Noble Reports Third Quarter 2005 Results

Noble Corporation reported net income for the third quarter of 2005 of $76.5 million, or $0.55 per diluted share, on operating revenues of $367.2 million, compared to net income of $30.6 million, or $0.23 per diluted share, on operating revenues of $265.6 million for the third quarter of 2004. Net income for the nine months ended September 30, 2005 was $195.4 million, or $1.42 per diluted share, on operating revenues of $1.02 billion, compared to net income of $93.2 million, or $0.70 per diluted share, on operating revenues of $764 million for the nine months ended September 30, 2004, a 110 percent increase in net income and a 34 percent increase in operating revenues.

At September 30, 2005, the Company's consolidated balance sheet reflected $2.65 billion in shareholders' equity, $211.5 million in cash and marketable debt securities, and $440.4 million in total debt. Net cash provided by operating activities for the nine month period ended September 30, 2005 was $337.9 million. Debt as a percentage of total capitalization decreased from 18 percent as of December 31, 2004 to 14 percent as of September 30, 2005. During the nine months ended September 30, 2005, the Company repaid $65 million principal amount of the outstanding balance on its $300 million bank credit facility.

As previously reported in the Company's October 6, 2005 press release, we estimated financial impacts directly attributable to Hurricanes Katrina and Rita to be a reduction of the Company's net income in the range of $0.13 to $0.15 per diluted share for the third quarter. During the third quarter of 2005, the Company recorded a $20 million charge, net of expected recoveries from our hull and machinery insurance, related to the damage from these events and $9.5 million in business interruption insurance proceeds that the Company expects to recover from our insurance underwriters. These financial impacts are presented in Hurricane losses and recoveries, net, as a component of Operating Costs and Expenses in our interim Unaudited Consolidated Statements of Income.

James C. Day, Chairman, Chief Executive Officer and President, said, "Obviously, the severe Katrina and Rita storms in the Gulf of Mexico have had a significant impact on the oil and gas service sector not only in the offshore arena but also in the onshore infrastructure needed to complete repairs. Importantly, all Noble personnel were evacuated to safety and we continue to assist those who have been impacted by the storms."

Net income for the third quarter of 2005 increased 4 percent from the second quarter of 2005 as average dayrates for all divisions continued to improve and operating days for most divisions, except for the U.S. Gulf of Mexico and North Sea, increased. Operating days in the U.S. Gulf of Mexico and North Sea decreased due to unscheduled downtime resulting from Hurricanes Katrina and Rita and the shipyard project related to the Noble Al White upgrade.

Compared to the third quarter of 2004, net income in the third quarter of 2005 increased 150 percent primarily due to an increase in worldwide utilization and higher average dayrates in the U.S. Gulf of Mexico, West Africa, Middle East and North Sea. Worldwide rig utilization increased to 97 percent in the third quarter of 2005 from 82 percent in the third quarter of 2004. Operating days in the Middle East increased by 360 days in the third quarter of 2005 over the third quarter of 2004 primarily due to the acquisitions of the Noble Cees van Diemen, Noble Mark Burns and Noble David Tinsley in the second half of 2004 and Noble Harvey Duhaney in the third quarter of 2005 and contributions from the Noble Dick Favor (which was in drydock during a portion of the third quarter of 2004). Operating days in Nigeria increased 250 days due to contracts for the Noble Ed Noble, Noble Don Walker, and Noble Homer Ferrington.

The average dayrates for the jackup and deepwater rigs (capable of drilling in water depths of 4,000 feet or greater) in the U.S. Gulf of Mexico increased 50 and 19 percent, respectively, from the third quarter of 2004. The average dayrates in the North Sea and West Africa increased $11,408 (22 percent) and $12,770 (25 percent), respectively, in the third quarter of 2005 from the third quarter of 2004.

Offshore contract drilling services revenues from deepwater drilling units accounted for approximately 33 percent and 29 percent, respectively, of the Company's total contract drilling services revenues for the third quarter of 2005 and 2004, respectively. The Company currently operates six deepwater semisubmersibles in the Gulf of Mexico, one deepwater semisubmersible and three deepwater drillships offshore Brazil, and one deepwater semisubmersible in Nigeria. Contract drilling services revenues from international sources accounted for approximately 76 percent and 75 percent, respectively, of the Company's total contract drilling services revenues for the third quarters of 2005 and 2004.

The average dayrate for the Company's international jackup rigs was $55,271 in the third quarter of 2005 compared to $49,954 in the third quarter of 2004. Utilization on these units increased from 82 percent in the third quarter of 2004 to 98 percent in the third quarter of 2005.

The increase in the Company's operating expenses in the third quarter of 2005 as compared to the same quarter of 2004 was mainly due to the increase in the number of operating days which was in part due to the addition of the Noble Cees van Diemen, Noble Mark Burns, Noble David Tinsley and Noble Harvey Duhaney and higher rig utilization.

Day said, "In October of 2004, the Company began analysis on developing a new operating standard for its semisubmersible fleet, designated API RP-2SK. This new operating design will assure our semisubmersible fleet can meet 100 year Deep Star storm conditions. We anticipate completing the new configuration over the next 24 months."
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