Earnings call transcript: SBM Offshore Q2 2025 sees strong revenue growth

SBM Offshore reported a robust increase in revenue for the first half of 2025, driven by strong performance in its turnkey segment. Revenue rose by 26% to 2.3 billion dollars, while EBITDA increased by 10% to 682 million dollars. The company’s stock, which InvestingPro analysis indicates is currently overvalued, has delivered an impressive 41.43% return year-to-date. With a market capitalization of $4.39 billion, SBM Offshore maintains a strong position in the industry. The company also raised its EBITDA guidance for the year, reflecting its optimistic outlook.

Key Takeaways

• Revenue rose 26% to 2.3 billion dollars in H1 2025.
• EBITDA grew by 10% to 682 million dollars.
• Turnkey segment revenue doubled, surpassing 1.3 billion dollars.
• Stock price increased by 2% post-announcement.
• Raised EBITDA guidance to above 1.6 billion dollars for the year.

Company Performance

SBM Offshore showcased strong performance in the first half of 2025, significantly increasing its revenue and EBITDA. The company’s turnkey segment was a major contributor, with revenue more than doubling compared to the previous period. However, the lease and operate segment saw a 16% decline in revenue. Despite this, SBM Offshore remains a leader in the deepwater market, benefiting from its "Fast Forward" execution model and strong presence in key regions like Brazil and Guyana.

Financial Highlights

• Revenue: 2.3 billion dollars, up 26% year-over-year
• EBITDA: 682 million dollars, up 10% year-over-year
• Turnkey segment revenue: over 1.3 billion dollars, up from 662 million dollars
• Lease and operate revenue: approximately 1 billion dollars, down 16%
• Net debt: stable at just above 5.6 billion dollars
• Net cash backlog: 9 billion dollars

Outlook & Guidance

SBM Offshore has raised its EBITDA guidance to above 1.6 billion dollars, indicating confidence in its future performance. This optimism is shared by Wall Street analysts, who maintain a Strong Buy consensus with a rating of 1.43. The company targets an average annual free cash flow of 470 million dollars through 2030 and plans to return 1.7 billion dollars in cash to shareholders between 2025 and 2030. For detailed analyst forecasts and comprehensive financial analysis, check out the exclusive Pro Research Report available on InvestingPro. SBM Offshore is also pursuing new opportunities in Namibia and Brazil and exploring ocean infrastructure beyond oil, such as power and freshwater solutions.

Executive Commentary

CEO Euven Tangan emphasized SBM Offshore’s commitment to providing reliable, affordable, and sustainable energy, stating, "We aim to provide reliable, affordable and sustainable energy for the long term." CFO Douglas Wood highlighted the company’s financial strategy, noting, "More returns, lower leverage, simpler story." These statements underscore SBM Offshore’s focus on maintaining strong financial health while pursuing growth opportunities.

Risks and Challenges

• Decline in lease and operate revenue could impact overall financial performance.
• Potential delays in major projects under construction, such as FPSO Jaguar, Tryon, and Grand Mogu.
• Market volatility and changes in oil prices could affect profitability.
• Competition in the deepwater market remains intense, particularly in emerging regions.
• Regulatory changes and environmental concerns may pose challenges to future operations.

Q&A

During the earnings call, analysts inquired about FPSO size optimization and turnkey margin variability. SBM Offshore addressed these concerns by explaining its strategies for managing project costs and optimizing fleet performance. Additionally, questions about potential new market opportunities highlighted the company’s interest in expanding its presence in emerging regions like Namibia.

Full transcript - SBM Offshore NV (SBMO) Q2 2025:

Conference Operator: Ladies and gentlemen, thank you for holding, and welcome to the SBM Offshore Half Year twenty twenty five Earnings Conference Call. At this moment, all participants are in listen only mode. After the presentation, there will be opportunity to ask questions. Just to remind you, this conference is being recorded. I would now like to hand the conference over to Mr.

Oven Tangan. Go ahead, please.

Euven Tangan, CEO, SBM Offshore: Thank you, operator. Good morning, everyone. I’m Euven Tangan, CEO of SBM Offshore, and joining me on the call is our Chief Financial Officer, Douglas Wood. We appreciate you being with us today and thank you for your continued interest in SBM Offshore’s journey and progress. SBM Offshore’s strategy is focused, advancing our core business, setting new benchmarks for efficiency, sustainability and returns and capturing a greater share in a growing market.

We aim to provide reliable, affordable and sustainable energy for the long term. And our core business linked to deepwater remains one of the most resilient and future fit segments of the energy mix, presenting low breakeven costs and low emissions. At the same time, we’re preparing with discipline to expand our product offering. We envision a broader role for ocean infrastructure across sectors and markets. This includes developing new offshore technology and new business models to support society sustainably.

