Northern Offshore Reports Third Quarter and Nine Month 2013 Financial Results and Declares Dividend

HOUSTON, Nov. 13, 2013 /PRNewswire/ --

Highlights
(All $ in USD)

  • Northern Offshore, Ltd. (Oslo Bors: NOF.OL) today reported net income for the three months ended September 30, 2013, of $2.7 million, or $0.01 per diluted share, on revenues of $42.6 million.
  • Generated $11.0 million of third quarter EBITDA.
  • Announced contracts for the construction of two jackup drilling rigs.
  • Contract awarded for Energy Endeavour.
  • Option exercised for the Energy Enhancer.
  • The company's directors have declared a dividend of $0.05 per share.

Management Comment

Gary W. Casswell, Northern Offshore's president and CEO, commented, "As announced in a recent press release, we have taken a significant step forward in the execution of our strategy to transform the company's asset base to a newer rig fleet by commencing the construction of two high specification jackups, with options for two more, capable of working in most geographic areas around the world outside of the North Sea. These units will be constructed in China at very competitive prices and will be fully equipped to handle the most demanding client requirements and drilling applications.  We are confident that the successful execution of this asset renewal strategy will be to the long term benefit of all of our stakeholders.

Mr. Casswell went on to say, "Maersk Oil and Gas has renewed the contract on our jackup Energy Enhancer operating in Denmark for one year from July at significantly higher rates. Additionally, the jackup Energy Endeavor has recently commenced a seven month plus options contract for Wintershall in the Netherlands at North Sea market rates. With four of five units now under contract we expect to see improved cash flow going forward.  And as always, we continue to focus on the safe operation of all of our units and providing a world class service to our clients."

Third Quarter Analysis

Net income for the three months ended September 30, 2013, was $2.7 million, or $0.01 per diluted share.  This compares to net income of $17.8 million, or $0.12 per diluted share for the third quarter of 2012.  Revenues for the third quarter of 2013 were $42.6 million, compared to $62.2 million for the third quarter of 2012.

For the nine months ended September 30, 2013, net income was $5.4 million, or $0.03 per diluted share.  For the same period in the prior year, net income was $6.0 million, or $0.04 per diluted share.  Revenues for the first nine months of 2013 were $128.1 million, compared to $134.0 million for the same period in 2012.

Revenues for the three months ended September 30, 2013, were lower than the same period of 2012, primarily because of a decrease in dayrate revenues from the drillship Energy Searcher and jackup Energy Endeavour due to lower utilization of these rigs as compared to the same period in the prior year.  This decrease was partially offset by an increase in revenues from the jackup Energy Enhancer due to higher dayrates attributable to the exercise of the rig's first one-year option during the current quarter. 

The tariff revenues from the Northern Producer averaged approximately $112,000 per day in the third quarter of 2013.  The company expects pricing levels to remain stable and production to decrease slightly in the near term.

Drilling and production expenses for the third quarter of 2013 were $1.7 million higher as compared with the same period in 2012, primarily due to higher labor and maintenance costs, which were partially offset by a decrease in the idle costs of the drillship Energy Searcher.

Third quarter 2013 depreciation, general and administrative expenses, interest expense, amortization of deferred financing fees and other financial items were comparable to those of the same period in 2012.

As of November 11, 2013, the company had an outstanding credit facility balance of $22.0 million and a cash balance of $37.0 million.

The company's directors have declared a dividend of $0.05 per share, or approximately $8.2 million.  Shareholders of record with the VPS on November 29, 2013, will be entitled to receive the dividend, which will be paid on or around December 16, 2013.  The shares of the company will be trading ex-dividend from November 27, 2013.

Conference Call Information

Northern Offshore, Ltd. will conduct a teleconference with security analysts at 9 a.m. CT, November 14, 2013, to discuss the company's quarterly results.  Individuals wishing to participate in the teleconference should call (866) 700-5192 (in the U.S.) or (617) 213-8833 (outside the U.S.) about five to ten minutes prior to the scheduled start time and refer to participant password 96790263.

The conference call also will be accessible by logging on to the company's website at http://www.northernoffshorelimited.com.  After logging on, go to "Investor Relations" and select the conference call webcast.

About the Company

Northern Offshore, Ltd. is a Bermuda holding company which operates offshore oil and gas drilling units and one production vessel in various markets around the world, including the North Sea, the Indian Ocean and Southeast Asia. The company's fleet consists of four drilling units (a drillship, a semisubmersible and two jackup drilling rigs) and one floating production facility.  More information on Northern Offshore, Ltd. may be found by visiting the company's website at http://www.northernoffshorelimited.com.

