I'd like to thank you all for joining us today. Joining me on the call are Marcelo Antonio Issa, Ventura Offshore's CFO, and Olaf Hammary, our Financial Advisor. We will provide you an overview of our performance between April and June of this year, an overview of the market, and at the end, open for questions. As in previous calls, you should see on your screen on the upper part a Q&A icon that you have to use to write your questions. I'm going to read them out loud at the end of the presentation and answer the questions. Okay? Can you move to the next slide, please? Yeah. That's our disclaimer, which you are familiar with. All right.
First off, we were very pleased to announce last quarter the commencement of operations of our managed vessel, the Atlantic Zonda, on her three firm plus three optional years contract with Petrobras, keeping this rig busy until 2028 and potentially 2031. I'm also happy to see our customer, Yanai, exercising their first optional well in Indonesia on the contract with the SSV Victoria, also as already announced last quarter. With this optional well, we estimate the rig to remain operating until the end of this year. If the additional remaining three optional wells are exercised, as we expect, we expect the Catarina to remain busy until August of 2026. Now, moving to the key highlights of this quarter, in Q2, Ventura Offshore has delivered an adjusted EBITDA of $18.2 million and a net income of $24 million.
Also, as you have been hearing in all our previous earnings calls, we have yet again delivered industry-leading cost structure, operating with an average OpEx of $109,000 per day, excluding ancillary service for the Catarina, which are fully reimbursed by the customer with a markup margin. We closed the quarter with a cash position of $46.6 million. Our backlog, as at the 30th of June of 2025, was $657 million, which includes the first of the optional wells by Yanai, which has been exercised, as I mentioned, as well as the Atlantic Zonda management fee. Finally, the company delivered an operational uptime of 90.9% and a financial uptime of 86% for our own rigs, which is below our targeted uptime and which is certainly not representative of our historical performance.
These figures were mostly adversely affected by a BOP pull on the SSV Catarina, compounded by the fact that most of the work done by the same rig, the Catarina, in Q2 was remunerated 90% of the day rate as per contract. Since the end of June, however, and to date, the fleet is back operating at historical levels with an uptime north of 95%. Before moving on to the next slide, I wanted to provide you with an update on the economic impact of the interdiction of the DS Carolina that occurred in Q1 this year. As we have informed before, we continue to be in productive and positive discussions with our customer, Petrobras, but no conclusion was reached so far. We remain confident, nonetheless, that the economic impact of this interdiction should not be material. We expect closure of this discussion sometime in Q4 or early next year.
Moving on to the next slide, please. You can see our fleet status report, and that provides you with a good picture of our contracting situation for all our owned and managed rigs. The DS Carolina is contracted until now with a new contract due at least 2029, with the possibility of extensions up to potentially 2033. The semi-submersible SSV Victoria is contracted until August of next year, continuing to operate for Petrobras in Búzios Field, and looking at the ongoing and future contract opportunities with Petrobras. The SSV Catarina, also a semi-submersible, continues to operate on its well-based contract for Yanai in Indonesia and has now one option well exercised by Yanai, which takes operations throughout 2025. Assuming the additional three option wells are also exercised, which is our expectation and we remain quite optimistic about this, Catarina operations under this contract will be taken into August of 2026.
Similarly to the Victoria, we're also actively marketing the Catarina for future opportunities, mostly but not only in Southeast Asia. Finally, as already mentioned, our managed rig, the Atlantic Zonda, has successfully started operations for Petrobras under its three-year contract with three additional optional years. This rig will operate until 2028 with the possibility of going to 2031. Again, our rig is under contract until 2026 and beyond, assuming the option wells in the Catarina are exercised. With that, I'll hand over to Marcelo Issa, Ventura Offshore's CFO, who will cover the financial highlights for our second quarter of 2025. Marcelo?
