Market Overview

Northern Offshore Reports Fourth Quarter and Preliminary Full Year 2012 Results

HOUSTON, Feb. 20, 2013 /PRNewswire/ --  

Highlights
(All $ in USD)

  • Northern Offshore, Ltd. (Oslo Bors: NOF.OL) today reported net income for the three months ended December 31, 2012 of $13.2 million, or $0.08 per diluted share, on revenues of $48.8 million.
  • For the full year ended December 31, 2012, net income was $19.2 million, or $0.12 per diluted share.
  • The company's directors have declared a dividend of $0.05 per share, or approximately $8.2 million.

Fourth Quarter and Year End Analysis

The net income for the three months ended December 31, 2012 of $13.2 million, or $0.08 per diluted share, on revenues of $48.8 million, compares to a net loss of $10.7 million, or $0.07 per diluted share, for the fourth quarter of 2011, on revenues of $33.9 million.  The financial results for the current fourth quarter included an after-tax gain of $7.5 million attributable to the sale of the jackup Energy Exerter.

The full year ended December 31, 2012 net income of $19.2 million, or $0.12 per diluted share, compares to a 2011 net loss of $3.4 million, or $0.02 per diluted share.  Revenues in 2012 were $182.8 million, as compared to $161.1 million reported in 2011.

Revenues for the three months ended December 31, 2012 were approximately $14.9 million higher than the same period of 2011, primarily as a result of an increase in dayrate revenues due to higher utilization for the semisubmersible Energy Driller and higher average dayrates for the jackups Energy Endeavour and Energy Enhancer, as well as an increase in tariff revenues from the floating production facility Northern Producer.  Partially offsetting these revenue increases was a decrease in dayrate revenues for the drillship Energy Searcher, as the unit was idle during the current quarter.

The tariff from the floating production facility Northern Producer averaged approximately $150,000 per day in the fourth quarter of 2012.  Production for the fourth quarter was elevated due to a new well coming online and work-over operations that enhanced recovery from an existing well.  The company expects pricing levels to remain stable and production volume to normalize in the high teens near term.

Drilling and production expenses for the three months ended December 31, 2012 were $4.0 million lower than the same period of last year, primarily due to lower drilling expenses while operating, compared to higher repair, maintenance and inspection costs incurred during the prior-year period when the semisubmersible Energy Driller was preparing for its three-year contract with ONGC.  Partially offsetting this decrease were higher labor, inspection and mobilization costs related to the jackup Energy Enhancer's operations offshore Denmark.

Depreciation expense for the three months ended December 31, 2012 was $1.4 million lower compared with the same period in 2011, primarily due to the disposition of the jackup Energy Exerter.  Fourth quarter 2012 general and administrative expenses, interest income and expense, amortization of financing fees and other financial items were comparable to those of the same period in 2011.

As of February 18, 2013, the company had an outstanding Revolving Credit Facility balance of $22.0 million and a cash balance of $43.0 million, resulting in a net cash position of $21.0 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 February 28, 2013 will be entitled to receive the dividend, which will be paid on or around March 15, 2013.  The shares of the company will be trading ex-dividend from February 26, 2013.

The information contained in this press release is preliminary and is subject to change until the release of the 2012 annual report when 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 21, 2013 to discuss the company's quarterly results. Individuals wishing to participate in the teleconference should call (866) 578-5784 (in the U.S.) or (617) 213-8056 (outside the U.S.) about five to ten minutes prior to the scheduled start time and refer to participant password 18005484.

