Prosafe SE

Welcome to the Q1 2025 presentation for Prosafe. So the last quarter or last -- so this year actually has been a very positive and active year for the company, and we have reached several milestones.

And just covering operation has been good in the quarter, so no sort of unexpected events. Last, we have fixed, as we have announced earlier, the Zephyrus for another 2.5 years in Brazil.

That was an extension of the current contract. That means we do not have to go in and do sort of cleaning of the hull.

So it's going to -- actually has gone straight onto the new contract or the extension of the contract at a slightly higher rate. We did sell the Concordia and Scandinavia in the quarter.

So that means that we're now left with the 5 core vessels. We are working on reactivation of the Boreas and Caledonia.

And, of course, I will come back to the Notos that we are in a very good position to extend the contract or renew the contract for Notos for another 4 years. Numbers were fairly stable versus where we should be, and the cash position is quite strong.

Reese will come back to that. I think what's the achievements in the quarter and looking forward, I think, all the activity we see both in Brazil and West Africa, for that matter, other places, the market is looking -- we've talked about this for quarters, if not years, that it is improving, and that is now coming through.

To dwell a little bit on the refinancing. So we have now agreed the refinancing.

We have a consensual deal, so all our lenders have agreed to this, and it passed the EGM last week. So this is -- now we need to wrap it up.

And we are sort of -- right now, it looks like early Q3 is when this will close. That means that we will convert $193 million of debt into equity.

That will result in 321 million new shares just versus the 17 million that's currently outstanding. In addition to that, our current shareholders will then get a warrant for a nominal value to subscribe for additional shares.

So the number of shares, of course, following this, depending on the uptake of the warrants, will increase significantly. So this is, as I said, a fully consensual deal.

And we are now moving forward on the sort of the closing of this. Part of the transaction is that we will have -- the current lenders will inject $75 million of new liquidity into the company.

That means that we have a fully funded business plan. Now we have the capital needed for all the CapEx going forward and everything.

So we have sort of a significantly improved balance sheet. And our net debt following this transaction will be $220 million, and that's compared to sort of like-for-like end of Q1, $366 million, so about $150 million net -- reduction of net debt.

So the debt will then be the tranche -- in different tranches. We have the Eurus facility, is unchanged.

Then we have a senior facility of $75 million. And then we have a super senior facility of $150 million.

Part of that is a new cash that is coming on in of $75 million. And as I said, this is -- we are working to close this in beginning of Q3.

That's sort of the timeline currently. But I'll just say that we're very happy with this.

And of course, the support the lenders have shown us and not least the shareholders that we managed to get this, and the shareholders actually agreed to this. We signed them up prior to the EGM.

So we're very happy with both the engagement and the support that the wider stakeholders have given us. So this is then how it looks going forward.

I mentioned that the Zephyrus, she is onto Petrobras at $115,000 per day. And then the Eurus is onto Petrobras as well and until '27, and she is onto about $86,000 per day.

And the Notos with this renewal, as we can see, the backlog is -- I'll come back to that, but that's quite strong. The Safe Boreas is actually leaving Norway today.

She is on heavy lift in Bergen, and she's heading to Singapore, and she will be -- sort of then commence the contract between November and February in Australia. So that's all going according to plan timewise.

And also, sort of the CapEx-wise, she is on schedule. The Safe Caledonia, likewise, she has been reactivated as we speak.

She is due to go on contract 1st of June, and again, according to plan. So it has been a very active quarter for Prosafe, both on operations and the reactivations.

And the Nova, Vega, there is nothing new there. So they are still sort of -- they were not part of the restructuring, the Eurus facility.

So that's unchanged. And as you can see, the Concordia and the Scandinavia are now exiting.

Actually, they have both been delivered to their new owners. Turning to the market.

This, as you can see, if you add this up, this sort of adds up to 27 units. This -- I'll show you a little bit more granular how we sort of build this up.

