BW Offshore: Q2 2015 - Condensed interim consolidated financial information
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EBITDA of USD 105.0 million
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Recovery project for FPSO Cidade de São Mateus ongoing
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Successful placement of a NOK 900 million senior unsecured bond
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Dividend payment of USD 0.01 per share
Operating revenues for Q2 2015 amounted to USD 243.7 million, an increase of USD 6.9 million from last quarter.
EBITDA for the second quarter amounted to USD 105.0 million, an increase of USD 11.8 million from USD 93.2 million in Q1 2015.
Depreciation amounted to USD 72.0 million, an increase of USD 14.7 million.
Net profit amounted to USD 19.6 million compared to USD 5.8 million.
Main change to EBITDA relates to higher revenues due to recognition of demob fee from termination of the original contract offset by lower revenues under the revised contract with Ithaca Energy for FPSO Athena. EBITDA is also positively affected by unused maintenance days invoiced to clients during second quarter. Lastly EBITDA is negatively impacted by the accident on Cidade de São Mateus, as the Company only started recognising loss of hire insurance from mid-May.
Depreciations have increased mainly as depreciations of non-recoverable costs on BW Athena have been accelerated due to the outlook under the revised contract with Ithaca Energy.
Net financial expenses have decreased mainly as a result of higher interest rates reducing net liability on hedging contracts.
Total equity at 30 June 2015 amounted to USD 1,189.5 million, an increase of USD 6.9 million (USD 1,182.6 million at 31 March 2015). The equity ratio was 32.5% at the end of the quarter, down from 33.4%.
As of 30 June 2015, the Company had USD 1,022.4 million in interest-bearing loans and USD 60.0 million in letters of guarantee drawn under the USD 2,400 million credit facility. The committed amount on the USD 2,400 million credit facility was USD 1,308.6 million, following scheduled reductions. Total utilised debt facilities for the company, including bond loans and other facilities was USD 1,793.9 million. Total available liquidity as of 30 June 2015 amounted to USD 418.3 million.
During the quarter, BW Offshore successfully completed a NOK 900 million senior unsecured bond issue with maturity in June 2020. The interest payable on the bond is NOK NIBOR + 425bps. The bond loan has been swapped to USD. The proceeds will be used for general corporate purposes.
Net debt amounted to USD 1,577.4 million at 30 June 2015 (USD 1,542.2 million at 31 March 2015).
Net cash inflow from operating activities was USD 129.3 million (USD 80.6 million). Net cash outflow from investing activities was USD 125.7 million (USD 13.2 million). Cash outflow on investing activities is mainly related to capitalisation on the Catcher project and capital expenditures for ongoing life extension activities. Life extension activities are generally either covered on a cost plus basis or reimbursed through higher day rates. Net cash inflow from financing activities was USD 37.2 million (Net cash outflow of USD 131.5 million).
BW Offshore operates 17 units. The owned fleet consists of 14 FPSOs and one FSO. Average uptime during the second quarter was 99.8% (94.4%). The lower uptime in the first quarter was caused by the off hire of FPSO Cidade de São Mateus, which is now excluded from the average uptime until the unit recommences operations after the repair project.
The Company operates the FPSO Peregrino for Statoil and Sinochem on the Peregrino oil field offshore Brazil.
The Company also operates the FPSO P-63 owned by Petrobras and Chevron on the Papa Terra field offshore Brazil for three years in a joint venture with Queiroz Galvão Óleo e Gás S.A. ('QGOG'). The operation started in November 2013.
Work is still ongoing after the accident on Cidade de São Mateus 11 February 2015 to empty the unit of cargo and disconnect the unit for transport to a yard for repairs. The disconnection of the unit has been significantly delayed by the approval process in Brazil. The cost of repairs are still being estimated together with impact from impairment to be taken for damages incurred. As the unit is still at the field, it has been challenging to get access to make an accurate assessment of the damages, and consequentially also to decide the book value to be impaired. This impairment charge will be booked as soon as a reliable estimate can be made.
BW Offshore carries insurance cover on a fleet wide basis, for its crew and support staff, pollution and clean up and any damage to vessels. In addition, the FPSO Cidade de São Mateus is also covered by a loss of hire insurance from 12 May for a period of 12 months. The accident and its consequences will to a large extent be covered by these policies and BW Offshore is working closely with insurers and their loss adjusters in the recovery operations. Given the delay to the disconnection the unit is expected to be without rate for some time before repairs can be carried out and the unit returns to the field. The length of this period is still uncertain.
All other FPSOs and FSO are on contract per the end of the quarter. Azurite has been returned by the client before the end of the fixed contract and is marketed for new projects.
PROJECTS
The Catcher project remains within budget with expected first oil in 2017. Good progress was made during the quarter on engineering, procurement and construction activities. Construction of the turret mooring system is progressing well with the mating cone module completed and delivered to the hull fabrication yard.
Hull activities have slipped due to yards inability to progress the hull delivery in accordance with the contractual schedule. A mitigation plan has been implemented to minimise the impact to the overall project schedule. Topside fabrication is developing as planned. At the end of the quarter more than 75% of the projected project cost has been committed. BW Offshore is closely monitoring progress and safety in all the project activities, ensuring that mitigating actions are implemented quickly if any deviation is detected.
The Company is undertaking a number of modification and life extension activities on existing units. These activities are either covered on a cost plus basis or reimbursed through higher day rates.
DIVIDEND
The Board has declared a cash dividend of one cent per share for the quarter. The shares will be traded ex-dividend as of 10 September 2015. The dividend will be payable on or about 18 September 2015 to shareholders of record on 11 September 2015.
OUTLOOK
The short- and medium term outlook for BW Offshore's products and services has changed due to the drop in oil price. Macro conditions for the offshore industry have significantly worsened with expected continued drop in capital expenditure.
BW Offshore still expects outsourcing of production to be a cost effective solution for oil & gas companies but believes it is prudent to expect a prolonged downturn in orders being awarded.
The majority of BW Offshore's fleet remain on long-term contracts with national and independent oil companies. The fleet will continue to generate a healthy cash flow in the time ahead.
Redeployment of units coming off contracts will be affected by the reduced number of new developments. In the current market, BW Offshore believes it is important to preserve financial capacity for a more uncertain future.
Please see the attachments for the full quarterly report and presentation.
BW Offshore hosts a presentation of the financial results at 09:00 (local time) today at Hotel Continental in Oslo, Norway. The presentation will be given by CEO Carl K. Arnet and CFO Knut R. Sæthre.
The presentation will be broadcasted via webcast, and will also be available for replay. Please visit www.bwoffshore.com for login-details.
For further information, please contact:
Knut R. Sæthre, CFO, +47 9111 7876
Kristian Flaten, Vice President IR and Corporate Finance, +47 9509 2322
About BW Offshore:
BW Offshore is a leading global provider of floating production services to the oil and gas industry. BW Offshore is the world's second largest contractor with a fleet of 14 FPSOs and 1 FSO represented in all major oil regions world-wide. The company also operates additional 2 FPSOs. BW Offshore has a long track record on project execution and operations, as well as a robust balance sheet and strong financial capabilities. In more than 30 years of production, BW Offshore has executed 38 FPSO and FSO projects. The company is listed on the Oslo Stock Exchange. Further information is also available on www.bwoffshore.com
This information is subject of the disclosure requirements pursuant to section 5-12 of the Norwegian Securities Trading Act.
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http://hugin.info/136844/R/1948118/707584.pdf
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