February 8, 2018
SBM Offshore delivered another year of strong
performance across the board. Revenues and EBITDA were in line with
latest expectations. During the year, the Company confirmed the
award for the Lease and Operate contracts by ExxonMobil for the
Floating Production, Storage and Offloading vessel (FPSO) Liza.
Additionally, the Company won the Turnkey award for delivering the
large complex mooring system for Statoil's Johan Castberg FPSO.
Good progress was made in safety and environmental performance
which contributed to SBM Offshore's inclusion in the Dow Jones
Sustainability Index for the eighth year running. Regarding its
legacy issues, the Company concluded its discussions with the US
Department of Justice (DoJ) and settled with a group of insurance
companies on its Yme insurance claim. Shell decided to exercise the
purchase option on FPSO Turritella, underlining the quality of this
award-winning asset, delivered by SBM Offshore. Given the Company's
stable backlog and cash and liquidity position combined with a
positive outlook for Turnkey activity and future significant cash
flow generation from the fleet, independent of oil price, a cash
dividend of US$0.25 per share is proposed, c. 9% increase
year-on-year.
Bruno Chabas, CEO of SBM Offshore,
commented:
"SBM Offshore continues to deliver very robust
operating and financial performance against the backdrop of a
gradually recovering offshore oil and gas market. Lease and Operate
set financial records in both revenues as well as EBITDA. Turnkey
performed well in closing out major projects. Outstanding safety
performance combined with significant progress achieved in
environmental results underlines the quality and capability of the
SBM Offshore team. Last year there were only four major FPSO-based
project investment decisions. We were awarded the FPSO for one of
these in a highly prospective new basin, and a large turret and
mooring system for another. This validates our strategy to provide
reliable life-time solutions based on our unique experience and
illustrates our clients' preference to rely on such experience.
Key for success in today's market is to join
client teams in the upfront optimization work, in order to bring
break-even prices for offshore developments down to a level where
these projects become economically attractive. Reliable delivery
combined with short time to first oil and a rapid ramp-up to
name-plate capacity is of paramount importance. As such, our
Fast4WardTM standardization project and investment in our digital
FPSO concept are rewriting the FPSO story. Throughout the downturn,
the Company has preserved its Turnkey capacity and experience.
Currently, we are adapting the organization further to maximize
synergies, organizational efficiency and flexibility in order to be
ready for the market upturn. In parallel, looking ahead at
tomorrow's reality where the energy mix is shifting towards a more
dominant role for gas and renewables, SBM Offshore is leveraging
its experience in order to benefit from the expected exponential
growth of demand for these energy sources in the long term."
Financial Highlights
- Underlying1 Directional2 2017 EBITDA of US$806 million, an
increase of c. 4% compared to last year
- Underlying Directional 2017 Earnings per share of US$0.39, a
decrease of US$0.18 year-on-year
- Directional 2017 revenue of US$1,676 million, a decrease of 17%
year-on-year
- Directional year-end pro-forma backlog of US$16.8 billion,
stable compared with US$17.1 billion at year-end 2016
- Cash dividend of US$0.25 per share for 2017, a c. 9% increase
compared with 2016
- Proportional net debt at year end decreased to US$2.7 billion,
with cash/undrawn credit facilities of US$1.9 billion
- 2018 Guidance: Directional revenue around US$1.9 billion,
Directional EBITDA around US$750 million; excluding gain on the
sale of Turritella and the impact of the new IFRS16 standard and
further assuming a partial sell-down of the ownership share of FPSO
Liza
The 2017 Annual Report including the financial statements are
published on the Company's website under
2017.annualreport.sbmoffshore.com.
1 Underlying earnings adjusted for exceptional items: further
explanation on page 2. This note relates to any reference made to
Underlying in this document.2 Directional view, presented under
IFRS8 Segment reporting, represents a pro-forma accounting policy,
which assumes all lease contracts are classified as operating
leases and all vessel joint ventures are proportionally
consolidated. This note relates to any reference made to
Directional in this document.
The 2017 Underlying Directional results exclude
a number of previously disclosed items for a total EBITDA impact of
US$210 million as follows: (i) payment of penalties to the DoJ
totaling US$238 million; (ii) income from the Yme insurance case
settlement with a group of insurers of US$125 million, after taking
into account contractual sharing with our partner Repsol and net of
claim-related costs incurred in 2017; (iii) a provision for US$80
million of partner compensation related to the sale of FPSO
Turritella; and iv) a net increase in the non-cash provision for
the onerous contract related to the diving support and construction
vessel SBM Installer of US$17
million.
