Northern Offshore Reports Fourth Quarter and Preliminary Full Year 2010 Results
HOUSTON, Feb. 23, 2011 /PRNewswire/ -- Northern Offshore, Ltd. (Oslo Bors: NOF.OL) today reported that the financial results for the current quarter included an after-tax, non-cash charge of US$205.4 million, or US$1.32 per diluted share, due to a valuation impairment of the jackup fleet. As a result, the company reported a net loss for the three months ended December 31, 2010 of US$186.9 million, or US$1.21 per diluted share, on revenues of US$69.0 million. Excluding the impairment charge, fourth quarter 2010 net income would have been US$18.4 million, or US$0.12 per diluted share. This compares to net income of US$17.4 million, or US$0.11 per diluted share, for the fourth quarter of 2009, on revenues of US$69.2 million.
The valuation impairment was calculated in accordance with US generally accepted accounting principles, which required that the carrying value of the company's assets be adjusted to reflect their fair market value. The fair market value of the fleet was evaluated based on the most recent valuations performed on the company's assets in December 2010.
For the full year ended December 31, 2010, the net loss was US$141.1 million or US$0.91 per diluted share. Excluding the above impairment charge and a US$4.4 million maintenance charge for the floating production facility Northern Producer taken in the third quarter, the company would have reported net income of US$68.6 million, or US$0.44 per diluted share, for the full year of 2010. This compares to net income of US$78.8 million or US$0.51 per diluted share for 2009, excluding a US$3.7 million bad debt expense taken in the prior year. Revenues in 2010 were US$257.5 million, as compared to US$279.2 million reported in 2009.
Gary W. Casswell, Northern Offshore's president and CEO, commented "We are pleased with our year-end operating results and the strengthening of our balance sheet throughout the year. Our financial performance in the first quarter of 2011 should be supported by solid cash flow from the floating production facility Northern Producer and semisubmersible Energy Driller, but negatively affected by the shipyard stay for the drillship Energy Searcher. We see improvement in the Southern North Sea market and expect the financial contributions from our jackup fleet to improve as we reduce idle costs and execute new contracts."
As of February 22, 2011, the company has a strong balance sheet, with an outstanding Revolving Credit Facility balance of US$34.0 million, a cash balance of US$23.2 million and a net debt position of US$10.8 million. The Revolving Credit Facility balance at year-end 2010 was US$43.0 million, down US$32.0 million from the third quarter of 2010. Cash at year-end 2010 was US$19.0 million, of which US$12.6 million was unrestricted, leaving the company in a net debt position of US$24.0 million as of December 31, 2010.
The tariff from the floating production facility Northern Producer increased from an average of US$123,000 per day in third quarter to US$166,000 per day in the fourth quarter of 2010, reflecting increases in production volumes and higher oil prices. The company expects production and price levels to remain strong in the near term.
The drillship Energy Searcher is currently undergoing a required five-year special periodic survey and dry-docking in Singapore. The present budget for the dry-docking, which is expected to be completed in April 2011, is approximately US$21.0 million. The company is actively marketing the Energy Searcher and has several interesting leads for both short- and long-term opportunities.
Mr. Casswell concluded "Although the Northern Offshore fleet is not of the latest generation, we are optimistic that the company will be able to deliver solid results by generating operational cash flow from existing and new contracts while minimizing expenditures."
Fourth Quarter Analysis
Revenues for the three months ended December 31, 2010 were comparable to the same period of 2009. Decreases in revenue this quarter attributable to lower utilization of the jackup Energy Endeavour and drillship Energy Searcher were offset by higher utilization of the jackup Energy Enhancer and higher tariff revenue from the floating production facility Northern Producer.
Drilling and production expenses for the fourth quarter of 2010 were US$3.7 million lower compared to the same period of 2009 due to lower utilization of the fleet in the 2010 quarter. General & administrative expenses were US$1.5 million lower this quarter as compared to the prior year fourth quarter due primarily to an executive separation charge in the 2009 fourth quarter.
The information contained in this press release is preliminary and is subject to change until the release of the 2010 audited accounts as approved by the Board of Directors.
Conference Call Information
Northern Offshore, Ltd. will conduct a teleconference with security analysts at 9 a.m. CT, February 24, 2011 to discuss the company's quarterly results. Individuals wishing to participate in the teleconference should call (866) 788-0546 (in the U.S.) or (857) 350-1684 (outside the U.S.) about five to ten minutes prior to the scheduled start time and refer to participant password 30155989.
