Noble Drilling to Retire Three Semi-Submersible Rigs

File image of the Noble Paul Wolff while being drydocked abord the semi submersible heavy lift barge, Gavea Lifter. Image: HMC

In Noble Corporation’s 4th quarter earnings report released today, the company took a $713 million impairment charge on the retirement of three of their semi-submersible drilling rigs, the Noble Paul Wolff, Noble Driller and Noble Jim Thompson.  The company reported a total loss of $595 million in the 4th quarter.

Chairman and CEO David W. Williams described the market environment as “increasingly difficult” due to the imbalanced supply and demand environment within the offshore drilling sector.  “Our financial performance in the quarter included an increase in idle time on several rigs, lower average daily revenues and margin contraction.”

Noble says average day rates in the fourth quarter declined to $330,700 from $346,700 in the third quarter, as several rigs, particularly in the U.S. Gulf of Mexico region, experienced lower contract dayrates.

For the full year, Noble Corporation reported a net loss of $152 million on revenues of $3.2 billion.  The company notes that were it not for the impairment charge, net income would have been $561 million for the full year.

“Despite the decline in market visibility and the difficulty in predicting client spending behavior during a period of falling commodity prices, Noble remains well-positioned in 2015. We completed some timely transformative steps, including a well-contracted newbuild program that has driven a decided shift to a premium fleet mix. Since 2011, we have added to date eight ultra-deepwater drillships and six high-specification jackups, with a final newbuild jackup addition expected in 2016,” commented Williams.

The decision to retire the three rigs were “based on revised assumptions on each rig’s future marketability in light of their age, technical features, and capital requirements in the context of the future supply of competitive rigs,” says Williams.

Noble says they reached an agreement with Hess to substitute the Noble Jim Thompson for the Noble Paul Romano which will execute the previously announced contract award covering four wells, or a primary term of up to one year in the U.S. Gulf of Mexico.  The day rate will remain at $300,000 per day and the switch is expected to be made on or around 1 September 2015.

“We face this period of market uncertainty with 81 percent of our fleet operating days under contract in 2015 and a $10.1 billion backlog that is expected to provide almost $3.0 billion in gross revenues over the year,” adds Williams.

“We possess a sound balance sheet and ample liquidity and we will continue to focus on capital discipline and preservation of liquidity through the cycle. Finally, an opportune and significant decline in capital expenditures compared to levels experienced over the past three years is expected to allow for positive free cash flow in 2015, providing the Company attractive financial flexibility during a period of increased market uncertainty.”

Unlock Exclusive Insights Today!

Join the gCaptain Club for curated content, insider opinions, and vibrant community discussions.

Sign Up