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SBM Offshore First Quarter Trading Update

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May 12, 2021

Highlights

  • Year-to-date Underlying1 Directional2 revenue of US$536 million, in line with expectation
  • Full year 2021 Revenues and EBITDA guidance maintained
  • Awarded LOI for FPSO Almirante Tamandaré; fourth Fast4Ward® hull allocated to project
  • Pro-forma backlog and cashflow visibility extended until 2050
  • Cash dividend of US$165 million paid, representing 10% year-on-year increase

Bruno Chabas, CEO of SBM Offshore, commented:

“SBM Offshore’s results over the first quarter of 2021 are in line with our expectation and we maintain our guidance for the full year. Despite the continuing challenging environment due to the pandemic, our operating performance was strong and our major projects under construction are progressing as expected.

Our increased dividend represents a cash yield of more than 5%. This dividend is underpinned by the infrastructure platform of our Lease and Operate backlog which now brings cash flow visibility up to 2050.

Our core business is going through a significant growth phase with four major FPSO projects under construction. World-class deep water projects continue to rank among the most attractive investments available to our clients. Our Fast4Ward® and emissionZEROTM FPSO programs provide industry-leading cost and carbon efficient solutions to help clients maximize value from these investments.

We believe that SBM Offshore has a significant role to play in satisfying the world’s future energy demand using our experience and technology both to offer low emission production solutions and new solutions for the energy transition. Our New Energies business is making good progress in maturing our innovative technology as well as strategically positioning the Company to benefit from expected growth in market demand.”

Financial Highlights

YTD Directional
in US$ million1Q 20211Q 2020% Change
Revenue 513 607 -15%
Lease and Operate 360 407 -12%
Turnkey 153 200 -24%
Underlying Revenue 536 607 -12%
Lease and Operate 383 407 -6%
Turnkey 153 200 -24%
in US$ million1Q 20211Q 2020
Item impacting Underlying Revenue
Deep Panuke redelivery - 2021 cash receipts 23 -
in US$ billionMar-31-21Dec-31-20% Change
Net Debt 4.3 4.1 5%
Backlog calculation will be provided in HY21 Earnings Update

Underlying Directional revenues for the first quarter of the year came in at US$536 million compared with US$607 million in the first quarter of 2020. This decrease mainly resulted from a lower contribution from the Turnkey segment, where the first quarter in 2020 benefited from the Johan Castberg turret project delivery.

SBM Offshore’s Turnkey division currently has four major projects under construction. Generally, SBM Offshore does not report Turnkey revenues on Lease and Operate projects that are 100% owned, such as the FPSOs LizaUnity, Prosperity and currently the FPSO Almirante Tamandaré. Contribution of these projects to Turnkey revenue is limited to upfront payments and variation orders directly paid by the clients before the start of the lease. Turnkey revenue is recognized on the 35% partners share in construction work for FPSO Sepetiba. The results of these projects will appear in future years as the vessels commence production.

First quarter Underlying revenue in Lease and Operate decreased by 6% compared with the same period last year. This decrease was mostly due to additional scope related to the decommissioning of Deep Panuke platform in the first quarter of 2020.

Underlying Directional revenue includes US$23 million related to cash received from the client during the first quarter of 2021 from the Deep Panuke contract. The expected cash receipts in 2021 from this contract were excluded from the Underlying 2020 Revenues as reported in the Full Year 2020 Earnings Update. Please refer to Post-Period Events section for an update on the Deep Panuke contract.

Compared with year-end 2020, net debt as at the end of the first quarter increased by c. US$200 million to US$4.3 billion. While Lease and Operate continues to generate strong operating cash flow, with four major projects under construction, SBM Offshore continues to invest in growth.

Project Review

Construction activities for SBM Offshore’s major projects continue to face challenges related to the pandemic. The teams continue to overcome the difficulties posed by remote working, travel restrictions and protocols with compulsory quarantine. The ultimate delivery of major projects is not considered at risk, based on currently known circumstances.

FPSO Liza Destiny

On FPSO Liza Destiny, further work is being done on elements of the flash gas compression system which is expected to be delivered during the month of July 2021. Additionally, plans initiated in 2020 are progressing to install a redesigned third stage flash gas compression system at the end of this year. SBM Offshore is continuing to work closely with the client and with the equipment manufacturer in order to expedite resolution of the situation.

