Saipem Spa

Good morning, this is the Coruscall conference operator. Welcome and thank you for joining the CYPEM first half 2025 results conference call. As a reminder, all participants are in listen-only mode. After the presentation, there will be an opportunity to ask questions. Should anyone need assistance during the conference call, they may signal an operator by pressing star and zero on their telephone. At this time, I would like to turn the conference over to Mr. Alessandro Puliti, CEO of Saipem. Please go ahead, sir.

Thank you and good morning. Thank you for joining us for the presentation of Saipem's results for the first half of 2025. I'm here in Milan today with our CFO Paolo Calcagnini and with the rest of the members of the Saipem senior management team. As you know, today is a special day for all of us, after the merger agreement announced last night. But in today's call, we are focusing on Saipem as a standalone company. I will start the presentation covering the key highlights of Q2, Paolo will then cover the financial results in more detail, and then I will wrap up with my closing remarks before opening the Q&A session. Let's start with the key highlights. I am pleased to report, in the second quarter, Saipem recorded a very strong performance in terms of revenue, EBITDA and cash flow generation. on top of having made the largest dividend payment in its history. Revenue stood at 3.7 billion euro, growing by 10% year-on-year and 5% sequentially. EBITDA stood at 413 million euro, growing by 39% year-on-year and 18% sequentially. EBITDA margin stood at 11.2%, a significant improvement compared to the previous quarter margin of 10%. In Q2, operating cash flow reached the record level of €447 million. The order intake in the second quarter stood at €2.2 billion, in line with the order intake of Q1. We expect our order intake to accelerate in the second half of the year, in line with the market dynamics. Our backlog remains close to the record high level, providing us with an excellent visibility for both 2025 and 2026. SIPEM continues to deliver steady growth and improved cash flow conversions. Revenue more than doubled since the beginning of 2022. EBITDA has increased in the same period by a factor of 4. EBITDA margin has also doubled and currently stands above 11%. Cash flow generation has grown steadily over the last three years, reflecting the progress made in executing the legacy backlog and the proactive management of the working capital. In particular, in the first six months of the year, our company has already generated an amount of cash flow equal to 80% of what we delivered in the full year 2024. Let's now cover in more detail the latest awards. The order intake of the quarter includes two energy transition projects from ENI and a substantial feed award from Sonatrac in Algeria. The key features of these awards are First, we are confirming our strong positioning in the CO2 management value chain in the UK following the East Coast Cluster Award in 2024. Second, we are also accelerating the conversion and upgrade of existing refining facilities for ENI. Third, we continue to de-risk our own shore awards by ensuring a substantial portion of the scope of work is under a reimbursable framework. Fourth, the feed in Algeria for an integrated fertilizer plant has also allowed us to make an important step in meeting our service order intake target for the year. As a reminder, engineering service, operating and maintenance and project management consultancies are key drivers for repositioning of our onshore business. We will cover this aspect in more detail later in the presentation. Let's now deep dive on the recent CO2 management awards. We are excited about the current development in CCUS, and we believe that this market will grow into a sizable opportunity for Saipem in the years to come. The order intake of last year was about projects for offshore CO2 transportation. In the first half of 2025, we started to collect orders for CO2 capture and management also in the onshore sector. Currently, Saipem is working on four CCUS projects for a total value of 2 billion euro. The clients for most of these projects are oil and gas companies and we have a consolidated relationship with most of them. Also, these projects are well diversified in terms of geographical footprint and also attractive in terms of size. Let's now focus on the recent developments in our service businesses. One of the key pillars of our strategic plan is the de-risking of our onshore APC framework. also by growing in the service market. I'm glad to report that we are making progress, and in particular, in the engineering services, we have acquired more than 300 million euro business since the beginning of the year, including the FEED study in Algeria, but also other studies in Italy. In the PMC space, we have now started our first project in West Africa, and we are awaiting feedback on several bids we have submitted. The pipeline in PMC looks promising. On operating and maintenance, we are working on a substantial list of prospective projects across the globe. We will give you regular updates on the evolution of our services offer going forward. Let's now have a look at our commercial effort. As you know, we are coming out of two very strong years in terms of order intake, totaling almost 40 billion euros of awards. Nevertheless, our commercial pipeline for the next 18 months remains robust at 53 billion euros. Also, half of our pipeline related to gas upstream projects, which are less sensitive to swings on oil price. We are also awaiting feedback on several feeds submitted, totaling 7 billion euro, and we expect to submit additional bids for 16 billion euro during the remainder of the year. As such, we remain confident about our order intake target for 2025. Let me now give you an operational update on two very important projects. On Courcelles, we confirmed the plan already presented in the Q1 results. We are aiming to restart the drilling activity next month and we expect to complete it by the end of 2026. Moving to Norway, I am glad to report that the Castorone vessel completed the laying of about 79 km of pipe-in-pipe pipeline for Equinor, connecting the IRPA subsea production template with the existing platform. This project is the deepest steel pipe ever installed in Norway and it is amongst the deepest piping pipe globally laid in S-lay mode, further consolidating Saipen leadership in pipe laying. The Castorone will now move to Guyana to do work for Exxon in the Uaro and Whiptail fields. I will now hand over to Paolo so he can give you more details on the financial results of the first half.

