Liza I & II FPSOs are ‘cash cows’ for Exxon’s builders …as Brazil places their FPSO order on hold

Nov 16, 2019 News

Dutch floater specialists, SBM Offshore—the company that has secured a contract with ExxonMobil Guyana, for the construction of several Floating, Production, Storage and Offloading Vessels (FPSO)—has reported double digit profit margins, earning more than $1.4B already for this year.

The Liza Destiny—the first of a number of FPSOs that have been ordered by ExxonMobil from SBM Offshore

This, in addition to a still to be accessed loan facility for another US$1.1B—the good news stemming primarily from its operations related to the Guyana Stabroek Block, with the construction of two FPSOs – the Liza Unity and Liza Destiny (for the Liza I&II oil fields.)
Plans and contracts are already underway for a third FPSO, the Liza Prosperity.
The Dutch company was contracted by ExxonMobil Guyana subsidiary, Esso Exploration and Production Guyana Limited (EEPGL), the operator of the Stabroek Block and has as its partners ExxonMobil (45%), Hess Corporation (30%) and CNOOC-Nexen (25%).
The company in its third quarter financial report released on Thursday last, said that it generated US$1.47B over the first three quarters of 2019.
This represents an increase of 18 percent compared with the same period last year, entirely driven “Turnkey,” the company said.
The company’s flagship projects are the FPSOs, Liza Destiny and Unity.
According to SBM Offshore in its public filings of its quarterly financials, “year-to-date Turnkey revenues almost doubled compared with the same period last year to a total of US$498M.”
Speaking to cash available to the company as a result of its projects, the company boasts that undrawn facilities at the end of the quarter totaled US$1.1B and are available for investment in major projects.
The monies represent project financing of the Liza Unity for a total of US$1.14 billion.
The project financing was secured by a consortium of nine international banks and the company had said it expects to draw the loan in full, phased over the construction period of the FPSO.
It was reported that “compared with year-end 2018, net debt increased from US$2.4B to US$3.1B, as a result of the investment in the three new FPSO projects currently under construction.”
SMB Offshore said that at the end of the third quarter, debt drawn under the billion-dollar revolving credit facility amounted to US$40M
The company reported too that US$560 million was drawn under the US$720 million project loan for FPSO Liza Destiny.
The FPSO Liza Destiny project loan, it said, will become non-recourse debt after the FPSO has reached the production readiness milestone and the pre-completion guarantee has been released.
The Liza Destiny has already been moored some 126 miles offshore Guyana was anchored to its mooring system by SBM Offshore specialists using its partly owned Normand Installer installation vessel.
Risers connection, commissioning and start-up are in line with client’s schedule, the company said.
It was reported too that the Company was awarded contracts for the Payara development offshore Guyana, starting with front-end engineering.
It said, the award was the first under the long-term FPSO “supply agreement with ExxonMobil and also secures the third Fast4Ward® hull under construction.”
It noted however that the next phase of the project, to deliver FPSO Prosperity, remains subject to government approvals, project sanction and authorisation.
The company’s success rate in building its profit margin has not been the same globally.
Outside of its Guyana projects however, an FPSO ordered by the Brazilians have been put on hold.
The project has commenced and its progress is according to client’s schedule.
According to reports, the Brazilian-owned Petrobras’ had placed an order for the vessel for a 2022 start up.
This however, has since been delayed by at least a year by Petrobras.

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