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Noble Corporation Reports Third Quarter 2010 Earnings of $0.34 per Diluted Share

ZUG, Switzerland, Oct 20, 2010 /PRNewswire via COMTEX/ --

Noble Corporation (NYSE: NE) today reported third quarter 2010 earnings of $86 million, or $0.34 per diluted share, versus $426 million, or $1.63 per diluted share, for the third quarter of last year. Results for the third quarter 2010 reflect $14 million, or $0.05 cents per share, in transaction costs associated with the acquisition of FDR Holdings Limited ("Frontier") at the end of July 2010. Contract drilling services revenues for the third quarter of 2010 were $585 million versus $875 million in the third quarter of 2009. The Company generated $271 million in net cash provided by operating activities in the quarter.

"We are pleased to have closed the Frontier transaction during the quarter and commenced a new chapter in our relationship with Shell," said David W. Williams, Chairman, President and Chief Executive Officer. "However, the continuing and far-reaching effects of the ongoing operational disruption in the U.S. Gulf of Mexico negatively impacted Noble's third-quarter results. We recognize that the effects of U.S. policies related to offshore drilling will be felt into 2011 and beyond. Noble continues to make progress toward full compliance with the recently released regulatory changes, and we look forward to clearing the remainder of these hurdles and returning to work in the near term."

Noble invested $355 million in capital projects during the quarter and repurchased 4 million shares at an average cost per share of $32.67, bringing the total number of shares repurchased in 2010 to 6.1 million shares as of September 30, 2010. At the end of the third quarter 2010, the Company had approximately 6.8 million shares remaining on its existing repurchase authorization. Debt as a percentage of total capitalization increased to 27.4 percent at September 30, 2010 from approximately 9.4 percent at the end of the second quarter 2010 due to the issuance of $1.25 billion aggregate principal amount of senior unsecured notes in July 2010 to finance the purchase of Frontier and the assumption of approximately $690 million of fully consolidated Bully joint venture project financing debt.

Operations Highlights

At the end of the third quarter 2010, approximately 72 percent of the Company's available rig operating days were committed for the remainder of 2010 and approximately 49 percent were committed for 2011. The Company's total backlog at September 30, 2010 was approximately $14 billion.

In the U.S. Gulf of Mexico, the newbuild ultra-deepwater semisubmersible Noble Jim Day is currently undergoing final testing, customer acceptance and certification of the rig's blowout preventer (BOP) before commencing its contract with Marathon. The Noble Danny Adkins has received certification of its BOP and commenced operations during the quarter at full dayrate. Also, the Noble Amos Runner has received its BOP certification and the unit has recently been substituted for the Noble Lorris Bouzigard at that rig's same dayrate. The Noble Lorris Bouzigard has been stacked. The Company's remaining deepwater units in the Gulf are in the process of having their BOPs recertified.

In Mexico, the Noble Earl Frederickson received a contract extension through December 31, 2010 at a dayrate of $62,000 - $64,000 and the Noble Lewis Dugger received an extension of the current direct assignment which extends the contract to November 15, 2010 at a dayrate of $76,000 - $78,000.

In the North Sea, the Noble Julie Robertson received a contract extension through March 31, 2011 at $86,000 - $88,000 per day and a letter of intent for one year at $88,000 - $90,000 per day. The Noble Ronald Hoope contract has been extended until March 31, 2011 at the previously reported dayrate. The Noble George Sauvageau signed a one year contract with its current operator which will extend the rig through December 31, 2011.

In West Africa, the Noble Lloyd Noble received a letter of intent for one well that is expected to begin shortly. In the Middle East, the Noble Scott Marks and Noble Roger Lewis each received three year contracts in Saudi Arabia at dayrates of $236,000 - $238,000 and $131,000 - $133,000 respectively. These rates do not include lump sum payments for mobilization and capital upgrades.

Noble has initiated arbitration proceedings in connection with the Noble Homer Ferrington, currently located in the Mediterranean, with respect to an assignment of the drilling contract between operators. Payment of the dayrate is subject to the resolution of this dispute. The rig has been on standby since April 24, 2010 and continues to be on standby. Pending resolution of the dispute, the Company has not recorded any revenue related to the assignment.

