SBM Offshore Full Year 2023 Earnings
February 29, 2024
Record-level Revenue and EBITDA, increasing total shareholder
returns
Highlights
- Record-level Directional1 Revenue of US$4.5 billion (+38%),
above guidance
- Record-level Directional EBITDA of US$1.3 billion (+31%), in
line with guidance
- US$30.3 billion Directional backlog; US$9.3 billion or
EUR46.6/share2 Directional net cash from L&O and BOT3
backlog4
- Evolving shareholder return policy: flexibility to pay
committed annual cash return via dividend and share repurchase
- 12% increase in annual cash return to shareholders of US$220
million
- Cash return composed of US$150 million proposed dividend and
EUR65 million (US$70 million equiv.5) share repurchase
- 2024 Directional Revenue guidance of around US$3.5 billion
- 2024 Directional EBITDA guidance of around US$1.2 billion
- Successful sale of FPSO Liza Unity, Whiptail FEED award,
10-year OMEA for Guyana FPSO fleet, and FPSOs Prosperity &
Sepetiba 1st oil
- 70% FPSO CO2 emissions reduction potential from CO2 capture
solution offered in partnership with MHI
SBM Offshore’s 2023 Annual Report can be found
on its website under:
https://2023.annualreport.sbmoffshore.com/
Bruno Chabas, CEO of SBM Offshore,
commented:
“In 2023, we delivered record level financial
performance and maintained our future backlog at more than US$30
billion. We expect to generate US$9.3 billion net cash from the
Lease and Operate (“L&O”) and Build-Operate-Transfer (“BOT”)
sales components of this backlog, equivalent to EUR46.6/share6.
Over the past 5 years we have grown this backlog of future net cash
by US$2.9 billion whilst at the same time returning US$1.3 billion
to shareholders.
This performance reflects the uniquely
recognized competitive positioning of SBM Offshore, the resilience
of our business model and strong organizational capability to
execute our strategy. In 2023, we delivered and commissioned two
large FPSOs in industry-leading timeframes, adding significant
value for our clients. The gross margin for our portfolio of
construction projects remained robust. The 10-year Operations and
Maintenance Enabling Agreement (“OMEA”) in Guyana establishes a new
benchmark which can be applied to other clients, demonstrating our
ability to develop new models and respond to the dynamics of an
evolving financing market. On the financing front, we raised US$3.2
billion for two FPSO projects, securing the financing of the entire
construction portfolio.
We have a positive outlook on the market given
the economics and low emission qualities of deepwater resources. We
have secured the FEED award and reserved an MPF hull for FPSO
Jaguar for the Whiptail project in Guyana. The carbon capture
solution developed in partnership with Mitsubishi Heavy Industries,
Ltd. (“MHI”) aims to reduce FPSO emissions by up to 70%. As a
result, we are on target to offer a near zero emission FPSO to the
market in 2025, a key enabler of our 2050 net zero ambition.
Our expertise in traditional oil and gas
deepwater floating systems can be applied to alternative energies
such as floating offshore wind, hydrogen and ammonia. The Provence
Grand Large windfarm, where three 8.4 MW floating wind units were
successfully installed in October, is a testament to our capacity
to make innovative ideas come true and contribute to the energy
transition. We will pace our activities in alternative energies in
line with market developments, remaining selective and
disciplined.
Our strong financial and operational performance
and the positive outlook for our business through the energy
transition and beyond seem to be under-appreciated by the market.
This is the catalyst for the evolution of our shareholder returns
policy: we are introducing flexibility to pay our annual committed
fixed cash return via share repurchase in combination with
dividend. Based on this we are increasing our fixed cash return by
12% to US$1.22 per share to be paid US$0.83 per share in dividend7
and US$0.39 per share via share repurchase8.
It has been a huge privilege to serve the
Company as CEO for the last 12 years. I have had the honor of
leading a team of talented, dedicated and passionate people in
transforming SBM Offshore. Today, the Group has a well-established
vision, purpose, and structure with a recognized leading market
position and strong growth prospects in the industry. I am
especially proud that SBM Offshore has a leadership team which
makes an internal succession possible and am extremely pleased to
hand over my responsibilities to Øivind Tangen and a talented team
of SBMers. Øivind will successfully guide the Company to achieve
its ambitious energy transition targets by focusing on the Company
strengths.”
