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Noble Corp Receives Full Settlement from Freeport-McMoRan

Zacks Equity Research
Updated

Noble Corporation plc NE announced that it has received the full settlement value of $540 million from Freeport-McMoRan Inc. FCX. The amount received was due to the previously announced early termination of the drilling contracts for two of its drillships.

Contacts for the drillships – Noble Sam Croft and Noble Tom Madden – were slated to terminate in Jul and Nov 2017, respectively.

Noble received the full amount in cash through the receipt of Freeport shares, which were immediately resold by Noble under a previously disclosed distribution agreement. The company is also entitled to collect contingent payments of about $75 million depending on the average price of crude oil (WTI) over a 12-month period, beginning Jun 30, 2016.
 

NOBLE CORP PLC Price

NOBLE CORP PLC Price | NOBLE CORP PLC Quote

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With this fresh infusion of liquidity, Noble's cash and cash equivalents was approximately $865 million as of Jun 22, 2016. The company's available revolver capacity remains undrawn at $2.4 billion. This makes the total liquidity of the company approximately $3.3 billion.

Earlier, the duo had agreed upon terminating the contracts for both Noble Sam Croft and Noble Tom Madden on May 10, 2016. Both rigs are in the process of being warm stacked while contract opportunities are being evaluated. While warm stacked, operating costs are expected to decline by an estimated $100,000 a day for each rig.

For the second quarter of 2016, Noble expects to recognize revenues associated with these two rigs of approximately $431 million. This includes a $348 million termination fee, $52 million related to second-quarter operations through the date of termination and $31 million for the accelerated recognition of other deferred contractual items. The remaining proceeds from the settlement will be applied to the outstanding accounts receivable.

Noble Corp. carries a Zacks Rank #3 (Hold). Some better-ranked players from the energy sector are CVR Refining, LP CVRR and ReneSola Ltd. SOL. Each of these stocks sports a Zacks Rank #1 (Strong Buy).

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FREEPT MC COP-B (FCX): Free Stock Analysis Report
 
NOBLE CORP PLC (NE): Free Stock Analysis Report
 
RENESOLA LT-ADR (SOL): Free Stock Analysis Report
 
CVR REFINING LP (CVRR): Free Stock Analysis Report
 
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