Student Investment
Management
SIM
Analyst:
Charles
Hathaway IV
(SIM)
Winter
2010
Phone: 614-859-9550
E-mail: Hathaway.70@osu.edu
SIM Portfolio Managers:
Chris Henneforth, CFA Royce West, CFA
Investment Thesis:
Noble Corporation is a Buy with a price
target of $60. Since 2005, offshore drilling contractors have
experienced significant growth in both revenues and margins,
primarily because of the price of oil and the subsequent increase
in demand for deepwater oil exploration. Contractors began
building new oil rigs and retrofitting old rigs financed by debt to
meet this new demand. As Noble is transitioning from a growth
phase to maturation, we can expect to see significant amounts of
free cash flow to begin coming in. From 2007 to 2010, Noble
financed their capital expenditure with retained earnings,
decreasing their free cash flow to a very low level. However, in
2010, we will begin seeing a trend of decreasing capital
expenditure. This is an opportunity to invest in an undervalued
company with great long-term growth prospects that will also act
as a fixed income security.
Noble Corporation
NYSE: NE
Market Cap: $11.27 Billion
Data as of: March 09, 2010
Recommendation: Buy
Target Price: $60
Current Price: $43.80
Upside: 38%
Including .78% ($.16) Annual Dividend
Noble’s 1 Year Performance
Catalysts: Higher Oil Prices
Contract Announcements
Stock Repurchase
Acquisition/Mergers
Higher Industry Utilization Rates
Noble vs. S&P 500
Year to Date Performance
Potential Risks: Overcapacity
Lower Bid Rates
Lower Oil Prices
Environmental Regulation
Double-Dip Recession
Financial Data
Revenues ($Mlns)
Operating Margins
Net Income ($Mlns)
EPS Diluted ($)
Dividend/Share ($S)
Cash/Share ($)
Share Price Data
52 Week Range
Performance (%)
Noble Corporation (NE)
S&P Energy Sector (.SPNY)
S&P 500 Index (.INX)
FY 2009
3,641
55%
1,675
6.42
.16
2.81
YTD
7.62%
0.49%
2.27%
FY2010E
3,500
50%
1,443
5.67
.25
3.00
22.03 - 45.06
1 Year
94.15%
38.96%
68.57%
FY2011E
3,600
50%
1,523
6.04
.35
3.20
5 Year
50.54%
21.35%
-6.68%
Sector
Industry
SubIndustry
Energy
Energy Equipment
& Services
Oil & Gas
Drilling
Noble Corporation
Page | 2
Company Overview…..................................................................................................................................................4
Types of Rigs...................................................................................................................................................4
Utilization Rates….…….…………........................................................................................................................5
Daily Rates…….………………...............................................................................................................................5
Industry Analysis........................................................................................................................................................6
Industry Trends…..……................................................................................................................................6-7
Industry News….…….......................................................................................................................................8
Noble vs. Peers in Offshore Oil & Drilling Performance................................................................................9
Sector Analysis…………………………………………………..………….……………………………………………………………………………….…….9
Macroeconomic Analysis.........................................................................................................................................10
Global GDP Growth………………………………………………………………………………………………………………………………..10
Inventory Levels…………………………………………………………………………………………………………………………………….10
Oil Futures…………………………………………………………………………………………………………………………………………..…10
Oil Prices...…..….………………………………………………………………………………………………………………………………………………….11
Regression Analysis……………………………………………………………………………………………………………………………....11
Discounted Free Cash Flow Valuation……………........................................................................................................12
DCF Sensitivity Analysis........................................................................................................................... 13
Discounted Free Cash Flow Analysis…………………..…………………………………………………………………………………13
Valuation Analysis……………...………………………………………………………………………………………………………………………………14
Advantages...............................................................................................................................................................15
Financial Ratios........................................................................................................................................................16
Risks……………………………….….....................................................................................................................................16
Conclusion ...............................................................................................................................................................17
Noble Corporation Income Statement.....................................................................................................................18
Noble Corporation Balance Sheet............................................................................................................................19
Noble Corporation Cash Flow Statement................................................................................................................20
Noble Corporation
Page | 2
Noble Corporation
Page | 3
List of Figures
Figure 1: Noble Corporation 2009 Revenue by Region ………….………………………….…………………………………………………………..4
Figure 2: Noble Corporation Revenue by Rig Type ………………………………………..……………………………………………….………………4
Figure 3: 2008-2009 Average Utilization Rates ………………………………..…………………………………………………………………………………5
Figure 4: Top Oil Driller Revenue Growth …………………………………………………………..…………………………………………………..………….6
Figure 5: Net Profit Margins………………………………………………………..………………………………………………………………………..……………6
Figure 6: Current Utilization Rates by Rig Type……………………………………………………………………………………………………………….…..7
Figure 7: Current Utilization Rates by Region ……………………………………….…………………………………………………………………………….7
Figure 8: Noble vs. Peers- 1 Year Performance …………………………………………………………………………………………………………………..8
Figure 9: Noble vs. Peers- 2 Year Performance ………………………………………………………………………………………….……………….………8
Figure 10: Noble vs. Peers- 5 Year Performance …………….…………………………………………………………………………………………….…….8
Figure 11: Energy Sector vs. S&P 500 – 1 Year Performance……………………………………………………………………………………………….9
Figure 12: Global GDP Forecast………………………………………………………………..……………………………………………………………………….10
Figure 13: U.S. Crude Oil Stock Levels…………..……………………………………………………………………………………………………………..……10
Figure 14: West Texas Intermediate – Oil Futures……………..………………….………………………………………………………………………….10
Figure 15: West Texas Intermediate Historical Spot Prices………………..….…………………………...………………………………………….…11
Figure 16: Noble Corporation vs. WTI Crude Spot Price…………….…….………………………………………………………………………………..11
List of Tables
Table 1: Noble Corporation Rig Fleet……………………………………………………………………………………………..……………………………………4
Table 2: Average Day Rates by Rig...……..…………………………………….……………….……………………………………………………..……………..5
Table 3: Current Rig Day Rates by Rig Type….……………………………..……………………………………………………………………………..……….7
Table 4: Energy Sector Industry Relative Strength….…………………………………………………..……………………………………………..……….9
Table 5: Noble Corporation vs. Oil Regression Results………………..…………………………………………………………………………………....11
Table 6: Noble Corporation Discounted Free Cash Flow……………..………..……………………………………………………………………..……12
Table 7: Noble Corporation Implied Equity Upside Matrix…………………………………………………………………………………………………13
Table 8: Valuation Analysis – Relative to Industry………………………………………………………………………………………………….………...14
Table 9: Valuation Analysis – Relative to Sector….…………………………………………………………………………………………………………….14
Table 10: Valuation Analysis – Absolute…….……………………………………………………………………………………………………..……………...14
Table 11: Noble Corporation Financial Ratios……………………………………………………………………………………………………..…………….16
Noble Corporation
Page | 3
Noble Corporation
Page | 4
Company Overview:
Noble Corporation (NE) is an oil and drilling company that was spun-off
off from the parent company Noble Energy (NBL)
in 1985, as oil was nearing an all-time
time low. The company has operations in waters off the coasts of five continents,
with a fleet of 62 offshore drilling units: 2 submersibles, 4 dynamically pos
positioned
itioned drillships, 13 semisubmersibles, and
43 jack-up
up rigs. Half of its rigs are capable of operating in water depths greater than 5,000 feet. The group, which
derives most of its revenues from its offshore drilling contracts, has positioned itself to ri
ride
de the global trend toward
deepwater exploration through acquisitions and equipment upgrading. Noble currently has over $8 Billion in backlog
revenue and is looking to sign a number of renewal and new contracts in anticipation of the world economic recover
recovery.
