Noble Corp. Says 'Try Me, I Know We Can Make It' - Noble Corporation plc (NYSE:NE)

Image: Jack-up Noble Sam Turner

Investment Thesis

The London-based Noble Corporation (NE) released its third quarter 2019 results, which confirmed again that we might have reached a bottom in revenues, which are oscillating roughly between $275 million and $300 million. It is progress for this struggling company, but will it be enough?

The contract backlog is still eroding, albeit at a slower pace, and daily rates are insufficient and going down for the floaters, from $281,796 in Q3'18 to $189,773 in Q3'19. Conversely, the Jack-ups increased a little with $130,339 in Q3'19 compared to $122,350 a year ago.

Consequently, the total backlog keeps shrinking since 2Q'15 and is $2 billion now. It was over $8 billion in 3Q'15.

After analyzing a few offshore drillers recently, e.g., Transocean's (RIG) third quarter 2019, Diamond Offshore (DO), I believe that the drilling industry is undergoing an unprecedented period of transition. You can read my recent articles about RIG 3Q'19 or DO 3Q'19 by clicking the blue link.

The "recovery" is hardly noticeable and visible only in the jack-ups segment. Daily rates have reached rock bottom, and a significant reduction of exploration CapEx has continued with oil price weakness.

The industry is entering a different standard model and will have to adapt to survive quickly. For Noble, the task may be more difficult due to its massive debt load. Worse, oil prices are showing signs of weakness due to world economy uncertainty and unbalance between demand a....

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