Prosafe Se

quarter one 2024 presentation as usual if you are joining us virtually you can ask questions in the chat and we read them out loud here at the end of presentation and if you are here in person you know more than happy to answer your questions but let's take it at the end So the first quarter this year, I think operationally, the four rigs that are working worked very well. I mean, they have high uptime, high utilization, so there are no sort of specific issues. We had 56% utilization in the quarter, and that's for the four working rigs. They are more or less working all the time. We had some of fire on safe euros due to some minor repairs. But I think it's steady states as far as the operation is concerned. On the financials, EBITDA came in the quarter at 7.2 million compared to last year. Of course, that was stronger. Everything is relative. And in totality, last year was a negative EBITDA year. So, of course, we are sort of trailing better, relatively speaking, in 2024. liquidity cash end of the quarter 63 million that was in line with our expectations as we have communicated earlier we are saying that we have runway into 2025 as far as cash is concerned that is highly dependent on new contracts and sort of the structure on the mobilization fees you can get there. So it will be sometimes into 2025, and as I'm sure you all are aware, the debt is maturing at the end of 2025. So this is sort of, I think, the... Cash flow runway and refinancing needs to be seen as one measure that we need to deal with. And of course, the financing as such, the refinancing as such, will then be highly dependent on the backlog that we are managing to build up. I'll come back to the backlog a little bit later. But of course, that will be an important component of the refinancing. When it comes to the outlook, I would say that we are still optimistic. We did not secure any contracts in a quarter. That's, of course, a little bit disappointing. But when that is said, the activity remains the same. It's just taking longer time. But we see that there is good activity across the different regions. In the North Sea, we are the only available units for 2025 and to a large extent into 2026. So we think we have a good position there, or we do have a good position there. What we see more specifically is that there is one tender out for 2025 work in North Sea in the UK. And we expect at least one more tender to come out. And as you know, we have two available units that can work in the North Sea, the Boreas and the Caledonia that are both laid up, ready to work, warm stacked. We have good dialogue with clients outside the North Sea as well, in different regions. We talk to clients in Africa, we talk to clients in Guyana and so forth. So we see that there is activity for work coming into 2025 and beyond. But as I said, it has taken longer than what we anticipated to get these across the line. One thing to be specific on sephiris, safe sephiris is on to Petrobras. She is expiring in February 2025, and there Petrobras has expressed an interest to extend the sephiris. So that's a dialogue that we will enter into, of course, later. She can also work in different markets, but I think that's quite an interesting development. And I would say I can come back to the market in Brazil, but, you know, it's around, you know, 120-ish, I would say, the market rate for maybe 115 to 120 in Brazil. So we are optimistic that we'll add more backlog for 25 and beyond, but it's taken a little bit more time. But we still think the fundamentals look strong. To be then on the fleet, to be a bit more specific, sephiris we talked about. I think the contract there, the extension, is most likely to be, if we do entertain that and if we sort of get into a contract situation, you're talking about a two-year extension of that contract. She is due SPS in 2025. There are some details in the back in terms of the cost and so forth, but roughly we're talking 10 million for the extension. And also the SPS of the Seferis, which was very much in line with what we paid for for years when she had a SPS last year. Euros onto Petrobras as you can see until the beginning of 2027 at the rate of $86,000 per day. Notice, likewise, on to Petrobras until 2026 at $75,000 per day. Just to give you an idea, if you take the notice and the euros and sort of readjust those contracts, legacy contracts, to the current rates, you're talking sort of an uptick in earnings, EBITDA, of about $25 to $30 million. Of course, they are not going to be readjusted at the current moment, but market to market, that's sort of the given idea of the potential earnings uplift on those two contracts. So we decided on the notice to shift those of you that pay sort of a detailed attention to this, the SPS into 25 from 26. I mean, we're talking months here, sort of beginning of 26 to the end of 25. That's to optimize it versus Petrobras. And you do not want to have an SPS towards the end of the year in Brazil. That can result in sort of a quite a lot of fire unnecessary. So we have moved that forward, just talking a couple of months. The Concordia is on a contract to November and there the client has two times one times options. We sort of fairly cautiously optimistic that those options will be declared, time will tell. But she is due for SPS in March 2025. And the SPS and life extension for Concordia is quite extensive. So what we have said there is that unless we get sort of a good contract that can fund that SPS and life extension, we're going to put her into layup. until such time uh she is a tier two rig uh so her earnings capacity is not the same as you have a burry as others but you know we are talking about i wouldn't sort of i wouldn't rule out that we get work for her but we will not sort of do to our you know we need we need to to manage our cash very thoroughly so we are not going to go ahead and and spend that capex unless we have visibility on the earnings Boreas, she is laid up in Norway, warm layup. I would say that it will take, give or take four months for her to get ready from when we push the button until she is ready to work. That has to do, we need to crew her up, we have to do some preparatory work. so i would say to say four months and she's also due for an sps and as you communicated before we are a little bit more granular this time uh so you have good visibility but we say that you give or take 15 million dollars for sps and reactive reactivation work on the boreas She can work worldwide, including Norway. I mean, there are basically four rigs in addition to a jackup that can work in Norway, and Boreal is one of them. Caledonia, likewise laid up, warm stacked, will also need to go through SPS. And reactivation will take about four months as well to get her out and ready to work. You should note that she is a moored unit. And she cannot work in Norway. She's actually most suitable to work in the UK. So I think priority wise, we are very much prioritizing to get Safe Boreas back into action. That's important to us. And there are, as I said, a number of opportunities that we are working on and Caledonia. there's also a fairly tailored opportunity for her that she can work in 2025. For 2024, I think as the time has passed, we've been fairly vocal about that before. that we see limited opportunity. There are some sort of scattered opportunity, but I wouldn't put it into my model. I think that will be a positive surprise. But