Backlog − Directional

Change in ownership scenarios and lease contract duration have the potential to significantly impact the Company’s future cash flows, net debt balance as well as the profit and loss statement. The Company therefore provides a pro-forma Directional backlog based on the best available information regarding ownership scenarios and lease contract duration for the various projects.

The pro-forma Directional backlog at the end of 2020 reflects the following key assumptions:

• The Liza Destiny (FPSO) contract covers 10 years of lease and operate. Based on previous discussions with the client, it was expected that the client would purchase the unit after a period of up to two years of operations, which as a result was reflected in previous pro-forma backlog at December 31, 2018 and 2019. Considering ongoing discussions with the client regarding lease and operations durations for FPSOs in Guyana, the current pro-forma backlog at December 31, 2020 was updated to reflect the basic contractual term of 10 years of lease and operate.
• The Liza Unity (FPSO) contract covers a maximum period of two years of lease and operate within which the unit will be purchased by the client. Normally, the Company would not yet take the operating and maintenance scope of this contract into account although it has been agreed in principle, pending a final work order. However, to be consistent with prior year and to better reflect the current reality, the pro-forma backlog set out below takes the operating and maintenance scope on Liza Unity (FPSO) into account. The impact of the sale of Liza Unity (FPSO) is reflected in the Turnkey backlog.
• The FPSO Prosperity contract awarded to the Company in October 2020 covers a period of up to two years, after which the FPSO ownership and operation will transfer to the client. The impact of the subsequent sale of Prosperity (FPSO) is reflected in the Turnkey backlog. Similar as for Liza Unity (FPSO), the operating and maintenance scope of this contract, which is pending a final work order, is taken into account in the pro-forma backlog. As reminder, the pro-forma backlog reported as at December 31, 2019, was limited to the value of the initial limited funds released to the Company to begin FEED activities and secure a Fast4Ward® hull.
• Discussions are ongoing with the client on the lease and operations durations for FPSOs in Guyana. The potential impact of these discussions has not been included in the backlog, as they have not yet been completed.

The pro-forma Directional backlog at the end of December 2020 increased by almost US$1 billion to a total of US$21.6 billion. This increase was mainly the result of (i) the awarded contracts for the next phase of the Payara development for the P rosperity (FPSO) project; (ii) the change in Liza Destiny (FPSO) assumptions to reflect the basic contractual term of 10 years of lease and operate and (iii) the five years’ extension for the lease and operate contracts of the FPSO Espirito Santo. Turnover for the period consumed US$2.4 billion of backlog.

Pro-forma Directional Backlog (in billions of US$)