This announcement contains statements that reflect the company's expectations or predictions of the future. These statements are forward-looking statements.  These forward-looking statements may include statements regarding earnings guidance, capital allocation strategy, the impact of activity levels, business performance, and other market and industry conditions.  The company's actual results could differ materially from those reflected in such forward-looking statements.  Additional information concerning factors that could cause actual results to differ materially from those in the forward-looking statements is contained from time to time in the company's regulatory filings.  The company disclaims any intention or obligation to revise any forward-looking statements, including financial estimates, whether as a result of new information, future events or otherwise.   

For further information, please contact:
Brian Hefty at (713) 739-7686,
or via email at brian.hefty@northernoffshoreltd.com

 

NORTHERN OFFSHORE, LTD. and SUBSIDIARIES

Consolidated Statements of Operations

(Unaudited)









Three Months Ended  September 30,  

Nine Months Ended  September 30, 

(Thousands of US Dollars, except per share amounts)

Q2 2013

2013

2012

2013

2012

Revenues

44,116

42,556

62,173

128,086

134,036

Operating expenses:






Drilling and production

(29,370)

(28,703)

(26,999)

(88,152)

(91,122)

Depreciation

(7,828)

(8,036)

(8,055)

(23,801)

(26,704)

General & administrative

(2,032)

(2,083)

(1,727)

(6,127)

(5,354)

Total operating expenses

(39,230)

(38,822)

(36,781)

(118,080)

(123,180)

Operating income

4,886

3,734

25,392

10,006

10,856

Interest expense

(384)

(369)

(747)

(1,147)

(1,905)

Amortization of deferred financing fees

(122)

(123)

(123)

(366)

(389)

Other financial items

(1,054)

(795)

(295)

(1,380)

(489)

Total other expense

(1,560)

(1,287)

(1,165)

(2,893)

(2,783)

Income before taxes

3,326

2,447

24,227

7,113

8,073

Income taxes (expense)/benefit

(1,668)

230

(6,383)

(1,713)

(2,027)

Net income

1,658

2,677

17,844

5,400

6,046







Earnings per share (US$)






     Basic

0.01

0.01

0.12

0.03

0.04

     Diluted

0.01

0.01

0.12

0.03

0.04







Weighted average common shares (000's)






     Basic

157,267

157,556

156,046

157,294

155,875

     Diluted

157,281

157,556

156,046

157,351

155,875

 

NORTHERN OFFSHORE, LTD. and SUBSIDIARIES

Consolidated Balance Sheets

(Unaudited)




(Thousands of US Dollars)

September 30, 
2013

December 31,
 2012

Current assets 



Cash and cash equivalents

32,996

26,504

Restricted cash 

1,000

-

Accounts receivable, net

23,769

29,386

Prepaid expenses 

3,891

4,099

Deferred mobilization costs 

1,227

2,209

Deferred insurance premium

2,662

1,869

Other current assets

1,505

1,711

Total current assets

67,050

65,778

Noncurrent assets 



Property, plant & equipment, net

184,566

201,077

Restricted cash, net of current portion 

5,436

5,436

Noncurrent deposit/escrow account

8,258

5,198

Deferred mobilization costs, net of current portion

675

1,596

Drydock costs, net of current portion

3,417

5,093

Other noncurrent assets 

672

1,748

Total noncurrent assets

203,024

220,148

Total assets

270,074

285,926

Current liabilities



Accounts payable

10,419

13,377

Accrued expenses

18,073

13,131

Income taxes payable

248

933

Affiliated debt

22,000

22,000

Deferred revenue

-

2,062

Total current liabilities

50,740

51,503

Shareholders' equity



Share capital

40,969

40,122

Additional paid-in capital

174,150

170,985

Accumulated other comprehensive loss

(6,691)

(6,691)

Retained earnings

10,906

30,007

Total shareholders' equity

219,334

234,423

Total liabilities and shareholders' equity  

270,074

285,926

 

NORTHERN OFFSHORE, LTD. and SUBSIDIARIES

Consolidated Statements of Cash Flows - (Unaudited)












Nine months ended 
September 30,

(Thousands of US Dollars)




2013

2012

Cash flows from operating activities





Net income




5,400

6,046

Adjustments to reconcile net income/(loss) to net cash




  provided by operating activities:





Stock-based compensation 




4,392

3,003

Depreciation




23,801

26,704

Amortization of deferred financing fees



366

389

(Gain)/loss on disposal of assets



(155)

83








Changes in operating assets and working capital




Accounts receivable



5,617

1,480

Prepaid expenses                          



208

(1,575)

Deferred mobilization costs




1,903

(4,215)

Other current and noncurrent assets



2,663

(4,790)

Accounts payable



(4,468)

(9,162)

Other payable



-

4,450

Other accrued liabilities



2,662

(4,832)

Deferred revenue



(2,062)

(1,720)

Income taxes payable



(685)

(2,211)

Other, net



10

12

Net cash provided by operating activities



39,652

13,662








Cash flows from investing activities





Capital expenditures




(5,014)

(8,891)

Changes in restricted cash




(1,000)

