Northern Offshore Reports Second Quarter and Six Month 2014 Financial Results
HOUSTON, Aug. 13, 2014 /PRNewswire/ --
Highlights
(All $ in USD)
- Northern Offshore, Ltd. (Oslo Bors: NOF.OL) today reported net income for the three months ended June 30, 2014, of $9.3 million, or $0.06 per diluted share, on revenues of $55.5 million.
- The company generated $20.1 million of second quarter adjusted EBITDA.
- Energy Searcher commenced contract in Nigeria
- 2 ½ year contract with Rosneft Oil Company announced for the Energy Endeavour
- Rate increase for the Energy Enhancer
- The company's directors have declared a dividend of $0.05 per share, or approximately $8.2 million.
Management Comment
Gary W. Casswell, Northern Offshore's president and CEO, commented, "Second quarter earnings were consistent with the first quarter, as expected. With the Energy Searcher commencing its contract in Nigeria during the quarter, we now have all rigs under contract, and with increased day rates for the Energy Enhancer, we expect to see improved results in the second half of the year. Additionally, we are excited about our recently announced contract with Rosneft, and look forward to commencement of this contract in direct continuation upon the conclusion of the program with our current client."
Mr. Casswell went on to say, "During the second quarter there have been announcements regarding further development and additional production wells in the fields that tie into the Northern Producer, which could have a significant positive implication for the company. As a result of this information, the company will further review the various divestment alternatives available to unlock value for our shareholders from the Northern Producer, including a sale or the potential spin-off which was previously announced."
Second Quarter Analysis
Net income for the three months ended June 30, 2014, was $9.3 million, or $0.06 per diluted share. This compares to net income of $1.7 million, or $0.01 per diluted share for the second quarter of 2013. Revenues for the second quarter of 2014 were $55.5 million, compared to $44.1 million for the second quarter of 2013.
For the six months ended June 30, 2014, net income was $19.3 million, or $0.12 per diluted share. For the same period in the prior year, net income was $2.7 million, or $0.02 per diluted share. Revenues for the first six months of 2014 were $105.0 million, compared to $85.5 million for the same period in 2013.
Revenues for the three months ended June 30, 2014, were higher as compared to the same period of 2013, primarily because of increases in dayrate revenues from the drillship Energy Searcher, which commenced its contract with CAMAC during the quarter, and the jackups Energy Enhancer and Energy Endeavour, which had increases in their daily operating rates.
The tariff revenues from the Northern Producer averaged approximately $96,000 per day in the second quarter of 2014. The company expects pricing levels to remain stable and production to decrease in line with forecast decline rates.
Drilling and production expenses for the second quarter of 2014 were $4.2 million higher when compared with the same period in 2013, primarily due to inspection costs for the Northern Producer and higher labor, repair and maintenance costs for the jackup fleet.
Second quarter 2014 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 2013.
As of August 8, 2014, the company had an outstanding credit facility balance of $37.0 million and a cash balance of $42.0 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 August 29, 2014 will be entitled to receive the dividend, which will be paid on or around September 15, 2014. The shares of the company will be trading ex-dividend from August 27, 2014.
Conference Call Information
Northern Offshore, Ltd. will conduct a teleconference with security analysts at 9 a.m. CT, August 14, 2014, to discuss the company's quarterly results. Individuals wishing to participate in the teleconference should call (866) 318-8614 (in the U.S.) or (617) 399-5133 (outside the U.S.) about five to ten minutes prior to the scheduled start time and refer to participant password 11492557.
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, Southeast Asia and West Africa. The company's fleet consists of four drilling units (a drillship, a semisubmersible and two jackup drilling rigs) and one floating production facility. Additionally, the company has under construction two 350' high specification jackup drilling rigs, with delivery expected in the first and third quarters of 2016. 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:
Brian Hefty at (713) 739-7686,
or via email at [email protected]
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.
