Earnings call transcript: BW Energy exceeds revenue forecast in Q3 2025

BW Energy Ltd reported its third-quarter 2025 earnings on October 28, revealing a revenue of approximately $200 million, surpassing the forecast of $182.38 million. Despite this revenue beat, the company’s stock price fell by 1.37%, closing at $40.2. According to InvestingPro data, the company’s overall Financial Health Score stands at FAIR, with particularly strong momentum and relative value metrics. The decline in stock price suggests mixed investor sentiment, potentially influenced by market conditions or concerns not detailed in the earnings report.

Key Takeaways

• Revenue exceeded expectations by 9.7%, reaching approximately $200 million.
• Stock price decreased by 1.37% post-earnings, closing at $40.2.
• Strong cash position of $260 million highlights financial stability.
• Production growth plans aim to triple output by 2028.
• Operational expenses per barrel are at the higher end of guidance.

Company Performance

BW Energy demonstrated strong revenue performance in Q3 2025, with approximately $200 million reported, surpassing forecasts. The company’s strategic investments in projects like the Maromba Project and Golfinho Boost are set to drive future growth. However, the stock’s decline post-earnings indicates investor caution, possibly due to broader market trends or EPS concerns not specified in the earnings report.

Financial Highlights

• Revenue: Approximately $200 million, exceeding forecast by 9.7%.
• EBITDA: $96 million.
• Net Profit: $20 million.
• Cash Position: $260 million.
• Operating Cash Flows: $81 million.
• Leverage Ratio: 0.9.

Earnings vs. Forecast

BW Energy’s revenue of approximately $200 million surpassed the forecast of $182.38 million by about 9.7%. This positive surprise reflects the company’s strong operational performance and strategic investments. However, without specific EPS data, further analysis of earnings performance is limited.

Market Reaction

Despite the revenue beat, BW Energy’s stock price fell by 1.37%, closing at $40.2. This decline, within the 52-week range of $21.5 to $50.4, suggests investor concerns potentially related to market conditions or undisclosed earnings figures. InvestingPro analysis indicates the stock is currently trading near its Fair Value, with a strong return over the last year despite recent market volatility. The broader market trend or sector performance may also have influenced this movement.

Outlook & Guidance

BW Energy aims to increase production from 30,000 barrels per day in 2025 to 90,000 barrels per day by 2028. This ambitious growth plan comes as InvestingPro data shows revenue decline of 32.52% in the last twelve months, highlighting the importance of successful execution of these expansion plans. For detailed analysis of BW Energy’s growth prospects and comprehensive financial metrics, explore the full Pro Research Report available on InvestingPro. The company plans significant capital expenditures of $475-$525 million for 2025, with ongoing projects like the Bourdon FID expected in Q4. The company’s strategic focus on leveraging existing infrastructure and transitioning to cash from operations post-Maromba Project completion highlights its growth trajectory.

Executive Commentary

CEO Carl Arnet emphasized the company’s growth potential, stating, "We expect to go from 30,000 or north of 30,000 barrels per day in 2025 to more than 90,000 barrels per day in 2028." CFO Thomas Young added, "We’re delivering on our strategy to create long-term value as a fast-growing E&P company," underscoring the company’s strategic direction and financial discipline.

Risks and Challenges

• Oil price volatility poses a risk to revenue stability.
• High operational expenses per barrel could impact margins.
• Market uncertainties and investor sentiment may affect stock performance.
• Execution risks associated with large-scale projects like Maromba and Bourdon.
• Potential geopolitical risks in regions of operation.

Q&A

Analysts inquired about the Karas Well, with the company confirming it had reached target depth and logging activities were starting. Questions also focused on the Namibia onshore investment, where BW Energy holds a 20% stake, highlighting strategic relationships. The Bourdon Development was discussed, with plans to leverage existing infrastructure for future growth.

Full transcript - BW Energy Ltd (BWE) Q3 2025:

Conference Operator: Welcome to BW Energy Ltd’s third quarter 2025 presentation. For the first part of this call, all participants will be in a listen-only mode. Afterwards, there will be a question and answer session. To ask a question, please press five star on your telephone keypad. This call is being recorded. I now turn the call over to you, Carl. Please begin your presentation.

