Bluewater reports loss in 1Q 2014

Bluewater group today reported that the net loss after tax for the first quarter of 2014 was U.S.$(3.3) million compared to a profit of U.S.$12.4 million for the first quarter of 2013. EBITDA for the for the first quarter of 2014 was U.S.$40.0 million compared  to U.S.$51.3 million for the first quarter of 2013.

The financial results for the first quarter of 2014 were mainly impacted by the following:

The SPM division generated U.S.$1.4 million EBITDA in the first quarter of 2014 compared to U.S.$10.8 million EBITDA in the first quarter of 2013. Progress on our current SPM projects is in early stages, resulting in a relatively low EBITDA contribution for the first quarter of 2014. In the first quarter of 2013, several SPM projects were in an advanced stage of completion, resulting in higher EBITDA. SPMs are used to transfer fluids to and from a floating production unit, an offshore storage vessel or shuttle tanker while securing the unit, vessel or tanker to the ocean floor. Most SPMs consist of an anchoring system that is connected to the ocean floor and a fluid transfer system that permits the transfer of fluids between fixed and rotating parts of the mooring system. SPMs are generally developed and constructed for oil companies and contractors.

The first quarter of 2014 EBITDA for the FPSO division was U.S.$40.3 million compared to U.S.$42.8 million for the first quarter of 2013. The U.S.$2.5 decrease in EBITDA compared to the first quarter of 2013 was caused by a decrease of U.S.$1.8 million in EBITDA of the FPSO Aoka Mizu due to declining field production and higher operational expenditures, a decrease of U.S.$1.1 million in EBITDA of the FPSO Haewene Brim mainly due to higher operational maintenance costs and a decrease of U.S.$0.1 million in EBITDA caused by higher lay-up costs of the FPSO Munin during the first quarter of 2014. Finally, tender costs and other FPSO related costs decreased by U.S.$0.5 million compared to the previous year.

The FPSO Haewene Brim has been back on location since November 16, 2013 and preparations are ongoing to prepare the vessel for recommencement of production on the Pierce field and start-up of the Brynhild field. The costs related to the modification and life time extension work to prepare the vessel for tie-in and production of the Brynhild field are fully reimbursed by the Brynhild field owners. During the first quarter of 2014, such costs, amounting to US$28.0 million, have been capitalized and related revenues have been deferred, resulting in nil impact on EBITDA. Income will be recognized once oil production on the Brynhild field commences and will be offset by depreciation of the capitalized costs.

Overhead costs for the first quarter of 2014 were U.S.$1.6 million versus U.S.$2.3 million for the first quarter of 2013. The decrease in overhead costs was largely driven by an increased workload of the engineering
organization compared to the first quarter of the previous year.
Depreciation expenditure was at the same level compared to the first quarter of 2013, at U.S.$22.9 million.
Finance expenses were U.S.$3.9 million higher compared to the previous year, at U.S.$18.4 million versus U.S.$14.5 million in the first quarter of 2013. Finance expense for the first quarter of 2014 includes U.S.$9.9
million interest accrued on the new U.S.$400 million bond loan and U.S.$1.4 million interest in relation to the U.S.$360 million unsecured bond loan that was repaid on January 27, 2014, compared to U.S.$6.5 million
interest on the U.S.$360 million unsecured bond in the first quarter of 2013.

Furthermore, the first quarter of 2014 includes U.S.$0.4 million of non-recurring costs in relation to the cancellation of the interest rate swap on the U.S.$360 million unsecured bond loan. Apart from these bond costs, interest costs decreased by U.S.$1.3 million during the first quarter of 2014 compared to the first quarter of 2013 following a significant reduction in net debt, resulting from steady operating cash flow.
Currency exchange results were U.S.$0.2 million positive in the first quarter of 2014 compared to U.S.$0.5 million negative in the first quarter of 2013. The currency exchange results relate mainly to the fluctuation in the fair value of forward currency contracts.

Income tax expense for the first quarter of 2014 were U.S.$2.2 million versus U.S.$1.0 million for the first quarter of 2013. The income tax expense in the first quarter of 2014 relates to U.S.$1.6 million withholding tax incurred 3 in relation to the Glas Dowr revenues and a U.S.$0.6 million Dutch corporate tax payment. The U.S.$1.0 million  income tax expense in the first quarter of 2013 relates fully to withholding tax incurred in relation to the Glas Dowr.

Other developments

On January 19, 2014, a new SPM contract was secured with total revenues of EUR107 million. This project is  expected to start contributing to EBITDA late 2014.
On January 27, 2014, the U.S.$360 million unsecured subordinated bond was fully redeemed with the proceeds from the new U.S.$400 million unsecured subordinated bond.
On January 29, 2014, the interest rate swap in relation to the U.S.$360 million bond due July 17, 2014 was cancelled. The costs of this cancellation amounted to U.S.$7.2 million, of which U.S.$6.8 was already accounted for in 2013.

Bluewater designs, develops, owns and operates floating production storage and offloading units (“FPSOs”), provides auxiliary equipment and services to FPSOs and designs, develops, performs project management and constructs single point mooring systems (“SPMs”).

 

Press Release, April 25, 2014

 

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