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Q3 2012 Earnings Call
October 18, 2012 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
Collin Gerry - Raymond James & Associates, Inc., Research Division
David Wilson - Howard Weil Incorporated, Research Division
Justin Sander - RBC Capital Markets, LLC, Research Division
Ian Macpherson - Simmons & Company International, Research Division
Robert MacKenzie - FBR Capital Markets & Co., Research Division
Robin E. Shoemaker - Citigroup Inc, Research Division
Gregory Lewis - Crédit Suisse AG, Research Division
Waqar Syed - Goldman Sachs Group Inc., Research Division
Previous Statements by NE
» Noble Management Discusses Q2 2012 Results - Earnings Call Transcript
» Noble Corporation's CEO Presents at UBS Global Energy & Gas Conference (Transcript)
» Noble's CEO Discusses Q1 2012 Results - Earnings Call Transcript
I would now like to introduce Mr. Jeff Chastain, Vice President of Investor Relations. Mr. Chastain, you may begin your conference.
Jeffrey L. Chastain
Okay. Thank you, Regina, and welcome, everyone, to Noble Corporation's Third Quarter of 2012 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. That's noblecorp.com.
Before I turn the call over to David Williams, I'd like to remind everyone that any statements we make about our plans, expectations, estimates, predictions or similar expressions for the future, including those concerning the drilling business, market outlook and industry fundamentals; financial performance, operating results, fleet condition, performance and downtime; also tax rates, spending guidance, backlog, dayrates, contract opportunities, tenders announcements, commitments and extensions, letters of intent; and finally, growth opportunities, newbuild delivery costs and dates, and plans and objectives of management for future operations, are all 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.
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, Chairman, President and Chief Executive of Noble.
David W. Williams
All right. Thank you, Jeff. Good morning, and welcome to everyone. Joining me today in Geneva are James MacLennan, Senior Vice President and Chief Financial Officer; and Roger Hunt, our Senior Vice President of Marketing and Contracts. Jeff, today, is handling his portion of the call from Houston.
Today, I'll provide some opening comments on the operational events during the third quarter that led to our reported results and review some highlights for the company and for the industry, especially as it pertains to the continued evidence of strong offshore market fundamentals. Following James' and Roger's detailed discussions on their respective areas, I'll close with some final thoughts before we begin to take your questions.
Our third quarter results were disappointing. Following the first half of 2012 when out-of-service time in the fleet was generally at or below expectations, we experienced a number of events in the third quarter that negatively influenced results. Most significant were the events involving some rigs in the U.S. Gulf of Mexico and Brazil. As most of you know, we are involved in an aggressive capital program that, once completed, will dramatically transform the look and capabilities of the Noble fleet through the addition of 8 ultra-deepwater drillships and 6 high specification jackups by the end of the year 2014.
The first of these 3 -- the first 3 of these drillships were delivered from shipyards over the second half of 2011 and placed in service in the first half of 2012. As is sometimes the case with new rigs, time may be required to get rigs in operations fully up to normal operational performance. This period may involve identifying and correcting issues that can relate to anything from software code adjustments to hardware modifications and/or repairs. This break-in period on the ultra-deepwater drillships Noble Globetrotter I and Noble Bully I was not as smooth in the third quarter as we would have preferred. However, matters involving the subsea control system on the Noble Globetrotter I and the thruster system on the Noble Bully I have been corrected and the rigs returned to their full operating dayrates, and we do expect improved performance going forward.
In Brazil, quarterly revenues were negatively impacted by a number of labor actions within the operational and regulatory support infrastructure that caused 2 rigs to be delayed following the completion of ongoing shipyard projects. These rigs included the semisubmersible Noble Dave Beard, which was limited to a special standby rate following the completion of repairs, and the drillship Noble Leo Segerius, which received no revenue in the quarter even though the rig had completed final testing and commissioning and was accepted by the client, Petrobras, to return to work in August.
As we noted previously, revenues from late August to the end of September on the Segerius are in dispute, and we believe our justification that at least a standby dayrate is warranted over this period of time and has solid contractual support. But whether or not we will win this argument with our customer remains to be seen, but we will continue to discuss this matter with Petrobras.