Press release from PR Newswire
Noble Corporation Reports Third Quarter 2010 Earnings of $0.34 per Diluted Share
Wednesday, October 20, 2010
Noble Corporation Reports Third Quarter 2010 Earnings of $0.34 per Diluted Share17:20 EDT Wednesday, October 20, 2010ZUG, Switzerland, Oct. 20 /PRNewswire-FirstCall/ -- Noble Corporation (NYSE: NE) today reported third quarter 2010 earnings of $86 million, or $0.34 per diluted share, versus $426 million, or $1.63 per diluted share, for the third quarter of last year. Results for the third quarter 2010 reflect $14 million, or $0.05 cents per share, in transaction costs associated with the acquisition of FDR Holdings Limited (?Frontier?) at the end of July 2010. Contract drilling services revenues for the third quarter of 2010 were $585 million versus $875 million in the third quarter of 2009. The Company generated $271 million in net cash provided by operating activities in the quarter. ?We are pleased to have closed the Frontier transaction during the quarter and commenced a new chapter in our relationship with Shell,? said David W. Williams, Chairman, President and Chief Executive Officer. ?However, the continuing and far-reaching effects of the ongoing operational disruption in the U.S. Gulf of Mexico negatively impacted Noble?s third-quarter results. We recognize that the effects of U.S. policies related to offshore drilling will be felt into 2011 and beyond. Noble continues to make progress toward full compliance with the recently released regulatory changes, and we look forward to clearing the remainder of these hurdles and returning to work in the near term.?Noble invested $355 million in capital projects during the quarter and repurchased 4 million shares at an average cost per share of $32.67, bringing the total number of shares repurchased in 2010 to 6.1 million shares as of September 30, 2010. At the end of the third quarter 2010, the Company had approximately 6.8 million shares remaining on its existing repurchase authorization. Debt as a percentage of total capitalization increased to 27.4 percent at September 30, 2010 from approximately 9.4 percent at the end of the second quarter 2010 due to the issuance of $1.25 billion aggregate principal amount of senior unsecured notes in July 2010 to finance the purchase of Frontier and the assumption of approximately $690 million of fully consolidated Bully joint venture project financing debt.Operations HighlightsAt the end of the third quarter 2010, approximately 72 percent of the Company?s available rig operating days were committed for the remainder of 2010 and approximately 49 percent were committed for 2011. The Company?s total backlog at September 30, 2010 was approximately $14 billion. In the U.S. Gulf of Mexico, the newbuild ultra-deepwater semisubmersible Noble Jim Day is currently undergoing final testing, customer acceptance and certification of the rig?s blowout preventer (BOP) before commencing its contract with Marathon. The Noble Danny Adkins has received certification of its BOP and commenced operations during the quarter at full dayrate. Also, the Noble Amos Runner has received its BOP certification and the unit has recently been substituted for the Noble Lorris Bouzigard at that rig?s same dayrate. The Noble Lorris Bouzigard has been stacked. The Company?s remaining deepwater units in the Gulf are in the process of having their BOPs recertified. In Mexico, the Noble Earl Frederickson received a contract extension through December 31, 2010 at a dayrate of $62,000 - $64,000 and the Noble Lewis Dugger received an extension of the current direct assignment which extends the contract to November 15, 2010 at a dayrate of $76,000 - $78,000. In the North Sea, the Noble Julie Robertson received a contract extension through March 31, 2011 at $86,000 - $88,000 per day and a letter of intent for one year at $88,000 - $90,000 per day. The Noble Ronald Hoope contract has been extended until March 31, 2011 at the previously reported dayrate. The Noble George Sauvageau signed a one year contract with its current operator which will extend the rig through December 31, 2011. In West Africa, the Noble Lloyd Noble received a letter of intent