Contracts would be beginning in late 2010, early 2011. Contracts are expected to be making headlines in the 1st and 2nd
Quarters of 2010.
Figure 1: Noble Corporation 2009 Revenue by Region
$900,000
$800,000
$700,000
$600,000
$500,000
$400,000
$300,000
$200,000
$100,000
$-
Figure 2: Noble Corporation Revenue by Rig Type
2009
2008
$2,500,000
$2,000,000
$1,500,000
$1,000,000
$500,000
$-
Source: Noble 2009 Annual Report
1
Source: Noble 2009 Annual Report
Types of Rigs :
•
•
•
Submersibles:
Mobile drilling platforms that are towed to the drill site
and submerged to drilling position by flooding the lower
hull until it rests on the sea floor, capable of drilling up
to 25,000 feet in shallow water.
Semisubmersibles:
Floating platforms that operate like submersibles,
however they are only partially submerged. Capable of
operating in up to 12,000 feet of water,
semisubmersibles are the most expensive to construct
and operate.
Drillships:
Capable of drilling in water depths up to 10,000 feet,
these ships are self-propelled
propelled and are designed for ultra
ultradeepwater harsh environments. They use a computer
computercontrolled dynamic positioning system to stay
positioned over the well.
Noble Corporation
1: Noble Corporation 2009 Annual Report
Table 1: Noble Corporation Rig Fleet
Number of
Rigs
Region
Type of Rig
U.S. Gulf of Mexico
Semisubmersible
6
U.S. Gulf of Mexico
Submersible
2
Mexico
Semisubmersible
Mexico
Jackups
1
Brazil
Brazil
Semisubmersible
Drillships
3
3
Europe - North Sea
Semisubmersible
1
Europe - North Sea
Jackups
9
Middle East
Jackups
14
West Africa
Jackups
5
West Africa
Southeast Asia
Semisubmersible
Drillships
1
1
Southeast Asia
Semisubmersible
1
Southeast Asia
Jackups
3
12
Source: Noble 2009 Annual Report
Page | 4
Noble Corporation
Page | 5
Types of Rigs:
Figure 3: 2008-2009
2009 Average Utilization Rates
•
100%
50%
2009
0%
2008
Independent Leg Cantilevered Jackups:
Jackups
Jackups are mobile, self-elevating
elevating drilling
platforms equipped with legs that can be lowered
to the ocean floor until a foundation is
established for support. The rig is towed to the
drill site byy tug boat where water depths are
shallow, ranging from 8 to 400 feet. Jackups can
drill down to a maximum depth of 30,000 feet.
Cantilevered Jackups are also capable of drilling
on top of pre-existing
existing platforms or structures.
Of the 62 rigs that Noble has,
ha only 5 are currently
not active or under contract, while 2 are
coldstacked1.
Source: Noble Corporation 2009 Annual Report
2
Utilization
Noble has been very successful in keeping its utilization rates above the industry mean. Company utilization in 2009 was
84% while the industry averaged 76%. In specific regions, utilization has been phenomenal. All 6 of the Brazilian rigs
received at leastt one month of performance bonus for their ability to maintain uptime above the stated contract
utilization. However, the Noble – Jim Day a new semisubmersible under construction, has had some delays and will be
pushed back a month. In addition to logistic
logistical
al delays, regional market forces are a typical cause of underutilization.
Weather, unanticipated repairs and early contract termination all lead to less than optimal performance. In 2010, Noble
has about half (32 rigs) of their fleet contracts ending. The
These
se come from primarily three regions, Mexico, Europe - North
Sea and the Middle East. Of the 13 rigs under contract with Pemex, 10 rigs must be renewed this year. Noble expects
these all to be renewed, but at a lower daily rate. Pemex and Noble have been eextending
xtending the lengths of some existing
contracts to avoid a work stoppage. This is good for both Noble and Pemex in an uncertain environment.
Daily Rates
Rates vary based on the rig type. However, in
2009 Noble saw a competitive environment
where spot day rates were down nearly 50%
from their 2008 highs. Since the 2009 lows,
bidding for rigs has gone up slightly with the
recovery in oil prices. Noble expects to be able
to renew contracts at better than previously
expected
ted rates. From 2008 to 2009, Noble saw a
utilization decrease of 6% from 90% in 2008 to
84% in 2009. This decrease was offset by an
increase in average daily rates, particularly
semisubmersibles of depths greater than 6,000
feet. Overall, daily rates under contract
increased on average 13% from $174,506 in
2008 to $197,143 in 2009. In 2010, rates are
expected to decrease by about 10%, based on
current spot prices. The biggest decreases
coming in the Jackups market which is quite
saturated currently.
Noble Corporation
Table 2: Average Day Rates by Rig
Change
%
Day
Rate
2008 Day
Rate
2008 Revenue
(Thousands)
2009 Day
Rate
2009 Revenue
(Thousands)
Jackups
$148,532
$2,061,476
$147,701
147,701
$1,878,609
-1%
Semisubmersible
> 6000'
$327,558
$807,758
417,177
$417,177
$1,075,482
27%
Type of Rig
Semisubmersible
< 6000'
$220,475
$242,082
253,557
$253,557
$277,645
15%
Drillships
$201,819
$147,732
$254,084
254,084
$252,305
26%
Submersibles
$ 54,106
$39,443
$61,711
61,711
$25,795
14%
Total
$174,506
$3,298,490
$197,143
197,143
$3,509,837
13%
Source: Noble Corporation 2009 Annual Report
Page | 5
1: Coldstacked is a term used for idle, uncontracted aand
nd unmanned rigs that are not being actively marketed in present market conditions
th
2: Utilization figures and forecast come from both the 2009 Annual Report and the 4 Quarter conference call.
