Noble Corporation Reports Fourth Quarter and Full Noble Corporation Reports Fourth Quarter and Full Year 2012 Earnings
ZUG, Switzerland, Jan. 23, 2013 /PRNewswire/ -- Noble Corporation (NYSE: NE) today reported fourth quarter 2012 earnings of $128 million, or $0.50 per diluted share, compared to $115 million, or $0.45 per diluted share, for the third quarter of 2012. Earnings for the fourth quarter 2011 totaled $127 million, or $0.50 per diluted share. Revenues for the fourth quarter of 2012 were $966 million compared to $884 million in the third quarter of 2012 and $751 million in the fourth quarter of 2011.
Earnings for the full year 2012 totaled $522 million, or $2.05 per diluted share, on revenues of $3.5 billion. The results compared to earnings of $371 million, or $1.46 per diluted share on revenues of $2.7 billion in 2011.
Addressing the Company's performance in the fourth quarter of 2012, David W. Williams, Chairman, President and Chief Executive Officer of Noble Corporation stated, "A company transformation as extensive as we are undertaking can be challenging, and as we saw in the fourth quarter, can produce inconsistent operating performance. Although Noble added three state-of-the-art, ultra-deepwater drillships to its fleet during 2012 and placed two other drillships into service following significant enhancement and maintenance programs, initial operations on these five rigs have not been as seamless as we had hoped, particularly with respect to certain critical components. Approximately 33 percent of the downtime days in the fourth quarter were attributable to these five rigs. In 2013, we are heavily focused on improving results from these rigs, our incoming newbuilds and the revenue efficiency of our entire fleet."
Contract drilling services revenues for the fourth quarter of 2012 of $922 million improved by $88 million, or 11 percent from the third quarter, due primarily to an increase in operating days following the return of several rigs to active service for all or a significant portion of the fourth quarter, and higher average dayrates, which improved 3 percent in the quarter. The increase in fleet operating days, in addition to costs associated with the repair and maintenance of rigs and mobilization and demobilization activity, contributed to a $35 million increase in contract drilling costs in the fourth quarter to $484 million, which compares to $449 million in the third quarter. Contract drilling margin for the fourth quarter was 47.5 percent, compared to 46.1 percent in the third quarter.
Williams also noted, "Milestones continue to be met in our newbuild program, putting us in a position this year to take delivery of three ultra-deepwater drillships from shipyards – the Noble Don Taylor, Noble Globetrotter II and Noble Bob Douglas – and three high-specification jackups – the Noble Mick O'Brien, Noble Regina Allen and Noble Houston Colbert. In addition, we secured contracts for two more of our JU3000N jackups. The Noble Houston Colbert has been awarded a minimum one-year contract at a base dayrate of $235,000, with the contract expected to commence during the fourth quarter of 2013. In addition, the Noble Sam Turner has been awarded a two-year contract at a dayrate of $215,000 for operations in the Dutch sector of the North Sea. This contract is expected to commence in the third quarter of 2014."
Jurong Shipyard in Singapore has successfully leveled the Noble Regina Allen, a JU3000N jackup under construction that tilted during a jacking system test in early December 2012. Although no structural damage has been identified, an investigation into the cause of the incident is being conducted by the vessel designer, the shipyard and relevant government authorities. The rig was originally scheduled for delivery during the first quarter of 2013; however, Noble has now been advised by the shipyard that, following completion of the repairs, the revised estimated delivery will be by the end of third quarter 2013.
Net cash from operating activities was $450 million in the fourth quarter 2012 and $1.4 billion for full year 2012. Capital expenditures in the fourth quarter 2012 totaled $423 million, including $146 million (excluding capitalized interest) related to the Company's fleet expansion program. In 2012, capital expenditures amounted to $1.7 billion, including $587 million (excluding capitalized interest) associated with the fleet expansion program. At December 31, 2012, approximately $2.7 billion in capital expenditures (excluding capitalized interest) is required to complete the remaining 11 projects in the fleet expansion program.
Debt as a percentage of total capitalization at December 31, 2012 was 35.3 percent, unchanged from September 30, 2012.
Operating Highlights
At December 31, 2012, approximately 74 percent of the Company's available rig operating days were committed for 2013, including 81 percent of the floating rig days and 75 percent of the jackup rig days. For 2014, an estimated 50 percent of the available rig operating days were committed, including 71 percent and 42 percent of the floating and jackup rig days, respectively. Total backlog at December 31, 2012 was approximately $14.3 billion, up from $13.7 billion at December 31, 2011.
