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BW Offshore: Third quarter results 2022

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Third quarter results 2022

HIGHLIGHTS

  • EBITDA of USD 80.4 million
  • Operating cashflow USD 191.9 million
  • Equity ratio 33.8% and USD 488.6 million in available liquidity
  • Cash dividend of USD 0.035 per share equivalent to USD 6 million and BW Energy shares as in-kind distribution of USD 5 million
  • Barossa FPSO project progress at 50% per end of October
  • Progressing towards contract award for Shell’s Gato do Mato development in Brazil
  • Six-month contract extension signed for Sendje Berge

BW Offshore continues to progress the Barossa FPSO project with overall completion being at 50% per end of October. The project has achieved 6.4 million manhours without injuries, which reflects BW Offshore and the project partners' commitment to safeguard people and operations. The overall project economics remain sound, despite the impact of inflation, supply chain challenges and design adjustments.

Shell Brasil Petróleo Ltda (Shell) and its partners have extended the limited notice to proceed (LNTP) period with BW Offshore and Saipem S.p.A. This extension is valid until 15 February 2023 and is related to the supply of an FPSO for the Gato do Mato oil and gas field offshore Brazil. Terms of the contract are in agreed form. Upon completion of the extension period, BW Offshore and Saipem have the option to be awarded the lease and operate contract, contingent on financing and the project reaching final investment decision (FID). If the project reaches FID and moves forward, the FPSO lease and operate contract will have a firm period of 18 years with seven years of options.

“Gato Do Mato is set to become the second major FPSO project in our portfolio. This is in line with our strategy of growing the core floating production business through new offshore energy infrastructure projects, meeting our investment requirements through a long-term contract, investment grade counterparties and an attractive partnership model,” said Marco Beenen, CEO of BW Offshore.

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. Shares will trade ex-dividend from 22 November 2022. Shareholders recorded in VPS following the close of trading on Oslo Børs on 23 November 2022 will be entitled to the distribution payable on or about 30 November 2022.

FINANCIALS
EBITDA for the third quarter of 2022 was USD 80.4 million (USD 75.6 million in Q2 2022).

EBIT for the third quarter was USD 29.6 million (USD 25.8 million in Q2 2022).

Net financial items were negative by USD 3.9 million (negative USD 2.6 million in Q2 2022). Low net financial items are mainly driven by positive mark to market (MTM) changes in interest rate hedges as long-term interest rates have increased during the third quarter, offsetting interest expenses. BW Offshore is well hedged against increasing interest rates under all debt facilities.

Net contribution from BW Offshore’s ownership in BW Energy was USD 7.2 million (negative USD 4.9 million in Q2 2022). BW Energy completed one lifting in the quarter at USD 101 per barrel.

Net profit for third quarter was USD 29.6 million (USD 12.3 million in Q2 2022).

Total equity at 30 September 2022 was USD 1,095.6 million (USD 1,077.8 million at 30 June 2022). The equity ratio was 33.8% at the end of the quarter (35.2% at 30 June 2022).

Net interest-bearing debt was USD 463.2 million (USD 528.3 million at 30 June 2022).

Available liquidity was USD 488.6 million, excluding consolidated cash from BW Ideol and including USD 222 million available to draw 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 99% (95% in Q2 2022).

In July, Pemex assumed the ownership and operations of Yùum K’ak’ Náab in accordance with the terms of the 15-year FPSO financial lease contract.

A short-term contract extension for Petróleo Nautipa was signed in July ahead of demobilisation and decommissioning, which commenced in October.

In November, BW Offshore signed a six-month contract extension for the lease and operation of Sendje Berge. The firm period has been extended to Q2 2023.

OFFSHORE FLOATING WIND
BW Offshore is actively pursuing opportunities in the energy transition. The Company's primary investment is in offshore floating wind through the 53.2% ownership of BW Ideol, a global market leader with more than ten years of experience from design, execution and development of floating wind projects based on proprietary and patented Damping Pool® technology and engineering capabilities.

In September, BW Ideol announced a cooperation with Taiya Renewable Energy for the joint development of floating offshore wind projects off Taiwan, initially focused on a 50 MW pilot project. BW Ideol will design, engineer, build and install the floating foundations based on its proven Damping Pool technology. Subject to the project reaching final investment decision, COD (commercial operating date) is targeted before the end of 2026, with construction expected to start as early as 2025. The agreement also covers joint development of several commercial-scale projects.

In Scotland, the Floating Energy Allyance (FEA), is proceeding with site investigations and environmental studies in preparation for the consent application process for the Buchan Offshore Wind project. During the quarter, the alliance started near-shore testing of the lidar which will be installed to collect wind data at the site of the planned 960 MW floating offshore wind farm off the northeast coast of Scotland. FEA is a development partnership comprising BayWa r.e., Elicio and BW Ideol.

OUTLOOK
BW Offshore expects the core FPSO fleet to generate significant cash flow in the time ahead. The firm contract backlog at end of September 2022 amounted to USD 6.1 billion, including the Barossa contract. With probable options, the backlog was USD 7.3 billion at the end of the quarter.

The war in Ukraine and the Covid-19 pandemic continue to affect global markets through supply chain disruptions and inflation across a wide range of commodities. The direct impact on operations from the pandemic has however started to decrease. The higher energy prices from late 2021 and into 2022 reflect both improved market fundamentals as more nations normalise activity levels in the wake of Covid-19, as well as concerns related to the security of energy due to the war in Ukraine.

Oil and gas companies have become more active in progressing new field development projects in response to higher energy prices. BW Offshore expects continued focus on large field development initiatives with low break-even costs and low carbon emissions. The company maintains a selective approach to such opportunities, progressing discussions on only a few high-end projects which can be developed in partnership with global infrastructure investors. Activity tied to potential re-deployment projects continues with a particular focus on BW Opportunity.

BW Ideol is BW Offshore's vehicle for investment in floating offshore wind. The company is progressing multiple projects.

BW Offshore seeks to optimise the asset portfolio and overall cost base. This include divestments or recycling of non-core FPSOs in line with strategy of focusing on infrastructure FPSOs.  

Please see attached the Q3Presentation. The earnings tables are available at:

www.bwoffshore.com/ir/

BW Offshore will host a presentation of its financial results 09:00 (CET) today at Hotel Continental in Oslo, Norway. The presentation will be given by CEO Marco Beenen and CFO Ståle Andreassen.

You can also follow the presentation via webcast with supporting slides, available on:
BW Offshore Webcast Q3 2022

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 and Strategy, +47 99 50 47 40

About BW Offshore:
BW Offshore engineers innovative floating production solutions. The Company has a fleet of 10 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.

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


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