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Operator: Good morning. This is the Chorus Call conference operator. Welcome, and thank you for joining the Saipem First Half 2025 Results Conference Call. [Operator Instructions] At this time, I would like to turn the conference over to Mr. Alessandro Puliti, CEO of Saipem. Please go ahead, sir.
Alessandro Puliti: Thank you, and good morning. Thank you for joining us for the presentation of Saipem's results for the first half of 2025. I'm here in Milan today with our CFO, Paolo Calcagnini, and with the rest of the members of the Saipem senior management team. As you know, today is a special day for all of us. After the merger agreement announced last night, but in today's call, we are focusing on Saipem as a stand-alone company. I will start the presentation covering the key highlights of Q2. Paolo will then cover the financial results in more detail. And then I will wrap up with my closing remarks before opening the Q&A session. Let's start with the key highlights. I'm pleased to report, in the second quarter, Saipem recorded a very strong performance in terms of revenue, EBITDA and cash flow generation. On top of having made the largest dividend payment in its history. Revenue stood at EUR 3.7 billion, growing by 10% year-on-year and 5% sequentially. EBITDA stood at EUR 413 million, growing by 39% year-on- year and 18% sequentially. EBITDA margin stood at 11.2%, a significant improvement compared to the previous quarter margin of 10%. In Q2, operating cash flow reached the record level of EUR 447 million. The order intake in the second quarter stood at EUR 2.2 billion, in line with the order intake of Q1. We expect our order intake to accelerate in the second half of the year in line with the market dynamics. Our backlog remains close to the record high level, providing us with an excellent visibility for both 2025 and 2026. Saipem continues to deliver steady growth and improved cash flow conversion. Revenue more than doubled, since the beginning of 2022. EBITDA has increased in the same period by a factor of 4. EBITDA margin has also doubled and currently stands above 11%. Cash flow generation has grown steadily over the last 3 years, reflecting the progress made in executing the legacy backlog and the proactive management of the working capital. In particular, in the first 6 months of the year, our company has already generated an amount of cash flow equal to 80% of what we delivered in the full year 2024. Let's now cover in more detail the latest awards. The order intake of the quarter includes 2 energy transition projects from Eni and a substantial FEED award from Sonatrach in Algeria. The key feature of these awards are first, we are confirming our strong positioning in the CO2 management value chain in the U.K. following the East Coast cluster award in 2024. Second, we are also accelerating the conversion and upgrade our existing refining facilities for Eni. Third, we continue to derisk our onshore awards by ensuring a substantial portion of the scope of work is under a reimbursable framework. Fourth, the FEED in Nigeria for an integrated fertilizer plant has also allowed us to make an important step in meeting our service order intake target for the year. As a reminder, engineering service, operating and maintenance and project management consultancies are key drivers for repositioning of our onshore business. We will cover this aspect in more detail later in the presentation. Let's now deep dive on the recent CO2 management awards. We are excited about the current development in CCUS, and we believe that this market will grow into sizable opportunity for Saipem in the years to come. The order intake of last year was about projects for offshore CO2 transportation. In the first half of 2025, we started to collect orders for CO2 capture and management also in the onshore sector. Currently, Saipem is working on 4 CCUS projects for a total value of EUR 2 billion. The clients for most of these projects are oil and gas companies, and we have a consolidated relationship with most of them. Also, these projects are well diversified in terms of geographical footprint and also attractive in terms of size. Let's now focus on the recent developments in our service businesses. One of the key pillar of our strategic plan is the derisking of our onshore EPC framework, also by growing in the service market. I'm glad to report that we are making progress, and in particular. In the engineering services, we have acquired more than EUR 300 million business, since the beginning of the year, including the FEED study in Nigeria, but also other studies in Italy. In the PMC space, we have now started our first project in West Africa, and we are awaiting the feedback on several bids we