Release Date: August 08, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- SBM Offshore NV (SBFFF, Financial) reported a significant increase in EBITDA, up nearly 40% to $620 million, prompting an upward revision of the full-year guidance to around $1.3 billion.
- The company's backlog reached a record level of $33.7 billion, driven by the award of the Jaguar FPSO contract, translating into $9.6 billion of net cash.
- A new share buyback program of EUR65 million was announced, in addition to the previously announced EUR65 million buyback, reflecting strong financial performance.
- SBM Offshore NV (SBFFF) successfully launched its eighth Fast4Ward MPF hull, reserved by TotalEnergies for the Block 58 development in Suriname, and ordered a ninth hull to maintain market positioning.
- The company is expanding into new strategic regions, securing a 20-year lease and operate contract for the FSO supporting Woodside's Trion field development project in Mexico.
Negative Points
- The company's uptime for the first half of 2024 was slightly lower than usual at 96.4%, due to shutdowns in two units, impacting operational performance.
- Net debt increased by $455 million, reflecting drawdowns to support the current construction portfolio, which could affect financial flexibility.
- The Angola business rationalization resulted in a negative impact on EBITDA, although it was partially offset by other factors.
- Despite strong performance, the company faces challenges in maintaining its competitive edge in a tight supply chain market, necessitating strategic planning.
- The transition to new business models, such as sale and operate, introduces variability in cash flow and margin, requiring careful management.
Q & A Highlights
Q: Can you clarify the net cash flow chart and whether Turnkey costs are included?
A: Yes, Turnkey costs are included for the period of construction, so you only need to consider the $75 million in other EBITDA as a proxy. (Douglas Wood, CFO)
Q: Why is SBM Offshore pursuing the smaller Trion FSO project?
A: The Trion project allows SBM Offshore to enter the Mexican market and add Woodside to its client portfolio. It also helps maintain competencies in turrets and disconnectable turrets, which are strategic for future projects. (Oivind Tangen, CEO)
Q: What are the dynamics behind operators buying back vessels earlier in the BOT model?
A: The purchase options are part of the BOT agreements, and it's up to the clients to decide based on their cash flow optimization strategies. (Oivind Tangen, CEO)
Q: Can you provide insights into the Suriname Block 58 reserves and the status of the Mondo and Saxi FPSOs?
A: SBM Offshore does not estimate reserves; it provides FPSOs based on client specifications. Mondo is extended, and discussions are ongoing for Saxi's future strategy. (Oivind Tangen, CEO)
Q: What is the impact of the sale and operate model on SBM Offshore's net cash backlog?
A: The sale and operate model accelerates cash flow during the Turnkey phase, improving the overall Turnkey P&L. The Jaguar FPSO award significantly increased the net cash backlog. (Douglas Wood, CFO)
Q: What is the rationale behind doubling the share buyback program?
A: The decision is based on strong performance, reduced risk in the project portfolio, and liquidity forecasts. The buyback will continue at the same pace through the first quarter of next year. (Douglas Wood, CFO)
Q: What is the opportunity set for SBM Offshore in floating power generation?
A: SBM Offshore is exploring business models and technical feasibility for decarbonized power supply to offshore assets, potentially consolidating power supply through a power barge. (Oivind Tangen, CEO)
Q: What are the expected impacts if ExxonMobil exercises purchase options for FPSOs Destiny and Prosperity?
A: If exercised, there would be a reduction in debt by over $1 billion and an EBITDA impact of over $500 million, depending on timing. (Douglas Wood, CFO)
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
