HOUSTON, Feb. 25 /PRNewswire-FirstCall/ -- Northern Offshore, Ltd. (Oslo Bors: NOF.OL) today reported net income for the three months ended December 31, 2008 of US$16.6 million, or US$0.11 per diluted share, on revenues of US$71.5 million. This compares to a net loss of US$5.6 million, or US$0.04 per diluted share, for the fourth quarter of 2007 on revenues of US$43.6 million.
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Results for the fourth quarter of 2008 include a US$2.2 million provision for doubtful accounts. Fourth quarter 2007 results included a US$9.8 million discrete tax charge and related interest and penalties. Excluding these items from the respective periods, fourth quarter 2008 net income would have been US$18.8 million or US$0.12 per diluted share compared to net income of US$4.2 million or US$0.03 per diluted share for the same quarter of the prior year.
Full year 2008 net income increased significantly from the prior year. For the year ended December 31, 2008, net income was US$64.1 million or US$0.42 per diluted share. This compares to net income for year ended December 31, 2007, of US$34.5 million or US$0.23 per diluted share. Excluding the US$2.2 million doubtful accounts provision discussed above and a US$3.0 million charge associated with the terminated transaction to acquire two North Sea semisubmersibles during the third quarter of 2008, the company would have reported net income of US$69.3 million or US$0.45 per diluted share for the full year 2008. This compares to net income of US$44.3 million or US$0.30 per diluted share for 2007 after excluding the US$9.8 million discrete charge mentioned above. Revenues in 2008 were US$271.4 million, 54% higher than the US$176.1 million reported in 2007.
Northern Offshore President and CEO, Marion Woolie, commented, "2008 was a year of transformation at Northern Offshore. We successfully built a quality management team, effectively transitioned two acquired rigs to our operating teams, expanded into new regions and delivered solid financial results. Although 2009 will be a challenging year for the entire industry, I believe we have the team in place to manage through this period."
Fourth Quarter Analysis
Revenues for the three months ended December 31, 2008 increased US$27.9 million compared to the same period of 2007, primarily due to higher dayrates for the three North Sea jackup rigs purchased in mid-June 2007 and higher utilization and dayrate for the semisubmersible Energy Driller which commenced a three-year contract offshore India with Oil & Natural Gas Corporation Limited ("ONGC") in July 2008. This revenue growth was partially offset by lower utilization of the drillship Energy Searcher which was idle during the fourth quarter of 2008.
Excluding the US$2.2 million provision for doubtful accounts, drilling and production expenses for the fourth quarter of 2008 were US$5.4 million higher compared to the same period of 2007 due primarily to the start-up of the Energy Driller contract in mid-2008. Depreciation was slightly higher in the 2008 quarter primarily due to the impact of upgrades to the Energy Driller for its contract with ONGC. General and administrative expenses were US$3.7 million lower in the fourth quarter of 2008 compared to the same period of 2007 due primarily to charges and penalties associated with the fourth quarter 2007 discrete tax event discussed above.
Amortization of drilling contract intangibles decreased US$7.9 million in the current quarter when compared to the same period of 2007 because the Energy Exerter and Energy Enhancer completed their contracts with Maersk Olie og Gas AS in April and September, respectfully, of 2008. Additionally, interest expense decreased US$2.9 million compared to the prior year quarter primarily due to the reduction of the principal balance under the Secured Term Loan Facility and lower interest rates.
Fourth Quarter 2008 Highlights
- The drillship Energy Searcher was awarded a contract with the Joint Operating Company Vietgazprom for an estimated 365 day program expected to begin mid-2009.
- The jackup rig Energy Exerter was awarded a contract with Aegean Energy S.A, for an estimated 135 day program expected to begin in early March 2009.
- The Energy Enhancer was awarded a contract with Centrica Resources Limited for an estimated 35 day drilling program expected to begin mid-April 2009.
- The Northern Producer completed its mooring operation on location in the Don Field on November 20, 2008 after completion of its life enhancement and equipment refurbishment in the McNulty Offshore facility in Newcastle. First production is expected to commence in late March or early April 2009.
- The company retired its NOK125 million commercial paper facility.
Conference Call Information
Northern Offshore, Ltd. will conduct a teleconference with security analysts at 9 a.m. CT, February 26, 2009 to discuss the company's quarterly financial results. Individuals wishing to participate in the teleconference should call 866-700-0133 (in the U.S.) or 617-213-8831 (outside the U.S.) about five to ten minutes prior to the scheduled start time and refer to participant password 89213580.
