Good morning and good afternoon, everyone. Welcome to BW Offshore's third quarter 2024 update. My name is Marco Beenen, CEO, and I'm here together with our CFO, Ståle Andreassen, to give you the update. I will give you a general update, and then Ståle will cover the financials. Then, first, please note our disclaimer, and then I'll move on to the highlights. First of all, we're pleased with the progress on Barossa and the Barossa FPSO, which we named BW Pioneer. That project is now 90% complete. Based on solid results, we continue to pay the third quarter cash dividend of $11 million, consistent with previous quarters, and also we have been able to raise our guidance of 2024 EBITDA to the range of $315-$320 million.
Starting with BW Pioneer for the Barossa project in Australia, first cash planned for second quarter next year, in line with our previous guidance. Our focus has been on maintaining the schedule, and during the integration and commissioning phase, we faced a tense market in Singapore, and that has put further pressure on the cost, as well as settlements that we had to make with our key subcontractors, mainly the yards, and also settlements that were still pending with the client. Therefore, we need to guide on a $100 million-$150 million additional investment for the EPC phase of the project, till the time it's completed next year. The project is now 90% complete with all construction finalized, integration 95% complete, and pre-commissioning and commissioning well underway. Important milestones in the commissioning scope have already been achieved.
First of all, the gas turbine generators have all been fired up and work well. Galley and mess rooms have gone live, and we have recently served the first meal for all our employees, subcontractors, and clients in the project. Also, most part of the leak testing program has now been completed. Moving on to the next slide, fleet and safety performance. We're happy with the safety statistics trending down. We had one LTI recorded, somebody with a broken arm, a subcontractor in the yard, but we had zero high potential incidents recorded, and that is what we find the most important metric that we're tracking, as that is a leading indicator. Commercial uptime is consistently high, and that is despite the planned shutdown that we had on our Catcher unit this quarter.
The good commercial uptime of the core assets delivers strong cash flows, and this is underpinned by the backlog of our core FPSO fleet. I mentioned BW Pioneer coming on stream in the first quarter of next year. But then we have the three units in Gabon, U.K., and Gulf of Mexico, respectively. BW Pioneer will benefit from increased production tariffs, and that is $3 per barrel above the 20,000 barrel per day range, and that is linked to the increased production that BW Energy is achieving, heading to nameplate capacity. I mentioned the planned maintenance shutdown from Catcher. That was a 21-day successful shutdown, but that, of course, explains the lower production in the quarter. Catcher is on a 12-month running extension, meaning this project, this contract gets extended every day with a year.
But our view on total duration of the contract is that it will continue at least till the end of 2028, and we'll base that on our view on the oil price and the decline of the production in the field. And then on Pioneer, also these units continue to deliver stable operations while, the field production is slowly declining. We have ongoing contract discussions with our client, and they are converging, but neither party has so far obtained a board approval for that contract yet, so that's still work in progress. Yeah, and then I'm handing over to Ståle to give an update on finance.
Thank you for that, Marco. I will take you through the financial figures for Q3. As said by Marco as well, we are pleased with the commercial performance in the third quarter, despite the planned shutdown on Catcher. EBITDA came in at $83 million, boosted by an additional $10 million from the Sakarya project as we closed out the remaining work on that project opportunity. I want to say we do not expect further contributions from Sakarya going forward. For 2024, we expect the continued steady performance, from the fleet for the remaining quarter, and we are now confident enough to revise our guidance upwards, targeting an EBITDA of $315-$320 million. Moving to the income statement, you will see depreciations remain stable at $45.6 million in the quarter.
Net interest expenses reduced to $4.3 million, due to the fact that we have no draw on the corporate facility, combined with good interest income from our cash balance. This quarter, we saw a negative mark-to-market adjustment on hedges. This is primarily due to lower U.S., dollar interest rates impacting our financial instruments. A $4 million loss on all the financial items reflects a stronger Norwegian krone against U.S., dollar, affecting Norwegian krone denominated bond valuations. A $5.7 million loss from equity accounted investments resulted from what was a one-off and non-cash $7 million accounting adjustment we had to make due to the fact that we had to change how we account for interest rate swaps related to the Barossa project. So with that, we delivered a net profit for Q3 of $13 million. Cash flow from operation was steady at $86 million in the quarter three.
Excluding the prepayment from Santos, the underlying operational cash flow was also good at $61 million, showing a modest improvement, quarter on quarter. Investment cash flow was in this quarter directed towards Barossa. We continued to fund the project. We called $26 million, net from the Barossa joint venture partners, which is also a little bit of a reduction, quarter on quarter. Net debt reduced by $15 million in the quarter, mainly linked to scheduled repayments on the Catcher loan facility, and we also paid out $11 million in dividends during Q3, which means that our cash position remained steady since the beginning of quarter three. As the Barossa project is a joint venture and not consolidated, these slides provide the overview of the project funding progress on the project.
