BW Offshore: Third quarter results 2023

Third quarter results 2023

HIGHLIGHTS

• EBITDA of USD 74.5 million
• Operating cashflow of USD 116.3 million
• Equity ratio of 31.0% and USD 452.2 million in available liquidity
• Dividend of USD 0.063 (NOK 0.70)¹ per share for the quarter
• Barossa FPSO project 77.2% complete per end of October 2023
• Abo FPSO sold for USD 20 million
• Offer launched to take BW Ideol private
  
  
  
  

BW Offshore continued to execute the Barossa FPSO project with overall completion at 77.2% per end of October, according to schedule. The FPSO is en route to Singapore following completion of the hull at the yard in South Korea. Lifting and installation of the topside modules will commence in November upon arrival at the integration yard in Singapore.

The Company continues to explore the provision of an Engineering, Procurement, Construction and Commissioning (EPCC) and Operations and Maintenance (O&M) service contract for a five-year transitional period with the buyer of BW Opportunity. BW Offshore is also selectively evaluating new FPSO contract opportunities meeting return targets.

"We see a continued strong FPSO market with oil and gas companies seeking efficient solutions for safe, secure and reliable production. We are selectively maturing projects that meet our criteria as well as progressing the discussions related to BW Opportunity,” said Marco Beenen, CEO of BW Offshore. “Operationally we have full focus on delivering the BW Opal per plan for the Barossa project and maintaining high operational uptime on our core assets.”

The Board of Directors has declared a cash dividend of USD 0.035 per share and USD 5 million of BW Energy Limited shares as in-kind distribution equivalent to USD 0.028 per share. Shares will trade ex-dividend from 20 November 2023. Shareholders recorded in VPS following the close of trading on Oslo Børs on 21 November 2023 will be entitled to the distribution payable on or about 28 November 2023.

FINANCIALS

EBITDA for the third quarter of 2023 was USD 74.5 million (USD 60.9 million in Q2). The increase is largely due to high commercial uptime for Catcher and lower costs relating to the legacy fleet divestment in the period compared with the second quarter.

EBIT for the third quarter was USD 38.2 million (USD 18.2 million).

Gain from sale of fixed assets was USD 9.6 million (USD 8.7 million) and relates to the sale of Abo FPSO.

Net financial items were negative USD 2.5 million (negative 4.9 million) of which net interest expense amounted to USD 10.1 million (USD 8.8 million). Mark-to-market (MTM) changes on FX hedges and interest rate hedges were positive as USD long-term interest rates increased during third quarter.

The net contribution from BW Offshore’s ownership in BW Energy was USD 0.4 million (USD 0.6 million).

Tax expense was USD 7.2 million (USD 3.0 million). The increase in tax expenses is mainly due to tax on the sale of Abo FPSO.

Net profit for third quarter was USD 28.9 million (USD 10.9 million).

Total equity on 30 September 2023 was USD 1 179.8 million (USD 1 150.3 million). The equity ratio was 31.0% at the end of the quarter (31.9%).

Net interest-bearing debt was USD 294.7 million (USD 347.6 million).

Available liquidity was USD 452.2 million, excluding consolidated cash from BW Ideol and including USD 195 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 99.2% (98.5% in Q2 2023).

In July, Sendje Berge was sold for USD 15 million, and in September, the sale of Abo FPSO for USD 20 million was completed.

Installation of the second gas lift compressor on the FPSO BW Adolo, operating on the Dussafu license, was completed to support production from additional wells for client BW Energy.

BW Offshore has signed an agreement for the sale of FPSO Polvo to BW Energy for USD 50 million. On 31 October, BW Energy paid the first instalment of USD 30 million. The second and last instalment will be paid on 30 April 2024.

BW ENERGY

BW Offshore own 23.3% of the shares in BW Energy. The Company is pleased to note average daily production increase to ~27,400 bbls/day for the third quarter following closing of the Golfinho acquisition in Brazil.

Two additional production wells were completed and started producing oil as part of the Hibiscus / Ruche phase 1 development program. In early November, BW Energy announced a new commercial oil discovery in the Hibiscus South satellite prospect providing low-cost and low-risk expansion of the production and reserve base.

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.

On 9 November, a group of shareholders (the "Initiating Shareholders") in BW Ideol, including BW Offshore, representing 84.7% of the shares outstanding, launched a voluntary offer for all the remaining shares of BW Ideol, with the intention to take the company private and delist from Euronext Growth Oslo.

BW Ideol was admitted to trading on Euronext Growth in 2021 to facilitate future capital raises and trading of the company’ shares. The offer and plan to take the company private reflects that the Initiating Shareholders consider it unlikely that BW Ideol as a company trading on Euronext Growth will be able to raise new equity on terms that are not highly dilutive for non-participating shareholders in the current equity capital market environment. The Initiating Shareholders believe that BW Ideol, if privately held, would benefit from reduced cost and more management time to progress the company. It will also position the company to raise capital from investors that invest in privately held growth companies, including other industrial investors in addition to BW Offshore.

The offer period commenced on 14 November and will last until 28 November. It is expected that the shares will be delisted in December 2023, subject to the offer being completed according to plan.

OUTLOOK

BW Offshore expects that the core units in the existing fleet will continue to generate significant cash flows in the time ahead, supported by the USD 5.6 billion firm contract backlog at end of September 2023, including the Barossa contract. Based on the contract backlog, the Company expects to report an EBITDA in the range of USD 285 - 295 million for the full year 2023 and USD 290 - 310 million for 2024.

The non-core fleet divestment programme is on track for completion by year-end.

There is continued interest for infrastructure-type FPSO projects due to high energy prices. These are tied to developments with long-term production, low break-even costs and low carbon emissions. Increased project complexity, combined with inflationary pressures and higher construction costs, necessitates financial structures with significant dayrate prepayments during the construction period for the new lease and operate projects. Alternatively, oil and gas majors may finance and own FPSOs, relying on FPSO specialists for the EPCI scope and O&M services.

BW Offshore continues to actively evaluate FPSO opportunities, focusing on projects that meet the required return targets, offer a firm contract with no residual value risk, and provide a financeable structure with national or investment-grade counterparties. The Company is also actively engaged in the energy transition by developing clean energy production solutions, applying the Company’s offshore engineering and operational capabilities to drive future value creation.

1. Exchange rate USD/NOK 11.1386 (as of 14.11.2023)

Please see attached the Q3 Presentation. The earnings tables are available at:

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BW Offshore will host a webcast of the financial results 14:00 (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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