Welcome to the presentation of EMGS's first quarter 2025 results. I'm here with our CFO, Anders Eimstad, and together we will present these results. Please take note of our disclaimer. During the quarter, the vessel arrived in India, and after successful inward clearance and all formalities in place, it started working on the first of the two proprietary acquisitions in the KG Basin on the east coast of India. Upon completion of this project, we started the mobilization for the second project, where the vessel is currently acquiring data. The revenues for the quarter came in at $10 million, the EBITDA was $2.7 million, and the Adjusted EBITDA was $2 million. Finally, the net profit was $0.6 million. The free cash at the end of the quarter fell to $6 million.
After the quarter, we announced the establishment of a new business platform for EMGS with the acquisition of the offshore subsea construction vessel, the CM Day. We'll talk more about this later in the presentation. We have also secured an extension of our convertible bond loan until November of 2030. Moving on to our operations and market section. As already mentioned, we completed the first proprietary contract in India during the quarter and started the mobilization for the second project, which is currently ongoing. The client for the second project is KN Oil & Gas. In a recent article in Upstream, KN explains what they're trying to accomplish with EM in their book.
The survey will help characterize and prioritize the extensive offshore exploration prospect portfolio within the block by integrating the gathered CSEM data with recently reprocessed 3D seismic data to enhance subsurface model accuracy and reduce exploration risks. Through our partnership with EMGS, we will fast-track development of the deep water block in line with our vision to contribute 50% of India's oil and gas production. The survey data will support the definition of locations for exploration, appraisal, and subsequent development, ensuring drilling decisions are based on the most accurate and comprehensive subsurface data." Upon the completion of the KN job, the vessel will depart India and head west. We are discussing several projects in West Africa, but it remains to be seen if we are able to secure this in time and also get all the required permits in place for when the vessel sails on.
We have received questions and comments from some of you about why we are not providing more information on upcoming work in general and specifically about West Africa, including Nigeria and Namibia. You might have seen that we have concluded an environmental impact assessment for Namibia and that there is information about an upcoming campaign in Nigeria. We would like to use this opportunity to clarify that we are at any given time working on projects in many countries and places around the world. We do not like to comment on specific projects that have not been secured, and we only issue releases for letter awards or signed contracts. That said, we are pursuing projects in those two countries, as well as many others, and we will inform the market if and when we sign contracts for projects in any location.
Now, over to the recent announcement of EMGS entering into the subsea construction business. This probably came as a surprise to many, so we'll spend some time outlining the rationale and the details of the deal. We are establishing a new business platform alongside the EM business. We are doing this through the acquisition of the offshore subsea construction vessel, the CM Day, for $109 million. The CM Day was built in 2013 at the Vard Brattvaag. She's a DP2 vessel with deadweight tonnage of 5,000 tons. She's about 121 m long and 22 m wide, and most importantly, equipped with a 250-ton crane. She also has a comparably low fuel consumption. The vessel is financed through a five-year bareboat charter to minimize the upfront cost to EMGS's shareholder. The vessel is currently on contract with a strong counterparty at market rates until the end of 2025.
We intend to offer the vessel in the term market on a project-by-project basis on a time charter basis in 2026 and 2027, as we expect these rates to be significantly better than the long-term time charter rates currently available. We are not planning to use the CM Day for EM or for OBN operations. The transaction is subject to approval at the upcoming annual general meeting on the 19th of June. Our newly formed long-term strategy is to pursue growth in the subsea market through the additions of additional vessels. Looking at the overall market backdrop, it is clear that oil and gas will be part of the energy mix for many years to come. The supply from currently producing fields will decline, and the supply from fields under development is not sufficient to meet the expected demand, even in the most optimistic energy transition scenarios.
Arctic Securities has helped us compile forecasts on the liquid supply-demand balance, and the demand for liquids is expected to either slightly increase or slightly decrease in most scenarios. Only in the most aggressive energy transition scenarios is the demand expected to fall significantly. For instance, in the DNV Energy Transition Outlook from 2024, the liquids demand in 2035 is expected to be 87 MMbpd . Even in this scenario, there is an expected supply gap of at least 15 MMbpd in 2035 that needs to come from either discovered or undiscovered resources. This is positive both for our existing EM business and for our new subsea business segment. If we now focus specifically on the subsea construction market, subsea Christmas tree installations are one of the main drivers for the activity level in this market.
