REVENUES
(segment, mUSD)
430
233
418
227
452
252
452
261
SHAREHOLDER RETURN
(since June 2024 IPO, mUSD)
BALANCE SHEET
(net leverage ratio)
TECHNICAL UTILIZATION
EBITDA
(segment, mUSD)
452 286
2.2x
~99%
261
100
50
200
100
300
150
400
200
500 300
250
2022 2023 2024 2025 2022 2023 2024 2025
ANNUAL REPORT
2025
Contents
Highlights and Key figures 1
Fleet 2
Board of Director’s Report 3
Company overview 3
Operational review 5
Financial statement summary 6
Corporate Governance 7
Enterprise risk management 11
QHSE performance 14
Organization and personnel 14
Board of Directors 15
Management 16
Main events since year-end 16
Responsibility Statement 19
Consolidated Financial Statements 20
Independent Auditor’s Report 44
Alternative Performance Measures 48
Highlights and Key figures
Paratus
1
delivered strong operational and financial performance in 2025, achieving approximately 99% fleet technical
utilization, and financial results exceeding initial guidance despite one stacked unit most of the year. Combined segment
revenues were $452 million
2
, in line with the prior year, while adjusted EBITDA increased 4% to $261 million
2
. Shareholders
benefited from consistent cash returns, with distribution each quarter of $0.22 per share, totalling $144 million paid in 2025. In
parallel, the Company executed $25 million in share repurchases under its previously announced authorization and simplified
its group structure through the monetization of its shareholding in Archer. In Mexico, the Company worked actively to reduce
its overdue receivables, collecting $356 million during the year, including $209 million through a receivable monetization
agreement, while in Brazil timely fleet acceptance was completed and all PLSVs contracted at materially higher Petrobras
dayrates. Paratus ended the year with $204 million
2
in cash, providing solid liquidity and financial flexibility entering 2026.
Key highlights from 2025 and notable post-year end developments include:
Achieved fleet utilization of approximately 99%, with financial results exceeding initial full-year guidance.
Combined segment revenues were $452 million
2
while adjusted EBITDA grew 4% to $261 million
2
.
Collected $356 million in Mexico, including $209 million through a receivable monetization agreement.
Simplified Group structure through sale of its 24% Archer stake, unlocking $48 million of cash, of which $18 million was
applied toward debt reduction.
Delivered $168 million of capital returns to shareholders through cash distributions and share buybacks.
Successfully completed acceptance testing across PLSV fleet, with all vessels contracted with Petrobras at materially
higher dayrates by year-end 2025.
Ended the year with $204 million
2
in Group cash and $581 million
2
in net debt.
On February 26, 2026 the Board declared a $0.22 per share dividend for Q4 2025, consistent with previous quarters.
On March 23, 2026, Paratus announced that it has entered into agreements with Borr Drilling and CME to sell Fontis'
drilling operations and jack-up fleet.
1
Unless the context indicates otherwise, “Paratus,” the "Company," "we," "us," "our," and similar terms, all refer to Paratus Energy Services Ltd., while “Paratus
Group” or the “Group” refers collectively to the Company and its consolidated subsidiaries and its ownership in Joint Ventures (“JV”). All references to "USD" and
"$" in this report denote U.S. dollars unless otherwise indicated.
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”.
(In $ millions, unless stated otherwise)
December 31,
2025
December 31,
2024
December 31,
2025
December 31,
2024
Selected financial figures
Total operating revenue
405.8 408.7 153.2 213.9
Total operating expenses
(244.2) (249.8) (117.2) (132.2)
Share in results from joint ventures
16.5 10.0 121.8 85.2
Other operating income
5.1 - 4.9 -
Operating income
183.2 168.9 162.7 166.9
Net financial expense and other items
(85.4) (107.7) (83.2) (108.7)
Income tax expense
(23.1) (29.7) (4.7) (26.6)
Net Income
74.8 31.6 74.8 31.6
Earnings per share ($ per share)
0.46 0.20 0.46 0.20
Cash and cash equivalents
203.7 98.8 178.3 86.4
Alternative performance measures, Other
Contract revenues
452.0 451.5
Adjusted EBITDA
261.2 251.6
Capex
34.6 31.9
Net debt
581.2 627.7
Net leverage ratio
2.2 2.5
Technical utilization rate
99.0% 98.8%
Contract backlog
1,320.0 1,150.8
Combined Segment figures
2
Consolidated US GAAP figures
Combined Segment figures
2
1
Fleet
Fleet status report 2025.
* The vessels were under contract with Petrobras throughout 2025. Esmeralda was under contract with Subsea 7 before transitioning to a
new PLSV contract in May 2025. Onix was under contract with Brava before transitioning to a new PLSV contract in September 2025.
** The Intrepid continues with its present contract under its well-in-progress contract clause.
*** The Defender has received extension until May 2026.
Vessel / Rig Name Build Year Location Client Contract Start Contract End
Seagems
Diamante 2014 Brazil Petrobras March 2025 May 2028
Topazio 2014 Brazil Petrobras April 2025 May 2028
Esmeralda* 2015 Brazil Subsea 7
Petrobras
May 2025 June 2028
Onix* 2015 Brazil Brava
Petrobras
August 2025 September 2028
Jade 2015 Brazil Petrobras July 2024 July 2027
Rubi 2016 Brazil Petrobras May 2025 May 2028
Fontis Energy
Oberon 2013 Mexico Not appl. Not appl. January 2026
(warm stacked)
Titania FE 2014 Mexico Not appl. Not appl. Warm stacked
Intrepid** 2008 Mexico Large NOC March 2020 May 2026
Courageous 2007 Mexico Not appl. Not appl. March 2026
(warm stacked)
Defender*** 2007 Mexico Large NOC March 2020 May 2026
2
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”) and
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"). 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:
Courageous, Defender, Intrepid, Oberon, and Titania FE.
The fleet comprises two Friede & Goldman (F&G) JU-
2000E and three LeTourneau Super 116-C rigs, all located
in Mexico. As of year-end 2025, four of the rigs were under
contract with a state-owned company in Mexico, while
Titania FE was warm stacked in Mexico. As of the reporting
date, Oberon and Courageous completed operations in
late January and March 2026, respectively, and have since
been demobilized for warm stacking in anticipation of new
work. Defender has been awarded contract extensions
and is scheduled to operate through May 2026, while
Intrepid continues under its current contract pursuant to
the well-in-progress clause.
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.
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 Vantris Energy Berhad
(“Vantris”, formerly Sapura Energy Berhad), 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 Vantris. 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
Paratus held a 23.8% ownership in Archer Limited
(“Archer”) until 25 September 2025, at which time the
entire shareholding was sold. Prior to the sale, the
investment was 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.
This section should be read in conjunction with the
subsequent event disclosure (Note 20 – Subsequent
events) regarding the Company’s recent announcement
on the sale of Fontis’ drilling operations and jack-up fleet.
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.
3
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 (renamed
to Vantris in 2025) 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 starting 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 as 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. files for voluntary Chapter 11
bankruptcy in order to implement the restructuring
agreement through a prepackaged Chapter 11 plan and
announces 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. is 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.
2024
SeaMex changes name to Fontis Energy. Seabras JV
changes name to Seagems.
Seagems is awarded three-year contracts with Petrobras
for its fleet, adding approximately $1.8 billion in backlog
through 2028.
Paratus places a new $500 million bond to partly refinance
existing 2026 notes.
Paratus Energy is listed at the Euronext Growth Oslo on
June 28, 2024. Paratus Energy is uplisted at the Euronext
Oslo Børs on November 13, 2024.
2025
In September 2025, Paratus sells its shareholding (~24%)
in Archer Limited.
Outlook
At year-end 2025, Paratus had 10 assets contracted into
2026 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 $685
million, with the vast majority concentrated in the PLSV
segment.
The Company observes improvement in the global jack-up
market, supported by operating and tender activity levels
in key regions. Near-term demand for jack-ups in Mexico
in 2026 appears to be driven more by the client’s approved
budgets than by drilling activity required to maintain
production, resulting in contracting processes progressing
more slowly than anticipated. Recent public statements by
the national oil company indicating a 34% year-over-year
increase in total capital expenditures, together with its
4
stated objective to increase crude oil production, point to
the potential for improved budget availability and activity
levels over the medium-term. As of the reporting date,
Oberon and Courageous completed operations in late
January and March 2026, respectively, and have since
been demobilized for warm stacking in anticipation of new
work. Defender has been awarded contract extensions
and is scheduled to operate through May 2026, while
Intrepid continues under its current contract pursuant to
the well-in-progress clause.
On March 23, 2026, Paratus announced that it has entered
into agreements with Borr Drilling Limited ("Borr") and
Proyectos Globales de Energía y Servicios CME, S.A. de
C.V ("CME") to sell Fontis' drilling operations and jack-up
fleet. The transaction is expected to be completed during
second half of 2026.
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 were fully
utilized in Brazil on multi-year Petrobras contracts with
dayrates at multi-year highs. Earlier in 2026, Petrobras
issued a PLSV tender for start-up in 2027-2028, offering
four-year contracts across five different lots with varying
technical specifications. The tender deadline is currently
set for May, and Seagems is well positioned to submit a
bid with at least one vessel.
The Company has, in recent quarters, evaluated
opportunities to expand the Seagems business and
leverage the strong operational platform it has developed.
In this context, Seagems has submitted a commercial
proposal in response to a Petrobras tender for the
demobilization of flexible lines. To support this bid,
Seagems has secured access to a third-party vessel,
which would be deployed in the event of a contract award.
