Noble Corporation - Complete Fleet Analysis As Of November 22, 2016, And Commentary

| About: Noble Corporation (NE)

Summary

Noble released its November fleet status report. No bad news or early termination this month.

Gulf of Mexico: Noble Paul Romano contract extension: Mid-December 2016 to Late May 2017 at a day rate of $128.5K or a backlog addition of $21 million. Total contract backlog.

I am confident NE is a survivor and believe the stock price is still undervalued.

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Noble Corporation plc (NYSE:NE)

This article is an update of my preceding article published on October 20, 2016, about the August fleet status.

Complete Fleet Analysis and Fleet Status as of November 22, 2016.

Link of the fleet status released by the company, [click here].

1. Class: Drillships

# Name

Spec.

K feet

Contract

End

Current

Day rate

K$

Location

(0-rate)

1

Noble Bob Douglas

2013

10/40

Mid 2/17

4/17 - 6/17 (60-day?)

636

$290?

[Anadarko]

GOM

[Apache]

Suriname

2

Noble Bully I

2011

8.2/40 Mid 3/17

488

Options for extensions have lapsed.

[Shell]

GOM

5-Y survey 9/16

0-rate (14d) 4Q'16 for thruster repair

3

Noble Bully II

2011

8.25/40

Early 4/22

456

[Shell]

Malaysia

4

Noble Don Taylor

2013

10/40 Late 2/19 482

[Shell]

US GOM

15% bonus eligible

Decline in day rate due to reduction in crewing level as requested by client

5

Noble Globetrotter I

2011

10/40 Mid 7/22 436 (For 1st 5 years)

[Shell]

US GOM 15% bonus eligible

(15d) 4Q'16*

6

Noble Globetrotter II

2013

10/40

Early 9/23

434 (Fixed for first 5 years)

[Shell]

Tanzania

15% bonus eligible

Decline in day rate due to reduction in crewing level as requested by client

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* Globetrotter I: Experienced 21 days planned out‐of‐service period at zero day rate for BSEE required BOP certification and five‐year special periodic survey. This work was planned for early 2017, but was accelerated to accommodate client schedule.

2. Class: Semi-Submersibles

# Name

Spec.

K feet

Contract

End

Current

Day rate

$ k

Location
1

Noble Paul Romano

1981/1998

6/25

Mid 12/16

Mid 12/16 - late 5/17

128.5

128.5

[Hess]

USGOM

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4. Class: Jack-Ups

# Name

Spec.

Feet/K feet

Contract

End

Current

Day rate

Location
1

Noble Alan Hay

1980/2005

300/25

Late 12/17

85

Arabian Gulf

0-rate 3Q'16 (55d) for SPS

2

Noble Lloyd Noble

2Q'2016

($409 million final payment)

492/32

late 11/16

late 11/16 - Late 11/20

Acceptance testing

447 (including mobilization revenue)

[Statoil] UKNS

2-year priced option

3

Noble David Tinsley

1981/

2004/2010

300/25

Late 12/17

85

Arabian Gulf

4

Noble Gene House

1981/1998

300/25

Mid 11/18

65

[Aramco] Arabian Gulf

(30d) 3Q17

5

Noble Hans Deul

2009

400/30

8/18

88 ("1")

[Shell]

UK

North Sea

6

Noble Joe Beall

1981/2004

300/25

Mid 11/18

65

[Aramco] Arabian Gulf

(90d) 1Q17

7

Noble Mick O'Brien

2013

400/35

8/17

150

UAE

8

Noble Roger Lewis

2007

400/30

Early 3/17

167

[Aramco] Arabian Gulf

0-rate 1Q'17 (15d)

9

Noble Sam Hartley

2014

400/35

Mid 1/19

111

[Total]

Brunei

10

Noble Sam Turner

2014

400/35

Late 8/18

96.5

[Maersk]

Denmark

11

Noble Scott Marks

2009

400/30

Early 7/17

167

[Aramco] Arabian Gulf

(30d) 1Q'17

12

Noble Regina Allen

2013

300/25

12/16

12/16 - Early 5/17

Available

Not disclosed (55k/d?)

[Not disclosed]

UK NS

13

Noble Houston Colbert

2014

400/35

12/16

12/16-5/17

Warm stacked

Not disclosed (80k/d?)

[JX Nippon]

Qatar

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("1") Client has the right to early terminate the contract for convenience subject to a notice period and, in some circumstances, a retroactive day rate adjustment.

Rigs available, ready stacked or cold stacked, idle.