Noble Corporation
Industry Analysis:
The oil drilling industry is focused on the discovery and
development of oil and gas resources. Offshore drilling is any
development that requires underwater recovery. This can refer
to lake or deep ocean exploration. During the oil bust of the
1980s and early 90s, many major oil companies spun
spun-off their
drilling
ng units to reduce costs and gain efficiencies. The strategy
worked well until the 2000s, when demand for offshore drilling
increased. The concentrated market for contract drilling
maintained its superiority in technology and human capital
resulting in everr higher operating margins at the expense of
exploration and major oil companies. In February 2010, the
drilling industry has grown to over 576 offshore rigs available
worldwide. A growing trend has been to move the contractor’s
headquarters to a more taxx advantageous location. Transocean,
Noble Corporation, Ensco International, and Nabors Industries,
have all moved “offshore” since 2007.
Industry Trends:
The off-shore
shore oil drilling industry has experienced boom and
bust periods since its inception. The cost of recovering oil in
deep waters becomes increasingly expensive with depth, and
therefore expansion in this industry is spurred by spikes in oil
prices as a result of increases in real demand for oil. The period
of 2005 to 2008 was one such period. The consumption of oil in
growing economies like China and India, as well as in OECD
countries, had oil rising from $45 to a record $140 a barrel in
2008. As with
ith most periods of rapid expansion, there was a
sharp pullback, which was seen in the Great Recession of 2008
20082009. Oil demand lessened and prices fell to 2003 levels of $36
a barrel. A big concern for investors in early 2009 was whether
or not there would
d be any demand for the newly built and
renovated rigs that were coming online from 2008 construction.
Renewal contracts on deep-water
water rigs were left on the table
and bid rates plummeted, reducing both the huge revenue
growth and tremendous operating margins
ns from which the oil
drillers had benefited in the past few years. 2009 utilization
rates were down across the industry. However, several
companies benefiting from long-term
term contracts were buffered
from the carnage. These companies were medium
medium-sized
contract
act drillers, such as Noble Corporation and Diamond
Offshore, rather than the larger such as Transocean.
Page | 6
Figure 4: Top Oil Driller Revenue Growth
2006
2007
2008
2009
100%
80%
60%
40%
20%
0%
-20%
-40%
Nearly all of Noble’s deepwater rigs are in long term contracts
through 2012 and make up a majority of its backlog revenue.
Additionally, most of the rigs coming up for contract renewals
this year are lower margin shallow water jack
jack-ups.
Noble Corporation
1: Mergent Online: an online equity research database available to Ohio State students
Source: Mergent Online
Figure 5:: Net Profit Margins
60%
50%
40%
30%
2006
20%
2007
2008
10%
2009
0%
Source: Mergent Online
Page | 6
Noble Corporation
ion
Page | 7
Industry Trends1:
Utilization across the industry varies by company, but also by region and rig type. In 2009, utilization rates have fallen
precipitously from the 2008 highs, as companies are beginning to be able to get out of the long
long--term contracts that
usually range from 3-55 years. This allows exploration and production companies to renegotiate long
long-term contract daily
rates lower (2010 rates) than the previous contracts (2005
(2005-2007), but also allows the off-shore
shore drillers to move the rigs
to better regions, thereby reducing the supply
supply-side for rigs in a specific locale keeping daily rates artificially high. In the
long-term, this strategy will not be successful unless the industry is in collusion. In March 2010, worldwide utilization
averaged 78.1%, which is up from a low of 76.2%, but still not near the 81.5% rate that the industry saw in March 2009.
The decrease is caused by contracts expiring, and not being renewed. These rigs were then released to the open market.
Figure 6: Current Utilization Rates by Rig Type
Figure 7: Current Regional Utilization Rates
100%
80%
60%
40%
20%
0%
100%
80%
60%
40%
20%
0%
Source: Rigzone1
Day Rates2:
Rig leasing costs are calculated on a daily rate for a specific
amount of time. There are penalties incurred by the rig
contractor for delays and downtime related to weather,
maintenance, equipment failures, or any unforeseen event.
Rigs are also capable of earning a performance bonus for
having more uptime than stated in the contract. Generally,
the more sophisticated the rig, the more expensiv
expensive it is to
lease. Sophistication includes the technology on board the
rig, as well as the depth to which the rig can get. Rigs range
from the shallow water Drill Barges (up to 150 feet) and
Jackups (up to 300 feet) to the deepwater Drillships and
Semisubmersibles
rsibles (4,000 feet). Day rates reached an all
all-time
high in early 2008 as oil peaked. In 2009, as rates fell, drillers
depended on a backlog of revenue from contracts to
continue operations and their future looked bleak. Share
prices tumbled with this fear.
r. However, in 2009 oil prices
began recovering and doubled to the current $70
$70-$80 range
that it has been trading in since January 1st. As per
expectation, daily rates have begun ticking back up and
companies are locking in rigs for the anticipated recover
recovery.
This is perfect timing for drilling contractors, as much of their
backlog was evaporating and would be forced to renew
contracts at lower rates for 2011 and beyond.
Noble Corporation
Source: Rigzone2
Table 3: Current Rig Day Rates by Rig Type
Rig Type
Number of Rigs
Average Day Rate
Drillship < 4000'
9
$
231,228
Drillship 4000'+
34
$
412,717
Semisub < 1500'
11
$
294,243
Semisub 1500'+
61
$
314,966
Semisub 4000'+
73
$
410,417
Jackup IC <250'
32
$
84,916
Jackup IC 250'+
40
$
99,926
Jackup IC 300'
95
$
124,982
Jackup IC 300'+
108
$
159,111
Jackup IS 250'
8
$
137,000
Jackup IS 300'
2
$
60,300
Jackup IS 300'+
3
$
190,000
Jackup MC < 200'
2
$
28,000
Jackup MC 200'+
12
$
47,109
Jackup MS 200'+
9
$
55,156
Drillbarge < 150'
19
$
30,000
Drillbarge 150'+
7
$
77,000
Inland Barge
29
$
49,585
Platform Rig
150
$
38,150
Submersible
1
$
35,500
21
$
117,325
Tender
Source: Rigzone
Page | 7
1: Rigzone, http://www.rigzone.com/data/utilization_ri
www.rigzone.com/data/utilization_rigtype.asp 2: Rigzone, http://www.rigzone.com/data/utilization_region.asp
www.rigzone.com/data/utilization_region.asp
Noble Corporation
Page | 8
1
Industry News :
Since August of 2009, the oil drilling industry has seen some big mergers announced, continuing the trend of
consolidating the number of competitors. Baker Hughes, one of the largest inland oil drilling and oilfield services
companies, has announced they will buy BJ Services for $6 billion and expect to close the deal in the 1st Quarter of
2010. A more recent announcement was the Schlumberger Ltd. acquisition of Smith International Inc. for $11 billion.
This deal was approved on February 21, 2010. These 2 deals look to signal that there is value within the energy services
area. Noble’s CEO David Williams mentioned in the 4th Quarter Conference Call that he was hoping for the financial
turmoil to last a bit longer so that Noble would be able to pick up some assets cheaply from its distressed competitors.
