Earnings call transcript: Subsea 7’s Q2 2025 results show steady growth

Subsea 7 reported its Q2 2025 earnings, revealing a 1% year-over-year increase in revenue to $1.8 billion and a notable 23% growth in adjusted EBITDA to $360 million. The company’s EBITDA margin expanded to over 20%, showcasing a 370 basis point improvement. With a market capitalization of $5.87 billion and trailing twelve-month EBITDA of $956.1 million, Subsea 7 demonstrates solid financial performance. The stock saw a modest increase, with a 0.13% rise in its share price, closing at $62.68. According to InvestingPro analysis, the stock appears undervalued based on its Fair Value calculations. The company maintains a strong backlog of nearly $12 billion, providing over 90% revenue visibility for the year.

Key Takeaways

• Subsea 7’s Q2 revenue rose by 1% to $1.8 billion.
• Adjusted EBITDA surged by 23% to $360 million.
• The company’s order intake reached $2.5 billion, with a book-to-bill ratio of 1.4x.
• Subsea 7’s backlog stands at nearly $12 billion, ensuring high revenue visibility for 2025.
• The stock price experienced a slight increase of 0.13%.

Company Performance

Subsea 7 demonstrated solid performance in Q2 2025, with incremental revenue growth and a significant boost in adjusted EBITDA. The company’s strong order intake of $2.5 billion and a backlog nearing $12 billion underscore its competitive position in the subsea and offshore wind sectors. The book-to-bill ratio of 1.4x for the quarter indicates robust demand for Subsea 7’s services. The company remains well-positioned in key markets, including Brazil, Norway, and the UK.

Financial Highlights

• Revenue: $1.8 billion, up 1% YoY
• Adjusted EBITDA: $360 million, up 23% YoY
• EBITDA Margin: Over 20%, 370 basis points expansion
• Net Income: $131 million
• Order Intake: $2.5 billion
• Backlog: Nearly $12 billion

Outlook & Guidance

Subsea 7 projects full-year 2025 revenue between $6.8 billion and $7.2 billion, with an adjusted EBITDA margin guidance of 18-20%. The company anticipates a steady flow of awards, particularly in Brazil, and continues to focus on long-cycle projects in cost-advantaged regions. The proposed merger with Saipem is expected to enhance Subsea 7’s global capabilities.

Executive Commentary

CEO John Evans expressed confidence in the company’s growth prospects, stating, "We have high conviction in the fundamental drivers for long-term growth of the energy industry." He also highlighted the strategic rationale behind the proposed merger with Saipem, noting, "Both Saipem and Subsea Seven have record backlogs in the Subsea business."

Risks and Challenges

• Potential delays in project awards due to geopolitical tensions.
• Fluctuations in oil prices impacting subsea project economics.
• Integration challenges from the proposed merger with Saipem.
• Competitive pressures in the offshore wind sector.
• Regulatory changes affecting project timelines and costs.

Subsea 7’s Q2 2025 earnings reflect a resilient performance amidst industry challenges. The company’s strategic initiatives and strong backlog position it well for future growth, although risks remain from market dynamics and geopolitical factors.

Full transcript - Subsea 7 SA (SUBC) Q2 2025:

Conference Operator: Good day, and thank you for standing by. Welcome to Subsea seven Q2 twenty twenty five Results Conference Call and Webcast. At this time, all participants are in a listen only mode. After the speakers’ presentation, there will be a question and answer session. To ask a question during the session, please press star one and 1 on your telephone.

You will then hear an automated message advising your hand is raised. Please note that today’s conference is being recorded. I would now like to hand the conference over to your speaker, Catherine Tongs. Please go ahead.

Catherine Tongs, Unspecified, Subsea Seven: Welcome, everyone, and thank you for joining us. The results press release is available to download on our website along with the slides that we’ll use during today’s call. Please note that some of the information discussed on the call today will include forward looking statements that reflect our current views. These statements involve risks and uncertainties that may cause actual results or trends to differ materially from our forecast. For more information, please refer to the risk factors discussed in Subsea seven’s annual report or today’s quarterly press release.

The question and answer session today may include discussion of our proposed merger with SiPEM. Security laws in The US restrict the broadcast and dissemination of such content into The US. Please refer to the disclaimer that will be displayed during the q and a session. I’ll now turn the call over to John Evans, CEO.

John Evans, CEO, Subsea Seven: Thank you, and good morning, everyone. With me today are Mark Foley, our CFO Nathi Lewis, General Counsel and Stuart Fitzgerald, CEO of Seaway. This is the first time we’ve had the opportunity to speak with the market following entering into the definitive merger agreement with Saipem. I expect there’ll be questions on the transactions, which we will take following our prepared remarks. I’ve invited Natalie Lewis, our general counsel, to today’s call.

