Noble Corporation Reports Third Quarter 2021 Results

SUGAR LAND, Texas, Nov. 4, 2021 /PRNewswire/ -- Noble Corporation (NYSE: NE, "Noble", or the "Company") today reported third quarter 2021 results.

Robert W. Eifler, President and Chief Executive Officer of Noble Corporation, stated "I am pleased with the performance of the Noble team over the third quarter. Notably, the Noble Lloyd Noble has now started its contract for Equinor in Norway and I'd like to thank our employees and local business partners for their effort and focus.  We also recently completed the successful sale of four jackups in Saudi Arabia. That transaction further bolsters our balance sheet, creates value for our shareholders, and supports our return of capital strategy."  

Third Quarter Results

Contract drilling services revenue for the third quarter of 2021 totaled $231 million compared to $200 million in the second quarter of 2021. The increase in revenue was largely due to contract commencements on the Noble Clyde Boudreaux and Noble Faye Kozack (formerly Pacific Khamsin); and higher operating days on the Noble Scott Marks, Noble Tom Prosser, Noble Sam Croft, and Noble Stanley Lafosse (formerly Pacific Sharav). Additionally, contract drilling services revenue included a reduction of $14 million in each of the second and third quarters of 2021 related to the non-cash amortization of favorable customer contract intangibles. Marketed fleet utilization was 81 percent in the three months ended September 30, 2021 compared to 74 percent in the second quarter.

Contract drilling services costs for the third quarter were $189 million, in line with the second quarter of 2021. As a result, contract drilling margin increased to 23 percent from 12 percent in the previous period when excluding the non-cash intangible amortization. During the third quarter, Noble incurred approximately $10 million of costs in connection to damages sustained during Hurricane Ida.

Adjusted EBITDA for the three months ended September 30, 2021 was $47 million compared to $10 million in the second quarter of 2021.            

Upon emergence from restructuring, Noble adopted fresh-start accounting which resulted in Noble becoming a new reporting entity for accounting and financial reporting purposes.  Accordingly, our financial statements and notes after February 5, 2021 are not comparable to our financial statements and notes prior to that date.  As required by GAAP, results must be presented separately for the predecessor period up to February 5, 2021 (the "Predecessor" period) and the successor period from February 6, 2021 through all dates after (the "Successor" period). 

Operating Highlights

Jackups – Over the course of the third quarter, the Noble Tom Prosser was awarded a new contract with Santos for three wells in Australia.  These firm wells are expected to start in the first quarter of 2022 in direct continuation of the rig's current contract with Santos.  In the UK North Sea, our customer IOG elected to exercise the first of two one-well options for the Noble Hans Deul.  In September the Noble Lloyd Noble received its Acknowledgement of Compliance from the Petroleum Safety Authority Norway and in late-October commenced its contract with Equinor.  The Noble Regina Allen recently completed its contract with BHP in Trinidad and Tobago and the Company is pursuing opportunities for follow-on work in the region.

Floaters – The Noble Gerry de Souza (formerly Pacific Santa Ana) completed its plug and abandonment contract with Petronas in Mauritania.  Since program conclusion in August, the rig has since mobilized to Las Palmas to complete installation of a managed pressure drilling system and a second blowout preventer stack in preparation for previously announced work in Suriname for APA Corporation.  In early September, the Noble Faye Kozack began operations for Petronas in Mexico and is expected to return to the U.S. Gulf of Mexico to start its next contract with Murphy in the fourth quarter.

Backlog and Liquidity Update       

At September 30, 2021, the Company's estimated revenue backlog totaled approximately $1.5 billion.  Additionally, the Company had total liquidity of $588 million consisting of $112 million in cash and $476 million available under its revolving credit facility.

On November 3, 2021, Noble completed the sale of four jackup rigs working in Saudi Arabia. The company expects to generate approximately $285 million in cash from the transaction net of fees, expenses, and the settlement of working capital. Applying the net proceeds on a pro forma basis, liquidity would have been approximately $873 million at September 30, 2021. Excluding the backlog related to the rigs sold, total backlog would be approximately $1.4 billion.

Outlook

Commenting on the state of the offshore drilling industry, Mr. Eifler added, "Oil prices remained stable through the third quarter and within a dollar-per-barrel range that provides supportive economics for our customers' offshore projects. Global energy demand also continues to normalize from last year's pandemic-driven lows. On the back of these global macro improvements, the rig market has continued to show consistent signs of recovery throughout 2021, especially in the UDW segment. These recent market trends are encouraging and are supportive of our strategy to implement a sustainable return of capital policy."

The Company also provided updated guidance for full year 2021 and full year 2022:

Fleet Status Report

In conjunction with third quarter results, the Company has also provided an updated "Fleet Status Report" which reflects the current status and contract information for each of its rigs.  The updated report can be found under the "Our Fleet" section of Company's website.

Conference Call

Noble has scheduled a conference call related to its third quarter 2021 results on Friday, November 5, 2021, at 8:00 a.m. U.S. Central Time.  Interested parties can access the call at https://events.q4inc.com/attendee/619174973 or via a live webcast available through the Company's Investor Relations website at https://investors.noblecorp.com.  A replay of the webcast will be available on the Investor Relations website for a limited time following the scheduled call.

