BW Offshore: Fourth quarter and full year results 2023

Fourth quarter and full year results 2023

HIGHLIGHTS

• Q4 EBITDA USD 91.1 million and operating cashflow of USD 230.0 million
• 2023 EBITDA 305.5 million and operating cashflow of USD 558.6 million
• Equity ratio 30.2% and USD 605.7 million in available liquidity at end-2023
• Q4 cash dividend USD 0.088 per share equivalent to USD 15.9 million
• Total dividend based on 2023 results of USD 48.6 million as a combination of cash and BW Energy shares in-kind to shareholders
• Barossa FPSO project 80% complete at end-January 2024
• Successful mobilisation of the BW Opal hull to Singapore, 22 months after first steel cut in South Korea
• Concluded the legacy fleet divestment programme, selling assets for USD 331 million        
• Raised USD 595 million of commercial debt and high yield bond
• Delisted BW Ideol from Euronext Growth to access private growth capital, retaining 64% ownership
• Sale of all BW Energy shares for USD 176 million in January
• Repurchased Senior Unsecured Bonds in 2023 with a principal amount of USD 44.2 million

BW Offshore continues to progress the Barossa FPSO project, having achieved overall completion of 80% by the end of January, in line with the project schedule. In November, a significant milestone was reached as the BW Opal hull arrived in Singapore, 22 months after first steel cut at the construction yard in South Korea, marking the start of topside construction activities. Integration activities in Singapore are well underway, with 11 out of 16 topside modules successfully installed at the end of February.

In January 2024, all shares in BW Energy were sold to BW Group Limited, for USD 176 million. Following the transaction, the Board of Directors has declared a cash dividend of USD 0.088 per share, amounting to USD 15.9 million in total, for the fourth quarter of 2023.

“We have a strong balance sheet after completing our fleet divestment programme and the sale of BW Energy shares, supported by strong cash generation from our FPSO fleet. This is reflected in our fourth quarter dividend which brings the total distribution based on 2023 results to USD 48.6 million, being the maximum allowed under our debt covenants, and shows our continuous commitment to returning value to shareholders,” said Marco Beenen, CEO of BW Offshore. “In Singapore, the BW Opal integration phase is still on track for first gas in the first half of 2025. The market for new FPSO projects remains strong with high FEED activity, and we continue to selectively progress growth opportunities that meet our selection criteria.”

The shares of BW Offshore will trade ex-dividend from 4 March 2024. Shareholders recorded in VPS following the close of trading on Oslo Børs on 5 March 2024 will be entitled to the distribution payable on or about 12 March 2024. For 2024, the Company plans to continue to provide a stable, predictable quarterly cash dividend based on an annual total distribution of 0.25 cents per share, with a potential adjustment for the fourth quarter subject to, inter alia, net income for the full year and debt covenants.

FINANCIALS

EBITDA for the fourth quarter of 2023 was USD 91.1 million (USD 74.5 million in Q3). The EBITDA reflects solid operational performance across the FPSO fleet, further enhanced by the conclusion of the Petróleo Nautipa contract.

EBIT for the fourth quarter was USD 44.3 million (USD 38.2 million). Gain from sale of fixed assets in the third quarter of USD 9.6 million relates to the sale of Abo FPSO.

Net financial expense was USD 19.4 million (expense USD 2.5 million) of which net interest expense amounted to USD 9.0 million (USD 10.1 million). FX and other financial items were negative, mainly due to the mark-to-market on interest hedges as swap rates decreased.

Share of profit from equity accounted investments was USD 17.5 million (USD 0.4 million) and relates to BW Offshore’s ownership in BW Energy.

Tax expense was USD 2.4 million (USD 7.2 million). The higher tax expense in the third quarter is mainly due to tax on the sale of Abo FPSO.

Net profit for the fourth quarter was USD 40.0 million (USD 28.9 million).

Total equity on 31 December 2023 was USD 1 195.3 million (USD 1 179.8 million). The equity ratio was 30.2% at the end of the quarter (31.0%).

Net interest-bearing debt was USD 172.2 million (USD 294.7 million).

Available liquidity was USD 605.7 million, excluding consolidated cash from BW Ideol and including USD 245 million available under the corporate loan facility.

FPSO OPERATIONS

The FPSO fleet continued to deliver stable uptime in the quarter with a weighted average fleet uptime of 97.3% (99.2% in Q3 2023). Fleet uptime was impacted by a planned shutdown on the BW Catcher FPSO.

