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Noble Corporation Reports First Quarter 2021 Results

May 04, 2021
- Successfully completed balance sheet restructuring on February 5, 2021
- Announced acquisition of Pacific Drilling in March and closed on April 15, 2021
- Revenue backlog of $1.5 billion as of March 31, 2021

 SUGAR LAND, Texas, May 4, 2021 /PRNewswire/ -- Noble Corporation ("Noble" or the "Company") today reported first quarter 2021 results.


Successor



Predecessor


Period from
Feb 6, 2021 -
Mar 31,
2021



Period from
Jan 1, 2021 -
Feb 5, 2021


Three
Months
Ended


Three
Months
Ended

(stated in millions, except per share amounts)




Dec 31,
2020


Mar 31,
2020

Total Revenue

$            92



$            77


$    203


$    281

Contract Drilling Services Revenue

85



74


195


267

Net Income (Loss)

(18)



250


(2,823)


(1,063)

Adjusted EBITDA*

6



22


57


91

Adjusted Net Loss*

(27)



(1)


(25)


(86)

Diluted Earnings (Loss) Per Share

(0.36)



0.98


(11.24)


(4.25)

Adjusted Diluted Loss Per Share*

(0.54)



-


(0.10)


(0.34)

Contract Drilling Services Backlog

1,543



 NM 


1,612


1,524










* A Non-GAAP supporting schedule is included with the statements and schedules attached to this press
release and can be found at www.noblecorp.com.  

Robert W. Eifler, President and Chief Executive Officer of Noble Corporation, stated, "We are pleased with our first quarter results and the accomplishment of a number of important strategic objectives in the first part of 2021. In early February we completed our financial restructuring transactions and emerged with a much stronger financial foundation. In March we announced the acquisition of Pacific Drilling and expeditiously closed the transaction on April 15th. Pacific Drilling represents a highly strategic acquisition, which enhances our position in the ultra-deepwater market."

Mr. Eifler continued, "Noble celebrated its one-hundred-year anniversary a few weeks ago, and while the market environment has continually changed over the life of our company, Noble's commitment to its core values does not waiver. I would like to personally thank all the men and women at Noble, both offshore and onshore, who remain focused every day on delivering best-in-class safety and operational performance for our customers."

Noble emerged from Chapter 11 bankruptcy protection on February 5, 2021 (the "Effective Date"). Upon emergence, 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 the Effective Date are not comparable to our financial statements and notes prior to that date. As required by GAAP, results for the quarter must be presented separately for the predecessor period from January 1, 2021 through February 5, 2021 (the "Predecessor" period) and the successor period from February 6, 2021 through March 31, 2021 (the "Successor" period). However, the Company has combined certain results of the Predecessor and Successor periods as non-GAAP measures ("combined" results) to compare to prior periods for discussion purposes herein since we believe it provides the most meaningful basis to analyze our results.

On a GAAP basis, total revenue and net loss in the Successor period from February 6, 2021 to March 31, 2021 were $92 million and $18 million, respectively. Total revenue and net income in the Predecessor period from January 1, 2021 to February 5, 2021 were $77 million and $250 million, respectively. The Predecessor period includes a net reorganization gain of $252 million from January 1, 2021 to February 5, 2021.

On a non-GAAP basis, contract drilling services revenue for the combined first quarter of 2021 totaled $159 million compared to $195 million in the fourth quarter of 2020. The decrease in revenue was largely due to the Noble Lloyd Noble moving to the shipyard in February to prepare for its upcoming work in Norway, lower operating days on the Noble Sam Croft as it moved from its previous work in Suriname and joined the Commercial Enabling Agreement (the "CEA") with ExxonMobil in Guyana in April, lower operating days on the Noble Roger Lewis as it was on standby for approximately four weeks in the first quarter, and lower revenue on the Noble Tom Prosser which was idle during the combined first quarter. Additionally, contract drilling services revenue for the combined first quarter included a reduction of $8 million related to the non-cash amortization of favorable customer contract intangibles which were recognized on the Effective Date. Marketed fleet utilization was 66% in the three months ended March 2021 compared to 70% in the fourth quarter.

Contract drilling services costs for the combined first quarter were $127 million compared to $125 million in the fourth quarter of 2020. Contract drilling margin decreased to 20 percent from 36 percent in the previous period. 

Adjusted EBITDA for the three months ended March 2021 was $28 million compared to $57 million in the fourth quarter.      

