NE

Noble Corporation PLC

Energy, Credit


Presented:01/27/2017
Price:$7.20
Cap:$1.75B
Current Price:$33.22
Cap:$5.33B

Presented

Date01/27/2017
Price$7.20
Market Cap$1.75B
Ent Value$5.96B
P/E Ratio8.57x
Book Value$28.96
Div Yield0.01%
Shares O/S243.22M
Ave Daily Vol12,270,129
Short IntN/A

Current

Price$33.22
Market Cap$5.33B
Noble Corp. Plc engages in offshore drilling services for oil and gas industry. It provides contract drilling services, which including owns and operates mobile offshore drilling units, and floating production storage and offloading unit. The company was founded by Lloyd Noble and Art Olson in 1921 and is headquartered in London, United Kingdom.

Publicly traded companies mentioned herein: Ensco PLC (ESV), Noble Corp plc (NE), Transocean Ltd (RIG)

Highlights

Shares of Noble Corp (NE) have severely lagged peers such as Ensco and Transocean over the past six months, and with the stock trading at just over $7 per share, the presenter sees the risk/ reward as favorable for a long position. However, he cautioned that the position is risky and hinges on major integrated oil and gas companies making some final investment decisions (FIDs) on offshore projects within the next 5-6 months. He stated, “The FIDs represent an interesting catalyst, but if we don’t see some soon - by May-June - then it probably won’t happen (and, the stock may trade ‘poorly’ until we see some offshore FIDs)”. Assuming offshore activity picks up he sees the potential for NE to generate $900mm of EBITDA in 2019 (the Street is forecasting EBITDA to be roughly half of that over the same period). At an 8.5x EBITDA multiple (on 2019), discounted back to today, the stock would be more fairly valued at $13.

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Idea Discussion

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