Offshore drilling contractor Noble Corporation reduced its quarterly loss as its revenues grew during the second quarter of 2019, but the company was affected by a charge related to the Paragon Offshore spinoff.
Noble on Thursday reported a net loss attributable to the company for the second quarter 2019 of $152 million, on total revenues of $293 million. In the second quarter of 2018, Noble’s net loss was $628.1 million on total revenues of $258.4 million.
Results for the second quarter included a charge totaling $100 million related to the Paragon Offshore litigation; a net gain totaling $34 million relating to the release of reserves for tax positions following the settlement of the examination of the company’s U.S. tax returns for the years ended December 31, 2010, and 2011.
Excluding these items, the company would have reported a net loss of $86 million.
With regard to the Paragon Offshore litigation charge, which was recorded as a general and administrative expense, the company said it continues to believe that it acted properly and that Paragon was adequately funded at the time of the August 2014 spinoff. However, the matter involves complex factual issues, and there is inherent risk and uncertainty in this type of litigation, Noble said.
Commenting on the company’s quarterly performance, Julie J. Robertson, Chairman, President and Chief Executive Officer of Noble Corporation, stated, “Total fleet operating days in the second quarter were 13 percent better than the first quarter due to the addition of the Noble Johnny Whitstine and the completion of a reactivation program on the Noble Sam Croft.
“The increase in operating days raised our total fleet utilization to the highest level since the industry downturn began, with the jack-up fleet reaching an industry-best 98 percent in the quarter, while our floating rigs, excluding three-cold-stacked units, improved to 89 percent.”
‘Steady recovery apparent’
According to the rig owner, utilization of the company’s floating rig fleet, consisting of eight drillships and four semi-submersibles, continued to strengthen with second quarter utilization improving to 67 percent compared to 60 percent in the first quarter. Excluding three cold-stacked floaters, active fleet utilization for the second quarter was 89 percent compared to 80 percent in the prior quarter. The improvement was due largely to a full quarter of operations for the drillship Noble Sam Croft, which completed a reactivation project during the first quarter of 2019.
Utilization in the second quarter of the company’s jack-up fleet improved to 98 percent compared to 93 percent in the first quarter, driving an 11 percent advance in revenues. The increase was attributable to the beginning in April of operations on the Noble Johnny Whitstine offshore Saudi Arabia, and a full quarter of operations on the Noble Tom Prosser offshore Australia.
These improvements were partially offset by fewer operating days for the Noble Houston Colbert following the conclusion in June of a contract offshore Qatar. The rig is currently in transit to the UK North Sea where it is expected to start an estimated seven-month contract later this year. Also, project commissioning and customer requested upgrades continue on the recently acquired jack-up Noble Joe Knight. The rig remains on schedule for a September 2019 start of a three-year contract offshore Saudi Arabia.
The company reported a total contract backlog of $2.1 billion at June 30, 2019, including approximately $1.33 billion contributed by the floating rig fleet and approximately $820 million by the jack-up rig fleet.
Addressing industry conditions, Robertson noted, “Steady recovery remains apparent with the industry’s marketed contracted utilization for both jack-up and floating rigs individually reaching 81 percent at the close of June 2019, up from 74 percent and 76 percent for jack-ups and floating rigs, respectively, at the same time in 2018. Increasing customer demand for premium jack-ups is evident in regions such as Mexico, Southeast Asia and Australia, while a step-up in exploration activity is contributing to a build in the number of contracted floating rigs, including those deployed on deepwater programs.
“Through the first six months of 2019, ten deepwater exploration campaigns concluded with announced discoveries, setting a pace that could result in the strongest annual performance since the 22 discoveries in 2016.”
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