SBM Offshore Half Year 2023 Earnings
August 10, 2023
Highlights
- Record-level US$32.2 billion pro-forma
order book
- Record-level US$9.5 billion pro-forma
net cash flow from L&O and BOT1 sales backlog2
- 2023 Directional3 revenue and EBITDA
guidance maintained
- 2 FPSOs on track for first oil by
year-end
- Over US$3.2 billion project financing
secured
The 2023 Half Year Earnings and Interim
Financial Statements are published on the Company’s website
here.
Bruno Chabas, CEO
of SBM Offshore, commented:
“The increase in our order book to a new record
level and reiteration of the 2023 guidance underline the fact that
our strategy as an Energy Transition Company is delivering
results.
We are on track to achieve first oil as planned
this year on two major FPSO projects. FPSO Prosperity is already in
Guyanese waters and FPSO Sepetiba has started her journey to Brazil
from China. While we continue to live with the after-effects of the
pandemic plus supply chain and inflationary constraints, we are
progressing the remaining projects under construction and the
overall margin remains robust at portfolio level.
With the closing of the financing for the FPSO
Alexandre de Gusmão in June, financing is now in place for the
entire construction portfolio. Including the FPSO Almirante
Tamandaré financing, we have secured over US$3.2 billion so far
this year which is a remarkable achievement in today’s challenging
environment.
The Lease and Operate division continues to
deliver solid results with fleet uptime standing at 99.5%4 for the
first half of the year. The new 10-year agreement for the
operations and maintenance of our FPSO fleet in Guyana through an
integrated operations model with our client is delivering
impressive operational results. This model establishes a benchmark
which can be applied to help other clients maximize value from
their developments.
The economics and low emission qualities of
deepwater resources mean that they will play a leading role in
fulfilling future demand through the Energy Transition, where the
FPSO is the solution of choice. Given the evolution of the
financing market, new models and sources of finance will need to
mature and evolve. We are well placed to capitalize on this new
dynamic given our ability to structure new models as in Guyana and
the depth and breadth of our experience and relationships with
financial institutions. The two un-allocated Multi-Purpose Floater
(MPF) hulls under construction further strengthen our ability to
secure new opportunities in a market with strong fundamentals.
In New Energies, we completed the successful
load out of the floating foundations for our first Floating
Offshore Wind farm and integration of the turbines has commenced.
This brings us one step closer to delivering the first iteration of
our latest floating energy solution, demonstrating our ability to
continue to innovate and to stay relevant through the energy
transition and beyond.”
Financial Overview5
|
|
Directional |
|
IFRS |
|
|
|
|
|
|
|
|
|
in US$ million |
|
1H 2023 |
1H 2022 |
% Change |
|
1H 2023 |
1H 2022 |
% Change |
Revenue |
|
1,491 |
1,763 |
-15% |
|
2,450 |
2,406 |
2% |
Lease and Operate |
|
933 |
854 |
9% |
|
760 |
694 |
10% |
Turnkey |
|
558 |
909 |
-39% |
|
1,689 |
1,712 |
-1% |
EBITDA |
|
457 |
500 |
-9% |
|
595 |
581 |
2% |
Lease and Operate |
|
546 |
527 |
4% |
|
355 |
342 |
4% |
Turnkey |
|
(37) |
16 |
-330% |
|
292 |
283 |
3% |
Other |
|
(52) |
(43) |
21% |
|
(52) |
(43) |
21% |
Profit
attributable to Shareholders |
|
36 |
103 |
-65% |
|
179 |
296 |
-40% |
Earnings per share (US$ per share) |
|
0.20 |
0.58 |
-66% |
|
0.99 |
1.67 |
-40% |
|
|
|
|
|
|
|
|
|
in US$ billion |
|
Jun-30-23 |
Dec-31-22 |
% Change |
|
Jun-30-23 |
Dec-31-22 |
% Change |
Pro-forma
Backlog |
|
32.2 |
30.5 |
6% |
|
- |
- |
- |
Net Debt |
|
7.2 |
6.1 |
18% |
|
9.1 |
7.9 |
16% |
Directional revenue for the first half-year of
2023 stood at US$1,491 million, a 15% decrease when compared with
the same period in 2022.