| NORTHERN OFFSHORE, LTD. and SUBSIDIARIES |
|||||
| Consolidated Statements of Operations |
|||||
| (Unaudited) |
|||||
| Three Months Ended |
Six Months Ended |
||||
| June 30, |
June 30, |
||||
| (Thousands of US Dollars, except per share amounts) |
Q1 2014 |
2014 |
2013 |
2014 |
2013 |
| Revenues |
49,432 |
55,531 |
44,116 |
104,963 |
85,530 |
| Operating expenses: |
|||||
| Drilling and production |
(26,949) |
(33,526) |
(29,370) |
(60,477) |
(59,449) |
| Depreciation |
(8,297) |
(8,296) |
(7,828) |
(16,592) |
(15,765) |
| General & administrative |
(2,142) |
(1,910) |
(2,032) |
(4,052) |
(4,043) |
| Total operating expenses |
(37,388) |
(43,732) |
(39,230) |
(81,121) |
(79,257) |
| Operating income |
12,044 |
11,799 |
4,886 |
23,842 |
6,273 |
| Interest expense |
(426) |
(543) |
(384) |
(969) |
(780) |
| Amortization of deferred financing fees |
(121) |
(40) |
(122) |
(161) |
(243) |
| Other financial items |
(45) |
(467) |
(1,054) |
(512) |
(585) |
| Total other expense |
(592) |
(1,050) |
(1,560) |
(1,642) |
(1,608) |
| Income before taxes |
11,452 |
10,749 |
3,326 |
22,200 |
4,665 |
| Income taxes expense |
(1,449) |
(1,467) |
(1,668) |
(2,916) |
(1,943) |
| Net income |
10,003 |
9,282 |
1,658 |
19,284 |
2,722 |
| Earnings per share (US$) |
|||||
| Basic |
0.06 |
0.06 |
0.01 |
0.12 |
0.02 |
| Diluted |
0.06 |
0.06 |
0.01 |
0.12 |
0.02 |
| Weighted average common shares (000's) |
|||||
| Basic |
159,091 |
159,270 |
157,267 |
159,181 |
157,163 |
| Diluted |
159,093 |
159,361 |
157,281 |
159,227 |
157,249 |
| NORTHERN OFFSHORE, LTD. and SUBSIDIARIES |
||
| Consolidated Balance Sheets |
||
| (Unaudited) |
||
| (Thousands of US Dollars) |
June 30, |
December 31, |
| Current assets |
||
| Cash and cash equivalents |
25,939 |
19,537 |
| Restricted cash |
1,000 |
1,000 |
| Accounts receivable, net |
39,398 |
24,158 |
| Prepaid expenses |
3,078 |
3,508 |
| Deferred mobilization costs |
21,823 |
2,202 |
| Deferred insurance premium |
4,216 |
1,627 |
| Other current assets |
977 |
1,382 |
| Total current assets |
96,431 |
53,414 |
| Noncurrent assets |
||
| Property, plant & equipment, net |
205,022 |
198,158 |
| Restricted cash, net of current portion |
5,436 |
5,436 |
| Noncurrent deposit/escrow account |
11,044 |
9,222 |
| Deferred mobilization costs, net of current portion |
- |
368 |
| Drydock costs, net of current portion |
1,742 |
2,859 |
| Other noncurrent assets |
1,482 |
1,665 |
| Total noncurrent assets |
224,726 |
217,708 |
| Total assets |
321,157 |
271,122 |
| Current liabilities |
||
| Accounts payable |
16,673 |
9,275 |
| Accrued expenses |
19,228 |
20,196 |
| Income taxes payable |
2,550 |
1,282 |
| Affiliated debt |
47,000 |
22,000 |
| Deferred revenue |
12,941 |
- |
| Total current liabilities |
98,392 |
52,753 |
| Shareholders' equity |
||
| Share capital |
41,219 |
40,933 |
| Additional paid-in capital |
176,676 |
175,462 |
| Accumulated other comprehensive loss |
(6,691) |
(6,691) |
| Retained earnings |
11,561 |
8,665 |
| Total shareholders' equity |
222,765 |
218,369 |
| Total liabilities and shareholders' equity |
321,157 |
271,122 |
| NORTHERN OFFSHORE, LTD. and SUBSIDIARIES |
||||||
| Consolidated Statements of Cash Flows - (Unaudited) |
||||||
| Six months ended |
||||||
| (Thousands of US Dollars) |
2014 |
2013 |
||||
| Cash flows from operating activities |
||||||
| Net income |
19,284 |
2,722 |
||||
| Adjustments to reconcile net income to net cash |
||||||
| provided by operating activities: |
||||||
| Stock-based compensation |
2,425 |
2,865 |
||||
| Depreciation |
16,592 |
15,765 |
||||
| Amortization of deferred financing fees |
161 |
243 |
||||
| Gain on disposal of assets |
(244) |
(26) |
||||
| Changes in operating assets and working capital |
||||||
| Accounts receivable |
(14,996) |
(2,498) |
||||
| Prepaid expenses |
430 |
716 |
||||
| Deferred mobilization costs |
(19,253) |
1,596 |
||||
| Other current and noncurrent assets |
1,265 |
1,791 |
||||
| Accounts payable |
4,317 |
(7,496) |
||||
| Other accrued liabilities |
(783) |
1,503 |
||||
| Deferred revenue |
12,941 |
(2,062) |
||||
| Income taxes payable |
1,268 |
593 |
||||
| Net cash provided by operating activities |
23,407 |
15,712 |
||||
| Cash flows from investing activities |
||||||
| Capital expenditures - existing fleet |
(4,309) |
(3,275) |
||||
| Capital expenditures - newbuild jackups |
