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Noble Corporation plc Reports First Quarter 2019 Results

HIGHLIGHTS AND RECENT ACCOMPLISHMENTS:

- Total fleet utilization continues to rise

- Purchase of Noble Joe Knight builds on opportunity for fleet expansion

- Noble Don Taylor awarded one-year contract in Guyana

- Contract extension into 2020 for Noble Clyde Boudreaux

- Contract extensions awarded to Noble Sam Hartley and Noble Joe Beall

- Noble Sam Croft commences contract following reactivation project

LONDON, May 1, 2019 /PRNewswire/ -- Noble Corporation plc (NYSE: NE, the Company) today reported a net loss attributable to the Company for the three months ended March 31, 2019 (first quarter) of $71 million, or $0.29 per diluted share, of which $4 million, or $0.02 per diluted share related to discontinued operations.

The Company's net loss from continuing operations attributable to Noble Corporation plc for the first quarter of 2019 was $67 million, or $0.27 per diluted share, on total revenues of $283 million.  Results for the first quarter included an after-tax gain of $25 million, or $0.10 per diluted share, resulting from the early extinguishment of debt as a result of a successful tender offer for Senior Notes. Excluding the impact of the gain from early debt extinguishment, the Company would have reported a net loss from continuing operations attributable to Noble Corporation plc of $92 million, or $0.37 per diluted share.

"We are encouraged by our strong start to 2019 and the continued evidence of steady industry improvement," said Julie J. Robertson, Chairman, President and Chief Executive of Noble Corporation plc. "Following the completion of timely reactivation programs, we have returned four floating units and one jackup to active service over the past seven months, including the drillship Noble Sam Croft during the first quarter of 2019. These cost-effective rig reactivations, coupled with the excellent regional positioning of our global fleet, were instrumental in driving higher total marketed fleet utilization in the first quarter, to 87 percent compared to only 57 percent for the same quarter in 2018. In addition, our fleet operating days continue to trend favorably, and operational execution remains outstanding with total fleet uptime in the first quarter of 97.8 percent."      

Contract drilling services revenues for the first quarter of 2019 totaled $271 million compared to $292 million in the fourth quarter of 2018. The seven percent decline was largely attributable to a reduction in average dayrates in the floating rig fleet, to $236,700 compared to $267,700 in the fourth quarter of 2018. The fourth quarter 2018 retirement of the standard duty jackup rig Noble Gene House and fewer calendar days in the first quarter also contributed to the revenue decline. Total fleet utilization in the first quarter improved to 76 percent compared to 75 percent in the fourth quarter of 2018 and 47 percent in the first quarter of 2018. The first quarter 2019 improvement was driven by modestly higher operating days in the floating rig fleet.

Contract drilling services costs for the first quarter of 2019 were $172 million compared to $179 million in the fourth quarter of 2018. The four percent decline was due primarily to recent rig retirements, reduced repair and maintenance expenses and lower costs associated with operations support and rig mobilizations. Partially offsetting these items were costs associated with higher floating rig activity. Contract drilling services margin declined to 37 percent in the first quarter compared to 39 percent in the fourth quarter of 2018, due mainly to reduced revenues from the drillship Noble Don Taylor following the conclusion in February of a legacy contract.

Operating Highlights
Utilization of the Company's floating rig fleet, consisting of eight drillships and four semisubmersibles, improved to 60 percent in the first quarter of 2019, compared to 56 percent and 37 percent in the fourth and first quarters of 2018, respectively. When measured as marketed utilization, which excludes three cold stacked units, utilization in the quarter was 80 percent as compared to 75 percent and 57 percent during the same periods in 2018. A five percent improvement in fleet operating days in the first quarter was driven primarily by increased activity for the drillships Noble Tom Madden and Noble Sam Croft, with both rigs active during the first quarter following the completion of reactivation projects during the fourth quarter of 2018 and first quarter of 2019, respectively. Seven of the Company's eight drillships are currently contracted, with six of these drillships now contractually committed into or beyond 2020. This includes recent commercial successes for the Noble Don Taylor, which received a contract extension for work in the U.S. Gulf of Mexico, followed by a one-year contract award for drilling services offshore Guyana. The rig, which is expected to remain under contract into the second half of 2020, will join the Noble Bob Douglas and Noble Tom Madden offshore Guyana, where Noble is the leading provider of contract drilling services in what continues to be one of the industry's most opportunity-rich offshore basins. Among the Company's four semisubmersibles, the Noble Clyde Boudreaux continues a drilling program offshore Myanmar, which has recently been extended following the expansion of the project's scope. The rig is now expected to be under contract through the first quarter of 2020. At March 31, 2019, 53 percent of the available floating rig days remaining in 2019 were under contract compared to 49 percent at the beginning of the year. The measure improves to 57 percent with the addition of the recent contract extension and award for the Noble Don Taylor since the end of the first quarter.

