Bw Offshore Adr

Good morning and welcome everyone. My name is Marco Bienen, CEO, and I'm pleased to present you our first quarter 2024 results of BW Offshore in this conference call. And I'm doing that together with our CFO, Stola Andreasen. And at the end of this presentation, we will be happy to address any questions you may have. And for that, you can use the Q&A module already during this call. Please note our disclaimer. Starting with the highlights, the BW Opal FPSO for the Barossa project remains on track. We continue with our quarterly cash dividend of 11 million US dollar. And we maintain our full year 2024 EBITDA outlook. And that's underpinned by first quarter EBITDA of 86 million US dollar, operating cash flow of 91 million US dollar, and a net profit of 37 million US dollar. Then operational update. First of all, the RFPSO BW Opal for the Barossa project in Australia for client Santos continues to progress in accordance with the schedule. And as such, we're on track to deliver first gas in the first half of next year. We are in the middle of the integration phase in Citrium with 13 out of 16 modules lifted and already on board and the remaining three lifts will take place before the end of this month. We're also progressing offshore with all mooring lines installed and now being hooked up to the lower part of the mooring buoy. Our top priority is to deliver per schedule and we are de-risking as we go. and this is the key driver to achieve the long-term project economics. Then our HSE performance and the fleet uptime. Our safety statistics are trending at satisfactory levels, as you can see, and this includes both our fleet and the project activities. With the project activities, we have a large amount of man-hours being liquidated in the yards, and that is also an underlying reason for the trending down of the statistics. We're focusing very much on the high potential incidents, the HPIs, and all of these will be followed by level three investigations to extract the learnings. And this quarter, we have two recorded HPIs, which were linked to dropped objects in the yard. Um, and again, nobody got hurt, but it could have been worse. And in particular, in a labor intensive phase, we are currently in. So we're taking the learning from that and working with, with our subcontractors to avoid, uh, recurring. Then our fleet commercial uptime, uh, was actually a hundred percent. So excellent uptime, uh, for this quarter. Um, and that underpins also the strong cash flows of this quarter. So then our contract and backlog, you see an overview of that on this slide. And so in addition to BW Opal, we have three FPSOs in operation, and those deliver the cash flows. First of all, BW Adolo in Gabon, stable productions, but the volumes and therefore also our production tariff is still impacted by issues with the electrical SIPMERS pumps. which our client BW Energy is working hard to solve these. So we do expect that these production levels will increase in the future. Then catcher, we actually exceeding 100% commercial uptime. And while we're on the rolling 12 month notice period, the expectation is that we will have at least three more years of production ahead of us, potentially more. And that is also because our client Harvard is looking at possible future tie-ins and will now embark on a 4D seismic program this year. And then BW Pioneer for our client Murphy in the Gulf of Mexico delivering stable production and the discussions with Murphy about a new contract are progressing well and we are converging. So the whole portfolio is expected to deliver strong cash flows till at least 2028. And with that, over to Stola for the financial update.

Thank you, Marco. And good morning, everyone. I want to start by saying I'm pretty pleased to report another robust quarter driven by strong commercial performance on the fleet, which delivered 100% uptime as Marco has just showed you. The EBTA of 86 million in the quarter was also positively impacted by contribution from the early works we have been doing for the Sakuraya project opportunity, as we were able to book almost 9 million net EBTA contribution related to this in the quarter. The contribution is coming from value-add engineering we are doing while we are progressing the contract negotiations and Markovol touch upon this later on in the presentation as well then when you look at the year as a whole i'm pretty confident to say that we don't expect any surprises related to the fleet which we expect to continue to deliver stable earnings throughout the year meaning we are confident in maintaining the full year 2024 ebta outlook of delivering between 290 to 310 miller So going to the overall income statement, as you can see, depreciations hovering around 46 million a quarter, and you should expect this to stay like this for the remaining quarters of the year. We had a small revaluation gain of just over a million related to the sale of Psyllul and Notipa as we sold the unit for about a million more than book at 9 million all in. Net interest expenses were relatively stable quarter on quarter as expected, while we could book a gain on financial instruments of 3.1 million in Q1. So even though US dollar has strengthened against Norwegian Krona this quarter and everything else equal, we should have had a negative impact. This was offset by a $6 million net gain and cash in. as we terminated one of the interest rate swaps we have in our portfolio. As of now, I would say we are over-hedged. We have no draw on our corporate debt facilities, and we have been in a position where we are able to take benefit of closing some of the hedges we have had set at very favourable rates in the past and take some cash gains from this now. We posted a gain on other financial instruments of 6.4 million, which is the usual revaluation of our Norwegian Krona denominated bond law. As indicated in Q4, we did expect that we'll have a small loss related to the sale of our BWN2 shares. And as you can see, we had to post an overall loss of 2.2 million on equity-accounted investments related to the sale and the effect of our net share of BW Energy up until the time of closing of the sale when we sold the shares. So overall, as Marco mentioned, net profit for the quarter just shy of 37 million, which is just below Q4, and the result that I would say we're overall quite pleased with. Cash flow from operations was 91 million. So when excluding prepayment from Santos, we had cash flow from underlying operation at 58 million for the quarter. Cash flow was somewhat affected by timing of the tax payments in Q1, as well as some timing-related payments of lease from clients, which shifted into Q2. Majority of investments were related to Barossa with 92 out of 94 million. The 2 million that you can see related to sale of fixed assets were prepayments for the sale of Petroleum Notepad, which was concluded in the second quarter. And then you can see the 176 million cash inflow related to their BWA energy shares that were sold back in January. For the Brosser project, we didn't need to make any draw on the debt facility in the quarter as we were relatively well funded. However, to plan for upcoming draw in Q2, we funded in 5 million in new equity for the joint venture, and the joint venture paid 10 million to VW Offshore for ongoing construction cost on the project. Net debt reduction in the quarter was 100 million. As we received the cash for the sale of Edible Energy shares, we could reduce the draw on our corporate facility to zero. Then we paid scheduled installments related to the catcher facility, and we purchased back convertible bonds for just under 36 million in Q1. Remaining cash transactions in the quarter should be relatively self-explanatory. And when you remove $10 million in consolidated cash from related to BW ideal, we could end the quarter with a cash position at over 390 million. Taking a look at Borussia funding, as I mentioned earlier, we have not drawn anything further on the debt facility, which stood at 890 million by end of Q1. We injected 10 million in new equity into the project, and Santos continued to pay based on progress milestones. Overall funding received was just shy of 2 billion per Q1. And I can confirm and say that we remain well funded for the remaining project, as the project is now progressing through the integration and commissioning phase in Singapore. I think this slide doesn't come as a surprise for those of you that follow us. We received 176 million in cash from selling shares in Q1, which means that, as you can see here on this slide, we are almost net debt free as of end of Q1 with only 28 million in net debt and a leverage ratio which stood at 0.1 times. When you look at equity ratio, it trended upwards a little bit, driven by positive results in the quarter, and stood at a comfortable 31.1%. So very good headroom to any covenants and a very comfortable balance sheet position. So summing it up from my side, we have a very solid liquidity situation with over 680 million in liquidity. as of end of the quarter, of which almost 400 million is cash, and a corporate facility which is fully available. All the planned refinancing are behind us. We will redeem the remaining convertible bond by November 2024, and I'm confident to say that we have sufficient liquidity to carry that out upon maturity of that bond. We have very good visibility on debt maturities and debt management with basically all our debt hedged and an all-in cost of debt of 4.9%. And as announced in Q4, we will be paying out 11.3 million or six cents per share based on Q1 results. And that would imply a dividend on an annual, well, on an annualized basis of between 9 to 10%, I think, based on where the stock is trading today. We believe this is an attractive dividend proposition, also with room to potentially increase, provided we are able to deliver a net result above 90 million for the year as a whole. So with that, back to you, Mark.

