netrashetty
Netra Shetty
NetDNA is a Los Angeles, CA, based content delivery network (CDN) and an application delivery network.[1][2] The company was founded in October 2009 by Ben Neumann and Chris Ueland[3] . Prior to NetDNA, Chris and Ben founded and operated Globat.com[4] a shared-hosting company. NetDNA has grown quickly, launching two additional brands, MaxCDN[5][6] and HDDN [7], a self-service, pay-as-you-go CDN solution and a self-service video-on-demand solution. The company is notable because of its popular brand MaxCDN which focuses on small and medium-sized businesses. NetDNA itseft works with enterprise customers. NetDNA also has partnerships with PacketExchange [8][9][10] , Flowplayer [11] and Wowza Media Systems
Noble Corporation (NYSE: NE) is a leading contract drilling firm in the oil and gas industry. Noble's business model depends on a mix of short-term and long-term contracts with national oil companies and independent producers; major oil companies are a small percentage of its business. This helps shield NE from the volatility of the consumer market for oil and has contributed to its longevity.
As an offshore oil exploration and production firm Noble Corporation has nearly 87% of its fleet deployed in international markets, including the Middle East, India, Mexico, the North Sea, Brazil and West Africa, with a majority of revenue generated from its international operations.[1] Noble is the second largest offshore drilling company in the world, behind Transocean (RIG). Increased demand for deepwater oil exploration has enabled NE to capitalize on its world-wide fleet drilling capabilities which consist of 13 semi-submersibles, 4 drill-ships, 43 jack-ups and 2 submersibles.[1]
The surge in the rising worldwide demand for energy and geopolitical turbulence in oil-rich nations over the past several years have driven up oil prices and day rates for drilling contractors, and as a result Noble Corporation has nearly doubled its operating revenues from $2,100,239 billion in 2006 to $3,640,784 in 2009.[2] The company's success has been tied to high oil and natural gas prices because high energy costs entice producers to either extend or take up new contracts with large drilling firms like Noble that are capable of drilling more wells.
Contents
1 Company Overview
1.1 Acquisition
1.2 Rig Specific Revenue Breakdown
2 Industry Trends and Risk Factors
2.1 Moratorium of offshore drilling in the Gulf of Mexico[9]
2.2 Noble's day rates are tied to natural gas and oil prices
2.3 Noble benefits from a need for new sources of oil through deepwater exploration
2.4 Severe weather conditions could hurt Noble's revenues
2.5 Competition is emerging from alternative energy markets
3 Competition
4 References
Company Overview
Noble Corporation generates revenue from renting its drilling rigs to oil and gas companies based on a day-rate price per rig. Increases in gas and oil prices stimulated demand for drilling activity, resulting in higher average day-rates--from 2008 to 2009, average day-rates increased 13% to $197,143.[3] While Noble Corporation's operating expenses have remained consistent, its operating income and total revenues have skyrocketed as a direct result from the rising worldwide demand for energy, especially oil and natural gas.
