Earnings

Noble CEO: 'I Don't Think We've Seen Any Demand' From Higher Oil Prices

Customers stay disciplined even as deepwater firms, and the U.S. Gulf rig count has slid to the mid teens, Robert Eifler told analysts.

Higher oil prices have not pushed drillers' customers to order more rigs, Noble Corporation CEO Robert Eifler said on the company's third-quarter earnings call Tuesday. "I don't think we've seen any demand that's arisen from this," he told a Barclays analyst, even as the deepwater market tightens around him.

Cash flow isn't becoming drilling

Noble, an offshore drilling contractor that rents mobile rigs to oil and gas companies, reported third-quarter revenue of $684 million, adjusted EBITDA of $201 million and free cash flow of negative $48 million, according to CFO Richard Barker.

Eifler said customers have kept discipline throughout the cycle, so extra cash "not translating into drilling just yet." Producers also know the oil price "could go right back down almost overnight," he said, given geopolitical drivers, so they are not making long-term decisions off it.

Asked by an analyst whether the Iran war's supply disruptions had changed budgets, he said he has seen "remarkably little change." Customers still use very conservative break-even oil price assumptions, he said.

Gulf soft, deepwater tightening

The U.S. Gulf, historically among the markets most responsive to commodity prices, has been a "noted soft spot" this year, Eifler said. Its rig count has fallen from the low 20s in recent years to the mid teens, though he expects some improvement next year.

Elsewhere the market is firming. Of 110 marketed ultra-deepwater rigs, 109 are contracted now or in the future, a 99% contracted rate that tops the 2024 high of 105 rigs. Working rigs number 88, still 10 short of the 2024 peak. Leading-edge day rates for top drill ships are in the mid-$400,000s up to $500,000.

Customer urgency has risen over the past 90 days, Eifler said, but is far from past cycles, and duration decisions are "still largely driven by need." He said 2027 may bring clearer evidence of wildcat exploration as customers leave budget season with strong 2026 cash flow.

Backlog and 2027 outlook

Noble won about $560 million of new awards in the past three months, lifting its backlog to $6.7 billion, of which about $2.6 billion is scheduled for 2027 revenue. It narrowed 2026 revenue guidance to $2.85 billion to $2.9 billion, from $2.8 billion to $2.9 billion, and adjusted EBITDA guidance to $850 million to $900 million, from $850 million to $925 million.

Barker said first-quarter 2027 adjusted EBITDA should be broadly similar to the fourth quarter of 2026, then build meaningfully each quarter. About 20% more capacity is already contracted for the second half of 2027 than the first. A year ago the second half of 2026 stood 5% below the first half.

The board declared a 50-cent dividend for the fourth quarter.

Barker said normalized net capital spending should run around $400 million, excluding the Klaus Bachmann upgrade, of which just over half remains to spend in 2027.