Subsea 7 SA

OSE:SUBC

Earnings Call Analysis

Subsea7 Reports Strong Growth and Positive Outlook through 2025

In Q3 2024, Subsea7 reported $1.8 billion in revenue, a 16% increase year-over-year, with adjusted EBITDA risen to $321 million—up 59%. The company raised its 2024 revenue guidance to $6.5-$6.8 billion. For 2025, they project revenue of $6.8-$7.2 billion and an EBITDA margin of 18%-20%. With a firm backlog of $11 billion, including $5.3 billion to be executed in 2025, Subsea7 is focused on robust cash generation, targeting $1 billion in returns to shareholders by 2027.

Strong Q3 Performance Sets Up Future Growth

Subsea7 reported impressive results for the third quarter, achieving an adjusted EBITDA of $321 million, which represents a significant 59% increase year-over-year. The company's EBITDA margin improved to 18%, up from 13%, reflecting operational efficiencies and a favorable project mix. This growth trend is expected to continue, and the company has revised its full-year EBITDA guidance upwards for the second time this year. With a solid backlog of contracts valued at $11.3 billion, Subsea7 anticipates strong cash generation, allowing for at least $1 billion to be returned to shareholders from 2024 to 2027.

Robust Order Intake and Backlog Details

In terms of order intake, Subsea7 secured $0.6 billion in Q3, bringing the total for the first nine months of the year to a healthy $5.9 billion. The company's backlog remained strong, with $1.8 billion scheduled for execution in Q4 and $5.3 billion expected in 2025. This visibility into future revenue is reassuring for investors, indicating that Subsea7 is well-positioned to meet its operational goals.

Sector Performance Insights

The company's performance in its subsea and conventional segments was robust, with revenue from Subsea up 12% year-on-year at $1.4 billion, driven by major projects like Mero 3 in Brazil and Yggdrasil in Norway. Adjusted EBITDA from Subsea was $252 million, at a margin of 17.5%. In contrast, the renewables segment saw revenue grow by 40%, reaching $376 million, buoyed by high asset utilization, resulting in an adjusted EBITDA margin of 16.4%. This diversification underscores Subsea7's strength across different markets.

Financial Guidance for Future Growth

Looking ahead, Subsea7 has provided revenue guidance for 2024 at the upper end of the range, forecasting $6.5 billion to $6.8 billion with an adjusted EBITDA target of $1,025 million to $1,075 million. For 2025, revenue is expected in the range of $6.8 billion to $7.2 billion, with adjusted EBITDA margins predicted to be between 18% and 20%. The company is directed towards a strong financial trajectory with a commitment to increase returns to shareholders, highlighted by a targeted $750 million return over the next three years.

Market Opportunities and Tender Pipeline

Subsea7's management expressed confidence in the long-term outlook based on a robust tender pipeline, currently valued at approximately $20 billion. The company has been actively engaging with clients to secure more contracts, particularly in key regions such as the U.K., Germany, Netherlands, and Taiwan, which could drive additional revenue. Management has noted a stabilization in the macro environment for offshore projects and a more disciplined approach from developers, positioning Subsea7 advantageously for future work.

Commitment to Shareholder Returns

As part of its commitment to returning value to shareholders, Subsea7 has executed approximately $250 million in returns this year, including $80 million in share repurchases and $170 million in dividends. The plan is to allocate at least $1 billion in returns through 2027, which is an encouraging sign for investors prioritizing income. The balance between dividends and share buybacks will continue to be shaped by shareholder preferences.

Earnings Call Transcript 2024-Q3

[Operator]

Good day, and thank you for standing by. Welcome to the Subsea7 Q3 2024 Results Conference Call. [Operator Instructions] Please be advised that today's conference is being recorded.

I would now like to hand the conference over to your speaker today, Katherine Tonks. Please go ahead.

[Katherine Tonks, executive]

Welcome, everyone, and thank you for joining us. With me on the call today are John Evans, our CEO; Mark Foley, our CFO; and Stuart Fitzgerald CEO of Seaway 7. The results press release is available to download on our website, along with the slides that we'll be using during today's call. And please note that some of the information discussed on the call today will include forward-looking statements that reflect our current views. These statements involve risks and uncertainties that may cause actual results or trends to differ materially from our forecast. For more information clear to the risk factors discussed in our annual report or in today's quarterly press release.