The 2025 has been marked by solid project execution and operations, delivering on our stakeholder commitments with stability and consistency. Our financial performance has been strong over the first months of twenty twenty five, A 26% increase in revenue to $2,300,000,000 and 10% increase in EBITDA to $682,000,000 by disciplined project execution, delivery and operations. Our net cash backlog of $9,000,000,000 provides long term visibility and resilience. Based on this performance and with two startups in Brazil and FPSO one Guyana on charter, we raised our EBITDA guidance from around $1,550,000,000 to above $1,600,000,000 So indeed, during the first half of the year, we brought online two large FPSOs in Brazil, Alexandre de Guzmau and Almerante Tamandare, the largest oil producing unit in Brazil. Their combined capacity adds 405,000 barrels of oil per day.

FPSO one Guyana is on charter as of August 4 and will be the largest producing unit in Guyana with an initial nameplate capacity of 250,000 barrels of oil per day. These three vessels delivered as promised in 2025, bring the size of our fleet to 17 FPSOs with a total installed production capacity of 2,700,000 barrels of oil per day. In June, we signed an agreement with Total Energies to provide the operations and maintenance service for a minimum of two years of FPSO Grand Morgu, becoming the first offshore operator in Suriname. In Guyana, we’ve reached record production levels with combined output from our units at 665,000 barrels of oil per day. One Guyana will take this to over 900,000 barrels per day, and we are proud to have played a role in helping our clients in their remarkable achievement of reaching this level in only six years.

Our strong growth forecast underscores our commitment to advancing our core and pioneering more. The deepwater market remains resilient with 46 potential contract awards in the next three years. We have two fast forward MPF hulls under construction, enabling rapid response to upcoming tenders. Our near zero FPSO now with AVS approval in principle is market ready. Our ability to deliver consistently and responsibly positions SBM Offshore at the forefront of the industry.

We are set up to achieve excellence in execution, delivery and operation. The deepwater sector continues to demonstrate exceptional double resilience with breakeven costs ranging from just $20 to $35 per barrel and emission intensity about 45% lower than the industry average. By 02/1930, more than 30% of new global oil production is expected to come from deepwater, reinforcing its critical role in the energy mix. We are firmly positioned at the forefront of this market with around one third of the potential award in our strategic sweet spot. Furthermore, our ability to anticipate has prompted the expansion of our operational footprint in high growth regions such as Suriname, Namibia and Mexico.

With three new FPSO start ups this year, our share of global deepwater production is more material than ever. To support future demand, we’ve ordered two additional hulls and are extending our capacity pipeline in collaboration with key yards with slot options in the coming years. Our disciplined and selective approach anchored by the proven Fast Forward program continues to deliver market share gains and efficiency improvements, ensuring we remain the partner of choice in the deepwater market. For us, excellence is more than a principle. It sits at the heart of realizing a new industry standard of performance.

This approach drives our relentless pursuit of optimization across the assets life cycle to deliver competitive and high performance solutions for our clients. By incorporating learnings from all phases of the life cycle, we standardize design, accelerate delivery and derisk execution, ensuring outcomes that are on time, on budget and built for long term performance. Our fast forward execution model is the embodiment of this mindset, smarter, faster and more reliable. And with in house installation capabilities, enhancing agility and control, we are setting new standards for delivery assurance. FPSOs, Alexandre de Guzmao and Almirante Thammandare achieved flare out in an industry leading average below 45.

Our uptime average across the fleet reached 99.4% for the first six months of the year. And in Guyana, debottlenecking of processing facilities on our initial three FPSOs has increased production capacity by 125,000 barrels of oil per day. This experience brings learnings and data, which allow us to continuously refine our value proposition, reinforcing our ability to execute complex projects at pace and at scale. Through a proven execution model, a culture of continuous improvement and a life cycle business model built to capture the right demand, SBM Offshore is converting opportunity at higher margin and generating recurring value, delivering growth through performance. Our project execution model is designed to assure value by leveraging the gains of Fast Forward.

Following the successful delivery of FPSO one Guyana, we now have three major projects under construction FPSO Jaguar for ExxonMobil, FPSO Tryon for Woodside and FPSO Grand Mogu for Total Energies. All three are progressing well and remain on schedule with overall portfolio progress at approximately 30% completion. This current project portfolio enjoys the full benefit of learnings of our earlier fast forward projects, which stand at six deliveries in just three point five years. We have also begun construction of our two additional MPF holes, extending our capacity pipeline in partnership with key yards. This targeted approach actively supports tender activities in a robust market.

Our sale and operate model for FPSO’s Jaguar and Grand Morgu begins to generate profit after just 25% completion, accelerating cash flow at an early stage of construction, while maintaining our life cycle value proposition through operations and maintenance contracts that commence upon completion of construction. Meanwhile, the Lease and Operate model for EPISO Tryon contributes to long term cash flow visibility. With the hulls under construction, we are responding to a clear market demand. This together with our overall fast forward approach, which encompasses not only our product, but also how we work with our clients, partners and suppliers, enables us to derisk project delivery and ensure operational reliability generating value for our clients. As global challenges intensify with the continuously growing energy demand and the energy trilemma, grid congestion, limited coastal space, offshore infrastructure is emerging as a strategic opportunity.

