Bernt Omdal: Welcome to the presentation of our results for Q3. My name is Bernt Omdal. I am the CEO of the company. Together with our CFO, Vidar Jerstad, we will take you through this presentation. Sea1 Offshore's report for Q3 was released prior to the market opening today. In this presentation, we will cover the main highlights of the report, and we will refer to the presentation issued together with the financial report. At the end of the presentation, we will open up for questions. I suggest you post your questions in the chat function. Looking at the highlights for the quarter, we operated 15 fully owned vessels. In addition, we had four vessels under construction. All of our vessels in operation delivered a positive EBITDA margin.
Bernt Omdal: We had close to $80 million in revenue, and we delivered $40.3 million in EBITDA, which is equal to an EBITDA margin of 51%. We have a book equity ratio of 54%, and our net interest-bearing debt was $265 million at the end of the quarter. Revenue and EBITDA is up year on year, and that is supported by higher day rates. We continue to deliver safe and efficient operations in all regions, and that is a result of high focus on safety at all levels in the company. The utilization of the fleet in Q3 was 90%. Recently, Mr. Lundetræ resigned from his position as a director, and Mr. Svanevik is appointed as a new director. Vidar Jerstad will now give some more details regarding the results for the quarter.
Vidar Jerstad: Thank you, Bernt. Please note that if comparing the year-to-date results for 2026 and 2025, it is important to remember that the subsea vessel, Sea1 Spearfish, was sold in May 2025. The prior year-to-date results therefore include a gain on sale of $41.5 million, as well as the vessel's operating contribution. However, we will now concentrate on the Q3 results. Operating revenues for Q3 2026 were $79.7 million, an increase of 26% compared with the same quarter last year. Revenues increased across all segments, driven by higher charter rates and revenue contributions from Ben Viking and partially Odin Viking, which operated under bareboat contracts. Operating expenses were $32.4 million. The increase of $9.6 million in the quarter primarily reflects the previously mentioned bareboat arrangements. We also see effects from stronger currencies compared to US dollars.
Vidar Jerstad: Administrative expenses totaled $7 million compared with $6.4 million in the prior year quarter. The increase primarily reflects the weakening of the US dollar against the Norwegian, Brazilian, and Australian currencies, as a significant portion of the company's G&A expenses is denominated in these currencies. EBITDA increased by 18% to $40.3 million, up from $34.2 million. Depreciation and amortization expenses totaled $13.6 million. Operating profit was $26.6 million. Net financial expenses totaled at $5.3 million. Net profit for the shareholders for the quarter was $20.1 million, equivalent to $0.13 per share. This slide presents the operating margins for our four main reporting segments. The charts on the left compare Q3 performance with the same period last year, while those on the right show year-to-date performances. All figures exclude G&A expenses.
Vidar Jerstad: The anchor handling segment continued to perform strongly, with operating margins increasing by 50% in the quarter and 38% year to date. Operating margins in the subsea segment increased by 8% in the quarter. Year to date, the margin in the subsea segment is down. However, when excluding the margin of Sea1 Spearfish in 2025, operating margins for the remaining subsea fleet have improved by 7% year to date. Operating margins for our two Brazilian PSVs and two oil spill recovery vessels in Brazil decreased compared with same quarter last year. However, after adjusting for a reversal of crew costs in the prior year period, operating margins for these segments increased on both quarterly and year-to-date basis. Overall, underlying margin trends remain positive across all segments. This slide provides an overview of Sea1 Offshore's financial position at quarter end.
Vidar Jerstad: The book equity ratio increased to 54%, underscoring the company's continued strong performances. Gross interest-bearing debt stood at $301 million, while net interest-bearing debt was $266 million. The revolving credit facility of $150 million remained fully undrawn at quarter end, providing additional available liquidity. At quarter end, $23 million has been drawn under the company's $315 million newbuild financing facility. $85 million is available prior to delivery to fund yard installments, with the remainder to be drawn upon vessel delivery. This facility is fully independent of any commercial contract commitments. Overall, Sea1 maintains a solid balance sheet, strong liquidity, and financial flexibility. Now take a look at the cash flow year-to-date for 2026. We started the year with $86 million in cash. We have received $106 million from operations. We have paid net interest of $13 million.
