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With day rates increasing, Exxon driller makes Guyana its prime cash cow
Kaieteur News – Offshore driller, Noble Corporation, has made Guyana its prime cash cow. Noble is one of the companies involved in the oil and gas sector, and has been winning big from increasing activities. The market day rates, according to the UK Company, are steadily rising for use of offshore vessels.
Noble
Noble announced in its 2023 first quarter earnings that ExxonMobil extended its Commercial Enabling Agreement (CEA) related to drilling services offshore Guyana. Exxon awarded an additional 6.3 years of backlog under the CEA, extending the contract duration for each of the four drillships operating under the CEA from Q4 2025 to Q2 2027. The drillships are the Noble Tom Madden, Noble Sam Croft, Noble Don Taylor, and Noble Bob Douglas.
Noble’s Chief Executive Officer Robert W. Eifler said in the company’s 2023 Q1 earnings release, “With improving harsh jackup demand expected in 2024 and beyond, we remain very constructive on the outlook for our business… The trend of steadily rising day rates and expanding contract duration for UDW units is expected to continue. We believe Noble’s floater fleet remains well positioned to benefit from positive re-contracting opportunities over the near term, with longer contract durations representing a crucial driver for maximizing utilization.”
Noble Corporation earned significantly from Guyana last year. The drilling company generated US$1.4 billion in total revenues for the year ended December 31, 2022, with a plurality of the revenue coming from its operations in Guyana – US$469 million.
ExxonMobil has been using most of Noble’s Guyana fleet at the Stabroek Block. The Discoverer is also currently being utilised by CGX Energy to drill the Wei-1 well. Noble merged with Maersk Drilling, establishing its position as a primary offshore drilling contractor for the oil and gas sector. According to Noble, the merger resulted in one of the most advanced and modern fleets of a worldwide magnitude in the industry.
It is important for regulators in Guyana to examine the veracity and reasonableness of claims related to Noble’s drilling offshore Guyana. As a major contractor of ExxonMobil, Noble stands to make significant earnings as Exxon ramps up drilling. The more Noble earns, the more it has to recover from the production of crude. The more that is recovered from the production of Guyana’s crude, the less remains as profit oil for Guyana.
Noble expects that its total revenue from its global operations will be in the range of US$2.35 to US$2.55 billion in 2023, Adjusted EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization) of US$725 to US$825 million, and capital expenditures (net of reimbursable capex) between US$325 and US$365 million. Eifler noted that “Our first-quarter results reflect a strong start to the year from an operational, financial, and commercial perspective. The steady tightening of offshore drilling fundamentals is affording attractive opportunities to place our fleet into improving contracts.”
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