Northern Offshore Reports First Quarter 2009 Financial Results

HOUSTON, May 27 /PRNewswire-FirstCall/ -- Northern Offshore, Ltd. (Oslo Bors:
NOF.OL) today reported net income for the three months ended March 31, 2009 of
US$3.6 million, or US$0.02 per diluted share, on revenue of US$56.6 million.
Net income for the first quarter of 2009 included a US$3.7 million charge to
bad debt expense. Excluding that charge, first quarter 2009 net income would
have been US$7.3 million, or US$0.05 per diluted share. This compares to net
income of US$9.5 million, or US$0.06 per diluted share, for the first quarter
of 2008 on revenue of US$52.6 million.

(Logo: http://www.newscom.com/cgi-bin/prnh/20080415/LATU540LOGO)

Northern Offshore President and CEO, Marion Woolie, commented, "Given the
current downturn, a focus on cost control and rig utilization are key elements
of our strategy. We have reduced costs across our fleet and in our shorebase
offices and today have every rig on contract."

First Quarter Analysis

Revenue for the three months ended March 31, 2009 increased US$3.9 million
compared to the same period of 2008. This increase was primarily due to higher
revenue from the semisubmersible Energy Driller, which was in the shipyard
undergoing upgrades during the first quarter of 2008, partially offset by idle
time on the drillship Energy Searcher and jackup Energy Enhancer during the
first quarter of 2009. The Energy Searcher remained idle during the entire
quarter, while the Energy Enhancer was idle 38 days between contracts.

Drilling and production expenses for the first quarter of 2009 were US$2.3
million lower compared to the same period of 2008 due primarily to cost
reductions associated with the operation of the jackups Energy Exerter and
Energy Enhancer following delivery to Northern Offshore. Depreciation was
US$1.2 million higher in the 2009 quarter primarily due to the impact of
upgrades to the Energy Driller. During the first quarter of 2009, the economic
downturn continued to contribute to customer disputes and impact accounts
receivable collection. As a result, the company recorded a bad debt expense of
US$3.7 million during the period.

Amortization of drilling contract intangibles decreased US$7.9 million in the
current year quarter when compared to the same period of 2008 due to the
completion of the Energy Exerter and Energy Enhancer contracts with Maersk
Olie og Gas AS during 2008. Additionally, interest expense decreased US$3.2
million compared to the prior year quarter primarily due to the reduction of
the principal balance under the Secured Term Loan Facility and lower interest
rates.

First Quarter 2009 Highlights

-- The jackup Energy Exerter commenced a contract with Aegean Energy
S.A.,
for an estimated 120 day program in March 2009.

-- The jackup Energy Enhancer was awarded and commenced a 20-day contract
with Ithaca Energy (UK) Limited in March 2009.

Conference Call Information
Northern Offshore, Ltd. will conduct a teleconference with security analysts
at 9 a.m. CDT, Thursday, May 28, 2009 to discuss the company's quarterly
financial results. Individuals wishing to participate in the teleconference
should call 866-783-2142 (in the U.S.) or 857-350-1601 (outside the U.S.)
about five to ten minutes prior to the scheduled start time and refer to
participant password 13647017.

The conference call also will be accessible by logging on to the company's
website at http://www.northernoffshorelimited.com. After logging on, go to
"Investor Relations" and select the conference call webcast.

About the Company

Northern Offshore, Ltd. is a Bermuda holding company which operates offshore
oil and gas production and drilling vessels deployed around the world. The
company's fleet consists of one floating production facility and five drilling
units (a drillship, a semisubmersible and three jackup drilling rigs). The
Northern Offshore fleet operates in various markets including the North Sea,
the Indian Ocean, offshore Russia, the Mediterranean Sea and Southeast Asia.
More information on Northern Offshore, Ltd. may be found by visiting the
company's website at http://www.northernoffshorelimited.com.

Contact

Brian Hefty
713-739-7686
brian.hefty@northernoffshoreltd.com

NORTHERN OFFSHORE, LTD. and SUBSIDIARIES
Consolidated Statements of Income
(Unaudited)

Three Months Ended
March 31,
------------------
(Thousands of US Dollars, except per
share amounts) Q4 2008 2009 2008

