SUGAR LAND, Texas, July 23 /PRNewswire-FirstCall/ -- Noble Corporation today reported second quarter 2008 earnings of $376 million, or $1.40 per diluted share, versus $290 million, or $1.08 per diluted share, for the second quarter of 2007. Per-share earnings were up 30 percent from the second quarter of 2007 and down 2 percent from the $1.43 per diluted share reported for the first quarter of 2008.
Contract drilling services revenues for the second quarter of 2008 were $783 million, up 19 percent from the second quarter 2007. Contract drilling margin for the second quarter 2008 was approximately 67 percent, generating $443 million in net cash provided by operating activities. The Company invested approximately $291 million in capital projects during the second quarter 2008. The results for the second quarter of 2008 include an after-tax gain on the sale of our North Sea labor contract drilling services business of $0.11 per diluted share and after-tax charges of $0.01 per diluted share related to the ongoing independent investigation of the Company's Nigerian operations.
"We are in the midst of another strong year, with great momentum as we head into the second half of 2008," said Noble Corporation Chairman, President and Chief Executive Officer David W. Williams. "We continue to see healthy demand for all classes of units in all markets. We are particularly pleased with the continued strength of the international jackup business. As we look ahead to the remainder of the year, we anticipate taking delivery of the Noble Hans Deul in September 2008 and seeing that unit enter service in the North Sea, increasing our jackup fleet in that market to eight units."
Debt as a percentage of total capitalization declined to 13.1 percent at June 30, 2008, from approximately 13.6 percent at March 31, 2008.
Earnings for the first six months of 2008 totaled $2.83 per diluted share compared with $2.01 in the same period last year. Earnings for 2008 include the gain on the sale of the North Sea labor contract drilling business, while earnings for 2007 included charges of $8 million related to the sale of non-core business assets. Contract drilling services revenues were $1.6 billion and earnings were $760 million in the first half of 2008, up 28 percent and 41 percent, respectively, from the year-earlier period.
Second Quarter Highlights
As of June 30, 2008, approximately 89 percent of the Company's total rig operating days were committed for the remainder of 2008 and approximately 68 percent were committed for 2009, reflecting the continued strong demand for the Company's services. In the U.S. Gulf of Mexico, Marathon exercised its right to extend the contract on the newbuild semisubmersible Noble Jim Day from two to four years at the dayrate of $515,000. During the quarter, the Noble Jim Thompson, a deepwater semisubmersible, received a two-year contract with Shell at a dayrate of $505,000 commencing in 2009. The Company also secured a contract for the Noble Lorris Bouzigard for a two-year term with LLOG at a dayrate of $270,000 which began in June 2008 and an extension for an additional year at a dayrate of $335,000 beginning in mid-2010.
Two of the Company's deepwater semisubmersibles were upgraded during the quarter with both projects completed ahead of schedule. With the conclusion of the work on the Noble Amos Runner, the Company completed its planned NC-5(SM) hurricane mooring system upgrades and the rig commenced its new contract with Anadarko at a dayrate of $435,000 in late April. Also, upgrades, maintenance and contract preparations on the semisubmersible Noble Max Smith were completed and that unit has been mobilized from the U.S. Gulf of Mexico to Mexico. The Noble Max Smith will commence its three-year contract at a dayrate of $484,000 in August. This unit will enable PEMEX to drill in waters of up to 7,000 feet for the first time giving access to many previously unreachable prospects.
In other international deepwater markets, the Noble Homer Ferrington's three-year contract at a dayrate of approximately $505,000 will commence in April 2009 for ExxonMobil. In the North Sea, the Noble Ton van Langeveld secured a one-year contract extension beginning in mid-2009 at a dayrate of $380,000, with an additional six month option at the same price.
The Company's international jackup units also experienced notable contract activity in many markets during the quarter. In the Middle East, the Noble David Tinsley secured a contract extension beginning in December 2008 and ending March 2009 at a dayrate of $160,000 and the Noble Kenneth Delaney received a contract extension for a minimum of 120 days beginning in mid-2009 at a dayrate of approximately $162,000. The Noble Gene House received commitments for approximately 16 months beginning late-2008 at dayrates ranging from $150,000 to approximately $162,000.
