Fourth quarter and full-year results 2021

28 February 2022

HIGHLIGHTS

Q4 EBITDA of USD 102.3 million and Q4 operating cashflow of USD 148.1 million
EBITDA USD of 401.3 million and operating cashflow of USD 510.2 million for the full year
Net impairment of USD 86.3 million in Q4
Equity ratio 33.9% and USD 391.7 million in available liquidity at end of 2021
Quarterly cash dividend of USD 0.035 per share
USD 65.7 million in gross proceeds and USD 14.9 million gain from sale of BW Energy shares in October
Barossa FPSO project progressing as planned
Contract extensions signed for Sendje Berge and Abo FPSO
Divestment of FPSO BW Joko Tole and BW Cidade de São Vicente
BW Ideol secures close to 1GW worth of floating offshore wind acreage in ScotWind leasing round

During the fourth quarter, BW Offshore continued to progress the Barossa FPSO project according to plan. All key subcontractors were assigned at year-end and purchase orders for all major mechanical packages have been issued. This provides good visibility for available resources and project timeline. By proactively locking in vendors and equipment packages, the Company has managed to mitigate cost inflation and maintain schedule despite continued challenges affecting global supply chains.

“We maintain full focus on safe and efficient execution of the Barossa project and delivering stable performance from our operating assets. We are also progressing strategic initiatives to position for long-term value creation opportunities offered by the ongoing energy transition,” said Marco Beenen, the CEO of BW Offshore. “We are very pleased with BW Ideol securing the rights to a significant floating offshore wind farm as one of the winners in the ScotWind licensing round. The award is a validation of the company’s market-leading proven floating wind technology and it’s firm plan for local manufacturing of concrete foundations, enabled by the exclusive development of the Ardersier Port in Scotland.”

The Board of Directors has declared a cash dividend of USD 0.035 per share. Shares will trade ex-dividend from and including 8 March 2022. Shareholders recorded in VPS following the close of trading on Oslo Børs on 9 March 2022 will be entitled to the distribution payable on or around 17 March 2022.

FINANCIALS
EBITDA for the fourth quarter of 2021 was USD 102.3 million (USD 97.1 million in Q3 2021). Fourth quarter EBITDA was impacted by a few one-offs, namely USD 7.5 million returned for previous premiums from The Norwegian Shipowners’ Mutual War Risks Insurance Association (DNK), as well as USD 5 million net positive one offs due to adjustments of provisions by year end.

EBIT for the fourth quarter was negative USD 50.9 million (positive USD 28.3 million in Q3 2021) after impairment of USD 86.3 million on the FPSO fleet. Impairment charges were recognised on BW Athena, Espoir Ivoirien, Sendje Berge, Joko Tole, Petróleo Nautipa and Umuroa. The Company also reversed a previous impairment of USD 4.2 million related to the sale of Cidade de São Vicente in the fourth quarter. The impairment reflects reduced expectation of longer term extensions to current contracts for the listed vessels that are still in operation, as well as limited potential for future redeployment of the abovementioned FPSOs that are in lay-up.

Share of profit of equity-accounted investees was USD 23.7 million compared to a loss of USD 3.8 million the third quarter and include BW Offshore’s share of net result from the ownership in BW Energy. In October 2021, BW Offshore sold 20 million shares in BW Energy for USD 65.7 million in gross proceeds. This transaction resulted in a gain of USD 14.9 million.

Tax expense for the quarter included a write down on deferred tax asset of USD 11.8 million relating to the sale of Joko Tole. The Company has further finalised the assessment of tax losses in Australia that can be utilised as a result of the Barossa contract, which has resulted in additional USD 9.3 million of deferred tax asset recognised in Q4.

Total equity on 31 December 2021 was USD 1,021.4 million (USD 1,089.5 million in Q3 2021). The equity ratio was 33.9% at the end of the quarter (39.0% in Q3 2021).

Available liquidity on 31 December 2021 was USD 391.7 million, excluding consolidated cash from BW Ideol.

Net interest-bearing debt was USD 653.4 million (USD 807.1 million in Q3 2021).

FPSO OPERATIONS
The FPSO fleet continued to deliver stable uptime in the quarter with an average commercial uptime for the fleet of 91.3% (91.6% in Q3 2021). Production on FPSO Espoir Ivoirien was restarted in October after scheduled maintenance during the quarter, while production from Sendje Berge was shut down to carry out the tank inspection program for Class renewal.

