Press release from PR Newswire
Noble Corporation Reports Third Quarter 2012 Earnings of $0.45 per Diluted Share
Wednesday, October 17, 2012
Noble Corporation Reports Third Quarter 2012 Earnings of $0.45 per Diluted Share17:00 EDT Wednesday, October 17, 2012ZUG, Switzerland, Oct. 17, 2012 /PRNewswire/ -- Noble Corporation (NYSE: NE) today reported third quarter 2012 earnings of $115 million, or $0.45 per diluted share, compared to $160 million, or $0.63 per diluted share, for the second quarter of 2012. For the third quarter 2011, the Company reported earnings of $135 million, or $0.53 per diluted share. Contract drilling services revenues for the third quarter of 2012 were $833 million compared to $848 million for the second quarter of 2012. For the third quarter of 2011, contract drilling services revenues totaled $705 million.David W. Williams, Chairman, President and Chief Executive Officer of Noble Corporation, stated, "The decline in third quarter financial results was due primarily to lower than expected utilization on two of our new drillships, Noble Bully I and Noble Bully II, as we worked to solve a number of operational issues, as well as delays in returning rigs to work in Brazil which were caused by a number of labor actions within the shipyard and regulatory support infrastructure that caused two rigs to be delayed following completion of ongoing projects. Further, we experienced other out of service time involving several rigs and in response to these events and the effects of Hurricane Isaac, operating costs in the quarter moved ahead of our expectations, further pressuring margins. With few exceptions, these matters have now been resolved and we expect improved operational performance in the final quarter of 2012."At the same time, we experienced improved utilization in our jackup rig fleet and were able to secure a number of additional contracts at significantly higher dayrates. We also expanded our global operating footprint with the mobilization to Australia of the semisubmersible Noble Clyde Boudreaux. This rig recently commenced its contract at a dayrate of $417,000. During the quarter we also reached a number of key milestones in our newbuild construction program as we prepare to deliver three ultra-deepwater drillships and three high specification jackups (JU3000N design) in 2013, continuing our efforts to transform the Noble fleet to a premium, versatile and more technically advanced fleet." Net cash from operating activities totaled $396 million in the third quarter of 2012, compared to $435 million in the second quarter, reflecting the impact on revenues and operating costs of several operational events in the Company's fleet. Average dayrates across the fleet declined 7 percent in the third quarter to $168,600 from $181,700 in the second quarter, due primarily to lower average daily revenues for floating rigs, which saw declines for both the Noble Homer Ferrington, which commenced a new contract in the Eastern Mediterranean at a reduced dayrate, and the Noble Roger Eason, which began receiving a special shipyard dayrate while undergoing a life enhancement program.Total debt was $4.6 billion at September 30, 2012 compared to $4.4 billion at June 30, 2012 and $4.1 billion at December 31, 2011. Debt as a percentage of total capitalization increased slightly from the second quarter to approximately 35.6 percent. Capital expenditures in the first nine months of 2012 totaled $1.2 billion, including $441 million (excluding capitalized interest) related to Noble's fleet transformation program. The Company expects capital expenditures for 2012 to total approximately $1.8 billion, including $580 million for newbuild construction programs.Operations Highlights At the end of the third quarter of 2012, 83 percent of the Company's available rig operating days were committed for the remainder of 2012, including 87 percent of the floating rig fleet and 87 percent of the jackup fleet. For 2013, 69 percent of operating days are committed, including 80 percent of the floating rig days and 67 percent of jackup days. Total backlog at September 30, 2012 was approximately $14.8 billion. In the U.S. Gulf