Offshore drilling contractor Noble Corp. late Wednesday reported its third consecutive quarter of higher-than-expected profits on higher dayrates and lower downtime for its rigs.
Net profits climbed to $282 million ($1.10/share) in 3Q2013 from year-ago earnings of $115 million (45 cents), with revenue increasing 22% to $1.08 billion from $1.02 billion. Excluding one-time items, Noble earned 85 cents/share, well above consensus estimates that averaged 70 cents. Downtime for the offshore fleet fell to 4.6% from 5.2%.
Average rig utilization year/year rose to 85% from 83%, on 5,349 operating days from 5,201. The average dayrate also was higher in 3Q2013 at $194,645 from $187,537. Semisubmersibles commanded the highest dayrates for the quarter at $380,048, up from $331,900 a year ago, while drillships brought in $353,048 versus $267,166 in the year-ago period. The average dayrate for jackups jumped in the latest quarter to $112,414 from $97,857.
The company in late September said it plans to split its operations, with one business comprised of standard specification (spec) drilling units, and one owning and operating high spec assets working in deepwater and ultra-deepwater markets, including those in harsh environments.
"With the continued success of our shipyard program, Noble benefited from the earlier-than-expected commencement of operations on two new ultra-deepwater drillships, which combined with a further reduction in total operational downtime, fewer shipyard days and essentially flat operating costs, were the primary catalysts behind the excellent third quarter performance," said CEO David W. Williams during a conference call Thursday.
Contract drilling services revenues in the quarter improved 7% to $1.04 billion from $975 million in the second quarter, primarily because two new ultra-deepwater drillships began operations, as well as a reduction in shipyard time and lower fleet downtime. Contract drilling margin increased to 53.1% from 49.6% in the second quarter.
At the end of September, about 80% of Noble's available rig operating days were committed through the rest of the year, including 84% of the floating rig days and 83% of the jackup rig days. For 2014, an estimated 71% of the available rig days already have been committed, including 76% of the floating and 72% of the jackup rig days.
Noble has 10 rigs now running in the Gulf of Mexico, including three drillships.
"Our view of the offshore drilling business remains decidedly positive, with jackup and floating rig contract opportunities visible in a number of regions," said Williams. "Many of the opportunities include contract durations ranging from one to three years, with isolated opportunities beyond three years. In the floating rig sector, ultra-deepwater capable rigs with advanced technical features are continuing to experience robust demand.
"Strong, sustained crude oil prices, a heightened focus by customers on exploration opportunities with an increasing interest in frontier locations, and the onset of a growth phase in field development programs are driving customer demand for the foreseeable future."