Fleet Financing

BW Offshore: Third Quarter 2021 Results


Third Quarter 2021 Results

TO SELECTHTS

  • EBITDA of $ 97.1 million and operating cash flow of $ 157.2 million
  • Barossa FPSO Debt Financing and Joint Venture Partnership Completed
  • Barossa’s FPSO project is progressing as planned
  • $ 67 million in gross proceeds from the October block sale of BW Energy shares
  • Quarterly cash dividend of $ 0.035 per share
  • Capital ratio of 39.0% and $ 305.7 million in available cash
  • One-year contract extension for FPSO Sendje Berge signed in November

In the third quarter, BW Offshore continued to advance the FPSO Barossa project according to plan, including completing the debt financing and joint venture partnership for the project. The first steel cut for the FPSO hull was made in September ahead of the initial schedule. Due to material price inflation, the project experiences cost increases which are covered by the project contingency. The company is focused on locking in suppliers and equipment packages to manage costs and keep schedule amid increasing stress on global supply chains.

The Board of Directors declared a cash dividend of $ 0.035 per share. The shares will be traded ex-dividend from November 26, 2021 inclusive. Shareholders registered in VPS after the close of trading in Oslo Børs on November 29, 2021 will be entitled to the distribution payable on or around December 7, 2021.

“The Barossa project is on track and the debt and equity financing is complete. We are fully focused on the safe and efficient execution of the FPSO construction and we are also delivering stable performance from our core operating assets, ”said Marco Beenen, CEO of BW Offshore. “The recent increases in energy prices underscore the need to continue to develop new oil and gas fields alongside a rapid increase in the production of renewable energy such as floating wind power. We are well positioned to seize opportunities for long-term growth and value creation in these markets through our expanded offering of offshore power generation solutions.

FINANCE
EBITDA for the quarter was $ 97.1 million ($ 91.1 million in the second quarter of 2021). The increase is mainly related to the increase in revenues of BW Catcher due to an agreement on commercial availability for the first three quarters of the year, the final milestone payment for the demobilization of Umuroa, partially offset by the effects of the planned production shutdown on Espoir Ivoirien and the absence of a contribution from FPSO Polvo because the contract has ended.

Third quarter EBIT was $ 28.3 million (second quarter 2021 $ 23.2 million). Net finance costs were $ 14.0 million ($ 16.2 million in Q2 2021). The tax charge for the quarter was $ 5.3 million ($ 6.4 million in the second quarter of 2021).

Total equity as at September 30, 2021 was $ 1,089.5 million ($ 1,103.7 million in the second quarter of 2021). The equity ratio stood at 39.0% at the end of the quarter (39.9% in Q2 2021).

Net interest-bearing debt was $ 807.1 million ($ 854.4 million in the second quarter of 2021).

Available liquidity was $ 305.7 million, including $ 106.9 million available under the business credit facility (excluding any liquidity in BW Ideol).

Barossa’s FPSO is funded by a US $ 1.150 billion 14-year long-term loan and construction facility from a syndicate of nine international banks and US $ 240 million from the joint venture made up of BW Offshore (51%) and ICMK. Offshore Investment Pte Ltd (a 50/50 joint venture of ITOCHU Corporation and a subsidiary of Meiji Shipping Co Ltd) (25%) and Macquarie Bank Limited (24%).

In addition, approximately USD 1 billion in prepayments will be paid by Barossa’s upstream joint venture partners during the construction period. These prepayments are linked to the progress and milestones of the project. By the end of September, a total of US $ 133 million had been received according to plan.

In October, BW Offshore sold 20 million shares of BW Energy, raising gross proceeds of $ 67 million. The Company has decided to sell part of its stake to accelerate growth opportunities in energy infrastructure. Following the sale, BW Offshore owns approximately 27.5% of the outstanding shares of BW Energy.

OPERATIONS
The average commercial availability of the fleet during the quarter was 91.6% (98.7% in the second quarter of 2021). Commercial availability was mainly affected by the scheduled maintenance shutdown on Espoir Ivoirien.

