Noble Corp. - Complete Fleet Status As Of February 11 And Commentary About The Settlement With Paragon Offshore

| About: Noble Corporation (NE)
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Summary

Noble Corp., released its February fleet status on February 11. Not much to talk about really, no new contracts and the company is still negotiating with Saudi Aramco.

On February 12, Noble reached a settlement with Paragon Offshore in which NE will pay about $8 to 12 million in taxes to the Mexican authorities.

I believe NE should be accumulated on any weakness and this is exactly what I have done lately.

Source: Drillship Noble Bob Douglas

Noble Corporation PLC. (NYSE:NE)

This article is an update of my preceding article published on February 4, 2016 about the Fourth-quarter results and fleet status.

Complete Fleet Analysis and Fleet Status as of February 11, 2016.

FSR February link 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

636

Day rate includes mob. fee

[Anadarko]

GOM

2

Noble Bully I

2011

8.2/40 Mid 3/17

494

[Shell] GOM

5-Y survey 9/16

1Y priced option

3 x 1Y option unpriced

3

Noble Bully II

2011

8.25/40

Early 4/22

458

[Shell]

Brunei

4

Noble Don Taylor

2013

10/40 Late 2/19 489

[Shell]

US GOM

15% bonus eligible

5

Noble Globetrotter I

2011

10/40 Mid 7/22 449 (For 1st 5 years)

[Shell]

US GOM 15% bonus eligible

6

Noble Globetrotter II

2013

10/40

Early 9/23

460 (Fixed for first 5 years)

[Shell]

Congo

15% bonus eligible

7

Noble Sam Croft

2014

10/40

Late 7/17

643 Started 11/21/14

Day rate include mob. fee

[Freeport-McMoran]

US GOM

Renegotiation in Process/Idle 98%

8

Noble Tom Madden

2014

10/40 Late 11/17

637

Day rate include mob. fee

[Freeport-McMoran]

US GOM

Renegotiation in Process/ Idle 98%

2. Class: Semi-Submersibles

# Name

Spec.

K feet

Contract

End

Current

Day rate

$ k

Location
1

Noble Dave Beard

1986/2008

10/35 Late 4/16 235

[Petrobas]

Brazil

15% bonus

eligible

2

Noble Paul Romano

1981/1998

6/25

Mid 9/16

302

[Hess]

USGOM

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 2Q'16(60d)

2

Noble LLoyd Noble

2Q'2016

($460 million final payment)

492/32

2Q'16

3Q'16-3Q'20

Transit

447 (including mobilization revenue)

[Statoil] UKNS
3

Noble David Tinsley

1981/

2004/2010

300/25

12/17

85

Arabian Gulf

4

Noble Gene House

1981/1998

300/25

Mid 11/18

TBD

[Aramco] Arabian Gulf
5

Noble Hans Deul

2009

400/30

Early 8/16

235

[Shell]

UK

North Sea

6

Noble Houston Colbert

2014

400/35

Early 4/16

4/16- Early 6/16

243

175

[Total] Argentina

2-months priced option

7

Noble Joe Beall

1981/2004

300/25

Mid 11/18

TBD

[Aramco] Arabian Gulf

8

Noble Mick O'Brien

2013

400/35

Shipyard

(3/16-6/16) to (4/17-7/17)

Available

150

UAE

NE can substitute another rig.

9

Noble Roger Lewis

2007

400/30

Early 3/17

TBD

[Aramco] Arabian Gulf

0-rate 4Q'16(30d)

10

Noble Sam Hartley

2014

400/35

Mid 1/19

111

[Total]

Brunei

11

Noble Sam Turner

2014

400/35

Late 6/16

Late 6/16 -8/18

197

96.5

[Maersk]

Denmark

12

Noble Scott Marks

2009

400/30

Early 7/17

TBD

[Aramco] Arabian Gulf

(30d)4Q'16

13

Noble Tom Prosser

2014

400/35

Early 4/17

203

[Apache

Quadrant En.]

Australia

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

/shipyard

Italy
2 Noble Max Smith (10/14) SemiSub 1980/1999 Available Singapore
3 Noble Regina Allen (12/15) JU 2013 Ready Stacked Denmark
4 Noble Clyde Boudreaux (12/15) SemiSub 1987/2007 Idle Singapore
5 Noble Amos Runner (2/16) SemiSub 1982/1999 Ready stacked GoM
6 Noble Jim Day (1/16) SemiSub 1989/1999/2010 Idle GoM
7 Noble Dany Adkins (2/16) SemiSub 1989/1999/2009 Idle GoM

The Company has decided to retire the drillship Noble Discoverer and the jackup Noble Charles Copeland, reducing its fleet count to 30 units.

Noble Fleet Snapshot

Total Drill-ships Semi-submersibles Jack-ups
Noble Corp. 24 8 2 13
Cold-stacked - Idle - Not contracted 7 0 6 1
Total 30 8 8 14
Fleet age average in year - 3 25 5

Backlog Detail:

Noble Corp. can be proud of its impressive contract backlog totaling approximately $6.96 billion in February 2016. I commented recently about the backlog remaining as of January 2016 and details.