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   December 31,  

Twelve Months Ended December 31, 


(Thousands of US Dollars, except per share amounts)

Q3 2012

2012

2011

2012

2011


Revenues

62,173

48,812

33,938

182,848

161,121


Operating expenses:







Drilling and production

(27,009)

(31,458)

(35,496)

(122,500)

(114,621)


Depreciation

(8,055)

(7,767)

(9,141)

(34,471)

(34,167)


General & administrative

(1,727)

(1,083)

(1,043)

(6,437)

(5,798)


Gain on disposal of assets

10

7,574

(784)

7,493

(1,701)


Total operating expenses

(36,781)

(32,734)

(46,464)

(155,915)

(156,287)


Operating income/(loss)

25,392

16,078

(12,526)

26,933

4,834


Interest income

2

3

6

9

28


Interest expense

(749)

(504)

(596)

(2,415)

(2,050)


Amortization of deferred financing fees

(123)

(123)

(144)

(512)

(2,593)


Other financial items

(295)

(193)

(811)

(681)

(1,409)


Total other income/(expense), net

(1,165)

(817)

(1,545)

(3,599)

(6,024)


Income/(loss) before taxes

24,227

15,261

(14,071)

23,334

(1,190)


Income taxes - benefit/(expense) 

(6,383)

(2,098)

3,409

(4,125)

(2,195)


Net income/(loss)

17,844

13,163

(10,662)

19,209

(3,385)









Earnings per share (US$)







     Basic

0.12

0.08

(0.07)

0.12

(0.02)


     Diluted

0.12

0.08

(0.07)

0.12

(0.02)









Weighted average common shares (000's)







     Basic

156,046

156,134

155,220

155,940

155,018


     Diluted

156,046

156,134

155,220

155,940

155,018

 

NORTHERN OFFSHORE, LTD. and SUBSIDIARIES

Consolidated Balance Sheets

(Unaudited)




(Thousands of US Dollars)

December 31, 
2012

December 31,
2011

Current assets 



Cash and cash equivalents

26,120

10,601

Restricted cash 

-

7,604

Accounts receivable, net

29,386

36,649

Prepaid expenses 

4,099

2,083

Deferred mobilization costs 

2,209

246

Deferred insurance premium

1,869

1,822

Other current assets

1,711

820

Total current assets

65,394

59,825

Noncurrent assets 



Property, plant & equipment, net

201,077

253,740

Restricted cash, net of current portion 

5,436

5,436

Noncurrent deposit/escrow account

5,198

-

Deferred mobilization costs, net of current portion

1,596

-

Drydock costs, net of current portion

5,093

4,967

Other noncurrent assets 

1,748

224

Total noncurrent assets

220,148

264,367

Total assets

285,542

324,192

Current liabilities



Accounts payable

16,376

27,435

Accrued expenses

9,748

7,289

Income taxes payable

933

2,926

Current debt

22,000

45,436

Deferred revenue

2,062

4,813

Total current liabilities

51,119

87,899

Shareholders' equity



Share capital

40,122

39,546

Additional paid-in capital

170,985

168,583

Accumulated other comprehensive loss

(6,691)

(6,691)

Retained earnings

30,007

34,855

Total shareholders' equity

234,423

236,293

Total liabilities and shareholders' equity  

285,542

324,192

 

NORTHERN OFFSHORE, LTD. and SUBSIDIARIES

Consolidated Statements of Cash Flows - (Unaudited)










Twelve months ended  
December 31,

(Thousands of US Dollars)



2012

2011

Cash flows from operating activities




Net income / (loss)



19,209

(3,385)

Adjustments to reconcile net income to net cash




  provided by operating activities:




Stock-based compensation 



4,043

2,756

Depreciation



34,471

34,167

Amortization of deferred financing fees


512

2,593

Gain on disposal of assets


(7,493)

1,701

Changes in operating assets and working capital




Accounts receivable


7,263

19,091

Prepaid expenses                          


(2,016)

517

Deferred income taxes


-

(286)

Deferred mobilization costs



(3,449)

(35)

Other current and noncurrent assets


(2,695)

(2,836)

Accounts payable


(15,309)

5,421

Other accrued liabilities


1,810

(11,327)

Deferred revenue


(2,751)

2,417

Income taxes payable


(1,993)

(503)

Other, net


11

33

Net cash provided by operating activities


31,613

50,324

Cash flows from investing activities




Capital expenditures



(14,578)

(32,416)

Changes in restricted cash



7,604

(6,593)

Changes in noncurrent deposit/escrow account


(5,198)

