Sbm Offshore Nv Ord

Ladies and gentlemen, thank you for holding and welcome to the FBM Offshore Half Year 2026 Earnings. At this moment, all participants are in a listen-only mode. After the presentation, there will be an opportunity to ask questions by pressing star 11. Just to remind you, this conference is being recorded. I would now like to hand the conference over to Mr. Oivind Tangen. Please go ahead.

Thank you, operator. Good morning everyone and welcome to SPM Offshore's half year 2026 earnings call. I am Oivind Tangen, CEO of SPM Offshore and joining me on the call as always is our CFO Douglas Wood. Thank you for joining us today and for your continued interest in SPM Offshore.

Please take notes of the disclaimer.

SBM Offshore entered 2026 with strong momentum and the first half of the year confirms the strength of our model, disciplined execution, robust client demand and continued value creation for shareholders. Our strategy continues to deliver profitable growth from our core offshore energy production activities. New order intake supported by sustained demand for lower carbon, lower cost deepwater infrastructure and strong project execution reinforces the resilience of our business. Our fast-forward program and disciplined investment in new hulls continue to enhance our competitiveness in a market supported by strong fundamentals. This performance is translating into value creation. We are expanding our portfolio, strengthening our financial position, delivering on our shareholder return commitments and supporting clients in developing critical energy infrastructure safely, efficiently and responsibly. While our priority remains to grow the core, we are also selectively applying our offshore expertise, engineering capabilities and lifecycle know-how to assess opportunities in the broader ocean infrastructure market. The first half of 2026 was marked by strong execution and solid performance across the business. The resilience of our model combined with the commitment of our teams enabled us to continue deliver predictable outcomes in a dynamic environment. Commercial activity was strong. In the first six months of the year, we secured the FPSO CEAP I and CEAP II awards from Petrobras and the feed contract for ExxonMobil Guyana's Longtail Development. These awards reflect client confidence in our execution capabilities and the continued robustness of our fast-forward program. Together, they strengthen our position in the lower-cost, lower-carbon deepwater market and support our long-term growth ambitions. With the outlook for deepwater developments remaining strong, we ordered an additional fast-forward halt. We now have two hulls under construction to support ongoing tendering activity, in addition to the hull allocated to ExxonMobil Guyana's long tail development. Our operational performance is also reflected in our financial results, with directional revenue increasing to $4.9 billion and directional EBITDA reaching $1.3 billion. Supported by strong execution, recent commercial successes and a robust market outlook, we are increasing our 2026 directional revenue guidance to around $7.6 billion and our directional EBITDA guidance to around $1.9 billion. The long-term fundamentals for deepwater remain attractive. Growing global energy needs continue to support demand for oil and gas while production from existing fields naturally declines. Substantial new developments will therefore be required to help bridge the global supply-demand gap. Deepwater is well positioned to meet this demand. It combines attractive economics with break-even costs around $20 to $35 per barrel and lower emission intensity than many other sources of oil production. This makes deepwater one of the most competitive sources for future oil and gas supply. As a result, we continue to see strong client demand for large-scale offshore developments. Industry forecasts indicate that the deepwater could account for approximately 30% of new oil production volumes up to 2030, reinforcing our confidence in the long-term outlook for the FBSO market and SPM offshore's growth opportunities. Deepwater projects provide safe, reliable and affordable energy and are attracting an increasing share of upstream investment. Major operators continue to prioritize offshore developments with around 80% of their exploration expenditure budgets directed towards deepwater. Over the next three years, we see a pipeline of more than 40 potential FPSO awards globally, including approximately 16 opportunities that align well with our expertise in large-scale deepwater FPSOs. These projects are concentrated in our core market around the Atlantic basin, including Brazil, Guyana, Mexico and West Africa. Gas is also becoming a more important element in our new FPSO designs, creating additional opportunities. Larger gas volumes increase topside complexity, from gas processing to reinjection or export for domestic use onshore. Our proven track record in managing large gas volumes strengthens our position in this growing segment. Next, to highlight one of the key milestones of the first half, the award of the CEAB 1 and CEAB 2 FPSO contracts from Petrobras in the New Basin. These awards follow the demanding tender process and demonstrate the competitiveness of our offering. They add significant value to our backlog and reinforce our position in Brazil, a strategic deepwater region. These FPSOs are large, technically complex units with sophisticated gas treatment facilities that enable pipeline quality gas export to shore. They are clear proof points of the industry trend where the monetization of gas is becoming an increasingly important part of deepwater development. Given this level of complexity, our standardized fast-forward program is key to the de-risking of execution while maintaining cost efficiency. The replication of our in-house design across these Design 1, Build 2 projects improves execution efficiency enhances schedule certainty and supports disciplined delivery. This is what Fast Forward is designed to deliver. Lower execution risk, stronger cost discipline, and improved schedule certainty through standardization and repeatability. Let me now explain how SVM can scale execution capacity for further growth while already managing five projects in execution. Large FPSO projects typically take around four years to deliver. Given their