. Adverse developments affecting the industry, including a decline in the price of oil or gas, reduced demand for oil and gas products and increased regulation of drilling and production, have in the past had and may in the future have a material adverse effect on our business, financial condition and results of operations.
The Company's functional currency is the US Dollar. However, a portion of our expenses are incurred in local currencies. Therefore, when the US Dollar weakens (strengthens) in relation to the currencies of the countries in which we operate, our expenses reported in US Dollars will increase (decrease).
Future cash flows are exposed to risks to the extent that foreign currency expenses exceed revenues denominated in the same foreign currency. To help manage this potential risk, the Company periodically enter into derivative instruments to manage our net exposure to fluctuations in currency exchange rates.
The Company are subject to market risk exposure related to changes in interest rates on borrowings and may be subject to similar exposure on future borrowing arrangements. Future cash flows for financial instruments will fluctuate because of changes in market interest rates.
For drilling contracts, credit risk is minimised by undertaking a credit assessment of the counterparty prior to entering into the contracts. Depending on creditworthiness, the Company may seek protection in the form of parent company guarantees, prepayments or other types of collateral.
Further the Company has a concentration of customers. This concentration of customers increases the risks associated with any possible termination or nonperformance of contracts, in addition to our exposure to credit risk. If any of these customers were to terminate or fail to perform their obligations under their contracts and the Company were not able to find other customers for the affected drilling units promptly, the financial condition and results of operations could be materially adversely affected.
Noble is first and foremost a people business, focused on acting with integrity and respect, and keeping people safe. With operations globally, Noble recognizes the risk of safety and its responsibility with regard to the impact it has on people on many levels, including employees, partners, customers, and the local communities where we operate.
Our commitment to conducting business with honesty and integrity is reflected in the Code of Conduct, which sets out the basic principles for how we expect our business to be conducted. The Code applies to all Noble employees, including executives, officers, and members of our Board of Directors, and it impacts those we do business with, including customers, contractors, suppliers, and agents. We regularly review the Code and reassess compliance processes to determine relevancy and consistency with regulatory requirements and the organization’s structure, and update it accordingly.
Policies on anti-corruption and bribery & action-assessment
The Code of Conduct is available in nine languages and can be found on the Noble Corporate Governance Documents page.
New employees are required to undertake online mandatory training on our Code of Conduct and complete and sign an acknowledgement statement that the employee fully understands the Company’s policy with respect to anti-corruption and anti-bribery, the FCPA, UKBA and acknowledges commitment to adhere to the Code and its related policies when they join the Company.
All employees are required to complete an annual self-certification on their understanding of the anticorruption and anti-bribery programs and compliance with laws against financial crimes and requirements to communicate any information of concerns or possible violation of applicable polices. To help ensure that all employees are thoroughly familiar with the Company’s policies and applicable laws, all Company personnel are required to complete mandatory ethics and compliance trainings. The Chief Compliance Officer, in cooperation with the General Counsel, is responsible for helping ensure that educational materials are developed and provided to appropriate persons.
In 2023, to enhance ethics education the Company launched a complete in-person compliance training program targeting 800 employees across major onshore locations. Internal live training sessions covered a range of compliance topics, including anti-corruption, export controls, competition law, and data protection for functions most sensitive to these compliance risks.
Human and labor rights assessment parameters are integrated into the strategic pre-market entry risk picture. Legal compliance risk assessments for potential new jurisdictions cover, among other things, corruption, exposure to financial and trade sanctions, level of protection of personal data, the general rule of law and internationally accepted reports regarding the observance of human rights.

Description of significant activities of entity

The Company and its subsidiaries are operators of high-technology drilling rigs and provide offshore drilling services to oil and gas companies. The Convincer contract in Brunei ended in 2022, therefore no additional revenues were recorded in 2023. The branch in Ghana continues with no operational activity. The Company continues its operations in Suriname branch as well as in the HQ, where the drilling is performed on UK waters.

Description of development in activities and financial affairs

The Company's income statement for 2023 shows a profit of USD 5,385 thousand as against a loss of USD 945 thousand in 2022. Equity in the Company's balance sheet at 31 December 2023 stood at USD 37,384 thousand as against USD 31,999 thousand at 31 December 2022.

Description of expected development

Results for 2024 are continued subject to risks and uncertainties as various factors, many of which are beyond the company’s control, may cause the actual development and results to differ materially from expectations. The result for 2024 are primarily sensitive to the level of contracting of additional days to the current backlog and the day rates hereon. Under current circumstances management expects to reach a result for 2024 in the range of USD 0-5 million.
The result nearly reached the 2022 target. The main reason why the Company has registered a better result was due to higher interest income.