Press release from Nordic American Offshore Ltd. (NYSE:NAO) - Letter to Shareholders from the Chairman. Increased Ownership. Dividend to Continue.
(Thomson Reuters ONE) -
Hamilton, Bermuda, March 17, 2015
Dear Shareholder,
I would like to share my thoughts with you as we approach Nordic American
Offshore's first anniversary of listing on the New York Stock Exchange (NYSE)
in June 2014. At that time, we entered the market for Platform Supply Vessels
(PSVs) against a background of high, stable oil prices and record investment
levels in the offshore segment.
I believe it is justified to keep an optimistic outlook for the future. Nine
months existence for a start-up company is a short period in the life of a
company that owns a young fleet.
A company owned and controlled by my son Alexander and I bought 50,000 NAO
shares yesterday at about USD 7.83 per share, in addition to the stock ownership
we have direct and indirect in NAO.
Currently the market for our vessels is turbulent - the decline in oil price has
led to reductions in exploration activity in the North Sea, in turn lowering the
number of working oil rigs and the demand for PSVs.
Five vessels in our eight vessel fleet are currently employed on contracts, up
from three last quarter. Three of our vessels are operating in the spot market.
At the time of this letter to you, we enter a period of greater visibility on
earnings and security in the current challenging environment. We have achieved
in excess of 80% utilization which is a sound performance in the current market
conditions. Rates for the spot ships have been reduced this year as a
consequence of the low oil prices.
For NAO as a start-up company, employing three vessels in the spot market serves
an important purpose in terms of marketing our modern, fuel efficient and
homogeneous vessels to the many customers operating in the North Sea and
elsewhere. Demonstrating the performance of our vessels and operations for
shorter jobs is important as we seek to be the first choice provider of PSVs as
our fleet grows. We recently contracted two vessels to Statoil to assist on the
prestigious Polarled project, securing employment for those vessels for several
months going forward.
When observing PSV rates, we must consider two important factors. First,
utilization and rates in our market are always affected by the winter season
when non-essential work tends to be postponed until weather conditions are more
favorable.
Second, our vessels operate in local currency, Norwegian Kroner in the Norwegian
sector and British Pounds in the British sector. This also applies to our
expenses. The weaker reported rates are impacted by the appreciation of the US
dollar.
Conversely, our two vessels delivered from the Norwegian yard of Ulstein earlier
this year were ordered from the yard in Norwegian Kroner. The realized currency
gain on these two vessels was about USD 8 mill per vessels, actually reducing
the USD price from about USD 44 mill to about USD 36 mill. It is indeed
comforting to see that an economic advantage of about USD 32 mill may be
achieved - spread across four vessels delivered in 2015.
The two additional vessels will be delivered to us later this year. We expect to
capture similar reductions in cost on those vessels, given the Norwegian Kroner/
USD relationship to be at the same level as now. Our positioning by ordering the
vessels in NOK and reaping the benefits of a stronger dollar, has indeed given
our shareholders an extra economic benefit.
The low oil price continues to put pressure on our industry. The fundamentals in
the oil market suggest an improved balance between supply and demand for crude
oil in the second half of this year. When Brent crude prices return to the $60 -
$80 range per barrel we expect to see renewed activity in our market, and
improved demand for our vessels.
The geopolitical situation involving Russia has also affected our market.
Vessels owned by other companies that were due to work in the Arctic regions had
their charters cancelled. Those vessels were drawn from the North Sea and their
return to this market has contributed to an oversupply of vessels. Should the
political situation change and sanctions against Russia be removed, this should
affect our market positively.
In our 2014 start-up year we declared total dividends of $1.80 per share. Going
forward we will review the dividend on a quarterly basis in the same way as
Nordic American Tankers (NAT) has done in the past. NAO basically employs the
same strategy as NAT. A strong balance sheet and low cost breakeven are the key
elements of our robust long-term performance. We expect to continue to pay a
dividend going forward - although, for the time being, at a lower level than for
the previous quarters when the dividend was 0.45 USD per share.
Our strategy is designed to remain robust in strong and weak markets. With that
said we are positive about the oil price in coming years. We expect to reap the
benefits of an improved oil price which will be a stimulus to the activities of
the PSV market.
With a low cash break even and an improved market, we expect that a higher oil
price should form the basis for improved commercial results for Nordic American
Offshore.
With my best personal regards,
Herbjørn Hansson
Executive Chairman
Nordic American Offshore Ltd.
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:
Jacob Ellefsen, Manager, IR and Research
Nordic American Offshore Ltd.
Tel: +33 678 631 959 or + 377 93 25 89 07
Tor-Øyvind Bjørkli, Chief Executive Officer
Nordic American Offshore Ltd.
Tel: +47 21 99 24 81 or +47 90 62 70 14
Herbjørn Hansson, Executive Chairman
Nordic American Offshore Ltd.
Tel: +1 866 805 9504 or + 47 901 46 291
Gary J.Wolfe
Seward & Kissel LLP, New York, USA
Tel: +1 212 574 1223
Web-site: www.nao.bm
Press release PDF:
http://hugin.info/159489/R/1904135/677338.pdf
This announcement is distributed by GlobeNewswire on behalf of
GlobeNewswire clients. The owner of this announcement warrants that:
(i) the releases contained herein are protected by copyright and
other applicable laws; and
(ii) they are solely responsible for the content, accuracy and
originality of the information contained therein.
Source: Nordic American Offshore Ltd via GlobeNewswire
[HUG#1904135]
Datum: 17.03.2015 - 12:32 Uhr
Sprache: Deutsch
News-ID 379136
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