With a record amount of cash on hand, Noble could possibly acquire a company or two in the near future. On March
3rd, the industry has begun announcing large contract deals, such as the Diamond Offshore, $1.4 Billion, 11-year, 3
drilling unit deal with Petrobas in Brazil. Noble has said they expect to announce similar deals in the first half of 2010.
Noble Corporation vs. Peers in Offshore Oil & Gas Drilling 1, 2, 5 year
Figure 8: 1 Year Performance
Figure 9: 2 Year Performance
Figure 10: 5 Year Performance
Source: Yahoo Finance
Noble
Transocean
Diamond Offshore
Rowan Companies
Noble has been one of the best performing offshore drilling contractors in the past 2 years. This can be attributed to its
excellent management in their smaller rig fleets. Larger competitors like Transocean that outperformed during the oil
boom of the 2000s have had a harder time finding contracts for its huge fleet. Nimbler, medium-sized contractors, such as
Noble and Diamond Offshore stand to benefit from higher margins and better utilization. In this respect, the smaller the
contractor, the more defensive it is. This is important for an industry that is known for its boom and bust image.
Noble Corporation
1: http://www.marketwatch.com/story/schlumberger-smith-intl-okay-merger-plan-2010-02-21-145500?dist=beforebell
2: http://www.finance.yahoo.com
Page | 8
Noble Corporation
Page | 9
Sector Analysis:
Table 4: Energy Sector Industry Relative Strength
The Energy Sector is the 5th Largest sector
in the S&P 500 with 1.15 Trillion in Market
Capitalization. Year to date, it is the 6th
best performing sector with a .42% return
year to date. In 3 and 5 year performance,
Energy ranks as the 3rd and best
performing industries respectively. Within
the energy sector, there are 7 industries
spanning the entire oil product life cycle.
Relative Strength
Industry
Coal & Consumable Fuels
Oil & Gas
Equipment/Services
Oil & Gas Drilling
Oil & Gas
Exploration/Production
Oil & Gas Storage
Oil & Gas Integrated
Oil & Gas
Refining/Marketing
Baseline
Symbol
COCOF
Since
Jan 1
6%
1 Year
65%
10
Year
713%
OGEQP
OGDRL
4%
-3%
26%
20%
88%
84%
OGEXP
OGSTO
OGINT
-1%
8%
-4%
10%
42%
-45%
454%
-24%
119%
OGREF
11%
-53%
127%
Source: Thomson Baseline
Oil & Gas Integrated dominates the energy sector, and overall sector performance is dictated by its performance.
Relative strength by industry is a more accurate gauge of how the sector is doing, and more particularly, how different
segments of the sector are performing. Over the past 10 years, energy has been outperforming the S&P solely because
of the appreciation of oil. However, in the past couple of years, we have seen some trends emerge. Specialty services
have been outperforming traditional integrated oil companies. Integrated oil is lagging because it is not achieving the
efficiencies that contractors have been gaining as a result of their specialization. Integrated has also been lagging
because of its exposure to refining, which has been abysmal since 2008. Refiners spent significant money building up
capacity, and just as it was coming online, demand dropped, and utilization dropped immensely. It shrunk their already
small margins further since it is a significant portion of integrated oil’s revenue and profit. Integrated oil’s performance
will drag the sector down as long as real demand for oil does not pick up, even if the price of oil increases from
speculation.
Figure 11: Energy Sector vs. S&P 500
1 Year
Source: Google Finance
The oil & drilling industry performance is only tied to the performance of the energy sector insofar as the price of oil.
There are other key factors that affect the demand for offshore drilling. They include weather, environmental
regulation, and the availability of and access to hydrocarbon bearing fields for the oil & gas company. The offshore
contract drilling industry is highly competitive and cyclical in nature, capitalized by high capital and maintenance
costs. Drilling contracts are traditionally awarded on a competitive bid basis. Price competition, rig availability,
location, suitability, experience of workforce, and condition of equipment must be factored into the probability of
success of the drilling contractor.
Noble Corporation
1: www.standardandpoors.com/indices/sp-500/en/us/?indexId=spusa=500-usduf--p-us-l-2: www.google.com/finance
Page | 9
Noble Corporation
Page | 10
Macroeconomic Analysis:
Figure 12: Global GDP Forecast
Oil prices depend on several factors: demand, supply, cost of
production, and weather. There are readily available means to
quantify those factors.
Global GDP Growth:
Global GDP is highly correlated with oil demand growth. As the
world’s economy expands, energy needs increase. In 2008, the
global economy contracted at one of the fastest rates since the
Great Depression. In 2009, the IMF expected it to rebound and
grow at a positive pace of 1% to 2%. In 2010 and 2011, they
predict an even stronger recovery of 4-5%, resulting in a large
increase in demand for energy. The energy industry has the
capacity to meet this additional demand and should expect
utilization rates to go up across all industries in energy.
40000
30000
25000
20000
15000
10000
5000
Dec 09, 2009
Apr 09, 2009
Aug 09, 2009
Dec 09, 2008
Apr 09, 2008
Aug 09, 2008
Dec 09, 2007
Apr 09, 2007
Aug 09, 2007
Dec 09, 2006
Apr 09, 2006
Aug 09, 2006
Dec 09, 2005
Apr 09, 2005
Aug 09, 2005
Dec 09, 2004
Apr 09, 2004
0
Source: U.S. Energy Information Administration
Oil Futures:
Oil is traded on a number of commodity exchanges worldwide
100
and they are all traded in the futures market. Futures contracts
95
allow intermediaries purchase and sell rights to oil in 1,000
90
barrel increments with or without taking physical possession.
85
The price is dependent on two factors: the spot price, and the
80
cost of holding the oil. The futures market has been in contango 75
for awhile. Contango occurs when there is an upward sloping
70
yield curve. Since the beginning of the year, the curve has been
narrowing, which indicates strong fundamentals (demand
increasing) and shows where traders believe oil is going.
Traders are valuing oil today more than in the future, and the
cost to carry oil is becoming cheaper narrowing the contango.
Noble Corporation
Inventory
35000
Aug 09, 2004
Inventory levels are a good indication of how well supply is
meeting demand. If inventory is decreasing, it means that
demand is currently greater than production. In the reverse
case, increasing inventories show that demand is lagging
production. Although inventories are not a good indication of
future oil prices (.0072 correlation), it can show an increase in
demand. As oil reached its peak in 2008, there was a sharp
increase in inventory levels, which accompanied the sharp
drop in price. Looking forward towards 2010, inventories have
been dropping, showing that demand is starting to pick up
once again and that if this trend continues, there will be a need
to increase production of oil, which is another positive for the
energy industry.
