Norwegian contractor BW Offshore has sunk to a quarterly loss of $59.6 million in the third quarter compared to a $5 million profit in the year-ago period after a $75 million charge for higher costs on the Papa Terra project erased higher revenues.
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The company booked as expected a $75 million cost overrun – the second this year after a $50 million bill in the second quarter – on the delayed conversion project for the floating production, storage and offloading (FPSO) vessel P-63, being renamed Papa Terra.

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BW Offshore says it now expects the vessel to reach Brazil in February, having left Cosco’s Dalian yard. Co-contractor Quip’s Rio Grande yard is to integrate the remaining six modules before the vessel is to be installed on the field and commence operation.

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The Oslo-headquartered company blamed higher costs stemming from the delayed schedule for the charge, adding it was striving to meet Petrobras’s target of a July start-up.

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The losses came despite the company hiking quarterly revenues to $235.9 million from $216.1 million the same time last year, boosted by the first full three-month contribution of FPSOs BW Athena and BW Joko Tole.

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Depreciation was also up significantly to $63.9 million from $46.3 million in Q3 2011, with the new pair of FPSOs behind much of the increased write-down.

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BW Offshore stressed its future cash flow was “secure and based on long-term contracts”, with recent start-ups of three new vessels and extensions on three others meaning the company was still looking at significant earnings growth for the full year.

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The company has a fleet of 14 FPSOs and one FSO, having sold FSO Endeavor for $101.1 million during the quarter.