Natalie, Mark, and I have been involved since the very start of the negotiations with Saipem and will assist me in answering any questions you have. I will start with a summary of the quarter before passing over to Mark for more details of the financial results. Turning to Slide three. Subsea seven delivered second quarter adjusted EBITDA of $360,000,000 representing 23% growth year on year and a margin of over 20%. We recorded strong margin expansion in both subsea and conventional and renewables, and this as well as high visibility on the remainder of the year supports the reiteration of our guidance for 2025.

Order intake was high in the quarter at $2,500,000,000 resulting in a book to bill of 1.4x for the quarter and 1x for the half year. Slide four shows the backlogs of both subsea and conventional and renewables, which continue to increase in quality as older vintage contracts are replaced with new. We have a combined backlog for execution in the remainder of 2025 of $3,600,000,000 giving us over 90% visibility on our full year revenue. And now I’ll pass over to Mark to run through the financial results.

Mark Foley, CFO, Subsea Seven: Thank you, John, and good morning, everyone. I’ll start with a look at group and business unit performance in the second quarter before turning to the cash flow and financial guidance for 2025. Slide five summarizes the group’s results. In the second quarter, revenue was $1,800,000,000 up 1% compared to the same quarter last year, driven by sustained high activity levels. Adjusted EBITDA of $360,000,000 was up 23% compared to the prior year, and their margin expanded by three seventy basis points to over 20%.

After depreciation and amortization of $175,000,000 other gains and losses of $32,000,000 driven by noncash foreign exchange gains and embedded derivatives, net finance costs of $16,000,000 and taxation of $71,000,000 Net income was $131,000,000 I’ll discuss the business unit performance in the next few slides. Slide six presents the key metrics for subsea and convention. Revenue in the second quarter was $1,400,000,000 broadly flat year on year, as high activity levels continues in Brazil, The U. S, Turkey and Norway. Adjusted EBITDA was $3.00 $1,000,000 equating to a margin of 21%, an increase of 400 basis points from the prior year.

The quarter benefited from strong execution performance and high vessel utilization as well as the continued mix shift towards projects with an improved balance of risk and reward. The results of subsea and conventional include a $9,000,000 net income contribution from OneSubsea, in line with our expectations. Net operating income was $165,000,000 a 30% increase compared to the prior year period. Selected renewables performance metrics are shown in Slide seven. Revenue in the second quarter was $3.00 $7,000,000 up nine percent year on year, reflecting high levels of activity at Dogger Bank C and East Anglia three.

Adjusted EBITDA was $53,000,000 equating to a margin of 17%, up from 14% in Q2 twenty twenty four. Net operating income was $20,000,000 a significant improvement from the $8,000,000 reported in the same quarter last year. Slide eight shows the cash bridge for the second quarter. Net cash generated from operating activities was $339,000,000 which included a $59,000,000 improvement in working capital. Capital expenditure was $93,000,000 including final payment for monoclave installation equipment for Seaway Ventas.

Net cash used in financing activities was $3.00 $6,000,000 which included lease payments of $77,000,000 and a payment of $184,000,000 in respect of the first tranche of our 2025 dividend, which was paid in May. At the end of the quarter, cash and cash equivalents decreased by $46,000,000 to $413,000,000 Net debt was $695,000,000 including lease liabilities of $448,000,000 equating to a net debt to last twelve months adjusted EBITDA of point six times. The group had liquidity of $1,200,000,000 at quarter end, which included approximately $760,000,000 of committed and utilized borrowing facilities. To conclude the financials, we come to Slide nine. We continue to expect revenue between $6,800,000,000 and $7,200,000,000 in the full year 2025.

The strong results in the first half of the year, combined with high visibility and confidence in our execution performance, we reiterate our guidance for adjusted EBITDA margin between 1820%. Guidance on other income statement variables as well as capital expenditure remains unchanged. I will now pass you back to John.

John Evans, CEO, Subsea Seven: Thank you, Mark. On the next two slides, we take a look at our activities in Norway. Slide 10 shows a sample of projects we have underway during 2025. Subsea seven has been involved with Ormen Langer since the original development in the early two thousands. For phase three, together with one Subsea, we delivered front end engineering and an integrated EPCI that includes Subsea FlowMAN system as well as two multiphase compression system.