Operating Highlights
During the combined first quarter, the jackup Noble Sam Turner began a two-year contract with Total in Denmark, and the Noble Lloyd Noble mobilized to the shipyard and began contract preparation work prior to its contract with Equinor in Norway, which is scheduled to commence in the third quarter of 2021. After an approximately four-week standby period, the Noble Roger Lewis returned to dayrate for gas well work with Saudi Aramco in mid-March, and the Noble Scott Marks is preparing to return to work in the second quarter of 2021 after its one-year suspension. The jackup Noble Hans Deul began its approximately 13-month contract with IOG in early April. 

The Pacific Santa Ana is currently under contract with Petronas in Mauritania into the third quarter of 2021. In April, the Pacific Sharav commenced its contract with Murphy in the U.S. Gulf of Mexico, with firm term through the second quarter of 2022. The Pacific Khamsin is currently preparing for its contract with Petronas in Mexico, scheduled to commence in the third quarter of 2021. ExxonMobil also utilized the CEA to transfer term from the Noble Tom Madden, which now has contract coverage into early 2027, to the Noble Sam Croft, which now has contract coverage through the end of 2022.

Backlog and Capital Structure Update     
At March 31, 2021, the Company's estimated revenue backlog totaled approximately $1.5 billion, consisting of approximately $1.1 billion associated with the floating rig fleet and approximately $400 million with the jackup fleet. An estimated $568 million of the revenue backlog was attributable to the remainder of the year 2021.

At March 31, 2021, Noble had total liquidity of $603 million consisting of $116 million in cash and $487 million available under the Company's revolving credit facility.

At emergence, Legacy Noble's ordinary shares were cancelled and 50 million initial ordinary shares of the Company, which includes 6.5 million penny warrants that are economically equivalent to ordinary shares, were issued to Legacy Noble's former bondholders. Certain former bondholders and former equity holders of Legacy Noble were also issued warrants to purchase shares of the Company. As part of the Pacific Drilling transaction, Noble issued 16.6 million new shares to the former equity holders of Pacific Drilling.  

Outlook
Commenting on the Pacific Drilling acquisition and the state of the offshore drilling industry, Mr. Eifler added, "We are pleased to have completed the Pacific Drilling acquisition on an expedited timeline. The integration of Pacific Drilling's high specification drillships into Noble's operations is going well, and we are excited to have available drillship capacity again to better serve the needs of our customers. We are on track to achieve our synergy target of $30 million before the end of 2021, and in so doing, lowering our shorebased burden per rig across the consolidated fleet."

Mr. Eifler continued, "We are optimistic about the market outlook and see a pipeline of interesting tender opportunities developing along with improving dayrates, especially in the floater market. We remain committed to maintaining a strong balance sheet and to capital discipline, and we look forward to continuing to execute on our strategy and build shareholder value."

About Noble Corporation
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 and its predecessors have been engaged in the contract drilling of oil and gas wells since 1921. Currently, Noble performs, through its subsidiaries, contract drilling services with a fleet of 24 offshore drilling units, consisting of 12 drillships and semisubmersibles and 12 jackups, focused largely on ultra- deepwater and high-specification jackup drilling opportunities in both established and emerging regions worldwide. Noble is an exempted company incorporated in the Cayman Islands with limited liability with registered office at P.O. BOX 31327, Ugland House, S. Church Street, Georgetown, Grand Cayman, KY1-1104. Additional information on Noble is available at www.noblecorp.com.

