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BW Offshore: First quarter results 2021

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First quarter results 2021

HIGHLIGHTS

  • EBITDA of USD 110.8 million

  • Operating cashflow USD 114 million, excluding final settlement of USD 43 million to Petrobras related to Cidade de Sao Mateus

  • Equity ratio 39.7% and USD 294.4 million in available liquidity

  • Successfully completed Floating Wind subsidiary BW Ideol private placement and listing on Euronext Growth

  • Signed USD 4.6 billion, 15-year firm FPSO Services contract for Barossa FPSO with Santos

  • Firm FPSO contract backlog of USD 7 billion at end of March, up from USD 2.6 billion at year end 2020

  • Recycling of FPSO Berge Helene in April in compliance with Hong Kong convention

  • Cash dividend of USD 0.035 per share

  • Contemplating inaugural green bond issue

In the first quarter, BW Offshore made significant progress in executing the dual-track strategy of evolving the core FPSO business and capturing energy transition opportunities by developing adjacent business areas.

The creation and listing of BW Ideol on Euronext Growth in Oslo on 18 March with BW Offshore ownership of 53.2% of the shares was one milestone. The listing followed a successful Private Placement which attracted strong interest from leading domestic and international investors, including specialist renewable energy investors, raising gross proceeds of NOK 519.6 million.

The USD 4.6 billion, 15-year firm FPSO Services contract for the Barossa gas field, located 300 kilometres offshore Darwin in Australia, was a second milestone. The final investment decision for the project was made by Santos and its partners on 30 March 2021. Initial gas production from the FPSO is targeted for the first half of 2025. The FPSO project capex of around USD 2 billion will be financed by BW Offshore in combination with banks and equity partners, and approximately USD 1 billion in pre-payments during the construction period by the client for FPSO Services to be performed during the production period.

Completion of the equity and debt financing for the Barossa project is progressing as planned with a syndicate of international project finance banks providing 14-year debt financing during both construction and operation. BW Offshore and international infrastructure equity partners will contribute 51% and 49% of the project equity respectively.

“We had an active start in 2021, progressing two major strategic projects. The creation of BW Ideol as a floating offshore wind champion and signing of the Barossa contract as a new infrastructure-like FPSO project with attractive long-term returns and strong partnerships, confirm our position as a leading provider of offshore energy production solutions across energy transition and oil and gas. We are now leveraging that position to widen our funding base in support of long-term growth plans and stable direct shareholder returns,” said Marco Beenen, the CEO of BW Offshore.

On 23 April BW Offshore completed the sale of FPSO Berge Helene for environmentally safe demolition and recycling in compliance with the Hong Kong Convention at Priya Blue shipyard in India. Grieg Green has been nominated as representatives to be on site at the yard to monitor progress, compliance with environmental and safety regulations and that the ship recycling plan is being applied.

FINANCIALS
BW Offshore completed the BW Ideol private placement in March 2021. Following the private placement, BW Offshore’s ownership in BW Ideol is 53.2% and consequently BW Offshore will consolidate BW Ideol from 15 March 2021.

EBITDA for the first quarter of 2021 was USD 110.8 million (USD 91.9 million in Q4 2020).

EBIT for the first quarter was USD 41.4 million (negative USD 30.0 million in Q4 2020) after impairment of USD 4.2 million for FPSO Berge Helene. The impairment was recognised as a consequence of the cash consideration of USD 16 million from selling the unit being USD 4.2 million lower than net book value for the unit at end of the quarter.

Net financial items were positive by USD 7.2 million. This is mainly driven by significant positive non-cash mark to market (MTM) changes to interest rate hedges due to increasing swap rates, offset by interest expenses in the quarter.

Tax expense was positive by USD 40.3 million. BW Offshore has tax losses carried forward in Australia as a result of a previous operation linked to the acquisition of Prosafe Production. This tax loss has previously not been on the balance sheet as the Company has had no operation in Australia in recent years. With the signing of Barossa, it is anticipated that this tax loss can be utilised and consequently a deferred tax asset of USD 48.8 million was recognised in Q1 2021.

Total equity at 31 March 2021 following the BW Ideol private placement was USD 1,105.5 million (USD 945.0 million in Q4 2020). The equity ratio was 39.7% at the end of the quarter (36.5% in Q4 2020).

Net interest-bearing debt was USD 931.2 million (USD 936.1 million in Q4 2020).

Available liquidity was USD 294.4 million when including USD 145 million available to draw under the corporate loan facility. Liquidity has been reduced during Q1 2021 as BW Offshore made a full and final settlement of USD 43 million with Petrobras to close out the contract for Cidade de Sao Mateus. This settlement has been fully provided for so there was no impact on the income statement in the quarter.

The Board of Directors has declared a cash dividend of USD 0.035 per share. Shares will trade ex-dividend from and including 1 June 2021. Shareholders recorded in VPS following the close of trading on Oslo Børs on 2 June 2021 will be entitled to the distribution payable on or around 10 June 2021.

FPSO OPERATIONS
The FPSO fleet continued to deliver stable uptime in the quarter with an average commercial uptime for the fleet of 97.4% (97.8% in Q4 2020).

The disconnection of the BW Umuroa has proceeded according to plan and the FPSO was successfully disconnected from the Tui field beginning of May. The unit will now be prepared for tow back to Asia mid May.

OUTLOOK
The majority of BW Offshore’s fleet remains on contract with national and independent oil companies. The Company expects that the existing fleet will continue to generate significant cash flow in the time ahead. The firm FPSO contract backlog at end of March 2021 amounted to USD 7.0 billion when including the Barossa contract, an increase from USD 2.6 billion at 31 December 2020. When adding probable options, the backlog was USD 10.0 billion at the end of the quarter (USD 4.0 billion).

The COVID-19 pandemic continues to affect operations and the market environment. Higher oil prices in 2021 are a sign of improved market fundamentals as distribution of vaccines accelerates and some nations are resuming more normal activity levels. Still, the expectation is that the oil and gas industry will continue to focus on progressing long-term large field development initiatives with low break-even costs. BW Offshore maintains a selective approach to such opportunities, considering only a few high-end projects which can be developed in partnership with global infrastructure investors.

BW Ideol is the Company’s vehicle for investment in floating offshore wind. The net proceeds from BW Ideol’s private placement will predominantly be used to fund the development of the project pipeline, working capital requirements and for general corporate purposes.

BW Offshore has a robust financial position and is positioned to continue to deploy capital towards future accretive offshore energy projects and long-term value creation, and to provide growing returns to shareholders and a quarterly cash dividend.

Please see attached the Q1 Presentation. The earnings tables are available at:

www.bwoffshore.com/ir/

BW Offshore will host a conference call of the financial results 09:00 (CEST) 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 quarterly results and Q&A will be hosted, please dial one of the following numbers:

Norway: +47 2350 0236
Singapore: +65 6408 5767
UK: +44 3333 009 271
US: +1 8335 268 347
France: +33 170 750 736

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

https://streams.eventcdn.net/bwo/2021q1/

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 engineers innovative floating production solutions. The Company has a fleet of 14 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 disclosure requirements pursuant to Section 5-12 of the Norwegian Securities Trading Act.


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