Good afternoon, and welcome everyone to the third quarter update of BW Offshore. My name is Marco Beenen, and I will run you through our presentation with our CFO, Ståle Andreassen. After which we will be happy to take questions, and these questions you can type in under the video player during the presentation. Then please note our disclaimer, and then I'm starting with the highlights. First of all, the Barossa FPSO continues to progress on schedule. The divestment program is nearing completion, with the latest divestments in Nigeria. We continue to pay our $11 million of quarterly dividends, and this is paid in a combination of cash and BW Energy shares, as you are used to. The EBITDA in the quarter came in at $75 million, and we generated an operating cash flow of $116 million.
And then, together with our other main shareholders, we decided to make an offer, to take our floating wind company, BW Ideol private, as we believe it will be a more efficient, way to raise equity in a privately held company and, so that we can fund the future growth. Then, moving on to our operational update. Again, first of all, the Barossa project is progressing to schedule to first gas in the first half of 2025. The hull of, BW Opal, which will be the name of the, FPSO, is now complete, and it has left the SK oceanplant yard in Korea end of last month, and she is now, as we speak, arriving in Singapore for the integration phase.
That marks a new phase in this project, and it's the last phase before the sailaway planned for end of next year. As we guided before, cost inflation is hitting this project, but we remain focused on delivering this project on schedule and mitigating the project delivery risks, and by doing so, the long-term project lease and operate economics remain intact. HSE performance. This quarter, we had zero high potential incidents, but we faced two LTIs, one minor, but also one incident with a scaffolding subcontractor of the yard where we built a hull, who fell from height and sadly lost his life. This was obviously a setback to all parties involved, and it did reset the almost 20 million hours without any incident for this project. The fleet commercial time, uptime was good, above 99%, slightly better than in the previous quarters.
Then moving on to our backlog of the core fleet. The core fleet delivers strong cash flows, and our total backlog now stands at $6.8 billion, of which 82% is firm. On the units, Adolo benefits from the increased production from the two additional wells, which were tied in, in the past, or during this quarter. And Catcher had a really good quarter with stellar commercial uptime above 100%. Next quarter, this will be a bit lower because we are planning a 37 days shutdown. And then Pioneer delivers stable production. As you can see, this portfolio of core assets will deliver a regular and transparent operational performance for the company going forward.
Then, as I mentioned already in the highlights, the fleet divestment program is now very close to conclusion, with only Petróleo Nautipa left, which is about to leave Gabon anytime now. There was a clear rationale for this divestment program as we were heading to an unbalanced monetary and operational risk-reward situation. It made sense to address this, while it had limited impact on the operational cash flows, and we were able to realize sales proceeds of around $330. This allowed for a leaner operational setup as well as we were reducing our global footprint. These proceeds provided us with the financial flexibility that's required for both shareholder returns, as well as making new investments in floating energy infrastructure projects. With that, I hand over to Ståle.
Okay. Thank you, Marco. Then we will move on to the financials. Starting with an overview on the EBITDA. As Marco mentioned, EBITDA came in at $75 million for quarter three, which is significantly better than last quarter. Predominantly, this was driven by strong commercial performance on the core fleet. We had higher production tariff on Adolo quarter- on- quarter. As production is ramping up, we also get more contribution from the production tariff under that contract. And as Marco mentioned, we also had very good commercial uptime on Catcher. For this quarter, we had non-recurring income of $5 million. This was mainly the settlement of outstanding compensation for tender work and some smaller service contracts.
Decommissioning activities on Petróleo Nautipa is still ongoing and was impacting EBITDA with about $5 million in Q3, which is lower than the estimated $10 million per quarter we indicated for quarter three and four during our last quarterly update. I, I do want to highlight that we will seek to get some of these costs reimbursed by the client, and dialogue on this is ongoing. However, it's not included in our estimates. From this quarter onwards, we have included an outlook on EBITDA as we aim to create more transparency on the expected contribution for the business. For the full year of 2023, we, we now expect to deliver an EBITDA between $285 million-$295 million, depending a bit on progress for demobilization of Petróleo Nautipa.
