Noble Corporation plc Reports Fourth Quarter And Full Year 2017 Results

 NOBLE CORPORATION PLC AND SUBSIDIARIES 

 CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS 

 (In thousands, except per share amounts) 

 (Unaudited) 

Three Months Ended

Twelve Months Ended

December 31, 

December 31, 

2017

2016

2017

2016

 Operating revenues 

 Contract drilling services 

$  321,095

$      400,879

$  1,207,026

$  2,242,200

 Reimbursables and other 

8,490

9,277

29,889

59,865

329,585

410,156

1,236,915

2,302,065

 Operating costs and expenses 

 Contract drilling services 

152,705

176,810

640,489

879,438

 Reimbursables 

5,061

6,053

18,435

45,499

 Depreciation and amortization 

138,071

155,160

547,990

611,067

 General and administrative 

21,765

14,912

71,634

69,258

 Loss on impairment 

121,639

1,442,133

121,639

1,458,749

439,241

1,795,068

1,400,187

3,064,011

 Operating loss 

(109,656)

(1,384,912)

(163,272)

(761,946)

 Other income (expense) 

 Interest expense, net of amount capitalized 

(72,446)

(55,940)

(291,989)

(222,915)

 Gain on extinguishment of debt, net 

-

6,748

-

17,814

 Interest income and other, net 

1,163

1,461

5,449

18

 Loss from continuing operations before income taxes 

(180,939)

(1,432,643)

(449,812)

(967,029)

 Income tax benefit (provision) 

167,960

149,473

(42,629)

109,156

 Net loss from continuing operations 

(12,979)

(1,283,170)

(492,441)

(857,873)

 Net loss from discontinued operations, net of tax 

-

-

(1,486)

-

 Net loss 

(12,979)

(1,283,170)

(493,927)

(857,873)

 Net income attributable to noncontrolling interests 

(11,696)

(19,680)

(22,584)

(71,707)

 Net loss attributable to Noble Corporation plc 

$  (24,675)

$  (1,302,850)

$   (516,511)

$   (929,580)

 Per share data: 

 Basic: 

 Loss from continuing operations 

$      (0.10)

$           (5.36)

$         (2.10)

$         (3.82)

 Loss from discontinued operations 

-

-

(0.01)

-

 Net loss attributable to Noble Corporation plc

$      (0.10)

$           (5.36)

$         (2.11)

$         (3.82)

 Diluted: 

 Loss from continuing operations 

$      (0.10)

$           (5.36)

$         (2.10)

$         (3.82)

 Loss from discontinued operations 

-

-

(0.01)

-

 Net loss attributable to Noble Corporation plc

$      (0.10)

$           (5.36)

$         (2.11)

$         (3.82)

 NOBLE CORPORATION PLC AND SUBSIDIARIES 

 CONDENSED CONSOLIDATED BALANCE SHEETS 

 (In thousands) 

 (Unaudited) 

 December 31,  

 December 31, 

2017

2016

 ASSETS 

 Current assets 

 Cash and cash equivalents 

$            662,829

$           725,722

 Accounts receivable, net 

204,696

319,152

 Prepaid expenses and other current assets 

171,450

147,740

 Total current assets 

1,038,975

1,192,614

 Property and equipment, at cost 

12,034,331

12,364,888

 Accumulated depreciation 

(2,545,091)

(2,302,940)

 Property and equipment, net 

9,489,240

10,061,948

 Other assets 

266,444

185,555

 Total assets 

$       10,794,659

$      11,440,117

 LIABILITIES AND  EQUITY 

 Current liabilities 

 Current maturities of long-term debt 

$            249,843

$           299,882

 Accounts payable 

84,032

108,224

 Accrued payroll and related costs 

54,904

48,383

 Other current liabilities 

204,245

176,804

 Total current liabilities 

593,024

633,293

 Long-term debt  

3,795,867

4,040,229

 Other liabilities 

455,140

299,150

 Total liabilities 

4,844,031

4,972,672

 Commitments and contingencies 

 Equity 

 Total shareholders' equity 

5,276,161

5,758,681

 Noncontrolling interests 

674,467

708,764

 Total equity 

5,950,628

6,467,445

 Total liabilities and equity 

$       10,794,659

$      11,440,117

 NOBLE CORPORATION PLC AND SUBSIDIARIES 

 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS 

 (In thousands) 

 (Unaudited) 

Twelve Months Ended

December 31, 

2017

2016

 Cash flows from operating activities 

 Net income (loss) 

$          (493,927)

$  (857,873)

 Adjustments to reconcile net income to net cash flow from operating activities: 

 Depreciation and amortization 

547,990

611,067

 Other long-term asset write-off 

29,032

-

 Loss on impairment 

121,639

1,458,749

 Gain on extinguishment of debt, net 

-

(17,814)

 Net change in operating activities 

249,204

(68,053)

453,938

1,126,076

 Cash flows from investing activities 

 New construction 

-

(435,064)

