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Noble Corporation Reports Fourth Quarter And Full Year 2013 Results

January 22, 2014

LONDON, Jan. 22, 2014 /PRNewswire/ — Noble Corporation (NYSE: NE) today reported fourth quarter 2013 net income of $174 million, or $0.68 per diluted share. Results for the fourth quarter included an after tax charge of $36 million, or $0.14 per diluted share, relating to an impairment taken on the FPSO Seillean. Excluding the impairment charge, net income for the fourth quarter would have totaled $210 million, or $0.82 per diluted share. For the third quarter of 2013, the Company reported net income of $282 million, or $1.10 per diluted share, which included after tax gains totaling approximately $63 million, or $0.25 per diluted share. Excluding the gains, net income in the third quarter would have been $219 million, or $0.85 per diluted share. During the fourth quarter of 2012, net income was $128 million, or $0.50 per diluted share. Revenues for the fourth quarter of 2013 were $1.17 billion compared to $1.08 billion in the third quarter of 2013 and $966 million in the fourth quarter of 2012.

Net income for the full year 2013 totaled $783 million, or $3.05 per diluted share, on revenues of $4.2 billion, compared to net income of $522 million, or $2.05 per diluted share on revenues of $3.5 billion in 2012.

Addressing the Company’s achievements in the fourth quarter of 2013, David W. Williams, Chairman, President and Chief Executive Officer of Noble Corporation stated, “Contract drilling revenues continued to grow during the fourth quarter with full or partial contributions from three new ultra-deepwater drillships and the first of our six JU3000N high-specification jackups. Building on an exceptional quarter and year of execution in the shipyard, we also saw the delivery of two more JU3000N jackups – the Noble Regina Allen in December, followed by the Noble Houston Colbert in early 2014. These fleet additions, along with the remaining six projects, of which five rigs are expected to complete construction in 2014, are redefining our Company, creating a premium fleet of offshore drilling rigs capable of addressing our clients’ most demanding global well construction assignments.”

Another significant achievement during the quarter was the progress made toward our planned divestiture of substantially all of the standard capability assets in our fleet. We cleared two key hurdles that place the Company on track to complete the divestiture by the end of 2014, with receipt of the private letter ruling from the IRS and the filing last quarter of a registration statement relating to the proposed initial public offering of the new company. While there is some level of uncertainty around global offshore activity in 2014, this is not interfering with our plans for the divestiture. The divestiture has always been about the strategic importance to Noble – a step necessary to allow the two fleets to be optimally managed and operated, placing both in a stronger competitive position for future cycles.”

Contract drilling services revenues for the fourth quarter of 2013 of $1.12 billion improved by $84 million, or 8 percent from the third quarter, due primarily to a 9 percent increase in average dayrates to $212,000 compared to $194,600 in the third quarter. Operating days declined slightly during the fourth quarter due in part to an increase in idle and shipyard days, particularly among rigs in the Middle East region, partially offset by the commencement of operations on the ultra-deepwater drillship Noble Bob Douglas and the high-specification jackup Noble Mick O’Brien, and a full quarter of operations from the ultra-deepwater drillships Noble Don Taylor and Noble Globetrotter II, which began operations during the third quarter. The addition of these new rigs contributed to a $74 million increase in contract drilling operating costs in the fourth quarter to $560 million, compared to $486 million in the third quarter. Contract drilling margin for the fourth quarter was 50.2 percent, compared to 53.3 percent in the third quarter.

Net cash from operating activities was $541 million in the fourth quarter 2013 and $1.7 billion for the full year 2013. Capital expenditures in the fourth quarter 2013 totaled $763 million, including $505 million related to the Company’s fleet expansion program. In 2013, capital expenditures amounted to $2.5 billion, including $1.5 billion associated with the fleet expansion program. As of December 31, 2013, approximately $1.9 billion in capital expenditures was required to complete the remaining seven projects in the Company’s newbuild program, comprising two ultra-deepwater drillships and five high-specification jackups. Six of the seven remaining newbuild projects are expected to be delivered from shipyards by the end of 2014, including the jackup Noble Houston Colbert, which was delivered in early-January.

Debt as a percentage of total capitalization at December 31, 2013 was 38.0 percent, up slightly from 37.5 percent at September 30, 2013, while liquidity, defined as cash and cash equivalents plus availability under revolving credit facilities, totaled $1.45 billion compared to $1.77 billion at September 30, 2013.