It unlocks access to untapped environments, enabling delivery of energy or other industrial processes, where land based systems are constrained or infeasible. Ocean infrastructure is flexible and scalable. Its modular, standardized execution model supports rapid global deployment with consistency and efficiency. This approach delivers compelling economics and flexible application across a spectrum of proven technologies. For example, low carbon power, ammonia and hydrogen production, carbon capture, carbon capture and storage and freshwater generation.

Offshore floating platforms can be critical enablers of resilient, future ready infrastructure systems. This is where we can apply our experience and capabilities to offer a unique value proposition for Ocean Infrastructure. With over sixty years of offshore experience during which we’ve delivered more than 500 floating solutions and built up more than four hundred cumulative years of operating experience, we combine a heritage of industry firsts, deep life cycle expertise and our fast forward approach to deliver infrastructure that is reliable, cost efficient and built for performance. Together, this positions us not only to meet today’s infrastructure demands, but those of tomorrow. Already, our teams are working on all the concepts that you can see here at the bottom of the page to enable us to enable, as we like to say, a better blue tomorrow.

Now over to Douglas for a deep dive on our financials.

Douglas Wood, CFO, SBM Offshore: Thank you, Oivind, and good morning, everybody. So as you’ve heard, our strong first half performance and the delivery of the three new units has driven an increase in revenue guidance to above $5,000,000,000 and EBITDA guidance to above $1,600,000,000 anticipating strong underlying growth year on year from the materialization of our backlog. And this is very much supported by the growth of the half on half numbers. Now all of this speaks to the ability and the great efforts of our teams to execute our life cycle model and materialize cash from our backlog, where, as we’ll see in a bit, we remain on track to generate an expected average of $470,000,000 a year available free cash flow up to 2,030. And notwithstanding the recent rise in our share price, that still represents a very respectable 10% yield.

And that’s even more so when you consider the quality and resilience of our business model. This has consistently demonstrated its robustness versus macroeconomic and geopolitical challenges. The contracts in our backlog are backed by take or pay contracts from premium clients, supporting developments with very low breakevens and have a significant inflation protection in both the construction and operating phases. And as we deliver the cash flow from our backlog, we’re paying down existing project debt. Given that the FPSO projects we have in execution and all of those in our near term tendering pipeline are based on the sale and operate model, we continue to anticipate further deleveraging of our balance sheet, simplifying our financial storyline.

And then the resulting available free cash flow from the backlog supports our ability to deliver very competitive returns. We’ve already paid our €150,000,000 dividend in May and have our $150,000,000 equivalent share buyback program ongoing. So we’re on track to deliver our promised $280,000,000 cash return for 2025 and a minimum of $1,700,000,000 from 2025 to 2030 inclusive. So then turning to the key metrics for the first half year 2025 on a directional basis, starting with the backlog. This was just above $33,000,000,000 lower than year end as a function of the revenue materialized over the first six months.

2025 is a year of delivery with the prospects we target estimated to be due for awards starting from around the end of the year. Moving to net debt. This remains stable versus year end 2024 with a slight decrease of just under $100,000,000 resulting in a net debt level just above $5,600,000,000 The impact of scheduled repayments during the first half was partially offset by final drawdowns under the facilities for existing projects and the previously announced sale and leaseback transaction for FPSO’s Sudeja dei Parati, which is accounted for as debt. As we’ll see in a minute, the deleveraging trend towards the end of this decade remains in line with what we previously shared. Next, the p and l metrics.

So total revenue was just over $2,300,000,000 in the first half compared with over $1,800,000,000 for the first half twenty twenty four. This 26% increase was driven by the Turnkey segment where revenue was more than $1,300,000,000 compared with $662,000,000 in the prior year period. Main driver here was the Jaguar and Grand Malgo projects, which follow the sale and operate model. Then on the lease and operate side, revenue was around $1,000,000,000, a decrease of 16% compared with the prior period. This mainly reflects a reduced contribution from FPSO’s Prosperity and Destiny as these move to an operation and maintenance only basis following the sales at the end of last year.

And this impact was only partially mitigated by the contributions from FPSOs Almarante to Mandare and Alexandre de Guizmal as these just started up during the first half. Turning to EBITDA, this was just over $680,000,000. That’s 10% higher compared with the same period in 2024. Similar to revenue, we saw an increased contribution from Turnkey at $225,000,000 compared with a negative $12,000,000 in the prior year period. The main driver of this was the margin for the period of Jaguar with a smaller impact from Grand Morgue as this only reached the milestone for booking margin towards the end of the current period.

