Release Date: November 15, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- BW Offshore Ltd (BWOFY, Financial) reported a strong commercial performance in Q3 2024, with an EBT of $83 million, boosted by an additional $10 million from the Sakaria project.
- The Barossa project is 90% complete, with significant milestones achieved, including the firing up of gas turbine generators and completion of most leak testing.
- The company has raised its 2024 EBITDA guidance to a range of $315 to $320 million, reflecting confidence in ongoing projects.
- BW Offshore Ltd (BWOFY) continues to maintain a strong cash flow from its fleet, supporting a steady dividend payout, marking the 19th consecutive quarter of dividend payments.
- The company is well-positioned in a strong FPSO market, with plans to pursue new projects and maintain a disciplined approach to long-term cash flow opportunities.
Negative Points
- The Barossa project requires an additional $100 to $150 million investment for the EPC phase, putting pressure on financial resources.
- There is a tense labor market in Singapore, leading to increased costs and challenges in settling with subcontractors.
- The company recorded a $4 million loss on financial items due to currency fluctuations, impacting Norwegian Kroner-denominated bond valuations.
- A $5.7 million loss from equity account investments was reported due to a non-cash accounting adjustment related to interest rate swaps.
- Ongoing contract discussions for the Pioneer unit have not yet reached board approval, creating uncertainty about future operations beyond March 2025.
Q & A Highlights
Q: Can you provide any color on the financial impact to BW Offshore from the additional $100 to $150 million investment in BW Opal? Is the whole figure to be covered by BW Offshore directly or indirectly?
A: This is the impact of BW Offshore, so this is the amount that's the exposure to BW Offshore.
Q: Is the extra cost already identified as a cost, or does it include a buffer to ensure that there is no more cost increase before the vessel is sent to Australia?
A: This is a result of a holistic approach. We've been working on settlements with subcontractors in Singapore and with our clients. The tense labor market in Singapore has made it difficult to settle as desired. The guidance includes outstanding results from discussions with our client Santos, but we are still working on recovering some of this.
Q: Can you quantify the likelihood of the Belé Pioneer vessel being employed on contract from the second quarter of 2025?
A: Unfortunately, we can't be fully conclusive yet. This is an ongoing dialogue, and typically these discussions conclude before the current contract expires. We are very close to an agreement, but neither company has obtained board approval yet. We are discussing various contract models with a common goal of another five years of operations.
Q: Are you considering strategic inorganic initiatives?
A: We always look at consolidation efforts. There aren't many FPSO players where a combination would make strategic sense, but there are some. We have the financial means, so yes, we're looking at these opportunities, but they need to make sense strategically and pricewise.
Q: How will the allocation of the additional $100 to $150 million CapEx for BW Opal be distributed between Q4 2024 and the first half of 2025? What is the estimated total remaining CapEx for the unit?
A: The additional cost is expected to be funded throughout the first half of 2025 towards completion. The remaining CapEx funded by the joint venture is a little more than $200 million, with the new guided number on top of this. The CapEx funded by the joint venture is 51% carried by BW Offshore, while the additional $100 to $150 million is 100% for our account.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
