To Prosafe's quarterly presentation. We're not that many in the meeting room today, which is a bit of a pity because it's a good quarter and the presentation is refreshed. Hopefully more people follow online. Disclaimer will be familiar. It is not refreshed to the same extent as the presentation. Quickly on the highlights before going into ops, passing it on to Reese McNeel, getting it back, and Reese McNeel will round us off in due course. Quickly on the quarter, a fairly good quarter. High activity. Six vessels in operation. 77% utilization, which is the highest since 2016 in a third quarter. Good backlog of $93 million. Operations and HSE have been without any major concern.
On the numbers, Reese will go through the details. Revenue just above $60 million, and cash and EBITDA around $24 million. Liquidity growing to $74.5 million in the quarter. A bit on outlook, the North Sea is still quiet, it's been for some time. We do not expect too much North Sea activity next year. It looks a bit weak. It's I think mainly a timing issue. We have good activity in 2022, then it looks weak in 2023, and then things are really picking up in 2024, which I will come back to. There are probably obviously something in 2023, but I don't expect something very meaty in the North Sea.
That is a bit unlike the rest of the world, as we have, as you see, maybe four of our vessels in the Americas next year. CapEx and modification costs, we will focus on that in the coming months. If the Safe Zephyrus goes to Brazil, that will incur about $10 million CapEx. We have some vessels coming off contract. We are preparing the Safe Concordia. That will be a key focus in the coming months and cost us some cash. Finally, on the outlook, even though the 2023 market in the North Sea looks very quiet, it doesn't mean that tendering activity is quiet.
Customers are very active these days, and I would expect that within the coming months, whether it will be this year or early into next year, I don't know, but we will see a conclusion of about 6 contracts for work in 2024 and a bit onwards. The key focus in the coming months, see if we can get some more work for 2023. Focus on executing the modifications and mobilizations. We have to guard our cash. Finally, we have a number of ongoing tenders, which will be concluded in the coming months. Quick on operations. As I mentioned, 77% utilization, and we can do a quick run-through of the fleet. The Boreas commenced and now concluded a short contract in the UK, where we had 20 of 30 days, option called.
Safe Zephyrus is at ETAP in the UK with BP. We expect it to be concluded on 21 December, and then it may ship to Brazil, as I will come back to. Safe Caledonia, still at Elgin, has been there for almost a year and a half and doing very well. Safe Eurus and Safe Notos are doing well in Brazil. No change in that. Safe Concordia has now concluded what was a very good contract for that DP2 vessel in Trinidad. As you can see, utilization of the fleet looks fairly healthy over the past quarters. Quickly on the backlog, as you can see, it has tripled in the past 12 months, mainly due to the Brazil contracts we have added, and now stands around $300 million.
The main addition for the quarter was the 11-17 months contracts in the U.S. for Safe Concordia, with a day rate around $100 for the firm period, around $110 for the options. There's a standby rate depending on commencement, but naturally, we hope for the earliest possible commencement from July onwards. At the end of the quarter, we were first placed in a bid with Petrobras. For those who remember, it's a retender. The first was canceled because the bids were above Petrobras's budget. It was retendered with an identical specification. That shows that Petrobras is willing to pay for this specification. There was a bit of savings so we could reduce the price a bit. We are first in that and the negotiations are ongoing.
Our main focus is to get the vessel as quickly as we can to Brazil. If it's done in late December, it may miss the carnival in Rio when it goes there, but hopefully not by much. We are in dialogue with Petrobras about the earliest possible commencement, which of course is in our interest as we want to keep the maximum commercial flexibility. A quick overview of our contract portfolio, focus is on getting work for our two vessels in 2023, one DP, one moored, and those are also the only two available we have for 2024 if the Zephyrus goes to Brazil. Zephyrus done around 21st December, we expect, and then it will go to Brazil if we conclude an agreement with Petrobras. As I mentioned, very busy on tendering activity.
6, I think, contracts to be concluded in the coming months, and we see some customer reaction based on our bid in Brazil and customers realizing that what we have available for 2024 is one DP vessel, the Boreas, and then Caledonia, and possibly Scandinavia. Over to Reese.
