Noble Corporation Reports Record Earnings for 4Q06
Noble Corporation (NYSE: NE) reported net income for the fourth quarter of 2006 of $199.7 million, or $1.47 per diluted share, on operating revenues of $558.8 million, compared to net income of $101.3 million, or $0.73 per diluted share, on operating revenues of $360.6 million for the fourth quarter of 2005. Net income for the 12 months ended December 31, 2006 was $731.9 million, or $5.33 per diluted share, on operating revenues of $2.1 billion. This compares to net income of $296.7 million, or $2.16 per diluted share, on operating revenues of $1.4 billion for the 12 months ended December 31, 2005, a 147 percent increase in net income and a 52 percent increase in operating revenues.
"Entering 2006, we identified three key factors expected to impact our performance for the year - retention of employees, cost control and execution of our shipyard projects," said Mark A. Jackson, President and Chief Executive Officer of Noble Corporation. "In each of these areas, Noble delivered. At the same time, we set our best ever safety record, with more hours worked than at any time in the Company's history. We continue to see the benefits of the strategic moves we began several years ago when we decided to take our jackup units out of the U.S. Gulf of Mexico market."
At December 31, 2006, the Company's consolidated balance sheet reflected $3.2 billion in shareholders' equity, $61.7 million in cash and cash equivalents and $694.1 million in total debt. Net cash provided by operating activities for the 12-month period ended December 31, 2006 was $1.0 billion as compared to $529.0 million in the same period of 2005. Debt as a percentage of total capitalization was 18 percent at December 31, 2006, down from 29 percent at December 31, 2005. During the fourth quarter of 2006, the Company repurchased 1.5 million shares at an average price of $75.81 per share, for a total cost of $113.7 million. This raised the Company's full year 2006 repurchases to 3.8 million shares at an average price of $70.27, for a total cost of $267.0 million.
Fourth Quarter Operations Review
Net income for the fourth quarter of 2006 increased 97 percent compared to the fourth quarter of 2005, due principally to higher dayrates and a strong focus on cost control. Total operating days were down 270 days from the third quarter of 2006, primarily attributable to a higher number of unpaid shipyard days quarter over quarter. More than half of full year 2006 unpaid shipyard days were incurred during the fourth quarter.
The Company currently operates five deepwater semisubmersibles in the Gulf of Mexico. The NC-5(SM) mooring system upgrade was completed in October on the semisubmersible Noble Jim Thompson, which returned to work for Shell in the U.S. Gulf of Mexico. Two additional semisubmersible units are scheduled to undergo the mooring system upgrade this year. The fourth quarter average dayrate on the Company's deepwater units in this market remained strong at $281,654.
Contract drilling services revenues from international sources accounted for approximately 77 percent and 83 percent of the Company's total contract drilling services revenues for the fourth quarter of 2006 and 2005, respectively. The average dayrate for the Company's international jackups was $90,121 in the fourth quarter of 2006 as compared to $59,178 in the fourth quarter of 2005. Utilization on these units decreased moderately to 93 percent in the fourth quarter of 2006 compared to 99 percent in the fourth quarter of 2005.
During the fourth quarter of 2006, Noble finalized contract renewals for six of the Company's 10 jackups in Mexico at dayrates ranging from $171,000 to $186,000.
"Looking ahead to 2007, I believe we will face many of the same challenges we faced in 2006," said Jackson. "While the recent downward movement in oil prices adds an element of caution to the discussion, I believe the market for premium assets will remain strong. No one will be immune to cost pressure in terms of labor and materials across the year, but Noble is actively managing these costs through our retention and project management programs. Overall, I am optimistic about the year, particularly as it relates to the outlook for our key markets."
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