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Noble Corp. Reports Operating Results (10-Q)
Posted by: gurufocus (IP Logged)
Date: May 6, 2011 11:20AM

Noble Corp. (NE) filed Quarterly Report for the period ended 2011-03-31. Noble Corp. has a market cap of $10 billion; its shares were traded at around $39.64 with a P/E ratio of 22.1 and P/S ratio of 3.5. The dividend yield of Noble Corp. stocks is 0.4%. Noble Corp. had an annual average earning growth of 21.5% over the past 10 years. GuruFocus rated Noble Corp. the business predictability rank of 2-star.

Highlight of Business Operations:

In the first quarter of 2011, we recognized net income attributable to Noble-Swiss of $54 million, or $0.21 per diluted share, on total revenues of $579 million. The average dayrate across our worldwide fleet increased to $150,294 for the first quarter of 2011 from $140,554 for the fourth quarter of 2010. Fleetwide average utilization was 61 percent in the first quarter of 2011, as compared to 73 percent in the fourth quarter of 2010. Daily contract drilling services costs increased to $84,858 for the first quarter of 2011 from $75,932 for the fourth quarter of 2010. As a result, our contract drilling services margin decreased in the first quarter of 2011 to 44 percent as compared to 46 percent in the fourth quarter of 2010. The first quarter of 2011 results reflect the effect of anticipated downtime on certain of our rigs for shipyard projects and contract completions.

On July 28, 2010, Noble-Swiss and Noble AM Merger Co., a Cayman Islands company and indirect wholly-owned subsidiary of Noble-Swiss (“Merger Sub”), completed the acquisition of FDR Holdings Limited, a Cayman Islands company (“Frontier”). Under the terms of the Agreement and Plan of Merger with Frontier and certain of Frontier’s shareholders, Merger Sub merged with and into Frontier, with Frontier surviving as an indirect wholly-owned subsidiary of Noble-Swiss and a wholly-owned subsidiary of Noble-Cayman. The Frontier acquisition was for a purchase price of approximately $1.7 billion in cash plus liabilities assumed and strategically expanded and enhanced our global fleet by adding three dynamically positioned drillships (including two Bully-class joint venture-owned drillships under construction), two conventionally moored drillships, including one that is Arctic-class, a conventionally moored deepwater semisubmersible and one FPSO. Frontier’s results of operations were included in our results beginning July 28, 2010. We funded the cash consideration paid at closing of approximately $1.7 billion using proceeds from our July 2010 offering of senior notes and existing cash on hand.

In 2007, we began, and voluntarily contacted the SEC and the U.S. Department of Justice (“DOJ”) to advise them of, an internal investigation of the legality under the United States Foreign Corrupt Practices Act (“FCPA”) and local laws of certain reimbursement payments made by our Nigerian affiliate to our customs agents in Nigeria. In 2010, we finalized settlements of this matter with each of the SEC and the DOJ. In order to resolve the DOJ investigation, we entered into a non-prosecution agreement with the DOJ, which provides for the payment of a fine of $2.6 million, as well as certain undertakings, including continued cooperation with the DOJ, compliance with the FCPA, certain self-reporting and annual reporting obligations and certain restrictions on our public discussion regarding the agreement. The agreement does not require that we install a monitor to oversee our activities and compliance with laws. In order to resolve the SEC investigation, in 2010, we agreed to the entry of a civil judgment against us. Pursuant to the agreed judgment, we agreed to disgorge profits of $4.3 million, pay prejudgment interest of $1.3 million and refrain from denying the allegations contained in the SEC’s petition, except in other litigation to which the SEC is not a party. We also agreed to an injunction restraining us from violating the anti-bribery, books and records, and internal controls provisions of the FCPA, and we waived a variety of litigation rights with respect to the conduct at issue. The agreed judgment does not require a monitor. Our ability to comply with the terms of the settlements is dependent on the success of our ongoing compliance program, including our ability to continue to manage our agents and supervise, train and retain competent employees, and the efforts of our employees to comply with applicable law and our code of business conduct and ethics.

Net income attributable to Noble Corporation (Noble-Swiss) for the three months ended March 31, 2011 (the “Current Quarter”) was $54 million, or $0.21 per diluted share, on operating revenues of $579 million, compared to net income for the three months ended March 31, 2010 (the “Comparable Quarter”) of $371 million, or $1.43 per diluted share, on operating revenues of $841 million.

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