When you move on to 2024, we would expect to deliver an EBITDA in the range of $290 million-$310 million. This would depend on most other things, the production on Adolo, as the tariff makes an impact on this, and it's all based on firm contract backlog only. Before I move on to the income statement, I want to highlight that we have made an update to the analytical information that you will find at the back of the presentation. There, we have now included information on core existing units, as well as where, where we have now also included information about future contribution to BW Offshore from BW Opal, when the FPSO starts operating in 2025.
And we hope this will be helpful for both investors and analysts that try to make calculations on future contribution and what that means for, for the company. Going to the income statement, and I'll, I'll only commenting on items below EBITDA. As you can see, depreciation is now stable, as most of the units in the investment program has been taken out. We did conclude the sale of Abo FPSO in quarter three. The unit was sold for $20 million, and that allowed us to book a gain from sale of this asset of $9.6 million, as you can see. Interest expenses were slightly higher quarter on quarter, mainly because we booked some expenses related to the refinancing as a, as a one-off in quarter three.
As long-term interest rates have continued to increase during the quarter, that has resulted in a significant positive mark-to-market adjustment on the interest hedge portfolio, and we could book a gain of $10.4 million related to that in quarter three. Contribution from BW Energy was minor in quarter three at $0.4 million. While, when you take a look at tax expenses, they were up quarter-on-quarter to $7.2 million as an expense, and that is driven by tax related to the sale of Abo FPSO, as I just mentioned. And overall, we're pleased to say we were able to deliver a profit of $28.9 million for the quarter. Moving on to cash flow. As you can see, operating cash flow in total was $160 million.
When we exclude the prepayments from Barossa, that means we had an underlying operating cash flow of $60 million in quarter three, which is a significant improvement from last quarter. For one, this is driven by what I mentioned earlier, and also what Marco mentioned about stellar uptime and good production from our core units, but also to a certain extent, driven by some late payments in quarter two that was settled and in quarter three, and impacting the operating cash flow positively. We had net investments of $194 million in the quarter, which was predominantly Barossa. And with the sale of Abo, we also got paid, as we would expect, and that was $20 million in for the unit.
As we continue with the Barossa construction, BW Offshore injected $7 million for our share into the joint venture, and the joint venture funded $134 million to BW Offshore for continued construction of the FPSO. As you can see, we continued to reduce our net debt, and I'll come back to that. And if you take into account that and other regular adjustments to the cash flow, you would see that we ended the quarter at a very solid cash position of $244 million. Going to Barossa and the funding schedule, you now see that we have drawn $785 million or approximately 68% of the available capacity under the senior secured debt facility for the project.
We continued to fund some equity, and on a 100% basis, that meant we injected $14 million more in equity into the project, and Santos continued to pay per progress on the project, and has now paid a total of $717 million out of approximately $1 billion for the project. So all in all, all the funding streams work well. Everything's on track, and we continue to be well-funded for the construction of the FPSO. Looking at the balance sheet as a whole. Again, good cash flow from the fleet allows us to continue to reduce our net consolidated net debt position, now down to $295 million from $348 million last quarter.
You now see also that the leverage ratio, when you measure it from a last twelve months reported EBITDA perspective, was down below one at 0.9 x. So it just shows that good cash flow from the fleet allows us to continue to reduce debt. That also combined with the project activity we have and the dividends we are paying. And on the right-hand side, you can see equity ratio was just slightly down and stood at a healthy 31%. With the recent refinancing on the senior secured facilities, i.e., the corporate facility and Catcher, we have no more senior secured debt that needs to be, or debt maturity, sorry, that needs to be addressed.
We have, more or less, completed the divestment program for our non-core fleet, and we are now set to generate in the range of $300 million in EBITDA for 2024 under the fixed-term contract for our three core FPSOs. We are 100% hedged on our debt at an all-in cost of about 4.6%, so which means we have good visibility and basis when it comes to serving debt maturities that we have. So very good predictability on that as the situation is at the moment. And we have a very solid and comfortable liquidity position, being just over $450 million at end of Q3.
So all in all, that taken into account, I think we have a good basis to complete with the dividend program that we have had now for quite some time, where we continue to pay a cash dividend combined with a dividend in kind through BW Energy shares being distributed to our shareholders, which at the moment, with current share price levels, is translate to an annualized dividend yield of around 11%. So then, to give a little bit more granularity on what Marco mentioned in the beginning, regarding BW Ideol. We look at BW Ideol as a company that's been able to deliver on strategic goals since we listed the company back in 2021, and maybe where the biggest achievement was them being successful in getting acreage for the Bakken development.
