2014

Noble Corporation Reports Second Quarter 2013 Earnings

ZUG, Switzerland, July 17, 2013 /PRNewswire/ -- Noble Corporation (NYSE: NE) today reported second quarter 2013 earnings of $177 million, or $0.69 per diluted share. Results for the quarter included $18 million, or $0.06 per diluted share, of revenue recognized relating to the previously reported cancellation of the contract by the customer for the newbuild jackup Noble Houston Colbert. Excluding the impact of the contract cancellation, second quarter 2013 earnings were $0.63 per diluted share. The results compared to $150 million, or $0.59 per diluted share, for the first quarter of 2013. Total revenues for the second quarter of 2013 were $1.02 billion, including the $18 million contract cancellation revenue, compared to $971 million in the first quarter of 2013.

In commenting on the second quarter results, David W. Williams, Chairman, President and Chief Executive Officer of Noble Corporation stated, "A continuation of excellent business fundamentals produced a better than 5 percent improvement in average dayrates as a number of our rigs transitioned to new contracts and previously idle rigs returned to work. In addition, we experienced another quarter of declining unpaid operational downtime, contributing to lower than expected repair and maintenance expenses and increased bonus revenue in the quarter.

"I am delighted with the progress we have made to date in capturing measurable improvement in the day to day execution of our expanding global operation, achieved during a period of dramatic transformation underway at Noble."

Contract drilling services revenues for the second quarter of 2013 totaled $975 million compared to revenues of $929 million in the first quarter. Excluding the $18 million contract cancellation revenue, contract drilling revenues were $957 million in the second quarter, an improvement of $28 million, or 3 percent from the first quarter. The improvement was driven primarily by higher utilization on the semisubmersibles Noble Paul Wolff, which experienced downtime in the first quarter stemming from a wellhead connector bolt failure, and the Noble Max Smith, which completed a full quarter of operations following the commencement of a three-year contract midway through the first quarter. Also, the jackup Noble George McLeod commenced a one-year contract offshore Malaysia in April, following the rig's mobilization to the region during the first quarter. The revenue improvement was partially offset by idle time on the semisubmersible Noble Homer Ferrington and planned out-of-service periods on the jackup Noble Byron Welliver and semisubmersible Noble Ton van Langeveld to complete regulatory inspections and required maintenance. Contract drilling services costs totaled $492 million in the second quarter, including $8 million related to the settlement of Mexico VAT assessments, compared to operating costs of $484 million in the first quarter. Second quarter cost increases resulting from ramp-up costs associated with the newbuild drillships were offset by lower repair and maintenance expenses. Contract drilling margin for the second quarter of 2013 increased to 49.6 percent from 47.9 percent during the first quarter.

Net cash from operating activities was $443 million in the second quarter of 2013 as compared to $203 million for the first quarter.  The increase was primarily driven by increased earnings in the quarter coupled with a decrease in accounts receivable resulting from resolution and collection of receivables from a major customer. Capital expenditures in the second quarter were $872 million, including $614 million related to the Company's newbuild construction program. During the quarter, the Company took delivery from the shipyard of the drillships Noble Don Taylor and Noble Globetrotter II. For the six months ended June 30, 2013, capital expenditures totaled $1.2 billion, of which $752 million related to the newbuild construction program. The Company estimates approximately $2.7 billion in capital expenditures will be required to complete the remaining 10 newbuilds under construction.

Total debt at June 30, 2013 was $5.3 billion, resulting in debt as a percentage of total capitalization of 38 percent, as compared to 36 percent at March 31, 2013.

Noble's second quarter 2013 effective tax rate was 16 percent, compared with 17 percent in the first quarter 2013. The decrease in the effective tax rate was due to changes in the geographic mix of pre-tax income and the recognition of certain discrete items in the quarter.  During the quarter, the Company settled certain matters related to outstanding income tax claims in Mexico.  While this did not have a material impact on the Company's effective tax rate during the quarter, it did significantly reduce the aggregate amount of claimed tax assessments in Mexico.  

