Nordic American Offshore Ltd ("NAO" or the "Company") owns and operates a fleet of 10 Platform Supply Vessels (PSV) each averaging approximately 4,000 DWT and with an average age of about 4 years. The vessels are primarily engaged in the North Sea offshore market between United Kingdom and Norway. The reactivation of two of our three laid-up vessels proved more costly than anticipated. There are no such costs anticipated for 3Q18.
We have during the last few weeks entered into term contracts for 4 of our 9 vessels ranging from 2 to 5 months, securing business for these vessels for the remainder of the present quarter and well into 4Q18. One of these term contracts are outside the North Sea and we are carefully considering expanding our geographical presence, on selected term business.
Results (accounting wise) for the second quarter 2018 came in slightly better compared with first quarter 2018. The Net Operating Loss was -$7.9m for 2Q18 as compared with -$8.3m for 1Q2018 (GAAP measure). The Adjusted Net Operating Result[1] for 2Q18 was -$3.5m as compared to -$4.1m (cash loss) for 1Q2018.
With the 4 term contracts concluded, and earnings achieved up until now, the revenue for 3Q18 is already close to that of the entire 2Q18. We still have 5 vessels available in the spot for the remainder of the quarter, that can add additional revenue.
The basic features of NAO are similar to the business model of the NYSE listed tanker company Nordic American Tankers Limited ("NAT"). NAT holds 16.1% of NAO's common shares. The Executive Chairman of NAO and his immediate family hold 13.4% of NAO's common shares. He is also the Chairman & CEO of NAT.
NAO aims to pursue a conservative financial policy. At the end of 2Q2018, the net debt[2] per vessel was $11.8 million.
We concentrate on keeping our vessel operating costs low, while always maintaining our strong commitment to safe operations. As we expand our fleet, we do not anticipate that our administrative costs will rise correspondingly.
We plan to have a telephone-conference later in August or September.
For further details on our financial position, please see the financial information reported below and this entire release.
Strategy Going Forward
The main elements of NAO's strategy are based on a homogenous fleet, low debt, low G&A costs and liquidity in the stock. NAO has about 35,000 shareholders, mostly in the USA. Under improved market conditions dividend is a priority.
NAO is committed to protecting its underlying earnings and strong balance sheet. We shall endeavor to safeguard and further strengthen NAO's position in a deliberate, predictable and transparent way.
We encourage investors interested in the offshore sector to consider buying shares in NAO.
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:
Gary J. Wolfe Seward & Kissel LLP New York, USA Tel: +1 212 574 1223
Bjørn Giæver, CFO Nordic American Offshore Ltd Tel: +1 888 755 8391 or +47 91 35 00 91
Herbjørn Hansson, Executive Chairman Nordic American Offshore Ltd. Tel: +1 866 805 9504 or +47 90 14 62 91
