Good morning, ladies and gentlemen, and welcome to the audio conference call of the 2024 full-year results of Constellation Oil Services. Thank you for standing by. All participants are in a listen-only mode. Please refer to the forward-looking statement section in the company's earnings release for the matters that will be discussed in this conference call. They reflect Constellation's current views and assumptions with respect to future events, which are subject to risks and uncertainties. The Q&A session will be held at the end of the prepared remarks, and questions can be made in the Submit Questions area of the webcasting link at any time. Please submit each question individually. Now, I would like to turn the conference over to Mr. Rodrigo Ribeiro, Constellation's CEO. Please go ahead, sir.
Thank you very much, and good morning, everyone, joining us for the release of Constellation Oil Services' 2024 full-year results. I'm pleased to have with me Daniel Rachman, our CFO. Our financial statements, earnings release, and presentation covering our results, and the updated fleet summary reports are available on our website at theconstellation.com. In my prepared remarks, I will provide an overview of our operational performance and a forward-looking update on our business. After that, I will hand over to Daniel, who will cover our financial results in detail. 2024 was an exceptional year for Constellation Oil Services. We not only delivered outstanding operational results, exceeding our targets, but also secured significant additional backlog across most of our fleet. Additionally, we successfully completed a complex financial recapitalization and refinancing, reducing the company's leverage to a healthy level in 2024.
The past year marked a turning point for Constellation, laying the groundwork to achieve our full potential by 2026, when we expect most of our fleets to be operational under the new contract rates. Our financial recapitalization has also strengthened our balance sheet, providing us with the liquidity needed to manage the several contract transitions expected in 2025. These milestones were instrumental in facilitating Constellation's recent listing of shares on Euronext Growth in Oslo. This listing provides increased liquidity and enhanced trading opportunities for all our shareholders, including those who participated in our $75 million equity private placement in December. Listing our shares and becoming a publicly traded company represents a significant milestone for Constellation. By increasing our visibility to the market, we can access a broader base of investors and improve our corporate profile and governance.
Oslo is a global hub for our industry and the energy sectors, with a strong investor community experiencing the capital allocation within the drilling business. Looking at our 2024 operational results, we maintained a high fleet utilization at 97%, with only one contract transition in the year from Alpha Star at the end of 2024. After completing its contract with Brava Energia in mid-November 2024, Alpha Star was moved to sheltered areas for overhaul, SPS, and adequacy works, as well as a Petrobras acceptance process for its upcoming contracts completed now in February 2025. Additionally, we are pleased to announce an amendment to Alpha Star's Petrobras contract, incorporating real-time riser analysis. Using advanced sensors and digital twin modeling, this technology can continuously monitor environmental data, enhancing safety and efficiency.
The amendment will add about $18 million on our backlog, and it's expected to be fully operational by Q4 2025, with the contract running through February 2028. This will be our second water depot unit equipped with this type of technology, following a similar agreement with Brava Star. On the operational front, the fleet closed the year with an impressive 97% uptime, exceeding the 94% achieved in 2023. Remarkably, in Q4, we achieved 100% uptime across the entire fleet. This outstanding performance pushed our 2024 adjusted EBITDA to $230 million, up from $185 million in 2023, and generated $224 million in operating cash flow, a 52% increase over the previous year. Daniel will share more detail in his remarks. Our strong operational results also enabled us to maintain the top spot in Petrobras' Sondópolis ranking since Q3 2024.
We now have the four best rigs in Petrobras' individuals ranking, an exceptional achievement. I would like to take a moment to thank our technical and operational teams for their dedication, which has been key in achieving these impressive results. On the commercial side, 2024 was another successful year. Constellation secured three long-term contracts through two tenders. Notably, we won new Petrobras contracts of Laguna Star and Amaralina Star, which together accounts for approximately $1 billion in backlog. The Amaralina Star contract awarded last December is valued at approximately $528 million, including mobilization fees and well-in-progress. Under this agreement, the Amaralina Star will be committed a three-year term starting in Q1 2026 to operate for Petrobras Pool, with the possibility of working in the Equatorial Margin.
