Dutch floater specialist SBM Offshore’s directional revenue as of June 30, 2019 totaled US$965 million, representing an increase of US$157 million or 19% compared with the same period last year. This increase was driven by a higher activity level in Turnkey on various projects, including the FPSO Liza Destiny and Unity oil production platforms on contract for ExxonMobil’s operations in the South American country of Guyana.
“SBM Offshore’s financial results are trending ahead of expectation for the year as it enters a period of significant growth. Developments of deep-water reservoirs continue to rank favorably in client project portfolios. This is because these developments benefit from large scale production facilities. The Company’s Fast4Ward® program brings scale combined with a reliable execution schedule and shorter cycle time to first oil. The program also enables the Company to increase productivity and resource flexibility. Demand growth and limited FPSO contractor capacity mean that SBM Offshore will remain selective in its contract choices,” commented Bruno Chabas, CEO of SBM Offshore.
The company said on Thursday it did not report adjustments for the period and, as such, reported earnings before interest, tax, depreciation and amortization (EBITDA) is the same as underlying EBITDA. Directional EBITDA for the period was US$399 million, US$15 million below the underlying EBITDA for the same period last year. This 4% decrease was primarily caused by the one-off nature of a number of positive close-out items for Turnkey projects during the first half of 2018.
Under Directional, the significant activity in Turnkey related to FPSO Liza Destiny, as well as FPSO Liza Unity, is not reflected in Revenues or EBITDA for the period as these are treated as operating leases and hence are booked in capital expenditure on the balance sheet. “These projects will generate revenues, margin and cash flow in Lease and Operate starting at first oil. The sale to the client, which is anticipated after a period of up to two years of operations on both vessels, will be booked in Turnkey,” the company stated.
The FPSO Liza Destiny continues to progress in line with schedule. “After successful topsides integration and pre-commissioning activities, the vessel left Singapore on July 18, 2019 and is on its way to its mooring location in Guyana, where it is scheduled to arrive in the third quarter of 2019. In Guyana, work is continuing with respect to operations readiness, setting up the shore base and delivering on local content commitments,” SBM said.
Meanwhile, the major project FPSO Liza Unity is also progressing according to schedule. The standard multipurpose hull was recently launched from the dry dock in China. The engineering is progressing as planned, benefiting from the Fast4Ward® module catalogue.
Oil production is set to begin by Q1 2020 in Guyana with the Liza Destiny while the Unity will push start-up of the Liza Phase 2 Development, targeted for 2022.