for one well that is expected to begin shortly. In the Middle East, the Noble Scott Marks and Noble Roger Lewis each received three year contracts in Saudi Arabia at dayrates of $236,000 - $238,000 and $131,000 - $133,000 respectively. These rates do not include lump sum payments for mobilization and capital upgrades. Noble has initiated arbitration proceedings in connection with the Noble Homer Ferrington, currently located in the Mediterranean, with respect to an assignment of the drilling contract between operators. Payment of the dayrate is subject to the resolution of this dispute. The rig has been on standby since April 24, 2010 and continues to be on standby. Pending resolution of the dispute, the Company has not recorded any revenue related to the assignment. ?Looking ahead, while there is little doubt we will be forced to endure continued challenges in the U.S. Gulf as a result of regulatory uncertainty, we remain optimistic about the long-term strength of the Company and the industry,? said Williams. ?As clarity increases in the months ahead and we return to work, the Company?s backlog and operating efficiency position us to resume our historical value creation and prepare us for further growth opportunities.?About NobleNoble is a leading offshore drilling contractor for the oil and gas industry. Noble performs, through its subsidiaries, contract drilling services with a fleet of 69 offshore drilling units (including five drilling rigs currently under construction) located worldwide, including in the Middle East, India, the U.S. Gulf of Mexico, Mexico, the Mediterranean, the North Sea, Brazil, West Africa and Asian Pacific. Noble also owns and operates a dynamically positioned floating production, storage, offloading vessel. Noble?s shares are traded on the New York Stock Exchange under the symbol "NE". Additional information on Noble Corporation is available via the worldwide web at http://www.noblecorp.com.Statements regarding contract backlog, earnings, costs, revenue, rig demand, fleet condition or performance, shareholder value, contract commitments, dayrates, contract commencements, contract extensions or renewals, letters of intent or award, industry fundamentals, customer relationships, future performance, growth opportunities, market outlook, as well as any other statements that are not historical facts in this release, are forward-looking statements that involve certain risks, uncertainties and assumptions. These include but are not limited to operating hazards and delays, risks associated with operations outside of the U.S., actions by regulatory authorities, customers and other third parties, legislation and regulations affecting drilling operations, compliance with regulatory requirements, costs and difficulties relating to the integration of acquired businesses, factors affecting the level of activity in the oil and gas industry, supply and demand of drilling rigs, factors affecting the duration of contracts, the actual amount of downtime, factors that reduce applicable dayrates, violations of anti-corruption laws, hurricanes and other weather conditions, the future price of oil and gas and other factors detailed in the Company?s most recent Form 10-K, Form 10-Q?s and other filings with the Securities and Exchange Commission. Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual results may vary materially from those indicated. Conference Call Noble has scheduled a conference call and webcast related to its third quarter 2010 results on Thursday, October 21, 2010, at 8:00 a.m. U.S. Central Daylight Time. Interested parties are invited to listen to the call by dialing from the U.S. 1-866-461-7129, or +1-706-679-3084 from outside the U.S., using access code: 38611734 or by asking for the Noble Corporation conference call. Interested parties may also listen over the Internet through a link posted in the Investor Relations section of the Company?s Web site. A replay of the conference call will be available on Thursday, October 21, 2010, beginning at 11:00 p.m. U.S. Central Daylight Time, through Wednesday, October 27, 2010, ending at 5:00 p.m. U.S. Central Daylight Time. The phone number for the conference call