Financial Overview9
|
|
Directional |
|
IFRS |
|
|
|
|
|
|
|
|
|
in US$
million |
|
FY 2023 |
FY 2022 |
% Change |
|
FY 2023 |
FY 2022 |
% Change |
Revenue |
|
4,532 |
3,288 |
38% |
|
4,963 |
4,913 |
1% |
Lease and Operate |
|
1,954 |
1,763 |
11% |
|
1,563 |
1,414 |
11% |
Turnkey |
|
2,578 |
1,525 |
69% |
|
3,400 |
3,499 |
-3% |
EBITDA |
|
1,319 |
1,010 |
31% |
|
1,239 |
1,209 |
3% |
Lease and Operate |
|
1,124 |
1,080 |
4% |
|
695 |
719 |
-3% |
Turnkey |
|
296 |
7 |
>500% |
|
646 |
569 |
14% |
Other |
|
(101) |
(77) |
-31% |
|
(101) |
(80) |
-26% |
Profit attributable to
Shareholders |
|
524 |
115 |
354% |
|
491 |
450 |
9% |
Earnings per share (US$ per
share) |
|
2.92 |
0.65 |
350% |
|
2.74 |
2.53 |
8% |
|
|
|
|
|
|
|
|
|
in US$
billion |
|
FY 2023 |
FY 2022 |
% Change |
|
FY 2023 |
FY 2022 |
% Change |
Pro-forma Backlog |
|
30.3 |
30.5 |
-1% |
|
- |
- |
- |
Net Debt |
|
6.7 |
6.1 |
10% |
|
8.7 |
7.9 |
10% |
Directional revenue for 2023 stood at US$4,532
million, a 38% increase when compared with 2022, primarily
attributable to the Turnkey segment.
Directional Turnkey revenue increased by 69% to
US$2,578 million compared with 2022. The strong increase was mainly
driven by the sale of FPSO Liza Unity completed in November 2023.
Turnkey revenue was additionally positively impacted by (i) the
start of FEED work for FPSO Jaguar, and (ii) additional variation
orders on FPSO Prosperity. The increase in turnkey revenue was
partially offset by (i) the comparative impact from the partial
divestment of FPSO Almirante Tamandaré and FPSO Alexandre de Gusmão
at the beginning of 2022, (ii) the completion of the FPSO Liza
Unity project in February 2022 and (iii) a reduced level of
progress during the period compared with the year-ago period on
FPSO Almirante Tamandaré and FPSO Alexandre de Gusmão consistent
with the commencement of topsides' integration.
Directional Lease and Operate revenue was
US$1,954 million, an increase versus US$1,763 million in the prior
period. This mainly reflects (i) FPSO Prosperity joining the fleet
upon successful delivery of the EPCI project during the last
quarter of 2023, and (ii) an increase in reimbursable scopes and an
improved performance of the fleet, partially offset by (iii) FPSO
Capixaba moving to the decommissioning phase after finishing
production in 2022 (no contribution to revenue in 2023).
Directional EBITDA was US$1,319 million,
representing a 31% increase compared with US$1,010 million in 2022.
This was mostly attributable to the Turnkey segment which increased
from US$7 million in 2022 to US$296 million in 2023. The increase
was driven by the sale of FPSO Liza Unity which was partly offset
by (i) some prior period positive one-off impacts including a US$9
million gain recognized in the year-ago period from the disposal of
the SBM Installer, (ii) the completion of FPSO Liza Unity project
in February 2022, (iii) the reduced level of progress on FPSO
Almirante Tamandaré and FPSO Alexandre de Gusmão during the current
year consistent with the commencement of topsides' integration, and
(iv) impacts linked to pressure on the global supply chain and the
consequences of the pandemic.
Directional Lease and Operate EBITDA was
US$1,124 million an increase versus US$1,080 million in the
year-ago period. This increase resulted from the same drivers as
for the Lease and Operate revenue partially offset by additional
non-recurring maintenance costs on the fleet under operation and
some prior period positive one-off impacts.