I'll now turn the call over to John.

[John Evans, executive]

Thank you, Katherine, and good morning, everyone. I will start with a summary of the third quarter before passing over to Mark for more details on the financial results.

Turning to Slide 3. Subsea7 delivered third quarter adjusted EBITDA of $321 million, a margin of 18%, up from 13% last year. We're on track to meet full year EBITDA guidance, which we have revised upwards for the second time this year and we have introduced new guidance for 2025 that implies continued growth in EBITDA, supported by a firm backlog of high-quality contracts. We remain confident in the long-term outlook based on a robust tender pipeline and positive conversations with our clients. Against this optimistic backdrop and with the prospect of strong cash generation, we're committed to returning at least $1 billion in the 4 years from 2024 to 2027.

Turning to Slide 4. After exceptional second quarter, order intake in the third quarter was $0.6 billion. Overall, our order intake for the first 9 months of this year was a healthy $5.9 billion.

Slide 5 shows details of our backlog. At the beginning of the third quarter, we had a group backlog of $11.3 billion, of which $1.8 billion is due to be executed in the fourth quarter and $5.3 billion in 2025. We have good visibility on the years ahead. including high utilization of our major Subsea vessels in the remainder of '24, '25 and into 2026. In renewables, the backlog is roughly flat as we remain selective in our tendering approach to support future margins and returns.

And now I'll pass over to Mark to run through the financial results.

[Mark Foley, executive]

Thank you, John, and good morning, everyone. I will begin with some details of group and business unit performance in the quarter before turning to the group cash flow and financial guidance of 2024 and 2025.

Slide 6 summarizes the group's third quarter results. Revenue was $1.8 billion, up 16% compared to the third quarter of 2023, driven by strong performances in both business units as major projects made good progress. Adjusted EBITDA of $321 million was up 59% compared with the prior year, and our margin increased by over 450 basis points to 18%. After depreciation and authorization of $158 million, net finance cost of $20 million and taxation of $70 million, net income was $98 million compared with $36 million in the prior year period.

I'll now discuss the drivers of the group's performance in the next few slides.

Slide 7 presents the key metrics for Subsea and Conventional. Revenue was $1.4 billion, up 12% year-on-year, reflecting good progress on Mero 3 in Brazil, Yggdrasil in Norway and the Gas-to-Energy project in Guyana. Adjusted EBITDA was $252 million, equating to a margin of 17.5%, an increase of 330 basis points from the prior year. This result reflects the continued evolution of the backlog mix towards higher-quality contracts, as well as a $10 million net income contribution from OneSubsea. Net operating income was $127 million compared to $76 million in the same quarter of last year.

Selected renewables performance metrics are shown on Slide 8. Revenue was $376 million, up 40% year-on-year, reflecting good progress at Dogger Bank B in the U.K. as well as projects in the U.S. and Taiwan. Adjusted EBITDA was $62 million, double that in the prior year, equating to a margin of 16.4%. This was driven by very high asset utilization, with all 7 vessels executing work and report.

Slide 9, shows the cash waterfall for the third quarter. Net cash generated by operating activities was $270 million, which included a minor movement in working capital. Capital expenditure was $132 million, including $83 million relating to the acquisition of Seven Merlin. Net cash used in the financing activities was $78 million, which included share repurchases of $20 million and lease payments of $60 million. At the end of the quarter, cash and cash equivalents increased by $150 million to $440 million. Net debt was $857 million, including lease liabilities of $495 million. The group had liquidity of $1.1 billion at the end of the quarter.

As of today, the company had returned approximately $250 million to shareholders this year, composed of $80 million of share repurchases and approximately $170 million of dividends.

To conclude, Slide 10 shows our guidance for the full year. In 2024, we expect revenue to be at the upper end of the range from $6.5 billion to $6.8 billion, with adjusted EBITDA of $1,025 million to $1,075 million. For 2025, we anticipate revenue to be between $6.8 billion and $7.2 billion, with an adjusted EBITDA margin ranging from 18% to 20%. Capital expenditure in the year is expected to be between $360 million and $380 million. Finally, in 2026, we continue to expect an adjusted EBITDA margin of over 20%.

