BW Offshore Stock

Good morning, and welcome to BW Offshore's Second Quarter 2026 Presentation. I'm Marco Beenen, CEO, and I'm joined by Stale Andreassen, our CFO. Thank you for joining this conference call today, and we will take you through the operational highlights, the financials and our strategic priorities and then leave time for questions at the end. And you can use the Q&A function in this webcast for that. And please note our disclaimer. And then I move on to the highlights.

We have delivered a solid EBITDA of USD 63 million this quarter. BW Opal is in stable production and generates revenues currently at approximately 85% of the nameplate capacity. But due to debottlenecking issues, which we discovered as we ramped up production, practical completion has been moved to the second quarter of 2027. And that shift in timing leads to an adjustment to our full year EBITDA guidance to a range of USD 250 million to USD 280 million and this shift has also triggered a noncash impairment in this quarter, and Stale will come back to that in more detail.

There is no impact on our commitment to our quarterly cash dividend under our covenants, which equates to USD 11 million or $0.063 per share. And lastly, the strategic review continues with interested parties, but the time line is naturally impacted by the revised practical completion date for BW Opal.

I will now start with an operational update and dive a bit deeper in the progress with Opal. As mentioned, since restarting production in May, the unit has continued to deliver stable gas production and revenue generation. We successfully replaced all compressor dry gas seals and completed extensive cleaning of the heat exchanger trains. And in June -- sorry, in July, we also completed the first condensate cargo, roughly 300,000 barrels, which was an important milestone for the project and, of course, also for the client partnership.

Commissioning was largely completed in August, but as production increased, some technical issues were identified and that prevented the ramp-up to 100% production rates and need to be resolved before practical completion. These issues primarily relate to an underperforming CO2 removal system where the membranes need to be replaced. And furthermore, the lean methanol tanks needs to be cleaned because we discovered residual sink trace contamination. And we need to inspect and repair weldings in the steam system. I want to emphasize that while these issues are frustrating, they are stand-alone vender and subcontractor-related quality issues rather than a fundamental design issue.

The unit produces at high rates, and we're working closely together with our client, Santos, to optimize production while we address these issues effectively. Given the delivery times of these membranes, we expect most of the repairs to be carried out in the first quarter of '27, and that moves the start of the 15-year contract period, which is marked by practical completion to the second quarter of '27. For the remaining of 2026, we continue to produce gas under the volume-based revenue scheme, and that largely offsets a further USD 65 million of CapEx that we have to spend on completion, which mostly fall in 2027. And this USD 65 million is before any recovery under the warranty programs.

Turning to safety and fleet performance. Safety remains our highest priority, and we continue to focus on maintaining a strong safety record. There was one new high potential incident in the quarter, and there are no injuries with a high potential incident, but we treat it as a leading indicator for something potentially serious and always follow up with a thorough investigation and lessons learned. The lost time incident trend is satisfying and trending down. The contracted fleet performed very well with another quarter of 100% commercial uptime. That excludes BW Opal since we're still in the commissioning phase and the formal contract term hasn't started yet, as I just explained.

At the end of the second quarter, our backlog stood at USD 2.2 billion, of which 97% is firm. And the only real change in the quarter is the timing of contract cash flow from BW Opal. The commercial uptime of Opal was approximately 75% in the quarter after the restart on the 3rd of May. BW Adolo continued to deliver stable production above 26,000 barrels a day and Catcher delivered close to 20,000 barrels per day, largely in line with previous quarter. And then for Pioneer, we continue to provide the O&M service under a 5-year contract for Murphy Oil, and they confirmed now drilling in the Chinook field in the second half of this year, which should result in a production increase for the remainder of the contract, and that benefits our managed fee structure.

Then an update on the Bay du Nord project with Equinor currently in the FEED phase. This project with Equinor continues to progress according to plan. Since signing the FEED contract with Equinor in April, both commercial and technical work streams have advanced well, and we expect the FEED to continue throughout 2026. We have already achieved an important milestone with the issuance of the first major equipment purchase of the gas turbine generators, and this was fully -- is fully reimbursed by our clients. We have also opened an office in St. Johns, and that's located in Newfoundland and Labrador to strengthen our relationship with the local supplier base ahead of pre-operations and subsequent operations and maintenance services.

Equinor's acquisition of BP's interest in the Bay du Nord project in July increases its ownership to 100% and it further confirms their commitment to the project. We continue to expect a final investment decision and contract award early 2027.

And with that, I'll hand over to Stale, who will take you through the financials.

Thank you, Marco, and good morning, everyone. As usual, I'll do a bit of a deep dive on the financial section. Now we start with the EBITDA performance. EBITDA was $63 million in the second quarter, which is up compared to quarter 1 and in line with expectation. And it's really a result of BW Opal delivering up to 97%, 98% of nominated gas volumes during the quarter following the restart of production back in May. The new charter rates on BW Catcher are somewhat lower following the contract extension back in February. 2026 EBITDA guidance is revised to a range of $250 million to $280 million from the earlier range, which we gave, which was $310 million to $340 million and is largely due to the adjusted completion schedule for BW Opal shifting the contract start into 2027.

About $50 million of the revision is related to BW Opal and about $10 million is related to higher tender activity. I would like to note that for the revision on Opal, about $40 million out of the $50 million is pure prepayments to be amortized. So when you calculate this, the net cash impact is very limited and around $10 million. Importantly, the long-term earnings capacity and contract backlog for the unit is unchanged. During this period until practical completion estimated second quarter next year, we are generating incremental revenues. BW Opal post practical completion will deliver an annual EBITDA estimated between $265 million to $275 million per year under the 15-year firm contract.

Operating revenues and EBITDA increased in quarter 2 as BW Opal resumed production. This is also reflected in higher tax expenses, while depreciation and recognition of interest expense will only commence at practical completion. EBIT and the reported net loss reflects the impairment of $125 million on BW Opal recognized in the second quarter financials, and that is despite we only identifying this and concluding this during the course of August. The impairment is triggered due to additional costs, as mentioned earlier, as well as additional borrowing costs to be capitalized during the extended time line until practical completion. I want to highlight no further impairment charges are expected from the delayed completion, and this impairment is also reversal under IFRS should we be able to improve on the completion timing or the cost picture. This is a noncash event. There's no effect on liquidity or debt service as a result of the impairment. But when you adjust for the impairment, the underlying net profit was stable and comparable to Q1 at $23 million.

Operating cash flow remained stable quarter-on-quarter. Investments were $38 million in the second quarter, of which about $30 million was related to BW Opal and the remaining largely related to funding of BW Elara as we are now progressing construction of our first floating desalination plant. In May, we decided to make a short-term placement of $25 million into a fixed income liquidity fund to achieve higher return or higher return on surplus cash. Under IFRS, it's required that this placement is recorded as an investment, although we, for practical purposes, look at this as available cash as we can liquidate this position at any point in time. So overall, we did reduce our cash position in this quarter when you consider this and other more regular movements to just below $280 million. And then I include the $25 million we have in the liquidity fund, which also implies that we continue to have a very comfortable cash position.

Leverage remains 0 as we are in a consolidated net cash position as presented. We continue to present net debt and leverage, excluding BW Opal, the project debt until practical completion. Once this is achieved, as we have said before, we will move to a presentation where we include both the debt and the related EBITDA as part of our leverage. The impairment naturally reduces the equity ratio now standing at 28.3% by end of Q2, which sits comfortably above the 25% minimum in our loan facilities, which also means we are well within our financial covenants overall. Available liquidity continues to be solid, stood at $511 million, and that includes just over $200 million on our revolving credit facility, which is completely undrawn.

We still have limited consolidated debt that's hedged at a comfortable 4.9% all in. Remaining committed investments totals approximately $140 million. Around $120 million is remaining net cash investment to complete BW Opal, and that includes the incremental $65 million estimated for the extended work period. The balance of the committed total, approximately $20 million is the remainder of our 50% share for the first BW Elara desalination unit. In numbers, our share is $30 million of the total estimated cost of building this unit estimated at $60 million.

And I just want to emphasize again that BW Opal will be producing and generating revenue during the pre-contract start-up period that largely will offset the cash flow impact of the incremental CapEx without eating into the backlog. Our commitment to shareholder returns stay unchanged. We continue with the dividend policy of quarterly distributions based on paying a minimum of $0.25 per share, which for this quarter, again, reflects a dividend payment of $11.3 million. As the impairment have an impact on what we can distribute for the year, it naturally reduces the 2026 net profit and a top-up in the Q4, as earlier indicated, should not be expected for 2026.

However, looking beyond '26, the framework remains unchanged and distribution capacity reset again from next year. Also looking forward, I am pleased to mention that we have started the market selling for the Bay du Nord FPSO financing, where we have seen significant interest from a number of banks. I believe this is really reflecting the robustness of the project itself as well as a strong indication that BW Offshore is a credible operator in the space and that we have a solid financial position.

With that, I'm going to hand it back to Marco, who takes us through an update on strategy and the market.

Yes. Thank you, Stale. And in this section, I'd like to give you an update on our strategic priorities for delivering growth in our portfolio. The FPSO market continues to provide attractive opportunities, and we see more than 70 potential FPSO awards over the next 5 years, and that is supported by an increasing energy demand, energy security consideration and continued offshore investments. It supports to remain disciplined and selective about the opportunities we pursue with a focus on strong counterparties, robust returns and appropriate allocation of risk, which includes effective partnership models. There has been a clear shift in the market from the conventional lease and operate contracts towards EPCI and O&M or hybrid models. That's like the ones we developed for BW Opal and Bay du Nord, that's all aimed at reducing project financing costs.

We are agnostic to these contract models. We can deliver all of these as we have experienced with all of them. We're well positioned for both the large newbuild FPSO market segment, but also the smaller redeployment projects. We can leverage the experience and lessons learned from BW Opal, one of the largest gas FPSOs in the world. And we also have access to a high-quality FPSO for redeployment with the acquisition of BW Hurra earlier this year. And we also now have control on the availability of Catcher to the firm contract extension without options and Catcher is a very attractive redeployment candidate from 2030.

We have a strong focus on winning new projects with a clear growth ambition of one project every other year. So that means executing 2 projects in parallel, but in a phased manner. Between now and 2030, of the mentioned 70 prospects, we identified 12 targets which we expect to meet our selection criteria, and we aim to win 2 or 3 of those. However, as mentioned, we maintain a disciplined approach, and that is also reflected in the latest bidding round for the Albacora tender and also tenders in past years. We weren't the lowest bidder in the Albacora tender, but I believe our bid reflected the right balance between commercial discipline and also value creation. The process established a strong partnership with Saipem, and that strengthens our position for future opportunities in Brazil, which we consider a key market with a strong pipeline of new FPSO projects.

The 12-month focus is on the Americas. where we are working actively on selected projects, which is led by Bay du Nord, which I already talked about, in addition to Buzios 12 in Brazil and also KAN and Zama project in Mexico. These Mexico projects with our client, Harbour Energy are well suited for redeployment of BW Hurra and later also for new deployment of BW Catcher. We see opportunities to leverage our FPSO expertise to develop low-carbon energy solutions and create future growth opportunities in adjacent business segments. Here also, we take a disciplined approach with selective allocation of capital until these markets mature, and we focus on creating the same shareholder value as in our core FPSO business.

Worth mentioning is the progress of BW Ideol, our floating offshore wind company, where we hold 68% ownership. BW Ideol signed an exclusive partnership agreement with NGE, and that's France Port's largest construction group for the Fos3F floating foundation fabrication line in the south of France. This partnership is a key step forward in delivering the strategy of unlocking the floater EPCI -- EPC supply chain in France. The aim is to replicate that also in U.K. later. We also continue to progress our floating desalination joint venture with BW Group, leveraging BW Water's technology. And the first barge has been acquired and is undergoing conversion into a floating desalination unit, targeting project completion and the first contract in the first half of 2027.

Other segments close to our core FPSO business and natural for us to consider are FLNG and gas to power as that would expand our offshore energy production portfolio. And that brings me to the summary and a busy outlook with clear priorities. Summing up, our key priorities are continued stable production on BW Opal and deliver practical completion in the second quarter of 2027, completing the FEED on Bay du Nord by the end of this year and signing 1 new FPSO project within the next 12 months. And then also bringing our first floating desalination unit to the market in 2027 and continued value creation for shareholders through an attractive shareholder return program.

And with that, that concludes this presentation, but we're happy to take your questions via the Q&A function.

Okay. We just start with the first one, which is a clarification around the strategic review process. Is there still a strategic review process ongoing? Or should the press release sent out in December last year be disregarded?

I would think, Marco, you can take this.

Yes. I mean the answer is simple. It's -- and I also mentioned it at the highlights. And the answer is, yes, it's ongoing with interested parties. But naturally, with the time line shift in practical completion of Opal, conclusion of such process is also moving. So yes, still ongoing.

Okay. And the next person has 2 questions in one. I'll take them. I'll read them both out and maybe we can split them. But the first one is the noncash impairment impacting the net result that is used as a base for calculating the dividend for the full year. And the second one being BP intends to pull out from the Bay du Nord project. How is this impacting the project?

I can take the first one on -- around the impairment, how that impacts dividend. The way our covenants are structured, it allows us to pay out a minimum dividend of $0.25 per year regardless of net results. So in that sense, we can continue with the same dividend at the same level as we're announcing in Q2 also for Q3 and Q4 regardless of the impairment. But the impairment has an impact if you want to raise the dividend above the minimum level as we have done for the last couple of years. And so the answer is yes. And that's also why I said that we should not expect that we will be able to do a top-up of the dividend for the fourth quarter this year. But again, importantly, this resets from 2027, and we start fresh again.

The second question, Marco, if you can take that. So BP tends to pull out from the Bay du Nord project, how is this impacting the project?

Yes. Well, it's a bit stronger than intention of BP. As I mentioned, Equinor has acquired the ownership from BP. So Equinor is now 100% owner of the field. That's 100% interest. And I think what it shows is the confidence of Equinor in the project and their commitment to meeting the time lines that they have laid out for this project. So from our perspective, as the selected contractor for the FPSO, this is positive because we are -- it gives confidence that we follow the time lines and we can move from FEED into contract award early next year.

Okay. Next one. [indiscernible] was a bit the way it was written, but I think the question is basically why is the BW Opal practical completion delayed? And what is the financial impact on BW Offshore?