In addition to the above adjustments Underlying Directional Profit
attributable to Shareholders reflects the following previously
disclosed adjustments reported below EBITDA: (i) net financing cost
was reduced by US$39 million, including US$21 million for the
unwinding of the project loan and hedge related to the sale of FPSO
Turritella and a time value of money charge4 for the compliance
related Brazilian settlement provision of US$18 million; (ii) the
share of profit from equity accounted investees was adjusted for
the impairment of the construction yard Paenal for US$34
million.
As reported, 2016 Underlying results reflect an
adjustment totaling US$53 million in EBITDA due to the initial
recognition of the provision for the onerous contract with the SBM
Installer and an increase in the Brazil compliance related
provision. The time value of money adjustment of the compliance
related Brazilian settlement provision in net financing cost was
US$14 million and an impairment related to Paenal of US$60 million
was adjusted for in share of profit from equity accounted
investees.
Directional revenue decreased by 17% to US$1,676
million compared to US$2,013 million in the year-ago period. This
was primarily attributable to lower Turnkey segment revenues. The
decrease is mostly attributable to the completion stage reached in
the course of 2016 on the Ichthys turret and FPSOs Cidade de
Maricá, Cidade de Saquarema and Turritella while new major awards
won during 2017 are expected to materially contribute to Turnkey
revenues from 2018 onward.
Underlying Directional EBITDA increased by 4% to
US$806 million compared with US$778 million in 2016. This increase
is primarily attributable to the Lease and Operate segment with
full year contribution of the three FPSOs delivered in 2016.
Despite the decreased activity year-on-year, underlying Turnkey
EBITDA came in at a loss of US$(86) million, which was better than
expected mainly due to sound performance in project close out.
3 2016 Directional Profit attributable to
Shareholders has been restated from an amount of US$24 million to
US$(5) million for tax of US$29 million based on the updated
Directional tax computation methodology. 2016 Underlying
Directional Profit attributable to Shareholders was restated for
the same amount.4 Represents the increase in the 2016 estimate of
the net present value of the future payments (instalments and bonus
reductions) related to the contemplated Leniency Agreement; the
unwinding effect of the initial discount being recognized over time
in the net financing costs according to IFRS
During previous years, to calculate the
Directional tax charge, SBM Offshore applied the year's IFRS
effective tax rate percentage to Directional pre-tax earnings. The
completion of the Company's Directional reporting during 2017
introduced an improvement in methodology for calculating
Directional tax through bottom-up tax submissions, which results in
a restatement of the 2016 tax charge and net profit under
Directional. The increase in Directional taxes for 2016 is caused
by the inclusion of revenues withholding tax at SBM Offshore
ownership share in equity accounted entities under IFRS.
Project Review and Operational Update
Project |
Contract |
SBM Share |
Capacity, Size |
POC |
Expected Delivery |
Notes |
Liza, FPSO |
10 year finance lease |
100% |
120,000 bpd |
|
2020 |
Vessel arrived in Keppel yard and conversion started;
first steel cut in January 2018 |
Castberg, Turret |
Turnkey sale |
100% |
Not disclosed |
|
2020 |
Early EPC activity started - project management,
procurement long lead items and engineering |
Legend, Percentage of Completion (POC) |
|
<25% |
|
25%-50% |
|
50%-75% |
|
>75% |
|
100% |
SBM Offshore is progressing in line with
clients' schedules for the Turnkey activities relating to its two
new major contracts.
SBM Offshore is capitalizing on its experience
through its Fast4WardTM program. The program's result is an
optimized design with standard specifications which leads to lower
cost, higher quality and productivity on a de-risked plan with
reduced safety exposure. Fast4WardTM accelerates first oil by up to
12 months. At mid-year 2017, SBM Offshore ordered its first
standard new-build, multi-purpose hull which is progressing in line
with schedule. The scope of the Fast4WardTM topsides catalogue has
been further expanded. The Company is witnessing increased client
interest in integrating the Fast4WardTM concept into development
plans and Front End Engineering and Design (FEED) studies.
The Lease and Operate fleet uptime performance
for the year was 98.3%, an improvement compared to 2016, with 2017
seeing SBM Offshore operate the three major FPSOs that were
commissioned during 2016.
Streamlining the Organization
Since 2014, SBM Offshore has constantly aligned
its organization in view of the downturn in the offshore services
industry, while preserving Turnkey capacity and protecting its
experience for the future. Today's gradual recovery in the offshore
oil and gas industry requires contractors to 'work as one' with
clients to optimize deep water development projects. SBM Offshore
will continue to adapt its organization to meet and exceed clients'
expectations. Product lines will continue to bring customer focus.