The Company is continuously monitoring developments to
plan and respond to current and future economic
environments.
As of reporting date, the Company has senior secured
notes with an aggregate principal amount of $197.9 million
maturing in July 2026 (the “2026 Notes”). The Company
plans to refinance the 2026 Notes in advance of their
maturity.
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 of $261
million, compared to $452 million and $252 million,
respectively in 2024.
Fontis
Fontis generated contract revenues of $187 million (2024:
$244.6 million). The revenue decrease was primarily
driven by Titania FE being warm stacked since end-
February 2025, lower variable revenues recognized in
2025 from previously unrecognized receivables, and lower
dayrates. These impacts were partly offset by the absence
in 2025 of the planned downtime incurred in 2024 for the
Courageous related to the installation of a new crane. In
relation to the crane, Fontis received $4.9 million insurance
claim repayment in 2025.
Operating expenses ("Opex") totalled $84.7 million in 2025
(2024: $96 million), while general and administrative
expenses ("G&A") amounted to $2.7 million (2024: $4.8
million). The cost reduction was mainly driven by lower
personnel costs, reflecting reduced headcount and costs
mainly related to Titania FE, as well as lower G&A
expenses. The operating costs in 2024 were elevated and
largely driven by the transition from Seadrill.
Adjusted EBITDA was $99.6 million, down from $143.8
million in 2024, primarily due lower revenues, partly offset
by cost reductions.
In 2025, Fontis achieved an average dayrate of $119.3
thousand per day (2024: $128.5 thousand per day) and an
average technical utilization of 99.5%, unchanged from
2024. The contract backlog at year-end 2025 was $20
million (2024: $195 million).
At year-end 2025, the notional value of the receivable
balance was $199.1 million, down from $346.9 million at
year-end 2024. During 2025, Fontis collected
approximately $356 million in payments toward overdue
invoices from its client in Mexico, including $209 million
through a receivable monetization agreement. Following
year-end 2025, Fontis has received $15 million in
collections from its client.
Seagems
The Company’s 50% share in the JV contributed with $265
million in contract revenues (2024: $206.9 million) and
$169.6 million in adjusted EBITDA (2024: $119.7 million).
The revenue increase compared to 2024 was primarily
driven by higher dayrates reflecting the new Petrobras
contracts, as well as fewer off-hire days.
Reported Opex was $69.3 million (2024: $62.5 million),
while G&A was $13.7 million (2024: $12.6 million).
The JV achieved an average dayrate of $253.9 thousand
per day (2024: $200.4 thousand per day) and an average
technical utilization of 98.2% (2024: 98.3%). The Seagems
5
JV had a contract backlog of approximately $1.3 billion
3
(2024: $1.9 billion
3
).
During 2025, Seagems JV provided cash distribution of
$129 million to Paratus (2024: $97.5 million).
In 2025, Seagems secured additional $60 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
Total operating revenues were $153.2 million, a decrease
of $60.7 million compared to $213.9 million in 2024. The
revenue decrease was primarily driven by Titania FE being
warm stacked since end-February 2025, lower variable
revenues recognized in 2025 from previously
unrecognized receivables, and lower dayrates. These
impacts were partly offset by the absence in 2025 of the
planned downtime incurred in 2024 for the Courageous
related to the installation of a new crane.
Total operating expenses were $117.2 million, a decrease
of $15 million compared to $132.2 million in 2024. The cost
reduction was mainly driven by lower personnel costs,
reflecting reduced headcount and costs mainly related to
Titania FE, as well as lower G&A expenses. The operating
costs in 2024 were elevated and largely driven by the
transition from Seadrill, the issuance of the 2029 Bonds
and partial redemption of the 2026 Notes, and the
Company’s public listing. The decrease in operating
expenses was partly offset by higher depreciation.
Share in results from Joint Venture was $121.8 million
(2024: $85.2 million), representing the Company’s 50%
share of the Seagems’ net income (net of taxes). The
increase compared to 2024, was primarily driven by higher
PLSV dayrates as all the vessels commenced new
contracts at significantly improved rates.
Other operating income of $4.9 million was related to an
insurance claim refund at Fontis received in 2025.
Operating income was $162.7 million, down from $166.9
million in 2024. This was mainly driven by lower operating
revenues as described above, partially offset by stronger
results in Seagems JV and other income in Fontis.
Net financial expense and other items was $83.2 million,
down from $108.7 million in 2024. The decrease primarily
reflects the gain on the sale of Archer shares of $13.2
million and the absence of a $34.3 million expense related
to the partial redemption of the 2026 Notes recorded in
3
Figures shown at 100% Seagems Joint Venture level.
2024. These effects were partly offset by the inclusion of
an upfront fee related to the receivables monetization
agreement, and effects of exchange rate fluctuations.
Tax expense was $4.7 million, down from $26.6 million in
2024, mainly driven by lower taxable results from Fontis
operating subsidiaries in Mexico and movement in the
provision for the uncertain tax positions (“UTP”). This was
partly offset by an adjustment of the tax receivable
recognized in the balance sheet.
Net income for 2025 was $74.8 million, compared to $31.6
million in 2024.
Allocation of the results
The Board approved cash distributions per quarter of
$0.22 per share to shareholders in connection with its 2025
interim reporting for the first, second, third, and fourth
quarters, with payments made in June, September and
December 2025, and March 2026, 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 the year-end 2025 was $178.3 million compared
to $86.4 million at year-end 2024.
Net cash from operating activities was $166.6 million, up
from cash used in operating activities of $27.6 million in
2024. The increase was primarily driven by higher
collections of receivables in Mexico.
Net cash from investing activities was $173.8 million,
primarily reflecting cash distributions from Seagems to
Paratus of $129 million, cash distributions from Archer of
$2.6 million, and cash proceeds from the sale of the
Company’s shareholding in Archer of $48.1 million. These
inflows were partly offset by additions to drilling units of
$5.9 million. In comparison, net cash from investing
activities in 2024 totalled $77.7 million, mainly relating to
distributions from Seagems to Paratus of $97.5 million,
partly offset by additions to drilling units of $7.7 million and
investment of $12.1m (Paratus’s pro-rata share) in a
private placement of Archer.
Net cash used in financing activities was $249.2 million,
primarily reflecting cash distributions to shareholders of
$143.5 million (excluding distributions on treasury shares
held by the Company), share buybacks totalling $24.9
million, partial redemption of 2026 Notes of $18.1 million
6
(including fees), interest income of $4.2 million, and
interest payments of $66.7 million. In 2024, cash used in
financing activities totalled $74.8 million, comprising of net
proceeds from the private placement in June 2024 of $72.5
million, interest income of $5 million, offset by interest
payments of $66.6 million, cash distribution to
shareholders of $74.1 million and transaction costs of
$11.6 million related to the bond issuance in June 2024
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, the Group prepares, reviews, and updates cash
flow projections regularly. These projections incorporate
various scenarios, including fluctuations in receivables
collections in Mexico and scheduled debt payments, to
ensure sufficient liquidity while maintaining appropriate
headroom in respect to financial covenant compliance
throughout the assessment period. As for the Company’s
share in the Seagems JV, the JV budgets and activity plans
are reviewed and approved annually. Pursuant to
agreement among the JV shareholders, Seagems
distributes all excess cash to its shareholders. The Board
of Directors and executive management utilize these
insights for informed decision-making.
The Group closed the year with a cash balance of $203.7
million and net debt of $581.2 million, including the
Company’s share in Seagems' cash balance and net debt
of $25.4 million and $61.6 million, respectively. In
comparison, the Group closed 2024 with a cash balance
of $98.8 million and net debt of $627.7 million, including
the Company’s share in Seagems' cash balance and net
debt of $12.4 million and $48.1 million, respectively. The
Group’s interest-bearing debt (at notional amounts)
totalled $784.9 million, comprising of $697.9 million at
Paratus and the balance of $87 million at Seagems (2024:
$775.9 million, comprised of $715.4 million and $60.5
million respectively).
As of reporting date, the Company has senior secured
notes with an aggregate principal amount of $197.9 million
maturing in July 2026 (the “2026 Notes”). The Company
plans to refinance the 2026 Notes in advance of their
maturity. While no binding agreements have been made as
of reporting date, the Company has made significant
progress in its discussions with financial institutions and
4
See definition of Net Debt and Net Leverage Ratio under the APM section.
expects to complete refinancing in a timely manner before
maturity.
The Net Leverage Ratio was 2.2x
4
at year-end 2025 (2024:
2.5x
4
).
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 has assessed the
appropriateness of the going concern assumption,
considering all relevant information available up to the date
of issuance of the Paratus consolidated financial
statements and covering a period of at least 12 months
from the issuance date of the annual report. This
assessment includes consideration of the recently
announced sale of Fontis’ drilling operations and jack-up
fleet, which is expected to be completed in the second half
of 2026. 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.
Based on this 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.
7
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
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 2025, the Board has authorised cash distributions
to shareholders of $0.22 per share in February, May,
August, as well as in November 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.
8
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
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’s overall purpose shall be to provide assistance
to the Board in fulfilling its oversight responsibility relating
to:
1. The quality and integrity of the financial statements and
the accounting and financial reporting processes of the
Company;
2. With regards to the Company’s financial reporting, the
systems for internal control and risk management,
including compliance with applicable legal and regulatory
requirements;
3. The appointment, mandate and remuneration of the
external auditor;
9
4. Any other tasks assigned in accordance with the
provisions set forth in these instructions; and
5. Any other duties delegated to the audit committee by the
Board.
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
2025 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 with its responsibilities
with respect to the financial reporting process. The audit
committee shall review, monitor and make
recommendations to the Board 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 financial 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.
