Hurricane Harvey deepens Noble’s 3Q loss
Offshore driller Noble Corporation on Thursday reported a net loss for the third quarter of of $97 million, on revenues $266 million.
According to Noble, the result includes a pre-tax charge to operating expenses totaling $14 million relating to damage sustained by two of the company’s cold-stacked semisubmersibles during Hurricane Harvey.
Excluding the charge, the net loss attributable to Noble Corporation in the third quarter of 2017 would have been $87 million, or $0.36 per diluted share.
In comparison, in the third quarter of 2016 Noble Corporation reported a net loss attributable to the Company of $55 million on revenues of $385 million.
Commenting on results for the third quarter, David W. Williams, Chairman, President and Chief Executive Officer of Noble Corporation plc stated, “Our premium fleet continued to attract the attention of top-tier customers around the world, as demonstrated by the more than $200 million of new contract awards in the quarter, further bolstering our excellent contract coverage. Also, we continued to generate positive free cash flow, despite the challenging industry environment, while maintaining our traditional high standards of operational performance.”
Fleet op days down
Contract drilling services revenues for the third quarter of 2017 totaled $260 million compared to $272 million in the preceding quarter of the year, which included a $6 million write-off of a derivative instrument relating to contingent customer payments.
Fleet operating days in the third quarter declined six percent due primarily to the jackup rig fleet, which saw three rigs complete contracts during the quarter, in addition to downward dayrate adjustments and reduced bonus revenues. These items were partially offset by higher mobilization revenues and one additional calendar day in the quarter.
Contract drilling services costs in the third quarter totaled $165 million, and included the $14 million charge relating to the rigs damaged during Hurricane Harvey. Excluding the charge, drilling services costs for the third quarter would have been $151 million.
Jack-up utilization drops
Utilization in the third quarter of the Company’s 14 jackups was 81 percent compared to 93 percent in the preceding quarter, with the decline due primarily to fewer operating days for the Noble Regina Allen, Noble Houston Colbert and Noble Mick O’Brien, as all three units completed contracts over the quarter.
The decline in operating days was partially offset by the Noble Tom Prosser, which in September commenced a contract offshore Australia following an idle period. The contract for the Noble Tom Prosser contributed to an increase in average daily revenues in the third quarter to $127,200 compared to $121,300 in the preceding quarter. Following the close of the third quarter, the Noble Houston Colbert was awarded a three-well, estimated one-year contract for work offshore Qatar.
The contract, which is expected to commence in February 2018, increases to 13 the number of jackups currently under contract in the Noble fleet, with five units expected to complete contracts during the fourth quarter of 2017.
Floaters utilization at 39 pct
The Company’s floating rig fleet, comprised of eight drillships and six semisubmersibles, reported utilization in the third quarter of 39 percent compared to 37 percent in the preceding quarter of the year. The slight improvement was due to an increase in operating days on the drillship Noble Bob Douglas.
Average daily revenues for the third quarter were $253,300 compared to $273,700 in the preceding quarter.
The decline followed lower revenues on the drillship Noble Globetrotter I, partially offset by higher average revenues on the Noble Globetrotter II and Noble Don Taylor. At the close of the third quarter, five of the Company’s eight drillships were under contract, including the Noble Bob Douglas, which in July was awarded a three-year primary term contract for work offshore Guyana, with an expected contract commencement date of first or second quarter of 2018. Also, following the close of the third quarter, the rig was awarded an estimated 80-day drilling assignment in the U.S. Gulf of Mexico, with an expected contract commencement in late November 2017. With this latest award, the Noble Bob Douglas, which in late-October completed a drilling assignment offshore Suriname, is now expected to remain under contract into early-2021.
The Company’s contract backlog, which totaled approximately $3.2 billion at September 30, 2017, has remained essentially flat throughout 2017 following the addition of more than $800 million in contracts through the third quarter. Of the $3.2 billion total, which extends beyond 2022, an estimated $2.0 billion relates to the floating rig fleet, with $1.2 billion associated with the jackup fleet.
Approximately 54 percent of the available rig operating days remaining in 2017 are committed to contracts, including 36 percent for the floating rig fleet and 73 percent for the jackup fleet. For 2018, 40 percent of available operating days are committed to contracts, including 34 percent and 46 percent of the floating and jackup rig days, respectively.
Early stages of recovery have begun
Addressing the outlook for the offshore industry, Williams stated, “We believe our industry continues to demonstrate that the early stages of recovery have begun. Discussions with customers about their future rig needs have intensified throughout the year and have resulted in contract awards across numerous regions.
“As we sharpen our focus on 2018, we expect these early signs of recovery to yield measurable benefits to Noble. Our current contract backlog of $3.2 billion is expected to provide revenues in 2018 that exceed $860 million, with revenues of over $700 million in 2019, and these estimates exclude contract awards since the conclusion of the third quarter and any future awards. Also, our current expectation for 2018 is to generate positive free cash flow, as we have demonstrated in 2017.”