Noble secures new work for ex-Pacific rigs but two stacked drillships retired

Following the acquisition of rival rig owner Pacific Drilling in April 2021, Noble Corporation has secured new contracts for legacy Pacific rigs and is on track to achieve the identified synergies three months ahead of schedule. The drilling contractor has also retired two stacked drillships.

Noble Corp. completed the acquisition of Pacific Drilling in April 2021 and, with it, its fleet of offshore drilling rigs, expecting annual pre-tax cost synergies of $30 million.

One of the key success factors for the acquisition was finding work for the new drillships. Noble has now revealed that, since the acquisition, it has secured new contracts for three of these rigs.

According to Noble’s 2Q 2021 report on Tuesday, the Pacific Sharav drillship in April started its contract with Murphy in the U.S. Gulf of Mexico, with a firm term into the third quarter of 2022.

Furthermore, the Pacific Khamsin is preparing to begin operations in August for Petronas in Mexico, scheduled for completion in mid-October 2021.

After that, Noble Corp. said that the drillship will follow on to a recently signed contract with Murphy for an estimated 83 days of work to begin in November 2021 in the U.S. Gulf of Mexico. Bassoe Offshore’s day rate estimate for this contract is $230,000. The rig will then move in direct continuation to the previously announced contract with EnVen, who has three subsequent priced options for additional follow on work.

Another legacy Pacific Drilling drillship has secured a new contract. The Pacific Santa Ana in July signed a contract with APA Corporation in Suriname for one firm well plus two option wells, starting in early February 2022. Bassoe Offshore estimates that the day rate for this contract will be about $230,000.

The rig has been working in Mauritania for Petronas since December 2019 and is scheduled to complete this job in mid-August 2021.

Robert W. Eifler, President and Chief Executive Officer of Noble Corporation, stated: “Noble’s achievements in the second quarter also validated our rationale behind the Pacific Drilling acquisition, which was announced in March and closed in April. Specifically, the team has already signed three contracts on legacy Pacific Drilling rigs and retired two of its stacked drillships.

“The integration of Pacific Drilling’s fleet into Noble’s operations is nearly complete and we are on track to deliver the identified synergies by the end of the third quarter this year, three months ahead of schedule”.

Noble previously said it would dispose of two drillships following the acquisition of Pacific Drilling, the Pacific Bora and Pacific Mistral. The disposal was completed in June. Together, the sales netted about $30 million in cash proceeds and will eliminate about $10 million in annual stacking cost for those rigs.

Now, according to the rig owner’s fleet status report from June 2021, the only two remaining cold stacked drillships in the fleet are Pacific Meltem and Pacific Scirocco. Noble is now actively evaluating options for these two drillships, which remain stacked in Las Palmas. Stacking costs are about $40,000 per day for the two drillships combined. The rig owner will not begin the reactivation of Meltem or Scirocco without an appropriate contract that would justify the required capital investment.

When it comes to its financial updates, Noble Corp. emerged from Chapter 11 bankruptcy in February 2021 and adopted a fresh-start accounting which resulted in Noble becoming a new reporting entity for accounting and financial reporting purposes.

However, the company has combined certain results of the predecessor and successor periods as non-GAAP measures to compare to prior periods.

With this said, the rig owner booked a net profit of $20 million in 2Q 2021 compared to a net loss of $42 million in 2Q 2020.

Noble Corp.’s contract drilling services revenues for the second quarter of 2021 totalled $200 million compared to $159 million in the combined first quarter of 2021 and $220 million for the predecessor entity in 2Q 2020.

The sequential increase in revenue was largely due to contract commencements on the Noble Tom Prosser, Noble Hans Deul, and Noble Clyde Boudreaux rigs; higher operating days on the Noble Sam Turner, and Noble Scott Marks; and the addition of the Pacific Santa Ana and Pacific Sharav into the fleet in April.

Marketed fleet utilisation was 74 per cent in the three months ended 30 June 2021, compared to 66 per cent in the combined first quarter.

At the end of June, the company’s estimated revenue backlog totalled approximately $1.5 billion, consisting of approximately $1.2 billion associated with the floating rig fleet and approximately $358 million with the jack-up fleet.

Commenting on the state of the offshore drilling industry, Eifler added that the company had seen a building pipeline of floater tender opportunities throughout the first part of 2021.

Eifler also said that, compared to the first quarter, the industry has seen a fivefold increase in contract fixtures in the U.S. Gulf of Mexico region with almost five rig years added in the second quarter.

“We do not believe the recent volatility in commodity prices has changed our customer’s offshore rig demand, especially for the most capable rigs, and we maintain our constructive outlook for ultra-deepwater floaters and stable outlook for jack-ups”, he added.

Eifler’s optimism is in line with statements from other drilling contractors earlier this week. Transocean remains encouraged by the upcycle that is currently unfolding and believes that rig utilisaton and day rates will be improving into 2022 while Valaris is beginning to see early signs of a recovery in customer demand following the downturn caused by the Covid-19 pandemic.