Northern Offshore: 3Q Figures Down on Lower Rig Utilization

Northern Offshore, a Bermuda-headquartered drilling contractor today reported its net income for the three months ended September 30, 2013, was $2.7 million, or $0.01 per diluted share.

This compares to net income of $17.8 million, or $0.12 per diluted share for the third quarter of 2012. Revenues for the third quarter of 2013 were $42.6 million, compared to $62.2 million for the third quarter of 2012.

For the nine months ended September 30, 2013, net income was $5.4 million, or $0.03 per diluted share. For the same period in the prior year, net income was $6.0 million, or $0.04 per diluted share. Revenues for the first nine months of 2013 were $128.1 million, compared to $134.0 million for the same period in 2012.
Revenues for the three months ended September 30, 2013, were lower than the same period of 2012, primarily because of a decrease in dayrate revenues from the drillship Energy Searcher and jackup Energy Endeavour due to lower utilization of these rigs as compared to the same period in the prior year. This decrease was partially offset by an increase in revenues from the jackup Energy Enhancer due to higher dayrates attributable to the exercise of the rig’s first one-year option during the current quarter.
The tariff revenues from the Northern Producer averaged approximately $112,000 per day in the third quarter of 2013. The company expects pricing levels to remain stable and production to decrease slightly in the near term.

Drilling and production expenses for the third quarter of 2013 were $1.7 million higher as compared with the same period in 2012, primarily due to higher labor and maintenance costs, which were partially offset by a decrease in the idle costs of the drillship Energy Searcher. Third quarter 2013 depreciation, general and administrative expenses, interest expense, amortization of deferred financing fees and other financial items were comparable to those of the same period in 2012.
As of November 11, 2013, the company had an outstanding credit facility balance of $22.0 million and a cash balance of $37.0 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 November 29, 2013, will be entitled to receive the dividend, which will be paid on or around December 16, 2013. The shares of the company will be trading ex-dividend from November 27, 2013

Gary W. Casswell, Northern Offshore’s president and CEO, commented, “As announced in a recent press release, we have taken a significant step forward in the execution of our strategy to transform the company’s asset base to a newer rig fleet by commencing the construction of two high specification jackups, with options for two more, capable of working in most geographic areas around the world outside of the North Sea. These units will be constructed in China at very competitive prices and will be fully equipped to handle the most demanding client requirements and drilling applications. We are confident thatthe successful execution of this asset renewal strategy will be to the long term benefit of all of our stakeholders.”

Casswell went on to say, “Maersk Oil and Gas has renewed the contract on our jackup Energy Enhancer operating in Denmark for one yearfrom July at significantly higher rates. Additionally, the jackup Energy Endeavor has recently commenced a seven month plus options contract for Wintershall in the Netherlands at North Sea market rates. With four of five units now under contract we expect to see improved cash flow going forward. And as always, we continue to focus on the safe operation of all ofour units and providing a world class service to our clients.”

[mappress]
November 14, 2013