Bw Offshore Adr

Welcome, everyone. My name is Marco Bene, CEO, and I will host this conference call together with our CFO, Stole Andreasen. And in this call, we will present BW of Shores first quarter 2023 results. Please note our disclaimer. And then I move on with the highlights. I'm pleased to report good progress on Barossa, now 67% complete by end of April. We have divested BW opportunity for 125 million US dollar. And we continue our return to shareholders with a combination of cash and dividend in kind in BW Energy shares. That's roughly 50-50 and equivalent to about 45 million US dollar on an annual basis. The EBITDA in the first quarter came in at 79 million, operating cash flow 128 million, and that includes 78 million of the prepayments of the Barossa day rate. Moving on with an update on operations, starting with Barossa, as I just mentioned in the highlights, the Barossa project is progressing well with 67% complete and on track for first oil in the first half of 2025, as planned. We're extremely pleased with the excellent safety performance on this project, accomplished by all parties involved, with 14.1 million man-hours without a lost-time injury event. The assembly of the mega-blocks in the floating dock is nearing completion, and we are preparing for a float-out in June. And the first major equipment packages are arriving in Dynamec in Singapore for integration in the modules. You can see from the pictures that we are now deep in the construction phase in all areas, the whole in South Korea, topside modules in Singapore and the turret mooring system in Indonesia. As you know, the project is being executed in difficult circumstances. We're dealing with inflation and global supply chain disruption. But we remain on track and maintain our guidance on schedule and the project economics. Then on our fleet and HSE performance, the safety statistics are trending down for recordable incidents, which is good. In addition, we report on the high potential incidents, which we treat as leading indicators, and we follow them up in the highest level of our internal investigation process. to ensure we take this incident as learning moments to prevent potential future incidents. And this quarter, we had two of those type of incidents. The fleet commercial availability expressed in weighted average fleet uptime was slightly down, and that was due to logistical challenges in Nigeria, which impacted Schengen Bergen. Overall, still a solid commercial uptime. Our strong cash flow is underpinned by our core fleet, which in addition to BWO Palo Verosa, consists of BWO Adolo in Gabon, BWO Catcher in the UK, and BWO Pioneer in the Gulf of Mexico. The backlog of these four units now stands at US$5.8 billion, and that is 84% of our total backlog of US$7 billion. The total backlog includes the most probable options that we have in these contracts. BWO Adolo will now increase its production above the average of 7,000 barrels per day achieved in the first quarter, and this is due to the achievement of the first over from Hibiscus and Ruisfield in April. And now the second well is in progress. I will come back to this in the BW Energy section of this presentation. BW Catcher had a strong quarter with 100% commercial uptime and an average production of just below 38,000 barrels per day. MBW Pioneer also delivered a strong quarter and we're looking forward to the results of the drilling activities in the Chinook field, which have started recently. Then an update on units that we had in layup. We sold both BW Opportunity and BW Athena for a total net proceeds of 130 million US dollar and we reduced with that also our OPEX going forward. In case of BW Opportunity, this was part of a redeployment project which consists of an EPCI and an O&M service contract which we currently negotiating. while the feed phase has already started. Then on the non-core fleet, we are on track with the divestment of this portfolio, and we're aiming for a conclusion before the end of this year. This will then cover the units in Nigeria and Ivory Coast. Petroleum Nautipa is progressing decommissioning, cleaning and then demobilization, and then followed by recycling in the second half of this year. And for FPSO Polvo, we have already agreed a sales transaction with BW Energy so that the unit can be redeployed on the Maromba field in Brazil. We have now agreed that BW Energy to delay the payment milestones in accordance with the adjusted timelines of the Maromba project. With that, I'm handing over to Stole to renew through the financials.

