Floating production is a good business Looking back at 2007 and 2008 What went wrong Status of BW Offshore What is the future
FPSO International 2009 WHAT WENT WRONG 4 March, 2009 4
Promises vs reality 2007 2008 Guaranteed IRR Cost overruns reduced IRR Long term cash flow Complexity Secure payments from clients/oilcos Supplier workload No risk conversions Startup and operations Reputable suppliers Delayed…
The turkey in the sandwich Low bargaining power up Demanding oil companies Lots of competition Low bargaining power down Tight supplier market Lack of yard space 120 100 BWO 80 PROD FOP 60 AKFP 40 SEVAN SBM 20 OSEBX…
Returns A 20% overrun on a typical project of USD 400 million cuts IRR from 12% to 7% Net present value falls from USD 50 million to minus USD 15 million FPSO companies have produced lower than expected IRR Construction overruns…
FPSO International 2009 BW OFFSHORE OVERVIEW 4 March, 2009 8
BW Offshores 2008 status Order intake 15 year FPSO contract for Petrobras on the Tupi field Award of several EPCI technology contracts Conversions in line with expectations Cidade de So Vicente sailed for Brazil on 5th February…
Long term contracted cash flow 2007 2010 2015 2020 2025 Belokamenka (FSO) Russia: Sovkomflot 2019 Sendje Berge Nigeria: Addax 2011 (+2 yrs) Berge Helene Mauritania: Petronas 2013 (+8 yrs) Berge Okoloba Toru * Nigeria: Global 2009…
Internalising technology Strategic technology for FPSO developments Increased market presence Increased scope and value creation Concept development capability Access to new business Orderbook Technology & Installation…
Strong global presence Norway Russia Scotland Latvia France USA Bermuda China Mexico India Philippines Nigeria Malaysia Singapore Brazil BW Offshore units APL Technology BW Offshore offices Recruitment centers 4…
FPSO International 2009 WHAT NOW 4 March, 2009 13
The upside Current investor perception Rigs good FPSO bad Return on Equity FPSO shares are cheap 35,00% Long term clients 30,00% Contracted cash flows 25,00% Solid clients 20,00% More bargaining power 15,00% SBM Rig Less…
E&P spending will come back Source: SEB Enskilda 4 March 2009 15
There are prospects 35 30 25 20 15 10 5 0 2002 2003 2004 2005 2006 2007 2008 2009e 2010e 2011e 2012e Past & current orders New orders - lease New orders - EPCI/operator owned Source: Fearnley Offshore 4 March…
Return and risk We must negotiate more balanced contracts We must get compensated for risk Pollution Counterparty Construction Commissioning and startup Redeployment Funding Interest Currency We must make profit on…
Steady course towards stronger figures Focus on operating results EBITDA improvement from existing units New FPSOs to commence operation in 2009 and 2010 Selective bidding 1500 Robust level of bidding activity 1250 Energy…
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