Currently, the rig is operating in the Roncador Field and will complete its term in Q4 2025, after which it will undergo necessary preparation, such as hull cleaning, class inspections, and other modifications before beginning operations. Late last year, we also extended the Atlantic Star's contract by additional 301 days to continue its P&A work in Campos Basin. Atlantic Star is highly efficient in P&A operations, and we anticipate continued demand due to the significant backlog of wells to be abandoned by Petrobras and other operators. We are already in discussions with at least two potential clients for further opportunities for this rig next year, including contracts disclosure in prior earnings call, such as the new Roncador tender from Petrobras, where we were awarded two contracts, including one management agreement, as well as the Lone Star contract with Brava Energia.
We secured five new contracts in the last six months of 2024, adding $1.2 billion in our backlog. As a result, the company increased its backlog by 31% from Q3 2024, closing the year with $2.1 billion. Regarding Gold Star, although a current contract with Petrobras matures in August this year, we anticipate an extension at least until Q4 2025. For 2026 and ahead, beyond the expected Petrobras tenders anticipated for late this year, we are also exploring potential opportunities with other oil companies, particularly the independent operators. On additional notes, we are very pleased to announce that on March 19, Constellation was declared the winner of Petrobras' recent bid to deploy a third-party jackup for shallow water P&A operations in Sergipe, Alagoas, Ceará, and Potiguar basins.
Constellation will operate the Admarine 511, owned by our partner Ades Group, and has up to 210 days to mobilize the rig from Bahrain to Brazil. The contract features a firm term of 1,143 days, with an option to extend up to 472 days by mutual agreement. We are very excited to engage in another project with our main partner, Petrobras. We continue to see promising signs for a global offshore water depot market, despite caution in certain regions. Brazil remains a key market with 100% rig utilization compared to 83% globally. This trend is expected to continue, fueled by Petrobras' five-year business plan. At Petrobras' February conference call with the contractors, we noted no significant changes to its deep water drilling plans.
We expect Petrobras to maintain a stable offshore fleet of rigs in Brazil in its business plan timeline, which is a great opportunity for those with incumbent rigs in country due to a well-known high cost of mobilization and adequacy to newcomers. Petrobras forecasted a robust demand for the offshore rigs, aiming to drill up to 270 wells, being 66 exploratory, conduct at least 180 workovers, and complete around 50 deep water P&A interventions annually, an 80% increase over 2024. This outlook underscores the need for a versatile, capable fleet, and we are very well positioned to meet this requirement. The market remains attractive with Petrobras' confirmation of a stable demand through 2029. Moreover, Petrobras has indicated potential for increased demand depending on the exploration in the Equatorial Margin and Pelotas Basin. Daniel will present our 2025 guidance in his remarks.
However, it is important to note that successfully managing five contract transitions, each involving SPS and adequacy activities, will be key for our performance in 2025. The first step is already complete as Alpha Star began its new contract with Petrobras last February. Considering recent news regarding the suspension of certain Petrobras chartered rigs over the regulator's safety concerns, Alpha Star's seamless acceptance process, during which Petrobras inspects the rig systems, procedures, and safety protocols, highlights Constellation's commitment to maintaining the highest standards for its operations. It is worth mentioning that none of our rigs were affected by recent ANP suspensions, which are not demand-driven but rather focused on enhancing safety procedures. Moving to our sustainability agenda, the company will publish its 2024 annual sustainability report by the end of April, highlighting our progress in the environmental, social, and governance areas.
By sharing our performance indicators, we aim to keep all stakeholders informed about our commitments and the development of our sustainable business practices. The report will show how Constellation is evolving with its ESG agenda. To finish, I want to thank all the men and women at Constellation for their incredible efforts throughout 2024. In addition to our operational and financial achievements, the recapitalization has provided us with a solid foundation for the years ahead. I would also like to extend my gratitude to our investors for their continued support. Notably, we successfully listed on the Oslo Stock Exchange and became a public company in February 2025, marking a significant milestone in our growth journey. I'm proud to be here showing how our company continues to improve. None of these accomplishments would be possible without each employee, whether in the office or on the rigs.
Your hard work and dedication truly drive our success. Looking ahead, these strong results make me confident we'll deliver another great year in 2025. With that, I'll turn the call over to Daniel so he can cover the financial results for the year. Daniel, please.