Forward-looking Disclosure Statement
This communication includes "forward-looking statements" within the meaning of Section 27A of the Securities Act and Section 21E of the Exchange Act. All statements other than statements of historical facts included in this communication, including those regarding the effect, impact, and other implications of our emergence from bankruptcy, rig demand, the offshore drilling market, oil prices, contract backlog, fleet status, our future financial position, business strategy, liquidity, borrowings under our credit facility or other instruments, sources of funds, future capital expenditures, contract commitments, dayrates, contract commencements, extension or renewals, contract tenders, plans and objectives of management for future operations, industry conditions, access to financing, impact of competition, worldwide economic conditions and timing, benefits or results of acquisitions or dispositions (including the benefits of the Pacific Drilling acquisition) are forward-looking statements. When used in this report, or in the documents incorporated by reference, the words "anticipate," "believe," "could," "estimate," "expect," "intend," "may," "might," "plan," "project," "should," "shall" and "will" and similar expressions are intended to be among the statements that identify forward-looking statements. Although we believe that the expectations reflected in such forward-looking statements are reasonable, we cannot assure you that such expectations will prove to be correct. These forward-looking statements speak only as of the date of this communication and we undertake no obligation to revise or update any forward-looking statement for any reason, except as required by law. We have identified factors, including, but not limited to, uncertainties relating to our emergence from bankruptcy, the ability to recognize the anticipated benefits of the Pacific Drilling acquisition, the effects of public health threats,pandemics and epidemics, such as the recent and ongoing outbreak of COVID-19, and the adverse impact thereof on our business, financial condition and results of operations (including but not limited to our growth, operating costs, supply chain, availability of labor, logistical capabilities, customer demand for our services and industry demand generally, our liquidity, the price of our securities and trading markets with respect thereto, our ability to access capital markets, and the global economy and financial markets generally), the effects of actions by, or disputes among OPEC+ members with respect to production levels or other matters related to the price of oil, market conditions, 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, operating hazards and delays, risks associated with operations outside the US, actions by regulatory authorities, credit rating agencies, customers, joint venture partners, contractors, lenders and other third parties, legislation and regulations affecting drilling operations, compliance with regulatory requirements, violations of anti-corruption laws, shipyard risk and timing, delays in mobilization of rigs, hurricanes and other weather conditions, and the future price of oil and gas, that could cause actual plans or results to differ materially from those included in any forward-looking statements. These factors include those "Risk Factors" referenced or described in the Company's most recent Form 10-K, Form 10-Q's, and other filings with the Commission. We cannot control such risk factors and other uncertainties, and in many cases, we cannot predict the risks and uncertainties that could cause our actual results to differ materially from those indicated by the forward-looking statements. You should consider these risks and uncertainties when you are evaluating us.

Conference Call
Noble has scheduled a conference call and webcast related to its combined first quarter 2021 results on Wednesday, May 5, 2021, at 8:00 a.m. U.S. Central Time. Interested parties are invited to listen to the call by dialing 1-877-680-4232, or internationally 1-647-689-5432, using access code: 1637219, or by asking for the Noble Corporation 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 Wednesday, May 5, 2021, beginning at 11:00 a.m. U.S. Central Time, through Wednesday, June 2, 2021, ending at 11:00 p.m. U.S. Central 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: 1637219. The replay will also be available on the Company's Website following the end of the scheduled call.


 

NOBLE CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except per share amounts)

(Unaudited)

 




Successor



Predecessor



Period from



Period from





February 6, 2021



January 1, 2021





through



through


Three Months Ended



March 31, 2021



February 5, 2021


March 31, 2020

Operating revenues








Contract drilling services


$

84,629




$

74,051



$

267,364


Reimbursables and other


7,804




3,430



13,947




92,433




77,481



281,311


Operating costs and expenses








Contract drilling services


79,981




46,965



161,145


Reimbursables


7,044




2,737



11,684


Depreciation and amortization


14,244




20,622



103,681


General and administrative


9,548




5,727



17,839


Loss on impairment







1,119,517




110,817




76,051



1,413,866


Operating income (loss)


(18,384)




1,430



(1,132,555)


Other income (expense)








Interest expense, net of amounts capitalized


(6,895)




(229)



(70,880)


Interest income and other, net


8




399



(2,282)


Reorganization items, net





252,051




Income (loss) before income taxes


(25,271)




253,651



(1,205,717)


Income tax benefit (provision)


7,047




(3,423)



143,040


Net income (loss)


$

(18,224)




$

250,228



$

(1,062,677)


Per share data








Basic:








Net income (loss)


$

(0.36)




$

1.00



$

(4.25)


Diluted:








Net income (loss)


$

(0.36)




$

0.98



$

(4.25)


 

 

NOBLE CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands)

(Unaudited)

 




Successor



Predecessor



March 31, 2021



December 31, 2020

ASSETS






Current assets






Cash and cash equivalents


$

116,326




$

343,332


Accounts receivable, net


178,942




147,863


Prepaid expenses and other current assets


59,327




111,089


Total current assets


354,595




602,284


Intangible assets


104,930





Property and equipment, at cost


1,178,688




4,777,697


Accumulated depreciation


(13,873)




(1,200,628)