Maybe, Marco, you again could explain -- maybe you just summarize what was said earlier in the presentation. What are the reasoning behind us shifting the estimate for the date of reaching practical completion for the unit.

Yes. What I've tried to cover in the update on Opal is that the unit is producing and it's producing well and it's producing at high rates. And we work very closely with our client, Santos, to maximize these rates. Over the past weeks, when production increased, and that was -- the result of that was because Santos added a third well. production or gas supply to the FPSO increased. So we could also increase our production levels. And during that debottlenecking process, we discovered that we have a performance issue with the membranes of the CO2 removal system. And to solve that, our assessment currently is that we have to replace the membranes of the CO2 removal system. That's a large job and also requires delivery of these membranes. And these membranes have delivery times that bring us into the -- in the first quarter of next year. So naturally, to be able to do that -- to do that job, replace the membranes, we will move into the first quarter of 2027 to complete that. Then that will debottleneck the production, and we will reach 100%.

And then after that, the practical completion will follow. Financial impact is mainly the USD 65 million that comes together with these activities as well as cleaning the lean methanol tank where we find traces of zinc. And we also are inspecting the wells in the steam system and expect some repairs there as well. The USD 65 million is additional CapEx. But as I said, we're producing. So it means like we're also receiving revenue. The revenue is directly linked to the level of production. So the USD 65 million increased CapEx during that period will largely be offset by additional revenue during that period before the contract term starts, which is the 15-year firm contract, and that is starting at practical completion.

So what you're saying so because maybe sort of in different terms, the key matter for -- which is restricting production to reach 100% is really those membranes that because if they're not functioning 100% as it should, we are not also not able to get 100% of the gas to be on spec for the client. So that's why you need to limit it somewhat while we're waiting for the new one to replace. While the other systems is criteria under contract, but not necessarily limiting production and what we can earn throughout this period. And as you're saying on financially, the revenues we're generating ahead of the contract start with the contract still being intact is cash for cash largely offsetting the net extra cash outflow that we will incur due to the moving the date out to second quarter 2027 for practical completion.

Other just trying to see -- if there's any other questions, please post it so we can read them out.

Looks like we covered the questions.

It doesn't seem to me in that case. Okay. I was holding -- okay. A new question that came in, do you expect shutdown on BW Opal during replacement of the CO2 membranes? If yes, how long and cash flow impact? Do you want to take it?

Yes, I can take it. No, we will not shut down the asset, but we will -- it will impact production during a couple of weeks as we will go bank by bank. There's 2 banks with CO2 membranes that we have to replace. So we will do 2 campaigns. And during that time, one bank will be out of service. So that would reduce the production with 50% for a couple of weeks as we see it now.

So you said for a few weeks during this period. And the cash flow impact as such is not expected to be significant. But we can say we will assume there will be an impact, meaning we're not able to deliver at current level during those shutdowns as you say.

Yes. No, over the period till practical completion, I don't think the cash flow impact is that significant. But of course, if we take out one bank to replace these membranes at that time, there is, of course, an impact on production.

Yes, I think that covers the question, Stale. You don't see anything else, right? I mean nothing else coming in.

No. From what I can see, no more questions coming in.

Okay. Well, then that leaves me with thanking everyone for joining this call and wishing everyone a good day. Thank you.

Good morning, everyone. Welcome to the first quarter trading update of BW Offshore. My name is Marco Beenen, and together with Stale Andreassen, our CFO, I will run you through the presentation in this call. Please note our disclaimer. Starting with the highlights. We delivered a stable first quarter EBITDA of USD 48 million and a net profit of USD 23 million.

We reached an agreement to extend the BW Catcher contract to 2030, and that increased our firm backlog. We signed the FEED contract, Equinor for Bay du Nord FPSO, targeting a final investment decision in '27. And we continue our predictable shareholder distribution program with a maximum payout under our governance. And based on that, this quarter, we will pay a cash dividend of USD 11 million or $0.063 per share. We adjusted the full year guidance, reflecting the catcher contract and technical downtime on BW Opal, and Stale will come back to both in more detail.

And on the strategic review, as communicated in December, -- we engaged an external adviser in response to the incoming interest against the backdrop of strong FPSO market fundamentals and a significant re-rating in the sector. And this process is active and progressing. Our Board and management are fully engaged, and we will provide a more substantive update when the process reaches a conclusion, but not before. But what I can confirm is that our operational priorities and capital allocation framework are unchanged. So we are not holding -- we're not in a holding pattern waiting for an outcome.

Then moving on with the operational update, starting with BW Opal. On Opal, we completed the replacement of all export compressor seals in March. And there is only one flash gas compressor still remaining, which is due to be replaced this month. Gas production recommenced in May after a temporary shutdown in March and April, and that was to clean the heat exchangers in the Dewpoint train. The root cause analysis for the heat exchanger filing has been completed and is currently under joint review with Santos, and that includes the determination of the source of the substance that has caused the filing.

We expect to gradually increase now the production towards practical completion, which is expected end of June or early July.

Then I move on to BW Catcher. As I mentioned, we are very pleased with this new contract that we have concluded with Harbour Energy. And this contract will now take effect in 1st of February '26 and then runs until 2030, plus or minus 6 months. So this is about a 5-year extension. And it adds approximately USD 490 million of firm operating cash flow to our backlog. An important element of this agreement is that the previous unilateral rolling 12-month extensions have been removed, and this now provides clarity around the contract end date and it allows us to market the unit early for new projects thereafter.

The updated terms include a 10% discount to the previous day rate. And for more information regarding the new terms, I refer to the appendix slides of this presentation. Then I move on with HSE and also fleet performance. We focus on maintaining a strong safety record, and I'm pleased that this quarter, there were 0 incidents to report. The trend upwards that you see is caused by reduced man hours as BW Opal is now in the commissioning phase and no new construction projects have started yet. The fleet delivered 100% commercial uptime in the quarter, but this excludes BW Opal as we're still in the commissioning phase and the contract term hasn't started.

Then an update on our backlog. As mentioned, the BW Catcher contract extension significantly increases our firm operating cash flow. At the end of the first quarter, it stands now at USD 2.3 billion, of which 97% is firm. And that in comparison at year-end last year, the firm portion of the backlog was 77%. BW Adolo production was a bit above 26,000 barrels per day, slightly down versus the last quarter of last year, and that is due to well workover to replace an electrical submersible pump and also natural depletion.

Furthermore, BW Energy has secured a 25-year field extension of the Dussafu field. Then Catcher already discussed and delivered uptime -- commercial uptime above 100% -- and on Pioneer, we continue to provide O&M services under a 5-year contract. And with Murphy Oil now confirming the drilling of the Chinook field in the second half of this year, we expect production to increase for the remaining part of the contract, and that will -- that benefits the management fee structure.

As expected, we signed the FEED contract with Equinor for Bay du Nord FPSO, and this FEED is expected to run through 2026. That includes further maturing the FPSO design, finalization of the execution plan and commercial alignment with Equinor as well as our selected subcontractors and vendors. Final investment decision and contract award is then expected in early '27. We have now also opened a new office in St. John's, and that is to strengthen the relationship with the local supplier base in preparation of our pre-operations and subsequent O&M services. And with that, I hand over to Staler, who will take you through the financials.

Thank you, Marco. As usual, I'll cover kind of 3 elements, which is the financial performance and the guidance. Then we'll look at the cash generation and the capital allocation and lastly, the balance sheet. So we'll start with the EBITDA performance and guidance. First quarter EBITDA, as Marco said, was $47.9 million and essentially stable quarter-on-quarter. This is a result of strong and high commercial uptime from the core existing fleet, however, offset by limited contribution from FPSO Opal during the temporary shutdown that we saw in March and April.

Moving on to the guidance. We have had to revise our 2026 EBITDA outlook to between $310 million to $340 million. The reduction is driven by 2 identifiable factors, the temporary shutdown for Opal as the timing there and the amended terms for the new contract on BW Catcher with a 10% discount. Roughly 2/3 of the reduction relates to Opal and 1/3 relates to Catcher.

More importantly, the underlying cash generation visibility remains very solid with these 2 units. This is driven by the long-term value drivers, the 15-year contract to commence for BW Opal and also now Catcher adding approximately 5 years of firm backlog.

Income statement shows a very stable quarter. Operating revenues were just over $130 million and EBITDA, as mentioned earlier, $47.9 million. Depreciation was broadly stable, and we delivered an EBIT of $27.5 million in the quarter, again, aligned with previous quarter. Net profit was a solid $23.4 million, corresponding to an earnings per share of $0.13 in dollar terms. So the quarter itself was therefore resilient despite the limited contribution from Opal.

Cash flow, of course, remain an important part of the investment case overall. This quarter, we generated $43 million of operating cash flow in Q1, which is a reduction quarter-on-quarter, mainly driven by the impact from Opal or the lack of contribution compared to expectations in Q1. We continue to incur some CapEx related to that unit due to the ongoing commission work and repair work offshore, about $20 million out of $29 million this quarter is related to Opal.

The rest is funding for our project Elara together with BW Group and some CapEx undertaken by BW Ideol. The reduction in cash also reflects $33 million of Q4 announced dividend payment, which was paid in Q1, where we topped up the 2025 distribution to reach 50% of net profit. So if you take into account that as well as other recurring items, debt servicing and interest, cash net to BW Offshore was $329 million at the end of Q1 and very substantial, I would say. We retain a net consolidated cash position of $167 million per end of Q1 and equity ratio of 30% sharp.

This gives us flexibility at an important part of the cycle. BW Opal is moving towards practical completion. Catcher, as Marco has now been extended to 2030 and Bay du Nord is in FEED now progressing towards FID early 2027. I want to mention we continue to present net debt and leverage, excluding BW Opal project debt, and that is because the unit has not reached practical completion and is not yet in steady-state EBITDA.

Once that is achieved, we will move to a leverage presentation view, including both debt related to that unit and EBITDA, giving investors a complete picture. Nevertheless, the key message is in any case that leverage remains relatively low and very well managed and financial flexibility in the company is good. So at quarter end, available liquidity stood at $568 million, which again includes an RCF, which is completely undrawn. All-in cost of our debt remains at an attractive 4.9%. And again, I want to remind you that all our floating rate debt is fully hedged. The Board has declared a Q1 dividend of $11.3 million, as also mentioned by Marco, equivalent to $0.063 per share. And that is consistent with the framework of paying a minimum of $0.25 in dollar terms minimum per year but paid quarterly with a potential top-up in the fourth quarter to reach 50% of net profit. And overall, we continue to prioritize a balanced capital allocation framework.

We want to make sure we are financially resilient. We are able to support selective growth, as also talked about earlier and which Marco will come back to. and returning cash to shareholders. And with that, I'll hand it back to Marco.

Yes. Thank you, Staler. In the next section, I would like to give you an update on our strategic priorities that are with the aim to deliver the growth of our portfolio. And I would like to start with the FPSO market. The FPSO market remains strong, and that's a result of the growing global energy demand and also the focus on energy security with multiple projects in various stages of maturity led by Africa, Brazil and Asia.

There has been a clear shift from the conventional lease and operate to EPCI and O&M contract models or hybrid models like we developed for BW Opal and also for the Bay du Nord project, all with the aim to reduce project finance costs. And we are agnostic to those contract models, and we have experience with all of them. We're well positioned for both the large new build FPSOs and also smaller redeployment projects. And we have proven this through the delivery of BW Opal, which is, again, one of the largest gas FPSOs in the world. And we also have access to a high-quality FPSO for redeployment with the acquisition of Nganhurra earlier this year. We now also have clarity on Catcher, which is a very attractive redeployment candidate in 2031 after this firm term that we announced will end.

And we can apply flexible execution models, including strong partners to projects that meet our selection criteria. We have a strong focus on winning new projects while we maintain a disciplined approach, and this is reflected in our ambition of winning one new project every other year. Currently, our 12-month focus is on the Americas, where we are working actively on selected projects, and those are led by Bay du Nord, Newfoundland and Labrador, which I just mentioned. But that is in addition to Albacora and Buzios 12 in Brazil and also the KAN and Zama projects in Mexico. The Brazil tenders will be done in a partnership with Saipem and the Mexico projects with our client Harbour Energy are very suitable for the redeployment of BW Hurra and also later prospects with BW Catcher. We also see opportunities to leverage our FPSO expertise to develop low-carbon energy solutions and to create future growth opportunities in adjacent business segments. We take a disciplined approach with selective allocation of capital until these markets mature, and we focus on creating the same shareholder value as in our core FPSO business.

In BW Ideol, which is a floating offshore wind specialist, we have already 68% ownership, and this company is progressing multiple projects. The latest development is Eolmed, 30-megawatt project in south of France that was now connected to the grid and delivered first power in April. And earlier this month, the 3 turbines reached maximum capacity.

And we also continue to progress our desalination joint venture with BW Group, where we leverage BW Water's technology. BW Elara has now taken the investment decision for the first unit with a planned delivery in early 2027. And natural other segments to consider, which are close to our FPSO business are FLNG, gas to power. And with that, we can expand our offshore energy production solution portfolio. And that brings me to the outlook.

To sum up, our key priorities are, first of all, the final commissioning, production ramp-up and contract commencement of BW Opal and also to complete the FEED for the Bay du Nord in '26. And then we target a contract award in early '27. So that underpins the target of 1 FPSO FEED in the next 12 months. We also want to bring the first floating desalination unit to the market in '27. And we continue to focus on value creation for shareholders through an attractive shareholder return program as well as concluding our strategic review process. And then we're happy to take any questions you may have.

Okay. We have some questions that has come in.

I'll read those and then I'll try and distribute it as I see best fit. First question is related to the strategic review and maybe you can reiterate what you're saying. The first is asking whether it's possible to provide more details about the strategic review and also around the timing and how far the review is.

Yes. Well, I think I said what I can say, but I want to emphasize again that this process has the full attention of our Board and management and the process is ongoing, and we conducted in a professional manner. What I can say is the underlying business that you've seen today, the backlog, the fleet performance and the financial position, Bay du Nord, all of that is the foundation of which any outcome will be assessed. And I also want to emphasize that our primary obligation is to create value for shareholders, and that's the lens through which this process is being conducted. But yes, we will communicate further when there's something more definitive to say, and that's not right now.

