Lysaker, May 21, 2019, Main events from Magnora’s first quarter 2019:
- Following the sale of the Magnora’s intellectual property and shares in HiLoad LNG AS to Sembcorp Marine Integrated Yard Pte Ltd, the company is now a profitable royalty company with two significant contracts with Shell and Dana Petroleum.
- The Western Isles agreement gives Magnora the right to USD 0.5 per barrel of oil produced and offloaded from the Western Isles FPSO (the “FPSO”) during the lifetime of the FPSO. The Western Isles development is expected to have a field life of 15 years. The FPSO is expected to have a design life of 20 to 25 years, and thus could produce oil for longer than 15 years. Magnora´s right to payments is tied to the FPSO, irrespective of operating location and field. Any potential oil field tied-back to the FPSO or any redeployment, irrespective of location, will also be subject to the payment obligations under the agreement. The Western Isles agreement is expected to generate income for Magnora in the years to come. The FPSO is owned and operated by Dana Petroleum and is currently producing at the Western Isles development in the UK sector of the North Sea. First oil was achieved in Q4 2017. The FPSO has a production capacity of 44,000 barrels per day. The related revenue for Q1 2019 was NOK 12.6 million (NOK 13.4 million) which was the equivalent of approximately 33 000 barrels per day on average for Q1 2019 compared with 33 550 on average for Q4 2018.
- The Penguins agreement gives Magnora the right to future license income of approximately USD 16 million from the Shell Penguins FPSO project. The Penguins FPSO is currently under construction in Asia. The payments of USD 16 million in total, are tied to three milestones. These three milestones are: 1) the completion and sail away of the FPSO from the construction yard 2) the installation of the FPSO at the field and achievement of first oil, and 3) the successful production, offloading and gas export of 4 million barrels which is estimated to be approximately 6 months after successful start-up. It is anticipated that the construction of the Penguins FPSO will be completed in Asia during mid 2021. Achievement of the further milestones will take place subsequently.
- Adjusted EBITDA, excluding one-off items, was NOK 9.8 million (NOK 10.8 million), a decrease of NOK 1.0 million versus the fourth quarter. The driver for the decrease is a reduction in income related to the Western Isles contract of NOK 0.8 million versus Q4.
- Operating costs, including one-off items, increased by NOK 3.8 million compared to the fourth quarter 2018. Excluding one-off items, operating costs in the quarter increased by NOK 0.2 million to NOK 3.4 million (NOK 3.2 million).
- Net profit decreased to NOK 7.9 million driven largely by the recognition of a deferred tax asset of NOK 42.8 million in the fourth quarter.
- At the extraordinary general meeting held on December 18, 2018, an authorisation was granted to the Board of Directors to initiate a share buyback program. The program was launched on January 16, 2019 and was terminated on April 24, 2019. As of the date of this report, Magnora owns 20 301 shares or 0.0004 percent of total shares outstanding. The board of directors intends to launch a new share buyback program based a new authorization from the Annual General Meeting (“AGM”) to be held on May 21, 2019.
- The board of Magnora intends to carry-out further distributions of capital to shareholders in 2019, in the form of dividends and/or reductions in share capital. The board has recommended to the AGM a share capital reduction, including a payout of NOK 1 per share, as well as the granting of an authorization to pay interim dividends to shareholders at the Annual General Meeting (“AGM”) to be held on May 21, 2019.
- Due to the sale of the cylindrical hull technology and related business activity to Sembcorp Marine last year, succeeded by a new strategic direction for the Company, Reese McNeel and the Board of Directors of Magnora agreed that Reese McNeel step down as CEO and CFO with effect from April 17, 2019. Reese McNeel is continuing as an advisor to the Board of Directors until the end of August 2019. Mr. Erik Sneve has been appointed the acting CEO effective from April 17, 2019, working closely with Torstein Sanness.
- The company has initiated a process of evaluating potential investment opportunities with the objective of realizing the strategic potential of the company and to generate further shareholder value.
Please see Magnora 2019 Q1 Report below
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For more information please contact:
Erik Sneve, CEO, Magnora ASA
The information in this announcement is subject to the disclosure requirements of the Norwegian Securities Trading Act section 5-12 and/or the Oslo Børs – Continuing Obligations.