have submitted. The pipeline in PMC looks promising. On operating and maintenance we are working on substantial list of prospective projects across the globe. We will give you regular updates on the evolution of our services offer going forward. Let's now have a look to our commercial effort. As you know, we are coming out of 2 very strong years in terms of order intake totaling almost EUR 40 billion of awards. Nevertheless, our commercial pipeline for the next 18 months remains robust at EUR 53 billion. Also, all of our pipeline related to gas upstream projects, which are less sensitive to swings on oil price. We are also awaiting feedback on several FEEDs submitted totaling EUR 7 billion, and we expect to submit additional bids for EUR 16 billion during the remainder of the year. As such, we remain confident our order -- about our order intake target for 2025. Let me now give you an operational update on 2 very important projects. On core sales, we confirm the plan already presented in the Q1 results. We are aiming to restart the drilling activity next month, and we expect to complete it by the end of 2026. Moving to Norway, I'm glad to report that the Castorone vessel completed the laying of about 79 kilometers of piping pipe pipeline for Equinor connecting the Irpa subsea production template with existing platform. This project is the deepest steel pipe ever installed in Norway, and it is amongst the deepest pipe-in-pipe globally laid in S-Lay mode, further consolidating site leadership in pipeline. The Castorone will now move to Guyana to do work for Exxon in the Uaru and Whiptail fields. I will now hand over to Paolo, so he can give you more details on the financial results of the first half.
Paolo Calcagnini: Thank you, Alessandro. Good morning, everyone. We will start from Slide 12, which represents a summary of our financial results for the first half of 2025. Revenue increased by 12% year-on-year to EUR 7.2 billion, and our EBITDA grew by 35% to EUR 764 million. The growth has been primarily supported by our offshore E&C activities. EBITDA margin keeps on improving, having surpassed the 10% threshold, up from 8.8% in H1 last year. This is due to a more favorable business mix and the reduced incidence of the legacy projects. Our net result was EUR 140 million, 19% higher than H1 last year. Operating cash flow stood at EUR 842 million, mainly driven by the growth in EBITDA year-on-year and the contribution of working capital movements. Let's now review the different business segments, starting with asset-based services on Page 13. Revenue stood at EUR 4.1 billion for H1 2025, marking an 18% increase from last year. Mainly driven by the growth of the SURF and conventional activities. The revenue mix remained relatively stable between SURF and conventional, with a slight increase in the weight on conventional projects year-on- year. The growth trajectory was mainly driven by the increased backlog after the strong order intake of the last 18 months. EBITDA stood at EUR 539 million, up by 38% and EBITDA margin stood at 13.2%, an increase of 190 basis points year-on-year. The increase in profitability is mainly driven by the good progress made on projects in the Emirates and Qatar and by the conclusion of the Sakarya project in Turkey. For the second half of 2025 we expect double-digit growth in revenue compared to the first half of 2025 and a further improvement in the EBITDA margin, mainly driven by the expected growth in volumes in both conventional and SURF activities. Let's now look at the Drilling Offshore on Page 14. Revenue stood at EUR 461 million, broadly stable compared to the same period last year. EBITDA grew by 11% year-on-year to EUR 185 million. EBITDA margin stood at 40.1%, a 290 basis points improvement year-on-year. In more detail, during the first half of 2025, 10 of the 14 units were fully booked and busy with the respective drilling campaigns. The second 12,000 underwent maintenance in Q1, but has been operational in Q2. The Perro Negro 10, following the Aramco suspension underwent preparation works, and has already moved to Mexico to start working in Q3. The Perro Negro 7 underwent maintenance in Q2, conceding with the beginning of the Aramco suspension. The Perro Negro 12 contract was terminated by Aramco in Q2 with the jack-up expected to be delivered back to its owner in the coming quarters. All in all, we are reducing our fleet by 3 units, namely the Perro Negro 9, 12 and Pioneer, which have been returned or will be returned to the owners. As a reminder, these units are not owned by Saipem, but least. And as such, our capital-light strategy has helped us navigating well through the Aramco suspensions. For the second half of 2025, we expect a low teens decline in revenue and a high single-digit