BW Offshore: Q2 2014 - Interim consolidated financial information
- EBITDA of USD 183.1 million in the second quarter and EBITDA of USD 296.0 million in the first half-year 2014
- Compensation for early termination by Murphy West Africa Limited for FPSO Azurite recognised during second quarter
- Stable operations with an uptime of 99.7% in the second quarter and 99.6% in the first half-year 2014
- Contract extension for BW Athena
- Completed USD 800 million bank loan for Catcher in July
- Agreement to take over 100% ownership for FPSO Petróleo Nautipa in July
- Dividend payment of USD 0.03 per share
Operating revenues for Q2 2014 amounted to USD 319.8 million, an increase of USD 82.5 million compared to USD 237.3 million in Q1 2014.
The increase in operating revenues for the quarter mainly represent early termination fee for Azurite. The compensation for the early termination by Murphy West Africa Limited for FPSO Azurite has been recognised during second quarter. The net effect from this termination is USD 70 million. The compensation is paid partially as a lump sum payment and partially as monthly payments over a period of 24 months from termination date which was 30 April. As BW Offshore has no further performance obligation under the contract the whole termination compensation is recognised in second quarter 2014.
EBITDA for Q2 2014 amounted to USD 183.1 million, an increase of USD 70.2 million compared to USD 112.9 million in the previous quarter.
Operating profit for the quarter amounted to USD 130.1 million compared to USD 57.2 million in the previous quarter.
Net profit amounted to USD 101.2 million compared to USD 33.1 million in the previous quarter.
Total equity at 30 June 2014 amounted to USD 1,213.9 million, an increase of USD 71.5 million compared to USD 1,142.4 million at 31 March 2014. The equity ratio was 34.9% at the end of the quarter, up from 33.1% last quarter.
Net debt amounted to USD 1,574.1 million at 30 June 2014, compared to USD 1,638.5 million at 31 March 2014. Total available liquidity as of 30 June 2014 amounted to USD 460.7 million.
On 24 July the Company successfully negotiated a USD 800 million 10 year combined construction and long term financing for the FPSO Catcher.
Net cash inflow from operating activities was USD 144.5 million compared to USD 146.1 million in the previous quarter. Net cash outflow from investing activities was USD 37.5 million compared to cash outflow of USD 126.0 million in the previous quarter. The main difference is due to the vessel BW Opal that was acquired during first quarter. Cash outflow on investing activites is mainly related to capitalisation of 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 outflow from financing activities was USD 92.6 million compared to cash inflow of USD 29.3 million in the previous quarter.
BW Offshore owns and operates 18 units. The owned fleet consists of 14 FPSOs, one FSO and one VLCC tanker. All operating units experienced stable performance with an average uptime of 99.7% during the second quarter.
The termination from Murphy West Africa Limited for FDPSO Azurite was effective May 2014. 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 second quarter the Company received a contract extension for the FPSO BW Athena with Ithaca Energy. The primary term of the contract expires in second quarter of 2015, and Ithaca Energy has exercised the option for a secondary term of up to five years. Ithaca Energy has the right to terminate the contract on a rolling 12-month notice.
BW Offshore is currently on a short term extension contract until end of fourth quarter 2014 for FPSO Abo with Nigerian Agip Exploration Ltd, a subsidiary of ENI S.p.A. 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 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's scope includes the delivery of the FPSO, mooring system, installation and operation of the unit throughout the charter period. 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 is financed by a project specific bank facility of USD 800 million in addition to BW Offshore's existing liquidity.
At the time of this report, the Catcher project is now well underway. Project team mobilisation has been completed and major subcontracts for the new built hull and the turret mooring system have been executed. The project is now ramping up planned engineering and procurement activities.
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 a continued improvement in the risk and reward balance for new FPSO projects.
BW Offshore will carry on with the efforts to constantly 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 Q2 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.