Thank you, Guilherme, and thanks to everyone for joining Ventura's earnings call. In Q2, Ventura generated a total adjusted revenue of $55.4 million, broken down as $53.2 million related to the operating activities of our three owned drilling rigs and $2.2 million in managed fees. The income statement reports $91.5 million in revenues, but it's important to highlight that this includes $22.6 million from the amortization of non-favorable contracts liabilities, a non-cash item, and $13.5 million as reimbursable expenses. Ventura remains committed to keeping OpEx low. Total OpEx for Q2 was $32.6 million, including the ancillary services provided to Yanai. Excluding this service and deferred mobilization costs, the average OpEx amounted to $109,000 per day. The SG&A for the quarter totaled $4.5 million, in line with company expectations. As a result, adjusted EBITDA for the period stands at $18.2 million.
The final free cash position in Q2 is $46.6 million. As mentioned during the last earnings call, $16 million from the accounts receivable that should have been paid in Q1 were collected in Q2. Also, $9.5 million held as cash collateral for a performance bond were released at the end of June. Regarding the $9.5 million cash collateral, it was replaced by a counter guarantee supported by the revolving credit facility. At the end of Q2, the RCF utilized was $28.3 million. At the beginning of Q3, these proceeds were used to pay part of the cash drawn from the RCF. Therefore, the cash draw from the RCF was reduced to $9.3 million. The $9.5 million was presented in other current assets before it was released. There is $16.9 million in restricted cash held on behalf of the owners of the managed vessel.
The bond loan was amortized by $10 million, and the gross interest-bearing debt in Q2 is $173.8 million. Next slide, please. Now looking at the balance sheet, the accounts receivable include $13.9 million related to the Yanai contract, $25.8 million to Petrobras, and $15.1 million for the managed vessel with Petrobras. CapEx invested in Q2 was $2.2 million, of which $1.4 million related to long-lead items for the new long-term co ntract of Carolina with Petrobras. I will now hand it back to Guilherme for some market highlights. Thank you.
Thanks, Marcelo. I will now quickly cover the market conditions and then focus a bit more in Brazil. As we know, we are seeing delays in FIDs by oil companies for important projects and pushing execution to late 2026 and 2027. In total, 2025 had 47 oil and gas offshore projects scheduled to start, with some originally planned but postponed to a later date. Geopolitical uncertainties and consequent low price of oil, allied with capital discipline from oil companies, and issues on supply chain have impacted spending growth. However, as we have been saying in our previous calls, it's our belief that the industry fundamentals remain strong and that we should see an important increase for floater demand over the next five years. In Southeast Asia, particularly, demand for floaters is steady, with potential to increase in the coming years.
The recently announced long-term ONGC tender in India, while disappointing to see the requirement for Drillships only, does bring an important silver lining that it's a new opportunity and it will likely take out some competition from that market. Similarly, PTTP is in the process of selecting a rig for Malaysia, and so is Yanai, who continues its efforts to develop deepwater blocks in Indonesia, which is their energy hub in Asia. Yanai actually has tenders for the Galega Field, which is one firm plus one optional well, plus an additional long-term demand for eight firm wells plus eight optional wells, as rumored by the market. These are also aimed at drillships, taking again competition off the market. That leaves a few opportunities in Asia suitable for the SSV Catarina in 2026, and we are in active discussions with customers about possible future work for the rig.
That includes Indonesia itself, India, Malaysia, and others, but we are not limiting ourselves to look at Southeast Asia alone. Now, focusing on Brazil, this country continues to be the main force and driver for the deepwater market, as it always is, and currently we have 25% of the worldwide fleet operating in Brazil. I'll talk about the ongoing tenders in a little while, but it's important to highlight some very good and encouraging very recent developments happening here in Brazil that, in my view, solidify the future of offshore deep and ultra-deepwater drilling in Brazil. Initially, it is the successful emergency response drill performed by Petrobras in the Equatorial Margin, which is a requirement by the Brazilian environmental authorities, the IBAMA, prior to conceding a drilling license.
