Hi everyone, and welcome to NorAm Drilling's Fourth Quarter 2023 Results Presentation. With me today, I have the company's CEO and CFO, Marty L. Jimmerson, from Houston. We will go through the presentation of the quarterly results and a recent market update before we will open up for a Q&A session. I will give you the instructions of how to post a question during the session, but you can also use the chat function when we get to that part. So just before we begin our presentation, I would like to note that this conference call would contain forward-looking statements. Words such as expects, anticipates, intents, estimates, or similar expressions are intended to identify those forward-looking statements. Forward-looking statements are not guarantees of future performance.
These statements are based on our current plans and expectations and are inherently subject to risks and uncertainties that could cause future activities and results of operations to be materially different from those set forth in the forward-looking statements. You should therefore not put undue reliance on these forward-looking statements. So with that, Marty, please go ahead.
Thank you, Marius, and we would like to welcome everyone for joining us today to review our fourth quarter results and provide a little outlook. Given the declines in WTI, natural gas, and rig counts during the fourth quarter, we are pleased to report continuously high uptime and safe operations of our working rigs, and we would like to thank all of our employees for their continued hard work and dedication. Revenue was down, or revenue was $24 million, down 10% from the previous quarter. The decline in revenue was primarily attributable to lowered day rates on our renewals, offset by higher utilization. NorAm's fleet utilization improved to 82.3% in the fourth quarter. We had three rigs hot-stacked at the end of September, and we successfully reactivated two rigs during the quarter and only had one rig stacked at the end of the fourth quarter.
We think these results are impressive given that the Permian rig count actually dropped 10 during the fourth quarter and finished at 307. Our clean day rate increased by 11% or decreased by 11% to $26,900. Adjusted EBITDA, defined as earnings before interest, tax, depreciation, and amortization plus non-cash stock option expense, was $5.4 million, down 22% from the previous quarter. We reported net income after tax of -$2.2 million or $0.05 per fully diluted shares. Our current backlog as of yesterday had increased to $27.6 million, which is up from the previous quarter and previous monthly updates. Turning to the next page, let's cover recent events and kind of our near-term outlook.
During the fourth quarter of 2023, as I stated earlier, rig counts in the Permian Basin declined 10, or 3%, primarily as a result of consolidation of private operator activity from previously announced M&A activity and continued discipline, production, for production plans demonstrated by several E&Ps. U.S. rig counts increased three outside of the Permian during the quarter. Based upon current customer discussions, we expect rig counts in the first half of 2024 to remain relatively flat given the current WTI price environment, but we do see opportunities for high-grading and replacing existing rigs with upgraded equipment like our rigs and for underperformance matters of other working rigs. Natural gas prices have declined early in the first quarter of 2024, further impacting our near-term outlook for U.S. rigs.
We continue to believe that a modest increase in rig activity could occur in the second half of 2024, which would increase demand for our Super Spec rigs. We've remained committed to pursuing opportunities that result in economics that justify operating our high-end Super Spec rigs. We believe that most drillers are maintaining the same financial discipline as us on pricing and believe day rates for renewals have neared bottom or have stabilized. Turning to the next page, we continue to believe that market fundamentals remain encouraging. As a result of customer consolidation and continued declining rig counts, the average number of completed wells have been declining for over a year now. As DUCs have continued to decline, we believe operators will need to increase drilling to maintain their production over time.
With this backdrop and operator financial discipline, we expect lower production growth ahead, which could lead to a rebound in rig activity sooner than later. With that, Marius, allow me to turn it back to you to cover our key operational results.
Thank you, Marty. Over to the key operational figures. In the fourth quarter, we achieved a rig utilization of 82.3%, up from 77.3% the last quarter. We reactivated two rigs during Q4, and we earned a day average day rate of approximately $26,900 per day. That was down 11% from the third quarter. Note that our day rate is adjusted for reimbursables out of pocket expenses of $0.9 million in the quarter. On the cost side, we paid operating expenses in line with expectations and had relatively flat development quarter-on-quarter. We do not foresee any major, inflation drivers in costs for 2024 as of today, meaning that we will run our rigs at about $17,000 per day all in, and we will have about 30% lower cost on any idle rigs.
Turning over to the right-hand side of this slide, we show our income statement for the quarter. Revenues came in at $24 million, and we had an EBITDA, just EBITDA of $5.4 million, including $0.1 million in non-cash costs related to stock options. We had a net financial income of about $300,000, primarily related to interest earned on cash proceeds. We also had a non-cash tax expense of about $3 million, which is related to deferred tax provisions against future projected taxable income. As a result, we reported a net loss of $2 million or $0.05 per share. Over to the balance sheet and cash flow statement. NorAm is a debt-free company and has minimal investment requirements going forward. We ended the cash balance at the end of the quarter at $12.1 million.