We used to say that this -- the total supply here is 23, but we have seen sort of latent supply coming into our market recently. I'll come back to that.

But this is where the units are as of today. So as you can see, in Europe, there are 6 units, that includes the Boreas that then will leave for Singapore and Australia this quarter.

So this is a picture, the way it looks today. And as you can see, there are a number of units in Asia, and that's the reactivated units, the Hai Shi 3, the Hai Shi 5, the Stavanger Spirit that are -- and the Greta that we see is coming back into the market and increasing sort of the total supply here -- active supply from 23 to 27.

In South America, that includes Guyana, there are currently 11 vessels in Brazil and 1 vessel in Guyana. So this is sort of the picture.

And West Africa, we see increased activity as well. But currently, there are actually 4 vessels or units operating in West Africa.

And this is, again, more granular than we usually show, but this is how we look at supply, sort of we have divided into active supply and latent supply. As you can see, some of the latent supply have moved into active supply.

And that is really sort of the 3 units in China: Hai Shi 3, Hai Shi 5, Greta and Stavanger Spirit. That's for all practical purposes.

And then, of course, the Reliance that used to be in layup have now also been reactivated into active supply, while the Scandinavia has gone out altogether. But this sort of gives a bit more granular picture of what we see as supply.

As far as Prosafe is concerned, we are still the biggest operator. We have a 20% market share of the total fleet, and we are, by far, the biggest operator in Brazil, with 25% market share.

And we control sort of 2 of the 4 vessels that we define as latent supply. That's the Nova, Vega, the options we have in China.

Turning to the market. Again, this shows data points since 2006, both in Brazil and in the North Sea.

And as you can see, there is a significant sort of trend upwards here. And the Notos is the latest data point here in Brazil at the rate that we have alluded to.

$140,000 per day is sort of the equivalent rate of -- if you normalize it. And so that's a good -- there is -- sort of the higher data point here is a shorter-term contract in Brazil.

So it's not like-for-like. But if you look at the last 3 years, the average length of the contract in the North Sea is 6 months, while, in Brazil, it is 26 months.

And, of course, that's the seasonality of the North Sea market versus sort of the longer-term nature of the Brazilian market, so that's sort of the comparison here. There has been good activity this year.

Year-to-date, we have seen over $800 million of awards or contracts that include sort of the Notos and the 2, the Hai Shi 3 and the Hai Shi 5, who has also been declared winners of Lot 1. Just to remind people, Petrobras came out earlier this year with a tender for 2 lots, Lot 1 and Lot 2.

Lot 1 was up to 2 vessels, and lot -- no, Lot 1 was up to 2 vessels. Lot 2 was up to 3 vessels.

So in Lot 1, they have declared 2 winners, the Hai Shi 3 and the Hai Shi 5. That's why we have taken them from sort of what we define as latent supply to active supply.

So they are now actively competing in our market. Then for Lot 2, Notos has been declared the winner.

They have not -- they have said that there might be additional declaration in Lot 2. So that is something that -- a process that's still ongoing.

So after you are declared the winner, you need to be awarded a contract. This is the Petrobras process.

So I think we are in a very good position. But just we have not sort of been awarded a contract yet.

And that normally takes a month, maybe longer, but that's sort of our estimate that if everything goes according to plan here, we will be awarded a contract, and that's when this is a firm deal. There is also another contract, another tender out in Brazil for a shorter contract at a lower spec unit.

And we also see that there is a good process there. And we do not participate there, but we think that that's also a contract that will be awarded, let's -- in not-too-distant future.

So outside of Brazil, again, we see good activity, as I mentioned, in West Africa. There are a number of units in -- active in West Africa today.

There are still a number of sort of tenders that's outstanding and -- in West Africa. So I think that's a market that's quite interesting.

And also Guyana, going forward, there is one active vessel there, but we see sort of more demand in Guyana. And of course, Australia for next year is going to be quite active.