Revenue 73,510 56,553 52,628
Operating expenses:
Drilling and production expenses (35,995) (28,993) (31,302)
Depreciation (16,007) (15,773) (14,589)
General & administrative expenses (720) (1,731) (889)
Bad debt expense (2,170) (3,664) (296)
------------------------------------------------------------------------
Total operating expenses (54,892) (50,161) (47,076)
------------------------------------------------------------------------
Operating income 18,618 6,392 5,552
------------------------------------------------------------------------
Interest income 881 90 500
Interest expense (4,836) (3,250) (6,407)
Amortization of drilling contract
intangibles 2,018 2,018 9,923
Amortization of deferred financing fees (397) (397) (397)
Other financial items 230 (764) 260
------------------------------------------------------------------------
Total other income/(expense), net (2,104) (2,303) 3,879
------------------------------------------------------------------------
Income before taxes 16,514 4,089 9,431
------------------------------------------------------------------------
Income taxes - (expense)/benefit 45 (469) 87
------------------------------------------------------------------------
Net income 16,559 3,620 9,518
------------------------------------------------------------------------
Earnings per share (US$)
Basic 0.11 0.02 0.06
Diluted 0.11 0.02 0.06
Weighted average common shares (000's)
Basic 153,100 153,100 153,100
Diluted 153,100 153,100 153,100

Note: Certain amounts from prior periods have been reclassified to conform
to the current period presentation. The primary reclassifications relate
to: 1) some shorebase expenses are now included in drilling and production
expenses rather than general and administrative, 2) reimbursable revenue
and expenses are now reported separately rather than net and 3) bad debt
expense is reported separately rather than with drilling and production
expenses.

NORTHERN OFFSHORE, LTD. and SUBSIDIARIES
Consolidated Balance Sheets

March 31, December 31,
2009 2008
(Thousands of US Dollars) (Unaudited) (Audited)
Current assets
Cash and cash equivalents 44,058 58,759
Restricted cash 8,087 8,077
Account receivables, net 62,020 48,797
Prepaid expenses and other current assets 9,072 17,202
Deferred financing fees 1,540 1,586
Deferred mobilization costs 3,670 566
-----------------------------------------------------------------------
Total current assets 128,447 134,987
-----------------------------------------------------------------------

Non-current assets
Property, plant & equipment, net 533,346 545,731
Restricted cash, net of current
portion 6,438 6,438
Deferred mobilization cost, net of
current portion 684 847
Deferred income tax assets - 645
Deferred financing fees, net of
current portion 111 461
-----------------------------------------------------------------------
Total non-current Assets 540,579 554,122
-----------------------------------------------------------------------
Total assets 669,026 689,109
-----------------------------------------------------------------------
Current liabilities
Accounts payable 15,921 19,975
Accrued expenses 19,740 5,215
Income tax payable 6,760 8,969
Current portion of debt 165,000 90,000
Deferred revenue 26,019 24,284
Current portion of drilling
contract intangibles 3,869 5,887
-----------------------------------------------------------------------
Total current liabilities 237,309 154,330
-----------------------------------------------------------------------
Non-current liabilities
Long-term debt, net of current portion 100,000 197,500
Deferred revenue, net of current portion 833 997
Other long-term liabilities 11,900 21,290
-----------------------------------------------------------------------
Total non-current liabilities 112,733 219,787
-----------------------------------------------------------------------
Total liabilities 350,042 374,117
-----------------------------------------------------------------------
Shareholders' equity
Share capital 38,754 38,281
Additional paid-in capital 164,759 164,860
Accumulated other comprehensive loss (6,691) (6,691)
Retained earnings 122,162 118,542
-----------------------------------------------------------------------
Total shareholders' equity 318,984 314,992
-----------------------------------------------------------------------
Total liabilities and shareholders' equity 669,026 689,109
-----------------------------------------------------------------------

Accounts receivable related accounts which were previously included in
other current assets are currently reported together with trade
receivables under Accounts Receivable, net. In addition, accounts payable
related accounts previously classified as accrued expenses are now
reported together with trade payables as Accounts Payable.

NORTHERN OFFSHORE, LTD. and SUBSIDIARIES
Consolidated Statement of Cash Flows - (Unaudited)

Three Months Ended
-------------------
March 31, March 31,
(Thousands of US Dollars) 2009 2008
---- ----
Cash flows from operating activities
Net income 3,620 9,518
Adjustments to reconcile net income to net cash
provided by operating activities:
Allowance for doubtful accounts 4,703 400
Stock-based compensation 372 371
Depreciation 15,773 14,589
Amortization of drilling contract intangibles (2,018) (9,923)
Amortization of deferred financing fees 397 397
Deferred Income taxes (2,417) (675)
Interest, net (150) (211)
------------------------------------------------------------------------
Operating cash flow before working capital changes 20,280 14,466
------------------------------------------------------------------------

