Northern Offshore Reports Third Quarter and Nine Month 2012 Financial Results and Declares Dividend

Northern Offshore Reports Third Quarter and Nine Month 2012 Financial Results
                            and Declares Dividend

PR Newswire

HOUSTON, Nov. 14, 2012

HOUSTON, Nov. 14, 2012 /PRNewswire/ --

Highlights
(All $ in USD)

  oNorthern Offshore, Ltd. (Oslo Bors: NOF.OL) today reported net income for
    the three months ended September 30, 2012 of $17.8 million, or $0.12 per
    diluted share, on revenues of $62.2 million.
  oThe company's directors have increased the dividend by 25%, to $0.05 per
    share, which represents an annualized yield in excess of 11% at
    yesterday's closing stock price.
  oThe Energy Exerter sale transaction closed on October 12, 2012.
  oThe company repaid $38.0 million of the outstanding credit facility
    balance on October 17, 2012.

Management Comment

Gary W. Casswell, Northern Offshore's president and CEO, commented, "We are
pleased to report improved profitability to our shareholders this quarter.
The recent sale of the jackup Energy Exerter marks a turning point for our
company. Our strategy going forward is to remain opportunistic with
monetizing existing units and use the proceeds to support our high dividend
payout and invest in modern assets. We are currently working with our board
of directors in evaluating all of our alternatives to successfully execute
this strategy, including the possibility of a spinoff of the Northern
Producer."

Third Quarter Analysis

Net income for the three months ended September 30, 2012 was $17.8 million, or
$0.12 per diluted share. This compares to net income of $0.3 million, or
$0.00 per diluted share for the third quarter of 2011. Revenues for the third
quarter of 2012 were $62.2 million compared to $36.8 million for the third
quarter of 2011.

For the nine months ended September 30, 2012, net income was $6.0 million, or
$0.04 per diluted share. For the same period in the prior year, net income
was $7.3 million, or $0.05 per diluted share. Revenues for the first nine
months of 2012 were $134.0 million compared to $127.2 million for the same
period in 2011.

Revenues for the three months ended September 30, 2012 were $25.4 million
higher when compared to the same period of 2011, primarily due to higher
utilization of the drillship Energy Searcher and semisubmersible Energy
Driller, and an increase in dayrate revenues for the jackups Energy Endeavour
and Energy Enhancer.

The tariff revenues from the Northern Producer averaged approximately $110,000
per day in the third quarter of 2012. The company expects pricing levels and
production to remain stable in the near term.

Third quarter 2012 drilling and production expenses, depreciation, general and
administrative expenses, interest income and expense, amortization of deferred
financing fees and other financial items were comparable to those of the same
period in 2011. Income taxes were higher in the third quarter of 2012 as
compared to the same period in the previous year due to higher taxable income
in the 2012 quarter. 

As of November 12, 2012, the company had an outstanding credit facility
balance of $32.0 million and a cash balance of $52.7 million.

The company's directors have declared a dividend of $0.05 per share, or
approximately $8.0 million. Shareholders of record with the VPS on November
30, 2012 will be entitled to receive the dividend, which will be paid on or
around December 14, 2012. The shares of the company will be trading
ex-dividend from November 28, 2012.

Conference Call Information

Northern Offshore, Ltd. will conduct a teleconference with security analysts
at 9 a.m. CST, November 15, 2012 to discuss the company's quarterly results.
Individuals wishing to participate in the teleconference should call
877-299-4454 (in the U.S.) or 617-597-5447 (outside the U.S.) about five to
ten minutes prior to the scheduled start time and refer to participant
password 29186511.

The conference call will also 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, 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
facility. More information on Northern Offshore, Ltd. may be found by
visiting the company's website at http://www.northernoffshorelimited.com.

This announcement contains statements that reflect the company's expectations
or predictions of the future. These statements are forward-looking
statements. These forward-looking statements may include statements regarding
earnings guidance, capital allocation strategy, and 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. Additional information concerning factors that
could cause actual results to differ materially from those in the
forward-looking statements is contained from time to time in the company's
regulatory filings. 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.