FPSO Liza Unity

Following the completion of the topside lifting campaign during Q1 2021, work is further progressing on integration and commissioning stages. The project continues to target first oil in 2022 in line with client planning.

FPSO Sepetiba

The Fast4Ward® hull was successfully launched out of drydock during Q1 2021. Module fabrication is further progressing in China and Brazil. The planned completion of the FPSO project is at the end of 2022.

FPSO Prosperity

The topsides fabrication started in the yards in Singapore. The project is progressing according to schedule with a planned completion in 2024. To further develop local capabilities, Guyanese companies were awarded contracts and started the fabrication of FPSO components in Guyana. In addition, Guyanese engineers have been hired and integrated into the project execution team.

FPSO Almirante Tamandaré

The Letter of Intent for FPSO Almirante Tamandaré was signed during Q1 2021. The Fast4Ward® multipurpose floater (MPF) hull construction as well as engineering and procurement activities are progressing in line with project schedule. Delivery of the FPSO is expected in the second half of 2024.

Fast4Ward® MPF hulls

Under the Company’s Fast4Ward® program, the total number of MPF hulls ordered to date stands at six. Four MPF hulls are allocated to FPSOs Liza Unity, Sepetiba, Prosperity and Almirante Tamandaré. Two MPF hulls are supporting ongoing tendering activity.

Operational Update

Fleet uptime during the first quarter of 2021 was 98.6% despite continued challenges brought by the COVID-19 pandemic. The health of our staff and safe operations remain the Company’s priority. Preventive and reactive measures implemented offshore and onshore last year have been successful to date and remain in place. After working for more than a year under these special conditions, attention is given to fatigue management with additional personnel mobilized for critical positions. The Company will continue to focus on protecting its personnel while minimizing impact on operations.

Energy Transition and ESG

SBM Offshore is playing an active role in developing technology to support the energy transition. This is demonstrated by the progress of the Floating Offshore Wind project and Wave Energy Convertor S3® prototype.

The Company measures performance against the United Nations’ Sustainable Development Goals related targets and seeks improvement opportunities. This program includes emission reduction from the fleet. SBM Offshore is also investing in emissionZERO™ which aims to bring to market an FPSO with near zero emissions.

SBM Offshore’s sustainability performance continues to be recognized by external rating agencies with inclusion in the S&P Global Sustainability Yearbook 2021 and the award of “Industry Mover” distinction demonstrating continuous commitment to sustainability and related performance improvement.

The Total Recordable Injury Frequency Rate was 0.13 over the first quarter of 2021, compared with the 2021 target of 0.18.

Post-Period Events

Deep Panuke

During the first quarter of 2021, SBM Offshore received notification, effective as of April 1, 2021, from the client of Deep Panuke project who elected to pay the contractually agreed lump sum amount replacing the initial contractual charter payments up to Q4 2021. The lump-sum payment (c. US$55 million) was received in April. The cash balance in the debt service account combined with part of the lump-sum payment was used to redeem the outstanding debt held by the noteholders who opted for early repayment, for an amount of c. US$50 million. The noteholders owning the remainder of the debt (c. US$20 million) opted to retain the notes until expiry in December 2021.

Dividends

On April 7, 2021, shareholders of the Company voted in favor of the proposed dividend of US$165 million, which represents an increase of 10% compared to last year. It resulted in a dividend distribution of US$0.8854 or €0.7439 per ordinary share. The dividend was paid on May 6, 2021 to all shareholders of record as at April 12, 2021.

Guidance

The Company’s 2021 Directional revenue guidance is maintained at around US$2.6 billion, of which around US$1.6 billion is expected from the Lease and Operate segment and around US$1 billion from the Turnkey segment. 2021 Directional EBITDA guidance is maintained at around US$900 million for the Company.

This guidance includes Directional revenues and EBITDA of US$75 million related to the cash received in 2021 from the Deep Panuke contract, which was recognized in 2020 and excluded from the 2020 underlying results. It also considers the currently foreseen COVID-19 impacts on projects and fleet operations. The Company highlights that the direct and indirect impact of the pandemic could continue to have a material impact on the Company’s business and results and the realization of the guidance for 2021.