10
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.
“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.
This section should be read in conjunction with the
subsequent event disclosure (Note 20 – Subsequent
events) regarding the Company’s recent announcement of
the sale of Fontis’ drilling operations and jack-up fleet.
Upon completion of the transaction, which is expected in
the second half of 2026, the Company’s risk profile is
expected to improve significantly, including through
reduced exposure to payment irregularities and
contracting uncertainty in Mexico.
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 2025, 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.
11
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 2025, 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-
renewals by these key customers could significantly
impact the Group’s financial performance, especially if
replacement contracts on similar terms are not secured. In
late February 2025, the Titania FE completed its
operations and has been warm stacked through the year.
As of the reporting date, Oberon and Courageous
completed operations in late January and March 2026,
respectively, and have since been demobilized for warm
stacking in anticipation of new work. Defender has been
awarded contract extensions and is scheduled to operate
through May 2026, while Intrepid continues under its
current contract pursuant to the well-in-progress clause.
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. In August 2025,
the Mexican government publicly introduced a
comprehensive financial support plan with the aim to make
Fontis’ client financially self-sufficient by 2027. Key
elements of the plan include the settlement of overdue
supplier payments, debt reduction initiatives, and a long-
term increase in national oil production from approximately
1.6 to 1.8 million barrels per day. As part of this initiative,
approximately $25 billion in new government guaranteed
funding has reportedly been secured by the client in
Mexico, including proceeds partially earmarked for capital
expenditures and supplier debt settlements. Following this,
Fontis collected approximately $147 million from its client
in August through December 2025.
The Company continues to actively pursue the collection
of its remaining outstanding receivables and remains
committed to recovering the full amounts due, consistent
with its past practice. While the Company recognizes that
the timing of collections may continue to fluctuate, recent
payments and ongoing government support initiatives
provide greater confidence that the payment cycle is
normalizing.
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
instability, civil unrest, military actions and the technical
12
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 2025, Fontis and Seagems had a total
backlog of approximately $20 million and $1.3 billion
5,
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;
5
Figures shown at 100% Seagems Joint Venture level.
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
13
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
2019 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.
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 2025, our safety performance continued to
demonstrate the effectiveness of our proactive risk
management, enhanced safety programs, and workforce
engagement initiatives. Total Recordable Incident Rate
(“TRIR”) at end of 2025 was 0.63 (0.56 in 2024).
Consistently low recordable incidents reflect
improvements made to increased safety awareness,
enhanced leadership commitment, and targeted risk
mitigation measures.
Organization and personnel
During 2025, the average FTE (Full-Time Equivalent) for
Paratus and its subsidiaries was 435 (2024: 498 FTEs).
The workforce is characterized by strong cultural, religious
and national diversity, with some 16 nationalities
represented. At year-end 2025, 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 2025
represented 9% percent of employees in managerial,
14
administrative and other onshore positions. There were no
incidents of discrimination reported through the internal
mechanisms for raising concern in 2025.
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.
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. Ms. 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 Sustainability
committee as well as the Project Steering Committee.
Previously she has also been working as an expert adviser
with a global management consultant on international and
cross border M&A projects and she spent over 10 years
with Vantris Energy Berhad Group (formerly 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, she 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.
Ms. Chow is a chartered accountant and a member of the
Chartered Institute of Marketing. She has also a BA Hons
in Business Studies from the University of South Wales.
James Ayers
Director, served since December 2018
has served as Director and Secretary of the Company
since December 2018. He has been Chief Executive
Officer of Front Ocean Management Ltd since 2021 and
previously served as Head of Corporate Administration at
Frontline Ltd. from 2018. Over the past decade, Mr. Ayers
has held a range of director, company officer, and senior
management roles across the maritime and offshore
energy sectors. He has served on the board of Northern
Ocean Ltd. since 2019 and previously as a board member
of Golden Ocean Group Limited. Prior to relocating to
Bermuda in 2015, Mr. Ayers worked in the UK finance
sector in management and corporate secretary roles.
Upon moving to Bermuda, he joined Appleby’s corporate
services division. Mr. Ayers holds a Master of Laws (LLM)
in International Business and Commercial Law, a Bachelor
of Laws (LLB), and a Legal Practice Course (LPC)
professional qualification.
Joachim Bale
Director, served since August 2023
Joachim Bale has a career spanning more than 15 years
in investment management, private equity, and
management consulting. 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. He has also held roles at Bain
Capital and McKinsey & Company. Mr. Bale holds an MSc
with Distinction in Financial Economics from University of
Oxford.
Dag Skindlo
Director, served since May 2025
Dag Skindlo is a business-oriented executive with over 30
years in the energy industry. Mr. Skindlo joined Archer in
April 2016 as CFO and was appointed to CEO in March
2020. Mr. Skindlo joined Schlumberger in 1992 where he
held various financial and operational positions before
joining the Aker Group of companies in 2005 where he held
several global CFO and Managing Director roles before
moving to Aquamarine Subsea as CEO. Mr. Skindlo
served as Chairman of the Nasdaq listed oilfield service
company KLX Energy Services Holdings Inc. from June
2021 to November 2024. Mr. Skindlo is a Norwegian
citizen, holds a Master of Science in Economics and
Business Administration from the Norwegian School of
Economy and Business Administration (NHH), and resides
in Oslo, Norway.
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.
Mr. Mey is a Chartered Accountant and attended the
Harvard Business School Executive Advanced
Management Program.
15
Management
Baton Haxhimehmedi
Group CFO and Interim CEO
Baton Haxhimehmedi currently serves as the Interim CEO
and CFO of the Company. Mr. Haxhimehmedi joined
Paratus Energy as CFO in June 2024 and has over 15
years of experience within the upstream oil and gas
industry. He has held several finance leadership roles at
DNO ASA and has an audit background from Ernst &
Young and KPMG primarily 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
Chief Accounting Officer
Nika Hasanova currently serves as Chief Accounting
Officer at Paratus Energy and has over 15 years of
experience in accounting and finance. Prior to joining
Paratus Energy, she held positions of Director of
Accounting and International Controller at Quorum
Software, leading provider of energy software worldwide.
Prior to this, she was an Audit Manager at
PricewaterhouseCoopers LLP working with Oil & Gas,
Technology and Pipeline clients. Ms. Hasanova 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 Energy. He brings close to three
decades of experience within the oil and gas industry. Mr.
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 Vantris Energy Berhad
Group (formerly Sapura Energy Berhad). Throughout his
entire tenure in the Vantris 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. Mr. 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 Seagems, the joint venture
between Paratus Energy and Vantris Energy Berhad
(formerly Sapura Energy Berhad). Salbego brings over 20
years of experience in the Brazilian oil and gas industry,
serving as the prior COO of Seagems and as a member of
the team since inception. Prior to this, he was a Project
Operation Manager at Subsea 7. Mr. Salbego holds an
MBA from Pontificia Universidade Catolica do Rio de
Janeiro and a BA in Mechanical Engineering from
Universidade Federal de Santa Maria.
Main events since year-end
Sale of Fontis
On March 23, 2026, the Company together with its indirect
subsidiary Fontis Finance Ltd. has entered into share
purchase agreements with Borr Drilling Limited and
Proyectos Globales de Energía y Servicios CME, S.A. de
C.V to sell Fontis' drilling operations and jack-up fleet for a
transaction price of $400 million.
The transaction is expected to close within six months of
signing, subject to customary closing conditions, including
regulatory and bondholder approvals. The Company
expects to receive approximately $148 million in cash at
closing, $15 million of deferred consideration, and $237
million in the form of a 2.5-year seller-financing
arrangement.
Fontis represents a reportable segment of the Group (see
Note 4 – Segment Information), and the assets and
liabilities to be disposed of primarily comprise those
associated with this segment. The planned divestiture
constitutes a strategic shift that is expected to have a major
effect on the Company’s operations and financial results.
Accordingly, the assets and liabilities associated with the
disposal will be classified as held for sale and the results
of operations and cash flows will be presented as
discontinued operations in future reporting periods.
The Company is currently evaluating the accounting
implications of the transaction, including the measurement
of any gain or loss on disposal. Due to the proximity of the
transaction to the issuance date of the financial statements
and the ongoing refinement of the assets and liabilities to
be included in the disposal group, the Company has not
yet finalized its assessment of the full financial statement
impact, including the related effects on results of
operations and cash flows. The ultimate gain or loss
recognized on disposal will depend on the final carrying
amounts of the assets and liabilities at the closing date and
may change as the Company completes its evaluation.
16
Situation in the Middle East
The Company notes the escalation of conflict in the Middle
East since late February 2026, including military actions
involving the United States, Israel, and Iran. The situation
remains uncertain and has contributed to increased
volatility in global oil and gas prices, as well as temporary
disruptions to offshore drilling activity in the region. While
the Company does not operate in the affected areas, it
continues to monitor potential indirect effects on energy
market and supply chains and regularly assesses the
implications for its operations.
Cash dividend to shareholders
On February 27, 2026, the Company announced that the
Board of Directors has approved a cash dividend of $0.22
per share for Q4 2025, to all shareholders of record as of
6 March 2026. The cash dividend was paid on 13 March
2026.
17
The Board of Directors of Paratus Energy Services Ltd.
