Good morning. This is the Chorus Call conference operator. Welcome and thank you for joining the Saipem First Half twenty twenty five Results Conference Call. As a reminder, all participants are in listen only mode. After the presentation, there will be an opportunity to ask questions.
At this time, I would like to turn the conference over to Mr. Alessandro Politi, CEO of Saipem. Please go ahead, sir.
Thank you, and good morning. Thank you for joining us for the presentation of results for the first half of twenty twenty five. I'm here in Milan today with our CFO, Paolo Calcanini and with the rest of the members of the Saipem senior management team. As you know, today is a special day for all of us after the merger agreement announced last night. But in today's call, we are focusing on Saipem as a stand alone company.
I will start the presentation covering the key highlights of Q2. Paolo will then cover the financial results in more detail, and then I will wrap up with my closing remarks before opening the Q and A session. Let's start with the key highlights. I'm pleased to report in the second quarter, Saipem recorded a very strong performance in terms of revenue, EBITDA and cash flow generation on top of having made the largest dividend payment in its history. Revenue stood at €3,700,000,000 growing by 10% year on year and 5% sequentially.
EBITDA stood at €413,000,000 growing by 39% year on year and 18% sequentially. EBITDA margin stood at 11.2%, a significant improvement compared to the previous quarter margin of 10%. In Q2, operating cash flow reached the record level of €447,000,000 The order intake in the second quarter stood at €2,200,000,000 in line with the order intake of Q1. We expect our order intake to accelerate in the second half of the year in line with the market dynamics. Our backlog remains close to the record high level providing us with an excellent visibility for both 2025 and 2026.
Saipem continues to deliver steady growth and improved cash flow conversion. Revenue more than doubled since the beginning of 2022. EBITDA has increased in the same period by a factor of four. EBITDA margin has also doubled and currently stands above 11%. Cash flow generation has grown steadily over the last three years, reflecting the progress made in executing the legacy backlog and the proactive management of the working capital.
In particular, in the first six months of the year, our company has already generated an amount of cash flow equal to 80% of what we delivered in the full year 2024. Let's now cover in more detail the latest awards. The order intake of the quarter includes two energy transition projects from ENI and a substantial FEED award from Sonatrach in Algeria. The key feature of these awards are: first, we are confirming our strong positioning in the CO2 management value chain in The UK, following the East Coast Cluster Award in 2024. Second, we are also accelerating the conversion and upgrade of existing refining facilities for ENI.
Third, we continue to derisk our onshore awards by ensuring a substantial portion of the scope of work is under a reimbursable framework. And fourth, the FEED in Algeria for an integrated fertilizer plant has also allowed us to make an important step in meeting our service order intake target for the year. As a reminder, engineering service, operating and maintenance and project management consultancies are key drivers for repositioning of our onshore business. We will cover this aspect in more detail later in the presentation. Let's now deep dive on the recent CO2 Management Awards.
We are excited about the current development in CCUS, and we believe that this market will grow into sizable opportunity for Saipem in the years to come. The order intake of last year was about projects for offshore CO2 transportation. In the first half of twenty twenty five, we started to collect orders for CO2 capture and management also in the onshore sector. Currently, Saipem is working on four CCUS projects for a total value of €2,000,000,000 The clients for most of these projects are oil and gas companies, and we have a consolidated relationship with most of them. Also, these projects are well diversified in terms of geographical footprint and also attractive in terms of size.
Let's now focus on the recent developments in our service businesses. One of the key pillar of our strategic plan is the de risking of our onshore EPC framework, also by growing in the service market. I'm glad to report that we are making progress and in particular. In the engineering services, we have acquired more than EUR 300,000,000 business since the beginning of the year, including the FEED study in Algeria, but also other studies in Italy. In the PMC space, we have now started our first project in West Africa and we are awaiting feedback on several bids we have submitted.
