Release Date: August 01, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Noble Corp PLC (NE, Financial) reported a solid quarter with adjusted EBITDA of $271 million, up nearly 50% from $183 million in Q1.
- The company has narrowed its EBITDA guidance for the year to a range of $950 million to $1 billion, reflecting confidence in its financial performance.
- Noble Corp PLC (NE) announced a 25% dividend increase to $0.50 per share for Q3 2024, making it the highest dividend payer among US-listed oilfield services.
- The company has secured several new contracts, including extensions and new deals in Brazil, Poland, Spain, and the UK, representing approximately $275 million in total contract value.
- Noble Corp PLC (NE) is optimistic about the future, with strong forward indicators for increased activity and a robust pipeline of customer tenders and drilling plans.
Negative Points
- Total backlog decreased from $4.4 billion last quarter to $4.2 billion, indicating a slight decline in future revenue visibility.
- Free cash flow was negative $26 million in Q2, impacted by higher capital expenditures and working capital adjustments.
- The company faces utilization headwinds for its sixth-generation rigs, which are expected to persist into 2025.
- There are supply chain pinch points affecting the pace of contract awards, including delays in partner approvals and permits.
- Noble Corp PLC (NE) anticipates lower utilization for its currently uncontracted sixth-generation rigs well into 2025, potentially impacting future revenue.
Q & A Highlights
Q: Are we seeing a transition from infrastructure-driven development to a better balance between greenfield and tiebacks?
A: Yes, there is data suggesting an uptick in greenfield projects. Our fleet's deployment around exploration remains consistent, and the increase in FIDs is expected to drive higher use of drillships worldwide. We are optimistic about the market's direction in late 2025 and 2026. (Robert Eifler, CEO)
Q: Will the Globetrotters rigs continue to focus on the Gulf of Mexico, or could they be moved elsewhere?
A: The Globetrotters could work anywhere, and we have pursued intervention work outside the US Gulf. While the lead time for booking intervention work is shorter in the US, we are bidding globally and have interesting opportunities outside the US. (Robert Eifler, CEO)
Q: What are your thoughts on the ultra-deepwater market, particularly regarding pricing for 2026?
A: Many see continuing tightness in the 7G market, leading to balanced conditions that drive increasing day rates. The market is expected to remain tight despite some shipyard rigs entering, with a slight discount for near-term work but overall confidence in demand materializing. (Robert Eifler, CEO)
Q: What are the potential opportunities for the Noble Voyager rig after its contract in Suriname?
A: The Voyager will undergo SPS scope for the next few months and be available later in the year. We are bidding it globally, with encouraging customer conversations indicating potential firm awards in the first half of next year. (Blake Denton, SVP Marketing and Contracts)
Q: Can you provide more details on the supply chain pinch points affecting the pace of awards?
A: The supply chain pinch points vary by customer and region, affecting different parts of the supply chain like FPSOs, wellheads, and casing. This has led to a gentle slide to the right in project timelines over the past year. (Robert Eifler, CEO)
Q: What is the status of the European regulatory milestones for the Diamond transaction?
A: The only remaining regulatory clearance needed is from Australia. This was anticipated and aligns with our original timeline for closing by Q1 2025. (Robert Eifler, CEO)
Q: How are you managing costs during periods of softer utilization for some deepwater units?
A: We are closely managing costs and have reduced expenses where rigs have availability. Our leadership on the rigs has done an excellent job managing their business rig by rig, focusing on cost control. (Robert Eifler, CEO)
Q: Are you seeing increased competition from sidelined rigs or newbuilds, and how does this affect day rate bifurcation?
A: The sixth-gen market may see a dip in utilization before recovering, with some rigs potentially moving into shorter lead time programs. The competition from sidelined rigs and newbuilds affects total marketed utilization and bidding behavior. (Robert Eifler, CEO)
Q: How does capital discipline among customers affect their decision-making and project timelines?
A: Capital discipline remains paramount, leading to conservative investment decisions. Partner alignment complexities can delay projects, and the budgeting process adds uncertainty to project approvals. (Robert Eifler, CEO)
Q: Are customers less worried about schedule slippage due to visible white space, or is price their main concern?
A: Customers have varying beliefs and approaches. Some are risk-averse and concerned about availability, while others are comfortable waiting, believing they can secure rigs when needed. (Robert Eifler, CEO)
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