Operating Highlights
Total contract backlog at December 31, 2013 was approximately $15.4 billion compared to $16.2 billion at September 30, 2013. The decline from the third quarter was due in part to a change in the bonus realization assumptions relating to contracts with Petrobras and Shell. The new bonus assumptions reflect the Company’s recent history of bonus realization, more stringent regulatory requirements, especially in the U.S. Gulf of Mexico, and changing customer expectations.

During the fourth quarter of 2013, utilization of the Company’s floating rig fleet (semisubmersibles and drillships) was 84 percent compared to 79 percent in the third quarter. Excluding the impact of two cold stacked floaters, utilization in the fourth quarter would have been 91 percent compared to 86 percent in the third quarter. The increase for the quarter primarily relates to the return to service of the semisubmersible Noble Homer Ferrington, which spent the majority of the quarter operating under a short-term contract in the Eastern Mediterranean following an idle period, and the drillship Noble Roger Eason, which in December returned to work offshore Brazil following the completion of a shipyard program. Average daily revenues in the floating rig fleet were $378,400 in the fourth quarter, or an improvement of approximately 3 percent from $369,100 in the third quarter, reflecting the commencement of operations on the ultra-deepwater drillship Noble Bob Douglas and a full quarter of operations on the Noble Don Taylor and the Noble Globetrotter II.

Fourth quarter 2013 utilization of the Company’s jackup rig fleet was 86 percent compared to 94 percent in the third quarter. The decrease primarily relates to fewer operating days on the Noble Roy Rhodes, the Noble Roger Lewis, the Noble David Tinsley and the Noble Gene Rosser which is expected to be sold during the first quarter of 2014. The decrease in utilization was partially offset by a 3 percent improvement in average daily revenues during the quarter to $115,700 from $112,400 during the third quarter.

At the end of the fourth quarter of 2013, approximately 73 percent of the Company’s available rig operating days were committed for 2014, including 78 percent of the floating rig days and 75 percent of the jackup rig days. For 2015, an estimated 44 percent of the available rig operating days were committed, including 61 percent and 38 percent of the floating and jackup rig days, respectively. The calculations for committed operating days include available days for two floaters and one jackup, all of which are currently cold stacked.

Outlook
Williams closed by stating, “After the very robust pace of offshore activity over the past four years, our industry may be entering a short and arguably useful pause in the cycle. As was the case in 2013, we entered this year with considerable backlog. That said, although we believe activity in the jackup sector is best defined as a steady state, the reality is that we find ourselves evaluating fewer floating rig contract opportunities today than we did a year ago. We expect to have additional contract opportunities under review as the year progresses, but it is increasingly clear that the first half of 2014 is likely to be characterized by lower rig utilization. The lower utilization is likely to be more pronounced for the floating rigs with limited technical features. Noble’s exposure to a weaker floating rig sector is limited in 2014, with only 22 percent of our operating days available.”

We are confident about the long-term outlook for offshore drilling and remain committed to a capital allocation strategy that promotes disciplined growth with strong returns and strategic appeal while offering the flexibility to consider other actions that promote enhanced shareholder value. In the ultra-deepwater segment, which represents a growing portion of our revenue, we continue to observe a fundamentally sound business. In the face of generally steady crude oil prices, successful exploration programs with over 240 announced deepwater discoveries since 2008, continued geographic expansion and a building backlog of field development projects, the segment is poised to provide exceptional future growth opportunities. Our transformation to a company with a predominately premium asset fleet positions Noble to successfully address the future opportunities in ultra-deepwater and high-specification jackup drilling applications.”

About Noble Corporation
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 77 offshore drilling units (including two ultra-deepwater drillships and four high-specification jackup drilling rigs currently under construction), located worldwide, including in the U.S. Gulf of Mexico and Alaska, Mexico, Brazil, the North Sea, the Mediterranean, West Africa, the Middle East, India, Malaysia and Australia. Noble’s shares are traded on the New York Stock Exchange under the symbol “NE.” Noble Corporation plc is a public limited company registered in England and Wales with company number 08354954 and registered office at Devonshire House, 1 Mayfair Place, London, W1J 8AJ England. 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 also has scheduled a conference call and webcast related to its fourth quarter and full year 2013 results on Thursday, January 23, 2014, at 8:00 a.m. U.S. Central Standard 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: 88221538, 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 23, 2014, beginning at 12:00 p.m. U.S. Central Standard Time, through Thursday, February 6, 2014, ending at 11:00 p.m. U.S. Central Standard 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: 88221538. The replay will also be available on the Company’s Web site following the end of the live call.

