Good morning, ladies and gentlemen, and welcome to the Constellation Oil Services conference call to discuss its fourth quarter and full year 2025 results. Thank you for standing by. All participants are in listen-only mode. Please refer to the forward-looking statements section in the company's earnings release for matters that may be discussed on this conference call. These statements reflect Constellation's current view and assumptions regarding future events and are subject to risks and uncertainties. The fourth quarter 2025 financial statements, earnings presentations, press release, and updated fleet summary report are available on the company's investor relations website. The Q&A session will take place at the end of the presentation. Questions may be submitted by attendees through the Q&A icon at the bottom of the screen. I will now turn the conference over to Mr. Rodrigo Ribeiro, Constellation's CEO. Please go ahead, sir.
Thank you, and good morning, everyone. Welcome, and thanks for joining us today for Constellation's fourth quarter and full year 2025 results. With me are Daniel Rachman, our CFO, and Thiago Schimmelpfennig, our Chief Commercial and Innovation Officer. Before turning to our operational update, I would like to briefly comment on the current geopolitical environment, which continues to shape global energy markets and capital allocation decisions across our industry. Recent developments in Middle East have once again highlighted the strategic importance of the supply security and geographic diversification. While these events contribute to oil price volatility, they also reinforce South America's role as reliable offshore region for long-term investment. Brazil, in particular, stands out as a large scale offshore market with a well-established ANP agenda, significant resource potential, and limited direct exposure to the geopolitical conflict.
This matters because geography has become increasingly relevant in today's energy landscape. With close to 20% of the global oil trade passing through the Strait of Hormuz, any disruption there can materially affect global supply and market sentiments. In that context, Brazil continues to offer operators and investors a more stable and predictable environment for long cycle offshore development. That positioning is supported by both current activity and future opportunities. Today, there are 43 floaters working in South America, 37 of them in Brazil. Looking ahead, the ANP's award of 38 offshore blocks in 2025 highlights the potential for new exploration and development over the coming years, particularly in the Equatorial Margin and Pelotas Basin. This reinforce Brazil's roles as a resilient and strategically relevant supplier in the global markets.
Over the short term, Petrobras' latest five year business plan, released in November, once again confirmed substantial E&P investments for 2026 to 2030 period. This supports a robust rig count and provides good visibility over its project pipeline. At the same time, international operators and independents continue to advance multi-well campaigns, development programs, and new tenders for 2026 and 2027. Together, Petrobras' consistent investment profile and the continued activity from other operators provide a balanced and resilient outlook for offshore demand in Brazil. With that, let me turn to our operational highlights. 2025 was a strong year for Constellation, marked by operational and financial performance above our initial expectations.
We delivered an adjusted EBITDA of $233 million, which was 37% above the initial guidance we provide a year ago. This result reflects a strong execution across the organization and was driven by a few key factors. First, both Gold Star and Atlantic Star operated throughout the year, contributing meaningfully to utilization and EBITDA. This highlights both continued client demand and the value of having a diversified fleet able to serve different offshore needs across the region. Second, we successfully completed two contract transitions, Alpha Star and Laguna Star, and two rig acceptance, Tidal Action and ADMARINE 511, all on schedule. Third, cost discipline remained an important source of upside in 2025.
The OpEx savings we capture played a central role in driving EBITDA above the top end of our revised guidance range. A key driver of this, controlled OpEx performance has been the disciplined way we align overhauls and SPS activities with contract transitions. By concentrating that work during the transition period, we reduce the need for interventions once the rigs are operating. This also support strong operating efficiency. For the year, our fleet delivered an uptime of 95%, reinforcing the reliability of our operations. This same discipline also translated into a smoother and faster client acceptance process. Over the past 24 months, we have reduced the average transition period across our fleet by approximately 40% from 90 to 55 days. 2025 also marked the beginning of the asset-light managed fleet business, an important step in expanding our operating model.
Both Tidal and ADMARINE 511 completed their mobilization process and have already entered into operations. The average Petrobras acceptance period for these two rigs was 76 days after arrival in Brazil, roughly 60% faster than what we have seen in comparable peer situation. This further validates Constellation's ability to extend its operating model beyond their own fleet with same discipline, technical rigor, and consistent execution. Building on this strong operational foundation, Constellation was well-positioned to capture the upside opportunities that emerged during the year and to enter a new contracting cycle. This is one of the most important commercial inflection points in our recent history. Several long-term contracts began at materially improved day rates, with average day rates across the repriced fleet increasing by around 50%.