Next question. Could you update on BW Hurra opportunities and condition and likelihood of a new contract in 2026? You did link it to some of the project opportunities you talked about in Mexico. Maybe you want to elaborate a little bit.

Yes. I think it was covered in the update on the market and where we what our targets are. So the targets in Mexico for the targets in Mexico BW Hurra is a strong candidate because it gives a very strong starting point for the whole and the gas turbine solution. So that's definitely a market for we also see some opportunities in Asia Australia for Hurra. So there's 3 4 of those out there.

Yes. Next one, is there an increase in local content around the world or at least local competition, making it more difficult to win FPSO contracts? This is another one for you, Marco.

Yes. I think you can chip in, Stale. But well, I would say there is always a drive and an increasing push for local content for all areas where oil and gas is being developed. I don't recognize so much to comment on local competition. I don't think that's the issue. Local content matters. It also matters for us, and we're actually quite proud of our track record of delivering very high local content in our operations everywhere we operate, close to 100%.

For construction, currently, it's only Brazil that really pushes for a significant amount of local content. And while that is built into the price and into the project execution models by the whole FPSO industry. In other places, that's less the case and it's simply because it will result in noneconomic projects.

Yes. Maybe as a comment, I think you said, I don't necessarily see that changing that lot. It has been -- there has been a drive in certain jurisdictions and Brazil, in particular, for construction. But when it comes to operations, we see this as a natural part of it. U.K. has a very strong focus on local operations. We do the same in Australia. will be the same in Canada, et cetera. I would say it's more about predictability. So the visibility on what terms you're working on, so you can plan ahead. And as you say, well, otherwise, we just welcome it because that's how we have always done it. We're used to it. So nothing that I would say that concerns us.

Yes, exactly.

Next one. Can you explain more about your evolving project execution model? Does it mean you're securing a preferred shipyard and other contractors for future contracts?

Yes. I think we also said it before in other updates. But as we see that these FPSO projects are becoming larger and larger and the CapEx number becoming higher and higher, it's important that we make sure that we bring this project within a risk level that is appropriate to the size of our company. And therefore, the updated project execution approach is very much focused on carving out some of the EPC risk and margins to partners, and that's either joint venture partners, but it can also be to carved out EPC subcontract, large part of the scope, EPC subcontracted to shipyards or topside contractors. And that reduces the overall risk for us. Of course, it also reduces the margin, but it brings it in the right risk/reward balance relative to the size of our company.

Next question. Can you please provide more color on the new capture terms? What's the new annual EBITDA contribution towards 2028 and from 2028 onwards? There's a couple of questions here. I'll take them one by one. I can start with this one.

So we have provided the updated guidance in the analytical slides further back on -- I think it's on Page 22. So now we're guiding on between $140 million to $160 million with $150 million annual EBITDA contribution as being a midpoint here, which is 10% down from what we have guided on earlier, in line with the discount provided under the new contract.

From '28 onwards, there has always been a step down in the contract where the base rate steps down by approximately 25% from where it is today and a production linked KPI system kicks in, which is effectively that we get 25% of produced kind of barrels above 6,000 barrels a day, multiplied by the Brent oil price that is there and also cap to it. Under the new scheme, the same mechanisms apply, 10% discount to the charter rate, both now and also after 2028 on the lower rate. But the KPI schemes kicks in again. there are some lower caps, which probably from a practical point of view, will not make much of a difference.

But I think analysts and investors and others can do their own calculations on production levels. As a guidance, I could indicate that if you have -- if you're producing, say, 12,000, 15,000 barrels and oil prices in the $60 to $70 range, you will end up with somewhat of the same all-in rate for capture post 2028 as you would before 2028. But of course, this depends on the exact production and it depends on the oil, the prevailing oil price at the moment. But I believe that updated information, we should give anyone a pretty good avenue to calculate and estimate the sensitivity to this.

Yes. And you said KPI scheme, I know you mentioned -- you meant the production tariff scheme.

Yes, sorry, production tariff scheme.

So the rate reduces 25%, but then it's kind of replenished by a production tariff scheme, as you explained.

The next question was related to Opal and projected CapEx for Opal to ensure contract startup. I presume this is related to remaining cash out. Remaining forecasted cash out is between $110 million to $120 million on paying all outstanding bills. In terms of growth that we have seen as a result of these delays and additional work that have been done, that will be in the range of $30 million to $35 million to the CapEx overall, just kind of give both angles to this. Remaining kind of cash out is more linked to just things that are to be paid when milestone based, et cetera.

But important to also note that we also received more income ahead of the contract term.

There's a natural offset pre-contract as you produce. The last question is from the same person, is the Baylor FEED generating any free cash flow? The answer is it's cash neutral. There was never an intent that we would make any free cash flow or any profit on the feed. It is a cash neutral engagement driving us towards FID on the project. So we are basically getting reimbursed what's being spent for engineering and design and development activities.

Next question. As of Q1 balance sheet, what is remaining CapEx related to Opal and the responsibility of BWO? I believe we have just answered that one. Also, are you able to recover any of the costs related to Opal start-up challenges from either equipment suppliers or the client? I believe this is related to the repair activities and the root cause analysis. I'm not sure what you want to say on that, Marco, whether we are able to recover any of these additional costs.

Yes. I would think the delays that we had in the last, I would say, couple of months linked to the heat exchanges, that was obviously an unprecedented event, and it took a while to fully understand the source of this. And I think our view is that this was not under our control. And as such, that is a topic for a discussion for cost recovery.

But given we are difficult to speculate on that now as we are focusing now on bringing production back up to kind of stable levels, working constructively with Santos doing so. And then we'd rather come back to the outcome later when that the conclusions are made.

Yes, that needs to be fully concluded first and then these discussions will also take place.

The next question is following kind of Bay du Nord and Opal. The question is which other gas projects that BW Offshore is considering?

Yes. So I mentioned we have -- for the next 12 months, we have a strong focus on Brazil and Mexico and several tenders are progressing there. For gas projects, we are looking at Indonesia developments. There are several interesting gas projects there that could be the next gas project.

Yes. And then there is another question, but it's more of a clarification to what we talked about earlier on Catcher. Just to confirm that the day rate step down from -- is it a 25% reduction versus the original base rate or fee -- sorry, 25% reduction of the new rate effectively 2026. Well, yes, the rate in '28 pre-contract amendment will drop by 25% from where it is today. So with the 10% discount that we are providing, there is a further drop from the original rate in 2028 because the way we measure it is the transition is consistent. There was 25% drop in the rate from today and into 2028. And with a 10% discount on today's rate, there will be a 25% drop from that new discounted rate to the new base rates being used for 2028 and onwards. Hopefully, that is clear.

For Petrobras project, which BW Offshore is bidding such as Albacora and Buzios 12 where minimum local content being imposed, what are the measures being taken when partnering?

Yes. So well, there are clear expectations for the Petrobras tenders for the Albacora and Buzios 12, the clear local content expectations, which we will comply with. So together with our partner, we are developing a local content plan and approach. But we're in a competitive process. So I don't want to give further details on that exact plan.

Okay. Then, just trying to see...

Any more questions?

No more questions popping up. That seems to be the end of it. And I think I give it back to you, Marco, for closing remarks.

Yes. Okay. Thank you. Well, I'm looking at it if there's anything popping up still last minute, but it doesn't look like that's the case. So with that, then we have also answered all the questions, and I do want to thank everyone for participating in this call and also for asking the questions as you did. And wishing everyone a good day. Thank you very much.

Good morning, and welcome to our update of the fourth quarter as well as the full year 2025 results of BW Offshore. My name is Marco Beenen, CEO, and I'm here together with Stale Andreassen, our CFO. As always, at the end of this call, there is the opportunity to raise questions through the Q&A button and Stale and I will be happy to address those questions. Then please note our disclaimer, and then I will start with the highlights.

We delivered a strong fourth quarter with high uptime and also strong full year results with EBITDA in line with our guidance at USD 240 million and an annual net profit of USD 134 million. And based on that, we will pay a cash dividend of USD 33 million in this quarter. Commissioning and ramp-up of our BW Opal is progressing with the first LNG cargo now delivered from the Darwin LNG facility in late January. Our 2026 EBITDA guidance is USD 340 million to USD 370 million. And as communicated in December, we initiated a strategic review, and that was a response to incoming interest for the company, linked to the strong FPSO market outlook and also our strong position within that market.

I want to emphasize that this is not a situation where we're addressing a problem. Rather the contrary, we very much see this as an opportunity, and therefore, we engaged in this process. I don't have any further comments at this stage. Our main strategic focus of growing the FPSO business supported by an optimized capital structure and strong partnership remains unchanged, and we can deliver on those growth ambitions with our current structure.

Moving on with an operational update. First, Opal. Opal is now ramping up its gas production, and we expect the output to reach 100% in the next quarter. As mentioned, the first LNG cargo was now delivered from the Darwin LNG facility. But during the fourth quarter, commissioning was delayed by 2 connection failures on the utilities and firewater piping system. And this resulted in a campaign to strengthen similar connections across the FPSO. And then in January, we had to follow the manufacturers advice to replace the gas compressor seals, and that impacted the available gas export capacity.

So as a consequence, we've been producing between about 1/3 and 2/3 of the max capacity during most of this quarter. And we're now completing these seal replacement activities in the coming weeks and will then ramp up towards 100% in the next quarter. From mid-March, we will transition to a volume-based day rate, and that replaces the fixed commissioning day rate of 60%, which we received since September last year. And then revenue recognition will also start from that date. After completion of the remaining commissioning activities, we will reach the practical completion milestone, and that marks the formal commencement of the 15-year fixed contract period. And this is now because of these mentioned delays expected in Q2.

Again, an excellent quarter with 100% commercial uptime of the fleet as we had no planned maintenance shutdowns in this quarter. We remain focused on maintaining a strong safety record, and we pay full attention to the trending up of the statistics, as you can see in the graph. The most important metric is the HPI, high potential incidents, and the increase in the high potential incidents was due to 2 new cases on BW Opal, linked to the pipe and connection failures I just mentioned. This did not result in any injuries, but it triggered a focused campaign to strengthen these critical connections across the FPSO facility.

The incident count remains at a stable level, while actual hours of exposures are being reduced. So that brings the HPI frequency up as well, as you see. The high commercial uptime across the fleet in Q4 delivered also strong cash flows, and that underpins the operating cash flow backlog. BW Adolo production was a bit more than 30,000 barrels a day, higher than in the previous quarter, and this drives the production tariff we received in addition to the bareboat charter. BW Catcher also delivered high commercial uptime. And based on the current oil price and reservoir performance, we now expect that Catcher will remain on contract through 2029.

We're also having ongoing dialogues with our client, Harbour Energy, about potential contract extension if that makes sense for both parties. We're proud that BW Catcher obtained the environmental ABATE notation from DNV last quarter. It's the first FPSO in the North Sea to receive this environmental notation, and it recognizes that the Catcher FPSO is leading in the industry with regard to managing and reducing emissions.

And on Pioneer, we continue to provide O&M services under a 5-year O&M contract. And our client, Murphy Oil has confirmed drilling of a new well, and that may provide a production-related upside to our O&M fees. Going into 2026, the operating cash flow backlog is now USD 2.2 billion, of which 77% is firm, and that backlog includes the expected additional year of contract duration for Catcher. A few words about the Bay du Nord project for Equinor. This is really our next new undertaking that we're doing together with Equinor. The pre-FEED phase has been completed and the bridging phase is currently ongoing.

The FEED is planned to commence in the coming months, and that's subject to final agreements between the partners and the local government. All technical and commercial discussions with Equinor are progressing well and are on schedule. And we also have started to engage with the supply chain and the expression of interest process for major equipment packages are ongoing. This project will expand our footprint into Canada, Newfoundland, and we're planning to open an office in St. John's in the first half of this year.

And with that, I hand over to Stale to take you through the financials.

Thank you, Marco, and good morning, everyone. Starting with the EBITDA performance as we usually do under the financial section. Q4 EBITDA was $48 million, which is an increase quarter-on-quarter, driven by the strong fleet performance where we were able to deliver 100% commercial uptime. Again, worth reminding you that this does not include contribution from BW Opal, even though the FPSO is earning 60% of full charter rate during commissioning as the lease have not started from a financial reporting perspective.

2025 EBITDA or the full year EBITDA reached $240 million, which is within the guidance we have given in the past, although it's in the lower range due to the prolonged commissioning activities on BW Opal as Marco took you through earlier. Then for 2026, we guide on an EBITDA in the range of $340 million to $370 million. We expect BW Adolo production to reflect normal field decline before increasing towards year-end in line with the guidance given by BW Energy. Contribution for the year should be in the range of $60 million to $70 million.

Catcher is anticipated to provide steady high commercial uptime throughout the year with a contribution of $160 million to $170 million under the current contract. Pioneer contribution should be $4 million to $8 million under the O&M contract with Murphy. The upper part of the range will depend on successful drilling and additional production being brought to the unit. For BW Opal, we are transitioning to a volume-based rate from mid-March, as earlier mentioned. From this point onwards, we earn charter based on gas volumes delivered to the client.

Assuming gradual increase of production towards full capacity and start of the contract in the second quarter, we expect an EBITDA in the range of $160 million to $180 million for 2026. Additionally, we have planned SG&A, we have tender costs and also planned R&D activities, which is estimated to cost in the range of $40 million to upwards towards $50 million for 2026. And otherwise, please see the analyst slide in the appendix for more details on the units.

Going to the income statement, which is pretty self-explanatory. The Q4 income statement reflects stable depreciation on the fleet. But from an EBIT perspective, an increase quarter-on-quarter to $27.5 million. There are relatively small movements this quarter on the financial items with net interest expenses being stable. And as we move to net profit, as mentioned earlier, that ended up being $24.1 million for Q4 and $134.2 million for the full year of 2025, which is again is reflecting an earnings per share of $0.13 for the quarter and $0.74 for the year. We are pleased to deliver another good quarter from a cash flow perspective.

As you can see, we are able to deliver strong cash generation from the fleet with operating cash flow being $108 million for the quarter. This does include $46 million from Santos, which is prepayment related to the project. Santos is, as I mentioned before, and which has been mentioned a couple of times before, paying 60% charter rate as well as they pay for operations, which is included in the operating cash flow. Investments of $55 million were primarily related to BW Opal as we capitalized cost, and we had some additional costs related to extended commissioning and repair work as well as a smaller part, which is connected to ongoing investment in the Bakken project under BW Ideol, which we also consolidate into our cash flow.

