Link to the complete 4th Quarter 2018
report:http://hugin.info/159489/R/2237201/881216.pdf
Hamilton, Bermuda, March 4, 2018.
Nordic American Offshore Ltd (NYSE: NAO) ("NAO"
or the "Company") today reported its results for the three months
and year ended December 31, 2018.
Share and per share results included herein have
been retroactively adjusted to reflect the one for ten reverse
stock split of the Company's common shares, which took effect on
January 28, 2019.
Results for the three months ended December
31, 2018 and 2017
For the three months ended December 31, 2018,
the Company's net loss was $169.3 million, or $26.23 per basic and
diluted loss per share, which included a non-cash impairment charge
of $160.1 million, or $24.80 per basic and diluted. Excluding the
impairment charge, the net loss for the fourth quarter of 2018 was
$9.2 million, or $1.43 per basic and diluted loss per share.
For the three months ended December 31, 2017,
the Company's net loss was $8.4 million or $1.35 per basic and
diluted loss per share.
Results for the year ended December 31, 2018
and 2017
For the year ended December 31, 2018, the
Company's net loss was $197.3 million or $31.50 per basic weighted
average and diluted loss per share, which included a non-cash
impairment charge of $160.1 million or $25.56 per basic weighted
average and diluted share. Excluding the impairment charge, the net
loss for the year ended December 31, 2018 was $37.2 million or
$5.94 per basic weighted average and diluted loss per share.
For the year ended December 31, 2017, the
Company's net loss was $29.3 million or $5.33 per basic and diluted
loss per share.
Emanuele Lauro, Chairman and Chief Executive
Officer, commented:
"We are making some difficult but necessary
adjustments at NAO to position the Company for the future.
These include an impairment and the continued negotiations with our
lenders for a sound and sustainable credit agreement. At the same
time, we are encouraged that activity and daily rates for PSV's in
the North Sea have increased markedly in the past month, indicating
improved fundamentals and boding well for the remainder of
2019".
Market Update
Utilization in the fourth quarter of 2018 was
improving compared to the rest of 2018, as a result of higher
market activity with more time charters concluded. The average
utilization of our nine operational vessels during the fourth
quarter of 2018 was 70%, which was the highest quarterly
utilization during 2018 and much higher than the fourth quarter of
2017, when we had three vessels laid-up and the corresponding
utilization for the seven vessels trading was 53%.
During the fourth quarter of 2018, we secured
long-term charters for two vessels for one and two-year firm
durations, and so far in 2019, we are seeing a steady stream of
tenders. Although rates are still below levels that are required to
be sustainable, rates are generally on the rise compared to last
year.
In January 2019, one of our vessels was
contracted for two months, and three vessels were contracted for
three months, which either commenced at the end of February or will
commence at the beginning of March. The new contracts have reduced
our spot exposure significantly. Further, we put two vessels into
warm lay-up to lower our costs during the slower winter months. One
of these vessels has just been fixed for a one-year charter
commencing in 2Q19, and the other warm-stacked unit could be
reactivated in approximately two weeks.
On the demand side, we see increased oil
exploration and production spending globally, which bodes well for
the coming years. Although the North Sea basin still has some 50
PSVs in lay-up. The cost of reactivating these units will demand
substantially higher earnings in the spot and term market than what
the market is currently yielding. The prolonged downturn has on the
positive side led to muted ordering of new vessels, extending the
attractiveness of our modern fleet for the coming years.
Private Placement and Change in
Management
On December 12, 2018 the Company announced a
private placement in which the Scorpio Offshore Investment Limited
("Scorpio") purchased 1.2 million shares at $4.20 per share for a
total of $5.0 million and has emerged as a new significant
shareholder. The $5 million in new cash equity helped to alleviate
the Company's liquidity situation.
Effective upon closing of the private placement
with Scorpio, Mr. Emanuele Lauro was appointed Chairman and Chief
Executive Officer of the Company. In addition, Mr. Robert
Bugbee was appointed to the Company's board and to the office of
President, Mr. Cameron Mackey was appointed Chief Operating
Officer, and Mr. Filippo Lauro was appointed Vice
President.
