The board of directors of Noble Corporation (NE) announced a 50% hike in its quarterly dividend to 37.5 cents per share from the previous 25 cents. The dividend will be paid on Feb 20, 2014, to shareholders of record on Feb 10.
Noble is focused on returning cash to shareholders, even during the company's transformation, which involves significant capital expenditures devoted to its newbuild program. We expect the deepwater market segment to deliver strong growth in the foreseeable future. With the company’s strong backlog position, Noble’s earnings and cash flow visibility are likely to increase in the near to medium term.
At the end of fourth quarter 2013, approximately 73% of the company's available rig operating days – comprising 78% of the floating rig fleet and 75% of the jackup fleet – were committed for the balance of 2014. Approximately 44% of the available rig operating days were committed for 2015 – including 61% of the floating rig days and 38% of jackup days. Noble's total backlog as of Dec 31, 2013, was approximately $15.4 billion versus $16.2 billion as of Sep 30, 2013.
This increase in its dividend is part of Noble’s strategy to deliver attractive returns to shareholders, in line with its capital allocation strategy and strong financial position. At the end of the fourth quarter, the company had a cash balance of approximately $114.5 million and long-term debt of $5,556.3 million, with a debt-to-capitalization ratio of 38.0% (versus 37.5% in third-quarter 2013). In the fourth quarter, Noble invested $763.0 million in capital projects.
Noble is a provider of diversified services for the oil and gas industry. The company performs contract drilling services with a fleet of 77 mobile offshore drilling units (including two ultra-deepwater rigs and four jackup drilling rigs currently under construction). It also provides labor contract drilling, engineering and consulting, and project management services. The company offers its services principally in the United States, the Middle East, India, Mexico, the North Sea, Brazil, and West Africa.
Noble currently carries a Zacks Rank #5 (Strong Sell), implying that it is expected to significantly underperform the broader U.S. equity market over the next one to three months.
Meanwhile, one can consider better-ranked players in the oil and gas sector like YPF SA (YPF), Helmerich & Payne, Inc. (HP) and Total SA (TOT). YPF sports a Zacks Rank #1 (Strong Buy) while Helmerich and Total carry a Zacks Rank #2 (Buy).
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