Noble Sam Turner was awarded a two-year contract extension, placing the rig under contract through late-August 2018. As part of the extension, the rig's dayrate was reduced to $197,000 effective December 3, 2015, from a previous dayrate of $218,000 and the two-year extension will begin in late-June 2016 at a dayrate of $96,500.

Rig name $ million
Noble Bob Douglas 239
Noble Bully I 200
Noble Bully II 1016
Noble Don Taylor 541
Noble Globetrotter I 1044
Noble Globetrotter II 1258
Noble Sam Croft 344
Noble Tom Madden 418
Noble Discoverer (Lump-Sum) 122
Noble Dave Beard 20
Noble Paul Romano 68
Noble Alan Hay 58
Noble Lloyd Noble 644
Noble David Tinsley 58
Noble Gene House 138
Noble Hans Deul 51
Noble Houston Colbert 32
Noble Joe Beall 136
Noble Mick O'Brien 54
Noble Roger Lewis 86
Noble Sam Hartley 118
Noble Sam Turner 103
Noble Scott Marks 124
Noble Tom Prosser 87


Commentary:

Noble Corp. released its February fleet status on February 11, 2016. Not much to talk about really, no new contracts, and the company is still negotiating with Saudi Aramco for its jackups. In fact, no news is good news, right now, as you can imagine.

Freeport-McMoRan (NYSE:FCX) has decided to idle the two rigs on location in the Gulf of Mexico, and pay 98% of the dayrate. I indicated the Noble Dany Adkins as idle, however, it should be really next week.

One quick look at the contract backlog is showing what is the main issue, that the entire offshore drilling industry is facing as we speak.

Most of the companies that I am following in this sector, have enough "fuel" to feed the engine for basically two more years, assuming no new contracts. Time is of the essence, and the only unknown is oil prices.

What investors, such as myself, are evaluating is whether or not this bear cycle will end "soon enough" to allow the industry to avoid a potential financial catastrophe. Because, the price of oil is merely one piece of the puzzle. The real issue is the tendering activity in 2017-2018.

Offshore drilling, as any other type of drilling, needs a price of oil between roughly $45 to $80 per barrel depending on the location. In short, oil must trade around $60 per barrel, for a little while, to convince big oil operators to start again investing in CapEx for exploration. Many CEOs in the oil business are confident it will get better in 2017-2018.

Noble has a large UDW drillship fleet, which is the actual strength of the company. However, this situation will be reversed in 2017 where four drillships will be rolling off contract.

I believe this financial situation will force Noble to suspend the dividend as many other offshore drillers did already. The company is still paying $0.60 per share which is a cost of $145 million per year. This is a luxury that NE cannot afford in 2016, and I do not understand why NE is so reticent to act, once and for all, on this non issue?

On the final note, Noble announced on February 12, 2016, the following:

A settlement agreement in principle with Paragon Offshore plc (PGNPF), the company spun-off by Noble in 2014, following the public announcement by Paragon that it has reached agreement with certain of its creditors in connection with its previously announced restructuring efforts and intends to seek court approval of a pre-negotiated bankruptcy plan.

Pursuant to the terms of the settlement between Noble and Paragon, once the settlement agreement becomes effective, Paragon would release Noble from all claims relating to the spin-off of Paragon by Noble in 2014, including any fraudulent conveyance claim that could be brought on behalf of Paragon's creditors, and Noble would assume certain pre-spin-off obligations relating to Paragon's Mexican tax matters.

In exchange for the release, Noble would take control of the administration and defense of Paragon's Mexican income, value-added and customs tax audit and assessment matters for specified years up to and including 2010. For the pertinent years, Noble would assume the Mexican income and value added tax liabilities relating to the Paragon business arising out of the audit and assessment process to the extent incurred in Noble's own legal entities. Paragon and Noble would equally share the other income, value-added and customs tax liabilities arising out of such audit and assessment process. Noble would post any required tax appeal bond, and Noble and Paragon would share the other costs of administering and defending these tax matters. Paragon would retain liability for all years not covered by the agreement. Noble is not making any cash settlement payment or assuming any other obligations in exchange for the release.

The Company expects the tax liability payments related to the settlement to be spread over a number of years. Based on its understanding of these matters and its experience to date in Mexico, the Company currently expects the net amount that it will actually pay over the period of the settlement for its portion of the taxes to be in the range of $8 to $12 million, although the final amount and the timing of such payments will depend on a number of factors. Once the settlement with Paragon is approved by the bankruptcy court, the Company would take a charge related to such payments as well as its share of the expenses expected to be incurred in connection with those tax liabilities

I am glad Paragon Offshore and Noble, have reached a settlement and put this issue behind, and for so little. Noble may have to pay approximately $8 to $12 million to the Mexican authorities spread over many years. However, I am not sure the PGNPF shareholders will be happy with this "settlement"?

Conclusion:

Noble presents a good balance sheet and balanced rig fleet, with a manageable long-term debt, and will be a survivor without a doubt. However, the oil situation is getting really serious and it is of a paramount importance that OPEC and Russia work together to lower oil production as soon as possible and allow the oil prices to get back to over $50 per barrel. I believe NE should be accumulated on any weakness and this is exactly what I have done lately.

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.

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