Thank you Sandro. Good morning everyone. We will start from slide 12 which represents a summary of our financial results for the first half of 2025. Revenue increased by 12% year-on-year to €7.2 billion, and our EBITDA grew by 35% to €764 million. The growth has been primarily supported by our offshore ENC activities. EBITDA margin keeps on improving, having surpassed the 10% threshold, up from 8.8% in H1 last year. This is due to a more favorable business mix and to the reduced incidence of the legacy projects. Our net result was €140 million, 19% higher than H1 last year. Operating cash flow stood at €842 million, mainly driven by the growth in EBITDA year-on-year and the contribution of working capital movements. Let's now review the different business segments, starting with asset-based services on page 13. Revenue stood at €4.1 billion for H1 2025, marking an 18% increase from last year, mainly driven by the growth of the SERF and conventional activities. The revenue mix remained relatively stable between surf and conventional, with a slight increase in the weight on conventional projects year on year. The growth trajectory was mainly driven by the increased backlog after the strong order intake of the last 18 months. EBITDA stood at 539 million euro, up by 38%, and EBITDA margin stood at 13.2%. an increase of 190 basis points year on year. The increase in profitability is mainly driven by the good progress made on projects in the Emirates and Qatar and by the conclusion of the Saqqariya project in Turkey. For the second half of 2025, we expect a double-digit growth in revenue compared to the first half of 2025 and a further improvement in EBITDA margin, mainly driven by the expected growth in volumes in both conventional and self-activities. Let's now look at the drilling offshore on page 14. Revenue stood at 461 million euro, broadly stable compared to the same period last year. EBITDA grew by 11% year-on-year to 185 million euro. EBITDA margins stood at 40.1%, a 290 basis points improvement year-on-year. In more detail, during the first half of 2025, 10 of the 14 units were fully booked and busy with the respective drilling campaigns. The Seppem 12000 underwent maintenance in Q1, but has been operational in Q2. The Perro Negro 10, following the Ramco suspension, underwent preparation works and has already moved to Mexico to start working in Q3. The Perro Negro 7 underwent maintenance in Q2, coinciding with the beginning of the Aramco suspension. The Perro Negro 12 contract was terminated by Aramco in Q2, with the jack-up expected to be delivered back to its owner in the coming quarters. All in all, we are reducing our fleet by three units, namely the Perro Negro 9, 12 and Pioneer. which have been returned or will be returned to their owners. As a reminder, these units are not owned by Saipem, but leased. And as such, our capital light strategy has helped us navigating well through the Aramco suspensions. For the second half of 2025, we expect a low-teens decline in revenue and high single-digit decline in EBITDA, compared to the first half of 2025. reflecting the reduction of the jack-up fleet, some white spaces, as well as the impact of planned maintenance activity. Let's now look at the energy carriers on page 15. Revenue grew by 6% year-on-year, reaching €2.7 billion. As a reminder, backlog related to energy carriers declined by 11% in the last 18 months. And as such, this means that Saipem is accelerating on the execution of the projects, in particular of the legacy backlog. Epita margin improved year-on-year, reaching 1.5% in the first half of 2025. Our primary goal in energy carriers is to complete the execution of the remaining legacy backlog while being very selective about the intake for new projects. For the second half of 2025, we expect a pick-up in revenue compared to H1 and a further improvement in profitability. The complete Group Income Statement is shown on page 16. We can now discuss some of the key items below EBITDA. DNA stood at €459 million and increased by €149 million compared to last year, mainly reflecting the growth of the fleet on a chartered basis and the leases associated with them. Financial expenses stood at €94 million in H1 2025. increasing by €21 million year-on-year, mainly reflecting the interest on lease liabilities and an increase in hedging costs due to the growing rates differential between the US dollars and the euro. Income taxes remained broadly stable year-on-year at €72 million, whilst the implied tax rate declined by 4.7 percentage points to 33.8%. On page 17, you can see the evolution of our net financial position. The cash flow generated in the first half of 2025 improved our net financial position by €171 million on a pre-IFRS basis, from a net cash position of €683 million to €854 million. This is a remarkable result considering that in May we paid dividends to our shareholders for €331 million. Gross capex stood at €191 million and were partly offset by disposals for €115 million, mainly related to the proceeds from the sale of the 10% stake in KCA, which was completed in Q1. Repayment of lease liabilities increased to €167 million in H1 2025 compared to €85 million in H1 2024, reflecting the growth in the fleet on a chartered basis. In line with our plan, lease liabilities increased in H1 by €399 million. For the second half of this year, We expect a marginally positive cash flow generation, but significantly lower than what was recorded in the first part of the year. This is mainly due to the expected reversal of the positive working capital dynamic seen in H1. On page 18, you can find a detailed breakdown of our gross debt and liquidity. Our liquidity position is very robust, at more than €3 billion. Also, we currently hold almost €1.3 billion of available cash, which is sufficient to cover almost all our maturities to 2029. As you know, with the 2025-2028 strategic plan, Saipem has set itself the target to achieve an investment-grade credit rating, and this is a key priority for us. we will continue to reduce our debt in the coming quarters. Let me now hand it back to Sandro for his closing remarks.

