BW Offshore: Q1 2015 - Interim consolidated financial information
- Initiated recovery project for FPSO Cidade de São Mateus
- EBITDA of USD 93.2 million
- Contract extension for Polvo and BW Athena
- Sale of VLCC BW Opal
- Completed USD 80 million bank loan for Petróleo Nautipa
- Dividend payment of USD 0.02 per share
Operating revenues for Q1 2015 amounted to USD 236.8 million, a decrease of USD 28.0 million compared to Q4 2014 of USD 264.8 million. Operating expenses amounted to USD 143.7 million, a decrease of USD 11.7 million from last quarter.
EBITDA for the first quarter amounted to USD 93.2 million, down from USD 109.2 million in Q4 2014. Operating profit for the quarter amounted to USD 36.7 million (USD 51.4 million).
Net profit amounted to USD 5.8 million compared to USD 12.7 million.
Main change relates to lower revenue due to FPSO Cidade de São Mateus being off-hire after the accident 11 February 2015.
Total equity at 31 March 2015 amounted to USD 1,182.6 million, a decrease of USD 15.5 million (1%) (USD 1,198.1 million at 31 December 2014). The equity ratio was 33.4% at the end of the quarter, up from 32.7%.
As of 31 March 2015, the Company had USD 1,092.4 million in interest-bearing loans and USD 60.0 million in letters of guarantee drawn under the USD 2,400 million credit facility. The committed amount on the USD 2,400 million credit facility was USD 1,308.6 million, following scheduled reductions. Total utilised debt facilities for the company, including bond loans and other facilities was USD 1,716.0 million. Total available liquidity as of 31 March 2015 amounted to USD 307.5 million.
On 13 February 2015, the Company settled a USD 50 million unsecured one-year term loan with Itaú Bank, established during first quarter 2014.
On 25 March, BW Offshore signed the facility documentation for a new USD 80 million senior secured credit facility in respect of the FPSO Petróleo Nautipa. The loan has a tenor of 7.5 years and will be used for general corporate purposes.
Net debt amounted to USD 1,542.2 million at 31 March 2015 (USD 1,589.7 million at 31 December 2014).
Net cash inflow from operating activities was USD 80.6 million (USD 133.2 million). Net cash outflow from investing activities was USD 13.2 million (USD 168.5 million). Cash outflow on investing activities is mainly related to capitalisation on the Catcher project, capital expenditures for ongoing life extension activities offset by the sale of BW Opal. Life extension activities are generally either covered on a cost plus basis or reimbursed through higher day rates. Net cash outflow from financing activities was USD 131.5 million (USD 66.4 million).
BW Offshore operates 17 units. The owned fleet consists of 14 FPSOs and one FSO. Average uptime during the first quarter was 94.4% (99.8%). The lower uptime was caused by the off hire of FPSO Cidade de São Mateus.
The Company operates the FPSO Peregrino for Statoil and Sinochem on the Peregrino oil field offshore Brazil.
The Company also operates the FPSO P-63 owned by Petrobras and Chevron on the Papa Terra field offshore Brazil for three years in a joint venture with Queiroz Galvão Óleo e Gás S.A. ('QGOG'). The operation started in November 2013.
On 11 February 2015, there was a gas explosion onboard the FPSO Cidade de São Mateus, operating on the Camarupim and Camarupim Norte fields for Petrobras in Espirito Santo Littoral. Production was stopped and the unit has been shut down since the accident. The accident resulted in nine fatalities and 26 crew needing medical attention of a total crew of 74. The joint investigation with Petrobras was started immediately after the accident. The investigation was completed by end of April and signed by both companies. BW Offshore will communicate findings and learnings from the accident to the stakeholders in the industry.
In parallel with the investigation damages to and necessary repair of the unit has been undertaken and is still ongoing. The first phase of the operation has been to stabilise the unit, free process and subsea systems of hydrocarbons, empty the unit of cargo and disconnect the unit for transport to a yard for repairs. The cost of repairs are still being assessed together with impact from impairment to be taken for damages incurred.
BW Offshore carries insurance cover on a fleet wide basis, for its crew and support staff, pollution and clean up and any damage to vessels. In addition, the FPSO Cidade de São Mateus is also covered by a loss of hire insurance. The accident and its consequences will to a large extent be covered by these policies and BW Offshore is working closely with insurers and their loss adjusters in the recovery operations.
In the quarter, BW Offshore received a notice of termination for the FPSO BW Athena contract from Ithaca Energy. BW Offshore and Ithaca Energy (on behalf of the Athena-field co-venturers) have agreed a revised contract structure to continue production on the Athena field beyond expiry of the firm period on a revised compensation scheme, involving advanced payment of an FPSO demobilisation fee and sharing of positive cash-flow from the field. Both parties have the right to terminate on a 60-day notice period.
In March, BW Offshore signed an agreement with PetroRio for a one-year extension for the lease and operation of the FPSO Polvo. The firm period has been extended to third quarter 2016 (from third quarter 2015), with options until third quarter 2022.
On 11 March 2015, the VLCC BW Opal was sold for USD 85.5 million to BW Group. The transaction was performed on an arms-length basis, based on independent valuation reports and technical inspection of the vessel. The agreement also includes an option to buy-back the vessel until first quarter 2017.
All other FPSOs and FSO, except Azurite which is being marketed for new projects, are on contract per the end of the quarter.
On 30 April 2014, a contract with Premier Oil and partners for an FPSO to operate on the Catcher oil field in the UK North Sea was signed. The firm charter period of the contract is seven years, with expected start up in mid-2017, with extension options of up to 18 years. Backlog from the contract is USD 2.3 billion including FPSO charter rate and opex and is based on a 10 year duration.
Good progress was made during the quarter on engineering, procurement and construction activities. Fabrication of the turret mooring system is progressing well and topside fabrication activities has started. At the end of the quarter more than 70% of projected project costs have been committed. BW Offshore is closely monitoring progress and safety in all the project activities, ensuring that mitigating actions are implemented quickly if any deviation is detected.
The Company is undertaking a number of modification and life extension activities on existing units. These activities are either covered on a cost plus basis or reimbursed through higher day rates.
The Board has declared a cash dividend of USD 0.02 per share for the quarter. The shares will be traded ex-dividend as of 10 June 2015. The dividend will be payable on or about 18 June 2015 to shareholders of record on 11 June 2015.
The short term outlook for BW Offshore's products and services has changed due to the drop in oil price. However, more recently we have seen an improvement in project activity related to previously identified prospects. BW Offshore expects to increase activity on FEED and bidding in the second half of 2015.
BW Offshore still expects outsourcing of production to be a cost effective solution for oil companies to pursue oil development initiatives going forward.
BW Offshore's cash flow from the operating units is to a large extent mitigated by the loss of hire insurance for Cidade de São Mateus in the coming year. Redeployment of units coming off contracts will depend on oil price development and related to this, the number of new developments.
The majority of BW Offshore's fleet remain on long term contracts with national and independent oil companies. The fleet will continue to generate a healthy cash flow in the time ahead.
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
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 production, 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.