BW Offshore, the Oslo listed floating production and storage (FPSO) vessel owner in the Singapore based BW Maritime group, has reported a sharp fall in profit in 1Q15, but says its business remains based on solid foundations.
Group net profit fell to USD5.8 million in 1Q15 from USD12.7 million in the same period last year. Revenues decreased to USD236.8 million from USD264.8 million.
The company, which operates 17 vessels of the 14 it owns, experienced a fall in uptime to 94.4% from 99.8% due to an explosion that took place on board FPSO Cidade de Sao Mateus in Brazilian waters on 11 February. An investigation into the cause of the accident that claimed nine lives is continuing.
“BW Offshore carries insurance cover on a fleet wide basis, for its crew and support staff, pollution and clean up and any damage to vessels. In addition, the FPSO Cidade de São Mateus is also covered by a loss of hire insurance. The accident and its consequences will to a large extent be covered by these policies and BW Offshore is working closely with insurers and their loss adjusters in the recovery operations,” the company said in a statement.
In 1Q15, BW Offshore received a notice of termination for the FPSO BW Athena contract from Ithaca Energy. “BW Offshore and Ithaca Energy have agreed a revised contract structure to continue production on the Athena field beyond expiry of the firm period on a revised compensation scheme, involving advanced payment of an FPSO demobilisation fee and sharing of positive cash-flow from the field. Both parties have the right to terminate on a 60-day notice period,” BW Offshore said.
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The company also won new business and in it signed an agreement with PetroRio for a one-year extension for the lease and operation of the FPSO Polvo. “The firm period has been extended to 3Q16 from 3Q15 with an option to extend it further to 3Q22.
After the end of the quarter, on 30 April 2014, BW Offshore signed a contract with Premier Oil and partners for an FPSO to operate on the Catcher oil field in the UK North Sea was signed. “The firm charter period of the contract is seven years, with expected start up in mid- 2017, with extension options of up to 18 years. Backlog from the contract is USD2.3 billion including FPSO charter rate and opex and is based on a 10 year duration,” the company said.
Moving on to the outlook, BW Offshore said the short term outlook has changed due to the price drop in oil. “However, more recently we have seen an improvement in project activity related to previously identified prospects. BW Offshore expects to increase activity on FEED and bidding in the second half of 2015,” it said.
“The majority of BW Offshore’s fleet remain on long-term contracts with national and independent oil companies. The fleet will continue to generate a healthy cash flow in the time ahead,’ the company concluded.