Welcome to this presentation of the Financial Results for the Second Quarter and First Half of 2025 for Energy Holdings. My name is Kurt Waldeland, and I am the CEO of Energy Holdings. I am joined today by Viggo Pedersen, CFO of Energy Drilling, and Sveinung Alvestad , CFO of SeaBird Exploration. Before we begin, I kindly ask you to review the disclaimer slide regarding forward-looking statements. During the second quarter, we successfully closed the transaction between Energy Drilling and SeaBird Exploration, establishing Energy Holdings. Energy Holdings is an industrial holding company, uniquely positioned with a robust backlog and a conservative capital structure. Our two subsidiaries, Energy Drilling and SeaBird Exploration, are both leaders in their respective segments, operating in highly attractive niches of the oil and gas service industry, with a primary exposure to brownfield development.
From the outset, we have communicated a firm commitment to distributing available capital to shareholders. This was underlined by the $40 million distribution announced in Q1 for the first half of 2025. Going forward, we will continue to distribute available capital while also exploring selective growth opportunities within the broader oil and gas service value chain, provided they support our distribution focus. The second quarter delivered solid results for Energy Holdings, driven by strong operational performance at both subsidiaries. Energy Drilling achieved a technical utilization of 99% during the quarter, while SeaBird reported 96%. Revenue came in at $52 million, with an adjusted EBITDA of $26 million. Our firm backlog has increased significantly from our last quarterly report and now stands at $567 million. Both Energy Drilling and SeaBird have secured new contracts since our previous report, further strengthening earnings visibility and supporting future distribution capacity.
We also completed the refinancing of subsidiary debt facilities during the quarter, consolidating them into one new facility on improved terms and conditions. This refinancing reduces costs and repayment obligations over the coming years. Net debt to last 12 months' EBITDA stood at just 0.2% at quarter end, among the lowest in the industry. Importantly, three rigs and both seismic vessels are currently unencumbered, giving us important financial flexibility. This conservative leverage profile ensures resilience in all market conditions and gives us significant optionality to pursue value-enhancing initiatives. We made a $9.9 million provision this quarter related to a tax audit of Energy Drilling in Thailand. We expect the provision to cover the final amount, with the audit and settlement to be completed in Q3. As previously announced, the $40 million distribution for the first half of 2025 was approved by the general meeting in late June.
The final formalities are being completed, and payment to shareholders is expected in late September or early October. In addition, we reiterate the full-year 2025 distribution guidance of $70 million - $90 million. Based on the continued strong operational performance in the second quarter, we now expect full-year distributions to be in the midpoint of this range. As noted, the $40 million cash distribution for the first half will be paid in late September or early October. Starting with Q3, which will be the first full quarter of operations for the combined company, distributions will be announced on a quarterly basis going forward. Our commitment remains unchanged; we will continue to distribute available capital to shareholders while optimizing our portfolio to maximize cash flow and distribution potential.
The full-year distribution target of $70 million - $90 million is also unchanged, and as mentioned, assuming continued strong operational performance, we expect to deliver in the midpoint of the range. Looking further ahead, the demand environment for both our subsidiaries remains encouraging. In drilling, tendering activity in Southeast Asia continues to support healthy utilization, while in seismic, demand for specialized OBN assets remains firm. These market dynamics, together with our strong backlog and low leverage, provide us with a very solid foundation for continued strong shareholder distributions. I hand it over to Viggo to cover nergy Drilling's quarterly highlights.
Thank you, Kurt. We'll get straight into what happened in Energy Drilling during the quarter. As Kurt alluded to, it was a good quarter for Energy Drilling in terms of operational performance. We're looking at over 99% utilization in terms of operating days for the rigs on contract, which is, needless to say, very high in this industry. We also saw a record for our rig T-16 that has been operating for Carigali in Malaysia that drilled about 220 m on average a day during the last nine months. Needless to say, our client is extremely happy with the performance of the rig. Economic utilization was about 76%, negatively affected by the GHT remaining in the yard preparing for its next campaign, and also the EDrill-2 demobilized from the field in late May, also moving into Singapore preparing for its next campaign.
