Thursday, February 5, 2015

Noble will retire 3 semi-submersible drilling rigs due to $595 million in fourth quarter losses

Noble will retire 3 semi-submersible drilling rigs due to $595 million in fourth quarter losses



Published in Oil Industry News on Thursday, 5 February 2015

Graphic for Noble Retire 3 Rigs in Oil and Gas News
Drilling contractor Noble Corporation has informed that the company will retire three of its semi-submersible drilling rigs, Noble Paul Wolff, Noble Driller and Noble Jim Thompson.

Noble Corporation also reported a fourth quarter 2014 loss from continuing operations of $595 million, or $2.38 per diluted share. Results for the quarter included an after-tax charge of $713 million, or $2.86 per diluted share, relating to the impairment of three rigs and the company’s total goodwill balance.

David W. Williams, Chairman, President and Chief Executive Officer of Noble Corporation, noted: “Rapidly declining crude oil prices during the fourth quarter further aggravated the offshore supply imbalance and contributed to an increasingly difficult environment for securing new contract commitments from our customers. Our financial performance in the quarter included an increase in idle time on several rigs, lower average daily revenues and margin contraction.

"Our decision to retire and recognize a non-cash charge with respect to three of our semi-submersibles in the quarter was based on revised assumptions on each rig’s future marketability in light of their age, technical features, and capital requirements in the context of the future supply of competitive rigs.”

“These rig retirements will reduce the average age of a fleet whose concentration of premium assets is already among the industry’s highest. We will continue to evaluate the fleet in 2015 as we work to opportunistically position the company ahead of the next cyclical upturn.”

With respect to the company’s decision to retire the Noble Jim Thompson, Noble and its customer have agreed to substitute the semi-submersible Noble Paul Romano to execute the previously announced contract award covering four wells, or a primary term of up to one year in the U.S. Gulf of Mexico. The Noble Paul Romano will mobilize from its current location in the Canary Islands and is expected to start operations on or around September 1, 2015, following a period to complete contract preparations. The dayrate for the primary term of the contract will remain $300,000.

Operating Highlights
The company’s total contract backlog at December 31, 2014 was an estimated $10.1 billion compared to $10.6 billion at September 30, 2014. Backlog depletion was partially offset by new contracts in the quarter that added approximately $342 million due significantly to three-year contract extensions on the Middle East-based jack-ups Noble Gene House and Noble Joe Beall at dayrates of $143,000 each.

Utilization of the company’s floating rig fleet (semi-submersibles and drillships) declined to 78 percent in the fourth quarter compared to 80 percent in the third quarter.

Utilization of the company’s jack-up rig fleet was 90 percent in the fourth quarter compared to 91 percent in the third quarter.

At December 31, 2014, 81 percent of the company’s available rig operating days were committed for 2015, including 80 percent of floating rig days and 82 percent of jack-up rig days. For 2016, an estimated 52 percent of available rig operating days are committed, consisting of 58 percent and 46 percent of floating and jack-up rig days, respectively.

Outlook
Williams closed by stating, “We face this period of market uncertainty with 81 percent of our fleet operating days under contract in 2015 and a $10.1 billion backlog that is expected to provide almost $3.0 billion in gross revenues over the year. We possess a sound balance sheet and ample liquidity and we will continue to focus on capital discipline and preservation of liquidity through the cycle.

“Finally, an opportune and significant decline in capital expenditures compared to levels experienced over the past three years is expected to allow for positive free cash flow in 2015, providing the company attractive financial flexibility during a period of increased market uncertainty.”
Source: www.offshoreenergytoday.com