Offshore driller Noble Corporation has now received the full settlement value of $540 million from Freeport-McMoRan regarding previously announced settlement and termination of drilling contract for two drilling rigs.
Noble received $540 million in cash through the receipt of Freeport shares, which were immediately resold by Noble under a previously disclosed distribution agreement.
With the settlement value collected, Noble’s cash and cash equivalents balance is approximately $865 million at June 22, 2016. The company’s available revolver capacity remains undrawn at $2.445 billion, resulting in a present liquidity position of approximately $3.3 billion, before a final payment of an estimated $410 million is made for the delivery of the high-specification jack-up Noble Lloyd Noble. The payment is expected to be made in July 2016.
In addition to the $540 million, Noble said it can receive additional contingent payments from Freeport of $25 million and $50 million depending upon the average price of West Texas Intermediate crude oil over a twelve-month period beginning June 30, 2016.
Rigs warm stacked
The contracts for both the Noble Sam Croft and Noble Tom Madden were terminated on May 10, 2016. Both rigs are in the process of being warm stacked while contract opportunities are 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, which 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 outstanding accounts receivable, mainly from the first quarter. Second quarter contract drilling services costs will include the accelerated recognition of deferred mobilization and other expenses of approximately $11 million, as well as normal rig operating expenses for these two rigs, the company added