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Fourth Quarter and Full Year 2020 Results Oslo Stock Exchange: BWO

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Fourth quarter and full year 2020 results

STRONG POINTS

  • Q4 EBITDA of $ 113.9 million before inventory adjustment
  • Q4 operating cash flow of $ 90.2 million
  • EBITDA USD of 436.1 million USD and operating cash flow of 387.3 million USD for the full year
  • FPSO fleet depreciation of $ 59.6 million and inventory depreciation of $ 22.0 million during the quarter
  • Equity ratio 36.5% and USD 369.6 million in available cash at the end of 2020
  • Cash dividend of $ 0.035 per share
  • Agreement with the New Zealand government for Umuroa
  • Signed extension for Abo FPSO
  • Invest in Ideol to create a floating champion in offshore wind energy BW Ideol

On February 17, BW Offshore announced its intention to invest 60 million euros in Ideol SA, a global pure player in offshore floating wind technology and jointly creating BW Ideol, a renewable energy company with advanced capabilities based on technologies developed and proven in-house. technology, supported by BW Offshores extensive experience in the development and operation of offshore power generation systems.

BW Offshore plans to own around 50% of BW Ideol after a planned capital increase and listing as a separate company on Euronext Growth, scheduled for late March, with BW Offshore participating as a benchmark investor. The investment and participation in the capital increase will be financed from existing liquidity reserves. The founders and employees of Ideol SA are expected to own around 20% of the shares after listing.

Over the past year, we have made significant progress in leveraging the vast operational and development capabilities of BW Offshore to position ourselves as a pioneer in the offshore energy transition. This translates into good progress on new infrastructure-type FPSO projects with attractive long-term returns and the development of partnerships to position us at the forefront of floating offshore wind developments, said Marco Beenen, CEO of BW Offshore. We accomplished this in a difficult operating environment due to COVID-19, while maintaining the financial flexibility to invest for growth and providing direct returns to shareholders through the IPO of BW Energy, buybacks of ‘shares and cash dividends.

On January 14, 2021, an accident aboard the FPSO Espoir Ivoirien killed two people. Production was halted and the FPSO was shut down after the accident. BW Offshore carried out a root cause analysis of the incident in cooperation with the operator on the ground and the local authorities. The FPSO resumed operations on February 13, 2021. BW Offshore is continuously working to maintain safe operations across the fleet and will apply lessons learned from the accident to prevent such incidents in the future, said Marco Beenen.

FINANCIAL
Q4 2020 EBITDA was $ 91.9 million (Q3 2020 $ 98.1 million). The company decided to reclassify low value items in inventory as consumables. These items will in the future be directly expensed upon purchase and therefore items held in stock at year end have been expensed. Inventories of decommitted units were also reassessed, resulting in a total depreciation of $ 22.0 million for the quarter which was recorded as operating expenses and included in EBITDA.

Fourth quarter EBIT was negative at $ 30.0 million (positive of $ 35.1 million in Q3 2020) after the depreciation of $ 59.6 million on the FPSOs BW Athena, BW Cidade de So Vicente and Espoir Ivoirien. The company expects a more difficult market for mature FPSO redeployments in the future and therefore also plans to recycle some of these stalled units.

Operational performance was strong for the full year 2020 with EBITDA of $ 436.1 million ($ 542.9 million for 2019) and operating cash flow of $ 387.3 million ($ 608.3 million for 2019). ).

Total equity at December 31, 2020 was $ 945.0 million ($ 1,004.8 million in Q3 2020). The equity ratio stood at 36.5% at the end of the quarter (37.5% in Q3 2020).

Net interest-bearing debt amounted to $ 936.1 million ($ 976.3 million in Q3 2020).

The board of directors declared a cash dividend of $ 0.035 per share. The shares will trade ex-dividend from February 25, 2021 inclusive. Shareholders registered in VPS after the close of trading on the Oslo Brs on February 26, 2021 will be entitled to the distribution payable on or around March 5, 2021.

FPSO OPERATIONS
The FPSO fleet continued to offer stable availability during the quarter with an average commercial availability for the fleet of 97.8% (93.2% in Q3 2020).

On November 18, BW Offshore signed an agreement with the New Zealand government to cover the costs of keeping FPSO Umuroa secure until the unit is disconnected from the Tui oilfield. Subject to current COVID-19 restrictions, the disconnection is expected to be completed by the second half of 2021.

On January 4, 2021, the FPSO Abo contract was extended until the end of 2021, with options until the second quarter of 2023.

OUTLOOK
The majority of the BW Offshores fleet remains under contract with national and independent oil companies. These contracts have withstood market fluctuations, with options to extend exercised even during previous lows in oil prices. The resilience of our order book and our fleet has been tested and proven again during a difficult period in 2020 when several extensions and a new contract were signed. The company expects the existing fleet to continue to generate significant cash flow in the years to come.

The COVID-19 pandemic, combined with lower long-term expectations for oil prices, has led the global E&P industry to reassess its investment plans. At the same time, the industry continues to push forward long-term field development initiatives on larger projects with low cost-to-return. The Company favors the large-scale FPSO infrastructure project market and expects there to be a significant number of potential rewards in the coming years. BW Offshore maintains a selective approach to these opportunities and has matured partnerships with global infrastructure investors, which will accelerate the company’s ability to undertake new profitable projects and expand into the high-end FPSO market.

At the same time, investments in clean energy production solutions at sea are increasing rapidly in response to global initiatives to reduce carbon emissions. BW Offshore has been evaluating investment opportunities in clean offshore energy for some time. The announced investment in Ideol SA represents such an opportunity to create a floating champion of offshore wind power by leveraging BW Offshores’ experience in the development and operation of offshore production systems and access to financial markets. .

BW Offshore has over time significantly reduced its debt and strengthened its financial strength. Combined with the IPO of BW Energy, these measures allow the company to deploy capital for future accretive and long-term value creation offshore projects, and provide increasing returns to shareholders and a quarterly cash dividend. .

Please see the attached Annual Report and Fourth Quarter Presentation. The pay tables are available on:

www.bwoffshore.com/ir/

BW Offshore will host a financial results conference call today at 9:00 am (CET). The presentation will be given by CEO Marco Beenen and CFO Stle Andreassen.

Conference Call Information:
To connect to the conference call for the fourth quarter results and Q&A, please dial one of the following numbers:

Norway: +47 2396 3938
United Kingdom: +44 3333 009272
United States: +1 833 823 0589
Singapore: +65 6408 5768

You can also follow the presentation via a webcast with additional slides, available at:

https://streams.eventcdn.net/bwo/2020q4/

Please note that if you follow the webcast through the above URL, you will experience a 30 second delay from the main conference call. The web page works best in an updated browser – Chrome is recommended.

For more information, please contact:
Stle Andreassen, CFO, +65 97 27 86 47
Anders S. Platou, Head of Corporate Finance, +47 99 50 47 40

About BW Offshore:
BW Offshore designs innovative floating production solutions. The company has a fleet of 15 FPSOs with potential and ambition for growth. Leveraging four decades of offshore operations and project execution, the company creates bespoke energy solutions for evolving markets around the world. BW Offshore has around 2,000 employees and is listed on the Oslo Stock Exchange.

This information is subject to disclosure obligations in accordance with section 5-12 of the Norwegian Securities Law.

  • Q4 2020 presentation

  • Annual report 2020

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