Noble's Not Panicking

Last week, we observed offshore rig contracts getting shredded. So why isn't Noble (NYSE:NE) sweating?

On its quarterly conference call yesterday, the contract driller hit upon a few comforting points, including one that I recently made about competitor Transocean (NYSE:RIG) -- namely, the caliber of the company's clients.

Noble passes this test with flying colors. If you look at the backlog, you'll see that 73% of those customers are national oil companies such as QatarGas or super majors such as ExxonMobil (NYSE:XOM) and Chevron (NYSE:CVX). Adding in large independents such as Anadarko (NYSE:APC) takes the figure to 97%. The company would barely feel the effects of corporate failure, a la Oilexco.

So Noble's customers are well-capitalized outfits. But isn't there still a risk that they'll seek to renegotiate their contracts? Granted, we've seen folks such as Saudi Aramco and StatoilHydro (NYSE:STO) playing hard to get with new tenders, but Noble says it hasn't had any discussions about modifying terms on existing arrangements.

The company also sought to allay concerns regarding specific clients. There's a large, multivessel Petrobras (NYSE:PBR) agreement that remains classified as a memorandum of understanding -- meaning the client has yet to sign on the dotted line. But the Brazilian behemoth really needs these rigs for its long-term development program, especially since weaker players' newbuild plans are getting canned.

Then there's Pemex, the state company in charge of the basket case that is Mexico's energy sector. The country's oil production declined by a deep 9.2% in 2008. It's true that Noble has a high concentration of its jackups working for Pemex, but few outfits in this world are more committed to pumping up the oil volume.

Mexico has also embarked on a 27-well deepwater exploration program -- with a Noble rig, among others -- to last though 2012. If this endeavor is successful, Noble may soon find its backlog brimming with even more Mexican work. Bring it on, I say.