Operating Highlights

Total contract backlog at June 30, 2013 was approximately $16.0 billion compared to $14.0 billion at March 31, 2013.  The increase was primarily due to contract awards for the ultra-deepwater drillships Noble Tom Madden and Noble Sam Croft. With the addition of these awards, all of the Company's ultra-deepwater drillships under construction now have contracts. The growth in backlog also reflects the drilling contract received for a new high-specification design CJ-70 jackup rig to be initially utilized on the Mariner Field in the UK beginning in 2016.

During the second quarter of 2013, utilization of the Company's floating rig fleet (semisubmersibles and drillships) was 77 percent compared to 83 percent in the first quarter. The decline in utilization was due primarily to idle days on the semisubmersible Noble Homer Ferrington. The rig, which is currently completing inspections and required maintenance in an Eastern Mediterranean shipyard, is being considered for drilling assignments in several regions, but is not expected to return to work before the end of the third quarter 2013. Average daily revenues in the floating rig fleet for the second quarter of 2013 improved 9 percent from the first quarter. The increase was primarily due to improved activity on the semisubmersibles Noble Max Smith and Noble Paul Wolff.

In the Company's jackup fleet, utilization in the second quarter of 2013 was 92 percent compared to 93 percent in the first quarter. The slight decline in utilization was due primarily to a planned out-of- service period on the Noble Byron Welliver in the North Sea. The Company continues to benefit from increased jackup activity in most of its operating regions, with several new contracts signed at improved dayrates during the quarter for rigs in the Middle East, Mexico and West Africa. Average daily revenues for the jackup fleet rose 10 percent in the second quarter as compared to the first quarter.

At the end of the second quarter of 2013, approximately 78 percent of the Company's available rig operating days were committed for the remainder of 2013, including 82 percent of the floating rig days and 82 percent of the jackup rig days. For 2014, an estimated 60 percent of the available rig operating days were committed, including 80 percent and 52 percent of the floating and jackup rig days, respectively. All calculations for committed operating days include cold stacked rigs.

Outlook

In closing, Williams commented, "The first six months of 2013 have been extremely busy and much has been accomplished. We continue to demonstrate an improvement in execution at the field operating level, we have seen excellent results in our newbuild construction program with rig deliveries that are on time or ahead of schedule, and we have secured impressive contracts for each of our drillships under construction, leaving only three jackups uncontracted in our current newbuild project backlog. We have established a new customer relationship with Statoil, offering exceptional strategic value. We continue to work through the complicated steps required to potentially spin off a portion of our fleet in what would be a significant transformative event for Noble, and we have initiated a process that we believe will provide increased corporate, managerial and operational benefits and enhanced global competitiveness by seeking to move our corporate domicile to the UK. I believe all of these actions have the potential to drive improvements in operating results and greater shareholder value in the future."

About Noble

Noble is a leading offshore drilling contractor for the oil and gas industry. Noble performs, through its subsidiaries, contract drilling services with a fleet of 79 offshore drilling units (including three ultra-deepwater drillships and seven high-specification jackup drilling rigs currently under construction), located worldwide, including in the U.S. Gulf of Mexico and Alaska, Mexico, Brazil, the North Sea, the Mediterranean, West Africa, the Middle East, India, Malaysia and Australia. Noble's shares are traded on the New York Stock Exchange under the symbol "NE." Additional information on Noble Corporation is available on the Company's Web site at http://www.noblecorp.com.

