Noble Corporation (NE) reported third quarter 2009 earnings of $1.58 per diluted share, beating the Zacks Consensus Estimate of $1.54 and year-earlier earnings of $1.42. The improved results were driven by the contribution from Contract Drilling Services segment and cost-control measures undertaken by the company.

Total revenue for the quarter was $905.6 million, up 5% year over year. Contract Drilling Services revenue was $875 million, up 4.8% year over year. Total operating income for the quarter was $504.4 million, up nearly 8% from the year-earlier level. Operating income for the Contract Drilling segment was $624 million, up more than 7% year over year.

Average dayrate for the semisubmersible (6,000 feet or greater) rigs were $434,435, compared to $329,586 in the year-earlier quarter. Average capacity utilization was 98% versus 95% in the year-ago period. Semisubmersible rigs that are capable to work up to 6,000 feet experienced an average dayrate of $261,167 versus $237,674 in the year-ago quarter while average capacity utilization was the same for the comparable periods at 100%.

Average dayrate for the company’s jackups was $143,388, compared to $150,350 in the year-ago period. Average capacity utilization fell significantly to 80% from the year-ago level of 91%.

At the end of the quarter, the company had cash balance of $756 million and long-term debt of $751 million, representing debt-to-capitalization ratio of 10.5%. During the quarter, the company repurchased 2 million shares, bringing year-to-date total repurchases to 3.7 million shares at an average price per share of $30.35 and a total cost of $113 million.

Noble’s solid backlog position provides the company with significant earnings and cash flow visibility for the coming years. It has also been benefiting from its strategy to transit from the U.S. markets to international markets.

We believe that Noble offers investors a quality, diversified play on the international offshore drilling markets, with exposure to both deepwater and shallow water. However, we are concerned about the continued weakness in global jackup market with dayrates still drifting down. Consequently, we rate the stock as Neutral.
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