General Electric Company (NYSE:GE) and Noble Corporation plc (NYSE:NE) jointly announced a partnership to collaborate on the Digital Rigsm solution, enabling data-driven operational efficiency by using data analytics, with the target of a 20 percent reduction in operational expenditure across the rigs.
Within the agreement, GE will initially deploy its latest marine Asset Performance Management (APM) system, powered by Predix*, on four of Noble’s drilling rigs. The partnership will allow data-driven operations intelligence to provide broad-ranging benefits for the selected assets on the program’s rigs:
- Enhanced drilling process efficiency—Foresight visibility of equipment anomalies and drilling process deviations to reduce operational disruptions and enhance performance consistency.
- Shift to predictive maintenance—Redefine maintenance strategies with a focus on predictive maintenance to achieve long-term, sustainable opex reductions across the fleet.
- Reduction of third-party service costs—Anytime, anywhere rig visibility and insights that leverage the one-to-many impact of shore-based experts to reduce third-party service costs.
“With shifting market dynamics, the offshore industry is on the cusp of change. Drilling contractors must seize the moment to enhance their competitive edge,” said David W. Williams, chairman, president and chief executive officer of Noble Corporation plc. “We believe the shift to data-driven decisions will have a significant effect on drilling efficiencies. It is imperative for our industry to embrace the digital revolution to stay efficient and nimble, and Noble is leading the way. We look forward to developing our Digital Rig solution with GE.”
“Sluggish oil price, market volatility and geopolitical complexity are shaking the offshore landscape. The industry is challenged with the increased pressure of cost reduction and need for productivity gains. The impending retirement of many experienced workers widens skills gaps and leads to further industry-wide uncertainties,” said Francesco Falco, chief commercial officer, GE Energy Connections’ Power Conversion. “GE’s innovative digital APM solution unlocks reductions in operational expenditure and enhances competitiveness even in the current down market environment.”
GE’s marine APM solution combines “digital twin” data models and advanced analytics to detect off-standard behavior—often a sign of potential failure or performance degradation—of target assets on the rigs. This can sometimes be detected weeks ahead and provides an early warning foresight to operators to mitigate a problem before it strikes.
As the system continues to learn, this ability to predict the future condition of rig-wide assets will also enable a shift from planned to predictive maintenance. Empowered by modern software-based analysis, maintenance is exercised only when there is evidence of need. Compared to planned maintenance, it avoids unnecessary maintenance as well as mitigates the risk of maintenance-induced problems, reducing unplanned downtime and creating significant cost savings. The partnership is targeting to deliver up to a 20 percent reduction in maintenance costs.
In ddition, the ability to provide actual rig asset data to onshore experts globally provides unparalleled insights into asset health, allowing experts to remotely diagnose problems and advise on next steps from a central location, potentially reducing third-party service costs. It also helps optimize the offshore maintenance team’s manpower and structure, as engineers will be able to focus on the drilling activity, not fault finding unnecessary problems.
“It is time for the industry to rethink the drilling ecosystem. Offshore companies must adapt to industry disruptions by leveraging digital solutions to counteract the current downswing and for readiness to scale during a market upswing,” said Tim Schweikert, president & CEO, GE’s Marine Solutions. “Industry-wide collaboration underpins a solid digital future. Together, we are stronger and will get there faster. It is a privilege to partner with Noble, and we are looking forward to delivering the results enabled by the digital age.”
Shares of General Electric are down nearly one percent to $29.47 in pre-market trading Monday. GE has a 1-year high of $33 and a 1-year low of $28.19. The stock’s 50-day moving average is $29.92 and its 200-day moving average is $30.23.
On the ratings front, GE has been the subject of a number of recent research reports. In a report issued on March 13, J.P. Morgan analyst Stephen Tusa maintained a Sell rating on GE, with a price target of $29, which represents a slight downside potential from current levels. Separately, on March 9, Cowen’s Gautam Khanna reiterated a Hold rating on the stock and has a price target of $30.
According to TipRanks.com, which ranks over 7,500 financial analysts and bloggers to gauge the performance of their past recommendations, Stephen Tusa and Gautam Khanna have a yearly average return of 3.2% and 11.4% respectively. Tusa has a success rate of 65% and is ranked #1518 out of 4554 analysts, while Khanna has a success rate of 66% and is ranked #708.
Overall, one research analyst has rated the stock with a Sell rating, 2 research analysts have assigned a Hold rating and 5 research analysts have given a Buy rating to the stock. When considering if perhaps the stock is under or overvalued, the average price target is $34.5 which is 16.1% above where the stock closed last Friday.