Property and equipment, net


1,164,815




3,577,069


Other assets


70,528




84,584


Total assets


$

1,694,868




$

4,263,937


LIABILITIES AND EQUITY






Current liabilities






Accounts payable


$

96,223




$

95,159


Accrued payroll and related costs


36,615




36,553


Other current liabilities


70,177




86,639


Total current liabilities


203,015




218,351


Long-term debt


393,500





Other liabilities


95,791




117,331


Liabilities subject to compromise





4,239,643


Total liabilities


692,306




4,575,325


Commitments and contingencies






Total shareholders' equity


1,002,562




(311,388)


Total liabilities and equity


$

1,694,868




$

4,263,937


 

 

NOBLE CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

(Unaudited)

 


Successor



Predecessor


Period from



Period from




February 6, 2021



January 1, 2021




through



through


Three Months Ended


March 31, 2021



February 5, 2021


March 31, 2020

Cash flows from operating activities







Net income (loss)

$

(18,224)




$

250,228



$

(1,062,677)


Adjustments to reconcile net income (loss) to net cash flow from operating
activities:







Depreciation and amortization

14,244




20,622



103,681


Loss on impairment






1,119,517


Amortization of intangible asset

8,459







Reorganization items, net




(280,790)




Changes in components of working capital







Change in taxes receivable

1,069




(1,789)



(120,838)


Net changes in other operating assets and liabilities

12,636




(33,719)



(40,493)


Net cash provided by (used in) operating activities

18,184




(45,448)



(810)


Cash flows from investing activities







Capital expenditures

(15,332)




(14,629)



(36,461)


Proceeds from disposal of assets, net

231




194




Net cash used in investing activities

(15,101)




(14,435)



(36,461)


Cash flows from financing activities







Issuance of second lien notes




200,000




Borrowings on credit facilities




177,500



110,000


Repayments of credit facilities




(545,000)




Debt issuance costs




(23,664)




Cash paid to settle equity compensation awards






(1,010)


Taxes withheld on employee stock transactions




(1)



(413)


Net cash provided by (used in) financing activities




(191,165)



108,577


Net increase (decrease) in cash, cash equivalents and restricted cash

3,083




(251,048)



71,306


Cash, cash equivalents and restricted cash, beginning of period

113,993




365,041



105,924


Cash, cash equivalents and restricted cash, end of period

$

117,076




$

113,993



$

177,230


 

 

NOBLE CORPORATION AND SUBSIDIARIES

OPERATIONAL INFORMATION

(Unaudited)

 



Average Rig Utilization











Successor



Predecessor


Period from



Period from






February 6, 2021



January 1, 2021






through



through


Three Months Ended


Three Months Ended


March 31, 2021



February 5, 2021


March 31, 2020


December 31, 2020

Jackups

53

%



58

%


94

%


61

%

Floaters

83

%



86

%


58

%


86

%

Total

64

%



68

%


77

%


70

%




















Operating Days











Successor



Predecessor


Period from



Period from






February 6, 2021



January 1, 2021






through



through


Three Months Ended


Three Months Ended


March 31, 2021



February 5, 2021


March 31, 2020


December 31, 2020

Jackups

342




252



1,082



676


Floaters

314




216



637



552


Total

656




468



1,719



1,228





















Average Dayrates











Successor



Predecessor


Period from



Period from






February 6, 2021



January 1, 2021






through



through


Three Months Ended


Three Months Ended


March 31, 2021



February 5, 2021


March 31, 2020


December 31, 2020

Jackups

$

83,472




$

95,212



$

131,253



$

104,450


Floaters

205,242




231,745



196,759



224,831


Total

$

141,752




$

158,228



$

155,526



$

158,585


 

 

NOBLE CORPORATION 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 income(loss) per share:



Successor



Predecessor


Period from



Period from




February 6, 2021



January 1, 2021




through



through


Three Months Ended


March 31, 2021



February 5, 2021


March 31, 2020

Numerator:







Basic







Net income (loss)

$

(18,224)




$

250,228



$

(1,062,677)


Diluted







Net income (loss)

$

(18,224)




$

250,228



$

(1,062,677)


Denominator:







Weighted average shares outstanding - basic

50,000




251,115



250,047


Weighted average shares outstanding - diluted

50,000




256,571



250,047









Income (loss) per share







Basic:







Net income (loss)

$

(0.36)




$

1.00



$

(4.25)


Diluted:







Net income (loss)

$

(0.36)




$

0.98



$

(4.25)


 

NOBLE CORPORATION AND SUBSIDIARIES
NON-GAAP MEASURES AND 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. The Company defines "Adjusted EBITDA" as net loss from continuing operations before income taxes; interest income and other, net; gain (loss) on extinguishment of debt, net; interest expense, net of amounts capitalized; loss on impairment; pre-petition charges; reorganization items, net; certain corporate legal matters; and depreciation and amortization expense. We believe that Adjusted EBITDA measure provides greater transparency of our core operating performance.