Carl Arnet, CEO, BW Energy Ltd: Thank you, operator. And a warm welcome to this third quarter presentation by BW Energy Ltd. This presentation will be hosted by Thomas Young, our new CFO, and Brice Morlot, our COO, also in a new position, and of course myself, Carl Arnet. The third quarter highlights. The broad picture is that everything is on schedule and we are on track to meet full year production guidance. Our project portfolio is going very well on both cost and schedule, and the Maromba financing has been completed and you will have more details on this later. The Bourdon is moving towards FID, the recently made discovery, and we are drilling our Kudu appraisal well. The EBITDA of the third quarter was $96 million, net profit at $20 million, and our cash position at around $260 million.

The operational performance in the quarter was affected by the Dussafu annual maintenance campaign and this reduced the availability of Dussafu to about 80%. If we account for the downtime, the Golfinho production was at 92% availability, which is good and an improvement over last quarters. The Golfinho production will be affected though in the fourth quarter with their annual maintenance and that will be a five weeks campaign. The overall is that the guidance for 2025 is maintained and stands at 11 to 12 million barrels, which is an average of 30,000 to 32,000 barrels per day. The year to date production is 8.5 million barrels. Just to clarify, if you look at the average production in the quarter that was affected then obviously by the decline and the shutdown for maintenance.

Again, just to reiterate what we have said previously, the quarterly decline is about 1,000 barrels net per quarter. This gives a competitive OpEx per barrel and year to date is shy of $20, so $19.50 per barrel and we have an updated guidance of $19 to $21. We previously had guidance a bit wider of $18 to $22. The annual maintenance on Dussafu was completed on schedule and we had a net production in the quarter of 20,000 barrels per day. Maromba execution project is very much on track. The FPSO refurbishment is going very well in China and we have taken delivery of the rig in Singapore and we have inspections going on to prepare work scope and we plan to take the rig to Dubai for the conversion.

The project engineering or the engineering effort is going well and we have placed all the orders for long lead items, so very much on track with the Maromba project. In terms of projects, we are executing the Maromba project, the Golfinho Boost project, and the Babomo Phase 2, and you will see that this will add significantly to our 2P reserves. $123 million for Maromba, $12 million for Golfinho Boost, and $14 million for the Babomo Phase 2. We also work on the Bourdon FID, and we expect to mature that within the fourth quarter and add an additional 18 million barrels net of Bourdon reserves. This will take us to an industry-leading growth. We expect to go from 30,000 or north of 30,000 barrels per day in 2025 to more than 90,000 barrels per day in 2028.

We maintain our track record of expanding our high-quality portfolio, and we have shown consistent growth in our 2P reserves with the addition of Maromba that will stand at 252 million barrels. Of course, we have significant remaining potential in the further to see reserves of 388 or close to 400 million barrels. With that, I will leave the word to Thomas Young that will take you through the financial highlights.

Thomas Young, CFO, BW Energy Ltd: Thank you for the introduction, Carl, and good afternoon to you all. It’s a pleasure to take over the financial leadership from Brice and to continue strengthening our financial position, which I see as an important foundation for the ongoing growth journey which is BW Energy. As we enter a period of increased productivity, I’m pleased to report that BW Energy maintains a strong financial position. Our producing assets continue to generate a very solid underlying cash flow. The balance sheet is robust, and we currently have ample liquidity headroom. This quarter has been particularly active, at least from a financing perspective, with several key financing transactions successfully completed, including firstly the approximately $365 million Maromba FPSO ECA-backed financing, the $108 million short-term lease financing for the purchase of the Maromba rig, and lastly the $250 million corporate revolving credit facility.

In closing these transactions, we’ve established some important new banking relationships in the Middle East and Asia that have given us access to low-cost and efficient financing. Let’s now take a look at the financial developments for the quarter from a lifting or sales perspective. This quarter is nearly identical to the previous quarter. We had two liftings from Dussafu at about 950,000 barrels a piece and a 500,000 barrel lifting from Golfinho. Realized prices were also quite similar to the second quarter, which then naturally means that the revenue this quarter is nearly the same. In terms of production, this quarter the production was a little lower due to the planned downtime on Dussafu, which was part of our annual maintenance cycle on the Dussafu FPSO.

We’ve seen this planned maintenance effect come as a surprise to some of you in previous years, so probably helpful to note that this happens every year around Q2 and Q3 and should be taken into account in any forecast or similar. The same goes for Golfinho really. Altogether, stable volumes and firm pricing delivered us a total revenue of approximately $200 million. Let’s move on to cash flow and breakdown of recent quarterly development. We began the quarter with a cash position of $193 million. Operating cash flows reached $81 million, a notable increase compared to the previous quarter despite similar lifting volumes. Just to comment on that, this increase was primarily due to timing. When we sell our oil to the oil marketer, they have a few days to pay us.

