REVENUES
(segment, USDm)
430
418
452
227
233
252
SHAREHOLDER RETURN
(since June 2024 IPO, USDm)
FIRM BACKLOG
(USD billion)
FLEET UTILIZATION
EBITDA
(segment, USDm)
452 132
~1.2
99%
252
ANNUAL REPORT
2024
100
50
200
100
300
150
400
200
500 300
250
2022 2023 2024 2022 2023 2024
Contents
Highlights and Key figures 1
Fleet 2
Board of Director’s Report 3
Company overview 3
Operational review 5
Financial statement summary 5
Corporate Governance 7
Enterprise risk management 11
QHSE performance 13
Organization and personnel 14
Board of Directors 15
Management 16
Main events since year-end 17
Responsibility Statement 18
Consolidated Financial Statements 19
Auditor’s Report 44
Alternative Performance Measures 50
1
Highlights and Key figures
Paratus
1
delivered exceptional operational and financial results in 2024, highlighted by a fleet utilization rate of around 99%
and financial results that surpassed initial expectations. Combined segment revenues reached $452 million
2
, reflecting a 5%
increase from 2023, while adjusted EBITDA grew by 8% to $252 million
2
. Shareholders benefited from consistent cash returns,
with consecutive quarterly cash distributions of $0.22 per share in Q2 and Q3, followed by a Q4 distribution paid in March
2025. Further strengthening its financial flexibility, Paratus successfully issued $500 million in bonds, enabling the partial
refinancing of its 2026 senior secured notes (“2026 Notes”). Additionally, the Company completed its uplisting from Euronext
Growth Oslo to the Euronext Oslo Børs, enhancing Paratus’ market visibility, improving trading liquidity, and expanding investor
access.
Key highlights from 2024 and notable post-year end developments include:
• Finalized the transition from Seadrill and established Paratus as a fully independent operational organization.
• Strengthened capital structure by issuing new $500 million five-year bonds, partially refinancing 2026 Notes, and
extending the majority of maturities to 2029.
• Completed IPO and raised $75 million in equity, followed by an uplisting to Euronext Oslo Børs.
• Invested $12 million (pro-rata share) in Archer’s private placement to support a strategic acquisition; Archer is expected
to deliver cash returns in 2025 following its announcement of shareholder distributions.
• Added $2.1 billion
3
of new backlog in the Seagems JV by securing new 3-year contracts across all six vessels.
• Achieved fleet utilization of approximately 99%, with financial results exceeding initial full-year guidance.
• Combined segment revenues increased 5% year-over-year to $452 million
2
, while EBITDA grew 8% to $252 million
2
.
• Collected $209 million in Mexico in early 2025 through a receivable monetization agreement.
• Maintained quarterly cash distributions of $0.22 per share, including declared Q4 2024 distribution in line with Q2 and Q3.
• Post year-end 2024, completed share buybacks of around $22 million
4
under the previously announced $100 million
authorization.
• Signed a 78-day contract extension for Oberon, while receiving notice of early termination options exercised for
Courageous and Intrepid, both subject to a 365-day notice period.
1
Unless the context indicates otherwise, “Paratus,” the "Company," "we," "us," "our," and similar terms, all refer to Paratus Energy Services Ltd., while “Paratus
Group” or the “Group” refers collectively to the Company and its consolidated subsidiaries and its ownership in Joint Ventures (“JV”). All references to "USD" and
"$" in this report denote U.S. dollars unless indicate otherwise.
2
Combined segment results are presented in accordance with management reporting. In this context, Seagems’ financial results are presented using proportional
consolidation of accounting. However, in our financial reporting under US GAAP, Seagems’ financial results are reported using the equity method, presented under
“Share in results from joint ventures.
3
Figures shown at 100% Seagems Joint Venture level.
4
As of 16 April 2025.
December 31, December 31, December 31, December 31,
(In $ millions, unless stated otherwise) 2024 2023 2024 2023
Selected financial figures
Operating revenues 408.7 381.1 213.9 166.8
Operating income 168.9 118.1 166.9 101.0
Net income/(loss) 31.6 (22.8) 31.6 (22.8)
EPS, basic ($ per share) 0.20 (0.15) 0.20 (0.15)
Cash and cash equivalents 98.8 133.8 86.4 114.7
Contract revenues 451.5 430.2
Adjusted EBITDA 251.6 233.4
Capex 31.9 36.9
Net debt 627.7 599.0
Technical utilization rate* 98.8% 98.5%
Contract backlog 1,150.8 583.5
* As of December 31, 2024, and updated for subsequent events (market indexation of Fontis dayrates in February 2025, the 78-day contract
extension for the Oberon and partial contract terminations for the Courageous and Intrepid in Q1 2025).
Alternative performance measures, Other
Consolidated US GAAP figures
Combined Segment figures
2)
Combined Segment figures
2)
2
Fleet
Fleet status report 2024.
Vessel / Rig Name Build Year Location Client Contract Start Contract End
Seagems
Diamante 2014 Brazil Petrobras
October 2021
April 2025
March 2025
April 2028
Topazio 2014 B
razil Petrobras
March 2022
April 2025
April 2025
April 2028
Esmeralda 2015 B
razil Subsea 7
Petrobras
December 2024
May 2025
May 2025
May 2028
Onix 2015 B
razil B rava
Petrobras
April 2024
September 2025
August 2025
September 2028
Jade 2015 Brazil Petrobras July 2024 July 2027
Rubi 2016 B
razil Petrobras June 2016
May 2025
May 2025
May 2028
Fontis Energy
Oberon* 2013 M
exico Large NOC March 2020 January 2026
Titania FE 2014 Mexico Large NOC May 2024 May 2025
Intrepid** 2008 Mexico
Large NOC March 2020 February 2026
Courageous** 2007 Mexico
Large NOC March 2020 February 2026
Defender 2007 Mexico Large NOC March 2020 January 2026
* Reflects 78-day extension agreed upon in Q1 2025.
** Reflects the early contract terminations for the Courageous and Intrepid received in Q1 2025.
3
Board of Director’s Report
Company overview
Introduction
The legal and commercial name of the Company is
Paratus Energy Services Ltd. The Company is an
exempted company limited by shares incorporated and
existing under the laws of Bermuda pursuant to the
Bermuda Companies Act. The Company was incorporated
on 14 March 2018 and was listed on the Euronext Oslo
Børs on 13 November 2024.
Business operations and principal activities
Paratus Energy Services Ltd. is a holding company of a
group of energy services companies and is comprised of
its wholly owned subsidiary Fontis
Holdings Ltd. and its
subsidiaries (collectively "Fontis” or “Fontis Energy”),
50/50 joint venture interest in Seagems joint venture,
comprising of Seabras Sapura Holding GmbH and
Seabras Sapura Participacoes SA, (collectively
“Seagems” or the “Seagems JV") and its 23.8% ownership
in Archer Limited ("Archer"). The Company is listed on the
Euronext Oslo Børs under the ticker “PLSV”.
Fontis Energy
Fontis was established in 2014 and is an offshore driller
with a fleet of five high-specification jack-up rigs. The fleet
comprises two Friede & Goldman (F&G) JU-2000E
and
three LeTourneau Super 116-C rigs, all located in Mexico
under contracts with a large state-owned petroleum
company. These rigs are currently leased for use in the
Gulf of Mexico for the drilling of hydrocarbons. Fontis has
had a strong, long-standing commercial relationship with
its client, with its five jack-ups working for this company
since 2014.
Fontis has been a wholly owned subsidiary of the
Company since 2 November 2021.
Fontis' fleet consists of five jack-ups: Courageous,
Defender, Intrepid, Oberon, and Titania FE.
Seagems
Seagems was established in 2011 and is a subsea
services company, with a fleet of six multipurpose pipe-
laying support vessels (“PLSV”) which are specialized
vessels designed for ultra deep-water installation of
flexible pipelines and equipment that connect offshore oil
and gas production wells with FPSOs and other facilities.
All of Seagems' vessels currently operate under long-term
contracts in Brazil. Seagems is a 50/50 joint venture
between the Company and Sapura Energy Berhad
(“Sapura”), a global integrated energy services and
solutions provider.
Seagems' fleet consists of six PLSVs: Diamante, Topazio,
Esmeralda, Onix, Jade and Rubi.
Seagems is a standalone organization and is not
operationally dependent on Paratus or Sapura. The
Company accounts for its share of the Seagems JV using
the equity method and is not a consolidated subsidiary of
Paratus. However, given that the Company’s primary
operations revolve around its ownership interests in
Seagems, the business operations of Seagems is included
as part of the Group's overall business and principal
activities.
Archer
Archer was established in 2007 and is a global oil services
company with a heritage in drilling and well services that
stretches back over 50 years, with a strong focus on safety
and delivering the highest quality products and services.
The group operates in about 40 locations providing drilling
services, well integrity and intervention, plug and
abandonment and decommissioning to its upstream oil
and gas clients. Archer has been listed on the Euronext
Oslo Børs since 2015 under the ticker symbol "ARCH".
The Company currently holds approximately 24%
ownership interest in Archer, which is accounted for under
the equity method.
Strategy and objectives
The Company is established as a long-term platform for
investing into the energy services industry. The
overarching business model is to be an active and value-
oriented owner of portfolio companies while pursuing and
executing accretive investment opportunities. The
Company's principal objective is focused on delivering
returns on invested capital.
Maintain a robust and efficient financial position
The Company seeks to maintain a robust and efficient
capital structure to ensure financial stability and sufficient
liquidity to withstand general sector volatility. The
Company is of the opinion that a balanced capital structure
provides flexibility to pursue near-term growth
opportunities and allows the Company to capitalize on a
dynamic market environment. To maintain the financial
strength and flexibility to fund growth opportunities, we will
look to internally generated funds and to capital markets to
strengthen the Company’s balance sheet.
Maintain a high-quality and diversified asset portfolio
The Company actively pursues accretive investment
opportunities that align with its existing portfolio or can
form the basis of new growth avenues within the offshore
oil and gas services industry. In Paratus' view, the quality
of the current fleet and operations, combined with long-
standing commercial relationships with the relevant
national oil companies (NOC) position the Group
competitively within the industry. Additionally, high-
specification and modern assets provide superior and
more efficient operational performance.
4
History and important events
The following below provides an overview of key events in
the history of the Company:
2011
Seabras JV (renamed to Seagems in 2024) is formed as a
50/50 joint venture between Seadrill and Sapura to build
and charter multipurpose PLSVs to Petrobras. The JV
expands Seadrill’s oilfield services in Brazil together with
the experienced oil services partner Sapura.
The first contracts awarded were 5-year contracts for three
PLSVs in Brazil with Petrobras and started in 2014.
2014
Seadrill establishes SeaMex JV in 2014 with Fintech
Advisory as 50/50 owners for the purpose of owning and
managing the jack-ups working for a large state-owned
petroleum company in Mexico, as well pursuing further
opportunities in Mexico and the rest of Latin America.
2018
Seadrill New Finance Ltd. (renamed to Paratus in 2022) is
incorporated in Bermuda to serve as a holding company
within the reorganized Seadrill corporate structure
following Seadrill’s first Chapter 11 restructuring, which
included 50% stake in Seagems JV, 50% stake in SeaMex
JV, 46.6% stake in Seadrill Partners and a minority stake
in Archer.
2021
Seadrill New Finance Ltd. enters a restructuring support
agreement with noteholders to amend and extend the
terms of the secured notes. The transaction involves
refinancing debt, issuing new secured notes, and
ultimately the sale of SeaMex assets to a new subsidiary,
SeaMex Holdings Ltd. (renamed to Fontis in 2024), a
wholly owned subsidiary by Seadrill New Finance Ltd.
Seadrill Partners emerged from its own Chapter 11
restructuring, which eliminated Seadrill New Finance Ltd.’s
ownership stake in Seadrill Partners.
2022
Seadrill New Finance Ltd. filed for voluntary Chapter 11
bankruptcy in order to implement the restructuring
agreement through a prepackaged Chapter 11 plan and
announced on 12 January 2022 that it had successfully
received approval from the U.S. Bankruptcy Court for the
Southern District of Texas for its Chapter 11 restructuring
under the plan, which it emerged from on 20 January 2022.
The key terms of the plan included transferring 65% of
equity ownership of Seadrill New Finance Ltd. to
noteholders and reinstatement of the notes (without any
discount on the outstanding notional amount).
Seadrill New Finance Ltd. was renamed Paratus Energy
Services Ltd. Pursuant to the Chapter 11 plan, Seadrill
retained 35% ownership of Paratus, with the remaining
65% distributed to Noteholders.
2023
Seadrill reaches agreement to sell its remaining 35% stake
in Paratus to a group of existing shareholders, and its
management incentive deed whereby Seadrill would be
entitled to receive a 5% fee on any proceeds arising out of
a liquidity event above certain level. The Company
subsequently re-acquired the management incentive deed
from the shareholders by issuing common shares valued
at $13 million.
Paratus subscribes to $15.5 million in new equity and
converts subordinated loan to equity in Archer, increasing
the Company’s ownership to approximately 24%.
Fontis retires $48 million balance remaining of its $219
million Fontis Notes which were issued in 2021.
Outlook
Of the total fleet (see fleet status page 2), Paratus has 10
assets contracted into next year or beyond, and the
majority of contracts extend into 2027 or 2028. The
Company, including its 50% share in Seagems, holds a
total backlog of approximately $1.2 billion, with the vast
majority concentrated in the PLSV segment, where from
mid-2025 the remaining contract duration averages
around 3 years.
Within Fontis, all rigs, except for the Titania, are contracted
into 2026. While Paratus anticipates that increased drilling
activity will be necessary to support its client’s production
goals in Mexico, the Company continues to explore
opportunities both within and beyond the region. However,
the Company expects lower average contractual dayrates
in 2025 due to a general weakening of the global jack-up
market, which will impact the market index mechanism for
existing contracts. In contrast, Fontis’ dayrates increased
by 15% in 2024 from contractual floor rates, benefiting
from a stronger jack-up market. This increase, however, is
expected to be reversed in 2025.
For the PLSV operations in Brazil, the outlook continues to
be supported by sustained offshore development and
growing demand for subsea infrastructure. As operators
advance both new and existing projects, the need for
reliable and efficient pipeline installation is expected to
drive stable vessel utilization. As of the reporting date, all
Seagems PLSVs are under long-term contracts extending
into 2027 and 2028. The average dayrate for the fleet will
increase significantly once the remaining five PLSVs
transition to their new contracts with Petrobras during
2025.
The Company is continuously monitoring developments to
plan and respond to current and future economic
environments.
5
Operational review
The following operational review is based on management
reporting as defined in the alternative performance
measures (“APM”) section of this report. See also Note 4
Segment information.
The Group, including the Company’s share in Seagems,
reported combined segment contract revenues
(“revenues”) of $452 million and adjusted EBITDA
(“EBITDA”) of $252 million, up from $430 million and $233
million, respectively in 2023.
Fontis
Fontis generated contract revenues of $245 million (2023:
$205 million). The revenue increase was primarily driven
by the recognition of variable revenue from previously
unbilled services agreed with the customer ($23 million)
and higher dayrates following market indexation in
February and August 2024 ($12 million). Furthermore, the
2024 revenues were impacted by the planned downtime
for the Courageous due to installation of a new crane ($7
million), while the revenues for 2023 were impacted by the
unplanned downtime for the Courageous and Defender in
parts of early 2023 ($9 million).
Operating expenses ("Opex") totaled $96 million in 2024
(2023: $90 million), while general and administrative
expenses ("G&A") amounted to $5 million (2023: $7
million). The 2023 Opex and G&A were impacted by
management services fees from the Company’s previous
manager, Seadrill, as well as certain transition-related
adjustments and timing effects that favorably impacted
2023 figures. The 2024 figures reflect increased personnel
and other costs driven by the build-up of the Fontis
organization.
EBITDA was $144 million, up from $108 million in 2023,
primarily due to the variable revenue recognized in 2024.
In 2024, Fontis achieved an average dayrate of $128.5
thousand per day (2023: $115.8 thousand per day) and an
average technical utilization of 99.5% (2023: 99.5%),
closing the year-end with a contract backlog of $195 million
(2023: $411 million).
At year-end 2024, the notional amount of the accounts
receivable was $347 million, up from $175 million in 2023.
During 2024, Fontis collected $108 million (2023: $171
million) from its client in Mexico. In early 2025, Fontis
entered into an agreement with a leading international
bank to facilitate payment to Fontis from the client in
Mexico of $209 million of outstanding overdue invoices
with its client in Mexico (the “Receivables Payment”). The
Receivables Payment was subject to an undisclosed
upfront fee, which was well below 10% of the gross
receivables amount. On February 5, 2025, Fontis
5
Figures shown at 100% Seagems Joint Venture level.
successfully received the full $209 million payment under
this arrangement. Also post year-end 2024, Fontis signed
a 78-day contract extension for Oberon, while receiving
notice of early termination options exercised for
Courageous and Intrepid, both subject to a 365-day notice
period.
Seagems
The Company’s 50% share in the JV contributed with $207
million in contract revenues (2023: $225 million) and $120
million in adjusted EBITDA (2023: $132 million). The
revenue decrease compared to 2023 was driven by lower
dayrates mainly related to Onix operating full-time with
Petrobras in 2023, while in 2024, Onix mainly operated for
Brava (formerly Enauta) at a lower day rate during the
period. Furthermore, the revenues in 2024 were impacted
by fewer operational days mainly due to the off-hire period
of Onix and Jade between spot contracts, as well as days
spent on the in-water survey (IWS) of Diamante,
Esmeralda Topazio and Rubi and days of maintenance cap
of Onix and Jade.
