Noble 4Q Earnings Down on GOM Stalls
Noble reported fourth quarter 2010 earnings of $99 million, or $0.39 per diluted share, versus $446 million, or $1.72 per diluted share, for the fourth quarter of 2009. Contract drilling services revenues for the fourth quarter of 2010 were $614 million versus $894 million in the fourth quarter of 2009. Earnings for the full year 2010 totaled $3.02 per diluted share compared with $6.42 per diluted share in 2009.
"2010 will be remembered as one of the most challenging years this industry has ever experienced," said David Williams, Chairman, President and Chief Executive Officer. "However, Noble's core values and strengths enabled us to not only weather the storm, but to do so while maintaining operational excellence, improving safety, expanding our geographic diversity and adding significant contract backlog with key customers."
Contract drilling services revenues for the fourth quarter 2010 were $614 million, down 31 percent from the year-earlier quarter. Contract drilling margins for the fourth quarter 2010 were approximately 46 percent, generating $369 million in net cash provided by operating activities during the quarter and $1.7 billion for full year 2010. The Company invested $537 million in capital projects during the quarter, bringing full-year capital spending for 2010 to $1.4 billion. Debt as a percentage of total capitalization increased slightly to 27.5 percent at December 31, 2010, from approximately 27.4 percent at the end of the third quarter 2010.
Fourth Quarter Highlights
At year end 2010, approximately 53 percent of the Company's available rig operating days was committed for 2011 and approximately 31 percent was committed for 2012. The Company's total backlog at December 31, 2010 was approximately $12.7 billion.
In the U.S. Gulf of Mexico, the Noble Danny Adkins resumed work for Shell on full rate in late December. The completion work being performed by the Adkins is expected to last until early February after which time the rig could return to standby rate if Shell does not have another work scope approved. Subsea systems in the Gulf of Mexico, including BOP stacks, have been certified by third parties on the Noble Amos Runner, Noble Clyde Boudreaux, Noble Danny Adkins, Noble Jim Day, Noble Paul Romano, and most recently, the Noble Jim Thompson.
In Mexico, the Noble John Sandifer and the Noble Sam Noble each received short-term extensions beginning early January at dayrates of $74,000-$76,000. In the North Sea, the Noble Byron Welliver received a contract for approximately six months plus two priced option wells beginning early June at a dayrate of $88,000-$91,000. The Noble Lynda Bossler's work with its current customer has been extended by approximately three months. The Noble Homer Ferrington is expected to begin a two-well assignment at the end of the first quarter.
In West Africa, the Noble Lloyd Noble is expected to begin a six-month contract in early February 2011. In the Middle East, the Noble Roy Rhodes received a two–month contract beginning early April 2011 at a dayrate of $88,000-$90,000, after which it will move to a dayrate of $92,000-$94,000 for a five-month contract as of mid May 2011. Also during the quarter, the Noble Joe Beall began a six-month contract for accommodation work at a dayrate of $53,000-$55,000.
In December, Noble announced the construction of two JU3000N high-specification jackups with total costs of $220 million per rig. The Company has options to construct up to four additional units exercisable before year-end 2011. In January, Noble also announced plans to construct two ultra-deepwater drillships at a cost of $605 million per unit. This contract contains options for up to two additional units which must be exercised by early May 2011. One of the drillships has received a Letter of Intent to work for Shell upon delivery in 2013 at a base dayrate of $410,000. The unit will be eligible for a 15 percent performance bonus.
"These newbuild announcements reinforce our strategy of adding high-specification rigs to our fleet at investment levels we believe will generate solid returns," said Williams. "Since 2005, we have more than doubled Noble's floating fleet, and upon completion of our existing newbuild program, we expect to have twelve ultra-deepwater units deployed in major petroleum basins around the world. Likewise, the JU3000N units will continue the modernization of our jackup fleet and be some of the most capable rigs in the world. These newbuilds, each to be constructed under turnkey contracts with proven shipyards, are expected to deliver value for many years to come."