This is driven by Directional Turnkey revenue
which decreased to US$558 million compared with US$909 million in
the year-ago period mainly resulting from (i) the comparative
effect of the partial divestment of FPSOs Almirante Tamandaré and
Alexandre de Gusmão at the beginning of 2022, (ii) the completion
of FPSO Liza Unity project in the first half-year of 2022, (iii) a
reduced level of progress during the first half-year of 2023
compared with same period in 2022 on FPSO Almirante Tamandaré
consistent with the commencement of topsides’ integration, partly
offset by (iv) additional variation orders and increased level of
activity on FPSOs Prosperity and ONE GUYANA.
Directional Lease and Operate revenue for the
first half-year of 2023 stood at US$933 million, a 9% increase
compared with the same period in 2022. This increase mainly
reflects (i) FPSO Liza Unity fully contributing to revenue in the
first half-year of 2023, (ii) an increase in reimbursable scopes
partly offset by (iii) the end of the FPSO Capixaba lease during
the first half of 2022.
Directional EBITDA for the first half-year of
2023 came in at US$457 million compared with US$500 million in the
year-ago period.
Directional Turnkey EBITDA contribution was
US$(37) million for the first half-year of 2023, a decrease from
US$16 million in the year-ago period. This is mainly driven by (i)
the fact that as previously highlighted for certain projects it has
been harder to fully mitigate impacts from the pressure on the
global supply chain and the pandemic, (ii) the lower contribution
of FPSO Almirante Tamandaré consistent with the commencement of
topsides’ integration, and (iii) a number of prior period one-off
impacts including a US$9 million gain recognized in the year-ago
period from the disposal of the SBM Installer.
It should be noted that in Directional Turnkey
EBITDA, the result is mainly driven by the margin made on the
portion of FPSOs sold to partners. It does not therefore include
the margin made on the SBM Offshore ownership share of the five
FPSOs currently in the construction phase. Including the latter,
the overall Turnkey margin at portfolio level remained robust, as
can be seen from the IFRS results. Under Directional, during the
period only a part of this overall margin compensated for costs
allocated to Turnkey which include growth related expenditure such
as Sales & Marketing, R&D and investment in Renewables. The
Directional Turnkey margin is therefore influenced by choices made
in relation to the level of ownership of FPSOs in the portfolio
which are driven by the optimization of the overall cash flow and
economics for the Company.
Directional Lease and Operate EBITDA was US$546
million in the first half-year of 2023, a slight increase compared
with US$527 million in the same period last year. The increase
reflects the same drivers as for Directional Lease and Operate
revenue.
The Other non-allocated costs charged to
Directional EBITDA amounted to US$52 million in the first half-year
of 2023, a US$9 million increase compared with the year-ago period
explained by US$11 million of restructuring costs following the
implementation of an optimization plan related to the Company’s
support functions’ activities.
Directional net profit stood at US$36 million
for first half-year of 2023, down from US$103 million in the
year-ago period. The decrease reflects the same drivers as for
Directional Turnkey EBTIDA and Other non-allocated costs charged to
Directional EBITDA.
Funding and Directional Net Debt
Reflecting the continued investment in growth,
net debt increased from US$6.1 billion to US$7.2 billion as of June
30, 2023. While the Lease and Operate segment continues to generate
strong operating cash flow, the Company drew on the project finance
facilities of FPSOs Prosperity, ONE GUYANA, Almirante Tamandaré and
Sepetiba, and on the Revolving Credit Facility to fund continued
investment in growth on FPSOs under construction. The first
drawdown on the recently closed US$1.615 billion FPSO Alexandre de
Gusmão project financing occurred in July 2023.
In line with its aim to diversify its sources of
debt and equity funding and to accelerate equity cash flow from the
backlog, the Company finalized the funding loan agreement with a
new funding partner in relation to FPSO Cidade de Ilhabela and
received US$125 million. The Company has also secured short-term
funds in form of a Supply Chain Financing facility of EUR50 million
(or USD equivalent) with outstanding balance of US$25 million as of
June 30, 2023.
Almost half of the Company's debt at half-year
consisted of non-recourse project financing in special purpose
investees. The remainder is mainly comprised of borrowings
supporting the ongoing construction of five FPSOs which will become
non-recourse following project execution finalization and release
of the related parent company guarantee.
