Prosafe Se

Welcome to this second quarter 2035 result for ProSafe. As usual, we'll do it if anyone online have questions, please just send them to Ries and we'll read them out here and try to answer them as best we can at the end. So I would say that the quarter and the first half of this year up to date has been a very active year for the company. Of course, one of the major work streams has been the refinancing that we concluded the 21st of July. Very happy with that and great support from both our lenders and our shareholders in coming to a fully consensual deal with all parties. Otherwise, also in the operation, we have been quite active. We managed to secure a four-year extension on the safe notice. And we also sort of worked on reactivating the safe Caledonia and the safe Boreas in the first half. So that's sort of ongoing work on Boreas. And we also sold the safe Scandinavia in the second quarter. So all in all, a very active quarter. And I think, you know, the strategy, building backlog and refinancing, you know, that has been done. And we're looking forward. Numbers wise, we will come back to that. But basically, I think more or less in line with our expectation where we came in. on EBITDA and cash flow. We'll come back to that a bit later. Looking forward on the market in general, I would say that Brazil is still sort of the market that's driving our segment, while there is a little bit less visibility in the UK and the North Sea in general. On the refinancings, as I said, we concluded that on the 21st of July. So that's now all done. We converted $193 million of debt into equity for 90% of the company. So the existing shareholders are then getting 5% in addition to a penny warrant. And we are in the process of that. The warrants have been issued. And just to remind everybody that you have to declare those by close of business on Monday if you haven't done so. That's probably a good idea to do it if you have... if you have subscribed for it so that means that that after this we'll have approximately 353 million shares of standings of course a significant sort of increase in the number of shares so we also had sort of the part of this deal is that we got a 20 75 million dollars in new cash That means that we have a fully funded business plan going forward, including the SPSs that are coming up. So our debt stack, as you can see here, our gross debt is $306 million, and our net debt post this restructuring is 220. And the debt is, for all practical purposes, carrying an interest of 11%, while sort of the senior, not the super senior, but the senior secured has a peak element of 9% that we are utilizing. Moving on to the fleet. SafeZephyrus has been renewed. That was last year. So it's now running to end of 27 at $115,000 per day. SafeZephyrus is continuing on our current, I would call it legacy contract at $86,000. and safe notice as i said earlier has been extended for four years so that rate actually goes from um 75 to approximately 140 000 and of course that is is a major uplift so i would say that the ebta for that that the vessel goes from you know five six million to you know, the mid-20s, probably a little bit more. So that's a significant uplift in rates. She is due for SPS this year, beginning of next year. And we are actually in discussion with Pretrobras to try to optimize that rather than postponing that to 2026 and rather than having two off-hire periods, to have one off-hire period between the contracts. work in progress and and i would say that's more optimization of the operation and and also just to make that clear on say sephorus she's also due for an sps towards the end of this year Sif Boreas, she is in Singapore. We took her on a heavy lift from Norway to Singapore. She arrived in the middle of July, and she's now working on putting the thrusters back on and getting ready for contract. We were notified by Shell recently that the startup window is between 16th of November and 16th of December, so the earlier part of the window that we talked about earlier. And so she will then go on a standby rate in the beginning of the first half of September before she moves down to Australia. Safe Caledonia went on contract on 2nd of June, according to schedule, and she has a six month contract. Of course, there are optionality there and they have three one month options. They are declarable sort of 45 days before the option starts. On the Nova and Vega, there is nothing really new. I think we have a good discussion with Costco, but there is more or less the same situation there. When it comes to the market, this is the world according to ProSafe when it comes to supply. So in total, there are 31 vessels in this market, the way we cut it. That includes... cylindrical units, monohulls, compacts, and jackups. So, you know, everything that we see that we compete on a day-to-day basis. So, and that's all, this also includes laid up vessels, not laid up, not delivered, the Nova and the Vega. So in total, this is sort of the market, the way we see it. And when it comes to Asia, just to dwell on that, you see that there are eight vessels here. That, of course, includes the Nova Vega, it includes the Boreas, that is Singapore, and it includes the three the Chinese vessels that have sort of been added to the supply here. So otherwise, looking to South America, of these vessels, 12 are currently in Brazil. Of those 12, nine are onto Petrobras. And what we see now is an increment of what they have contracted to date. I'll come back to that a bit later. But what they have contracted to date is an addition. They have contracted in the first round, they have contracted two, The second round, they contracted one. That's renewal of the notice. And they also sort of contracted a separate tender. So the incremental demand from Petrobras has gone from nine to 12 vessels. And that's also the incremental demand in Brazil. I'll come back a little bit to this later when it comes to what's happening in Brazil. This is the current market. I would say that the last done in the North Sea is probably $170,000 to $190,000 per day. We see that there is some requirements going forward. So we think that the market in Norway and the North Sea in general is probably going to pick up from these levels. And in Brazil, the safe notice, of course, was done at $140,000 a day. And that's more or less the same as the Chinese vessels were contracted. They might have got a slightly higher rate, but in the same sort of vicinity as the safe notice. And of course, as you can see here, the nature of the market is very different in terms of the term. I mean, an average in the North Sea is six months. An average in Brazil is 26 months, while Petrobras typically contracting for four years. So this is earlier this year, Petrobras came out with a tender. It was a lot one and a lot two. In lot one, they have contracted two vessels, the Haishi 3 and the Haishi 5. And that concludes that lot. They've said that they would do up to five vessels. In the second lot, with a slightly later start-up date, they have contracted safe notice. That's the four-year extension. Then we have reasons to believe that they might contract one additional vessel. So time will tell which vessel that is. So that's sort of a further incremental demand than what I alluded to earlier. So that means that Petrobras will go then from 12 to 13 vessels. Significant uplift in number of vessels that will be then deployed to Petrobras. And we think that it could be that Petrobras is coming out with a tender later in the year or even next year. So we will see. But this is a fluid situation. They also contracted a compact semi-submersible for a shorter and a more low spec work earlier in the year. When it comes to the market, I would say that we see good activity both in West Africa and Guyana. uh and the north sea is we have less visibility there was one there was a one contract awarded for for 26 that was a low spec unit with a pretty low low uh pob so that was done by jacob so the the pob there the requirement was less than 100 people so so emerge jack up took that job Otherwise, we see for 27, there is some more work in the UK. And further out in 29 and even further out, we also see some requirements in Norway. But otherwise, this used to be very much the backbone of our market. Now that's definitely moved to Brazil. When it comes to operation, I would say that in general, very happy with operation in the quarter and also the first half. No LTI safety wise. Well, we had one LTI actually, but safety wise in general, I think we are operating well and we have high utilization that we typically have. So the safe Caledonia was on contract to Ithaca on the captain field from the 2nd of June. And since then, she had been 100% off time. And I also explained the safe Boreas earlier. So currently, then, we have five units in our fleet, the four modern units and safe Caledonia. Backlog, if you look at this, you know, we have focused a lot on the backlog and reactivating the vessels. So compared to the second quarter last year, our backlog has increased with 60% and of course at a much higher rate. So I think, you know, that is something that we are sort of happy with and that's for obvious reasons. We're going to continue to focus on that going forward. And then there's sort of the safe Caledonia. We see there that there is limited visibility in the North Sea for 26. There is more visibility in 27, but there are some opportunity in West Africa that we are looking at for Caledonia. And then the next in line is then the Euras in Brazil, the renewal there, and also sort of the sephiris coming after. And typically, you know, these contracts are sort of renewed a year ahead of expiry. It varies, but of course, there's a continuous dialogue with our clients. Financial Reese, do you want to take us through this?

