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]
NORTHERN OFFSHORE, LTD. and SUBSIDIARIES |
||||||
Consolidated Statements of Operations |
||||||
(Unaudited) |
||||||
Three Months Ended |
Nine Months Ended |
|||||
(Thousands of US Dollars, except per share amounts) |
Q2 2011 |
2011 |
2010 |
2011 |
2010 |
|
Revenues |
49,925 |
36,806 |
71,524 |
127,183 |
188,468 |
|
Operating expenses: |
||||||
Drilling and production |
(26,389) |
(27,229) |
(27,258) |
(80,042) |
(79,157) |
|
Depreciation |
(8,175) |
(8,907) |
(14,698) |
(25,026) |
(43,434) |
|
General & administrative |
(1,538) |
(1,465) |
(1,445) |
(4,755) |
(6,136) |
|
Total operating expenses |
(36,102) |
(37,601) |
(43,401) |
(109,823) |
(128,727) |
|
Operating income/(loss) |
13,823 |
(795) |
28,123 |
17,360 |
59,741 |
|
Interest income |
7 |
9 |
11 |
22 |
76 |
|
Interest expense |
(486) |
(367) |
(1,187) |
(1,454) |
(5,326) |
|
Amortization of deferred financing fees |
(1,582) |
(115) |
(777) |
(2,448) |
(1,805) |
|
Other financial items |
(332) |
(195) |
69 |
(598) |
(268) |
|
Total other income/(expense), net |
(2,393) |
(668) |
(1,884) |
(4,478) |
(7,323) |
|
Income/(loss) before taxes |
11,430 |
(1,463) |
26,239 |
12,882 |
52,418 |
|
Income taxes - benefit/(expense) |
(6,842) |
1,720 |
(3,101) |
(5,604) |
(6,625) |
|
Net income |
4,588 |
257 |
23,138 |
7,278 |
45,793 |
|
Earnings per share (US$) |
||||||
Basic |
0.03 |
0.00 |
0.15 |
0.05 |
0.30 |
|
Diluted |
0.03 |
0.00 |
0.15 |
0.05 |
0.30 |
|
Weighted average common shares (000’s) |
||||||
Basic |
155,007 |
155,098 |
154,437 |
154,951 |
154,320 |
|
Diluted |
155,645 |
155,216 |
155,332 |
155,373 |
155,861 |
|
NORTHERN OFFSHORE, LTD. and SUBSIDIARIES |
|||
Consolidated Balance Sheets |
|||
(Unaudited) |
|||
(Thousands of US Dollars) |
September 30, 2011 |
December 31, 2010 |
|
Current assets |
|||
Cash and cash equivalents |
19,582 |
12,587 |
|
Restricted cash |
8,603 |
6,445 |
|
Account receivables, net |
32,741 |
55,686 |
|
Prepaid expenses |
4,798 |
4,785 |
|
Deferred financing fees |
455 |
2,279 |
|
Deferred mobilization costs |
53 |
281 |
|
Other current assets |
- |
419 |
|
Total current assets |
66,232 |
82,482 |
|
Non-current assets |
|||
Property, plant & equipment, net |
249,077 |
252,397 |
|
Restricted cash, net of current portion |
5,436 |
- |
|
Deferred financing fees, net of current portion |
286 |
- |
|
Other noncurrent assets |
3,231 |
1,677 |
|
Total non-current Assets |
258,030 |
254,074 |
|
Total assets |
324,262 |
336,556 |
|
Current liabilities |
|||
Accounts payable |
14,092 |
17,528 |
|
Accrued expenses |
6,805 |
18,616 |
|
Income tax payable |
6,740 |
3,429 |
|
Current debt |
45,436 |
43,000 |
|
Deferred revenue |
100 |
2,396 |
|
Total current liabilities |
73,173 |
84,969 |
|
Total liabilities |
73,173 |
84,969 |
|
Shareholders' equity |
|||
Share capital |
39,554 |
39,176 |
|
Additional paid-in capital |
167,964 |
166,632 |
|
Accumulated other comprehensive loss |
(6,691) |
(6,691) |
|
Retained earnings |
50,262 |
52,470 |
|
Total shareholders' equity |
251,089 |
251,587 |
|
Total liabilities and shareholders' equity |
324,262 |
336,556 |
|
NORTHERN OFFSHORE, LTD. and SUBSIDIARIES |
|||
Consolidated Statements of Cash Flows - (Unaudited) |
|||
Nine months ended |
|||
(Thousands of US Dollars) |
2011 |
2010 |
|
Cash flows from operating activities |
|||
Net income |
7,278 |
45,793 |
|
Adjustments to reconcile net income to net cash |
|||
provided by operating activities: |
|||
Stock-based compensation |
1,918 |
1,470 |
|
Depreciation |
25,026 |
43,434 |
|
Amortization of deferred financing fees |
2,448 |
1,805 |
|
Loss on disposal of rig assets |
917 |
- |
|
Changes in operating assets and working capital |
|||
Accounts receivable |
22,999 |
(14,257) |
|
Prepaid expenses |
(13) |
(523) |
|
Other current and noncurrent assets |
(1,135) |
- |
|
Accounts payable |
(3,436) |
905 |
|
Other accrued liabilities |
(11,811) |
(7,667) |
|
Deferred revenue |
(2,296) |
(1,908) |
|
Income tax payable |
3,311 |
(474) |
|
Other, net |
241 |
(277) |
|
Net cash provided by operating activities |
45,447 |
68,301 |
|
Cash flows from investing activities |
|||
Capital expenditures |
(22,691) |
