Northern Offshore Reports Third Quarter and Nine Month 2011 Financial Results and Declares Dividend

HOUSTON, Nov. 16, 2011 /PRNewswire/ -- Northern Offshore, Ltd. (Oslo Bors: NOF.OL) reported net income for the three months ended September 30, 2011 of US$0.3 million, or US$0.00 per diluted share.  This compares to net income of US$23.1 million, or US$0.15 per diluted share for the third quarter of 2010.  Revenues for the third quarter of 2011 were US$36.8 million compared to US$71.5 million for the third quarter of 2010.

For the nine months ended September 30, 2011, net income was US$7.3 million or US$0.05 per diluted share.  For the same period in the prior year, net income was US$45.8 million or US$0.30 per diluted share.  Revenues for the first nine months of 2011 were US$127.2 million compared to US$188.5 million for the same period in 2010.

The company's directors have declared a dividend of US$0.03 per share, or approximately US$5.0 million.  Shareholders of record with the VPS on November 30, 2011 will be entitled to receive the dividend, which will be paid on or around December 15, 2011.  The shares of the company will be trading ex-dividend from November 28, 2011.

Gary W. Casswell, Northern Offshore's president and CEO, said, "Our third quarter results were flat, as anticipated.  We expect this situation for the second half of 2011 as we prepare several rigs for new programs, including the Energy Driller major shipyard project, which is on schedule and on budget.  As previously announced, we are pleased with the three new awards during the quarter for the Energy Driller, Energy Searcher and Energy Enhancer, amounting to more than US$280 million of additional backlog, which should contribute to significant improvement in 2012."

Third Quarter Analysis

Revenues for the three months ended September 30, 2011 decreased US$34.7 million as compared to the same period of 2010, primarily due to a decrease in dayrate revenues for the drillship Energy Searcher and semisubmersible Energy Driller, partially offset by an increase in dayrate revenues due to higher utilization of the jackup Energy Endeavour.

Drilling and production expenses for the three months ended September 30, 2011 were comparable to the same period last year despite the off-contract status of the floating rigs, primarily due to demobilization costs for the semisubmersible Energy Driller and the ready stacked status of the drillship Energy Searcher during the current quarter.  Depreciation expense for the three months ended September 30, 2011 was US$5.8 million lower than the third quarter of 2010 primarily due to the decrease in depreciable basis of the jackup fleet attributable to the asset impairment charge taken in 2010.  General and administrative expenses were comparable to the same period in 2010.  

Interest expense was lower than in the third quarter of 2010 primarily due to lower outstanding loan balance.  Amortization of deferred financing fees and other financial items were comparable to the same period last year.  Income tax expense was US$4.8 million lower than the same period last year primarily due to lower pretax income during the current quarter.    

At September 30, 2011, the Revolving Credit Facility balance was US$45.4 million and the cash balance was US$33.6 million, of which approximately US$19.6 million was unrestricted, leaving the company with a US$11.8 million net debt position at the end of the period.  During the quarter, the company drew down US$13.4 million under the Revolving Credit Facility to collateralize a US$5.4 million performance guarantee and fund shipyard cost associated with the semisubmersible Energy Driller in preparation for its three-year drilling program in India.

Updates

The semisubmersible Energy Driller received a letter of award in September for a three-year drilling program offshore India, with operations expected to begin during the first quarter of 2012.  The Energy Driller completed its previous three-year contract with ONGC on August 31, 2011 and was subsequently demobilized to a Singapore shipyard arriving September 20, 2011. The rig will undergo Class inspections and maintenance in preparation for the new contract. The estimated contract value for the award is approximately US$230 million.

Also during September, the drillship Energy Searcher was awarded a contract for one well offshore Indonesia with an expected duration of 60-90 days, including travel time from and back to Singapore.  The estimated contract value for the program is from US$18-25 million, including mobilization fees.  Drilling operations are expected to commence later in November 2011.

The jackup Energy Enhancer was awarded a contract in the Danish Sector of the North Sea, with an initial duration of one year and options to extend the contract for up to three further years.  Commencement is expected early 2012. The estimated contract value for the initial term is US$35.7 million.

The floating production facility Northern Producer remains under contract with EnQuest.  The unit continues producing in the North Sea with further field development and tie-back ongoing. The tariff from the facility for the third quarter 2011 averaged US$125,780 per day on average per-day production of 20,963 barrels.

Conference Call Information

Northern Offshore, Ltd. will conduct a teleconference with security analysts at 9 a.m. CT, November 17, 2011 to discuss the company's quarterly results. Individuals wishing to participate in the teleconference should call (800) 591-6923 (in the U.S.) or (617) 614-4907 (outside the U.S.) about five to ten minutes prior to the scheduled start time and refer to participant passcode 87479757.

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, 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).   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 [email protected]

SOURCE Northern Offshore, Ltd.