Dutch floater specialist SBM Offshore, while currently dealing with the challenges brought on by the COVID-19 pandemic and low oil price environment, is looking ahead to large capacity offshore developments where its state-of-the-art Fast4Ward® programme will be playing a major role.
The company said on Thursday year-to-date directional revenues were US$607 million compared with US$456 million in the first quarter of 2019. This 33% increase resulted from higher Turnkey activity and higher revenues in Lease and Operate as a result of FPSO Liza Destiny joining the fleet at the end of 2019 together with last year’s acquisition of a minority partner’s ownership in five Brazilian FPSOs. The Liza Destiny FPSO is operating offshore Guyana on ExxonMobil’s Liza Phase 1 Development project.
“SBM Offshore delivered a good set of results during the first quarter of 2020, in line with expectations. The Company’s results, the dividend track record and completed share repurchase exemplify SBM Offshore’s robust business model. At the same time, SBM Offshore is also impacted by the combined demand and supply crises in the oil and gas market and is taking measures to evolve and adapt with the uncertain dynamic market conditions,” said Bruno Chabas, CEO of SBM Offshore.
He said the company is prioritizing the health, safety and well-being of its staff, clients, and contractors. “In our Lease and Operate division, our global task force implemented protocols covering all relevant scenarios to manage business continuity through an extended period of COVID-19 impact. Uptime was maintained at 99.3%, in line with our historical track record.”
Despite crew change challenges associated with the COVID-19 pandemic, SBM Offshore has been able to maintain production levels on the Liza Destiny FPSO and is in fact ramping up production to its peak levels of 120,000 barrels of oil per day which is expected to be achieved by next month.
Chabas said in Turnkey, SBM Offshore continues to execute the projects for its clients and the on schedule sailaway of the last two modules of the Johan Castberg turret is one such example.
“Oil and gas companies have responded to the low oil price environment by delaying and reducing investments. Although the market conditions have worsened across the board, large capacity offshore developments will attract funding in the future,” the CEO said.
The company is currently building the second FPSO – the Liza Unity – for Phase 2 of ExxonMobil’s Liza development in Guyana and is expected to also deliver future units as projects continue to be sanctioned in the South American country.
Of the three allocated hulls under its Fast4Ward® programme, the first hull was allocated to the Liza Unity FPSO while the next two hulls are allocated to FPSO Sepetiba and FPSO Prosperity. The Prosperity project which is targeting ExxonMobil’s 3rd development in Guyana remains subject to government approvals, project sanction and an authorization to proceed with the next phase. SBM Offshore said the construction of these hulls is progressing while there has been an initial impact to the delivery schedule due to COVID-19.
Referring to these large capacity offshore developments, Chabas said, “These projects have very competitive break-even prices and will be prioritized in clients’ selection of investment opportunities. SBM Offshore targets this niche with Fast4Ward® and will strengthen its position through this program. Fast4Ward® enhances client development plans through more economical production, safer operations and reliable delivery.”
Although the number of projects coming to the market will decrease in the short to medium term, the CEO said SBM Offshore remains disciplined in selecting opportunities and in accepting only that level of risk appropriate to deliver value to all its stakeholders.
“SBM Offshore is uniquely positioned not only to weather this crisis but to come out stronger at the end of it,” he stated.
Shortly after arriving in Singapore in February 2020, the Fast4Ward® MPF hull for the Liza Unity FPSO was moved into dry-dock. During this phase, the mooring structures are integrated, and the first topsides modules are lifted onto the vessel. Upon completion of the dry-dock phase, the hull will be transferred back to the integration quayside to complete the topsides lifting and integration campaign. SBM Offshore said due to COVID-19, the yards in Singapore are currently closed.