Energy SpA — Earnings Release 2023

Nov 16, 2023

BW Energy: Third quarter 2023 results

BW Energy: Third quarter 2023 results

THIRD QUARTER 2023 RESULTS

HIGHLIGHTS

* Q3 EBITDA of USD 49.7 million and net profit of USD 0.5 million

* Q3 gross production of 2.49 million barrels with 1.93 million barrels net to

BW Energy

* Completed one lifting of 950,000 barrels (net BWE) at a price of USD 79 per

barrel

* Start-up of two additional Hibiscus / Ruche production wells and gas lift

compressor

* Assumed 100% ownership and operatorship of Golfinho from late August

* USD 80 million Golfinho prepayment facility and offtake agreement completed

and drawn

* Maintained strong balance sheet with cash position of USD 198 million

* Substantial oil discovery made in the Hibiscus South prospect (November)

BW Energy, operator of the Dussafu Marine licence in Gabon and the Golfinho

cluster offshore Brazil, reported EBITDA for the third quarter of 2023 of USD

49.7 million, up from USD 39.3 million in the second quarter. Gross production

from the operated assets was 27,400 barrels of oil per day in quarter, an

increase of 80% compared to the second quarter of 2023. This included a full

quarter of production from the Tortue and Hibiscus fields in the Dussafu licence

(73.5% working interest) and production from the Golfinho field after assuming

100% ownership on 28 August.

"We continue to make significant progress on executing our strategy, delivering

strong production growth from Dussafu and by becoming owner and operator of

material production and cashflow in Brazil, thereby also diversifying and our

production and resource base," said Carl K. Arnet, the CEO of BW Energy.?"We

have also fast-tracked our appraisal program offshore Gabon, making a

substantial oil discovery in the Hibiscus South satellite prospect. This will

rapidly be brought into production and provide us with low-cost and low-risk

access to high value barrels."

FIELD OPERATIONS

BW Energy completed one lifting in the third quarter and realised a price of USD

79 per barrel. BW Energy's share of gross production was approximately 1.57

million barrels of oil, an increase of over 50% from the prior quarter. The net

sold volume, which is the basis for revenue recognition in the financial

statement, was approximately 1 million barrels including 32,500 barrels of

Domestic Market Obligation (DMO) deliveries with an under-lift position of

116,000 barrels at the end of the period.

Gross production from the Dussafu licence averaged approximately 23,200 barrels

of oil per day in the quarter, amounting to a total gross production of

approximately 2.14 million barrels of oil for the period. Production was

positively impacted by first oil from two additional Hibiscus wells and start-up

of the additional gas lift compressor on the FPSO BW Adolo, partly offset by

challenges with the ESPs (electrical submersible pumps) on the DHIBM-3H and -4H

wells. Production costs (excluding royalties) for the period was approximately

USD 28 per barrel. The decrease from previous quarters reflects increased

production.

While the ESPs were re-started in mid-October, the Company continues to

experience challenges impacting production. BW Energy is working closely with

the supplier to identify and resolve the issues affecting the ESPs' electrical

system. Also in October, the company completed on lifting of approximately

950,000 barrels to the Company at an average price of about USD 90. The next

lifting to BW Energy is planned for end-November.

For 2023, the Company expects a total production of approximately 6.7 million

barrels from the Dussafu licence, reflecting the continued ESP challenges. The

annualised average OPEX is expected at USD 30 per barrel. For 2024, the

production?expectation is in the range of 10 to 12 million barrels due to the

ongoing ESP challenges.

Gross production from the Golfinho field averaged approximately 11,200 barrels

of oil per day from the period 28 August to 30 September, amounting to a total

production of 381,700 barrels in the period. There were no liftings in the

quarter. Production cost (excluding royalties) averaged USD 48 per barrel for

the period. The first Golfinho lifting of about 521,500 barrels of oil was

concluded in early November. A second lifting is planned in December. The take-

over of FPSO Cidade de Vitória from Saipem is awaiting ANP approval.

BW Energy had a cash balance of USD 197.6 million on 30 September 2023, compared

to USD 233.5 million on 30 June 2023. The decrease is primarily due to ongoing

development of Hibiscus Ruche and the Golfinho closing, offset by draw-down on

the USD 80 million Golfinho prepayment facility. The Company had a total drawn

debt balance of USD 380 million as of 30 September 2023 including the prepayment

facility.

