Brooge Energy Reports Revenue of $41.8 Million for the Year Ending December 31, 2020

Rhea-AI Summary

Brooge Energy Ltd. (BROG) reported a net income of $17.2 million for 2020, a significant recovery from a $75.3 million loss in 2019. Earnings per share improved to $0.19 from a loss of $0.94. The company completed a $200 million bond issuance to fund ongoing capital expenditures for its new Phase II oil storage facility, expected to expand capacity by 600,000 cbm. However, revenue declined to $41.8 million from $44.1 million, primarily due to reduced ancillary services. Cash and bank balances stood at $47.9 million as of year-end.

Positive

• Net income increased to $17.2 million in 2020 from a loss of $75.3 million in 2019.
• Earnings per share improved to $0.19 from a loss of $0.94.
• Successfully raised $200 million through a senior secured bond to fund Phase II facility.
• Expected completion of Phase II facility in Q2 2021 will add approximately 600,000 cbm of storage capacity.

Negative

• Revenue decreased to $41.8 million in 2020 from $44.1 million in 2019.
• Gross profit fell to $28.9 million from $33.9 million due to decreased ancillary revenues.
• General and administrative expenses surged by 147% to $6.5 million.
• Adjusted EBITDA declined from $37.1 million (84.1% of revenue) to $29.1 million (69.5% of revenue).

Net income improves to $17.2 million for 2020, compared with a loss of $75.3 million for 2019

Earns $0.19 per basic and diluted share in 2020, compared with a loss of $0.94 per basic and diluted share in 2019

Completed the issuance of a USD$200 million 5-year senior secured bond with proceeds, among other purposes, to fund remaining capital expenditures ahead of the launch of the Company’s Phase II oil storage facility

At December 31, 2020, the Company had $47.9 million of cash and bank balances

NEW YORK, April 05, 2021 (GLOBE NEWSWIRE) -- Brooge Energy Ltd. (“Brooge Energy” or the “Company”) (NASDAQ: BROG), a midstream oil storage and service provider strategically located outside the Strait of Hormuz, adjacent to the Port of Fujairah in the United Arab Emirates (“UAE”) through its wholly-owned subsidiaries Brooge Petroleum and Gas Investment Company FZE (“BPGIC”) and Brooge Petroleum and Gas Investment Company Phase III FZE (“BPGIC III”), today announced its financial results for the year ending December 31, 2020.

Nicolaas L. Paardenkooper, CEO of Brooge Energy and BPGIC, said, “In 2020, we continued to operate Phase I of our operational footprint at full capacity yielding favorable margins and profitability during the year. The midstream sector continues to be of significant strategic importance, supporting the infrastructure and storage needs of the oil industry and ultimately allowing the market to work more efficiently. During the year we were also able to complete the issuance of $200 million in proceeds from a bond offering, part of which was used towards construction of Phase II.”

Mr. Paardenkooper continued, “We expect Phase II construction to be completed in Q2 2021. Phase II is fully contracted and after completion, our storage capacity will be expanded by approximately 600,000 cbm, which equates to 3.8 million barrels. This increases the total capacity of the BPGIC Terminals to approximately one million cubic meters, or the equivalent of 6.3 million barrels. By this point, we will be the second largest non-captive storage operator in Fujairah.”

Operational Highlights in 2020 to Date:
Phase I:

• Signed three new oil storage contracts for its Phase I facility at 50% premium.
• Signed two new oil storage contracts for its Phase I facility at 60% premium.
• Signed offtake contract with an oil trading company which is one of the “Super major” oil companies in the world to provide oil storage in Phase I for an initial six month period commencing April 28, 2020.
  

Phase II:

• Commenced hydrotesting for Phase II storage facility expansion.
  

Phase III:

• Engaged Ernst & Young to perform a feasibility study for the Phase III oil storage facility.
• Commenced preconstruction work on Phase III oil storage facility, including the Soil Investigation and Environmental Impact Assessment (“EIA”).
• Completed final basic design, Front End Engineering Designs, for Phase III oil storage terminals and refinery.
  

Operational Milestones for Remainder of 2021:

• Phase II construction to be completed in Q2 2021 and will operate at, or near, full capacity by Q3 ’21. Phase II is fully contracted, expanding storage capacity by approximately 600,000 cbm, which equates to 3.8 million barrels.
• Phase III will commence construction which will expand capacity by up to 3.5 million m³ of storage capacity in Fujairah.

Financial Information for the Year Ending December 31, 2020:
Revenue for the year ended December 31, 2020 decreased to $41.8 million as compared to $44.1 million for the same period ended December 31, 2019 primarily due to ancillary revenue in 2020 decreasing by $5.1 million to $14.9 million as compared to $20.1 million in 2019.

