Northern Offshore Reports Third Quarter and Nine Month 2014 Financial Results
HOUSTON, Nov. 5, 2014 /PRNewswire/ --
Highlights
(All $ in USD)
- Northern Offshore, Ltd. (Oslo Bors: NOF.OL) today reported net income for the three months ended September 30, 2014, of $5.2 million, or $0.03 per diluted share, on revenues of $63.6 million.
- The Company generated $15.0 million of third quarter adjusted EBITDA.
- The current client for the jackup Energy Endeavour exercised its second and final contract extension option which is expected to keep the rig employed through March 2015.
- The Company paid down $8.0 million of its current revolver debt.
- The Company's directors have declared a dividend of $0.05 per share, or approximately $8.0 million.
Management Comment
Gary W. Casswell, Northern Offshore's President and CEO, commented;
"While the Company's third quarter results were somewhat negatively impacted by the previously announced unplanned downtime for the Energy Searcher, we were pleased that our operations personnel were able to expedite the successful replacement of the blowout preventer control system hoses allowing the rig to return to normal operations ahead of schedule. Going forward, we expect fourth quarter results to improve based upon the strength of the fleet's increased operating performance."
Mr. Casswell further commented that, "I am pleased to announce that following a review of our financial results for the third quarter, our Board of Directors have approved payment of $0.05 per share to shareholders of record. "
With respect to the previously announced plans for a strategic disposal of the Northern Producer, Mr. Casswell said; "Over the course of the last few months, we have reviewed specific opportunities to increase shareholder value with respect to an outright sale or other special purpose option for monetizing the unit, however, as of this time, we have not found the appropriate solution to unlock what we believe is the full value of the Northern Producer. Nevertheless, our continuing initiative to find the right opportunity will remain a strategic focus."
Third Quarter Analysis
For the nine months ended September 30, 2014, net income was $24.5 million, or $0.15 per diluted share. For the same period in the prior year, net income was $5.4 million, or $0.03 per diluted share. Revenues for the first nine months of 2014 were $168.5 million, compared to $128.1 million for the same period in 2013.
Net income for the three months ended September 30, 2014, was $5.2 million, or $0.03 per diluted share. This compares to net income of $2.7 million, or $0.01 per diluted share for the third quarter of 2013. Revenues for the third quarter of 2014 were $63.6 million, compared to $42.6 million for the third quarter of 2013.
Revenues for the three months ended September 30, 2014, were higher compared to the same period of 2013, primarily due to the increase in dayrate revenues from the drillship Energy Searcher as the unit commenced its contract with CAMAC last quarter coupled with higher utilization and dayrate increases for the jackup fleet.
The tariff revenues from the Northern Producer averaged approximately $86,000 per day in the third quarter of 2014. The Company expects pricing levels to decline slightly in the near term as the price of N. Sea Brent has fallen below $90 per barrel with production decreasing in line with forecast decline rates.
Drilling and production expenses for the third quarter of 2014 were $18.1 million higher when compared with the same period in 2013, primarily due to the increase in operating costs for the drillship Energy Searcher and the jackup fleet resulting from higher utilization and higher labor costs associated with change in operating locations.
Third quarter 2014 depreciation, general and administrative expenses, interest expense and amortization of deferred financing fees were comparable to those of the same period in 2013. Other financial items were $1.1 million lower than the same period last year due to favorable foreign currency exchange rates fluctuations.
As of November 1, 2014, the Company had an outstanding revolver balance of $29.0 million and a cash balance of $15.0 million.
The Company's directors have declared a dividend of $0.05 per share, or approximately $8.0 million. Shareholders of record with the VPS on November 28, 2014 will be entitled to receive the dividend, which will be paid on or around December 15, 2014. The shares of the Company will be trading ex-dividend from November 26, 2014.
Conference Call Information
Northern Offshore, Ltd. will conduct a teleconference with security analysts at 9 a.m. CT, November 6, 2014, to discuss the Company's quarterly results. Individuals wishing to participate in the teleconference should call (877) 474-9504 (in the U.S.) or (857) 244-7557 (outside the U.S.) about five to ten minutes prior to the scheduled start time and refer to participant password 96027212.