And speaking of margin, the Turnkey directional gross margin was 21%, so that’s starting to converge with the IFRS gross margin of 26% as a result of the sale and operate model. Now while we very much expect to deliver healthy margins in Turnkey consistent with what we’ve seen over the recent years, with sale and operate, you can expect a bit of volatility depending on the timing of new awards and relative phasing and stage of completion of the portfolio. To round off the EBITDA story, lease and operate EBITDA was around $500,000,000 compared with $679,000,000 in the year ago period, the drivers being the same as for revenue. Then other revenue was $41,000,000 negative. It’s an improvement versus $47,000,000 negative last year as a result of lower g and a costs.

Next, looking at our view of the pipeline of opportunities for the coming three years, our expectation remains that the majority, if not all of these, will follow the sale and operate model where we either have only short term construction financing as with the case of Jaguar or no debt as with Grand Morgue. So our life cycle model will require a structurally lower level of debt. Now, of course, while our existing debt is well structured, correlated to individual project contracts and nonrecourse in the operating phase, it’s clear that at least the optics of this in the financials create a challenge for some potential investors. So with the shift towards the sale and operate model, as our existing debt pays down, we expect to see the trend of deleveraging continuing, simplifying an aspect of our financial storyline and more readily clearing key screening hurdles for some investors. And so assuming no lease and operate awards in the period, our current expectation is that net debt should decrease by around $4,000,000,000 up to 02/1930.

Now it’s very important to note we could see some fluctuations, particularly in leverage ratios where, for example, the twelve months to end 2024 and the rolling twelve months to the first half of this year benefit from the EBITDA impact of the Prosperity and Destiny sales. And then there’s also the point I just mentioned about the potential for variability driven by the Turnkey margin. However, we’re confident about the overall trend. Turning to the net cash backlog, this stood at $9,000,000,000 at the end of the first half. The delta with the year end level of 9.5 reflects a successful materialization of more than $300,000,000 in the first half across Turnkey and Lease and Operate, with the further circa 200,000,000 difference mainly coming from the impact of the sale and leaseback transaction for Parity.

Through this transaction, as well as demonstrating our ability to access diverse sources of financing, we accelerated more than $200,000,000 at a competitive rate. At this time, we’ve made the turnkey backlog a bit more prominent as you can see on the chart where we show the aggregate amount we expect until completion of all projects in the portfolio currently 2028. Now when it comes to the discounted analysis of the net cash value at various discount rates, there’s a circa €1 impact from the change in the backlog with a much bigger circa €3 impact driven by dollar depreciation versus the euro. The discounted analysis includes about €2.5 per share for the existing Turnkey backlog, but no upside from anticipated growth. If you wanted to value the Turnkey upside applying a four to six times multiple range, every $250,000,000 of turnkey EBITDA, which is pretty much what we’ve delivered so far in the first six months, would be worth 5 to €7 a share.

The backlog with the visibility and predictability that it gives us on future cash flow underpins our ability to offer stable returns with growth potential, and we remain very much on track with this, here reconfirming the picture for the six years from this year 2025 to 02/1930. At the minimum $1,700,000,000 return, as I mentioned, we’ve already paid the dividend component of our cash return for this year and we’re on track with the share buyback, which will take the overall cash return to $280,000,000 for the year. Now you might ask how the parity sale and leaseback plays in this equation. Well, this was anticipated at the start of the year, and we’re using the proceeds as planned to manage and optimize our liquidity, mainly to reduce the short term net equity investment. So it’s net neutral on this picture overall.

As a result, upside remains from the additional $1,100,000,000 we effectively have in the tank from the existing backlog, plus potential new sale and operate awards, which with the accelerated cash flow these bring would impact this period. So to conclude, if you want to succinctly summarize the future financial perspective we have for SBM, It’s more returns, lower leverage, simpler story. That’s it for me. Now back to Oeyvind to conclude.

Euven Tangan, CEO, SBM Offshore: Thank you, Douglas. So concluding, we’ve successfully delivered three major FPSOs in just seven months, a benchmark unmatched in the industry. The upgraded guidance reflects both this operational momentum and the strong financial performance of our organization. We are on track to deliver a minimum of $1,700,000,000 from 2025 to 2030 inclusive, with upside potential from the existing backlog and prospective new awards. Our robust business model allows us to navigate a complex macroeconomic and geopolitical landscape and deliver reliable performance, results and shareholder returns.

There is a strong market for new build, large and complex FPSOs today and in the years ahead. And beyond that, given the flexibility and versatility of ocean infrastructure, we are focused on applying our unique experience and capabilities to develop solutions that can help address many of today’s global challenges. So from the foundation of consistent and strong delivery of what we do today, we set for growth not only in the near term, but also for the long term. I’d like to finish by thanking our teams worldwide for their dedication and to our stakeholders for their continued support. Thank you all for listening.

We’re now looking forward to your questions.

Conference Operator: To withdraw a question, please press 11 again. Please standby while compile the K and A rule studies. It will take a few moments.