increasing size and scope, there is limited room to shorten delivery timelines materially. However, we have clear levers to grow beyond our stated in-house capacity of six FPSOs in parallel while keeping the same core organization and execution discipline. Standardization is central to this approach. A standardized design allows us to enter projects with greater maturity at contract award, reducing complexity and optimizing engineering scope during execution. At the same time, strategic relationships and early engagement with suppliers and yards allow us to order long lead times in advance, improving predictability and supporting on-time delivery at scale. Replication is another important enabler. Some clients adopt a design one, build many approach. Combined with the systematic application of lessons learned, this creates design, engineering, and procurement synergies across multiple projects. It reduces scope, improves efficiency, and allows us to deliver more projects with the same core organizations. Partnerships also expand our execution capacity beyond the core organization. Standardization is critical here because standardized work scopes, whether in detailed engineering or topside construction, are easier to place with trusted strategic partners. By remaining disciplined on what we outsource, we can expand capacity while maintaining the quality and consistency of our delivery model. Together these enablers allow us to scale execution capacity and support further growth in a strong market. In our turnkey portfolio we are making good progress across five major projects under construction and we have a well-phased execution plan extending into the next decade. FPSO Jaguar for Exxon Mobil is the most advanced with first oil expected in 2027. FPSO Grand Morgue for Total Energies and FSO Chalchi for Woodside are both more than 50% complete, while the two SEAP units for Petrobras are progressing through the early execution phase with contractual handover expected in 2030 and 2031. This phase delivery profile supports discipline growth. Grand Morgue is being delivered in partnership with Technip Energies. Chelsea has limited topside scopes with a disconnectable turret buoy completed and on its way to Mexico for installation. The CEAP projects benefit from design replication, improving engineering and procurement efficiency. Looking beyond the current portfolio, the market outlook remains attractive. Our investment in three fast-forward hulls, one of which has already been allocated to the longtail development, Together with future slot options we maintain with key yards gives us flexibility to support future client demand while maintaining schedule certainty. On the operations side our fleet continues to perform exceptionally well with uptime around 99% across 16 operating units demonstrating the consistency and robustness of our assets. Today, SBM Offshore is the largest FPSO contractor by oil production capacity, producing about 2 million barrels of oil equivalents per day, around 17% of total deepwater production or 2% of total global production. Our focus remains on safe and reliable operations, while continuously identifying opportunities to enhance performance across the fleet. By systematically applying lessons learned, we continue to improve asset performance and unlock additional production potential. This has supported successful debottlenecking on recent units in Guyana and Brazil, where we are achieving production records and delivering around 140,000 barrels of additional oil production above initial nameplate capacity, accelerating value creation for our clients. We also continue to unlock value from our portfolio. During the first half of the year, we completed the sale of FBSO 1 Guyana and finalized the divestment of a minority interest in FBSO Chalchi. In Angola, we continue to see opportunities to extend asset lives. We recently received a notification letter for a two-year extension of the Ngoma FBSO, and we have started brownfield work related to the extensions of FBSO's Mondo and Saxiba II, further strengthening our long-standing positioning in the country. Looking ahead, we see additional opportunities to enhance fleet performance through operational data. By combining operational excellence with data-driven insights, we continue to improve reliability, efficiency and value creation across the fleet. We have built a digital ecosystem that connects offshore teams, workflows, remote support functions and operational data. By bringing together people, processes, and data, we can identify opportunities earlier, improve planning and decision making, and apply lessons learned across the fleet. This supports more targeted predictive maintenance and asset integrity, strengthening performance throughout the asset lifecycle. In parallel, we continue to deploy technologies that support smarter and safer operations. Robotics are becoming increasingly important for asset inspection and maintenance, including confined spaces, tanks and hull inspections. These technologies reduce exposure to higher risk environments, improve inspection quality and consistency, and support more efficient maintenance planning. Beyond our core FPSO business, we are selectively applying the capabilities built over decades of offshore experience to address global challenges through ocean infrastructure solutions. As land-based solutions face increasing constraints, offshore infrastructure offers growing potential. Modularity, standardization and scalability make the ocean an attractive platform for deploying proven technologies at scale and in new environments. By leveraging our expertise in offshore design, execution and operations, SPM Offshore is well positioned to enable proven industrial technologies offshore. One example is our partnership with Veolia to develop a floating desalination solution, combining Veolia's water treatment expertise with our ocean infrastructure and operating experience. With more than 60 years of offshore experience and a strong track record in standardization and lifecycle management, SPM Offshore can act as an offshore enabler of technology solutions in areas such as carbon capture, power, ammonia and fresh water. At the same time, we remain disciplined in capital allocation, risk management and the opportunities we pursue. With that, I will now hand it over to Douglas for the financials.