Staffing of projects and functional support will be managed
centrally, across the globe. This is bringing further efficiency
and productivity through global leveraging of the Company's
experience and resource base. Integrated with the standardization
program Fast4WardTM, this evolution of the organization is further
enhancing SBM Offshore's competitiveness and enabling the Company
to prosper in a phase of controlled growth as the cycle
develops.
Directional Backlog
SBM Offshore provides a pro-forma Directional
backlog overview, which provides a normalized outlook of the
existing leases.
Normally, at year-end 2017, the backlog would
not yet reflect the sale of FPSO Turritella which closed on January
16, 2018 or the agreed FPSO Liza operating and maintenance scope,
which is pending a final work order. However, for the purposes of
the pro-forma backlog represented in the table below, both have
been taken into account in line with the pro-forma backlog
disclosed at the end of the first half 2017.
The pro-forma Directional backlog at the end of
2017 remained stable at US$16.8 billion despite the US$1.7 billion
of revenues mainly booked from backlog during the year,
demonstrating the resilience of SBM Offshore's business model as
well as successful sales of major contracts. Total order intake
from FPSO Liza, the Castberg mooring system, the FPSO Serpentina
extension and various others was c. US$2.6 billion while the sale
of FPSO Turritella reduced backlog by c. US$1.1 billion and other
adjustments caused a net decrease of c. US$0.1 billion.
Net debt and liquidity
Directional net debt decreased by US$0.4 billion
to a total of US$2.7 billion at year-end. This was primarily driven
by strong cash flow generation from Lease and Operate covering uses
of cash in investment, operating expenditure, interest and
dividend. This includes c. US$280 million cash received under the
settlement with a group of insurers of the Company's Yme insurance
case. These proceeds remain to be shared as disclosed in the
Company's press release of August 11, 2017. In December, the
Company paid the US$238 million in penalties to the DoJ under the
deferred prosecution agreement announced on November 30, 2017.
Project financing for the FPSO Liza of US$720 million was completed
in December but remained undrawn at year-end.
At the end of the year, SBM Offshore's
Directional cash and undrawn committed credit facilities remained
stable compared to last year at US$1.9 billion.
Dividend proposal
In line with the Company's dividend policy and
further taking into account the specific circumstances relating to
2017 including the nature of the non-recurring items, the Company
proposes a dividend of US$0.25 per share in respect of 2017, to be
declared at the Annual General Meeting of Shareholders (AGM) on
April 11, 2018. This represents a c. 9% increase per share compared
to last year and represents a pay-out of c. 64% of underlying
Directional 2017 net result, which was adjusted for exceptional
items. The proposed ex-dividend date is April 13, 2018. The
dividend is payable within 30 days following the AGM and will be
calculated in US Dollars but payable in Euros. The conversion into
Euros will be effected on the basis of the exchange rate on April
11, 2018. Given the Company's cash position, the dividend will be
fully paid in cash.
Corporate Social Responsibility
SBM Offshore continued to improve its safety
performance and achieved its best ever Total Recordable Injury
Frequency Rate (TRIFR) on record of 0.19 at year-end 2017, compared
with last year's performance of 0.31. During the year, the Company
focused on safety awareness with contributions from the
company-wide monthly campaigns and continued implementation of the
process safety framework. Going forward, the Company targets
continuous improvement, building on the SBM Offshore safety culture
and will continue to embed the process safety framework in its
management system and operating practices.
Regarding Loss of Primary Containment, the
number of most severe (Tier 1) incidents was in line with average
over the past four years. However, a marked improvement compared
with last year in the aggregate of Tier 1 and 2 incidents was
achieved with a reduction of almost 50%.
Environmental reporting shows that SBM Offshore
achieved reductions in air emissions, energy consumption and
discharges. In 2017, flaring relative to hydrocarbon production
decreased by 50% compared with the previous year. The majority of
the Company's fleet achieved their flaring reduction targets as set
in SBM Offshore's CO2 challenge. Greenhouse gas emission levels
relative to production reduced by 29% compared with the previous
year. Energy consumption, relative to production, improved by
almost 10%.
For the eighth consecutive year the Company was
included in the Dow Jones Sustainability World index, demonstrating
SBM Offshore's continued commitment and the effectiveness of its
sustainability program.
