For the period from 11 March 2011 (Date of incorporation) to 31 December 20 II

Transcription

1 Annual accounts as at 31 December 2011 For the period from 11 March 2011 (Date of incorporation) to 31 December 20 II (With the report of the Reviseur d' Entreprises Agree) Pacific Drilling S.A. Societe anonyme 37, rue d' Anvers L- I 130 Luxembourg R.C.S. Luxembourg: BI

2 Table of contents: Page(s) Report of the Reviseur d'entreprises Agree Balance sheet Profit and loss account Notes to the annual accounts

3 ... KPMG luxembourg S.S r.i. 9. allee Scheffer l l uxembourg Telephone Fax Internet WwVW.kprng.lu Info@):pmglu To the Shareholders of Pacific Drilling S.A. 37, rue d'anvers L-1130 Luxembourg REPORT OF THE REVISEUR D'ENTREPRISES AGREE Following our appointment by the General Meeting of the Shareholders held on March II, 20 11, we have audited the accompanying annual accounts of Pacific Dri lling S.A., wh ich comprise the balance sheet as at December 31, 20 II and the profit and loss account for the period from March 1 I, 20 J I (date of incorporation) to December 3 1, 20 II, and a summary of significant accounting policies and other explanatory information. Board of Directors' responsibility for the annual accouf1fs The Board of Directors is responsible for the preparation and fair presentation of these annual accounts in accordance with Luxembourg legal and regulatory requirements relati ng to the preparation of the annual accounts, and for such internal control as the Board of Directors determines is necessary to enable the preparation of annual accounts that are free from material mi sstatement, whether due to fraud or error. Responsibility of the Reviseur d 'Emreprises agree Our responsi bility is to express an opinion on these annual accounts based on our audit. We conducted our audit in accordance with Internati onal Standards on Auditing as adopted for Luxembourg by the Commission de Surveillance du Secteur Financier. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the annual accounts are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and di sclosures in the annual accounts. The procedures selected depend on the j udgement of the Rev iseur d'entreprises agree, including the assessment of the risks of material misstatement of the annual accounts, whether due to fraud or error. In making those risk assessments, the Reviseur d' Entreprises agree considers internal control relevant to the entity's preparation and fair presentation of the annual accounts in order to design audit proced ures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity's internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by the Board of Directors, as well as evaluating the overal l presentation of the annual accounts. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion. "",""G _'IISi'... omb<>.rrg~ od"""'".., IhoIlJ'l\olG_..._...-Iorr _... ~!"-'G_.s v _..... <PMG-...r VA RS --, 4891In _'"'118'913

4 Opinion In our opinion, the annual accounts give a lrue and fa ir view of the financial position of Paci fic Drilling S.A. as of December 31, 20 11, and of the resu lts of its operations for the period from March 11, 2011 to December 31, in accordance with Luxembourg legal and regulatory requirements relating to the preparation of the an nual accounts. Luxembourg, Apr i1 27, KPMG Luxem bourg S.a r.1. Cabinet de rev ision agree = ~ 9\ ~ 'I Ph. Meyer

5 Balance sheet as at 31 December2011 expressed in USD ASSETS Note(s) 2011 C. Fixed assets III. Financial assets 1. Shares in affiliated undertakings D. Current assets II. Debtors 2. Amounts owed by affiliated undertakings a. becoming due and payable within one year 4. Other debtors b. becoming due and payable after more than one year IV. Cash at bank. cash in postal cheque accounts, cheques and cash in hand E. Prepayments and accrued income TOTAL ASSETS 2 13S The accompanying notes form an integral part of these annual accounts. 3

6 Balance sheet as at 31 December2011 (continued) expressed in USD LIABILITIES Note(s) 2011 A - Capital and reserves 4 I II VI Subscribed capita l Share premium and similar premiums Result for the financial period ( ) C - Provisions Provisions for taxation Other provisions Non-subonlinated debts 4. Trade creditors a) - becoming due and payable within one year Amounts owed to affiliated undertakings a) - becoming due and payable within one year Tax and socia l sec urity debts a) Tax debts b) - Social sec urity debts Other creditors a) - becoming due and payable within one yea r TOTAL LIABILITIES The accompanying notes form an integral part of these annual accounts. 4

7 Profit and loss account for the period from 11 March 2011 to 31 December 2011 expressed in USD A CHARGES Note(s) Pe riod from 11 March 20t 1 to 31 December Other external charges 3. Staff costs a) Wages a nd salaries b) Social security costs accruing by reference to wages and sala ries 5. Other operating charges J O. Tax on profit or Joss TOTAL CHARGES B INCOME Note(s) 8. Other interest and other fmanciai income b) other Ilterest receivable and s imilar income 10. Loss for the fgjanciai period TOTAL INCOME II The accompanying notes form an integral part of these annual accounts. 5