                                                                  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,
                                                        ------------                       ------------

                                                                         2013                               2012        2013        2012
                                                                         ----                               ----        ----        ----

     Operating revenues

       Contract drilling services                                  $1,124,760                           $921,603  $4,070,070  $3,349,362

       Reimbursables                                                   33,198                             21,405     111,874     115,495

       Labor contract drilling services                                 9,091                             23,352      52,241      81,890

       Other                                                                -                                  7         105         265
                                                                          ---                                ---         ---         ---

                                                                    1,167,049                            966,367   4,234,290   3,547,012
                                                                    ---------                            -------   ---------   ---------

     Operating costs and expenses

       Contract drilling services                                     560,259                            478,841   2,014,217   1,769,428

       Reimbursables                                                   24,254                             17,478      85,548      94,096

       Labor contract drilling services                                 6,879                             12,721      36,604      46,752

       Depreciation and amortization                                  236,966                            208,842     879,422     758,621

       General and administrative                                      31,802                             24,602     117,997      99,990

       Incremental spin-off related costs                               7,260                              5,106      17,702       7,196

       Loss on impairment                                              40,103                              2,039      43,688      20,384

       Gain on disposal of assets, net                                      -                                  -     (35,646)          -

       Gain on contract settlements/extinguishments,
        net                                                                 -                                  -     (46,800)    (33,255)

                                                                      907,523                            749,629   3,112,732   2,763,212
                                                                      -------                            -------   ---------   ---------

     Operating income                                                 259,526                            216,738   1,121,558     783,800

     Other income (expense)

       Interest expense, net of amount capitalized                    (31,185)                           (28,980)   (106,300)    (85,763)

       Interest income and other, net                                   1,167                                662       2,754       5,188
                                                                        -----                                ---       -----       -----

     Income before income taxes                                       229,508                            188,420   1,018,012     703,225

       Income tax provision                                           (40,600)                           (53,981)   (167,606)   (147,088)
                                                                      -------                            -------    --------    --------

     Net income                                                       188,908                            134,439     850,406     556,137

       Net income attributable to noncontrolling
        interests                                                     (14,848)                            (6,862)    (67,709)    (33,793)

     Net income attributable to Noble Corporation                    $174,060                           $127,577    $782,697    $522,344
                                                                     ========                           ========    ========    ========

     Net income per share

       Basic                                                            $0.68                              $0.50       $3.05       $2.05

       Diluted                                                          $0.68                              $0.50       $3.05       $2.05

                       NOBLE CORPORATION AND SUBSIDIARIES

                           CONSOLIDATED BALANCE SHEETS

                                 (In thousands)

                                   (Unaudited)

                             December 31,                 December 31,

                                                 2013                         2012
                                                 ----                         ----

     ASSETS

     Current
      assets

       Cash and
        cash
        equivalents                          $114,458                     $282,092

       Accounts
        receivable                            949,069                      743,673

       Prepaid
        expenses
        and
        other
        current
        assets                                327,408                      279,560
                                              -------                      -------

     Total
      current
      assets                                1,390,935                    1,305,325
                                            ---------                    ---------

     Property
      and
      equipment,
      net                                  14,558,090                   13,025,972

     Other
      assets                                  268,932                      276,477
                                              -------                      -------

       Total
        assets                            $16,217,957                  $14,607,774
                                          ===========                  ===========

      LIABILITIES
      AND
      EQUITY

     Current
      liabilities

       Accounts
        payable                              $347,214                     $350,147

       Accrued
        payroll
        and
        related
        costs                                 151,161                      132,728

       Dividend
        payable                               128,249                       66,369

       Other
        current
        liabilities                           425,291                      362,205

     Total
      current
      liabilities                           1,051,915                      911,449
                                            ---------                      -------

     Long-
      term
      debt                                  5,556,251                    4,634,375

     Deferred
      income
      taxes                                   225,455                      226,045

     Other
      liabilities                             334,308                      347,615
                                              -------                      -------

       Total
        liabilities                         7,167,929                    6,119,484
                                            ---------                    ---------

      Commitments
      and
      contingencies

     Equity

       Total
        shareholders'
        equity                              8,322,583                    7,723,166