The pipeline in PMC looks promising. On operating and maintenance, we are working on substantial list of prospective projects across the globe. We will give you regular updates on the evolution of our services offer going forward. Let's now have a look to our commercial effort. As you know, we are coming out of two very strong years in terms of order intake, totaling almost EUR 40,000,000,000 of awards.
Nevertheless, our commercial pipeline for the next eighteen months remains robust at EUR 53,000,000,000. Also, half of our pipeline related to gas upstream projects, which are less sensitive to swings on oil price. We are also awaiting feedback on several feeds submitted totaling €7,000,000,000 and we expect to submit additional bids for EUR 16,000,000,000 during the remainder of the year. As such, we remain confident about our order intake target for 2025. Let me now give you an operational update on two very important projects.
On Koursel, we confirm the plan already presented in the Q1 results. We are aiming to restart the drilling activity next month and we expect to complete it by the end of twenty twenty six. Moving to Norway, I'm glad to report that the Castorone vessel completed the laying of about 79 kilometers of pipe in pipe pipeline for Equinor connecting the IRPA subsea production template with existing platform. This project is the deepest steel pipe ever installed in Norway and it is amongst the deepest pipe in pipe globally laid in Nestle mode, further consolidating Saipem leadership in pipe laying. The Castorone will now move to Guyana to do work for Exxon in the Uaru and Whiptail fields.
I will now hand over to Paolo, so he can give you more details on the financial results of the first half.
Thank you, Sandro. Good morning, everyone. We will start from Slide 12, which represents a summary of our financial results for the first half of twenty twenty five. Revenue increased by 12% year on year to EUR 7,200,000,000.0, and our EBITDA grew by 35% to EUR $764,000,000. The growth has been primarily supported by our offshore E and C activities.
EBITDA margin keeps on improving, having surpassed the 10% threshold, up from 8.8% in H1 last year. This is due to a more favorable business mix and to the reduced incidence of the legacy projects. Our net result was EUR 140,000,000, 19% higher than H1 last year. Operating cash flow stood at EUR $842,000,000, mainly driven by the growth in EBITDA year on year and the contribution of working capital movements. Let's now review the different business segments, starting with Asset Based Services on Page 13.
Revenue stood at EUR 4,100,000,000.0 for H1 twenty twenty five, marking an 18% increase from last year, mainly driven by the growth of the Surf and Conventional activities. The revenue mix remained relatively stable between Surf and Conventional, with a slight increase in the weight on conventional projects year on year. The growth trajectory was mainly driven by the increased backlog after the strong order intake of the last eighteen months. EBITDA stood at EUR $539,000,000, up by 38% and EBITDA margin stood at 13.2%, an increase of 190 basis points year on year. The increase in profitability is mainly driven by the good progress made on projects in The Emirates and Qatar and by the conclusion of the Saqqariya project in Turkey.
For the second half of twenty twenty five, we expect double digit growth in revenue compared to the 2025 and a further improvement in EBITDA margin, mainly driven by the expected growth in volumes in both conventional and SURF activities. Let's now look at the Drilling Offshore on Page 14. Revenue stood at EUR $461,000,000, broadly stable compared to the same period last year. EBITDA grew by 11% year on year to EUR 185,000,000. EBITDA margin stood at 40.1%, a two ninety basis points improvement year on year.
In more detail, during the first half of twenty twenty five, 10 of the 14 units were fully booked and busy with the respective drilling campaigns. The Sappam 12,000 underwent maintenance in Q1, but has been operational in Q2. The Perro Negro 10 following the Aramco suspension underwent preparation works and has already moved to Mexico to start working in Q3. The Perronegro seven underwent maintenance in Q2, coinciding with the beginning of the Aramco suspension. The Peronegro 12 contract was terminated by Aramco in Q2 with a jackup expected to be delivered back to its owner in the coming quarters.