Conference Moderator: And now we’re going to take our first question.

Conference Operator: And the question comes from the line of Guillaume Levy from Morgan Stanley. Your line is open. Please ask your question.

Guillaume Levy, Analyst, Morgan Stanley: Hi, good morning everyone. Thank you for taking my questions. I have two please. Firstly, could you say a few words on the competitive environment for new awards from Petrobras in Brazil recently? We know, of course, that there has been a big push from them to drive costs lower.

But at the same time, I understand that many of the yards that won’t work there recently are very full of work. So how can I conciliate the two things? How can I conciliate Petrobras’ ambition to drive down costs with the ability of pure EPC players to compete there? And then second question, it might be a bit more technical, but looking at your cash flow statement, could you perhaps say a few words on the cash flow strong investment activities on this half and in the coming one? How should we think about CapEx in the second half of the year?

And also in the first half, what’s inside the $180,000,000 figure of other investment activities? Thank you.

Euven Tangan, CEO, SBM Offshore: Thank you, Guillaume. So let me address the first one, and then Douglas will take your cash technical question. So competitive environment on Petrobras contracts, I think it’s pretty classic. I think those that are technically qualified to bid on those jobs is a limited number of players. And there is a healthy prospect pipeline in what we know as the 50% of the market outlook

So I think we are a partner of Petrobras, and we want to remain a partner of Petrobras. We are obviously leaning in on some of these prospects that fit into the sweet spot of SBM. And we do see some more activities with the type of BOT contracts that Yards may be entering this space, but we are confident that the life cycle value proposition also plays to our competitive positioning. So it’s pretty as per historical trends on the competitive landscape in Brazil.

Douglas Wood, CFO, SBM Offshore: Okay. And then on the net, the cash flows, and investment, it’s really the the repayment of the residual net equity investment that we we have. That’s how we see the the cash flow on the investing side going for this year, remembering that the picture we show you is a directional one. So we had about 300 left at the end of the at the end of last year. We’re making good progress with that.

We probably have a bit left at the end of the year, but we’ll repay most of that over this year. As I mentioned, effectively, we’re applying the proceeds from the parity sale and leaseback on that. And, yeah, the one eighty number you mentioned, that’s the IFRS side of things, so it doesn’t quite go around with the whole, cash storyline that we, we had, we showed on the, on the slide that I concluded with. Thank you.

Conference Moderator: Thank you. Now we’re going to take our next question.

Conference Operator: And the question comes from the line of Thijs Berkelder from ABN ODDO. Your line is open. Please ask your question.

Thijs Berkelder, Analyst, ABN ODDO: Yes. Good morning, gentlemen. Congrats with strong results. Question on your guidance, Douglas. You already hinted a bit in your presentation, but turnkey margins in H1 were up to 21%, thanks to recognition of Jaguar now being included.

IFRS 26% and Grand Margo also contributing in the second half. Does it mean that in the second half, we should see then turnkey margin more towards the twenty six percent? Second question is, you report two hulls under construction. Can you maybe elaborate a bit on the options on more hulls and hulls availability? And third question is, I see that in Directional, you have $1,800,000,000 left as as a center construction.

Is that Wangana and Tryon, or what is it still about?

Douglas Wood, CFO, SBM Offshore: Okay. Let me start on the guidance. So, yeah, you know, with with Sail and Operate, it’s a strong year for, for Turnkey. As I mentioned, so Jaguar was driving the, the the EBITDA in the first half. Grab more goos only just starting to contribute, so we’ll see a growing, contribution, from from from from that.

So but I’m I’m not gonna give, like, percentage guidance on the Turnkey gross margin, but it’s fair to say that as everything kind of normalizes if you if you like and we we get the the the the lease and operate or the BOT projects out of Turnkey, then there’ll be more convergence with IFRS.

Euven Tangan, CEO, SBM Offshore: Do you want to do this last question? So can you do the Yes. I’ll do the hull first. Yes, Thijs, thank you for your question. So we got two hulls under construction.

So that lines up nicely with the prospects we’re currently pursuing. And then as we’ve been doing over the last decade, we do have good insights into the next couple of years with dialogue with our partnership yards to sort of line up their availabilities and our pristine needs. The pipeline is something that we keep on renewing, looking, let’s call it, eighteen to twenty four months ahead at the time. So it’s not a definite number. It’s just a continuous journey with our partnership yards.

Douglas Wood, CFO, SBM Offshore: So, then in terms of what the assets under construction are, it’s, it’s one guy on a, Grand Morgue, B58, and Jaguar.

Euven Tangan, CEO, SBM Offshore: Thank you, Douglas.

Douglas Wood, CFO, SBM Offshore: Okay.

Conference Moderator: Thank you. Now we’re going to take our next question. And it comes from

Conference Operator: the line of Jeremy Kincaid from Van Launsch at Kempen. Your line is open. Please ask your question.