Thank you, Rodrigo, and good morning to all participants. In today's presentation, I'll provide a brief overview of our 2024 financial results before offering guidance for 2025. As reported in the earnings release, Constellation delivered an adjusted EBITDA of $230 million in 2024 compared to $185 million in 2023, despite operating one less rig. The reduction in fleet size helped decrease operating expenses, which in turn improved EBITDA. Our adjusted EBITDA margin of 41% in 2024, up from 34% in 2023. We finished 2024 with the highest margin among our listed peers, which is quite remarkable.
Average fleet uptime improved to 97% in 2024 compared to 94% in 2023. This increase in uptime is key in keeping our revenues slightly above last year level. As a result, net operating revenues increased by 2% year-over-year, from $552 million in 2023 to $564 million in 2024. Along with the 300 basis point improvement in fleet uptime, this increase was driven by higher day rates from new contracts from the Brava Star and Alpha Star, as well as the contract extension of Atlantic Star. These factors more than offset the decline in revenue of Olinda Star, which completed its operations in January 2024. Brava Star, Alpha Star, and Atlantic Star together generated $78 million of additional revenue, compensating for the $68 million reduction related to Olinda Star.
Our contract backlog grew by about 38%, or $562 million year-over-year, reaching a total of $2.1 billion as of December 31, 2024. We significantly increased our contract backlog, particularly after securing three new contracts for Laguna Star, Amaralina Star, and Lone Star, which added together $1.1 billion to our backlog. Additionally, Petrobras contract extension for Atlantic Star contributed another $61 million to our backlog. It's important to note that while the Tidal Action contract has similar economics to Laguna Star, we added approximately $12 million related to the fixed management fee. However, the variable component of its contract is not included in the backlog. On the P&L, contract drilling expenses decreased by 6%, at $320 million in 2024 compared to $340 million in 2023.
This decrease was mainly driven by, first, a $23 million reduction in maintenance and materials costs, primarily due to Olinda Star's exit from the fleet in January 2024. Additionally, we recognized a $4 million COVID claim reimbursement, which further reduced our costs. This decrease was partially offset by a $6 million increase in personnel costs, driven by union agreements, salary adjustments, short-term incentive accrual linked to 2024 results, and accruals for the 2025 offshore retention plan. Our general and administrative expenses came to $35 million, an increase of $4 million compared to last year. The primary driver of this increase was an $8 million provision for our management incentive plan, linked to the recapitalization and liquidity event, along with $2 million in labor contingencies. These higher costs were partially offset by a $5 million reversal of age provisions previously reported in Q3 2024.
On the operating income, we posted a loss of $18 million, mainly due to a $48 million impairment provision reflecting a more conservative valuation of our offshore rigs and a $3 million provision for underused contracts, primarily related to higher depreciation. These negative results were partially offset by a $24 million gain from Constellation's financial recapitalization due to the debt repayment discounts, $8 million in revenue from the sale of Olinda Star, and a $2 million reversal of contractual penalty provision related to Brava Star. It is important to remember that impairment provision, underused contract provision, and the gain on the financial recapitalization have no cash impact, and as such, they are excluded from adjusted EBITDA and adjusted net income calculations.
Moving to our adjusted net financial expense, which excludes the effects of derivatives, it remained stable at a $63 million loss in 2024 compared to a $64 million loss in 2023. Despite a $5 million increase in financial income from our cash balance, financial expenses were higher in Q4 2024. During the period between the issuance and release of the bonds as part of the company's liquidity event, we were required to pay interest on both the old debt and the newly issued bonds held in escrow. This dual interest obligation resulted in an increased financial expense for the year. Bottom line, we posted an adjusted net loss in 2024 of $29 million loss compared to an adjusted net loss of $69 million in 2023.
The $40 million reduction in adjusted net loss was primarily due to a $45 million increase in adjusted EBITDA and a $10 million reduction in income taxes, which was partially offset by a $16 million increase in depreciation related to the impairment reversal recognized in 2023. Moving now to the cash flow, the $224 million operating cash flow generated in 2024 represents a 52% increase compared to 2023. The $76 million increase was driven by a $45 million variance in adjusted EBITDA and a $26 million mobilization fee from Brava Star received early last year. Additionally, we received $8 million from the sale of Olinda Star and also released $2 million in restricted cash after the repayment of the legacy debt.
