Bw Offshore Adr

Thank you and good morning everyone. Welcome to our fourth quarter 2022 update and our full year results presentation. Together with Stol Andreessen, our CFO, I will run you through our presentation and then we will conclude with a Q&A at the end. Please note our disclaimer. And then I continue with the highlights. Full year results came in with a 346 million US dollar EBITDA and an operational cash flow of 650 million US dollar, of which about half came from the lease prepayments for the Barossa FPSO. For the quarter, EBITDA was 105 million US dollar, and that includes a one-off from the Gato-Tomato Limited Notice to Proceed, which was terminated. The Barossa project continues to progress well and is by now about 60% complete. We continue to pay our dividend this quarter through a mix of cash dividend and dividend in kind with BW Energy shares like we did in the previous quarters. On an annual basis, this equates to US$45 million, and that means we have returned capital to shareholders at a 9% dividend yield. Then continue with an operational update. First of all, the Barossa project. The FPSO will now be named BW Opal. And I'm very pleased with the safety performance where we have now passed 10 million man hours without any LTI, any lost time incident. You can also see on the pictures that now the construction is really taking shape both for the whole top sites as well as the turret. And this means engineering is nearing completion and we're heading towards the phase where we can actually assembly the mega blocks. Despite the inflation, supply chain disruptions and design adjustments, the forecast of the project economics remains sound and they haven't changed since previous quarter. So I'm proud of this team which keeps the project on track for delivery in the first half of 2025. I move on to fleet and HSE performance. I'm pleased with the trending down of our safety statistics, which now includes both the BW sure employees and also the man hours of our contractors. We take the three. HPIs that we recorded in the quarter, high potential incidents. We take them as opportunities to learn and improve. We are considering these HPIs as leading safety performance indicators, and therefore we treat them very seriously. On the uptime, the fleet average commercial uptime was above 99%, and that is where it should be without any planned shutdowns. Then I move to the backlog. Ninety-nine percent of the backlog is now from our core FPSOs. We already talked about Barossa. Adolo is producing slightly below 10,000 barrels per day, but this will change by the end of this quarter when we expect first of all from the hibiscus roost development, and we will also boost production from the Tortue field with a second gas lift compressor. The increased production will trigger additional income for the FPSO to a production tariff. Then Ketcher in the UK delivered a strong quarter with 100% commercial uptime, and the same applies for PW Pioneer in the Gulf of Mexico. So nothing specific to report there really. So in total, with those four units, we are now having a backlog that stands at 7.1 billion US dollar, of which 84% is firm. The rest of the fleet is in progress of recycling or divestments, and with the aim to conclude this divestment program in 2023. The exception is BW Opportunity, which is in the yard in Singapore. And for that unit, we are progressing redeployment opportunities. I will elaborate a bit more about that after the financial section, but we'll hand over to Stolle first.