As of June 30, 2023, the net cash balance stood
at US$381 million.
Directional Pro-Forma Backlog
Change in ownership scenarios and lease contract
duration have the potential to significantly impact the Company's
future cash flows, net debt balance as well as the profit and loss
statement. The Company therefore provides a pro-forma Directional
backlog based on the best available information regarding ownership
scenarios and lease contract duration for the various projects.
The pro-forma Directional backlog increased by
US$1.7 billion compared with the position at December 31, 2022 to a
total of US$32.2 billion. The increase was mainly the result of the
signed 10-year operations and maintenance enabling agreement for
the Guyana FPSO fleet, partially offset by turnover for the period
which consumed approximately US$1.5 billion of backlog. The
Company’s backlog provides cash flow visibility up to 2050.
in US$ billion |
|
Turnkey |
Lease & Operate |
Total |
2H 2023 |
|
0.4 |
1.1 |
1.5 |
2024 |
|
1.7 |
2.1 |
3.8 |
2025 |
|
1.3 |
2.4 |
3.7 |
Beyond 2025 |
|
2.1 |
21.2 |
23.3 |
Total Backlog |
|
5.4 |
26.8 |
32.2 |
The pro-forma Directional backlog at June 30,
2023 reflects the following key assumptions:
- The FPSO Liza Destiny contract
covers the basic contractual term of 10 years of lease.
- The FPSOs Liza Unity, Prosperity
and ONE GUYANA contracts cover a maximum period of lease of two
years, within which the FPSOs ownership will transfer to the
client.
- 10 years of operations and
maintenance is considered for FPSOs Liza Destiny, Liza Unity,
Prosperity and ONE GUYANA following enabling agreement signature in
2023.
- The impact of the subsequent sale
of FPSOs Liza Unity, Prosperity and ONE GUYANA is reflected in the
Turnkey backlog at the end of the maximum two-year period.
- ExxonMobil Guyana has indicated
that it is contemplating the exercise of its contractual purchase
option to acquire the FPSO Liza Unity towards the end of 2023,
slightly ahead of the end of the maximum lease term in February
2024.
- The 13.5% equity divestment in FPSO
Sepetiba to CMFL has not yet been reflected in the backlog as the
transaction remains subject to various approvals.
Organizational Update
Creation of a Corporate and Business Solutions
Center (CBSC) – The Company is reorganizing its support and
corporate functions by establishing a new multi-disciplinary center
located in Porto, Portugal. This center will gather a number of
functions currently spread over the world into a unique
organization called CBSC, including Finance, Business Services,
Human Resources and IT. The objective is to increase synergies and
enhance both efficiency and competitiveness. A restructuring plan
has been implemented accordingly in 3 locations in Europe for a
total cost of US$11 million.
SBM Offshore strengthens its presence in India –
In order to further develop its footprint in India and support the
Company’s growth, SBM Offshore has acquired the remaining 49%
equity ownership held by its partner in the SBM Nauvata engineering
and operational center located in Bangalore, India. This
acquisition is part of the Company’s strategy to develop a high
value center in India focused on turnkey execution, support to
operations and innovation while remaining cost-disciplined and
agile. The center has been renamed SBM Offshore India.
Project Review and Fleet Operational
Update
Project |
Client/country |
Contract |
SBM Share |
Capacity, Size |
Percentage of Completion |
Expected First Oil |
Sepetiba |
PetrobrasBrazil |
22.5-year L&O |
64.50% |
180,000 bpd |
>75% |
2023 |
Prosperity |
ExxonMobilGuyana |
2-year BOT |
100% |
220,000 bpd |
>75% |
2023 |
Almirante Tamandaré |
PetrobrasBrazil |
26.25-year L&O |
55% |
225,000 bpd |
>75% |
2025 |
Alexandre
de Gusmão |
PetrobrasBrazil |
22.5-year L&O |
55% |
180,000 bpd |
>50% <75% |
2025 |
ONE
GUYANA |
ExxonMobilGuyana |
2-year BOT |
100% |
250,000 bpd |
>50% <75% |
2025 |
The environment remains challenging with
continued inflationary pressures and supply chain constraints.
Projects remain on track with two major deliveries expected by
year-end. An update on individual project schedules is provided
below considering latest known circumstances.