For the EDrill-2 , we signed a 5 + 3 year contract during the quarter with PTTEP. She's going to stay out there for another five years, and we need to perform SPS as well. We're offshore, and while she's in Singapore, we're now performing some additional maintenance that's going to ensure that she stays out on contract for the entire duration of that firm bit, which is five years. I think the comment to that is that you'll see that overall drilling demand in Asia is strong, and duration of contracts continue to extend. We'll talk about it a bit later on the overall market, but again, it's a testament to the overall drilling demand that you see in the region. We also signed another five-year extension of our master services agreement with PTTEP. This again deepens the relationship that we already have with our key clients.
It streamlines the processes that we have on further bids, and there are several ongoing and upcoming contract opportunities with PTTEP throughout the region. A big win for us to get this signed up, and that will then obviously create the pathway for long-term contracts going forward. Moving on to the next slide, I'll give you a bit more update on the backlog. Overall, the backlog for Energy Drilling, the firm bit of it, is $550 million worth of revenue. That's excluding all the options that we have. On this particular slide, we've now kind of updated and adjusted the numbers for various ancillary services that we do provide to our clients, as well as mobilization fees, modifications, and other change orders that we receive during the contract period. In particular, for GHTH, I want to highlight one issue.
She has been sitting for about five months in Singapore prepping for her new job. She will receive a significant mobilization fee when she gets on contract in November. For the eD-2, people are on board, getting her ready to leave Singapore by mid-September, and she's then going to go stay out there for another five years, at least firm. Overall, a healthy backlog. We already see some of our clients coming to market for work in 2026 and 2027, and I'll cover more of that on the next slide as we talk about the overall market for tender rigs and drilling in Southeast Asia. As I alluded to, the market is generally quite robust in Southeast Asia as compared to certain other markets, as in the North Sea or the Middle East. The number of rigs active in the region remains a record high.
What we see now is that lead times for long-term jobs are increasing. We see clients coming to us talking about drilling demands in 2027, 2028, and 2029 already now, and we're in 2025. We see that actual contract durations are up across the region, not just in Thailand, but in other countries such as Indonesia, Vietnam, and Malaysia. Generally speaking, a very healthy demand picture. I'd like to mention that after quarter end, PTTEP came to the market for another 5 + 3 year contract that we're actively pursuing. As a reminder from our previous presentation, we do have options for another rig sitting in the yard in China, so obviously actively pursuing additional contracts. Generally speaking, the market is very healthy. We've had a bit of a dip in the day rates.
That's primarily for the barges, where we had to compete head-to-head with some of the premium jackups leaving the Middle East, while the semis is a market that's pretty much sold out, and we're not competing with the jackups, and that market has held up pretty well for us. I just want to highlight again that the market in the region remains robust. Drilling activity is high, and we do see a lot of new opportunities coming up over the next couple of months. Coming back to EDrill-1 and T-15, that are the first ones that roll off contract for us. Already, we expect the tender documents to come out in Q4. Overall, extremely healthy market. The tender rig space is pretty much sold out until 2027, and we expect any additional long-term contracts will have to come from incremental work.
With that, I'll hand it over to Sveinung to go through SeaBird Exploration and the financials.
Thank you, Viggo. Now turning to the SeaBird vertical. In short, for new investors, SeaBird Exploration is a global provider of maritime seismic acquisition. The company specializes in operation within the high-end source vessel and 2D markets. The company owns and operates two vessels, both built in 2009, with substantial upgrades during the last years. More details of the fleet and our operation can be found on SeaBird's web pages. Now turning to page 12, let's jump into the quarterly review. Please note that all figures included in this section are on a 100% basis. The operational uptime for the second quarter was 96%, slightly below the 98% average over the last 12 months, but still at a very competitive level. We continue to work to minimize our downtime, and this low level is something we are recognized by our client for.