Figure 13: U.S. Crude Oil Stock Levels
Figure 14: Oil Futures
Oil Futures Price
Apr-10
Nov-10
Jun-11
Jan-12
Aug-12
Mar-13
Oct-13
May-14
Dec-14
Jul-15
Feb-16
Sep-16
Apr-17
Nov-17
Jun-18
Inventory Levels:
Source: IMF World Economic Outlook
Source: Yahoo Finance Oil Futures Chain
Page | 10
Noble Corporation
Page | 11
Oil Prices:
Figure 15: West Texas Intermediate Crude Historical Spot Price
From the 1980s through early 2000, the price of oil 160
was stable at around $20 a barrel. During this
WTI Crude
time, traditional oil exploration companies such as 140
Spot Price
Noble Energy and Sonat Energy, spun off their
120
drilling units as they were not profitable to keep
100
them around for internal use. Today, those
companies are both successful and independent
80
under the names Noble Corporation and
Transocean. From 1999 onwards, oil has been
60
anything but stable and oil drillers have ridden oil’s
40
climb from $20 to a height of $140 a barrel in the
summer of 2008. The resulting crash in oil was
20
spurred by The Great Recession of 2008. In 2009,
prices bottomed out in the $30 range and began
0
rebounding. Oil is currently trading at nearly $80
Jan 02,
Jan
1986
02,
Jan
1988
02,
Jan
1990
02,
Jan
1992
02,
Jan
1994
02,
Jan
1996
02,
Jan
1998
02,
Jan
2000
02,
Jan
2002
02,
Jan
2004
02,
Jan
2006
02,
Jan
2008
02, 2010
and is expected to remain in the $70-$80 range for
the next year. If the economy is better than
expected, oil will respond appropriately to the
upside. This bodes well for Noble and the other Figure 16: Noble Corporation vs. West Texas Intermediate Crude
offshore drillers because it will make economic
160
West Texas Intermediate
140
sense to conduct offshore exploration, and will
Noble Corporation (NE)
120
allow them to renew drilling contracts. The longer
100
that oil trades within this range, the more
80
comfortable exploration companies will be locking
60
40
in rigs for long-term contracts at favorable day
20
rates.
0
As long as the world’s population is increasing, the
demand for energy will increase. The key is by how
much and how fast. This fact keeps a floor on oil
prices, and provides some safety for investors.
Table 5: Noble Corporation vs. Oil Regression Results
Regression Analysis
A simple regression of Oil vs. Noble
Corporation, over the past 10 years
shows a correlation of .8278. This is
nearly a 1 to 1 relationship and
confirms the hypothesis that Noble
will perform as oil does. As oil is not
expected to drop drastically lower
anytime in the near future, the
limited downside provides security
in investing in Noble with a huge
upside if oil begins spiking again.
Jan 04, 2000
Jan 04, 2001
Jan 04, 2002
Jan 04, 2003
Jan 04, 2004
Jan 04, 2005
Jan 04, 2006
Jan 04, 2007
Jan 04, 2008
Jan 04, 2009
Jan 04, 2010
Summary
ANOVA Table
Explained
Unexplained
Multiple
R
R-Square
Adjusted
R-Square
StErr of
Estimate
0.9098
0.8278
0.8277
5.108141564
Degrees of
Sum of
Mean of
Freedom
Squares
Squares
1
319034.8602
319034.8602
2544
66380.87245
26.09311024
F-Ratio
p-Value
12226.7854
< 0.0001
Standard
Regression
Table
Constant
West Texas
Intermediate
Coefficient
Confidence Interval 95%
t-Value
p-Value
Error
Lower
Upper
6.686807406
0.226188153
29.5630
< 0.0001
6.243275755
7.130339057
0.432830435
0.003914368
110.5748
< 0.0001
0.425154763
0.440506107
Noble Corporation
1: WTI Crude Spot Prices, http://tonto.eia.doe.gov/dnav/pet/hist/LeafHandler.ashx?n=PET&s=RWTC&f=D
Page | 11
Noble Corporation
Page | 12
Discounted Free Cash Flow:
Year
Revenue
2009
3,641
2010E
3,500
Growth
BP%Plc.
2,003
Operating Margin
5
0.14%
323
Tax Rate
Minority Interest
8
301
-
Minority Interest % of Sales
0.0%
Net Income
1,675
% Growth
0.0%
1,443
0.0%
1,523
-13.8%
Add Depreciation/Amort
% of Sales
5.6%
0.0%
1,624
6.6%
0.0%
1,681
3.5%
0.0%
1,740
3.5%
0.0%
1,801
3.5%
2,441
51.5%
10
352
365
1,929
3.5%
15.0%
-
0.0%
3.5%
0.22%
15.0%
-
0.0%
51.5%
0.22%
15.0%
-
1,864
2,359
10
340
-
4,741
3.5%
Page | 11
0.22%
15.0%
2019E
3.5%
51.5%
10
329
-
4,580
2,279
0.22%
15.0%
2018E
3.5%
51.5%
9
318
-
4,425
2,202
0.22%
15.0%
2017E
3.5%
51.5%
9
307
-
4,276
2,128
0.22%
15.0%
2016E
3.5%
51.5%
9
297
-
4,131
2,056
0.22%
15.0%
2015E
3.5%
51.5%
8
287
-
3,991
1,986
0.22%
15.0%
2014E
3.5%
51.5%
8
269
-
3,856
1,919
0.22%
16.0%
2013E
3.5%
50.0%
0.17%
16.2%
3,726
1,800
50.0%
6
2012E
2.9%
1,750
55.0%
Interest % of Sales
Taxes
3,600
-3.9%
Operating Income
Interest and Other
2011E
Table 6: Noble Corporation Discounted Free Cash Flow
0.0%
1,996
0.0%
2,066
3.5%
3.5%
408
500
500
522
540
539
558
556
553
573
593
11.2%
14.3%
13.9%
14.0%
14.0%
13.5%
13.5%
13.0%
12.5%
12.5%
12.5%
75
10
10
Plus/(minus) Changes WC
% of Sales
19
19
20
21
21
22
23
24
0.5%
0.5%
0.5%
0.5%
0.5%
0.5%
0.5%
0.5%
Subtract Cap Ex
1,466
1,000
800
671
694
718
744
770
797
824
853
Capex % of sales
40.3%
28.6%
22.2%
18.0%
18.0%
18.0%
18.0%
18.0%
18.0%
18.0%
18.0%
Free Cash Flow
692
% Growth
953
1,233
1,494
1,546
1,580
1,635
1,671
1,708
1,767
1,829
37.7%
29.4%
21.1%
3.5%
2.2%
3.5%
2.2%
2.2%
3.5%
3.5%
Terminal Value
22,274
Free Cash Yield
8.21%
Terminal P/E
10.8
NPV of Cash Flows
8,277
54%
NPV of terminal value
7,172
46%
Projected Equity Value
15,448
100%
Free Cash Flow Yield
6.26%
Current P/E
Projected P/E
6.6
9.2
Current EV/EBITDA
Projected EV/EBITDA
Shares
Outstanding
BP
Plc.
