SBM Offshore First Quarter Trading Update

REVENUE ON TRACK; REITERATING GUIDANCE 

Highlights

  • Year-to-date 2017 Directional[1] revenue in line with Management expectations at US$420 million
  • New 5-year Operating and Maintenance contract signed for FPSO Serpentina
  • Increased dividend of US$ 0.23 per share as compared to US$0.21 last year (up c.17% in Euros), to be paid on May 12, 2017
  • Reiterating 2017 Directional revenue and EBITDA guidance of around US$1.7 billion and around US$750 million, respectively

 

Bruno Chabas, CEO of SBM Offshore commented:

“Today we report revenues which are in-line with full year guidance. The results underline the importance of the Lease and Operate segment, the revenues of which are not oil price dependent and are contractually secured for many years to come. This segment’s quarterly revenues have grown c. 30% compared to Q1 2016 driven by the new FPSO deliveries during the course of last year. The decrease in Turnkey compared to the same period last year was expected based on the low order intake since the oil price downturn. Based on our engagement with clients, we see signs of recovery for the deepwater market in the medium term, albeit, as previously stated, we see that structurally the market is unlikely to return to historical levels. In this environment, the strength of our Lease and Operate business leaves us well positioned and enables us to maintain a commercially disciplined approach. On the basis of the solid performance of our lease fleet, I am pleased to reiterate full-year guidance, which includes overall EBITDA at a similar level to last year.”

 

Financial Highlights

 

Year-to-date 2017 Directional revenue came in at US$420 million versus US$442 million in the year-ago period. This decrease was driven by the low Turnkey activity level as the last major projects were delivered in 2016. Revenues from the Lease and Operate segment increased due to the additions to the fleet during 2016, which largely offset the Turnkey decrease.

Directional Turnkey segment revenue decreased by 72% to US$42 million, while Lease and Operate segment revenue increased 29% from the year-ago period to US$378 million. The growth in Lease and Operate revenue is mostly attributable to the fact that the 2016 delivered FPSOs Cidade de Maricá, Cidade de Saquarema and Turritella contributed to the result during the first quarter in 2017.

Compared to end December 2016, proportional net debt as of March 31, 2017 decreased slightly to just below US$3.1 billion. Cash flow from Lease and Operate was mainly allocated to interest and loan redemption, acquisition of a vessel, structural expenses and the planned decrease in trade payables associated with the 2016 FPSO deliveries.

Lease fleet

FPSO Serpentina (Equatorial Guinea)

On March 3, 2017, GEPsing – a joint venture company between SBM Offshore (60%) and the National Oil Company of Equatorial Guinea, GEPetrol (40%) – was awarded a new 5-year contract by MEGI (Mobil Equatorial Guinea Inc.) to operate and maintain the FPSO Serpentina with effective date April 1, 2017. FPSO Serpentina is located on the Zafiro field offshore Equatorial Guinea and is owned by MEGI. Constructed by SBM Offshore, the FPSO achieved first oil in July 2003 and operates at a water depth of c. 500 meters with a maximum throughput capacity of 110,000 bopd. GEPsing also operates FPSO Aseng.

Compliance

Discussions with the Brazilian authorities and Petrobras regarding the Leniency Agreement signed on July 16, 2016, that was subsequently sent back by the Brazilian Fifth Chamber to the Public Prosecutor for adjustments, are ongoing. The Leniency Agreement is also under review by the Federal Court of Accounts (Tribunal de Contas da União).

Under the current interpretation of the tender rules in Brazil, the Company can participate in tenders, but it cannot be awarded a contract until the Leniency Agreement is final. The Company challenges this position as it considers this situation to be unsatisfactory in light of its ongoing efforts to reach a final resolution.

In the United States, the Company discussions with the Department of Justice (“DOJ”) are advancing. These regard the investigation the DOJ had closed in November 2014 and reopened early 2016 and its inquiry into Unaoil, a company that SBM Offshore had engaged as an agent prior to 2012 in relation to delivery of barges, offshore terminals and maintenance.

Pending the discussions with the Brazilian authorities and the DOJ, the Company cannot provide further clarity or assurance on the outcomes of these discussions, or on the timing thereof.

Post-Period Events

Dividend

On April 13, 2017, the Annual General Meeting of Shareholders (AGM) voted in favor of the proposed US$0.23 per ordinary share dividend distribution. Dividends are to be paid in Euros using an exchange rate of 1.0655, which equates to €0.2159 per ordinary share and represents an increase of 17% compared to the previous year. The cash dividend will be paid on May 12, 2017 to all shareholders of record as of April 20, 2017.

Share cancellation

Pursuant to a resolution by the AGM on April 13, 2017, SBM Offshore has started the formal process for cancellation of 7.8 million ordinary shares. These shares are currently held in treasury by the Company resulting from the share repurchase program which was completed in 2016. Remaining shares will be held in treasury as these will be allocated to employee share programs or may be cancelled at a later moment in time.

Outlook and Guidance

As anticipated, the offshore oil and gas market continues to show early signs of recovery, with a gradual improvement expected over time. Management maintains its positive medium and long-term outlook as deep water development has significantly improved in competitiveness and as such is likely to remain an indispensable energy source for the foreseeable future.

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$0.2 billion in the Turnkey segment. The Company also confirms the 2017 Directional EBITDA guidance of around US$750 million.

 

Conference Call

SBM Offshore has scheduled a conference call followed by a Q&A session at 10:00 am Central European Summer Time on Wednesday, May 10, 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 658643# until June 10, 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 Board
Amsterdam, the Netherlands, May 10, 2017

 

Financial Calendar Date Year
Half-Year 2017 Earnings – Press Release August 8 2017
Trading Update 3Q 2017 – Press Release November 7 2017
Full-Year 2017 Earnings – Press Release February 7 2018
Annual General Meeting of Shareholders April 11 2018

 

For further information, please contact:

Investor Relations

Bert-Jaap Dijkstra

Investor Relations Director

Mobile NL:

Mobile MC:

+31 (0) 6 2114 1017

+33 (0) 6 4391 9302

Telephone: +377 9205 1732
E-mail: Bert-Jaap Dijkstra
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
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.