of Mexico, the ultra-deepwater drillship Noble Globetrotter I completed final testing and commissioning procedures in late-September 2012, a process that hampered the rig's contribution in the third quarter. Also, repairs and upgrades to the deepwater semisubmersible Noble Max Smith were significantly completed by the end of the third quarter. However, the rig's departure for Brazil, where it is expected to commence a three-year contract by early-February 2013, is expected to be delayed until late-October. The Company's 12-rig jackup fleet operating in Mexico experienced improved utilization in the third quarter to 99 percent, up from 69 percent in the second quarter, following multi-year contract awards for the Noble Earl Frederickson, Noble Tom Jobe and Noble Sam Noble. The Company expects near full contract utilization of the fleet for the immediate future with promising contract opportunities for three jackups with expected availability by late 2012. In the North Sea, where the Company operates eight jackup rigs and one semisubmersible, utilization in the third quarter was 98 percent compared to 100 percent in the second quarter, with the slight decrease the result of a planned 21-day maintenance program on the Noble Byron Welliver. Recent contract awards at industry-leading dayrates were received for the Noble Hans Deul, Noble Al White, Noble Piet van Ede, Noble Ronald Hoope and a letter-of-intent was received for the Noble Lynda Bossler, resulting in contractual commitments on five of the Company's eight jackups into 2014. The Company's 18-rig jackup fleet operating in the Middle East and India recorded utilization of 72 percent in the third quarter compared to 76 percent in the second quarter, with the decline due primarily to the Noble Dick Favor, which completed a contract during the quarter and is currently idle, and the Noble Kenneth Delaney, which is awaiting the conclusion of the monsoon season in Southern Asia before moving back to a drilling location offshore India. The rig is expected to recommence its contract in mid-November 2012. Utilization in the region is expected to improve following the recent commencement of a one-year contract award for the Noble Gus Androes at a dayrate of $125,000 and a three-year contract on the Noble Charles Copeland at $95,000. Also, the Company was recently awarded new contracts for the Noble David Tinsley and Noble Alan Hay for continued work in the Middle East. Both contract awards cover durations of three years.In closing, Williams noted, "Industry fundamentals remain solid across the offshore spectrum, as evidenced by the continued success with securing contracts for both floating and jackup rigs. The standard jackup sector has experienced substantial improvement over 2012, with recent contract signings on 15 rigs in the Noble fleet representing an average dayrate improvement of approximately 40 percent from the previous contract dayrate. In the ultra-deepwater sector, a record year for announced discoveries, along with expanding geographic reach by our customers, greater offshore access and a building field development project backlog, are leading to expected higher customer demand, longer contract durations and the prospects for higher dayrates. Our newbuild delivery schedule is well timed to address increasing customer needs for ultra-deepwater drillships and high-specification jackups, both of which address the increasing complexity of many wells to be drilled in the future, while offering improved operating efficiencies."The anticipated scope of our fleet transformation is beginning to take shape, as new assets are added to the active fleet, improving the overall mix of the asset base, while serving as the most significant catalyst for improving earnings and cash flow over the coming years." 