        Noncontrolling
        interests                             727,445                      765,124

       Total
        equity                              9,050,028                    8,488,290
                                            ---------                    ---------

       Total
        liabilities
        and
        equity                            $16,217,957                  $14,607,774
                                          ===========                  ===========

               NOBLE CORPORATION AND SUBSIDIARIES

              CONSOLIDATED STATEMENTS OF CASH FLOWS

                         (In thousands)

                           (Unaudited)

                                                    Twelve Months Ended

                                                      December 31,
                                                      ------------

                                                      2013                2012
                                                      ----                ----

     Cash flows from
      operating
      activities

       Net income                                 $850,406            $556,137

       Adjustments to reconcile net
        income to net cash from operating
        activities:

       Depreciation
        and
        amortization                               879,422             758,621

       Loss on
        impairment                                  43,688              20,384

       Gain on
        disposal of
        assets, net                                (35,646)                  -

       Other changes
        in operating
        activities                                 (35,553)             46,551

       Net cash from
        operating
        activities                               1,702,317           1,381,693
                                                 ---------           ---------

     Cash flows from
      investing
      activities

       New
        construction                            (1,526,523)           (586,746)

       Other capital
        expenditures                              (845,903)           (947,090)

       Capitalized
        interest                                  (115,094)           (135,975)

       Proceeds from
        disposal of
        assets                                      61,000                   -

       Other investing
        activities                                 (58,587)           (121,077)

       Net cash from
        investing
        activities                              (2,485,107)         (1,790,888)
                                                ----------          ----------

     Cash flows from
      financing
      activities

       Net change in
        borrowings on
        bank credit
        facilities                               1,221,333            (635,192)

       Repayment of
        long-term
        debt                                      (300,000)                  -

       Proceeds from
        issuance of
        senior notes,
        net of debt
        issuance costs                                   -           1,186,636

       Contributions
        from joint
        venture
        partners                                         -              40,000

       Dividends paid
        to joint
        venture
        partners                                  (105,388)                  -

       Dividends/Par
        value
        reduction
        payments to
        shareholders                              (194,913)           (138,293)

       Other financing
        activities                                  (5,876)             (1,060)

       Net cash from
        financing
        activities                                 615,156             452,091
                                                   -------             -------

       Net change in
        cash and cash
        equivalents                               (167,634)             42,896

     Cash and cash
      equivalents,
      beginning of
      period                                       282,092             239,196
                                                   -------             -------

     Cash and cash
      equivalents,
      end of period                               $114,458            $282,092
                                                  ========            ========

                                                                                                                        NOBLE CORPORATION AND SUBSIDIARIES

                                                                                                                 FINANCIAL AND OPERATIONAL INFORMATION BY SEGMENT

                                                                                                                   (In thousands, except operating statistics)

                                                                                                                                   (Unaudited)

                                                          Three Months Ended December 31,                                     Three Months Ended September 30,
                                                         -------------------------------                                   --------------------------------

                                                                       2013                           2012                                                 2013
                                                                       ----                           ----                                                 ----

                                                     Contract                                                                              Contract                                              Contract

                                                     Drilling                                                                              Drilling                                              Drilling

                                                     Services                             Other            Total                           Services                Other         Total           Services               Other          Total
                                                     --------                             -----            -----                           --------                -----         -----           --------               -----          -----

     Operating revenues

     Contract drilling services                                  $1,124,760               $           -           $1,124,760                        $921,603      $            -       $921,603           $1,041,118  $             -        $1,041,118

     Reimbursables                                                   31,520                       1,678               33,198                          21,043                 362         21,405               28,840              402            29,242

     Labor contract drilling services                                     -                       9,091                9,091                               -              23,352         23,352                    -            8,493             8,493

     Other                                                                -                           -                    -                               7                   -              7                   28                -                28
                                                                        ---                         ---                  ---                             ---                 ---            ---                  ---              ---               ---

                                                                 $1,156,280                     $10,769           $1,167,049                        $942,653             $23,714       $966,367           $1,069,986           $8,895        $1,078,881
                                                                 ==========                     =======           ==========                        ========             =======       ========           ==========           ======        ==========

     Operating costs and expenses

     Contract drilling services                                    $560,259               $           -             $560,259                        $478,841      $            -       $478,841             $485,861    $           -          $485,861

