Quick Read
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NE shares are up 65% year to date, and Eifler sees a path to a fully sold-out deepwater rig market within a year.
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Eifler says customers believe the price "could go right back down almost overnight" on geopolitical fears, so they won't make long-term drilling commitments.
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Eifler reports 109 of 110 ultra-deepwater rigs are already contracted, with day rates for high-end drillships reaching $500,000.
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Noble ( NYSE:NE )President and CEO Robert Eifler said something on the company's Oct. 27, Q3 earnings call that cuts against what many energy investors expect. Noble has not "seen any real demand response so far this year resulting from higher commodity prices."
Oil has rose sharply this year. Brent crude was $61.98 per barrel on Jan. 2 and $115.22 on Oct. 20. Offshore drilling demand has stayed about where it was.
Why Customers Won't Chase $115 Oil
Eifler said customers believe "the current oil price could go right back down almost overnight, given the geopolitical drivers," so "people aren't really willing to make long-term decisions off of it right now." He said they still use "very conservative break-even oil price assumptions" and remain "extremely disciplined." An analyst asked whether the Iran war supply disruptions had made producers more urgent. Eifler said Noble has seen "remarkably little change in the stance of our customers."
The quarter showed that flat demand. Revenue of $729 million beat estimates but fell 8.7% from a year earlier. Adjusted EPS of -57 cents missed expectations of 23 cents, partly because of a $133.05 million tax provision.
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Deepwater Rigs Are Nearly Sold Out Anyway
A day rate is the daily fee an oil company pays to rent a rig and its crew. Ultra-deepwater drillships are floating vessels that drill wells far offshore in very deep water. Robert Eifler said 109 out of 110 available ultra-deepwater rigs are contracted now or for future work. Robert Eifler also said recent contracts confirm day rates for high-end drillships from the mid 400s up to $500,000 per day.
Development projects are driving that demand. Eifler said they are leading the way because "a lot of things that had been delayed in years past are now starting up." Noble's backlog is $6.70B, and the company already has about 20% more contracted capacity in the second half of 2027 than in the first half.
U.S. Gulf Is the Weak Spot
Eifler called the Gulf "a noted soft spot amidst an otherwise robust global market throughout this year," with its rig count falling to a "mid teens market presently." He added, "We do expect to see some improvement in the Gulf next year based on current customer dialogue."
What Could Change in 2027
Eifler said "2027 has been cited as a year where we would perhaps see an uptick in some of the wildcat exploration." Robert Eifler also said India could need two to four drillships starting in late 2027 and 2028. In his view, the middle part of the Brent curve, rather than the spot price, is "probably the best indicator of our business." If the longer-dated prices keep rising, exploration budgets could finally follow.
What to Watch
Noble shares traded around $46.20 on Wednesday, Oct. 28 and are up 59.31% year to date. The key signal is Eifler's forecast: "It's not hard to draw a straight line to a fully sold-out market for high-end deepwater rigs within the next year or so." If new contracts for 2027 keep pushing day rates toward $500,000, that forecast is playing out. If they delay, the expected recovery in the second half of 2027 gets pushed back.
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