8 Notes to the annual accounts as at 31 December 2011 Note 1 - General information Pacifi c Drilling S.A. (hereafter "the Company") was incorporated on 11 March 2011 and organ ised under the laws of Luxembourg as a public company lim ited by shares (societe anonyme) for an unlimited period. The Compan y is registered in Luxembourg with ReS number B The registered office of the Company is established in 37, rue d' Anvers, L Luxembourg, Grand Duchy of Luxembourg. The Company's object is the acqui sition of participations in Luxembourg or abroad, in any company or enterprise in any form whatsoever, and the management of those participations. The Company may in particular acquire, by subscription, purchase or exchange or in any other manner, any stock, shares and other participation securi ties, bonds, debentures, certificates of deposit and other debt instruments and, more generally, any securities and financial instruments issued by any publ ic or private entity. It may participate in the creation, development, management and control of any company or en terprise. Further, it may in vest in the acquisition and management of a portfolio of patents or other intellectual property ri ghts of any nature or origin. The Company may borrow in any form. It may issue notes, bonds and any other kind of debt and equity securities. It may lend funds, including, without limitation, the proceeds of any borrowings, to its subsidi aries, affi liated companies and any other companies. It may also give guarantees and pledge, transfer, encumber or otherwise create and grant security over Some or all of its assets to guarantee its own obli gations and those of any other company, and, generally, for its own benefit and that of any other company or person. For the avoidance of doubt, the Company may not carry out any regu lated financial sector activities without having obtained the requisite authori sation. The Company may use any techniques, legal means and instruments to manage its investments efficiently and protect itse lf against credit ri sks, currency exchange exposure, interest rate ri sks and other ri sks. The Company may carry out any commercial, financial, or industrial operation and any transaction with respect to real estate or movable property, which directl y or indirectly, favours or re lates to its corporate object. The Company's financial year begins the first day of January and ends the last day of December of each year with the exception of the first financial period which started on 11 March 20 11, and ended on 31 December 20 II. Shares of our common stock have traded on the Norwegian OTC List si nce 5 Apri l under the symbol "PDSA." Shares of our common stock commenced trad ing on the New York Stock Exchange (the "NYSE") on I I November 2011 under the symbol "PACD." The NYSE listing is intended to be the Company's primary listing and the Norwegian OTC listing is intended to be the Company's secondary listing. 6

9 Notes to the annual accounts as at 31 December 2011 (cont.) Note 1 - General information (cont.) In accordance with Article 3 13 of Law of August 10, 1915 as subsequentl y amended, the Company is exempted from the requirements to prepare consolidated accounts and a consolidated management repolt. Therefore, in accordance with the legal provisions, these annual accounts are presented on a non-consolidated basis to be approved by the shareholders during the Annual General Meeti ng of the Company. A majority of the outstanding shares of the Company are controlled by Quantum Pacifi c (G ibraltar) Limited, a company incorporated under the laws of Gibraltar, whose consolidated accounts are not available. The Company intends to prepare and fil e consolidated accounts for the year ending on 3 1 December Note 2 - Summar\' ofsignificant accounting policies 2.1 Basis o/preparation The annual accounts have been prepared in accordance with legal and regulatory requirements and generally accepted accounting principles in the Grand Duchy of Luxembourg. Accounting pol icies and valuation rules are, besides the ones laid down by the Law of 19 December 2002 as amended, determined and applied by the Board of Directors. 2.2 Significant accounting policies The main valuation rules applied by the Company are the followin g: Assets and liabilities Unless stated otherwise, assets and liabil ities have been stated at their hi storical cost Financial assets Financial assets are accounted for at historical cost. A write down is recorded if there is a permanent impairment in the va lue Foreign currency translation Transactions expressed in currenci es other than US D are translated into USD at the exchange rate effective at the ti me of the transacti on. Cash at bank is translated at the exchange rate effective at the ba lance sheet date. Exchange losses and gains are recorded in the profit and loss accou nt of the period. 7