"Looking ahead, while there is little doubt we will be forced to endure continued challenges in the U.S. Gulf as a result of regulatory uncertainty, we remain optimistic about the long-term strength of the Company and the industry," said Williams. "As clarity increases in the months ahead and we return to work, the Company's backlog and operating efficiency position us to resume our historical value creation and prepare us for further growth opportunities."

About Noble

Noble is a leading offshore drilling contractor for the oil and gas industry. Noble performs, through its subsidiaries, contract drilling services with a fleet of 69 offshore drilling units (including five drilling rigs currently under construction) located worldwide, including in the Middle East, India, the U.S. Gulf of Mexico, Mexico, the Mediterranean, the North Sea, Brazil, West Africa and Asian Pacific. Noble also owns and operates a dynamically positioned floating production, storage, offloading vessel. Noble's shares are traded on the New York Stock Exchange under the symbol "NE". Additional information on Noble Corporation is available via the worldwide web at http://www.noblecorp.com.

Statements regarding contract backlog, earnings, costs, revenue, rig demand, fleet condition or performance, shareholder value, contract commitments, dayrates, contract commencements, contract extensions or renewals, letters of intent or award, industry fundamentals, customer relationships, future performance, growth opportunities, market outlook, as well as any other statements that are not historical facts in this release, are forward-looking statements that involve certain risks, uncertainties and assumptions. These include but are not limited to operating hazards and delays, risks associated with operations outside of the U.S., actions by regulatory authorities, customers and other third parties, legislation and regulations affecting drilling operations, compliance with regulatory requirements, costs and difficulties relating to the integration of acquired businesses, factors affecting the level of activity in the oil and gas industry, supply and demand of drilling rigs, factors affecting the duration of contracts, the actual amount of downtime, factors that reduce applicable dayrates, violations of anti-corruption laws, hurricanes and other weather conditions, the future price of oil and gas and other factors detailed in the Company's most recent Form 10-K, Form 10-Q's and other filings with the Securities and Exchange Commission. Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual results may vary materially from those indicated.

Conference Call

Noble has scheduled a conference call and webcast related to its third quarter 2010 results on Thursday, October 21, 2010, at 8:00 a.m. U.S. Central Daylight Time. Interested parties are invited to listen to the call by dialing from the U.S. 1-866-461-7129, or +1-706-679-3084 from outside the U.S., using access code: 38611734 or by asking for the Noble Corporation conference call. Interested parties may also listen over the Internet through a link posted in the Investor Relations section of the Company's Web site.

A replay of the conference call will be available on Thursday, October 21, 2010, beginning at 11:00 p.m. U.S. Central Daylight Time, through Wednesday, October 27, 2010, ending at 5:00 p.m. U.S. Central Daylight Time. The phone number for the conference call replay is 1-800-642-1687 from the U.S. or, for calls from outside of the U.S., +1-706-645-9291, using access code: 38611734.

The replay will also be available on the Company's Web site following the end of the live call. The conference call may include non-GAAP financial measures. Noble will post a reconciliation of any such measures to the most directly comparable GAAP measures in the "Investor Relations" section of the Company's Web site under the heading "Regulation G Reconciliations."

NOBLE CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME

(In thousands, except per share amounts)

(Unaudited)














Three Months Ended


Nine Months Ended




September 30,


September 30,




2010


2009


2010


2009

Operating revenues










Contract drilling services


$ 584,919


$ 874,969


$ 2,081,075


$ 2,615,571


Reimbursables


19,177


22,455


57,163


61,967


Labor contract drilling services


7,887


7,490


23,704


21,843


Other


635


721


1,449


1,277




612,618


905,635


2,163,391


2,700,658

Operating costs and expenses










Contract drilling services


315,844


250,842


845,870


742,752


Reimbursables


14,351


18,717


44,459


52,081


Labor contract drilling services


5,302


4,642


16,570


13,899


Depreciation and amortization


143,282


103,245


385,366


295,646


Selling, general and administrative


25,482


21,700


71,261


60,901


Loss on asset disposal/involuntary conversion, net


-


2,076


-


31,053




504,261


401,222


1,363,526


1,196,332











Operating income


108,357


504,413


799,865


1,504,326











Other income (expense)










Interest expense, net of amount capitalized


(4,144)


(379)


(5,119)


(1,261)


Interest income and other, net


2,561


2,605


7,193


4,995

Income before income taxes


106,774


506,639


801,939


1,508,060


Income tax provision


(20,287)


