Paratus Energy Services Provides a Trading Update for Q1 2024

Source: www.gulfoilandgas.com 5/24/2024, Location: North America

Paratus Energy Services Ltd. ("Paratus") announced a trading update for the first quarter 2024 and updates on Paratus, its subsidiaries and associated companies ("Paratus Group" or the "Group").

Company overview
Paratus Energy Services Ltd. is the holding company of a group of leading energy services companies. The Group is primarily comprised of its wholly-owned subsidiary Fontis Energy, a 50/50 JV interest in Seabras (equity accounted), and a 24% ownership interest in Archer Ltd. (equity accounted).

1. Key Highlights
- Delivered adjusted EBITDA of $53 million on $109 million of gross revenue
- Exited the quarter with a cash balance of $126 million and $638 million in net debt
- Secured average contractual rates of $118 thousand/day at an average utilization of 99.6% and $205 thousand/day at an average utilization of 98.7% for - Fontis and Seabras, respectively
- Bolstered Seabras' backlog by $1.8 billion
- Appointment of Group CFO
- Share split effected to simplify capital structure
- Rebranding of SeaMex

1.1 Paratus Group
In the first quarter 2024, the Group, including the Company's share in Seabras JV, generated $109 million in gross revenue and $53 million in adjusted EBITDA, compared to $97 million and $43 million in the first quarter 2023, respectively. The full-year 2023 adjusted EBITDA stood at $227 million on the back of gross revenues totaling $430 million.

The Group closed the quarter with a cash balance of $126 million and $638 million in net debt, compared to $134 million and $632 million at year-end 2023, respectively. Compared to first quarter 2023, the cash balance has increased by $25 million whilst the net debt was reduced by $60 million (Q1 2023: Cash of $101 million and net debt of $698 million), largely driven by the retirement of senior secured notes at Fontis Energy.

1.2 Fontis Energy (previously SeaMex)
During the first quarter 2024, the Company's wholly owned subsidiary Fontis Holdings Ltd. ("Fontis Energy") and its subsidiaries generated $56 million in gross revenue and $27 million in EBITDA. Compared to the first quarter 2023, gross revenue and EBITDA increased by 30% and 81%, respectively, largely driven by downtime on the Courageous and Defender rigs experienced in the first quarter 2023. In 2023, Fontis Energy generated $205 million in gross revenue and $105 million in EBITDA.

In the first quarter 2024, Fontis Energy earned an average contractual rate of $118 thousand per day at an average utilization of 99.6% and ended the quarter with $419 million in contract backlog.

As of March 31, 2024, the accounts receivables balance was $222 million, up from $174 million at year-end 2023. Due to normal administrative requirements associated with its name change (as further described in Section 2.1), Fontis Energy was unable to submit new billings to its key customer for a period of six months, leading to a build in accounts receivable. Fontis Energy believes this is a non-recurring event and a normalization of collections will occur as the name change has now been completed. Beginning in March 2024, payments from its key customer resumed ahead of anticipated timing. Fontis Energy collected $16 million and $14 million in March and April 2024, respectively.

"Since the separation from Seadrill, the new management team has had a clear focus, solely dedicated to the Fontis business, and this has allowed us to build a stronger relationship with our key customer," said Raphael Siri, CEO of Fontis Energy. "Such improved cooperation was visible with the timely completion of the name change and follow-up payments received in a shorter time than anticipated. We will continue to work together to bring our accounts receivable to a more routine level."

1.3 Joint Venture in Seabras (figures reflect 100%)
Seabras UK Limited, a wholly owned subsidiary of Paratus, holds a 50% equity interest in Seabras Sapura Holding GmbH, its associated company, Seabras Sapura Participacoes S.A and their subsidiaries (collectively with Seabras UK Limited, "Seabras" or "JV").

During the first quarter 2024, Seabras generated $107 million in revenue (Q1 2023: $108 million) and $55 million in EBITDA (Q1 2023: $61 million). The reduction in EBITDA compared to the first quarter 2023 was largely due to a slight increase in off-hire days and modest cost increases.

In the first quarter 2024, Seabras earned an average contractual rate of $205 thousand per day at an average utilization of 98.7% and ended the quarter with $2.1 billion in contract backlog, pro forma for the contract awards announced on May 10, 2024.

As previously announced, pursuant to an agreed plan amongst the JV shareholders, Seabras has distributed and will continue to distribute all excess cash to its JV shareholders since April 2023. During the first quarter 2024, Paratus received $24 million from Seabras.


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