Fitch Affirms Noble Corp.'s IDR at 'A-'; Outlook Stable.NEW YORK New York, state, United States New York, Middle Atlantic state of the United States. It is bordered by Vermont, Massachusetts, Connecticut, and the Atlantic Ocean (E), New Jersey and Pennsylvania (S), Lakes Erie and Ontario and the Canadian province of -- Fitch has affirmed the Issuer Default Rating (IDR IDR In currencies, this is the abbreviation for the Indonesian Rupiah. Notes: The currency market, also known as the Foreign Exchange market, is the largest financial market in the world, with a daily average volume of over US $1 trillion. ) and senior unsecured rating for Noble Corp. (NYSE NYSE See: New York Stock Exchange :NE) (Noble) at 'A-'. The Rating Outlook is Stable. The affirmations reflect Noble's robust credit profile, high-quality, diverse fleet of offshore drilling Offshore drilling typically refers to the act of extracting resources, primarily oil, in an ocean or lake. Controversy As with all oil drilling, there has been a certain level of controversy surrounding the issue. rigs, and the company's history of maintaining a strong balance sheet throughout industry cycles. Based on Noble's 2006 earnings release, Fitch estimates 2006 EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortization) A metric used to show a company's profitability, but not its cash flow. EBITDA became popular in the 1980s to show the potential profitability of leveraged buyouts, but has become at $1.17 billion and balance sheet debt at $694 million. Credit metrics were robust with interest coverage estimated at 21.5 times (x) and debt-to-EBITDA of 0.6x. Free cash flow (cash from operations less capital expenditures less dividends) was negative $131.9 million as a result of increased capital expenditures associated with the company's newbuild activities. Rigs repricing Repricing To change the price of an asset. In derivatives, it sometimes refers to the exchange of options of with different strike prices. repricing to higher dayrate contracts, delivery of two newbuild/upgraded rigs in 2007 and continued cost management are expected to result in positive free cash flow in 2007. Noble currently has firm contracts for approximately 90% of its fleet in 2007, 55% in 2008 and 33% in 2009 which are expected to limit downside risk Downside Risk An estimation of a security's potential to suffer a decline in price if the market conditions turn bad. Notes: You can think of this as an estimate of the amount that you could lose on a stock or other investment. to the company from the expected increase in the supply of newbuild jackup and semisubmersible sem·i·sub·mers·i·ble n. A seagoing, self-propelled barge that rides at anchor, stands on partially submerged vertical legs on submerged pontoons, and serves as living quarters and a base of operations in offshore drilling. rigs over the next two years. Risks to the company's credit profile stem primarily from increased cost pressures resulting in weaker than expected cash flows, downward pressure on dayrates for rigs resulting from the arrival of a large number of speculative newbuild rigs in 2007 & 2008, and Noble's sizable capital expenditure program. It is important to note that capital expenditures could increase further if the company is successful in securing a contract for the Bingo 4 Hull. Additional risks to the credit profile result from asset purchases and event risks related to leveraged buyouts (LBOs). While Noble recently announced its Board of Directors authorized share repurchases up to 15.3 million shares, Fitch would expect management to fund repurchases out of excess cash flows and therefore not result in additional balance sheet debt. The Stable Rating Outlook is based on Fitch's expectation for management to use future cash flow to fund a substantial portion of capital expenditures, mitigate future borrowings and to maintain a conservative balance sheet. Noble is a leading provider of diversified services for the oil and gas industry. Contract drilling services are performed with the company's fleet of 63 mobile offshore drilling units located in key markets worldwide. This fleet consists of 13 semisubmersibles, three dynamically positioned drillships, 44 jackups and three submersibles. The fleet includes three newbuild F&G JU-2000E enhanced premium jackups with scheduled delivery of one rig in 2007, one in 2008 and one in 2009. In addition, Noble expects to complete upgrade work on the Noble Clyde Boudreaux in the first quarter of 2007, delivery of the newbuild semisubmersible Dave Beard in the second half of 2008 and delivery of the Danny Adkins (formerly the Bingo 3 Hull) in the first half of 2009. Approximately 84% of the fleet is currently deployed in international markets, including the Middle East, Mexico, the North Sea, Brazil, western Africa, and India. Fitch's rating definitions and the terms of use Terms of Use are rules set up by the owner of an intellectual property or service to govern how they may be legally used. In many cases, terms of service are used as a contractual agreement between a company and users of a service they provide. of such ratings are available on the agency's public site, www.fitchratings.com. Published ratings, criteria and methodologies are available from this site, at all times. Fitch's code of conduct, confidentiality, conflicts of interest, affiliate firewall, compliance and other relevant policies and procedures Policies and Procedures are a set of documents that describe an organization's policies for operation and the procedures necessary to fulfill the policies. They are often initiated because of some external requirement, such as environmental compliance or other governmental are also available from the 'Code of Conduct' section of this site. |
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