Prosafe Se

the second quarter 2024 presentation for ProSafe. In the quarter, we had very good safety performance. We actually had no LTIs for the last 12 months. The utilization of the operating fleet was 56% and close to 100% for the four vessels that actually were working. In the quarter, we have secured letter of intent for both Boreas and Caledonia, and we expect those to firm up during August. Numbers-wise, Numbers wise, EBTA came in at 6.6 in a quarter. That was in line with the first quarter and very much in line with expectations. We saw a significant improvement compared to last year. where actually revenue for the first half of this year, revenue more than doubled, and EBITDA came in at 14 million versus minus 16 last year. Cash stands at 66 million, up from 63 million last quarter. We have runway into second, third quarter of 2025 versus our covenants and liquidity. And the improvement is very much due to the payment terms we have managed to negotiate for the letter of intents that we have secured. So going forward, we are factoring capex of total $80 million. That is related to SPS for the vessels that are due for that, trust rover hulls, midlife work, as well as mobilization and reactivation for Boreas and Caledonia. The loans mature in 2025, as you are aware, and we will start refinancing this in good time before they are maturing and on the back of the increased backlog that we now are securing. Outlook wise, we have good visibility for 2025 and also into 2026. And we expect the options on Concordia, the Concordia is fixed until November this year. We expect the options to be declared. We have a fairly sort of high expectation that they will be declared so that she will run until February next year. When it comes to the vessels, this is how it looks. Here we have indicated the letter of intent and the options. So you can see we also here sort of indicated when we are planning to do the SPS and CAPEX work for the different vessels. Go a little bit into, say, Boreal. So she will go into a 15-month firm contract with a six-month option in Western Australia. She will mobilize towards the beginning of next year. And... Currently, there is a six-month delivery window. That will narrow as we go forward, and we'll keep you informed when the commencement of that contract will start. The contract value is between 75 and 100 million, depending on whether the options are declared. And as I said, the execution is expected to happen fairly soon. I would say sort of within August, we expect to sign a final contract. Likewise, for the safe Caledonia, she has entered into an LOI, or we have entered into an LOI, with Itaca Energy in the UK for the captain field. And that will be a six-month fur period with options of three months. And there, the contract value is between $23 and $37 million. We need to do the SPS and reactivation costs on her as well before we start. And we expect to execute that contract also within August of this year. When it comes to the markets... We have defined that to be the active competing supply. So the total market that we are competing with is 23 vessels. That is up one vessel in a quarter, and that's due to the C40s that have been delivered. So this is very much what we see as supply. But you should note here that the manned picture here is vessel years. Of course, there are mobilizations. They're off-fire. There's work. So when you reach a utilization, I'll show it on the next graph, of 80%, 90%, it's more or less fully utilized. So this is not comparing really apples to apples. It's number of vessels versus vessel years. So I think that this looks very favorable going forward, especially when you see the trough in the early 20s here. So this is based on what you saw on the previous graph, what this will actually look like going forward in terms of utilization. So you can see we are actually back to levels that we saw 14, 15 in terms of utilization. And then time will tell what that will mean in rates. But back then, I mean, we saw rates of 175,000 in Brazil. and over 300,000 in the North Sea. So this is sort of the picture. In addition to the 23 vessels, there are actually six vessels that could come in and add to the supply here. That will change the picture somewhat. But of those six vessels, we control three of them, two new buildings and a safe Scandinavia that is in layup. So we feel that we are well positioned to capture this. And of course, you know, the utilization will be affected by entry of new vessels, the six potential vessels. But it also, we haven't sort of factored in any sort of scrapping or deletion of any vessels here. So Brazil is by far the most important market. The big driver in Brazil is the increase in production. They're talking, you know, currently they produce about, in total, about 3 million barrels. They are planning to increase that to between 5 and 6 million barrels in 2030. Whether that's happening in 2030 or somewhere thereafter, time will tell. But this is sort of the main driver and is very much... FPSO market. So we see that currently there are actually 19 FPSOs in order, and we expect sort of additional pipeline of 20 FPSOs. This week, Petrobras came out with a tender for four new FPSOs. So this is moving forward. And in order to reach sort of the production goal of five, six million barrels, this is actually something that needs to happen. Also what we see when we do sort of a deep dive into when are the sort of the bigger FPSOs starting to utilize accommodation vessels. Petrobras in particular started to do that two to three years after they have been delivered. So it's very much a preventive maintenance strategy that they have, and that's going to drive demand for accommodation vessels going forward. So we see that going forward, currently there are about 10 vessels, or there are 10 accommodation vessels in Brazil. We see that that can increase with three to five vessels going forward. So as strong this is going to be a market that is going to drive the accommodation market going forward. And we just indicated that it's not only Petrobras that is active in this market. We have the lease operators like Modek, SPM, Jensen, but also the smaller E&P companies are now starting to sort of indicate that they need accommodation vessels going forward. When it comes to the North Sea, currently there are five units operating in the North Sea. That's up from three last year. In 2023 was actually the first year ever there was no accommodation vessels operating in the UK sector. And that is very much due to the tax regime that they have introduced in the UK. But this year, we see units also active in the UK sector. That's going forward. I think this is going to be a fairly stable market. It might pick up a little bit towards 2026. as the hookup of the, especially the Norwegian projects are coming online. But we see this to be a steady market going forward. UK, there is a sort of unfavorable tax regime, but also, you know, the assets there also, they do need maintenance of those vessels. And in Norway, we also see a further potential for electrification coming into the latter part of this decade. Okay. I would say that the market-wise, the market in Norway now is approximately $150,000 to $200,000. And in the UK, $125,000 to $175,000. Rest of the world, this is a little bit of a mixed bag. Everything from, you know, you can see high rates in Canada, up to 300,000, to more sort of second-tier work in Africa, about $100,000 per day. But there is sort of more. There is scattered demand throughout. I mean, in Australia now, there are two vessels operating next year. So we actually see that there is demand. there is a steady demand also going forward for the rest of the world. And, you know, there's going to be like three, four vessels that are going to operate in these markets. It's more difficult to predict. And, of course, the markets, the rates are depending on where you operate. But so this is also a part of the demand picture going forward. This you have seen before, but I think it's an important one. Well, you know, currently in this quarter, we made $6.6 million EBTA. But if you sort of annualize that based on if you have reset all our vessels to the current market, we would have had an EBTA today, you know, if all the vessels have been activated, except for Scandinavia, of $125 million. So this sort of shows the earnings potential. In the current market, and if you then go back to what the market was back in the peak, we would have made $200 million of EBITDA. And in a growth case, if the utilization proves to come through the way we hope and believe, there is a significant earnings potential. And likewise, then you see that earnings compared to our debt level. So the earnings capacity is there to service the current debt level. Again, just comparing this to some other segments of the markets, you can see that the vessels EV compared to replacement value for our segment, or at least our company, is very favorable. And when it comes to EV compared to what sort of the underlying broker values is favorable and also compared to new building parity. If you say that the two most modern vessels are worth 350 apiece, So the total value, the sort of new building cost of our fleet, I would say is between, as we indicate here, one and a half billion dollars. So even on that basis, that matrix, we are very favorably valued. Operation, again, as I said, very stable operation during quarter. We have had more or less 100% utilization on the safe Concordia, very high utilization on the three rigs in Brazil. And the letter of intent for safe Boreas and safe Caledonia will then come into the market for next year. So you see here in the sort of the very last quarter of this year, we predicted a slight decrease in utilization. That's because here it is only a firm backlog. So we have not included the extension of the Concordia. So this is a nice graph to show. I mean, hopefully these letter of intents will be materialized. We have high hopes and expectation that that will happen. So finally, we can actually show an increase in our backlog. So a 56% increase if you include all the options in this quarter compared to the last quarter. And we're also in discussion with Petrobras regarding extending the sephiris in Brazil under the current contract. Financial Reese, do you want to take us through that?

