Contracts for Guyana’s oil ships help SBM’s profits soar to US$1.5B

Aug 12, 2023 ExxonMobil, News, Oil & Gas

Kaieteur News – SBM Offshore, one of ExxonMobil’s builders of floating production, storage and offloading (FPSO) vessels, has reported impressive mid-year financial figures for 2023, heavily influenced by its investments and activities in Guyana. SBM Offshore is one of the many international companies making big wins in Guyana’s oil sector.

The company registered revenues amounting to US$1.49 billion in the first six months of the year. A significant portion of this achievement is attributed to its activities in Guyana, particularly the FPSO Prosperity and FPSO ONE GUYANA projects. Notably, the FPSO Prosperity, which is under SBM Offshore’s full ownership, is on track with offshore commissioning activities. The company aims to commence oil production with this vessel in 2023. The vessel will be able to produce 220,000 barrels per day (bpd). Concurrently, the ONE GUYANA project, also fully owned by SBM, is projected to start production in 2025. That will be able to produce 250,000 bpd.

These two FPSOs will add to Liza Destiny and Unity, which are collectively producing almost 400,000 bpd in the Stabroek Block.

Delving deeper into SBM Offshore’s financial overview reveals that the company experienced a surge in net debt, which rose from US$6.1 billion to US$7.2 billion by June 30, 2023. Chief Executive Officer (CEO), Bruno Chabas commented on this, stating “The increase in net debt reflects our strategic and continued investment in growth.” He pointed out that while the Lease and Operate segment has been producing strong cash flow, they’ve leveraged project finance facilities, especially for the FPSOs in Guyana, to fund ongoing constructions.

This investment strategy, designed to foster growth, does not overshadow the company’s healthy net cash balance which stood firmly at US$381 million by mid-year.

Guyana’s Prosperity FPSO

The company’s backlog, a measure of its expected future revenues, also showed a marked increase by US$1.7 billion compared to its position at the end of 2022, bringing the total to a remarkable US$32.2 billion. This growth was primarily due to a 10-year operations and maintenance agreement for the Guyana FPSO fleet. With the signed agreement in place, the company’s backlog ensures cash flow visibility stretching all the way to 2050.

In terms of future revenue distribution, the company expects to realize around US$1.9 billion from the Lease and Operate segment and a little over US$1 billion from its Turnkey segment in 2023. Moreover, SBM Offshore’s guidance anticipates earnings above the US$1 billion mark for the same period.

However, it is crucial to note that the ongoing geopolitical tension between Russia and Ukraine remains a variable in the company’s projections. SBM Offshore’s guidance acknowledges the potential impact of the conflict on its work. The direct and indirect ramifications of this situation could influence the company’s business outcomes and the realization of its 2023 targets.

Additionally, the possible purchase of FPSO Liza Unity in 2023 is a significant event on SBM’s horizon. Exxon said it may purchase the vessel, along with Destiny, as its deal with SBM Offshore includes such an option. Chabas highlighted that any guidance would be revised once the intricacies of this acquisition are settled.

Apart from its Guyanese ventures, SBM Offshore’s activities in Brazil, including projects like FPSO Sepetiba, FPSOs Almirante Tamandaré, and Alexandre de Gusmão, also play a significant role in the company’s earnings and future prospects.

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Achievement, FPSO Sepetiba, FPSOs Almirante Tamandaré, Guyana, offshore

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