May 14, 2020
Highlights
- Responding to COVID-19 challenges to safeguard health and
safety of staff and protect our assets
- Ensuring continuous operation of projects and fleet (uptime of
99.3%) in the current environment
- Cost reduction to mitigate COVID-19 impacts and adapt to market
circumstances
- Year-to-date Directional1 revenue of US$607 million, in
line with expectation
- 2020 Directional revenue guidance adjusted from “above” to
“around” US$2.3 billion
- 2020 Directional EBITDA guidance maintained at around US$900
million
- Final modules for the Johan Castberg Turret Mooring System
shipped
- US$150 million dividend paid and EUR150 million 2020 share
repurchase program completed
Bruno Chabas, CEO of SBM Offshore,
commented:
“SBM Offshore delivered a good set of results
during the first quarter of 2020, in line with expectations. The
Company’s results, the dividend track record and completed share
repurchase exemplify SBM Offshore’s robust business model. At the
same time, SBM Offshore is also impacted by the combined demand and
supply crises in the oil and gas market and is taking measures to
evolve and adapt with the uncertain dynamic market conditions.
Our teams are doing a fantastic job managing the
current situation. We prioritize the health, safety and wellbeing
of our staff, clients and contractors. In our Lease and Operate
division, our global task force implemented protocols covering all
relevant scenarios to manage business continuity through an
extended period of COVID-19 impact. Uptime was maintained at 99.3%,
in line with our historical track record. In Turnkey, SBM Offshore
continues to execute the projects for its clients. The on-schedule
sailaway of the last two modules of the Johan Castberg turret is a
good example thereof.
Oil and gas companies have responded to the low
oil price environment by delaying and reducing investments.
Although the market conditions have worsened across the board,
large capacity offshore developments will attract funding in the
future. These projects have very competitive break-even prices and
will be prioritized in clients’ selection of investment
opportunities. SBM Offshore targets this niche with Fast4Ward® and
will strengthen its position through this program. Fast4Ward®
enhances client development plans through more economical
production, safer operations and reliable delivery. Although the
number of projects coming to the market will decrease in the short
to medium term, SBM Offshore remains disciplined in selecting
opportunities and in accepting only that level of risk appropriate
to deliver value to all its stakeholders.
SBM Offshore is uniquely positioned not only to
weather this crisis but to come out stronger at the end of it.”
Financial Highlights
|
|
YTD Directional |
|
|
|
|
|
in US$ million |
|
1Q 2020 |
1Q 2019 |
% Change |
Revenue |
|
607 |
456 |
33% |
Lease and Operate |
|
407 |
311 |
31% |
Turnkey |
|
200 |
145 |
38% |
|
|
|
|
|
in US$ billion |
|
Mar-31-20 |
Dec-31-19 |
% Change |
Net Debt |
|
3.7 |
3.5 |
6% |
Backlog
calculation will be provided in 1H20 Earnings Update |
|
|
|
|
Year-to-date Directional revenues were US$607
million compared with US$456 million in the first quarter of 2019.
This 33% increase resulted from higher Turnkey activity and higher
revenues in Lease and Operate as a result of FPSO Liza Destiny
joining the fleet at the end of 2019 together with last year’s
acquisition of a minority partner’s ownership in five Brazilian
FPSOs.
Compared with year-end 2019, net debt as at the
end of the first quarter increased by c. US$200 million to US$3.7
billion. While Lease and Operate continues to generate strong
operating cash flow, the Company is drawing down under the project
loan facilities for continued investment in growth.
As at the end of March 2020, SBM Offshore had
US$2.1 billion of liquidity, with US$0.5 billion from cash
balances, US$1 billion from the undrawn revolving credit facility
and US$0.6 billion under the remaining Liza Unity project loan. The
Liza Destiny project loan is fully drawn. The financing process for
the FPSO Sepetiba is progressing in line with the project execution
schedule.
Project Review
SBM Offshore construction activities are based
upon global supply chains, which face challenges in varying degrees
from the pandemic. Some suppliers experience difficulty delivering
equipment on time, have capacity issues or are facing the
consequences of international travel restrictions. Project teams
are working closely with client teams and contractors to mitigate
impacts on and create alternatives for execution planning. Impacts
on cost and schedule are regularly assessed. An update on
individual projects is provided below.
FPSO Liza Unity
Shortly after arriving in Singapore in February
2020, the Fast4Ward® MPF hull was moved into dry-dock. During this
phase the mooring structures are integrated and the first topsides
modules are lifted onto the vessel. Upon completion of the dry-dock
phase, the hull will be transferred back to the integration
quayside to complete the topsides lifting and integration campaign.
Due to COVID-19, the yards in Singapore are currently closed.