In December, Petróleo Nautipa was decommissioned from the field in Gabon and is expected to be sold for recycling in 2024.

In October, BW Energy paid the first instalment of USD 30 million for the FPSO Polvo. The second and last instalment will be paid on 30 April 2024.

On 6 January 2024, the BW Catcher contract was extended beyond the initial fixed term. The contract is subject to a rolling 12-month termination right. The contract automatically extends on a day-to-day basis beyond 6 January 2025 into the option period.

BW ENERGY

BW Energy had an average daily production of ~32,900 bbls/day in the fourth quarter from the Tortue and Hibiscus fields in the Dussafu licence and Golfinho field in Brazil.

At the end of the fourth quarter, BW Offshore held 22.52% of the shares in BW Energy. The entire shareholding was divested to BW Group on 25 January 2024. The Company expects to record loss of USD 6.0 million on the book value of the BW Energy shares from the transaction in first quarter 2024 accounts.

OFFSHORE FLOATING WIND

BW Offshore is actively engaged in the energy transition by developing clean energy production solutions, applying its offshore engineering and operations capabilities to drive future value creation through its ownership in BW Ideol. BW Ideol is a global leader in offshore floating wind technology and co-development with more than 12 years of experience from design, execution and development of floating wind projects based on proprietary and patented Damping Pool® technology and engineering capabilities.

In October, BW Ideol AS and ADEME Investissement completed an initial financial closing investing EUR 17.8 million into BW Ideol Projects Company SAS, with BW Ideol initially holding 75.8% and ADEME Investissement set to gradually increase its share under the EUR 40 million funding agreement. BW Ideol manages the development company through a service agreement. In November, BW Ideol signed a Memorandum of Understanding (MOU) to investigate the feasibility of serialised production of floating concrete substructures based on own design at APB’S Port Talbot to position for the upcoming UK Celtic Sea leasing round with a multi-GW development potential. The operational period for the Floatgen pilot in France was recently extended by five years. The unit has generated over 30 GWh of electricity since start of operations in 2018, underscoring the robustness of BW Ideol's design.

On 20 December, the shares of BW Ideol were delisted from Euronext Growth Oslo following the completion of a compulsory offer for all shares outstanding by a consortium consisting of existing shareholders following an earlier voluntary tender offer. The delisting positions BW Ideol to raise capital more efficiently from investors that invest in privately held growth companies. Furthermore, the management at BW Ideol would benefit from freed-up management time to focus on core activities to develop the company. The delisting of BW Ideol is expected to facilitate funding and execution of the company’s dual-leg growth strategy as EPCI provider and project co-developer.

OUTLOOK

BW Offshore expects that the fleet will continue to generate significant cash flows in the time ahead. Based on the contract backlog, BW Offshore maintains the guidance of reporting an EBITDA in the range USD 290-310 million for 2024.

Growing energy demand, underinvestment in production capacity and geopolitical conflicts continue to support high oil and gas prices and drive interest for developing new infrastructure-type FPSO projects. These projects typically have long production profiles, low break-even costs and focus on lower emissions. Increased project complexity, combined with inflationary pressures and higher construction costs, necessitates financial structures with significant dayrate prepayments during the construction period for new lease and operate projects. Alternatively, oil and gas majors may finance and own FPSOs, relying on FPSO specialists for the design, construction and installation scope, combined with operation and maintenance services.

BW Offshore will continue to selectively evaluate new projects that meet required return targets, offer a firm contract with no residual value risk, and provide a financeable structure with strong national or investment-grade counterparties.

BW Offshore is also actively applying its offshore engineering and operational capabilities to drive future value creation within the energy transition by developing low-carbon and clean energy production solutions. This includes exploring new ventures that target significant market opportunities emerging within gas-to-power, ammonia and carbon capture, as well as combining FPSO and floating offshore wind capabilities to grow in new, adjacent areas. BW Offshore maintains a disciplined approach with selective and diligent allocation of capital.

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

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BW Offshore will host a webcast of the financial results 09:00 (CET) today. The presentation will be given by CEO Marco Beenen and CFO Ståle Andreassen.

Webcast information:

You can follow the presentation via webcast with supporting slides and a Q&A module, available on:

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,

About BW Offshore:

BW Offshore engineers innovative floating production solutions. The Company has a fleet of 5 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 1,400 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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