(80,556)


(126,801)


(275,833)

Net income


86,487


426,083


675,138


1,232,227












Net income attributable to noncontrolling interests


(467)


-


(467)


-

Net income attributable to Noble Corporation


$ 86,020


$ 426,083


$ 674,671


$ 1,232,227











Net income per share










Basic


$ 0.34


$ 1.63


$ 2.63


$ 4.72


Diluted


$ 0.34


$ 1.63


$ 2.62


$ 4.70

NOBLE CORPORATION AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(In thousands)

(Unaudited)










September 30,


December 31,




2010


2009

ASSETS





Current assets






Cash and cash equivalents


$ 367,242


$ 735,493


Accounts receivable


487,029


647,454


Prepaid expenses and other current assets


133,786


100,243

Total current assets


988,057


1,483,190







Property and equipment






Drilling equipment and facilities


11,981,111


8,666,750


Other


167,290


143,477


Total property and equipment


12,148,401


8,810,227


Accumulated depreciation


(2,468,867)


(2,175,775)


Net property and equipment


9,679,534


6,634,452







Other assets


338,833


279,254


Total assets


$ 11,006,424


$ 8,396,896







LIABILITIES AND EQUITY





Current liabilities






Current maturities of long term debt


$ 52,650


$ -


Accounts payable


277,944


197,800


Accrued payroll and related costs


127,046


100,167


Taxes payable


35,751


68,760


Other current liabilities


96,051


67,220

Total current liabilities


589,442


433,947







Long-term debt


2,670,701


750,946

Deferred income taxes


270,645


300,231

Other liabilities


274,546


123,340


Total liabilities


3,805,334


1,608,464







Commitments and contingencies











Shareholders' equity






Shares


947,710


1,130,607


Additional paid-in capital


31,350


-


Retained earnings


6,531,742


5,855,737


Treasury shares


(373,813)


(143,031)


Accumulated other comprehensive loss


(60,994)


(54,881)


Total shareholders' equity


7,075,995


6,788,432








Noncontrolling interests


125,095


-


Total equity


7,201,090


6,788,432


Total liabilities and equity


$ 11,006,424


$ 8,396,896

NOBLE CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

(Unaudited)




Nine Months Ended




September 30,




2010


2009

Cash flows from operating activities






Net income


$ 675,138


$ 1,232,227


Adjustments to reconcile net income to net cash from






operating activities:






Depreciation and amortization


385,366


295,646


Loss on asset disposal/involuntary conversion, net


-


31,053


Deferred income tax provision


(29,586)


29,916


Share-based compensation expense


26,906


28,543


Pension contributions


(8,249)


(13,022)


Net change in other assets and liabilities


236,122


(89,150)


Net cash from operating activities


1,285,697


1,515,213







Cash flows from investing activities






New construction


(381,928)


(457,233)


Other capital expenditures


(439,921)


(342,399)


Major maintenance expenditures


(64,244)


(93,112)


Accrued capital expenditures


4,213


(44,493)


Acquisition of FDR Holdings Limited, net of cash acquired


(1,629,644)


-


Net cash from investing activities


(2,511,524)


(937,237)







Cash flows from financing activities






Payments of long-term debt


-


(172,700)


Proceeds from issuance of joint venture partner notes


35,000


-


Proceeds from issuance of long-term debt, net


1,238,074


-


Proceeds from employee stock transactions


9,703


9,371


Settlements of interest rate swap agreements


(2,041)


-


Dividends/par value reduction payments


(193,869)


(35,093)


Repurchases of employee shares for taxes


(9,961)


(6,475)


Repurchases of shares


(219,330)


(130,297)


Net cash from financing activities


857,576


(335,194)


Net increase in cash and cash equivalents


(368,251)


242,782

Cash and cash equivalents, beginning of period


735,493


513,311

Cash and cash equivalents, end of period


$ 367,242


$ 756,093

NOBLE CORPORATION AND SUBSIDIARIES

FINANCIAL AND OPERATIONAL INFORMATION BY SEGMENT

(In thousands, except utilization amounts, operating days and average dayrates)

(Unaudited)






