FPSO Sepetiba
The construction yards in China reopened and are
running near normal capacity following a period at the beginning of
this year when the yards were closed due to the Chinese New Year
and COVID-19. Keel laying for the Fast4Ward® MPF hull was finalized
and the topsides fabrication in China and Brazil has commenced.
Turret Mooring System (TMS) Johan Castberg
FPSO
In accordance with client schedule, the
fabrication phase of the last two modules for the TMS for the Johan
Castberg FPSO was successfully completed. The final modules were
shipped from the yard in Dubai.
Fast4Ward® hulls
Under the Company’s Fast4Ward® program the total
number of hulls ordered to date stands at five. Three hulls are
allocated to projects.
Of the three allocated hulls, the first hull is
allocated to FPSO Liza Unity and is completed. The next two hulls
are allocated to FPSO Sepetiba and FPSO Prosperity. The Prosperity
project remains subject to government approvals, project sanction
and an authorization to proceed with the next phase. The
construction of these hulls is progressing while there has been an
initial impact to the delivery schedule due to COVID-19.
Regarding the hulls not allocated to projects,
hulls number four and five, construction of the fourth hull
commenced and is making progress in line with SBM Offshore’s
execution plan. Construction of the fifth hull has not started. The
Company continues to monitor the situation in light of the FPSO
market, which is evolving both as a result of COVID-19 and
disruptions in the oil market.
Operational Update
SBM Offshore’s fleet uptime during the first
quarter of 2020 was 99.3%, in line with the fleet’s lifetime
historical average.
In response to the COVID-19 pandemic, business
continuity protocols have been activated at shore bases as well as
offshore in our fleet. The Company’s COVID-19 response strategy
aims to prevent the occurrence of cases on board our vessels and in
onshore locations and to minimize impact on operations if and when
cases are identified.
Various cases of COVID-19 have been identified
in the fleet on multiple units. SBM Offshore’s response plans have
been effective to date, in some cases supported by deep
decontamination measures. The incremental costs from the
implementation of these additional measures are charged to clients
in the case of reimbursable contracts or otherwise borne by the
relevant operating companies in which SBM Offshore has an ownership
stake.
The Thunder Hawk semi-submersible production
facility, owned 100% by SBM Offshore, was temporarily shut down due
to COVID-19 impacts at the end of April upon operator request. The
Thunder Hawk contract is the only lease contract in the SBM
Offshore lease portfolio for which revenues are dependent on
production.
Under contractual arrangements with clients the
Company has considerable time under charters in which to deal with
disruptions from events outside the Company’s control, thus
providing it with considerable financial protection. To date, the
Company has been able to manage the COVID-19 situation without the
need to use such protection.
Cost Discipline
The Company implemented measures to mitigate the
incremental costs of the COVID-19 pandemic and to address the
immediate impacts of lower activity. The aggregate staff and
contractor workforce has been reduced by c. 300 positions. A hiring
freeze has been implemented and a number of internal programs
postponed or eliminated. Existing programs and initiatives designed
to enhance competitiveness and flexibility continue to be
progressed and in some cases accelerated. These will help the
Company to evolve and adapt in line with market conditions. An
update will be provided as part of the 2020 Half Year Earnings
Update.
Sustainability and HSSE
On March 20, 2020, SBM Offshore launched its
updated Sustainability Policy. The Company’s commitment to
sustainability is an essential part of the Company’s vision and
strategy. The new policy supports integration of sustainability in
every step of the project lifecycle, from the development of new
technology to the recycling phase. The updated policy underlines
SBM Offshore’s commitment to the United Nations Sustainable
Development Goals and, amongst others, themes like the energy
transition, emission reductions and diversity. The policy can be
found on the Company website.
The total recordable injury frequency rate
(TRIFR) was 0.12 over the first quarter of 2020, compared with the
2020 target of 0.20.
Post-Period Events
Dividend
On April 8, 2020, the Annual General Meeting of
Shareholders voted in favor of the proposed dividend of US$150
million, which represents a dividend distribution of US$0.8098 or
€0.7450 per ordinary share. The dividend was paid on May 6, 2020 to
all shareholders of record as at April 15, 2020. The dividend
represents an increase of more than 100% per share compared with
last year.
Share Repurchase Program
On April 3, 2020, the EUR150 million 2020 Share
Repurchase Program was completed. Under the program, a total number
of 12,094,623 common shares were repurchased at an average price of
EUR12.40 per share.
Outlook & Guidance
The outlook for the number and timing of new
projects coming to the market remains uncertain; in the short to
medium term the number of prospects will decrease. SBM Offshore’s
US$20.7 billion Directional backlog2 uniquely positions the Company
in navigating the current challenges and future uncertainties.