What matters here is not only the higher value of these contracts, but also the efficiency with which our teams transitioned into them. By delivering these milestones on schedule, we strengthened our financial performance and set the stage for a significant step up in earnings. These successful transitions mark Constellation's entry into a new financial level. With most of our fleet now repriced, we are entering 2026 with a much stronger base. These contracts are at the core of our outlook and support our expectation of meaningful improvement in EBITDA and cash generation. Turning to remaining transitions scheduled for 2026, we also have a positive development. Amaralina Star began its new contract with Petrobras earlier this month after successfully completing its transition in 60 days. Lone Star concluded its previous Petrobras contract in January and moved directly into a new agreement with Brava Energia.
The rig completed hull cleaning and SPS while still on day rate and began operating at full contractual day rate in early March. Both of these transitions had originally been expected to occur in 2025. However, at client's request, the rigs remained on their previous contracts for a longer period, and the transitions therefore moved into early 2026. As a result, part of the related operational activity also shift into the first quarter of 2026. Finally, Atlantic Star was released from its Petrobras contract at the end of February and is now completing its preparation work in Guanabara Bay ahead of its campaign with Karoon. The rig remains on schedule to begin operations in April with a scope of work of at least 70 days in the Santos Basin.
Let me now briefly address the Petrobras cost optimization initiative, the so-called Renecon. Constellation and Petrobras have worked constructively on solutions designed to balance Petrobras' objectives with long-term visibility and stability for us. We believe the framework under conclusion, centered on blend-and-extend solutions, is consistent with that objective. The related negotiations are substantially advanced, although the full set of agreements has not yet been formally executed. One agreement has already been signed and is disclosed in our financial statements as a non-adjusting subsequent event. It has a firm term of 1,042 days and a total contract value of approximately $266 million. Because it was signed after year-end, it is not included in our backlog of December 31, 2025.
We expect the remaining agreements to be finalized in due course, and once the overall package is completed, we intend to update the market. Due to the confidentiality obligations, we are not in the position to provide additional details at this time. What matters is that the Renecon discussions are expected to strengthen backlog and extend contract coverage, further reinforcing our visibility into the coming years. This stronger outlook give us confidence to move forward in the next phase of our capital allocation strategy. With a stronger balance sheet and a repriced contract portfolio, we are now in a position to establish a disciplined framework for returning capital to shareholders. Early this month, we received bondholder consent, allowing the company to distribute up to $25 million per quarter as our net leverage reach 2.25.
The proposal remains subject to the shareholders' approval at the upcoming AGM, and only after that approval, the company will be in a position to formally confirm the resumption of distributions. Subject to that approval, the framework contemplates a baseline distribution of up to $25 million per quarter over an initial one year period. As the leveraging continues and net leverage moves towards 1.25, the company may have room to consider higher distributions. The restatement of shareholder distributions is an important milestone, as it reflects the cash-generating potential of the business under this new earnings profile. Another important initiative for 2026 is our planned up-listing to the Oslo Børs main venue, subject to final approvals. This move reflects the maturity the company has reached, and it's intended to broaden our shareholder base, improve liquidity, and further strengthen our capital market profile.
Importantly, our current reporting, governance, and compliance practice already meet the standards required by the main market, which give us confidence in a smooth transition. As we reflect on 2025 and look ahead to 2026, I want to recognize the outstanding work of our teams. We currently hold number one position in Sondópolis, a ranking that reflects uptime, safety performance, absence of spills and accidents, and overall client satisfaction. This is a meaningful recognition of the consistency and professionalism of our people. With the backlog visibility improving, most of our fleet repriced, and the remaining transitions now largely behind us, we are well-prepared to carry this momentum into 2026 and beyond. Thank you all for your continued interest in Constellation. With that, I want to hand the call over to Daniel to review our financial results in more details. Daniel, please.
