Oil and gas service provider, Noble Corporation (NE) has inked a 70-day contract with U.S. energy firm Apache Corp. (APA) for its semi-submersible rig Noble Amos Runner.
In the August 2011 fleet status report, Noble highlighted that Noble Amos Runner is slated to start the contract in late August in the region of Gulf of Mexico (GoM) and will earn $360,000 per day. The company added that the rig also secured a nine-month deal, in the GoM, with privately held U.S. company Llog at a comparable day rate. The rig will likely begin operations on the latter contract following closing of its service with Apache.
The company further revealed that its Noble Gene Rosser jack-up rig secured a 1,039-day contract with state-run company, Pemex, in Mexico at a day rate of $81,000. The contract is expected to commence in mid September this year and wrap up by mid-July 2014. Additionally, Pemex also gained access to Noble Gene Rosser from late February next year for a 488-day contract at the same rate.
Additionally, in its fleet status report, Noble revealed that Noble Homer Ferrington semi-submersible has been awarded a three-month contract by GeoGlobal Resources. The rig is expected to be operational by mid-April 2012 in the region of North Sea at a day rate of $325,000.
Following the suspension of the moratorium in the U.S. GoM, companies in the offshore oil industry are trying to ramp up their deepwater assignments. Additionally, offshore drillers are experiencing improved market conditions with an uptrend in oil prices and better bidding activity.
Likewise, as a contract drilling company, Switzerland-based Noble is also making constant efforts to make the most of the scenario by expanding and upgrading its ultra-deepwater rig fleet. We believe this will in turn transform Noble into one of the industry's most modern and capable offshore drilling contractors.
We see long-term earnings and cash flow visibility in the company’s solid backlog position, which will be further bolstered by recent newbuild agreements. Noble’s backlog as of June 30, 2011, stood at a healthy $13 billion.
Over the longer term, we expect the stock to perform in line with the broader market and maintain our Neutral recommendation. The company also holds a Zacks #3 Rank, which is equivalent to a short-term Hold rating.
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