Noble Corporation plcNYSE
Noble Corp: How To Value It In The Down Cycle And Is It A Buy?
Alec Mazo • 30 Comments
Alec Mazo • 30 Comments
Fri, Oct. 7, 8:00 AM
Thu, Sep. 22, 2:10 PM
Wed, Sep. 21, 3:43 PM
- Diamond Offshore (DO +3.6%) is downgraded to Sell from Neutral with a $10 price target, while Noble Corp. (NE +5.3%) is upgraded to Neutral from Sell with a $4 target, at Goldman Sachs, which foresees weakness in the offshore rig market likely persisting through 2020.
- Goldman says DO is significantly over-earning vs. the spot market, and with key above-market contracts set to expire through 2020, the company’s EBITDA likely will decline by 40% annually vs. 10% for NE, which already has suffered a sharp EBITDA correction.
- The firm expects demand for jack-up rigs to recover before demand for floaters, and DO has the least jack-up exposure within the peer group while NE enjoys significantly higher exposure to jack-ups.
- Evercore ISI recently upgraded DO to Buy amid signs of hope for the offshore rig market.
Tue, Sep. 20, 3:45 PM
- Diamond Offshore (DO +2.4%) is upgraded to Buy from Hold at Evercore ISI, which believes the unwinding of shorts as oil prices firm and an offshore rig market bottom materializes over the next 6-12 months could be a catalyst for offshore drillers.
- The firm notes the recent news that the Rowan Reliance drilling contract may be terminated early - the news was expected but was surprised that the company said an exclusive five-year service agreement could be in lieu of a contract termination; it sees the modified blend-and-extend agreement suggests the operator could see a potential offshore rig market bottoming by March 31 and tightening within the next 12 months.
- Evercore continues to rate Ensco (ESV -1.4%), Rowan ([[RDC] -0.5%) and Noble Corp. (NE -2%) as Buys, "as this select group of offshore drillers will be survivors of the current multi-year cyclical downturn."
Fri, Sep. 16, 9:13 AM
- Noble Corp. (NYSE:NE) says in its latest fleet status report that it reached agreement with Hess for an extension for one of its deepwater rigs in the Gulf of Mexico but at a $128.5K dayrate, 58% lower than the previous contract for $304K; the extension is estimated at ~80 days.
- NE also says it has found work for a currently stacked jackup rig beginning next month, but contract terms were not disclosed.
Thu, Aug. 25, 12:27 PM
- Transocean (RIG +1.4%) is upgraded to Neutral from Sell with an $11 price target at Citigroup, which says RIG has exceeded expectations for cost reductions while the backlog remains superior to peers.
- Citi says that while RIG's EBITDA should steadily decline, the company does not face an EBITDA cliff unlike some peers, and the company also was able to issue debt which has lowered bond yields.
- Among offshore drillers, Citi rates Ensco (ESV +0.1%), Diamond Offshore Drilling (DO +0.1%), Noble Corp. (NE -0.6%), Atwood Oceanics (ATW -1.4%), Rowan (RDC -0.6%) and RIG at Neutral, while Pacific Drilling (PACD -2.7%) remains rated a Sell.
Wed, Aug. 17, 12:59 PM
- RBC Capital trims estimates after taking a look at the new fleet report from Noble Corporation (NE -2.3%).
- The investment firm sees a negative penny impact from Noble Bob Douglas and a $0.06 hit to Noble Tom Prosser after factoring in the new dayrates.
- RBC's broad look at the sector: "We expect the group to continue to underperform through 2017. While the offshore drillers continue to execute well in a tough market, the overall fundamentals for the space remain negative for the foreseeable future."
- Shares of Noble are down 39% YTD including today's dip.
- Noble Fleet Status Report (.pdf)
Tue, Aug. 16, 12:44 PM
- Marathon Oil (MRO +2.1%) is higher after BofA/Merrill Lynch upgrades shares to Buy from Neutral with a $21 price target, saying it believes management can resume growth in oil and gas production in 2017 as the addition of the STACK play likely dominating incremental drilling activity starting in H2.
- The firm says MRO is one of the most oil levered large-cap U.S. oil names, which positions the stock for upside to peers based on a binary outcome of higher oil prices; during recent months, MRO also has improved the balance sheet, increased capital flexibility and scooped up PayRock Energy Holdings.
