Noble Corporation Reports Second Quarter 2010 Earnings of $0.85 per Diluted Share
ZUG, Switzerland, July 19 /PRNewswire-FirstCall/ -- Noble Corporation (NYSE: NE) today reported second quarter 2010 earnings of $218 million, or $0.85 per diluted share, versus $392 million, or $1.49 per diluted share, for the second quarter of last year. Results for the quarter include approximately $0.06 per share due to a higher than anticipated effective tax rate of 19 percent versus 13 percent in the first quarter 2010 which resulted primarily from the current drilling restrictions in the U.S. Gulf of Mexico and a net after-tax charge of approximately $0.02 per share resulting from an accrual relating to the Company’s ongoing Nigeria FCPA investigation, a matter which has not yet been resolved.
Contract drilling services revenues for the second quarter of 2010 were $688 million versus $868 million in the second quarter of 2009. Contract drilling margins for the second quarter of 2010 were approximately 60 percent and the Company generated $510 million in net cash provided by operating activities in the quarter. Noble invested $193 million in capital projects during the quarter. The Company also reported that it still expects to close the previously announced acquisition of FDR Holdings Limited (“Frontier”) at the end of July 2010.
“Noble’s second-quarter revenues declined due to a combination of factors, not the least of which was the government-ordered drilling limitations in the U.S. Gulf of Mexico,” said David W. Williams, Chairman, President and Chief Executive Officer. “However, we have moved quickly on a variety of fronts to protect our backlog and shareholder value. At the same time, we were delighted to announce the acquisition of Frontier and separate agreements with Shell which, following the closing of the transaction, will add seven drilling units and an FPSO to the fleet, double our contract backlog, and provide further backlog protection for units operating in the Gulf.”
Operations Highlights
At the end of the second quarter 2010, approximately 61 percent of the Company’s available rig operating days were committed for the remainder of 2010 and approximately 35 percent were committed for 2011. The Company’s total backlog at June 30, 2010 was approximately $6.7 billion.
During the quarter, the Noble Jim Day, the Company’s last 10,000’ ultra-deepwater semisubmersible under construction, began its mobilization to the U.S. Gulf of Mexico from Singapore. It is expected to arrive during the third quarter and will undergo thruster installation, final testing and customer acceptance before commencing its contract.
Also, Noble secured additional work for a number of its jackup units in several different countries around the world. In Mexico, the Company obtained commitments on seven of our units through a combination of contract extensions and direct assignments. The Company also secured a letter of award for a 254-day contract at a dayrate of $63,500 for the Noble Roy Butler. In the North Sea, the Noble Hans Deul secured a two-year contract at a dayrate of $175,000 and the Noble Piet van Ede received a one-year extension at a dayrate of approximately $86,000. In West Africa, the Noble Percy Johns and Noble Ed Noble both secured two-year commitments at dayrates of $85,000. In the Middle East and India, the Noble Harvey Duhaney received an 18-month contract at a dayrate of approximately $60,000 and the Noble Kenneth Delaney will soon commence a three-year modified bareboat charter at a dayrate of approximately $50,000.
“Despite an uncertain environment in the U.S. Gulf, drilling continues around the world both in shallow and deepwater. We intend to maintain our focus on safety as we plan for the rapid integration of Frontier’s operations, and we are generally optimistic about opportunities during the remainder of the year,” Williams said.
About Noble Corporation
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 62 offshore drilling units (including two rigs currently under construction) located worldwide, including in the Middle East, India, the U.S. Gulf of Mexico, Mexico, the Mediterranean, the North Sea, Brazil, and West Africa. Noble’s shares are traded on the New York Stock Exchange under the symbol “NE”. Additional information on Noble Corporation is available via the worldwide web at http://www.noblecorp.com.
Statements regarding the Frontier transaction, including the closing, integration, contract backlog, fleet, and benefits, protection of the Company’s backlog and shareholder value, Shell agreements, contract backlog, completion and acceptance of the Noble Jim Day, earnings, costs, revenue, rig demand, fleet performance, contract commitments, dayrates, contract commencements, contract extensions or renewals, letters of award, industry fundamentals, 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, risks associated with operations outside of the U.S., actions by regulatory authorities, customers and other third parties, legislation and regulations affecting drilling operations, costs and difficulties relating to the integration of acquired businesses, consummation, availability and terms of any financing, satisfaction of any closing conditions, factors affecting the level of activity in the oil and gas industry, supply and demand of drilling rigs, factors affecting the duration of contracts, 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 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 2010 results on Tuesday, July 20, 2010, at 9:00 a.m. U.S. Central Daylight Time. Interested parties are invited to listen to the call by dialing from the U.S. 1-866-461-7129, or +1-706-679-3084 from outside the U.S., using access code: 38611304 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 Tuesday, July 20, 2010, beginning at 12:00 p.m. U.S. Central Daylight Time, through Tuesday, July 27, 2010, ending at 5:00 p.m. U.S. Central Daylight Time. The phone number for the conference call replay is 1-800-642-1687 from the U.S. or, for calls from outside of the U.S., +1-706-645-9291, using access code: 38611304. The replay will also be available on the Company’s Web site following the end of the live call. The conference call may include non-GAAP financial measures. Noble will post a reconciliation of any such measures to the most directly comparable GAAP measures in the “Investor Relations” section of the Company’s Web site under the heading “Regulation G Reconciliations.”
