Q3 2009: Interim consolidated financial information
Adjusted EBITDA of USD 45.4 million in third quarter, before transactions relating to associates
FPSO BW Pioneer conversion progressing as planned
Signed Letter of Intent for Papa Terra FPSO for Petrobras
BW Offshore hosts a conference call of the financial results at 13:00 (CET). The results will be presented by CEO Carl K. Arnet and CFO Knut R.Sæthre, followed by a Q&A session. Please see separate notice for dial-in numbers and replay alternatives.
(Figures in brackets refer to corresponding figures for 2008)
Operating revenue amounted to USD 116.6 million (USD 114.8 million). The FPSO segment experienced an increase in operating revenue which was partly offset by a decrease in operating revenue in the Technology segment. The increase in operating revenue for the FPSO segment was mainly due to the positive contribution from the FPSO BW Cidade de São Vicente, the FPSO YÙUM K`AK`NÀAB and the final settlement from Equator Exploration for the terminated FPSO contract in 2007.
Operating expenses in the third quarter amounted to USD 71.2 million (USD 95.8 million), a decrease resulting mainly from lower activity level in the Technology segment. The claim from Aker Marine Contractors, received in 2007, has been settled in the third quarter and is reflected in the FPSO segment operating expense.
EBITDA was USD 47.7 million (USD -51.4 million) in the third quarter. Adjusted EBITDA (EBITDA before share of profit related to associates and before write down and gain on shares) was USD 45.4 million (USD 19.0 million). Changes in market values of currency derivative instruments related to operating cash flows are included in the EBITDA. For the third quarter this amounted to a gain of USD 4.8 million (USD 0.0 million).
Share of profit / loss (-) of associates was USD 2.3 million (USD -1.6 million) in the third quarter and relates to the investments in Prosafe Production Limited (PROD) and Nexus Floating Production Ltd (Nexus). Share of profit from PROD amounted to USD 2.3 million. As the book value of Nexus is USD 0.0 million, losses no longer reduce the investment further as there are no further obligations to be met; consequently the share of profit from Nexus is USD 0.0 million in the third quarter (USD 0.0 million). At 30 September 2009, the Company owned 23.9% of the shares in PROD and 49.7% of the shares in Nexus.
Net financial items for the third quarter were USD -18.6 million (USD -21.7 million). Interest expense was USD 6.1 million (USD 9.2 million) in the third quarter. The decrease in interest expenses is mainly a result of reduced interest rates. Interest income was USD 2.7 million (USD 6.3 million). Net financial items include a decrease in fair value of USD 13.9 million (USD -19.7 million) on interest derivative contracts.
Result before tax was USD 8.3 million in the third quarter (USD -251.4 million). Income tax expense amounted to USD 1.8 million (USD 4.1 million) in the third quarter.
At 30 September 2009, total assets amounted to USD 2,338.0 million (USD 2,445.8 million), total equity amounted to USD 927.9 million (USD 1,233.2 million). The decrease in total assets and equity is primarily a result of impairment charges in 2008 offset by increased book value of conversion projects.
Net cash inflow from operating activities was USD 72.4 million (USD 34.2 million). Net cash outflow from investing activities was USD 84.5 million (USD 104.3 million). Cash flow from investing activities relates mainly to the conversion projects in the FPSO segment. Net cash inflow from financing activities was USD 10.8 million (cash outflow USD 63.7 million), arising from a net drawdown of USD 15.0 million (USD 0.0 million) on the loan facility offset by interest payments.
At 30 September 2009, the Company held USD 42.4 million (USD 67.7 million) in cash and deposits. Currently, the Company has drawn down USD 887.8 million on the USD 1,500 million credit facility. Net debt amounted to USD 870.0 million at 30 September 2009 (USD 445.3 million).
Revenues in the third quarter were USD 65.2 million (USD 48.2 million). EBITDA was USD 41.3 million (USD 7.7 million). Cash flow from operating activities in the third quarter was USD 57.8 million (USD 18.0 million).
The FPSO BW Carmen has during the third quarter effectively completed a short term contract with Shell. The FPSO supported a pipeline cleaning operation for a decommissioning project in the UK sector of the Southern North Sea.
The FPSO YÙUM K`AK`NÀAB had a stable performance during the third quarter.
