Noble Corp. 2Q results helped by rig deal cancellations

Offshore drilling contractor Noble Corporation posted a rise in its second quarter 2016 profit helped by a gain from rig contracts cancellation. 

The drilling contractor on Wednesday posted second quarter 2016 net income attributable to Noble Corporation of $323 million, on revenues of $895 million.

In comparison, net income attributable to Noble Corporation for the second quarter of 2015 was $159 million, on revenues of $794 million.

The reported results include several net favorable after-tax items totaling $322 million. This includes a gain of $379 million from a settlement with Freeport-McMoRan’s oil and gas section which terminated a contract with Noble for two drillships, the Noble Sam Croft and Noble Tom Madden.

The results were also partially offset by net loss of $15 million relating to the impairment of certain capital spares; and net loss of $22 million resulting from an unfavorable discrete tax item.

Excluding all of these items, net income attributable to Noble Corporation plc was slightly greater than $1 million on revenues of $502 million.

The company’s capital expenditures in the second quarter and through June 30, 2016 were $69 million and $121 million, respectively.

Contract drilling services revenues in the second quarter were $877 million, including $379 million related to the contract cancellation settlement with Freeport and $14 million pertaining to the contract termination date valuation of a derivative instrument relating to future contingent revenue payments from Freeport as part of the settlement. Excluding these amounts, contract drilling services revenues in the second quarter were $484 million, down from $591 million in the first quarter.

Noble cuts capex guidance

The company has lowered its full year 2016 estimate of total capital expenditures to $675 million from the previous estimate of $800 million. The $125 million reduction is attributable to lower revised expenditures across all spending categories.

David W. Williams, Chairman, President and Chief Executive Officer of Noble Corporation, said, “Reduced customer spending and the current fleet capacity imbalance weigh heavily on the near- to intermediate-term outlook for our industry. However, I remain encouraged by the long-term prospects for industry recovery.

Williams added: “Also, although offshore exploration has been curtailed dramatically over the last two years, I am further encouraged by some recent operator interest offshore Guyana and Suriname, where a new, highly prospective hydrocarbon province is under evaluation, as well as the developing deepwater opportunity offshore Mexico. ”

Offshore Energy Today Staff