FPSO operator BW Offshore has suspended its dividend to shareholders until the outlook for the oil sector improves.
The company felt the effects of the oil price slump in its third quarter results, which revealed a loss of $7.3million, compared to a $19.6million profit last quarter.
The company said: “The continued low oil price has changed the short and medium-term outlook for BW Offshore’s products and services. Macro conditions for the offshore industry have significantly worsened with expected continued drop in capital expenditure.”
It still expects outsourcing of production to be a cost effective solution for oil and gas companies, but believes it is prudent to expect a prolonged downturn in orders being awarded.
The majority of BW Offshore’s fleet remain on long-term contracts with national and independent oil companies. The fleet will continue to generate a healthy cash flow in the time ahead.
The firm posted third-quarter earnings before interest, taxes and depreciation and amortisation of $174 million against expectations for US$100. The Norwegian-registered company reported revenue of $308.7million.
An insurance recovery of US$75, recorded for direct damages to FPSO Cidade de São Mateusas was also taken into account. Nine workers were killed on the vessel in February of this year following an explosion.
The recovery project for Cidade de São Mateus continues, where the unit now has been freed of gas and condensate has been offloaded. The next significant step is to disconnect the risers and mooring lines so that the unit can be towed to a yard for repairs.
The company said it was working closely with insurers and loss adjusters and that February’s accident and its consequences are mostly covered.
BW Offshore operates 17 units and owns 14 FPSOs and one FSO. The company operates the FPSO Peregrino for Statoil and Sinochem on the Peregrino oil field offshore Brazil.