November 8, 2017
REVENUE ON TRACK; GUIDANCE REITERATED
Highlights
- Year-to-date 2017 Directional[1] revenue in line with
management expectations at US$1,254 million
- Reiterating 2017 Directional revenue guidance of around US$1.7
billion and underlying Directional EBITDA guidance of above US$750
million
- Update of the provision for onerous contract related to the
DSCV SBM Installer long term charter at a cost of c. US$30
million
- Full impairment of net investment in the construction yard
Paenal in Angola at a cost of c. US$30 million
- As announced on November 6, 2017 provision of US$238 million
based on advanced discussions with the U.S. Department of Justice
("DoJ") in relation to their reopened investigation into legacy
issues and Unaoil
Bruno Chabas, CEO of SBM Offshore commented:
"During the past difficult few years, SBM
Offshore's teams have continued to deliver for our
clients. This has led to solid year-to-date operational
performance in both Lease and Operate as well as in Turnkey. The
prospect of closure with the DoJ is a significant step in settling
our legacy issues, however the process to reach a resolution in
Brazil remains complex. While we are continuing to work to reach an
acceptable conclusion for these historical issues, it is important
to note that since 2012, the Company has fundamentally changed by
improving its ways of working and changing the business model.
As we focus on the future, these new foundations
are allowing us to successfully leverage our industry leading
experience to deliver technology-driven solutions that can
transform the industry. Our recent decision to proceed with the
order of the first Fast4WardTM hull demonstrates this fact. Further
based on our confidence that our experience and products can help
make deepwater competitive, even in a lower oil price environment,
we have invested in retaining core competence and experience
through the cycle. Combining this with our balance sheet
position, we are well positioned to benefit from the gradual
recovery in the market that is proceeding in line with our earlier
expectations. This is evidenced by the award of FPSO Liza and
increasing Turnkey activity."
Financial Highlights
Year-to-date 2017 Directional revenue came in at
US$1,254 million compared to US$1,574 million for the same period
last year. This represents a decrease of 20%, caused by lower
activity in Turnkey as three major projects were delivered in 2016.
The decrease in Turnkey revenue is partially offset by an increase
in revenues from the Lease and Operate segment. This increase is
driven by the addition of the three Floating, Production, Storage
and Offloading vessels (FPSOs) to the fleet during 2016 which
contributed in full during the period.
Under Directional reporting, Turnkey activity is
booked as capital expenditure adding to property, plant and
equipment for the portion of the asset which is built for own
account. At present, FPSO Liza is 100% owned by SBM Offshore and as
such did not contribute to the Company's revenue line during the
period.
Compared to year-end 2016, directional net debt
as of September 30, 2017 decreased by c. US$400 million to c.
US$2.6 billion, due to positive operating cash flow from Lease and
Operate and cash received under the Yme settlement. Part of the Yme
settlement monies are required to be used to reimburse legal fees
and other claim related expenses incurred to date. The remainder of
the settlement monies will be equally distributed between SBM
Offshore and project partner Repsol in accordance with the terms of
a Settlement Agreement made on March 11, 2013 which concluded the
Yme project.
SBM Offshore continues to pursue its claim
against all remaining insurers including the two excess layers,
with trial proceedings scheduled to commence October 2018.
Compliance Update
In a separate press release dated November 6,
2017 the Company provided an update on its compliance-related
legacy issues in the United States and Brazil. A summary is
provided below, however, for further information and detail,
reference is made to this separate release.
United States
The Company is in advanced discussions with the
United States DoJ concerning a potential resolution of the DoJ's
investigation that the DoJ had closed in 2014 and reopened in 2016
and its inquiry into the Company's relationship with Unaoil. Based
on these investigations and the applicable U.S. statutory rules,
the DoJ has concluded that the evidence not only supports
jurisdiction in the United States but also requires a further
penalty in the Unites States. Confronted with the DoJ's conclusions
and in anticipation of a final resolution, the Company has made a
provision of US$238 million.
The proposed terms under discussion reflect
confidence in the quality of the Company's compliance program and
efforts by current management.
Final resolution with the DoJ remains subject
to, amongst other matters, agreement on the terms and conditions of
the resolution, including subsequent approval thereof by the
Company's Supervisory Board.
