Press release from PR Newswire
Noble Corporation Reports Second Quarter 2011 Earnings of $0.21 per Diluted Share
Wednesday, July 20, 2011
Noble Corporation Reports Second Quarter 2011 Earnings of $0.21 per Diluted Share17:00 EDT Wednesday, July 20, 2011ZUG, Switzerland, July 20, 2011 /PRNewswire/ -- Noble Corporation (NYSE: NE) today reported second quarter 2011 earnings of $54 million, or $0.21 per diluted share, matching earnings reported for the first quarter of 2011. Results for the second quarter included a $0.04 per diluted share benefit relating to the settlement of certain discrete tax matters. First quarter 2011 results included a one-time after-tax net gain of $0.06 per diluted share relating to the substitution of the drillship Noble Phoenix for the drillship Noble Muravlenko in Brazil. Contract drilling services revenues totaled $590 million in the second quarter of 2011, up nine percent from $543 million in the first quarter of 2011. Contract drilling margin percentage for the second quarter of 2011 was approximately 43 percent compared to 44 percent in the prior quarter. Noble invested $815 million in capital projects during the second quarter.At June 30, 2011, approximately 73 percent of the Company's available rig operating days were committed for the remainder of 2011 and approximately 43 percent were committed for 2012. The Company's total backlog at June 30, 2011 was approximately $13 billion. David W. Williams, Chairman, President and Chief Executive Officer, noted, "Second quarter results were significantly hindered by several downtime events involving five rigs. Although we were disappointed by the interruption in service on these rigs, most of which pertained to subsea equipment and control systems, four out of five rigs returned to service prior to the end of the second quarter. Despite the fleet downtime, the quarter was characterized by an improvement in business fundamentals, as utilization and tendering activity improved for both jackups and deepwater units, and several Noble rigs returned to active status."Operations HighlightsIn Mexico, six of Noble's jackups returned to active status during the second quarter following the award of contracts, while a contract on the Noble Sam Noble is expected to commence by the end of July. Also, the Noble Roy Butler was awarded a three-year contract in July, which is expected to commence in September 2011 following the completion of a leg-extension project. Dayrates for the rigs that have or will soon return to work range from approximately $80,000 to $100,000. Noble now has all 12 of its jackup rigs in Mexico under contract, with 10 of the 12 units under contract into late 2011 or beyond.In the North Sea, the jackup Noble Byron Welliver was awarded a three-well contract at a dayrate of $91,000, while the jackup Noble Lynda Bossler was awarded a two-well contract at a dayrate of $105,000. Both rigs are expected to commence their new contracts in or around January 2012. The Company continued to build its presence in Saudi Arabia following the award of contracts for the jackups Noble Gene House and Noble Joe Beall. The three-year contracts are expected to commence in September 2011 with an operating dayrate for each rig of $81,000. With these awards, the Company now has four jackups committed to Saudi Aramco.Finally, in the U.S. Gulf of Mexico, the semisubmersible Noble Jim Day began receiving its full contract dayrate of $485,000 on July 11 following the award to our client of permits necessary to commence well operations in the region. In addition, certification of the subsea control system on the semisubmersible Noble Driller was completed in July and the rig is expected to resume operations shortly at its full operating dayrate, pending receipt of a drilling permit. The Company now has certified subsea equipment and control systems on all six of its active semisubmersibles in the U.S. Gulf of Mexico."Offshore demand continues to build in most regions around the world, supporting expectations for gradually improving utilization and dayrates among our jackups and floating rigs," said Williams. He added, "Additional client demand for jackups is visible in Mexico and the Middle East. In the deepwater sector, Petrobras continues to tender for dynamically positioned and moored rigs for offshore Brazil with contract lengths of three to five years and we continue to see client interest in some of the emerging deepwater frontiers."In closing, Williams stated, "Our fleet enhancement program, currently composed of the construction of seven ultra-deepwater drillships and four high-specification jackups, is transforming Noble into one of the industry's most modern and capable offshore drilling contractors. As client demand in the offshore sector increases and expands geographically, so does the need for technically advanced, versatile and efficient rigs that address both shallow and deepwater prospects. We believe our strategic growth initiatives strongly position the Company to benefit from further client demand and offshore industry expansion."