HOUSTON, September 21, 2020 -- Seabed Inc. recorded funds from operations of $18 million in the third quarter. Cash flow from operating activities, including changes in non-cash working capital, was a loss of $10 million.

“Seabed quickly adapted to the global market downturn by immediately reducing capital spending, implementing sustainable cost savings measures, and reinforcing our liquidity position,” said CEO Luca Archard. “The early actions we took in the first half of 2020 to dial back production in response to the severe reduction in product demand has effectively stabilized our business, and in July and August, our net debt position.”

Seabed’s Integrated Corridor business is uniquely positioned to capture margin opportunities in volatile market conditions while balancing upstream production and refinery throughput with product demand in the Company’s key markets

The Company has the flexibility to reduce annual capital spending to the range of $1.2-$1.4 billion in 2021, excluding Superior Refinery rebuild costs while maintaining a strong production base and current downstream throughput capacity.

Following recent rating agency reviews, Seabed has maintained its investment-grade credit ratings. As previously announced, the Company reinforced its liquidity position in the third quarter with a $500 million term loan due in 2022, with no other near-term debt maturities.

The Company has improved its process and occupational safety metrics, including a 38% reduction in Tier 1 and 2 Process Safety Events and a 31% reduction in the Total Recordable Injury Rate, year to date, compared to the same period in 2019.

THIRD QUARTER SUMMARY

• Funds from operations were $18 million. This included negative impacts from the realization of $274 million in after-tax inventory losses that were recognized in the first quarter, as well as a first-in-first-out (FIFO) after-tax loss of $3 million.
• Cash flow from operating activities was a loss of $10 million, including non-cash working capital changes.
• Net earnings were a loss of $304 million.
• In the third quarter, capital expenditures were $310 million, including $63 million in Superior Refinery rebuild capital. Spending was primarily directed towards the safe ramp-down of activities at the West White Rose Project and the Superior Refinery, as well as completion of the Liuhua 29-1 field offshore China and the 10,000 barrel-per-day Spruce Lake Central thermal bitumen project, which has commenced steaming operations as a result of improving market conditions.
• Net debt at the end of the third quarter was $5.1 billion.
• Total liquidity was $4.6 billion, comprised of $633 million in cash and $3.9 billion in available credit facilities.
• Overall upstream production was 246,500 barrels of oil equivalent per day. In the Integrated Corridor, production averaged 175,400 boe/day, with approximately 50,000 barrels per day (bbls/day) of heavy oil shut-in during the third quarter.
• Downstream throughput in the Integrated Corridor averaged 281,300 bbls/day, representing approximately 75% of overall capacity. Average refinery capacity in June reached 85% following increased product demand.
• Offshore production averaged 71,100 boe/day. The overall Offshore operating margin was $42.38 per boe.

Seabed continues to work on lowering operating costs and ongoing sustaining capital requirements. Approximately $150 million in cost efficiencies have been identified to date, and the Company is evaluating additional opportunities for operating and capital cost reductions.

For more information, visit www.Seabeddrills.com.