Bw Offshore Adr

Good morning and welcome everyone to the second quarter results of PW Offshore. My name is Marco Beynes, CEO, and I will present today together with our CFO Stole Andreasen. And please note our disclaimer and then we're moving on to highlights. First of all, the Barossa project continues to progress by plan. And based on This quarter results and previous quarter results. We have the confidence to adjust the EBITDA guidance up to 305 to 315 million US dollar. And we maintain our quarterly cash dividend of 11 million US dollar. Moving on to the operational update, mentioned the BWL PAL FPSO for the Barossa project. We're now 86% complete. Pleased with the progress. As you can see on the pictures, all the topside modules have now successfully been lifted on board. So it really looks like a completed FPSO, but obviously there's still a lot of integration and pre-commissioning, commissioning work to do while we are in the Citrium Yard in Singapore. Integration is now 75% complete and the pre-commissioning and commissioning activities are ramping up. We're focused on maintaining the schedule and mitigating the project risk and delivering this unit safely to the field on the Barossa field in Australia. In accordance with the guidance on the schedule, we also are confident that the long term project economics remain intact. So in short, we're on track to be ready for first gas in the first half of next year. Then, to the fleet and HSE performance. We're happy with the right trending of the high potential incidents, trending downwards like we like to see it, because this is the kind of leading indicator of safety performance. On the lagging indicators, we had, unfortunately, an LTI with a subcontractor in Indonesia, not without severe consequences, but we followed up with a level three investigation and implemented lessons learned together with this subcontractor. Like last quarter, we have had a strong commercial uptime, and that underpins the good financial results of this quarter. Then, moving to the fleet backlog overview, you see here the three operating assets, and with those three units, we deliver strong and predictable cash flow, which together with BW Opal, gives us a firm contract backlog of 5.4 billion US dollar. BW Adolo production is a bit lower this quarter. That was due to a planned shutdown. BW Catcher delivered 100% commercial uptime, but next quarter there will be, and this will be a bit lower due to planned maintenance. Currently we are on a 12 months rolling extension in the contract. And based on the current performance of the field and the fuel on the oil price, we expect that we will remain on contract through to 2028. BW Pioneer delivers consistently stable production. And while we are converging on outstanding topics of the contract extension, we have not been able to conclude yet. for a new contract after March 2025. But again, I think we're really converging and the number of outstanding issues is steadily reducing. With that, I hand over to Stole to run us through the financials.

Thank you. For the quarter, it came in at a strong 77 million. This was driven by underlying good performance from the fleet, although slightly impacted by 21 days planned maintenance shutdown for Adolo. In addition, we had a sizable contribution to our earnings from the value-add engineering work we have done for the Sakuraya project, also in the second quarter, which added another 7 million to our EBITDA. our client, Turkish Petroleum, has decided to progress this redeployment as a local content project in Turkey. And as a result, we will not see a role and be part of this project going forward. And we have agreed on remaining deliverables from our side to close out the project on our side or for our sake, which will be completed during the third quarter. And that, we expect, will add another contribution of $10 million, which we expect to book into quarter three. So then when you look at the year as a whole, we expect steady contribution from the fleet for the rest of the year. And when you then include expected contribution from the efforts we have performed on the Sakuraya project opportunity, it does allow us to increase the EBTA outlook for the year. to a range of $305 to $315 million for the year as a whole. The income statement shows very few surprises, I would say. Depreciations continue to be stable as we have now stabilized also the size of the fleet. Net interest expenses came in lower quarter on quarter at $4.8 million. This is driven by The fact that we have a lot of cash on hand, which generates interest income at the moment, but also the fact that we have no need to draw on our corporate facilities. So we only pay a commitment fee for that. And that offsets a lot of our interest expenses on the other loans we have. As you can see, we can post again on financial instruments, which is the typical mark-to-market movements you have on hedges. which in this quarter was largely offset by a $2.2 million loss being posted related to revaluation on our Norwegian kroner denominated bond loan. And overall, as also Marco mentioned, we were able to post a profit of $29.2 million for the quarter, which is equivalent to $0.16 in earnings per share. Cash flow from operations. Another quarter of good cash flow. Also, when you remove the ongoing prepayments related to Barossa from Santos, we had the underlying free cash flow from the fleet of $57 million. As you can see, majority of investments are related to Barossa, as you would expect, with 111 out of 130 million is invested into that unit. This quarter, we were able to close out the sale for Polvo. We received the full and final installment from Be The Bench in quarter two, which was approximately $28 million. Given the ownership of the FBSO is set up through a joint venture with two external partners, we do our funding through the JV. And then this quarter, the JV funded $58 million towards completion of the FBSO, which when you add to the $50 million received from Santos, more or less covers all the ongoing investments. We continue to pay installments on other loan facilities. $40 million was scheduled installments on the catcher loan facility. So then when you take into account all the recurring items on the cash flow, It allowed us to increase our already solid, I would say, cash position, which was above 400 million when we started the quarter, to 448 million by end of Q2. As we've said many times, the Barossa project is set up as a joint venture. All the funding is set up through these joint ventures. As such, not consolidated on our balance sheets. We produced these slides to give an overview of how the funding looks like and how that progresses. For the second quarter, we continued to draw on the debt facilities set up for this project. We drew another 70 million, which resulted in overall draw on the facility of 960 million with another 190 million available, which we expect to draw as we complete the project. We did call for some new equity, so we added $8 million in new equity, where the total equity injection for the project stood at $230 million, with another close to $30 million to go upon sort of expected equity contribution for completion of the project. And Santos continued to pay for scheduled installments. As I mentioned also on the previous slide, and as you can see, the client has, well, almost funded the equal amount to what we have drawn in debt on the project. So overall funding for the project was 2.1 billion. And we are kind of well funded with this for remaining cash needs to complete the project. When you look at cash flow and the balance sheet, you can see that during quarter two, we went actually from a net debt position to a net cash position now of $29 million, which is an improvement of close to $60 million, all driven by good underlying cash flow from the fleet, which adds to our net cash position. Equity ratio was trending more or less flat and stood at a comfortable 30.4% by end of Q2. And despite The funding that we need to do for Brossa, despite the fact we continue to pay dividends quarterly, we still are able to increase our available liquidity. And we almost increased it by 50 million in quarter two, and it stood at 728 million by end of the quarter. And this also includes the corporate facility, which is fully available at $268 million. We only have one major maturity that we need to manage, and this is the convertible bond, which matures in November 2024, so quite shortly. We have 157 million left under that convertible bond after we've been buying it back gradually over some time now. And the plan has also earlier communicated that we will use available funds to retire that bond upon maturity in November. In terms of dividends, going forward, our ambition is, as we have said before, we will aim to pay out 50% of annual net profits as dividends. On a quarterly basis, we will continue with a flat dividend, which is equivalent to $6 per share, and then we will calibrate this depending on what results we can deliver for the full year and either potentially then top up our dividends during or when we present Q4 results. So overall, I would say we're tracking well on our financial strategy. We have a good and strong balance sheet. We have liquidity that allows us to capture growth opportunities coming in the market. And we need that for That to have that capital available, it gives us flexibility and agility. And we believe we are being able to combine this with a sustainable and attractive dividend policy that generates solid direct returns for shareholders. With that, I'll give the word back to Marko.