Reported Opex was $62 million (2023: $67 million), while
G&A was $13 million (2023: $16 million). Cost decrease
compared to 2023 was mainly due to reclassification of
certain expenditures, from Opex to capitalised
expenditures (“Capex”) and reimbursement of an
insurance claim for Esmeralda, partly offset by a
withholding tax reimbursement in 2023.
The JV achieved an average dayrate of $200.4 thousand
per day (2023: $211.3 thousand per day) and an average
technical utilization of 98.3% (2023: 97.7%). The lower
average dayrate in 2024 compared to 2023 was mainly
driven by the Onix as explained above and foreign
exchange fluctuations, partly offset by Esmeralda
operating at higher average dayrates in Q4 2024. The
Seagems JV had a contract backlog of approximately $1.9
billion
5
(2023: $345 million
5
).
During 2024, Seagems JV provided cash distribution of
$98 million to Paratus (2023: $114 million).
In Q4 2024, Seagems secured a $30 million capex funding
from a local Brazilian bank to be paid over 3 years.
Financial statement summary
The following financial summary is based on our financial
reporting under US GAAP and should be read in
conjunction with the financial statements and
accompanying notes provided elsewhere in this report.
Statement of operations
Reported net income in 2024 was $32 million compared to
a net loss of $23 million in 2023.
6
Operating income was $167 million, up $66 million
compared to $101 million in 2023. The increase in
operating income was mainly driven by higher revenues
and higher income from equity method investment in
Seagems. Additionally, the 2023 operating income was
impacted by the accounting effects from the termination of
the management incentive deed ("MID") with Seadrill in Q2
2023, of which $13 million was recognized as other
operating expense.
Operating revenues were $214 million, up $47 million,
compared to $167 million in 2023. The revenue increase
was primarily driven by the recognition of variable revenue
from previously unbilled services agreed with the customer
($23 million), higher dayrates following market indexation
in February and August 2024 ($12 million), and lower
amortization of favorable contracts ($8 million).
Furthermore, 2024 operating revenues were impacted by
the planned downtime for the Courageous due to
installation of a new crane ($7 million), while the operating
revenues for 2023 were impacted by downtime for the
Courageous and Defender in parts of early 2023 ($9
million).
Opex totaled $96 million in 2024 (2023: $94 million), while
G&A amounted to $17 million (2023: $10 million). The
2023 Opex and G&A were impacted by management
services fees from the Company’s previous manager,
Seadrill, as well as certain transition-related adjustments
and timing effects that favorably impacted 2023 figures.
The 2024 figures reflect increased personnel and other
costs driven by the build-up of the organization. G&A costs
in 2024 were also significantly impacted by transaction
costs incurred in connection with the placement of bonds
and activities related to the IPO and subsequent uplisting
to Euronext Oslo Børs.
Depreciation was $18 million ($3 million increase),
compared to $15 million in 2023.
Share in results from Joint Venture was $85 million, up
from $67 million in 2023 and represents the Company’s
50% share in the Seagems’ net income (net of taxes).
Net financial expense was $109 million, compared to $100
million in 2023. The increase in net financial expense of $9
million compared to 2023 was primarily due to the partial
redemption of the 2026 Notes ($34 million) and share in
net loss from Archer, partially offset by an accounting gain
related to the conversion of Archer debt in 2023 and
unrealized foreign exchange gain from the revaluation of
provisions for uncertain tax positions ("UTP") in Mexico,
compared with an unrealized foreign exchange loss
recorded in 2023.
Tax expense was $27 million, compared to $24 million in
2023.
Allocation of the results
The Board approved quarterly cash distributions of $0.22
per share to shareholders in connection with its 2024
interim reporting for the second, third, and fourth quarters,
with payments made in September and December 2024,
and March 2025, respectively.
Under the Bermuda Companies Act, dividends cannot be
paid if there are reasonable grounds for believing that (a)
The company is, or would after the payment be, unable to
pay its liabilities as they become due; or (b) The realisable
value of the company’s assets would thereby be less than
its liabilities. The Company has acted within the rules in the
Bermuda Companies Act when declaring cash
distributions to shareholders.
Cash flow
Consolidated cash and cash equivalents (Paratus and
Fontis) at year-end 2024 was $86 million (year-end 2023:
$115 million).
Net cash used in operating activities was $28 million,
compared to net cash generated from operating activities
of $17 million in 2023. This decrease was primarily due to
increase in receivables in Mexico relative to collections,
partly offset by higher net income.
Net cash from investing activities was $78 million, mainly
related to distributions from Seagems to Paratus of $98
million, partly offset by additions to drilling units of $8
million and investment of $12 million (its pro-rata share) in
a private placement of Archer. In comparison, net cash
from investing activities in 2023 was $87 million, consisting
of distributions from Seagems to Paratus of $114 million,
partly offset by additions to drilling units of $12 million and
purchase of marketable securities in Archer of $16 million.
Net cash used in financing activities in 2024 was $75
million, comprised of net proceeds from the private
placement in June 2024 of $73 million, interest income of
$5 million, interest payments of $67 million, cash
distribution to shareholders of $74 million and transaction
costs of $12 million related to the bond issuance in June
2024. In 2023, financing activities comprised of repayment
of external loan at Fontis of $48 million, interest income of
$1 million and interest payments of $35 million.
Capital structure
The Company actively manages its capital structure to
ensure it maintains sufficient funding to support its
strategic business objectives and maximize shareholder
value. If required, the Company may adjust its capital
structure through various measures, including equity or
debt transactions, asset restructurings, or other strategic
initiatives. Primary sources of liquidity include existing
cash reserves and operating cash flows from its operating
entities, including distributions from Seagems. Additionally,
the Company relies on debt financing and may in the future
rely on equity financing. To proactively manage liquidity,
7
the Group prepares, reviews, and updates cash flow
projections regularly. These projections incorporate
various scenarios, including fluctuations in receivables
collections in Mexico, to ensure sufficient funding. The
Board of Directors and executive management utilize
these insights for informed decision-making.
The Group closed the year-end 2024 with a cash balance
of $99 million and net debt
6
of $628 million, including the
Company’s share in Seagems' cash balance and net debt
of $12 million and $48 million, respectively. In comparison,
the Group closed year-end 2023 with a cash balance of
$134 million and net debt of $599 million, including the
Company’s share in Seagems' cash balance and net debt
of $19 million and $32 million, respectively. The Group’s
interest-bearing debt totalled $776 million, comprised of
$715 million at Paratus plus $61 million in Seagems
(Company share) (2023: $767 million, comprised of $715
million and $51 million, respectively).
The Net Leverage Ratio was 2.5x
6
at year-end 2024
(2023: 2.6x
6
), or 1.7x
6
adjusted for the receivables
monetization agreement in February 2025.
Bond issue in June 2024
In June 2024, the Company successfully placed a $500
million senior secured bond issue under the bond loan
“9.50% Paratus Energy Services Ltd USD 500,000,000
Senior Secured Bond Issue 2024/2029” (“2029 Bonds”).
The purpose of the bond issue was to partially refinance
the 2026 Senior secured notes (“2026 Notes”). The 2029
Bonds were listed on Nordic ABM in December 2024.
Private placement in June 2024
In June 2024, the Company applied for admission to
trading on Euronext Growth Oslo. On 24 June 2024, the
Company announced that it has successfully completed a
$75 million private placement through the conditional
allocation and issuance of 15,309,059 new shares at the
NOK equivalent of $4.90 per share.
Refinancing in July 2024
In July 2024, the proceeds from the bond issue in June,
were used to partially refinance the 2026 Notes. As a
result, the remaining aggregate principal amount under the
2026 Notes Indenture is approximately $215 million.
Going concern
The Company regularly evaluates its financial position,
cash flow forecasts and its compliance with financial
covenants by considering various scenarios, including
fluctuations in receivables collections in Mexico.
The Company’s Board of Directors conducted a review of
the going concern assumption considering all relevant
information
available up to the date the Paratus
consolidated financial statements are issued and taking
into account all available information about the future
6
See definition of Net Debt and Net Leverage Ratio under the APM section.
covering at least 12 months from the issuance date of the
annual report. The Board of Directors’ review included, in
particular, assessment of the Company’s projected cash
reserves and access to financing arrangements,
considering debt maturities and its operational outlook and
contract duration, while maintaining appropriate headroom
in respect of sound equity, liquidity and financial covenant
compliance throughout the assessment period.
Following its review, the Board of Directors confirmed that
the requirements of the going concern assumption are met
and that these financial statements have been prepared on
that basis.
Corporate Governance
Introduction to Corporate Governance
Paratus Energy Services Ltd. is an exempted company
limited by shares, incorporated in Bermuda and listed on
the Euronext Oslo Børs. The Company is subject to
Bermuda laws and regulations, including the Companies
Act 1981 of Bermuda (the "Bermuda Companies Act"), as
well as regulatory requirements for foreign companies
listed on the Euronext Oslo Børs.
Paratus has adopted a corporate governance policy (the
"Corporate Governance Policy"), approved by the Board of
Directors (the “Board”), which is based on the Norwegian
Code of Practice for Corporate Governance, issued by the
Norwegian Corporate Governance Board on 14 October
2021 (the "Norwegian Code of Practice"). The Norwegian
Code of Practice applies to Paratus to the extent that the
provisions of this Norwegian Code of Practice do not
conflict with Bermuda law and legislation.
The Board is responsible for ensuring that the Company
maintains sound corporate governance practices. The
Company recognizes the importance of, and is committed
to, maintaining good corporate governance across the
Group. It aims to comply with the recommendations of the
Norwegian Code of Practice to the extent possible,
however, certain deviations are necessary due to
differences in corporate governance practices and legal
principles applicable to Bermuda companies. These
deviations are set out below.
The Norwegian Code of Practice is available in its entirety
at the Euronext Oslo Børs website
(www.euronext.com/nb/markets/oslo
) and the website of
The Norwegian Corporate Governance Board
(
www.nues.no).
Implementation and reporting on Corporate
Governance:
“Business”: In accordance with common practice for
Bermuda companies, the Company's Bye-laws do not
8
include a specific description of its business. According to
the Memorandum of Association, the objects for which the
Company was formed and incorporated are unrestricted.
As a Bermuda incorporated company, the Company has
chosen to establish the constitutional framework in
compliance with the common practice of Bermuda and
accordingly deviates from section 2 of the Norwegian Code
of Practice.
“Equity and dividends”: In accordance with Bermuda
law, the Board is authorised to exercise the power of the
Company to acquire its own shares to be held as treasury
shares, and to issue any unissued shares within the limits
of the authorised share capital. These authorities are
neither limited to specific purposes nor to a specific period
as recommended in section 3 of the Norwegian Code of
Practice.
The Board will ensure that the Company has a capital
structure that is appropriate to the Company’s objective,
strategy and risk profile, thereby ensuring that there is an
appropriate balance between equity and other sources of
financing. The Board will continuously assess the
Company’s capital requirements related to the Company’s
objective, strategy and risk profile. The Board will propose
to the shareholders that they consider and, if necessary,
resolve to increase the authorized capital of the Company
that will allow the Board some flexibility to increase the
number of issued shares without further shareholder
approval. Any increase of the authorized capital is,
however, subject to approval by the shareholders by
simple majority of the votes cast.
According to NUES section 3, the annual general meeting
can resolve to grant a mandate to the board of directors to
approve the distribution of dividends on the basis of the
approved annual accounts. Such a mandate should be
explained. The explanation should state, inter alia, how the
mandate is based on the company’s dividend policy. This
means that any authorization to distribute dividends must
be granted by the general meeting. However, the Bye-laws
state that no such approval is required from the general
meeting, which constitutes a deviation from NUES Section
3.
During 2024, the Board has authorised cash distributions
to shareholders of $0.22 per share in September,
November 2024, as well as in February 2025.
"Equal treatment of shareholders": The Company has
one class of shares, and all shares carry equal rights.
Pursuant to Bye-law 2, the Board has the authority to issue
any unissued shares on such terms and conditions as it
may determine. Neither the Company's Bye-laws nor
Bermuda company laws provide for pre-emptive rights for
shareholders in connection with share capital increases.
The Company is, however, subject to the general principle
of equal treatment of shareholders under the Norwegian
Securities Trading Act section 5-14. In connection with any
future share issues, the Board will assess, on a case-by-
case basis, whether deviation from the principle of equal
treatment is justified.
Any transactions carried out by the Company in the
Company's own shares will as a general rule be carried out
through Oslo Børs and at prevailing stock exchange
prices. In the event that there is limited liquidity in the
Company's shares, the Company will consider other ways
to ensure equal treatment of shareholders. Any
transactions in own shares will be evaluated in relation to
the rules on the duty of disclosure, as well as in relation to
the prohibition against illegal insider trading and market
manipulation, the requirement for equal treatment of all
shareholders, and the prohibition of unreasonable
business methods.
“General meetings”: The Company encourages
shareholders to attend its general meetings. It is also the
intention to have representatives of the Board to attend
general meetings. The Company will, however, normally
not have the entire Board attend general meetings, as this
is not required by Bermuda law. This represents a
deviation from section 6 of the Norwegian Corporate Code
of Practice, which states that arrangements shall be made
to ensure participation by all directors.
Furthermore, pursuant to Bye-law 24, general meetings of
shareholders are chaired by the chair of the Board, if there
be one, and if not the president of the Company, if there be
one, or a person appointed by the board of directors.
Having the chair, president or a director of the Board
chairing general meetings simplifies the preparations for
general meetings significantly and is in compliance with
common procedures under Bermuda law. However, this
represents a deviation from section 6 of the Norwegian
Code of Practice, which states that the Board should seek
to ensure that an independent chair is appointed, if
considered necessary based on the agenda items or other
relevant circumstances.
As a Bermuda registered company with a limited number
of employees and contractors, the Company does not
have a corporate assembly. Given the size of the Company
this is not deemed necessary.
“Nomination committee”: As permitted under Bermuda
law, the Company will not have a nomination committee as
recommended by the Norwegian Code of Practice section
7. In lieu of a nomination committee comprised of
independent directors, the Board is responsible for
identifying and recommending potential candidates to
become Board members and recommending directors for
appointment to Board committees.
“Board of directors composition and independence”:
The CEO serves as a Board member, deviating from
section 8 of the Norwegian Code of Practice, which
recommends that management not be represented on the
board of directors. However, management representation
is considered beneficial in the Company's current phase to
9
ensure the Board has the necessary competence and
aligns with Bermuda corporate governance practices.
Pursuant to section 8 of the Norwegian Code of Practice,
the general meeting should elect the chair of the board of
directors. However, according to the Company's Bye-laws,
the Board elects its Chair, rather than the shareholders.
Given the Company’s current development status, the
Company believe that this is satisfactory, and that the
Chair can ensure that the Board is effective in its tasks of
setting and implementing the Company’s direction and
strategy.
The composition of the Board shall ensure that the Board
can attend the common interests of all shareholders and
meet the Company's need for expertise, capacity and
diversity. In appointing members to the Board, it is
emphasized that the Board shall have the necessary
competence to independently evaluate the subject
presented by the executive management team. It is also
considered important that the Board can function well as a
team. Board members are encouraged to own shares in
the Company, as recommended in section 8 of the
Norwegian Code of Practice.
“The work of the board of directors”: The Board shall
prepare an annual plan for its work with special emphasis
on goals and strategy. The Board’s primary responsibilities
shall be (i) participating in the development and approval
of the Company’s strategy, (ii) performing necessary
control functions and (iii) acting as an advisory body for the
executive management team. Its duties are not static, and
the focus will depend on the Company’s ongoing needs.
The chair of the Board is responsible for ensuring that the
Board’s work is performed effectively and correctly.
The Board shall ensure that the Company has proper
management with a clear internal distribution of
responsibilities and duties. A division of work has been
established between the Board and the executive
management team. Furthermore, the Board shall issue
instructions that state how the Board and the executive
management shall handle agreements with related parties,
including whether an independent valuation must be
obtained.
The Board and management will consider and determine
on a case-by-case basis whether independent third-party
evaluations are required if entering into agreements with
related parties in accordance with section 9 of the
Norwegian Code of Practice. However, the Board may
decide, due to the specific agreement or transaction, to
deviate from this recommendation if the interest of the
shareholders in general is believed to be maintained in a
satisfactory manner through other measures. The Board
shall present any such agreements in their annual
director's report.
Pursuant to section 9 of the Norwegian Code of Practice,
the Board shall consider appointing a remuneration
committee. The Board has decided not to establish such
committee as it has assessed that, given the Company's
limited number of employees, remuneration matters
related to the Company's executive management handled
directly by the Board without the need for a separate
dedicated preparatory committee. Board members who
are not considered independent of the Company's
executive personnel will not participate in the Board's
deliberations on remuneration matters. Neither the Board
nor the general meeting has adopted any resolutions that
are deemed to have a material impact on the Group's
corporate governance regime.
Board committees
The Bye-laws empower the Board to designate one or
more committees. Each such committee of one or more
persons may consist partly or entirely of non-executive
directors and may exercise the powers of the Board as
may be delegated to such committee in the management
of the business and affairs of the Company. The Board
shall have power to change the members of any such
committee at any time, to fill vacancies and to discharge
any such committee, either with or without cause, at any
time.
The Board has established an audit committee. The audit
committee shall (i) carry out preparatory work for the
Board’s monitoring of the financial reporting, (ii) monitor
the Company's systems for internal control and risk
management, and the Company’s internal audit function if
applicable, (iii) maintain regular contact with the
Company's elected auditor in respect of the statutory audit
of the annual accounts, and (iv) review and monitor the
independence of the statutory auditor, and in particular the
extent to which services other than statutory audit provided
by the auditor or audit firm represent a threat to the
auditor's independence. The audit committee shall be
comprised of members of Board. At least one member of
the audit committee shall be independent and have
competence in accounting and/or auditing.
The members of the audit committee as of 31 December
2024 were, Mei Mei Chow (chair of the committee) and
Mark Mey.