The third phase aims to recover an additional 30 to 50,000,000,000 cubic meters of gas for export to European markets and as an illustration of the SIA’s capability in unlocking reserves and maximizing the value of existing infrastructure through brownfield developments. Now IntraSil is a flagship development in Norway targeting 450,000,000 barrels of recoverable oil, which will create a new hub in the region. Our scope is on track, and we will be utilizing the Seven Vega, Seven Oceans, and Seven Africa to install a range of pipelines alongside two large bundles. Finally, we have the Northern Lights project. Engineering is underway for phase two with offshore activities scheduled for the next year.

The project aims to increase the c o two storage capacity from 1.5 to at least 5,000,000 tons per year, marking a major step up in this large scale cross border project that will play a crucial role in decarbonizing hard to abate industries in Europe. Our second slide on Norway shows a sample of the new awards that will sustain Subsea seven’s activities, including a number of important brownfield projects. East three will tie back to the new Idrisil hub, unlocking oil located beneath gas structures that were produced in the nineteen nineties. As with Idrisil, the project will use our cost efficient proprietary pipeline bundle design, which we fabricated at our base in Wickenskopf. We expect to be offshore in three campaigns in ’25, ’26, and ’27.

Now France Orr involves the development of four fields that will be tied back to the existing Trollsea platform, again unlocking reserves and extending the life of existing infrastructure. Subsea seven was involved with a FEED study in close collaboration with the clients to bring the project to FID. The resulting EPCI award covers subsea umbilicals, flow lines, and risers that are due for installation in ’26, ’27, and ’28. Finally, we have ConocoPhillips’ previously produced fields or Subsea seven is involved in the feed work to revitalize existing infrastructure, this time at Ecopist. These fields were amongst the earliest producing oil fields in Norway, but were shut in with significant gas still in place.

New seismic and drilling technologies have enabled the reappraisal and redevelopment, which, if sanctioned, will use the seven Borealis. With significant reserves close to existing facilities, Norway stands to deliver incremental production with low carbon intensity and compelling project economics. Subsea seven is well placed in this market with highly collaborative client relationships that leverage our early engagement expertise and innovative development solutions. I now want to review our prospects on Slide twelve and thirteen. In Subsea, tendering activities remain high across our key regions.

In Brazil, the number of prospects has increased with the addition of Mero Way two and Bugios Way two, which are both designed to maximize production of existing FPSOs. We’re also pleased to recently be awarded an integrated FEED study for Bacalab two, extending our relationship with Equinor in the region. Overall, we expect a steady flow of awards to the industry this year and next from Brazil. Elsewhere, bidding for Saqqa Ria three in Turkey is advancing well, and we expect the contract to be awarded to the industry in the coming months. In The Middle East, we continue to bid on a selective basis for scopes that match our asset capabilities.

Whilst in Africa, there are several major projects on the tendering horizon. In Norway, North America and Australia, we have a number of smaller prospects that bring balance and diversification to our bidding pipeline. Overall, our focus on long cycle projects in cost advantage regions for the oil sector as well as on strategic gas developments adds resilience to our subsea strategy and gives us confidence in the outlook. On the next slide, we’ve replaced our usual wind map with an overview of the projects that may participate in The UK’s allocation REN7. There were some delays to AR7 as the government debated zonal pricing and preconsented projects as well as consulting with the industry on reforms to the contract for difference scheme.

It is now moving forward after recent announcements that nonconsented projects can participate and that the CFD duration will extend from fifteen to twenty years. A maximum strike price of £113 per megawatt hour in the money of 2024 has also been announced. Linking us back to previous rounds of money in 02/2012, AR seven raised to £81, whilst the maximum strike price for AR six is £73, and AR five is £44. The auction process is due to commence in August with the results expected to be confirmed early next year. As the largest single market in the global offshore wind sector outside China and with a number of other markets showing slower than anticipated growth, the timing of The UK process will be key to deliver the medium term momentum in the industry.

Subsea 7, through Seaway 7, is tendering multiple scopes and working closely with a number of our key clients to optimize their AR7 developments, whilst remaining selective in the contracts we pursue to safeguard our future profitability. To conclude, we turn to our final slide on Page 14. Subsea seven finished the 2025 with a backlog of firm orders valued at nearly $12,000,000,000 This gives us over 90% visibility on revenue in the full year 2025 and supports our reiteration of our full year guidance, implying EBITDA growth of over 20%. Looking further ahead, we have high conviction in the fundamental drivers for long term growth of the energy industry as a whole, and we are confident that Subsea seven is well placed in sectors with favorable dynamics. On the July 23, we announced the signing of a definitive agreement to merge with SiPen.

We will be engaging with shareholders in the coming months and look forward to discussing the benefits of this transaction with you ahead of an EGM on the September 25. And with that, we’ll be happy to take your questions.