These inflows were partially offset by $131 million invested in new CapEx, including the contractual upgrades of Alpha Star that had its transition kicked off in November 2024, condition-based maintenance, and regular maintenance of the fleet, which includes the thruster replacement of Laguna and Gold Star, and the overall corporate initiatives like the ERP project, which is expected to go live in March 2025. We had a $3 million financial activity resulting in cash flow generation of $100 million in the period. In addition, the $57 million interest paid on legacy loans and financing, the financial activity also includes the effects of our recapitalization, which includes $697 million in net proceeds from the equity private placement and bond issuance, which were partially offset by $620 million of the loans repayment and $23 million in share repurchases.
The $83 million increase in cash and cash equivalents reported on our financial statements includes $17 million in short-term investments. However, these funds remain in the company's liquidity. On the balance sheet, our total cash increased to $183 million as of December 31, 2024, compared to $90 million as of December 31, 2023. Our total debt decreased to $643 million as of December 31, 2024, compared to $964 million at the end of 2023. As a result, net debt decreased by $420 million to $454 million as of December 31, 2024. The net debt reduction resulted from the comprehensive refinancing and recapitalization transactions concluded in December 2024. As part of our strategy to strengthen our financial position, Constellation successfully optimized its capital structure. This plan included refinancing all current debt and raising additional equity from third parties or existing stakeholders.
We raised $75 million in new equity and recapitalized approximately $300 million from stakeholders who choose to roll part or all of their debt into new junior capital. The transaction was completed in December 2024. Post recapitalization, our total gross debt stands at $650 million, with cash in the balance sheet of more than $180 million. The recapitalization led us to close the year with a net debt-to-adjusted EBITDA ratio of 2x , an outstanding result if we compare to 4.7x in December 2023. Additionally, we are pleased to have listed our shares on Euronext Growth Oslo on March 6, 2025. This platform has an investor base with significant experience in the oil and gas and offshore drilling sectors. The listing is a significant step in enhancing liquidity for our shareholders and providing a transparent and accessible trading platform.
It also strengthens our market position and offers new investors access to a growing and well-established offshore drilling company. We are excited about the opportunities this new chapter brings. Moving now to subsequent events, as disclosed in our financial statements, we received debit notice from Petrobras in January for penalties related to the alleged delays in the start of the chartered agreements of the Sete Brasil project, which are Urca, Mangaratiba, and Bracuhy rigs. The total claim penalties amount to $269 million, with an original payment due date of January 21, 2025. In March, we accepted Petrobras' invitation to enter into an out-of-court mediation process, which formally paused any debt collection while the mediation takes place. Based on external legal counsel's opinion and our own assessment, we believe the likelihood of loss from these claims is remote and do not consider them a material risk.
We also want to reassure you that Petrobras is committed to working together on a resolution that works for everyone involved. We will continue to keep a close eye on the situation and update you if anything significant changes. Now, turning into our financial outlook for 2025, we anticipate a transitional year with five planned contract transitions. As a result, we expect lower revenues and EBITDA compared to 2024. However, once the rigs switch to their new higher contracts in 2026, we expect significant growth in both revenue and EBITDA. For 2025, we expect revenue to range between $535 million-$555 million, with adjusted EBITDA between $160 million-$180 million. This guidance reflects our solid backlog and planned contract transitions and should be fairly straightforward with no extensions for any of the existing contracts.
If full-priced extensions materialize, we are targeting an incremental of approximately $20 million in EBITDA and free cash flow. Given our good visibility, this range of guidance should offer investors a clearer picture of our expected performance for this year. On capital expenditures, we expect to invest approximately $150 million this year, primarily for overhauls and upgrades related to contract transitions for Alpha Star, Laguna Star, Lone Star, and Amaralina Star. These four contracts are expected to generate $94 million in mobilization fees, with $55 million expected to be collected in 2025. Turning to our cash flow guidance for 2025, combining EBITDA, mobilization fees, and capital expenditures, we expect to generate in between $65 million-$75 million in cash from operations. Most of this will be used to service our debt, with $61 million in interest payments. As a result, we expect to be at a break-even level from a cash generation standpoint.
