Robert W. Eifler, President and Chief Executive Officer of Noble Corporation, stated “I am pleased with the performance of the Noble team over the third quarter. Notably, the Noble Lloyd Noble has now started its contract for Equinor in Norway and I’d like to thank our employees and local business partners for their effort and focus. We also recently completed the successful sale of four jackups in Saudi Arabia. That transaction further bolsters our balance sheet, creates value for our shareholders, and supports our return of capital strategy.”
Third Quarter Results
Contract drilling services revenue for the third quarter of 2021 totaled $231 million compared to $200 million in the second quarter of 2021. The increase in revenue was largely due to contract commencements on the Noble Clyde BoudreauxandNoble Faye Kozack(formerly Pacific Khamsin); and higher operating days on the Noble Scott Marks, Noble Tom Prosser, Noble Sam Croft, and Noble Stanley Lafosse(formerly Pacific Sharav). Additionally, contract drilling services revenue included a reduction of $14 million in each of the second and third quarters of 2021 related to the non-cash amortization of favorable customer contract intangibles. Marketed fleet utilization was 81 percent in the three months ended September 30, 2021 compared to 74 percent in the second quarter.
Contract drilling services costs for the third quarter were $189 million, in line with the second quarter of 2021. As a result, contract drilling margin increased to 23 percent from 12 percent in the previous period when excluding the non-cash intangible amortization. During the third quarter, Noble incurred approximately $10 million of costs in connection to damages sustained during Hurricane Ida.
Adjusted EBITDA for the three months ended September 30, 2021 was $47 million compared to $10 million in the second quarter of 2021.
Upon emergence from restructuring, Noble adopted fresh-start accounting which resulted in Noble becoming a new reporting entity for accounting and financial reporting purposes. Accordingly, our financial statements and notes after February 5, 2021 are not comparable to our financial statements and notes prior to that date. As required by GAAP, results must be presented separately for the predecessor period up to February 5, 2021 (the “Predecessor” period) and the successor period from February 6, 2021 through all dates after (the “Successor” period).
Operating Highlights
Jackups – Over the course of the third quarter, the Noble Tom Prosser was awarded a new contract with Santos for three wells in Australia. These firm wells are expected to start in the first quarter of 2022 in direct continuation of the rig’s current contract with Santos. In the UK North Sea, our customer IOG elected to exercise the first of two one-well options for the Noble Hans Deul. In September the Noble Lloyd Noble received its Acknowledgement of Compliance from the Petroleum Safety Authority Norway and in late-October commenced its contract with Equinor. The Noble Regina Allenrecently completed its contract with BHP in Trinidad and Tobago and the Company is pursuing opportunities for follow-on work in the region.
Floaters – The Noble Gerry de Souza (formerly Pacific Santa Ana) completed its plug and abandonment contract with Petronas in Mauritania. Since program conclusion in August, the rig has since mobilized to Las Palmas to complete installation of a managed pressure drilling system and a second blowout preventer stack in preparation for previously announced work in Suriname for APA Corporation. In early September, the Noble Faye Kozack began operations for Petronas in Mexico and is expected to return to the U.S. Gulf of Mexico to start its next contract with Murphy in the fourth quarter.
Backlog and Liquidity Update
At September 30, 2021, the Company’s estimated revenue backlog totaled approximately $1.5 billion. Additionally, the Company had total liquidity of $588 million consisting of $112 million in cash and $476 million available under its revolving credit facility.
On November 3, 2021, Noble completed the sale of four jackup rigs working in Saudi Arabia. The company expects to generate approximately $285 million in cash from the transaction net of fees, expenses, and the settlement of working capital. Applying the net proceeds on a pro forma basis, liquidity would have been approximately $873 million at September 30, 2021. Excluding the backlog related to the rigs sold, total backlog would be approximately $1.4 billion.
Outlook
Commenting on the state of the offshore drilling industry, Mr. Eifler added, “Oil prices remained stable through the third quarter and within a dollar-per-barrel range that provides supportive economics for our customers’ offshore projects. Global energy demand also continues to normalize from last year’s pandemic-driven lows. On the back of these global macro improvements, the rig market has continued to show consistent signs of recovery throughout 2021, especially in the UDW segment. These recent market trends are encouraging and are supportive of our strategy to implement a sustainable return of capital policy.”
Source: Noble
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