Just two days ago, on Wednesday, this exercise was concluded and involved one drillship, which is the foreseeable end to 12 vessels, three choppers, and over 400 people. All accounts are that it was a big success, a successful exercise, and now the ball is in IBAMA, the environmental authorities' court, to evaluate the results and, as we all hope, issue the drilling license. There is no predefined date for that to happen, but expectation is that it could be imminent. As you know, looking at the Petrobras five-year plan that we've discussed in previous calls, the one issued last year, November of last year, there is a dedicated $3 million investment plan for the Equatorial Margin alone with 15 exploration wells to be drilled. Linked to this, we have the most recent ANP bidding round. ANP is the oil and gas agency in Brazil responsible for leasing blocks.
In the most recent bidding round, now in June, Petrobras and Exxon together, as well as Chevron with CNPC, invested heavily in acquiring blocks in this very same Equatorial Margin. Remembering that Exxon is the main operator in Guyana, were they have this huge offshore development, which provides some interesting perspective on what they expect to find in this area in Brazil with the same similar geology. Exxon and Petrobras JV acquired 10 blocks in the Equatorial Margin, with Petrobras being the operator for five and Exxon for the other five. Very auspicious, in my view. Chevron, which is great to see them investing back in Brazil, acquired nine blocks in the Equatorial Margin with CNPC as partner.
While these blocks in the Equatorial Margin may have been taking most of the attention by the media in this recent ANP round, the Pelotas Basin was also an area of interest with Petrobras acquiring two blocks. As you may recall from previous calls and probably heard in other calls, Pelotas Basin is Petrobras holds lots of hopes for the Pelotas Basin due to geological similarities with Namibia, and Petrobras has been very vocal about this. Finally, Karoon and Shell and Equinor, to a lesser extent, were also very active in acquiring blocks in the Santos Basin. A very interesting prospect for the Brazilian offshore drilling with a lot of focus back on exploration, which, as I mentioned earlier, solidified the future of offshore deep and ultra-deepwater drilling in Brazil.
The third piece of news that is also important to mention, and you've probably read about this, is BP announcing their discovery in the Bumerangue Field, a very, very promising discovery that also adds to this optimistic view that we have for the future of offshore drilling in Brazil. With that, I move to the next slide where I can spend a minute or two looking at the active tendering opportunities in Brazil. Thank you. Basically, there are five ongoing opportunities for drilling rigs in Brazil, but not necessarily five units because the Petrobras' Búzios f opportunity calls for one or more. Starting from the right, we have both Shell and Equinor looking for ultra-deepwater units for their Gato do Mato and Bacalhau fields, respectively. Karoon is also looking at units for their Union and Baúna fields, Union being the firm commitment, Baúna, as we understand, optional. Finally, we have Petrobras.
Start off with the Búzios market inquiry, which started early. This is a four-year contract for one or more rigs equipped with MPD, which is a new requirement. The previous Búzios tenders did not have that requirement. This is to start between January and February of 2027. Bids were submitted now in July with several participants utilizing for the first time in a long while the reverse auction process, as you know. This process is proceeding. We are optimistic, very optimistic about our chances, but it's an evolving process that we expect to be finalizing early Q4. All going well, we expect that by October, this should be finalized, but you know delays are not unheard of, so it could be that it delays a bit, but current expectation is that we should see the results around October. Next one is Mero.
This is also a four-year contract and similar to Búzios, also with Petrobras having the right to early terminate after two and a half years, even though I think this is highly unlikely, for one rig equipped with MPD to start between January and March of 2027. Bids are due now early October, and the process will also follow the reverse auction method utilized for Búzios. We also expect potentially an additional tendering process for the pool, which is the rigs not assigned to any specific field in Petrobras. Petrobras can take them pretty much anywhere. We estimate this one to occur as the meta process is close to finalization, probably end of the year or most likely early 2026.
