BW Offshore: Q1 2014 - Interim consolidated financial information
- EBITDA of USD 112.9 million in the first quarter
- Stable operations with an uptime of 99.5%
- Long-term extension for FPSO Sendje Berge
- Signed Letter of Award and contract for the Catcher FPSO
- Termination of the Letter of Intent for acquiring stake in Polvo oil field
- Successful placement of a NOK 750 million senior unsecured bond
- Dividend payment of USD 0.03 per share
Operating revenues for Q1 2014 amounted to USD 237.3 million, compared to USD 260.6 million in Q4 2013. Operating expenses amounted to USD 125.0 million, compared to USD 156.8 million in the previous quarter. The decrease in operating revenues and operating costs for the quarter mainly represent gross effects from reimbursable elements on the Papa Terra project in previous quarter.
EBITDA for the first quarter amounted to USD 112.9 million, compared to USD 107.4 million in the previous quarter.
Depreciation amounted to USD 55.3 million, compared to USD 66.5 million in the previous quarter. BW Offshore has during first quarter reviewed and amended the estimates used for defining useful life on the existing fleet. This review has resulted in a revised depreciation schedule on a number of FPSOs in the fleet. The reduction in depreciation of USD 11.2 million this quarter is largely due to this revision.
Operating profit (EBIT) for the quarter amounted to USD 57.2 million compared to USD 40.2 million in the previous quarter.
Net profit amounted to USD 33.1 million compared to USD 14.2 million in the previous quarter.
Total equity at 31 March 2014 amounted to USD 1,142.4 million, corresponding to an equity ratio of 33.1%.
Total available liquidity as of 31 March 2014 amounted to USD 420.5 million, while net debt amounted to USD 1,638.5 million at 31 March 2014.
During the quarter BW Offshore successfully completed a NOK 750 million senior unsecured bond issue with maturity in March 2019. The interest payable on the bond is NOK NIBOR + 350bps. The Company also completed a USD 50 million unsecured one-year term loan during the quarter. The interest payable on the loan is LIBOR + 130bps.
Net cash inflow from operating activities was USD 146.1 million compared to USD 83.2 million in the previous quarter. Net cash outflow from investing activities was USD 126.0 million compared to cash outflow of USD 25.8 million in the previous quarter. This is related to the acquisition of BW Opal for USD 84.5 million, capitalisation of FEED expenses on the Catcher project and capital expenditures for ongoing life extension activities. Most life extension activities are either covered on a cost plus basis or reimbursed through higher day rates. Net cash inflow from financing activities was USD 29.3 million compared to cash outflow of USD 32.2 million in the previous quarter.
BW Offshore owns and operates 18 units, and the owned fleet consists of 14 FPSOs, one FSO and one VLCC tanker. All operating units experienced stable performance with an average uptime of 99.5% during the first quarter.
During the quarter, BW Offshore signed an interim agreement for a six year extension for FPSO Sendje Berge with Addax Petroleum Exploration Ltd. The firm period has been extended to first quarter 2018 with options until first quarter 2020.
The termination from Murphy West Africa Limited for FDPSO Azurite is to be effective from 1 May 2014. Production ceased in November last year and the unit has as of the time of the report left the field and is in transit to Singapore. The vessel is currently being marketed for new projects. The Company is being compensated for the early termination of the contract. The compensation is reflecting the value of the remaining period of the original fixed term of the contract.
During the quarter, the charter of the FPSO Polvo was novated from BP Energy do Brasil LTDA ("BP") to HRT O&G Exploração e Produção de Petróleo LTDA ("HRT"). This was completed as HRT took over operatorship of the Polvo oil field from previous operator BP. On the same day BW Offshore signed an agreement with HRT for a one year extension for the lease and operation of the FPSO Polvo. The firm period has been extended to third quarter 2015. The Polvo oil field is now owned by HRT (operator, 60%) and Maersk (40%).