-

Proceeds from disposal of assets, net


44,502

-

Net cash provided by / (used in) investing activities

32,330

(39,009)

Cash flows from financing activities




Proceeds from drawdown of revolver facility


14,564

52,436

Principal payments on revolver facility


(38,000)

(50,000)

Debt issuance costs



(405)

(1,072)

Payment for taxes on vested shares


(1,065)

(435)

Dividends paid



(23,518)

(14,230)

Net cash used in financing activities


(48,424)

(13,301)

Net changes in cash and cash equivalents


15,519

(1,986)

Cash and cash equivalents at beginning of period


10,601

12,587

Cash and cash equivalents at end of period


26,120

10,601







Supplemental disclosure of cash flow information



Cash paid during the period for:





    Income taxes



2,561

2,505

    Interest




2,802

734







Significant non-cash transactions during the period for:



Accrued capital expenditures



3,592

4,849

Deferred - other



110

363

Accrued dividends



539

254

 

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, 2010

156,708

39,176

166,632

(6,691)

52,470

251,587










Net loss



-

-

-

-

(3,385)

(3,385)

Issuance of restricted stock


1,476

370

(370)

-

-

-

Payments for taxes on vested shares

-

-

(435)

-

-

(435)

Stock-based compensation 


-

-

2,756

-

-

2,756

Common shares dividends


-

-

-

-

(14,230)

(14,230)

Balance at December 31, 2011

158,184

39,546

168,583

(6,691)

34,855

236,293










Balance at December 31, 2011

158,184

39,546

168,583

(6,691)

34,855

236,293










Net income



-

-

-

-

19,209

19,209

Issuance of restricted stock


2,304

576

(576)

-

-

-

Payments for taxes on vested shares

-

-

(1,065)

-

-

(1,065)

Stock-based compensation 


-

-

4,043

-

-

4,043

Common shares dividends


-

-

-

-

(24,057)

(24,057)

Balance at December 31, 2012

160,488

40,122

170,985

(6,691)

30,007

234,423

 


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 2012

2012

2011

2012

2011









Net income/(loss) (GAAP)

17,844

13,163

(10,662)

19,209

(3,385)









Add Back:







Net interest expense

870

624

734

2,918

4,615


Income taxes

6,383

2,098

(3,409)

4,125

2,195


Depreciation

8,055

7,767

9,141

34,471

34,167









EBITDA (Non-GAAP)

33,152

23,652

(4,196)

60,723

37,592























EBITDA is defined as Net Income/(Loss) before Interest, Taxes and Depreciation

 

 

NORTHERN OFFSHORE, LTD. and SUBSIDIARIES

Operating Statistics

(Unaudited)











 Three Months Ended 

 Twelve Months Ended 




 December 31, 

 December 31, 


Q3 2012


2012

2011

2012

2011








Jackups (3)














Average rig utilization 

67%


94%

67%

56%

52%

Operating days 

184


184

184

565

567

Average revenue per day 

101,756


103,195

69,695

94,760

69,886








Drillship (1)














Average rig utilization 

98%


0%

58%

62%

15%

Operating days

90


0

53

225

53

Average revenue per day 

186,194


0

105,306

202,333

225,101








Semisubmersible (1)














Average rig utilization 

100%


100%

0%

70%

67%

Operating days

92


92

0

257

243

Average revenue per day

179,229


172,108

0

165,218

208,955








Total Drilling Rigs (5)














Average rig utilization 

80%


73%

52%

60%

47%

Operating days 

366


276

237

1,047

863

Average revenue per day 

141,994


126,456

94,988

135,172

118,577








Floating Production  Facility (1)














Days in period 

92


92

92

366

365

Production days

92


92

92

366

365

Average bpd

18,250


24,965

21,653

18,585

23,648

Average tariff revenue per day

109,514


149,789

129,921

111,509

141,889

Average other revenue per day 

1,387


1,408

(5,190)

1,395

1,396

Total average revenue per day 

110,901


151,197

124,731

112,904

143,285















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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