A few opportunities are happening in Brazil, which, on top of the recent developments I alluded to earlier regarding the Equatorial Margin, the interest in the latest ANP bidding round, and the BP recent major find in Bumerangue , do help paint a quite positive and optimistic picture for offshore drilling in Brazil, which local players like Ventura Offshore will certainly benefit from. Next slide, please. That's our last slide that closes our presentation for Q2 2025. I couldn't close it without thanking our teams onshore and offshore for all the work they put in day in and day out, tackling the challenges as they come, as was the case for Q2, and overcoming them. Always keeping safe operations at the top of their agendas, maintaining our industry-leading cost structure, and positioning the company very well for the opportunities to recontract our rigs.
I also wanted to express my appreciation for our shareholders, partners, and customers for their continued trust in Ventura Offshore. Thank you all for joining this call and for your interest in Ventura Offshore. With that, I close our presentation, and I will open for questions, remembering that you have an icon on your screen where you can write the questions, and I will read them. Give me a couple of minutes, and I'll start reading the questions. We already have a couple. Starting, a first question that I have here: can you give some color on when you expect the Búzios and Meta tenders to complete? I think I already mentioned this. Búzios' expectation is around October, with a very small chance of being earlier than that, though I wouldn't bet on it, and a very small chance of delay. October is your best bet here.
For Meta, bids are due now in early October, and if you look at how long Búzios is taking, you have to add at least a couple of months to that. We're talking December, January before a result. The process hasn't even started. If you look at Búzios as your benchmark for the Meta process, then we should be talking about probably January before it's closed. If you were to get a long-term award with Victoria, you would talk of potential balance sheet optimization. Can you elaborate on what an optimal balance sheet looks like?
There is not much that we can say now. What we can say is we are going to have a contract, a four-year contract that should begin in January. This contract requires MPD, and we need to invest in an MPD for Victoria. That's what we can say now.
I think to add to that, Frederick, we will be looking at the refinancing, right? Once we have a new contract for the Victoria, I think the next step will be looking at refinancing, right? We can look at the refinancing via probably, you know, upsizing of our RCF and also by bond. And IDs, of course, cover the CapEx that we'll need because there will be a CapEx investment required for the Victoria, as Marcelo indicated. I don't know if that answered your question. If not, please follow up here on the Q&A session. You mentioned in today's report that you are looking at work for the Catarina outside Yanai. Is there any chance you will take the rig to Brazil? Yes. I mean, we're looking at, I think for us, utilization is the key, right? Catarina in Brazil, of course, we look at this possibility.
Her sister vessel, the Victoria, is here. We are here. It's our backyard. The challenge is, of course, the CapEx to bring a rig into Brazil, right? It's a big barrier, an entry barrier that we have. The CapEx to bring the Catarina to Brazil would be significantly lower than any other rig because this rig was built with Petrobras' specs in mind, but the Petrobras specs of 12 years ago. Those specs have evolved. We would have to spend some money on the rig. It is a possibility. We don't close the door to bringing her back to Brazil. The next question. Do you expect Brazil to become a market which requires MPD for all work, given that the two recent tenders are requesting one? Should the Victoria win the contract with Petrobras, would you purchase or rent an MPD? What would be the cost of either option?
I don't think it's going to be a requirement for every new rig for MPD. It is for Búzios, and for Mero. Mero, the two rigs currently operating in Mero already have MPD. The Búzios currently operating in Búzios, half of them have MPD, half do not. Going forward, it will be a requirement for Búzios, but not necessarily for all rigs in Brazil operating for Petrobras. It really depends on the field that the rigs are going to be drilling. If the pool tender, for instance, materializes, which is our expectation, there is a very good chance that there's not going to be a need for MPD. At least maybe what they can do is, as they have done in the past, have two batches, one requiring MPD, the other not requiring MPD. I don't think we're at the point that all rigs in Brazil will need MPD.
For Búzios, that's a fact, and for Mero as well. You asked about renting or purchasing. We will most likely purchase. We think it makes more sense. The cost to purchase an MPD, I'll give you a ballpark number. It's about $25 million. I mean, to purchase and install, between you have to put all your piping, and then you have to buy the kit and install it. So $25 million is a good ballpark number. Of course, it's going to vary depending on who is your provider of the MPD kit. Next question. Do you expect SPS in Victoria and Catarina once their current contracts expire? Yes. The way we operate is we try to make sure that the SPSs are done in between contracts so you don't have to stop operations while in the course of a contract, right? You don't have some lost time.