FPSO Polvo reached contract end in July 2021. Decommissioning was completed during the quarter and preparations for demobilization are underway. The unit will then be awaiting the final investment decision on the development of BW Energy’s Maromba field.

Umuroa and Cidade de São Vicente have reached their disposal sites, in Indonesia and Oman, and the Company is currently evaluating recycling options.

In November, BW Offshore signed an agreement with Addax Petroleum Exploration (Nigeria) Ltd, for a one-year extension of the lease and operation of the Sendje Berge FPSO. The firm period has been extended until the fourth quarter of 2022.

WIND FLOATING OFFSHORE
BW Offshore is actively engaged in the energy transition by developing clean energy production solutions, applying its offshore engineering and operating capabilities to drive future value creation through its 53.2% stake in BW Ideol, a global pure player in floating offshore wind power. BW Ideol has a dual strategy as a co-developer of offshore floating wind projects and as an EPCI (engineering, procurement, construction and installation) contractor of offshore floating wind technology.

In the third quarter, BW Ideol announced its partnership with EDF Renewables and Maple Power for the first commercial-scale floating offshore wind tender in South Brittany. The company has also obtained exclusive long-term access to the port of Ardersier in Scotland for the local fabrication of floating concrete wind substructures for the ScotWind project based on BW Ideol’s proven Damping Pool® technology.

In addition, BW Offshore is also participating in the ScotWind call for tenders in partnership with the American renewable energy and utilities company Invenergy.

OUTLOOK
The Company expects the base units of the existing fleet to continue to generate significant cash flow in the times to come. FPSO’s firm order backlog at the end of September 2021 stood at $ 6.6 billion including the Barossa contract. With probable options, the backlog stood at $ 8.0 billion at the end of the third quarter.

The Covid-19 pandemic continues to affect operations and the market environment. Rising energy prices in 2021 are a sign of improving market fundamentals as vaccine distribution accelerates and more countries normalize activity levels.

The oil and gas industry should continue to focus on advancing long-term development initiatives for large fields with low equilibrium costs. This expectation is supported by the increase in oil and gas prices to date in 2021. BW Offshore maintains a selective approach to these opportunities, advancing discussions on only a few high-end projects that can be developed in partnership with global infrastructure investors.

The Company seeks to optimize the current asset portfolio taking into account the overall cost base. This includes potential divestment or recycling of units if FPSO redeployment opportunities do not materialize.

BW Ideol is BW Offshore’s investment vehicle in floating offshore wind. The company is advancing several projects supported by private placement funding earlier this year.

BW Offshore has a solid financial position. With the recent divestiture of part of the stake in BW Energy, the Company has further strengthened its balance sheet, in order to position itself for accelerated growth in future profitable offshore energy projects and long-term value creation. The Company remains committed to providing increasing returns to shareholders and a quarterly cash dividend.

Please find attached the Q3 Presentation. The eearnings tcapacities are available at:

www.bwoffshore.com/ir/

BW Offshore will host a presentation of its financial results at 9:00 a.m. (CET) today at the Continental Hotel in Oslo, Norway. The presentation will be given by CEO Marco Beenen and CFO Ståle Andreassen.

You can also follow the webcast presentation, available at:

https://www.bwoffshore.com/ir/bwo-q3-2021

Please note that if you follow the webcast through the above URL, you will experience a delay from the live presentation. The web page works best in an updated browser.

For more information, please contact:
Stèle Andreassen, CFO, +65 97 27 86 47
Anders S. Platou, Head of Corporate Finance & Strategy, +47 99 50 47 40

About BW Offshore:
BW Offshore develops innovative floating production solutions. The Company has a fleet of 14 FPSOs with potential and ambition for growth. By leveraging four decades of offshore operations and project execution, the company creates bespoke offshore energy solutions for evolving markets around the world. BW Offshore has around 2,000 employees and is listed on the Oslo Stock Exchange.

This information is subject to disclosure obligations in accordance with section 5-12 of the Norwegian Securities Law.