The Company has established a structured system for
internal control over financial reporting to ensure the
integrity and reliability of its financial reporting in
accordance with U.S. Generally Accepted Accounting
Principles (“US GAAP”) and applicable regulatory
requirements. These systems are designed to identify,
assess, and mitigate risks that could impact on the
accuracy and completeness of the Group's financial
statements, in line with applicable accounting standards
and regulatory requirements.
The Board has delegated the audit committee the
responsibility to assist the Board of Directors with its
responsibilities with respect to the financial reporting
process. The audit committee shall review, monitor and
10
make recommendations to the Board of Directors
regarding, inter alia, the financial reporting process, the
statutory audit of the annual and consolidated accounts,
the effectiveness of the company's internal control and risk
management systems. At least once a year, the audit
committee reviews and reports to the Board on the
Company's internal control procedures with the auditor,
including weaknesses identified by the auditor and
proposals for improvement.
Directors’ and officers’ insurance (“D&O”)
The Company has directors’ and officers’ liability insurance
which covers the cost of compensation claims made
against the Company’s directors and key managers
(officers) for alleged wrongful acts.
“Risk management and internal control": The Board
shall ensure that the Company has sound systems for risk,
impact and opportunity management and internal control,
including but not limited to topics related to ESG and
compliance, that are appropriate in relation to the extent
and nature of the Company’s activities.
The objective of the risk, impact and opportunity
management and the internal control is to manage, rather
than eliminate, exposure to risks in order to ensure
successful conduct of the Company’s business and to
support the quality of its financial reporting. The Board
shall define the risk appetite of the Company.
The Board shall carry out an annual review of the
Company’s most important areas of exposure to risk,
impact and opportunities and its internal control
arrangements. The Board shall provide an account in the
annual report of the main features of the Company’s
processes and systems for risk, impact and opportunity
management and internal control to the extent required by
applicable laws and regulations.
With respect to this section, the Company complies with
section 10 of the Norwegian Code of Practice.
“Remuneration of the board of directors”: There is no
obligation to present the guidelines for remuneration of the
Board to the shareholders of a Bermuda incorporated
company. Consequently, the Company deviates from this
part of section 11 of the Norwegian Code of Practice. There
are no service contracts between the Company and any of
its directors providing for benefits upon termination of their
service.
The Company has granted options and warrants to
members of the Board. As a general guideline, the
Company does not grant such instruments to its Board
members. However, to support the Company's phase as a
newly listed company, certain Board members have taken
on selected assignments for the Company beyond their
duties. The Board shall be informed when individual Board
members perform tasks for the Company outside their
directorship. In some cases, it may be to include options
or other financial instruments as part of Board member
remuneration, evaluated on a case-by-case basis.
Consequently, the Company deviates from the
recommendation in section 11 of the Norwegian Code of
Practice.
“Remuneration of executive personnel”: There is no
obligation to present the guidelines for remuneration of the
executive management to the shareholders of a Bermuda
incorporated company. In the view of the Company, there
is sufficient transparency and simplicity in the
remuneration structure and information provided through
the annual report and financial statements are sufficient to
keep shareholders adequately informed. The Company
therefore deviates from this part of section 12 of the
Norwegian Code of Practice.
"Information and communication": The Board and the
executive management team assign considerable
importance to giving the shareholders relevant and current
information about the Company and its activity areas.
Emphasis is placed on ensuring that the shareholders
receive the same and simultaneous information. Sensitive
information will be handled internally in a manner that
minimizes the risk of leaks.
The Board have a policy on who is entitled to speak on
behalf of the Company on various subjects. The Company
has a contingency plan for information management in
response to events of a particular character or of interest
to the media. The CEO and the CFO are the main contact
persons of the Company in such respects.
The Board should ensure that the shareholders are given
the opportunity to make known their points of view at and
outside the general meeting.
The Company is obliged to continually provide its
shareholders, Euronext Oslo Børs, and the financial
markets in general with timely and precise information
about the company and its operations. This information
shall be published via the stock exchange’s reporting
system and in the investor section on the Company’s
website
Relevant information is provided in annual and quarterly
reports, press releases, notices to the stock exchange, and
published investor presentations according to what is
deemed appropriate and required at any given time.
Paratus also holds regular presentations of annual and
interim results.
The Company publishes financial calendar with an
overview of dates of important events, such as the annual
general meeting, interim financial reports, and public
presentations. Subject to any applicable exemptions, the
Company discloses all inside information promptly. The
Company always provides information about certain
decisions by the Board and the general meeting
concerning dividends, mergers/demergers, and/or
changes in share capital.
11
“Take-overs”: The Company has not yet established
guiding principles for how it will act in the event of a take-
over bid, which is a deviation from section 14 of the
Norwegian Code of Practice. In the event of a takeover, the
Company shall take all reasonable measures to comply
with the recommendations of the Norwegian Code of
Practice related to this section, which inter alia requires
that all shareholders are given sufficient information and
time to form an independent view of a potential takeover
offer, and that the Board has specific consideration to the
equal treatment of shareholders, and whilst continuing to
act in accordance with its fiduciary duties governed under
Bermuda law.
"Auditor": The Company’s auditor is elected at the AGM.
The audit committee is responsible for ensuring that the
Group is subject to an independent and effective audit. The
auditor annually presents an audit plan to the audit
committee and participates in audit committee meetings
concerning the Company’s annual financial statements,
presentation of audit findings and identified internal control
process improvement opportunities. The auditor also
participates in board meetings when considered
appropriate, with and without management present.
Paratus’ external auditor is KPMG AS.
Enterprise risk management
The risk factors included in this section are not exhaustive
with respect to all risks relating to the Group. The risks and
uncertainties described in this section are the material
known risks and uncertainties faced by the Group,
including the Company's ownership interest in Seagems,
that the Company believes are relevant to the primary
users of the financial statements.
Financial risk
The Group is exposed to various financial risks that may
impact its financial performance, including market risk,
liquidity risk, concentration risk, and credit risk. The
Group’s financial risk management is primarily handled by
the Company’s finance function in accordance with
guidelines established by the Board of Directors. These
guidelines aim to mitigate potential adverse effects through
sound business practices and structured risk management
procedures.
Market risk
Market risk arises from fluctuations in foreign exchange
rates and interest rates, which can affect the Group’s
financial results.
Foreign currency exchange rate risk
Revenues from drilling services in Mexico are primarily
denominated in US dollars, while expenditures are mainly
incurred in US dollars and Mexican Pesos (“MXN”). We
also have MXN exposure for payment of taxes in Mexico.
Capital contributions and shareholder distributions are
made in US dollars and NOK. As of year-end 2024, the
Group did not have any active currency hedging
instruments. However, it continuously monitors foreign
currency risk exposure and evaluates potential hedging
strategies to mitigate volatility.
Interest rate risk
The Group’s financing primarily consists of US dollars-
denominated loans with fixed interest rates, eliminating the
need for interest rate hedging. Interest rate exposure
related to loans within the Seagems JV is considered
limited. Additionally, the Group is exposed to interest rate
fluctuations on its cash deposits, which are held at floating
rates.
Liquidity risk
Liquidity risk refers to the potential inability to secure
adequate funding for business operations. Effective
liquidity management requires maintaining sufficient cash
reserves, credit facilities, and financial resources to ensure
flexibility under dynamic market conditions.
The Group’s primary sources of liquidity include existing
cash reserves and operating cash flows from its operating
entities, including distributions from Seagems. Additionally,
the Company relies on debt financings and may in the
future rely on equity financings.
To proactively manage liquidity, the Group prepares,
reviews, and updates cash flow projections regularly.
These projections incorporate various scenarios, including
fluctuations in receivables collections in Mexico, to ensure
sufficient funding. The Board and executive management
utilize these insights for informed decision-making.
Investment in joint venture
The Group conducts a significant portion of its operations
through Seagems JV. The terms of co-operation and
shareholding in the JV are governed by the investment and
shareholders' agreements between the shareholders,
which contain, inter alia, provisions requiring unanimous
shareholders' consent in certain matters, such as share
capital changes, dividends and distributions, entering into
bids, contracts, assuming liabilities, and making material
changes to any contract or transaction. The Company's
obligations in respect of, and the Company's ability to
receive any dividends from, its JVs depend on the terms
and conditions of its investment and shareholders'
agreements and relationship with its joint shareholders.
The Seagems JV budgets and activity plans are reviewed
and approved annually. Pursuant to agreement among JV
shareholders, Seagems distributes all excess cash to its
shareholders.
Excessive risk concentration and credit risk
In 2024, the Company’s consolidated operating revenues
were generated from a major state-owned petroleum
company in Mexico. For Seagems, Petrobras accounted
for a significant share of its revenues. Any reduction in
activity, contract cancellations, suspensions, or non-
12
renewals by these key customers could significantly
impact the Group’s financial performance, especially if
replacement contracts on similar terms are not secured. In
March 2025, Fontis received early termination notices for
the drilling contract for Courageous and Intrepid, which
highlights the risks associated with customer dependency
and contract uncertainty. Additionally, the high customer
concentration may increase the Group's credit risk
exposure, as evidenced by payment delays from its client
in Mexico. To address these delays, Fontis secured an
agreement with a leading international bank in early 2025
to accelerate the payment of $209 million in overdue
invoices, subject to an upfront fee, demonstrating that the
Company can access liquidity through alternative means
when needed. The Company is actively engaging with the
client to expedite the collection of outstanding receivables,
while acknowledging and planning for the possibility of
ongoing fluctuations in the timing of collections.
Operational risks
Risks relating to the jack-up drilling market and the
offshore service industry
The Group's revenue from the jack-up drilling market and
offshore services (through its share in Seagems) depends
on its ability to sell its services and the rates it can charge
customers, including dayrates for its vessels and rigs. The
rates for offshore services, and consequently the value of
the Group's assets, are largely influenced by supply of and
demand in the offshore services industry, which historically
has been a highly cyclical and volatile industry. The supply
in the Group's primary markets, Brazil and Mexico, is
affected by various external factors. The Group's five jack-
ups are currently located in Mexico, while the Seagems
JV’s six PLSVs are operating in Brazil. Subsea services in
Brazil rely on offshore support vessels, and their
availability depends on factors such as the number of
newbuilds ordered and delivered, the number of vessels
being scrapped, conversion of vessels to other uses and
the number of vessels that are out of service and lay-ups
due to market situations. Similarly, the supply of drilling and
well services in Mexico is influenced by the number of
operational rigs, new rigs under construction or
reactivation of stacked rigs. An increase in the supply of
offshore support vessels and rigs, or decrease in the
demand for such services, could reduce dayrates, which in
turn may negatively impact the Group's financial
performance.
Risks related to mobilization of drilling rigs and vessels
between geographic areas
The offshore service market is generally global, allowing
vessels and drilling rigs to be moved from one area to
another. However, mobilization may be constrained by
several factors such as governmental regulation, customs
practices, high costs, risk of damage, availability of
suitable tow vessels, weather conditions, political
7
Figures shown at 100% Seagems Joint Venture level.
instability, civil unrest, military actions and the technical
capability of the drilling rigs to relocate and operate in
various environments. During mobilization, whether within
the same market (from one location to another) or to a new
geographic market, the Group may not be paid for the time
the vessel or jack-up rig is out of service or reimbursed for
relocation costs. Additionally, not all of the Group's units
are designed to work in all regions, water depths or
environmental conditions. Further, the Group may relocate
vessels and/or rigs to another geographic market without
a customer contract, which could result in costs that are
not reimbursable by future customers.
The Group's business involves numerous operating
hazards
The Group's operations are subject to hazards inherent in
the offshore support vessel business and the drilling,
completion and operation of oil and natural gas wells, such
as use of heavy equipment, exposure to hazardous
conditions, high pressure drilling, mechanical difficulties, or
equipment failure, which increase the risk of delays,
material costs or liabilities. Accidents, equipment
breakdowns, subcontractor failures, or personnel
shortages could lead to operational disruptions, as seen in
the operational incidents on the Courageous in November
2022 and the Defender in January 2023, which caused
operational downtime. The nature of the Group’s work also
carries the risk of severe injury or loss of life, particularly
for crew members operating in hazardous environments,
such as rig operations, extreme weather, and heavy
machinery zones. Ineffective safety policies or inadequate
implementation could heighten accident risks. Such
incidents, and any failure to maintain consistently high
standards across all of its operational fields, may harm the
Group’s reputation, result in significant liabilities, legal
actions and/or impact its ability to secure future contracts.
The Group's Contract backlog may not be ultimately
realized, whereas any non-realisation would result in lower
revenues than estimated
As of 31 December 2024, Fontis and Seagems had a total
backlog of approximately $195 million and $1.9 billion
7
,
respectively. The Group's contract backlog represents
future revenue under contracts for utilization of its fleet but
does not provide a precise indication when revenues will
be received, nor is their realization guaranteed within the
expected timeframes or at all. Backlog calculations are
based on current contractual terms; however, revenue
realization may be subject to price indexation clauses or
other factors that may intervene with and/or result in
delays. Additionally, the Group may fail to realize expected
backlog due to, for example:
• contract clauses allowing inter alia (i) termination for
cause, (ii) early termination for charterers'
convenience, or (iii) renegotiation due to, among other
reasons, adverse market conditions;
13
• the Group's inability to fulfil contractual obligations,
including for reasons beyond its control such as
shortage of qualified personnel;
• client default or failure to pay amounts owed to the
Group.
For instance, on 3 March 2025, the Company announced
that Fontis had received notice of early termination of the
drilling contracts for the Courageous and the Intrepid.
The aforementioned factors may impact both the timing
and certainty of the Group's revenue recognition.
Political, compliance and legal risks
The Group's primary operating markets are Brazil and
Mexico
The Group primarily operates in Brazil and Mexico, where
political instability, government changes, and corruption
scandals have led to shifts in policies and regulations.
Political decisions, including shifts in economic policies,
trade restrictions, or government intervention, may create
uncertainties that affect the Group’s business
environment. Additionally, regulatory changes in areas
such as taxation, labor laws, or environmental standards
could impact the Group’s operations, compliance
obligations, and profitability. While the Group monitors
political developments, unexpected policy shifts or
regulatory changes could still pose challenges to its
business and financial position.
The Group operates internationally and is subject to
various laws and regulations
The Group operates in countries with differing political and
regulatory environments, primarily Mexico and Brazil.
Navigating these regulatory environments are essential for
maintaining operations and growth but presents significant
challenges. For instance, the Brazilian and Mexican legal
system is known for its complexity and slow-paced
proceedings, potentially resulting in protracted legal
disputes. Failure to comply with applicable regulations or
unexpected compliance costs could lead to, among other
things, reputational damage, legal penalties, or operational
disruptions, potentially hindering the Group's ability to
conduct business effectively, limiting growth opportunities,
and negatively impact its financial positions.
The Group operates in countries known to experience
governmental corruption
Mexico and Brazil are known for governmental corruption,
as indicated by Transparency International's Corruption
Perception Index. While the Group is committed to
conducting business in a legal and ethical manner, there is
a risk that employees, agents or affiliates may violate anti-
corruption laws and regulations, including those based on
the 1997 OECD Convention on Combating Bribery of
Foreign Public Officials in International Business
Transactions. In certain jurisdictions where the Group
utilizes local agents and/or establish entities with local
operators or strategic partners, for example in Mexico, the
local activities may involve interaction by the Group's
agents with government officials. If improper payments are
made in connection with the Group’s operations, the Group
could face investigations and, if found in violation of anti-
bribery laws, be subject to fines, sanctions, and other
penalties, which could have a material adverse impact on
its business, financial condition, and results of operations.
The Group may from time to time become involved in legal
disputes and proceedings
The Group may from time to time become involved in legal
disputes and legal proceedings relating to its operations,
environmental issues, intellectual property rights or
otherwise. Legal proceedings could result in adverse
rulings requiring the Group and its affiliated companies to,
inter alia, pay damages, halt operations, suspend projects
or relinquish licenses. As noted above and in Note 12, the
Group is currently undergoing audits by the Mexican tax
authorities ("SAT") in respect of accounting years 2014 and
2018 through 2020. These liabilities relate mainly to the
deductibility of mobilization costs and transfer pricing. No
assurance can be made that the Mexican tax authorities
will not open audits for periods from 2021 and onwards. If
the audits expand in scope or the authorities continue to
question the Group's tax position, the Group could face
significant legal and financial consequences, such as
higher taxes, penalties, and interest, which in turn could
significantly affect the Group's tax expenses and effective
tax rate, potentially impacting earnings and cash flow
operations and the Group's overall financial position.
Environmental risk
The Group's operations are subject to laws and
regulations, including, among other things, requirements
to control the discharges, manage emissions, remove and
remediate contamination. As an owner of offshore support
vessels and drilling rigs and provider of services to oil and
gas companies, the Group may be liable (under applicable
laws and regulations or contractually) for damages and
costs incurred in connection with spills or contamination,
which may lead to, inter alia, fines, cleanups costs and
liability claims. Environmental damage, including incidents
involving the Group's customers, may harm its reputation,
impact customer relationships and business opportunities.
Although the Group actively works towards minimizing the
risk of damage to the environment as a result of its
operations, there are still risks of environmental damage
and negative consequences for the Group.
QHSE performance
Our Quality, Health, Safety, and Environment (“QHSE”)
standards, procedures, and protocols are built on a set of
core principles that define our approach to safety,
operational excellence, and environmental responsibility.
These principles ensure that every aspect of our work
aligns with best practices, regulatory requirements, and
our commitment to continuous improvement.
14
• People First: We foster a supportive work environment
where every individual feels valued and protected.
• Proactive Risk Management and Prevention: Our
comprehensive prevention strategies ensure a safe
and secure workplace for all.