Thank you, Paolo. And to conclude before going into the Q&A, first of all, we continue to deliver strong results with sustained growth in revenue and EBITDA and high cash flow generation. Then our backlog provide us with strong visibility for the next two years. Our revenue for both 2025 and 2026 are almost fully covered by the existing backlog. Our construction fleet is fully booked again for 2025 and 2026 and we are increasing our visibility also for the following years. Our balance sheet is strong and even after having paid a record dividend to our shareholders. We expect our commercial activity to lead to an acceleration in terms of new awards in the second part of the year. And finally, we confirm our guidance for 2025. Thank you for your attention and we can now move into the Q&A session.

Thank you. This is the ColuSchool conference operator. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and 1 on their touch-tone telephone. To remove yourself from the question queue, please press star and 2. Please pick up the receiver when asking questions. Anyone who has a question may press star and 1 at this time. We will pause for a moment as participants are joining the queue. This question is from Alessandro Pozzi, Mediobanca.

Hi, everyone. Thank you for taking the questions, and congrats on the merger agreement. I'm sure it wasn't easy. The first question I have is on cash flow. As you pointed out, cash flow was strong in the first half. I think the free cash flow post... lease payment is above the full year guidance. Can you maybe give us more color about the free cash flow in the second half? You talked about a reversal of working capital. If you can maybe give us some of the moving parts there. And also a second question on accounting. I think if we look at Q2, there is some movements in the non-monetary items. I was wondering if you can maybe tell us whether you've taken some additional provisions. Maybe on this point, if you can give us an update on Thai oil as well. Thank you.

Okay, so for the first two questions, I will ask Paolo to reply, Alessandro.

So, Alessandro, on the free cash flow, you probably noticed that the cash flow in the first half has been remarkably strong. It's been very close to the guidance for the full year. Apart from the very good operational performance, there's been a positive contribution in Q1 and to less extent in Q2 by working capital. And we expect the working capital to revert in the in the two coming quarters, especially in Q3. So we foresee, while we remain very optimistic about the guidance, we expect a negative contribution by working capital in Q3 and Q4. On the accounting, well, I guess you know the company almost better than us. And by going through the numbers of the press release, you can actually see the net provisions that we accounted for in Q2 by going through the non-monetary items and deducting the depreciation and amortization. And you easily come up with a figure that tells you the net provisions at portfolio level. And and it's a significant number, and we can say that it's only Thai Oil, it's the entire portfolio, so it's a number made by pluses and minuses, but I guess you can figure out the big number yourself.

Okay, and on Thai Oil, is there any update there?

On Thai oil, I will answer to your question. So following the termination of the contract back in April, on the ground what is going on is we are orderly handing over the project to the client and this is what is really going on on the ground and while on the Let's say on the arbitration that was opened by the consortium, we are now in the very early stages of that activity, and so we will provide you further update as soon as things are progressing.