right now, we are working on a few things, but again, fairly low probabilities. But there is activity around, not only the North Sea and Brazil, but we see that there's activity in Guyana. We see that there's activity in the Gulf of Mexico, Africa, and other places. And then the two sort of Chinese units, nothing new there, basically. I think you can, as we have said before, look upon those more or less like an option for us to take delivery. They are already at the yard in China. Market, we've been through this before. This is the last print. Nothing much to add. I think the latest here was a contract with Equinor for Oscar that was awarded in January to a competitor. And that's sort of our take on what the rates was on that. Of course, this is our subjective view on that. And I think when it comes to Brazil, as I said, our assessment is that the market there is around 120-ish, and likewise just below 200,000 in the North Sea. But there has been fairly limited activities in those two markets recently. This is, of course, this is the most interesting and most important market for us, Brazil. Nothing much has changed. We expect 11 units to work in Brazil in 2024. And we do expect that there will be another tender coming out from Petrobras later in the year. And this is in addition then to the potential extension of the Zephyrus. This is our assessment. We know that Petrobras is doing their own sort of review of their demand for flotels going forward. And of course, we are very close to Petrobras and discussing with them. So this is our assessment. Driving this is increased oil production in Brazil, which is going from the currently 3 million barrels per day up to 5 million barrels per day. That's their target in 2030, whether they will hit that in 2030 or a couple of years later. Later, time will tell. But that means the FPSOs operating in Brazil is going to go from the current sort of low 70s up to 90 units. And many of those are actually contracted. So this is something that is going to happen. And we see it in other markets. The general activity level in Brazil is very, very interesting indeed. So if you look at our market, if you say that the total supply is is 24 units worldwide, including some jackups and monohulls. So you see almost 50% of the total demand is then used in Brazil. So the market has changed in terms that the demand in the North Sea is not the same as it was 5, 10 years ago. But then Brazil is very much out of the base load here. It has picked up a lot of the capacity. And we think that's going to continue. So looking a little bit further ahead here when it comes to market, we think that in the North Sea, one potential driver in Norway is the electrification of the Norwegian field. That will most likely also mean life extension of some of these fairly big production units. And when we talk to our clients, that's what they say. The electrification of the Norwegian shelf is going to happen. I know the politicians, other people are discussing whether we are going to electrify. When we talk to the clients, they are actually making the decisions right now. So we are sort of... fairly confident that that that will happen and that that will also lead to demand for for flotels going forward you're talking probably you know 27 28 29 30 might be some work coming in 26 but i think the sort of the the major sort of demand here is going to come from the latter part of this decade. And that could be quite substantial. It could be quite interesting. It's early days yet, but that's what we see. Others, even to look further ahead, I think that we talked about that before also. Namibia is a very interesting market for corrosive. That's a sort of a market that's very similar to Brazil in terms of the corrosiveness. I mean, you're talking three to five times as high corrosiveness in Brazil as in North Sea. And we sort of expect very much the same sort of environment in Namibia. But again, you're talking first production, Shell is talking first production there, 2029. So then they're into the 30s. But I mean, my point here is that there is definitely a market for our units going forward. I think that the North Sea, the UK windfall tax, of course, what's happened there, they've extended that. That's not positive, but there are other markets that will pick up the demand here going forward. This is something we have shown before, but it is important to sort of show you what our earnings capacity is. And this is sort of to the left here, the current market. This is if all the rigs with these assumptions are then reset at market to market based on what we assess to be the current market. we would have made today 125 million. We would love to have done that. But that sort of gives an impression about the earnings capacity. And then likewise, you know, if you go into the peak market and if you get the rigs back in work, you're talking over $200,000 per day. And then you can look at that compared to our market cap and sort of the debt level. again uh looking at i mean our ev today our net debt is 355 you add the market cap you get the over just over 400 million dollars of ev and then you can compare that to broker values you can compare that to other segments of the market so so you know compared to the new building parity You know, most of the segments in the oil service industry is attractive price, but I would say that the flotel market in particular are attractive price. I usually say that for simplicity, that, you know, the two most modern and most sophisticated rigs would cost $350 million per day. That's what $350 million did to build. And then we have the other two that's a little bit older and a little bit less sophisticated. They will cost about 250. So if you just look at the four modern units that we have in our fleet, you're talking about, you know, $1.2 billion in replacement value. And then you add on, let's say, you know, for sake of good measure, $100 million for the three legacy assets. And then you are 1.3-ish replacement value. So based on that data point, of course, we are very attractively priced. Operations, not very much to add. I said it initially. I think that our operation, we are the biggest operator in Brazil. We have three units operating in Brazil. Our nearest competitor has two. And this is something that our position in Brazil is something that is very valuable. And we also see that we have very close and good dialogue with Petrobras. And that's something that, you know, when issues pop up, we are the first one they reach out to. And that's a relationship that is highly valuable. Also going forward in terms of looking at new business. And this could be a market where the Chinese new buildings could be added into when that time is right. So the two units had 100% utilization there. Safe Eurus, I mentioned it was some small issues. So we had 95%. And Safe Concordia, even though she's an older lady, she's performing very well in the Gulf of Mexico. And the Scandinavia is laid up in Norway. And Boreas and Caledonia we talked about. Backlog gone down, unfortunately, but that's just where we are. And that's something we are focusing and working a lot to build the backlog going forward. And I said, you know, I think we covered it before. We are somewhat, yeah, this is something we had expected to turn, but I think we need a little bit more time for this to materialize. Yeah, that's Rhys. Do you want to go through the numbers?