(1,846)

Changes in noncurrent deposit/escrow account



(3,060)

(3,624)

Proceeds from disposal of assets, net



155

-

Net cash used in investing activities



(8,919)

(14,361)








Cash flows from financing activities





Proceeds from drawdown of revolver facility



-

24,564

Debt issuance costs




-

(405)

Payment for taxes on vested shares



(380)

(649)

Dividends paid




(23,861)

(15,451)

Net cash (used in)/provided by financing activities


(24,241)

8,059








Net changes in cash and cash equivalents



6,492

7,360

Cash and cash equivalents at beginning of period



26,504

10,601

Cash and cash equivalents at end of period



32,996

17,961








Supplemental disclosure of cash flow information




Cash paid during the period for:






    Income taxes




407

1,759

    Interest





450

1,548








Significant non-cash transactions during the period for:




Accrued capital expenditures




2,286

1,440

Accrued dividends




639

573

 

NORTHERN OFFSHORE, LTD. and SUBSIDIARIES

 Consolidated Statements of Shareholders' Equity

(Unaudited)
















Accumulated






Common 


Additional

other






shares

Share 

paid-in

comprehensive

Retained 


(Thousands of US Dollars)


('000)

capital

capital

loss

earnings

Total










Balance at December 31, 2011

158,184

39,546

168,583

(6,691)

34,855

236,293










Net income



-

-

-

-

6,046

6,046

Issuance of restricted stock


2,577

644

(644)

-

-

-

Payments for taxes on vested shares

-

-

(649)

-

-

(649)

Stock-based compensation 


-

-

3,003

-

-

3,003

Common shares dividends


-

-

-

-

(16,024)

(16,024)

Balance at September 30, 2012

160,761

40,190

170,293

(6,691)

24,877

228,669










Balance at December 31, 2012

160,488

40,122

170,985

(6,691)

30,007

234,423










Net income



-

-

-

-

5,400

5,400

Issuance of restricted stock


3,389

847

(847)

-

-

-

Payments for taxes on vested shares

-

-

(380)

-

-

(380)

Stock-based compensation 


-

-

4,392

-

-

4,392

Common shares dividends


-

-

-

-

(24,501)

(24,501)

Balance at September 30, 2013

163,877

40,969

174,150

(6,691)

10,906

219,334

 

NORTHERN OFFSHORE, LTD. and SUBSIDIARIES

Reconciliation of GAAP to Non-GAAP Financial Results

(Unaudited)





















 Three Months Ended 

Nine Months Ended



 September 30, 

 September 30, 

(Thousands of US Dollars)

Q2 2013

2013

2012

2013

2012







Net income (GAAP)

1,658

2,677

17,844

5,400

6,046







Add Back:






Net interest expense

506

492

870

1,513

2,294

Income taxes

1,668

(230)

6,383

1,713

2,027

Depreciation

7,828

8,036

8,055

23,801

26,704

Other financial items

1,054

795

295

1,380

489







Adjusted EBITDA (Non-GAAP)

12,714

11,770

33,447

33,807

37,560



















Adjusted EBITDA is defined as Net Income before Interest, Taxes, Depreciation and Other Financial Items

 

NORTHERN OFFSHORE, LTD. and SUBSIDIARIES

Operating Statistics

(Unaudited)











 Three Months Ended 

 Nine Months Ended 




 September 30, 

 September 30, 


Q2 2013


2013

2012

2013

2012








Jackups (2)














Average rig utilization 

92%


67%

100%

86%

70%

Operating days 

167


123

184

470

381

Average revenue per day 

115,839


133,480

101,756

116,513

90,686








Drillship (1)














Average rig utilization 

0%


0%

98%

0%

82%

Operating days

0


0

90

0

225

Average revenue per day 

0


0

186,194

0

201,977








Semisubmersible (1)














Average rig utilization 

100%


100%

100%

100%

60%

Operating days

91


92

92

273

165

Average revenue per day

156,168


170,841

179,229

155,128

161,376








Total Drilling Rigs (4)














Average rig utilization 

71%


58%

100%

68%

70%

Operating days 

258


215

366

743

771

Average revenue per day 

130,064


149,467

141,994

130,701

138,292








Floating Production  Facility (1)














Days in period 

91


92

92

273

274

Production days

91


92

92

273

274

Average bpd

19,109


18,643

18,250

18,676

16,437

Average tariff revenue per day

114,654


111,855

109,514

112,057

98,655

Average other revenue per day 

1,390


1,415

1,387

1,404

1,391

Total average revenue per day 

116,044


113,270

110,901

113,461

100,046















Note 1: Operating days represent actual days under contract.











Note 2: Costs which are reimbursed by the client are included in the average revenue per day calculation.  








Note 3: Energy Exerter is excluded from calculation for the jackup fleet for 2012.

 

SOURCE Northern Offshore, Ltd.



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