Okay, thank you very much.

Next question is from Guillaume Delapie, Bernstein. Please go ahead.

Yes, good morning. I would say three questions, two specific. First, could you provide us a little bit of, let's say, guidance or feeling about the booking of your fleet for 27 and 28? I think nine months ago you were mentioning 50%. Can you maybe update or confirm this number? This is my first question. The second question, and it is for Paolo, could you maybe repeat just what you said on the mechanism for understanding the provisioning for legacy projects? Sorry about that. And the third question is rather for Alessandro, maybe versus three or four months ago, What have you noticed, I would say, in the energy world? We hear many, many contradictory messages from many companies. So what has surprised you over the past three or four months? What has changed, according to you, in the world energy scene? Of course, in 20 seconds. Thank you so much.

Okay, so let's start from the first one that is the most straightforward, I would say. So, booking for 2027 and 2028, yes, we confirm what we said, as you rightly reported, and the comment that I can make today is that In the next months, I'm confident you will see increasing this booking level. We are in the final stages of several tenders we submitted. Some of them were really in the final, very, very final negotiation stages. So I believe that in the next couple of months you will see the percentage increasing substantially. This is my comment and clearly I cannot reveal more because there are negotiations with clients that are confidential until we will be published. in the price release. Then I'll leave the ground to Paolo for the second one.

Yeah, thanks. On the net provisions, while you know that we don't disclose provisions on a project by project, you can find the numbers for the entire portfolio. What you can do is you can look at the numbers at page 2 of the press release where you can calculate the DNAs. And then at page 12, you have the depreciation, amortization, and other non-monetary items. If you make the difference between the two numbers, you get the non-monetary items. Non-monetary items being mostly, even not entirely, the net provisions that have been made in the period. So if you look at the numbers, there is in Q2 this year an increase in the net provisions, obviously at portfolio level, so it's the entire portfolio of projects. But you can guess yourself that we made a large part of the provisions on those two or three situations that we took almost in every call we have. finally finally if you wait a few days and you go to the to the our first half report when we will publish it you will find the detail of the provisions on contractual losses and you will see the gross and net changes in in the number thank you very much thank you that's very helpful

Okay, and now I'm back to your third question. So what we see in changes, clearly in this first half of 2025, we see a bit of uncertainties around the world that are generated by the current geopolitical situation that it is in. Nevertheless, more complicated than the geopolitical that was, let's say, where we were used in the last few years. But I would like to remind some, I believe, key numbers. So, in the second half of last year, of 2024, we clocked 12.1 billion euros of award. That is an exceptional number. And clearly this number could be by any means being replicated in the first half of 2025. Really because it was really an exceptional one. And if you look at the dynamics on the market of 2024, there was a very important in terms of order intake. And you see that the first half, in the first half, we clocked 7.1 billion. So the first half, it is historically less important than the second half of in terms of award. This is a normal dynamic because our clients, let's say, they tend to concentrate their final investment and decision and so they come to conclusion to the tender in the second part of the year. And so this is also the reason why we believe we are positive for order intake in the second half of the year because we believe and we see The same dynamics occurring this year. And this is also part of the answer of your first question. We have many tenders that are coming to the final stage in the negotiation in these days that clearly they will generate in the second half of the year or their intake. So we see this dynamic that is a normal dynamic. Maybe this year a bit more. If you are asking me whether there is a change, maybe this dynamic is better. is a bit more stronger than in the year before. So what we are expecting is a concentration of award in the second half.

Thank you very much, Danita Vera. Thank you very much.

Next question is from Mick Pickup Barclays. Please go ahead.

Good morning, everybody. A couple of questions, if I may. Firstly, for Paolo, can you just talk about the amortization in the asset-backed services business? It jumped best part of 50 million quarter on quarter. Is there something one-off in that or is that the level we should be thinking about? And secondly, on the drilling fleet, if you look at the high-end drilling fleet, there's a lot of option periods coming up later this year. I know you've got some contracts starting back-end and into next year, but what's the thought process on those option periods? Thank you.

The first question, I will answer to the second question first. So, yes, there are optional periods, and I will repeat what I said regarding the ENC fleet. We are in the final stage of negotiation for getting those optional periods, let's say, confirmed. And I believe that, yes, in the next months, so in the second half, we will see those options becoming confirmed. This is our expectation.

