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SMALL BUSINESS
Northern Offshore Reports Second Quarter and Six Month 2009 Financial Results
HOUSTON, Aug. 26 /PRNewswire-FirstCall/ -- Northern Offshore, Ltd. (Oslo Bors: NOF.OL) today reported net income for the three months ended June 30, 2009 of US$22.8 million, or US$0.15 per diluted share. This compares to net income of US$22.5 million, or US$0.15 per diluted share for the second quarter of 2008. Revenues for the second quarter of 2009 were US$73.4 million compared to US$73.2 million for the second quarter of 2008.
(Logo: http://www.newscom.com/cgi-bin/prnh/20080415/LATU540LOGO)
For the six months ended June 30, 2009, net income was US$26.4 million or US$0.17 per diluted share. Net income for the first quarter of 2009 included a US$3.7 million charge to bad debt expense. Excluding that charge, net income for the first six months of 2009 would have been US$30.1 million, or US$0.20 per diluted share. In comparison, net income for the same period in the prior year was US$32.0 million or US$0.21 per diluted share. Revenues for the first six months of 2009 were US$129.9 million compared to US$125.8 million for the same period in 2008.
Northern Offshore President and CEO, Marion Woolie, commented, "Given the challenging conditions that exist in the marketplace, our second quarter results are very solid. We will continue our focus on cost control and utilization to maximize shareholder value during these competitive times."
Second Quarter Analysis
Revenues for the three months ended June 30, 2009 were at a level similar to the same period of 2008. Second quarter of 2009 results included revenue from the semisubmersible Energy Driller which had been idle in the second quarter of the previous year. This revenue growth was offset by lower utilization of the drillship Energy Searcher, which was idle for approximately half of the second quarter of 2009, and by a lower average dayrate for the jackup fleet.
Drilling and production expenses for the second quarter of 2009 were lower than in the same period in 2008 primarily due to an adjustment of an overaccrual of transportation expenses associated with the Energy Driller. Amortization of drilling contract intangibles decreased US$4.5 million to US$2.0 million in the current quarter compared to same period last year due to the completion of contracts which were in place at the time the company acquired the jackups Energy Exerter and Energy Enhancer. Additionally, interest expense decreased US$2.7 million from US$5.5 million in the prior year quarter primarily due to reduction of the Secured Term Loan Facility principal balance and lower interest rates.
Operating Highlights
- The floating production facility Northern Producer commenced production operations on April 28, 2009 under a life-of-field contract in the Don Area development in the UK sector of the North Sea.
- The Energy Searcher arrived on location May 27, 2009 to commence operations in Vietnam for a five-well contract expected to last at least one year.
Conference Call Information
Northern Offshore, Ltd. will conduct a teleconference with security analysts at 9 a.m. CDT, August 27, 2009 to discuss the company's quarterly financial results. Individuals wishing to participate in the teleconference should call 866-788-0539 (in the U.S.) or 857-350-1677 (outside the U.S.) about five to ten minutes prior to the scheduled start time and refer to participant password 13490456.
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 deployed around the world. The company's fleet consists of one floating production facility and five drilling units (a drillship, a semisubmersible and three jackup drilling rigs). The Northern Offshore fleet operates in various markets including the North Sea, the Indian Ocean, offshore Russia, the Mediterranean Sea and Southeast Asia. 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 brian.hefty@northernoffshoreltd.com
NORTHERN OFFSHORE, LTD. and SUBSIDIARIES
Consolidated Statements of Income
(Unaudited)
Three Months Six Months
(Thousands of US Ended June 30, Ended June 30,
Dollars, except per ------------- -------------
share amounts) Q1 2009 2009 2008 2009 2008
Revenue 56,553 73,352 73,161 129,905 125,789
Operating expenses:
Drilling and production (28,993) (28,934) (30,537) (57,927) (61,839)
Depreciation (15,773) (16,225) (15,557) (31,998) (30,146)
General &
administrative (1,731) (2,299) (2,401) (4,030) (3,290)
Bad debt (3,664) (233) 45 (3,897) (251)
-------- ------ ---- --- ------ ----
Total operating expenses (50,161) (47,691) (48,450) (97,852) (95,526)
------------------------ ------- ------- ------- ------- -------
Operating income 6,392 25,661 24,711 32,053 30,263
---------------- ----- ------ ------ ------ ------
Interest income 90 112 152 202 652
Interest expense (3,250) (2,718) (5,455) (5,968) (11,862)
Amortization of
drilling contract
intangibles 2,018 2,018 6,558 4,036 16,481
Amortization of
deferred financing
fees (397) (397) (397) (794) (794)
Other financial items (764) 409 (997) (355) (738)
--------------------- ---- --- ---- ---- ----
Total other income/
(expense), net (2,303) (576) (139) (2,879) 3,739
------------------- ------ ---- ---- ------ -----
Income before taxes 4,089 25,085 24,572 29,174 34,002
------------------- ----- ------ ------ ------ ------
Income taxes -
(expense)/benefit (469) (2,293) (2,074) (2,762) (1,987)
------------------ ---- ------ ------ ------ ------
Net income 3,620 22,792 22,498 26,412 32,015
---------- ----- ------ ------ ------ ------
Earnings per share (US$)
Basic 0.02 0.15 0.15 0.17 0.21
Diluted 0.02 0.15 0.15 0.17 0.21
Weighted average common
shares (000's)
Basic 153,100 153,108 153,100 153,104 153,100
Diluted 153,100 153,265 153,101 153,183 153,100
Note: Certain amounts from prior periods have been reclassified to conform
to the current period presentation. The primary reclassifications relate
to: 1) some shorebase expenses are now included in drilling and production
expenses rather than general and administrative, 2) reimbursable revenue
and expenses are now reported separately rather than net and 3) bad debt
expense is reported separately rather than with drilling and production
expenses.