29 April 2026
(signed)
(signed)
(signed)
Joachim Bale
Mei Mei Chow
James Ayers
Director
Chair
Director
(signed)
(signed)
(signed)
Dag Skindlo
Baton Haxhimehmedi
Mark Mey
Director Group CFO and Interim CEO 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
2025 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 2026
(signed)
(signed)
(signed)
Joachim Bale
Mei Mei Chow
James Ayers
Director
Chair
Director
(signed)
(signed)
(signed)
Dag Skindlo
Baton Haxhimehmedi
Mark Mey
Director Group CFO and Interim CEO 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
Independent Auditor’s Report
Alternative Performance Measures
20
December 31,
December 31,
(In $ millions, except per share amounts) Note 2025 2024
Total operating revenues
5 153.2 213.9
Operating expenses
Rig operating expenses (84.7) (96.0)
General and administrative expenses (10.7) (16.7)
Depreciation and amortization 10 (23.0) (17.9)
Expected credit losses 5 1.2 (1.6)
Total operating expenses
(117.2) (132.2)
Share in results from joint ventures 18 121.8 85.2
Other operating income 4.9 -
Operating income
162.7
166.9
Financial and other items
Share in results from associated companies 18 (6.1) (5.4)
Interest income 4.2 5.0
Interest expense 11 (76.5) (82.1)
Gain on sale of equity method investee 18 13.2 -
Loss on extinguishment of financial instruments 11 (1.0) (34.3)
Other financial items 12 (17.0) 8.1
Net financial expense and other items
(83.2)
(108.7)
Income before taxes
79.5
58.2
Income tax expense 12 (4.7) (26.6)
Net income
74.8
31.6
Income per share:
14
Basic
0.46
0.20
Diluted
0.46
0.19
See accompanying notes that are an integral part of these Consolidated Financial Statements.
for the years ended December 31, 2025 and 2024
Paratus Energy Services Ltd.
CONSOLIDATED STATEMENTS OF OPERATIONS
21
Note
December 31,
December 31,
(In $ millions)
2025
2024
Net income
74.8
31.6
Other comprehensive income/(loss):
Share of other comprehensive income from equity method investments 1.0 12.2
Reclassification on the sale of equity method investee 18 (8.5) -
Total other comprehensive income
67.3
43.8
See accompanying notes that are an integral part of these Consolidated Financial Statements.
Paratus Energy Services Ltd.
for the years ended December 31, 2025 and 2024
CONSOLIDATED STATEMENTS OF OTHER COMREHENSIVE INCOME/(LOSS)
22
December 31,
December 31,
(In $ millions, except par value amounts)
Note
2025
2024
ASSETS
Current assets
Cash and cash equivalents 6 178.3 86.4
Accounts receivables, net 5 193.0 339.6
Amounts due from related parties 17 3.3 3.3
Favorable contracts - current 5 4.1 28.9
Other current assets 7 14.5 10.0
Total current assets
393.2
468.2
Non-current assets
Equity method investments 18 299.9 358.2
Drilling units and equipment, net 10 249.8 259.0
Deferred tax assets 12 3.1 -
Favorable contracts - non-current 5 - 9.0
Other non-current assets 9 0.7 0.3
Total non-current assets
553.5
626.5
Total assets
946.7 1,094.7
LIABILITIES AND EQUITY
Current liabilities
Trade accounts payable 1.9 16.7
Interest-bearing debt, short-term 11 193.8 -
Other current liabilities 8, 12 53.0 65.0
Total current liabilities
248.7
81.7
Non-current liabilities
Interest-bearing debt, long-term 11 491.3 692.5
Other non-current liabilities 9, 12 51.0 61.4
Deferred tax liabilities 12 - 2.2
Total non-current liabilities
542.3
756.1
Equity
Shareholders' equity 155.7 256.9
Total equity
155.7
256.9
Total liabilities and equity
946.7 1,094.7
See accompanying notes that are an integral part of these Consolidated Financial Statements.
Paratus Energy Services Ltd.
as at December 31, 2025 and 2024
CONSOLIDATED BALANCE SHEETS
29 April 2026
Joachim Bale Mei Mei Chow James Ayers
Director Chair Director
Dag Skindlo Baton Haxhimehmedi Mark Mey
Director DirectorGroup CFO and Interim CEO
23
December 31,
December 31,
(In $ millions)
Note
2025
2024
Cash Flows from Operating Activities
Net income 74.8 31.6
Adjustments to reconcile net income to net cash provided by
Amortization of favorable contracts 5 33.8 30.7
Depreciation 10 23.0 17.9
Net income from equity method investments 18 (115.7) (79.8)
Net interest expense and amortization 11 72.3 77.1
Unrealized foreign exchange (gain)/loss 3.9 (12.0)
Deferred and other taxes 12 (5.3) 2.2
Expected credit losses 5 (1.2) 1.6
Gain on sale of equity method investee 18 (13.2) -
Loss on extinguishment of financial instruments 11 1.0 34.3
Share-based compensation 15 0.2 0.3
Payments for long-term maintenance 10
(7.8) (8.7)
Other (0.3) (0.4)
Change in working capital items and other
Accounts receivables, net 147.8 (171.9)
Trade accounts payable (15.5) 1.8
Other assets (4.9) 12.5
Other liabilities (26.3) 35.2
Net cash (used in)/provided by operating activities 166.6 (27.6)
Investing Activities
Additions to drilling units and equipment 10 (5.9) (7.7)
Proceeds received from the sale of equity method investments (net) 18 48.1 -
Investment in equity method investees 18
- (12.1)
Distribution from equity method investees 18 131.6 97.5
Net cash provided by investing activities 173.8 77.7
Financing Activities
Interest on bank deposits 4.2 5.0
Redemption of bonds 11 (18.1) (500.0)
Issuance of bonds (net of debt issuance costs) 11 - 488.4
Payment of interest on borrowings 11 (66.7) (66.6)
Issuance of common shares (net of issue costs) 13 - 72.5
Share buyback 13 (24.9) -
Return of capital to shareholders (71.9) (74.1)
Cash dividends paid (71.6) -
Share-based compensation 15 (0.2) -
Net cash used in financing activities (249.2) (74.8)
Effect of exchange rate changes on cash and cash equivalents 0.7 (3.6)
Net increase/(decrease) in cash and cash equivalents 91.9 (28.3)
Cash and cash equivalents at beginning of period 86.4 114.7
Cash and cash equivalents at end of period 178.3 86.4
Supplementary disclosure of cash flow information
Interest paid 66.7 66.6
Income taxes paid
14.2 16.7
Mexico
14.0 16.7
Other foreign jurisdictions
0.2 -
See accompanying notes that are an integral part of these Consolidated Financial Statements.
for the year ended December 31, 2025 and 2024
Paratus Energy Services Ltd.
CONSOLIDATED STATEMENTS OF CASH FLOWS
24
(In $ millions)
Common shares
Additional paid-
in capital
Accumulated
other
comprehensive
loss
Accumulated
deficit Total equity
Balances as at January 1, 2024
-
1,290.9
(3.5)
(1,072.5)
214.9
Net Income - - - 31.6 31.6
Other comprehensive income - - 12.2 - 12.2
Stock based compensation 0.3 - - 0.3
Issuance of common shares 72.5 - - 72.5
Return of capital - (74.6) - - (74.6)
Balance as at December 31, 2024
-
1,289.1
8.7
(1,040.9)
256.9
Net income - - - 74.8 74.8
Other comprehensive loss - - (7.5) - (7.5)
Stock based compensation - (0.1) - - (0.1)
Share buyback - (24.9) -
-
(24.9)
Return of capital -
(71.9)
- - (71.9)
Cash dividends paid - - - (71.6) (71.6)
Balance as at December 31, 2025 - 1,192.2 1.2 (1,037.7) 155.7
See accompanying notes that are an integral part of these Consolidated Financial Statements.
Paratus Energy Services Ltd.
for the year ended December 31, 2025 and December 31, 2024
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
25
Paratus Energy Services Ltd.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Note 1 - General Information
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 "$" in this report denote U.S. dollars unless indicate otherwise.
Company details
The legal and commercial name of the Company is Paratus Energy Services Ltd. The Company is an exempted company limited by shares
incorporated and existing under the laws of Bermuda pursuant to the Bermuda Companies Act. The Company was incorporated on 14 March
2018 and was listed on the Euronext Oslo Børs on 13 November 2024 under the ticker “PLSV”.
Business
Paratus is a holding company of a group of energy services companies and is comprised of its wholly owned subsidiary Fontis Holdings Ltd.
and its subsidiaries (collectively "Fontis") and 50/50 joint venture interest in Seagems joint venture, comprising of Seabras Sapura Holding
GmbH and Seabras Sapura Participacoes SA, (collectively “Seagems” or the "JV"). Paratus also held a 23.8% ownership in Archer Limited
(“Archer”) until 25 September 2025, at which time the company sold its entire shareholding.
• Fontis is a provider of drilling services, operating a fleet of five high-specification jack-up rigs – Defender, Courageous, Intrepid, Oberon,
and Titania FE - currently located in Mexico, under contract with a state-owned company in Mexico. As of year-end 2025, four of the rigs
were under the contract with a state-owned company in Mexico, while Titania FE was warm stacked in Mexico.
• Seagems is a subsea services company, operating a fleet of six multipurpose pipe-laying support vessels - Diamante, Topazio,
Esmeralda, Onix, Jade and Rubi – with capabilities for subsea engineering, installation, and other services, under contract in Brazil.
Basis of preparation
These Consolidated Financial Statements (the group financial statements) are presented in accordance with generally accepted accounting
principles in the United States of America (“US GAAP”).
The amounts are presented in United States dollar (“US dollar”, “$” 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. As at December 31, 2025 the Company held
a 100% ownership in Fontis (consolidated) and 50% in Seagems (equity method accounting). The Company also held 23.8% in Archer which
was accounted for using equity method until the entire shareholding was sold on September 25, 2025.