Actually, for a short period of time, there's going to be 3 vessels operating in Australia next year. Turning to operation.

Again, safety, we have a good safety records. However, there was -- we had one LTI in April after the quarter.

Otherwise, the vessels that are operating in Brazil have 99% uptime. This is more or less according to what they have been doing for the last years actually.

And I mentioned the Safe Concordia and Safe Scandinavia. And also, as mentioned, the Caledonia will then go on contract 1st of June and the Boreas between 15th of November and 15th of February.

That's the window when that -- when she will go on contract. Backlog, this is -- we are focused on 2 things, the last 1.5 years, one, building backlog, and the other is refinancing.

So I think on both those 2 sort of main topics for the company, we are quite happy. So more or less 2.5x on the backlog compared to the same quarter last year.

So the current backlog assuming that we are awarded the Notos contract is at $545 million. And so this is something that is -- very happy about that.

And you see also the rates that we see. Just to give you a picture, the Notos, current run rate for Notos EBITDA, based on the current contract, is about $6 million, and the new contract will be about $28 million.

So I mean it's a significant uplift in contribution to the company going forward here. Reese, do you want to go through the numbers?

Very good. Thank you, Terje.

Yes, I'd like to walk a bit through the numbers. I think, as Terje mentioned, it was a very stable quarter, Q1.

So if we look in Brazil, we had the 3 vessels all operating, all at 90%, 99% uptime, so a very good revenue contribution and also a very good EBITDA contribution. So if you look at the Brazil vessels, I think they're contributing, in the quarter, about $8.5 million in EBITDA from the Brazil vessels.

Also in the quarter, we were very happy that we could dispose of the Concordia. That was a good benefit in the sense that we didn't incur the demobilization costs related to that.

So we also had good revenue and good EBITDA contribution from the Concordia up until she ended that contract on the 9th of March. So coming against, I think, the good EBITDA contribution that we had from Brazil and from the Concordia in the quarter was, of course, the fact that we're reactivating the Boreas and the Caledonia.

So we did incur approximately $3 million in sort of reactivation cost in the quarter in getting those vessels off. So -- but all in all, we're very happy, I think, with the results, good operations, and I think we were managed also with these disposals to reduce sort of the run rate burn.

Looking a bit to the income statement, a bit through the lower lines, I think the big music in the income statement is obviously the cost, which we are incurring as part of this refinancing. We incurred approximately $3.6 million in cost in the quarter related to refinancing.

I think we've been pretty consistent. We think this process is going to cost us just north of $15 million in total.

We had some costs associated with it last year. And of course, that $15 million includes also some success elements.

But I think we're still within that kind of ballpark range, maybe just slightly north of the $15 million. But we were very happy that we could get this to be a consensual process.

I think as many people who've been through these processes, they can be much more costly than that. So I think we were quite happy with how we managed that process.

Also some exchange difference this year. There's quite some swing, I think, particularly in the real in the quarter.

The balance sheet, I think Terje also mentioned, obviously, the balance sheet is going to get a significant overhaul with the conversion of $193 million. And we're expecting, as Terje mentioned, the net debt coming out of the process to be around about $220 million, which is obviously a significant reduction from where we are today.

I think cash flow, cash flow is, obviously, for me, the most interesting aspect looking ahead. We had a significant amount of prepayments, which we received in the quarter.

So we have negotiated some very favorable contracts with Boreas and also with Caledonia that we're receiving a significant portion of money upfront, which is covering our -- the cash that we're having to incur on the reactivation. So you see that they all -- they matched up quite nicely this quarter.

We received about $21 million in actual prepayments from the clients with respect to those 2 units, and we spent $21 million as well on the CapEx. Of course, also, we had in here some of the proceeds received from Scandi.

We hadn't delivered her yet. So some big working capital swings in the quarter, as we're receiving money for these contracts that we're paying money out in CapEx.