The other non-allocated costs charged to EBITDA
amounted to US$(101) million in 2023, a US$(24) million increase
compared with the US$(77) million in the year-ago period which is
mainly explained by the implementation of an optimization plan
related to the Company's support functions' activities (including
US$11 million of restructuring costs), and continuing investment in
the Company's digital initiatives.
Directional net profit increased to US$524
million in 2023, or US$2.92 per share, compared with US$115 million
in the year-ago period. The increase was mainly the result of the
increase in Directional EBITDA in 2023.
Liquidity, Funding and Directional Net
Debt
The Company’s financial position has remained
strong as a result of the cash flow generated by the fleet, as well
as the positive contribution of the Turnkey activities.
Directional Net debt increased by US$572 million
to US$6,654 million at year-end 2023. While the Lease and Operate
segment continues to generate strong operating cash flow together
with the net cash proceeds from the sale of FPSO Liza Unity, the
Company drew on the project finance facilities for FPSO Prosperity,
FPSO ONE GUYANA, FPSO Almirante Tamandaré, FPSO Alexandre de
Gusmão, the Revolving Credit Facility and the new Revolving Credit
Facility for MPF hull financing.
To diversify its sources of debt and equity
funding and to accelerate equity cash flow from the backlog, the
Company finalized the funding loan agreement with CMFL and received
US$125 million in relation to FPSO Cidade de Ilhabela.
Almost half of the Company’s debt at year-end
2023 consisted of non-recourse project financing (US$3.3 billion)
in special purpose investees. The remainder (US$3.8 billion)
consisted mainly of borrowings to support the ongoing construction
of 3 FPSOs which will become non-recourse following completion of
construction, the project loan for FPSO Sepetiba (following start
up, this has recently become non-recourse), the new US$210 million
RCF for MPF hull financing fully drawn to fund MPF capital
expenditure, and US$550 million drawn under the RCF as at December
31, 2023.
Directional cash and cash equivalents amounted
to US$563 million and lease liabilities totaled US$85 million at
December 31, 2023.
Cash and undrawn committed credit facilities
amount to US$2,276 million at December 31, 2023.
Directional Pro-Forma Backlog
Change in ownership scenarios and lease contract
duration have the potential to significantly impact the Company's
future cash flows, net debt balance as well as the profit and loss
statement. The Company therefore provides a pro-forma Directional
backlog based on the best available information regarding ownership
scenarios and lease contract duration for the various projects.The
pro-forma Directional backlog at the end of December 2023 slightly
decreased by US$0.2 billion to a total of US$30.3 billion. This was
mainly the result of (i) the signed 10-year OMEA for the Guyana
FPSO fleet and (ii) the awarded initial scope to begin FEED
activities and secure a Fast4Ward® hull for FPSO Jaguar, offset by
turnover for the period which consumed approximately US$4.5 billion
of backlog (including the sale of FPSO Liza Unity completed in
November 2023 a few months ahead of the end of the maximum lease
term in February 2024). The Company's backlog provides cash flow
visibility up to 2050.
in US$
billion |
|
Turnkey |
Lease & Operate |
Total |
2024 |
|
0.5 |
2.2 |
2.7 |
2025 |
|
1.3 |
2.5 |
3.8 |
2026 |
|
0.1 |
2.6 |
2.7 |
Beyond
2026 |
|
2.1 |
19.0 |
21.1 |
Total Directional Backlog |
|
|
|
30.3 |
The pro-forma Directional backlog at the end of
2023 reflects the following key assumptions:
-
The FPSO Liza Destiny contract covers the basic contractual term of
10 years of lease.
-
The FPSOs Prosperity and ONE GUYANA contracts cover a maximum
period of lease of two years, within which the FPSOs ownership will
transfer to the client.
-
10 years of operations and maintenance is considered for FPSOs Liza
Destiny, Liza Unity, Prosperity and ONE GUYANA following signature
of the OMEA in 2023.
-
The impact of the subsequent sale of FPSOs Prosperity and ONE
GUYANA is reflected in the Turnkey backlog at the end of the
maximum two-year period.
-
With respect to FPSO Jaguar, for which the full construction,
installation and operations contracts award is subject to necessary
government approvals and final work order to be received from the
client, the amount included in the pro-forma backlog is limited to
the value of the initial limited release of funds to the Company to
begin FEED activities and secure a Fast4Ward® hull.
