SBM Offshore posts 2016 Half-Year earnings
SBM Offshore has announced revenue in line with expectations, a Settlement Agreement with Petrobras and Brazilian authorities, the delivery of two of three vessels under construction and FPSO Turritella approaching Ready for Start-Up leading to first oil. The revenue contribution from the new additions to the Lease & Operate fleet has allowed SBM Offshore to commence generating positive free cash flow in the first half of the current fiscal year, which is expected to be continued over the remainder of 2016. While the oil and gas industry continues to face headwinds, SBM Offshore is playing its part to lower the cost of deepwater development. These advances have led to increased client engagement and positive signs for the medium term outlook of the offshore industry. SBM Offshore reiterates its 2016 guidance and announces the initiation of a EUR 150 million share repurchase program.
Financial Highlights
Share repurchase program of EUR 150 million announced
Cost savings of US$270 million, well ahead of plan
New Chief Financial Officer nominated
Settlement Agreement reached in Brazil
Directional revenue in line with expectations at US$939 million
Underlying Directional EBITDA of US$349 million and underlying EPS of $0.31 per share
Proportional net debt at the end of June reduced by US$68 million to US$3.1 billion
Cash dividend of US$0.21 per share paid on May 3, 2016
SBM Offshore reiterates its 2016 Directional revenue guidance of at least US$2.0 billion, of which US$0.6-0.7 billion is expected in the Turnkey segment and US$1.3-1.4 billion in the Lease and Operate segment. SBM Offshore also reconfirms the 2016 Directional EBITDA guidance of around US$750 million.
Directional revenue for the first half of 2016 declined by 40% to US$939 million versus US$1,572 million in the year-ago period, reflecting the expected slowdown in Turnkey activity levels due to continued difficult oil and gas market conditions.
Directional Turnkey revenue decreased by US$692 million from the year-ago period to US$338 million for the first half of 2016. This reflects lower activity on the construction of the FPSOs Cidade de Maricá, Cidade de Saquarema and Turritella, the finalization of the remaining turret projects, the positive effect in 2015 of the divestment of a 45% stake in the Turritella project to joint venture partners and the lack of significant order intake over the periods.
Directional Lease and Operate revenue increased by 11% versus the first half of 2015 mainly due to the commencement of production of FPSO Cidade de Maricá which was on hire commencing February 7, 2016 and the contribution of the Production Handling Agreement signed in September 2015 with Noble to connect the Big Bend and Dantzler fields to the Thunder Hawk DeepdraftTM Semi in the U.S. Gulf of Mexico.
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.
SBM Offshore provides floating production solutions to the offshore energy industry, over the full product life-cycle. SBM Offshore is market leading in leased floating production systems with multiple units currently in operation and has unrivalled operational experience in this field.
SBM Offshore’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, 2015, Group companies employed approximately 7,000 people worldwide. Full time company employees (4,900) are spread over five regional centers, eleven operational shore bases and the offshore fleet of vessels. A further 2,100 are working for the joint ventures with several construction yards.