Noble Corp (NE) Q2 Earnings Miss, Revenues Beat Estimates

Leading contract drilling company Noble Corporation (NYSE:NE) reported second-quarter 2016 earnings of 1 cent per share. The bottom line missed the Zacks Consensus Estimate of 7 cents per share and also deteriorated from the year-ago quarter earnings of 66 cents per share.

Total revenue in the quarter rose to $894.8 million from $793.5 million in the comparable quarter last year. The top line also surpassed the Zacks Consensus Estimate of $515 million. Contract Drilling Services grew 13.7% year over year and contributed $876.7 million to the total revenue.

Second-Quarter Operating Highlights

Net income from continuing operations was $345.4 million compared with $177.8 million in the second quarter of 2015. Total rig utilization decreased to 65% from the year-earlier level of 83%. The overall average dayrate declined to $509,145 from $340,217 in the year-ago quarter.

The average dayrate for drillships of $1,134,011 was substantially higher than $509,783 a year ago. Average capacity utilization was 86% compared with 100% in the prior-year period.

The average dayrate for the company's jackups was $136,041 as against $171,482 in the prior-year quarter. Average capacity utilization decreased to 83% from the year-ago level of 84%.

The average dayrate for the company's semi-submersibles was $290,106 compared with $403,319 in the prior-year quarter. Average capacity utilization decreased significantly to 16% from the year-ago level of 63%.

As of Jun 30, 2016, 60% of the company's available rig operating days were committed for 2016, which included 40% of floating rig days and 85% of jackup rig days. For 2017, an estimated 46% of available rig operating days are committed. This consisted of 27% and 68% of floating and jackup rig days, respectively.

Backlog

As of Jun 30, 2016, total backlog was approximately $5.1 billion as against $8.7 billion as of Jun 30, 2015.

Financials

At the end of the reported quarter, the company had a cash balance of $823 million and long-term debt of $3,829.4 million, with debt-to-capitalization ratio of 32.9% compared with 38.4% in the prior-year quarter.

Guidance

Noble Corp. has lowered its 2016 capital spending projection to $675 million. The revision in guidance is attributable to the company’s cost-management initiatives and assessment of expenditure on certain projects.

Zacks Rank and Key Stock Picks

Currently, Noble Corp carries a Zacks Rank #3 (Hold). Some better-ranked players from the energy sector are Sasol Ltd (NYSE:SSL) , Dril-Quip, Inc. (NYSE:DRQ) and QEP Resources, Inc (NYSE:QEP) . Each of these stocks sports a Zacks Rank #1 (Strong Buy).