Ladies and gentlemen, thank you for holding and welcome to the SBM Offshore Half Year 2024 Earnings. At this moment, all participants are in listen-only mode. After the presentation, there'll be an opportunity to ask questions. Just to remind you, this conference is being recorded. I'd like to hand it over to our CEO, Mr. Øivind Tangen. Please go ahead.
Welcome everybody to the SBM Offshore Half Year 2024 earnings call, and thank you for joining us. I'm Øivind Tangen, CEO of SBM Offshore, and I'm joined today by Douglas Wood, our CFO. I will start with our main achievements for the half year, after which Douglas will go through our financials before I conclude. As always, we welcome your questions after the prepared section of this call. Thanks to our great teams, we have delivered an excellent performance over the first half. Under our ocean infrastructure platform, which covers our existing business under turnkey and lease and operate, we delivered a strong set of financial results, with EBITDA increasing versus the same period last year by almost 40% to $620 million. As a result, we are increasing our EBITDA guidance to around $1.3 billion.
Thanks to the award of Jaguar, our backlog reached another record level at $33.7 billion, which translates into $9.6 billion of net cash, or around EUR 50 per share. Given these results and the very high level of completion of the three projects due to start up next year, we are launching a new share buyback program of EUR 65 million, on top of the previously announced EUR 65 million share buyback program. FPSO Almirante Tamandaré sailed away as scheduled on August first, and will benefit from our Fast4Ward program learnings as it transitions from construction to operation. The next generation of projects, like our Jaguar FPSO, are already seeing the Fast4Ward benefits from inception of a full life cycle of earnings learnings. Excellence in performance is created through standardization and focus.
We have taken steps to rationalize our business in Angola, to focus on lease and operate, acquiring from Sonangol their share in the three FPSOs we operate, and selling them our share in the Paenal Yard . As always, whether we execute or operate, safety is our top priority. The total recordable injury frequency rate stands at 0.09, below the yearly target, and has been consistently on this level through several years, a clear demonstration of our strong commitment to safety. Under the transition platform, where we secured, where we secure new opportunities and develop new ocean infrastructure solutions, we secured the FPSO Jaguar contract award, the fifth FPSO awarded by ExxonMobil to SBM Offshore in Guyana. This award follows the sale and operate model, bringing accelerated cash. We expect to see 50% of future awards use this model.
Then, this morning, we have announced the award of a 20-year lease and operate contract for the FSO, supporting Woodside's Trion development project in Mexico, positioning the company in a new strategic region and diversifying our client portfolio. Our eighth Fast4Ward MPF hull has been reserved by TotalEnergies for the Block 58 development in Suriname, and in line with our strategy to have one hull built in anticipation, we proceeded to order the ninth hull to maintain our unique market positioning. Together with further hull options, this will allow us to de-risk future project schedules in a tight supply chain market. And finally, we are applying our expertise in ocean infrastructure solutions to position the company for a long term in a number of alternative energy markets. In July, Ekwil, our pure play floating offshore wind venture with Technip Energies, was launched.
Later in the month, we signed an MOU with Ocean Power to deliver standardized low-emission floating power generation concept using carbon capture, injection, and storage. The fundamentals driving the strong demand we see for FPSOs have not changed. Given the pace of development of sustainable and affordable alternatives and the supply gap created by the decline rate of existing oil fields, the new field developments are required to meet demand. FPSOs is the solution of choice to meet this demand, given deepwater projects are carbon and cost efficient. FPSO, SBM Offshore is a leader in this market. Large-scale development, deepwater developments have low break-even prices, ranging between $20-$35 per barrel, with a greenhouse gas emission intensity around 40% lower than oil and gas industry average.
Through our Fast4Ward program, we are helping our clients de-risk their project and enhance their cost competitiveness. Under our EmissionZERO program, we have technologies ready for deployment, which reduce emission intensity even further. In this context, the market outlook for FPSOs, deepwater FPSOs is strong and our tendering pipeline remains robust. Within the next 3 years, we see 40 potential FPSO awards, 40% of which are within the company's targeted market of large and complex FPSOs. With a capacity to have 6 FPSOs at different stages of completion concurrently, we remain disciplined in selected high quality projects to ensure we deliver value to our stakeholders. We have a unique offering over the full FPSO life cycle.
