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Noble Recent Fleet Status Report Is Not Inspiring

Feb. 11, 2019 12:51 PM ETNoble Corporation Plc (NE)168 Comments


  • Noble's contract backlog totaled an estimated ~$2.4 billion on February 7, 2019.
  • No new contracts this time, and the Jack-up Noble Gene House was retired in December 2018.
  • It is imperative to trade a large part of your NE position to be able to survive this volatile environment.

Image: Drillship Noble Tom Madden. Source: MarineTraffic.

Business Thesis

Noble Corp. (NYSE:NE) is a puzzling offshore drilling company. The reason is apparent because it was perhaps the most likely to be acquired, and while others like Transocean (RIG) and Ensco (ESV) have since engaged in such transactions multiple times, oddly, Noble has not been able to make the move that I was expecting about a year ago.

Last year, I predicted wrongly that Diamond Offshore (DO) and Noble could be a good match and by merging into one new entity, they could create a stronger company.

I was wrong, and nothing happened. The idea is becoming even more improbable now after the oil prices significantly began to weaken in October 2018, and never regained the level of strength that could allow sufficient confidence in the future.

It signaled the start of a new period for Noble, who will have to fight alone those harsh headwinds, which have slowed down and almost ended the company's effort to financial recovery.

The fact is that the Oil services is a cyclical industry which is highly dependent on oil and gas prices. NE is highly correlated to oil prices. Hence, it is imperative to trade a large part of your position to be able to survive this volatile environment which is here to stay and may get even worse in 2019.

Noble Corp. is showing a firm contract backlog that I have estimated at ~$2.3-$2.4 billion as of February 7, 2019.

Complete Fleet status and fleet analysis as of February 7, 2019.

1. Class: Drillships

# Name






Day rate





Noble Bob Douglas




Not disclosed ($220k/d?)

[Exxon Mobil (XOM)]



Noble Bully II



Commitment split 50/50 - Joint Venture

This article was written by

Fun Trading profile picture

I am a former test & measurement doctor engineer (geodetic metrology). I was interested in quantum metrology for a while.

I live mostly in Sweden with my loving wife.

I have also managed an old and broad private family Portfolio successfully -- now officially retired but still active -- and trade personally a medium-size portfolio for over 40 years.

“Logic will get you from A to B. Imagination will take you everywhere.” Einstein.

Note: I am not a financial advisor. All articles are my honest opinion. It is your responsibility to conduct your own due diligence before investing or trading.

Analyst’s Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. 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.

I am only day trading or trading short term the stock now.

Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.

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Comments (168)

WhyNotBuy profile picture

Shale nightmare unfolding. No one is funding this scam industry any more. XOM wins in that it now controls the industry so just one more tool in it's tool box. IMHO
WhyNotBuy profile picture
I added another 1850 share JUST this week at rock bottom prices. Chowing down on this company - chop chop. IMHO
Fun Trading profile picture

Good luck to you... Please, be careful and do not invest all your money on NE. The potential for gain at this level is real but the company future is not necessarily bright and a lot could go wrong. Do not forget to trade the stock!
WhyNotBuy profile picture
I am mostly in real estate with LOTS of equity and a retirement account that would make your eyes POP along with a 34 year pension and many great dividend champions. My oil holding is a mere 22% of my apple. I live in my truck so I have no bills to speak of. I am just having a blast here watching the petro-dollar fail. Best time I have had since 2008. IMHO
Fun Trading profile picture

You are really something... I think you are managing your finance quite good but why living in your truck if you are mostly in real estate?
Thanks FT
Fun Trading profile picture
You are welcome aalam, it would be great if you could tell us what you think about the debt?

Best regards,
Sharp15 profile picture
See NE presentations. NE runway until 2024. See latest NE presentation for jackup rig utilization. They are doing wonderful.
Hi Fun, Do you know their loan payment schedule? I tried to find it in their website but could not find it. Thanks.
WhyNotBuy profile picture
Many SA authors will not post what you ask for because that is positive news. No real debt to worry about until 2024. FT may post it here for you so let us wait and see? IMHO
Fun Trading profile picture

Look at the last 10K (2017) waiting for the 10K 2018...


Page ~37 to 40

Best regards,
Sharp15 profile picture
NE management is executing really well. Debt is not an issue until 2024.
Buying and holding NE since 2014 (which I have), has been an economic opportunity cost. If anyone follows portfolio theory, it doesn’t take an idiot to see you would have made more return (buying and holding) by now just putting the same cash in an S & P 500, Consumer Discretionary, Small Cap, or Defense and Aero ETF.