• Compliance with Industry and Regulatory Standards:
We continuously monitor and update our practices to
remain compliant and uphold the highest standards of
quality and safety, with no penalties enforced.
• Strong Leadership and Workforce Engagement: By
empowering our workforce, we drive innovation and
achieve collective success.
• Environmental Stewardship and Sustainability: Our
Environmental Team and initiatives aim to minimize
our ecological footprint and promote a greener future.
• Continuous Improvement and Learning Culture: We
strive to enhance our processes and deliver
exceptional results.
By adhering to these core QHSE principles, we create a
safe, responsible, and high-performing work environment.
Our structured approach to risk management, compliance,
leadership engagement, environmental responsibility, and
continuous improvement reflects our strong commitment to
aligning with industry standards and driving progress
across all areas of our operations.
During 2024, our safety performance continued to
improve, demonstrating the effectiveness of our proactive
risk management, enhanced safety programs, and
workforce engagement initiatives. Total Recordable
Incident Rate (“TRIR”) at end of 2024 was 0.56, compared
to 0.85 in 2023, reflecting a significant reduction in
recordable incidents. This improvement is attributed to
increased safety awareness, enhanced leadership
commitment, and targeted risk mitigation measures.
Organization and personnel
During 2024, the average FTE (Full-Time Equivalent) for
Paratus and its subsidiaries was 498. The workforce is
characterized by strong cultural, religious and national
diversity, with some 13 nationalities represented. At year-
end 2024, the Board of Directors consisted of six
members, one of whom is female. Management consisted
of one woman and four men. While the Company does not
currently have formalized policies on equality and diversity,
the Company is committed to maintain a working
environment with equal opportunities for all based on
qualifications, irrespective of gender, ethnicity, sexual
orientation, or disability. Diversity considerations are taken
into account in recruitment and appointment processes
and the Company continues to recruit and promote women
who at year-end 2024 represented 36% percent of
employees in managerial, administrative and other
onshore positions. There were no incidents of
discrimination reported through the internal mechanisms
for raising concern in 2024.
Men and women with the same level of jobs, with equal
professional experience and who perform equally receive
the same pay in Paratus. The complexity of the job,
discipline area and work experience affect the pay level of
individual employees.
Diversity is an important part of the Group's key human
resources processes such as recruitment, succession
planning, promotions, performance management and
employee development.
15
Board of Directors
Mei Mei Chow
Chair, served since January 2022
Mei Mei Chow is an ICAEW Chartered Accountant with
over 25 years' experience at senior and executive
management levels. Most recently she has been working
as an expert adviser with a global management consultant
on international and cross border M&A projects. Mei Mei
Chow is currently an independent non-executive board
member of Gas Malaysia Berhad, a company listed on
Malaysia’s Kuala Lumpur Stock Exchange, and also
serves as its chair of the audit committee and member of
the risk and compliance committee. She has also spent
over 10 years recently with Sapura Energy Berhad, a
global oil and gas company, as a member of Sapura's
leadership team alongside the group CEO
and other top
management. Prior to that, Mei Mei held various senior
management positions including divisional CFO roles and
Group Head of Strategy, with the Sime Darby Group, a top
five listed conglomerate in Malaysia. She is a chartered
accountant and also a member of the Chartered Institute
of Marketing. In 2024, the Minister of Women & Family to
the Government of Malaysia requested Mei Mei Chow to
join a newly formed committee and panel of a start-up
initiative to provide support and government funding to
upcoming women leaders. Mei Mei Chow has a BA Hons
in Business Studies from the University of South Wales.
Robert Jensen
Director and CEO, served since February 2023
Robert A. Jensen currently serves as the CEO of Paratus
Energy and has 16 years of experience across asset
management, investment banking and research positions
within global energy, oil services and transportation. Prior
to joining Paratus Energy, Mr. Jensen was a Partner at
Arctic Securities, a leading independent Norwegian
investment bank, specializing in corporate finance
transactions and advisory services. Prior to this, Mr.
Jensen was a Partner at CF Partners Capital
Management, an event-driven, liquid hedge fund with
investments across the capital structure in the energy and
natural resources value chain. Mr. Jensen has also held
various roles at Sparebank 1 Markets, Clarksons Platou
Securities, Jefferies International and Fearnley Offshore.
Mr. Jensen has a MSc in Shipping, Trade and Finance
from Bayes Business School in London and a MSc in
Business Administration from BI Norwegian Business
School.
James Ayers
Director, served since December 2018
James Ayers has served as a Director of Paratus Energy
since December 2018. Mr. Ayers is the CEO of Front
Ocean Management and Company Secretary for the
Fredriksen Group of companies based in Bermuda,
including publicly listed and SEC-regulated companies. He
has served as Director and Secretary of Northern Ocean
Ltd. since February 2019 and Golden Ocean Group
Limited since March 2025. Mr. Ayers has more than ten
years of industry experience with a range of director, officer
and management positions across the maritime sectors.
He holds a Master's in International Business and
Commercial Law, a Bachelor's in Law and a professional
qualification in Legal Practice.
Joachim Bale
Director, served since August 2023
Joachim Bale's career spans over more than 14 years in
investment management, private equity, and management
consulting, and brings a wealth of financial expertise and
strategic insights that will contribute to the Company's
continued growth and success. Mr. Bale is a founding
partner at Lodbrok Capital LLP, an alternative investment
management firm. Prior to Lodbrok Capital, Mr. Bale
served as an investment professional at Farallon Capital,
a multi-strategy hedge fund. Mr. Bale has also held roles
at Bain Capital and McKinsey & Company. Mr Bale holds
an MSc with Distinction in Financial Economics from
University of Oxford.
Ørjan Svanevik
Director, served since December 2023
Ørjan Svanevik is an Investment Director at Seatankers.
He was recently acting CEO at Western Bulk. Previously,
he served as CEO of Arendals Fossekompani from 2019
to 2022, and was Director and COO at Seatankers
Management from 2014 to 2017, advising companies
including Seadrill, Mowi and Archer. He held roles at
Kværner ASA during its reorganization into Aker
companies, and was later Partner and Head of M&A at
Aker. He has chaired the boards of companies including
Volue, Archer, ENRX, Kleven Verft and North Atlantic
Drilling. He has also been a director at Seadrill, Mowi,
Nordic Jet Line, RigNet, American Shipping Company,
amongst others. Mr. Svanevik has an AMP from Harvard
Business School, MBA/MIM from Thunderbird and a
Master's from BI Norwegian Business School.
Mark Mey
Director, served since November 2024
Mark Mey is a seasoned energy professional with more
than three decades of experience from the energy and
financial services industry. He served as Executive Vice
President and Chief Financial Officer of Transocean from
May 2015 to May 2024. Prior to Transocean, Mr. Mey
served as Executive Vice President and Chief Financial
Officer of Atwood Oceanics, and Senior Vice President and
Chief Financial Officer and a Director of Scorpion Offshore
Ltd. He also held positions of increasing responsibility
during his 12 years with offshore driller Noble Corporation,
including Vice President and Treasurer. He served on the
Board of Directors of Transocean Partners LLC from June
2015 to December 2016. Mr. Mey earned an Advanced
Diploma in Accounting and a Bachelor of Commerce
degree from the University of Port Elizabeth, South Africa.
16
He is a Chartered Accountant and attended the Harvard
Business School Executive Advanced Management
Program.
Management
Robert Jensen
Group CEO
Robert A. Jensen currently serves as the CEO of Paratus
Energy and has 16 years of experience across asset
management, investment banking and research positions
within global energy, oil services and transportation. Prior
to joining Paratus Energy, Mr. Jensen was a Partner at
Arctic Securities, a leading independent Norwegian
investment bank, specializing in corporate finance
transactions and advisory services. Prior to this, Mr.
Jensen was a Partner at CF Partners Capital
Management, an event-driven, liquid hedge fund with
investments across the capital structure in the energy and
natural resources value chain. Mr. Jensen has also held
various roles at Sparebank 1 Markets, Clarksons Platou
Securities, Jefferies International and Fearnley Offshore.
Mr. Jensen has a MSc in Shipping, Trade and Finance
from Bayes Business School in London and a MSc in
Business Administration from BI Norwegian Business
School.
Baton Haxhimehmedi
Group CFO
Baton Haxhimehmedi joined Paratus as Chief Financial
Officer in June 2024. Mr. Haxhimehmedi has been working
with the oil and gas upstream industry for 15 years. He has
previously held positions as Group Head of Finance and
Deputy CFO of DNO, and was an audit manager in KPMG
and senior associate in Ernst & Young mainly working with
international upstream oil and gas clients. Mr.
Haxhimehmedi holds a Master in Accounting and Auditing
and a Bachelor of Science in Business and Economics
from the Norwegian Business School (BI).
Nika Hasanova
Group Head of Finance
Nika Hasanova currently serves as Group Head of Finance
at Paratus Energy and has over 15 years of experience in
accounting and finance. Prior to joining Paratus, she held
positions of Director of Accounting and International
Controller at Quorum Software, leading provider of energy
software worldwide. Prior to this, Nika Hasanova was an
audit manager at PricewaterhouseCoopers LLP working
with Oil & Gas, Technology and Pipeline clients and holds
Canadian CPA designation from the Canadian Institute of
Chartered Accountants (CICA), MBA and Bachelor of
Business Administration (BBA) from Azerbaijan State Oil
Academy.
Raphael Siri
CEO of Fontis Energy
Raphael Siri is the CEO of Fontis Energy, a wholly-owned
subsidiary of the Paratus. He brings close to three decades
of experience within the oil and gas industry. Siri joined
Fontis Energy in June 2023, following 17 years of
operational and management experience in major oil and
gas drilling contractors like Schlumberger, Pride
International and Seadrill; and 10 years of Executive
Management experience in the Sapura Energy Berhad
Group. Throughout his entire tenure in the Sapura Energy
Group as an Executive Committee member, he held the
position of CEO of Sapura Drilling, and periodically
managed Group Corporate functions including Risk,
Performance, Transformation, SCM, IT, and QHSE. His
international career included living in 11 different countries
across the globe, from Africa, Asia to North and Central
America. Siri holds an Engineering Diploma in Applied
Mathematics from Ecole Nationale Supérieure de
Techniques Avancées in Paris, and a degree in Applied
Mathematics from Université de Nice Sophia Antipolis in
Nice.
Rogerio Salbego
CEO of Seagems
Rogerio Salbego is the CEO of Seabras Sapura, the joint
venture between Paratus and Sapura Energy. Salbego
brings over 20 years of experience in the Brazilian oil and
gas industry, serving as the prior COO of Seabras Sapura
JV and as a member of the team since inception. Prior to
this, he was a Project Operation Manager at Subsea 7.
Salbego holds an MBA from Pontificia Universidade
Catolica do Rio de Janeiro and a BA in Mechanical
Engineering from Universidade Federal de Santa Maria.
17
Main events since year-end
Share buybacks
On March 4, 2025, the Company repurchased 5.4 million
own shares at a price of NOK 41.5 per share by way of a
reverse bookbuilding, marking the first step in deploying
the previously announced share repurchase authorization
of up to $100 million.
On April 2, 2025, the Company initiated repurchase of up
to 1,600,000 shares by way of open market transactions
on the Euronext Oslo Børs (the "Buyback"), pursuant to an
agreement with Arctic Securities AS ("Arctic"). A total NOK
amount equivalent to $5 million has been set aside for the
Buyback. The Buyback commenced on April 2, 2025, and
will remain in effect until the earlier of (i) the acquisition of
the maximum number of shares as set above; (ii) the
maximum total consideration as set out above has been
reached; or (iii) May 28, 2025. For the period from April 2,
2025, to and including April 16, 2025, the Company
purchased a total of 460,896 shares at an average price of
NOK 35.4460 per share.
Following the completion of the above transactions, the
Company owns a total of 5,860,896 of own shares,
corresponding to 3.46% of the Company's share capital.
Contract update for Courageous and Intrepid
On March 3, 2025, the Company announced that Fontis
had received notice from its client that it has elected to
exercise the previously disclosed contractual options for
early termination of the drilling contracts for the
Courageous and the Intrepid. Both rigs are subject to a
365-day notice period.
The reasons cited for the early termination includes
unfavorable contract terms, such as limited suspension
rights and indexation structure of dayrates (with floor and
cap), and economic considerations. Nothing in the client’s
notification suggests that this action was driven by reduced
operational need for drilling rigs in 2026. This action may
enable the client to better align contractual terms across
its service providers during 2026, as Fontis’ contracts
benefit from certain rights, which have resulted in that all
of Fontis’ rigs are on contract, despite the current reduced
activity announced by other service providers in the
region. Following the client’s election to terminate the rigs,
the client has no remaining contractual flexibility to further
shorten the contracts for any of Fontis’ rigs.
The drilling contracts for Courageous and Intrepid will now
expire on 28 February 2026 as opposed to its original
expiration date of 29 November 2026 and 27 May 2026,
respectively. Furthermore, Fontis has been awarded a 78-
day contract extension for the Oberon.
Cash distribution to shareholders
On February 28, 2025, the Company announced that the
Board of Directors has approved a cash distribution to
shareholders of $0.22 per share for the fourth quarter of
2024, to all shareholders of record as of 12 March 2025.
The cash distribution was paid on 21 March 2025 and was
in the form of return of capital.
Receivables monetization agreement and receipt
of payment in Mexico
On January 24, 2025, the Company announced that Fontis
had entered into an agreement with a leading international
bank to facilitate payment to Fontis of approximately $209
million of outstanding overdue invoices with its client in
Mexico (the “Receivables Payment”). The Receivables
Payment was subject to an undisclosed upfront fee, which
was well below 10% of the gross receivables amount. On
February 5, 2025, the Company announced that Fontis
had successfully received full payment of approximately
$209 million of overdue invoices from its client in Mexico
under this arrangement. The Receivables Payment was
completed in accordance with the terms of the agreement.
The Board of Directors of Paratus Energy Services Ltd.
29 April 2025
(signed)
(signed)
(signed)
Mei Mei Chow
Robert Jensen
James Ayers
Chair
CEO and
Director
Director
(signed)
(signed)
(signed)
Joachim Bale
Ørjan Svanevik
Mark Mey
Director
Director
Director
18
Responsibility Statement
We confirm to the best of our knowledge that the consolidated financial statements for the period 1 January to 31 December
2024 have been prepared in accordance with applicable accounting standards and give a fair view of the assets, liabilities,
financial position and results for the period viewed in their entirety, and that the Board of Directors’ report includes a fair review
of any significant events that arose during the period and their effect on the financial statements, any significant related parties’
transactions and a description of the significant risks and uncertainties to which the Group is exposed.
The Board of Directors of Paratus Energy Services Ltd.
29
April 2025
(signed)
(signed)
(signed)
Mei Mei Chow
Robert Jensen
James Ayers
Chair
CEO and
Director
Director
(signed)
(signed)
(signed)
Joachim Bale
Ørjan Svanevik
Mark Mey
Director
Director
Director
19
Consolidated Financial Statements
- Consolidated statements of operations
- Consolidated statements of comprehensive income
- Consolidated balance sheets
- Consolidated statements of cash flows
- Consolidated statements of changes in equity
- Notes to the consolidated financial statements
A
uditor’s Report
Alt
ernative Performance Measures
December 31,
December 31,
(In $ millions, except per share amounts)
Note 2024 2023
Total operating revenues 5
213.9 166.8
Operating expenses
Rig operating expenses (96.0) (94.0)
General and administrative expenses (16.7) (9.9)
Depreciation and amortization 10 (17.9) (15.2)
Settlement of management incentive deed - (12.9)
Expected credit losses 5 (1.6) (0.8)
Total operating expenses
(132.2) (132.8)
Share in results from joint ventures
18
85.2
67.0
Operating income
166.9
101.0
Financial items
Share in results from associated companies 18 (5.4) (0.7)
Interest income 5.0 2.2
Interest expense 11 (82.1) (85.3)
Gain /(loss) extinguishment of financial instruments 11 (34.3) 4.4
Other financial items 12 8.1 (20.6)
Net financial expense
(108.7)
(100.0)
Income before taxes
58.2
1.0
Income tax expense 12 (26.6) (23.8)
Net income/(loss)
31.6
(22.8)
Income/(loss) per share:
14
Basic
0.20
(0.15)
Diluted
0.19
(0.15)
See accompanying notes that are an integral part of these Consolidated Financial Statements.
for the years ended December 31, 2024 and 2023
Paratus Energy Services Ltd.
CONSOLIDATED STATEMENTS OF OPERATIONS
20
December 31,
December 31,
(In $ millions)
2024
2023
Net income/(loss)
31.6
(22.8)
Other comprehensive income/(loss):
Share of other comprehensive income/(loss)
from equity method investments
12.2 (3.5)
Archer convertible bond reclassification - (6.0)
Total other comprehensive income/(loss)
43.8
(32.3)
See accompanying notes that are an integral part of these Consolidated Financial Statements.
Paratus Energy Services Ltd.
for the years ended December 31, 2024 and 2023
CONSOLIDATED STATEMENTS OF OTHER COMREHENSIVE INCOME/(LOSS)
21
December 31,
December 31,
(In $ millions, except par value amounts)
Note
2024
2023
ASSETS
Current assets
Cash and cash equivalents 6 86.4 114.7
Accounts receivables, net 5 339.6 169.3
Amounts due from related parties 17 3.3 3.3
Favorable contracts - current 5 28.9 30.7
Other current assets 7 10.0 22.5
Total current assets
468.2
340.5
Non-current assets
Equity method investments 18 358.2 354.5
Drilling units and equipment, net 10 259.0 258.3
Favorable contracts - non-current 5 9.0 37.9
Other non-current assets 0.3 0.3
Total non-current assets
626.5
651.0
Total assets 1,094.7 991.5
LIABILITIES AND EQUITY
Current liabilities
Trade accounts payable 16.7 18.5
Other current liabilities 8, 12 65.0 18.0
Total current liabilities
81.7
36.5
Non-current liabilities
Interest-bearing debt, long-term 11 692.5 655.4
Other non-current liabilities 9, 12 61.4 84.7
Deferred tax liabilities 12 2.2 -
Total non-current liabilities
756.1
740.1
Equity
Shareholders' equity 256.9 214.9
Total equity 256.9 214.9
Total liabilities and equity 1,094.7 991.5
See accompanying notes that are an integral part of these Consolidated Financial Statements.
