Noble Corporation (NE)
Q4 2010 Earnings Conference Call
January 27, 2011 9:00 AM ET
Lee Ahlstrom – VP, IR and Planning
David Williams – President, Chairman and CEO
Tom Mitchell – CFO
Roger Hunt – SVP, Marketing and Contracts
Joe Hill – Tudor Pickering
Kurt Hallead – RBC Capital
Ian McPherson – Simmons
Mike Urban – Deutsche Bank
Dave Wilson – Howard Weil
Dan Boyd – Goldman Sachs
Geoff Kieburtz – Weeden
Scott Grouper – Sanford Bernstein
Doug Becker – Merrill Lynch
Arun Jayaram – Credit Suisse
Robin Shoemaker – Citi
Previous Statements by NE
» Noble Corp. CEO Discusses Q3 2010 Results - Earnings Call Transcript
» Noble Corp. Q2 2010 Earnings Call Transcript
» Noble Corporation Q1 2010 Earnings Call Transcript
As a reminder, ladies and gentlemen, this conference is being recorded today, Thursday, January 27, 2011. Thank you. I would now like to introduce Mr. Lee Ahlstrom, Vice President of Investor Relations and Planning. Mr. Ahlstrom, you may begin your conference.
Thank you, Sylvia, and welcome to Noble Corp’s fourth quarter and full year 2010 earnings call. Before we begin, I’d like to remind everyone that any statements we make today about our plans, expectations, estimates, predictions or similar expressions for the future, including those concerning the drilling business, financial performance, operating results, tax rates, spending guidance, backlog, day rates, contract tenders, and extensions or commencements, letters of intent, the outlook for the U.S. Gulf of Mexico and other regions, new bill delivery costs and dates, plans and objectives of management for future operations, and the outcome of any litigation, dispute or investigation are forward-looking statements and are subject to risks and uncertainties.
Our filings with the U.S. Securities and Exchange Commission, which are posted on our website, discuss the risks and uncertainties in our business and industry, and the various factors that could keep outcomes of any forward-looking statements from being realized. Our actual results could differ materially from these forward-looking statements.
We have included summary balance sheets and income and cash flow statements with our earnings news release. 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.
Now, I’ll turn the call over to David Williams, our President, Chairman, and Chief Executive Officer.
Thanks, Lee. Hello, everyone, and thanks for joining us today. With me in Geneva are Tom Mitchell, our CFO, and Roger Hunt, our Senior Vice President of Marketing and Contracts.
I’d like to start off today by thanking our employees for turning in another year of impressive results. Advancing the safety culture and maintaining a focus on operational integrity are not always the easiest things to do especially when you’re already in a leadership position. However, our worldwide efforts in these areas continue to increase awareness and drive results to the point that we turned in our second-best ever safety performance in our 90-year history, coming in right behind 2009’s record-breaking results.
Furthermore, I’m pleased to see that our overall potential severity rate continues to follow a downward trend. And while four of our seven operating divisions have extended their record-breaking results last year, more work lies ahead of us in 2011 and beyond as we journey towards creating a truly accident-free environment.
With respect to 2010, the best thing I can say is we’re glad it’s over. We had some wins last year, including our acquisition with Frontier, our agreements with Shell, and the announcements about our newbuild jackups. But we certainly faced our share of challenges, including the fallout from Macondo, both in the U.S. and abroad, continuing uncertainty in Mexico and some construction challenges.
I’d like to talk about some of these issues today. Going into 2010, about 30% of our budget’s revenue was projected to come out of the U.S. Gulf of Mexico. So when the Macondo event occurred, we were exposed. When the government imposed a moratorium, a tragic situation was compounded by economic uncertainty.
In the wake of what was believed to be a six-month moratorium and because of where we were on the Frontier deal, we moved quickly to try and preserve our backlog, sustain our workforce, and protect our future earnings. We sincerely appreciate those customers who worked with us and who continue to work with us.
While these events have had a significant overall impact on our company, our two biggest disappointments coming out of this, other than the now three-month-old permatorium, have been the cancelation of the Noble Jim Day contract and the controversy that arose on the Noble Homer Ferrington. In both cases, the dialogue at the time led us to believe that the situations would be resolved satisfactorily in due course. So perhaps we’re guilty of being too optimistic for too long.
I will tell you that our relationship with Exxon Mobil remains strong and I believe we will ultimately prevail in our claim for payment on the Ferrington. With regard to Marathon, we’re considering our options and I can’t predict how that dispute will ultimately work out.
I will tell you that the Noble Jim Day is one of the finest rigs I’ve ever seen and it befits its namesake. Furthermore, the rig is completely ready to go to work, having received its certificate of compliance from the Coast Guard, a COC on the BOP system, and a positive third-party fitness report all before January the 1st.