# Rig name/shipyard date Type Year built Status Location
1 Noble Homer Ferrington (1/14) SemiSub 1985/2004

Cold Stacked

Italy
2 Noble Max Smith(10/14) SemiSub 1980/1999 Preparing for cold stacked Singapore
3 Noble Clyde Boudreaux (12/15) SemiSub 1987/2007 Warm stacked Singapore
4 Noble Amos Runner(2/16) SemiSub 1982/1999 Cold stacked GoM
5 Noble Jim Day (1/16) SemiSub 1989/1999/2010 Cold Stacked GoM
6 Noble Dany Adkins(3/16) SemiSub 1989/1999/2009 Preparing cold stacked GoM
7

Noble Sam Croft(5/16)

Drillship 2014 Warm stacked GoM
8 Noble Tom Madden(5/16) Drillship 2014 Warm Stacked GoM
9 Noble Dave Beard(4/16) Semi-sub 1986-2008 Cold stacked Singapore
10 Noble Tom Prosser(9/16) JU 2014 Available En route Middle East
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Noble Fleet Snapshot

Total Drill-ships Semi-submersibles Jack-ups
Noble Corp. 20 6 1 13
Cold-stacked - Idle - Not contracted 10 2 7 1
Total 30 8 8 14
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Backlog Detail:

Noble Corp.'s contract backlog totaled approximately ~$4.51 billion as of November 22, 2016.

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Commentary:

Noble Corp. released its November fleet status, and I noticed a few changes that deserve some comments:

1 - The Semi-Submersible Paul Romano got a contract extension with HESS in the Gulf of Mexico from mid 12/16 to late May 2017. This is about 162-day @128.5K/d or about $21 million in backlog.

2 - The Semi-Submersible Noble Danny Adkins is being prepared to be cold stacked.

3 - The Jack-up Noble Lloyd Noble is ready to commence her contract with Statoil at $447k/d.

The market is still a "tough cookie", and new contracts are hard to come by, these days. However, the company managed to get a contract extension with Hess in the Gulf of Mexico.

The backlog is down less than 5% month over month, which shows a slowing but still negative trend. Based on a quarterly revenues average of $500 to $600 million, NE needs a monthly contract addition of approximately $150 million to keep its backlog constant and it is not doing that obviously.

The company has now six rigs cold stacked or "about to be" cold stacked, and three floaters warm stacked. The semi-Submersible Noble Clyde Boudreaux, and the two drillships terminated by Freeport McMoran, the Noble Sam Croft and the Noble Tom Madden. My suggestion to the company is that one of the two drillships actually warm stacked should be cold stacked instead.

The market is too weak to keep two drillships ready when one a certainly enough and save probably $35k/d which is about $12 million a year.

Another topic that I will discuss here is about the recent announcement by Rowan Companies who have agreed to form a 50/50 joint venture with Saudi Aramco. The question is, of course, what will be the long term incidence of this new collaboration for Noble, Ensco (NYSE:ESV), Seadrill (NYSE:SDRL) and a few others who have a significant fleet working already long term for Saudi Aramco?

I commented on the news, on November 21, 2016. [Click here]

Rowan Companies (NYSE:RDC) and Saudi Aramco have signed an agreement to create a 50/50 joint venture to own, run, and manage offshore rigs in Saudi Arabia, starting 2Q'17. The new company will operate five jack-ups and will manage another five jack-ups. Two more jack-ups will be added by RDC in 2018. Initial working capital with be $50 million.

It is clear that this new venture can be seen as a threat for a few companies already working for Saudi Aramco, especially small struggling companies. We will have to monitor the situation in 2017, and see what could be the financial effects on Noble and Ensco in the Middle East.

A similar 50/50 JV could eventually be created with National Drilling Company "NDC" in UAE, which operates about 18 Jack-ups offshore and is contracting numerous others in the region, such as a few jack-ups from Paragon Offshore (OTCPK:PGNPQ), the Jack-up Noble Mick O'Brien or the Jack-up Ensco 110. This could be a potential for Noble or Ensco.

Conclusion:

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In my preceding article I called a bottom between $4.50-$5.00 with a potential of a positive breakout as a conclusion. The graph shows a clear descending triangle at the end of the cycle.

This is exactly what happened and the stock is now close to the $6 level. We need confirmation, of course, but the chart is encouraging and suggests clearly higher highs, especially if the oil prices turn bullish again. No guarantee though and risk is still high.

I believe NE is a long term investment, and should be accumulated. This bear cycle will end and the ones who can invest for the long term will probably get a nice return on their investment.

Disclosure: I am/we are long NE.

I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Additional disclosure: I trade the stock as well on special occasions.