26
Note 2 - Significant Accounting Policies
Note 3 – Recently Issued Accounting Standards
We recently adopted the following accounting standard updates (“ASUs”):
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 amendments in this update have been incorporated
retrospectively into the disclosure in Note 12, effective December 31, 2024.
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 2024-03 / 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, namely rig operating expenses and G&A costs, 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. Once the update is effective, the company will implement this update prospectively. The impacts are not expected to be material and
will be limited to disclosures only.
ASU 2025-05 - Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses for Account Receivable and Contract
Assets
In July 2025, the FASB issued an update to simplify the estimation of expected credit losses on current accounts receivable and current
contract assets arising from revenue transactions under ASC 606. The Update provides a practical expedient that allows management to
assume that conditions existing at the balance-sheet date remain unchanged for the remaining life of the asset when estimating credit losses.
The update is applied on a prospective basis and the amendments will be effective for annual reporting periods beginning after December 15,
2025, and interim reporting periods within those annual reporting periods. The update is not expected to have a material impact on the financial
statements.
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)
Significant accounting policies
Revenue recognition (disclosed in Note 5)
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.
27
Note 4 - Segment Information
(In $ millions)
Seagems
(50% share) Fontis Other
Total
reporting
Segments
Reconciling
Items
Total
Consolidated
Contract revenues
265.0
187.0
-
452.0
(265.0)
187.0
Amortization of favorable contracts - (33.8) (33.8) - (33.8)
Tax on revenues (12.4) - - (12.4) 12.4 -
Operating revenues
252.6
153.2
-
405.8
(252.6)
153.2
Rig / Vessel operating expenses (69.3) (84.7) - (154.0) 69.3 (84.7)
General and administrative exp. (13.7) (2.7) (8.0) (24.4) 13.7 (10.7)
Expected credit losses - 1.2 - 1.2 - 1.2
Other operating income 0.2 4.9 - 5.1 (0.2) 4.9
Depreciation and amortization (44.0) (23.0) - (67.0) 44.0 (23.0)
Share in results from joint ventures - - 16.5 16.5 105.3 121.8
Operating income
125.8
48.9
8.5
183.2
(20.5)
162.7
Share in results from associated companies - - (6.1) (6.1) - (6.1)
Interest expense (4.8) - (76.5) (81.3) 4.8 (76.5)
Other financial items, net 2.7 (16.0) 15.4 2.1 (2.7) (0.6)
Income tax expense (18.4) (4.4) (0.3) (23.1) 18.4 (4.7)
Net income/(loss)
105.3
28.5
(59.0)
74.8
-
74.8
December 31, 2025
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. As of year-
end 2025, four of the rigs were under contract with a state-owned company in Mexico. Titania FE was as of the reporting date warm stacked 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 general corporate and finance activities, basis difference adjustment to equity method investments and our 23.8%
ownership in Archer which was accounted for as an equity method investment until September 25, 2025 when all the shares in Archer were
sold.
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). The Company believes this segment information provides 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
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)
Expected credit losses - (1.6) - (1.6) - (1.6)
Other operating expenses (0.2) - - (0.2) 0.2 -
Depreciation and amortization (42.3) (17.9) - (60.2) 42.3 (17.9)
Share in results from joint ventures - - 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 (2.6) - (82.1) (84.7) 2.6 (82.1)
Other financial items, net 3.6 9.3 (30.5) (17.6) (3.6) (21.2)
Income tax expense (3.1) (26.6) - (29.7) 3.1 (26.6)
Net income/(loss)
75.2
76.3
(119.9)
31.6
-
31.6
(In $ millions)
Seagems
(50% share)
Fontis Other Total
reporting
Segments
Reconciling
Items
Total
Consolidated
Cash and cash equivalent
25.4 60.1 118.2 203.7 (25.4)
178.3
Property, plant and equipment
576.9 249.8 - 826.7 (576.9)
249.8
Capital Expenditures
20.9 13.7 - 34.6 (20.9)
13.7
Equity method investments
- - - - 299.9
299.9
Total assets (excl. equity method investments)
664.6 524.9 121.9 1,311.4 (664.6)
646.8
Short-term interest-bearing debt, net
21.3 - 193.8 215.1 (21.3)
193.8
Long-term interest-bearing debt, net
65.7 - 491.3 557.0 (65.7)
491.3
(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 (excl. equity method investments)
674.5 668.4 68.1 1,411.0 (674.5)
736.5
Long-term interest-bearing debt, net
60.5 - 692.5 753.0 (60.5)
692.5
December 31, 2024 *
December 31, 2025
December 31, 2024 *
*Presentation of comparative information has been updated in conformity with the 2025 year-end presentation.
Geographic and customer segment data
For the year ended December 31, 2025 and 2024, all of our operating drilling units were located in one geographic location, Mexico, where all
of Fontis revenues were generated under contract with one customer. Operations of the Seagems JV and their assets were all located in Brazil
during the years ended December 31, 2025 and 2024. 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)
2025
2024
Contract revenues
187.0 244.6
Amortization of favorable contracts
(33.8) (30.7)
Operating revenues
153.2
213.9
December 31,
December 31,
(In $ millions)
2025
2024
Favorable contracts
171.9 171.9
Less: Accumulated amortization
(167.8) (134.0)
Favorable contracts, net
4.1
37.9
Of which:
Favorable contracts - current
4.1
28.9
Favorable contracts - non-current
-
9.0
Changes in the favorable contract asset during the period are as follows:
2025
2024
Opening balance at the beginning of the year
37.9
68.6
Amortization of favorable contracts
(33.8) (30.7)
Closing balance at the end of the year
4.1
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.
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 acknowledgement 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.
The following tables provide information about favorable contracts related to our contracts with customers:
The amortization is recognized in the consolidated statement of operations as an adjustment to revenue of favorable contracts. The average
remaining amortization period for the favorable contracts is two months, as at December 31, 2025.
30
Note 5 - Revenue from Contracts with Customers (continued)
December 31, December 31,
(In $ millions)
2025
2024
Account receivables
199.1 346.9
Less: Allowance for credit losses
(6.1) (7.3)
Account receivables, net
193.0
339.6
(In $ millions)
Allowance for
credit losses –
trade
receivables
Allowance for
credit losses –
related party LT
Total Allowance
for credit losses
As at January 1, 2024
5.7 - 5.7
Credit loss addition
1.6 - 1.6
As at December 31, 2024
7.3
-
7.3
Credit loss reversal
(1.2) - (1.2)
As at December 31, 2025
6.1
-
6.1
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, risk overlay 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, 2025 amounted to $67.3 million (2024:
$52.6 million). These escalations may be approved by the client as part of the contract finalization process at which point escalations will
become billable and will be recognized as revenue in the period in which acknowledgment from the client is received.
Outstanding receivables in Mexico
At of December 31, 2025, the notional value of the receivable balance was $199.1 million, down from $346.9 million as of December 31, 2024.
In 2025 the Company collected approximately $356 million towards overdue invoices from its client in Mexico of which $143 million was
collected through payments made via a Mexican government investment fund. Subsequent to December 31, 2025, Fontis received $15 million
in collections from its client.
The Company continues to actively pursue the collection of its remaining outstanding receivables and remains committed to recovering the full
amounts due, consistent with its past practice. While the Company recognizes that the timing of collections may continue to fluctuate, recent
payments and ongoing government support initiatives provide greater confidence that the payment cycle is normalizing.
The following table summarizes the balance sheet movement in the allowance for credit losses for the years ended December 31, 2025 and
2024:
The following tables provide information about trade receivables related to our contracts with customers:
31
Note 6 - Cash and Cash Equivalents
December 31,
December 31,
(In $ millions)
2025
2024
Cash and cash equivalents, non-restricted
163.9 75.3
Cash and cash equivalents, restricted
14.4 11.1
Total cash and cash equivalents
178.3
86.4
Note 7 - Other Current Assets
Other current assets consist of the following:
December 31,
December 31,
(In $ millions)
2025
2024
VAT asset
7.5 -
Taxes receivable 5.5 8.9
Prepaid expenses
1.5 1.1
Total other current assets
14.5
10.0
Note 8 - Other Current Liabilities
Other current liabilities consist of the following:
December 31,
December 31,
(In $ millions)
2025
2024
VAT liability
- 21.2
Taxes payable
16.4 21.5
Employee withheld taxes and social security
2.1 2.7
Other current liabilities
16.3 16.4
Uncertain tax positions (UTP) provision
17.7 2.7
Accrued interest on senior secured notes
0.5 0.5
Total other current liabilities
53.0
65.0
Note 9 - Other Non-Current Liabilities
Other non-current liabilities consist of the following:
December 31,
December 31,
(In $ millions)
2025
2024
Uncertain tax positions (UTP) provision
50.4 61.3
Other non-current liabilities
0.6 0.1
Total other non-current liabilities
51.0
61.4
Accounting policy
Cash and cash equivalents comprise cash bank deposits and short-term deposits with an original maturity of three months or less.