Obviously, when we look ahead, working capital and the cash flow is going to be, I think, a key thing to keep in mind when looking at Prosafe because, of course, the money that we're receiving in advance, we've received the cash now, but the profit is going to come later. So I think we're going to see some differences there going forward.

But generally, I think we're quite happy with how we were able to manage the cash flow. I think if we roll back a few quarters, we thought the quarter would be significantly tighter, but we have managed, I think, to do well in disposing of the vessels, getting these prepayments in.

And I think we have also -- as you see sort of in the back, the Zephyrus SPS has moved back in time. And so that's also given us a little bit more breathing space on the cash flow and the liquidity in the run-up to the refinancing, which again, we think, should be wrapped up here in early Q3.

So with that, I'll hand it back to Terje to wrap things up.

I guess we'll take questions, right? Are we taking questions here?

Yes, so if people have questions, just send them to Reese, and then, we will answer it here if there are from online. So yes -- so this is, again, a very active quarter.

Very happy to have delivered on some major milestones. So we are sort of the market leader still in this.

After the divestments, we are still the market leader in our little niche of the market. And I think we have also good access.

We do have good access on newbuildings if -- and that's something that we will look closely at going forward after refinancing with the 2 vessels in China. I think we talked about Brazil a little bit today.

We talked about it earlier. I think that's going to be sort of the main driver also for this market going forward.

More or less, less than just under 50% of the active fleet is in Brazil, and there is no reason to believe that Brazil -- I mean, with everything going on there, is going to drive this market. The recapitalization means that we have now, as I said, a fully funded business plan.

Very happy with that and sort of ready to go into the next phase. And as you sort of -- what we see is that also now the higher rates is sort of flowing down to our P&L when sort of -- as a proxy, the Notos and going from $6 million EBITDA contribution to $28 million.

I mean, I think that speaks a lot. And that's what we have been speaking about for a long time, and -- but now it's actually happening.

And that together with Boreas going on contract, the Caledonia being reactivated, so we see that finally, it's -- some of the prospects are converging into cash flow going forward for Prosafe. So that's what we had on the agenda today.

So I don't know if -- are there any questions, Reese?

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

I think our capacity -- the only capacity we have now is for Safe Caledonia. And Safe Caledonia is a moored unit.

As a moored unit, she is not ideal for West Africa. So if she is to sort of be a player in West Africa, then we need to reactivate the DP system on the Caledonia.

And of course, that's something that we are constantly looking at. That's a CapEx element, but that's sort of a -- for West Africa for us, that's sort of the really sort of -- at least in theory, the only capacity we have for West Africa.

And, of course, they are shorter contracts. Otherwise, I think that that's how we are positioned.

But that's more of, yes, a big picture view on that.

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

I think that as -- to the people that follow this market closely, you have seen that we actually bid them into Brazil in these tenders that were out. But sort of the rates that we bid them at is also an indication of what we need to reactivate those vessels.

But as we have said previously, we do have a financing arrangement with the yard. But that is -- it used to be a longer-term financing arrangement.

So I think for us to take delivery of Nova and Vega, we need to renegotiate the financing arrangement. So I think that's, again, something that's post-refinancing.

We will really look very closely to see if there is a way, I guess, on the back of a longer-term contract that we can get an appropriate financing arrangement in place to reactivate. But clearly, that's our ambition.

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

Yes. The North Sea, we see that in the U.K., there is, for '26, not that much demand.

We see that there are a couple of -- yes, fairly low visibility for '26. I think there's better visibility for '27 in the North Sea.

And in Norway, I mean, all the activity that has happened in Norway with the tax incentives after the COVID, that's playing out now. But there are still some demands also further out.

We're talking of demand in '29, '31. So there is going to be activity in the North Sea.

But I think the gravity is -- what we've seen, a change in Brazil, we see that, that sort of that gravity is continuing. So Brazil is going to be the market.

But there's always going to be demand for sort of a 5-vessel plus/minus in the North Sea. Okay.

Any questions from the audience?

That was it.

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