SBM Offshore reports positive performance for 2019; Liza Destiny FPSO delivery is key milestone

The Liza destiny FPSO

CEO of SBM Offshore Bruno Chabas said 2019 was a positive year for the company, noting that expectations for an offshore industry rebound materialized and coincided perfectly with the company’s readiness to meet demand. He also called the commencement of oil production by the Liza Destiny FPSO offshore Guyana one of the highlights of 2019.

ExxonMobil has contracted SBM Offshore to build, operate and maintain two FPSOs – the Liza Destiny and the Liza Unity, and has awarded the Dutch floater company preliminary contracts to perform Front End Engineering and Design (FEED) for the Prosperity FPSO. The Unity and Prosperity FPSO’s are under SBM Offshore’s Fast4Ward® programme.

Chabas, in a message on Thursday, said the progress made in 2019 is a result of several years of development in technologies and new ways of working, as the company leveraged its expertise to optimize, transform and innovate.

“The revival in deep water projects feeds optimism for a brighter market outlook, albeit tempered with continued uncertainty over oil prices in light of macroeconomic, geopolitical and environmental developments,” Chabas said.

However, he added that SBM Offshore is confident of where it is going, noting that the flexibility of the company’s Fast4Ward program allows it to adapt to the market’s fluctuations in a profitable, efficient and reliable manner.

“Continued firm interest from clients for Fast4Ward products is fueling our expansion – of the five hulls under construction in 2019, three are allocated to two different clients and the fourth and fifth are to support our tendering activities,” he stated.

He said advanced solutions from experienced contractors like SBM Offshore allow clients to de-risk their projects and achieve a higher level of economic certainty. “The ramp-up in investment in 2019 by the major players translated into two FPSO contracts and one FPSO FEED for SBM Offshore, based on our Fast4Ward new build design, which shows the confidence there is in our program,” he said.

“One of the contracts cements our foothold in our historically strongest market, offshore Brazil, while the other sees the company expand into the new territory, offshore Guyana. In parallel, we are expanding our global geographic footprint to help us meet demand; this includes our engineering capacity in India and a significant presence in China,” the CEO added.

According to Chabas, one of SBM’s major achievements was the delivery of the FPSO Liza Destiny, which achieved first oil in December 2019, illustrating that the principles of Fast4Ward can be beneficial when applied to the EPC phase for conversions. “One of these principles is upfront engagement with our client, which significantly reduced the schedule, allowing us to achieve first oil within three years of the FEED start,” he pointed out.

He said SBM Offshore strives to be an industry example of how to do the right thing and is never complacent about these critical issues. “This can be seen from our embracing of the United Nations’ Sustainable Development Goals (SDGs). For 2019, we set specific business targets in line with the SDGs; we met and exceeded most of them and are taking lessons learned to improve performance going forward. I am proud that SBM Offshore is once again included in the Dow Jones Sustainability Index,” he said.

In 2019, he said SBM increased its commitments to sustainability, “as evidenced by our explicit targets on three SDGs being expanded to six. To protect the environment, we aimed high this year, with ambitious targets to reduce the quantity of gas flared by 20% and to reduce the plastic waste generated onboard offshore units by 40%.”

The CEO said although the company achieved improvements in its environmental performance, it did not meet all the targets set out.

“Setting the bar high helps to intensify the focus and action to improve performance: our crews and onshore base personnel embrace these sustainability goals and strive to achieve them,” Chabas said.

He this year’s share repurchase program and the 50% increase in its dividend contributed to the overall shareholder return being well above the industry average at 18% (versus 6% for the industry).