The FPSO BW Cidade de São Vicente is operating successfully on the Tupi field offshore Brazil. The FPSO received 95% stand by rate during part of the third quarter due to subsea problems experienced by Petrobras. The FPSO has resumed operation and has received full day rates from the beginning of September.
The LPG FPSO Berge Okoloba Toru was sold during third quarter 2009. All costs related to the sale have been booked during third quarter, resulting in a net loss related to the sale of the FPSO of USD 2.2 million.
The ongoing conversion of the FPSO BW Pioneer for the Petrobras Chinook & Cascade field is continuing in line with expectations. More than 2000 people are working daily on the FPSO at the yard and sail away from Singapore is planned shortly.
The Papa Terra Joint Venture, consisting of Petrobras (operator) and Chevron, has concluded the contracting and negotiation process with the consortium of BW Offshore and the Brazilian industrial group QUIP for the FPSO P-63 for the Papa Terra field. Letter of Intent was signed 7 October 2009, while contract signing of the project will occur at a later date.
BW Offshore has during the third quarter 2009 received payments from Equator Exploration related to the termination of the FPSO BW Cidade de São Vicente (former BW Peace) for the Bilabri field.
The claim from Aker Marine Contractors related to the installation campaign of the FPSO YÙUM K`AK`NÀAB has also been settled during third quarter. The outcome of the claim is reflected in the third quarter operating expenses.
The revenues (from external customers) in the third quarter were USD 51.4 million (USD 66.6 million) with EBITDA of USD 6.4 million (USD -59.1 million). This resulted in an EBITDA margin of 9.3% (9.5%). Cash flow from operating activities in the third quarter was USD 14.6 million (USD 16.2 million).
The projects Chinook & Cascade, Pazflor for Total and Peregrino for Maersk, are progressing according to schedule. As for the Neptune project, all systems have been installed and delivered during the third quarter.
During the third quarter 2009, APL initiated a process to adjust the capacity of its organization in line with market demand. The process is now completed and full provisions for all costs have been included in the third quarter.
The financial market stabilization efforts undertaken by governments around the world have slowly eased the project financing difficulties experienced at the beginning of the year. A steady increase in oil prices resulted in improved prospects for new exploration of oil and gas fields internationally going forward. BW Offshore expects a pickup in activity levels in the fourth quarter of 2009 and in 2010. The changes to the competitive landscape with fewer competitors pursuing new projects are expected to remain.
The Company is fully funded for all ongoing projects. Cash flows from existing units are secure and arise from reputable clients. Additional financial capacity is available for new projects if they should meet the targeted returns. BW Offshore is of the opinion that the long-term fundamentals of the business are sound. Underlying growth in energy demand combined with accelerating depletion of existing fields, will necessitate the exploration of new oil and gas fields. The investments in new facilities by international and national oil companies will lead to continuing demand for the services provided by BW Offshore.
The Company's FPSO BW Pioneer is being completed in Singapore for operations and will arrive in US waters during the first quarter 2010. This vessel will contribute to an increased EBITDA for the Floating Production segment in 2010 and onwards.
The Technology segment, although affected by the short term reduction in E&P activity, is seeing improved activity again as E&P activity is picking up and anticipated to continue to do so in 2010.
Bermuda, 19 November 2009
For further information, please contact:
Carl K. Arnet, CEO BW Offshore, +65 9630 3290
Knut R. Sæthre, CFO BW Offshore, +47 9111 7876
BW Offshore is one of the world`s leading FPSO contractors and a market leader within advanced offshore loading and production systems to the oil and gas industry. BW Offshore has more than 25 years'
experience and has successfully delivered 14 FPSO projects and 50 turrets and offshore terminals. BW Offshore's technology division APL has delivered solutions for production vessels, storage vessels and
tankers in a wide range of field developments. Adapting through competence, in-house technology, solid project execution and operational excellence, BW Offshore ensures that customer needs are met through versatile solutions for offshore oil and gas projects. BW Offshore has a global network with offices in Europe, Asia Pacific, West Africa and the Americas. BW Offshore has 1,100 employees and is listed on the Oslo Stock Exchange. For more information, please visit www.bwoffshore.com and www.apl.no.