FPSO operator BW Offshore expects activities in the offshore field developments sanctions to pick up, following years of underinvestment caused by the oversupply of oil in the market.
Providing its quarterly results on Thursday, BW Offshore said: “Offshore production of oil and gas is expected to decline after several years of low investments. This will likely become more evident in coming years, as production tied to investments made in the previous up-cycle now has commenced and will start to decline.”
BW Offshore said the overall market balance has improved with a reduced oversupply of crude oil. In addition, it added, the industry has become more effective with lower break-even costs for new developments.
“This is expected to lead to sanction of new projects which will improve the market outlook for offshore field developments. Initially, the Company expects increased focus on incremental investments to existing infrastructure, while more green-field investments may emerge later in the cycle,” the company explained.
When it comes to the financial results, BW Offshore reported a first-quarter net profit of $18.1 million.
This was a decrease compared to the $47.2 million in the fourth quarter of 2017, but it was an improvement compared to the $15.1 loss reported in the first quarter of 2017.
Operating revenues for the quarter were to $192.5 million, compared to the 4Q 2017 when BW Offshore reported 150.3 million. This is also an increase compared to the first quarter 2017, when operating revenues were $159.6 million.
BW Offshore’s EBITDA for the first quarter was USD 108.5 million (USD 73.5 million). The increase is mainly related to a full quarter of income from BW Catcher in the UK North Sea, partly offset by no contribution from Berge Helene which is being demobilized after completing its contract at the end of the fourth quarter of 2017. In addition, the FPSO Sendje Berge provided lower contribution for the quarter the due to the revised contract with Addax, BW said.
“BW Offshore is seeing improved market activity for FPSOs. The company will take a commercially disciplined approach to new investments by bidding selectively on new projects,” the company said.