The EPC conversion project P-63 (Papa Terra) is under construction at the COSCO Dalian yard in China. As a consequence of increased work scope compared with initial plans, the departure of the unit has been delayed.
A thorough review of the consequences of the extended yard stay and additional scope has resulted in a revision of the forecasted cost for completing the project. The second quarter will as a result be negatively impacted by USD 50 million. BW Offshore will release the second quarter results 2012 on 30th August 2012 as previously announced.
The additional project costs are mainly linked to increased steel replacement, completion of the boiler systems, increased engineering and commissioning cost and increased yard costs associated with the delayed schedule. All possible efforts are being made by BW Offshore and its Brazilian partner to meet the overall project schedule requirements from Petrobras.
The Papa Terra project is accounted for as a fixed-price construction contract where revenue is recognised in accordance with the “Percentage of Completion” (POC) accounting method. BW Offshore is receiving milestone payments from the client Petrobras throughout the project period.
Press Release, July 19, 2012; Image: McDermott