Noble Reports Fourth Quarter and Full Year 2005 Results
Noble Corporation (NYSE: NE) reported net income for the fourth quarter of 2005 of $101.3 million, or $0.73 per diluted share, on operating revenues of $360.6 million, compared to net income of $52.9 million, or $0.39 per diluted share, on operating revenues of $302.2 million for the fourth quarter of 2004. Net income for the year ended December 31, 2005 was $296.7 million, or $2.16 per diluted share, on operating revenues of $1,382.1 million, compared to net income of $146.1 million, or $1.09 per diluted share, on operating revenues of $1,066.2 million for the year ended December 31, 2004.
At December 31, 2005, the Company's consolidated balance sheet reflected $2.75 billion in shareholders' equity, $166.3 million in cash and marketable securities, and $1,138.3 million in total debt. Net cash provided by operating activities for the year ended December 31, 2005 was $529.0 million.
The Company's premium fleet of 62 offshore drilling rigs includes two new F&G JU-2000E enhanced premium jackups, the Noble Roger Lewis and the Noble Hans Deul, which are currently under construction and scheduled for delivery in the third quarter of 2007 and the first quarter of 2008, respectively. The purchase price for these two new build units, each of which has a two year contract, is being financed with net cash provided by operating activities.
James C. Day, Chairman, Chief Executive Officer and President, said, "Even with extraordinary weather events, the Company's financial results continued to improve throughout the year."
Net income for the fourth quarter of 2005 increased 32 percent from the third quarter of 2005 as market conditions continued to improve in West Africa and the North Sea. Average dayrates on the Company's North Sea units continued to increase during the fourth quarter and utilization in the North Sea was 100 percent. The Company's results for the third quarter of 2005 included a $20.0 million charge, net of expected recoveries from our hull and machinery insurance, related to the damage from Hurricanes Katrina and Rita and $9.5 million in expected loss of hire insurance recoveries. The fourth quarter of 2005 includes $40.2 million in expected loss of hire insurance recoveries related to Hurricanes Katrina and Rita. These financial impacts are presented in Hurricane losses and recoveries, net, as a component of Operating Costs and Expenses in our Consolidated Statements of Income.
Net income for the fourth quarter of 2005 increased 92 percent as compared to the fourth quarter of 2004 due principally to higher dayrates, primarily in Mexico and the North Sea, expected loss of hire recoveries related to Hurricanes Katrina and Rita, higher utilization rates across the fleet and additional operating days in the Middle East. These items were partially offset by additional costs associated with increased utilization and higher labor costs.
The Company's Middle East division, which operates 17 rigs and includes India and the Mediterranean Sea, experienced an increase of 309 operating days in the fourth quarter of 2005 as compared to the fourth quarter of 2004. The increase in operating days was primarily due to the acquisition of the Noble Mark Burns and Noble David Tinsley, both 300' independent leg cantilever premium jackups, in June 2004 and October 2004, respectively, which were activated in August 2005 and February 2005, respectively, and the purchase of the remaining 50 percent interest in the Noble Harvey Duhaney, a 300' independent leg cantilever premium jackup, in August 2005. Utilization in our West Africa operating division was also higher in the fourth quarter of 2005 as compared to the same quarter in 2004, increasing to 100 percent in the recent quarter from 88 percent in the fourth quarter of 2004.
In October 2005, the Noble Paul Wolff ultra deep semisubmersible went into the shipyard in Brazil for a 150-day contract related upgrade project, which unfavorably impacted average dayrates during the fourth quarter as the unit remains under contract during this project. Partially offsetting this year- over-year comparison was the reactivation of the Noble Roger Eason, a 6,000' ice class drillship, in April 2005 after having been in the shipyard all of 2004 undergoing planned maintenance and significant upgrades which increased its operating capabilities.
Offshore contract drilling services revenues from deepwater drilling units (capable of drilling in water depths of 4,000 feet or greater) accounted for approximately 24 percent and 29 percent of the Company's total contract drilling services revenues for the fourth 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 another deepwater semisubmersible in Nigeria. Contract drilling services revenues from international sources accounted for approximately 83 percent and 77 percent of the Company's total contract drilling services revenues for the fourth quarter of 2005 and 2004, respectively.