In order to realize further growth for the company and meet capital commitments that we know are coming, we will need additional financing. While the challenge is that raising new capital in an efficient manner is really constrained by the current listing and the capital market sentiments to this industry, and we expect that such an equity raise would lead to a substantial dilution for non-participating shareholders. So as of 9th of November, we, together with shareholders representing 84.7% of the shares in the company, have made an offer to pay 12 NOK per share for all the remaining outstanding shares, with the intention to delist the company from Euronext Growth.
And I can add that the cash offer represent a premium of above 42% to the closing price of the shares on 9th of November, and an even higher premium if you measure this over the last 30 trading days. We believe that offer allows public investors to realize all cash for their shares at a substantial and good premium to the market price, while we at the same time give shareholders an alternative to the cash consideration to continue as shareholders also in a private setting, should they prefer to do that. And as a shareholder group representing this offer, we further believe that BW Ideol, at this point in time, if privately held, will be able to raise capital more efficiently through investors that invest in privately held growth companies.
At the same time, we believe this will really free up management time to continue to focus on core business and reduce time spent on dealing with formal obligations. With that, I will hand it back to Marco.
Thank you, Ståle. Then I will continue with giving an update on our strategic investments and new opportunities as we see them. The FPSO demand remains strong, and that's on the back of a relatively high Brent price. However, projects are increasingly harder to finance, as CapEx has grown significantly due to inflation, and cost of finance has increased due to more selective support from lenders, as well as the increase of the interest rates. Therefore, I expect that we will see more a shift to more EPCI contracts compared to the conventional lease and operate contracts. We in this market have completed a FEED for a BW Opportunity, and we're discussing EPCI terms now.
We have signed a new FEED contract for an opportunity in the Gulf of Mexico, and we are in direct negotiations with Petrobras for the Albacora tender. In case of lease and operate opportunities, we will remain selective and stick to our clear investment criteria, but we're also comfortable with EPCI contract models in combination with operation and maintenance service contracts, where we will then bring the FPSO contractor competence and provide and connect engineering, construction, installation, commissioning, startup, and operations, provided that this comes with the right risk reward, of course. But in this current market, I believe it should be possible to get the risk reward balance right. Then, for energy transition opportunities, we also look at possibility to capture those, first of all, by applying the kind of new technology, low CO2 emissions technology or CO2 capturing technology, on our own FPSOs.
The Barossa project is an example where we are the first FPSO company that deployed a combined cycle gas turbines for power generation. And we also work with our client, Santos, on to implement CCS solutions. Generically, I think we are positioning through applying our competence that we have in offshore engineering, construction, and operations, and we want to apply that into new energy infrastructure segments like floating wind, green or blue power generation, or to oil and gas infrastructure, but also opportunities in the CO2 value chain and clean fuel floating production. It takes time, though, and it requires more regulatory changes for such projects to become economically feasible. So we will remain patient but active, and we will remain selective before we allocate significant capital in such opportunities.
Then an update on BW Energy, of which we hold about 24% shareholding. BW Energy did a big step up on production levels, both in Gabon and Brazil, resulting in 80% production increase in the quarter to 27,400 barrels per day. And in addition, further upsides have been discovered in the Dussafu license, as a substantial discovery was made in Hibiscus South. And then for the Kudu field in Namibia, the new seismic results show a significant increase in the probability of future Kudu resources. So all that is very positive and will continue to support BW Energy in their journey. Then wrapping up with a brief outlook, our main focus is, of course, to ensure the safe and timely execution of the Barossa project.
This is our biggest undertaking, and the success of the company is linked to this, to this project. In the meantime, we continue to unlock the value in contract extensions of our core fleet, and we selectively progress with new infrastructure like FPSO projects. We'll continue to support BW Ideol as a private company, capitalized by new industrial shareholders. We'll also continue to support BW Energy with their production ramp-up, and we maintain an attractive shareholder return program. And with that, we are ready to take any questions you may have, and we will take them from the web.