Economical utilization for the quarter was 72%, down from the last 12 months' average of 89%. As reported in the first quarter, the Eagle Explorer was off hire in April and half of May, which obviously impacted the revenue in the quarter. We expect insurance to largely cover the cost associated with this yard stay. Revenue for the second quarter was $7.5 million, and EBITDA was $2.7 million, down from the preceding quarters due to the yard stay, which I just explained. Now turning to page 13 and the backlog overview. The Eagle Explorer has worked as a source vessel on an OBN project in the Western Hemisphere since April 2024. The vessel is currently demobilizing from her current contract to the Gulf of the Americas, where she is marketed for new work.
We remain comfortable that she will be back on contract relatively shortly, as we already have ongoing discussions. The Fulmar Explorer is currently coming to her end of a three-year-long contract and is now demobilizing in the Gulf of the Americas as well. Mobilization for her new contract, which is commencing mid-September, will begin in direct continuation with the current contract. The firm backlog currently stands at $15 million, which includes the recent contract award for the Fulmar. We are actively working on converting our pipeline into additional firm awards, as already spoken about with the Eagle. Turning to page 14 and the market outlook. The short-term market fundamentals are impacted by increased geopolitical volatility, which has resulted in delayed investment decisions from our end clients, and cash flow preservation is key on the agenda. This has impacted the overall exploration spending and consequently delayed contracting activity somewhat.
Despite the near-term noise, we remain confident that the structural growth in the OBN market will continue over the coming years. That is driven by the oil companies allocating more resources to reserve near existing infrastructure to reduce cycle time. The OBN technology also provides a better understanding of the reservoirs to optimize the recovery rate and lifespans of fields. This is a cost-efficient technology to increase the value of information on the oil and gas fields. As for the supply side, the active fleet currently counts 13 vessels, of which 12 are currently contracted. The average age of the fleet is close to 20 years, where our vessels are 16. We continue to see a low risk of influx of additional vessels to the market as the current rate environment does not provide sufficient economics to justify the acquisition and/or conversion costs.
In dialogue with our clients, it is apparent that securing critical resources such as the source vessels is high on the agenda, and this is especially true for the high-end tonnage in the market. We believe these dynamics support a tighter market, and in turn, it will strengthen the pricing and contracting environment, especially for the high-end tonnage, which is our vessel. Turning to page 15 and the financial. Before I will dig into the numbers, I want to give a short explanation on the basis of the accounts in the half-year report and this presentation. In this presentation, we have applied a management reporting approach, where we are presenting the figures as if the merger took place on 1st of January , meaning that the Energy Drilling and SeaBird Exploration figures are combined on a line-to-line basis, both in the current and the comparison periods.
We believe this gives a good understanding for the readers on how the combined company is performing. While the half-year report is presented in accordance with IAS 34 and IFRS 3, which implies that the merger has been recognized as a reversed acquisition. As a result of this, the financial information presented for the period to the financial information presented for periods prior to the transaction reflects Energy Drilling only. SeaBird Exploration has only been included in the financial information from the transaction date 26th of May 2025. Reconciliation between the management reporting and the consolidated financial statement is provided in the appendix of this presentation. Now turning to page 16 and the numbers. Energy Holdings reported the Q2 revenue of $52 million, a close to 50% increase from the prior year quarter. This is primarily driven by more rigs in operation at higher day rates.
The SG&A of $10.2 million in the quarter includes non-recurring merger costs of $7.7 million, of which $2.5 million relates to legal and advisory costs, and $5.2 million is a non-cash cost related to the long-term incentive plan. We continue to expect a normalized level to be around $12 million per year. Underlying EBITDA after adjusting for the said one-offs was $26 million in the second quarter and $60.1 million for the first six months of 2026. The strong year-over-year growth is driven by higher activity across the fleet, with more rigs in operation at higher day rates. The net loss of $6.2 million for the quarter was negatively impacted by the merger-related one-offs as just described, and refinancing costs of $1.1 million and a tax provision of $9.9 million. The underlying net profit for the quarter was $12.5 million.