I will now pass you back to John.

[John Evans, executive]

Thank you, Mark. On the next 2 slides, we'll review the latest developments in the offshore wind industry and progress specific to Seaway7.

Starting on Slide 11 with our existing contracts. This summer, we achieved a strong operational performance in the installation of monopiles on Dogger Bank A and Dogger Bank B project. Completion is now at 95%, with final monopiles anticipated to be installed before the year-end. In 2025, we will move on to Dogger Bank C project with the same well-proven assets and execution strategy. At the same time, cable lay projects on Moray West in the U.K., Chang Fang Xidao in Taiwan as well as turbine installation on Gode Wind 3 in Germany have been completed.

After a positive CFD allocation round this year in the U.K., we were pleased to be successful in our bids for 2 new projects, covering cable lay at Hornsea 3 and East Anglia 2. Recent operational performance and the high grading of our backlog underpins our view that we will achieve an adjusted EBITDA margin in renewables of between 14% and 16% in 2025 and beyond. This represents a further step-up in our expectations on financial performance within this segment and its contribution to the group results.

Slide 12 summarizes our view of the offshore wind business group today. While the industry remains dynamic, overall, we're seeing improvements in the macro environment for projects over the course of 2024. After an extended period of uncertainty, there has been a stabilization of input costs for developments as well as a more supportive political and regulatory environment in a number of the key markets. We also see increased discipline from developers, and this has created a generally more constructive environment for the assessment and sanction of new projects. In 4 key historical and future markets, the U.K., Germany, Netherlands and Taiwan, we see good momentum and we have a strong track record, operating presence and ongoing project activity in each of these geographies, which position us well.

In the U.S. market, we've always been cautious and selective on our exposure. We do expect the recent election outcomes to lead to a downward revision in the projection for offshore wind developments but see no risk for ongoing Revolution cable project, which is currently executing offshore.

Now on to a review of our tendering pipeline on Slides 13 and 14. Bidding for subsea work remains very active, and our tenders in-house amount to approximately $20 billion. The outlook for Brazil remains very good with several projects on the 12-month horizon, each valued at over $1.25 billion. While we have recently seen an additional bidder in this region, industry dynamic remains in our favor, and we are confident of winning our fair share of this market. Elsewhere, there are a wide range of projects in deepwater markets in the U.S., Gulf of Mexico, West Africa, Turkey and beyond. Overall, we are confident that we have a strong tendering pipeline that can support continued momentum in our Subsea order intake.

On the next slide, we have our wind prospects. In Continental Europe, a large number of prospects in Germany, the Netherlands and Poland are due to open for bidding in the coming year. After a successful licensing round in the Netherlands, 2 of our existing clients appear to be making good progress towards the bidding phase of their substantial developments. In the U.K., we're optimistic that the new government will support the domestic offshore wind industry with potentially increased volumes in next year's CFD allocation rent. We expect Seaway7 to remain one of the leaders in this market. Despite the evolution of the U.S. market, we remain confident that the long-term outlook for offshore wind market is strong and that through selective bidding, we can continue to deliver good financial performance in our renewables business.

To conclude, we turn to our final slide on Page 15. As we've outlined today, we have increased our guidance for 2024, reaffirmed guidance for 2025 and 2026 including confirmation of materially higher margins in our offshore wind business. Overall, Subsea7 is on track to deliver strong EBITDA growth this year and next, doubling our 2023 results in '25. Our optimism is supported by an $11 billion backlog of firm work and an active tender pipeline in both Subsea

[Technical Difficulty]

[Operator]

Please continue to stand by. Your conference will resume shortly. Please proceed.

[John Evans, executive]

Well, hopefully, you caught the final wrap-up from our section, but I'll just go through the very last slide again.

So we go to Slide 10 in terms of a final conclusion on where we're at as a business. As we've outlined today, we've increased our guidance for 2024 and reconfirmed guidance for 2025 and 2026. The including confirmation of materially higher margins in our offshore wind business. Overall, Subsea7 is on track to deliver strong EBITDA growth this year and next, doubling our 2023 results in '25. Our optimism is supported by $11 billion backlog of firm work and an active pipeline of projects and opportunities in Subsea and wind. Management is focused on achieving high conversion of this EBITDA into cash flow and is committed to allocating a substantial portion of this to shareholder returns.