January 2019 Reverse Stock Split
On January 28, 2019, the Company effected a
one-for-ten reverse stock split. Pursuant to this reverse
stock split, the common shares outstanding were reduced from
73,741,595 shares to 7,374,034 shares (which reflects adjustments
for fractional share settlements). The par value was adjusted to
$0.10 per shares as a result of the reverse stock split. On March
1, 2019, the Compay received confirmation from the NYSE that it
regained compliance with the NYSE's continued listing standards as
a result of the increased market price for the Company's common
shares following the reverse stock split. All share and per share
information contained in this press release has been retroactively
adjusted to reflect the reverse stock split.
Discussions with lenders
NAO is in a dialogue with its lenders regarding
covenant waivers and a new long-term capital structure for the
company including new long-term financing. At the time of this
report, constructive discussions are ongoing, but more time is
needed to conclude. Waivers have been extended until March 11, 2019
to accommodate this. As the result of covenant breaches under the
$150,000,000 Revolving Credit Facility dated March 16, 2015 (the
"Credit Facility"), the Company has classified the outstanding
balance of the Credit Facility as a current liability on its
balance sheet.
Impairment of vessels
The Company has experienced another difficult
financial year, with negative results and a market below our
expectations. As a result of the lower for longer offshore supply
vessel market, the Company recorded an impairment charge of $160.1
million as of December 31, 2018. All of the Company's vessels
were written down to their current estimated fair values.
About the Company
NAO owns and operates a fleet of 10 Platform
Supply Vessels ("PSV"), each averaging approximately 4,000 DWT and
with an average age of about 5 years. During the fourth quarter of
2018, nine of the ten vessels were trading, while one vessel was
laid-up.
For further details on our financial position,
please see the financial information reported below and this entire
release.
Link to the complete 4th Quarter 2018
report:http://hugin.info/159489/R/2237201/881216.pdf
CAUTIONARY STATEMENT REGARDING
FORWARD-LOOKING STATEMENTS
Matters discussed in this press release may
constitute forward-looking statements. The Private Securities
Litigation Reform Act of 1995 provides safe harbor protections for
forward-looking statements in order to encourage companies to
provide prospective information about their business.
Forward-looking statements include statements concerning plans,
objectives, goals, strategies, future events or performance, and
underlying assumptions and other statements, which are other than
statements of historical facts.
The Company desires to take advantage of the
safe harbor provisions of the Private Securities Litigation Reform
Act of 1995 and is including this cautionary statement in
connection with this safe harbor legislation. The words "believe,"
"anticipate," "intend," "estimate," "forecast," "project," "plan,"
"potential," "may," "should," "expect," "pending" and similar
expressions identify forward-looking statements.
The forward-looking statements in this press
release are based upon various assumptions, many of which are
based, in turn, upon further assumptions, including without
limitation, our management's examination of historical operating
trends, data contained in our records and other data available from
third parties. Although we believe that these assumptions
were reasonable when made, because these assumptions are inherently
subject to significant uncertainties and contingencies which are
difficult or impossible to predict and are beyond our control, we
cannot assure you that we will achieve or accomplish these
expectations, beliefs or projections. We undertake no
obligation to update any forward-looking statement, whether as a
result of new information, future events or otherwise. Important
factors that, in our view, could cause actual results to differ
materially from those discussed in the forward-looking statements
include the strength of world economies and currencies, general
market conditions, including fluctuations in charter rates and
vessel values, changes in demand in the PSV market, as a result of
changes in the general market conditions of the oil and natural gas
industry which influence charter hire rates and vessel values,
demand in platform supply vessels, our operating expenses,
including bunker prices, dry docking and insurance
costs, governmental rules and regulations or actions taken by
regulatory authorities as well as potential liability from pending
or future litigation, general domestic and international political
conditions, potential disruption of shipping routes due to
accidents or political events, the availability of financing and
refinancing, vessel breakdowns and instances of off-hire and other
important factors described from time to time in the reports filed
by the Company with the Securities and Exchange Commission.
Contacts:
Nordic
American Offshore Ltd.+ 377 9798 5717 (Monaco)+ 1 646 432
3315 (New York)Web-site: www.nao.bm |
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