Noble Corp. (NYSE: NE) ended first-quarter 2016 with about $250 million in cash, but will add another $540 million after reaching an agreement with debt-heavy Freeport-McMoRan Inc. to end contracts for two drillships early.

Depending on the average price of oil over a 12-month period, Noble could pocket an additional $75 million. The agreement, Noble executives said, eliminates some counterparty and downtime risks. But it drops the total number of drillships the company has under contract to six.

“We will be in a position whereby we can reduce our costs a little more per rig by essentially $100,000 per day for each of the rigs going forward, and it will allow us to extract a significant portion of the total backlog value for those two rigs,” Bernie Wolford, senior vice president of operations, said May 10 during the Citi Global Energy and Utilities Conference in Boston.

The settlement will probably prevent Noble from having to draw into its revolver capacity, according to Jeff Chastain, the company’s investor relations head. The company planned to do so upon taking delivery of a newbuild, despite have “robust liquidity.”

While the extra cash helps, it will not wipe away all woes for the offshore drilling contractor that is depending on its “premium fleet” among other qualities to weather the downturn. The WTI price has risen from about $26-$27/barrel (bbl) in February to just under $45/bbl, but the gains have not sparked a drilling ramp-up offshore, although rig utilization rates—specifically for drillships and jackups—were strong for Noble.

Noble’s quarterly profit dropped 41% for the quarter to about $105 million as operating revenue fell by nearly 24% to about $612 million, according to Noble’s first-quarter 2016 results. Also falling was the average day rate, which dropped about 15% to $287,169. Total debt as of March 31 was $4.2 billion.

However, Wolford said Noble’s contract coverage, consistent operational execution, liquidity, solid balance sheet with manageable maturities, and its “premium fleet” will enable the company to weather today’s storm. With an average age of 10 years, Noble’s fleet consists of 30 rigs, including eight drillships, eight semisubmersibles and 16 jackups. The company currently has one newbuild under construction—the Noble Lloyd Noble, a jackup that will be used by Statoil in the North Sea’s Mariner Field.

“For 2016, we have 54% of our available days committed for deep water and 36% of our 2017 available days committed,” Wolford said during the conference, which was livestreamed. “The jackup picture is a better story.”

Already, 87% of Noble’s available operating days are committed and 66% is committed for next year. “We also remain optimistic that some of the currently available days in our jackup fleet will be able to gain contract cover the latter half of this year.”

In addition, Noble continues to reduce downtime as less downtime means more money. Fleet downtime was 3.8% for the quarter compared to guidance of 5% fleetwide, which was revised down from 6%. Wolford attributed the lower number to money invested in critical capital spares, a project initiated in 2010, and putting in place subsea quality assurance supervisors with technical expertise.

“Noble is positioned for advantage in the current market,” Wolford said. “We have a 95-year history of successfully managing through all types of cycles while staying focused on what really matters to delivery of top-of-the-line service and continuation of our strong reputation. You should expect no less from us in this current cycle.”

Where drilling activity picks up first depends on circumstances in that region. Some areas are challenged by the government’s stake on royalty and production, and $50/bbl would only scratch the surface, Wolford said, referring to places like Angola. In areas like the Gulf of Mexico, where infrastructure is in place, some new opportunities may still emerge, even with oil at $45/bbl.

“I don’t think you’ll see one particular basin magically emerge as the driver for future activities,” he continued. Instead, the industry could see a major inflection point in oil prices and a gradual need to replace reserves. “It’ll be operator and region specific.”

But Wolford does believe the jackup market will rebound faster than deepwater. He was encouraged by recently extended contacts by Shell for the Noble Hans Deul, a two-year extension for the Noble Sam Turner with Maersk Oil, albeit at a lower rate according to media reports, and a new three-year contract with Total for jackups.

Velda Addison can be reached at