In order to minimize customer concentration risk, the Company made a decision to diversify its customer base by signing new contracts. In 2020 the Company obtained five new customers as compared to 2019, each of which has no or minimal requirement for ancillary services. The decrease of $5.1 million was partially offset by $1.3 million from new contracts at higher storage rates and terms of agreement. Ancillary services revenue also includes port charges of $1.6 million that are paid by the Company to the port authority and recharged to the customers.

The Company’s gross profit decreased to $28.9 million in 2020 from $33.9 million in 2019 mainly due to a decrease in ancillary revenues of $5.1 million, which is offset by an increase in storage revenues of $1.3 million and an increase in direct costs attributable to cost of production of $1.1 million as explained above.

General and administrative expenses increased by $3.8 million or 147% from $2.6 million in 2019 to $6.5 million in 2020. The major reasons for this increase are:

1. Increase in salaries and addition of new staff towards the mid of 2019 which resulted in an increase of $0.5 million in 2020 compared to 2019.
2. Increase of $1.9 million in consultancy charges, which comprises of legal charges of lawyers and investor relations which were for a partial period in 2019 as compared to full year in 2020. This also includes an increase in audit charges during 2020 when compared to 2019.
3. During the year 2020, the Company opted for an insurance cover of directors and key management liability for $0.6 million which was not taken in 2019 resulting in a straight increase. Also during the year 2020, board member fees of $0.4 million was accounted which was not there in 2019.
   

During the year 2020, there was an increase in finance cost by 45% in 2020 as compared to 2019 from $5.7 million in 2019 to $8.3 million in 2020. The main reasons for the increase in finance cost are:

1. The increase in finance costs on borrowings & bank charges includes the balance of prepaid documentation fees on Phase 1 term loan of around $0.5 million, which was expensed out in 2020 in full as the loan was settled in the month of November 2020, which contributed as a direct increase in 2020 as against 2019.
2. The finance costs on borrowings & bank charges also includes an amount of $4.3 million, being interest for the year 2020 on the new $200 million Bond Financing Facility which was not there in 2019.
3. Penalty charges for $0.7 million are the pre-settlement charges paid towards settlement of the Phase 1 loan in 2020.
4. Accretion expense on asset retirement obligation has been recognized of $0.07 million.
5. There is an increase in interest on lease liability on account of Phase III land as per IFRS 16. Interest on lease liability for Phase III amounting to $0.6 million was accounted for one month of December 2020.
6. The Company signed the Phase III Land Lease during the year 2020. As per the Phase III Land Lease, there is a rental free period for first 18 months until July 2021. However, as per IFRS 16, land lease interest and depreciation had to be accounted for one month of December 2020 even though the rental free period had not expired and there was no actual outflow of cash towards lease rentals. This reduced the overall net profit by $0.64 million in 2020.

Adjusted EBITDA declined by $8.0 million in 2020 when compared to 2019 from $37.1 million (84.1% of revenue) for the year ended December 31, 2019 to $29.1 million (69.5% of revenue) for the year ended December 31, 2020. The main reasons for decline of Adjusted EBITDA in 2020 are:

1. There was a net decline in revenue of $2.2 million in 2020. This $2.2 million was due to a decrease in ancillary business to the extent of $5.2 million during the last quarter of 2020 with an increase of $1.3 million in storage rental fixed revenues due to the Company’s legacy customer releasing additional capacity of 124,854 m³ over and above the 129,000 m³ released earlier for the Super Major. Ancillary services revenue also includes port charges of $1.6 million that are paid by the Company to the port authority and recharged to the customers as against 2019. There was an increase of total direct costs by $2.7 million from $10.2 million in 2019 to $12.9 million in 2020 which is around 27% over the previous year 2019. Also, general and administrative expenses increased by 147% or $3.8 million from $2.6 million in 2019 to $6.4 million in 2020.
2. This overall decline in revenue by $2.3 million and increase in expenses by $6.5 million contributed to the decrease in Adjusted EBITDA.

During the year 2020, the Company generated net profit of $17.2 million, as against net loss of $75.3 million in 2019. The loss in 2019 was primarily due to a non-cash expense of $98.6 million.

Balance Sheet and Liquidity:
The Company had cash and bank balances of $47.9 million at December 31, 2020.

During the year 2020, the Company’s net expenditure towards capital expenses amounted to $97.2 million. During the year 2020, the Company made net payments of $81.2 million towards the Phase II construction, $28.8 million out of which went from the Company’s operating cash flow and the balance of $52.4 million out of the proceeds of the Bond Financing Facility.

