Brooge Energy Limited

Q1 2021 Earnings Conference Call


spk_0: readings and welcome to the bruges energy limited half year two thousand twenty one earnings results call at this time all participants are no listen only mode a question and answer session with all the formal presentation if anyone should require operator assistance during the conference please press stars zero undertow phone keypad a reminder discovered is being recorded on now turn the conference over to your host mister vaulter pinto managing director casey as they should you to communications figure he may begin
spk_1: where you operator in the morning log to the bruges energy finance results coverage go to the six months ended june thirtieth two thousand twenty one on today's call be nico party pooper chief executive officer seed massoud chief financial officer arena for you chief strategy officer like to remind everyone that this conference call contain certain forward looking statements of payments that address or operating performance events or developments that we expect to anticipate occurring in the future are forward looking statements before looking statements are based on agents beliefs and assumptions and are not on the information currently available to or management team made with he believes is how are looking statements reasonable as and when made however you should not place undue reliance on any such forward looking statements because the same speak only as of the date when may we do not undertake any obligation to publicly update or revise any forward looking statements either as a result of new information future events or otherwise except as required by law in addition forward looking statements or subjects certain risks and uncertainties that could cause actual results events and development to differ materially from our historical experiences or our present expectations are projections his research or and these include but are not limited to those described in arduous factors and elsewhere in our annual report on form twenty f filed with the securities and exchange commission and those described from time to time in other reports when we file with the fcc and i'll extend the call over to mr nico party pooper chief executive officer bruges energy he got please go ahead
spk_2: then i think the older for introduction and thank you everyone who has joined us on today's go as you know these yeah continues to be significant volatility across the world's reportedly perception to global supply chains our stores to know provides a crucial shows at this time acting as an essential lincoln oil industry the your chamber supporting the infrastructure and story needs of the industry and nailing the markets to work efficiency or story continues to be in especially high demand and as our channels are in the ideal geographical location it has been incredibly important that we demonstrate reliable service at this time i'm pleased that we have i do this without phase one terminals continue to operate seamlessly and at full capacity despite this book that much disruptive market conditions this will idol and high quality service has been recognized by the market that bp jc winning the global workforce for him award for them as terminals of year in the middle east for the third time in a row moreover so far this year we have been able to take advantage of the high demand for all sorts and our grown reputation as one of the best providers and industry by securing new contract with more attractive terms in june we're new to fix to these contracts with alec lines for two hundred thirty two thousand seventy two cubic meters of phase one storage capacity at a premium that seventy percent higher than the starting six police source price of the earlier contracts the conflict in rules consists of a total of hundred ninety thousand seventy two meters sangha declines on a two year terms each consisting of one year there's a two year utah and you new across the remaining forty two thousand cubic meters was your new by clients for a two year term consisting of six months for six months subject to a mutually to informational two years these developments follow the flight new customers that be secured in twenty twenty as higher take storage rates and terms of agreement this further demonstrates those resilience of demand for oil storage doing this time of macro economic uncertainty we are pleased to have that we are pleased to have delivered yeah pleased to have delivered year over year growth in revenue as our business benefits are some higher fix to insights revenue for the six month period end of june thirtieth twenty twenty one increase to twenty three point three million as compared to twenty nine twenty two point nine million for the same period ending june thirtieth twenty twenty that a great abortion coming from fits with so as read news as opposed to bible and sorry revenues we have also comments operation said i'll say still storage facility and have received our first guy editor animals following the successful completion of old testing and commissioning and the and the sheets of regulatory approvals this is a major milestone for boot energy and follows months careful planning construction contract negotiations and testing all while navigating a challenging michael and by and it's impacted our supply chain and construction time timeless the faced and facility which now includes capacity to store google along with fuel is officially open and they'll be contributing revenues in the second thousand twenty two on one with to entire capacity fully contract for didn't know you take up a contract our face to facility was built to the same award winning standards as our phase one facility utilizing some of the latest technology to maximize company performers inefficiency loud reducing operating costs our seamless out to made the store solutions use a superior for certain design that is designed to reduce college toss historians users and go for and silly service solutions such as eating and blending the facility includes cling put on public storage capacity as well schools also it's capacity and is poorly contracted pulling the launch it as he is now the second largest independent stores operating in the region it a capacity of approximately one day and cubic meters or six point three million vowels simultaneously he laid the groundwork for our size three storage facility and refinery projects you know why