Thank you, Oivind, and good morning, everybody. So as you've heard, we've delivered a strong set of results for the first half. And that's thanks to the performance of the project portfolio, the fleet, including the impact of the three large vessels we started up last year, and of course, the sale of one Guyana and a share in the FSO Chowchi. This great performance from our teams in executing our existing portfolio drives the increase in EBITDA guidance around $1.8 Thank you very much. Strong Cash and Margin Potential. On the backlog, this increased to a record $35.6 billion, with the CEAP awards offsetting significant consumption over the first half, where we had the one Guyana and Chalchi divestments on top of the strong underlying operational performance. And then we expect to generate around $8 billion from the backlog on a net cash basis. Net debt was $3.7 billion, lower than year-end driven by the sale of One Guyana and repayment of the associated financing. This leads to a pro forma leverage ratio of around 1.6 times EBITDA based on the rolling last 12 months EBITDA. As we've mentioned in the past, construction financing that we had in place for Jaguar and likely Longtail and sale and operate temporary working capital movements will mean this will fluctuate a bit but the long-term trend is the structurally lower leverage. Finally we paid the 100 million dollar 2025 dividend in May and are formally reconfirming today the identical 100 million dollar interim dividend for 2026 to be paid in September and this together with the ongoing 270 million dollar equivalent buyback program means we're on track relative to delivering a minimum 2.1 billion dollar aggregate return for the six years 2026 to 2031 inclusive with the anticipated upside potential materializing as we secure new awards and next to review the financials in a little bit more detail starting with the backlog but this was as I mentioned for 35.6 billion dollars it's an increase of around four and a half billion dollars versus the year end So the addition of the two SAF awards more than offset the consumption from the strong operational performance over the first half and the impacts from the sale of one Guyana and a share in FSO Chowchi. On net debt, the one Guyana sale resulted in a significant decrease in leverage. Their total revenue was around $4.9 billion compared with around $2.3 billion for the first half 2025. The biggest contributor to revenue was Turnkey. Above $3.7 billion compared with around $1.3 billion in the year-ago period, and the main driver of the increase was the sale of one Guyana. On the Leighton Operates side, revenue was around $1.2 billion versus around $1 billion for the first half 2025. Here the increase was driven by the contribution of the three large vessels that joined the fleet over the course of last year. Now turning to EBITDA, this was over $1.3 billion, almost double the year-ago period. And this increase was driven by turnkey, where EBITDA was $813 million. That's up by almost $600 million compared to the year-ago period, the main driver again being the one Guyana sale. Lease and operate EBITDA was around $547 million compared with around $500 million in the year-ago period. Again, that was mainly due to the contribution of the three new vessels, the impact of which on an EBITDA basis was partially offset by the fact Assang and Thunderhawks left the fleet at the end of last year, plus the comparative impact of the gain on sale of TK we saw in the first half of 2025. Finally, other EBITDA was around $50 million negative. It's an increase versus around $40 million negative last year as a result of higher G&A costs to support.

Growth Activity.