Our standardized product offering enables us to accelerate and de-risk field development, and rapidly transition from execution to operations, where, with almost 400 years cumulative operating experience, we offer high levels of reliability and uptime. Then, at the end of the life cycle, we use responsible recycling options to the highest international standards. The commercial models through which we deliver these unique value propositions are evolving, and we now expect to see more sale and operate awards like Jaguar, with an accelerated cash flow profile and no or very short-term financing. Douglas will explain the differences of these models a bit more in detail in a moment. Turning to project execution and operations, we have seen good performance in the first half. The three FPSOs under construction have achieved a very high level of completion, well above the 75% mark.
These are the last units which have lived through the pandemic and a rapid increase in global inflation. As a result of this high level of completion, we now have a de-risked project portfolio, and our new projects, like the Jaguar, is benefiting from the learnings from these projects from the start through our Fast4Ward philosophy. Another key area of focus is emissions. Our team's effort and focus on flawless commissioning drives down emissions and is setting new benchmarks in the industry, with an average duration for readiness for gas injection below the 60-day target. In line with company's 2030 intermediate targets, flaring intensity is reducing from 28 kg of CO2 equivalents per barrel in 2016, to 15 in the first half of the year, which is a 47% decrease in less than 8 years.
Finally, the new build units benefiting from the Fast4Ward programs have a low emission intensity, ranging between 8 and 12 kg of CO2 equivalents per barrel. As already mentioned, we maintained our strong safety track record, and the uptime for the first half of 2024 stood at 96.4%. Slightly lower than usual, as 2 units experienced shutdowns for part of the period. One has restarted and is back to normal operating levels, and for the second, we are looking closely with all parties involved to resume operations. Now over to Douglas for more details on the financial results.
Thank you, Øyvind, and good morning, everybody. So, as you've heard, we're on track to beat our initial EBITDA guidance for 2024. The $100 million upgrade increases this to around $1.3 billion, and there is material potential upside above this, where, as you may have seen from the press release, ExxonMobil Guyana has indicated that it's contemplating the exercise of its contractual purchase options for FPSOs Prosperity and Destiny during the second half. Now, if we look at the key financial metrics, the award of Jaguar has driven the order book higher to $33.7 billion at the first half, and that's despite the consumption of more than $1 billion revenue for the period. We look at the backlog on a net cash basis, the Jaguar award has helped increase this to $9.6 billion.
That's the equivalent of nearly EUR 50 per share. Note that we're now including turnkey in the net cash backlog. I will explain the details in a moment. Turning to the P&L metrics, revenue was over $1.8 billion, compared with around $1.5 billion in the year ago period. In turnkey, revenue increased to $662 million, compared with $558 million for the first half last year. In addition to the impact of Jaguar, we saw an increase in brownfield fleet support activity, and this was partially offset by the fact that Prosperity and Sepetiba moved into operations, plus lower revenue from the more mature projects in the portfolio as these approach completion.
The startup of Prosperity and Sepetiba, along with an increase in reimbursable scope, drove an increase in revenue of $245 million in lease and operate to $1.17 billion. This impact was partially offset by the fact that Liza Unity moved to an operating contract following the purchase last year. Turning to EBITDA, this increased to $620 million versus $457 million in the year ago period. Turnkey EBITDA increased by $25 million to -$12 million at the end of the first half, driven by the same factors as revenue, plus the absence of floating offshore wind pilot project investment booked last year.
So at the first half, phasing effects linked to the evolution of the construction portfolio were visible, but as ever, to reiterate that through the cycle, we very much expect turnkey to generate positive cash flow and margin, particularly in the context of more sale and operate awards. So we see turnkey turning positive in the second half, and that's before the potential vessel purchases in Guyana. The lease and operate EBITDA was $679 million, around $133 million higher than half the first half last year. Again, the increase was driven by the same factors as the revenue, plus an impact from the business rationalization in Angola. Then to round off the story on EBITDA, other EBITDA was -$47 million, a $5 million improvement on the year-ago period.
On net debt, this increased by $455 million, reflecting drawdown on debt to support the current construction portfolio. Then last, but very much not least, based on the performance so far this year and the outlook for liquidity and cash flow, we're launching today an incremental buyback of EUR 65 million, which is expected to complete by the end of April next year. Now, we published this slide before, but we've included it again today to emphasize the financial impact of the fact that the new opportunities we expect to win will use a different, mix of different models.