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, 2024
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
Additions
13.7
-
13.7
Depreciation*
-
(22.9)
(22.9)
As at December 31, 2025
319.9
(70.1)
249.8
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 fair value of our assets is estimated using market-based
evidence, including observable market data for comparable assets. 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, 2025 and 2024, no impairment was 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
2025
2024
9.00% 15/07/2026 197.9 215.4
9.50% 27/06/2029 500.0 500.0
697.9
715.4
(12.8) (22.9)
685.1
692.5
(193.8) -
491.3
692.5
Interest expense
Interest expense is comprised of the following:
December 31,
December 31,
(In $ millions)
2025
2024
Loan interest expense
66.7 67.2
Amortization of debt discount
9.8 14.9
Interest expense
76.5
82.1
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, 2025 and 2024 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. In November 2025, pursuant to a completion of a tender offer,
the company repurchased $17.6 million in principle amount of its 2026 Notes. In connection with the partial redemption, we recognized a loss
on extinguishment of financial instruments of $1 million (2024: $34.3 million) in the Consolidated Statements of Operations which consists of
$0.5 million call premium paid in cash and $0.5 million unamortized discount release. The remaining principal amount under the 2026 Notes
was $197.9 million as at December 31, 2025 (December 31, 2024: $215.4 million). The carrying amount of the 2026 Notes are presented net of
unamortized discount and debt issuance costs.
The Company actively manages its capital structure to maintain sufficient liquidity to meet its obligations as they fall due and to support its
strategic objectives. Primary sources of liquidity include existing cash balances and operating cash flows from its operating entities, including
distributions from the Seagems JV. At year-end 2025, total consolidated cash amounted to $178 million. At year-end 2025, accounts receivable
amounted to $199 million (year-end 2024: $347 million). The Company collected $356 million during 2025 and continues to pursue the
remaining outstanding balances. Recent collections and ongoing government support initiatives have improved visibility over expected cash
inflows and support management’s assessment that the payment cycle is continuing to normalize.
The Group prepares and regularly updates cash flow forecasts covering the relevant assessment period. These forecasts incorporate various
scenarios, including potential fluctuations in receivable collections, scheduled debt service requirements and consideration of the recently
announced sale of Fontis’ drilling operations and jack-up fleet, which is expected to be completed in the second half of 2026 (Note 20 -
Subsequent events). The Company expects to maintain sufficient liquidity and appropriate headroom under its financial covenants.
The 2026 Notes mature in July 2026. The Company plans to refinance the 2026 Notes in advance of their maturity. While no binding
agreements have been made as of reporting date, the Company has made significant progress in its discussions with financial institutions and
expects to complete refinancing in a timely manner before maturity.
2029 Senior secured bonds ("2029 Bonds")
Secured bonds were issued on June 27, 2024 and are due June 27, 2029. At December 31, 2025 and 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. In the
Consolidated Statements of Cash Flows proceeds received in 2024 are presented net of debt issuance costs of $11.6 million.
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, 2025 and 2024 the carrying value of our debt, all long-term, was comprised as follows:
34
Note 12 - Taxation and Provisions for Uncertain Tax Positions
Income tax expense is comprised of the following:
December 31,
December 31,
(In $ millions)
2025
2024 *
Current tax expense:
Foreign
Mexico
9.2 24.2
Other
0.6 -
Deferred tax expense:
Foreign
Mexico
(5.1) 2.4
Income tax expense
4.7 26.6
(In $ millions)
Amount
Percentage
Amount
Percentage
Income tax Bermuda at statutory tax rate - - - -
Foreign tax effects
Mexico
Rate differential
8.4 10.6% (2.2) (3.8%)
FX variations functional and tax currency
(8.9) (11.2%) 1.7 2.9%
Changes due to inflation adjustment
(2.9) (3.6%) (3.7) (6.4%)
Other
0.2 0.3% 1.7 2.9%
Return to provision
(2.1) (2.6%) - -
Change in valuation allowance
(2.0) (2.5%) 7.1 12.2%
Effects of Cross-Border Tax Laws
6.9 8.7% 15.9 27.3%
Increase in uncertain tax positions
0.1 0.1% 6.1 10.5%
Decrease in tax benefits
4.4 5.5% - -
Other tax jurisdictions
0.6 0.8% - -
Income tax expense reconciled
4.7
5.9%
26.6
45.7%
*Presentation of comparative information has been updated in conformity with the 2025 year-end presentation.
December 31, 2025 December 31, 2024 *
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. We recognize interest, penalties and inflation related to UTP on the income
tax expense line in the accompanying statement of operations. The uncertain tax provision is included in "Other current" and "Other non-
current liabilities” on the Consolidated Balance Sheets and includes associated accrued interest and penalties.
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 for the year ended December 31, 2025 and 2024 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)
2025
2024
Other current liabilities
16.7 13.8
Net operating losses carried forward
36.7 17.9
Deferred tax asset
53.4
31.7
Valuation allowance
(30.0) (18.6)
Total deferred tax assets
23.4
13.1
Property, plant and equipment (13.9) (10.7)
Other temporary differences (6.4) (4.6)
Total deferred tax liabilities
(20.3)
(15.3)
Net deferred tax liabilities
3.1
(2.2)
December 31,
December 31,
(In $ millions)
2025
2024
Balance at the beginning of the year
64.1 85.3
Increase a result of position taken in the current year
- 1.2
Decrease as a result of settlements
(3.5) (13.0)
Increase/(decrease) as a result of positions taken in previous years*
0.1 5.0
Increase/(decrease) due to foreign currency revaluation
7.4 (14.4)
Uncertain tax positions
68.1
64.1
In 2025 valuation allowance increased by $11.4 million (2024: $11.3 million) which is primarily related to return to provision adjustments and
foreign exchange fluctuations.
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 in Mexico:
*Increase
includes
additional
interest,
penalties
and
inflation
adjustments
.
Uncertain tax positions
As at December 31, 2025 the Group was undergoing audits by the Mexican tax authorities ("SAT") in respect of accounting years 2014, 2018,
2019 and 2020. In 2024, the tax liabilities relating to 2017 tax audit were resolved and settled for approximately $13 million. In 2025, 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, 2025 was $68 million (2024: $64.1 million), of which $17.7 million (2024: $2.7 million) was included
in "Other-current liabilities" and $50.4 million (2024: $61.3 million) in "Other non-current liabilities" on the balance sheet. Included in the
provision for UTP is accrued interest and penalties totaling $24.2 million (2024: $21.1 million). The movement in the UTP provision compared
to year-end 2024 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"). Subsequent to year-end, the tax liabilities relating to 2018 tax audit
were settled for approximately $18 million.
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 is
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 the Company continues to monitore developments of these rules, it is currently not within the scope of the Corporate Income Tax Act and
does not expect to become subject to it in the near term.
36
Note 13 - Share Capital
December 31,
December 31,
2025
2024
Class A ordinary shares 169,550,049 169,550,049
Treasury shares (6,815,000) -
Total
162,735,049
169,550,049
Note 14 - Earnings per Share (EPS)
The following reflects the net income and share data used in the earnings per share calculation:
December 31,
December 31,
2025
2024
Net income
74.8
31.6
164,113,880 161,989,730
164,125,161 162,060,493
Earnings per share:
Basic
0.46
0.20
Diluted
0.46
0.19
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 580,000 shares were excluded from the computation of diluted EPS. Dilutive
options totaling 125,000 shares are considered in deriving diluted earnings per share.
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.
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.
In February and March 2025, the Company repurchased a total of 5,400,000 of its shares for approximately $20.1 million. In April and May
2025, the Company repurchased further 1,415,000 of its shares for approximately $4.8 million. Following the completion of the share buyback,
the Company owns a total of 6,815,000 of its own shares, corresponding to approximately 4% of the Company's share capital.
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, 2025 and
2024.
37
Note 15 - Stock Options and Other Share-Based Compensation
Share options with USD exercise price
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
400,000 4.6 2.9 625,000 3.9 3.9
Granted
- - - - - -
Exercised
75,000 - - 225,000 - -
Outstanding at end of the year
325,000 5.2 1.9 400,000 4.6 2.9
Exercisable at the end of the year
325,000 5.2 1.9 200,000 3.3 2.9
Share options with NOK exercise price
2025
2024
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
780,000 55.7 4.7 - - -
Granted
- - - 780,000 55.7 4.7
Exercised
- - - - - -
Outstanding at end of the year
780,000 55.7 3.8 780,000 55.7 4.7
Exercisable at the end of the year
260,000 51.7 3.7 - - -
2025 2024
2025 2024
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. Performance based awards were exercised in September 2024. There are no
performance based awards outstanding as at December 31, 2025 and 2024.
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 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.
In 2025, 75,000 stock options granted under 2023 incentive plan were exercised and settled in cash in accordance with the terms of the award
agreements. Subsequent to year-end a further 125,000 stock options granted under the 2023 incentive plan were exercised and settled in
cash.
For equity awards, 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 2025 was $0.1 million (2024: $0.3 million) and is presented in general and
administrative expenses in our consolidated statements of operation.
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. Cash settled awards are measured at
the fair value of the instrument at the grant date and every reporting period, with changes in fair value recognized through profit or loss and a
corresponding amount recorded as a liability.
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.
This section should be read in conjunction with the subsequent event disclosure (Note 20 - Subsequent events) regarding the Company’s recent
announcement of the sale of Fontis’ drilling operations and jack-up fleet. Upon completion of the transaction, which is expected in the second
half of 2026, the Company’s risk profile is expected to improve significantly, including through reduced exposure to payment irregularities and
contracting uncertainty in Mexico.
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 2025, 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 Company actively manages its capital structure to maintain sufficient liquidity to meet its obligations as they fall due and to support its
strategic objectives. Primary sources of liquidity include existing cash reserves and operating cash flows from its operating entities, including
distributions from Seagems JV. At year-end 2025, total consolidated cash amounted to $178 million. At year-end 2025, accounts receivable
amounted to $199 million (year-end 2024: $347 million). The Company collected $356 million during 2025 and continues to pursue the
remaining outstanding balances. Recent collections and ongoing government support initiatives have improved visibility over expected cash
inflows and support management’s assessment that the payment cycle is continuing to normalize.