Thank you, Terry. Touching briefly on the results for the quarter and the first half, slightly lower EBITDA this quarter than the previous quarters. I think that's driven mainly by timing. We had Concordia on higher last year, had Concordia on higher until early March, and we have now Caledonia starting up a little bit later. So I think the phasing there impacted slightly, as Terry mentioned, very much in line with our expectation. Looking a little bit ahead, we do see Boreas starting up a little bit earlier than we thought. So we will see a improvement of the EBITDA going forward. We have gone out and said we expect EBITDA in the 35 to 40 million range for the full year. And that is driven largely by Boreas coming onto contract in the second half. Not a lot of news on the income statement. I think, you know, good to point out, I think, so the other financial items, obviously, we've been through a lengthy refinancing process with a debt for equity and did incur some significant advisor fees. It was fully consensual, so that obviously helped. But I do think we're seeing the back end of those fees now that we finally got the deal done in June. So I think we will also see a significant improvement in the net loss position also going forward. Balance sheet, again, post the restructuring, we will see an improvement, obviously, in the equity with the conversion of the $193 million of debt. I think the main thing that we're focusing on very clearly when it comes to the balance sheet is working capital. which has an impact on our cash situation. This was the picture in Q1. I think we saw quite a bit of working capital movement. The one thing that's important to kind of point out is that we have received a significant portion of mobilization fees in relation to the Safe Boreas and the Safe Caledonia contracts. That's obviously been a very positive working capital movement, which is offsetting to a large extent our capex. And that was the intention of those contracts that by and large, they are being funded by the client. Obviously, what we will see for those who are a bit interested in the accounting, we will see that that go the other way when we start to recognize revenue in EBITDA. So we'll have positive revenue in EBITDA and more negative working capital movement as we need to recognize the EBITDA over the contract period. But decent cash flow in the quarter. And I think, as Terry mentioned, we're sitting today at around about 90 million of liquidity, which gives us you know, sustainable liquidity position looking ahead. We do have the remaining SPS projects to complete. We got the SPS on Notus, we got the SPS on Zephyrus. Those are coming up now between Q3 and Q1 next year. And we also have the Boreas, which I think a good portion of the Boreas cost is behind us, but we still need to get her on contract here towards the back half of the year. So with that, I will hand it back to Telia to wrap things up.