completed the feasibility study puts a street results or which support the financial viability of the project he why highlighted upcoming infrastructure investments in the region as a key driver for sustainable storage meant and rising domestic an expert in and forty five products as a key driver of the environment we are very encouraged by these results the phase three expansion project is for a two point five million cubic storage two point five million cubic meters storage facility a modeling moderate twenty five thousand bail of a refinery and a larger hundred and eighty thousand validate conventionally violent successful build out about safety facility would position the company has the largest in and oil storage facilities for yeah like capacity to store leave the john birch middle distillates high elo low self with your as well as good the face to be expected conception periods is two years if he's healthy study indicates that opponents as your boost economics and reinforces the strength of our business strategy highlighting that the oil market is expected to continue to be the most important energy source going forward with the middle east region continue to be the leading producer and export of crude over the mean him to won't term outstretch it's strategic position for jam where that is a high utilization of dirt spotty stores generals along the upcoming been substitute investments is expected to live sustainable and growing demand for outdoor solutions two levels of duty as much as possible he also plan to build out modular and a conventional finding including the capability to comply with the new imo twenty twenty know so for look at a time when the you laid is adding to it's all production capacity which we anticipate would like immensely try new services for both domestic and export market we have size of the finder agreement with an old trading company for the twenty five thousand bail a date modify me he planned to simply the land to the altar and company which will be responsible for constructing refinery including bearing the summer cost of the construction under construction is complete we will be responsible for operating refinery burning revenue from doing feeds on a steak or paid basis the agreement between bp jazz sheet and okay company includes a tolling concept contact with daniel of twenty years to zero consistent over five year contract to commit upon completion of the conception finally and three renewal previous for five years each whether you eat adding to it's all production capacity which we anticipate don't drive demand for you sign says it's allowed to domestic an export markets we believe is an opportune time to enter the segment auto industry this agreement is a low risk approach that fencing these plants as told trading partner middle owned assets and take on the cost of construction and any old guys risk while our focus remains in our area of expertise as the operator of the facilities this is expected to drive additional that used to lose energy at favorable at the margins we are now looking forward to potentially starting concert since a street over the next several months meanwhile the also in discussions that book global the majors which have expressed interest in doing fortunes of the capacity of ancestry storage facility prior to begin to go section we will ensure that the recipes pretty contracted on the know you take effect on track to provide revenue stability and visibility we that i will not turn over to mr side muscles our see ago to talk to outrun and show results site the floor as yours i couldn't books
spk_3: thank you to convey gonna be one
spk_2: maybe for the six month period june thirty two twenty one was trying to keep on tv and dollars of trump eight or nine million dollars in the same futile to yet bad yeah he replied to reject ingredient is hired to the divine industry triggered specially outfitted a bj crash into the chopping and story good i like it more specifically in together visual the shortage fees so be tired and demand for and thirty seconds services no in addition the companies hi tech and hypothetically deeds with the louis gonna blossom issues attracted increasingly more attention enabling the business will in five new customers wikipedians
spk_3: the degrees of four point one meet at million dollars in ancelotti said with it's as compared to the same period of the barrier was upset by four point five million dollars from new contracts and tired to raise rates and terms of agreement
spk_2: and to little bit revenue also useful charges a one point three million dollars that are paid by the company to the port authorities and three jobs to the customers that direct costs increased by one point one billion dollars on seventeen point two percent and seven point two million dollars in the first six months of this year the largest expense please was one six million dollars in august and says due to increase productivity
spk_3: and movement with the introduction of more customers
spk_2: next was an end results point two million dollars in in her feet in preparation for the a betting on seems to have patience the remaining gotten up a million dollars it affects how you shouldn't sawdust maintenance charges for the bought equipment and hired a position been automatically list in office it's it's it's gross topic for the first six month period was it's kingpin one billion dollars compared with sixteen point seven billion dollars in the same period of the guy at representing a year already or into the for can do the person this degrees of point six million dollars in got profit as a result of an even got it caused by one
spk_4: point one