Jeremy Kincaid, Analyst, Van Launsch at Kempen: Good morning, everyone. Thanks for taking my questions. I’ve got four. The first one is just on the guidance. You’ve obviously lifted the EBITDA by €50,000,000 and you talked to your strong execution of the three turnkey projects you delivered.

Could you just provide a little bit more color around the assumptions or what’s changed there? Are you collecting more revenue or are the costs lower? The second question, just on the net debt you published, it’s a bit different to what Consensus had. So I was just wondering if you had any thoughts around that. And obviously, you did talk to the fact that Turnkey margins can vary half on half.

So I was just wondering if you could provide some color as well as to when those margins might be higher or lower, at what stage of the S and O sale and operate model would lead to higher margins or lower margins? The third question is just on Slide 12. You talk to the net cash backlog. Obviously, in the second half, you show there’s another £300,000,000 to come through. Are you able to share what the first half number was?

And then finally, just on the timing of potentially new awards, I know you can’t share anything around what you’re potentially bidding on or anything like that, but are you able to share when new awards are usually tendered or what the pipeline could look like for the second half of the year? Thank you.

Douglas Wood, CFO, SBM Offshore: Alright. Morning, Jeremy. I counted five questions, actually, by the way, but no. No. No problem.

Let’s work through them. So the EBITDA and the three startups. Yeah. So when we, give our guidance, for the year, we do it based on the risks and opportunities, that we see. And, with three project startups, yeah, there’s there is definitely an element of risk there, some of which you control, other which you don’t control because startups are sometimes dependent on other parties doing doing doing doing various things.

So I I would say the beginning of the year, we took a a kind of a balanced approach in that regard, but we’re very pleased that things have pretty much gone to to plan with the the three start ups and, you know, thanks to the the efforts of our our team. So with those behind us, I would say, you know, there’s less risk now in terms of the, the forecast for six months into the into the year, and, that’s that’s driving the, the increase there. On net debt, hard for me to comment on the the consensus and the and the variance. I I to be honest, I haven’t really done an analysis on that, but there yeah. If you if obviously, there’s the sale in leaseback that we we did, so that added added some debt.

Margin wise, now I don’t expect, like, a big volatility for the rest of the year. Basically, there, I was just, like, laying down a bit of a marker if you like, that things can, can can vary, and it very much depends. You know, you’ve got a lot of factors in the list. It’s obviously the number of awards you win. But if you if you if you had no awards and you won a lot of awards because of the the the gate percentage of completion, you could take a while to book.

So it depends on the whole timing, the maturity. So all I’m saying is it can go up and down in the in the future. But, nonetheless, you know, when you look at the average, which is really how I would judge our performance, you can expect performance very much in line with the very good performance that we’ve been delivering for the past years. On net cash, as I mentioned, we consumed during the first half 500,000,000 from the net cash backlog, and 300 was consumption during the period. The 200 was the the sale and and leaseback.

Oyben, do you want to take the last?

Euven Tangan, CEO, SBM Offshore: Yeah. All right. So timing on new awards. So there’s obviously a lot of factors coming into play to that. So we are pursuing, as we’ve said, competitive base both in Namibia and in Brazil.

We are our efforts are going to meet all the specs and the deadlines that our clients have set and then how fast they will choose, whether they will choose us and when the FID comes, that depends a lot on parameters outside of our control. So we have but we have made real significant investment into providing our best competitive offers. So hopefully, that will be turned around in a timeline that that gives us good top up of our portfolio in the, you know, in the period ahead, but we can’t we can’t really say anything on dates. That’s that’s that’s way outside our control.

Jeremy Kincaid, Analyst, Van Launsch at Kempen: Great. Thank you very much. And I think you’re right. There was five questions. Thanks.

Thank

Conference Moderator: you. Now we’re going to take our next question. And it comes from the

Conference Operator: line of Mick Pickup from Barclays. Your line is open. Please ask your question.

Mick Pickup, Analyst, Barclays: Good morning, everyone. Can I just ask about the ocean infrastructure, which you seem to emphasize a bit more this time? Just exactly where you are on some of the projects, I’m thinking floating power. And one of the concepts is freshwater. I think that’s the first time that’s popped up if I’ve been observant.

Why would you need an FPSO for fresh water rather than a pipe from shore?

Euven Tangan, CEO, SBM Offshore: So okay. Very good, good, interesting, question, Mick. So so, you know, we we we need to think ahead beyond oil and we need to think ahead beyond FPSOs. And when we do that thinking, do really want to stay close to what is the SPM value proposition and our capabilities and the learnings we’ve harvested through standardization and fast forward thinking. And when we look across the specter of opportunities, there are in the blue economy as we relate it to emerging plays that calls for those types of capabilities.

