Noble Corporation is a principal offshore drilling company in the oil and gas industry. It is a Swiss company that provides contract oil and gas drilling services using its fleet that comprises of 79 movable drilling units and a single floating offloading and production storage unit. The entire fleet has 49 jackups, 14 semisubmersibles, 2 submersibles, and 14 drillships. The corporation has been highly cyclical and competitive given the high principal and maintenance costs required in the contract drilling.
Over the past few years, the corporation has experienced duration of volatility following global economic crisis and instability. Despite these instabilities, the corporation began to experience stability in drilling market following increased demand for services of offshore drilling in the past few years.
As at 31st December 2011, the corporation reported its financial and operating outcomes as follows. Its operating revenues totaled to $2.7 billion. Net income seen was $371 million which was equivalent to $1.46 in every diluted share. Operating activities brought net cash of $759 million. The company also recorded a 33.5% debt increase in total capitalization from 27.5% in 2010 following a $1.1 billion issuance in senior notes and $935 million extra debt drawn on company’s credit facilities.
In order to provide a clear overview of Noble Corporation’s financial performance, consolidated balance sheet, statement of income, and statement of cash flow for the years 2011, 2010 and 2009 will be evaluated. In addition, share repurchases and dividends offered in the last three years will be analyzed as indicated by Noble Corporation (2012).
Beginning with a consolidated balance sheet, the corporation reported total assets of $13,495,159 and $11,302,387 in 2011 and 2010 respectively. Total liabilities on the other hand for both years were $5,397,307 and $4,014,753 respectively while total equity was $ 8,097,852 and $7,287,634 as shown in the table below. Note: All amounts in US$ thousands.
In 2009, 2008 and 2007, the company’s total assets were $8,396,896, $7,106,799 and $5,876,006 while total equity was $6,788,432, $5,290,715 and $4,308,322 respectively. This indicates that the company has sustained a positive growth in both its assets and equity, and so does the shareholder’s equity. This is mainly because the company has increased its fleet and drilling units.
In 2008 and 2007, operating revenues were $3,446,501 and $2,995,311 respectively. It is therefore evident that operating revenues of the company recorded an increase for the period spanning 2007 to 2009 after which it declined significantly in 2011and 2010. This decline in operating revenues is attributed to reductions in overall dayrates and days of operations. Decrease in dayrates made revenues to decline by about $71million while decrease in days of operation lowered revenues by another $68 million. Operating costs and expenses have also shown a sustained increase. This was due to added rigs in the fleet that increased operating costs with about $120 million in 2010. Excluding the extra costs incurred related to the additional rigs, drilling costs also increased primarily because maintenance of rigs, mobilization costs, labor costs, and safety and training costs increased by $71 million.
In the statement of cash flow, the company has also recorded decrease in the net cash arising from operating activities, investing activities but increase in financing activities.
The major decreases in the cash flows from different activities occurred due to adjustments in income taxes, interest rates, foreign currency rates, and market following the global economic instability that adversely affected oil and gas industry entirely. The company was subjected to these adjustments because it operates in different countries that have varying computational methods within their jurisdictions. This includes changes in interest rates and additional expenses incurred when using local currencies outside consistent currencies in oil and gas industry.
Fluctuations in the share purchases and costs were affected by operations outcomes, financial situations, cash requirements, and contractual restrictions among other factors that affect overall performance of the company in financial terms. It also offers dividends in four equal installments depending on the above factors. However, the corporation intends to offer $0.52 per share in 2012 but after shareholder’s approval. In respect to the number of outstanding shares currently, the company in 2012 will make total cash payments of about $66 million.
In conclusion, Noble Corporation has proved to be a competitive company in the oil and gas industry. It has also shown to recover and regain stability in a short period of time, thus providing an attractive investment opportunity to its shareholders.