“Our strategic decision in 2001 to reduce our jackup fleet in the U.S. Gulf of Mexico by moving units to regions with greater geological potential clearly has had a positive impact on our financial results,” said James C. Day, Noble’s chairman and CEO. “Notwithstanding the moderating shallow water market, the deepwater U.S. Gulf of Mexico continues to be quite active.”
Noble reported net income for the second quarter of 2006 of $179.8 million, or $1.30 per diluted share, on operating revenues of $517.5 million, compared to net income of $73.3 million, or $0.53 per diluted share, on operating revenues of $344.0 million for the second quarter of 2005.
Net income for the six months ended June 30, 2006, was $325.0 million, or $2.35 per diluted share, on operating revenues of $979.4 million, compared to net income of $118.8 million, or $0.87 per diluted share, on operating revenues of $654.3 million for the six months ended June 30, 2005, a 173-percent increase in net income and a 50-percent increase in operating revenues. The company’s results for the 2006 second quarter and year-to-date include a pre-tax loss of $3.8 million ($0.02 per diluted share after tax) on the sale of the software business of our Maurer Technology Incorporated subsidiary in June 2006.
At June 30, 2006, Noble's consolidated balance sheet reflected $3.0 billion in shareholders' equity, $261.0 million in cash and marketable securities, and $698.6 million in total debt. Net cash provided by operating activities for the six-month period ended June 30, 2006 was $370.6 million as compared to $190.2 million in the comparable period of 2005. Debt as a percentage of total capitalization was 19 percent at June 30, 2006, decreasing from 29 percent at December 31, 2005.
Net income for the second quarter of 2006 increased 24 percent from the first quarter of 2006 as average dayrates on the company's deepwater units continued to increase. Additionally, total operating days increased 2 percent, primarily resulting from the Noble Joe Alford, which returned to work in early April after repairing damages caused by Hurricane Rita.
Compared to the second quarter of 2005, net income for the second quarter of 2006 increased 145 percent due principally to higher dayrates, increased utilization rates across the fleet, and additional operating days. In August of 2005, the company activated the Noble Mark Burns and also acquired the remaining 50 percent interest in the Noble Harvey Duhaney.
Offshore contract drilling services revenues from deepwater drilling units (capable of drilling in water depths of 4,000 feet or greater) accounted for approximately 37 percent and 35 percent of the company's total contract drilling services revenues for the second quarter of 2006 and 2005, respectively. Noble currently operates five deepwater semisubmersibles in the Gulf of Mexico, one deepwater semisubmersible and three deepwater drillships offshore Brazil, and one deepwater semisubmersible in Nigeria. In addition, the Noble Therald Martin is currently undergoing shipyard upgrades prior to mobilization to Brazil in late-July.
The company recently received new commitments for two existing semisubmersibles, the Noble Ton van Langeveld which will work for Venture Production plc (Venture Production) in the North Sea at $360,000 per day commencing in or about May 2008, and the Noble Homer Ferrington will work for Anadarko Petroleum Co. in Nigeria at a dayrate of $434,000 commencing in or about January 2008. Contract drilling services revenues from international sources accounted for approximately 71 percent and 74 percent of the company's total contract drilling services revenues for the second quarter of 2006 and 2005, respectively.
The average dayrate for the company's international jackups was $72,601 in the second quarter of 2006 compared to $51,747 in the second quarter of 2005. Utilization on these units increased slightly to 98 percent in the recent quarter as compared to 97 percent in the second quarter of 2005. The company recently announced the receipt of a letter of award from Venture Production to enter into a contract to build an F&G JU-2000E enhanced premium jackup. The commitment will have a contract term of two years at a dayrate of $210,000. Venture Production currently plans to deploy the rig in the North Sea. This is the third F&G JU-2000E newbuild jackup the company plans to deliver over the next three years.
The average dayrate on the Noble's deepwater units in the U.S. Gulf of Mexico capable of drilling in water depths of 6,000 feet or greater increased 118 percent to $273,779 in the second quarter of 2006, compared to $125,866 in the second quarter of 2005. The deepwater market in the U.S. Gulf and Brazil remains strong.
“Worldwide drilling activity should remain strong even though near-term commodity prices are under some pressure, most particularly North American natural gas,” said Day.
Noble repurchased 1 million of its ordinary shares in the second quarter at an average price of $68.71 per share, excluding related transaction costs.
Noble Corp. is a leading provider of diversified services for the oil and gas industry. Contract drilling services are performed with the company's fleet of 63 mobile offshore drilling units located in key markets worldwide. This fleet consists of 13 semisubmersibles, three dynamically positioned drillships, 44 jackups, and three submersibles. The fleet count includes three F&G JU-2000E enhanced premium newbuild jackups under contract for construction, with scheduled delivery of the first unit in the third quarter of 2007, the second unit in first quarter of 2008, and the third unit in the first quarter of 2009. Approximately 84 percent of the fleet is currently deployed in international markets, principally including the Middle East, Mexico, the North Sea, Brazil, West Africa, and India.
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