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, | |||||||||
2010 | 2009 | 2010 | 2009 | |||||||
Operating revenues | ||||||||||
Contract drilling services | $ 687,510 | $ 868,205 | $ 1,496,156 | $ 1,740,602 | ||||||
Reimbursables | 13,753 | 22,834 | 37,986 | 39,512 | ||||||
Labor contract drilling services | 8,056 | 7,419 | 15,817 | 14,353 | ||||||
Other | 603 | 414 | 814 | 556 | ||||||
709,922 | 898,872 | 1,550,773 | 1,795,023 | |||||||
Operating costs and expenses | ||||||||||
Contract drilling services | 275,595 | 251,054 | 530,026 | 491,910 | ||||||
Reimbursables | 10,365 | 19,281 | 30,108 | 33,364 | ||||||
Labor contract drilling services | 5,380 | 4,881 | 11,268 | 9,257 | ||||||
Depreciation and amortization | 126,227 | 99,417 | 242,084 | 192,401 | ||||||
Selling, general and administrative | 23,808 | 21,484 | 45,779 | 39,201 | ||||||
Loss on asset disposal/involuntary conversion, net | - | 16,943 | - | 28,977 | ||||||
441,375 | 413,060 | 859,265 | 795,110 | |||||||
Operating income | 268,547 | 485,812 | 691,508 | 999,913 | ||||||
Other income (expense) | ||||||||||
Interest expense, net of amount capitalized | (510) | (361) | (975) | (882) | ||||||
Interest income and other, net | 1,006 | 1,318 | 4,632 | 2,390 | ||||||
Income before income taxes | 269,043 | 486,769 | 695,165 | 1,001,421 | ||||||
Income tax provision | (51,118) | (94,920) | (106,514) | (195,277) | ||||||
Net income | $ 217,925 | $ 391,849 | $ 588,651 | $ 806,144 | ||||||
Net income per share | ||||||||||
Basic | $ 0.85 | $ 1.50 | $ 2.29 | $ 3.08 | ||||||
Diluted | $ 0.85 | $ 1.49 | $ 2.28 | $ 3.08 | ||||||
NOBLE CORPORATION AND SUBSIDIARIES | ||||||
CONSOLIDATED BALANCE SHEETS | ||||||
(In thousands) | ||||||
(Unaudited) | ||||||
June 30, | December 31, | |||||
2010 | 2009 | |||||
ASSETS | ||||||
Current assets | ||||||
Cash and cash equivalents | $ 1,083,112 | $ 735,493 | ||||
Accounts receivable | 471,348 | 647,454 | ||||
Prepaid expenses and other current assets | 132,036 | 100,243 | ||||
Total current assets | 1,686,496 | 1,483,190 | ||||
Property and equipment | ||||||
Drilling equipment and facilities | 9,130,967 | 8,666,750 | ||||
Other | 161,046 | 143,477 | ||||
Total property and equipment | 9,292,013 | 8,810,227 | ||||
Accumulated depreciation | (2,356,040) | (2,175,775) | ||||
Net property and equipment | 6,935,973 | 6,634,452 | ||||
Other assets | 281,033 | 279,254 | ||||
Total assets | $ 8,903,502 | $ 8,396,896 | ||||
LIABILITIES AND SHAREHOLDERS' EQUITY | ||||||
Current liabilities | ||||||
Accounts payable | $ 199,850 | $ 197,800 | ||||
Accrued payroll and related costs | 99,550 | 100,167 | ||||
Taxes payable | 56,557 | 68,760 | ||||
Other current liabilities | 80,870 | 67,220 | ||||
Total current liabilities | 436,827 | 433,947 | ||||
Long-term debt | 751,028 | 750,946 | ||||
Deferred income taxes | 288,389 | 300,231 | ||||
Other liabilities | 158,886 | 123,340 | ||||
Total liabilities | 1,635,130 | 1,608,464 | ||||
Commitments and contingencies | ||||||
Shareholders' equity | ||||||
Shares | 1,107,281 | 1,130,607 | ||||
Additional paid-in capital | 20,856 | - | ||||
Retained earnings | 6,445,722 | 5,855,737 | ||||
Treasury shares | (242,484) | (143,031) | ||||
Accumulated other comprehensive loss | (63,003) | (54,881) | ||||
Total shareholders' equity | 7,268,372 | 6,788,432 | ||||
Total liabilities and shareholders' equity | $ 8,903,502 | $ 8,396,896 | ||||