All in all, we are reducing our fleet by three units, namely the Perronegro nine, twelve and Payoneer, which have been returned or will be returned to their owners. As a reminder, these units are not owned by Saipem, but leased. And as such, our capital light strategy has helped us navigating well through the Aramco suspensions. For the second half of twenty twenty five, we expect a low teens decline in revenue and high single digit decline in EBITDA compared to the first half of twenty twenty five, reflecting the reduction of the jackup fleet, some white spaces as well as the impact of planned maintenance activity. Let's now look at the energy carriers on Page 15.
Revenue grew by 6% year on year, reaching EUR 2,700,000,000.0. As a reminder, backlog related to energy carriers declined by 11% in the last eighteen months. And as such, this means that Saipem is accelerating on the execution of the projects, in particular of the legacy backlog. EBITDA margin improved year on year, reaching 1.5% in the first half of twenty twenty five. Our primary goal in Energy Carriers is to complete the execution of the remaining legacy backlog while being very selective about the intake for new projects.
For the second half of twenty twenty five, we expect a pickup in revenue compared to H1 and a further improvement in profitability. The complete group income statement is shown on Page 16. We can now discuss some of the key items below EBITDA. D and A stood at EUR $459,000,000 and increased by EUR 149,000,000 compared to last year, mainly reflecting the growth of the fleet on a chartered basis and the leases associated with them. Financial expenses stood at EUR 94,000,000 in H1 twenty twenty five, increasing by EUR21 million year on year, mainly reflecting the interest on lease liabilities and an increase in hedging costs due to the growing rates differential between the U.
S. Dollars and the euro. Income taxes remained broadly stable year on year at EUR72 million, whilst the implied tax rate declined by 4.7 percentage points to 33.8. On Page 17, you can see the evolution of our net financial position. The cash flow generated in the 2025 improved our net financial position by EUR 171,000,000 on a pre IFRS basis from a net cash position of EUR $683,000,000 to EUR $854,000,000.
This is a remarkable result considering that in May, we paid dividends to our shareholders for EUR $331,000,000. Gross CapEx stood at EUR 191,000,000 and were partly offset by disposals for EUR 115,000,000, mainly related to the proceeds from the sale of the 10% stake in KCA, which was completed in Q1. Repayment of lease liabilities increased to EUR 167,000,000 in H1 twenty twenty five compared to EUR 85,000,000 in H1 twenty twenty four, reflecting the crude in the fleet on a chartered basis. In line with our plan, lease liabilities increased in H1 by EUR $399,000,000. For the second half of this year, we expect a marginally positive cash flow generation, but significantly lower than what was recorded in the first part of the year.
This is mainly due to the expected reversal of the positive working capital dynamic seen in H1. On Page 18, you can find a detailed breakdown of our gross debt and liquidity. Our liquidity position is very robust at more than EUR 3,000,000,000. Also, we currently hold almost EUR 1,300,000,000.0 of available cash, which is sufficient to cover almost all our maturities to 2029. As you know, with the twenty twenty five-twenty twenty eight strategic plan, Saipem has set itself the target to achieve an investment grade credit rating, and this is a key priority for us.
We will continue to reduce our debt in the coming quarters. Let me now hand it back to Sandro for his closing remarks.
Thank you, Paolo. And to conclude before going into the Q and A, First of all, we continue to deliver strong results with sustained growth in revenue and EBITDA and high cash flow generation. Then our backlog provide us with strong visibility for the next two years. Our revenue for both twenty twenty five and 2026 are almost fully covered by the existing backlog. Our construction fleet is fully booked again for 2025 and 2026 and we are increasing our visibility also for the following years.
Our balance sheet is strong and even after having paid a record dividend to our shareholders. We expect our commercial activity to lead to an acceleration in terms of new awards in the second part of the year. And finally, we confirm our guidance for 2025. Thank you for your attention, and we can now move into the Q and A session.
Thank you. This is the Chorus Call conference operator. We will now begin the question and answer session. First question is from Alessandro Pozzi, Mediobanca.
Hi, everyone. Thank you for taking the questions and congrats on the merger agreement. I'm sure it wasn't easy. The first question I have is on cash flow. As you pointed out, cash flow was strong in the first half.