In the third quarter, we drew another $50 million on the project debt facility, leaving $140 million available to draw towards completion of the project. We required only $4 million in new equity, while Santos contributed $25 million as per the contract, and as illustrated on the previous slide. With that, the total funding towards the project stood at $2,184 million, and the project Capex was a little bit lower, but increased to $2,161 million by the end of Q3. Our fleet continues to deliver steady cash flow, and that has allowed us to strengthen our consolidated net cash position even further, and it stood at $38 million at the end of Q3. The equity ratio remains almost steady. It stood at 29.6%, which is a slight dip from the 30.4% we had in Q2. Our balance sheet remains strong.
We have an unused corporate facility, which is ready to support future project opportunities and growth. We ended the quarter with available liquidity above $700 million, only slightly reduced from quarter two. The reduction quarter on quarter is primarily due to the fact that we have scheduled semi-annual reductions on the corporate facility, which reduces by $34 million every six months. In November, i.e., after the quarter, we repaid the remaining $157 million on the convertible bond that was issued in 2019, which means that the blue bar you're seeing there in 2024 on the right side of the slide will be gone at next quarter. We continue to pay a dividend of $0.0625 per share, amounting to $11.3 million, which will be distributed to shareholders in November. This marks the 19th consecutive quarter of dividend payments since we reintroduced dividends in 2020.
I also want to remind everyone about our goal of distributing 50% of annual net profits as dividends. With the announced increase in net investment for BW Pioneer, as Marco mentioned, we do need to allocate additional funds to support the project's completion, ensuring we remain on track. However, we remain well positioned financially. We have a strong cash flow from our fleet. We have ample liquidity that allows us to comfortably meet our liabilities. This financial flexibility enables us to pursue growth opportunities, I would say both organic and strategic, while we maintain our commitment to paying an attractive dividend. Back to you, Marco.
Yeah, thank you, Ståle. I'll continue with an update on the market. Our view on the market has not really changed. There is a strong demand, with about 60 projects identified in the market between now and 2030, and this is supported by the expectations of a robust oil price for the remainder of the decade, but awards have been lagging, and that's mainly because cost levels of these projects went up due to complexity, inflation, and also interest rates, and particularly the latter has made the lease and operate model less attractive, and we see a gradual shift towards EPCI and O&M. We're well positioned to continue or to follow that trend. We like lease and operate, but we also, we're also very much comfortable with EPCI plus O&M contracts.
We're ramping up our tender efforts, and we focus on six targets in this market, of which we think we will land one or two in the next 12-36 months. I think the project nearest to an FID could be the project for Repsol in the Gulf of Mexico. In that market where the pace of project awards have been falling behind in past years, and that actually makes the market only stronger as these projects don't go away, although some of them will, but generally, this is more a delay than a cancellation. We'll continue to face this strong market, but a selective market. We are well positioned in that market. We're maintaining a disciplined approach, though.
As I said, the preference is long-term cash flows with O&M, but we're not limited to only lease and only the lease and operate market. But we will not take residual value risk in lease and operate contracts. We're looking for solid counterparts, and we're working and co-investing with partners as the scale of the projects is significant. So in that market, we have a favorable position. First of all, as we demonstrate to BW Pioneer for the Barossa project, we can deliver these premier league FPSO projects. We're demonstrating our competence in building gas FPSOs, but also the RapidFramework hull design delivers an approach where we're less dependent on early lock-in of dry dock slots. So that gives us flexibility where we can build in a tight supply chain market.
We have demonstrated our ability to put together hybrid financing solutions, as we showed on Barossa with a true hybrid of almost 50% prepayments. But as many, there are many alternatives to this as well. Again, the market allows a good risk-reward balance for future projects. On to the floating wind market, our subsidiary, BW Ideol, is progressing well, both on their current project portfolio, but also on new business development initiatives. First of all, the Buchan Offshore Wind project, which is a one gigawatt project offshore Scotland, is progressing towards a consent application by mid next year, and then final consent is expected in 2026.
Also, the demonstrator or the pre-commercial project in South of France, the Eolmed, which is a three times 10-megawatt project, is progressing, and the first two floaters for this project are now assembled, and also the blades and the turbines have arrived on site. In the same area, we're awaiting the outcome of the AO6 tender, where BW Ideol tendered in consortium with EDF and Maple Power.
And then we're progressing, on the back of the positions that we have in these markets, we're progressing the development of fabrication line one in Ardersier, which is in the UK, where we have exclusive access to the port there for floating wind, and also in this market where we built Eolmed, and also where AO6 and AO9 would materialize to unlock the supply chain constraints that currently exist for floating wind. Furthermore, we're also looking at other projects in Europe and Asia, and in particular Japan and Taiwan. We're continuing to have investor dialogues to join us as BW Offshore for this private company. We go into the final slide, which is the outlook.
Again, the focus is, of course, on the Barossa project, starting of BW Pioneer, in the second quarter of next year. We also continue to look at value that we take from contract extensions, Catcher beyond 2028, and, as I also explained, the discussion we have on Pioneer, and then focusing on new what we call infrastructure-like FPSO projects like Barossa in a very strong FPSO market. And then BW Ideol, as I explained, we continue to support the development of that company as a private company now, and look for further capitalization by new industrial shareholders, and the strong cash flows from the FPSO fleet support the continuation of our attractive shareholder return program. That concludes this Q3 trading update, but we're happy to take any questions if you would have.
