BW Offshore has presented solid financial figures for the second quarter of 2009. The operational performance remains high and stable, and the FPSO BW Cidade de São Vicente has successfully been completed and put into operation at the Tupi field. The conversion of BW Pioneer and the installation of the Neptune LNG import terminal are both progressing according to schedule
Net profit of USD 21.8 million in the second quarter
Operating revenue amounted to USD 114.9 million (USD 124.8 million). The decrease in revenue on a consolidated level is a result of decreased activity level in the Technology and Installation Services segment.
Operating expenses in the second quarter amounted to USD 85.1 million (USD 124.7 million), a decrease resulting mainly from lower operating expenses for the operating fleet together with lower activity level in the Technology and installation Services segment.
EBITDA was USD 31.8 million (USD 34.5 million) in the second quarter. Adjusted EBITDA (EBITDA before share of profit related to associates and before write down and gain on shares) was USD 29.8 million (USD 0.1 million). Changes in market values of currency derivative instruments related to operating cash flows are included in the EBITDA. For the second quarter this amounted to a gain of USD 0.8 million (USD 0.0 million).
Share of profit of associates was USD 2.0 million (USD -7.9 million) in the second quarter and relates to the investments in Prosafe Production Limited (PROD) and Nexus Floating Production Ltd (Nexus). Share of profit from PROD amounted to USD 2.0 million. As the book value of Nexus is USD 0.0 million, negative share of profit will not reduce the investment further as there is no further obligations to be met, hence the share of profit from Nexus is included with USD 0.0 million in the second quarter (USD -0.4 million). At 30 June 2009, the Company owned 23.9% of the shares in PROD and 49.7% of the shares in Nexus.
Net financial items for the second quarter were USD 6.3 million (USD 15.6 million). Interest expense was USD 6.7 million (USD 11.0 million) in the second quarter. The decrease in interest expenses is mainly a result of reduced interest rates. Interest income was USD 2.7 million (USD 3.9 million). Net financial items include an increase in fair value of USD 10.7 million (USD 12.8 million) on interest derivative contracts.
Result before tax was USD 23.6 million in the second quarter (USD 39.0 million). Income tax expenses amounted to USD 1.8 million (USD 4.2 million) in the second quarter.
At 30 June 2009, total assets amounted to USD 2,324.4 million (USD 2,790.0 million), total equity amounted to USD 923.5 million (USD 1,509.6 million). The reduction in total assets and equity over previous year resulted mainly from impairment charges of associates, goodwill and the fleet offset by increased book value of the ongoing conversion projects carried out in 2008.
Net cash outflow from operating activities was USD 18.1 million (inflow USD 11.1 million). Net cash outflow from investing activities was USD 93.9 million (cash inflow USD 574.5 million). Cash flow from investing activities relates to the conversion projects in the Floating Production segment. Net cash inflow from financing activities was USD 95.5 million (cash outflow USD 314.6 million), arising from a net drawdown of USD 100.0 million (USD 0.0 million) on the loan facility offset by interest payments.
At 30 June 2009, the Company held USD 43.7 million (USD 328.3 million) in cash and deposits. Currently the Company has drawn down USD 872.3 million on the USD 1,500 million credit facility. Net debt amounted to USD 827.3 million at 30 June 2009 (USD 370.2 million).
Floating Production
Revenues in the second quarter were USD 52.4 million (USD 43.2 million). EBITDA was USD 22.3 million (USD 21.6 million). Cash flow from operating activities in the second quarter was USD 14.7 million (USD –35.4 million).
The operating expenses for the existing fleet in operation have come down compared to previous quarters. The oil process uptime was 99.2% in second quarter 2009.
The FPSO BW Carmen was laid up in the second quarter and is being marketed for new contracts.
The FPSO YÙUM K`AK`NÀAB had a planned shutdown for modifications and repairs in the second quarter. Operational disturbance during the startup resulted in a reduced oil up time and flaring penalties. This resulted in reduced revenue and increased operating expenses for this unit.
The FPSO BW Cidade de São Vicente received first oil late April and has since been operating successfully. Due to subsea problems experienced by Petrobras the unit is currently on standby at 95% of full rate due to lack of oil production.
The FPSO Berge Okoloba Toru, with a book value of USD 0.0 million, is still evacuated in Nigeria. During the second quarter the Company settled the dispute with the insurance companies regarding the FPSO. The settlement is reflected in the second quarter EBITDA. Payment for the settlement was received in the third quarter 2009.
The ongoing conversion of the BW Pioneer for the Petrobras Chinook & Cascade field is continuing in line with expectations.
Technology & Installation Services
The revenues (from external customers) in the second quarter were USD 62.5 million (USD 81.6 million) and EBITDA USD 9.5 million (USD 12.9 million). Adjusting for the share of profit of the investment in Nexus, EBITDA was USD 9.5 million, representing a margin of 12.3% (11.6%). Cash flow from operating activities in the second quarter was USD -32.8 million (USD 46.5 million). The negative operating cash flow derives mainly from a negative change in the working capital.
Due to the outlook the Company decided 24th August to reduce the workforce associated with the Technology Segment to reflect the expected workload going forward.
All major projects, such as Chinook & Cascade, Pazflor for Total, Peregrino for Maersk and Neptune for Suez, are progressing according to schedule.