Conference Operator: Thank you. As a reminder to ask a question, please press 11 on your telephone and wait for your name to be announced. You. We are now going to proceed with our first question. And the first question comes from the line of Sebastian Erskine from Rothschild and Co.

Redburn. Please ask your question.

Sebastian Erskine, Analyst, Rothschild and Co/Redburn: Yes. Hi, good morning, John, Mark and team. Bloody congrats on the announcement of the definitive merger agreement with Saipem and the performance today. Most importantly, you can now enjoy your summer. I guess I’ll start on the merger, if I can.

We’ve seen the addition of roughly 105,000,000 extraordinary dividend connected with a permitted divestment. Can you shed any light on this? And is that related to your fleet? And then kind of secondly, there’s been some concern in the market around the potential liabilities associated with Saipem’s legacy backlog. How were you able to get comfortable during your due diligence, the provisioning on the on some of the legacy projects was sufficient?

John Evans, CEO, Subsea Seven: Yeah. Thanks, Sebastian. Let’s take the second question first. So we went into complimentary GD process at the February, and we had a good look at all the projects in the site and portfolio. The offshore construction division, which we’re very familiar with, has good performance, and we’re very comfortable with everything that’s in that portfolio.

We had a good look at core sell through Stewart’s team in CUA seven. We have good understanding of core cell and their plans to complete that project. The one area that we did spend quite some time on is Thai oil, which has been one of the topics that’s been in in focus publicly. And we benefited from meetings with site and senior management with a project team. We also brought in some independent consultants to work our way through that project.

We were also then, benefiting from a range of, reasonable outcomes that they showed us dependent on different scenarios that we’ll put forward, and we also understood the provisioning that’s already taken place. Long story short, when we completed the due diligence, we firmly believe that this is a very good transaction for Subsea seven shareholders, the combination of the preclosed dividend and the future growth, that the combined business will have. We certainly do believe, that this is a very good transaction for us to move on. I’ll ask Mark to talk about the hundred and five minute.

Mark Foley, CFO, Subsea Seven: Yeah. Sure. Sebastian, as you would expect, both Saipem and our sales are constantly reevaluating our portfolio, and when we have to, you know, or potential transactions on either transactions. One is moving ahead on our side, and we haven’t entered into an SPA yet. And as such, I think it would be remiss of me to provide any details.

However, we will have noted in our financial statements that we have created disposal groups for the assets that we expect to be disposed. And as a result, in the MOU and the merger agreement, the disposals of this part of the portfolio will lead to a 150,000,000 dividend to Subsea seven shareholders, and that will be the end of the close of this particular permissible transaction and the effective date of the merger. Today, some more color to your question.

Sebastian Erskine, Analyst, Rothschild and Co/Redburn: I appreciate it. Thanks very much. If I could just squeeze in one follow-up on your order outlook. I was intrigued to know that you seem to be involved in quite a lot of Middle Eastern tenders. I think you mentioned that, John.

It’s a region that’s historically not been a key focus given it’s kind of not served pure play. But obviously, there are kind of CRPOs you’ve been named in for Aramco and then also Bullhernin in Qatar. How big a factor is that region going to have in your order intake in the second half?

John Evans, CEO, Subsea Seven: We have a business in The Middle East that’s scaled correctly for Subsea seven. It uses a certain group of assets, which aren’t generally the ultra deepwater assets that we use elsewhere. And we are looking in the second half of this year to replenish some of the backlog that we burned off in the last year. So, again, we are very selective about which CRPOs and which packages we bid. As you know, we have a a good relationship with Larsen and Toubro to bring our combined strengths together on some of the larger projects.

So for us, it’s about maintaining a reasonable level of work, from Middle East group, which is complementary to our, subsea and ultra deepwater group.

Sebastian Erskine, Analyst, Rothschild and Co/Redburn: Many thanks, John and Mark. I’ll hand it back now. Thank you.

Conference Operator: We are now going to proceed with our next question. And the questions come from the line of Victoria McCullough from RBC. Please ask your question.

Victoria McCullough, Analyst, RBC: Hi, morning all. Thanks very much for your time. Maybe starting with the deal first. One of the benefits you highlighted in the initial presentation when the deal was announced was the geographic focus of the key enabler vessels. Can you give us just to try and understand the potential magnitude and the impact this could have, how much additional availability do you think key enablers might be able to achieve by keeping them in key geographies from the combination?

And then secondly, looking at the financials for the second half of the year, are your expectations in terms of margins that we see the usual seasonality through Q3 and Q4? And just if I can do a slight follow-up to the previous questions. Should we interpret that the 105,000,000 reflects a premium to book value received with the reflection of it not having been in the deal terms prior previously agreed? Thanks very much.

