OREANDA-NEWS. Nordic American Offshore Ltd. (“NAO” or “the Company”) became stock listed on the New York Stock Exchange (NYSE) on June 12, 2014.  The operating cash flow1 for NAO was -$2.5m in 2Q2016. NAO is performing well compared with several other companies in the industry. NAO should be differentiated from other companies owning Platform Supply Vessels (PSVs).

We see opportunities to grow the Company. NAO has ten high-quality PSVs built in Norway in the period 2012-2016. Eight of these are now in operation. The NAO Horizon and NAO Galaxy were taken over on April 19, 2016 and June 16, 2016, respectively. A specific feature of our vessels is the very low fuel consumption, resulting in low emissions and in attractive transportation economics. The vessels are also particularly well suited to North Sea operations, where weather conditions can be severe.

The Board has declared a dividend of $0.05 per share for 2Q2016 to shareholders on record as of August 17, 2016. The payment of the dividend is expected to take place about September 6, 2016.  Since its original establishment in late 2013, NAO has paid dividends for 10 consecutive quarters, totalling $2.54 per share, including the dividend to be paid about September 6, 2016.

The North Sea is currently the trading area for the Company’s vessels.

Key points to consider:

  • Operating cash flow per share has been: -$0.12 for 2Q2016, -$0.10 for 1Q2016 and $0.14 for 2Q2015.
     
  • Earnings per share (EPS) has been: -$0.36 for 2Q2016, -$0.30 for 1Q2016 and -$0.02 for 2Q2015.  EPS does not take into account financial risk.
     
  • NAO had at the end of 2Q2016 total net debt of $122m for its ten vessel fleet, or about $12.2m per ship. $132m of its $150m credit facility was drawn. The credit facility matures in March 2020.
     
  • NAO maintains industry leading cash breakeven levels of about $11,000 per day per vessel, including financing costs and G&A costs.

Financial Information

The Board has declared a cash dividend of $0.05 per share for 2Q2016 to shareholders of record as of August 17, 2016. The payment date is on or about September 6, 2016.

The Company's operating cash flow was -$2.5m in 2Q2016. In 1Q2016 and 2Q2015 operating cash flow was -$2.2m and $3.4m, respectively.

Net Income was -$7.4m in 2Q2016. In 1Q2016 and 2Q2015 Net Income was -$6.3m and -$0.4m, respectively.

In our 2015 Annual Report on Form-20F we gave detailed information on the cancellation of a contract for one of our ships which resulted in a cash payment to us of $3.9m in mid-2015.   On a quarterly basis this amount is being booked as income up to April 2018, or about $0.3m per quarter depending upon currency movements of GBP/USD.

On May 21, 2015, NAO announced a share repurchase program allowing NAO to buy back up to 2.5 million shares in the open market over the next two years. As of this report NAO has repurchased 1,145,873 shares at an aggregate cost of about $6.9m at about $6.02 per share. In addition, NAO purchased 1,571,749 of its own shares in a private transaction on February 17, 2016 at a price of $4.50 per share. NAO currently has a total of 20,713,748 shares outstanding. Nordic American Tankers Limited is the largest shareholder of NAO, owning about 29% of the shares in NAO.

As a matter of policy, the Company always focuses on maintaining a strong balance sheet with low net debt. At the end of 2Q2016, net debt per NAO vessel in operation was $12.2m. NAO has in place until early 2020 a non-amortizing credit facility of $150m, of which $132m has been drawn as of June 30, 2016. Several service companies in our sector are in a difficult financial position.  Going forward, NAO sees commercial and strategic opportunities for expansion.

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.

The Fleet

Our fleet is comprised of ten high-quality PSVs. All our vessels operate in the UK and in the Norwegian sectors of the North Sea. The vessels may operate in either sector or elsewhere. The significant fuel efficiency, and corresponding low emissions of our ships are attractive features.

The Company’s objective is to ensure spot or term employment for the fleet, including for the newbuildings. The specifications of the Company’s vessels are by and large the same.