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's shares are traded on the New York Stock Exchange under the symbol "NE". Additional information on Noble Corporation is available on the Company's Web site 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 Call Noble has scheduled a conference call and webcast related to its second quarter 2011 results on Thursday, July 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: 27255924 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, July 21, 2011, beginning at 11:00 a.m. U.S. Central Daylight Time, through Thursday, August 4, 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: 27255924. 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 EndedSix Months EndedJune 30,June 30,2011201020112010 Operating revenues Contract drilling services $ 589,550$ 687,510$ 1,132,155$ 1,496,156 Reimbursables 24,12213,75346,41337,986 Labor contract drilling services 14,0128,05627,55915,817 Other 313603758814627,997709,9221,206,8851,550,773 Operating costs and expenses Contract drilling services 336,728275,595643,091530,026 Reimbursables 18,72310,36535,82630,108 Labor contract drilling services 8,7505,38017,27311,268 Depreciation and amortization 163,119126,227321,241242,084 Selling, general and administrative 21,63223,80845,34745,779 Gain on contract extinguishments, net --(21,202)-548,952441,3751,041,576859,265 Operating income 79,045268,547165,309691,508 Other income (expense) Interest expense, net of amount capitalized (14,829)(510)(33,870)(975) Interest income and other, net (534)1,0062,0584,632 Income before income taxes 63,682269,043133,497695,165 Income tax provision (9,508)(51,118)(24,867)(106,514) Net income 54,174217,925108,630588,651 Net income attributable to noncontrolling interests (91)-(52)- Net income attributable to Noble Corporation $ 54,083$ 217,925$ 108,578$ 588,651 Net income per share Basic $ 0.21$ 0.85$ 0.43$ 2.29 Diluted $ 0.21$ 0.85$ 0.43$ 2.28NOBLE CORPORATION AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (In thousands) (Unaudited) June 30, December 31, 2011 2010 ASSETS Current assets Cash and cash equivalents $ 230,877$ 337,871 Accounts receivable 510,019387,414 Prepaid expenses and other current assets 236,600186,509 Total current assets 977,496911,794 Property and equipment 13,926,05212,643,866 Accumulated depreciation (2,863,482)(2,595,779) Property and equipment, net 11,062,57010,048,087 Other assets 398,172342,506 Total assets $ 12,438,238$ 11,302,387 LIABILITIES AND EQUITY Current liabilities Current maturities of long-term debt $ -$ 80,213 Accounts payable 303,902374,814 Accrued payroll and related costs 114,736125,663 Interest payable 58,32840,260 Other current liabilities 149,590180,497 Total current liabilities 626,556801,447 Long-term debt 3,521,7702,686,484 Deferred income taxes 257,069258,822 Other liabilities 212,475268,000 Total liabilities 4,617,8704,014,753 Commitments and contingencies Shareholders' equity Shares 857,795917,684 Additional paid-in capital 50,49939,006 Retained earnings 6,739,0786,630,500 Treasury shares (383,344)(373,967) Accumulated other comprehensive loss (42,316)(50,220) Total shareholders' equity 7,221,7127,163,003 Noncontrolling interests 598,656124,631 Total equity 7,820,3687,287,634 Total liabilities and equity $ 12,438,238$ 11,302,387NOBLE CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (In thousands) (Unaudited) Six Months EndedJune 30,20112010 Cash flows from operating activities Net income $ 108,630$ 588,651 Adjustments to reconcile net income to net cash from operating activities: Depreciation and amortization 321,241242,084 Gain on contract extinguishments, net (21,202)- Deferred income taxes (1,753)(11,842) Share-based compensation expense 16,38816,285 Net change in