Brazil
The discussions relating to the leniency
agreement which was signed on July 16, 2016 but which was
ultimately sent back for adjustment to the Public Prosecutor by the
Brazilian Fifth Chamber for Coordination and Review and
Anti-corruption are complex. It has transpired that two leniency
agreements are now required which necessitate agreement and
coordination among the multiple parties involved. Consequently, a
resolution has not yet been reached.
The Company confirms its commitment to close out
its legacy issues in Brazil and its willingness in principle to pay
the previously agreed substantial amounts. However, to enter into
the proposed leniency agreements, the Company would need to be in a
position to reach satisfactory closure with all Brazilian
authorities and Petrobras on all outstanding leniency issues at the
same time. In view of the current situation, the Company cannot
guarantee that a satisfactory resolution will be reached. The
Company will await resolution before participating in
Petrobras-operated tenders.
Impairment Review
The following non-cash adjustments to the
accounts are the result of SBM Offshore's regular review as part of
its planning process.
Because offshore oil and gas industry conditions
continue to be challenging, SBM Offshore expects a reduced
utilization of its Diving Support and Construction Vessel (DSCV)
SBM Installer. As a result, the contract continues to be classified
as onerous and the non-cash provision is to be increased by c.
US$30 million, to be recognized in the Gross Margin of the Turnkey
segment. SBM Offshore's investment (25% ownership) in the Joint
Venture which owns the vessel is consolidated using equity
accounting.
As the activity outlook for the Paenal
construction yard operating in Angola has continued to deteriorate,
SBM Offshore's investment in the Joint Venture owning the Paenal
construction yard (30% ownership) is to be fully impaired to a net
book value of zero, resulting in an additional impairment charge of
c. US$30 million. Because this investment is consolidated using the
equity method, this non-cash impairment is to be recognized in the
Company's consolidated income statement on the line item share of
profit of equity-accounted investees.
Project Review
FPSO Liza
An agreement with Keppel Shipyard Ltd (Keppel
Shipyard) was signed for the conversion of a Very Large Crude
Carrier (VLCC) into an FPSO for the Liza project offshore Guyana,
operated by an ExxonMobil affiliate. The shipyard's work scope
includes refurbishment and life extension works, such as the
upgrading of living quarters, fabrication and installation of
spread mooring systems, as well as the installation and integration
of topside modules. The VLCC is scheduled to arrive at the shipyard
in November 2017 with vessel related work scope planned to commence
by the end of this year.
Operational update
SBM Offshore continued to improve its safety
performance with a Reported Total Recordable Injury Frequency Rate
(TRIFR) below its 2017 target of 0.32.
The Lease and Operate fleet uptime performance
year-to-date was 98.5% compared to 96.4% for the year 2016.
Dow Jones Sustainability Index ("DJSI")
On September 11, 2017, for the eighth consecutive year, SBM
Offshore was included as an index component of the DJSI (Energy
Equipment & Services industry).
Outlook and Guidance
The Company is reiterating its 2017 Directional
revenue guidance of around US$1.7 billion, of which around US$1.5
billion is expected in the Lease and Operate segment and around
US$200 million in the Turnkey segment. The Company also reiterates
its underlying Directional EBITDA guidance of above US$750
million.
The accounting for the Turritella sale will
impact both 2017 and 2018 Directional accounts. The partner
compensation and costs relating to the unwinding of the loan and
hedge will be booked in 2017. The former will impact EBITDA, the
latter net financing cost. The net gain on disposal will be booked
in 2018, impacting EBITDA.
Underlying 2017 Directional EBITDA guidance
excludes impacts relating to the non-cash provision relating to the
SBM Installer charter contract, one-off elements of the Yme
settlement, the partner compensation booked on the sale of FPSO
Turritella and the provision for US DoJ settlement. These impacts
are currently estimated to have an aggregate impact on EBITDA in
excess of US$200 million.
Conference Call
SBM Offshore has scheduled a conference call
followed by a Q&A session at 10:00 am Central European Time on
Wednesday, November 8, 2017.
The call will be hosted by Bruno Chabas (CEO),
Philippe Barril (COO), Erik Lagendijk (CGCO) and Douglas Wood
(CFO). Interested parties are invited to listen to the call
by dialing +31 (0) 20 531 5851 in the Netherlands, +44 (0) 20 3365
3210 in the UK or +1 866 349 6093 in the US.