During the quarter, we closed a transaction with Holcim, which brings them in as a shareholder and strategic partner for BW Ideol, which combined brought in around $9 million in new proceeds. Under financing elements, you can see we amortized another $50 million on the Catcher loan facility. And after dividends and other recurring items, we ended the year with $395 million as our net cash position.

Looking at the balance sheet, not much movement quarter-on-quarter. We continue to maintain a very strong financial position, where we are in a consolidated net cash position of $212 million, and equity ratio continues to trend in a very stable way and stood at just over 30% by end of the year. Liquidity remains robust at $635 million. This includes available capacity under our committed RCF, which is completely undrawn. All-in cost of debt continued to be very competitive. It was at 4.9% all in as our debt is fully hedged.

As you can see on the right-hand side, we have limited consolidated debt maturities over the next few years. For Q4, we are increasing our dividend payments as we will be paying out $33 million, equivalent to $0.18 per share. So we continue to operate according to our strategic capital allocation framework, where we have substantive cash flow from the FPSO fleet to build on. Our objective is to grow the business pipeline with focus on FPSO projects being priority, but manage that in a way where growth does not compromise our promise to balance this with increasing dividends to shareholders over time.

Q4 distribution have been adjusted, as mentioned before in part of our -- in our communication and is based on distribution of 50% of net income, which is the maximum allowed we can do under the bond covenants that we have. Thus, full year dividend totaled $67 million or $0.37 per share. This itself is up 12% year-on-year and in line with our target to provide growing dividends over time. With that, I'll hand it back to Marco. He should give you then an update on market and further outlook.

Thank you, Stale. The FPSO market remains strong with more than 75 projects between now and 2030 planned in various stages of maturity, and this is led by Brazil and then Asia and West Africa. As I have commented in previous updates, the FPSO market has changed with larger and more complex developments, and that drives a shift from the conventional lease and operate contracts to the EPCI plus O&M model. That reduces the need for project finance and also allows for more aligned partnerships during all phases of the project.

There are still also opportunities for hybrid models where we own and operate the asset, while the clients take 50% or more of the project financing through prepayments, like we did with Santos and also now again with Equinor for the Bay du Nord project. And this reduces the financing constraints and increases the capital efficiency for those developments. We're taking a different approach to risk management and risk sharing with partners, which allows us to take on and better manage the larger FPSO projects.

And with that, we're well positioned for both new build FPSOs and also redeployment projects for smaller developments. We have proven this through the delivery of BW Opal for the larger new build projects, but we also have access to a high-quality FPSO hull for redeployment following our acquisition of the Nganhurra early this year. And we can apply flexible execution and financing models, including strong partners to projects that meet our selection criteria.

Of those 75-plus projects between now and 2030, I mentioned, there are about 12, which we think that there is a good probability that these get to an FID and where we have a good chance to win, and that's the projects we're focusing on. And as we have shown in past years, we maintain a disciplined approach towards new projects while we have a strategic target of winning one new project every other year. Currently, we're working actively on a number of selected projects, which is led by Bay du Nord, which we actually consider our next project.

But in addition to that, the Kan prospect in Mexico and also the Albacora tender in Brazil. And the Brazil tenders will be done in an EPCI and O&M partnership. For BW Nganhurra, we see good opportunities in Mexico and Southeast Asia to redeploy that hull and then deliver a fast-track solution for smaller developments. We continue to leverage our FPSO expertise to develop low-carbon energy production solutions and create future growth opportunities in parallel to the FPSO segment.

We're taking a disciplined approach, though, with selective allocation of capital and focus on creating sensible returns. Today, we have a position as a majority owner in a floating offshore wind specialist, BW Ideol. And that company has a clear focus on the France and U.K. market. In France, 3 floating substructures for the EolMed pilot floating wind farm have been completed and the 10-megawatt turbines have been installed end of last year.

BW Ideol holds a 5% ownership stake in this EolMed development. And then in November, the Fos3F project for developing a fabrication line for concrete floating foundations in Fos-sur-Mer, France was selected by the European Commission Innovation Fund for a grant of up to EUR 74 million.

And by year-end, also a EUR 53 million grant was awarded by the French government also for the Fos-sur-Mer fabrication line. And then as Stale already mentioned, in December, Holcim became a minority shareholder in BW Ideol as part of a strategic partnership to accelerate the industrial scale-up of concrete floating foundation for offshore wind. So based on that capital injection and also the conversion of the shareholder loans, BW Ideol is now fully financed through 2026 and BW Offshore owns 68%.

We continue to progress our desalination joint venture with BW Group. That joint venture is called BW Elara, and it was established end of 2025. And here, we leverage BW Water's technology and market access. We have now taken an investment decision to invest in the construction of the first unit in 2026. And we're also monitoring opportunities within the FLNG and gas-to-power segment where we can leverage our FPSO expertise to develop floating energy production infrastructure.

Looking back at '25, we are pleased with our achievements on project delivery, progressing new business, also delivering strong cash flows within our guidance and shareholder returns. We achieved first gas on BW Opal, delivering a state-of-the-art gas FPSO and the largest undertaking in BW Offshore's history. We secured the position as selected FPSO contractor to continue to progress the Bay du Nord project with Equinor. And that's a project where we can leverage our core capabilities with developing and operating harsh weather FPSOs with disconnectable mooring systems.

And we continue to deliver attractive shareholder returns, including a 12% increase in dividend year-over-year. And then going into '26, we're building this out with our key priorities, completion of the commissioning and delivering at full production capacity, our BW Opal flagship, commencing the Bay du Nord FEED and progress that opportunity to contract award, maintain the target of signing one new FPSO project during the next 12 months and bring the first floating desalination unit to the market and then maintain an attractive shareholder return program and long-term value creation.

And with that, that concludes the update, and we're happy to take on any questions you may have.

Okay. Great. We're over to the Q&A section. So we have some questions that has come in, and I'll read them out and then we'll distribute those between us. First question, given the strong cash flow visibility, long-term contracts and the current trading level relative to book equity, can management comment on whether you believe the current market valuation reflects the underlying intrinsic value of the company?

I can start on this. Generally, we don't comment or have a strong opinion about market valuation. It's up to the market to decide. Our focus is generally always it is to execute on the strategy that we have communicated. It is to deliver on the operational aspect and optimize the capital structure of the company, do what we can control. Then it's up to the market to make a consideration about what the overall market valuation should be. What of course, we can say is that at the current level, the market valuation is still below the current book equity of the company.

Next question. Can you update investors on the current operational status of BW Opal and whether the project is progressing in line with internal expectations? And to help investors understand the remaining milestones, can you share your current internal expectations regarding timing for IPT and provisional acceptance? It's practical -- sorry, regarding timing for IPT and provisional acceptance and whether there are any factors today that could materially impact that time line. I think the first is maybe practical completion. I was a bit confused.

Yes, that's practical completion. But as we -- as I said in this update, the expectation was to have -- to achieve practical completion by the end of this quarter. That's what we guided on before. But during this quarter, we faced some setbacks on the commissioning process first with repair of seawater lines and firewater lines and then we got this advice from the manufacturer to replace dry gas seals all compressors to avoid bundled damage, which, of course, would have a bigger impact on production. So that's what we have been focusing on this quarter, and that means that everything shifts now to more like end of next quarter.

So in that sense, not fully in line with expectations. But on the other hand, yes, this is a big machine. There are a lot of commissioning activities, and we're still in the commissioning phase. And in that sense, yes, that's how these things run. What's important is that we get paid a commissioning day rate since September, and that's how the contracts have been structured that we do receive revenue during this duration, that is not super accurately to plan. It's commissioning duration. And we continue to get paid. And as Stale explained, then from mid-March, we'll enter a performance regime, which will be similar revenue levels. And then we continue to do practical completion by end of next quarter.

Okay. Next question. You announced a strategic review in response to market rumors back in December. Without commenting on counterparties or pricing, can you clarify whether the process is still active today and whether management and the Board are currently evaluating concrete alternatives?

I also see the next question from another person is also quite similar. If no transaction is concluded, should investors expect the BW Offshore to continue as a stand-alone dividend focused cash flow company with the same strategic direction as of today? I think those questions kind of quite interlinked.

Yes. I can -- repeating a little bit what I said earlier in the call, I mean, we're responding to incoming interest. So again, this is much more responding to an opportunity than that we're actually addressing a problem. And both the Board and management are approaching this strategic review with just one simple objective, and that's to evaluate options that can deliver the best long-term outcome for all shareholders. And we do that while we ensure an equal treatment and full compliance with our disclosure obligations. That's why I can't comment on any of those questions in specifics.

I mean I understand that the shareholders want more detail, but this is how the process is run and should run. But what I can say again is that our strategic focus is on growing the FPSO business, and we want to do that with an optimized capital structure and strong partnerships. And that focus remains. And in the current structure, we can deliver that as a listed company with a supporting major shareholder. But if there's ways to optimize this, we will take that. And that's exactly what this process is all about.

I think the only thing I could add would be that the strategic review may consider a range of outcomes. This could be M&A related or it could be a take private scenario, but it's also as well a possibility that there is no change. We continue in the existing setting as a public listed company.

Yes.

Next question there. Following some media reports describing advanced talks with Carlyle and references to potential additional interested parties, can you clarify whether the strategic review currently involves multiple counterparties and whether the Board has received any formal indicative proposals or nonbinding offers as part of the process?

As I explained, I mean, we can't -- if you would try to answer this, we go into a level of details that we should not go to at this stage. So we can't really comment on this question.

And the next one, without commenting on specific counterparties or pricing, can you clarify whether the Board and a majority shareholder currently see the strategic review as an active value maximizing process or whether the primary focus remains on executing BW Offshore stand-alone strategy. You have answered it already. I don't think we can't comment on behalf of the majority shareholder. What we can comment on is the fact that for sure, for the Board, exactly as you said, the objective here is to evaluate various options to increase long-term value creation for all shareholders, full stop. And if the process doesn't lead to that, I think we assume we continue in the current state. And while all this is ongoing, our focus is to execute on the strategy as we have communicated earlier. So just repeating what you've already said.

Next question there. Beyond the strategic review, how does management view the value creation potential from the existing FPSO backlog and upcoming projects such as Bay du Nord? And should investors expect a step change in earnings visibility over the next few years? So how does management view the value creation potential from the existing FPSO backlog?

What we do in the backlog is that we provide a number that includes what we believe is reasonably certain that we will get, as Marco was referring to earlier. What we do not include in our backlog, which I would say is value creation potential is for instance, a longer contract term on Catcher beyond 2029, as we were guiding on earlier or a redeployment of Catcher in the future, which we believe will be a case and which is something we are going to work quite hard to watch going forward.

It also does not include additional value from the option period for BW Opal. We only include the firm contract period in the backlog. And we also, as of this point in time, does not include any value from Bay du Nord. So at least from our perspective, we are pretty sure, we believe there's significant value creation potential compared to existing backlog going forward, both from existing units and from new projects.

Next question. It's stuck here. Sorry. First of all, congratulations on delivering solid and consistently good results and showing positive development and future prospects. Second -- okay, same. The obvious elephant in the room, I understand the companies need to keep any discussions with potential acquirers private. Nevertheless, I would like to request the company's statement regarding progress and possible milestones and the time when you can receive information about the given outcome of these possible talks and negotiations.

There's not really much to add, which haven't been said already. When it comes to time line, what we will do is that whenever there is something relevant to share, we will share that with the market. We will do that through a press release. If there's a need to engage with shareholders, we will do that at the right time to make sure it's a transparent process where everyone who should be involved will be involved in this.

Next question. Is there any plans or thoughts of premature payment of the bond, which is held by the bondholders who blocked possible amendments of the terms that limits the dividend payments to 50% annual profit.

I would say we have not been very active on this, the last quarter we've taken in the feedback we got when we engaged with bondholders where we, at the time, did not see it as accretive for all stakeholders to accept the proposal that we left the covenants as they are. It doesn't mean we will not look at it going forward. As of now, that's not high on our list. But yes, we will continue to look at this and see if there's a way we can work to agree with bondholders on the mandates. And we will come back to the market if we're able to find a way to make changes or do something, which brings value to everyone.

The next question. Is the dividend of this size expected in the coming quarters as well?

There we can say -- no generally because what we do, what we have done over the last few years is that we follow a fixed dividend structure based on $0.25 per year, divided by $4, which we announce and pay for the first 3 quarters and then we adjust our dividend based on what we can do on the covenants in Q4. So I would say shareholders should expect that the dividend will go back to the normal Q1 to Q3 announced dividend in the coming quarters. And then the aim will be to deliver 50% on an annual basis with adjustment coming in Q4.

Yes. That's the last question. It seems to be, unless there's any other questions.

Yes, let's see if there's anything else. We are through the list of questions. So if anyone still has a question, then it's a good time to raise it. No. If not, then I would like to thank everyone for participating in this call and wishing everyone a good day ahead. Thank you.

Welcome, and good morning, everyone. Thank you for participating in the third quarter market update of BW Offshore. My name is Marco Beenen, CEO; and our CFO, Stale Andreassen, joins me in this call. At the end of our update, there will be an opportunity to ask questions via the Q&A function of the webcast, and we will be happy to address these.

Starting with our disclaimer, please take note, and then I move on to the highlights. Our main highlight is first gas and receiving day rates with our new flagship, BW Opal. This marks the end of the construction phase and the start of operations with cash flow recognition. In early September, we signed the heads of agreement with Equinor for the Bay du Nord FPSO, and the project is progressing towards the start of engineering in early '26. We established a joint venture with BW Group to design and build floating desalination units.

And then on the financials, our EBITDA guidance narrowed based on our year-to-date performance and our fourth quarter outlook to the range of USD 240 million to USD 250 million. And we continue our predictable shareholder distribution program similar as previous quarter and consistent with last year, we will adjust to 50% annual net profit in the fourth quarter.