 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 4, 2021, are appropriate measures of the continuing and normal operations of the Company:

(i) 

In the first quarter of 2020, an impairment on four of our rigs, certain capital spare equipment and discrete tax items;

(ii) 

In the fourth quarter of 2020, an impairment on 12 of our rigs, discrete tax items, and reorganization items.

(iii) 

In the period of January 1, 2021 to February 5, 2021, discrete tax items, and reorganization items. In the period
of February 6, 2021 to March 31, 2021, merger and integration costs and discrete tax items.

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 AND SUBSIDIARIES

NON-GAAP MEASURES

(In thousands, except per share amounts)

(Unaudited)

 


Reconciliation of Adjusted EBITDA


Successor



Predecessor



Period from



Period from







February 6, 2021



January 1, 2021







through



through


Three Months Ended


Three Months Ended



March 31, 2021



February 5, 2021


March 31, 2020


December 31, 2020

Income (loss) before income taxes


$

(25,271)




$

253,651



$

(1,205,717)



$

(2,844,179)


Interest expense, net of amounts capitalized


6,895




229



70,880



67


Interest income and other, net


(8)




(399)



2,282



(466)


Depreciation and amortization


14,244




20,622



103,681



90,477


Loss on impairment







1,119,517



2,795,891


Intangible contract amortization


8,459









Merger and integration costs


2,013









Reorganization items, net





(252,051)





14,916


Adjusted EBITDA


$

6,332




$

22,052



$

90,643



$

56,706


 

 

NOBLE CORPORATION AND SUBSIDIARIES

NON-GAAP RECONCILIATION

(In thousands, except per share amounts)

(Unaudited)

 


Reconciliation of Income Tax Benefit
(Provision)


Successor



Predecessor



Period from



Period from







February 6, 2021



January 1, 2021







through



through


Three Months Ended


Three Months Ended



March 31, 2021



February 5, 2021


March 31, 2020


December 31, 2020

Income tax benefit (provision)


$

7,047




$

(3,423)



$

143,040



$

21,459












Adjustments










Loss on impairment







(95,630)



(4,047)


Reorganization





2,500






Discrete tax items


(10,829)




(1,692)



(47,240)



(9,187)


Total Adjustments


(10,829)




808



(142,870)



(13,234)


Adjusted income tax benefit (provision)


$

 

(3,782)




$

(2,615)



$

170



$

8,225














Reconciliation of Net Loss


Successor



Predecessor



Period from



Period from







February 6, 2021



January 1, 2021







through



through


Three Months Ended


Three Months Ended



March 31, 2021



February 5, 2021


March 31, 2020


December 31, 2020

Net (loss) income


$

(18,224)




$

250,228



$

(1,062,677)



$

(2,822,720)












Adjustments










Loss on impairment, net of tax







1,023,887



2,791,844


Reorganization





(249,551)





14,916


Merger and integration costs


2,013









Discrete tax items


(10,829)




(1,692)



(47,240)



(9,187)


Total Adjustments


(8,816)




(251,243)



976,647



2,797,573


Adjusted net  (loss) income


$

 

(27,040)




$

(1,015)



$

(86,030)



$

(25,147)














Reconciliation of Diluted EPS


Successor



Predecessor



Period from



Period from







February 6, 2021



January 1, 2021







through



through


Three Months Ended


Three Months Ended



March 31, 2021



February 5, 2021


March 31, 2020


December 31, 2020

Unadjusted diluted EPS


$

(0.36)




$

0.98



$

(4.25)



$

(11.24)












Adjustments










Loss on impairment







4.10



11.11


Reorganization





(0.97)





0.06


Merger and integration costs


0.04









Discrete tax items


(0.22)




(0.01)



(0.19)



(0.03)


Total Adjustments


(0.18)




(0.98)



3.91



11.14


Adjusted diluted EPS


$

(0.54)




$



$

(0.34)



$

(0.10)


 

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SOURCE Noble Corporation

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