I think the free cash flow post lease payment is above the full year guidance. Can you maybe give us more color about the free cash flow in the second half. You talked about reversal of working capital, if you can maybe give us some of the moving parts there. And also second question on accounting, I think if we look at Q2, there is some movements in the nonmonetary items. I was wondering if you can maybe tell us whether you've taken some additional provisions.
And maybe on this point, if you can give us an update on Thai oil as well. Thank you.
Okay. So for the first two questions, I will ask Paolo to reply, Alessandro.
Yes. So Alessandro, on the free cash flow, you probably noticed that the free cash flow in the first half has been remarkably strong. It's been very close to the guidance for the full year. Apart from the very good operational performance, there's been a positive contribution in Q1 and to less extent in Q2 by working capital. And we expect the working capital to revert in the two coming quarters, especially in Q3.
So we foresee while we remain very optimistic about the guidance, we expect a negative contribution by working capital in Q3 and Q4. On the accounting, well, I guess, know the company almost better than us. And by going through the numbers of the press release, you can actually see the net provisions that we accounted for in Q2 by going through the non monetary items and deducting the depreciation and amortization. And you easily come up with a figure that tells you the net provisions at portfolio level. And it's a significant number.
We can say that it's only Thai oil, it's the entire portfolio. So it's a number made by pluses and minuses. But I guess you can figure out the big number yourself.
Okay. And on oil, is there any update there Okay. At the project
So on Thai oil, I will answer to your question. So following the determination on the contract back in April, on the ground what is going on is we are orderly handing over the project to the client and this is what is really going on the ground. And while on the let's say on the arbitration that was opened by the consortium, we are now in the very early stages of that activity And so we will provide you further update as soon as things are progressing.
Okay. Thank you very much.
Next question is from Guillaume Derapie, Bernstein. Please go ahead.
Yes. Good morning. I would say three questions, two specific. First, could you provide us a little bit of, let's say, guidance of feeding about the booking of your fleet for 2728%? I think nine months ago, you were mentioning 50%.
Can you maybe update or confirm this number? This is my first question. The second question, and it is for Paolo, could you maybe repeat just what you said on the mechanism for understanding the provisioning for legacy projects? Sorry about that. And the third question is rather for Alessandro, maybe versus three or four months ago, what have you noticed, I would say, in the energy world, we hear many, many contradictory messages from many companies.
So what has surprised you over the past three or four months? What has changed according to you in the world energy scene of course in twenty seconds? Thank you so much.
Okay. So let's start from the first one that is the most straightforward, I will say. So booking for 2027 and 2028, yes, we confirm what we said and what you and as you rightly reported. And the comment that I can make today is that there is in the next months, I'm confident you will see increase in this booking level. We are in the final stages of several tenders we submitted.
Some of them we are really in the final, very, very final negotiation stages. So I believe that in the next couple of months, you will see the percentage increasing substantially. This is my comment and clearly, I cannot reveal more because there are negotiations with clients that confidential until we will be published in the press release. Then I'll leave the ground to Paolo for the
second Yes.
Thanks. On the net provisions, so while you know that we don't disclose provisions on a project by project, we you can find the numbers for the entire portfolio. And what you can do is you can look at the numbers that at Page two of the press release where you can calculate the D and As. And then at Page 12, you have the depreciation, amortization and other nonmonetary items. If you make the difference between the two numbers, you get the nonmonetary items, nonmonetary items being mostly, even not entirely, the net provisions that have been made in the period.
So if you look at the numbers, there is in Q2 this year an increase in the net provisions, Obviously, at portfolio portfolio level, so it's the entire portfolio of projects. But you can guess yourself that that we made a large part of the provisions on those two or three situation that we talk almost in every call we have.
Finally
Very clear, Paolo.
Finally, if you wait a few days and you go to the our first half report when we will publish it, you will find the detail of the provisions on contractual losses and you will see the gross and net changes in the number.
Thank you very much. Thank you. That's very helpful.
