BW Offshore – Q3 2008
BW Offshore reported revenue of USD 114.8 million in Q3 2008. The recurring operating profit from core business was USD 7.8 million. Reported operating profit was USD -229.7 million, including an impairment charge of USD 68.8 million related to Nexus Floating Production and a goodwill impairment of USD 167.2 million.
The operating result of the YÙUM K`AK`NÀAB is still lower than originally planned. However the measures taken in the operation the FPSO are performing according to the previously communicated plan, and management still expects a return to full capacity in the fourth quarter 2008. BW Carmen has during the third quarter been in operation on a short term contract in the UK sector of the North Sea for StatoilHydro. The contract ends in the fourth quarter 2008 and the FPSO is now being marketed for new contracts.The ongoing conversions of the FPSOs BW Pioneer and BW Cidade de Sao Vicente (former BW Peace) continue in line with our expectations.
Major technology projects, such as Nexus, Chinook Cascade, Peregrino and Neptune are in production with no significant deviation from the plans. The order inflow in the third quarter has been strong. Cash flow from operating activities in the third quarter was USD 17.3 million. Net cash flow from operating activities was USD 29.2 million, whereas net cash outflow from investing activities was USD 108.1 million and net cash outflow from financing activities USD 55.0 million. Cash and cash deposits stood at USD 194.5 million at 30 September 2008, and net debt at USD 445.3 million.
BW Offshore capital expenditure programs are fully funded at attractive terms. The Company had per 30 September 2008 drawn USD 642 million of its total USD 1,500 million credit facility. The current turmoil in the financial markets and lower oil price could possibly impact negatively on our business, mostly on the commercial front with a lower number of new projects, or delays in these projects due to financing challenges.
In this period of uncertainty, the Company is fully financed at attractive terms and future cash flow is secured by long-term contracts with reputable clients. Beyond this immediate horizon, the Board of BW Offshore is convinced that the long term fundamentals of our business remain sound. Underlying growth in energy demand combined with accelerating depletion of existing fields will fuel increased demand for new oil and gas fields. Investments in new facilities by international and national oil companies will improve market conditions in the medium to long term for the services provided by BW Offshore.