Vidar Jerstad: We have invested $85 million in vessels, comprising of $36 million invested in the existing fleet and $49 million in the newbuild program. We have increased debt by $6 million. We have paid $63 million in dividend and ended up with $35 million in cash at the quarter end. Hans.
Bernt Omdal: Moving on to the contract backlog. Sea1 Offshore has a backlog of close to $1.1 billion, whereof $502 million is options. The largest part of our backlog is related to our subsea fleet, which represents 85% of our total backlog. For the remaining of this year, we have a firm backlog of $53 million. Our fleet now consists of 15 fully owned vessels, as listed on this slide. In addition, we have four offshore energy support vessels under construction, and we have eight vessels under our technical and commercial management. We now have two well intervention vessels. We have one offshore construction vessel. We have, as mentioned, four new buildings being built in China. We have six large anchor handlers. We have two PSVs. We have two oil spill recovery vessels and two fast crew vessels.
Bernt Omdal: In addition, we have eight anchor handlers on our technical and commercial management. Our four newbuilds are on schedule with regards to delivery time. The first two vessels, Sea1 Diamond and Sea1 Citrine, which you see on these pictures, are both launched and alongside the quay in Nantong. Delivery date is end of January for Sea1 Diamond and end of April for Sea1 Citrine. Both vessels will, after delivery, sail to Singapore for installation of ROVs. So far, no commercial commitments have been made. We are working on getting contracts in place. In case we do not find long-term contracts at favorable rates, we will concentrate on, call it well-paid short-term contracts. Moving on to the next slide, where we have listed vessels, offices, and area of operations as per today.
Bernt Omdal: The company has, as mentioned before, a very good global footprint, which is important for the utilization of the fleet. We will continue to move vessels around the world where we can perform safe operations based on sustainable conditions. For the anchor handler segment, there are mainly shorter contracts and campaigns. In Australia, we currently have three of our anchor handlers, that is Sea1 Aquamarine, Sea1 Emerald, and Andreas Viking, all operating on term contracts. We have Sea1 Sapphire and Sea1 Amethyst. They are trading the spot market in the APAC region. Avalon Sea is still operating in Canada. The rest of the anchor handler fleet is trading the spot market. We have one construction vessel in operation, and that is Sea1 Dorado. She is on a firm contract operating offshore Brazil.
Bernt Omdal: In Brazil, we also have the two well intervention vessels, Siem Helix 1 and 2, and they are both on long-term contracts with Petrobras as end client. Two PSVs in Brazil, that is Sea1 Atlas and Sea1 Giant, both on term contracts. For our smaller Brazilian fleet, as we call it, we have the two oil spill recovery vessels, Sea1 Maragogi and Sea1 Marataizes, both on term contracts with Petrobras. Then we have two smaller fast crew vessels, which are on long-term bareboat agreements. Just a few comments to the market. The geopolitical tension continues to shape our operating environment, and it creates demand and opportunities for our industry. For the construction support vessel market, long-term demand fundamentals remain strong, with subsea backlogs from leading EPCs at record levels. However, new vessels with delivery the next two years may moderate the day rates a bit.
Bernt Omdal: The anchor handler market was firm throughout the quarter. Spot activity continued to be volatile, and the market for anchor handlers is expected to remain cyclical and with some regional differentiations. Despite higher rates, the overall utilization remained moderate and is expected to be a challenge as we enter into the winter months. The global anchor handler market is expected to gradually improve in H2 2027, with some regional variations. Both APAC region and South America are softening a bit in the short term, but we are still positive about the market in these regions for the years to come. To summarize, we deliver a strong quarter with high activity. We continue to deliver first-class operations with excellent HSSEQ performance. Our newbuild program is on track, with the first vessel to be delivered January next year. We have a solid financial position.