Paratus Energy Services Ltd.
as at December 31, 2024 and 2023
CONSOLIDATED BALANCE SHEETS
Mei Mei Chow
Joachim Bale Ørjan Svanevik Mark Mey
29 April 2025
Robert Jensen James Ayers
(signed)
Director
(signed)(signed)
(signed) (signed) (signed)
DirectorDirectorDirector
CEO and DirectorChair
22
December 31,
December 31,
(In $ millions)
Note
2024
2023
Cash Flows from Operating Activities
Net income/(loss) 31.6 (22.8)
Adjustments to reconcile net income to net cash provided by
Amortization of favorable contracts 5 30.7 38.6
Depreciation 10 17.9 15.2
Settlement of Management Incentive Deed (MID) - 12.9
Income from equity method investments 18 (79.8) (66.3)
Net interest expense and amortization 11 77.1 83.1
Loss on realization of marketable securities - 4.9
Unrealized foreign exchange (gain)/loss (12.0) 15.1
Deferred and other taxes 12 2.2 1.6
Expected credit losses 5 1.6 0.8
(Gain)/loss on extinguishment of financial instruments 11 34.3 (4.4)
Share-based compensation 15 0.3 -
Payments for long-term maintenance 10
(8.7) (11.2)
Other (0.4) -
Change in working capital items and other
Accounts receivables, net (171.9) (56.5)
Trade accounts payable 1.8 8.5
Related party balances - (2.0)
Other assets 12.5 2.7
Other liabilities 35.2 (3.4)
Net cash (used in)/provided by operating activities
(27.6) 16.8
Investing Activities
Additions to drilling units and equipment 10 (7.7) (11.6)
Investment in equity method investee (12.1) (15.6)
Distribution from equity method investee 18 97.5 114.0
Net cash provided by investing activities
77.7 86.8
Financing Activities
Interest on bank deposits 5.0 1.1
Redemption of bonds 11 (500.0) (48.4)
Issuance of bonds (net of debt issuance costs) 11 488.4 -
Payment of interest on borrowings 11 (66.6) (35.2)
Issuance of common shares (net of issue costs) 13 72.5 -
Return of capital to shareholders (74.1) -
Net cash used in financing activities
(74.8) (82.5)
Effect of exchange rate changes on cash and cash equivalents (3.6) (0.3)
Net increase/(decrease) in cash and cash equivalents (28.3) 20.8
Cash and cash equivalents at beginning of period 114.7 93.9
Cash and cash equivalents at end of period
86.4 114.7
Supplementary disclosure of cash flow information
Interest paid 66.6 35.0
Income taxes paid
16.7 16.0
See accompanying notes that are an integral part of these Consolidated Financial Statements.
for the year ended December 31, 2024 and 2023
Paratus Energy Services Ltd.
CONSOLIDATED STATEMENTS OF CASH FLOWS
23
(In $ millions)
Common
shares
Additional paid-
in capital
Accumulated
other
comprehensive
loss
Accumulated
deficit Total equity
Balances as at January 1, 2023
-
1,278.0
6.0
(1,049.7)
234.3
Net loss - - - (22.8) (22.8)
Other comprehensive income - - (9.5) - (9.5)
Issuance of C-shares in connection
with termination of MID
- 12.9 - - 12.9
Balance as at December 31, 2023
-
1,290.9
(3.5)
(1,072.5)
214.9
Net income - - - 31.6 31.6
Other comprehensive income - - 12.2 - 12.2
Issuance of common shares - 72.5 - - 72.5
Stock based compensation - 0.3 - - 0.3
Return of capital - (74.6) - - (74.6)
Balance as at December 31, 2024 - 1,289.1 8.7 (1,040.9) 256.9
See accompanying notes that are an integral part of these Consolidated Financial Statements.
Paratus Energy Services Ltd.
for the year ended December 31, 2024 and December 31, 2023
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
24
Note 1 - General Information
Paratus Energy Services Ltd.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Unless the context indicates otherwise, “Paratus,” the "Company," "we," "us," "our," and similar terms, all refer to Paratus Energy
Services Ltd., while “Paratus Group” or the “Group” refers collectively to the Company and its consolidated subsidiaries and its
ownership in Joint Ventures (“JV”). All references to "USD" and "$" in this report denote U.S. dollars unless indicate otherwise.
Company details
Paratus Energy Services Ltd. is a company incorporated under the laws of Bermuda and in accordance with the Bermuda Companies
Act 1981. On June 28, 2024, the Company was listed on the Euronext Growth Oslo, and subsequently uplisted on the Euronext Oslo
Børs on November 13, 2024, under the ticker “PLSV”.
Business
Paratus is a holding company of a group of energy services companies and is comprised of its wholly owned subsidiary Fontis Holdings
Ltd. and its subsidiaries (collectively "Fontis"), 50/50 joint venture interest in Seagems joint venture, comprising of Seabras Sapura
Holding GmbH and Seabras Sapura Participacoes SA, (collectively “Seagems” or the "JV") and its 23.8% ownership in Archer Limited
("Archer").
• Fontis Energy is a provider of drilling services, operating a fleet of five high-specification jack-up rigs – Defender, Courageous,
Intrepid, Oberon, and Titania FE - currently located in Mexico, under contract with a state-owned company in Mexico.
• Seagems is a subsea services company, operating a fleet of six multipurpose pipe-laying support vessels - Diamante, Topazio,
Esmeralda, Onix, Jade and Rubi – with capabilities for subsea engineering, installation, and other services, under contract in Brazil.
• Archer is a global oil services company which operates in 40 locations providing drilling services, well integrity and intervention,
plug and abandonment and decommissioning to its upstream oil and gas clients. Archer is listed on the Euronext Oslo Børs under
the ticker “ARCH”.
Basis of preparation
These Consolidated Financial Statements (the group financial statements) are presented in accordance with generally accepted
accounting principles in the United States of America (“US GAAP”).
The amounts are presented in United States dollar (“US dollar”, “$” or “US$”) which is also the Company’s functional currency and
presentation currency. Statements of operations and cash flows of subsidiaries, joint ventures and associated companies that have a
functional currency different from the parent company are translated into the presentation currency at average exchange rates.
Statements of balance sheets are translated using the exchange rate at the reporting date, with the translation differences taken
directly to other comprehensive income.
Subtotals and totals in some of the tables included in the Consolidated Financial Statements may not equal the sum of the amounts
shown due to rounding.
Paratus has selected a presentation in which the description of accounting policies, as well as estimates, assumptions, and judgmental
considerations, are disclosed in the notes to which the policies relate.
Basis of consolidation
Investments in companies that we directly or indirectly hold more than 50% of the voting control are consolidated in the Consolidated
Financial Statements. Intercompany transactions and internal sales have been eliminated on consolidation. The Company currently
holds a 100% ownership in Fontis (consolidated), 50% in Seagems (equity method) and 23.8% in Archer (equity method).
25
Note 2 - Significant Accounting Policies
Use of estimates
The preparation of the Consolidated Financial Statements in accordance with US GAAP requires us to make estimates and
assumptions that affect the reported amounts of assets, liabilities, revenues and expenses and related disclosures about contingent
assets and liabilities. We base these estimates and assumptions on historical experience and on various other information and
assumptions that we believe to be reasonable. Critical accounting estimates are important to the portrayal of both our financial position
and results of operations and require us to make subjective or complex assumptions or estimates about matters that are uncertain.
Actual results could differ from those estimates.
The key assumptions and key sources of estimation uncertainty for the Group are described in each of the following notes:
• Expected credit losses (Note 5)
• Impairment of drilling units and equipment (Note 10)
• Useful lives and residual value (Note 10)
• Uncertain tax provision in Mexico (Note 12)
• Share-based compensation (Note 15)
Significant accounting policies
Revenue recognition (disclosed in Note 5)
Change in presentation of income from joint ventures in the Statements of operations (Note 18)
The Company accounts for its investments in the Seagems JV applying the equity method. Until 2023, the Company's share of income
from Seagems was presented under "Financial items and other" in the Statements of Operations. However, after evaluating the relevant
facts and circumstances, the Company has decided to present its share of income from Seagems in a separate line within operating
income, effective January 1, 2024. This change reflects the view that the operations of the Company's investment in Seagems is
"integral" to our business. The Company believes this adjustment will provide users of our financial statements with more relevant
information and aligns with industry practices. Comparative figures have been updated accordingly.
Rig Operating Expenses
Rig operating expenses are costs associated with operating a drilling unit and include the remuneration of offshore crews and related
costs, supplies, insurance costs, expenses for repairs and maintenance as well as costs related to onshore personnel and are
expensed as incurred.
Current and non-current classification
Generally, assets and liabilities (excluding deferred taxes and liabilities subject to compromise) are classified as current assets and
liabilities respectively, if their maturity is within one year of the balance sheet date. In addition, we classify any derivatives financial
instruments as current.
Generally, assets and liabilities are classified as non-current assets and liabilities respectively if their maturity is beyond one year of the
balance sheet date. In addition, we classify loan fees based on the classification of the associated debt principal.
26
Note 3 – Recently Issued Accounting Standards
We recently adopted the following accounting standard updates (“ASUs”):
ASU 2023-07 - Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures
The amendments in this update are effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years
beginning after December 15, 2024. The amendments in this update improve reportable segment disclosure requirements, primarily
through enhanced disclosures about significant segment expenses. The amendments in this update have been incorporated into
disclosure in Note 4.
Recently issued ASUs by the FASB that we have not yet adopted but which could affect our Consolidated Financial Statements and
related disclosures in future periods:
ASU 2024-01 - Compensation - Stock Compensation (Topic 718): Scope Application of Profits Interest and Similar Awards
In March 2024, FASB issued clarification and guidance on accounting for profits interest awards in accordance with Topic 718. There is
no impact on the Company from this new guidance issued.
ASU 2024-02 - Codification Improvements - Amendments to Remove References to the Concepts Statements
The update removes references to various Concept Statements in the Codification. The update simplifies Codification and draws a
distinction between authoritative and nonauthoritative literature. We do not currently expect any of these updates to affect our
Consolidated Financial Statements and related disclosures. The amendments in this update are effective for public business entities for
fiscal years beginning after December 15, 2024.
ASU 2024-03 / 2025-01 - Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures
(Subtopic 220-40): Disaggregation of Income Statement Expenses
In November 2024, FASB issued this update to improve the disclosures about a public business entity’s expenses. The update will
require disclosure of additional information about specific expense categories in the notes to financial statements at interim and annual
reporting periods. This information is generally not presented in the financial statements today. The incremental information will allow
investors to better understand the components of the Company’s expenses, make their own judgments about the entity’s performance,
and more accurately forecast expenses, which in turn should enable investors to better assess the Company’s prospects for future cash
flows. It also will provide contextual information for an entity’s preparation and an investor’s consideration of management’s discussion
and analysis of financial position and results of operations presented in the directors' report.
The update is effective for public business entities for annual reporting periods beginning after December 15, 2026, and interim
reporting periods within annual reporting periods beginning after December 15, 2027. While early adoption is permitted we do not
anticipate it will be applied. The impacts are not expected to be material and will be limited to disclosures only.
ASU 2023-06 – Disclosure Improvements: Codification Amendments in Response to the SEC’s Disclosure Update and
Simplification Initiative
The amendments in this update represent changes to clarify or improve disclosure and presentation requirements of a variety of topics.
We do not currently expect any of these updates to affect our Consolidated Financial Statements and related disclosures. The
amendments in this update should be applied prospectively. The effective date for non-SEC registered entities will be two years after
the effective date of removal of that related disclosure from regulation S-X or S-K by SEC, with early adoption prohibited.
ASU 2023-09 - Income Taxes (Topic 740): Improvements to Income Tax Disclosures
In December 2023, the FASB issued ASU No. 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures. The
standard requires disaggregated information about a reporting entity’s effective tax rate reconciliation and information on income taxes
paid. The new requirement is effective for annual periods beginning after December 15, 2024. The guidance will be applied on a
prospective basis with the option to apply the standard retrospectively, with early adoption permitted. Upon adoption, this standard will
require additional disclosures to be included in our financial statements. The impacts are not expected to be material.
27
Note 4 - Segment Information
(In $ millions)
Seagems
(50% share)
Fontis Other
Total
reporting
Segments
Reconciling
Items
Total
Consolidated
Contract revenues
206.9
244.6
-
451.5
(206.9)
244.6
Amortization of favorable contracts - (30.7) (30.7) (30.7)
Tax on revenues (12.1) - - (12.1) 12.1 -
Operating revenues
194.8
213.9
-
408.7
(194.8)
213.9
Rig / Vessel operating expenses (62.5) (96.0) - (158.5) 62.5 (96.0)
General and administrative exp. (12.6) (4.8) (11.9) (29.3) 12.6 (16.7)
Other operating expenses (0.2) (1.6) - (1.8) 0.2 (1.6)
Depreciation and amortization (42.3) (17.9) - 60.2- 42.3 (17.9)
- - 10.0 10.0 75.2 85.2
Operating income
77.2
93.6
(1.9)
168.9
(2.0)
166.9
Share in results from associated
companies
- - (5.4) (5.4) - (5.4)
Interest expense (6.2) - (82.1) (88.3) 6.2 (82.1)
Other financial items, net 7.3 9.3 (30.5) (13.9) (7.3) (21.2)
Income tax benefit/(expense) (3.1) (26.6) - (29.7) 3.1 (26.6)
Net income/(loss)
75.2
76.3
(119.9)
31.6
-
31.6
Share in results from joint ventures
December 31, 2024
Fontis Holdings Ltd. and its subsidiaries (collectively "Fontis"), a wholly-owned subsidiary of Paratus, is a provider of drilling services,
operating a fleet of five high-specification jack-up rigs – Defender, Courageous, Intrepid, Oberon, and Titania FE - currently located in
Mexico, under contract with a state-owned company in Mexico.
The Seagems segment represents the Company's 50/50 joint venture interest in Seagems joint venture, comprising of Seabras
Sapura Holding GmbH and Seabras Sapura Participacoes SA (collectively “Seagems” or the "JV"). Seagems is a subsea services
company, operating a fleet of six multipurpose pipe-laying support vessels - Diamante, Topazio, Esmeralda, Onix, Jade and Rubi –
with capabilities for subsea engineering, installation, and other services, under contract in Brazil. Under US GAAP, we report on
Seagems' results in our consolidated financial statements using the equity method. Accordingly, the full operating results included
below are not included within our consolidated results and are thus adjusted for under "Reconciling items" and fully replaced with our
equity in earnings of the equity method. For segment reporting purposes, we present 50% information for Seagems. Our segment
reporting for Seagems includes information to reconcile from our segment reporting for Seagems to our consolidated financial
statements prepared under US GAAP.
The Other segment includes our 23.8% ownership in Archer which is accounted for as an equity method investment as well as
general corporate and finance activities, and basis difference adjustment to equity method investments.
Our CODM is the Board of Directors assisted by the executive management, which is comprised of the Chief Executive Officer and
Chief Financial Officer. The CODM assesses segment performance based on their review of the operating income (loss) of each
segment, which measures profitability after deducting normal operating costs. Components within operating income (loss), such as
revenues, operating expense and general and administrative expense, are used to monitor actual performance against budget and
forecasted results for each segment. Further, the CODM utilizes revenue to derive a segment’s asset utilization and average dayrate.
Using these metrics, the CODM can identify inefficiencies in the segments and develop strategies to enhance performance, make
investment decisions and allocate resources as needed. The disaggregated segment information, as presented in the tables below,
includes intercompany eliminations and aligns with the segment level information that is regularly provided to the CODM.
The following tables provide disclosures of the key metrics used by the CODM when assessing the operations of the business.
Accounting policy
A segment is a distinguishable component of the business that is engaged in business activities from which the Company earns
revenues and incurs expenses, and whose operating results are regularly reviewed by the chief operating decision maker ("CODM").
These are subject to risks and rewards that are different from those of other segments. We have identified three reportable segments
such as Seagems, Fontis and Other (Corporate expenses).
From January 1, 2024, the Company reports its operations under three segments: Fontis, Seagems, and Other. This change (i.e.,
presenting Seagems JV operating results and the Company 50% share of the JV) reflects the view that the operations of the JV are
"integral" to our business. The Company believes this segment information will provide users of our financial statements with more
relevant information and aligns with industry practices.