10.7
4.6
6.4
$ 43.80
Implied equity value/share
$ 59.88
Noble Corporation
7.3
10.1
4.9
6.9
Terminal
EV/EBITDA
4.8
36.71%
7.3
6.7
Page | 13
258.00
Current Price
Upside/(Downside) to DCF
7.7
Analyst: Charles Hathaway
Terminal
Discount Rate =
12.0%
Date: March 9, 2009
Terminal FCF
Growth =
3.5%
Page | 12
Noble Corporation
Page | 13
Discounted Free Cash Flow:
Table 7: Implied Equity Upside Matrix
Terminal Growth
2.0%
2.5%
3.0%
3.5%
4.0%
12%
26.4%
29.5%
32.9%
36.7%
41.0%
Discount Rate
12.5%
13%
20%
14.3%
22.7%
16.6%
25.7%
19.2%
28.9%
22.0%
32.6%
25.2%
13.5%
9%
11%
13.3%
15.7%
18.5%
14%
4.2%
6%
7.9%
10.1%
12.5%
14.5%
-.3%
1.3%
3.1%
5.0%
7.0%
15.0%
-4.4%
-2.9%
-1.4%
.3%
2.1%
Noble Corporation has an implied equity of $59.88 according to the discounted free cash flow model while including a
terminal growth of 3.5% and a discount rate of 12%. Noble can attribute this strong valuation to their past performance
and funding capital expenditures with retained earnings, rather than distributing it back to shareholders. If demand for oil
recovers as expected and stabilizes, the recent speculative build up in new drilling rigs will negate the need for any new
construction to be completed in the short term. There will be serious impacts on the market: temporarily reduced day
rates due to a surplus of capacity, dropped profit margins for contractors, and a reduction in capital expenditure. This will
lead to a huge growth in free cash flow for Noble, which the company has never experienced in its history. Only two
options are left for the board; declare a dividend, or repurchase stock. They have indicated they will do both.
Revenue:
The renewal of contracts will reduce Noble’s revenue in 2010. However, in 2011, 3 new rigs that are currently in
construction; the Globe Trotter 3, Noble – Jim Day, and the Noble – Dave Beard will buffer the decrease in day and
utilization rates. With energy prices expected to outpace core inflation, there is not a long-term viability risk for Noble as
there will be continued demand for deepwater drilling rigs and that justifies the minimal 3.5% terminal revenue growth.
Operating Margins:
Operating margins will level out around 50%, down from their high in 2009 of 57.5% as companies renew and establish
new contracts with Noble at lower daily rates. However, as the industry grows into the new capacity, daily rates will
stabilize at a healthy level. Long-term profit margins should remain elevated as barriers to entry in this market are high.
Exploration companies will likely demand shorter contracts, which will help drillers like Noble.
Interest and Financing Costs:
Financing expenses will continue to stay low and may disappear completely as the company will continue financing
operations and growth with cash generated in its operations. This will result in a net positive interest item, as short-term
investments with cash on hand will generate interest income for the company.
Taxes:
Tax consideration is an essential piece of the value of Noble. Currently, its tax rate is at 16% and guidance from the
company believe that they will be able to reduce their average tax rate further to around 15%. If taxes do go up, this will
eat up a significant portion of free cash flow generated and could be a cause for concern.
Capital Expenditures & Depreciation
Accompanying the decrease in capital expenditures, there will be a decrease in depreciation expense, as there are fewer
new assets to depreciate. With the number of rigs staying constant, revenues will grow at a considerably slower pace
than seen in the past. This is because of the transition into the maturation phase of the company and industry lifecycle.
Once demand begins outpacing current supply capacity, we will see an increase in capital expenditures again.
Noble Corporation
Page | 13
Noble Corporation
Page | 14
Valuation Analysis1:
Noble Corporation is underappreciated by the capital markets. It suffered a catastrophic decline along with the rest of
the energy sector as oil prices dropped into the basement in 2008. Since the March 2009 market lows, Noble has
outpaced the S&P 500. However, it is still undervalued, according to the valuation ratio’s test, in relation to the
industry and sector means. It also remains undervalued according to its own past ratios averages.
Table 8: Noble Corporation Valuation - Relative to Industry
Relative to Industry
High
Low
Median
Current
Status
P/Trailing E
P/Forward E
P/B
P/S
1.3
1.1
1.5
1.7
0.63
0.52
0.8
1.1
0.94
0.89
1.1
1.3
0.67
0.58
1.1
1.6
Undervalued
Undervalued
Fairly Priced
Overvalued
P/CF
1.5
0.8
1.3
1
Table 9: Noble Corporation Valuation - Relative to Sector
Relative to Sector
P/Trailing E
P/Forward E
P/B
P/S
P/CF
Absolute
P/Trailing E
P/Forward E
P/B
P/S
P/CF
High
Low
Median
Current
3.7
0.4
1.1
1.9
0.3
0.8
1.3
0.6
1.0
7.7
2.7
4.5
3.4
0.5
1.5
Table 10: Noble Corporation Absolute Valuation
High Low Median Current
50.5
25.7
4.1
23.85
26.8
4
3.3
1.1
2.58
3.1
13.8
9
3.2
9.51
10.4
Undervalued
0.4
0.6
0.8
2.8
0.7
Status
Undervalued
Undervalued
Undervalued
Undervalued
Undervalued
Target
Multiple
Target/Share
Target
Price
9
9
2.5
7
7.5
6.42
5.538
25.29
9.58
8.15
57.78
50
63.24
67.06
61.98
6.9
7.8
1.7
4.57
5.3
Source: Thomson Baseline
The market has kept the Noble’s share price down because of the
uncertainty in regards to revenue and earnings. The market is unsure of
whether or not Noble will be able to renew their contracts with primary
companies like Pemex and Petrobras. Until that uncertainty is cleared
up, Noble won’t revert back to their mean valuations. It is also unlikely
they will revert back 100% to mean valuations if the industry is indeed
in maturation, as mature companies trade at lower multiples than
growth companies. CEO David Williams reported in the 4th Quarter
Conference Call that they were working diligently with the oil
companies in the bidding process for the rigs. He expects a flurry of
announcements in the 1st and 2nd Quarters of 2010 with awards in
Mexico and the Persian Gulf and that all of the rigs will be active and
under contract with none going to ready stacked status. With this
guidance from management, the only question remaining; is at what
price will Noble Corporation get the contract, and for how long.