decline in EBITDA compared to the first half of 2025, reflecting the reduction of the jack-up fleet, some white spaces as well as the impact of planned maintenance activity. Let's now look at the Energy Carriers on Page 15. Revenue grew by 6% year-on-year, reaching EUR 2.7 billion. As a reminder, backlog related to Energy Carriers declined by 11% in the last 18 months. And as such, this means that Saipem is accelerating on the execution of the projects, in particular, of the legacy backlog. EBITDA margin improved year-on-year, reaching 1.5% in the first half of 2025. Our primary goal in Energy Carriers is to complete the execution of the remaining legacy backlog, while being very selective about the intake for new projects. For the second half of 2025, we expect a pickup in revenue compared to H1 and the further improvement in profitability. The complete group income statement is shown on Page 16. We can now discuss some of the key items below EBITDA. G&A stood at EUR 459 million, an increase by EUR 149 million compared to last year, mainly reflecting the growth of the fleet on a chartered basis and the leases associated with them. Financial expenses stood at EUR 94 million in H1 2025, increasing by EUR 21 million year-on-year, mainly reflecting the interest on lease liabilities and an increase in hedging costs due to the growing rate differential between the U.S. dollar and the euro. Income taxes remained broadly stable year-on-year at EUR 72 million, whilst the implied tax rate declined by 4.7 percentage points to 33.8%. On Page 17, you can see the evolution of our net financial position. The cash flow generated in the first half of 2025 improved our net financial position by EUR 171 million on a pre-IFRS basis, from a net cash position of EUR 683 million to EUR 854 million. This is a remarkable result considering that in May, we paid dividends to our shareholders for EUR 331 million. Gross CapEx stood at EUR 191 million and were partly offset by disposals for EUR 115 million, mainly related to the proceeds from the sale of the 10% stake in KCA, which was completed in Q1. Repayment of lease liabilities increased to EUR 167 million in H1 2025 compared to EUR 85 million in H1 2024, reflecting the growth in the fleet on a charter basis. In line with our plan, lease liabilities increased in H1 by EUR 399 million. For the second half of this year, we expect a marginally positive cash flow generation, but significantly lower than what was recorded in the first part of the year. This is mainly due to the expected reversal of the positive working capital dynamic seen in H1. On Page 18, you can find a detailed breakdown of our gross debt and liquidity. Our liquidity position is very robust at more than EUR 3 billion. Also, we currently hold almost EUR 1.3 billion of available cash which is sufficient to cover almost all our maturities to 2029. As you know, with the 2025, 2028 strategic plan, Saipem has set itself the target to achieve an investment grade credit rating, and this is a key priority for us. We will continue to reduce our debt in the coming quarters. Let me now hand it back to Alessandro for his closing remarks.
Alessandro Puliti: Thank you, Paolo. And to conclude before going into the Q&A. First of all, we continue to deliver strong results with sustained growth in revenue and EBITDA and high cash flow generation. And our backlog provide us with strong visibility for the next 2 years. Our revenue for both 2025 and 2026 are almost fully covered by the existing backlog. Our construction fleet is fully booked again for 2025 and 2026, and we are increasing our visibility also for the following years. Our balance sheet is strong and even after having paid a record dividend to our shareholders. We expect our commercial activity to lead to an acceleration in terms of new awards in the second part of the year. And finally, we confirm our guidance for 2025. Thank you for your attention, and we can now move into the Q&A session.
Operator: [Operator Instructions] First question is from Alessandro Pozzi, Mediobanca.
Alessandro Pozzi: Congrats on the merger agreement. I'm sure it wasn't easy. The first question I have is on cash flow. As you pointed out, cash flow was strong in the first half. I think the free cash flow post lease payments is above the full year guidance. Can you maybe give us more color about the free cash flow in the second half? You talked about a reversal of working capital, if you can maybe give us some of the moving parts there? And also second question on accounting. I think if we look at Q2, there is some movements in the nonmonetary items. I was wondering, if you can maybe tell us whether you've taken some additional provisions maybe on this point, if you can give us an update on Thaioil as well?
