Fourth quarter and full year 2021 results

Fourth quarter and full year 2021 results

HIGHLIGHTHTS

  • Q4 EBITDA of $102.3 million and Q4 operating cash flow of $148.1 million
  • EBITDA of $401.3 million and operating cash flow of $510.2 million for the full year
  • Net impairment of $86.3 million in Q4
  • Equity ratio 33.9% and 391.7 million USD of cash available at the end of 2021
  • Quarterly cash dividend of $0.035 per share
  • $65.7 million gross proceeds and $14.9 million gain from sale of BW Energy shares in October
  • Barossa FPSO project progressing as planned
  • Contract extensions signed for Sendje Berge and Abo FPSO
  • Disposal of FPSO BW Joko Tole and BW Cidade de São Vicente
  • BW Ideol secures nearly 1GW of floating offshore wind area as part of ScotWind leasing round

During the fourth quarter, BW Offshore continued to progress the Barossa FPSO project according to plan. All major subcontractors were appointed by the end of the year and purchase orders for all major mechanical assemblies were issued. This provides good visibility of available resources and the project schedule. By proactively locking in vendors and equipment sets, the company was able to mitigate cost inflation and maintain schedule despite ongoing challenges affecting global supply chains.

“We remain fully focused on the safe and efficient execution of the Barossa project and on delivering stable performance from our operating assets. We are also making progress on strategic initiatives to position ourselves for the long-term value creation opportunities offered by the ongoing energy transition,” said Marco Beenen, CEO of BW Offshore. “We are very pleased that BW Ideol has secured the rights to a major floating offshore wind farm as one of the winners of the ScotWind licensing round. The award is a validation of the company’s proven floating wind technology and of its firm plan to manufacture concrete foundations locally, made possible by the exclusive development of the port of Ardersier in Scotland.

The Board of Directors declared a cash dividend of $0.035 per share. The shares will be traded ex-dividend from March 8, 2022 inclusive. Shareholders registered in VPS after the close of trading on Oslo Børs on March 9, 2022 will be entitled to the distribution payable on or about March 17, 2022.

FINANCE
EBITDA for the fourth quarter 2021 was $102.3 million ($97.1 million in the third quarter 2021). Fourth quarter EBITDA was impacted by a few one-time items, namely $7.5 million reimbursed for past premiums from the Norwegian Shipowners’ War Risk Insurance Association (DNK), as well as positive items one-time net losses of $5 million due to year-end provision adjustments.

Fourth quarter EBIT was negative $50.9 million (positive $28.3 million in Q3 2021) after an impairment of $86.3 million on the FPSO fleet. Impairments were recorded on BW Athena, Espoir Ivoirien, Sendje Berge, Joko Tole, Petróleo Nautipa and Umuroa. The Company also reversed a prior impairment charge of $4.2 million related to the sale of Cidade de São Vicente in the fourth quarter. The impairment reflects a reduced expectation of longer-term extensions of current contracts for listed vessels that are still in operation, as well as limited potential for future redeployment of the aforementioned FPSOs that are decommissioned.

Equity accounted profit share was $23.7 million compared to a loss of $3.8 million in the third quarter and includes BW Offshore’s share of net income from the BW Energy stake . In October 2021, BW Offshore sold 20 million shares of BW Energy for gross proceeds of $65.7 million. This transaction generated a gain of $14.9 million.

The tax charge for the quarter included an impairment on the deferred tax asset of $11.8 million related to the sale of Joko Tole. The Company has further finalized the assessment of tax losses in Australia that can be utilized as a result of the Barossa contract, which resulted in the recognition of additional deferred tax assets of US$9.3 million in the fourth quarter. .

Total equity as of December 31, 2021 was $1,021.4 million ($1,089.5 million in the third quarter of 2021). The equity ratio stood at 33.9% at the end of the quarter (39.0% in Q3 2021).

Available liquidity as of December 31, 2021 was $391.7 million, excluding BW Ideol’s consolidated cash.

Interest-bearing net debt was $653.4 million ($807.1 million in the third quarter of 2021).

FPSO OPERATIONS
The FPSO fleet continued to deliver stable availability during the quarter with an average commercial fleet availability of 91.3% (91.6% in Q3 2021). Production of the Espoir Ivoirien FPSO was restarted in October after scheduled maintenance during the quarter, while Sendje Berge production was halted to carry out the tank inspection program for the class renewal.

In November 2021 and January 2022, BW Offshore signed agreements for the lease and operating extensions of FPSO Sendje Berge and FPSO Abo, respectively. Both contracts have been extended until the end of 2022.