     Reimbursables                                                   23,329                         925               24,254                          17,127                 351         17,478               23,281              390            23,671

     Labor contract drilling services                                     -                       6,879                6,879                               -              12,721         12,721                    -            8,127             8,127

     Depreciation and amortization                                  233,730                       3,236              236,966                         205,329               3,513        208,842              219,695            4,016           223,711

     General and administrative                                      31,553                         249               31,802                          24,060                 542         24,602               33,346              430            33,776

     Incremental spin-off related costs                               7,201                          59                7,260                           5,002                 104          5,106                2,388               27             2,415

     Loss on impairment                                              40,103                           -               40,103                               -               2,039          2,039                3,585                -             3,585

     Gain on disposal of assets, net                                      -                           -                    -                               -                   -              -              (35,646)               -           (35,646)

     Gain on contract settlements/extinguishments,
      net                                                                 -                           -                    -                               -                   -              -              (45,000)               -           (45,000)

                                                                   $896,175                     $11,348             $907,523                        $730,359             $19,270       $749,629             $687,510          $12,990          $700,500
                                                                   ========                     =======             ========                        ========             =======       ========             ========          =======          ========

     Operating income                                              $260,105                       $(579)            $259,526                        $212,294              $4,444       $216,738             $382,476          $(4,095)         $378,381
                                                                   ========                       =====             ========                        ========              ======       ========             ========          =======          ========

     Operating statistics

     Jackups:

     Average Rig Utilization                                             86%                                                                              89%                                                     94%

     Operating Days                                                   3,360                                                                            3,520                                                   3,635

     Average Dayrate                                               $115,749                                                                         $100,356                                                $112,414

     Semisubmersibles:

     Average Rig Utilization                                             84%                                                                              85%                                                     79%

     Operating Days                                                   1,076                                                                            1,096                                                   1,012

     Average Dayrate                                               $402,358                                                                         $360,226                                                $380,048

     Drillships:

     Average Rig Utilization                                             85%                                                                              82%                                                     79%

     Operating Days                                                     869                                                                              679                                                     702

     Average Dayrate                                               $348,702                                                                         $255,667                                                $353,278

     FPSO/Submersibles:

     Average Rig Utilization                                              0%                                                                               0%                                                      0%

     Operating Days                                                       -                                                                                -                                                       -

     Average Dayrate                               $                      -                                                                $               -                                    $                  -

     Total:

     Average Rig Utilization                                             82%                                                                              83%                                                     85%

     Operating Days                                                   5,305                                                                            5,295                                                   5,349

     Average Dayrate                                               $212,019                                                                         $174,065                                                $194,645

                                                                     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              Twelve months ended

                                                     December 31,                    December 31,
                                                     ------------                    ------------

                                                                    2013                            2012              2013      2012
                                                                    ----                            ----              ----      ----

     Basic

     Net income attributable
      to Noble Corporation                                      $174,060                        $127,577          $782,697  $522,344

     Earnings allocated to
      unvested share-based
      payment awards                                              (2,077)                         (1,301)           (9,271)   (5,309)
                                                                  ------                          ------            ------    ------

     Net income to common
      shareholders -basic                                       $171,983                        $126,276          $773,426  $517,035
                                                                ========                        ========          ========  ========

     Diluted

     Net income attributable
      to Noble Corporation                                      $174,060                        $127,577          $782,697  $522,344

     Earnings allocated to
      unvested share-based
      payment awards                                              (2,075)                         (1,300)           (9,261)   (5,302)
                                                                  ------                          ------            ------    ------

     Net income to common
      shareholders -diluted                                     $171,985                        $126,277          $773,436  $517,042
                                                                ========                        ========          ========  ========

     Weighted average number
      of  shares outstanding
      -basic                                                     253,423                         252,722           253,288   252,435

     Incremental shares
      issuable from assumed
      exercise of stock
      options                                                        238                             253               259       356

     Weighted average number
      of  shares outstanding
      -diluted                                                   253,661                         252,975           253,547   252,791
                                                                 =======                         =======           =======   =======

     Weighted average
      unvested share-based
      payment awards                                               3,061                           2,604             3,036     2,592
                                                                   =====                           =====             =====     =====

     Earnings per share

     Basic                                                         $0.68                           $0.50             $3.05     $2.05

     Diluted                                                       $0.68                           $0.50             $3.05     $2.05

SOURCE Noble Corporation


Source: PR Newswire



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