In the North Sea, Maersk exercised its one-year option right at a dayrate of $210,000 on the Noble Byron Welliver. The Noble Piet van Ede entered into a six month contract extension beginning January 2009 at a dayrate of $215,000, with the option to convert the extension to one year at a dayrate of $212,000. Both the Noble Ronald Hoope and the Noble George Sauvageau secured one-year contracts beginning in January 2009 at dayrates of $212,000 and $220,000, respectively. In West Africa, the Noble Percy Johns secured a one-year contract beginning in March 2009 at a dayrate of $183,000. Also in that market, the Noble Ed Noble secured a 10 month contract beginning September 2008 at a dayrate of $173,000 and the Noble Tommy Craighead received a letter of intent for one year beginning in January 2009 at a strong market dayrate.
In Mexico, the Company announced today that its customer PEMEX has awarded a 1,217-day tender for the Noble Tom Jobe at a dayrate for the first six months of $155,000 and adjustable quarterly thereafter to an index of U.S. and international like kind jackup rates.
Business Outlook
"Looking ahead, our industry faces a number of challenges. Raw materials costs, such as the price of steel, continue to climb. Added to this are increases in labor costs and the fluctuation in foreign exchange," said Williams. "That said the unprecedented strength of Noble's current global markets for both our deepwater fleet and our jackups is likely to create strong opportunities for our sustained growth. During the second half of 2008, we expect to continue leveraging our key strengths, such as safety and operational excellence, driving revenue growth and helping maintain our margins."
Noble Corporation is a leading offshore drilling contractor for the oil and gas industry. The Company performs contract drilling services with its fleet of 62 mobile offshore drilling units located in key markets worldwide, including the U.S. Gulf of Mexico, Middle East, Mexico, the North Sea, Brazil, West Africa and India. The fleet count includes five rigs under construction. Additional information on Noble Corporation is available via the worldwide web at http://www.noblecorp.com/.
This news release contains "forward-looking statements" about the business, financial performance and prospects of the Company. Statements about the Company's or management's plans, intentions, expectations, beliefs, estimates, predictions, or similar expressions for the future are forward-looking statements. No assurance can be given that the outcomes of these forward-looking statements will be realized, and actual results could differ materially from those expressed as a result of various factors. A discussion of these factors, including risks and uncertainties, is set forth from time to time in the Company's filings with the U.S. Securities and Exchange Commission.
Conference Call
Noble will hold its second quarter conference call on Thursday, July 24, 2008, at 1:00 p.m., Central Time. The call may be accessed live via telephone at (866) 461-7129 (706-679-3084 for international callers), using pass code 52518031. The call also will be available over the Internet through the "Investor Relations" section of the Company's Web site, using the "Web cast" link. A replay of the conference call will be available on Thursday, July 24, 2008, beginning at 5:00 p.m., Central Time, through Thursday, July 31, 2008, ending at 5:00 p.m., Central Time. The phone number for the conference call replay is 800-642-1687 (706-645-9291 for international callers), using the conference ID number 52518031. The conference call may include non-GAAP financial measures. Noble will post a reconciliation of any such measures to the most directly comparable GAAP measures in the "Investor Relations" section of the Company's Web site under the heading "Reg G Reconciliations."