Thank you, Rodrigo, and good morning, everyone. I'll now take you through Constellation's financial results for the full year 2025. Our fleet recorded solid uptime of 95% in 2025, reflecting the operational discipline Rodrigo just described. Operating revenues totaled $597 million in 2025, up $34 million year-over-year. This increase was mainly driven by three factors. First, managed fleet operations contributed $29 million with Tidal Action and ADMARINE 511 commencing operations with Petrobras in late Q3 and early Q4 respectively. Second, Laguna Star delivered 98% uptime following the start of its new contract, and contributed approximately $12 million of incremental revenue in the year. Third, Gold Star delivered 100% uptime and remained active throughout extensions during 2025, contributing approximately $11 million of year-over-year revenue growth.
These positive effects were partially offset by Amaralina Star 14 day planned stop during the year, as well as the conclusion of mobilization fee amortizations from its prior contract in October 2024, which together reduced year-over-year revenue by about $10 million. In addition, Lone Star experienced higher downtime during the period, reducing revenue by approximately $8 million. These were operational interruptions that were subsequently resolved, with the rig returning to expected performance levels. Turning now to cost. Contract drilling expenses for our own fleet, excluding depreciation, came in at $312 million in 2025, down $8 million or 2.4% year-over-year. This is an important result of our cost control efforts. We were able to offset annual indexation in our cost base and still deliver a real reduction in operating expenses.
This performance reflects a stronger cost discipline, more efficient import processes, and better planning and execution across the fleet. Our operating model today is more predictable, more collaborative, and more cost efficient. Including the managed fleet, total contract drilling expenses increased $12 million year-over-year to $332 million. This increase is explained by the start of managed fleet operations, which added approximately $20 million of reimbursable expenses. General and administrative expenses totaled $42 million in 2025, up $7 million year-over-year, mainly driven by one-off expenses recognized during 2025, and an age commercial fee provision reverted in 2024, which reduced comparative basis. Excluding one-off items, G&A would be at $34 million. Adjusted EBITDA reached $233 million, which was $23 million above the top end of our revised guidance range.
It also exceeded the midpoint of our regional guidance by a very significant amount, reflecting the strength of our execution throughout the year. Net financial expenses were $46 million in 2025, compared to $36 million in 2024. The increase mainly reflects a $26 million one-off accounting benefit recorded in 2024 related to the reversal of provisions settled as part of the recapitalization, which lowered the comparative base. This effect was partially offset by a $9 million gain on derivative instruments related to our hedging strategy implemented in 2025, as well as $5 million of higher interest income on short-term investments reflecting the higher cash balance in the period. Lastly, we reported a net loss of $138 million for the year, compared with a net loss of $42 million in 2024.
It is important to highlight a non-cash item that significantly impacted these figures and is not reflected in adjusted EBITDA. The year-over-year variation mainly reflects a $127 million impairment recognized in 2025, which was $80 million higher than in 2024. As required under IFRS, we perform annual impairment tests to ensure that assets are not carried above their recoverable value. Given our total asset base of approximately $2 billion, the impairment recognized in 2025 does not affect the view of the company's operating performance or its cash generation capacity. Turning now to cash flow. Operating cash flow reached $277 million in 2025, up $53 million versus last year.
This was driven by strong fleet utilization and by the mobilization fees for Laguna Star and Alpha Star, amounting to $32 million and $24 million respectively, which were received in Q4 and Q2 2025. CapEx totaled $175 million in 2025, up $44 million year-over-year, reflecting contract transitions and scheduled maintenance across the fleet. The main items were $54 million for Laguna Star related to preparation for the Roncador contract that started in October 2025, $43 million for Amaralina Star related to its transition into a new contract that commenced in March 2026, and $39 million for Alpha Star related to the contract transition completed early in 2025. It is important to clarify that our CapEx guidance reflects expected cash outflows in the period, which totaled $153 million and differs from PP&E additions under accounting recognition.
This timing effect is also visible in payables to suppliers, which increased from $51 million to $69 million year-over-year. As cash payments catch up with assets already recognized, we expect this temporary difference to narrow. Cash used in financing activities totaled $61 million in 2025, reflecting the two semi-annual bond coupon payments made in May and November. As a result, cash equivalents, and short-term investments increased by $45 million to $228 million at year-end. Please note that restricted cash related to the Tidal Action reserve account is not included in liquidity figure. Gross debt increased by $3 million to $646 million as of December 31, 2025, mainly due to accrued interest supported by higher liquidity. Net debt decreased by $42 million since December 2024 to $418 million.