Thank you, Jesper. Before I go in a bit into the details of the financials, I want to say that we have done a bit of a refresh on the presentation, and I think also people have noticed that we've included a lot more information and then some supplementary pages to the presentation. I think a lot of that has been driven by, of course, the increased interest in the company over the past months. I think Jesper and I have gotten many questions on many different fronts, and we felt both amongst the management and the board that it was the right thing to go out and give people, you know, a lot more detailed information this time.
This is not something we probably will do every single quarter, but at least a couple times a year, we'll have the intent to sort of give people, I think, a bit more information around, you know, CapEx numbers, contract rates, and what we're seeing sort of at the OpEx levels per vessel. That's something we'll try to do. I think also there's the intention going forward to present more at the half year and at the final year and maybe be a little bit more tight on the quarters just coming out with a presentation rather than sort of the full quarterly report. We will continue to deliver, I think, on the financial information and continue to be as transparent as possible. I hope everybody finds that beneficial.
In the quarter, a solid quarter, very good quarter, as Jesper mentioned, $24 million in EBITDA for the quarter, largely driven by the utilization. Most of the vessels on hire, all the vessels on hire during, you know, not over the whole period, but during the period. A very strong quarter and obviously one of the better ones that we have had for several years. I would just like to highlight that we do have quite a large portion of what we call other income. I think, for the sort of accountants out there, a big chunk of that in this last quarter was actually what I call a gross-up of the income statement, where we're actually including in revenue some withholding tax, which is then actually also on the expenses side.
Not really much of a margin on that, and that's very much related to the Trinidad and Tobago contract, which actually ended at the very end of the quarter. Underlying around $50 million of revenue and a little bit of earnings on the other income, but not that much. Otherwise on the P&L, no real big surprises in the P&L. As I've talked about a few times before, we do have some taxes. That's again related to Trinidad. I think going forward, we won't see this level of taxes. That was very project related. We do have a large tax loss in Norway, and I think we have a very tax efficient structure.
I think going forward, the only taxes we see are some minor taxes, related to contracts or, you know, based on the transfer pricing structure. I think that is a bit of a one-off that will taper off. I think otherwise on the balance sheet, I think we're very happy this quarter to see a little bit of unwinding on the working capital. We'll see that a bit on the next page. Improvement in the actual cash balance, which I think was very favorable. I think we will see that through this quarter as well with some of the contracts coming off, the Trinidad contract finishing up at the end of last quarter and then this quarter as well, with Boreas coming, you know, finishing its contract.
We think we'll see some positive working capital changes now in the fourth quarter. Otherwise on the balance sheet, no big surprises. As I mentioned, cash, very happy to see the cash balance going up. I think if you remember last quarter, actually we had a good result, but actually pretty flat on the cash. That was largely driven by working capital. I think we were able to catch some of that up with BP coming through. I think we see that issue kind of coming over. I think we'll see sort of you know, continued good cash generation at least through this quarter. Yeah, and a good kind of look there. I think always good to remember that we do have some interest costs.
Although we have a very favorable financing package, there is some interest costs that we have to pay on the amortization on the Eurus facility or seller's credit, I guess is a better term. Net interest-bearing debt and the debt profile. Not going to dwell too much on that. I just always like to remind people that we do have a fair value adjustment in our calculation of net interest-bearing debt of some $14 million, which I think is from an accounting perspective something that, you know, one may like to add that to the net debt number or not. But we always kind of footnote that. We do have a very favorable package from COSCO on that financing for the yard.
We just have to keep that in mind. Otherwise, no big issues. I think we do see interest rates, of course, coming up. We are unhedged when it comes to our interest rate exposure. Actually don't have any hedging lines readily available, so we are a bit subject to the interest rate fluctuations and changes going forward. But nevertheless, part of you know a very small margin on top of the base rate, but that is obviously a sensitivity that we're keenly aware of. I think I'll move on and let Jesper talk briefly about the market, and then I'll come back at the end for a few
Okay.
A bit more on the outlook.