NOBLE CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF INCOME (In thousands, except per share amounts) (Unaudited) Three Months Ended Six Months Ended June 30, June 30, 2008 2007 2008 2007 OPERATING REVENUES Contract drilling services $783,280 $657,504 $1,581,114 $1,234,419 Reimbursables 20,964 28,608 53,422 59,751 Labor contract drilling services 8,218 39,165 39,149 75,720 Engineering, consulting and other 479 722 681 2,533 812,941 725,999 1,674,366 1,372,423 OPERATING COSTS AND EXPENSES Contract drilling services 256,436 212,050 492,388 408,892 Reimbursables 17,831 24,608 47,292 52,154 Labor contract drilling services 6,547 32,454 31,884 60,857 Engineering, consulting and other - 7,255 - 11,296 Depreciation and amortization 87,836 68,323 170,735 132,388 Selling, general and administrative 19,667 20,302 40,940 34,528 Gain on disposal of assets, net (35,521) - (35,521) - 352,796 364,992 747,718 700,115 OPERATING INCOME 460,145 361,007 926,648 672,308 OTHER INCOME (EXPENSE) Interest expense, net of amounts capitalized (721) (1,231) (1,831) (2,735) Interest income and other, net 1,580 512 4,709 1,670 INCOME BEFORE INCOME TAXES 461,004 360,288 929,526 671,243 INCOME TAX PROVISION (85,286) (70,257) (169,620) (130,892) NET INCOME $375,718 $290,031 $ 759,906 $ 540,351 NET INCOME PER SHARE: Basic $ 1.41 $ 1.09 $ 2.85 $ 2.03 Diluted $ 1.40 $ 1.08 $ 2.83 $ 2.01 WEIGHTED AVERAGE SHARES OUTSTANDING: Basic 266,464 265,927 266,458 266,521 Diluted 269,194 268,740 268,886 269,167 NOBLE CORPORATION AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (In thousands) (Unaudited) June 30, December 31, 2008 2007 ASSETS CURRENT ASSETS Cash and cash equivalents $ 320,964 $ 161,058 Accounts receivable 560,923 613,115 Insurance receivables - 39,066 Prepaid expenses 51,529 20,721 Other current assets 36,499 26,231 Total current assets 969,915 860,191 PROPERTY AND EQUIPMENT Drilling equipment and facilities 6,794,897 6,354,782 Other 97,515 80,169 6,892,412 6,434,951 Accumulated depreciation (1,753,263) (1,639,035) 5,139,149 4,795,916 OTHER ASSETS 243,256 219,899 $6,352,320 $5,876,006 LIABILITIES AND SHAREHOLDERS' EQUITY CURRENT LIABILITIES Current maturities of long-term debt $ 27,958 $ 10,334 Accounts payable 172,805 198,395 Accrued payroll and related costs 97,623 115,914 Taxes payable 102,814 85,641 Interest payable 9,465 9,951 Other current liabilities 53,551 72,537 Total current liabilities 464,216 492,772 LONG-TERM DEBT 701,507 774,182 DEFERRED INCOME TAXES 254,521 240,621 OTHER LIABILITIES 94,237 65,705 1,514,481 1,573,280 COMMITMENTS AND CONTINGENCIES MINORITY INTEREST (5,313) (5,596) SHAREHOLDERS' EQUITY Ordinary shares-par value $0.10 per share; 400,000 shares authorized; 269,157 shares issued and outstanding in 2008; 268,223 shares issued and outstanding in 2007 26,916 26,822 Capital in excess of par value 686,641 683,697 Retained earnings 4,139,866 3,602,870 Accumulated other comprehensive loss (10,271) (5,067) 4,843,152 4,308,322 $6,352,320 $5,876,006 NOBLE CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (In thousands) (Unaudited) Six Months Ended June 30, 2008 2007 CASH FLOWS FROM OPERATING ACTIVITIES Net income $759,906 $540,351 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 170,735 132,388 Impairment loss on assets - 5,400 Deferred income tax provision 13,900 6,324 Share-based compensation expense 18,471 16,903 Pension contribution (17,445) (16,705) Gain on disposal of assets, net (35,521) - Other 7,761 9,426 Other changes in current assets and liabilities: Accounts receivable 52,192 (88,627) Hurricane insurance recoveries 17,319 - Other current assets (42,632) 14,325 Accounts payable (7,994) (20,960) Other current liabilities (1,179) 33,243 Net cash provided by operating activities 935,513 632,068 CASH FLOWS FROM INVESTING ACTIVITIES New construction (310,770) (323,338) Other capital expenditures (161,546) (216,452) Major maintenance expenditures (52,577) (39,370) Accrued capital expenditures (17,596) 22,173 Hurricane insurance recoveries 21,747 - Proceeds from sales of property and equipment 39,134 3,284 Net cash used for investing activities (481,608) (553,703) CASH FLOWS FROM FINANCING ACTIVITIES Borrowings on bank credit facilities - 220,000 Payments on bank credit facilities (50,000) (85,000) Payments of other long-term debt (5,076) (4,730) Net proceeds from employee stock transactions 10,558 13,560 Dividends paid (222,910) (10,788) Repurchases of ordinary shares (26,571) (120,687) Net cash used for financing activities (293,999) 12,355 NET INCREASE IN CASH AND CASH EQUIVALENTS 159,906 90,720 CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 161,058 61,710 CASH AND CASH EQUIVALENTS, END OF PERIOD $320,964 $152,430 NOBLE CORPORATION AND SUBSIDIARIES FINANCIAL AND OPERATIONAL INFORMATION BY SEGMENT (In