Thank you, Marko. Moving to the finance section. Starting with the overview, as usual, you can see operating revenues came in at 166 million and EBITDA at 79 million for the quarter. If you compare to quarter four of last year, you will see that those numbers were impacted by the one-off reimbursement for the work we had done on the Gato de Malto project. And as such, it's not representative for underlying business going forward. And as Marko mentioned, we had good performance on the units during the quarter, only affected by the shutdown on Senneberge, which have limited impact on the financial results overall. And when going forward now, we should see minor impact as marginal units are leaving the fleet through the divestment program. But that should be offset by a better and higher tariff from Adolo as production is increasing in line with planned production increase from BW Energy and also somewhat offset by a lower OPEX as units are leaving the fleet. Looking at the overall income statement, as you can see, depreciations are reducing slightly. Again, it's just a natural effect of units being fully amortized. We have a fully amortized FBSO Abo in last quarter of 22, and as such, you see lower depreciation in this first quarter of 23. Sale of BW opportunity resulted in a gain, as it was so slightly above book value, of 6.4 million recorded in quarter one. And when you move on to financial instruments, you will see that we have a negative mark to market impact of 13.9 million in Q1 related to hedges we have put in place. This is mostly driven by strengthening of US dollar against other currencies that we have hedged, and also declining swap rates, which has had a negative mark-to-market impact quarter-on-quarter on interest rate hedges. Countering this somewhat is the fact that we are revaluating our bond loan, which is denominated in Norwegian kronor, to the same strengthening of US dollar, which has a positive impact on our P&L of 10.3 million in quarter one. Other items are more or less in line with the expectations. Share of our investment in BW Energy, the impact was close to zero this quarter. Tax expenses similar to last quarter, and we ended the quarter with 17.8 million net profit in Q1. Taking a look at the cash flow, as you can see, cash flow from operation was 128 million in quarter one. And when you exclude the prepayment related to the Barossa FBSO charter, we had cash flow of 50 million from existing operations. I have to say that's somewhat lower than what you would expect. And this is driven by some delay on payments from clients. which has come in after quarter end and has not been reflected in this cash flow statement. We had the net investments of 196 million in the quarter, of which 159 million is related to Barossa. The remaining cash flow out in the quarter is one related to the final milestone payment to Keppel for the repair work we have done on BW Opportunity, which was all settled ahead of the sale. and some capex that we still are incurring on the dollar related to the time for rouge phase one. And I just want to mention that this capex also, although not so significant, but it does translate to a higher ongoing day rate, including an agreed return on the investment we're making on the unit. As Mark already said, we have sold BW Opportunity in the quarter, and we got 125 million in from the buyer. For Barossa, BW Offshore for our 51% ownership injected another 13 million into the joint venture. And the same joint venture paid another 100 million to the construction company as we're progressing as per plan for the project. All the debt was reduced by 66 million in the quarter as we continue with the scheduled installments on our facilities. And you now can note that interest expenses are reducing to about 5 million for the quarter as we actually get quite a bit of benefit from the positive cash settlement under our interest rate hedges, which are now significantly in the money. And so end of the quarter, we had 283 million in consolidated, when excluding consolidated cash from BW Ideal. Taking a look at the funding for the BROSA project, as Marco has mentioned already, we are progressing well on the project. We continue to fund as planned, and in Q1, we did draw another 135 million on the project debt facility, which is now about 50% drawn in total. And as you can see, we called another 25 million in equity when you combine the equity injection from BW Offshore as well as our partners. And this implies that there's approximately 52 million more to be funded from BWO until end of the project. Prepayments from Santos is coming in as expected. They are being paid based on percentage measured completion of the project. And as of end of Q1, we had received $607 million from Santos, which shows their continued very strong commitment to completion of the FBSO. And I've said this before, but again, we are 100% funded for all costs related to this project. This quarter, the net debt reduced by almost 130 million to 369 million by end of Q1. And the basically exceptional debt reduction in the quarter is largely driven by the sale of BW opportunity that was closed in March. But I also think it shows to demonstrate that we continue to fund equity for Barossa as well as paying dividend without the need to increase on consolidated debt on our balance sheet. Equity ratio trended down slightly and stood at 32.4% by end of Q1. As you can see, we have two debt facilities and two bonds that needs to be addressed over the next couple of years. I'm pleased to say that we have now launched the refinancing of the corporate facility and the facility for BW catcher, which both have their original maturity mid-2024. We are targeting to extend the corporate facility with five years from closing and