Here's some interesting reading: S&P ups Noble Drilling corp credit rating=2
Wednesday, April 22, 1998 11:20 AM
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The corporate credit and unsecured note ratings were removed from CreditWatch, where they were
placed Sept. 17, 1997.
The rating upgrade reflects a growing contractual revenue base, and a demonstrated firm pricing
through the current depressed oil pricing conditions.
Also, Standard & Poor's expects the supply of mobile offshore drilling equipment to increase in an
orderly fashion in the near-to-medium term.
In addition, Standard & Poor's expects the probability of the oil industry to experience an extreme
construction cycle that would eventually lead to a severe supply overhang and poor dayrates is now
reduced.
As such, market conditions are expected to remain very favorable for Noble Drilling over the
near-to-medium term; but most importantly, a market downside would not be as severe as the last
market trough.
This rating action also follows similar upgrades in the vastly improved contract drilling sector over the
last few quarters.
Financial performance for these companies has been extraordinarily strong, and could improve further
over the next one-to-two years such as with old long-term contracts rolling-over at higher dayrates, or
with the addition of new equipment.
However, Standard & Poor's also has concluded that such high level of financial performance is
unsustainable over the long-term.
Still, given expectations that conservative financial policies and strong balance sheets will continue;
lower probability of the construction cycle overheating; good visibility of earnings and cash flows; and
the prospects of less-severe downturns than has historically been the case, Noble Drilling should
perform at their current rating levels over the term of the next business cycle.
Fleet size, geographic and equipment class diversification, as well as participation in long-term
drilling markets are key rating attributes, which combined with debt tolerance levels ultimate
differentiate the ratings among the contract drillers.
OUTLOOK: STABLE
Maintenance of the current rating depends on continued adherence to currently conservative financial
politcies, Standard & Poor's said. |