Having completed the Alpha Star contract transition already, I'm confident about the remaining contract transitions. Our operational and technical teams have prepared for smooth handovers. Looking ahead, 2025 will be a key preparation phase, and thus we expect to reach our full potential in 2026 under newly repriced contracts. Looking ahead to 2026, we have strong visibility, with our secure backlog providing already 71% of contract coverage for the year. With that, we anticipate a significant increase in EBITDA and cash flow, with additional upside potential for Gold and Atlantic Star, as we are optimistic about securing new contracts for them in 2026. This provides a clearer path to sustain growth in the coming years. In line with this growth, we recognize the importance of returning capital to shareholders.
As part of our capital allocation framework, we plan to introduce dividends and/or share buyback programs starting potentially in 2026, once we achieve a net leverage ratio of 1.25x , as required by the financial covenant in our bonds. While we cannot provide specific figures and dates at this time, our strategy is clear: returning cash to shareholders will be a priority once we reduce leverage. With that, I'll turn the call back to the operator.
Thank you, ladies and gentlemen. We will now begin the question and answer session. Questions can be made by creditors in the Submit Questions area of the webcasting link. We kindly ask you to not forget to submit each question individually. Our first question comes from Julian Rios, Sell Side Analyst at SMBC. The question is, "Can you please provide what the average day rate for Amaralina contract is?
Also, what is the average day rate for the five contracts that were signed in the second half of 2024? Thanks.
Hello, Julian. I'll take your questions here, Rodrigo. Thank you for your question. I cannot comment on rates individually, but I will explain between the drillships and the semi-submersibles. In terms of the average daily rates for the drillships, it is approximately $440,000 per day. For the semi-submersibles, we will see something around $350,000 per day. Bear in mind that this is with no mobilization fees included, but with most of the rigs with the third-party integrated services incorporated.
My last comment in that sense is that, as you know, those rates are considered, in our view, very positive rates for several different reasons, but mainly because we are operating the rigs in the same hub where we can explore our full capacity in terms of synergies and cost reductions. Also, we have to take into consideration the time between the contracts, which in our view are the best maximizing the efficiencies between the moment where we stop the revenues from the previous contracts and the new ones. Third, of course, is the amount of money that we have to invest for mobilizing the rig and to adequate the rig as well for the new contract. All in, it's a very positive outcome for us, and those are the figures that I can share with you.
Okay, thank you.
The next question now comes from Omar, Sell Side Analyst for Oppenheimer. The question is, "Hello, sorry if I missed it, but is there an update for the Gold Star contract renewal or extension?"
Hi, Omar. Thank you for your question as well. For Gold Star, the current contract will end in the third quarter of this year. We really anticipate that Petrobras will exercise the extension rights, as they have done for our other rigs as well. This will push the contract until the Q4, very close to the end of this year in our view. The rig will be fully occupied throughout 2025 in our current view. As a result of that, our target is to secure a new contract for Gold Star starting in 2026. This will give us some time.
We have a privileged position right now in terms of the fleet utilization. Gold Star is our only DP rig available for this time period. We have time to explore the best option to either extend this contract with the current client or even to negotiate new contracts, which could be a new tender coming from Petrobras, or also evaluating the progress of some conversations we are having with the IOCs or independents in Brazil, which have, of course, demand for this type of rig. We have options, we have time, and we are carefully analyzing the best alternative for us to allocate this vessel.
Okay, thank you. The next question comes from Fredrik Stene, Sell Side Analyst, Clarksons Securities . The question is, "Are you able to give some additional color on the contracting opportunities for the Gold Star and the Atlantic Star?
Should we expect downtime on any of the rigs in between contracts?
Okay, I have a comment already, the situation of Gold Star. Now I'll focus on Atlantic Star. As you all know, Atlantic Star is our oldest vessel. This is the only moored rig in our fleet, but also, as of today, the only moored rig in Brazil. The rig is allocated to a P&A campaign with Petrobras and was recently extended. This extension will maintain the rig fully occupied throughout the year in our view as well. When we analyze the future of Atlantic Star, we have to take two things into consideration: the integrity level of the vessel, which will drive the demand for CapEx and cost of adequacies for this rig in terms of next contracts, and the demand for P&A in Brazil itself.
