(Paratus Energy Services Ltd., 24.May.2024) — Paratus Energy Services Ltd. announced a trading update for the first quarter 2024 and updates on Paratus, its subsidiaries and associated companies (“Paratus Group” or the “Group”).
Company overview
Paratus Energy is the holding company of a group of leading energy services companies. The Group is primarily comprised of its wholly-owned subsidiary Fontis Energy, a 50/50 JV interest in Seabras (equity accounted), and a 24% ownership interest in Archer Ltd. (equity accounted).
1. Key Highlights
- Delivered adjusted EBITDA of $53mn on $109mn of gross revenue
- Exited the quarter with a cash balance of $126mn and $638mn in net debt
- Secured average contractual rates of $118 thousand/day at an average utilization of 99.6% and $205 thousand/day at an average utilization of 98.7% for Fontis and Seabras, respectively
- Bolstered Seabras’ backlog by $1.8bn
- Appointment of Group CFO
- Share split effected to simplify capital structure
- Rebranding of SeaMex
1.1 Paratus Group
In the first quarter 2024, the Group, including the company’s share in Seabras JV, generated $109mn in gross revenue and $53mn in adjusted EBITDA, compared to $97mn and $43mn in the first quarter 2023, respectively. The full-year 2023 adjusted EBITDA stood at $227mn on the back of gross revenues totaling $430mn.
The Group closed the quarter with a cash balance of $126mn and $638mn in net debt, compared to $134mn and $632mn at year-end 2023, respectively. Compared to first quarter 2023, the cash balance has increased by $25mn whilst the net debt was reduced by $60mn (Q1 2023: Cash of $101mn and net debt of $698mn), largely driven by the retirement of senior secured notes at Fontis Energy.
1.2 Fontis Energy (previously SeaMex)
During the first quarter 2024, the company’s wholly owned subsidiary Fontis Holdings Ltd. (Fontis Energy) and its subsidiaries generated $56mn in gross revenue and $27mn in EBITDA. Compared to the first quarter 2023, gross revenue and EBITDA increased by 30% and 81%, respectively, largely driven by downtime on the Courageous and Defender rigs experienced in the first quarter 2023. In 2023, Fontis Energy generated $205mn in gross revenue and $105mn in EBITDA.
In the first quarter 2024, Fontis Energy earned an average contractual rate of $118 thousand per day at an average utilization of 99.6% and ended the quarter with $419mn in contract backlog.
As of 31 Mar. 2024, the accounts receivables balance was $222mn, up from $174mn at year-end 2023. Due to normal administrative requirements associated with its name change (as further described in Section 2.1), Fontis Energy was unable to submit new billings to its key customer for a period of six months, leading to a build in accounts receivable. Fontis Energy believes this is a non-recurring event and a normalization of collections will occur as the name change has now been completed. Beginning in March 2024, payments from its key customer resumed ahead of anticipated timing. Fontis Energy collected $16mn and $14mn in March and April 2024, respectively.
“Since the separation from Seadrill, the new management team has had a clear focus, solely dedicated to the Fontis business, and this has allowed us to build a stronger relationship with our key customer,” said Raphael Siri, CEO of Fontis Energy. “Such improved cooperation was visible with the timely completion of the name change and follow-up payments received in a shorter time than anticipated. We will continue to work together to bring our accounts receivable to a more routine level.”
1.3 Joint Venture in Seabras (figures reflect 100%)
Seabras UK Limited, a wholly owned subsidiary of Paratus, holds a 50% equity interest in Seabras Sapura Holding GmbH, its associated company, Seabras Sapura Participaҫões S.A and their subsidiaries (collectively with Seabras UK Limited, “Seabras” or “JV”).
During the first quarter 2024, Seabras generated $107mn in revenue (Q1 2023: $108mn) and $55mn in EBITDA (Q1 2023: $61mn). The reduction in EBITDA compared to the first quarter 2023 was largely due to a slight increase in off-hire days and modest cost increases.
In the first quarter 2024, Seabras earned an average contractual rate of $205 thousand per day at an average utilization of 98.7% and ended the quarter with $2.1bn in contract backlog, pro forma for the contract awards announced on 10 May 2024.
As previously announced, pursuant to an agreed plan amongst the JV shareholders, Seabras has distributed and will continue to distribute all excess cash to its JV shareholders since April 2023. During the first quarter 2024, Paratus received $24mn from Seabras.
2. Significant Subsequent Events and Other Updates
2.1 Fontis Energy Name Change
Since commencing its separation from Seadrill in mid-2023, the entity formerly known as SeaMex Holdings, LLC has undergone a name change to Fontis Energy. This effort has provided for complete separation from Seadrill and enhanced the Fontis Energy brand as a leading standalone player in the offshore drilling space. The name change highlights Paratus’ successful efforts to complete its separation from its former parent company Seadrill.
