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Press release from PR Newswire

Noble Corporation Reports First Quarter 2011 Earnings of $0.21 per Diluted Share

Wednesday, April 20, 2011

Noble Corporation Reports First Quarter 2011 Earnings of $0.21 per Diluted Share16:33 EDT Wednesday, April 20, 2011ZUG, Switzerland, April 20, 2011 /PRNewswire/ -- Noble Corporation (NYSE: NE) today reported first quarter 2011 earnings of $54 million, or $0.21 per diluted share, versus $99 million, or $0.39 per diluted share, for the fourth quarter of 2010. First quarter 2011 results include a one-time after-tax net gain of $0.06 per diluted share related to the previously announced substitution of the drillship Noble Phoenix for the drillship Noble Muravlenko in Brazil. Contract drilling services revenues for the first quarter of 2011 were $543 million versus $614 million for the fourth quarter of 2010. Contract drilling margin for the first quarter of 2011 was approximately 44 percent, versus 46 percent in the prior quarter. Noble invested $614 million in capital projects during the quarter."Noble's first quarter results reflect the continuing impact of drilling restrictions in the U.S. Gulf of Mexico," said David W. Williams, Chairman, President and Chief Executive Officer. "However, improving utilization in the rest of the world coupled with our extensive contract backlog afforded us the financial flexibility to expand and extend our newbuild program, adding both high-spec ultra-deepwater and jackup units to the fleet. With several new contracts commencing this quarter and the possibility of increased permitting in the U.S. Gulf of Mexico, we expect contract drilling revenues to improve across the balance of the year."In February 2011, Noble issued $1.1 billion aggregate principal amount of senior notes in three separate tranches with a weighted average coupon of 4.71 percent. A portion of the proceeds was used to repay our half of the $693 million of joint venture debt associated with the Noble Bully I and Noble Bully II drillships. Our joint venture partner, Shell, contributed the remaining half to retire the full balance of the debt. Debt as a percentage of total capitalization was 29 percent at March 31, 2011.Operations HighlightsAt the end of the first quarter of 2011, approximately 64 percent of the Company's available rig operating days were committed for the remainder of 2011 and approximately 33 percent were committed for 2012. The Company's total backlog at March 31, 2011 was approximately $13.1 billion.In the first quarter, Noble continued its strategy of upgrading its fleet by adding rigs with the latest technology and capabilities. Noble announced a total of five newbuilds, including three ultra-deepwater drillships and two heavy duty, harsh environment (HDHE) jackups which are in addition to the two HDHE jackups announced in December 2010. Deliveries are expected to commence in the fourth quarter of 2012 when the first jackup is scheduled to be completed. Additionally, the first of the three drillships has been awarded a Letter of Intent for five and a half years with an expected commencement date in the second half of 2013 at a dayrate of $410,000. The unit is eligible for up to a 15 percent performance bonus. In the past five months, Noble has committed more than $2.7 billion to its fleet upgrade strategy. The Company has one remaining drillship option that expires August 31, 2011 and two remaining jackup options that expire January 1, 2012.In the U.S. Gulf of Mexico, the Noble Jim Thompson returned to earning its full dayrate of $359,000-$361,000 at the beginning of April after being on standby for approximately nine months. The unit resumed drilling operations for our customer Shell after they received approval for an exploration permit. Noble has three other rigs on standby with Shell in the Gulf, the Noble Danny Adkins and Noble Jim Day, both at dayrates of $155,000-$157,000, and the Noble Driller at a dayrate of $84,000-$86,000. As previously announced during the quarter, Noble secured a one-year commitment on the Noble Jim Day which includes a period of standby between mid-February and July 31, 2011 and an agreement that the rig will receive a dayrate of $484,000-$486,000 from August 1, 2011 through January 31, 2012 regardless of whether or not the unit is drilling. When operating, the unit will be eligible for a performance bonus of up to 15 percent of the dayrate.In Mexico, Noble was awarded contracts on seven jackups at dayrates ranging from the mid-$50,000's to approximately $100,000 for durations between 139 days and 624 days. The Company also secured extensions on two units, the Noble Carl Norberg and Noble Roy Butler.In January, Noble announced a substitution of the Noble Phoenix for the Noble Muravlenko to operate in Brazil. In conjunction with the rig swap, Noble cancelled a planned reliability upgrade on the Noble Muravlenko. Also in Brazil, the Noble Clyde Boudreaux commenced a one-year