Noble Signs Settlement Agreement with Paragon Offshore
Noble Corporation NE announced a settlement agreement in principle with Paragon Offshore plc.
Notably, Paragon was formed after a spin-off by Noble in 2014. Once the settlement agreement becomes effective, subject to the terms of the settlement between Noble and Paragon, the latter would discharge the former of all claims involving the spin-off. This will include any false conveyance claim that could be brought on behalf of Paragon's creditors.
Noble, on the other hand, would assume some pre-spin-off obligations associated with Paragon's Mexican tax matters. Noble would also take responsibility for the administration and defense of Paragon’s Mexican income, value-added and customs tax audit as well as assessment matters for specified years up to and including 2010. The extent of liability undertaking would depend upon the amount incurred in Noble’s own legal entities.
Other income, value-added and customs tax liabilities from such audit and assessment process would be shared equally by Noble and Paragon. Although Noble would have to post any mandatory tax appeal bond, all other costs relating to administering and defending these tax matters would be shared equally by the two companies. Notably, Paragon would retain liability for all years that do not fall within the scope of the agreement. Noble will neither pay any cash settlement nor assume any other obligations in exchange for the release.
According to Noble, the tax liability payments related to the settlement will be made over several years. On the basis of its knowledge of these matters and its experience in Mexico so far, the company has estimated the net amount payable over the period of the settlement for its portion of the taxes in the range of $8 to $12 million. However, a number of factors might influence the final amount and timing of such payments.
Noble currently carries a Zacks Rank #3 (Hold). Some better-ranked players from the oil and gas industry are Cheniere Energy Partners LP. CQP, Braskem S.A. BAK and Enviva Partners, LP EVA. Each of these stocks sports a Zacks Rank #1 (Strong Buy).
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