spk_2: million dollars partially offset by even begun you are point four million dollars as i just mentioned gentlemen administrative expenses impedes by one million dollars or thirty eight or nine percent to keep on seven billion dollars into green and you on the major reasons that np this up i didn't leave of point six six million dollars a charges can to legal consulting fees and surcharges as been a professional repeats of point six million due to the or it'll be an mvp yet you could have here and the pointing and million dollars and salaries and wages which is due to the north dakota stopping from a think when you can to didn't get an insurance charges of point two million dollars which includes a short span because level employees and i don't add that has a negative things are going on and on us and book on do you think is the partially offset by you didn't mean has cost the decades during point six months of the twenty one by pointed around us dude restrictions associated with the nineteen pandemic travelling expenses degree by point zero six two million dollars advertisement extensive degrees that point you to buy some million dollars and business promotion instances degrees by about point you don't have several million dollars during first half of the year finance cause v sixty four point eight percent year over year in five point six million dollars from two point four million dollars a mean jesus wouldn't even been as cost up the finance cost on bombings and bank charges and in the expense of four point eight million dollars on the two hundred million bond finance opportunity as compared to two point eight million dollars in debt expense but a six month period ended june thirty two including on don't know the just occurred and
spk_3: number twenty twenty with the proceeds from the newborns
spk_2: adjusted ebitda was fifteen point three million dollars
spk_3: cause it's apply for seven percent of animals in the past six months compared with seventy million dollars or ten be cheaper nine percent of revenue for the same period of the guy yet
spk_2: this represented a decline of one point six million dollars or ten percent the main reasons for the district of you can decline
spk_5: it follows
spk_2: number one day was an increase in total that it cost of one point one million dollars as
spk_6: you disgust
spk_2: number two also generated mistreated extensive and gave that to the nine percent odd one million dollars for two point seven million dollars lovely
spk_3: that's over in peace and everything about twenty million i didn't fees and expenses like two point one billion going to the to that the key them against it
spk_2: net profit was eleven point one million dollars in cuts top paid twenty one compared to sixteen point two million dollars in the same thing the degrees was primarily due to the high finance cause and a lower noncash benefit from changes and clear that you're getting that to one sided like that issue commensurate with cash and bank balances a and billion dollars i don't get going on the one
spk_3: capital expenditures to do amounted to
spk_2: fourteen point seven million dollars the majority of the fun you'd like that construction it specifically these payments over eleven point five million dollars of which one point one million dollars will go at it on the company gotta be bashful and the balance of and been putting and dollars on the use of the greek on the want an indefinite the capital expenditure in the remainder of you can do one at a perfect the approximately fourteen point one billion dollars which is expected to be funded primarily to cash from operations and from the remainder of the proceeds from the twenty twenty one of
spk_3: these can capital expenditures will consist primarily of expenditure take it to the construction of the beach to that's anything
spk_2: the debt i will not done the call will go to open the lines for to him
spk_7: thank you at this time will be conducting a question and answer session as you'd like to ask a question please post star one hundred thousand keep keypad a confirmation on indicator line is in the question to you first start to as he like to remove your question family for participants using her climate sorry to pick up your handset before pressing a start once again it's star one to ask a question at this time apart a moment ah for question
spk_0: thinking our first question comes from the line of martha chaska with edison investment returns please resubmit your question
spk_8: ah hell ah congratulations on their each of the my calm and an option
spk_9: i skill has soda
spk_8: ah fresh our sat in our staff at first half of september and ah well as i still be operating at full capacity so on are adequate around bacteria and our on at or take
spk_2: oh thank you for your question nicobar go up a year the ramp up periods his first of all the facilities forty contractors and as regretting mentions the have started the operations august the you cannot bring all the six hundred thousand to the can go and based on today's information the anticipated this to be completed between four and six weeks
spk_8: ah thank you and i could have to or follow up on as i stroke and we know there are contracts for free to were already secured in advance ah he said there any possibility touring er a negotiate contracts to get more favourable conditions and based on there are you have had demands on our fight
spk_2: yes i i think that you need to see the next the announcement of the company in the next two days or weeks and then you're unsure is be been given on that part i'm a dismal good finally did not an asset is it
spk_10: thank you very much
spk_2: you're most welcome and thank you for your questions
spk_7: thank you and as a reminder if you'd like to join the question you please press star one on the telephone our next question comes on the line of yeah
spk_11: with rbc capital markets is risky request hi everyone i'm to the couple of questions for me quickly under cars on the cost increases that
spk_2: you outline in the pets release the you talk about on the call i mean are those all recurring class the should we think of this is the new cost run rape thank you all these are things like neither don't be so can you please take this question yet yep
spk_3: you're thankful that as would use cost the bit so this is their fields course nobody over the past six months and the that the average cost this will not be going up
spk_2: the in the little the percentage is it not been to the more than what it is
spk_11: due to the next and cause that everyone wanted good okay great thank you and then ah where are you are on the progress now of contracting states three i think he said you were in discussions with with some potential customers the just curious how far along you are and do you need to contact the entire two and a half
spk_2: million cubic meters in order to proceed with construction phase three take yoga so we are the haven't announced a new contract and shirt the team and myself we are very close to closing partially of the concerts capacity the of was me
spk_12: the only builds as no always that in size women face to only builds and builds that what we have conflicted you know goons the collections
