Constellation Oil Services (COSH) Pareto Securities 31st Annual Energy Conference summary

Essential insights from presentations and announcements

• Constellation holds a leading position in Brazil, controlling about 25% of the ultra-deepwater (UDW) market, the largest globally, with a 44-year operational track record and a modern fleet of 7 offshore units.

• The company maintains 100% fleet commitment for 2024, with six rigs transitioning to new contracts in 2025, offering repricing opportunities and backlog security through 2028.

• 2024 priorities include full fleet utilization, efficiency improvements, and targeting $550–570 million in revenues and $185–195 million in adjusted EBITDA, leveraging economies of scale to offset labor and supply chain pressures.

• Innovation initiatives focus on emissions reduction, digitalization, and operational efficiency, including digital twin vessels, real-time monitoring, and advanced crew training.

• The company is actively negotiating to finalize remaining contracts within 6–9 months, aiming to optimize capital structure and continue deleveraging.

Industry analysis and market outlook

• Brazil is the most attractive floater market, with 35% of active floaters and 21% of projected global floater demand through 2030, driven by increasing deepwater and ultra-deepwater activity.

• CapEx for deepwater rigs in Brazil is expected to grow at a 15% CAGR from 2020–2027, with 76% allocated to ultra-deepwater and production forecasted to rise 41% by 2027.

• Oil production outlook supports current fleet utilization, with a robust pipeline of offshore projects and contract terms improving, including longer durations and pre-mobilization windows.

• Petrobras demand is shifting toward more intervention and Plugging & Abandonment (P&A) work, with Constellation’s diversified fleet positioned to address full-cycle needs from exploration to decommissioning.

• Dayrates in Brazil are reaching global levels, and Constellation’s utilization and contract tenors outpace peers, supported by strong partnerships and operational efficiency.

Forward-looking statements and financial scenarios

• Adjusted EBITDA could rise significantly if contracts are repriced to current market rates, with illustrative scenarios showing potential increases from $195 million to $617 million depending on dayrate assumptions.

• The company’s strong operational track record includes top uptime performance and efficient contract transitions, resulting in superior contract execution and additional revenues.

• Strategic focus remains on maintaining leadership, leveraging scale, and driving innovation and sustainability to capitalize on high barriers to entry in the Brazilian offshore market.