Ladies and gentlemen, thank you for holding, and welcome to the SBM Offshore First Quarter 2025 Trading Update Conference Call. At this moment, all participants are in a listen-only mode. After the presentation, there will be an opportunity to ask questions. I would like to hand over the conference to Mr. Charles Albers, Investor Relations. Please go ahead.
Thank you, Heidi, and thank you all for joining us today. This call is being recorded and will be available for replay on the company's website. Today's prepared remarks will be delivered by CEO Øivind Tangen, followed by a Q&A session. Before we begin, I would like to point out the disclaimer at the bottom of our press release and remind participants that some of our comments today may include forward-looking statements reflecting SBM Offshore's view of future events. These matters involve risks and uncertainties that could cause our results to materially differ from our forward-looking statements. The risks are included in detail in SBM Offshore's 2024 annual report, which can be found on the company's website. Once again, we will welcome your questions after the conclusion of the prepared remarks. I will now turn the call over to Øivind.
Thank you, Charles. Good morning, everyone, and thank you for joining the SBM Offshore First Quarter 2025 Trading Update Call. I'm Øivind Tangen, CEO of SBM Offshore, and as usual, I'm joined by our CFO, Douglas Wood. Starting with our performance over the last quarter, our teams continue to deliver strong results in line with the plan. We're pleased to report a directional revenue of $1.1 billion for the first quarter, up 27% compared to the first quarter of 2024. Our full-year directional revenue and EBITDA guidance demonstrate the resilience of our business model and our ability to navigate macroeconomic uncertainty with confidence. As the world's offshore infrastructure expert, we run a global operation focused on excellence at every step of the SBM Offshore life cycle. This translates to a pro forma directional backlog of $35.1 billion as of December 2024, backed by premium clients and with inflation protection.
We continue to expect to deliver a minimum of $1.7 billion cash return to shareholders up to 2030. Our promise is to continuously enhance the quality and efficiency of our operations. The excellent performance achieved in all regions of the Lease and Operate activities attests to that, with the fleet uptime standing at 99.5% at the end of first quarter. On the execution side, we are well on track to deliver three major units in 2025. First, FPSO Almirante Tamandaré achieved first oil in February 2025. This unit is followed by FPSO Alexandre de Gusmão, which arrived at its location in Brazil in March of this year. The hookup and installation works are complete, and the FPSO is being prepared for first oil around mid-year. The third unit to be delivered this year, FPSO One Guyana, arrived safely in Guyanese waters, where the installation and hookup campaign is progressing well.
We're targeting first oil in the third quarter. We continue to progress as per plan on our three projects under construction. On FPSO Jaguar, the topside module fabrication is progressing very well, and first oil is expected in 2027. On FPSO Triumph, engineering and procurement are progressing as planned, and the fabrication of the disconnectable turret mooring system has begun. Finally, the Fast4Ward MPF hull has been delivered to the FPSO GranMorgu project, and the topside fabrication will start in the coming months. With a strong FPSO market outlook in the Atlantic Basin, we continue to follow our Fast4Ward model for the best competitive positioning. A total of eight Fast4Ward hulls have been delivered, of which four are in operation and four have been delivered to projects. Another two MPF hulls have been ordered to support active discussions with clients on premium prospects.
We are also pleased to share an important milestone in our offering of decarbonized floating solutions. Just last week, SBM Offshore received an approval in principle from the American Bureau of Shipping for our near-zero FPSO design. This is an important step in the emission zero roadmap, and the design is fully integrated with our proven Fast4Ward concept, delivering on our commitment to a market-ready near-zero FPSO by the end of 2025. Building on our expertise in ocean infrastructure, we are partnering with other innovative companies to diversify our product offering. We have signed a strategic collaboration agreement with Microsoft to develop standardized AI-powered ocean infrastructure solutions. The first phase of the collaboration will focus on floating gas-to-power solutions, integrating our modularized carbon capture solution. Now to financials.
