Noble Corp (NYSE:NE) released first-quarter financial results and hosted an earnings call on Monday. Read the complete transcript below.
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Access the full call at https://events.q4inc.com/attendee/107153466
Summary
Noble Corp reported Q1 2026 adjusted EBITDA of $277 million and free cash flow of $169 million, maintaining a 35% EBITDA margin.
The company secured new contract awards totaling approximately $565 million, with significant extensions and new deals in Brazil, Australia, Guyana, Ghana, and Malaysia, raising its backlog to $7.5 billion.
Noble Corp anticipates higher floater rates amid tightening deepwater rig demand, supported by energy security concerns and an upward move in oil prices.
Despite geopolitical disruptions, the company experienced limited operational impacts, with the Mick O’Brien rig being an exception due to the Iran conflict.
Management maintains 2026 guidance for total revenue between $2.8 and $3 billion and adjusted EBITDA between $940 million to $1.02 billion, with potential upside tied to operational efficiency and additional contract wins.
Full Transcript
OPERATOR
Hello everyone and welcome to Noble Corp. First quarter 2026 earnings call. Please note that this call is being recorded. After the speaker’s prepared remarks, there will be a question and answer session. If you’d like to ask a question during that time, please press STAR and then one on your telephone keypad. Thank you. I would now like to hand the call over to Ian McPherson, vice president of Investor Relations. You may now go ahead.
Ian McPherson (Vice President of Investor Relations)
Thank you, operator. And welcome everyone to Noble Corp’s first quarter 2026 earnings call. You can find a copy of our earnings report along with the supporting statements and schedules on our website at noblecorp.com we will reference an earnings presentation that’s posted in the investor relations page of our website as well. Today’s call will feature prepared remarks from our President and CEO Robert Eifler, as well as our CFO Richard Barker. We also have with us Blake Denton, Senior Vice President of Marketing and Contracts, and Joey Kawaja, Senior Vice President of Operations. During the course of this call, we will may make certain forward looking statements regarding various matters related to our business and companies that are not historical facts. Such statements are based upon current expectations and assumptions of management and are therefore subject to certain risks and uncertainties. Many factors could cause actual results to differ materially from these forward-looking statements and Noble does not assume any obligation to update these statements. Also note, we are referencing non-GAAP financial measures on the call today. You can find the required supplemental disclosure for these measures, including the most directly comparable GAAP measure and an associated reconciliation in our earnings report issued yesterday and filed with the sec. Now I’ll turn the call over to Robert Eifler, President and CEO of Noble.
Robert Eifler (President and CEO)
Thanks Ian. Welcome everyone and thank you for joining us. I’ll open today’s call with a brief summary of our Q1 highlights and recent contract awards, followed by an update on the market. Richard will then cover the financials before I wrap up with closing remarks and move to Q and a. During the first quarter, we earned adjusted EBITDA of $277 million and generated free cash flow of $169 million. We again distributed our 50 cent quarterly dividend and yesterday our board declared a 50 cent per share dividend for the second quarter, maintaining our consistent and highly differentiated return of cash strategy. Overall, it was a solid start to the year and I’d like to thank our outstanding men and women of Noble around the world for your fantastic teamwork in helping us to realize our first choice, offshore performance standards. While it’s an understatement to say that energy markets have seen extreme volatility over the past couple of months. Since the outset of the Iran conflict, we are fortunate to have experienced limited operational disruption confined to just one jackup in the Middle east, the Mick O’Brien, which we sold in January but have continued to operate under a bare boat agreement. All of our crew and related personnel were safely evacuated from the rig during the early days of the conflict and Richard will expand on the rig’s current status outside of the war impacted region in the Middle East, Commercial momentum throughout the offshore drilling market remains brisk, irrespective in many ways of the recent oil price surge. However, the recent reawakening of energy security concerns around the world and the corresponding move higher in the oil futures strip are clearly supportive of the already steadily improving demand trends evident in the deep water and harsh environment offshore