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:
Paul Ravesies 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 |
Nine Months Ended |
||||
| (Thousands of US Dollars, except per share amounts) |
Q2 2014 |
2014 |
2013 |
2014 |
2013 |
| Revenues |
55,531 |
63,555 |
42,556 |
168,518 |
128,086 |
| Operating expenses: |
|||||
| Drilling and production |
(33,526) |
(46,764) |
(28,703) |
(107,240) |
(88,152) |
| Depreciation |
(8,296) |
(8,429) |
(8,036) |
(25,022) |
(23,801) |
| General & administrative |
(1,910) |
(1,771) |
(2,083) |
(5,822) |
(6,127) |
| Total operating expenses |
(43,732) |
(56,964) |
(38,822) |
(138,084) |
(118,080) |
| Operating income |
11,799 |
6,591 |
3,734 |
30,434 |
10,006 |
| Interest expense |
(543) |
(556) |
(369) |
(1,526) |
(1,147) |
| Amortization of deferred financing fees |
(40) |
- |
(123) |
(161) |
(366) |
| Other financial items |
(467) |
295 |
(795) |
(218) |
(1,380) |
| Total other expense |
(1,050) |
(261) |
(1,287) |
(1,905) |
(2,893) |
| Income before taxes |
10,749 |
6,330 |
2,447 |
28,529 |
7,113 |
| Income taxes (expense)/benefit |
(1,467) |
(1,141) |
230 |
(4,057) |
(1,713) |
| Net income |
9,282 |
5,189 |
2,677 |
24,472 |
5,400 |
| Earnings per share (US$) |
|||||
| Basic |
0.06 |
0.03 |
0.01 |
0.15 |
0.03 |
| Diluted |
0.06 |
0.03 |
0.01 |
0.15 |
0.03 |
| Weighted average common shares (000's) |
|||||
| Basic |
159,270 |
159,595 |
157,556 |
159,319 |
157,294 |
| Diluted |
159,361 |
160,483 |
157,556 |
159,646 |
157,351 |
| NORTHERN OFFSHORE, LTD. and SUBSIDIARIES |
||
| Consolidated Balance Sheets |
||
| (Unaudited) |
||
| (Thousands of US Dollars) |
September 30, |
December 31, |
| Current assets |
||
| Cash and cash equivalents |
15,527 |
19,537 |
| Restricted cash |
6,436 |
1,000 |
| Accounts receivable, net |
34,210 |
24,158 |
| Prepaid expenses |
3,694 |
3,508 |
| Deferred mobilization costs |
16,211 |
2,202 |
| Deferred insurance premium |
3,036 |
1,627 |
| Other current assets |
671 |
1,382 |
| Total current assets |
79,785 |
53,414 |
| Noncurrent assets |
||
| Property, plant & equipment - existing fleet, net |
162,991 |
180,329 |
| Property, plant & equipment - newbuild jackups |
52,942 |
17,829 |
| Restricted cash, net of current portion |
- |
5,436 |
| Noncurrent deposit/escrow account |
12,029 |
9,222 |
| Deferred mobilization costs, net of current portion |
- |
368 |
| Drydock costs, net of current portion |
1,367 |
2,859 |
| Other noncurrent assets |
1,482 |
1,665 |
| Total noncurrent assets |
230,811 |
217,708 |
| Total assets |
310,596 |
271,122 |
| Current liabilities |
||
| Accounts payable |
11,921 |
9,275 |
| Accrued expenses |
15,816 |
20,196 |
| Income taxes payable |
2,295 |
1,282 |
| Affiliated debt |
37,000 |
22,000 |
| Deferred revenue |
6,120 |
- |
| Total current liabilities |
73,152 |
52,753 |
| Non-current liabilities |
||
| Other long-term liabilities |
16,465 |
- |
| Total liabilities |
89,617 |
52,753 |
| Shareholders' equity |
||
| Share capital |
41,211 |
40,933 |
| Additional paid-in capital |
177,904 |
175,462 |
| Accumulated other comprehensive loss |
(6,691) |
(6,691) |
| Retained earnings |
8,555 |
8,665 |
| Total shareholders' equity |
220,979 |
218,369 |
| Total liabilities and shareholders' equity |
310,596 |
271,122 |
| NORTHERN OFFSHORE, LTD. and SUBSIDIARIES |
||||||
| Consolidated Statements of Cash Flows - (Unaudited) |
||||||
| Nine months ended |
||||||
| (Thousands of US Dollars) |
2014 |
2013 |
||||
| Cash flows from operating activities |
||||||
| Net income |
24,472 |
5,400 |
||||
| Adjustments to reconcile net income to net cash |
||||||
| provided by operating activities: |
||||||
| Stock-based compensation |
3,699 |
4,392 |
||||
| Depreciation |
25,022 |
23,801 |
||||
| Amortization of deferred financing fees |
161 |
366 |
||||
| Gain on disposal of assets |
(267) |
(155) |
||||
| Changes in operating assets and working capital |
||||||
| Accounts receivable |
(10,052) |
5,617 |
||||
| Prepaid expenses |
(186) |
208 |
||||
| Deferred mobilization costs |
(13,641) |
1,903 |
||||
| Other current and noncurrent assets |
2,019 |
2,663 |
||||
| Accounts payable |
307 |
(4,468) |
||||
| Other accrued liabilities |
(4,365) |
2,672 |
||||
| Deferred revenue |
6,120 |
(2,062) |
||||
| Income taxes payable |
1,013 |
(685) |
||||
| Net cash provided by operating activities |
34,302 |
39,652 |
||||
