Q1 2010: Interim consolidated financial information
- EBITDA of USD 31.2 million in the first quarter 2010, before results from associates
- FPSO BW Pioneer arrived in the US Gulf of Mexico in March 2010
- Signed contract for FPSO P-63 Project (Papa Terra)
- Signed Letter of Intent for FPSO BW Carmen
BW Offshore hosts a presentation of the financial results at 09:00 (CET) today at 'Shippingklubben` (Haakon VII gt 1, 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.
Alternative login: http://media01.smartcom.no/Microsite/register.aspx?eventid=5097
Operating revenue amounted to USD 113.3 million in Q1 2010 (vs USD 99.3 million in Q1 2009). The increase is mainly a result of the commencement of operation of the FPSO BW Cidade de São Vicente and revenue recognised on the turnkey Papa Terra contract. The increased revenue is offset by lower activity level in the APL segment.
Operating expenses in the first quarter amounted to USD 82.1 million (USD 70.8 million), an increase resulting mainly from an increase in operating expenses related to the commencement of operation of the FPSO BW Cidade de São Vicente and expenses recognised on the Papa Terra project, offset by lower expenses in the APL segment.
The EBITDA was USD 32.7 million (USD -10.7 million) in the first quarter while the EBITDA before transactions related to associates was USD 31.2 million (USD 28.5 million). The increase in EBITDA arose mainly from the commencement of operation of the FPSO BW Cidade de São Vicente and the progress on the Papa Terra project which is accounted for as a "fixed price" construction contract. Revenue from this project is recognised in accordance with the "percentage of completion" (POC) method. The positive mentioned effects were offset by the APL segment which experienced a year on year reduction of EBITDA, excluding share of associates, amounting to USD 10.2 million. Changes in market values of currency derivatives amounting to USD -2.3 million (USD 7.3 million) were included in the EBITDA.
Share of profit / loss (-) of associates was USD 1.5 million (USD -39.2 million) in the first 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 1.5 million (USD 0.3 million) while the share of profit from Nexus was USD 0.0 million (USD -39.5 million). At 31 March 2010, the Company owned 23.9% of the shares in PROD and 49.7% of the shares in Nexus.
Net financial items for the first quarter were USD -12.4 million (USD -7.0 million). The increase in net finance expenses was mainly due to a reduction in fair value of USD 9.5 million (USD -3.3 million) on interest derivative contracts. Interest expense was USD 4.6 million (USD 6.7 million) in the first quarter. The decrease in interest expenses is mainly a result of reduced interest rates. Interest income was USD 1.5 million (USD 2.7 million).
Result before tax was USD 3.0 million in the first quarter (USD -28.2 million). Income tax expense amounted to USD 2.8 million (USD 1.6 million) in the first quarter. Net profit was USD 0.2 million in the first quarter (USD -29.8 million).
At 31 March 2010, total assets amounted to USD 2,495.8 million (USD 2,266.3 million) and the total equity amounted to USD 919.2 million (USD 894.0 million). The net increase in total assets is mainly a result of net increased book value of vessels due to conversion projects and increased cash equivalents, partly offset by reduced CIRR deposits and reduced receivables.
Net cash inflow from operating activities was USD 124.2 million (USD 11.5 million). Net cash outflow from investing activities was USD 42.5 million (USD 92.8 million). Cash flow from investing activities relates mainly to the conversion projects in the FPSO segment. Net cash inflow from financing activities was USD 45.3 million (cash inflow USD 73.8 million), mainly arising from a net drawdown of USD 50.0 million (USD 80.0 million) on the loan facility.
At 31 March 2010, the Company held USD 195.0 million (USD 60.2 million) in cash and deposits. Currently, the Company has drawn down USD 943.8 million on the USD 1,500 million credit facility. Net debt amounted to USD 774.1 million at 31 March 2010 (USD 709.1 million).
Revenues in the first quarter were USD 79.9 million (USD 44.6 million). The EBITDA was USD 31.2 million (USD 17.1 million). The increase in revenues and EBITDA reflects the commencement of operation of the FPSO BW Cidade de São Vicente and the POC accounting on the Papa Terra project. Cash flow from operating activities in the first quarter was USD 134.6 million (USD 21.6 million).
The FPSOs YÙUM K`AK`NÀAB, BW Cidade de São Vicente, Berge Helene and Sendje Berge experienced stable performance during the first quarter resulting in an oil process uptime of 99.6% during the period.
The FPSO BW Carmen was in lay up for the entire quarter; the vessel is intended for an upgrade once the Letter of Intent with Ithaca Energy and partners results in a signed contract.
The FPSO BW Pioneer entered US waters on 27 March 2010 and is currently anchored, with final preparations for operation taking place. The operator of the fields is currently completing required subsea work before BW Pioneer can commence operations.
The contract for the conversion of the FPSO P-63 (the Papa Terra project) for Petrobras was signed on 29 January 2010. BW Offshore's main scope relates to the conversion of the vessel BW Nisa into an FPSO. The project is accounted for as a fixed-price construction contract. The Company is receiving milestone payments from Petrobras throughout the project period.
The revenues in the first quarter were USD 36.0 million (USD 75.7 million) with an EBITDA of USD 1.9 million (USD -26.9 million), resulting in an EBITDA-margin of 5.3% in the first quarter. The negative EBITDA in the first quarter 2009 included a share of negative results from associates of USD 39.5 million. Cash flow from operating activities in the first quarter was USD -9.4 million (USD -10.1 million).
APL's main projects are the Cascade and Chinook project for the FPSO division, two SAL harsh environment terminal systems for a major international oil company, Pazflor for Total and Peregrino for Maersk, and have all progressed according to schedule.
The market activity in the oil service sector has improved during the first quarter and is progressing in line with BW Offshore expectations. BW Offshore expects a continued increase in activity during the course of 2010.
BW Offshore is fully funded for all ongoing projects. The operating cash flow from existing vessels is secure and long term, and arises from large national oil companies. Additional financial capacity is available for new projects if they should meet BW Offshore's targeted returns.
The commencement of operation of the FPSO BW Pioneer and the Papa Terra project will contribute to a significant growth in the EBITDA for the FPSO segment in 2010. The APL segment, although still affected by the reduction in the Exploration and Production activity, is experiencing improved activity level. It is expected that this will result in improved business prospects materialising in 2010 and 2011.
Bermuda, 19 May 2010
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.