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 is a Bermuda holding company which operates offshore oil and gas production and drilling vessels deployed around the world. The company's recently updated fleet consists of one floating production facility and five drilling units including a drillship, a semisubmersible and three jackup drilling rigs. The company's vessels operate in various markets including the North Sea, the Indian Ocean, offshore Russia, the Mediterranean Sea and Southeast Asia.
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 Twelve Months
Ended Ended
December 31, December 31,
-------------- --------------
(Thousands of US Dollars,
except per share amounts) Q3 2008 2008 2007 2008 2007
Revenue 74,909 71,543 43,626 271,354 176,109
Operating expenses:
Drilling and
production expenses (30,770) (33,156) (25,614) (118,979) (85,082)
Depreciation (15,849) (16,007) (14,622) (62,002) (38,312)
General &
administrative expenses (8,922) (3,751) (7,493) (22,093) (15,553)
------------------------ ------ ------ ------ ------- -------
Total operating expenses (55,541) (52,914) (47,729) (203,074) (138,947)
------------------------ ------- ------- ------- -------- --------
Operating income /
(loss) 19,368 18,629 (4,103) 68,280 37,162
------------------------ ------ ------ ------ ------ ------
Interest income 294 881 1,179 1,827 3,614
Interest expense (5,641) (4,836) (7,684) (22,340) (17,027)
Amortization of drilling
contract intangibles 3,447 2,018 9,923 21,946 17,167
Amortization of deferred
financing fees (397) (397) (397) (1,587) (867)
Other financial items 940 219 285 411 197
------------------------ --- --- --- --- ---
Total other income/
(expense), net (1,357) (2,115) 3,306 257 3,084
------------------------ ------ ------ ----- --- -----
Income/(loss)
before taxes 18,011 16,514 (797) 68,537 40,246
------------------------ ------ ------ ---- ------ ------
Income taxes -
(expense)/benefit (2,515) 45 (4,771) (4,457) (5,743)
------------------------ ------ -- ------ ------ ------
Net income/(loss) 15,496 16,559 (5,568) 64,080 34,503
------------------------ ------ ------ ------ ------ ------
Earnings/(loss) per
share (US$)
Basic 0.10 0.11 (0.04) 0.42 0.23
Diluted 0.10 0.11 (0.04) 0.42 0.23
Weighted average common
shares (000's)
Basic 153,100 153,100 153,100 153,100 148,313
Diluted 153,101 153,100 153,100 153,100 149,186
NORTHERN OFFSHORE, LTD. and SUBSIDIARIES
Consolidated Balance Sheets
December 31, December 31,
2008 2007
(Thousands of US Dollars) (Unaudited) (Audited)
Current assets
Cash and cash equivalents 58,759 21,690
Restricted cash 14,515 42,500
Trade receivables, net 47,855 32,224
Prepaid expenses and other current
assets 18,710 19,725
Deferred financing fees 1,586 1,586
----------------------- ----- -----
Total current assets 141,425 117,725
-------------------- ------- -------
Non-current assets
Property, plant & equipment, net 545,731 561,815
Deferred mobilisation cost 847 -
Deferred tax asset 645 1,282
Deferred financing fees, net of
current portion 461 2,048
------------------------------ --- -----
Total non-current Assets 547,684 565,145
------------------------ ------- -------
Total assets 689,109 682,870
------------ ------- -------
Current liabilities
Trade payables 11,042 11,717
Accrued expenses 14,148 9,575
Income tax payable 8,969 6,389
Deferred income tax payable - 13
Current portion of debt 90,000 90,000
Deferred revenue 24,284 -
Current portion of drilling contract
intangibles 5,887 21,946
------------------------------------ ----- ------
Total current liabilities 154,330 139,640
------------------------- ------- -------
Non-current liabilities
Long-term debt, net of current
portion 197,500 287,500
Drilling contract intangibles,
net of current portion - 5,887
Deferred revenue, net of current
portion 997 -
Other long-term liabilities 21,290 -
---------------------------- ------ -
Total non-current liabilities 219,787 293,387
----------------------------- ------- -------
Total liabilities 374,117 433,027
------------------ ------- -------
Shareholders' equity
Share capital 38,275 38,275
Additional paid-in capital 164,866 163,174
Accumulated other comprehensive loss (6,691) (6,068)
