BW Energy: Third Quarter 2022 Results
THIRD QUARTER 2022 RESULTS
- Q3 EBITDA of USD 61.5 million and net profit of USD 33.8 million
- Q3 gross production of ~960,000 barrels with ~700,000 net to the Company
- Completed one lifting with ~682,000 barrels sold (net BWE) at a price of USD ~101 per barrel
- Hibiscus / Ruche development on track for first oil in late Q1 2023
- Progressing towards closing of Golfinho in Q1 2023, approved as deep-water class A operator by ANP
- Maintained a strong balance sheet with a cash position of USD 186 million
- Initial draw-down of USD 100 million made on Reserve Based Lending (RBL) facility
EBITDA for the third quarter of 2022 was USD 61.5 million, up from USD 5.5 million in the second quarter of 2022, primarily due to one lifting to the Company at a price of USD 101 per barrel. A further lifting to the Company is scheduled in December 2022.
"We deliver stable production and solid cash generation from our Dussafu operations. The Hibiscus / Ruche development is progressing to schedule with the BW MaBoMo production facility and the subsea pipeline to the BW Adolo FPSO is already installed. With drilling set to commence in January, we are on track for first oil towards end of the first quarter," said Carl K. Arnet, the CEO of BW Energy.
BW Energy's share of gross production was approximately 700,000 barrels of oil. The net sold volume, which is the basis for revenue recognition in the financial statement, was 715,000 barrels including 32,500 barrels of quarterly Domestic Market Obligation (DMO) deliveries with an under-lift position of 185,000 barrels at the end of the period.
Gross production from the Tortue field averaged approximately 10,400 barrels of oil per day in the third quarter of 2022, amounting to a total gross production of approximately 960,000 barrels of oil for the period. Production was in line with the previous quarter and remain affected by the continued shortage of gas lifting capacity. The new gas lift compressor arrived in Gabon in late October and is being prepared for mobilisation to the FPSO with planned installation at year-end and start-up in the first quarter of 2023.
Third quarter production cost (excluding royalties) was approximately USD 36 per barrel. Cash balance was USD 186 million at 30 September 2022, compared to USD 123 million at 30 June 2022. The increase is due to the payment received for the August lifting and a drawdown on the Company's reserve-based lending (RBL) facility, partly offset by continued investments in the Hibiscus / Ruche development project. The six-year RBL facility was signed in August with an initial commitment of USD 200 million which can be expanded up to an additional USD 100 million.
At the start of the period, the Company had commodity price hedges for a remaining total volume of one million barrels for 2022 and 2023, of which 37% is for 2022. These were a combination of swaps and zero-cost collars that will allow for future cash flow stability for ongoing development projects. BW Energy has recognised realised crude oil hedge losses in the amount of USD 2.9 million and unrealised gains in the amount of USD 14.9 million for the third quarter.
The Dussafu 2022 total production estimate for 2022 is maintained at approximately 4.0 million barrels gross and full-year production cost (excluding royalties) is expected at approximately USD 35 per barrel.
In late September, the BW MaBoMo offshore production facility arrived in Gabon on schedule. The production facility has since been installed on site and preparations are underway for future drilling operations and for the tie-in of the export pipeline to the BW Adolo FPSO and the BW MaBoMo. Twenty kilometres of the subsea pipeline has now been installed, with final connections planned for year-end. Separately, the drilling rig is on schedule to spud the first production well planned in January. This is in line with the plan for first oil from the Hibiscus / Ruche development towards the end of the first quarter of 2023.
The total gross Hibiscus / Ruche Phase 1 development Capex is projected to be approximately USD 440 million, mainly due to first oil shifting into 2023 with certain elements originally considered operating expenses being reclassified as project investments. Capex still remains below the original final investment budget of USD 490 million gross.
In Brazil, Company progressed the Maromba development project following the April decision to proceed with the project and agreement to purchase the FPSO Polvo, which will be upgraded and redeployed to the field.
In Namibia, BW Energy is negotiating heads of terms for the Kudu gas to power project with the local power company. The review of geophysical and well data from previous exploration activities and recently purchased 2D seismic data has confirmed the high potential of the Kudu license. The Company has decided to acquire 3D seismic over the license to further enhance the depositional model, identify potential exploration targets and better data to support FEED work programs and for potential future farm-in discussions.
Also in Brazil, the Company continued to prepare for the acquisition of a 100% operated working interest (WI) in the Golfinho and Camarupim Clusters and 65% WI in the BM-ES-23 block from Petrobras, as well as taking over the FPSO Cidade de Vitoria from Saipem. This includes progressing relevant approvals from the Brazilian authorities, operational preparedness, field development planning and build-up of the local BW Energy organization. The Company was approved as a deep-water class A operator by ANP in November. Both transactions are expected to close in the first quarter of 2023, subject to fulfilment or waiver of conditions precedent. The transactions are expected to add approximately 9,000 barrels of oil per day net to BW Energy as well as several proven low risk in-field development opportunities with short lead times and substantial potential long-term upside.
Please see the attached Q3 presentation. The earnings tables are available at:
BW Energy will today hold a conference call followed by a Q&A hosted by CEO Carl K. Arnet, CFO Knut R. Sæthre and COO Lin G. Espey at 14:00 CEST.
You can also follow the presentation via webcast with supporting slides, available on:
Please note, that if you follow the webcast via the above URL, you will experience a 30 second delay compared to the main conference call. The web page works best in an updated browser - Chrome is recommended.
For further information, please contact:
Knut R. Sæthre, CFO BW Energy, +47 91 11 78 76
ABOUT BW ENERGY:
BW Energy is a growth E&P company with a differentiated strategy targeting proven offshore oil and gas reservoirs through low risk phased developments. The Company has access to existing production facilities to reduce time to first oil and cashflow with lower investments than traditional offshore developments. The main assets are 73.5% of the producing Dussafu Marine Permit offshore Gabon and a 95% interest in the Maromba field in Brazil, both operated by the Company. Total net 2P+2C reserves were 240 million barrels at the start of 2022.
This information is subject to the disclosure requirements pursuant to section 5-12 of the Norwegian Securities Trading Act
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