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 79 offshore drilling units (including five ultra-deepwater rigs and six jackup drilling rigs currently under construction), located worldwide, including in the U.S. Gulf of Mexico, Mexico, Brazil, the North Sea, the Mediterranean, West Africa, the Middle East, India and the 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. Conference Call Noble has scheduled a conference call and webcast related to its third quarter 2012 results on Thursday, October 18, 2012, 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: 20608573, 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 18, 2012, beginning at 11:00 a.m. U.S. Central Daylight Time, through Thursday, November 1, 2012, ending at 5:00 p.m. U.S. Central Daylight Time. The phone number for the conference call replay is 1-855-859-2056 or, for calls from outside of the U.S., 1-404-537-3406, using access code: 20608573. 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." Statements regarding financial performance, contract backlog, earnings, costs, capital expenditures, revenue, rig demand, fleet composition, condition or performance, timing of delivery of newbuilds, contract commitments, dayrates, contract commencements, contract extensions or renewals, letters of intent or award, industry fundamentals, customer relationships or demand, 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, 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. NOBLE CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF INCOME (In thousands, except per share amounts) (Unaudited) Three Months EndedNine Months EndedSeptember 30,September 30,2012201120122011 Operating revenues Contract drilling services $ 833,212$ 704,892$ 2,427,759$ 1,837,047 Reimbursables 28,13717,43894,09063,851 Labor contract drilling services 22,66715,56458,53843,123 Other 168258766884,032737,9022,580,6451,944,787 Operating costs and expenses Contract drilling services 449,125358,5471,292,6381,001,638 Reimbursables 21,04713,97176,61849,797 Labor contract drilling services 12,9918,05334,07025,326 Depreciation and amortization 195,087166,213549,779487,454 Selling, general and administrative 26,85827,53675,38872,883 Loss on impairment --18,345- Gain on contract settlements/extinguishments, net --(33,255)(21,202)705,108574,3202,013,5831,615,896 Operating income 178,924163,582567,062328,891 Other income (expense) Interest expense, net of amount capitalized (25,635)(11,530)(56,783)(45,400) Interest income and other, net 1,5531,1174,5263,175 Income before income taxes 154,842153,169514,805286,666 Income tax provision (25,162)(17,614)(93,107)(42,481) Net income 129,680135,555421,698244,185 Net income attributable to noncontrolling interests (14,906)(238)(26,931)(290) Net income attributable to Noble Corporation $ 114,774$ 135,317$ 394,767$ 243,895 Net income per share Basic $ 0.45$ 0.53$ 1.55$ 0.96 Diluted $ 0.45$ 0.53$ 1.55$ 0.96 NOBLE CORPORATION AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (In thousands) (Unaudited) September 30, December 31, 20122011 ASSETS Current assets Cash and cash equivalents $ 218,467$ 239,196 Accounts receivable 791,408587,163 Prepaid expenses and other current assets 294,617233,253 Total current assets 1,304,4921,059,612 Property and equipment 16,637,62615,540,178 Accumulated depreciation (3,825,482)(3,409,833) Property and equipment, net 12,812,14412,130,345 Other assets 343,770305,202 Total assets $ 14,460,406$ 13,495,159 LIABILITIES AND EQUITY Current liabilities Accounts payable $ 298,363$ 436,006 Accrued payroll and related costs 145,595117,907 Dividend payable 99,582- Other current liabilities 298,669273,267 Total current liabilities 842,209827,180 Long-term debt 4,639,4294,071,964 Deferred income taxes 235,851242,791 Other liabilities 353,595255,372 Total liabilities 6,071,0845,397,307 Commitments and contingencies Equity Total shareholders' equity 7,631,0607,406,521 Noncontrolling interests 758,262691,331 Total equity 8,389,3228,097,852 Total liabilities and equity $ 14,460,406$ 13,495,159 NOBLE CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (In thousands) (Unaudited) Nine Months EndedSeptember 30,20122011 Cash flows from operating activities Net income $ 421,698$ 244,185 Adjustments to reconcile net income to net cash from operating activities: Depreciation and amortization 549,779487,454 (Gain) on contract extinguishments/ loss asset impairment, net 18,345(21,202) Other changes in operating activities (58,318)(251,407) Net cash from operating