BW Energy IPO slated for first quarter of 2020

Norwegian FPSO operator BW Offshore is targeting 1Q 2020 for the IPO and listing of its 68.6% owned exploration and production subsidiary, BW Energy.

BW Adolo FPSO; Source: BW Offshore
BW Adolo FPSO; Source: BW Offshore

BW said on Wednesday that the IPO and listing were planned through a combination of a distribution of shares from BW Offshore and a contemplated equity raise of about $175 million.

New investors will be invited to subscribe for new shares at a valuation of $700-800 million for the current outstanding share capital of BW Energy.

Carl Krogh Arnet, CEO of BW Energy, said: “Throughout 2019, we exceeded operational and financial targets at Dussafu. Successful in-field exploration significantly increased our reserves base and led to an acceleration of future production growth.

“In Brazil, we acquired the Maromba license and submitted a field development plan. At Maromba, we will deploy the same development approach utilizing an existing FPSO, which has made Dussafu a world-class asset.”

“Our development plans for Dussafu and Maromba are expected to deliver a 5-fold increase in production to more than 50,000 bbl/day net by 2023 when we reach first oil from Maromba. This is profitable growth, from proven reservoirs, with highly attractive economics that will yield substantial cash flow and dividend potential to our shareholders in the years ahead.”

BW Energy is an E&P company with a strategy targeting proven offshore oil and gas reservoirs through phased developments by utilizing existing FPSOs to reduce time to first oil and cash-flow with lower investments than traditional offshore developments.

Currently, the two main assets of the company are the producing Dussafu Marine Permit offshore Gabon (73.5% working interest) and the Maromba field development in Brazil (95% interest post optional farm-out) which are both operated by the company. Total net 2P reserves + 2C resources are 247 million barrels per Netherland, Sewell & Associates, Inc., (NSAI) reports.

Effective from the day of listing, the board of directors of BW Energy will consist of: Andreas Sohmen-Pao (BW Group Limited), Marco Beenen (CEO of BW Offshore), Hilde Drønen (independent), Russell Scheirman (independent), and Tormod Vold (independent).

The listing 

BW said that the listing was intended to be executed through a combination of an IPO of new shares in the company raising gross proceeds of about $175 million and distribution of existing shares in the company held by BW Offshore to its shareholders.

The net proceeds from the IPO will strengthen the company’s financial position and fund the development of the Maromba field as well as future growth opportunities.

Based on initial feedback obtained by the Joint Global Coordinators, the company and its current shareholders expect to execute the IPO at a pre-money valuation of current outstanding share capital in the range of $700-800 million.

The company intends to satisfy the free float requirement for listing on the Oslo Stock Exchange through a combination of the IPO and a distribution of BW Energy shares from BW Offshore to its shareholders. It is estimated that the distribution will be of about $100 million.

The final amount of BW Energy shares to be distributed to the BW Offshore shareholders will be determined when the price and size of the IPO are finally determined following completion of the IPO book-building period. BW Energy shares distributed are expected to be tradable for BW Offshore shareholders on the first day of listing for BW Energy on the Oslo Stock Exchange. BW Offshore has currently approximately 3,850 shareholders which, coupled with the contemplated IPO placement, add significant liquidity and distribution of shares in the company after the IPO.

Tortue output  above guidance 

BW is the operator of the Dussafu block offshore Gabon, which contains the Tortue field. The production from the Tortue field was 4.3 million barrels in 2019 (gross, equivalent to 11,779 bbl/day), above earlier guidance. For 2020, the company expects production of 6.3 – 7.9 million barrels (equivalent to 17,300 – 21,600 bbl/day, gross) from Tortue as Phase 2 is planned to come on stream during 1Q and 2Q 2020.

Following the announced Hibiscus discovery in August 2019, BW Energy has updated the previously sanctioned development of the Ruche area. A larger jacket with 12 well slots will be installed closer to Hibiscus and will produce 70 million barrels of gross certified reserves.

The initial six wells will develop 37 million barrels in the Hibiscus and Ruche structures and the subsequent wells will develop an additional 33 million barrels from Hibiscus, Ruche and Ruche NE structures. The total gross capex for the greater Ruche development area (Phase 1 and 2) is $660 million, decreasing the unit capex from $13 to $9 per barrel.

Maromba first oil by 2022-end 

In March 2019, BW Energy announced the acquisition of the Maromba license from Petrobras and Chevron in Brazil.

Maromba is a well delineated field with 2C contingent resources in excess of 100 million barrels as certified by NSAI. BW Energy delivered a field development plan to Brazilian regulator ANP in December 2019 based on subsea wells tied back to an FPSO.

Initial development will target 55 million gross barrels from the 3 first wells and an incremental 44 million gross barrels from a further 3 producers and with support from 2 water injectors in the second phase. BW Energy is targeting first oil from Maromba by year-end 2022.