And I'll continue with an operational update of an exciting quarter. Starting with BW Opal. As just mentioned, we received first gas on 20 September and started to export gas to the Darwin LNG terminal in October. The day rate will increase to 100% at the practical completion milestone once the ongoing commissioning and ramp-up phase is completed. And this is now expected for the first quarter in 2026, and it will be the formal start-up of the 15-year contract with 10 years of options, and it is the starting point of our IFRS revenue recognition. In the meantime, we will receive day rates during the entire ramp-up phase, and that's recognized in cash flow, which will be amortized over the contract duration.

Our HSE and fleet performance was strong in the quarter, although the fleet delivered just below 99% commercial uptime, which is slightly lower than normal, but this was impacted by 3 weeks of scheduled maintenance on BW Adolo. And on safety performance, our primary focus is on maintaining a strong safety record, and I'm pleased to say that we had 0 recordable incidents during this quarter. The increase in the HPI statistics, high potential incidents in the graph is due to the reduction of hours exposure post the Barossa wind down, while the 12 months incident count did not change. So the ratio trended up, but we did not have an increase in incidents.

Then an update on our backlog and the fleet. The units in operations now complemented by BW Opal, delivered strong cash flow backed based on a high commercial uptime, and that underpins a healthy operating cash flow backlog. Similar as in the previous quarter, we report here the backlog in operating cash flow rather than revenue recognition. And the operating cash flow backlog stands now at USD 2.1 billion, where 82% is firm and almost 50% will be delivered before 2029.

As mentioned, BW Adolo production was impacted by a 3-week planned maintenance campaign, but delivered otherwise high uptime. And also BW Catcher underwent a 2-week scheduled maintenance shutdown. However, she still contributed with 100% commercial uptime. And I expect Catcher to remain on contract through at least end 2028 and probably a bit beyond. For Pioneer, we are providing the O&M services, operation and maintenance services under a 5-year contract on a reimbursable basis with production-linked management fees.

Then an update on the Bay du Nord FPSO for Equinor, also mentioned in the highlights. We were very pleased that we were selected as the preferred contractor for the Bay du Nord project offshore Newfoundland and Labrador in Canada, and that was after 2 years of close collaboration with Equinor. The pre-FEED deliverables we were working on are now completed by mid-September and Equinor exercised their option for a bridging phase to prepare for FEED in early '26. And then we hope that Equinor will take an FID and award the contract by end of next year. The base case is a fixed 10-year lease contract with options to extend further. And our current focus is on refining a smart and cost-effective design based on our Rapid Framework hull solution suitable for specific environmental conditions at the Bay du Nord fields.

And with that, I hand over to Stale, who will take you through the financials.

Thank you, Marco. And as usual, we start with an overview on EBITDA performance. Third quarter EBITDA was $44 million, driven by strong fleet performance, only impacted by a 3-week planned maintenance shutdown for FPSO Adolo. The 2025 EBITDA guidance is now set to a range of $240 million to $250 million, mainly due to the BW Opal's contract timing. Practical completion is now expected first quarter next year, basically delaying revenue recognition. Importantly, this has minimal commercial impact as we already remain on rate and continue to generate cash flow and will do so up until contract start and beyond.

When you look ahead into 2026, there's no doubt that EBITDA contribution will increase significantly. BW Opal, as we mentioned before, will alone contribute over $260 million on an annual basis with Catcher adding another $160 million and actually a bit above and Adolo will deliver over $60 million.

Going to the income statement, which reflects overall very stable operations quarter-on-quarter. You can see that depreciations on the fleet remain unchanged quarter-on-quarter at $21.4 million, which left us with an EBIT of $22.5 million for Q3. Other financial items reflect the valuation gain on the financial liability on our balance sheet related to BW Opal. And otherwise, there are only smaller changes quarter-on-quarter. Net profit for the third quarter was $23.3 million. And year-to-date, we are now at above $110 million, which translates into an earnings per share for the third quarter of $0.13 and for year-to-date, $0.61.

Going to the cash flow. I'm pleased to say that the operating cash flow was exceptionally strong in the quarter at $142 million, which includes $67 million from Santos, which, by the way, now also include charter hire for September. And it also includes the roughly $11 million settlement from Repsol as they paid for the tender efforts on the -- yes, the FEED engineering and project tender effort we performed for them in previous quarters.

Investments of $119 million were primarily related to BW Opal as well as the acquisition of FPSO and Nganhurra. Financing includes a $28 million draw from the Barossa joint venture to fund ongoing activities on BW Opal and $15 million in regular amortization on the Catcher loan facility. So after dividends and other recurring items, we ended the quarter with a very comfortable strong cash position of $388 million.

We continue to be in a net cash position, reflecting our strong balance sheet and, I would say, financial stable situation. And as you can see, the equity ratio trended more or less flat and stood at a comfortable 30.5% by end of Q3. We have strengthened our financial flexibility further in the quarter following a, I would say, successful refinancing of the existing revolving credit facility, which had a $86 million limit into a new $220 million facility with maturity fourth quarter 2028.

As part of this, we have also made efforts to make amendments to our existing covenants under the senior secured facilities. These amendments are meant to provide more flexibility for us to use prepayment structures by clients on projects as well as provide more flexibility on shareholder distributions to allow us to be efficient on capital management. I have to commend secured lenders for engaging in a very proactive and collaborative approach, demonstrating that our request was sensible for the long run of the company. It does allow us to engage constructively on new projects with our clients, and it allows us to manage capital allocation efficiently, as I earlier mentioned.

We also reached out to bondholders with a request to amend covenants under BWO06. We made what we believe is an appropriate proposal to bondholders put together in discussion with our adviser, but bondholders viewed this differently. And although we respect that bondholders wanted a different outcome, we think it was best for all stakeholders not to engage in a dialogue where only one party get a very favorable outcome. And as a result, the overall covenants for the company continue to follow covenants restrictions or covenant restrictions under the bond unless changed or until maturity, which is later part of 2028. And to make it clear, that means that the overall dividend payout ratio remains unchanged at 50% of net profit.

Liquidity remains very strong. increased from last quarter, driven by the increased liquidity under the new RCF put in place, which remains undrawn as we speak. All our debt is hedged at very competitive rates. And as I mentioned before, we are in a net consolidated cash position to be exact, $187 million, as shown on the slide for Q3. Our capital allocation framework is built upon a disciplined operating model where cash flow generated by our FPSOs is the foundation. With the way we're operating our fleet, we will have and we will have a continued good visibility on cash flow going forward.

We target to grow the FPSO business to new projects and increase free cash flow. We are focusing on maintaining a strong balance sheet, and that means maintain modest gearing while we look for new ways to expand our liquidity sources. And ultimately, we target to grow dividends to our shareholders over time. For 2025, this means that our target is and remains to be -- to pay out 50% of net profit as dividends, while we continue to distribute quarterly dividend based on $0.25 per share annually. So with an earnings per share of $0.61 year-to-date, we are already positioned to exceed the minimum distribution for 2025, which looks good in terms of being able to upsize the dividend in Q4.

With that, I'll hand it back to Marco.

Yes. Thank you, Stale. We're moving on with an update on the FPSO market. This market remains strong with multiple projects in various stages of maturity led by areas like Brazil, and in Brazil is led by Petrobras, but also Asia and Africa. Australia is also interesting for us. There, we can leverage our newly established presence with BW Opal.

From the market outlook presented here, we identified about 12 targets between now and 2030, where our competitive offering applies, and we target 1 to 2 contract awards in the next 12 to 24 months. This could include the Bay du Nord project. And thereafter, we target 1 project award every other year, in line with the strategy update we gave you previous quarter.

As mentioned earlier, the FPSO market has changed with larger and more complex developments, and that shifts from conventional lease and operating models to EPCI in combination with operation and maintenance contracts or even hybrid contract and finance models. For the lease and operate projects, client prepayments are required to enable external financing as well as shared risk allocation with clients, joint venture partners and subcontractors. And this is a revised approach to risk management with an appropriate risk/reward balance, which suits the size of our company.

In this market, we are well positioned for both newbuild FPSOs, but also redeployment or conversion projects. As we have with BW Opal, we have proven that we can deliver Premier League FPSOs even in difficult circumstances. We have access to a high-quality FPSO hull for redeployment following the acquisition of Nganhurra FPSO earlier this year. And this will allow for a faster and cheaper solutions compared to tanker conversions for those type of projects. We have sufficient investment capacity and a robust deleveraged balance sheet, as Stale explained. And we can apply flexible project execution models, which includes strong partnerships to deliver projects that meet our selection criteria.

Then shifting to the wind market. Our subsidiary, BW Ideol celebrated its 15-year anniversary in September, and that underlines its pioneering position in this segment. The company is progressing with a floating wind pipeline with more than 70 foundations for the 1 gigawatt Buchan project in Scotland and the 250-megawatt AO6 project in France. Also in France, the EolMed project is now on track for first power at the end of 2025 using the BW Ideol floater technology.

BW Ideol is a 5% owner in this project with partners [ Care ] as operator and also TotalEnergies. The float out of those 3 10-megawatt turbine foundations was completed this quarter and integration with the wind turbines is currently ongoing. Then in Scotland, the Buchan project has submitted the offshore and onshore consent applications and expect to receive the final consent in the third quarter of next year. And earlier this week, we received good news that BW Ideol's fabrication line in France was selected for an EU Commission grant of EUR 74 million.

The company is currently financed by shareholder loans and discussions with potential new investors are ongoing. As mentioned in the highlights, we are excited about the potential of a new business segment. BW Offshore and BW Group have established a 50-50 joint venture to design and build Floating Desalination Units, leveraging BW Water's technology. BW Water is a 100% subsidiary of BW Group and a specialist in desalination. Access to freshwater is an emerging global challenge driven by infrastructure delays, climate change and population growth.

The Floating Desalination Unit combines proven technology into a modular, rapid to deploy desalination solution, which we will deliver through flexible surface supply models. So this is ideal for urgent deployment in response to draws, delays in land-based desalination projects or other temporary industrial and infrastructure water demand spikes. We see great interest from potential clients worldwide within both municipal but also industrial sectors. And this market potential underpins our ambition to develop and operate a sizable multiregional fleet over time. So our aim now is to deploy our first unit by the end of next year.

So concluding with an outlook with busy times ahead of us. Summing up, our focus ahead is, first of all, bringing BW Opal to practical completion with a contract start-up early next year. Move the Bay du Nord projects forward to FEED and then followed by a contract award, hopefully. We target our next FPSO project during the next 12 months, and we'll look forward -- and we will work towards an FID on the first Floating Desalination Unit, sign a supply contract and then bring it to the market by the end of next year. And we remain focused on an attractive and gradually growing shareholder return program.

That concludes the trading update, and we're happy to take the questions that has come in through the webcast.

Okay. We have some questions and comments. I will just start going through. I think the first one, I'll take up -- here is for you, Marco. Could you update on the Nganhurra? So we have renamed it. So if you could clarify if BW Offshore has purchased that, they saw what opportunities being pursued for that unit?

Yes. That's correct. We renamed the unit because we completed the transaction as announced earlier. And this unit is now available for redeployment, but it's really a whole solution for us. So we have now a readily available FPSO hull, and that will put us in a competitive position for smaller projects that are based on tanker conversions where we basically have the hull already ready. And we see about 3 prospects, I would say, that -- where we can use or where we can apply the solution.

Okay. The next one is also around the market. What do you make of the Namibia opportunity? If it's a harsh environment criteria, there been -- the [ spin ] is already underway. So what does the opportunity set look like for BW Offshore?

Yes, we're monitoring the Namibia development closely. We're not bidding on the Venus project. There are already 3 companies working very actively on that opportunity. There is high expectations about the Namibia market. The question is always the time lines. So yes, we're monitoring that. I think we have a role to play there also with early production units based on redeployments. So it's definitely an area we pay attention to as it develops.

Okay. The next question is -- it's related to CapEx for BW Opal. Should we expect any CapEx related to BW Opal in the fourth quarter as well? Or does the CapEx in the third quarter represent the last part? And if so, how should we think about the maintenance CapEx for the current FPSO fleet going forward?

I can respond on this one because as we're getting towards the end of the project, we're also, of course, getting towards the end of the CapEx investments into the unit. There is -- there are some contracts to be closed out. So there is some CapEx that will be taken into Q4 as well. And typically -- then you have CapEx and then you have some timing impact on the cash out, but should be in the magnitude of $30 million, $40 million gross, which will somewhat be offset also by still some outstanding milestone payments from Santos.

On the fleet in general, no, we do not model with maintenance CapEx on the current fleet. Our contracts are reimbursable in nature, which means we set a budget for the year in agreement with our clients. And for what needs to be done and our clients reimburse us plus pay us a margin for doing maintenance on their units. So we don't have any additional regular CapEx or maintenance CapEx that we need to forecast or model for -- on the existing fleet today.

I'll move on to -- looking at the FPSO client base, your largest dry docks have successfully targeted particular clients. So do you have a strategy around clients? Or is it more of a geographical focus? Do you want to start with this one?

Yes, I can take that. I think our strategy is focused on clients in the first place. We like to continue with clients we have and focus on repeat projects thereafter. We also have a geographical focus, but then even more so from a regulator perspective. We're one of the few FPSO companies that have an extensive experience in highly regulated jurisdictions like U.K., Australia, Gulf of Mexico and also Canada. So that's a differentiator. And naturally, we look at projects in these areas.

Good. Then some financial-related questions, but I'll take one here. What is the economic impact of BW Offshore delaying practical completion from what was earlier guided to be fourth quarter into first quarter of next year, in particular, in terms of revenue recognition and cash flow timing?

And maybe I could start with this one to make sure this is clearly understood how the model works and you can tap in on this, Marco. But when we achieved -- ready for start-up on the unit, we received -- we started receiving 60% of the full charter day rate under the contract. And we will continue to do so for some time, and then we will eventually ramp up through the next phase and get to 85% until we get to what we call practical completion and the formal 5-year contract period starts.

The contract was designed this way to allow us time to build stability in the unit before the formal contract period starts us. This is a facility where you can't just switch on -- turn on the switch and then you will -- you can expect that everything will run stable and deliver gas with high uptime to the client immediately. So it was designed that way to allow some time to do commissioning, testing and make sure the facility can deliver for the expectations of the client.

It's important to note that these cash flows are in addition to the original contract. So per se, there is no negative commercial impact for us by switching or moving practical completion from Q4 this year to Q1 next year. Because we have paid this and the contract haven't started, the formal 15-year contract period haven't started. It will have an impact on EBITDA because we need to -- we need -- revenue recognition follows practical completion and the formal contract startup. But it's not a negative for us from a commercial point of view and financial point of view as we getting paid throughout this whole period. And in fact, in addition to what we will be paid under the contract.

