Noble Corporation Reports Fourth Quarter and Full Year 2011 Earnings
ZUG, Switzerland, Jan. 25, 2012 /PRNewswire/ — Noble Corporation (NYSE: NE) today reported fourth quarter 2011 earnings of $127 million, or $0.50 per diluted share, compared to $135 million, or $0.53 per diluted share, for the third quarter of 2011. Earnings for the fourth quarter 2010 totaled $99 million, or $0.39 per diluted share. Contract drilling services revenues for the fourth quarter of 2011 were $720 million compared to $705 million in the third quarter of 2011 and $614 million in the fourth quarter of 2010.
Earnings for the full year 2011 totaled $371 million, or $1.46 per diluted share, on contract drilling services revenues of $2.6 billion. The results compared to earnings of $773 million, or $3.02 per diluted share on contract drilling services revenues of $2.7 billion in 2010.
“During the fourth quarter, we continued to make progress in our newbuild program, with two more of our ultra-deepwater drillships, the Noble Bully II and Noble Globetrotter I, departing shipyards, bringing to three the number of new technically advanced drillships scheduled to commence contracts during the first quarter of 2012,” said David W. Williams, Chairman, President and Chief Executive Officer. “These units, and the other five drillships and six high-specification jackup rigs currently under construction, are intended to enhance our competitive position and long-term revenue growth potential by equipping us to meet the most complex drilling needs of our customers. Also, improving industry activity allowed us to place several rigs back into active status in the quarter, including the semisubmersible Noble Paul Romano and jackup rigs Noble Gene House, Noble Joe Beall and Noble Dick Favor. From a backlog perspective, we added approximately $1 billion in contract commitments (net of backlog rolloff) during 2011, including over $840 million net in the fourth quarter of 2011, resulting in total contract backlog of $13.7 billion at December 31, 2011. Some of these contract awards allowed us to enter or enhance our presence in operating regions, such as Australia, the Mediterranean and Saudi Arabia, supporting our strategic objective of increased geographic diversification.
While we continue to work on our initiatives to mitigate fleet downtime, some of our semisubmersibles and drillships again experienced unacceptable levels of non-productive time, resulting in lower than expected revenues in the fourth quarter and unfavorably impacting operating costs, which hampered our margins. Reducing fleet downtime is a Company-wide focus as we begin 2012,” noted Williams.
Contract drilling services revenues for the fourth quarter 2011 of $720 million improved 2 percent from the third quarter 2011 and 17 percent from the fourth quarter 2010. Contract drilling margin for the fourth quarter 2011 was approximately 47 percent, compared to 49 percent and 46 percent in the third quarter of 2011 and fourth quarter of 2010, respectively. The Company’s revenues and operating margins over the past year were, in part, negatively impacted by the drilling moratorium and reduced pace of well permitting in the U.S. Gulf of Mexico that followed the Macondo incident.
Net cash from operating activities was $285 million in the fourth quarter 2011 and $759 million for full year 2011. Capital expenditures in the fourth quarter 2011 totaled $652 million, including $390 million (excluding capitalized interest) related to the Company’s fleet expansion program. For the year, capital expenditures amounted to $2.6 billion, including $1.7 billion (excluding capitalized interest) associated with the fleet expansion program. Debt as a percentage of total capitalization increased slightly to approximately 33 percent at December 31, 2011, from approximately 32 percent at the end of the third quarter 2011.
Operating Highlights
At year-end 2011, approximately 68 percent of the Company’s available rig operating days were committed for 2012, including 69 percent of the floating rig days and 72 percent of the jackup fleet days.
In the U.S. Gulf of Mexico, deepwater drilling activity remained robust as operators continued to initiate drilling programs slowed by the well permitting process. Short- and long-term requirements of operators are increasingly apparent, as evidenced by the recent contract award for the ultra-deepwater semisubmersible rig Noble Jim Day covering three-years at a dayrate of $530,000, excluding a 15 percent bonus opportunity. The contract is expected to commence in early 2013. Approximately 10 months of the operating days that remain open on the rig in 2012 are expected to be largely committed to short-term operator requirements. Also, the ultra-deepwater drillship Noble Bully I commenced client acceptance and testing procedures during the fourth quarter of 2011, with an expected date for completion and contract commencement of February 2012.