Next, we're reconfirming the direction of travel on deleveraging. We foresee our leverage ratio staying below three times going forward, but we could see some upward movement this year from the pro forma H1 number as we draw down debt on Jaguar and Chowchi, and also depending on the timing of receipt of some large milestone payments relative to project progress at the year-end cover point. and that's a facet of the sale and operate model being that we can see some large but temporary movements in working capital which can then obviously impact net debt. But again, we see this trend staying below three times. Turning to cash and the backlog on a net cash basis, this stood at around $8 billion. As highlighted in the chart we showed at year end, the sale of one Guyana drove significant consumption during the period. Now while the impact of the SayUp Awards was more than enough to offset this on a net cash basis, we also have an impact from the deconsolidation of the share of the lease and operate cash flow of FSO Chowchi sold to partners, which meant we ended up a little lower than year end. Now this illustrates something it's important to bear in mind for the backlog linked to the sale and operate model. Thanks to the SayUp Awards, The turnkey net cash backlog has more than doubled to $1 billion. Now this boosts the near-term cash, and that's very clear, as you can see in the chart. Now while the NPVs, the Sale and Operate, and Lease and Operate projects are similar, in absolute net cash terms, the same award on a lease and operate basis is much higher as the cash comes much later. So that's why the sale of a portion of the 20-year Chalchi project has a relatively material impact. However, given ongoing fee activity and the market outlook, we're optimistic we could see an increase at year-end. Then looking more at the charts on the page, we've played out the blue bar on the left, which includes turnkey and lease and operate, overtime in dark blue on the right-hand chart. We have average net cash over four-year cycles, as sale and operate transactions can have a material impact in the early years and introduce significant year-on-year volatility. making a multi-year average a more representative measure of underlying cash performance. And as the backlog already includes the two new SEAP awards we've then adjusted the light blue modeled scenario from February showing two large FPSO awards for the next six years up to 2031 accordingly. So the scenario now has 10 rather than 12 FPSOs. Again It's important to note here we're not planning on shutting up shop and running down the business in six years and are confident of more to come thereafter from FPSO awards but also from diversification into other ocean infrastructure solutions over time. We've therefore maintained further illustrative waves of awards to the right of the model near-term scenario. Then in the chart on the top right, we have the usual euro per share analysis of the backlog at a range of discount rates, where again, we've maintained the light blue models near-term scenario on top. And looking at capital allocation, as a result of the strong operational performance and the backlog, we remain very much on track to deliver a minimum of $2.1 billion in shareholder returns for the six years 2026 to 2031 inclusive. The chart on the left is the same six-year view as we showed in February for 2026 to 2031 inclusive. We're going to provide a further update for 2027 to 2032 inclusive with the 2026 full-year results. During the course of the year, of the $440 million cash return we intend to pay in 2026, we've already paid $100 million in dividends. We've repurchased around 3 million shares for $118 million. and we're formally reconfirming the $100 million interim dividend to be paid in September. At a $440 million cash return represents a 7.2% cash yield based on the share price end of June. If you benchmark this for the AEX, this is top quarter. Now, as I mentioned, the 2.1, it's a minimum based on the backlog we had in hand at the end of 2025. but obviously since then we've made very good progress on materializing the upside with the two CEAP awards. We're working on the feed for Longtail. So we're optimistic our year-end update will reflect further progress with more to come in future as a result of the strong market outlook. Finally, to cover the details of the guidance update, 2026 directional revenue guidance is updated from above $6.9 billion to around $7.6 billion. of which around $2.4 billion is expected from the lease and operate segment and around $5.2 billion expected from the turnkey segment. 2026 directional EBITDA guidance is updated from around $1.8 billion to around $1.9 billion. That's it for me. Now back to Oivind to conclude.

Thank you, Douglas. very clear as always and no we're certainly not planning on shutting up shop so with that to conclude our first half performance demonstrates the resilience of spm offshore's life cycle model and the continued strength of the deep water market supported by disciplined execution operational excellence and commercial momentum We are growing the core with two new FPSO awards in Brazil and a FEED award in Guyana, reinforcing our position in key deepwater markets. The outlook for deepwater remains strong and we are well positioned to capture our share of future opportunities. To support these opportunities, we recently ordered an additional fast-forward hull, bringing the total number of hulls under construction to three. These halls strengthen our ability to respond to client demand while maintaining execution discipline and de-risking delivery schedules. Finally, reflecting our execution performance, operational excellence and recent awards, we have increased our directional revenue and EBITDA guidance for 2026. I would like to thank our clients and stakeholders for their continued trust and support and our teams around the world for their dedication, collaboration and Commitment to delivering our strategy. Thank you all for listening. We will now be happy to answer your questions.

Ladies and gentlemen, we will start the question and answer session now. To be registered for the question and answer queue, please press star 1 1. If you have a question, please press star 1 1.

Go ahead, please.

Our first question for today, just one moment, comes from the line of Guilherme Levi from Morgan Stanley. Please go ahead.

Hi, yes, good morning. Thank you for taking my questions. Firstly, perhaps to make the capacity discussion a little bit more concrete, is there a particular phase of execution that we should think as the actual constraint? Engineering, procurement, fabrication, meaning if you get awards for the two new unallocated hosts, your headline number of orders will rise to eight rather than the six of stated capacity. Of course, some will be almost complete, others will still be in very early stages, so not necessarily an overlap of stages. So can we think about the six number as something applicable to a specific stage of execution rather than for the whole process? And then secondly, on Venus, There is a press article this morning saying that your competitor is now the frontrunner on the negotiations with Total. I know that you normally don't comment on the current state of things, but perhaps can you tell us a bit about this prospect? What are the main challenges from an engineering execution standpoint and where you think you have an edge versus others? Thank you.