 Capital expenditures 

(111,140)

(202,428)

 Change in accrued capital expenditures 

(46,830)

(34,814)

 Capitalized interest 

-

(22,433)

 Proceeds from disposal of assets 

2,382

24,808

 Net cash used in investing activities 

(155,588)

(669,931)

 Cash flows from financing activities 

 Issuance of senior notes 

-

980,100

 Repayments of debt 

(300,000)

(1,049,338)

 Debt issuance costs on senior notes and credit facility 

(42)

(12,111)

 Premiums paid on early repayment of long-term debt 

-

(24,649)

 Dividend payments 

-

(47,534)

 Dividends paid to noncontrolling interests 

(56,881)

(85,944)

 Other financing activities 

(4,320)

(3,192)

 Net cash used in financing activities 

(361,243)

(242,668)

 Net increase (decrease) in cash and cash equivalents 

(62,893)

213,477

 Cash and cash equivalents, beginning of period 

725,722

512,245

 Cash and cash equivalents, end of period 

$            662,829

$   725,722

 NOBLE CORPORATION PLC AND SUBSIDIARIES 

 FINANCIAL AND OPERATIONAL INFORMATION BY SEGMENT 

 (In thousands, except operating statistics) 

 (Unaudited) 

Three Months Ended December 31,

Three Months Ended September 30,

2017

2016

2017

Contract

Contract

Contract

Drilling

Drilling

Drilling

Services

Other

Total

Services

Other

Total

Services

Other

Total

 Operating revenues 

 Contract drilling services 

$  321,095

$        -

$  321,095

$     400,879

$        -

$     400,879

$ 259,740

$        -

$      259,740

 Reimbursables and other 

8,490

-

8,490

9,277

-

9,277

6,472

-

6,472

$  329,585

$        -

$  329,585

$     410,156

$        -

$     410,156

$ 266,212

$        -

$      266,212

 Operating costs and expenses 

 Contract drilling services 

$  152,705

$        -

$  152,705

$     176,810

$        -

$     176,810

$ 165,028

$        -

$      165,028

 Reimbursables 

5,061

-

5,061

6,053

-

6,053

3,834

-

3,834

 Depreciation and amortization 

132,392

5,679

138,071

149,335

5,825

155,160

131,819

5,788

137,607

 General and administrative 

21,765

-

21,765

14,912

-

14,912

15,331

-

15,331

 Loss on impairment 

121,639

-

121,639

1,442,133

-

1,442,133

-

-

-

$  433,562

$  5,679

$  439,241

$  1,789,243

$  5,825

$  1,795,068

$ 316,012

$  5,788

$      321,800

 Operating loss 

$ (103,977)

$ (5,679)

$ (109,656)

$ (1,379,087)

$ (5,825)

$ (1,384,912)

$ (49,800)

$ (5,788)

$       (55,588)

 Operating statistics 

 Jackups: 

 Average Rig Utilization 

76%

86%

81%

 Operating Days 

971

1,050

1,043

Average Dayrate

$  134,413

$     124,470

$ 127,163

 Semisubmersibles: 

 Average Rig Utilization 

17%

13%

17%

 Operating Days 

92

92

92

Average Dayrate

$  261,661

$     166,253

$ 104,028

 Drillships: 

 Average Rig Utilization 

60%

73%

56%

 Operating Days 

440

537

410

Average Dayrate

$  378,709

$     474,462

$ 286,819

 Total: 

 Average Rig Utilization 

58%

62%

60%

 Operating Days 

1,503

1,679

1,545

Average Dayrate

$  213,664

$     238,704

$ 168,127

 NOBLE CORPORATION PLC AND SUBSIDIARIES 

 CALCULATION OF BASIC AND DILUTED NET INCOME PER SHARE 

 (In thousands, except per share amounts) 

 (Unaudited) 

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

Three Months Ended

Twelve Months Ended

 December 31, 

 December 31, 

2017

2016

2017

2016

 Numerator:  

 Basic 

 Net loss attributable to Noble -UK 

$ (24,675)

$ (1,302,850)

$ (516,511)

$ (929,580)

 Net loss from discontinued operations, net of tax  

-

-

1,486

-

Earnings allocated to unvested share-based payment awards ⁽¹⁾

-

-

-

-

 Net loss from continuing operations to common shareholders - basic 

$ (24,675)

$ (1,302,850)

$ (515,025)

$ (929,580)

-

 Diluted 

 Net loss attributable to Noble -UK 

$ (24,675)

$ (1,302,850)

$ (516,511)

$ (929,580)

 Net loss from discontinued operations, net of tax  

-

-

1,486

-

 Net loss from continuing operations to common shareholders - diluted 

$ (24,675)

$ (1,302,850)

$ (515,025)

$ (929,580)

 Denominator: 

 Weighted average shares outstanding - basic 

244,970

243,238

244,743

243,127

Incremental shares issuable from assumed exercise of stock options and unvested share-based payment awards outstanding

