Gary W. Casswell, Northern Offshore s President and CEO, commented;

Transcription

1 Press Release HOUSTON, TEXAS - May 20, 2015 Northern Offshore Reports First Quarter 2015 Results Highlights (All $ in USD) Northern Offshore, Ltd. (Oslo Børs: NOF.OL) today reported net income for the three months ended 2015, of $5.9 million, or $0.04 per diluted share, on revenues of $44.6 million. The Company generated adjusted EBITDA of $14.1 million in the first quarter The semisubmersible Energy Driller concluded its three year contract with ONGC on April 18, 2015 and was moved to a stacking location in Bahrain where it will remain while the Company actively pursues marketing opportunities in the Asia Pacific Region. The jackup Energy Endeavour concluded its drilling program with Wintershall on May 13, 2015 and has been relocated to Rotterdam, the Netherlands. The Company continues to market the unit for immediate employment. Management Comment Gary W. Casswell, Northern Offshore s President and CEO, commented; Our first quarter results exceeded our expectations due to the acceleration of the cost savings initiatives implemented by the Company. Both the semisubmersible Energy Driller and jackup Energy Endeavour successfully concluded their drilling programs and are located at their stacking locations. Following release from its previous contract in Nigeria, the Company made a strategic relocation of the drillship Energy Searcher to the Middle East/Asia Pacific Region to pursue marketing opportunities in those areas while taking advantage of a lower cost layup location. As we look forward, we will rely heavily on our experienced and dedicated management team to remain focused on cost control and capital discipline while continuing to market our services in a highly competitive environment.

2 First Quarter Analysis Net income for the three months ended 2015 of $5.9 million, or $0.04 per diluted share, with revenues of $44.6 million compares to net income of $10.0 million, or $0.06 per diluted share, with revenues of $49.4 million for the first quarter of Revenues for the three months ended 2015 were $4.9 million lower than the same period in 2014, primarily related to the floating production facility Northern Producer as the tariff revenue was negatively impacted by a combination of lower production volume and decrease in the tariff rate due to the decline in the price of North Sea Brent. Drilling and production expenses for the three months ended 2015 were $1.8 million higher as compared to the same period in 2014, primarily due to an increase in operating expenses for the drillship Energy Searcher relating to the completion of its contract offshore Nigeria. Partially offsetting this increase was an overall decrease in operating expenses for the remainder of the fleet primarily due to lower labor, repair and maintenance costs. First quarter 2015 depreciation, general and administrative expenses, interest expense, and other financial items were comparable to those of the same period in Tariff revenues from the floating production facility Northern Producer averaged approximately $39,000 per day in the first quarter of The company expects pricing levels to remain stable and production to decrease slightly in line with the forecast decline rates. As of today, the company has an outstanding credit facility balance of $29 million and an unrestricted cash balance of approximately $37 million. Conference Call Information Northern Offshore, Ltd. will conduct a teleconference with security analysts at 9 a.m. CT, May 21, 2015, to discuss the company's quarterly results. Individuals wishing to participate in the teleconference should call (in the U.S.) or (toll free or outside the U.S.) about five to ten minutes prior to the scheduled start time and refer to participant password The conference call also will be accessible by logging on to the company's website at 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, and Southeast Asia. The company s fleet consists of four drilling units (a drillship, a semisubmersible and two jackup drilling rigs) and one floating production

3 facility. Additionally, the company has under construction two 350 high specification jackup drilling rigs, with contract delivery in the fourth quarter of 2016 and second quarter of More information on Northern Offshore, Ltd. may be found by visiting the company's website at For further information, please contact: Paul Ravesies at (713) or via at This announcement contains statements that reflect the company s expectations or predictions of the future. These forward-looking statements may include comments 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. 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.

4 Consolidated Statements of Operations Three Months Ended (Thousands of US Dollars, except per share amounts) Q Revenues 77,767 44,570 49,432 Operating expenses: Drilling and production (52,493) (28,782) (26,949) Depreciation (8,552) (8,605) (8,297) General & administrative (1,360) (1,697) (2,142) Total operating expenses (62,405) (39,084) (37,388) Operating income 15,362 5,486 12,044 Interest expense (391) (363) (426) Amortization of deferred financing fees - - (121) Other financial items (45) Total other expense (592) Income before taxes 15,417 5,606 11,452 Income taxes benefit / (expense) (2,911) 295 (1,449) Net income 12,506 5,901 10,003 Earnings per share (US$) Basic Diluted Weighted average common shares (000 s) Basic 159, , ,091 Diluted 159, , ,093