As the last second quarter lifting took place at the very end of June, it meant that the proceeds from that particular lifting, even though it was booked P&L wise in the second quarter, weren’t received until July, which explains the increase. As planned, we ramped up our investment spend this quarter in line with increasing product activity. While reported investment cash flow was around $120 million, actual spend exceeded $200 million. The reason why the investment cash flow shown here is lower than our actual spend is because we converted the Maromba rig purchase, or the Bolaris 247, to a lease. The rig investment therefore does not show up in our investment activity cash flow, but rather as a right of use asset with a corresponding lease liability.

Beyond Maromba, we invested approximately $30 million in the Kudu well with the residual spending at Golfinho Boost and some early planning costs for Maromba Phase 2 at Dussafu. I’d like to point out that our intention is not to exit quarters with this level of cash on hand. Between the corporate RCF and the Dussafu RBL, both being revolving credit facilities, we have the ability to repay and redraw when needed. This highlights the flexibility and efficiency of our current debt capital structure. Looking ahead, I’d expect to see less cash on our balance sheet going forward as we would rather regulate down the RCF debt to reduce interest costs and rather keep more available liquidity. In addition to our liquidity position, our balance sheet metrics also remain strong.

We ended the third quarter with a conservative leverage ratio of 0.9, which is a strong starting position as we move into a high activity growth phase. This growth phase is funded to a degree by operating cash flow, where excess spend is funded primarily by additional debt. Naturally, that means that we will see an increase in net debt as we move closer to Maromba First Oil and as we draw on the various project financings we have in place today. Equity continues to grow steadily, but as we’re investing in a lot of high value activities, we see that total assets are also increasing, which will maintain the equity ratio going forward, at least until we see the fruits of our labor. Moving to liquidity, this is a very important part of what makes the current BW Energy capital structure efficient.

When undrawn, we only pay a fraction of the drawing cost, the best example of this being the corporate RCF. When undrawn we pay 60 basis points or 0.6% for the liquidity on the corporate RCF, which makes this a very efficient source of liquidity. The makeup of the additional liquidity in the third quarter is $70 million available on the Dussafu RBL and $200 million available on the corporate RCF, although it is not by definition classified as liquidity. In the presentation like this it is important to note that the project financing on the FPSO and a planned Maromba wellhead platform project lease is available to be drawn as we spend.

We have slightly north of $200 million remaining on the Maromba FPSO project finance that will effectively offset against our CapEx guidance and we expect that when we close the long-term project lease for the wellhead platform it will offset most of the $250 million wellhead platform CapEx. In other words, there’s about $200 million of undrawn debt in relation to the FPSO and about $250 million that we expect for the wellhead platform. At least that per definition is not part of the $529 million liquidity shown here, but for all practical purposes it’s available subject to spending on the respective projects. In total, these items give us significant headroom in the years before Maromba first oil. The chart illustrates our capital strategy for 2027. On the left you’ll see our available liquidity and expected cash flow generation from existing projects.

On the right, how we plan to invest it. The key takeaway is even in the lower than $60 per barrel oil price scenario through 2025, 2026, and 2027, a rather unlikely scenario if you ask me, but regardless, we’ll have more than enough capital to fund our growth until Maromba is online. The majority of our debt maturities fall after Maromba comes on stream at the end of 2027, which of course marks a key inflection point for the company where we expect to transition from drawing on facilities to being funded by cash from operations. Since the second quarter presentation we have made excellent progress and completed several attractive financing agreements, a project finance facility for the FPSO, a short-term lease to cover the purchase of the jack-up rig, and secured a corporate RCF facility as additional liquidity buffer should it be needed.

These solutions have been enabled through strong relations in the Middle East and Asia to strike deals with reliable long-term financial partners and very attractive terms and conditions. With that, let me give you an update on how we are tracking against our targets for 2025. We are pleased to present an updated outlook for 2025. Year to date production has averaged 31,500 barrels per day including completed maintenance at Dussafu. While we still have some remaining downtime at Golfinho in Q4, we maintain our full year guidance of 30,000 to 32,000 barrels per day. Operating costs have been strong, allowing us to narrow our guidance to $19 to $21 per barrel from the previous $18 to $22. Capital expenditure for the first nine months totaled $304 million, below expectation due to the $108 million Weller platform CapEx being converted to a lease financing.

