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Noble Corporation Is Highly Undervalued

Summary

Noble Corporation has seen its stock price take an impressive hit recently dropping by more than 85% from the start of the oil crash.

Noble Corporation has a total of 30 rigs with a young average age of just 10 years. At the same time, the company has a respectable backlog.

Given that Noble Corporation can handle an oil crash that lasts until the mid-2020s, I recommend investing in the company at the present time.

Introduction

Noble Corporation (NYSE: NE) is an offshore drilling contractor based in London, United Kingdom. The company is the successor of the Noble Drilling Corporation and one of the largest drilling contractors in the world. The company also operates in most other major markets in the oil industry moving its fleet of dozens of rigs across the world from job to job.

Noble Corporation Rig - Noble Corp

Despite this market strength, Noble Corporation has had an incredibly difficult time recently. Noble Corporation's stock peaked at just under $35 per share in mid-2014. From that point, the company's stock dropped by more than 85% to it's late-September 2016 lows of less than $5.5 per share. Since that point, the company's stock has recovered by 10% to less than $6 per share.

Despite this price crash, as we will see, Noble Corporation still has impressive potential as a highly undervalued offshore driller.

Noble Corporation Fleet Advantage

Now that we have an overview of Noble Corporation, it is now time to discuss the company's fleet advantage.

Noble Corporation Fleet Overview - Noble Corporation Investor Presentation

Noble Corporation has an incredibly well positioned fleet. The company has a total of 30 rigs with 8 drillships, 8 semisubmersibles, and 14 jackups. More importantly, the company has been growing its fleet with the size of its jackup fleet alone doubling from 2012. The company has a young average fleet age of just 10 years. This fleet means the company can handle the oil crash without having to worry about spending enormous amounts of capital on renewing its fleet.

Noble Corporation Total Revenue 1H 2016 - Noble Corporation Investor Presentation

Noble Corporation's impressive fleet also means that the company has an impressive backlog. The company earned total revenues of $1.5 billion for the first-half of 2016. The company earned the majority of these revenues from the United States, but also has its revenue well...


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