“Our new Fontis Energy vision, values and logo – all rotating around integrity, dependability and performance – form the basis of our improved business model and deliverables that will fuel our growth,” said Raphael Siri, CEO of Fontis Energy.
Going forward, reference to SeaMex will be discontinued and will be superseded with Fontis Energy.
2.2 Seabras secures additional backlog of $1.8bn for its full fleet with new contracts from Petrobras
On 10 May 2024, Paratus announced that certain entities of Seabras had successfully been awarded contracts for its full fleet of six multi-purpose pipe-laying support vessels (“PLSV”) as part of a competitive Petrobras tender process. This achievement bolstered Seabras’ backlog by approximately $1.8bn. Following the contract award, Seabras’ backlog stands at $2.1bn.
The contracts, each with a three-year term, will commence on different mobilization dates between May 2024 and June 2025 according to the current contract schedule for each of the PLSVs, with the longest dated contract going through 2028, improving secured backlog visibility up to another four years.
The contract awards represent a meaningful improvement to dayrates, reflecting the positive industry momentum and the growing demand for PLSVs in Brazil. This achievement is a testament to Seabras’ unwavering commitment to operational excellence, safety, and customer satisfaction. Since commencing operations in 2014, the vessels have maintained an average technical utilization of approximately 98%.
2.3 Governance Update
On 21 May 2024, Paratus, with the approval of its shareholders, has undertaken and completed an administrative reorganisation of its existing share capital and governance structure.
The effect of the reorganisation is that the capital structure of the company has been simplified, to reduce the number of share classes to a single class of Class A Common Shares of US $0.00002 each, via the following steps:
- with effect from 15 Mar. 2024, the Class C Common shares of US $0.01 each in the company were redesignated to Class A Common Shares of US $0.01 each in the company; and
- with effect from May 21, 2024, each of the Class A Common Shares of US$0.01 each in the company (including those existing following the above step), were sub-divided into 500 A Common Shares of US$0.00002 each.
In conjunction with these steps, the governance framework for the company has been adjusted such that, with effect from 21 May 2024:
- the shareholders’ agreement relating to the Company dated 20 Jan. 2022 has been terminated and will not be replaced; and
- the company has adopted a new set of bye-laws (in substitution for the then existing bye-laws) which will form the basis for the governance of the company going forward.
Following the administrative reorganisation, Paratus had total Class A Common Shares of 154,015,990.
2.3 Appointment of Group CFO
The company is pleased to announce the appointment of Mr. Baton Haxhimehmedi as the Group Chief Financial Officer (“GCFO”) of Paratus Management Norway AS with effect from 1 Jun. 2024. Mr. Haxhimehmedi most recently held positions as Deputy CFO and Group Head of Finance of DNO ASA, an oil and gas company listed on the Oslo Stock Exchange, and previous senior audit positions in various ‘Big 4″ accounting firms, mainly working with international upstream oil and gas clients.
“We are pleased to welcome Baton Haxhimehmedi as our Group Chief Financial Officer,” said Mei Mei Chow, Chairperson of the Paratus board. “With the addition of Baton’s extensive experience in a listed oil oil and gas company with global operations, coupled with his strong track record in senior management roles, Baton has joined us at a pivotal time. Together with Robert Jensen, the Paratus Group leadership team is now well positioned to further develop the business as a leading oilfield services company and continue executing on our strategic priorities.”
Financial Tables and Fleet Status Report
Basis of preparation
These financials are presented in accordance with generally accepted accounting principles in the United States of America (“US GAAP”). The amounts are presented in United States dollar (“US dollar”, “$” or “US$”). The accounting policies applied are consistent with those followed in the preparation of the Annual Report.
The interim financial information for 2024 and 2023 is unaudited.
Non-GAAP performance measurements definitions
The Company uses certain financial information calculated on a basis other than in accordance with US GAAP as listed below. These non-GAAP financial measures are important measures that the Company uses to assess its financial performance.
Gross revenues – Represents operational revenue before amortization of favorable contracts and tax on revenue. Paratus Group revenue include JV share of Seabras gross revenue (see below reconciliation).
EBITDA – Earnings before interest, tax, depreciation and amortization, represents net income/(loss) adjusted for: depreciation and impairment, credit loss allowances, other non-operating income, income from equity method investments, net financial items, and income tax.