And what you see there are examples of this. Freshwater is linking to a shortage, projected shortage of freshwater in certain areas of the world, where desalination comes into play. And you will know that we do a lot of desalination with selected partners part of our FPSO, process plant. So typically both in terms of power needs and clean power needs, partly driven maybe by the AI and that boom that is happening in the world, that is also part of the FPSO offering, part of our power plants on the FPSO modularized power barges with carbon capture, that is also something we got technology ready. So it’s to try and configure products that lend themselves to these emerging markets and then frame that under an ocean infrastructure umbrella that we pursue again with discipline and with through partnerships and playing to SPM’s trade.

So this is to give a flavor of what the world may look like in some years ahead of us. Keeping in mind that the FPSO pipeline is really strong in the years that we still have a good visibility up to this end of this decade. So so we’re hurrying ourselves slowly and disciplined in a disciplined way into the SPMO tomorrow.

Mick Pickup, Analyst, Barclays: Yeah. And and then you just mentioned the modular. We’re seeing increasingly modular solutions in other parts of the energy spectrum. I’m thinking LNG plants for The US modular this week. What’s yard availability like for those slots?

Euven Tangan, CEO, SBM Offshore: I think, looking at capacity, so modular capabilities, that’s part of the the the expertise to develop when you do floating solutions. Right? So, and maybe as a contrast to, building on land, stick building on land, which is maybe less efficient from a space and economic equation. So when we look at capacity constraints typically for our classic projects, modular build is not really where the constraints are, it’s more on hulls and dry docking and these things. So we’re pretty confident if we unlock value propositions in terms of modular designs, that’s something we can find capacity for in typically the yards that we’re using today and have been using for a long time.

Conference Operator: Thank you.

Conference Moderator: Thank you. Now we’re going to take our next question.

Conference Operator: And the next question comes from the line of Quirin Mulder from ING. Your line is open. Please ask your question.

Quirin Mulder, Analyst, ING: Yeah. Good morning, everyone. Congratulations with your numbers and also organization with the efforts, let me say, the the successful efforts to place three episodes on the water. First of all, I have two questions, in fact. One is about the the the discussion in the industry about, the size of FPSOs and that it has to be reduced, that you get something like a lighter version.

At the same time, we see some, yeah, c o two, me say, taking off, as as an important part of the vessels, electrification, etcetera. So how what is the development with regard to these large FPSOs you think into the future? My second question is about the outlook and the first half year. EBITDA was €682,000,000 But in that number, there is a balance of gains. I think it’s about €67,000,000 against the €30,000,000 last year.

Is that correct that the €35,000,000 about or that is related to one off? What to what extent does it play a role in the outlook for the full year, taking also into account the impact of, the wind down of Equatorial Vignea plus the divestment of ASEAN? That’s one of my questions.

Euven Tangan, CEO, SBM Offshore: Okay. I think I counted more than two as well. That’s that’s okay. Good. So, thank you for the recognition on the deliveries.

Sometimes, and this is only to our our teams, they make it look easy, but this is nothing trivial. And as you said, it’s an historical delivery, in the history of deepwater oil and gas. So we’re really proud of that. Now when it comes to the size of the FPSO, we’ve seen, and maybe also looking at history in sort of expensive times that cost base and size and everything goes a bit of proportion. And there is a recalibration happening a bit that we see in terms of the size of the FPSOs as some of them were creeping really high up in topside weight and maybe a bit challenging, then, also like our own business model with the MPFOs and what they can deliver in terms of the future market.

What we’re seeing now is a reset on that. And if you look at our FPSOs like Prosperity, Unity, AT and ONE Guyana, they are all sort of 250,000 plus delivering throughput at top sides, well within the historical sort of just above 40,000 and also down to 25,000 tons. So we believe there’s a lot of dialogue around it. Keeping the size of the FPSOs at the current size is important to continue to be economical and meet those breakeven costs that we know are the underpinning the deepwater development. So we feel then again that the life cycle knowledge is instrumental in being able to harness that topside weight growth, because it’s through operational experience that you’re able to provide efficient top sides that are reliable, functional at the cost level of the CapEx that is optimized.

So therefore, we expect topside ways to sort of flatten out right now, also to facilitate potential integration of extra topside associated with your question then on carbon. So as we said, we have an emission zero design approval in principle by ABS that includes a carbon capture module and carbon injection, CO2 injection facilities on the topside, that is, at the size of a normal MPF hole. So right now in the pipeline though, there isn’t a call for carbon capture, but we do see studies emerging where we are participating in studies to qualify our carbon capture solution in offshore application. So that’s the work we’ve been doing with Mitsubishi Heavy Industries. So for now, it’s they will see a slow shift, but it’s not materializing in our core prospect pipeline.

Douglas, on,

Douglas Wood, CFO, SBM Offshore: on EBITDA? Yep. So, Aykuran, you’re exactly right. So there there is six to 7,000,000, 67,000,000 impact in the first half relative to, just slightly less actually than 30, last year. So there’s a kind of a relative impact just below 40 in there.

