Ultra-deepwater drilling is the buzzword right now. Noble Corp.
First-quarter results have been pretty impressive. Net income leapfrogged 122% from the year-ago quarter to $120 million, or $0.47 per share. This actually doesn't come as a major surprise given the way Noble has improved on its top line for the last four consecutive quarters, indicating strong fundamentals. For the record, first-quarter revenues stood at $798 million, a 38% gain over last year.
Transition to success?
Noble is going through a fleet transformation with the induction of more ultra-deepwater rigs. The newly built drillship Noble Globetrotter I, which can drill in 10,000 feet of water, is undergoing inspection for a 10-year contract in the Gulf of Mexico which is expected to commence by the end of this month. The company also managed to get higher dayrates for at least four of its deepwater rigs.
Royal Dutch Shell
Noble's decision to move into ultra-deepwater drilling is laudable. At the end of the first quarter, total backlog of orders stood at a commendable $14.5 billion -- up from $13.7 billion three months before.
It's apparent that management considered the long-term view before embarking on the transition. To facilitate the transition, the company raised a $1.2 billion debt by issuing five-, 10-, and 30-year notes, which I believe was a good move.
Foolish bottom line
With a solid management backing it up, Noble is poised to do well in the future. The company should gain immensely from the transition. Keep abreast of the situation by adding Noble Corp. to your free personalized watchlist.
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Fool contributor Isac Simon does not own shares of any of the companies mentioned in this article. The Motley Fool has a disclosure policy.