Prosafe Se

Welcome to Q4 2024 Result for ProSafe. The last quarter was quite an eventful quarter for us on operation. I would say that we had a good quarter. All the four vessels that are in operations had 100% utilization. We managed to extend the contract for Cephris for another two years. As we said in the previous quarter, we expected that. But now we actually have ink on the paper. For financials, Result will come back to that later. But we are working on the refinancing of the company. As previous said, we are looking to refinance a total of $400 million. We have good dialogue with all stakeholders, including our lenders. We are working on that and we expect to have that completed within the first half. I think that we have good progress on the refinancing as such. Market wise, I will come back to Brazil. There is a lot of activity there. That is quite positive. Our thesis on Brazil is coming through. We are optimistic on that. I will also talk a little bit about what happens in the rest of the world. In general, the back load has grown. That is something that we have focused very much on for the last year. There we have executed on the back load growth. When it comes to the fleet, Cephris is now on contract to Q3 2027. There we got a slight uptick in rates. We also have some more coverage for bunker consumption. Cephris will do her SPS towards the latter half of this year. We have not pinned down the final dates yet. That will happen in 2025. The safe EUROS is on to Petrobras. She is going on a contract and that is running until 2027. It is $86,000 per day. On the notes, she will also do her SPS. That will happen either towards the end of this year or the beginning of next year. I will talk a little bit about the future after 2026. I think the Petrobras tenders that are out could be very suitable for a notice. I will talk a little bit about that. Likewise, the safe Concordia is on a contract. She is going to go off contract on the 9th of March. Then she will do her SPS immediately thereafter. I will come back to that as well later. Boreas, we are working on the reactivations. She is currently in Norway in Skjipivika. The thrusters are off. We expect her to be on a heavy lift vessel around the beginning of April to go to the Far East. Then she will be on contract. The contract window is such that most likely you are talking towards the end of the year. November, December commencement of that contract. It is 15 months with six months of options. The safe Caledonia, we are reactivating her. She is going to go on a contract to Ithaca on the 1st of June. That is a six-month contract with three months of options. Scandinavia, no news. She is still cold stack and there is no news regarding Nova or Vega. When it comes to the market, we define our market as 23 vessels that are active. I would like to say that there are other units that can also enter the market, especially on the tender in Brazil. Our core market are 23 units. As you can see, 11 of those are currently for 25. We expect them to operate in Brazil. That is more or less 50% of the market. When it comes to the North Sea, what we see there is activity, particularly for Caledonia, which is on contract this year. There is also activity going on in 26 and 27. We are working hard to see if we can find contracts for Caledonia for the coming years. The strategy there when we took her out to lay up this year was really cash on cash. That the Caledonia should be positive and that is very much the case. Then we have a vessel that has been reactivated, has done her SPS and is ready to work for the coming years. I would say that we also see activities in Africa, Guiana, so in general outside of Brazil, there is definitely activity. But Brazil is the market now that is really driving the flotel industry. We have shown this before. The driver here, of course, is the increase in oil production in Brazil. They are currently producing 3 million barrels per day. Their target is to come to 5 million barrels towards the end of the 20s, early 30s. We see that the number of FPSOs that have been contracted and we expect to be contracted is very much strong. Obviously, the general activity, not only for flotels but in other segments of the industry, is also very strong in Brazil. But I just add that there are actually other, not only Petrobras in Brazil, there are a number of other lease operators and also EPC companies in Brazil. We see that there is more demand from other players in Brazil picking up. We are quite optimistic of that as well. As we talked about before, the corrosion in Brazil is quite heavy and that is not something that is only the case for Petrobras, also for other operators in Brazil. That is definitely the case. In Brazil, there are two tenders out actually. First, they came out with a four-year tender. That is a high-specification tender. The original date was last week. It has been extended to the middle of this month. That is very typical. There will be some extension before you have to give your rate. There are other players also, obviously, for that. That tender is for up to five units. That means that they can take everything from zero to five units for that tender. We think it is ideal for Notos. We know that Notos is one of the premium rigs or vessels that Petrobras really like. We think we are well positioned for Notos in this coming tender. They have the first date, the commencement date, we cannot make. We can very much make the second window here with the second tender. This is something that will most likely be concluded Q2. It takes some time before this process to play out, but I think that we will know more in Q2. The way we read Petrobras is that we think that currently they have eight vessels on contract. We think that their incremental demand is three vessels. That is in addition to the eight. Of course, Notos is part of that eight. That is the way we assess the situation. There are also other operators in Brazil, as we talked about. We think that there could be, if this plays out, the demand in Brazil could go from the current 10 vessels in 24 to between 15 and 17 vessels a couple of years out. Then there is an addition to the first tender. There is a second tender out for a lower spec vessel for two years. Again, Concordia could be a candidate for that. Time will tell, but it depends on, as we said, we are not going to go through the SPS with Concordia unless we have a contract that can justify it. On operations, we touched upon that earlier. Good operations, 100% utilization on the vessels in operation, and also that includes the safe Concordia. Our thinking there is really either we are going to put her in layup unless we have a contract that can justify the SPS. That is quite a big number that we are talking about there. It must be a contract that stands on its own two legs. An alternative, we also look for a sale, if that makes sense. We are quite pragmatic on Concordia, what makes most sense. The Caledonia, again, she is going on contract 1st of June to Ithaca. There everything goes, she is in scapa flow, there is some bad weather, but other than that, that is going according to plan. Likewise, the safe Kiboreas is also going according to plan. The safe Scandinavia has now been laid up for a number of years. It costs us about a million dollars to have her cold stacked per year. It is an option premium in a way to see where the market goes. Now we have had her in layup for a number of years, so unless we can see some visibility for contract there, we are considering to sell the Scandinavia as well. This is the backlog we have delivered on this. The backlog has now up 44% compared to the same quarter last year. The next vessels that are due for contract is of course the Notos and Caledonia for 2026 and potentially the Concordia. That is what I had on the numbers. You can do the numbers, Haris.

