What does Noble Corporation’s management see ahead?
Noble Corporation’s (NE) management thinks that upstream producers will continue to cut exploration and production spending in 2016.
In the company’s 4Q15 conference call, Simon W. Johnson, Noble’s senior vice president, said, “In response to a further material weakening in the underlying commodity price environment in January, operators have started making additional cuts to previously planned 2016 upstream expenditure programs, which had already experienced serious contraction on a year-on-year basis.”
Johnson continued, “This has, in turn, had a negative impact on the already depressed near-term environment for offshore rigs, and we’re expecting a tough 2016.”
Noble’s CEO’s views
Noble Corporation’s CEO David W. Williams considers contract awards to be positive for NE despite challenges in 2016. In the company’s 4Q15 conference call, he said, “Our fleet contract cover is high and remains a distinguishing factor between Noble and its peers. In 2016, 57% of the available rig operating days are committed to contracts in the floating fleet and 81% in the jack-up fleet. And we’ve had success for securing additional work in recent months, adding over 1,800 contract operating days in our jack-up fleet.”
Analysts’ targets for Noble Corporation
While the lowest analyst target price for Noble Corporation is $5.1, the highest is $16.5. NE’s median target price, surveyed among sell-side analysts, is $9.2. NE is currently trading near $10.9, implying a ~16% downside at its median price.
Oil States International (OIS), Noble Corporation’s peer, has a $29 median target price. This, relative to its current price of ~$30, implies a ~2% downside. NE makes up 0.19% of the iShares US Energy ETF (IYE). Oil and gas equipment and services make up 14.9% of IYE.
Next, let’s discuss Noble Corporation’s revenue and earnings.