Prosafe Se

Welcome to the Q1 2025 presentation for ProSafe. so uh the last quarter or last you know this year actually been a very positive and active year for the company and we have reached several milestones and just the covering operation has been good in the quarter so no sort of unexpected events last we have a fixed as we have announced earlier the sephiris for another two and a half years in Brazil. That was an extension of a current contract. That means we do not have to go in and do sort of cleaning of the hull. So it actually has gone straight on to the new contract or the extension of the contract at a slightly higher rate. We did sell the Concordia and Scandinavia in the quarter. So that means that we're now left with the five core vessels. We are working on reactivation of Boreas and Caledonia. And of course, I will come back to the notice that we are in very good position to extend the contract or renew the contract for a notice for another four years. Numbers are fairly stable versus where we should be. And the cash position is quite strong. We will come back to that. I think, you know, what's the achievements in a quarter and looking forward, I think all the activity we see both in Brazil and West Africa, for that matter, other places, the market is looking, you know, we've talked about this for quarters, if not years, that it is improving and that is not now coming through. Well, a little bit on the refinancing. So we have now agreed the refinancing. We have a consensual deal. So all our lenders have agreed to this and it passed the EGM last week. So this is now we need to wrap it up. And we are sort of right now it looks like early Q3 is when this will close. That means that we will convert $193 million of debt into equity. That will result in 321 million new shares, just versus the 17 million that's currently outstanding. In addition to that, our current shareholders will then get a warrant for a nominal value to subscribe for one additional shares. So the number of shares, of course, following this, depending on the uptake of the warrants, will increase significantly. So this is, as I said, a fully consensual deal. And we are now moving forward on the sort of the the closing of this. Part of the transaction is that we will have the current lenders will inject $75 million of new liquidity into the company. That means that we have a fully funded business plan. Now we have the capital needed for all the capex going forward and everything. So we have sort of a significantly improved balance sheet. And our net debt following this transaction will be 220 million. And that's compared to sort of like for like, end of Q1, 366. So about $150 million net reduction of net debt. So the debt will then be tranched in different tranches. We have the U.S. facility is unchanged. Then we have a senior facility of $75 million. And then we have a super senior facility of $150 million. Part of that is a new cash that is coming in of $75 million. And as I said, we are working to close this beginning of Q3. That's sort of the timeline currently. But I'll just say that we're very happy with this and of course the support the lenders have shown us and not least the shareholders that we managed to get this and the shareholders actually agreed to this. We signed them up prior to the EGM. So we're very happy with both the engagement and the support that the wider stakeholders have given us. So this is then how it looks going forward. I mentioned that the Zephyrus, she's on to Petrobras at $115,000 per day. And then the Eurus is on to Petrobras as well until 27, and she is on to about $86,000 per day. And then notice with this renewal, as you can see, that the backlog is, I'll come back to that, but that's quite strong. The safe Boreas is actually leaving Norway today. She is on a heavy lift in Bergen and she's heading to Singapore. And she will be, so then commence the contract between November and February in Australia. So that's all going according to plan, time-wise and also sort of the capex-wise. She is on schedule. The safe Caledonia, likewise, she's been reactivated as we speak. She is due to go on contract 1st of June. And again, according to plan. So it has been a very active quarter for, you know, for ProSafe, both in operations and the reactivations. And the Nova Vega, there is nothing new there. So they are still sort of, they were not part of restructuring the EURES facility. So that's unchanged. And as you can see, the Concordia and the Scandinavia are now exiting. Actually, they have both been delivered to their new owners. Turning to the market, this, as you can see, if you add this up, this sort of adds up to 27 units. I'll show you a little bit more granular how we sort of build this up. We used to say that this, you know, the total supply here is 23, but we have seen some latent supply coming into our market recently. I'll come back to that. But this is where the units are as of today. So as you can see, in Europe, there are six units. That includes the boreas that then will leave for Singapore and Australia this quarter. So this is a picture of the way it looks today. And as you can see, there are a number of units in Asia. And that's the reactivated units, the high G3, the high G3. Five, the Stavanger Spirit and the Greta that we see is coming back into the market and increasing the total supply here, active supply, from 23 to 27. In South America, that includes Guiana, there are currently 11 vessels in Brazil and one vessel in Guiana. So this is the picture and in West Africa we see increased activity as well. But currently there are actually four vessels or units operating in West Africa. And this is, again, more granular than we usually show, but this is how we look at supply. So we have divided into active supply and latent supply. As you can see, some of the latent supply have moved into active supply, and that is really sort of the three units in China, Heishi 3, Heishi 5, Greta, and Stavanger Spirit. That's for all practical purposes. And then, of course, the reliance that used to be in layup have now also been reactivated into active supply while the Scandinavia has gone out altogether. But this sort of gives a bit more granular picture of what we see as supply. As far as ProSafe is concerned, we are still the biggest operator. We have a 20% market share of the total fleet. And we are by far the biggest operator in Brazil with 25% market share. And we control two of the four vessels that we define as latent supply. That's the Nova, Vega, the options we have in China. Turning to the market, again, this shows data points since 2006, both in Brazil and in the North Sea. And as you can see, there is a significant sort of trend upwards here. And the NOTOS is the latest data point here in Brazil at the rate that we have alluded to. $140,000 per day is sort of the equivalent rate if you normalize it. The higher data point here is a shorter term contract in Brazil, so it's not like for like. But if you look at the last three years, the average length of the contract in the North Sea is six months, while in Brazil it's 26 months. And of course, that's the seasonality of the North Sea market versus the longer term nature of the Brazilian market. So that's sort of the comparison here. There has been good activity this year. Year to date, we have seen over $800 million of awards or contracts that includes sort of the NOTAs and the high sheet three and the high sheet five, who has also been declared winners of lot one. Just to remind people, Petrobras came out earlier this year with a tender for two lots, with lot one and lot two, lot one was up to two vessels and lot one was up to two vessels, lot two was up to three vessels. So in lot one, they have declared two winners, the high shift three and the high shift five. That's why we have taken them from sort of what we define as latent supply to active supply. So they are now actively competing in our market. Then for Lot 2, NOTOS has been declared the winner. They have said that there might be additional declaration in Lot 2, so that is something that a process that's still ongoing. So after you are declared the winner, you need to be awarded a contract. This is the Petrobras process. So I think we are in very good position, but just, you know, we have not sort of been awarded a contract yet. And that normally takes, you know, a month, maybe longer. But that's sort of our estimate that, you know, if everything goes according to plan here, we will be awarded a contract. And that's when this is a firm deal. There's also another contract, another tender out in Brazil for a shorter contract at the lower spec unit. And we also see that there's a good process there. And we do not participate there, but we think that that's also a contract that will be awarded not too distant future. So outside of Brazil, again, we see good activity, as I mentioned, in West Africa. There are a number of units inactive in West Africa today. There are still a number of tenders that's outstanding in West Africa. So I think that's a market that's quite interesting. And also Guyana going forward. There's one active vessel there, but we see more demand in Guyana. And of course, Australia for next year is going to be quite active. Actually, for a short period of time, there's going to be three vessels operating in Australia next year. Turning to operation, again, safety. We have good safety records. However, we had one LTI in April after the quarter. Otherwise, the vessels that are operating in Brazil have 99% uptime. This is more or less according to what they have been doing for the last years, actually. And I mentioned the safe Concordia and safe Scandinavia. And also, as mentioned, the Caledonia will then go on contract 1st of June and the Boreas between 15th of November and 15th of February. That's the window when she will go on contract. Backlog, this is, we are focused on two things, the last year and a half. One, building backlog, and the other is refinancing. So I think on both those two sort of main topics for the company, we are quite happy. So more or less two and a half X on the backlog compared to the same quarter last year. So the current backlog, assuming that we are awarded the NOTOS contract, is at $545 million. And so this is something that is, you know, very happy about that. And you see also the rates that we see. Just to give you a picture, the Nolto's current run rate for Nolto's EBITDA, you know, based on the current contract, is about $6 million. And the new contract will be about $28 million. So, I mean, it's a significant uplift in contribution to the company going forward here. Rhys, do you want to go through the numbers?

