Petrobras FPSO awards lift SBM Offshore backlog and annual guidance

SBM Offshore N.V. raised its 2026 revenue and earnings guidance after new floating production contracts, major project milestones and an early asset sale more than doubled its first-half Directional revenue. The Euronext Amsterdam-listed offshore infrastructure company, which trades under $SBMO, reported Directional revenue of $4.9 billion and Directional EBITDA of $1.31 billion for the six months ended June 30. Pro-forma Directional backlog reached a record $35.6 billion after the company secured two floating production, storage and offloading projects from Petrobras and advanced work for ExxonMobil Guyana. SBM Offshore now expects approximately $7.6 billion of Directional revenue and $1.9 billion of Directional EBITDA for the full year, compared with earlier guidance of more than $6.9 billion and approximately $1.8 billion. The central tension is that the contracted project pipeline provides unusually long cash-flow visibility, but simultaneous construction programs, complex accounting and substantial execution requirements make the 112% reported revenue increase less straightforward than the headline suggests.

Directional net profit attributable to shareholders increased to $826 million from $274 million, while Directional earnings per share rose to $4.90 from $1.57. Under International Financial Reporting Standards, however, revenue declined 2% to $2.79 billion and shareholder profit increased only 1% to $325 million. The difference reflects SBM Offshore’s alternative Directional reporting method and the accounting treatment of jointly owned projects and finance leases.

The company also declared a $100 million interim cash dividend, equivalent to €0.5075 per ordinary share, payable on September 3. This is in addition to the $100 million dividend paid in May and an ongoing $270 million share-repurchase program that was approximately 44% complete after the August 5 market close.

Why SBM Offshore’s 112% revenue increase is not purely underlying growth

SBM Offshore uses Directional reporting to present its business according to how management evaluates project economics and cash generation. The method treats lease contracts as operating leases and proportionally consolidates jointly owned lease entities according to SBM Offshore’s ownership percentage. These calculations differ from IFRS and should not be interpreted as directly comparable statutory revenue.

Directional revenue increased to $4.9 billion from $2.31 billion during the corresponding 2025 period. Turnkey revenue, which includes engineering, construction and asset-sale activity, rose 181% to $3.71 billion and accounted for approximately 76% of the total. Lease and Operate revenue increased 21% to $1.19 billion.

Much of the increase came from the February sale of FPSO ONE GUYANA to ExxonMobil Guyana for approximately $2.32 billion. ExxonMobil purchased the vessel ahead of the maximum lease expiration in August 2027, while SBM Offshore retained an operations and maintenance role through 2035. The proceeds were used primarily to repay $1.74 billion of project financing.

Under Directional reporting, the sale consideration was recognized as revenue during 2026 and the unit’s net book value was recorded as a cost of sale. Under IFRS, the asset had already been accounted for as a finance-lease receivable, producing a substantially smaller impact on the first-half income statement. This treatment explains a large part of the difference between 112% Directional revenue growth and the 2% decline in IFRS revenue.

The FSO Chalchi transaction also supported Turnkey revenue. SBM Offshore completed the divestment of a 45% interest in the project’s special-purpose companies to Nippon Yusen Kabushiki Kaisha while retaining a 55% ownership position. The company also recognized revenue from construction progress on FPSO GranMorgu and initial work connected with the Petrobras and ExxonMobil Guyana awards.

Directional EBITDA increased 92% to $1.31 billion, including Turnkey EBITDA of $813 million and Lease and Operate EBITDA of $547 million. The newly awarded Petrobras projects and Longtail engineering contracts contributed to revenue but had not reached the stage required for margin recognition, meaning their first-half contribution to Directional EBITDA was limited.

The figures therefore demonstrate a strong commercial and project-delivery period, but they should not be treated as evidence that SBM Offshore’s recurring operating base doubled within six months. Asset sales, project milestones and accounting treatment materially influenced the comparison.

How Petrobras projects lifted backlog and changed SBM Offshore’s guidance

Petrobras awarded SBM Offshore contracts to design, build and operate FPSO SEAP I and FPSO SEAP II for developments in Brazil’s Sergipe-Alagoas basin. The Petrobras-led project consortia will own the vessels, while SBM Offshore will operate each unit under an initial 6.5-year operations and maintenance agreement.

Each vessel will use SBM Offshore’s standardized Fast4Ward hull design and will have capacity to produce approximately 120,000 barrels of oil per day. The units will also contain substantial gas-treatment and export infrastructure, reflecting the importance of commercializing natural gas alongside oil from the developments.

