Noble CorporationNE released its Fleet Status Report on Dec 17, 2015, which showed no new contract additions. Notably, the company had no new contracts last month either, according to the Fleet Status Report .
This scenario can be detrimental to the prospects of companies like Paragon Offshore PGN - Noble Corp.'s spin-off firm - that are on the verge of bankruptcy. However, Noble Corp. has adequate cash, liquidity and contracts to sail through troubled waters.
In the current environment, there is a severe dearth of contracts for all drillers; even for those with good rigs. However, Noble Corp.'s strong management skills, farsightedness and superior capability are positives that will help the company to survive this crisis. The divestiture of all of the company's old rigs in the Paragon Offshore spin-off in 2014 is a marvelous instance of its management skill. This spin-off helped Noble Corp. achieve a strong balance sheet and fleet of good rigs.
Most underwater drillers continue to trade on oil prices that are still very volatile. The near-term negatives include Iranian oil (in storage and in the ground) hitting the markets and slowdown of activity in China. The positives include increased consumption in the U.S., recovery in Europe (driving consumption) and Mideast instability.
Noble Corp. is a leading offshore drilling firm with a robust portfolio of assets. The company provides diversified services for the oil and gas industry. The company performs contract drilling services with a fleet of 32 offshore drilling units (consisting of 17 semi-submersibles and drillships and 15 jackups).Though the industry witnessed a setback in the past few months, the company is likely to be less impacted by the situation than its peers. This is because Noble Corp. enjoys a strong backlog position.
Noble Corp. has made continuous endeavors to upgrade its fleet through acquisitions and newbuild projects. Moreover, it continues to benefit from its robust position in the ultra-deepwater market.
Noble Corp. currently carries a Zacks Rank #2 (Buy). Some other well-placed players from the energy sector are Energy Transfer Equity, L.P. ETE and Boardwalk Pipeline Partners, LP BWP . Each of these stocks sports a Zacks Rank #1 (Strong Buy).
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.