With 2025 adjusted EBITDA of $233 million, net leverage improved to 1.8x versus the 2x in the previous quarter. Overall, we are pleased with the year's performance marked by strong EBITDA and solid operating cash flow. Importantly, even though CapEx was above our initial expectations, mainly due to additional work on Laguna Star and the acceleration of certain activities for Amaralina Star and Lone Star, our cash generation remained well ahead of plan. While our initial 2025 guidance contemplated roughly break-even cash generation after debt service, we delivered positive free cash flow to equity of approximately $55 million. During the quarter, we also resolved a long-standing patent dispute with Transocean related to Brava Star. The settlement agreement was approved by the court in early February 2026, with the claims being withdrawn and the case closed.
This removes a legacy contingency from our financial statements. As we enter this new phase, we are implementing a financial framework that reinforces our disciplined capital allocation approach, supported by a stronger balance sheet and by the improved visibility from our repriced contract portfolio. This framework prioritizes continued deleveraging while also establishing a structured path for returning excess cash to shareholders. As Rodrigo anticipated, following the approval of the recent consent request, the company will be able to start quarterly shareholder distributions after the AGM, with its payment scheduled for April, subject to the required approvals. I would also note that the consent solicitation received very strong support from our bondholders, which reflects confidence in Constellation's credit profile and in the stability of our future cash flow.
While this creates greater transparency for shareholders, capital returns will continue to be assessed carefully by management and the board in light of market conditions and strategic opportunities. This oversight is further supported by our strategy committee, which meets regularly to review the company's strategic direction and capital allocation priorities. I would also like to briefly comment on the planned uplisting to the Oslo Børs main market, which is expected to be completed in May, subject to final approval from the stock exchange. Moving from Euronext Growth to the main market is an important step for the company. It is expected to strengthen our capital markets profile, broaden access to institutional investors, and support improved trading liquidity. We are well prepared for this step from a governance, controls, and disclosure standpoint. Turning now to our 2026 guidance.
We expect a year of significant growth as the full benefit of the repriced contracts begins to reflect in our results. With most transitions behind us and the fleet moving into longer-term contract at higher day rates, 2026 should be the first year to fully capture this uplift. For 2026, we expect revenues between $740 million and $775 million, and adjusted EBITDA between $350 million and $385 million. As a reminder, these revenue estimates include only the management fee contribution from managed fleet contracts, consistent with how analysts model our results. Reimbursable revenue is therefore excluded from guidance.
For CapEx, we expect to invest between $95 million and $110 million in 2026, which will be partially offset by the cash-in of Amaralina Star $39 million mobilization fee expected by early Q2 2025. This already includes the final investment related to the Lone Star and Amaralina Star transitions, as well as room for eventual adequacy needs related to Renecon. Importantly, these ranges already reflect our best current assumptions regarding Renecon, reinforcing the visibility we have into next year's earnings profile. In line with the recently approved consent request, our 2026 guidance also reflect the assumption of quarterly shareholder distributions of $25 million. On that basis, the framework contemplates up to $100 million of distributions during the year. From a cash perspective, 2026 should remain very solid.
We will continue investing in fleet maintenance and upgrades, meet our debt service obligations, including the first amortization and interest payments, and begin shareholder distributions. Even so, we expect to end the year with the cash position meaningfully above $100 million, a level we consider adequate to support liquidity and fleet operations. This provides a solid foundation for a potential step up in distributions as we expect to continue increasing cash generated from operations, which will drive further deleveraging, targeting levels below 1.25x by the end of 2026 and around 1x in 2027. To conclude, 2025 was a year of meaningful progress for Constellation. We strengthened our balance sheet, advanced key strategic priorities, and built the foundation for a significantly stronger earnings profile in 2026.
With a well-contracted fleet, stronger cash generation visibility, and a disciplined capital allocation framework, we are entering the new cycle with confidence. Thank you for your attention. Operator, please open the line for Q&A.
Ladies and gentlemen, we will now begin the question-and-answer session. Questions may be submitted through the Q&A icon at the bottom of the screen. Our first question will come from Frederik Steen, Sell-side Analyst from Clarksons Securities. There will be two questions asked. In the written report, you talk about 1,042 day extension in Brazil worth $266 million. Which rigs is this, and can you give more color on the potential downtime or CapEx required to commence the work? The second question being, there now seems to be a consensus that Renecon will conclude early April. Will you announce the outcome of this in the press release when it is concluded? Should we expect changes to all contracts you have with Petrobras? Are there a few that have been unchanged? What has been the most important elements for you in the discussion?