FPSO Sepetiba – In June 2023, the vessel safely
departed from the yard in China after successful completion of the
topsides’ integration phase and the onshore commissioning campaign.
The project targets first oil by year-end 2023.
FPSO Prosperity – Project teams are completing
offshore commissioning activities while the hook-up and
installation campaign is progressing. The project targets first oil
in 2023.
FPSO Almirante Tamandaré – The topsides modules
lifting campaign is progressing along with their integration. The
FPSO delivery continues to be on track for 2024 and the client is
expecting first oil from the field in early 2025.
FPSO Alexandre de Gusmão – The modules
fabricated in Brazil are being progressively delivered at the yard
in China. The topsides fabrication in China continues to progress.
First oil is expected in 2025.
FPSO ONE GUYANA – The topsides fabrication is
progressing in line with plan. First oil is expected in 2025.
Fast4Ward® MPF hulls – The total number of MPF
hulls ordered to date under the Company’s Fast4Ward® program,
stands at eight with six delivered to projects and exclusivity for
the seventh granted to ExxonMobil Guyana.
Fleet Uptime – The fleet’s uptime was 99.5%4 in
the first half of 2023, in line with historical performance.
Share Purchase Agreements signed with Sonangol
entities – In July 2023, SBM Offshore signed two Share Purchase
Agreements with its partner Sonangol EP for i) the acquisition of
Sonangol's equity shares in the lease and operating entities
related to FPSOs N’goma, Saxi Batuque and Mondo; and ii) the full
divestment to a Sonangol subsidiary of SBM Offshore’s equity shares
in the parent company of the Angolan based Paenal Yard. Those
agreements remain conditional upon several conditions precedent,
including consent from clients, lenders, partners and approval by
various competent authorities. Through this transaction, SBM
Offshore is reorganizing its business in Angola, focusing on core
lease and operate activities and divesting a non-core construction
yard.
FPSO Capixaba decommissioning – The
decommissioning phase of FPSO Capixaba has started following the
cessation of production in 2022. In May 2023, the contract award
for the safe and environmentally sound recycling of the unit, in
compliance with Regulation (EU) 1257/2013 on ship recycling, has
been granted to M.A.R.S. (Modern American Recycling Services
Europe) using its EU approved Green recycling facility in Denmark.
This award is in line with the Company’s responsible recycling
policy which aims to follow the highest international standards on
workers’ safety and environmental protection.
Contract extension – The Company has agreed a
contract extension related to the lease and operations of FPSO
Mondo to December 2024.
Environment, Social and Governance
The Company’s Total Recordable Injury Frequency
Rate year-to-date was 0.10, compared with the full year 2023 target
of below 0.146.
Emissions – In the first half of the year, the Company is on
track to meet the target set on Gas flared with a maximum average
fleet target of 1.48 mmscf/d.
New Energies
Provence Grand Large – All three floaters
constructed by SBM Offshore for the Provence Grand Large pilot
project have been successfully loaded out from the yard at
Fos-sur-mer and launched in the water. The integration of the three
turbines with a capacity of 8.4 MW each by Siemens-Gamesa is
progressing and will be followed by the offshore installation
campaign of the floaters by SBM Offshore. Once commissioned, the
pilot farm will produce the equivalent of the electricity
consumption of 45,000 people and will account for approximately 10%
of the total installed floating wind electricity capacity in the
world.
Outlook and Guidance
The Company’s 2023 Directional revenue guidance
is maintained at above US$2.9 billion of which around US$1.9
billion is expected from the Lease and Operate segment and above
US$1 billion from the Turnkey segment.
2023 Directional EBITDA guidance is maintained
above US$1 billion for the Company.
This guidance considers the currently foreseen
impacts from the war between Russia and Ukraine on projects and
fleet operations. The Company highlights that the direct and
indirect effects from this event could continue to have a material
impact on the Company’s business and results and the realization of
the guidance for 2023.
Should the purchase of FPSO Liza Unity occur in
2023, the guidance will be revised accordingly once the final
details of the purchase are confirmed.
Conference Call
SBM Offshore has scheduled a conference call
together with a webcast, which will be followed by a Q&A
session, to discuss the Half Year 2023 Earnings release.