Thanks, Reese. Give me three slides, and then I'm ready to hand back. A bit on the markets. On a global view, I guess, the numbers are quite clearly indicative of a tightening market. The supply side here, we can see how that is declining slightly with older vessels being scrapped. We are not in an industry that has any big order book or overhang from a supply side. In terms of demand, the trend is quite clearly increasing. Be mindful that this is in number of vessel years. If you're in the North Sea, you often require two vessels to satisfy one demand year. That is worth keeping in mind.
Of course, the utilization rates are moving positively, and getting into a territory which is meaningful also from a rate point of view, if you look at other industries. If I recall what we pointed to in previous presentations, we see some of the lower-spec vessels also winning work, and we can actually see how that's improving here at the brown or grayish line at the bottom, that even the lower-tier vessels are winning work, which I think is a good sign of how things are presently in our market and what may lie ahead. A quick look at the North Sea before we take a look at Brazil.
I think in the North Sea, as you can see currently, we have had a high period, the previous cycle here, which been coming down. Even though it's not so visible, rates are moving up between $100 and $140. It's been in a long period, but of course, how things are looking, the market is definitely tightening. On the activity side, we also see a clear increase. What we have done this year is mainly tiebacks, short-cycle projects, tiebacks in the UK. When we look forward, we also see tiebacks and works related to that. I wouldn't be surprised if that continues to be an important activity for us.
Brazil is a bit more predictable market, I think, as we do planned maintenance activity, largely linked to the installed base in Brazil. Well, we haven't put in our latest bid of 112, but that will probably be as high as you've seen from 2017, and rates have moved quickly in Brazil. Interestingly, if you look on the historical activity in Brazil, the peak in 2015 and 2016 from a Flotel or UMS activity level was actually on a lower installed base. When we see the installed base increasing and increasing with larger FPSOs, it basically underlines our view that there will be more activity and opportunities in Brazil, and therefore our focus is, of course, to have more vessels to offer to Petrobras. Reese, quickly, the two last.
Yeah. Yeah, we've also been receiving a lot of questions, I think, around what is the earnings potential, and I think that's always a great question to get. While the past is never a predictor of what the future will be, I think we did do a little bit of work around, you know, what has it looked like in the past. Going through the last sort of cycle, we are in a cyclical business. I think a lot of people think we are sort of entering a new cycle in the sector. I think we believe the same. What, you know, if one is sort of looking at that a little bit holistically, what does that mean for us looking at historical patterns?
What we see is that going back and looking through history, we see that sort of when we were kind of at the peak, on average, we had vessels making around $40m EBITDA. Again, on average, we had some peaking out above, but that was kind of what it was when we were in those peak years. If we look sort of over the whole, you know, almost an entire cycle, it's probably not fully the cycle, but getting close, we see that it was around about the 20-ish mark.
We wanted to kinda give people some indicators, at least also from how we're looking at it, as sort of what has been, what is sort of a football field of potential EBITDA per vessel type of range one could look at in, you know, as the market is picking up. We think this is a good football field. One can of course debate, is it 20? Is it 40? Is it 50? We think this gives people a decent feel. I think as well that the number of vessels, we can talk about that. We've put in Safe Scandinavia into the analysis. One can also say what's happening in Brazil. Is it fair to sort of put Safe Eurus and Safe Notos in this analysis as only having the rates they have today?
Of course, one can discuss that, but our view is that they are on these contracts till 2026, 2027. After that, of course, we will see. I'm not saying this is sort of, this is not sort of our guidance on what it will be, but I think giving people some metrics that they can look at looking back in time. I hope that's informative and gives a bit of a view. Coming back just to wrap up, I think as Jesper said, it was a very strong quarter. I think we see that 2022 we're landing in the range of our guidance. I think we will be right at the upper end, which is about $60, you know, $60 or $62 or $63, we will see.
I think we're right about at where we thought we would be, which we're quite happy about. It was a very full year, one of the better years that we've seen in many years. We've also had really good operations, HSE performance throughout that year. That was quite an achievement coming off of a low base. That's been very positive. As Jesper said, 2023 looking much lighter than we would like it to be, and that in combination with activities around getting Concordia on a job, which of course is a cash contributing job, you know, over the contract period. There is some upfront loading of the expenses in CapEx. The same a bit with Zephyrus in Brazil should we win that.
