On Friday, JPMorgan (NYSE:JPM) reiterated its Neutral rating and $37.00 price target for Noble Corporation (NYSE:NE).
The firm's analysis highlighted Noble's recent achievements, including securing contracts for several of its drilling vessels, such as the Noble Venturer, Noble Globetrotter I, and Noble Developer. Despite these positive developments, the pace of contracting has not kept up with the high levels seen in 2022-23.
The company was informed by INPEX of an early termination for the Noble Deliverer rig. However, Noble will receive the remaining contract value as a termination fee, which will be reported as a special item in the fourth-quarter 2024 earnings. Noble anticipates the rig might be back in service in the third quarter of 2025 after a special survey.
JPMorgan forecasts Noble's fourth-quarter 2024 EBITDA to be $295 million, aligning with consensus estimates. The company is working towards securing more contracts for its fleet for the year 2025, with expectations of increased contracting activities towards the end of 2025 and into early 2026.
Noble is preparing to bid its Noble Valiant drillship and Noble Voyager for global work opportunities.
There are also signs of an uptick in the Norwegian jackup market, which could result in contracts for up to three Noble jackups by the end of the year. The financial impact of these potential contracts on Noble, however, is expected to be minimal.
The integration of Diamond Offshore into Noble's operations is on track, with the majority of the anticipated $100 million in annual cost synergies to be realized in 2025.
Capital expenditures for 2025 are estimated at $422 million, a 23% decrease from the 2024 forecast of $550 million, which should support free cash flow generation of $197 million in 2024 and $380 million in 2025.
JPMorgan's EBITDA projections for 2024 and 2025 are $1,162 million and $1,220 million, respectively, compared to the street estimates of $1,040 million and $1,244 million. The firm's December 2025 price target of $37 per share remains unchanged.
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