Very good. Thank you, Terje. Yeah, I'd like to walk a bit through the numbers. I think as Terje mentioned, it was a very stable quarter, Q1. So if we look in Brazil, we had the three vessels all operating, all at 99% uptime. It's a very good revenue contribution and also a very good EBITDA contribution. So if you look at the Brazil vessels, I think they're contributing in the quarter about $8.5 million in EBITDA from the Brazil vessels. Also in the quarter, we were very happy that we could dispose of the Concordia. That was a good benefit in the sense that we didn't incur the demobilization costs related to that. So we also had good revenue and good EBITDA contribution from the Concordia up until she ended that contract on the 9th of March. So coming against, I think, the good eBay contribution that we had from Brazil and from the Concordia in the quarter was, of course, the fact that we're reactivating the Boreas and the Caledonia. So we did incur approximately $3 million in reactivation cost in the quarter in getting those vessels off. But all in all, we're very happy, I think, with the results, good operations, and I think we were managed also with these disposals to reduce sort of the run rate burn. Looking a bit to the income statement, a bit to the lower lines, I think the big music in the income statement is obviously the cost which we are incurring as part of this refinancing. We incurred approximately $3.6 million in cost in the quarter related to refinancing. I think we've been pretty consistent. We think this process is going to cost us just north of $15 million in total. We had some costs associated with it last year. And of course, that 15 includes also some success elements. But I think we're still within that kind of ballpark range, maybe just slightly north of the 15. But we were very happy that we could get this to be a consensual process. I think as many people who've been through these processes, they can be much more costly than that. So I think we were quite happy with how we'd manage that process. Also some exchange differences here. There's quite some swing, I think, particularly in the real in the quarter. The balance sheet, I think Terry also mentioned, obviously the balance sheet's going to get a significant overhaul with the conversion of $193 million. And we're expecting, as Terry mentioned, the net debt coming out of the process to be around about $220, which is obviously a significant reduction from where we are today. I think cash flow. Cash flow is obviously for me the most interesting aspect looking ahead. We had a significant amount of prepayments which we received in the quarter, so we have negotiated some very favorable contracts. with Boreas and also with Caledonia that we're receiving a significant portion of money upfront, which is covering the cash that we're having to incur on the reactivation. So you see that they matched up quite nicely this quarter. We received about $21 million in actual prepayments from the clients with respect to those two units. And we spent 21 as well on the CapEx. Of course, also, we had in here some of the proceeds received from Scandu hadn't delivered her yet. So some big working capital swings in the quarter as we, you know, as we're receiving money for these contracts that we're paying money out in capex. Obviously, when we look ahead, cap working capital and the cash flows is going to be, I think, a key thing to keep in mind when looking at ProSafe. Because, of course, the money that we're receiving advance. We've received the cash now, but the profit is going to come later. So I think we're going to see some differences there going forward. But generally, I think we were quite happy with how we were able to manage the cash flow. I think if we roll back a few quarters, we thought the quarter would be significantly tighter. But we have managed, I think, to do well in disposing of the vessels, getting these prepayments in. And I think we have also... As you see sort of in the back, the Zephyrus SPS has moved back in time, and so that has also given us a little bit more breathing space on the cash flow and the liquidity in the run-up to the refinancing, which again we think should be wrapped up here in early Q3. So with that, I'll hand it back to Terje to wrap things up.