Fourth Quarter 2010 Summary
On January 26, 2011, Noble reported fourth quarter 2010 earnings of $99 million, or $0.39 per share, a 78% decrease from the same quarter in 2009. Drilling revenues were $614 million, a 31% drop year over year. For the same reason as the previous quarter, these declines were attributed to the continued disruptions in drilling operations in the U.S. Gulf of Mexico. During the quarter, Noble invested $537 million in capital projects and has increased its debt as percentage of total capitalization from 27.4 percent in third quarter 2010 to 27.5 percent in fourth quarter 2010. At the end of 2010, Noble was able to commit 53 percent of its available rig operating days for 2011.[4]
Third Quarter 2010 Summary
On October 20, 2010, Noble Corporation reported third quarter earnings of $86 million, or $0.34 per diluted share, an 80% drop from the third quarter in 2009, while drilling revenues were $585 million, a 33% drop from the same period in 2009. These declines are attributed to the continued disruptions in drilling operations in the U.S. Gulf of Mexico. Additionally, $14 million of transaction costs in the acquisition of FDR Holdings Limited (“Frontier”) is accounted for in the quarter's results. In total, Noble invested $355 million in capital projects and has increased its debt as percentage of total capitalization from 9.4 percent in second quarter 2010 to 27.4 percent in third quarter 2010, in order to finance the purchase of Frontier.[5]
Second Quarter 2010 Summary
On July 19, 2010, Noble Corporation reported second quarter earnings of $218 million, or $0.85 per diluted share, a 44% drop from the second quarter in 2009. Drilling revenues were $688 million, a 21% drop from the same period in 2009. These declines are attributed to drilling limitations imposed on the U.S. Gulf of Mexico. During the quarter, Noble's capital expenditures amounted to over $193 million, a large part of which is due to the acquisition of FDR Holdings Limited ("Frontier"), which is expected to close at the end of July 2010. This acquisition which will add six drilling units and a floating production, storage and offloading (FPSO) unit to their fleet, effectively doubling Noble's contract backlog.[6]
NE Operating results, 2009.[7]
NE breakdown of revenue by products, 2009.[7]
Acquisition
In June 2010, Noble Corporation entered into an agreement to acquire FDR Holdings Limited, also known as Frontier Drilling, for a price of $2.16 billion. In doing so, Noble Corporation will gain Frontier's six drilling rigs and one floating production, storage, offloading (FPSO) vessel, effectively increasing Noble Corporation's existing $7.5 billion backlog by $2 billion. This acquisition will preserve the company's position as the second largest offshore drilling company.[8]
Rig Specific Revenue Breakdown
Drill ships are solely used in Noble's international operations. Drill ships are used for exploratory drilling of new oil and gas wells in deep water depths of up to 6,000 feet. In 2009 the average day-rate for Noble Corporation drill ships was $254,084.[3]
Jack-ups are stationary units that operate at water depths of up to 400 feet and are more commonly used in shallower waters. In 2009 the average day-rate for Noble Corporation’s jack-ups was $147,701.[3]
Semi-submersibles are floating units that can operate at water depths of up to 3,000 meters. Because of their greater capabilities, the demand for Semi’s has increased as interest in deep water drilling and exploration grows. Semi-submersibles generate the most revenue per day-rate depending on drilling depth. In 2009 Noble Corporation’s Semi’s drilling at depths >6,000’ on average generated $417,177 in revenue, while Semi’s drilling at depths <6,000’ on average generated $253,557.[3]
Industry Trends and Risk Factors
Moratorium of offshore drilling in the Gulf of Mexico[9]
With controversy surrounding BP and Transocean's oil spill, the oil industry's reputation is at stake. Although Noble Corporation was not involved in the Deepwater Horizon incident, it will indirectly be affected by the lower overall consumer confidence in the industry. Safety has become a higher priority for oil companies--regulators will become more strict and companies will become more scrutinized.
On May 6, 2010, the Department of the Interior announced that no applications for drilling permits for operations on the Outer Continental Shelf will be issued until the Department of the Interior completes a safety review process of offshore drilling. Although Noble conducts 87% of its business in international markets, the moratorium will severely limits Noble's production capacity in the Gulf of Mexico.
On December 28, 2010, Standard & Poor's lowered its credit ratings outlook on Noble to A- from stable, due to expectations of the company's credit quality remaining weak because of slower permitting for deepwater-drilling in the Gulf of Mexico, lower dayrates, and negative free cash flow due to a heavy capital expenditure program. Production has decreased significantly, and since the drilling moratorium was lifted in October, U.S. regulators have approved just one well above 500 feet.[10]
Noble's day rates are tied to natural gas and oil prices
The economic conditions of oil and gas prices have been the major factor in Noble's success. Oil cost less than $20 a barrel in 2000[11], and peaked on July 3, 2008, when crude oil futures reached a record high of $145.85.[12] Although oil prices took a dip in 2009 due to the global financial crisis, averaging $62 per barrel[13], prices have returned, averaging at $79 per barrel during first quarter of 2010.[14] This allows companies such as Noble Corporation to increase its margins, as well as its revenues. Over the last decade, oil prices have fluctuated violently, but the overall trend has been beneficial to Noble Corporation, as it has been trending upwards.