Okay.
And now back to your third question. So what we're changes, clearly in this first half of twenty twenty five, we see a bit of uncertainties around the world that are generated by the current geopolitical situation that it is nevertheless more complicated than the geopolitical that was, let's say, the world were used in the last few years. But I would like to remind some, I believe, key numbers. So in the second half of last year or 2024, we clocked €12,100,000,000 of award. That is an exceptional number and clearly this number could be by any means being replicated in the 2025 really because it was really an exceptional one.
And if you look at the dynamics on the market of 2024, there was a very important year in terms of order intake and you see the first half. In the first half, we clocked $7,100,000,000 So the first half, it is historically less important than the second half in terms of award. This is a normal dynamic because our clients, let's say, they tend to concentrate their final investment decision and so they come to conclusion to the tender in the second part of the year. And so this is also the reason why we believe we are positive for order intake in the second half of the year because we believe and we see the same dynamics occurring this year. And this is also part of the answer of your first question.
We have many tenders that are coming to the final stage in the negotiation in these days that clearly they will generate in the second half of the year order intake. So we see this dynamic that is a normal dynamic. Maybe this year a bit more if you are asking me whether there is a change, maybe this dynamic is a bit more stronger than in the year before. So what we are expecting a concentration of award in the second half.
Okay. Thank you very much. I turn it over. Thank you very much.
Next question is from Mick Pickup, Barclays. Please go ahead.
Good morning, everybody. A couple of questions, if I may. Firstly, Paolo. Can you just talk about the amortization in the asset backed services business? It jumped best part of 50,000,000 quarter on quarter.
Is there something one off in that? Or is that the level we should be thinking about? And secondly, on the drilling fleet, if you look at the high end drilling fleet, there's a lot of option periods coming up later this year. I know you've got some contracts starting back end and into next year, but what's the thought process on those option periods? Thank you.
The first question I will answer to the second question first. So yes, there are optional period. And I will repeat what I said regarding the E and C fleet. We are in the final stage of negotiation for getting those optional period, let's say, confirmed. And I believe that, yes, in the next months, so in the second half, we will see those options becoming confirmed. This is our expectation.
Okay.
Now I'll leave it
to And on the depreciation for the asset based services, it's mostly two additional vessels that enter into the fleet, namely the Shanda and the Boulder Turn, which entered into the fleet this year, especially Q2, and that explains the increase in the depreciation compared to last year.
Okay. And so when I'm looking at it on an EBIT level, year on year Asset Back Services EBIT is down, but you're telling me the profitability is improving in that business. How do I reconcile that?
Look, Mick, this is consistent with the IFRS 16 treatment of lease liabilities. We've been saying for a while that we have a huge amount of backlog to execute and we want to execute it on a capital light basis. That means leasing more chartered tonnage. And as such, you have a bit of a divergence between your EBITDA performance and the EBIT performance because in between, have a D and A line which is increasing. But if you think about it, knowing that the fleet would have grown on a charter basis, we started since eighteen months ago to report cash flow post lease liabilities, really to bridge that gap between EBITDA and cash flow generation. I hope it helps.
Thank you.
Next question is from Guillaume Levy, Morgan Stanley.
Hi, good morning. Thank you for taking my question. The first one, just going back to the CFFO discussion. Could you perhaps share with us what's your expectation in terms of working capital for the full year? So looking for looking at 2025 as a whole, should we expect a build or a release at this point?
And perhaps in underlying of your CFFO guidance, should we expect any change to the pace of lease payments in the second half versus the first one? And then second question, just if you can comment on the environment for drilling activity, specifically in Saudi and on your Tejon Negro 12 contract, if you can disclose any sort of compensation that you get that you got from Aramco or maybe define that you are now probably entitled to pay to return the unit to the owner? And then third one, sorry, technical one, but it's good to see that your commercial pipeline isn't changed at EUR 53,000,000,000. I was just curious to see if you have changed at all your FX assumption behind that number. I assume that part of your commercial pipeline is denominated in dollars.
