Bw Offshore Adr

Welcome and good morning, everyone. Thank you for participating in the third quarter market update of BW Assure. My name is Marco Bienen, CEO, and our CFO, Stola Andreasen, joins me in this call. At the end of our update, there will be an opportunity to ask questions via the Q&A function of the webcast, and we will be happy to address these. Starting with our disclaimer, please take note And then I move on to the highlights. Our main highlight is first gas and receiving day rates with our new flagship BW Opel. This marks the end of the construction phase and the start of operations with cash flow recognition. In early September, we signed the heads of agreement with Equinor for debate in or FPSO and the project is progressing towards the start of engineering in early 26. We established a joint venture with BW Group to design and build floating desalination units. And then on the financials, our EBITDA guidance narrowed based on our year-to-date performance and our fourth quarter outlook to the range of 240 to 250 million US dollars. And we continue our predictable shareholder distribution program, similar as previous quarter, and consistent with last year, we will adjust to 50% annual net profit in the fourth quarter. And I'll continue with an operational update of an exciting quarter, starting with BW Opel. As just mentioned, we received first gas on 20 September and started to export gas to the Darwin LNG terminal in October. The day rate will increase to 100% at the practical completion milestone once the ongoing commissioning and ramp-up phase is completed. And this is now expected for the first quarter in 2026. And it will be the formal start-up of the 15-year contract with 10 years of options. And it is the starting point of our IFRS revenue recognition. In the meantime, we will receive day rates during the entire ramp-up phase and that's recognized in cash flow, which will be amortized over the contract duration. Our HSE and fleet performance was strong in the quarter, although the fleet delivered just below 99% commercial uptime, which is slightly lower than normal, but this was impacted by three weeks of scheduled maintenance on BW Adolo. And on safety performance, Primary focus is on maintaining a strong safety record, and I'm pleased to say that we had zero recordable incidents during this quarter. The increase in the HPI statistics, high potential incidents in the graph, is due to the reduction of hours exposure post the Barossa wind down, while the 12 months incident count did not change. So the ratio trended up, but we did not have an increase in incidents. Then an update on our backlog and the fleet. The units and operations now complemented by BW Opal deliver strong cash flow based on high commercial uptime, and that underpins a healthy operating cash flow backlog. Similar as in the previous quarter, we report here the backlog in operating cash flow rather than revenue recognition. And the operating cash flow backlog stands now at 2.1 billion US dollar, where 82% is firm and almost 50% will be delivered before 2029. As mentioned, BWU dollar production was impacted by a three-week planned maintenance campaign, but delivered otherwise high uptime. And also BWU catcher underwent a two-week scheduled maintenance shutdown. However, she still contributed with 100% commercial uptime. And I expect Ketcher to remain on contract through at least end 2028 and probably a bit beyond. For Pioneer, we are providing the O&M services, operational maintenance services, under a five-year contract on a reimbursable basis with production-linked management fees. Then an update on the Bay-Dunor FPSO for Equinor, also mentioned in the highlights. We are very pleased that We were selected as the preferred contractor for the Babynore project offshore Newfoundland and Labrador in Canada, and that was after two years of close collaboration with Equinor. The pre-feed deliverables we were working on are now completed by mid-September, and Equinor exercised their option for a bridging phase to prepare for feed in early 26th. And then we hope that Equinor will take an FID and award the contract by end of next year. The base case is a fixed 10-year lease contract with options to extend further. And our current focus is on refining a smart and cost-effective design based on our rapid framework hull solution, suitable for specific environmental conditions at the Bay-de-Noor field. And with that, I hand over to Stolle, who will take you through the financials.