As exploratory work intensifies, the increase in demand for drilling rigs relates to the rising demand for oil and gas in emerging industrialized countries such as China and India. As a result, the global economic cycle has been heavily impacted by the economic growth of developing nations.
Noble benefits from a need for new sources of oil through deepwater exploration
Traditional oil producing basins have matured, particularly on land, and oil exploration and production companies have started to look for new reserves in challenging, deepwater environments. The recent increases of oil and gas costs have enabled offshore drilling contractors to engage in deepwater oil exploration that was once too expensive to pursue. For Noble, the prospect of entering new long and short-term contracts is more economically feasible because it profits from exposure to rising day-rates with short-term contracts. The company also mixes in long-term contracts to protect itself if day-rates plummet. Noble Corporation stands to profit from deepwater drilling because of its superior fleet of 62 offshore drilling units. Noble Corporation’s average day-rates for its higher end rigs can go upwards of $400,000.[3]
Severe weather conditions could hurt Noble's revenues
Severe weather conditions threaten the entire offshore contract drilling industry, especially those concentrated in hurricane prone areas such as the Gulf of Mexico. These areas are especially vulnerable to environmental disasters as we witnessed with hurricanes like Katrina and Rita. With 28% of its operations in the GOM Noble Corporation recorded a $20 million charge of insurance recoveries for the non-reimbursable portion of damages sustained in the those hurricanes and $49.8 million in losses of insurance proceeds for their fleet of semi-submersibles. Operating days are far less during hurricane season because storms can delay or completely halt operations for several days. Moreover, rigs can be damaged and maintaining, upgrading or replacing rigs is very expensive.
Competition is emerging from alternative energy markets
Rising oil prices have led both consumers and companies to seek out alternative sources of energy and invest in renewable energy such as nuclear, solar, wind, biofuels, and ethanol. As the global consumer demand shifts toward renewable energy sources due to recent environmental concerns over climate change, this change in consumer consciousness may adversely affect the oil and gas industry. With the advent of hybrid and fuel cell vehicles and the cost of gasoline becoming dangerously close to $4 per gallon, consumers have become less inclined to purchase gas guzzling SUV’s opposed to more fuel-efficient cars. As a result offshore contract drilling companies stand to lose if the oil and gas industry encounters a sudden decrease in demand.
Competition
In the offshore contract drilling industry, competition is primarily encountered on a regional basis. For 87 years Noble Corporation has been able to sustain its longevity by retaining one of the highest industry-wide utilization rates for its rigs in both the international (97%) and domestic (96%) arenas. Noble Corporation's utilization efficiency is significant when compared to the overall rig utilization statistics for the entire competitive rig fleet which is 85.4%.[15]
High utilization rates indicate large profits because most of Noble Corporation's revenue is generated through its day-rates. High day-rates and continual increases of oil and gas prices may indicate that discovering new deposits of fossil fuels is becoming more difficult.
Noble Corporation encounters significant regional competition. Below are listed NE's major competitors.
Transocean (RIG)- Transocean Inc. claims to be the world's largest offshore drilling contractor with a drilling fleet of nearly 150 highly specialized units.[16] Transocean Inc. recently announced a merger with the GlobalSantaFe Corporation.
Diamond Offshore Drilling (DO)- DO owns one of the largest drilling fleets in the world, a total of 44 ships, including 30 semisubmersibles, 14 jack-ups and one drillship. DO's operations are primarily based in the Gulf of Mexico and Asia.
Pride International (PDE)- Pride owns a global fleet of 272 rigs, consisting of two deepwater drillships, 12 semisubmersible rigs, 28 jackup rigs, 16 tender-assisted, barge and platform rigs and 214 land-based drilling and workover rigs.