Frederick, this is Rodrigo here. Thank you very much for your question. Actually, I'm very glad to start with this topic, because I'm pretty sure that this is the topic that will attract most of the attention in today's call. The message that I want to transmit today is very consistent with everything that I have shared with most of you previously about the Renecon. Number one, in terms of timing, is good to see the first tangible progress that we are able to announce today. Answering one of your questions here, it is confirmed that Petrobras is getting prepared to announce the full package in the beginning of April.
We, from our side here, we see no reason why by today we shouldn't be ready to re-engage and share the whole scope of Renecon in the beginning of April. Secondly, in terms of strategy and in terms of deliverables, it's very important to see as we are going to start to disclose from now on that the conclusion of the Renecon for Constellation is indeed reducing recontracting risks and impacting positively our backlog, adding a substantial backlog to our fleet from now to 2030. The main instrument will be indeed the extensions.
In this financial statement now, we announced the first one where we are extended one of our contracts by 1,042 days and aggregating approximately $266 million in backlog for this rig. I will have to continue to ask you to be patient on the details because today for instance, I will not be able to give you the name of the rig because this is part of the agreement with the client. In fact, this specific rig will continue the operations with no stop for transition, no need for additional CapEx for adequacies.
Therefore, this is a very accretive for us considering that this period of time will take a continuous operation until December 2028. By having said that, I want to complement that this will not be the only one. Of course, in April, we'll be able to announce other amendments and extensions on our fleet. Trying to be a little bit more clear in one of your questions as well, we'll not be seeing this for the entire fleet, but we'll be in a position to announce other changes on our contracts that will go in the same line. This will be working to reduce our risks in terms of utilization and materializing a larger backlog for us.
Just to finalize my comments on the Renecon, I want to say that one of our objectives, while discussing this with Petrobras, and by the way, it is, in our view, that this negotiation was in good faith, looking for opportunities that will indeed benefit both sides. One of our main focus was to produce visibility and increase utilization on our semis. I'm very glad with the final outcome that we're gonna be in a position to detail in the beginning of April.
By saying that, I also want to complement that it is our intention, as soon as we have the full documentation concluded, which is ongoing right now, to invite a call and to share the full package of details with all of you. I will once again ask you to exercise your patience a little bit more, and we're gonna be soon together debating and discussing the full scope that we just negotiated. Thank you.
Thank you. Following up, question from Frederik Steen from Clarksons Securities. You will commence a $25 million quarterly dividend payments shortly. At least in the model, you will generate more cash than that. What are your plans for excess cash, and how should we think about future dividend progression? And as well, can you talk a bit more about your up-listing process?
Hi, Frederik. Thanks again for joining the call and making those constructive questions here. Let me address first related to the dividend distributions. As we have included in our recent investor presentation, that is in IR website, you may see in there that we recently approved this framework, which we are very happy to confirm that we have a $25 million quarterly p ayments starting already as of now as we have now the consent approval by the bondholders, and we expect that the AGM will just confirm and give us the ability to already execute the first payment by the end of April.
This is really an important and remarkable time for the company that we are able to come back with the dividend distributions. These quarterly distributions of $25 million that we plan for this year amounting to $100 million is the baseline. It's just the first ordinary payments that we are announcing at this stage.
To your question, and I think you are very accurate, in the models, you should be seeing as well together with the guidance that you may see in our screen, that, we shall be able, as we deliver those results, to continue generating more cash and to continue having the ability to have step up in those dividend payments. Important to say that this will always happen with the board discretion and will have the ability to just preserve cash for the company as we plan on the strategic initiatives and if we have any incremental investment. As of this stage, and I think, we've been very active on our communication on saying the top priority for the company today is returning cash to shareholders.
We will do so once we continue the deleveraging journey that we have in which we are targeting to be below 1x already in 2027. Achieving all of that, we'll be able to step up the distributions, and this will be announced together with the results of this year at the end of 2026, early 2027. Regarding your second question, which I think is an excellent segue as well, is the uplisting process. We've shared here in the scripts and already as well informed in our investor presentation that this is a pretty organic step for the company since we initially listed in March last year, in which we started in the Euronext Oslo Growth, and now we are planning and taking all the necessary steps to have the approval to be already trading on the main venue in May.