Bernt Omdal: We have a strong backlog with quality clients, and we have a positive long-term market outlook. That was the end of the presentation, and we will now open up for questions. All right, I see we have got some questions posted in the chat function. First one is, "Which company will operate the ROVs on the newbuilds?" We have signed a deal with Oceaneering for Sea1 Diamond, and we are working on another deal for the second vessel as we speak. Then there is another question, "Can the newbuilds be used as well intervention vessels?" Well, they are not built as a well intervention vessel, but you can put on, call it a mobile package on the deck, and then you could do some light well intervention work. Then there is a question regarding increase of utilization for the anchor handlers. How can that be done?
Bernt Omdal: I mean, you can increase the utilization, but we are not living off utilization alone. I mean, it is a balance between utilization and day rates. We could, of course, increase the utilization by lowering the day rates. That doesn't mean that we will get a better result. So that is a balance. Another question here, "Do you see any further consolidation of the anchor handler market, ref buying up vessels?" There are still a few candidates out there that could be of interest to the company. But so far, we have had no success in further consolidation. But of course, the market needs a consolidation to get a healthy market, to put it that way. Then there is another question regarding the newbuilds.
Bernt Omdal: If the newbuilds are traded in the spot market, can Sea1 provide services directly to energy companies, or do you depend on a contractor to do that?" Well, Sea1 is a ship-owning company. We supply a working platform in terms of our vessels, so we are not into the subsea service markets ourselves.
Vidar Jerstad: We have one question regarding yard installments for the newbuilds and financing. In the next quarter, in Q4, we will pay around $50 million in yard installments, and $25 million of those will be financed by the newbuild debt facility. All payments beyond is fully financed by the newbuild facility.
Bernt Omdal: Then we have one more question regarding the anchor handlers. "Is it possible to relocate some of the anchor handler vessels from the North Sea to Brazil? Why or why not?" Well, it is possible to relocate them, but we are not sailing them over to trade as spot markets, which is not functioning very well in Brazil. We will relocate vessels to Brazil if we have a term contract in place. Then there is one more question regarding the newbuilds. "Are the newbuilds accepted in Brazil?" Yes, they are accepted in Brazil, and we also have REB capacity in our company, meaning that we can reflag the vessel to Brazilian flag, which is an advantage compared to some of our competitors. One more in here. Do the newbuilds have a moonpool? Yes, they have a moonpool.
Bernt Omdal: Where do you see current CSV day rates, and what is an acceptable term rate for the newbuilds? Well, we have seen fixtures close to $75,000 to $80,000 a day. Our feeling is that those numbers are on the low side, so we are targeting higher day rates than such. Then there is one more question here regarding anchor handlers. You mention in the report that you expect the next 6 to 9 months could be more challenging for anchor handlers, with more vessels in the North Sea and relatively few projects across the region. Could you give some color on how you see this playing out in terms of rates and utilization? Maybe you can answer that, Andreas.
[Company Representative] (Sea1 Offshore): Yes. Thank you, Bernt. So, of course, with quite much more vessels in the North Sea this autumn than we have seen earlier this year, we see pressure on the rates, and we do not think it will start improving before maybe closer to Q2 next year. So, we just have to trade the market and get the most out of it as it is now. But we will expect more activity then for project side, and also the rig activity on UK will increase from H2 2027.
Bernt Omdal: Thank you. Then there is one question regarding the Avalon Sea. What is the status and prospect for Avalon Sea? Avalon Sea is a purpose-built vessel anyway for ice management. She is currently in Canada, and we are bidding for some work with commencement early next year. Then one question with regards to the potential for Sea1 Dorado. We are on a firm contract that expires in April next year. We are in negotiations for an extension there, and we are also bidding for other work elsewhere in the world. Yeah, that was the last question in the chat function here. If there is no further questions, give it half a minute more to see if there are more questions coming up. No. So, with no further questions, we will end this session, and we thank you all for attending. Have a good day. Thank you.
