BW Energy: Third quarter 2023 results
THIRD QUARTER 2023 RESULTS
HIGHLIGHTS
- Q3 EBITDA of USD 49.7 million and net profit of USD 0.5
million
- Q3 gross production of 2.49 million barrels with 1.93 million
barrels net to BW Energy
- Completed one lifting of 950,000 barrels (net BWE) at a price
of USD 79 per barrel
- Start-up of two additional Hibiscus / Ruche production wells
and gas lift compressor
- Assumed 100% ownership and operatorship of Golfinho from late
August
- USD 80 million Golfinho prepayment facility and offtake
agreement completed and drawn
- Maintained strong balance sheet with cash position of USD 198
million
- Substantial oil discovery made in the Hibiscus South prospect
(November)
BW Energy, operator of the Dussafu Marine licence in Gabon and
the Golfinho cluster offshore Brazil, reported EBITDA for the third
quarter of 2023 of USD 49.7 million, up from USD 39.3 million in
the second quarter. Gross production from the operated assets was
27,400 barrels of oil per day in quarter, an increase of 80%
compared to the second quarter of 2023. This included a full
quarter of production from the Tortue and Hibiscus fields in the
Dussafu licence (73.5% working interest) and production from the
Golfinho field after assuming 100% ownership on 28
August.
"We continue to make significant progress on executing our
strategy, delivering strong production growth from Dussafu and by
becoming owner and operator of material production and cashflow in
Brazil, thereby also diversifying and our production and resource
base,” said Carl K. Arnet, the CEO of BW Energy. “We have also
fast-tracked our appraisal program offshore Gabon, making a
substantial oil discovery in the Hibiscus South satellite prospect.
This will rapidly be brought into production and provide us with
low-cost and low-risk access to high value barrels.”
FIELD OPERATIONS
BW Energy completed one lifting in the third quarter and
realised a price of USD 79 per barrel. BW Energy's share of gross
production was approximately 1.57 million barrels of oil, an
increase of over 50% from the prior quarter. The net sold volume,
which is the basis for revenue recognition in the financial
statement, was approximately 1 million barrels including 32,500
barrels of Domestic Market Obligation (DMO) deliveries with an
under-lift position of 116,000 barrels at the end of the
period.
Gross production from the Dussafu licence averaged approximately
23,200 barrels of oil per day in the quarter, amounting to a total
gross production of approximately 2.14 million barrels of oil for
the period. Production was positively impacted by first oil from
two additional Hibiscus wells and start-up of the additional gas
lift compressor on the FPSO BW Adolo, partly offset by challenges
with the ESPs (electrical submersible pumps) on the DHIBM-3H and
-4H wells. Production costs (excluding royalties) for the period
was approximately USD 28 per barrel. The decrease from previous
quarters reflects increased production.
While the ESPs were re-started in mid-October, the Company
continues to experience challenges impacting production. BW Energy
is working closely with the supplier to identify and resolve the
issues affecting the ESPs’ electrical system. Also in October, the
company completed on lifting of approximately 950,000 barrels to
the Company at an average price of about USD 90. The next lifting
to BW Energy is planned for end-November.
For 2023, the Company expects a total production of
approximately 6.7 million barrels from the Dussafu licence,
reflecting the continued ESP challenges. The annualised average
OPEX is expected at USD 30 per barrel. For 2024, the
production expectation is in the range of 10 to 12 million barrels
due to the ongoing ESP challenges.
Gross production from the Golfinho field averaged approximately
11,200 barrels of oil per day from the period 28 August to 30
September, amounting to a total production of 381,700 barrels in
the period. There were no liftings in the quarter. Production cost
(excluding royalties) averaged USD 48 per barrel for the period.
The first Golfinho lifting of about 521,500 barrels of oil was
concluded in early November. A second lifting is planned in
December. The take-over of FPSO Cidade de Vitória from Saipem is
awaiting ANP approval.
BW Energy had a cash balance of USD 197.6 million on 30
September 2023, compared to USD 233.5 million on 30 June 2023. The
decrease is primarily due to ongoing development of Hibiscus Ruche
and the Golfinho closing, offset by draw-down on the USD 80 million
Golfinho prepayment facility. The Company had a total drawn debt
balance of USD 380 million as of 30 September 2023 including the
prepayment facility.