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 production and drilling vessels in various markets around the world, including the North Sea, the Indian Ocean, offshore Russia, the Mediterranean Sea and Southeast Asia. The company's fleet consists of one floating production facility and five drilling units (a drillship, a semisubmersible and three jackup drilling rigs). The company also provides rig management services, and is currently operating in this capacity on two semisubmersibles in the Caspian Sea. More information on Northern Offshore, Ltd. may be found by visiting the company's website at http://www.northernoffshorelimited.com.
For further information, please contact: |
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Brian Hefty at (713) 739-7686, |
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or via email at [email protected] |
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NORTHERN OFFSHORE, LTD. and SUBSIDIARIES |
||||||
Consolidated Statements of Income |
||||||
(Unaudited) |
||||||
Three Months Ended December 31, |
Twelve Months Ended December 31, |
|||||
(Thousands of US Dollars, except per share amounts) |
Q3 2010 |
2010 |
2009 |
2010 |
2009 |
|
Revenue |
71,524 |
69,020 |
69,178 |
257,488 |
279,169 |
|
Operating expenses: |
||||||
Drilling and production |
(27,258) |
(25,523) |
(29,177) |
(104,680) |
(117,804) |
|
Depreciation |
(14,698) |
(14,675) |
(15,520) |
(58,110) |
(62,033) |
|
General & administrative |
(1,445) |
(1,078) |
(2,571) |
(7,213) |
(8,588) |
|
Impairment loss on fixed assets |
- |
(205,361) |
- |
(205,361) |
- |
|
Bad debt |
- |
- |
- |
- |
(3,840) |
|
Total operating expenses |
(43,401) |
(246,637) |
(47,268) |
(375,364) |
(192,265) |
|
Operating income / (loss) |
28,123 |
(177,617) |
21,910 |
(117,876) |
86,904 |
|
Interest income |
11 |
14 |
60 |
90 |
310 |
|
Interest expense |
(1,187) |
(1,000) |
(1,949) |
(6,326) |
(10,197) |
|
Amortization of drilling contract intangibles |
- |
- |
- |
- |
5,887 |
|
Amortization of deferred financing fees |
(777) |
(768) |
(397) |
(2,573) |
(1,587) |
|
Other financial items |
69 |
(292) |
(1,248) |
(560) |
(398) |
|
Total other income/(expense), net |
(1,884) |
(2,046) |
(3,534) |
(9,369) |
(5,985) |
|
Income/(loss) before taxes |
26,239 |
(179,663) |
18,376 |
(127,245) |
80,919 |
|
Income taxes - (expense) |
(3,101) |
(7,261) |
(973) |
(13,886) |
(5,860) |
|
Net income/ (loss) |
23,138 |
(186,924) |
17,403 |
(141,131) |
75,059 |
|
Earnings per share (US$) |
||||||
Basic |
0.15 |
(1.21) |
0.11 |
(0.91) |
0.49 |
|
Diluted |
0.15 |
(1.21) |
0.11 |
(0.91) |
0.49 |
|
Weighted average common shares (000’s) |
||||||
Basic |
154,437 |
154,474 |
153,327 |
154,358 |
153,161 |
|
Diluted |
155,332 |
155,657 |
154,845 |
155,848 |
153,797 |
|
NORTHERN OFFSHORE, LTD. and SUBSIDIARIES |
|||
Consolidated Balance Sheets |
|||
(Unaudited) |
|||
(Thousands of US Dollars) |
December 31, 2010 |
December 31, 2009 |
|
Current assets |
|||
Cash and cash equivalents |
12,587 |
79,162 |
|
Restricted cash |
6,445 |
9,371 |
|
Account receivables, net |
55,686 |
35,423 |
|
Prepaid expenses |
4,785 |
6,097 |
|
Deferred financing fees |
2,279 |
561 |
|
Deferred mobilization costs |
281 |
601 |
|
Other current assets |
419 |
- |
|
Total current assets |
82,482 |
131,215 |
|
Non-current assets |
|||
Property, plant & equipment, net |
252,397 |
499,594 |
|
Restricted cash, net of current portion |
- |
6,438 |
|
Deferred mobilization cost, net of current portion |
- |
382 |
|
Other noncurrent assets |
1,677 |
- |
|
Total non-current Assets |
254,074 |
506,414 |
|
Total assets |
336,556 |
637,629 |
|
Current liabilities |
|||
Accounts payable |
17,528 |
12,917 |
|
Accrued expenses |
18,616 |
21,467 |
|
Income tax payable |
3,429 |
