Third quarter results 2021

23.11.2021

Third quarter results 2021

HIGHLIGHTS

• EBITDA of USD 97.1 million and operating cashflow of USD 157.2 million
• Completed Barossa FPSO debt financing and equity joint venture partnership
• Barossa FPSO project progressing as planned
• USD 67 million in gross proceeds from block sale of shares in BW Energy in October
• Quarterly cash dividend of USD 0.035 per share
• Equity ratio of 39.0% and USD 305.7 million in available liquidity
• One-year contract extension for FPSO Sendje Berge signed in November
  
  

In the third quarter, BW Offshore continued to progress the Barossa FPSO project according to plan, including completing the debt financing and the equity joint venture partnership for the project. First steel cut for the FPSO hull was achieved in September ahead of original schedule. Due to price inflation for materials, the project is experiencing some cost increases which are covered by the project contingency. The Company is focused on locking in suppliers and equipment packages to manage costs and maintain schedule amid increasing stress on global supply chains.

The Board of Directors has declared a cash dividend of USD 0.035 per share. Shares will trade ex-dividend from and including 26 November 2021. Shareholders recorded in VPS following the close of trading on Oslo Børs on 29 November 2021 will be entitled to the distribution payable on or around 7 December 2021.

"The Barossa project is on track and debt and equity financing have been completed. We have full focus on safe and efficient execution of the FPSO construction and we are also delivering stable performance from our core operating assets," said Marco Beenen, the CEO of BW Offshore. "The recent increases in energy prices emphasises the need for continued development of new oil and gas fields in tandem with a rapid scale-up of renewable energy production such as floating wind. We are well positioned to capture long-term growth and value creation opportunities across these markets with our widening offering of offshore energy production solutions."

FINANCIALS
EBITDA for the quarter was USD 97.1 million (USD 91.1 million in Q2 2021). The increase is mainly related to higher revenue from BW Catcher due to agreement on commercial uptime for the first three quarters in the year, final milestone payment for demobilisation of Umuroa, partly offset by effects coming from planned production shutdown on Espoir Ivoirien and no contribution from FPSO Polvo as the contract has ended.

EBIT for the third quarter was USD 28.3 million (USD 23.2 million in Q2 2021). Net financial expense was USD 14.0 million (USD 16.2 million in Q2 2021). Tax expense in the quarter was USD 5.3 million (USD 6.4 million in Q2 2021).

Total equity at 30 September 2021 was USD 1,089.5 million (USD 1,103.7 million in Q2 2021). The equity ratio was 39.0% at the end of the quarter (39.9% in Q2 2021).

Net interest-bearing debt was USD 807.1 million (USD 854.4 million in Q2 2021).

Available liquidity was USD 305.7 million when including USD 106.9 million available to draw under the corporate loan facility (excluding any liquidity in BW Ideol).

The Barossa FPSO is financed by a 14-year combined construction and long-term debt facility of USD 1,150 billion with a syndicate of nine international banks and by USD 240 million from the equity joint venture, consisting of BW Offshore (51%) and ICMK Offshore Investment Pte Ltd (a 50:50 JV of ITOCHU Corporation and a subsidiary of Meiji Shipping Co Ltd) (25%) and Macquarie Bank Limited (24%).

In addition, approximately USD 1 billion in pre-payments will be paid by the Barossa Upstream Joint Venture Partners during the construction period. These pre-payments are linked to progress and milestones on the project. By end September a total of USD 133 million has been received as per plan.

In October, BW Offshore sold 20 million shares in BW Energy raising USD 67 million in gross proceeds. The Company decided to divest part of its shareholding to accelerate growth opportunities within energy infrastructure. Following the sale, BW Offshore holds approximately 27.5% of the shares outstanding in BW Energy.

OPERATIONS
The average commercial uptime for the fleet during the quarter was 91.6% (98.7% in Q2 2021). The commercial uptime was mainly affected by the planned maintenance shutdown on Espoir Ivoirien.

FPSO Polvo reached end of contract in July 2021. Decommissioning has been completed in the quarter and preparations for demobilisation are ongoing. The unit will subsequently be in lay-up awaiting final investment decision on BW Energy's Maromba field development.

Umuroa and Cidade de São Vicente have reached their lay-up locations, in Indonesia and Oman, and the Company is currently evaluating recycling options.

In November, BW Offshore signed an agreement with Addax Petroleum Exploration (Nigeria) Ltd, for a one-year extension for the lease and operation of the FPSO Sendje Berge. The firm period has been extended to Q4 2022.

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 53.2% ownership in BW Ideol, a global pure player in floating offshore wind. BW Ideol has a dual-track strategy as a co-developer of offshore floating wind projects and as an EPCI (engineering, procurement, construction and installation) contractor of floating offshore wind technology.

In the third quarter, BW Ideol announced its partnership with EDF Renewables and Maple Power for France's first commercial-scale floating offshore wind tender in South Brittany. The company also secured exclusive long-term access to the Ardersier Port in Scotland for local manufacturing of concrete floating wind substructures for the ScotWind project based on BW Ideol's proven Damping Pool® technology.

Separately, BW Offshore is also participating in the ScotWind tender in partnership with the U.S. renewable energy and utility company Invenergy.

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 September 2021 amounted to USD 6.6 billion when including the Barossa contract. With probable options, the backlog was USD 8.0 billion at the end of the third quarter.

The Covid-19 pandemic continues to affect operations and the market environment. Higher energy prices in 2021 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. This expectation is supported by the increase in oil and gas prices to date in 2021. 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 earlier this year.

BW Offshore has a robust financial position. With the recent divestment of part of the shareholding in BW Energy, the Company has further strengthened the balance sheet, to position for accelerated growth into future accretive offshore energy projects and long-term value creation. The Company remains committed to provide growing returns to shareholders and a quarterly cash dividend.

Please see attached the Q3Presentation. The earnings tables are available at:

www.bwoffshore.com/ir/

BW Offshore will host a presentation of its financial results 09:00 (CET) today at Hotel Continental in Oslo, Norway. The presentation will be given by CEO Marco Beenen and CFO Ståle Andreassen.

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

https://www.bwoffshore.com/ir/bwo-q3-2021

Please note that if you follow the webcast via the above URL, you will experience a delay compared to the live presentation. The web page works best in an updated browser.

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 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.

Attachment

• 2021 Q3 Presentation

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