So I was just curious to see if the €52,000,000,000 is unchanged disregard of that FX change. Thank you.
Okay. I will start to give you a bit of the ground on our drilling activity and the situation of our jackups in Saudi. So basically, what has happened is what it has been well described by Paulo in the call. We leveraged on our asset light strategy. And so the vessel the units, the three units basically, they've been shut down by Aramco.
Two of them, they're being returned to the company that lease those units to ourselves. And and one unit has found another location, the owned one, Perro Negro ten, has found another location in Mexico. Going into detail, yes, we use part of the termination fees to cover for the cost of relocation of the vessel. That's for sure something that we did. But I believe that here, what really matters is the success of our SLI strategy that allow us to grow very quickly in 2000 let's say, 2023 when the demand in Saudi was very high and also to copy without impact, I would say, the slowdown of the demand in 2024 and twenty twenty twenty five.
So I believe that this is demonstrated the success of this strategy because as you saw from the results of our drilling offshore business line, basically, is no impact in terms of financials of this swing, but this is because we have been actively working on the asset light strategy in terms of acquiring vessels. And now, I hand over to Paolo for your the other questions.
So we expect in the second half negative contribution in terms of cash flows from working capital. So the working capital increasing, while you observed that in Q1, there was a significant positive contribution. So we expect a reversal of the working capital effect in the second half and an increase in the lease payments that will almost double in second half compared to the first half. So all in all, this is the reason why I said that we expect we're confirming the guidance even though looking at first half numbers, we made almost entirely the free cash flow that we guided for in only six months. The reason being the increase in lease payments and most importantly, the working capital reversal in Q2 mostly, but also in Q4.
Q4. And then just to give you the full picture, there's there's going to be also an increase in the CapEx because if you remember our guidance, we actually did less than 50% of the capital that we were foreseeing for the entire 2025 in the first half. So they will increase a bit in the second half. On the backlog, you asked the question very technical on exchange rate effect. Actually, that's the number we present, it's a total of plus and minus within the revaluation of contract values, etcetera.
And it's obviously denominated in euro. So you can see that for contracts whose value face value was in dollars, they now account a bit less. But the number we present, it's total of opportunities that enter into our commercial pipeline or leave the commercial pipeline or whose value is updated because of changes in the expected contract value, etcetera. So all in all, we still see the same commercial pipeline we're bidding for than we saw in Q1.
Understood. Thank you.
Next question is from Kevin Roger, Kepler Cheuvreux.
Questions that will be basically two follow ups, please, just to be sure I well understand the accounting mechanism. So roughly, we can calculate that there is a net provision movement of €150,000,000 in the cash flow statement. Just to be sure, this €150,000,000 where do I find it in the P and L? It's already included in the EBITDA, meaning that if you did not add the €150,000,000 movement in provision, you will have to list an adjusted EBITDA or something like that well above €500,000,000 just to understand the relationship between the two? And if yes, it will basically also coming back on the question from Mick explain that, okay, the EBITDA margin is improving in the E and C Offshore business asset based, but that the EBIT margin is going down because you have the provision that have been taken into the EBITDA also?
Just to be sure I understand because effectively you mentioned improvements profitability on the asset base, but on the EBIT level it's going down. So just to be sure to understand all those two accounting factors please.
I guess Kevin that you are promoted in mathematics because you got the number very right. Those are the net provisions in Q2. And yes, they go into the EBITDA. So they go both into EBITDA and obviously in the EBIT. The only difference between the EBITDA and EBIT being the apart from the net provisions, the CapEx on leased vessels mostly.
Okay. So the adjusted EBITDA will have been at the group level above EUR 500,000,000?
Yes. So in other words, the EBITDA already accounts for the CHF 150,000,000 of that net provisions.
Okay. That's perfect. Now
it's I guess we're going very technical. It also explains why the operating cash flow has been remarkably strong compared to the increase in the EBITDA, Because those net provisions are non monetary component.
