Offshore driller Noble Corp. has reiterated its belief in long term-oil market fundamentals despite posting a loss of $302 million in the first quarter of the year on revenues of $363 million.
The company said the loss would have been $42 million had it not been for a negative impact of non-cas discrete tax item of $260 million, following a previously announced internal reorganization that should enhance liquidity through a lower current tax expense.
For comparison, in the first quarter of 2016, the offshore driller posted a net income of $105 million, on revenues of $612 million.
The company said its average fleet utilization improved in the first quarter to 69 percent, up from 62 percent in the preceding quarter. However, Noble said, average daily revenues declined to $202,700 from $238,700 over the same period of comparison.
Despite an increase in operating days, contract drilling services costs declined nine percent in the first quarter to $160 million compared to $177 million in the preceding quarter.
“The favorable result was driven largely by lower activity in the floating rig fleet and a reduction in demobilization and repair and maintenance expenses, partially offset by a full quarter of operations on the Noble Lloyd Noble. With the further decrease in contract drilling services costs, the operating margin for the first quarter remained healthy at 55 percent compared to 56 percent in the preceding quarter,” Noble Corp said.
Looking ahead David W. Williams, Chairman, President and Chief Executive said: “We believe improving conditions in the offshore drilling industry are becoming clearer. Client tenders for both jackups and floating rigs are on the rise and include emerging regions, as well as previously active areas that have largely been dormant over the past two years. Also, contract awards, especially in the jackup sector, are occurring with greater frequency, and field development activity is up, relative to the recent past, as project cost rationalization efforts lead to better program economics. Finally, we believe long-term oil market fundamentals are supportive of stable to higher crude oil prices, which with time will support an increase in rig demand.”
The company said it added approximately 12 rig years in new contracts during the first quarter, equating to more than $650 million in revenue backlog, and closed the first quarter with all 14 jackups under contract, including 13 units currently executing drilling assignments.
At March 31, 2017, the company’s contract backlog totaled $3.5 billion with an estimated $2.0 billion relating to the floating rig fleet and $1.5 billion to the jackup rig fleet. Approximately 54 percent of the available rig operating days remaining in 2017 are committed to contracts, including 32 percent of the floating rig fleet and 77 percent of the jackup fleet. In 2018, 40 percent of available operating days are committed to contracts, including 29 percent and 50 percent of the floating and jackup rig days, respectively.
“We remain committed to preserving our excellent competitive position in the industry by building upon our operational and financial accomplishments of the past two years. I am proud of the consistency of our operational performance and the unwavering internal support of cost management initiatives. Also, our success with securing contracts, our backlog which includes numerous higher margin contracts, as well as the geographic positioning of our fleet, should drive future success. And finally, I am pleased with the healthy liquidity position we have preserved through the worst of the industry recession, as well as the manageability of our debt profile. We believe Noble is in an enviable position relative to our peers, as investors begin to shift their attention to 2018 and 2019,” Williams said.