ENSCO International (ESV) ENSCO International's offshore rig fleet includes 43 jackup rigs, one ultra-deepwater semisubmersible rig and one barge rig. In addition, it has three ultra-deepwater semisubmersible rigs. Its operations are concentrated in the geographic regions of Asia Pacific, Europe/Africa, and North and South America.
Noble Corporation (NYSE: NE) is a leading contract drilling firm in the oil and gas industry. Noble's business model depends on a mix of short-term and long-term contracts with national oil companies and independent producers; major oil companies are a small percentage of its business. This helps shield NE from the volatility of the consumer market for oil and has contributed to its longevity.
As an offshore oil exploration and production firm Noble Corporation has nearly 87% of its fleet deployed in international markets, including the Middle East, India, Mexico, the North Sea, Brazil and West Africa, with a majority of revenue generated from its international operations.[1] Noble is the second largest offshore drilling company in the world, behind Transocean (RIG). Increased demand for deepwater oil exploration has enabled NE to capitalize on its world-wide fleet drilling capabilities which consist of 13 semi-submersibles, 4 drill-ships, 43 jack-ups and 2 submersibles.[1]
The surge in the rising worldwide demand for energy and geopolitical turbulence in oil-rich nations over the past several years have driven up oil prices and day rates for drilling contractors, and as a result Noble Corporation has nearly doubled its operating revenues from $2,100,239 billion in 2006 to $3,640,784 in 2009.[2] The company's success has been tied to high oil and natural gas prices because high energy costs entice producers to either extend or take up new contracts with large drilling firms like Noble that are capable of drilling more wells.
Contents
1 Company Overview
1.1 Acquisition
1.2 Rig Specific Revenue Breakdown
2 Industry Trends and Risk Factors
2.1 Moratorium of offshore drilling in the Gulf of Mexico[9]
2.2 Noble's day rates are tied to natural gas and oil prices
2.3 Noble benefits from a need for new sources of oil through deepwater exploration
2.4 Severe weather conditions could hurt Noble's revenues
2.5 Competition is emerging from alternative energy markets
3 Competition
4 References
Company Overview
Noble Corporation generates revenue from renting its drilling rigs to oil and gas companies based on a day-rate price per rig. Increases in gas and oil prices stimulated demand for drilling activity, resulting in higher average day-rates--from 2008 to 2009, average day-rates increased 13% to $197,143.[3] While Noble Corporation's operating expenses have remained consistent, its operating income and total revenues have skyrocketed as a direct result from the rising worldwide demand for energy, especially oil and natural gas.
Fourth Quarter 2010 Summary
On January 26, 2011, Noble reported fourth quarter 2010 earnings of $99 million, or $0.39 per share, a 78% decrease from the same quarter in 2009. Drilling revenues were $614 million, a 31% drop year over year. For the same reason as the previous quarter, these declines were attributed to the continued disruptions in drilling operations in the U.S. Gulf of Mexico. During the quarter, Noble invested $537 million in capital projects and has increased its debt as percentage of total capitalization from 27.4 percent in third quarter 2010 to 27.5 percent in fourth quarter 2010. At the end of 2010, Noble was able to commit 53 percent of its available rig operating days for 2011.[4]
Third Quarter 2010 Summary
On October 20, 2010, Noble Corporation reported third quarter earnings of $86 million, or $0.34 per diluted share, an 80% drop from the third quarter in 2009, while drilling revenues were $585 million, a 33% drop from the same period in 2009. These declines are attributed to the continued disruptions in drilling operations in the U.S. Gulf of Mexico. Additionally, $14 million of transaction costs in the acquisition of FDR Holdings Limited (“Frontier”) is accounted for in the quarter's results. In total, Noble invested $355 million in capital projects and has increased its debt as percentage of total capitalization from 9.4 percent in second quarter 2010 to 27.4 percent in third quarter 2010, in order to finance the purchase of Frontier.[5]
Second Quarter 2010 Summary