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 Operations
(Unaudited)
                                       Three Months Ended Nine Months Ended

                                       September 30,     September 30,
(Thousands of US Dollars,     Q2 2012  2012      2011      2012      2011
except per share amounts)
Revenues                      43,626   62,173    36,806    134,036   127,183
Operating expenses:
Drilling and production       (28,981) (26,999)  (27,229)  (91,122)  (80,042)
Depreciation                  (9,251)  (8,055)   (8,907)   (26,704)  (25,026)
General & administrative      (1,718)  (1,727)   (1,465)   (5,354)   (4,755)
Total operating expenses      (39,950) (36,781)  (37,601)  (123,180) (109,823)
Operating income/(loss)       3,676    25,392    (795)     10,856    17,360
Interest income               2        2         9         6         22
Interest expense              (666)    (749)     (367)     (1,911)   (1,454)
Amortization of deferred      (127)    (123)     (115)     (389)     (2,448)
financing fees
Other financial items         179      (295)     (195)     (489)     (598)
Total other income/(expense), (612)    (1,165)   (668)     (2,783)   (4,478)
net
Income/(loss) before taxes    3,064    24,227    (1,463)   8,073     12,882
Income taxes -                (719)    (6,383)   1,720     (2,027)   (5,604)
benefit/(expense)
Net income                    2,345    17,844    257       6,046     7,278
Earnings per share (US$)
 Basic                    0.01     0.12      0.00      0.04      0.05
 Diluted                  0.01     0.12      0.00      0.04      0.05
Weighted average common
shares (000's)
 Basic                    155,891  156,046   155,098   155,875   154,951
 Diluted                  155,891  156,046   155,216   155,875   155,373





NORTHERN OFFSHORE, LTD. and SUBSIDIARIES
Consolidated Balance Sheets
(Unaudited)
                                                    September 30, December 31,
(Thousands of US Dollars)
                                                    2012          2011
Current assets
Cash and cash equivalents                           17,961        10,601
Restricted cash                                    9,450         7,604
Accounts receivable, net                            35,169        36,649
Prepaid expenses                                   3,658         2,083
Deferred mobilization costs                        2,559         246
Deferred insurance premium                          3,160         1,822
Assets held for sale                                35,932        -
Other current assets                                1,725         820
Total current assets                                109,614       59,825
Noncurrent assets
Property, plant & equipment, net                    201,000       253,740
Restricted cash, net of current portion            5,436         5,436
Noncurrent deposit/escrow account                   3,624         -
Deferred mobilization costs, net of current portion 1,902         -
Drydock costs, net of current portion               5,693         4,967
Other noncurrent assets                            2,061         224
Total noncurrent assets                             219,716       264,367
Total assets                                        329,330       324,192
Current liabilities
Accounts payable                                    16,072        27,435
Accrued expenses                                    6,331         7,289
Income taxes payable                                715           2,926
Other payable                                       4,450         -
Current debt                                        70,000        45,436
Deferred revenue                                    3,093         4,813
Total current liabilities                           100,661       87,899
Shareholders' equity
Share capital                                       40,190        39,546
Additional paid-in capital                          170,293       168,583
Accumulated other comprehensive loss                (6,691)       (6,691)
Retained earnings                                   24,877        34,855
Total shareholders' equity                          228,669       236,293
Total liabilities and shareholders' equity        329,330       324,192





NORTHERN OFFSHORE, LTD. and SUBSIDIARIES
Consolidated Statements of Cash Flows - (Unaudited)
                                                          Nine months ended

                                                          September 30,
(Thousands of US Dollars)                                 2012     2011
Cash flows from operating activities
Net income                                                6,046    7,278
Adjustments to reconcile net income to net cash

 provided by operating activities:
Stock-based compensation                                 3,003    1,918
Depreciation                                              26,704   25,026
Amortization of deferred financing fees                   389      2,448
Loss on disposal of rig assets                            83       917
Changes in operating assets and working capital
Accounts receivable                                       1,480    22,999
Prepaid expenses                (1,575)  (13)
Deferred mobilization costs                               (4,215)  (228)
Other current and noncurrent assets                       (4,790)  (907)
Accounts payable                                          (12,463) (3,436)
Other payable                                             4,450    -
Other accrued liabilities                                 (1,531)  (11,984)
Deferred revenue                                          (1,720)  (2,296)
Income taxes payable                                      (2,211)  3,311
Other, net                                                12       241
Net cash provided by operating activities                 13,662   45,274
Cash flows from investing activities
Capital expenditures                                      (8,891)  (22,691)
Changes in restricted cash                                (1,846)  (7,592)
Changes in noncurrent deposit/escrow account              (3,624)  -
Net cash used in investing activities                     (14,361) (30,283)
Cash flows from financing activities
Proceeds from drawdown of revolver facility               24,564   52,436
Principal payments on former revolver facility            -        (50,000)
Debt issuance costs                                       (405)    (911)
Payment for taxes on vested shares                        (649)    (208)
Dividends paid                                            (15,451) (9,313)
Net cash provided by/(used in) financing activities       8,059    (7,996)
Net changes in cash and cash equivalents                  7,360    6,995
Cash and cash equivalents at beginning of period          10,601   12,587
Cash and cash equivalents at end of period                17,961   19,582
Supplemental disclosure of cash flow information
Cash paid during the period for:
 Income taxes                                          1,759    1,848
 Interest                                              1,548    734
Significant non-cash transactions during the period for:
Accrued capital expenditures                              1,440    -
Accrued dividends                                         573      173



