Welcome to the Q2 presentation for Solstad Offshore ASA. This presentation will be held by CFO Kjetil Ramstad and myself, Lars Peder Solstad. We are happy to present the best quarter we have ever had, with a very high utilization on our fleet, a record high revenue, and also a record high EBITDA. We have also continued to build a backlog in a nice way during the quarter. The quarterly report is still a bit messy, as the PSV fleet was delivered to new owners a week after the quarter end, and thereby the balance sheet in June still includes the PSVs. Having said that, in this presentation, we have excluded the PSVs to give a correct picture of how the company are developing based on the relevant fleet of CSVs and anchor handlers.
After this presentation, there will be a Q&A session, so please send in your questions by using the chat function. A quick look at the disclaimer before we move on to the financial highlights of the quarter. As mentioned, these numbers are excluding the PSVs, and that also goes for the last year's numbers, which you will see in brackets. As you see, the revenue came in just above NOK 1.9 billion in the quarter. And with NOK 934 million in EBITDA, that means an operational margin of close to 50%, and it has been some time since we saw similar margins.
We continue to build a healthy backlog with good counterparts, and our cash position has also improved further. Looking at the assets, the debt, and equity, these numbers are all adjusted for the PSV sale, and Kjetil will dive deeper into these numbers later in the presentation. We have seen a continued high demand for our services, with increased willingness from our clients to charter in longer and to accept improved commercial terms for our services. This has resulted in a 77% increase in EBITDA in the quarter, compared to second quarter of last year, which is our best operational result ever. It's also very encouraging to see that as much as 31% of our EBITDA comes from renewable energy activities.
During the second quarter, we have been involved in several offshore wind projects in Taiwan, in the UK, and in France, and also in other countries, and this market segment is contributing significantly to the high demand for offshore vessels, and then particularly the CSVs. The earlier announced sale of our PSV fleet was concluded just after the quarter end, resulting in a significant reduction in the company debt, and a reposition of Solstad as one of the main owners and operators of high-end offshore tonnage. The entire remaining fleet will have all types of offshore energy activity as markets, and we are able to offer our clients not only vessels on time charter, but also additional services as ROVs, survey, tooling, and project support.
Our experience is that our clients are welcoming this offering, and we are able to increase revenue and EBITDA per vessel. In this quarter, we have ordered four new ROVs that will be utilized on the company's CSVs from end of this year. We continue to see many opportunities in the market. Brazil is very active, and at the moment, there are opportunities in the market for pipe-laying vessels, ROV survey vessels, large anchor handlers, medium-sized anchor handlers, all for long-term contracts. And there are also ongoing bidding in other geographical regions and also to subsea contractors for global project work. For the anchor handling fleet that are not on term contracts, we experience a busy project market.
And for our fleet of five large anchor handlers trading the project and spot market, we have had several good projects in the quarter, with earnings compensating for a rather slow North Sea spot market. We are actively seeking project work, and we expect to be involved in several projects also in second half of 2023. On the market, we continue to see a market with very high bidding activity. Clients are willing to commit longer and to improved commercial terms. This goes for oil and gas, and also renewable energy activities. More clients realize that it's highly probable that there will be a shortage of vessels and are therefore interested in securing capacity....
Except for the SOV segment, where there are plenty of vessels under construction, there are close to zero vessels being built that can service both the oil and gas, and renewable energy markets. Lack of capacity or lack of new capacity in a market that continue to grow, could easily make a strong market even stronger going forward. As we see it, there will not be any meaningful new capacity added to the market the coming years. To have a strong global presence will continue to be a benefit. North Sea-based rigs have left the North Sea region for contracts in Africa, Australia, and Canada, but they will still require support, and, preferably from companies that can offer local content services.
Brazil and Guyana will have very high field development activity, and to have the global approach is necessary to be able to participate in this activity. Same goes for other areas, and within offshore wind, local content is even more in focus than in oil and gas. We believe that our first-class fleet and service, in combination with direct presence or in partnership with others in many of the busiest regions, will be beneficial also going forward. I would like to give you a few examples of contracts we have signed lately, and Normand Pioneer is our oldest vessel. And we are now signing a new contract for 18 months for clients in Brazil, and that is at the highest rate that we have ever seen on that vessel.
And as a consequence of the new contract, we are also taking the vessel through its 25-year class, meaning that we will extend the commercial life of the vessel until 2029. Normand Maximus, our largest vessel, is now went on hire to a new client this week and are now booked for the coming 2 years. And she's gonna, on a new contract, she's gonna work on global subsea contracts. And we are already now also participating on tenders beyond 2025, 2026. So there's a lot of interest in that type of vessel. Normand Carioca is the only PSV we did not sell.
That vessel has now been converted to a well stimulation vessel on the client's account. At the same time, the contract was extended with 4.5 years, meaning that she's fully committed until end of 2027 at good terms. Going forward, we will include Normand Carioca as one of our CSVs. If we take a look at the backlog, also in second quarter, we signed contracts for higher value than we invoiced our clients in the same period, giving a book-to-bill of 1.1. This is the same factor as we had in second quarter 2020, but keep in mind that the revenue in back then was about NOK 1.3 billion, and now it's NOK 1.9 billion.