So it's good to clarify that. I'm not sure if anything you want to add, Marco, on this particular thing. So it's understood in terms of our focus on getting the facility to operate stable before we try to trigger a practical completion and the formal contract startup.

Yes. No, exactly. I think you explained it clearly. But the key is that we get -- that we are -- since ready for start-up, we're actually on rate, and we're producing gas to the client, but it's just irregular, and that's why the contract hasn't started yet. And that's as expected, as you explained, yes.

Okay. Given the strong net profit delivered year-to-date, could you provide some guidance on what you expect for net profit in the fourth quarter and consequently for the full year 2025?

We don't guide specifically on net profit. But well, I think it's reasonable to say that we don't expect net results to change significantly in Q4 versus Q3. And then I think you can extrapolate on that. We are pleased with being now above $110 million in net profit for the first 3 quarters, and we expect to build on that also in Q4, which should allow us to be in a good position for adjusting also dividend distributions when we get to Q4.

We got a question on, can you elaborate on financing activities Q4 and 2026?

Well, I think it's pretty easy when it comes to Q4. We have no planned financing activities in the fourth quarter. For 2026, in terms of activities, those will be -- the first one is obviously linked to the progress on Bay du Nord. Provided everything goes according to plan and this moves towards FID and contract towards end of 2026, we will start the initiative related to financing for that project. So that will be a large, planned undertaking that we would kicks up in early 2026 if things goes according to plan. Beyond that, we don't have any other larger activities planned.

And then we've got a question on how much capital are you going to deploy into the new JV as BW Elara, presumably referred. Do you want to say something about this, Marco?

Yes. As we explained, our target is to have the first unit in operation end of -- towards end of next year. And as we explained, I think it was first -- previous quarter in this segment, these units are -- we think the CapEx is somewhere between $60 million and $80 million. We're aiming for the lower end of that range. So I mean that gives you an indication of the capital allocation and then divided 50-50 with BW Group to put this segment in working basically during '26.

Okay. I don't see any other new questions coming in. Let's give it a refresh.

I'm also checking.

No, that seems to be...

Covered everything?

Seems to be it.

Well, there was a question about customer base for the Floating Desalination. I see. I can take that.

Sorry, yes. What kind of -- sorry. Yes, there. I missed that. What kind of customer demand are you seeing for the FDU concept? And when could the first contract realistically be signed?

Yes. So as we also explained in the press release, we see obviously a growing market driven by water stress basically in various places in the world, and that's increasing. The particular niche for this solution is for areas where there's both the demand from municipalities, but also industrial. And then the client base can be exactly that. It could be industrial players that want to secure their freshwater supply, but it can also be local governments that make sure that there is a quick solution to respond to unexpected events or developing shortages. So particularly, that combination is, I think, the ideal part of the market. And first contract could be as early as next quarter.

Very good. Then, am I missing anything or?

No, I think we -- going through the list. I think we've covered it.

I didn't see any -- wait, sorry. Now there was a new one coming in. Could you give us some comments on how you will manage risks of cost overruns in future FPSO projects? But that one is related to project execution, which could be an interesting one to touch upon.

Yes. As we also explained in previous quarter, this is all about risk management and risk allocation, and certain project execution models carry more risk than others. And even if you price the risk, I think you need to then be realistic about whether these risks are proportional to the size of the company. And as I also explained, these projects, the CapEx values of these projects have been growing significantly. And that means that we just basically need to reduce the overall risk exposure rather than just looking at percentages. And ways to do that is to team up with partners. So we're looking at strategic joint ventures such that we can share or basically make the project smaller, share the risk of a project over 2 parties.

Another element is the risk allocation to clients, particular risk that we don't control. So inflationary exposures, commodity pricing risk, et cetera. Those are better placed with clients and most of our clients actually recognize that. And risk allocation to subcontractors, which is similar nature as joint ventures where you basically say you carve out pieces of the project and leave the EPC integration of that, including the profits, but also then the risk to those parties. So yes, that's, I think, the key.

And last but not least is, of course, the level of definition that you create before contracts get signed. And for instance, Bay du Nord project with Equinor is a nice example where there's an extensive period. We've been working on a pre-FEED that lasted 9 months. And now we're preparing for a FEED that will probably take another 9 months or even a bit longer, which means by the time this contract is signed, there's a very high level of engineering definition, which derisks the project, both for our clients and for ourselves.

Okay. So I try to sum it up. Number one, more -- kind of extensive upfront planning of the project before kickoff to make sure we have a good understanding on the schedule and the cost. Two, both commercial and strategic partnership models where we focus on each other's strengths and you basically divide the project up in, I would say, smaller pieces. And three, more subcontracting. So you allocate more of the scope directly to subcontractors and which reduces the risk, of course, also the profit margin to us, but it splits it up and give us better control on the overall commercials of the project.

I'm just trying to sum it up in a simple way what you said there. Hopefully, you agree.

Exactly.

Okay. Yes, that's -- while we were speaking, I didn't see any new questions come up. So then I'll give it back to you to wrap it up.

Yes. So then this concludes our third quarter trading update. I thank everyone for participation and interest in BW Offshore, and wish you a good day and a good weekend. Thank you.

Okay. Welcome. Good morning, everyone, and thanks for joining us here in Hotel Continental. We will present our second quarter results to you, but we also give you a high-level strategy update, and that's the result of a review we took over the summer. And we took stock basically of what we delivered of our strategy the last 5 years.

And then we also took a look at the focus forward and the refinement of that strategy for the next 5 years, we have taken a look at the market, our positioning in that market, our competitive strengths. And also, we redefined our revised project execution model with the right risk reward for the size of projects we see in the future for the company.

And after that, we will be happy to take questions. And for those of you joining online, you can participate in that through the Q&A function on the webcast and, of course, very welcome as well to join this event. So my name is Marco Beenen, CEO. I'm here with Stale Andreassen, CFO; and Anders Platou, Chief Strategy Officer. We will present, but we also have representation of the company from our New Ventures group headed by Fredrik Savio sitting there and also Jon Harald Kilde, Business Development. And they also will be happy to engage in any questions after the session.

So with that, please take note of our disclaimer before I continue with the highlights. I'm pleased to report that BW Opal now is hooked up on the Barossa field, and we're very close to starting up now and flowing the first gas through the facility. We delivered a strong financial performance in this quarter, but also in the first quarter. And that means that we can raise our EBITDA -- 2025 EBITDA guidance to a range of USD 240 million to USD 260 million.

And also, our second quarter cash dividend will be maintained and consistent with what we did last year and in full compliance with our covenants. Stale will come back to the last 2 points. I will continue with an operational update. I must say it has been a busy quarter and busy summer for us, not the least with our flagship BW Opal now leaving Singapore heading to Australia and she left there end May and then arrived in the field in June, and then we started all the preparations for the startup.

We also handed over the operation and maintenance of BW Adolo FPSO to BW Energy. And we are progressing a couple of pre-FEED activities for several new prospects as well over the summer. I'll start with BW Opal. As mentioned in the highlights already, she is now very close to starting up and then that will follow by first gas. And that also means that we are -- we will remain within the guidance that we've given previously or well within that guidance actually.

At readiness for start-up, which we call RFSU, it means that a 60% day rate will kick in, and that will then increase subsequently over various other milestones to the full rate of 100% at practical completion. And that's scheduled for the fourth quarter this year. So -- and that is when the contract actually starts. That's the 15-year firm lease and operate contract that generates USD 4.6 billion, and that includes the lease repayments. In addition to that, we also have the 10-year options that come after that.

And then the operation and maintenance services during that period will be fully reimbursed in a separate contract with markups and incentives. Then continuing with our fleet and HSE performance. As you can see, our 3 operating assets have been consistently delivering very high uptime, basically close to 99% and above for the last 6 quarters. And that's the result of the high grading of the fleet. This is a result of the divestments we have executed in the last couple of years. And you can see that with that consistent high uptime, that obviously drives the predictable cash flows. I'll come back to that in the next slide.

Our HSE statistics seems to trend up. But it should be noted that we include the recordable incidents over the past 12 months, and we define that by the total man-hours of projects and operations. But as the project's activity is now sharply winding down, you naturally define it by a lower number, so you will see initial trend up. But I consider that as temporary, and that's also because we don't see an increase in incidents. So it's not a concern of safety performance. But nevertheless, we're monitoring these trends very closely.

The main focus, as always, is on the high-potential incident. We had 1 to record on Pioneer in this quarter and high potential incidents are always followed by the highest level of investigation and learnings that we have in the company. I mentioned the core FPSO fleet delivers high commercial uptime and that results in predictable and strong cash flows, and this will further grow once BW Opal will come on rate. And as I said, that will be very soon.

On the operating units, I mentioned already BW Adolo is now being operated by BW Energy, and that creates synergies for them in -- for their Gabon setup, and it also allows us to exit. We continue to benefit from the charter rates and the production tariff. And that will at least last till '28. By that time, there will be a call and a put option of USD 100 million. So it's quite likely that, that will happen. But till that time, again, we have the charter rate and production incentive and the production incentive is linked or will be close to the nameplate capacity of 40,000 barrels per day. That's the expectation that the unit will produce for the time to come.

And then BW Catcher delivers consistently 100% commercial uptime. We have a very good performance on that unit, and we also have an effective bonus miles performance regime that drives those results. And based on the decline of production in that field, I'm also convinced that we will continue and that the unit will be needed there until at least through 2028. We are having discussions with our clients to convert the options into a firm contract extension.

But we also see a very strong -- we see it as a very strong redeployment candidate in a market where there are actually very few usable redeployment FPSOs available. So either way, we have a good view on the future of Catcher. And for Pioneer, we now entered into a 5-year reimbursable contract with potentially some upside if the production on that field would increase after interventions by the client.

I conclude this operational update with an update on the FEED and tender activities, which are public. First of all, the Block 29 development in Mexico. We have been engaged in the FEED over the year, and we have completed that FEED in May, we were hoping that, that would result in a contract award or at least negotiations towards that. But the client decided to consider broader options for the development and also a broader engagement with the market. We will be invited in that engagement as well, but it's a bit unclear when that will happen.

So for now, we will be compensated for the FEED work, and we will await the next steps by our clients probably in the next quarter or later this year. And then the Bay du Nord in Canada, this is a development by Equinor in offshore Newfoundland in Canada. This is a location with a harsh environment, very cold as well. And it has the requirement for a quick disconnection mooring system in case icebergs approach.

And our engagement with Equinor started already more than 2 years ago. Then in competition with 4 FPSO contractors that has been reduced to 2 with the start of a pre-FEED earlier this year. And we're now nearing the completion of that pre-FEED. This is a very interesting project for us. And here, we can really bring our competence of harsh environment, health solutions, but also our disconnectable mooring system competence as well as the operational experience of both namely Catcher in the North Sea and also Pioneer as a disconnectable FPSO in the Gulf of Mexico.

The pre-FEED has been successful and is on track to be completed basically mid next month. And this has resulted in a close and effective collaboration with Equinor where we've defined the design, the safety standards and also the commercial approach. So really looking forward to continue that collaboration with Equinor post the completion of the pre-FEED.

And with that, I'm handing over to Stale for a financial update.

Good morning, everyone. See the slides. I'll start with an update on the EBITDA. As you can see, the EBITDA for the quarter came in at $57 million, which is lower than the first quarter due to some one-offs. The commercial uptime, as highlighted by Marco is very good on the fleet, very close to 100%, very pleased with the operational performance. The reduction quarter-on-quarter, which is about $40 million was driven by the fact that we sold BW Pioneer in the first quarter, so the unit is effectively out of our books.

In the first quarter, we were also able to announce a successful outcome of the arbitration related to Polvo, which was also booked as a one-off. So this explains the delta quarter-on-quarter to a large extent. As Marco was referring to earlier, and we have completed the FEED work for Repsol's Block 29, well, tender effort. We have been compensated for this work, and we have booked in a $10 million compensation in this quarter's result.

When you look forward to the 2025 EBITDA outlook, we're now comfortable with the numbers. We are raising our guidance to a range of $240 million to $260 million. The main variability in the numbers is, as you can -- most of you follow us closely would know is linked to the actual contractual start-up date for BW Opal. A month from this unit generates more than $20 million to the EBITDA. When you look forward then to 2026, it goes without saying that we expect to deliver significantly higher EBITDA contributions as this unit, on its own, will deliver more than $260 million on an annual basis.

On the income statement, if you follow through the Q2, you will see that depreciations have dropped significantly quarter-on-quarter, again, explained by the fact that we sold BW Pioneer, concluded that sale in Q1. So depreciations have dropped from $32 million to $21.4 million, and we expect that to be the range to where we're going to trend until the contractual start-up for Opal in Q4.

Under impairment, it reflects the write-off of the investment costs we made in the Block 29 tender work. So if you try to compare the net investment cost, which, for us, was about $4.5 million in the quarter, that's -- this kind of completes the picture. $10 million compensated, $14.5 million as an investment cost. That's now been fully written off. Net interest income was 0 in the quarter. Our interest expenses on debt is basically offset by interest income on a substantial cash balance that we're holding.

Also this quarter, we could book a gain on hedging instruments. And this is basically due to the weakening of U.S. dollar, which gives us a positive mark-to-market impact on the hedges we have in place for our Norwegian krone-denominated bond loan.

Moving down to taxes. This is now normalized again. At least this for us is what we consider to be a bit normal going forward for a while because we had an exceptional tax expense in the last quarter related to the sale of Pioneer. So when you sum it up, net profit of $24.6 million for the quarter, which translates to $0.14 per share.

Moving to cash flow. I would say operating cash flow this quarter was -- well, nothing but exceptional at $103 million. $25 million of this is related to the prepayment from our client, Santos, for BW Opal and $36 million is reflecting the full and final installment or full and final settlement related to the Polvo arbitration settlement. So when you take this out of the equation, we still remain a very healthy $42 million in operating cash flow from the fleet.