Utilization in the first quarter of the Company's 11 active jackups was 93 percent compared to 94 percent and 56 percent in the fourth and first quarters of 2018, respectively. Operating days in the first quarter declined 11 percent compared to the fourth quarter of 2018, or three percent when adjusted for the fourth quarter 2018 retirement of the Noble Gene House.  The decline was primarily due to idle time on the Noble Tom Prosser, which spent the quarter completing a regulatory program and transitioning to a new contract assignment offshore Australia that commenced in March. These idle days were partially offset by a full quarter of operations on the Noble Sam Hartley. During the first quarter, the recently acquired newbuild jackup Noble Johnny Whitstine completed a mobilization to the Middle East and commenced a three-year contract offshore Saudi Arabia in mid-April. Also, the newbuild jackup Noble Joe Knight, purchased during the first quarter of 2019, is in a shipyard in Singapore completing final commissioning and client-requested upgrades. The rig remains on schedule to commence a three-year contract offshore Saudi Arabia by the end of the third quarter 2019.  Finally, in April, contract extensions were awarded to the Noble Sam Hartley and Noble Joe Beall, keeping the rigs employed into April 2020 and December 2019, respectively. At March 31, 2019, 75 percent of the available jackup rig days remaining in 2019 were under contract, improving to 81 percent with the addition of the recent extensions.

Backlog, Capital and Balance Sheet
The Company's contract backlog totaled $2.3 billion at March 31, 2019, including an estimated $1.4 billion contributed by the floating rig fleet and $900 million by the jackup rig fleet. Approximately 64 percent of the available days remaining in 2019 are committed to contracts across the Company's fleet of 25 rigs. The backlog figure and days committed to contracts exclude the recently awarded contract extension and one-year award for the Noble Don Taylor and extensions for the Noble Sam Hartley and Noble Joe Beall.

Capital expenditures in the first quarter of 2019 totaled $83 million, consisting of $8 million of sustaining capital, $41 million for major projects, reactivations and subsea equipment, $30 million devoted to the February 2019 purchase of the Noble Joe Knight, and $4 million in capitalized interest.  The Company continues to expect capital expenditures in 2019 to total approximately $250 million, excluding the $54 million seller-financed portion of the Noble Joe Knight purchase price.

During the first quarter, the Company completed cash tender offers for certain Senior Notes outstanding, resulting in the purchase of $441 million aggregate principal amount of Notes for $400 million, plus accrued interest. The Company utilized cash on hand and borrowings of $300 million against its 2015 credit facility to complete the cash tender transaction. In addition to modestly reducing debt maturities up to 2025 through the repurchase of the Senior Notes at a discount, the transaction is expected to reduce annual interest expense by approximately $10 million. At March 31, 2019, the Company reported cash and cash equivalents of $187 million, with $350 million outstanding under its revolving credit facilities, and total debt of just under $3.9 billion.

Outlook
Concluding, Ms. Robertson noted, "At the close of the first quarter of 2019, utilization of the offshore industry's floating fleet, as measured by marketed contracted units, reached 80 percent for the first time since September 2015. Customer needs for floating rig capacity are becoming more numerous, with an increasing number of opportunities requiring primary terms of one or more years. These favorable developments, together with continuing improvement across the global jackup rig fleet, further supports the argument for a gradual, broadening industry recovery."

A Non-GAAP supporting schedule is included with the statements and schedules attached to this press release and can also be found at www.noblecorp.com. It provides a reconciliation for revenues, net loss, income tax and diluted earnings per share for the first quarter 2019, and fourth and first quarters of 2018.

About Noble Corporation plc
Noble is a leading offshore drilling contractor for the oil and gas industry. The Company owns and operates one of the most modern, versatile and technically advanced fleets in the offshore drilling industry. Noble performs, through its subsidiaries, contract drilling services with a fleet of 25 offshore drilling units, consisting of 12 drillships and semisubmersibles and 13 jackups, focused largely on ultra-deepwater and high-specification jackup drilling opportunities in both established and emerging regions worldwide. Noble is a public limited company registered in England and Wales with company number 08354954 and registered office at 10 Brook Street, London, W1S 1BG England. Additional information on Noble is available at www.noblecorp.com.