There. Let me see. There are some number of questions which has come in through the web. I'll read out the questions, and then we'll respond to them in order. So the first one that came in was a question related to a Catcher, and the question is, could you please update on the latest on discussions to extend the Catcher FPSO? To Marco, you could-
Yeah.
Take, take that.
So on the Catcher FPSO, there are contract 18 times one year options, well defined in the contract at a defined rate. And our client, Harbour Energy, well, these options will roll basically automatically, and unless our client would not want to take the option, you have to specifically notify. And this is not what we expect based on the discussions we're having. So the expectation is that these extension will roll into a new year contract.
Okay. The next question is, how much decommissioning costs do you expect for Q4? Are there other negative or positive one-off effects that need to be taken into consideration in Q4? And I assume this, these are related to the decommissioning of Petróleo Nautipa. Well, simply said, we're still on. We stay by our guiding that we gave last quarter around this, that we see an anticipated kind of all-in cost towards the end of the year of 10% or $20 million in total for decommissioning of the unit. Timing-wise, we had less expenses in this quarter than we expected, but so that still implies that we would be looking at $10-$15 million in Q4 to wrap this up.
I maybe just want to add on this one that in our estimate, we're also assuming some cost related to moving the unit out of country. So there's some towing cost into that estimate as well. So it's not purely for decommissioning of the field locally in Gabon. As of now, there's no particular negative or positive one-off effects that we foresee for the current quarter we're in today. Next question. Looking on the guided depreciation of BW O pal of $170 million, that was well above estimated numbers. So this is from an analyst. Assuming a 25-year lifetime, it would imply book value of note of $4 billion, well above the unit's cost.
Is depreciation on BW O pal from that loaded, and could you indicate how long it will remain at the implied $170 million per year level? Well, we have taken a bit of a more conservative approach in terms of depreciation of the unit. And, yeah, I appreciate that. Maybe should have been stated more clearly in this analytical information we gave. But we are basically, as of now, considered it prudent to just depreciate the units contract period. Let me just apologize for this, the sound dropped, or I was disconnected there for a second. Just go back to the question in case this was missed. On the response to the depreciation.
So what we are currently using here is, we are depreciating the unit to zero over 15 years. So, although we do believe that the units have a 25-year lifespan and could potentially be on field for 25 years, we have taken a prudent approach as of now, where we don't take any residual value risk or risk related to contract extension. So we have assumed we depreciate the unit to zero over the firm 15-year contract period. Next question: How does BWO assess the potential financial and contractual risk related-associated with delivering the FPSO to the Barossa project? Specifically, are there clauses in the contract that could imply BW O ffshore in the extent of project cancellation or significant delays, last Federal Court news this Wednesday? I think that's for you, Marco.
Yeah. Well, I think it's fair to say that in, there's a lot of turbulence in Australia around environmental permits, not only for our client, Santos, but also for Woodside. So then the regulator, NOPSEMA, gets challenged in court, with regard to their approvals, and then that has an impact on the oil and gas companies in Australia. So that's obviously not a great situation for our client. However, the impact on us or, you know, what it means towards our contract, I can say that we have a very solid contract. There are several clauses in our contract that are effective in various potential events, like lay up rates, standby rates, but also termination fees, in case it would go that way.
But at the same time, as you can also read in the media, Santos remains, despite these challenges, remains in the view that this project will continue and is still on track for delivery first gas in the first half of 2025, and so are we with the FPSO. So we remain focused on delivering our project and continue to deliver it on schedule, and then go on rate. And we'll see if that's a standby rate or another rate. But in that sense, we have the right clauses in the contract for any of these situations.
Yeah, thank you. The next question is, you are currently in the market to raise a new NOK 1 billion loan. That is 3 x larger than the size you previously indicated. What has changed? Well, I don't think we've indicated anything in particular. What we're doing is very simple. We have a high yield bond that matures beginning of December, which is NOK 900 million, and which have been swapped to US dollars. So outstanding on that loan is just over $90 million. So the plan is to raise a new bond, or at least test the market, for the...
How conducive it is for issuing a new bond of NOK 1 billion, which would be equivalent to about $90 million, which will be used to refinance that loan that expires. We don't see this as being larger or anything different than what we have indicated. When it comes to the convertible bond debt that we currently have, the plan is still that this will be either just repaid on maturity, or we might still opportunistically buy back part of that bond and amortize that down to zero towards maturity late part of 2024. Next question is regarding the legal challenges in Australia to stop Barossa. Is BW Offshore concerned about its FPSO contract?