On the depreciation for the asset-based services, it's mostly two additional vessels that enter into the freight, namely the Shenda and the Bold Turn. which entered into the fleet this year, especially Q2, and that explains the increase in the depreciation compared to last year.

Okay. So when I'm looking at it on an EBIT level, year-on-year asset-backed services EBIT is down, but you're telling me the profitability is improving in that business. How do I reconcile that?

But look, Mick, this is consistent with the IFRS 16 treatment of lease liabilities. We've been saying for a while that we have a huge amount of backlog to execute and we want to execute it on a capital life basis. That means leasing more chartered tonnage. And as such, we have a bit of a divergence between your EBITDA performance and EBIT performance because in between you have a DNA line which is increasing. But, you know, if you think about it, knowing that, you know, the fleet would have grown on a charter basis, we started since 18 months ago to report cash flow post lease liabilities, really to bridge the gap between BDA and cash flow generation. I hope it helps.

Thank you. Next question is from Guilherme Levy, Morgan Stanley.

Hi, good morning. Thank you for taking my question. The first one, just going back to the CFFO discussion, could you perhaps share with us what's your expectation in terms of working capital for the full year? So looking at 2025 as a whole, should we expect a build or a release at this point? And perhaps in other line of your CFO guidance, should we expect any change to the pace of lease payments in the second half versus the first one? And then second question, just if you can comment on the environment for drilling activity specifically in Saudi, and on your Perro Negro 12 contract, if you can disclose any sort of compensation that you got from Aramco, or maybe define that you are now probably entitled to pay to return the unit to the owner. And then third one, sorry, just a more technical one, but it's good to see that your commercial pipeline is unchanged at 53 billion euros. I was just curious to see if you have changed at all your FX assumption behind that number. I assume that part of your commercial pipeline is denominated in dollars. So I was just curious to see if the 53 billion is unchanged in regard of that FX change from you.

Okay, I will start to give you a bit of the ground on our drilling activity and the situation of our jet caps in Saudi. So basically what has happened is what it has been well described by by Paolo in the call, we leveraged on our asset light strategy and so the vessel, the units, the three units basically, they have been shut down by Aranco. Two of them have been returned to the to the company that leased those units to ourselves and one unit has found another location, they own one, Perro Negro 10 has found another location in Mexico. Going into detail, yes, we use part of the termination fees to cover for the cost of relocation of the vessel. That's for sure something that we did. But I believe that here what really matters is the success of our SLI strategy that allow us to grow very quickly in 2000 let's say in 2023 when the demand in saudi was very high and also to to copy uh without impact i would say the slow down of the demand in 2024 and 2025 so i believe that this is the demonstrated the success of this strategy because as you saw from the results of our drilling offshore business line basically there is no impact in terms of financials of this swing but this is because we have been actively working on the SLI strategy in terms of acquiring vessels. And now over to Paolo for the other questions.

So we expect in the second half a negative contribution in terms of cash flows from working capital, so the working capital increasing, while you observed that in Q1 it was a significant positive contribution, so we expect a reversal of the working capital effect in the second half. and an increase in the lease payments that will almost double in second half compared to the first half. So all in all, this is the reason why I said that we are confirming the guidance, even though looking at first half numbers, we made almost entirely the... the free cash flow that we gathered for in only six months. The reason being the increase in lease payments and most importantly the working capital reversal in Q2 mostly but also in Q4. And then just to give you the full picture, there's going to be also an increase in the capex, because if you remember our guidance, we actually did less than 50% of the capital that we were foreseeing for the entire 2025 in the first half. So they will increase a bit in the second half. On the backlog, you asked a question very technical on the exchange rate effect. Actually, the number we present is... it's the total of plus and minuses and the revaluation of contract values etc and all and it's obviously obviously denominated in euro and so you can say that for contracts whose value face value was in dollars they now account a bit less but the number we present it's the It's the total of opportunities that enter into our commercial pipeline or leave the commercial pipeline or whose value is updated because of changes in the expected contract value, et cetera. So all in all, we still see the same commercial pipeline we're bidding for than we saw in Q1.

Understood. Thank you.

Next question is from Kevin Roger at Kepler Sugar.