NORTHERN OFFSHORE, LTD. and SUBSIDIARIES
Consolidated Statements of Shareholders' Equity
(Unaudited)
                                               Accumulated
                    Common          Additional
(Thousands of US            Share              other         Retained
Dollars)            shares          paid-in                           Total
                            capital            comprehensive earnings
                    ('000)          capital
                                               loss
Balance at December 156,708 39,176  166,632    (6,691)       52,470   251,587
31, 2010
Net income          -       -       -          -             7,278    7,278
Issuance of         1,510   378     (378)      -             -        -
restricted stock
Payments for taxes  -       -       (208)      -             -        (208)
on vested shares
Stock-based         -       -       1,918      -             -        1,918
compensation
Common shares       -       -       -          -             (9,486)  (9,486)
dividends
Balance at          158,218 39,554  167,964    (6,691)       50,262   251,089
September 30, 2011
Balance at December 158,184 39,546  168,583    (6,691)       34,855   236,293
31, 2011
Net income          -       -       -          -             6,046    6,046
Issuance of         2,577   644     (644)      -             -        -
restricted stock
Payments for taxes  -       -       (649)      -             -        (649)
on vested shares
Stock-based         -       -       3,003      -             -        3,003
compensation
Common shares       -       -       -          -             (16,024) (16,024)
dividends
Balance at          160,761 40,190  170,293    (6,691)       24,877   228,669
September 30, 2012



NORTHERN OFFSHORE, LTD. and SUBSIDIARIES
Reconciliation of GAAP to Non-GAAP Financial Results
(Unaudited)
                                    Three Months Ended   Nine Months Ended
                                    September 30,        September 30,
(Thousands of US Dollars)  Q2 2012  2012       2011        2012      2011
Net income (GAAP)          2,345    17,844     257         6,046     7,278
Add Back:
Net interest expense       791      870        473         2,294     3,880
Income taxes               719      6,383      (1,720)     2,027     5,604
Depreciation               9,251    8,055      8,907       26,704    25,026
EBITDA (Non-GAAP)          13,106   33,152     7,917       37,071    41,788
EBITDA is defined as Net Income/(loss) before Interest, Taxes and Depreciation



NORTHERN OFFSHORE, LTD. and SUBSIDIARIES
Operating Statistics
(Unaudited)
                                      Three Months Ended Nine Months Ended
                                      September 30,      September 30,
                          Q2 2012     2012       2011      2012      2011
Jackups (3)
Average rig utilization  33%         67%        67%       46%       47%
Operating days           91          184        184       381       383
Average revenue per day  99,996      101,756    72,196    90,686    69,977
Drillship (1)
Average rig utilization  95%         98%        0%        82%       0%
Operating days            86          90         0         225       0
Average revenue per day  186,008     186,194    0         201,977   0
Semisubmersible (1)
Average rig utilization  80%         100%       67%       60%       89%
Operating days            73          92         62        165       243
Average revenue per day   138,877     179,229    167,638   161,376   209,157
Total Drilling Rigs (5)
Average rig utilization  55%         80%        54%       56%       46%
Operating days           250         366        246       771       626
Average revenue per day  140,937     141,994    96,251    138,292   127,586
Floating Production
Facility (1)
Days in period           91          92         92        274       273
Production days           91          92         92        274       273
Average bpd               15,137      18,250     20,963    16,437    24,320
Average tariff revenue    90,818      109,514    125,780   98,655    145,923
per day
Average other revenue per 1,393       1,387      5,520     1,391     3,616
day
Total average revenue per 92,211      110,901    131,300   100,046   149,539
day
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.



SOURCE Northern Offshore, Ltd.

Website: http://www.northernoffshorelimited.com
 
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