For the first quarter of the year, the company's directional revenue increased by 27% to $1.1 billion, compared with the same period last year, driven by directional Turnkey, which stood at $627 million. The year-on-year improvement reflects the progress booked under the sale and operate model on FPSO GranMorgu and FPSO Jaguar. Directional Lease and Operate revenue was $476 million for the first quarter of 2025, approximately $18 million below the same period last year due to the sale of FPSO Prosperity and Lease at Destiny in Q4 2024. This was partially offset by an increasing reimbursable scope and FPSO Almirante Tamandaré joining the fleet in February 2025 as it entered on charter. Our net debt position has been stable since the end of last year and stood at $5.7 billion for the period up to March 31.
Most of the debt is related to our projects in operation and the funding of our large FPSOs under construction. There is no refinancing risk related to this debt, and all project debt becomes non-recourse in the operating phase. Since the beginning of the year, we have also demonstrated our ability to diversify our sources of financing with the completion of the $400 million sale and lease-back transaction for FPSO Cidade da Paraty. This was completed in April, and we're pleased with the successful syndication of the increased revolving credit facilities, reflecting the strong support SBM Offshore continues to receive from financial institutions across the globe. Finally, regarding cash return to shareholders, at our AGM in April, the proposed EUR 150 million cash dividend was approved, which resulted in a dividend distribution of EUR 8.6 per ordinary share paid on May 6th.
We have also started a EUR 141 million share buyback program after the 2024 program was completed. The new program is progressing and was about 7% complete as of May 14th. To conclude, we are confident in our ocean infrastructure experience, the expert capabilities of our teams, and the resilience of our business model. Our strategy of advancing the core and pioneering more delivers, and it pays. This quarter's results provide evidence by reiterating the company's guidance for 2025 in a time of increased macroeconomic uncertainty, reconfirming our existing targets to deliver $1.7 billion cash return to shareholders until 2030, maintaining high safety records and excellent uptime, successfully delivering FPSO Almirante Tamandaré and well on track for the deliveries of FPSO Alexandre de Gusmão and FPSO One Guyana. We continue to diversify our sources of financing and creating new partnerships with innovative companies. This concludes today's call. Thank you for listening.
Operator, we can now open the call for questions.
Thank you. If you wish to ask a question, you will need to press star one, one on your telephone, and wait for your name to be announced. To withdraw your question, please press star one, one again. We will take our first question, and the question comes from the line of Philip Ngotho from Jefferies. Please go ahead. Your line is open.
Hi, good morning, and thank you for taking the questions. I have two, if I may. First of all, just on the general market, I mean, we've seen, of course, quite a volatile oil price environment and down 15% year to date. I also understand that large-scale ultra-deep FPSOs that you're involved in usually operate at fields that sit within the first quarter of the cost curve. Nonetheless, I was just wondering if you've seen any hesitance or cautiousness from your clients in discussions on future projects or whether that could lead to any potential delays versus your initial timeline. If I may, I have one other question.
I was just wondering in terms of the refinancing that you did on Cidade da Paraty, would there be any other FPSOs in your portfolio where you could do something similar in terms of refinancing and freeing up additional cash in the near term?
Okay, Philip, thank you for your question. Oil price and the market ahead of us. We do not see any shifts on the prospects we are working that are active in the market now. We follow prospects that inherently have very sound economic and underlying economics, and we do not see any shifts that are being communicated by our clients. I think you can see that in the public domain very well. In the immediate, we do not see anything in the pace of awards planned. Douglas on number two.
On the second one, yeah. Morning, Philip. So we're, of course, always reviewing how we optimize the financing of our portfolio so that we're effectively managing the cash flows. What I would say, though, is that in terms of cash acceleration, given that we see quite a lot of cash acceleration coming just as a result of the sale and operate model, I wouldn't say that we're prioritizing cash acceleration. This transaction also enabled us to approve, if you like, a new financing model that we hope to deploy to our competitive advantage in the future. Of course, we're always reviewing if there's an opportunity to refinance existing debt at lower costs. Definitely, that's something that we would consider doing and pursue.
