Interim consolidated financial information
NOT FOR PUBLIC DISTRIBUTION, DIRECTLY OR INDIRECTLY, IN OR INTO THE UNITED STATES OF AMERICA, CANADA, SOUTH AFRICA, AUSTRALIA OR JAPAN
- EBITDA of USD 22.4 million in Q2 2010, before results from associates
- Signed contract for a gas FPSO for the TSB project (Indonesia)
- Signed contract for the completion of FPSO OSX-1 (Brazil)
- Established a new bridging credit facility of USD 1.1 billion
- Voluntary exchange offer to acquire all issued and outstanding shares in Prosafe Production Limited
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, as well as important legal disclaimers.
(Figures in brackets refer to corresponding figures for 2009)
Consolidated operating revenues were down USD 16.1 million to USD 98.8 million compared to USD 114.9 million in Q2 2009. Revenues from the FPSO segment increased by USD 22.2 million offset by a USD 38.3 million decrease in the APL segment.
The increase in revenues in the FPSO segment is mainly a result of the FPSO BW Cidade de São Vicente operating a full quarter, improved operation for the BW Offshore fleet and revenue recognised on the Papa Terra contract. The revenues in the FPSO segment in Q2 2009 included a settlement with insurance companies.
The decrease in revenue in the APL segment in Q2 2010 compared to Q2 2009 is due to the high activity level experienced in Q2 2009.
Consolidated operating expenses were down USD 8.7 million to USD 76.4 million compared to USD 85.1 million in Q2 2009. Expenses from the FPSO segment increased by USD 23.3 million, offset by a USD 32.0 million decrease in the APL segment.
The increase in expenses in the FPSO segment is mainly a result of expenses recognised on the Papa Terra project and the negative changes in fair market values of currency hedges of USD 5.7 million compared to a gain of USD 0.8 million in Q2 2009.
The EBITDA for the quarter was down USD 9.3 million to USD 22.5 million compared to USD 31.8 million in Q2 2009. The EBITDA before transactions related to associates was USD 22.4 million compared to USD 29.8 million in Q2 2009.
The share of profit of associates was USD 0.1 million (USD 2.0 million) in the quarter and relates to the investments in Prosafe Production Limited (PROD). At 30 June 2010, the Company held 23.9% of the shares in PROD.
Net financial items were down USD 35.2 million to a negative USD 28.9 million compared to a net gain of USD 6.3 million in Q2 2009. The company has hedging policies in place with the overall perspective to reduce the exposure in currency and interest rate fluctuations. The negative development in the financial items was mainly due to changes in fair market value on financial instruments of USD 19.3 million compared to a gain of USD 10.7 million in Q2 2009.
The result before tax was reduced by USD 47.3 million ending with a loss of USD 23.7 million compared to a profit of USD 23.6 million in Q2 2009. The development in interest rates and foreign currency movements during the quarter has affected the result for the quarter negatively by USD 27.9 million. The income tax expense increased by USD 2.3 million to USD 4.1 million compared to USD 1.8 million in Q2 2009.
Net loss was USD 27.8 million compared to a net profit of USD 21.8 million in Q2 2009.
At 30 June 2010, the total assets amounted to USD 2,402.6 compared to USD 2,324.4 million at 30 June 2009. The net increase of USD 78.2 million mainly relates to an increased book value of vessels' ongoing conversion, increased cash and deposits offset by reduced receivables and CIRR deposits.
The total equity was down USD 32.2 million to USD 891.3 million at 30 June 2010 compared to USD 923.5 million at 30 June 2009. The decrease reflects the total comprehensive loss for the period.
Net cash flow from the operating activities was USD 32.1 million (USD -18.1 million). The net cash outflow from the investing activities was USD 38.9 million (USD 93.9 million). The cash flow from the investing activities relates mainly to the conversion projects in the FPSO segment. The net cash outflow from financing activities was USD 106.9 million (cash inflow USD 95.5 million), mainly arising from a net repayment of USD 100.0 million on the loan facility.
At 30 June 2010, the Company had USD 81.3 million (USD 43.7 million) in cash and deposits. Currently, the Company has drawn USD 843.3 million on the USD 1,500 million credit facility. Net debt amounted to USD 785.5 million at 30 June 2010 (USD 827.3 million).
SEGMENTS
Floating Production
The revenues in the quarter were USD 74.6 million (USD 52.4 million). The EBITDA was USD 19.3 million (USD 22.3 million). The difference compared to Q2 2009 reflects the improved operation of the BW Offshore fleet, the FPSO BW Cidade de São Vicente in operation for a full quarter and the EBITDA included from the Papa Terra project. These effects were offset by the negative development on currency hedges in addition to the settlement with insurance companies included in Q2 2009. The cash flow from operating activities in the second quarter was USD 38.8 million (USD 14.7 million).
The FPSOs YÙUM K`AK`NÀAB, BW Cidade de São Vicente, Berge Helene and Sendje Berge experienced stable performance during the second quarter resulting in an oil process uptime of 99.9% during the period.
The FPSO BW Pioneer passed the initial inspections on the 25th August. The hook up to the buoy will commence as soon as all systems are ready to start with the pull-in. The FPSO will receive stand by day rate when the buoy is hooked up and the vessel is prepared to start operations.
The ongoing conversion of the FPSO P-63 (the Papa Terra project) for Petrobras is continuing in line with expectations. BW Offshore's main scope relates to the marine conversion of the vessel BW Nisa. The project is accounted for as a fixed-price construction contract, so the revenue from this project is recognised in accordance with the "percentage of completion" (POC) accounting method. The Company is receiving milestone payments from Petrobras throughout the project period.
APL
The revenues in the quarter were USD 29.6 million (USD 77.2 million) with an EBITDA of USD 3.2 million (USD 8.7 million), resulting in an EBITDA-margin of 10.8%. Cash flow from operating activities in the quarter was USD -6.7 million (USD -32.8 million).
APL's main projects during the quarter have been the Cascade and Chinook project for the FPSO division, terminal systems for the Hibernia project, Pazflor for Total and Peregrino for Maersk. The projects have progressed according to schedule.
During the quarter APL has increased its backlog with signed agreements for delivering of systems to the Goliat FPSO, to the OSX-1 FPSO and to the TSB FPSO.
OUTLOOK
The activity has improved during the first half-year and is progressing in line with BW Offshore's expectations. The company 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, as well as the FPSO projects for Papa Terra and OSX, will contribute to a significant growth in the EBITDA for the FPSO segment in the second half of 2010. The two new FPSO contracts for the TSB and Athena fields will contribute to further growth in the EBITDA in 2011 and 2012.
The APL segment, although still affected by the general reduction in Exploration and Production in the energy sector, is experiencing an improved activity level within both execution and business development. It is expected that this will result in higher EBITDA for the second half year of 2010 and onwards.
About BW Offshore
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.
This information is subject to the disclosure requirements according to section 5-12 of the Norwegian Securities Trading Act.
This announcement is not an offer for sale of any securities in the United States. Securities may not be offered or sold in the United States absent registration or an exemption from registration under the U.S. Securities Act. BW Offshore Limited has not registered and does not intend to register any portion of any offering of shares in the United States or to conduct a public offering of any securities in the United States.