In 2024, we have delivered the first tranche of these returns with at least a further $750 million in the coming 3 years. And with that, hopefully, we have everybody back online, and we're happy to take your questions.

[Operator]

[Operator Instructions] Your first question comes from the line of Guilherme Levy from Morgan Stanley.

[Guilherme Levy, analyst]

I have 2, please. The first one, looking at the CapEx guidance for next year, can you walk us through the increase year-on-year that you expect for 2025? And also, how should we think about your recurring underlying CapEx level from here? And also related to new investment on offshore wind, specifically, with the increased visibility that you're now seeing in terms of utilization rates and the higher margins for the coming years, is that enough for you to consider hedging new capacity again in this segment?

[John Evans, executive]

I'll ask Mark to answer the first one, and I'll answer the second with visibility.

[Mark Foley, executive]

Thank you, Guilherme. We've provided CapEx guidance for next year in the region of $360 million to $388 million. What we see next year is a switch in CapEx slightly more allocated towards non-vessels. That would be our real estate portfolio, including our spoolbases on an operational basis as well as investments in equipment to allow us to achieve productivity opportunities offshore. What we have seen in the recent years has been increasing costs associated with the supply chain.

As you know, we have 29 owned vessels within our fleet. And we've seen increases in costs in terms of original equipment manufacturers and materials. Similarly, the costs associated with dry docking have increased, too. It's incredibly important that we maintain the availability of our vessels by making these investments. So that we have the high utilization that allows us to execute the work that we have in the backlog as well as having vessels available to access the opportunity sets presented by the pipeline of prospects presented by the market. So next year, the characteristic there is slightly more of a proportion associated with non-vessels compared to vessels as we had this year and last year.

[John Evans, executive]

On the wind question that you asked, I guess the important message that we wanted to give here today is that we are seeing improved margins and a very good performing business, and we have a nice portfolio of work ahead. I think it's fair to say that the ambitions in the market from many countries that we were looking far outweighs the capacity that's in the sector towards the end of this decade. But interesting enough, there are a number of clients who are very much engaged in discussions with suppliers like ourselves about how they could put some commitments behind future investments. So for us at the moment, we will entertain those type of discussions to understand any form of client-backed investment we would like to understand those and see if there's an opportunity there for us.

I think on-spec building is not something that we'd be doing in this market. But equally, we are open for dialogues with our clients, and we'll see how that develops over the coming year or so.

[Operator]

Your next question comes from the line of Richard Dawson from Berenberg.

[Richard Dawson, analyst]

My first question is also on offshore wind. And looking back across most of your recent awards, they tend to be transportation and installation of inter-array cables. Do you see a shift at all to larger foundation-based work? Or are the risk dynamics still not really favorable to bid in those types of work?

And then secondly, on -- you mentioned in the release about 75% of the 2015 -- sorry, 2025 revenue guidance was already booked. Do you expect the remaining '25 to be mainly short cycle sort of book and turn type work? Or will this be coming from sort of future larger awards that fill the gap?

[John Evans, executive]

If I take the 2025 question, and I'll ask Stuart to come back on the wind question you raised. We have a number of projects, for example, DSVi, which is a call-off arrangement with multi-clients in the North Sea, where every year at the start of the year, they call that backlog off with us, which then commits 1 or 1.5 of our diving ships to work. So we do pretty much know where that work will come from, Richard. It just needs to go through the call-off arrangements that our different clients use. There is some spot work to get it right up to the 100%, but that's common for us as well. But we're pretty clear on the path that we should achieve our 100% utilization in terms of the revenues that we're looking for next year.

[Mark Foley, executive]

And I can take the first question there, Richard. So I think the recent awards, as you say, have been inter-array cables award. I wouldn't read too much into that. We're actively tendering foundation scopes that are within the capabilities of our current fleet. So it's more of the timing of awards than any significant trend to read into that.

[Richard Dawson, analyst]

Perfect. And then maybe just a quick follow-up on that final question. When you say you're tendering scopes, would this tend to be this side of Christmas? Or is it probably more 2025 for those awards?