Thank you, Marko. And as usual, we start with an overview on EVTA performance. Third quarter EVTA was 44 million, driven by strong fleet performance, only impacted by a three-week planned maintenance shutdown for FBSO Adorno. The 2025 EVTA guidance is now set to a range of 240 to 250 million. mainly due to the BWP's contract timing. Practical completion is now expected first quarter next year, basically delaying revenue recognition. Importantly, this has minimal commercial impact as we already remain on rate and continue to generate cash flow and will do so up until contract start and beyond. When you look ahead into 2026, There's no doubt that EBTA contribution will increase significantly. BWL Pal, as we mentioned before, will alone contribute over $260 million on an annual basis, with Catcher adding another $160 million, and actually a bit above, and Adolo will deliver over $60 million. Going to the income statement, which reflects overall very stable operations quarter on quarter. You can see that depreciations on the fleet remain unchanged quarter on quarter at 21.4 million, which left us with an EBIT of 22.5 million for Q3. Other financial items reflect the valuation gain on the financial liability on our balance sheet related to BWPAL, and otherwise there are only smaller changes quarter on quarter. Net profit for the third quarter was $23.3 million, and year-to-date we are now at above $110 million, which translates into an earnings per share for the third quarter of $13 cents, And for year to date, $61 cents. Going to the cash flow, I'm pleased to say that the operating cash flow was exceptionally strong in the quarter at $142 million, which includes $67 million from Santos, which by the way now also includes a charter hire for September. And it also includes the roughly 11 million settlement from Repsol, as they paid for the tender efforts on the feed engineering and product tender effort we performed for them in previous quarters. Investments of 190 million were primarily related to BWPAL, as well as the acquisition of FBSO and Gahura. Financing includes a $28 million draw from the Brussels Joint Venture to fund ongoing activities on BWPAL, and $50 million in regular amortization on the capture loan facility. So, after dividends and other recurring items, we ended the quarter with a very comfortable, strong cash position of $388 million. We continue to be in the net cash position, reflecting our strong balance sheet and financial stable situation. And as you can see, the equity ratio trended more or less flat and stood at a comfortable 30.5% by end of Q3. We have strengthened our financial flexibility further in the quarter following a, I would say, successful refinancing of the existing revolving credit facility, which had a $86 million limit, into a new $220 million facility with maturity fourth quarter 2028. As part of this, we have also made efforts to make amendments to existing covenants under the senior secured facilities. These amendments are meant to provide more flexibility for us to use prepayment structures by clients on products, as well as provide more flexibility on shareholder distributions to allow us to be efficient on capital management. I have to commend secured lenders for engaging in a very proactive and collaborative approach, demonstrating that our request was sensible for the long run of the company. It does allow us to engage constructively on new projects with our clients, and it allows us to manage capital allocation efficiently, as I earlier mentioned. We also reached out to bondholders with a request to amend covenants under BWO 06, We made what we believe is an appropriate proposal to bondholders, put together in discussion with our advisor, but bondholders viewed this differently. And although we respect that bondholders wanted a different outcome, we think it was best for all stakeholders not to engage in a dialogue where only one party get a very favorable outcome. And as a result, The overall covenants for the company continue to follow covenants restrictions under the bond, unless changed or until maturity, which is later part of 2028. And to make it clear, that means that the overall dividend payout ratio remains unchanged at 50% of net profit. Liquidity remains very strong. increased from last quarter, driven by the increased liquidity under the new RCF put in place, which remains undrawn, as you speak. All our debt is hedged at very competitive rates, and as I mentioned before, we are in net consolidated cash position, to be exact, 187 million, as shown on the slide, per Q3. Our capital allocation framework is built upon a disciplined operating model where cash flow generated by our FBSOs is the foundation. With the way we're operating our fleet, we will have a continued good visibility on cash flow going forward. We target to grow the FBSO business to new projects and increase free cash flow. We are focusing on maintaining a strong balance sheet, and that means maintain modest gearing while we look for new ways to expand our liquidity sources. And ultimately, we target to grow dividends to our shareholders over time. For 2025, this means that our target is and remains to be to pay out 50% of net profit as dividends. while we continue to distribute quarterly dividend based on 25 cents per share annually. So with an earnings per share of 61 cents year-to-date, we're already positioned to exceed the minimum distribution for 2025, which looks good in terms of being able to upsize the dividend in Q4. With that, I'll hand it back to Mark.