Questions? That would be basically to follow up, please, just to be sure I well understand the accounting mechanism. So roughly we can calculate that there is a net provision movement of 150 million in the cash flow statement. Just to be sure, this 150 million, where do I find it in the P&L? It's already included in the EBITDA, meaning that if you did not add the 150 million movement in provision, you will have published an adjusted EBITDA or something like that, valuable 500 million, just to understand the relationship between the two. And if yes, it will basically also, going back on the question from Nick, explain that, okay, the EBITDA margin is improving in the E&C offshore business asset-based, but that the EBIT margin is going down because you have the provision that has been taken into the EBITDA also, just to be sure I understand, because effectively you mentioned improvements in the profitability on the asset-based, but on the EBIT level, it's going down. So just to be sure to understand all those two accounting factors, please.

I guess, Kevin, that you are promoted in mathematics because you got the number very right. Those are the net provisions in Q2. And yes, they go into the EBITDA. So they go both into EBITDA and obviously in the EBIT. The only difference between the EBITDA and EBIT being the, apart from the ENF provisions, the capex on leased vessels, mostly.

Okay, so the adjusted EBITDA will have been at the group level above 500 million?

Yes, so in other words, the EBITDA already accounts for the 150 million of the net provisions.

Okay.

I guess we are going very technical. It also explains why the operating cash flow has been remarkably strong compared to the increase in the EBITDA, right? Because the net provisions are a non-monetary component.

Okay, no, that's perfect. Understood now perfectly. Thanks. Thanks.

Next question is from Massimo Bonisoli, Equity.

Good morning. Two quick questions left. Can you provide an update on Mozambique project and the eventual restart going forward? And the second question, if you can give us an indication of the remaining balance of the legacy projects in energy carriers. Thank you.

so Mozambique you know today there is the call of the operator of area one so for sure you will get even more even more details there nevertheless it's a fact that the Mozambique LNG partners are very actively working to restart the project within the summer So I would say that we are pretty close, being in July. That's what I can comment. And this is what has been public domain since a few weeks now. So that's the status of Mozambique. Regarding the legacy project, I believe Paolo can give you the precise number, but now it's becoming pretty little.

Yeah, as far as the onshore legacy projects are concerned, we are almost below the 100 million threshold in terms of remaining piece of the, it was coming from, if you refer to the legacy as the 2021-2022 bed projects, it's less than 100 million.

If I may squeeze a follow-up, just to understand, so in the third and fourth quarter for the energy carriers, we can see a sort of step up in profitability considering the level of legacy projects right now?

Yeah, if you remember, we are targeting a mid-to-high single-digit margin for the energy for the onshore business, obviously the way from negative or zero to the high single digit, it goes through the 1.5% and possibly two and then three and so on. So, yeah, you can expect an increase, which is the path towards a high single digit target margin.

Very clear. Thank you.

Next question is from Mark Wilson, Jefferies.

Good morning. Thank you very much. A lot of my questions have been answered already. Just a clarification on that point regarding the provisions that have been taken. You know, you've had a few quarters now where these things have come through, but EBITDA report has been very good. So, given the fact you reconfirmed Corsil-Somer and with the termination and, you know, clarifications regarding that, it sounds like all of those recognized situations, there's going to be no more of those coming through. So, the net effect you just described, all things being equal, We're not going to see that anymore. And then the second part would be, you mentioned on the Mozambique, what would be the backlog exposure to a restart there? Thank you very much.

So the backlog in Mozambique is around 3 billion. This is what we have. So that's the plus, let's say, restart activity. So that's the order of magnitude of the backlog in Mozambique.

On the provisions, I guess your question is a bit general on the way we accounted for possible future losses in the last two years. It's a hard question to answer, but I think we can all agree that in the past two years we have been... most of the times on the prudent side when accounting for the future. I guess we are hoping that the provisions we have today would be more than sufficient for the works that we have to complete. It's been the case in the last two years, and we're hoping that the assumptions made will turn out to be as prudent as the past ones. This is the most I can tell. What we are very happy about is that two years ago we had seven bad projects in our portfolio. Now we are down to two, almost one. And as I said before, the legacy portfolio accounts less and less on the total revenues and on the total provisions, which is I think what we are trying to achieve to put the last project behind us as soon as possible. And this is gonna be end of 2025, beginning of 2026.

And so you mentioned regarding current work, But regarding potential future arbitration, for example, is that included in your commentary you've just given?

Yes, it is. The provisions we make are made for, let's say, alive contracts and dead ones, obviously, so including litigations or possible litigations. Thank you very much, Don Pasadena.

Next question is from Richard Dawson .

