Northern Offshore, Ltd. (Oslo Bors: NOF.OL) reported net income for the three months ended March 31, 2010 of US$23.2 million, or US$0.15 per diluted share, on revenues of US$68.1 million. This compares to net income of US$3.6 million, or US$0.02 per diluted share, for the first quarter of 2009, on revenues of US$56.6 million. Net income for the prior year quarter included a US$3.7 million charge to bad debt expense. Excluding that charge, first quarter 2009 net income would have been US$7.3 million, or US$0.05 per diluted share.
First Quarter Analysis
Revenues for the three months ended March 31, 2010 increased US$11.5 million compared to the same period of 2009. This increase was primarily due to revenue from the drillship Energy Searcher, which had been idle in the first quarter of the previous year, earnings from the company's management contract in the Caspian region, and tariff revenue from the floating production facility Northern Producer, which had not yet commenced production operations in the first quarter of 2009. Partially offsetting this increase was lower utilization of the jackups Energy Exerter and Energy Enhancer, which were idle during the 2010 first quarter, and lower dayrates for the jackup Energy Endeavour.
Drilling and production expenses for the first quarter of 2010 were US$6.3 million lower compared to the same period of 2009 due primarily to lower utilization of the jackup fleet in the 2010 quarter. This was partially offset by higher expenses associated with the utilization of the drillship Energy Searcher. Depreciation expense for the first quarter of 2010 was US$1.7 million lower compared to the first quarter of 2009 primarily due to the extension of the useful life of the floating production facility Northern Producer in the second quarter of 2009 and a change in the accounting estimate of the fleet's salvage value. Amortization of drilling contract intangibles declined US$2.0 million from the previous year quarter as the intangibles were fully amortized in 2009.
Energy Searcher Update
The repairs to the drillship Energy Searcher are currently underway and are on schedule. The company currently estimates repair costs to be approximately US$4.0 million. Based on current work progress, the rig is expected to be back on location in Vietnam around July 1, 2010.