Because painful mistakes and endless debates here has changed my strategy I wholeheartedly agree going forward the only way to make money is trading it without the morale debate of right or wrong choices that can’t be debated for years to come with so many uncertainties clouding a fair assessment at this time. Unless something unexpected happens, I am not adjusting my strategy off the short/term.
Fun Trading profile picture

Excellent philosophy. Short-term is what applies to the offshore drillers.

Best regards,
WhyNotBuy profile picture
I am accumulating long term at 30 year lows on the worst petrodollar war in history since QE 1,2,3 have left the dollar worthless and devalued. The Central Banks are even now buying gold at the fastest pace ever. Accumulate brothers. IMHO
Fun Trading profile picture

As long as it is a small part of your position, it is a risk you can take but do not go overboard.

Best regards,
Sharp15 profile picture
Read news for today. So NE purchased 2 jackups in the last few weeks. NE management is executing really well.
Bulldog67 profile picture

You can put away your pom poms! You are not going to get the stock to $7 with all your bullish comments!

No one that I have read on SA is recommending shorting NE at current prices! After the stock has been more than cut in half, from $7 to $3, currently this would be a terrible short sale candidate. The time to short was last October when it was @ $7. While you may see that price again, it is going to take strongly rising oil prices, and more profitable contracts. Those events will move the stock .... not your bullish comments!

Your constant bullish rantings sound like a desperate man trying to get the stock back to the price of your cost basis.
Sharp15 profile picture
I never said my comments will move the stock price. Go see the new target for NE by the analyst few days ago. Tell him hey analyst this is not going to happen because you say so. NE has enough runway to 2024 for this company to make a comeback and go much higher than $7. NE has NO new builds to finance and has strong credit facility that has not been used. Yes the price of oil is moving higher and will be a factor. But NE management cares about its shareholders and is taking the right steps. There are those who want to emphasize the weaknesses but not the strengths.
Bulldog67 profile picture
@Sharp15 ,

Actually you may be surprised, but I don't disagree with you regarding NE's runway till 23-24. That is IF we get rising day rates, but I do expect that to occur by that time frame. Those looking for much higher day rates in 2019 are going to be disappointed.

However, anyone investing in NE has to be aware that it is a high risk (probably the highest risk of the legacy drillers), and that NE has a weak balance sheet that will get even weaker before it gets better. Just want to make sure that those who never look at debt/equity ratios know what they are buying!
Sharp15 profile picture
NE purchased another jackup and on contract for 3 years with 1 year option.
The contract is with Aramco. NE is managing really well. It is stupid to short NE.
Stick a fork in this. After defrauding hapless suckers with Paragon this management team should be drawn and quartered.
Fun Trading profile picture

You should ask Bulldog about Paragon spinoff, he made some good profit at the time. You could have sold your shares at around $11 if I recall. However, after the oil crash....
Do you still own NE?

Best regards,
Henrik Alex profile picture
The company is by far the weakest of the larger industry players right now (except for SDRL/SDLP). Low cash balances, huge debtload. But this doesn't mean they will go bankrupt anytime soon. Just like most of its peers, they will be fine until 2023.
WhyNotBuy profile picture
Low cap x WITH NO NEWBUILDS unlike other drillers so the balance sheet is misleading and many balance sheets have not taken huge impairments yet as has NE. NE is by far the best driller out there brother and you know that. Best operational company as well. IMHO
Fun Trading profile picture

Sorry but I am not sure you are right here? NE is struggling and alone, the company will be pressured and struggled to compete against stronger OSD.

Best regards,
Sharp15 profile picture
NE is NOT struggling. Just purchased another jackup. Runway until 2024.
WhyNotBuy profile picture
Oil is rising as if the Venezuela oil is already back on the petrodollar but that is NOT yet the case. If the USA blocks vessels at sea, and Russia does not intervene as they did in Syria, then we will see massive oil move up. The geopolitical landscape is in fact a seascape. IMHO
BMoney$$ profile picture
@Fun Trading @Bulldog67 @Aventador @Henrik Alex @Vladimir Zernov

There still seems to be a lot of chit-chat regarding the ability of NE to stay afloat. The whole offshore sector is currently at an unseen level and 2019 will be a pivotal year in determining the long-term future of not only Noble but likewise its offshore competitors. I have taken notice that each one of us holds a particularly distinct view on the future prospects of NE but one thing none of you should deny-This is a great level to accumulate at!

Saudi Arabia has come to its senses and began announcing production cuts to attempt balancing its budget. For anyone that truly understands oil, you should know that production cuts take months to take there effect on the price of oil. The first impact wave on the price of oil should take effect at the start of March with the peak effect being during the month of June.

