Noble Corporation PLC: 114% Upside with This 10%-Yielder?
April 24, 2025
Noble Closes on Blockbuster Acquisition
Oil and gas have taken a tariff-sized hit on concerns that a global trade war will result in a recession both here and abroad. This will, of course, curb demand for crude oil. That doesn’t mean companies are going to stop looking for oil in the meantime.
Strong global energy demand necessitates the ongoing pursuit of the next big crude oil discovery. And here, offshore drilling continues to be at the top of the heap. Global oil demand is expected to grow from 1.1 million barrels per day (mb/d) to 103.9 million mb/d in 2025. (Source: “Oil Market Report – December 2024,” IEA, last accessed April 15, 2025.)
The massive increase in demand has resulted in increased offshore oil drilling projects worldwide. The offshore drilling market is projected to grow from $39.6 billion in 2024 to $86.09 billion by 2034, expanding at a compound annual growth rate (CAGR) of 8.07%. (Source: “Offshore Drilling Market Size, Share, and Trends 2025 to 2034,” Precedence Research, February 17, 2025.)
This bodes well for offshore drilling companies in 2025 and beyond, especially in light of high rig, offshore support vehicles (OSV) and subsea utilization and day rates. Activity remains especially strong in the Middle East, Brazil, and West Africa.
And it’s in this robust environment that Noble Corporation PLC (NYSE:NE) operates. Houston-Texas-based Noble is a leading offshore drilling contractor for the oil and gas industry.
The company owns and operates one of the most modern, versatile, and technically advanced mobile offshore drilling fleets largely focused on ultra-deepwater and high specification jackup drilling opportunities.
In September 2024, Noble closed on the acquisition of Diamond Offshore Drilling, Inc. With the acquisition, the company’s position is strengthened by the addition of four drill ships; at a cost of $460,000 per day, they’re not cheap to rent. Noble is also adding one of the most advanced harsh environment semisubmersible rigs in the world to its fleet. (Source: “Noble Corporation plc announces closing of Diamond acquisition and new appointment to the board of directors,” Noble Corporation PLC, September 4, 2024.)
The company’s current fleet consists of 41 rigs, including 28 floaters and 13 jackups. The acquisition also adds $2.0 billion in backlog, increasing Noble’s current backlog to $5.8 billion, or approximately 4.5 rig years.
Q4 Revenue Jumps 44%
For the fourth quarter ended December 31, 2024, Noble’s total revenue increased 44% on an annual basis and 16% on a sequential basis to $927.3 million. (Source: “Noble Corporation plc Announces Fourth Quarter and Full Year 2024 Results,” Noble Corporation PLC, February 17, 2025.)
The company’s net income increased 59% to $97.0 million, or $0.59 per share, from $61.0 million, or $0.40 per share, in the third quarter. Its adjusted net income was $91.0 million, or $0.56 per share, which was an improvement from $89.0 million, or $0.58 per share, in the third quarter and $56.0 million, or $0.39 per share, in the fourth quarter of 2023.
Noble’s fourth-quarter adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) climbed 9.6% to $319.0 million. Its net cash provided by operating activities in the fourth quarter was $136.0 million and free cash flow (FCF) was $2.0 million.
The company’s full-year revenue was up 18% at $3.05 billion. Its net income slipped slightly to $448.3 million, or $2.96 per share. Adjusted net income rallied 25% to $2.30 per share. And Noble’s full-year FCF was $103.4 million.
Commenting on the results, Robert W. Eifler, Noble’s president and chief executive officer, said, “The fourth quarter capped our first full quarter incorporating the Diamond acquisition, with solid results. We have also had a number of important contract wins recently which collectively have augmented our revenue coverage for 2025 and 2026.”
Noble Corporation PLC’s 2025 Outlook
For 2025, Noble expects to report:
- Total revenue in the range of $3.25 billion to $3.45 billion
- Adjusted EBITDA in the range of $1.05 billion to $1.15 billion
- Capital expenditures of between $375.0 million and $425.0 million
Commenting on Noble’s outlook, Eifler added, “Noble’s high quality backlog and lower capex requirements for 2025 compared to 2024 are expected to support meaningfully higher free cash flow this year, which we intend to direct toward dividends and share repurchases.”
$575.0 Million Returned to Investors
Noble Corporation PLC makes a lot of money, which allows it to provide shareholders with a reliably growing, ultra-high-yield dividend. In 2024, it returned more than $575.0 million in capital through dividends and share buybacks.
In March, it paid a first-quarter 2025 dividend of $0.50 per share, or $2.00 per share on an annual basis, for a forward dividend yield of 10.3%.
Noble just paid out its first dividend in August 2023, so it doesn’t have a long, storied history of payouts, but, it has raised its distribution twice since then. (Source: “Dividend Information,” Noble Corporation PLC, last accessed April 15, 2025.)
114% Upside Potential with NE Stock?
Talk of tariffs has wreaked havoc on global stocks, being especially unkind to energy stocks. And, despite solid fourth-quarter and full-year results and a strong outlook, NE stock has not escaped the sell-off.
As of April 15, NE is deep in the red, down 36% year to date and 56% over the last 12 months.
The outlook for the next year looks a little brighter, with Wall Street analysts providing a 12-month share price forecast range of $34.91 to $42.00. This points to potential upside of approximately 78% to 114%.
Chart courtesy of StockCharts.com
The Lowdown on Noble Corporation PLC
To summarize, Noble Corporation is a leading offshore drilling contractor that recently completed a blockbuster acquisition, one that increases its fleet and backlog. Management expects the transaction to contribute to accelerated growth in its return of capital to shareholders.
The company reported solid fourth-quarter and full-year results, and, thanks in part to the acquisition of Diamond Offshore Drilling, provided strong full-year 2025 guidance. On top of that, a large number of recent contract wins has helped augment Noble’s revenue coverage for 2026.
That’s good news for common shareholders and the 413 institutions that hold a 79.15% stake in NE. The three biggest institutional holders are The Vanguard Group Inc, First Eagle Investment Management, and BlackRock Inc. (Source: “Holders,” Yahoo! Finance, last accessed April 15, 2025.)
It’s also important to note that 21.04% of all outstanding NE shares are held by insiders. This kind of skin in the game should motivate management to see the company perform well.