In between contracts, that's when we do the SPS, and that would be the plan. Next question. Will the Carolina be asked to add an MPD? No. The current contract, and that's actually going back to the previous question, the Carolina was recently contracted to Sépia-Atapu field, and there was no requirement for MPD. We have not added an MPD to that rig. Of course, if Petrobras is interested in installing an MPD, we can have a commercial discussion with them, but we are under no obligation of installing an MPD and no intent of doing it for the time being. Next question. What level of repricing daily rates do you anticipate for next year? That's a difficult question to answer.
If you look at the most recent tenders already awarded, or contracts more recently awarded by Petrobras, and I'm assuming here you're considering Brazil in your question, the numbers varied between $350,000 and low $400,000s, depending if the rig is single activity or dual activity. I believe that for next year, we might see that number reducing a bit, but by not much. That would be my expectation, but we have to wait and see the results of Búzios and the results of Mero that are going to give us a better indication. Next question. If the Victoria is awarded under the Búzios tender, what is the contract preparation and MPD CapEx? The MPD CapEx I already mentioned. If you're talking about contract preparation, I'm not sure if you're talking about guidance on the CapEx, the whole CapEx.
If it is, at this moment, I would refer you to what some analysts are estimating because I already alluded to us considering refinancing of the balance sheet in connection with a new contract if we get that, right? At that moment, we will be providing more detailed guidance on CapEx. For the time being, if your question relates to CapEx, it's not very clear. I would suggest you refer to the analysts because their numbers seem to be in the ballpark number accurate. Next question is the exact same one. Can you talk about CapEx requirements in 2026? Again, I refer you guys to the analyst numbers. In the hopes that we get a contract for the Victoria, as we go to refinancing, we will be providing more detailed guidance. Are you already in dialogue with Yanai on the remaining options?
We are always in dialogue with Yanai since we started operating. As I mentioned, I am quite positive about the option wells being exercised. However, contractually, Yanai can exercise those option wells up to 60 days prior to contract end. They are under no obligation to exercise them now. They can wait a bit more. I remain positive that those option wells will be exercised. Yes, I was actually in Indonesia last week. Actually, I arrived this week in discussions with Yanai. We keep our relationship very close, and we keep a dialogue open. I'm optimistic about those wells being exercised, those option wells being exercised. What is actually going on at the moment with the Búzios tender? Is the auction still running with price still being lowered by participants, or has that final stage finished and has moved the discussion between Petrobras and the leading parties from the auction?
The tendering is the lowering of prices, if you will, the reverse auction is over. It's in the second phase now. The reverse auction is a one-day process. Actually, not even a one-day. It's an hour, a couple of hours process. After that, you move to the second phase. It's now in the second phase. Can you potentially bid the Mero tender being active in Búzios? Until you have a contract signed, you can bid whatever you want. The Petrobras rules are that if you bid a rig in two tenders simultaneously, the preference is given to the one you bid earlier. Next question. Is the Búzios auction process transparent, or are the prices offered by different participants only visible to the other participants, or is nothing transparent even to participants? The process is transparent. It's not public. That's why it's only limited information I can provide you.
It is transparent in the sense that we participated, as you know, and we could see the different prices by the different participants, and we could see as each participant lowered their prices. What we did not know is who was who. They had bidder number one, bidder number two, bidder number three. You could follow the process live as bidder number two reduced their rate by $2,000, and as bidder number five reduced their rate by $50,000. That you could follow during the process, but you do not know who's who. Next question. Marcelo, I think this one is for you. What was the reason of accounts payable increasing from $15.9 million in March 2025 to $40.1 million in June 2025 and the reduction in other current liabilities in this last quarter?