Alessandro Puliti: Okay. So for the first 2 questions, I will ask Paolo to reply.
Paolo Calcagnini: Yes. So Alessandro, on the free cash flow, and you probably noticed that the cash flow in the first half has been remarkably strong. It's been very close to the guidance for the full year. Apart from the -- for the very good operational performance, there has been a positive contribution in Q1 and to a less extent in Q2 by working capital, and we expect the working capital to revert in the 2 coming quarters, especially in Q3. So we foresee -- while we remain very optimistic about the guidance, we expect a negative contribution by working capital in Q3 and Q4. On the accounting, well, I guess you know the company almost better than us. And by going through the numbers of the press release, you can actually see the net provisions that we accounted for in Q2 by going through the nonmonetary items and deducting the depreciation and amortization. And you easily come up with a figure that tells you the net provisions at portfolio level. And I'd say, a significant number. And we can say that it's only Thaioil. It's the entire portfolio. So it's a number made by pluses and minuses. But I guess you can figure out the big number yourself.
Alessandro Pozzi: Okay. And on Thaioil, is there any update there at the project level?
Alessandro Puliti: On Thaioil I will answer to your question. So following the termination of the contract back in April, on the ground, what is going on, we are orderly handing over the project to the client, and this is what is really going on, on the -- on the ground. And while on the -- let's say, on the arbitration that was opened by the consortium. We are now in the very early stages of that activity. And so we will provide you further update as soon as things are progressing.
Operator: Next question is from Guillaume Delaby, Bernstein.
Guillaume Delaby: Yes. I would say 3 questions, 2 specific. First, could you provide us a little bit of, let's say, guidance or feeling about the booking of your fleet for '27 and '28. I think 9 months ago, you were mentioning 50%. Can you maybe update or confirm this number? This is my first question. The second question, and it is for Paolo, could you maybe repeat just what you said on the mechanism for understanding the provisioning for legacy projects sorry about that. And the third question is rather for Alessandro, maybe versus 3 or 4 months ago, what have you noticed, I would say, in the energy world, we hear many, many contract victory messages from many companies. So what has surprised you over the past 3 or 4 months, what has changed according to you in the world energy scene, of course, in [ 20 seconds ]?
Alessandro Puliti: Okay. So let's start from the first one that more straightforward, I would say. So booking for 2027 and 2028, yes, we confirm what we said and what you as you rightly reported. And the comment that I can make today is that there is -- in the next months, I'm confident you will see increase in this booking level. We are in the final stages of several tenders we submitted. Some of them were really in the final -- very, very final negotiation stages. So I believe that in the next couple of months, you will see the percentage increasing substantially. This is my comment. And clearly, I cannot reveal more because there are negotiation with clients that are confidential until we will be published in the press release. Then I'll leave the ground to Paolo for the same.
Paolo Calcagnini: Yes. On the net provisions, so while you know that we don't disclose provisions on a project by project, we -- you can find the numbers for the entire portfolio. And what you can do is you can look at the numbers at Page 2 of the press release, where you can calculate the D&As and then on Page 12, you have the depreciation, amortization and other nonmonetary items. If you make the difference between the 2 numbers, you get the nonmonetary items, nonmonetary items being mostly even not entirely, the net provisions that have been made in the period. So if you look at the numbers, there is in Q2 this year, an increase in the net provisions, obviously, at portfolio level, so it's the entire portfolio of projects that you can guess yourself that we made a large part of the provision on those 2 or 3 situations that we took almost in every call we have. Finally, if you wait a few days and you go to the -- our first half report when we will publish it, you will find the detail of the provisions on contraction losses. And you will see the gross and net changes in the number.