spk_2: the capacity
spk_13: his are busy large to confide in and give
spk_2: whereby we believes that we can announce the save before we start in the deception or what type of capacity amount we have been conflicted
spk_11: does that answer the question of you
spk_2: ah yeah yeah that that answered my question and then also under phase three refinery is the hundred needed thousand barrels and day is that the expectation for the refinery years i just the maximum size depending on contacted the maximum size of the plot of land is not be mentioned in the announcement just now is to coincide men to bookstores capacity the twenty five thousand though the sophie funny an honor to eighty thousand buried finding the hundred and eighty thousand and buried finally relented a maximum of region as
spk_11: with have any other to place bigelow sophie finally and the people inside known stores
spk_2: okay
spk_7: great thank you very much and yoga for your questions
spk_5: thank you once again ladies and gentlemen a star one to ask the question
spk_14: thinking or next question comes from line of guess tie up with think the capitol police received your question
spk_2: get a little answer your dad nice to be touch with uganda regrets guys for getting your face to launch its that's wonderful and i had just a couple questions for you years and can we expect a gross margins and phase two months after two amp at face to expected to be the sillier similar levels to face gander higher or lower that's that's the first question and secondly you expecting to treat your genie costs for face to do you think you need now and power at headquarters lego like over a ged for face to urge or should it be expected to stare at send letters it is now good the of no guess thank you so much for your question that you take the second question for your first and that do not open sort of says questions and site to the number of men power in the facility as you know there are seven people operating d as it's sort of one million we don't foresee and submitting breeze of manpower due to the automation the assets is managed from i'm control over the dcs whereby additional manpower of obliging that as it is not visits to be and it's a dish in significant number for didier operations at large so you can you please take the first lesson from guess yeah sure he got hi this so be expected got models to be a google obviously the pays to revenues getting and since we have already we have been a are you
spk_15: he making almost all the expenses on the maxim him say that the do that you deserve on the wonder if used to be expect the margins to be a little boost and as because they've that
spk_2: but as as and don't have that it costs that that might be slightly that slightly all a make my countries for because of the automation abdominal it may not be a significant increase
spk_7: wonderful thank you both
spk_16: thank you this for your questions
spk_8: think you are next question is a from the line of martha else with edison investment research please proceed with good question
spk_2: i've got a question on faith free so we know our their total lung capacity for face pre fight is are three point five half million cubic meter ah but they're on physics to study was based on that torn house for million so and is or any calls to expand the then storage capacity in the future thank you much as so the lens can house three point five million two bookstores capacity overall did the land is grieving built with thanks because we are adding and refinery of up two hundred and eighty thousand though that means a significant size the about a new into the first competitive therefore the lent as we have mentioned in the discussion million our call today that we can build two point five million to two bookstores deposited a twenty five thousand barrels a day long so we finally and and hundred and eighty thousand barrels a day conventionally finally on that moment so in case the refinery mood not materialize
spk_8: then the lens can be it's it it's deep inside news to us to the couples and most and landed
spk_2: i think it's a so are in the light of this are different our capacity as how is that reflected in that a potential our expenditures are afraid or free as so that previously guidance for that presentation of able or from one year ago or it was one point i'm a billion dollars are so how should think about it mother the just to study that we say the numbers of the producer now previous ip there were in the one point for one billion us as the related postal management said
spk_17: based on the to confide news to his capacity
spk_2: the new i study revealed that the two point five million two bookstores us to vo writer was not far off the management has already forecasted back in two thousand sentence
spk_8: okay thank you does eventually aggressive montana or do i need to elaborate more
spk_2: oh or an hour after follow up on this at topics as the soul and how we should think about a tiny of the capital expenditures are you should expect have for a twenty twenty one the and on split evenly between twenty twenty twenty twenty anti free or ass am and he an additional notice the project obviously is a project was his lasting around twenty four months to complete the to confide moon source capacity of nobility mongo so the later
spk_18: the construction of as me is going as for a project schedule and the project costs and the products financing arrangements
spk_2: or if we woods
spk_0: if he would say go on a bike on such rude so the costs will be belated over the only yup them twenty four months on the moment that we started yesterday
spk_2: thank you very much thank you madam thank you ladies and gentlemen this concludes our question and answer session altered the for mcdermott apart and cooper for any final comments thank you to everyone who were joined today school this is an exciting time and i'll developments we are poised to generate significant mangrove going forward with face to conception of compete and the facility operational barlow we are progressing with our plans will say steve facility which will include good old with that capabilities as well as adding more capacity for fuel and three products and are encouraged by the feasibility study completed by your wife
spk_7: i look forward to provide you with further those my progress for future earnings goals

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