Changes in operating assets and working capital:
Increase in accounts receivable (17,013) (21,114)
Decrease in prepaid expenses 5,013 5,645
Increase in deferred tax assets (73) (398)
Increase (decrease) in accounts payable (4,054) 2,712
Increase (decrease) in other accrued liabilities 14,665 (1,678)
Increase in deferred revenue 1,571 5,387
Decrease in other long term liabilities (9,390) -
Other, net 162 (530)
------------------------------------------------------------------------
Net cash provided by operating activities 11,161 4,490
------------------------------------------------------------------------

Cash flows from investing activities
Capital expenditures (3,388) (12,182)
------------------------------------------------------------------------
Net cash used in investing activities (3,388) (12,182)
------------------------------------------------------------------------

Cash flows from financing activities
Proceeds from commercial paper - 24,392
Principal repayment of bank term loan (22,500) (22,500)
Release of restricted cash - 20,943
------------------------------------------------------------------------
Net cash provided by (used in) financing activities (22,500) 22,835
------------------------------------------------------------------------

Net increase/(decrease) in cash and cash
equivalents (14,727) 15,143
Cash and cash equivalents at beginning of period 58,759 21,690
Effects of exchange rate changes on cash and cash
equivalents 26 52
------ ------
Cash and cash equivalents at end of period 44,058 36,885
------ ------

Supplemental disclosure of cash flow information:
Cash paid during the period for:
Income taxes 2,808 990
Interest 2,722 6,222
------ ------

Note: Certain categories from prior periods are reported separately on the
cash flow statement to conform with current year presentation. Such
categories include prepaid expenses, other accrued liabilities and other
long term liabilities.

NORTHERN OFFSHORE, LTD. and SUBSIDIARIES
Consolidated Statements of Shareholders' Equity
(Unaudited)

Accumulated
Common Additional other
(Thousands of shares Share paid-in comprehensive Retained
US Dollars) ('000) capital capital gain/(loss) earnings Total

Balance at
January 1,
2008 153,100 38,275 163,174 (6,068) 54,462 249,843
---------------------------------------------------------

Net income 64,080 64,080
Issuance of
restricted
stock 24 6 (6) -
Stock-based
compensation 1,692 1,692
Other
comprehensive
loss (623) (623)
---------------------------------------------------------
Total
comprehensive
income - - 1,692 (623) 64,080 65,149
---------------------------------------------------------

Balance at
December 31,
2008 153,124 38,281 164,860 (6,691) 118,542 314,992
---------------------------------------------------------

Net income 3,620 3,620
Issuance of
restricted
stock 1,892 473 (473) -
Stock-based
compensation 372 372
---------------------------------------------------------
Total
comprehensive
income - - 372 - 3,620 3,992
---------------------------------------------------------

Balance at
March 31,
2009 155,016 38,754 164,759 (6,691) 122,162 318,984
---------------------------------------------------------

NORTHERN OFFSHORE, LTD. and SUBSIDIARIES
Reconciliation of GAAP to Non-GAAP Financial Results
(Unaudited)

Three Months
Ended
March 31,
------------
(Thousands of US Dollars) Q4 2008 2009 2008

Net Income (GAAP) 16,559 3,620 9,518

Add Back:
Net interest expense 4,352 3,557 6,304
Income taxes (45) 470 (87)
Depreciation 16,007 15,773 14,589
Amortization (2,018) (2,018) (9,923)

---------------------------------------------------------------
EBITDA (Non-GAAP) 34,855 21,402 20,401
---------------------------------------------------------------

EBITDA is defined as Net Income before Interest, Taxes, Depreciation and
Amortization.

NORTHERN OFFSHORE, LTD. and SUBSIDIARIES
Operating Statistics
(Unaudited)

Three Months
Ended
March 31,
---------------
Q4 2008 2009 2008

Jackups (3)

Average rig utilization 100% 86% 100%
Operating days 276 233 273
Average dayrate 199,565 157,184 141,825

Drillship (1)

Average rig utilization 0% 0% 94%
Operating days 0 0 86
Average dayrate 0 0 156,459

Semisubmersible (1)

Average rig utilization 100% 100% 0%
Operating days 92 90 0
Average dayrate 195,411 210,276 0

Total

Average rig utilization 80% 72% 79%
Operating days 368 323 359
Average dayrate 198,526 171,972 145,325

Note: Operating days represent actual days under contract.

SOURCE Northern Offshore, Ltd.

Brian Hefty of Northern Offshore, Ltd., +1-713-739-7686,
brian.hefty@northernoffshoreltd.com