We all know the backbone of all offshore stocks is the price of oil. Higher sustained oil prices=Gains in offshore stocks. On another note, I advise you all to take heed of NE's most recent Credit Suisse Energy Summit Conference Call in which the CFO Adam Peakes raised some very interesting points.

Although NE has a significantly smaller fleet than its competitors there is no denying that management has done a good job of keeping their rigs active. Of the 24 total rigs that which include 8 drillships, 4 semis, and 12 jack-ups, the number of available operational days in 2019 that are under contract is close to 75%. All 12 jack-ups are under contract and all but 1 drillship is currently active. Now I agree that day-rates are not anywhere near there highs but Mr. Peakes referred to the undisclosed day rates of the jack-up backlog to be at "enticing levels". If this is still not enough to convince you NE is worth accumulating take a look at the future of some of their rigs.

-Noble Tom Prosser JU in Australia will stay under contract until April 2020 with extended contract options available.
-Noble Hans JU in the North Sea will remain under contract until mid-July of this year with extended well options available.
-Noble Tom Madden and Bob Douglas are reaping the benefits of drilling in Guyana with the possibility of extension contracts for both of them.

My point is despite the low day-rates NE has done an equal if not, a better job than its competitors in maintaining high utilization rates and taking advantage of contracts that come their way. Another thing I should note is management has recently stated "We fully recognize the large amount of debt as others in the sector also hold. The strategy is to position the company to grow in a balance sheet enhancing way." It is not fair to just pick on Noble as Fun Trading has done when ESV, RDC, RIG, and DO all also hold sizeable amounts of debt.

I am not in any way a believer we see NE at its 2013 highs anytime soon but I am a strong believer in a touchback to the $6-$7 range in the coming months. For now, I am long the whole offshore sector and truly believe we have all set our eyes on exceptionally enticing prices. Take advantage, accumulate what you can, and wait for the ride up;)
Fun Trading profile picture

Thank you, very good comment that covers well what is at stake here.

"I am not in any way a believer we see NE at its 2013 highs anytime soon but I am a strong believer in a touchback to the $6-$7 range in the coming months."

Your target is possible assuming that oil prices can really take off and trigger a recovery in this sector. I mean a meaningful recovery with higher daily rates, which is anything but hypothetical now.
However, we are in 2019 and it is more apparent that any potential recovery will take place in late 2020 or later. Read the cc from DO.
Thus, NE is entering a difficult period with new lows and new lower highs in my opinion. The question is not how high it will go but how cheap it will get before a rebound can be seen ahead?
Look at the TA pattern and you will see that NE may eventually test $2 (just a fact not a desire in any form). When NE will be cheap enough and recovery will be more evident, then your words will come true hopefully.
Trade NE with this thinking in mind.

Best regards,
WhyNotBuy profile picture
NE Shorts must run their game as must longs. The driving motivation of the short and cloudy falling sky narrative is not always based on fact or deductive reasoning but on game-bias. Accumulate like it's 1999 brother. IMHO
WhyNotBuy profile picture
NE stated on the call that the best way to increase day rates is for a client to re-contract a rig already working even if NE increases the day rate and normally the client is willing to pay a bit more and does not want to lose the rig that they are already using and familiar with. So day rates may increase for reasons beyond just math utilization. I found this comment interesting brothers. IMHO
WhyNotBuy profile picture
Just fed my pet raccoon in PV and listened to the call and it appears the second JU purchase is almost complete and news should be out soon. NE may also expand its DW fleet but not at the expense of shortening it's 2024 runway safety. The JU will be seller financed with part cash but any future DW ship would of course require equity selling at least in part. NE will survive easily but it will be a long road. Anyway, my raccoon is named Noble. Also have a skunk that visits so maybe I will name him DODO? PGN trial is pushed out to 2020 most likely. That's it brothers and sisters. Accumulate. IMHO
WhyNotBuy profile picture
New JU was just purchased so the option has been exercised. IMHO
As many have said FT - NE missed the secondary window when they were trading in the high 6's - perhaps 7+ if I recall correctly ? If they get a 2nd chance at that - that would be their Long term survival ticket. I hate to think of this old war OSD having to go the BK route.
WhyNotBuy profile picture
XOM is hovering like a hungry sludge oil vulture near Venezuela waters. When Madura is murdered for wanting national sovereignty over his nation, the swooping will begin. get set boys as blood for oil begets little humanity. The milk of human kindness will never run a ICE engine. Accumulate the dips as 2019 is the momentum years for OSD as fracking wells will never reach 400+ this year to stay a mere even from declines rates. What a world we have! IMHO
Aventador profile picture
Once again WNB your point is a bewilderment. Since the majority of VZ reserves lie onshore they will certainly restore that production first. As well with the claimed largest reserves on the planet not even adding in the Orinoco Belt. It doesn't take a genius to gather any meaningful restart and growth only hurts offshore drillers.
WhyNotBuy profile picture
You missed the point brother. At the point I mention POST-Madura ==>> the V oil will be trading back on the petrodollar, and V will no longer be part of the BRICS nations. Oil will rise once the largest oil reserve in the world is controlled by the Central Western Banks as a grand dollar slave. IMHO
FredBerger profile picture
So it turns out, as I suggested, that indeed the one jackup that they bought a few months ago, merely replaces the one that went off contract and was retired now. Not such an exciting acquisition/context/contract after all.
Fun Trading profile picture
Thank you,