Three Months Ended September 30,


Three Months Ended June 30,



2010


2009


2010



Contract






Contract






Contract







Drilling






Drilling






Drilling







Services


Other


Total


Services


Other


Total


Services


Other


Total

Operating revenues



















Contract drilling services


$ 584,919


$ -


$ 584,919


$ 874,969


$ -


$ 874,969


$ 687,510


$ -


$ 687,510

Reimbursables


18,488


689


19,177


21,511


944


22,455


12,989


764


13,753

Labor contract drilling services


-


7,887


7,887


-


7,490


7,490


-


8,056


8,056

Other


635


-


635


509


212


721


603


-


603



$ 604,042


$ 8,576


$ 612,618


$ 896,989


$ 8,646


$ 905,635


$ 701,102


$ 8,820


$ 709,922




















Operating costs and expenses



















Contract drilling services


$ 315,844


$ -


$ 315,844


$ 250,842


$ -


$ 250,842


$ 275,595


$ -


$ 275,595

Reimbursables


13,696


655


14,351


17,811


906


18,717


9,626


739


10,365

Labor contract drilling services


-


5,302


5,302


-


4,642


4,642


-


5,380


5,380

Depreciation and amortization


140,199


3,083


143,282


100,669


2,576


103,245


123,379


2,848


126,227

Selling, general and administrative


25,220


262


25,482


21,629


71


21,700


23,561


247


23,808

Loss on asset disposal/involuntary conversion, net


-


-


-


2,076


-


2,076


-


-


-



$ 494,959


$ 9,302


$ 504,261


$ 393,027


$ 8,195


$ 401,222


$ 432,161


$ 9,214


$ 441,375




















Operating income


$ 109,083


$ (726)


$ 108,357


$ 503,962


$ 451


$ 504,413


$ 268,941


$ (394)


$ 268,547




















Operating statistics



















Jackups:



















Average Rig Utilization


77%






80%






81%





Operating Days


3,032






3,183






3,183





Average Dayrate


$ 90,791






$ 143,388






$ 96,677
























Semisubmersibles - (6,000 feet or greater):



















Average Rig Utilization


89%






98%






92%





Operating Days


736






631






750





Average Dayrate


$ 203,316






$ 434,435






$ 355,450
























Semisubmersibles - (less than 6,000 feet):



















Average Rig Utilization


94%






100%






100%





Operating Days


321






276






273





Average Dayrate


$ 102,589






$ 261,167






$ 253,697
























Drillships:



















Average Rig Utilization


100%






100%






67%





Operating Days


468






276






182





Average Dayrate


$ 229,963






$ 243,186






$ 242,045
























Submersibles/others:



















Average Rig Utilization


26%






42%






0%





Operating Days


64






78






-





Average Dayrate


$ 304,000






$ 65,944






$ -
























Total:



















Average Rig Utilization


79%






83%






80%





Operating Days


4,621






4,444






4,388





Average Dayrate


$ 126,581






$ 196,900






$ 156,683





NOBLE CORPORATION AND SUBSIDIARIES

CALCULATION OF BASIC AND DILUTED NET INCOME

(In thousands, except per share amounts)

(Unaudited)










The following table sets forth the computation of basic and diluted net income per share:












Three months ended


Nine months ended



September 30,


September 30,



2010


2009


2010


2009

Allocation of net income









Basic









Net income


$ 86,020


$ 426,083


$ 674,671


$ 1,232,227

Earnings allocated to unvested share-based payment awards


(828)


(4,520)


(6,416)


(12,176)

Net income to common shareholders - basic


$ 85,192


$ 421,563


$ 668,255


$ 1,220,051










Diluted









Net income


$ 86,020


$ 426,083


$ 674,671


$ 1,232,227

Earnings allocated to unvested share-based payment awards


(825)


(4,505)


(6,394)


(12,141)

Net income to common shareholders - diluted


$ 85,195


$ 421,578


$ 668,277


$ 1,220,086










Weighted average number of shares outstanding - basic


252,513


257,913


253,944


258,550

Incremental shares issuable from assumed exercise of stock options


672


925


855


778

Weighted average number of shares outstanding - diluted


253,185


258,838


254,799


259,328










Weighted average unvested share-based payment awards


2,453


2,765


2,438


2,581










Earnings per share









Basic


$ 0.34


$ 1.63


$ 2.63


$ 4.72

Diluted


$ 0.34


$ 1.63


$ 2.62


$ 4.70

SOURCE Noble Corporation


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