Noble Reports 2Q Earnings
Noble Corporation reported second quarter 2008 earnings of $376 million, or $1.40 per diluted share, versus $290 million, or $1.08 per diluted share, for the second quarter of 2007. Per-share earnings were up 30 percent from the second quarter of 2007 and down 2 percent from the $1.43 per diluted share reported for the first quarter of 2008.
Contract drilling services revenues for the second quarter of 2008 were $783 million, up 19% from the second quarter 2007. Contract drilling margin for the second quarter 2008 was approximately 67%, generating $443 million in net cash provided by operating activities. The Company invested approximately $291 million in capital projects during the second quarter 2008. The results for the second quarter of 2008 include an after-tax gain on the sale of our North Sea labor contract drilling services business of $0.11 per diluted share and after-tax charges of $0.01 per diluted share related to the ongoing independent investigation of the Company's Nigerian operations.
Debt as a percentage of total capitalization declined to 13.1% at June 30, 2008, from approximately 13.6 % at March 31, 2008.
Earnings for the first six months of 2008 totaled $2.83 per diluted share compared with $2.01 in the same period last year. Earnings for 2008 include the gain on the sale of the North Sea labor contract drilling business, while earnings for 2007 included charges of $8 million related to the sale of non-core business assets. Contract drilling services revenues were $1.6 billion and earnings were $760 million in the first half of 2008, up 28 percent and 41%, respectively, from the year-earlier period.
As of June 30, 2008, approximately 89% of the Company's total rig operating days were committed for the remainder of 2008 and approximately 68 percent were committed for 2009, reflecting the continued strong demand for the Company's services. In the U.S. Gulf of Mexico, Marathon exercised its right to extend the contract on the newbuild semisubmersible Noble Jim Day from two to four years at the dayrate of $515,000. During the quarter, the Noble Jim Thompson, a deepwater semisubmersible, received a two-year contract with Shell at a dayrate of $505,000 commencing in 2009. The Company also secured a contract for the Noble Lorris Bouzigard for a two-year term with LLOG at a dayrate of $270,000 which began in June 2008 and an extension for an additional year at a dayrate of $335,000 beginning in mid-2010.
Two of the Company's deepwater semisubmersibles were upgraded during the quarter with both projects completed ahead of schedule. With the conclusion of the work on the Noble Amos Runner, the Company completed its planned NC-5 hurricane mooring system upgrades and the rig commenced its new contract with Anadarko at a dayrate of $435,000 in late April. Also, upgrades, maintenance and contract preparations on the semisubmersible Noble Max Smith were completed and that unit has been mobilized from the U.S. Gulf of Mexico to Mexico. The Noble Max Smith will commence its three-year contract at a dayrate of $484,000 in August. This unit will enable PEMEX to drill in waters of up to 7,000 feet for the first time giving access to many previously unreachable prospects.
In other international deepwater markets, the Noble Homer Ferrington's three-year contract at a dayrate of approximately $505,000 will commence in April 2009 for ExxonMobil. In the North Sea, the Noble Ton van Langeveld secured a one-year contract extension beginning in mid-2009 at a dayrate of $380,000, with an additional six month option at the same price.
The Company's international jackup units also experienced notable contract activity in many markets during the quarter. In the Middle East, the Noble David Tinsley secured a contract extension beginning in December 2008 and ending March 2009 at a dayrate of $160,000 and the Noble Kenneth Delaney received a contract extension for a minimum of 120 days beginning in mid-2009 at a dayrate of approximately $162,000. The Noble Gene House received commitments for approximately 16 months beginning late-2008 at dayrates ranging from $150,000 to approximately $162,000.
In the North Sea, Maersk exercised its one-year option right at a dayrate of $210,000 on the Noble Byron Welliver. The Noble Piet van Ede entered into a six month contract extension beginning January 2009 at a dayrate of $215,000, with the option to convert the extension to one year at a dayrate of $212,000. Both the Noble Ronald Hoope and the Noble George Sauvageau secured one-year contracts beginning in January 2009 at dayrates of $212,000 and $220,000, respectively. In West Africa, the Noble Percy Johns secured a one-year contract beginning in March 2009 at a dayrate of $183,000. Also in that market, the Noble Ed Noble secured a 10 month contract beginning September 2008 at a dayrate of $173,000 and the Noble Tommy Craighead received a letter of intent for one year beginning in January 2009 at a strong market dayrate.
In Mexico, the Company announced today that its customer PEMEX has awarded a 1,217-day tender for the Noble Tom Jobe at a dayrate for the first six months of $155,000 and adjustable quarterly thereafter to an index of U.S. and international like kind jackup rates.
"Looking ahead, our industry faces a number of challenges. Raw materials costs, such as the price of steel, continue to climb. Added to this are increases in labor costs and the fluctuation in foreign exchange," said Williams. "That said the unprecedented strength of Noble's current global markets for both our deepwater fleet and our jackups is likely to create strong opportunities for our sustained growth. During the second half of 2008, we expect to continue leveraging our key strengths, such as safety and operational excellence, driving revenue growth and helping maintain our margins."
Manages 28 Offshore Rigs
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