How many oil service companies do you see reporting higher
year-on-year results this earnings season?
Halliburton (NYSE: HAL)?
Hardly.
Weatherford (NYSE: WFT)?
Whiffed it.
Noble (NYSE: NE) is a bird of a different
feather. Thanks to
steady demandand long-term contracts in the deepwater
drilling market, this contractor is riding high despite the
industry downturn.
For the quarter, contract drilling revenue came in at $875
million, up 5% from last year. Drilling margins were a
characteristically regal 71%, and net income was $426
million, versus $383 million last year.
Capital projects only chewed up about 71% of cash flow,
allowing Noble to hoover up two million of its own shares.
Year to date, the firm has repurchased 3.7 million shares at
an average cost of just above $30 a stub -- about a 30%
discount to where shares trade today.
Again: how many oil service companies do you see buying
back shares at beaten-down prices these days? Shareholders
should be smiling. This is a very special outfit.
At an energy conference earlier this month, management
cited a survey which found that 2010 spending by the industry
will approximate 2008 levels, with national oil companies
(NOCs) like
Petrobras (NYSE: PBR) and
CNOOC (NYSE: CEO) leading the way. That bodes
very well for Noble, given the firm's leverage to NOCs and
super majors like
ExxonMobil (NYSE: XOM).
On the conference call today, Noble's CEO reiterated this
point, saying that "the market is starting to feel better
again" as the industry heads into budget season. He followed
this up by asserting that even if oil prices get cut in half
from the recent $80 level, "Noble is in fantastic shape to
take advantage." That would be an unwelcome development for
Noble,
Transocean (NYSE: RIG), or any of their
peers, but it's good to see this top driller prepared for a
wide range of outcomes. Investors should approach this
volatile market in exactly the same way.
This article was originally published as
Noble's Ready for Anythingon
Fool.com
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reserved.
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