Forward-looking Disclosure Statement
Statements regarding contract backlog, future earnings, costs, expense management, revenue, rig demand, fleet condition, operational or financial performance, shareholder value, contract commitments, dayrates, contract commencements, contract extensions, renewals or renegotiations, rig reactivations, shipyard risks and timing of shipyard deliveries, delays in mobilization of rigs, letters of intent or award, industry fundamentals, customer relationships and requirements, strategic initiatives, future performance, growth opportunities, the offshore drilling market, market outlook, capital allocation strategies, our financial position, business strategy, taxes and tax rates, liquidity, competitive position, capital expenditures, financial flexibility, debt levels, debt repayment, the outcome of any dispute, litigation, audit or investigation, as well as any other statements that are not historical facts in this release, are forward-looking statements that involve certain risks, uncertainties and assumptions. These include but are not limited to operating hazards and delays, risks associated with operations outside of the U.S., actions or claims by regulatory authorities, customers and other third parties, legislation and regulations affecting drilling operations, compliance with regulatory requirements, factors affecting the level of activity in the oil and gas industry, supply and demand of drilling rigs, factors affecting the duration of contracts, the actual amount of downtime, factors that reduce applicable dayrates, violations of anti-corruption laws, hurricanes and other weather conditions, market conditions, the future price of oil and gas and other factors detailed in the Company's most recent Form 10-K, Form 10-Q's and other filings with the Securities and Exchange Commission. Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual results may vary materially from those indicated.

Conference Call 
Noble has scheduled a conference call and webcast related to its first quarter 2019 results on Thursday, May 2, 2019, at 8:00 a.m. U.S. Central Daylight Time. Interested parties are invited to listen to the call by dialing 1-833-245-9653, or internationally 1-647-689-4225, using access code: 7183887, or by asking for the Noble Corporation plc conference call. Interested parties may also listen over the Internet through a link posted in the Investor Relations section of the Company's Website. 

A replay of the conference call will be available on Thursday, May 2, 2019, beginning at 11:00 a.m. U.S. Central Daylight Time, through Saturday, June 1, 2019, ending at 11:00 p.m. U.S. Central Daylight Time. The phone number for the conference call replay is 1-800-585-8367 or, for calls from outside of the U.S., 1-416-621-4642, using access code: 7183887.  The replay will also be available on the Company's Website following the end of the live call.

 

NOBLE CORPORATION PLC AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except per share amounts)

(Unaudited)




Three Months Ended March 31,



2019


2018

Operating revenues





Contract drilling services


$

270,501



$

229,106


Reimbursables and other


12,387



6,051




282,888



235,157


Operating costs and expenses





Contract drilling services


171,728



136,849


Reimbursables


9,395



4,350


Depreciation and amortization


109,578



128,755


General and administrative


15,999



22,083




306,700



292,037


Operating loss


(23,812)



(56,880)


Other income (expense)





Interest expense, net of amounts capitalized


(70,244)



(76,015)


Gain (loss) on extinguishment of debt, net


31,266



(8,768)


Interest income and other, net


2,506



1,339


Loss from continuing operations before income taxes


(60,284)



(140,324)


Income tax provision


(2,865)



(2,996)


Net loss from continuing operations


(63,149)



(143,320)


Net loss from discontinued operations, net of tax


(3,821)




Net loss


(66,970)



(143,320)


Net (income) loss attributable to noncontrolling interests


(3,919)



986


Net loss attributable to Noble Corporation plc


$

(70,889)



$

(142,334)


Net loss attributable to Noble Corporation plc





Net loss from continuing operations


$

(67,068)



$

(142,334)


Net loss from discontinued operations, net of tax


(3,821)




Net loss attributable to Noble Corporation plc


$

(70,889)



$

(142,334)


Per share data





Basic:





Loss from continuing operations


$

(0.27)



$

(0.58)


Loss from discontinued operations


(0.02)




Net loss attributable to Noble Corporation plc


$

(0.29)



$

(0.58)


Diluted:





Loss from continuing operations


$

(0.27)



$

(0.58)


Loss from discontinued operations


(0.02)




Net loss attributable to Noble Corporation plc


$

(0.29)



$

(0.58)


 

NOBLE CORPORATION PLC AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands)

(Unaudited)




March 31,
 2019


December 31,
 2018

ASSETS

Current assets





Cash and cash equivalents


$

187,093



$

375,232


Accounts receivable, net


211,729



200,722


Prepaid expenses and other current assets


62,288



83,102


Total current assets


461,110



659,056


Property and equipment, at cost


11,017,281



10,956,412


Accumulated depreciation


(2,510,699)



