Noble Corporation’s second-quarter (Q2) net income more than doubled to $195 million, up from $95 million in Q1 2024, and adjusted EBITDA increased to $271 million up from $183 million in Q1 2024. 

 

Net cash provided by operating activities in the second quarter of 2024 was $107 million, net capital expenditures were $133 million, and free cash flow (non-GAAP) was $(26) million driven by a significant working capital build.

 

Robert W Eifler, President and Chief Executive Officer of Noble Corporation, said: "Our second quarter results reflect a strong earnings improvement driven by key contract startups, resulting in a 48% sequential improvement in Adjusted EBITDA. To that end, the 25% increase to our quarterly dividend to $0.50 per share in Q3 further demonstrates Noble's return of capital commitment. We are extremely excited to be progressing toward closing the highly accretive acquisition of Diamond, which represents a critical milestone in our First Choice journey through the formation of an industry leading deepwater fleet and a strong free cash generation and return of capital platform."

 

Contract drilling services

Contract drilling services revenue for Q2 totalled $661 million compared to $612 million in Q1 2024, with the sequential increase driven by increased utilisation. Marketed fleet utilisation was 78% in the three months ended June 30, 2024, compared to 72% in the previous quarter. Contract drilling services costs for the second quarter of 2024 were $336 million, down from $390 million the first quarter of 2024, with lower contract preparation and mobilisation expenses. 

 

Balance sheet and capital allocation

The company's balance sheet as of June 30, 2024, reflected total debt principal value of $635 million and cash (and cash equivalents) of $163 million. On June 10, 2024, Noble's Board of Directors approved an interim quarterly cash dividend on our ordinary shares of $0.50 per share for the third quarter of 2024. This dividend is in addition to the $0.40 per share dividend previously announced which was paid on June 27, 2024, to shareholders of record at close of business on June 6, 2024. The $0.50 dividend is expected to be paid on September 26, 2024, to shareholders of record at close of business on September 12, 2024. 

 

The company intends to continue to pay dividends on a quarterly basis, and the third quarter dividend represents $2.00 on an annualised basis. Future quarterly dividends and other shareholder returns will be subject to, amongst other things, approval by the Board of Directors and may be modified as market conditions dictate. 

 

The limited waiver of certain restrictions pursuant to the merger agreement with Diamond has provided Noble the flexibility to execute under its previously approved share repurchase programme following the conclusion of the Diamond shareholder vote currently scheduled for August 27, and subject to laws and regulations.

 

Operating highlights and backlog

Noble's marketed fleet of sixteen floaters was 78% contracted through the second quarter, compared with 76% in the prior quarter. Industry leading edge dayrates for tier-1 drillships remain firm in the high $400,000s to low $500,000s per day range, excluding discounted rates for longer term duration fixtures. Contract fixtures for lower specification sixth generation floaters have been limited, resulting in continued white space for these units and bifurcated dayrate expectations for tier-1 rigs and lower specification rigs in 2024 and 2025.

 

Utilisation of Noble's thirteen marketed jackups improved to 77% in the second quarter, up from 67% utilisation during the prior quarter. Leading edge harsh environment jackup dayrates are in the mid $200,000s per day in Norway and $130,000 to $150,000 per day in other North Sea. The Northern Europe jackup market is characterised by moderately improving demand visibility in Norway for 2025, contrasted with a more cautious near term outlook in the southern North Sea arising from policy and permitting uncertainty in the UK.

Noble's backlog as of July 31, 2024, stands at $4.2 billion.

 

Outlook

For the full year 2024, Noble is updating its guidance as follows: Total revenue increases and narrows to a range of $2.65-$2.75 billion (previously $2.55-$2.7 billion) with the increase primarily driven by higher reimbursable revenue and revenue from ancillary services; Adjusted EBITDA narrows to a range of $950-$1 billion (previously $925-$1.03 billion), and capital additions (net of reimbursements) remains the same with a range of $400 to $440 million.

 

Commenting on Noble's outlook, Eifler said: "Deepwater fundamentals remain firm, and key indicators continue to support meaningful additional growth over the course of this cycle. Although demand has been flat over the past twelve months and appears likely to remain approximately flat into mid-2025, we expect several sizeable development programme will drive another leg of growth from late 2025 and 2026. Notwithstanding this expected moderated EBITDA trajectory throughout this transition period with continuing white space impacts, Noble has now reached a free cash flow inflection point, and we intend to continue to drive shareholder value by directing essentially all free cash flow to dividends and share repurchases."

 

Noble's outlook does not include any impact of its pending acquisition of Diamond.--TradeArabia News Service