Subsea 7 announced on 1 June that it emerged as the winner of a Petrobras competitive tender process for four pipelay support vessels (PLSVs) long-term contracts commencing in 2025. The day-rate contracts are much-anticipated extensions, since all four vessels are already deployed on time-charter contracts with the Brazilian oil company.
The Oslo-listed (SUBC.OL) subsea and offshore renewables specialist reported that the contracts have a “combined value of over $1.25 billion”. However, the total amount is likely closer to $1.4 billion, according to market sources. This is on top of the “super-major” contract announced only 4 days earlier, which means a “contract as being over $1.25 billion” in Subsea 7 parlance. That EPCI contract, covering the rigid SURF scope of the Buzios-9 project, is also understood to be valued at close to $1.5 billion. In total, the company grew its orderbook in Brazil by almost 3 billion dollars in less than one week. The company’s global orderbook stood at $10.4 billion by the end of the first quarter and is expected to blow past record-high levels in the next public update.
Subsea 7 came up with the “super-major” contract category this year after finding that “$750 million as a cut-off point on some of the very larger subsea projects is probably a bit low”, CEO John Evans told analysts on 25 April. Jefferies analyst Mark Wilson inquired if a new “category of super margin contracts” would be disclosed as well. After years of thin margins under crisis mode, the subsea industry is currently in a much better shape. Subsea 7 has delivered a still weak but improving 12% EBITDA margin in Q1 2024, but is guiding an 18-20% adjusted EBITDA margin in 2025. The new PLSVs contracts will help push the numbers up. Bård Rosef and Jørgen Opheim of Pareto Securities estimate EBITDA margins at around 70%.
The PLSVs Seven Rio, Seven Cruzeiro and Seven Sun are getting three-year extensions, while Seven Waves has been awarded a four-year contract. The vessels were built between 2014 and 2016 by Dutch shipbuilder Royal IHC.
Maritime South 