Bw Offshore Adr

Good morning and good afternoon, everyone. Welcome to BW Offshore's third quarter, 2024 update. My name is Marco Bene, CEO, and I'm here together with our CFO, Stola Andreasen, to give you the update. I will give you a general update and then Stola will cover the financials. Then first, please note our disclaimer. And then I'll move on to the highlights. First of all, we're pleased with the progress on Barossa and the Barossa FPSO, which we named BW Opal. That project is now 90% complete. Based on solid results, we continue to pay the third quarter cash dividend of 11 million, consistent with previous quarters. And also we have been able to raise our guidance of 2024 EBITDA, to the range of 315 to 320 million US dollar. Starting with BWO Pal for the Barossa project in Australia, first gas planned for second quarter next year, in line with our previous guidance. Our focus has been on maintaining the schedule and during the integration and commissioning phase, we faced a tense market in Singapore and that has put further pressure on the cost as well as settlements that we had to make with our key subcontractors, mainly the yards and also settlements that were still pending with the client. Therefore, we need to guide on a 100 to 150 million US dollar additional investment for the EPC phase of the project till the time it's completed next year. The project is now 90% complete with all construction finalized, integration 95% complete, and pre-commissioning and commissioning well underway. Important milestones in the commissioning scope have already been achieved. First of all, the gas turbine generators have all been fired up and work well. Galley and mess rooms have gone live and we have recently served the first meal for all our employees, subcontractors and clients in the project. And also most part of the leak testing program has now been completed. Then moving on to the next slide, fleet and safety performance. We're happy with the safety statistics trending down. We had one LTI recorded, somebody with a broken arm, a subcontractor in the yard, but we had zero high potential incidents recorded. And that is the, what we find the most important metric that we're tracking as that is a leading indicator. Commercial uptime is consistently high, and that is despite the planned shutdown that we had on our catchy unit this quarter. The good commercial uptime of the core assets deliver strong cash flows, and this is underpinned by the backlog of our core FPSO fleet. I mentioned BWL-PAL coming on stream in the first quarter of next year. But then we have the three units in Gabon, UK and Gulf of Mexico, respectively. BW Adolo will benefit from increased production tariffs, and that is $3 per barrel above the 20,000 barrel per day range. And that is linked to the increased production that BW Energy is achieving, heading to nameplate capacity. I mentioned the planned maintenance shutdown from Ketscher. That was a 21-day successful shut down, but that of course explains the lower production in the quarter. Catcher is on a 12-month running extension, meaning this project, this contract gets extended every day with a year. But our view on total duration of the contract is that it will continue at least till the end of 28. And we'll base that on our view on the old price and the decline of the production in the field. And then Pioneer, also these units continue to deliver stable operations while the field production is slowly declining. We have ongoing contract discussions with our client and they are converging, but neither party has so far obtained board approval for that contract yet. So that's still working in progress. Yeah, and then I'm handing over to Stola to give an update on finance.

Thank you for that, Marco. I will take you through the financial figures for Q3. And as said by Marco as well, we are pleased with the commercial performance in the third quarter, despite the planned shutdown on Catcher. EBTA came in at 83 million, boosted by an additional 10 million from the Zachariah project as we closed out the remaining work on that project opportunity. I want to say we do not expect further contributions from Sakuraya going forward. For 2024, we expect continued steady performance from the fleet for the remaining quarter, and we are now confident enough to revise our guidance upwards, targeting an EBITDA of $315 to $320 million. Moving to the income statement, you will see depreciations remain stable at 45.6 million in the quarter. Net interest expenses reduced to 4.3 million due to the fact that we have no draw on the corporate facility combined with good interest income from our cash balance. This quarter, we saw a negative mark-to-market adjustment on hedges. This is primarily due to lower US dollar interest rates impacting our financial instruments. A $4 million loss on other financial items reflected stronger Norwegian kronor against US dollar affecting Norwegian kronor denominated bond valuations. A 5.7 million loss from equity accounts investments resulted from what was a one-off and non-cash 7 million accounting adjustment we had to make due to the fact that we had to change how we account for interest rate swaps related to the BROSA project. So with that, we delivered a net profit for Q3 of $13 million. Cash flow from operation was steady at 86 million in the quarter three, excluding the prepayment from Santos. The underlying operational cash flow was also good at 61 million, showing a modest improvement quarter on quarter. Investment cash flow was in this quarter directed towards Barossa. We continued to fund the project. We called $26 million net from the Rossa joint venture partners, which is also a little bit of a reduction quarter on quarter. Net debt reduced by 15 million in the quarter, mainly linked to scheduled repayments on the catcher loan facility. And we also paid out 11 million in dividends during Q3, which means that our cash position remains steady since beginning of As the Barossa project is a joint venture and not consolidated, these slides provide the overview of the project funding progress on the project. In the third quarter, we drew another 50 million on the project debt facility, leaving 140 million available to draw towards completion of the project. We required only 4 million in new equity, while Santos contributed 25 million as per the contract and as illustrated on the previous slide. With that, the total funding towards the project stood at 2,184,000,000, and the project capex was a little bit lower, but increased to 2,161,000,000 by end of Q3. Our fleet continues to deliver steady cash flow, and that has allowed us to strengthen our consolidated net cash position even further. And it stood at 38 million at the end of Q3. The equity ratio remains almost steady. It stood at 29.6%, which is a slight dip from the 30.4% we had in Q2. Our balance sheet remains strong. We have an unused balance. corporate facility, which is ready to support future project opportunities and growth. So we ended the quarter with an available liquidity above $700 million, only slightly reduced from quarter two. The reduction quarter on quarter is primarily due to the fact that we have scheduled semi-annual reductions on the corporate facility, which reduces by 34 million every six months. In November, after the quarter, we repaid the remaining 157 million on the convertible bond that was issued in 2019, which means that the blue bar you're seeing there in 2024 on the right side of the slide will be gone at next quarter. We continue to pay a dividend of 6.25 cents per share amounting to 11.3 million, which will be distributed to shareholders in November. And this marks the 19th consecutive quarter of dividend payments since we reintroduced dividends in 2020. And I also want to remind everyone about our goal of distributing 50% of annual net profits as dividends. With the announced increase in net investment for BWPAL, as Marco mentioned, we do need to allocate additional funds to support the project's completion. ensuring we remain on track. However, we remain well positioned financially. We have a strong cash flow from our fleet. We have ample liquidity that allows us to comfortably meet our liabilities. This financial flexibility enables us to pursue growth opportunities, I would say both organic and strategic, while we maintain our commitment to paying an attractive dividend. Back to you, Marco.