[John Evans, executive]

I would say both. We still have ongoing tenders, which could award this side of Christmas and then obviously, tenders ongoing on a longer time frame as well.

[Operator]

Your next question comes from the line of Haakon Amundsen from ABG Sundal Collier.

[Haakon Amundsen, analyst]

Two questions from me. First of all, it's been a little bit more volatile in the oil service industry in terms of how the sector has developed the quarter and order intake is a bit down, both on escalations and new awards. Just wondering, is there any change in the behavior from your clients in terms of either the escalation side on existing projects or the timing of actually sanctioning new awards? So that's my first question.

And the second one, improving renewables margins. Have your -- but keeping the overall group range guidance. Is there any kind of movement on that range from improving renewables margins? Any color on how that impacts your kind of total expectation?

[John Evans, executive]

Thank you, Haakon. Yes, I think we said it at the time 3 months ago that we had a blockbuster Q2 and we didn't expect to repeat it. Our order intake is coming in as we expect it during the year. It's a lumpy bias quarter-by-quarter. The discussions we're having with our clients continue to be very positive about what they're trying to achieve and where they're trying to go to. Yes, there's a lot of volatility in the world per se, today. But the conversations we're in remain positive and remain future-focused.

Turning to escalations. As you know, we have certain escalation mechanisms in some of our large projects in Brazil. So the anniversary of those projects, we get some escalation mechanisms that kick in to cover inflation. And generally for us, Q4 is also an interesting period of time, which we talk quite often about where clients try to settle their accounts for a particular year. So variation orders either get settled or moved into the next year for debate and discussion. So for us at the moment, we would expect to carry on the path that we're on. But at the moment, there's no major signals there that's causing us a concern in terms of the toll and the messaging that we've seen.

As we know, all these big projects that we sign up are very, very large pieces of business and they take quite a bit of time for our clients to get their alignment as to how to get them over the line. Equally, in my travels in the last month or so, we've spoken to many clients. I've been in Brazil. I've been to Turkey. I've been to the U.S., and we've been to Norway. Again, conversations are very positive.

Our Turkish client, Turkish Petroleum, are looking at the third phase of Sakarya being bid to the market early part of next year. So again, there are parts of the world that didn't use to be on the list where there are opportunities opening up.

In terms of renewables, when we were putting our figures together for the view of next year, we had in mind that we could see our renewables business starting to stabilize and deliver those margins. The work that Stuart has brought in just recently and again in this quarter has again given us reinforcement for that.

So we just felt that since the market has asked us repeatedly what do we think the underlying percentages would be that's baked into the overall group numbers. But we feel comfortable today that the 14% to 16% EBITDA is a reasonably good run rate for that business over a period of, say, each year going ahead.

[Operator]

Your next question comes from the line of Kate O’'Sullivan from Citi.

[Kate O'Sullivan, analyst]

Firstly, through this year, you've had multiple upgrades to your EBITDA guidance. And today, you've provided new FY '25 revenue guidance, maintained your margin guide. I just appreciate some comments on how conservative this FY '25 guidance is perhaps which scenarios you can most likely anticipate having upgrades to next year's guidance?

Secondly, on the Subsea prospect side with South America, Block 58 Suriname, a couple of your competitors have had recent awards here. Is there scope for more SURF SPS as part of the current GranMorgu development? Or are you anticipating future opportunities within this block?

[John Evans, executive]

I guess in terms of how this year has played out, like every year, we have a plan to deliver and certain opportunities come our way, certain things fall rightly into place for us. So again, we will go into 2025. We've given our best estimate of where we think we'll be in 2025. There's a lot of work to liquidate in 2025. The vast majority is on our books. So we know what we need to do. And generally, as we progress through each quarter, we give the market an update of how we're doing and how we're liquidating the opportunities that are ahead of us. So again, we feel we've given you our best view of '25 at this point. And as we progress through the year, we will come back to the market if we feel it's appropriate to adjust accordingly.