The event is scheduled for Thursday, August 10,
2023 at 10.00 AM (CEST) and will be hosted by Bruno Chabas (CEO),
Øivind Tangen (COO) and Douglas Wood (CFO).
Interested parties are invited to register prior
to the call using the link: Half Year 2023 Earnings Conference
Call
Please note that the conference call can only be
accessed with a personal identification code, which is sent to you
by email after completion of the registration.
The live webcast will be available at: Half Year
2023 Earnings Webcast
A replay of the webcast, which is available
shortly after the call, can be accessed using the same link.
Corporate Profile
SBM Offshore designs, builds, installs and
operates offshore floating facilities for the offshore energy
industry. As a leading technology provider, we put our marine
expertise at the service of a responsible energy transition by
reducing emissions from fossil fuel production, while developing
cleaner solutions for renewable energy sources.
More than 7,000 SBMers worldwide are committed
to sharing their experience to deliver safe, sustainable and
affordable energy from the oceans for generations to come.
For further information, please visit our
website at www.sbmoffshore.com.
Financial Calendar |
|
Date |
Year |
Third Quarter
2023 Trading Update |
|
November 9 |
2023 |
Full Year 2023
Earnings |
|
February 29 |
2024 |
Annual General
Meeting |
|
April 12 |
2024 |
First Quarter
2024 Trading Update |
|
May 8 |
2024 |
Half Year 2024
Earnings |
|
August 8 |
2024 |
For further information, please contact:
Investor RelationsLudovic
RobinoInvestor Relations Manager
Mobile: |
+31 (0) 6 15 16 50 35 |
E-mail: |
ludovic.robino@sbmoffshore.com |
Website: |
www.sbmoffshore.com |
Media RelationsEvelyn Tachau
BrownGroup Communications & Change Director
Mobile: |
+377 (0) 6 40 62 30 34 |
E-mail: |
evelyn.tachau-brown@sbmoffshore.com |
Website: |
www.sbmoffshore.com |
Market Abuse Regulation
This press release may contain inside
information within the meaning of Article 7(1) of the EU Market
Abuse Regulation.
Disclaimer
Some of the statements contained in this release
that are not historical facts are statements of future expectations
and other forward-looking statements based on management’s current
views and assumptions and involve known and unknown risks and
uncertainties that could cause actual results, performance, or
events to differ materially from those in such statements. These
statements may be identified by words such as ‘expect’, ‘should’,
‘could’, ‘shall’ and similar expressions. Such forward-looking
statements are subject to various risks and uncertainties. The
principal risks which could affect the future operations of SBM
Offshore N.V. are described in the ‘Risk Management’ section of the
2022 Annual Report.
Should one or more of these risks or
uncertainties materialize, or should underlying assumptions prove
incorrect, actual results and performance of the Company’s business
may vary materially and adversely from the forward-looking
statements described in this release. SBM Offshore does not intend
and does not assume any obligation to update any industry
information or forward-looking statements set forth in this release
to reflect new information, subsequent events or otherwise.
Nothing in this release shall be deemed an offer
to sell, or a solicitation of an offer to buy, any securities. The
companies in which SBM Offshore N.V. directly and indirectly owns
investments are separate legal entities. In this release “SBM
Offshore” and “SBM” are sometimes used for convenience where
references are made to SBM Offshore N.V. and its subsidiaries in
general. These expressions are also used where no useful purpose is
served by identifying the particular company or companies.
"SBM Offshore®", the SBM logomark, “Fast4Ward®”,
“emissionZERO®” and “Float4Wind®” are proprietary marks owned by
SBM Offshore.
1 Lease and Operate (L&O), Build Operate
Transfer (BOT)2 Reflects a pro-forma view of the Company’s
Directional backlog and expected net cash from Lease and Operate
and Build Operate Transfer sales after tax and debt service.3
Directional reporting, presented in the Financial Statements under
section Operating Segments and Directional Reporting, represents a
pro-forma accounting policy, which treats all lease contracts as
operating leases and consolidates all co-owned investees related to
lease contracts on a proportional basis based on percentage of
ownership. This explanatory note relates to all Directional
reporting in this document.4 Excluding planned maintenance.5
Numbers may not add up due to rounding.6 Measured per 200,000
manhours.
- SBM Offshore Half Year 2023 Earnings
SBM Offshore NV (EU:SBMO)
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