Solid Results, Major New Order Won, Investing in Industry Leading Competitiveness
SBM Offshore is pleased to report revenues and EBITDA in line with management expectations. Lease and Operate delivered solid performance after successfully integrating three new large Floating Production, Storage and Offloading vessels (FPSOs) into the fleet. Turnkey performed well in the final phase of delivering projects to our clients. The Company was awarded the FPSO Liza contract by ExxonMobil, the industry’s only major FPSO contract award of the past 18 months. SBM Offshore committed to its standardization program Fast4WardTM by signing a new-build hull contract with China Shipbuilding Trading Company, Ltd. (“CSTC”) and the shipyard of Shanghai Waigaoqiao Shipbuilding and Offshore Co., Ltd. (“SWS”). Post-period, the purchase option on FPSO Turritella was exercised by Shell and Heads of Terms for settlement were agreed with a majority group of primary layer insurers on SBM Offshore’s Yme insurance claim.
Break-even prices of deep water projects have substantially improved as result of cost deflation, more fit-for-purpose scope and leaner concept designs. In particular, deep water projects in areas with world class reservoirs have gained competitiveness against other oil and gas investment options. SBM Offshore is well positioned to benefit from this development. Whilst final investment decisions are on the increase, clients remain cautious and selective. As a result, the offshore services industry is gradually recovering but with a structurally lower activity level when compared to the market over the past decade.
Bruno Chabas, CEO of SBM Offshore, commented:
“SBM Offshore produced solid results for the first half of 2017, not only driven by the Lease and Operate segment, but also by sound performance in closing out Turnkey projects. With the three additional FPSOs ramping up, our fleet produced repeatedly more than 1 million barrels per day, which represents more than 10% of global deep water oil production. In today’s oil price environment, characterized by continued low prices, deep water field developments need to build on the competitiveness gained.
In an industry that more than ever needs performance, SBM Offshore brings competitive edge with its track record of reliable delivery and increased productivity through product standardization and faster times to market. Having delivered 34 FPSOs plus 300 years cumulative experience in operating its lease fleet, SBM Offshore is capitalizing on this experience through its Fast4WardTM program. The program’s result is an optimized design with standard specifications which leads to lower cost, higher quality and productivity on a de-risked plan with reduced safety exposure. Fast4WardTM accelerates first oil by up to 12 months. SBM Offshore has now ordered its first standard new-build, multi-purpose hull. As our teams continue to demonstrate today, SBM Offshore is leveraging its experience in order to gain competitiveness and bring value to our clients by helping to lower break-even prices even further.”
Underlying Directional EBITDA increased by US$82 million, or 23%, to US$431 million, compared to the same period last year
Underlying Directional EPS of US$0.39 per share, which represents an increase of 26% compared to first half of 2016
Directional revenue of US$835 million, a decrease of 11% compared to same period last year
Directional net debt at the end of June of US$3.0 billion, compared to US$3.1 billion at year-end 2016
Confirmed award of FPSO Liza contracts by ExxonMobil, covering a lease period of 10 years; keeping backlog stable
Sale of FPSO Turritella with expected closing date in early 2018
Settlement of Yme insurance claim agreed with majority group of primary layer insurers
First new-build, multi-purpose FPSO hull under SBM Offshore’s Fast4WardTM program on order
Expanded Directional reporting with introduction of Directional balance sheet and cash flow statement
2017 guidance for Directional revenue reiterated at “around US$1.7 billion” and for Underlying Directional EBITDA updated to “above US$750 million”
15.33 +69ct vol. 830.000