So the value of the new contract is significantly up. And the figures shown on this graph is also, of course, excluding the PSV fleet. The total firm backlog is at NOK 6.5 billion, and about double, at NOK 12.3 billion, if we include options. And as you will notice, the backlog for execution in second half of this year is fairly high, and the same goes for 2024, especially if options are included, which is a likely scenario in a tight market. An overweight of the firm backlog comes from the CSV segment. And the backlog has high quality, and all new contracts are being done at healthy margins.
We believe that we have a good combination of backlog in hand and available capacity to add more contracts in an improving market. We have already signed more contracts after quarter end and are involved in a large number of bidding processes and contract negotiations globally. These are for both anchor handlers and CSVs, and it is with oil and gas clients, and it is with renewable energy clients. This gives us the comfort that we have a good combination of the right type of vessels, firm contracts, and availability capacity to take on more contracts, long term, medium term, and projects in a market that we believe will continue to improve. So then, Kjetil, I hand the word over to you to take a closer look at our numbers.
Thank you, Lars. And if we start with the income statement, as mentioned, the second quarter has been the best quarter in the company history. Also taking into consideration that the PSV fleet has been sold. Operating income from continued operations was increased by 44% to more than NOK 1.9 billion, compared to last year. And EBIT adjusted from continued operations increased by 77% to NOK 934 million, compared to 528 last year. EBIT was NOK 630 million, or 33% over the revenue.
It's good also to see that the net result for the quarter is positive NOK 336 million. If you look at the EBITDA distribution on the graph on the right-hand side, you will see that the—we have more than 30% of the revenue was generated from renewable projects or activities. So it's good to have a fleet that can do both activities.
If we go on the balance sheet, and the balance sheet is a pro forma balance sheet, trying to illustrate how the balance sheet had looked like if we have closed the PSV transaction in second quarter. So this is just for showing how it would look like. But as you can see, the largest movements on the balance sheet is obviously on the fixed asset, where you can see that the reduction has been almost NOK 6 billion compared to last year.
Also, if you look at accounts receivable and cash, you see that cash is on the same level as last year. But also accounts receivable is up, and that will be normalized in third quarter, and we expect that the cash position will increase going forward. If you look at the equity side, it's also a little bit up from previous or last year. I will come back to that a little bit on the next slide. Same on the debt side.
You can see that the debt has been reclassified from long term to short term, but you can also see that the reduction has been nearly NOK 6 billion of reduced debt to credit institutions. And this also gives equity ratio that is increasing for the company. If we go- if we start on the equity side, and as we have mentioned previous quarters, our debt is 70% denominated in U.S. dollars.
This, of course, when we translate it to NOK in our books, in our group books, we will have some unrealized foreign exchange effects, as you can see. Been less the last quarter, but yeah, but the last 12 months, we still are looking at the unrealized effects of almost NOK 1 billion. On the good side, we see that the company's operations are performing, and the net result for that period correspondingly is NOK 1.2 billion, giving an increased equity of approximately NOK 300 million compared to last year.
On the debt side, it's a little bit of the same. As you can see, we have repaid NOK 1.6 billion of debt in the period. But we also have added on a new lease for Normand Maximus of now almost NOK 1 billion. And we have effects of almost NOK 1.5 billion on the US dollar loan. As mentioned, we sold the PSVs, and then we are taking down the interest-bearing debt to almost NOK 6 billion, taking us down to NOK 17 billion at the end of second quarter.
Then if we go to refinancing and, as you know, we have a refinance coming up early next year in end of the first quarter. On the main portion of the refinancing is related to the what we call the fleet loan, which consists of 36 vessels after the PSV sale. It was 71 before. And of course, as mentioned, the debt there was reduced by 500 or approximately NOK 6 billion, as you can see on the graph to the right-hand side.
Meaning that when we come to debt maturity in 2024, the gross debt will be around NOK 13 billion in total to be refinanced. From the fleet loan, it's approximately NOK 11 billion. On Normand Maximus, as mentioned, we signed a new bareboat agreement there last year. And it's good to say that that structure is standing on its own feet with the new contract taking the vessel through the next two years with healthy cash generations in that structure.
BNDES in Brazil and the structure that we have there is also self-funded with contract backlog, and also adding on Carioca improves that position, so that is good. We have started the discussions with all stakeholders regarding the refinancing. And we have engaged financial advisors to assist us in this process. And we will share information when we have information that we can share with all of you. So with that, I will give the word back to you, Lars, to wrap it up.
Thanks, Kjetil. And just to summarize the presentation, we have had a very good quarter with excellent operations and record high revenue and EBITDA. This has also continued into the third quarter, and the market conditions looks promising going forward. From early third quarter, we have left the PSV segment, and we now have full focus on the high end CSV and anchor handling segments. And industrial, this makes a lot of sense for us, as this is the part of the market with the better outlook in our view. Our entire fleet are now also relevant for all types of offshore energy activities, meaning that we're gonna be also gonna be very relevant for the ongoing energy transition.
