Leading contract drilling company,
) reported third-quarter 2013 adjusted earnings of 85 cents per
share. With a decrease in downtime and early start-up of two new
rigs, the results comfortably surpassed the Zacks Consensus
Estimate of 70 cents and improved the year-ago adjusted figure of
NOBLE CORP (NE): Free Stock Analysis Report
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The total revenue in the quarter rose 22.0% to approximately
$1,078.9 million from $884.0 million in the comparable quarter
last year and almost matched our expectation of $1,078.0 million.
Contract Drilling Services contributed $1,041.1 million to the
total revenue, reflecting a year-over-year increase of 25.0%
mainly on the start-up of two ultra-deepwater rigs and lower
Third Quarter Operating Highlights
Noble's total operating income shot up 111.5% to $378.4 million
from the year-ago level of $178.9 million. Operating income from
the Contract Drilling segment soared 120.7% year over year to
$382.5 million from $173.3 million.
Total rig utilization improved to 85% from the year-earlier level
of 78%. The overall average dayrate increased 15.4% to $194,645
from $168,608 in the year-ago quarter.
The average dayrate for semisubmersible rigs registered about a
14.5% year-over-year rise to $380,048. Average capacity
utilization was 79% versus 83% in the year-ago period.
The average dayrate for Drillships increased about 32.2% year
over year to $353,278. Average capacity utilization was 79%
versus 73% in the year-ago period.
The average dayrate for Noble's jackups was $112,414 compared
with $97,857 in the year-ago quarter. Average capacity
utilization increased to 94% from the year-ago level of 83%.
Noble has 80% of all rig days committed for the remainder of the
year, including 84% of floating rig days and 83% of jackup rig
days. For 2014, 71% of the rig days are booked, comprising 76% of
the floater time and 72% of the jackup rig days.
Overall total backlog at the end of the third quarter was
approximately $16.2 billion versus $16.0 billion at Jun 30, 2013.
The increase reflects new contracts awarded to several jackups in
the North Sea, West Africa and in the Middle East.
At the end of the third quarter, the company had a cash balance
of approximately $178.4 million and long-term debt of $5,307.8
million, with a debt-to-capitalization ratio of 37.5% (versus
38.1% in second-quarter 2013). In the reported quarter, Noble
invested $480.0 million in capital projects. For the entire year,
the company expects total capex of $2.6 billion.
Noble currently carries a Zacks Rank #3 (Hold), implying that it
is expected to perform in line with the broader U.S. equity
market over the next one to three months.
We expect the deepwater market segment to deliver strong growth
in the foreseeable future. With Noble's strong backlog position
($16.2 billion), its earnings and cash flow visibility will
likely increase in the near-to-medium term.
However, Noble remains highly leveraged to the North Sea, where
tax regime changes could have a significant impact on future
demand. Moreover, its high dependence on few customers may also
pose a risk.
Meanwhile, there are other oil and gas drilling firms that offer
value and are worth considering. These include
Ocean Rig UDW Inc.
Pioneer Energy Services Corp.
) which sport a Zacks Rank #1 (Strong Buy) or
Seadrill Partners LLC
) which currently holds a Zacks Rank #2 (Buy).