The on-time delivery of the Prosperity floating production, storage and offloading (FPSO) vessel and the award of a new front-end engineering and design (FEED) contract for the Whiptail development project are among the key accomplishments noted by SBM Offshore in its 2023 third quarter report. Both projects are operated by ExxonMobil in the Stabroek block offshore Guyana.
These achievements underscore robust operational performance by SBM Offshore in the quarter.
The Whiptail contract represents the fifth company undertaking in Guyana and introduces a novel commercial model, as described by chief executive officer, Bruni Chabas. “The FPSO’s ownership is expected to be transferred to the client at the end of the construction period,” he said.
SBM Offshore is set to manage the FPSO operations using an integrated model that builds on the firm’s experience with prior FPSO contracts linked to the Stabroek block. The company has allocated its seventh multi-purpose floater (MPF) hull to the Whiptail project, and its eighth is under construction to support tender activities.
Further underscoring its quarterly achievements, SBM Offshore said Prosperity is currently preparing for its inaugural oil production in Guyanese waters. The Prosperity, alongside the Sepetiba FPSO, poised for a December 2023 first oil achievement in Brazil, have combined production of 400,000 barrels per day (bpd), the company said.
Chabas expressed contentment with the quarter’s accomplishments, stating, “We have delivered results this quarter in line with expectation.” The contractual progression with ExxonMobil Guyana, including the exercise of the purchase option for FPSO Liza Unity, has led to an upward revision of SBM Offshore’s financial projections. Exxon exercised its right to purchase the FPSO in November, a few months ahead of the end of the maximum term lease, in February 2024. Following ownership of the unit, SBM Offshore will continue to operate and maintain the FPSO up to 2033. The net cash proceeds will be applied to full repayment of the US$1.14 billion project financing and as such will decrease SBM Offshore’s net debt position.
The sale of the asset has updated SBM offshore’s directional revenue guidance for 2023, from above US$2.9 billion, to around US$4.4 billion. Of this, around US$1.9 billion is expected from lease and operate projects, and around US$2.5 billion is expected from turnkey projects.
Chabas also drew attention to the progress in the company’s New Energies platform, noting the installation of floaters for the Provence Grand Large project. “Once commissioned, the 3 floaters will produce 25MW of clean energy,” he shared, pointing to the project as a commercial testament to SBM Offshore’s mooring technology and its potential to deliver renewable energy.
Financially, directional revenue for the quarter experienced an 11% dip to US$2.247 billion, predominantly due to the partial divestment of FPSOs and the completion of the Liza Unity project earlier in the year. Yet, the company’s lease and operate work sector saw growth, with a 9% increase in revenue. The company’s net debt also saw an increase, attributable to the investment in its fleet expansion program.
Operational updates indicate that SBM Offshore’s fleet is performing reliably with an uptime of 99.3%, maintaining the historical trend. With several FPSOs on track for deployment and the development of projects like Whiptail, SBM Offshore continues to fortify its financial position.