On the first side, I'm very glad to share that this is a rig that we consider to be in very good condition in terms of integrity. The rig has been kept active in Brazil since 1996. The clients know the potential of this vessel very well. The rig is performing right now in basically almost 100%. Actually, last year was indeed a very positive year in terms of performance of this rig as well, and this continues to be. Operationally wise, we are very comfortable to confirm that we have no reasons to decide to scrap this rig or anything like that. In terms of demand, Petrobras has disclosed the work scope that they have for P&A, and this is amazing: 476 wells in the current work scope demand for Petrobras. Of course, this is not only shallow water; it's shallow and deep water.
The demand and the commitment from Petrobras with the regulator for P&A program is getting more and more mature as well. There is an important work scope being prepared from the independents that had acquired acreage from fields from the Petrobras divestment in the previous years. We are comfortable to say that this is a rig that we believe that will continue to contribute with the cash flow of the company throughout the years.
Adding to this question from Frederic, also, what are the moving parts that will decide whether you end in the low or high end of your guidance?
Hey, Frederick, thanks for the question. Let me try to give more color on what we have already considered in the guidance that has been provided and what could be potential upside.
I will start by emphasizing again, this year is a transitional year for us, right? We have all the four contract transitions. Certainly, the range there is to assume the risks that we have on being able to execute all those transitions on time and to be able to deliver all those projects at the expected timeframe that we will have. Usually, we plan about 90 days for the large transitions that we have for the new Petrobras three-year programs. I can tell you that we have our teams focused to deliver in about 60 days for those. What you will see in the guidance is really providing us a range in between how many days we have a final time in between such contracts.
We have provided as well about $20 million of potential upside to this range, which is what we would be able to deliver in case we are able to bring all the contracts, including the Gold Star and specifically the Atlantic Star, up to the very last day of the contracts with Petrobras and to consider as well some of the downtime during the course of all the contract that Petrobras could be using as incremental extensions that would bring incremental time for the extensions that we already have in place in the regular guidance, right? If we really have Petrobras using, which is likely to happen considering that they are lower rates than the new contracts, we will then be able to bring more work to the rigs, have them busy to the very end of the year, and with that, we will be bringing some upside.
That's why we provided the ranges and the upside guidance, okay? I hope with that that we have more color.
Thank you. Frederic also asks, "How do you view the competitive landscape in Brazil going forward? Do you think there is room for M&A? And what would be Constellation's role in this?"
Oh, Frederick, thank you. Thank you for your question. First, I should say that we feel indeed we are in a privileged position to have our fleet in the best market for offshore drillers in the planet. Indeed, our 22% of market share here in Brazil gives us a very bright potential for exploring increasing cash flow generation that we can forecast in our numbers in the company today. It is good to see that we are not facing big pressure today in terms of short and medium-term contract location for our rig.
This is a great indication of the benefits of Constellation's position in the best markets of the planet. Indeed, the consolidation and M&A opportunities is always a live topic in our industry. This is not different from Constellation. We constantly have dialogues in the management and also in our special committees with our boards. We will continue to maintain our focus on securing our market-leading scale in the region, improving our operational performance, and, of course, being committed with our capital allocation protocol, which is by materializing the performance that we are having in the next years, reducing quite a lot the debt level of the company and start heavily remunerating our shareholders as we have in the plan. By doing that, it is very clear as well for us that, especially for a Brazilian market, the synergies, opportunities that we might have in case of Constellation, they are considerable.
They are important, they are considerable, and Constellation will be always focused on analyzing those opportunities. Of course, it's very important to say that any transaction must be accretive to our shareholder value. That is exactly what will drive our governance and our decision-making in the near future.
Okay, thank you. The next question comes from Brett, buyside analyst from Caius Capital. The question is, "Can you please provide a breakdown of CapEx for the year? Guidance of CapEx for 2025 with breakdown and expected timing and cost of SPS on the fleet over the next few years?"
Excellent. Thanks for the question. Let me try to briefly cover on what we have as the CapEx guidance for this year, 2025, right?