3,762 |
|
Current portion of debt |
43,000 |
197,500 |
|
Deferred revenue |
2,396 |
2,076 |
|
Total current liabilities |
84,969 |
237,722 |
|
Non-current liabilities |
|||
Deferred revenue, net of current portion |
- |
2,396 |
|
Other long-term liabilities |
- |
6,022 |
|
Total non-current liabilities |
- |
8,418 |
|
Total liabilities |
84,969 |
246,140 |
|
Shareholders' equity |
|||
Share capital |
39,176 |
38,829 |
|
Additional paid-in capital |
166,632 |
165,750 |
|
Accumulated other comprehensive loss |
(6,691) |
(6,691) |
|
Retained earnings |
52,470 |
193,601 |
|
Total shareholders' equity |
251,587 |
391,489 |
|
Total liabilities and shareholders' equity |
336,556 |
637,629 |
|
NORTHERN OFFSHORE, LTD. and SUBSIDIARIES |
|||||
Consolidated Statement of Cash Flows - (Unaudited) |
|||||
Twelve months ended December 31, |
|||||
(Thousands of US Dollars) |
2010 |
2009 |
|||
Cash flows from operating activities |
|||||
Net (loss) / income |
(141,131) |
75,059 |
|||
Adjustments to reconcile net income to net cash |
|||||
provided by operating activities: |
|||||
Bad debt expense |
- |
3,840 |
|||
Stock-based compensation |
1,672 |
1,438 |
|||
Depreciation |
58,110 |
62,033 |
|||
Impairment loss on fixed assets |
205,361 |
- |
|||
Amortization of drilling contract intangibles |
- |
(5,887) |
|||
Amortization of deferred financing fees |
2,573 |
1,586 |
|||
Interest, net |
(234) |
(375) |
|||
Changes in operating assets and working capital |
|||||
(Increase)/decrease in accounts receivable |
(6,492) |
11,042 |
|||
Decrease in prepaid expenses |
1,312 |
11,358 |
|||
Increase in other current assets |
(319) |
(100) |
|||
Decrease in accounts payable |
(9,160) |
(3,244) |
|||
Decrease in other accrued liabilities |
(11,668) |
(2,292) |
|||
Decrease in deferred revenue |
(2,076) |
(20,809) |
|||
Decrease in income tax payable |
(333) |
(5,367) |
|||
Other, net |
(1,069) |
(733) |
|||
Net cash provided by operating activities |
96,546 |
127,549 |
|||
Cash flows from investing activities |
|||||
Capital expenditures |
(13,246) |
(16,371) |
|||
Release of restricted cash |
9,394 |
- |
|||
Funding of restricted cash |
- |
(1,250) |
|||
Proceeds from sale of equipment |
- |
475 |
|||
Net cash used in investing activities |
(3,852) |
(17,146) |
|||
Cash flows from financing activities |
|||||
Proceeds from drawdown of revolver |
100,000 |
- |
|||
Principal payment on revolver |
(57,000) |
- |
|||
Payoff of bond loan |
(100,000) |
- |
|||
Principal payment of bank term loan |
(97,500) |
(90,000) |
|||
Deferred financing fees |
(4,326) |
- |
|||
Payment for taxes on vested shares |
(443) |
- |
|||
Net cash used in financing activities |
(159,269) |
(90,000) |
|||
Net decrease / increase in cash and cash equivalents |
(66,575) |
20,403 |
|||
Cash and cash equivalents at beginning of period |
79,162 |
58,759 |
|||
Cash and cash equivalents at end of period |
12,587 |
79,162 |
|||
Supplemental disclosure of cash flow information |
|||||
Cash paid during the period for: |
|||||
Income taxes |
14,296 |
4,638 |
|||
Interest |
4,987 |
10,163 |
|||
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 |
gain / (loss) |
earnings |
Total |
|
Balance at January 1, 2009 |
153,124 |
38,281 |
164,860 |
(6,691) |
118,542 |
314,992 |
|
Net income |
- |
- |
- |
- |
75,059 |
75,059 |
|
Issuance of restricted stock |
2,196 |
548 |
(548) |
- |
- |
- |
|
Stock-based compensation |
- |
- |
1,438 |
- |
- |
1,438 |
|
Balance at December 31, 2009 |
155,320 |
38,829 |
165,750 |
(6,691) |
193,601 |
391,489 |
|
Net (loss) |
- |
- |
- |
- |
(141,131) |
(141,131) |
|
Issuance of restricted stock |
1,388 |
347 |
(347) |
- |
- |
- |
|
Payments for taxes on vested shares |
- |
- |
(443) |
- |
- |
(443) |
|
Stock-based compensation |
- |
- |
