Latest update November 15th, 2024 1:00 AM
Exxon’s US$1.3B purchase of Liza Unity FPSO will help reduce SBM Offshore’s debt
Kaieteur News – SBM Offshore, a shipbuilder for Guyana’s production vessels, will get a hearty benefit from the recent transaction with ExxonMobil Guyana Limited, for the purchase of the Liza Unity This deal involves the purchase of the FPSO Liza Unity floating production, storage and offloading (FPSO) vessel. The purchase, for approximately US$1.3 billion, will improve the company’s financial position, including by helping it to pay off significant debt.
The net cash proceeds from this transaction will primarily be used for the full repayment of the US$1.14 billion loans taken by SBM Offshore to finance the FPSO project, SBM Offshore said. This move is expected to decrease SBM Offshore’s net debt position substantially. On the other hand, the payment for the purchase by ExxonMobil, and its partners Hess and CNOOC, is expected to simply be recovered by the oil companies from the production at the Liza field offshore Guyana.
The Liza Unity FPSO, which has been on hire since February 2022, will see a continuation of SBM Offshore’s role operationally, offshore Guyana. The company will maintain its responsibility for operating and maintaining the FPSO up to 2033, even as ExxonMobil Guyana assumes ownership.
The Liza Destiny was purchase by ExxonMobil for approximately US$1.3 billion
Bruno Chabas, SBM Offshore’s Chief Executive Officer, said “We have delivered results this [third] quarter in line with expectation. Given the exercise of the purchase option of FPSO Liza Unity by ExxonMobil Guyana, we have revised our revenue and EBITDA [earnings before interest, taxes, depreciation and amortization] guidance upwards to reflect this.” The transaction is not only significant in terms of its financial value but also in its timing, as it was completed a few months before the end of the maximum lease term in February 2024.
The Liza Unity FPSO’s performance has been a game-changing vessel, because it is one of the largest by production in SBM Offshore’s portfolio. ExxonMobil has been pushing the company to build large vessels, to produce Guyana’s oil as quickly as possible. The vessel, delivered to the Stabroek block, started oil production in February 2022. It has a nameplate capacity of 220,000 barrels per day (bpd) but has produced up to 250,000 bpd. This performance complements the Liza Destiny, another FPSO in the Stabroek block, which has increased its production from an initial 120,000 bpd to about 150,000 bpd after debottlenecking. The Liza Unity FPSO is expected to produce oil for a total of 20 years offshore Guyana, targeting about 600 million barrels of crude.
Furthermore, SBM Offshore’s 2023 financial guidance reflects the impact of the purchase transaction. The company has revised its 2023 directional revenue guidance from above US$2.9 billion to around US$4.4 billion, with an expected EBITDA of around US$1.3 billion. This revision accounts for the sale of the Liza Unity FPSO and represents a significant increase from previous projections. SBM Offshore recently delivered the Prosperity FPSO to Guyana, which will start production soon. It is also building out the ONE GUYANA FPSO for the Yellowtail project with US$1.75 billion in financing, and has been contracted to deliver another FPSO for the Whiptail project.
- floating production, Liza Unity, Offshore Patrol vessel, storage and offloading (FPSO), US$1.3 billion
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