activities 931,504459,030 Cash flows from investing activities New construction (440,520)(1,280,577) Other capital expenditures (582,644)(464,861) Drilling equipment replacement and upgrades (115,755)(138,914) Capitalized interest (108,220)(88,220) Other investing activities (195,044)(30,140) Net cash from investing activities (1,442,183)(2,002,712) Cash flows from financing activities Borrowings on bank credit facilities, net (630,000)675,000 Proceeds from issuance of senior notes, net of debt issuance costs 1,186,6361,087,833 Contributions from joint venture partners 40,000481,000 Payments of joint venture debt -(693,494) Settlement of interest rate swaps -(29,032) Par value reduction payments/dividends paid (105,092)(114,453) Other financing activities (1,594)(4,028) Net cash from financing activities 489,9501,402,826 Net change in cash and cash equivalents (20,729)(140,856) Cash and cash equivalents, beginning of period 239,196337,871 Cash and cash equivalents, end of period $ 218,467$ 197,015 NOBLE CORPORATION AND SUBSIDIARIES FINANCIAL AND OPERATIONAL INFORMATION BY SEGMENT (In thousands, except operating statistics) (Unaudited) Three Months Ended September 30,Three Months Ended June 30,201220112012ContractContractContractDrillingDrillingDrillingServicesOtherTotalServicesOtherTotalServicesOtherTotal Operating revenues Contract drilling services $ 833,212$ -$ 833,212$ 704,892$ -$ 704,892$ 848,237$ -$ 848,237 Reimbursables 27,0871,05028,13714,6462,79217,43830,12468830,812 Labor contract drilling services -22,66722,667-15,56415,564-19,86319,863 Other 16-168-811-11$ 860,315$ 23,717$ 884,032$ 719,546$ 18,356$ 737,902$ 878,372$ 20,551$ 898,923 Operating costs and expenses Contract drilling services $ 449,125$ -$ 449,125$ 358,547$ -$ 358,547$ 423,502$ -$ 423,502 Reimbursables 20,0391,00821,04711,3622,60913,97124,30766324,970 Labor contract drilling services -12,99112,991-8,0538,053-11,84711,847 Depreciation and amortization 191,6383,449195,087162,8373,376166,213180,1123,503183,615 Selling, general and administrative 26,22863026,85827,21232427,53624,83556925,404 Loss on impairment ------12,7105,63518,345 Gain on contract settlements/extinguishments, net ------(33,255)-(33,255)$ 687,030$ 18,078$ 705,108$ 559,958$ 14,362$ 574,320$ 632,211$ 22,217$ 654,428 Operating income $ 173,285$ 5,639$ 178,924$ 159,588$ 3,994$ 163,582$ 246,161$ (1,666)$ 244,495 Operating statistics Jackups: Average Rig Utilization 83%82%79% Operating Days 3,2853,2293,073 Average Dayrate $ 97,857$ 89,352$ 97,612 Semisubmersibles: Average Rig Utilization 83%84%88% Operating Days 1,0671,0861,127 Average Dayrate $ 331,900$ 315,034$ 349,163 Drillships: Average Rig Utilization 73%60%65% Operating Days 590329469 Average Dayrate $ 267,166$ 225,669$ 329,761 FPSO/Submersibles: Average Rig Utilization 0%0%0% Operating Days --- Average Dayrate $ -$ -$ - Total: Average Rig Utilization 78%76%76% Operating Days 4,9424,6444,669 Average Dayrate $ 168,608$ 151,782$ 181,663 NOBLE CORPORATION AND SUBSIDIARIES CALCULATION OF BASIC AND DILUTED NET INCOME PER SHARE (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 Nine months ended September 30,September 30,2012201120122011 Allocation of net income Basic Net income attributable to Noble Corporation $ 114,774$ 135,317$ 394,767$ 243,895 Earnings allocated to unvested share-based payment awards (1,192)(1,415)(4,008)(2,487) Net income to common shareholders - basic $ 113,582$ 133,902$ 390,759$ 241,408 Diluted Net income attributable to Noble Corporation $ 114,774$ 135,317$ 394,767$ 243,895 Earnings allocated to unvested share-based payment awards (1,190)(1,412)(4,002)(2,481) Net income to common shareholders - diluted $ 113,584$ 133,905$ 390,765$ 241,414 Weighted average number of shares outstanding - basic 252,657251,580252,339251,327 Incremental shares issuable from assumed exercise of stock options 317449358640 Weighted average number of shares outstanding - diluted 252,974252,029252,697251,967 Weighted average unvested share-based payment awards 2,6512,6582,5882,589 Earnings per share Basic $ 0.45$ 0.53$ 1.55$ 0.96 Diluted $ 0.45$ 0.53$ 1.55$ 0.96 SOURCE 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.