To proactively manage liquidity, the Group prepares and regularly updates cash flow forecasts covering the relevant assessment period. These
forecasts incorporate various scenarios, including potential fluctuations in receivable collections, scheduled debt service requirements and
consideration of the recently announced sale of Fontis’ drilling operations and jack-up fleet, which is expected to be completed in the second
half
of 2026 (Note 20 - Subsequent events). The Company expects to maintain sufficient liquidity and appropriate headroom under its financial
covenants.
The 2026 Notes mature in July 2026. The Company plans to refinance the 2026 Notes in advance of their maturity. See also Note 11 -Interest-
bearing Debt.
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 2025, 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-
renewals by these key customers could significantly impact the Group’s financial performance, especially if replacement contracts on
similar
terms are not secured. As at the end of 2025 all contracts were due to expire in Q1 2026 with no extensions received as at reporting date, 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. In August 2025, the Mexican government
publicly introduced a comprehensive financial support plan with the aim to make Fontis’ client financially self-sufficient by 2027. Key elements
of
the plan include the settlement of overdue supplier payments, debt reduction initiatives, and a long-term increase in national oil production from
approximately 1.6 to 1.8 million barrels per day. As part of this initiative, approximately $25 billion in new government guaranteed funding has
reportedly been secured by the client in Mexico, including proceeds partially earmarked for capital expenditures and supplier debt settlements
.
Following this, Fontis collected approximately $147 million from its client in August through December 2025.
The Company continues to actively pursue the collection of its remaining outstanding receivables and remains committed to recovering the full
amounts due, consistent with its past practice. While the Company recognizes that the timing of collections may continue to fluctuate, recent
payments and ongoing government support initiatives provide greater confidence that the payment cycle is normalizing. 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.
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*
1 198.4 193.8 215.4 203.2
2029 Senior secured notes*
1 500.8 491.3 488.2 489.3
* These instruments are at a fixed interest rate
December 31, 2025 December 31, 2024
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.
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.
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,
2025
2024
Management and administrative fees
(a)
(0.9) (0.8)
Total
(0.9)
(0.8)
December 31, December 31,
2025 2024
Seagems loan receivable
(b)
3.3 3.3
Total 3.3 3.3
Related party expenses include:
(a) Management and administrative service agreements and short-term other payables - the Group received management, administrative, and
operational support services from affiliates of the Company, in which the principal shareholder has, or had, significant direct or indirect interest.
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.
(b) 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 2025 (2024: nil).
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, 2025 and 2024 are comprised as follows:
December 31,
December 31,
Ownership percentage
2025
2024
Seagems 50.0 % 50.0 %
Archer 0.0 % 23.8 %
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,
September 25,
December 31,
(In $ millions, except ownership percentage)
2025
2024
2025
2024
Operating revenues
505.2 389.7 1,030.8 1,300.7
Operating income
251.6 154.5 60.1 71.3
Net income / (loss)
210.6 150.4 (25.4) (24.5)
Paratus ownership percentage* 50.0 % 50.0 % 23.8 % 23.8 %
Share of net income/(loss)
105.3
75.2
(6.0)
(5.8)
Amortization of basis differences
16.5 10.0 (0.1) 0.4
Share in results
121.8 85.2 (6.1) (5.4)
December 31,
December 31,
December 31,
December 31,
(In $ millions, except ownership percentage)
2025
2024
2025
2024
Current assets
167.1 140.6 - 404.1
Non-current assets
1,162.0 1,208.4 - 596.5
Current liabilities
(109.0) (101.3) - (338.2)
Non-current liabilities
(136.8) (115.3) - (437.2)
Non-controlling interest
- - - (15.4)
Net Assets (gross, 100%)
1,083.3
1,132.4
-
209.8
Paratus' ownership percentage 50.0 % 50.0 % - 23.8 %
Paratus' share of book equity
541.7
566.2
-
50.7
Shareholder loans held as equity 0.9 0.9 - -
Basis difference (242.7) (254.6) - (5.0)
Carrying amount equity method investments
299.9
312.5
-
45.7
Seagems* Archer
ArcherSeagems*
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”. 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 October 30, 2024, the Company subscribed to a pro-rata number of shares in Archer issued as part of the Private Placement transaction for
approximately $12.1 million. On November 14, 2024 Archer acquired additional shares in Iceland Drilling from its joint venture partner which
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.
On September 25, 2025, the Company sold its entire holding of 21,583,826 shares in Archer Limited at NOK 22.50 per share, receiving net
cash proceeds of approximately $48.1 million. Prior to the sale, the investment was accounted for under the equity method with a carrying
amount of $43.1 million which was reduced by $8.5 million reclassified from Other Comprehensive Income (“OCI”) to the carrying amount. The
investment was derecognized upon completion of the sale, and the Company recognized a gain of $13.2 million, presented within “Gain on sale
of equity method investee” in the Consolidated Statement of Operations. The net proceeds are reflected within investing activities in the
Consolidated Statement of Cash Flows. While Archer continues to be a related party through principal owners, as at December 31, 2025 the
Company has no ownership in Archer.
The summarized balance sheets of our equity method investments and our share of recorded equity in these entities is as follows:
*Presentation of comparative information has been updated to show amounts after elimination of intercompany transactions and balances
between JV entities.
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, as at
December 31, 2025 the Company was 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.
Sale of Fontis
On March 23, 2026, the Company together with its indirect subsidiary Fontis Finance Ltd. has entered into share purchase agreements with
Borr Drilling Limited and Proyectos Globales de Energía y Servicios CME, S.A. de C.V to sell Fontis' drilling operations and jack-up fleet for a
transaction price of $400 million.
The transaction is expected to close within six months of signing, subject to customary closing conditions, including regulatory and bondholder
approvals. The Company expects to receive approximately $148 million in cash at closing, $15 million of deferred consideration, and $237
million in the form of a 2.5-year seller-financing arrangement.
Fontis represents a reportable segment of the Group (see Note 4 – Segment Information), and the assets and liabilities to be disposed of
primarily comprise those associated with this segment. The planned divestiture constitutes a strategic shift that is expected to have a major
effect on the Company’s operations and financial results. Accordingly, the assets and liabilities associated with the disposal will be classified as
held for sale and the results of operations and cash flows will be presented as discontinued operations in future reporting periods.
The Company is currently evaluating the accounting implications of the transaction, including the measurement of any gain or loss on disposal.
Due to the proximity of the transaction to the issuance date of the financial statements and the ongoing refinement of the assets and liabilities
to be included in the disposal group, the Company has not yet finalized its assessment of the full financial statement impact, including the
related effects on results of operations and cash flows. The ultimate gain or loss recognized on disposal will depend on the final carrying
amounts of the assets and liabilities at the closing date and may change as the Company completes its evaluation.
Situation in the Middle East
The Company notes the escalation of conflict in the Middle East since late February 2026, including military actions involving the United States,
Israel, and Iran. The situation remains uncertain and has contributed to increased volatility in global oil and gas prices, as well as temporary
disruptions to offshore drilling activity in the region. While the Company does not operate in the affected areas, it continues to monitor potential
indirect effects on energy market and supply chains and regularly assesses the implications for its operations.
Cash dividend to shareholders
On February 27, 2026, the Company announced that the Board of Directors has approved a cash dividend of $0.22 per share for Q4 2025, to
all shareholders of record as of 6 March 2026. The cash dividend was paid on 13 March 2026.
43
KPMG AS
P.O. Box 7000, N-0306 Oslo
Dronning Eufemias gate 6A
0191 Oslo
Telephone +47 45 40 40 63
Internet www.kpmg.no
Enterprise 935 174 627 MVA
To the General Meeting of Paratus Energy Services Ltd.
Independent Auditor’s Report
Report on the Audit of the Financial Statements
Opinion
We have audited the financial statements of Paratus Energy Services Ltd., which comprise the consolidated
financial statements of Paratus Energy Services Ltd. and its subsidiaries (the Group), which comprise the
consolidated balance sheet as at 31 December 2025, the consolidated statement of operations, the consolidated
statement of other comprehensive income (loss), the consolidated statement of changes in equity and
consolidated statement of cash flows for the year then ended, and notes to the financial statements, including
material accounting policy information.
In our opinion
the consolidated financial statements comply with applicable statutory requirements, and
the consolidated financial statements give a true and fair view of the financial position of the Group as at
31 December 2025, and its financial performance and its cash flows for the year then ended in
accordance with accounting principles generally accepted in the United States of America (US GAAP).
Our opinion is consistent with our additional report to the Audit Committee.
Basis for Opinion
We conducted our audit in accordance with International Standards on Auditing (ISAs). Our responsibilities under
those standards are further described in the Auditor’s Responsibilities for the Audit of the Financial Statements
section of our report. We are independent of the Group as required by relevant laws and regulations in Norway
and the International Ethics Standards Board for Accountants’ International Code of Ethics for Professional
Accountants (including International Independence Standards) (IESBA Code) as applicable to audits of financial
statements of public interest entities, and we have fulfilled our other ethical responsibilities in accordance with
these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide
a basis for our opinion.
To the best of our knowledge and belief, no prohibited non-audit services referred to in the Audit Regulation
(537/2014) Article 5.1 have been provided.
We have been the auditor of Paratus Energy Services Ltd. for four years from our engagement by the Board of
Directors on 7 June 2023 for the accounting year 2022.
Key Audit Matters
Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of
the financial statements of the current period. These matters were addressed in the context of our audit of the
financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on
these matters.
