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What Is Driving Noble’s Revenues and Earnings?

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Aug. 18 2020, Updated 9:35 a.m. ET

NE’s revenues

In the year preceding fiscal 3Q15, Noble Corporation’s (NE) revenue was steady. From fiscal 3Q14 to fiscal 3Q15, Noble’s revenues increased 53%. This is remarkable, given that low energy prices resulted in lower drilling activity and rigs idling in the past year. This affected most of the oilfield service (or OFS) companies’ revenues and earnings negatively during this period.

However, the company’s fiscal 3Q15 revenue was boosted by $177 million received in connection with the Noble Homer Ferrington arbitration award from British Petroleum plc (BP) and Exxon Mobil Corporation (XOM). Adjusted for the arbitration award, NE’s revenues declined 11% compared to a year ago. Quarter-over-quarter, NE’s adjusted revenue decline was 7% in fiscal 3Q15.

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Noble Corporation’s earnings

In the past 11 quarters, Noble Corporation’s (NE) net income was relatively steady, except for a dip in fiscal 4Q14. In fiscal 4Q14, NE recorded $713 million in impairment charges related to goodwill and three of its rigs.

Since fiscal 3Q14, NE’s net income has more than doubled to $326 million from $127 million net income in fiscal 3Q14. However, excluding the impact of the arbitration award, NE’s fiscal 3Q15 net income was $178 million, 40% higher than a year ago.

Factors affecting NE’s growth

Recent negative factors affecting NE’s growth include marginally lower average rig utilization and lower contract drilling service revenue due to the retirement of two semisubmersible rigs.

Recent positive factors affecting NE’s growth include higher semisubmersible and drillship rig utilization, as well as lower contract drilling services operating costs due to lower operations support costs

In comparison, peer Dril-Quip, Inc.’s (DRQ) net income declined 9% to $51 million in fiscal 3Q15 from $56 million net income a year earlier. NE comprises 0.2% of the Vanguard Energy ETF (VDE). VDE tracks an index made up of stocks of large, mid-size, and small US companies within the energy sector.

Next, we will discuss NE’s indebtedness.

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