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Strong order inflow and conversions in line with expectations

Q2 2008
 
HIGHLIGHTS
EBITDA of USD 34.5 million
Letter of Intent for FPSO in Australia
Letter of Award for deepwater offloading system in Angola
FPSO conversions in line with expectations
Sale of shares in Prosafe SE
Award of three installation campaigns
 
 
FINANCIAL SUMMARY
(Figures in brackets refer to corresponding figures for 2007)
 
EBITDA was USD 34.5 million (USD 41.7 million) in the second quarter. The decrease is primarily a result of increased start-up costs for YÙUM K'AK'NÁAB, provisions related to Berge Okoloba Toru and an impairment charge of USD 84.7 million against our investment in Prosafe Production Public Limited. The decrease is offset by a gain on sale of shares in Prosafe SE amounting to USD 127.0 million. Share of profit of associates was USD -7.9 million (USD 5.2 million) and relates to the investments in Prosafe Production Public Limited, Prosafe SE and  Nexus Floating Production Limited (Nexus). At 30 June 2008 the Company owned 23.9% of the shares in Prosafe Production Public Limited and 49.7% of the shares in Nexus.
 
Total revenue amounted to USD 124.8 million (USD 265.5 million). The change is mainly due to reduced construction contract revenues from the YÙUM K'AK'NÁAB conversion project that ended 30 June 2007.
 
Operating expenses in the second quarter amounted to USD 124.7 million (USD 229.0 million). Operating expenses for Floating Production were USD 56.4 million (USD 179.1 million). The change is mainly related to reduced construction contract expenses for the YÙUM K'AK'NÁAB conversion project. Operating expenses related to Technology and Installation Services amounted to USD 68.3 million (USD 49.9 million), due to higher activity in the segment.
 
Net financial items for the second quarter amounted
to USD 15.6 million (USD -3.4 million).
 
Net profit after tax in the second quarter was USD 34.8 million (USD 25.2 million).
 
At 30 June 2008 total assets amounted to USD 2,790.0 million (USD 3,005.7 million). The change in total assets arose mainly from the sale of shares in Prosafe SE, repayment of outstanding debt and a write-down of shares held in Prosafe Production Public Ltd.
At 30 June 2008 total equity amounted to USD 1,509.6 million (USD 1,545.4 million).
 
Net cash flow from investing activities was USD 577.1 million; primarily a result of the sale of shares in Prosafe SE. Net cash flow from financing activities was USD -307.8 million, primarily due to repayment of interest-bearing debt.
 
At 30 June 2008 net interest bearing debt amounted to USD 370.2 million (USD 998.2 million)
 
Floating Production
EBITDA for the second quarter was USD 21.6 million (USD 36.3 million). The first half-year of 2008 was influenced by higher than expected start-up costs regarding YÙUM K`AK`NÀAB, and consequences of the challenging operating environment in the Niger Delta and lower than expected insurance settlement relating to Berge Helene. Cash flow from operating activities in the second quarter was USD -46.1 million (USD -21.8 million).
 
The ongoing conversions of the FPSOs BW Pioneer and BW Peace are in line with the expectations of the management of BW Offshore.
 
Technology & Installation Services
The revenues in the second quarter were USD 114.5 million (USD 55.7 million) with an EBITDA of USD 12.9 million (USD 5.4 million), giving an EBITDA-margin of 11.6%. The figures reflect a higher activity level and improved margins. Major projects, such as Nexus, Chinook Cascade, Peregrino and Neptune are in production with no significant deviation from the plans. The order inflow during the first half year has been strong.
 
Cash flow from operating activities in the second quarter was USD 47.8 million (USD -25.0 million).
 
Please also see the attached Q2 2008 report and presentation.
 
BW Offshore will host a presentation of the financial results at 09:00 (CET) today at `Shippingklubben` (Haakon VII gt 1, Oslo, Norway). The presentation will be given by CEO Svein Moxnes Harfjeld, Deputy CEO Carl K. Arnet and CFO Knut R. Sæthre.
 
The presentation will also be broadcasted via webcast. Please visit www.bwoffshore.com for login-details.
 
 
 
Bermuda, 29 August 2008
 
 
For further information, please contact:
Svein Moxnes Harfjeld, CEO BW Offshore, +47 4140 4886
Carl K. Arnet, Deputy CEO BW Offshore, +65 9630 3290
Knut R. Sæthre, CFO BW Offshore, +47 9111 7876
 
 
BW Offshore is one of the world's leading FPSO contractors and a market leader within advanced offshore loading and production systems to the oil and gas industry. BW Offshore has more than 25 years' experience and has successfully delivered 13 FPSO projects and 50 turrets and offshore terminals. BW Offshore's technology division APL has delivered solutions for production vessels, storage vessels and tankers in a wide range of field developments. Adapting through competence, in-house technology, solid project execution and operational excellence, BW Offshore ensures that customer needs are met through versatile solutions for offshore oil and gas projects.  BW Offshore has a global network with offices in Europe, Asia Pacific, West Africa and the Americas. BW Offshore has 1,200 employees and is listed on the Oslo Stock Exchange. For more information, please visit www.bwoffshore.com and www.apl.no.