Third quarter results 2020
HIGHLIGHTS
- Protecting people, operations and partners remain a priority amid the Covid-19 pandemic
- EBITDA of USD 98.1 million and operating cashflow USD 82.0 million for the quarter
- Contract extension signed for Petróleo Nautipa
- Agreement with New Zealand government for Umuroa
- Cash dividend of USD 0.035 per share
- Equity ratio of 37.5% and USD 386.6 million in available liquidity at end of quarter
BW Offshore maintains a proactive approach to minimise risk of business interruption due to the spread of Covid-19 by implementing comprehensive procedures to safeguard people and operations and adhering to local public health advisory across all locations.
“The financial performance reflects a challenging quarter with reduced commercial uptime due to the events on the FPSO’s Sendje Berge and Yùum K'ak' Náab, as well as higher operational costs as we are still managing Covid-19,” said Marco Beenen, the CEO of BW Offshore. “Still, a majority of the FPSOs delivered stable operations and we continue to distribute dividend and further progress new business opportunities.”
FINANCIALS
EBITDA decreased to USD 98.1 million from USD 116.2 million in the second quarter. The reduction was mainly a result of reduced revenue from Yùum K'ak' Náab due to shut down following the tanker incident early in Q3 and the one-off settlement of outstanding claims related to FPSO P63 in Q2. Direct identified costs related to managing Covid-19 continues to be significant and were slightly higher than Q2.
Net financial expense decreased to USD 8.2 million from USD 14.4 million in the second quarter. This is mainly driven by positive mark to market (MTM) changes on interest rate hedges due to increasing swap rates and positive MTM changes on FX hedges due to USD weakening.
Total equity at 30 September 2020 was USD 1,004.8 million (USD 1,004.5 million in Q2 2020). The equity ratio was 37.5% at the end of the quarter (35.8% in Q2 2020).
Available liquidity was USD 386.6 million when including USD 257.5 million available to draw under the corporate loan facility.
Net interest-bearing debt was USD 976.4 million (USD 1,015.4 million in Q2 2020).
The Board of Directors has declared a cash dividend of USD 0.035 per share. Shares will trade ex-dividend from and including 25 November 2020. Shareholders recorded in VPS following the close of trading on Oslo Børs on 26 November 2020 will be entitled to the distribution payable on or around 3 December 2020.
OPERATIONS
The average commercial uptime for the fleet during the quarter was 93.2% (99.4% in Q2 2020). The commercial uptime was mainly affected by the shut down on Yùum K’ak’ Náab and Sendje Berge. Production from the units were reactivated in end July and mid-October respectively.
In July, the firm period for Petróleo Nautipa was extended until the third quarter of 2022.
The contract for BW Cidade de São Vicente reached the end of its term in the quarter and the FPSO is currently in lay up in Brazil.
On 18 November, BW Offshore signed an agreement with the New Zealand government, through the Ministry of Business, Innovation and Employment (MBIE), which will cover costs for continued safe operations of the FPSO Umuroa until such time when the unit is disconnected from the Tui oil field. Subject to prevailing Covid-19 restrictions, the disconnection is expected to be completed before second half of 2021. As a result, the company has ceased the previously announced voluntary liquidation of BW Umuroa Pte. Ltd, a subsidiary of BW Offshore and the owner of the FPSO Umuroa.
OUTLOOK
The majority of BW Offshore’s fleet remains on contracts with national and independent oil companies. Historically, these contracts have withstood market fluctuations, with options to extend exercised even during previous oil price lows. The fleet should continue to generate significant cash flow in the time ahead. At 30 September, the order backlog amounted to USD 4.2 billion of future revenue from firm contracts and options expected to be exercised.
The Covid-19 pandemic and a new low oil price environment has made the global E&P sector reassess short-term investment plans. At the same time, the industry continues to progress long-term field development initiatives. In parallel, investments in alternative offshore energy production solutions are growing rapidly as a response to global initiatives to reduce carbon emissions. BW Offshore maintains an active dialogue in relation to several field-development prospects and FPSO projects, while also evaluating the offshore energy transition activity and the potential to leverage its engineering and operational capabilities for growth and long-term value creation.
BW Offshore has over time substantially reduced leverage and strengthened its financial solidity, including refinancing the main loan facility and bond portfolio in 2019. Combined with the IPO of BW Energy, these measures position the company to deploy capital towards future accretive offshore projects and long-term value creation, and to provide a sustainable return to shareholders through a quarterly cash dividend.
Please see the attached Q3 Presentation. The earnings tables are available at:
https://bwoffshore.com/ir/quarterly-results/
BW Offshore will host a conference call of the financial results 09:00 (CET) today. The presentation will be given by CEO Marco Beenen and CFO Ståle Andreassen.
Conference call information:
To dial in to the conference call where the third quarter results and Q&A will be hosted, please dial one of the following numbers:
Norway: +47 23 96 00 36
UK: +44 203 059 58 69
US: +1 631 3026 547
Singapore: +65 31 57 64 17
You can also follow the presentation via webcast with supporting slides, available on:
https://webinars.on24.com/q4/bwoffshoreq32020
Please note, that if you follow the webcast via the above URL, you will experience a 30 second delay compared to the main conference call. The web page works best in an updated browser - Chrome is recommended.
For further information, please contact:
Ståle Andreassen, CFO, +65 97 27 86 47
Anders S. Platou, Head of Corporate Finance, +47 99 50 47 40
About BW Offshore:
BW Offshore is a leading provider of floating production services to the oil and gas industry. The company also participates in developing proven offshore hydrocarbon reservoirs. BW Offshore is represented in all major oil and gas regions world-wide with a fleet of 15 owned FPSOs. The company has more than 35 years of production track record, having executed 40 FPSO and FSO projects. BW Offshore is listed on the Oslo Stock Exchange.
This information is subject to the disclosure requirements pursuant to section 5-12 of the Norwegian Securities Trading Act.
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