But as implied by the guidance, they were expecting a strong finish to the year. We’ll see the contribution from Grand Morgue and then, of course, big boost in, lease and operate, from the two units we started up, in, in Brazil and also impact from, from from one Guyana as well. So at least an operator really gonna get going, in the second half off the back of these successful startups.

Quirin Mulder, Analyst, ING: And are you saying it doesn’t play a role or not?

Douglas Wood, CFO, SBM Offshore: It’s factored. It’s it’s, it’s it’s in. That’s not a it’s not a big impact relative to all those other things. No. It’s okay.

Okay. It’s very small. K. Relatively small. Yeah.

Thank you.

Conference Moderator: Thank you.

Conference Operator: Ladies and gentlemen, if you have any additional questions or remarks, please press star one one on your telephone keypad. Now going to take the question from Lucian Colthorne from KPU Capital. Just

Lucian Colthorne, Analyst, KPU Capital: two questions for me. Just in terms of debt drawdowns in H2, if you can kind of give us any guidance on that. And then, Douglas, you mentioned about the kind of FX impact on the backlog. So just any comments on terms of, like, what steps are in place to to mitigate the kind of FX impact, and and are those measures included within the backlog guide, or or do they only get shown as and when they kinda get realized? Thanks.

Douglas Wood, CFO, SBM Offshore: Yeah. So if I start with the last one, just to be clear, to avoid any confusion whatsoever, what what what I was referring to is the, you know, we just we mechanically do the math for you, on the net cash backlog, at a variety of discount rates. The net cash backlog is dollar based. Obviously, our share price is in euros. So just mechanically applying a different exchange rate compared with what we used at the year end, versus, what it is now, that that drives a a decrease in the in the number.

So that’s that’s that one. When it comes to the the sort of fundamentals of exchange rates and everything, we get paid in in dollars or with sometimes a small amount in local currencies. So we’re we’re pretty well hedged in terms of the operating side for new contracts where we have procurement in currencies other than dollars, we’re hedged, and that’s all kind of factored in, if you like, and covered in our our office. There’s there’s no exposure there. And, again, I think you asked one of the things about SPM inflation exchange rate.

We have a, you know, very resilient business model to all of the macroeconomic factors that that that impact that. On the the the debt side, I yeah. I think, yeah, we do have construction financing for for Jaguar. So I think, you know, it’s it’s not gonna be a linear decline to 2030. We’re still in a phase where we’ve got some some project debt.

So I would I would see actually the the reduction coming, yeah, more in the not necessarily this year, but in the in the years to come. But, again and so which is why I mentioned, you know, it’s there could be some ups or downs. But, again, overall, we are confident, that we are going to see a significant deleveraging through to the end of this, decade in line with the the slide that we, we showed.

Lucian Colthorne, Analyst, KPU Capital: Got it. If I could just ask two follow ups, one for each. So on the debt side, I mean, there was further it was about 1,350,000,000.00 for kind of Jaguar, Grand For h two, kind of what can you kind of guide in terms of relative size or size relative to that amount that we might expect? Is it kind of higher, lower, similar?

Douglas Wood, CFO, SBM Offshore: Yeah. There’s there’s no doubt on Grand Morgue. So there is doubt on on on Jaguar. And off the top of my head, I’m afraid I don’t know the exact profile of the of the drawdown, but probably about in line with what it was for the first half.

Lucian Colthorne, Analyst, KPU Capital: Okay. And then just on the FX side. So, I mean, if we if we look at kind of, obviously, the the cash profile you’ve given kind of I mean, let’s take $20.42 randomly. Yeah. Like, 400,000,000 on on the the the profile.

I mean, when you’re kind of thinking there’s our cash coming in 2042, Are you taking in measures when that’s signed, let’s say, a year or two ago to kind of lock in an an implied FX rate, or or are you kind of exposed

Douglas Wood, CFO, SBM Offshore: to No. So so so we’re gonna get that’s the money we’re gonna be paid in dollars in the in, you know, whatever 2040 or whichever year you you you you pick.

Lucian Colthorne, Analyst, KPU Capital: And Yeah.

Douglas Wood, CFO, SBM Offshore: Those, when we get into the charter phase, basically, we’re getting paid in dollars with sometimes, but it’s gonna be a small amount for for for local OpEx commensurate with what It goes up its inflation linked, etcetera. So, basically, that’s the money we’re going to get. Where there is exposure you need to manage is when you start building something because you have all sorts of contracts in different, currencies, And there, we do the hedging upfront.

Lucian Colthorne, Analyst, KPU Capital: It. Thank you.

Douglas Wood, CFO, SBM Offshore: Yes.

Conference Moderator: Thank you.

Conference Operator: Dear speakers, there are no further questions for today. This concludes today’s conference call. Thank you for participating. You may now all disconnect. Have a nice day.

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