BW Offshore: Agreement For Insurance Settlement For The FPSO Cidade De Sao Mateus

By Finance

BW Offshore has signed an agreement with its insurers for an early repair cost settlement for the FPSO Cidade de São Mateus. The agreed settlement amount is approximately USD 250 million. Proceeds from the settlement is expected to be received during Q1 2017.

BW Offshore: Agreement For Insurance Settlement For The FPSO Cidade De Sao Mateus

FPSO Cidade de São Mateus - Image courtesy: BW Offshore

The insurance settlement will be recorded in the Q4 2016 financial statements. The 2015 financial statements included a total of USD 160 million in estimated preliminary insurance revenue for repair of the unit and an equal amount as impairment of the net book value of the asset. The Q4 2016 financial statements will reflect approximately USD 90 million recorded as insurance revenues, which will bring the total recorded amount for insurance revenues for repair of the FPSO Cidade de São Mateus to approximately USD 250 million.

As a consequence of concluding the repair-evaluation and signing the agreement with the insurers, the Company has deemed it necessary to record a further impairment to the net book value of the FPSO. It is estimated that this impairment will be approximately USD 140 million, subject to a final evaluation before the Q4 2016 report is approved.

The FPSO Cidade de São Mateus is currently in lay-up. Before final discussions are concluded and agreed with the client, it is not possible to establish a firm plan for when the unit will return to the field.

Related news on the Cidade de São Mateus incident 

Source: BW Offshore