Alessandro Puliti: Okay. And back to your third question. So what we're seeing changes clearly in this first half of 2025, we see a bit of uncertainties around the world that are generated by the current geopolitical situation that it is nevertheless more complicated than the geopolitical that was, let's say, they were -- were used in the last few years. But I would like to remind some, I believe, key numbers. So in the second half, of last year or 2024, we clocked EUR 12.1 billion of award. That is an exceptional number. And clearly, this number could be, by any means, being replicated in the first half of 2025 really because it was really an exceptional one. And if you look at the dynamics on the market of 2024, there was a very important year in terms of order intake. And you see the first half -- in the first half, we clocked EUR 7.1 billion. So the first half, it is historically less important than the second half in terms of award. This is a normal dynamic because our clients let's say, they tend to concentrate their final investment decision, and so they come to conclusion to the tender in the second part of the year. And so, this is also the reason why we believe we are positive for order intake in the second half of the year because we believe and we see the same dynamics occurring this year. And this is also part of the answer of your first question. We have many tenders that are coming to the -- to the final stage in the negotiation in these days. Clearly, they will generate in the second half of the year order intake. So we see this dynamic that is a normal dynamic maybe this year, a bit more. If you are asking me whether there is a change. And maybe this dynamic is -- is a bit more stronger than in the year before. So what we are expecting a concentration of our award in the second half.
Operator: Next question is from Mick Pickup of Barclays.
Michael Brennan Pickup: Couple of questions, if I may. Firstly for Paolo. Can you just talk about the amortization in the asset-backed services business? It jumps best part EUR 50 million quarter-on-quarter. Is there something one-off in that? Or is that the level we should be thinking about? And secondly, on the drilling fleet, if you look at the high-end drilling fleet, there's a lot of option periods coming up later this year. I know you've got some contracts starting back end and into next year, but what's the thought process on those option periods?
Alessandro Puliti: The first question, I will answer to the second question first. So yes, there are optional periods and I will repeat what I said regarding the E&C fleet. We are in the final stage of negotiation for getting those optional period, let's say, confirmed. And I believe that, yes, in the next months, so in the second half, we will see those options becoming confirmed. This is our expectation. Now I will leave it to Paolo?
Paolo Calcagnini: On the depreciation so for the asset-based services is mostly 2 additional vessels that enter into the fleet, namely the Shen Da and the Bold Tern, which entered into the fleet this year, especially Q2, and that explains the increase in the depreciation compared to last year?
Michael Brennan Pickup: Okay. And so when I'm looking at it on an EBIT level, year-on-year asset-backed services EBIT is down, but you're telling me the profitability is improving in that business. How do I reconcile that?
Paolo Calcagnini: Look, Mick, this is consistent with the IFRS 16 treatment of lease liabilities. We've been saying for a while that we have a huge amount of backlog to execute, and we want to execute it on a capital-light basis. That means leasing more charter tonnage. And as such, we have a bit of a divergence between your EBITDA performance and the EBIT performance because in between, you have a D&A line, which is increasing. But if you think about it, knowing that the fleet would have grown on a charter basis, we started since 18 months ago to report cash flow post lease liabilities really to bridge the gap between EBITDA and cash flow generation. I hope it helps.
Operator: Next question is from Guilherme Levy, Morgan Stanley.
Guilherme Levy: The first one, just going back to the CFFO discussion. Could you perhaps share with us what's your expectation in terms of working capital for the full year. So looking for -- looking at 2025 as a whole, should we expect a build or a release at this point? And perhaps on other line of your CFFO guidance, should we expect any change to the base of lease payments in the second half versus the first one? And then second question, just if you can comment on the environment for drilling activity, specifically in Saudi and your Perro Negro 12 contract? If you can disclose any sort of compensation that you got from Aramco or maybe define that you are now probably entitled to pay to return the unit to the owner? And then third one, sorry, just a more technical one, but it's good to see that your commercial pipeline is unchanged at EUR 53 billion. I was just curious to see if you have changed at all your FX assumption behind that number? I assume that part of your commercial pipeline is denominated in dollars. So I was just curious to see if the EUR 53 billion is unchanged with regard of that FX change?
