BW Offshore Cuts Dividend

Posted by Joseph Keefe February 16, 2015

BW Offshore cut its dividend on Monday, blaming lower spending by customers due to a fall in crude prices as well as a deadly accident in Brazil last week.

The company, which also met fourth-quarter earnings forecasts, said it planned a dividend of 2 U.S. cents a share for October-December, one cent less than in recent quarters and below expectations for 3 cents in a Reuters poll of analysts.

On Feb 11, an explosion on one of BW's oil production vessels offshore Brazil killed five employees, while four are still missing.

"The cut in dividend is because of the drop in oil price, increased uncertainty and on the backdrop of recent events," Chief Financial Officer Knut Saethre said during the company's earnings presentation in Oslo.

"We're first and foremost explaining the dividend cut by pointing to the general (market) uncertainty. It wouldn't be right to say it's caused by the accident, but it's obvious that it has played a part," he added.

The Cidade de Sao Mateus ship was on lease to Brazilian state oil firm Petrobras, and BW said on Monday the search for missing crew members was ongoing.

The price of Brent crude plunged to around $45 per barrel in January from $115 last June, and although it has since recovered to around $60 per barrel, many oil companies are scaling back spending.

"In general, projects are being delayed because of the drop in oil price. We are also seeing this and are adapting ... We are looking especially at the cost side," Saethre said.

"The crystal ball is quite muddy at the moment, so it's very hard to predict how the market will evolve in the short term. We see that some projects are being postponed, but not all."

By 0916 GMT, BW's shares were down 6.4 percent at 7.21 Norwegian crowns, against a 0.4 percent rise in Oslo's benchmark index.

The firm posted earnings before interest, taxes, depreciation and amortisation (EBITDA) of $104 million in the quarter, broadly in line with a mean forecast for $103 million in the Reuters poll.