• Revenue: $764 million in Q3, up from $661 million in Q2.
• Adjusted EBITDA: $291 million in Q3, up from $271 million in Q2.
• Adjusted EBITDA Margin: 36% for Q3.
• Free Cash Flow: $165 million in Q3.
• Total Backlog: $6.2 billion as of November 5th.
• Share Repurchases: $360 million completed under the original $400 million authorization.
• Dividend: Maintained at $0.50 per share for Q4.
• Capital Expenditures: Net capital expenditures were $119 million in Q3.
• Fourth Quarter Revenue Guidance: $850 million to $890 million.
• Fourth Quarter Adjusted EBITDA Guidance: $275 million to $305 million.
• Fourth Quarter Net Capital Additions Guidance: $105 million to $135 million.

• Warning! GuruFocus has detected 3 Warning Signs with NE.

Release Date: November 06, 2024

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Noble Corp PLC (NYSE:NE) successfully closed the acquisition of Diamond Offshore, creating a combined fleet of 41 rigs and adding $2 billion in backlog.
• The company achieved strong financial results in Q3 2024, with adjusted EBITDA of $291 million and free cash flow of $165 million.
• Noble Corp PLC (NYSE:NE) completed $360 million of share repurchases and announced a second $400 million authorization, highlighting a strong capital return program.
• The company secured 4.8 rig years of additional backlog with ExxonMobil in Guyana, extending visibility through August 2028.
• Noble Corp PLC (NYSE:NE) reported a total backlog of $6.2 billion, with significant contracting activity expected to support a ramp in utilization and EBITDA by the second half of 2025.

Negative Points

• There is a general lack of urgency to drill, leading to white space concerns in the first half of 2025.
• The company faces potential utilization headwinds due to customer capital discipline and delayed projects.
• Noble Corp PLC (NYSE:NE) may need to stack rigs if demand does not materialize as expected, particularly for its 6th generation units.
• The North Sea jack-up market is experiencing constrained demand visibility amid fiscal and regulatory challenges.
• The company has not provided specific guidance for 2025, citing ongoing negotiations and uncertainty in contracting opportunities.

Q & A Highlights

Q: Could you expand on the reasons for utilization headwinds in the first half of next year and your confidence in rig demand rebounding in 2026? A: Robert Eifler, President and CEO, explained that there is a general lack of urgency to drill due to capital discipline, causing delays. However, there are indicators like open tenders and FID's suggesting work is forthcoming. Conversations have picked up, indicating potential improvement in late 2025 and 2026.

Q: What are your thoughts on potentially stacking rigs if demand doesn't materialize as expected? A: Robert Eifler stated that while they will minimize costs when necessary, they do not anticipate taking dramatic measures with seventh-generation rigs that would make them less marketable.

Q: Can you provide insight into the expected EBITDA inflection in the back half of next year? A: Richard Barker, CFO, noted that while specific guidance for 2025 is not yet provided, the first half of the year is expected to be flat compared to Q4. The potential inflection could be significant, contingent on winning current work negotiations.

Q: How do you view capital allocation given the increased debt post-acquisition? A: Robert Eifler mentioned they are satisfied with the current capital structure and plan to continue dividends, supplementing with share repurchases as excess free cash flow allows.

Q: Are there any regions you are particularly optimistic about for future opportunities? A: Robert Eifler indicated that opportunities are globally present but more abundant in the Golden Triangle, with growth expected in South America, particularly Caricom, and West Africa. Key regions for 2026 and 2027 include C&I, West Africa, and Mozambique.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.