SEAP II is expected to be contractually handed over during 2030, followed by SEAP I during 2031. Engineering and procurement activities have started, but both projects were less than 25% complete at the end of June.

The awards were the primary reason SBM Offshore raised its full-year Directional revenue forecast to approximately $7.6 billion. The company now expects around $5.2 billion from Turnkey activities and approximately $2.4 billion from Lease and Operate operations.

The Petrobras awards are not expected to increase 2026 EBITDA because the projects have not advanced sufficiently for margin recognition. The increase in EBITDA guidance to approximately $1.9 billion instead reflects stronger performance and progress across the company’s existing portfolio.

This distinction is important because additional project revenue does not automatically translate into immediate profit. Large engineering and construction contracts require spending on hulls, equipment, fabrication, labor and working capital before meaningful margins can be recognized.

SBM Offshore’s pro-forma Directional backlog increased by $4.5 billion from year-end 2025 to a record $35.6 billion. The total includes $10.4 billion of Turnkey work and $25.2 billion connected with Lease and Operate activities, providing contractual visibility extending as far as 2050.

Approximately $2.7 billion of the backlog is scheduled for the second half of 2026, followed by $5.4 billion in 2027 and $5.2 billion in 2028. Another $22.3 billion is assigned to periods beyond 2028, although actual cash flow will depend on ownership changes, project completion, contract extensions and client decisions.

Backlog offers valuable visibility, but it is not the same as immediately available revenue or profit. SBM Offshore must complete the vessels, satisfy contractual performance obligations and operate the units reliably over several decades before realizing the full economic value.

Why Guyana remains central to SBM Offshore’s project and cash-flow strategy

SBM Offshore is performing front-end engineering and design work for ExxonMobil Guyana’s proposed Longtail development. The initial contract released funding for engineering activities and allocated a Fast4Ward hull, while full construction remains subject to government approvals, ExxonMobil’s final investment decision and authorization for the next work phase.

The proposed vessel would become SBM Offshore’s sixth FPSO project connected with ExxonMobil Guyana, following Liza Destiny, Liza Unity, Prosperity, ONE GUYANA and Jaguar. The repeated use of standardized hulls and design experience can reduce engineering duplication and provide greater certainty over construction schedules.

FPSO Jaguar is already under construction for ExxonMobil Guyana. It is designed to process approximately 250,000 barrels per day, with first oil expected during 2027. Topsides fabrication was nearing completion at the end of June, and all major process modules had been lifted onto the vessel.

Selling FPSO ONE GUYANA demonstrates another element of SBM Offshore’s model. The company can design and finance a vessel, receive construction and lease income, sell the asset to the customer and continue earning operations and maintenance revenue after ownership transfers.

The $2.32 billion ONE GUYANA transaction contributed to Directional profit and sharply lowered debt. Directional net debt declined by approximately $1.97 billion from the end of 2025 to $3.68 billion, supported by the project-financing repayment and cash generated by the Turnkey and Lease and Operate businesses.

More than 70% of Directional debt consisted of non-recourse project financing held within special-purpose entities. This structure generally limits lender claims to the relevant project, although it does not remove construction, operational or refinancing risks from the wider business.

SBM Offshore reported $2.37 billion of Directional cash and undrawn committed credit facilities at June 30. The liquidity supports working-capital requirements for projects under construction, new standardized hull orders and shareholder distributions.

The company has ordered 13 Fast4Ward hulls. Eight have been delivered or allocated to operational and construction projects, while five are under construction. Three of the unfinished hulls are allocated to Longtail and the two Petrobras projects, while two were ordered ahead of final project awards to support active tenders.

Ordering hulls before obtaining firm contracts can shorten project schedules and strengthen SBM Offshore’s competitive position. It also exposes the company to capital and utilization risk if expected awards are delayed, changed or cancelled.

Why simultaneous FPSO construction creates execution and safety pressure

SBM Offshore is managing five disclosed projects at different stages of design or construction, including Jaguar, GranMorgu, Chalchi, SEAP I and SEAP II. Longtail remains in the engineering phase and could add another major construction program if the required approvals and final work order are received.

FPSO GranMorgu, developed for TotalEnergies’ project in Suriname, was between 50% and 75% complete at the end of June. Its hull had been launched from the second dry dock, while topsides fabrication continued ahead of expected first oil in 2028.

