Noble (NE) boosted by long-term deepwater contracts

Despite crude oil prices falling during the second quarter, Noble (NE) managed to grow profits 4% thanks to lucrative long-term deepwater contracts. Revenue increased 11% to $898 million and operating margin came in at an impressive 54%, well above the industry average.

Looking ahead, management does not expect any significant changes to the near-term contracting environment despite the gradual recovery in oil prices. CEO David Williams said, “every day that crude prices stay at a reasonable level or continue to improve builds confidence in our future.”

Although they did not materially impact results, it’s also worth mentioning that Noble paid late-delivery penalties to Petrobras. Rig delivery delays not only result in cash penalties, but they also disappoint customers that are often managing time-sensitive drilling programs.

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Peter J. Lazaroff, Investment Analyst