Noble: Hurting? — Barron’s Blog

By Ben Levisohn

Shares of Noble ( NE) are slipping today after Argus analyst David Coleman cut the offshore driller to Sell from Hold. He explains why:

We are downgrading Noble Corp. plc (NYSE: NE) to SELL from HOLD. Noble continues to face pressure from the decline in offshore drilling activity and has seen little benefit from its fleet of high-spec rigs, as fleet utilization and day rates fell once again in the second quarter. The company has also been hurt by the early termination of drillship contracts and could see additional cancellations going forward. In addition, Noble’s once strong balance sheet has deteriorated, and the company is now facing higher borrowing costs following credit downgrades from S&P and Moody’s. In April, it also slashed its quarterly dividend to $0.02 from $0.15. Based on these factors and the absence of positive catalysts, we believe that a SELL rating is now appropriate.

Shares of Noble have declined 2.2% to $7.03at 11:16 a.m. today, but I’m guessing that it doesn’t have much to do with the downgrade, as Ensco ( ESV), Rowan ( RDC) and Transocean ( RIG) and other offshore drillers are falling even more.

Ensco has dropped 4.6% to $8.57, Rowan has fallen 2.9% to $13.95, and Transocean is off 4% at $10.57.

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