Valuation Analysis Results
Implied Equity: $60.01
Current Price: $43.80
Upside: 38%*
*Including .78% dividend yield
Noble Corporation
1: Valuations are based on a 5 year Time period. Industry is Oil & Gas Drilling (OGDRL)
2: Conference Call Transcript: http://seekingalpha.com/article/185220-noble-corporation-q4-2009=earnings-call-transcript?page=-1
Page | 14
Noble Corporation
Page | 15
Advantages:
Noble’s shareholders should be excited about the performance of their company during the recession. Even
though their share price suffered, the company survived and is fundamentally strong going forward without any
lag in its performance. There are several particular reasons why Noble is a strong buy:
•
Undervalued:
Relative to other offshore drillers, Noble is undervalued. Although the market for drilling is unique, and needs for
specific types of rigs would lead to some variation in the values of an offshore contractor, Noble is diversified. They
have deepwater, shallow water, and medium depth drilling units stationed all over the world and is positioned to
respond to the needs of its customers. They have 3 new rigs coming online in 2011 which should continue to add
to the versatility of the company. They have been performing better than Transocean who is the industry leader
over the past 2 years, but yet Noble is still underappreciated.
•
Contract Renewals:
Coming through the recession unscathed has put Noble in a great financial situation to which they can negotiate
with their customers. Pemex is the largest customer for Noble, and they have 10 of 13 rigs coming up for renewal
in 2010. Pemex sole sourcing their drilling needs, puts Noble in an excellent position for renewal because of the
specification and working relationships which they companies enjoy. There is no indication that they will not
renew the rigs.
Morgan Stanley has released a research report expecting demand for drilling rigs to exceed available supply by the
2nd half of 2010. This will only help contract bid rates going forward and may lead to a revision in estimated
revenue for 2010 and 2011.
•
Stock Buyback Program & Dividend:
Since 2006, Noble has instituted a stock repurchase program and has returned over $1 Billion to shareholders.
They have indicated that they will continue to repurchase stock as long as they feel the stock is undervalued. Their
Annual Shareholder’s meeting is on April 30, 2010 and there are expectations for the program to be extended and
increased. In addition to the buyback program, there is talk of increasing the dividend which is a meager .78%
currently. As future free cash flow is expected to grow, it is likely that this will in fact happen. In February 2010,
Diamond Offshore announced a special 8.8% dividend. Noble Corporation is in the same fiscal position as Diamond
and may announce a similar special dividend at its Annual Shareholder’s meeting.
•
Oil price stabilization:
Oil prices have stabilized over the past couple of months in the $70 to $80 range and this has given some
confidence to the markets by establishing a price floor for oil. Noble has benefited from this by seeing an increase
in bidding for their rigs. Stable oil prices benefit energy companies because it allows the companies to more
accurately forecast future needs and are more confident in locking in long-term contracts, which benefited Noble
in the past couple years.
•
Strong Balance Sheet and Fiscal Position:
Noble has a backlog of revenue of over $8 Billion at the beginning of the 2010. Meaning that if they are not able to
renew any new contracts ever again, they are nearly guaranteed $8 Billion in revenue, excluding any counter party
risk. With net profit margins hovering at 40%, they would have a terminal value of nearly 100% of current market
value. $3.2 Billion in net income ($8 Billion * .40) along with $8 Billion in assets which can be sold to other
companies. This equals $11.1 Billion, which is approximately their market cap at this writing. As a mid-sized
company with a positive reputation, they would be a great takeover opportunity. There has been such activity with
the Schlumberger-Smith takeover as well as the Baker Hughes – BJ Services deal.
Noble Corporation
th
Noble Corporation 4 Quarter Conference Call
Noble Corporation 2010 Annual Report
Page | 15
http://www.reuters.com/article/idUSSGE61I0DI20100219?type=marketsNews
Noble Corporation
Page | 16
Financial Ratios:
Table 11: Noble Corporation
Financial Ratio’s
2007
2006
Quick Ratio
3.2
1.73
1.65
1.23
1.74
Leverage Ratio
11%
14%
18%
21%
41%
Return on Assets
22%
24%
23%
16%
8%
Return on Equity
28%
32%
Cash Flow per Share
$8.28
$7.11
Book Value per Share
$26.29
$20.2
Risks:
2009
2008
32%
2005
25%
12%
$5.3
$3.64
$1.94
$16.1
$12
$9.97
Noble’s strong balance sheet is typified by their
quick ratio. As they have been spending less on
capital expenditure, they have bringing in a lot of
cash. They have historically strong ROA’s and ROE’s.
Along with their repurchasing shares and reinvesting
earnings, they have been increasing the book value
per share by 25% a year. They have been reducing
long-term debt since 2005 and will eliminate it
completely in the next couple of years. Noble is a
financially strong company with a ridiculously small
amount of risk of default.
Noble’s earnings and shareholder value face a number of threats ranging from macroeconomic factors such as interest
rate risk, systemic risk, higher taxes, and currency disparities to company related risks such as environmental regulation,
sovereign risk, and finally to acts of terrorism on its property.
•
Overcapacity1:
Noble’s greatest threat is that they will be renewing contracts at lower day rates that will reduce their revenue and
their operating margins. In 2010 they will be renewing half of their rigs (32 of 62). 10 of those are with Pemex and
those renewals are expected to be fine. Concern comes with their rigs in the Middle East and North Sea, where the
contracts are with a number of different companies and Noble will be facing market competition for specific
assignments
In the run up to the world recession, Noble and the entire drilling industry spent billions of dollars investing in new
rigs, especially in high margin deepwater rigs. Noble spent $1.4 Billion in 2009, $1.2 Billion in 2008 and $1.3 in 2007
on capital expenditures. These investments will only bear fruit if energy demand and prices bounce back to the
levels we saw in 2007 and 2008. It is uncertain in this economic environment if that will happen. In 2009, Noble’s
utilization rate was down from 90% to 84%. This did not affect Noble’s margins in 2009 because of the long-term
contracts they had. However, half of those contracts are being renewed this year and overcapacity is going to be a
factor in the new daily rates.
•
Environmental Regulation2:
Global climate change has been a hot topic since 2006. In December of 2009, the UN Framework Convention on
Climate Change was held in Copenhagen, Denmark. This was aimed at creating rules to extend the Kyoto Protocol
and make the C02 emission reductions more binding. Although it was unsuccessful in garnering any real progress, it
highlights the risk that energy companies are going to face in the future. If it had not been for the current recession,
we probably would have seen some real commitments made.
