Offshore oil drilling company Noble‘s (NYSE:NE) stock submerged on Tuesday. That followed the release of third-quarter figures after market close the previous day. Ultimately, the stock closed Tuesday’s trading session down by more than 5%.
A big splash of red ink
For the quarter, Noble booked $729 million in revenue, down 9% year over year. On the bottom line, the company flipped hard to a net loss. That deficit on an adjusted (non-GAAP) basis was $91.5 million ($0.57 per share), compared with the year-ago period’s more than $30 million profit.
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Collectively, pundits tracking Noble were modeling an adjusted net profit of $0.24 per share. At least the company topped the average revenue estimate of slightly under $714 million.
In its earnings release, the company said the quarter was impacted by several of its drilling rigs transitioning to new contracts. On a more positive note, it successfully resumed the operation of its two rigs in Brazil.
Guidance tweaks
Another reason for Tuesday’s investor sell-off is Noble’s adjustment of certain guidance items. For the entirety of 2026, it’s now projecting that adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) will be $850 million to $900 million. The top end of that range was previously $925 million. Capital expenditures are expected to hit $680 million to $705 million; while that’s well above the preceding guidance of $615 million to $665 million, the increase is mainly due to customer-reimbursable expenses.
Management did increase the bottom end of its range for annual revenue. Guidance now stands at $2.85 billion to $2.9 billion; formerly it was $2.8 billion to $2.9 billion.
It’s hard to ignore a surprise net loss, but the contract oil drilling space is cyclical. This quarter was, inarguably, a miss for Noble, mostly because of the relatively transitory state of its rig fleet. If I were an investor, I’d keep a sharper eye on the company’s backlog, which encouragingly grew by $560 million to $6.7 billion — $2.6 billion of which is set to convert next year.
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