In South America, we see opportunities in Ghana. We see opportunities in Brazil, and we see opportunities in Suriname. As you know, we did our first project in Ghana this year, which we discussed the Gas-to-Energy project, which we discussed in our Q2. We will continue to bid on all the projects that are available to bid in that part of the world. And we would expect as we get into 2025, there will be some opportunities to bid in Namibia, which again is another area of new opportunity. And as I touched on in my previous answer, Turkey continues to provide a lot of opportunity in the Black Sea Phase 3, which we show on that Subsea prospect is a very, very, very large Subsea development of the Sakarya field in Turkey, which effectively doubles the size when you add Phase I and Phase II together. So again, a very large opportunity set of deepwater will come from multiple geographies next year.

[Operator]

Your next question comes from the line of Kevin Roger from Kepler Chevreux.

[Kevin Roger, analyst]

Yes. I will have a first one. One of your peers recently mentioned that there is quite a big stress on the vessel for capacity available over the next 2 to 3 years and that now clients are ready to pay reservation fees before making the decision on the project, the official FID. So I was wondering if you do see the same trend on your side with clients ready to pay reservation fees before the final decision. You just mentioned Sakarya, for example. Would it be something that could materialize? That's the first question.

And the second one, you mentioned in your remarks that in Brazil, you have a new bidder that has emerged that has been welcomed. But if I'm not making any mistake, I think they do not have the EPC capabilities for doing those kind of big FPS or Subsea works. So can you comment a bit on here how it impacts the bidding environment, the capabilities of all the players in Brazil, please?

[John Evans, executive]

Yes. Thank you, Kevin. So let's look at the capacity of the other peers. I think it's fair to say that a lot of our client discussions in the Subsea commercial business is about having access to capacity and capability in the pipeline, rigid pipeline side, in particular, in the outer years. So that discussion is ongoing. I'm sure it's happening with the main 3 or 2 or 1 players in the sector. As you know, for example, we have been selected by Equinor for both Bay du Nord and Wisting as preferred contractors to work on those and associated with a commitment that if the project goes ahead, we would get the work. There is a vessel commitment mechanism that goes behind that. So we have some vessel commitments to go into the next decade around those mechanisms.

So to answer your question, a number of clients who have large volumes of work are very much interested in those type of discussions. How you monetize that and how you report that through contract mechanisms there is by different clients. We're always interested in pragmatic solutions that allow us to give clients the opportunity to FID their projects or it's given us the opportunity then to be the preferred bidder post the award. So there are a number of mechanisms that are discussed in the industry, and we're not alone, and our peers have also talked about that as well.

When we come back to Brazil. And as I said, there are 4 major projects in a hopper, which Petrobras have publicly declared and are out to bid at the moment: Búzios 10, Búzios 11, Atapu 2 and Sépia 2. So these are the opportunity sets that's ahead of us. We've always been very clear that we will get our fair share, and I remain very confident that we'll get our fair share of the Petrobras scopes.

What, Petrobras has seen, though, and we've certainly been part of those earlier discussions that projects that link in FPSO moorings, a lot of flexible works are very complicated to administer because a lot of the flex-lay vessels, of course, are tied in on other contracts with Petrobras. So some of the linked in packages are cleaner. They are primarily rigid pipeline contracts with some tie-ins associated with them, with the flexibles and umbilicals done through the PLSV contract directly with Petrobras.

So again, those 4 packages are cleaner in terms of its engineering and pipelines, procurement of pipelines and installation of pipelines, which has allowed Petrobras to open up to the trunkline such as Allseas, who are very confident in what they do in the trunk line space. So again, we never believed that we would get everything in Brazil. We've never planned our business. We can't do everything in Brazil. And so for us, over that list, we expect to get our share, and we remain confident of that.

[Operator]

Your next question comes from the line of Christopher Mollerlokken from Sparebank 1 Markets.

[Christopher Møllerløkken, analyst]

Yes, briefly on share buybacks versus dividends. Is it fair to still assume that the dividend level will be kept unchanged going forward and the remaining shareholder distribution will be through share buybacks? Or do you see that the nominal dividend level will likely increase going forward?

[Mark Foley, executive]

The internal debate, Christopher, what we can say is that we have executed the first tranche, approximately $250 million this year of at least $1 billion that we will return to shareholders going out to 2027. I think many on the call are familiar with our approach. We canvass a large number of shareholders in terms of their preference for how the company returns excess cash in terms of share repurchases and dividends. As you would expect, each constituent has a particular preference. And as much as possible, we reflect those preferences to the Board of Directors who ultimately decide the combination of the shareholder returns.