Thank you and good morning. So particular constraints associated with the work phases of the FBSO. So I guess the thing to think about the work phases, some are done largely in-house, some are done outsourced. So typically our engineering and procurement is in-house. So that's where the partnership discussion comes into play and we have a means of scaling up to add to that capacity constraint as it may be. On the supply chain, equipment deliveries and yards, that is where we have time to plan ahead and look at the prospect pipelines and as we go through the commercial processes, scale up accordingly. When we communicated in the past, it was the sizing of the organization, the number of projects, project management we could run in parallel. Now, as we go on and have had very successful deliveries over the last few years and standardization is materializing or the learnings from standardization are materializing, we are able to reassess our view on capacity and expand that capacity beyond the six. So then it's always a function of the pipeline ahead and keeping a cost base in the organization that is optimized. So we don't see any particular constraints, but in terms of award-based and historical execution models, that's where the six came in. Now we can look beyond that in the same very disciplined way and not compromising on the quality of the execution. When it comes to Venus, I think I've seen many string articles on Venus over the last few years. We don't know the outcome of the prospect yet. So beyond that, I don't think we have any further comments. It has no particular technicalities that compared to others is a good fit for our portfolio. But beyond that, I don't have any technical comments on it.

Understood. Thank you. Thank you.

Thank you. We are now going to take our next question. And this one comes from Luke Van Beek from DeGroof Petercam. Please go ahead.

Yes, good morning. First, a question about the statement that you included in your press release on an increasingly complex and volatile environment. I see that for the first time. So can you elaborate why you included it? Are there any specific new challenges, for example, in the supply chain? And the second question is on the impact of Chelsea on the APTA guidance. Is there a significant impact from that? And finally, a question on the taxes, which were very low due to higher deferred tax assets in H1. Can you Indicative if there will be any such change in H2.

Okay, thank you, Luke. Good morning. So I'll do the first one and Douglas will do the other two. So I'm in volatile environment. I think we're just observing a world that moves around a lot and one could think that that would impact elements of our operational activities or the commercial prospects. So we like to think that The predictability of our performance, whether it's operational and financial, is a bit of a contrast to that volatility. And we like to emphasize that as a strength in our value proposition. And those are based on the parameters that we've communicated on before. So that's, I think, very consistent. And then I'll leave Douglas to two and three.

Yeah. Morning, Luke. So Chow Chee had a small impact, but not very significant impact on EBITDA. In the first half, the tax is really about the one Guyana sale where we basically already paid the tax so you have a big lot of income with no associated tax to pay now.

Thank you.

Thank you. We are now going to move to our next question.

And this one comes from Filip Ngoto from Kepler Chevrolet. Please go ahead.

Yes, good morning. Thank you for taking my questions. I have a few. Maybe just to start with a rather simple one. Just trying to understand the 2026 guidance and the bridge from the H1 EBITDA. Of course, 1 Guyana will not be present in H2. You discussed Chelsea just now. Are there any other items that we should be mindful of when modeling H2 ABDA versus H1? Then my second question is still on Venus as well. I appreciate it's an ongoing process and you're so limited in what you can disclose, of course. But I was wondering to what extent the competitors in the bidding process are maybe also placing more value on We've been reading about possible follow-on orders as well in this region, so is winning this first project therefore more important than in other bidding processes? And my last question is more on working capital going into year end and net debt evolution. How much should we expect given the whole investments and any additional costs on say up and long tail? Just for a model like this for net debt figure.

All right, let me take, Felipe, good morning. Let me take the Venus and then I'll let Douglas take the other two. So, you know, as to the commercial strategies of our competitors, I can't really comment. But we've always said that Venus was strategically important to SPM because we would like to be a frontrunner in Namibia. I think we see a lot of exploration activities in Namibia, so we'll see how that market evolves from there on. But, you know, as to when our own gross margins and the discussions around our commercial strategies We don't compromise on the return expectations on our prospects. So there's no singular prospect that will make us shift from our general appetite for returns to our shareholders. So we keep our discipline there as we do stay disciplined in the way we operate and run the company. So that's as much as I can say about that, I think. And I'll let Douglas talk to working capital and guidance.

Yeah. Hi, Philip. So on the guidance. and like as you mentioned obviously one guy on and makes a big boost in the first half result so yeah unfortunately the year end isn't going to be double that but I think there isn't anything really significant other than you know needing to maintain a very good operational and project performance in terms of the delivery of the round 1.9 where we first put the guidance on the working capital. As I sort of mentioned in the remarks, it's quite hard with the sale and operate project to project exactly because, you know, we can see these timing difference between the money we've invested and when we get paid for it by the clients. And especially when you have like a cutoff period, it can be like a few weeks between, you know, you book the Thank you. We are now going to take our next question.

and this one comes from Victoria McCulloch from RBC. Please go ahead.

Good morning. Thank you very much for your time. Just one question remaining for me. Can you talk a bit about how you've seen the tender pipeline evolve over the past 12 months? Obviously, the oil price has changed dramatically. The environment around the world has changed. But also it appears the competitive environment has shifted a little bit for you guys. But again, these are long-term projects. So what are your customers telling you in terms of the tender pipeline, the opportunities, their appetite? Have you seen a shift in delays or any slowdown because it's hard to make decisions in this environment or are you seeing a continued acceleration as the slides would suggest with the tender pipeline you present? Thanks very much.