Thank you everyone for joining. I will walk through some of the numbers here. I think probably the most important activity from a financial perspective that we are working on is the refinancing as Teria correctly mentioned. As we previously communicated in the last quarter, we are looking at a total financing need in the range of $400 million. That includes not only the refinancing of the debt that is coming due at the end of the year, but it also includes a cash need in 2025. That number we believe is in the range of $70 million. We are reactivating the Caledonia, we are reactivating the Boreas, we have a couple of SPSs coming up. We are looking at in CapEx alone approximately a number close to the $70 million mark. That number is the total cash flow, not just the CapEx of course, but a significant portion of the spend in 2025 is related to CapEx. The amounts coming due plus the CapEx plus giving us headroom in the future to continue to operate the business, we believe we have a need in the $400 million range. As Teria said, good dialogue with the various stakeholders and we are aiming to conclude the process in the first half. And as we've communicated over the last several quarters, actually the runway that we have is into mid 2025. So this is clearly the focus over the coming weeks and months is to resolve the capital need. Jumping back to the performance of the actual quarter, I think it was a good quarter. As Teria said, we had a very good uptime. I think revenue was broadly in line with the previous quarters as expected. We did have some one-off other income in the quarter, which was positive. This is largely related to some historical agreements. It was good to see an extra million or so coming in on that, but by and large steady as she goes on the operating revenue. On the cost side, we did see some slightly increased costs. I think that was mentioned already. I think this morning I saw a few analyst comments. We did have some increased costs in the quarter. I think that by and large is driven to timing, particularly around Concordia. So should we actually go and lay out Concordia? There is a demobilization cost associated with this, which we have taken an adjustment in the quarter. Moving on, I think cash and balance sheet is obviously the key focus. On the balance sheet, I think there's obviously been a recategorization. Long-term debt is now short-term debt, given its maturity within one year. Otherwise, I think the balance sheet is by and large pretty steady. The one thing that we do see, of course, running through the balance sheet and the cash flow is working capital. As we ramp up on these projects, particularly the Caledonia and the Boreas, we did start some work on the Caledonia-Boreas in Q4. And we see that that had a negative working capital draw. So I think there have been some questions around the cash and liquidity balance at the year end versus estimates. The majority of this is driven by working capital movements, both year end movements. Pretty typical clients pay you slightly over the year end rather than before the year end. But in addition, we saw some draw driven by the ramp up of these projects. And also we saw some pulling forward of capex in relation to these projects, particularly Caledonia, where we spent a little bit more capex in Q4, which was originally planned to spend in Q5. But the cash balance today is still hovering around the $50 million mark. And we do have a significant portion of prepayments coming from clients supporting these reactivations. So we think the runway again runs into mid 2025. With that, I'll jump back, let the Terje jump back in and wrap things up.

Yeah, I mean, I think we touched upon this, but I think we are well positioned in terms of the market. And I think that the market will tighten. We see it from Brazil and that's going to drive this market in the years to come. And obviously we are focusing a lot on the refinancing now that we hope to conclude within the first quarter or first half of this year. I think that sort of ends our presentation. And if there are any questions, you can either raise them here in the audience or you can send an email to Reese. And we will sort of read them out and answer them as best we can. Maybe you want to use a microphone.

With Petrobras requiring up to three incremental units in the new tender, do you see any potential to bid the new builds?

I mean, that's part of course some of our assessment. So that is that they are, you know, they meet the specification. I mean, put it that way. But I think in terms of what we will bid and not bid will keep our card close to our chest. But what I can say is that the new buildings are meeting the specifications. But as always in Brazil, it's the lowest bidder that wins.

So there

it's in this new tender compared with the 120 level that we've seen recently. Again,

we think that the market dynamics are favorable. But we will again try to be a little bit sort of cautious in commenting too much on what we think the market will be for these contracts. But we think that the market fundamentals are positive. So that should sort of hopefully mean that it's in our favor. There's one question here from the audience regarding

the marketing of Safe Scandinavia. Any plans regarding that?

I think we have in terms of marketing for the contract, we are very active on that. In terms of marketing for sale, we have you talking to, you know, she's out there. So we have a dialogue with a few parties, but nothing that we can report on. OK. Anything else, Ries? If not, thank you very much all for attending. Thank you very much for your time and I look forward to seeing you next quarter.