John Evans, CEO, Subsea Seven: The discussion on the enabling assets is just around the fact that the very large assets that both ourselves and Saipem have are global neighbors and have to serve the global portfolio. Today, as a standalone businesses, we move these assets around quite significantly, and they probably do between sixty and ninety days a year of transiting. The opportunity set that should the merger proceed would be to geographically place these assets and minimize the amount of transit in. So, again, with a portfolio of, say, six global neighbors between the two fleets, if you can get another thirty days out of each one, you could get another six months worth of capacity that we can provide to the industry for more project work through per year. So that’s one way of thinking about it, Tory.

It’s not a very scientific way of looking at it, but just to help you understand the opportunity set and just roughly the scale inputs on that. On the 105,000,000 in the second half financials, I’ll pass over to Mark.

Mark Foley, CFO, Subsea Seven: Yes. Tore, yes, we expect to experience normal seasonality in terms of margins this year. We had low margins in Q1, Northern Hemisphere’s winter, activity in the North Sea, in particular, and Norway as well as the renewables business. And again, we get some of that in Q4 too. So what we do see is we do expect is peak margins for the year in Q2 and Q3.

In terms of your question on the €105,000,000 dividend, yes, we believe there will be a premium to book value.

Victoria McCullough, Analyst, RBC: Thanks very much for the color. Really appreciate it.

Conference Operator: We are now going to proceed with our next question. And the next questions come from the line of Mick Pickup from Barclays. Please go ahead.

Mick Pickup, Analyst, Barclays: Good morning, everybody. Quick question, if I may, on Brazil. Obviously, several new projects turned up there. Can you just talk about Brazil’s contracting? There was talk about them trying to get another vessel in.

It’s clearly an area where the combined company could make use of this positioning of global enablers. So what type of flexibility in those contracts is available, for using the vessel? And it’s an area where I would have thought you could get some early submissions into the competition authorities. I’m wondering if any of that has been done.

John Evans, CEO, Subsea Seven: Thanks, Mick. Good question. I’ll let you come back from Brazil. I was in Brazil earlier this week. Petrobras, as you have seen in our map, continue to put newer projects into the portfolio.

There is what they call Mero phase two and Bujios phase two. And what those projects are around is the fact that there are empty slots on the rise of porches on each FPSO. So when we put a greenfield in, we put the initial field development in, and there are additional slots to allow other risers to come in. So there’ll be a package of work covering multiple FPSOs in the Merrill field, which is the equivalent of one brand new greenfield from a surf viewpoint, and similarly, they’ll do the same with Bujos. So Petrobras are looking, again, not just only at pure greenfields, but maximizing out their existing production in each of the fields that, that have been developed over the last five years.

So the clarity of Petrobras’ thinking is there. They are interested in, inquiring to the market, about the availability of a large, rigid pipe layer to work in a similar mode as a PLSV, the flex layers. And, again, that will be something that they will come to the market, I expect, in the next year. And lastly, I think, Petrobras are also, interested, for certain, in making sure there’s stiff competition, in Brazil. We’ve seen, in the last three big submissions a lot of very, very tight competition, in our world.

So I expect us to continue to be in that world. The good news out that is Subsea seven are always just roughly about the right places, although sometimes we win, sometimes we lose the packages. So we expect to win our fair share of work, in Brazil. And maybe I’ll pass over to Natalie just to talk about the, antitrust process and just, how Brazil fits into that.

Natalie Lewis, General Counsel, Subsea Seven: We believe that this is a merger of two highly complementary businesses with limited overlap. We have been working diligently to prepare for filing with the relevant authorities, and this has reaffirmed our confidence that the deal will be approved. We’ve already initiated pre filing processes in certain jurisdictions, and I think that we remain with our current best estimate for closing in the 2026. But in the meantime, we will manage our respective business as business as usual until the proposed transaction closes.

John Evans, CEO, Subsea Seven: And I think just to add to that point, it is Brazil that we believe drives our critical path makes sense. So probably the question you can ask us next, what is the critical path to get to the second half? It will, probably be Brazil. Yes. Indeed.

Mick Pickup, Analyst, Barclays: Okay. Perfect. And can I just ask a a follow-up question on SAKARIA phase three? You mentioned empty risers. The riser joints for SAKURIA Phase three were awarded a week or so ago.

So where do we stand on that project going forward?

John Evans, CEO, Subsea Seven: As I said in my prepared remarks, we expect that to be awarded to the industry, sometime either late q three or early q four. So, yes, the long leads are being ordered, by our clients to make sure that the project schedules are maintained whilst they’re going through their main procurement process of FPSO, SDS, and SURF and Trundle.

Mick Pickup, Analyst, Barclays: Perfect, John. Thank you very much.