We also have the notice in Eurus, hull cleaning, and we will bring forward the SPS for the Eurus, so that we only have that vessel off hire once rather than twice. If you put all that into the mix, we also see that 2023 will be a year where we have to have a keen focus on our cash management throughout the year, which we are keenly aware of and also very focused on new opportunities in 2023. We see some opportunities, like Jesper said. We think some opportunities will come, but it is lighter today than what we would like it to be.
2024 onwards is looking good, and we do have, you know, tendering activity, and we're quite positive that in the coming months there will actually be some awards for the time period 2024 and beyond. Overall, looking very positive, and 2023 will be a bit of a in-between year in our view. I think we can now hand it over to questions.
Questions.
If there are any questions, maybe we take the questions in the room first.
Yeah.
I think there were some questions on the phone as well.
Yeah.
Yeah.
I have a few questions actually. Or partially, I think you answered the first one by saying that you need to have a prudent cash management in 2023. By that I conclude that you aren't going to spend very much cash in 2023.
Yeah.
Is that a fair assumption?
Yeah. The question, just for everyone listening in, the question was around cash management and in particular cash sweep at the end of this year. That's correct. We do not envision any cash sweep at the end of the year. The cash sweep mechanism says that all cash shall be swept above $67 million, but on a forward-looking basis. If in the future we see that we will go below the $67 million in the 12 months ahead, then there is no sweep. We do not foresee a sweep at the end of this year, even though we do believe the cash will be above.
Okay. Yeah. I think, Jesper, you mentioned that you had 6 tenders that you expected to be concluded over the next few months. Are you able to give a bit of color on, you know, region, startup, term on those? Just trying to kind of assess the idle time there on the fleet.
Yeah. No. All the 6 tenders or the works that we expect will be concluded on, all of them are in the North Sea. There are different things around the world, but the 6 I mentioned are all related to the North Sea, a bit mixed between Norway and U.K. and a bit mixed between duration. I think the key we see is that customers are moving early. That's the trend we observe. Yeah. Duration is a bit mixed and how they glue together, overlap, it's a bit more of a complex puzzle.
That means that this is potentially then for 2024 work carry on.
Yeah.
There is no 2023 work in those tenders.
There can pop something up in 2023 in the coming months, but we don't expect if it does, it will be very meaty. The most of the chunk for those six is 2024 and a bit onwards.
Final one from me. Sorry, everyone. On the Petrobras tender.
Yeah.
The 650. You said, you know, they kept the spec and they're increasing their budget.
Yeah.
Do you have, you know, any idea of how much they've increased the budget? Just thinking, you know, a theoretical willingness to pay.
Yeah. Yeah, that I have an opinion, but it's, I think if you look at the bidding in the tender which was canceled, I think that would have given Petrobras kind of an idea of what they would have to pay to be in the ballpark. That I would basically go back and take a look at. I don't know what their budget is, but of course, I have an idea. I think how we think about it's we will see if we made the right choice in 2024. We are very optimistic of 20 more in the North Sea, and then we're looking at 2023. We took this job.
In the long term, I think it's important that we're also quite optimistic about Brazil in the long term and also on the North Sea for 2025. The investment of $10 million is, I think, will be valuable to have that flexibility between the North Sea and where you also see Petrobras focusing on this spec. I'm quite sure that they have also understood that, it may be able to attract a vessel from outside. In short, yeah, the exact budget, but I guess going back and looking at the bidding history, would give an indication of what would make sense.
Thanks.
You mentioned earlier that you're seeing also activity levels likely for the low-risk spec vessels. In those six tenders, are you eyeing an opportunity for Scandinavia?
Yeah. That's a good question, Celina. I think we do see a bit of a pecking order, to be honest, that most customers would like to have a DP vessel in the middle of the summer, and then that may or may not be so attractive. I think, although we do bid in the Safe Scandinavia, there will be a bit of a pecking order where it will come into play, especially when the other alternatives are limited.