Statements regarding contract backlog, earnings, costs, revenue, rig demand, fleet condition or performance, shareholder value, timing of delivery of newbuilds, contract commitments, dayrates, contract commencements, contract extensions or renewals, letters of intent or award, industry fundamentals, customer relationships and requirements, a potential spin off of a portion of our fleet, a potential change in our corporate domicile, strategic initiatives, future performance, growth opportunities, market outlook, as well as any other statements that are not historical facts in this release, are forward-looking statements that involve certain risks, uncertainties and assumptions. These include but are not limited to operating hazards and delays, actions by regulatory authorities, customers and other third parties, risks associated with operations outside of the U.S., actions by regulatory authorities, customers and others, legislation and regulations affecting drilling operations, compliance with regulatory requirements, factors affecting the level of activity in the oil and gas industry, supply and demand of drilling rigs, factors affecting the duration of contracts, delays in the construction of newbuilds, the actual amount of downtime, factors that reduce applicable dayrates, violations of anti-corruption laws, hurricanes and other weather conditions, the future price of oil and gas, the inability to consummate a potential spin-off transaction or change in corporate domicile or the inability to realize the expected benefits from any such transactions and other factors detailed in the Company's most recent Form 10-K, Form 10-Q's and other filings with the Securities and Exchange Commission. Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual results may vary materially from those indicated. 

Conference Call

Noble has scheduled a conference call and webcast related to its second quarter 2013 results on Thursday, July 18, 2013, at 8:00 a.m. U.S. Central Daylight Time. Interested parties are invited to listen to the call by dialing 1-866-461-7129, or internationally 1-706-679-3084, using access code: 75236143, or by asking for the Noble Corporation conference call. Interested parties may also listen over the Internet through a link posted in the Investor Relations section of the Company's Web site. 

A replay of the conference call will be available on Thursday, July 18, 2013, beginning at 11:00 a.m. U.S. Central Daylight Time, through Thursday, August 1, 2013, ending at 11:00 p.m. U.S. Central Daylight Time. The phone number for the conference call replay is 1-855-859-2056 or, for calls from outside of the U.S., 1-404-537-3406, using access code: 75236143.  The replay will also be available on the Company's Web site following the end of the live call.

 

NOBLE CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME 

(In thousands, except per share amounts) 

(Unaudited) 














Three Months Ended


Six Months Ended




June 30,


June 30,




2013


2012


2013


2012

 Operating revenues 










 Contract drilling services 


$  975,455


$ 848,237


$ 1,904,192


$ 1,594,547


 Reimbursables 


28,260


30,812


49,434


65,953


 Labor contract drilling services 


13,603


19,863


34,657


35,871


 Other 


67


11


77


242




1,017,385


898,923


1,988,360


1,696,613

 Operating costs and expenses 










 Contract drilling services 


491,983


423,502


976,070


843,513


 Reimbursables 


22,701


24,970


37,623


55,571


 Labor contract drilling services 


9,402


11,847


21,651


21,079


 Depreciation and amortization 


212,589


183,615


418,745


354,692


 Selling, general and administrative 


26,850


25,404


52,420


48,530


 Loss on impairment 


-


18,345


-


18,345


 Gain on contract settlements/extinguishments, net 


-


(33,255)


(1,800)


(33,255)




763,525


654,428


1,504,709


1,308,475











 Operating income 


253,860


244,495


483,651


388,138











 Other income (expense) 










 Interest expense, net of amount capitalized 


(24,665)


(20,652)


(51,966)


(31,148)


 Interest income and other, net 


955


1,188


530


2,973

 Income before income taxes 


230,150


225,031


432,215


359,963


 Income tax provision 


(36,824)


(46,356)


(71,176)


(67,945)

 Net income 


193,326


178,675


361,039


292,018


 Net income attributable to noncontrolling interests 


(16,706)


(18,857)


(34,359)


(12,025)

 Net income attributable to Noble Corporation 


$  176,620


$ 159,818


$    326,680


$    279,993











 Net income per share 










 Basic 


$        0.69


$       0.63


$          1.28


$          1.10


 Diluted 


$        0.69


$       0.63


$          1.27


$          1.10

 

 NOBLE CORPORATION AND SUBSIDIARIES 

 CONSOLIDATED BALANCE SHEETS 

 (In thousands) 

 (Unaudited) 










