Prosafe SE

Welcome to Q4 2024 results for Prosafe. The last quarter was quite an eventful quarter for us.

On operation, I would say that we had a good quarter. All the 4 vessels that are in operations had 100% utilization, and we managed to extend the contract for Zephyrus for another 2 years.

As we said in the previous quarter, we expected that, but now we actually have ink on the paper. For financials, Reese will come back to that later, but we are working on the refinancing of the company.

And as previously said, we are looking to refinance a total of $400 million, and we have good dialogue with all stakeholders, including our lenders on that. So we are working on that, and we expect to have that completed within the first half.

But I think that we have good progress on the refinancing as such. Market-wise, I'll come back to Brazil actually, because there's a lot of activity there.

So that's quite positive. So our thesis on Brazil is coming through.

So we are optimistic on that. And also, I'll talk a little bit about what happens in the rest of the world.

But in general, the backlog has grown, and that's something that we have focused very much on for the last year. So there, we have executed on the backlog growth.

When it comes to the fleet, Zephyrus is now on contract to Q3 2027. So there, we got a slight uptick in rates, and we also have some more coverage for bunker consumption.

So the Zephyrus will do her SPS towards the latter half of this year. We haven't sort of pinned down the final dates yet, but that will happen in 2024, sort of the second half -- sorry, '25, the second half of 2025.

The Safe Eurus is on to Petrobras. So I mean she is going on the contract, and that is sort of running until 2027.

So it's, I think, $86,000 per day. On Notos, she is also due her SPS, so that will happen either towards the end of this year or the beginning of next year.

Again, I'll talk a little bit about the future after '26. I think that the Petrobras tenders that are out could be very suitable for Notos, but I'll talk a little bit about that.

And likewise, the Safe Concordia is on a contract, and she is going to go off contract the 9th of March, and then she is due her SPS immediately thereafter. So I'll come back to that as well later.

Boreas, we are working on the reactivation. She's currently in Norway, in Skipavika, and the thrusters are off, and we expect her to be on a heavy lift vessel around beginning of April to go to the Far East, and then she will be on contract.

The contract window is such that most likely you're talking towards the end of the year, November, December, commencement of that contract. It's 15 months with 6 months of options.

The Safe Caledonia, we are reactivating her, and she's going to go on a contract to Ithaca 1st of June, and that's a 6 months contract with 3 months of options. Scandinavia, no news.

She is still cold stacked, and there is no news regarding Nova or Vega. When it comes to the market, we define our market as 23 vessels that are active.

I just like to say that there are other units that can also sort of enter the market, especially on the tender in Brazil. But our core market are 23 units.

And as you can see, 11 of those are currently for '25. We expect them to operate in Brazil.

So that's more or less 50% of the market. When it comes to the North Sea, what we see there is there is activity, both for -- particularly for Caledonia, which is on contract this year, but there's also activity going on in '26 and '27.

So we are working hard then to see if we can find contracts for the Caledonia for the coming years. The strategy there, when we took her out to layup this year, was really sort of cash on cash that the Caledonia should be positive, and that is very much the case.

So then we have a vessel that has been reactivated, has done her SPS, and then is ready to work for the coming years. I would say that we also see activities in Africa, Guyana.

So in general, outside of Brazil, there is definitely activity, but Brazil is the market now that is really driving the Floatel industry. So this -- we've shown this before.

So sort of the driver here, of course, is the increase in oil production in Brazil. They are currently producing 3 million barrels per day.

Their target is to come to 5 million barrels towards end of the 20s, early 30s. And we see that the number of FPSOs that are sort of being -- that have been contracted and we expect to be contracted is very strong.

So obviously, the general activity, not only for Floatels, but in other segments of the industry is also very strong in Brazil. But I'd just add that there are actually other -- not only Petrobras in Brazil, there are a number of other sort of both lease operators and also EPC companies in Brazil.

So we see that there are more demand from other players in Brazil picking up. And so we are quite optimistic of that as well.

As we talked about before, sort of the corrosion in Brazil is quite heavy, and that is not something that's only sort of in the case for Petrobras, also for other operators in Brazil, that's definitely the case. So in Brazil, there are 2 tenders out actually.

First, they came out with a 4-year tender. That's a high specification tender and the original date was last week.

It has been extended to the middle of this month. So that's very typical that there will be some extension before you have to give your rate.

There are other players also, obviously, for that. So that tender is for up to 5 units.

So that means that they can take everything from 0 to 5 units for that tender. We think it is ideal for Notos.

We know that Notos is one of sort of the premium rigs or vessels that Petrobras -- they really like it. So we think we are well positioned for Notos in this coming tender.

And the date, sort of they have the first date, the commencement date, we cannot make, but we can very much make the second window here with the second tender. So this is something that will most likely, I would say, be concluded in Q2.

I mean it takes some time for this process to play out, but I think that we will know more in Q2. But this is the way we read sort of Petrobras is that we think that currently they have 8 vessels on contract.

We think that their incremental demand, based on our reading of the situation, is their incremental demand is 3 vessels. That's in addition to the 8.

And of course, Notos is part of that 8. So that's the way we sort of assess the situation.

And then there are also other operators in Brazil, as we talked about. So we think that there could be -- if this plays out, the demand in Brazil could go from the current sort of 10 vessels in '24 to between 15 and 17 vessels a couple of years out.

Then there is, in addition to the first tender, there's a second tender out for a lower spec vessel for 2 years. Again, there are -- Concordia could be a candidate for that.

Time will tell, but it depends on, as we said, we are not going to go through the SPS with Concordia unless we have a contract that can justify it. On operations, we touched upon that earlier.