Compliance
As reported on December 22, 2017, the Company
learned that the Federal Prosecutor's Office (Ministério Público
Federal - "MPF") has filed a damage claim based on the Brazilian
Improbity Act with the Federal Court in Rio de Janeiro against a
Brazilian subsidiary of the Company, an intermediate holding
company in Switzerland and a number of individuals, including
former employees of the SBM Offshore Group. The claim relates to
the alleged improper sales practices prior to 2012 that are also
the subject of the leniency agreements under discussion with other
Brazilian authorities and Petrobras.
The judge handling the case will have to decide
on the acceptance of the lawsuit, after which the defendants will
be served with the court documents. In the context of this lawsuit,
the MPF asked the court to impose a provisional measure as a means
to secure damages potentially awarded. The Company continues to
seek clarification of the current position in these proceedings. If
and when necessary, the relevant Group companies will defend their
position before the authorities and in court.
The Company remains committed to close out its
legacy issues in Brazil by means of the leniency agreements and
continues its discussions with various authorities involved. To
enter into the 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. The filing of the damage claim by the MPF has made such
satisfactory resolution more uncertain. Under the current
circumstances, the Company cannot guarantee that a satisfactory
resolution will be reached, nor predict the timing thereof.
As reported on November 30, 2017, the Company
reached a resolution with the DoJ resolving the reopened
investigation into the Company's legacy issues and the
investigation into the Company's relationship with Unaoil. As part
of the overall resolution, the Company paid monetary penalties for
a total amount of US$238 million.
Outlook and Guidance
Management expects the deep water oil and gas
market to continue to recover on the basis of improved break-even
prices of world-class reservoirs combined with clients gaining
confidence in long-term returns of offshore projects. Medium term
market visibility has improved as there is increased client demand
for FEED scope aiming at optimizing project returns so that Final
Investment Decisions (FIDs) can be taken. The Company continues to
believe that deep water developments have a significant role to
play in the energy mix of the future. The low level of investment
in offshore projects over the past years has the potential to cause
a long-term supply gap as reservoir decline rates are not offset by
new production.
The Company's 2018 Directional revenue guidance
is around US$1.9 billion, with around US$1.3 billion from Lease and
Operate and around US$600 million from Turnkey. Guidance for 2018
Directional EBITDA is around US$750 million. This excludes the gain
on the sale of FPSO Turritella (US$213 million) and the expected
positive impact from implementation of IFRS16 (c. US$35 million)
which the Company has decided to adopt early from 2018.
Management expects that the performance of its
Turnkey division will improve in line with the gradual market
recovery in 2018 with 2017 being the turning point of the current
cycle.
The above guidance assumes a partial sell-down
of the Company's ownership share of FPSO Liza, which remains
subject to negotiation and Management decision. Should expectation
of this scenario change, guidance will be adjusted accordingly.
Analyst Presentation & Conference
Call
SBM Offshore has scheduled a conference call and
webcast of its presentation to the financial community followed by
a Q&A session at 10.00 Central European Time on Thursday,
February 8, 2018.
The webcast 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 20 531 5853 in the Netherlands, +44 203 365 3210 in the
UK or +1 (866) 349 6093 in the US. Interested parties may also
listen to the presentation via webcast through the link below, also
posted on the Investor Relations section of the Company's
website.
The live webcast and replay, which should be
available shortly after the call, will be available at:
https://ssl.webinar.nl/webcast/sbmoffshoreinvestors/20180208_1/
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 |
Full-Year 2018 Earnings - Press Release |
February 14 |
2019 |
Note: date in bold was changed from May 10, 2018 before
market opening to May 9, 2018 after market close as communicated in
the press release of November 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
lifecycle. The Company is market leading in leased floating
production systems delivered to date, 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 solutions for the offshore energy industry.
As of December 31, 2017, Group companies employ
approximately 4,800 people worldwide. Full time company employees
totaling c. 4,300 are spread over offices in key markets,
operational shore bases and the offshore fleet of vessels. A
further 500 are working for the joint ventures with two
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,
February 8, 2018
For further information, please contact:
Investor Relations Bert-Jaap Dijkstra Director Corporate
Finance and IR |
|
Telephone: |
+31 (0)
20 236 3222 |
Mobile: |
+31 (0)
6 21 14 10 17 |
E-mail: |
bertjaap.dijkstra@sbmoffshore.com |
Website: |
www.sbmoffshore.com |
Media Relations Vincent Kempkes Group 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. This press release contains regulated information
within the meaning of the Dutch Financial Markets Supervision Act
(Wet op het financieel toezicht). 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.
Attachments:
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