Under Directional reporting, Turnkey activity is booked as capital expenditure adding to property, plant and equipment for the portion of the asset which is built for own account. At present, FPSO Liza is 100% owned by SBM Offshore and as such did not contribute to the Company`s revenue line during the period.
Compared to year-end 2016, directional net debt as of September 30, 2017 decreased by c. US$400 million to c. US$2.6 billion, due to positive operating cash flow from Lease and Operate and cash received under the Yme settlement. Part of the Yme settlement monies are required to be used to reimburse legal fees and other claim related expenses incurred to date. The remainder of the settlement monies will be equally distributed between SBM Offshore and project partner Repsol in accordance with the terms of a Settlement Agreement made on March 11, 2013 which concluded the Yme project.
SBM Offshore continues to pursue its claim against all remaining insurers including the two excess layers, with trial proceedings scheduled to commence October 2018.
Compliance Update
In a separate press release dated November 6, 2017 the Company provided an update on its compliance-related legacy issues in the United States and Brazil. A summary is provided below, however, for further information and detail, reference is made to this separate release.
United States
The Company is in advanced discussions with the United States DoJ concerning a potential resolution of the DoJ`s investigation that the DoJ had closed in 2014 and reopened in 2016 and its inquiry into the Company`s relationship with Unaoil. Based on these investigations and the applicable U.S. statutory rules, the DoJ has concluded that the evidence not only supports jurisdiction in the United States but also requires a further penalty in the Unites States. Confronted with the DoJ`s conclusions and in anticipation of a final resolution, the Company has made a provision of US$238 million.
The proposed terms under discussion reflect confidence in the quality of the Company`s compliance program and efforts by current management.
Final resolution with the DoJ remains subject to, amongst other matters, agreement on the terms and conditions of the resolution, including subsequent approval thereof by the Company`s Supervisory Board.
Brazil
The discussions relating to the leniency agreement which was signed on July 16, 2016 but which was ultimately sent back for adjustment to the Public Prosecutor by the Brazilian Fifth Chamber for Coordination and Review and Anti-corruption are complex. It has transpired that two leniency agreements are now required which necessitate agreement and coordination among the multiple parties involved. Consequently, a resolution has not yet been reached.
The Company confirms its commitment to close out its legacy issues in Brazil and its willingness in principle to pay the previously agreed substantial amounts. However, to enter into the proposed 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. In view of the current situation, the Company cannot guarantee that a satisfactory resolution will be reached. The Company will await resolution before participating in Petrobras-operated tenders.
Impairment Review
The following non-cash adjustments to the accounts are the result of SBM Offshore`s regular review as part of its planning process.
Because offshore oil and gas industry conditions continue to be challenging, SBM Offshore expects a reduced utilization of its Diving Support and Construction Vessel (DSCV) SBM Installer. As a result, the contract continues to be classified as onerous and the non-cash provision is to be increased by c. US$30 million, to be recognized in the Gross Margin of the Turnkey segment. SBM Offshore`s investment (25% ownership) in the Joint Venture which owns the vessel is consolidated using equity accounting.
As the activity outlook for the Paenal construction yard operating in Angola has continued to deteriorate, SBM Offshore`s investment in the Joint Venture owning the Paenal construction yard (30% ownership) is to be fully impaired to a net book value of zero, resulting in an additional impairment charge of c. US$30 million. Because this investment is consolidated using the equity method, this non-cash impairment is to be recognized in the Company`s consolidated income statement on the line item share of profit of equity-accounted investees.
Project Review
FPSO Liza
An agreement with Keppel Shipyard Ltd (Keppel Shipyard) was signed for the conversion of a Very Large Crude Carrier (VLCC) into an FPSO for the Liza project offshore Guyana, operated by an ExxonMobil affiliate. The shipyard`s work scope includes refurbishment and life extension works, such as the upgrading of living quarters, fabrication and installation of spread mooring systems, as well as the installation and integration of topside modules. The VLCC is scheduled to arrive at the shipyard in November 2017 with vessel related work scope planned to commence by the end of this year.
Operational update
SBM Offshore continued to improve its safety performance with a Reported Total Recordable Injury Frequency Rate (TRIFR) below its 2017 target of 0.32.
The Lease and Operate fleet uptime performance year-to-date was 98.5% compared to 96.4% for the year 2016.
Dow Jones Sustainability Index ("DJSI")
On September 11, 2017, for the eighth consecutive year, SBM Offshore was included as an index component of the DJSI (Energy Equipment & Services industry).
Outlook and Guidance
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$200 million in the Turnkey segment. The Company also reiterates its underlying Directional EBITDA guidance of above US$750 million.
The accounting for the Turritella sale will impact both 2017 and 2018 Directional accounts. The partner compensation and costs relating to the unwinding of the loan and hedge will be booked in 2017. The former will impact EBITDA, the latter net financing cost. The net gain on disposal will be booked in 2018, impacting EBITDA.
Underlying 2017 Directional EBITDA guidance excludes impacts relating to the non-cash provision relating to the SBM Installer charter contract, one-off elements of the Yme settlement, the partner compensation booked on the sale of FPSO Turritella and the provision for US DoJ settlement. These impacts are currently estimated to have an aggregate impact on EBITDA in excess of US$200 million.
Conference Call
SBM Offshore has scheduled a conference call followed by a Q&A session at 10:00 am Central European Time on Wednesday, November 8, 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 126152# until December 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 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, November 8, 2017
| 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 |
Note: date in bold was changed from May 10, 2017 before market opening to May 9, 2017 after market close to accommodate Ascension Day
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: | +31 20 236 3222 |
| 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. 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.
SBM OFFSHORE THIRD QUARTER TRADING UPDATE
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The issuer of this announcement warrants that they are solely responsible for the content, accuracy and originality of the information contained therein.
Source: SBM Offshore N.V. via GlobeNewswire
HUG#2147988