NOBLE CORPORATION AND SUBSIDIARIES | ||||||
CONSOLIDATED STATEMENTS OF CASH FLOWS | ||||||
(In thousands) | ||||||
(Unaudited) | ||||||
Six Months Ended | ||||||
June 30, | ||||||
2010 | 2009 | |||||
Cash flows from operating activities | ||||||
Net income | $ 588,651 | $ 806,144 | ||||
Adjustments to reconcile net income to net cash from | ||||||
operating activities: | ||||||
Depreciation and amortization | 242,084 | 192,401 | ||||
Loss on asset disposal/involuntary conversion, net | - | 28,977 | ||||
Deferred income tax provision | (11,842) | 6,431 | ||||
Share-based compensation expense | 16,285 | 17,294 | ||||
Pension contributions | (4,947) | (1,432) | ||||
Net change in other assets and liabilities | 184,193 | (51,376) | ||||
Net cash from operating activities | 1,014,424 | 998,439 | ||||
Cash flows from investing activities | ||||||
New construction | (184,963) | (275,153) | ||||
Other capital expenditures | (305,751) | (192,657) | ||||
Major maintenance expenditures | (40,687) | (57,750) | ||||
Accrued capital expenditures | (17,848) | (68,134) | ||||
Net cash from investing activities | (549,249) | (593,694) | ||||
Cash flows from financing activities | ||||||
Payments of long-term debt | - | (172,700) | ||||
Proceeds from employee stock transactions | 3,711 | 2,978 | ||||
Dividends/par value reduction payments | (23,306) | (10,470) | ||||
Repurchases of employee shares for taxes | (9,309) | (5,577) | ||||
Repurchases of shares | (88,652) | (60,867) | ||||
Net cash from financing activities | (117,556) | (246,636) | ||||
Net increase in cash and cash equivalents | 347,619 | 158,109 | ||||
Cash and cash equivalents, beginning of period | 735,493 | 513,311 | ||||
Cash and cash equivalents, end of period | $ 1,083,112 | $ 671,420 | ||||
NOBLE CORPORATION AND SUBSIDIARIES | |||||||||||||||||||
FINANCIAL AND OPERATIONAL INFORMATION BY SEGMENT | |||||||||||||||||||
(In thousands, except utilization amounts, operating days and average dayrates) | |||||||||||||||||||
(Unaudited) | |||||||||||||||||||
Three Months Ended June 30, | Three Months Ended March 31, | ||||||||||||||||||
2010 | 2009 | 2010 | |||||||||||||||||
Contract | Contract | Contract | |||||||||||||||||
Drilling | Drilling | Drilling | |||||||||||||||||
Services | Other | Total | Services | Other | Total | Services | Other | Total | |||||||||||
Operating revenues | |||||||||||||||||||
Contract drilling services | $ 687,510 | $ - | $ 687,510 | $ 868,205 | $ - | $ 868,205 | $ 808,646 | $ - | $ 808,646 | ||||||||||
Reimbursables | 12,989 | 764 | 13,753 | 22,295 | 539 | 22,834 | 23,303 | 930 | 24,233 | ||||||||||
Labor contract drilling services | - | 8,056 | 8,056 | - | 7,419 | 7,419 | - | 7,761 | 7,761 | ||||||||||
Other | 603 | - | 603 | 414 | - | 414 | 211 | - | 211 | ||||||||||
$ 701,102 | $ 8,820 | $ 709,922 | $ 890,914 | $ 7,958 | $ 898,872 | $ 832,160 | $ 8,691 | $ 840,851 | |||||||||||
Operating costs and expenses | |||||||||||||||||||
Contract drilling services | $ 275,595 | $ - | $ 275,595 | $ 251,054 | $ - | $ 251,054 | $ 254,431 | $ - | $ 254,431 | ||||||||||
Reimbursables | 9,626 | 739 | 10,365 | 18,754 | 527 | 19,281 | 18,869 | 874 | 19,743 | ||||||||||
Labor contract drilling services | - | 5,380 | 5,380 | - | 4,881 | 4,881 | - | 5,888 | 5,888 | ||||||||||