Hi, good morning, and thank you for taking my questions. Firstly, just a clarification on depreciation. I believe your expectations for four-year DNA was about 820 million euros as previously guided. Has this now changed given you've done 459 million already in the first half? And then the second question is on Brazil. There were reports this month that Petrobras could award the Atapu 2 EPCI contract to a competitor who seems to have bid a significantly lower value than contractors, including Saipem. Is there any read across here on where prices might be going for new awards? Are margins maybe leveling off? Thank you.

Okay, let's start from Brazil. In Brazil we are working and, you know, Castoro 10 just started the work for Equinor in Brazil and we have other vessels working. So, yes, the we don't win all the contracts that are tendered in Brazil and that's I believe normal dynamics and Brazil is a very competitive market with many competitors working in the area so what is happening I believe is It's not just normal market dynamics. We are working. Sometimes we win projects. Sometimes we don't win projects. That's the life of the contractor. But it is a sign of a very, very competitive market.

Richard, on your second question on DNA, of course, you recall correctly with the full year results, we said we were expecting DNA between 820 and 840 million euros for the full year 2025. I think, you know, for the second part of the year, you are likely to see an increase in DNA, which, yes, will bring us to the top end of that range or possibly even marginally higher. that's again mainly driven by you know the growth of the fleet on a charter basis and and a few additions that we had in the first part of the year including the ball turn and and uh that's clear thank you next question is from victoria mecholuk rbc morning thanks very much for your time just one remaining for me um maybe could you give us a bit of color on

more on the dynamic bidding environment than on slide number nine. That's really helpful, the split. In terms of the work that's submitted into tenders, can you give us an idea of the split for onshore versus offshore for this? And then more broadly, are you seeing delays from, say, feed to FID stage sorry, to award stage on projects from when they're FID things coming through. What's the software communication that you're seeing from your customers? Is this harder to get things across the line? You're getting pushback from costs because we're hearing mixed commentary across the spectrum as to where costs are on the services side. Thanks very much.

Okay, so regarding client's attitude, I would say that there are... There are news. Clients, they are never happy of the price we submitted. They always consider that we are too expensive and that's their mood always. So, as I said before, The main market move that we have seen in these days is a shift from, let's say, taking final investment decision and so awarding of the contract more toward the second half of the year than the first part of the year. As I said before, this is a normal dynamics, but this year... what I see is more stronger than the year before. On the onshore, just to give you some figures, we are bidding from prospect in the range of 15 billion that can be assigned over the 8 to 12 months. Tell you frankly, the competition is very strong. As I said in the last call, we confirm we will be very selective, so I do not expect for sure to win all the 15 billion that we are tendering because We said that we would be selective and we are selective. What does it mean being selective? That we really want to make sure that our own shore activity is robust, is done in a risk manner and with the right price. Because that is our strategy and we remain stick to our strategy. The total, let's say, the second part of the year, we are expecting and we are bidding a total of $16 million. But this is including both onshore and offshore. And as I said earlier in the call, we are expecting results from 7 billion of tender that are out. And we are expecting results of those tender. And those are already submitted in the first part of the year. so you see the first part of the year we submitted seven and in the second part of the year we expect to submit 16. this is the the ratio between the first and the second half thanks very much for the color appreciate it next question is from sebastian eskin rothall and call redburn yeah good morning alessandra paulo thanks for squeezing me in um

Just zeroing in on your comment, Alessandra, on the kind of market dynamics kind of meaning more that step up in the second half versus the first half of the year. Can we extrapolate that strength into 2026? And I guess which kind of basins will see that strength in order intake in that year? And then just a very quick one on the offshore drilling side. Can you confirm when the renewed contract on Scarab 8 with ACA BP from last year kicks in, if it hasn't already, and kind of the uplift from that on the results in that division? Thank you.

So whether I expect the same in 2026, in a certain extent, yes, because this is a dynamic that we see year on year. And as I said before, this year may be more clear, more evident than the previous one. So it is possible that next year, again, we will see the same dynamics. Then the second question, you're really dragging me in something that is too specific, too detailed, and it involves, let's say, confidential negotiation that we are having these days. So I really cannot comment on that.

Appreciate it. Thanks very much.

Thank you.

For any further questions, please press star N1 on your telephone. Mr. Puliti, there are no more questions registered at this time.

Okay.

Well, then that's it. Thank you very much. Have a good day.

Ladies and gentlemen, thank you for joining the conference.