Noble Reports 2Q:23 Results

(Noble, 2.Aug.2023) — Noble Corporation plc (NYSE: NE, CSE: NOBLE) reported second quarter 2023 results.

Robert W. Eifler, President and Chief Executive Officer of Noble Corporation plc, stated “Our second quarter results reflected solid operational and financial performance. Our recent initiation of a quarterly dividend starting at $0.30 per share, combined with $60mn of share repurchases in the second quarter, highlights our industry leading platform for cash flow generation and our commitment to returning capital to shareholders. We are realizing the combined benefits of the business combination with Maersk Drilling with our enhanced capabilities, we believe, allowing us to better serve our customers. Continuing improvement in the UDW market has driven our backlog to $5bn, with several recent floater awards including the Noble Faye Kozack’s 2.5-year contract in Brazil, and we are increasingly encouraged by the expanding geographic breadth of UDW demand worldwide.

Three Months Ended
(in millions, except per share amounts)June 30, 2023June 30, 2022March 31, 2023
Total Revenue$                   639$                   275$                     610
Contract Drilling Services Revenue606262575
Net Income (Loss)6637108
Adjusted EBITDA*18884138
Adjusted Net Income (Loss)*563327
Basic Earnings (Loss) Per Share0.480.530.80
Diluted Earnings (Loss) Per Share0.450.450.74
Adjusted Diluted Earnings (Loss) Per Share*0.380.400.19
* A Non-GAAP supporting schedule is included with the statements and schedules attached to this press release.

Second Quarter Results
Contract drilling services revenue for the second quarter of 2023 totaled $606mn compared to $575mn in the first quarter, with the sequential increase driven by improving average dayrates. Marketed fleet utilization was 76% in the three months ended June 30, 2023 compared to 80% in the previous quarter. Contract drilling services costs for the second quarter were $363mn, flat versus the first quarter. Adjusted EBITDA increased to $188mn in the second quarter, up from $138mn in the first quarter. Net cash provided by operating activities in the second quarter was $211mn, capital expenditures were $107mn, and free cash flow (non-GAAP) was $104mn.

Balance Sheet and Capital Allocation
The company’s balance sheet as of June 30, 2023 reflected total debt principal value of $600mn and cash (and cash equivalents) of $255mn. Share repurchases totaled $60mn during the second quarter, bringing 2023 year-to-date share repurchases to $70mn, following approximately $86mn of cash used for share repurchases during the fourth quarter of 2022 (including the mandatory purchase associated with the Maersk Drilling squeeze-out).

Subsequent to the end of the second quarter, Noble announced the initiation of a planned quarterly interim dividend program, beginning with a $0.30 per share dividend to be paid on September 14, 2023 to shareholders of record at close of business on August 17, 2023.

Operating Highlights and Backlog
Noble’s marketed fleet of sixteen floaters was 90% contracted through the second quarter, compared with 91% in the prior quarter. All sixteen marketed floaters continue to be consistently contracted with strong visibility for future follow-on opportunities, while utilization remains tempered slightly by gaps between contracts and planned SPS related downtime. Leading edge dayrates for working tier 1 drillships are in the mid to high-$400,000s; 6th generation floaters also continue to command a normal price discount to tier 1 drillships consistent with technical capability differentials.

Subsequent to last quarter’s earnings press release, new contracts for Noble’s floater fleet with total contract value of approximately $750mn (including mobilization payments) include the following:

  • Noble Faye Kozack was awarded a 2.5 year contract with Petrobras, expected to commence in Q1 2024 and valued at approximately $500mn including mobilization and additional services.
  • Noble Voyager was awarded a one-well contract from Shell for an exploration well in Mauritania at an undisclosed value. This contract follows in direct continuation of the current Shell contract in Colombia and is expected to extend the rig through year-end 2023.
  • Noble Discoverer was awarded a one-well contract with Petronas in Suriname, expected to commence in August 2023, with an estimated duration of 90 days. The firm contract value is approximately $43mn, including additional services provided, mobilization and demobilization fees.
  • Noble Viking had three option wells exercised by Shell, with total contract value of approximately $49mn and estimated total duration of 111 days. The first of these three option wells is scheduled to commence in December following the rig’s SPS, and the rig’s firm backlog is now extended into Q2 2025.
  • Noble Deliverer received a nine-month extension from Inpex in Australia, expected to continue from July 2024 to April 2025 at a dayrate of $451,500.

Utilization of Noble’s thirteen marketed jackups was 59% in the second quarter, compared with 67% utilization during the first quarter, with sequential downticks in utilization experienced by the Noble Tom Prosser, Noble Innovator and Noble Interceptor.

Commercial activity for the jackup fleet was subdued in the first half of 2023 but has recently begun to pick up, and we anticipate that jackup fleet utilization will begin improving based on existing and potential contracts. The warm stacked Noble Intrepid has recently been awarded a contract with Harbour Energy for 10 months of accommodation scope in the U.K. North Sea with a total contract value of $28.5mn. Additionally, the Noble Tom Prosser has recently commenced its long term program in Malaysia in July, and we believe the Noble Regina Allen is well positioned to resume operations by mid 2024 upon completion of repairs. Based on these dynamics and additional contract prospects over the near term, a steady recovery in jackup revenue and EBITDA contribution is expected to unfold over the coming quarters, with a more assertive recovery still predicated on demand dynamics in Norway and then North Sea from late 2024 onward.

Noble’s backlog as of August 2, 2023 stands at $5bn.

Outlook
For the full year 2023, Noble maintains the previously communicated guidance for total revenue in the range of $2.35bn to $2.55bn, Adjusted EBITDA of $725mn to $825mn, and capital expenditures (net of reimbursable capex) between $325mn and $365mn.

Commenting on Noble’s outlook, Mr. Eifler stated, “Offshore fundamentals remain exceptionally strong, supporting a steady upward progression in contract status across our fleet. We expect UDW market tightness to persist and drive further upward pressure on dayrates going forward. With Adjusted EBITDA and Free Cash Flow expected to increase in the second half of the year versus the first half, we remain focused on maximizing shareholder value through best-in-class execution and returning the significant majority of free cash flow to shareholders.”

Due to the forward-looking nature of Adjusted EBITDA, management cannot reliably predict certain of the necessary components of the most directly comparable forward-looking GAAP measure. Accordingly, the Company is unable to present a quantitative reconciliation of such forward-looking non-GAAP financial measure to the most directly comparable forward-looking GAAP financial measure without unreasonable effort. The unavailable information could have a significant effect on Noble’s full year 2023 GAAP financial results.

Conference Call
Noble will host a conference call related to its second quarter 2023 results on Thursday, August 3, 2023, at 8:00 a.m. U.S. Central Time. Interested parties may dial +1 929-203-0901 and refer to conference ID 31391 approximately 15 minutes prior to the scheduled start time. Additionally, a live webcast link will be available on the Investor Relations section of the Company’s website. A webcast replay will be accessible for a limited time following the scheduled call.

____________________

Previous post Bristow Group Reports 2Q:23 Results
Next post AES Reports Strong Execution on Strategic Priorities