So I'm not in a position now to review why there will be any significant deviation from $80 million that we have come through share repurchases this year and approximately $170 million in 2 tranches of the cash dividend. But we clearly will engage as we have in previous years with our shareholders to understand the preferences and that we will present that to the Board for them to make a decision.

[Operator]

Your next question comes from the line of Daniel Thomson from BNP Paribas Exane.

[Daniel Thomson, analyst]

Just one question left on my list. And it's just on the Middle East market. this year, I think from Subsea7, we've seen relatively quiet sort of commercial momentum in that area, but we are coming off the margin and to sort of execution. So just wondering, are the vessels that are on that project at the moment, are they booked for a follow-up project at the moment? Or are you looking to redeploy them outside Saudi Arabia? Just sort of wondering on any color you can provide on -- are you seeing the terms and conditions in Saudi Arabia and in the area in general? Are they still up to what you'd expect? Are they still attractive?

[John Evans, executive]

Well, thank you, Daniel. As you know, we have a relatively small Middle East business, but it's a presence, and we are part of the Saudi Aramco long-term agreement framework opportunity. We are liquidating Marjan, as you said, and getting towards the end of that scope, which has been a very large piece of business. We also have Zuluf to do next year, which we're under contract to work with our partners Larsen & Toubro on Zuluf. So Zuluf will take us into next year.

We use a mixture of vessels such as the Champion, which is a regional vessel shallow water for the specific water depths in the Middle East. But we've also used the Borealis this year both in Saudi, but also both in Guyana in South America as well. So we can deploy different assets in there.

You maybe touched on it at the start. There was quite a big reprofiling of Saudi Aramco's focus in February when the country decided to reset its ambitions. So there was a reset on the CRPOs and what the priority was. So there's been some delay in awards there. But we're now seeing the CRPO packages come back out again in a reformatted manner in terms of scope, but the terms and conditions are pretty much where they've always been with Saudi Aramco. So again, we will continue to bid a number of these opportunities to allow us to have an opportunity set in that market.

[Operator]

Your next question comes from the line of Mark Wilson from Jefferies.

[Mark Wilson, analyst]

Most questions have been answered. But I was wondering if we could touch on the one Subsea combined, if there's any particular update to give there, say, on integration or products? And at the same time, is there any specific market communication or Investor Day on that business planned in the coming year?

[John Evans, executive]

Thank you, Mark. It's probably an interesting time. It's just over a year since we made our investment and the combination came together on the 1st of October 2023. As you know, it is consolidated through SLB. So SLB provides the main market focus there. But we are very pleased to be part of the ownership structure of that business, but also, as you know, through the Subsea Integration Alliance, the partners for the integrated SURF SPS opportunity to come to the market. The business has done well. It's had a good first year. It's tracking in line with what we had all expected when we made our investment choices. If you look at the press releases from OneSubsea, they have done very well in picking up a number of key SPS hardware orders in the market.

So again, we feel comfortable that we have a good investment there and a very good relationship. It's important to remember our relationship with OneSubsea goes right the way back to 2015. So this is nearly a decade-long relationship that we've had working with each other. And then if we look at Norway, a lot of activity in Norway where again, OneSubsea and Aker hardware is used well. So for us, we are very much in a place where we're very comfortable with the set-up there. I'm not aware of a Capital Markets Day, but that will come through the SLB announcements in due course if that will take place, Mark.

[Operator]

This concludes today's question-and-answer session. I'll now hand back to John Evans, CEO, for closing remarks.

[John Evans, executive]

Well, thank you very much from everybody. Very pleased that you could join us. I know it's a busy day. There's some other Capital Markets Day going on here today. So thank you for your questions as ever. We look forward to speaking to you about our Q4 results early on in 2025. As ever, if you have any other further questions, please contact Katherine or Mark or myself, and we hopefully could help you. But thank you very much. We look forward to another interesting quarter ahead of us in Q4, and we'll talk again in early 2025. And thank you for your continued support of Subsea7.

[Operator]

This concludes today's conference call. Thank you for participating. You may now disconnect.