Okay. No, that's perfect. Understood now perfectly. Thanks.
Thanks.
Next question is from Massimo Bonizoli, Equita.
Good morning. Two quick questions left. Can you provide an update on Mozambique project and the eventual restart going forward? And the second question, if you can give us an indication of the remaining balance of the legacy projects in energy carriers? Thank you.
So Mozambique, today there is the call of the operator of Area 1. So for sure, you will get even more details there. Nevertheless, it's a fact that the Mozambique LNG partners are very actively working to restart the project within the summer. So I will say that we are pretty close being in July. That's what I can comment and this is what has been public domain since few weeks now.
So that's the status of the Mozambique. Regarding the legacy project, I believe Paulo can give you the precise number, but now it's becoming pretty little.
Yes. As far as the onshore legacy projects are concerned, we are almost below the EUR 100,000,000 threshold in terms of remaining piece of the that was coming from if you refer to the legacy as the twenty twenty one, twenty twenty two bed projects is less than EUR 800,000,000.
If I may squeeze a follow-up, just to understand, so that in the third and fourth quarter for the energy carriers, we can see a sort of a step up in profitability considering the level of legacy projects right now?
Yes. If you remember, we are targeting mid to high single digit margin for the onshore business. Obviously, the way from negative or zero to the high single digit, it goes through the 1.5% possibly 2% and then 3% and so on. So yes, you can expect an increase which is the path toward a high single digit target margin.
Very clear. Thank you.
Next question is from Mark Wilson, Jefferies.
Good morning. Thank you very much. A lot of my questions have been answered already. Just a clarification on that point regarding the provisions that have been taken. You've had a few quarters now where these things have come through, but EBITDA report has been very good.
So given the fact you reconfirmed CorSoil Semere and with the termination and clarifications regarding that, it sounds like all of those recognized situations, there's going to be no more of those coming through. So the net effect you've just described, all things being equal, we're not going to see that anymore. And then the second part would be, you mentioned on the Mozambique, what would be the backlog exposure to a restart there? Thank you very much.
Sure. The backlog in Mozambique is around EUR 3,000,000,000. This is what we have. So that's the plus, let's say, restart activity. So that's the order of magnitude of the backlog in Mozambique.
On the provisions, I guess that your question is a bit general on the way we accounted for possible future losses in the last two years. It's an hard question to answer, but I think we can all agree that in the past two years we have been most of the times on prudent side when accounting for the future. Well, I guess we are hoping that the provisions we have today would be more than sufficient for the works that we have to complete. And it's been the case in the last two years, and we're hoping that assumptions made will turn out to be as prudent as the past ones. This is the most I can tell.
What we are very happy about is that two years ago we had seven bad projects in our portfolio, now we are down to two, almost one. And as I said before, the legacy portfolio comes less and less on the total revenues and on the total provisions, which is I think the what we are trying to achieve to put the last project behind us as soon as possible. And this is going to be end of twenty twenty five, beginning of twenty twenty six.
And so you mentioned regarding current work, but regarding potential future arbitration, for example, is that included in your commentary you've just given?
Yes, it is. And the provisions we make are made for, let's say, alive contracts and dead ones, obviously, so including litigations or possible litigations or possible.
Thank you very much.
Next question is from Richard Thorson, Berenberg.
Hi, good morning and thank you for taking my questions. Firstly, just a clarification on depreciation. I believe your expectations for full year D and A was about €820,000,000 as previously guided. Has this now changed given you've done €459,000,000 already in the first half? And then second question is on Brazil.
There are reports this month that Petrobras could award the Atapu II EPCI contract to a competitor who seems to have bid a significantly lower value than contracts including Saipem. Is there any read across here on where prices might be going for new awards? Are margins maybe leveling off? Thank you.
Okay. Let's start from Brazil. In Brazil, we are working and Castoro ten just started the work for Equinor in Brazil and we have other vessel working. So yes, we don't win all the contracts that are tendered in Brazil and that's I believe normal dynamics. And Brazil is a very competitive market with many competitors working in the area.