Okay, very clear. Thank you.
Thank you. We will take our next question. The next question comes from the line of Luke Van Beek from Degroof Petercam. Please go ahead. Your line is open.
Yes, I was wondering if you can tell a bit more about the cooperation with Microsoft. When you expect to do the first project, can you give a brief indication of the typical project size that you expect and how it will develop?
Thank you, Luke. It is a collaboration where SBM's capabilities and Microsoft's projected demands for power and needs. Right now, we are exploring into that collaboration, economic viability, or potential development of designated power budgets with carbon capture to meet any electrification demands associated with AI-powered data centers. For now, it is very early phases for that collaboration to understand whether there is a product offering that the multiple companies like Microsoft need and potential other players in the journey of energy needs for data and AI.
Thank you.
Thank you. We will take our next question. Your next question comes from the line of [Tys Bokhada] from ABN AMRO or the BHF. Please go ahead. Your line is open.
Yeah, good morning, all. Question on Q1. Can you maybe disclose the direction of gate access spent in Q1 for the, let's say, remaining three FPSOs? And I recall you indicated something like EUR 250 million still needed to be spent this year, or am I wrong there? Further, did Q1 include some kind of a delivery result or not because of the Almirante Tamandaré being producing now? And third question is, do you see any impact so far from, yeah, potential tariff measures by the Trump government?
Okay, morning, Tys. Regarding your question on the net equity investment, we're not giving quarter-on-quarter guidance, but what I would reiterate is that, yeah, indeed, it's EUR 250 million. Most of it we anticipate to be spent this year, and I think we're trending on track there. Regarding Almirante Tamandaré, yes, it did have an impact in the first quarter. Of course, we're looking forward to seeing the impact from the other two FPSOs, which are due to come on stream in the coming periods. That, by the way, is one of the big drivers. If you multiply our revenue for Q1 times four, you'll see we're a bit shy of the guidance, but that's because we haven't yet seen the impact of those big units, which are coming on stream later.
Yeah, thank you, Douglas. On tariffs, as we've said previously as well, our existing backlog is not really subjected to trade across American borders. In terms of generally inflation protection, that's inherent both through either reimbursable contracts or index-adjusted contracts on lump sum stuff. We do not see an exposure in existing backlog from the tariffs on new work. Obviously, any uncertainties in the world, and we manage that through how we lock in prices and then bid we're doing on upcoming commercial opportunities and the contractual structures supporting service work after delivery on those future opportunities. We'll also have measures that build in all the learnings we've done through other fluctuations, namely COVID, namely Ukraine war, and how we adjusted to these volatilities that we've seen over the last decade almost now.
We feel that our model is very resilient also from the underlying economics, the prospects we pursue, and the contractual structures, both in existing and new backlog. We have good strategies to manage that.
Yeah. A follow-on on your, let's say, announcement that you rent out your Norman Installer to, let's say, to BP for Gulf of Mexico, you don't need to have an own installation vessel on your current project deliveries?
Yeah, very good observation. Obviously, the Norman Installer is a great tool for us that we use on our installation of all our FPSOs. It knows our design and gives us a very efficient and flexible way of planning our project schedule and giving project schedule certainty. Our own scope does not fill completely the workload of the Norman Installer. Every time we have an opportunity between our own installation work, she is in the market, and this contract is a great example of how she is a very useful tool also in generating additional revenue to the company. This is an example. We also had other awards for the Norman Installer over the last year. She is a very good tool with a very good team.
Okay, thanks.
Thank you. We will take our next question. Your next question comes from the line of Kylie Moja from ING. Please go ahead. Your line is open.
Yeah, good morning, everyone. My question is especially with regard to the hulls and the construction in China. I read it as some progression with regard to more focusing on clients. Is that correct, that conclusion, or let me say, have you made some progression there, not only on the, yeah, not only on the construction, but also on targeting the clients?
