Exxon to Acquire 3 of 5 FPSOs It Has Leased from SBM Offshore by Yearend

Wedoany.com Report-Nov 20,  Exxon Mobil Corp. will assume ownership of floating production, storage and offloading (FPSO) vessel Liza Destiny by next month, owner SBM Offshore NV has said.

Liza Destiny is one of five FPSOs that the United States oil giant contracted from the Dutch ocean engineering and construction company for deployment in Guyana, where ExxonMobil holds a 45 percent operating stake in the Stabroek block. Four FPSOs were contracted last year: Liza Destiny, One Guyana, Prosperity and Unity. One was contracted this year, called Jaguar.

Under last year’s contract agreement, ExxonMobil will acquire the four vessels after the lapse of their contract durations but has the option to make the purchase earlier. So far ExxonMobil has acquired two of the four, FPSO Unity last year and FPSO Prosperity last month.

“Following the purchase of FPSO Prosperity, ExxonMobil Guyana Ltd has informed the Company that it will also exercise its right to purchase FPSO Liza Destiny by year-end 2024”, SBM Offshore said in its quarterly report. “This is ahead of the end of the maximum lease term which would have expired in December 2029”.

For One Guyana, which has yet to be deployed, “The integration and onshore commissioning activities are progressing in line with plan, including the successful completion of the power plant commissioning”, SBM Offshore said. “First oil is expected in the second half of 2025”.

Earlier this year ExxonMobil tapped SBM Offshore to build FPSO Jaguar. “Ownership will transfer to EMGL [ExxonMobil Guyana Ltd.] prior to the FPSO’s installation in Guyana, and SBM Offshore expects to operate the FPSO for 10 years under the Operations and Maintenance Enabling Agreement signed in 2023”, SBM Offshore said in a press release April 12, 2024, referring to the four-FPSO agreement that it announced May 2, 2023.

Jaguar will serve the sixth development in Stabroek. The development, called Whiptail, is expected to raise Guyana’s oil production to 1.3 million barrels per day. The owners target to put the $12.7 billion Whiptail project onstream 2027, according to ExxonMobil’s announcement of the final investment decision April 12.

In other developments, SBM Offshore said last Thursday it had won a contract along with fellow Dutch company Technip Energies NV to build an FPSO for TotalEnergies SE’s GranMorgu field in Suriname. “SBM Offshore is expected to operate the unit under an operations and maintenance agreement”, SBM Offshore said.

“The FPSO will be the first large deepwater project development in Suriname with an expected production capacity of up to 220,000 barrels of oil per day and associated gas treatment capacity of up to 500 million cubic feet per day”, it added. It will have a storage capacity of two million barrels of crude oil. Production is expected to start 2028.

“Thanks to the joint expertise of Technip Energies and SBM Offshore, this all-electric drive FPSO will also be designed to eliminate routine flaring, in line with TotalEnergies objectives and SBM Offshore’s goal to deliver carbon efficient units”, SBM Offshore said.

For the third quarter, SBM Offshore logged $2.84 billion in “directional revenue”, up 26 percent compared to the same three-month period last year.

SBM Offshore’s directional lease-and-operate revenue grew 28 percent year-on-year to $1.8 billion partly thanks to acquisition and divestment transactions in Angola, offset by “lower revenue generation from FPSO Liza Unity following the sale of the vessel in 4Q 2023 with a contribution coming solely now under the Operations and Maintenance Enabling Agreement”.

Meanwhile directional turnkey revenue rose 24 percent year-on-year to $1.04 billion, “mainly driven by the contract award for FPSO Jaguar and higher support to the fleet through brownfield activities, partly offset by a comparatively lower amount of revenue booked in the construction portfolio as projects approach completion”, SBM Offshore said.

It said directional net debt increased by $603 million to $7.26 billion, “driven by drawings under the project finance facilities, which reflects the continued investment in the construction program of 4 FPSOs”.

However, SBM Offshore said proceeds from the sale of Liza Destiny “will be applied to full repayment of the US$405 million outstanding project financing and as such together with the repayment of the US$979 million outstanding financing for FPSO Prosperity will decrease SBM Offshore’s net debt position”.

As a result of the sale of Prosperity and Liza Destiny, SBM Offshore increased its projected directional revenue for 2024 to over $6 billion, of which $3.7 billion is expected to come from its turnkey segment and $2.3 billion from the lease-and-operate segment. EBITDA guidance has been increased to about $1.9 billion.

SBM Offshore said it has completed more than half its current share buyback program of around $140 million.