We have good operations, 100% utilization on the vessels in operation and also that includes the Safe Concordia. So our thinking there is really either we're going to put them in layup unless we have a contract that can justify the SPS.

And that's quite a big number that we're talking about there. So it must be sort of a contract that stands on its own 2 legs, and alternatively, we also look for sale, if that makes sense.

So we are quite sort of pragmatic on Concordia what makes most sense. So the Caledonia, again, she's going on contract 1st of June to Ithaca.

And there, everything goes -- she's in Scapa Flow. There's some bad weather.

But other than that, that's going according to plan. And likewise, the Safe Boreas is also going according to plan.

The Safe Scandinavia has now been laid up for a number of years. I mean it costs us about $1 million to have her cold stacked per year.

So I mean, it's an option premium in a way to see where the market goes. But now we had her in layup for, again, a number of years.

So unless we can see some visibility for contract there, we are considering to sell the Scandinavia as well. So this is the backlog.

We have delivered on this. So the backlog is now up 44% compared to the same quarter last year.

So now the sort of the next vessels then that are due for contract is, of course, the Notos and Ithaca now -- sorry, and Caledonia for 2026, and potentially the Concordia. Yes.

That's what I had on the numbers, and maybe you can do the numbers, Reese?

Yes. Thank you, everyone, for joining.

I'll walk through some of the numbers here. I think probably the most important activity from a financial perspective that we're working on is the refinancing, as Terje correctly mentioned.

As we previously communicated in the last quarter, we're looking at a total financing need in the range of $400 million. That includes not only the refinancing of the debt that's coming due at the end of the year, but it also includes a cash need in 2025.

And that number, we believe, is in the range of $70 million. We are reactivating the Caledonia.

We're reactivating the Boreas. We have a couple of SPSs coming up.

So we are looking at, in CapEx alone, approximately a number close to the $70 million mark. So that number is sort of the total cash flow, not just the CapEx, of course, but a significant portion of the spend in '25 is related to CapEx.

So the amounts coming due plus the CapEx, plus giving us headroom in the future to continue to operate the business, we believe we have a need in the $400 million range. As Terje said, good dialogue with the various stakeholders, and we are aiming to conclude the process in the first half.

And as we've communicated over the last several quarters, actually, the runway that we have is into mid-2025. So this is clearly the focus over the coming weeks and months is to resolve the capital need.

Jumping back to the performance of the actual quarter. I think it was a good quarter.

As Terje said, we had very good uptime. I think revenue was broadly in line with the previous quarters as expected.

We did have some one-off other income in the quarter, which was positive. This is largely related to some historical agreements.

It was good to see an extra $1 million or so coming in on that. But by and large, steady as she goes on the operating revenue.

On the cost side, we did see some slightly increased costs. I think that was mentioned already, I think this morning, I saw a few analyst comments.

We did have some increased costs in the quarter. I think that, by and large, is driven to timing, particularly around Concordia.

So should we actually go and lay out Concordia, there is a demobilization cost associated with this, which we've taken an adjustment in the quarter. Moving on, I think cash is probably -- cash on balance sheet is obviously the key focus.

On the balance sheet, I think there's obviously been a recategorization. Long-term debt is now short-term debt given its maturity within 1 year.

Otherwise, I think the balance sheet is, by and large, pretty steady. The one thing that we do see, of course, running through the balance sheet and the cash flow is working capital, as we ramp up on these projects, particularly the Caledonia and the Boreas.

We did start some work on the Caledonia and Boreas in Q4, and we see that, that had a negative working capital draw. So I think there have been some questions around the cash and liquidity balance at the year-end versus estimates.

The majority of this is driven by working capital movements, both sort of year-end movements, pretty typical clients pay you slightly over the year-end rather than before the year-end. But in addition, we saw some draw driven by the ramp-up of these projects.

And also, we saw some pulling forward of CapEx in relation to these projects, particularly Caledonia, where we spent a little bit more CapEx in '24, which was originally planned to spend in '25. But the cash balance today is still hovering around the $50 million mark, and we do have a significant portion of prepayments coming from clients supporting these reactivations.

So we think the runway again runs into mid-2025. With that, I'll let Terje jump back in and wrap things up.

Yes. I mean I think we touched upon this, but I think we are well positioned in terms of the market.

And I think that the market will tighten. We see it from Brazil, and that's going to drive this market in the years to come.

And obviously, we are focusing a lot on the refinancing now that we hope to conclude within the first quarter, or first half of this year. I think that sort of ends our presentation.

If there are any questions, you can either raise them here in the audience or you can send an e-mail to Reese, and we will sort of read them out and answer them as best we can.

With Petrobras requiring up to 3 incremental units in new tender, do you see any potential to bid new builds?

Yes. I mean that's part, of course, of our assessment.

So they meet the specification, let me put it that way. But I think in terms of what we will bid and not bid, we'll keep our cards close to our chest.

But what I can say is that the new buildings are meeting the specifications. But as always, in Brazil, it's the lowest bidder that wins.

So, yes.

Would you expect a meaningful increase in day rates in this tender compared with the 120 level that we've seen recently?

Again, we think that the market dynamics are favorable, but we will again try to be a little bit sort of cautious in commenting too much on what we think the market will be for these contracts. But we think that the market fundamentals are positive.

So that should sort of hopefully mean that it's in our favor.

There's one question in the audience regarding the marketing of Safe Scandinavia. Any plans regarding that?

I think we have -- in terms of marketing for contract, we are very active on that. In terms of marketing for sale, we're talking to -- she's out there.

So we have a dialogue with a few parties, but nothing that we can report on. Okay.

Anything else, Reese, from...

No.

If not, thank you very much all for attending, and I look forward to see you next quarter.