The demand for subsea tree installations is expected to increase significantly and up to 45% in 2027 compared to 2024. If we also look at the supply side, and specifically at the vessels with cranes capable of 250 tons or more, the current fleet of 74 vessels is expected to increase to 89 vessels in 2027 due to new builds entering the market towards the end of 2026. Despite this increase in fleet size, the demand increase is expected to absorb this, and we think this is a good market to be in. Now we would like to provide some additional details on the CM Day deal. We are acquiring the CM Day offshore subsea construction vessel, or OSCV for short, for $108.9 million.
90% of the vessel acquisition is financed by a five-year bareboat charter from CM Day 2 AS, which is to be owned 80% by the CM Group and 20% by Perestroika, our two biggest shareholders. The bareboat charter rate will be $42,000 per day in 2025 and increasing to $45,000 thereafter. The implied interest cost to EMGS is 10.4%. The bareboat agreement includes a series of covenants, including a cash sweep mechanism related to revenues above a certain level from the chartering of the CM Day, as well as a free cash covenant of $3 million. The bareboat agreement also includes a net purchase obligation after the five-year period for $59.1 million, less any cash sweep proceeds. The remaining 10% in the form of an initial payment of $10.9 million will be financed by an increase of the existing convertible bond loan.
At the same time, the convertible bond loan is amended and extended, including a new maturity date of 9th of November 2030, the removal of the existing cash covenant requiring EMGS to have a minimum free cash balance of $2.5 million at all times. The vessel will be managed and operated by Aurora Offshore Management, and we are estimating the operational expenses to be approximately $22,000 per day. We find this to be an attractive solution as EMGS currently have limited experience in operating subsea vessels, and by subcontracting the day-to-day operations to Aurora, EMGS management can continue to focus on running the existing EM business.
Thank you, Bjørn Petter. The total revenue for the first quarter was $10 million. The graph on the upper right shows the quarterly revenue development. From this graph, you can see that revenue has increased from the previous quarter. While most of the revenue in the fourth quarter was related to multi-client projects, all but $150,000 were related to proprietary surveys in the first quarter of this year. We had one vessel on charter in the first quarter. During the quarter, the Atlantic Guardian completed the mobilization to India and completed one of two Indian proprietary survey acquisitions. The vessel utilization in the quarter was 37%. We recorded an EBITDA of $2.7 million in the first quarter. EBITDA excludes the capitalized multi-client expenses as well as the vessel and office lease expenses. If we add these expenses to the EBITDA, we get an Adjusted EBITDA.
The quarterly development of the Adjusted EBITDA is shown in the graph at the bottom right of the slide. The Adjusted EBITDA in the first quarter was $2 million. The next slide details the movement in the operational cost base. In the graph to the left, you can see the quarterly development and the components of EMGS's operational cost base. The components are charter hire, fuel and crew expenses, employee expenses, and other operational expenses. In addition, the capitalized multi-client expenses and vessel and office lease expenses are added to the cost base. The operational cost base for the first quarter was $8 million, compared to an operational cost base of $4.7 million in the previous quarter. In the first quarter, $1.5 million related to transit costs to India, which were capitalized in the fourth quarter, were expensed.
Adjusted for the capitalized transit cost, the operational cost base over the last four quarters has been relatively consistent given the activity level. The next slide details the movement of free cash in the first quarter. Free cash decreased in the first quarter by $3.1 million. This is illustrated in the graph to the left. The light blue bar to the left shows a free cash position at the end of the fourth quarter of $9.1 million. The components increasing the cash position during the first quarter are shown in dark blue, whilst the components reducing the cash position are colored red. Free cash at the end of the first quarter was $6 million. The EBITDA of $2.7 million increased the cash this quarter. Vessel and office leases decreased cash by $0.7 million.
The increase in trade receivables from $0.9 million- $9 million decreased the cash this quarter by $8.1 million. The increase in trade payables from the previous quarter in the amount of $0.4 million increased free cash in the quarter. Changes in other working capital also increased cash by $3.1 million. Interest paid in the quarter on the convertible bond and other interest expenses amounted to $0.6 million in the first quarter. Now back to Bjørn Petter.
That concludes our presentation for today. As always, please submit your questions to emgs@emgs.com. Thank you so much.