(18,393) |
- |
||||
| Changes in noncurrent deposit/escrow account |
(1,822) |
(2,383) |
||||
| Net cash used in investing activities |
(24,524) |
(5,658) |
||||
| Cash flows from financing activities |
||||||
| Proceeds from drawdown of revolver facility |
25,000 |
- |
||||
| Payment for taxes on vested shares |
(925) |
(335) |
||||
| Dividends paid |
(16,556) |
(15,924) |
||||
| Net cash provided by/(used in) financing activities |
7,519 |
(16,259) |
||||
| Net changes in cash and cash equivalents |
6,402 |
(6,205) |
||||
| Cash and cash equivalents at beginning of period |
19,537 |
26,504 |
||||
| Cash and cash equivalents at end of period |
25,939 |
20,299 |
||||
| Supplemental disclosure of cash flow information |
||||||
| Cash paid during the period for: |
||||||
| Income taxes |
488 |
253 |
||||
| Interest |
362 |
450 |
||||
| Significant non-cash transactions during the period for: |
||||||
| Accrued capital expenditures |
771 |
2,634 |
||||
| Accrued dividends |
(168) |
396 |
||||
| 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, 2012 |
160,488 |
40,122 |
170,985 |
(6,691) |
30,007 |
234,423 |
||
| Net income |
- |
- |
- |
- |
2,722 |
2,722 |
||
| Issuance of restricted stock |
3,584 |
896 |
(896) |
- |
- |
- |
||
| Payments for taxes on vested shares |
- |
- |
(335) |
- |
- |
(335) |
||
| Stock-based compensation |
- |
- |
2,865 |
- |
- |
2,865 |
||
| Common shares dividends |
- |
- |
- |
- |
(16,320) |
(16,320) |
||
| Balance at June 30, 2013 |
164,072 |
41,018 |
172,619 |
(6,691) |
16,409 |
223,355 |
||
| Balance at December 31, 2013 |
163,732 |
40,933 |
175,462 |
(6,691) |
8,665 |
218,369 |
||
| Net income |
- |
- |
- |
- |
19,284 |
19,284 |
||
| Issuance of restricted stock |
1,145 |
286 |
(286) |
- |
- |
- |
||
| Payments for taxes on vested shares |
- |
- |
(925) |
- |
- |
(925) |
||
| Stock-based compensation |
- |
- |
2,425 |
- |
- |
2,425 |
||
| Common shares dividends |
- |
- |
- |
- |
(16,388) |
(16,388) |
||
| Balance at June 30, 2014 |
164,877 |
41,219 |
176,676 |
(6,691) |
11,561 |
222,765 |
||
| NORTHERN OFFSHORE, LTD. and SUBSIDIARIES |
|||||
| Reconciliation of GAAP to Non-GAAP Financial Results |
|||||
| (Unaudited) |
|||||
| Three Months Ended |
Six Months Ended |
||||
| June 30, |
June 30, |
||||
| (Thousands of US Dollars) |
Q1 2014 |
2014 |
2013 |
2014 |
2013 |
| Net income (GAAP) |
10,003 |
9,282 |
1,658 |
19,284 |
2,722 |
| Add Back: |
|||||
| Net interest expense |
547 |
583 |
506 |
1,130 |
1,023 |
| Income taxes |
1,449 |
1,467 |
1,668 |
2,916 |
1,943 |
| Depreciation |
8,297 |
8,296 |
7,828 |
16,592 |
15,765 |
| Other financial items |
45 |
467 |
1,054 |
512 |
585 |
| Adjusted EBITDA (Non-GAAP) |
20,341 |
20,095 |
12,714 |
40,434 |
22,038 |
| 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 |
Six Months Ended |
|||||
| June 30, |
June 30, |
|||||
| Q1 2014 |
2014 |
2013 |
2014 |
2013 |
||
| Jackups (2) |
||||||
| Average rig utilization |
100% |
100% |
92% |
100% |
96% |
|
| Operating days |
180 |
182 |
167 |
362 |
347 |
|
| Average revenue per day |
139,435 |
137,202 |
115,839 |
138,312 |
110,499 |
|
| Drillship (1) |
||||||
| Average rig utilization |
0% |
23% |
0% |
12% |
0% |
|
| Operating days |
0 |
21 |
0 |
21 |
0 |
|
| Average revenue per day |
0 |
285,034 |
0 |
285,034 |
0 |
|
| Semisubmersible (1) |
||||||
| Average rig utilization |
100% |
100% |
100% |
100% |
100% |
|
| Operating days |
90 |
91 |
91 |
181 |
181 |
|
| Average revenue per day |
172,416 |
172,958 |
156,168 |
172,689 |
147,141 |
|
| Total Drilling Rigs (4) |
||||||
| Average rig utilization |
75% |
81% |
71% |
78% |
73% |
|
| Operating days |
270 |
294 |
258 |
564 |
528 |
|
| Average revenue per day |
150,536 |
158,730 |
130,064 |
154,807 |
123,060 |
|
| Floating Production Facility (1) |
||||||
| Days in period |
90 |
91 |
91 |
181 |
181 |
|
| Production days |
90 |
91 |
91 |
181 |
181 |
|
| Average bpd |
16,009 |
15,973 |
19,109 |
15,991 |
18,693 |
|
| Average tariff revenue per day |
96,057 |
95,836 |
114,654 |
95,946 |
112,159 |
|
| Average other revenue per day |
1,579 |
1,580 |
1,390 |
1,579 |
1,398 |
|
| Total average revenue per day |
97,636 |
97,416 |
116,044 |
97,525 |
113,557 |
|
| 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. |
||||||
SOURCE Northern Offshore, Ltd.
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