Okay, then we'll move to a Q&A, and we have a couple of questions coming in via the web. So I'll start this off. The first question, one, can you provide any color on the financial impact to BW Offshore from the additional 100-150 million investment in BW Pioneer? Is the whole figure to be covered by BW Offshore directly or indirectly?
Yeah, this is the impact to BWO. So this is the amount that's the exposure to BWO.
Then, the second question here is, is the extra cost already identified as an identified cost, or does it include a buffer to ensure that there is no more cost increase before the vessel is sent to Australia, or I assume until the vessel is delivered on the field?
Yeah, this is, you know, the result of a holistic approach. And as I said just now in the update that we have been working quite hard on settlements with our subcontractors in Singapore and also with our clients. And it was difficult to settle them in a way we wanted, given the tense labor market in Singapore. And that's why that's basically the basis for the guidance, but also the outstanding results of the discussions we have with our client Santos. We included that in this number, but we haven't given up on these discussions. They will continue till the project is complete. So we're still working on recovering some of this.
Maybe just going to add in terms of the fact that it's we have given a range here, and it is clearly a buffer. You can see we can see costs towards the midpoint of our guidance, but anything beyond here is, as we see it, a pure buffer that's going to take us towards completion. So we do have some room in the estimates we have given out. We want to be transparent in the way where we don't want to guide on cost overruns on a regular basis, and we want to be cautious when we do that. We really thought it through to avoid coming with these kind of updates to the market more than we absolutely have to.
Yep.
The next question is related to BW Pioneer, and the question is whether we can quantify the likelihood of the vessel being employed, I guess on contract from second quarter 2025 or 2025 as a whole. And I guess as most people know, this contract, at least the formal five-year contract, comes to an end in March 2025. Yes.
Yeah, no. Sorry. Now, unfortunately, we can't be fully conclusive yet, but as I said in previous quarters, this is an ongoing dialogue, and typically these discussions take longer. They will always get concluded before the current contract really expires, and I'm very certain that, you know, the operation continues beyond that date in 2025, and I think we're very close to an agreement, but none of the companies have been able to obtain board approval yet, so it's too early to communicate, and we have also been discussing various contract models, and actually still do. I think, you know, we're aligned on the objective, but there's different ways to get there, but everything is done in kind of a view of another five years in operations in the field.
And that's the common, common goal of the, of both companies.
Okay. Then, we have a slightly different question. Are you considering strategic inorganic initiatives? If yes, can you give a bit of color?
Yeah.
If that's for.
We always, we always look at, you know, consolidation efforts. I think that's what this is referred to. There are not that many FPSO players and not that many companies that would make a lot of, you know, where a combination would make strategic sense. But there are some. We have the financial means. So yes, we're looking at these things, but again, it needs to make sense strategically. And also, you know, it needs to make sense price-wise. So yeah, there's not that many opportunities out there, but we are looking at them.
And then, we have another question, which is directed towards Barossa again, or BW Pioneer. How will the allocation of the additional $100-$150 million Capex be for BW Pioneer in terms of Q4 2024 versus first half of 2025? And what is the estimated total remaining Capex for the unit net to BW Pioneer? Well, the fact of the way that we have added the $100-$150 million, this is cost that we will see come, is coming in the backend of the project. So this is cash outlay we expect to have to fund throughout the first half of 2025 towards completion of the unit. So we would allocate that in our cash flow plan for 2025.
Then in terms of what is the remaining Capex, you know, we have. There's two sources here of. You have a Capex that's funded by RJV. I was just trying to roughly get that number. So that's that should be remaining a little bit more than 200 on the unit. Then this new guided number would come on top of this. But the first the Capex funded by the JV is only 51% carried by BW Offshore, while the remaining 100-150 that we have guided on is 100% for our account. Hopefully that is clear. Next question. I understand that BW is one of the two companies selected by Equinor to participate in a FEED conference for the Bay du Nord project offshore Newfoundland.
Could you confirm and shed some color on the contracting process?
It's a bit of a, I would say, bit premature. But what I can confirm is that we have been, we're working already for more than 12 months constructively together with Equinor on this Bay du Nord FPSO project. And it is a project we like and where I think we have a lot of value to add, based on, you know, experience that we have in harsh environment, operating FPSOs in harsh environment, and the hull solutions and mooring solutions we have for that. Yeah, we are a company that is being considered by Equinor for the next phase, but it's, we don't have a confirmation of that yet that we will actually participate in the FEED.
Okay. Unless there's anything else. Nope. That is the last question. So I guess, as nothing else is coming in, then.
Yeah.
It's for you to wrap it up.
Okay. Yeah. If no further questions, then thanks for participating in this call and your interest in BW Offshore, and I do want to wish everyone a good rest of the day. Thank you very much.