So, yeah, Outlook. So, again, we are sort of in an improving market, and we see it, of course, for ProSafe, there is a lagging element due to legacy contracts. But based on sort of the current rates, I'll come back to illustrate that a little bit. But we are sort of both sort of the supply demand here, but also just the fact that the legacy contracts are coming towards an end is going to be uplifted in our earnings going forward. So we are, as we said, are sort of guiding. This is the first time we have done guiding for a long time, but that's between 35 and 40 million for the year. So this is sort of giving an illustration what we think the earnings potential is in ProwlSafe based on the current market. So if all the contracts were set at the current market, so for illustration purposes, looking ahead then to 28 and assuming everything is reset, that's the first year that the legacy contracts are reset in full. If they are reset at the current market, i.e. $140,000 per day, the same as notice, we will have an EBITDA in the vicinity of $100 million, 90 to 100. That's sort of the earnings potential. But of course, if the market goes up, there is more potential. If the market goes down, there is less. But this is sort of a state of the union as of today. And when it comes to the debt carrying capacity, of course, based on the current guiding for 2025, the net debt to EBITDA is quite high. But looking forward, we are sort of, if this is sort of the case, in 28, with these assumptions, we'll have a net debt to EBITDA of around two and a half, which of course is very different than what we had sort of in the past. So we think that there is significant earnings potential and value creation potential in ProCif. And this is looking at, again, the steel value here, enterprise value. Our current net debt is 220. Current market cap is about 140. That means that enterprise value today is around $360 million. And comparing that both, so the broker values, and new building replacement costs. I mean, I would say that to build one of our rigs today, one of our vessels will cost at least between 300 and 350 million dollars. That means that, you know, the new building parity today is above 1.2 billion. Then we don't sort of put any value on the safe Caledonia, just on the four modern units. So it's sort of based on new building parity. Of course, there is significant upside as well. But the question is whether there will be built more accommodation vessels. Time will tell. So this sums it up. We are the market leader and we have capacity going forward when the contract is coming off renewal. I think after this, we have a sustainable capital structure and we have a fully funded business plan. So Brazil is very much the focus, and it is, and it's going to continue to be for ProSafe and also for our market. And we are focusing to continue to build the backlog. And I think on that note, I think that, of course, the advantage by operating in Brazil compared to the North Sea is the long contracts. That's one of the main reasons why we like Brazil so much. There you get four-year contracts, while in the North Sea it's much more staggered and you need to take a lot more risk on options and you need to take a lot more risk of filling the void spaces. While the visibility we have in Brazil is something that we like a lot, and that we are going to continue. I mean, Brazil is a difficult market to operate, but when you're there, as I tell my colleagues when I complain sometimes, that's our competitive advantage. I mean, that's really where we are strong and where we want to continue to be strong. So with that, I think I will end the presentation as such. Are there any questions from the audience? Maybe you can talk into the mic that's over there.

How do you see the demand outlook in Australia? Do you think the Boreas could stay there post the upcoming contract or do you think you'll have to move it to Brazil or West Africa?

I mean, I think that that's clearly our, you know, the pure sort of math on that. That's clearly our priority to stay in Australia. So next year there will be two vessels operating in Australia. But we see that there is demand from Australia. The visibility is not great, but that's clearly one of the, you know, for obvious reasons, one of the focus areas that we'll see if we can find new work for Breas in Australia. Thank you.

Maybe we can add also that we've mitigated somewhat the risk. We've mitigated somewhat the risk in the sense of the current contract covers returning the vessel back to this side of the world. So we have mitigated somewhat that as well. But clearly, to stay in Australia would be advantageous.

Okay. Nothing to you, Rhys? no nothing okay then thank you very much we'll end the presentation here so thank you for