NEW YORK (The Deal) --Houston oil services provider Noble Corp. (NE) said after the markets closed Tuesday that its board approved a plan to spin off part of its drilling business into a separate publicly traded company, allowing each company to be more focused and create more growth and value.
The company is following in the footsteps of Oil States International Inc. (OIS), which is spinning off its accommodations business, and National Oilwell Varco (NOV), which announced yesterday it's separating its distribution business.
The new company, yet to be named, will own five drillships, three semisubmersibles, 34 jackups, two submersibles and one floating production, storage and offloading unit. It also will be responsible for the Hibernia platform operations.
Global Hunter Securities analyst Ryan Fitzgibbon estimates the new unit will generate $860 million to $910 million in EBITDA on sales of $1.9 billion to $2.18 billion in 2014 and 2015, leaving Noble with $1.8 billion to $2.2 billion in EBITDA on sales of $3.4 billion to $4.38 billion. Simmons & Co. International estimates the new unit will have $1.8 billion of revenue and $680 million in EBITDA per year over the next three years starting in 2014."The purpose of the separation is for Noble to move forward with our development as a robust high specification and deepwater drilling company through continued execution of newbuilds and fleet enhancements," Noble CEO David Williams said in a statement. Noble may issue up to 20% of the company first in an initial public offering, which could be filed late this year or early next year. The transaction is contingent upon a tax ruling from the Internal Revenue Service, which Noble expects to receive soon. Shareholders also must approve the spinoff, which may come in the second quarter of 2014. Noble hopes to complete the separation by the end of 2014. Noble's stock was up 2% in afternoon trading Wednesday to $38.70. Tudor, Pickering, Holt & Co. Securities Inc. said the move was long awaited but is still positive. It thinks a first-half IPO seems realistic and the move should be 5% to 10% accretive to Noble based on how comparable offshore drillers are trading. "OIS [Oil States], NOV [National Oilwell Varco] and now NE [Noble are] adeptly utilizing favorable energy capital markets backdrop to spin off respective business segments and thereby simplify these oilfield service/equipment stories," it wrote in a note. Written by Claire Poole
Select the service that is right for you!COMPARE ALL SERVICES
Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.
- $2.5+ million portfolio
- Large-cap and dividend focus
- Intraday trade alerts from Cramer
- Weekly roundups
Access the tool that DOMINATES the Russell 2000 and the S&P 500.
- Buy, hold, or sell recommendations for over 4,300 stocks
- Unlimited research reports on your favorite stocks
- A custom stock screener
- Upgrade/downgrade alerts
Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.
- Diversified model portfolio of dividend stocks
- Alerts when market news affect the portfolio
- Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.
- Real Money + Doug Kass Plus 15 more Wall Street Pros
- Intraday commentary & news
- Ultra-actionable trading ideas
Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.
- 100+ monthly options trading ideas
- Actionable options commentary & news
- Real-time trading community
- Options TV