(10,268) |
|
Changes in restricted cash, net |
(7,592) |
9,395 |
|
Net cash used in investing activities |
(30,283) |
(873) |
|
Cash flows from financing activities |
|||
Proceeds from drawdown of new revolver facility |
45,436 |
- |
|
Proceeds from drawdown of former revolver facility |
7,000 |
100,000 |
|
Principal payment on revolver |
(50,000) |
(25,000) |
|
Payoff of bond loan |
- |
(100,000) |
|
Principal payment of bank term loan |
- |
(97,500) |
|
Debt issuance costs |
(911) |
(4,325) |
|
Payment for taxes on vested shares |
(208) |
(419) |
|
Dividends paid |
(9,486) |
- |
|
Net cash used in financing activities |
(8,169) |
(127,244) |
|
Net increase/(decrease) in cash and cash equivalents |
6,995 |
(59,816) |
|
Cash and cash equivalents at beginning of period |
12,587 |
79,162 |
|
Cash and cash equivalents at end of period |
19,582 |
19,346 |
|
Supplemental disclosure of cash flow information |
|||
Cash paid during the period for: |
|||
Income taxes |
1,848 |
6,766 |
|
Interest |
734 |
3,871 |
|
Significant non-cash transactions during the period for: |
|||
Accrued capital expenditures |
- |
3,000 |
|
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 January 1, 2010 |
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 |
||
Net income |
- |
- |
- |
- |
7,278 |
7,278 |
||
Issuance of restricted stock |
1,510 |
378 |
(378) |
- |
- |
- |
||
Payments for taxes on vested shares |
- |
- |
(208) |
- |
- |
(208) |
||
Stock-based compensation |
- |
- |
1,918 |
- |
- |
1,918 |
||
Common shares dividends |
- |
- |
- |
- |
(9,486) |
(9,486) |
||
Balance at September 30, 2011 |
158,218 |
39,554 |
167,964 |
(6,691) |
50,262 |
251,089 |
||
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 2011 |
2011 |
2010 |
2011 |
2010 |
|
Net income (GAAP) |
4,588 |
257 |
23,138 |
7,278 |
45,793 |
|
Add Back: |
||||||
Net interest expense |
2,061 |
473 |
1,953 |
3,880 |
7,055 |
|
Income taxes |
6,842 |
(1,720) |
3,101 |
5,604 |
6,625 |
|
Depreciation |
8,175 |
8,907 |
14,698 |
25,026 |
43,434 |
|
EBITDA (Non-GAAP) |
21,666 |
7,917 |
42,890 |
41,788 |
102,907 |
|
NORTHERN OFFSHORE, LTD. and SUBSIDIARIES |
|||||||
Operating Statistics |
|||||||
(Unaudited) |
|||||||
Three Months Ended |
Nine Months Ended |
||||||
September 30, |
September 30, |
||||||
Q2 2011 |
2011 |
2010 |
2011 |
2010 |
|||
Jackups (3) |
|||||||
Average rig utilization |
60% |
67% |
33% |
47% |
26% |
||
Operating days |
164 |
184 |
92 |
383 |
213 |
||
Average revenue per day |
71,839 |
72,196 |
69,564 |
69,977 |
76,680 |
||
Drillship (1) |
|||||||
Average rig utilization |
0% |
0% |
100% |
0% |
100% |
||
Operating days |
0 |
0 |
92 |
0 |
273 |
||
Average revenue per day |
0 |
0 |
309,964 |
0 |
256,512 |
||
Semisubmersible (1) |
|||||||
Average rig utilization |
100% |
67% |
100% |
89% |
100% |
||
Operating days |
91 |
62 |
92 |
243 |
273 |
||
Average revenue per day |
218,007 |
167,638 |
232,004 |
209,157 |
226,572 |
||
Total Drilling Rigs (5) |
|||||||
Average rig utilization |
56% |
54% |
60% |
46% |
56% |
||
Operating days |
255 |
246 |
276 |
626 |
759 |
||
Average revenue per day |
132,801 |
96,251 |
203,844 |
127,586 |
195,276 |
||
Floating Production Facility (1) |
|||||||
Days in period |
91 |
92 |
92 |
273 |
273 |
||
Production days |
91 |
92 |
92 |
273 |
273 |
||
Average bpd |
22,372 |
20,963 |
24,024 |
24,320 |
20,185 |
||
Average tariff revenue per day |
134,230 |
125,780 |
123,203 |
145,923 |
104,505 |
||
Average other revenue per day |
2,646 |
5,520 |
8,109 |
3,616 |
8,583 |
||
Total average revenue per day |
136,876 |
131,300 |
131,305 |
149,539 |
113,088 |
||
Note 1: |
Operating days represent actual days under contract. |
|
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. |
|
Note 3: |
The provision of rig management services for two semisubmersibles in the Caspian Sea ended on July 31, 2011. The company earned an average dayrate of US$33,828 per day for the month ended July 31, 2011 and US$30,614 per day for the seven months ended July 31, 2011. |
|
Note 4: |
Costs which are reimbursed by the client are included in the average revenue per day calculation. |
|
SOURCE Northern Offshore, Ltd.
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