Conference Operator: Are now going to proceed with our next question. And the questions come from the line of Kevin Roger from Kepler Cheuvreux. I

Kevin Roger, Analyst, Kepler Cheuvreux: will ask two, if I may. The first one, if you can help me to understand a bit more the guidance that you confirmed today because in the merger and plan documents, we can find that basically for the payment of the dividend, you have an EBITDA target of $1,400,000,000 So on the mid range of your top line guidance, that makes a kind of 20% EBITDA margin. So just trying to understand a bit more the guidance that you confirm today with the 18%, 20% margin range compared to what we have in the merger documents, please. And the second one is maybe on the offshore wind. And so you provided a lot of details on The UK environment.

Just to be sure, those are there. Do you believe that it will fall in 2025 or in 2026 for you, please? Thanks.

John Evans, CEO, Subsea Seven: I will ask Mark to take the guidance and merger question, and Stuart will come in to answer your waiting question.

Mark Foley, CFO, Subsea Seven: Thanks, Kevin. In the merger document, this is a customary inclusion to regulate evidence for both parties. The $1,400,000,000 sits within the range that we reconfirmed today. That was revenue between 6.8 and $7,200,000,000 and adjusted EBITDA margin between 1820%. So at the upper end of the range, the 1.46 within the guidance that we shared with the at the recent market today.

But, again, it’s important to underscore that the mechanism in the merger agreement is for a different purpose, and that’s because they delay the dividends from both parties. And I’ll take

Stuart Fitzgerald, CEO of Seaway, Subsea Seven: the second one, Kevin, on timing of UK AR seven CFD. It’s at the turn of the year, so the timelines given by the authorities is awards of CFD at the very end of 2025. But in case of appeals, that then moves into January, February 2026. So it’ll be at the turn of the year. Our working assumption is early twenty twenty six rather than 2025.

Kevin Roger, Analyst, Kepler Cheuvreux: Okay. Perfect. Thanks.

Conference Operator: We are now going to proceed with our next question. And the questions come from the line of Richard Dawson from Berenberg. Please ask your question.

Catherine Tongs, Unspecified, Subsea Seven0: Hi, good morning and thank you for taking my questions. Just a follow-up on the margin question for H2. Given you’ve already done 18% or over 18% in the first half given the seasonality you tend to see, what’s the risk of maybe landing towards the lower half of the margin guidance for the full year? And then secondly, on the merger, it’s been several months now since the merger was announced in February. So just wanted to get a sense whether there’s been any change in feedback from your key customers and what their comments are now?

Thank you.

John Evans, CEO, Subsea Seven: Yes. Thank you, Richard. On the merger, we’ve engaged with all our clients, and we’ve engaged with, most of our shareholders as well, in the last few months. And generally, the discussions are positive. Our clients understand what we are trying to achieve, but they fully understand that it has to go through a regulatory process with this new process between the antitrust in each of the countries that we’re in.

So for us, we now need to work our way through. There’s nothing discussed earlier. That’s that’ll take us to the middle half of next year. But direction of travel and discussions with clients are positive. The main feedback from all our clients is both Saipem and Subsea seven have record backlogs in the Subsea business, and they wanna make sure that we concentrate on anything and deliver their projects for them, which again is exactly what we are doing here to make sure that we continue to perform, in the next, period of time.

Mark, maybe just take on the question because I think it’s a variation on the same theme with

Mark Foley, CFO, Subsea Seven: the previous project. Indeed. So, Richard, we’ve got about 18% EBITDA margin in the first half of the year. The the guidance for the full year is between 1820%. And of course, if we get any good news to share with the market, then we will share that with you in q three in terms of any re ratings upwards.

But as it stands today, the guidance remains 18% to 20%.

Catherine Tongs, Unspecified, Subsea Seven0: All right. Fair enough. Thank you very much.

Conference Operator: We are now going to proceed with our next question. And the questions come from the line of Guillaume Delavy from Bernstein. Yes.

Catherine Tongs, Unspecified, Subsea Seven1: John, good afternoon Mark and Catherine. Maybe a very naive and candid question, if I may. So the DMA has been published, I would say, just a few weeks after the initial date. So maybe can you provide us maybe one or reason why things have been taken slightly more? And my naive intended question is during all the discussion you had recite them, how would you qualitatively describe those conversations?

Were they lively, professional, tough, friendly. Could you maybe provide a little bit of, qualitative feeling, about that? Thank you.