DEVELOPMENT PLANS

The ongoing Hibiscus / Ruche Phase 1 drilling campaign comprises eight firm

wells. In addition to the four Hibiscus wells drilled to date, the updated plan

includes a fifth Hibiscus well, a Hibiscus South development well, finalisation

of the Ruche well, and a Bourdon prospect test well. Drilling results to date

show a larger Hibiscus resource and a slightly smaller Ruche resource than

previously modelled, with management estimates of a net addition of ~10 million

barrels oil in place.

In July and September, production commenced from the third and fourth Hibiscus

wells respectively. At the Ruche field, drilling and completion activities on

the DRM-3H production well were suspended pending an alternative casing after

encountering oil in the Gamba reservoir. The Company expects to return to

complete this well later in the drilling campaign when additional casing

material is received.

Drilling of the Hibiscus South satellite prospect (DHBSM-1) was completed after

encountering commercial volumes of oil with approximately 20 meters of pay in an

overall hydrocarbon column of 26.5 meters in the Gamba formation. The Company

plans to return to the well to complete it as a production well in early 2024.

The Hibiscus South structure is a separate accumulation with a deeper oil-water

contact than the nearby Hibiscus Field, which increases the Company's reserve

base and provides the opportunity to add one or more additional production well

in the current drilling campaign.

The Hibiscus / Ruche drilling campaign has the potential to bring total oil

production on the Dussafu licence up to approximately 40,000 barrels per day

gross when all wells are on-stream. In addition to the Hibiscus South Prospect,

the Company also plans a prospect test well in Bourdon (Prospect B) under the

current rig contract.

In Brazil, the Company progressed preparations for two planned Golfinho infill

wells (GLF-51 oil well and GLF-50 gas well) which are expected to double

production in 2026. Also in Brazil, the Maromba development plan progressed with

completion of the revised concept expected in the second quarter of 2024. Total

oil production from Maromba at peak annual average is expected between

30-40,000 barrels of oil per day. The final investment decision is subject to

completion of the project financing. In October, BW Energy paid the first USD

30 million instalment for FPSO Polvo per schedule. The Company will pay the

remaining USD 20 million in the second quarter of 2024.

In Namibia, BW Energy is progressing the revised development plan for the gas-

to-power project and analysing data from the 3D survey completed in May.

Interpretation of the initial fast-track data has enhanced the depositional

model and de-risked potential targets?with additional prospects identified, and

the Company has decided to start ordering long-lead items for a future

exploration program.

OUTLOOK

BW Energy prioritises safety first with zero harm as an overriding objective for

people and environment. The Company is substantially reducing the carbon

footprint by developing discovered oil and gas resources through large-scale

repurposing of existing production infrastructure.

The Company expects oil and gas to remain an important part of the global energy

mix in decades to come and remains focused on realising long-term value creation

via its phased development strategy and investments in high-return assets. The

flexible investment strategy has proven robust for a range of market scenarios

and positions the Company to address both short- and long-term opportunities to

drive cash flows and earnings.

Energy prices remain at high levels despite a softening of macro-economic

drivers as geopolitical conflicts, global supply change challenges, inflation

and high interest rates. Short-term, the focus is on completing the Dussafu

drilling program and stabilising production from the Tortue, Hibiscus, Ruche and

Hibiscus South fields, and optimising output from the assets in Brazil. Both are

providing a substantial increase in oil production and significant value for

stakeholders.

REPORTS AND PRESENTATION

Please see the attached third quarter presentation and earnings tables.

CONFERENCE CALL/WEBCAST

BW Energy will today hold a conference call followed by a Q&A hosted by CEO Carl

K. Arnet, CFO Knut R. Sæthre and COO Lin G. Espey at 09:00 CET.

Participants dial in numbers:

Pin code for all countries: 980877

DK: +45 7876 8490

SE: +46 8 1241 0952

NO: +47 2195 6342

UK: +44 203 769 6819

US: +1 646-787-0157

SG: +65-3-1591097

FR: +33-1-81221259

The presentation may also be followed via webcast on:

https://events.webcast.no/viewer-registration/ZTZNirHH/register

(https://events.webcast.no/viewer-registration/ZTZNirHH/register)

This information is subject to the disclosure requirements pursuant to Section

5-12 the Norwegian Securities Trading Act