We therefore now revise our full year CapEx guidance to $475 to $525 million, with spending expected to increase going forward as project activity ramps up. General and administrative expenses remain in line with expectation, and we continue to guide as previously communicated. Overall, our year to date performance remains strong, and we have momentum heading into year end. Before we open the floor to Q&A, I’d like to share a few concluding remarks. We’re delivering on our strategy to create long term value as a fast growing E&P company supported by a diversified portfolio, strong cash flow, and a robust balance sheet. We’re actively advancing key development projects that will drive significant growth, targeting production of around 90,000 barrels per day by 2028. Our financial capacity underpins this journey with disciplined capital allocation, a resilient balance sheet, and key Maromba financing milestones completed.

In sum, the company is well positioned to fund our growth and deliver sustained value for shareholders. With that, I’ll hand it back to the operator to the floor to open for questions. Thank you.

Conference Operator: Thank you. If you do wish to ask a question, you will need to press five star on your telephone. To withdraw a question, press five star again. Our first question comes from the line of Theodore Nilsen from SP1 Markets. Please go ahead. You will now be unmuted.

Good afternoon and thanks for taking my questions. A few questions from here, first on the card as well. In Namibia, ongoing. As far as I understand, long term activity has been going on for at least a week or so. Just wonder what you can share about what you found there or if there’s any resources that you can disclose today. Second question is on CapEx and the changes to CapEx guidance this year. I understand that the major part of the change in CapEx guidance relates to the lease, but still I wonder how does that change impact 2026 CapEx? Should we expect some of the previously guided 2025 CapEx to roll over to 2026? My last question is on the diesel food production for 2026. Should we expect a minor the year compared to the average 2025 production or will that remain at the current level? Thanks.

Carl Arnet, CEO, BW Energy Ltd: Okay, I suppose I’ll take the first Karas question. We have not been logging for a week. We’re actually a little bit ahead of schedule. We reached target depth last night, and the logging activities are just getting started as we speak. We will be back with news from Karas shortly, but it’s a little bit early days. We will come back when we have completed the logging activities, and then CapEx guiding. I guess you take that, Ty.

Thomas Young, CFO, BW Energy Ltd: I can take that. Thanks, Tildo. Yeah, I mean firstly, you know, you asked about, I think, a little bit the impact of the lease on the CapEx guidance. Just to kind of clarify, this first lease is obviously the short lease that we’ve done for the rig acquisition in anticipation of the longer term lease. That’s done a full offset basically of that CapEx, which was an acquisition cost of $107.5 million, to be specific. In terms of as we move forward into the longer term lease, which will hopefully be in place by year end, that’s at least a plan. We expect to see roughly under $1 million offset in 2026, with the remainder of the weather platform cost in 2027. In terms of the remainder of the delayed phasing, we see this as quite natural.

A couple of reasons: there’s no change to the budget, there’s no change to schedule. When we do our planning, we see cash flows can be a bit delayed, reflecting really the difference between committed costs and actual cash out, which has elements of payment terms with suppliers, etc. It’s generally considered a prudent approach to cash flow planning. Further, we actively manage cash out, so we see some extension of Tasman.

Brice Morlot, COO, BW Energy Ltd: I can take the third question about production guidance. Production guidance are unchanged for 2025. Golfinho production is, so today the installations are shut down due to planned maintenance. We decided to extend the scope this year with a couple of weeks to accelerate some of the improvements we want to do for the Boost project. This longer maintenance will avoid the shutdown next year. Therefore, there will be no shutdown in 2026. In Brazil on Dussafu, the production is in line with the budget in terms of decline going forward. You can take into account approximately between 10% and 15% per year, while some wells will experience steeper declines. The new wells are also coming online. We have the Babomo Phase 2 project, so it’s four new wells in Gabon with appraisals. They will come online end 2026.

It’s quite a highly profitable project with fast payback, two to four months. Basically, by the time the trading begins on the new well, the initial well is paid off. In terms of cash flow, it means that the Dussafu project are repaid by Maromba. Perfect. For the 2026 guidance, we will share this during the next quite early communication.

Okay, thank you.

Conference Operator: Thank you, Theodore. There’ll be a brief pause while new questions are being registered. As a reminder, press five star to ask a question as no one else has lined up for questions in this call. I’ll now hand it over to Thomas for any written questions.