replay is 1-800-642-1687 from the U.S. or, for calls from outside of the U.S., +1-706-645-9291, using access code: 38611734.The replay will also be available on the Company?s Web site following the end of the live call. The conference call may include non-GAAP financial measures. Noble will post a reconciliation of any such measures to the most directly comparable GAAP measures in the ?Investor Relations? section of the Company?s Web site under the heading ?Regulation G Reconciliations.? NOBLE CORPORATION AND SUBSIDIARIESCONSOLIDATED STATEMENTS OF INCOME(In thousands, except per share amounts)(Unaudited)Three Months EndedNine Months EndedSeptember 30,September 30,2010200920102009Operating revenues Contract drilling services $ 584,919$ 874,969$ 2,081,075$ 2,615,571Reimbursables 19,17722,45557,16361,967Labor contract drilling services 7,8877,49023,70421,843Other 6357211,4491,277612,618905,6352,163,3912,700,658Operating costs and expenses Contract drilling services 315,844250,842845,870742,752Reimbursables 14,35118,71744,45952,081Labor contract drilling services 5,3024,64216,57013,899Depreciation and amortization 143,282103,245385,366295,646Selling, general and administrative 25,48221,70071,26160,901Loss on asset disposal/involuntary conversion, net -2,076-31,053504,261401,2221,363,5261,196,332Operating income 108,357504,413799,8651,504,326Other income (expense) Interest expense, net of amount capitalized (4,144)(379)(5,119)(1,261)Interest income and other, net 2,5612,6057,1934,995Income before income taxes 106,774506,639801,9391,508,060Income tax provision (20,287)(80,556)(126,801)(275,833)Net income 86,487426,083675,1381,232,227Net income attributable to noncontrolling interests (467)-(467)-Net income attributable to Noble Corporation $ 86,020$ 426,083$ 674,671$ 1,232,227Net income per share Basic $ 0.34$ 1.63$ 2.63$ 4.72Diluted $ 0.34$ 1.63$ 2.62$ 4.70NOBLE CORPORATION AND SUBSIDIARIESCONSOLIDATED BALANCE SHEETS(In thousands)(Unaudited)September 30,December 31,20102009ASSETS Current assets Cash and cash equivalents $ 367,242$ 735,493Accounts receivable 487,029647,454Prepaid expenses and other current assets 133,786100,243Total current assets 988,0571,483,190Property and equipment Drilling equipment and facilities 11,981,1118,666,750Other 167,290143,477Total property and equipment 12,148,4018,810,227Accumulated depreciation (2,468,867)(2,175,775)Net property and equipment 9,679,5346,634,452Other assets 338,833279,254Total assets $ 11,006,424$ 8,396,896LIABILITIES AND EQUITY Current liabilities Current maturities of long term debt $ 52,650$ -Accounts payable 277,944197,800Accrued payroll and related costs 127,046100,167Taxes payable 35,75168,760Other current liabilities 96,05167,220Total current liabilities 589,442433,947Long-term debt 2,670,701750,946Deferred income taxes 270,645300,231Other liabilities 274,546123,340Total liabilities 3,805,3341,608,464Commitments and contingencies Shareholders' equity Shares 947,7101,130,607Additional paid-in capital 31,350-Retained earnings 6,531,7425,855,737Treasury shares (373,813)(143,031)Accumulated other comprehensive loss (60,994)(54,881)Total shareholders' equity 7,075,9956,788,432Noncontrolling interests 125,095-Total equity 7,201,0906,788,432Total liabilities and equity $ 11,006,424$ 8,396,896NOBLE CORPORATION AND SUBSIDIARIESCONSOLIDATED STATEMENTS OF CASH FLOWS(In thousands)(Unaudited)Nine Months EndedSeptember 30,20102009Cash flows from operating activities Net income $ 675,138$ 1,232,227Adjustments to reconcile net income to net cash from operating activities: Depreciation and amortization 385,366295,646Loss on asset disposal/involuntary conversion, net -31,053Deferred income tax provision (29,586)29,916Share-based compensation expense 26,90628,543Pension contributions (8,249)(13,022)Net change in other assets and liabilities 236,122(89,150)Net cash from operating activities 1,285,6971,515,213Cash flows from investing activities New construction (381,928)(457,233)Other capital expenditures (439,921)(342,399)Major maintenance expenditures (64,244)(93,112)Accrued capital expenditures 4,213(44,493)Acquisition of FDR Holdings Limited, net of cash acquired (1,629,644)-Net cash from investing