All right, thank you very much, Terje. Take a brief look at the numbers in the quarter as well. First on the revenue and the EBITDA, I would say that very much in line with our expectation this last quarter. We have a very stable operation on the four rigs, as Terje mentioned, a good high uptime, and we were also very happy with the cost level that we were able to maintain in the quarter. Revenue around 34 million and EBITDA just over the seven mark. And I think if we look a little bit forward, as Terje showed on the previous slide, we see that we have pretty stable operations ahead of us for the next few quarters. So we expect that this trend, the positive trend, particularly versus last year when it comes to EBITDA. We'll continue and we don't have any large SPSs or planned downtime in the coming couple of quarters. So we're very happy with the result that we were able to achieve in Q1. Looking on the income statement, of course, EBITDA, we talked about that. I think the only other point to really point out on the full income statement is the interest. We have a very favorable interest rate on the current package we have. So we're talking about 8% interest. If you look at sort of competitors in the market who've done refinancing, we're talking about interest rate levels 10+. So that's obviously a benefit and the seller's credit. Although we have in the P&L an implied interest, it's actually... Until the middle of this year, it's actually interest payable free. So I think we have a favorable financing cost up until, of course, the refinancing, which Terry mentioned is due at the end of next year. Also have a very efficient tax structure. I think we have large tax losses in Norway that has enabled us, obviously, to maintain a very low level of actual tax payable. And the tax that is payable is largely some local taxes that we have to pay in Brazil. Basically jump over, I think, the balance sheet. I think the main topic of interest when it comes to the balance sheet is very much the cash position and liquidity looking ahead. What we saw in this last quarter, and that was very much in line, as Terry mentioned again, with our expectation, was that we had the SPS on EURUS in the back position. back part of last year, in Q4 of last year, and we saw those payables unwind in this quarter, so we did the work in November, December, and then of course we had to pay the vendors a bit later, so that 7 million net working capital was largely impacted by By that, by the net working capital unwind, and again, you have the interest and the debt repayment. The debt repayment is again the minimum amortization on the Costco seller's credit for the Euros. So I think cash generation, looking ahead, as Terry mentioned, we see getting into 2025 and we're monitoring very closely how that liquidity will look subject to contracts and backlog going forward. I'll hand it back to Terry who will wrap things up and then we'll move on to the Q&A.