NORTHERN OFFSHORE, LTD. and SUBSIDIARIES
Consolidated Balance Sheets
(Unaudited)
June 30, December 31,
(Thousands of US Dollars) 2009 2008
Current assets
Cash and cash equivalents 40,651 58,759
Restricted cash 8,099 8,077
Account receivables, net 79,907 48,797
Prepaid expenses 14,410 17,202
Deferred financing fees 1,253 1,586
Deferred mobilization costs 775 566
Other current assets 118 -
--------------------- --- ---
Total current assets 145,213 134,987
-------------------- ------- -------
Non-current assets
Property, plant & equipment, net 520,428 545,731
Restricted cash, net of current portion 6,438 6,438
Deferred mobilization cost, net of current portion 566 847
Deferred income tax assets - 645
Deferred financing fees, net of current portion - 461
Total non-current Assets 527,432 554,122
------------------------ ------- -------
Total assets 672,645 689,109
------------ ------- -------
Current liabilities
Accounts payable 16,993 19,975
Accrued expenses 20,645 5,215
Income tax payable 8,023 8,969
Current portion of debt 242,500 90,000
Deferred revenue 27,516 24,284
Current portion of drilling contract intangibles 1,851 5,887
------------------------------------------------ ----- -----
Total current liabilities 317,528 154,330
------------------------- ------- -------
Non-current liabilities
Long-term debt, net of current portion - 197,500
Deferred revenue, net of current portion 667 997
Other long-term liabilities 12,321 21,290
---------------------------- ------ ------
Total non-current liabilities 12,988 219,787
----------------------------- ------ -------
Total liabilities 330,516 374,117
------------------ ------- -------
Shareholders' equity
Share capital 38,764 38,281
Additional paid-in capital 165,102 164,860
Accumulated other comprehensive loss (6,691) (6,691)
Retained earnings 144,954 118,542
----------------- ------- -------
Total shareholders' equity 342,129 314,992
-------------------------- ------- -------
Total liabilities and shareholders' equity 672,645 689,109
-------------------------------------------- ------- -------
Accounts receivable related accounts which were previously included in
other current assets are currently reported together with trade
receivables under Accounts Receivable, net. In addition, accounts
payable related accounts previously classified as accrued expenses are
now reported together with trade payables as Accounts Payable.
NORTHERN OFFSHORE, LTD. and SUBSIDIARIES
Consolidated Statement of Cash Flows - (Unaudited)
Six months
ended June 30,
---------------
(Thousands of US Dollars) 2009 2008
---- ----
Cash flows from operating activities
Net income 26,412 32,015
Adjustments to reconcile net income to net cash provided
by operating activities:
Bad debt expense 3,897 251
Stock-based compensation 725 866
Depreciation 31,998 30,146
Amortization of drilling contract intangibles (4,036) (16,481)
Amortization of deferred financing fees 794 794
Realized gain on foreign currency (101) -
Furniture and equipment writeoff - 34
Interest, net (309) 1,456
---- -----
Changes in operating assets and working capital
Increase in accounts receivable (34,105) (16,009)
Decrease in prepaid expenses 2,570 691
Increase in deferred tax assets (73) (116)
Increase in accounts payable 1,264 5,126
Increase in other accrued liabilities 2,620 1,652
Increase in deferred revenue 2,902 2,785
Current income taxes (1,154) (93)
Other, net 163 213
---------- --- ---
Net cash provided by operating activities 33,567 43,330
----------------------------------------- ------ ------
Cash flows from investing activities
Capital expenditures (6,883) (20,600)
Release of restricted cash - 21,660
Proceeds from sale of equipment 188 -
------------------------------- --- ---
Net cash provided by/(used in) investing activities (6,695) 1,060
--------------------------------------------------- ------ -----
Cash flows from financing activities
Proceeds from commercial paper - 24,392
Principal payment of bank term loan (45,000) (45,000)
Net cash used in financing activities (45,000) (20,608)
------------------------------------- ------- -------
Net increase/(decrease) in cash and cash equivalents (18,128) 23,782
Cash and cash equivalents at beginning of period 58,759 21,690
Effects of exchange rate changes on cash and cash
equivalents 20 55
--- ---
Cash and cash equivalents at end of period 40,651 45,527
------ ------
Supplemental disclosure of cash flow information
Cash paid during the period for:
Income taxes 3,708 1,546
Interest 6,165 10,406
Note: Certain categories from prior periods are reported separately on the
cash flow statement to conform with current year presentation. Such
categories include prepaid expenses, other accrued liabilities and other
long term liabilities.