John Evans, CEO, Subsea Seven: Well, the timing of the merger agreement, definitive, we had targeted around mid July in the middle of the year, so I think we’re within a few days of where we targeted. So I don’t think there was any delays in getting there. It’s quite a task to get the whole paperwork together, but there was nothing that impeded us from getting there. The discussion started as we’ve shared with everybody late October from a position of great respect, of two companies that, that sometimes work with each other in the wind sector, sometimes work with each other in joint ventures in the offshore, construction business, but are also two, very good global contractors and that has some complementary strengths and complementary capabilities. So the discussions have always been, respectful and with a view that says that, you know, there is a logic and there’s a merit to put these two businesses together, and if we can find the right way of doing it, our margin caps were convergent towards fifty fifty.

And, you know, we we’ve always known that the Saipem offshore construction business has always been a very, very strong business, and they’ve also understood that such as such. It’s a very, very strong business as well. So the discussions have always been where we needed it to be, and, we are where we are today. And, we we’ll push ahead. And, you know, the next step was signing the merger agreement that was done last week.

Natalie’s team will work, diligently with a number of different geographies around the globe on the antitrust that we need to do, And we will start preparing integration planning in September with two teams from both sides. And as such, he said, pretty well motivated and looking forward to that task. So very professional and looking forward to the opportunity should we be able to pass through the various authorities and new processes we need to do.

Catherine Tongs, Unspecified, Subsea Seven1: Okay. Hi, Tanita. Thank you very much, John.

Conference Operator: We are now going to proceed with our next question. And the next questions come from the line of Erik Aspenfossa from SB1 Markets. I

Catherine Tongs, Unspecified, Subsea Seven2: have a question for you first, John. There’s so many oil service sectors now, struggling, rig, seismic supply, oil service majors, are declining margins and revenue. Even the subsea support vessels are seeing less activity. So there seems to be, like, some some more cautious spending or projects being delayed by the by the oil companies. So I’m wondering, are you seeing anything of of that, or why are you seemingly untouched by by this this this weakness?

Are you is it just because you’re late cycle, or or or is there something more to it?

John Evans, CEO, Subsea Seven: Thanks, Eric. You know, we certainly are late cycle, and we need to remember that we’re late cycle. So, for us, we have multiple years of good quality earnings ahead of us here and good quality projects to deliver to our clients. As we try to show in the, the map of opportunities, there’s actually more opportunities on map at the end of q two than there was at the end of q one. I discussed earlier in one of the earlier questions about Brazil.

So there are two additional major projects added on in Brazil. So for us, it’s, we can only talk about the market that we’re in, and the market that we serve. You know, some of the challenges, other people have discussed are about onshore US, services, about Mexico, and about Saudi. As we discussed earlier, we have a relatively small business in Saudi. We have some projects in in Mexico, but ultra deepwater projects, which, again, are quite specialist, and we have no onshore exposure.

So we can only talk about the markets we’re in. Stuart has talked about the wind sector, which as we discussed, has its challenges in certain geographies. But equally, the market that we lead in, The UK, looks like it’s getting the stars to align to have an opportunity set that comes towards the end of this year. Now, again, we’ll see how all that plays out, but so that’s the reason why we have our level of optimism and our view about the prospects for Subsea seven in the future. So I can’t really give you, why others are struggling in their particular area or concern.

We’re in a place for these data.

Catherine Tongs, Unspecified, Subsea Seven2: I appreciate that color, John. And one just one more question to you, Mark, on the lease costs. It came up quite a bit this quarter. I guess that’s related to the chart of Skanvasy. What should we expect, going forward?

Is that Q2 level, something that we can extrapolate on? Or is it going to increase or come down a little bit?

Mark Foley, CFO, Subsea Seven: No. You’re you’re right. There there was a step up between q one and q two, Eric. I think we have signaled way in advance the joining the fleet. Just to set context, we have 11 leased vessels within the fleet at the moment, nine servicing subsea and conventional and two servicing renewables.

But to specifically answer your question, use q two as a proxy for what to expect on lease cash payments in Q3 and Q4.

Catherine Tongs, Unspecified, Subsea Seven2: We

Conference Operator: are now going to proceed with our next question. And the next questions come from the line of Mark Wilson from Jefferies. Please ask your question.

Catherine Tongs, Unspecified, Subsea Seven3: Thank you. Yes. Good morning. First point is on the offshore wind slide. Just remind us how we should understand looking at that.

You show a list of projects that may well be entered into the a r seven round. Could you tell us which one of those you’re involved with, or would the tenders for such work come after a client moves forward? That’s the first point. And second, regarding the the AGM vote that you got coming up in September, could you just remind us what the the approval levels you’re looking for on that to move forward? And also, last point, if there is any break fee on or break clause on this, definitive merger agreement.

Those are my points. Thank you very much.

