BW Energy lowers Dussafu production target

EBITDA for 1Q20 was US$14.8 million, down from US$57.3 million in 4Q19. The decrease reflects one lifting from Tortue with net 0.4 million bbl to BW Energy compared to two liftings and net 1.3 million bbl in the previous quarter, as well as a realised oil price of US$33/bbl compared to US$65/bbl in the fourth quarter.

Gross production from Tortue increased to an average of 11 485 bpd for the first quarter compared to 10 735 bpd for the fourth quarter. Total gross production from the Tortue field increased to 1 045 000 bbl of oil from 987 000 in the fourth quarter. Production regularity was impacted by a scheduled downtime for the FPSO to connect the two new wells which came onstream in early March. Production cost (excluding royalty) was US$21.8/bbl in the quarter compared to US$22.8/bbl in 4Q19.

Net financial expense was US$5.5 million for the first quarter mainly caused by a US$1.5 million loss on interest rate swaps and currency losses due to the strengthening of the US$. Total equity at 31 March 2020 was US$460.9 million compared to US$363.1 million at the end of 2019. The equity ratio was 55.2% compared to 49.2% at year-end. Total available liquidity at the end of the quarter amounted to US$168.3 million compared to US$81.0 at the end of 2019.

BW Energy is continuing the process to establish a reserve-based lending (RBL) facility for Dussafu with a syndicate of leading banks.

"We have managed to protect our employees and partners and maintain full operations amid Covid-19. At the same time, we have taken action to protect our operational and financial flexibility, having more than halved our planned CAPEX for 2020," said Carl K. Arnet, CEO of BW Energy. "Our business model enables us to rapidly adapt to changing conditions, and we will quickly resume our development activities once restrictions are lifted. Our Dussafu assets are profitable at low oil prices and this highly prospective area holds significant remaining potential."

Revised development plans and outlook

BW Energy's total capital spending programme for 2020 has been reduced from US$250 million to US$115 million, of which US$49 million was expensed in the first quarter.

As a result, the Dussafu production projection for 2020 has been lowered to 15 000 - 16 500 bpd (gross) based on four producing wells, compared to an average of 11 800 bpd achieved in 2019. Operating expenditure per barrel is expected to decrease to approximately US$16-18/bbl, compared to US$21/bbl in 2019.

Drilling of the DTM-6H well was completed in March. The installation programme to connect the well to the FPSO has been rescheduled as the Covid-19 restrictions on international travel limits the movement of essential personnel, subcontractors and equipment to and from several countries, including Gabon. The company has for the same reason suspended drilling and connection of the planned DTM-7H well and the subsequent exploration well.

The Ruche project has also been deferred until efficient project execution can be assured.

The Maromba project has been refocused on activities required to progress on government approvals and optimisation of the field development plan with respect to investment, operational costs, and schedule.

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