BW Energy: Third Quarter 2020 Results

HIGHLIGHTS THIRD QUARTEREBITDA of USD 22.2 million compared to USD 21.8 million in Q2 2020Safeguarding people, operations and assets amid COVID-19 pandemicQ3 2020 gross production of 1.4 million barrels or ~15,500 bbls/day (gross)Strong cash position of USD 145.3 millionAcquisition of jack-ups for the Dussafu developmentContinuation of Tortue Phase 2 campaign subject to easing of COVID-19 restrictionsEBITDA for the third quarter of 2020 was USD 22.2 million, up from USD 21.8 million in the second quarter of 2020 mainly due to increased realised oil price.Dussafu daily operations continue to perform in line with expectations from four wells (DTM-2H, DTM-3H, DTM-4H and DTM-5H) with a quarterly production of approximately 15,500 barrels per day (gross) of oil to the FPSO BW Adolo. Total gross production in the third quarter was 1.42 million barrels of oil. One lifting was completed to BW Energy in the quarter realising an average price of about USD 46 per barrel. Production cost (excluding royalty) was USD 19.6 per barrel. This includes approximately USD 2 million of additional costs related to the COVID-19 pandemic in the quarter. The Company sold 548,441 barrels of oil net in the quarter compared to 532,357 barrels net in the second quarter of 2020.“We are ready to resume value-adding development activities on the Dussafu license led by the connection of the Tortue Phase 2 wells, and restart the Hibiscus/Ruche project utilising a converted jack-up rig to reduce investments, time to first oil and environmental footprint,” says Carl K. Arnet, CEO of BW Energy. “We continue to manage the pandemic to maintain stable operations while preparing for COVID-19 restrictions to be lifted to a level where we can efficiently execute our plans.”Total Dussafu production for 2020 is projected to be approximately 14,250 barrels per day (gross) based on four producing wells, compared to 11,800 barrels per day on average in 2019. The decrease from the previous projection of 15,000 – 16,000 barrels per day (gross), is due to a maintenance program and associated shutdown of the FPSO in October. The shutdown brings BW Energy in compliance with Gabonese production allocations to meet the nation’s OPEC quotas.Full year OPEX per barrel is expected to increase to around USD 19 per barrel, compared to USD 17-18 per barrel from previous guidance. Both production and costs have been impacted from the COVID-19 restrictions. The drilling of DTM-7H, and the connection of DTM-6H and -7H to BW Adolo has been deferred to mid-2021 with first oil expected in third quarter 2021. The Hibiscus/Ruche project will be reactivated as soon as current COVID-19 restrictions are eased to allow for efficient project execution.Net financial expense was USD 2.8 million for the third quarter, mainly representing the lease liability interest expense for the FPSO BW Adolo. Total equity at 30 September 2020 was USD 448.4 million compared to USD 455.3 million at the end of Q2 2020. The equity ratio was 59.2% compared to 58.7% at the end of Q2 2020. The company generated an operating cash flow of USD 25.7 million with a cash balance of USD 145 million on 30 September 2020, compared to USD 128 million on 30 June 2020.BW Energy has a solid liquidity situation and intends to establish a reserve-based lending (RBL) facility for Dussafu with a syndicate of leading banks when investing activities can resume.DEVELOPMENT PLANS AND OUTLOOK
In November, BW Energy concluded on an alternative development plan for the Hibiscus/Ruche satellite field, utilising a converted jack-up as an offshore installation. The Company has acquired two jack-up drilling rigs for a total of USD 14.5 million. Structural engineering for the first conversion has commenced. Using a converted jack-up is expected to reduce capital investments by around USD 100 million and enable a substantial reduction to field development related CO₂ emissions and installation cost as the unit can “self-install”.The cash break even oil for the Hibiscus/Ruche (phase 1 and 2) development has moved down to approximately USD 25 per barrel Brent, and the total Dussafu license production cost is expected to decline to approximately USD 11 per barrel with production growth from the remaining Tortue wells and Hibiscus/Ruche development. A final decision to restart the Hibiscus/Ruche development is subject to a lifting of COVID-19 restrictions to allow for efficient project execution.The Maromba project continues to progress towards the environmental approval and optimisation of the field development plan with respect to investment, operational costs, and schedule. The Field Development Plan was approved by the regulator (ANP) in August and final investment decision is planned by the first quarter of 2022.BW Energy will today hold a conference call followed by a Q&A hosted by CEO Carl K. Arnet, CFO Knut R. Sæthre and COO Lin G. Espey at 14:00 CET.Conference call information:
To dial in to the conference call where the third quarter results and Q&A will be hosted, please dial in to one of the following numbers:Norway: +47 23 96 00 36
France: +33 170 918 701
UK: +44 203 059 58 69
US: +1 631 3026 547
Singapore: +65 31 57 64 17You can also follow the presentation via webcast with supporting slides, available on:https://webinars.on24.com/q4/bwenergyq32020Please note, that if you follow the webcast via the above URL, you will experience a 30 second delay compared to the main conference call.For further information, please contact:
Knut R. Sæthre, CFO BW Energy, +47 91 11 78 76
ir@bwenergy.noAbout BW Energy:
BW Energy is a growth E&P company with a differentiated strategy targeting proven offshore oil and gas reservoirs through low risk phased developments. The Company has access to existing FPSOs to reduce time to first oil and cashflow with lower investments than traditional offshore developments. The main assets are 73.5% of the producing Dussafu Marine Permit offshore Gabon and a 95% interest in the Maromba field in Brazil, both operated by the Company. Total net 2P+2C reserves are 247 million barrels at the start of 2020.This information is subject to the disclosure requirements pursuant to section 5-12 of the Norwegian Securities Trading Act. Attachment2020 Q3 Presentation