(By Mani) Offshore driller Noble Corp
. (NYSE: NE
) is expected to benefit from an improving fleet utilization and contract repricing.
The company says it has entered into a three-year term drilling contract with Anadarko Petroleum Corp. (NYSE: APC) for the Noble Bob Douglas, one of Noble's new ultra-deepwater drillships currently under construction at the Hyundai Heavy Industries Co. Ltd. (HHI) shipyard in Ulsan, South Korea.
The contract, which has a dayrate of $618k/d in the Gulf of Mexico with Anadarko starting early in 2014, is projected to generate revenues of about $677 million over the three-year term.
Noble still has two remaining ultra deep water (UDW) drillships available with deliveries in 2014 and they could see additional orders before the end of the year.
The company also announced two one-year jackup contracts for the Noble Percy Johns and the Noble Ed Noble at dayrates of $149k and $142k, respectively.
"These contracts are another positive data point for strong demand for lower spec commodity assets as these ~30-year-old jackups commanded dayratres ~65% above their previous contracts and close to the $165k/d earned by the hi-spec assets in the region," RBC Capital Markets analyst Kurt Hallead wrote in a note to clients.
Meanwhile, several company-specific initiatives are beginning to bear fruit as it relates to reducing downtime, while improved utilization should enhance the prospects for realizing highly accretive bonus revenue on eligible rigs.
Even after the signing of the two jackups in West Africa, Noble still has high relative optionality among peers to the standard jackup market. This is a positive given rising dayrate trends for this asset class.
"Despite the influx of new capacity hitting the offshore industry over the next several months, we believe that sufficient demand exists to keep utilization levels healthy," Hallead noted.
For the global floater fleet, the UDW fleet currently appears to be 88 percent contracted for 2013 despite growing total supply by 21 rigs, suggesting robust demand and providing a positive indication for dayrate trends.
On the jackup front, the analyst sees incremental supply of 46 rigs entering the market in 2013. While this suggests about 80 percent utilization in 2013 based on current contracts, several opportunities exist for new contracts for hi-spec jackups.
"We expect improving fleet utilization and contract repricing to provide positive momentum for the stock," Hallead added.