As a consequence of the sale, our debt are reduced with approximately NOK 6 billion, which should be, should be beneficial for the 2024 refinancing of the company. The outlook for for offshore energy activity continue to look good, with very high investment programs from our client side, both within oil and gas and within renewable energy. So with that, we conclude our presentation, and we move over to to Q&A, if there are any questions, Kjetil.
Yep. There are some questions, and the first one is on the Australian market. Are the company considering to sending more vessels to the Brazilian market in the coming period? I mean, the Brazilian market.
Brazil?
Yeah.
Yeah, why not? We are participating in tenders there, and if we are successful, we will do that. We see Brazil as one of the sort of main geographical areas for us, and we find it very interesting, so we are following that very closely.
Next one is, it looks like the company has a split of long-term and short-term contracts on, especially on the CSV side. Can you explain why we are not doing longer term on most of the vessels?
Well, I think it all comes down to what the rates we can achieve. Of course, if we find the commercial terms attractive enough on the long-term contracts, we will, of course, go long term. But as per now, we also find it very interesting to keep some vessels in the shorter-term market, because we see that the project market has been really good. Also looking over a period of a year, for example, compared to what we can do on long-term contracts for some of the vessels.
So I think it will be a combination also going forward, but probably a little bit higher, let's say, percentage on the long-term contracts if we look a year ahead from now.
Congratulations with a good second quarter. Do you expect that there will be availability on the CSV fleet during the winter season, like it has traditionally been some years back?
Well, I think in a tight market, we see less differences between the seasons. But also back to the previous questions, we have a few vessels trading the project market. So we are continuously looking for projects that will take us through the winter season, but I think it will be, let's say, less availability than we saw, for example, last year.
Thank you. You mentioned the schedule on, on Normand Maximus. Can you give an update on, on, if the vessel is fully booked for 2023 and 2024, or any available periods?
The vessel is now fully booked. So the vessel is booked from early this week, and until third quarter 2025, so fully booked.
Okay, good. There is market reports recently stated that Australia is now sold out for high-end anchor handler capacity. With several rigs mobilizing to Australia going forward, how do you see the demand for anchor handlers, large anchor handlers, moving from North Sea to the Far East?
That may happen. It's one of the few, let's say, long-term markets for anchor handlers. You have Brazil, Australia, as the two long-term contract markets. And as it is now, the all vessels in Australia, the bigger anchor handlers are working, so additional rigs should require more vessels moving in from other areas. So I believe that would happen.
And then, next question is, can you comment on the earnings potential? Do the company still have old type of contracts from previous or from previous periods in its portfolio that-
Mm
... that have a potential for higher earnings down the road?
Yeah, yeah. We still have a few, let's say, legacy contracts that we are working on. Many of them will either come to a conclusion or the contract end within the, let's say, next six to 12 months, or we will hold them over from firm to optional periods, and most of the optional periods are at a higher price than the firm contracts. There are quite a few of the contracts that will be held over to better terms going forward, both on the anchor handling segment and on the CSV segment.
And then the next question is, the market is generally dominated by high activity, and in many segments, there will be lack of vessels. How do Solstad regard the future when it comes to new builds, and planning for new investments?
I think what we're going to do now is to concentrate on the fleet we have. We see that there is. So we don't look at new builds at the moment. I think we are still in, I mean, we still have to refinance the company, as you know. If you look at the cost of new vessels, it is probably double from what the, so let's say, latest generation vessels cost when they were delivered back in 2014, 2015, 2016. There is a technology vacuum, with what type of fuel are you going to go for?
Financing is a third element. So, I think from Solstad side, we are concentrating on the vessels we have at the moment, and but we are looking more into how can we build on more services to the vessels we have, so we can generate additional revenue and EBITDA based on the same vessels. Thank you.
And then, there is a question if we can say a little bit more on what our strategy is around additional services, with we mentioned new ROVs, et cetera.
Mm.
Can we elaborate a little bit around that?
Yeah. We see that the, we see that the, it's not only, it's not only vessels that are going to be in shortage going forward, it also goes for equipment, it goes for people, it goes for tooling, it goes for engineering capacity a lot. And we believe that if we can offer a larger scope to our client, that will be beneficial. And we have, we are doing some investments ourselves together with, with some very recognized partners, to build up a fleet of ROVs that we are mobilizing onto our own vessels. And we are also able to offer other type of services from the same with the same partners.
So, by bundling more, by bundling more services into the vessel delivery, we believe we will make ourselves more attractive, and we also believe that we are able to take out more margins than on the vessel alone. So that is a clear strategy for us going forward, that we will do more within services.
Okay, we are starting to approach the end, but here is another one, very good performance. How much would you say the CSV rates has increased on average year-over-year, if you also exclude the impact of Normand Maximus?
If we compare with a year ago, I would say the rates has probably doubled, something like that.
Yeah.
Depending on type of vessel, of course, but, but in general, doubled.
That's good. I think that concludes the questions. So,
Okay. Thank you.
Thank you for the presentation.
Thanks for listening in.
Yep.
Yeah, thank you. Have a good day, and have a good weekend. Thanks.