Yeah, thank you. So I'll continue with an update on the market. Our view on the market has not really changed. There is a strong demand with about 60 projects identified in the market between now and 2030. And this is supported by the expectations of a robust oil price for the remaining of the decade. But awards have been lagging, and that's mainly because cost levels of these projects went up due to complexity. inflation and also interest rates. And particularly the latter has made the lease and operate model less attractive. And we see a gradual shift towards EPCI and O&M. We're well positioned to continue or to follow that trend. We like lease and operate, but we're also very much comfortable with EPCI plus O&M contracts. So we're ramping up our tender efforts and we focus on six targets in this market of which we think we will land one or two in the next 12 to 36 months. And I think the project nearest to NFID could be the project for Repsol in the Gulf of Mexico. In that market where the pace of project awards have been falling behind in past years, and that actually makes the market only stronger as these projects don't go away, although some of them will, but generally this is more a delay than a cancellation. So we'll continue to face this strong market, but a selective market. And we are well positioned in that market. We're maintaining a disciplined approach though. As I said, the preference is long-term cash flows with O&M, but we're not limited to only the lease and operate market, but we will not take residual value risk in lease and operate contracts. We're looking for solid counterparts and we're working and co-investing with partners as the scale of the projects is significant. So in that market we have a favorable position. First of all, as we demonstrate to BWO-PAL for the Barossa project, we can deliver these Premier League PSO projects. We're demonstrating our competence in building gas PSOs, but also the rapid framework whole design then delivers an approach where We're less dependent on early lock-in of the dry dock slots. So that gives us flexibility where we can build in a tight supply chain market. We have demonstrated our ability to put together hybrid financing solutions, as we showed on Barossa with a true hybrid of almost 50% prepayments. But there are many alternatives to this as well. And again, the market allows a good risk reward balance for future projects. On to the floating wind market, our subsidiary BWDL is progressing well, both on their current project portfolio, but also on new business development initiatives. First of all, the Buchan offshore wind project, which is a one gigawatt project offshore Scotland project, is progressing towards consent application mid next year. And then final consent is expected in 26. Also the demonstrator or the pre-commercial project in south of France, the EOMAT, which is a three times 10 megawatt project is progressing. And the first two floaters for this project are now assembled. And also the, The blades and the turbines have arrived on site. In the same area, we're awaiting the outcome of the AO6 tender, where BWEDO tendered in consortium with EDF and Maple Power. And then we're progressing on the back of the positions that we have in these markets. We're progressing the development of fabrication line, one in Ardachie, which is in the UK, where we have exclusive access to the port there for floating wind. And also in this market where we built EOMAT and also where AO6 and AO9 would materialize to unlock the supply chain constraints that that currently exists for Floating Wind. Furthermore, we're also looking at other projects in Europe and Asia, and in particular, Japan and Taiwan. And we're continuing to have investor dialogues to join us as BWF Shore for this private company. Then we go into the final slide, which is the outlook. Again, the focus is, of course, on the Barossa project, starting at BW Opal in the second quarter of next year. We also continue to look at value that we take from contract extensions, catcher beyond 2028. And as I also explained, the discussion we have on Pioneer. And then focusing on new, what we call infrastructure-like FPSO projects like Barossa in a very strong FPSO market. And then BWDL, as I explained, we continue to support the development of that company as a private company now and look for further capitalization by new industrial shareholders and the strong cash flows from the FPSO fleet. support the continuation of our attractive shareholder return program. That concludes this Q3 trading update, but we're happy to take any questions if you would have.