markets where we are operate over the past three months we’ve secured new contract awards totaling approximately $565 million. First, the Noble Courage received an extension with Petrobras of slightly more than three years which will keep that rig committed in Brazil through the end of 2030. This extension represents net incremental backlog of $339 million, with the current day rate reduced from $290,000 to $280,000 from April 1, 2026 through late 2027, followed by the extension of slightly over three years at just over $309,000 per day. Next, I’m pleased to announce that the Noble Deliverer has been awarded a five well contract from Woodside in Australia which will support that rig’s reactivation. This contract is valued at $121 million based on an estimated 300 days of firm scope excluding options, and also does not include revenue for additional services or potential rig upgrades. In Guyana, the Noble Developer has been awarded a one well contract with ExxonMobil at $375,000 per day, which is scheduled to slot in after the rig’s current program right around year end. Next, the Noble Black Rhino has recently commenced an exercised option well for beacon in the US Gulf with an estimated duration of 100 days. In Ghana, the Noble Venturer has been awarded a one well contract with Planet One in Ghana at a day rate of $430,000, expected to commence late this year with estimated duration of approximately 45 days with two unpriced options. And finally, in Southeast Asia, the Noble Viking has received an additional one well contract in Malaysia which is expected to extend the rig through October this year. With these awards, our current backlog stands at $7.5 billion. Now I’ll share a few observations on recent developments in the market. In short, all measurable and anecdotal indicators of deepwater rig demand are flashing green. And I would submit that this is not a reflection of $100 oil because most of what we’re seeing in the market today has been in motion for months or longer. But of course, recent events absolutely have elevated energy security priorities around the world and improved upstream cash flows will only serve to enhance an already strong and expanding demand picture and deep water exploration thesis in parallel, the volume of Deepwater contract fixtures had spiked in the early part of this year, partially but not entirely due to the execution of Petrobras wide reaching contract extensions. The first quarter saw 32 rig years of Ultra-Deepwater (UDW) fixtures, which was roughly double the average quarterly run rate of last year. And with conclusion of Petrobras extensions in April, this month alone has already had more than 40 additional Ultra-Deepwater (UDW) rig years fixed, bringing year to date backlog additions significantly above the entirety of last year’s contracting volumes. For the full year, Petrobras has comprised over half of 2026 year to date Deepwater rig years fixed and non Petrobras contracting activity has also continued at a healthy level. And notably, despite this recent surge in contract fixtures, the pipeline of open demand in the form of tenders and pretenders has actually continued to expand rather than deplete. Last quarter we observed slightly over 100 rig years of open floater demand which was a 33% year on year increase. This figure has now eclipsed 110 rig years. All this tendering activity is developing alongside an increasingly tightening supply demand balance. Total Ultra-Deepwater (UDW) contracted utilization is currently 105 rigs or 95% of marketed supply. This is approaching recent peak contracted demand levels of two years ago, albeit with markedly different directional momentum, especially considering the renewed length of backlog across the South America region juxtaposed against open demand throughout the rest of the world. That’s now more than 55% higher compared to the previous high water mark two years ago. The contracted Ultra-Deepwater (UDW) count of 105 includes 14 rigs with future contracts that aren’t yet working today, six of which happen to be noble rigs. We have been anticipating the convergence of future contracted utilization and present utilization as a critical factor that could substantially eliminate industry white space and result in a comprehensively tight market. This convergence becomes increasingly tangible as these 14 future contracted assets ramp up over the next six to 12 months with average contract durations of two years per rig. Taken together, all these market dynamics are resulting in upward day rate pressure. Therefore, we believe it is likely that we will begin to see floater rates move higher as we move through the rest of this year. So overall, with the continuing positive development of our backlog as well as the state of the drilling market more broadly, we’re even more optimistic about the years ahead than we were last quarter. Now I’ll pass the call over to Richard for the Financial review.