The average dayrate for the Company's international jackup rigs was $59,178 in the fourth quarter of 2005 compared to $50,984 in the fourth quarter of 2004. Utilization on these rigs improved to 99 percent in the recent quarter as compared to 97 percent in the fourth quarter of 2004. The average dayrate on the Company's deepwater rigs in the U.S. Gulf of Mexico capable of drilling in water depths of 6,000 feet or greater decreased 48 percent to $51,146 in the fourth quarter of 2005 as compared to $98,767 in the fourth quarter of 2004 due to rigs under repair related to Hurricanes Katrina and Rita. Loss of hire insurance recoveries associated with these rigs for the fourth quarter of 2005 are expected to be $40.2 million and are presented in Hurricane losses and recoveries, net, as a component of Operating Costs and Expenses in our Consolidated Statements of Income. All deepwater rigs were back on contract as of January 15, 2006. The U.S. Gulf of Mexico deepwater market has continued to strengthen, and the dayrates under recent contracts for the Company's domestic deepwater semisubmersibles have been higher than the average dayrate for the fourth quarter of 2005. Utilization on these units was 100 percent during the fourth quarter of 2005 and 91 percent in the same quarter of the previous year. The average dayrate on the Company's domestic jackups increased 52 percent to $75,976 in the fourth quarter of 2005 as compared to the fourth quarter of 2004.
Day said, "The Company is well positioned with talented personnel and premium assets to fully participate in an expanding worldwide market anticipated in 2006. Assuring access to premium assets for our key clients remains a challenge particularly in the ultra deep market."
On December 23, 2005, the Company acquired, directly and indirectly, 21,095,600 Class A shares and 2,501,374 Class B shares of Smedvig ASA ("Smedvig"). The purchase price for the Class A shares was NOK 200.00 per share and for the Class B shares was NOK 150.00 per share, totaling NOK 4,594,326,100 (or approximately US$691 million). The Company financed the acquisition of the Smedvig shares with an aggregate of $700 million in new debt borrowings. On January 23, 2006, SeaDrill Limited, a Bermudian limited company ("SeaDrill"), reported that SeaDrill had received acceptances for a total of 24,876,009 Class A shares and 15,417,402 Class B shares of Smedvig under the voluntary offer conducted by SeaDrill for shares of Smedvig. SeaDrill further reported that, including its already owned shares, SeaDrill controlled 51.24 percent of the Class A shares and 52.47 percent of the Smedvig capital. SeaDrill has expressed its intention to put forward a mandatory offer in Norway together with a tender offer in the United States to all remaining shareholders in Smedvig as soon as practically possible. As a result of the foregoing, the Company is currently reviewing available alternatives relative to the Company's investment in Smedvig shares. The Company has no present plans or intention to make an offer for the balance of the shares of Smedvig the Company does not own. The Company continues to reserve the right to pursue all options available to it.
Noble Corporation is a leading provider of diversified services for the
oil and gas industry. Contract drilling services are performed with the
Company's premium fleet of 62 mobile offshore drilling units located in key
markets worldwide. This fleet consists of 13 semisubmersibles, three
dynamically positioned drillships, 43 jackups and three submersibles. The
fleet count includes two new F&G JU-2000E enhanced premium jackups, with
scheduled delivery of the first unit in the third quarter of 2007 and the
second unit in the first quarter of 2008. As previously announced, these
units have been contracted. Approximately 80 percent of the fleet is
currently deployed in international markets, principally including the Middle
East, Mexico, the North Sea, Brazil, West Africa, India, and the Mediterranean
Sea. The Company provides technologically advanced drilling-related products
and services designed to create value for our customers. The Company also
provides labor contract drilling services, well site and project management
services, and engineering services. The Company's ordinary shares are traded
on the New York Stock Exchange under the symbol "NE".
Manages 28 Offshore Rigs
- Sembcorp Marine Delivers World's Largest Jackup Noble Lloyd Noble (Jul 18)
- Oil Industry Maintains Country Club Culture During Downturn (May 23)
- Freeport to Pay Noble $540 Million to Not Use 2 Oil Rigs (May 10)