Leading contract drilling company, Noble Corporation (NE) intends to sell $1.185 billion in aggregate principal amount of senior unsecured notes due 2022 and 2024 in a private offering to prepare for its previously announced Paragon Offshore spin-off. The proceeds from the issue would be used as partial consideration for the transfer of Noble's standard specification drilling business to Paragon in connection with the spin-off, which is expected to be completed in the ongoing quarter.
Post spin-off, Paragon Offshore will own and operate most of Noble's current standard specification drilling business, including five drillships, three semisubmersibles and 34 jackups. The new company will also be responsible for the Hibernia platform operations. Noble will continue to own and operate its high-specification assets with particular operating focus in deepwater and ultra-deepwater market segments for drillships and semisubmersibles alongwith harsh environment and high-specification segments for jackups.
Noble is focused on returning cash to shareholders, even during the 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 first-quarter 2014, the company had 74% of all rig days committed for this year, including both floater and jackup units. For 2015, 47% of rig days are booked, comprising 62% of floater time and 39% of jackup rig days. Overall, total backlog at the end of the quarter was approximately $14.3 billion versus $15.4 billion as of year-end 2013.
Noble is a provider of diversified services for the oil and gas industry. The company performs contract drilling services. 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 #3 (Hold). Better-ranked stocks in the oil and gas sector include Baytex Energy Corp. (BTE), Calumet Specialty Products Partners LP (CLMT) and EXCO Resources Inc. (XCO). All these stocks carry a Zacks Rank #1 (Strong Buy).
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