We are currently sitting with a little excess liquidity, versus our $11 million minimum cash balance, which is including a non-utilized revolving credit facility of $4.5 million. We intend to use this excess liquidity to reactivate idle rigs, and use this this cash for future working capital. Hence, we do not expect any reactivations would interfere with our dividend policy of continuously paying out excess free cash flow from the operations. During Q4, we paid out about $5.3 million to our shareholders, or NOK 1.32 per share. So far in Q1, we have declared two additional quarterly, sorry, monthly dividends. So to summarize, NorAm has a fleet of 11 modernized ultra Super Spec rigs, fully upgraded with the highest performing equipment, and has earned us the number one most efficient land driller in the U.S. in Q3, according to Enverus.
We are strategically positioned 100% in Permian, which is the basin with the largest resources in the U.S. and also the largest producing basin in the U.S.. We have an industry low cash break even, which is due to our lean management team, skilled labor, low employee turnover, and relatively flat organization. We are debt-free and we have pursued a full payout strategy. Since listing in October 2022, we have paid total cash distributions to our shareholders of NOK 12.4 per share, or $51 million. The latest monthly cash distribution implies an annualized yield of 16%. So with that, I'll turn over to the Q&A session. We will conduct the Q&A session in the following way.
You can either use the raise hand function in Teams to ask a question, or you can write your question in the chat lobby in Teams. So I'll pause there for a moment to give the audience time to ask a question. All right, we have our first question from Will Miller. I'll unmute you now. Please ask your question, Will. Sorry, Will, we can't hear you. Are you able to either try to unmute your microphone, or you can write your question in the chat function. Sorry about that.
How about now?
Now it works.
Cool. Hi, guys. Sorry for making everyone wait. So I'm not suggesting that you will do this or that you should do this in any way, but just as we think about this from a valuation perspective, with some modest costs from unutilized rigs and some uncertainty going forward, you know, were you to decide that you wanted to run a slightly leaner fleet and sell one or two of the rigs, in particular the ones that are stacked, can you give us a view on what you think you could realize in such a sale if it would be even possible?
Will, how are you doing? Thanks for the question. So, you know, it's interesting that you ask that. We still believe in the fundamentals of our business, and we think that we're going to continue to earn probably, despite kind of the near-term flatness. The economic returns from continuing to own and operate our rigs are going to be much higher than what I think could be achieved in the market. There's been a couple of deals in the marketplace over the last 12 months, none of which have transacted. They've been substantially more than kind of one rig or two rigs that you may be alluding to. I'm not sure that we have a basis for what the real market opportunity is to sell a rig or two. I don't think it would be necessarily currently in the U.S.. It would probably be more international.
We have looked previously at moving our rigs to the Middle East, like some others have done. But what I'll tell you is I think that our rigs are much more overqualified for the requirements internationally. So, sorry, I can't give you a number of what I think a rig could command in a sell environment, but I continue to strongly believe that our IRR will be much higher by continuing to own and operate our rigs, as we expect market activity to pick up later in 2024.
Thank you.
All right. We have another question from Andrew Simpson. I'll, he wrote it in the chat function, so I'll just read it out to Marty. With the recent oil company consolidation in the industry, what do you expect the average Permian rig count to be in 2024?
Yeah, Andrew, thanks for the question. So, you know, had a great week out in Midland this week, meeting with several customers and many other friends and foes, if you will. And what we think's going to happen here is that just near-term, and let's kind of say over the next three to four to five months, it seems like we're in a very static rig count environment. I did hear of a rig here or a rig there that's being released for performance matters. And, you know, I think those will be opportunities for us as we move forward. There could be some further reduction in rig counts associated with consolidation. But it kind of feels like for the most part, we're going to be flat near-term.
We could also, Marty, refer to some of the market analysts that are specializing in this market. I, at least, we've seen some charts recently, and we've listened to some of the oil service companies' conference calls. I would say there's a general expectation, at least between what I have seen, that the rig counts in Permian are expected to be flat to modestly increase throughout 2024.
Yeah, and Marius, let me let’s go back to the market fundamentals here. You know, and so any consolidation or decline, you know, modest decline, near-term in rig counts, we don't believe that longer term, that the production can continue at its pace, growth pace, and will start declining sooner than later if these rig counts remain. And what we really have going on, based upon kind of what I heard this week, and observed, is most operator budgets are flat for now. There's not a lot of incentive, with WTI in the upper 70s to go make a special request for some extra dollars because operators, much like us, are committed to returning value to their shareholders. And so, you are ultimately kind of sitting in a static environment, if you will, from a production standpoint.
But all of this kind of suggests to us that it cannot continue, long term. And so it feels like you're developing, albeit slower than we would like, some pent-up demand, that we're going to need more rigs. There are very few DUCs available, to go after. You know, it feels like, sooner than later, we could see a rebound here.
All right. Another question from Jin. Do you expect dividend cut in 2024 first half given current market outlook?
Sure. So as Marius stated earlier, we've remained committed to a full payout strategy of our, after our minimum cash requirements. I don't want to predict whether we'll change the dividend. Could go up, could go down. It's going to all be subject to utilization and day rates. And again, you have a very lean and efficient organization. So just stay tuned. And we're committed to returning you everything that we can earn.
All right. There are no further questions at this time. So I would like to give the opportunity to thank you all for joining this conference call. If there are any questions you may have that have not been answered during the call, feel free to reach out to us at the ir@noramdrilling.com. I hope to see you again next quarter. Thank you all.