FSO Chalchi, developed for Woodside Energy’s Trion project in Mexico, was also between 50% and 75% complete. SBM Offshore secured $465 million of project financing and completed the sale of a 45% ownership interest, reducing its capital exposure while retaining operational and economic participation.

The company formed a joint venture with Solstad Offshore and ordered a next-generation deepwater installation and construction vessel scheduled for delivery during the first half of 2029. The investment is intended to improve control over offshore installation activity and reduce reliance on limited third-party vessel capacity.

Vertical integration can improve scheduling and project execution, but it adds another capital-intensive asset whose utilization must be managed. Its financial return will depend on SBM Offshore’s project pipeline and demand from external customers.

The first-half report also disclosed a fatal incident involving a subcontractor at a Chinese construction yard during June. SBM Offshore said it was supporting the investigation and had introduced immediate precautionary measures with the yard. A separate 2025 incident in Singapore was reclassified as a permanent impairment for 2026 safety reporting.

The incidents underline the operational risks associated with building several complex vessels across international fabrication yards. Schedule and financial performance cannot be separated from safety management, contractor supervision and workforce capacity.

SBM Offshore’s operating fleet achieved oil uptime of 98.9% during the first half. Its 16-unit fleet produced an average of more than two million barrels of oil equivalent per day during June, supporting the recurring Lease and Operate cash flow that balances the more volatile Turnkey business.

The company’s growth strategy now depends on preserving that fleet reliability while executing a historically large construction workload. Cost inflation, fabrication delays, supply-chain problems or engineering changes could reduce margins even when the contracted backlog remains intact.

How debt reduction supports SBM Offshore’s $2.1 billion shareholder-return target

SBM Offshore paid a $100 million dividend during May and plans another $100 million interim distribution in September. Its $270 million repurchase program is intended primarily to reduce share capital, with up to $30 million available for employee and management share plans. Shares acquired for the capital-return portion will be cancelled.

Management remains committed to returning at least $2.1 billion to shareholders over the six years ending in 2031, including distributions made during 2026. The target is supported by contracted backlog, asset-sale opportunities and recurring operating cash flow, but remains dependent on project performance and capital requirements.

The ONE GUYANA sale created room for distributions by lowering project debt and converting a financed asset into cash. Similar future sales could release additional capital, although timing will depend on individual client purchase options and negotiations.

SBM Offshore must balance shareholder returns with investment in construction, standardized hulls, project working capital and the new installation vessel. Returning excessive cash while simultaneously expanding the project portfolio could increase reliance on borrowing or project-partner financing.

The record backlog and stronger guidance show that deepwater investment remains commercially important to major oil producers. SBM Offshore has positioned itself around large, standardized vessels capable of producing high volumes at relatively competitive development costs.

The financial opportunity is accompanied by a demanding execution cycle. The quality of SBM Offshore’s 2026 performance will ultimately depend less on the headline 112% revenue increase than on construction margins, safety, debt reduction and the conversion of its $35.6 billion backlog into durable free cash flow.

Key takeaways from SBM Offshore’s first-half 2026 earnings

• SBM Offshore N.V. reported Directional revenue of $4.9 billion, an increase of 112%, while Directional EBITDA rose 92% to $1.31 billion.
• IFRS revenue declined 2% to $2.79 billion, demonstrating the material difference between statutory results and SBM Offshore’s Directional reporting method.
• The $2.32 billion sale of FPSO ONE GUYANA drove a significant portion of Turnkey revenue and funded repayment of $1.74 billion of project debt.
• Petrobras awarded SBM Offshore contracts for FPSO SEAP I and FPSO SEAP II, each designed to produce approximately 120,000 barrels of oil per day.
• The Petrobras projects helped increase pro-forma Directional backlog to a record $35.6 billion, with contractual visibility extending to 2050.
• Full-year Directional revenue guidance increased to approximately $7.6 billion, while Directional EBITDA guidance rose to around $1.9 billion.
• Directional net debt declined by approximately $1.97 billion to $3.68 billion as asset-sale proceeds and operating cash flow strengthened the balance sheet.
• SBM Offshore is simultaneously advancing major projects for ExxonMobil, Petrobras, TotalEnergies and Woodside Energy, increasing both growth potential and execution pressure.
• The company declared a second $100 million dividend and continued a $270 million repurchase program that was approximately 44% complete.
• The outlook for $SBMO depends on completing its project portfolio safely and profitably while converting record backlog into cash and meeting its $2.1 billion shareholder-return commitment.

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