-

-

-

-

 Weighted average shares outstanding - diluted 

244,970

243,238

244,743

243,127

 Loss per share  

 Basic: 

 Continuing operations 

$     (0.10)

$          (5.36)

$       (2.10)

$       (3.82)

 Discontinued operations 

-

-

(0.01)

-

 Net loss to Noble Corporation plc 

$     (0.10)

$          (5.36)

$       (2.11)

$       (3.82)

 Diluted: 

 Continuing operations 

$     (0.10)

$          (5.36)

$       (2.10)

$       (3.82)

 Discontinued operations 

-

-

(0.01)

-

 Net loss to Noble Corporation plc 

$     (0.10)

$          (5.36)

$       (2.11)

$       (3.82)

⁽¹⁾ For the quarters and years ended December 31, 2017 and 2016, we experienced net losses from continuing operations, as such, unvested share-based payment awards were excluded from the loss per share calculation during these periods, as the awards were anti-dilutive.

Non-GAAP Reconciliation

Certain non-GAAP performance measures and corresponding reconciliations to GAAP financial measures for the Company have been provided for meaningful comparisons between current results and prior operating periods. Generally, a non-GAAP financial measure is a numerical measure of a company's performance, financial position, or cash flows that excludes or includes amounts that are not normally included or excluded in the most directly comparable measure calculated and presented in accordance with generally accepted accounting principles. In order to fully assess the financial operating results, management believes that the results of operations, adjusted to exclude the following items, which are included in the Company's press release issued on February 21, 2018, and discussed in the related conference call on February 22, 2018, are appropriate measures of the continuing and normal operations of the Company: 

(i) 

In the second and third quarter of 2017, a discrete tax item;

(ii) 

In the second quarter of 2017, the Noble Max Smithwrite-off of receivables;

(iii) 

In the third quarter of 2017, the Noble Danny Adkins and Noble Jim Day related cost damage; and  

(iv) 

In the fourth quarter of 2017, the Noble Jim Day and Noble Bully II special payments received.             

These non-GAAP adjusted measures should be considered in addition to, and not as a substitute for, or superior to, contract drilling revenue, contract drilling cost, contract drilling margin, average daily revenue, operating income, cash flows from operations, or other measures of financial performance prepared in accordance with GAAP. Please see the following Non-GAAP Financial Measures and Reconciliations for a complete description of the adjustments. 

NOBLE CORPORATION PLC AND SUBSIDIARIES

NON-GAAP MEASURES 

(In thousands, except per share amounts)

(Unaudited)

Reconciliation of total revenue

Three Months Ended,

Twelve Months Ended,

December 31,

December 31,

2017

2016

2017

2016

Total revenue 

$ 329,585

$     410,156

$ 1,236,915

$ 2,302,065

Adjustments

Noble Tom Prosser-cancellation agreement

-

(16,375)

-

(16,375)

Noble Jim Day-Marathon Settlement

(12,709)

-

(12,709)

-

Noble Bully II-Shell escalation Provision 

(25,326)

-

(25,326)

-

Cancellations with Freeport:

Contractual items

-

-

-

(379,143)

Termination date valuation of contingent payments

-

-

-

(13,900)

Total Adjustments

(38,035)

(16,375)

(38,035)

(409,418)

Adjusted total revenue 

$ 291,550

$     393,781

$ 1,198,880

$ 1,892,647

Reconciliation of Income tax provision

Three Months Ended,

Twelve Months Ended,

December 31,

December 31,

2017

2016

2017

2016

Income tax provision

$ 167,960

$     149,473

$    (42,629)

$    109,156

Adjustments

Noble Tom Prosser-cancellation agreement

-

334

-

334

Noble Danny Adkins and Noble Jim Day rig damages

-

-

(4,845)

-

Noble Jim Day-Marathon Settlement

4,003

-

4,003

-

Noble Bully II-Shell escalation Provision 

380

-

380

-

Cancellations with Freeport:

Contractual items

-

-

-

32,035

Termination date valuation of contingent payments

-

-

-

1,211

Loss on impairment

(26,819)

(144,103)

(26,819)

(145,551)

Debt retirement

-

(762)

-

202

Discrete tax items

(120,821)

(8,472)

139,264

(13,985)

Total Adjustments

(143,257)

(153,003)

111,983

(125,754)

Adjusted income tax provision

$   24,703

$        (3,530)

$      69,354

$    (16,598)

Reconciliation of net loss attributable to Noble Corporation plc

Three Months Ended,

Twelve Months Ended,

December 31,

December 31,

2017

2016

2017

2016

Net loss attributable to Noble Corporation plc

$ (24,675)

$ (1,302,850)

$  (516,511)

$  (929,580)

Adjustments

Noble Tom Prosser-cancellation agreement, net of tax

-

(16,041)

-

(16,041)

Noble Max Smith-write-off of receivables

-

-

14,419

-

Noble Danny Adkins and Noble Jim Day rig damages