As Kurt mentioned, the group has during July been subject to a tax audit by the Thai Revenue Department. We expect that the final outcome of the audit will be about a $10 million settlement, which forms the basis for the provision recorded in the second quarter. The audit and the payments are expected to be finalized during the third quarter of this year. We are actively working to optimize our structure to minimize the company's tax position in the region going forward. However, the implication of the ongoing audit is expected to be an additional withholding tax cost of around $6 million on an annualized basis from the second half of 2025. Now turning to page 17. Net cash flow of the company for the first six months of the year was $48 million, whereas $39 million was cash flow from operation.
CapEx has been modest year to date, but with EDrill-2 and GHTH currently in the yard preparing for the contract starting in Q4, we believe CapEx will increase substantially in the second half of the year. We continue to see normalized CapEx for the group of around $60 million per year. As mentioned, the group's debt facility was refinanced during the second quarter, resulting in a debt draw of $11 million. Note that the repayment of the SeaBird facility was done after the period ends. In total, we maintain a strong liquidity position for the group with a cash position of $80 million, of which $40 million is dedicated for shareholder distribution scheduled for late September or early October. Turning to page 18. As shown in the graph on the left-hand side, we have over the past 12 months delivered on a disciplined capital strategy to significantly reduce leverage.
In Q2 2024, the net debt of the company was $51 million. This has contracted by 50% to $26 million by the end of the second quarter of 2025. At the same time, the EBITDA has increased substantially, reflecting the operational strength from $63 million in Q2 2024 to $106 million in Q2 2025 on the last 12 months' rolling basis. This has resulted in a very strong balance sheet with a leverage of only 0.2 x. When benchmarking this against our offshore drilling peers, as illustrated in the chart on the right-hand side, we now hold one of the strongest balance sheets in the sector. We believe this strong balance sheet creates a meaningful advantage for us, as it provides ample capacity to return capital to shareholders and makes us well-positioned to act on strategic opportunities as they arise.
With that, I will hand it back to Kurt for summary and closing remarks.
Thank you, Sveinung . If we turn to page 20, as already described, we have seen a significant increase in our firm backlog. This provides robust visibility and a solid foundation for continued significant shareholder distributions. As shown on the chart on the left-hand side, based on existing firm contracts, we expect an increase in revenue in 2026, laying the foundation for a step up in distributions from 2025 to 2026, assuming continued strong operational performance. For 2025, as mentioned earlier, we expect distributions to be at the midpoint of the $70 million - $90 million range, with the first $40 million scheduled for payment in late September or early October. To summarize the key highlights, a strong backlog, high cash conversion from operations, and a robust balance sheet enable significant shareholder distributions for 2025 and beyond. This is further supported by an encouraging market outlook for both our subsidiaries.
We will continue to optimize the balance sheets and realize financial synergies to further increase flexibility and distribution capacity. In parallel, we are assessing accretive strategic opportunities within the broader oil and gas service value chain. As always, we will remain disciplined and focused on opportunities that support our distribution capacity. Thank you for your attention. With that, I think we will now move on to any questions that have been submitted.
Okay. I think we can start with the question for you, Kurt. The question goes as follows. Do you see more M&A activity in the future?
I think it's a good question, and I think we have seen an increase in M&A activity, with consolidation starting to play a bigger role in our markets. As the market continues to improve, I think M&A will be higher on people's agenda going forward than it has been over the last 12 to 24 months.
Okay. Thank you. We have a question on the two options we have discussed earlier in earlier presentations. Viggo, maybe you can give some more light around these options.
Thank you, Sveinung. We have an extremely good relationship with the shipyards in China. We have, over the last year and a half, worked with them to see if we can find suitable opportunities to bring out two of these tender assist rigs that were historically ordered by a Thai company that folded, and these rigs were never taken delivered. They're kind of brand new sitting in China. They do need a bit of work, and they don't have spares and all that stuff. It's going to take about eight to nine months to bring something like that to the market. That tells you that we need a significant lead time between when we push the button to go ahead and when they're going to start on a contract. We won't take them out on a speculative basis, right?
