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Guyana has been a fairytale to SBM Offshore – CEO
Kaieteur News – Guyana has been a dream scenario for SBM Offshore, the world’s undisputed leader in floating production, storage and offloading vessels (FPSOs).
CEO, SBM Offshore, Oivind Tangen (Photo: SBM Offshore)
This was revealed by Chief Executive Officer (CEO) of the Dutch ship builder, Oivind Tangen in an exclusive interview with Upstream, an online source for independent news and analysis of the major oil and gas projects.
In an article last week, Upstream reported that the company is reaping the rewards of its forward thinking and outstanding project execution, while its new chief executive intends to keep the company well ahead of its peers.
Tangen said, “Guyana so far has just been a fairytale, and it happened at about the same time as we launched our Fast4Ward programme, and that positioned us well for a series of Petrobras projects as well.”
Fast4Ward is the ground-breaking design that SBM came up with in 2012 tailored for benign ultra-deepwater settings like Brazil and Guyana, and which SBM was able to replicate in stunning fashion, with a standardisation philosophy and with repeat subcontractors and vendors, all supported by its two principal customers ExxonMobil in Guyana and Petrobras in Brazil.
Next year, there will be 19 active SBM floaters around the world producing about 2 million barrels per day of oil of which seven will be Fast4Ward designs. The company has already ordered the eighth and ninth hulls.
Two Fast4Wards are operating for ExxonMobil in Guyana and two more are being built.
SBM was contracted by Exxon, the operator of Guyana’s prolific Stabroek Block, to construct five of the six FPSOs sanctioned to date.
The Liza Destiny, Liza Unity and Prosperity FPSOs have been delivered and are operating, while the fourth FPSO, One Guyana is scheduled to arrive next year. SBM also secured a contract to construct the FPSO for the sixth project, Whiptail. To this end, the Jaguar FPSO is expected to commence production by the end of 2027.
Tangen told Upstream that ExxonMobil continues to set the benchmark, with decisions to own the FPSOs in Guyana. The CEO said this provides SBM with significant early cash followed by the revenue from a long-term Operations and Maintenance (O&M) contract.
Exxon has stated that it will have six FPSOs in operation in Guyana by the end of 2027.
“We are in a very good dialogue with Exxon and they know when it’s a good fit for SBM and themselves, where we unlock value together, that’s normally where we find the opportunities to move forward together,” Tangen said.
Last month, Kaieteur News reported that SBM increased earnings for the first-half of 2024, buoyed by strong project performance and continued expansion in Guyana, a key growth market for the company.
Tangen disclosed, “Our great teams continue to deliver strong performance and we ended the period with a record backlog of US$33.7 billion. As a result, we are increasing our Directional EBITDA [earnings before interest, taxes, depreciation, and amortization] guidance to around US$1.3 billion from around US$1.2 billion…”
He added, “With our unique value proposition, we expect to see more awards based on the “sale & operate” model like FPSO Jaguar, with an accelerated cash flow profile versus the historical “lease & operate” model.”
For the first-half of 2024, SBM Offshore reported Directional revenue of US$1.8 billion, a 23% increase compared to the same period in 2023. The company’s Directional net profit for the period also saw substantial growth, rising to US$128 million up from US$36 million in the year-ago period.
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