Okay. Regarding the accounts payable, the increase was caused by the increase of the restricted cash, $8 million, and the accounts receivable related to the managed vessel, $15 million. This is the corresponding entry that we made in accounts payable. Regarding the other current liabilities, basically, we have $5.7 million related to the deferred MOB fee and $7 million related to the liability of the Catarina property split that we removed from December because of the settlement. I hope this clarified. If not, please send me any question.
Thanks, Marcelo. Okay. Next question. Regarding the timeline of CapEx to be done, specifically the Carolina CapEx, what is the expectation? Any relevant cash needs already in 2025, or should you expect a higher need only in 2026, transition quarter for the Carolina? There are always some CapEx requirements for the long-lead items that we have to incur this year, but the vast majority will occur in 2026 as we approach the out-of-service period. Regarding the time, we estimate around 60 days for out-of-service and contract preparation. It's SPS plus contract preparation. Next question. Can you give some color on the downtime in Q2 for the owned rigs? Yeah, sure. We had one major event, as we mentioned, which was a BOP pull on the Catarina. We had a malfunction on the upper blind shear ram, and as a consequence, we had to pull the BOP to fix it.
That was done. The upper blind shear ram was fixed. Because under this contract, and it is very common, you hop the BOP from well to well. The BOP had been down for a very long time. Every time you pull your BOP, you have your in-between well BOP maintenance, and the scope is longer or shorter depending on how long the BOP had been wet or had been down. In this case, we had a lot of preventive maintenance that had to occur because we had pulled the BOP. That was the major event. We also had one event on the Victoria where we had to recover the DHA. These were the two main events that justified the lower financial uptime than what we usually present.
Also, bear in mind, again, that the Catarina, because of the operations and nature of the operations that we carried out, we were remunerated at 90% for most of the quarter instead of 100%. Next question is, what's the average cost of an SPS? I already answered that, referring to some numbers indicated by analysts and saying that we will have more detailed guidance once we start our refinancing. What's the max idle time between contracts that you would consider cold or warm stacking your rigs? In other words, should you not win Búzios or Mero, how should you think about Victoria employment when the current contract expires in June of next year? In case we don't win a contract or the Búzios contract, we have the Mero opportunity, and then we have the pool opportunity.
To answer your question, it's not about time, but it's about when is the next tender, and how aggressive we would be to avoid keeping the rig warm or cold stacked. Okay. I think it's different from companies that have rigs in various parts of the world where there's not a flow of tenders happening like we do in Brazil. The answer to your question is not about time, but it's about when is the next tender coming. As I mentioned, we remain optimistic that between Búzios, Mero, the pool, we won't have to have a discussion about cold or warm stacking our rigs. At what cash position level do you feel comfortable operating? What is your target net leverage?
We are comfortable with a liquidity of $15 million. This is a good cash position for us.
Thanks. Last question. Petrobras is striking a more cautious tone in recent references to CapEx. Do you maintain the view that you see a flattish Petrobras rig count for next years, or has a downside risk increased on your view? You're right. Petrobras is indeed more cautious, and every time you hear a Petrobras CEO speaking, she has changed the tone to a certain extent, and she's saying that she counts on the suppliers to assist Petrobras on that. However, that being said, bear in mind that the economic resilience for Petrobras is pretty impressive, where 98% of Petrobras' assets are economically viable with a barrel at $45. I do not see that necessarily impacting the rig count for Petrobras. The rig count that Petrobras has announced in their previous five-year plan between 2025-20 30, I think there was an execution risk on that.
As we start to see the Búzios tender, Mero, potentially the pool tender, I think the requirement is going to remain at those levels, mostly if the drilling license for the Equatorial Margin is indeed issued by the environmental authorities. It is true that Petrobras has taken a more cautious approach, but I do not think this is going to impact very much the rig count that they need to deliver on their program and on their five-year plan. That was the last question. I wanted to thank you all once again for attending our earnings call. If you want any follow-up on these questions, feel free to reach out directly to us, and I'll be happy to answer any follow-up questions. Thank you, and I want to wish you all a good day. See you in three months.