28
Note 4 - Segment Information (continued)
(In $ millions)
Seagems
(50% share)
Fontis Other
Total
reporting
Segments
Reconciling
Items
Total
Consolidated
Contract revenues
224.8
205.4
-
430.2
(224.8)
205.4
Amortization of favorable contracts - (38.6) (38.6) - (38.6)
Tax on revenues (10.5) - - (10.5) 10.5 -
Operating revenues
214.3
166.8
-
381.1
(214.3)
166.8
Rig / Vessel operating expenses (66.7) (90.0) (4.0) (160.7) 66.7 (94.0)
General and administrative exp. (15.7) (6.9) (3.0) (25.6) 15.7 (9.9)
Other operating expenses 0.4 (2.6) (11.1) (13.3) (0.4) (13.7)
Depreciation and amortization (41.2) (15.2) - 56.4- 41.2 (15.2)
- - (7.0) (7.0) 74.0 67.0
Operating income
91.1
52.1
(25.1)
118.1
(17.1)
101.0
Share in results from associated
companies
- - (0.7) (0.7) - (0.7)
Interest expense (11.5) (1.7) (83.6) (96.8) 11.5 (85.3)
Other financial items, net 0.5 (18.8) 4.8 (13.5) (0.5) (14.0)
Income tax benefit/(expense) (6.1) (23.8) - (29.9) 6.1 (23.8)
Net income/(loss)
74.0
7.8
(104.6)
(22.8)
-
(22.8)
(In $ millions)
Seagems
(50% share)
Fontis Other
Total
reporting
Segments
Reconciling
Items
Total
Consolidated
Cash and cash equivalent
12.4 21.5 64.9 98.8 (12.4)
86.4
Property, plant and equipment
629.5 259.0 - 888.5 (629.5)
259.0
Capital Expenditures
15.5 16.4 - 31.9 (15.5)
16.4
Equity method investments
- - 45.7 45.7 312.5
358.2
Total assets
674.5 668.4 426.3 1,769.2 (674.5)
1,094.7
Long-term interest-bearing debt, net
60.5 - 692.5 753.0 (60.5)
692.5
(In $ millions)
Seagems
(50% share)
Fontis Other
Total
reporting
Segments
Reconciling
Items
Total
Consolidated
Cash and cash equivalent
19.1 55.1 59.6 133.8 (19.1)
114.7
Property, plant and equipment
627.2 258.3 - 885.5 (627.2)
258.3
Capital Expenditures
14.1 22.8 - 36.9 (14.1)
22.8
Equity method investments
- - 42.1 42.1 312.4
354.5
Total assets
748.6 586.4 405.1 1,740.1 (748.6)
991.5
Long-term interest-bearing debt, net
51.3 - 655.4 706.7 (51.3)
655.4
December 31, 2023
December 31, 2024
December 31, 2023
Share in results from joint ventures
Reconciling items
Reconciling items in the tables above represent adjustments made to arrive from 50% of Seagems results (proportional consolidation
of accounting) to the equity method income as disclosed under operating activities in the statement of operations.
Geographic and customer segment data
For the year ended December 31, 2024 and 2023, all of Fontis revenues were generated in one geographic location, Mexico under
contract with one customer. During the same periods all of our operating drilling units were located in one geographic location,
Mexico. Operations of the Seagems JV and their assets were all located in Brazil during the years ended December 31, 2024 and
2023. The vessels were contracted predominantly by one customer, with no other customers contributing 10% or more to contract
revenues. As each segment disclosed in the tables above operated only in one geographical area and predominantly for one
customer additional geographic and customer segment information has not been presented.
29
Note 5 - Revenue from Contracts with Customers
December 31,
December 31,
(In $ millions)
2024
2023
Contract revenues
244.6 205.4
Amortization of favorable contracts
(30.7) (38.6)
Operating revenues
213.9 166.8
December 31, December 31,
2024
2023
(In $ millions)
Account receivables
346.9 175.1
Less: Allowance for credit losses
(7.3) (5.8)
Account receivables, net
339.6
169.3
December 31,
December 31,
2024
2023
(In $ millions)
Favorable contracts
171.9 171.9
Less: Accumulated amortization
(134.0) (103.3)
Favorable contracts, net
37.9 68.6
Of which:
Favorable contracts - current
28.9
30.7
Favorable contracts - non-current
9.0
37.9
Accounting policy
The activities that primarily drive the revenue earned from our drilling contracts include (i) providing a drilling rig and the crew and
supplies necessary to operate the rig, (ii) mobilizing and demobilizing the rig to and from the drill site and (iii) performing rig preparation
activities and/or modifications required for the contract. Consideration received for performing these activities may consist of dayrate
drilling revenue, mobilization and demobilization revenue, contract preparation revenue and reimbursement revenue. We account for
these integrated services as a single performance obligation that is (i) satisfied over time and (ii) comprised of a series of distinct time
increments.
We recognize consideration for activities that correspond to a distinct time increment within the contract term in the period when the
services are performed. We recognize consideration for activities that are (i) not distinct within the context of our contracts and (ii) do
not correspond to a distinct time increment, ratably over the estimated contract term. The Company's current contracts (except the
contract for Titania FE) with its customer includes a termination option exercisable at the discretion of the client up to 12 months in
advance of the contract end date.
We determine the total transaction price for each individual contract by estimating both fixed and variable consideration expected to be
earned over the term of the contract. The amount estimated for variable consideration may be constrained and is only included in the
transaction price to the extent that it is probable that a significant reversal of previously recognized revenue will not occur throughout
the term of the contract. When determining if variable consideration should be constrained, we consider whether there are factors
outside of our control that could result in a significant reversal of revenue as well as the likelihood and magnitude of a potential
reversal of revenue. We re-assess these estimates each reporting period as required. Our contracts provide for escalations in the
dayrate to be included to reflect market conditions. Such escalations are only recognized as revenue when we receive written approval
from the customer.
Contract Revenue – Our drilling contracts generally provide for payment on a dayrate basis, with higher rates for periods when the
drilling unit is operating and lower rates or zero rates for periods when drilling operations are interrupted or restricted. The dayrate
invoices billed to the customer are typically determined based on the varying rates applicable to the specific activities performed on an
hourly basis. Such dayrate consideration is allocated to the distinct hourly increment it relates to within the contract term, and
therefore, recognized in line with the contractual rate billed for the services provided for any given hour. The amortization of favorable
revenue contract assets is recognized as an adjustment to revenues over the contract term.
Contract Balances – Accounts receivable are recognized when the right to consideration becomes unconditional based upon
contractual billing schedules. Accounts receivable consist of billed and unbilled (accrued) elements. Contract asset balances consist
primarily of demobilization revenues which have been recognized during the period but are contingent on future demobilization
activities. Contract liabilities include payments received for mobilization as well as rig preparation and upgrade activities which are
allocated to the overall performance obligation and recognized ratably over the initial term of the contract.
Local Taxes – Taxing authorities may assess taxes on our revenues. Such taxes may include sales taxes, use taxes, value-added
taxes, gross receipts taxes and excise taxes. We generally record tax-assessed revenue transactions on a net basis.
Subsequent to year-end 2024, the Company received payment of $209 million in relation to account receivables balance. Refer to Note
20.
The following tables provide information about trade receivables and favorable contracts related to our contracts with customers:
30
Note 5 - Revenue from Contracts with Customers (continued)
Changes in the favorable contract asset during the period are as follows:
2024
2023
Opening balance at the beginning of the year
68.6
107.2
Amortization of favorable contracts
(30.7) (38.6)
Closing balance at the end of the year
37.9
68.6
(In $ millions)
2025
2026
Total
Amortization of favorable contracts 28.9 9.00
37.9
(In $ millions)
Allowance for
credit losses –
trade
receivables
Allowance for
credit losses –
related party LT
Total Allowance
for credit losses
As at January 1, 2023
4.8 1.7 6.5
Credit loss addition/(reversal)
0.9 (1.7) (0.8)
As at December 31, 2023
5.7
-
5.7
Credit loss addition
1.6 - 1.6
As at December 31, 2024
7.3
-
7.3
Accounting policy
Receivables
Receivables, including accounts receivable, are recorded in the balance sheet at their nominal amount net of expected credit losses and
write-offs.
Allowance for credit losses
The current expected credit loss ("CECL") model requires recognition of expected credit losses over the life of a financial asset to be
incurred upon its initial recognition on in-scope receivable balances. We determined doubtful accounts on a case-by-case basis and
considered the financial condition of the customer as well as specific circumstances related to the receivable such as customer disputes.
The CECL model contemplates a broader range of information to estimate expected credit losses over the contractual lifetime of an
asset. It also requires us to consider the risk of loss even if it is remote. We estimate expected credit losses based on relevant
information about past events, including historical experience, current conditions, and reasonable and supportable forecasts of events
which may affect the collectability. We estimate the CECL allowance using a “probability-of-default” model, calculated by multiplying the
exposure at default by the probability of default by the loss given default by a risk overlay multiplier over the life of the financial
instrument.
We have used a probability-of-default model to estimate expected credit losses for all classes of in-scope receivable balances. Under
this methodology we use data such as customer credit ratings, maturity of loan, security of loan, and incorporate historical data
published by credit rating agencies, to estimate the chance of default and loss given default. We then multiply the balance outstanding
by the estimated chance of default and loss given default to calculate the allowance required for the expected credit loss. We monitor
the credit quality of receivables by re-assessing credit ratings, assumed maturities and probability-of-default on a quarterly basis.
Unrecognized unbilled escalations from November 2021 (date of Fontis acquisition) to December 31, 2024 amounted to $52.6 million
(2023: $45.6 million).
The amortization is recognized in the condensed consolidated statement of operations as an adjustment to revenue of favorable
contracts. The average remaining amortization period for the favorable contracts is 13 months.
The table below shows the amounts relating to favorable contracts that is expected to be amortized over the following periods:
The following table summarizes the balance sheet movement in the allowance for credit losses for the years ended December 31, 2024
and 2023:
31
Note 6 - Cash and Cash Equivalents
December 31,
December 31,
(In $ millions)
2024
2023
Cash and cash equivalents, non-restricted
75.3 91.7
Cash and cash equivalents, restricted
11.1 23.0
Total cash and cash equivalents
86.4
114.7
Note 7 - Other Current Assets
Other current assets consist of the following:
December 31,
December 31,
(In $ millions)
2024
2023
VAT asset*
- 9.2
Taxes receivable 8.9 11.3
Prepaid expenses
1.1 2.0
Total other current assets
10.0
22.5
Note 8 - Other Current Liabilities
Other current liabilities consist of the following:
December 31,
December 31,
(In $ millions)
2024
2023
VAT liability*
21.2 -
Taxes payable*
21.5 7.6
Employee withheld taxes and social security
2.7 2.1
Other current liabilities
16.4 8.3
Uncertain tax positions (UTP) provision
2.7 -
Accrued interest on senior secured notes
0.5 -
Total other current liabilities
65.0
18.0
Note 9 - Other Non-Current Liabilities
Other non-current assets consist predominantly of right of use assets.
Other non-current liabilities consist of the following:
December 31,
December 31,
(In $ millions)
2024
2023
Uncertain tax positions (UTP) provision
61.3 84.7
Other non-current liabilities
0.1 -
Total other non-current liabilities
61.4
84.7
Accounting policy
Cash and cash equivalents comprise cash bank deposits and short-term deposits with an original maturity of three months or less.
* Previous year balances were reclassified to conform with 2024 presentation. VAT tax balances in the same jurisdiction are shown net
starting from 2024 for those balances where netting is permitted. 2023 balances have been reclassified accordingly.
* Previous year balances were reclassified to conform with 2024 presentation, refer to Note 7.
Restricted cash represents cash collateral supporting performance guarantees issued to a large national oil company in Mexico.
32
Note 10 - Drilling Units and Equipment
(In $ millions)
Gross carrying
value
Accumulated
depreciation
Net carrying
value
As at January 1, 2023
267.0
(16.3)
250.7
Additions
22.8
-
22.8
Depreciation
-
(15.2)
(15.2)
As at December 31, 2023
289.8
(31.5)
258.3
Additions
16.4
-
16.4
Depreciation*
-
(15.7)
(15.7)
As at December 31, 2024
306.2
(47.2)
259.0
Accounting policy
Carrying value of rig assets
Generally, the carrying amount of our drilling units and related equipment are recorded at historical cost less accumulated depreciation.
However, drilling units acquired through a business combination would be measured at fair value as of the date of acquisition. Our drilling units
are subject to various estimates, assumptions, and judgments related to capitalized costs, useful lives and residual values, and impairments.
Our estimates, assumptions and judgments reflect both historical experience and expectations regarding future operations, utilization and
performance.
Useful lives and residual value
The cost of our drilling units less estimated residual value is depreciated on a straight-line basis over their estimated remaining useful lives.
The estimated useful life of our jack-up rigs, when new, is 30 years.
The useful lives of rigs and related equipment are difficult to estimate due to a variety of factors, including technological advances that impact
the methods or cost of oil and gas exploration and development, changes in market or economic conditions, changes in laws or regulations
affecting the drilling industry and possible climate change impacts. We re-evaluate the remaining useful lives of our drilling units annually and
as and when events occur which may directly impact our assessment of their remaining useful lives. This includes changes in the operating
condition or functional capability of our rigs as well as market and economic factors.
No residual value is assumed when depreciating drilling unit assets. Our current position is that though there is the potential that we may
recover scrap value at the end of the life of a drilling unit, we are not able to form a reliable estimate of the amount, which may also be reduced
by any potential decommissioning costs. Therefore, we have made a prudent estimate that the residual value at retirement is $nil. We re-
evaluate residual value annually and as and when events occur which may directly impact our assessment of residual value.
The use of different estimates, assumptions and judgments in establishing estimated useful lives and residual values could result in
significantly different carrying values for our drilling units which could materially affect our results of operations.
Impairment considerations (Drilling units)
The carrying values of our long-lived assets are reviewed for impairment when certain triggering events or changes in circumstances indicate
that the carrying amount of an asset may no longer be recoverable. Asset impairment evaluations are, by nature, highly subjective. They
involve expectations about future cash flows generated by our assets and reflect management’s assumptions and judgments regarding future
industry conditions and their effect on future utilization levels, dayrates and costs. The use of different estimates and assumptions could result
in significantly different carrying values of our assets and could materially affect our results of operations. An impairment loss is recorded in the
period in which it is determined that the aggregate carrying amount is not recoverable.
For the year ended December 31, 2024 and 2023, no indicators of impairment were identified against our drilling units.
Repairs, maintenance and periodic surveys
Costs related to periodic overhauls of drilling units are capitalized under drilling units and amortized over the anticipated period between
overhauls, which is generally five years. Related costs are primarily yard costs and the cost of employees directly involved in the work.
Amortization costs for periodic overhauls are included in depreciation and amortization expense. Costs for other repair and maintenance
activities are included in vessel and rig operating expenses and are expensed as incurred.
* Depreciation charge includes the effects of an immaterial prior period adjustment.
The gross carrying value and accumulated depreciation included in drilling units in the balance sheet are as follows:
33
Note 11 - Interest-bearing Debt
December 31,
December 31,
(In $ millions)
Interest Rate
Maturity Date
2024
2023
9.00% 15/07/2026 215.4 715.4
9.50% 27/06/2029 500.0 -
715.4
715.4
(22.9) (60.0)
692.5
655.4
- -
692.5
655.4
Interest expense
Interest expense is comprised of the following:
December 31,
December 31,
(In $ millions)
2024
2023
Loan interest expense
67.2 69.7
Amortization of debt discount
14.9 15.6
Interest expense
82.1
85.3
Carrying Amount
Total interest-bearing debt (notional)
Less: Unamortized discount and debt issuance costs
Total interest-bearing debt, net
Less: Current portion, net
Long-term interest-bearing debt, net
2026 Senior secured notes plus PIK interest
2029 Senior secured bonds
The key terms relating to our debt in the year ended December 31, 2024 and 2023 are explained below.
2026 Senior secured notes ("2026 Notes")
Senior secured notes were issued on January 20, 2022 and are due July 15, 2026. In July 2024, the proceeds from the $500 million bond
issue described below (“2029 Bonds”) were used to partially refinance the 2026 Notes. As a result, the remaining principal amount under the
2026 Notes was $215 million as at December 31, 2024. The carrying amount of the 2026 Notes are presented net of unamortized discount
and debt issuance costs.
2029 Senior secured bonds ("2029 Bonds")
Secured bonds were issued on June 27, 2024 and are due June 27, 2029. At December 31, 2024, the outstanding principal amount is $500
million. The carrying amount of the 2029 Bonds are presented net of unamortized discount and debt issuance costs. Debt issuance costs
amounted to $11.6 million and relate to legal and broker fees associated with the transaction.
Gain/(loss) on extinguishment of financial instruments
In connection with the partial redemption of the 2026 Notes, a $34.3 million non-cash accounting expense was recognized in 2024 in the
statements of operations presented under “Gain/(loss) extinguishment of financial instruments”.
In 2023, in connection with repayment of the Fontis Notes made in July 2023 a $2.7 million loss as the result of the call premium paid on the
early redemption of $2.7 million was recognized as "Gain/(loss) on extinguishment of financial instruments" presented in our 2023
Consolidated Statement of Comprehensive Income. The loss was offset by gain on conversion of Archer loan of $7.1 million, refer to Note 17.
Accounting policy
Loan related costs, including debt issuance, arrangement fees and legal expenses, are capitalized and presented in the Consolidated
Balance Sheets as a direct deduction from the carrying amount of the related financial liability, and amortized over the term of the related loan
using the effective interest method, the amortization is included in “Interest expense” within the Consolidated Statement of Operations.
As of December 31, 2024 and 2023 the carrying value of our debt, all long-term, was comprised as follows:
34
Note 12 - Taxation and Provisions for Uncertain Tax Positions
Income taxes is comprised of the following:
December 31,
December 31,
(In $ millions)
2024
2023
Current tax expense:
Foreign
24.2 18.6
Deferred tax expense:
Foreign
2.4 5.2
Income tax expense
26.6 23.8
Effective tax rate
46%
2380%
December 31,
December 31,
(In $ millions)
2024
2023
Income tax Bermuda at statutory tax rate (0%) - -
Income tax in other jurisdictions (excl. Mexico) at statutory tax rates
26.9 28.5
Non-taxable income
(26.9) (28.6)
Mexico
Withholding taxes on bareboat charter
15.9 8.3
Income tax at statutory tax rate (30%)
(2.2) 2.1
FX variations between functional and tax currency
1.7 (4.6)
Valuation allowance
7.1 9.2
Other items including other permanent differences
(2.0) (1.3)
Uncertain tax positions
6.1 10.2
Income tax expense reconciled
26.6
23.8
Accounting policy
Paratus is a Bermudan company that has a number of subsidiaries and affiliates in various jurisdictions. Currently, the Company and its
Bermudan subsidiary are not required to pay taxes in Bermuda on ordinary income or capital gains as they qualify as exempt companies.