Richard Barker (Chief Financial Officer)
Thank you Robert and good morning or good afternoon all. In my prepared remarks today, I will briefly review the highlights of our first quarter and then discuss the outlook for the remainder of 2026, starting with our quarterly results. Contract drilling services revenue for the first quarter totaled $742 million. Adjusted EBITDA was $277 million and adjusted EBITDA margin was 35%. Q1 cash flow from operations was $273 million, capital expenditures were $104 million and free cash flow was $169 million. I’d like to touch on a few discrete cash flow related items during the first quarter. Firstly, we received $210 million in cash proceeds from the jack-up sale to Bore Drilling in addition to the 150 million seller’s note which is recorded in other assets on the balance sheet. Secondly, we completed the lease buyout on the first two of the four Blackships’ BOP systems for 36.5 million. The buyout of the remaining two BOP systems is expected to occur during Q2 and Q4 this year for approximately 18 million each. In total, the lease buyout for all four systems is expected to cost 73 million. The cash outflow for these payments is not part of capital expenditures but instead is part of financing activities on our cash flow statement. Lastly, during the first quarter we redeemed 55 million principal amount of the 8.5% senior SECured notes at 103 as an opportunistic and efficient use of capital. As summarised on page 5 of the Earnings presentation slide, our total backlog as of April 26th stands at 7.5 billion. As a reminder, our backlog excludes reimbursable revenue as well as revenue from ancillary services. Our current backlog includes approximately 1.8 billion that is scheduled for revenue conversion during the remainder of 2026 and 2.4 billion scheduled for 2027. Referring to page 9 of the earnings presentation, we are maintaining full year 2026 guidance for total revenue between 2.8 and 3 billion, which includes approximately $150 million in reimbursable and other revenue and adjusted EBITDA between 940 million to 1.02 billion. Capital expenditures guidance for this year is increased by 25 million and this is due to the contract award supporting the reactivation of the Noble deliverer. The lower side of our adjusted EBITDA range is fully contracted by current backlog, although we have banked a somewhat stronger than expected first quarter in terms of adjusted EBITDA. This is offset by a few discrete items including the recent notice of early contract termination on the Mick o’, Brien, the lower near term dayrate revision resulting from the Courage’s blend and extend and slightly later estimated contract commencement dates for the Jerry d’ Souza and Endeavour driven by customer schedules. Regarding the Mick o’ Brien recall that we closed the sales of Bore Drilling in January and have continued to manage the rig through the completion of its current contract in Qatar with a corresponding bareboat that we paid to bore into early December 2026. On April 12th we received notice of early release from the customer QE LNG and we are now in the process of winding down operations. The contract termination is effective after 30 days and this will result in an estimated negative impact of approximately 15 million due to our remaining bareboat obligations through early December as well as stacking costs for the rig. To sum up, we have had a very solid start of 2026 from a financial point of view. With continued contract wins in the quarter and solid project execution. We continue to solidify the expected path to a healthy inflection of both EBITDA and free cash flow starting in 2027 as we outlined in detail on our call last quarter. With that, I’ll now pass it back to Robert for concluding remarks.
Robert Eifler (President and CEO)
Thank you Richard. Starting this summer with the Voyager, Jerry D’Souza and Interceptor startups, followed by the Valiant and Endeavour later this year and then the Great Fight Deliver, Deliver and Venture throughout next year, we have a sharp organizational focus on project execution. This is a large slate of projects to deliver in a quote, normal time. And these are of course hardly normal times given the various dislocations resulting from the Strait of Hormuz impasse. But overall, I’m pleased to report that all of our projects are progressing very well so far and we’re incredibly excited to be preparing for commencement on these important drilling campaigns for our customers. These programs span virtually all of the major non OPEC offshore basins around the world, which are increasingly critical to current and future energy supply to wrap up as outlook for our business continues to improve. Noble is very well positioned to grow into the next leg of the offshore drilling cycle with a strong balance sheet, $7.5 billion of backlog …
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