Conference Call

SBM Offshore has scheduled a conference call, which will be followed by a Q&A session, to discuss the First Quarter 2021 Trading Update.

The event is scheduled for Wednesday, May 12, 2021 at 10.00 AM (CEST) and will be hosted by Bruno Chabas (CEO), Douglas Wood (CFO), Philippe Barril (COO) and Erik Lagendijk (CGCO).

Interested parties are invited to register prior to the call using the link: https://www.kpneventcall.nl/EventRegistration/6e5808a0-6b80-4b69-be24-ed0872382e3b

Please note that the conference call can only be accessed with a personal identification code, which is sent to you by email after completion of the registration.

A replay will be available shortly after the end of the conference call. Interested parties can listen to the replay by dialing +31 (0) 20 785 1180 and using access code 244995# until June 12, 2021.

Corporate Profile

The Company’s main activities are the design, supply, installation, operation and the life extension of floating production solutions for the offshore energy industry over the full lifecycle. The Company is market leading in leased floating production systems, with multiple units currently in operation.

As of December 31, 2020, the Company employed approximately 4,570 people worldwide spread over offices in our key markets, operational shore bases and the offshore fleet of vessels.

SBM Offshore N.V. is a listed holding company headquartered in Amsterdam, the Netherlands. It holds direct and indirect interests in other companies.

Where references are made to SBM Offshore N.V. and /or its subsidiaries in general, or where no useful purpose is served by identifying the particular company or companies “SBM Offshore” or “the Company” are sometimes used for convenience.

For further information, please visit our website at www.sbmoffshore.com.

The Management Board
Amsterdam, the Netherlands, May 12, 2021

Financial Calendar DateYear
Half Year 2021 Earnings – Press Release August 5 2021
Trading Update 3Q 2021 – Press Release November 11 2021
Full Year 2021 Earnings – Press Release February 10 2022
Annual General Meeting April 6 2022
Trading Update 1Q 2022 – Press Release May 12 2022


For further information, please contact:

Investor Relations
Bert-Jaap Dijkstra
Group Treasurer and IR

Mobile: +31 (0) 6 21 14 10 17
E-mail: bertjaap.dijkstra@sbmoffshore.com
Website: www.sbmoffshore.com

Media Relations
Vincent Kempkes
Group Communications Director

Mobile: +377 (0) 6 40 62 87 35
E-mail: vincent.kempkes@sbmoffshore.com
Website: www.sbmoffshore.com

Disclaimer

This press release contains inside information within the meaning of Article 7(1) of the EU Market Abuse Regulation. This press release contains regulated information within the meaning of the Dutch Financial Markets Supervision Act (Wet op het financieel toezicht). Some of the statements contained in this release that are not historical facts are statements of future expectations and other forward-looking statements based on management’s current views and assumptions and involve known and unknown risks and uncertainties that could cause actual results, performance, or events to differ materially from those in such statements. Such forward-looking statements are subject to various risks and uncertainties, which may cause actual results and performance of the Company’s business to differ materially and adversely from the forward-looking statements. Certain such forward-looking statements can be identified by the use of forward-looking terminology such as “believes”, “may”, “will”, “should”, “would be”, “expects” or “anticipates” or similar expressions, or the negative thereof, or other variations thereof, or comparable terminology, or by discussions of strategy, plans, or intentions. Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual results may vary materially from those described in this release as anticipated, believed, or expected. SBM Offshore NV does not intend, and does not assume any obligation, to update any industry information or forward-looking statements set forth in this release to reflect subsequent events or circumstances. Nothing in this press release shall be deemed an offer to sell, or a solicitation of an offer to buy, any securities.


1 Underlying 2021 revenue and EBITDA exclude one-off effects to enable comparison of like-for-like underlying performance with 2020.
2 Directional view, presented in the Financial Statements under Operating segments and Directional Reporting, represents a pro-forma accounting policy, which assumes all lease contracts are classified as operating leases and all vessel investees are proportionally consolidated. This explanatory note relates to all Directional reporting in this document.

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