activities (2,511,524)(937,237)Cash flows from financing activities Payments of long-term debt -(172,700)Proceeds from issuance of joint venture partner notes 35,000-Proceeds from issuance of long-term debt, net 1,238,074-Proceeds from employee stock transactions 9,7039,371Settlements of interest rate swap agreements (2,041)-Dividends/par value reduction payments (193,869)(35,093)Repurchases of employee shares for taxes (9,961)(6,475)Repurchases of shares (219,330)(130,297)Net cash from financing activities 857,576(335,194)Net increase in cash and cash equivalents (368,251)242,782Cash and cash equivalents, beginning of period 735,493513,311Cash and cash equivalents, end of period $ 367,242$ 756,093NOBLE CORPORATION AND SUBSIDIARIESFINANCIAL AND OPERATIONAL INFORMATION BY SEGMENT(In thousands, except utilization amounts, operating days and average dayrates)(Unaudited)Three Months Ended September 30,Three Months Ended June 30,201020092010ContractContractContractDrillingDrillingDrillingServicesOtherTotalServicesOtherTotalServicesOtherTotalOperating revenues Contract drilling services $ 584,919$ -$ 584,919$ 874,969$ -$ 874,969$ 687,510$ -$ 687,510Reimbursables 18,48868919,17721,51194422,45512,98976413,753Labor contract drilling services -7,8877,887-7,4907,490-8,0568,056Other 635-635509212721603-603$ 604,042$ 8,576$ 612,618$ 896,989$ 8,646$ 905,635$ 701,102$ 8,820$ 709,922Operating costs and expenses Contract drilling services $ 315,844$ -$ 315,844$ 250,842$ -$ 250,842$ 275,595$ -$ 275,595Reimbursables 13,69665514,35117,81190618,7179,62673910,365Labor contract drilling services -5,3025,302-4,6424,642-5,3805,380Depreciation and amortization 140,1993,083143,282100,6692,576103,245123,3792,848126,227Selling, general and administrative 25,22026225,48221,6297121,70023,56124723,808Loss on asset disposal/involuntary conversion, net ---2,076-2,076---$ 494,959$ 9,302$ 504,261$ 393,027$ 8,195$ 401,222$ 432,161$ 9,214$ 441,375Operating income $ 109,083$ (726)$ 108,357$ 503,962$ 451$ 504,413$ 268,941$ (394)$ 268,547Operating statistics Jackups: Average Rig Utilization 77%80%81%Operating Days 3,0323,1833,183Average Dayrate $ 90,791$ 143,388$ 96,677Semisubmersibles - (6,000 feet or greater): Average Rig Utilization 89%98%92%Operating Days 736631750Average Dayrate $ 203,316$ 434,435$ 355,450Semisubmersibles - (less than 6,000 feet): Average Rig Utilization 94%100%100%Operating Days 321276273Average Dayrate $ 102,589$ 261,167$ 253,697Drillships: Average Rig Utilization 100%100%67%Operating Days 468276182Average Dayrate $ 229,963$ 243,186$ 242,045Submersibles/others: Average Rig Utilization 26%42%0%Operating Days 6478-Average Dayrate $ 304,000$ 65,944$ -Total: Average Rig Utilization 79%83%80%Operating Days 4,6214,4444,388Average Dayrate $ 126,581$ 196,900$ 156,683NOBLE CORPORATION AND SUBSIDIARIESCALCULATION OF BASIC AND DILUTED NET INCOME(In thousands, except per share amounts)(Unaudited)The following table sets forth the computation of basic and diluted net income per share: Three months endedNine months endedSeptember 30,September 30,2010200920102009Allocation of net income Basic Net income $ 86,020$ 426,083$ 674,671$ 1,232,227Earnings allocated to unvested share-based payment awards (828)(4,520)(6,416)(12,176)Net income to common shareholders - basic $ 85,192$ 421,563$ 668,255$ 1,220,051Diluted Net income $ 86,020$ 426,083$ 674,671$ 1,232,227Earnings allocated to unvested share-based payment awards (825)(4,505)(6,394)(12,141)Net income to common shareholders - diluted $ 85,195$ 421,578$ 668,277$ 1,220,086Weighted average number of shares outstanding - basic 252,513257,913253,944258,550Incremental shares issuable from assumed exercise of stock options 672925855778Weighted average number of shares outstanding - diluted 253,185258,838254,799259,328Weighted average unvested share-based payment awards 2,4532,7652,4382,581Earnings per share Basic $ 0.34$ 1.63$ 2.63$ 4.72Diluted $ 0.34$ 1.63$ 2.62$ 4.70SOURCE Noble CorporationFor further information: Investors, Lee M. Ahlstrom, Vice President - Investor Relations and Planning, +1-281-276-6440, or Media, John S. Breed, Director of Corporate Communications, +1-281-276-6729, both of Noble Drilling Services Inc.