Underpinned by “in hand” activities from the backlog, 2020
Directional EBITDA guidance is maintained at around US$900 million.
2020 Directional revenue guidance is adjusted from “above” to
“around” US$2.3 billion of revenues, with around US$1.6 billion
coming from Lease and Operate and around US$0.7 billion from the
Turnkey segment. The EBITDA and revenue guidance considers the
currently foreseen COVID-19 impacts on projects and fleet
operations. The Company highlights that the direct and indirect
impact of the crises could have a material impact on the Company’s
business and results. Further updates on the status of the outlook
and guidance for 2020 financials will be provided as usual on a
quarterly basis.
Conference Call
SBM Offshore has scheduled a conference call
followed by a Q&A session on Thursday, May 14, 2020 at 10:00 am
(CEST). A presentation to be referenced during the call has been
posted on the Company’s website.
The call will be hosted by Bruno Chabas (CEO),
Philippe Barril (COO), Erik Lagendijk (CGCO) and Douglas Wood
(CFO). Interested parties are invited to listen to the call
by dialing +31 (0) 20 531 5851 in the Netherlands, +44 (0) 20 3365
3210 in the UK or +1 866 349 6093 in the US.
A replay will be available shortly after the end
of the conference call. Interested parties can listen to the replay
by dialing +31 (0) 20 785 1180 and using access code 841168# until
June 14, 2020.
Corporate
Profile
The Company’s main activities are the design,
supply, installation, operation and the life extension of floating
production solutions for the offshore energy industry over the full
lifecycle. The Company is market leading in leased floating
production systems, with multiple units currently in operation.
As of December 31, 2019, the Company employs
approximately 4,450 people worldwide spread over offices in our key
markets, operational shore bases and the offshore fleet of
vessels.
SBM Offshore N.V. is a listed holding company
headquartered in Amsterdam, the Netherlands. It holds direct and
indirect interests in other companies.
Where references are made to SBM Offshore N.V.
and /or its subsidiaries in general, or where no useful purpose is
served by identifying the particular company or companies “SBM
Offshore” or “the Company” are sometimes used for convenience.
For further information, please visit our
website at www.sbmoffshore.com.
The Management BoardAmsterdam, the Netherlands,
May 14, 2020
Financial Calendar |
Date |
Year |
Half Year 2020 Earnings – Press Release |
August 6 |
2020 |
Trading Update 3Q 2020 – Press Release |
November 12 |
2020 |
Full Year 2020 Earnings – Press Release |
February 11 |
2021 |
Annual General Meeting of Shareholders |
April 7 |
2021 |
Trading Update 1Q 2021 – Press Release |
May 12 |
2021 |
For further information, please contact:
Investor RelationsBert-Jaap
DijkstraGroup Treasurer and IR
Telephone: |
+31 (0) 20 236 3222 |
Mobile: |
+31 (0) 6 21 14 10 17 |
E-mail: |
bertjaap.dijkstra@sbmoffshore.com |
Website: |
www.sbmoffshore.com |
Media RelationsVincent
KempkesGroup Communications Director
Telephone: |
+31 (0) 20 236 3170 |
Mobile: |
+31 (0) 6 25 68 71 67 |
E-mail: |
vincent.kempkes@sbmoffshore.com |
Website: |
www.sbmoffshore.com |
Disclaimer
This press release contains inside information
within the meaning of Article 7(1) of the EU Market Abuse
Regulation. This press release containsregulated information within
the meaning of the Dutch Financial Markets Supervision Act (Wet op
het financieel toezicht). 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. Such forward-looking statements are subject to various
risks and uncertainties, which may cause actual results and
performance of the Company’s business to differ materially and
adversely from the forward-looking statements. Certain such
forward-looking statements can be identified by the use of
forward-looking terminology such as “believes”, “may”, “will”,
“should”, “would be”, “expects” or “anticipates” or similar
expressions, or the negative thereof, or other variations thereof,
or comparable terminology, or by discussions of strategy, plans, or
intentions. Should one or more of these risks or uncertainties
materialize, or should underlying assumptions prove incorrect,
actual results may vary materially from those described in this
release as anticipated, believed, or expected. SBM Offshore NV 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 subsequent events or circumstances. Nothing
in this press release shall be deemed an offer to sell, or a
solicitation of an offer to buy, any securities.
1 Directional view, presented in the Financial
Statements under Operating segments and Directional reporting,
represents a pro-forma accounting policy, which assumes all lease
contracts are classified as operating leases and all vessel
investees are proportionally consolidated. This explanatory note
relates to all Directional reporting in this document.2 Backlog
refers to the pro-forma Directional backlog as reported in the SBM
Offshore 2019 Full Year Earnings Update
- SBM Offshore 2020 1Q Trading Update
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