Yes, thank you, Stalle. Yeah, I will address the opportunities that we see. There's clearly a strong FPSO market with a historical high demand for FPSOs, as you can see here on this map, which is one of the presentations of the market. But at the same time, and that's a bit ironic, we see that the awards are lagging. The last two, three years, only a limited number of FPSO contracts have been awarded compared to the expectations. The reason is that on one hand, the relatively high oil price and also concerns about the energy security pushes demand up. But at the same time, projects have become large and more complex, and multiple years of inflations and high interest rates have increased the cost of the projects itself and also the cost to finance these. And this has resulted in delays of FIDs and recycling of tenders by our clients. And that's what you see in the graphs in this slide. However, I do think that this is going to change towards the end of 25, 26, 27. And we have identified six attractive targets where BWF Shore has an edge. And half of these are gas FPSOs, where we can leverage our credibility and experience of the Barossa project for Australia, which we're currently completing, as you know. We're also progressing with the feed for Repsol for a Gulf of Mexico project and the other targets are in the Americas and Europe and Australia and these are all jurisdictions where we have presence and where we have experience. Aim is to land one or two of these targets in the next 12 to 36 months and with Barossa starting up in the and first half of next year, we have both the financial capacity and the organizational capacity to do so. And consequently, we are ramping up our tender efforts. The inflation and interest rates increases have also resulted in less appetite in the market for the conventional long-term lease and operate contract models. The trend is more towards EPCI and combined with our own models, operation and maintenance, and often with negotiable risk reward structures. And we are adjusting accordingly where we focus on delivering to our clients the unique FPSO contractor competence, which is the seamless delivery of engineering to building, operating and maintaining the facility of our client. while we're open about the contract structure. And this is to tailor to our client needs while meeting our risk-reward appetite. Our aim is to lower the risk and consequently lower margins, but with high probability of the envisaged profit takeout. An example is our involvement in the Sakuraya Phase 2 project in the Black Sea. And this was already mentioned by Stoller. But this is a project where we assisted our client with engineering and procurement services till the phase where they decided to make a strategic change and make it 100% local content project, which had limited, there was limited added value to give by us in that setup. And so while the project became a lot smaller than I visited earlier, we have still been able to deliver to our client what they needed and we were able to extract a healthy profit, and that contributes meaningfully to our 2024 results. So all in all, as Tole also said, we don't consider this as a bad outcome, neither for ourselves nor for our client. And this service contract model can be replicated with other clients as well, from EPCI all the way into the O&M phase. So all in all, We take a positive view on the market, in which we take a strong position for gas FPSOs. We also bring a long experience in all major oil and gas regions. And our rapid framework whole strategy eliminates the constraints of dry dock capacity in the supply chain. And I think the delays in the contact awards in past years have only made the market stronger for the coming years. And we are ready to take the benefit of this market with disciplined investments, and new financing models and or de-risk EPCI plus R&M contracts. Then moving on to floating wind. Our subsidiary BWDO and together with its consortium partners, BEWA and Elicio, continue to be one of the frontrunners of the ScotWind floating wind developments as they progress the Bukan offshore wind project towards final consent. And this is expected in 2026. And the EOMED consortium, which is led by CARE for a French Mediterranean pilot floating wind project, is also progressing with their three times 10 megawatt development. And this project is based on the BWEDO floater solution. So now all steel blocks are in production and the wind turbine blades are being delivered, and the project is further progressing towards production in 26. Focus for further developments are in Europe and Asia, and in particular, France and Taiwan. Together with the BWDO management, we are engaged in investor dialogues for a capital increase in the private company. Then I come to the outlook and summary. Our focus is in the first place on our ongoing business, in particular Barossa. We focus on the safe delivery and completion of the Barossa project with a startup in the first half of next year, as explained. And also we're trying to unlock value to contract extensions for Catcher and Pioneer. But in parallel, we're looking for new business and we have increased our tender efforts on six targets with the aim to land one or two in the next 12 to 36 months. Then we continue our support to BWDO as a private company with the aim to increase capital with new industrial shareholders. And we maintain an attractive shareholder return program as we have consistently delivered during past years. That concludes this second quarter update and we're happy to take any questions.