As Øivind already highlighted, key to note that there are different ways of structuring the delivery of our same unique lifecycle model, which is de-risk on time project delivery, rapid start-up, exceptional high level of availability and reliability in operations, and then safe and sustainable recycling. So in this slide, we've set out the net cash profiles of the three models that we have in the portfolio: sale and operate, BOT, and lease and operate. As we've been highlighting this year, we're seeing an increase in appetite among clients for the sale and operate model, as in the case of Jaguar, where effectively the client provides all or a major part of the funding, paying for and purchasing the vessel in the EPC phase with an O&M contract following after.
This results in acceleration of cash and margin, booked in turnkey under directional, which follows cash flow with a smaller but still meaningful cash flow in the operations phase. BOT, the model we've used for the second, third and fourth Guyana units, also results in a relatively accelerated cash flow. However, the key difference with sale and operate is, while the material cash comes pretty early, we need to wait for this until the operating period, with the big impact coming from the purchase post-start up, as we saw with Unity. And recently, this has been driving some of the variability and margin under directional and turnkey. Finally, lease and operate, which I think you are all pretty familiar with. The majority of net cash for SBM comes towards the end of the operating period following repayment of the project debt.
Our current view is that at least 50% of new opportunities will follow the sale and operate model. This would result in accelerated cash flow during the turnkey phase and therefore improve the overall turnkey P&L under directional going forward. But as evidenced by today's Trion award, there is still demand for lease and operate projects, and we remain confident that we're able to access a broad range of sources of financing to continue to support this model. Finally, if we do see 50% pure sale and operate, over time, our balance sheet will deleverage, and this would obviously also be helped by the potential early purchase of vessels in Guyana.
Now, here you see a real-life example of the impact of the sale and operate model on our net cash backlog, where the award of the FPSO Jaguar has been the main driver of the increase from $9.3 billion- $9.6 billion, so nearly EUR 50 per share. And you can see this impact reflected in the earlier years. So we're therefore now including the net cash component of the turnkey backlog. So let me explain how we've done this. First, we include in-hand turnkey projects on a gross margin basis. Second, for the period where we have vessels under construction, currently to end 2027, we include the turnkey overhead and taxes, net of the margin we typically generate from our services business. And this is the net circa $50 million per annum investment we have previously guided for.
It's important to note that this investment in turnkey overheads is also supporting the acquisition of new awards, for which we don't count ourselves rich in this backlog, but there is obviously potential for material upside to be generated here. So now, in the backlog, we have the full picture of turnkey, the BOT purchases, and lease and operate, including debt repayment, overheads and tax in these segments applicable to the backlog. Now, it's hard to forecast the year-by-year materialization of the turnkey backlog, so for simplicity, we are giving aggregate guidance for this for the duration of the existing construction portfolio, as you can see on the slide. To note that Triumph, which is a very meaningful project but much smaller than the latest FPSO projects, is not yet included, and we have not anticipated the potential early purchases of Prosperity and Destiny.
Now, we've seen some appreciation in the share price since the last update, but with the addition of new awards, as anticipated, the disconnect with the implied value, at least as we see it, persists. So the incremental backlog we announced today underscores this view, and as we've already guided, when it comes to our annual cash return, we expect to focus on stepping up the structural buyback component of this, where there is upside based on the existing backlog. And you can see this upside when we look at the net cash expected to be generated from the backlog up to the end of 2030, so the next six and a half years....
This is $4 billion, on top of which, thanks to the investment in turnkey overhead that is now included, we should be able to generate incremental net cash in the period, particularly if we secure more sale and operate awards. From this $4 billion, as we've been guiding, we need to cover the remaining net equity of the existing projects with around $400 million to go. Then we have 6.5 years of corporate overheads included here, and our existing cash return commitment gives a bit more than $1.3 billion for the period, to which if you add today's buyback, you get around $1.4 billion. We then have around $1.7 billion remaining for returns and to fund any future growth requirements, which, as we've previously communicated, we would expect to be lower than in recent years.