Alessandro Puliti: Okay. I will start to give you a bit of background on our drilling activity and the situation of our jack-ups in Saudi. So the -- basically, what has happened is what it has been well described by Paolo in the call, we leveraged on our asset-light strategy. And so the vessel, the units, pre units, basically, they have been -- that have been shut down by Aramco. 2 of them have been return to the company to lease those units to ourselves, and we -- and 1 unit has found another location, they own 1, Perro Negro 10 is found in other location in Mexico. Going into detail, yes, we use part of the termination fees to cover for the cost of relocation of the -- cost of relocation of the vessel. That's for sure. Something that we did. But I believe that here, what really matters is the success of our asset life strategy that allow us to grow very quickly in 2000, let's say, 2023 when the demand in Saudi was very high and also to copy without impact, I would say, the slowdown of the demand in 2024 and 2025. So I believe that this is the demonstrated the success of this strategy. Because as you saw from the results of our drilling offshore business line, basically, there is no impact in terms of financials of this swing, but this is because we have been actively working on the asset-light strategy in terms of acquiring vessels. Now I hand over to Paolo for your -- the other questions.
Paolo Calcagnini: So we expect in the second half, a negative contribution in terms of cash flows from working capital. So the working capital increasing, while you observe that in Q1, it was a significant positive contribution. So we expect a reversal of the working capital effect in the second half and an increase in the lease payments that will almost double in second half compared to the first half. So all in all, this is the reason why I said that in -- we expect we are confirming the guidance, even though looking at first half numbers, we made almost entirely the free cash flow that we guided for in only 6 months. The reason being the increase in lease payments and most importantly, the working capital reversal in Q2 mostly, but also in Q4. And then just to give you the full picture, there's also -- there's going to be also an increase in the CapEx because if you remember our guidance, we actually did less than 50% of the capital that we were foreseeing for the entire 2025 in the first half, so they will increase a bit in the second half. On the backlog, you asked the question very technical on the exchange rate effect. Actually, that's -- I mean, the number we present, it's -- it's a total of plus and minuses and the revaluation of contract values, et cetera. And it's obviously, denominated in euro and -- so you can say that for contracts, whose value -- face value was in dollars, they now account a bit less. But the number we present, it's the total of opportunities that enter into our commercial pipeline or leave the commercial pipeline or whose value is updated because of changes in the expected contract value, et cetera. So all in all, we still see the same commercial pipeline we're bidding for than we saw in Q1.
Operator: Next question is from Kevin Roger, Kepler Cheuvreux.
Kevin Roger: Questions that will be basically 2 follow-ups, please, just to be sure I well understand the accounting mechanism. So roughly, we can calculate that there is a net provision movement of EUR 150 million in the cash flow statement. Just to be sure, this EUR 150 million, where do I find it in the P&L? It's already included in the EBITDA, meaning that if you did not add the EUR 150 million movement in provision, you will have to list an adjusted EBITDA or something like that, well above EUR 500 million, just to understand the relationship between the 2. And if yes, it will basically also coming back on the question from Mick explained that, okay, the EBITDA margin is improving in the E&C Offshore business asset-based, but that the EBIT margin is going down because you have the provision that has been taken into the EBITDA also, just to be sure I understand because effectively, you mentioned improvements in the profitability on the asset base, but on the EBIT level, it's going down. So just to be sure to understand all those 2 accounting factors, please?
Paolo Calcagnini: Well, I guess, Kevin, that you are promoted in mathematics because you've got the number very right. Those are the net provisions in Q2. And yes, they go into the EBITDA. So when they go both into EBITDA and obviously in the EBIT. The only difference between the EBITDA and EBIT being the -- apart from the net provisions, the CapEx on leased vessels, mostly.
Kevin Roger: Okay. So the adjusted EBITDA will have been at the group level above EUR 500 million?
Paolo Calcagnini: Yes. So in other words, the EBITDA already accounts for the EUR 150 million of the net provisions.
Kevin Roger: Okay. Okay. That's the uptake is very...
Paolo Calcagnini: Also -- I guess we're going very technical. It also explains why the operating cash flow has been remarkably strong compared to the increase in the EBITDA, right, because those net provisions are nonmonetary components.