10 Notes to the annual accounts as at 31 December 2011 (cont.) Note 2 - Summary of significant accounting policies (cont.) Other assets and liabilities are translated separately respectively at the lower or at the higher of the va lue converted at the historical exchange rate or the value determined on the basis of the exchange rates effective at the balance sheet date. The unrealised exchange losses are recorded in the profit and loss account. The realised exchange gains are recorded in the profit and loss account at the moment of their realisation Provisions Provisions are intended to cover losses or debts the nature of wh ich is clearly defined and wh ich, at the date of the balance sheet are either likely to be incurred or certain to be incurred but uncertain as to their amount or as to the date on which they will arise. Note 3 - Shares in affiliated undertakings Investment in Pacific Drilling (Gibraltar) Limited On 15 March 20 II, the Company subscribed to the entire share capital of Pacific Drilling (Gibraitar) Limited, a private lim ited company duly formed under the laws of Gibraltar, represented by one ordinary share of one euro (EUR I, USD 1,42). On 30 March 20 II, the sole shareholder of the Company subscribed to one hundred forty five mill ion (145,000,000) new issued shares of the capital of the Company, without nominal value and fully paid it up by way of a contribution in kind consisting of the entire issued share capital in Pacific Drilling Limited, a private limited company duly formed under the laws of Liberia, having its registered office at 82 Broad Street, Monrovia, Republic of Liberia registered with the Ministry of Foreign Affairs under number C 1086I S. During the year, the Company contributed one million nine hundred and twenty thousand, seven hundred and sixty one (1,920,76 1) shares of the issued share capital stock of Pacific Drilling Limited, which represented the entire issue share capital, as a contribution to Pacific Drilling (Gibraltar) Limited's capital for no additional shares of Pacific Drilling (Gibraltar) Limited. The value of the shares is one billion, five hundred million dollars (USD 1,500,000,000). The Company made a further capital contribution for a total amount of US D 628,309,668 to Pacific Drilling (Gibraltar) Limited's capital for no additional shares. 8

11 Notes to the annual accounts as at 31 December 2011 (coni.) Note 3 Shares in affiliated undertakings (cont.) On 31 December 2011, the Company's shares in affiliated undertakings are as follows: Undertaking's Registered Ownership Last Net equity at the Profit or (loss) name office % balance balance sheet date of the last sheet date of the company financial year concerned Pacific Drilling 57/63 Line Wall ! (Gibraltar) Road, Gibraltar December Limited 2011 The accounts as at 3 1 December 20 II have not been approved yet Note 4 - Capital and reserves The Company was in corporated on 11 March with a subscribed share capital of USD 50,000 represented by 50,000 shares without nominal value (the "Incorporation Shares") and an authorised share capi!al of USD On 30 March 20 II, an Extraordinary General Meeting ("EGM") of th e shareholder of the Company approved to: Split of the Incorporation Shares into 5,000,000 shares without nominal value; Increase the share capital of the Company by USD 1,450,000 by the issuance of 145,000,000 new shares without nominal value and a share premium attached of USD 1,498,550,000 in consideration of the contribution in kind of the shares of Pacific Drilling Ltd (Liberia). On 4 April 20 II, the Board of Directors of the Company approved the increase of the share capital of the Company by USD 600,000 by the issuance of 60,000,000 new shares without nominal va lue and a share premium attached of USD 599,400,000 through a private placement to international and U.S. investors. Following resolutions taken by the Board of Directors on I August 20 II and 10 November 20 II, the share capital of the Company was further in creased through initial public offering in the USA as follows: By USD 60,000 represented by 6,000,000 new shares without nominal value and a share premium attached of USD 45,975,000; By USD 9,000 represented by 900,000 new shares without nominal value and a share premium atlached ofusd 6, On 2 November 20 II, the Board of Directors of the Company approved the increase of the share capital of the Company by USD 72,000 by the issuance of7,200,ooo new shares without nominal value to one of our indirect subsidiaries. These shares, which represent 3.3% of the capital, are held for the purposes of adm inistering our 2011 Omnibus Stock Incentive Plan. 9

12 Notes to the annual accounts as at 31 December 2011 (cont.) Note 4 - Capital and reserves (cont.) As of 31 December 20 II, the subscribed share capital amounts to USD 2,24 1,000 represented by 224, I 00,000 shares and the authorised share capital amount to USD 50,000,000, represented by 5,000,000,000 shares. Note 5 - Amounts owed to affiliated undertakings On 3 1 December 20 11, this item is composed as follows: USD 24,026 payable to Pacific Drilling Operations Ltd.; and, USD 10,4 12,496 payable to Pacific Drilling (Gibraltar) Ltd. Note 6 Staff costs During th e year under review, the Company employed one part-time employee. Note 7 Taxes The Company is subj ect in Luxembourg to the applicable general tax regulations. Note 8 - Transactions with related parties Director's fees In 20 II, a total of USD was allocated to the members of the Board of Directors of the Company and the committees that emanate from it, with respect to their functions. Transactions wit" shareholders In 2011, the Company did not conclude any transaction with its shareholders. Note 9 - Off balance sheet commitments As at 31 December 2011 the Company had no oft balance sheet commitments. 10

13 Notes to the annual accounts as at 31 December 2011 (cont.) Note 10- Subsequent events In February 20 12, the Company completed a private placement of US D 300 mi llion in aggregate principal amount of 8.25% senior unsecured U.S. dollar denominated bond s (the "Senior Unsecured Bonds") due in to eligible purchasers. The bonds bear interest at 8.25% per annum, payable semi annuall y on 23 February and 23 August of each year and mature on 23 February