Thomas Young, CFO, BW Energy Ltd: Thank you. Operator. We have a question from Yaakov in SP1 Markets asking about the breakdown of the debt structure. I can jump into that. We have today a $400 million RBL. That’s an RCF facility sitting at Dussafu level. We have currently drawn $330 million, which leaves $70 million outstanding on Dussafu. We also have a state and lease.

Bank.

Platform that’s producing there today. We have roughly $131 million outstanding there as of the end of the quarter. On Golfinho, we have a small prepayment leftover that was there for covering the working capital of the acquisition. It’s been extended once. At the moment, we plan to fully repay it by the end of the year and that’s currently sitting at $40 million. That is repaid with liftings on the bond. We have a Nordic IO bond VO1 sitting at $100 million. We also have the Maromba well, a platform short-term lease that we’ve covered. We have the corporate revolving credit facility that’s a $250 million RCF sitting at the corporate level with $50 million drawn at the moment. We have the Maromba FPSO ECA-backed financing, which is a construction per six and a half years term with it’s a part of your finance facility.

It’s draw as you spend and it’s for $365 million, of which we have drawn roughly $130 million. Moving on, we have some questions on Q3. I think that’s already been covered by Carl. We have a question on the rationale for the onshore investments in Namibia. Carl, perhaps you could cover that.

Carl Arnet, CEO, BW Energy Ltd: Yes, I can cover that. This is a little bit outside what we normally are interested in, but as it is Namibia and we have a good relationship with ReconAfrica, we decided to participate in their onshore exploration program. I think one reason is that we want to be a good corporate citizen in Namibia, and this is something that Namibia wants done and it has good local support. The other thing is of course it’s a good hedge for us with interests in gas to power in Namibia in the longer picture. Those are the main reasons for being interested in this exploration program, and we have a 20% stake in the asset.

Thomas Young, CFO, BW Energy Ltd: Thanks, Carl. Moving on, we have a question on Bourdon, whether or not we could comment on FID timeline and how it compares to Maromba, Brice. Perhaps you could cover that one.

Brice Morlot, COO, BW Energy Ltd: Yes. Bourdon is a new major discovery in Gabon. Very important for the country and for us. We are working on the field development plan. It’s a great project with strong economics because the FPSO infrastructures are there already, and we have a lot of synergies: electricity production, living quarters, logistics. We want to go ahead with the project. It will add two years of reserves replacement on the license, and it will contribute to material extension of the plateau production. Also, in studying an infrastructure in this region of the field, we’ll unlock the potential of this region with other prospects to uprise. We see significant near field development with a proven potential. We have Bourdon, Southeast Bourdon, Southwest Bourdon, Ebo, Deep, Abay, Grillon. Very good prospects there. The appraisal of Bourdon already confirmed the best reservoir and fluid quality in Dussafu.

We are working on making an optimal solution which also fits the overall company development schedule. In terms of development, we are working on a capex efficient concept leveraging the existing infrastructure. Basically, it’s a blueprint of Babomo. We will use the sister rig Jasmin in Dubai, but it’s going to be a more efficient development later. For phase one, three producing wells tie back to the existing pipeline between Babomo and Adelo, and one or two appraisals. We will have the well bay to accommodate 12 slots for future development. The good thing is the rig is in Dubai, and we have Maromba wallet platform conversion at the same time in Dubai. There will be synergies with ongoing jackup conversion project for the Maromba development, and we plan to FID in the coming months. Hope it answered the question.

Thomas Young, CFO, BW Energy Ltd: Thank you, Rhys.

Conference Operator: Thank you.

Thomas Young, CFO, BW Energy Ltd: We have another question here asking about the 90,000 barrel per day target by 2028 with a 10 to 15% decline for the current portfolio. Dussafu and Golfinho currently producing 32 and Maromba adding 60,000 on plateau. Which other projects together with Golfinho Boost will contribute to reaching 90,000 barrels a day by 2028? I think I can cover that one quickly. We do not include Bourdon there, so it’s Babomo Phase 2. We have another question from Yaakov. When can we expect announcement of long term lease facility for Maromba, as the jackup conversion commenced or later? As mentioned, I expect that we will be able to announce something there by the end of the year and I think that concludes it for questions online.

Carl Arnet, CEO, BW Energy Ltd: Okay, I guess the only thing that remains is that we thank everybody for listening in and participating in our third quarter presentation. Thank you very much.

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