Thank you, Marco. Before I begin I would actually like to encourage everyone to take a look at our annual report which is out today. It's a report we have spent a lot of time on and it's a very good product for anyone who wants to get a better insight in what we do today, what is our financial situation and where we are going as a company and you will find the report on our website. Starting with the overview as usual, I'm quite pleased to state that we were able to finish 2022 with a quarter where we delivered good financial performance. As you can see, operating revenues came in at 211 million and EBTA was 105 million. For this quarter, both revenues and EBTA has been positively impacted as we have now invoiced Shell for settlement in Kurd settlement of incurred costs related to the work we have done under the limited notice of proceed uh work arrangement for the gato domato project uh that we was work that we were working on and at the same time we have expensed off all the cost for work that was carried out in quarter four so so net off as you can see there was an impact of 13.6 million in the quarter And as I will get back to on the next slide, you will see that we have also written off all costs incurred in previous quarters related to this. So when removing the impact from settlement with Shell, we still delivered an EBTA of 91.4 billion in the quarter, which shows that underlying performance of key units have been good. And I would in particular highlight Catcher as we've been able to meet annual KPIs. and we had good commercial uptime on the unit in the quarter. And that had an impact as in quarter three, we had a partial kind of planned shutdown for the unit. Going to the income statement, you will see that as usual, depreciation are stable quarter to quarter. We have been capitalizing engineering cost since late 2021, related to Gato D'Amato, as it was seen as an integrated part of the overall construction cost of the FBSO to be built. As the project has now been put on hold, we have expensed off all these costs that was earlier capitalized, and that is reflected now through an impairment of 15.8 million in the quarter. take the net effect of the 13.6 million as was presented on the last slide, and you deduct these additional 15.8 million, you will see that we have spent slightly more than we've been compensated for the project as a whole. Net interest expenses continues to be stable quarter on quarter as we are fully hedged on floating rate interest exposure. We have also hedged a significant part of our FX exposure to any currencies other than the U.S. dollar, which includes our 900 million bond loan in Norwegian kroner. And over the course of the quarter, U.S. dollar has weakened significantly against currencies, particularly Zing dollar, Norwegian kroner, and euros impacting us. And this has contributed to the majority of this 24.4 million gain on financial instruments reported in Q4. Other financial items were negative 3.9 million in the quarter, and that is largely due to revaluation of bond loan issued in Norwegian Krona. Share of loss from equity accounted investments were 2 million, and that is a reflection of our relative share of the result delivered by BW Energy in Q4. And when you take into account tax expenses, we delivered an overall profit of 41.3 million for 44. On the cash flow side, you see cash flow from operation was 175 million, which means when you exclude prepayments from Santos for the Barossa Charter, we delivered cash flow from operation at 87 million. So again, good cash contribution from predominantly coming all from our core units. We had net investments of 166 million in the quarter, of which 154 million is related to Barossa, and remaining is to a large extent related to still ongoing upgrade works for FBSO Adolo related to the tie-in for Rouge phase one. We did not draw any further on the project facility for the BROSA in the quarter. We injected five million more equity, and that is also why you can see that our cash balance has reduced in quarter four as we've been trying to minimize working capital held for the project and utilizing that cash and that allowed us not to draw on the project loan facility in the quarter and could delay that into quarter one 2023. We did draw 33 million on the revolving credit facility we have and that was to a large extent to manage liquidity as we had scheduled installments related to catch facility and the fact that we bought back 31 million in commercial bonds for during q q4 and that when you take into account payment of interest dividends and and the payments under the pressure arrangement with icbc we ended the quarter with 230 million in consolidated kind of cash position The browser project has been progressing well during the quarter as Marco has touched upon, also reflected in the financing as it is a good measure for progress on the project. As I mentioned on the previous slide, we have not drawn on the debt facility for this project in the quarter. Normally, we will draw equity and debt based on forward-looking calculations of funding needed for the project, but in quarter four, When factoring in prepayments from Santos, we had sufficient liquidity to push out any drawdown to the next quarter. The prepayments from Santos was based on the percentage measured completion of the project in the quarter and stood at approximately 53% of the total by end of the year, up from 44% by end of quarter three. Looking at our overall financial position, as you can see, net debt increased slightly in the quarter, now to 497 million. And although we have reduced overall consolidated debt levels, this is primarily driven by lower cash balance as we've been utilizing cash on hand for Barossa in the quarter. And despite this, we are still trending on a leverage ratio of 1.4 times last 12 months EBTA. So we have what we consider a comfortable leverage position. We continue to be supported by steady, strong cash flow from our core units. And if you turn to the equity ratio, you see slightly down, down by just over percent, quarter on quarters, and this is in line with expectations as our balance sheet continue to increase as progress or construction on Barossa moves forward, and we do expect that this effect will continue until the project is completed and then it will unwind and equity ratio will start trending upwards. Looking at the consolidated debt, we have two debt facilities and two bonds that needs to be addressed over the next couple of years. As we're now entering 2020, sorry, as we're now entering 2023, we are now kicking off efforts on amending and extending the corporate facility and the BW catch facility, which both have maturity mid 2024 originally. We believe we have a very good starting point as the facilities are supported by our three core FBSOs, which we expect to be unleased to our clients for years to come and that will provide good steady cash flow visibility and support our efforts on extending the maturities on these two facilities, as I mentioned. For the capital markets debts, our plan stays firm in the terms that we are expected to reduce the overall debt quite significantly from today's level of around 335 million down to 150, 200 million as we address the maturities on those. So we continue to focus on divesting non-core assets in line with our strategy, and that shall ultimately allow us to simplify the organization, free up liquidity, and grow infrastructure FBSOs in the medium term. Divestment dialogue for non-core FBSOs are ongoing with aim to close out these dialogues and close transactions within first half of this year. Looking at the overall liquidity situation, it's very stable. We had a liquidity of 371 million at the end of Q4. This has allowed us to, in addition to regular debt installments, repurchase more of the convertible bond debt in Q4. approximately for approximately 31 million in in the quarter and when you look at 2022 as a whole we did repurchase bonds for just over 60 million and i might sound like a broken record as i mentioned this before but having 100 hedge coverage on debt does give us good protection against increased interest rates and give his ability on financing cost in what we still consider to be an inflationary environment. So summing up, delivering on the divestment program and managing liquidity through capital discipline is what we consider an enabler for delivering long-term value growth to our shareholders. We do have an ambition to taking on new infrastructure FBSO projects, but we do believe that building on the capital structure model that we established for Barossa thus enable us to take on new projects without overstretching the balance sheet and creating a good risk-reward balance and creating long-term value for shareholders while we still deliver on our promise of paying steady dividends. With that, I'll give the word back to Mark.