As we know, this year, having all the contract transitions, it's going to be significantly higher than what would be a regular year that will happen in the beyond years after 2025. We're starting with 2025 and the color in each of those. What I can tell you, within the guidance that we provided of $150 million, we're certainly going to have a heavier amount on the Alpha Star, which has been a significant upgrade to get back into the Petrobras campaign, right? This rig was outside of Petrobras before. We have in between $45 million-$50 million planned for Alpha. Amaralina and Laguna, they are both rigs that have been operating for Petrobras. They have some adequacies, and they have as well within the upgrades for the contract as well maintenance that will be done.
I would say that typically those will be costing about $30 million each. All the remainder obviously will be to keep maintaining the fleet as per our asset integrity standards and not really as significant as those three that I just given the references. Important to say that we have also highlighted that from this $150 million that we're going to be investing, we expect receiving $55 million from mobilization fees already within the year, right? More to come as we're going to have a transition that will be done later in the year, which probably will give us another $40 million to take place in January or February 2026. There is an offset component to that with the quick payback that we have on the mobilization fees for many of those investments that we're doing during this year.
Now, moving on into what to be considering as CapEx plan on the years after 2025, I would say in a regular year without much of transitions that we have as this year and without upgrades being done in the rigs, we should expect something about $55 million-$60 million as a number that we have on the ongoing maintenance for the fleet, okay? This would be, I would say, a fair consideration within what we have in our estimates.
Okay, thank you. The next question comes from Miguel Ospina, Vinci Partners. The question is, "Could you comment again on your dispute with PBR potential impact and why you think the probability of this risk materializing is remote?"
Hi, Miguel. Rodrigo here. Thank you for the question. I will not dismiss the importance of this topic.
This is no doubt a type of surprise that no one would like to have. In fact, you are right to say that our consideration is the risk of having an impact in the company is remote. We have received this debt notice from Petrobras in January. The penalties are related to alleged delays in the contracts related to three rigs that we had a participation on this Sete Brasil project. The total claim is $269 million. That being said, since the first day that we heard about that, we started, as usual, a very close dialogue with Petrobras in all levels. I'm personally doing that on a weekly basis. The good news is that Petrobras is fully committed to take this situation to the finish line in an amicable way with no harm for the parties.
This is what we've been hearing from Petrobras. After a series of discussions with them, the decision was to invite all the drilling contractors involved in this situation for a mediation process. This will be an out-of-court process, which certainly is formally opposing any debt collection that was initially presented by Petrobras. By the way, we have no threats or any potential short-term concern in terms of this debt notice being applied to our current contracts. This is pretty much in line with what we have been hearing from Petrobras. We understand that this is, let's say, a very old dispute that basically the main claim is against Sete Brasil itself, which is still in a judicial recovery condition here in Brazil.
The administrators in Petrobras understood that it's like a pro forma action that they would need to do to formalize this Petrobras right to seek compensation against the drilling contract. We really see it as a pro forma action. All the indications, as I mentioned today, are positive. The negotiations are progressing in the way that we expected so far. We expect the mediation process will commence somewhere between April and May. As this is a process, we are not envisioning a very short-term conclusion for this mediation, considering that we have to follow all the protocols of this process here in Brazil. On the other hand, we are optimistic that before the end of the year, we'll see a conclusion of this process in line with our expectation, which is no harm for the parties as we are communicating.
Thank you.
Miguel also goes on to ask, "Could you give us some guidance about cash flow generation in 2026?"
Thank you, Miguel. I see as well that this is a common question that we are receiving, especially as well I see the Exbrook team as well questioning about that and more specifically trying to understand if we will be able to comment already on the contracts that we have in backlog, how much of a jump it will be able to give us on EBITDA. Unfortunately, right now, we are not providing specific figures, and I will not be able to comment on any specific value on how much more EBITDA we're going to be able to bring for 2026.
I'll be able to confirm again to you that we do expect significant growth as we are having 2026 a year with a full year of revenue and EBITDA with the contribution already of the new rates that we have just disclosed. We have offered in prior investor presentations that is in our IR website together with the conference discussions that we had on the last months, a good model that we believe is a very good sensitivity that you should be looking at in which you have as the base case in there giving a potential to be bringing the EBITDA to about $470 million once we have all the rigs operating under the newly signed contracts. This would include as well signing a contract for Golden Atlantic.
