Noble Corp CEO: Challenges still here, but improvement in offshore activity is inevitable

Offshore drilling contractor Noble Corporation posted first quarter 2016 net income attributable to the company of $105 million, on revenues of $612 million.

In comparison, for the first quarter of 2015, net income attributable to Noble Corporation was $178 million, on revenues of $804 million.

Net cash from operating activities was $175 million in the first quarter, while capital expenditures were $51 million.

The company said it continues to expect total capital expenditures for 2016 of $800 million, inclusive of $461 million to be paid upon delivery of the high-specification jackup Noble Lloyd Noble.

The final payment on the jackup is expected during the early to mid-third quarter of 2016, which assumes a 15 to 30-day delay in delivery following the previously reported shipyard incident.

Four semis cold stacked

Noble Corp. closed the first quarter with all eight of its drillships and two of its eight semi-submersibles under contract, resulting in average daily revenues for the floating fleet of $425,900 compared to an adjusted average dayrate of $424,500 in the fourth quarter. Among the company’s eight semi-submersibles, the Noble Homer Ferrington, Noble Max Smith and Noble Amos Runner are cold stacked.

Noble said that the Noble Clyde Boudreaux, Noble Jim Day and Noble Danny Adkins semi-submersibles are in the process of being warm stacked, “as the company remains focused on the preservation of sensitive technical systems and each rig’s state of readiness as contract opportunities remain under evaluation”. Subsequent to the conclusion of the first quarter, the Noble Dave Beard completed its contract offshore Brazil and is currently in transit to a temporary stacking location.

Inevitable reset

Providing the near-term outlook for the industry, the company’s CEO David W. Williams said the industry challenges noted at the start of 2016 have not abated, despite a generous percentage improvement in crude prices since January’s lows.

Williams said: “We believe a reset of industry fundamentals is in progress and improved future offshore activity is inevitable. Although it seems unproductive to speculate on the timing of an industry recovery, we know that higher and sustained commodity prices, geologic success and global project cost rationalization will drive offshore activity higher.

He said the company would continue to pursue contract awards and work to expand “our strong contract coverage, as we have demonstrated with our jackup fleet, where we now have 87 percent of our remaining operating days committed in 2016”.