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Noble Corporation Q1 2010 Earnings Call Transcript

Noble Corporation Q1 2010 Earnings Call Transcript

Noble Corp. (NE)

Q1 2010 Earnings Call

April 22, 2010; 08:00am ET


David Williams - Chairman, President & Chief Executive Officer

Tom Mitchell - Chief Financial Officer

Roger Hunt - Senior Vice President of Marketing & Contracts

Lee Ahlstrom - Vice President of Investor Relations & Planning


Dan Boyd - Goldman Sachs

Kurt Hallead - RBC Capital Market

Joe Hill - Tudor Pickering, Holt

Jim Crandell - Barclay

Robin Shoemaker - Citi

Angie Sedita - UBS

Arun Jayaram - Credit Suisse

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Jud Bailey - Jeffries & Co.

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Good morning. My name is Regina, and I will be your conference operator today. At this time I would like to welcome everyone to the Noble Corporation, first quarter 2010 earnings conference call. All lines have been placed on mute to prevent any background noise. After the speakers prepared remarks there will be a question-and-answer period. (Operator Instructions)

I would now like to introduce Mr. Lee Ahlstrom, Vice President of Investor Relations and Planning. Mr. Ahlstrom, you may begin your conference.

Lee Ahlstrom

Thank you Regina, and welcome everyone to Noble Corps first quarter 2010 earnings call.

Before we begin, I’d like to remind everyone that any statements we make today about our plans, expectations, estimates, predictions or similar expressions for the future, including those concerning financial performance, operating results, spending guidance and the drilling business, are forward-looking statements and are subject to risks and uncertainties.

Our filings with the U.S. Securities and Exchange Commission, which are posted on our website discuss the risks and uncertainties in our business and the industry, and the various factors that could keep outcomes of any forward-looking statements from being realized. Our actual results could differ materially from our expectations.

We have included detailed balance sheets and income and cash flow statements with our earnings news release. Also, note that we may use non-GAAP financial measures in the call today. If we do, you will find the required supplemental disclosure for these measures, including the most directly comparable GAAP measure on our website and an associated reconciliation on the website.

Now, I’ll turn the call over to David Williams, our Chairman, President and Chief Executive.

David Williams

Thanks Lee. Good morning and thanks for joining us today. I’d like to begin today by expressing our concerns and sympathy for our friends and colleagues at Transocean

over the events that they are dealing with in the U.S. and Gulf of Mexico. The oil fields are closed in their community, and we certainly have those families in our thoughts and prayers today, and hope that you would as well.

Our prepared remarks will be brief today. I’ll align more time for some Q-and-A activity. After my opening remarks, Tom Mitchell our CFO will review the financials and update guidance for 2010. Then Roger Hunt, Senior Vice President of Marketing and Contracts will update you on the general market conditions, and after that we’ll take some questions.

I believe we put up another fine quarter in an environment that continues to be somewhat challenging. With oil prices in the 80 plus range we feel good about where we are, and we remain optimistic about the phase of tendering and bidding activity, particularly on the jack-up front.

Having said that, a recovery is never fast enough to suite drillers or investors, and we continue to ratchet back our calls. Deferring or canceling optional projects optional projects around the fleet, all those might have been planned against specific jobs, which for one reason or another either have been delayed or in some case we just didn’t get them.

We are working hard to run the company lean, without sacrificing the operational conditions of our units. This is primarily what led to our out performance during the quarter, and as Tom runs through the financials you can expect us to [Inaudible] full year costs a little bit lower and provide a tighter band for you.

During the quarter we announced the commenced of a five-year contract of Noble Dave Beard at Petrobras. Starting the rig construction in China and complicating it in Brazil is quite a long journey, but we are pleased to say that we are very happy with the finished product, and the quality of workmanship delivered, both in China and Brazil, and that quality will be awarded for us for many years to come. Today the rigs are on location and operating normally.

We continue to push hardcore commencement of operations on the Noble Danny Adkins, while the year has been on location holding station outside of Louisiana since arriving at the Gulf. We continue to experience equipment issues on the rig board. Everyone is working harder and we are clearly disappointed at the pace of progress; however, we are doing everything necessarily to work with our customers and our suppliers, to ensure the rig is safe, officially when it does go to work.

Today the work on the drill force is nearing completion with only a few punch list items remaining. Today we are mobilizing to our test location to prepare around the stack. At this point we think we should go to work in three or four weeks.

Our final two new builds, the Noble Jim day and Noble Globetrotter are both proceeding very well. They are scheduled to leave Singapore on heavy lift ship around the end of May, where they’ll travel to the U.S., Gulf of Mexico, where it’s scheduled to commence operations in September. The good news of the Adkins is that we and our suppliers have been able to apply lessons learned on the day, and we should see a smooth and more efficient piece of commissioning process the second time we ran on the sister rig of the Noble Jim Day.

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