The Company has received written assurance from the Minister of Finance in Bermuda that it will be exempt from taxation until March
2035. Certain subsidiaries operate in other jurisdictions where taxes are imposed. Consequently, income taxes have been recorded in
these jurisdictions when appropriate.
The determination and evaluation of our annual group income tax provision involves interpretation of tax laws in various jurisdictions in
which we operate and requires significant judgment and use of estimates and assumptions regarding significant future events, such as
amounts, timing and character of income, deductions and tax credits. There are certain transactions for which the ultimate tax
determination is unclear due to uncertainty in the ordinary course of business. We recognize tax liabilities based on our assessment of
whether our tax positions are more likely than not sustainable, based solely on the technical merits and considerations of the relevant
taxing authority’s widely understood administrative practices and precedence. We measure the tax benefit/cost of an uncertain tax
position ("UTP") as the largest amount that us more than 50% likely of being realized upon settlement. We regularly assess the potential
outcomes of examinations by tax authorities in determining the adequacy of our provision for income taxes.
Changes in tax laws, regulations, agreements, treaties, foreign currency exchange restrictions or our levels of operations or profitability in
each jurisdiction may impact our tax liability or recognition of deferred taxes and liabilities in any given year. Current income tax expense
reflects an estimate of our income tax liability for the current year, withholding taxes, changes in prior year tax estimates as tax returns
are filed, from tax audit adjustments and movements in provision for UTP in Mexico. The uncertain tax provision is included in "Other
current" and "Other non-current liabilities” on the Consolidated Balance Sheets.
Deferred tax assets and liabilities are based on temporary differences that arise between carrying values used for financial reporting
purposes and amounts used for taxation purposes of assets and liabilities and the future tax benefits of tax loss carry forwards. The
amount provided is based upon the expected manner of settlement.
Our deferred tax expense or benefit represents the change in the balance of deferred tax assets or liabilities as reflected on the
Consolidated Balance Sheets. Valuation allowances are determined to reduce deferred tax assets when it is more likely than not that
some portion or all of the deferred tax assets will not be realized. A change in such estimates and assumptions, such as future taxable
income or where our drilling units operate, along with any changes in tax laws, could require us to adjust the deferred tax assets,
liabilities, or valuation allowances.
Income tax expense are primarily impacted by withholding taxes and movements in the UTP in Mexico.
Income tax expense for the year ended December 31, 2024 and 2023 differed from the amount computed by applying the statutory
income tax rate in Bermuda of 0% as follows:
35
Note 12 - Taxation and Provisions for Uncertain Tax Positions (continued)
December 31,
December 31,
(In $ millions)
2024
2023
Other current liabilities
13.8 10.1
Net operating losses carried forward
17.9 30.6
Deferred tax asset
31.7
40.7
Valuation allowance
(18.6) (29.5)
Total deferred tax assets
13.1
11.2
Property, plant and equipment (10.7) (10.3)
Other temporary differences (4.6) (0.9)
Total deferred tax liabilities
(15.3)
(11.2)
Net deferred tax liabilities
(2.2)
-
December 31,
December 31,
(In $ millions)
2024
2023
Balance at the beginning of the year
85.3 73.2
Increase a result of position taken in the current year
1.2 5.8
Decrease as a result of settlements
(13.0) (9.1)
Increase/(decrease) as a result of positions taken in previous years*
5.0 3.1
Increase/(decrease) due to foreign currency revaluation
(14.4) 12.3
Uncertain tax positions
64.1
85.3
In 2024 valuation allowance decreased by $11.3 million (2023: $12.9 million) of which is primarily related to return to provision
adjustments.
Deferred income taxes
Deferred income taxes reflect the impact of temporary differences between the amount of assets and liabilities recognized for financial
reporting purposes and such amounts recognized for tax purposes.
The tax effects of temporary differences and net operating losses carried forward:
*Increase
includes
additional
interest,
penalties
and
inflation
adjustments
.
Uncertain tax positions
The Group is currently undergoing audits by the Mexican tax authorities ("SAT") in respect of accounting years 2014, 2018, 2019 and
2020. In 2023, the tax liabilities relating to 2016 tax audit were resolved and settled for approximately $9 million. In 2024, the tax liabilities
relating to 2017 tax audit were resolved and settled for approximately $13 million. Subsequent to December 31, 2024, the tax liabilities in
relation to 2014 Titania rig operating entity were resolved and settled for approximately $3.5 million. The Group's UTP estimate, including
for those accounting years that are currently not subject to audit, is based on the information available at the time to the best of
management's assessment of all relevant available information including the tax audits that have been finalized.
The provision for UTP as of December 31, 2024 was $64.1 million (2023: $85.3 million), of which $2.7 million (2023: nil) was included in
"Other-current liabilities" and $61.3 million (2023: $85.3 million) in "Other non-current liabilities" on the balance sheet. Included in the
provision for UTP is accrued interest and penalties totaling $21.1 million (2023: $41.3 million). The movement in the UTP provision
compared to year-end 2023 was mainly driven by fluctuations in foreign currency rates (included in "Other financial items"), settlements
made, inflation adjustments and accruals for interest (included in "Income tax expense").
Pillar 2
In December 2023, Bermuda passed into law the Corporate Income Tax 2023 (the “Corporate Income Tax Act”) in response to the
Organization for Economic Co-operation and Development's ("OECD") Pillar 2 global minimum tax initiative to impose a 15% corporate
income tax that will be effective for fiscal years beginning on or after January 1, 2025. The assurance granted by the Minister of Finance
pursuant to the Tax Protection Act has been made subject to the application of any taxes payable pursuant to the Corporate Income Tax
Act. Subject to certain exceptions, Bermuda entities that are part of a multinational group will be in scope of the provisions of the
Corporate Income Tax Act if, with respect to a fiscal year, such group has annual revenue of Euro 750 million or more in the consolidated
financial statements for at least two of the four fiscal years immediately prior to such fiscal year (“Bermuda Constituent Entity Group”).
While we are still closely monitoring developments of these rules and evaluating the potential impact on future periods, we do not expect
they will have an impact on our financials in the near term.
36
Note 13 - Share Capital
December 31,
December 31,
2024
2023
Class A ordinary shares 169,550,049 142,849,991
Class C ordinary shares - 11,165,999
Total
169,550,049
154,015,990
Note 14 - Earnings per Share (EPS)
The following reflects the net income/(loss) and share data used in the earnings per share calculation:
December 31,
December 31,
2024
2023
Net income/(loss)
31.6
(22.8)
161,989,730 149,610,784
162,060,493 149,610,784
Earnings per share:
Basic 0.20 (0.15)
Diluted 0.19 (0.15)
Weighted average numbers of shares outs. (basic)
Weighted average numbers of shares outs. (diluted)
(in $ million, except share and per share amounts)
The computation of basic income/(loss) per share ("EPS") is based on the weighted average number of shares outstanding during the
period.
Diluted earnings per share amounts are calculated by dividing the net income/(loss) by the weighted average number of shares
outstanding during the period, plus the weighted average number of ordinary shares that would be outstanding if all the dilutive potential
ordinary shares were issued. Anti-dilutive options granted to employees totaling 780,000 shares were excluded from the computation of
diluted EPS.
On May 21, 2024, the Company, with the approval of its shareholders, undertook and completed a share split of its existing A-shares
into 500 class A-shares, via the following steps:
i. with effect from March 15, 2024, the Class C shares of US $0.01 each in the Company were redesignated to Class A shares of
US $0.01 each in the Company; and
ii. with effect from May 21, 2024, each of the Class A shares of US$0.01 each in the Company, were split into 500 A shares of
US$0.00002 each.
Except where indicated, the number of shares outstanding and share equivalents have been retroactively restated for this change.
On June 26, 2024, the Company issued 15,309,059 new shares in relation with a private placement immediately before the Initial
Public Offering ("IPO") in June. Issuance costs capitalized in relation to the private placement amounted to $0.7 million.
On September 12, 2024, the Company issued 225,000 new shares in relation with exercise of warrants by the chair of the board of
directors.
Following the above, Paratus, had total Class A common shares of 169,550,049 at par value of US $0.00002 each at December 31,
2024. The share information provided as at December 31, 2023 in the table immediately below is prior to the share split.
37
Note 15 - Stock Options and Other Share-Based Compensation
Share options with USD exercise price
2024
2023
Expected term in years - 4
Volatility - 50%
Risk-free interest rate - 3.58%
Weighted average fair value per option/warrant granted - 0.3
Number of
shares
Weighted-
Average
Exercise
Price, USD
Average
Remaining
Contractual
Term
(Years)
Number of
shares
Weighted-
Average
Exercise
Price, USD
Average
Remaining
Contractual
Term
(Years)
Outstanding at beginning of the year
625,000 3.9 3.9 - - -
Granted
- - - 625,000 3.9 3.9
Exercised
225,000 -
Outstanding at end of the year
400,000 4.6 2.9 625,000 3.9 3.9
Exercisable at the end of the year
200,000 3.3 2.9 75,000 2.0 3.9
Share options with NOK exercise price
2024
2023
Expected term in years 3 -
Volatility 54% -
Risk-free interest rate 3.18% -
Weighted average fair value per option/warrant granted 20.1 -
Number of
shares
Weighted-
Average
Exercise
Price, NOK
Average
Remaining
Contractual
Term
(Years)
Number of
shares
Weighted-
Average
Exercise
Price, NOK
Average
Remaining
Contractual
Term
(Years)
Outstanding at beginning of the year
- - - - - -
Granted
780,000 55.7 4.7 - - -
Exercised
- -
Outstanding at end of the year
780,000 55.7 4.7 - - -
Exercisable at the end of the year
- - - - - -
2024 2023
2024 2023
In April 2023, the Company approved establishment of incentive plans to provide selected participants with a financial incentive, which
recognizes long-term corporate, organization and individual performance and accomplishments. In September 2024, the new incentive plan
was established and implemented by the Board of Directors. The plan allows directors and management of the Company and/or its
subsidiaries to be awarded from time to time in accordance with the plan.
In April 2023, the Company issued warrants and stock options to the directors of the Company as compensation for the services performed.
The Warrants issued are performance-based awards and require achievement of certain performance criteria, which is predefined by the
Board of Directors at the time of grant. Stock option awards expire 4 years after the grant date and vest based upon the passage of time. Both
warrants and options granted in 2023 have a USD exercise price.
In September and November 2024 the Company issued two share option awards under the new Incentive plan. A total of 780,000 options
were awarded to certain members of the management team and board members. Stock option awards expire 5 years after the grant date and
vest based upon passage of time. Awards issued under the incentive plan have a NOK exercise price as the Company is listed in Euronext
Oslo Børs.
The grant date fair value of stock options and warrants granted were measured using the Black-Scholes option-pricing model with the following
weighted average assumptions:
Compensation expense recognized for stock options in 2024 was $0.3m (2023: $0.06m) and is presented in general and administrative
expenses in our consolidated statements of operation. The expense related to performance based awards was recognized in 2024. No
performance bonus awards remain outstanding as of December 31, 2024.
Accounting policy
The Company issues stock options and warrants compensation to certain employees and board members. For equity awards total
compensation cost is based on the grant date fair value. The fair value of stock option awards is estimated using a Black-Scholes-Merton
option-pricing model. The company recognizes stock-based compensation expense for stock-options over the service period required to earn
the award, which is the time period from the grant date to the vesting date of the award, at which point employee becomes eligible to maintain
it. The company amortizes these awards on a straight-line basis. Compensation expense for performance based awards granted is recognized
as the fair value of the award in the reporting period in which certain performance criteria is achieved.
The Company has made a policy election to estimate the number of stock-based compensation awards that will ultimately vest to determine
the amount of compensation expense recognized each reporting period.
38
Note 16 - Risk Management and Financial Instruments
The Company is exposed to various financial risks that may impact its financial performance, including market risk, liquidity risk,
concentration risk, and credit risk. To manage these exposures, the Company may utilize a range of derivative instruments and financial
contracts, there can however be no assurance that such measures will be undertaken, or if undertaken, that such measures will be
sufficient. The Paratus financial risk management is primarily handled by the Group finance function in accordance with guidelines
established by the Board of Directors. These guidelines aim to mitigate potential adverse effects through sound business practices and
structured risk management procedures. No hedge accounting is applied.
Market risk
Market risk arises from fluctuations in foreign exchange rates and interest rates, which can affect the Group’s financial results.
Foreign currency exchange rate risk
Revenues from drilling services in Mexico are primarily denominated in US dollars, while expenditures are mainly incurred in US dollars
and Mexican Pesos (MXN). We have also MXN exposure for payment of taxes in Mexico. Capital contributions and shareholder
distributions are made in US dollars and NOK. As of year-end 2024, the Company did not have any active currency hedging instruments.
However, it continuously monitors foreign currency risk exposure and evaluates potential hedging strategies to mitigate volatility.
Interest rate risk
The Company’s financing primarily consists of US dollar denominated bond loans with fixed interest rates, eliminating the need for interest
rate hedging. Interest rate exposure related to loans within the Seagems JV is considered limited, and no hedging arrangements were in
place during 2024. Additionally, the Company is exposed to interest rate fluctuations on its cash deposits, which are held at floating rates.
Liquidity risk
Liquidity risk refers to the potential inability to secure adequate funding for business operations. Effective liquidity management requires
maintaining sufficient cash reserves, credit facilities, and financial resources to ensure flexibility under dynamic market conditions.
The Group’s primary sources of liquidity include existing cash reserves and operating cash flows from its operating entities, including
distributions from Seagems. Additionally, the Company relies on debt financings, and may in the future rely on equity financings. To
proactively manage liquidity, the Group prepares, reviews, and updates cash flow projections regularly. These projections incorporate
various scenarios, including fluctuations in receivables collections in Mexico, to ensure sufficient funding. The Board of Directors and
executive management utilize these insights for informed decision-making.
Investment in joint venture
The Company conducts a significant portion of its operations through the Seagems JV. The terms of co-operation and shareholding in the
JV are governed by the investment and shareholders' agreements between the shareholders, which contain, inter alia, provisions
requiring unanimous shareholders' consent in certain matters, such as share capital changes, dividends and distributions, entering into
bids, contracts, assuming liabilities, and making material changes to any contract or transaction. The Company's obligations in respect of,
and the Company's ability to receive any dividends from, its JVs depend on the terms and conditions of its investment and shareholders'
agreements and relationship with its joint shareholders. The Seagems JV budgets and activity plans are reviewed and approved annually.
Pursuant to agreement among JV shareholders, Seagems distributes all excess cash to its shareholders.
Excessive risk concentration and credit risk
In 2024, the Company’s consolidated operating revenues were generated from a major state-owned petroleum company in Mexico. For
Seagems JV, Petrobras accounted for a significant share of its revenues. Any reduction in activity, contract cancellations, suspensions, or
non-renewals by these key customers could significantly impact the Group’s financial performance, especially if replacement contracts on
similar terms are not secured. In March 2025, Fontis received early termination notices for the drilling contract for Courageous and
Intrepid, which highlights the risks associated with customer dependency and contract uncertainty. Additionally, the high customer
concentration may increase the Group's credit risk exposure, as evidenced by payment delays from its client in Mexico. To address these
delays, Fontis secured an agreement with a leading international bank in early 2025 to accelerate the payment of $209 million in overdue
invoices, subject to an upfront fee, demonstrating that the Company can access liquidity through alternative means when needed. The
Company is actively engaging with the client to expedite the collection of outstanding receivables while acknowledging and planning
for
the possibility of ongoing fluctuations in the timing of collections. For details on how we estimate expected credit losses, refer to Note 5 –
“Revenue from Contracts with Customers”.
Our cash and cash equivalents are held by financial institutions that are considered investment-grade and financially stable representing
minimal risk to the Company. We do not believe a significant credit risk exists for our cash and cash equivalents balances. We monitor the
credit ratings of these institutions to make decisions on limiting the exposure to any such institution.
Fair value of financial instruments
Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal
or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date.
The fair value hierarchy prescribed by US GAAP requires an entity to maximize the use of observable inputs and minimize the use
of
unobservable inputs when measuring fair value.
There are three levels of inputs that may be used to measure fair value:
Level 1: Quoted prices for identical instruments in active markets.
Level 2: Quoted market prices for similar instruments in active markets; quoted prices for identical or similar instruments in markets that
are not active; and model-derived valuations in which all significant inputs and significant value drivers are observable in active markets.
Level 3: Valuations derived from valuation techniques in which one or more significant inputs or significant inputs or significant value
drivers are unobservable.
39
Note 16 - Risk Management and Financial Instruments (continued)
(In $ millions)
Assets
Level
Fair
value
Carrying value
Fair
value
Carrying value
Related party loans receivables – Seagems
loans receivables
2 3.0 3.3 3.0 3.3
Liabilities
2026 Senior secured notes*
1 215.4 203.2 699.0 655.4
2029 Senior secured notes*
1 488.2 489.3 - -
* These instruments are at a fixed interest rate
December 31, 2024 December 31, 2023
The carrying value of cash and cash equivalents, restricted cash, accounts receivable, related party payables and accounts payable are
by their nature short-term. As a result, the carrying values included in the Condensed Consolidated Balance Sheets approximate fair
value. These assets and liabilities are categorized as Level 1 on the fair value measurement hierarchy.
Related party loans receivables - Seagems loans receivable
We estimate the fair value of the related party loans receivable from Seagems to be equal to the carrying value after adjusting for
expected credit losses. The debt is not freely tradeable and cannot be recalled by us at prices other than specified in the loan note
agreements. The loans were entered into at market rates. The loans are categorized as Level 2 on the fair value hierarchy.