other assets and liabilities (177,968)179,246 Net cash from operating activities 245,3361,014,424 Cash flows from investing activities New construction (1,017,190)(184,963) Other capital expenditures (316,245)(305,751) Major maintenance expenditures (95,348)(40,687) Refund from contract extinguishments 18,642- Change in accrued capital expenditures (51,500)(17,848) Net cash from investing activities (1,461,641)(549,249) Cash flows from financing activities Borrowings on bank credit facilities 625,000- Payments on bank credit facilities (240,000)- Payments of other long-term debt (693,494)- Proceeds from issuance of senior notes, net of debt issuance costs 1,087,833- Contributions from joint venture partners 436,000- Settlements of interest rate swaps (29,032)- Par value reduction payments (72,141)(23,306) Repurchases of shares -(88,652) Financing costs on credit facilities (2,835)- Proceeds from employee stock transactions 7,3573,711 Repurchases of employee shares surrendered for taxes (9,377)(9,309) Net cash from financing activities 1,109,311(117,556) Net change in cash and cash equivalents (106,994)347,619 Cash and cash equivalents, beginning of period 337,871735,493 Cash and cash equivalents, end of period $ 230,877$ 1,083,112NOBLE CORPORATION AND SUBSIDIARIES FINANCIAL AND OPERATIONAL INFORMATION BY SEGMENT (In thousands, except operating statistics) (Unaudited) Three Months Ended June 30,Three Months Ended March 31,201120102011ContractContractContractDrillingDrillingDrillingServicesOtherTotalServicesOtherTotalServicesOtherTotal Operating revenues Contract drilling services $ 589,550$ -$ 589,550$ 687,510$ -$ 687,510$ 542,605$ -$ 542,605 Reimbursables 22,9821,14024,12212,98976413,75321,60468722,291 Labor contract drilling services -14,01214,012-8,0568,056-13,54713,547 Other 313-313603-603445-445$ 612,845$ 15,152$ 627,997$ 701,102$ 8,820$ 709,922$ 564,654$ 14,234$ 578,888 Operating costs and expenses Contract drilling services $ 336,728$ -$ 336,728$ 275,595$ -$ 275,595$ 306,363$ -$ 306,363 Reimbursables 17,6061,11718,7239,62673910,36516,44066317,103 Labor contract drilling services -8,7508,750-5,3805,380-8,5238,523 Depreciation and amortization 159,8433,276163,119123,3792,848126,227154,8883,234158,122 Selling, general and administrative 21,35927321,63223,56124723,80823,44926623,715 Gain on contract extinguishments, net ------(21,202)-(21,202)$ 535,536$ 13,416$ 548,952$ 432,161$ 9,214$ 441,375$ 479,938$ 12,686$ 492,624 Operating income $ 77,309$ 1,736$ 79,045$ 268,941$ (394)$ 268,547$ 84,716$ 1,548$ 86,264 Operating statistics Jackups: Average Rig Utilization 71%81%62% Operating Days 2,7973,1832,381 Average Dayrate $ 80,742$ 96,677$ 80,866 Semisubmersibles: Average Rig Utilization 85%94%69% Operating Days 1,0881,023868 Average Dayrate $ 269,798$ 328,286$ 277,859 Drillships: Average Rig Utilization 58%67%70% Operating Days 317182361 Average Dayrate $ 220,953$ 242,045$ 301,647 FPSO/Submersibles: Average Rig Utilization 0%0%0% Operating Days --- Average Dayrate $ -$ -$ - Total: Average Rig Utilization 70%80%61% Operating Days 4,2024,3883,610 Average Dayrate $ 140,296$ 156,683$ 150,294NOBLE 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 Six months ended June 30,June 30, 2011 2010 2011 2010 Allocation of net income Basic Net income attributable to Noble Corporation $ 54,083$ 217,925$ 108,578$ 588,651 Earnings allocated to unvested share-based payment awards (572)(2,143)(1,083)(5,652) Net income to common shareholders - basic $ 53,511$ 215,782$ 107,495$ 582,999 Diluted Net income attributable to Noble Corporation $ 54,083$ 217,925$ 108,578$ 588,651 Earnings allocated to unvested share-based payment awards (572)(2,137)(1,082)(5,632) Net income to common shareholders - diluted $ 53,511$ 215,788$ 107,496$ 583,019 Weighted average number of shares outstanding - basic 251,368254,224251,198254,671 Incremental shares issuable from assumed exercise of stock options 700800737949 Weighted average number of shares outstanding - diluted 252,068255,024251,935255,620 Weighted average unvested share-based payment awards 2,6882,4802,5542,431 Earnings per share Basic $ 0.21$ 0.85$ 0.43$ 2.29 Diluted $ 0.21$ 0.85$ 0.43$ 2.28SOURCE Noble CorporationFor further information: Investors, Jeffrey L. Chastain, Vice President - Investor Relations, +1-281-276-6383, or Media, John S. Breed, Director of Corporate Communications, +1-281-276-6729, both of Noble Drilling Services Inc.