Noble is the only drilling contractor that produces a sustainability report. In their most recent report in 2008, they
reported 26 unplanned spills, with only 52 gallons of hydrocarbons “reaching the sea”. This is extraordinarily low.
Continuing their stellar performance, Noble had no newsworthy environmental accidents in 2009 or so far in 2010.
•
Reserve Replacement3:
Reserve replacement is an important part of an oil exploration company’s sustainability, as well as the drilling
contractor that relies on them. Environmental regulation has increasingly focused on where oil companies can go to
extract oil. Instances of areas protected have come with increasing frequency, eg. Florida, Argentina. The one saving
grace for offshore deepwater exploration is that it is normally far off the coasts of countries where the out of sight,
out of mind mentality actually benefits drilling. It is also a question of who exactly owns the rights to the deposits
and who’s in charge of the regulation.
Noble Corporation
1: http://www.noblecorp.com/Docs/NE_FleetStatus.pdf
2: http://www.noblecorp.com/Docs/SR2008.pd
3: http://www.reuters.com/article/idustre61c2lt20100213, http://www.nytimes.com/2010/02/26/world/americas/26argentina.htm
Page | 16
Noble Corporation
Page | 17
Conclusion:
Noble Corporation is a Buy with a price target of $60. Since 2005, offshore drilling contractors have experienced
significant growth in both revenues and margins, primarily because of the price of oil and the subsequent increase in
demand for deepwater oil exploration. Contractors began building new oil rigs and retrofitting old rigs financed by debt
to meet this new demand. As Noble is transitioning from a growth phase to maturation, we can expect to see significant
amounts of free cash flow to begin coming in. From 2007 to 2010, Noble financed their capital expenditure with retained
earnings, decreasing their free cash flow to a very low level. However, in 2010, we will begin seeing a trend of decreasing
capital expenditure. This is an opportunity to invest in an undervalued company with great long-term growth prospects
that will also act as a fixed income security.
Discounted Free Cash Flow
The discounted free cash flow shows an implied equity of $59.88 with a
discount rate of 12% and a terminal growth rate of 3.5%. This shows that the
company is undervalued and has an upside of 37%. Any uncertainty of
revenues is offset by the decrease in capital expenditures. Noble is aware of
the risks of capital expenditure and will not build new rigs speculatively.
With that in mind, regardless of revenues going forward, there will be large
amounts of free cash flow generated by Noble, which will either be
reinvested to fuel future growth, or will be returned to shareholders,
through dividends and buybacks.
Implied Value: $59.88
Current Price: $43.80
Expected Upside: 37%
Discount Rate: 12%
Terminal Growth: 3.5%
Valuation Analysis:
Absolute
P/Trailing E
P/Forward E
P/B
P/S
P/CF
High Low Median Current
50.5
25.7
4.1
23.85
26.8
4
3.3
1.1
2.58
3.1
13.8
9
3.2
9.51
10.4
6.9
7.8
1.7
4.57
5.3
Noble is undervalued under the Valuation Analysis test, particularly
in Price to Cash Flow and Price to Sales at nearly 50% undervalued.
The averages of these ratios indicate that Noble is undervalued with
a 38% upside.
Noble Corporation
Target
Multiple
Target/Share
Target
Price
9
9
2.5
7
7.5
6.42
5.538
25.29
9.58
8.15
57.78
50
63.24
67.06
61.98
Implied Equity: $60.01
Current Price: $43.80
Upside: 38%*
*Including .78% dividend yield
Page | 17
Noble Corporation
Page | 18
Noble Corporation
Income Statement
Year Ended December 31,
Operating revenues
Contract drilling
services
2012E
2011E
2010E
2009
2008
2007
2006
2005
2004
3,559,650
3,448,600
3,348,500
$3,509,755
$3,298,850
$2,714,250
$1,886,987
$1,187,185
$937,414
Reimbursables
90,000
90,000
100,000
99,201
90,849
121,241
92,354
86,332
50,234
Labor contract
drilling services
75,000
60,000
50,000
30,298
55,078
156,508
111,201
91,465
51,237
1,350
1,400
1,500
1,530
1,724
3,312
9,697
17,155
27,256
Total Revenues
3,726,000
3,600,000
3,500,000
3,640,784
3,446,501
2,995,311
2,100,239
1,382,137
1,066,231
Operating costs and
expenses
Contract drilling
services
Other
1,099,000
1,142,000
1,047,035
1,006,764
1,011,882
880,049
696,264
580,864
521,663
Reimbursables
80,000
74,000
88,436
85,035
79,327
105,952
79,520
76,238
44,610
Labor contract
drilling services
25,000
20,000
19,580
18,827
42,573
125,624
91,353
77,041
42,610
17,520
16,779
22,678
27,339
Enginnering,
consulting and other
Depreciation and
amortization
500,000
500,000
500,000
408,313
356,658
292,987
253,325
241,752
209,123
Selling, general and
administrative
85,000
80,000
83,472
80,262
74,143
85,831
46,272
40,278
33,714
15,000
30,839
(26,485)
(3,514)
(10,704)
(29,759)
-
1,789,000
1,816,000
1,753,523
1,630,040
1,538,098
1,504,449
1,172,809
1,009,092
879,059
1,937,000
1,784,000
1,746,477
2,010,744
1,908,403
1,490,862
927,430
373,045
187,172
500
(-800)
(1,200)
(1,685)
(4,388)
(13,111)
(16,167)
(19,786)
(34,389)
8,500
8,800
7,000
6,843
8,443
11,151
10,024
10,833
9,034
Income before income
taxes
1,929,000
1,792,000
1,752,277
2,015,902
1,912,458
1,488,902
921,287
364,092
161,817
Income tax provision
(289,000)
(269,000)
(301,000)
(337,260)
(351,463)
(282,891)
(189,421)
(67,396)
(15,731)
Net income
1,640,000
1,523,000
$1,451,277
$1,678,642
$1,560,995
$1,206,011
731,866
296,696
146,086
Basic
$6.67
$ 6.07
$5.69
$6.44
$5.85
$4.49
$2.69
$1.09
$1.10
Diluted
$6.63
$6.04
$5.67
$6.42
$5.81
$4.45
$2.66
$1.08
$1.09
$.40
$..35
$.25
$0.18
$0.91
$0.12
$.08
Basic
246,000
251,000
255,000
258,035
264,782
266,700
271,834
Diluted
247,000
252,000
256,000
258,891
266,805
269,330
274,756
(Gain)/loss on asset
disposal/involuntary
Operating income
Other income
(expense)
Interest expense, net
of amount capitalized
Interest income and
other, net
Net income per share
Dividends per share
Weighted-Average
Shares Outstanding:
Noble Corporation
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Noble Corporation
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Noble Corporation
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Noble Corporation
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Noble Corporation
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