So there's therefore material upside for additional returns. And this is before further potential link to growth, where, again, more sale and operate awards should generate accelerated cash in the period. Timing-wise, as I just mentioned, we're still working through the remaining net equity investment, which consumes cash and liquidity in the initial part of the period, but the materialization of the potential purchases in Guyana and or the execution of project refinancings would improve this picture and create more opportunity in the shorter term. So we'll see how this picture develops for the remainder of the year and look forward to the next update at year-end. That's it from me. Now back to Øivind.
Thank you, Douglas. Very clear. So as an energy transition company, we are committed to providing the world with safe, sustainable, and affordable energy. With ocean infrastructure, we are dedicated to executing the growing backlog with excellence as new vessels join the fleet. And with transition, we are adapting to new business models and looking at enhancing the backlog through our Emission Zero program on the FPSO side, but also leveraging our overall expertise to profitably enter new ocean infrastructure markets. As we look at our key ambitions, although the average size of FPSOs has increased, we are maintaining our capacity to have up to six FPSO projects under construction concurrently, and we expect to have a near zero emission FPSO ready for the market in 2025.
Always with the safety of our people coming first, we remain focused on our emission reduction targets, and in the course of the next decade, we expect to see new ocean infrastructure solutions make a material impact in growing our backlog. We are drawing on more than 60 years of experience in delivering ocean infrastructure projects as we develop new solutions to contribute to the energy transition and beyond. While we expect FPSOs to drive our business for at least the rest of this decade, we are very focused on developing such solutions, which will drive our business for the decades to come. Here you see what we are currently focusing on in this space. We are market ready with a carbon capture module in partnership with Mitsubishi Heavy Industries for our near zero emission FPSO.
Then we are looking to leverage our experience in marinizing carbon capture solutions in partnership with Ocean Power to collaborate on a floating power generation hub with CO2 capture. This could power offshore assets or be used for balancing power systems on shore. We have delivered a commercial scale reference for our floating offshore wind technology, which we will now take further through the Ekwil JV. Then we are working to leverage our terminals experience to enter the ammonia and hydrogen markets. A few words to conclude: Through the Jaguar and now Trion contract awards, we are demonstrating our ability to materialize the forecast growth upside. This has led to an increase in the backlog to a record $33.7 billion level, $9.6 billion in net cash terms, or around EUR 50 per share.
The fact that we expect at least 50% of new awards to use the sale and operate model like Jaguar, should accelerate the cash flow from our backlog with a reduction in borrowing levels over time. The performance so far this year and outlook are the catalysts for the incremental step up in the share buyback program. But as you saw, there is certainly upside here, with some potential for cash acceleration options in the short term. Finally, our strong results during the first half have led us to increase the guidance for the year. Directional EBITDA increased to around $1.3 billion from around $1.2 billion. Directional revenue increased to above $3.8 billion from around $3.5 billion.
Obviously, if the purchase of Destiny and Prosperity occur in 2024, we will revise the guidance accordingly once the final details of the purchases are confirmed. Thank you for your attention. The floor is yours for questions.
Thank you very much, sir. Ladies and gentlemen, we'll start the question and answer session now. To be registered for a question and answer, sorry, to be registered for questions, please press star one on your telephone keypad. We'll pause just a moment to give everybody a chance to signal... Our first question today is coming from Mick Pickup, Barclays. Please go ahead.
Good, good morning, gents. Two questions, if I may. Firstly, Douglas, can we just be perfectly clear on your net cash flow chart? So I think historically, we've taken off the chart you gave, the corporate number, and then the turnkey SG&A and costing that. You're now saying that's included in that turnkey net cash. So all I need to take off the valuation of that chart now is that $75 million you're using in other EBITDA as a proxy. Is that correct?
Yes. Yes.
Okay. So I don't need to make an estimate for turnkey costs anymore. You've done that job for me as well. Thank you.
We have for the period of construction. So it's up to 27-
Yeah, but there's no backlog after that anyhow, is there?
Exactly. Yeah.
That, that's perfect. Thank you, Douglas. That's really clear. Now, second question. Can I just ask about Trion and an FSO? I think your message has been, we've got a limited skill set. We choose our opportunities carefully. There's lots of $3 billion opportunities out there. Why are we doing a much smaller unit?