contract at a dayrate of $289,000-$291,000 in early April. The rig is eligible for up to a 15 percent performance bonus.The Noble Homer Ferrington commenced a farmout in mid-March earning a full dayrate of $504,000-$506,000 while operating in Morocco.Finally, the Noble Roger Lewis commenced its three-year contract in Saudi Arabia in early March at a dayrate of $131,000-$133,000. The Noble Scott Marks, scheduled to begin a three-year contract in Saudi Arabia in July, arrived in the Middle East to begin necessary upgrades."A number of anticipated catalysts have come to fruition and created value for our shareholders during the quarter, including a return to work of rigs in the U.S. Gulf, in Mexico, the Middle East, and the Mediterranean," said Williams. "With what is now eleven newbuilds, we have committed to a significant fleet upgrade program and are beginning to evaluate our existing assets to determine their ultimate future within our fleet. In the meantime, we continue to believe that there is additional upside to the Noble story, including the delivery of three ultra-deepwater drillships during 2011 and a return to normal drilling activity in the U.S. Gulf."About Noble CorporationNoble is a leading offshore drilling contractor for the oil and gas industry. Noble performs, through its subsidiaries, contract drilling services with a fleet of 76 offshore drilling units (including seven ultra-deepwater rigs and four jackup 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, timing of delivery of newbuilds, 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, delays in the construction of newbuilds, 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 CallNoble has scheduled a conference call and webcast related to its first quarter 2011 results on Thursday, April 21, 2011, at 8:00 a.m. U.S. Central Daylight Time. Interested parties are invited to listen to the call by dialing 1-866-461-7129, or internationally 1-706-679-3084, using access code: 27255923 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, April 21, 2011, beginning at 11:00 a.m. U.S. Central Daylight Time, through Thursday, May 5, 2011, ending at 5:00 p.m. U.S. Central Daylight Time. The phone number for the conference call replay is 1-800-642-1687 or, for calls from outside of the U.S., 1-706-645-9291, using access code: 27255923. 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 SUBSIDIARIES CONSOLIDATED STATEMENTS OF INCOME (In thousands, except per share amounts) (Unaudited) Three Months EndedMarch 31, 20112010 Operating revenues Contract drilling services $ 542,605$ 808,646 Reimbursables 22,29124,233 Labor contract drilling services 13,5477,761 Other 445211578,888840,851 Operating costs and expenses Contract drilling services 306,363254,431 Reimbursables 17,10319,743 Labor contract drilling services 8,5235,888 Depreciation and amortization 158,122115,857 Selling, general and administrative 23,71521,971 Gain on contract extinguishments, net (*) (21,202)-492,624417,890 Operating income 86,264422,961 Other income (expense) Interest expense, net of amount capitalized (19,041)(465) Interest income and other, net 2,5923,626 Income before income taxes 69,815426,122 Income tax provision (15,359)(55,396) Net income 54,456370,726 Net income attributable to noncontrolling interests 39- Net income attributable to Noble Corporation $   54,495$ 370,726 Net income per share Basic $       0.22$       1.44 Diluted $       0.21$       1.43* Includes a $52.5 million gain on the contract extinguishment on the Noble Phoenix and a $1.3 million gain on the payoff of joint venture credit facilities, offset by a $32.6 million loss on the Noble Muravlenko shipyard contract cancellation.NOBLE CORPORATION AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (In thousands) (Unaudited) March 31,December 31,20112010 ASSETS Current assets Cash and cash equivalents $      508,681$           337,871 Accounts receivable 445,875387,414 Prepaid expenses and other current assets 170,434105,443 Total current assets 1,124,990830,728 Property and equipment Drilling equipment and facilities 12,991,52512,471,283 Other 175,431172,583 Total property and equipment 13,166,95612,643,866 Accumulated depreciation (2,727,227)(2,595,779) Net property and equipment 10,439,72910,048,087 Other assets 365,166342,506 Total assets $ 11,929,885$      11,221,321 LIABILITIES AND  EQUITY Current liabilities Current maturities of long term debt $                -$             80,213 Accounts payable 395,131374,814 Accrued payroll and related costs 93,113125,663 Interest payable 27,54340,260 Other current liabilities 90,20199,431 Total current liabilities 605,988720,381 Long-term debt 3,167,6462,686,484 Deferred income taxes 261,641258,822 Other liabilities 218,044268,000 Total liabilities 4,253,3193,933,687 Commitments and contingencies Shareholders' equity Shares 887,431917,684 Additional paid-in capital 44,94739,006 Retained earnings 6,684,9956,630,500 Treasury shares (379,667)(373,967) Accumulated