I think Rodrigo has already explained with many details the reasons why we are fairly optimistic about for 2026, those rigs also being busy and also finding good rates as the ones that we have achieved last year. With that, we believe that we will be able to get to very close levels to what we have into that base case that was provided in that sensitivity analysis. Unfortunately, I'll not be able to provide much more color exactly on how much is or not in backlog, although it's not that difficult to model, right?
With all those assumptions that we have provided and all the color that you may find in that specific sensitivity analysis, just by removing the revenue and the specific EBITDA of the associated rigs that do not have a contract right now, which are Gold Star and Atlantic Star, you will be able to see that there is already a significant increase in EBITDA only with the contracts that are in backlog. With that, we do expect to start generating a significant cash flow in 2026, which is the year that will allow us to hopefully be able to get to the 1.25x of net leverage, which is the triggering point for the company to start distributing money back to our shareholders. Within, as I highlighted before, is within the top priority in our capital framework that we should be implementing dividends and share buybacks within the next year.
Thank you. The next question will come from Abhinav from Barclays. The question is, "Could you please explain why EBITDA in 2025 is projected to be lower than in 2024?"
Yes, absolutely. I see this as well as a common question. Let me try to walk us back and understand exactly why 2025 will present a lower revenue and likely EBITDA than what we had in 2024. This is a transitional year that we are going to have all this docking time, which we refer to as the idle time in between the contracts, which, as I highlighted in a different question before, we usually expect up to 90 days of the time in between the contracts when we are doing all the upgrades and maintenance for the rig.
Due to that fact, we already started the year with Alpha Star being the first one to be in the project for docking and getting ready. We recently as well just shared with you that finally this has resumed operations and is now fully accepted and operating with Petrobras. As you see in our fleet status report, we have offered that as well. The specific white spaces that you find, which is not necessarily a white space, but the time in between the contracts, that is going to be the time that we are planning to do all this maintenance. We have three upcoming as well dockings planned to happen during this year. Due to this fact, it is a period that we are not incurring revenue. Hence, we are going to have revenue and EBITDA lower this year because of that.
Again, we have highlighted that we are working and we have really good visibility into upside potential if we are able to bring the existing contracts up to the very last day on when Petrobras can be using them, which would be offering us the opportunity to as well maximize and deliver better results this year.
Okay, thank you. The next question now will come from Dasha buy-side analyst. The question is, "Will you carry out any additional work on the rigs to avoid potential ANP compliance issues in 2025?"
Hi, Dasha. Rodrigo here. Thank you for the question. I will start by saying that Brazil is indeed a highly regulated place, not only by the activities of the regulator, but other authorities as well. This is not the first time that we see the regulator with a more stringent position for certain aspects on the rigs.
They have maintained often audits on the rigs as part of their regular activities for making sure that their own safety operational code is being followed and fulfilled by all the parties. That being said, my answer to you is that first, none of the Constellation rigs were affected by the recent suspensions. Instead, as I mentioned on my prepared remarks, one of our rigs, Alpha Star, was recently accepted for a new contract a couple of weeks ago. The reason why I'm mentioning that is that during this process of acceptance of new contracts, there is also a very close interaction with the regulator where they review the rig documentation and conditions as well. Our Alpha Star was accepted with no issues with the regulator.
This is an important point that somehow indicates the level of preparation that we have in Constellation, not only for this rig, but also for the entire fleet. In terms of work scope and readiness plan, that was exactly what we have, not from now, but since actually we noticed this trend from the regulator that, as I mentioned, takes place from time to time. We started our readiness plan, and we are in a very advanced stage for our fleet, especially for those points that they are more focused right now, which is integrity of fuel critical systems on the rigs and also the gas dispersion studies and protocols for emergency reaction on the rigs. I can tell you that we are very well prepared to face that, not from now, but also since we have heard this trend, which is far in the beginning of last year.
Thank you. This concludes today's questions and answer session. I would like to invite Mr. Rodrigo Ribeiro to proceed with the closing statements. Please go ahead, sir.
Thank you all for joining our call today. We have indeed had a remarkable year laying a solid foundation for our future growth. Our achievements in 2024 indeed reflect the dedication of our teams and the support of our investors as well. We look forward to seeing you all in the upcoming release of the first quarter of 2025. I'll now hand it back to the operator. Thank you all.
That does conclude Constellation Oil Services Audio Conference for today. Thank you very much for your participation and have a good day.