(2,475,694)


Property and equipment, net


8,506,582



8,480,718


Other assets


148,622



125,149


Total assets


$

9,116,314



$

9,264,923


LIABILITIES AND EQUITY

Current liabilities





Current maturities of long-term debt


$

300,000



$


Accounts payable


111,044



125,557


Accrued payroll and related costs


34,867



50,284


Other current liabilities


149,721



189,616


Total current liabilities


595,632



365,457


Long-term debt


3,550,791



3,877,402


Other liabilities


386,083



367,490


Total liabilities


4,532,506



4,610,349







Commitments and contingencies










Equity





Total shareholders' equity


4,183,506



4,253,171


Noncontrolling interests


400,302



401,403


Total equity


4,583,808



4,654,574


Total liabilities and equity


$

9,116,314



$

9,264,923


 

NOBLE CORPORATION PLC AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

(Unaudited)




Three Months Ended March 31,



2019


2018

Cash flows from operating activities





Net loss


$

(66,970)



$

(143,320)


Adjustments to reconcile net loss to net cash flow from operating activities:





Depreciation and amortization


109,578



128,755


(Gain) loss on extinguishment of debt, net


(31,266)



8,768


Changes in components of working capital:





Change in taxes receivable


4,204



84,486


Net changes in other operating assets and liabilities


(56,321)



(23,776)


Net cash provided by (used in) operating activities


(40,775)



54,913


Cash flows from investing activities





Capital expenditures


(96,793)



(33,816)


Proceeds from disposal of assets, net


7,930



117


Net cash used in investing activities


(88,863)



(33,699)


Cash flows from financing activities





Issuance of senior notes




750,000


Borrowings on credit facilities


350,000




Repayments of debt


(400,000)



(952,209)


Debt issuance costs


(90)



(14,184)


Dividends paid to noncontrolling interests


(5,020)



(2,667)


Taxes withheld on employee stock transactions


(2,763)



(3,305)


Net cash used in financing activities


(57,873)



(222,365)


Net decrease in cash, cash equivalents and restricted cash


(187,511)



(201,151)


Cash, cash equivalents and restricted cash, beginning of period


375,907



662,829


Cash, cash equivalents and restricted cash, end of period


$

188,396



$

461,678


 

NOBLE CORPORATION PLC AND SUBSIDIARIES

FINANCIAL AND OPERATIONAL INFORMATION BY SEGMENT

(In thousands, except operating statistics)

(Unaudited)




Three Months Ended March 31,


Three Months Ended December 31,



2019


2018


2018



Contract
Drilling
Services


Other


Total


Contract
Drilling
Services


Other


Total


Contract
Drilling
Services


Other


Total

Operating revenues



















Contract drilling services


$

270,501



$



$

270,501



$

229,106



$



$

229,106



$

292,049



$



$

292,049


Reimbursables and other


12,387





12,387



6,051





6,051



17,843





17,843




$

282,888



$



$

282,888



$

235,157



$



$

235,157



$

309,892



$



$

309,892


Operating costs and expenses



















Contract drilling services


$

171,728



$



$

171,728



$

136,849



$



$

136,849



$

178,666



$



$

178,666


Reimbursables


9,395





9,395



4,350





4,350



14,761





14,761


Depreciation and amortization


106,086



3,492



109,578



123,215



5,540



128,755



110,372



3,854



114,226


General and administrative


15,999





15,999



22,083





22,083



14,694





14,694


Loss on impairment














9,290





9,290




$

303,208



$

3,492



$

306,700



$

286,497



$

5,540



$

292,037



$

327,783



$

3,854



$

331,637





















Operating loss


$

(20,320)



$

(3,492)



$

(23,812)



$

(51,340)



$

(5,540)



$

(56,880)



$

(17,891)



$

(3,854)



$

(21,745)






















Operating statistics










Jackups:










Average Rig Utilization


93

%


56

%


94

%

Operating Days


923



706



1,037


Average Dayrate


$127,150



$153,662



$121,949


Floaters:










Average Rig Utilization


60

%


37

%


56

%

Operating Days


647



465



619


Average Dayrate


$236,715



$259,326



$267,737


Total:










Average Rig Utilization


76

%


47

%


75

%

Operating Days


1,570



1,171



1,655


Average Dayrate


$172,305



$195,633



$176,443


 

