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Digging into Noble Corporation's 1Q17 Results

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Part 2
Digging into Noble Corporation's 1Q17 Results PART 2 OF 6

Noble Corporation: Optimistic about Offshore Drilling Outlook

Revenue

Noble Corporation’s (NE) contract drilling revenue was $354.0 million in 1Q17 compared to $591.0 million in the same period last year. From the previous quarter, Noble’s revenue fell ~8.1%.

Noble Corporation: Optimistic about Offshore Drilling Outlook

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Revenue sources

Noble earns the majority of its revenue through ultra-deepwater floaters, followed by deepwater floaters, high-specification jackups, and standard jackups. Most of its rigs are currently in the US Gulf of Mexico, where Noble earned ~68.0% of its 1Q17 revenue.

What impacted revenue?

The year-over-year fall in revenue was driven by a 29.0% fall in average day rates. This decreased the company’s revenue by $148.0 million. Also, a 15.0% fall in operating days decreased revenues by $89.0 million.

Peer revenues

Below are the revenue performances of other offshore drilling (IYE) companies in 1Q17:

  • Ensco (ESV): Its revenue fell 42.0% YoY (year-over-year) to $471.0 million.
  • Transocean (RIG): Its revenue was $785.0 million, a 31.0% fall YoY.
  • Diamond Offshore Drilling (DO): Its revenue was $374.0 million, or 20.0% lower YoY.

Outlook

Noble’s future revenues are closely related to the offshore drilling industry’s outlook. Noble Corporation’s CEO (chief executive officer) David W. Williams is optimistic about the industry’s future. He stated, “We believe improving conditions in the offshore drilling industry are becoming clearer. Client tenders for both jackups and floating rigs are on the rise and include emerging regions, as well as previously active areas that have largely been dormant over the past two years.”

Williams went on to say, “Also, contract awards, especially in the jackup sector, are occurring with greater frequency, and field development activity is up, relative to the recent past, as project cost rationalization efforts lead to better program economics. Finally, we believe long-term oil market fundamentals are supportive of stable to higher crude oil prices, which with time will support an increase in rig demand.”

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