Depreciation and amortization | 123,379 | 2,848 | 126,227 | 96,952 | 2,465 | 99,417 | 113,173 | 2,684 | 115,857 | ||||||||||
Selling, general and administrative | 23,561 | 247 | 23,808 | 21,411 | 73 | 21,484 | 21,743 | 228 | 21,971 | ||||||||||
Loss on asset disposal/involuntary conversion, net | - | - | - | 16,943 | - | 16,943 | - | - | - | ||||||||||
$ 432,161 | $ 9,214 | $ 441,375 | $ 405,114 | $ 7,946 | $ 413,060 | $ 408,216 | $ 9,674 | $ 417,890 | |||||||||||
Operating income | $ 268,941 | $ (394) | $ 268,547 | $ 485,800 | $ 12 | $ 485,812 | $ 423,944 | $ (983) | $ 422,961 | ||||||||||
Operating statistics | |||||||||||||||||||
Jackups: | |||||||||||||||||||
Average Rig Utilization | 81% | 80% | 81% | ||||||||||||||||
Operating Days | 3,183 | 3,076 | 3,141 | ||||||||||||||||
Average Dayrate | $ 96,677 | $ 157,381 | $ 116,498 | ||||||||||||||||
Semisubmersibles - (6,000 feet or greater): | |||||||||||||||||||
Average Rig Utilization | 92% | 94% | 90% | ||||||||||||||||
Operating Days | 750 | 596 | 661 | ||||||||||||||||
Average Dayrate | $ 355,450 | $ 408,510 | $ 484,510 | ||||||||||||||||
Semisubmersibles - (less than 6,000 feet): | |||||||||||||||||||
Average Rig Utilization | 100% | 100% | 100% | ||||||||||||||||
Operating Days | 273 | 273 | 270 | ||||||||||||||||
Average Dayrate | $ 253,697 | $ 251,945 | $ 250,254 | ||||||||||||||||
Drillships: | |||||||||||||||||||
Average Rig Utilization | 67% | 100% | 92% | ||||||||||||||||
Operating Days | 182 | 273 | 247 | ||||||||||||||||
Average Dayrate | $ 242,045 | $ 226,187 | $ 222,306 | ||||||||||||||||
Submersibles: | |||||||||||||||||||
Average Rig Utilization | 0% | 88% | 0% | ||||||||||||||||
Operating Days | - | 161 | - | ||||||||||||||||
Average Dayrate | $ - | $ 63,324 | $ - | ||||||||||||||||
Total: | |||||||||||||||||||
Average Rig Utilization | 80% | 84% | 81% | ||||||||||||||||
Operating Days | 4,388 | 4,379 | 4,319 | ||||||||||||||||
Average Dayrate | $ 156,683 | $ 198,270 | $ 187,214 | ||||||||||||||||
NOBLE CORPORATION AND SUBSIDIARIES | |||||||||
CALCULATION OF BASIC AND DILUTED NET INCOME | |||||||||
(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, | ||||||||
2010 | 2009 | 2010 | 2009 | ||||||
Allocation of net income | |||||||||
Basic | |||||||||
Net income | $ 217,925 | $ 391,849 | $ 588,651 | $ 806,144 | |||||
Earnings allocated to unvested share-based payment awards | (2,143) | (4,174) | (5,652) | (7,671) | |||||
Net income to common shareholders - basic | $ 215,782 | $ 387,675 | $ 582,999 | $ 798,473 | |||||
Diluted | |||||||||
Net income | $ 217,925 | $ 391,849 | $ 588,651 | $ 806,144 | |||||
Earnings allocated to unvested share-based payment awards | (2,137) | (4,164) | (5,632) | (7,650) | |||||
Net income to common shareholders - diluted | $ 215,788 | $ 387,685 | $ 583,019 | $ 798,494 | |||||
Weighted average number of shares outstanding - basic | 254,224 | 258,487 | 254,671 | 258,874 | |||||
Incremental shares issuable from assumed exercise of stock options | 800 | 839 | 949 | 702 | |||||
Weighted average number of shares outstanding - diluted | 255,024 | 259,326 | 255,620 | 259,576 | |||||
Weighted average unvested share-based payment awards | 2,480 | 2,783 | 2,431 | 2,487 | |||||
Earnings per share | |||||||||
Basic | $ 0.85 | $ 1.50 | $ 2.29 | $ 3.08 | |||||
Diluted | $ 0.85 | $ 1.49 | $ 2.28 | $ 3.08 | |||||
SOURCE Noble Corporation
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