Adjusted EBITDA – Represents EBITDA based on proportional consolidation method of accounting for Seabras JV according to internal management reporting. The bridge between the management reporting and the figures reported in accordance with the equity method is presented below.
| Unaudited Financials | |||||||||
| Q1 2024 | Q1 2023 | FY 2023 | |||||||
| (US $ in Millions) | Management reporting (including 50% in Seabras JV) | Equity accounting adjustment | Equity method reporting | Management reporting (including 50% in Seabras JV) | Equity accounting adjustment | Equity method reporting | Management reporting (including 50% in Seabras JV) | Equity accounting adjustment | Equity method reporting |
| Debt | 765 | -50 | 715 | 800 | -56 | 744 | 766 | -51 | 715 |
| Cash | 126 | -18 | 108 | 101 | -47 | 55 | 134 | -19 | 115 |
| Net Debt/-Cash | 638 | -31 | 607 | 698 | -9 | 689 | 632 | -32 | 600 |
| Gross Revenue | 109 | -53 | 56 | 97 | -54 | 43 | 430 | -225 | 205 |
| Adjusted EBITDA | 53 | -27 | 26 | 43 | -31 | 12 | 227 | -132 | 95 |
Contract backlog – Sum of estimated undiscounted revenue related to secured contracts. Contract backlog may be subject to price indexation clauses or other factors that may intervene with and/or result in delays in revenue realization, and it does not include potential growth or value of non-declared options within existing contracts.
Utilization rate – Utilization rate of vessel / rigs is based on actual operating days which excludes days at yard for periodical maintenance, upgrading, transit or idle time between contracts.
| Schedule 1. Key Financial Highlights | |||
| Unaudited financials (management reporting)(1) | |||
| (US $ in Millions) | Q1 2024 | Q1 2023 | FY 2023 |
| Fontis Energy | |||
| Debt (2) | $0 | $46 | $0 |
| Cash (3) | 65 | 52 | 55 |
| Net Cash (4) | 65 | 6 | 55 |
| Gross Revenue | 56 | 43 | 205 |
| EBITDA | 27 | 15 | 105 |
| Contract Backlog | 419 | 500 | 411 |
| Receivables Balance(5) | 222 | 146 | 174 |
| Seabras JV (figures reflect 100%) | |||
| Debt (2) | 100 | 111 | 102 |
| Cash (3) | 37 | 93 | 38 |
| Net Debt (4) | 63 | 18 | 64 |
| Gross Revenue | 107 | 108 | 450 |
| EBITDA | 55 | 61 | 264 |
| Contract Backlog | 2,096 | 604 | 345 |
| Paratus Group (1) | |||
| Debt (2) | 765 | 800 | 766 |
| Cash (3) | 126 | 101 | 134 |
| Net Debt (4) | 638 | 698 | 623 |
| Gross Revenue | 109 | 97 | 430 |
| Adjusted EBITDA | 53 | 43 | 227 |
Notes:
- See section about non-Gaap measures
- Excludes intercompany debt and any amortization of fees and fair value adjustment; represents debt principal only
- Includes cash and restricted cash
- Calculated as gross debt less cash
- Reflected before expected credit loss allowances
- Reflected pro forma to include the Petrobras contract awards announced on 10 May 2024
| Schedule 2. Fleet Status Report | ||||||
| Fontis Energy | ||||||
| Rig Name | Generation / Type | Built | Location | Client | Start | Expire |
| Defender | BE | 2007 | Mexico | PEMEX | Mar-20 | Jan-26 |
| Çourageous | BE | 2007 | Mexico | PEMEX | Mar-20 | Nov-26 |
| Intrepid | BE | 2008 | Mexico | PEMEX | Mar-20 | May-26 |
| Oberon | BE | 2013 | Mexico | PEMEX | Mar-20 | Oct-25 |
| Titania | BE | 2014 | Mexico | PEMEX | May-24 | Apr-25 |
| Seabras | ||||||
| Vessel Name | Generation / Type | Built | Location | Client | Start | Expire |
| Diamante | PLSV | 2014 | Brazil | Petrobras | Oct-21 | Mar-25 |
| PLSV | 2014 | Brazil | Petrobras | Mar-25 | Mar-28 | |
| Topazio | PLSV | 2014 | Brazil | Petrobras | Mar-22 | Mar-25 |
| PLSV | 2014 | Brazil | Petrobras | Apr-42 | Mar-28 | |
| Esmeralda | PI-SV | 2016 | Brazil | Petrobras | Apr-16 | Aug-24 |
| PISV | 2016 | Brazil | Petrobras | Sep-24 | Sep-27 | |
| Onix | PLSV | 2015 | Brazil | Enauta | Apr-24 | Jun-25 |
| PLSV | 2015 | Brazil | Petrobras | Jun-24 | Jun-28 | |
| Jade | PLSV | 2016 | Brazil | PetroRio | Apr-24 | May-24 |
| PLSV | 2016 | Brazil | Petrobras | May-24 | May-27 | |
| Rubi | PISV | 2016 | Brazil | Petrobras | Jun-16 | Sep-24 |
| PLSV | 2016 | Brazil | Petrobras | Sep-24 | Sep-27 |
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