| Cash flows from investing activities |
||||||
| Capital expenditures - existing fleet |
(6,566) |
(5,014) |
||||
| Capital expenditures - newbuild jackups |
(18,646) |
- |
||||
| Changes in restricted cash |
- |
(1,000) |
||||
| Changes in noncurrent deposit/escrow account |
(2,807) |
(3,060) |
||||
| Proceeds from disposal of assets, net |
267 |
155 |
||||
| Net cash used in investing activities |
(27,752) |
(8,919) |
||||
| Cash flows from financing activities |
||||||
| Proceeds from drawdown of revolver facility |
25,000 |
- |
||||
| Principal payments on revolver facility |
(10,000) |
- |
||||
| Payment for taxes on vested shares |
(979) |
(380) |
||||
| Dividends paid |
(24,581) |
(23,861) |
||||
| Net cash used in financing activities |
(10,560) |
(24,241) |
||||
| Net changes in cash and cash equivalents |
(4,010) |
6,492 |
||||
| Cash and cash equivalents at beginning of period |
19,537 |
26,504 |
||||
| Cash and cash equivalents at end of period |
15,527 |
32,996 |
||||
| Supplemental disclosure of cash flow information |
||||||
| Cash paid during the period for: |
||||||
| Income taxes |
689 |
407 |
||||
| Interest |
698 |
450 |
||||
| Significant non-cash transactions during the period for: |
||||||
| Accrued capital expenditures |
17,601 |
2,286 |
||||
| Accrued dividends |
- |
639 |
||||
| 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 |
- |
- |
- |
- |
5,400 |
5,400 |
||
| Issuance of restricted stock |
3,389 |
847 |
(847) |
- |
- |
- |
||
| Payments for taxes on vested shares |
- |
- |
(380) |
- |
- |
(380) |
||
| Stock-based compensation |
- |
- |
4,392 |
- |
- |
4,392 |
||
| Common shares dividends |
- |
- |
- |
- |
(24,501) |
(24,501) |
||
| Balance at September 30, 2013 |
163,877 |
40,969 |
174,150 |
(6,691) |
10,906 |
219,334 |
||
| Balance at December 31, 2013 |
163,732 |
40,933 |
175,462 |
(6,691) |
8,665 |
218,369 |
||
| Net income |
- |
- |
- |
- |
24,472 |
24,472 |
||
| Issuance of restricted stock |
1,114 |
278 |
(278) |
- |
- |
- |
||
| Payments for taxes on vested shares |
- |
- |
(979) |
- |
- |
(979) |
||
| Stock-based compensation |
- |
- |
3,699 |
- |
- |
3,699 |
||
| Common shares dividends |
- |
- |
- |
- |
(24,582) |
(24,582) |
||
| Balance at September 30, 2014 |
164,846 |
41,211 |
177,904 |
(6,691) |
8,555 |
220,979 |
||
| 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 2014 |
2014 |
2013 |
2014 |
2013 |
| Net income (GAAP) |
9,282 |
5,189 |
2,677 |
24,472 |
5,400 |
| Add Back: |
|||||
| Net interest expense |
583 |
556 |
492 |
1,687 |
1,513 |
| Income taxes |
1,467 |
1,141 |
(230) |
4,057 |
1,713 |
| Depreciation |
8,296 |
8,429 |
8,036 |
25,022 |
23,801 |
| Other financial items |
467 |
(295) |
795 |
218 |
1,380 |
| Adjusted EBITDA (Non-GAAP) |
20,095 |
15,020 |
11,770 |
55,456 |
33,807 |
| 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 |
Nine Months Ended |
|||||
| September 30, |
September 30, |
|||||
| Q2 2014 |
2014 |
2013 |
2014 |
2013 |
||
| Jackups (2) |
||||||
| Average rig utilization |
100% |
100% |
67% |
100% |
86% |
|
| Operating days |
182 |
184 |
123 |
546 |
470 |
|
| Average revenue per day |
137,202 |
147,504 |
133,480 |
141,410 |
116,513 |
|
| Drillship (1) |
||||||
| Average rig utilization |
23% |
100% |
0% |
41% |
0% |
|
| Operating days |
21 |
92 |
0 |
113 |
0 |
|
| Average revenue per day |
285,034 |
147,626 |
0 |
173,162 |
0 |
|
| Semisubmersible (1) |
||||||
| Average rig utilization |
100% |
100% |
100% |
100% |
100% |
|
| Operating days |
91 |
92 |
92 |
273 |
273 |
|
| Average revenue per day |
172,958 |
160,294 |
170,841 |
168,512 |
155,128 |
|
| Total Drilling Rigs (4) |
||||||
| Average rig utilization |
81% |
100% |
58% |
85% |
68% |
|
| Operating days |
294 |
368 |
215 |
932 |
743 |
|
| Average revenue per day |
158,730 |
150,732 |
149,467 |
153,198 |
130,701 |
|
| Floating Production Facility (1) |
||||||
| Days in period |
91 |
92 |
92 |
273 |
273 |
|
| Production days |
91 |
92 |
92 |
273 |
273 |
|
| Average bpd |
15,973 |
14,392 |
18,643 |
15,452 |
18,676 |
|
| Average tariff revenue per day |
95,836 |
86,353 |
111,855 |
92,713 |
112,057 |
|
| Average other revenue per day |
1,580 |
1,535 |
1,415 |
1,565 |
1,404 |
|
| Total average revenue per day |
97,416 |
87,888 |
113,270 |
94,278 |
113,461 |
|
| 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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