- The MRO move is part of BofA/Merrill's more upbeat outlook for the broader energy sector, noting that when oil has rallied more than 25%, energy has outperformed the market nearly 90% of the time; the firm also upgrades Noble Corp. (NE -2.9%) and Patterson-UTI Energy (PTEN +1.9%) to Neutral from Underperform, and adds Devon Energy (DVN +1.8%) to its US 1 List.
Fri, Aug. 12, 5:30 PM
- It's still too early to get involved in offshore drillers, RBC analysts say as they expect the group to continue to underperform through 2017 with the supply overhang requiring years to balance out.
- The firm says drillers will need to continue the current pace of rig retirements and retire an additional ~110 rigs by 2020 to balance the market, another 70 retirements are still needed to balance the floater market, and the jackup market will need ~40 additional retirements over the next four years to reach mid-cycle equilibrium by 2020.
- RBC cuts its price targets for Transocean (NYSE:RIG) to $11 from $14, Diamond Offshore (NYSE:DO) to $23 to $29, Atwood Oceanics (NYSE:ATW) to $11 from $14, Rowan (NYSE:RDC) to $16 from $22, and Noble Corp. (NYSE:NE) to $8 from $11.
Wed, Aug. 10, 2:28 PM
- Noble Corp. (NE -5.1%) is downgraded to Sell from Hold at Argus on declining offshore drilling activity and balance sheet concerns.
- Argus says NE has seen little benefit from its fleet of high-spec rigs, as fleet utilization and day rates fell again in Q2, and has been hurt by the early termination of drillship contracts with more possible cancellations still ahead.
- The firm also notes that NE will now face higher borrowing costs following credit downgrades from S&P and Moody's.
- The firm cuts its 2016 EPS estimate to $0.20 from $0.61, and widens its 2017 loss estimate to $0.47/share from $0.42.
Wed, Jul. 27, 6:58 PM
- Noble Corp. (NYSE:NE) -0.5% AH after missing Q2 earnings estimates and lowering its full-year capital spending outlook.
- NE says Q2 contract drilling services revenues totaled $877M, helped immensely by a $379M gain from a settlement with Freeport McMoRan (NYSE:FCX), which canceled a contract during the quarter; without the settlement, contract drilling services revenues were $484M, down 18% from $591M in Q1, driven by a reduction in fleet operating days, with fleet utilization declining to 65% vs. 79% in Q1.
- NE's average dayrate for Q2 was $509,145; excluding the FCX settlement, NE earned only $280,884 per rig, down from ~$287K in Q1 and ~$340K in the year-ago quarter.
- NE also cuts its full-year capex estimate to $675M from $800M, saying "industry conditions remain challenging."
Wed, Jul. 27, 5:57 PM
- Offshore drilling stocks were slammed today as crude oil prices fell to three month lows, but Atwood Oceanics (NYSE:ATW) took the worst beating, -8.6% following its latest fleet status update.
- The contract for the Atwood Osprey rig, which had been expected to start working for Woodside Energy until January 2017 at a $450K dayrate, was extended but at a new rate of $190K; also, no contracts were announced for two uncontracted, newbuild drillships despite talk of a potential Brazil agreement in the works.
- Also in today's trade: RIG -4.1%, DO -3.1%, RDC -4.6%, ESV -4.7%, SDRL -0.6%, NE -3%.
Wed, Jul. 27, 5:02 PM
Tue, Jul. 26, 5:35 PM
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Fri, Jul. 22, 2:23 PM
- Transocean (RIG -5.5%) falls more than 5% after its latest fleet status report showed it stacked an additional six rigs, taking its total number of currently stacked rigs to 28, with reduced dayrates for others.
- RIG says it won a two-year contract for one of its semi-submersibles to operate off India for ONGC at a $127K dayrate, and a newbuild ultra-deepwater rig started operations on a 10-year contract in the Gulf of Mexico at a $498K dayrate.
- Following the report, RBC's Kurt Hallead says RIG shares have limited upside until the market gains more confidence in the supply and demand outlook for floating rigs in 2017-18. Currently, fundamentals continue to weaken for floating rigs, and it remains unclear where dayrates and utilization may bottom.
- Offshore drillers are broadly lower: RIGP -1%, DO -1.5%, ESV -4.2%, RDC -5%, SDRL -1.6%, NE -4.8%, ATW -3.6%, PACD -3.8%.
Fri, Jul. 22, 10:20 AM