Operator: Next question is from Massimo Bonisoli, Equita.
Massimo Bonisoli: 2 quick questions last. Can you provide an update on Mozambique project and the eventual start going forward? And the second question, if you can give us an indication of the remaining balance of the legacy projects in Energy Carriers?
Alessandro Puliti: So Mozambique, today, there is the call of the -- the operator of Area 1. So for sure, you will get even more details there. Nevertheless, it's a fact that the Mozambique LNG partners are very actively working to restart the project within the summer. So I will say that we are pretty close being in July, that's what I can comment. And this is what has been public domain, since a few weeks now. So that's the status of the Mozambique. Regarding the legacy project, I believe Paolo can give you the precise number, but now it's becoming pretty little.
Paolo Calcagnini: Yes. As far as the onshore legacy projects are concerned, we are almost below the EUR 100 million threshold in terms of remaining piece of the -- that was coming from, if you refer to the legacy as the 2021, 2022, that project is less than EUR 100 million.
Massimo Bonisoli: If I may squeeze a follow-up just to understand. So in the third and fourth quarter for the energy carriers, we can see a sort of a step up in profitability considering the level of legacy projects right now?
Paolo Calcagnini: Yes. We -- if you remember, we are targeting mid- to high single-digit margin for the onshore business obviously, the way from negative or 0 to the high-single-digit. It goes through the 1.5% and possibly 2% and then 3% and so on. So yes, you can expect an increase, which is the path towards a high single-digit target margin.
Operator: Next question is from Mark Wilson from Jefferies.
Mark Wilson: A lot of my questions have been answered already. Just a clarification on that point regarding the provisions that have been taken you've had a few quarters now, where these things have come through and -- but EBITDA reported has been very good. So given the fact you've reconfirmed the core sales and with the termination and clarifications regarding that, it sounds like all of those recognized situations, there's going to be no more of those coming through. So the net effect you just described, all things being equal, we're not going to see that anymore. And then the second part would be, you mentioned on the Mozambique. What would be the backlog exposure to a restart there?
Alessandro Puliti: So the backlog in Mozambique is around EUR 3 billion. This is what we have. So that's a plus, let's say, restart activity. So that's the order of magnitude of the backlog in Mozambique.
Paolo Calcagnini: On the provisions, and I guess that's -- I mean your question is a bit general on an the way we accounted for possible future losses in the last 2 years. It's an hard question to answer, but we can all agree that in the past 2 years, we have been most of the times on the prudent side when accounting for the future. And well, I guess we are hoping that the provisions we have today would be more than sufficient for the works that we have to complete. And it's been the case in the last 2 years. So we're hoping that the assumptions made we've turned out to be as prudent as the past ones. So this is the most second I can tell. What we are very happy about is that 2 years ago, we had 7 bad projects in our portfolio, we are down to 2, almost 1. And as I said before, the -- the legacy portfolio accounts less and less on the total revenues on the total provisions, which is I think -- the -- what we are trying to achieve to put the last project behind us as soon as possible, and this is going to be end of 2025, beginning of 2026.
Mark Wilson: And so you mentioned regarding current work, but regarding potential future arbitration, for example, is that included in your commentary you was given?
Paolo Calcagnini: Yes, it is. And the provisions we make are made for let's say, alive contracts and dead ones, obviously, so including litigations or possible litigations.
Operator: Next question is from Richard Dawson, Berenberg.
Richard George Dawson: Firstly, just a clarification on depreciation. I believe your expectations for full year D&A was about EUR 820 million as previously guided. Has this now changed given you've done EUR 459 million already in the first half? And then second question is on Brazil. There are reports this month that Petrobras could award the Attribute 2 EPCI contract to a competitor. You seem to have been a significantly lower value than contracted, including Saipem. Is there any read across here on where prices might be going for new awards? Or margins may be leveling off?
