Leading contract drilling company, Noble
Corporation ( NE ) reported fourth
quarter 2012 earnings of 50 cents per share. The results failed to
meet the Zacks Consensus Estimate of 62 cents and were flat year
over year. The underperformance stemmed mainly from the extended
downtime in the deepwater rigs.HERCULES OFFSHR (HERO): Free Stock Analysis
ReportNOBLE CORP (NE): Free Stock Analysis ReportSEADRILL PTNRS (SDLP): Free Stock Analysis
ReportVANTAGE DRILLNG (VTG): Free Stock Analysis
ReportTo read this article on Zacks.com click here.Zacks Investment
However, total revenue in the quarter jumped almost 29% to $966.4
million from $751.0 million in the comparable quarter last year,
and surpassed the Zacks Consensus Estimate of $963.0 million.
Contract Drilling Services contributed $921.6 million to the total
revenue, reflecting a year-over-year increase of 28.1% mainly on
the back of improved operating days and higher average
Full-year 2012 earnings registered a 40.4% jump from the
year-earlier level to $2.05 per share. Total revenue increased
31.6% year over year to reach $3,547.0 million in 2012.
Fourth Quarter Operating Highlights
Total operating income in the quarter shot up 34.1% to $216.7
million from the year-ago level of $161.6 million. Operating income
from the Contract Drilling segment experienced a 35.8% annualized
growth and recorded $212.3 million in the quarter versus $156.3
million in the year-earlier quarter.
Total rig utilization in the quarter improved to 83% from the
year-earlier quarter level of 79%. The overall average dayrate
surged 16.0% to $174,065 from $150,027 in the year-ago
The average dayrate for semisubmersible rigs registered about
13.3% year-over-year improvement to $360,226. Average capacity
utilization was 85% versus 88% in the year-ago period. Drillships
experienced an average dayrate of $255,667 versus $207,769 in the
year-ago quarter, while average capacity utilization was 82% versus
50% in the comparable quarter of last year.
The average dayrate for the company's jackups was $100,356
compared with $89,049 in the year-ago quarter. Average capacity
utilization increased to 89% from the year-ago level of 86%. The
company has 74% of all rig days committed for this year, including
81% of floating rig days and 75% of jackup rig days. For 2014, 50%
of the rig days are booked, comprising 71% of the floater
At the end of the fourth quarter, the company had a cash balance
of $282.1 million and long-term debt of $4,634.4 million, with
debt-to-capitalization ratio of 35.3% (versus 35.6% in the
preceding quarter). At year-end 2012, Noble invested $1.7 billion
in capital projects.
Noble Corporation is a leading offshore drilling contractor and
provider of diversified services for the oil and gas
The company's initial operations on five high-end drilling ships
were lower than expected due to some critical mechanism. The five
rigs accounted for 33% of the company's downtime during the fourth
quarter. Among these five units, three state-of-the-art,
ultra-deepwater units were added in 2012 and two went for major
maintenance work before being put back into service.
Although the company's fourth quarter results were adversely
affected by a number of operational issues and delays in returning
rigs to work, its fundamentals remain strong. The company remains
committed to the fleet modernization program, accompanied with
improved revenue efficiency through lower fleet downtime. Noble
also remains enthusiastic about increasing its geographic
diversity, and is spreading out to areas like Southeast Asia.
The owner of the world's third-largest offshore drilling fleet
also foresees continued successes for its offshore drilling
We see long-term earnings and cash flow visibility in Noble's
impressive backlog position, which will be enhanced by the recent
agreement for newbuilds. The company's backlog, as of Dec 31, 2012,
stood at $14.3 billion, representing a 4.4% increase from $13.7
billion at Dec 31, 2011.
Noble retains a Zacks Rank #3, which is equivalent to a short-term
Hold rating. Other companies in the industry which are expected to
perform well in the coming one to three months include
Seadrill Partners LLC ( SDLP ) with a Zacks
Rank #1 (Strong Buy), Hercules Offshore, Inc. ( HERO ) and
Vantage Drilling Company ( VTG ). Both these
stocks carry a Zacks Rank #2 (Buy).