thousands, except utilization amounts, operating days and average dayrates) (Unaudited) Three Months Ended June 30, 2008 Contract Drilling Services Other Total OPERATING REVENUES Contract drilling services $783,280 $ - $783,280 Reimbursables 19,646 1,318 20,964 Labor contract drilling services - 8,218 8,218 Engineering, consulting and other 464 15 479 $803,390 $ 9,551 $812,941 OPERATING COSTS AND EXPENSES Contract drilling services $256,436 $ - $256,436 Reimbursables 16,565 1,266 17,831 Labor contract drilling services - 6,547 6,547 Engineering, consulting and other - - - Depreciation and amortization 86,636 1,200 87,836 Selling, general and administrative 19,526 141 19,667 Gain on disposal of assets, net - (35,521) (35,521) $379,163 $(26,367) $352,796 OPERATING INCOME $424,227 $ 35,918 $460,145 OPERATING STATISTICS Jackups: Average Rig Utilization 93% Operating Days 3,481 Average Dayrate $147,081 Semisubmersibles - (6,000 feet or greater): Average Rig Utilization 90% Operating Days 572 Average Dayrate $323,830 Semisubmersibles - (less than 6,000 feet): Average Rig Utilization 100% Operating Days 273 Average Dayrate $192,416 Drillships: Average Rig Utilization 67% Operating Days 182 Average Dayrate $131,174 Submersibles: Average Rig Utilization 67% Operating Days 182 Average Dayrate $ 53,039 Total: Average Rig Utilization 90% Operating Days 4,690 Average Dayrate $167,002 NOBLE CORPORATION AND SUBSIDIARIES FINANCIAL AND OPERATIONAL INFORMATION BY SEGMENT (In thousands, except utilization amounts, operating days and average dayrates) (Unaudited) Three Months Ended June 30, 2007 Contract Drilling Services Other Total OPERATING REVENUES Contract drilling services $657,504 $ - $657,504 Reimbursables 19,856 8,752 28,608 Labor contract drilling services - 39,165 39,165 Engineering, consulting and other 376 346 722 $677,736 $48,263 $725,999 OPERATING COSTS AND EXPENSES Contract drilling services $212,050 $ - $212,050 Reimbursables 16,706 7,902 24,608 Labor contract drilling services - 32,454 32,454 Engineering, consulting and other 15 7,240 7,255 Depreciation and amortization 66,108 2,215 68,323 Selling, general and administrative 19,743 559 20,302 Gain on disposal of assets, net - - $314,622 $50,370 $364,992 OPERATING INCOME $363,114 $(2,107) $361,007 OPERATING STATISTICS Jackups: Average Rig Utilization 98% Operating Days 3,553 Average Dayrate $112,804 Semisubmersibles - (6,000 feet or greater): Average Rig Utilization 100% Operating Days 555 Average Dayrate $285,758 Semisubmersibles - (less than 6,000 feet): Average Rig Utilization 87% Operating Days 239 Average Dayrate $169,283 Drillships: Average Rig Utilization 100% Operating Days 273 Average Dayrate $128,874 Submersibles: Average Rig Utilization 100% Operating Days 273 Average Dayrate $ 82,137 Total: Average Rig Utilization 98% Operating Days 4,893 Average Dayrate $134,364 NOBLE CORPORATION AND SUBSIDIARIES FINANCIAL AND OPERATIONAL INFORMATION BY SEGMENT (In thousands, except utilization amounts, operating days and average dayrates) (Unaudited) Three Months Ended March 31, 2008 Contract Drilling Services Other Total OPERATING REVENUES Contract drilling services $797,834 $ - $797,834 Reimbursables 21,166 11,292 32,458 Labor contract drilling services - 30,931 30,931 Engineering, consulting and other 187 15 202 $819,187 $42,238 $861,425 OPERATING COSTS AND EXPENSES Contract drilling services $235,952 $ - $235,952 Reimbursables 18,753 10,708 29,461 Labor contract drilling services - 25,337 25,337 Engineering, consulting and other - - - Depreciation and amortization 80,785 2,114 82,899 Selling, general and administrative 19,896 1,377 21,273 Gain on disposal of assets, net - - - $355,386 $39,536 $394,922 OPERATING INCOME $463,801 $ 2,702 $466,503 OPERATING STATISTICS Jackups: Average Rig Utilization 97% Operating Days 3,601 Average Dayrate $145,337 Semisubmersibles - (6,000 feet or greater): Average Rig Utilization 100% Operating Days 637 Average Dayrate $291,924 Semisubmersibles - (less than 6,000 feet): Average Rig Utilization 100% Operating Days 273 Average Dayrate $201,699 Drillships: Average Rig Utilization 67% Operating Days 182 Average Dayrate $133,665 Submersibles: Average Rig Utilization 66% Operating Days 179 Average Dayrate $ 51,274 Total: Average Rig Utilization 94% Operating Days 4,872 Average Dayrate $163,772