Yeah, good morning, Victoria. Thank you for your question. So in terms of tendering, you know, before Prospect comes to tendering, there's been already a lot of work and exploration and for development to get enough definition before it reaches sort of our pipeline. So that wouldn't really be influenced by the more recent, let's call it oil price hike. So it's more about for us. Remaining on our model of early engagement with our clients and helping clients when they invite us in with their development plans to gain pace and use the SPM value proposition. And that dynamic hasn't really changed materially and we see the continued pipeline in Guyana, we see Other countries in West Africa as we've spoken about before as well emerging with opportunities and we see Brazil still with a strong prospect pipeline in the years ahead. So for us, really the dynamic hasn't changed that much. What you've seen over the last couple of years is this change from lease and operate to more sale and operate and that has, you know, doing something with the competitive landscape we've made. bring in other types of contractors, which is where we refer back to our competitive positioning and the lifecycle proposition of SPM. So it is competitive, it will remain competitive, but depend on the pipeline, and we like to think that the deep water in the Atlantic Basin, as we said, in the years ahead of us, remains very strong.

Thanks very much. Just as a follow-up to that, we've also seen a shift in the public commentary around decarbonization, certainly from the majors, and throughout the value chain, how much has that impacted the work you do that we don't see around decarbonisation options and that tender opportunity and I appreciate it's much longer timeline to that and it's much earlier stage but have you seen a change as the outside environment have seen a change in tone?

No, I think from our own perspective, right, so we've been working for many years on lowering the emission intensity of our FPSO. So that's been an ongoing journey and we bring that into our offering of reducing the environmental footprint of the plant. FBSOs and we're also conducting studies right now on modularized carbon capture systems that we are ready to integrate into our future FBSOs as and when they become you know as part of the specification in the actual prospects today the from the prospect in the market and the way the current market is you know all the efficiency gains that we've that we've developed and sort of already deployed on our FPSOs. That remains, of course, a part of the FPSOs of tomorrow, but the next step to carbon capture, we don't see it materializing yet, or it may start to materialize, but nothing has really changed dramatically for us. We always want to be environmentally efficient and also deliver on reliable energy solutions for the future. So let's see how policies evolve in the years ahead.

Thanks very much.

Thank you.

Thank you. We are now going to take our next question. And this one comes from Mick Pickup from Barclays. Please go ahead.

Good morning, team. A couple of questions, if I may. They're both back-of-the-envelope type questions, so I'm just thinking medium term here. So if I look at your turnkey order book by year of execution, you've roughly got 3 billion in for next year. and 3 billion for 28. So if I'm looking on that longer out view, 3 billion already, long tail adds a chunk as well. You expect to win a couple more units before then. Why would I be wrong in thinking that turnkey doesn't go towards 5 billion of turnover medium term?

Is that your question? Your only question, Mick. Good morning. Morning.

That's the starting one.

Okay.

Okay. All right, shall I answer?

Yeah, yeah, Douglas, why don't you, there's numbers in there, so I stay away from that.

Yeah, so just kind of generally, and I mean you can see it from our backlog chart, so what we have in hand is what we have in hand, so that's obviously in the backlog, but what we're saying is there is a lot of potential from the strong Thank you very much.

Right, and then follow-up is, just looking at your chart at the back on your net cash backlog, you're saying there's a billion dollars of net cash coming from turnkey. So you've got $10 billion of backlog, team's margin, just talk through the gap to that $1 billion of value, and obviously tax is a big chunk, but is there anything else I should be thinking of?

Yeah, so you've got, like also with so in terms of like the the net cash we've got long tail the initial some of the stuff associated with the feed in there so that's like a bit diluted and then you have the billion net cash but it's net of overheads so you know we've which we've actually extended a bit because we added the stay up award so they longer obviously will be aiming to add more awards in the coming period which will then consume or offset if you like a portion of those of those overheads so that's the core so that's kind of in the mix you need to if you're looking at kind of doing a gross margin type of calculation you have to add back to roughly 100 million overheads a year okay yeah because obviously clearly you've got 10 billion a backlog and you used to say a billion of capital value was just under a euro a share

and that 10 billion is coming to 5 euros there. Not 10.

Yeah.

And so the difference is that includes the corporate cost now?

No, it's not the corporate cost. It's the turnkey overhead. So it's 100 million a year. So you've got like six years worth of overheads there. So that's 600 million. So you're looking at 1.6 versus 10, including long tail, for which there isn't any net cash in the backlog yet. And of course, we are always clear to mention we take a relatively conservative approach when we project forward the backlog and include a bit of contingency. Thank you. Thank you, Mick.

Thank you. We are now going to take our next question. And this one comes from Jeremy Kincaid from Panla Schottkampen. Please go ahead.