$97 million was related, based in its entirety, to BW Opal as ongoing investment for that unit and $24 million is reflecting the final payments related to the sale of BW Pioneer. We had to draw another $21 million from our joint venture to fund ongoing activities for Opal. And when you kind of track through, you see take into account CapEx, amortizations on debt and the fact that we continue to pay dividend with $11 million also this quarter. We still continue to increase our cash position, which now stood at just over $420 million. end of Q2 when you exclude any cash sitting in our subsidiary, BW Ideol.

From this quarter, we decided to make some changes and make some additions to how we present cash flow or backlog visibility. So we introduced a concept called operating cash flow backlog. We acknowledge that when you look at the revenue backlog, as we've been presenting it in the past with how we see contracts changing, where you see more and more prepayments from the clients, and we see more and more contracts going into being reimbursable, you get a bigger and bigger discrepancy between what is actually in our revenue backlog going forward?

And what is the net cash -- or net future cash flow being generated to BW Offshore. So revenue backlog sort of quarter-on-quarter stood at $6 billion and 90% of this is firm. But it does include $1.1 billion of prepayments from Santos, which we'll have to amortize over the firm 15-year contract period when that starts in Q4. So the operating cash flow, as we presented, basically fixes this. It stood at $2.2 billion. It only includes our 51% of the cash flow EBITDA that will be generated by the firm contract period for Opal.

We have factored in any future estimated operating costs as well as taxes to try and create a picture of this is clear net operating cash flow being generated by existing fleet. And as you can see on the pie chart, half of this is expected to be generated within 2029. So we believe this shows that there is substantial value creation in the existing fleet, which will cover, of course, debt obligations, but also give us a lot of flexibility when it comes to defining and following up on our strategy in terms of creating long-term growth and sustaining dividend distributions as guided upon.

I'll do this slide quickly because it's starting to be very repetitive. We have effectively no consolidated leverage anymore. We are in a net cash position. It was $213 million by end of Q2. And as you see on the equity ratio, it trends very flat and stood at a very comfortable 30.7% at the end of the quarter.

To sum it up from my side, available liquidity, I would say, rock solid at $531 million. This includes $100 million under the RCF, which remains undrawn at the moment. We have a very comfortable debt profile, as you can see on the right-hand side. The guidance on remaining CapEx and investments in BW Opal stands as before and, obviously, can be managed quite easily with our liquidity position as well as future cash flow from the fleet.

We continue to pay our quarterly dividend of $11.3 million in cash, translating to about $0.063 or $0.063 per share going forward. But if you go back to the guidance we gave in Q4 last year, as we said, this is what we do. We will continue to do a minimum dividend for the first 3 quarters of the year with an ambition to pay out 50% of net profit as dividend in Q4.

When you look at the fact that we have $87 million in net profit for the first half, I think, we are in a very good position to get beyond kind of the minimum dividend kind of ambition when we get to the end of the year, which basically would be if you deliver $90 million, we can't raise the dividend. Anything above would allow us to pay a higher dividend in Q4, which we'll present in February next year.

So with that, I'll hand the word over to Anders, which will give us a strategy update, and eventually, we'll move to Q&A.

Thank you, Stale, and good morning, everyone. So as Marco said, we have just conducted a thorough strategy review and this included a top-down scenario and market analysis, but it also included a top or bottom-up process involving a substantial share of our clients, employees, partners and other stakeholders. But the key takeaways are as follows: Firstly, BW Offshore is well positioned for the future. And we are addressing both energy security, but also the energy transition.

Second, FPSO is also becoming even more critical due to increasing complexity of -- and size of field developments and also the prevailing focus on stable supply of oil and gas. And finally, we see opportunities for floating transition solutions albeit these are shifting out in time. And it also remains challenging raising capital for such ventures. We do ever continue believing the latter is an area with sound potential for future growth and attractive returns.

So against this backdrop, we feel we are well positioned for increasing value creation over time. BWO is today a leaner and more streamlined company with increased investment capacity. We have also been disciplined in tendering over the last few years given the constantly shifting markets. There is, however, no denying, we also have had our commercial and project execution challenges; nevertheless, the current market context is very clear. Oil and gas will be here for longer.

We see this in a large number of planned FPSO projects, which are underpinned by a positive market for our core business. And in terms of priorities, we are continuously working to improve across all key functions to unlock this clear business potential. We're optimizing the way we do business and manage risk both through strong partnerships and enhanced risk reward models. We also continue investing in our organization to ensure we have the right people and capabilities to deliver on BWO's long-term ambitions.

So in 2020, BW Offshore presented a revised strategy in which we moved away from medium-sized clients, shorter contracts and relying on redeployments of our existing fleet. And since then, we freed up over $600 million by divesting 12 FPSOs and spinning off BW Energy, and we paid over $200 million in dividends back to shareholders, and actually over $300 million if we include the shares we spun off or paid out in spending of BW Energy, and we've also strengthened our financial position.

In addition, we've secured and invested in a new FPSO project as well as floating wind company, BW Ideol. However, as mentioned, we have, unfortunately, not been able to deliver as many new FPSO projects as targeted. Following the recent strategy review, we are now reaffirming our position and ambition in the FPSO space. And we're also refining our approach to floating transition solutions. And we're now renaming it floating -- or sorry, in the transition, and we're renaming its floating transition solutions because we are, in fact, looking at areas beyond renewable energy production.

Irrespectively, we're looking to add 2 segments in this area by the end of 2030. Our old strategy, though, is very much anchored in the conviction that oil and gas will remain a dominant energy source for years to come. We also see new business segments emerging in the transition area. However, we expect this to only start to mature towards the end of the decade and thereafter. Our view is nevertheless aligned with multiple external scenarios for the expected future development of the global energy mix as you can see on the slide. And this again forms the basis for our market assessment, targeted segments and overall long-term planning. Importantly, fossil fuels and our FPSO offering remains highly relevant well into 2040.

On to the market, which we find certainly exciting. We see multiple opportunities in regional hotspots like Brazil, Asia and Africa. Still, I want to emphasize, we maintain a disciplined approach with clear selection criteria, and this applies both to new builds and also redeployments. And as Marco has talked about on several occasions, the FPSO market has changed with larger and more complex developments, shifts from the lease and operate to EPC and O&M models or even hybrid models for that matter.

And our clients offering prepayments to enable external financing as well as new approaches to risk management allows us to take on and better manage large FPSO projects. That said, we also see a demand for medium-sized units and opportunities to use existing infrastructure through redeployments. Our success in these areas depends on aligning capabilities with the long-term market needs as well as good project execution to ensure predictable value creation. And we at BW Offshore are confident we have the competitive offering required to capture a decent share of what we see as a very exciting market.

Success does however require we continuously work on strengthening our capabilities and organization. The goal is to ensure delivery of floating production offering that meets our clients' needs and the long-term market demands. And I will briefly touch upon 4 areas: The first is simplification. By this, we mean standardizing how we approach design, risk reward principles as well as optimizing internal processes. Secondly, we are enhancing our client focus, and it starts with actively cultivating a client-centric approach throughout the company.

We will strengthen our business development efforts and frequency of tendering, and we will also look to make our contract negotiations more efficient. Thirdly, in our business, predictable project delivery is fundamental. We are therefore reworking our strategy and framework for managing project execution and risk, fully leveraging our learnings from previous projects. We have optimized the project organization and are developing long-term EPC partnerships. In addition, we are strengthening our processes to ensure clarity and certainty on project cost estimation.

Lastly and most importantly, it comes down to our people. Large and complex projects require big team efforts, and we will collaborate and lead by example, supported by a highly motivated workforce. The lease and operate contract model has historically been restricted by the absolute project size from a financing perspective. Still, we have proven there are ways around this with robust financing, partnerships and prepayments offered by our clients. In recent years, these clients have also shifted towards EPCI and O&M models, which further addresses some of the financing challenges.

Irrespectively, with larger projects, the absolute magnitude of risk also increases. And this requires a change in mindset and ways of working. Using BW Opal as an example, we carried all the EPCI risk. And this meant that all project issues and deviations across multiple layers of subcontractors, suppliers and project work streams filter up to us. We nevertheless managed to stay on schedule and deliver a state-of-the-art gas FPSO, albeit at a significant additional cost.

So going forward, we will seek contract structures better aligned with our clients. We will also develop strong EPC partnerships to enhance project execution, capacity and capabilities. And lastly, we'll apply models for sharing risk reward, both with our subcontractors and other suppliers. And as a result, BW Offshore can better manage projects with reduced risk and more predictable returns.

On to our FPSO prospects. We maintain the ambition of winning 1 new FPSO project every other year and the promising market outlook I showed earlier fully supports this. Now we consider 12 of the FPSOs planned for awards towards 2030 as a good fit and are currently progressing several opportunities. As Marco mentioned, we're working well on Bay du Nord with Equinor. And on Block 29, the client is considering its options following our bid submission.

And we are furthermore exploring opportunities for BW Catcher, which is currently on contract with Harbour Energy. We've also acquired the Nganhurra FPSO, which gives access to a high-quality hull, enabling rapid and cost competitive responses to various redeployment opportunities. Finally, we're advancing several other early prospects across multiple regions.

Moving on to floating transition solutions and our plans to become a leading EPCI player in floating wind. Admittedly, since we invested in BW Ideol in 2021, lead times from project concept to actual installation of turbines and power generation have shifted out. And this, of course, has also impacted the access to and cost of growth capital. Nevertheless, we see this as an exciting company with tangible revenue streams. Ideol leveraging co-development positions as a neighbor of EPCI opportunities in Scotland and France. And on the related fabrication side, the company is developing 2 dedicated construction sites in the same geographies for serial production of the proven damping pool platform.

Zooming in on the Port of Ardersier in Scotland, the ambition is to produce 1 floater every 12 days, once the production line is fully up and running. And in fact, that equates to 30 floaters per year, which can be potentially supplied to the entire U.K. sector and not just the Bakken project where Ideol is invested. And we firmly believe we have a competitive edge and the ability to capture a decent share of this overall business through local production concrete, both in terms of cost and regional governmental support.

And importantly, the Bakken project alone will require the production of around 60 floaters. And we are working closely with partners on the construction side to make it all happen. On the funding side, Ideol is today a private company, most recently financed with a shareholder loan. And based on their recent strategy review, Ideol targets positive cash flow from 2028 on the back of project-related engineering revenues and licensing fees. We also continue progressing discussions with potential investors. And in the longer term, we are looking to realize additional value through monetization of co-development positions around FID.

So in sum, we are encouraged by Ideol's position in an emerging market, which could become a substantial market opportunity from 2030 and beyond. We're also looking beyond floating wind and into other floating transition opportunities. As of now, we see 3 distinct solutions, and those are floating desalination, gas to power and ammonia. Our view on times to commercial viability are rooted in scenario modeling, which drive our priorities accordingly.

We maintain a disciplined value-driven approach to capital allocation in these emerging segments. And this means applying the same risk approach as in our FPSO business. In other words, contracted cash flows to quality counterparties and demanding similar returns. We further more focus on combining proven technologies in new ways and on projects that can be realized in areas with strong public support.

So we see these as the new emerging segments that in a few years could provide opportunities for long-term profitable growth. So I started this strategy section talking about increased value creation, and this is something that goes 2 ways. Number one, we have a clear focus on delivering long-term value to our clients; and two, we look to deliver increased value to our shareholders. We maintain our capital allocation framework, which guides our financial priorities, which are to ensure efficient operation and cash flow from the existing fleet, invest to grow free cash flow from new FPSOs and later also transition solutions, maintain a robust balance sheet and pay growing dividends to shareholders over time.

Our aspiration towards 2030 is to deliver an average total shareholder return of at least 15%, and this is based on BWO winning 3 FPSO projects over the next few years, including then extension of employment for BW Catcher, as mentioned. In sum, it implies doubling the company value by 2030, realized partly through direct quarterly returns and partly through share price appreciation as BW Offshore grows through profitable projects.

So to sum it all up, I could hand it over to Marco, but I prefer stealing his thunder and doing the near-term outlook myself. So here it goes. Most importantly, start-up of BW Opal remains imminent. We also continue progressing our FPSO projects and hope to land one relatively soon. And lastly, we will maintain our attractive shareholder return program.

So with that, we go to Q&A, and I think we can start with the people in the audience and then move on to the online questions. Thanks.

Well, I will take charge of the Q&A in any case, but what I will be in good company. Opening up, first the room or anyone who wants to start? Yes.

Lukas Daul with Arctic Securities. So just on that 15% return target, is that a combination of dividends and other shareholder returns? Or how exactly do you define it?

I can go. Yes. So that's how we designed it to be a combination of direct returns through dividends and through equity returns through value -- long-term value growth. So that's how we need to look at it. And I think from a perspective of how we aim to do it, we aim to be as forward-leaning on distributions as we can as long as we don't jeopardize the potential to take on new contracts.

And as we have quite a lot of discussions around when targets move out and as you can see from the liquidity we're sitting on and the cash flow we're generating, we will need to adjust this based on how long until we can mature a project, how much cash do we need and adjust the dividends accordingly.

And with that, I can also mention that we're looking into covenants in terms of giving us more flexibility to, I would say, be more agile when it comes to capital allocation in terms of being more forward-leaning on dividend distributions when we have the ability to do so.

Okay. And then on the impairment you took in the quarter, was that sort of the entire capital that you have spent on that project? I mean, did you receive $10 million and you have expensed $15 million?

Total numbers is $21 million, $22 million invested in the effort over the total duration. Total compensation is between $14 million and $15 million. We have gotten some compensation as we go, but there were smaller numbers. That's why we didn't go explicitly out with those. And we also didn't start putting cost in the balance sheet from the get-go when we started. That's also why the impairment is $14 million and not $21 million, $22 million.

And is that the typical kind of inventory for a FEED project that you are basically spending $5 million on the FEED and then you have some kind of a hit ratio whether you succeed or not?

I think you could say that. I think every serious FPSO opportunity takes about 2 years towards a contract award. In case of Repsol, would actually be more. But let's say, 2 to 3 years, that's the 10 years. And I also explained, we already engaged with Equinor since 2 years ago. Typically, there is a $5 million to $10 million investment linked with an opportunity over that period. Still depends a bit on the approach clients take. Certain clients say, well, it's all your cost and you just do what you want to do. But it's fully your cost. We don't pay anything. Then it's pure tender.

