Noble Drilling Earnings Jump 50 Percent in 2013

noble bob douglas
Noble Bob Douglas, image (c) Noble Drilling

Noble Corporation’s (NYSE: NE) 4th quarter and 2013 earnings release today revealed the offshore drilling contractor earned $783 million, or $3.05 per diluted share in net income last year, representing a full 50 percent gain over their 2012 figures.  Revenues for the same period were $4.2 billion, reflecting an increase of $700 million over 2012.

Addressing the successful close-out of 2013, David W. Williams, Chairman, President and Chief Executive Officer of Noble Corporation commented:

“Contract drilling revenues continued to grow during the fourth quarter with full or partial contributions from three new ultra-deepwater drillships and the first of our six JU3000N high-specification jackups. Building on an exceptional quarter and year of execution in the shipyard, we also saw the delivery of two more JU3000N jackups – the Noble Regina Allen in December, followed by the Noble Houston Colbert in early 2014.  These fleet additions, along with the remaining six projects, of which five rigs are expected to complete construction in 2014, are redefining our Company, creating a premium fleet of offshore drilling rigs capable of addressing our clients’ most demanding global well construction assignments.”

Noble also notes their plans to divest their standard-capability assets are progressing and should be completed by end of 2014.  These assets include five drillships, three semi-submersibles, 34 jack-ups, two submersibles, one FPSO and the Hibernia platform offshore Canada.

Improving Dayrates

Noble primarily attributes improvements to their bottom line to progressively higher day rates earned over the course of 2013 noting that average dayrates in the fourth quarter increased 9 percent to $212 million versus the third quarter resulting in $84 million in increased revenues.  In addition however, more rigs came online in the third and fourth quarters including the ultra-deepwater drillships Noble Don Taylor and Noble Globetrotter II, and in the following quarter, the drillship Noble Bob Douglas and the high-specification jackup Noble Mick O’Brien.

Newbuildings

In 2013, Noble spent $1.5 billion on their fleet expansion program which currently consists of two Gusto P10,000 ultra-deepwater drillships for Plains E&P, Noble Sam Croft and Noble Tom Madden and the following five high-specification jackups:

  • Noble Houston Colbert  – F&G JU-3000N – Total – Delivered in early January
  • Noble Sam Turner – F&G JU-3000N – Maersk – Mar 2014
  • Noble Tom Prosser – F&G JU-3000N – TBA – Q4 2014
  • Noble Sam Hartley – F&G JU-3000N – TBA – Q4 2014
  • Unnamed – Gusto MSC CJ70-x150-ST – Statoil – Q2 2016

The two drillships are due for delivery from Hyundai Heavy in April and October 2014, respectively.

Debt as a percentage of total capitalization at December 31, 2013 was 38.0 percent, up slightly from 37.5 percent at September 30, 2013, while liquidity, defined as cash and cash equivalents plus availability under revolving credit facilities, totaled $1.45 billion compared to $1.77 billion at September 30, 2013.

Lower Rig Utilization on the Horizon

“Although we believe activity in the jackup sector is best defined as a steady state, the reality is that we find ourselves evaluating fewer floating rig contract opportunities today than we did a year ago,” notes Williams.  “We expect to have additional contract opportunities under review as the year progresses, but it is increasingly clear that the first half of 2014 is likely to be characterized by lower rig utilization. The lower utilization is likely to be more pronounced for the floating rigs with limited technical features. Noble’s exposure to a weaker floating rig sector is limited in 2014, with only 22 percent of our operating days available.”

We are confident about the long-term outlook for offshore drilling and remain committed to a capital allocation strategy that promotes disciplined growth with strong returns and strategic appeal while offering the flexibility to consider other actions that promote enhanced shareholder value. In the ultra-deepwater segment, which represents a growing portion of our revenue, we continue to observe a fundamentally sound business. In the face of generally steady crude oil prices, successful exploration programs with over 240 announced deepwater discoveries since 2008, continued geographic expansion and a building backlog of field development projects, the segment is poised to provide exceptional future growth opportunities. Our transformation to a company with a predominately premium asset fleet positions Noble to successfully address the future opportunities in ultra-deepwater and high-specification jackup drilling applications.”

Noble shares are up 2.2 percent in after hours trading.