In the U.S. Gulf of Mexico, activity levels in 2012 improved significantly in the floating rig segment, with contracting opportunities, especially for deepwater and ultra-deepwater capable rigs. The ultra-deepwater drillships Noble Bully I and Noble Globetrotter I, which commenced initial operations during the first half of 2012, completed the fourth quarter with improved utilization statistics compared to the third quarter of 2012, as both rigs continued to successfully address initial startup challenges. The Company's seven active rigs in the region remain under contract through late 2013. The average contract duration on three conventionally moored rigs exceeds one year, including a recent contract award for the semisubmersible Noble Driller covering five months at $405,000 per day, while four dynamically positioned rigs have an average contract duration of more than four years.
In Brazil, the Company completed the planned replacement of the drillship Noble Muravlenko with the Noble Phoenix during the fourth quarter of 2012, while the Noble Leo Segerius completed its first quarter of operations following the conclusion of a life-enhancement shipyard project. At present, six of the Company's eight floating rigs assigned to the region are operating and the semisubmersible Noble Max Smith and the drillship Noble Roger Eason are expected to commence operations during the first and third quarters of 2013, respectively, following shipyard programs. All eight of the Company's rigs in Brazil have contracts that extend into 2014 or beyond, including four rigs that are contracted into or beyond 2016.
The Company's 12 jackup rigs operating offshore Mexico experienced another strong quarter with all rigs under contract and 100 percent utilization during the period. Three rigs in the region, which were expected to complete contracts in late 2012, the Noble Johnnie Hoffman, Noble John Sandifer and Noble Lewis Dugger, each received contract extensions to complete wells in progress that could run into the mid-to-late first quarter of 2013. The Noble Johnnie Hoffman and Noble John Sandifer are candidates for new contracts, with multi-year terms and improved dayrates. The contracts are expected to be awarded during the first quarter. The Company announced in December 2012 a definitive agreement to sell the Noble Lewis Dugger for $61 million. The transaction is expected to close by the end of the first quarter or early in the second quarter of 2013.
Utilization of the Company's North Sea and Mediterranean fleet, consisting of eight jackups and three semisubmersibles, was 95 percent in the fourth quarter, down slightly from the third quarter 2012. This decline was the result of the Noble Paul Romano completing its contract in early November. Activity, particularly in the North Sea, remains brisk and there are opportunities for multi-year contracts, such as the recent award for the Noble Julie Robertson with contract terms of one year at a dayrate of $160,000. The customer has the right to extend that contract up to a maximum of five years. At present, seven of the Company's eight jackups in the region are contracted into 2014.
The Company's Middle East and India division, consisting of 18 jackups, the drillship Noble Duchess and the semisubmersible Noble Clyde Boudreaux, completed the fourth quarter of 2012 with utilization of 85 percent, compared to 72 percent in the third quarter. Three rigs, which were idle in the third quarter while completing shipyard programs, returned to work during the fourth quarter, improving utilization. The Company currently has seven rigs in the two regions with availability during 2013, and contract opportunities are being evaluated for most of the rigs. The division is expected to remain active in 2013, especially in the jackup segment. One of the Company's two idle rigs in the Middle East, the Noble George McLeod, recently received a one-year contract for operations offshore Malaysia at a dayrate of $115,000. The contract is expected to commence in May 2013, following the mobilization of the rig. The Noble George McLeod will be the Company's first rig to operate in offshore Southeast Asia.
In West Africa, the customer for the jackup Noble Tommy Craighead exercised its last priced option, carrying the rig through early August 2013 at a dayrate of $108,000. In addition, the Company announced in December that it had entered into a definitive agreement to sell the Noble Don Walker for $18 million. This standard specification jackup unit had been previously cold stacked in Cameroon. This transaction is expected to close during the first quarter of 2013.
Outlook
In closing, Williams commented, "Our business appears poised for another year of cyclical expansion, supported by solid market fundamentals. We continue to see strong customer demand across all the regions in which we operate and are fortunate to have technologically advanced drilling units to offer clients as they plan exploration and production spending beyond 2013.
In 2013, Noble remains focused on several strategic initiatives, including strong execution of our fleet modernization program, improved revenue efficiency through lower fleet downtime, increased geographic diversity, with expansion into areas such as Southeast Asia, and progress toward our standard-specification asset divestment process. As we move another year closer to transforming the Noble fleet to a premium asset base, we expect to have increased flexibility in our capital allocation plans for the future. We believe that Noble is well positioned to drive long-term, sustainable value for our shareholders and unparalleled service, safety and operational integrity for our customers."
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