Good morning, gentlemen. Congrats on the results. I'll start with two questions first. I saw in the release that there was unfortunately a fatality at one of your subcontractors in one of the Chinese yards. I assume that's one of the yards producing the So I was just wondering what the impact might be for you. Could there be delays? Might you have to do an audit of that yard and does that limit your ability to construct future fast-forward hulls there going forward? And then my second question is on the upgrade to your EBITDA guidance. I was just curious about the nature of some of these Thank you Jeremy. So let's talk to the fatalities. So in the

In the layers of how we contract a subcontractor of a subcontractor, very unfortunately, we suffered a fatality after an incident in one of our yards in China. The way this is dealt with as any, what we categorize as a Tier 1 event, is a very thorough investigation. Obviously, when there's loss of life, this also involves the authorities of the country. and we draw all the learnings from that and we look after all the immediately impacted people both in the external part of that equation and our own people that have been there and involved in those activities. So that's our first priority and then of course there is a lot of lessons we can learn from any such event and that takes time so that we are in that phase now we're working on the Thorough Investigation to see also in mind that we keeping in mind that we expect to have growth in our operational activities in China going forward we want to make sure we walk into that growth with the full set of learnings from this event so that is the main focus from an operational perspective there is no impact as such on yard selections or capacity or schedules on any work Out of this incident as a direct impact. This is an extremely unfortunate event and our duty is to deal with that in the way the best practices are established. So to the second part of your question, no, there is no impact other than that. Douglas?

Hi, Jeremy. Just backing up a bit on EBITDA, we've been very consistent with our guidance and when we set the guidance from the beginning of the year there were a number of risks and opportunities that we could potentially foresee so we would like to take a balanced view. I think it's fair to say so far this year we have been successful in capturing a number opportunities and there I would say the fleet has performed pretty well and you know some of our contracts there are bonuses for uptime and various other performance things so we've been very successful during the first half in capturing those then on if you like the risk side you know a percentage point in percentage of completion And now for the accounting.

Just picking up on the working capital question, the drag has been quite severe over the last 12 months. It was, I think, $500 million in the second half last year and then another $450 million this year. You obviously talk to timing on the S&O contracts and you've had some hulls which have been constructed. So I suppose my question would be, Should we expect a similar level of working capital drag over the next six to 12 months as you are building more hulls and you do have more S&O contracts coming into the mix?

Yeah, so we're very focused on managing working capital and associated liquidity I guess one component to start with is, as we add more FPSOs, then we're going to add on the operate side, if you like, more working capital. Obviously, when we're doing our tendering, we're kind of pricing in the cost of that. But structurally, you have more FPSOs, you're going to have more in the operate phase working capital. Then on the turnkey side, Sail and Operate. So over the lifetime of the construction process, we're aiming to run on average cash neutral. That's how we try to build things. But yeah, of course, from time to time, you get these big timing differences. And then, of course, again, it depends on new projects versus the rundown of old projects, because at some point, even if you've got a working capital help at the end of the day after the project finishes you need to you need to pay the bills so it's this like phasing you will see and then as you mentioned yes you know it's a strong market outlook so as such we're very comfortable in the hull investments that we're making. So with growth, you know, growth will increase working capital on an absolute basis and also because of sale and operate the volatility. Helpful. Thank you.

Thank you. We are now going to take our next question. And this one comes from Thijs Berkelder from ABN AMRO AutoBHS. Please go ahead.

Yeah, thank you. Congrats with the strong performance. First question is on your slide nine on your projects in execution where Jaguar, Grand Mordu and Chelsea all according to the picture are more or less one and a half year before delivery. So could it be that also Grand Mordu and Chelsea more or less get finalized before end of 27 then the next question is yeah question comment on Namibia I wish a total good luck as they would make the choice for Hanwha because then the delivery date probably will be two years or more later. But in case the project is not one which we need to then move people again away from Namibia to other locations in the world. Then the third question is on slide 17 on the cash returns WSU more or less said well at this moment we're not yet Updating our cash return picture, although you have one, say of one and two, and are probably close to the award of long-tail. What is sort of reasonable to assume once, let's say, long-tail lands and relate to that Is it correct that in the backlog 27 there's nearly nothing for long-tail at this moment?

That is right.

I think so.

Did we lose? Yeah, okay. So let's see, projects in progress. So I think our release has a pretty clear date. So I mean, the most advanced project is Jaguar, right, with pretty much all our topside modules on board. And we are in the early commissioning phase for a startup next year. And the other two are going to start up in the subsequent year. The portfolio on Namibia. So just can you just get me back to the question whether or not I didn't catch all of it. If you could just repeat.

Jaap, first coming back on Jaguar and Grand Morgue. The contracts are indicating that the transfer of the vessel is already taking place in Singapore or not, or only after first oil because you have a first oil date there. What is the SPM of your scenario on your people and preparations in Namibia? Should you not get the award from Total?