-
The 13.5% equity divestment in FPSO Sepetiba to CMFL has not yet
been reflected in the backlog as the transaction remains subject to
various approvals, which include the consent from co-owners,
lenders and export credit agencies.
For further details of the overall assumptions
applicable to the backlog, please refer to the 2023 Annual
Report.
Project Review
Project |
Client/country |
Contract |
SBM Share |
Capacity, Size |
Percentage of Completion |
Expected First Oil |
Almirante Tamandaré |
Petrobras Brazil |
26.25-year L&O |
55% |
225,000 bpd |
>75% |
2025 |
Alexandre de Gusmão |
Petrobras Brazil |
22.5-year L&O |
55% |
180,000 bpd |
>75% |
2025 |
ONE GUYANA |
ExxonMobil Guyana |
2-year
BOT |
100% |
250,000 bpd |
>50% <75% |
2025 |
Projects remain on track with two major
deliveries achieved by year-end. FPSO Prosperity joined the fleet
in Guyana, achieving first oil on November 14, 2023. FPSO Sepetiba
achieved first oil on December 31, 2023, and was formally on hire
as of January 2, 2024. An update on individual projects under
construction is provided below considering latest known
circumstances.
FPSO Almirante Tamandaré – The topside modules
lifting campaign is reaching completion. Integration and
commissioning activities are progressing in line with plan. The
FPSO delivery continues to be on track for 2024 and the client is
expecting first oil from the field in early 2025.
FPSO Alexandre de Gusmão – The topside modules
lifting campaign is progressing along with their integration. First
oil is expected in 2025.
FPSO ONE GUYANA – The topsides fabrication is
progressing in line with plan allowing the commencement of the
lifting campaign. First oil is expected in 2025.
Fast4Ward® MPF hulls – The total number of MPF
hulls ordered to date under the Company’s Fast4Ward® program,
stands at eight with six delivered to projects and exclusivity for
the seventh allocated to FPSO Jaguar.
Fleet Operational UpdateFleet Uptime –
The fleet’s uptime was 98.2%10 in 2023, in line with historical
performance.
Operations and Maintenance Enabling Agreement -
On May 02, 2023, SBM Offshore announced a 10-year Operations and
Maintenance Enabling Agreement with Esso Exploration &
Production Guyana Ltd. for the operation and maintenance of the
fleet of FPSOs in Guyana with estimated impact on the revenue
backlog of around US$3 billion11. As a result, an integrated
operating model has been established with ExxonMobil Guyana,
leveraging the combined operational excellence of both parties.
Share Purchase Agreements signed with Sonangol
entities – In July 2023, SBM Offshore signed two Share Purchase
Agreements with its partner Sonangol EP for (i) the acquisition of
Sonangol's equity shares in the lease and operating entities
related to FPSOs N’goma, Saxi Batuque and Mondo; and (ii) the full
divestment to a Sonangol subsidiary of SBM Offshore’s equity shares
in the parent company of the Angolan based Paenal Yard. Those
agreements remain conditional upon several conditions precedent,
including consent from clients, partners and approval by various
competent authorities. Therefore, there was no impact considered in
2023 from theses share purchase agreements. Through this
transaction, SBM Offshore is reorganizing its business in Angola,
focusing on core lease and operate activities and divesting a
non-core construction yard.
Safety and SustainabilitySafety – The
Company’s Total Recordable Injury Frequency Rate for the year was
0.08 compared with the full year 2023 target of below 0.1412. For
2024 the target is set to below 0.12.
Responsible recycling – In Brazil,
decommissioning of FPSO Capixaba is under final phase. The unit is
scheduled to depart Brazil around mid-2024 for recycling at an EU
approved green recycling facility in Denmark. Deep Panuke Recycling
has been completed with a recycling rate of 97%.
Emissions – For 2023, the Company targeted an
absolute volume of gas flared below 1.48 mmscft/d as an overall
FPSO fleet average during the year. As of December 31, 2023 SBM
Offshore outperformed with the actual being 1.18 mmscft/d, which is
17% lower compared with 2022.
Net-zero ambitions In support of its 2050
net zero ambition, SBM Offshore has created intermediate targets.
