(Noble, 1.May.2019) — Noble Corporation plc today reported a net loss attributable to the Company for the three months ended March 31, 2019 (first quarter) of $71 million, or $0.29 per diluted share, of which $4 million, or $0.02 per diluted share related to discontinued operations.
The Company’s net loss from continuing operations attributable to Noble Corporation plc for the first quarter of 2019 was $67 million, or $0.27 per diluted share, on total revenues of $283 million. Results for the first quarter included an after-tax gain of $25 million, or $0.10 per diluted share, resulting from the early extinguishment of debt as a result of a successful tender offer for Senior Notes. Excluding the impact of the gain from early debt extinguishment, the Company would have reported a net loss from continuing operations attributable to Noble Corporation plc of $92 million, or $0.37 per diluted share.
“We are encouraged by our strong start to 2019 and the continued evidence of steady industry improvement,” said Julie J. Robertson, Chairman, President and Chief Executive of Noble Corporation plc. “Following the completion of timely reactivation programs, we have returned four floating units and one jackup to active service over the past seven months, including the drillship Noble Sam Croft during the first quarter of 2019. These cost-effective rig reactivations, coupled with the excellent regional positioning of our global fleet, were instrumental in driving higher total marketed fleet utilization in the first quarter, to 87 percent compared to only 57 percent for the same quarter in 2018. In addition, our fleet operating days continue to trend favorably, and operational execution remains outstanding with total fleet uptime in the first quarter of 97.8 percent.”
Contract drilling services revenues for the first quarter of 2019 totaled $271 million compared to $292 million in the fourth quarter of 2018. The seven percent decline was largely attributable to a reduction in average dayrates in the floating rig fleet, to $236,700 compared to $267,700 in the fourth quarter of 2018. The fourth quarter 2018 retirement of the standard duty jackup rig Noble Gene House and fewer calendar days in the first quarter also contributed to the revenue decline. Total fleet utilization in the first quarter improved to 76 percent compared to 75 percent in the fourth quarter of 2018 and 47 percent in the first quarter of 2018. The first quarter 2019 improvement was driven by modestly higher operating days in the floating rig fleet.
Contract drilling services costs for the first quarter of 2019 were $172 million compared to $179 million in the fourth quarter of 2018. The four percent decline was due primarily to recent rig retirements, reduced repair and maintenance expenses and lower costs associated with operations support and rig mobilizations. Partially offsetting these items were costs associated with higher floating rig activity. Contract drilling services margin declined to 37 percent in the first quarter compared to 39 percent in the fourth quarter of 2018, due mainly to reduced revenues from the drillship Noble Don Taylor following the conclusion in February of a legacy contract.
Operating Highlights
Utilization of the Company’s floating rig fleet, consisting of eight drillships and four semisubmersibles, improved to 60 percent in the first quarter of 2019, compared to 56 percent and 37 percent in the fourth and first quarters of 2018, respectively. When measured as marketed utilization, which excludes three cold stacked units, utilization in the quarter was 80 percent as compared to 75 percent and 57 percent during the same periods in 2018. A five percent improvement in fleet operating days in the first quarter was driven primarily by increased activity for the drillships Noble Tom Madden and Noble Sam Croft, with both rigs active during the first quarter following the completion of reactivation projects during the fourth quarter of 2018 and first quarter of 2019, respectively. Seven of the Company’s eight drillships are currently contracted, with six of these drillships now contractually committed into or beyond 2020. This includes recent commercial successes for the Noble Don Taylor, which received a contract extension for work in the U.S. Gulf of Mexico, followed by a one-year contract award for drilling services offshore Guyana. The rig, which is expected to remain under contract into the second half of 2020, will join the Noble Bob Douglas and Noble Tom Madden offshore Guyana, where Noble is the leading provider of contract drilling services in what continues to be one of the industry’s most opportunity-rich offshore basins. Among the Company’s four semisubmersibles, the Noble Clyde Boudreaux continues a drilling program offshore Myanmar, which has recently been extended following the expansion of the project’s scope. The rig is now expected to be under contract through the first quarter of 2020. At March 31, 2019, 53 percent of the available floating rig days remaining in 2019 were under contract compared to 49 percent at the beginning of the year. The measure improves to 57 percent with the addition of the recent contract extension and award for the Noble Don Taylor since the end of the first quarter.
