HOUSTON, Nov. 18 /PRNewswire-FirstCall/ -- Northern Offshore, Ltd. (Oslo Bors: NOF.OL) reported net income for the three months ended September 30, 2009 of US$31.2 million, or US$0.20 per diluted share. This compares to net income of US$15.5 million, or US$0.10 per diluted share for the third quarter of 2008. The prior-year quarter included a US$3.0 million after-tax charge associated with a terminated transaction. Excluding that charge, the company would have reported net income of US$18.5 million or US$0.12 per diluted share in the 2008 quarter. Revenues for the third quarter of 2009 were US$80.1 million compared to US$76.9 million for the third quarter of 2008.
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For the nine months ended September 30, 2009, net income was US$57.7 million or US$0.38 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 nine months of 2009 would have been US$61.4 million, or US$0.40 per diluted share. For the same period in the prior year, net income was US$47.5 million or US$0.31 per diluted share. Excluding the US$3.0 million charge discussed above, the company would have reported net income of US$50.5 million or US$0.33 per diluted share for the first nine months of 2008. Revenues for the first nine months of 2009 were US$210.0 million compared to US$202.7 million for the same period in 2008.
Third Quarter Analysis
Revenues for the three months ended September 30, 2009 were approximately US$3.2 million higher than in the same period of 2008. Third quarter 2009 results included revenue from the drillship Energy Searcher which had been idle in the third quarter of the previous year, as well as tariff revenue from the floating production facility Northern Producer which was undergoing shipyard upgrades in 2008. This revenue growth was offset by lower utilization of the jackup Energy Exerter, which was idle during the 2009 third quarter, and lower dayrates for the Energy Enhancer and Energy Endeavour.
Drilling and production expenses for the third quarter of 2009 were approximately US$4.5 million lower than in the same period in 2008 primarily due to lower utilization of the jackup fleet in the 2009 quarter. Depreciation expense decreased as compared to the prior-year quarter due to an extension of the remaining useful life of the Northern Producer. Amortization of drilling contract intangibles decreased US$1.6 million to US$1.9 million in the current year quarter from the same period last year due to completion of the jackup Energy Exerter and jackup Energy Enhancer contracts with Maersk Olie og Gas AS during 2008. General & Administrative expenses were approximately the same as in the prior-year quarter, excluding the US$3.0 million charge associated with a terminated transaction in the third quarter of 2008. Interest expense decreased US$3.4 million from US$5.6 million in the prior-year quarter primarily due to reduction of the principal balance under the Secured Term Loan Facility and lower interest rates.
Conference Call Information
Northern Offshore, Ltd will conduct a teleconference with security analysts at 9 a.m. CST, November 19, 2009 to discuss the company's quarterly financial results. Individuals wishing to participate in the teleconference should call 866.804.6921 (in the U.S.) or 857.350.1667 (outside the U.S.) about five to ten minutes prior to the scheduled start time and refer to participant password 30602370.
