NAO Logs a Big Loss

Nordic American Offshore Ltd (NYSE: NAO) reported for the three months ended December 31, 2018, the company's net loss was $169.3 million, or $26.23 per basic and diluted loss per share, which included a non-cash impairment charge of $160.1 million, or $24.80 per basic and diluted. 

Excluding the impairment charge, the net loss for the fourth quarter of 2018 was $9.2 million, or $1.43 per basic and diluted loss per share. For the year ended December 31, 2018, the company's net loss was $197.3 million or $31.50 per basic weighted average and diluted loss per share, which included a non-cash impairment charge of $160.1 million. Excluding the impairment charge, the net loss for the year ended December 31, 2018 was $37.2 million comparted to a net loss of  $29.3 million for the year ended December 2017.

"We are making some difficult but necessary adjustments at NAO to position the company for the future,” said Emanuele Lauro, Chairman and Chief Executive Officer. “These include an impairment and the continued negotiations with our lenders for a sound and sustainable credit agreement. At the same time, we are encouraged that activity and daily rates for PSV's in the North Sea have increased markedly in the past month, indicating improved fundamentals and boding well for the remainder of 2019".

The average utilization of the company’s nine operational vessels during the fourth quarter of  2018 was 70%, which was the highest quarterly utilization during 2018 and much higher than the fourth quarter of 2017, when we had three vessels laid-up and the corresponding utilization for the seven vessels trading was 53%.

During the fourth quarter of 2018, NAO secured long-term charters for two vessels for one and two-year firm durations, and so far in 2019, NAO is seeing a steady stream of tenders. It said that rates are still below levels that are required to be sustainable.

On December 12, 2018 the company announced a private placement in which the Scorpio Offshore Investment Limited (Scorpio) purchased 1.2 million shares at $4.20 per share for a total of $5 million and has emerged as a new significant shareholder. The $5 million in new cash equity helped to alleviate the company's liquidity situation. Effective upon closing of the private placement with Scorpio, Emanuele Lauro was appointed Chairman and Chief Executive Officer of the Company.  In addition, Robert Bugbee was appointed to the company's board and to the office of President, Cameron Mackey was appointed Chief Operating Officer, and Filippo Lauro was appointed Vice President.

With the negative market and company results, NAO recorded an impairment charge of $160.1 million as of December 31, 2018.  All of the company's vessels were written down to their current estimated fair values.