In Mexico, utilization of the Company’s jackup rig fleet improved to 84 percent in the fourth quarter of 2011. Contract awards were secured for the jackups Noble Eddie Paul, Noble Bill Jennings and Noble Leonard Jones covering contract durations ranging from 1,068 days to 1,406 days. Dayrates for each rig improved to $112,000 from $100,000 previously. Also, the Company’s deepwater semisubmersible rig Noble Max Smith completed a multi-year drilling assignment in December 2011 and is currently mobilizing to the U.S. Gulf of Mexico to complete maintenance and certifications. Operator interest for the rig remains strong.
In the North Sea, the Company’s jackup rig fleet utilization remained at 100 percent in the fourth quarter and customers aggressively moved to secure rig commitments through 2012 and into 2013. The Company currently has four of its eight jackup rigs committed into 2013, with the remaining units committed to late 2012. Recently, the jackup Noble Byron Welliver was awarded a one-year contract at a dayrate of $122,000, up from a previous dayrate of $91,000. The rig is now committed until July 2013. In the Eastern Mediterranean Sea, the semisubmersible rig Noble Paul Romano began an estimated six-month contract, before options, following the mobilization of the rig from the U.S. Gulf of Mexico. Noble now has two deepwater semisubmersibles in the region, which is expected to offer additional contract opportunities as drilling results confirm compelling hydrocarbon prospects.
The Company’s jackup rig fleet in the Middle East and India recorded utilization of 89 percent in the fourth quarter compared to 83 percent in the previous quarter in 2011. The jackup rigs Noble Gene House and Noble Joe Beall returned to active status in the quarter, with each rig commencing a three-year contract with Saudi Aramco. Also, the jackup rig Noble Charles Copeland was awarded a three-year contract from Saudi Aramco at a dayrate of $95,000. The contract is expected to commence in July 2012. The Company now has five jackup rigs under contract with Saudi Aramco.
Outlook
In closing, Williams commented, “As we enter 2012, Noble has a number of reasons to be optimistic. Our fleet transformation program is providing tangible results, with the initial three ultra-deepwater drillships expected to meaningfully contribute to operating results this year. Also, the direct negative fallout from the Macondo incident is largely behind us, and all of our active U.S. Gulf of Mexico-based semisubmersibles start the year at their full operating dayrates. In spite of continued global macroeconomic uncertainty, our industry continues to display signs of cyclical improvement, especially in the deepwater sector, where operator needs are building in multiple regions, supported by strong geologic success, stable crude oil prices, a growing interest in frontier locations, and larger exploration and production spending budgets. We are in a position in 2012 to benefit from this recovery, with available rig days to offer our clients on several deepwater units, including the Noble Jim Day, Noble Max Smith, Noble Amos Runner, Noble Paul Romano and Noble Homer Ferrington.
The Company remains focused on strong execution in our fleet expansion program and on several strategic initiatives, including expansion into key regions, improved revenue efficiency through lower fleet downtime and completion of our non-core fleet evaluation process. We believe that Noble is well positioned to drive long-term, sustainable value for our shareholders and unparalleled service, safety and operational integrity for our customers.”
About Noble
Noble 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 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 and requirements, strategic initiatives, 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.