 June 30, 


 December 31, 




2013


2012

 ASSETS 





 Current assets 






 Cash and cash equivalents 


$      166,207


$      282,092


 Accounts receivable 


834,576


743,673


 Prepaid expenses and other current assets 


343,443


279,560

 Total current assets 


1,344,226


1,305,325







 Property and equipment 


18,198,504


16,971,666


 Accumulated depreciation 


(4,354,168)


(3,945,694)

 Property and equipment, net 


13,844,336


13,025,972







 Other assets 


277,524


276,477


 Total assets 


$ 15,466,086


$ 14,607,774







 LIABILITIES AND  EQUITY 





 Current liabilities 






 Accounts payable 


$      344,468


$      350,147


 Accrued payroll and related costs 


126,267


132,728


 Dividend payable 


256,420


66,369


 Other current liabilities 


359,435


362,205

 Total current liabilities 


1,086,590


911,449







 Long-term debt 


5,276,304


4,634,375

 Deferred income taxes 


218,513


226,045

 Other liabilities 


324,379


347,615


 Total liabilities 


6,905,786


6,119,484







 Commitments and contingencies 











 Equity 






 Total shareholders' equity 


7,807,466


7,723,166


 Noncontrolling interests 


752,834


765,124


 Total equity 


8,560,300


8,488,290


 Total liabilities and equity 


$ 15,466,086


$ 14,607,774

 

 NOBLE CORPORATION AND SUBSIDIARIES 

 CONSOLIDATED STATEMENTS OF CASH FLOWS 

 (In thousands) 

 (Unaudited) 




Six Months Ended




June 30,




2013


2012

 Cash flows from operating activities 






 Net income 


$   361,039


$  292,018


 Adjustments to reconcile net income to net cash from operating activities: 





 Depreciation and amortization 


418,745


354,692


 Gain on contract extinguishments/asset impairment, net 


-


18,345


 Other changes in operating activities 


(133,719)


(129,109)


  Net cash from operating activities 


646,065


535,946







 Cash flows from investing activities 






 New construction 


(752,332)


(161,502)


 Major projects 


(324,424)


(358,766)


 Other capital expenditures 


(105,829)


(68,106)


 Capitalized interest 


(61,726)


(76,766)


 Other investing activities 


(39,047)


(159,134)


  Net cash from investing activities 


(1,283,358)


(824,274)







 Cash flows from financing activities 






 Borrowings on bank credit facilities, net 


941,653


(825,000)


 Repayment of long-term debt 


(300,000)


-


 Proceeds from issuance of senior notes, net of debt issuance costs 


-


1,186,636


 Contributions from joint venture partners 


-


40,000


 Dividends paid to joint venture partners 


(46,649)


-


 Dividends/Par value reduction payments paid to shareholders 


(66,672)


(71,897)


 Other financing activities 


(6,924)


(5,314)


  Net cash from financing activities 


521,408


324,425


  Net change in cash and cash equivalents 


(115,885)


36,097

 Cash and cash equivalents, beginning of period 


282,092


239,196

 Cash and cash equivalents, end of period 


$   166,207


$  275,293

 

 NOBLE CORPORATION AND SUBSIDIARIES 

 FINANCIAL AND OPERATIONAL INFORMATION BY SEGMENT 

 (In thousands, except operating statistics) 

 (Unaudited) 






