$620m of Senior secured notes ("2026 Notes")
The fair value of the senior secured notes were derived using market traded value, and as such, we have categorized this at Level 1 on
the fair value measurement hierarchy. Refer to Note 11 – Debt for further information.
$500m Senior secured bonds ("2029 Bonds")
The fair value of the senior secured bonds were derived using market traded value, and as such, we have categorized this at Level 1 on
the fair value measurement hierarchy. Refer to Note 11 – Debt for further information.
US GAAP emphasizes that fair value is a market-based measurement, not an entity-specific measurement, and should be determined
based on the assumptions that market participants would use in pricing the asset or liability. As a basis for considering market participant
assumptions in fair value measurements, US GAAP establishes a fair value hierarchy that distinguishes between market participant
assumptions based on market data obtained from sources independent of the reporting entity (observable inputs that are classified within
levels 1 and 2 of the hierarchy) and the reporting entity’s own assumptions about market participant assumptions (unobservable inputs
classified within level 3 of the hierarchy).
The carrying value of cash and cash equivalents, restricted cash, accounts receivable (net of ECL), related party payables and accounts
payable are by their nature short-term. As a result, the carrying values included in the Consolidated Balance Sheets approximate fair
value.
Level 1
The carrying value of cash and cash equivalents and restricted cash, which are highly liquid, is a reasonable estimate of fair value and
categorized at level 1 of the fair value hierarchy. Quoted market prices are used to estimate the fair value of marketable securities, which
are valued at fair value on a recurring basis.
The fair value of the senior secured notes were derived using market traded value. We have categorized this at level 1 on the fair value
measurement hierarchy. Refer to Note 11 – Debt for further information.
Level 2
We estimate the fair value of the related party loans receivable from Seagems to be equal to the carrying value after adjusting for
expected credit losses. The debt is not freely tradable and cannot be recalled by us at prices other than specified in the loan note
agreements. The loans were intended to be entered into at market rates. The loans are categorized as level 2 on the fair value hierarchy.
Other trading balances with related parties not shown in the table above are covered in Note 17 – Related party transactions. The fair
value of other trading balances with related parties are also assumed to be equal to their carrying value after adjusting for expected credit
losses on the receivables.
For the majority of our financial instruments, the carrying value approximates their fair value due to the relatively short maturities. In
circumstances where payments are delayed the fair value could differ for time value of money. For other financial instruments, a
comparison of fair value and carrying value is as follows:
40
Note 17 - Related Party Transactions
December 31,
December 31,
2024
2023
Management and administrative fees
(a)
(0.8) (10.0)
Gain on Archer convertible debt instrument
(b)
- 2.0
Total
(0.8)
(8.0)
December 31, December 31,
2024 2023
Seagems loan receivable
(c)
3.3 3.3
Total 3.3 3.3
In prior periods we have entered into certain agreements with affiliates of Seadrill to provide certain management and administrative
services, as well as technical and commercial management services. All of these services were terminated in November, 2023. These
services are now provided by other affiliates of PESL or performed in-house.
Both Seadrill and Fintech, the former JV partners, have also provided financing arrangements as described within this note below.
Related party expenses include:
(a) Management and administrative service agreements and short-term other payables - Fontis received management, administrative,
and operational support services from Seadrill Limited. The expenses incurred for these services are reported within either "Vessel and
rig operating expenses" or "Selling, general and administrative expenses" on the Consolidated Statement of Operations, depending on
the nature of the service provided. Agreement with Seadrill was terminated in November, 2023. From 2024 administrative services are
provided by affiliates of PESL.
(b) Gain on Archer convertible debt instrument - In 2020 Archer Limited (“Archer”) issued a convertible loan for the principal amount of
$13 million maturing in 2024. The convertible loan included an equity conversion option which was exercised by PESL on April 20, 2023.
Shown in the table above is a gain recognized in 2023 on the conversion option included within the convertible bond prior to conversion.
On conversion PESL received 208,000,000 new common shares of Archer in connection with the conversion of the convertible loan.
From the date of the conversion PESL started applying equity method accounting in relation to Archer. Prior to the conversion date, the
investment in Archer was recognized as Marketable Securities included in "Other Current Assets" in the Consolidated Balance Sheets.
On the date of conversion, the fair value of the convertible debt instrument was $22 million. The value of shares received on conversion
date was estimated as $20 million and was based on quoted market prices. We recognized gain on conversion of the loan in the amount
of $7.1 million in Gain/(loss) on extinguishment of financial instruments in our 2023 Consolidated Statement of Comprehensive Income.
This gain includes the difference between the fair value of the new shares received and the net carrying value of the convertible debt
extinguished, including the impact of the related fair value movements in the period. The gain includes $6 million realized gain as a result
of the reclassification of related changes in fair value from AOCI into income.
(c) Seagems loan receivable - this includes a series of loan facilities that we extended to Seagems between May 2014 and December
2016. The $3.3 million balance shown in the table above includes only $3.3 million of loan principal. Nil accrued interest and allowance
for expected credit loss. The loans are repayable on demand, subject to restrictions on Seagems' external debt facilities. No repayments
were received in relation to the loan during 2024 (2023: $56 million).
Accounting policy
Parties are related if one party has the ability, directly or indirectly, to control the other party or exercise significant influence over the
other party in making financial and operating decisions. Parties are also related if they are subject to common control or common
significant influence.
41
Note 18 - Equity Method Investments
Our equity method investments as of December 31, 2024 and 2023 are comprised as follows:
December 31,
December 31,
Ownership percentage
2024
2023
Seagems 50.0 % 50.0 %
Archer 23.8 % 24.2 %
The tables below set out the results of these entities, and our share in the results of these equity method investments:
December 31,
December 31,
December 31,
December 31,
(In $ millions, except ownership percentage)
2024
2023
2024
2023
Operating revenues
439.3 433.0 1,300.7 695.0
Operating income
174.3 207.0 71.3 48.0
Net income / (loss)
150.4 148.0 (24.5) (7.0)
Paratus ownership percentage* 50.0 % 50.0 % 23.8 % 24.2 %
Share of net income/(loss)
75.2
74.0
(5.8)
(1.7)
Amortization of basis differences
10.0 (7.0) 0.4 1.0
Share in results
85.2 67.0 (5.4) (0.7)
December 31,
December 31,
December 31,
December 31,
(In $ millions, except ownership percentage)
2024
2023
2024
2023
Current assets
197.6 192.3 404.1 354.8
Non-current assets
1,208.4 1,304.8 596.5 550.9
Current liabilities
(158.3) (309.0) (338.2) (277.5)
Non-current liabilities
(115.3) (126.3) (437.2) (432.0)
Non-controlling interest
- - (15.4) -
Net Assets (gross, 100%)
1,132.4
1,061.8
209.8
196.2
Paratus' ownership percentage 50.0 % 50.0 % 23.8 % 24.2 %
Paratus' share of book equity
566.2
530.9
50.7
47.5
Shareholder loans held as equity 0.9 57.6 - -
Basis difference (254.6) (276.1) (5.0) (5.4)
Carrying amount equity method investments
312.5
312.4
45.7
42.1
Seagems Archer
ArcherSeagems
Twelve months ended Twelve months ended
Accounting policy
Equity method investments are accounted for using the equity method if we have the ability to significantly influence, but not control, the
investee. Significant influence is presumed to exist if our ownership interest in the voting stock of the investee is between 20% and
50%. We also consider other factors such as representation on the investee’s board of directors and the nature of commercial
arrangements. We classify our equity investees as “Investments in Associated Companies”. The Company recognizes its share of
earnings or losses from the JV equity in the Consolidated Statements of Operations as “Share in results from joint ventures”. Refer to
Note 2 - Significant accounting policies. Share of earnings or losses of other associated companies is recognized as "Share of results in
associated companies" in the Consolidated Statements of Operations.
We assess our equity method investments for impairment at each reporting period when events or circumstances suggest that the
carrying amount of the investments may be impaired. We record an impairment charge for other-than-temporary declines in value when
the value is not anticipated to recover above the cost within a reasonable period after the measurement date. We consider: (1) the
length of time and extent to which fair value is below carrying value, (2) the financial condition and near-term prospects of the investee,
and (3) our intent and ability to hold the investment until any anticipated recovery. If an impairment loss is recognized, subsequent
recoveries in value are not reflected in earnings until sale of the equity method investee occurs.
* On April 20, 2023, the Company exchanged Archer convertible debt in exchange for new common shares issued. As a result of the
conversion, the Company's holding in Archer increased to 24.2%. Prior to the conversion in April 2023, the investment in Archer was
accounted for as a marketable security. Archer results are shown for the period from April 20, 2023 to December 31, 2023 in the
comparative periods.
On October 30, 2024, the Company subscribed to a pro-rata number of shares in Archer issued as part of the Private Placement
transaction.
On November 14, 2024 Archer agreed to acquire additional 10% of the shares in Iceland Drilling from its joint venture partner for $2.5
million. This transaction was settled through the issuance of new Archer shares. As the result of the above transactions the Company's
ownership decreased to 23.8% as at December 31, 2024.
The summarized balance sheets of our equity method investments and our share of recorded equity in these entities is as follows:
42
Note 19 - Commitments and Contingencies
Note 20 - Subsequent Events
The Company may from time to time become involved in legal disputes and legal proceedings relating to its operations through its
subsidiaries and JV, environmental issues, intellectual property rights or otherwise. Legal proceedings could result in adverse rulings
requiring the Company and its affiliated companies to, inter alia, pay damages, halt operations, suspend projects or relinquish licenses.
As described in Note 12, the Company is currently undergoing audits by the Mexican tax authorities in respect of accounting years 2014
and 2018 through 2020. No assurance can be made that the Mexican tax authorities will not open audits for periods from 2021 and
onwards. If the audits expand in scope or the authorities continue to question the Company’s tax position, the Company could face
significant legal and financial consequences, such as higher taxes, penalties, and interest, which in turn could significantly affect the
consolidated tax expenses and effective tax rate, potentially impacting earnings and cash flow operations and the Company's overall
financial position.
Share buybacks
On March 4, 2025, The Company repurchased 5.4 million own shares at a price of NOK 41.5 per share by way of a reverse
bookbuilding, marking the first step in deploying the previously announced share repurchase authorization of up to $100 million.
On April 2, 2025, the Company initiated repurchase of up to 1,600,000 shares by way of open market transactions on the Euronext Oslo
Børs (the "Buyback"), pursuant to an agreement with Arctic Securities AS ("Arctic"). A total NOK amount equivalent to $5 million has
been set aside for the Buyback. The Buyback commenced on April 2, 2025, and will remain in effect until the earlier of (i) the acquisition
of the maximum number of shares as set above; (ii) the maximum total consideration as set out above has been reached; or (iii) May
28, 2025. For the period from April 2, 2025, to and including April 16, 2025, the Company purchased a total of 460,896 shares at an
average price of NOK 35.4460 per share.
Following the completion of the above transactions, the Company owns a total of 5,860,896 of own shares, corresponding to 3.46% of
the Company's share capital.
Contract update for Courageous and Intrepid
On March 3, 2025, the Company announced that Fontis had received notice from its client that it has elected to exercise the previously
disclosed contractual options for early termination of the drilling contracts for the Courageous and the Intrepid. Both rigs are subject to a
365-day notice period.
The reasons cited for the early termination includes unfavorable contract terms, such as limited suspension rights and indexation
structure of dayrates (with floor and cap), and economic considerations. Nothing in the client’s notification suggests that this action was
driven by reduced operational need for drilling rigs in 2026. This action may enable the client to better align contractual terms across its
service providers during 2026, as Fontis’ contracts benefit from certain rights, which have resulted in that all of Fontis’ rigs are on
contract, despite the current reduced activity announced by other service providers in the region. Following the client’s election to
terminate the rigs, the client has no remaining contractual flexibility to further shorten the contracts for any of Fontis’ rigs.
The drilling contracts for the Courageous and the Intrepid will now expire on 28 February 2026 as opposed to its original expiration date
of 29 November 2026 and 27 May 2026, respectively. Furthermore, Fontis has been awarded a 78-day contract extension for the
Oberon.
Cash distribution to shareholders
On February 28, 2025, the Company announced that the Board of Directors has approved a cash distribution to shareholders of $0.22
per share for the fourth quarter of 2024, to all shareholders of record as of 12 March 2025. The cash distribution was paid on 21 March
2025 and was in the form of return of capital.
Receivables monetization agreement and receipt of payment in Mexico
On January 24, 2025, the Company announced that Fontis had entered into an agreement with a leading international bank to facilitate
payment to Fontis of approximately $209 million of outstanding overdue invoices with its client in Mexico (the “Receivables Payment”).
The Receivables Payment was subject to an undisclosed upfront fee, which was well below 10% of the gross receivables amount. On
February 5, 2025, the Company announced that Fontis had successfully received full payment of approximately $209 million of overdue
invoices from its client in Mexico under this arrangement. The Receivables Payment was completed in accordance with the terms of the
agreement.
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Alternative Performance Measures
December 31,
December 31,
(In $ millions)
2024
2023
Calculation of adjusted EBITDA
Net income/(loss) 31.6 (22.8)
Add back: Income tax expense 26.6 23.8
Add back: Net financial expense 108.7 100.0
Deduct: Share in results from joint ventures (85.2) (67.0)
Add back: Expected credit losses 1.6 0.8
Add back: Settlement of Management Incentive Deed - 12.9
Add back: Depreciation and amortization 17.9 15.2
Add back: Amortization of favorable contracts 30.7 38.6
Adjusted EBITDA (consolidated)
131.9
101.5
Net income/(loss) - 50% of Seagems 75.2 74.0
Add back: Income tax expense 3.1 6.1
Add back: Net financial expense (1.1) 11.0
Add back: Depreciation and amortization 42.3 41.2
Add back: Other operating expenses 0.2 (0.4)
Adjusted EBITDA (50% Seagems)
119.7
131.9
Combined Segment EBITDA
251.6
233.4
December 31,
December 31
(In $ millions)
2024
2023
Net debt
Interest-bearing debt (notional amount)
715.4
715.4
Paratus
715.4
715.4
Less: Cash and cash equivalents
86.4
114.7
Paratus
64.9
59.6
Fontis
21.5
55.1
Less: Market value Archer shares*
49.4
33.9
Paratus
49.4
33.9
Net debt
579.6
566.8
50% of Seagems interest-bearing debt (notional amount) 60.5 51.3
12.4 19.1
50% of Seagems net debt
48.1
32.2
Net debt (as per management reporting)
627.7
599.0
Net Leverage Ratio
Net debt (as per management reporting) 627.7 599.0
Combined Segment EBITDA 251.6 233.4
Net Leverage Ratio
2.5
2.6
* Trading venue: Euronext Oslo Børs (ticker: ARCH).
Less: 50% of Seagems cash and cash equivalents
The Company discloses certain alternative performance measures (“APM”) as a supplement to the consolidated financial statement
prepared in accordance with US GAAP. These measures provide additional insight into the Group’s operating performance, financing,
and future prospects, often used by analysts, investors, and other stakeholders.
Other companies may not calculate the APMs in the same manner, and, as a result, the presentation thereof may not be fully
comparable to measures used by other companies under the same or similar titles. Accordingly, undue reliance should not be placed
on the APMs contained below and should not be considered as a substitute for revenue or other financial metrics.
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Alternative performance measures (continued)
Definitions and explanations of APMs
EBITDA is an abbreviation of "Earnings Before Interest, Income taxes, Depreciation and Amortization" and represents net income/(loss)
before net interest expense, income taxes, depreciation and amortization.
Adjusted EBITDA, as applied by the Company, represents EBTIDA excluding certain non-cash items such as expected credit
gains/(losses), impairment charges, amortization of favorable contracts, and other items that the Company believes are not indicative of
ongoing performance of its core operations. The Company presents this APM as it provides useful supplemental information about the
financial performance of its business, enables comparison of financial results between periods where certain items may vary
independent of business performance, and allows for greater transparency with respect to key metrics used by management in
operating our business and measuring our performance. Further, it may provide comparability to similarly titled measures of other
companies.
Net debt as defined under the bond indenture agreement, is interest-bearing debt (notional) including the Company’s share in Seagems
interest-bearing debt (notional) less total cash and cash equivalents including the Company’s share in Seagems cash and cash
equivalents, and the market value of marketable securities (the Company's ownership in Archer). The Company presents this APM as it
is a useful indicator of the Group's net interest-bearing indebtedness as it indicates the level of borrowings after taking into account
cash that could be utilized to pay down outstanding borrowings.
Net Leverage Ratio is defined as the ratio of Net debt to adjusted EBITDA. The Company presents this APM as it is a useful indicator
of the Group’s financial leverage, as it measures the level of net debt relative to adjusted EBITDA, providing insight into the Company’s
ability to service its debt obligations.
Management reporting represents the Company’s internal financial and operational performance assessment. In this context,
Seagems’ financial results are presented using proportional consolidation of accounting. However, in our financial reporting under US
GAAP, Seagems’ financial results are reported using the equity method, presented under “Share in results from joint ventures.”
Additionally, in management reporting, operating revenues reflect contract revenues before amortization of favorable contracts for
Fontis and exclude revenue taxes for Seagems.
Additionally, the Company uses other performance indicators that are not considered to be an APM, but is important for assessing the
Group's performance:
Contract backlog represents the sum of estimated undiscounted revenue related to secured contracts. Contract backlog may be
subject to price indexation clauses or other factors that may intervene with and/or result in delays in revenue realization, and it does not
include potential growth or value of non-declared options within existing contracts.
Technical utilization is based on actual operating days versus actual available days excluding days at yard for periodical maintenance,
upgrading, transit or idle time between contracts.
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