In November 2021 and January 2022, BW Offshore signed agreements for the extensions for the lease and operation of FPSO Sendje Berge and Abo FPSO, respectively. Both contracts have been extended until the end of 2022.

As part of BW Offshore’s strategy to transition to floating energy infrastructure investments, an agreement was signed with an Indonesian consortium for the sale of FPSO Joko Tole for further operations under local ownership. The sale will free up over USD 50 million of liquidity, comprising net sale proceeds of USD 42.5 million and the release of USD 9 million of working capital upon closing. Closing is expected late in the first quarter of 2022. BW Offshore will provide transition services for a period of up to four months after closing to ensure safe and uninterrupted transfer of operations, including the local organisation, to the buyer.

In February 2022, BW Cidade de São Vicente was sold for environmentally safe demolition and recycling in compliance with the Hong Kong Convention at Priya Blue shipyard in India. The vessel was sold for a cash consideration of USD 12.8 million. A third-party has been nominated as representative on site at the yard to monitor progress, compliance with environmental and safety regulations as well as proper application of the ship recycling plan.

OFFSHORE FLOATING WIND
BW Offshore is actively pursuing opportunities in the energy transition. The Company’s primary investment is in offshore floating wind through the 53.2% ownership of BW Ideol, a global market leader with more than ten years of experience from design, execution and development of floating wind projects based on proprietary and patented Damping Pool® technology and engineering capabilities.

In December 2021, BW Ideol signed an agreement to acquire a 5% ownership in the 30MW EOLMED floating wind pilot project in the French Mediterranean, following earlier selection of its floater technology and engineering services.

In January 2022, BW Ideol secured the rights to develop a floating offshore wind farm with an approximate capacity of 1GW off the northeast coast of Scotland through Crown Estate Scotland’s ScotWind leasing round, as part of the partnership Floating Energy Allyance.

Also, in January, BW Ideol agreed to create an investment company for financing the co-development of offshore wind projects using the patented Damping Pool® technology over the next 5 years with JERA, Japan’s largest utility company, and ADEME Investissement, a French State-owned company financing innovative infrastructure projects.

OUTLOOK
The Company expects that core units in the existing fleet will continue to generate significant cash flow in the time ahead. The firm FPSO contract backlog at end of 2021 amounted to USD 6.5 billion when including the Barossa contract. With probable options, the backlog was USD 7.7 billion at the end of the year.

The Covid-19 pandemic continues to affect operations and the market environment. Higher energy prices in 2021 and into 2022 are a sign of improved market fundamentals as distribution of vaccines accelerates and more nations normalise activity levels.

The oil and gas industry is expected to continue to focus on progressing long-term large field development initiatives with low break-even costs and low carbon emissions. This expectation is supported by the higher oil and gas prices. BW Offshore maintains a selective approach to such opportunities, progressing discussions on only a few high-end projects which can be developed in partnership with global infrastructure investors.

The Company is seeking to optimise the current asset portfolio considering the overall cost base. This includes potential divestment or recycling of units if FPSO redeployment opportunities do not materialise.

BW Ideol is BW Offshore's vehicle for investment in floating offshore wind. The company is progressing multiple projects supported by the funding from the private placement in 2021.

With the recent divestment of FPSO assets and part of the shareholding in BW Energy, the Company has further strengthened the balance sheet, and is positioned for growth into accretive offshore energy projects and long-term value creation.

Please see attached the Annual Report and Q4 Presentation. The earnings tables are available at:

www.bwoffshore.com/ir/

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 fourth quarter results and Q&A will be hosted, please dial one of the following numbers:

Norway: +47 2396 3688
UK: +44 3333 009 268
Singapore: +65 6408 5768
France: +33 170 750 737
US: +1 631 913 1422 (PIN: 64647263#)

You can also follow the presentation via webcast with supporting slides, available on:

BW Offshore Limited - BW Offshore Q4 Presentation

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 & Strategy, +47 99 50 47 40

About BW Offshore:
BW Offshore engineers innovative floating production solutions. The Company has a fleet of 13 FPSOs with potential and ambition to grow. By leveraging four decades of offshore operations and project execution, the Company creates tailored offshore energy solutions for evolving markets world-wide. BW Offshore has around 2,000 employees and is publicly 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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