Noble Corp. September 2019 Fleet Status Report Analysis

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About: Noble Corporation plc (NE)
by: Vladimir Zernov
Summary

Noble Corp. provides its new fleet status report.

The company gets two jack-up contract extensions.

Only three active rigs have contract roll-offs in late 2019 - do not expect too much news from the company at the end of this year.

Noble Corp. (NE) has just provided its fleet status update. Noble Corp.'s contract schedule is very busy this year, so I did not expect much news, but it turned out that the company scored two contract extensions:

  1. Jack-up Noble Mick O'Brien will work in Qatar from late October 2019 to late March 2020 in direct continuation of the current job. Interestingly, the dayrate is undisclosed, but the fleet status report states that the company is awaiting client approval to disclose dayrate. Obviously, this is a sign that the dayrate is worth disclosing, which is fully in line with the current bullish trend in the jack-up market.
  2. Jack-up Noble Tom Prosser will now work in Australia until August 2020 in comparison to the previous expectation that the job will end in April 2020 as five option wells were exercised by the client. One more 1-well option remains.

Noble Tom Prosser

Noble Corp. stated that it will release its next fleet status report on October 17, 2019. I expect that there'll be little news if any on that report since Noble has few upcoming contract roll-offs:

  1. Drillship Noble Sam Croft ends its current job with Apache in Suriname in early December 2019. This contract has three 1-well options, and hopefully, Noble Corp. will get them and continue to work for the current customer since the market for drillships is still in a highly challenged state despite the fact that recent fixtures have finally crossed the $200,000 mark.
  2. Jack-up Noble Hans Deul ends its current job in the UK in late December 2019. This contract has a 1-well option. Given the positive trends on both the jack-up and the floater side of the North Sea market segment, there should be no problems with keeping the rig employed.
  3. Jack-up Noble Joe Beall ends its work for Saudi Aramco in late December 2019. This older jack-up built back in 1981 is in high risk of leaving the fleet. The situation is binary - the rig will either get some more months of work or head directly to the scrapyard.

As time goes by, it becomes increasingly obvious that Noble Corp.'s stacked units - drillship Noble Bully I and semi-subs Noble Danny Adkins and Noble Jim Day - will never work again. The warm stacked semi-sub, Noble Paul Romano, is also in a danger zone since it has been warm-stacked for a long time and did not find any work. Currently, Noble Corp. has 25 rigs, but this number may ultimately shrink to 20 as 3 semi-subs, one drillship and one jack-up have material chances to leave the fleet. However, other rigs are modern and in good shape, so this is not a big problem, unlike the company's debt or the slow pace of the offshore drilling recovery.

Noble Corp. shares have performed very well following the panic in August. As I stated many times in my offshore drilling-related articles, the market was making its "final call" too early - there'll be many ups and downs ahead. I maintain my view that shares of drillers, including Noble Corp., are only good to be trading vehicles at this stage - they are hardly suited for buy and hold strategies and are surely not a place to park your nest egg due to high risk of losing principal and huge volatility.

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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.

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