I guess it is fair to say that we have had interest, though, in the Safe Scandinavia.
Yes
with different, you know, not necessarily for a classic accommodation job, but we have had a few clients looking into the vessel for other uses. I think the timing is a bit uncertain, but
Yeah
She has picked up some interest.
Yes, she has.
Yeah.
Any other questions in the room? Otherwise, we should.
Yeah.
We check if there's any online. Normally, that's the more active. Any more other questions? No. I think those we covered.
I just have one more quick question.
Go ahead. Yeah, go ahead.
In the chart where you're showing these historical EBITDA rates, which is super interesting obviously, and looking back at sort of historical highs and extrapolating from that. Is that comparable vessels like 100%, or are there adjustments that you need to do in order to make it comparable basically?
Yeah.
to today's fleet?
Yeah. The question was if looking at this slide, whether the vessels are the same sort of comparable vessels. The answer is actually no, they're not 100% comparable vessels because if you go back and look at sort of what our fleet was in the past it was a bit of an older set of vessels than the fleet we have today. We have now today a more modern fleet. Nevertheless, we think that you know, the underlying kind of demand driver for the service has not necessarily changed. You know, it's still maintenance work and tie-ins and hookups. Maybe the spec of the vessel has changed slightly, but we still think it.
Yeah, we had quite a bit of discussion around that, but I think, you know, the underlying sort of demand characteristics are quite similar. We think that there's not really a large need for adjusting as such, on the sort of vessel.
The earnings, revenues, capacity is comparable?
I think so.
Okay.
Yeah, we think so.
Yeah.
I think there's not a big gap there.
Okay.
I mean, we can always discuss the margins. I think, for example, like we're discussing here, Zephyrus, you know, you can have her going between the two key markets. You know, maybe that wasn't something in the past that you had so much flexibility on. Yeah.
There were a few questions here from the audience. One of the questions was from online. Moving Zephyrus from the North Sea to Brazil, what does that mean for your view on the market in the North Sea in the longer term?
Yeah. No, it's, I think, as I said, it's a difficult dilemma because we are fairly optimistic of both the North Sea and Brazil in that point. I guess the key for us is to keep commercial flexibility of being able to service both markets. Perhaps it stays in Brazil. Who knows in 2025. If there are opportunities in the North Sea, we would like to be able to capture those as well.
Yeah. The next question from online was around Nova and Vega. It says, do you see some potential awards for Petrobras in 2023 or 2024 to use the Nova or Vega?
Yeah. Well, we have an ongoing dialogue with the yards to basically make sure that we have a competitive offer with a realistic timeline. Now, as you saw, they had a bit of damage from a typhoon, which the yard is assessing, and then we have to see, okay, what does that mean in terms of delivery time? But we are quite keen to make sure that we have something on the shelves as we expect that Petrobras will have demand also in the coming years.
Yeah. Another question was, do we see longer contract awards materializing in the North Sea given the expectations?
I actually haven't analyzed that, to be honest. There are some of longer duration, and some are more classical standard 5-6 months jobs. I think what our focus is here and there is, of course, to ensure that we have the optimum utilization. That's, I think that will be key, whether you bundle jobs or whether you have one long one. I think that will be a bit of what this is our challenge. Is there any trend on the duration? I think it's too early to say.
Yeah. Can we elaborate at all on the discussions around mergers and acquisitions?
No.
No. Okay. Okay, let's see if there was any other, questions coming in. Yeah. There was a final question here that just came in. Can we elaborate at all on the cost split between expenses, between CapEx, the upgrade and relocation costs being expensed versus capitalized? I think the best way to refer on that is if people have a quick look at the supplementary information which we have provided, where we have actually tried to break it down into what we think the day rate CapEx will be coming onto contract and what we think the actual CapEx element will be. I think if people want to look into that, they can look at it onto this slide where we have tried our best to break it down.
If there are questions about that, please feel free to reach out. For us, it's all cash.
Yes.
Yes.
Okay. Very good. Thank you very much.
Okay. Thank you very much.