During the year, Brooge completed the issuance of a USD $200 million 5-year senior secured bond with a borrowing limit of USD$ 250 million in the Nordic bond market. The bond, which will mature in September 2025, provides a flexible financial platform to support our future growth agenda and marks a key milestone for the Company in entering the international bond market.

Capital expenditures in 2021 are expected to be approximately $33.1 million, which is expected to be funded primarily through cash from operations and from the remainder of the proceeds from the Bond Financing Facility. These planned capital expenditures will consist primarily of expenditures related to the construction of the Phase II facility.

Earnings Conference Call and Webcast Information

Date:	April 7, 2021
Time:	8:00 a.m. ET / 4:00pm UAE
Dial-in numbers:	+1 877-425-9470 (U.S.), 800 035 703 290 (UAE), +1-201-389-0878 (International)
Instructions:	Request the “Brooge Energy Call” or Conference ID: 13718379
Live webcast:	http://public.viavid.com/index.php?id=144209

A dial-in replay of the call will also be available, to those interested, until April 14, 2021. To access the replay, dial +1 844-512-2921 (United States) or +1 412-317-6671 (International) and enter replay pin number: 13718379.

About Brooge Energy Limited
Brooge Energy conducts all of its business and operations through its wholly-owned subsidiaries, Brooge Petroleum and Gas Investment Company FZE (“BPGIC”) and Brooge Petroleum and Gas Investment Company Phase III FZE (“BPGIC III”), Fujairah Free Zone Entities. Brooge Energy is a midstream oil storage and service provider strategically located outside the Strait of Hormuz adjacent to the Port of Fujairah in the United Arab Emirates. Its oil storage business differentiates itself from competitors by providing customers with fast order processing times, excellent customer service and high accuracy blending services with low oil losses. For more information please visit at www.broogeenergy.com

Adjusted EBITDA is not a financial measure presented in accordance with IFRS. Adjusted EBITDA should not be considered in isolation or as a substitute for or superior to analysis of our results, including net income, prepared in accordance with IFRS. Because Adjusted EBITDA is a non-IFRS measure, it may be defined differently by other companies in our industry, our definition of this Non-IFRS financial measure may not be comparable to similarly titled measures of other companies, thereby diminishing the utility. We encourage investors and others to review our financial information in its entirety and not rely on a single financial measure.

We present Adjusted EBITDA as a supplemental performance measure because we believe that the presentation of this non-IFRS financial measure will provide useful information to investors in assessing our financial condition and results of operations. Profit (loss) is the IFRS measure most directly comparable to Adjusted EBITDA. Adjusted EBITDA has important limitations as an analytical tool because it excludes some, but not all, items that affect net income. Some limitations of Adjusted EBITDA are:

• Adjusted EBITDA does reflect finance costs of, or the cash requirements necessary to service interest on our debts; and
• Adjusted EBITDA excludes depreciation and although these are non-cash charges, the assets being depreciated may have to be replaced in the future.

Management compensates for the limitations of Adjusted EBITDA as an analytical tool by reviewing the comparable IFRS measure, understanding the difference between Adjusted EBITDA and profit (loss) and incorporating this knowledge into its decision-making processes. We believe that investors benefit from having access to the same financial measures that our management uses in evaluating our operating results.

The following table presents a reconciliation of net income to Adjusted EBITDA, the most directly comparable IFRS financial measure for the indicated periods:

		For the Year Ended December 31,
$		2018			2019			2020
Profit (loss) for the year/ period			16,060,652			(75,284,923)			17,159,113
Adjustments for:
Depreciation charge			5,716,063			5,785,745			5,799,023
Finance costs			6,951,923			5,730,535			8,306,150
Listing Expenses			-			101,773,877			-
Net changes in estimated fair value of derivative warrant liabilities			-			(1,273,740)			(2,547,542)
Net changes in fair value of derivative financial instruments			1,190,073			328,176			340,504
Total Adjustments			13,858,059			112,344,593			11,898,135
Adjusted EBITDA			29,918,711			37,059,670			29,057,248
Revenues			35,839,268			44,085,374			41,831,537
Adjusted EBITDA % of Revenues			83.48	%		84.06	%		69.46	<

FAQ

What is Brooge Energy's net income for 2020?

Brooge Energy reported a net income of $17.2 million for 2020.

How did Brooge Energy's earnings per share change in 2020?

Earnings per share improved to $0.19 in 2020 from a loss of $0.94 in 2019.

What was the revenue for Brooge Energy in 2020?

The revenue for Brooge Energy decreased to $41.8 million in 2020 from $44.1 million in 2019.

When is the completion date for Brooge Energy's Phase II facility?

The Phase II facility is expected to be completed in Q2 2021.

How much cash and bank balances did Brooge Energy have at the end of 2020?

Brooge Energy had cash and bank balances of $47.9 million at December 31, 2020.