August 30, 2007 / 4:48 PM / 12 years ago

Noble shares down as Chevron cancels rig early

HOUSTON (Reuters) - Shares of offshore oil and gas drilling contractor Noble Corp (NE.N) fell more than 4 percent on Thursday after the company said Chevron Corp (CVX.N) put an early end to a contract for a rig in Nigeria.

In its fleet status report filed with regulators on Wednesday, Noble said Chevron had ended its contract for the “Noble Roy Butler” jackup rig about four months early.

Jackup rigs are used to drill in shallower waters.

“It had nothing to with rig performance or safety,” said John Breed, a spokesman for Noble. “It allows us to market the rig four months earlier with the goal of achieving a higher dayrate in a high rig demand period worldwide.”

Shares of Sugar Land, Texas-based Noble were off 3.3 percent to $49.49 in afternoon trade on the New York Stock Exchange after falling as low as $48.82.

“Early termination of Noble’s jackup ‘Roy Butler’ in Nigeria is going to raise eyebrows (raised ours),” Tudor Pickering & Co. Securities Inc wrote in a note to clients. “Is this simply Nigeria instability or something broader? Probably former, but datapoint will bring out offshore drilling skeptics saying rig oversupply.”

Noble also reported that delivery dates for four newly built rigs have been pushed back by a couple of months.

A Houston-based spokesman for Chevron was not immediately available to comment on why it canceled the contract early.

There are a number of new jackup rigs currently under construction, which has led to investor worry about those rigs flooding the market and pushing dayrates down.

The daily rate paid for use of the “Noble Roy Butler” was $129,000 to $131,000, according to a filing with the U.S. Securities and Exchange Commission.

In June, Noble said it was investigating whether its Nigerian affiliate made illegal payments to customs agents while trying to get permits to bring drilling equipment into the waters of the West African nation.

In its last quarterly filing with the SEC, Noble said it had not been able to obtain or renew permits for five of its seven rigs operating there due to its bribery probe. The company cautioned in the filing that it might have to cancel contracts if the proper permits were not obtained.

Noble’s Breed declined to discuss whether the Chevron decision was related to permitting difficulties.

A number of other contract drillers are under scrutiny by the U.S. Department of Justice and the SEC to determine whether the companies or their agents violated the U.S. Foreign Corrupt Practices Act.

Under that law, it is illegal for U.S. companies or their agents to win business abroad by paying bribes.

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