BW Offshore: First quarter results 2023

First quarter results 2023

HIGHLIGHTS

• EBITDA of USD 79.0 million
• Operating cashflow of USD 128.1 million
• Equity ratio of 32.4% and USD 521.4 million in available liquidity
• Dividend of USD 0.063 (NOK 0.68)¹ per share for the quarter
• Barossa FPSO project 67% complete per end of April 2023
• Divested BW Opportunity and BW Athena, releasing USD 130 million of liquidity
• Short-term contract extensions signed for Abo FPSO and Espoir Ivoirien
• Repurchased USD 14 million of Senior Unsecured Convertible Bonds as per April 2023

BW Offshore continued to execute the Barossa FPSO project with overall completion at 67% per end of April, according to plan. Hull blocks have been assembled in the floating dock and preparations for float out are progressing, with major equipment arriving at the topside construction yard. The FPSO project has achieved 14.1 million manhours without injuries, which is a testament to BW Offshore and project partners’ commitment to safeguard people and operations.

The Company also progressed its strategy of capturing value from non-core assets with the sale of BW Opportunity in the first quarter and the subsequent divestment of BW Athena in April. Combined, the transactions have released USD 130 million of liquidity to BW Offshore equivalent to NOK 7.8 per share¹. The Company is exploring the provision of an Engineering, Procurement, Construction and Commissioning (EPCC) and Operations and Maintenance (O&M) services contract for a five-year transitional period with the buyer of BW Opportunity.

"We deliver on our plan to generate value from our asset base through divestments and are discussing potential redeployment-related work for BW Opportunity with its new owner. This reflects a strong FPSO market with oil and gas companies seeking efficient solutions for safe, secure and reliable production,” said Marco Beenen, CEO of BW Offshore. “In this environment, we continue to selectively explore new energy infrastructure projects meeting our return criteria, while maintaining a firm focus on progressing the Barossa FPSO per plan and delivering high operational uptime on our core assets.”

The Board of Directors has declared a cash dividend of USD 0.035 per share and USD 5 million of BW Energy Limited shares as in-kind distribution equivalent to USD 0.028 per share. Shares will trade ex-dividend from 26 May 2023. Shareholders recorded in VPS following the close of trading on Oslo Børs on 30 May 2023 will be entitled to the distribution payable on or about 6 June 2023.

FINANCIALS
EBITDA for the first quarter of 2023 was USD 79.0 million (USD 104.9 million in Q4 2022). The reduction is largely due to a non-recurring reimbursement recorded in fourth quarter 2022 for expenses incurred under the limited notice to proceed (LNTP) contract with Shell for Gato do Mato.

EBIT for the first quarter was USD 37.2 million (USD 37.8 million in Q4 2022) including a USD 6.4 million gain from sale of BW Opportunity.

Net financial items were negative by USD 16.0 million of which net interest expense is USD 12.4 million (USD 12 million in Q4 2022). Mark-to-market (MTM) changes on FX hedges and interest rate hedges were negative as USD has strengthened and long-term interest rates have declined during first quarter.

Share of loss of equity-accounted investees was USD 0.3 million compared to a loss of USD 2.0 million the fourth quarter and includes BW Offshore’s share of net result from the ownership in BW Energy.

Net profit for first quarter was USD 17.8 million.

Total equity on 31 March 2023 was USD 1 144.4 million (USD 1 151.1 million in Q4 2022). The equity ratio was 32.4% at the end of the quarter (32.9% in Q4 2022).

Net interest-bearing debt was USD 369.1 million (USD 497.4 million in Q4 2022) strongly influenced by the closing of the sale of BW Opportunity for USD 125 million.

Available liquidity was USD 521.4 million, excluding consolidated cash from BW Ideol and including USD 176 million available under the corporate loan facility.

FPSO OPERATIONS
The FPSO fleet continued to deliver stable uptime in the quarter with a weighted average fleet uptime of 98.6% (99.1% in Q4 2022). Uptime was affected by a shutdown on Sendje Berge.

During March and April, two short-term extensions for FPSO Espoir Ivorien were signed, in order to discuss a potential purchase of the FPSO by the client. The firm period has been extended until 1 June 2023.