For additional information, visit www.noblecorp.com or email [email protected] 

Craig Muirhead
Vice President - Investor Relations and Treasurer
+1 713-239-6564

Aaron Campbell
Director - Investor Relations
+1 713-417-9112

About Noble Corporation

Noble is a leading offshore drilling contractor for the oil and gas industry. The Company owns and operates one of the most modern, versatile, and technically advanced fleets in the offshore drilling industry. Noble and its predecessors have been engaged in the contract drilling of oil and gas wells since 1921.  Currently, Noble performs, through its subsidiaries, contract drilling services with a fleet of 20 offshore drilling units, consisting of 12 drillships and semisubmersibles and 8 jackups, focused largely on ultra-deepwater and high-specification jackup drilling opportunities in both established and emerging regions worldwide. Noble is an exempted company incorporated in the Cayman Islands with limited liability with registered office at P.O. BOX 309, Ugland House, S. Church Street, Grand Cayman, KY1-1104.

Forward-looking Statements

This communication includes "forward-looking statements" within the meaning of Section 27A of the Securities Act and Section 21E of the Exchange Act. All statements other than statements of historical facts included in this communication, including those regarding 2021 and 2022 guidance, including revenue, EBITDA and capital expenditures, net proceeds from the sale of four jackup rigs working in Saudi Arabia, the impact of the transaction and use of proceeds, free cash flow, return of capital to shareholders, rig demand, the offshore drilling market, oil prices, contract backlog, fleet status, our future financial position, business strategy, liquidity, borrowings under our credit facility or other instruments, sources of funds, future capital expenditures, contract commitments, dayrates, contract commencements, extension or renewals, contract tenders, plans and objectives of management for future operations, industry conditions, access to financing, impact of competition, worldwide economic conditions and timing, benefits or results of acquisitions or dispositions are forward-looking statements. When used in this report, or in the documents incorporated by reference, the words "anticipate," "believe," "could," "estimate," "expect," "intend," "may," "might," "plan," "project," "should," "shall" and "will" and similar expressions are intended to be among the statements that identify forward-looking statements. Although we believe that the expectations reflected in such forward-looking statements are reasonable, we cannot assure you that such expectations will prove to be correct. These forward-looking statements speak only as of the date of this communication and we undertake no obligation to revise or update any forward-looking statement for any reason, except as required by law.  We have identified factors, including, but not limited to, uncertainties relating to the effects of public health threats, pandemics and epidemics, such as the recent and ongoing outbreak of COVID-19, and the adverse impact thereof on our business, financial condition and results of operations (including but not limited to our growth, operating costs, supply chain, availability of labor, logistical capabilities, customer demand for our services and industry demand generally, our liquidity, the price of our securities and trading markets with respect thereto, our ability to access capital markets, and the global economy and financial markets generally), the effects of actions by, or disputes among OPEC+ members with respect to production levels or other matters related to the price of oil, market 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, operating hazards and delays, risks associated with operations outside the US, actions by regulatory authorities, credit rating agencies, customers, joint venture partners, contractors, lenders and other third parties, legislation and regulations affecting drilling operations, compliance with regulatory requirements, violations of anti-corruption laws, shipyard risk and timing, delays in mobilization of rigs, hurricanes and other weather conditions, and the future price of oil and gas, that could cause actual plans or results to differ materially from those included in any forward-looking statements.  These factors include those "Risk Factors" referenced or described in the Company's most recent Form 10-K, Form 10-Q's, and other filings with the Commission. We cannot control such risk factors and other uncertainties, and in many cases, we cannot predict the risks and uncertainties that could cause our actual results to differ materially from those indicated by the forward-looking statements. You should consider these risks and uncertainties when you are evaluating us.

NOBLE CORPORATION AND SUBSIDIARIES
NON-GAAP MEASURES AND RECONCILIATION

Certain non-GAAP performance measures and corresponding reconciliations to GAAP financial measures for the Company have been provided for meaningful comparisons between current results and prior operating periods. Generally, a non-GAAP financial measure is a numerical measure of a company's performance, financial position, or cash flows that excludes or includes amounts that are not normally included or excluded in the most directly comparable measure calculated and presented in accordance with generally accepted accounting principles. The Company defines "Adjusted EBITDA" as net loss from continuing operations before income taxes; interest income and other, net; gain (loss) on extinguishment of debt, net; interest expense, net of amounts capitalized; loss on impairment; pre-petition charges; reorganization items, net; certain corporate legal matters; and depreciation and amortization expense. We believe that Adjusted EBITDA measure provides greater transparency of our core operating performance.

 In order to fully assess the financial operating results, management believes that the results of operations, adjusted to exclude the following items, which are included in the Company's press release issued on November 4, 2021, are appropriate measures of the continuing and normal operations of the Company:

These non-GAAP adjusted measures should be considered in addition to, and not as a substitute for, or superior to, contract drilling revenue, contract drilling cost, contract drilling margin, average daily revenue, operating income, cash flows from operations, or other measures of financial performance prepared in accordance with GAAP. Please see the following non-GAAP Financial Measures and Reconciliations for a complete description of the adjustments.

SOURCE Noble Corporation