Noble 2Q Revenues Stung by GOM 'Limitations'
Noble reported second quarter 2010 earnings of $218 million, or $0.85 per diluted share, versus $392 million, or $1.49 per diluted share, for the second quarter of last year. Results for the quarter include approximately $0.06 per share due to a higher than anticipated effective tax rate of 19 percent versus 13 percent in the first quarter 2010 which resulted primarily from the current drilling restrictions in the U.S. Gulf of Mexico and a net after-tax charge of approximately $0.02 per share resulting from an accrual relating to the Company's ongoing Nigeria FCPA investigation, a matter which has not yet been resolved.
Contract drilling services revenues for the second quarter of 2010 were $688 million versus $868 million in the second quarter of 2009. Contract drilling margins for the second quarter of 2010 were approximately 60 percent and the Company generated $510 million in net cash provided by operating activities in the quarter. Noble invested $193 million in capital projects during the quarter. The Company also reported that it still expects to close the previously announced acquisition of FDR Holdings Limited ("Frontier") at the end of July 2010.
"Noble's second-quarter revenues declined due to a combination of factors, not the least of which was the government-ordered drilling limitations in the U.S. Gulf of Mexico," said David W. Williams, Chairman, President and Chief Executive Officer. "However, we have moved quickly on a variety of fronts to protect our backlog and shareholder value. At the same time, we were delighted to announce the acquisition of Frontier and separate agreements with Shell which, following the closing of the transaction, will add seven drilling units and an FPSO to the fleet, double our contract backlog, and provide further backlog protection for units operating in the Gulf."
At the end of the second quarter 2010, approximately 61 percent of the Company's available rig operating days were committed for the remainder of 2010 and approximately 35 percent were committed for 2011. The Company's total backlog at June 30, 2010 was approximately $6.7 billion.
During the quarter, the Noble Jim Day, the Company's last 10,000' ultra-deepwater semisubmersible under construction, began its mobilization to the U.S. Gulf of Mexico from Singapore. It is expected to arrive during the third quarter and will undergo thruster installation, final testing and customer acceptance before commencing its contract.
Also, Noble secured additional work for a number of its jackup units in several different countries around the world. In Mexico, the Company obtained commitments on seven of our units through a combination of contract extensions and direct assignments. The Company also secured a letter of award for a 254-day contract at a dayrate of $63,500 for the Noble Roy Butler. In the North Sea, the Noble Hans Deul secured a two-year contract at a dayrate of $175,000 and the Noble Piet van Ede received a one-year extension at a dayrate of approximately $86,000. In West Africa, the Noble Percy Johns and Noble Ed Noble both secured two-year commitments at dayrates of $85,000. In the Middle East and India, the Noble Harvey Duhaney received an 18-month contract at a dayrate of approximately $60,000 and the Noble Kenneth Delaney will soon commence a three-year modified bareboat charter at a dayrate of approximately $50,000.
"Despite an uncertain environment in the U.S. Gulf, drilling continues around the world both in shallow and deepwater. We intend to maintain our focus on safety as we plan for the rapid integration of Frontier's operations, and we are generally optimistic about opportunities during the remainder of the year," Williams said.
Manages 28 Offshore Rigs
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