Utilization in the first quarter of the Company’s 11 active jackups was 93 percent compared to 94 percent and 56 percent in the fourth and first quarters of 2018, respectively. Operating days in the first quarter declined 11 percent compared to the fourth quarter of 2018, or three percent when adjusted for the fourth quarter 2018 retirement of the Noble Gene House. The decline was primarily due to idle time on the Noble Tom Prosser, which spent the quarter completing a regulatory program and transitioning to a new contract assignment offshore Australia that commenced in March. These idle days were partially offset by a full quarter of operations on the Noble Sam Hartley. During the first quarter, the recently acquired newbuild jackup Noble Johnny Whitstine completed a mobilization to the Middle East and commenced a three-year contract offshore Saudi Arabia in mid-April. Also, the newbuild jackup Noble Joe Knight, purchased during the first quarter of 2019, is in a shipyard in Singapore completing final commissioning and client-requested upgrades. The rig remains on schedule to commence a three-year contract offshore Saudi Arabia by the end of the third quarter 2019. Finally, in April, contract extensions were awarded to the Noble Sam Hartley and Noble Joe Beall, keeping the rigs employed into April 2020 and December 2019, respectively. At March 31, 2019, 75 percent of the available jackup rig days remaining in 2019 were under contract, improving to 81 percent with the addition of the recent extensions.
Backlog, Capital and Balance Sheet
The Company’s contract backlog totaled $2.3 billion at March 31, 2019, including an estimated $1.4 billion contributed by the floating rig fleet and $900 million by the jackup rig fleet. Approximately 64 percent of the available days remaining in 2019 are committed to contracts across the Company’s fleet of 25 rigs. The backlog figure and days committed to contracts exclude the recently awarded contract extension and one-year award for the Noble Don Taylor and extensions for the Noble Sam Hartley and Noble Joe Beall.
Capital expenditures in the first quarter of 2019 totaled $83 million, consisting of $8 million of sustaining capital, $41 million for major projects, reactivations and subsea equipment, $30 million devoted to the February 2019 purchase of the Noble Joe Knight, and $4 million in capitalized interest. The Company continues to expect capital expenditures in 2019 to total approximately $250 million, excluding the $54 million seller-financed portion of the Noble Joe Knight purchase price.
During the first quarter, the Company completed cash tender offers for certain Senior Notes outstanding, resulting in the purchase of $441 million aggregate principal amount of Notes for $400 million, plus accrued interest. The Company utilized cash on hand and borrowings of $300 million against its 2015 credit facility to complete the cash tender transaction. In addition to modestly reducing debt maturities up to 2025 through the repurchase of the Senior Notes at a discount, the transaction is expected to reduce annual interest expense by approximately $10 million. At March 31, 2019, the Company reported cash and cash equivalents of $187 million, with $350 million outstanding under its revolving credit facilities, and total debt of just under $3.9 billion.
Outlook
Concluding, Ms. Robertson noted, “At the close of the first quarter of 2019, utilization of the offshore industry’s floating fleet, as measured by marketed contracted units, reached 80 percent for the first time since September 2015. Customer needs for floating rig capacity are becoming more numerous, with an increasing number of opportunities requiring primary terms of one or more years. These favorable developments, together with continuing improvement across the global jackup rig fleet, further supports the argument for a gradual, broadening industry recovery.”
A Non-GAAP supporting schedule is included with the statements and schedules attached to this press release and can also be found at www.noblecorp.com. It provides a reconciliation for revenues, net loss, income tax and diluted earnings per share for the first quarter 2019, and fourth and first quarters of 2018.
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