BW Energy: Q2 2024 trading update

BW Energy: Q2 2024 trading update 

BW Energy will publish financial figures for the second quarter and first half year of 2024 on Thursday, 29 August 2024. 

Net production to BW Energy was 2.14 million barrels of oil in the second quarter of 2024. This includes production from the Tortue, Hibiscus and Hibiscus South fields in the Dussafu licence (73.5% working interest) and production from the Golfinho field (100% working interest).  

DUSSAFU 

Production from the Dussafu licence was 1.41 million barrels net to BW Energy in the quarter, an average of 15,570 barrels of oil per day. Production was impacted by planned annual maintenance of the FPSO BW Adolo as well as the situation with defective ESPs (Electrical Submersible Pumps). The annual scheduled maintenance resulted in a shutdown of 21 days during May and June. Work included tank-refurbishments as well as work on the boiler system, the gas lift compressors and other general systems improvements. BW Energy completed one lifting in the quarter in May of ~ 734,000 barrels net at an average realised price of USD 80 per barrel. Production costs (excluding royalties) for the period were approximately USD 29 per barrel. This compares with first quarter production costs of USD 23 per barrel, reflecting the lower production. 

The net sold volume, which is the basis for revenue recognition in the financial statement, was approximately 940,000 barrels, including 32,500 barrels of DMO deliveries and 173,000 barrels of state profit oil, with an under-lift position of 341,000 barrels at the end of the period. 

In May, the Company made a substantial oil discovery with good reservoir quality in the DHIBM-7P pilot well, appraising the northern flank of the Hibiscus field. The preliminary evaluation indicates an increase in Hibiscus gross recoverable reserves (mid-case) of 8-12 million barrels of oil. The well will be drilled as a production well later in the present program. 

Earlier in May, the DHBSM-2P pilot well confirmed a northern extension of the Hibiscus South field with good reservoir quality, increasing reserve estimates of Hibiscus South. The DHBSM-2H development well has completed drilling and has been completed with the first conventional ESP system. The well was handed over from drilling to production on 25 July and will now start production after hook-up and testing. 

BW Energy has extended the contract for the Borr Norve jack-up, and the delivery of conventional ESP systems including spares has now been secured, allowing all previously drilled and completed wells to be successively worked over and completed with conventional ESP systems. The contract extension is also expected to include the drilling of the Bourdon prospect.  

GOLFINHO 

Production from the Golfinho licence was 732,000 barrels net in the quarter, an average of 8,040 barrels of oil per day. Production was impacted by reduced gas-lift compressor up-time and lack of gas production from the GLF-28 well. GLF-28 has subsequently been successfully restarted after ROV intervention, and work is underway to improve reliability. A 12-day shutdown is scheduled for August on the FPSO Cidade de Vitória, to undertake compressor maintenance and other activities to improve production stability. 

A lifting of 505,000 barrels was completed in April with a realised price of USD 90 per barrel, followed by a lifting in June of 500,000 barrels with a realised price of USD 83 per barrel. Remaining inventory was ~385,000 barrels at the end of the period. The production cost, excluding royalties, averaged USD 48 per barrel.   

OTHER NEWS 

In April, BW Energy executed a sale and leaseback agreement with a Minsheng Financial Leasing Co entity (MSFL) for the MaBoMo production facility on the Dussafu Licence. The transaction added USD 110 million of net liquidity for the Company.  

In June, the Company issued a USD 100 million, five-year senior unsecured bonds with a coupon of 10% per annum. The bond placement met strong investor demand across Nordic and international markets and was significantly oversubscribed. An application has been made for the bonds to be listed on the Oslo Stock Exchange.  

In July, the Company signed a Letter Agreement with Reconnaissance Energy Africa Ltd ("ReconAfrica”) to acquire ~16.8 million shares and ~16.8 million warrants for a total consideration of USD 16 million in ReconAfrica’s announced equity raise. By participating in the equity raise, BW Energy will also receive a 20% non-operating interest in the onshore Petroleum Exploration License 73 ("PEL 73”). This enables the Company to expand its footprint in this strategically important energy region. 

HEDGING, LIQIDITY AND DEBT 

BW Energy expects to recognise a net loss of USD 1.5 million in the second quarter related to the hedging program, of which USD 0.8 million is unrealised.  

The Company had a cash balance of approximately USD 244 million on 30 June 2024, compared to USD 150 last quarter. The increase reflects the net impact from oil sold in the period, proceeds from the MaBoMo sale leaseback, the bond issue, repayment on the RBL facility and investments. Investments for the period are primarily related the ongoing Hibiscus Ruche field development program.  

The Company had a total drawn debt balance of USD 589.2 million on 30 June including the MaBoMo lease financing, the bond debt, as well as a USD 70 million principal repayment on the Dussafu RBL. 

For further information, please contact: 

Brice Morlot, CFO BW Energy, +33.7.81.11.41.16 

ir@bwenergy.no 

About BW Energy: 

BW Energy is a growth E&P company with a differentiated strategy targeting proven offshore oil and gas reservoirs through low risk phased developments. The Company has access to existing production facilities to reduce time to first oil and cashflow with lower investments than traditional offshore developments. The Company’s assets are 73.5% of the producing Dussafu Marine licence offshore Gabon, 100% interest in the Golfinho and Camarupim fields, a 76.5% interest in the BM-ES-23 block, a 95% interest in the Maromba field in Brazil and a 95% interest in the Kudu field in Namibia, all operated by BW Energy. Total net 2P+2C reserves and resources were 580 million barrels of oil equivalent at the start of 2024. 

This information is subject to the disclosure requirements pursuant to section 5-12 of the Norwegian Securities Trading Act.