Conference Call
Noble has scheduled a conference call and webcast related to its fourth quarter and full year 2011 results on Thursday, January 26, 2012, at 8:00 a.m. U.S. Central 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: 20606604, 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, January 26, 2012, beginning at 11:00 a.m. U.S. Central Time, through Thursday, February 9, 2012, ending at 5:00 p.m. U.S. Central 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: 20606604. 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
Ended Twelve Months Ended
December 31, December 31,
------------ ------------
2011 2010 2011 2010
---- ---- ---- ----
Operating
revenues
Contract
drilling
services $719,711 $614,418 $2,556,758 $2,695,493
Reimbursables 15,344 19,668 79,195 76,831
Labor
contract
drilling
services 15,881 8,816 59,004 32,520
Other 109 883 875 2,332
--- --- --- -----
751,045 643,785 2,695,832 2,807,176
------- ------- --------- ---------
Operating
costs
and
expenses
Contract
drilling
services 382,562 331,930 1,384,200 1,177,800
Reimbursables 8,642 14,955 58,439 59,414
Labor
contract
drilling
services 8,559 5,486 33,885 22,056
Depreciation
and
amortization 171,186 154,463 658,640 539,829
Selling,
general
and
administrative 18,494 20,736 91,377 91,997
Gain on
contract
extinguishments,
net - - (21,202) -
589,443 527,570 2,205,339 1,891,096
------- ------- --------- ---------
Operating
income 161,602 116,215 490,493 916,080
Other
income
(expense)
Interest
expense,
net of
amount
capitalized (10,327) (4,338) (55,727) (9,457)
Interest
income
and
other,
net (1,691) 2,693 1,484 9,886
------ ----- ----- -----
Income
before
income
taxes 149,584 114,570 436,250 916,509
Income
tax
provision (30,144) (16,276) (72,625) (143,077)
------- ------- ------- --------
Net
income 119,440 98,294 363,625 773,432
------- ------ ------- -------
Net
income
attributable
to
noncontrolling
interests 7,563 464 7,273 (3)
----- --- ----- ---
Net
income
attributable
to
Noble
Corporation $127,003 $98,758 $370,898 $773,429
======== ======= ======== ========
Net
income
per
share
Basic $0.50 $0.39 $1.46 $3.03
Diluted $0.50 $0.39 $1.46 $3.02
NOBLE CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In thousands)
(Unaudited)
December 31,
------------
2011 2010
---- ----
ASSETS
Current assets
Cash and cash equivalents $239,196 $337,871
Accounts receivable 587,163 387,414
Prepaid expenses and other
current assets 233,253 186,509
------- -------
Total current assets 1,059,612 911,794
--------- -------
Property and equipment 15,037,112 12,643,866
Accumulated depreciation (3,139,645) (2,595,779)
---------- ----------
Property and equipment, net 11,897,467 10,048,087
---------- ----------
Other assets 538,080 342,506
------- -------
Total assets $13,495,159 $11,302,387
=========== ===========
LIABILITIES AND EQUITY
Current liabilities
Current maturities of long-term
debt $- $80,213
Accounts payable 436,006 374,814
Accrued payroll and related
costs 117,907 125,663
Taxes payable 94,920 96,448
Interest payable 54,419 40,260
Other current liabilities 123,928 84,049
------- ------
Total current liabilities 827,180 801,447
------- -------
Long-term debt 4,071,964 2,686,484
Deferred income taxes 242,791 258,822
Other liabilities 255,372 268,000
------- -------
Total liabilities 5,397,307 4,014,753
--------- ---------
Commitments and contingencies
Equity
Total shareholders' equity 7,406,521 7,163,003
Noncontrolling interests 691,331 124,631
Total equity 8,097,852 7,287,634
--------- ---------
Total liabilities and equity $13,495,159 $11,302,387
=========== ===========
NOBLE CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
Year Ended
December 31,
------------
2011 2010
---- ----
Cash flows from operating
activities
Net income $363,625 $773,432
Adjustments to reconcile net
income to net cash from
operating activities:
Depreciation and amortization 658,640 539,829
Gain on contract
extinguishments, net (21,202) -
Deferred income tax provision (91,383) (41,409)
Share-based compensation
expense 31,904 34,930
Net change in other assets and
liabilities (182,600) 347,594
Net cash from operating
activities 758,984 1,654,376
------- ---------
Cash flows from investing
activities
New construction (1,671,057) (580,233)
Other capital expenditures (657,286) (656,539)
Major maintenance expenditures (189,212) (103,542)
Capitalized interest (122,424) (83,170)
Accrued capital expenditures
and refunded deposits 99,689 139,185
Acquisition of FDR Holdings,
Ltd., net of cash acquired - (1,629,644)
Net cash from investing
activities (2,540,290) (2,913,943)