The company has been ready from an overall governance standpoint, and we have all the controls that are needed for that. It's a matter of now just having and refreshing all the final documentation, and we believe this should be achievable in May. This is a very important step for us as we continue receiving feedback from investors that this is as well an extra and that would be more convenient for institutional investors, more qualified investors taking approach and accessing the paper. We are happy to now complete or to be close to complete this step, which we believe gonna be overall incremental and favorable in the capital markets. Thank you very much again for the question.
Thank you. The following question comes from George, investor at Altana Wealth. The question is: Should we translate this blend and extend as follows, initial contract plus incremental contract number of days equals new day rate, or is this to be phased, a 1,042 day extension to be followed by a higher priced contract?
Hi, George. This is Thiago here. Thanks for your question. To the extent of what we can disclose right now, we can say that this contract is incremental to the fleet status that we just shared. It's incremental, 1,042 days and incremental $266 million. This is an uninterrupted continuity of an ongoing contract, as Rodrigo pointed out, without the need of investments or readequacy. It's a pure blend-and-extend continuation of an ongoing contract. As just referred, further details will be definitely provided with regards to this contract, including the name of the asset and additional specifics upon the conclusion of this renegotiation process.
Okay, thank you. Moving on to the next question from Preet Radat, Buy-side Analyst from Kairos Capital. The question is: Hi, can you please comment on the Sete Brasil discussion? Is this also part of the Renecon, or will it continue after Renecon?
Hi, Preet. Thank you for your question. Rodrigo again here. No, I think the main message here is that the mediation process proposed by Petrobras has started and is ongoing as we expect. We actually don't have a material update beyond that, what we have already shared on previous earnings call. We are in the same position. The relationship with Petrobras remains very constructive. No impact or indication of potential impact on our day-to-day operations with our fleet. Again, we are on the same page. This is well-known complex legal issue involving the Sete Brasil project back for over 10 years now. We are very consistent on our view that the prognosis is still the same. This will be settled with no impact or no significant impact for Constellation. We expect the ongoing mediation process continue to take its course. It's always a little bit more difficult to
Indicate timing for when this will be concluded, but we remain here with a view that the most important is the final outcome, and this is in line with our previous expectations with no impact for us. Hopefully we'll see a conclusion before the end of this year, as we see the mediation process progressing as expected. Thank you.
Thank you. The next question now comes from Buyside Analyst, Heinz Smith. The question is, do the impairments imply a downward revision on the remaining economic life of the impaired assets, especially Atlantic Star, which is impaired to only $40 million? What will happen to this asset after the conclusion of the current contract?
Hello. Let me try to explain a little bit better on the impairment analysis that we have to do on an annual basis, and also important to always remember that this is something that applies to all the players and peers that are in IFRS. This is something that we do not see with the ones that were able to do reset accounting under U.S. GAAP, but quite common for peers under IFRS. On an annual basis, we have to make the test, and we perform this annual impairment test to ensure that the assets are not carried above their recoverable value. Indeed, we did not change the economic life of any of our rigs in our fleet.
I think that the major impact here, the way that I recommend and encourage you all to see this, is pretty much on the sensitivity that we have on the day rates when we are comparing December 2024 to December 2025. There were some reviews in the market of some reductions of the day rates that we were seeing in the tenders when you compare the past cycles in 2025 to what we've seen in 2024, and this is really the reflection that we have in there. As we review the future expected day rates in our test, this is then projected over to all the model that we do until the terminated life of the rigs, and this is the application we have there.
As we have net assets of about $2 billion in PP&E, so any sensitivity in there cause a very significant accounting adjustment, but this does not reflect that it's changing the economic life of any of the assets. Today's specific question regarding Atlantic Star, I just wanted to reassure what Rodrigo already mentioned during the opening of the call in which Atlantic Star is also a rig that we believe has still plenty of work on the P&A activities in Brazil. There are plenty of wells that Thiago and our commercial team have mapped under the independents that would need a rig like that. We are still expecting Atlantic to continue busy.
Of course, as we've done before in our fleet, when comes the time that this rig does not find work, which we do not believe is this year, but when it comes, we will be considering a swap. If the rig starts to consume cash of the company, scrapping would be one of the possibilities. Once again, just re-emphasizing, it's not what we expect to happen. It's a rig that can be cash neutral to positive and still offer a significant possibility of being a good cash incremental for the next couple of years.