On July 19, 2010, Noble Corporation reported second quarter earnings of $218 million, or $0.85 per diluted share, a 44% drop from the second quarter in 2009. Drilling revenues were $688 million, a 21% drop from the same period in 2009. These declines are attributed to drilling limitations imposed on the U.S. Gulf of Mexico. During the quarter, Noble's capital expenditures amounted to over $193 million, a large part of which is due to the acquisition of FDR Holdings Limited ("Frontier"), which is expected to close at the end of July 2010. This acquisition which will add six drilling units and a floating production, storage and offloading (FPSO) unit to their fleet, effectively doubling Noble's contract backlog.[6]
NE Operating results, 2009.[7]
NE breakdown of revenue by products, 2009.[7]
Acquisition
In June 2010, Noble Corporation entered into an agreement to acquire FDR Holdings Limited, also known as Frontier Drilling, for a price of $2.16 billion. In doing so, Noble Corporation will gain Frontier's six drilling rigs and one floating production, storage, offloading (FPSO) vessel, effectively increasing Noble Corporation's existing $7.5 billion backlog by $2 billion. This acquisition will preserve the company's position as the second largest offshore drilling company.[8]
Rig Specific Revenue Breakdown
Drill ships are solely used in Noble's international operations. Drill ships are used for exploratory drilling of new oil and gas wells in deep water depths of up to 6,000 feet. In 2009 the average day-rate for Noble Corporation drill ships was $254,084.[3]
Jack-ups are stationary units that operate at water depths of up to 400 feet and are more commonly used in shallower waters. In 2009 the average day-rate for Noble Corporation’s jack-ups was $147,701.[3]
Semi-submersibles are floating units that can operate at water depths of up to 3,000 meters. Because of their greater capabilities, the demand for Semi’s has increased as interest in deep water drilling and exploration grows. Semi-submersibles generate the most revenue per day-rate depending on drilling depth. In 2009 Noble Corporation’s Semi’s drilling at depths >6,000’ on average generated $417,177 in revenue, while Semi’s drilling at depths <6,000’ on average generated $253,557.[3]
Industry Trends and Risk Factors
Moratorium of offshore drilling in the Gulf of Mexico[9]
With controversy surrounding BP and Transocean's oil spill, the oil industry's reputation is at stake. Although Noble Corporation was not involved in the Deepwater Horizon incident, it will indirectly be affected by the lower overall consumer confidence in the industry. Safety has become a higher priority for oil companies--regulators will become more strict and companies will become more scrutinized.
On May 6, 2010, the Department of the Interior announced that no applications for drilling permits for operations on the Outer Continental Shelf will be issued until the Department of the Interior completes a safety review process of offshore drilling. Although Noble conducts 87% of its business in international markets, the moratorium will severely limits Noble's production capacity in the Gulf of Mexico.
On December 28, 2010, Standard & Poor's lowered its credit ratings outlook on Noble to A- from stable, due to expectations of the company's credit quality remaining weak because of slower permitting for deepwater-drilling in the Gulf of Mexico, lower dayrates, and negative free cash flow due to a heavy capital expenditure program. Production has decreased significantly, and since the drilling moratorium was lifted in October, U.S. regulators have approved just one well above 500 feet.[10]
Noble's day rates are tied to natural gas and oil prices
The economic conditions of oil and gas prices have been the major factor in Noble's success. Oil cost less than $20 a barrel in 2000[11], and peaked on July 3, 2008, when crude oil futures reached a record high of $145.85.[12] Although oil prices took a dip in 2009 due to the global financial crisis, averaging $62 per barrel[13], prices have returned, averaging at $79 per barrel during first quarter of 2010.[14] This allows companies such as Noble Corporation to increase its margins, as well as its revenues. Over the last decade, oil prices have fluctuated violently, but the overall trend has been beneficial to Noble Corporation, as it has been trending upwards.