No, I mean, we're pursuing several commercial opportunities, and these hulls are just following the same model as we've had done for the last nine years. We have two hulls that are unallocated, and we obviously, through any commercial work, we engage with our clients on potential technical clarification, etc. These are two unallocated standard hulls that we are hopeful will help us to be securing future backlog growth. There are no different strategies in terms of engagement or otherwise with the clients or prospects.
Okay, thank you.
Thank you. We will take our next question. Your next question comes from the line of Jeremy King Carl from Van Lanschot Kempen. Please go ahead. Your line is open.
Good morning, everyone. Just this line of questioning on the sale and lease spec, could you just help us with the bottling of it? So am I right in assuming you're going to receive $400 times by your ownership percentage in the second quarter as an inflow, and then there'll be steady cash outflows for the remainder of the lifetime of the vessel, which I think is until fiscal year 2033? Is that correct?
Yes.
Okay, excellent. Thanks. Obviously, you still have a little bit of corporate debt. I think last reported was around EUR 100 million. Do you want, what's the ideal situation there? Would you like that number to be zero in the long term, or are you happy to have some level or small amount of corporate debt in the mid to long term?
The corporate debt is really the RCS, so that's going to fluctuate depending on where we are with awards, potentially bridging future financings if we have those or managing working capital. We're comfortable with where it's at, and we're very happy that we have the RCS renewed to support our business.
Clear. And then one final question. From memory, I believe you calculate some contingencies in the backlog just in case things go wrong. Obviously, you have some vessels which will be operational or becoming operational in FY 25. Do you release those contingencies in the backlog when they become operational, and are you able to quantify how much that might be?
Yeah, so specifically, if we have some level of contingency for turnkey projects, then yeah, we would release that when the vessels come on stream.
Are you able to quantify how much?
We do not give the specific details of all the contingencies. We just give the overall guidance.
Sure, understood. Thank you.
Thank you. As a reminder, if you wish to ask a question, please press star one, one on your telephone. We will take our next question. The question comes from the line of Guillaume Delaby from Bernstein . Please go ahead. Your line is open.
Yes, good morning. I think one year ago in the specialized press in Upstream, there were some articles mentioning that Brazil could or Petrobras could gradually shift to a more, I would say, SMO model. I think last week at the OTC conference in Houston, Petrobras mentioned that again. Maybe could you give us a little bit of flavor when you are discussing with Petrobras how they are evolving regarding the SMO model? Thank you.
Thank you, Guillaume. I think you'll see what they put out in the market now that there is a representation both EPC with Petrobras specification and BOT, which is a handover of the asset early in its operating life and also some maybe lease and operate. Typically, the FPSOs in the market where we will bid, you see a shift from long-term lease and operate to a BOT model right now. This is published by Petrobras themselves. In recent articles in Upstream, you'll see they're quite explicit about the strategy. I was also referring to other questions earlier about pace of awards. You see, Petrobras is very much pursuing a high pace of awards. They got a lot of prospects to get out, so they're seeking models that contractors will respond to. Douglas, do you want to add something?
Yeah, just to be clear, because we use the term BOT for Guyana. It's slightly different. Makes perfect sense for Petrobras to call it a BOT, but for us, that would be sale and operate because we're not going to have any financing, and we'll be booking the margin in turnkey and then the operating part thereafter should we, as we hope, be successful in winning some of these upcoming awards.
Yeah, very good clarification. Thank you, Douglas. Thank you, Guillaume.
Thank you. I turn it over.
Thank you. This concludes today's question- and- answer session. I will now hand back for closing remarks.
Thank you very much for your continued interest in SBM. Of course, as always, if you have further questions or want to seek more details, you could connect with our teams, and we will be happy to explore and share information with you. Thank you very much, and have a great day.
Ladies and gentlemen, this concludes the SBM Offshore Conference Call. You may now disconnect your lines. Thank you for your participation.