Shell lifts option to buy FPSO Turritella from SBM Offshore
Date: July 12, 2017
in: AEX, Latest News, SBM Offshore, Spotlight
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SBM Offshore announced that Shell has exercised its right to acquire FPSO Turritella for an amount of around $ 1 billion. The Turritella has been officially on hire since 2 September 2016 in the Gulf of Mexico.
At a depth of 2,896 meters or 9,500 feet it is the world’s most advanced FPSO. The FPSO has a capacity of 60,000 barrels per day. Its hull can store 800,000 barrels of crude.
In July, 2015, SBM Offshore sold a combined 45% stake to Mitsubishi Corporation (30%) and NYK Line (15%) for a total consideration of $ 590 million.
SBM Offshore signed the original contract with Shell for the Stones project in the Walker Ridge Area, 200 miles offshore Louisiana in July 2013. The initial contract was for an initial Lease & Operate period of ten years with an extension option up to another ten years.
Although the joint venture in which SBM Offshore owns 55% receives an upfront $ 1 billion in cash upon completion of the transaction, which is expected to close in early 2018, the deal can be considered a bit of a blow.
Based on the transaction value with the two financial partners in 2015, the total value of the FPSO would be $ 1.3 billion, which suggests that the investors already lost $ 140 million, reduced by the proceeds since the FPSO was on hire.
Based on the implied value of the FPSO of $ 1.3 billion, annual proceeds of the FPSO can be estimated at around $ 125 million. SBM Offshore entered into project financing of around $ 800 million at an interest rate of 3.6%.
As a result, SBM Offshore and its partners will be missing out on net proceeds of nearly $ 100 mln per annum, minus the operational costs. However, EBITDA margins on Lease & Operate activities are north of 60%, so the premature sale of the Turritella will undoubtedly hurt SBM’s profit & loss account at a time that new projects are scares.
Post source : SBMO