Q1 2013 Earnings Call
April 18, 2013 9:00 am ET
Jeffrey L. Chastain - Vice President of Investor Relations
David W. Williams - Chairman, Chief Executive Officer and President
James A. MacLennan - Chief Financial Officer and Senior Vice President
Roger B. Hunt - Senior Vice President of Marketing and Contracts
Edward Muztafago - Societe Generale Cross Asset Research
Byron K. Pope - Tudor, Pickering, Holt & Co. Securities, Inc., Research Division
Ian Macpherson - Simmons & Company International, Research Division
Robin E. Shoemaker - Citigroup Inc, Research Division
Harry Mateer - Barclays Capital, Research Division
John Booth Lowe - Cowen Securities LLC, Research Division
Matthew D. Conlan - Wells Fargo Securities, LLC, Research Division
Michael W. Urban - Deutsche Bank AG, Research Division
Waqar Syed - Goldman Sachs Group Inc., Research Division
John David Anderson - JP Morgan Chase & Co, Research Division
Previous Statements by NE
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Jeffrey L. Chastain
Okay. Thank you, Regina, and welcome, everyone, to Noble Corporation's First Quarter 2013 Earnings Call. We appreciate your interest in the company. A copy of Noble's earnings report issued last evening, along with the supporting statements and schedules, can be found on the Noble website, and that's noblecorp.com.
Before I turn the call over to David Williams, I'd like to remind everyone that we may make statements about our operations, opportunities, plans, operational and financial performance, the drilling business or other matters that are not historical facts and are forward-looking statements that are subject to certain risks and uncertainties. Our filings with the U.S. Securities and Exchange Commission, which are posted on our website, discuss the risk and uncertainties in our business and industry and the various factors that could keep outcomes of any forward-looking statements from being realized, including the price of oil and gas, customer demand, operational and other risks. Our actual results could differ materially from these forward-looking statements, and Noble does not assume any obligation to update these statements. Also note that we may use non-GAAP financial measures in the call today. If we do, you will find the required supplemental disclosure for these measures, including the most directly comparable GAAP measure and an associated reconciliation, on our website.
With that, I'll now turn the call over to David Williams, who's the Chairman, President and Chief Executive of Noble.
David W. Williams
All right. Thank you, Jeff. Good morning, everyone, and welcome. Joining me today on the call with Jeff are James MacLennan, our Senior Vice President and Chief Financial Officer; and Roger Hunt, our Senior Vice President of Marketing and Contracts. Jeff, James and I are in Houston this morning, while Roger is joining us from Geneva.
Hopefully, in addition to our improved operating results for the first quarter, you saw the news we issued early this morning regarding the contract awards for our new ultra-deepwater drillships, Noble Sam Croft and Noble Tom Madden, both from Plains Exploration & Production Company. These contracts, which add in excess of $1.3 billion in backlog, mean we now have contracts for all 5 of the drillships that remain under construction. We're absolutely delighted to have Plains as a customer, and we look forward to supporting them in their Gulf of Mexico drilling programs, and I know Roger will have more to say in this subject in just a moment.
I want to start this morning with some brief comments on our first quarter results which did see an improvement in our fleet downtime. Clearly, this is not by accident, as this area of our operational execution process is receiving a great deal of attention and we expect to deliver more consistent fleet performance going forward. I want you to be aware that operational performance will continue to be a focal point, and we do expect to see further operational improvement.
Also, we continue to enjoy a robust business climate, as evidenced by our contracts for not only the Croft and Madden and several other recent contract awards are discussed and in progress that we hope to conclude in the near future.
I want to mention some business developments that keep me excited about the industry and the foreseeable future. And after James and Roger provide expanded commentary on our quarterly financial performance in the market, I'll close with some final thoughts on some key topics for investors regarding Noble and continued transformation of the company. After that, we'll take some questions.
One highlight of our first quarter results was a reduction of about 2 percentage points in overall fleet downtime from the fourth quarter of 2012 to about 5%. While the 5% level is not the goal, when compared to levels experienced over the second half of 2012, which averaged about 6.5% over the last 6-month period, our first quarter performance represents a significant improvement. Remember that the 48 days of downtime in the first quarter were the result of the failure of the wellhead connector bolts on the Noble Paul Wolff in Brazil. In the absence of this event, which had a negative impact on the whole industry, downtime would have been around 4%, and this primarily is due to downtime on the Noble Clyde Boudreaux in Australia and the Globetrotter I in the Gulf of Mexico.
The overall improvement is noteworthy because it was accomplished in part due to operating improvements on the new ultra-deepwater drillships, Noble Bully I and Noble Bully II, and the deepwater drillships, Noble Phoenix and Noble Leo Segerius, 2 rigs that completed significant upgrade and maintenance programs late in 2012.