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September 27, 2006

Noble reports rig breakaways, damage

Noble Corporation (NYSE: NE) reported that its offshore drilling units located in the main path of Hurricane Rita were safely evacuated prior to the storm's arrival and that all the company's units in the U.S. Gulf of Mexico have been secured. However, four semisubmersibles operating in Green Canyon blocks, the Noble Therald Martin, Noble Paul Romano, Noble Amos Runner and Noble Max Smith, broke away from their mooring lines as Hurricane Rita passed. The company was able to track the location of the units during the storm using global positioning system (GPS) technology installed onboard each of the units.

The Noble Therald Martin, Noble Paul Romano, Noble Amos Runner and Noble Max Smith moved approximately 89 miles, 118 miles, 75 miles and 123 miles, respectively, off their original locations. Noble assessment crews have been onboard each unit for preliminary evaluations of condition.

In addition, the Noble Lorris Bouzigard semisubmersible broke at least one of its 10 mooring lines, with the remaining lines holding the unit in position approximately 0.8 of a mile off its original location, and the submersible Noble Joe Alford moved approximately 8 miles off its original location.

Principal damage to the Noble Max Smith comprised a hole of approximately 8 feet by 20 feet in its starboard outboard column at the 96 foot level, a crossover deck on the starboard side, and the main deck outboard of an anchor winch.

According to Noble, an industry publication was in error in reporting that the Noble Max Smith was "blown off location and straight into Chevron's Tension Leg Platform ... 'Typhoon'."

After its mooring lines broke, the Noble Max Smith passed approximately 2.5 miles to the south and west of the fixed location of the Typhoon TLP, based on the rig direction indicator data from Noble's GPS technology onboard.

Principal damage to the Noble Joe Alford comprised bent or broken support members below the hull. Based on the limited and preliminary investigations conducted to date, the company believes it will need to make repairs to the Noble Max Smith and Noble Joe Alford in a shipyard, while it may be possible to complete an investigation and damage assessment, and make any necessary repairs, of the other units without taking them to a shipyard. The company has secured slots for the units if necessary in shipyards in Sabine Pass, Texas, and Pascagoula, Mississippi.

The company says it is not able to make a complete assessment of the condition of the units until additional crew members and other technical personnel are able to conduct further surveys. High levels of offshore drilling activity in recent periods have led to reduced availability and extended delivery times of some offshore drilling equipment, materials and supplies, which could result in delays in returning units to operational status. Latent damage to the units or delays in shipyard repair projects could also adversely impact schedules to return the units to operational status. Additional information will be released after further survey of the condition of the units.

In Noble's marine package insurance program, the company maintains retention (a deductible) of $10,000,000 per any one occurrence, with a $40,000,000 annual aggregate deductible. Based on the information currently available, the company expects Hurricane Rita-related claims under its insurance program to exceed the company's $10,000,000 retention.

During Hurricane Rita, the Noble Jim Thompson was ballasted down in a designated anchorage location in the Sabine River, where it was undergoing inspection and repairs of damage to its mooring systems sustained during Hurricane Katrina.The onboard GPS technology noted no movement of the unit during the storm. Noble crews have not inspected the unit due to restrictions on movement within Sabine Pass and southeast Texas following the storm. The company expects to have Noble personnel onboard the unit today.

The company further reported, also based on limited and preliminary investigations, that its other two submersibles and its two jackup rigs operating in the U.S. Gulf of Mexico appeared not to have sustained damage of a material nature. The company expects these units to return to operations in due course.

See earlier story

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