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 1-713-739-7686, or via email at brian.hefty@northernoffshoreltd.com NORTHERN OFFSHORE, LTD. and SUBSIDIARIES Consolidated Statements of Income (Unaudited) Three Nine Months Ended Months Ended September 30, September 30, --------------- -------------- (Thousands of US Dollars, except per share amounts) Q2 2009 2009 2008 2009 2008 Revenue 73,352 80,086 76,888 209,991 202,677 Operating expenses: Drilling and production (28,934) (30,699) (35,177) (88,627) (97,016) Depreciation (16,225) (14,515) (15,849) (46,513) (45,995) General & administrative (2,299) (1,987) (5,015) (6,017) (8,305) Bad debt (233) 57 - (3,840) (251) -------- ---- --- --- ------ ---- Total operating expenses (47,691) (47,144) (56,041) (144,997) (151,567) ------------------------ ------- ------- ------- -------- -------- Operating income 25,661 32,942 20,847 64,994 51,110 ---------------- ------ ------ ------ ------ ------ Interest income 112 48 294 250 946 Interest expense (2,718) (2,280) (5,642) (8,248) (17,504) Amortization of drilling contract intangibles 2,018 1,850 3,447 5,887 19,928 Amortization of deferred financing fees (397) (397) (397) (1,190) (1,190) Other financial items 409 1,206 (538) 850 (1,267) --------------------- --- ----- ---- --- ------ Total other income/ (expense), net (576) 427 (2,836) (2,451) 913 ------------------- ---- --- ------ ------ --- Income before taxes 25,085 33,369 18,011 62,543 52,023 ------------------- ------ ------ ------ ------ ------ Income taxes - (expense)/benefit (2,293) (2,124) (2,515) (4,886) (4,502) ------------------ ------ ------ ------ ------ ------ Net income 22,792 31,245 15,496 57,657 47,521 ---------- ------ ------ ------ ------ ------ Earnings per share (US$) Basic 0.15 0.20 0.10 0.38 0.31 Diluted 0.15 0.20 0.10 0.38 0.31 Weighted average common shares (000's) Basic 153,108 153,108 153,100 153,105 153,100 Diluted 153,265 153,978 153,101 153,448 153,100 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) September 30, December 31, (Thousands of US Dollars) 2009 2008 Current assets Cash and cash equivalents 88,947 58,759 Restricted cash 8,260 8,077 Account receivables, net 40,966 48,797 Prepaid expenses 11,150 17,202 Deferred financing fees 858 1,586 Deferred mobilization costs 623 566 ---------------------------- --- --- Total current assets 150,804 134,987 -------------------- ------- ------- Non-current assets Property, plant & equipment, net 510,049 545,731 Restricted cash, net of current portion 6,438 6,438 Deferred mobilization cost, net of current portion 524 847 Deferred income tax assets - 645 Deferred financing fees, net of current portion - 461 Total non-current Assets 517,011 554,122 ------------------------ ------- ------- Total assets 667,815 689,109 ------------ ------- ------- Current liabilities Accounts payable 10,030 19,975 Accrued expenses 25,538 5,215 Income tax payable 8,240 8,969 Current portion of debt 220,000 90,000 Deferred revenue 18,703 24,284 Current portion of drilling contract intangibles - 5,887 ------------------------------------ --- ----- Total current liabilities 282,511 154,330 ------------------------- ------- ------- Non-current liabilities Long-term debt, net of current portion - 197,500 Deferred revenue, net of current portion 2,563 997 Other long-term liabilities 9,059 21,290 ---------------------------- ----- ------ Total non-current liabilities 11,622 219,787 ----------------------------- ------ ------- Total liabilities 294,133 374,117 ------------------ ------- ------- Shareholders' equity Share capital 38,767 38,281 Additional paid-in capital 165,407 164,860 Accumulated other comprehensive loss (6,691) (6,691) Retained earnings 176,199 118,542 ----------------- ------- ------- Total shareholders' equity 373,682 314,992 -------------------------- ------- ------- Total liabilities and shareholders' equity 667,815 689,109 ----------------------------------- ------- ------- 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) Nine months ended September 30, ----------------- (Thousands of US Dollars) 2009 2008 Cash flows from operating activities Net income 57,657 47,521 Adjustments to reconcile net income to net cash provided by operating activities: Bad debt expense 3,840 - Stock-based compensation 1,033 1,351 Depreciation 46,513 45,995 Amortization of drilling contract intangibles (5,887) (19,928) Amortization of deferred financing fees 1,190 1,191 Realized gain on foreign currency (652) - Interest, net (362) 1,424 ---- ----- Changes in operating assets and working capital (Increase) decrease in accounts receivable 5,519 (34,779) Decrease in prepaid expenses 6,310 819 (Increase) decrease in deferred tax assets (73) 115 Increase (decrease) in accounts payable (6,134) 23,442 Increase in other accrued liabilities 4,666 2,535 Increase (decrease) in deferred revenue (4,015) 2,321 Current income taxes (936) 2,319 Other, net - 778 Net cash provided by operating activities 108,669 75,104 ----------------------------------------- ------- ------ Cash flows from investing activities Capital expenditures (10,993) (35,739) Release of restricted cash - 21,500 Funding of restricted cash (150) - Proceeds from sale of equipment 188 - ------------------------------- --- --- Net cash provided by/ (used in) investing activities (10,955) (14,239) ------------------------------------------ ------- ------- Cash flows from financing activities Proceeds from commercial paper - 21,764 Principal payment of bank term loan (67,500) (67,500) Net cash used in financing activities (67,500) (45,736) ------------------------------------- ------- ------- Net increase/(decrease) in cash and cash equivalents 30,214 15,129 Cash and cash equivalents at beginning of period 58,759 21,690 Effects of exchange rate changes on cash and cash equivalents (26) (24) --- --- Cash and cash equivalents at end of period 88,947 36,795 ------ ------ Supplemental disclosure of cash flow information Cash paid during the period for: Income taxes 4,715 2,203 Interest 8,328 15,064 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 (Thousands other of Common Additional comprehensive US shares Share paid-in gain / Retained 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 57,657 57,657 Issuance of restricted stock 1,944 486 (486) - Stock-based compensation 1,033 1,033 ----- ----- Balance at September 30, 2009 155,068 38,767 165,407 (6,691) 176,199 373,682 ------- ------ ------- ------ ------- ------- NORTHERN OFFSHORE, LTD. and SUBSIDIARIES Condensed Consolidated Statement of Comprehensive Income (Unaudited) Three Months Nine Months Ended Ended September 30, September 30, ------------ ------------- (Thousands of US Dollars) 2009 2008 2009 2008 Net income 31,245 15,496 57,657 47,521 Currency translation adjustment - 215 - 187 ------ ------ ------ ------ Total other comprehensive income 31,245 15,711 57,657 47,708 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 2009 2009 2008 2009 2008 Net Income (GAAP) 22,792 31,245 15,496 57,657 47,521 Add Back: Net interest expense 3,003 2,629 5,745 9,188 17,748 Income taxes 2,293 2,124 2,515 4,886 4,502 Depreciation 16,225 14,515 15,849 46,513 45,995 Amortization (2,018) (1,850) (3,447) (5,887) (19,928) ---------------- ------ ------ ------ ------- ------ EBITDA (Non-GAAP) 42,295 48,663 36,158 112,357 95,838 ----------------- ------ ------ ------ ------- ------ EBITDA is defined as Net Income before Interest, Taxes, Depreciation and Amortization. NORTHERN OFFSHORE, LTD. and SUBSIDIARIES Operating Statistics (Unaudited) Three Nine Months Ended Months Ended September 30, September 30, --------------- --------------- Q2 2009 2009 2008 2009 2008 Jackups (3) Average rig utilization 94% 73% 100% 84% 97% Operating days 256 201 276 690 793 Average revenue per day 145,419 109,958 201,406 139,067 176,395 Drillship (1) Average rig utilization 48% 100% 0% 50% 62% Operating days 43 92 - 135 170 Average revenue per day 261,331 333,541 - 310,416 228,357 Semisubmersible (1) Average rig utilization 100% 100% 89% 100% 30% Operating days 91 92 82 273 82 Average revenue per day 229,426 212,049 226,560 217,321 226,560 Total Drilling Rigs Average rig utilization 86% 84% 78% 80% 76% Operating days 390 385 358 1,098 1,045 Average revenue per day 177,902 187,801 209,451 179,644 188,777 Floating Production Facility (1) Days in period 91 92 92 273 274 Production days 64 92 - 156 - Average bpd 8,999 15,039 - 12,561 - Average tariff revenue per day 37,294 68,776 - 55,861 - Average other revenue per day 17,374 15,607 20,700 14,608 25,436 Total average revenue per day 43,608 84,383 20,700 46,528 25,436 Note 1: Operating days represent actual days under contract. Note 2: Northern Producer contract commenced March 1, 2008 with 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.
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Northern Offshore, Ltd.
CONTACT: Brian Hefty of Northern Offshore, Ltd., +1-713-739-7686,
brian.hefty@northernoffshoreltd.com
Web Site: http://www.northernoffshorelimited.com/