5 Consolidated Balance Sheets (Thousands of US Dollars) 2015 December 31, 2014 Current assets Cash and cash equivalents 25,990 16,604 Restricted cash 6,898 6,436 Accounts receivable, net 28,898 48,909 Prepaid expenses 4,023 3,425 Deferred mobilization costs Deferred insurance premium 597 1,855 Other current assets Total current assets 66,528 77,963 Noncurrent assets Property, plant & equipment - existing fleet, net 146, ,267 Property, plant & equipment - newbuild jackups 119,270 84,924 Noncurrent deposit/escrow account 12,040 12,034 Drydock costs, net of current portion 803 1,085 Other noncurrent assets 19,240 1,154 Total noncurrent assets 298, ,464 Total assets 364, ,427 Current liabilities Accounts payable 7,012 11,973 Accrued expenses 12,741 14,458 Income taxes payable 1,701 2,775 Affiliated debt 29,000 29,000 Total current liabilities 50,454 58,206 Non-current liabilities Other long-term liabilities 81,435 47,793 Total liabilities 131, ,999 Shareholders' equity Share capital 41,469 41,117 Additional paid-in capital 179, ,253 Accumulated other comprehensive loss (6,691) (6,691) Retained earnings 18,650 12,749 Total shareholders' equity 232, ,428 Total liabilities and shareholders' equity 364, ,427

6 Consolidated Statements of Cash Flows - Three months ended (Thousands of US Dollars) Cash flows from operating activities Net income 5,901 10,003 Adjustments to reconcile net income to net cash provided by operating activities: Stock-based compensation 805 1,174 Depreciation 8,605 8,297 Amortization of deferred financing fees Gain on disposal of assets - (325) Changes in operating assets and working capital Accounts receivable 20,011 (4,548) Prepaid expenses (598) 253 Deferred mobilization costs 307 (13,829) Other current and noncurrent assets (17,513) 718 Accounts payable (3,689) 1,380 Other accrued liabilities (1,716) (583) Deferred revenue - 5,785 Income taxes payable (1,074) 450 Net cash provided by operating activities 11,039 8,896 Cash flows from investing activities Capital expenditures - existing fleet (153) (529) Capital expenditures - newbuild jackups (704) (17,997) Changes in restricted cash (462) - Changes in noncurrent deposit/escrow account (6) (1,182) Net cash used in investing activities (1,325) (19,708) Cash flows from financing activities Proceeds from drawdown of revolver facility - 25,000 Payment for taxes on vested shares (328) (844) Dividends paid - (7,956) Net changes in financing activities (328) 16,200 Net changes in cash and cash equivalents 9,386 5,388 Cash and cash equivalents at beginning of period 16,604 19,537 Cash and cash equivalents at end of period 25,990 24,925 Supplemental disclosure of cash flow information Cash paid during the period for: Income taxes Interest 86 - Significant non-cash transactions during the period for: Accrued capital expenditures 33,642 2,850 Accrued dividends - 204

7 Consolidated Statements of Shareholders Equity Accumulated Common Additional other shares Share paid-in comprehensive Retained (Thousands of US Dollars) ('000) capital capital loss earnings Total Balance at December 31, ,732 40, ,462 (6,691) 8, ,369 Net income ,003 10,003 Issuance of restricted stock (333) (83) Payments for taxes on vested shares - - (844) - - (844) Stock-based compensation - - 1, ,174 Common shares dividends (8,160) (8,160) Balance at ,399 40, ,875 (6,691) 10, ,542 Balance at December 31, ,470 41, ,253 (6,691) 12, ,428 Net income ,901 5,901 Issuance of restricted stock 1, (352) Payments for taxes on vested shares - - (328) - - (328) Stock-based compensation Common shares dividends Balance at ,877 41, ,378 (6,691) 18, ,806

8 Reconciliation of GAAP to Non-GAAP Financial Results Three Months Ended (Thousands of US Dollars) Q Net income (GAAP) 12,506 5,901 10,003 Add Back: Net interest expense Income taxes 2,911 (295) 1,449 Depreciation 8,552 8,605 8,297 Other financial items (446) (483) 45 Adjusted EBITDA (Non- GAAP) 23,914 14,091 20,341 Adjusted EBITDA is defined as Net Income before Interest, Taxes, Depreciation and Other Financial Items

9 Operating Statistics Three Months Ended Q Jackups (2) Average rig utilization 100% 100% 100% Operating days Average revenue per day 146, , ,435 Drillship (1) Average rig utilization 100% 2% 0% Operating days Average revenue per day 323, Semisubmersible (1) Average rig utilization 100% 100% 100% Operating days Average revenue per day 166, , ,416 Total Drilling Rigs (4) Average rig utilization 100% 76% 75% Operating days Average revenue per day 195, , ,536 Floating Production Facility (1) Days in period Production days Average bpd 11,665 10,430 16,009 Average tariff revenue per day 60,556 38,974 96,057 Average other revenue per day 1,451 1,478 1,579 Total average revenue per day 62,007 40,452 97,636 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.