Yeah. Okay, Mike, that's a good question. So, so there are a few elements to that. So we want our, our prospects to have to be meaningful and have a good return level, but there is also strategic parts to the, the equation. So it allows us to enter Mexico, obviously, and, and Woodside is a great client to add to our client portfolio. And you will know, knowing the history of the company, that, turrets and disconnectable turrets can be certainly enabler, an enabler in, in, in future projects. And keeping that competency alive in the company is also fundamental to the, the way we see ourselves in the ocean infrastructure space in the future. So a lot of good elements to that job and a very, very nice job for the company.
Okay, and how big a turret is it? Just trying to get-
It's a relatively small turret. As you know, FSOs is just a low pressure transition of oil. So it's a small turret, but technology wise, the disconnectable space in the hurricane area is a good enabler, which is also why SPM is the provider of the FSO and not any other company.
Okay, thank you. And, and if I can be rude, can I just throw another question at you that I've just thought of here? That turnkey net cash of $400 million, if I add 3-4 years of what you said, $50 million a year, takes me up to $600 million. You've got $4 billion in backlog, doing $600 million in net cash. I thought the margin was 20%+ in that business.
No, it's—well, it's consistent with the historical IFRS margin, which is around 18, 18%. So it goes up and down, but yeah, roughly.
So you've included that 18%, so 18% of that - 200. Okay, fine, and then there's rounding it. Okay, thank you. Cheers.
Yep.
I'll hand it over.
Thank you very much, sir. Ladies and gentlemen, once again, if you have any questions, please do press star one on your telephone keypad. We'll now go to Jeremy Kincaid, calling from Van Lanschot Kempen. Please go ahead.
I just have one question. Obviously, you've explained quite well that the cash flow velocity is improving quite well with the sale and operate model, but it also looks to be improving in the BOT model as well as operators look to be sort of buying those vessels back earlier than anticipated. Could you just talk to some of the dynamics there? You know, why are people doing this? What... Why are they, you know, what's in it for them? And do you think that trend will continue if you sign any other BOT deals in the future?
Yeah. Morning, morning, Jeremy. So the BOT projects that we have are with ExxonMobil Guyana, and all of them and actually included the lease and operate project, they have a purchase option. So it's really it's a question for really the client, in terms of, they have the option and how do they want to optimize their cash flows. So that it's basically so we they have the option, and it's really down to them to figure out what works best for them. So in the case of Prosperity and Destiny, they've indicated that they're considering it, and we need to see the next steps.
As to why it's the best option for them?
Well, they're always gonna – I mean, Prosperity, they have – we're gonna have to buy by the end of next year. So, it's a small acceleration. But then it's really down to them on how they wanna manage their operations, their cash flows.
Thank you, Mr. Kincaid. Ladies and gentlemen, once again, if you have any questions, please press star one. We'll now go to Andre Mulder of Kepler Cheuvreux. Please go ahead.
Hey, good morning. I have a few questions. So firstly, on Suriname, I see some diverging levels in terms of the reprofitable reserves, anywhere from 700 million to 2.3 billion. Can you fill us in, what kind of recoverable reserves you think there are in that Block 58? Second question, I've seen the extension of the Mondo. What's the position of the Saxi? Third question is on floating offshore wind. You're mentioning a number of projects, number of areas. Projects in U.K. and Canada will remain in your scope. What's happening to Codemo, a U.S. project?
... I think those will be my questions for the time being.
All right, good morning, Andre, thank you for your question. So Suriname reserves, obviously that is the heart of the oil company's competency, and certainly not at the heart of ours. So we only prepare our commercial offering in line with what the clients are asking in terms of providing FPSOs adequately sized to the reserves as they have estimated them. So I can't formulate any opinion on that. For Block 15, so Mondo is extended as a matter of course, and both Mondo and Saxi are coming towards the end of their contract terms. So I think it's discussions ongoing as to the further strategy for Block 15 in Angola.
With our, you know, our current ownership structure as reported in Angola, we're well positioned to have a good discussion around how these assets may or may not be extended further. On floating offshore wind, I'll hand that over to Douglas.
Yeah. So to clarify, going forward, the JV Ekwil is going to be the vehicle through which we pursue the EPCI market with our and also Technip Energies floating foundation technologies. But we already, as you know, had a number of floating offshore wind development projects in our portfolio in the U.K., Northern Ireland, Canada, and actually also the U.S. although Cademo, it's a much smaller project. So we're continuing to work on those.