By 2030, the Company aims for net-zero on scope 1 and 2 emissions
and a 50% reduction of GHG intensity on scope 313 as well as zero
routine flaring. The Company is on track to meet these targets.
By 2025, under its emissionZERO® program, the
Company has an ambition to offer near zero emission FPSOs as a key
enabler of the energy transition. During 2023, a partnership
agreement with MHI was concluded to offer a CO2 capture solution:
the technology can reduce CO2 emissions from overall FPSO
operations by an estimated 70%.
Sustainable Development GoalsThe Company uses
the United Nations’ Sustainable Development Goals (SDG) framework
to further embed sustainability into its operations with targets
linked to Management Board and employee short-term incentive
schemes. For the year 2023, the Company set 14 SDG-linked targets
out of which 13 have been met or exceeded.
Energy Transition
Floating offshore wind – SBM Offshore has
installed its first commercial pilot project in floating offshore
wind. The three 8.4 MW floaters for the Provence Grand Large
project, jointly owned by EDF Renewables and Maple Power, accounted
for around 10% of the globally installed floating wind electricity
generation capacity in 2023. This is the first floating offshore
wind project installed in France and the first project worldwide
using tension leg mooring technology, which has minimal motion and
seabed footprint. The floating offshore wind market will take time
to further develop and become commercially mature: SBM Offshore is
investigating partnerships to facilitate its pursuit of this
promising market on a sustainable basis.
Future Energy Markets - SBM Offshore’s expertise
in traditional oil and gas deepwater floating systems can be
applied to alternative energies such as hydrogen and ammonia and
carbon capture utilization and storage. Associated R&D
activities are ongoing. The Company will remain selective and
disciplined, pacing its activities in line with relevant market
developments.
Capital allocation and Shareholder
Returns
The Company is evolving its shareholder returns
policy as follows: “The Company’s shareholder returns policy is to
maintain a stable annual cash return to shareholders which grows
over time, with flexibility for the Company to make such cash
return in the form of a cash dividend and the repurchase of shares.
Determination of the annual cash return is based on the Company’s
assessment of its underlying cash flow position. The Company
prioritizes a stable cash distribution to shareholders and funding
of growth projects, with the option to apply surplus capital
towards incremental cash returns to shareholders.” The policy will
be presented for discussion at the Annual General Meeting on April
12, 2024.
As a result, following review of its cash flow
position and forecast, the Company intends to pay a total cash
return to shareholders of US$220 million in 2024. This represents
an increase of 12% compared with the dividend paid in 2023. The
cash return is to be composed of a proposed dividend of US$150
million (equivalent to c. US$0.83 per share14) combined with a
EUR65 million (US$70 million equivalent15) share repurchase
program. Shares repurchased as part of the cash return will be
cancelled. The share repurchase program will be launched on March
1, 2024, and the dividend will be proposed at the Annual General
Meeting on April 12, 2024. Going forward, the Company intends to
maintain a material level of dividend as part of the annual cash
return with US$150 million as a base level.
Guidance
The Company’s 2024 Directional revenue guidance
is around US$3.5 billion of which around US$2.2 billion is expected
from the Lease and Operate segment and around US$1.3 billion from
the Turnkey segment.
2024 Directional EBITDA guidance is around
US$1.2 billion for the Company.
Conference Call
SBM Offshore has scheduled a conference call
together with a webcast, which will be followed by a Q&A
session, to discuss the Full Year 2024 Earnings release.The event
is scheduled for Thursday, February 29, 2024 at 10.00 AM (CET) and
will be hosted by Bruno Chabas (CEO), Øivind Tangen (COO) and
Douglas Wood (CFO).Interested parties are invited to register prior
the call using the link: Full Year 2023 Earnings Conference
CallPlease note that the conference call can only be accessed with
a personal identification code, which is sent to you by email after
completion of the registration.The live webcast will be available
at: Full Year 2023 Earnings WebcastA replay of the webcast, which
is available shortly after the call, can be accessed using the same
link.
Corporate Profile
SBM Offshore designs, builds, installs and
operates offshore floating facilities for the offshore energy
industry. As a leading technology provider, we put our marine
expertise at the service of a responsible energy transition by
reducing emissions from fossil fuel production, while developing
cleaner solutions for alternative energy sources.