1,672 |
- |
- |
1,672 |
|
Balance at December 31, 2010 |
156,708 |
39,176 |
166,632 |
(6,691) |
52,470 |
251,587 |
|
NORTHERN OFFSHORE, LTD. and SUBSIDIARIES |
||||||
Reconciliation of GAAP to Non-GAAP Financial Results |
||||||
(Unaudited) |
||||||
Three Months Ended |
Twelve Months Ended |
|||||
December 31, |
December 31, |
|||||
(Thousands of US Dollars) |
Q3 2010 |
2010 |
2009 |
2010 |
2009 |
|
Net income / loss (GAAP) |
23,138 |
(186,924) |
17,403 |
(141,131) |
75,059 |
|
Add Back: |
||||||
Net interest expense |
1,953 |
1,754 |
2,286 |
8,809 |
11,474 |
|
Income taxes |
3,101 |
7,261 |
973 |
13,886 |
5,860 |
|
Depreciation |
14,698 |
14,675 |
15,520 |
58,110 |
62,033 |
|
Amortization |
- |
- |
- |
- |
(5,887) |
|
Impairment loss |
- |
205,361 |
- |
205,361 |
- |
|
Adjusted EBITDA (Non-GAAP) |
42,890 |
42,127 |
36,182 |
145,035 |
148,539 |
|
Adjusted EBITDA is defined as Net Income before Interest, Taxes, Depreciation, Amortization and Impairment Loss On Fixed Assets. |
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NORTHERN OFFSHORE, LTD. and SUBSIDIARIES |
||||||||
Operating Statistics |
||||||||
(Unaudited) |
||||||||
Three Months Ended |
Twelve Months Ended |
|||||||
December 31, |
December 31, |
|||||||
Q3 2010 |
2010 |
2009 |
2010 |
2009 |
||||
Jackups (3) |
||||||||
Average rig utilization |
33% |
21% |
33% |
25% |
71% |
|||
Operating days |
92 |
59 |
92 |
272 |
781 |
|||
Average revenue per day |
69,564 |
72,300 |
93,979 |
75,730 |
133,930 |
|||
Drillship (1) |
||||||||
Average rig utilization |
100% |
67% |
100% |
92% |
62% |
|||
Operating days |
92 |
62 |
92 |
335 |
227 |
|||
Average revenue per day |
309,964 |
400,676 |
327,038 |
283,193 |
317,148 |
|||
Semisubmersible (1) |
||||||||
Average rig utilization |
100% |
100% |
100% |
100% |
100% |
|||
Operating days |
92 |
92 |
92 |
365 |
365 |
|||
Average revenue per day |
232,004 |
225,776 |
227,922 |
226,371 |
219,993 |
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Total Drilling Rigs (5) |
||||||||
Average rig utilization |
60% |
46% |
60% |
53% |
75% |
|||
Operating days |
276 |
213 |
276 |
972 |
1,373 |
|||
Average revenue per day |
203,844 |
234,174 |
216,313 |
203,800 |
187,146 |
|||
Floating Production Facility (1) |
||||||||
Days in period |
92 |
92 |
92 |
365 |
365 |
|||
Production days from April 28, 2009 |
92 |
92 |
92 |
365 |
248 |
|||
Average bpd (from April 28th) |
24,024 |
28,816 |
12,389 |
22,361 |
12,389 |
|||
Average tariff revenue per day |
123,203 |
166,374 |
61,111 |
120,100 |
57,808 |
|||
Average other revenue per day |
8,109 |
8,099 |
8,775 |
8,461 |
13,140 |
|||
Total average revenue per day |
131,305 |
174,473 |
69,886 |
128,561 |
52,415 |
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Note 1: Operating days represent actual days under contract. |
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Note 2: Northern Producer commenced first oil on April 28, 2009. Average tariff per day is calculated based on number days in the period from commencement of first oil. From April 1 to April 27 the company received contractual dayrate of US$30,000 per day. |
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Note 3: In Q4'10 we earned an average dayrate of US$33,578 per day for the three months ended December 31, 2010 and US$34,163 per day for the twelve months ended December 31, 2010 for provision of rig management services for two semisubmersibles in the Caspian Sea which commenced October 1, 2009. |
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Note 4: Costs which are reimbursed by the client are included in the average revenue per day calculation. |
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SOURCE Northern Offshore, Ltd.
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