NORTHERN OFFSHORE, LTD. and SUBSIDIARIES
Consolidated Statements of Shareholders' Equity
(Unaudited)
Accumulated
other
Common Additional comprehensive
(Thousands of shares Share paid-in gain/ Retained
US Dollars) ('000) capital capital (loss) earnings Total
Balance at
January 1, 2008 153,100 38,275 163,174 (6,068) 54,462 249,843
------- ------ ------- ------ ------ -------
Net income 64,080 64,080
Issuance of
restricted stock 24 6 (6) - - -
Stock-based
compensation - - 1,692 - - 1,692
Other
comprehensive
loss - - - (623) - (623)
--- --- --- ---- --- ----
Balance at
December 31,
2008 153,124 38,281 164,860 (6,691) 118,542 314,992
------- ------ ------- ------ ------- -------
Net income - - - - 26,412 26,412
Issuance of
restricted
stock 1,931 483 (483) - - -
Stock-based
compensation - - 725 - - 725
--- --- --- --- --- ---
Balance at
June 30, 2009 155,055 38,764 165,102 (6,691) 144,954 342,129
------- ------ ------- ------ ------- -------
NORTHERN OFFSHORE, LTD. and SUBSIDIARIES
Condensed Consolidated Statement of Comprehensive Income
(Unaudited)
Three Months Six Months
Ended June 30, Ended June 30,
-------------- --------------
(Thousands of US Dollars) 2009 2008 2009 2008
Net income 22,792 22,498 26,412 32,015
Currency translation adjustment - 446 - (28)
------ ------ ------ ------
Total other comprehensive income 22,792 22,944 26,412 31,987
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 2009 2009 2008 2009 2008
Net Income (GAAP) 3,620 22,792 22,498 26,412 32,015
Add Back:
Net interest expense 3,557 3,003 5,700 6,560 12,004
Income taxes 469 2,293 2,074 2,762 1,987
Depreciation 15,773 16,225 15,557 31,998 30,146
Amortization (2,018) (2,018) (6,558) (4,036) (16,481)
---------------- ------ ------ ------ ------ ------
EBITDA (Non-GAAP) 21,401 42,295 39,271 63,696 59,671
----------------- ------ ------ ------ ------ ------
EBITDA is defined as Net Income before Interest, Taxes, Depreciation and
Amortization.
NORTHERN OFFSHORE, LTD. and SUBSIDIARIES
Operating Statistics
(Unaudited)
Three Months Six Months
Ended Ended
June 30, June 30,
------------- -------------
Q1 2009 2009 2008 2009 2008
Jackups (3)
Average rig utilization 86% 94% 89% 90% 95%
Operating days 233 256 244 489 517
Average revenue per day 157,184 145,419 187,495 151,031 163,042
Drillship (1)
Average rig utilization - 48% 92% 24% 93%
Operating days - 43 84 43 170
Average revenue per day - 261,331 292,000 261,331 223,541
Semisubmersible (1)
Average rig utilization 100% 100% - 100% -
Operating days 90 91 - 181 -
Average revenue per day 210,276 229,426 - 220,000 -
Total Drilling Rigs
Average rig utilization 72% 86% 72% 79% 76%
Operating days 323 390 328 713 687
Average revenue per day 172,027 177,902 214,273 175,241 178,000
Floating Production
Facility (1)
Days in period 90 91 91 181 122
Production days from April
28, 2009 - 64 - 64 -
Average bpd (from April
28th) - 8,999 - 8,999 -
Average tariff revenue per
day - 37,294 - 37,294 -
Average other revenue per
day 10,783 17,374 31,647 14,099 29,008
Total average revenue per
day 10,783 43,608 31,647 27,286 29,008
Note 1: Operating days represent actual days under contract.
Note 2: Nothern 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.
SOURCE Northern Offshore, Ltd.