Three Months Ended June 30,


Three Months Ended March 31,



2013


2012


2013



Contract






Contract






Contract







Drilling






Drilling






Drilling







Services


Other


Total


Services


Other


Total


Services


Other


Total

 Operating revenues 



















 Contract drilling services 


$    975,455


$           -


$    975,455


$ 848,237


$           -


$ 848,237


$ 928,737


$           -


$ 928,737

 Reimbursables 


28,000


260


28,260


30,124


688


30,812


20,711


463


21,174

 Labor contract drilling services 


-


13,603


13,603


-


19,863


19,863


-


21,054


21,054

 Other 


67


-


67


11


-


11


10


-


10



$ 1,003,522


$ 13,863


$ 1,017,385


$ 878,372


$ 20,551


$ 898,923


$ 949,458


$ 21,517


$ 970,975




















 Operating costs and expenses 



















 Contract drilling services 


$    491,983


$           -


$    491,983


$ 423,502


$           -


$ 423,502


$ 484,087


$           -


$ 484,087

 Reimbursables 


22,469


232


22,701


24,307


663


24,970


14,469


453


14,922

 Labor contract drilling services 


-


9,402


9,402


-


11,847


11,847


-


12,249


12,249

 Depreciation and amortization 


209,082


3,507


212,589


180,112


3,503


183,615


202,619


3,537


206,156

 Selling, general and administrative 


26,378


472


26,850


24,835


569


25,404


24,949


621


25,570

 Loss on impairment 


-


-


-


12,710


5,635


18,345


-


-


-

 Gain on contract settlements/extinguishments, net 


-


-


-


(33,255)


-


(33,255)


(1,800)


-


(1,800)



$    749,912


$ 13,613


$    763,525


$ 632,211


$ 22,217


$ 654,428


$ 724,324


$ 16,860


$ 741,184




















 Operating income 


$    253,610


$      250


$    253,860


$ 246,161


$ (1,666)


$ 244,495


$ 225,134


$   4,657


$ 229,791




















 Operating statistics 



















 Jackups: 



















   Average Rig Utilization 


92%






79%






93%





   Operating Days 


3,594






3,073






3,598





   Average Dayrate 


$    116,266






$   97,612






$ 105,559
























 Semisubmersibles: 



















   Average Rig Utilization 


76%






88%






84%





   Operating Days 


970






1,127






1,053





   Average Dayrate 


$    370,117






$ 349,163






$ 321,037
























 Drillships: 



















   Average Rig Utilization 


78%






65%






83%





   Operating Days 


637






469






669





   Average Dayrate 


$    311,490






$ 329,761






$ 315,216
























 FPSO/Submersibles: 



















   Average Rig Utilization 


0%






0%






0%





   Operating Days 


-






-






-





   Average Dayrate 


$              -






$           -






$           -
























 Total: 



















   Average Rig Utilization 


83%






76%






86%





   Operating Days 


5,201






4,669






5,320





   Average Dayrate 


$    187,537






$ 181,663






$ 174,578





 

 NOBLE CORPORATION AND SUBSIDIARIES 

 CALCULATION OF BASIC AND DILUTED NET INCOME PER SHARE 

 (In thousands, except per share amounts) 

 (Unaudited) 










 The following table sets forth the computation of basic and diluted net income per share: 
















 Three months ended 


 Six months ended 



June 30,


June 30,



2013


2012


2013


2012

 Allocation of net income 









 Basic 









  Net income attributable to Noble Corporation 


$    176,620


$    159,818


$    326,680


$    279,993

  Earnings allocated to unvested share-based payment awards 


(2,169)


(1,694)


(3,822)


(2,797)

   Net income to common shareholders - basic 


$    174,451


$    158,124


$    322,858


$    277,196










 Diluted 









  Net income attributable to Noble Corporation 


$    176,620


$    159,818


$    326,680


$    279,993

  Earnings allocated to unvested share-based payment awards 


(2,167)


(1,692)


(3,819)


(2,793)

   Net income to common shareholders - diluted 


$    174,453


$    158,126


$    322,861


$    277,200










 Weighted average number of  shares outstanding - basic 


253,295


252,387


253,185


252,179

  Incremental shares issuable from assumed exercise of stock options 


261


358


264


425

 Weighted average number of  shares outstanding - diluted 


253,556


252,745


253,449


252,604










 Weighted average unvested share-based payment awards 


3,150


2,704


2,998


2,555










 Earnings per share 









 Basic 


$          0.69


$          0.63


$          1.28


$          1.10

 Diluted 


$          0.69


$          0.63


$          1.27


$          1.10

SOURCE Noble Corporation



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