Then you have clients that says, I'll pay you some and then you need to deliver this, but for the rest is your game. Repsol was a bit more in that corner, partly specified and partly we had to do what we had to do. Equinor is taking, I would say, a more prudent approach, and you see the larger operators going more in that direction where you fund these phases and make sure that the definitions and, yes, the whole project definition is solid by funding it actually such that for both parties, that's a better starting point. So you have that range of approaches, which is different client to client. But either way, somehow you end up always with a certain level of investment. Yes.

So how much do you budget for a year that you will spend on initiatives like this and then every second year, you get an award.

Well, so in terms of activities, let's say, $20 million to $30 million of activities and then investment around $10 million, $15 million.

Maybe I could just add on this in terms of how we see the market because I think this is quite relevant to how we see the market is now getting more comfortable on our side with less competitors, a large number of prospects. We are gradually also seeing that compensation is getting closer and closer to the effort we need to put in, where in the past, Petrobras is still there when they basically say, you tender, you take the cost if you win good for you, if you lose, you take the cost.

I think on all other prospects we are pursuing, we see to a large extent that you're getting quite close to now getting compensated for the FEED and driven by fewer market participants, bigger efforts that are being undertaken and less competition on this where the clients see that, okay, if we're going to get subcontractors to go into multi kind of year tender efforts, they're not going to be willing to do this with significant cash outlays on top of their kind of time -- cost of time and effort and the risk that they're taking.

Okay. And from the new type of offering that you are sort of looking to expand into over the next years, which one do you think is going to be the first one where you're going to secure a commercial award?

Yes. I would say the Petrobras tenders in one way tend to go relatively fast because it's -- in a way, it's a lower -- first technical qualifying and then the lowest bidder and then some negotiations, but that goes relatively fast. But the time line seems to shift. But still, if Petrobras like the stuff that they put in the market now, they will probably be awarded by mid-'26.

Yes, I was actually thinking about the gas to power ammonia, which one would be in your head...

Sorry, in the transitional, I think, we see -- we find this floating desalination market very interesting, and that could potentially move first. Gas to power is real. And I mean, a lots of discussions here also in Norway. But still, it's not -- particularly if you have to add CCS, yes, we still think it's a few years out, and ammonia even more. So -- and that's also why we really also want to communicate. We see a good FPSO market. This will be needed, and we have the organization and the capital available, so that's what we really want to press on.

And in the meantime, we'll stay disciplined on monitoring the time lines of the transition because we've all seen sentiment swing and then time line swing. I don't think you can extrapolate sentiment just as you couldn't 5 years ago, I don't think you can extrapolate the sentiments now, but we need to stay close. But it's also fair to say that these things will not go fast. So we're staying disciplined there with how much we progress.

Erik Aspen Fossa –at Spare 1 Markets. On -- I just want to have a question on future FPSO opportunities. With the Repsol project now most likely out of the picture, what type of projects do you see as most likely within the next 12 months? Is it a new build redeployment project and what type of region?

Well, it's a bit of both, and maybe it's more the other answer I started. I think there's a couple of Petrobras projects coming in the pipeline. There is a legacy of the things move, but still once the bids open, it goes fast. So I think that will come by mid-'26. Equinor talks about contract awards more towards the end of '26. So those are both new builds. But the Repsol project is not -- has not disappeared. And as you can see, we have done a lot of work. We will still be part -- we will evaluate what -- how they come back to the market, but we can still be part of that.

And then that project would go relatively fast as well, so maybe more '26, but that's a redeployment. And then also with Nganhurra, we see a couple of opportunities that we think will get a contract towards somewhere second half and '26. So that's a bit of the time lines. But it is a bit -- we're taking a mix. We've taken the smaller, more redeployment projects that in principle go faster and then the larger new build projects, and it's kind of the things we're working on most actively now is about 4 and it's 2-2 split.

Russell Searancke from Upstream. I'm not usually an environmentalist, but I have to ask about Barossa and the CO2 situation at Barossa. There's going to be a lot of CO2 vented from your FPSO. So I'm just curious to know how you feel about that, about the high volumes of CO2 and also what sort of capabilities the FPSO has for, I guess, reducing the amount of vented CO2?

Yes. So the design is such that we can either take the CO2 out on the facility or we can export the CO2 to the Darwin LNG facility and then it's taken out there and export it to an abandoned reservoir. And that's the plan that Santos has, and they're working hard on that. They're actually installing pipelines as we speak. And we'll all try to work on that to get this in place as soon as possible. So then there's a very robust carbon capture plan in place and actually not only for Barossa, but for the whole oil and gas area there.

And my understanding from Santos is that's a clear strategic focus as well. In the meantime, CO2 will be extracted from the gas on the facility. And again, the time lines, I don't know exactly, but what I do know is that this will -- we'll try to minimize that period and move to the carbon capture solution as soon as we can.

Okay. If there are no more questions from the room, we'll proceed to the online questions. Referencing to the Petronas logo on the FEED presentation earlier, is BWO also involved in the Kelidang FPSO FEED project?

No, we're not directly involved.

And regarding dividends, Stale, you mentioned discussions on renegotiating bond covenants to have more flexibility and not be limited by 50%. Any update on this?

Well, I did not mention the discussion with bondholders about that. What I said is that we're -- also on the question is that we have a dialogue around dividend covenants. And -- but it's not -- our approach is not just about dividend covenants, it's covenants in general. So number one, what's important for us is to have covenants that enables us to grow as a company and has a balance to what we're trying to do. We have covenants that we argue is a bit outdated for what we're trying to do today, where, for instance, large prepayments are kind of counted as debt on our balance sheet, although they are not repayable.

And then yes, with the new contract structures, you -- suddenly, you're not able to move forward, so we are having a dialogue on changing this. And the covenant restriction around dividend is one of those because, of course, it's important for us to be able to be efficient on our capital allocation. We believe it's good to have a balance where, yes, you have safety vis-a-vis lenders that lend us money that we're able to repay this. But there should also be a balance where you can reward your shareholders with dividends in periods where you have too much liquidity and nowhere to place it, which could be a potential for us as some of these prospects that we're looking at. You can't exactly calculate the time on when you can secure a project.

I think it's fair to say that the covenants we have on dividend, I think we see them as a bit outdated and they don't match anymore the kind of cash flow levels that we're going to produce in the coming years, and that's why we're taking that discussion. We see potential for more dividend and then we want to have that flexibility. And so it's a logical step to do. And now particular Opal comes on stream, it all becomes very predictable what we're going to produce in the coming years. So that's -- this is the right time to have that discussion.

And will Equinor reach FID on the Bay du Nord project this year? And if so, when is the EPC award to BW Offshore expected?

Yes, well, I mean, what happens on the Bay du Nord and what Equinor will do is really what Equinor has to communicate. But I'm sure that there will not be an FID on the project this year. That's not where the development is at the moment.

We're completing the pre-FEED that will be followed by FEED and then that results in an FID. And Equinor has a very solid process -- phased process to get to that decision. And no, that will not be -- that will not happen in the coming months. But it is a very interesting project that makes good progress. And we're -- both Equinor and ourselves are very happy with the progress we're making on the pre-FEED to define that project.

When BWO states an estimated commercial viability for floating ammonia at 3 to 5 years, what are the drivers behind this? Any triggers to look out for. And contract length is stayed at 10 to 20 years, what contract formats does BW Offshore foresee in this segment?

Yes, I can start. So we've spent quite a few years now on green ammonia, trying to produce ammonia on the floater by the use of renewable power from shore. And the power input and the cost of the FPSO unit and what people are willing to pay for it just doesn't stack up. There, we saw LOIs on 10-year contracts typically. So that's shelved for the moment. Obviously, we're monitoring the market. But we do see that could be more commercial in the shorter picture is producing blue ammonia with residual gas, problem gas from existing oil fields. So that's really what we're digging into now and that could be near term, and then we talk towards sort of 2030 in terms of real projects.

I guess your 15% return objective includes share price appreciation, but this doesn't depend exclusively on you, but rather the market. If you fall below the 15%, would you consider buybacks to accelerate the share price appreciation?

What I think you can say the buybacks is always -- is an alternative that we can use. Today, we pay dividends. But yes, the answer is yes, it will always be considered as an option to be -- well, if we can't use the capital we have in a good way to create returns. And maybe just to comment on the value creation in terms of 15% return. We can't really drive the share price. That's not how we operate.

We cannot operate the company on the basis of the share price. Share price appreciation is because it's driven by value creation overall and that people believe in what you do. That's the way I see it. What we focus on is create return on equity by directly delivering value through the projects we do. And then I mentioned earlier that our growth comes from that as well as the direct return investors do get when they receive dividends from us.

I would like to add, in general terms, we really will want to strike a balance, and we have been so far, and we continue to do so to have a predictable dividend ideally growing, but also grow the company. And that's striking a balance. But as we see time lines of these relatively big investments are hard to predict on the quarter or half year or even a year. So that's where we then have flexibility of what you do in terms of creating the returns. But it has to be that balance. We have a clear ambition to build back and grow the backlogs after the divestments, both in the FPSO space and later in the floating transition space and have a predictable dividend program.

Not directly a concern of BWO, but thinking of risks regarding Catcher, financial problems of Waldorf seems to be getting serious. Could that affect our business here?

No, I don't see that as an issue for us. That's maybe an issue or opportunity, I don't know, for the partners, for other parties. But the underlying parties are the operator, Harbour, and the performance of the field, but that's what we are exposed to. And that part, we fully understand.

Will BWO adopt the same EPC approach and partners as the Opal FPSO for the future engineering and construction projects?

No, I think what we're trying to say is rather the opposite. And Anders explained, that was perhaps a more traditional FPSO approach that we took where you control everything. And in a way that on paper, that will also create the highest level of profit. But it's also fair to say that you take the highest level of risk. And then, of course, when you do that in a time where everything works against you, which was the reality if you look at what the world had to face in the last 5 years, then you see that these risks are really too large for these large projects. And that's why we're doing now the opposite. We're really looking at how you shift this risk.

First of all, what can we shift to clients like inflation and commodity pricing, et cetera. but then also very much to what can we shift to partners. So how can we make effectively the projects smaller by carving out pieces of the project to partners and/or subcontractors. So it's really shifting the risk upwards, sideways and down. And that requires a different approach. It also requires actually a smaller organization, and that's the measures we took as well. The size of organization and for that matter, the cost of our organization has also reduced quite a bit.

So we're reducing our exposure to risk, but we're also reducing our exposure to cost of the organization in between projects. As we now have said a couple of times, these time lines are hard to manage, and we need to remain disciplined, and I think we have shown that we're disciplined. But it also means like you need to then kind of suck up the time that you sit in between and you need to do that with the most efficient organization that you can have. So that's the new model going forward, and that's quite different than what we have been doing in the past 5 years.

And following up on that, it has been discussed earlier in the Q&A, but could you give us the next -- sorry, the net expected cost outlay range after normalized compensation that you expect to have for chasing new FPSO projects and base this on an award every second year as you target?

Sorry, I'm not sure. Say it again.

Could you give us the net expected cost outlay range after normalized compensation you expect to have for chasing new FPSO projects?

Okay. So that's maybe a bit similar as the question earlier. So it sits somewhere between $5 million and $10 million. But the trend is also that it actually will be reduced because there's only so many competitors and everyone starts to become more demanding to the clients to fund this. And we see examples where clients fund everything. And with that, in that way, also drive a much better outcome of the tender process. So yes, I think, let's say, in average, about $5 million per opportunity, and we're chasing a couple of these per year.

Have you studied floating liquefied natural gas as another growth opportunity? And if yes, why has it been discarded from the strategic plan?

Yes, that's a good question, and it's not really discarded. So we are actually looking at it. And I mean, Fredrik's Group with New Ventures also looks at it, and we're having dialogues with potential partners or potential O&M opportunities. So it is a segment we see as a natural fit. But it's also fair to say that the segment has been promising for many years and still hasn't developed as we expected. But it's also true that there's a couple of companies now active there that are progressing. So this may be the time also that FPSO contracts could play a bigger role there, and then we will definitely look at that as well.

Thank you. So that was the last of the questions received online. But perhaps there are more questions in the room.

Maybe some new thoughts, yes.

Just for clarity, just looking ahead on your contracting models, are you veering more towards EPCI O&M and away from L&O?

Well, we're a bit agnostic on first lease and operate or EPCI and O&M. I mean it is true, of course, if projects get big, companies like us can't finance it on our own. So then we need equity partners and we need prepayments. But we have shown that we have -- we know how that works. We can pull that off even for very large projects. So it's not a lease and operate. It's -- there's no showstoppers there from our perspective. But what you do see is that client acknowledge that it is expensive capital if contractors try to finance for major oil companies. That's a natural kind of pressure on that model.

And -- but clients do generally value the competence that FPSO contractors bring, and that is the integration all the way from engineering into operations and all these steps in between and seamless start-up and operations, et cetera. So they like that offering still. And then you see that a way to address that is to do a combined EPCI and O&M contract and put real incentives in the O&M that drives the right behaviors in the EPCI, which is different than if you do a more like shipyard approach on EPCI and an O&M with an O&M contractor. But then the client has to connect all these things themselves and have to make sure that they get the right EPCI solution for the right O&M solution. So we're agnostic. We can do both.

Either way, our offering is this integration of engineering into operations and all these steps in between. And we see a market for both. And naturally, you see when the projects get bigger, it seems to trend more to EPCI and O&M and, for instance, more redeployment projects that are, you could argue, half the size capital-wise could be still more than lease and operate. But there's all kind of creativity there. So it's hard to say where it exactly goes. And -- but we are flexible. We have a lot of experience in financing projects. So we can actually be quite flexible towards our clients on whatever model works with that. And that's really our approach to take an open approach there and find a solution with the client.

And just one last one. Are you saying that you're focused on new builds and redeployments and not conversions?

Yes. Conversion, we've also done many conversions. So it's not that we can't do conversion. But for me, between redeployments and conversions, these words are used both. But it's a bit of a gray area because in many cases, the top sides are not very useful of an FPSO because you have to then find the exact field that works for these top side, but the hulls are. And then you do a hull, you redeploy a hull and you put top sides on versus you convert a tanker and you put the top side on. There's all not that much difference. I'd like to redeploy FPSO hulls because you have a better starting point than converting a tanker, but we can do it either way.

All right. There are no further questions from online.

Well, if there's no further questions, then I would like to thank everyone for your attendance and participation, and have a good day. Thank you.