Noble (NE) Q3 Loss Narrower Than Expected, Revenues Beat

Noble Corporation plc (NYSE:E) reported third-quarter 2018 loss of 43 cents per share, excluding non-cash change, narrower than the Zacks Consensus Estimate of 47 cents and the year-ago quarter's adjusted loss of 36 cents. Increase in total rig utilization and dayrates led to the improvement.

Total revenues in the quarter grew to $279 million from $266 million in the year-ago quarter. Also, the top line beat the Zacks Consensus Estimate of $259 million, courtesy of higher sales from Contract Drilling Services.

Operating Highlights

Net loss from continuing operations was $81.6 million, narrower than $96.8 million in the third quarter of 2017. Total rig utilization increased to 69% from the year-earlier quarter's level of 60%. However, overall average dayrate rose to $174,665 from $168,127 in the year-ago quarter.

The average dayrate for Drillships of $298,443 was higher than $286,819 recorded in the prior-year quarter. The average capacity utilization increased to 63% from 56% in the year-ago quarter.

The average dayrate for the company's jackups fell to $122,350 from $127,163 in the prior-year quarter. Nevertheless, average capacity utilization increased to 93% from the year-ago quarter's level of 81%.

The average dayrate for the company's semisubmersibles was $99,470, lower than $104,028 in the prior-year quarter. On the flip side, average capacity utilization fell to 11% from the year-ago quarter’s 17%.

As of Sep 30, 2018, 7% of the company's available rig operating days were committed for fourth quarter of 2018, including 55% of floating rig days and 93% of jackup rig days. For 2019, about 45% of the available rig days were committed, including 37% of the floating rig days and 53% of the jackup rig days.

Costs

Cost of contract drilling services fell nearly 2% year over year to $163 million.

Backlog

As of Sep 30, 2018, total backlog was approximately $2.5 billion.

Capital Expenditure & Balance Sheet

In the third quarter, the company’s capital expenditure came in at $136 million.

At the end of the reported quarter, the company had a cash balance of $326.3 million and long-term debt of $3.9 billion, with a debt-to-capitalization ratio of 45.4%.

Outlook & Guidance

The company expects more contracts to follow with the rising crude prices as several projects will turn out to be profitable. It can lead to more opportunities for the offshore drilling contractor.

For 2018, the company raised capital expenditure projection to about $280 million from $150 million.

Zacks Rank & Key Picks

Currently, London-based Noble has a Zacks Rank #3 (Hold).

A few better-ranked players in the same sector are Hess Corporation (NYSE:E) , Enbridge Inc (NYSE:E) and Eni SpA (NYSE:E) , each carrying a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

New York-based Hess is a global integrated energy company. It delivered an average positive earnings surprise of 230.5% in the last four quarters.

Headquartered in Calgary, Alberta, Enbridge is a leading energy infrastructure company. In the trailing four quarters, the company delivered an average positive earnings surprise of 33.2%.

Based in Rome, Italy, Eni is among the leading integrated energy players in the world. The partnership witnessed a negative earnings surprise of 0.3% in the preceding four quarters.

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