Uncertain tax positions
Reference is made to Note 12 Taxation and provisions for uncertain tax positions
44
The Key Audit Matter How the matter was addressed in our audit
The Group has recognized a provision for uncertain
tax positions in Mexico of $68.1 million as at 31
December 2025.
The Group recognizes liabilities for uncertain tax
positions based upon its assessment on whether
the tax positions are more likely than not to be
sustainable based upon the technical merits and its
considerations of the relevant tax authorities
including administrative practices and precedence.
At 31 December 2025, the Group was undergoing
audits by the Mexican tax authorities (“SAT”) in
respect to accounting years 2014, 2018, 2019 and
2020. The Group’s estimate, including for those
accounting years that are currently not subject to
audit, is based on the information available at the
time of management’s assessment of relevant
available information including the tax audits that
have been finalized.
Determining the liabilities for uncertain tax position
requires significant judgment by management
including a high degree of estimation uncertainty.
Addressing the liability for uncertain tax positions in
Mexico included the following audit procedures:
Obtaining an understanding of management’s
processes, including the roles and
responsibilities of management’s external tax
experts and management’s control related to
uncertain tax positions.
Comparing management’s estimates to
settlements reached in 2025 and after year-
end.
With the assistance of our tax specialists in
Mexico, our audit procedures in these areas
included i) evaluating correspondence with tax
authorities ii) dialogue with management and
management’s external tax experts to
understand the judgments applied in
interpreting local tax rules and regulations,
including the consideration of ongoing and
completed settlements and new information
impacting existing tax positions iii) evaluating
the reasonableness of the assumptions and
judgements used by management including
the application of interest and penalties and
other significant inputs to management’s
estimates iv) testing the mathematical
accuracy of management’s calculations.
Assessed the sufficiency of relevant
disclosures in the consolidated financial
statements and the current and long-term
portions of the liabilities for uncertain tax
positions
Other Information
The Board of Directors and the Chief Executive Officer (management) are responsible for the information in the
Board of Directors’ report and the other information accompanying the financial statements. The other information
comprises information in the annual report, but does not include the financial statements and our auditor’s report
thereon. Our opinion on the financial statements does not cover the information in the Board of Directors’ report
nor the other information accompanying the financial statements.
In connection with our audit of the financial statements, our responsibility is to read the Board of Directors’ report
and the other information accompanying the financial statements. The purpose is to consider if there is material
inconsistency between the Board of Directors’ report and the other information accompanying the financial
statements and the financial statements or our knowledge obtained in the audit, or whether the Board of Directors’
report and the other information accompanying the financial statements otherwise appears to be materially
misstated. We are required to report if there is a material misstatement in the Board of Directors’ report or the
other information accompanying the financial statements. We have nothing to report in this regard.
Based on our knowledge obtained in the audit, it is our opinion that the Board of Directors’ report
is consistent with the financial statements, and;
contains the information required by applicable statutory requirements.
Our opinion on the Board of Directors' report applies correspondingly to the statement on Corporate Governance.
Responsibilities of Management for the Financial Statements
45
Management is responsible for the preparation of financial statements that give a true and fair view in accordance
with accounting principles generally accepted in the United States of America, and for such internal control as
management determines is necessary to enable the preparation of financial statements that are free from material
misstatement, whether due to fraud or error.
In preparing the financial statements, management is responsible for assessing the Group’s ability to continue as
a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of
accounting unless management either intends to liquidate the Group or to cease operations, or has no realistic
alternative but to do so.
Auditor’s Responsibilities for the Audit of the Financial Statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free
from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our
opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in
accordance with ISAs will always detect a material misstatement when it exists. Misstatements can arise from
fraud or error and are considered material if, individually or in aggregate, they could reasonably be expected to
influence the economic decisions of users taken on the basis of these financial statements.
As part of an audit in accordance with ISAs, we exercise professional judgment and maintain professional
scepticism throughout the audit. We also:
identify and assess the risks of material misstatement of the financial statements, whether due to fraud
or error. We design and perform audit procedures responsive to those risks, and obtain audit evidence
that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material
misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve
collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.
obtain an understanding of internal control relevant to the audit in order to design audit procedures that
are appropriate in the circumstances, but not for the purpose of expressing an opinion on the
effectiveness of the Group's internal control.
evaluate the appropriateness of accounting policies used and the reasonableness of accounting
estimates and related disclosures made by management.
conclude on the appropriateness of management’s use of the going concern basis of accounting and,
based on the audit evidence obtained, whether a material uncertainty exists related to events or
conditions that may cast significant doubt on the Group's ability to continue as a going concern. If we
conclude that a material uncertainty exists, we are required to draw attention in our auditor’s report to the
related disclosures in the financial statements or, if such disclosures are inadequate, to modify our
opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor’s report.
However, future events or conditions may cause the Group to cease to continue as a going concern.
evaluate the overall presentation, structure and content of the financial statements, including the
disclosures, and whether the financial statements represent the underlying transactions and events in a
manner that achieves a true and fair view.
obtain sufficient appropriate audit evidence regarding the financial information of the entities or business
activities within the Group to express an opinion on the consolidated financial statements. We are
responsible for the direction, supervision and performance of the group audit. We remain solely
responsible for our audit opinion.
We communicate with the Board of Directors regarding, among other matters, the planned scope and timing of
the audit and significant audit findings, including any significant deficiencies in internal control that we identify
during our audit.
We also provide the Audit Committee with a statement that we have complied with relevant ethical requirements
regarding independence, and to communicate with them all relationships and other matters that may reasonably
be thought to bear on our independence, and where applicable, related safeguards.
From the matters communicated with the Board of Directors, we determine those matters that were of most
significance in the audit of the financial statements of the current period and are therefore the key audit matters.
We describe these matters in our auditor’s report unless law or regulation precludes public disclosure about the
46
matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our
report because the adverse consequences of doing so would reasonably be expected to outweigh the public
interest benefits of such communication.
Report on Other Legal and Regulatory Requirements
Report on Compliance with Requirement on European Single Electronic Format (ESEF)
Opinion
As part of the audit of the financial statements of Paratus Energy Services Ltd., we have performed an assurance
engagement to obtain reasonable assurance about whether the financial statements included in the annual report,
with the file name 549300XB7T5BX418QX67-2025-12-31-1-en, have been prepared, in all material respects, in
compliance with the requirements of the Commission Delegated Regulation (EU) 2019/815 on the European
Single Electronic Format (ESEF Regulation) and regulation pursuant to Section 5-5 of the Norwegian Securities
Trading Act, which includes requirements related to the preparation of the annual report in XHTML format.
In our opinion, the financial statements, included in the annual report, have been prepared, in all material
respects, in compliance with the ESEF regulation.
Management’s Responsibilities
Management is responsible for the preparation of the annual report in compliance with the ESEF regulation. This
responsibility comprises an adequate process and such internal control as management determines is necessary.
Auditor’s Responsibilities
Our responsibility, based on audit evidence obtained, is to express an opinion on whether, in all material respects,
the financial statements included in the annual report have been prepared in compliance with ESEF. We conduct
our work in compliance with the International Standard for Assurance Engagements (ISAE) 3000 – “Assurance
engagements other than audits or reviews of historical financial information”. The standard requires us to plan and
perform procedures to obtain reasonable assurance about whether the financial statements included in the annual
report have been prepared in compliance with the ESEF Regulation.
As part of our work, we have performed procedures to obtain an understanding of the Group’s processes for
preparing the financial statements in compliance with the ESEF Regulation. We examine whether the financial
statements are presented in XHTML-format. We believe that the evidence we have obtained is sufficient and
appropriate to provide a basis for our opinion.
Oslo, 29 April 2026
KPMG AS
John Thomas Sørhaug
State Authorised Public Accountant
47
Alternative Performance Measures
December 31,
December 31,
(In $ millions)
2025
2024
Calculation of adjusted EBITDA
Net income 74.8 31.6
Add back: Income tax expense 4.7 26.6
Add back: Net financial expense 83.2 108.7
Deduct: Share in results from joint ventures and associates (121.8) (85.2)
Add back/(deduct): Expected credit losses (1.2) 1.6
Deduct: Other operating income (4.9) -
Add back: Depreciation and amortization 23.0 17.9
Add back: Amortization of favorable contracts 33.8 30.7
Adjusted EBITDA (consolidated)
91.6
131.9
Net income/(loss) - 50% of Seagems 105.3 75.2
Add back: Income tax expense 18.4 3.1
Add back: Net financial expense 2.2 (1.1)
Add back: Depreciation and amortization 44.0 42.3
Add back: Other operating expenses (0.2) 0.2
Adjusted EBITDA (50% Seagems)
169.6
119.7
Combined Segment EBITDA
261.2
251.6
December 31,
December 31
(In $ millions)
2025
2024
Net debt
Interest-bearing debt (notional amount)
697.9
715.4
Paratus 697.9 715.4
Less: Cash and cash equivalents
178.3
86.4
Paratus 118.2 64.9
Fontis 60.1 21.5
Less: Market value Archer shares*
-
49.4
Paratus - 49.4
Net debt
519.6
579.6
50% of Seagems interest-bearing debt (notional amount) 87.0 60.5
25.4 12.4
50% of Seagems net debt
61.6
48.1
Net debt (as per management reporting)
581.2
627.7
Net Leverage Ratio
Net debt (as per management reporting) 581.2 627.7
Combined Segment EBITDA 261.2 251.6
Net Leverage Ratio
2.2
2.5
* 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.
48
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.
Average dayrate is calculated based on recognized revenue divided by the total operational days per period.
49