NOBLE CORPORATION PLC AND SUBSIDIARIES

CALCULATION OF BASIC AND DILUTED NET INCOME/(LOSS) PER SHARE

(In thousands, except per share amounts)

(Unaudited)


The following table presents the computation of basic and diluted loss per share:




Three Months Ended March 31,



2019


2018

Numerator:





Basic





Net loss from continuing operations


$

(67,068)



$

(142,334)


Net loss from discontinued operations, net of tax


(3,821)




Net loss attributable to Noble Corporation plc


$

(70,889)



$

(142,334)


Diluted





Net loss from continuing operations


$

(67,068)



$

(142,334)


Net loss from discontinued operations, net of tax


(3,821)




Net loss attributable to Noble Corporation plc


$

(70,889)



$

(142,334)


Denominator:





Weighted average shares outstanding - basic


248,251



246,175


Weighted average shares outstanding - diluted


248,251



246,175







Loss per share





Basic:





Loss from continuing operations


$

(0.27)



$

(0.58)


Loss from discontinued operations


(0.02)




Net loss attributable to Noble Corporation plc


$

(0.29)



$

(0.58)


Diluted:





Loss from continuing operations


$

(0.27)



$

(0.58)


Loss from discontinued operations


(0.02)




Net loss attributable to Noble Corporation plc


$

(0.29)



$

(0.58)


NOBLE CORPORATION PLC AND SUBSIDIARIES
NON-GAAP RECONCILIATION

Certain non-GAAP performance measures and corresponding reconciliations to GAAP financial measures for the Company have been provided for meaningful comparisons between current results and prior operating periods. Generally, a non-GAAP financial measure is a numerical measure of a company's performance, financial position, or cash flows that excludes or includes amounts that are not normally included or excluded in the most directly comparable measure calculated and presented in accordance with generally accepted accounting principles. In order to fully assess the financial operating results, management believes that the results of operations, adjusted to exclude the following items, which are included in the Company's press release issued on May 1, 2019, and discussed in the related conference call on May 2, 2019, are appropriate measures of the continuing and normal operations of the Company:

(i)

In the first quarter of 2019, a gain on debt extinguishment;



(ii)

In the first and fourth quarter of 2018, a loss and gain on debt extinguishment, respectively; and



(iii)          

In the fourth quarter of 2018, an impairment of two of our rigs.

These non-GAAP adjusted measures should be considered in addition to, and not as a substitute for, or superior to, contract drilling revenue, contract drilling cost, contract drilling margin, average daily revenue, operating income, cash flows from operations, or other measures of financial performance prepared in accordance with GAAP. Please see the following non-GAAP Financial Measures and Reconciliations for a complete description of the adjustments.

NOBLE CORPORATION PLC AND SUBSIDIARIES

NON-GAAP RECONCILIATION

(In thousands, except per share amounts)

(Unaudited)


Reconciliation of Income Tax Benefit (Provision)


Three Months Ended March 31,


Three Months Ended
December 31,



2019


2018


2018

Income tax benefit (provision)


$

(2,865)



$

(2,996)



$

56,307









Adjustments







Gain (loss) on debt extinguishment


6,566



(1,841)



1,442


Discrete tax items






(60,568)


Total Adjustments


6,566



(1,841)



(59,126)


Adjusted income tax benefit (provision)


$

3,701



$

(4,837)



$

(2,819)









Reconciliation of Net Loss Attributable to Noble Corporation plc


Three Months Ended March 31,


Three Months Ended
December 31,



2019


2018


2018

Net loss attributable to Noble Corporation plc


$

(70,889)



$

(142,334)



$

(33,062)









Adjustments







Loss on impairment






9,290


(Gain) loss on debt extinguishment


(24,700)



6,927



(5,424)


Discrete tax items






(60,568)


Total Adjustments


(24,700)



6,927



(56,702)


Adjusted net loss attributable to Noble Corporation plc


$

(95,589)



$

(135,407)



$

(89,764)









Reconciliation of Diluted EPS Attributable to Noble Corporation plc


Three Months Ended March 31,


Three Months Ended
December 31,



2019


2018


2018

Unadjusted diluted EPS attributable to Noble Corporation plc


$

(0.29)



$

(0.58)



$

(0.13)









Adjustments







Loss on impairments






0.04


(Gain) loss on debt extinguishment


(0.10)



0.03



(0.02)


Discrete tax items






(0.25)


Total Adjustments


(0.10)



0.03



(0.23)


Adjusted diluted EPS attributable to Noble Corporation plc


$

(0.39)



$

(0.55)



$

(0.36)


 

Cision

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