other comprehensive loss (46,731)(50,220) Total shareholders' equity 7,190,9757,163,003 Noncontrolling interests 485,591124,631 Total equity 7,676,5667,287,634 Total liabilities and equity $ 11,929,885$      11,221,321NOBLE CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (In thousands) (Unaudited) Three Months EndedMarch 31,20112010 Cash flows from operating activities Net income $    54,456$ 370,726 Adjustments to reconcile net income to net cash from operating activities: Depreciation and amortization 158,122115,857 Gain on contract extinguishments, net (21,202)- Deferred income tax provision 2,819(444) Share-based compensation expense 8,2718,100 Pension contributions (1,602)(1,574) Net change in other assets and liabilities (114,090)11,269 Net cash from operating activities 86,774503,934 Cash flows from investing activities New construction (426,204)(141,404) Other capital expenditures (149,062)(179,044) Major maintenance expenditures (39,058)(18,316) Accrued capital expenditures (471)54,476 Refund from contract extinguishments 18,642- Net cash from investing activities (596,153)(284,288) Cash flows from financing activities Borrowings on bank credit facilities 200,000- Payments on bank credit facilities (240,000)- Proceeds from issuance of senior notes, net of debt issuance costs 1,087,833- Contribution from joint venture partners 361,000- Payments of joint venture debt (693,494)- Settlements of interest rate swap agreements (29,032)- Proceeds from issuance of notes to joint venture partner  35,000- Dividends/par value reduction payments (34,920)(11,935) Repurchases of shares -(88,652) Financing costs on credit facilities (2,835)- Proceeds from employee stock transactions 2,3372,443 Repurchases of employee shares for taxes (5,700)(9,285) Net cash from financing activities 680,189(107,429) Net change in cash and cash equivalents 170,810112,217 Cash and cash equivalents, beginning of period 337,871735,493 Cash and cash equivalents, end of period $  508,681$ 847,710NOBLE CORPORATION AND SUBSIDIARIES FINANCIAL AND OPERATIONAL INFORMATION BY SEGMENT (In thousands, except utilization amounts, operating days and average dayrates) (Unaudited) Three Months Ended March 31,Three Months Ended December 31,201120102010ContractContractContractDrillingDrillingDrillingServicesOtherTotalServicesOtherTotalServicesOtherTotal Operating revenues Contract drilling services $ 542,605$           -$ 542,605$ 808,646$         -$ 808,646$ 614,418$         -$ 614,418 Reimbursables 21,60468722,29123,30393024,23319,17948919,668 Labor contract drilling services -13,54713,547-7,7617,761-8,8168,816 Other 445-445211-211883-883$ 564,654$ 14,234$ 578,888$ 832,160$ 8,691$ 840,851$ 634,480$ 9,305$ 643,785 Operating costs and expenses Contract drilling services $ 306,363$           -$ 306,363$ 254,431$         -$ 254,431$ 331,930$         -$ 331,930 Reimbursables 16,44066317,10318,86987419,74314,48347214,955 Labor contract drilling services -8,5238,523-5,8885,888-5,4865,486 Depreciation and amortization 154,8883,234158,122113,1732,684115,857151,2563,207154,463 Selling, general and administrative 23,44926623,71521,74322821,97120,57116520,736 Gain on contract extinguishments, net (21,202)-(21,202)------$ 479,938$ 12,686$ 492,624$ 408,216$ 9,674$ 417,890$ 518,240$ 9,330$ 527,570 Operating income $   84,716$   1,548$   86,264$ 423,944$  (983)$ 422,961$ 116,240$    (25)$ 116,215 Operating statistics Jackups: Average Rig Utilization 62%81%76% Operating Days 2,3813,1413,019 Average Dayrate $   80,866$ 116,498$   83,023 Semisubmersibles Average Rig Utilization 69%93%69% Operating Days 868931826 Average Dayrate $ 277,859$ 416,572$ 241,483 Drillships: Average Rig Utilization 70%92%90% Operating Days 361247495 Average Dayrate $ 301,647$ 222,306$ 302,753 FPSO/Submersibles: Average Rig Utilization 0%0%11% Operating Days --31 Average Dayrate $           -$             -$ 465,616 Total: Average Rig Utilization 61%81%73% Operating Days 3,6104,3194,371 Average Dayrate $ 150,294$ 187,214$ 140,554NOBLE CORPORATION AND SUBSIDIARIES CALCULATION 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 ended March 31, 2011 2010 Allocation of net income Basic Net income attributable to Noble Corporation $ 54,495$ 370,726 Earnings allocated to unvested share-based payment awards (509)(3,476) Net income to common shareholders - basic $ 53,986$ 367,250 Diluted Net income attributable to Noble Corporation $ 54,495$ 370,726 Earnings allocated to unvested share-based payment awards (509)(3,461) Net income to common shareholders - diluted $ 53,986$ 367,265 Weighted average number of  shares outstanding - basic 251,026255,122 Incremental shares issuable from assumed exercise of stock options 7751,099 Weighted average number of  shares outstanding - diluted 251,801256,221 Weighted average unvested share-based payment awards 2,4192,381 Earnings per share Basic $     0.22$       1.44 Diluted $     0.21$       1.43SOURCE 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.