As exploratory work intensifies, the increase in demand for drilling rigs relates to the rising demand for oil and gas in emerging industrialized countries such as China and India. As a result, the global economic cycle has been heavily impacted by the economic growth of developing nations.
Noble benefits from a need for new sources of oil through deepwater exploration
Traditional oil producing basins have matured, particularly on land, and oil exploration and production companies have started to look for new reserves in challenging, deepwater environments. The recent increases of oil and gas costs have enabled offshore drilling contractors to engage in deepwater oil exploration that was once too expensive to pursue. For Noble, the prospect of entering new long and short-term contracts is more economically feasible because it profits from exposure to rising day-rates with short-term contracts. The company also mixes in long-term contracts to protect itself if day-rates plummet. Noble Corporation stands to profit from deepwater drilling because of its superior fleet of 62 offshore drilling units. Noble Corporation’s average day-rates for its higher end rigs can go upwards of $400,000.[3]
Severe weather conditions could hurt Noble's revenues
Severe weather conditions threaten the entire offshore contract drilling industry, especially those concentrated in hurricane prone areas such as the Gulf of Mexico. These areas are especially vulnerable to environmental disasters as we witnessed with hurricanes like Katrina and Rita. With 28% of its operations in the GOM Noble Corporation recorded a $20 million charge of insurance recoveries for the non-reimbursable portion of damages sustained in the those hurricanes and $49.8 million in losses of insurance proceeds for their fleet of semi-submersibles. Operating days are far less during hurricane season because storms can delay or completely halt operations for several days. Moreover, rigs can be damaged and maintaining, upgrading or replacing rigs is very expensive.
Competition is emerging from alternative energy markets
Rising oil prices have led both consumers and companies to seek out alternative sources of energy and invest in renewable energy such as nuclear, solar, wind, biofuels, and ethanol. As the global consumer demand shifts toward renewable energy sources due to recent environmental concerns over climate change, this change in consumer consciousness may adversely affect the oil and gas industry. With the advent of hybrid and fuel cell vehicles and the cost of gasoline becoming dangerously close to $4 per gallon, consumers have become less inclined to purchase gas guzzling SUV’s opposed to more fuel-efficient cars. As a result offshore contract drilling companies stand to lose if the oil and gas industry encounters a sudden decrease in demand.
Competition
In the offshore contract drilling industry, competition is primarily encountered on a regional basis. For 87 years Noble Corporation has been able to sustain its longevity by retaining one of the highest industry-wide utilization rates for its rigs in both the international (97%) and domestic (96%) arenas. Noble Corporation's utilization efficiency is significant when compared to the overall rig utilization statistics for the entire competitive rig fleet which is 85.4%.[15]
High utilization rates indicate large profits because most of Noble Corporation's revenue is generated through its day-rates. High day-rates and continual increases of oil and gas prices may indicate that discovering new deposits of fossil fuels is becoming more difficult.
Noble Corporation encounters significant regional competition. Below are listed NE's major competitors.
Transocean (RIG)- Transocean Inc. claims to be the world's largest offshore drilling contractor with a drilling fleet of nearly 150 highly specialized units.[16] Transocean Inc. recently announced a merger with the GlobalSantaFe Corporation.
Diamond Offshore Drilling (DO)- DO owns one of the largest drilling fleets in the world, a total of 44 ships, including 30 semisubmersibles, 14 jack-ups and one drillship. DO's operations are primarily based in the Gulf of Mexico and Asia.
Pride International (PDE)- Pride owns a global fleet of 272 rigs, consisting of two deepwater drillships, 12 semisubmersible rigs, 28 jackup rigs, 16 tender-assisted, barge and platform rigs and 214 land-based drilling and workover rigs.
ENSCO International (ESV) ENSCO International's offshore rig fleet includes 43 jackup rigs, one ultra-deepwater semisubmersible rig and one barge rig. In addition, it has three ultra-deepwater semisubmersible rigs. Its operations are concentrated in the geographic regions of Asia Pacific, Europe/Africa, and North and South America.