Northern Offshore reported net income for the three months ended June 30, 2011 of US $4.6 million, or US $0.03 per diluted share. This compares to a net loss of US $0.5 million, or US $0.0 per diluted share for the second quarter of 2010. Revenues for the second quarter of 2011 were US $49.9 million compared to US $48.9 million for the second quarter of 2010.
For the six months ended June 30, 2011, net income was US $7.0 million or US $0.05 per diluted share. For the same period in the prior year, net income was US $22.7 million or US $0.15 per diluted share. Revenues for the first six months of 2011 were US $90.4 million compared to US $116.9 million for the same period in 2010.
The company's directors have declared a dividend of US $0.03 per share, or approximately US $5.0 million. Shareholders of record with the VPS on August 31, 2011 will be entitled to receive the dividend, which will be paid on or around September 15, 2011. The shares of the company will be trading ex-dividend from August 29, 2011.
Second Quarter Analysis
Revenues for the three months ended June 30, 2011 were slightly higher when compared to the same period of 2010, primarily due to higher utilization of the jackup fleet, partially offset by lower utilization of the drillship Energy Searcher.
Drilling and production expenses for the three months ended June 30, 2011 were US $2.8 million lower than the same period last year primarily due to lower operating expenses for the drillship Energy Searcher and reduced idle costs for the jackup Energy Exerter. This decrease was partially offset by higher operating expenses related to the contract start-up of the jackups Energy Enhancer and Energy Endeavour. Depreciation expense for the three months ended June 30, 2011 was US $6.5 million lower than the same period in 2010 due to the decrease in depreciable basis of the jackup fleet attributable to the asset impairment charge taken in December 2010. General and administrative expenses were lower than the same period in 2010 due to lower compensation costs.
Interest expense was US $1.3 million lower than in the second quarter of 2010 primarily due to lower outstanding loan balance. Amortization of deferred financing fees was higher than the same period last year primarily due to the acceleration of the amortization of the deferred financing fees relating to the early repayment and cancellation of the US $120 million Revolving Credit Facility on May 31, 2011. Income tax expense was US $6.4 million higher than the same period last year primarily due to a higher annualized effective tax rate, partially offset by a reduction in the accrued withholding tax rate for operations in India.
At June 30, 2011, the Revolving Credit Facility balance was US $32.0 million and the cash balance was US $35.6 million, of which approximately US $28.2 million is unrestricted, leaving the company a net cash position at the end of the period of US $3.6 million.
The company is pleased to report that the semisubmersible Energy Driller was recently both technically and commercially qualified in a tender process requesting three one-thousand foot depth rated floating drilling rigs for a program offshore India. Although an award has yet to be made, the company is optimistic that the rig should receive a three-year contract due to the qualifying bid and anticipates receiving a letter of award in the next four to six weeks.
The floating production facility Northern Producer remains under contract with EnQuest. The unit continues producing in the North Sea with further field development and tie-back ongoing. The tariff from the facility for the second quarter 2011 averaged US $134 thousand per day on average per-day production of 22.4 thousand barrels.
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