Northern Ocean (NOL) Q2 2024 earnings summary

Executive summary

• Deepsea Mira operated under contract with TotalEnergies, relocating from Namibia to Congo; contract extended post-quarter for one additional well with an option for another.

• Deepsea Bollsta completed its Shell contract in Namibia, then entered SPS; new contract in Namibia to start Q4 2024 for one well.

• Raised $60 million equity and refinanced debt, reducing bank debt by $90 million and extending maturities; Sterna converted $15 million debt into 30 million shares.

• Net loss from continuing operations before taxes was $6.3 million, improved from $9.6 million loss in the previous quarter; loss per share $0.03 vs. $0.05 prior quarter.

• Total revenue backlog estimated at $85 million; fleet technical utilization for H1 2024 was 97.6%.

Financial highlights

• Q2 2024 operating revenue was $73.3 million, down from $85.4 million sequentially, mainly due to reduced contract revenue as Deepsea Bollsta completed its Shell contract mid-June.

• Total operating expenses were $66.2 million, down from $82.6 million, mainly due to lower amortization of deferred costs.

• Interest expense remained steady at $12.5 million; foreign exchange loss of $0.5 million vs. $0.8 million gain prior quarter.

• Net loss from continuing operations was $6.3 million; basic and diluted loss per share $0.03.

• Cash and cash equivalents at June 30, 2024, were $75.9 million; total assets $1,056.1 million; total equity $495.6 million.

Outlook and guidance

• Offshore drilling market showed strengthening with increased tender activity in West Africa and other regions; high floater utilization driven by Brazil, US, and West Africa.

• Several short- to medium-term opportunities expected in Namibia and West Africa, with long-term opportunities likely to take time to materialize.

• Rising drillship rates may make high-spec semi-subs attractive even in benign regions.