Okay. Yeah, a follow-up question on Suriname. Is already clear whether it will be a turnkey or lease, and what kind of length of lease contracts are you looking at? And also a question on, I do not know whether it's also in directional, but first I saw this net gain of $32 million, that's turning into lease, where you would have expected to be in turnkey. Why is it there? And is it indeed the same level that we see for directional?
Okay. So let me take Suriname. So currently the Suriname job is under a commercial process, which is for an EPC contract for the provision of the FPSO. So that's where it is today, until any FID is given, you know, things may or may not change, but that's where it is today. On the second question on-
Yeah. So, you're referring... I think, are you referring to the Angola business rationalization?
That's right.
Okay. Good to clarify. So yeah, there's an impact under IFRS from that transaction, and it's roughly similar in direction from the consolidation of all the various elements of that rationalization.
And normally, you will see some changes appearing in the ownership structure with those results coming into turnkey rather than lease. Well, why, why is it under lease this time?
Because we're, it's a lease and operate portfolio, basically. So we've increased our share in a number of FPSOs, including N'Goma. So it's a lease and operate focus transaction.
Okay, thanks.
Thank you much for your question, Mr. Mulder. Ladies and gentlemen, once again, for questions, please press star one. We'll now go to Daniel Thompson, calling from BNP Paribas Exane. Please go ahead, sir.
Hi, good morning. Yeah, just one question from me. It looks like the coverage of your second half revenue covered by backlog is sitting at over 100%. So just wondering if you could talk through the various puts and takes going into that guide for the $3.8 billion revenue for the rest of the year. You know, is it coming down to you know, to the uptime, getting back up to where you expect it, or you risk the construction that's scheduled a bit? Yeah, just any color there that you can provide. Thank you.
Yeah, no, so things never phase perfectly. You get different kind of timing, timing effects. A lot of our operation revenues, for example, are based on reimbursable items, so that depends on what and when the client needs and the maintenance planning. So it's not always a linear thing.
Okay. Thank you.
Thank you, sir. Our next question will be coming from Thijs Berkelder of ABN AMRO ODDO BHF. Please go ahead.
Yeah, good morning, gentlemen. Congrats with strong H1 results. First question on the timing of the purchase options by ExxonMobil. Can you maybe give a bit more explanation when to exactly expect them to list these options, and or what is needed for them? Do they need to have, let's say, signatures from regulators, governments, or something like that, to act on that, or signatures from the co-shareholders to exercise these purchase options? That's my first question. Then on the gain reported in lease and operate, this only relate to Angola?
... and relate to that, can we expect also a gain or a loss related to the offshore wind JV transaction to happen? Third question for Douglas. In case the options for the Destiny and the Prosperity are indeed being lifted, can you give us some guidance on where to expect a net debt to land at the year-end 2024? And/or, should we expect an additional book gain of, let's say, $600 million-$700 million or so?
All right, that's a-
Well, let's take all of those, as I thank you for the congrats.
I'm struggling to keep up with the numbers, but I think I got it, Thijs. Good morning. First up, yeah, so basically it's gonna be in the second half. So we had a similar situation last year, and we ended up, I think announcing in November. What needs to happen is they would give us a formal notice, and then we need to finalize a sale and purchase agreement. That's basically what has to happen there. And then relative to the impacts, we would see more than $1 billion.
This is, it depends on the timing and everything, but directionally, if you like, very roughly, above $1 billion impact in terms of the reduction on debt and rough EBITDA. Again, it all depends on timing, but somewhere north of $500 million EBITDA impact, if that helps. Then you asked about Angola. It's just all the gain in lease, no, but it's just Angola. And then there was a question, are we gonna get losses from Ekwil? Answer to which is no. And I think I got all of your questions.
Yes, you, you did. Maybe a follow-up question. I think the Destiny and the Unity are prepared for, let's say, gas exports to shore. What does that change mean for SBM Offshore and for your contracts with ExxonMobil?
Yeah, no, thank you, Thijs. So it's a relatively straightforward sort of brownfield job that we are executing on the assets. And after which it has no contractual or material impact to us. It's just we're diverting the gas stream ashore rather than down the hole. So that's it.
Yeah. And then you started your presentation talking about further hull options. Can you give us a size, how you've ordered the ninth hull? How many options do you have in hand right now?