During March and April, three short-term extensions for the lease and operation of Abo FPSO were signed to progress a potential sale of the unit to the current client. The firm period has been extended until 31 May 2023.

In Brazil, work progressed on optimising the Maromba development plan. As previously communicated, the planned first oil has been revised to the second half of 2026. As part of the project rescheduling, BW Energy and BW Offshore have agreed to defer payments for the FPSO Polvo. The Company will pay an instalment of USD 30 million in the fourth quarter of 2023 and the remaining USD 20 million of the agreed price in second quarter of 2024. BW Energy will compensate BW Offshore with interest during the period.

OFFSHORE FLOATING WIND
BW Offshore is actively engaged in the energy transition by developing clean energy production solutions, applying its offshore engineering and operations capabilities to drive future value creation through its 53.2% ownership in BW Ideol. BW Ideol is a global leader in offshore floating wind technology and co-development with more than 12 years of experience from design, execution and development of floating wind projects based on proprietary and patented Damping Pool® technology and engineering capabilities.

In March, BW Ideol and ADEME Investissement, a state-owned French financier of innovative infrastructure projects, announced exclusive negotiations related to EUR 40 million of equity funding of BW Ideol’s project development activities, which are set to transferred to a new DevCo. ADEME Investissement will pay an initial EUR 16.7 million at first closing, following which, BW Ideol will own 76.6% of DevCo, representing a post-money valuation of the entity of around EUR 72 million. Negotiations are ongoing with completion of first closing on track for end of the second quarter of 2023.

BW Ideol will retain full ownership of its other business activities and assets, including technology and IP, the floater EPCI business. Separately, BW Offshore and Noria, another BW Ideol shareholder, have agreed to provide a EUR 12 million loan, which combined with the planned funding from ADEME Investissement, is expected to finance execution of BW Ideol’s business plan for the next 12 months.

OUTLOOK
BW Offshore expects that the core units in the existing fleet will continue to generate significant cash flow in the time ahead supported by the USD 5.8 billion firm contract backlog at end of March 2023, including the Barossa contract.

The Company is experiencing continued strong interest for infrastructure-type lease and operate FPSO projects, combined with continued access to equity and debt financing for field development initiatives with long-term production, low break-even costs and low carbon emissions. Discussions are ongoing with the buyer of BW Opportunity for EPCC work and an operations and maintenance contract related to a redeployment of the FPSO which can drive growth in the FPSO segment.

The ongoing asset divestment programme for the non-core FPSOs is expected to be completed in 2023 in line with strategy, reducing the operational risks associated with the conventional units and strengthening the balance sheet.

BW Ideol is BW Offshore’s vehicle for investment in floating offshore wind. The Company is progressing multiple projects in collaboration with BW Offshore and other partners as well as solutions for long-term funding to progress development of the Company.

BW Offshore has initiated the planned refinancing of the current revolving corporate facility as well as the Catcher loan facility, both maturing mid-2024, with an aim to extend current maturities.

BW Offshore is well-positioned for future growth and long-term value creation through the execution of accretive offshore energy projects.

Please see attached the Q1Presentation. The earnings tables are available at:

https://www.bwoffshore.com/ir/

BW Offshore will host a webcast of the financial results 14:00 (CEST) today. The presentation will be given by CEO Marco Beenen and CFO Ståle Andreassen.

Webcast information:
You can follow the presentation via webcast with supporting slides and a Q&A module, available on:

BW Offshore Limited - Q1 Presentation Webcast

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:
Ståle Andreassen, CFO, +47 91 71 86 55
Anders S. Platou, Head of Corporate Finance & Strategy, +47 99 50 47 40

About BW Offshore:
BW Offshore engineers innovative floating production solutions. The Company has a fleet of 8 FPSOs with potential and ambition to grow. By leveraging four decades of offshore operations and project execution, the Company creates tailored offshore energy solutions for evolving markets world-wide. BW Offshore has around 2,000 employees and is publicly listed on the Oslo stock exchange.

1. Exchange rate USD/NOK 10.882 (as of 22.05.2023)

This information is subject to the disclosure requirements pursuant to section 5-12 of the Norwegian Securities Trading Act.

Attachment

• 2023 Q1 Presentation

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