Noble is Friday's IBD Stock Of The Day as the offshore drilling contractor is near a buy point, buoyed by a near full contract log and optimistic oil and gas demand forecasts for 2023. Noble stock edged up Friday.
Headquartered in Sugar Land, Texas and incorporated in the Cayman Islands, Noble is an offshore drilling contractor for the oil and gas industry.
The company operates a fleet of ultra-deep-water drillships and high specification jackup oil rigs, pursuing opportunities in both established and emerging regions worldwide. The company has operations in North America, Europe, the Middle East, South America, Australia and Asia.
In June, 2021, Noble stock relaunched following bankruptcy proceedings, through which it offloaded $3.4 billion in bond debt.
Since then, Noble has posted three quarterly profits and two quarters of losses. In the third quarter, Noble topped estimates and saw earnings grow 233% to 50 cents per share. Meanwhile, sales edged up 22% to $306 million.
There have also been recent optimistic oil demand forecasts from both the International Energy Agency (IEA) and the Organization of Petroleum Exporting Countries (OPEC). U.S. crude oil prices on Friday hovered near $81 per barrel. U.S. crude oil futures have regained support above their 50-day moving average line, after settling above that line on Tuesday for the first time since mid-November.
In November, the company reported that its contracting activity remains firm, "reflecting the tight condition of the high-end drillship market segment."
As of Nov. 2, 13 of Noble's 15 drillships were under contract. TotalEnergies had contracts on three of Noble's fleet. Meanwhile, Shell had contracted five of the units. Current contracts on three of Noble's four semi-submersibles extend until at least April, Noble's jackup fleet is also mostly booked, with 12 of its 13 rigs working under contract.
Noble Stock
Noble stock edged up 0.3% to 40.35 during Friday's market trade. On the week, NE shares have gained around 4%. The stock has built a cup base with a 42.18 buy point, according to MarketSmith analysis. Noble stock is around 4% below the buy point.
NE shares, settled in a 10-week cup base, are extended from a jump off its 10-week moving average. Noble stock has been in a volatile period of multiple breakouts since March 2022. However, since exiting bankruptcy in June, 2021, NE shares are up almost 67%.
For the fourth quarter, Noble expects adjusted EBITDA of $155 million-$175 million. The company predicts capital expenditures between $65 million and $85 million. The company plans to report Q4 results in March. Analysts forecast 74 cents earnings per share, up from a loss of 45 cents a year ago. Revenue is expected to balloon 164% to $550 million in Q4.
If these forecasts hold true, it would be the third straight quarterly profit for Noble.
IBD ranks Noble stock fourth in the Oil&Gas-Drilling industry group. NE shares have a Composite Rating of 97 out of 99. Its Relative Strength Rating is 95, The RS Rating is an exclusive IBD Stock Checkup gauge for share price movement, with a 1-99 score. The company's EPS Rating is 77.
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