Okay, thank you, Stole. I continue with an overview of the market. On this slide, you see ample opportunities for new FPSO projects for the remaining of the decade. And while there are only four contractors actively pursuing these projects, so we're still in a window of an attractive supply and demand balance in the FPSO space. Previous quarter, we advised you that we were heading towards a new opportunity with Gato de Mato. We assumed that by now we would have signed a contract with Shell for this project. And while not fully concluded, we were quite far progressed with putting the debt finance for this project together. And therefore we were caught by surprise as Shell suddenly decided that this was not the right time to proceed with the Gato de Mato project. And while this is obviously disappointing, the work done for the Gato de Mato project proved that we were ready for taking on these kinds of projects. with a quality stamp on our proposed execution plan and our financing plan, both by Shell and our lenders. Recycling of such projects happen in our business, and the project may come back in 12 to 24 months, as Shell advised. But for now, it simply means that we are moving on with targeting new prospects, in particular with the focus on the redeployment of BW opportunity. And we're progressing with various prospects for her and aim for a contract award within 2023. That's a clear target. In addition, we have identified a handful of potential FPSO infrastructure projects which meets our investments criteria, which are a firm contract of 15 years or more, solid NOCs or investment grade counterparties, and teaming up with strategic and or co-investing partners in the project. We're making preparations to be able to submit a tender when these opportunities come to the market in this year and coming years. Then moving on to the floating wind market. This is a market that is now clearly emerging and taking shape. The floating offshore wind pipeline for the next three years tripled compared to 12 months ago to 33 gigawatts. And of that pipeline, BWEDO has secured one gigawatt in 2022, which is currently being developed as part of Scotland. And three gigawatt of projects are substantiated and being targeted through specific leading partnerships. For example, the EDF Maple Power partnership with BWEDO is targeting the three French tenders that are currently ongoing. Together with BW offshore, BWDO is engaged in multiple feasibility studies for floating wind to power solutions, targeting accelerated revenue generation to EPCI activities in the coming years. The focus of the company is on preserving and expanding the technology leadership, building on the day-to-day experience gained from the two full-scale floating wind turbines in the water in Japan and in France, and optimizing the project execution and strengthening the competencies to ensure project readiness. Project readiness for either FIDs for developments or for EPCI tenders by other developers. Disciplined operational management is being applied with a full year operational revenue in 2022 of 6.6 million euro and a net cash burn of 3.4 million. Together, we are working on a long-term financing plan for closing targeted in the first half of 2023, and that includes a 10 million convertible shareholder loan from BW Offshore. Moving on to BW Energy, BW Energy is progressing towards a step change in production, as mentioned in connection to the BW Adolo FPSO update. First of all, from the uh rich hibiscus development and then followed by an increase in production from the tortue field with a new gas lift compressor in addition bw energy works on the closing of the golvino acquisition in brazil and this is expected to close this quarter as well and will then immediately add because this is existing production the company is further looking at maturing the gas field with 3D seismic. And this is triggered by the nearby discoveries made by a couple of oil majors. And this may point at a whole new offshore oil and gas region. So exciting months ahead for BW Energy and therefore also for BW Offshore. Presenting this Port quarter results justifies a summary of last year as well, where we have shown discipline delivery to our strategic priorities. And these priorities are. First, accelerate and maximize the value extraction from the legacy fleet, and we did that through divestment and ownership transfer of five units. And this allowed us to increase the returns to 45 million US dollar over the year, which. was partly done through dividend in kind with PWE shares as well. Secondly, we want to invest in new and better backlog through infrastructure type FPSO projects. We're progressing the Barossa FPSO project in accordance with the schedule, and that is despite the difficult circumstances in the global supply chain. The Gato-Romato tender, the fact that we have been selected and have reached project kick-off readiness, which was built on this experience from Barossa, and it confirmed our ability to develop a robust execution plan and the sourcing that is required to fund this kind of projects. We will also build on that for the next opportunities in the FPSO infrastructure arena. And then thirdly, we want to position and invest in the Jason business to capture the opportunities in the energy transition and that has materialized to securing the one gigawatt offshore floating wind acreage in the Scotland leasing route. So we're pleased with the progress that we made in 2022 and this forms a very good basis to continue in 2023. And with that I can conclude with an outlook. The Barossa FPSO project safe and timely delivery remains our top priority. We will take the benefit of a healthy FPSO market with a window of attractive demand supply balance, and we will pursue the next energy infrastructure FPSO project, leveraging the proven capabilities in the PROSA project. We'll support BWD-YOL in pursuing floating wind opportunities, in particular for the first EPCI tenders, which are due to come to the market, as well as floating wind power to platform opportunities. The fleet divestment program will be concluded in 2023. And we continue with a substantial shareholder return program. Thank you. And now we open for questions from the operator.

We currently have no questions coming through. Thank you. Yeah, thank you. But then I think we can take a couple of the questions who came in via the web. So I'll start with the first one, which came from Georgie Dodo from Brooks MacDonald, and he's asking, what proceeds are you expecting to raise from the four FBSOs for sale? I guess, Mark, could you take that?

Yeah, well, that's an ongoing process, so it's a bit difficult to be, and not appropriate to be too exact, but we're expecting something between the 50 and 75 million US dollar.

We got another question from here. Wushan from Borea is asking how much of the revenue backlog is related to BW catcher options? I can take that one how much it is so the per backlog is six billion and what we call the probable backlog is 7.1 billion and that includes some option and in the 7.1 billion 650 million is related to to catch her as a whole, roughly 650 million. That is all the questions I have on the web at the moment. So back to you.

It appears there's no further question. Thank you. Okay, then I think we conclude this conference call. Thanks everyone for your interest for this presentation and for BW Assure and hope to talk to you next quarter. Thank you very much.