Yeah. We ordered the ninth hull with CMHI. As we finishing up our MPFC, we placed the order for MPFD, and we have a security slot, sort of sliding slot for MPFE, and then we have six and seven with SWS. So we have three further slots, at least. And then we, as this is, takes us a few years ahead, so we can—we're always in anticipation mode to help them manage their capacity. So it's not about how many slots more than the program that runs.
And related to that, looking at your ordering these hulls in China, looking at sanctions in China, is there any risk or potential to also order hulls or topsides again outside China?
As any emerging risk to our operational or to our business model, we are evaluating that continuously. We also do, of course, benchmark yards across the world to make sure we stay competitive. That is a part of the equation that we're working very actively.
Yeah. Maybe final from my side for now, can you explain why you now, let's say, double the share buyback, in terms of amounts? What is behind the doubling? Is it kind of, let's say, first step towards real cash returns in 2025? Should I see it that way?
Yeah. So, well, I guess I would beg to, well, not differ, but in what at least in what you're kind of inferring, 'cause I think that, you know, $220 million a year is already a pretty decent cash return. And, you know, especially consider our track record for more than went to nearly 10 since 2016, we've returned a very material amount of money to our shareholders. So yeah, we're focused, though very much focused on the cash, returning cash, pacing it in line with the materialization of that cash flow.
Then, in terms of the driver, you know, we, we obviously delivered a strong set of results for the year. The portfolio is performing well. As already been mentioned, we're finalizing the earlier projects in the portfolio, and which are anticipated to start up next year. So, you know, there's less, less risk in that part of the portfolio, which was impacted by COVID and supply chain. And so what we decided to do was based on all of these, as well as looking at our liquidity, our cash flow forecast, is double the existing buyback, which will enable us to keep going at the same pace through to the first quarter next year.
And then, as I said, let's see how things develop in terms of the materialization of a potential cash acceleration options. And then, as ever, we take a look at the cash return strategy at the year end.
Okay, great. Thank you.
Thank you much for your question, sir. We now have a follow-up question from Andre Mulder of Kepler Cheuvreux. Please go ahead, sir.
Good morning. A follow-up indeed on the share buyback. After this doubling, have you fully utilized the potential that came out of this consent of April 2024?
No.
Could you say how much is left?
Off the top of my head, no, but I know there's still headroom.
Okay, and then the next step would indeed be to ask the AGM in 2025 for another consent for share buyback. Are there any restrictions to that? We've seen in the past 10%, but are there any limits to that, or can you ask for more?
No, I mean, every year, we ask the shareholders for permission. It's, if you like, a kind of standard option. It's a rolling thing. As I said, we're, we always review our returns strategy at the end of the year when we'll provide a further update in February, and then, whatever it is that we decide to do, we'll make sure that we have all the requisite authorizations and approvals in place.
Okay, thanks.
Thank you, sir. We have another follow-up question, this time coming from Mick Pickup of Barclays. Please go ahead.
Yeah, hi, gents. Just a quick one. There was a press release last month about floating power generation. You getting involved in that? I know it's something you mentioned at the end of the capital markets day. Can you just talk about what the opportunity set is there? And I believe your partner used to be in bed with a cylindrical floating company. Why are they now talking with you or working with you?
Yeah. Ocean Power is a Norwegian startup with certainly heritage from the cylindrical standardized hull. So it's right now we are exploring business model and technical feasibility for decarbonized power supply to offshore assets or as part of the lowering the emission of existing production facilities in the world, and potentially also for future development, greenfield development, where you could think of consolidating power supply through a power barge providing electricity to offshore assets. So we're exploring that. It's early days. It's quite exciting. There will be more to see about that further into the year.
Okay, thanks, Øivind.
Thank you, sir. Ladies and gentlemen, as a final reminder, if you have any questions, please press star one at this time. Okay, we do not appear to have any further questions. Mr. Tangen, I'd like to turn the call back over to you for any additional or closing remarks. Thank you.
All right. Thank you all for your engagement in SBM Offshore. We're very happy with our results, and look forward to communicating more with you through the remainder of the year. Have a nice day.
Thank you. Ladies and gentlemen, thank you for attending. This concludes the SBM Offshore event call. You may now disconnect your line. Have a nice day.