More than 7,400 SBMers worldwide are committed
to sharing their experience to deliver safe, sustainable and
affordable energy from the oceans for generations to come.
For further information, please visit our
website at www.sbmoffshore.com.
Financial Calendar |
|
Date |
Year |
Annual General Meeting |
|
April
12 |
2024 |
First Quarter 2024 Trading Update |
|
May
8 |
2024 |
Half Year 2024 Earnings |
|
August
8 |
2024 |
Third Quarter 2024 Trading Update |
|
November 14 |
2024 |
Full Year 2024 Earnings |
|
February 20 |
2025 |
For further information, please contact:
Investor RelationsWouter
HoltiesCorporate Finance & Investor Relations Manager
Mobile: |
+31 (0) 6 23 34 37 64 |
E-mail: |
wouter.holties@sbmoffshore.com |
Website: |
www.sbmoffshore.com |
Media RelationsEvelyn Tachau
BrownGroup Communications & Change Director
Mobile: |
+377 (0) 6 40 62 30 34 |
E-mail: |
evelyn.tachau-brown@sbmoffshore.com |
Website: |
www.sbmoffshore.com |
Market Abuse RegulationThis press release may
contain inside information within the meaning of Article 7(1) of
the EU Market Abuse Regulation.
DisclaimerSome 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. These statements may be identified by words such as
‘expect’, ‘should’, ‘could’, ‘shall’ and similar expressions. Such
forward-looking statements are subject to various risks and
uncertainties. The principal risks which could affect the future
operations of SBM Offshore N.V. are described in the ‘Impact, Risk
and Opportunity Management’ section of the 2023 Annual Report.
Should one or more of these risks or
uncertainties materialize, or should underlying assumptions prove
incorrect, actual results and performance of the Company’s business
may vary materially and adversely from the forward-looking
statements described in this release. SBM Offshore 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 new information, subsequent events or otherwise.
Nothing in this release shall be deemed an offer
to sell, or a solicitation of an offer to buy, any securities. The
companies in which SBM Offshore N.V. directly and indirectly owns
investments are separate legal entities. In this release “SBM
Offshore” and “SBM” are sometimes used for convenience where
references are made to SBM Offshore N.V. and its subsidiaries in
general. These expressions are also used where no useful purpose is
served by identifying the particular company or companies.
"SBM Offshore®", the SBM logomark, “Fast4Ward®”,
“emissionZERO®” and “Float4Wind®” are proprietary marks owned by
SBM Offshore.
1 Directional reporting, presented in the
Financial Statements under section Operating Segments and
Directional Reporting, represents a pro-forma accounting policy,
which treats all lease contracts as operating leases and
consolidates all co-owned investees related to lease contracts on a
proportional basis based on percentage of ownership. This
explanatory note relates to all Directional reporting in this
document.2 Based on the number of shares outstanding and exchange
rate EUR/USD of 1.105 at 31st of December 2023.
3 Lease and Operate (L&O), Build Operate
Transfer (BOT).4 Reflects a pro-forma view of the Company’s
Directional backlog and expected net cash from Lease and Operate
and Build Operate Transfer sales after tax and debt service.5 Based
on the EUR/USD exchange rate on February 22, 2024.6 Based on the
number of shares outstanding and exchange rate EUR/USD of 1.105 at
31st of December 2023.7 Based on the number of shares outstanding
at December 31, 2023. Dividend amount per share depends on number
of shares entitled to dividend. The proposed ex-dividend date is
April 16, 2024.8 Based on the foreign exchange rate on February 22,
2024. Share repurchase amount per share calculated based on the
number of shares outstanding amount at 31st of December 2023.
9 Numbers may not add up due to rounding.10
Fleet uptime without FPSO Mondo.11 Based on various operating and
maintenance assumptions.
12 Measured per 200,000 manhours.13 Scope 3 –
downstream leased assets.
14 Based on the number of shares outstanding at
December 31, 2023. Dividend amount per share depends on number of
shares entitled to dividend. The proposed ex-dividend date is April
16, 2024.15 Based on the foreign exchange rate on February 22,
2024.
- SBM Offshore Full Year 2023 Earnings
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