Thank you, Terje. And I'll take a quick run through the financials here in the quarter. Looking at revenue, I think revenue and EBITDA has been very steady. As Terje mentioned, we had four rigs on operation, very high uptime. And I think we were also able to keep the cost very much under control. So looking at a very steady revenue picture and also on the EBITDA hovering around about the 7 million number quarter on quarter. And I guess looking ahead briefly in the remaining quarters of 24, as Theria said, expecting the extension on Concordia, we think that the revenue and the EBITDA picture will continue to be relatively stable. On the income statement... Other than, of course, the positive development of revenue driven by the higher utilization, I think it's important to note also that the interest level has stabilized out. Of course, we've all seen the increase in interest rates. We have a flexible interest rate pattern. picture on our balance sheet. So we're not hedged. So as the interest rates went up, we saw an increase in cost. But that has obviously stabilized out. And let's see how that develops in the future. But quarter on quarter and half year on quarter, pretty stable. And of course, a large increase in the overall result year on year, driven by having these vessels on stable operation. Balance sheet. I think the main issue in the balance sheet is actually related to cash flow. That continues to be our main focus area. There has not been too much, too many other material changes in our balance sheet picture. So looking at the cash flow, it was a positive quarter cash flow-wise. Important to note that the majority of that increase was driven by prepayment received with respect to Boreas. I think that's a very positive development that we're seeing in the market and links very much with the increase in utilization across the accommodation spaces that we see that clients, probably for the first time since 2020, you know, the last decade, 2013, 2014, we see clients willing to actually pre-fund or pay in advance significant sums. Um, and we already have received the first portion of that with respect to the safe Berea. So that was a significant portion of the network and capital change. Um, I think looking ahead, our focus is shifting very much to 2025 in the liquidity picture. As Thaddeus said, we see that we have liquidity and headroom to the covenant into Q2, Q3 next year. And the focus is very much on investigating and continuing to follow up with measures to improve that liquidity picture. It's driven largely from reactivations. We have secured these LOIs. We need to reactivate those rigs. That's a very positive story, of course. But in addition, we see that at the same time, we have to do the SPSs on the vessels in Brazil, and we're coming up against a thruster overhaul. So 2025, as Terry said, we see a picture of 80 million in potential CapEx reactivation spend, which, of course, is a large amount. quite a large number, but a significant portion of that on the back of good news, which is that the market is improving and we're getting the rigs out. So with that, I'll hand it back to Terry to wrap it up.