---------- ----------
Cash flows from financing
activities
Increase in bank credit
facilities, net 935,000 40,000
Proceeds from issuance of
senior notes, net of debt
issuance costs 1,087,833 1,238,074
Contributions from joint
venture partners 536,000 35,000
Payments of joint venture debt (693,494) -
Settlement of interest rate
swaps (29,032) (6,186)
Par value reduction payments (150,532) (227,325)
Financing costs on credit
facilities (2,835) -
Proceeds from employee stock
transactions 9,924 11,828
Repurchases of employee shares
surrendered for taxes (10,233) (10,116)
Repurchases of shares - (219,330)
--- --------
Net cash from financing
activities 1,682,631 861,945
--------- -------
Net change in cash and cash
equivalents (98,675) (397,622)
Cash and cash equivalents,
beginning of period 337,871 735,493
------- -------
Cash and cash equivalents, end
of period $239,196 $337,871
======== ========
NOBLE CORPORATION AND SUBSIDIARIES
FINANCIAL AND OPERATIONAL INFORMATION BY SEGMENT
(In thousands, except utilization amounts, operating days and average dayrates)
(Unaudited)
Three Months Ended September
Three Months Ended December 31, 30,
------------------------------- -----------------------------
2011 2010 2011
---- ---- ----
Contract Contract Contract
Drilling Drilling Drilling
Services Other Total Services Other Total Services Other Total
-------- ----- ----- -------- ----- ----- -------- ----- -----
Operating
revenues
Contract
drilling
services $719,711 $- $719,711 $614,418 $- $614,418 $704,892 $- $704,892
Reimbursables 18,046 (2,702) 15,344 19,179 489 19,668 14,646 2,792 17,438
Labor contract
drilling
services - 15,881 15,881 - 8,816 8,816 - 15,564 15,564
Other 109 - 109 883 - 883 8 - 8
--- --- --- --- --- --- --- --- ---
$737,866 $13,179 $751,045 $634,480 $9,305 $643,785 $719,546 $18,356 $737,902
======== ======= ======== ======== ====== ======== ======== ======= ========
Operating costs
and expenses
Contract
drilling
services $382,562 $- $382,562 $331,930 $- $331,930 $358,547 $- $358,547
Reimbursables 11,181 (2,539) 8,642 14,483 472 14,955 11,362 2,609 13,971
Labor contract
drilling
services - 8,559 8,559 - 5,486 5,486 - 8,053 8,053
Depreciation
and
amortization 169,574 1,612 171,186 151,256 3,207 154,463 162,837 3,376 166,213
Selling,
general and
administrative 18,242 252 18,494 20,571 165 20,736 27,212 324 27,536
$581,559 $7,884 $589,443 $518,240 $9,330 $527,570 $559,958 $14,362 $574,320
======== ====== ======== ======== ====== ======== ======== ======= ========
Operating
income $156,307 $5,295 $161,602 $116,240 $(25) $116,215 $159,588 $3,994 $163,582
======== ====== ======== ======== ==== ======== ======== ====== ========
Operating
statistics
Jackups:
Average Rig
Utilization 86% 76% 82%
Operating Days 3,386 3,019 3,229
Average Dayrate $89,049 $83,023 $89,352
Semisubmersibles
Average Rig
Utilization 88% 69% 84%
Operating Days 1,134 826 1,086
Average Dayrate $318,013 $241,483 $315,034
Drillships:
Average Rig
Utilization 50% 90% 60%
Operating Days 277 495 329
Average Dayrate $207,769 $302,753 $225,669
FPSO/
Submersibles:
Average Rig
Utilization 0% 11% 0%
Operating Days - 31 -
Average Dayrate $- $465,616 $-
Total:
Average Rig
Utilization 79% 73% 76%
Operating Days 4,797 4,371 4,644
Average Dayrate $150,027 $140,554 $151,782
NOBLE 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 Twelve Months
ended Ended
December 31, December 31,
------------ ------------
2011 2010 2011 2010
---- ---- ---- ----
Allocation of net income
Basic
Net income attributable to Noble
Corporation $127,003 $98,758 $370,898 $773,429
Earnings allocated to unvested share-
based payment awards (1,221) (952) (3,727) (7,497)
------ ---- ------ ------
Net income to common shareholders -
basic $125,782 $97,806 $367,171 $765,932
======== ======= ======== ========
Diluted
Net income attributable to Noble
Corporation $127,003 $98,758 $370,898 $773,429
Earnings allocated to unvested share-
based payment awards (1,219) (950) (3,719) (7,481)
------ ---- ------ ------
Net income to common shareholders -
diluted $125,784 $97,808 $367,179 $765,948
======== ======= ======== ========
Weighted average number of shares
outstanding -basic 251,636 250,687 251,405 253,123
Incremental shares issuable from
assumed exercise of stock options 414 687 584 813
Weighted average number of shares
outstanding -diluted 252,050 251,374 251,989 253,936
======= ======= ======= =======
Weighted average unvested share-based
payment awards 2,442 2,439 2,552 2,438
===== ===== ===== =====
Earnings per share
Basic $0.50 $0.39 $1.46 $3.03
Diluted $0.50 $0.39 $1.46 $3.02
SOURCE Noble Corporation