the catcher facility with 3.5 years from closing. And we do have a target to close these refinancing efforts within end of second quarter. We think that we are offering lenders an attractive refinancing opportunity backed by units which have good cash flow visibilities and in two facilities that are further supported by our corporate guarantee. And post-closing of the refinancing, the next step will then be to start addressing the outstanding bond debt that we have in the market. And as I've said before, we indicated that we, as we've indicated before, sorry, we expect to reduce this debt significantly on a going forward basis. Well, to sum it up, and I think Marco has said it to a large extent, we are progressing well on divestments on the non-core fleet. freeing up 130 million from the sale of VW Opportunity and VW Athena. The efforts on the remaining non-core units in terms of divestments are continuing, also including the sale of Polvo, which is now being moved to completion by the first half of 2024. Looking at the liquidity situation, I would argue it's rock solid with the sale of opportunity, and we now have over 520 million in available liquidity at the end of the quarter. And with the liquidity situation being where it is, we have continued to opportunistically repurchase the convertible bond as it's trading significantly under par. And as I mentioned on the previous slide, we are now well underway with the refinancing of both the corporate facility as well as the catcher facility, which all in all will help improve our overall financial flexibility and our capacity when it comes to new product business that we are in the market for. And I think when you bring this to the project and outlook there, as Mark was saying, we are delivering well on ROSA and we have good cash flow visibility with activities we're undertaking and that allows us to continue with what we would argue is a substantial dividend program at the same level as before and which is at current share price level implies a dividend yield of approximately 10 percent annually. So that I'll hand it back to Marco for the remaining part of the presentation.

Thank you, Stolen. The last part of our presentation is an update on our strategic investments. The window of opportunity is definitely still open and even improved on the back of concerns about the energy security and relatively high oil prices. And this also supports contract extensions and redeployment, which are obviously relevant for our core fleet. But for new FPSO projects, this year we may see 10 new awards in the market, and there are about 40 to 50 serious FPSO projects on the map between now and 2030. As BW Offshore, we're targeting the four to five most attractive of these. And we do see that lenders and investors are increasingly selective on which projects to support. In addition, we see several banks no longer supporting oil and gas developments, including lease FPSOs. So selecting the right project is absolutely key here. Our preference remains long-term lease contracts with lease prepayments, similar as we have with the Barossa project. But we're also looking at EPCI plus long-term O&M opportunities. key criteria for us is that we will not invest in projects which require residual value risk in the asset then in the floating wind segment the assembly of the first eomet floater based on bw edo's damping pool design has now started in port la nouvelle um Our subsidiary BWD Oil has signed a head of terms with the local developer Elevon to co-develop floating wind projects in Spain and Portugal. And the BWD Oil board has approved a partnership for the Celtic Sea tender. And good progress has been made for the project development funding backed by France investment fund ADEME. ADEME will invest 40 million US dollars in BWD Oil's project portfolio. Together with Noria, BW Offshore provides a buffer of 12 million euro through a shareholder loan. And last but not least, the Ardèche port, where BW Deol obtained exclusive rights to manufacture floating wind turbines, has now secured 300 million British pounds to progress the development plans. Then moving on to BW Energy. BW Energy is on track for a step change in production during 2023. They started with the first oil from Hibiscus Rus', and that added about 6,000 barrels per day, which is in line with the expectations. And it will continue to bring five more wells online during this year, targeting about 30,000 barrels per day when all these six wells are online. In addition, an additional gas lift compressor on board FPSO Adolo will further support the production and startup is now expected very, very soon. In Brazil, the planned transaction of the Golvinho field is now progressing towards closing. And then in Namibia, on the Kudu field, a 3D seismic campaign is progressing to further study the potential of the reservoir. following the recent nearby discovery made by a couple of old majors. And this may open a whole new oil and gas region. That brings me to the end of the presentation. Brief summary and outlook. As we explained, the full focus is on the safe and timely execution of the Barossa project, which is going as planned. we will conclude the fleet divestment program in the second half of this year we're actively but selectively progressing new infrastructure type fpso projects and we continue to support bw neo in pursuing floating wind opportunities both co-development as well as the first epci opportunities and we continue to support bw energy in the ambitious production ramp up remain focused on shareholder returns while we grow the company both in the FPSO segment and the renewable energy segment. And that concludes this presentation and we will then continue with the questions that we have received on the web.