Thank you. The next question will come from Carolina Stefania, BCI. Hi guys, this is Carolina from BCI. Thank you for the call. The question is, what is the current status of the commercial activities for Brava Star? When can we anticipate the results of the ongoing tender process?
Carolina, thank you for the question about our Brava Star, which is our seventh-generation drillship that continues to operate very well. For us, the modality in which this rig will be contracted in the end is less important. The most important is that we continue confident and Brava Star remains very well-positioned given its technical capability. The availability window for the next opportunity is a privileged position from Brava Star as well, which means that we are in a very good position to address the needs from Petrobras with the lowest possible costs for this project.
The way we see today, honestly, is indeed that Petrobras has decided to run things in parallel with the Renecon. We expect that the situation involving Búzios tender and Brava Star will be also clarified in the beginning of April, once Petrobras finally announce the results of Renecon. If this will be a continuity of the tender, the original tender from Búzios, or if this will be a bespoke negotiation from as part of the Renecon, it really doesn't matter for us. The most important is that we're gonna keep the fundamentals.
We're gonna keep the upsides and the possibilities to have Brava Star allocated to a next long-term contract, and this remains absolutely unchanged. In our view, the confidence and the way we see is that this rig will be allocated in the next contract in the continuation or just after a transition. That's what we can share at this stage, and I really ask you to stay next few weeks. We're gonna be able to discuss more in details about it.
Thank you. The following question comes from sell-side analyst Lars from ABGSC. The question is: Does your guidance include the expected contract awards from the Renecon?
Thanks, Lars, for the question. To clarify, emphasize to all, yes, the guidance considers already the best picture that we may expect out of the announcements that will come in the upcoming weeks with the Renecon closure that Rodrigo just anticipated, right? We believe early April gonna be the time that we'll bring all the details of that. We already included what will be the likely outcome of this Renecon in our guidance figures that you see on the screen.
Moving on to the next question comes from Sell-side Analyst, Joaquin from Balanz Capital. Do you see a window to refinance the 2029 notes following extension announcements?
Hello, Joaquin. The optionality that we have to go for liability management as we complete the two year anniversary of the bond in November 2026 is certainly something that will be considered by the company. To remember, this becomes callable in November. Indeed, adding more backlog and getting all of our contracts ready to be with great visibility for the coverage that we'll have on the upcoming years makes our overall credit story to be way and much enhanced from what it was two years ago when we went into the market to place the bonds, the $650 million, at 9.38%. We'll be considering that, and we'll be exploring what the optionalities will be, and if this really get us the ability to reduce the cost of that.
More importantly, if it give us as well a good covenant package that would be just similar and consistent to what the peers in the market have, this could be a significant enhancement and more flexibility to the company as well. Remember that we placed these bonds back in 2024 at a time that we were pretty much debuting back in the debt capital markets as the company was emerging from restructuring just three years before, and more than 10 years without any activity on placing bonds. We do expect that now in a much completely different story and all of this backlog to justify us to be in a great position to consider this optionality.
Again, something that we'll be observing, something we'll be considering, will depend on the overall capital markets appetite, and something that we shall follow up at the end of the year.
Thank you. Next question comes from Rene Ryan, FSEC. There has been rumors of M&A activity. For example, Ventura Offshore mentioned on the call that they would be happy to engage in such activity. Are you in the same mindset?
Hi, Rene. Thank you for the question. Rodrigo here again. I think we never change our mindset. The first thing is to be very consistent on what we can do with our own business plan and with the standalone company capabilities. I think we are becoming clearer and clearer as our business plan starts to materialize and give more and more indication of how solid is the company capacity to generate free cash flow. One very good example that shows the level of confidence that we have in the company's ability in terms of the cash generation is the consent that we recently got from our bond holders.
We appreciate the understanding that the company is able to anticipate the dividend quarterly payment without creating any sort of risks or turbulence for our commitments. On the contrary, this is a way to balance the interests of different stakeholders, and it shows how solid the standalone plan of the company is. Following that, as Daniel mentioned very clearly, we have work to do in terms of our next steps of listing the company in Oslo. I think it has been so far a great journey of learning, understanding and education with all the investors in the region there. We feel very comfortable with our standalone position from now on.