A replay will be available shortly after the end
of the conference call. Interested parties can listen to the replay
by dialing +31 (0) 20 530 0220 and using access code 126152# until
December 8, 2017.
Corporate Profile
SBM Offshore N.V. is a listed holding company
that is headquartered in Amsterdam. It holds direct and indirect
interests in other companies that collectively with SBM Offshore
N.V. form the SBM Offshore group ("the Company").
SBM Offshore provides floating production
solutions to the offshore energy industry, over the full product
life-cycle. The Company is market leading in leased floating
production systems with multiple units currently in operation and
has unrivalled operational experience in this field. The Company's
main activities are the design, supply, installation, operation and
the life extension of Floating Production, Storage and Offloading
(FPSO) vessels. These are either owned and operated by SBM Offshore
and leased to its clients or supplied on a turnkey sale basis.
As of December 31, 2016, Group companies employ
approximately 4,750 people worldwide. Full time company employees
totaling c. 4,250 are spread over five regional centers, ten
operational shore bases and the offshore fleet of vessels. A
further 500 are working for the joint ventures with several
construction yards. For further information, please visit our
website at www.sbmoffshore.com.
The companies in which SBM Offshore N.V.
directly and indirectly owns investments are separate entities. In
this communication "SBM Offshore" is sometimes used for convenience
where references are made to SBM Offshore N.V. and its subsidiaries
in general, or where no useful purpose is served by identifying the
particular company or companies.
The Management BoardAmsterdam, the Netherlands,
November 8, 2017
Financial Calendar |
Date |
Year |
Full-Year 2017 Earnings - Press Release |
February 8 |
2018 |
Annual General Meeting of Shareholders |
April 11 |
2018 |
Trading Update 1Q 2018 - Press Release |
May 9 |
2018 |
Half-Year 2018 Earnings - Press Release |
August 9 |
2018 |
Trading Update 3Q 2018 - Press Release |
November 15 |
2018 |
Note: date in bold was changed from May 10, 2017
before market opening to May 9, 2017 after market close to
accommodate Ascension Day
For further information, please contact:
Investor RelationsBert-Jaap
DijkstraInvestor Relations Director
Mobile
NL:Mobile MC: |
+31 (0)
6 2114 1017+33 (0) 6 4391 9302 |
Telephone: |
+31 20
236 3222 |
E-mail: |
bertjaap.dijkstra@sbmoffshore.com |
Website: |
www.sbmoffshore.com |
Media Relations Vincent KempkesGroup
Communications Director
Telephone: |
+31 (0)
20 2363 170 |
Mobile: |
+31 (0)
6 25 68 71 67 |
E-mail: |
vincent.kempkes@sbmoffshore.com |
Website: |
www.sbmoffshore.com |
Disclaimer
This press release contains inside information
within the meaning of Article 7(1) of the EU Market Abuse
Regulation. Some of the statements contained in this release
that are not historical facts are statements of future expectations
and other forward-looking statements based on management's current
views and assumptions and involve known and unknown risks and
uncertainties that could cause actual results, performance, or
events to differ materially from those in such statements. Such
forward-looking statements are subject to various risks and
uncertainties, which may cause actual results and performance of
the Company's business to differ materially and adversely from the
forward-looking statements. Certain such forward-looking statements
can be identified by the use of forward-looking terminology such as
"believes", "may", "will", "should", "would be", "expects" or
"anticipates" or similar expressions, or the negative thereof, or
other variations thereof, or comparable terminology, or by
discussions of strategy, plans, or intentions. Should one or more
of these risks or uncertainties materialize, or should underlying
assumptions prove incorrect, actual results may vary materially
from those described in this release as anticipated, believed, or
expected. SBM Offshore NV does not intend, and does not assume any
obligation, to update any industry information or forward-looking
statements set forth in this release to reflect subsequent events
or circumstances. Nothing in this press release shall be deemed an
offer to sell, or a solicitation of an offer to buy, any
securities.
[1] Directional view is a non-IFRS disclosure, which assumes all
lease contracts are classified as operating leases and all vessel
joint ventures are proportionally consolidated.
Attachments:
http://www.globenewswire.com/NewsRoom/AttachmentNg/103212ad-08d1-480c-8b28-aee68f2df991
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