BW Offshore is currently on a short term extension contract until end of second quarter 2014 for FPSO Abo with Nigerian Agip Exploration Ltd, a subsidiary of ENI S.p.A. The contract further has an option to extend until end of fourth quarter 2014. The extension has been agreed to secure operational continuity while joint work to detail a longer term program for investment and production is completed. The Company is currently performing life extension activities on the unit, which are being compensated on a reimbursable cost plus basis.
All other FPSOs and FSOs are currently on longer term contracts.
On 30 April 2014 BW Offshore signed a contract with Premier Oil for a FPSO to operate on the Catcher oil field in the UK North Sea. The field is owned by Premier Oil (50% operator), Cairn Energy (30%) and MOL (20%). The final contract follows the Letter of Award which was signed 30 March 2014.
The firm charter period of the contract is seven years, with extension options of up to 18 years. Based on a field life of 10 years, the contract value is USD 2.3 billion including FPSO charter rate and opex.
BW Offshore was awarded a FEED study as part of a funded tender process by Premier Oil in fourth quarter 2012, and has performed extensive engineering studies on the project during 2013 and first quarter 2014. BW Offshore's scope includes the delivery of the FPSO, mooring system, installation and operation of the unit throughout the charter period. The FPSO will have a processing capacity of 60,000 bopd and a storage capacity of 650,000 bbl. BW Offshore will order a new built hull from Japan for the project, while conversion and integration work will be performed in Singapore. The FPSO shall be ready for production mid-2017.
The project will be financed by a project specific bank facility of USD 800 million in addition to BW Offshore's existing liquidity.
On 13 December 2013, BW Offshore announced the Letter of Intent ("LOI") to acquire 30% of the participating interests in the Polvo field in Brazil from HRT. Such transaction was subject to due diligence, and regulatory, governmental and board approvals. Upon the expiry of the backstop date under the LOI on 8 April 2014, BW Offshore elected to terminate the aforesaid LOI pursuant to its terms.
BW Offshore took possession of the BW Opal during February 2014. BW Opal is a Daewoo Shipbuilding & Marine Engineering designed and built VLCC (320,000 dwt) from 2012. BW Offshore has performed detailed engineering studies and inspections of the VLCC since fourth quarter 2012, and is currently evaluating several FPSO projects suitable for the vessel.
The outlook for BW Offshore's products and services remains good due to the geographical presence, scale and competence of the Company.
BW Offshore's cash flow from the operating units is secure and based on long term contracts with national and independent oil companies. The fleet of BW Offshore will continue to generate a steady cash flow in the time ahead, providing a sound basis for dividend payments as well as for further investments in new assets.
BW Offshore is currently evaluating several projects meeting the Company's financial targets. In addition the Company is in negotiations for contract extensions for existing units.
BW Offshore intends to grow selectively and expects to see an improvement in the risk and reward balance for new FPSO projects.
BW Offshore will carry on with the efforts to improve safety, efficiency, planning, disciplined execution and financial control in all its operations.
The Board has declared a cash dividend of USD 0.03 per share for Q1 2014.
Please see the attachments for the full quarterly report and presentation.
BW Offshore hosts a presentation of the financial results at 09:00 (CET) today at Hotel Continental in Oslo, Norway. The presentation will be given by CEO Carl K. Arnet and CFO Knut R. Sæthre. The presentation will be broadcasted via webcast, and will also be available for replay. Please visit www.bwoffshore.com for link and login details.
For further information, please contact:
Knut R. Sæthre, CFO, +47 9111 7876 (Media)
Kristian Flaten, Vice President IR and Corporate Finance, +47 9509 2322
About BW Offshore:
BW Offshore is a leading global provider of floating production services to the oil and gas industry. BW Offshore is the world's second largest contractor with a fleet of 14 FPSOs and 1 FSO represented in all major oil regions world-wide. The company also operates additional 2 FPSOs. BW Offshore has a long track record on project execution and operations, as well as a robust balance sheet and strong financial capabilities. In more than 30 years of operation, BW Offshore has executed 38 FPSO and FSO projects. The company is listed on the Oslo Stock Exchange. Further information is also available on www.bwoffshore.com
This information is subject of the disclosure requirements pursuant to section 5-12 of the Norwegian Securities Trading Act.