DEVELOPMENT PLANS
The ongoing Hibiscus / Ruche Phase 1 drilling campaign comprises
eight firm wells. In addition to the four Hibiscus wells drilled to
date, the updated plan includes a fifth Hibiscus well, a Hibiscus
South development well, finalisation of the Ruche well, and a
Bourdon prospect test well. Drilling results to date show a larger
Hibiscus resource and a slightly smaller Ruche resource than
previously modelled, with management estimates of a net addition of
~10 million barrels oil in place.
In July and September, production commenced from the third and
fourth Hibiscus wells respectively. At the Ruche field, drilling
and completion activities on the DRM-3H production well were
suspended pending an alternative casing after encountering oil in
the Gamba reservoir. The Company expects to return to complete this
well later in the drilling campaign when additional casing material
is received.
Drilling of the Hibiscus South satellite prospect (DHBSM-1) was
completed after encountering commercial volumes of oil with
approximately 20 meters of pay in an overall hydrocarbon column of
26.5 meters in the Gamba formation. The Company plans to return to
the well to complete it as a production well in early 2024. The
Hibiscus South structure is a separate accumulation with a deeper
oil-water contact than the nearby Hibiscus Field, which increases
the Company’s reserve base and provides the opportunity to add one
or more additional production well in the current drilling
campaign.
The Hibiscus / Ruche drilling campaign has the potential to
bring total oil production on the Dussafu licence up to
approximately 40,000 barrels per day gross when all wells are
on-stream. In addition to the Hibiscus South Prospect, the Company
also plans a prospect test well in Bourdon (Prospect B) under the
current rig contract.
In Brazil, the Company progressed preparations for two planned
Golfinho infill wells (GLF-51 oil well and GLF-50 gas well) which
are expected to double production in 2026. Also in Brazil, the
Maromba development plan progressed with completion of the revised
concept expected in the second quarter of 2024. Total oil
production from Maromba at peak annual average is expected between
30-40,000 barrels of oil per day. The final investment decision is
subject to completion of the project financing. In October, BW
Energy paid the first USD 30 million instalment for FPSO Polvo per
schedule. The Company will pay the remaining USD 20 million in the
second quarter of 2024.
In Namibia, BW Energy is progressing the revised development
plan for the gas-to-power project and analysing data from the 3D
survey completed in May. Interpretation of the initial fast-track
data has enhanced the depositional model and de-risked potential
targets with additional prospects identified, and the Company has
decided to start ordering long-lead items for a future exploration
program.
OUTLOOK
BW Energy prioritises safety first with zero harm as an
overriding objective for people and environment. The Company is
substantially reducing the carbon footprint by developing
discovered oil and gas resources through large-scale repurposing of
existing production infrastructure.
The Company expects oil and gas to remain an important part of
the global energy mix in decades to come and remains focused on
realising long-term value creation via its phased development
strategy and investments in high-return assets. The flexible
investment strategy has proven robust for a range of market
scenarios and positions the Company to address both short- and
long-term opportunities to drive cash flows and earnings.
Energy prices remain at high levels despite a softening of
macro-economic drivers as geopolitical conflicts, global supply
change challenges, inflation and high interest rates. Short-term,
the focus is on completing the Dussafu drilling program and
stabilising production from the Tortue, Hibiscus, Ruche and
Hibiscus South fields, and optimising output from the assets in
Brazil. Both are providing a substantial increase in oil production
and significant value for stakeholders.
REPORTS AND PRESENTATION
Please see the attached third quarter presentation and
earnings tables.
CONFERENCE CALL/WEBCAST
BW Energy will today hold a conference call followed by a
Q&A hosted by CEO Carl K. Arnet, CFO Knut R. Sæthre and COO Lin
G. Espey at 09:00 CET.
Participants dial in numbers:
Pin code for all countries: 980877DK: +45 7876 8490SE: +46 8
1241 0952NO: +47 2195 6342UK: +44 203 769 6819US: +1
646-787-0157SG: +65-3-1591097FR: +33-1-81221259
The presentation may also be followed via webcast on:
https://events.webcast.no/viewer-registration/ZTZNirHH/register
This information is subject to the disclosure requirements
pursuant to Section 5-12 the Norwegian Securities Trading Act
- BW Energy Q3 2023 presentation
- Earnings tables Q3 2023
BW Energy (TG:6BW)
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