Alessandro Puliti: Okay. Let's start from Brazil, we are working and Castoro 10 just started the work for Equinor in Brazil. And we have other vessels working. So yes, we don't win all the contracts that are standard in Brazil, and that's, I believe, normal dynamics. And Brazil is a very competitive market with many competitors working in the area. So what is happening, I believe, is just normal market dynamics. We are working, sometimes we win projects, sometimes we don't win projects. That's the -- that's life of the contractor, but it is a sign of a very, very competitive market.
Paolo Calcagnini: Richard, on your second question on D&A, of course, you remind you recall correctly, with the full year results, we said -- we were expecting D&A between EUR 20 million and EUR 40 million for the full year 2025. I think for the second part of the year, you are likely to see increased in D&A, which will bring us to the top end of the range or possibly even marginally higher. And that's, again, mainly driven by the growth of the fleet on a charter basis and a few additions that we had in the first part of the year, including the Bold Tern and Shen Da.
Operator: Next question is from Victoria McCulloch, RBC.
Victoria McCulloch: Just one remaining for me. Maybe could you give us a bit of color on -- more on the dynamic bidding environment on Slide #9. That's really helpful to split. In terms of the work that's submitted into tenders, can you give us an idea of the split for onshore versus offshore for this? And then more broadly, are you seeing delays from, say, speak to FID stage -- sorry, sorry, to award stage on projects from when they are FID things coming through. What's the, I guess, the software communication fee that you're seeing from your customers. Is it harder to get things across the line you're getting pushed back from cost because we're hearing your mixed commentary across the spectrum as to where costs are on the services side?
Alessandro Puliti: Okay. So regarding client attitude, I will say that there are revenues clients, they are never happy of the price we submitted. They always consider that we are to -- we are too expensive, and that's their mood always. So as I said before, the main market move that we have seen in these days is a shift from let's say, taking final investment decision and so awarding of the contract more toward the second half of the year than the first part of the year. As I said before, this is a normal dynamics, but this year, what I see is more is more stronger than the year before. On the onshore, just to give you some figures, we are bidding from prospect in the range of EUR 15 billion that can be assigned over the 8 and 12 months. Tell you frankly, the competition is very strong. We -- as I said in the last call, we confirm we will be very selective. So I do not expect -- I do not expect for sure to win all the EUR 15 billion that we are tendering because we said that we will be selective and we are selective. What does it mean being selective that we really want to make sure that our onshore activity is robust is done in a derisk manner and with the right price because that's the -- that's what -- that it is our strategy, and we remain stick to our strategy. The total, let's say, the second part of the year, we are expecting and we are bidding a total of EUR 16 billion, but this is including both onshore and offshore. And as I said earlier in the call, we are expecting results from EUR 7 billion of tenders that are out, and we are expecting results of those tenders. And those are already submitted in the first part of the year. So you see the first part of the year, we submitted 7. And in the second part of the year, we expect to submit 16. This is the ratio between the first and the second half.
Operator: Next question is from Sebastian Erskine, Redburn.
Sebastian Erskine: Just zeroing in on your comment, Alessandro, on the kind of market dynamics kind of meaning more of that step up in the second half versus the first half of the year. Can we extrapolate that strength into 2026? And I guess, which kind of basins will see that strength in order intake in that year? And then just a very quick one on the offshore drilling side. I was just -- can you confirm when the renewed contract on Scarabeo 8 with AkerBP from last year kicks in, if it hasn't already and kind of the uplift from that on the results of that division?
Alessandro Puliti: So whether I expect the same in 2026 in a certain extent yes, because this is a dynamic that we see year-on-year. And as I said before, this year, maybe more clear, more evident than the previous one. So it's possible that next year, again, we will see the same dynamics. Then the second question, you really dragging me in something that is too specific to detail and it involves, let's say, confidential negotiations that we are having in these days. So I really cannot comment on that.
Operator: [Operator Instructions] Mr. Puliti, there are no more questions registered at this time.
Alessandro Puliti: Okay. Well, then that's it. Thank you very much. Good day.
Operator: Ladies and gentleman, thank you for joining. Conference is now over. You may disconnect your telephone.