The reason why I really start with this in order to touch on the M&A is because we always thought that the offshore drilling market benefits from consolidation. This is not a new position from us. We are glad to see the last movement from Transocean, a very disciplined player that will certainly benefit all the drilling contractors. We believe that the synergies and all that is behind an operation, especially in Brazil, is undeniable. Nobody can dispute. Scale is important for what we do and the Constellation numbers is a proof of how is important to have scale.
We operate one of the largest single hub for offshore drilling activities in the globe, and we know how important it is for us to be able to sustain, as we do, a proper level of engineering capability, the cost sharing strategy and possibilities that we have by operating nine rigs from the same hub. The final indication is our current position in the Petrobras Sondópolis, which is, as I used to say, a very sophisticated set of indicators when it comes to evaluate the performance of drilling contractors.
Constellation is standing as number one, not only as a company as a whole, but also having the five best performing rigs among the 10 best rigs working for Petrobras. All in all, the company is really well-shaped. It's much beyond the numbers that we are sharing with the market today. It's how we feel the traction in terms of safety of our operations, what we are able to deliver with our rigs.
I can tell you, coming from operations and having the possibility to run the operations in this company from 2012 to 2020, I can assure you all the company is fully prepared with all tools that we have to make sure that we will extract every single penny of those contracts and increase the margins day after day. We are having a tremendous operations right now, and I feel very, very motivated and excited to see what we are going to be able to deliver in 2026.
More important, beyond that, all the way to 2030, the avenue is very clear, the way is paved, and the company will be ready to select the best options for our shareholders. That's the good side of looking for M&As in the way that we look. Very positive, open for it, but making sure that it really needs to be accretive for our shareholders. Once the opportunity lands, not only the management team, but our special committee is fully aligned to make sure we'll have the proper angle and we'll materialize if the rationale in terms of economics and benefit for our shareholders is present.
Thank you. Following up on Rene's questions. Do you think Petrobras will favor rigs that already are in Brazil today and working for Petrobras in terms of Renecon negotiation? Or do you think international rigs will be able to enter the market given rumors on some international rigs being bidders in the Búzios tender?
Hi, Rene. Thiago again. Thanks for your question. Certainly very, very hard to comment about rumors. What I would say is that most of the discussion has been concentrated on blend-and-extend opportunities. It requires rigs to be already in ongoing contracts. Definitely we also understand that Petrobras always benefit the economics of the deal. I think there is always a challenge for rigs to come to the country. This requires adequacy to the Brazilian regulations and to the technical specifications. Usually a high ticket, more than $100 million. I believe that definitely focus will be given to the rigs already in Brazil for the Renecon package to the extent that this is what will benefit the cash of the client.
Thank you. The next question will come from Owen. What do you do to improve the liquidity of the share before the IPO on the Oslo Stock Exchange?
Thanks, Owen, for the question, and this is gonna be our last question of the day. I already take the opportunity to thank everyone for joining and staying with us a little bit over the top of the hour. Regarding liquidity and what are we doing in order to continue improving that as we drive to the up-listing, I think we've already kinda touched on that topic before, but just important to continue doing what we are doing. Positioning the company well on delivering the results, on being open regarding like the call that we are doing today, and more importantly as well on joining all the conferences as we've had, right? This first quarter of the year we had joined many conferences in the industry and already outside of the industry.
We are planning together with the up-listing journey to be attending as well many investor meetings, which we're gonna be as well informing dates and planning as well to be doing as well road shows before the up-listing due date. We'll be available to be reaching more investors to be getting the chance to promote the name of the company and to get the investment thesis out to all the broader investor community. Other than that, there's really more organic moves that are as we expect that the stock is gaining on volume and liquidity, that we'll be seeing more sellers and more buyers. This will be something that will continue evolving.
As we are already seeing, the last quarter is much greater even though it's not yet on the levels that we would expect, but it's much greater than the quarters before. We would expect this to continue organically growing as the company continue moving on those steps that we just mentioned.
Thank you. This concludes today's question and answer session. I would like to invite Mr. Rodrigo Ribeiro to proceed with his closing statement. Please go ahead, sir.
No, just to say thank you for everybody, and thanks for your interest in Constellation. We look forward to speak to you soon again. If you have any question, please feel free to contact our IR team and I hope you have a nice day. Thank you very much.
That does conclude Constellation Oil Services audio conference for today. Thank you very much for your participation, and have a good day.