For us, clearly, there needs to be a contract of a certain duration and a certain value before we actually start looking into bringing some of these assets to work. As I alluded to in my comments earlier today, there are several opportunities that we see lining up. We're maintaining a close dialogue with the yard around these options. I do not want to comment on what it's going to cost us at this point in time, but needless to say, it needs to be accretive to us and contribute to our distribution capacity on a go-forward basis.
Thank you. There is a question about the distribution, which is scheduled to be paid late September, early October. I can take this one. We are in the last process of getting the regulatory approval for the distribution in Cyprus. We will come to market with key dates, I would say, in the beginning or mid of September. As a rule of thumb, I would say that we are going ex-dividend about five to seven days before we are doing the actual distribution. I think that gives a good indication of the timeline. There is a question about the OBN demand. If oil prices are sustained in the $60 per barrel range, how resilient is it? What we will say there is that a lot of the projects we are doing in the OBN space are linked to already producing infrastructure.
What we see there is that the resilience of that demand is quite good. These are projects which have been done two, three times already. By doing it with regular intervals, it gives the oil companies a very good indication of how the reservoirs are performing over time. This is a demand we see will continue to be resilient going forward. Also, we see that it's a high demand for OBN when you look at new tie-ins projects and in general exploration close to existing infrastructure. There is a question about the five-year extension on the master services agreement. Viggo, maybe you can give us a bit more details and consequences of what this agreement entails.
As I previously alluded to, it deepens the relationship that we have with PTTEP. It simplifies all the tenders that we participate in because pretty much everything's pre-agreed in terms of the Ts and Cs. Whenever we submit a bid, for example, we can just refer to the master services agreement, and then that's all taken care of. It does simplify and expedite how we are responding to the needs of our client. It also illustrates the long-term demand that they have for our rigs over the next couple of years. That just deepens and extends the relationship that we have with them. Needless to say, it also shows that we're an integral part of their planning for the development of their assets in the entire region as we go forward.
For those of you who have followed PTTEP, they've been in an extremely expansive mode in the region, buying out assets from both Chevron, Petronas, and other larger operators. That positioned us extremely well with further work for them throughout Southeast Asia. I don't think I'm going to get into more specifics on that, but it's a good testament to the deep relationship that we have with our key client.
Thank you, Viggo. A question for you, Kurt. The balance sheet is quite robust, and there is a question about how we are allocating funds going forward. We are already talking about the distribution and potential M&As, maybe you can give us a bit more color around capital allocation going forward in relation to how the balance sheet looks at this point.
Yes. No. I think we've mentioned it multiple times during this presentation and last presentation. The key priority is to distribute the available capital to our shareholders. We are very happy with the balance sheet as it looks now with the debt level that we have. As we continue to build backlog, as Viggo was alluding to earlier, we are now seeing requirements for 2027 and beyond. As we continue to build backlog for 2027 and beyond, we will continuously review our balance sheet to see if there are ways to optimize it, to improve the distribution capacity on a quarterly basis going forward. Yeah.
Thank you. I think we have covered all of the questions in the call as well. There is one last one here now. This is for you as well, Viggo. GHTH is currently mobilizing in Singapore for a new contract in Q4. You mentioned a substantial mobilization fee in your comments. Can you provide some additional details around that structure and how this is going to be?
I think the best thing I can do is to give you an idea of around what we gave you as an input in Q1, the Q1 presentation, and the delta between the two. You can make some assumptions around what the additional additions to our day rate is because it's amortized over the firm bit of that period. Other than that, I'm not going to go into details because that's a commercial discussion that we had. You can sort of back it out from the deltas.
Okay. Thank you, Viggo. With that, I think this ends the second quarter and half-year presentation. Thank you all for tuning in.