Yes, however, it is still a good deal, and I hope they can repeat that with the other one. Not many options for the company at the moment.

Best regards,
Any lawyers out there? Are senior note holders ranked pari passu whatever the year due or do some holders have priority over others? If pari passu, and all have an equal claim on assets once any one group of holders call the debt unpayable (is that how it works, or just the holders calling in the debt get priority?), then with $3.9m in debt, no cash and assets no one really wants in the current environment, I am not sure it is in anyone's interest to refuse negotiation on notes due, in the event repayment is not possible. Or, conversely, is the fear that the company itself simply proclaims itself bankrupt? Are management's healthy pension liabilities protected in such an event - if so, management has a strong inducement to proclaim voluntary bankrupcy?

One could ask the same of ESV with its $7.5bn of debt due (assuming a merger). Add in the fact that the same lenders probably bought across 2 companies and the situation becomes rather toxic. Arsenic, anyone?
Fun Trading profile picture

Thank you,

It is the risk in this sector... The longer it takes for the recovery to show signs of life the more concerning the debt. I was talking about the debt covenants earlier, anyone here can give some info about that or is it not available.
The EBITDA level has greatly degraded and I wonder if there are a minimum ratio based on that in the covenants?

Best regards,
Interesting comment by Marc Edward's of DO. "Of the 116 rigs that have been scrapped during this downturn over 80% have been moored rigs. And so this asset class is beginning to see a recovery in dayrates. Our clients are beginning to show flexibility in their own schedules as it relates to securing the availability of moored assets. The recovery in this segment is not limited to the North Sea alone as we are seeing it in all moored markets around the world"
NE has 2 moored Semis. 1 working & 1 warm stacked...
The other 2 are DP (dynamic positioned with thrusters)
Wonder if there is the space to retrofit mooring spreads to those 2 relatively modern deepwater Semis? If market dynamics and hypothetically awarded contract economics were to justify doing so? If Marc Edwards is correct maybe NE will be able to get 2 of their 4 semis working on good contracts? And possibly they could do something with the 2 cold stacked DP Semis? Anybody know if retrofit mooring spreads are feasible to do on these 2 if good contracts appear in the Market?
FredBerger profile picture
All four are moored. It's just that, in addition to being moored, two of them have also DP capabilities. But they could only go with moored, if they wish, they don't have to use their DP capabilities, unless they need to.
Looked up their Semi Sub specifications on their own website. 2 with mooring spreads, no thrusters or DP mentioned.
2 with thrusters & DP3, no mooring spread mentioned.
I believe that is the status of those 4 Semis according to Noble Corporation. Can anyone accurately confirm any different?
Fun Trading profile picture
Thank you for the discussion both.
parisbiker profile picture
Adam Peake went from Goldman Sachs to penny stocks.
Fun Trading profile picture

What do you think about DO recent earnings? The market reacted very negatively yesterday.
Maybe too much...
Best regards,
Risk Professor profile picture
It’s risky now...on the other hand I like to buy stocks no one else likes.
Fun Trading profile picture

Below $3, NE starts to be a potential for a good trade. However, it is risky as you said.

Best regards,
Noble's relatively small fleet of twelve floaters lacks geographic concentration to make use of economies of scale. Essentially just two working in Guyana with Exxon. In GOM, if no new contracts are won, then all five floaters will be idle within the quarter (three are currently idle). If it wasn't for the 3 contracts with Shell (end 7/22, 9/23 and 2/22) Noble would be on fumes ... the three Shell rigs are spread though-out the world. Sad they couldn't merge to scale up.
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