So what is happening, I believe, is just normal market dynamics. We are working. Sometimes we win projects. Sometimes we don't win projects. That's the life of the contractor, but it is a sign of a very, very competitive market.
Richard, on your second question on D and A, of course, you remind you recall correctly with the full year results, we said we were expecting D and A between $820,000,000 and $840,000,000 for the full year 2025. I think for the second part of the year, you are likely to see an increase in D and A, which, yes, will bring us to the top end of the range or possibly even marginally higher. And that's, again, mainly driven by the growth of the fleet on a charter basis and the few additions that we had in the first part of the year, including the bolt on and Shanda.
That's clear. Thank you.
Next question is from Victoria McCulloch, RBC.
Good morning. Thanks very much for your time. Just one remaining for me. Maybe could you give us a bit of color on more on the dynamic bidding environment on Slide number nine? That's really helpful, the split.
In terms of the work that's submitted into tenders, can you give us an idea of the split for onshore versus offshore for this? And then more broadly, are you seeing delays from, say, feed to FID stage sorry, to award stage on projects from when they're FID things coming through. What's the guess the software communications that you're seeing from your customers? Is this harder to get things across the line when you're getting pushback from costs? Because we're hearing mixed commentary across the spectrum as to where costs are on the services side? Thanks very much.
Okay. So regarding clients' attitude, I would say that there are new clients, they are never happy of the price we submitted. They always consider that we are too expensive and that's their mood always. So as I said before, the main market move that we have seen in these days is a shift from, let's say, taking final investment decision and so awarding of the contract more toward the second half of the year than the first part of the year. As I said before, this is a normal dynamics, but this year, I see is more stronger than the year before.
On the onshore, just to give you some figures, are bidding from prospect in the range of EUR 15,000,000,000 that can be assigned over the eight to twelve months. To tell you frankly, competition is very strong. We as I said in the last call, we confirm we will be very selective. So I do not expect for sure to win all the $15,000,000,000 that we are tendering because we said that we will be selective and we are selective. What does it mean being selective?
That we really want to make sure that our onshore activity is robust, is done in a de risk manner and with the right price because that's what that it is our strategy and we remain stick to our strategy. The total, let's say, in the second part of the year, we are expecting and we are bidding a total of 16,000,000,000 but this is including both onshore and offshore. And as I said earlier in the call, we are expecting results from €7,000,000,000 of tender that are out and we are expecting results of those tender and those are already submitted in the first part of the year. So you see the first part of the year, we submitted €7,000,000,000 and in the second part of the year, we expect to submit 16%. This is the ratio between the first and the second half.
Thanks very much for the color. Appreciate it.
Question is from Sebastian Erskine, Rothschild and Co, Redburn.
Yes. Good morning, Alessandra, Paolo. Thanks for squeezing me in. Just zeroing in on your comment, Alessandra, on the kind of market dynamics kind of meaning more of that step up in the second half versus the first half of the year. Can we extrapolate that strength into 2026?
And I guess, kind of basins we'll see that strength in order intake in that year? And then just a very quick one on the offshore drilling side. I was curious, can you confirm when the renewed contract on Scarabeo eight with Aker BP from last year kicks in, if it hasn't already and kind of the uplift from that on the results in that division? Thank you.
So whether I expect the same in 2026, in a certain extent, yes, because this is a dynamic that we see year on year. And as I said before, this year may be more clear, more evident than the previous one. So it is possible that next year, again, we will see the same dynamics. Then the second question, you're really dragging me in something that is too specific to detail then it involves, let's say, confidential negotiation that we are having in these days. So I really cannot comment on that.
Appreciate it. Thanks very much. Thank you.
Mr. Pulisi, there are no more questions registered at this time.
Okay.
Well, then that's it. Thank you very much. Have a good day.
Ladies and gentlemen, thank you for joining. The conference is now over. You may disconnect your telephones.