As part of BW Offshore’s strategy to transition to investments in floating energy infrastructure, an agreement has been signed with an Indonesian consortium for the sale of the FPSO Joko Tole for further locally owned operations. The sale will free up more than $50 million in cash, including net sale proceeds of $42.5 million and the release of $9 million in working capital at closing. Closing is expected at the end of the first quarter of 2022. BW Offshore will provide transition services for a period of up to four months after closing to ensure a safe and uninterrupted transfer of operations, including local organization, to the buyer.

In February 2022, BW Cidade de São Vicente was sold for demolition and environmentally friendly recycling in accordance with the Hong Kong Convention to the Priya Blue shipyard in India. The vessel was sold for a cash consideration of $12.8 million. A third party has been appointed as on-site representative at the yard to monitor progress, compliance with environmental and safety regulations and proper application of the ship recycling plan.

FLOATING WIND OFFSHORE
BW Offshore actively pursues the opportunities of the energy transition. The company’s main investment is in offshore floating wind through the 53.2% stake of BW Ideol, a global market leader with over ten years of experience in the design, execution and development of floating wind projects based on proprietary and patented Damping Pool® technology and engineering. capacities.

In December 2021, BW Ideol signed an agreement to acquire a 5% stake in the 30 MW EOLMED floating wind pilot project in the French Mediterranean, following an earlier selection of its floating technology and engineering services.

In January 2022, BW Ideol secured the rights to develop a floating offshore wind farm of approximately 1GW capacity off the northeast coast of Scotland through Crown Estate’s ScotWind lease cycle Scotland, as part of the Floating Energy Alliance partnership.

Furthermore, in January, BW Ideol agreed to create an investment company to finance the co-development of offshore wind projects using the patented Damping Pool® technology over the next 5 years with JERA, the world’s largest utility company. Japan, and ADEME Investissement, a French state-owned company. equity financing innovative infrastructure projects.

OUTLOOK
The Company expects the main units of the existing fleet to continue to generate strong cash flows in the years to come. The backlog of firm FPSO contracts at the end of 2021 amounted to 6.5 billion USD including the Barossa contract. Including probable options, the backlog stood at $7.7 billion at year-end.

The Covid-19 pandemic continues to affect operations and the market environment. Rising energy prices in 2021 and into 2022 are a sign of improving market fundamentals as vaccine distribution accelerates and more countries normalize activity levels.

The oil and gas industry should continue to focus on advancing long-term large-field development initiatives with low breakeven costs and low carbon emissions. This expectation is supported by higher oil and gas prices. BW Offshore maintains a selective approach to these opportunities, advancing discussions on only a few high-end projects that can be developed in partnership with global infrastructure investors.

The Company seeks to optimize the current asset portfolio given the overall cost base. This includes the potential disposal or recycling of units if FPSO redeployment opportunities do not materialize.

BW Ideol is BW Offshore’s vehicle for floating offshore wind investments. The company is advancing several projects supported by the private placement financing in 2021.

With the recent disposal of the FPSO assets and part of the stake in BW Energy, the company has further strengthened its balance sheet and is positioning itself for growth in accretive offshore energy projects and long-term value creation.

Please find attached the Annual report and Q4 Presentation. the andearnings youare available on:

www.bwoffshore.com/ir/

BW Offshore will hold a conference call on financial results at 09:00 (CET) today. The presentation will be given by CEO Marco Beenen and CFO Ståle Andreassen.

Conference call information:
To connect to the conference call where the fourth quarter results and Q&A will be hosted, please dial one of the following numbers:

Norway: +47 2396 3688
UK: +44 3333 009 268
Singapore: +65 6408 5768
France: +33 170 750 737
USA: +1 631 913 1422 (PIN: 64647263#)

You can also follow the presentation via webcast with supporting slides, available on:

BW Offshore Limited – Introducing BW Offshore Q4

Please note that if you follow the webcast via the URL above, you will experience a 30 second delay from the main conference call. The webpage works best in an updated browser – Chrome is recommended.

For more information, please contact:
Ståle Andreassen, CFO, +65 97 27 86 47
Anders S. Platou, Head of Corporate Finance & Strategy, +47 99 50 47 40

About BW Offshore:
BW Offshore designs innovative floating production solutions. The Company has a fleet of 13 FPSOs with growth potential and ambition. Drawing on four decades of offshore operations and project execution, the company creates tailor-made offshore energy solutions for evolving markets around the world. BW Offshore has approximately 2,000 employees and is listed on the Oslo Stock Exchange.

This information is subject to the disclosure requirements in accordance with Section 5-12 of the Norwegian Securities Act.

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