Northern Offshore Adds 2 Acquired Rigs, Reaps Record Profits
Northern Offshore has 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.
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.
Manages 3 Offshore Rigs
- Northern Offshore Delays Delivery of 2 Jackups Now Being Built in China (Apr 01)
- Northern Offshore Issues Notice to Terminate Contract for Energy Searcher (Jan 13)
- Energy Searcher Signed Up for Nigeria Drill (Dec 09)