Retained earnings 118,542 54,462
----------------- ------- ------
Total shareholders' equity 314,992 249,843
-------------------------- ------- -------
Total liabilities and
shareholders' equity 689,109 682,870
--------------------- ------- -------
NORTHERN OFFSHORE, LTD. and SUBSIDIARIES
Consolidated Statement of Cash Flows
(Unaudited)
Twelve months ended
-------------------------
December 31, December 31,
(Thousands of US 2008 2007
Dollars) ---- ----
Cash flows from operating
activities
Net income 64,080 34,503
Adjustments to reconcile net
income to net cash
provided by operating
activities:
Allowance for doubtful
receivables 2,166 345
Assets written off 31 -
Gain on sale of asset (1,485) -
Stock-based compensation 1,692 165
Depreciation 62,002 38,312
Amortization of
drilling contract
intangibles (21,946) (17,167)
Amortization of
deferred financing fees 1,587 867
Difference
between paid and
expensed interest 1,727 767
-------------- ----- ---
Operating cash flow before
working capital changes 109,854 57,792
---------------- ------- ------
Changes in
operating assets
and working
capital:
Trade and other
receivables (17,631) (31,092)
Trade and other
payables 23,464 10,699
Deferred income 25,281 -
Deferred tax assets 624 -
Currency translation
adjustment (549) 219
Income taxes 2,579 5,302
---------------- ----- -----
Net cash provided by
operating activities 143,622 42,920
------------ ------- ------
Cash flows from investing
activities
Purchase of
property, plant
and equipment (46,633) (462,937)
---------------- ------- --------
Net cash used in
investing activities (46,633) (462,937)
---------------- ------- --------
Cash flows from
financing activities
Issuance of new shares - 2,275
Increase in additional
paid-in capital - 45,755
Proceeds from
bank term loan - 300,000
Proceeds from bond - 100,000
Proceeds from
sale of asset 2,170 -
Principal repayment of
bank term loan (90,000) (22,500)
Financing costs - (4,501)
Restricted cash - (42,500)
Release of restricted cash 27,985 -
---------------- ------ -
Net cash provided by
financing activities (59,845) 378,529
------------ ------- -------
Net increase/
(decrease) in cash and cash
equivalents 37,144 (41,488)
Cash and cash
equivalents at
beginning of period 21,690 63,003
Effects of
exchange rate
changes on cash
and cash equivalents (75) 175
--- ---
Cash and cash equivalents at
end of period 58,759 21,690
------ ------
Supplemental disclosure of
cash flow information:
Cash paid during
the period for:
Income taxes 3,232 2,273
Interest 19,339 16,260
------ ------
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, 2007 144,000 36,000 117,254 (6,459) 19,959 166,754
------- ------ ------- ------ ------ -------
Net income - - - - 34,503 34,503
Issuance of
new
shares 9,100 2,275 45,755 - - 48,030
Stock-based
compensation - - 165 - - 165
Other
comprehensive
income - - - 391 - 391
- - - --- - ---
Total
comprehensive
income 9,100 2,275 45,920 391 34,503 83,089
----- ----- ------ --- ------ ------
Balance at
December 31,
2007 153,100 38,275 163,174 (6,068) 54,462 249,843
------- ------ ------- ------ ------ -------
Net income - - - - 64,080 64,080
Stock-based
compensation - - 1,692 - - 1,692
Other
comprehensive
loss - - - (623) - (623)
- - - ---- - ----
Total
comprehensive
income/(loss) - - 1,692 (623) 64,080 65,149
- - ----- ---- ------ ------
Balance at
December 31,
2008 153,100 38,275 164,866 (6,691) 118,542 314,992
------- ------ ------- ------ ------- -------
NORTHERN OFFSHORE, LTD. and SUBSIDIARIES
Reconciliation of GAAP to Non-GAAP Financial Results
(Unaudited)
Three Months Twelve Months
Ended Ended
December 31, December 31,
------------ ------------
(Thousands of US Dollars) 2008 2007 2008 2007
Net Income (GAAP) 16,559 (5,568) 64,080 34,503
Add Back:
Net Interest Expense 3,955 6,505 20,513 13,413
Income Taxes (45) 4,771 4,457 5,743
Depreciation 16,007 14,622 62,002 38,312
Amortization (1,621) (9,526) (20,359) (16,300)
---------------- ------ ------ ------- ------
EBITDA (Non-GAAP) 34,855 10,804 130,693 75,671
----------------- ------ ------ ------- ------
EBITDA is defined as Net Income before Interest, Taxes, Depreciation and
Amortization.