I guess we'll take questions, right? Are we taking questions, Lina? Yeah, so if people have questions, you know, just send them to Reese, and we will answer it here, if they are from online. So, yeah, so this is, again, very active quarter. Very happy to have delivered on some major milestones. So we are sort of the... the market leader still in this after the divestments, but we're still the market leader in our little niche of the market. And I think we have also good access, we do have good access on new buildings, and that's something that we will look closely at going forward. after refinancing with the two vessels in China. I think we talked about Brazil a little bit today. We talked about it earlier. I think that's going to be the main driver also for this market going forward. Less than just under 50% of the active fleet is in Brazil, and there is no reason to believe that Brazil, with everything going on there, is going to drive this market. the recapitalization means that we have now as i said a fully funded business plan uh very happy with that and uh and the sort of ready to to go into the next phase and um and that's sort of what we see is that uh also now the high rates is sort of uh is a flowing down to our our pnl when sort of as as a proxy the notice and going from six million dollars gbth contribution I mean, I think that that speaks a lot. And that's what we have been speaking about for a long time. But now it's actually happening. And that together with Boreas going on contract, the Caledonia being reactivated. So we see that finally, you know, it's some of the prospects are converging into cash flow going forward for ProSiv. So that's what we had on the agenda today. So I don't know if, are there any questions, Rhys?

Yeah, there was a couple of questions here. One of the questions related to how is ProSafe positioned with respect to the longer term contracts, which you mentioned, and in particular West Africa?

I think our capacity, the only capacity we have now, is for Safe Caledonia. And Safe Caledonia is a moored unit. As a moored unit, she's not ideal for West Africa. So if she is to sort of be a player in West Africa, then we need to reactivate the DP system on the Caledonia. And of course, that's something that we are constantly looking at. That's a capex element, but for West Africa, for us, that's really, at least in theory, the only capacity we have for West Africa. And of course, there are shorter contracts. Otherwise, I think that's how we are positioned, but that's more of a big picture view on that.

There's a couple more here. Any commentary on safe Nova and safe Vega likelihood of them being delivered?

I think that as the people that follow this market closely, you have seen that we actually bid them in to Brazil in these tenders that were out. But the rates that we bid them at is also an indication of what we need. to reactivate those vessels. But, you know, as we have said previously, we do have a financing arrangement with the yard, but that is, you know, it used to be a longer term financing arrangement. So I think for us to take delivery of Nova and Vega, we need to renegotiate the financing arrangements. So I think that's, again, something that's post-refinancing. We will really look very closely to see if there is a way, I guess, on the back of a longer-term contract, that we can get an appropriate financing arrangement in place to reactivate. But clearly, that's our ambition.

And the final question here is, how do we see the outlook for the North Sea?

Yeah, the North Sea, we see that in the UK, there is for 26, not that much demand. We see that there are a couple of fairly low visibility for 26. I think there's better visibility for 27 in the North Sea. And in Norway, I mean, all the activity that has happened in Norway with the tax incentives after the COVID, that's playing out now. But there are still some demands also further out. You know, we're talking demand in 29, 31. So there is going to be activity in the North Sea. But, you know, I think the gravity, you know, what we've seen has changed in Brazil. We see that that sort of that gravity is continuing. So Brazil is going to be the market, but it's always going to be demand for sort of a, you know, five vessel plus minus in the North Sea. Okay. Any questions from the audience?

That was it.

If not, thank you very much for attending, and we look forward to presenting Q2 after the summer. Thank you.