Performance operational-wise has been good, both safety and uptime in the quarter. Of course, we are very excited about the LOIs for the Boreas and the Caledonia going into 2025. It's been quite a while since we actually have secured new contracts, so we are encouraged by that and positive that they actually will be executed. Again, if we then can do the extension of the sephiris, you're talking approximately, you know, we're discussing about approximately two years extension. That will, of course, improve our backlog further. We think that the markets, as I alluded to earlier, is very favorable. And this is going to be driven very much by the Brazilian market. The other sort of segments in the market in total, we see a stable demand. But the demand coming from Brazil is going to drive utilization going forward here. You do see inquiries from clients both in Norway and the UK, actually in the UK also for 2025. It's going to be quite a challenge for them. But we see also inquiries for work in 2026, both in Norway and UK. And we think that, you know, UK is also going to be an important factor due to the aging infrastructure in the UK. And again, we, of course, we are acutely aware of our liquidity situation. We are managing that, very much focused on it. And the runway we had, as we have said earlier, is into Q2, Q3 next year, both in terms of, you know, also in terms of covenants. So this is something that we are managing and we are looking at ways that that can sort of be dealt with in good time before we get there. I think that is summarizing sort of what we have to say. We are more than happy to take any questions either from the room here or if you have, you can sort of send it in the chat and then Rhys can read them up. I don't know, Rhys, if you have received any.

No, we haven't received any questions so far, so any questions in the room? Good.

Bard from Pareto. On Caledonia, after the current contract, can you update us on the outlook there?

I think Caledonia is a vessel that is very suitable for the UK market. So going into 2026, I think that's a natural home for her. She is a moored unit. So she has to know DP, so she will have to be moored. And that's the UK market is something where she can actually work. So we do have a dialogue with clients for 26. And she is actually starting to work for Itaka first of June. 1st of June. So there, you know, potentially there could also be a window before that. So, I mean, so there, again, there is demand. We see that for both 26 and thereafter, but there are also sort of, you know, 25 is not totally closed out yet. Let me put it that way.

Following up on Concordia in the Gulf, upcoming SPS, that's quite expensive. It's not the highest turning vessel. What's your latest thinking there?

The thinking on Concordia is very much in line with what we said last quarter. So she, hopefully, she will be on contract until February. Then she's due for SPS in March. And, you know, it's a significant sort of capex amount that we need both SPS and life extension. So our thinking there is unless we can sort of secure a contract that can justify that capex contract, she will go into layup. In the current circumstances, we are not going to spend that cash unless we have visibility on the earnings for her and the cash flow.

From the outlook for that, I mean, as you said, you have quite a few clients now aware of their need to pay up front if they want to keep vessels. So just on the outlook there for maybe the current clients or other clients, what's the dialogue?

With regards to Concordia? Concordia, yeah. West Africa, those kind of markets. I mean, it's not comparable to the Boreas or the Sepphoris in terms of sophistication. She's DP2. You know, she doesn't have six thrusters. So there's a little bit sort of limit. So it's more a tier two rig, I would say, tier two vessel. But we do have a dialogue, but we again, we need, and with our current financial system, we need a significant upfront payment for that to make sense. But yes, we do have dialogue with different clients, but I don't want to sort of oversell that at the current moment. So the base case is that she will go into layup.

Just continuing on Zephyrus Brazil, right to assume that for Petrobras to give an extension outside of their ordinary tendering, there needs to be no change in the scope of the contract and the day rate would sort of have to be flattish.

I think a flat dish is probably, let's see. But again, it is part of the ongoing discussion. So clearly we have ambitions, and then the question is whether those ambitions will be met. I think that's the best way to summarize the situation when it comes to the Zephyrus.

Yeah, I understand. Thanks. Okay. Okay.

Anything else, Ries?

No, no questions.

Okay. Well, thank you very much for attending this.