Yeah, thank you, Ståle. Then I will now continue to give you some insights in our strategic priorities, and starting with a market outlook. As you can see on this slide, and we've shown it in the quarters before here as well, there is a strong demand for FPSOs as a production facility to develop new oil and gas fields. And this is supported by a continued high brand price. However, we also see that the increased complexity of the facilities that are specified and the cost inflation and higher interest rates, these have made these projects more expensive and harder to finance. And consequently, contract awards are moving to the right and the number of the actual awards has been much lower than planned if you look at the last two years. And I expect this to continue for a while. And that also sort of means that the project awards keep moving to the right. And that also means for, uh, for our project targets that probably will take longer before we can sign up in the next contact award where we are targeting this year. Um, I think this will move now in, uh, in, into 2025. Um, but in the meantime, for the Sakaraya project. That's the project we have talked about earlier as well. We continue with paid early works agreements for our client, Turks Petroleum, and we are progressing towards a meaningful EPC management contract for the conversion of BW Opportunity. And that's the unit we sold last year already to Turks Petroleum. And hopefully this can be concluded in the coming months or at least in during 2024. in this market we are well positioned we bring experience from all major fpso regions we also have a proven rapid framework whole design which is not limited to dry dock capacity and and it's designed for meeting harsh environments and large stop sites requirements and we're also creative in finding new FPSO financing solutions as we have shown with Santos for the Barossa project. In this market, it is important to maintain a disciplined approach as we have shown the last five years. Our preference is lease and operate or EPCI combined with accurate long-term O&M contracts with focus on a balanced risk reward with our clients. And we don't take residual value risk on our investments. So the return requirements will be met during the firm period of the lease. We're looking for solid NRC or investment grade counterparties, and we bring partners in the EPC phase as well as in the asset owning phase. Then I'm moving to Floating Wind. Our subsidiary BWEDO continues to progress business development initiatives and its project portfolio. Last quarter, they have launched the standardized floating foundation design for mass production. And this design is optimized for varying meteocean conditions across all key markets for floating wind. It's scalable and replicable with minimum harbor requirement because of its shallow draft design and it is compatible with all current 15 megawatt wind turbine manufacturers and scalable for future 20 plus megawatt models. It allows for flexible manufacturing and it's capable to produce one foundation per week in a manufacturing line. So these all provide tangible benefits for developers to focus on price, schedule and flexibility, and it is an important piece to unlock the supply chain for floating wind. Another piece is the manufacturing lines, the manufacturing lines of floating foundations, and BWD Hall has the exclusive access in our dossier. And good news for our dossier is that This development now is backed by a hundred million British pound loan from the UK and Scottish government. And for the support development, we have the manner affecting line designs ready for a capacity of 50 floaters per year. In parallel with all this, we're progressing investor dialogues as a private company, as we're looking for an industrial or a financial partner to co-fund the future of this company. Then I conclude with the outlook. This is more or less the same focus as I've communicated in previous quarters. Barossa remains the most important undertaking we have at hand and we're fully focused on the safe and timely execution of this project with first gas next year. We're also working with our clients, Harbor and Pioneer, to unlock future value of these assets through contract extensions. And as explained in this market with strong demand, but still also a difficult market to progress towards FIDs, we remain selective. to land the next FPSO project. And for BWD Oil, as just explained, now as a private company, we're looking for capitalization of this company with industrial shareholders, preferably, and we maintain an attractive shareholder return program, as Stola also explained. And with that, I think we can continue with the questions.