Second Look: Noble Corp. Up Slightly

NEW YORK (AP) -- Noble Corp. struggled to hold on to its gains on Friday, as analysts maintained mostly positive ratings for the company and suggested the market sell-off of Noble shares the previous day was unwarranted.

Noble shares rose 14 cents to $49.44 in afternoon trading, down from an earlier height of $50.31. The stock fell 3.6 percent on Thursday following disappointing news in Noble's fleet report, which some took as an indication of oncoming demand issues for offshore drillers.

FBR analyst Robert MacKenzie maintained his "Outperform" rating for Noble in a report on Friday and called the market's reaction on Thursday "overblown." However, he and other analysts have lowered earnings estimates for Noble due to the report and market concerns.

Analysts polled by Thomson Financial now expect, on average, earnings per share of $1.19 for Noble in the third quarter, versus $2.38 per share before its fleet report Wednesday.

The "most telling concern" is whether Noble will deny operators seeking lower rates in the near term, MacKenzie said.

"We would like to see management hold a firm line on pricing, a stance we are not sure is shared by the company," he wrote.

Noble's disclosure that Chevron Corp. had terminated a contract four months early could be "positive news" if the company finds a suitor for the rig at a higher rate, according to MacKenzie, though others see it as an indication of weakening demand.

He was concerned that the company could not contract its George McLeod rig immediately after the original agreement expired, but does not take that as a hint about the state of the broader offshore market. Though Noble's intended agreement for the rig may have a price tag below market rates, MacKenzie said, it can regain part of the loss through lower operating expenses.

"We certainly do not draw any conclusions about the health of the global jackup market from one unusual contract," MacKenzie wrote.

Stifel Nicolaus analyst R. Thaddeus Vayda was less optimistic, however: "We fully expect to hear of more problems (and estimate adjustments) as new rig deliveries in 2008 and 2009 become more imminent," he wrote. "Further, we do not think that reports of downward pressure on jackup pricing are isolated events."

Vayda maintained a "Hold" rating on Noble as RBC Capital Markets and Bear Stearns maintained an "Outperform" rating and Jefferies & Co. held steady its "Buy" rating.