Thank you. So I think for ProSafe, it's very much sort of working on the market, the backlog, and that's very much our focus. We are optimistic on the market. We see that there are opportunities going forward in a different basis and hopefully we can come back to you with some news on that going forward. We think that in particular the Brazilian market is strong and we have a good position in the North Sea. And as far as the debt and the refinancing is concerned, that is, of course, something that we are managing. We are proactively looking at it, also sort of working on it. But it will depend on how the backlog. So that's sort of how the sequence will go. play out here. So first the backlog and then we'll sort of, based on that, we'll start to have a clear view on how the refinancing is going to look. So I think I'll end the presentation with that and I'm very happy to answer questions if there are any.

There's one question here from coming in. From the web, which was, with respect to the tenders in the North Sea, are those for high-end units only, or can walk-to-work solutions compete in the UK?

In Norway, you cannot have work-to-work for unmanned installations. That's a specific requirement in Norway. In the UK, you can have work-to-work, but our assessment is that the tender that is out work-to-work is less likely. It's not ruled out, but it is less likely. The requirement of that job is of such a nature that we think a flotel is best suitable.

Okay, there's no more questions.

Okay, any questions from the audience? Yeah, please.

Maybe we can ask... Could you please comment on the SPS cost for Notos and Caledonia? Sure. Rhys, do you want to...

Yeah, so the SPS for NOTAS, this will be our 10-year SPS that will need to be done. It will be carried out in Brazil. What we have seen is that the five-year SPS we did on NOTAS cost us $8 million. The SPS that we recently did on EURAS cost us $10 million. That's not only the special survey, that also includes the fact that you need to clean the hole in Brazil, you need to come into sheltered water, and also you need to do certain life extension repairs. And when you're getting on to 10 years working in Brazil, you also have some fabric maintenance and upgrade work that needs to be done. So that figure that we have put in, which we estimate to be sort of in this range, $9 to $11 million, is including, of course, all of those items, that work scope. It doesn't include thruster overhaul. That is something actually that you usually do around about the 10-year mark, or you start to begin a rotational program around overhauling, maybe not all, but some. And that's something that we will also be looking into and plan to execute with respect to Zephyrus and Notice in the coming, I think, as we indicated, 24 to 36 months. Caledonia was the next one. Caledonia moored unit laid up in the UK. She's in layup status, but she needs to do an SPS before she can work again, and she needs to be reactivated. And that total cost we have estimated in a range of $11 to $13 million, and sort of the midpoint being approximately $12 million. That includes, of course, the cost of, you know, crew ramp up, crew familiarization and, you know, operating cost elements as well. Okay.

Okay. If there are no further questions, I think we will end it there. Thank you very much for attending both online and here in the audience.