Is there a situation where Santos terminates? It's a bit similar-
Well, it's a bit similar question, but in any case, I want to reiterate, there's no signs at all for us that Santos would consider termination of the contract. They're very committed to this project as they communicate in the media. But our FPSO contracts always have a strong termination clause. In any case, that's the nature of a lease and operate contract, and the termination fees are typically around the equivalent of discounted cash flows of the lease contract. So, from that perspective, that's not a concern. But obviously, you know, we're very committed to this project, and so is Santos, and we're all working hard to deliver this project on time.
The next question is regarding BW Opportunity, where the question is: what are the main discussion points, and what is BW's level of confidence that a deal can be reached?
Yeah, so on BW Opportunity, we have completed the FEED. We're working closely with our client, Turkish Petroleum. The project looks very interesting for both parties. But we're not yet at a conclusion of an EPCI contract, and a potential O&M contract after that. So we're basically still discussing pricing and also remuneration models. These things always takes time, but it looks like a very interesting project for both our client and ourselves.
Yeah, thank you. Next one, well, slightly overlapping with the previous question, but because it was related to potential for extensions on Catcher. But the person is also asking about potential for extension on Pioneer. Maybe if-
Yeah, we're also,
Favor on that.
Yeah, I think so. We're also discussing with our client, Murphy, on Pioneer extension. The field still has life ahead, and obviously definitely in the Gulf of Mexico, but in general, it's not really an option to replace an FPSO. So we're both discussing a contract format which allows to continue production on the field and for that matter extend the Pioneer contract. But we haven't concluded these discussions, and there's also still a little bit of time to do so. And, you know, experience shows that normally it takes kind of close to the final date that things have to be agreed, that it gets agreed. So we're in that phase now.
Our next question: have you recognized the cash inflow of the sale of Sendje Berge since the transaction closed in July? However, it seems like it did not hit in this quarter. Well, we sold the unit for a total consideration of $15 million. Well, to give a bit more on the details of this, so part of the sales price was paid, or $9 million of this was paid upfront, and the remaining $6 million will be paid in monthly installments after closing. So the first $9 million was actually received already in Q2, and we also recognized that.
Then the payments, the remaining $6 million, we are now receiving month- on- month over the next six months starting in July. So very little impact in the Q3. So I didn't mention it specifically when I went through the cash flow. Does your full year 2024 EBIT guidance include anything for Petróleo Nautipa Decom? The answer is no. That has been included in the Q3... sorry, the 2023 guidance. Next question: Can you comment anything about the protest against the Barossa project in Australia? How does this potentially impact BW Offshore? I think you responded that already, so.
Okay.
We move on. As net debt quickly approaches zero, is the company considering increasing cash dividends? Since capital market seems to undervalue the assets in the company, is the company considering distributing BW Energy shares in kind to realize shareholder value? Maybe to take the second part of the question first, I think we are distributing BW Energy shares in kind. So yeah, unless I misunderstand the question, whether it should be more or not. But I think at least for now, I think we're at the level we're at. This is what's approved by the board, and we can't bring anything beyond that before. Okay, apologize for this.
Seems to be that we have a bit of network problem. I think it just dropped as I was about to respond to the last part of this question, which was around that net debt quickly approaches zero, is the company considering increasing cash dividends? At this point in time, we have no plan to increase cash dividend. We do have a very solid and comfortable cash position, but we also think that is the right way to structure kind of the company and set the capital allocation, because it also allows to have cash buffer for well, unforeseen challenges down the road.
But, more, I would say, even more importantly for us as, as companies to have capital available for, for project opportunities, if you need to deploy capital for, for good potential projects which we're still chasing, which Marco mentioned it earlier, earlier in the presentation, that it's—we still see a strong market, lots of opportunities, and, and we need to prepare ourselves to be ready for, for, for this. However, of course, if you over time see that you can't, how should I say, attract or, yeah, deliver on any of these prospects, yes, then we, we might change the approach in terms of, adjusting the cash, cash dividend. But I think that's, that's what we can say at the moment. That is the last, question we have on the, on the web.