John Evans, CEO, Subsea Seven: Okay. Just on the win side then, I’ll pass over to Stuart to give an update on that, and then Natalie can cover the, EGM Road, and Martha will cover the brake fleet.

Stuart Fitzgerald, CEO of Seaway, Subsea Seven: Yep. I can take the first one there, Mark. So this list is the, list of projects that we see qualifying for AR seven under, the rules that have been set. It is also the list where we see in our interactions with the clients that, they’re actively not committed yet to submit, but they’re actively considering and preparing for, submissions. The tendering work and the engagement that we have with these clients is ongoing now, as, obviously, they need to set their cost levels, as part of their business cases, to prepare their submissions.

So, actively engaged with probably the majority of projects on that list and that engagement happening now.

John Evans, CEO, Subsea Seven: So maybe on to the EGM question, Natalie?

Natalie Lewis, General Counsel, Subsea Seven: Just on the EGM question, the merger will be submitted for approval by the shareholders of respectively CYPEN Subsea seven on the at the AGM on the September 25. For Subsea seven, the approval requires a quorum of at least half of the issued share capsule of the company represented and a voting majority of two thirds of the votes validly cast.

Mark Foley, CFO, Subsea Seven: And then, Mark? Yeah. The common merger plan, Mark, contains the conditions precedent to the transaction. Those are clearly stated, but I just would emphasize that those CTs can be waived by the parties in order to allow the effectiveness of the merger to complete. So hopefully, that provides a response to your question.

John Evans, CEO, Subsea Seven: Sorry, Mark. So the the does that

Stuart Fitzgerald, CEO of Seaway, Subsea Seven: is there a break fee

Catherine Tongs, Unspecified, Subsea Seven3: or or not? I’m sorry.

Mark Foley, CFO, Subsea Seven: Yeah. I’m not going into to details of the break fees. Instead, I’ll focus on this in there. The conditions to send them to the transaction. Those are clearly stated and can be waived by the parties to allow the transaction to continue.

John Evans, CEO, Subsea Seven: Got it. Okay.

Catherine Tongs, Unspecified, Subsea Seven3: Thank you very much. I’ll hand it over.

Conference Operator: We are now going to proceed with our next question. And the questions come from the line of Guillaume Levy from Morgan Stanley. I

Catherine Tongs, Unspecified, Subsea Seven4: have a follow-up on Brazil. We saw recently a headline on the Atapuchu bid process. And I I I remember that in the past, commented that particularly for Buzios ten, what made you less competitive were instructions from from, from Petrobras in terms of overlap with existing work that you have there. So so I was wondering if, for the Atapucu process, that also that effect also played a role, with in in terms of, yeah, you, perhaps not being able to place the lowest bid just because, you have other other types of costs or other types of challenges there. And then, the second one, just going back to the geo, how would you classify overall the state of the offshore fleets of the two companies?

Do you think that both fleets were equivalent in terms of maintenance? Or is any of the two players expected to do some specific catch up work in terms of CapEx into your conclusion or something that you’re perhaps lining up to be done just after completion?

John Evans, CEO, Subsea Seven: Yeah. Thanks. On the due diligence we did on the fleet, both of us did, due diligence on each other’s fleets. Both are well maintained. Both are under regular planned maintenance regimes, and both of them need to go through saturated dry dockings and such like.

So we don’t expect any fundamental changes when we bring the two fleets together. They’ll continue on their respective cycles of maintenance and dockings. I’m not gonna go into any specific bids, because we’re actually bidding it at present, so that is not concluded. But, my main point about Brazil is there’s a portfolio of projects there, and we expect to win our share, of the work. I have to keep reminding everybody that, you know, we don’t have the capability to do everything that’s out there, and that’s why Petrobras has created a very strong competitive tension, in the system.

So some projects suit some companies better than others. It’s also not just about instructions on the bid. This was a clean bid in terms of instructions. It was also just about availability of assets and timing in which assets are available coming off one job to the next also has a part to play for each of the bidders that puts their prices down. So for us, we, reaffirm the fact that we truly believe that we can continue to serve Petrobras into the future with its portfolio of projects and that we’ll get our share of that work.

Catherine Tongs, Unspecified, Subsea Seven4: We

Conference Operator: have no further questions at this time. I will now hand back to you for closing remarks.

John Evans, CEO, Subsea Seven: Well, thank you very much for joining us. I know it’s an exceptionally busy day today with a lot of other people reporting. But thank you for your continued support of Subsea seven, and we look forward to talking to you again at the Q3 results later on this year. Thank you very much. Bye.

Conference Operator: This concludes today’s conference call. Thank you all for participating. You may now disconnect your lines. Thank you.

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