by Karen Boman
Friday, October 19, 2012
Drilling contractor Noble Corp. is well positioned to benefit from improving offshore activity and the continued robust ultra-deepwater outlook despite third quarter earnings coming in below estimates, according to a Friday analyst report from Barclays Capital.
The company has good rig availability through 2013 and beyond through its aggressive newbuild program and continues to attack fleet issues head-on, said Barclays analyst James C. West, noting that, “A spin or sale of older assets has returned to the forefront and we believe this transaction would further high-grade the company’s fleet.”
Noble reported third quarter 2012 earnings per share of 45 cents Wednesday, below Barclays’ estimate of 52 cents, and total operating income was $179 million, lower than Barclays’ forecast of $204 million. Noble’s third quarter earnings were impacted by lower-than-expected utilization for the Noble Bully I (UDW drillship) and Noble Bully II (UDW drillship), unplanned downtime on units in Brazil due to labor and permitting complications and Hurricane Isaac, according to the Barclays note.
Evidence of the continued robust outlook for ultra-deepwater drilling includes sold-out supply, recent exploration successes and the proliferation of coastal countries proceeding with licensing programs, according to the analyst note.
“While ultra-deepwater day rates have largely plateaued at around $600,000, we think the next leg up could be imminent,” West noted. There are roughly four ultra-deepwater rigs available for the first half of next year, and Barclays believes absorption of these units could result in another scramble for availability and a subsequent jump in day rates moving into 2013.
Noble experienced start-up issues in the third quarter with the Globetrotter I (UDW drillship) and Bully I rigs, which it took delivery of in the first half of 2012.
“Unplanned downtime for newbuilds industrywide will be commonplace over the next two years as deliveries accelerate,” according to an Oct. 19 report from GHS Research.
Because Noble has the most newbuild exposure of the group, GHS expects estimates to be ratcheted lower for Noble over the next two to three quarters as these rigs work through bottlenecks and likely miss utilization expectations for those not adequately accounting for shakedown periods.
While Noble believes ultra-deepwater rig rates could move higher if operators are willing to pay for immediate use, GHS estimates that day rates will not move above the $600,000 through $625,000 range to which investors have become accustomed.
“While we agree with NE that UDW [ultra-deepwater] rates may trend slightly higher in response to increased labor and spare component costs, we’d argue the incremental day rate is equally offset by the incremental cost,” GHS noted.
HAHA…so the BULLY’s and GLOBETROTTER’s are proving to be the bastard stepchildren that I knew they would be! As someone wisely pointed out here before “twenty pounds of shit in a ten pound sack”. Too small for the purpose, terrible engineering and worse workmanship. Shame on Shell for getting suckered into owning 1/2 the BULLY’s and for giving longterm charters to the GLOBETROTTER’s. Making a huge commitment to unproven designs with a company with no real experience! Serves them right, but that was a true shotgun marriage if there ever was one and now Shell has to wake up next to that fat hog of a wife every morning. I’d sure as hell would chew off my own arm to escape that “love nest”.
How can such a huge company like Shell be so STOOPID! At least they aren’t giving any more money to that ugly bitch hagfish of a wife to waste…now they’re getting a little bit on the side with their ex main squeeze Miss Transocean and it appears that they’ll be spending more and more nights over at her place “consoling her” after her bad breakup with BP.
There she is…Miss Noble Drilling 2012! Your prize is a year’s supply of Mountain Dew and Moon Pies my lovely lady!