Houston based drilling and floating production firm Northern Offshore is considering spinning off its sole floating production platform (FPF) into a new business (pictured).
The firm operates the semisubmersible Northern Producer FPF, used by EnQuest on the Dons fields in the UK North Sea, alongside four drilling units operating in South Asia, the North Sea, and West Africa.
Northern Offshore also has two high spec LeTourneau Super 116E jackups under construction with options for two more. In April, first steel was cut on the first new jackup, the Energy Engager.
Announcing its Q1 results, the firm said tariff revenues from the Northern Producer averaged US$96,000/d and were expected to remain stable and production to decline from the unit. But, it says operator EnQuest is planning an addition well on the DON SW field later in the year. EnQuest is also producing a field development plan (FDP) for the Don NE field.
“Should the FDP result in additional development drilling in Don NE, earnings from the Northern Producer could increase substantially,” says Gary W. Casswell, Northern Offshore’s president and CEO. “As such, our board of directors recently requested that management investigate the possibility of spinning off the Northern Producer and its life-of-field contract. The board believes that a spinoff of the Northern Producer could unlock value for the shareholders and allow the remaining company to focus exclusively on growing its contract drilling business.”
He said the intent would be to establish a publicly traded company to own and operate the Northern Producer. Initially the plan is to consider distributing approximately 20% of this new company to the shareholders of Northern Offshore. This company would also consider the acquisition of similar assets with long-dated contracts.
Northern Offshore’s net income for Q1 were $10 million. Revenues in the period were $8.0 million higher than the same period in 2013, mostly due to higher operating efficiencies of the semisubmersible Energy Driller, and higher day rates for the jackups Energy Endeavour and Energy Enhancer.
Drilling and production expenses for Q1 lower than last year due to a decrease in operating expenses for the drillship Energy Searcher. This was partially offsetting by an increase in operating expenses for the jackup Energy Endeavour, mostly due to higher labor costs.
Northern Offshore was created in July 2000, and reorganized into its current form in June 2005 under a new board. The company listed on the Oslo Stock Exchange in September 2007.
The Northern Producer
The Northern Producer is a semisubmersible floating production platform (FPF) of Aker H-3 design. It was originally built as a semisubmersible drilling rig in 1977, at the Trosvik Verft shipyard in Norway. From 1989-1991, the Northern Producer was converted into an FPF for the Emerald field and subsequently adapted to the Galley field in the UK sector in 1996 and 1997. It is able to handle 55,000 b/d oil production, 60Mcf gas, and water injection of 45,000 b/d.
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