) inked a pair of agreements for the sale of jackup rigs. The
total consideration of the transactions is around $79 million.
Both the deals are expected to close by early next year, subject
to necessary closing conditions.
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Under the first deal, Noble intends to sell jackup Noble Lewis
Dugger to an affiliate of Mexico's Goimar SA de CV for $61
million. The rig is capable of performing operations at a water
depth of 300 feet. The unit is presently under contract with
PEMEX and hence the deal will get closed as the PEMEX contract
The second agreement calls for the sale of a rig capable of
drilling at 150-foot water depth to Nigeria's Axxis
Petroconsultants Ltd. for $18 million. This unit has been idle in
Cameroon since the last three years.
Switzerland-based Noble is a provider of diversified services for
the oil and gas industry. The company has made continuous
endeavors to upgrade its fleet through acquisitions or
divestitures as well as through newbuild projects.
We remain optimistic on Noble given its long-term growth
strategy, geographically diversified fleet, potential
acquisitions and newbuilding. We see long-term earnings and cash
flow visibility with the company's solid backlog position, which
was further enhanced by its agreements for newbuilds. We remain
upbeat on the company due to strong oil prices and growing jackup
rig demand in the core markets of the Arabian Gulf, North Sea,
Mexico, the Middle East and Southeast Asia.
Although the company's third quarter results were adversely
affected by a number of operational issues and delays in
returning rigs to work, the fundamentals remain strong and Noble
remains busy in securing contracts for both floating and jackup
rigs at significantly higher dayrates. The owner of the world's
third-largest offshore drilling fleet foresees continued
successes for its offshore drilling business.
However, we are cautious as offshore drillers face a number of
headwinds, including the lack of pricing power and geopolitical
risks associated with international operations and operational
challenges. Again, tough competition from its larger peers such
Diamond Offshore Drilling Inc.
) is a concern.
Over the longer term, we expect the stock to perform in line with
the broader market. The company retains a Zacks #3 Rank, which is
equivalent to a short-term Hold rating.