Yeah, okay. Thank you. So the Sail and Operate contract, so they transfer ownership at the same way from the yard. And then there is a warranty period thereafter. So that's standard. And then there's an O&M contract that comes into effect as we move into the operational phase, following the offshore commissioning. On Namibia, you know, we have a very small structure in Namibia. We believe in the Namibian outlook, and that is not just linked to Venus, but in general terms. We hope it can be a prolific market. So it's a team that works on mapping out the opportunities in Namibia and position us there for future growth there. So we're not linking directly our plan there with just the outcome of the Venus. It's more a strategic direction for the company as such. It's a very minimal cost with a potential high upside to us. So that is that. And then cash returns, Douglas?

uh yes so um yeah like as i mentioned we'll do an update we're going to do it on an annual basis because then we don't want to do kind of six h1 through h1 20 32 type of uh things so to keep it simple we do it once once a year but yeah of course uh you know um and and already in our net cash backlog we have say at one and two and subject to um a long tail going ahead We would hope to add that. So as I mentioned, relative to H1, we're optimistic that the net cash backlog could be higher at the end of the year, which would then obviously convert into more available cash relative to the $2.1 billion minimum that we have so far. So just to be clear, we're pointing to the fact in the way that we say minimum on the one hand, and then these new awards, there will be upside in terms of returns. And our policy is to link our shareholder returns to the backlog. So as that grows, we should be able to increase returns. Then specifically, you asked about long tail. In the revenue backlog, we got long tail, but we don't have it in the net cash backlog at the moment. So long tail would increase the net cash backlog. Okay, thanks for that. There may be a final one for the record where you can indicate whether you have any real impact from the conflict. in the Middle East on your operations or your SSN construction and or can you maybe repeat what your let's say maybe most crucial supplies are like turbines or so that also for the record okay thank you so middle east so we've assessed that in in great detail since the

And the most crucial supplies? Yeah, so the most crucial supplies in our general supply chain, you know, is typically rotating machinery where we always work in anticipation and it's not impacted by Middle East conflict.

Okay, thanks. Thank you.

Thank you. We are now going to take our next question. And this one comes from Kirin Molder from ING. Please go ahead.

Yeah, good morning everyone.

Two small questions. One is how large is the impact of NAGOMA extensions and what is the potential for later on, let me say after December 20, 2028. And my second question is about your remark about Veolia. How concrete are these plans for desalination plans with the French player?

And where is the idea? What's the place to build that? That were my questions.

Okay, let me do a bit on desalination and Douglas will talk about engoma. So, you know, we work with Veolia on water treatment on many of our FPSOs. So it's about, you know, repurposing already known technology with them. They are a leading water treatment company in the world. They have a big network of industrial relations in that space. We are very good on ocean infrastructure and modularized solutions. The combination of those two opens up potential commercial avenues into space where special industrial applications where fresh water is required could be mining or other types of So for now, this is in a technology-wise, it is a well-documented solution from a commercial and market-wide. That is where we're looking now and studying the size of that potentially. And of course, it's about pace of execution, using, leveraging the same partnerships for build and equipment that we have already existing in our supply chain. So it's really in line with the strategic thinking that we have also communicated to the past of really repurposing the existing solutions that are some of the building blocks of the FBSOs and leveraging the partnerships we have in the supply chain. So follow this one. It's exciting.

All right. Hi, Karine. So NGOMA, so that's a two-year rough extension to 2028. So it makes a... Small but meaningful, I would say, contribution to the net cash backlog. Let's say if you're generous with the rounding, it impacts the net cash backlog number, if that gives you a sense.

Okay, thank you.

Thank you, Kieran. All right. Operator?

Hello, this is the operator. We will now take our next question. Please stand by.

Next question is on the line of Philip Ngoto from Kepler-Shubra. Please go ahead.

Yes, hi. Just one follow-up question, and it relates to the To the comment on the turnkey segment, the 100 million overhead. Douglas, I was just wondering how has that evolved over the years? So how large has the turnkey segment then grown? And also just maybe interested in number of, if you look at the FTE splits or what is there now in turnkey to get a sense of the size?

Yeah, hello again, Philip. So I would say it's been pretty, the overhead itself has been pretty stable and we're very good at managing the overall complement of people and minimizing under recovery. So yeah, it's pretty, pretty, pretty stable.

Okay, okay, thank you.

Thank you. There are no further questions, Mr. Tangen?

All right. Thank you so much. Thanks to all of you that have engaged in the call today. And we look forward to sharing more information as the company progresses in the next quarter. Have a nice day.

Ladies and gentlemen, thank you for attending. This concludes the SPM Offshore event call. You may now disconnect your line. Have a nice day.