Yes, thank you, Stolik. We're moving on with an update on the FPSO market. This market remains strong with multiple projects in various stages of maturity led by areas like Brazil, and in Brazil it's led by Petrobras, but also Asia and Africa. Australia is also interesting for us. There we can leverage our newly established presence with BWO Pop. From the market outlook presented here, we identified about 12 targets between now and 2030, where our competitive offering applies. And we target one to two contract awards in the next 12 to 24 months. This could include the Babynore project. And thereafter, we target one project award every other year in line with the strategy update we gave you previous quarter. As mentioned earlier, the FBSO market has changed. with larger and more complex developments, and that shifts from conventional lease and operating models to EPCI in combination with operation and maintenance contracts, or even hybrid contract and finance models. For the lease and operate projects, client prepayments are required to enable external financing, as well as shared risk allocation with clients, joint venture partners, and subcontractors. And this is a revised approach to risk management with an appropriate risk-reward balance which suits the size of our company. In this market, we are well positioned for both new-built FPSOs, but also redeployment or conversion projects. As we have with BWO Pal, we have proven that we can deliver Premier League FPSOs even in difficult circumstances. We have access to a high-quality FPSO willful redeployment following the acquisition of Nangura FPSO earlier this year. And this will allow for a faster and cheaper solutions compared to 10K conversions for those type of projects. We have sufficient investment capacity and a robust delivered balance sheet, as Tole explained. and we can apply flexible project execution models, which includes strong partnerships to deliver projects that meet our selection criteria. Then shifting to the wind market, our subsidiary BWDOL celebrated its 15-year anniversary in September, and that underlines its pioneering position in this segment. The company is progressing with a floating wind pipeline with more than 70 foundations for the 1 gigawatt Buchan project in Scotland and the 250 megawatt AO6 project in France. Also in France, the EOMAT project is now on track for first power at the end of 2025 using the BW-EDL floater technology. BWDOL is a 5% owner in this project with partners CARE as operator and also Total Energies. The float out of those three 10 megawatt turbine foundations was completed this quarter and integration with the wind turbines is currently ongoing. And in Scotland, the Buchan project has submitted the offshore and onshore consent applications and expect to receive the final consent in the third quarter of next year. And earlier this week, we received good news that BWEDL's fabrication line in France was selected for an EU commission grant of 74 million euros. Company is currently financed by shareholder loans and discussions with potential new investors are ongoing. As mentioned in the highlights, we are excited about the potential of a new business segment. BW Shore and BW Group have established a 50-50 joint venture to design and build floating desalination units, leveraging BW Water's technology. BW Water is a 100% subsidiary of BW Group and a specialist in desalination. Access to fresh water is an emerging global challenge driven by infrastructure delays, climate change, and population growth. The floating desalination unit combines proven technology into a modular, rapid-to-deploy desalination solution, which we will deliver through flexible surface supply models. So this is ideal for urgent deployment in response to dross, delays in land-based desalination projects, or other temporary industrial and infrastructure water demand spikes. We see great interest from potential clients worldwide, within both municipal but also industrial sectors. And this market potential underpins our ambition to develop and operate a sizable multi-regional fleet over time. So our aim now is to deploy our first unit by the end of next year. So concluding with an outlook with busy times ahead of us, summing up, our focus is first of all bringing BW Opel to practical completion with a contract startup early next year. Move the BDNOR project forward to feed and then followed by a contract award, hopefully. We target our next FPTO project during the next 12 months, and we'll look forward, and we will work towards an FRD on the first floating desalination unit, sign a supply contract, and then bring it to the market by the end of next year. And we remain focused on an attractive and readily growing shareholder return program. That concludes the trading update, and we're happy to take the questions that has come in to the webcast.